<PAGE>
As filed with the Securities and Exchange Commission
on July 9, 1999
Securities Act File No. 33-51308
Investment Company Act File No. 811-7142
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X /
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 28 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X /
Amendment No. 30 /X /
(Check appropriate box or boxes)
GE FUNDS
...............................................................
(Exact Name of Registrant as Specified in Charter)
3003 Summer Street
Stamford, Connecticut 06905
....................................................
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code:
(203) 326-4040
Matthew J. Simpson, Esq.
Vice President, Associate General Counsel & Assistant Secretary
GE Investment Management Incorporated
3003 Summer Street
Stamford, Connecticut 06905
.........................................................
(Name and Address of Agent for Service)
Copies to:
Burton M. Leibert, Esq.
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019-6099
<PAGE>
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.
It is proposed that this filing will become effective (check appropriate box):
o immediately upon filing pursuant to paragraph (b) ___
o on (date) pursuant to paragraph (b) ___
o 60 days after filing pursuant to paragraph (a)(1) X
--
o on (date) pursuant to paragraph (a)(1) ___
o 75 days after filing pursuant to paragraph (a)(2) ___
o on (date) pursuant to paragraph (a)(2) of Rule 485 ___
If appropriate, check the following box:
This post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
___
This post-effective amendment includes an updated prospectus only for those
series of Registrant (the shares of) which are currently offered to the public.
GE International Fixed Income Fund and GE Small-Cap Growth Equity Fund, series
of Registrant (the shares of) which are not currently being offered to the
public, remain registered and unaffected by this post-effective amendment.
<PAGE>
Prospectus
--------
GE Funds
September [ ], 1999
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Equity Funds
GE U.S. Equity Fund
GE Premier Growth Equity Fund
GE Value Equity Fund
GE Mid-Cap Growth Fund
GE Mid-Cap Value Equity Fund
GE Small-Cap Value Equity Fund
GE Global Equity Fund
GE International Equity Fund
GE Europe Equity Fund
GE Emerging Markets Fund
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Income Funds
GE Fixed Income Fund
GE Government Securities Fund
GE Short-Term Government Fund
GE Tax-Exempt Fund
GE High Yield Fund
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Asset Allocation Funds
GE Strategic Investment Fund
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Money Market Funds
GE Money Market Fund
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Like all mutual funds, the Funds' shares have not been approved or disapproved
by the Securities and Exchange Commission, nor has the Securities and Exchange
Commission passed upon the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense.
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[GE LOGO]
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We bring good things to life.
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<PAGE>
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Contents
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GE Funds
Prospectus
Equity Funds 2
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GE U.S. Equity Fund 4
GE Premier Growth Equity Fund 6
GE Value Equity Fund 8
GE Mid-Cap Growth Fund 10
GE Mid-Cap Value Equity Fund 12
GE Small-Cap Value Equity Fund 13
GE Global Equity Fund 14
GE International Equity Fund 16
GE Europe Equity Fund 18
GE Emerging Markets Fund 19
Income Funds 20
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GE Fixed Income Fund 22
GE Government Securities Fund 24
GE Short-Term Government Fund 26
GE Tax-Exempt Fund 28
GE High Yield Fund 30
Asset Allocation Funds 32
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GE Strategic Investment Fund 34
Money Market Funds 36
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GE Money Market Fund 38
Fund Expenses 40
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More on Strategies and Risks 46
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More on Risks 46
Other Risk Considerations 49
More on Investment Strategies 50
About the Investment Adviser 58
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Investment Adviser and
Administrator 58
About the Funds' Portfolio Managers 59
About the Sub-Advisers 60
Prior Performance Information 62
How to Invest 66
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How to Buy Shares 66
Choosing a Share Class 68
How to Redeem Shares 72
How to Exchange Shares 74
Distribution and Shareholder
Service Fees 75
Dividends, Capital Gains and
Other Tax Information 76
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Calculating Share Value 78
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Financial Highlights 79
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Additional information regarding the GE Funds ("Funds") is contained in the
Statement of Additional Information dated January 30, 1999, which is
incorporated by reference into (legally forms a part of) this Prospectus.
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<PAGE>
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2 GE Funds Equity Funds
Prospectus
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An investment in a GE Equity 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. An investment in a GE Fund is subject to risk, including
possible loss of principal invested.
Who may want to invest in a GE Equity Fund?
GE Equity Funds may be appropriate for your investment portfolio if you:
o have a long-term investment goal
o are willing to accept higher short-term risk for potential long-term returns
o want to diversify a portfolio composed mostly of fixed income investments
GE Equity Funds may not be appropriate if you want:
o to avoid potentially significant changes in share price
o a short-term investment
o regular income
Equity funds generally invest in equity securities. Equity securities may
include common stocks, preferred securities, depositary receipts, convertible
preferred securities, convertible bonds, convertible debentures, convertible
notes, and rights and warrants of U.S. and foreign companies. Stocks represent
an ownership interest in a corporation. Equity funds have more potential for
capital growth than other funds, but they have greater risk.
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<PAGE>
------------
3
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[This page intentionally left blank.]
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<PAGE>
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4 GE Funds
Prospectus
Equity Funds
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GE U.S. Equity Fund
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Investment Objective: Seeks long-term growth of capital.
The Strategy
GE U.S. Equity Fund invests primarily in equity securities of U.S. companies.
The portfolio managers use a Multi-Style(R) investment strategy that combines
growth and value investment management styles. As a result, the portfolio has
characteristics similar to the Standard & Poor's 500 Composite Stock Index,
including capital appreciation and income potential. Stock selection is key to
the performance of the Fund.
Through fundamental company research, the portfolio managers seek to identify
securities of large companies with characteristics such as:
o attractive valuations
o financial strength
o high quality management focused on generating shareholder value
The Fund also may invest to a lesser extent in foreign securities and debt
securities. The Fund generally intends to hold its investments for a long time,
which results in a relatively low portfolio turnover rate. The portfolio
managers may use various investment techniques to adjust the Fund's investment
exposure, but there is no guarantee that these techniques will work.
The Risks
The principal risks of investing in this Fund are stock market risk and style
risk. To the extent that the portfolio managers invest in foreign securities or
debt securities, the Fund would be subject to foreign exposure risk or interest
rate risk and credit risk.
If you would like additional information regarding the Fund's investment
strategies and risks, including a description of the terms in bold type, please
refer to "More on Strategies and Risks" later in this Prospectus.
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<PAGE>
------------
5
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Fund Performance
The bar chart and table opposite illustrate the short-term variability in the
Fund's performance and the Fund's returns relative to a common measure of
performance.
The bar chart illustrates how the Fund's performance varies from year to year
over the periods shown. The bar chart does not reflect the impact of sales
charges, which lower the Fund's returns. During the periods presented in the bar
chart, Class A's highest return for a quarter was 19.77% for the quarter ended
December 31, 1998. The lowest return for a quarter was -10.18% for the quarter
ended September 30, 1998. The Fund's year-to-date return was ___% as of June 30,
1999.
The table opposite illustrates how the Fund's average annual returns for
different calendar periods compare to the returns of the Standard & Poor's 500
Composite Stock Index (S&P 500 Index(R)). The table reflects the impact of the
Fund's expenses and sales charges for each share class. It assumes that you sold
your shares at the end of each period.
- --------------------------------------------------------------------------------
Calendar Year Total Returns
Class A Shares*
[GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
Average Annual Total Return
(as of December 31, 1998)
Since
1 Year 5 Years Inception**
------ ------- -----------
GE U.S. Equity Fund
Class A* % % %
Class B 18.40% 20.52% 20.72%
Class C -- -- --
Class Y 23.67% 21.75% 21.70%
S&P 500 Index 28.70% 24.08% 24.08%***
Both the bar chart and table assume reinvestment of dividends and distributions.
If GE Investment Management had not reduced certain expenses during the periods
shown, the Fund's total returns would have been lower. As with all mutual funds,
past performance is not an indication of future performance.
* Returns are those of the predecessor Class C, which was combined with Class A
as of the close of business on September 17, 1999.
** Inception date (commencement of investment operations):
Class A - February 22, 1993
Class B - December 22, 1993
Class C - October 1, 1999
Class Y - November 29, 1993
*** Since January 1, 1994
All mutual funds use a standard formula to calculate total return. Total return
measures the price change in a share assuming the reinvestment of all dividend
income and capital gain distributions.
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<PAGE>
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6 GE Funds
Prospectus
Equity Funds
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GE Premier Growth Equity Fund
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Investment Objective: Seeks long-term growth of capital and future income rather
than current income.
The Strategy
GE Premier Growth Equity Fund invests primarily in a limited number of equity
securities of large- and medium-sized companies with above-average growth
histories and/or growth potential. The portfolio manager chooses equity
securities from a number of industries based on the merits of individual
companies. Stock selection is key to the performance of the Fund.
The portfolio manager seeks to identify stocks of growth companies with
characteristics such as:
o above-average annual growth rates
o financial strength
o leadership in their respective industries
o high quality management focused on generating shareholder value
The Fund also may invest to a lesser extent in foreign securities and debt
securities. The Fund generally intends to hold its investments for a long time,
which results in a relatively low portfolio turnover rate. The portfolio manager
may use various investment techniques to adjust the Fund's investment exposure,
but there is no guarantee that these techniques will work.
The Risks
The principal risks of investing in this Fund are stock market risk and style
risk. To the extent that the portfolio manager invests in foreign securities or
debt securities, the Fund would be subject to foreign exposure risk or interest
rate risk and credit risk.
If you would like additional information regarding the Fund's investment
strategies and risks, including a description of the terms in bold type, please
refer to "More on Strategies and Risks" later in this Prospectus.
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<PAGE>
------------
7
- --------------------------------------------------------------------------------
Fund Performance
The bar chart and table opposite illustrate the short-term variability in the
Fund's performance and the Fund's returns relative to a common measure of
performance.
The bar chart illustrates how the Fund's performance varies from year to year
over the periods shown. The bar chart does not reflect the impact of sales
charges, which lower the Fund's returns. During the periods presented in the bar
chart, Class A's highest return for a quarter was 23.40% for the quarter ended
December 31, 1998. The lowest return for a quarter was -6.73% for the quarter
ended September 30, 1998. The Fund's year-to-date return was __% as of June 30,
1999.
The table opposite illustrates how the Fund's average annual returns for
different calendar periods compare to the returns of the Standard & Poor's 500
Composite Stock Index (S&P 500 Index(R)), a widely recognized, unmanaged index
of common stock prices. The table reflects the impact of the Fund's expenses and
sales charges for each share class. It assumes that you sold your shares at the
end of each period.
- --------------------------------------------------------------------------------
Calendar Year Total Returns
Class A Shares*
[GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
Average Annual Total Return
(as of December 31, 1998)
Since
1 Year Inception**
------ -----------
GE Premier Growth
Equity Fund
Class A* % %
Class B 30.37% 29.10%
Class C -- --
Class Y 35.75% 31.18%
S&P 500 Index 28.70% 30.98%***
Both the bar chart and table assume reinvestment of dividends and distributions.
If GE Investment Management had not reduced certain expenses during the periods
shown, the Fund's total returns would have been lower. As with all mutual funds,
past performance is not an indication of future performance.
* Returns are those of the predecessor Class C, which was combined with Class A
as of the close of business on September 17, 1999.
** Inception date (commencement of investment operations):
Classes A, B and Y - December 31, 1996
Class C - October 1, 1999
*** Since December 31, 1996
All mutual funds use a standard formula to calculate total return. Total return
measures the price change in a share assuming the reinvestment of all dividend
income and capital gain distributions.
- --------------------------------------------------------------------------------
<PAGE>
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8 GE Funds
Prospectus
Equity Funds
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GE Value Equity Fund
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Investment Objective: Seeks long-term growth of capital and future income.
The Strategy
GE Value Equity Fund invests primarily in equity securities of large U.S.
companies that are undervalued by the market but have solid growth prospects. A
company may be undervalued for reasons such as market overreaction to recent
company, industry or economic problems. Stock selection is key to the
performance of the Fund.
The portfolio manager seeks to identify securities of companies with
characteristics such as:
o low prices in relation to their peers and the overall market
o the potential for long-term earnings growth
o higher-than-average dividend yields
o strong management
o financial strength
o attractive upside potential and limited downside risk
The Fund also may invest to a lesser extent in foreign securities and debt
securities. The Fund generally intends to hold its investments for a long time,
which results in a relatively low portfolio turnover rate. The portfolio manager
may use various investment techniques to adjust the Fund's investment exposure,
but there is no guarantee that these techniques will work.
The Risks
The principal risks of investing in this Fund are stock market risk and style
risk. To the extent that the portfolio manager invests in foreign securities or
debt securities, the Fund would be subject to foreign exposure risk, interest
rate risk and credit risk.
If you would like additional information regarding the Fund's investment
strategies and risks, including a description of the terms in bold type, please
refer to "More on Strategies and Risks" later in this Prospectus.
- --------------------------------------------------------------------------------
<PAGE>
------------
9
- --------------------------------------------------------------------------------
Fund Performance
The bar chart and table opposite illustrate the short-term variability in the
Fund's performance and the Fund's returns relative to a common measure of
performance.
The bar chart illustrates how the Fund's performance varies from year to year
over the periods shown. The bar chart does not reflect the impact of sales
charges, which lower the Fund's returns. During the periods presented in the bar
chart, Class A's highest return for a quarter was 20.39% for the quarter ended
June 30, 1997. The lowest return for a quarter was -10.22% for the quarter ended
September 30, 1998. The Fund's year-to-date return was __% as of June 30, 1999.
The table opposite illustrates how the Fund's average annual returns for
different calendar periods compare to the returns of the Standard & Poor's
500/Barra Value Index (S&P Value Index). The table reflects the impact of the
Fund's expenses and sales charges for each share class. It assumes that you sold
your shares at the end of each period.
- --------------------------------------------------------------------------------
Calendar Year Total Returns
Class A Shares
[The following table was depicted as a bar chart in the printed material.]
1994 ................. -2%
1995 ................. 30%
1996 ................. 23%
1997 ................. 33%
1998 ................. 24%
- --------------------------------------------------------------------------------
Average Annual Total Return
(as of December 31, 1998)
Since
1 Year 5 Years Inception*
------ ------- ----------
GE Value Equity Fund
Class A 17.20% 19.50% 18.54%
Class B 19.59% 20.05% 19.09%
Class C -- -- --
Class Y -- -- 24.48%
S&P Value Index 14.68% 19.87% 18.60%**
Both the bar chart and table assume reinvestment of dividends and distributions.
If GE Investment Management had not reduced certain expenses during the periods
shown, the Fund's total returns would have been lower. As with all mutual funds,
past performance is not an indication of future performance.
* Inception date (commencement of investment operations):
Class A - September 8, 1993
Class B - September 8, 1993
Class C - October 1, 1999
Class Y - January 5, 1998
** Since September 1, 1993
All mutual funds use a standard formula to calculate total return. Total return
measures the price change in a share assuming the reinvestment of all dividend
income and capital gain distributions.
- --------------------------------------------------------------------------------
<PAGE>
- ----------------
10 GE Funds
Prospectus
Equity Funds
- --------------------------------------------------------------------------------
GE Mid-Cap Growth Fund
- ----------------
Investment Objective: Seeks long-term growth of capital.
The Strategy
GE Mid-Cap Growth Fund invests primarily in equity securities of mid-cap
companies with above-average growth potential. The Fund defines a mid-cap
company as one with a market capitalization within the capitalization range of
the Standard & Poor's MidCap 400 Index. As of January 6, 1999, the market
capitalization of companies in the index ranged from $271 million to $11.4
billion. The portfolio manager will not sell a stock merely because the market
capitalization of a company in the portfolio moves above or below the maximum or
minimum capitalization of the index. Stock selection is key to the performance
of the Fund.
The portfolio manager seeks to identify securities of growth companies with
characteristics such as:
o above-average revenue and earnings growth
o reasonable valuation
o attractive products or services
o financial strength
o strong competitive positions within their industries
o high quality management focused on generating shareholder value
The Fund also may invest to a lesser extent in securities with capitalizations
outside the Fund's mid-cap range, foreign securities and debt securities. The
portfolio manager may use various investment techniques to adjust the Fund's
investment exposure, but there is no guarantee that these techniques will work.
The Risks
The principal risks of investing in this Fund are stock market risk
and style risk. To the extent that the portfolio manager invests in foreign
securities or debt securities, the Fund would be subject to foreign exposure
risk or interest rate risk and credit risk.
If you would like additional information regarding the Fund's investment
strategies and risks, including a description of the terms in bold type, please
refer to "More on Strategies and Risks" later in this Prospectus.
- --------------------------------------------------------------------------------
<PAGE>
------------
11
- --------------------------------------------------------------------------------
Fund Performance
The bar chart and table opposite illustrate the short-term variability in the
Fund's performance and the Fund's returns relative to a common measure of
performance.
The bar chart illustrates how the Fund's performance varies from year to year
over the periods shown. The bar chart does not reflect the impact of sales
charges, which lower the Fund's returns. During the periods presented in the bar
chart, Class A's highest return for a quarter was 19.55% for the quarter ended
June 30, 1997. The lowest return for a quarter was -18.52% for the quarter ended
September 30, 1998. The Fund's year-to-date return was __% as of June 30, 1999.
The table opposite illustrates how the Fund's average annual returns for
different calendar periods compare to the returns of the Standard & Poor's
MidCap 400 Stock Index (S&P MidCap Index). The table reflects the impact of the
Fund's expenses and sales charges for each share class. It assumes that you sold
your shares at the end of each period.
- --------------------------------------------------------------------------------
Calendar Year Total Returns
Class A Shares
- --------------------------------------------------------------------------------
Calendar Year Total Returns
Class A Shares
[The following table was depicted as a bar chart in the printed material.]
1994 ................. -1%
1995 ................. 32%
1996 ................. 18%
1997 ................. 26%
1998 ................. 3%
- --------------------------------------------------------------------------------
Average Annual Total Return
(as of December 31, 1998)
Since
1 Year 5 Years Inception*
------ ------- ----------
GE Mid-Cap Growth Fund
Class A -2.48% 13.55% 13.60%
Class B -1.12% 14.12% 14.12%
Class C -- -- --
Class Y -- -- 4.00%
S&P MidCap Index 18.66% 18.63% 18.09%**
Both the bar chart and table assume reinvestment of dividends and distributions.
If GE Investment Management had not reduced certain expenses during the periods
shown, the Fund's total returns would have been lower. As with all mutual funds,
past performance is not an indication of future performance.
* Inception date (commencement of investment operations):
Class A - September 8, 1993
Class B - September 8, 1993
Class C - October 1, 1999
Class Y - January 5, 1998
** Since September 1, 1993
All mutual funds use a standard formula to calculate total return. Total return
measures the price change in a share assuming the reinvestment of all dividend
income and capital gain distributions.
- --------------------------------------------------------------------------------
<PAGE>
- ----------------
12 GE Funds
Prospectus
Equity Funds
- --------------------------------------------------------------------------------
GE Mid-Cap Value Equity Fund
- ----------------
Investment Objective: Seeks long-term growth of capital.
The Strategy
The GE Mid-Cap Value Equity Fund invests primarily in equity securities of
mid-cap companies that the portfolio manager believes are undervalued by the
market and have above-average growth potential. The dollar-weighted median
market capitalization of the companies in the Fund's portfolio will fall within
the mid-cap range defined by the Morningstar rating agency, between $1.3 and
$8.4 billion as of December 31, 1998. The portfolio manager will not sell a
stock merely because the market capitalization of a company in the portfolio
moves above or below the maximum or minimum capitalization range defined by
Morningstar. Stock selection is key to the performance of the Fund.
The Fund is value-oriented and seeks to identify undervalued companies where a
catalyst exists to recognize value or improve a company's profitability.
Examples of these catalysts are:
o new management
o industry consolidation
o company restructuring
o change in the company's fundamentals
The Fund also may invest to a lesser extent in foreign securities and debt
securities. The portfolio manager may use various investment techniques to
adjust the Fund's investment exposure, but there is no guarantee that these
techniques will work.
The Risks
The principal risks of investing in this Fund are stock market risk and style
risk. To the extent that the portfolio manager invests in foreign securities or
debt securities, the Fund would be subject to foreign exposure risk or interest
rate risk and credit risk.
If you would like additional information regarding the Fund's investment
strategies and risks, including a description of the terms in bold type, please
refer to "More on Strategies and Risks" later in this Prospectus.
- --------------------------------------------------------------------------------
Fund Background
Because the Fund recently commenced investment operations, performance
information is included in the Fund's semi-annual report dated March 31, 1999.
Prior performance information of Jon Bosse, the Fund's portfolio manager, can be
found under "Prior Performance Information" beginning on page 62.
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<PAGE>
------------
13
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GE Small-Cap Value Equity Fund
- ----------------
Investment Objective: Seeks long-term growth of capital.
The Strategy
GE Small-Cap Value Equity Fund invests primarily in equity securities of
small-cap companies that are undervalued by the market but have solid growth
prospects. A company may be undervalued for reasons such as market overreaction
to recent company, industry or economic problems. The Fund defines a small-cap
company as one with a market capitalization within the capitalization range of
the Russell 2000 Index. As of December 31, 1998, the market capitalization of
companies in the index ranged from $4.4 million to $3.21 billion. The portfolio
managers will not sell a stock merely because the market capitalization of a
company in the portfolio moves above or below the maximum or minimum
capitalization of the index. Stock selection is key to the performance of the
Fund.
The portfolio managers seek to identify securities of companies with
characteristics such as:
o high quality management
o attractive products or services
o appropriate capital structure
o strong competitive positions in their industries
o management focused on generating shareholder value
The Fund also may invest to a lesser extent in securities with capitalizations
outside the Fund's small-cap range, debt securities and foreign securities. The
Fund generally intends to hold its investments for a long time, which results in
a relatively low portfolio turnover rate. The portfolio managers may use various
investment techniques to adjust the Fund's investment exposure, but there is no
guarantee that these techniques will work.
The Risks
The principal risks of investing in this Fund are stock market risk and style
risk. To the extent that the portfolio managers invest in foreign securities or
debt securities, the Fund would be subject to foreign exposure risk or interest
rate risk and credit risk.
If you would like additional information regarding the Fund's investment
strategies, including a description of the terms in bold type, please refer to
"More on Strategies and Risks" later in this Prospectus.
- --------------------------------------------------------------------------------
Fund Background
Because the Fund recently commenced investment operations, performance
information is included in the Fund's semi-annual report dated March 31, 1999.
Prior performance information of the Senior Investment Commitee of Palisade
Capital Management, L.L.C., the Fund's sub-adviser, can be found under "Prior
Performance Information" beginning on page 62.
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<PAGE>
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14 GE Funds
Prospectus
Equity Funds
- --------------------------------------------------------------------------------
GE Global Equity Fund
- ----------------
Investment Objective: Seeks long-term growth of capital.
The Strategy
GE Global Equity Fund invests primarily in equity securities of companies in
developed and developing countries, including the United States. The portfolio
managers focus on companies that they expect will grow faster than relevant
markets and whose security price does not fully reflect its potential growth.
Under normal circumstances, the Fund's assets are invested primarily in
countries included in the Morgan Stanley Capital International World Index and
in no fewer than three different countries. Stock selection is key to the
performance of the Fund.
The portfolio managers seek to identify securities of growth companies with
characteristics such as:
o low prices relative to their long-term cash earnings potential
o potential for significant improvement in the company's business
o financial strength
o sufficient liquidity
The Fund also may invest to a lesser extent in debt securities. The portfolio
managers may use various investment techniques to adjust the Fund's investment
exposure, but there is no guarantee that these techniques will work.
The Risks
The principal risks of investing in this Fund are stock market risk, foreign
exposure risk, style risk, and emerging markets risk. To the extent that the
portfolio managers invest in debt securities, the Fund would be subject to
interest rate risk and credit risk.
If you would like additional information regarding the Fund's investment
strategies and risks, including a description of the terms in bold type, please
refer to "More on Strategies and Risks" later in this Prospectus.
- --------------------------------------------------------------------------------
<PAGE>
------------
15
- --------------------------------------------------------------------------------
Fund Performance
The bar chart and table opposite illustrate the short-term variability in the
Fund's performance and the Fund's returns relative to a common measure of
performance.
The bar chart illustrates how the Fund's performance varies from year to year
over the periods shown. The bar chart does not reflect the impact of sales
charges, which lower the Fund's returns. During the periods presented in the bar
chart, Class A's highest return for a quarter was 21.86% for the quarter ended
December 31, 1998. The lowest return for a quarter was -18.87% for the quarter
ended September 30, 1998. The Fund's year-to-date return was ___% as of June 30,
1999.
The table opposite illustrates how the Fund's average annual returns for
different calendar periods compare to the returns of the Morgan Stanley Capital
International World Index (MSCIW Index). The table reflects the impact of the
Fund's expenses and sales charges for each share class. It assumes that you sold
your shares at the end of each period.
- --------------------------------------------------------------------------------
Calendar Year Total Returns
Class A Shares*
[The following table was depicted as a bar chart in the printed material.]
1994 ................. -2%
1995 ................. 14%
1996 ................. 14%
1997 ................. 7%
1998 ................. 16%
- --------------------------------------------------------------------------------
Average Annual Total Return
(as of December 31, 1998)
Since
1 year 5 years Inception**
------ ------- -----------
GE Global Equity Fund
Class A % % %
Class B 11.42% 9.06% 9.58%
Class C -- -- --
Class D 16.57% 10.13% 11.73%
MSCIW Index 24.34% 15.68% 15.68%***
Both the bar chart and table assume reinvestment of dividends and distributions.
If GE Investment Management had not reduced certain expenses during the periods
shown, the Fund's total returns would have been lower. As with all mutual funds,
past performance is not an indication of future performance.
* Returns are those of the predecessor Class C, which was combined with Class A
as of the close of business on September 17, 1999.
** Inception date (commencement of investment operations):
Class A - February 22, 1993
Class B - December 22, 1993
Class C - October 1, 1999
Class D - November 29, 1993
*** Since January 1, 1994
All mutual funds use a standard formula to calculate total return. Total return
measures the price change in a share assuming the reinvestment of all dividend
income and capital gain distributions.
- --------------------------------------------------------------------------------
<PAGE>
- ----------------
16 GE Funds
Prospectus
Equity Funds
- --------------------------------------------------------------------------------
GE International Equity Fund
- ----------------
Investment Objective: Seeks long-term growth of capital.
The Strategy
GE International Equity Fund invests primarily in equity securities of companies
located in developed and developing countries other than the United States. The
portfolio managers focus on companies that they expect will grow faster than
relevant markets and whose security price does not fully reflect their potential
for growth. Under normal circumstances, the Fund's assets are invested in no
fewer than three different countries. Under certain circumstances, the Fund may
invest in securities of companies located in the United States. Stock selection
is key to the performance of the Fund.
The portfolio managers seek to identify securities of growth companies with
characteristics such as:
o low prices relative to their long-term cash earnings potential
o potential for significant improvement in the company's business
o financial strength
o sufficient liquidity
The Fund also may invest to a lesser extent in debt securities. The portfolio
managers may use various investment techniques to adjust the Fund's investment
exposure, but there is no guarantee that these techniques will work.
The Risks
The principal risks of investing in this Fund are stock market risk, foreign
exposure risk, style risk and emerging markets risk. To the extent that the
portfolio managers invest in debt securities, the Fund would be subject to
interest rate risk and credit risk.
If you would like additional information regarding the investment strategies and
risks, including a description of the terms in bold type, associated with this
Fund, please refer to "More on Strategies and Risks" later in this Prospectus.
- --------------------------------------------------------------------------------
<PAGE>
------------
17
- --------------------------------------------------------------------------------
Fund Performance
The bar chart and table opposite illustrate the short-term variability in the
Fund's performance and the Fund's returns relative to a common measure of
performance.
The bar chart illustrates how the Fund's performance varies from year to year
over the periods shown. The bar chart does not reflect the impact of sales
charges, which lower the Fund's returns. During the periods presented in the bar
chart, Class A's highest return for a quarter was 17.55% for the quarter ended
March 31, 1998. The lowest return for a quarter was -18.10% for the quarter
ended September 30, 1998. The Fund's year-to-date return was ___% as of June 30,
1999.
The table opposite illustrates how the Fund's average annual returns for
different calendar periods compare to the returns of the Morgan Stanley Capital
International Europe Australasia Far East Index (MSCI EAFE Index). The table
reflects the impact of the Fund's expenses and sales charges for each share
class. It assumes that you sold your shares at the end of each period.
- --------------------------------------------------------------------------------
Calendar Year Total Returns
Class A Shares
[GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
Average Annual Total Return
(as of December 31, 1998)
Since
1 year Inception*
------ ----------
GE International
Equity Fund
Class A 7.37% 7.21%
Class B 9.67% 7.98%
Class C -- --
Class Y 14.60% 9.15%
MSCI EAFE Index 20.00% 7.76%**
Both the bar chart and table assume reinvestment of dividends and distributions.
If GE Investment Management had not reduced certain expenses during the periods
shown, the Fund's total returns would have been lower. As with all mutual funds,
past performance is not an indication of future performance.
* Inception date (commencement of investment operations):
Classes A, B and Y - March 2, 1994
Class C - October 1, 1999
** Since March 1, 1994
All mutual funds use a standard formula to calculate total return. Total return
measures the price change in a share assuming the reinvestment of all dividend
income and capital gain distributions.
- --------------------------------------------------------------------------------
<PAGE>
- ----------------
18 GE Funds
Prospectus
Equity Funds
- --------------------------------------------------------------------------------
GE Europe Equity Fund
- ----------------
Investment Objective: Seeks long-term growth of capital.
- ----------------
Developed European countries currently include:
Austria
Belgium
Denmark
Finland
France
Germany
Greece
Ireland
Italy
Luxembourg
the Netherlands
Norway
Portugal
Spain
Sweden
Switzerland
United Kingdom
The Strategy
The GE Europe Equity Fund invests primarily in equity securities of issuers
located in developed European countries. The portfolio managers focus on
companies that are expected to grow faster than relevant markets and whose
security price does not fully reflect their potential growth. Under normal
circumstances, the Fund's assets are invested in no fewer than three different
countries. Stock selection is key to the performance of the Fund.
The portfolio managers seek to identify securities of growth companies with
characteristics such as:
o low prices relative to their long-term cash earnings potential
o potential for significant improvement in the company's business
o financial strength
o sufficient liquidity
The Fund may also invest to a lesser extent in securities of companies
representing European emerging market countries, developed or emerging countries
outside of Europe (including the United States) and debt securities. European
emerging market countries include the Czech Republic, Poland, Hungary, Turkey,
Russia and other former republics of the Soviet Union. The portfolio managers
may use various investment techniques to adjust the Fund's investment exposure,
but there is no guarantee that these techniques will work.
The Risks
The principal risks of investing in this Fund are stock market risk, foreign
exposure risk and style risk. To the extent that the portfolio managers invest
in securities of emerging market countries and debt securities, the Fund would
be subject to emerging markets risk, interest rate risk and credit risk.
Because the Fund targets a single region, investors should expect the Fund to be
more volatile than a more geographically diversified equity fund. Fund
performance is closely tied to economic and political conditions within Europe.
If you would like additional information regarding the Fund's investment
strategies and risks, including a description of the terms in bold type, please
refer to "More on Strategies and Risks" later in this Prospectus.
- --------------------------------------------------------------------------------
Fund Background
Because the Fund recently commenced investment operations, performance
information is included in the Fund's semi-annual report dated March 31, 1999.
- --------------------------------------------------------------------------------
<PAGE>
------------
19
- --------------------------------------------------------------------------------
GE Emerging Markets Fund
- ----------------
Investment Objective: Seeks long-term growth of capital.
The Strategy
The Emerging Markets Fund invests primarily in equity securities of issuers
located in emerging markets. The portfolio managers focus on companies that are
expected to grow faster than relevant markets and whose security price does not
fully reflect its potential growth. Under normal circumstances, the Fund's
assets are invested in no fewer than three different countries. The portfolio
managers consider which emerging market countries in which to invest based on
certain factors, including investment restrictions, tax barriers, local market
cycles, economic outlook for growth, currency exchange rates and the political
environment. The portfolio managers consider the following factors in
determining whether an issuer is located in an emerging market country: country
of organization, primary securities trading market, location of assets, or
country where the issuer derives at least half of its revenues and profits.
An emerging market country is any country having an economy and market that are
(or would be) considered by the World Bank to be emerging or developing, or
listed in the Morgan Stanley Capital International Emerging Markets Index.
Emerging market countries are located in regions such as Asia, Latin America,
the Middle East, Southern Europe, Eastern Europe (including the former republics
of the Soviet Union and the Eastern Bloc) and Africa.
The portfolio managers seek to identify securities of growth companies with
characteristics such as:
o low prices relative to their long-term cash earnings potential
o potential for significant improvement in the company's business
o financial strength
o sufficient liquidity
The Fund may also invest to a lesser extent in securities of companies located
in countries other than emerging market countries (including the United States)
and debt securities. The portfolio managers may use various investment
techniques to adjust the Fund's investment exposure, but there is no guarantee
that these techniques will work.
The Risks
The principal risks of investing in this Fund are stock market risk, foreign
exposure risk, emerging markets risk and style risk. To the extent that the
portfolio managers invest in debt securities, the Fund would be subject to
interest rate risk and credit risk.
If you would like additional information regarding the Fund's investment
strategies and risks, including a description of the terms in bold type, please
refer to "More on Strategies and Risks" later in this Prospectus.
- --------------------------------------------------------------------------------
Fund Background
Because the Fund recently commenced investment operations, performance
information is included in the Fund's semi-annual report dated March 31, 1999.
- --------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------
20 GE Funds Income
Prospectus Funds
- --------------------------------------------------------------------------------
An investment in a GE Income 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. An investment in a GE Fund is subject to risk, including
possible loss of principal invested.
Who may want to invest in a GE Income Fund?
GE Income Funds may be appropriate for your investment portfolio if you:
o seek regular income
o seek lower potential volatility than equity funds over the long term
o want to diversify a portfolio composed mostly of equity investments
The GE Tax-Exempt Fund may be appropriate for your investment portfolio if you
o are in a high tax bracket
o want income that is exempt from federal income tax
GE Income Funds may not be appropriate if you want:
o high potential capital appreciation
Income funds generally invest in debt securities. Debt securities are bonds and
other securities that are used by issuers to borrow money from investors.
Holders of debt securities have a higher priority claim to assets than do equity
holders. Typically, the debt issuer pays the investor a fixed, variable or
floating rate of interest and must repay the borrowed amount at maturity. Some
debt securities, such as zero coupon bonds, are sold at a discount from their
face values instead of paying interest. Income funds provide regular income and
some provide federally tax-exempt income.
- --------------------------------------------------------------------------------
<PAGE>
------------
21
- --------------------------------------------------------------------------------
[This page intentionally left blank.]
- --------------------------------------------------------------------------------
<PAGE>
- ----------------
22 GE Funds
Prospectus
Income Funds
- --------------------------------------------------------------------------------
GE Fixed Income Fund
- ----------------
Investment Objective: Seeks maximum income consistent with prudent investment
management and the preservation of capital.
The Strategy
GE Fixed Income Fund invests primarily in a variety of debt securities, such as
mortgage-backed securities, corporate bonds, U.S. Government securities, and
money market instruments. The Fund normally has a weighted average maturity of
approximately five to ten years.
The portfolio managers seek to identify debt securities with characteristics
such as:
o attractive yields and prices
o the potential for capital appreciation
o reasonable credit quality
The Fund also may invest to a lesser extent in asset-backed securities and
foreign securities. The portfolio managers may use various investment techniques
to adjust the Fund's investment exposure, but there is no guarantee that these
techniques will work.
The Fund's investment strategy may result in a high portfolio turnover rate,
which may cause the Fund to experience increased transaction costs and
shareholders to incur increased taxes on their investment in the Fund.
The Risks
The principal risks of investing in this Fund are interest rate risk, credit
risk and prepayment risk. To the extent that the portfolio managers invest in
foreign securities, the Fund would be subject to foreign exposure risk. Certain
portfolio securities are derivative securities that carry derivative securities
risk.
If you would like additional information regarding the Fund's investment
strategies and risks, including a description of the terms in bold type, please
refer to "More on Strategies and Risks" later in this Prospectus.
- --------------------------------------------------------------------------------
<PAGE>
------------
23
- --------------------------------------------------------------------------------
Fund Performance
The bar chart and table opposite illustrate the short-term variability in the
Fund's performance and the Fund's returns relative to a common measure of
performance.
The bar chart illustrates how the Fund's performance varies from year to year
over the periods shown. The bar chart does not reflect the impact of sales
charges, which lower the Fund's returns. During the periods presented in the bar
chart, Class A's highest return for a quarter was 5.77% for the quarter ended
June 30, 1995. The lowest return for a quarter was -2.53% for the quarter ended
March 31, 1994. The Fund's year-to-date return was ___% as of June 30, 1999.
The table opposite illustrates how the Fund's average annual returns for
different calendar periods compare to the returns of the Lehman Brothers
Aggregate Bond Index (LB Aggregate Bond Index). The table reflects the impact of
the Fund's expenses and sales charges for each share class. It assumes that you
sold your shares at the end of each period.
- --------------------------------------------------------------------------------
Calendar Year Total Returns
Class A Shares*
[GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
Average Annual Total Return
(as of December 31, 1998)
Since
1 year 5 years Inception**
------ ------- -----------
GE Fixed Income Fund
Class A % % %
Class B 4.02% 5.84% 5.85%
Class C -- -- --
Class Y 8.09% 6.88% 6.85%
LB Aggregate Bond Index 8.67% 7.27% 7.27%***
Both the bar chart and table assume reinvestment of dividends and distributions.
If GE Investment Management had not reduced certain expenses during the periods
shown, the Fund's total returns would have been lower. As with all mutual funds,
past performance is not an indication of future performance.
* Returns are those of the predcessor Class C, which was combined with Class A
as of the close of business on September 17, 1999.
** Inception date (commencement of investment operations):
Class A - February 22,1993
Class B - December 22, 1993
Class C - October 1, 1999
Class Y - November 29, 1993
*** Since January 1, 1994
All mutual funds use a standard formula to calculate total return. Total return
measures the price change in a share the assuming the reinvestment of all
dividend income and capital gain distributions.
- --------------------------------------------------------------------------------
<PAGE>
- ----------------
24 GE Funds
Prospectus
Income Funds
- --------------------------------------------------------------------------------
GE Government Securities Fund
- ----------------
Investment Objective: Seeks a high level of current income consistent with
safety of principal.
The Strategy
GE Government Securities Fund invests primarily in U.S. Government securities,
including mortgage-backed securities, with remaining maturities of one year or
more. The Fund normally has an average duration of about three to six years. The
Fund invests in securities issued by the:
o U.S. Treasury
o Government National Mortgage Association (Ginnie Mae)
o Federal National Mortgage Association (Fannie Mae)
o Federal Home Loan Mortgage Corporation (Freddie Mac)
o other U.S. Government agencies
No more than 25% of the Fund's assets may be invested in debt securities rated A
or lower by Moody's or S&P or comparably rated by another nationally recognized
statistical rating organization, and no more than 10% of the Fund's assets may
be invested in debt securities rated Baa by Moody's or BBB by S&P or comparably
rated by another nationally recognized statistical rating organization.
The portfolio managers seek to identify debt securities with characteristics
such as:
o attractive yields and prices
o the potential for capital appreciation
o reasonable credit quality
The Fund also may invest to a lesser extent in corporate debt securities,
privately issued mortgage-backed securities, asset-backed securities and foreign
securities. The portfolio managers may use various investment techniques to
adjust the Fund's investment exposure, but there is no guarantee that these
techniques will work.
The Risks
The principal risks of investing in this Fund are interest rate risk, credit
risk and prepayment risk. To the extent that the portfolio managers invest in
foreign securities, the Fund also would be subject to foreign exposure risk.
Certain portfolio securities are derivative securities that carry derivative
securities risk.
If you would like additional information regarding the investment strategies and
risks associated with this Fund, including a description of the terms in bold
type, please refer to "More on Strategies and Risks" later in this Prospectus.
- --------------------------------------------------------------------------------
<PAGE>
------------
25
- --------------------------------------------------------------------------------
Fund Performance
The bar chart and table opposite illustrate the short-term variability in the
Fund's performance and the Fund's returns relative to a common measure of
performance.
The bar chart illustrates how the Fund's performance varies from year to year
over the periods shown. The bar chart does not reflect the impact of sales
charges, which lower the Fund's returns. During the periods presented in the bar
chart, Class B's highest return for a quarter was 6.87% for the quarter ended
June 30, 1989. The lowest return for a quarter was -4.85% for the quarter ended
June 30, 1994. The Fund's year-to-date return was ___% as of June 30, 1999.
The table opposite illustrates how the Fund's average annual returns for
different calendar periods compare to the returns of the Lehman Brothers
Government Bond Index (LB Government Bond Index). The table reflects the impact
of the Fund's expenses and sales charges for each share class. It assumes that
you sold your shares at the end of each period.
- --------------------------------------------------------------------------------
Calendar Year Total Returns
Class B Shares
[The following table was depicted as a bar chart in the printed material.]
1989 ................. 13%
1990 ................. 9%
1991 ................. 14%
1992 ................. 6%
1993 ................. 8%
1994 ................. -9%
1995 ................. 14%
1996 ................. 2%
1997 ................. 9%
1998 ................. 8%
- --------------------------------------------------------------------------------
Average Annual Total Return
(as of December 31, 1998)
Since
1 year 5 years 10 years Inception*
------ ------- -------- ----------
GE Government
Securities Fund
Class A 4.18% 4.11% -- 3.68%
Class B 5.32% 4.35% 7.19% --
Class C -- -- -- --
LB Government
Bond Index 9.85% 7.18% 9.17%
Both the bar chart and table assume reinvestment of dividends and distributions.
If GE Investment Management had not reduced certain expenses during the periods
shown, the Fund's total returns would have been lower. As with all mutual funds,
past performance is not an indication of future performance.
* Inception date (commencement of investment operations):
Class A - September 8, 1993
Class B - April 22, 1987
Class C - October 1, 1999
All mutual funds use a standard formula to calculate total return. Total return
measures the price change in a share assuming the reinvestment of all dividend
income and capital gain distributions.
- --------------------------------------------------------------------------------
<PAGE>
- ----------------
26 GE Funds
Prospectus
Income Funds
- --------------------------------------------------------------------------------
GE Short-Term Government Fund
- ----------------
Investment Objective: Seeks a high level of income consistent with prudent
investment management and the preservation of capital.
The Strategy
GE Short-Term Government Fund invests primarily in U.S. Government securities,
including mortgage-backed securities, and repurchase agreements secured by U.S.
Government securities. The Fund normally has a weighted average maturity of not
more than three years. The Fund invests in securities issued or secured by the:
o U.S. Treasury
o Government National Mortgage Association (Ginnie Mae)
o Federal National Mortgage Association (Fannie Mae)
o Federal Home Loan Mortgage Corporation (Freddie Mac)
o other U.S. Government agencies
The portfolio managers seek to identify debt securities with characteristics
such as:
o attractive yields and prices
o the potential for capital appreciation
o reasonable credit quality
The Fund also may invest to a lesser extent in a variety of debt securities
including corporate debt securities, privately issued mortgage-backed
securities, asset-backed securities and foreign securities. The portfolio
managers may use various investment techniques to adjust the Fund's investment
exposure, but there is no guarantee that these techniques will work.
The Fund's investment strategy may result in a high portfolio turnover rate,
which may cause the Fund to experience increased transaction costs and
shareholders to incur increased taxes on their investment in the Fund.
The Risks
The principal risks of investing in this Fund are interest rate risk, credit
risk and prepayment risk. [To the extent that the Fund invests in foreign
securities, the fund would be subject to foreign exposure risk.] Certain
portfolio securities are derivative securities that carry derivative securities
risk.
If you would like additional information regarding the Fund's investment
strategies and risks, including a description of the terms in bold type, please
refer to "More on Strategies and Risks" later in this Prospectus.
- --------------------------------------------------------------------------------
<PAGE>
------------
27
- --------------------------------------------------------------------------------
Fund Performance
The bar chart and table opposite illustrate the short-term variability in the
Fund's performance and the Fund's returns relative to a common measure of
performance.
The bar chart illustrates how the Fund's performance varies from year to year
over the periods shown. The bar chart does not reflect the impact of sales
charges, which lower the Fund's returns. During the periods presented in the bar
chart, Class A's highest return for a quarter was 3.08% for the quarter ended
June 30, 1995. The lowest return for a quarter was 0.21% for the quarter ended
March 31, 1996. The Fund's year-to-date return was ___% as of June 30, 1999.
The table opposite illustrates how the Fund's average annual returns for
different calendar periods compare to the returns of the Lehman Brothers 1-3
Year Government Bond Index (LB 1-3 Year Government Bond Index). The table
reflects the impact of the Fund's expenses and sales charges for each share
class. It assumes that you sold your shares at the end of each period.
- --------------------------------------------------------------------------------
Calendar Year Total Returns
Class A Shares*
[GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
Average Annual Total Return
(as of December 31, 1998)
Since
1 year Inception**
------ -----------
GE Short-Term
Government Fund
Class A % %
Class B 2.75% 5.05%
Class C -- --
Class Y 6.56% 5.94%
LB 1-3 Year
Government Bond
Index 6.97% 6.16%***
Both the bar chart and table assume reinvestment of dividends and distributions.
If GE Investment Management had not reduced certain expenses during the periods
shown, the Fund's total returns would have been lower. As with all mutual funds,
past performance is not an indication of future performance.
* Returns are those of the predecessor Class C, which was combined with Class A
as of the close of business on September 17, 1999.
** Inception date (commencement of investment operations):
Classes A, B and Y - March 2, 1994
Class C - October 1, 1999
*** Since March 1, 1994
All mutual funds use a standard formula to calculate total return. Total return
measures the price change in a share assuming the reinvestment of all dividend
income and capital gain distributions.
- --------------------------------------------------------------------------------
<PAGE>
- ----------------
28 GE Funds
Prospectus
Income Funds
- --------------------------------------------------------------------------------
GE Tax-Exempt Fund
- ----------------
Investment Objective: Seeks as high a level of income exempt from Federal income
taxation as is consistent with preservation of capital.
The Strategy
GE Tax-Exempt Fund invests primarily in investment-grade municipal securities.
The portfolio manager manages the Fund so that at least 80% of the Fund's income
is exempt from federal personal income tax and the federal alternative minimum
tax.
The Fund generally will have an effective duration of 75% to 125% of the
duration of the Lehman Brothers 10-Year Municipal Index (Lehman Index). As of
December 31, 1998, the duration of the Lehman Index was 6.83 years.
The portfolio manager seeks to identify debt securities with characteristics
such as:
o attractive yields and prices
o the potential for income generation
o the potential for capital appreciation
o reasonable credit quality
The Fund also may invest to a lesser extent in tax-free or taxable money market
instruments and may hold cash and cash equivalents. The portfolio manager may
use various investment techniques to adjust the Fund's investment exposure, but
there is no guarantee that these techniques will work.
The Risks
The principal risks of investing in this Fund are municipal securities risk,
interest rate risk and credit risk. The Fund's income may be subject to state
and local taxes. Capital gains, if any, are subject to capital gains tax.
If you would like additional information regarding the Fund's investment
strategies and risks, including a description of the terms in bold type, please
refer to "More on Strategies and Risks" later in this Prospectus.
- --------------------------------------------------------------------------------
<PAGE>
------------
29
- --------------------------------------------------------------------------------
Fund Performance
The bar chart and table opposite illustrate the short-term variability in the
Fund's performance and the Fund's returns relative to a common measure of
performance.
The bar chart illustrates how the Fund's performance varies from year to year
over the periods shown. The bar chart does not reflect the impact of sales
charges, which lower the Fund's returns. During the periods presented in the bar
chart, Class A's highest return for a quarter was 6.47% for the quarter ended
May 31, 1995. The lowest return for a quarter was -4.30% for the quarter ended
March 31, 1994. The Fund's year-to-date return was ___% as of June 30, 1999.
The table opposite illustrates how the Fund's average annual returns for
different calendar periods compare to the returns of the Lehman Brothers 10-Year
Municipal Index (LB 10-Year Muni Index). The table reflects the impact of the
Fund's expenses and sales charges for each share class. It assumes that you sold
your shares at the end of each period.
- --------------------------------------------------------------------------------
Calendar Year Total Returns
Class A Shares
[The following table was depicted as a bar chart in the printed material.]
1994 ................. -4%
1995 ................. 15%
1996 ................. 4%
1997 ................. 7%
1998 ................. 5%
- --------------------------------------------------------------------------------
Average Annual Total Return
(as of December 31, 1998)
Since
1 Year 5 Years Inception*
------ ------- ----------
GE Tax-Exempt Fund
Class A .58% 4.50% 4.54%
Class B 1.41% 5.11% 5.09%
Class C -- -- --
Class Y 5.98% -- 6.15%
LB 10-Year Muni Index 6.76% 6.35% 6.47%**
Both the bar chart and table assume reinvestment of dividends and distributions.
If GE Investment Management had not reduced certain expenses during the periods
shown, the Fund's total returns would have been lower. As with all mutual funds,
past performance is not an indication of future performance.
* Inception date (commencement of investment operations):
Class A - September 8, 1993
Class B - September 8, 1993
Class C - October 1, 1999
Class Y - September 26, 1997
** Since September 1, 1993
Tax-Exempt Investing--Tax-exempt investing usually benefits investors in higher
tax brackets.
All mutual funds use a standard formula to calculate total return. Total return
measures the price change in a share assuming the reinvestment of all dividend
income and capital gain distributions.
- --------------------------------------------------------------------------------
<PAGE>
- ----------------
30 GE Funds
Prospectus
Income Funds
- --------------------------------------------------------------------------------
GE High Yield Fund
- ----------------
Investment Objective: Seeks to achieve above-average total return over a market
cycle of three to five years, consistent with reasonable risk.
The Strategy
The GE High Yield Fund invests primarily in high yield securities (including
bonds rated below investment grade, sometimes called "junk bonds"). The
portfolio managers will not sell a particular security only because it is no
longer classified as high yield. The Fund may also invest in U.S. Government
securities, mortgage-backed securities, investment grade securities, municipal
securities, agency securities (securities that are not guaranteed by the U.S.
Government, but which are issued, sponsored or guaranteed by a federal agency or
federally sponsored agency), and short-term fixed income securities, such as
certificates of deposit, treasury bills and commercial paper. The Fund expects
to achieve its objective by earning a high rate of current income, although the
Fund may seek capital growth opportunities when consistent with its objective.
The Fund's average weighted maturity will ordinarily be greater than five years.
The portfolio managers use equity and fixed income valuation techniques,
analyses of economic and industry trends and maturity and duration management to
determine the portfolio's structure. Individual securities are selected and
monitored by fixed income portfolio managers who specialize in corporate bonds
and use in-depth financial analysis to uncover opportunities in undervalued
issues.
The Fund also may invest to a lesser extent in foreign debt securities,
including high yield securities of foreign issuers. The Fund also may use
derivatives to pursue its portfolio strategy. The portfolio managers may use
various investment techniques to adjust the Fund's investment exposure, but
there is no guarantee that these techniques will work.
The Risks
The principal risk of investing in this Fund is high yield securities risk. The
Fund is also subject to interest rate risk, credit risk, prepayment risk and
style risk. To the extent that the Fund invests in foreign securities and
derivative securities, the Fund would be subject to foreign exposure risk,
emerging markets risk and derivative securities risk.
Because the Fund invests primarily in high yield securities that are considered
speculative, investment in the Fund may not be suitable for all investors.
If you would like additional information regarding the Fund's investment
strategies and risks, including a description of the terms in bold type, please
refer to "More on Strategies and Risks" later in this Prospectus.
- --------------------------------------------------------------------------------
Fund Background
Because the Fund recently commenced investment operations, performance
information is included in the Fund's semi-annual report dated March 31, 1999.
Prior performance information of Miller Anderson & Sherrerd, LLP, the Fund's
sub-adviser, can be found under "Prior Performance Information" beginning on
page 62.
- --------------------------------------------------------------------------------
<PAGE>
------------
31
- --------------------------------------------------------------------------------
[This page intentionally left blank.]
- --------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------
32 GE Funds Asset Allocation
Prospectus Funds
- --------------------------------------------------------------------------------
An investment in a GE Asset Allocation Fund is not a deposit of any bank and is
not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other agency. An investment in a GE Fund is subject to risk, including possible
loss of principal invested.
Who may want to invest in a GE Asset Allocation Fund?
An Asset Allocation Fund may be appropriate for your investment portfolio if
you:
o seek both capital appreciation and current income
o want a single diversified investment
Asset allocation funds are designed to meet the needs of investors who prefer to
have their asset allocation decisions made by professional money managers. They
provide an investor with a means to diversify by investing in a core portfolio
that typically holds both equity securities and debt securities. Although an
investor may achieve the same level of diversification by buying individual GE
Equity or Income Funds, the GE Strategic Investment Fund presents a
diversification alternative within one fund. An investor should not expect
capital appreciation or current income levels comparable to funds for which
either capital appreciation or current income is their sole objective.
- --------------------------------------------------------------------------------
<PAGE>
------------
33
- --------------------------------------------------------------------------------
[This page intentionally left blank.]
- --------------------------------------------------------------------------------
<PAGE>
- --------------------
34 GE Funds
Prospectus
Asset Allocation
Funds
- --------------------------------------------------------------------------------
GE Strategic Investment Fund
- --------------------------
Investment Objective: Seeks to maximize total return.
The Strategy
The GE Strategic Investment Fund invests in both equity securities and debt
securities. The portfolio managers follow an asset allocation process
established by GE Investment Management's Asset Allocation Committee to
diversify holdings across asset classes. It is likely that the Fund will
maintain a weighting in U.S. equity securities, debt securities and foreign
securities based on the relative attractiveness of the asset classes. The Fund
invests in equity securities principally for their capital appreciation
potential and debt securities principally for their income potential. Within
each asset class, the portfolio managers use active security selection to choose
securities based on the merits of individual issuers.
The portfolio managers seek to identify equity securities of companies with
characteristics such as:
o strong earnings growth
o attractive prices
o a presence in successful industries
o high quality management
The portfolio managers seek to identify debt securities with characteristics
such as:
o attractive yields and prices
o the potential for capital appreciation
o reasonable credit quality
The portfolio managers may use various investment techniques to adjust the
Fund's investment exposure, but there is no guarantee that these techniques will
work.
The Fund's asset allocation process may result in a high portfolio turnover
rate, which may cause the Fund to experience increased transaction costs and
shareholders to incur increased taxes on their investment in the Fund.
The Risks
The principal risks of investing in this Fund are stock market risk, foreign
exposure risk, interest rate risk, credit risk and prepayment risk. To the
extent the portfolio managers invest in high yield securities, the Fund would be
subject to high yield securities risk. Certain portfolio securities are
derivative securities that carry derivative securities risk.
If you would like additional information regarding the Fund's investment
strategies and risks, including a description of the terms in bold type, please
refer to "More on Strategies and Risks" later in this Prospectus.
- --------------------------------------------------------------------------------
<PAGE>
------------
35
- --------------------------------------------------------------------------------
Fund Performance
The bar chart and table opposite illustrate the short-term variability in the
Fund's performance.
The bar chart illustrates how the Fund's performance varies from year to year
over the periods shown. The bar chart does not reflect the impact of sales
charges, which lower the Fund's returns. During the periods presented in the bar
chart, Class A's highest return for a quarter was 11.67% for the quarter ended
December 31, 1998. The lowest return for a quarter was -5.88% for the quarter
ended September 30, 1998. The Fund's year-to-date return was ___% as of June 30,
1999.
The table opposite illustrates how the Fund's average annual returns for
different calendar periods compare to the return of the Standard & Poor's 500
Composite Stock Index (S&P 500 Index) and the return of the Lehman Brothers
Aggregate Bond Index (LB Aggregate Bond Index). The table reflects the impact of
the Fund's expenses and sales charges for each share class. It assumes that you
sold your shares at the end of each period.
- --------------------------------------------------------------------------------
Calendar Year Total Returns
Class A Shares
[GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
Average Annual Total Return
(as of December 31, 1998)
Since
1 Year 5 Years Inception**
------ ------- -----------
GE Strategic
Investment Fund
Class A % % %
Class B 11.60% 13.45% 13.53%
Class C -- -- --
Class Y 16.75% 14.62% 14.68%
S&P 500 Index 28.70% 24.08% 24.08%****
LB Aggregate Bond Index 8.67% 7.27% 7.27%****
S&P 500 Index &
LB Aggregate Bond Index*** 21.05% 17.33% 17.33%****
Both the bar chart and table assume reinvestment of dividends and distributions.
If GE Investment Management had not reduced certain expenses during the periods
shown, the Fund's total returns would have been lower. As with all mutual funds,
past performance is not an indication of future performance.
* Returns are those of the predecessor Class C, which was combined with Class A
as of the close of business on September 17, 1999.
** Inception date (commencement of investment operations):
Class A - February 22, 1993
Class B - December 22, 1993
Class C - October 1, 1999
Class Y - November 29, 1993
*** The S&P 500 Index and the LB Aggregate Bond Index simulates a blended return
which is representative of the approximate asset allocation mix of the GE
Strategic Investment Fund for the periods presented (composed of 60% S&P 500
Index, 40% LB Aggregate Bond Index). The actual asset allocation mix of the Fund
may have varied from time to time.
**** Since January 1, 1994
All mutual funds must use the same formula to calculate total return. Total
return measures the price change in a share assuming the reinvestment of all
dividend income and capital gain distributions.
- --------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------
36 GE Funds Money
Prospectus Market Funds
- --------------------------------------------------------------------------------
Who may want to invest in a GE Money Market Fund?
A Money Market Fund may be appropriate for your portfolio if you:
o want regular income
o are investing for a short period of time
o want an investment that seeks to maintain a stable share price
A Money Market Fund may not be appropriate if you:
o want a potentially higher rate of income
o want a long-term investment
o seek capital appreciation
Money market funds invest in short-term, high quality debt securities. They seek
to provide stability of principal and regular income. The income provided by a
money market fund varies with interest rate movements.
- --------------------------------------------------------------------------------
<PAGE>
------------
37
- --------------------------------------------------------------------------------
[This page intentionally left blank.]
- --------------------------------------------------------------------------------
<PAGE>
- ----------------
38 GE Funds
Prospectus
Money Market
Funds
- --------------------------------------------------------------------------------
GE Money Market Fund
- ----------------------
Investment Objective: Seeks a high level of current income consistent with the
preservation of capital and maintenance of liquidity.
The Strategy
The GE Money Market Fund invests primarily in short-term, U.S.
dollar-denominated money market instruments. The Fund's investments may include
U.S. Government securities, repurchase agreements, commercial paper,
certificates of deposit, variable rate securities, foreign debt securities,
Eurodollar deposits and domestic and foreign bank deposits. The portfolio
manager limits investments to high quality securities with maturities of up to
13 months and limits the average maturity of the Fund's portfolio to 90 days.
The Fund invests consistent with regulatory standards governing security
quality, maturity and portfolio diversification. The Fund may invest more than
25% of its total assets in the banking industry. Changes in banking regulations
or the economy can have a significant negative impact on the banking industry.
All of the Fund's assets are rated in the two highest short-term rating
categories (or their unrated equivalents), and at least 95% of its assets are
rated in the highest rating category (or its unrated equivalent), by a
nationally recognized statistical rating organization. Additional information
about the money market securities in which the Fund may invest, including rating
categories, is contained in the statement of additional information.
The Risks
The principal risks of investing in this Fund are interest rate risk, credit
risk and foreign exposure risk.
An investment in the Fund is not a bank deposit and is not insured or guaranteed
by the Federal Deposit Insurance Corporation (FDIC) or any other government
agency. Although the Fund seeks to maintain a net asset value of $1.00 per
share, it is possible to lose money by investing in the Fund. The Fund's yield
will change due to movements in current short-term interest rates and market
conditions. A change in interest rates or default on the Fund's investments
could cause the Fund's share price to decline below $1.00.
If you would like additional information regarding the investment strategies and
risks associated with this Fund, including a description of the terms in bold
type, please refer to "More on Strategies and Risks" later in this Prospectus.
- --------------------------------------------------------------------------------
<PAGE>
------------
39
- --------------------------------------------------------------------------------
Fund Performance
The bar chart and table opposite illustrate the short-term variability in the
Fund's performance and the Fund's returns relative to a common measure of
performance.
The bar chart illustrates how the Fund's performance varies from year to year
over the periods shown. During the periods presented in the bar chart, the
Fund's highest return for a quarter was 1.42% for the quarter ended March 31,
1995. The Fund's lowest return for a quarter was 0.69% for the quarter ended
March 31, 1994. The Fund's seven day yield was 4.68% and the seven day effective
yield was 4.79% as of December 31, 1998. The Fund's year-to-date return was __%
as of June 30, 1999. "Effective yield" reflects the compounding effect of
earnings on reinvested dividends.
The table opposite illustrates how the Fund's average annual returns for
different calendar periods compare to the returns of the 90 Day Treasury Bill
Rate (90 Day T-Bill). The table reflects the impact of the Fund's expenses. It
assumes that you sold your shares at the end of each period.
- --------------------------------------------------------------------------------
Calendar Year Total Returns
[GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
Average Annual Total Return
(as of December 31, 1998)
Since
1 Year 5 Years Inception*
------ ------- ----------
GE Money Market Fund 5.13% 4.98% 4.65%
90 Day T-Bill 4.88% 5.05% 4.76%**
Both the bar chart and table assume reinvestment of dividends and distributions.
If GE Investment Management had not reduced certain expenses during the periods
shown, the Fund's total returns would have been lower. As with all mutual funds,
past performance is not an indication of future performance.
* Inception date (commencement of investment operations): February 22, 1993
** Since March 1, 1993
All mutual funds use a standard formula to calculate total return. Total return
measures the price change in a share assuming the reinvestment of all dividend
income and capital gain distributions.
- --------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------
40 GE Funds Fund Expenses
Prospectus
- --------------------------------------------------------------------------------
The following tables show what it will cost you directly or indirectly to invest
in a Fund.
Shareholder transaction expenses, if any, are paid directly from your account
and are not reflected in the share price.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Shareholder Transaction Expenses*
GE GE GE
Premier GE GE Mid-Cap Small-Cap GE
GE U.S. Growth Value Mid-Cap Value Value Global GE
Equity Equity Equity Growth Equity Equity Equity International
Fund Fund Fund Fund Fund Fund Fund Equity Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum Sales Charge (load) Imposed
on Purchases of Shares (as a percentage
of offering price):
Class A** 5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 5.75% 5.75%
Classes B, C and Y None None None None None None None None
- ------------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Charge (load) Imposed on
Reinvested Dividends (as a percentage
of offering price): All Classes None None None None None None None None
- ------------------------------------------------------------------------------------------------------------------------------------
Maximum Contingent Deferred Sales Charge
(as a percentage of redemption proceeds):**
Class A*** 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0%
Class B 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0%
Class C+ 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0%
Class Y None None None None None None None None
- ------------------------------------------------------------------------------------------------------------------------------------
Redemption Fee: All Classes None None None None None None None None
- ------------------------------------------------------------------------------------------------------------------------------------
Exchange Fee: All Classes None None None None None None None None
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
------------
41
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Shareholder Transaction Expenses*
GE GE GE GE GE GE GE GE
Europe Emerging Fixed Government Short-term GE High Strategic Money
Equity Markets Income Securities Government Tax-Exempt Yield Investment Market
Fund Fund Fund Fund Fund Fund Fund Fund Fund++
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum Sales Charge (load) Imposed on
Purchases of Shares (as a percentage
of offering price):
Class A** 5.75% 5.75% 4.25% 4.25% 2.50% 4.25% 4.25% 5.75% N/A
Classes B, C and Y None None None None None None None None N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Charge (load) Imposed on
Reinvested Dividends (as a percentage
of offering price): All Classes None None None None None None None None N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Maximum Contingent Deferred Sales Charge
(as a percentage of redemption proceeds):**
Class A*** 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% N/A
Class B 4.0% 4.0% 3.0% 3.0% 3.0% 3.0% 3.0% 4.0% N/A
Class C+ 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% N/A
Class Y None None None None None None None None N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Redemption Fee: All Classes None None None None None None None None N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Exchange Fee: All Classes None None None None None None None None N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Certain broker-dealers and financial institutions also may charge their
clients fees in connection with investments in the Funds, which fees are not
reflected in the fee table.
** The sales charge and contingent deferred sales charge ("CDSC") set out in the
above table are the maximum charges imposed on purchases or redemptions of
shares. Investors may pay actual charges that are less depending on the amount
purchased and in the case of the Class B shares, the length of time the shares
are held. A maximum CDSC of 5% will be imposed on Class B shares issued or
exchanged in connection with the combination of certain GE Funds and Investors
Trust. Investors Trust is a family of mutual funds formerly distributed by GNA
Distributors, Inc., an affiliate of GE Investment Management Incorporated, the
Trust's investment adviser and administrator. See "How To Invest: How to Redeem
Shares."
*** Expenses shown above would be increased by the imposition of the 1% CDSC for
redemption of shares within one year of purchase that were not subject to a
front-end sales charge by virtue of being part of a purchase of $1 million or
more. This CDSC does not apply to redemptions under a systematic withdrawal
plan.
+ Expenses shown above would be increased by the imposition of the 1% CDSC for
redemption of shares within one year of purchase. This CDSC does not apply to
redemptions under a systematic withdrawal plan.
++ GE Money Market Fund does not currently offer multiple classes of shares. No
sales charges, redemption fees or exchange fees are assessed by the Trust with
respect to shares of GE Money Market Fund.
- --------------------------------------------------------------------------------
<PAGE>
- -----------------
42 GE Funds
Prospectus
Fund Expenses
- --------------------------------------------------------------------------------
Annual fund operating expenses come out of a Fund's assets and are reflected in
the Fund's share price and dividends.
The figures below are based upon operating expenses anticipated to be incurred
during the current fiscal year. Accordingly, these figures may not
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses
(as a percentage of average net assets)
GE GE GE
GE Premier GE GE Mid-Cap Small-Cap GE GE
U.S. Growth Value Mid-Cap Value Value Global International
Equity Equity Equity Growth Equity Equity Equity Equity
Fund Fund* Fund Fund* Fund** Fund** Fund Fund*
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory and Administration Fees:***
All Classes .40% .60% .55% .60% .80% .70% .75% .80%
- ------------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) fees:
Class A .25% .25% .25% .25% .25% .25% .25% .25%
Class B 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Class C 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Class Y None None None None None None None None
- ------------------------------------------------------------------------------------------------------------------------------------
Other Expenses:****
All Classes .22% .35% .29% .40% .39% .49% .47% .47%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses:
Class A .87% 1.20% 1.09% 1.25% 1.44% 1.44% 1.47% 1.52%
Class B 1.62% 1.95% 1.84% 2.00% 2.19% 2.19% 2.22% 2.27%
Class C++ 1.62% 1.95% 1.84% 2.00% 2.19% 2.19% 2.22% 2.27%
Class Y .62% .95% .84% 1.00% 1.19% 1.19% 1.22% 1.27%
- ------------------------------------------------------------------------------------------------------------------------------------
Waiver and/or Reimbursement: N/A .05% .00% .10% .29% .29% .12% .17%
Net Operating Expenses: +
Class A 1.15% 1.09% 1.15% 1.15% 1.15% 1.35% 1.35%
Class B 1.90% 1.84% 1.90% 1.90% 1.90% 2.10% 2.10%
Class C++ 1.90% 1.84% 1.90% 1.90% 1.90% 2.10% 2.10%
Class Y .90% .84% .90% .90% .90% 1.10% 1.10%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
------------
43
- --------------------------------------------------------------------------------
be the same as figures that appear in the Annual Report dated September 30,
1998.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Fund Operating Expenses
(as a percentage of average net assets)
GE GE GE GE GE GE GE GE
Europe Emerging Fixed Government Short-Term GE High Strategic Money
Equity Markets Income Securities Government Tax-Exempt Yield Investment Market
Fund** Fund** Fund Fund Fund* Fund Fund** Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory and Administration Fees:***
All Classes 1.05% 1.20% .35% .40% .30% .35% .60% .35% .25%
- ------------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) fees: None
Class A .25% .25% .25% .25% .25% .25% .25% .25%
Class B 1.00% 1.00% 1.00% 1.00% .85% 1.00% 1.00% 1.00%
Class C 1.00% 1.00% 1.00% 1.00% .85% 1.00% 1.00% 1.00%
Class Y None None None None None None None None
- ------------------------------------------------------------------------------------------------------------------------------------
Other Expenses:****
All Classes .39% .39% .32% .23% .46% .46% .27% .30% .32%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses: .57%
Class A 1.69% 1.84% .92% .88% 1.09% 1.06% 1.12% .90%
Class B 2.44% 2.59% 1.67% 1.63% 1.61% 1.81% 1.87% 1.65%
Class C++ 2.44% 2.59% 1.67% 1.63% 1.61% 1.81% 1.87% 1.65%
Class Y 1.44% 1.59% .67% .63% .76% .81% .87% .65%
- ------------------------------------------------------------------------------------------------------------------------------------
Waiver and/or Reimbursement: .24% .24% .12% .03% .31% .21% .17% .00% .07%
Net Operating Expenses: + .50%
Class A 1.45% 1.60% .80% .85% .70% .85% .95% .90%
Class B 2.20% 2.35% 1.55% 1.60% 1.30% 1.60% 1.70% 1.65%
Class C++ 2.20% 2.35% 1.55% 1.60% 1.30% 1.60% 1.70% 1.65%
Class Y 1.20% 1.35% .55% .60% .45% .60% .70% .65%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* With respect to GE Premier Growth Equity Fund, GE Mid-Cap Growth Fund, GE
International Equity Fund and GE Short-Term Government Fund, administration fees
(amounting to .05%) and advisory fees are imposed pursuant to separate
contracts.
** Other Expenses for the GE Mid-Cap Value Equity Fund, GE Small-Cap Value
Equity Fund, GE Europe Equity Fund, GEEmerging Markets Fund and GEHigh Yield
Fund are based on estimated amounts to be charged in the current fiscal year.
*** The nature of the services provided to, and the advisory and administration
fees paid by, each Fund are described under "About the Investment Adviser."
**** "Other expenses" includes fees for shareholder services other than those
borne by a Fund (under a shareholder servicing and distribution plan or an
advisory and administration agreement adopted by the GE Funds). Such fees
include custodial fees, legal and accounting fees, printing costs and
registration fees, the costs of regulatory compliance and membership in the
mutual fund industry trade , the costs associated with maintaining the GE Funds'
legal existence and the costs involved in communicating with shareholders of the
Funds.
+ The fee table reflects contractual arrangements with GE Investment Management
to limit "Other Expenses" and/or reduce "Advisory and Administration Fees" of
each class of certain funds on an annualized basis through the fiscal year ended
[September 30, 1999.]
++ Expenses for Class C shares are based on estimated amounts to be charged in
the first year of operations.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------
44 GE Funds
Prospectus
Fund Expenses
- --------------------------------------------------------------------------------
The Impact of Fund Expenses
The following examples are intended to help you compare the cost of investing in
a Fund with the cost of investing in other mutual funds. Although actual costs
may be higher or lower, you would pay the following expenses on a $10,000
investment, assuming a 5% annual return. The examples also assume that you
either redeemed all of your shares at the end of
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Examples + You would pay the following You would pay the following
expenses on a $10,000 investment, expenses on a $10,000 investment,
assuming redemption: assuming no redemption:
1 Year 3 Years 5 Years 10 Years** 1 Year 3 Years 5 Years 10 Years**
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GE U.S. Equity Fund:
Class A* $ $ $ $ $ $ $ $
Class B $ 553 $ 699 $ 869 $ 1,649 $ 153 $ 499 $ 869 $ 1,649
Class C $ $ $ $ $ $ $ $
Class Y $ 51 $ 186 $ 334 $ 762 $ 51 $ 186 $ 334 $ 762
- ------------------------------------------------------------------------------------------------------------------------------
GE Premier Growth Equity Fund:
Class A* $ $ $ $ $ $ $ $
Class B $ 593 $ 807 $ 1,047 $ 2,015 $ 193 $ 607 $ 1,047 $ 2,015
Class C $ $ $ $ $ $ $ $
Class Y $ 92 $ 298 $ 520 $ 1,161 $ 92 $ 298 $ 520 $ 1,161
- ------------------------------------------------------------------------------------------------------------------------------
GE Value Equity Fund:
Class A* $ $ $ $ $ $ $ $
Class B $ 588 $ 782 $ 1,001 $ 1,913 $ 188 $ 582 $ 1,001 $ 1,913
Class C $ $ $ $ $ $ $ $
Class Y $ 87 $ 271 $ 471 $ 1,049 $ 87 $ 271 $ 471 $ 1,049
- ------------------------------------------------------------------------------------------------------------------------------
GE Mid-Cap Growth Fund:
Class A* $ $ $ $ $ $ $ $
Class B $ 593 $ 817 $ 1,068 $ 2,063 $ 193 $ 617 $ 1,068 $ 2,063
Class C $ $ $ $ $ $ $ $
Class Y $ 92 $ 308 $ 542 $ 1,214 $ 92 $ 308 $ 542 $ 1,214
- ------------------------------------------------------------------------------------------------------------------------------
GE Mid-Cap Value Equity Fund:
Class A* $ $ N/A N/A $ $ N/A N/A
Class B $ 593 $ 856 N/A N/A $ 193 $ 856 N/A N/A
Class C $ $ N/A N/A $ $ N/A N/A
Class Y $ 92 $ 348 N/A N/A $ 92 $ 348 N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------
GE Small-Cap Value Equity Fund:
Class A* $ $ N/A N/A $ $ N/A N/A
Class B $ 593 $ 856 N/A N/A $ 193 $ 856 N/A N/A
Class C $ $ N/A N/A $ $ N/A N/A
Class Y $ 92 $ 348 N/A N/A $ 92 $ 348 N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------
GE Global Equity Fund:
Class A* $ $ $ $ $ $ $ $
Class B $ 613 $ 882 $ 1,178 $ 2,293 $ 213 $ 682 $ 1,178 $ 2,293
Class C $ $ $ $ $ $ $ $
Class Y $ 112 $ 375 $ 658 $ 1,465 $ 112 $ 375 $ 658 $ 1,465
- ------------------------------------------------------------------------------------------------------------------------------
GE International Equity Fund:
Class A* $ $ $ $ $ $ $ $
Class B $ 613 $ 892 $ 1,198 $ 2,340 $ 213 $ 692 $ 1,198 $ 2,340
Class C $ $ $ $ $ $ $ $
Class Y $ 112 $ 385 $ 680 $ 1,517 $ 112 $ 385 $ 680 $ 1,517
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
each period shown or you did not redeem your shares. The examples should not be
considered to be a representation of past or future expenses of a Fund. Actual
expenses may be more or less than those shown.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
You would pay the following You would pay the following
expenses on a $10,000 investment, expenses on a $10,000 investment,
assuming redemption: assuming no redemption:
1 Year 3 Years 5 Years 10 Years** 1 Year 3 Years 5 Years 10 Years**
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GE Europe Equity Fund:
Class A* $ $ N/A N/A $ $ N/A N/A
Class B $ 623 $ 936 N/A N/A $ 223 $ 736 N/A N/A
Class C $ $ N/A N/A $ $ N/A N/A
Class Y $ 122 $ 431 N/A N/A $ 122 $ 431 N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------
GE Emerging Markets Fund:
Class A* $ $ N/A N/A $ $ $ $
Class B $ 638 $ 981 N/A N/A $ 238 $ 781 $ 1,351 $ 2,658
Class C $ $ N/A N/A $ $ $ $
Class Y $ 137 $ 477 N/A N/A $ 137 $ 477 $ 841 $ 1,865
- -----------------------------------------------------------------------------------------------------------------------------
GE Fixed Income Fund:
Class A* $ $ $ $ $ $ $ $
Class B $ 458 $ 714 $ 895 $ 1,704 $ 158 $ 514 $ 895 $ 1,704
Class C $ $ $ $ $ $ $ $
Class Y $ 56 $ 202 $ 361 $ 822 $ 56 $ 202 $ 361 $ 822
- -----------------------------------------------------------------------------------------------------------------------------
GE Government Securities Fund:
Class A* $ $ $ $ $ $ $ $
Class B $ 463 $ 711 $ 883 $ 1,669 $ 163 $ 511 $ 883 $ 1,669
Class C $ $ $ $ $ $ $ $
Class Y $ 61 $ 199 $ 348 $ 783 $ 61 $ 199 $ 348 $ 783
- -----------------------------------------------------------------------------------------------------------------------------
GE Short-Term Government Fund:
Class A* $ $ $ $ $ $ $ $
Class B $ 432 $ 677 $ 845 $ 1,694 $ 132 $ 477 $ 845 $ 1,694
Class C $ $ $ $ $ $ $ $
Class Y $ 46 $ 211 $ 391 $ 911 $ 46 $ 211 $ 391 $ 911
- -----------------------------------------------------------------------------------------------------------------------------
GE Tax-Exempt Fund:
Class A* $ $ $ $ $ $ $ $
Class B $ 463 $ 748 $ 959 $ 1,848 $ 163 $ 548 $ 959 $ 1,848
Class C $ $ $ $ $ $ $ $
Class Y $ 61 $ 237 $ 428 $ 980 $ 61 $ 237 $ 428 $ 980
- -----------------------------------------------------------------------------------------------------------------------------
GE High Yield Fund:
Class A* $ $ N/A N/A $ $ N/A N/A
Class B $ 473 $ 672 N/A N/A $ 173 $ 572 N/A N/A
Class C $ $ N/A N/A $ $ N/A N/A
Class Y $ 72 $ 261 N/A N/A $ 72 $ 261 N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------
GE Strategic Investment Fund:
Class A* $ $ $ $ $ $ $ $
Class B $ 568 $ 720 $ 897 $ 1,694 $ 168 $ 520 $ 897 $ 1,694
Class C $ $ $ $ $ $ $ $
Class Y $ 66 $ 208 $ 362 $ 810 $ 66 $ 208 $ 362 $ 810
- -----------------------------------------------------------------------------------------------------------------------------
GE Money Market Fund $ 51 $ 175 $ 311 $ 706 $ 51 $ 175 $ 311 $ 706
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ The expenses shown above for each Fund, other than the GE U.S. Equity Fund,
reflect GE Investment Management's agreement to reduce or otherwise limit the
Fund's expenses for the first year of each period noted.
* Expenses shown above would be increased by the imposition of the 1% CDSC for
redemptions of shares which were not subject to a front-end sales charge by
virtue of being part of a purchase of $1 million or more.
** Expenses for Class B shares shown above reflect the conversion of Class B
shares into Class A shares after six years. Class B shares originally purchased
through the Investors Trust Funds will convert to Class A shares after eight
years.
- --------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------
46 GE Funds More on
Prospectus Strategies
and Risks
- --------------------------------------------------------------------------------
More on Risks
Like all mutual funds, investing in the GE Funds involves risk factors and
special considerations. A Fund's risk is defined primarily by its principal
investment strategies, which are described earlier in this Prospectus.
Investments in a Fund are not insured against loss of principal. As with any
mutual fund, there can be no assurance that a Fund will achieve its investment
objective. Investing in shares of a Fund should not be considered a complete
investment program. The share value of the Equity Funds, Income Funds and Asset
Allocation Funds will rise and fall. Although the GE 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.
One of your most important investment considerations should be balancing risk
and return. Different types of investments tend to respond differently to shifts
in the economic and financial environment. So, diversifying your investments
among different asset classes -- such as stocks, bonds and cash -- and within an
asset class -- such as small-cap and large-cap stocks -- can help you manage
risk and achieve the results you need to comfortably reach your financial goals.
The primary risks of particular investments are summarized below, For more
information about the risks associated with the Funds, please see the Statement
of Additional Information (SAI), which is incorporated by reference into this
Prospectus.
Credit Risk: The price of a bond is affected by the issuer's or counterparty's
credit quality. Changes in financial condition and general economic conditions
can affect the ability to honor financial obligations and therefore credit
quality. Lower quality bonds are generally more sensitive to these changes than
higher quality bonds. Even within securities considered investment grade,
differences exist in credit quality and some investment grade debt securities
may have speculative characteristics. A security's price may be adversely
affected by the market's opinion of the security's credit quality level even if
the issuer or counterparty has suffered no degradation in ability to honor the
obligation.
Derivative Securities Risk: A Fund's use of various investment techniques to
increase or decrease its exposure to changing security prices, interest rates,
currency exchange rates, commodity prices or other factors that affect security
values may involve derivative securities and contracts. Derivative securities
and contracts (securities and contracts whose values are based on other
securities, currencies or indices) include option contracts (on stocks, indices,
currencies, futures contracts or bonds), forward currency exchange contracts,
futures contracts, currency and interest rate swap contracts and structured
securities. Derivative securities and contracts may be used as a direct
investment or as a hedge for a Fund's portfolio or a portion of a portfolio.
Hedging involves using a security or contract to offset investment risk. Hedging
may include reducing the risk of a position held in a portfolio. Hedging and
other investment techniques also may be used to increase a Fund's exposure to a
particular investment strategy. If the portfolio manager's judgment of market
conditions proves incorrect or the strategy does not correlate well with a
Fund's investments, the use of derivatives could result in a loss regardless of
whether the intent was to reduce risk or increase return and may increase a
Fund's volatility. In addition, in the event that non-exchange traded
derivatives are used, these derivatives could result in a loss if the
counterparty to the transaction does not perform as promised. A Fund is not
obligated to pursue any hedging strategy. In additon, hedging techniques may not
be available, may be too costly to be used effectively or may be unable to be
used for other reasons.
Emerging Markets Risk: Emerging market securities bear most foreign exposure
risks discussed below. In addition, there are greater risks involved in
investing in emerging markets than in developed foreign markets. Specifically,
the economic structures in emerging market countries are less diverse and mature
than those in developed countries, and their political systems are less stable.
Investments in
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emerging market countries may be affected by national policies that restrict
foreign investment. Emerging market countries may have less developed legal
structures, and the small size of their securities markets and low trading
volumes can make investments illiquid and more volatile than investments in
developed countries. As a result, a Fund investing in emerging market countries
may be required to establish special custody or other arrangements before
investing.
Foreign Exposure Risk: Investing in foreign securities, including depositary
receipts, or securities of U.S. entities with significant foreign operations,
involves additional risks which can affect a Fund's performance. Foreign
markets, particularly emerging markets, may be less liquid, more volatile and
subject to less government supervision than U.S. markets. There may be
difficulties enforcing contractual obligations, and it may take more time for
transactions to clear and settle in foreign countries than in the U.S. Less
information may be available about foreign issuers. The costs of buying and
selling foreign securities, including tax, brokerage and custody costs,
generally are higher than those involving domestic transactions. The specific
risks of investing in foreign securities include:
o Currency Risk: The values of foreign investments may be affected by changes in
currency rates or exchange control regulations. If the local currency gains
strength against the U.S. dollar, the value of the foreign security increases in
U.S. dollar terms. Conversely, if the local currency weakens against the U.S.
dollar, the value of the foreign security declines in U.S. dollar terms. U.S.
dollar-denominated securities of foreign issuers, including Depositary Receipts,
also are subject to currency risk based on their related investments.
o Political/Economic Risk: Changes in economic, tax or foreign investment
policies, government stability, war or other political or economic actions may
have an adverse effect on a Fund's foreign investments.
o Regulatory Risk: Foreign companies often are not subject to uniform
accounting, auditing and financial reporting standards or to other regulatory
practices and requirements common to U.S. companies.
High Yield Securities Risk: Below investment-grade securities, sometimes called
"junk bonds," are considered speculative. These securities have greater risk of
default than higher rated securities. The market value of below investment-grade
securities is more sensitive to individual corporate developments and economic
changes than higher rated securities. The market for below investment-grade
securities may be less active than for higher rated securities, which can
adversely affect the price at which these securities may be sold. Less active
markets may diminish a Fund's ability to obtain accurate market quotations when
valuing the portfolio securities and calculating a Fund's net asset value. In
addition, a Fund may incur additional expenses if a holding defaults and a Fund
has to seek recovery of its principal investment. Below investment-grade
securities may also present risks based on payment expectations. For example,
these securities may contain redemption or call provisions. If an issuer
exercises these provisions in a declining interest rate market the Fund would
have to replace the security with a lower yielding security resulting in a
decreased return for investors.
Illiquid Securities Risk: Illiquid securities may be difficult to resell at
approximately the price they are valued in the ordinary course of business in
seven days or less. When investments cannot be sold readily at the desired time
or price, a Fund may have to accept a lower price or may not be able to sell the
security at all, or forego other investment opportunities, all of which may have
an impact on the Fund.
Interest Rate Risk: Bond prices generally rise when interest rates decline and
decline when interest rates rise. The longer the duration of a bond, the more a
change in interest rates affects the bond's price. Short-term and long-term
interest rates may not move the same amount and may not move in the same
direction.
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Municipal Securities Risk: Municipal securities are backed by the entities that
issue them and/or other revenue streams. Like other debt securities, prices of
municipal debt securities are affected inversely by changes in interest rates
and by changes in the credit rating or financial condition of the issuer. Income
derived from investments in municipal securities typically is exempt from
Federal income tax, however capital gains are subject to Federal tax. The
municipal securities market is volatile and may be significantly affected by
tax, legislative or political changes. Some municipal securities are insured and
guarantee the timely payment of interest and repayment of principal.
Prepayment Risk: Prices and yields of mortgage-backed securities assume the
securities will be redeemed at a given time. When interest rates decline,
mortgage-backed securities experience higher prepayments because the underlying
mortgages are repaid earlier than expected. A Fund's portfolio manager may be
forced to invest the proceeds from prepaid mortgage-backed securities at lower
rates, which results in a lower return for the Fund. When interest rates
increase, mortgage-backed securities experience lower prepayments because the
underlying mortgages may be repaid later than expected. This typically reduces
the value of the underlying securities.
Repurchase and Reverse Repurchase Agreements Risk: A Fund entering into a
repurchase agreement may suffer a loss if the other party to the transaction
defaults on its obligations and could be delayed or prevented from exercising
its rights to dispose of the underlying securities. The value of the underlying
securities might decline while the Fund seeks to assert its rights. The Fund
could incur additional expenses in asserting its rights or may lose all or part
of the income from the agreement. A reverse repurchase agreement involves the
risk that the market value of the securities retained by a Fund may decline
below the price of the securities the Fund has sold but is obligated to
repurchase at a higher price under the agreement.
Restricted Securities Risk: Restricted securities may be subject to legal
restraints on resale and, therefore, are typically less liquid than other
securities. The prices received from reselling restricted securities in
privately negotiated transactions may be less than those originally paid by a
Fund. Companies whose securities are restricted are not subject to the same
investor protection requirements as publicly traded securities.
Stock Market Risk: A Fund's share price will move up and down in reaction to
stock market movements. Stock prices change daily in response to company
activity and general economic and market conditions. A Fund's investments in
common stocks and other equity securities are subject to stock market risk,
which is the risk that the value of equity securities may decline. Also, equity
securities are subject to the risk that a particular issuer's securities may
decline in value, even during periods when equity securities in general are
rising.
Style Risk: Securities with different characteristics tend to shift in and out
of favor depending upon market and economic conditions as well as investor
sentiment. A Fund may underperform other funds that employ a different style. A
Fund also may employ a combination of styles that impact its risk
characteristics. Examples of different styles include growth and value
investing, as well as those focusing on large, medium, or small company
securities.
o Growth Investing Risk: Growth stocks may be more volatile than other stocks
because they are more sensitive to investor perceptions of the issuing company's
growth potential. Growth oriented funds will typically underperform when value
investing is in favor.
o Value Investing Risk: Undervalued stocks may not realize their perceived value
for extended periods of time or may never realize their perceived value. Value
stocks may respond differently to market and other developments than other types
of stocks. Value oriented funds will typically underperform when growth
investing is in favor.
o High Yield Value Investing Risk: The GE High Yield Fund is subject to the risk
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that the Fund will not benefit from the price appreciation (and may be harmed by
price depreciation) of individual securities.
o Mid-Cap Company Risk: Investments in securities of mid-cap companies entail
greater risks than investments in larger, more established companies. Mid-cap
companies tend to have more narrow product lines, more limited financial
resources and a more limited trading market for their stocks, as compared with
larger companies. As a result, their stock prices may decline significantly as
market conditions change.
o Small-Cap Company Risk: Investing in securities of small-cap companies may
involve greater risks than investing in larger, more established issuers.
Smaller companies may have limited product lines, markets or financial
resources. Their securities may trade less frequently and in more limited volume
than securities of larger, more established companies. In addition, smaller
companies are typically subject to greater changes in earnings and business
prospects than are larger companies. Consequently, the prices of small company
stocks tend to rise and fall in value more than other stocks. Although investing
in small-cap companies offers potential for above-average returns, the companies
may not succeed and the value of stock shares could decline significantly.
Other Risk Considerations
EURO Conversion: On January 1, 1999, eleven of the fifteen member countries of
the European Economic and Monetary Union (Participating Countries) established
fixed conversion rates between their existing sovereign currencies and the EURO,
a new common currency in Europe. The introduction of the EURO may result in
uncertainties for securities of European companies, European markets and the
operation of the Funds. The redenomination of certain European debt and equity
securities over a period of time may result in differences in various
accounting, tax and/or legal treatments that would not otherwise occur. Market
disruptions may occur that could adversely affect the value of European
securities and currencies held by the Funds. Other risks relate to the ability
of financial institution systems to process EURO transactions.
GE Investment Management has addressed ongoing EURO conversion issues in a broad
range of areas, including internal business applications, trading systems and
accounting systems. In addition, GE Investment Management has worked closely
with the Funds' major service providers to address EURO conversion issues. It is
possible, however, that the markets for securities in which certain Funds invest
may be adversely affected by the conversion to the EURO. Furthermore, individual
issuers may suffer increased costs and decreased earnings due to the long-term
impact of EURO conversion.
Year 2000: Like other business organizations and individuals around the world,
each of the Funds could be adversely affected if the computer systems used by
its Investment Managers and external service providers do not properly process
and calculate date-related information from and after January 1, 2000. This is
commonly known as the "Year 2000 Problem." GE Investment Management is engaged
in a multi-year effort to address the Year 2000 Problem in a broad range of
areas, including internal business applications, process-enabling systems and
facilities. In addition, efforts are underway to track each of the Funds' major
service providers to see what they have completed, or have undertaken to address
the Year 2000 Problem. At this time, however, there can be no assurance that
these steps will be sufficient to avoid any adverse impact on the Funds.
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Furthermore, it is possible that the markets for securities in which the Funds
invest may be detrimentally affected by computer failures throughout the
financial services industry beginning January 1, 2000. Corporate and
governmental data processing errors may result in production problems for
individual companies and overall economic uncertainties. Earnings of individual
issuers may be affected by remediation costs. In addition, it has been reported
that foreign institutions have made less progress in addressing the Year 2000
Problem than major U.S. entities, which could have a greater impact on certain
GE Funds' investments that are more sensitive to these risks.
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More on Investment Strategies
A Fund is permitted to use other securities and investment strategies in pursuit
of its investment objective, subject to limits established by the Funds' Board
of Trustees. No Fund is under any obligation to use any of the techniques or
strategies at any given time or under any particular economic condition. Certain
instruments and investment strategies may expose the Funds to other risks and
considerations, which are discussed in the Funds' SAI.
Holding Cash and Temporary Defensive Positions: Under normal circumstances, each
Fund may hold cash and/or money market instruments (i) pending investment, (ii)
for cash management purposes, and (iii) to meet operating expenses. A Fund may
from time to time take temporary defensive positions when the portfolio manager
believes that adverse market, economic, political or other conditions exist. In
these circumstances, the portfolio manager may (i) without limit hold cash and
cash equivalents and/or invest in money market instruments, or (ii) restrict the
securities markets in which a Fund's assets are invested by investing those
assets in securities markets deemed to be conservative in light of the Fund's
investment objective and strategies. The Funds, other than the Money Market
Fund, may invest in money market instruments directly or indirectly through
investment in the GEI Short-Term Investment Fund ("Investment Fund"). The
Investment Fund is advised by GE Investment Management, which charges no
advisory fee to the Investment Fund.
To the extent that a Fund, other than the GE Money Market Fund, holds cash or
invests in money market instruments, it may not achieve its investment
objective.
Various investment techniques are utilized by a Fund to increase or decrease its
exposure to changing security prices, interest rates, currency exchange rates,
commodity prices or other factors that affect security values. For certain
Funds, these techniques may involve derivative transactions such as buying and
selling options and futures contracts, entering into currency exchange contracts
or swap agreements and purchasing indexed securities. These techniques are
designed to adjust the risk and return characteristics of a Fund's portfolio of
investments and are not used for leverage. To the extent that a Fund employs
these techniques, the Fund would be subject to derivative securities risk.
The following are important definitions that may be unfamiliar to an investor
reading about the GE Funds:
Asset-backed securities represent a participation in, or are secured by and
payable from, a stream of payments generated by particular assets, such as
credit card receivables or auto loans.
Bank deposits are cash, checks or drafts deposited in a financial institution
for credit to a customer's account. Banks differentiate between demand deposits
(checking accounts on which the customer may draw) and time deposits, which pay
interest and have a specified maturity or require 30 days' notice before
withdrawal.
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Cash and cash equivalents are highly liquid and highly rated instruments such as
commercial paper and bank deposits.
Certificates of deposit include short-term debt securities issued by banks.
Commercial paper includes short-term debt securities issued by banks,
corporations and other borrowers.
Convertible securities may be debt or equity securities that pay interest or
dividends or are sold at a discount and that may be converted on specified terms
into the stock of the issuer.
Corporate bonds are debt securities issued by companies.
Debt securities are bonds and other securities that are used by issuers to
borrow money from investors. Holders of debt securities have a higher priority
claim to assets than do equity holders. Typically, the debt issuer pays the
investor a fixed, variable or floating rate of interest and must repay the
borrowed amount at maturity. Some debt securities, such as zero coupon bonds,
are sold at a discount from their face values instead of paying interest. Income
funds provide regular income and some provide federally tax-exempt income.
Depositary receipts represent interests in an account at a bank or trust company
which holds equity securities. These interests may include American Depositary
Receipts (held at U.S. banks and traded in the United States), European
Depositary Receipts, Global Depositary Receipts or other similar instruments.
Derivative securities (securities whose values are based on other securities,
currencies or indices) include options (on stocks, indices, currencies, futures
contracts or bonds), forward currency exchange contracts, futures contracts,
swaps, interest-only and principal-only debt securities, certain mortgage-backed
securities like collateralized mortgage obligations ("CMOs"), and structured
securities.
Duration is a mathematical calculation of the average life of a bond (or
portfolio of bonds) based on cash flows that serves as a useful measure of the
security's sensitivity to changes in interest rates. Each year of duration
approximates an expected one percent change in the bond's price for every one
percent change in the interest rate.
Equity securities may include common stocks, preferred stocks, depositary
receipts, convertible preferred stocks, convertible bonds, convertible
debentures, convertible notes, and rights and warrants of U.S. and foreign
companies. Stocks represent an ownership interest in a corporation. Equity funds
have more potential for capital growth than other funds, but they have greater
risk.
Eurodollar deposits are deposits issued in U.S. dollars by foreign banks and
foreign branches of U.S. banks.
Foreign debt securities are issued by foreign corporations and governments. They
may include the following:
o Eurodollar Bonds, which are dollar-denominated securities issued outside the
U.S. by foreign corporations and financial institutions and by foreign branches
of U.S. corporations and financial institutions
o Yankee Bonds, which are dollar-denominated securities issued by foreign
issuers in the U.S.
o Securities denominated in currencies other than U.S. dollars
Foreign securities include interests in or obligations of entities located
outside of the United States. The determination of where an issuer of a security
is located will be made by reference to the country in which the issuer (a) is
organized, (b) derives at least 50% of its revenues or profits from goods
produced or sold, investments made or services performed, (c) has at least 50%
of its assets situated, or (d) has the principal trading market for its
securities. Foreign securities may be denominated in non-U.S. currencies and
traded outside the United States or may be in the form of depositary receipts.
High yield securities are debt securities of corporations, preferred stock and
convertible bonds and convertible
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preferred stock rated Ba through C by Moody's or BB through D by S&P (or
comparably rated by another nationally recognized statistical rating
organization) or, if not rated by Moody's or S&P, are considered by portfolio
management to be of equivalent quality. High yield securities include bonds
rated below investment grade, sometimes called "junk bonds," and are considered
speculative by the major credit rating agencies.
Investment-grade securities are rated Baa or better by Moody's and BBB or better
by S&P or are comparably rated by another nationally recognized statistical
rating organization, or, if not rated, are of similar quality to such
securities. Securities rated in the fourth highest grade have some speculative
elements.
Maturity is the date on which a debt security matures or when the issuer must
pay back the principal amount of the security.
Money market instruments are short-term debt securities of the U.S. government,
banks and corporations. The Funds may invest in money market securities through
investments in the GEI Short-Term Investment Fund (Investment Fund), The
Investment Fund is advised by GE Investment Management, which charges no
advisory fee for such services.
Mortgage-backed securities include securities issued by the Government National
Mortgage Association (Ginnie Mae), the Federal National Mortgage Association
(Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and other
government agencies and private issuers. They may also include collateralized
mortgage obligations ("CMOs") which are derivative securities that are fully
collateralized by a portfolio of mortgages.
Municipal securities are debt obligations of local, state or regional
governments. Municipal securities generally include both municipal bonds
(securities with maturities of more than one year) and municipal notes
(securities with maturities of less than one year). They may be a general
obligation of the municipality that issued them or they may be secured by the
revenues of a special project or facility. Income derived from investments in
municipal securities is typically exempt from Federal income tax, however,
capital gains are subject to Federal tax.
Preferred securities are classes of stock that pay dividends at a specified
rate. Dividends are paid on preferred stocks before they are paid on common
stocks. In addition, preferred stockholders have priority over common
stockholders as to the proceeds from the liquidation of a company's assets.
Repurchase agreements (repos) are transactions in which a security (usually a
government security) is purchased with a simultaneous commitment to sell it back
to the seller (a commercial bank or recognized securities dealer) at an agreed
upon price on an agreed upon date -- usually the next day.
Rights represent a preemptive right of stockholders to purchase additional
shares of a stock at the time of a new issuance, before the stock is offered to
the general public, allowing the stockholder to retain the same ownership
percentage after the new stock offering.
U.S. Government securities are issued or guaranteed by the U.S. Government or
one of its agencies or instrumentalities. Some U.S. Government Securities are
backed by the full faith and credit of the federal government. Other U.S
Government Securities are backed by the issuer's right to borrow from the U.S.
Treasury and some are backed only by the credit of the issuing organization. All
U.S. Government Securities are considered highly creditworthy.
Variable rate securities carry interest rates that may be adjusted periodically
to market rates. Interest rate adjustments could increase or decrease the income
generated by the securities.
Warrants are securities that are usually issued together with a bond or
preferred stock, that permits the holder to buy a proportionate amount of common
stock at a specified price that is usually higher than the stock price at the
time of issue.
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Weighted average maturity is the length of time in days or years until the
average security in a money market or bond fund will mature or be redeemed by
its issuer. The average maturity is weighted according to the dollar amounts
invested in the various securities in the fund. This measure indicates an income
fund's sensitivity to changes in interest rates. In general, the longer a fund's
average weighted maturity, the more its share price will fluctuate in response
to changing interest rates.
Types of investment styles the GE Funds may use
Growth investing involves buying stocks with above-average growth rates.
Typically, growth stocks are the stocks of faster growing companies in more
rapidly growing sectors of the economy. Generally, growth stock valuation levels
will be higher than those of value stocks and the market averages.
Value investing involves buying stocks that are out of favor and/or undervalued
in comparison to their peers and/or their prospects for growth. Generally, value
stock valuation levels are lower than those of growth stocks.
The following tables summarize each Fund's current investment policies and
limitations. Certain policies and limitations may be changed at the discretion
of GE Investment Management. Percentage figures refer to the percentage of a
Fund's assets that may be invested in accordance with the indicated policy.
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<TABLE>
<CAPTION>
Non-Publicly Purchasing Purchasing
Reverse Traded and Structured and Writing and Writing
Repurchase Repurchase Illiquid and Indexed Securities Securities
Borrowing Agreements Agreements Securities Securities Options Index Options
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
GE U.S. Equity Fund 33 1/3% Yes No Yes No Yes Yes
- ------------------------------------------------------------------------------------------------------------------------------------
GE Premier Growth Equity Fund 33 1/3% Yes No Yes No Yes Yes
- ------------------------------------------------------------------------------------------------------------------------------------
GE Value Equity Fund 33 1/3% Yes Yes Yes No Yes Yes
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GE Mid-Cap Growth Fund 33 1/3% Yes No Yes No Yes Yes
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GE Mid-Cap Value Equity Fund 33 1/3% Yes No Yes Yes Yes Yes
- ------------------------------------------------------------------------------------------------------------------------------------
GE Small-Cap Value Equity Fund 33 1/3% Yes Yes Yes No Yes Yes
- ------------------------------------------------------------------------------------------------------------------------------------
GE Global Equity Fund 33 1/3% Yes No Yes No Yes Yes
- ------------------------------------------------------------------------------------------------------------------------------------
GE International Equity Fund 33 1/3% Yes No Yes No Yes Yes
- ------------------------------------------------------------------------------------------------------------------------------------
GE Europe Equity Fund 33 1/3% Yes Yes Yes Yes Yes Yes
- ------------------------------------------------------------------------------------------------------------------------------------
GE Emerging Markets Fund 33 1/3% Yes Yes Yes No Yes Yes
- ------------------------------------------------------------------------------------------------------------------------------------
GE Fixed Income Fund 33 1/3% Yes No Yes Yes Yes Yes
- ------------------------------------------------------------------------------------------------------------------------------------
GE Government Securities Fund 33 1/3% Yes Yes Yes Yes Yes Yes
- ------------------------------------------------------------------------------------------------------------------------------------
GE Short-Term Government Fund 33 1/3% Yes No Yes Yes Yes Yes
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GE Tax-Exempt Fund 10% Yes Yes Yes No Yes Yes
- ------------------------------------------------------------------------------------------------------------------------------------
GE High Yield Fund 33 1/3% Yes Yes Yes Yes Yes Yes
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GE Strategic Investment Fund 33 1/3% Yes No Yes Yes Yes Yes
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GE Money Market Fund 33 1/3% Yes Yes No No No No
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</TABLE>
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<TABLE>
<CAPTION>
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Maximum
Maximum Investment in Maximum When-Issued
Futures and Forward Options on Investment Below-Investment Investment and Delayed
Options on Currency Foreign in Debt Grade Debt in Foreign Delivery
Futures Transactions Currencies Securities Securities Securities Securities
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
GE U.S. Equity Fund Yes Yes Yes 35% 5% 15%* Yes
- ------------------------------------------------------------------------------------------------------------------------------------
GE Premier Growth Equity Fund Yes Yes No 35% 5% 25%* Yes
- ------------------------------------------------------------------------------------------------------------------------------------
GE Value Equity Fund Yes Yes Yes 35% 5% 25%* Yes
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GE Mid-Cap Growth Fund Yes Yes Yes 35% (maximum of 10% in BB or B by 35%* Yes
25% in BBB by S&P, S&P or Ba or B by
Baa by Moody's or Moody's or
equivalent) equivalent
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GE Mid-Cap Value Equity Fund Yes Yes Yes 35% 15% in securities 15%* Yes
rated BBB or below
by S&P or Baa or
below by Moody's
or equivalent
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GE Small-Cap Value Equity Fund No No No 35% 10% 10%* Yes
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GE Global Equity Fund Yes Yes Yes 35% 5% 100% Yes
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GE International Equity Fund Yes Yes Yes 35% 5% 100% Yes
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GE Europe Equity Fund Yes Yes Yes 35% 15% 100% Yes
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GE Emerging Markets Fund Yes Yes Yes 35% 10% in BB or B by 100% Yes
S&P or Ba or B by
Moody's or
equivalent
- ------------------------------------------------------------------------------------------------------------------------------------
GE Fixed Income Fund Yes Yes Yes 100% (maximum of 10% in BB or B by 35%* Yes
25% in BBB by S&P S&P or Ba or B by
or Baa by Moody's Moody's or
or equivalent) equivalent
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GE Government Securities Fund Yes Yes Yes 100% (maximum of None 35%* Yes
10% in BBB by S&P
or Baa by Moody's
or equivalent;maximum
of 25% in A or lower
by S&P, Moody's or
equivalent)
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GE Short-Term Government Fund Yes Yes Yes 100% None 35%* Yes
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GE Tax-Exempt Fund Yes No No 100% (maximum of 5% in debt None Yes
10% in BBB by S&P downgraded below
or Baa by Moody's investment grade
or equivalent) subsequent to
purchase
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GE High Yield Fund Yes Yes Yes 100% 100% 35%* Yes
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GE Strategic Investment Fund Yes Yes Yes 100% (maximum 10% in BB or B 30%* Yes
of 25% in BBB by S&P by S&P or Ba or
or Baa by Moody's B by Moody's
or equivalent) or equivalent
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GE Money Market Fund No No No 100% None 25%* Yes
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</TABLE>
* This limitation excludes ADRs and securities of a foreign issuer with a class
of securities registered with the Securities and Exchange Commission and listed
on a U.S. national securities exchange or traded on the Nasdaq National Market
or the Nasdaq Small Cap Market.
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<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Debt Securities Floating Participation
Lending Obligations of of Other and Variable Interests in
Portfolio Rule 144A Supranational Depositary Investment Municipal Rate Municipal
Securities Securities Agencies Receipts Funds Leases Instruments Obligations
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GE U.S. Equity Fund Yes Yes Yes Yes No No No* No
- ------------------------------------------------------------------------------------------------------------------------------------
GE Premier Growth Equity Fund Yes Yes Yes Yes Yes No No* No
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GE Value Equity Fund Yes Yes Yes Yes Yes No No* No
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GE Mid-Cap Growth Fund Yes Yes Yes Yes Yes No No* No
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GE Mid-Cap Value Equity Fund Yes Yes Yes Yes Yes No No* No
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GE Small-Cap Value Equity Fund Yes Yes Yes Yes Yes No No* No
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GE Global Equity Fund Yes Yes Yes Yes Yes No No* No
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GE International Equity Fund Yes Yes Yes Yes Yes No No* No
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GE Europe Equity Fund Yes Yes Yes Yes Yes No Yes No
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GE Emerging Markets Fund Yes Yes Yes Yes Yes No No* No
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GE Fixed Income Fund Yes Yes Yes Yes Yes No Yes No
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GE Government Securities Fund Yes Yes Yes Yes Yes No Yes No
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GE Short-Term Government Fund Yes Yes Yes Yes Yes No Yes No
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GE Tax-Exempt Fund Yes Yes Yes No Yes Yes Yes Yes
- ------------------------------------------------------------------------------------------------------------------------------------
GE High Yield Fund Yes Yes Yes Yes Yes No Yes No
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GE Strategic Investment Fund Yes Yes Yes Yes Yes Yes Yes Yes
- ------------------------------------------------------------------------------------------------------------------------------------
GE Money Market Fund Yes Yes Yes No No No Yes No
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</TABLE>
* Excludes commercial paper and notes with variable and floating rates of
interest
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<TABLE>
<CAPTION>
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Asset Backed
Mortgage Government Securities Short
Custodial Related Stripped and Sales
Municipal Receipts on Securities, Mortgage Receivable- Mortgage Against
Zero Coupon Obligations Municipal including Related Backed Dollar the
Obligation Components Obligations CMOs Securities Securities Rolls Box
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GE U.S. Equity Fund Yes No No No No No No No
- ------------------------------------------------------------------------------------------------------------------------------------
GE Premier Growth Equity Fund No No No No No No No No
- ------------------------------------------------------------------------------------------------------------------------------------
GE Value Equity Fund No No No No No No No Yes
- ------------------------------------------------------------------------------------------------------------------------------------
GE Mid-Cap Growth Fund No No No No No No No Yes
- ------------------------------------------------------------------------------------------------------------------------------------
GE Mid-Cap Value Equity Fund Yes No No No No No No Yes
- ------------------------------------------------------------------------------------------------------------------------------------
GE Small-Cap Value Equity Fund No No No No No No No Yes
- ------------------------------------------------------------------------------------------------------------------------------------
GE Global Equity Fund No No No No No No No Yes
- ------------------------------------------------------------------------------------------------------------------------------------
GE International Equity Fund No No No No No No No Yes
- ------------------------------------------------------------------------------------------------------------------------------------
GE Europe Equity Fund No No No No No No No Yes
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GE Emerging Markets Fund No No No No No No No Yes
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GE Fixed Income Fund Yes No No Yes Yes Yes Yes No
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GE Government Securities Fund Yes No No Yes Yes Yes Yes Yes
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GE Short-Term Government Fund Yes No No Yes Yes Yes Yes No
- ------------------------------------------------------------------------------------------------------------------------------------
GE Tax-Exempt Fund Yes Yes Yes No No No No Yes
- ------------------------------------------------------------------------------------------------------------------------------------
GE High Yield Fund Yes No No Yes Yes Yes Yes Yes
- ------------------------------------------------------------------------------------------------------------------------------------
GE Strategic Investment Fund Yes Yes Yes Yes Yes Yes Yes No
- ------------------------------------------------------------------------------------------------------------------------------------
GE Money Market Fund No No No No No No No No
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
- ------------------------------------------------------------
58 GE Funds About the
Prospectus Investment
Adviser
- --------------------------------------------------------------------------------
Investment Adviser and Administrator
GE Investment Management Incorporated, located at 3003 Summer Street, P.O. Box
7900, Stamford, Connecticut 06904, is the investment adviser and administrator
of each Fund. GE Investment Management is a wholly-owned subsidiary of General
Electric Company (GE) and a registered investment adviser. GE Investment
Management's principal officers, directors and portfolio managers hold similar
positions with General Electric Investment Corporation (GEIC), a wholly-owned
subsidiary of GE. As of June 30, 1999, GE's investment advisory firms managed
$__ billion in individual and institutional assets with over $__ billion in
mutual funds alone.
For many years, GE's tradition of ingenuity and customer focus has included
financial services. In the late 1920s, through a desire to promote the financial
well-being of its employees, GE began managing assets for its employee pension
plan. By the mid-1930s, GE pioneered some of the nation's earliest mutual funds,
the Elfun Funds -- to be followed years later by the GE Savings and Security
Program Funds. The success of these Funds spurred growth; eventually GE expanded
its mutual fund offerings to include a wide variety of investment products
called the GE Family of Funds, created specifically for the general public.
GE Investment Management bases its investment philosophy on two enduring
principles. First, GE Investment Management believes that a disciplined,
consistent approach to investing can add value to an investment portfolio over
the long term. Its commitment to in-depth research, sound judgment and hard work
provides investors with an opportunity to take advantage of attractive
investments around the world. Second, GE Investment Management follows the same
principles of integrity and quality that have guided GE over the past century
and have made it the world-class company that it is today.
For their services, GE Investment Management pays (out of the advisory fee that
it receives) Palisade, BBH, MAS and NWQ monthly compensation in the form of an
investment sub-advisory fee. The fee is paid by GE Investment Management monthly
and is based upon the average daily net assets of the Fund that each sub-adviser
manages.
Investment Management Fee:
Each Fund pays GE Investment Management an investment management fee. The fee is
accrued daily and paid monthly up to the following maximum annual fee rates:
GE U.S. Equity Fund 0.40%
- --------------------------------------------------------------------------------
GE Premier Growth Equity Fund 0.60%
- --------------------------------------------------------------------------------
GE Value Equity Fund 0.55%
- --------------------------------------------------------------------------------
GE Mid-Cap Growth Fund 0.60%
- --------------------------------------------------------------------------------
GE Mid-Cap Value Equity Fund* 0.80%
- --------------------------------------------------------------------------------
GE Small-Cap Value Equity Fund* 0.70%
- --------------------------------------------------------------------------------
GE Global Equity Fund 0.75%
- --------------------------------------------------------------------------------
GE International Equity Fund 0.80%
- --------------------------------------------------------------------------------
GE Europe Equity Fund* 1.05%
- --------------------------------------------------------------------------------
GE Emerging Markets Fund* 1.20%
- --------------------------------------------------------------------------------
GE Fixed Income Fund 0.35%
- --------------------------------------------------------------------------------
GE Government Securities Fund 0.40%
- --------------------------------------------------------------------------------
GE Short-Term Government Fund 0.30%
- --------------------------------------------------------------------------------
GE Tax-Exempt Fund 0.35%
- --------------------------------------------------------------------------------
GE High Yield Fund* 0.60%
- --------------------------------------------------------------------------------
GE Strategic Investment Fund 0.35%
- --------------------------------------------------------------------------------
GE Money Market Fund 0.25%
- --------------------------------------------------------------------------------
*These figures do not reflect (i) a .15% reduction of investment management fees
for the GE Mid-Cap Value Equity Fund, GE Small Cap Value Equity Fund, GE Europe
Equity Fund and GE Emerging Markets Fund and (ii) a .10% reduction of investment
management fees for the GE High Yield Fund, on an annualized basis through
September 30, 1999.
- --------------------------------------------------------------------------------
<PAGE>
-----------------
59
- --------------------------------------------------------------------------------
About The Funds' Portfolio Managers
Eugene Bolton is a Director and Executive Vice President of GE Investment
Management. He manages the overall U.S. equity investments for GE Investment
Management. He leads a team of portfolio managers for GE U.S. Equity Fund. He
has served in this capacity since the Fund's inception. Mr. Bolton joined GE
Investment Management in 1984 as Chief Financial Officer and has been a
portfolio manager since 1986.
David B. Carlson is a Senior Vice President of GE Investment Management. He is
portfolio manager for GE Premier Growth Equity Fund and manages equity
investments for GE Strategic Investment Fund. He has served in those capacities
since each Fund's inception. Since joining GE Investment Management in 1982, Mr.
Carlson has held several positions.
Peter J. Hathaway is a Senior Vice President of GE Investment Management and
portfolio manager for GE Value Equity Fund. Mr. Hathaway has served in that
capacity since the Fund's inception and has over 36 years of investment
experience. He has held several positions since joining GE Investment Management
in 1985.
Ralph R. Layman is a Director and Executive Vice President of GE Investment
Management. Mr. Layman leads a team of portfolio managers for GE International
Equity Fund and GE Emerging Markets Fund and serves as co-portfolio manager for
GE Global Equity Fund since each Fund's inception. Mr. Layman has also managed
foreign investments for GE Strategic Investment Fund since September 1997. Mr.
Layman joined GE Investment Management in 1991 as Executive Vice President for
International Investments.
Robert A. MacDougall is a Director and Executive Vice President of GE Investment
Management. He leads a team of portfolio managers for GE Government Securities
Fund, GE Fixed Income Fund, GE Short-Term Government Fund and GE Money Market
Fund. Mr. MacDougall also manages fixed income investments for GE Strategic
Investment Fund. He has served in those capacities since each Fund's inception.
Mr. MacDougall joined GE Investment Management in 1986 as Vice President.
Ralph E. Whitman is a Vice President of GE Investment Management and Portfolio
Manager of the GE Mid-Cap Growth Fund. He has served in that capacity since
December 1998. Mr Whitman has more than 11 years of investment experience and
has held positions with GE Investment Management since 1987.
Michael J. Solecki is a Vice President of GE Investment Management, and
portfolio manager of GE Europe Equity Fund. He has served in that capacity since
the Fund's inception. Mr. Solecki also serves as co-portfolio manager of GE
Global Equity Fund and has served in that capacity since September 1997. He has
held several positions since joining GE Investment Management in 1990.
- --------------------------------------------------------------------------------
<PAGE>
- -----------------
60 GE Funds
Prospectus
About the
Investment
Adviser
- --------------------------------------------------------------------------------
About the Sub-Advisers
GE Investment Management seeks to make the best managers available to Fund
shareholders, whether that means accessing GE Investment Management's wealth of
internal talent or using external talent (Sub-Advisers). When GE Investment
Management feels the need to access specialists outside, it investigates and
engages Sub-Advisers with strong performance records and styles that match the
investment objectives of the Funds. GE Investment Management is proud to engage
the following Sub-Advisers to conduct the investment programs for the following
Funds.
GE Small-Cap Value Equity Fund
Palisade Capital Management, L.L.C. (Palisade)
One Bridge Plaza
Fort Lee, NJ 07024
Palisade has a history of managing small-cap equity portfolios and for several
years has provided pension fund services to GE. The company has managed various
institutional and private accounts with total assets in excess of $2.7 billion
as of December 31, 1998. Palisade has managed the Small-Cap Value Equity Fund
since inception. Although Palisade has no previous experience managing mutual
fund portfolios, Palisade translates its experience from various institutional
and private accounts to mutual funds.
The Fund is managed by an investment advisory committee (Senior Investment
Committee) composed of the following members: Jack Feiler, Martin L. Berman,
Steven E. Berman and Richard Meisenberg. Mr. Feiler, Chief Investment Officer at
Palisade, has day-to-day responsibility for managing the Fund and works with the
Senior Investment Committee in developing and executing the Fund's investment
program. Mr. Feiler has more than 30 years of investment experience and has
served as the principal small-cap portfolio manager at Palisade since the
commencement of Palisade's operations in April 1995. Prior to joining Palisade,
Mr. Feiler was a Senior Vice President-Investments at Smith Barney from 1990 to
1995.
- --------------------------------------------------------------------------------
GE Tax-Exempt Fund
Brown Brothers Harriman & Co. (BBH)
59 Wall Street
New York, NY 10005
BBH has a long history of managing fixed-income portfolios and provides
investment management services to a wide range of mutual funds and institutional
clientele. As of December 31,1998, BBH had $33.4 billion of assets under
management.
Barbara A. Brinkley of BBH is portfolio manager of the GE Tax-Exempt Fund and
has served in that capacity since inception. Ms. Brinkley joined BBH in 1976 and
has held several positions within the municipal securities department throughout
her career.
- --------------------------------------------------------------------------------
<PAGE>
-----------------
61
- --------------------------------------------------------------------------------
GE High Yield Fund
Miller Anderson & Sherrerd, LLP (MAS)
One Tower Bridge
West Conshohocken, PA 19428
MAS is a Pennsylvania limited liability partnership founded in 1969, and is
wholly-owned by subsidiaries of Morgan Stanley Dean Witter & Co. As of December
31, 1998, MAS had $63 billion of assets under management.
Robert E. Angevine, Thomas L. Bennett, Stephen F. Esser and Gordon W. Loery are
co-portfolio managers of the GE High Yield Fund and have served in that capacity
since the Fund's inception. Mr. Angevine has more than 18 years of investment
experience and joined Morgan Stanley Dean Witter Investment Management Inc., an
affiliate of MAS, in 1988. Mr. Angevine is currently a Principal of Morgan
Stanley & Co. Incorporated. Mr. Bennett has more than 19 years of investment
experience and joined MAS in 1984. Mr. Bennett is currently a Managing Director
of Morgan Stanley & Co. Incorporated. Mr. Esser has more than 13 years of
investment experience and joined MAS in 1988. Mr. Esser is currently a Managing
Director of Morgan Stanley & Co. Incorporated. Mr. Loery joined MAS in 1996 and
is currently a Principal of Morgan Stanley Dean Witter. He served as a Fixed
Income Analyst at Morgan Stanley Asset Management Inc. from 1990 to 1996, and
was a Fixed Income Analyst at MAS from 1996 to 1999.
- --------------------------------------------------------------------------------
GE Mid-Cap Value Equity Fund
NWQ Investment Management Company (NWQ)
2049 Century Park East-4th Floor
Los Angeles, CA 90067
NWQ is a wholly-owned subsidiary of United Asset Management Corporation, a
company whose principal business is managing investments for institutional
clients through 50 operating subsidiaries and acquiring investment management
firms. NWQ is a manager of domestic investment portfolios for individual, union,
corporate, municipal, endowment and foundation clients with 17 years of
experience. As of December 31, 1998, NWQ had in excess of $8.13 billion of
assets under management.
Jon D. Bosse is the portfolio manager of the GE Mid-Cap Value Equity Fund and
has served in that capacity since the Fund's inception. Mr. Bosse has more than
12 years of investment experience and has held the position of Director of
Equity Research and Managing Director at NWQ since 1996. Prior to his joining
NWQ, he spent ten years with ARCO Investment Management Company where he was
director of equity research and managed a value-oriented portfolio. Previous to
this, he spent four years in the corporate finance department of ARCO. Mr. Bosse
is a Chartered Financial Analyst and a member of the Association for Investment
Management and Research and the Los Angeles Society of Financial Analysts.
- --------------------------------------------------------------------------------
<PAGE>
- -----------------
62 GE Funds
Prospectus
About the
Investment
Adviser
- --------------------------------------------------------------------------------
Prior Performance Information
Senior Investment Committee of Palisade Capital Management, L.L.C.
(Sub-adviser to the GE Small-Cap Value Equity Fund)
The performance information provided opposite includes a composite of the
performance of certain private accounts ("Accounts") managed by the Senior
Investment Committee of Palisade Capital Management, L.L.C. ("Palisade"), the
sub-adviser of the GE Small-Cap Value Equity Fund. Each of the Accounts included
in the composite has objectives, policies and strategies substantially similar
to those of the Fund. The Accounts were managed by the Senior Investment
Committee while at Palisade and during its previous employment with Smith
Barney, Inc.
The Senior Investment Committee, which has operated together since July 1, 1993,
consists of Jack Feiler, Martin L. Berman, Steven E. Berman and Richard
Meisenberg. As is the case with the GE Small-Cap Value Equity Fund, Mr. Feiler
was primarily responsible for management of the Accounts and worked with the
Senior Investment Committee in developing and executing the Accounts' investment
programs. No person other than the members of the Senior Investment Committee
had a significant role in achieving the performance described opposite.
Unlike management of the Accounts, the Senior Investment Committee's management
of the GE Small-Cap Value Equity Fund will be subject to certain regulatory
restrictions (e.g., limits on percentage of assets invested in a single issuer
and industry and requirements on distributing income to shareholders) that did
not apply to the Accounts. The Fund also will incur certain operating expenses
that were not borne by the Accounts. In addition, the Fund will likely
experience cash flows different from those of the Accounts. All of these factors
may adversely affect the performance of the Fund and cause it to differ from
that of the composite described opposite.
- --------------------------------------------------------------------------------
<PAGE>
-----------------
63
- --------------------------------------------------------------------------------
The Senior Investment Committee Performance Composite represents the performance
of the Accounts net of fees and other expenses, not the performance of the GE
Small-Cap Value Equity Fund, and should not be considered an indication of
future performance of the Fund.
- --------------------------------------------------------------------------------
Calendar Year Total Returns
Investment Committee Performance Composite
[GRAPHIC OMITTED]
* Represents performance from 7/1/93 through 12/31/93
- --------------------------------------------------------------------------------
Average Annual Total Return
(as of December 31, 1998)
Russell
Period Composite 2000 Index
--------- ----------
1 Year -4.96% -2.55%
3 Years 13.91% 11.58%
5 Years 15.12% 11.86%
Since 7/1/93 15.65% 12.96%
Note A -- Performance Results. Performance results provided above for the period
from July 1, 1993 to April 1, 1995 (commencement of Palisade's operations)
reflect the performance of the Accounts while the Senior Investment Committee
was employed as a separate operating group within Smith Barney Inc. Thereafter,
performance results reflect the performance of the Accounts managed by the
Senior Investment Committee while at Palisade.
Note B -- Composite. The composite performance is compared to the performance of
the Russell 2000 Index, which is an unmanaged index of issuers with total market
capitalizations between $4.4 million and $3.21 billion as of December 31, 1998.
The information provided above for both the composite and the Index reflect the
reinvestment of dividends and distributions. Unlike the Index performance
information, however, the performance of the composite is net of fees and other
expenses applicable to the Accounts. Expenses of the GE Small-Cap Value Equity
Fund are expected to differ from those of the Accounts.
- --------------------------------------------------------------------------------
<PAGE>
- -----------------
64 GE Funds
Prospectus
About the
Investment
Adviser
- --------------------------------------------------------------------------------
Jon Bosse
(Portfolio Manager of the GE Mid-Cap Value Equity Fund)
This performance information includes a composite of the performance of certain
private accounts and mutual funds ("Accounts") managed by Jon Bosse, the
portfolio manager primarily responsible for the day-to-day management of the GE
Mid-Cap Value Equity Fund. Each of the Accounts included in the composite has
objectives, policies and strategies substantially similar to those of the Fund.
The Accounts were managed by Mr. Bosse while he was employed with NWQ Investment
Management Company (NWQ), the sub-adviser of the Fund, since October 1996 and
during his previous employment with ARCO Investment Management Company ("ARCO")
since January 1990. As is the case with the Fund, Mr. Bosse was primarily
responsible for management of the Accounts and no other person had a significant
role in achieving the performance described.
Unlike management of the private accounts included in the composite, Mr. Bosse's
management of the GE Mid-Cap Value Equity Fund will be subject to certain
regulatory restrictions (e.g., limits on percentage of assets invested in a
single issuer and industry and requirements on distributing income to
shareholders) that did not apply to the private accounts. The Fund also will
incur certain operating expenses that were not borne by the private accounts. In
addition, the Fund will likely experience cash flows different from those of the
private accounts. All of these factors may adversely affect the performance of
the Fund and cause it to differ from that of the composite described opposite.
The Portfolio Manager Performance Composite represents the performance of the
Accounts net of fees and other expenses, not the performance of the GE Mid-Cap
Value Equity Fund, and should not be considered an indication of future
performance of the Fund.
- --------------------------------------------------------------------------------
Calendar Year Total Returns
Portfolio Manager Performance Composite
[GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
Average Annual Total Returns
(as of December 31, 1998)
S&P MidCap
Period Composite 400 Index
--------- ---------
1 Year 8.34% 19.1%
3 Years 24.43% 23.4%
5 Years 23.12% 18.8%
Since 1/1/90 23.79% 17.6%
Note A -- Performance Results. Performance results provided in the composite for
the period from January 1, 1990 to August 31, 1996 reflect the performance of a
single private account managed by Mr. Bosse ("ARCO Account") while he was
employed as a portfolio manager at ARCO. Performance results for the month of
September 1996 reflect the performance during that month of the portfolio of
securities held in the ARCO Account at August 31, 1996 (when Mr. Bosse ceased
managing the ARCO Account), assuming that no changes in the portfolio were made
through the end of the month and dividend income from the portfolio securities
was received. Because no actual portfolio of securities was managed during this
one month period, performance results for September 1996 should be considered
hypothetical. Performance results from October 1, 1996 (when Mr. Bosse commenced
employment at NWQ and purchased for an NWQ private account substantially the
same portfolio of securities held in the ARCO Account at August 31, 1996),
reflect the performance of Accounts managed by Mr. Bosse while employed with
NWQ.
Note B -- Composite. The performance results of the ARCO private account,
including the hypothetical performance for September 1996, have been adjusted to
reflect the maximum investment management fee of 1% per year that is applicable
to the NWQ private accounts. The composite performance is compared to the
performance of the S&P MidCap 400 Index, which is an unmanaged index of 400
domestic stocks selected for market size, liquidity and industry group
representation. The information provided above for both the composite and the
Index reflect the reinvestment of dividends and distributions. Unlike the Index
performance information, however, the performance of the composite is net of
applicable fees and other expenses. Expenses of the GE Mid-Cap Value Equity Fund
are expected to differ from those of the Accounts.
- --------------------------------------------------------------------------------
<PAGE>
-----------------
65
- --------------------------------------------------------------------------------
Miller Anderson & Sherrerd, LLP
(Sub-adviser to the GE High Yield Fund)
This performance information is a composite of the performance of certain mutual
funds ("MAS Managed Funds") managed by Miller Anderson & Sherrerd, LLP ("MAS"),
the sub-adviser of the GE High Yield Fund. Each of the MAS Managed Funds
included in the composite has objectives, policies and strategies substantially
similar to those of the Fund.
The Sub-Adviser Performance Composite represents the performance of the MAS
Managed Funds net of fees and other expenses, not the performance of the GE High
Yield Fund, and should not be considered an indication of future performance of
the Fund.
- --------------------------------------------------------------------------------
Calendar Year Total Returns
Sub-Adviser Performance Composite
[GRAPHIC OMITTED]
* Represents performance from February 28, 1989, the date the initial MAS
Managed Fund commenced operations, through December 31, 1989.
- --------------------------------------------------------------------------------
Average Annual Total Return
(as of December 31, 1998)
Salomon Brothers
High Yield Market
Period Composite Index
--------- -----
1 Year 3.22% 3.61%
3 Years 11.33% 9.20%
5 Years 9.71% 9.06%
Since 2/28/89 11.21% 11.00%
Note A -- Composite. The composite performance is compared to the performance of
the Salomon Brothers High Yield Market Index, which is a broad based unmanaged
index that includes below investment grade corporate bonds issued in the U.S.
and publicly traded with remaining maturities of at least one year. The
information provided above for both the composite and the Index reflect the
reinvestment of dividends and distributions. Unlike the Index performance
information, however, the performance of the composite is net of fees and other
expenses applicable to the MAS Managed Funds. Expenses of the GE High Yield Fund
are expected to be higher than those of the MAS Managed Funds and may adversely
affect the performance of the Fund and cause it to differ from that of the
composite.
- --------------------------------------------------------------------------------
<PAGE>
- ------------------------------------------------------------
66 GE Funds How to Invest
Prospectus
- --------------------------------------------------------------------------------
How to Buy Shares
The GE Funds offer several ways to purchase shares. You may open an account and
make an investment through your investment professional, by mail, bank wire,
electronic funds transfer, by telephone. You may obtain an application from your
investment professional by calling 1-800-242-0134 or directly by visiting the GE
Funds Website at www.ge.com/mutual funds.
- --------------------------------------------------------------------------------
Minimum
Investments
By mail By wire Automatically
------- ------- -------------
Initial Investment $500 $1,000 $25
- --------------------------------------------------------------------------------
Subsequent Investments $100 $1,000 $25
- --------------------------------------------------------------------------------
Minimums are reduced for Direct Deposit, Automatic Investment and Payroll
Savings Plans. Accounts that fall below the $500 account minimum may be
automatically redeemed by a Fund on 30 days' notice.
- --------------------------------------------------------------------------------
<PAGE>
-----------------
67
- --------------------------------------------------------------------------------
Investing Through an Authorized Firm
If you invest through an authorized firm with an investment professional, they
can help you set up your new account and make subsequent investments for you.
Your investment professional is responsible for forwarding your application and
payment promptly to the Fund. Your investment professional may charge fees not
described in this prospectus.
Investing By Mail
- --------------------------------------------------------------------------------
o Read this prospectus.
o If opening a new account, complete and sign the attached application. You may
obtain an application by calling the Funds' Distributor at the number listed on
the back cover.
o Send a check drawn on a U.S. bank in U.S. dollars payable to GE Funds. Third
party checks, endorsed checks, cash, money orders, travelers cheques or credit
card checks are not accepted by the Funds.
o If adding to an existing account, include your account number on the check.
o If a check used to open or add to an account does not clear, you may be
assessed an additional charge.
Mail to:
GE Funds
P.O. Box 419631
Kansas City, MO 64141-6631
Overnight delivery:
GE Funds
c/o National Financial Data Services Inc.
330 West 9th Street
Kansas City, MO 64105
Once You Have Opened an Account -- You Have Additional Options
By Wire
o Wire to the address below. Include your name, the name of the Fund and your
account number.
o Wire orders received by the close of regular trading on the New York Stock
Exchange (NYSE) are executed at that day's offering price. Wire orders received
after the close of regular trading on the NYSE receive the next business days'
offering price.
Wire Address:
State Street Bank and Trust Company
ABA 0110-0002-8
DDA No. 9904-641-9
Electronic Funds Transfer
You may transfer money between your bank account and your fund account if you
have completed the appropriate section of the application. Prior to your first
transfer, call the GE Funds at (800) 242-0134 to confirm that electronic
transfer has been enabled on your account. Most transfers are complete within
three business days of your call.
Direct Deposit or Payroll Savings Plan
o You must have an existing account.
o You may invest automatically with money deducted from your Federal paycheck,
Social Security check, GE employee payroll check or through your company's
payroll savings plan.
o To establish a direct deposit arrangement or to invest through a payroll
savings plan, contact your payroll department or Federal agency.
o You may elect to modify or terminate your participation in the Direct Deposit
or Payroll Savings Plans by notifying the Funds in writing.
o The Funds may modify or terminate your participation in a Plan upon notice.
Automatic Investment Plan
o You may have funds transferred directly from your bank account each month.
Call (800) 242-0134 to make arrangements.
o If an automatic monthly investment transaction fails due to insufficient funds
in your account, you may be assessed an additional charge. The Funds may modify
or terminate the Plan at any time.
Retirement Plans
Shares of the Funds, other than the Tax-Exempt Fund, are available for purchase
through individual retirement accounts ("IRAs") and other retirement plans. An
IRA application and further details about IRAs and other retirement plans are
available from your investment professional or the Distributor.
Purchases in Kind -- If You Invest More than $10 Million
Large investments in a Fund ($10 million or more) may be detrimental to existing
shareholders because they can significantly increase transaction costs charged
to existing shareholders. In these circumstances, the Fund may require that you
purchase Fund shares "in kind," or provide the Fund with securities instead of
cash. The Funds' distributor would inform you of the securities acceptable to
the Fund. The securities would be accepted by the Fund at their market value in
return for Fund shares of equal value. You may have to pay associated brokerage
commissions for the securities that you purchase.
- --------------------------------------------------------------------------------
<PAGE>
- ------------------
68 GE Funds
Prospectus
How to Invest
- --------------------------------------------------------------------------------
Choosing a Share Class
Each GE Fund (other than the GE Money Market Fund and GE Government Securities
Fund) offers four share classes to investors. You should select the share class
that best suits your needs. Sales charges and expenses are determined by the
share class you purchase. Offering price is equal to the net asset value next
determined after receipt of your order in good form plus any applicable sales
charge.
Class A shares carry an initial sales charge, Class B shares are subject to a
contingent deferred sales charge (CDSC) based on the amount of time you hold
your shares, Class C shares are subject to a CDSC for one year after purchase,
and finally, Class Y shares are available only to certain institutional
investors. GE employees, retirees and their family members, and other investors
(excluding Class Y investors) purchasing shares directly through the Fund's
Distributor may purchase Class A shares on a load-waived basis. The Funds may
modify the manner in which shares are offered, minimum investments, or sales
charge rates or waivers.
The Funds and GE Investment Distributors, Inc. ("GEID"), the Funds' Distributor,
may reject any purchase order or exchange request for any reason. Excessive or
short-term trading in Fund shares may harm performance by compromising portfolio
management strategies and increasing Fund expenses. Although there is no current
limit on transactions in Fund shares, the Funds or GEID may reject a purchase
order and may terminate or restrict the exchange privilege of any investor, or
person acting on behalf of any investor or investors, whose pattern of trading
or transaction history involves, in the opinion of the Funds or GEID, actual or
potential harm to the Funds.
- --------------------------------------------------------------------------------
<PAGE>
-----------------
69
- --------------------------------------------------------------------------------
Purchasing Class A Shares
Class A shares may be appropriate for long-term investors who are comfortable
with traditional front-end sales charges and for investors who are eligible for
quantity discounts or waivers.
Class A shares have initial sales charges, which are included in the offering
price. Initial sales charges on Class A shares may be reduced, waived or may
vary with the amount invested. The initial sales charge varies with the amount
invested, as shown below:
- --------------------------------------------------------------------------------
GE U.S. Equity Fund, GE Premier Growth Equity Fund, GE Value Equity Fund, GE
Mid-Cap Growth Fund, GE Mid-Cap Value Equity Fund, GE Small-Cap Value Equity
Fund, GE Global Equity Fund, GE International Equity Fund, GE Europe Equity
Fund, GE Emerging Markets Fund and GE Strategic Investment Fund
<TABLE>
<CAPTION>
Maximum Dealers'
Your Investment** Front-End Sales Charge* Reallowance*
----------------- -------------------------------------------------------------- -------------------------
(As a % of Offering Price) (As a % of Your Net Investment) (As a % of Offering Price)
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.25%
- --------------------------------------------------------------------------------------------------------------------------------
$50,000 but less than $100,000 4.25% 4.44% 3.75%
- --------------------------------------------------------------------------------------------------------------------------------
$100,000 but less than $250,000 3.25% 3.36% 2.75%
- --------------------------------------------------------------------------------------------------------------------------------
$250,000 but less than $500,000 2.50% 2.56% 2.00%
- --------------------------------------------------------------------------------------------------------------------------------
$500,000 but less than $1,000,000 2.00% 2.04% 1.55%
- --------------------------------------------------------------------------------------------------------------------------------
$1,000,000 or more*** 0 0 +
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GE Fixed Income Fund, GE Government Securities Fund, GE Tax-Exempt Fund and GE
High Yield Fund
<TABLE>
<CAPTION>
Maximum Dealers'
Your Investment** Front-End Sales Charge Reallowance*
----------------- -------------------------------------------------------------- -------------------------
(As a % of Offering Price) (As a % of Your Net Investment) (As a % of Offering Price)
<S> <C> <C> <C>
Less than $100,000 4.25% 4.44% 3.75%
- --------------------------------------------------------------------------------------------------------------------------------
$100,000 but less than $250,000 3.25% 3.36% 2.75%
- --------------------------------------------------------------------------------------------------------------------------------
$250,000 but less than $500,000 2.50% 2.56% 2.00%
- --------------------------------------------------------------------------------------------------------------------------------
$500,000 but less than $1,000,000 2.00% 2.04% 1.55%
- --------------------------------------------------------------------------------------------------------------------------------
$1,000,000 or more*** 0 0 +
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GE Short-Term Government Fund
<TABLE>
<CAPTION>
Maximum Dealers'
Your Investment** Front-End Sales Charge Reallowance*
----------------- -------------------------------------------------------------- -------------------------
(As a % of Offering Price) (As a % of Your Net Investment) (As a % of Offering Price)
<S> <C> <C> <C>
Less than $100,000 2.50% 2.56% 2.25%
- --------------------------------------------------------------------------------------------------------------------------------
$100,000 but less than $250,000 2.25% 2.30% 2.00%
- --------------------------------------------------------------------------------------------------------------------------------
$250,000 but less than $500,000 1.75% 1.78% 1.50%
- --------------------------------------------------------------------------------------------------------------------------------
$500,000 but less than $1,000,000 1.25% 1.27% 1.00%
- --------------------------------------------------------------------------------------------------------------------------------
$1,000,000 or more*** 0 0 +
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* The dealer's reallowance may be changed during special promotions. Dealers who
receive more than 90% of the sales charge may be considered "underwriters" under
the U.S. securities laws.
** Under the Distributor's guidelines, purchases of $250,000 or more will be
made in Class A shares only.
*** Purchases of $1 million or more in Class A shares at net asset value are
subject to a 1% contingent deferred sales charge if redeemed within one year of
purchase. The CDSC is calculated by multiplying the CDSC percentage by the
lesser of the share class' net asset value at the time of purchase or its net
asset value at the time of redemption. Purchases by GE Employees (as defined
below) are not subject to a CDSC.
+ For purchases of a single Fund that exceed $1 million, the Distributor will
pay a concession of 1.00% of any amounts under $5 million, 0.50% of the next $45
million and 0.25% thereafter, to the selling dealer except for purchases by GE
Employees (as defined below).
- --------------------------------------------------------------------------------
<PAGE>
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70 GE Funds
Prospectus
How to Invest
- --------------------------------------------------------------------------------
Reduced Sales Charges for Class A Shares
Purchases of Class A shares have reduced sales charges in the following
situations:
o "Combined Right Of Accumulation" Policy--you may group prior investments made
by you and/or members of your immediate family in Class A shares of the same or
other GE Funds to count towards volume discounts on new purchases. Contact your
investment professional or the Distributor for details.
o "Letter Of Intent" Purchase--if you intend to make purchases in GE Funds of
over $50,000 within a 13 month period, you may sign a letter of intent and
receive a volume discount on each purchase as if you were making a single
purchase. (Please complete and sign the letter of intent section on the Fund
application.) If you fail to satisfy the letter of intent, the higher sales
charges applicable to your investment will be assessed retroactively. The Funds'
Transfer Agent will hold 5.75% of the amount specified in the letter of intent
as Fund shares in escrow, which will be used to cover the applicable sales
charge if the letter is not satisfied. Contact your investment professional or
the Distributor for details.
Sales Charge Waivers for Class A Shares
The sales charge on Class A shares is waived if the purchase:
o is at least $1 million
o represents reinvested dividends or capital gains
o is made by banks, insurance companies and corporations purchasing shares for
their own account
o is made by Class Y eligible employee retirement plans that seek the additional
services provided or paid by GE Investment Management ("Class A Retirement
Plans"), investment companies not managed or sponsored by GE Investment
Management or any of its affiliates, or certain customers of financial
intermediaries
o is made by a Class A Retirement Plan with at least 250 eligible employees
o is made directly through GE Investment Distributors
o is made by officers, directors, employees and registered representatives of
authorized firms that have agreements with GE Investment Distributors or other
financial institutions selling Fund shares
o is made through offerings to selected customers of certain subsidiaries and
divisions of GE
o is made by a GE Employee (as defined below)
o is made by employees and their family members of certain vendors of GE's
employee retirement plan
o is made by certain investors who previously purchased shares during special
limited offerings
o is made through certain GE LifeStyle Funds
o is made through broker-dealers for supplemental savings plans for individuals
who are employed by a single employer with 750 or more eligible investors
o is made through certain broker-dealers, financial institutions, recordkeepers
and other financial intermediaries who charge a management, consulting or other
fee for their services and who have an agreement with or among the Funds, GE
Investment Management, GE Investment Distributors to compensate them for certain
services.
Purchases of $1 million or more in Class A shares at NAVare subject to a 1% CDSC
if redeemed within one year of purchase. The Class A CDSC is calculated in the
same manner and is subject to the same waivers as the CDSC on Class B shares.
For more information on Class A sales charge waivers, please contact your
investment professional.
If You Work for GE ... You and Your Family May Purchase Class A Shares Without
Paying a Sales Charge
As a GE employee or retiree, you and your family members can purchase Class A
shares directly from GE Investment Distributors without paying the sales charge
typically associated with buying Class A shares of a Fund from a broker.
The following persons ("GE Employees") are eligible for the employee Class A
sales charge waiver:
o employees, retirees, officers or directors of GE, or affiliate companies and
members of their families (including your spouse, parents, children, siblings,
grandparents and grandchildren)
o certain investors who purchased shares during special limited offerings
o investors and their family members who purchased shares of the Funds issued
before November 29, 1993.
Please call 1-800-242-0134 for details.
- --------------------------------------------------------------------------------
<PAGE>
-----------------
71
- --------------------------------------------------------------------------------
Purchasing Class B Shares
Class B Shares may be appropriate if you are opposed to front-end sales charges
or if you are not planning to redeem shares in the short term.
Class B shares have no initial sales charge but may be subject to a contingent
deferred sales charge (CDSC). Class B shares convert automatically to Class A
shares after six years to take advantage of lower fund expenses.
Class B shares acquired initially through Investors Trust Funds convert to Class
A shares after eight years. Intended purchases of Class B shares by investors
not eligible for Class Y shares of $250,000 or more should be made in Class A
shares.
Redemptions subject to CDSC
The CDSC on Class B shares declines based on the amount of time you hold the
shares. Class B shares redeemed during each of the time periods described at
right will have a CDSC. Shares purchased initially through Investors Trust Funds
are subject to a longer CDSC period.
The CDSC is calculated by multiplying the CDSC percentage by the lesser of the
share class' net asset value at the time of purchase or its net asset value at
the time of redemption. To ensure that you pay the lowest CDSC possible, the
Funds use the shares with the lowest CDSC to fill your redemption requests.
CDSC Waivers on Certain Redemptions of Class A, Class B and Class C Shares
CDSCs are waived on shares:
o acquired through dividends or capital gains reinvestment
o redeemed because of death or disability (as defined in the Internal Revenue
Code)
o that are mandatory retirement distributions on IRA accounts that represent the
minimum required distribution from an IRA effected pursuant to a Systematic
Withdrawal Plan
o that are redemptions of Class A shares originally purchased in amounts of
$1 million or more without paying an initial sales charge and are being redeemed
within one year pursuant to a Systematic Withdrawal Plan
o that represent "substantially equal periodic payments" as described under
Section 72(+)(2) of the Internal Revenue Code of 1986, as amended
Contingent Deferred Sales Charges
- --------------------------------------------------------------------------------
If you initially purchased through GE Funds:
Funds Contingent Deferred Sales Charge
- --------------------------------------------------------------------------------
GE U.S. Equity Fund o 4% in the first year
GE Premier Growth Equity Fund o 3% in the second year
GE Value Equity Fund o 2% in the third year
GE Mid-Cap Growth Fund o 1% in the fourth year
GE Mid-Cap Value Equity Fund o 0% in the fifth and sixth years
GE Small Cap Value Equity Fund o converts to Class A shares
GE Global Equity Fund
GE International Equity Fund
GE Europe Equity Fund
GE Emerging Markets Fund
GE Strategic Investment Fund
- --------------------------------------------------------------------------------
GE Fixed Income Fund o 3% in the first and second years
GE Government Securities Fund o 2% in the third year
GE Short-Term Government Fund o 1% in the fourth year
GE Tax-Exempt Fund o 0% in the fifth and sixth years
GE High Yield Fund o converts to Class A shares
- --------------------------------------------------------------------------------
If you initially purchased through Investor Trust Funds:
Funds Contingent Deferred Sales Charge
- --------------------------------------------------------------------------------
Any Fund's Class B shares acquired o 5% in the first year
as a result of combining Investors Trust o 4% in the second year
Funds with certain GE Funds. o 3% in the third year
o 2% in the fourth year
o 1% in the fifth year
o 0% in the sixth year
o converts to Class A shares
- --------------------------------------------------------------------------------
<PAGE>
- ------------------
72 GE Funds
Prospectus
How to Invest
- --------------------------------------------------------------------------------
Purchasing Class C Shares
(Level load class)
Beginning on October 1, 1999, you may purchase Class C (level load) shares.
Class C shares may be appropriate if you are opposed to traditional front-end
sales charges or are unsure of the length of time you will hold your investment.
Because you may purchase Class C shares at the NAV next determined without
paying an initial sales charge, your entire investment in Class C shares is
available to work for you. However, Class C shares pay a higher distribution and
service fee (Rule 12b-1 fee) than Class A shares (or Class B shares after
conversion to Class A shares).
Class C shares may be subject to a 1% CDSC if redeemed within 12 months of
purchase. Proceeds from the CDSC may be used to defray the expenses of GE
Investment Distributors related to the sale of Class C shares, including the
payment of compensation to authorized firms. The CDSC on Class C shares is
calculated in the same manner and is subject to the same waivers as the CDSC on
Class B shares.
Intended purchases of Class C shares by investors not eligible for Class Y
shares of $1,000,000 ($500,000 for the Short-Term Government Fund) should be
made in Class A shares. An amount up to 1% of the amount invested in Class C
shares is paid by GE Investment Distributors to authorized firms.
Purchasing Class Y Shares
(Institutional Investors)
Class Y shares have no initial sales charges or CDSC. Class Y shares may be
purchased by:
o financial institutions and corporations purchasing shares for their own
account
o fiduciaries investing on behalf of clients
o certain tax-exempt investors including defined contribution plans that do not
seek additional services provided or paid by GE Investment Management
o investment companies not managed by GE Investment Management
o clients of certain financial intermediaries who invest at least $250,000
Investors eligible to purchase Class Y shares may not purchase any other class
of shares, except as described under Class A shares.
How to Redeem Shares
You may take money out of your account by redeeming (selling) some or all of
your shares.
If You Invested With an Investment Professional
Shares purchased with the assistance of an investment professional may be
redeemed either by the investment professional or the shareholder of record.
Please see your account statement for the telephone number of your investment
professional. Or call Shareholder Services at (800) 242-0134.
By Mail
Send a signed written request, stating the share class and number of shares or
specific dollar amount you want to sell. Your signature(s) must appear exactly
as it does on the account registration.
Mail to:
GE Funds
P.O. Box 419631
Kansas City, MO 64141-6631
Overnight Delivery:
GE Funds
c/o National Financial Data Services Inc.
330 West 9th Street
Kansas City, MO 64105
Telephone: (816) 843-7335
Signature(s) must each be guaranteed for any redemption:
o exceeding $50,000
o mailed to a different address from that on record
- --------------------------------------------------------------------------------
<PAGE>
-----------------
73
- --------------------------------------------------------------------------------
o paid to someone else
o wired to a financial institution
o mailed to an address that has been changed within the last 30 days
By Telephone
Shares may be redeemed by telephone up to a maximum of $50,000 per day utilizing
the Funds' automated system or by an agent during business hours. The telephone
option must have been selected during initial account setup or subsequently by
written request signed by all registered shareholders. Call toll-free (800)
242-0134.
GE Investment Distributors will not be responsible for losses resulting from
unauthorized telephone transaction instructions if it follows reasonable
procedures to verify the identity of the investor.
By Wire
You may redeem your shares by telephone and have the proceeds of the sale wired
to your bank instead of receiving a check. Wire instructions must have been
provided during initial account setup or subsequently by written request signed
by all registered shareholders with a signature guarantee.
o Minimum wire amount: $1,000
o A $10 fee per wire will be charged to your account (in addition to any
applicable sales charges)
o Include your account number, share class and specific dollar amount you want
to wire in your wire request
Mail your signed written wire request to:
GE Funds
P.O. Box 419631
Kansas City, MO 64141-6631
Or call Shareholder Services at (800) 242-0134.
By Systematic Withdrawal Plan
You may select a specific amount to be redeemed from your account on a regular
basis.
o Your account balance must be at least $10,000
o Maximum of 10% of the value of your account each year and a minimum of $50 per
withdrawal
o You may sell shares monthly or quarterly
Checkwriting
Checkwriting privileges may be elected at no cost by shareholders of the Money
Market Fund. Checks may be made payable to any person in amounts of $100 or
more. The Transfer Agent will redeem shares in an amount sufficient to cover the
amount of a check. If the amount of the check is greater than the value of the
shares in your account, the check will be returned marked "insufficient funds"
and you may be assessed an additional charge. Please contact the Distributor at
the number listed on the back cover for additional details.
Special Considerations for Selling Shares
o If you own more than one share class of a Fund, specify which share class you
want to sell. Otherwise, the selling transaction may be delayed.
o When using a check to sell shares of GE Money Market Fund, the minimum check
amount is $100.
o If you have purchased shares of a Fund by personal check, redemption of these
shares can only be processed after your check is cleared by your bank. This
could take up to 10 business days or more.
o If your account balance falls below $500, the transfer agent may request that
you bring your balance up to the $500 minimum or request that you close your
account. If you take no action within 30 days, the transfer agent may sell your
shares and mail the proceeds to you. This $500 minimum balance requirement is
waived for qualified plans, Direct Deposit accounts, Payroll Savings Plan
accounts and Automatic Investment
Plan accounts.
o Normally, redemption requests are processed by the next business day, but may
take up to seven business days if making immediate payment would adversely
affect the fund.
o Redemptions may be suspended or payment postponed when the NYSE is closed,
when trading on the NYSEis restricted, or as permitted by the Securities and
Exchange Commission.
- --------------------------------------------------------------------------------
<PAGE>
- ------------------
74 GE Funds
Prospectus
How to Invest
- --------------------------------------------------------------------------------
Reinstatement of Shares
For 60 days after you sell shares, you have the right to "reinstate" your
investment at the then current NAV and pay no sales charge. For Class A, Class B
and Class C shares, any CDSC associated with the redemption will be reinstated
to your account in direct proportion to the amount reinvested. Reinstatement
will occur at the then-current net asset value and may have tax consequences.
You must request share reinstatement in writing.
Redemptions in Kind
Large redemptions that exceed $250,000 or 1% of a Fund's assets may be
considered detrimental to the Fund's existing shareholders. Therefore, the Fund
may require that you take a "distribution in kind" upon redemption and may give
you portfolio securities instead of cash proceeds. Such Fund portfolio
securities will have to be sold through a broker and you may incur transaction
costs when you sell them.
How To Exchange Shares
You can exchange shares of a class of one GE Fund for the same class of another
GE Fund. You can also exchange shares from GE Money Market Fund for Class A,
Class B, Class C or Class Y shares of another GE Fund. An exchange is a sale and
purchase of shares for tax purposes. You may have a taxable gain or loss when
you exchange your shares. To exchange shares:
o by phone, call (800) 242-0134. (This option is not available for certain
corporate or trust accounts.)
o in writing, send your request to GE Funds:
Mail to:
GE Funds
P.O. Box 419631
Kansas City, MO 64141-6631
Overnight Delivery:
GE Funds
c/o National Financial Data Services Inc.
330 West 9th Street
Kansas City, MO 64105
Telephone: (816) 843-7335
You must be eligible to purchase the shares that you wish to exchange into and
should review the description of the Fund that you wish to purchase. If you
exchange Class A, Class B or Class C shares for Money Market Fund shares, you
will be subject to the applicable CDSC at the time that you sell your Money
Market Fund shares. The time that you hold Money Market Fund shares is not
included in the holding period for purposes of calculating the applicable CDSC
on a redemption.
When We Receive Your Transaction Order
Purchase and redemption requests received in good order will be executed at the
next offering price calculated after receipt of transaction instructions.
Offering price is equal to the net asset value next determined plus any
applicable sales charge.
o Purchase and redemption orders are executed only on days when the NYSE is open
for trading. If the NYSE closes early, the deadlines for purchase and redemption
orders will be accelerated to the earlier closing time.
o If you hold more than one Class of shares of a Fund, you must specify which
class you intend to purchase or sell.
o For Funds declaring daily income dividends, you will begin to earn income as
of the first business day after payment for your order has been received by the
Fund.
- --------------------------------------------------------------------------------
<PAGE>
-----------------
75
- --------------------------------------------------------------------------------
Distribution and
Shareholder
Service Fees
To pay for the cost of promoting the Funds and servicing your shareholder
account, Class A, Class B and Class C shares of the Funds have adopted a Rule
12b-1 plan which requires that fees be paid out of the assets of each class.
Over time the fees will increase your cost of investing and may exceed the cost
of paying other types of sales charges. The following table shows the
distribution and service fees associated with investing in each class of shares.
- --------------------------------------------------------------------------------
Distribution and Shareholder Service Fee Rates
<TABLE>
<CAPTION>
All GE Funds except
GE Short-Term Government Fund
and GE Money Market Fund* GE Short-Term Government Fund
- ------------------------------------------------------------------------------------------------------------
Distribution Fee Service Fee Distribution Fee Service Fee
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A 0.00% 0.25% 0.00% 0.25%
- ------------------------------------------------------------------------------------------------------------
Class B 0.75% 0.25% 0.60% 0.25%
- ------------------------------------------------------------------------------------------------------------
Class C 0.75% 0.25% 0.75% 0.25%
- ------------------------------------------------------------------------------------------------------------
Class Y None None None None
- ------------------------------------------------------------------------------------------------------------
</TABLE>
* No distribution and service fees are paid by the GE Money Market Fund.
- --------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------
76 GE Funds Dividends, Capital Gains
Prospectus and Other Tax Information
- --------------------------------------------------------------------------------
Most GE Funds pay dividends from net investment income and from net capital
gains once each year. Unless you instruct a Fund to mail dividends from net
investment income and net capital gains to you, they will be reinvested in your
account. There are no fees or charges to reinvest dividends.
GE Funds are subject to a 4% excise tax on undistributed net investment income
and net capital gains. To avoid this tax, the Funds may pay dividends from net
investment income and net capital gains more frequently.
- --------------------------------------------------------------------------------
Fund Distribution Schedule
- --------------------------------------------------------------------------------
GE U.S. Equity Fund o Dividends are declared and paid annually.
GE Premier Growth Equity Fund o Short-term and long-term capital gains, if
any, are declared and paid annually.
GE Value Equity Fund
GE Mid-Cap Growth Fund
GE Mid-Cap Value Equity Fund
GE Small-Cap Value Equity Fund
GE Global Equity Fund
GE International Equity Fund
GE Europe Equity Fund
GE Emerging Markets Fund
GE Strategic Investment Fund
- --------------------------------------------------------------------------------
GE Fixed Income Fund o Dividends are declared daily and paid
monthly.
GE Government Securities Fund*
o Short-term and long-term capital gains, if
GE Short-Term Government Fund any, are declared and paid annually.
GE Tax-Exempt Fund
GE High Yield Fund
GE Money Market Fund
*The Government Securities Fund pays a dividend based on periodic projections.
Total distributions could exceed taxable income earned by the Fund potentially
creating a return of capital.
- --------------------------------------------------------------------------------
<PAGE>
------------
77
- --------------------------------------------------------------------------------
Taxes
Tax issues can be complicated. We suggest you see your investment professional
or tax advisor for any questions you may have.
Dividends and distributions from net investment income and short-term capital
gains are taxed as ordinary income. Long-term capital gains distributions are
taxed at the long-term capital gains rate, whether you reinvest your
distributions or have them paid to you.
- --------------------------------------------------------------------------------
Distributions from GE
Tax-Exempt Fund
In general, income from the GE Tax-Exempt Fund is exempt from Federal income tax
but may be subject to state and local taxes. Because the Fund may invest in
taxable securities, some dividends from net investment income may be subject to
Federal and state income taxes. Short-term and long-term capital gains
distributed by the Fund are taxable.
Tax Statement
You will receive an annual statement summarizing your dividend and capital gains
distributions. Please consult a tax advisor if you have questions about your
specific tax situation.
Backup Withholding
If you do not provide complete and certified taxpayer identification
information, each Fund is obligated by law to withhold 31% of most Fund
distributions.
- --------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------
78 GE Funds Calculating
Prospectus Share Value
- --------------------------------------------------------------------------------
Fund shares are sold at net asset value ("NAV") plus any applicable sales
charge. The NAV of each share class is calculated at the close of regular
trading on the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time,
each day the NYSE is open for trading. The NAV per share class for Funds (other
than the Money Market Fund) is determined by adding the value of the Fund's
investments, cash, and other assets attributable to that class, subtracting its
liabilities, and then dividing the result by the number of that class'
outstanding shares.
A Fund's portfolio securities are valued most often on the basis of market
quotations. Foreign securities are valued on the basis of quotations from the
primary market in which they are traded. Some debt securities are valued using
dealers and pricing services. Municipal bond valuations are based on prices
supplied by a qualified municipal pricing service.
The prices are composed of the mean average of the bid and ask prices on the
secondary market. All portfolio securities of the Money Market Fund and any
short-term securities held by any other Fund with remaining maturities of sixty
days or less are valued on the basis of amortized cost or original cost plus
accrued interest. A Fund's written or purchased options are valued at the last
sales price, or if no sales occurred that day, at the last traded bid price. A
Fund's NAV may change on days when shareholders will not be able to purchase or
redeem the Fund's shares.
If quotations are not readily available for any security, or if the value of a
security has been materially affected by events occurring after the closing of a
market, the security may be valued by using procedures approved by a Fund's
Board of Trustees that they believe accurately reflects "fair value".
- --------------------------------------------------------------------------------
<PAGE>
------------------------------------------------------
Financial GE Funds 79
Highlights Prospectus
- --------------------------------------------------------------------------------
The financial highlights tables that follow are intended to help you understand
a Fund's financial performance for the fiscal years ended September 30, unless
otherwise noted. 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 the Fund (assuming reinvestment of
all dividends and distributions). Fiscal year end information has been audited
by _______, whose report, along with the Funds' financial statements, are
included in the Funds' Annual Report, which is available on request.
- --------------------------------------------------------------------------------
<PAGE>
- --------------
80 GE Funds
Prospectus
Financial
Highlights
- --------------------------------------------------------------------------------
GE U.S. Equity Fund
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------
Years ended September 30 1998(b) 1997(b) 1996(b) 1995(b) 1994
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 1/5/93
- -----------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period
- -----------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations:
Net Investment Income (Loss)
- -----------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized)
- -----------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations
- -----------------------------------------------------------------------------------------------------------------
Less Distributions
- -----------------------------------------------------------------------------------------------------------------
Dividends (from net investment income)
- -----------------------------------------------------------------------------------------------------------------
Distributions (from capital gains)
- -----------------------------------------------------------------------------------------------------------------
Total Distributions
- -----------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
Total Return (a)
- -----------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -----------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands)
- -----------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets*
- -----------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets*
- -----------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets*
- -----------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GE Premier Growth Equity Fund
<TABLE>
<CAPTION>
CLASS A
-------------------
Years ended September 30 1998(b) 1997(b,d)
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Inception date 12/31/96
- ------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period
- ------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss)
- ------------------------------------------------------------------------------------------
Net Gains (Losses) Investments (both realized and unrealized)
- ------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations
- ------------------------------------------------------------------------------------------
Less Distributions
- ------------------------------------------------------------------------------------------
Dividends (from net investment income)
- ------------------------------------------------------------------------------------------
Distributions (from capital gains)
- ------------------------------------------------------------------------------------------
Total Distributions
- ------------------------------------------------------------------------------------------
Net Asset Value, End of Period
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
Total Return (a)
- ------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ------------------------------------------------------------------------------------------
Net Assets, End of Period
- ------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets
- ------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets
- ------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets*
- ------------------------------------------------------------------------------------------
Portfolio Turnover Rate
- ------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
------------
81
- --------------------------------------------------------------------------------
GE U.S. Equity Fund
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------
Years ended September 30 1998(b) 1997(b) 1996(b) 1995(b) 1994
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 12/22/93
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $28.35 $22.57 $19.71 $16.03 $16.41
- ----------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations:
Net Investment Income (Loss) 0.05 0.11 0.19 0.21 0.24
- ----------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized) 1.20 8.03 3.25 3.84 (0.25)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 1.25 8.14 3.44 4.05 (0.01)
- ----------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.06 0.17 0.31 0.28 0.20
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 2.43 2.19 0.27 0.09 0.17
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions 2.49 2.36 0.58 0.37 0.37
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $27.11 $28.35 $22.57 $19.71 $16.03
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (a) 4.80% 38.75% 17.78% 25.92% (0.09%)
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $21,407 $14,380 $7,194 $1,563 $91
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 1.50% 1.50% 1.50% 1.50% 1.50%
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 0.17% 0.44% 0.90% 1.29% 1.28%
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.63% 1.88% 2.08% 3.50% 1.96%
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 29% 38% 49% 43% 51%
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS Y
-----------------------------------------------------------
Years ended September 30 1998(b) 1997(b) 1996(b) 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 11/29/93
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $28.99 $23.03 $19.98 $16.16 $16.37
- -----------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations:
Net Investment Income (Loss) 0.34 0.37 0.40 0.38 0.32
- -----------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized) 1.21 8.19 3.31 3.88 (0.16)
- -----------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 1.55 8.56 3.71 4.26 0.16
- -----------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.33 0.41 0.39 0.35 0.20
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 2.43 2.19 0.27 0.09 0.17
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions 2.76 2.60 0.66 0.44 0.37
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $27.78 $28.99 $23.03 $19.98 $16.16
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return (a) 5.86% 40.16% 18.97% 27.14% 0.96%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $281,071 $212,957 $144,470 $128,247 $114,885
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 0.50% 0.50% 0.50% 0.50% 0.50%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 1.16% 1.45% 1.90% 2.36% 2.27%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 0.56% 0.52% 0.59% 0.71% 0.96%
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 29% 38% 49% 43% 51%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GE Premier Growth Equity Fund
<TABLE>
<CAPTION>
CLASS B CLASS Y
------------------------------- ----------------------
Years ended September 30 1998(b) 1997(b,d) 1998(b) 1997(b,d)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Inception date 12/31/96 12/31/96
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $18.25 $15.00 $18.38 $15.00
- ----------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) (0.12) (0.09) 0.09 0.04
- ----------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) Investments (both realized and unrealized) 2.36 3.34 2.37 3.34
- ----------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 2.24 3.25 2.46 3.38
- ----------------------------------------------------------------------------------------------------------------------------
Less Distributions
- ----------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.00 0.00 0.05 0.00
- ----------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.29 0.00 0.29 0.00
- ----------------------------------------------------------------------------------------------------------------------------
Total Distributions 0.29 0.00 0.34 0.00
- ----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $20.20 $18.25 $20.50 $18.38
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total Return (a) 12.47% 21.67% 13.65% 22.53%
- ----------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period $2,076 $447 $7,580 $5,770
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets 1.90% 1.90% 0.88% 0.90%
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets (0.62%) (0.76%) 0.47% 0.31%
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 2.27% 9.30% 0.89% 1.17%
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 35% 17% 35% 17%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
- --------------
82 GE Funds
Prospectus
Financial
Highlights
- --------------------------------------------------------------------------------
GE Value Equity Fund
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------
Years ended September 30 1998(b) 1997(d) 10/31/96 10/31/95 10/31/94
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 9/8/93
- ---------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period
- ---------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
- ---------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss)
- ---------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Securities (both realized and unrealized)
- ---------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations
- ---------------------------------------------------------------------------------------------------------------------
Less Distributions
- ---------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income)
- ---------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains)
- ---------------------------------------------------------------------------------------------------------------------
Total Distributions
- ---------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Total Return (a)
- ---------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands)
- ---------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets*
- ---------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets*
- ---------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets*
- ---------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GE Mid-Cap Growth Fund
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------
Years ended September 30 1998(b) 1997(c) 10/31/96 10/31/95 10/31/94
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 9/8/93
- ---------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period
- ---------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
- ---------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss)
- ---------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Securities (both realized and unrealized)
- ---------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations
- ---------------------------------------------------------------------------------------------------------------------
Less Distributions
- ---------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income)
- ---------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains)
- ---------------------------------------------------------------------------------------------------------------------
Returns of Capital
- ---------------------------------------------------------------------------------------------------------------------
Total Distributions
- ---------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Total Return (a)
- ---------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------------------------------
Net Assets, End of period (in thousands)
- ---------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets*
- ---------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets*
- ---------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets*
- ---------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
------------
83
- --------------------------------------------------------------------------------
GE Value Equity Fund
<TABLE>
<CAPTION>
CLASS B CLASS Y
---------------------------------------------------- ---------
Years ended September 30 1998(b) 1997(d) 10/31/96 10/31/95 10/31/94 1998(b,f)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 9/8/93 1/5/98
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $13.48 $10.79 $8.93 $7.50 $7.64 10.00
- -----------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
- -----------------------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) 0.00 (0.01) 0.04 0.07 0.08 0.08
- -----------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Securities (both realized and unrealized) 0.45 3.57 1.93 1.45 (0.17) 0.30
- -----------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 0.45 3.56 1.97 1.52 (0.09) 0.38
- -----------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.00 0.00 0.04 0.09 0.05 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 4.16 0.87 0.07 0.00 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions 4.16 0.87 0.11 0.09 0.05 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $9.77 $13.48 $10.79 $8.93 $7.50 $10.38
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return (a) 5.32% 35.23% 22.30% 20.50% (1.10%) 3.80%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $44,655 $46,035 $33,318 $14,450 $7,970 $1,580
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 1.81% 2.05% 2.10% 2.10% 2.10% 0.81%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 0.00% (0.12%) 0.23% 0.94% 1.09% 0.98%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.81% 2.07% 2.40% 3.18% 4.02% 0.81%
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 40% 131% 100% 27% 15% 40%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GE Mid-Cap Growth Fund
<TABLE>
<CAPTION>
CLASS B CLASS Y
-------------------------------------------------------- ---------
Years ended September 30 1998(b) 1997(d) 10/31/96 10/31/95 10/31/94 1998(b,f)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 9/8/93 1/5/98
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $17.11 $12.87 $11.21 $8.74 $8.70 $10.00
- ----------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
- ----------------------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) (0.08) (0.18) (0.09) (0.05) (0.04) 0.01
- ----------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Securities (both realized and
unrealized) (1.79) 4.42 1.75 2.52 0.16 (1.30)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations (1.87) 4.24 1.66 2.47 0.12 (1.29)
- ----------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.00 0.00 0.00 0.00 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 7.40 0.00 0.00 0.00 0.08 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
Returns of Capital 0.04 0.00 0.00 0.00 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions 7.44 0.00 0.00 0.00 0.08 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $7.80 $17.11 $12.87 $11.21 $8.74 $8.71
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (a) (16.62%) 33.02% 14.81% 28.26% 1.67% (12.90%)
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of period (in thousands) $22,038 $32,280 $27,616 $14,311 $5,857 $471
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 1.90% 2.06% 2.10% 2.10% 2.09% 0.89%
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net
Assets* (0.86%) (1.26%) (0.73%) (0.66%) (0.82%) 0.21%
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.93% 2.21% 2.41% 3.19% 4.06% 0.89%
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 13% 139% 41% 74% 100% 13%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
- --------------
84 GE Funds
Prospectus
Financial
Highlights
- --------------------------------------------------------------------------------
GE Global Equity Fund
<TABLE>
<CAPTION>
CLASS A
--------------------------------------
Years ended September 30 1998(b) 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 1/5/93
- -------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period
- -------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss)
- -------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized)
- -------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations
- -------------------------------------------------------------------------------------------------------------------
Less Distributions
- -------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income)
- -------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains)
- -------------------------------------------------------------------------------------------------------------------
Total Distributions
- -------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Total Return (a)
- -------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
- -------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands)
- -------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets*
- -------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets*
- -------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets*
- -------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GE International Equity Fund
<TABLE>
<CAPTION>
CLASS A
----------------------------------------
Years ended September 30 1998(b) 1997 1996(b) 1995 1994
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 3/2/94
- ---------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period
- ---------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
- ---------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss)
- ---------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized)
- ---------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations
- ---------------------------------------------------------------------------------------------------------------------
Less Distributions
- ---------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income)
- ---------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains)
- ---------------------------------------------------------------------------------------------------------------------
Total Distributions
- ---------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Total Return (a)
- ---------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands)
- ---------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets*
- ---------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets*
- ---------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets*
- ---------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
------------
85
- --------------------------------------------------------------------------------
GE Global Equity Fund
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------------------
Years ended September 30 1998(b) 1997 1996 1995 1994
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 12/22/93
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $24.32 $21.87 $20.14 $19.32 $18.48
- --------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) (0.11) (0.08) (0.04) 0.00 (0.01)
- --------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized) (2.57) 3.82 2.14 1.23 1.06
- --------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations (2.68) 3.74 2.10 1.23 1.05
- --------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- --------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.00 0.00 0.00 0.02 0.01
- --------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 2.47 1.29 0.37 0.39 0.20
- --------------------------------------------------------------------------------------------------------------------------------
Total Distributions 2.47 1.29 0.37 0.41 0.21
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $19.17 $24.32 $21.87 $20.14 $19.32
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Total Return (a) (11.44%) 17.92% 10.61% 6.62% 5.70%
- --------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $989 $877 $600 $356 $128
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 2.10% 2.10% 2.10% 2.10% 2.10%
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* (0.48%) (0.52%) (0.34%) (0.11%) (0.08%)
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 2.45% 3.33% 3.50% 3.50% 2.52%
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 71% 70% 46% 46% 26%
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS Y
---------------------------------------------------------
Years ended September 30 1998(b) 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 11/29/93
- ------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $24.83 $22.25 $20.37 $19.45 $17.49
- ------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) 0.09 0.10 0.13 0.13 0.11
- ------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized) (2.63) 3.94 2.21 1.31 2.06
- ------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations (2.54) 4.04 2.34 1.44 2.17
- ------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- ------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.10 0.17 0.09 0.13 0.01
- ------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 2.47 1.29 0.37 0.39 0.20
- ------------------------------------------------------------------------------------------------------------------------------
Total Distributions 2.57 1.46 0.46 0.52 0.21
- ------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $19.72 $24.83 $22.25 $20.37 $19.45
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Return (a) (10.59%) 19.14% 11.71% 7.76% 12.43%
- ------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
- ------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $15,039 $22,642 $10,123 $9,785 $10,504
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 1.07% 1.10% 1.10% 1.10% 1.10%
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 0.37% 0.48% 0.56% 0.84% 0.82%
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.07% 1.10% 1.12% 1.75% 1.52%
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 71% 70% 46% 46% 26%
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GE International Equity Fund
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------
Years ended September 30 1998(b) 1997 1996(b) 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 3/2/94
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $20.02 $17.47 $15.77 $15.13 $15.00
- ---------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
- ---------------------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) (0.05) (0.06) 0.05 0.01 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized) (1.55) 3.11 1.65 0.64 0.13
- ---------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations (1.60) 3.05 1.70 0.65 0.13
- ---------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.00 0.00 0.00 0.01 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 3.74 0.50 0.00 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions 3.74 0.50 0.00 0.01 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $14.68 $20.02 $17.47 $15.77 $15.13
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (a) (9.39%) 17.86% 10.78% 4.33% 0.87%
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $948 $455 $272 $57 $34
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 2.10% 2.10% 2.10% 2.10% 2.10%
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* (0.26%) (0.30%) 0.28% 0.10% 0.47%
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 2.59% 4.12% 3.50% 3.50% 2.43%
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 93% 51% 36% 27% 6%
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS Y
-----------------------------------------------------------
Years ended September 30 1998(b) 1997 1996(b) 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 3/2/94
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $20.43 $17.76 $15.94 $15.22 $15.00
- ---------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
- ---------------------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) 0.01 0.13 0.17 0.12 0.10
- ---------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized) (1.46) 3.18 1.73 0.70 0.12
- ---------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations (1.45) 3.31 1.90 0.82 0.22
- ---------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.06 0.14 0.08 0.10 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 3.74 0.50 0.00 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions 3.80 0.64 0.08 0.10 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $15.18 $20.43 $17.76 $15.94 $15.22
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (a) (8.34%) 19.16% 11.97% 5.45% 1.47%
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $15,367 $75,098 $63,225 $32,907 $26,460
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 1.04% 1.01% 1.03% 1.07% 1.10%
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 0.08% 0.76% 0.99% 0.97% 1.52%
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.06% 1.01% 1.03% 1.18% 1.43%
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 93% 51% 36% 27% 6%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
- --------------
86 GE Funds
Prospectus
Financial
Highlights
- --------------------------------------------------------------------------------
GE Fixed Income Fund
<TABLE>
<CAPTION>
CLASS A
--------------------------------------
Years ended September 30 1998(b) 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 1/5/93
- ------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period
- ------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss)
- ------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Securities (both realized and unrealized)
- ------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations
- ------------------------------------------------------------------------------------------------------------
Less Distributions
- ------------------------------------------------------------------------------------------------------------
Dividends (from net investment income)
- ------------------------------------------------------------------------------------------------------------
Distributions (from capital gains)
- ------------------------------------------------------------------------------------------------------------
Returns of Capital
- ------------------------------------------------------------------------------------------------------------
Total Distributions
- ------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
Total Return (a)
- ------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands)
- ------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets*
- ------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets*
- ------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets*
- ------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate
- ------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GE Government Securities Fund
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------
Years ended September 30 1998(b) 1997(c) 10/31/96 10/31/95 10/31/94
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 9/8/93
- -------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period
- -------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss)
- -------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Securities (both realized and unrealized)
- -------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations
- -------------------------------------------------------------------------------------------------------------------
Less Distributions
- -------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income)
- -------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains)
- -------------------------------------------------------------------------------------------------------------------
In Excess of Net Investment Income
- -------------------------------------------------------------------------------------------------------------------
Returns of Capital
- -------------------------------------------------------------------------------------------------------------------
Total Distributions
- -------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Total Return (a)
- -------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands)
- -------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets*
- -------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets*
- -------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets*
- -------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
------------
87
- --------------------------------------------------------------------------------
GE Fixed Income Fund
<TABLE>
<CAPTION>
CLASS B
--------------------------------------------------------
Years ended September 30 1998(b) 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 12/22/93
- ------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $12.06 $11.70 $11.91 $11.26 $12.15
- ------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) 0.58 0.63 0.60 0.65 0.42
- ------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Securities (both realized and unrealized) 0.50 0.36 (0.20) 0.66 (0.81)
- ------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 1.08 0.99 0.40 1.31 (0.39)
- ------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- ------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.57 0.63 0.61 0.66 0.42
- ------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.00 0.00 0.00 0.00 0.08
- ------------------------------------------------------------------------------------------------------------------------------
Returns of Capital 0.02 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------
Total Distributions 0.59 0.63 0.61 0.66 0.50
- ------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $12.55 $12.06 $11.70 $11.91 $11.26
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Return (a) 9.24% 8.64% 3.41% 11.98% (3.31%)
- ------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $1,855 $1,401 $1,673 $234 $65
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 1.55% 1.56% 1.60% 1.60% 1.58%
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 4.79% 5.17% 5.19% 5.57% 4.83%
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.85% 2.19% 2.44% 3.50% 2.01%
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 219% 258% 275% 315% 298%
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS Y
---------------------------------------------------------
Years ended September 30 1998(b) 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- 11/29/93
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period 12.05 $11.69 $11.92 $11.27 $12.17
- -------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) 0.71 0.75 0.72 0.77 0.55
- -------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Securities (both realized and unrealized) 0.50 0.35 (0.22) 0.65 (0.83)
- -------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 1.21 1.10 0.50 1.42 (0.28)
- -------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- -------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.70 0.74 0.73 0.77 0.54
- -------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.00 0.00 0.00 0.00 0.08
- -------------------------------------------------------------------------------------------------------------------------------
Returns of Capital 0.02 0.00 0.00 0.00 0.00
- -------------------------------------------------------------------------------------------------------------------------------
Total Distributions 0.72 0.74 0.73 0.77 0.62
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $12.54 $12.05 $11.69 $11.92 $11.27
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Total Return (a) 10.33% 9.74% 4.32% 13.10% (2.34%)
- -------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $30,067 $16,229 $19,098 $6,642 $2,732
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 0.55% 0.56% 0.55% 0.59% 0.58%
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 5.58% 5.97% 6.14% 6.57% 5.40%
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 0.57% 0.59% 0.57% 2.50% 1.01%
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 219% 258% 275% 315% 298%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GE Government Securities Fund
<TABLE>
<CAPTION>
CLASS B
--------------------------------------------------------
Years ended September 30 1998(b) 1997(c) 10/31/96 10/31/95 10/31/94
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 4/22/87
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $8.54 $8.49 $8.71 $8.42 $10.14
- -----------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) 0.52 0.47 0.55 0.51 0.60
- -----------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Securities (both realized and unrealized) 0.39 0.05 (0.22) 0.41 (1.58)
- -----------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 0.91 0.52 0.33 0.92 (0.98)
- -----------------------------------------------------------------------------------------------------------------------------
Less Distributions
- -----------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.48 0.47 0.48 0.52 0.60
- -----------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.00 0.00 0.00 0.00 0.03
- -----------------------------------------------------------------------------------------------------------------------------
In Excess of Net Investment Income 0.04 0.00 0.00 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------
Returns of Capital 0.00 0.00 0.07 0.11 0.11
- -----------------------------------------------------------------------------------------------------------------------------
Total Distributions 0.52 0.47 0.55 0.63 0.74
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $8.93 $8.54 $8.49 $8.71 $8.42
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Total Return (a) 10.99% 6.36% 4.00% 11.19% (9.98%)
- -----------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $399,675 $523,303 $767,216 $1,112,254 $1,252,348
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 1.60% 1.63% 1.69% 1.76% 1.76%
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 6.00% 6.15% 5.77% 6.08% 6.45%
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.61% 1.63% 1.69% 1.78% 1.76%
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 64% 110% 334% 316% 129%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
- --------------
88 GE Funds
Prospectus
Financial
Highlights
- --------------------------------------------------------------------------------
GE Short-Term Government Fund
<TABLE>
<CAPTION>
CLASS A
--------------------------------------
Years ended September 30 1998(b) 1997 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 3/2/94
- ---------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period
- ---------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss)
- ---------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized))
- ---------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations
- ---------------------------------------------------------------------------------------------------------------
Less Distributions
- ---------------------------------------------------------------------------------------------------------------
Dividends (from net investment income)
- ---------------------------------------------------------------------------------------------------------------
Distributions (from capital gains)
- ---------------------------------------------------------------------------------------------------------------
Total Distributions
- ---------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Total Return (a)
- ---------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands)
- ---------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets*
- ---------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets*
- ---------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets*
- ---------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GE Tax-Exempt Fund
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------
Years ended September 30 1998(b) 1997(c) 10/31/96 10/31/95 10/31/94
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 9/8/93
- ------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period
- ------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss)
- ------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized)
- ------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations
- ------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- ------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income)
- ------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains)
- ------------------------------------------------------------------------------------------------------------------------------
Total Distributions
- ------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Total Return (a)
- ------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands)
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets*
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets*
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets*
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
------------
89
- --------------------------------------------------------------------------------
GE Short-Term Government Fund
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------------------
Years ended September 30 1998(b) 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 3/2/94
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $11.84 $11.78 $11.90 $11.72 $12.00
- -----------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) 0.58 0.61 0.56 0.59 0.33
- -----------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized)) 0.20 0.06 (0.05) 0.21 (0.31
- -----------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 0.78 0.67 0.51 0.80 0.02
- -----------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.59 0.60 0.57 0.62 0.30
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.02 0.01 0.06 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions 0.61 0.61 0.63 0.62 0.30
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $12.01 $11.84 $11.78 $11.90 $11.72
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return (a) 6.83% 5.84% 4.35% 7.01% 0.20%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $895 $1,031 $145 $83 $25
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 1.30% 1.30% 1.30% 1.30% 1.30%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 4.87% 4.84% 4.67% 5.07% 4.38%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.88% 7.77% 3.35% 3.35% 2.06%
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 185% 265% 201% 415% 146%
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS Y
------------------------------------------------------------
Years ended September 30 1998(b) 1997(b) 1996(b) 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 3/2/94
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $11.85 $11.78 $11.90 $11.72 $12.00
- ---------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) 0.68 0.70 0.66 0.69 0.39
- ---------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized)) 0.19 0.08 (0.05) 0.21 (0.31)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 0.87 0.78 0.61 0.90 0.08
- ---------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.69 0.70 0.67 0.72 0.36
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.02 0.01 0.06 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions 0.71 0.71 0.73 0.72 0.36
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $12.01 $11.85 $11.78 $11.90 $11.72
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (a) 7.65% 6.83% 5.24% 7.92% 0.69%
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $9,444 $7,717 $7,786 $8,048 $7,822
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 0.45% 0.45% 0.45% 0.45% 0.45%
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 5.74% 5.80% 5.54% 5.89% 5.32%
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 0.68% 0.68% 0.83% 0.98% 1.21%
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 185% 265% 201% 415% 146%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GE Tax-Exempt Fund
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------------------
Years ended September 30 1998(b) 1997(c) 10/31/96 10/31/95 10/31/94
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 9/8/93
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $11.63 $11.44 $11.32 $10.60 $11.48
- ----------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) 0.44 0.51 0.62 0.55 0.43
- ----------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized) 0.21 0.21 0.06 0.73 (0.82)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 0.65 0.72 0.68 1.28 (0.39)
- ----------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.45 0.53 0.56 0.56 0.49
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.00 0.00 0.00 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions 0.45 0.53 0.56 0.56 0.49
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $11.83 $11.63 $11.44 $11.32 $10.60
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (a) 5.68% 6.46% 6.12% 12.33% (3.45%)
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $8,905 $10,133 $9,184 $7,668 $4,990
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 1.60% 0.57% 0.00% 0.00% 1.14%
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 3.81% 4.79% 5.43% 5.01% 3.75%
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.71% 2.32% 2.26% 2.56% 2.30%
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 74% 13% 6% 25% 0%
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS Y
----------------------
Years ended September 30 1998(b) 1997(d)
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Inception date -- 9/26/97
- -------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $12.10 $12.09
- -------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) 0.58 0.02
- -------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized) 0.27 0.00
- -------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 0.85 0.02
- -------------------------------------------------------------------------------------------------
Less Distributions
- -------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.65 0.01
- -------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.00 0.00
- -------------------------------------------------------------------------------------------------
Total Distributions 0.65 0.01
- -------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $12.30 $12.10
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
Total Return (a) 7.30% 0.11%
- -------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $24 $3,216
- -------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 0.60% 0.54%
- -------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 4.74% 4.31%
- -------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.25% 0.56%
- -------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 74% 13%
- -------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
- --------------
90 GE Funds
Prospectus
Financial
Highlights
- --------------------------------------------------------------------------------
GE Strategic Investment Fund
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------
Years ended September 30 1998(b) 1997(b) 1996(b) 1995(b) 1994(c)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 1/5/93
- ---------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period
- ---------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss)
- ---------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized)
- ---------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations
- ---------------------------------------------------------------------------------------------------------------------
Less Distributions
- ---------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income)
- ---------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains)
- ---------------------------------------------------------------------------------------------------------------------
Total Distributions
- ---------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Total Return (a)
- ---------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands)
- ---------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets*
- ---------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets*
- ---------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets*
- ---------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GE Money Market Fund
<TABLE>
<CAPTION>
CLASS A
-------------------------------------
Years ended September 30 1998(b) 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 1/5/93
- ------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period
- ------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss)
- ------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized)
- ------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations
- ------------------------------------------------------------------------------------------------------------
Less Distributions:
- ------------------------------------------------------------------------------------------------------------
Dividends (from net investment income)
- ------------------------------------------------------------------------------------------------------------
Distributions (from capital gains)
- ------------------------------------------------------------------------------------------------------------
Total Distributions
- ------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
Total Return (a)
- ------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
- ------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands)
- ------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets*
- ------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets*
- ------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets*
- ------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
------------
91
- --------------------------------------------------------------------------------
GE Strategic Investment Fund
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------
Years ended September 30 1998(b) 1997(b) 1996(b) 1995(b) 1994
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 12/22/93
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $23.70 $20.04 $18.26 $15.62 $16.14
- --------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) 0.42 0.42 0.41 0.40 0.27
- --------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized) 0.69 3.82 1.87 2.58 (0.46)
- --------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 1.11 4.24 2.28 2.98 (0.19)
- --------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- --------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.38 0.33 0.42 0.34 0.27
- --------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.78 0.25 0.08 0.00 0.06
- --------------------------------------------------------------------------------------------------------------------------------
Total Distributions 1.16 0.58 0.50 0.34 0.33
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $23.65 $23.70 $20.04 $18.26 $15.62
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Total Return (a) 4.91% 21.57% 12.73% 19.53% (1.25%)
- --------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $11,158 $5,685 $3,701 $882 $150
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 1.63% 1.65% 1.65% 1.65% 1.65%
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 1.72% 1.92% 2.11% 2.46% 1.92%
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.63% 1.93% 2.10% 3.50% 2.08%
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 119% 106% 93% 98% 68%
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS Y
-----------------------------------------------------------
Years ended September 30
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 11/29/93
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $24.16 $20.44 $18.49 $15.74 $16.02
- --------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) 0.67 0.64 0.63 0.55 0.45
- --------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized) 0.72 3.89 1.90 2.62 (0.40)
- --------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 1.39 4.53 2.53 3.17 0.05
- --------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- --------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.57 0.56 0.50 0.42 0.27
- --------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.78 0.25 0.08 0.00 0.06
- --------------------------------------------------------------------------------------------------------------------------------
Total Distributions 1.35 0.81 0.58 0.42 0.33
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $24.20 $24.16 $20.44 $18.49 $15.74
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Total Return (a) 6.10% 22.76% 13.95% 20.70% 0.25%
- --------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $51,802 $37,924 $36,162 $18,665 $17,159
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 0.64% 0.65% 0.58% 0.65% 0.65%
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 2.70% 2.90% 3.16% 3.46% 2.93%
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 0.64% 0.65% 0.59% 0.97% 1.08%
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 119% 106% 93% 98% 68%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Notes to Financial Highlights
(a) Total returns are historical and assume changes in share price,
reinvestment of dividends and capital gains distributions, and assume no
sales charge. Had the Adviser not absorbed a portion of expenses, total
returns would have been lower. Periods less than one year are not
annualized.
(b) Per share data is based on average shares outstanding during the period.
(c) For the period November 1, 1996, through September 30, 1997.
(d) For the period December 31, 1996 (commencement of operations), through
September 30, 1997.
(e) For the period October 2, 1997 (commencement of operations), through
September 30, 1998.
(f) For the period January 5, 1998 (commencement of operations), through
September 30, 1998.
(g) For the period October 28, 1997 (commencement of operations), through
September 30, 1998.
(h) The values shown for the per share information have been adjusted to
reflect the 1 share for 4.71 shares and the 1 share for 1.68 shares
reverse stock split in the GE Mid-Cap Growth and GE Value Equity Funds,
respectively, on November 6, 1998.
* Annualized for periods less than one year.
- --------------------------------------------------------------------------------
<PAGE>
GE Funds
Prospectus
- --------------------------------------------------------------------------------
Investment Adviser
GE Investment Management Incorporated
P.O. Box 7900
3003 Summer Street
Stamford, CT 06904
- --------------------------------------------------------------------------------
Transfer Agent and Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02101
- --------------------------------------------------------------------------------
Distributor
GE Investment Distributors, Inc.
777 Long Ridge Road, Building B
Stamford, CT 06927
- --------------------------------------------------------------------------------
If you wish to know more
You will find additional information about the GE Funds in the following
documents:
Annual/Semi-Annual Reports to Shareholders: These reports detail the Funds'
actual investments as of the report date. Reports usually include performance
numbers, a discussion of market conditions and investment strategies that
affected Fund performance during the Funds' last fiscal year.
Statement of Additional Information (SAI): The SAI contains additional
information about the Funds and their investment strategies and policies and is
incorporated by reference (legally considered part of the prospectus). The SAI
is on file with the Securities and Exchange Commission (SEC).
You may visit the SEC's Internet Website (http://www.sec.gov) to view the SAI
and other information. Also, you can obtain copies of this information by
sending your request and duplicating fee to the SEC's Public Reference Section,
Washington, D.C. 20549-6009. You may review and copy information about the
Funds, including the SAI, at the SEC's Public Reference Room in Washington, D.C.
To find out more about the public reference room, call the SEC at
1-800-SEC-0330.
You may obtain a free copy of the SAI or the Funds' annual/semiannual report and
make shareholder inquiries by contacting:
GE Investment Distributors, Inc.
P.O. Box 7900
3003 Summer Street
Stamford, CT 06904
Telephone 1-800-242-0134
Website http://www.ge.com/mutualfunds
Investment Company Act file number: 811-7142
- --------------------------------------------------------------------------------
GEF-PRO-1
<PAGE>
Subject to Completion, Dated July 9, 1999
STATEMENT OF ADDITIONAL INFORMATION
September 18, 1999
GE FUNDS
- --------
3003 Summer Street, Stamford, Connecticut 06905
For information, call (800) 242-0134
* GE Premier Growth Equity Fund * GE International Fixed Income Fund
* GE U.S. Equity Fund * GE Strategic Investment Fund
* GE Small-Cap Growth Equity Fund * GE Tax-Exempt Fund
* GE Small-Cap Value Equity Fund * GE High Yield Fund
* GE Mid-Cap Growth Fund * GE Fixed Income Fund
* GE Mid-Cap Value Equity Fund * GE Government Securities Fund
* GE Value Equity Fund * GE Short-Term Government Fund
* GE Global Equity Fund * GE Money Market Fund
* GE International Equity Fund
* GE Europe Equity Fund
* GE Emerging Markets Fund
Contents Page
-------- ----
Investment Strategies and Risks...............................................3
Investment Restrictions......................................................35
Portfolio Transactions and Turnover..........................................41
Management of the Trust......................................................43
Purchase, Redemption and Exchange of Shares..................................52
Net Asset Value..............................................................66
Dividends, Distributions and Taxes...........................................67
The Funds' Performance.......................................................72
Principal Stockholders.......................................................79
Fund History and Additional Information......................................79
Financial Statements.........................................................81
Appendix....................................................................A-1
This Statement of Additional Information ("SAI") supplements
the information contained in the current Prospectus of GE Funds (the "Trust")
dated September 18, 1999 (the "Prospectus"), and should be read in conjunction
with the Prospectus. This SAI, although not a prospectus, is incorporated in
its entirety by reference into the Prospectus. Copies of the Prospectus
describing each series of the Trust listed above ("Funds") may be obtained
without charge by calling the Trust at the telephone number listed above. The
Trust's financial statements for the fiscal year ended September 30, 1998 and
the Auditor's Report thereon are incorporated by reference to the Trust's
Annual Report and the Trust's financial statements for the six month period
ended March 31, 1999 are incorporated by reference to the Trust's Semi-Annual
Report, each of which may be obtained without charge by calling the Trust at
the telephone number listed above. Information regarding the status of
shareholder accounts may be obtained by calling the Trust at the telephone
number listed above or by writing to the Trust at
<PAGE>
P.O. Box 120065, Stamford, CT 06912-0065. Terms that are defined in
the Prospectus shall have the same meanings in this SAI.
2
<PAGE>
INVESTMENT STRATEGIES AND RISKS
The Prospectus discusses the investment objectives and
principal investment strategies of the following diversified open-end Funds: GE
Premier Growth Equity Fund (the "Premier Fund"), GE U.S. Equity Fund (the "U.S.
Equity Fund"), GE Small-Cap Value Equity Fund (the "Small-Cap Value Fund"), GE
Mid-Cap Growth Fund (the "Mid-Cap Growth Fund"), GE Mid-Cap Value Equity Fund
(the "Mid-Cap Value Fund"), GE Value Equity Fund (the "Value Equity Fund"), GE
Global Equity Fund (the "Global Fund"), GE International Equity Fund (the
"International Fund"), GE Europe Equity Fund (the "Europe Fund"), GE Emerging
Markets Fund (the "Emerging Markets Fund"), GE Strategic Investment Fund (the
"Strategic Fund"), GE Tax-Exempt Fund (the "Tax-Exempt Fund"), GE High Yield
Fund (the "High Yield Fund"), GE Fixed Income Fund (the "Income Fund"), GE
Government Securities Fund (the "Government Securities Fund"), GE Short-Term
Government Fund (the "Short-Term Government Fund") and GE Money Market Fund
(the "Money Market Fund"). GE International Fixed Income Fund (the
"International Income Fund") and GE Small-Cap Growth Equity Fund (the
"Small-Cap Growth Fund"), each an additional series of the Trust, are not
currently offered by the Trust.
Premier Fund. The investment objective of the Premier Fund is
long-term growth of capital and future income rather than current income. The
Fund seeks to achieve this objective through investment primarily in
growth-oriented equity securities which, under normal market conditions, will
represent at least 65% of the Fund's assets.
U.S. Equity Fund. The investment objective of the U.S. Equity
Fund is long-term growth of capital, which objective the Fund seeks to achieve
through investment primarily in equity securities of U.S. companies. In
pursuing its objective, the Fund, under normal conditions, invests at least 65%
of its assets in equity securities.
Small-Cap Value Fund. The investment objective of the the
Small-Cap Value Fund is long-term growth of capital. The Fund seeks to achieve
its objective by investing, under normal market conditions, at least 65% of its
total assets in a portfolio of equity securities of small-capitalization
companies traded on U.S. securities exchanges or in the U.S. over-the-counter
market.
Mid-Cap Growth Fund. The investment objective of the Mid-Cap
Growth Fund is long-term growth of capital. The Fund seeks to achieve this
objective by investing primarily in the equity securities of companies with
medium-sized market capitalizations ("mid-cap") that have the potential for
above-average growth. The Fund, under normal market conditions, invests at
least 65% of its total assets in a portfolio of equity securities of mid-cap
companies traded on U.S. securities exchanges or in the U.S. over-the-counter
market.
Mid-Cap Value Fund. The investment objective of the Mid-Cap
Value Fund is long-term growth of capital. In seeking its investment objective,
the Fund will invest primarily in equity securities of mid-cap companies that
the portfolio manager believes are undervalued by the market and have
above-average growth potential.
3
<PAGE>
Value Equity Fund. The investment objective of the Value
Equity Fund is long-term growth of capital and future income. The Fund seeks to
achieve its objective by investing primarily in equity securities of companies
with large sized market capitalizations that GE Investment Management
Incorporated ("GEIM"), the Fund's Investment Adviser, considers to be
undervalued by the market. Undervalued securities are those selling for low
prices given the fundamental characteristics of their issuers. During normal
market conditions, the Fund invests at least 65% of its assets in common
stocks, preferred stocks, convertible bonds, convertible debentures,
convertible notes, convertible preferred stocks and warrants or rights issued
by U.S. and foreign companies.
Global Fund. The investment objective of the Global Fund is
long-term growth of capital, which the Fund seeks to achieve by investing
principally in foreign equity securities. In seeking its objective, the Fund
invests primarily in a portfolio of securities issued by companies located in
developed and developing countries throughout the world. Although the Fund is
subject to no prescribed limits on geographic asset distribution, under normal
circumstances, at least 65% of the Fund's assets are invested in the aggregate
in no fewer than three different countries.
International Fund. The investment objective of the
International Fund is long-term growth of capital, which the Fund seeks to
achieve by investing primarily in foreign equity securities. The Fund may
invest in securities of companies and governments located in developed and
developing countries outside the United States. The Fund intends to position
itself broadly among countries and, under normal circumstances, at least 65% of
the Fund's assets will be invested in securities of issuers collectively in no
fewer than three different countries other than the United States. The
International Fund, under normal conditions, invests at least 65% of its assets
in common stocks, preferred stocks, convertible debentures, convertible notes,
convertible preferred stocks and warrants or rights issued by companies
believed by GEIM to have a potential for superior growth in sales and earnings.
Europe Fund. The investment objective of the Europe Fund is
long-term growth of capital. In seeking its investment objective, the Fund will
invest, under normal conditions, at least 65% of its total assets in equity
securities of companies located in developed European countries.
Emerging Markets Fund. The investment objective of the
Emerging Markets Fund is long-term growth of capital. In seeking its investment
objective, the Fund will invest, under normal conditions, at least 65% of its
total assets in equity securities of issuers that are located in emerging
markets countries.
Income Fund. The investment objective of the Income Fund is
to seek maximum income consistent with prudent investment management and the
preservation of capital. Capital appreciation with respect to the Fund's
portfolio securities may occur but is not an objective of the Fund.
Government Securities Fund. The investment objective of the
Government
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Securities Fund is a high level of current income consistent with
safety of principal. The Fund invests at least 65% of the value of its total
assets in U.S. Government Securities, except during times when it adopts a
temporary defensive position by investing more heavily in cash or high-quality
money market instruments due to prevailing market or economic conditions.
Short-Term Government Fund. The investment objective of the
Short-Term Government Fund is to seek a high level of income consistent with
prudent investment management and the preservation of capital. In seeking to
achieve its investment objective, the Fund will invest at least 65% of its
total assets in Government Securities including repurchase agreements secured
by Government Securities.
Tax-Exempt Fund. The investment objective of the Tax-Exempt
Fund is to seek as high a level of income exempt from Federal income taxation
as is consistent with preservation of capital. The Tax-Exempt Fund operates
subject to a fundamental investment policy providing that it will invest its
assets so that, during any fiscal year, at least 80% of the income generated by
the Fund is exempt from Federal personal income taxes and the Federal
alternative minimum tax. Under normal conditions, the Fund may hold up to 10%
of its total assets in cash or money market instruments, including taxable
money market instruments.
High Yield Fund. The investment objective of the High Yield
Fund is to seek above-average total return over a market cycle of three to five
years, consistent with reasonable risk. In seeking to achieve its investment
objective, the Fund generally will invest at least 65% of its total assets in
high yield securities (including bonds rated below investment grade, sometimes
called "junk bonds").
The portfolio managers of the the High Yield Fund seek to
identify undervalued sectors and securities through analysis of credit quality,
option characteristics and liquidity. Quantitative models are used in
conjunction with judgment and experience to evaluate and select securities with
imbedded put or call options which are attractive on a risk- and
option-adjusted basis. Successful value investing will permit the Fund to
benefit from the price appreciation of individual securities during periods
when interest rates are unchanged.
The maturity and duration structure of the Fund is actively
managed in anticipation of cyclical interest rate changes. Adjustments are not
made in an effort to capture short-term, day-to-day movements in the market,
but instead are implemented in anticipation of longer-term shifts in the levels
of interest rates. Adjustment made to shorten portfolio maturity and duration
are made to limit capital losses during periods when interest rates are
expected to rise. Conversely, adjustments made to lengthen maturity are
intended to produce capital appreciation in periods when interest rates are
expected to fall. The foundation for maturity and duration strategies lies in
analysis of the U.S. and global economies, focusing on levels of real interest
rates, monetary and fiscal policy actions, and cyclical indicators.
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The Fund may invest in foreign bonds and other fixed income
securities denominated in foreign currencies, where, in the opinion of the
portfolio managers, the combination of current yield and currency value offer
attractive expected returns. When the total return opportunities in a foreign
bond market appear attractive in local currency terms, but where in the
portfolio managers' judgment unacceptable currency risk exists, currency
futures and options, forwards and swaps may be used to hedge the currency risk.
In addition, the Fund may invest in securities of issuers located in emerging
markets based on the portfolio managers' evaluation of both short- and
long-term international economic trends and the individual emerging market
securities.
Strategic Fund. The investment objective of the Strategic
Fund is to maximize total return, consisting of capital appreciation and
current income. In seeking its objective, the Fund follows an asset allocation
strategy that provides diversification across a range of asset classes and
contemplates shifts among them from time to time.
GEIM has broad latitude in selecting the classes of
investments to which the Strategic Fund's assets are committed. Although the
Fund has the authority to invest solely in equity securities, solely in debt
securities, solely in money market instruments or in any combination of these
classes of investments, GEIM anticipates that at most times the Fund will be
invested in a combination of equity and debt instruments.
Money Market Fund. The investment objective of the Money
Market Fund is to seek a high level of current income consistent with the
preservation of capital and the maintenance of liquidity. In seeking its
objective, the Fund invests in the following U.S. dollar denominated,
short-term money market instruments: (i) Government Securities; (ii) debt
obligations of banks, savings and loan institutions, insurance companies and
mortgage bankers; (iii) commercial paper and notes, including those with
floating or variable rates of interest; (iv) debt obligations of foreign
branches of U.S. banks, U.S. branches of foreign banks and foreign branches of
foreign banks; (v) debt obligations issued or guaranteed by one or more foreign
governments or any of their political subdivisions, agencies or
instrumentalities, including obligations of supranational entities; (vi) debt
securities issued by foreign issuers; and (vii) repurchase agreements.
* * * * *
Supplemental information concerning certain of the securities
and other instruments in which the Funds may invest, the investment policies
and strategies that the Funds may utilize and certain risks attendant to those
investments, policies and strategies are discussed below unless otherwise
indicated, all Funds are permitted to engage in the following investment
strategies. The Funds are not obligated to pursue the following strategies and
do not represent that these techniques are available now or will be available
at any time in the future. Some or all of the Funds may invest in the types of
instruments and engage in the types of strategies described in detail below. A
Fund will not purchase all of the following types of securities or employ all
of the following strategies unless doing so is consistent with its investment
objective.
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Money Market Fund Investments. The Money Market Fund limits
its portfolio investments to securities that the Trust's Board of Trustees
determines present minimal credit risk and that are "Eligible Securities" at
the time of acquisition by the Fund. "Eligible Securities" means securities
rated by the requisite nationally recognized statistical rating organizations
("NRSROs") in one of the two highest short-term rating categories, consisting
of issuers that have received these ratings with respect to other short-term
debt securities and comparable unrated securities. "Requisite NRSROs" means (i)
any two NRSROs that have issued ratings with respect to a security or class of
debt obligations of an issuer or (ii) one NRSRO, if only one NRSRO has issued
such a rating at the time that the Fund acquires the security. Currently, five
organizations are NRSROs: S&P, Moody's Investors Service, Inc. ("Moody's"),
Fitch Investors Service, Inc., Duff and Phelps, Inc. and Thomson BankWatch Inc.
A discussion of the ratings categories is contained in the appendix to this
SAI. By limiting its investments to Eligible Securities, the Fund may not
achieve as high a level of current income as a fund investing in lower-rated
securities.
The Money Market Fund may not invest more than 5% of its
total assets in the securities of any one issuer, except for Government
Securities and except to the extent permitted under rules adopted by the
Securities and Exchange Commission ("SEC") under the Investment Company Act of
1940, as amended ("1940 Act"). In addition, the Fund may not invest more than
5% of its total assets in Eligible Securities that have not received the
highest short-term rating for debt obligations and comparable unrated
securities (collectively, "Second Tier Securities"), and may not invest more
than the greater of $1,000,000 or 1% of its total assets in the Second Tier
Securities of any one issuer. The Fund may invest more than 5% (but not more
than 25%) of the then-current value of the Fund's total assets in the
securities of a single issuer for a period of up to three business days, so
long as (i) the securities either are rated by the Requisite NRSROs in the
highest short-term rating category or are securities of issuers that have
received such ratings with respect to other short-term debt securities or are
comparable unrated securities and (ii) the Fund does not make more than one
such investment at any one time. Determinations of comparable quality for
purchases of unrated securities are made by GEIM in accordance with procedures
established by the Board of Trustees. The Fund invests only in instruments that
have (or, pursuant to regulations adopted by the SEC, are deemed to have)
remaining maturities of 13 months or less at the date of purchase (except
securities subject to repurchase agreements), determined in accordance with a
rule promulgated by the SEC. Up to 25% of the Fund's total assets may be
invested in foreign securities, excluding, for purposes of this limitation,
ADRs, U.S., and securities of a foreign issuer with a class of securities
registered with the SEC and listed on a U.S. national securities exchange or
traded on the Nasdaq Small-Cap Market. The Fund will maintain a dollar-weighted
average portfolio maturity of 90 days or less. The assets of the Fund are
valued on the basis of amortized cost, as described below under "Net Asset
Value." The Fund also may hold liquid Rule 144a Securities (see "Non-Publicly
Traded and Illiquid Securities").
Money Market Instruments. The types of money market
instruments in which each Fund, other than the Money Market Fund, may invest
directly or indirectly through its investment in the GEI Short-Term Investment
Fund (the "Investment Fund"), described below, are as follows: (i) securities
issued or guaranteed by the U.S. Government or one of its agencies or
instrumentalities ("Government Securities"), (ii) debt obligations of banks,
savings and loan
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institutions, insurance companies and mortgage bankers, (iii) commercial paper
and notes, including those with variable and floating rates of interest, (iv)
debt obligations of foreign branches of U.S. banks, U.S. branches of foreign
banks and foreign branches of foreign banks, (v) debt obligations issued or
guaranteed by one or more foreign governments or any of their political
subdivisions, agencies or instrumentalities, including obligations of
supranational entities, (vi) debt securities issued by foreign issuers and
(vii) repurchase agreements.
Each Fund, other than the Money Market Fund, may also invest
in the Investment Fund, an investment fund created specifically to serve as a
vehicle for the collective investment of cash balances of the Funds (other than
the Money Market Fund) and other accounts advised by GEIM or its affiliate,
General Electric Investment Corporation ("GEIC"). The Investment Fund invests
exclusively in the money market instruments described in (i) through (vii)
above. The Investment Fund is advised by GEIM. No advisory fee is charged by
GEIM to the Investment Fund, nor will a Fund incur any sales charge, redemption
fee, distribution fee or service fee in connection with its investments in the
Investment Fund. Each Fund, other than the Money Market Fund, may invest up to
25% (5% in the case of the Tax-Exempt Fund) of its assets in the Investment
Fund.
Each of the Funds may invest in the following types of
Government Securities: debt obligations of varying maturities issued by the
U.S. Treasury or issued or guaranteed by the Federal Housing Administration,
Farmers Home Administration, Export-Import Bank of the United States, Small
Business Administration, Government National Mortgage Association ("Ginnie
Mae"), General Services Administration, Central Bank for Cooperatives, Federal
Farm Credit Banks Funding Corporation, Federal Home Loan Banks, Federal Home
Loan Mortgage Corporation ("Freddie Mac"), Federal Intermediate Credit Banks,
Federal Land Banks, Federal National Mortgage Association ("Fannie Mae"),
Federal Deposit Insurance Corporation, Maritime Administration, Tennessee
Valley Authority, District of Columbia Armory Board, Student Loan Marketing
Association and Resolution Trust Corporation. Direct obligations of the U.S.
Treasury include a variety of securities that differ in their interest rates,
maturities and dates of issuance. Certain of the Government Securities that may
be held by the Funds are instruments that are supported by the full faith and
credit of the United States, whereas other Government Securities that may be
held by the Funds are supported by the right of the issuer to borrow from the
U.S. Treasury or are supported solely by the credit of the instrumentality.
Because the U.S. Government is not obligated by law to provide support to an
instrumentality that it sponsors, a Fund will invest in obligations issued by
an instrumentality of the U.S. Government only if the Investment Manager(1)
determines that the instrumentality's credit risk does not make its securities
unsuitable for investment by the Fund.
- --------------
(1) As used in this SAI, the term "Investment Manager" shall refer to GEIM, the
Funds' investment adviser and administrator, Brown Brothers Harriman & Co.,
Palisade Capital Management, L.L.C., Miller Anderson & Sherrerd, LLP or NWQ
Investment Management Company, the sub-advisers to the Tax-Exempt Fund, the
Small-Cap Value Fund, the High Yield Fund and the Mid-Cap Value Fund,
respectively.
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Each Fund, other than the Money Market Fund, may invest in
money market instruments issued or guaranteed by foreign governments or by any
of their political subdivisions, authorities, agencies or instrumentalities.
Money market instruments held by a Fund, other than the Money Market Fund, may
be rated no lower than A-2 by Standard & Poor's ("S&P") or Prime-2 by Moody's
Investor's Service ("Moody's") or the equivalent from another NRSRO, or if
unrated, must be issued by an issuer having an outstanding unsecured debt issue
then rated within the three highest categories. A description of the rating
systems of Moody's and S&P is contained in the Appendix. At no time will the
investments of a Fund, other than the Tax-Exempt Fund and the Money Market
Fund, in bank obligations, including time deposits, exceed 25% of the value of
the Fund's assets.
Temporary Defensive Positions. During periods when the
Investment Manager believes there are unstable market, economic, political or
currency conditions domestically or abroad, the Investment Manager may assume,
on behalf of a Fund, a temporary defensive posture and (i) without limitation
hold cash and/or invest in money market instruments, or (ii) restrict the
securities markets in which the Fund's assets will be invested by investing
those assets in securities markets deemed by the Investment Manager to be
conservative in light of the Fund's investment objective and policies. Under
normal circumstances, each Fund may invest a portion of its total assets in
cash and/or money market instruments for cash management purposes, pending
investment in accordance with the Fund's investment objective and policies and
to meet operating expenses. To the extent that a Fund, other than the Money
Market Fund, holds cash or invests in money market instruments, it may not
achieve its investment objective. For temporary defensive purposes, the Premier
Growth Fund may invest in fixed income securities without limitation.
Bank Obligations. Domestic commercial banks organized under
Federal law are supervised and examined by the U.S. Comptroller of the Currency
and are required to be members of the Federal Reserve System and to be insured
by the Federal Deposit Insurance Corporation ("FDIC"). Foreign branches of U.S.
banks and foreign banks are not regulated by U.S. banking authorities and
generally are not bound by mandatory reserve requirements, loan limitations,
accounting, auditing and financial reporting standards comparable to U.S.
banks. Obligations of foreign branches of U.S. banks and foreign banks are
subject to the risks associated with investing in foreign securities generally.
These obligations entail risks that are different from those of investments in
obligations in domestic banks, including foreign economic and political
developments outside the United States, foreign governmental restrictions that
may adversely affect payment of principal and interest on the obligations,
foreign exchange controls and foreign withholding or other taxes on income.
A U.S. branch of a foreign bank may or may not be subject to
reserve requirements imposed by the Federal Reserve System or by the state in
which the branch is located if the branch is licensed in that state. In
addition, branches licensed by the Comptroller of the Currency and branches
licensed by certain states ("State Branches") may or may not be required to:
(i) pledge to the regulator by depositing assets with a designated bank within
the state, an amount of its assets equal to 5% of its total liabilities; and
(ii) maintain assets within the state in an amount equal to a specified
percentage of the aggregate amount of liabilities of the foreign bank payable
at or through all of its agencies or branches within the state. The deposits of
State Branches may not necessarily be insured by the FDIC. In addition, less
information may
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be available to the public about a U.S. branch of a foreign bank than about a
U.S. bank.
Debt Instruments. A debt instrument held by a Fund will be
affected by general changes in interest rates that will in turn result in
increases or decreases in the market value of those obligations. The market
value of debt instruments in a Fund's portfolio can be expected to vary
inversely to changes in prevailing interest rates. In periods of declining
interest rates, the yield of a Fund holding a significant amount of debt
instruments will tend to be somewhat higher than prevailing market rates, and
in periods of rising interest rates, the Fund's yield will tend to be somewhat
lower. In addition, when interest rates are falling, money received by such a
Fund from the continuous sale of its shares will likely be invested in
portfolio instruments producing lower yields than the balance of its portfolio,
thereby reducing the Fund's current yield. In periods of rising interest rates,
the opposite result can be expected to occur.
Ratings as Investment Criteria. The ratings of "NRSROs" such
as S&P or Moody's represent the opinions of those organizations as to the
quality of securities that they rate. Although these ratings, which are
relative and subjective and are not absolute standards of quality, are used by
the Investment Manager as initial criteria for the selection of portfolio
securities on behalf of the Funds, the Investment Manager also relies upon its
own analysis to evaluate potential investments.
Subsequent to its purchase by a Fund, an issue of securities
may cease to be rated or its rating may be reduced below the minimum required
for purchase by the Fund. Although neither event will require the sale of the
securities by a Fund, other than the Money Market Fund, the Investment Manager
will consider the event in its determination of whether the Fund should
continue to hold the securities. In the event the rating of a security held by
the Money Market Fund falls below the minimum acceptable rating or the issuer
of the security defaults, the Money Market Fund will dispose of the security as
soon as practicable, unless the Board determines that disposal of the security
would not be in the best interests of the Money Market Fund. To the extent that
a NRSRO's ratings change as a result of a change in the NRSRO or its rating
system, the Funds will attempt to use comparable ratings as standards for their
investments in accordance with their investment objectives and policies.
Certain Investment Grade Debt Obligations. Although
obligations rated BBB by S&P or Baa by Moody's are considered investment grade,
they may be viewed as being subject to greater risks than other investment
grade obligations. Obligations rated BBB by S&P are regarded as having only an
adequate capacity to pay principal and interest and those rated Baa by Moody's
are considered medium-grade obligations that lack outstanding investment
characteristics and have speculative characteristics as well.
Below Investment-Grade Debt Securities. Certain Funds are
authorized to invest in securities rated lower than investment grade (sometimes
referred to as "junk bonds"). Below investment-grade and comparable unrated
securities (collectively referred to as "below investment-grade" securities)
likely have quality and protective characteristics that, in the judgment of a
rating organization, are outweighed by large uncertainties or major risk
exposures to adverse conditions, and are predominantly speculative with respect
to the issuer's capacity to pay interest and repay principal in accordance with
the terms of the obligation. Securities in the lowest rating categories may be
in default or may present substantial risks of default.
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The market values of certain below investment-grade
securities tend to be more sensitive to individual corporate developments and
changes in economic conditions than higher-rated securities. In addition, below
investment-grade securities generally present a higher degree of credit risk.
Issuers of below investment-grade securities are often highly leveraged and may
not have more traditional methods of financing available to them, so that their
ability to service their debt obligations during an economic downturn or during
sustained periods of rising interest rates may be impaired. The risk of loss
due to default by these issuers is significantly greater because below
investment-grade securities generally are unsecured and frequently are
subordinated to the prior payment of senior indebtedness. A Fund may incur
additional expenses to the extent that it is required to seek recovery upon a
default in the payment of principal or interest on its portfolio holdings. The
existence of limited markets for below investment-grade securities may diminish
the Trust's ability to obtain accurate market quotations for purposes of
valuing the securities held by a Fund and calculating the Fund's net asset
value.
Repurchase and Reverse Repurchase Agreements. Each Fund may
engage in repurchase agreement transactions with respect to instruments in
which the Fund is authorized to invest. The Funds may engage in repurchase
agreement transactions with certain member banks of the Federal Reserve System
and with certain dealers listed on the Federal Reserve Bank of New York's list
of reporting dealers. Under the terms of a typical repurchase agreement, which
is deemed a loan for purposes of the 1940 Act, a Fund would acquire an
underlying obligation for a relatively short period (usually from one to seven
days) subject to an obligation of the seller to repurchase, and the Fund to
resell, the obligation at an agreed-upon price and time, thereby determining
the yield during the Fund's holding period. This arrangement results in a fixed
rate of return that is not subject to market fluctuations during the Fund's
holding period. The value of the securities underlying a repurchase agreement
of a Fund are monitored on an ongoing basis by the Investment Manager to ensure
that the value is at least equal at all times to the total amount of the
repurchase obligation, including interest. The Investment Manager also
monitors, on an ongoing basis to evaluate potential risks, the creditworthiness
of those banks and dealers with which a Fund enters into repurchase agreements.
Income derived by the Tax-Exempt Fund when engaging in a repurchase agreement
is not exempt from Federal income taxation.
Certain Funds may engage in reverse repurchase agreements,
subject to their investment restrictions. A reverse repurchase agreement, which
is considered a borrowing by a Fund, involves a sale by the Fund of securities
that it holds concurrently with an agreement by the Fund to repurchase the same
securities at an agreed upon price and date. A Fund uses the proceeds of
reverse repurchase agreements to provide liquidity to meet redemption requests
and to make cash payments of dividends and distributions when the sale of the
Fund's securities is considered to be disadvantageous. Cash, Government
Securities or other liquid assets equal in value to a Fund's obligations with
respect to reverse repurchase agreements are segregated and maintained with the
Trust's custodian or designated sub-custodian.
In the event the buyer of securities under a reverse
repurchase agreement files for bankruptcy or becomes insolvent, a Fund's use of
the proceeds of the agreement may be restricted pending a determination by the
party, or its trustee or receiver, whether to enforce the Fund's obligation to
repurchase the securities.
Non-Publicly Traded and Illiquid Securities. Each Fund, other
than the Money Market Fund, may invest up to 10% of its assets in non-publicly
traded securities. Non-publicly
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traded securities are securities that are subject to contractual or legal
restrictions on transfer, excluding for purposes of this restriction, Rule 144A
Securities that have been determined to be liquid by the Board based upon the
trading markets for the securities. In addition, each Fund, other than the Money
Market Fund, may invest up to 15% (10% in the case of the Tax-Exempt Fund) of
its assets in "illiquid securities"; the Money Market Fund may not, under any
circumstance, invest in illiquid securities. Illiquid securities are securities
that cannot be disposed of by a Fund within seven days in the ordinary course of
business at approximately the amount at which the Fund has valued the
securities. Illiquid securities that are held by a Fund may take the form of
options traded over-the-counter, repurchase agreements maturing in more than
seven days, certain mortgage related securities and securities subject to
restrictions on resale that the Investment Manager has determined are not liquid
under guidelines established by the Board.
Non-publicly traded securities may be less liquid than
publicly traded securities. Although these securities may be resold in
privately negotiated transactions, the prices realized from these sales could
be less than those originally paid by a Fund. In addition, companies whose
securities are not publicly traded are not subject to the disclosure and other
investor protection requirements that may be applicable if their securities
were publicly traded. A Fund's investments in illiquid securities are subject
to the risk that should the Fund desire to sell any of these securities when a
ready buyer is not available at a price that the Investment Manager deems
representative of their value, the value of the Fund's net assets could be
adversely affected.
Rule 144A Securities. Each of the Funds may purchase Rule
144A Securities. Certain Rule 144A Securities may be considered illiquid and
therefore subject to a Fund's limitation on the purchase of illiquid
securities, unless the Board determines on an ongoing basis that an adequate
trading market exists for the Rule 144A Securities. A Fund's purchase of Rule
144A Securities could have the effect of increasing the level of illiquidity in
the Fund to the extent that qualified institutional buyers become uninterested
for a time in purchasing Rule 144A Securities held by the Fund. The Board has
established standards and procedures for determining the liquidity of a Rule
144A Security and monitors the Investment Manager's implementation of the
standards and procedures. The ability to sell to qualified institutional buyers
under Rule 144A is a recent development and GEIM cannot predict how this market
will develop.
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When-Issued and Delayed-Delivery Securities. To secure prices
or yields deemed advantageous at a particular time, each Fund may purchase
securities on a when-issued or delayed-delivery basis, in which case, delivery
of the securities occurs beyond the normal settlement period; no payment for or
delivery of the securities is made by, and no income accrues to, the Fund,
however, prior to the actual delivery or payment by the other party to the
transaction. Each Fund will enter into when-issued or delayed-delivery
transactions for the purpose of acquiring securities and not for the purpose of
leverage. When-issued securities purchased by a Fund may include securities
purchased on a "when, as and if issued" basis under which the issuance of the
securities depends on the occurrence of a subsequent event, such as approval of
a merger, corporate reorganization or debt restructuring. Cash or other liquid
assets in an amount equal to the amount of each Fund's when-issued or
delayed-delivery purchase commitments will be segregated with the Trust's
custodian, or with a designated subcustodian, in order to avoid or limit any
leveraging effect that may arise in the purchase of a security pursuant to such
a commitment.
Securities purchased on a when-issued or delayed-delivery
basis may expose a Fund to risk because the securities may experience
fluctuations in value prior to their delivery. Purchasing securities on a
when-issued or delayed- delivery basis can involve the additional risk that the
return available in the market when the delivery takes place may be higher than
that applicable at the time of the purchase. This characteristic of when-issued
and delayed-delivery securities could result in exaggerated movements in a
Fund's net asset value.
When a Fund engages in when-issued or delayed-delivery
securities transactions, it relies on the selling party to consummate the
trade. Failure of the seller to do so may result in the Funds incurring a loss
or missing an opportunity to obtain a price considered to be advantageous.
Warrants. Because a warrant, which is a security permitting,
but not obligating, its holder to subscribe for another security, does not
carry with it the right to dividends or voting rights with respect to the
securities that the warrant holder is entitled to purchase, and because a
warrant does not represent any rights to the assets of the issuer, a warrant
may be considered more speculative than certain other types of investments. In
addition, the value of a warrant does not necessarily change with the value of
the underlying security and a warrant ceases to have value if it is not
exercised prior to its expiration date. The investment by a Fund in warrants
valued at the lower of cost or market, may not exceed 5% of the value of the
Fund's net assets. The Money Market Fund may not invest in any form of
warrants. Warrants acquired by a Fund in units or attached to securities may be
deemed to be without value.
Foreign Securities. Investing in securities issued by foreign
companies and governments, including securities issued in the form of
depositary receipts, involves considerations and potential risks not typically
associated with investing in obligations issued by the U.S. Government and U.S.
corporations. Less information may be available about foreign companies than
about U.S. companies, and foreign companies generally are not subject to
uniform accounting, auditing and financial reporting standards or to other
regulatory practices and requirements comparable to those applicable to U.S.
companies. The values of foreign investments are affected by changes in
currency rates or exchange control regulations, restrictions or prohibitions on
the repatriation of foreign currencies, application of foreign tax
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laws, including withholding taxes, changes in governmental administration or
economic or monetary policy (in the United States or abroad) or changed
circumstances in dealings between nations. Costs are also incurred in
connection with conversions between various currencies. In addition, foreign
brokerage commissions are generally higher than those charged in the United
States and foreign securities markets may be less liquid, more volatile and
less subject to governmental supervision than in the United States. Investments
in foreign countries could be affected by other factors not present in the
United States, including expropriation, confiscatory taxation, lack of uniform
accounting and auditing standards, limitations on the use or removal of funds
or other assets (including the withholding of dividends), and potential
difficulties in enforcing contractual obligations, and could be subject to
extended clearance and settlement periods.
Depositary Receipts. Certain Funds may invest in securities
of foreign issuers in the form of ADRs and European Depositary Receipts
("EDRs"), which are sometimes referred to as Continental Depositary Receipts
("CDRs"). ADRs are publicly traded on exchanges or over-the-counter in the
United States and are issued through "sponsored" or "unsponsored" arrangements.
In a sponsored ADR arrangement, the foreign issuer assumes the obligation to
pay some or all of the depositary's transaction fees, whereas under an
unsponsored arrangement, the foreign issuer assumes no obligations and the
depositary's transaction fees are paid directly by the ADR holders. In
addition, less information is available in the United States about an
unsponsored ADR than about a sponsored ADR. Each of these Funds may invest in
ADRs through both sponsored and unsponsored arrangements. EDRs and CDRs are
generally issued by foreign banks and evidence ownership of either foreign or
domestic securities.
EURO Conversion. The recent introduction of a single European
currency, the EURO, on January 1, 1999 for participating European countries in
the Economic Monetary Union ("Participating Countries") presents unique risks
and uncertainties for investors in those countries, including (i) whether the
payment and operational systems of banks and other financial institutions will
perform as expected; (ii) the creation of suitable clearing and settlement
payment schemes for the EURO; (iii) the legal treatment of outstanding
financial contracts after January 1, 1999 that refer to existing currencies
rather than the EURO; (iv) the fluctuation of the EURO relative to non-EURO
currencies during the transition period from January 1, 1999 to December 31,
2000 and beyond; and (v) whether the interest rate, tax and labor regimes of
the Participating Countries will converge over time. Further, the conversion of
the currencies of other Economic Monetary Union countries, such as the United
Kingdom, and the admission of other countries, including Central and Eastern
European countries, to the Economic Monetary Union could adversely affect the
EURO. These or other factors may cause market disruptions and could adversely
affect the value of European securities and currencies held by the Funds.
Currency Exchange Rates. A Fund's share value may change
significantly when the currencies, other than the U.S. dollar, in which the
Fund's portfolio investments are denominated, strengthen or weaken against the
U.S. dollar. Currency exchange rates generally are determined by the forces of
supply and demand in the foreign exchange markets and the relative merits of
investments in different countries as seen from an international perspective.
Currency exchange rates can also be affected unpredictably by intervention by
U.S. or foreign governments or central banks or by currency controls or
political developments in the United States or abroad.
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Developing Countries. Investing in securities issued by
companies located in developing countries involves not only the risks described
above with respect to investing in foreign securities, but also other risks,
including exposure to economic structures that are generally less diverse and
mature than, and to political systems that can be expected to have less
stability than, those of developed countries. Other characteristics of
developing countries that may affect investment in their markets include
certain national policies that may restrict investment by foreigners in issuers
or industries deemed sensitive to relevant national interests and the absence
of developed legal structures governing private and foreign investments and
private property. The typically small size of the markets for securities issued
by companies located in developing countries and the possibility of a low or
nonexistent volume of trading in those securities may also result in a lack of
liquidity and in price volatility of those securities.
Lending Portfolio Securities. Each Fund is authorized to lend
its portfolio securities to well-known and recognized U.S. and foreign brokers,
dealers and banks. These loans, if and when made, may not exceed 30% (5% in the
case of the Tax-Exempt Fund) of a Fund's assets taken at value. The Fund's
loans of securities will be collateralized by cash, letters of credit or
Government Securities. Cash or instruments collateralizing a Fund's loans of
securities are segregated and maintained at all times with the Trust's
custodian, or with a designated sub-custodian, in an amount at least equal to
the current market value of the loaned securities. In lending securities, a
Fund will be subject to risks, which, like those associated with other
extensions of credit, include possible loss of rights in the collateral should
the borrower fail financially. Income derived by the Tax-Exempt Fund on any
loan of its portfolio securities will not be exempt from Federal income
taxation.
If a Fund loans its portfolio securities, it will adhere to
the following conditions whenever its portfolio securities are loaned: (i) the
Fund must receive at least 100% cash collateral or equivalent securities from
the borrower; (ii) the borrower must increase the collateral whenever the
market value of the securities loaned rises above the level of the collateral;
(iii) the Fund must be able to terminate the loan at any time; (iv) the Fund
must receive reasonable interest on the loan, as well as any dividends,
interest or other distributions on the loaned securities, and any increase in
market value; (v) the Fund may pay only reasonable custodian fees in connection
with the loan; and (vi) voting rights on the loaned securities may pass to the
borrower except that, if a material event adversely affecting the investment in
the loaned securities occurs, the Trust's Board of Trustees (the "Board") must
terminate the loan and regain the right to vote the securities. From time to
time, a Fund may pay a part of the interest earned from the investment of
collateral received for securities loaned to the borrower and/or a third party
that is unaffiliated with the Fund and is acting as a "finder."
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Securities of Other Investment Companies. Certain Funds may
invest in investment funds that invest principally in securities in which the
Fund is authorized to invest. Currently, under the 1940 Act, a Fund may hold
securities of another investment company in amounts which (a) do not exceed 3%
of the total outstanding voting stock of such company, (b) do not exceed 5% of
the value of the Fund's total assets and (c) when added to all other investment
company securities held by the Fund, do not exceed 10% of the value of the
Fund's total assets. Investments by a Fund (other than the Money Market Fund)
in the Investment Fund is not considered an investment in another investment
company for purposes of this restriction. To the extent a Fund invests in other
investment companies, the Fund's shareholders will incur certain duplicative
fees and expenses, including investment advisory fees.
Purchasing Put and Call Options on Securities. Each Fund,
other than the Money Market Fund, may purchase put and call options that are
traded on a U.S. or foreign securities exchange or in the over-the-counter
market. A Fund may utilize up to 10% of its assets to purchase put options on
portfolio securities and may do so at or about the same time that it purchases
the underlying security or at a later time. By buying a put, a Fund will seek
to limit its risk of loss from a decline in the market value of the security
until the put expires. Any appreciation in the value of the underlying
security, however, will be partially offset by the amount of the premium paid
for the put option and any related transaction costs. A Fund may utilize up to
10% of its assets to purchase call options on portfolio securities. Call
options may be purchased by a Fund in order to acquire the underlying
securities for a price that avoids any additional cost that would result from a
substantial increase in the market value of a security. A Fund may also
purchase call options to increase its return at a time when the call is
expected to increase in value due to anticipated appreciation of the underlying
security. Prior to their expirations, put and call options may be sold by a
Fund in closing sale transactions, which are sales by the Fund, prior to the
exercise of options that it has purchased, of options of the same series.
Profit or loss from the sale will depend on whether the amount received is more
or less than the premium paid for the option plus the related transaction
costs. The aggregate value of the securities underlying the calls or
obligations underlying the puts, determined as of the date the options are
sold, shall not exceed 25% of the net assets of a Fund. In addition, the
premiums paid by a Fund in purchasing options on securities, options on
securities indices, options on foreign currencies and options on futures
contracts will not exceed 20% of the Fund's net assets.
Covered Option Writing. Each Fund, other than the Money
Market Fund, may write covered put and call options on securities. A Fund will
realize fees (referred to as "premiums") for granting the rights evidenced by
the options. A put option embodies the right of its purchaser to compel the
writer of the option to purchase from the option holder an underlying security
at a specified price at any time during the option period. In contrast, a call
option embodies the right of its purchaser to compel the writer of the option
to sell to the option holder an underlying security at a specified price at any
time during the option period.
The Funds with option-writing authority will write only
options that are covered. A call option written by a Fund will be deemed
covered (i) if the Fund owns the securities underlying the call or has an
absolute and immediate right to acquire those securities without additional
cash consideration upon conversion or exchange of other securities held in its
portfolio, (ii) if the Fund holds a call at the same exercise price for the
same exercise period and on the same securities as the call written, (iii) in
the case of a call option on a stock index, if the
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Fund owns a portfolio of securities substantially replicating the movement of
the index underlying the call option, or (iv) if at the time the call is
written, an amount of cash, securities issued or guaranteed by the U.S.
Government or one of its agencies or instrumentalities ("Government
Securities") or other liquid assets equal to the fluctuating market value of
the optioned securities, is segregated with the Trust's custodian or with a
designated sub-custodian. A put option will be deemed covered (i) if, at the
time the put is written, an amount of cash, Government Securities or other
liquid assets having a value at least equal to the exercise price of the
underlying securities is segregated with the Trust's custodian or with a
designated sub-custodian, or (ii) if the Fund continues to own an equivalent
number of puts of the same "series" (that is, puts on the same underlying
securities having the same exercise prices and expiration dates as those
written by the Fund), or an equivalent number of puts of the same "class" (that
is, puts on the same underlying securities) with exercise prices greater than
those that it has written (or if the exercise prices of the puts it holds are
less than the exercise prices of those it has written, the difference is
segregated with the Trust's custodian or with a designated sub-custodian).
The principal reason for writing covered call options on a
securities portfolio is to attempt to realize, through the receipt of premiums,
a greater return than would be realized on the securities alone. In return for
a premium, the writer of a covered call option forfeits the right to any
appreciation in the value of the underlying security above the strike price for
the life of the option (or until a closing purchase transaction can be
effected). Nevertheless, the call writer retains the risk of a decline in the
price of the underlying security. Similarly, the principal reason for writing
covered put options is to realize income in the form of premiums. The writer of
a covered put option accepts the risk of a decline in the price of the
underlying security. The size of the premiums that a Fund may receive may be
adversely affected as new or existing institutions, including other investment
companies, engage in or increase their option-writing activities.
Options written by a Fund will normally have expiration dates
between one and nine months from the date written. The exercise price of the
options may be below, equal to or above the market values of the underlying
securities at the times the options are written. In the case of call options,
these exercise prices are referred to as "in-the-money," "at-the-money" and
"out-of-the-money," respectively.
So long as the obligation of a Fund as the writer of an
option continues, the Fund may be assigned an exercise notice by the
broker-dealer through which the option was sold, requiring the Fund to deliver,
in the case of a call, or take delivery of, in the case of a put, the
underlying security against payment of the exercise price. This obligation
terminates when the option expires or the Fund effects a closing purchase
transaction. A Fund can no longer effect a closing purchase transaction with
respect to an option once it has been assigned an exercise notice. To secure
its obligation to deliver the underlying security when it writes a call option,
or to pay for the underlying security when it writes a put option, a Fund will
be required to deposit in escrow the underlying security or other assets in
accordance with the rules of the Options Clearing Corporation (the "Clearing
Corporation") and of the securities exchange on which the option is written.
A Fund may engage in a closing purchase transaction to
realize a profit, to prevent
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an underlying security from being called or put or, in the case of a call
option, to unfreeze an underlying security (thereby permitting its sale or the
writing of a new option on the security prior to the outstanding option's
expiration). To effect a closing purchase transaction, a Fund would purchase,
prior to the holder's exercise of an option that the Fund has written, an
option of the same series as that on which the Fund desires to terminate its
obligation. The obligation of a Fund under an option that it has written would
be terminated by a closing purchase transaction, but the Fund would not be
deemed to own an option as the result of the transaction. An option position
may be closed out only if a secondary market exists for an option of the same
series on a recognized securities exchange or in the over-the-counter market.
In light of the need for a secondary market in which to close an option
position, the Funds are expected to purchase only call or put options issued by
the Clearing Corporation. The Investment Manager expects that the Funds will
write options, other than those on Government Securities, only on national
securities exchanges. Options on Government Securities may be written by the
Funds in the over-the-counter market.
A Fund may realize a profit or loss upon entering into
closing transactions. When a Fund has written an option, for example, it will
realize a profit if the cost of the closing purchase transaction is less than
the premium received upon writing the original option; the Fund will incur a
loss if the cost of the closing purchase transaction exceeds the premium
received upon writing the original option. When a Fund has purchased an option
and engages in a closing sale transaction, whether the Fund realizes a profit
or loss will depend upon whether the amount received in the closing sale
transaction is more or less than the premium the Fund initially paid for the
original option plus the related transaction costs.
Option writing for a Fund may be limited by position and
exercise limits established by U.S. securities exchanges and the National
Association of Securities Dealers, Inc. and by requirements of the Internal
Revenue Code of 1986, as amended (the "Code") for qualification as a regulated
investment company. In addition to writing covered put and call options to
generate current income, a Fund may enter into options transactions as hedges
to reduce investment risk, generally by making an investment expected to move
in the opposite direction of a portfolio position. A hedge is designed to
offset a loss on a portfolio position with a gain on the hedge position; at the
same time, however, a properly correlated hedge will result in a gain on the
portfolio's position being offset by a loss on the hedge position.
A Fund will engage in hedging transactions only when deemed
advisable by the Investment Manager. Successful use by a Fund of options will
depend on the Investment Manager's ability to predict correctly movements in
the direction of the securities underlying the option used as a hedge. Losses
incurred in hedging transactions and the costs of these transactions will
affect a Fund's performance.
Securities Index Options. In seeking to hedge all or a
portion of its investments, each Fund, other than the Money Market Fund, may
purchase and write put and call options on securities indices listed on U.S. or
foreign securities exchanges or traded in the over-the-counter market, which
indices include securities held in the Fund's portfolio. The Funds with such
option writing authority may write only covered options. A Fund may also use
securities index options as a means of participating in a securities market
without making direct purchases of securities.
A securities index measures the movement of a certain group
of securities by
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assigning relative values to the securities included in the index. Options on
securities indexes are generally similar to options on specific securities.
Unlike options on securities, however, options on securities indices do not
involve the delivery of an underlying security; the option in the case of an
option on a securities index represents the holder's right to obtain from the
writer in cash a fixed multiple of the amount by which the exercise price
exceeds (in the case of a call) or is less than (in the case of a put) the
closing value of the underlying securities index on the exercise date. A Fund
may purchase and write put and call options on securities indexes or securities
index futures contracts that are traded on a U.S. exchange or board of trade or
a foreign exchange, to the extent permitted under rules and interpretations of
the Commodity Futures Trading Commission ("CFTC"), as a hedge against changes
in market conditions and interest rates, and for duration management, and may
enter into closing transactions with respect to those options to terminate
existing positions. A securities index fluctuates with changes in the market
values of the securities included in the index. Securities index options may be
based on a broad or narrow market index or on an industry or market segment.
The delivery requirements of options on securities indices
differ from options on securities. Unlike a securities option, which
contemplates the right to take or make delivery of securities at a specified
price, an option on a securities index gives the holder the right to receive a
cash "exercise settlement amount" equal to (i) the amount, if any, by which the
fixed exercise price of the option exceeds (in the case of a put) or is less
than (in the case of a call) the closing value of the underlying index on the
date of exercise, multiplied by (ii) a fixed "index multiplier." Receipt of
this cash amount will depend upon the closing level of the securities index
upon which the option is based being greater than, in the case of a call, or
less than, in the case of a put, the exercise price of the option. The amount
of cash received will be equal to the difference between the closing price of
the index and the exercise price of the option expressed in dollars times a
specified multiple. The writer of the option is obligated, in return for the
premium received, to make delivery of this amount. The writer may offset its
position in securities index options prior to expiration by entering into a
closing transaction on an exchange or it may allow the option to expire
unexercised.
The effectiveness of purchasing or writing securities index
options as a hedging technique will depend upon the extent to which price
movements in the portion of a securities portfolio being hedged correlate with
price movements of the securities index selected. Because the value of an index
option depends upon movements in the level of the index rather than the price
of a particular security, whether a Fund realizes a gain or loss from the
purchase or writing of options on an index depends upon movements in the level
of prices in the market generally or, in the case of certain indices, in an
industry or market segment, rather than movements in the price of a particular
security. As a result, successful use by a Fund of options on securities
indices is subject to the Investment Manager's ability to predict correctly
movements in the direction of the market generally or of a particular industry.
This ability contemplates different skills and techniques from those used in
predicting changes in the price of individual securities.
Securities index options are subject to position and exercise
limits and other regulations imposed by the exchange on which they are traded.
The ability of a Fund to engage in closing purchase transactions with respect
to securities index options depends on the existence of a liquid secondary
market. Although a Fund will generally purchase or write securities index
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options only if a liquid secondary market for the options purchased or sold
appears to exist, no such secondary market may exist, or the market may cease
to exist at some future date, for some options. No assurance can be given that
a closing purchase transaction can be effected when the Investment Manager
desires that a Fund engage in such a transaction.
Over-the-Counter ("OTC") Options. Certain Funds may purchase
OTC or dealer options or sell covered OTC options. Unlike exchange-listed
options where an intermediary or clearing corporation, such as the Clearing
Corporation, assures that all transactions in such options are properly
executed, the responsibility for performing all transactions with respect to
OTC options rests solely with the writer and the holder of those options. A
listed call option writer, for example, is obligated to deliver the underlying
stock to the clearing organization if the option is exercised, and the clearing
organization is then obligated to pay the writer the exercise price of the
option. If a Fund were to purchase a dealer option, however, it would rely on
the dealer from whom it purchased the option to perform if the option were
exercised. If the dealer fails to honor the exercise of the option by the Fund,
the Fund would lose the premium it paid for the option and the expected benefit
of the transaction.
Listed options generally have a continuous liquid market
while dealer options have none. Consequently, a Fund will generally be able to
realize the value of a dealer option it has purchased only by exercising it or
reselling it to the dealer who issued it. Similarly, when a Fund writes a
dealer option, it generally will be able to close out the option prior to its
expiration only by entering into a closing purchase transaction with the dealer
to which the Fund originally wrote the option. Although the Funds will seek to
enter into dealer options only with dealers who will agree to and that are
expected to be capable of entering into closing transactions with the Funds,
there can be no assurance that a Fund will be able to liquidate a dealer option
at a favorable price at any time prior to expiration. The inability to enter
into a closing transaction may result in material losses to a Fund. Until a
Fund, as a covered OTC call option writer, is able to effect a closing purchase
transaction, it will not be able to liquidate securities (or other assets) used
to cover the written option until the option expires or is exercised. This
requirement may impair a Fund's ability to sell portfolio securities or, with
respect to currency options, currencies at a time when such sale might be
advantageous. In the event of insolvency of the other party, the Fund may be
unable to liquidate a dealer option.
Futures and Related Options. Each Fund, other than the
Small-Cap Value Fund and the Money Market Fund, may enter into interest rate,
financial and stock or bond index futures contracts or related options that are
traded on a U.S. or foreign exchange or board of trade approved by the CFTC or
in the over-the-counter market. If entered into, these transactions will be
made solely for the purpose of hedging against the effects of changes in the
value of portfolio securities due to anticipated changes in interest rates
and/or market conditions, to gain market exposure for accumulating and residual
cash positions, for duration management, or when the transactions are
economically appropriate to the reduction of risks inherent in the management
of the Fund involved. No Fund will enter into a transaction involving futures
and options on futures for speculative purposes.
An interest rate futures contract provides for the future
sale by one party and the purchase by the other party of a specified amount of
a particular financial instrument (debt security) at a specified price, date,
time and place. Financial futures contracts are contracts that
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obligate the holder to deliver (in the case of a futures contract that is sold)
or receive (in the case of a futures contract that is purchased) at a future
date a specified quantity of a financial instrument, specified securities, or
the cash value of a securities index. A municipal bond index futures contract
is based on an index of long-term, tax-exempt municipal bonds and a corporate
bond index futures contract is based on an index of corporate bonds. Stock
index futures contracts are based on indices that reflect the market value of
common stock of the companies included in the indices. An index futures
contract is an agreement pursuant to which two parties agree to take or make
delivery of an amount of cash equal to the difference between the value of the
index at the close of the last trading day of the contract and the price at
which the index contract was originally written. An option on an interest rate
or index futures contract generally gives the purchaser the right, in return
for the premium paid, to assume a position in a futures contract at a specified
exercise price at any time prior to the expiration date of the option.
A Fund may not enter into futures and options contracts for
which aggregate initial margin deposits and premiums paid for unexpired options
exceed 5% of the fair market value of the Fund's total assets, after taking
into account unrealized losses or profits on futures contracts or options on
futures contracts into which it has entered. The current view of the staff of
the SEC is that a Fund's long and short positions in futures contracts as well
as put and call options on futures written by it must be collateralized with
cash or other liquid assets and segregated with the Trust's custodian or a
designated sub-custodian or "covered" in a manner similar to that for covered
options on securities and designed to eliminate any potential leveraging.
No consideration is paid or received by a Fund upon trading a
futures contract. Upon entering into a futures contract, cash, short-term
Government Securities or other U.S. dollar-denominated, high-grade, short-term
money market instruments equal to approximately 1% to 10% of the contract
amount will be segregated with the Trust's custodian or a designated
sub-custodian. This amount, which is subject to change by the exchange on which
the contract is traded, is known as "initial margin" and is in the nature of a
performance bond or good faith deposit on the contract that is returned to the
Fund upon termination of the futures contract, so long as all contractual
obligations have been satisfied; the broker will have access to amounts in the
margin account if the Fund fails to meet its contractual obligations.
Subsequent payments, known as "variation margin," to and from the broker, will
be made daily as the price of the securities underlying the futures contract
fluctuates, making the long and short positions in the contract more or less
valuable, a process known as "marking-to-market." At any time prior to the
expiration of a futures contract, a Fund may elect to close a position by
taking an opposite position, which will operate to terminate the Fund's
existing position in the contract.
If a Fund has hedged against the possibility of an increase
in interest rates and rates decrease instead, the Fund will lose part or all of
the benefit of the increased value of securities that it has hedged because it
will have offsetting losses in its futures positions. In addition, in such
situations, if the Fund had insufficient cash, it may have to sell securities
to meet daily variation margins requirements at a time when it may be
disadvantageous to do so. These sales of securities may, but will not
necessarily, be at increased prices that reflect the decline in interest rates.
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An option on a futures contract, unlike a direct investment
in such a contract, gives the purchaser the right, in return for the premium
paid, to assume a position in the futures contract at a specified exercise
price at any time prior to the expiration date of the option. Upon exercise of
an option, the delivery of the futures position by the writer of the option to
the holder of the option will be accompanied by delivery of the accumulated
balance in the writer's futures margin account, which represents the amount by
which the market price of the futures contract exceeds, in the case of a call,
or is less than, in the case of a put, the exercise price of the option on the
futures contract. The potential loss related to the purchase of an option on
futures contracts is limited to the premium paid for the option (plus
transaction costs). Because the price of the option to the purchaser is fixed
at the point of sale, no daily cash payments are made to reflect changes in the
value of the underlying contract. The value of the option, however, does change
daily and that change would be reflected in the net asset value of the Fund
holding the options.
The use of futures contracts and options on futures contracts
as a hedging device involves several risks. No assurance can be given that a
correlation will exist between price movements in the underlying securities or
index and price movements in the securities that are the subject of the hedge.
Furthermore, because any income earned from transactions in futures contracts
and related options will be taxable, the Investment Manager of the Tax-Exempt
Fund anticipates that the Fund will invest in these instruments only in unusual
circumstances, such as when the Investment Manager anticipates a significant
change in interest rates or market conditions. Losses incurred in hedging
transactions and the costs of these transactions will affect a Fund's
performance.
Although the Trust intends that the Funds enter into futures
contracts only if an active market exists for the contracts, positions in
futures contracts and options on futures contracts may be closed out only on
the exchange or board of trade on which they were entered and no assurance can
be given that an active market will exist for the contracts at any particular
time. Most U.S. futures exchanges and boards of trade limit the amount of
fluctuation permitted in futures contract prices during a single trading day.
Once the daily limit has been reached in a particular contract, no trades may
be made on that day at a price beyond that limit. Futures contract prices may
move to the daily limit for several consecutive trading days with little or no
trading, thereby preventing prompt liquidation of futures positions and
subjecting some futures traders to substantial losses. In such a case, and in
the event of adverse price movements, a Fund would be required to make daily
cash payments of variation margin. In such circumstances, an increase in the
value of the portion of the portfolio being hedged, if any, may partially or
completely offset losses on the futures contract.
Forward Currency Transactions. Certain Funds, may hold
currencies to meet settlement requirements for foreign securities and may
engage in currency exchange transactions to protect against uncertainty in the
level of future exchange rates between a particular foreign currency and the
U.S. dollar or between foreign currencies in which the Fund's securities are or
may be denominated. The use of forward currency contracts does not eliminate
fluctuations in the underlying prices of the securities, but it does establish
a rate of exchange that can be achieved in the future. No Fund will enter into
forward currency transactions for speculative purposes. A Fund will not enter
into a currency transaction if, as a result, it will fail to qualify as
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a regulated investment company under the Internal Revenue Code of 1986, as
amended ("Code"), for a given year.
Forward currency contracts are agreements to exchange one
currency for another at a future date. The date (which may be any agreed-upon
fixed number of days in the future), the amount of currency to be exchanged and
the price at which the exchange will take place will be negotiated and fixed
for the term of the contract at the time that a Fund enters into the contract.
Forward currency contracts (i) are traded in a market conducted directly
between currency traders (typically, commercial banks or other financial
institutions) and their customers, (ii) generally have no deposit requirements
and (iii) are typically consummated without payment of any commissions. A Fund,
however, may enter into forward currency contracts requiring deposits or
involving the payment of commissions. The cost to a Fund of engaging in
currency transactions varies with factors such as the currency involved, the
length of the contract period and the market conditions then prevailing. To
assure that a Fund's forward currency contracts are not used to achieve
investment leverage, cash or other liquid assets will be segregated with the
Trust's custodian or a designated sub-custodian in an amount at all times equal
to or exceeding the Fund's commitment with respect to the contracts.
Upon maturity of a forward currency contract, a Fund may (i)
pay for and receive the underlying currency, (ii) negotiate with the dealer to
roll over the contract into a new forward currency contract with a new future
settlement date or (iii) negotiate with the dealer to terminate the forward
contract into an offset with the currency trader providing for the Fund's
paying or receiving the difference between the exchange rate fixed in the
contract and the then current exchange rate. The Trust may also be able to
negotiate such an offset on behalf of a Fund prior to maturity of the original
forward contract. No assurance can be given that new forward contracts or
offsets will always be available to a Fund.
In hedging a specific portfolio position, a Fund may enter
into a forward contract with respect to either the currency in which the
position is denominated or another currency deemed appropriate by the
Investment Manager. A Fund's exposure with respect to forward currency
contracts is limited to the amount of the Fund's aggregate investments in
instruments denominated in foreign currencies.
Because transactions in currency exchange are usually
conducted on a principal basis, no fees or commissions are involved. If a
devaluation is generally anticipated, a Fund may not be able to sell currency
at a price above the anticipated devaluation level.
In entering into forward currency contracts, a Fund will be
subject to a number of risks and special considerations. The market for forward
currency contracts, for example, may be limited with respect to certain
currencies. The existence of a limited market may in turn restrict the Fund's
ability to hedge against the risk of devaluation of currencies in which the
Fund holds a substantial quantity of securities. The successful use of forward
currency contracts as a hedging technique draws upon the Investment Manager's
special skills and experience with respect to those instruments and will
usually depend upon the Investment Manager's ability to forecast interest rate
and currency exchange rate movements correctly. Should interest or exchange
rates move in an unexpected manner, a Fund may not achieve the anticipated
benefits of forward currency contracts or may realize losses and thus be in a
less advantageous position than if those strategies had not been used. Many
forward currency contracts are subject to no daily price
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fluctuation limits so that adverse market movements could continue with respect
to those contracts to an unlimited extent over a period of time. In addition,
the correlation between movements in the prices of those contracts and
movements in the prices of the currencies hedged or used for cover will not be
perfect. Although forward currency contracts limit the risk of loss due to a
decline in the value of the hedged currency, at the same time, they limit any
potential gain that might result should the value of the currency increase.
The ability to dispose of a Fund's positions in forward
currency contracts depends on the availability of active markets in those
instruments, and the Investment Manager cannot predict the amount of trading
interest that may exist in the future in forward currency contracts. Forward
currency contracts may be closed out only by the parties entering into an
offsetting contract. As a result, no assurance can be given that a Fund will be
able to utilize these contracts effectively for the intended purposes.
Options on Foreign Currencies. Certain Funds, may purchase
and write put and call options on foreign currencies for the purpose of hedging
against declines in the U.S. dollar value of foreign currency denominated
securities and against increases in the U.S. dollar cost of securities to be
acquired by the Fund. The Funds with such option writing authority may write
only covered options. No Fund will enter into a transaction involving options
on foreign currencies for speculative purposes. Options on foreign currencies
to be written or purchased by a Fund are traded on U.S. or foreign exchanges or
in the over-the-counter market. The Trust will limit the premiums paid on a
Fund's options on foreign currencies to 5% of the value of the Fund's total
assets.
Certain transactions involving options on foreign currencies
are undertaken on contract markets that are not regulated by the CFTC. Options
on foreign currencies traded on national securities exchanges are within the
jurisdiction of the SEC, as are other securities traded on those exchanges. As
a result, many of the protections provided to traders on organized exchanges
will be available with respect to those transactions. In particular, all
foreign currency option positions entered into on a national securities
exchange are cleared and guaranteed by the Clearing Corporation, thereby
reducing the risk of counterparty default. In addition, a liquid secondary
market in options traded on a national securities exchange may exist,
potentially permitting a Fund to liquidate open positions at a profit prior to
exercise or expiration, or to limit losses in the event of adverse market
movements.
The purchase and sale of exchange-traded foreign currency
options are subject to the risks of the availability of a liquid secondary
market as described above, as well as the risks regarding adverse market
movements, margining of options written, the nature of the foreign currency
market, possible intervention by governmental authorities and the effects of
other political and economic events. In addition, exercise and settlement of
exchange-traded foreign currency options must be made exclusively through the
Clearing Corporation, which has established banking relationships in applicable
foreign countries for this purpose. As a result, the Clearing Corporation may,
if it determines that foreign governmental restrictions or taxes would prevent
the orderly settlement of foreign currency option exercises, or would result in
undue burdens on the Clearing Corporation or its clearing members, impose
special procedures on exercise and settlement, such as technical changes in the
mechanics of delivery of currency, the fixing of dollar settlement prices or
prohibitions on exercise.
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Like the writing of other kinds of options, the writing of an
option on a foreign currency constitutes only a partial hedge, up to the amount
of the premium received; a Fund could also be required, with respect to any
option it has written, to purchase or sell foreign currencies at
disadvantageous exchange rates, thereby incurring losses. The purchase of an
option on a foreign currency may constitute an effective hedge against
fluctuation in exchange rates, although in the event of rate movements adverse
to a Fund's position, the Fund could forfeit the entire amount of the premium
plus related transaction costs.
Options on foreign currencies may be traded on foreign
exchanges, to the extent permitted by the CFTC. These transactions are subject
to the risk of governmental actions affecting trading in or the prices of
foreign currencies or securities. The value of these positions could also be
adversely affected by (i) other complex foreign political and economic factors,
(ii) lesser availability of data on which to make trading decisions than in the
United States, (iii) delays in a Fund's ability to act upon economic events
occurring in foreign markets during non-business hours in the United States,
(iv) the imposition of different exercise and settlement terms and procedures
and margin requirements than in the United States and (5) lesser trading
volume.
Structured and Indexed Securities. Certain Funds may also
invest in structured and indexed securities, the value of which is linked to
currencies, interest rates, commodities, indexes or other financial indicators
("reference instruments"). The interest rate or the principal amount payable at
maturity or redemption may be increased or decreased depending on changes in
the value of the reference instrument. Structured or indexed securities may be
positively or negatively indexed, so that appreciation of the reference
instrument may produce an increase or a decrease in interest rate or value at
maturity of the security. In addition, the change in the interest rate or value
at maturity of the security may be some multiple of the change in value of the
reference instrument. Thus, in addition to the credit risk of the security's
issuer, the Funds will bear the market risk of the reference instrument.
Mortgage Related Securities. Certain Funds may invest in
mortgage related securities which represent pools of mortgage loans assembled
for sale to investors by various governmental agencies, such as GNMA, by
government related organizations, such as FNMA and FHLMC, as well as by private
issuers, such as commercial banks, savings and loan institutions, mortgage
bankers and private mortgage insurance companies.
The average maturity of pass-through pools of mortgage
related securities in which certain of the Funds may invest varies with the
maturities of the underlying mortgage instruments. In addition, a pool's stated
maturity may be shortened by unscheduled payments on the underlying mortgages.
Factors affecting mortgage prepayments include the level of interest rates,
general economic and social conditions, the location of the mortgaged property
and age of the mortgage. Because prepayment rates of individual mortgage pools
vary widely, the average life of a particular pool cannot be predicted
accurately.
Mortgage related securities may be classified as private,
governmental or government-related, depending on the issuer or guarantor.
Private mortgage related securities represent pass-through pools consisting
principally of conventional residential mortgage loans created by
non-governmental issuers, such as commercial banks, savings and loan
associations
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and private mortgage insurance companies. Governmental mortgage related
securities are backed by the full faith and credit of the United States. Ginnie
Mae, the principal U.S. guarantor of these securities, is a wholly-owned U.S.
government corporation within the Department of Housing and Urban Development.
Government-related mortgage related securities are not backed by the full faith
and credit of the United States. Issuers include Fannie Mae and Freddie Mae.
Fannie Mae is a government-sponsored corporation owned entirely by private
stockholders, which is subject to general regulation by the Secretary of
Housing and Urban Development. Pass-through securities issued by Fannie Mae are
guaranteed as to timely payment of principal and interest by Fannie Mae.
Freddie Mae is a corporate instrumentality of the United States, the stock of
which is owned by the Federal Home Loan Banks. Participation certificates
representing interests in mortgages from Freddie Mae's national portfolio are
guaranteed as to the timely payment of interest and ultimate collection of
principal by Freddie Mae.
Private, governmental or government-related entities may
create mortgage loan pools offering pass-through investments in addition to
those described above. The mortgages underlying these securities may be
alternative mortgage instruments, that is, mortgage instruments whose principal
or interest payments may vary or whose terms to maturity may be shorter than
previously customary. The Investment Manager assesses new types of mortgage
related securities as they are developed and offered to determine their
appropriateness for investment by the relevant Fund.
Several risks are associated with mortgage related securities
generally. The monthly cash inflow from the underlying loans, for example, may
not be sufficient to meet the monthly payment requirements of the mortgage
related security. Prepayment of principal by mortgagors or mortgage
foreclosures will shorten the term of the underlying mortgage pool for a
mortgage related security. Early returns of principal will affect the average
life of the mortgage related securities remaining in these Funds. The
occurrence of mortgage prepayments is affected by factors including the level
of interest rates, general economic conditions, the location and age of the
mortgage and other social and demographic conditions. In periods of rising
interest rates, the rate of prepayment tends to decrease, thereby lengthening
the average life of a pool of mortgage related securities. Conversely, in
periods of falling interest rates the rate of prepayment tends to increase,
thereby shortening the average life of a pool. Reinvestment of prepayments may
occur at higher or lower interest rates than the original investment, thus
affecting the yield of these Funds. Because prepayments of principal generally
occur when interest rates are declining, the Fund will likely have to reinvest
the proceeds of prepayments at lower interest rates than those at which its
assets were previously invested, resulting in a corresponding decline in the
Fund's yield. Thus, mortgage related securities may have less potential for
capital appreciation in periods of falling interest rates than other fixed
income securities of comparable maturity, although those other fixed income
securities may have a comparable risk of decline in market value in periods of
rising interest rates. To the extent that these Funds purchase mortgage related
securities at a premium, unscheduled prepayments, which are made at par, will
result in a loss equal to any unamortized premium.
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Adjustable rate mortgage related securities ("ARMs") have
interest rates that reset at periodic intervals, thereby allowing certain Funds
to participate in increases in interest rates through periodic adjustments in
the coupons of the underlying mortgages, resulting in both higher current
yields and lower price fluctuation than would be the case with more traditional
long-term debt securities. Furthermore, if prepayments of principal are made on
the underlying mortgages during periods of rising interest rates, these Funds
generally will be able to reinvest these amounts in securities with a higher
current rate of return. None of these Funds, however, will benefit from
increases in interest rates to the extent that interest rates rise to the point
at which they cause the current yield of ARMs to exceed the maximum allowable
annual or lifetime reset limits (or "caps") for a particular mortgage. In
addition, fluctuations in interest rates above these caps could cause ARMs to
behave more like long-term fixed rate securities in response to extreme
movements in interest rates. As a result, during periods of volatile interest
rates, these Funds' net asset values may fluctuate more than if they did not
purchase ARMs. Moreover, during periods of rising interest rates, changes in
the coupon of the adjustable rate mortgages will slightly lag behind changes in
market rates, creating the potential for some principal loss for shareholders
who redeem their shares of these Funds before the interest rates on the
underlying mortgages are adjusted to reflect current market rates.
Collateralized mortgage related securities ("CMOs") are
obligations fully collateralized by a portfolio of mortgages or mortgage
related securities. Payments of principal and interest on the mortgages are
passed through to the holders of the CMOs on the same schedule as they are
received, although certain classes of CMOs have priority over others with
respect to the receipt of prepayments on the mortgages. Therefore, depending on
the type of CMOs in which these Funds invest, the investment may be subject to
a greater or lesser risk of prepayment than other types of mortgage related
securities.
Mortgage related securities may not be readily marketable. To
the extent any of these securities are not readily marketable in the judgment
of the Investment Manager, each of these Funds limits its investments in these
securities, together with other illiquid instruments, to not more than 15% (10%
in the case of the Tax-Exempt Fund) of the value of its net assets.
Supranational Agencies. Each Fund may invest up to 10% of its
assets in debt obligations of supranational agencies such as: the International
Bank for Reconstruction and Development (commonly referred to as the World
Bank), which was chartered to finance development projects in developing member
countries; the European Community, which is a twelve-nation organization
engaged in cooperative economic activities; the European Coal and Steel
Community, which is an economic union of various European nations' steel and
coal industries; and the Asian Development Bank, which is an international
development bank established to lend funds, promote investment and provide
technical assistance to member nations in the Asian and Pacific regions. Debt
obligations of supranational agencies are not considered Government Securities
and are not supported, directly or indirectly, by the U.S. Government.
Municipal Obligations. The term "Municipal Obligations" as
used in the Prospectus and this SAI means debt obligations issued by, or on
behalf of, states, territories and possessions of the United States and the
District of Columbia and their political subdivisions,
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agencies and instrumentalities or multistate agencies or authorities, the
interest from which debt obligations is, in the opinion of bond counsel to the
issuer, excluded from gross income for Federal income tax purposes. Municipal
Obligations generally are understood to include debt obligations issued to
obtain funds for various public purposes, including the construction of a wide
range of public facilities, refunding of outstanding obligations, payment of
general operating expenses and extensions of loans to public institutions and
facilities. Private activity bonds that are issued by or on behalf of public
authorities to finance privately operated facilities are considered to be
Municipal Obligations if the interest paid on them qualifies as excluded from
gross income (but not necessarily from alternative minimum taxable income) for
Federal income tax purposes in the opinion of bond counsel to the issuer.
Opinions relating to the validity of Municipal Obligations
and to the exemption of interest on them from Federal income taxes are rendered
by bond counsel to the respective issuers at the time of issuance. Neither the
Trust nor the Investment Manager will review the proceedings relating to the
issuance of Municipal Obligations or the basis for opinions of counsel. The
Strategic Fund and Tax-Exempt Fund may invest without limit in debt obligations
that are repayable out of revenues generated from economically related projects
or facilities or debt obligations whose issuers are located in the same state.
Sizable investments in these obligations could involve an increased risk to the
Funds should any of the related projects or facilities experience financial
difficulties.
Municipal Obligations may be issued to finance life care
facilities, which are an alternative form of long-term housing for the elderly
that offer residents the independence of a condominium life-style and, if
needed, the comprehensive care of nursing home services. Bonds to finance these
facilities have been issued by various state industrial development
authorities. Because the bonds are secured only by the revenues of each
facility and not by state or local government tax payments, they are subject to
a wide variety of risks, including a drop in occupancy levels, the difficulty
of maintaining adequate financial reserves to secure estimated actuarial
liabilities, the possibility of regulatory cost restrictions applied to health
care delivery and competition from alternative health care or conventional
housing facilities.
Even though Municipal Obligations are interest-bearing
investments that promise a stable flow of income, their prices are inversely
affected by changes in interest rates and, therefore, are subject to the risk
of market price fluctuations. The values of Municipal Obligations with longer
remaining maturities typically fluctuate more than those of similarly rated
Municipal Obligations with shorter remaining maturities. The values of fixed
income securities also may be affected by changes in the credit rating or
financial condition of the issuing entities.
Tax legislation in recent years has included several
provisions that may affect the supply of, and the demand for, Municipal
Obligations, as well as the tax-exempt nature of interest paid on those
obligations. Neither the Trust nor the Investment Manager can predict with
certainty the effect of recent tax law changes upon the Municipal Obligation
market, including the availability of instruments for investment by a Fund. In
addition, neither the Trust nor the Investment Manager can predict whether
additional legislation adversely affecting the Municipal Obligation market will
be enacted in the future. The Trust monitors legislative developments and
considers whether changes in the objective or policies of a Fund need to be
made in response
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to those developments. If any laws are enacted that would reduce the
availability of Municipal Obligations for investment by the Tax-Exempt Fund so
as to affect the Fund's shareholders adversely, the Trust will reevaluate the
Fund's investment objective and policies and might submit possible changes in
the Fund's structure to the Fund's shareholders for their consideration. If
legislation were enacted that would treat a type of Municipal Obligation as
taxable for Federal income tax purposes, the Trust would treat the security as
a permissible taxable money market instrument for the Fund within the
applicable limits set forth in the Prospectus.
The Strategic Fund and Tax-Exempt Fund intend to invest in
Municipal Obligations of a broad range of issuers, consistent with prudent
regional diversification. Investors in certain states may be subject to state
taxation on all or a portion of the income and capital gains produced by such
securities.
Municipal Obligation Components. Certain Funds may invest in
Municipal Obligations, the interest rate on which has been divided by the
issuer into two different and variable components, which together result in a
fixed interest rate. Typically, the first of the components (the "Auction
Component") pays an interest rate that is reset periodically through an auction
process, whereas the second of the components (the "Residual Component") pays a
residual interest rate based on the difference between the total interest paid
by the issuer on the Municipal Obligation and the auction rate paid on the
Auction Component. A Fund may purchase both Auction and Residual Components.
Because the interest rate paid to holders of Residual Components is generally
determined by subtracting the interest rate paid to the holders of Auction
Components from a fixed amount, the interest rate paid to Residual Component
holders will decrease as the Auction Component's rate increases and increase as
the Auction Component's rate decreases. Moreover, the extent of the increases
and decreases in market value of Residual Components may be larger than
comparable changes in the market value of an equal principal amount of a fixed
rate Municipal Obligation having similar credit quality, redemption provisions
and maturity.
Municipal Leases. Municipal leases are Municipal Obligations
that may take the form of a lease or an installment purchase contract issued by
state and local governmental authorities to obtain funds to acquire a wide
variety of equipment and facilities such as fire and sanitation vehicles,
computer equipment and other capital assets. Interest payments on qualifying
municipal leases are exempt from Federal income taxes and state income taxes
within the state of issuance. Although municipal lease obligations do not
normally constitute general obligations of the municipality, a lease obligation
is ordinarily backed by the municipality's agreement to make the payments due
under the lease obligation. These obligations have evolved to make it possible
for state and local government authorities to acquire property and equipment
without meeting constitutional and statutory requirements for the issuance of
debt. Thus, municipal leases have special risks not normally associated with
Municipal Obligations. These obligations frequently contain "non-appropriation"
clauses that provide that the governmental issuer of the obligation has no
obligation to make future payments under the lease or contract unless money is
appropriated for those purposes by the legislative body on a yearly or other
periodic basis. In addition to the non-appropriation risk, municipal leases
represent a type of financing that has not yet developed the depth of
marketability associated with other Municipal Obligations. Some municipal lease
obligations may be, and could become,
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illiquid. Moreover, although municipal leases will be secured by the leased
equipment, the disposition of the equipment in the event of foreclosure might
prove to be difficult.
Municipal lease obligations may be deemed to be illiquid as
determined by or in accordance with methods adopted by the Board. In
determining the liquidity and appropriate valuation of a municipal lease
obligation, the following factors relating to the security are considered,
among others: (i) the frequency of trades and quotes; (ii) the number of
dealers willing to purchase or sell the security; (iii) the willingness of
dealers to undertake to make a market; (iv) the nature of the marketplace
trades; and (v) the likelihood that the obligation will continue to be
marketable based on the credit quality of the municipality or relevant obligor.
Municipal leases held by a Fund will be considered illiquid
securities unless the Board determines on an ongoing basis that the leases are
readily marketable. An unrated municipal lease with a non-appropriation risk
that is backed by an irrevocable bank letter of credit or an insurance policy
issued by a bank or insurer deemed by the Investment Manager to be of high
quality and minimal credit risk, will not be deemed to be illiquid solely
because the underlying municipal lease is unrated, if the Investment Manager
determines that the lease is readily marketable because it is backed by the
letter of credit or insurance policy.
Municipal leases that a Fund may acquire will be both rated
and unrated. Rated leases that may be held by a Fund include those rated
investment grade at the time of investment or those issued by issuers whose
senior debt is rated investment grade at the time of investment. A Fund may
acquire unrated issues that the Investment Manager deems to be comparable in
quality to rated issues in which a Fund is authorized to invest. A
determination that an unrated lease obligation is comparable in quality to a
rated lease obligation and that there is a reasonable likelihood that the lease
will not be canceled will be subject to oversight and approval by the Board.
To limit the risks associated with municipal leases, a Fund
will invest no more than 5% of its total assets in those leases. In addition, a
Fund will purchase lease obligations that contain non-appropriation clauses
when the lease payments will commence amortization of principal at an early
date resulting in an average life of five years or less for the lease
obligation.
Floating and Variable Rate Instruments. Certain Funds may
invest in floating and variable rate instruments. Income securities may provide
for floating or variable rate interest or dividend payments. The floating or
variable rate may be determined by reference to a known lending rate, such as a
bank's prime rate, a certificate of deposit rate or the London InterBank
Offered Rate (LIBOR). Alternatively, the rate may be determined through an
auction or remarketing process. The rate also may be indexed to changes in the
values of interest rate or securities indexes, currency exchange rate or other
commodities. Variable and floating rate securities tend to be less sensitive
than fixed rate securities to interest rate changes and to have higher yields
when interest rates increase. However, during periods of rising interest rates,
changes in the interest rate of an adjustable rate security may lag changes in
market rates.
The amount by which the rates paid on an income security may
increase or decrease may be subject to periodic or lifetime caps. Fluctuations
in interest rates above these caps could cause adjustable rate securities to
behave more like fixed rate securities in response to
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extreme movements in interest rates.
Floating and variable rate income securities include
securities whose rates vary inversely with changes in market rates of interest.
Such securities may also pay a rate of interest determined by applying a
multiple to the variable rate. The extent of increases and decreases in the
value of securities whose rates vary inversely with changes in market rates of
interest generally will be larger than comparable changes in the value of an
equal principal amount of a fixed rate security having similar credit quality,
redemption provisions and maturity.
Certain Funds may purchase floating and variable rate demand
bonds and notes, which are Municipal Obligations ordinarily having stated
maturities in excess of one year but which permit their holder to demand
payment of principal at any time or at specified intervals. Variable rate
demand notes include master demand notes, which are obligations that permit a
Fund to invest fluctuating amounts, which may change daily without penalty,
pursuant to direct arrangements between the Fund, as lender, and the borrower.
These obligations have interest rates that fluctuate from time to time and
frequently are secured by letters of credit or other credit support
arrangements provided by banks. Use of letters of credit or other credit
support arrangements will not adversely affect the tax-exempt status of
variable rate demand notes. Because they are direct lending arrangements
between the lender and borrower, variable rate demand notes generally will not
be traded and no established secondary market generally exists for them,
although they are redeemable at face value. If variable rate demand notes are
not secured by letters of credit or other credit support arrangements, a Fund's
right to demand payment will be dependent on the ability of the borrower to pay
principal and interest on demand. Each obligation purchased by a Fund will meet
the quality criteria established by the Investment Manager for the purchase of
Municipal Obligations. The Investment Manager considers on an ongoing basis the
creditworthiness of the issuers of the floating and variable rate demand
obligations in the relevant Fund's portfolio.
Participation Interests. Certain Funds may purchase from
financial institutions participation interests in certain Municipal
Obligations. A participation interest gives the Fund an undivided interest in
the Municipal Obligation in the proportion that the Fund's participation
interest bears to the total principal amount of the Municipal Obligation. These
instruments may have fixed, floating or variable rates of interest. If the
participation interest is unrated, or has been given a rating below one that is
otherwise permissible for purchase by a Fund, the participation interest will
be backed by an irrevocable letter of credit or guarantee of a bank that the
Board has determined meets certain quality standards, or the payment obligation
otherwise will be collateralized by Government Securities. A Fund will have the
right, with respect to certain participation interests, to demand payment, on a
specified number of days' notice, for all or any part of the Fund's
participation interest in the Municipal Obligation, plus accrued interest. The
Trust intends that a Fund exercise its right to demand payment only upon a
default under the terms of the Municipal Obligation, or to maintain or improve
the quality of its investment portfolio. A Fund will invest no more than 5% of
the value of its total assets in participation interests.
Zero Coupon Obligations. Certain Funds may invest in zero
coupon obligations. Zero coupon securities generally pay no cash interest (or
dividends in the case of preferred stock)
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to their holders prior to maturity. Accordingly, such securities usually are
issued and traded at a deep discount from their face or par value and generally
are subject to greater fluctuations of market value in response to changing
interest rates than securities of comparable maturities and credit quality that
pay cash interest (or dividends in the case of preferred stock) on a current
basis. Although each of these Funds will receive no payments on its zero coupon
securities prior to their maturity or disposition, it will be required for
federal income tax purposes generally to include in its dividends each year an
amount equal to the annual income that accrues on its zero coupon securities.
Such dividends will be paid from the cash assets of the Fund, from borrowings
or by liquidation of portfolio securities, if necessary, at a time that the
Fund otherwise would not have done so. To the extent these Funds are required
to liquidate thinly traded securities, the Funds may be able to sell such
securities only at prices lower than if such securities were more widely
traded. The risks associated with holding securities that are not readily
marketable may be accentuated at such time. To the extent the proceeds from any
such dispositions are used by these Funds to pay distributions, each of those
Funds will not be able to purchase additional income-producing securities with
such proceeds, and as a result its current income ultimately may be reduced.
The Tax-Exempt Fund, the Short-Term Government Fund, the High
Yield Fund and the Strategic Fund may each invest up to 10% of its assets in
zero coupon Municipal Obligations. Zero coupon Municipal Obligations are
generally divided into two categories: "Pure Zero Obligations," which are those
that pay no interest for their entire life and "Zero/Fixed Obligations," which
pay no interest for some initial period and thereafter pay interest currently.
In the case of a Pure Zero Obligation, the failure to pay interest currently
may result from the obligation's having no stated interest rate, in which case
the obligation pays only principal at maturity and is sold at a discount from
its stated principal. A Pure Zero Obligation may, in the alternative, provide
for a stated interest rate, but provide that no interest is payable until
maturity, in which case accrued, unpaid interest on the obligation may be
capitalized as incremental principal. The value to the investor of a zero
coupon Municipal Obligation consists of the economic accretion either of the
difference between the purchase price and the nominal principal amount (if no
interest is stated to accrue) or of accrued, unpaid interest during the
Municipal Obligation's life or payment deferral period.
Custodial Receipts. Certain Funds may acquire custodial
receipts or certificates underwritten by securities dealers or banks that
evidence ownership of future interest payments, principal payments, or both, on
certain Municipal Obligations. The underwriter of these certificates or
receipts typically purchases Municipal Obligations and deposits the obligations
in an irrevocable trust or custodial account with a custodian bank, which then
issues receipts or certificates that evidence ownership of the periodic
unmatured coupon payments and the final principal payment on the obligations.
Custodial receipts evidencing specific coupon or principal payments have the
same general attributes as zero coupon Municipal Obligations described above.
Although under the terms of a custodial receipt a Fund would be typically
authorized to assert its rights directly against the issuer of the underlying
obligation, the Fund could be required to assert through the custodian bank
those rights as may exist against the underlying issuers. Thus, in the event
the underlying issuer fails to pay principal and/or interest when due, a Fund
may be subject to delays, expenses and risks that are greater than those that
would have been involved if the Fund had purchased a direct obligation of the
issuer. In addition, in the event
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that the trust or custodial account in which the underlying security has been
deposited is determined to be an association taxable as a corporation, instead
of a non-taxable entity, the yield on the underlying security would be reduced
in recognition of any taxes paid.
Government Stripped Mortgage Related Securities. Certain
Funds may invest in government stripped mortgage related securities issued and
guaranteed by Ginnie Mae, Fannie Mae or Freddie Mae. These securities represent
beneficial ownership interests in either periodic principal distributions
("principal-only") or interest distributions ("interest-only") on mortgage
related certificates issued by Ginnie Mae, Fannie Mae or Freddie Mae. The
certificates underlying the government stripped mortgage related securities
represent all or part of the beneficial interest in pools of mortgage loans.
These Funds will invest in government stripped mortgage related securities in
order to enhance yield or to benefit from anticipated appreciation in value of
the securities at times when the Investment Manager believes that interest
rates will remain stable or increase. In periods of rising interest rates, the
expected increase in the value of government stripped mortgage related
securities may offset all or a portion of any decline in value of the
securities held by these Funds.
Investing in government stripped mortgage related securities
involves risks normally associated with investing in mortgage related
securities issued by government or government related entities. In addition,
the yields on government stripped mortgage related securities are extremely
sensitive to prepayment on the mortgage loans underlying the certificates
collateralizing the securities. If a decline in the level of prevailing
interest rates results in a rate of principal prepayments higher than
anticipated, distributions of principal will be accelerated, thereby reducing
the yield to maturity on interest-only government stripped mortgage related
securities and increasing the yield to maturity on principal-only government
stripped mortgage related securities. Sufficiently high prepayment rates could
result in these Funds' not fully recovering their initial investment in an
interest-only government stripped mortgage related security. The sensitivity of
an interest-only security that represents the interest portion of a particular
class, as opposed to the interest portion of an entire pool, to interest rate
fluctuations, may be increased because of the characteristics of the principal
portion to which they relate. Government stripped mortgage related securities
are currently traded in an over-the-counter market maintained by several large
investment banking firms. No assurance can be given that these Funds will be
able to effect a trade of a government stripped mortgage related security at a
desired time. These Funds will acquire government stripped mortgage related
securities only if a secondary market for the securities exists at the time of
acquisition. Except for government stripped mortgage related securities based
on fixed rate FNMA and FHLMC mortgage certificates that meet certain liquidity
criteria established by the Board, the Trust treats government stripped
mortgage related securities as illiquid and will limit each of these Funds'
investments in these securities, together with other illiquid investments, to
not more than 15% of its net assets.
Asset-Backed and Receivable-Backed Securities. Certain Funds
may invest in asset-backed and receivable-backed securities. To date, several
types of asset-backed and receivable-backed securities have been offered to
investors including "Certificates for Automobile Receivables" ("CARs(Service
Mark)") and interests in pools of credit card receivables. CARs(Service Mark)
represent undivided fractional interests in a trust, the assets of which consist
of a pool of motor
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vehicle retail installment sales contracts and security interests in the
vehicles securing the contracts. Payments of principal and interest on
CARs(Service Mark) are passed through monthly to certificate holders and are
guaranteed up to certain amounts and for a certain time period by a letter of
credit issued by a financial institution unaffiliated with the trustee or
originator of the trust.
An investor's return on CARs(Service Mark) may be affected
by early prepayment of principal on the underlying vehicle sales contracts. If
the letter of credit is exhausted, these Funds may be prevented from realizing
the full amount due on a sales contract because of state law requirements and
restrictions relating to foreclosure sales of vehicles and the availability of
deficiency judgments following these sales, because of depreciation, damage or
loss of a vehicle, because of the application of Federal and state bankruptcy
and insolvency laws or other factors. As a result, certificate holders may
experience delays in payment if the letter of credit is exhausted. Consistent
with each of these Funds' investment objective and policies and subject to the
review and approval of the Board, these Funds may also invest in other types of
asset-backed and receivable-backed securities.
Mortgage Dollar Rolls. Certain Funds may, with respect to up
to 25% of their total assets, enter into mortgage "dollar rolls" in which the
Fund sells securities for delivery in the current month and simultaneously
contracts with the same counterparty to repurchase similar (same type, coupon
and maturity) but not identical securities on a specified future date. The Fund
loses the right to receive principal and interest paid on the securities sold.
However, the Fund would benefit to the extent of any price received for the
securities sold and the lower forward price for the future purchase (often
referred to as the "drop") or fee income plus the interest earned on the cash
proceeds of the securities sold until the settlement date of the forward
purchase. Unless such benefits exceed the income, capital appreciation and gain
or loss due to mortgage repayments that would have been realized on the
securities sold as part of the mortgage dollar roll, the use of this technique
will diminish the investment performance of the Fund compared with what such
performance would have been without the use of mortgage dollar rolls. The Fund
will hold and maintain in a segregated account until the settlement date cash
or liquid assets in an amount equal to the forward purchase price. The benefits
derived from the use of mortgage dollar rolls may depend upon the Investment
Manager's ability to predict correctly mortgage prepayments and interest rates.
There is no assurance that mortgage dollar rolls can be successfully employed.
For financial reporting and tax purposes, each of these Funds
proposes to treat mortgage dollar rolls as two separate transactions: one
involving the purchase of a security and a separate transaction involving a
sale. The Funds do not currently intend to enter into mortgage dollar rolls
that are accounted for as a financing.
Short Sales Against the Box. Certain Funds may sell
securities "short against the box." Whereas a short sale is the sale of a
security a Fund does not own, a short sale is "against the box" if at all times
during which the short position is open, the Fund owns at least an equal amount
of the securities or securities convertible into, or exchangeable without
further consideration for, securities of the same issue as the securities sold
short.
34
<PAGE>
WEBS and Other Index-Related Securities. Certain Funds may
invest in shares in an investment company whose shares are known as "World
Equity Benchmark Shares" or "WEBS." WEBS have been listed for trading on the
American Stock Exchange, Inc. The Funds also may invest in the CountryBaskets
Index Fund, Inc., or another fund the shares of which are the substantial
equivalent of WEBS. Certain Funds may invest in S&P Depositary Receipts, or
"SPDRs." SPDRs are securities that represent ownership in a long-term unit
investment trust that holds a portfolio of common stocks designed to track the
performance of the S&P 500 Index. A Fund investing in a SPDR would be entitled
to the dividends that accrue to the S&P 500 stocks in the underlying portfolio,
less trust expenses.
INVESTMENT RESTRICTIONS
Each Fund is subject to fundamental and non-fundamental
investment policies and limitations. Under the 1940 Act, fundamental investment
policies and limitations may not be changed without the vote of a majority of
the outstanding voting securities (as defined in the 1940 Act) of the Fund.
All Funds except the Tax-Exempt Fund:
The following policies and limitations supplement those
described in the Prospectus and this SAI. Investment restrictions numbered 1
through 10 below have been adopted by the Trust as fundamental policies of all
the Funds, except the Tax-Exempt Fund. Investment restrictions 11 through 17
are not fundamental policies and may be changed by a vote of the Board at any
time.
1. No Fund may borrow money, except that the Small-Cap Growth
Fund, Small-Cap Value Fund, the Value Equity Fund, the Europe Fund, the
Emerging Markets Fund, the High Yield Fund, the Government Securities Fund and
the Money Market Fund may enter into reverse repurchase agreements, and except
that each Fund may borrow from banks for temporary or emergency (not
leveraging) purposes, including the meeting of redemption requests and cash
payments of dividends and distributions that might otherwise require the
untimely disposition of securities, in an amount not to exceed 33-1/3% of the
value of the Fund's total assets (including the amount borrowed) valued at
market less liabilities (not including the amount borrowed) at the time the
borrowing is made. Whenever borrowings of 5% or more of a Fund's total assets
are outstanding, including reverse repurchase agreements, the Fund will not
make any additional investments.
35
<PAGE>
2. No Fund may lend its assets or money to other persons,
except through (a) purchasing debt obligations, (b) lending portfolio
securities in an amount not to exceed 30% of the Fund's assets taken at market
value, (c) entering into repurchase agreements (d) trading in financial futures
contracts, index futures contracts, securities indexes and options on financial
futures contracts, options on index futures contracts, options on securities
and options on securities indexes and (e) entering into variable rate demand
notes.
3. No Fund, other than the International Income Fund, may
purchase securities (other than Government Securities) of any issuer if, as a
result of the purchase, more than 5% of the Fund's total assets would be
invested in the securities of the issuer, except that (a) up to 25% of the
value of the total assets of each Fund, other than the Money Market Fund, may
be invested without regard to this limitation, and (b) the Money Market Fund
may invest more than 5% of its total assets in the securities of an issuer to
the extent permitted by Rule 2a-7 under the 1940 Act. All securities of a
foreign government and its agencies will be treated as a single issuer for
purposes of this restriction.
4. No Fund, other than the International Income Fund, may
purchase more than 10% of the voting securities of any one issuer, or more than
10% of the outstanding securities of any class of issuer, except that (a) this
limitation is not applicable to a Fund's investments in Government Securities
and (b) up to 25% of the value of the assets of a Fund, other than the Money
Market Fund, may be invested without regard to these 10% limitations. All
securities of a foreign government and its agencies will be treated as a single
issuer for purposes of this restriction.
5. No Fund may invest more than 25% of the value of its total
assets in securities of issuers in any one industry. For purposes of this
restriction, the term industry will be deemed to include (a) the government of
any one country other than the United States, but not the U.S. Government and
(b) all supranational organizations. In addition, securities held by the Money
Market Fund that are issued by domestic banks are excluded from this
restriction.
6. No Fund may underwrite any issue of securities, except to
the extent that the sale of portfolio securities in accordance with the Fund's
investment objective, policies and limitations may be deemed to be an
underwriting, and except that the Fund may acquire securities under
circumstances in which, if the securities were sold, the Fund might be deemed
to be an underwriter for purposes of the Securities Act of 1933, as amended
(the "1933 Act").
7. No Fund may purchase or sell real estate or real estate
limited partnership interests, or invest in oil, gas or mineral leases, or
mineral exploration or development programs, except that a Fund may (a) invest
in securities secured by real estate, mortgages or interests in real estate or
mortgages, (b) purchase securities issued by companies that invest or deal in
real estate, mortgages or interests in real estate or mortgages, (c) engage in
the purchase and sale of real estate as necessary to provide it with an office
for the transaction of business or (d) acquire real estate or interests in real
estate securing an issuer's obligations, in the event of a default by that
issuer.
8. No Fund may make short sales of securities or maintain a
short position, unless at all times when a short position is open, the Fund
owns an equal amount of the securities
36
<PAGE>
or securities convertible into or exchangeable for, without payment of any
further consideration, securities of the same issue as, and equal in amount to,
the securities sold short.
9. No Fund may purchase securities on margin, except that a
Fund may obtain any short-term credits necessary for the clearance of purchases
and sales of securities. For purposes of this restriction, the deposit or
payment of initial or variation margin in connection with futures contracts,
financial futures contracts or related options, and options on securities,
options on securities indexes and options on currencies will not be deemed to
be a purchase of securities on margin by a Fund.
10. No Fund may invest in commodities, except that each Fund
(other than the Money Market Fund) may invest in futures contracts (including
financial futures contracts, index futures contracts or securities index
futures contracts) and related options and other similar contracts (including
foreign currency forward, futures and options contracts) as described in this
Statement of Additional Information and in the Prospectus.
11. No Fund may purchase or sell put options, call options,
spreads or combinations of put options, call options and spreads, except that
(a) each Fund, other than the Money Market Fund, may purchase and sell covered
put and call options on securities and stock indexes and futures contracts and
options on futures contracts and (b) the Money Market Fund may acquire "puts"
and "unconditional puts" as defined in Rule 2a-7 under the 1940 Act.
12. No Fund may purchase securities of other investment
companies, other than a security acquired in connection with a merger,
consolidation, acquisition, reorganization or offer of exchange and except as
otherwise permitted under the 1940 Act.
13. No Fund may invest in companies for the purpose of
exercising control or management.
14. No Fund may purchase warrants (other than warrants
acquired by the Fund as part of a unit or attached to securities at the time of
purchase) if, as a result, the investments (valued at the lower of cost or
market) would exceed 5% of the value of the Fund's net assets. For purposes of
this restriction, warrants acquired by a Fund in units or attached to
securities may be deemed to be without value. The Money Market Fund may not
invest in any form of warrants.
15. No Fund may purchase illiquid securities if more than 15%
of the total assets of the Fund would be invested in illiquid securities; the
Money Market Fund will not purchase illiquid securities. For purposes of this
restriction, illiquid securities are securities that cannot be disposed of by a
Fund within seven days in the ordinary course of business at approximately the
amount at which the Fund has valued the securities.
16. No Fund may purchase restricted securities if more than
10% of the total assets of the Fund would be invested in restricted securities.
Restricted securities are securities that are subject to contractual or legal
restrictions on transfer, excluding for purposes of this restriction,
restricted securities that are eligible for resale pursuant to Rule 144A under
the 1933 Act ("Rule 144A Securities"), that have been determined to be liquid
by the Board based upon
37
<PAGE>
the trading markets for the securities.
17. No Fund may issue senior securities except as otherwise
permitted by the 1940 Act and as otherwise permitted herein.
The Tax-Exempt Fund:
Investment restrictions numbered 1 through 9 below have been
adopted by the Trust as fundamental policies of the Tax-Exempt Fund. Investment
restrictions 10 through 15 are not fundamental policies and may be changed by a
vote of the Board at any time. The Tax-Exempt Fund may not:
1. Purchase more than 10% of any class of securities of any
one issuer (except Government Securities and securities fully collateralized by
Government Securities).
2. Invest more than 5% of its total assets in the securities
of any one issuer (except for Government Securities and securities fully
collateralized by Government Securities, and options thereon).
3. Issue senior securities, as defined in the 1940 Act,
except as permitted by Section 18(f)(2) of that Act or as permitted by an SEC
exemptive order.
4. Borrow amounts in excess of 10% of its total assets and
then only as a temporary measure for extraordinary or emergency purposes. This
restriction shall not prohibit entry into reverse repurchase agreements if as a
result the Tax-Exempt Fund's current obligations under such agreements would
not exceed one-third of the current market value of its total assets (less its
liabilities other than under reverse repurchase agreements).
5. Purchase or sell real estate or real estate limited
partnership interests, or invest in oil, gas or mineral leases, or mineral
exploration or development programs, except that the Tax-Exempt Fund may (a)
invest in securities secured by real estate, mortgages or interests in real
estate or mortgages, (b) purchase securities issued by companies that invest or
deal in real estate, mortgages or interests in real estate or mortgages, (c)
engage in the purchase and sale of real estate as necessary to provide it with
an office for the transaction of business or (d) acquire real estate or
interest in real estate securing an issuer's obligations, in the event of a
default by that issuer.
6. Invest in commodities, except that the Tax-Exempt Fund may
invest in futures contracts (including financial futures contracts, index
futures contracts or securities index futures contracts) and related options
and other similar contracts (including foreign currency forward, futures and
options contracts) as described in this Statement of Additional Information and
in the Prospectus.
7. Make loans, except that this restriction shall not
prohibit the purchase and holding of a portion of an issue of publicly
distributed debt securities, the lending of portfolio securities (not more than
5% of the Tax-Exempt Fund's net assets), the entry into repurchase agreements
(not more than one-third of the current market value of the Tax-Exempt Fund's
total
38
<PAGE>
assets shall constitute secured "loans" by the Tax-Exempt Fund under
repurchase agreements), trading in financial futures contracts, index futures
contracts, securities indexes and options on financial futures contracts,
options on index futures contracts, options on securities and options on
securities indexes and investing in variable rate demand notes.
8. Invest more than 25% of the value of the Tax-Exempt Fund's
total assets in securities of issuers in any one industry, except securities
issued or guaranteed by a state, municipality or other political subdivision,
unless the securities are backed only by the assets and revenues of
non-governmental users. For purposes of this restriction, the term industry
will be deemed to include (a) the government of any one country other than the
United States, but not the U.S. Government, and (b) all supranational
organizations.
9. Underwrite any issue of securities, except to the extent
that the sale of portfolio securities in accordance with the Tax-Exempt Fund's
investment objective, policies and limitations may be deemed to be an
underwriting, and except that the Tax-Exempt Fund may acquire securities under
circumstances in which, if the securities were sold, the Tax-Exempt Fund might
be deemed to be an underwriter for purposes of the 1933 Act.
10. Invest in the securities of an issuer for the purpose of
exercising control or management, but the Tax-Exempt Fund may do so where it is
deemed advisable to protect or enhance the value of an existing investment.
11. Purchase securities of any other investment company,
except in the open market in a transaction involving no commission or profit to
a sponsor or dealer (other than the customary brokerage commission) and only to
the extent of 10% of the Tax-Exempt Fund's assets or as part of a merger,
consolidation, acquisition, reorganization or offer of exchange and except as
otherwise permitted under the 1940 Act.
12. Purchase restricted securities if more than 10% of the
total assets of the Tax-Exempt Fund would be invested in restricted securities.
Restricted securities are securities that are subject to contractual or legal
restrictions on transfer, excluding, for purposes of this restriction,
repurchase agreements having less than seven days to maturity, reverse
repurchase agreements, firm commitment agreements, futures contracts and
options thereon, and Rule 144A Securities that have been determined to be
liquid by the Board based upon the trading markets for the securities.
13. Purchase securities on margin, except any short-term
credits which may be necessary for the clearance of transactions and the
initial or maintenance margin in connection with options and futures contracts
and related options.
14. Make short sales of securities, unless the Tax-Exempt
Fund owns an equal amount of the securities or securities convertible into or
exchangeable without further consideration for securities of the same issue as
the securities sold short; provided that this restriction shall not prohibit
the use of options and futures contracts for hedging purposes.
39
<PAGE>
15. Purchase any security while borrowings representing more
than 5% of the Tax-Exempt Fund's net assets (including loans, reverse
repurchase agreements or other borrowings) are outstanding.
Notes to Investment Restrictions
With respect to investment restriction No. 12 (No. 11 in the
case of the Tax-Exempt Fund), investments by the Funds (other than the Money
Market Fund) in the Investment Fund is not considered an investment in another
investment company for purposes of this restriction.
The percentage limitations in the restrictions listed above
apply at the time of purchases of securities. For purposes of investment
restriction No. 5 (No. 8 in the case of the Tax-Exempt Fund), the Trust may use
the industry classifications reflected by the S&P 500 Composite Stock Index, if
applicable at the time of determination. For all other portfolio holdings, the
Trust may use the Directory of Companies Required to File Annual Reports with
the SEC and Bloomberg Inc. In addition, the Trust may select its own industry
classifications, provided such classifications are reasonable.
40
<PAGE>
PORTFOLIO TRANSACTIONS AND TURNOVER
Decisions to buy and sell securities for each Fund are made by
the Investment Manager, subject to review by the Board. Transactions on domestic
stock exchanges and some foreign stock exchanges involve the payment of
negotiated brokerage commissions. On exchanges on which commissions are
negotiated, the cost of transactions may vary among different brokers. On most
foreign exchanges, commissions are fixed. No stated commission will be generally
applicable to securities traded in U.S. over-the-counter markets, but the prices
of those securities include undisclosed commissions or mark-ups. The cost of
securities purchased from underwriters include an underwriting commission or
concession, and the prices at which securities are purchased from and sold to
dealers include a dealer's mark-up or mark-down. Government Securities generally
will be purchased on behalf of a Fund from underwriters or dealers, although
certain newly issued Government Securities may be purchased directly from the
U.S. Treasury or from the issuing agency or instrumentality.
In selecting brokers or dealers to execute securities
transactions on behalf of a Fund, the Investment Manager seeks the best overall
terms available, ("best execution"). In assessing the best overall terms
available for any transaction, the Investment Manager considers factors that it
deems relevant, including the breadth of the market in the security, the price
of the security, the financial condition and execution capability of the broker
or dealer and the reasonableness of the commission, if any, for the specific
transaction and on a continuing basis. In addition, the investment advisory
agreement between the Trust and GEIM relating to each Fund authorizes the
Investment Manager, on behalf of the Fund, in selecting brokers or dealers to
execute a particular transaction, and in evaluating the best overall terms
available, to consider the brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934) provided to the
Fund and/or other accounts over which the Investment Manager or its affiliates
exercise investment discretion. The fees under the investment advisory agreement
relating to a Fund will not be reduced by reason of the Fund's receiving
brokerage and research services. The Board periodically reviews the commissions
paid by a Fund to determine if the commissions paid over representative periods
of time were reasonable in relation to the benefits inuring to the Fund.
Over-the-counter purchases and sales on behalf of the Funds will be transacted
directly with principal market makers except in those cases in which better
prices and executions may be obtained elsewhere. A Fund will not purchase any
security, including Government Securities, during the existence of any
underwriting or selling group relating to the security of which any affiliate of
the Fund or the Investment Manager is a member, except to the extent permitted
under rules, interpretations or exemptions of the SEC.
The Investment Manager may select broker-dealers who are
affiliated with the Trust or the Investment Manager. The Board has determined
that, to the extent consistent with applicable provisions of the 1940 Act and
rules thereunder and procedures adopted by the Board, transactions for a Fund
may be executed through the Distributor, if, in the judgment of the Investment
Manager, the use of the Distributor is likely to result in price and execution
at least as favorable to the Fund as those obtainable through other qualified
broker-dealers, and if, in the transaction, the Distributor charges the Fund a
fair and reasonable rate consistent with that payable by the Fund to other
broker-dealers on comparable transactions. Under rules adopted by the SEC, the
Distributor may not execute transactions for a Fund on the floor of any national
41
<PAGE>
securities exchange, but may effect transactions by transmitting orders for
execution providing for clearance and settlement, and arranging for the
performance of those functions by members of the exchange not associated with
the Distributor. The Distributor will be required to pay fees charged by those
persons performing the floor brokerage elements out of the brokerage
compensation that it receives from a Fund.
A 100% annual turnover rate would occur if all of a Fund's
securities were replaced one time during a period of one year. Certain of the
Fund's investment strategies may result in the Fund having a high portfolio
turnover rate. Higher portfolio turnover may cause a Fund to experience
increased transaction costs, brokerage expenses and other acquisition costs, and
shareholders to incur increased taxes on their investment in the Fund. The
Investment Manager does not consider portfolio turnover rate a limiting factor
in making investment decisions on behalf of any Fund consistent with the Fund's
investment objective and policies. The Money Market Fund may attempt to increase
its yield by trading to take advantage of short-term market variations, which
trading would result in the Fund's experiencing high portfolio turnover. Because
purchases and sales of money market instruments are usually effected as
principal transactions, however, this type of trading by the Money Market Fund
will not result in the Fund's paying higher brokerage commissions.
During the fiscal period ended September 30, 1998, the
International Fund, the Global Fund, the U.S. Equity Fund, the Strategic Fund,
the Premier Fund, the Mid-Cap Growth Fund and the Value Equity Fund paid
$261,481, $196,841, $347,560, $135,540, $45,824, $29,220 and $53,784,
respectively in commissions to broker-dealers for execution of portfolio
transactions. Of these amounts, $11,571, $12,065, $47,540, $7,742, $3,523,
$3,771 and $7,144 in brokerage transactions was paid by the International Fund,
the Global Fund, the U.S. Equity Fund, the Strategic Fund, the Premier Fund, the
Mid-Cap Growth Fund and the Value Equity Fund respectively, to a broker that
provided research services during that fiscal year. During the fiscal period
ended September 30, 1997, the International Fund, the Global Fund, the U.S.
Equity Fund, the Strategic Fund, the Premier Fund, the Mid-Cap Growth Fund and
the Value Equity Fund paid $268,970, $204,750,$218,896, $91,950, $14,844,
$151,399 and $91,033, respectively, in commissions to broker-dealers for
execution of portfolio transactions. During the fiscal year ended September 30,
1996, the International Fund, the Global Fund, the U.S. Equity Fund and the
Strategic Fund paid $268,291, $100,049, $207,206 and $75,115, respectively, in
commissions to broker-dealers for execution of portfolio transactions. The
Income Fund, the Government Securities Fund, the Tax-Exempt Fund, the Short-Term
Government Fund and the Money Market Fund made no payments to broker-dealers for
execution of portfolio transactions during the 1998, 1997 or 1996 fiscal years.
For the period from November 1, 1996 to September 26, 1997,
Investors Trust Growth Fund (the "IT Growth Fund"), Investors Trust Value Fund
(the "IT Value Fund") and Investors Trust Government Fund (the "IT Government
Fund"), predecessor funds to the Mid-Cap Growth Fund, the Value Equity Fund and
the Government Securities Fund, paid $31,146, $33,834 and $0, respectively in
commissions to broker-dealers for execution of portfolio transactions. During
the fiscal year ended October 31, 1996, the IT Growth Fund, the IT Value Fund
and the IT Government Fund paid $31,672, $60,237 and $30,581, respectively in
commissions to broker-dealers for execution of portfolio transactions. The
Investors Trust Tax
42
<PAGE>
Free Fund (the "IT Tax Free Fund"), predecessor Fund to the Tax-Exempt Fund,
made no payments to broker-dealers for execution of portfolio transactions
during 1997 or 1996. The IT Growth Fund, the IT Value Fund, the IT Government
Fund and the IT Tax Free Fund made no payments for research services in 1997 or
1996.
MANAGEMENT OF THE TRUST
TRUSTEES AND OFFICERS
The Board of Trustees oversees the business affairs of the
Trust. The Trustees approve all significant agreements between the Trust and the
persons and companies that furnish services to the Funds, including agreements
with the Funds' investment adviser and administrator, distributor, custodian and
transfer agent. The day-to-day operations of the Funds have been delegated to
GEIM.
The names of the Trustees and executive officers of the Trust,
their addresses and their principal occupations during the past five years and
their other affiliations are shown below. Each person named as a Trustee also
may serve in a similar capacity for other Funds advised by GEIM or GEIC. The
executive officers of the Trust are employees of organizations that provide
services to the Funds. An asterisk appears before the name of each Trustee who
is an "interested person" of the Trust, as defined in the 1940 Act. The business
address of each Trustee and executive officer who is an "interested person" (as
defined in the 1940 Act) is 3003 Summer Street, Stamford, Connecticut 06905.
<TABLE>
<CAPTION>
Position(s) Held Age and Principal Occupation(s)
Name and Address With Trust During Past Five Years
---------------- ---------------- -------------------------------
<S> <C> <C>
*Michael J. Cosgrove Chairman of the Age 49. President, GE Investment Services
Board and President Group of GE Financial Assurance Holdings,
Inc. ("GEFA"), an indirect wholly-owned
subsidiary of General Electric Company
("GE"), since February 1997; Executive Vice
President - Mutual Funds of GEIM and GEIC,
wholly-owned subsidiaries of GE that are
registered as investment advisers under the
Investment Advisers Act of 1940, as amended,
since March 1993; Director of GEIC and GEIM
since 1988; from 1988 until 1993, Mr.
Cosgrove served as Executive Vice President
- Finance and Administration of GEIM and
GEIC; Chairman of the Board, Chief Executive
Officer and President of GE Investment
Distributors, Inc., a registered
broker-dealer, since 1993; Chairman of the
Board and Chief Executive Officer of GE
Investment Retirement Services, Inc., since
1998.
*Alan M. Lewis Trustee and Age 52. Executive Vice President, General
Executive Vice Counsel and Secretary of GEIM since 1988
President and of GEIC since October 1987.
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
Position(s) Held Age and Principal Occupation(s)
Name and Address With Trust During Past Five Years
---------------- ---------------- -------------------------------
<S> <C> <C>
John R. Costantino Trustee Age 52. Managing Director, Walden Partners,
150 East 58th Street Ltd., consultants and investors, since
New York, NY 10055 August 1992; President, CMG Acquisition
Corp., Inc., a holding company, since 1988;
Vice Chairman, Acoustiguide Holdings, Inc.,
a holding company, since 1989; President
CMG/IKH, Inc., a holding company, since
1991; Director, Crossland Federal Savings
Bank, a financial institution; Director,
Brooklyn Bankcorp, Inc., a financial
institution; Director, IK Holdings, Inc., a
holding company since 1991; Director, I.
Kleinfeld & Son, Inc., a retailer, since
1991; Director, High Performance Appliances,
Inc., a distributor of kitchen appliances
("HPA"), since 1991; Director, HPA Hong
Kong, Ltd., a service subsidiary of HPA,
since 1991; Director, Lancit Media
Productions, Ltd., a children's and family
television film and videotape production
company, since 1995.
William J. Lucas Trustee Age 51. Vice President and Treasurer of
Fairfield University Fairfield University since 1983.
North Benson Road
Fairfield, CT 06430
Robert P. Quinn Trustee Age 62. Retired since 1983 from Salomon
45 Shinnecock Road Brothers Inc.; Director, GP Financial Corp.,
Quogue, NY 11959 a holding company, since 1994; Director, The
Greenpoint Savings Bank, a financial
institution, since 1987.
Michael Tansley Treasurer Age 34. Manager of Fund Administration at
GEIM and GEIC since May 1998; from 1990 to
May 1998, Mr. Tansley held various positions
in the Investment Company Services Group of
PriceWaterhouseCoopers LLP, New York
(formerly Price Waterhouse LLP).
Matthew J. Simpson Secretary Age 37. Vice President and General Counsel,
Investment Services Group of GEFA since
February 1997; Vice President, Associate
General Counsel and Assistant Secretary of
GEIM and GEIC since October 1992.
</TABLE>
44
<PAGE>
No employee of GE or any of its affiliates receives any compensation from the
Trust for acting as a Trustee or officer of the Trust. Each Trustee of the Trust
who is not a director, officer or employee of GEIM, GEID, GE, or any affiliate
of those companies, receives an annual fee of $10,000 for services as Trustee.
In addition, each Trustee receives $500 for each meeting of the Board attended
by the Trustee and is reimbursed for expenses incurred in connection with
attendance at Board meetings.
TRUSTEES' COMPENSATION
(FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998)
<TABLE>
<CAPTION>
Total Compensation Total Compensation from Investment
Name of Trustee From the Trust Companies Managed by GEIM or GEIC
--------------- ------------------- ----------------------------------
<S> <C> <C>
Michael J. Cosgrove None None+
Alan M. Lewis None None+
John R. Costantino $17,000 $25,000++
William J. Lucas $17,000 $25,000++
Robert P. Quinn $17,000 $25,000++
</TABLE>
-----------------------
+ As of September 30, 1998, Mr. Cosgrove served as Trustee or Director of
four investment companies advised by GEIM and of eight investment
companies advised by GEIC. Mr. Lewis serves as Trustee of three
investment companies advised by GEIM and eight investment companies
advised by GEIC. They are considered to be interested persons of each
investment company advised by GEIM or GEIC, as defined under Section
2(a)(19) of the 1940 Act, and, accordingly, serve as Trustees thereof
without compensation.
++ As of September 30, 1998, Messrs. Costantino, Lucas and Quinn served as
Trustees or Directors of four investment companies advised by GEIM and
the compensation is for their services as Trustees or Directors of these
companies.
INVESTMENT ADVISER AND ADMINISTRATOR
GEIM serves as the Trust's investment adviser and
administrator. GEIM is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended, and is located at 3003 Summer Street,
Stamford, Connecticut 06905. GEIM, which was formed under the laws of Delaware
in 1988, is a wholly owned subsidiary of GE. GE is a highly diversified
conglomerate comprised of 12 global manufacturing and service sector businesses.
GE's businesses include aircraft engines, appliances, capital services,
lighting, medical systems, broadcasting, plastic manufacturing, power systems,
electrical distribution and control systems, industrial control systems,
information services and transportation systems. GEIM currently provides
advisory services with respect to a number of other mutual funds and private
institutional accounts. The professionals responsible for the investment
operations of GEIM serve in similar capacities with respect to GEIC, a sister
company of GEIM wholly owned by
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GE, which provides investment advisory services with respect to GE's pension and
benefit plans and a number of funds offered exclusively to GE employees,
retirees and certain related persons. These funds include the Elfun family of
Funds (the first of which, Elfun Trusts, was established in 1935) and the funds
offered as part of GE's 401(k) program (also known as the GE Savings and
Security Program), which are referred to as the GE S&S Program Mutual Fund and
the GE S&S Long Term Interest Fund. The investment professionals at GEIM and
GEIC and their predecessors have managed GE's pension assets since 1927. GEIM
and GEIC managed assets in excess of $78 billion as of December 31, 1998, of
which more than $15 billion was invested in mutual fund assets.
GEIM INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENTS
The duties and responsibilities of GEIM are specified in
investment advisory and administration agreements (each, an "Advisory Agreement"
and collectively, the "Advisory Agreements") between GEIM and the Trust on
behalf of the respective Funds. Under each Advisory Agreement, GEIM, subject to
the supervision of the Trust's Board of Trustees, provides a continuous
investment program for the relevant Fund's assets, including investment research
and management. GEIM determines from time to time what investments are
purchased, retained or sold by the Fund and places purchase and sale orders for
the Fund's investments. GEIM provides the Trust with all executive,
administrative, clerical and other personnel necessary to operate each Fund, and
pays salaries and other employment-related costs of employing these persons.
GEIM furnishes the Trust and each Fund with office space, facilities, and
equipment and pays the day-to-day expenses related to the operation of such
space, facilities and equipment. GEIM, as administrator, also: (a) maintains the
books and records of each Fund; (b) prepares reports to shareholders of each
Fund; (c) prepares and files tax returns for each Fund; (d) assists with the
preparation and filing of reports and the Trust's registration statement with
the SEC; (e) provides appropriate officers for the Trust; (f) provides
administrative support necessary for the Board of Trustees to conduct meetings;
and (g) supervises and coordinates the activities of other service providers,
including independent auditors, legal counsel, custodians, accounting service
agents and transfer agents.
GEIM is generally responsible for employing sufficient staff
and consulting with other persons that it determines to be necessary or useful
in the performance of its obligations under each Advisory Agreement. Each
Advisory Agreement obligates GEIM to provide services in accordance with the
relevant Fund's investment objective, policies and restrictions as stated in the
Trust's current registration statement, as amended from time to time, and to
keep the Trust informed of developments materially affecting that Fund,
including furnishing the Trust with whatever information and reports the Board
of Trustees reasonably requests.
Each Advisory Agreement provides that GEIM may render similar
advisory and administrative services to other clients so long as when a Fund or
any other client served by GEIM are prepared to invest in or desire to dispose
of the same security, available investments or opportunities for sales will be
allocated in a manner believed by GEIM to be equitable to the Fund. The Advisory
Agreements also provide that GEIM shall not be liable for any error of judgment
or mistake of law or for any loss incurred by a Fund in connection with GEIM's
services pursuant to the Agreement, except for a loss resulting from willful
misfeasance, bad faith or gross negligence in the performance of its duties or
from reckless disregard of its
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obligations and duties under the Agreement.
Each Advisory Agreement is effective from its date of
execution, and continues in effect for an initial two-year term and will
continue from year to year thereafter so long as its continuance is approved
annually by (a) the Board of Trustees or (b) a vote of a majority of the
relevant Fund's outstanding voting securities, provided that in either event the
continuance also is approved by the vote of a majority of the Trustees who are
not parties to the Agreement or interested persons, as such term is defined in
the 1940 Act, of any party to the Agreement by a vote cast in person at meeting
called for the purpose of voting on such approval.
Each Advisory Agreement is not assignable and may be
terminated without penalty by either the Trust or GEIM upon no more than 60
days' nor less than 30 days' written notice to the other or by vote of holders
of a majority of the relevant Fund's outstanding voting securities.
The agreements governing the investment advisory services
furnished to the Trust by GEIM provide that, if GEIM ceases to act as the
investment adviser to the Trust, at GEIM's request, the Trust's license to use
the initials "GE" will terminate and the Trust will change the name of the Trust
and the Funds to a name not including the initials "GE."
INVESTMENT ADVISORY FEES
The Funds pay GEIM fees for advisory and administration
services provided under the Advisory Agreements that are accrued daily and paid
monthly at the following annual rates based upon the value of the Funds' average
daily net assets: the Premier Fund -- 0.60%, the U.S. Equity Fund -- 0.40%, the
Small-Cap Value Fund -- 0.70%, the Mid-Cap Growth Fund -- 0.60%, the Mid-Cap
Value Fund -- 0.80%, the Value Equity Fund -- 0.55%, the Global Fund -- 0.75%,
the International Fund -- 0.80%, the Europe Equity Fund -- 1.05%, the Emerging
Markets Fund -- 1.20%, the Strategic Fund -- 0.35%, the Tax-Exempt Fund --
0.35%, the High Yield Fund -- 0.60%, the Income Fund -- 0.35%, the Government
Securities Fund -- 0.40%, the Short-Term Government Fund -- 0.30% and the Money
Market Fund -- 0.25%.
For the fiscal period ended September 30, 1998, the
International Fund, the Premier Fund, the Mid-Cap Growth Fund, the Value Equity
Fund, the Global Fund, the U.S. Equity Fund, the Strategic Fund, the Tax-Exempt
Fund, the Income Fund, the Government Securities Fund, the Short-Term Government
Fund and the Money Market Fund paid $513,776, $143,798, $251,052, $343,640,
$405,430, $1,859,219, $478,553, $308,751, $91,406, $322,161, $1,895,373 and
$72,503, respectively, for investment advisory and administration services. For
the fiscal period ended September 30, 1997, the International Fund, the Premier
Fund, the Mid-Cap Growth Fund, the Value Equity Fund, the Global Fund, the U.S.
Equity Fund, the Strategic Fund, the Tax-Exempt Fund, the Income Fund, the
Government Securities Fund, the Short-Term Government Fund and the Money Market
Fund paid to GEIM $682,857, $43,759, $2,854, $4,434, $382,192, $1,218,687,
$368,324, $1,453, $227,295, $24,158, $33,016 and $252,319, respectively, for
investment advisory and administration services. For the fiscal year ended
September 30, 1996, the International Fund, the Global Fund, the U.S. Equity
Fund, the Strategic Fund, the Tax-Exempt Fund, the Income Fund, the Short-Term
Government Fund and the Money Market Fund paid $464,327, $287,004, $836,061,
$243,374, $42,029, $192,880,
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$34,453 and $205,219, respectively, for investment advisory and administration
services.
During the fiscal year ended September 30, 1998, GEIM waived a
total of $18,400, $11,424, $18,322, $3,378, $13,686, $305,619, $35,084, $24,174,
$68,899, $59,817 and $18,762 of expenses of the International Fund, the Premier
Fund, the Mid-Cap Growth Fund, the Value Equity Fund, the Global Fund, the U.S.
Equity Fund, the Tax-Exempt Fund, the Income Fund, the Government Securities
Fund, the Short-Term Government Fund and the Money Market Fund, respectively.
During the fiscal period ended September 30, 1997, GEIM waived a total of
$18,715, $46,849, $0, $0, $54,856, $246,852, $25,481, $126, $55,467, $0, $50,448
and $91,356 of expenses of the International Fund, the Premier Fund, the Mid-Cap
Growth Fund, the Value Equity Fund, the Global Fund, the U.S. Equity Fund, the
Strategic Fund, the Tax-Exempt Fund, the Income Fund, the Government Securities
Fund, the Short-Term Government Fund and the Money Market Fund, respectively.
During the fiscal year ended September 30, 1996, GEIM waived a total of $24,972,
$85,533, $309,241, $53,026, $74,915, $56,349, $66,598 and $169,636 of expenses
of the International Fund, the Global Fund, the U.S. Equity Fund, the Strategic
Fund, the Tax-Exempt Fund, the Income Fund, the Short-Term Government Fund and
the Money Market Fund, respectively.
GNA Capital Management, Inc. ("GNA Capital"), a wholly-owned
subsidiary of GNA Corporation, located at Suite 5600, Two Union Square, 601
Union Street, Seattle, Washington 98101, was, prior to September 26, 1997, the
investment adviser to the IT Growth Fund, the IT Value Fund, the IT Government
Fund and the IT Tax Free Fund (the predecessor funds to the Mid-Cap Growth Fund,
the Value Equity Fund, the Government Securities Fund and the Tax-Exempt Fund,
respectively.. For the period from November 1, 1996 to September 26, 1997, the
IT Growth Fund, the IT Value Fund, the IT Government Fund and the IT Tax Free
Fund paid to GNA Capital $281,759, $351,339, $3,792,436 and $132,688,
respectively, for investment advisory services. For the fiscal year ended
October 31, 1996, the IT Growth Fund, the IT Value Fund, the IT Government Fund
and the IT Tax Free Fund paid to GNA Capital $226,411, $219,848, $5,871,824 and
$29,290, respectively, for investment advisory services. For the period from
November 1, 1996 to September 26, 1997, GNA Capital reimbursed a total of
$53,838, $10,220, $0 and $328,817 of expenses of the IT Growth Fund, the IT
Value Fund, the Government Securities Fund and the IT Tax Free Fund,
respectively. During the fiscal year ended October 31, 1996, GNA Capital
reimbursed a total of $90,565, $86,354, $0 and $442,198 of expenses of the IT
Growth Fund, the IT Value Fund, the Government Securities Fund and the IT Tax
Free Fund, respectively.
SUB-INVESTMENT ADVISERS
Each Advisory Agreement permits GEIM, subject to the approval
of the Board of Trustees and other applicable legal requirements, to enter into
any advisory or sub-advisory agreement with affiliated or unaffiliated entities
whereby such entity would perform some or all of GEIM's responsibilities under
the Advisory Agreement. In this event, GEIM remains responsible for ensuring
that these entities perform the services that each undertakes pursuant to a
sub-advisory agreement. GEIM has engaged the following sub-advisers to manage
certain of the Funds.
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TAX-EXEMPT FUND. Brown Brothers Harriman & Co. ("Brown
Brothers"), located at 59 Wall Street, New York, New York 10005, has been
retained by GEIM to act as sub-investment adviser of the Tax-Exempt Fund.
Pursuant to the sub-investment advisory agreement between Brown Brothers and
GEIM, Brown Brothers bears all expenses in connection with the performance of
its services as the Tax-Exempt Fund's sub-investment adviser. For its services
as sub-investment adviser to the Tax-Exempt Fund, GEIM (and not the Fund) pays
Brown Brothers a fee equal to an annual rate of .20% of the first $25 million of
the Fund's average daily net assets, .175% of the next $25 million, .15% of the
next $50 million and .125% of amounts in excess of $100 million.
SMALL-CAP VALUE FUND. Palisade Capital Management, L.L.C.
("Palisade"), located at One Bridge Plaza, Fort Lee, New Jersey 07024, has been
retained by GEIM to act as sub-investment adviser of the Small-Cap Value Fund.
Pursuant to the sub-investment advisory agreement between Palisade and GEIM,
Palisade bears all expenses in connection with the performance of its services
as the Small-Cap Value Fund's sub-investment adviser. Although Palisade has no
previous experience managing mutual fund portfolios, Palisade has managed
various institutional and private accounts. For its services as sub-investment
adviser to the Small-Cap Value Fund, GEIM (and not the Fund) pays Palisade a fee
equal to an annual rate of .45% of the first $25 million of the Fund's average
daily net assets, .40% of the next $50 million, .375% of the next $100 million
and .35% of amounts in excess of $175 million.
HIGH YIELD FUND. Miller Anderson & Sherrerd, LLP ("MAS"),
located at One Tower Bridge, West Conshohocken, PA 19428, has been retained to
act as sub-investment adviser of the High Yield Fund. MAS is wholly-owned by
indirect subsidiaries of Morgan Stanley Dean Witter & Co. Pursuant to the
sub-investment advisory agreement between MAS and GEIM, MAS bears all expenses
in connection with the performance of its services as the High Yield Fund's
sub-investment adviser. For its services as sub-investment adviser to the High
Yield Fund, GEIM (and not the Fund) pays MAS a fee equal to an annual rate of
.375% of the Fund's average daily net assets.
MID-CAP VALUE FUND. NWQ Investment Management Company ("NWQ"),
located at 2049 Century Park East, Los Angeles, CA 90067, has been retained to
act as sub-investment adviser of the Mid-Cap Value Fund. NWQ is a wholly-owned
subsidiary of United Asset Management Corporation, a company whose principal
business is managing investments for institutional clients. Pursuant to the
sub-investment advisory agreement between NWQ and GEIM, NWQ bears all expenses
in connection with the performance of its services as the Mid-Cap Value Fund's
sub-investment adviser. For its services as sub-investment adviser to the
Mid-Cap Value Fund, GEIM (and not the Fund) pays NWQ a fee equal to an annual
rate of .45% of the first $50 million of the Fund's average daily net assets and
.375% of amounts thereafter.
SUB-ADVISORY AGREEMENTS
Brown Brothers, Palisade, MAS and NWQ serve as sub-advisers to
the Tax-Exempt Fund, the Small-Cap Value Fund, the High Yield Fund and the
Mid-Cap Value Fund respectively, pursuant to sub-advisory agreements with GE
Investment Management (the "Sub-Advisory Agreements"). Each of the Sub-Advisory
Agreements is not assignable and may be terminated without penalty by either the
sub-adviser or GE Investment Management upon 60
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days' written notice to the other or by the Board of Trustees, or by the vote of
a majority of the outstanding voting securities of a Fund, on 60 days' written
notice to the sub-adviser. The Sub-Advisory Agreements provide that the
sub-adviser may render similar sub-advisory services to other clients so long as
the services that it provides under the Agreement are not impaired thereby. The
Sub-Advisory Agreements also provide that the investment sub-adviser shall not
be liable for any error of judgment or mistake of law or for any loss incurred
by the Fund except for a loss resulting from willful misfeasance, bad faith or
gross negligence in the performance of its duties or from reckless disregard of
its obligations and duties under the Sub-Advisory Agreement.
SECURITIES ACTIVITIES OF THE INVESTMENT MANAGER
Securities held by the Funds also may be held by other funds
or separate accounts for which the Investment Manager or GEIC acts as an
adviser. Because of different investment objectives or other factors, a
particular security may be bought by the Investment Manager or GEIC for one or
more of their clients, when one or more other clients are selling the same
security. If purchases or sales of securities for a Fund or other client of the
Investment Manager or GEIC arise for consideration at or about the same time,
transactions in such securities will be made, insofar as feasible, for the Fund
and other clients in a manner deemed equitable to all. To the extent that
transactions on behalf of more than one client of the Investment Manager or GEIC
during the same period may increase the demand for securities being purchased or
the supply of securities being sold, there may be an adverse effect on price.
On occasions when the Investment Manager (under the
supervision of the Board of Trustees) deems the purchase or sale of a security
to be in the best interests of the Trust as well as other funds or accounts for
which the Investment Manager or GEIC acts as an adviser, it may, to the extent
permitted by applicable laws and regulations, but will not be obligated to,
aggregate the securities to be sold or purchased for the Trust with those to be
sold or purchased for other funds or accounts in order to obtain favorable
execution and low brokerage commissions. In that event, allocation of the
securities purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Investment Manager in the manner it considers
to be most equitable and consistent with its fiduciary obligations to the Trust
and to such other funds or accounts. In some cases this procedure may adversely
affect the size the position obtainable for a Fund.
SHAREHOLDER SERVICING AND DISTRIBUTION PLANS
The Trust has adopted Shareholder Servicing and Distribution
Plans (the "Plans") pursuant to Rule 12b-1 under the 1940 Act with respect to
each Fund other than the Money Market Fund ("Participant Funds").
The annual fees payable with respect to each Class of a
Participant Fund are intended to compensate GEIM or enable GEIM to compensate
other persons ("Service Providers") for providing ongoing servicing and/or
maintenance of the accounts of shareholders of the Participant Fund
("Shareholder Services") and to compensate GEIM, or enable GEIM to compensate
Service Providers, including any distributor of shares of the Participant Fund,
for providing services that are primarily intended to result in, or that are
primarily attributable to, the
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sale of shares of the Participant Fund ("Selling Services"). Shareholder
Services means all forms of shareholder liaison services, including, among other
things, one or more of the following: providing Class A, Class B or Class C
shareholders of a Participant Fund with (i) information on their investments;
(ii) general information regarding investing in mutual funds; (iii) periodic
newsletters containing materials relating to the Participant Fund or to
investments in general in mutual funds; (iv) periodic financial seminars
designed to assist in the education of shareholders with respect to mutual funds
generally and the Participant Fund specifically; (v) access to a telephone
inquiry center relating to the Participant Fund; and other similar services not
otherwise required to be provided by the Trust's custodian or transfer agent.
Selling Services include, but are not limited to: the printing and distribution
to prospective investors in the Participant Fund of prospectuses and statements
of additional information that are used in connection with sales of Class A,
Class B and Class C shares of the Participant Fund; the preparation, including
printing, and distribution of sales literature and media advertisements relating
to the Class A, Class B or Class C shares of the Participant Fund; and
distributing Class A, Class B or Class C shares of the Participant Fund. In
providing compensation for Selling Services in accordance with the Plans, GEIM
is expressly authorized (1) to make, or cause to be made, payments reflecting an
allocation of overhead and other office expenses related to the distribution of
the Class A, Class B or Class C shares of a Participant Fund; (2) to make, or
cause to be made, payments to, or to provide for the reimbursement of expenses
of, persons who provide support services in connection with the distribution of
the Class A, Class B or Class C shares of the Participant Fund; and (3) to make,
or cause to be made, payments to broker-dealers who have sold Class A, Class B
or Class C shares of the Participant Fund.
Payments under the Plans are not tied exclusively to the
expenses for shareholder servicing and distribution expenses actually incurred
by GEIM or any Service Provider, and the payments may exceed expenses actually
incurred by GEIM and/or a Service Provider. The Board evaluates the
appropriateness of the Plans and its payment terms on a continuing basis and in
doing so considers all relevant factors, including the types and extent of
Shareholder Services and Selling Services provided by GEIM and/or Service
Providers and amounts GEIM and/or Service Providers receive under the Plans.
Under the Plans, the Trust pays GEIM, with respect to each
Participant Fund, (1) for shareholder servicing and distribution services
provided to the Class A, Class B and Class C shares of the Participant Fund, an
annual fee of 0.25% of the value of the average daily net assets attributed to
the Class A, Class B and Class C shares of the Participant Fund, respectively
and (2) for distribution services provided to the Class B and Class C shares of
each Participant Fund other than the Short-Term Government Fund, an annual fee
of 0.75% of the value of the average daily net assets of the Participant Fund,
respectively; or in the case of the Short-Term Government Fund, an annual fee of
0.60% of the value of the average daily net assets of the Short-Term Government
Fund.
Under their terms, the Plans continue from year to year,
provided their continuance is approved annually by vote of the Trust's full
Board, as well as by a majority of the Trustees who are not interested persons
of the Trust and who have no direct or indirect financial interest in the
operation of the Plans or in any agreements related to them (the "Independent
Trustees"). The Plans may not be amended to increase materially the amount of
the fees paid
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under the Plans with respect to a Fund without approval of shareholders of the
Fund. In addition, all material amendments of the Plans must be approved by the
Trustees and Independent Trustees in the manner described above. The Plans may
be terminated with respect to a Fund at any time, without penalty, by vote of a
majority of the Independent Trustees or by a vote of a majority of the
outstanding voting securities of a Fund (as defined in the 1940 Act).
During the fiscal period ended September 30, 1998, $7,538,779
was paid to GE Investment Management for distribution and shareholder servicing.
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company ("State Street"), located
at 225 Franklin Street, Boston, Massachusetts 02101, serves as custodian and
transfer agent of the Funds' investments. Under its custodian contract with the
Trust, State Street is authorized to appoint one or more banking institutions as
subcustodians of assets owned by each Fund. For its custody services, State
Street receives monthly fees charged to the Funds based upon the month-end,
aggregate net asset value of the Funds, plus certain charges for securities
transactions. The assets of the Trust are held under bank custodianship in
accordance with the 1940 Act. As transfer agent, State Street is responsible for
processing purchase and redemption requests and crediting dividends to the
accounts of shareholders of the Funds.
DISTRIBUTOR
GE Investment Distributors, Inc. ("GEID"), located at 777 Long
Ridge Road, Building B, Stamford, Connecticut 06927, serves as the distributor
of Fund shares on a continuing best efforts basis. Michael J. Cosgrove, a member
of the Trust's board of trustees, is the Chairman of the Board, Chief Executive
Officer and President of GEID.
PURCHASE, REDEMPTION AND EXCHANGE OF SHARES
PURCHASES
Shares are offered to investors at the offering price, based
on the NAV next determined after receipt of an investment in good order by State
Street Bank and Trust Company, the Trust's custodian and transfer agent. The
offering price is equal to NAV plus any applicable initial sales charge imposed
at the time of purchase, as described below.
GEID and other persons remunerated on the basis of sales of
shares may receive different levels of compensation for selling one Class of
shares over another. [In addition, trail commissions of up to 0.25% may be paid
to authorized broker-dealers, financial institutions or investment advisers
which have entered into sales agreements with the GEID ("Authorized Firms") for
providing on-going services with respect to Class A, Class B and Class C
shares.]
CLASS A SHARES. Class A shares are sold at NAV per share plus
a maximum initial sales charge imposed at the time of purchase as discussed in
the Prospectus. The sales charge is retained by GEID, although a portion of the
sales charge may be paid to registered representatives or other dealers that
enter into selected dealer agreements with the GEID. The initial sales charge
may be
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reduced or waived for certain purchases. No sales charge is imposed on Class A
shares purchased through reinvestment of dividends or capital gains
distributions. In addition, Class A shares are offered without any sales charge
with respect to:
(1) purchases of $1 million or more of Class A shares by an
investor, including an investment by a Class Y eligible employee retirement plan
that seeks the additional services provided to Class A Shareholders ("Class A
Retirement Plans"), (2) all purchases by Class A Retirement Plans which have 250
or more eligible employees, (3) all purchases by Class A Retirement Plans,
including Plans purchasing less than $1 million of Class A shares of the Funds
and which have less than 250 employees if such Plans purchase Class A shares
exclusively through GEID and not through an Authorized Firm, (4) all purchases
through GEID and not through an Authorized Firm, (5) all purchases by officers,
directors, employees and registered representatives of Authorized Firms which
have entered into sales agreements with GEID or financial institutions through
which shares of the Funds are being offered or made available for sale, (6) all
purchases made through certain broker-dealers, financial institutions,
recordkeepers and other financial intermediaries who charge a management,
consulting or other fee for their services (each, a "Financial Intermediary,"
collectively, the "Financial Intermediaries") and who have an agreement with or
among the Trust, GEIM or GEID, requiring the Trust, GEIM or GEID to compensate
the Financial Intermediary for administrative, subaccounting, transfer agency
and/or other services, (7) all purchases resulting from offerings made to
selected customers of certain subsidiaries and divisions of GE and to employees
(and their family members) of certain vendors of GE's employee retirement plan,
including any subsequent purchases by persons who invest through such offerings,
provided that any such person maintains an account with the Trust in its, his or
her name at the time of the subsequent purchase and the investment is made in
that name, or as custodian for a minor or in an IRA for the customer, (8) all
purchases by certain customers of GE who previously purchased Class A shares
during a special limited offering of such shares by GEID, provided that the
customer maintains an account with the Trust in its, his or her name at the time
of the current purchase and the investment is made in that name, or as custodian
for a minor or in an IRA for the customer, (9) all purchases by certain of the
GE LifeStyle Funds, a "fund of funds" vehicle designed to invest in certain
classes of the Funds (10) all purchases made through certain broker-dealers that
have entered into an agreement with GEID for sales to supplemental savings plans
at a single employer with 750 or more eligible investors when such purchases are
made through the Payroll Savings Plan or other systematic investment plan, and
(11) all purchases by a GE Employee (as defined below).
For purposes of waiver number 11, the term "GE Employee"
includes (1) current holders of shares of a Participant Fund or of the Money
Market Fund that were issued and outstanding on November 29, 1993 ("Existing
Shares") who are not eligible to be holders of Class Y shares, (2) any family
member of a holder of Existing Shares , (3) employee, retirees, officers or
directors, in each case, whether investing directly or through their IRA and (4)
certain other persons who previously purchased Class C shares in existence prior
to October 1, 1999 during a special limited offering of such shares by GEID,
provided that the person maintains an account with the Trust in its, his or her
name at the time of such additional purchase or exchange and the investment is
made in that name, or as custodian for a minor or in an individual retirement
account for such person. Also for purposes of waiver number 11, the term "family
member" includes spouses and by reason of blood or marriage, parents, children,
siblings,
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grandparents and grandchildren. Also, for purposes of this SAI, the
term "employees, retirees, officers or directors of GE or an affiliate of GE"
includes (i) persons who are currently employed by GE or an affiliate of GE (GE
and its affiliates are hereinafter referred to as "GE"), (ii) persons who have
retired or will retire from GE, or (iii) persons who are no longer employed by
GE, but who have either retained a balance in the GE S&S Program or a defined
contribution plan sponsored by GE or an affiliate of GE or were employed by GE
for at least 20 consecutive years. Any holder of Existing Shares falling within
subcategory (1) above, who fully redeems his or her shares or whose shares are
redeemed in accordance with the involuntary redemption procedure set out below,
will not have the right to reinvest in without paying the sales change. Eligible
investors may purchase shares directly from GEID.
Reduced sales charges are available under a combined right of
accumulation under which an investor may combine (1) the value of Class A shares
held in the Participant Fund, (2) the value of Class A shares held in another
Participant Fund with respect to which the investor has previously paid, or is
subject to the payment of, a sales charge, and (3) the value of Class A shares
being purchased. For example, if an investor owns shares of the Global Fund and
the Strategic Fund that have an aggregate value of $92,000, and makes an
additional investment in Class A shares of the Global Fund of $15,000, the sales
charge applicable to the additional investment would be 3.25% rather than the
5.75% normally charged on a $15,000 purchase. In addition, Class A Retirement
Plans may include, as part of the calculation of accumulation benefits,
purchases of shares of the Money Market Fund and interests in other pooled
investment vehicles, which are made available to such investors and specified by
GEID as eligible for accumulation benefits in sales agreements with Authorized
Firms.
By completing the appropriate section of the account
application and by fulfilling a Letter of Intent ("LOI"), an investor becomes
eligible for the reduced sales load applicable to the total number of
Participant Fund Class A shares purchased in a 13-month period. By marking the
LOI section on the account application and by signing the account application,
the investor indicates that he or she understands and agrees to the terms of the
LOI and is bound by the provisions described below.
Each purchase of shares of a Participant Fund made during the
13-month period will be made subject to the sales charge applicable to a single
transaction of the total dollar amount indicated by the LOI, as described in the
tables set out in the Prospectus. It is the investor's responsibility at the
time of purchase to specify the account numbers that should be considered in
determining the appropriate sales charge and to indicate that the purchase is
pursuant to an LOI. The applicable sales charge may be further reduced pursuant
to the "right of accumulation" described above provided State Street is advised
of all other accounts at the time of the investment. Shares acquired through
reinvestment of dividends and capital gains distributions will not be applied to
the LOI. At any time during the 13-month period after meeting the original
obligation, an investor may revise his or her intended investment amount upward
by submitting a written and signed request. In such event, all subsequent
purchases will be treated as a new LOI (including escrow of additional Fund
shares) except that the original expiration date of the LOI will remain
unchanged. Purchases made within 90 days before signing an LOI may be applied
toward completion of the LOI provided State Street is advised of the date of the
first purchase to be applied toward the completion of the LOI. The LOI effective
date will
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be the date of the first purchase within the 90-day period. Sales charges
previously paid will not be adjusted or refunded.
Out of the initial purchase (or subsequent purchases, if
necessary), State Street will hold in escrow 5.75% of the amount specified in
the LOI in the form of Fund shares. All dividends and capital gains on the
escrowed shares will be credited to the investor's account. All shares
purchased, including those escrowed, will be registered in the investor's name.
If the total investment specified under the LOI is completed within the 13-month
period, the escrowed shares will be promptly released. Assuming completion of
the minimum investment under the LOI, an adjustment will be made to reflect any
reduced sales charge applicable to shares purchased during the 90-day period
prior to the submission of the LOI. Additionally, if the total number of shares
purchased within the period exceeds the amount specified in the LOI, an
adjustment will be made to reflect further reduced sales charges applicable to
such purchases. The investor or Investment Professional must notify State Street
prior to investment of the additional amounts and should specify the appropriate
sales charge rate as described in the Prospectus. All such adjustments will be
made in the form of additional shares credited to the shareholder's account at
the then current offering price.
If the intended investment is not completed, an investor will
be requested to remit an amount equal to the difference between the sales load
actually paid and the sales load applicable to the aggregate purchases actually
made. If GEID does not receive such unpaid sales charge within 20 days, the
investor, by marking the LOI section on the account application, irrevocably
constitutes and appoints State Street as his or her attorney-in-fact to redeem
any and all escrowed shares sufficient to cover the unpaid sales charge. Full
shares and any cash proceeds for a fractional share remaining after such
redemptions will be released from escrow.
If at any time before completing the LOI, an investor wishes
to cancel the agreement, an investor must give written notice to GEID. GEID may
withdraw an investor's LOI privilege for future purchases if an investor
requests State Street to liquidate or transfer beneficial ownership of Fund
shares. An LOI does not bind an investor to purchase, or the Trust to sell, the
full amount indicated at the sales load in effect at the time of signing, but an
investor must complete the intended purchase to obtain the reduced sales load.
CLASS B SHARES. Investors are able to purchase Class B shares
at their net asset value per share next determined after a purchase order is
received, without imposition of any sales charge. Class B shares are sold
subject to a maximum 4.00% CDSC as disclosed in the Prospectus. For each year of
investment, the applicable CDSC declines in accordance with the tables set out
in the Prospectus.
Six years after the date of purchase (eight years in the case
of shares acquired or exchanged from shares of Investors Trust), Class B shares
will convert automatically to Class A shares, based on the relative net asset
values of shares of each Class, and will at that time be subject to a
distribution and service fee of 0.25% of the Participant Fund's net assets
attributable to the Class. The conversion of Class B shares into Class A shares
is subject to the continuing availability of an opinion of counsel to the effect
that the conversions will not constitute taxable events for Federal tax
purposes.
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GEID has adopted guidelines, in view of the relative sales
charges, service fees and distribution fees, directing its representatives and
all selling agents that all purchases of shares should be for Class A shares
when the purchase amount for Class B shares is $250,000 or more by an investor
not eligible to purchase Class Y shares. GEID reserves the right to vary these
guidelines at any time. In addition, a dealer reallowance of up to 4% of the net
amount invested is paid to Authorized Firms selling Class B shares.
CLASS C SHARES. Class C shares will be offered at their net
asset value per share next determined after a purchase order is received,
without imposition of an initial sales charge. Class C shares are sold subject
to a maximum 1.00% CDSC applicable for one year after purchase as disclosed in
the Prospectus. The CDSC is calculated in the same manner as that for Class B
shares. Unlike Class B shares, Class C shares do not convert to Class A shares
after a specified period of time.
GEID has adopted guidelines, in view of the relative sales
charges, service fees and distribution fees, directing its representatives and
all selling agents that all purchases of shares should be for Class A shares
when the purchase amount for Class C shares is $1,000,000 ($500,000 for the
Short-Term Government Fund) or more by an investor not eligible to purchase
Class Y shares. GEID reserves the right to vary these guidelines at any time. In
addition, a dealer reallowance of up to 1.00% of the net amount invested is paid
to Authorized Firms selling Class C shares.
CLASS Y SHARES. Class Y shares will be offered without
imposition of a sales charge, CDSC, service fee or distribution fee exclusively
to: banks, insurance companies and industrial corporations each purchasing
shares for their own account; financial institutions investing in their
fiduciary capacity on behalf of clients or customers; tax-exempt investors,
including defined benefit or contribution plans (including plans meeting the
requirements of Section 401(k) of the Code), plans established under Section
403(b) of the Code, trusts established under Section 501(c)(9) of the Code to
fund the payment of certain welfare benefits, charitable, religious and
educational institutions, and foundations and endowments of those investors;
investment companies not managed or sponsored by GEIM or any affiliate of GEIM;
and Financial Intermediaries that have an agreement with the Trust, GEIM or GEID
which does not require the Trust, GEIM or GEID to compensate the Financial
Intermediary for its services for initial purchases by their clients or
customers equal to or exceeding $250,000 per Participant Fund (the "Minimum
Purchase Requirement") and any subsequent purchases by such clients or customers
who have already met the Minimum Purchase Requirement ("Institutional
Investors"). The Minimum Purchase Requirement for clients or customers of
Financial Intermediaries is waived for purchases by certain non-qualified
deferred compensation plans (such as supplemental employee retirement plans) and
tax-exempt customers, including, but not limited to, defined benefit or defined
contribution plans meeting the requirements of Section 401(a) of the Code
(including 401(k) plans), retirement plans for self-employed individuals, plans
established under Section 403(b) of the Code and plans meeting the requirements
of Section 457(b) of the Code. IRAs, simplified employee pension IRAs
("SEP-IRAs"), salary reduction SEP-IRAs and Keogh plans are only eligible to
purchase Class Y shares through Financial Intermediaries. For purposes of this
SAI, the term "industrial corporation" is intended to mean any corporate entity
employing 100 or more persons but does not include professional
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corporations or corporations established under Subchapter S of the Code.
Investors eligible to purchase Class Y shares may not purchase any other Class
of shares, except as noted above under "Class A Shares." In addition, a dealer
reallowance of up to .32% of the net amount invested is paid to Authorized Firms
selling Class Y shares.
PURCHASES THROUGH INTERMEDIARIES. Class A shares of each
Participant Fund, Class Y shares of each Participant Fund other than the
Short-Term Government Fund and shares of the Money Market Fund are available to
clients and customers of Financial Intermediaries as provided above. Certain
features of each Fund, such as initial and subsequent investment minimums,
redemption fees and certain operational procedures, may be modified or waived
subject to agreement with or among the Trust, GEIM or the Distributor and such
Financial Intermediaries. Financial Intermediaries may impose transaction or
administrative charges or other direct fees, which charges or fees would not be
imposed if Fund shares are purchased or redeemed directly from the Trust.
Therefore, a client or customer should contact their investment adviser and/or
Financial Intermediary acting on his or her behalf concerning the fees (if any)
charged in connection with a purchase or redemption of Fund shares and should
read the Prospectus in light of the terms governing his or her account with the
Financial Intermediary. Financial Intermediaries will be responsible for
promptly reporting client or customer purchase and redemption orders to the
Trust in accordance with their agreements with their clients or customers and
their agreements with or among the Trust, GEIM or the Distributor.
The Trust has authorized certain Financial Intermediaries and
their authorized designees to accept purchase and redemption orders on behalf of
the Trust. The Trust is deemed to have received a purchase or redemption order
when a Financial Intermediary or it authorized designee accepts the order from
its client or customer. Orders received in such a manner will be priced
according to the net asset value of the Fund next determined after the order is
received by the Financial Intermediary or its authorized designee.
SUBSEQUENT PURCHASE OF SHARES.
Investors may purchase additional shares of a Fund at any time
in the manner outlined above. All payments should clearly indicate the
investor's account number, Fund number and desired Class.
PURCHASES IN-KIND.
The Trust may, in its discretion, require that proposed
investments of $10 million or more in a particular Class of a Participant Fund,
or in the Money Market Fund, be made in kind. This requirement is intended to
minimize the effect of transaction costs on existing shareholders of a Fund.
Such transaction costs, which may include broker's commissions and taxes or
governmental fees, domestic or foreign, as the case may be, may, in such event,
be borne by the proposed investor in shares of the Fund. Under these
circumstances, the Trust would inform the investor of the securities and amounts
that are acceptable to the Trust. The securities would then be accepted by the
Trust at their current market value in return for shares in the Fund of an equal
value.
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REDEMPTIONS
Shares of the Money Market Fund, as well as shares of a Class
of a Participant Fund, may be redeemed on any day on which the Fund's net asset
value is calculated as described below under "Net Asset Value." Redemption
requests received in proper form prior to the close of regular trading on the
NYSE will be effected at the net asset value per share determined on that day.
Redemption requests received after the close of regular trading on the NYSE will
be effected at the net asset value as next determined. The Trust normally
transmits redemption proceeds within seven days after receipt of a redemption
request. If a shareholder holds shares in more than one Class of a Participant
Fund, any request for redemption must specify the Class being redeemed. In the
event of a failure to specify which Class or if the investor owns fewer shares
of the Class than specified, the redemption request will be delayed until the
Trust receives further instructions. Redemption proceeds will be subject to no
charge, except for certain redemptions of Class A and Class B shares of a
Participant Fund. In addition, if the shareholder has checkwriting privileges,
redemption of $100 or more may be made by writing a check either to the
shareholder or to a third party. A shareholder who pays for shares of a Fund by
personal check will receive the proceeds of a redemption of those shares when
the purchase check has been collected, which may take up to 15 days or more.
Shareholders who anticipate the need for more immediate access to their
investment should purchase shares with Federal funds or bank wire or by a
certified or cashier's check.
The right of redemption of shares of a Fund may be suspended
or the date of payment postponed (1) for any periods during which the NYSE is
closed (other than for customary weekend and holiday closings), (2) when trading
in the markets the Fund normally utilizes is restricted, or an emergency, as
defined by the rules and regulations of the SEC, exists, making disposal of a
Fund's investments or determination of its net asset value not reasonably
practicable or (3) for such other periods as the SEC by order may permit for the
protection of the Fund's shareholders. A shareholder who pays for Fund shares by
personal check will receive the proceeds of a redemption of those shares when
the purchase check has been collected, which may take up to 15 days or more.
Shareholders who anticipate the need for more immediate access to their
investment should purchase shares with Federal funds or bank wire or by a
certified or cashier's check.
The Trust requires that a shareholder of a Fund maintain a
minimum investment in a Fund of $500, so care should be exercised to ensure that
redemptions do not reduce the shareholder's investment below this minimum. Two
exceptions exist to this minimum investment requirement for (1) an account
established by a Qualified Plan, and (2) new accounts established with the
Direct Deposit Privilege, Payroll Savings Plan or Automatic Investment Plan. If
the shareholder's account balance is less than $500 (except in the circumstances
described above), the Trust may automatically redeem the shares of the Fund in
the account and remit the proceeds to the shareholder so long as the shareholder
is given 30 days prior written notice of the action.
A holder of Existing Shares who fully redeems his account or
whose account balance is involuntarily redeemed by the Trust in the manner set
out below will not remain eligible for the load waiver thereafter, unless the
person is otherwise eligible to purchase Class A shares without paying a load.
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A CDSC payable to the Distributor is imposed on certain
redemptions of Class A, Class B and Class C shares of a Participant Fund,
however effected. Class A, Class B and Class C shares that are redeemed will not
be subject to a CDSC to the extent that the value of such shares represents (1)
shares that were purchased more than a fixed number of years prior to the
redemptions, (2) reinvestment of dividends or capital gains distributions or (3)
capital appreciation of shares redeemed. The amount of any applicable CDSC will
be calculated by multiplying the applicable percentage charge by the lesser of
(1) the net asset value of the Class A, Class B or Class C shares at the time of
purchase or (2) the net asset value of the Class A, Class B or Class C shares at
the time of redemption. In circumstances in which the CDSC is imposed upon
redemption of Class B shares, the amount of the charge will depend on the number
of years since the shareholder made the purchase payment from which the amount
is being redeemed.
The CDSC on Class A and Class C shares is payable on the same
terms and conditions as would be applicable to Class B shares, except that the
CDSC on Class A and Class C shares is at a lower rate and for a shorter period
than that imposed on Class B shares (1% for redemptions only during the first
year after purchase) and except that Class A and Class C shares have no
automatic conversion feature. The CDSC applicable to Class A and Class C shares
is calculated in the same manner as the CDSC with respect to Class B shares and
is waived in the same situations as with respect to Class B shares.
The following table sets forth the CDSC rates applicable to
redemptions of Class B shares of the U.S. Equity Fund, the Premier Fund, the
Value Equity Fund, the Small-Cap Value Fund, the Mid-Cap Growth Fund, the
Mid-Cap Value Fund, the Global Fund, the International Fund, the Europe Fund,
the Emerging Markets Fund and the Strategic Fund:
CDSC as a %
Year Since Purchase of Amount
Payment was Made Redeemed
- --------------------------------------------------------------------------------
Within First Year 4.00%
Within Second Year 3.00%
Within Third Year 2.00%
Within Fourth Year 1.00%
Within Fifth Year 0.00%
Within Sixth Year 0.00%
- --------------------------------------------------------------------------------
The following table sets forth the CDSC rates applicable to
redemptions of Class B shares of the Tax-Exempt Fund, the Income Fund, the
Government Securities Fund, the High Yield Fund and the Short-Term Government
Fund:
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CDSC as a %
Year Since Purchase of Amount
Payment was Made Redeemed
- --------------------------------------------------------------------------------
Within First Year 3.00%
Within Second Year 3.00%
Within Third Year 2.00%
Within Fourth Year 1.00%
Within Fifth Year 0.00%
Within Sixth Year 0.00%
- --------------------------------------------------------------------------------
The following table sets forth the CDSC rates applicable to
redemptions of any Fund's Class B shares acquired, either by purchase or
exchange, as a result of the combination of the Investors Trust Funds with
certain Funds:
CDSC as a %
Year Since Purchase of Amount
Payment was Made Redeemed
- --------------------------------------------------------------------------------
Within First Year 5.00%
Within Second Year 4.00%
Within Third Year 3.00%
Within Fourth Year 2.00%
Within Fifth Year 1.00%
Within Sixth Year 0.00%
Within Seventh Year 0.00%
Within Eighth Year 0.00%
- --------------------------------------------------------------------------------
Class B shares will automatically convert to Class A shares
six years (eight years in the case of Class B shares acquired, either by
purchase or exchange, as a result of the combination of the Investors Trust
Funds with certain Funds) after the date on which they were purchased and
thereafter will no longer be subject to the higher distribution fee applicable
to such Class B shares, but will be subject to the 0.25% distribution fee
applicable with respect to Class A shares. See "Exchange Privilege" for the
effect of exchanges on the CDSC applicable to exchanged shares.
In determining the applicability and rate of any CDSC to a
redemption of shares of a Fund, the Distributor will assume that a redemption is
made first of shares representing reinvestment of dividends and capital gain
distributions and then of other shares held by the shareholder for the longest
period of time. This assumption will result in the CDSC, if any, being imposed
at the lowest possible rate.
The Trust will waive the CDSC on redemptions of Class A, Class
B or Class C shares of the Funds upon the death or disability of a shareholder
if the redemption is made within one year of death or disability of a
shareholder. The CDSC would be waived when the decedent or disabled person is
either an individual shareholder or, in the case of death, owns the shares with
his or her spouse as a joint tenant with right of survivorship, and when the
redemption is
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made within one year of the death or initial determination of disability. This
waiver of the CDSC would apply to a total or partial redemption but only to
redemptions of Class A, Class B or Class C shares held at the time of the death
or initial determination of disability. The Trust will also waive the CDSC (1)
on redemptions of Class A, Class B or Class C shares of the Funds representing a
minimum required distribution from an IRA effected pursuant to a systematic
withdrawal plan (see "Systematic Withdrawal Plan" below), (2) on redemptions of
Class A shares being redeemed within one year of purchase that were subject to
no front-end sales load upon purchase by virtue of being part of a purchase of
$1 million or more or Class C shares provided the redemption is pursuant to a
Systematic Withdrawal Plan, and (3) on redemptions that represent "substantially
equal periodic payments" as described under Section 72(t)(2) of the Internal
Revenue Code of 1986, as amended.
REDEMPTIONS THROUGH AN AUTHORIZED FIRM
An investor whose shares are purchased with the assistance of
an Investment Professional may redeem all or part of his or her shares in
accordance with the instructions pertaining to such accounts. If such investor
is also the shareholder of record of those accounts on the books of State
Street, he or she may redeem shares pursuant to methods described below. Such an
investor using the redemption by mail or wire methods must arrange with the
Authorized Firm for delivery of the required forms to State Street. It is the
responsibility of the Authorized Firm to transmit the redemption order (and
credit its customers' account with the redemption proceeds, if applicable) on a
timely basis.
REDEMPTIONS BY MAIL
Shares of a Fund may be redeemed by mail by making a written
request for redemption that (1) states the Class (if applicable) and the
number of shares or the specific dollar amount to be redeemed, (2) identifies
the Fund or Funds from which the number or dollar amount is to be redeemed,
(3) identifies the shareholder's account number and (4) is signed by each
registered owner of the shares exactly as the shares are registered and
sending the request to the Trust at:
GE Funds
P.O. Box 419631
Kansas City, MO 64141-6631
For overnight package delivery:
GE Funds
c/o National Financial Data Services Inc.
1004 Baltimore
Kansas City, MO 64105
Signature guarantees are required for all redemptions over
$50,000. In addition, signature guarantees are required for requests to have
redemption proceeds (1) mailed to an address other than the address of record,
(2) paid to someone other than the shareholder, (3) wired to a bank other than
the bank of record, or (4) mailed to an address that has been changed within 30
days of the redemption request. All signature guarantees must be guaranteed by a
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commercial bank, trust company, broker, dealer, credit union, national
securities exchange or registered association, clearing agency or savings
association or by Managers of Personnel Accounting of GE or their designated
alternates. The Trust may require additional supporting documents for
redemptions made by corporations, executors, administrators, trustees, guardians
or persons utilizing a power of attorney. A request for redemption will not be
deemed to have been submitted until the Trust receives all documents in proper
order typically required to assure the safety of a particular account. The Trust
may waive the signature guarantee on a redemption of $50,000 or less if it is
able to verify the signatures of all registered owners from its accounts.
REDEMPTION BY TELEPHONE
Shares of a Fund may be redeemed by telephone, unless the
investor has declined this option on the applicable section of the account
application form. Proceeds from a telephonic wire redemption request placed
through a customer service representative will be transferred by wire to the
shareholder's bank account (which has previously been identified in writing to
the Trust). A fee of $10 will be charged for wire transfers of funds by the
Trust. Wire transfers will be made directly to the account specified by the
shareholder if that bank is a member of the Federal Reserve System or to a
correspondent bank if the bank holding the account is not a member. Fees on wire
transfers may also be imposed by the bank and will be the responsibility of the
shareholder. Proceeds from a telephonic check redemption request placed through
the automated system will be sent by check to the shareholder's address of
record. The minimum telephonic wire redemption request is $1,000; the minimum
telephonic check redemption request is $500 and the maximum telephonic check
redemption request is $50,000. If the account is registered jointly in the name
of more than one shareholder, only one shareholder will be required to authorize
redemption of shares by telephone, and the Trust will be entitled to act upon
telephonic instructions of any shareholder of a joint account. Redemptions of
shares of a Fund by a Qualified Plan may not be effected by telephone. Wire
transfer of funds will be made within two business days following the telephonic
request. Dividends will be earned through and including the date of receipt of
the redemption request.
Telephone redemption requests may be difficult to implement in
times of drastic economic or market changes. In the event shareholders of the
Funds are unable to contact the Trust by telephone, shareholders should write to
the Trust at:
GE Funds
P.O. Box 419631
Kansas City, MO 64141-6631
For overnight package delivery:
GE Funds
c/o National Financial Data Services Inc.
1004 Baltimore
Kansas City, MO 64105
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By making a telephonic redemption request, a shareholder
authorizes the Trust to act on the telephonic redemption instructions by any
person representing himself or herself to be the shareholder and believed by the
Trust to be genuine. The Trust will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine and the Trust's records of
such instructions will be binding. If the procedures, which include the use of a
personal identification number ("PIN") system and the provision of written
confirmation of transactions effected by telephone, were not employed by the
Trust, the Trust could be subject to liability for any loss resulting from
unauthorized or fraudulent instructions. As a result of compliance with this
policy, if the Trust follows the procedures outlined above and has a good faith
belief that the instructions it received were genuine, the shareholder will bear
the risk of loss in the event of a fraudulent redemption transaction.
SYSTEMATIC WITHDRAWAL PLAN
The Trust's Systematic Withdrawal Plan permits investors in a
Fund to request withdrawal of a specified dollar amount (minimum of $50) on
either a monthly or quarterly basis if they have a $10,000 minimum account in a
Class of a Participant Fund or in the Money Market Fund. The maximum amount
which may be withdrawn under the Systematic Withdrawal Plan is 10% of the value
of a Shareholder's account on an annual basis. An application for the Systematic
Withdrawal Plan can be obtained from the Trust. The Systematic Withdrawal Plan
may be terminated at any time by the investor or the Trust.
INVOLUNTARY REDEMPTIONS
An account of a shareholder of a Fund with respect to a Class
of shares (if applicable) that is reduced by redemptions, and not by reason of
market fluctuations to a value of $500 or less may be redeemed by the Trust, but
only after the shareholder has been given notice of at least 30 days in which to
increase the balance in the account to more than $500. An account established
through a Qualified Plan or an account that has not yet reached the $500 minimum
through the Direct Deposit Privilege, Payroll Savings Plan or Automatic
Investment Plan will not be involuntarily redeemed.
DISTRIBUTIONS IN-KIND
If the Board determines that it would be detrimental to the
best interests of a Fund's shareholders to make a redemption payment wholly in
cash, the Trust may pay, in accordance with rules adopted by the SEC, any
portion of a redemption in excess of the lesser of $250,000 or 1% of the Trust's
net assets by a distribution in kind of portfolio securities in lieu of cash.
Redemptions failing to meet this threshold must be made in cash. Portfolio
securities issued in a distribution in kind will be deemed by GEIM to be readily
marketable. Shareholders receiving distributions in kind of portfolio securities
may incur brokerage commissions when subsequently disposing of those securities.
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CHECKWRITING PRIVILEGES
A shareholder of the Money Market Fund may request in an
application form or by letter sent to the Trust that he or she would like
checkwriting privileges, which are provided at no cost to the shareholder. The
Trust will provide redemption checks ("Checks") drawn on the shareholder's
account. Checks will be sent only to the shareholder of the account and only to
the address of record. The application or written request must be manually
signed by the shareholder. Checks may be made payable to the order of any person
in an amount of $100 or more. Dividends are earned until the Check clears. When
a Check is presented to State Street for payment, State Street, as agent, will
cause the Money Market Fund to redeem a sufficient number of shares in the
shareholder's account to cover the amount of the Check. Checks will generally
not be returned to the shareholder after clearance, unless such return is
requested in writing by the shareholder. Shareholders generally will be subject
to the same rules and regulations that State Street applies to checking
accounts. Unless otherwise specified in writing to the Trust, only the signature
of one shareholder of a joint account is required on Checks.
Checks may not be written to redeem shares purchased by check
until the earlier of (1) the date that good funds are credited to State Street
by its correspondent bank or (2) 15 days from the date of receipt of the check
utilized to purchase shares. If the amount of the Check is greater than the
value of the shares in a shareholder's account, the Check will be returned
marked "insufficient funds." Checks should not be used to close an account.
Checks written on amounts subject to the hold described above will be returned
marked "uncollected." If the Check does not clear, the shareholder will be
responsible for any loss that the Money Market Fund or State Street incurs.
The Trust may modify or terminate the checkwriting privilege
at any time on 30 days' notice to participating shareholders. The checkwriting
privilege is subject to State Street's rules and regulations and is governed by
the Massachusetts Uniform Commercial Code. All notices with respect to Checks
drawn on State Street must be given to State Street. Stop payment instructions
may be given by calling the applicable toll free number listed on the back cover
of the Prospectus.
REINSTATEMENT PRIVILEGE
Participant Funds also offer a reinstatement privilege under
which a shareholder that has redeemed Class A, Class B or Class C shares may
reinvest the proceeds from the redemption without imposition of a sales charge,
provided the reinvestment is made within 60 days of the redemption. A
shareholder wishing to exercise this privilege must do so in writing.
For purposes of determining the amount of any CDSCs payable on
any subsequent redemptions, the purchase payment made through exercise of the
reinstatement privilege will be deemed to have been made at the time of the
initial purchase (rather than at the time the reinstatement was effected). The
tax status of a gain realized on a redemption will not be affected by exercise
of the reinstatement privilege but a loss will be nullified if the reinvestment
is made within 30 days of redemption. Refer to the section titled "Dividends,
Distributions and Taxes" later in this SAI for the tax consequences when, within
90 days of a purchase of Class A, Class B or Class C shares, the shares are
redeemed and reinvested in a Participant Fund.
EXCHANGE PRIVILEGE
The exchange privilege described in the Prospectus enables a
shareholder of a
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Fund to acquire shares in a Fund having a different investment objective and
policies when the shareholder believes that a shift between Funds is an
appropriate investment decision. Upon receipt of proper instructions and all
necessary supporting documents, shares submitted for exchange are redeemed at
the then-current net asset value and the proceeds are immediately invested in
shares of the Fund being acquired. The Trust reserves the right to reject any
exchange request.
Shares of each Class of a Participant Fund may be exchanged
for shares of the same Class of any other Participant Fund at their respective
net asset values. An Institutional Investor (other than a Class Y eligible
retirement plan) can exchange shares of the Money Market Fund for Class Y shares
of a Participant Fund. A Class Y eligible retirement plan can exchange shares of
the Money Market Fund for Class A or Class Y shares of a Participant Fund, as
selected by the plan sponsor, depending upon whether the plan sponsor desires
the additional services provided to Class A shareholders. All other Money Market
Fund shareholders will be given the choice of receiving either Class A, Class B
or Class C shares of a Participant Fund upon the completion of an exchange. The
privilege is available to shareholders residing in any state in which shares of
the Fund being acquired may legally be sold.
An exchange of shares is treated for Federal income tax
purposes as a redemption (that is, a sale) of shares given in exchange by the
shareholder, and an exchanging shareholder may, therefore, realize a taxable
gain or loss in connection with the exchange. An exchange of shares may be made
by calling or by writing the Trust. The Trust may, upon 60 days' prior written
notice to the shareholders of a Fund, materially modify or terminate the
exchange privilege with respect to the Fund or impose a charge of up to $5 for
exchanges of shares of the Fund.
Shareholders who exchange their Class A, Class B or Class C
shares for Money Market Fund shares will be subject to the CDSC applicable to
Class A, Class B or Class C shares at the time the shareholder redeems such
Money Market Fund shares. Upon an exchange of Class A, Class B or Class C shares
for Class A, Class B or Class C shares (as applicable) of another Participant
Fund, the new Class A, Class B or Class C shares will be deemed to have been
purchased on the same date as the Class A, Class B or Class C shares of the
Participant Fund which have been exchanged for CDSC calculation purposes.
However, a shareholder who exchanges his Class A, Class B or Class C shares for
shares of the Money Market Fund and then exchanges those Money Market Fund
shares for Class A, Class B or Class C shares will be subject to having the
period of time in which his shares were invested in the Money Market Fund tolled
when computing the applicable CDSC. Likewise, shareholders who exchange their
Class A, Class B or Class C shares of a Participant Fund with Class A, Class B
or Class C shares of another Participant Fund will be subject to the CDSC of the
original Fund at the time of redemption from the second Fund.
Class B shares of any Participant Fund acquired either by
purchase or exchange, as a result of the combination of the Investors Trust
Funds with certain Funds, will be charged the CDSC applicable to the Class B
shares that had been applicable to the relevant Investors Trust Fund before the
combination. Shareholders of the Money Market Fund who acquired their shares by
exchange from an Investors Trust Fund will be charged the CDSC that had been
applicable to the Class B shares of the relevant Investors Trust Fund upon
redemption from the
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<PAGE>
Money Market Fund. Shares of the Funds purchased through a Financial
Intermediary may only be exchanged for shares of another Fund which is offered
by that Financial Intermediary.
Shareholders exercising the exchange privilege should review
the Prospectus disclosure for the Fund they are considering investing in
carefully prior to making an exchange.
NET ASSET VALUE
The Trust will not calculate net asset value on days that the
NYSE is closed. On those days, securities held by a Fund may nevertheless be
actively traded, and the value of the Fund's shares could be significantly
affected.
Because of the need to obtain prices as of the close of
trading on various exchanges throughout the world, the calculation of the net
asset value of the Money Market Fund or a Class of certain Participant Funds may
not take place contemporaneously with the determination of the prices of many of
their portfolio securities used in the calculation. A security that is listed or
traded on more than one exchange is valued at the quotation on the exchange
determined to be the primary market for the security. All assets and liabilities
of the Funds initially expressed in foreign currency values will be converted
into U.S. dollar values at the mean between the bid and offered quotations of
the currencies against U.S. dollars as last quoted by any recognized dealer. If
these quotations are not available, the rate of exchange will be determined in
good faith by the Board. In carrying out the Board's valuation policies, GEIM
may consult with one or more independent pricing services ("Pricing Service")
retained by the Trust.
Debt securities of U.S. issuers (other than Government
Securities and short-term investments), including Municipal Obligations, are
valued by a dealer or by a pricing service based upon a computerized matrix
system, which considers market transactions and dealer supplied valuations.
Valuations for municipal bonds are obtained from a qualified municipal bond
pricing service; prices represent the mean of the secondary market. When, in the
judgment of the Pricing Service, quoted bid prices for investments of the
Tax-Exempt Fund are readily available and are representative of the bid side of
the market, these investments are valued at the mean between the quoted bid
prices and asked prices. Investments of the Tax-Exempt Fund that are not
regularly quoted are carried at fair value as determined by the Board, which may
rely on the assistance of the Pricing Service. The procedures of the Pricing
Service are reviewed periodically by GEIM under the general supervision and
responsibility of the Board .
The valuation of the portfolio securities of the Money Market
Fund is based upon amortized cost, which does not take into account unrealized
capital gains or losses. Amortized cost valuation involves initially valuing an
instrument at its cost and thereafter assuming a constant amortization to
maturity of any discount or premium, regardless of the effect of fluctuating
interest rates on the market value of the instrument. Although this method
provides certainty in valuation, it may result in periods during which value, as
determined by amortized cost, is higher or lower than the price the Money Market
Fund would receive if it sold the instrument.
The use of the amortized cost method of valuing the portfolio
securities of the Money Market Fund is permitted by a rule adopted by the SEC.
Under this rule, the Money
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<PAGE>
Market Fund must maintain a dollar-weighted average portfolio maturity of 90
days or less, purchase only instruments having remaining maturities of 397
calendar days or less, and invest only in "eligible securities" as defined in
the rule, which are determined by GEIM to present minimal credit risks. Pursuant
to the rule, GEIM has established procedures designed to stabilize, to the
extent reasonably possible, the Fund's price per share as computed for the
purpose of sales and redemptions at $1.00. These procedures include review of
the Money Market Fund's portfolio holdings at such intervals as GEIM may deem
appropriate, to determine whether the Fund's net asset value calculated by using
available market quotations or market equivalents deviates from $1.00 per share
based on amortized cost.
The rule regarding amortized cost valuation provides that the
extent of certain significant deviations between the Money Market Fund's net
asset value based upon available market quotations or market equivalents and the
$1.00 per share net asset value based on amortized cost must be examined by the
Board. In the event the Board determines that a deviation exists that may result
in material dilution or other unfair results to investors or existing
shareholders of the Money Market Fund, the Board must, in accordance with the
rule, cause the Fund to take such corrective action as the Board regards as
necessary and appropriate, including: selling portfolio instruments of the Fund
prior to maturity to realize capital gains or losses or to shorten average
portfolio maturity; withholding dividends or paying distributions from capital
or capital gains; redeeming shares in kind; or establishing a net asset value
per share by using available market quotations.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
Net investment income (that is, income other than long- and
short-term capital gains) and net realized long- and short-term capital gains
are determined separately for each Fund. Dividends of a Participant Fund or the
Money Market Fund which are derived from net investment income and distributions
of net realized long- and short-term capital gains paid by a Fund to a
shareholder will be automatically reinvested in additional shares of the same
Class of the Participant Fund or the Money Market Fund, respectively, and
deposited in the shareholder's account, unless the shareholder instructs the
Trust, in writing or by telephone, to pay all dividends and distributions in
cash. Shareholders may contact the Trust for details concerning this election.
However, if it is determined that the U.S. Postal Service cannot properly
deliver Fund mailings to a shareholder, the Fund may terminate the shareholder's
election to receive dividends and other distributions in cash. Thereafter, the
shareholder's subsequent dividends and other distributions will be automatically
reinvested in additional shares of the Fund until the shareholder notifies the
Fund in writing of his or her correct address and requests in writing that the
election to receive dividends and other distributions in cash be reinstated. No
interest will accrue on amounts represented by uncashed dividend, distribution
or redemption checks. Dividends attributable to the Tax-Exempt Fund, the Income
Fund, the Government Securities Fund, the Short-Term Government Fund and the
Money Market Fund are declared daily and paid monthly.
The Government Securities Fund will declare a distribution
each day in an amount based on periodic projections of its future net investment
income and will pay such
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<PAGE>
distributions monthly. Consequently, the amount of each daily distribution may
differ from actual net investment income. The purpose of these distribution
procedures is to attempt to eliminate, to the extent possible, fluctuations in
the level of monthly distribution payments that might result if such Fund
declared dividends in the exact amount of its daily net investment income.
It is possible, however, as a result of this policy that total
distributions in a year could exceed the total of the Government Securities
Fund's current year net investment income and capital gains. If this should
occur, a portion of the distributions received by shareholders of such Fund
could be a nontaxable "return of capital" for federal income tax purposes and
thereby reduce the shareholder's cost basis in shares of the Fund. If
distributions are received in additional shares rather than cash, the capital
"returned" would be automatically reinvested. In general, a shareholder's total
cost basis in the Fund will reflect the cost of the shareholders' original
investment plus the amount of any reinvestment.
Dividends attributable to the net investment income of the
Premier Fund, the U.S. Equity Fund, the Small-Cap Value Fund, the Mid-Cap Value
Fund, the Mid-Cap Growth Fund, the Value Equity Fund, the Global Fund, the
International Fund, the Europe Equity Fund, the Emerging Markets Fund and the
Strategic Fund are declared and paid annually. If a shareholder redeems all of
his shares of the Tax-Exempt Fund, the Income Fund, the Government Securities
Fund, the Short-Term Government Fund, the High Yield Fund or the Money Market
Fund at any time during a month, all dividends to which the shareholders is
entitled will be paid to the shareholder along with the proceeds of his
redemption. Written confirmations relating to the automatic reinvestment of
daily dividends will be sent to shareholders within five days following the end
of each quarter for the Tax-Exempt Fund, the Income Fund, the Government
Securities Fund, the Short-Term Government Fund and the High Yield Fund, and
within five days following the end of each month for the Money Market Fund.
Distributions of any net realized long-term and short-term capital gains earned
by a Fund will be made annually. These dividends and distributions are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. All expenses of the Tax-Exempt Fund,
the Income Fund, the Government Securities Fund, the Short-Term Government
Securities Fund, the High Yield Fund and the Money Market Fund are accrued daily
and deducted before declaration of dividends to shareholders. Earnings of the
Tax-Exempt Fund, the Income Fund, the Government Securities Fund, the Short-Term
Government Securities Fund, the High Yield Fund and the Money Market Fund for
Saturdays, Sundays and holidays will be declared as dividends on the business
day immediately preceding the Saturday, Sunday or holiday. As a result of the
different service and distribution fees applicable to the Classes, the per share
dividends and distribution on Class Y shares will be higher than those on Class
A shares, which in turn will be higher than those of Class B and Class C shares.
Each Fund is subject to a 4% non-deductible excise tax measure
with respect to certain undistributed amounts of net investment income and
capital gains. If necessary to avoid the imposition of this tax, and if in the
best interests of the Fund's shareholders, the Trust will declare and pay
dividends of the Fund's net investment income and distributions of the Fund's
net capital gains more frequently than stated above.
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<PAGE>
TAX STATUS OF THE FUNDS AND THEIR SHAREHOLDERS
Set forth below is a summary of certain Federal income tax
considerations generally affecting the Funds and their shareholders. The summary
is not intended as a substitute for individual tax planning, and shareholders
are urged to consult their tax advisors regarding the application of Federal,
state, local and foreign tax laws to their specific tax situations.
Each Fund is treated as a separate entity for Federal income
tax purposes. Each Fund's net investment income and capital gains distributions
are determined separately from any other series that the Trust may designate.
The Trust intends for each Fund to continue to qualify each
year as a "regulated investment company" under the Code. If a Fund (1) is a
regulated investment company and (2) distributes to its shareholders at least
90% of its net investment income (including for this purpose its net realized
short-term capital gains) and 90% of its tax-exempt interest income (reduced by
certain expenses), the Fund will not be liable for Federal income taxes to the
extent that its net investment income and its net realized long-term and
short-term capital gains, if any, are distributed to its shareholders. In
addition, in order to avoid a 4% excise tax, a Fund must declare, no later than
December 31 and distribute no later than the following January 31, at least 98%
of its taxable ordinary income earned during the calendar year and 98% of its
capital gain net income for the 1-year period ending generally on October 31 of
such calendar year. One requirement for qualification as a regulated investment
company is that each Fund must diversify its holdings so that, at the end of
each quarter, (i) at least 50% of the market value of the Fund's assets is
represented by cash and cash items, securities of other regulated investment
companies, U.S. government securities and other securities, with such other
securities limited for purposes of this calculation in respect of any one issuer
to an amount not greater than 5% of the value of the Fund's assets and not
greater than 10% of the outstanding voting securities of such issuer, and (ii)
not more than 25% of the value of its total assets is invested in the securities
of any one issuer or of two or more issuers that are controlled by the Fund
(within the meaning of Section 851(b)(3)(B) of the Code) that are engaged in the
same or similar trades or businesses or related trades or businesses (other than
U.S. government securities or the securities of other regulated investment
companies).
Another requirement for qualification as a regulated
investment company is that each Fund must earn at least 90% of its gross income
from dividends, interest, payments with respect to securities loans, gains from
the disposition of stock or securities (including gains from related investments
in foreign currencies) and income (including gains from options, futures or
forward contracts) derived with respect to its business of investing in such
stocks, securities or currencies (the "90% Test").
If for any taxable year a Fund does not qualify for the
special Federal income tax treatment afforded regulated investment companies,
all of its taxable income will be subject to Federal income tax at regular
corporate rates (without any deduction for distributions to its shareholders).
In such event, dividend distributions, including amounts derived from interest
on tax-exempt obligations, would be taxable to shareholders to the extent of
current and accumulated earnings and profits, and would be eligible for the
dividends received deduction for corporations in the case of corporate
shareholders.
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<PAGE>
As of September 30, 1998, the following Funds have capital
loss carryforwards as indicated below. The capital loss carryforward of the
Tax-Exempt Fund includes a capital loss carryforward of $42,651 acquired as a
result of the Reorganization with the Investors Trust Tax Free Fund. The capital
loss carryforward is available to offset future realized capital gains to the
extent provided in the Code and regulations promulgated thereunder.
<TABLE>
<CAPTION>
Expiration Dates:
Fund Amount September 30,
- ---- ------ -----------------
<S> <C> <C>
Tax-Exempt Fund $428,324 2004
Income Fund $684,519 2003
$38,636 2004
$445,270 2005
Government Securities Fund $80,657,745 2002
$107,525,597 2003
$1,748,819 2004
Money Market Fund $3,153 2003
$5,688 2005
</TABLE>
As a result of the Reorganization, each of Investors Trust
Adjustable Rate Fund and Investors Trust Tax Free Fund had a taxable year ending
on the date of the Reorganization, and the taxable year of each respective
acquiring GE Fund in which the Reorganization occurs will be a separate taxable
year for purposes of determining the taxable years in which carryforwards of
these two Investors Trust Funds may be applied. Accordingly, the Reorganization
has the effect of reducing the carryforward periods of Investors Trust
Adjustable Rate Fund and Investors Trust Tax Free Fund. Such reduced periods are
reflected in the foregoing table of expiration dates.
Net investment income or capital gains earned by a Fund
investing in foreign securities may be subject to foreign income taxes withheld
at the source. The United States has entered into tax treaties with many foreign
countries that entitle the Funds to a reduced rate of tax or exemption from tax
on this related income and gains. The effective rate of foreign tax cannot be
determined at this time since the amount of these Funds' assets to be invested
within various countries is not now known. The Trust intends that the Funds seek
to operate so as to qualify for treaty-reduced rates of tax when applicable. In
addition, if a Fund qualifies as a regulated investment company under the Code,
if certain distribution requirements are satisfied, and if more than 50% of the
value of the Fund's assets at the close of the taxable year consists of stocks
or securities of foreign corporations, the Trust may elect, for U.S. Federal
income tax purposes, to treat foreign income taxes paid by the Fund that can be
treated as income taxes under U.S. income tax principles as paid by its
shareholders. The Global Fund, the International Fund, the Europe Fund and the
Emerging Markets Fund each anticipates that it may qualify for and make this
election in most, but not necessarily all, of its taxable years. If a Fund were
to make an election an amount equal to the foreign income taxes paid by the Fund
would be included in the income of its shareholders and the shareholders would
be entitled to credit their portions of this
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<PAGE>
amount against their U.S. tax liabilities, if any, or to deduct those portions
from their U.S. taxable income, if any. Shortly after any year for which it
makes an election, the Trust will report to the shareholders of the Fund, in
writing, the amount per share of foreign tax that must be included in each
shareholder's gross income and the amount that will be available as a deduction
or credit. No deduction for foreign taxes may be claimed by a shareholder who
does not itemize deductions. Certain limitations will be imposed on the extent
to which the credit (but not the deduction) for foreign taxes may be claimed.
A Fund's transactions in options and futures contracts are
subject to special provisions of the Code that, among other things, may affect
the character of gains and losses realized by the Fund (that is, may affect
whether gains or losses are ordinary or capital), accelerate recognition of
income to the Fund and defer losses of the Fund. These rules (1) could affect
the character, amount and timing of distributions to shareholders of a Fund, (2)
will require the Fund to "mark to market" certain types of the positions in its
portfolio (that is, treat them as if they were closed out) and (3) may cause the
Fund to recognize income without receiving cash with which to make distributions
in amounts necessary to satisfy the distribution requirements for avoiding
income and excise taxes described above and in the Prospectus. The Trust seeks
to monitor transactions of each Fund, will seek to make the appropriate tax
elections on behalf of the Fund and seeks to make the appropriate entries in the
Fund's books and records when the Fund acquires any option, futures contract or
hedged investment, to mitigate the effect of these rules and prevent
disqualification of the Fund as a regulated investment company.
In order for the Tax-Exempt Fund to pay exempt-interest
dividends for any taxable year, at the close of each taxable quarter, at least
50% of the aggregate value of the Fund's portfolio must consist of
exempt-interest obligations. Within 60 days after the close of the taxable year
of the Tax-Exempt Fund, the Trust will notify the Fund's shareholders of the
portion of the dividends paid that constitutes an exempt-interest dividend with
respect to that taxable year. The percentage of total dividends paid by the
Tax-Exempt Fund with respect to any taxable year that qualifies as Federal
exempt-interest dividends will be the same for all shareholders receiving
dividends from the Fund for that year.
Interest on indebtedness incurred by a shareholder to purchase
or carry shares of the Tax-Exempt Fund is not deductible for income tax purposes
if the Fund distributes exempt-interest dividends during the shareholder's
taxable year. In addition, if a shareholder of the Tax-Exempt Fund holds shares
for six months or less, any loss on the sale or exchange of those shares will be
disallowed to the extent of the amount of exempt-interest dividends received
with respect to the shares.
As a general rule, a shareholder's gain or loss on a sale or
redemption of shares of a Fund will be a long-term capital gain or loss if the
shareholder has held the shares for more than one year. The gain or loss will be
a short-term capital gain or loss if the shareholder has held the shares for one
year or less.
A Fund's net realized long-term capital gains are distributed
as described in the Prospectus. The distributions ("capital gain dividends"), if
any, are taxable to a shareholder of a Fund as long-term capital gains,
regardless of how long a shareholder has held the shares, and
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<PAGE>
will be designated as capital gain dividends in a written notice mailed by the
Trust to the shareholders of the Fund after the close of the Fund's prior
taxable year. If a shareholder receives a capital gain dividend with respect to
any share of a Fund, and if the share is sold before it has been held by the
shareholder for six months or less, then any loss on the sale or exchange of the
share, to the extent of the capital gain dividend, will be treated as a
long-term capital loss. This rule will apply to a sale of shares of the
Tax-Exempt Fund only to the extent the loss is not disallowed under the
provision described above. Investors considering buying shares of a Fund on or
just prior to the record date for a taxable dividend or capital gain
distribution should be aware that the amount of the dividend or distribution
payment will be a taxable dividend or distribution payment.
Special rules contained in the Code apply when a shareholder
of a Fund disposes of shares of the Fund through a redemption or exchange within
90 days of purchase and subsequently acquires shares of a Fund on which a sales
charge normally is imposed without paying a sales charge in accordance with the
exchange privilege described in the Prospectus. In these cases, any gain on the
disposition of the shares of the Fund will be increased, or loss decreased, by
the amount of the sales charge paid when the shares were acquired, and that
amount will increase the adjusted basis of the shares of the Fund subsequently
acquired. In addition, if shares of a Fund are purchased within 30 days of
redeeming shares at a loss, the loss will not be deductible and instead will
increase the basis of the newly purchased shares.
If a shareholder of a Fund fails to furnish the Trust with a
correct taxpayer identification number, fails to report fully dividend or
interest income, or fails to certify that he or she has provided a correct
taxpayer identification number and that he or she is not subject to "backup
withholding," then the shareholder may be subject to a 31% "backup withholding"
tax with respect to (1) taxable dividends and distributions from the Fund and
(2) the proceeds of any redemptions of shares of the Fund (other than the Money
Market Fund). An individual's taxpayer identification number is his or her
social security number. The 31% backup withholding tax is not an additional tax
and may be credited against a taxpayer's regular Federal income tax liability.
THE FUNDS' PERFORMANCE
The Trust, from time to time, may quote a Fund's performance,
in terms of the Money Market Fund's or a Class' yield and/or total return, in
reports or other communications to shareholders of a Fund or in advertising
material. Additional information regarding the manner in which performance
figures are calculated is provided below.
YIELD FOR THE MONEY MARKET FUND
The Trust may, from time to time, include the yield and
effective yield of the Money Market Fund in advertisements or reports to
shareholders or prospective investors. "Current yield" will be based upon the
income that a hypothetical investment in the Fund would earn over a stated
seven-day period. This amount would then be "annualized," which means the amount
of income generated over that week is assumed to be generated each week over a
52-week period and is shown as a percentage of the investment. The Money Market
Fund's "effective yield" will be calculated similarly, but, when annualized, the
income earned
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<PAGE>
by an investment in the Fund is assumed to be reinvested. The effective yield
would be slightly higher than the current yield because of the compounding
effect of this presumed reinvestment.
The yield for the Money Market Fund is computed by (1)
determining the net change in the value of a hypothetical pre-existing account
in the Fund having a balance of one share at the beginning of a
seven-calendar-day period for which yield is to be quoted, (2) dividing the net
change by the value of the account at the beginning of the period to obtain the
base period return, and (3) annualizing the results (that is, multiplying the
base period return by 365/7). The net change in the value of the account
reflects the value of additional shares purchased with dividends declared on the
original share and any such additional shares less a hypothetical charge
reflecting deductions from shareholder accounts, but does not include realized
gains and losses or unrealized appreciation and depreciation. In addition, the
Trust may calculate a compound effective annualized yield by adding one to the
base period return (calculated as described above), raising the sum to a power
equal to 365/7 and subtracting one.
The seven-day current yield and effective seven-day yield as
of June 30, 1999 were []% and []%, respectively. Had GEIM not absorbed a portion
of the Money Market Fund's expenses, the Fund's seven-day yield and effective
seven-day yield as of June 30, 1999 would have been lower.
YIELD FOR OTHER FUNDS
The Trust may, from time to time, advertise a 30-day "yield"
for each Class of a Participant Fund and an "equivalent taxable yield" for each
Class of the Tax-Exempt Fund. The 30-day yield figures are calculated for a
Class of a Fund according to a formula prescribed by the SEC. The formula can be
expressed as follows:
Yield = 2[(a-b + 1)(6)-1]
---
cd
Where:
a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursement).
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends.
d = the maximum offering price per share on the last day of
the period.
For the purpose of determining the interest earned (variable
"a" in the formula) on debt obligations that were purchased by a Fund at a
discount or premium, the formula generally calls for amortization of the
discount or premium; the amortization schedule will be adjusted monthly to
reflect changes in the market values of the debt obligations.
Investors should recognize that, in periods of declining
interest rates, the yield will tend to be somewhat higher than prevailing market
rates, and in periods of rising interest
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<PAGE>
rates the yield will tend to be somewhat lower. In addition, when interest rates
are falling, moneys received by a Fund from the continuous sale of its shares
will likely be invested in portfolio instruments producing lower yields than the
balance of the Fund's portfolio, thereby reducing the current yield of the Fund.
In periods of rising interest rates, the opposite result can be expected to
occur.
Yield information is useful in reviewing the performance of a
Fund, but because yields fluctuate, this information cannot necessarily be used
to compare an investment in shares of the Fund with bank deposits, savings
accounts and similar investment alternatives that often provide an agreed or
guaranteed fixed yield for a stated period of time. Shareholders of a Fund
should remember that yield is a function of the kind and quality of the
instruments in the Fund's portfolio, portfolio maturity, operating expenses and
market conditions.
The 30-day yield for the period ended June 30, 1999 for Class
A, Class B, Class C (former) and Class Y shares, respectively, of the Tax-Exempt
Fund, Short-Term Government Fund, Government Securities Fund and Income Fund
were as follows:
<TABLE>
<CAPTION>
Fund Class A Class B Class C Class Y
(former)
<S> <C> <C> <C> <C>
Tax-Exempt Fund
Short-Term Government Fund
Government Securities Fund
Income Fund
</TABLE>
Had the Funds' investment adviser not absorbed a portion of
the above Funds' expenses, these Funds' 30-day yield for the period ended
September 30, 1998 class of shares would have been lower.
The equivalent taxable yield of the Tax-Exempt Fund
demonstrates the yield on a taxable investment necessary to produce an after-tax
yield equal to the Fund's tax-exempt yield. The Tax-Exempt Fund's tax equivalent
yield is computed for a Class by dividing that portion of the Fund's yield that
is tax-exempt by one minus a stated income tax rate and adding the product to
that portion, if any, of the Fund's yield that is not tax-exempt. Thus, the
equivalent taxable yield of a Class of the Tax-Exempt Fund will always exceed
the Class' yield. Assuming an effective tax rate of 39.6%, for the 30-day period
ended June 30, 1999, the equivalent taxable yield of the Tax-Exempt Fund for
Class A, Class B, Class C (former) and Class Y shares, respectively, was []%,
[]%, []% and []%. Had the Tax-Exempt Fund's investment adviser not absorbed a
portion of the Fund's expenses, assuming an effective tax rate of 39.6%, the
equivalent taxable yield of the Tax-Exempt Fund for the indicated 30-day period
for the relevant Class of shares would have been lower.
AVERAGE ANNUAL TOTAL RETURN
From time to time, the Trust may advertise an "average annual
total return,"
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<PAGE>
which represents the average annual compounded rates of return over one-, five-
and ten-year periods, or over the life of the Fund (as stated in the
advertisement) for each class of shares of a Fund. This total return figure
shows an average percentage change in value of an investment in the Class from
the beginning date of the measuring period to the ending date of the period. The
figure reflects changes in the price of a class of shares and assumes that any
income, dividends and/or capital gains distributions made by the Fund during the
period are reinvested in shares of the same Class. When considering average
annual total return figures for periods longer than one year, investors should
note that a Fund's annual total return for any one year in the periods might
have been greater or less than the average for the entire period.
The "average annual total return" figures for the Funds
described below are computed for a Class according to a formula prescribed by
the SEC. The formula can be expressed as follows:
P(1 + T)(n) = ERV
Where:
P = a hypothetical initial payment of $1,000;
T = average annual total return;
n = number of years; and
ERV = Ending Redeemable Value of a hypothetical
$1,000 investment made at the beginning of a
1-, 5- or 10-year period at the end of a 1-,
5- or 10-year period (or fractional portion
thereof), assuming reinvestment of all
dividends and distributions.
The ERV assumes the maximum applicable sales load is deducted
from the initial investment or redemption amount, in the case of CDSC, complete
redemption of the hypothetical investment at the end of the measuring period.
The average annual total return for the periods ended June 30,
1999 for Class A, Class B, Class C (former) and Class Y shares, respectively, of
each Participant Fund was as follows:
75
<PAGE>
<TABLE>
<CAPTION>
Load Adjusted
- ------------------------------------------------------------------------------------------------------------------------------
One Year Three Five Ten Since One Three Five Ten Since Inception
Fund Years Years Years Inception Year Years Years Years Inception Date
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Equity
Class A
Class B
Class C
Class Y
Tax-Exempt
Class A
Class B
Class C
Class Y
S-T Government
Class A
Class B
Class C
Class Y
Income
Class A
Class B
Class C
Class Y
Global
Class A
Class B
Class C
Class Y
International
Class A
Class B
Class C
Class Y
Strategic
Class A
Class B
Class C
Class Y
Premier
Class A
Class B
Class C
Class Y
Gov't Securities
Class A
Class B
Class C
Mid-Cap Growth
Class A
Class B
Class C
Class Y
Value Equity
Class A
Class B
Class C
Class Y
Money Market
</TABLE>
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<PAGE>
Notes to Performance
For periods prior to September 26, 1997, the performance data relating to Class
A and B shares of the Mid-Cap Growth Fund, Value Equity Fund, Tax-Exempt Fund
and Government Securities Fund reflect the prior performance and expense ratios
of Investors Trust Growth Fund, Investors Trust Value Fund, Investors Trust Tax
Free Fund and Investors Trust Government Fund, respectively, each a series of
Investors Trust, the assets of which were acquired by the corresponding GE Fund.
The Government Securities Fund has not offered Class Y shares since the Fund's
inception, therefore no performance data is shown for Class Y shares of this
Fund.
The performance data has been calculated to assume the current maximum sales
charges imposed by the Trust, which are generally higher than the sales charges
formerly imposed by the Trust.
The mutual fund results are net of fees and expenses and assume changes in share
price, reinvestment of dividends and capital gains, and, if applicable, the
deduction of any sales charges as set forth under the "Load Adjusted" column.
GEIM has voluntarily agreed to reduce or otherwise limit certain expenses of the
Trust. Also, certain of the results for funds that were series of Investors
Trust were favorably affected by expense waivers or limitations. Absent these
limits, the GE Funds' and Investors Trust Funds' performance would have been
lower.
The Funds may compare their average annual total returns to
the returns of the following securities market indices. The Standard & Poor's
("S&P") Composite Index of 500 stocks (S&P 500 Index), the S&P Composite Index
of 400 mid-cap stocks (S&P Mid-Cap 400 Index), the S&P/BARRA Composite Index of
500 value stocks (S&P 500 Value Index), Morgan Stanley Capital International
World Index (MSCI World), Morgan Stanley Capital International EAFE Index (MSCI
EAFE), Lehman Brothers Aggregate Bond Index (LB Aggregate), the Lehman Brothers
Municipal Bond Index (LBMI), Lehman Brothers 1-3 Year Government Bond Index (LB
1-3), the Lehman Brothers 10-Year Municipal Index and the Lehman Brothers
Government Bond Index are unmanaged indexes and do not reflect the actual cost
of investing in the instruments that comprise each index. The S&P 500 Index is a
composite of the prices of 500 widely held stocks recognized by investors to be
representative of the stock market in general. The S&P Mid-Cap 400 Index is a
capitalization-weighted index of 400 U.S. stocks with a median market
capitalization of approximately $700 million. The S&P 500 Value Index is a
capitalization-weighted index of all the stocks in the S&P 500 Index that have
low price-to-book ratios. The MSCI World Index is a composite of 1,561 stocks in
companies from 22 countries representing the European, Pacific Basin and
American regions. The MSCI EAFE Index is a composite of 1,103 stocks of
companies from 20 countries representing stock markets of Europe, Australasia,
New Zealand and the Far East. LB Aggregate is a composite index of short-,
medium-, and long-term bond performance and is widely recognized as a barometer
of the bond market in general. The LBMI is a composite of investment grade,
fixed-rate municipal bonds and is considered to be representative of the
municipal bond market. The LB 1-3 is a composite of government and U.S. Treasury
obligations with maturities of 1-3 years. The Lehman Brothers 10-Year Municipal
Index is comprised of 8,987 bonds with a nominal maturity from eight years up
to, but not including, 12 years. The Lehman Brothers Government Bond Index is
comprised of all U.S. dollar fixed-rate U.S. agency and Treasury bond issues
(excluding stripped issues) with remaining maturities greater than one year and
with at least $100 million in outstanding issuance. S&P 500 Index & LB Aggregate
Bond Index simulates a blended return which is representative of the approximate
asset allocation mix of the GE Strategic Investment Fund for the periods
presented (composed of 60% S&P 500 Index, 40% LB Aggregate). The actual
allocation mix of this Fund may have varied from time to time. The results shown
for the foregoing indexes assume the reinvestment of net dividends.
The Trust also may advertise the actual annual and annualized
total return performance data for various periods of time, which may be shown by
means of schedules, charts
77
<PAGE>
or graphs. Actual annual or annualized total return
data generally will be lower than average annual total return data because the
latter reflects compounding of return. Yield and total return figures are based
on historical earnings and are not intended to indicate future performance.
AGGREGATE TOTAL RETURN
The Trust may use "aggregate total return" figures in
advertisements, which represent the cumulative change in value of an investment
in a class of shares of a Fund for a specific period, and which reflects changes
in the Fund's share price and reinvestment of dividends and distributions.
Aggregate total return may be shown by means of schedules, charts or graphs, and
may indicate subtotals of the various components of total return (that is, the
change in value of initial investment, income dividends and capital gains
distributions). Because distribution and shareholder service fees vary across
Classes, the total returns for each Class will differ. Aggregate total return
data reflects compounding over a longer period of time than does annual total
return data, and therefore aggregate total return will be higher.
"Aggregate total return" represents the cumulative change in
the value of an investment in a Class for the specified period are computed by
the following formula:
Aggregate Total Return = ERV - P
-------
P
Where P = a hypothetical initial
payment of $1,000; and
ERV = Ending Redeemable Value of
a hypothetical $1,000
investment made at the
beginning of a 1-, 5- or
10-year period at the end
of the 1-, 5- or 10-year
period (or fractional
portion thereof), assuming
reinvestment of all
dividends and
distributions.
DISTRIBUTION RATE
The Trust may advertise a Fund's distribution rate and/or
effective distribution rate. A Fund's distribution rate differs from yield and
total return and therefore is not intended to be a complete measure of
performance.
A Fund's distribution rate measures dividends distributed for
a specified period. A Fund's distribution rate is computed by dividing the most
recent monthly distribution per share annualized by the current net asset value
per share. A Fund's effective distribution rate is computed by dividing the
distribution rate by the ratio used to annualize the distribution and
reinvesting the resulting amount for a full year on the basis of such ratio. The
effective distribution rate will be higher than the distribution rate because of
the compounding effect of the assumed reinvestment. A Fund's yield is calculated
using the standardized formula described above. In contrast, the distribution
rate is based on the Fund's last monthly distribution, which tends to be
relatively stable and may be more or less than the amount of net investment
income and short-term capital gain actually earned by the Fund during the month.
78
<PAGE>
COMPARATIVE PERFORMANCE INFORMATION
In addition to the comparative performance information
included in the Prospectus and otherwise quoted in sales and advertising
materials, the Trust may compare the Fund's performance with (a) the performance
of other mutual funds as listed in the rankings prepared by Lipper Analytical
Services, Inc. or similar independent services that monitor the performance of
mutual funds, (b) various unmanaged indices, including the Russell Index, S&P
500 Index, and the Dow Jones Industrial Average or (c) other appropriate indices
of investment securities or with data developed by GEIM derived from those
indices.
Performance information also may include evaluations of a Fund
published by nationally recognized ranking services and by financial
publications that are nationally recognized, such as Barron's, Business Week,
Forbes, Fortune, Institutional Investor, Kiplinger's Personal Finance, Money,
Morningstar Mutual Fund Values, The New York Times, The Wall Street Journal and
USA Today. These ranking services or publications may compare a Fund's
performance to, or rank it within, a universe of mutual funds with investment
objectives and policies similar, but not necessarily identical, to that of the
Funds. Such comparisons or rankings are made on the basis of several factors,
including the size of the Fund, objectives and policies, management style and
strategy, and portfolio composition, and may change over time if any of those
factors change.
PRINCIPAL STOCKHOLDERS
The following persons are the only persons known by the Trust
to hold beneficially more than 5% of the outstanding shares of any class of the
Funds as of August 31, 1999.
Name and Address Amount of Percent
of Record Owner Ownership of Class
- ---------------- --------- --------
As of August 31, 1999: (i) except in the case of Class C
shares of the Short-Term Government Fund, the current Trustees and officers of
the Trust, as a group, beneficially owned less than 1% of each Fund's
outstanding shares; (ii) one of the Trustees owned []% of the Class C shares of
the Short-Term Government Fund; (iii) GE Capital Assurance ("GECA") owned []% of
the outstanding shares of the Small-Cap Value Fund; and (iv) GNA Corporation
owned []% of the outstanding shares of the Short-Term Government Fund. So long
as GECA and GNA Corporation own more than 25% of the outstanding shares of the
Small-Cap Value Fund and the Short-Term Government Fund, respectively, they may
be deemed to control these Funds.
FUND HISTORY AND ADDITIONAL INFORMATION
The Trust is an open-end management investment company
organized as an unincorporated business trust under the laws of the Commonwealth
of Massachusetts pursuant to a Declaration of Trust dated August 10, 1992, as
amended from time to time (the "Declaration").
79
<PAGE>
Currently, there are nineteen funds in the Trust. The U.S.
Equity Fund was established as a series of the Trust on August 24, 1992. The
Global Fund, the Strategic Fund, the Tax-Exempt Fund, the Income Fund and the
Money Market Fund were added as series of the Trust on November 11, 1992. The
Short-Term Government Fund and the International Fund were added as series of
the Trust on March 1, 1994. The Mid-Cap Growth Fund and the International Income
Fund were added as series of the Trust on June 17, 1994. The Premier Fund was
added as a series of the Trust on July 22, 1996. The Value Equity Fund and the
Government Securities Fund were added as series of the Trust on June 2, 1997.
The Small-Cap Value Fund, the Small-Cap Growth Fund, the Mid-Cap Value Fund and
the High Yield Fund were added as series of the Trust on May 8, 1998. The Europe
Fund and the Emerging Markets Fund were added as series of the Trust on November
6, 1998.
On September 26, 1997, the Trust, on behalf of GE Mid-Cap
Growth Fund, GE Value Equity Fund, GE Tax-Exempt Fund, GE Government Securities
Fund and GE Short-Term Government Fund, acquired all or substantially all of the
assets of Investors Trust Growth Fund, Investors Trust Value Fund, Investors
Trust Tax Free Fund, Investors Trust Government Fund and Investors Trust
Adjustable Rate Fund, respectively (each a series of Investors Trust).
In the interest of economy and convenience, physical
certificates representing shares of a Fund are not issued. State Street
maintains a record of each shareholder's ownership of shares of a Fund.
SHAREHOLDER LIABILITY. Massachusetts law provides that
shareholders of the Funds may, under certain circumstances, be held personally
liable for the obligations of the Trust. The Declaration disclaims shareholder
liability for acts or obligations of the Trust, however, and permits notice of
the disclaimer be given in each agreement, obligation or instrument entered into
or executed by the Trust or a Trustee of the Trust. The Declaration provides for
indemnification from the property of a Fund for all losses and expenses of any
shareholder of the Fund held personally liable for the obligations of the Fund.
Thus, the risk of a shareholder of a Fund incurring financial loss on account of
shareholder liability is limited to circumstances in which the Fund would be
unable to meet its obligations, a possibility that the Trust's management
believes is remote. Upon payment of any liability incurred by a Fund, the
shareholder paying the liability will be entitled to reimbursement from the
general assets of the Fund. The Trustees intend to conduct the operations of the
Trust and the Funds in such a way so as to avoid, as far as practicable,
ultimate liability of the shareholders for liabilities of the Funds.
SHAREHOLDER RIGHTS AND VOTING. When issued, shares of a Fund
will be fully paid and non-assessable. Shares are freely transferable and have
no preemptive, subscription or conversion rights. Each Class represents an
identical interest in a Fund's investment portfolio. As a result, each Class has
the same rights, privileges and preferences, except with respect to: (1) the
designation of each Class; (2) the sales arrangement; (3) certain expenses
allocable exclusively to each Class; (4) voting rights on matters exclusively
affecting a single Class; and (5) the exchange privilege of each Class. The
Board does not anticipate that there will be any conflicts among the interests
of the holders of the different Classes. The Trustees, on an ongoing basis, will
consider whether any conflict exists and, if so, will take appropriate action.
Certain aspects of the shares may be changed, upon notice to Fund shareholders,
to satisfy certain tax regulatory requirements,
80
<PAGE>
if the change is deemed necessary by the Board.
When matters are submitted for shareholder vote, each
shareholder of each Fund will have one vote for each full share held and
proportionate, fractional votes for fractional shares held. In general, shares
of all Funds vote as a single class on all matters except (1) matters affecting
the interests of one or more of the Funds or Classes of a Fund, in which case
only shares of the affected Funds or Classes would be entitled to vote or (2)
when the 1940 Act requires the vote of an individual Fund. Normally, no meetings
of shareholders of the Funds will be held for the purpose of electing Trustees
of the Trust unless and until such time as less than a majority of the Trustees
holding office have been elected by shareholders of the Trust, at which time the
Trustees then in office will call a shareholders' meeting for the election of
Trustees. Shareholders of record of no less than a majority of the outstanding
shares of the Trust may remove a Trustee for cause through a declaration in
writing or by vote cast in person or by proxy at a meeting called for that
purpose. A meeting will be called for the purpose of voting on the removal of a
Trustee at the written request of holders of 10% of the Trust's outstanding
shares. Shareholders who satisfy certain criteria will be assisted by the Trust
in communicating with other shareholders in seeking the holding of the meeting.
COUNSEL. Willkie Farr & Gallagher, 787 Seventh Avenue,
New York, New York 10019-6099, serves as counsel for the Trust.
INDEPENDENT ACCOUNTANTS. ______________, 160 Federal Street,
Boston, Massachusetts 02110, serves as independent accountants of the Trust.
Coopers & Lybrand L.L.P. (one of the predecessor firms of PricewaterhouseCoopers
LLP), One Post Office Square, Boston, Massachusetts 02109, served as independent
accountants to Investors Trust, all or substantially all the assets of which
were acquired by the Trust on September 26, 1997.
FINANCIAL STATEMENTS
The Annual Report dated September 30, 1998 and Semi Annual
Report dated March 31, 1999, which either accompany this SAI or have previously
been provided to the person to whom this SAI is being sent, are incorporated
herein by reference with respect to all information other than the information
set forth in the Letter to Shareholders included in the Reports. The Annual
Report dated October 31, 1996 for Investors Trust Growth Fund, Investors Trust
Value Fund, Investors Trust Tax Free Fund and Investors Trust Government Fund,
which are the predecessor funds to the Mid-Cap Growth Fund, the Value Equity
Fund, the Tax-Exempt Fund and the Government Securities Fund, respectively
(collectively with the Annual Report for GE Funds, the "Financial Reports"), are
incorporated herein by reference. The Mid-Cap Value Fund, High Yield Fund,
Europe Fund, and Emerging Markets Fund commenced operations as of the date of
this SAI and the Small-Cap Value Fund commenced operations as of January 30,
1999. The International Income Fund and the Small-Cap Growth Equity Fund have
not yet commenced operations and have no assets as of the date of this SAI. The
Trust will furnish, without charge, a copy of the Financial Reports, upon
request to the Trust at P.O. Box 120065, Stamford, CT 06912-0065, (800)
242-0134.
81
<PAGE>
APPENDIX
DESCRIPTION OF RATINGS
COMMERCIAL PAPER RATINGS
The rating A-1+ is the highest, and A-1 the second highest
commercial paper rating assigned by S&P. Paper rated A-1+ must have either the
direct credit support of an issuer or guarantor that possesses excellent
long-term operating and financial strength combined with strong liquidity
characteristics (typically, such issuers or guarantors would display credit
quality characteristics that would warrant a senior bond rating of AA or higher)
or the direct credit support of an issuer or guarantor that possesses above
average long-term fundamental operating and financing capabilities combined with
ongoing excellent liquidity characteristics. Paper rated A-1 must have the
following characteristics: liquidity ratios are adequate to meet cash
requirements; long-term senior debt is rated A or better; the issuer has access
to at least two additional channels of borrowing; basic earnings and cash flow
have an upward trend with allowance made for unusual circumstances; typically,
the issuer's industry is well established and the issuer has a strong position
within the industry; and the reliability and quality of management are
unquestioned. Capacity for timely payment on issues rated A-2 is satisfactory.
However, the relative degree of safety is not as high as issues designated
"A-1."
The rating Prime-1 is the highest commercial paper rating
assigned by Moody's. Among the factors considered by Moody's in assigning
ratings are the following: (a) evaluation of the management of the issuer; (b)
economic evaluation of the issuer's industry or industries and an appraisal of
speculative-type risks that may be inherent in certain areas; (c) evaluation of
the issuer's products in relation to competition and customer acceptance; (d)
liquidity; (e) amount and quality of long-term debt; (f) trend of earnings over
a period of ten years; (g) financial strength of parent company and the
relationships that exist with the issue; and (h) recognition by the management
of obligations that may be present or may arise as a result of public interest
questions and preparations to meet the obligations.
Issuers rated Prime-2 (or supporting institutions) have a
strong ability for repayment of senior short-term debt obligations. This
normally will be evidenced by many of the characteristics cited above, but to a
lesser degree. Earnings trends and coverage ratios, while sound, may be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.
Short-term obligations, including commercial paper, rated A-1+
by IBCA Limited or its affiliate IBCA Inc. are obligations supported by the
highest capacity for timely repayment. Obligations rated A-1 have a very strong
capacity for timely repayment. Obligations rated A-2 have a strong capacity for
timely repayment, although that capacity may be susceptible to adverse changes
in business, economic and financial conditions.
Fitch Investors Services, Inc. employs the rating F-1+ to
indicate issues regarded as having the strongest degree of assurance of timely
payment. The rating F-1 reflects an assurance of timely payment only slightly
less in degree than issues rated F-1+, while the rating
<PAGE>
F-2 indicates a satisfactory degree of assurance of timely payment although the
margin of safety is not as great as indicated by the F-1+ and F-1 categories.
Duff & Phelps Inc. employs the designation of Duff 1 with
respect to top grade commercial paper and bank money instruments. Duff 1+
indicates the highest certainty of timely payment: short-term liquidity is
clearly outstanding and safety is just below risk-free U.S. Treasury short-term
obligations. Duff 1- indicates high certainty of timely payment. Duff 2
indicates good certainty of timely payment; liquidity factors and company
fundamentals are sound.
Thomson BankWatch Inc. employs the rating TBW-1 to indicate
issues having a very high degree of likelihood of timely payment. TBW-2
indicates a strong degree of safety regarding timely payment, however, the
relative degree of safety is not as high as for issues rated TBW-1. While the
rating TBW-3 indicates issues that are more susceptible to adverse developments
than obligations with higher ratings, capacity to service principal and interest
in a timely fashion is considered adequate. The lowest rating category is TBW-4;
this rating is regarded as non-investment grade and, therefore, speculative.
Various NRSROs utilize rankings within ratings categories
indicated by a plus or minus sign. The Funds, in accordance with industry
practice, recognize such ratings within categories or gradations, viewing for
example S&P's ratings of A-1+ and A-1 as being in S&P's highest rating category.
DESCRIPTION OF S&P CORPORATE BOND RATINGS
AAA -- This is the highest rating assigned by S&P to a bond
and indicates an extremely strong capacity to pay interest and repay principal.
AA -- Bonds rated AA have a very strong capacity to pay
interest and repay principal and differ from AAA issues only in small degree.
A -- Bonds rated A have a strong capacity to pay interest and
repay principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt in higher
rated categories.
BBB -- Bonds rated BBB have an adequate capacity to pay
interest and repay principal. Adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay interest and
repay principal for bonds in this category (even though they normally exhibit
adequate protection parameters) than for bonds in higher rated categories.
BB, B and CCC -- Bonds rated BB and B are regarded, on
balance, as predominately speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB
represents a lower degree of speculation than B, and CCC the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
A-2
<PAGE>
To provide more detailed indications of credit quality, the
ratings from AA to B may be modified by the addition of a plus or minus sign to
show relative standing within this major rating category.
DESCRIPTION OF MOODY'S CORPORATE BOND RATINGS
Aaa -- Bonds that are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a large or
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa -- Bonds that are rated Aa are judged to be of high quality
by all standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present that make the long-term risks appear somewhat larger than in Aaa
securities.
A -- Bonds that are rated A possess favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present that suggest a susceptibility to impairment sometime in the
future.
Baa -- Bonds that are rated Baa are considered as medium-grade
obligations, that is, they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba -- Bonds that are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and thereby
not well safeguarded during both good and bad times over the future. Uncertainty
of position characterizes bonds in this class.
B -- Bonds that are rated B generally lack characteristics of
desirable investments. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa -- Bonds that are rated Caa are of poor standing. These
issues may be in default, or present elements of danger may exist with respect
to principal or interest.
Moody's applies numerical modifiers (1, 2 and 3) with respect
to the bonds rated Aa through B, The modifier 1 indicates that the bond being
rated ranks in the higher end of its generic rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the bond ranks
in the lower end of its generic rating category.
A-3
<PAGE>
DESCRIPTION OF S&P MUNICIPAL BOND RATINGS
AAA -- Prime -- These are obligations of the highest quality.
They have the strongest capacity for timely payment of debt service.
General Obligation Bonds -- In a period of economic stress,
the issuers will suffer the smallest declines in income and will be least
susceptible to autonomous decline. Debt burden is moderate. A strong revenue
structure appears more than adequate to meet future expenditure requirements.
Quality of management appears superior.
Revenue Bonds -- Debt service coverage has been, and is
expected to remain, substantial. Stability of the pledged revenues is also
exceptionally strong due to the competitive position of the municipal enterprise
or to the nature of the revenues. Basic security provisions (including rate
covenant, earnings test for issuance of additional bonds, debt service reserve
requirements) are rigorous. There is evidence of superior management.
AA -- High Grade -- The investment characteristics of bonds in
this group are only slightly less marked than those of the prime quality issues.
Bonds rated AA have the second strongest capacity for payment of debt service.
A -- Good Grade -- Principal and interest payments on bonds in
this category are regarded as safe although the bonds are somewhat more
susceptible to the adverse effects of changes in circumstances and economic
conditions than bonds in higher rated categories. This rating describes the
third strongest capacity for payment of debt service. The ratings differ from
the two higher ratings of municipal bonds, because:
General Obligations Bonds -- There is some weakness, either in
the local economic base, in debt burden, in the balance between revenues and
expenditures, or in quality of management. Under certain adverse circumstances,
any one such weakness might impair the ability of the issuer to meet debt
obligations at some future date.
Revenue Bonds -- Debt service coverage is good, but not
exceptional. Stability of the pledged revenues
A-4
<PAGE>
could show some variations because of increased competition or economic
influences on revenues. Basic security provisions, while satisfactory, are less
stringent. Management performance appears adequate.
BB, B, CCC and CC -- Bonds rated BB, B, CCC and CC are
regarded, on balance, as predominately speculative with respect to capacity to
pay interest and repay principal in accordance with the terms of the obligation.
BB includes the lowest degree of speculation and CC the highest degree of
speculation. While these bonds will likely have some quality and protective
characteristics, these characteristics are outweighed by large uncertainties or
major risk exposures to adverse conditions.
C -- The rating C is reserved for income bonds on which no
interest is being paid.
D -- Bonds rated D are in default, and payment of interest
and/or repayment of principal is in arrears.
S&P's letter ratings may be modified by the addition of a plus
or a minus sign, which is used to show relative standing within the major rating
categories, except in the AAA-Prime Grade category.
DESCRIPTION OF S&P MUNICIPAL NOTE RATINGS
Municipal notes with maturities of three years or less are
usually given note ratings (designated SP-1, -2 or -3) to distinguish more
clearly the credit quality of notes as compared to bonds. Notes rated SP-1 have
a very strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics are given the
designation of SP-1+. Notes rated SP-2 have satisfactory capacity to pay
principal and interest.
DESCRIPTION OF MOODY'S MUNICIPAL BOND RATINGS
Aaa -- Bonds that are rated Aaa are judged to be the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa -- Bonds that are rated Aa are judged to be of high quality
by all standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities, or fluctuation
of protective elements may be of greater amplitude, or there may be other
elements present that make the long-term risks appear somewhat larger than in
Aaa securities.
A -- Bonds that are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present that suggest a susceptibility to impairment sometime in the
future.
A-5
<PAGE>
Baa -- Bonds that are rated Baa are considered as medium grade
obligations, that is, they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba -- Bonds that are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and thereby
not well safeguarded during both good and bad times over the future. Uncertainty
of position characterize bonds in this class.
B -- Bonds that are rated B generally lack characteristics of
the desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa -- Bonds that are rated Caa are of poor standing. Such
issues may be in default or there may be present elements of danger with respect
to principal or interest.
Ca -- Bonds that are rated Ca represent obligations that are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C -- Bonds that are rated C are the lowest rated class of
bonds, and issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 in each
generic rating classification from Aa through B. The modifier 1 indicates that
the security ranks in the higher end of its generic ratings category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the
issue ranks in the lower end of its generic ratings category.
DESCRIPTION OF MOODY'S MUNICIPAL NOTE RATINGS
Moody's ratings for state and municipal notes and other
short-term loans are designated Moody's Investment Grade (MIG) and for variable
rate demand obligations are designated Variable Moody's Investment Grade (VMIG).
This distinction recognizes the differences between short-term credit risk and
long-term risk. Loans bearing the designation MIG 1/VMIG 1 are the best quality,
enjoying strong protection from established cash flows of funds for their
servicing or from established and broad-based access to the market for
refinancing, or both. Loans bearing the designation MIG 2/VMIG 2 are of high
quality, with margins of protection ample, although not as large as the
preceding group. Loans bearing the designation MIG 3/VMIG3 are of favorable
quality, with all security elements accounted for but lacking the undeniable
strength of the higher grades. Market access for refinancing, in particular, is
likely to be less well established. Loans bearing the designation MIG 4/VMIG 4
are of adequate quality. Protection commonly regarded as required of an
investment security is present and although not distinctly or predominantly
speculative, there is specific risk.
A-6
<PAGE>
PART C
OTHER INFORMATION
Item 23. Exhibits
Exhibit No. Description of Exhibit
(a)(1) Declaration of Trust*
(2) Certificate of Amendment of Declaration of Trust and Change of
Series Designation*
(3) Form of Amendment to Declaration of Trust to add GE Short-Term
Government Fund ("Short-Term Government Fund") and GE
International Equity Fund ("International Fund")*
(4) Form of Amendment to Declaration of Trust to add GE Mid-Cap
Growth Fund ("Mid-Cap Growth Fund") and GE International Fixed
Income Fund ("International Income Fund")*
(5) Form of Amendment to Declaration of Trust to add GE Premier
Growth Equity Fund ("Premier Fund")*
(6) Form of Amendment to Declaration of Trust to add GE Value
Equity Fund ("Value Equity Fund") and GE Government Securities
Fund ("Government Securities Fund")*
(7) Form of Amendment to Declaration of Trust to add GE Small-Cap
Value Equity Fund ("Small-Cap Value Fund"), GE Small-Cap
Growth Equity Fund ("Small-Cap Growth Fund"), GE Mid-Cap Value
Equity Fund ("Mid-Cap Value Fund") and GE High Yield Fund
("High Yield Fund")*
(8) Form of Amendment to Declaration of Trust to add GE Europe
Equity Fund ("Europe Fund") and GE Emerging Markets Fund
("Emerging Markets Fund")*
(9) Certificate of Amendment to Declaration of Trust**
(10) Amendment to Establishment and Designation of Classes**
(11) Amendment to Establishment and Designation of Classes**
(b) By-Laws*
(c) Not applicable
<PAGE>
(d)(1) Form of Investment Advisory and Administration Agreement*
(2) Form of Investment Advisory Agreement for Short-Term
Government Fund and International Fund*
(3) Form of Investment Advisory Agreement for Mid-Cap Growth Fund
and International Income Fund*
(4) Form of Investment Advisory and Administration Agreement for
Premier Fund*
(5) Form of Investment Advisory and Administration Agreement for
Value Equity Fund and Government Securities Fund*
(6) Form of Amended and Restated Investment Advisory and
Administration Agreement for Tax-Exempt Fund*
(7) Form of Investment Advisory and Administration Agreement for
Small-Cap Value Fund and Small-Cap Growth Fund*
(8) Form of Amended and Restated Investment Advisory and
Administration Agreement for Mid-Cap Value Fund*
(9) Form of Amended and Restated Investment Advisory and
Administration Agreement for High Yield Fund*
(10) Form of Investment Advisory and Administration Agreement for
Europe Fund*
(11) Form of Investment Advisory and Administration Agreement for
Emerging Markets Fund*
(12) Form of Sub-Investment Advisory Agreement for Tax-Exempt Fund*
(13) Form of Sub-Investment Advisory Agreement for Small-Cap Value
Fund*
(14) Form of Sub-Investment Advisory Agreement for Mid-Cap Value
Fund*
(15) Form of Sub-Investment Advisory Agreement for High Yield Fund*
(e) Form of Distribution Agreement, as amended*
(f) Not applicable
(g) Form of Custodian Contract*
C-2
<PAGE>
(h)(1) Form of Transfer Agency and Service Agreement*
(2) Form of Administration Agreement for Short-Term Government
Fund and International Fund*
(3) Form of Administration Agreement for Mid-Cap Growth Fund and
International Income Fund*
(i)(1) Opinion and Consent of Willkie Farr & Gallagher, counsel to
Registrant**
(2) Opinion and Consent of Bingham Dana LLP**
(j) Consent of PricewaterhouseCoopers LLP**
(k) Not applicable
(l)(1) Purchase Agreement*
(2) Form of Purchase Agreement for Short-Term Government Fund and
International Fund*
(3) Form of Purchase Agreement for Mid-Cap Growth Fund and
International Income Fund*
(m)(1) Form of Amended and Restated Shareholder Servicing and
Distribution Plan
(2) Form of Amended and Restated Shareholder Servicing and
Distribution Plan for Short-Term Government Fund
(3) Form of Amended and Restated Shareholder Servicing and
Distribution Agreement
(4) Form of Amended and Restated Shareholder Servicing and
Distribution Agreement for Short-Term Government Fund
(n) Financial Data Schedules**
(o) Written Plan Adopted pursuant to Rule 18f-3 under the
Investment Company Act of 1940, as amended
- ------------
* Previously filed.
** To be filed by amendment.
Item 24. Persons Controlled by or Under
Common Control with Registrant
See Item 26.
C-3
<PAGE>
Item 25. Indemnification
Reference is made to Article IV of the Declaration of Trust of GE Funds
("Registrant") filed as Exhibit (a) to this Registration Statement. Insofar as
indemnification for liability arising under the Securities Act, may be permitted
for Trustees, officers and controlling persons of Registrant pursuant to
provisions of Registrant's Declaration of Trust, or otherwise, Registrant has
been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Registrant of expenses
incurred or paid by a Trustee, officer, or controlling person of Registrant in
the successful defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
Item 26. Business and Other Connections of Investment Advisers
Reference is made to "About the Investment Adviser" in the Prospectus
forming Part A, and "Management of the Trust" in the Statement of Additional
Information forming Part B, of this Registration Statement.
The list required by this Item 26 of officers and directors of GE
Investment Management Incorporated ("GEIM"), the Funds' investment adviser,
together with information as to any other business, profession, vocation or
employment of a substantial nature engaged in by those officers and directors
during the past two years, is incorporated by reference to Schedules A and D of
the Form ADV filed by GEIM pursuant to the Investment Advisers Act of 1940, as
amended (the "Advisers Act") (SEC File No. 801-31947).
Brown Brothers Harriman & Co. ("Brown Brothers"), the Tax-Exempt Fund's
sub-adviser, is a New York limited partnership which conducts a general banking
business and is a member of the New York Stock Exchange, Inc. To the knowledge
of the Funds, none of the general partners or officers of Brown Brothers is
engaged in any other business, profession, vocation or employment of a
substantial nature.
The list required by this Item 26 of officers and directors of Palisade
Capital Management, L.L.C. ("Palisade"), the Small-Cap Value Fund's sub-adviser,
together with information as to any other business, profession, vocation or
employment of a substantial nature engaged in by those officers and directors
C-4
<PAGE>
during the past two years, is incorporated by reference to Schedules A and D of
the Form ADV filed by Palisade pursuant to the Advisers Act (SEC File No.
801-48401).
The list required by this Item 26 of officers and directors of NWQ
Investment Management Company ("NWQ"), the Mid-Cap Value Fund's sub-adviser,
together with information as to any other business, profession, vocation or
employment of a substantial nature engaged in by those officers and directors
during the past two years, is incorporated by reference to Schedules A and D of
the Form ADV filed by NWQ pursuant to the Advisers Act (SEC File No. 801-42159).
The list required by this Item 26 of partners and officers of Miller
Anderson & Sherrerd, LLP ("MAS"), the High Yield Fund's sub-adviser, together
with information as to any other business, profession, vocation or employment of
a substantial nature engaged in by those partners and officers during the past
two years, is incorporated by reference to Schedules B and D of the Form ADV
filed by MAS pursuant to the Advisers Act (SEC File No. 801-10437).
Item 27. Principal Underwriters
(a) GE Investment Distributors, Inc. ("GEID") also serves as
distributor for GE Investments Funds, Inc., GE Institutional Funds, GE LifeStyle
Funds, Elfun Tax-Exempt Income Fund, Elfun Income Fund, Elfun Global Fund, Elfun
Money Market Fund, Elfun Trusts and Elfun Diversified Fund.
(b) The information required by this Item 27 with respect to each
director and officer of GEID is incorporated by reference to Schedule A of Form
BD filed by GEID pursuant to the Securities Exchange Act of 1934 (SEC File No.
8-45710).
(c) Not applicable.
Item 28. Location of Accounts and Records
All accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940, as
amended, and the rules thereunder, are maintained at the offices of: Registrant
located at 3003 Summer Street, Stamford, Connecticut 06905; 777 Long Ridge Road,
Stamford, Connecticut 06927; State Street Bank and Trust Company ("State
Street"), Registrant's custodian and transfer agent, located at 225 Franklin
Street, Boston, Massachusetts 02101; and National Financial Data Services Inc.,
a subsidiary of State Street, located at P.O. Box 419631, Kansas City, Missouri
64141-6631.
Item 29. Management Services
Not applicable.
C-5
<PAGE>
Item 30. Undertakings
Not applicable.
C-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, Registrant has duly caused this
Amendment to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Stamford, State of Connecticut, on this 9th day of
July, 1999.
By: /s/ Michael J. Cosgrove
-------------------------
Michael J. Cosgrove
President and Chairman
of the Board
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment to Registrant's Registration Statement on Form N-1A has been signed
below by the following persons in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Michael J. Cosgrove President and July 9, 1999
- ----------------------- Chairman of the Board
Michael J. Cosgrove (Chief Executive Officer)
* Trustee July 9, 1999
- ----------------------
John R. Costantino
/s/ Alan M. Lewis Trustee July 9, 1999
- ----------------------
Alan M. Lewis
* Trustee July 9, 1999
- ----------------------
William J. Lucas
* Trustee July 9, 1999
- ----------------------
Robert P. Quinn
/s/ Michael Tansley Treasurer July 9, 1999
- ---------------------- (Chief Financial and
Michael Tansley Accounting Officer)
C-7
<PAGE>
* Signature affixed by Matthew J. Simpson pursuant to a power of attorney dated
December 9, 1998 filed herewith.
/s/ Matthew J. Simpson
- ----------------------
Matthew J. Simpson
C-8
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
(m)(1) Form of Amended and Restated Shareholder Servicing and
Distribution Plan
(m)(2) Form of Amended and Restated Shareholder Servicing and
Distribution Plan for Short-Term Government Fund
(m)(3) Form of Amended and Restated Shareholder Servicing and
Distribution Agreement
(m)(4) Form of Amended and Restated Shareholder Servicing and
Distribution Agreement for Short-Term Government Fund
(o) Written Plan Adopted pursuant to Rule 18f-3 under the
Investment Company Act of 1940, as amended
<PAGE>
GE FUNDS
AMENDED AND RESTATED
SHAREHOLDER SERVICING AND DISTRIBUTION PLAN
This Amended and Restated Shareholder Servicing and
Distribution Plan ("Plan") is adopted by GE Funds, a business trust organized
under the laws of The Commonwealth of Massachusetts (the "Trust"), with respect
to each of GE U.S. Equity Fund, GE Premier Growth Equity Fund, GE Value Equity
Fund, GE Mid-Cap Growth Fund, GE Mid-Cap Value Equity Fund, GE Small-Cap Value
Equity Fund, GE Tax-Exempt Fund, GE Fixed Income Fund, GE High Yield Fund, GE
Government Securities Fund, GE Global Equity Fund, GE International Equity Fund,
GE Europe Equity Fund, GE Emerging Markets Fund and GE Strategic Investment Fund
and any other investment fund offered by the Trust in the future that adopts
this Plan (individually a "Covered Fund" and collectively the "Covered Funds"),
pursuant to Rule 12b-1 (the "Rule") under the Investment Company Act of 1940, as
amended (the "1940 Act"). Under a multiple distribution system adopted by the
Trust, each of the Covered Funds has four classes (each a "Class" and together
the "Classes") of shares of beneficial interest ("Shares"), designated as Class
A, Class B, Class C and Class Y Shares. This Plan is intended to describe the
shareholder servicing and distribution services to be provided by GE Investment
Distributors, Inc. ("GEID"), a corporation organized under the laws of the State
of Delaware, and/or the distributor of the Covered Funds' Shares (the
"Distributor") in connection with the multiple distribution system. Those
services will be provided as set out below, subject to the following terms and
conditions:
SECTION 1. AMOUNT OF PAYMENTS.
(a) Class A Shares. The Trust will pay GEID with respect to
each Covered Fund, for shareholder services and distribution related services
provided with respect to the Class A Shares of the Covered Fund, an annual fee
of .25% of the value of the average daily net assets of the Covered Fund
attributable to the Class A Shares (a "Service and Distribution Fee").
(b) Class B Shares. (i) The Trust will pay GEID, with respect
to each Covered Fund, for shareholder services provided with respect to the
Class B Shares of the Covered Fund, an annual fee of .25% of the value of the
average daily net assets of the Covered Fund attributable to the Class B Shares
(a "Service Fee").
(ii) The Trust will pay GEID, in addition to the Class B
Service Fee, a fee in connection with distribution related services provided
with respect to the Class B Shares of
<PAGE>
a Covered Fund (a "Distribution Fee") at the annual rate of .60% of the value
of the average daily net assets of the Covered Fund attributable to the Class B
Shares.
(c) Class C Shares. (i) The Trust will pay GEID, with respect
to each Covered Fund, for shareholder services provided with respect to the
Class C Shares of the Covered Fund, an annual fee of .25% of the value of the
average daily net assets of the Covered Fund attributable to the Class C Shares
(a "Service Fee").
(ii) The Trust will pay GEID, in addition to the Class C
Service Fee, a fee in connection with distribution related services provided
with respect to the Class C Shares of a Covered Fund (a "Distribution Fee") at
the annual rate of .60% of the value of the average daily net assets of the
Covered Fund attributable to the Class C Shares.
(d) The fees to be paid with respect to the Covered Funds
under this Plan will be calculated daily and paid monthly by the Trust with
respect to the foregoing Classes of the Covered Funds' Shares at the annual
rates indicated above.
SECTION 2. SERVICES PROVIDED UNDER THE PLAN.
(a) The fees payable with respect to each Class of a Covered
Fund for shareholder services are intended to compensate GEID, or enable GEID to
compensate other persons ("Service Providers"), for providing ongoing servicing
and/or maintenance of the accounts of shareholders of the Covered Fund (which is
interpreted to include shareholders of another registered investment company
which primarily invests in the Covered Fund) ("Shareholder Services") and the
fees for distribution related services are intended to compensate GEID, or
enable GEID to compensate Service Providers, including any Distributor of Shares
of the Covered Fund, for providing services that are primarily intended to
result in, or that are primarily attributable to, the sale of Shares of the
Covered Fund ("Selling Services"). "Shareholder Services" as used in this Plan
mean all forms of shareholder liaison services, including, among other things,
one or more of the following: providing shareholders of a Covered Fund with (i)
information on their investments; (ii) general information regarding investing
in mutual funds; (iii) periodic newsletters containing materials
-2-
<PAGE>
relating to the Covered Fund or to investments in general in mutual funds; (iv)
periodic financial seminars designed to assist in the education of shareholders
with respect to mutual funds generally and the Covered Fund specifically; (v)
access to a telephone inquiry center relating to the Covered Fund; and (vi)
other similar services not otherwise required to be provided by the Trust's
custodian or transfer agent. "Selling Services" as used in this Plan include,
but are not limited to: the printing and distribution to prospective investors
in the Covered Fund of prospectuses and statements of additional information
that are used in connection with sales of Class A Shares, Class B Shares and
Class C Shares of the Covered Fund; the preparation, including printing, and
distribution of sales literature and media advertisements relating to the Class
A Shares, Class B Shares or Class C Shares of the Covered Fund; and distributing
shares of the Class A Shares, Class B Shares and Class C Shares of the Covered
Fund. In providing compensation for Selling Services in accordance with this
Plan, GEID is expressly authorized (i) to make, or cause to be made, payments
reflecting an allocation of overhead and other office expenses related to the
distribution of the Class A, Class B and Class C Shares of a Covered Fund; (ii)
to make, or cause to be made, payments, or to provide for the reimbursement of
expenses of, persons who provide support services in connection with the
distribution of the Class A Shares, Class B Shares and Class C Shares of the
Covered Fund; and (iii) to make, or cause to be made, payments to broker-dealers
who have sold Class A Shares, Class B Shares and Class C Shares of the Covered
Fund. Fees paid by Class A Shares may be used to pay for either shareholder
services or distribution related services.
(b) Payments under this Plan are not tied exclusively to the
expenses for shareholder servicing and distribution expenses actually incurred
by GEID or any Service Provider, and the payments may exceed expenses actually
incurred by GEID and/or a Service Provider.
SECTION 3. APPROVAL OF PLAN.
(a) Shareholder Approval. Neither the Plan nor any related
agreements will take effect, and no fee will be payable in accordance with
Section 1 of the Plan, with respect to any Class until the Plan has been
approved by a vote of at least a majority of the outstanding voting securities
represented by the Class. The Plan will be deemed to have been approved with
respect to each Class so long as a majority of the outstanding voting securities
of the Class votes for the approval of the Plan, notwithstanding that: (i) the
Plan has not been approved by a majority of the outstanding voting securities
represented by any other Class or (ii) the Plan has not been approved by a
majority of the outstanding voting securities of the Covered Fund.
-3-
<PAGE>
(b) Trustee Approval. Neither this Plan nor any related
agreements will take effect with respect to any Class of a Covered Fund until
approved by (i) a majority vote of the full Board of Trustees of the Trust and
(ii) those Trustees who are not interested persons of the Trust and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreements related to it (the "Independent Trustees"), cast in person at a
meeting called for the purpose of voting on this Plan and the related
agreements.
SECTION 4. CONTINUANCE OF PLAN.
This Plan will continue in effect with respect to each Class
of a Covered Fund from year to year so long as its continuance is specifically
approved annually by vote of the Trust's Board of Trustees in the manner
described in Section 3(b) above. The Trust's Board of Trustees will evaluate the
appropriateness of this Plan with respect to each Class and its payment terms on
a continuing basis and in doing so will consider all relevant factors, including
the types and extent of Shareholder Services and Selling Services provided by
GEID and/or Service Providers and amounts GEID and/or Service Providers receive
under this Plan.
SECTION 5. TERMINATION.
This Plan may be terminated with respect to any Class of a
Covered Fund at any time, by vote of a majority of the Independent Trustees or
by a vote of a majority of the outstanding voting securities of the Class. This
Plan may remain in effect with respect to a particular Class of the Covered Fund
even if the Plan has been terminated in accordance with this Section 5 with
respect to any other Class of the Covered Fund.
SECTION 6. AMENDMENTS.
This Plan may not be amended with respect to any Class to
increase materially the amount of the fees described in Section 1 above without
approval of the shareholders of the Class as contemplated in Section 3(a) above.
In addition, all material amendments to this Plan must be approved in the manner
described in Section 3(b) above.
SECTION 7. SELECTION OF CERTAIN TRUSTEES.
While this Plan is in effect with respect to any Class of a
Covered Fund, the selection and nomination of the Trust's Trustees who are not
interested persons of the Trust will be committed to the discretion of the
Trustees then in office who are not interested persons of the Trust.
-4-
<PAGE>
SECTION 8. WRITTEN REPORTS.
In each year during which this Plan remains in effect with
respect to a Covered Fund, any person authorized to direct the disposition of
monies paid or payable by the Trust with respect to the Covered Fund pursuant to
the Plan or any related agreement will prepare and furnish to the Trust's Board
of Trustees, and the Board will review, at least quarterly, written reports,
complying with the requirements of the Rule, which set out the amounts expended
under this Plan and the purposes for which those expenditures were made.
SECTION 9. PRESERVATION OF MATERIALS.
The Trust will preserve copies of this Plan, any agreement
relating to this Plan and any report made pursuant to Section 8 above, for a
period of not less than six years (the first two years in an easily accessible
place) from the date of this Plan, the agreement or the report.
SECTION 10. MEANING OF CERTAIN TERMS.
As used in this Plan, the terms "interested person" and
"majority of the outstanding voting securities" will be deemed to have the same
meaning that those terms have under the 1940 Act and the rules and regulations
under the 1940 Act, subject to any exemption that may be granted to the Trust
under the 1940 Act by the Securities and Exchange Commission.
SECTION 11. FILING OF DECLARATION OF TRUST.
The Trust represents that a copy of its Declaration of Trust,
dated as of August 10, 1992, as amended from time to time (the "Declaration
Trust"), is on file with the Secretary of The Commonwealth of Massachusetts and
with the Boston City Clerk.
SECTION 12. LIMITATION OF LIABILITY.
The obligations of the Trust under this Plan will not be
binding upon any of the Trustees, shareholders, nominees, officers, employees or
agents, whether past, present or future, of the Trust, individually, but are
binding only upon the assets and property of the Trust, as provided in the
Declaration of Trust. The execution and delivery of this Plan have been
authorized by the Trustees of the Trust, and signed by an authorized officer of
the Trust, acting as such, and neither the authorization by the Trustees nor the
execution and delivery by the officer will be deemed to have been made by any of
them individually or to impose any liability on any of them personally, but will
bind only the trust property of the Trust as provided in the Declaration of
Trust. No Covered Fund will be liable for any claims against any other Covered
Fund.
-5-
<PAGE>
SECTION 13. DATE OF EFFECTIVENESS.
This Plan has been executed by the Trust with respect to the
Covered Funds as of the close of business on the 17th day of September, 1999 and
will become effective with respect to a particular Class of a Covered Fund as of
the date on which interests in that Class are first offered to or held by the
public.
GE FUNDS
By: /s/ Michael J. Cosgrove
----------------------------
Name: Michael J. Cosgrove
Title: President
-6-
<PAGE>
GE FUNDS
AMENDED AND RESTATED
SHAREHOLDER SERVICING AND DISTRIBUTION PLAN
This Amended and Restated Shareholder Servicing and
Distribution Plan ("Plan") is adopted by GE Funds, a business trust organized
under the laws of The Commonwealth of Massachusetts (the "Trust"), with respect
to GE Short-Term Government Fund (the "Covered Fund"), pursuant to Rule 12b-1
(the "Rule") under the Investment Company Act of 1940, as amended (the "1940
Act"). Under a multiple distribution system adopted by the Trust, the Covered
Fund has four classes (each a "Class" and together the "Classes") of shares of
beneficial interest ("Shares"), designated as Class A, Class B, Class C and
Class Y Shares. This Plan is intended to describe the shareholder servicing and
distribution services to be provided by GE Investment Distributors, Inc.
("GEID"), a corporation organized under the laws of the State of Delaware,
and/or the distributor of the Covered Fund's Shares (the "Distributor") in
connection with the multiple distribution system. Those services will be
provided as set out below, subject to the following terms and conditions:
SECTION 1. AMOUNT OF PAYMENTS.
(a) Class A Shares. The Trust will pay GEID with respect to
the Covered Fund, for shareholder services and distribution related services
provided with respect to the Class A Shares of the Covered Fund, an annual fee
of .25% of the value of the average daily net assets of the Covered Fund
attributable to the Class A Shares (a "Service and Distribution Fee").
(b) Class B Shares. (i) The Trust will pay GEID, with respect
to the Covered Fund, for shareholder services provided with respect to the Class
B Shares of the Covered Fund, an annual fee of .25% of the value of the average
daily net assets of the Covered Fund attributable to the Class B Shares (a
"Service Fee").
(ii) The Trust will pay GEID, in addition to the Class B
Service Fee, a fee in connection with distribution related services provided
with respect to the Class B Shares of a Covered Fund (a "Distribution Fee") at
the annual rate of .60% of the value of the average daily net assets of the
Covered Fund attributable to the Class B Shares.
(c) Class C Shares. (i) The Trust will pay GEID, with respect
to the Covered Fund, for shareholder services provided with respect to the Class
C Shares of the Covered Fund, an annual fee of .25% of the value of the average
<PAGE>
daily net assets of the Covered Fund attributable to the Class C Shares (a
"Service Fee").
(ii) The Trust will pay GEID, in addition to the Class C
Service Fee, a fee in connection with distribution related services provided
with respect to the Class C Shares of a Covered Fund (a "Distribution Fee") at
the annual rate of .60% of the value of the average daily net assets of the
Covered Fund attributable to the Class C Shares.
(d) The fees to be paid with respect to the Covered Funds
under this Plan will be calculated daily and paid monthly by the Trust with
respect to the foregoing Classes of the Covered Fund's Shares at the annual
rates indicated above.
SECTION 2. SERVICES PROVIDED UNDER THE PLAN.
(a) The fees payable with respect to each Class of the Covered
Fund for shareholder services are intended to compensate GEID, or enable GEID to
compensate other persons ("Service Providers"), for providing ongoing servicing
and/or maintenance of the accounts of shareholders of the Covered Fund (which is
interpreted to include shareholders of another registered investment company
which invests primarily in the Covered Fund) ("Shareholder Services") and the
fees for distribution related services are intended to compensate GEID, or
enable GEID to compensate Service Providers, including any Distributor of Shares
of the Covered Fund, for providing services that are primarily intended to
result in, or that are primarily attributable to, the sale of Shares of the
Covered Fund ("Selling Services"). "Shareholder Services" as used in this Plan
mean all forms of shareholder liaison services, including, among other things,
one or more of the following: providing shareholders of the Covered Fund with
(i) information on their investments; (ii) general information regarding
investing in mutual funds; (iii) periodic newsletters containing
-2-
<PAGE>
materials relating to the Covered Fund or to investments in general in mutual
funds; (iv) periodic financial seminars designed to assist in the education of
shareholders with respect to mutual funds generally and the Covered Fund
specifically; (v) access to a telephone inquiry center relating to the Covered
Fund; and (vi) other similar services not otherwise required to be provided by
the Trust's custodian or transfer agent. "Selling Services" as used in this Plan
include, but are not limited to: the printing and distribution to prospective
investors in the Covered Fund of prospectuses and statements of additional
information that are used in connection with sales of Class A Shares, Class B
Shares and Class C Shares of the Covered Fund; the preparation, including
printing, and distribution of sales literature and media advertisements relating
to the Class A Shares, Class B Shares or Class C Shares of the Covered Fund; and
distributing shares of the Class A Shares, Class B Shares or Class C Shares of
the Covered Fund. In providing compensation for Selling Services in accordance
with this Plan, GEID is expressly authorized (i) to make, or cause to be made,
payments reflecting an allocation of overhead and other office expenses related
to the distribution of the Class A, Class B and Class C Shares of the Covered
Fund; (ii) to make, or cause to be made, payments, or to provide for the
reimbursement of expenses of, persons who provide support services in connection
with the distribution of the Class A Shares, Class B Shares and Class C Shares
of the Covered Fund; and (iii) to make, or cause to be made, payments to
broker-dealers who have sold Class A Shares, Class B Shares or Class C Shares of
the Covered Fund. Fees paid by Class A Shares may be used to pay for either
shareholder services or distribution related services.
(b) Payments under this Plan are not tied exclusively to the
expenses for shareholder servicing and distribution expenses actually incurred
by GEID or any Service Provider, and the payments may exceed expenses actually
incurred by GEID and/or a Service Provider.
SECTION 3. APPROVAL OF PLAN.
(a) Shareholder Approval. Neither the Plan nor any related
agreements will take effect, and no fee will be payable in accordance with
Section 1 of the Plan, with respect to any Class until the Plan has been
approved by a vote of at least a majority of the outstanding voting securities
represented by the Class. The Plan will be deemed to have been approved with
respect to each Class so long as a majority of the outstanding voting securities
of the Class votes for the approval of the Plan, notwithstanding that: (i) the
Plan has not been
-3-
<PAGE>
approved by a majority of the outstanding voting securities represented by any
other Class or (ii) the Plan has not been approved by a majority of the
outstanding voting securities of the Covered Fund.
(b) Trustee Approval. Neither this Plan nor any related
agreements will take effect with respect to any Class of the Covered Fund until
approved by (i) a majority vote of the full Board of Trustees of the Trust and
(ii) those Trustees who are not interested persons of the Trust and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreements related to it (the "Independent Trustees"), cast in person at a
meeting called for the purpose of voting on this Plan and the related
agreements.
SECTION 4. CONTINUANCE OF PLAN.
This Plan will continue in effect with respect to each Class
of the Covered Fund from year to year so long as its continuance is specifically
approved annually by vote of the Trust's Board of Trustees in the manner
described in Section 3(b) above. The Trust's Board of Trustees will evaluate the
appropriateness of this Plan with respect to each Class and its payment terms on
a continuing basis and in doing so will consider all relevant factors, including
the types and extent of Shareholder Services and Selling Services provided by
GEID and/or Service Providers and amounts GEID and/or Service Providers receive
under this Plan.
SECTION 5. TERMINATION.
This Plan may be terminated with respect to any Class of the
Covered Fund at any time, by vote of a majority of the Independent Trustees or
by a vote of a majority of the outstanding voting securities of the Class. This
Plan may remain in effect with respect to a particular Class of the Covered Fund
even if the Plan has been terminated in accordance with this Section 5 with
respect to any other Class of the Covered Fund.
SECTION 6. AMENDMENTS.
This Plan may not be amended with respect to any Class to
increase materially the amount of the fees described in Section 1 above without
approval of the shareholders of the Class as contemplated in Section 3(a) above.
In addition, all material amendments to this Plan must be approved in the manner
described in Section 3(b) above.
-4-
<PAGE>
SECTION 7. SELECTION OF CERTAIN TRUSTEES.
While this Plan is in effect with respect to any Class of the
Covered Fund, the selection and nomination of the Trust's Trustees who are not
interested persons of the Trust will be committed to the discretion of the
Trustees then in office who are not interested persons of the Trust.
SECTION 8. WRITTEN REPORTS.
In each year during which this Plan remains in effect with
respect to the Covered Fund, any person authorized to direct the disposition of
monies paid or payable by the Trust with respect to the Covered Fund pursuant to
the Plan or any related agreement will prepare and furnish to the Trust's Board
of Trustees, and the Board will review, at least quarterly, written reports,
complying with the requirements of the Rule, which set out the amounts expended
under this Plan and the purposes for which those expenditures were made.
SECTION 9. PRESERVATION OF MATERIALS.
The Trust will preserve copies of this Plan, any agreement
relating to this Plan and any report made pursuant to Section 8 above, for a
period of not less than six years (the first two years in an easily accessible
place) from the date of this Plan, the agreement or the report.
SECTION 10. MEANING OF CERTAIN TERMS.
As used in this Plan, the terms "interested person" and
"majority of the outstanding voting securities" will be deemed to have the same
meaning that those terms have under the 1940 Act and the rules and regulations
under the 1940 Act, subject to any exemption that may be granted to the Trust
under the 1940 Act by the Securities and Exchange Commission.
SECTION 11. FILING OF DECLARATION OF TRUST.
The Trust represents that a copy of its Declaration of Trust,
dated as of August 10, 1992, as amended from time to time (the "Declaration
Trust"), is on file with the Secretary of The Commonwealth of Massachusetts and
with the Boston City Clerk.
SECTION 12. LIMITATION OF LIABILITY.
The obligations of the Trust under this Plan will not be
binding upon any of the Trustees, shareholders, nominees,
-5-
<PAGE>
officers, employees or agents, whether past, present or future, of the Trust,
individually, but are binding only upon the assets and property of the Trust, as
provided in the Declaration of Trust. The execution and delivery of this Plan
have been authorized by the Trustees of the Trust, and signed by an authorized
officer of the Trust, acting as such, and neither the authorization by the
Trustees nor the execution and delivery by the officer will be deemed to have
been made by any of them individually or to impose any liability on any of them
personally, but will bind only the trust property of the Trust as provided in
the Declaration of Trust. The Covered Fund will not be liable for any claims
against any other series of the Trust.
SECTION 13. DATE OF EFFECTIVENESS.
This Plan has been executed by the Trust with respect to the
Covered Fund as of the close of business on the 17th day of September, 1999 and
will become effective with respect to a particular Class of the Covered Fund as
of the date on which interests in that Class are first offered to or held by the
public.
GE FUNDS
By: /s/ Michael J. Cosgrove
---------------------------
Name: Michael J. Cosgrove
Title: President
-6-
<PAGE>
GE FUNDS
AMENDED AND RESTATED
SHAREHOLDER SERVICING AND DISTRIBUTION AGREEMENT
GE Investment Distributors, Inc.
777 Long Ridge Road, Building B
Stamford, Connecticut 06927
Dear Sirs:
GE Funds (the "Trust") confirms its agreement with GE
Investment Distributors, Inc.("GEID"), a corporation organized under the laws of
the State of Delaware, implementing the terms of the Amended and Restated
Shareholder Servicing and Distribution Plan (the "Plan"), adopted by the Trust
with respect to GE U.S. Equity Fund, GE Premier Growth Equity Fund, GE Value
Equity Fund, GE Mid-Cap Growth Fund, GE Mid-Cap Value Fund, GE Small-Cap Value
Equity Fund, GE Tax-Exempt Fund, GE Fixed Income Fund, GE High Yield Fund, GE
Government Securities Fund, GE Global Equity Fund, GE International Equity Fund,
GE Europe Equity Fund, GE Emerging Markets Fund and GE Strategic Investment Fund
and any other investment fund offered by the Trust in the future that adopts the
Plan (individually a "Covered Fund" and collectively the "Covered Funds"), each
a series of the Trust, pursuant to Rule 12b-1 (the "Rule") under the Investment
Company Act of 1940, as amended (the "1940 Act"). Under a multiple distribution
system adopted by the Trust, each of the Covered Funds has four classes (each a
"Class" and together the "Classes") of shares of beneficial interest ("Shares"),
designated as Class A, Class B, Class C and Class Y Shares. This Agreement is
intended to describe the shareholder servicing and distribution services to be
provided by GEID, and/or the distributor of the Covered Funds' Shares (the
"Distributor"). Those services will be provided as set out below, as follows:
SECTION 1. AMOUNT OF PAYMENTS.
(a) Class A Shares. The Trust will pay GEID, with respect to
each Covered Fund, for shareholder services and distribution related services
provided with respect to the Class A Shares of the Covered Fund, an annual fee
of .25% of the value of the average daily net assets of the Covered Fund
attributable to the Class A Shares (a "Service and Distribution Fee").
(b) Class B Shares. (i) The Trust will pay GEID, with respect
to each Fund, for shareholder services provided with respect to the Class B
Shares of the Covered Fund, an annual fee of .25% of the value of the average
daily net assets of the Covered Fund attributable to the Class B Shares (a
"Service Fee").
<PAGE>
(ii) The Trust will pay GEID, in addition to the Class B
Service Fee, a fee in connection with distribution related services provided
with respect to the Class B Shares of a Covered Fund (a "Distribution Fee") at
the annual rate of .75% of the value of the average daily net assets of the
Covered Fund attributable to the Class B Shares.
(c) Class C Shares. (i) The Trust will pay GEID, with respect
to each Fund, for shareholder services provided with respect to the Class C
Shares of the Covered Fund, an annual fee of .25% of the value of the average
daily net assets of the Covered Fund attributable to the Class C Shares (a
"Service Fee").
(ii) The Trust will pay GEID, in addition to the Class C
Service Fee, a fee in connection with distribution related services provided
with respect to the Class C Shares of a Covered Fund (a "Distribution Fee") at
the annual rate of .60% of the value of the average daily net assets of the
Covered Fund attributable to the Class C Shares.
(d) The fees to be paid with respect to the Covered Funds
under this Agreement will be calculated daily and paid monthly by the Trust with
respect to the foregoing Classes of the Covered Funds' Shares at the annual
rates indicated above.
SECTION 2. SERVICES PROVIDED UNDER THE AGREEMENT.
The fees payable with respect to each Class of a Covered Fund
for shareholder services are intended to compensate GEID, or enable GEID to
compensate other persons ("Service Providers") for providing ongoing servicing
and/or maintenance of the accounts of shareholders of the Covered Fund (which is
interpreted to include shareholders of another registered investment company
which invests primarily in the Covered Fund) ("Shareholder Services") and the
fees for distribution related services are intended to compensate GEID, or
enable GEID to compensate Service Providers including any Distributor of Shares
of the Covered Fund, for providing services that are primarily intended to
result in, or that are primarily attributable to, the sale of shares of the
Covered Fund ("Selling Services"). "Shareholder Services" as used in this
Agreement mean all forms of shareholder liaison
2
<PAGE>
services, including, among other things, one or more of the following: providing
shareholders of a Covered Fund (and shareholders of a registered investment
company investing in a Covered Fund) with (i) information on their investments;
(ii) general information regarding investing in mutual funds; (iii) periodic
newsletters containing materials relating to the Covered Fund or to investments
in general in mutual funds; (iv) periodic financial seminars designed to assist
in the education of shareholders with respect to mutual funds generally and the
Covered Fund specifically; (v) access to a telephone inquiry center relating to
the Covered Fund; and (vi) any other similar services not otherwise required to
be provided by the Trust's custodian or transfer agent. "Selling Services"
include, but are not limited to: the printing and distribution to prospective
investors in the Covered Fund of prospectuses and statements of additional
information that are used in connection with sales of Class A Shares, Class B
Shares and Class C Shares of the Covered Fund; the preparation, including
printing, and distribution of sales literature and media advertisements relating
to the Class A Shares, Class B Shares or Class C Shares of the Covered Fund; and
distributing shares of the Class A Shares, Class B Shares or Class C Shares of
Covered Fund. In providing compensation for Selling Services in accordance with
the Plan, GEID is expressly authorized (i) to make, or cause to be made,
payments reflecting an allocation of overhead and other office expenses related
to the distribution of the Class A Shares, Class B Shares or Class C Shares of a
Covered Fund; (ii) to make, or cause to be made, payments, or to provide for the
reimbursement of expenses of, persons who provide support services in connection
with the distribution of the Class A Shares, Class B Shares or Class C Shares of
the Covered Fund; and (iii) to make, or cause to be made, payments to
broker-dealers who have sold Class A Shares, Class B Shares or Class C Shares of
the Covered Fund. Fees payable by Class A Shares may be used to pay for either
shareholder services or distribution related services.
SECTION 3. APPROVAL BY TRUSTEES.
This Agreement will not take effect with respect to any Class
of a Covered Fund until approved by a majority vote of (a) the full Board of
Trustees of the Trust and (b) those Trustees who are not interested persons of
the Trust and who have no direct or indirect financial interest in the operation
of the Plan or in this Agreement (the "Independent Trustees"), cast in person at
a meeting called for the purpose of voting on this Agreement.
SECTION 4. CONTINUANCE OF AGREEMENT.
This Agreement will continue in effect with respect to a
Covered Fund from year to year so long as its continuance is specifically
approved annually by vote of the Trust's Board of Trustees in the manner
described in Section 3 above.
3
<PAGE>
SECTION 5. TERMINATION.
(a) This Agreement may be terminated with respect to any Class
of a Covered Fund at any time, without the payment of any penalty, by vote of a
majority of the Independent Trustees or by vote of a majority of the outstanding
voting securities of the Class on not more than 60 days' written notice to GEID.
This Agreement may remain in effect with respect to a particular Class of the
Covered Fund even if the Agreement has been terminated in accordance with this
Section 5 with respect to any other Class of the Covered Fund.
(b) This Agreement will terminate automatically in the event
of its assignment.
SECTION 6. SELECTION OF CERTAIN TRUSTEES.
While this Agreement is in effect with respect to any Class of
a Covered Fund, the selection and nomination of the Trust's Trustees who are not
interested persons of the Trust will be committed to the discretion of the
Trustees then in office who are not interested persons of the Trust.
SECTION 7. WRITTEN REPORTS.
GEID agrees that, in each year during which this Agreement
remains in effect with respect to a Covered Fund, GEID will prepare and furnish
to the Trust's Board of Trustees, and the Board will review, at least quarterly,
written reports, complying with the requirements of the Rule, that set out the
amounts expended under this Agreement and the purposes for which those
expenditures were made.
SECTION 8. PRESERVATION OF MATERIALS.
The Trust will preserve copies of this Agreement and any
report made pursuant to Section 7 above, for a period of not less than six years
(the first two years in an easily accessible place) from the date of this
Agreement.
SECTION 9. MEANING OF CERTAIN TERMS.
As used in this Agreement, the terms "interested person" and
"majority of the outstanding voting securities" will be deemed to have the same
meaning that those terms have under the 1940 Act and the rules and regulations
under the 1940 Act, subject to any exemption that may be granted to the Trust
under the 1940 Act by the Securities and Exchange Commission.
SECTION 10. FILING OF DECLARATION OF TRUST.
The Trust represents that a copy of its Declaration of Trust,
dated as of August 10, 1992, as amended from time to time
4
<PAGE>
(the "Declaration of Trust"), is on file with the Secretary of The Commonwealth
of Massachusetts and with the Boston City Clerk.
SECTION 11. LIMITATION OF LIABILITY.
The obligations of the Trust under this Agreement will not be
binding upon any of the Trustees, shareholders, nominees, officers, employees or
agents, whether past, present or future, of the Trust, individually, but are
binding only upon the assets and property of the Trust, as provided in the
Declaration of Trust. The execution and delivery of this Agreement have been
authorized by the Trustees of the Trust, and signed by an authorized officer of
the Trust, acting as such, and neither the authorization by the Trustees nor the
execution and delivery by the officer will be deemed to have been made by any of
them individually or to impose any liability on any of them personally, but will
bind only the trust property of the Trust as provided in the Declaration of
Trust. No Covered Fund will be liable for any claims against any other Covered
Fund.
SECTION 12. EFFECTIVE DATE.
This Agreement has been executed by the Trust with respect to
the Covered Funds as of the close of business on September 17, 1999 and will
become effective with respect to a particular Class of a Covered Fund as of the
date on which interests in that Class are first offered to or held by the
public.
* * * * *
If the terms and conditions described above are in accordance
with your understanding, kindly indicate your acceptance of this Agreement by
signing and returning to us the enclosed copy of this Agreement.
Very truly yours,
GE FUNDS
By: /s/ Michael J. Cosgrove
--------------------------
Name: Michael J. Cosgrove
Title: President
Accepted:
GE INVESTMENT DISTRIBUTORS, INC.
By: /s/ Matthew J. Simpson
----------------------
Name: Matthew J. Simpson
Title: Secretary
5
<PAGE>
GE FUNDS
SHAREHOLDER SERVICING AND DISTRIBUTION AGREEMENT
GE Investment Distributors, Inc.
777 Long Ridge Road, Building B
Stamford, Connecticut 06927
Dear Sirs:
GE Funds (the "Trust") confirms its agreement with GE
Investment Distributors, Inc. ("GEID"), a corporation organized under the laws
of the State of Delaware, implementing the terms of the Shareholder Servicing
and Distribution Plan (the "Plan"), adopted by the Trust with respect to GE
Short-Term Government Fund (the "Covered Fund") a series of the Trust, pursuant
to Rule 12b-1 (the "Rule") under the Investment Company Act of 1940, as amended
(the "1940 Act"). Under a multiple distribution system adopted by the Trust, the
Covered Fund has four classes (each a "Class" and together the "Classes") of
shares of beneficial interest ("Shares"), designated as Class A, Class B, Class
C and Class Y Shares. This Agreement is intended to describe the shareholder
servicing and distribution services to be provided by GEID, and/or the
distributor of the Covered Fund's Shares (the "Distributor"). Those services
will be provided as set out below, as follows:
SECTION 1. AMOUNT OF PAYMENTS.
(a) Class A Shares. The Trust will pay GEID, with respect to
the Covered Fund, for shareholder services and distribution related services
provided with respect to the Class A Shares of the Covered Fund, an annual fee
of .25% of the value of the average daily net assets of the Covered Fund
attributable to the Class A Shares (a "Service and Distribution Fee").
(b) Class B Shares. (i) The Trust will pay GEID, with respect
to each Fund, for shareholder services provided with respect to the Class B
Shares of the Covered Fund, an annual fee of .25% of the value of the average
daily net assets of the Covered Fund attributable to the Class B Shares (a
"Service Fee").
(ii) The Trust will pay GEID, in addition to the Class B
Service Fee, a fee in connection with distribution related services provided
with respect to the Class B Shares of the Covered Fund (a "Distribution Fee") at
the annual rate of .60% of the value of the average daily net assets of the
Covered Fund attributable to the Class B Shares.
<PAGE>
(c) Class C Shares. (i) The Trust will pay GEID, with respect
to each Fund, for shareholder services provided with respect to the Class C
Shares of the Covered Fund, an annual fee of .25% of the value of the average
daily net assets of the Covered Fund attributable to the Class C Shares (a
"Service Fee").
(ii) The Trust will pay GEID, in addition to the Class C
Service Fee, a fee in connection with distribution related services provided
with respect to the Class C Shares of the Covered Fund (a "Distribution Fee") at
the annual rate of .60% of the value of the average daily net assets of the
Covered Fund attributable to the Class C Shares.
(d) The fees to be paid with respect to the Covered Funds
under this Agreement will be calculated daily and paid monthly by the Trust with
respect to the foregoing Classes of the Covered Fund's Shares at the annual
rates indicated above.
SECTION 2. SERVICES PROVIDED UNDER THE AGREEMENT.
The fees payable with respect to each Class of the Covered
Fund for shareholder services are intended to compensate GEID, or enable GEID to
compensate other persons ("Service Providers") for providing shareholders of the
Covered Fund (which is interpreted to include shareholders of another registered
investment company which invests primarily in the Covered Fund) ("Shareholder
Services") and the fees for distribution related services are intended to
compensate GEID, or enable GEID to compensate Service Providers including any
Distributor of Shares of the Covered Fund, for providing services that are
primarily intended to result in, or that are primarily attributable to, the sale
of shares of the Covered Fund ("Selling Services"). "Shareholder Services" as
-2-
<PAGE>
used in this Plan mean all forms of shareholder liaison services, including,
among other things, one or more of the following: providing shareholders of a
Covered Fund with (i) information on their investments; (ii) general information
regarding investing in mutual funds; (iii) periodic newsletters containing
materials relating to the Covered Fund or to investments in general in mutual
funds; (iv) periodic financial seminars designed to assist in the education of
shareholders with respect to mutual funds generally and the Covered Fund
specifically; (v) access to a telephone inquiry center relating to the Covered
Fund; and (vi) and other similar services not otherwise required to be provided
by the Trust's custodian or transfer agent. "Selling Services" include, but are
not limited to: the printing and distribution to prospective investors in the
Covered Fund of prospectuses and statements of additional information that are
used in connection with sales of Class A Shares, Class B Shares and Class C
Shares of the Covered Fund; the preparation, including printing, and
distribution of sales literature and media advertisements relating to the Class
A Shares, Class B Shares and Class C Shares of the Covered Fund; and
distributing shares of the Class A Shares, Class B Shares or Class C Shares of
the Covered Fund. In providing compensation for Selling Services in accordance
with the Plan, GEID is expressly authorized (i) to make, or cause to be made,
payments reflecting an allocation of overhead and other office expenses related
to the distribution of the Class A Shares, Class B Shares or Class C Shares of
the Covered Fund; (ii) to make, or cause to be made, payments, or to provide for
the reimbursement of expenses of, persons who provide support services in
connection with the distribution of the Class A Shares, Class B Shares or Class
C Shares of the Covered Fund; and (iii) to make, or cause to be made, payments
to broker-dealers who have sold Class A Shares, Class B Shares or Class C Shares
of the Covered Fund. Fees payable by Class A Shares may be used to pay for
either shareholder services or distribution related services.
SECTION 3. APPROVAL BY TRUSTEES.
This Agreement will not take effect with respect to any Class
of the Covered Fund until approved by a majority vote of (a) the full Board of
Trustees of the Trust and (b) those Trustees who are not interested persons of
the Trust and who have no direct or indirect financial interest in the operation
of the Plan or in this Agreement (the "Independent Trustees"), cast in person at
a meeting called for the purpose of voting on this Agreement.
-3-
<PAGE>
SECTION 4. CONTINUANCE OF AGREEMENT.
This Agreement will continue in effect with respect to the
Covered Fund from year to year so long as its continuance is specifically
approved annually by vote of the Trust's Board of Trustees in the manner
described in Section 3 above.
SECTION 5. TERMINATION.
(a) This Agreement may be terminated with respect to any
Class of the Covered Fund at any time, without the payment of any penalty, by
vote of a majority of the Independent Trustees or by vote of a majority of the
outstanding voting securities of the Class on not more than 60 days' written
notice to GEID. This Agreement may remain in effect with respect to a particular
Class of the Covered Fund even if the Agreement has been terminated in
accordance with this Section 5 with respect to any other Class of the Covered
Fund.
(b) This Agreement will terminate automatically in the event
of its assignment.
SECTION 6. SELECTION OF CERTAIN TRUSTEES.
While this Agreement is in effect with respect to any Class of
the Covered Fund, the selection and nomination of the Trust's Trustees who are
not interested persons of the Trust will be committed to the discretion of the
Trustees then in office who are not interested persons of the Trust.
SECTION 7. WRITTEN REPORTS.
GEID agrees that, in each year during which this Agreement
remains in effect with respect to the Covered Fund, GEID will prepare and
furnish to the Trust's Board of Trustees, and the Board will review, at least
quarterly, written reports, complying with the requirements of the Rule, that
set out the amounts expended under this Agreement and the purposes for which
those expenditures were made.
SECTION 8. PRESERVATION OF MATERIALS.
The Trust will preserve copies of this Agreement and any
report made pursuant to Section 7 above, for a period of not less than six years
(the first two years in an easily accessible place) from the date of this
Agreement.
SECTION 9. MEANING OF CERTAIN TERMS.
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<PAGE>
As used in this Agreement, the terms "interested person" and
"majority of the outstanding voting securities" will be deemed to have the same
meaning that those terms have under the 1940 Act and the rules and regulations
under the 1940 Act, subject to any exemption that may be granted to the Trust
under the 1940 Act by the Securities and Exchange Commission.
SECTION 10. FILING OF DECLARATION OF TRUST.
The Trust represents that a copy of its Declaration of Trust,
dated as of August 10, 1992, as amended from time to time (the "Declaration of
Trust"), is on file with the Secretary of The Commonwealth of Massachusetts and
with the Boston City Clerk.
SECTION 11. LIMITATION OF LIABILITY.
The obligations of the Trust under this Agreement will not be
binding upon any of the Trustees, shareholders, nominees, officers, employees or
agents, whether past, present or future, of the Trust, individually, but are
binding only upon the assets and property of the Trust, as provided in the
Declaration of Trust. The execution and delivery of this Agreement have been
authorized by the Trustees of the Trust, and signed by an authorized officer of
the Trust, acting as such, and neither the authorization by the Trustees nor the
execution and delivery by the officer will be deemed to have been made by any of
them individually or to impose any liability on any of them personally, but will
bind only the trust property of the Trust as provided in the Declaration of
Trust. The Covered Fund will not be liable for any claims against any other
series of the Trust.
SECTION 12. EFFECTIVE DATE.
This Agreement has been executed by the Trust with respect to
the Covered Fund as of the close of business on September 17, 1999 and will
become effective with respect to a particular Class of the Covered Fund as of
the date on which interests in that Class are first offered to or held by the
public.
* * * * *
If the terms and conditions described above are in accordance
with your understanding, kindly indicate your acceptance of this Agreement by
signing and returning to us the enclosed copy of this Agreement.
Very truly yours,
-5-
<PAGE>
GE FUNDS
By: /s/ Michael J. Cosgrove
--------------------------
Name: Michael J. Cosgrove
Title: President
Accepted:
GE INVESTMENT DISTRIBUTORS, INC.
By: /s/ Matthew J. Simpson
-------------------------
Name: Matthew J. Simpson
Title: Secretary
-6-
<PAGE>
Amended and Restated
Rule 18f-3(d)
Multiple Class Plan for GE Funds
Introduction
This amended and restated plan (the "Plan") is adopted as of the close
of business on September 17, 1999 pursuant to Rule 18f-3(d) under the Investment
Company Act of 1940, as amended (the "1940 Act"). The purpose of the Plan is to
restate the existing arrangements previously approved by the Board of Trustees
of GE Funds (the "Trust") under the Trust's existing order of exemption
(Investment Company Act Release Nos. 19731 (September 22, 1993) (notice) and
19801 (October 19, 1993) (order)). Shares of GE U.S. Equity Fund, GE Premier
Growth Equity Fund, GE Value Equity Fund, GE Mid-Cap Growth Fund, GE Mid-Cap
Value Equity Fund, GE Small-Cap Value Equity Fund, GE Global Equity Fund, GE
International Equity Fund, GE Europe Equity Fund, GE Emerging Markets Fund,
GE Strategic Investment Fund, GE High Yield Fund, GE Tax-Exempt Fund, GE Fixed
Income Fund, GE Government Securities Fund and GE Short-Term Government Fund
(each a "Participant Fund" and collectively, the "Participant Funds") are
distributed pursuant to a system (the "Multiple Distribution System") in which
each class of shares of a Participant Fund represents interests in the same
portfolio of investments of the Participant Fund and differs only to the extent
outlined below.
I. Distribution Arrangement and Service Fees
Classes of shares within the Participant Funds are offered for purchase
by investors with the following sales load and service and distribution fee
arrangements.
1. Class A Shares.
Class A shares are offered with a front-end sales load together with a
plan of distribution adopted pursuant to Rule 12b-1 under the 1940 Act ("Rule
12b-1") providing for a service and distribution at an annual rate of up to
0.25% of average daily net assets. In addition, the Funds are permitted to
assess a contingent deferred sales charge ("CDSC") on certainn redemptions of
Class A shares sold pursuant to a complete waiver of front-end sales loads
applicable to large purchases, if the shares are redeemed within one year of the
date of purchase. This waiver applies to sales of Class A shares where the
amount of purchase is equal to or exceeds $1 million.
No provision of this Plan will preclude the Board of Trustees from
identifying, from time to time pursuant to Rule 22d-1 under the 1940 Act,
certain persons who may be
<PAGE>
eligible to purchase Class A shares pursuant to special arrangements with
respect to the front-end sales load.
2. Class B Shares.
Class B shares are offered with a four year CDSC and a Rule 12b-1
plan providing for a service fee at an annual rate of up to 0.25%, and, other
than with respect to GE Short-Term Government Fund, a distribution fee at an
annual rate of up to 0.75%, of average daily net assets. Class B shares of GE
Short-Term Government Fund are subject to a distribution fee at an annual rate
of up to 0.60% of average daily net assets.
3. Class C Shares.
Class C Shares are offered with a one year CDSC and a Rule 12b-1 plan
providing for a service fee at an annual rate of up to 0.25%, and a distribution
fee at an annual rate of up to 0.75%, of average daily net assets.
4. Class Y Shares.
Class Y shares (formerly designated Class D shares) are offered without
imposition of either a sales charge or a service or distribution fee. Class Y
shares are available exclusively to financial institutions and corporations
purchasing shares for their own account; fiduciaries investing on behalf of
-2-
<PAGE>
clients; certain tax-exempt investors, including defined contribution plans
that do not seek additional services provided or paid by GE Investment
Management Incorporated ("GEIM"); investment companies not managed by GEIM; and
clients of certain financial intermediaries who invest at least $250,000.
5. Additional Classes of Shares.
The Board of trustees of the Trust have the authority to create
additional classes, or change existing classes, from time to time, in accordance
with Rule 18f-3 of the 1940 Act.
II. Expense Allocations
Under the Multiple Distribution System, all expenses incurred by a
Participant Fund are allocated among the various classes of shares based on the
net assets of the Fund attributable to each class, except that each class's net'
asset value and expenses reflect the expenses associated with that class's Rule
12b-1 plan, including any costs associated with obtaining shareholder approval
of the Rule 12b-1 plan (or an amendment to the Rule 12b-1 plan) and any Class
Expenses. Class Expenses are limited to the following:
(i) transfer agency fees as identified by the transfer agent as
being attributable to a specific class;
(ii) Blue Sky registration fees incurred by a class of shares;
-3-
<PAGE>
(iii) Securities and Exchange Commission registration fees
incurred by a class of shares;
(iv) the expenses of administrative personnel and services as
required to support the shareholders of a specific class;
(v) litigation or other legal expenses relating solely to one
class of shares;
(vi) Trustees' fees incurred as a result of issues relating to
one class of shares; and
(vii) printing and postage expenses related to preparing and
distributing materials such as shareholder reports, prospectuses and
proxies to current shareholders.
The Class Expenses set forth above are not currently incurred on a
class basis and, therefore, are not currently allocated to a particular class.
Such expenses, however, may be incurred on a class basis in the future.
III. Conversion Rights of Class B Shares
All Class B shares of each participant Fund will automatically convert
to Class A shares after a certain holding period, expected to be, in most cases,
approximately six years. Upon the expiration of the holding period, Class B
shares (except those purchased through the reinvestment of dividends and other
distributions paid in respect of Class B shares of that Fund) will automatically
convert to Class A shares of the Fund at the relative net assets values of each
of the classes, and will, as a result, thereafter be subject to the lower fee
under the Class A Rule 12b-1 plan.
Shares purchased through the reinvestment of dividends and other
distributions paid in respect of Class B shares are also Class B shares.
However, for purposes of conversion to Class A, all Class B shares in a
shareholder's Fund account that were purchased through the reinvestment of
dividends and other distributions paid in respect of Class B shares (and that
have not converted to Class A shares as provided in the following sentence) are
considered to be held in a separate sub-account. Each time any Class B shares in
the shareholder's Fund account (other than those in the sub-account referred to
in the preceding sentence) convert to Class A, a pro rata portion of the Class B
shares then in the sub-account also converts to Class A. The portion is
determined by the ratio that the shareholder's Class B shares converting to
Class A bears to the shareholder's total Class B shares not acquired through
dividends and distributions.
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The conversion of Class B shares to Class A shares is subject to the
continuing availability of a ruling of the Internal Revenue Service that payment
of different dividends on Class A and Class B shares does not result in the
Fund's dividends or distributions constituting "preferential dividends" under
the Code, and the continuing availability of an opinion of counsel to the effect
that the conversion of shares does not constitute a taxable event under the
Code. The conversion of Class B shares to Class A shares may be suspended if
this opinion is no longer available. In the event that conversions of Class B
shares do not occur, Class B shares would continue to be subject to the
distribution fee for an indefinite period.
IV. Exchange Privileges
Shareholders of a Participant Fund may exchange their shares at net
asset value for shares of the same class in any other Participant Fund of the
Trust or for shares of GE Money Market Fund, as set forth in the prospectus for
such Participant Fund. In addition, a Class Y eligible retirement plan can
exchange Class A shares for Class Y shares and vice versa.
Class A shareholders who wish to exchange all or part of their shares
for Class A shares of a Participant Fund sold subject to a sales charge equal to
or lower than that assessed with respect to the shares of the Participant Fund
being exchanged may do so without paying a sales charge. Class A shareholders of
a Participant Fund who wish to exchange all or part of their shares for Class A
shares of a Participating Fund sold subject to a sales charge higher than that
assessed with respect to the shares of the Fund being exchanged are charged
appropriate "sales charge differential." Currently, a shareholder who exchanges
his Class B or Class C shares, respectively, will be subject to having the
period of time in which his shares were invested in GE Money Market Fund tolled
when computing the applicable CDSC. Likewise, shareholders who exchange their
Class B or Class C shares of a Participant Fund with Class B or Class C shares,
respectively, of another Participant Fund will be subject to the CDSC of the
original Fund at the time of redemption from the second Fund. The exchange
privileges applicable to all classes of shares must comply with Rule 11a-3 under
the 1940 Act.
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