<PAGE>
As filed with the Securities and Exchange Commission
on January 25, 2000
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. 30 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 32 /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 Asset 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 January 29, 2000 pursuant to paragraph (b) X
---
o 60 days after filing pursuant to paragraph (a)(1)
---
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>
[GRAPHIC OMITTED]
Prospectus
--------
GE Funds
January 29, 2000
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
Income Funds
GE Fixed Income Fund
GE Government Securities Fund
GE Short-Term Government Fund
GE Tax-Exempt Fund
GE High Yield Fund
- --------------------------------------------------------------------------------
Asset Allocation Funds
GE Strategic Investment Fund
- --------------------------------------------------------------------------------
Money Market Funds
GE Money Market Fund
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
[GE LOGO]
- -----------------
We bring good things to life.
- --------------------------------------------------------------------------------
<PAGE>
---------------------------------------
Contents
- --------------------------------------------------------------------------------
GE Funds
Prospectus
Equity Funds 3
---------------------------------------
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 14
GE Global Equity Fund 16
GE International Equity Fund 18
GE Europe Equity Fund 20
GE Emerging Markets Fund 21
Income Funds 23
---------------------------------------
GE Fixed Income Fund 24
GE Government Securities Fund 26
GE Short-Term Government Fund 28
GE Tax-Exempt Fund 30
GE High Yield Fund 32
Asset Allocation Funds 35
---------------------------------------
GE Strategic Investment Fund 36
Money Market Funds 39
---------------------------------------
GE Money Market Fund 40
Fund Expenses 42
---------------------------------------
More on Strategies and Risks 48
---------------------------------------
Important Definitions 48
More on Investment Strategies 51
More on Risks 56
Other Risk Considerations 59
About the Investment Adviser 60
---------------------------------------
Investment Adviser and
Administrator 60
About the Funds' Portfolio Managers 61
About the Sub-Advisers 62
Prior Performance Information 64
How to Invest 66
---------------------------------------
How to Buy Shares 66
Choosing a Share Class 70
How to Redeem Shares 74
How to Exchange Shares 76
Distribution and Shareholder
Service Fees 77
Dividends, Capital Gains and
Other Tax Information 78
---------------------------------------
Calculating Share Value 80
---------------------------------------
Financial Highlights 81
---------------------------------------
Additional information regarding the GE Funds ("Funds") is contained in the
Statement of Additional Information dated January 29, 2000, which is
incorporated by reference into (legally forms a part of) this Prospectus.
<PAGE>
- --------------------------------------------------------------------------------
[This page intentionally left blank.]
- --------------------------------------------------------------------------------
<PAGE>
----------
3
- ----------------------------------------------------
GE Funds Equity Funds
Prospectus
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
<PAGE>
- ---------------
4 GE Funds
Prospectus
Equity Funds
- --------------------------------------------------------------------------------
GE U.S. Equity Fund
- ---------------
Investment Objective: 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 apprecia-tion 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 may result 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 risk of investing in the Fund is stock market 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.
- --------------------------------------------------------------------------------
<PAGE>
----------
5
- --------------------------------------------------------------------------------
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 19.82% for the quarter ended
December 31, 1998. The lowest return for a quarter was -10.11% for the quarter
ended September 30, 1998.
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*
[BAR CHART]
1994 -2%
1995 35%
1995 22%
1997 32%
1998 23%
1999 19%
- --------------------------------------------------------------------------------
Average Annual Total Return
(as of December 31, 1999)
Since
1 Year 5 Years Inception**
------ ------- -----------
GE U.S. Equity Fund
Class A* 12.48% 24.88% 19.20%
Class B 14.47% 25.43% 20.34%
Class C (level load) -- -- --
Class Y*** 19.62% 26.68% 21.36%
S&P 500 Index 21.07% 28.59% 21.73%****
Both the bar chart and table assume reinvestment of dividends and distributions.
If GE Asset 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. Average annual total return
figures have been adjusted to reflect Class A expenses and sales charges.
** Inception date (commencement of investment operations):
Class A - February 22, 1993
Class B - December 22, 1993
Class C - September 30, 1999
Class Y - November 29, 1993
*** Formerly named Class D
**** 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>
- ---------------
6 GE Funds
Prospectus
Equity Funds
- --------------------------------------------------------------------------------
GE Premier Growth Equity Fund
- ---------------
Investment Objective: 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 that the portfolio manager
believes have 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 expectation of income in future periods
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 may result 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 the Fund are stock market risk and style
risk (growth investing 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>
----------
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 23.47% for the quarter ended
December 31, 1998. The lowest return for a quarter was -6.71% for the quarter
ended September 30, 1998.
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*
[BAR CHART]
1997 26%
1998 35%
1999 36%
- --------------------------------------------------------------------------------
Average Annual Total Return
(as of December 31, 1999)
Since
1 Year Inception**
------ -----------
GE Premier Growth Equity Fund
Class A* 27.96% 29.83%
Class B 30.72% 31.43%
Class C (level load) -- --
Class Y*** 36.09% 32.76%
S&P 500 Index 21.07% 27.61%****
Both the bar chart and table assume reinvestment of dividends and distributions.
If GE Asset 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. Average annual total return
figures have been adjusted to reflect Class A expenses and sales charges.
** Inception date (commencement of investment operations):
Classes A, B and Y - December 31, 1996
Class C - September 30, 1999
*** Formerly named Class D
**** 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>
- ---------------
8 GE Funds
Prospectus
Equity Funds
- --------------------------------------------------------------------------------
GE Value Equity Fund
- ---------------
Investment Objective: 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 the portfolio manager believes 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 above-average dividend yields
o expectation of income in future periods
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 may result 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 the Fund are stock market risk and style
risk (value investing 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>
----------
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 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*
[BAR CHART]
1994 -2%
1995 30%
1996 23%
1997 33%
1998 24%
1999 18%
- --------------------------------------------------------------------------------
Average Annual Total Return
(as of December 31, 1999)
Since
1 Year 5 Years Inception**
------ ------- -----------
GE Value Equity Fund
Class A* 11.35% 23.95% 18.48%
Class B 13.56% 24.61% 18.84%
Class C (level load) -- -- --
Class Y*** 18.76% -- 21.72%
S&P Value Index 12.69% 22.92% 17.65%****
Both the bar chart and table assume reinvestment of dividends and distributions.
If GE Asset 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 reflect the impact of Distribution and Service Fees imposed at the
rate of 0.50% of average daily net assets. Effective September 17, 1999,
Distribution and Service Fees were reduced to 0.25% of average daily net assets.
** Inception date (commencement of investment operations):
Class A - September 8, 1993
Class B - September 8, 1993
Class C - September 30, 1999
Class Y - January 5, 1998
*** Formerly named Class D
**** 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: Long-term growth of capital.
The Strategy
GE Mid-Cap Growth Fund invests primarily in equity securities of mid-cap
companies that the portfolio manager believes have 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 December 31, 1999 the market capitalization of companies in the
index ranged from $165 million to $37 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 attractive products or services
o financial strength
o strong competitive positions within their industries
o high quality management focused on generating shareholder value
o reasonable valuation
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 the Fund are stock market risk and style
risk (growth investing risk and mid-cap company 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 22.83% for the quarter ended
December 31, 1999. The lowest return for a quarter was -18.52% for the quarter
ended September 30, 1998.
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*
[BAR CHART]
1994 -1%
1995 32%
1996 18%
1997 26%
1998 3%
1999 17%
- --------------------------------------------------------------------------------
Average Annual Total Return
(as of December 31, 1999)
Since
1 Year 5 Years Inception**
------ ------- -----------
GE Mid-Cap Growth Fund
Class A* 10.72% 17.52% 14.20%
Class B 12.81% 18.17% 14.54%
Class C (level load) -- -- --
Class Y*** 17.98% -- 10.83%
S&P MidCap Index 14.77% 23.02% 17.77%****
Both the bar chart and table assume reinvestment of dividends and distributions.
If GE Asset 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 reflect the impact of Distribution and Service Fees imposed at the
rate of 0.50% of average daily net assets. Effective September 17, 1999,
Distribution and Service Fees were reduced to 0.25% of average daily net assets.
** Inception date (commencement of investment operations):
Class A - September 8, 1993
Class B - September 8, 1993
Class C - September 30, 1999
Class Y - January 5, 1998
*** Formerly named Class D
**** 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: 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 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 $1.7 and $10.7 billion as of
December 31, 1999. The Fund's market capitalization is calculated in accordance
with the Morningstar rating agency's trimmed median formula. 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 the Fund are stock market risk and style
risk (value investing risk and mid-cap company 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>
----------
13
- --------------------------------------------------------------------------------
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 13.86% for the quarter ended
June 30, 1999. The lowest return for a quarter was -14.52% for the quarter ended
September 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.
- ----------------
Prior Performance Information
Prior performance information of Jon Bosse, the Fund's portfolio manager, can be
found under "Prior Performance Information" later in this Prospectus.
- --------------------------------------------------------------------------------
Calendar Year Total Returns
Class A Shares*
[BAR CHART]
1999 8%
- --------------------------------------------------------------------------------
Average Annual Total Return
(as of December 31, 1999)
Since
1 Year Inception**
------ -----------
GE Mid-Cap Value Fund
Class A* 1.71% 1.70%
Class B 3.12% 3.11%
Class C (level load) -- --
Class Y*** 8.08% 8.06%
S&P MidCap Index 14.77% 14.77%****
Both the bar chart and table assume reinvestment of dividends and distributions.
If GE Asset 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 reflect the impact of Distribution and Service Fees imposed at the
rate of 0.50% of average daily net assets. Effective September 17, 1999,
Distribution and Service Fees were reduced to 0.25% of average daily net assets.
** Inception date (commencement of investment operations):
Classes A, B and Y - December 31, 1998
Class C - September 30, 1999
*** Formerly named Class D
**** Since January 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>
- ----------------
14 GE Funds
Prospectus
Equity Funds
- --------------------------------------------------------------------------------
GE Small-
Cap Value
Equity Fund
- ----------------
Investment Objective: Long-term growth of capital.
The Strategy
GE Small-Cap Value Equity Fund invests primarily in equity securities of
small-cap companies that the portfolio managers believe 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, 1999 the
market capitalization of companies in the index ranged from $10 million to
$13.04 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 may result
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 the Fund are stock market risk and style
risk (value investing risk and small-cap company 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.
- --------------------------------------------------------------------------------
<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 22.64% for the quarter ended
June 30, 1999. The lowest return for a quarter was -18.52% for the quarter ended
March 31, 1999.
The table opposite illustrates how the Fund's average annual returns for
different calendar periods compare to the returns of the Russell 2000 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*
[BAR CHART]
1999 21%
- --------------------------------------------------------------------------------
Average Annual Total Return
(as of December 31, 1999)
Since
1 Year Inception**
GE Small-Cap Value Fund
Class A* 14.17% 28.67%
Class B 16.21% 31.65%
Class C (level load) -- --
Class Y*** 21.40% 35.31%
Russell 2000 Index 21.09% 31.53%****
Both the bar chart and table assume reinvestment of dividends and distributions.
If GE Asset 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 reflect the impact of Distribution and Service Fees imposed at the
rate of 0.50% of average daily net assets. Effective September 17, 1999,
Distribution and Service Fees were reduced to 0.25% of average daily net assets.
** Inception date (commencement of investment operations): Classes A, B and Y -
September 30, 1998 Class C - September 30, 1999
*** Formerly named Class D
**** Since October 1, 1998
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 Global
Equity Fund
- ----------------
Investment Objective: 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 their potential for
growth. Under unusual 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 the Fund are stock market risk, foreign
exposure risk, style risk (growth investing 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>
----------
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 21.91% for the quarter ended
December 31, 1998. The lowest return for a quarter was -18.81% for the quarter
ended September 30, 1998.
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*
[BAR CHART]
1994 -2%
1995 14%
1996 15%
1997 7%
1998 16%
1999 36%
- --------------------------------------------------------------------------------
Average Annual Total Return
(as of December 31, 1999)
Since
1 year 5 years Inception**
------ ------- -----------
GE Global Equity Fund
Class A* 28.32% 15.91% 14.87%
Class B 31.16% 16.43% 13.46%
Class C (level load) -- -- --
Class Y*** 36.47% 17.60% 15.46%
MSCIW Index 24.94% 19.76% 17.93%****
Both the bar chart and table assume reinvestment of dividends and distributions.
If GE Asset 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. Average annual total return
figures have been adjusted to reflect Class A expenses and sales charges.
**Inception date (commencement of investment operations):
Class A - February 22, 1993
Class B - December 22, 1993
Class C - September 30, 1999
Class D - November 29, 1993
*** Formerly named Class D
**** 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>
- ----------------
18 GE Funds
Prospectus
Equity Funds
- --------------------------------------------------------------------------------
GE
International
Equity Fund
- ----------------
Investment Objective: 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
foreign securities of companies representing at least 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 Fund also
may invest in securities of companies located in the United States. 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 the Fund are stock market risk, foreign
exposure risk, style risk (growth investing 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>
----------
19
- --------------------------------------------------------------------------------
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 21.52% for the quarter ended
December 31, 1999. The lowest return for a quarter was -18.01% for the quarter
ended September 30, 1998.
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*
[BAR CHART]
1995 15%
1996 12%
1997 6%
1998 14%
1999 31%
- --------------------------------------------------------------------------------
Average Annual Total Return
(as of December 31, 1999)
Since
1 year 5 years Inception**
------ ------- -----------
GE International
Equity Fund
Class A* 23.22% 13.94% 11.13%
Class B 25.71% 14.44% 11.43%
Class C (level load) -- -- --
Class Y*** 30.99% 15.66% 12.62%
MSCI EAFE Index 26.96% 12.83% 10.77%****
Both the bar chart and table assume reinvestment of dividends and distributions.
If GE Asset 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 ClassA
as of the close of business on September 17, 1999. Average annual total return
figures have been adjusted to reflect Class A expenses and sales charges.
** Inception date (commencement of investment operations):
Classes A, B and Y - March 2, 1994
Class C - September 30, 1999
*** Formerly named Class D.
**** 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>
- ----------------
20 GE Funds
Prospectus
Equity Funds
- --------------------------------------------------------------------------------
GE Europe
Equity Fund
- ----------------
Investment Objective: 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 for growth. Under normal
circumstances, the Fund's assets are invested in foreign securities of companies
representing at least 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 the Fund are stock market risk, foreign
exposure risk and style risk (growth investing 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 annual report dated September 30, 1999.
- --------------------------------------------------------------------------------
<PAGE>
----------
21
- --------------------------------------------------------------------------------
GE Emerging
Markets Fund
- ----------------
Investment Objective: 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 their potential for growth. Under normal circumstances, the Fund's
assets are invested in foreign securities of companies representing at least
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 (growth investing risk and
small-cap company 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 annual report dated September 30, 1999.
- --------------------------------------------------------------------------------
<PAGE>
22
- --------------------------------------------------------------------------------
[This page intentionally left blank]
- --------------------------------------------------------------------------------
<PAGE>
----------
23
----------------------------------------
Income GE Funds
Funds Prospectus
- --------------------------------------------------------------------------------
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>
- ----------------
24 GE Funds
Prospectus
Equity Funds
- --------------------------------------------------------------------------------
GE Fixed
Income Fund
- ----------------
Investment Objective: Maximum income consistent with prudent investment
management and the preservation of capital.
The Strategy
GE Fixed Income Fund invests primarily in a variety of investment grade 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 the 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>
----------
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 A's highest return for a quarter was 5.92% for the quarter ended
June 30, 1995. The lowest return for a quarter was -2.59% for the quarter ended
March 31, 1994.
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*
[BAR CHART]
1994 -3%
1995 17%
1996 3%
1997 9%
1998 8%
1999 -2%
- --------------------------------------------------------------------------------
Average Annual Total Return
(as of December 31, 1999)
Since
1 year 5 years Inception**
------ ------- -----------
GE Fixed Income Fund
Class A* -5.76% 5.94% 4.66%
Class B -5.13% 6.08% 4.45%
Class C (level load) -- -- --
Class Y*** -1.44% 7.10% 5.44%
LB Aggregate Bond Index -0.83% 7.73% 6.01%****
Both the bar chart and table assume reinvestment of dividends and distributions.
If GE Asset 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. Average annual total return
figures have been adjusted to reflect Class A expenses and sales charges.
** Inception date (commencement of investment operations):
Class A - February 22,1993
Class B - December 22, 1993
Class C - September 30, 1999
Class Y - November 29, 1993
*** Formerly named Class D
**** 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>
- ----------------
26 GE Funds
Prospectus
Equity Funds
- --------------------------------------------------------------------------------
GE
Government
Securities
Fund
- ----------------
Investment Objective: 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 the 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>
----------
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 B's highest return for a quarter was 5.15% for the quarter ended
September 30, 1991. The lowest return for a quarter was -4.85% for the quarter
ended June 30, 1994.
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
[BAR CHART]
1990 9%
1991 14%
1992 6%
1993 8%
1994 -9%
1995 14%
1996 2%
1997 9%
1998 8%
1999 -3%
- --------------------------------------------------------------------------------
Average Annual Total Return
(as of December 31, 1999)
Since
1 year 5 years 10 years Inception*
------ ------- -------- ----------
GE Government
Securities Fund
Class A** -6.54% 5.48% -- 2.70%
Class B -5.87% 5.70% 5.54% --
Class C (level load) -- -- -- --
LB Government
Bond Index -2.25% 7.43% 7.48% --
Both the bar chart and table assume reinvestment of dividends and distributions.
If GE Asset 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 (inception date of predecessor fund which merged into
GE Government Securities Fund on September 26, 1997)
Class C - September 30, 1999
** Returns reflect the impact of Distribution and Service Fees imposed at the
rate of 0.50% of average daily net assets. Effective September 17, 1999,
Distribution and Service Fees were reduced to 0.25% of average daily net assets.
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
Equity Funds
- --------------------------------------------------------------------------------
GE Short-
Term
Government
Fund
- ----------------
Investment Objective: 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 the 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>
----------
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 3.15% for the quarter ended
June 30, 1995. The lowest return for a quarter was 0.19% for the quarter ended
March 31, 1996.
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*
[BAR CHART]
1995 10%
1996 5%
1997 6%
1998 6%
1999 3%
- --------------------------------------------------------------------------------
Average Annual Total Return
(as of December 31, 1999)
Since
1 year 5 Year Inception**
------ ------ -----------
GE Short-Term
Government Fund
Class A* -0.12% 5.35% 4.70%
Class B -0.90% 5.26% 4.52%
Class C (level load) -- -- --
Class Y*** 2.90% 6.16% 5.41%
LB 1-3 Year
Government Bond
Index 2.96% 6.47% 5.61%****
Both the bar chart and table assume reinvestment of dividends and distributions.
If GE Asset 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. Average annual total return
figures have been adjusted to reflect Class A expenses and sales charges.
** Inception date (commencement of investment operations):
Classes A, B and Y - March 2, 1994
Class C - September 30, 1999
*** Formerly named Class D.
**** 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>
- --------------------
30 GE Funds
Prospectus
Income Funds
- --------------------------------------------------------------------------------
GE Tax-Exempt Fund
- --------------------
Investment Objective: 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 the 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>
----------
31
- --------------------------------------------------------------------------------
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
March 31, 1995. The lowest return for a quarter was -4.30% for the quarter ended
March 31, 1994.
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.
The GE Tax-Exempt Fund changed its benchmark index during the fiscal year ended
September 30, 1999 from the Lehman Brothers 10-Year General Obligation Municipal
Bond Index to the LB 10-Year Muni Index because the Fund more closely tracks the
duration of the latter index.
- --------------------------------------------------------------------------------
Calendar Year Total Returns
Class A Shares*
[BAR CHART]
1994 -4%
1995 15%
1996 4%
1997 7%
1998 5%
1999 -3%
- --------------------------------------------------------------------------------
Average Annual Total Return
(as of December 31, 1999)
Since
1 Year 5 Years Inception**
------ ------- -----------
GE Tax-Exempt Fund
Class A* -6.76% 4.71% 3.37%
Class B -5.90% 5.32% 3.75%
Class C (level load) -- -- --
Class Y*** -2.12% -- 2.41%
LB 10-Year Muni Index -1.24% 7.12% 5.21%****
LB 10-Year GO Muni Index -1.32% 7.20% 5.23%****
Both the bar chart and table assume reinvestment of dividends and distributions.
If GE Asset 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 reflect the impact of Distribution and Service Fees imposed at the
rate of 0.50% of average net assets. Effective September 17, 1999, Distribution
and Service Fees were reduced to 0.25% of average daily net assets.
** Inception date (commencement of investment operations):
Class A - September 8, 1993
Class B - September 8, 1993
Class C - September 30, 1999
Class Y - September 26, 1997
*** Formerly named Class D.
**** 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>
- --------------------
32 GE Funds
Prospectus
Income Funds
- --------------------------------------------------------------------------------
GE High Yield Fund
- --------------------
Investment Objective: 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
obligations, 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 weighted average 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 the Fund is high yield securities risk. The
Fund is also subject to interest rate risk, credit risk, prepayment risk and
style risk (high yield investing 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.
- --------------------------------------------------------------------------------
<PAGE>
----------
33
- --------------------------------------------------------------------------------
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 3.80% for the quarter ended
December 31, 1999. The lowest return for a quarter was -0.87% for the quarter
ended June 30, 1999.
The table opposite illustrates how the Fund's average annual returns for
different calendar periods compare to the returns of the Salomon High Yield
Index ("High Yield 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.
- -----------------------------
Prior Performance Information
Prior performance information of Miller Anderson & Sherrerd, LLP, the Fund's
sub-adviser, can be found under "Prior Performance Information" later in this
Prospectus.
- --------------------------------------------------------------------------------
Calendar Year Total Returns
Class A Shares*
[BAR CHART]
1999 4%
- --------------------------------------------------------------------------------
Average Annual Total Return
(as of December 31, 1999)
Since
1 Year Inception**
------ -----------
GE High Yield Fund
Class A* -0.04% -0.04%
Class B 0.67% 0.67%
Class C -- --
Class Y*** 4.61% 4.60%
High Yield Index 1.74% 1.74%****
Both the bar chart and table assume reinvestment of dividends and distributions.
If GE Asset 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. Average annual total return
figures have been adjusted to reflect Class A expenses and sales charges.
** Inception date (commencement of investment operations):
Classes A, B and Y - December 31, 1998
Class C - September 30, 1999
*** Formerly named Class D
**** Since January 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>
34
- --------------------------------------------------------------------------------
[This page intentionally left blank.]
- --------------------------------------------------------------------------------
<PAGE>
----------
35
----------------------------------------------
Asset Allocation GE Funds
Funds Prospectus
- --------------------------------------------------------------------------------
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>
- --------------------
36 GE Funds
Prospectus
Asset Allocation
Funds
- --------------------------------------------------------------------------------
GE Strategic Investment Fund
- --------------------
Investment Objective: Maximum total return.
The Strategy
The GE Strategic Investment Fund invests primarily in a combination of equity
securities and investment grade debt securities. The portfolio managers follow
an asset allocation process established by GE Asset Management's Asset
Allocation Committee to diversify holdings across asset classes. The Fund
adjusts its weightings among 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 portion of the Fund invested in debt securities normally has a weighted
average maturity of approximately five to ten years.
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 the 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>
----------
37
- --------------------------------------------------------------------------------
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 11.74% for the quarter ended
December 31, 1998. The lowest return for a quarter was -5.81% for the quarter
ended September 30, 1998.
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*
[BAR CHART]
1994 -2%
1995 27%
1996 14%
1997 18%
1998 16%
1999 13%
- --------------------------------------------------------------------------------
Average Annual Total Return
(as of December 31, 1999)
Since
1 Year 5 Years Inception**
------ ------- -----------
GE Strategic Investment Fund
Class A* 6.77% 16.26% 12.76%
Class B 8.42% 16.73% 13.35%
Class C (level load) -- -- --
Class Y*** 13.53% 17.94% 14.49%
S&P 500 Index 21.07% 28.59% 21.73%****
LB Aggregate Bond Index -0.83% 7.73% 6.01%****
S&P 500 Index & LB Aggregate Bond Index+ 12.01% 20.10% 15.41%****
Both the bar chart and table assume reinvestment of dividends and distributions.
If GE Asset 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. Average annual total return
figures have been adjusted to reflect Class A expenses and sales charges.
** Inception date (commencement of investment operations):
Class A - February 22, 1993
Class B - December 22, 1993
Class C - September 30, 1999
Class Y - November 29, 1993
*** Formerly named Class D.
**** Since March 1, 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.
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>
38
- --------------------------------------------------------------------------------
[This page intentionally left blank.]
- --------------------------------------------------------------------------------
<PAGE>
--------------------------------------
Money GE Funds 39
Market Funds Prospectus
- --------------------------------------------------------------------------------
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>
- ---------------------
40 GE Funds
Prospectus
Money Market
Funds
- --------------------------------------------------------------------------------
GE Money Market Fund
- ---------------------
Investment Objective: 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 Fund invests consistent with regulatory standards governing security
quality, maturity and portfolio diversification. For example, 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 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 the 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>
----------
41
- --------------------------------------------------------------------------------
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 5.36% and the seven day effective
yield was 5.50% for the calendar quarter ended December 31, 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
[BAR GRAPH]
1994 4%
1995 6%
1996 5%
1997 5%
1998 5%
1999 5%
- --------------------------------------------------------------------------------
Average Annual Total Return
(as of December 31, 1999)
Since
1 Year 5 Years Inception*
------ ------- ----------
GE Money Market Fund 4.80% 5.17% 4.67%
90 Day T-Bill 4.83% 5.14% 4.77%**
Both the bar chart and table assume reinvestment of dividends and distributions.
If GE Asset 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>
- ---------------------------------------
42 GE Funds Fund Expenses
Prospectus
- --------------------------------------------------------------------------------
The following tables describe the fees and expenses that you may pay if you
buy and hold shares of a Fund.
- --------------------------------------------------------------------------------
Shareholder Fees (paid directly from your investment, not reflected in share
price)*
<TABLE>
<CAPTION>
GE Premier
GE U.S. Growth Equity GE Value GE Mid-Cap
Equity Fund Fund Equity Fund Growth Fund
- --------------------------------------------------------------------------------------------------------------------------------
<S> <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%
Classes B, C and Y None None None None
- --------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Charge (load) Imposed on Reinvested
Dividends (as a percentage of offering price): All Classes 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%
Class B 4.0% 4.0% 4.0% 4.0%
Class C+ 1.0% 1.0% 1.0% 1.0%
Class Y None None None None
- --------------------------------------------------------------------------------------------------------------------------------
Redemption Fee: All Classes None None None None
- --------------------------------------------------------------------------------------------------------------------------------
Exchange Fee: All Classes None None None None
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
GE Mid-Cap GE Small-Cap
Value Equity Value Equity GE Global GE International
Fund Fund Equity Fund Equity Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <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%
Classes B, C and Y None None None None
- ------------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Charge (load) Imposed on Reinvested
Dividends (as a percentage of offering price): All Classes 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%
Class B 4.0% 4.0% 4.0% 4.0%
Class C 1.0% 1.0% 1.0% 1.0%
Class Y None None None None
- ------------------------------------------------------------------------------------------------------------------------------------
Redemption Fee: All Classes None None None None
- ------------------------------------------------------------------------------------------------------------------------------------
Exchange Fee: All Classes None None None None
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
----------
43
- --------------------------------------------------------------------------------
Shareholder Fees (paid directly from your investment, not reflected in share
price)*
<TABLE>
<CAPTION>
GE Europe GE Emerging GE Fixed GE Government
Equity Fund Markets Fund Income Fund Securities Fund
- -------------------------------------------------------------------------------------------------------------------------------
<S> <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%
Classes B, C and Y None None None None
- -------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Charge (load) Imposed on Reinvested
Dividends (as a percentage of offering price): All Classes 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%
Class B 4.0% 4.0% 3.0% 3.0%
Class C+ 1.0% 1.0% 1.0% 1.0%
Class Y None None None None
- -------------------------------------------------------------------------------------------------------------------------------
Redemption Fee: All Classes None None None None
- -------------------------------------------------------------------------------------------------------------------------------
Exchange Fee: All Classes None None None None
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
GE Short-term GE Tax-Exempt GE High Yield GE Strategic
Government Fund Fund Fund Investment Fund
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Maximum Sales Charge (load) Imposed on Purchases
of Shares (as a percentage of offering price):
Class A** 2.50% 4.25% 4.25% 5.75%
Classes B, C and Y None None None None
- ---------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Charge (load) Imposed on Reinvested
Dividends (as a percentage of offering price): All Classes 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%
Class B 3.0% 3.0% 3.0% 4.0%
Class C+ 1.0% 1.0% 1.0% 1.0%
Class Y None None None None
- ---------------------------------------------------------------------------------------------------------------------------------
Redemption Fee: All Classes None None None None
- ---------------------------------------------------------------------------------------------------------------------------------
Exchange Fee: All Classes None None None None
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
GE Money
Market Fund++
- ---------------------------------------------------------------------------------
<S> <C>
Maximum Sales Charge (load) Imposed on Purchases
of Shares (as a percentage of offering price):
Class A** N/A
Classes B, C and Y N/A
- ---------------------------------------------------------------------------------
Maximum Sales Charge (load) Imposed on Reinvested
Dividends (as a percentage of offering price): All Classes N/A
- ---------------------------------------------------------------------------------
Maximum Contingent Deferred Sales Charge
(as a percentage of redemption proceeds):**
Class A*** N/A
Class B N/A
Class C+ N/A
Class Y N/A
- ---------------------------------------------------------------------------------
Redemption Fee: All Classes N/A
- ---------------------------------------------------------------------------------
Exchange Fee: All Classes N/A
- ---------------------------------------------------------------------------------
</TABLE>
* Certain broker-dealers and financial institutions also may charge their
clients fees not reflected in the table above in connection with investments in
the Funds.
** 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. See "How To Invest."
*** 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 GE Money
Market Fund.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------
44 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.
- --------------------------------------------------------------------------------
Annual Fund
Operating
Expenses
(as a percentage of
average net assets)
<TABLE>
<CAPTION>
GE U.S. Equity GE Premier Growth GE Value Equity GE Mid-Cap Growth
Fund Equity Fund* Fund Fund*
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Management Fees:**
All Classes .40% .60% .55% .60%
- --------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees:
Class A .25% .25% .25% .25%
Class B 1.00% 1.00% 1.00% 1.00%
Class C 1.00% 1.00% 1.00% 1.00%
Class Y None None None None
- --------------------------------------------------------------------------------------------------------------------
Other Expenses:***
All Classes .18% .25% .27% .37%
- --------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses:
Class A .83% 1.10% 1.07% 1.22%
Class B 1.58% 1.85% 1.82% 1.97%
Class C++ 1.58% 1.85% 1.82% 1.97%
Class Y .58% .85% .82% .97%
- --------------------------------------------------------------------------------------------------------------------
Waiver and/or Reimbursement: .00% .00% .00% .07%
Net Annual Fund Operating Expenses:
Class A .83% 1.10% 1.07% 1.15%
Class B 1.58% 1.85% 1.82% 1.90%
Class C++ 1.58% 1.85% 1.82% 1.90%
Class Y .58% .85% .82% .90%
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
GE Mid-Cap Value GE Small-Cap Value GE Global Equity GE International
Equity Fund Equity Fund Fund Equity Fund*
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Management Fees:**
All Classes .80% .70% .75% .80%
- ------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) Fees:
Class A .25% .25% .25% .25%
Class B 1.00% 1.00% 1.00% 1.00%
Class C 1.00% 1.00% 1.00% 1.00%
Class Y None None None None
- ------------------------------------------------------------------------------------------------------------------------
Other Expenses:***
All Classes .49% .46% .37% .34%
- ------------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses:
Class A 1.54% 1.41% 1.37% 1.39%
Class B 2.29% 2.16% 2.12% 2.14%
Class C++ 2.29% 2.16% 2.12% 2.14%
Class Y 1.29% 1.16% 1.12% 1.14%
- ------------------------------------------------------------------------------------------------------------------------
Waiver and/or Reimbursement: .39% .26% .02% .04%
Net Annual Fund Operating Expenses:
Class A 1.15% 1.15% 1.35% 1.35%
Class B 1.90% 1.90% 2.10% 2.10%
Class C++ 1.90% 1.90% 2.10% 2.10%
Class Y .90% .90% 1.10% 1.10%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
----------
45
- --------------------------------------------------------------------------------
Accordingly, these figures may not be the same as figures that appear in the
Annual Report dated September 30, 1999.
- --------------------------------------------------------------------------------
Annual Fund Operating Expenses
(as a percentage of average net assets)
<TABLE>
<CAPTION>
GE Europe GE Emerging GE Fixed GE Government GE Short-Term
Equity Fund Markets Fund Income Fund Securities Fund Government Fund*
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Management Fees:**
All Classes 1.05% 1.20% .35% .40% .30%
- ----------------------------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) fees:
Class A .25% .25% .25% .25% .25%
Class B 1.00% 1.00% 1.00% 1.00% .85%
Class C 1.00% 1.00% 1.00% 1.00% 1.00%
Class Y None None None None None
- ----------------------------------------------------------------------------------------------------------------------------------
Other Expenses:***
All Classes .61% .45% .23% .23% .46%
- ----------------------------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses:
Class A 1.91% 1.90% .83% .88% 1.01%
Class B 2.66% 2.65% 1.58% 1.63% 1.61%
Class C++ 2.66% 2.65% 1.58% 1.63% 1.76%
Class Y 1.66% 1.65% .58% .63% .76%
- ----------------------------------------------------------------------------------------------------------------------------------
Waiver and/or Reimbursement: .46% .30% .03% .03% .31%
Net Annual Fund Operating Expenses:+
Class A 1.45% 1.60% .80% .85% .70%
Class B 2.20% 2.35% 1.55% 1.60% 1.30%
Class C++ 2.20% 2.35% 1.55% 1.60% 1.45%
Class Y 1.20% 1.35% .55% .60% .45%
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
GE Tax-Exempt GE High GE Strategic GE Money
Fund Yield Fund Investment Fund Market Fund
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Management Fees:**
All Classes .35% .60% .35% .25%
- -----------------------------------------------------------------------------------------------------------------
Distribution and Service (12b-1) fees:
Class A .25% .25% .25% None
Class B 1.00% 1.00% 1.00% None
Class C 1.00% 1.00% 1.00% None
Class Y None None None None
- -----------------------------------------------------------------------------------------------------------------
Other Expenses:***
All Classes .40% .31% .27% .25%
- -----------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses:
Class A 1.00% 1.16% .87% .50%
Class B 1.75% 1.91% 1.62% .50%
Class C++ 1.75% 1.91% 1.62% .50%
Class Y .75% .91% .62% .50%
- -----------------------------------------------------------------------------------------------------------------
Waiver and/or Reimbursement: .15% .21% .00% .00%
Net Annual Fund Operating Expenses: +
Class A .85% .95% .87% .50%
Class B 1.60% 1.70% 1.62% .50%
Class C++ 1.60% 1.70% 1.62% .50%
Class Y .60% .70% .62% .50%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
* With respect to GE Premier Growth Equity Fund, GE Mid-Cap Growth Fund, GE
International Equity Fund and GE Short-Term Government Fund, "Management Fees"
include administration fees (amounting to .05%) which are imposed pursuant to a
separate contract.
** 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 fee table reflects contractual arrangements with GE Asset Management to
limit "Other Expenses" and/or reduce "Management Fees" of each class of each
Fund on an annualized basis through January 28, 2001.
++ Expenses for Class C shares are based on estimated amounts to be charged in
the first year of operations.
- --------------------------------------------------------------------------------
<PAGE>
- ----------------
46 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 and that each Fund's operating expenses
remain the same. The examples also
- --------------------------------------------------------------------------------
Examples +
<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 U.S. Equity Fund:
Class A $ 655 $ 825 $1,009 $1,541 $ 655 $ 825 $1,009 $1,541
Class B $ 561 $ 699 $ 860 $1,492 $ 161 $ 499 $ 860 $1,492
Class C $ 261 $ 499 $ 860 $1,878 $ 161 $ 499 $ 860 $1,878
Class Y $ 59 $ 186 $ 324 $ 726 $ 59 $ 186 $ 324 $ 726
- ---------------------------------------------------------------------------------------------------------------------------------
GE Premier Growth Equity Fund:
Class A $ 681 $ 905 $1,146 $1,838 $ 681 $ 905 $1,146 $1,838
Class B $ 588 $ 782 $1,001 $1,793 $ 188 $ 582 $1,001 $1,793
Class C $ 288 $ 582 $1,001 $2,169 $ 188 $ 582 $1,001 $2,169
Class Y $ 87 $ 271 $ 471 $1,049 $ 87 $ 271 $ 471 $1,049
- ---------------------------------------------------------------------------------------------------------------------------------
GE Value Equity Fund:
Class A $ 678 $ 896 $1,131 $1,806 $ 678 $ 896 $1,131 $1,806
Class B $ 585 $ 773 $ 985 $1,760 $ 185 $ 573 $ 985 $1,760
Class C $ 285 $ 573 $ 985 $2,137 $ 185 $ 573 $ 985 $2,137/
Class Y $ 84 $ 262 $ 455 $1,014 $ 84 $ 262 $ 455 $1,014
- ---------------------------------------------------------------------------------------------------------------------------------
GE Mid-Cap Growth Fund:
Class A $ 685 $ 933 $1,200 $1,962 $ 685 $ 933 $1,200 $1,962
Class B $ 593 $ 812 $1,056 $1,918 $ 193 $ 612 $1,056 $1,918
Class C $ 293 $ 612 $1,056 $2,290 $ 193 $ 612 $1,056 $2,290
Class Y $ 92 $ 302 $ 533 $1,206 $ 92 $ 302 $ 533 $1,206
- ---------------------------------------------------------------------------------------------------------------------------------
GE Mid-Cap Value Equity Fund:
Class A $ 685 $ 997 $1,331 $2,273 $ 685 $ 997 $1,331 $2,273
Class B $ 593 $ 878 $1,190 $2,234 $ 193 $ 678 $1,190 $2,234
Class C $ 293 $ 678 $1,190 $2,695 $ 193 $ 678 $1,190 $2,695
Class Y $ 92 $ 370 $ 670 $1,522 $ 92 $ 370 $ 670 $1,522
- ---------------------------------------------------------------------------------------------------------------------------------
GE Small-Cap Value Equity Fund:
Class A $ 685 $ 971 $1,278 $2,147 $ 685 $ 971 $1,278 $2,147
Class B $ 593 $ 851 $1,136 $2,107 $ 193 $ 651 $1,136 $2,107
Class C $ 293 $ 651 $1,136 $2,573 $ 193 $ 651 $1,136 $2,573
Class Y $ 92 $ 343 $ 613 $1,386 $ 92 $ 343 $ 613 $1,386
- ---------------------------------------------------------------------------------------------------------------------------------
GE Global Equity Fund:
Class A $ 705 $ 982 $1,280 $2,125 $ 705 $ 982 $1,280 $2,125
Class B $ 613 $ 862 $1,137 $2,084 $ 213 $ 662 $1,137 $2,084
Class C $ 313 $ 662 $1,137 $2,450 $ 213 $ 662 $1,137 $2,450
Class Y $ 112 $ 354 $ 615 $1,361 $ 112 $ 354 $ 615 $1,361
- ---------------------------------------------------------------------------------------------------------------------------------
GE International Equity Fund:
Class A $ 705 $ 986 $1,288 $2,144 $ 705 $ 986 $1,288 $2,144
Class B $ 613 $ 866 $1,146 $2,103 $ 213 $ 666 $1,146 $2,103
Class C $ 313 $ 666 $1,146 $2,469 $ 213 $ 666 $1,146 $2,469
Class Y $ 112 $ 358 $ 624 $1,383 $ 112 $ 358 $ 624 $1,383
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ The expenses shown above for each Fund reflect GE Asset Management's agreement
to reduce or otherwise limit the Fund's expenses for the first year of each
period noted.
- --------------------------------------------------------------------------------
<PAGE>
----------
47
- --------------------------------------------------------------------------------
assume that you either redeemed all of your shares at the end of each period
shown or you did not redeem your shares.
- --------------------------------------------------------------------------------
<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 $ 714 $1,099 $1,507 $2,644 $ 714 $1,099 $1,507 $2,644
Class B $ 623 $ 983 $1,369 $2,610 $ 223 $ 783 $1,369 $2,610
Class C $ 323 $ 783 $1,369 $2,959 $ 223 $ 783 $1,369 $2,959
Class Y $ 122 $ 491 $ 869 $1,929 $ 122 $ 491 $ 869 $1,929
- ---------------------------------------------------------------------------------------------------------------------------------
GE Emerging Markets Fund:
Class A $ 728 $1,110 $1,516 $2,646 $ 728 $1,110 $1,516 $2,646
Class B $ 638 $ 995 $1,378 $2,612 $ 238 $ 795 $1,378 $2,612
Class C $ 338 $ 795 $1,378 $2,961 $ 238 $ 795 $1,378 $2,961
Class Y $ 137 $ 491 $ 869 $1,929 $ 137 $ 491 $ 869 $1,929
- ---------------------------------------------------------------------------------------------------------------------------------
GE Fixed Income Fund:
Class A $ 503 $ 676 $ 863 $1,404 $ 503 $ 676 $ 863 $1,404
Class B $ 458 $ 696 $ 858 $1,489 $ 158 $ 496 $ 858 $1,489
Class C $ 258 $ 496 $ 858 $1,876 $ 158 $ 496 $ 858 $1,876
Class Y $ 56 $ 183 $ 321 $ 723 $ 56 $ 183 $ 321 $ 723
- ---------------------------------------------------------------------------------------------------------------------------------
GE Government Securities Fund:
Class A $ 508 $ 691 $ 889 $1,461 $ 508 $ 691 $ 889 $1,461
Class B $ 463 $ 711 $ 884 $1,546 $ 163 $ 511 $ 884 $1,546
Class C $ 263 $ 511 $ 884 $1,930 $ 163 $ 511 $ 884 $1,930
Class Y $ 61 $ 199 $ 348 $ 783 $ 61 $ 199 $ 348 $ 783
- ---------------------------------------------------------------------------------------------------------------------------------
GE Short-Term Government Fund:
Class A $ 320 $ 533 $ 765 $1,428 $ 320 $ 533 $ 765 $1,428
Class B $ 432 $ 678 $ 847 $1,577 $ 132 $ 478 $ 847 $1,577
Class C $ 248 $ 524 $ 925 $2,048 $ 148 $ 524 $ 925 $2,048
Class Y $ 46 $ 212 $ 392 $ 913 $ 46 $ 212 $ 392 $ 913
- ---------------------------------------------------------------------------------------------------------------------------------
GE Tax-Exempt Fund:
Class A $ 508 $ 716 $ 940 $1,585 $ 508 $ 716 $ 940 $1,585
Class B $ 463 $ 736 $ 935 $1,669 $ 163 $ 536 $ 935 $1,669
Class C $ 263 $ 536 $ 935 $2,050 $ 163 $ 536 $ 935 $2,050
Class Y $ 61 $ 225 $ 402 $ 916 $ 61 $ 225 $ 402 $ 916
- ---------------------------------------------------------------------------------------------------------------------------------
GE High Yield Fund:
Class A $ 518 $ 758 $1,017 $1,756 $ 518 $ 758 $1,017 $1,756
Class B $ 473 $ 780 $1,012 $1,841 $ 173 $ 580 $1,012 $1,841
Class C $ 273 $ 580 $1,012 $2,216 $ 173 $ 580 $1,012 $2,216
Class Y $ 72 $ 269 $ 483 $1,100 $ 72 $ 269 $ 483 $1,100
- ---------------------------------------------------------------------------------------------------------------------------------
GE Strategic Investment Fund:
Class A $ 659 $ 837 $1,029 $1,586 $ 659 $ 837 $1,029 $1,586
Class B $ 565 $ 711 $ 881 $1,537 $ 165 $ 511 $ 881 $1,537
Class C $ 265 $ 511 $ 881 $1,922 $ 165 $ 511 $ 881 $1,922
Class Y $ 63 $ 199 $ 346 $ 774 $ 63 $ 199 $ 346 $ 774
- ---------------------------------------------------------------------------------------------------------------------------------
GE Money Market Fund $ 51 $ 160 $ 280 $ 628 $ 51 $ 160 $ 280 $ 628
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Class A expenses shown above would be increased by the imposition of the 1%
CDSC for redemptions of Class A shares which were 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 (eight years for Class B shares
originally purchased through the Investors Trust Funds).
- --------------------------------------------------------------------------------
<PAGE>
- -----------------------------------
48 GE Funds More on
Prospectus Strategies
and Risks
- --------------------------------------------------------------------------------
Important Definitions
This section defines important terms 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.
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 obligations of supranational agencies are obligations of
multi-jurisdictional agencies that operate across national borders (e.g., the
World Bank).
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.
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 are securities whose values are based on other securities,
currencies or indices and 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 represents 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 securities, depositary
receipts, convertible securities and rights and warrants of U.S. and foreign
companies. Stocks represent an ownership interest in a corporation.
Eurodollar deposits are deposits issued in U.S. dollars by foreign banks and
foreign branches of U.S. banks.
Floating and variable rate instruments are securities with floating or variable
rates of interest or dividend payments. 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.
- --------------------------------------------------------------------------------
<PAGE>
----------
49
- --------------------------------------------------------------------------------
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.
Forward currency transactions involve agreements to exchange one currency for
another at a future date.
Futures are agreements to buy or sell a specific amount of a commodity,
financial instrument or index at a particular price and future date. Options on
futures give 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.
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.
High yield securities are debt securities of corporations, preferred stock and
convertible bonds and convertible 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 represents 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 which are derivative securities that are fully
collateralized by a portfolio of mortgages. Government stripped mortgage-related
securities are mortgage-backed securities that have been stripped into their
interest and principal components. They represent interests in distributions of
interest on or principal underlying mortgage-backed certificates. Mortgage
dollar rolls are transactions involving the sale of a mortgage-backed security
with a simultaneous contract (with the purchaser) to buy similar, but not
identical, securities at a future date.
Municipal obligations are debt obligations issued by or on behalf of states,
territories and possessions of the United States and the District of Columbia
and their political subdivisions, agencies and instrumentalities, or multi-state
agencies or authorities. They include: (i) municipal leases, which pay interest
that is exempt from federal, and in certain cases, state, income tax; (ii)
participation interests in municipal obligations, which are proportionate,
undivided interests in municipal obligations; (iii) municipal obligation
components, which are
- --------------------------------------------------------------------------------
<PAGE>
- ----------------------
50 GE Funds
Prospectus
More on Strategies
and Risks
- --------------------------------------------------------------------------------
Municipal Obligations that have been divided into two components (one component
pays interest at a rate adjusted periodically through an auction process, the
second pays the residual rate after the auction rate is deducted from total
interest payable); and (iv) Custodial receipts on municipal obligations, which
evidence ownership of future interest payments, principal payments, or both, on
certain Municipal Obligations.
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.
Purchasing and writing options are permitted investment strategies for certain
Funds. An option is the right to buy (i.e., a "call") or sell (i.e., a "put")
securities or other interests for a predetermined price on or before a fixed
date. An option on a securities index represents the option holder's right to
obtain from the seller, 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 securities index on the exercise date. An option
on a foreign currency represents the right to buy or sell a particular amount of
that currency for a predetermined price on or before a fixed date.
Repurchase agreements (repos) are used to invest cash on a short-term basis. A
seller (bank or broker-dealer) sells securities, usually government securities,
to the Fund, agreeing to buy them back at a designated price and time -- usually
the next day.
Restricted securities (which include Rule 144A Securities) may have contractual
restrictions on resale, or cannot be resold publicly until registered. Certain
restricted securities may be illiquid. Illiquid securities may be difficult or
impossible to sell when a Fund wants to sell them at a price at which the Fund
values them. Rule 144A securities are restricted securities that may be sold to
certain institutional purchasers under Rule 144A.
Reverse repurchase agreements involve selling securities held and concurrently
agreeing to repurchase the same securities at a specified price and future date.
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.
Short Sales Against the Box involve selling short securities actually owned or
otherwise covered at all times during the period the short position is open.
Structured and Indexed Securities are securities whose prinicpal and/or interest
rate is determined by reference to changes in the value of one or more specific
currencies, interest rates, commodities, indices or other financial indicators.
U.S. Government securities are issued or guaranteed as to principal or interest
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.
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.
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.
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
- --------------------------------------------------------------------------------
<PAGE>
----------
51
- --------------------------------------------------------------------------------
securities and 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. No Fund is under any obligation to use any of these techniques at
any given time or under any particular economic condition. To the extent that a
Fund employs these techniques, the Fund would be subject to derivative
securities risk.
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.
Weighted average maturity repre- sents 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.
When-issued and delayed delivery securities are securities that are purchased or
sold for delivery and payment at a future date, i.e., beyond normal settlement
date.
Zero coupon obligations pay no interest to their holders prior to maturity.
Instead, interest is paid in a lump sum at maturity. They are purchased at a
deep discount from par value, and generally are more volatile than other fixed
income securities.
- --------------------------------------------------------------------------------
More on Investment Strategies
In addition to each Fund's principal investment strategies described earlier in
this Prospectus, a Fund is permitted to use other securities and investment
strategies in pursuit of its investment objective. No Fund is under any
obligation to use any of these 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 later in this Prospectus or 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.
The following tables summarize the investment techniques that may be employed by
a Fund. Certain techniques 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 technique.
- --------------------------------------------------------------------------------
<PAGE>
- -------------------
52 GE Funds
Prospectus
More on Strategies
and Risks
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Repurchase Reverse Repurchase Restricted and Structured and Indexed
Borrowing Agreements Agreements Illiquid Securities Securities
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
GE U.S. Equity Fund 33 1/3% Yes No Yes No
- --------------------------------------------------------------------------------------------------------------------------
GE Premier Growth Equity Fund 33 1/3% Yes No Yes No
- --------------------------------------------------------------------------------------------------------------------------
GE Value Equity Fund 33 1/3% Yes Yes Yes No
- --------------------------------------------------------------------------------------------------------------------------
GE Mid-Cap Growth Fund 33 1/3% Yes No Yes No
- --------------------------------------------------------------------------------------------------------------------------
GE Mid-Cap Value Equity Fund 33 1/3% Yes No Yes Yes
- --------------------------------------------------------------------------------------------------------------------------
GE Small-Cap Value Equity Fund 33 1/3% Yes Yes Yes No
- --------------------------------------------------------------------------------------------------------------------------
GE Global Equity Fund 33 1/3% Yes No Yes No
- --------------------------------------------------------------------------------------------------------------------------
GE International Equity Fund 33 1/3% Yes No Yes No
- --------------------------------------------------------------------------------------------------------------------------
GE Europe Equity Fund 33 1/3% Yes Yes Yes Yes
- --------------------------------------------------------------------------------------------------------------------------
GE Emerging Markets Fund 33 1/3% Yes Yes Yes No
- --------------------------------------------------------------------------------------------------------------------------
GE Fixed Income Fund 33 1/3% Yes No Yes Yes
- --------------------------------------------------------------------------------------------------------------------------
GE Government Securities Fund 33 1/3% Yes Yes Yes Yes
- --------------------------------------------------------------------------------------------------------------------------
GE Short-Term Government Fund 33 1/3% Yes No Yes Yes
- --------------------------------------------------------------------------------------------------------------------------
GE Tax-Exempt Fund 10% Yes Yes Yes No
- --------------------------------------------------------------------------------------------------------------------------
GE High Yield Fund 33 1/3% Yes Yes Yes Yes
- --------------------------------------------------------------------------------------------------------------------------
GE Strategic Investment Fund 33 1/3% Yes No Yes Yes
- --------------------------------------------------------------------------------------------------------------------------
GE Money Market Fund 33 1/3% Yes Yes No No
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Purchasing and Writing Purchasing and Writing
Securities Options Securities Index Options
- -----------------------------------------------------------------------------------
<S> <C> <C>
GE U.S. Equity Fund Yes Yes
- -----------------------------------------------------------------------------------
GE Premier Growth Equity Fund Yes Yes
- -----------------------------------------------------------------------------------
GE Value Equity Fund Yes Yes
- -----------------------------------------------------------------------------------
GE Mid-Cap Growth Fund Yes Yes
- -----------------------------------------------------------------------------------
GE Mid-Cap Value Equity Fund Yes Yes
- -----------------------------------------------------------------------------------
GE Small-Cap Value Equity Fund Yes Yes
- -----------------------------------------------------------------------------------
GE Global Equity Fund Yes Yes
- -----------------------------------------------------------------------------------
GE International Equity Fund Yes Yes
- -----------------------------------------------------------------------------------
GE Europe Equity Fund Yes Yes
- -----------------------------------------------------------------------------------
GE Emerging Markets Fund Yes Yes
- -----------------------------------------------------------------------------------
GE Fixed Income Fund Yes Yes
- -----------------------------------------------------------------------------------
GE Government Securities Fund Yes Yes
- -----------------------------------------------------------------------------------
GE Short-Term Government Fund Yes Yes
- -----------------------------------------------------------------------------------
GE Tax-Exempt Fund Yes Yes
- -----------------------------------------------------------------------------------
GE High Yield Fund Yes Yes
- -----------------------------------------------------------------------------------
GE Strategic Investment Fund Yes Yes
- -----------------------------------------------------------------------------------
GE Money Market Fund No No
- -----------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
----------
53
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Futures and Options Forward Currency Options on Foreign Maximum Investment
on Futures Transactions Currencies in Debt Securities
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GE U.S. Equity Fund Yes Yes Yes 35%
- -------------------------------------------------------------------------------------------------------------------
GE Premier Growth Equity Fund Yes Yes No 35%
- -------------------------------------------------------------------------------------------------------------------
GE Value Equity Fund Yes Yes Yes 35%
- -------------------------------------------------------------------------------------------------------------------
GE Mid-Cap Growth Fund Yes Yes Yes 35% (maximum of
25% in BBB by S&P,
Baa by Moody's or
equivalent)
- -------------------------------------------------------------------------------------------------------------------
GE Mid-Cap Value Equity Fund Yes Yes Yes 35%
- -------------------------------------------------------------------------------------------------------------------
GE Small-Cap Value Equity Fund No No No 35%
- -------------------------------------------------------------------------------------------------------------------
GE Global Equity Fund Yes Yes Yes 35%
- -------------------------------------------------------------------------------------------------------------------
GE International Equity Fund Yes Yes Yes 35%
- -------------------------------------------------------------------------------------------------------------------
GE Europe Equity Fund Yes Yes Yes 35%
- -------------------------------------------------------------------------------------------------------------------
GE Emerging Markets Fund Yes Yes Yes 35%
- -------------------------------------------------------------------------------------------------------------------
GE Fixed Income Fund Yes Yes Yes 100% (maximum of
25% in BBB by S&P
or Baa by Moody's
or equivalent)
- -------------------------------------------------------------------------------------------------------------------
GE Government Securities Fund Yes Yes Yes 100% (maximum of
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)
- -------------------------------------------------------------------------------------------------------------------
GE Short-Term Government Fund Yes Yes Yes 100%
- -------------------------------------------------------------------------------------------------------------------
GE Tax-Exempt Fund Yes No No 100% (maximum of
10% in BBB by S&P
or Baa by Moody's
or equivalent)
- -------------------------------------------------------------------------------------------------------------------
GE High Yield Fund Yes Yes Yes 100%
- -------------------------------------------------------------------------------------------------------------------
GE Strategic Investment Fund Yes Yes Yes 100% (maximum
of 25% in BBB by S&P
or Baa by Moody's
or equivalent)
- -------------------------------------------------------------------------------------------------------------------
GE Money Market Fund No No No 100%
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
Maximum Investment in
Below-Investment Grade Maximum Investment in When-Issued and
Debt Securities Foreign Securities Delayed Delivery Securities
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
GE U.S. Equity Fund 5% 15%* Yes
- -------------------------------------------------------------------------------------------------------------------
GE Premier Growth Equity Fund 5% 25%* Yes
- -------------------------------------------------------------------------------------------------------------------
GE Value Equity Fund 5% 25%* Yes
- -------------------------------------------------------------------------------------------------------------------
GE Mid-Cap Growth Fund 10% in BB or B by 35%* Yes
S&P or Ba or B by
Moody's or
equivalent
- -------------------------------------------------------------------------------------------------------------------
GE Mid-Cap Value Equity Fund 15% in securities 15%* Yes
rated BBB or below
by S&P or Baa or
below by Moody's
or equivalent
- -------------------------------------------------------------------------------------------------------------------
GE Small-Cap Value Equity Fund 10% 10%* Yes
- -------------------------------------------------------------------------------------------------------------------
GE Global Equity Fund 5% 100% Yes
- -------------------------------------------------------------------------------------------------------------------
GE International Equity Fund 5% 100% Yes
- -------------------------------------------------------------------------------------------------------------------
GE Europe Equity Fund 15% 100% Yes
- -------------------------------------------------------------------------------------------------------------------
GE Emerging Markets Fund 10% in BB or B by 100% Yes
S&P or Ba or B by
Moody's or
equivalent
- -------------------------------------------------------------------------------------------------------------------
GE Fixed Income Fund 10% in BB or B by 35%* Yes
S&P or Ba or B by
Moody's or
equivalent
- -------------------------------------------------------------------------------------------------------------------
GE Government Securities Fund None 35%* Yes
- -------------------------------------------------------------------------------------------------------------------
GE Short-Term Government Fund None 35%* Yes
- -------------------------------------------------------------------------------------------------------------------
GE Tax-Exempt Fund 5% in debt None Yes
downgraded below
investment grade
subsequent to
purchase
- -------------------------------------------------------------------------------------------------------------------
GE High Yield Fund 100% 35%* Yes
- -------------------------------------------------------------------------------------------------------------------
GE Strategic Investment Fund 10% in BB or B 30%* Yes
by S&P or Ba or
B by Moody's
or equivalent
- -------------------------------------------------------------------------------------------------------------------
GE Money Market Fund None 25%* Yes
- -------------------------------------------------------------------------------------------------------------------
</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.
- --------------------------------------------------------------------------------
<PAGE>
- ---------------------
54 GE Funds
Prospectus
More on Strategies
and Risks
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Lending Portfolio Debt Obligations of
Securities Rule 144A Securities Supranational Agencies Depositary Receipts
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GE U.S. Equity Fund Yes Yes Yes Yes
- ---------------------------------------------------------------------------------------------------------------------------
GE Premier Growth Equity Fund Yes Yes Yes Yes
- ---------------------------------------------------------------------------------------------------------------------------
GE Value Equity Fund Yes Yes Yes Yes
- ---------------------------------------------------------------------------------------------------------------------------
GE Mid-Cap Growth Fund Yes Yes Yes Yes
- ---------------------------------------------------------------------------------------------------------------------------
GE Mid-Cap Value Equity Fund Yes Yes Yes Yes
- ---------------------------------------------------------------------------------------------------------------------------
GE Small-Cap Value Equity Fund Yes Yes Yes Yes
- ---------------------------------------------------------------------------------------------------------------------------
GE Global Equity Fund Yes Yes Yes Yes
- ---------------------------------------------------------------------------------------------------------------------------
GE International Equity Fund Yes Yes Yes Yes
- ---------------------------------------------------------------------------------------------------------------------------
GE Europe Equity Fund Yes Yes Yes Yes
- ---------------------------------------------------------------------------------------------------------------------------
GE Emerging Markets Fund Yes Yes Yes Yes
- ---------------------------------------------------------------------------------------------------------------------------
GE Fixed Income Fund Yes Yes Yes Yes
- ---------------------------------------------------------------------------------------------------------------------------
GE Government Securities Fund Yes Yes Yes Yes
- ---------------------------------------------------------------------------------------------------------------------------
GE Short-Term Government Fund Yes Yes Yes Yes
- ---------------------------------------------------------------------------------------------------------------------------
GE Tax-Exempt Fund Yes Yes Yes No
- ---------------------------------------------------------------------------------------------------------------------------
GE High Yield Fund Yes Yes Yes Yes
- ---------------------------------------------------------------------------------------------------------------------------
GE Strategic Investment Fund Yes Yes Yes Yes
- ---------------------------------------------------------------------------------------------------------------------------
GE Money Market Fund Yes Yes Yes No
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Securities of Other Floating and Variable Participation Interests in
Investment Funds Municipal Leases Rate Instruments Municipal Obligations
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GE U.S. Equity Fund No No* No No
- -------------------------------------------------------------------------------------------------------------------------------
GE Premier Growth Equity Fund Yes No* No No
- -------------------------------------------------------------------------------------------------------------------------------
GE Value Equity Fund Yes No* No No
- -------------------------------------------------------------------------------------------------------------------------------
GE Mid-Cap Growth Fund Yes No* No No
- -------------------------------------------------------------------------------------------------------------------------------
GE Mid-Cap Value Equity Fund Yes No* No No
- -------------------------------------------------------------------------------------------------------------------------------
GE Small-Cap Value Equity Fund Yes No* No No
- -------------------------------------------------------------------------------------------------------------------------------
GE Global Equity Fund Yes No* No No
- -------------------------------------------------------------------------------------------------------------------------------
GE International Equity Fund Yes No* No No
- -------------------------------------------------------------------------------------------------------------------------------
GE Europe Equity Fund Yes Yes No No
- -------------------------------------------------------------------------------------------------------------------------------
GE Emerging Markets Fund Yes No* No No
- -------------------------------------------------------------------------------------------------------------------------------
GE Fixed Income Fund Yes Yes No No
- -------------------------------------------------------------------------------------------------------------------------------
GE Government Securities Fund Yes Yes No No
- -------------------------------------------------------------------------------------------------------------------------------
GE Short-Term Government Fund Yes Yes No No
- -------------------------------------------------------------------------------------------------------------------------------
GE Tax-Exempt Fund Yes Yes Yes Yes
- -------------------------------------------------------------------------------------------------------------------------------
GE High Yield Fund Yes Yes No No
- -------------------------------------------------------------------------------------------------------------------------------
GE Strategic Investment Fund Yes Yes Yes Yes
- -------------------------------------------------------------------------------------------------------------------------------
GE Money Market Fund No Yes No No
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Excludes commercial paper and notes with variable and floating rates of
interest
- --------------------------------------------------------------------------------
<PAGE>
----------
55
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Zero Coupon Municipal Obligations Custodial Receipts on Mortgage Related Securities,
Obligation Components Municipal Obligations including CMOs
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GE U.S. Equity Fund Yes No No No
- ---------------------------------------------------------------------------------------------------------------------------------
GE Premier Growth Equity Fund No No No No
- ---------------------------------------------------------------------------------------------------------------------------------
GE Value Equity Fund No No No No
- ---------------------------------------------------------------------------------------------------------------------------------
GE Mid-Cap Growth Fund No No No No
- ---------------------------------------------------------------------------------------------------------------------------------
GE Mid-Cap Value Equity Fund Yes No No No
- ---------------------------------------------------------------------------------------------------------------------------------
GE Small-Cap Value Equity Fund No No No No
- ---------------------------------------------------------------------------------------------------------------------------------
GE Global Equity Fund No No No No
- ---------------------------------------------------------------------------------------------------------------------------------
GE International Equity Fund No No No No
- ---------------------------------------------------------------------------------------------------------------------------------
GE Europe Equity Fund No No No No
- ---------------------------------------------------------------------------------------------------------------------------------
GE Emerging Markets Fund No No No No
- ---------------------------------------------------------------------------------------------------------------------------------
GE Fixed Income Fund Yes No No Yes
- ---------------------------------------------------------------------------------------------------------------------------------
GE Government Securities Fund Yes No No Yes
- ---------------------------------------------------------------------------------------------------------------------------------
GE Short-Term Government Fund Yes No No Yes
- ---------------------------------------------------------------------------------------------------------------------------------
GE Tax-Exempt Fund Yes Yes Yes No
- ---------------------------------------------------------------------------------------------------------------------------------
GE High Yield Fund Yes No No Yes
- ---------------------------------------------------------------------------------------------------------------------------------
GE Strategic Investment Fund Yes Yes Yes Yes
- ---------------------------------------------------------------------------------------------------------------------------------
GE Money Market Fund No No No No
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Government Stripped Mortgage Asset Backed Securities
Related Securities and Receivable-Backed Securities Mortgage Dollar Rolls
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
GE U.S. Equity Fund No No No
- -------------------------------------------------------------------------------------------------------------------------------
GE Premier Growth Equity Fund No No No
- -------------------------------------------------------------------------------------------------------------------------------
GE Value Equity Fund No No No
- -------------------------------------------------------------------------------------------------------------------------------
GE Mid-Cap Growth Fund No No No
- -------------------------------------------------------------------------------------------------------------------------------
GE Mid-Cap Value Equity Fund No No No
- -------------------------------------------------------------------------------------------------------------------------------
GE Small-Cap Value Equity Fund No No No
- -------------------------------------------------------------------------------------------------------------------------------
GE Global Equity Fund No No No
- -------------------------------------------------------------------------------------------------------------------------------
GE International Equity Fund No No No
- -------------------------------------------------------------------------------------------------------------------------------
GE Europe Equity Fund No No No
- -------------------------------------------------------------------------------------------------------------------------------
GE Emerging Markets Fund No No No
- -------------------------------------------------------------------------------------------------------------------------------
GE Fixed Income Fund Yes Yes Yes
- -------------------------------------------------------------------------------------------------------------------------------
GE Government Securities Fund Yes Yes Yes
- -------------------------------------------------------------------------------------------------------------------------------
GE Short-Term Government Fund Yes Yes Yes
- -------------------------------------------------------------------------------------------------------------------------------
GE Tax-Exempt Fund No No No
- -------------------------------------------------------------------------------------------------------------------------------
GE High Yield Fund Yes Yes Yes
- -------------------------------------------------------------------------------------------------------------------------------
GE Strategic Investment Fund Yes Yes Yes
- -------------------------------------------------------------------------------------------------------------------------------
GE Money Market Fund No No No
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Short Sales Against the Box
- ------------------------------------------------------------------
<S> <C>
GE U.S. Equity Fund No
- ------------------------------------------------------------------
GE Premier Growth Equity Fund No
- ------------------------------------------------------------------
GE Value Equity Fund Yes
- ------------------------------------------------------------------
GE Mid-Cap Growth Fund Yes
- ------------------------------------------------------------------
GE Mid-Cap Value Equity Fund Yes
- ------------------------------------------------------------------
GE Small-Cap Value Equity Fund Yes
- ------------------------------------------------------------------
GE Global Equity Fund Yes
- ------------------------------------------------------------------
GE International Equity Fund Yes
- ------------------------------------------------------------------
GE Europe Equity Fund Yes
- ------------------------------------------------------------------
GE Emerging Markets Fund Yes
- ------------------------------------------------------------------
GE Fixed Income Fund No
- ------------------------------------------------------------------
GE Government Securities Fund Yes
- ------------------------------------------------------------------
GE Short-Term Government Fund No
- ------------------------------------------------------------------
GE Tax-Exempt Fund Yes
- ------------------------------------------------------------------
GE High Yield Fund Yes
- ------------------------------------------------------------------
GE Strategic Investment Fund No
- ------------------------------------------------------------------
GE Money Market Fund No
- ------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
- -----------------------
56 GE Funds
Prospectus
More on 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 addition, hedging techniques may
not be available, may be too costly to be used effectively or may be unable to
be used for other reasons. These investments may be considered speculative.
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
- --------------------------------------------------------------------------------
<PAGE>
----------
57
- --------------------------------------------------------------------------------
systems are less stable. Investments in 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.
<PAGE>
- ----------------------
58 GE Funds
Prospectus
More on Strategies
and Risks
- --------------------------------------------------------------------------------
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 (including Rule 144A
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.
- --------------------------------------------------------------------------------
<PAGE>
----------
59
- --------------------------------------------------------------------------------
o High Yield Value Investing Risk: The GE High Yield Fund uses value-based
criteria to select securities. Such securities may not realize their perceived
value for extended periods of time or may never realize their perceived value.
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 their stock prices could decline significantly.
Other Risk Considerations
EURO Conversion: The introduction of the EURO, a new common currency in Europe,
may result in uncertainties for European companies and markets, Individual
issuers may suffer increased costs and decreased earnings due to the long-term
impact of EURO conversion. Market disruptions may occur that could adversely
affect the value of European securities and currencies.
Year 2000: The inability of computer systems worldwide to process correctly
date-related information from before, on, and after January 1, 2000 could cause
difficulties for systems' users (the "Year 2000 Issue"). The impact of failures
by companies, markets, or governments of countries in which a Fund invests to
address effectively the Year 2000 Issue may be felt well after January 1, 2000
and may negatively impact a Fund's performance. In addition, a Fund could be
adversely affected if the computer systems used by its investment manager or
external service providers do not correctly process such date-related
information.
- --------------------------------------------------------------------------------
<PAGE>
- ----------------------------------------------
60 GE Funds About the
Prospectus Investment
Adviser
- --------------------------------------------------------------------------------
Investment Adviser and Administrator
GE Asset Management Incorporated ("GE Asset Management"), located at 3003 Summer
Street, P.O. Box 7900, Stamford, Connecticut 06904, is the investment adviser
and administrator of each Fund. GE Asset Management is a wholly-owned subsidiary
of General Electric Company (GE) and a registered investment adviser. GE Asset
Management's principal officers, directors and portfolio managers hold similar
positions with General Electric Investment Corporation, a wholly-owned
subsidiary of GE. As of December 31, 1999, GE's investment advisory firms
oversaw $115.8 billion and managed individual and institutional assets of $91.7
billion, of which more than $18.2 billion was invested in mutual funds.
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 Asset Management bases its investment philosophy on two enduring principles.
First, GE Asset 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 Asset 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 Asset 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 Asset 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 Asset 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 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 effective through January 28, 2001.
- --------------------------------------------------------------------------------
<PAGE>
----------
61
- --------------------------------------------------------------------------------
About the Funds' Portfolio Managers
Eugene Bolton is a Director and Executive Vice President of GE Asset Management.
He manages the overall U.S. equity investments for GE Asset Management. He leads
a team of portfolio managers for GE U.S. Equity Fund. He has served in this
capacity since the Fund's commencement. Mr. Bolton joined GE Asset 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 Asset 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 commencement. Mr. Carlson joined GE Asset Management in1982 as
a Securities Analyst for Investment Operations. He became a Vice President for
Mutual Fund Portfolios and a Senior Vice President in 1989.
Peter J. Hathaway is a Senior Vice President of GE Asset Management and
portfolio manager for GE Value Equity Fund. Mr. Hathaway has served in that
capacity since September 1997 and has over 36 years of investment experience. He
joined GE Asset Management in 1985 as a Vice President for Pension Fund
Portfolios. He became a Senior Vice President in 1987.
Ralph R. Layman is a Director and Executive Vice President of GE Asset
Management. He manages the overall international equity investment for GE Asset
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. He has served in those capacities since each Fund's
commencement. Mr. Layman has also managed foreign investments for GE Strategic
Investment Fund since September 1997. Mr. Layman joined GE Asset Management in
1991 as Executive Vice President for International Investments.
Robert A. MacDougall is a Director and Executive Vice President of GE Asset
Management. He manages the overall fixed income investments for GE Asset
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
commencement. Mr. MacDougall joined GE Asset Management in 1986 as Vice
President. He became a Senior Vice President of Fixed Income in 1993 and a
Director and Executive Vice President of Fixed Income in 1997.
Ralph E. Whitman is a Senior Vice President of GE Asset 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. He
joined GE Asset Management in 1987 as an Equity Analyst. He became Vice
President for U.S. Equity Investments in 1995 and Senior Vice President for U.S.
Equity Portfolios in 1998.
Michael J. Solecki is a Vice President of GE Asset Management, and portfolio
manager of GE Europe Equity Fund. He has served in that capacity since the
Fund's commencement. Mr. Solecki also serves as co-portfolio manager of GE
Global Equity Fund and has served in that capacity since September 1997. He
joined GE Asset Management in 1990 as an International Equity Analyst. He became
a Vice President for International Equity Portfolios in 1996.
- --------------------------------------------------------------------------------
<PAGE>
- --------------
62 GE Funds
Prospectus
About the
Investment
Adviser
- --------------------------------------------------------------------------------
About the Sub-Advisers
GE Asset Management seeks to make the best managers available to Fund
shareholders, whether that means accessing GE Asset 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 Asset 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 $2.1 billion
as of December 31, 1999. 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 September 30, 1999, BBH had $34.1 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>
----------
63
- --------------------------------------------------------------------------------
GE High Yield Fund
Miller Anderson & Sherrerd, LLP (MAS)One Tower BridgeWest 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, 1999, MAS and its affiliates had $66.6 billion of assets under management.
Robert E. Angevine, Stephen F. Esser, Gordon W. Loery and Deanna L. Loughnane
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. 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. Ms. Loughnane joined
MAS in 1997 and is currently a Principal of Morgan Stanley Dean Witter. She
served as a Financial Analyst at MAS from 1997 to 1999 and was a Senior
Corporate Bond Analyst at Putnam Investments from 1993 to 1997.
- --------------------------------------------------------------------------------
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 November 30, 1999, NWQ had in excess of $6.4 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 in 1996, 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>
- --------------
64 GE Funds
Prospectus
About the
Investment
Adviser
- --------------------------------------------------------------------------------
Prior Performance Information of Jon Bosse
(Portfolio Manager of the GE Mid-Cap Value Equity Fund)
The bar chart and table opposite illustrate the performance of a composite of
certain private and mutual fund accounts ("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 is 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 do
not apply to the private accounts. The Fund also incurs certain operating
expenses that are not borne by the private accounts. In addition, the Fund
generally experiences cash flows that are 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.
- --------------------------------------------------------------------------------
Calendar Year Total Returns
[BAR CHART]
S&P MidCap
Composite 400 Index
--------- ---------
1990 1% -5%
1991 54% 50%
1992 30% 12%
1993 20% 14%
1994 9% -4%
1995 39% 31%
1996 29% 19%
1997 35% 32%
1998 8% 19%
1999 18% 15%
- --------------------------------------------------------------------------------
Average Annual Total Returns
(as of December 31, 1999)
S&P MidCap
Period Composite 400 Index
- ------ --------- ---------
1 Year 17.52% 14.70%
3 Years 19.77% 21.78%
5 Years 25.07% 23.01%
Since 1/1/90 23.15% 17.32%
Note A -- 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 provided in the composite 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. Composite 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. NWQ believes that the difference in performance
between the Mid-Cap Value Equity Fund and the composite for the one year period
ended December 31, 1999 is attributable primarily to differences in certain
security holdings and security weightings due to the earlier inception date of
the composite as compared to the Fund.
Note B -- As of December 31, 1999, the total assets of the composite was $506
million. 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.
The Portfolio Manager Composite results represent 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.
- --------------------------------------------------------------------------------
<PAGE>
----------
65
- --------------------------------------------------------------------------------
Prior Performance Information of Miller Anderson & Sherrerd, LLP
(Sub-adviser to the GE High Yield Fund)
The bar chart and table opposite illustrate the performance of a composite 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.
- --------------------------------------------------------------------------------
Calendar Year Total Returns
[BAR CHART]
Salomon Brothers
High Yield Market
Composite Index
--------- -----------------
1989* -6% 1%
1990 -11% -7%
1991 44% 40%
1992 19% 18%
1993 25% 17%
1994 -7% -1%
1995 24% 20%
1996 15% 11%
1997 16% 13%
1998 3% 4%
1999 8% 2%
* 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, 1999)
Salomon Brothers
High Yield Market
Period Composite Index
- ------ --------- -----------------
1 Year 7.71% 1.73%
3 Years 8.83% 6.06%
5 Years 12.99% 9.71%
10 Years 12.5% 10.94%
Since 2/28/89 10.88% 10.11%
Note A -- As of December 31, 1999, the total assets of the composite was $1.16
billion. 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.
The Sub-Adviser 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.
- --------------------------------------------------------------------------------
<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, or directly through GE
Investment Distributors, Inc. (the "Distributor"), the Funds' distributor. You
may purchase Class A shares by mail, bank wire, electronic funds transfer, or by
telephone. You may obtain an application from your investment professional or
from the Distributor by calling 1-800-242-0134 or directly by visiting the GE
Funds Website at www.ge.com/mutualfunds.
The Funds and the 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 the Distributor 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 the Distributor, actual or potential
harm to the Funds.
- --------------------------------------------------------------------------------
Minimum
Investments
By mail By wire Automatically
Initial Investment $500 $1,000 $25
- --------------------------------------------------------------------------------
Subsequent Investments $100 $1,000 $25
- --------------------------------------------------------------------------------
Minimums are reduced for accounts with active 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
- --------------------------------------------------------------------------------
Opening an Account
o Read this Prospectus.
o Complete and sign an application. You may obtain an application from your
investment professional or from the Distributor by calling 1-800-242-0134 or by
visiting the GE Funds Website at www.ge.com/mutual funds.
o If you are opening an account directly through the Distributor, 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 219631
Kansas City, MO 64121-9631
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 You may have your financial institution electronically transfer ("wire")
monies to your account. Wire to the address below. Include your name, the name
of the Fund and your account number.
Wire Address:
State Street Bank and Trust Company
ABA No. 0110-0002-8
DDA No. 9904-641-9
o Your financial institution may change a fee for wire transactions.
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.
Electronic Funds Transfer
You may transfer money between your bank account and your fund account by
electronic funds transfer if you have completed the appropriate section of the
application. Electronic funds transfers are similiar to wires but are not
processed as quickly. Most transfers are completed within three business days of
your request. Prior to your first transfer, call the GE Funds at (800) 242-0134
to confirm that electronic transfer has been enabled on your account.
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 money transferred directly from your bank account each month.
Call 1-800-242-0134 or your investment professional to make arrangements.
o If an automatic monthly investment transaction fails because there is an
insufficient balance 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, the Distributor, or the GE Funds
Website at www.ge.com/mutual funds.
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
- --------------------------------------------------------------------------------
<PAGE>
- -----------------
68 GE Funds
Prospectus
How to Invest
- --------------------------------------------------------------------------------
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. An in kind purchase of Fund
shares will be a taxable event.
- --------------------------------------------------------------------------------
<PAGE>
----------
69
- --------------------------------------------------------------------------------
[This page intentionally left blank.]
- --------------------------------------------------------------------------------
<PAGE>
- -----------------
70 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 select and manner in which 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.
- --------------------------------------------------------------------------------
Investing through an Authorized Firm
You may invest through authorized broker-dealers, financial institutions or
investment advisers that have entered into sales agreements with the Distributor
("Authorized Firms").
If you invest through an Authorized Firm with an investment professional, they
can provide investment advice, determine the suitability of a particular Fund or
Funds, help you set up your new account and make subsequent investments for you.
Your investment professional will forward your investment details and payment to
the Fund. Your investment professional may charge fees not described in this
Prospectus.
Class A shares carry an initial sales charge. Certain investors listed below
under "Sales Charge Waivers for Class A Shares" may purchase Class A shares on a
load-waived basis. 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. The Funds may modify the
manner in which shares are offered, minimum investments, or sales charge rates
or waivers.
- --------------------------------------------------------------------------------
Investing in Class A shares directly through the Distributor
If you choose to make your own investment decisions , you may purchase Class A
shares directly from the Distributor via the Internet, by mail or other direct
means without paying the initial sales charge. Subsequent purchases of Class A
shares in accounts initially established with a purchase through the Distributor
also may be made without paying any initial sales charge.
For additional information, call the Distributor at 1-800-242-0134 or visit the
GE Funds Website at www.ge.com/mutualfunds
If You Work for GE
As a GE Employee, as defined below, you and your family members may purchase
Class A shares directly from the Distributor without paying the sales charge
typically associated with buying Class A shares of a Fund through an investment
professional. If a GE Employee purchases Fund shares through an investment
professional other than the Distributor, they may pay transaction fees including
any applicable sales charges.
The following persons ("GE Employees") are eligible for the employee Class A
sales charge waiver if they purchase shares through the Distributor:
o employees, retirees, officers or directors of GE, or affiliated companies and
members of their families (including your spouse, parents, children, siblings,
grandparents and grandchildren)
o investors and their family members who purchased shares of the Funds issued
before November 29, 1993.
Please call 1-800-242-0134 or visit the GE Funds Website at
www.ge.com/mutualfunds for details.
- --------------------------------------------------------------------------------
<PAGE>
----------
71
- --------------------------------------------------------------------------------
Purchasing Class A Shares (through an Authorized Firm)
Class A shares may be appropriate for long-term investors who compensate their
investment professional for the services they provide with tradi tional
front-end sales charges and for investors who are eligible for quantity
discounts or waivers. When purchased through an Authorized Firm, 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 intended
for Class B shares and purchases of $1,000,000 or more ($500,000 for the
Short-Term Government Fund) intended for Class C shares should be made in
Class A shares.
*** Purchases through an Authorized Firm 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.
+ For purchases through an Authorized Firm 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.
- --------------------------------------------------------------------------------
<PAGE>
- -----------------
72 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.
o "Letter Of Intent" Purchase--if you intend to make purchases in GE Funds of
over $50,000 in the Equity Funds or $100,000 in the Fixed Income Funds 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 a
portion 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.
Additional information about sales charge reductions is contained in the SAI or
you may 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 received on Fund shares
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 or its affiliates ("Class
A Retirement Plans")
o is made by a Class A Retirement Plan with at least 250 eligible employees
o is made by investment companies not managed or sponsored by GE Investment
Management or any of its affiliates
o is made through the Distributor by participants of defined contribution plans
which include GE Funds as investment options
o is made by officers, directors, employees and registered representatives of
authorized firms that have agreements with the Distributor or other financial
institutions selling Fund shares
o is made directly through the Distributor
o is made through an account with a broker-dealer with which the Distributor has
an agreement for the use of GE Funds in particular investment products or
programs on a load-waived basis
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, and the Distributor to compensate them for certain
services.
Purchases of $1 million or more in Class A shares at NAV are 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. The Class A CDSC does not apply to investors purchasing $1 million or
more of any fund's Class A shares if such investors are otherwise eligible to
purchase Class A shares pursuant to a sales charge waiver. For more information
on Class A sales charge waivers, please contact the Distributor or your
investment professional.
- --------------------------------------------------------------------------------
<PAGE>
----------
73
- --------------------------------------------------------------------------------
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 your 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 of the block of shares being redeemed at the time
of their 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 of 1986, as amended)
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 B or Class C shares effected through the
Systematic Withdrawal Plan, not to exceed 10% of an investor's initial account
value
o that are redemptions of Class A
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 Investors Trust Funds:
Funds Contingent Deferred Sales Charge
- --------------------------------------------------------------------------------
Any Fund's Class B shares acquired as a o 5% in the first year
result of the merger of 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>
- -----------------
74 GE Funds
Prospectus
How to Invest
- --------------------------------------------------------------------------------
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. The sales charge waiver in this instance is limited
to the first $100,000 redeemed.
o that represent "substantially equal periodic payments" as described under
Section 72(t)(2) of the Internal Revenue Code of 1986, as amended.
- --------------------------------------------------------------------------------
Purchasing Class C Shares(Level load class)
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 one year 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 the Distributor to authorized firms.
- --------------------------------------------------------------------------------
Purchasing Class Y Shares (formerly Class D 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.
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 219631
Kansas City, MO 64121-9631
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
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
- --------------------------------------------------------------------------------
<PAGE>
----------
75
- --------------------------------------------------------------------------------
By Telephone
Shares may be redeemed by telephone up to a maximum of $50,000 per day utilizing
the Funds' automated Voice Response 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 1-800-242-0134.
The Distributor 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.
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 redeem in your wire request
Wire instructions must have been provided during initial account setup or
subsequently by written request signed by all registered shareholders with a
signature guarantee.
Mail your signed, signature guaranteed written request to establish wire
privileges to:
GE Funds
P.O. Box 219631
Kansas City, MO 64121-9631
Or call the Distributor at 1-800-242-0134.
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 has been cleared by your bank.
This could take up to 15 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 NYSE is restricted, or as permitted by the Securities and
Exchange Commission.
- --------------------------------------------------------------------------------
<PAGE>
- -----------------
76 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 1-800-242-0134. (This option is not available for certain
corporate or trust accounts.)
o through the GE Funds Website at www.ge.com/mutual funds. (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 219631
Kansas City, MO 64121-9631
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>
----------
77
- --------------------------------------------------------------------------------
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 Rule
12b-1 plans 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
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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
* No distribution and service fees are paid by the GE Money Market Fund.
**The amount paid by Class A Shares under the Rule 12b-1 plan may be used for
both distribution and shareholder service expenses.
Investment Through Intermediaries If you invest through a third party (rather
than directly through the Distributor), the fees may be different than those
described in this Prospectus. Banks, brokers, financial advisers and financial
supermarkets may charge transaction fees and may set different minimum
investments or limitations on buying or selling shares. Consult a representative
from your financial institution if you have questions. Financial services firms
selling significant amounts of Class A Shares or Class Y Shares may receive
extra compensation. This compensation, which GEAsset Management will pay out of
its own resources, may include reimbursement for marketing costs.
- --------------------------------------------------------------------------------
<PAGE>
- ----------------------------------------------
78 GE Funds Dividends,
Prospectus Capital Gains
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 typically declared and
paid annually.
GE Premier Growth Equity Fund
o Short-term and long-term capital
GE Value Equity Fund gains, if any, are typically declared
and paid annually.
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
GE Short-Term Government Fund gains, if any, are typically 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>
----------
79
- --------------------------------------------------------------------------------
Taxes
Tax issues can be complicated. We suggest you see your investment professional
or tax advisor for any questions you may have.
Except for investments in tax-deferred accounts, you generally will owe taxes on
amounts distributed to you. 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.
Distributions generally will be taxed in the same manner whether they are
received in cash or reinvested.
In addition, if you sell or redeem Fund shares, you generally will realize a
capital gain or loss, which will be long-term or short-term, depending upon how
long you hold those shares. If you exchange shares for the same class of another
GE Fund, the exchange will be treated as a sale and purchase of shares for tax
purposes.
- --------------------------------------------------------------------------------
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>
- ----------------------------------------------
80 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 81
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. 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
PricewaterhouseCoopers LLP, whose report, along with the Funds' financial
statements, are included in the Funds' Annual Report, which is available on
request.
- --------------------------------------------------------------------------------
<PAGE>
- --------------
82 GE Funds
Prospectus
Financial
Highlights
- --------------------------------------------------------------------------------
GE U.S. Equity Fund
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------
Years ended September 30 1999(b,c) 1998(b) 1997(b) 1996(b) 1995(b)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 1/5/93
- ---------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $27.82 $29.00 $23.02 $19.98 $16.13
- ---------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations:
Net Investment Income (Loss) 0.18 0.27 0.30 0.36 0.37
- ---------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized) 7.26 1.22 8.19 3.30 3.86
- ---------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 7.44 1.49 8.49 3.66 4.23
- ---------------------------------------------------------------------------------------------------------------------------
Less Distribution
- ---------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.23 0.24 0.32 0.35 0.29
- ---------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 2.50 2.43 2.19 0.27 0.09
- ---------------------------------------------------------------------------------------------------------------------------
Total Distributions 2.73 2.67 2.51 0.62 0.38
- ---------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $32.53 $27.82 $29.00 $23.02 $19.98
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Total Return (a) 27.79% 5.62% 39.76% 18.70% 26.86%
- ---------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $311.958 $124,714 $97,886 $50,035 $26,007
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 0.81% 0.75% 0.75% 0.75% 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 0.56% 0.92% 1.18% 1.66% 2.12%
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 0.83% 0.84% 0.93% 1.06% 1.19%
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 46% 29% 38% 49% 43%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GE Premier Growth Equity Fund
<TABLE>
<CAPTION>
CLASS A
--------------------------------------
Years ended September 30 1999(b,c) 1998(b) 1997(b)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Inception date -- -- 12/31/96
- ----------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $20.44 $18.35 $15.00
- ----------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) (0.08) 0.03 0.00
- ----------------------------------------------------------------------------------------------------------
Net Gains (Losses) Investments (both realized and unrealized) 7.83 2.38 3.35
- ----------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 7.75 2.41 3.35
- ----------------------------------------------------------------------------------------------------------
Less Distributions
- ----------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.03 0.03 0.00
- ----------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.66 0.29 0.00
- ----------------------------------------------------------------------------------------------------------
Total Distributions 0.69 0.32 0.00
- ----------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $27.50 $20.44 $18.35
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
Total Return (a) 38.54% 13.35% 22.33%
- ----------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ----------------------------------------------------------------------------------------------------------
Net Assets, End of Period $67.311 $15,044 $7,287
- ----------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets 1.10% 1.12% 1.15%
- ----------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets (0.29)% 0.17% (0.03)%
- ----------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.10% 1.16% 1.62%
- ----------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 26% 35% 17%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
----------
83
- --------------------------------------------------------------------------------
GE U.S. Equity Fund
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------------
Years ended September 30 1999(b) 1998(b) 1997(b) 1996(b) 1995(b)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 12/22/93
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $27.11 $28.35 $22.57 $19.71 $16.03
- -------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations:
Net Investment Income (Loss) (0.06) 0.05 0.11 0.19 0.21
- -------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized) 7.08 1.20 8.03 3.25 3.84
- -------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 7.02 1.25 8.14 3.44 4.05
- -------------------------------------------------------------------------------------------------------------------------------
Less Distribution
- -------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.05 0.06 0.17 0.31 0.28
- -------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 2.50 2.43 2.19 0.27 0.09
- -------------------------------------------------------------------------------------------------------------------------------
Total Distributions 2.55 2.49 2.36 0.58 0.37
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $31.58 $27.11 $28.35 $22.57 $19.71
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Total Return (a) 26.83% 4.80% 38.75% 17.78% 25.92%
- -------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $36.921 $21,407 $14,380 $7,194 $1,563
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 1.56% 1.50% 1.50% 1.50% 1.50%
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* (0.19)% 0.17% 0.44% 0.90% 1.29%
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.58% 1.63% 1.88% 2.08% 3.50%
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 46% 29% 38% 49% 43%
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS Y
-----------------------------------------------------------
Years ended September 30 1999(b) 1998(b) 1997(b) 1996(b) 1995
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 11/29/93
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $27.78 $28.99 $23.03 $19.98 $16.16
- -------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations:
Net Investment Income (Loss) 0.26 0.34 0.37 0.40 0.38
- -------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized) 7.25 1.21 8.19 3.31 3.88
- -------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 7.51 1.55 8.56 3.71 4.26
- -------------------------------------------------------------------------------------------------------------------------------
Less Distribution
- -------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.31 0.33 0.41 0.39 0.35
- -------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 2.50 2.43 2.19 0.27 0.09
- -------------------------------------------------------------------------------------------------------------------------------
Total Distributions 2.81 2.76 2.60 0.66 0.44
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $32.48 $27.78 $28.99 $23.03 $19.98
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Total Return (a) 28.14% 5.86% 40.16% 18.97% 27.14%
- -------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $358.583 $281,071 $212,957 $144,470 $128,247
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 0.56% 0.50% 0.50% 0.50% 0.50%
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 0.81% 1.16% 1.45% 1.90% 2.36%
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 0.58% 0.56% 0.52% 0.59% 0.71%
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 46% 29% 38% 49% 43%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GE Premier Growth Equity Fund
<TABLE>
<CAPTION>
CLASS B CLASS Y
-----------------------------------------------------------------
Years ended September 30 1999(b) 1998(b) 1997(b) 1999(b) 1998(b) 1997(b)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Inception date -- -- 12/31/96 -- -- 12/31/96
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $20.20 $18.25 $15.00 $20.50 $18.38 $15.00
- -----------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) (0.27) (0.12) (0.09) (0.01) 0.09 0.04
- -----------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) Investments (both realized and unrealized) 7.73 2.36 3.34 7.84 2.37 3.34
- -----------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 7.46 2.24 3.25 7.83 2.46 3.38
- -----------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.00 0.00 0.00 0.07 0.05 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.66 0.29 0.00 0.66 0.29 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions 0.66 0.29 0.00 0.73 0.34 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $27.00 $20.20 $18.25 $27.60 $20.50 $18.38
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return (a) 37.53% 12.47% 21.67% 38.92% 13.65% 22.53%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period $15,501 $2,076 $447 $20,704 $7,580 $5,770
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets 1.84% 1.90% 1.90% 0.85% 0.88% 0.90%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets (1.03)% (0.62)% (0.76)% (0.03)% 0.47% 0.31%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.84% 2.27% 9.30% 0.85% 0.89% 1.17%
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 26% 35% 17% 26% 35% 17%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
- --------------
84 GE Funds
Prospectus
Financial
Highlights
- --------------------------------------------------------------------------------
GE Value Equity Fund
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------
Years ended September 30 1999(b,c) 1998(b) 1997(d) 10/31/96(e) 10/31/95
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 9/8/93
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $9.93 $13.58 $10.83 $8.95 $7.51
- --------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) 0.18 0.05 0.07 0.05 0.14
- --------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Securities (both realized and unrealized) 2.66 0.46 3.59 1.99 1.45
- --------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 2.68 0.51 3.66 2.04 1.59
- --------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- --------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.03 0.00 0.04 0.09 0.15
- --------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.40 4.16 0.87 0.07 0.00
- --------------------------------------------------------------------------------------------------------------------------------
Total Distributions 0.43 4.16 0.91 0.16 0.15
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $12.18 $9.93 $13.58 $10.83 $8.95
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Total Return (a) 27.34% 5.86% 36.18% 23.10% 21.45%
- --------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $29,607 $14,276 $8,236 $5,833 $4,083
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 1.29% 1.31% 1.30% 1.35% 1.35%
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 0.18% 0.50% 0.63% 1.03% 1.71%
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.30% 1.33% 1.33% 1.73% 2.43%
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 31% 40% 131% 100% 27%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GE Mid-Cap Growth Fund
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------
Years ended September 30 1999(b,c) 1998(b) 1997(e) 10/31/96 10/31/95
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 9/8/93
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $8.27 $17.61 $13.16 $11.38 $8.81
- --------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) (0.04) (0.04) (0.07) 0.00 0.01
- --------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Securities (both realized and unrealized) 1.19 (1.86) 4.52 1.78 2.56
- --------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 1.15 (1.90) 4.45 1.78 2.57
- --------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- --------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.00 0.00 0.00 0.00 0.00
- --------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.00 7.37 0.00 0.00 0.00
- --------------------------------------------------------------------------------------------------------------------------------
Returns of Capital 0.00 0.07 0.00 0.00 0.00
- --------------------------------------------------------------------------------------------------------------------------------
Total Distributions 0.00 7.44 0.00 0.00 0.00
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $9.42 $8.27 $17.61 $13.16 $11.38
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Total Return (a) 13.91% (16.11)% 33.81% 15.64% 29.17%
- --------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of period (in thousands) $15.943 $10,134 $10,885 $8,222 $5,986
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 1.38% 1.40% 1.31% 1.35% 1.35%
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* (0.41)% (0.35)% (0.51)% 0.03% 0.10%
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.46% 1.45% 1.46% 1.70% 2.44%
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 48% 13% 139% 41% 74%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
----------
85
- --------------------------------------------------------------------------------
GE Value Equity Fund
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------
Years ended September 30 1999(b) 1998(b) 1997(e) 10/31/96 10/31/95
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 9/8/93
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $9.77 $13.48 $10.79 $8.93 $7.50
- -------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) (0.04) 0.00 (0.01) 0.04 0.07
- -------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Securities (both realized and unrealized) 2.61 0.45 3.57 1.93 1.45
- -------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 2.57 0.45 3.56 1.97 1.52
- -------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- -------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.00 0.00 0.00 0.04 0.09
- -------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.40 4.16 0.87 0.07 0.00
- -------------------------------------------------------------------------------------------------------------------------------
Total Distributions 0.40 4.16 0.87 0.11 0.09
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $11.94 $9.77 $13.48 $10.79 $8.93
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Total Return (a) 26.67% 5.32% 35.23% 22.30% 20.50%
- -------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $51,369 $44,655 $46,035 $33,318 $14,450
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 1.81% 1.81% 2.05% 2.10% 2.10%
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* (0.32)% 0.00% (0.12)% 0.23% 0.94%
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.82% 1.81% 2.07% 2.40% 3.18%
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 31% 40% 131% 100% 27%
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS Y (d)
-------------------
Years ended September 30 1999(b) 1998(b)
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Inception date -- 1/5/98
- ----------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $10.38 10.00
- ----------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) 0.81 0.08
- ----------------------------------------------------------------------------------------
Net Gains (Losses) on Securities (both realized and unrealized) 2.76 0.30
- ----------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 2.84 0.38
- ----------------------------------------------------------------------------------------
Less Distributions
- ----------------------------------------------------------------------------------------
Dividends (from net investment income) 0.08 0.00
- ----------------------------------------------------------------------------------------
Distributions (from capital gains) 0.40 0.00
- ----------------------------------------------------------------------------------------
Total Distributions 0.48 0.00
- ----------------------------------------------------------------------------------------
Net Asset Value, End of Period $12.74 $10.38
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Total Return (a) 27.85% 3.80%
- ----------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ----------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $2,292 $1,580
- ----------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 0.81% 0.81%
- ----------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 0.68% 0.98%
- ----------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 0.82% 0.81%
- ----------------------------------------------------------------------------------------
Portfolio Turnover Rate 31% 40%
- ----------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GE Mid-Cap Growth Fund
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------
Years ended September 30 1999(b) 1998(b) 1997(e) 10/31/96 10/31/95
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 9/8/93
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $7.80 $17.11 $12.87 $11.21 $8.74
- -------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) (0.08) (0.08) (0.18) (0.09) (0.05)
- -------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Securities (both realized and unrealized) 1.12 (1.79) 4.42 1.75 2.52
- -------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 1.04 (1.87) 4.24 1.66 2.47
- -------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- -------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.00 0.00 0.00 0.00 0.00
- -------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.00 7.40 0.00 0.00 0.00
- -------------------------------------------------------------------------------------------------------------------------------
Returns of Capital 0.00 0.04 0.00 0.00 0.00
- -------------------------------------------------------------------------------------------------------------------------------
Total Distributions 0.00 7.44 0.00 0.00 0.00
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $8.84 $7.80 $17.11 $12.87 $11.21
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Total Return (a) 13.33% (16.62)% 33.02% 14.81% 28.26%
- -------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of period (in thousands) $18,073 $22,038 $32,280 $27,616 $14,311
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 1.90% 1.90% 2.06% 2.10% 2.10%
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* (0.91)% (0.86)% (1.26)% (0.73)% (0.66)%
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.97% 1.93% 2.21% 2.41% 3.19%
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 48% 13% 139% 41% 74%
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS Y (d)
-------------------
Years ended September 30 1999(b) 1998(b)
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Inception date -- 1/5/98
- ---------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $8.71 $10.00
- ---------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) 0.01 0.01
- ---------------------------------------------------------------------------------------
Net Gains (Losses) on Securities (both realized and unrealized) 1.26 (1.30)
- ---------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 1.27 (1.29)
- ---------------------------------------------------------------------------------------
Less Distributions
- ---------------------------------------------------------------------------------------
Dividends (from net investment income) 0.00 0.00
- ---------------------------------------------------------------------------------------
Distributions (from capital gains) 0.00 0.00
- ---------------------------------------------------------------------------------------
Returns of Capital 0.00 0.00
- ---------------------------------------------------------------------------------------
Total Distributions 0.00 0.00
- ---------------------------------------------------------------------------------------
Net Asset Value, End of Period $9.98 $8.71
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
Total Return (a) 14.58% (12.90)%
- ---------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------
Net Assets, End of period (in thousands) $783 $471
- ---------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 0.90% 0.89%
- ---------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 0.09% 0.21%
- ---------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 0.97% 0.89%
- ---------------------------------------------------------------------------------------
Portfolio Turnover Rate 48% 13%
- ---------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
- --------------
86 GE Funds
Prospectus
Financial
Highlights
- --------------------------------------------------------------------------------
GE Mid-Cap Value Equity Fund
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS Y (d)
------------------------------------------
Years ended September 30 1999(b,c) 1999(b) 1999(b)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Inception date 12/31/98 12/31/98 12/31/98
- -------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $10.00 $10.00 $10.00
- -------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) 0.04 (0.02) 0.06
- -------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Securities (both realized and unrealized) (0.21) (0.21) (0.22)
- -------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations (0.17) (0.23) (0.16)
- -------------------------------------------------------------------------------------------------------------
Less Distributions
- -------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.00 0.00 0.00
- -------------------------------------------------------------------------------------------------------------
Returns of Capital 0.00 0.00 0.00
- -------------------------------------------------------------------------------------------------------------
Total Distributions 0.00 0.00 0.00
- -------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $9.83 $9.77 $9.84
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Total Return (a) (1.70)% (2.30)% (1.60)%
- -------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $708 $177 $10,103
- -------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 1.15% 1.90% 0.90%
- -------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 0.47% (0.21)% 0.79%
- -------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.54% 2.38% 1.36%
- -------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 17% 17% 17%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GE Small-Cap Value Equity Fund
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS Y (d)
-------------------------------------------
Years ended September 30 1999(b,c) 1999(b) 1999(b)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Inception date 9/30/98 9/30/98 9/30/98
- -------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $10.00 $10.00 $10.00
- -------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) (0.02) (0.06) 0.05
- -------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Securities (both realized and unrealized) 2.24 2.19 2.19
- -------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 2.22 2.13 2.24
- -------------------------------------------------------------------------------------------------------------
Less Distributions
- -------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.03 0.01 0.03
- -------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.03 0.03 0.03
- -------------------------------------------------------------------------------------------------------------
Total Distributions 0.06 0.04 0.06
- -------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $12.16 $12.09 $12.18
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Total Return (a) 22.28% 21.37% 22.53%
- -------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $14,561 $8,505 $293
- -------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 1.15% 1.90% 0.90%
- -------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* (0.15)% (0.56)% 0.41%
- -------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.41% 2.19% 1.71%
- -------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 182% 182% 182%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
----------
87
- --------------------------------------------------------------------------------
[This page intentionally left blank.]
- --------------------------------------------------------------------------------
<PAGE>
- --------------
88 GE Funds
Prospectus
Financial
Highlights
- --------------------------------------------------------------------------------
GE Global Equity Fund
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------
Years ended September 30 1999(b,c) 1998(b) 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 1/5/93
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $19.72 $24.81 $22.18 $20.31 $19.40
- -------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) 0.06 0.05 0.04 0.06 0.09
- -------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized) 7.05 (2.65) 3.94 2.22 1.30
- -------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 7.11 (2.60) 3.98 2.28 1.39
- -------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- -------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.00 0.02 0.06 0.04 0.09
- -------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.97 2.47 1.29 0.37 0.39
- -------------------------------------------------------------------------------------------------------------------------------
Total Distributions 0.97 2.49 1.35 0.41 0.48
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $25.86 $19.72 $24.81 $22.18 $20.31
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Total Return (a) 36.89% (10.86)% 18.82% 11.44% 7.47%
- -------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $39,245 $28,412 $35,120 $28,682 $28,683
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 1.35% 1.34% 1.35% 1.35% 1.35%
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 0.23% 0.22% 0.24% 0.33% 0.59%
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.35% 1.35% 1.45% 1.60% 1.42%
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 64% 71% 70% 46% 46%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GE International Equity Fund
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------
Years ended September 30 1999(b,c) 1998(b) 1997 1996(b) 1995
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 3/2/94
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $15.11 $20.36 $17.65 $15.88 $15.19
- -------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) 0.05 0.09 0.05 0.11 0.12
- -------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized) 3.74 (1.60) 3.19 1.72 0.65
- -------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 3.79 (1.51) 3.24 1.83 0.77
- -------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- -------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.00 0.00 0.03 0.06 0.08
- -------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.57 3.74 0.50 0.00 0.00
- -------------------------------------------------------------------------------------------------------------------------------
Total Distributions 0.57 3.74 0.53 0.06 0.08
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $18.33 $15.11 $20.36 $17.65 $15.88
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Total Return (a) 25.48% (8.71)% 18.79% 11.54% 5.16%
- -------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $32,938 $6,114 $6,152 $3,230 $1,262
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 1.35% 1.35% 1.35% 1.35% 1.35%
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 0.29% 0.50% 0.45% 0.68% 0.83%
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.39% 1.42% 1.58% 1.96% 2.75%
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 51% 93% 51% 36% 27%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
----------
89
- --------------------------------------------------------------------------------
GE Global Equity Fund
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------
Years ended September 30 1999(b) 1998(b) 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 12/22/93
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $19.17 $24.32 $21.87 $20.14 $19.32
- --------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) (0.12) (0.11) (0.08) (0.04) 0.00
- --------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized) 6.84 (2.57) 3.82 2.14 1.23
- --------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 6.72 (2.68) 3.74 2.10 1.23
- --------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- --------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.00 0.00 0.00 0.00 0.02
- --------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.97 2.47 1.29 0.37 0.39
- --------------------------------------------------------------------------------------------------------------------------------
Total Distributions 0.97 2.47 1.29 0.37 0.41
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $24.92 $19.17 $24.32 $21.87 $20.14
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Total Return (a) 35.85% (11.44)% 17.92% 10.61% 6.62%
- --------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $1,477 $989 $877 $600 $356
- --------------------------------------------------------------------------------------------------------------------------------
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* (0.51)% (0.48)% (0.52)% (0.34)% (0.11)%
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 2.12% 2.45% 3.33% 3.50% 3.50%
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 64% 71% 70% 46% 46%
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS Y(d)
--------------------------------------------------------
Years ended September 30 1999(b) 1998(b) 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 11/29/93
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $19.72 $24.83 $22.25 $20.37 $19.45
- -----------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) 0.12 0.09 0.10 0.13 0.13
- -----------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized) 7.04 (2.63) 3.94 2.21 1.31
- -----------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 7.16 (2.54) 4.04 2.34 1.44
- -----------------------------------------------------------------------------------------------------------------------------
Less Distributions
- -----------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.07 0.10 0.17 0.09 0.13
- -----------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.97 2.47 1.29 0.37 0.39
- -----------------------------------------------------------------------------------------------------------------------------
Total Distributions 1.04 2.57 1.46 0.46 0.52
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $25.84 $19.72 $24.83 $22.25 $20.37
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Total Return (a) 37.20% (10.59)% 19.14% 11.71% 7.76%
- -----------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $23,086 $15,039 $22,642 $10,123 $9,785
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 1.10% 1.07% 1.10% 1.10% 1.10%
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 0.50% 0.37% 0.48% 0.56% 0.84%
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.12% 1.07% 1.10% 1.12% 1.75%
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 64% 71% 70% 46% 46%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GE International Equity Fund
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------
Years ended September 30 1999(b) 1998(b) 1997 1996(b) 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 3/2/94
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $14.68 $20.02 $17.47 $15.77 $15.13
- --------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) (0.07) (0.05) (0.06) 0.05 0.01
- --------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized) 3.62 (1.55) 3.11 1.65 0.64
- --------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 3.55 (1.60) 3.05 1.70 0.65
- --------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- --------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.00 0.00 0.00 0.00 0.01
- --------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.57 3.74 0.50 0.00 0.00
- --------------------------------------------------------------------------------------------------------------------------------
Total Distributions 0.57 3.74 0.50 0.00 0.01
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $17.66 $14.68 $20.02 $17.47 $15.77
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Total Return (a) 24.56% (9.39)% 17.86% 10.78% 4.33%
- --------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $1,488 $948 $455 $272 $57
- --------------------------------------------------------------------------------------------------------------------------------
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* (0.40)% (0.26)% (0.30)% 0.28% 0.10%
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 2.14% 2.59% 4.12% 3.50% 3.50%
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 51% 93% 51% 36% 27%
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS Y(d)
--------------------------------------------------------
Years ended September 30 1999(b) 1998(b) 1997 1996(b) 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 3/2/94
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $15.18 $20.43 $17.76 $15.94 $15.22
- -----------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) 0.11 0.01 0.13 0.17 0.12
- -----------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized) 3.73 (1.46) 3.18 1.73 0.70
- -----------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 3.84 (1.45) 3.31 1.90 0.82
- -----------------------------------------------------------------------------------------------------------------------------
Less Distributions
- -----------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.01 0.06 0.14 0.08 0.10
- -----------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.57 3.74 0.50 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------
Total Distributions 0.58 3.80 0.64 0.08 0.10
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $18.44 $15.18 $20.43 $17.76 $15.94
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Total Return (a) 25.72% (8.34)% 19.16% 11.97% 5.45%
- -----------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $21,952 $15,367 $75,098 $63,225 $32,907
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 1.10% 1.04% 1.01% 1.03% 1.07%
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 0.60% 0.08% 0.76% 0.99% 0.97%
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.14% 1.06% 1.01% 1.03% 1.18%
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 51% 93% 51% 36% 27%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
- --------------
90 GE Funds
Prospectus
Financial
Highlights
- --------------------------------------------------------------------------------
GE Europe Equity Fund
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS Y(d)
-----------------------------------------
Years ended September 30 1999(b,c) 1999(b) 1999(b)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Inception date 1/29/99 1/29/99 1/29/99
- ---------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $10.00 $10.00 10.00
- ---------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) 0.06 0.02 0.09
- ---------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Securities (both realized and unrealized) (0.13) (0.14) (0.15)
- ---------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations (0.07) (0.12) (0.06)
- ---------------------------------------------------------------------------------------------------------------
Less Distributions
- ---------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.00 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------
Returns of Capital 0.00 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------
Total Distributions 0.00 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $9.93 $9.88 $9.94
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Total Return (a) (0.70)% (1.20)% (0.60)%
- ---------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $669 $144 $10,051
- ---------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 1.45% 2.20% 1.20%
- ---------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 0.88% 0.24% 1.36%
- ---------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.91% 2.69% 1.71%
- ---------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 47% 47% 47%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GE Emerging Markets Fund
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS Y(d)
-----------------------------------------
Years ended September 30 1999(b,c) 1999(b) 1999(b)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Inception date 1/29/99 1/29/99 1/29/99
- ---------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $10.00 $10.00 $10.00
- ---------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) (0.05) (0.10) (0.01)
- ---------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Securities (both realized and unrealized) 3.52 3.50 3.50
- ---------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 3.47 3.40 3.49
- ---------------------------------------------------------------------------------------------------------------
Less Distributions
- ---------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.00 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.00 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------
Total Distributions 0.00 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $13.47 $13.40 $13.49
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Total Return (a) 34.70% 34.00% 34.90%
- ---------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $900 $225 $13,651
- ---------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 1.60% 2.35% 1.35%
- ---------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* (0.56)% (1.26)% (0.18)%
- ---------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.90% 2.71% 1.74%
- ---------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 59% 59% 59%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
----------
91
- --------------------------------------------------------------------------------
[This page intentionally left blank.]
- --------------------------------------------------------------------------------
<PAGE>
- --------------
92 GE Funds
Prospectus
Financial
Highlights
- --------------------------------------------------------------------------------
GE Fixed Income Fund
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------
Years ended September 30 1999(b,c) 1998(b) 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 1/5/93
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $12.55 $12.06 $11.70 $11.92 $11.27
- -------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) 0.64 0.68 0.72 0.69 0.73
- -------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Securities (both realized and unrealized) (0.79) 0.50 0.35 (0.21) 0.67
- -------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations (0.15) 1.18 1.07 0.48 1.40
- -------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- -------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.64 0.67 0.71 0.70 0.75
- -------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.00 0.00 0.00 0.00 0.00
- -------------------------------------------------------------------------------------------------------------------------------
Returns of Capital 0.00 0.02 0.00 0.00 0.00
- -------------------------------------------------------------------------------------------------------------------------------
Total Distributions 0.64 0.69 0.71 0.70 0.75
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $11.76 $12.55 $12.06 $11.70 $11.92
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Total Return (a) (1.20)% 10.06% 9.45% 4.10% 12.81%
- -------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $92,217 $49,736 $35,097 $28,115 $21,401
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 0.80% 0.80% 0.85% 0.85% 0.85%
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 5.27% 5.53% 6.17% 5.84% 6.37%
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 0.83% 0.83% 0.96% 0.99% 0.95%
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 246% 219% 258% 275% 315%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GE Government Securities Fund
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------
Years ended September 30 1999(b,c) 1998(b) 1997(e) 10/31/96 10/31/95
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 9/8/93
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $8.90 $8.53 $8.48 $8.70 $8.43
- -------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) 0.50 0.56 0.53 0.62 0.58
- -------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Securities (both realized and unrealized) (0.68) 0.39 0.05 (0.22) 0.38
- -------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations (0.18) 0.95 0.58 0.40 0.96
- -------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- -------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.58 0.53 0.53 0.54 0.58
- -------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.00 0.00 0.00 0.00 0.00
- -------------------------------------------------------------------------------------------------------------------------------
In Excess of Net Investment Income 0.00 0.00 0.00 0.08 0.11
- -------------------------------------------------------------------------------------------------------------------------------
Returns of Capital 0.00 0.05 0.00 0.00 0.00
- -------------------------------------------------------------------------------------------------------------------------------
Total Distributions 0.58 0.58 0.53 0.62 0.69
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $8.14 $8.90 $8.53 $8.48 $8.70
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Total Return (a) (2.01)% 11.61% 7.13% 4.80% 11.77%
- -------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $42,723 $24,541 $24,027 $29,090 $26,889
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 1.07% 1.10% 0.88% 0.90% 1.01%
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 5.89% 6.52% 6.91% 6.59% 6.78%
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.11% 1.16% 0.88% 0.90% 1.01%
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 101% 64% 110% 334% 316%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
----------
93
- --------------------------------------------------------------------------------
GE Fixed Income Fund
<TABLE>
<CAPTION>
CLASS B
---------------------------------------------------------
Years ended September 30 1999(b) 1998(b) 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 12/22/93
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $12.55 $12.06 $11.70 $11.91 $11.26
- -----------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) 0.55 0.58 0.63 0.60 0.65
- -----------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Securities (both realized and unrealized) (0.78) 0.50 0.36 (0.20) 0.66)
- -----------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations (0.23) 1.08 0.99 0.40 1.31
- -----------------------------------------------------------------------------------------------------------------------------
Less Distributions
- -----------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.55 0.57 0.63 0.61 0.66
- -----------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.00 0.00 0.00 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------
Returns of Capital 0.00 0.02 0.00 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------
Total Distributions 0.55 0.59 0.63 0.61 0.66
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $11.77 $12.55 $12.06 $11.70 $11.91
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Total Return (a) (1.85)% 9.24% 8.64% 3.41% 11.98%
- -----------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $2,854 $1,855 $1,401 $1,673 $234
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 1.55% 1.55% 1.56% 1.60% 1.60%
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 4.54% 4.79% 5.17% 5.19% 5.57%
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.58% 1.85% 2.19% 2.44% 3.50%
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 246% 219% 258% 275% 315%
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS Y
---------------------------------------------------------
Years ended September 30 1999(b) 1998(b) 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 11/29/93
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $12.54 12.05 $11.69 $11.92 $11.27
- -----------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) 0.67 0.71 0.75 0.72 0.77
- -----------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Securities (both realized and unrealized) (0.78) 0.50 0.35 (0.22) 0.65
- -----------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations (0.11) 1.21 1.10 0.50 1.42
- -----------------------------------------------------------------------------------------------------------------------------
Less Distributions
- -----------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.67 0.70 0.74 0.73 0.77
- -----------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.00 0.00 0.00 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------
Returns of Capital 0.00 0.02 0.00 0.00 0.000
- -----------------------------------------------------------------------------------------------------------------------------
Total Distributions 0.67 0.72 0.74 0.73 0.772
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $11.76 $12.54 $12.05 $11.69 $11.92
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Total Return (a) (0.87)% 10.33% 9.74% 4.32% 13.10%
- -----------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $36,152 $30,067 $16,229 $19,098 $6,642
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 0.55% 0.55% 0.56% 0.55% 0.59%
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 5.51% 5.58% 5.97% 6.14% 6.57%
- -----------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 0.58% 0.57% 0.59% 0.57% 2.50%
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 246% 219% 258% 275% 315%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GE Government Securities Fund
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------
Years ended September 30 1999(b) 1998(b) 1997(e) 10/31/96 10/31/95
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 4/22/87
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $8.93 $8.54 $8.49 $8.71 $8.42
- --------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) 0.46 0.52 0.47 0.55 0.51
- --------------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Securities (both realized and unrealized) (0.67) 0.39 0.05 (0.22) 0.41
- --------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations (0.21) 0.91 0.52 0.33 0.92
- --------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- --------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.52 0.48 0.47 0.48 0.52
- --------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.00 0.00 0.00 0.00 0.00
- --------------------------------------------------------------------------------------------------------------------------------
In Excess of Net Investment Income 0.00 0.04 0.00 0.00 0.00
- --------------------------------------------------------------------------------------------------------------------------------
Returns of Capital 0.00 0.00 0.00 0.07 0.11
- --------------------------------------------------------------------------------------------------------------------------------
Total Distributions 0.52 0.52 0.47 0.55 0.63
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $8.20 $8.93 $8.54 $8.49 $8.71
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Total Return (a) (2.42)% 10.99% 6.36% 4.00% 11.19%
- --------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $269,409 $399,675 $523,303 $767,216 $1,112,254
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 1.59% 1.60% 1.63% 1.69% 1.76%
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 5.34% 6.00% 6.15% 5.77% 6.08%
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.63% 1.61% 1.63% 1.69% 1.76%
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 101% 64% 110% 334% 316%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
- ------------------------
94 GE Funds Prospectus
Financial Highlights
- --------------------------------------------------------------------------------
GE Short-Term Government Fund
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------
Years ended September 30 1999(b,c) 1998(b) 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 3/2/94
- --------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $12.02 $11.86 $11.79 $11.91 $11.72
- --------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) 0.55 0.65 0.67 0.63 0.66
- --------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized) (0.25) 0.19 0.08 (0.05) 0.22
- --------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 0.30 0.84 0.75 0.58 0.88
- --------------------------------------------------------------------------------------------------------------------------
Less Distributions
- --------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.56 0.66 0.67 0.64 0.69
- --------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.05 0.02 0.01 0.06 0.00
- --------------------------------------------------------------------------------------------------------------------------
Total Distributions 0.61 0.68 0.68 0.70 0.69
- --------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $11.71 $12.02 $11.86 $11.79 $11.91
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Total Return (a) 2.52% 7.36% 6.57% 4.98% 7.74%
- --------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $23,106 $8,199 $5,319 $3,653 $2,437
- --------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 0.70% 0.70% 0.70% 0.70% 0.70%
- --------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 4.70% 5.47% 5.57% 5.28% 5.62%
- --------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.01% 0.95% 1.07% 1.34% 1.84%
- --------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 118% 185% 265% 201% 415%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GE Tax-Exempt Fund
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------
Years ended September 30 1999(b,c) 1998(b) 1997(e) 10/31/96 10/31/95
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 9/8/93
- --------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $11.83 $11.63 $11.42 $11.31 $10.59
- --------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) 0.49 0.51 0.53 0.62 0.55
- --------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized) (0.69) 0.20 0.22 0.05 0.73
- --------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations (0.20) 0.71 0.75 0.67 1.28
- --------------------------------------------------------------------------------------------------------------------------
Less Distributions
- --------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.49 0.51 0.54 0.56 0.56
- --------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.00 0.00 0.00 0.00 0.00
- --------------------------------------------------------------------------------------------------------------------------
Total Distributions 0.49 0.51 0.54 0.56 0.56
- --------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $11.14 $11.83 $11.63 $11.42 $11.31
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Total Return (a) (1.84)% 6.33% 6.77% 6.13% 12.24%
- --------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $22,228 $5,730 $16,542 $16,169 $16,025
- --------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 1.08% 1.10% 0.35% 0.00% 0.00%
- --------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 4.28% 4.32% 5.01% 5.42% 5.01%
- --------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.21% 1.23% 1.57% 1.52% 1.81%
- --------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 48% 74% 13% 6% 25%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
----------
95
- --------------------------------------------------------------------------------
GE Short-Term Government Fund
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------------
Years ended September 30 1999(b) 1998(b) 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 3/2/94
- ------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $12.01 $11.84 $11.78 $11.90 $11.72
- ------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) 0.48 0.58 0.61 0.56 0.59
- ------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized) (0.26) 0.20 0.06 (0.05) 0.21
- ------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 0.22 0.78 0.67 0.51 0.80
- ------------------------------------------------------------------------------------------------------------------------
Less Distributions
- ------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.48 0.59 0.60 0.57 0.620
- ------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.05 0.02 0.01 0.06 0.00
- ------------------------------------------------------------------------------------------------------------------------
Total Distributions 0.53 0.61 0.61 0.63 0.62
- ------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $11.70 $12.01 $11.84 $11.78 $11.90
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
Total Return (a) 1.91% 6.83% 5.84% 4.35% 7.01%
- ------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $641 $895 $1,031 $145 $83
- ------------------------------------------------------------------------------------------------------------------------
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* 4.10% 4.87% 4.84% 4.67% 5.07%
- ------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.61% 1.88% 7.77% 3.35% 3.35%
- ------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 118% 185% 265% 201% 415%
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS Y(d)
----------------------------------------------------------
Years ended September 30 1999(b) 1998(b) 1997(b) 1996(b) 1995
- ----------------------------------------------------------------------------------------------------------------------
Inception date -- -- -- -- 3/2/94
- ----------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $12.01 $11.85 $11.78 $11.90 $11.72
- ----------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) 0.58 0.68 0.70 0.66 0.69
- ----------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized) (0.25) 0.19 0.08 (0.05) 0.21
- ----------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 0.33 0.87 0.78 0.61 0.90
- ----------------------------------------------------------------------------------------------------------------------
Less Distributions
- ----------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.58 0.69 0.70 0.67 0.72
- ----------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.05 0.02 0.01 0.06 0.00
- ----------------------------------------------------------------------------------------------------------------------
Total Distributions 0.63 0.71 0.71 0.73 0.72
- ----------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $11.71 $12.01 $11.85 $11.78 $11.90
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Total Return (a) 2.87% 7.65% 6.83% 5.24% 7.92%
- ----------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $3,140 $9,444 $7,717 $7,786 $8,048
- ----------------------------------------------------------------------------------------------------------------------
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* 4.91% 5.74% 5.80% 5.54% 5.89%
- ----------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 0.76% 0.68% 0.68% 0.83% 0.98%
- ----------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 118% 185% 265% 201% 415%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GE Tax-Exempt Fund
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------------
Years ended September 30 1999(b) 1998(b) 1997(e) 10/31/96 10/31/95
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 9/8/93
- ------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $11.83 $11.63 $11.44 $11.32 $10.60
- ------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) 0.43 0.44 0.51 0.62 0.55
- ------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized) (0.70) 0.21 0.21 0.06 0.73
- ------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations (0.27) 0.65 0.72 0.68 1.28
- ------------------------------------------------------------------------------------------------------------------------
Less Distributions
- ------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.43 0.45 0.53 0.56 0.56
- ------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------
Total Distributions 0.43 0.45 0.53 0.56 0.56
- ------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $11.13 $11.83 $11.63 $11.44 $11.32
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
Total Return (a) (2.34)% 5.68% 6.46% 6.12% 12.33%
- ------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $7,269 $8,905 $10,133 $9,184 $7,668
- ------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 1.60% 1.60% 0.57% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 3.72% 3.81% 4.79% 5.43% 5.01%
- ------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.75% 1.71% 2.32% 2.26% 2.56%
- ------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 48% 74% 13% 6% 25%
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS Y
------------------------------------------------------------
Years ended September 30 1999(b) 1998(b) 1997
- ------------------------------------------------------------------------------------------------------------------------
Inception date -- -- 9/26/97
- ------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $12.30 $12.10 $12.09
- ------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
Net Investment Income (Loss) 0.57 0.58 0.02
- ------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized) (0.72) 0.27 0.00
- ------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations (0.15) 0.85 0.02
- ------------------------------------------------------------------------------------------------------------------------
Less Distributions
- ------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.57 0.65 0.01
- ------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------
Total Distributions 0.57 0.65 0.01
- ------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $11.58 $12.30 $12.10
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
Total Return (a) (1.37)% 7.30% 0.11%
- ------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $24 $24 $3,216
- ------------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 0.59% 0.60% 0.54%
- ------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 4.72% 4.74% 4.31%
- ------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 0.74% 1.25% 0.56%
- ------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 48% 74% 13%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
- -----------------
96 GE Funds
Prospectus
Financial
Highlights
- --------------------------------------------------------------------------------
GE Strategic Investment Fund
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------
Years ended September 30 1999(b,c) 1998(b) 1997(b) 1996(b) 1995(b)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 1/5/93
- ---------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $24.15 $24.11 $20.38 $18.46 $15.72
- ---------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
- ---------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) 0.55 0.61 0.59 0.54 0.53
- ---------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized) 2.98 0.73 3.88 1.92 2.59
- ---------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 3.53 1.34 4.47 2.46 3.12
- ---------------------------------------------------------------------------------------------------------------------
Less Distributions
- ---------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.56 0.52 0.49 0.46 0.38
- ---------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 2.08 0.78 0.25 0.08 0.00
- ---------------------------------------------------------------------------------------------------------------------
Total Distributions 2.64 1.30 0.74 0.54 0.38
- ---------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $25.04 $24.15 $24.11 $20.38 $18.46
- ---------------------------------------------------------------------------------------------------------------------
Total Return (a) 15.28% 5.88% 22.45% 13.58% 20.35%
- ---------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $107,034 $49,540 $40,516 $26,467 $17,821
- ---------------------------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 0.87% 0.85% 0.90% 0.90% 0.90%
- ---------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 2.17% 2.49% 2.66% 2.81% 3.21%
- ---------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 0.87% 0.85% 0.94% 1.05% 1.03%
- ---------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 109% 119% 106% 93% 98%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GE High
Yield Fund
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS Y
------- ------- -------
1999(b,c) 1999(b) 1999(b)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Inception Date 12/31/98 12/31/98 12/31/98
- ---------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $10.00 $10.00 $10.00
- ---------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
- ---------------------------------------------------------------------------------------------------
Net Investment Income (Loss) 0.55 0.48 0.55
- ---------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gains (Losses) on Investments (0.49) (0.48) (0.48)
- ---------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 0.06 0.00 0.07
- ---------------------------------------------------------------------------------------------------
Less Distributions from:
- ---------------------------------------------------------------------------------------------------
Net Investment Income 0.53 0.47 0.54
- ---------------------------------------------------------------------------------------------------
Net Realized Gains 0.00 0.00 0.00
- ---------------------------------------------------------------------------------------------------
Total Distributions 0.53 0.47 0.54
- ---------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $9.53 $9.53 $9.53
- ---------------------------------------------------------------------------------------------------
Total Return (a) 0.53% (0.03)% 0.71%
- ---------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $1,931 $154 $20,126
- ---------------------------------------------------------------------------------------------------
Ratio of Net Expenses to Average Net Assets* 0.89% 1.70% 0.70%
- ---------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 7.57% 6.53% 7.49%
- ---------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 1.16% 2.05% 0.98%
- ---------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 27% 27% 27%
- ---------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
----------
97
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B CLASS Y(d)
- ---------------------------------------------------------------------------------------------------------
1999(b) 1998(b) 1997(b) 1996(b) 1995(b) 1999(b) 1998(b) 1997(b) 1996(b) 1995
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-- -- -- -- 12/22/93 -- -- -- -- 11/29/93
- ---------------------------------------------------------------------------------------------------------
$23.65 $23.70 $20.04 $18.26 $15.62 $24.20 $24.16 $20.44 $18.49 $15.74
- ---------------------------------------------------------------------------------------------------------
0.35 0.42 0.42 0.41 0.40 0.61 0.67 0.64 0.63 0.55
- ---------------------------------------------------------------------------------------------------------
2.93 0.69 3.82 1.87 2.58 2.99 0.72 3.89 1.90 2.62
- ---------------------------------------------------------------------------------------------------------
3.28 1.11 4.24 2.28 2.98 3.60 1.39 4.53 2.53 3.17
- ---------------------------------------------------------------------------------------------------------
0.40 0.38 0.33 0.42 0.34 0.62 0.57 0.56 0.50 0.42
- ---------------------------------------------------------------------------------------------------------
2.08 0.78 0.25 0.08 0.00 2.08 0.78 0.25 0.08 0.00
- ---------------------------------------------------------------------------------------------------------
2.48 1.16 0.58 0.50 0.34 2.70 1.35 0.81 0.58 0.42
- ---------------------------------------------------------------------------------------------------------
$24.45 $23.65 $23.70 $20.04 $18.26 $25.10 $24.20 $24.16 $20.44 $18.49
- ---------------------------------------------------------------------------------------------------------
14.44% 4.91% 21.57% 12.73% 19.53% 15.56% 6.10% 22.76% 13.95% 20.70%
- ---------------------------------------------------------------------------------------------------------
$16,372 $11,158 $5,685 $3,701 $882 $62,714 $51,802 $37,924 $36,162 $18,665
- ---------------------------------------------------------------------------------------------------------
1.62% 1.63% 1.65% 1.65% 1.65% 0.62% 0.64% 0.65% 0.58% 0.65%
- ---------------------------------------------------------------------------------------------------------
1.44% 1.72% 1.92% 2.11% 2.46% 2.41% 2.70% 2.90% 3.16% 3.46%
- ---------------------------------------------------------------------------------------------------------
1.62% 1.63% 1.93% 2.10% 3.50% 0.62% 0.64% 0.65% 0.59% 0.97%
- ---------------------------------------------------------------------------------------------------------
109% 119% 106% 93% 98% 109% 119% 106% 93% 98%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
GE Money
Market Fund
<TABLE>
<CAPTION>
Years ended September 30 1999(b) 1998(b) 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 1/5/93
- ------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Investment Operations
- ------------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) 0.05 0.05 0.05 0.05 0.05
- ------------------------------------------------------------------------------------------------------------------------
Net Gains (Losses) on Investments (both realized and unrealized) 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Investment Operations 0.05 0.05 0.05 0.05 0.05
- ------------------------------------------------------------------------------------------------------------------------
Less Distributions:
- ------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) 0.05 0.05 0.05 0.05 0.05
- ------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------
Total Distributions 0.05 0.05 0.05 0.05 0.05
- ------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------------------------------------------------
Total Return (a) 4.68% 5.23% 5.14% 5.18% 5.52%
- ------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
- ------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $196,155 $153,665 $114,030 $85,842 $71,664
- ------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets* 0.49% 0.50% 0.47% 0.45% 0.45%
- ------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to Average Net Assets* 4.58% 5.11% 5.04% 5.06% 5.32%
- ------------------------------------------------------------------------------------------------------------------------
Ratio of Gross Expenses to Average Net Assets* 0.50% 0.52% 0.56% 0.66% 0.70%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
- ------------------
98 GE Funds
Prospectus
Financial
Highlights
- --------------------------------------------------------------------------------
Notes to Financial Highlights
(a) Total returns are historical and assume changes in share price, reinvestment
of dividends and capital gains distribution, and assume no sales charge. Had GE
Asset Management 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) Effective as of the close of business September 17, 1999, Class C shares of
GE Funds were combined with Class A shares. The current year and prior years'
per share information, total return, and ration/supplemental data reflect the
relevant information of the predecessor Class C shares for all Funds except for
the GE Value Equity Fund, GE Mid-Cap Growth Equity Fund, GE Government
Securities Fund and GE Tax-Exempt Fund where the relevant information for Class
A shares was retained. Also see Note 10 of Notes to Financial Statements in the
Funds' Annual Report.
(d) Effective as of the close of business September 17, 1999, Class D shares are
renamed Class Y shares.
(e) For the period November 1, 1996 through September 30, 1997.
* Annualized for periods less than one year.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
[This page intentionally left blank.]
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
[This page intentionally left blank.]
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
GE Funds
Prospectus
- --------------------------------------------------------------------------------
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 include performance numbers
and a discussion of market conditions and investment strategies that
significantly 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).
You may visit the SEC's Internet Website (http://www.sec.gov) to view the
Annual/Semi-Annual Reports, the SAI and other information about the GE Funds.
Also, you can obtain copies of this information, after paying a duplicating fee,
by sending your request electronically to the following e-mail address:
[email protected] or writing to the SEC's Public Reference Section, Washington,
D.C. 20549-0102. 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 1-202-942-8090.
- --------------------------------------------------------------------------------
GE Funds
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 Adviser
GE Asset Management
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
Investment Company Act file number: 811-7142
- --------------------------------------------------------------------------------
GEF-PRO-1
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
January 29, 2000
GE FUNDS
3003 Summer Street, Stamford, Connecticut 06905
For information, call (800) 242-0134
* GE Premier Growth Equity Fund * GE Emerging Markets Fund
* GE U.S. Equity Fund * GE International Fixed Income Fund
* GE Small-Cap Growth Equity Fund * GE Strategic Investment Fund
* GE Small-Cap Value Equity Fund * GE Tax-Exempt Fund
* GE Mid-Cap Growth Fund * GE High Yield Fund
* GE Mid-Cap Value Equity Fund * GE Fixed Income Fund
* GE Value Equity Fund * GE Government Securities Fund
* GE Global Equity Fund * GE Short-Term Government Fund
* GE International Equity Fund * GE Money Market Fund
* GE Europe Equity Fund
Contents Page
-------- ----
Investment Strategies and Risks................................................2
Investment Restrictions.......................................................40
Portfolio Transactions and Turnover...........................................46
Management of the Trust.......................................................48
Purchase, Redemption and Exchange of Shares...................................58
Net Asset Value...............................................................73
Dividends, Distributions and Taxes............................................75
The Funds' Performance........................................................81
Principal Stockholders........................................................88
Fund History and Additional Information......................................101
Financial Statements.........................................................103
Appendix.....................................................................A-1
This Statement of Additional Information ("SAI") supplements the
information contained in the current Prospectus of GE Funds (the "Trust") dated
January 29, 2000 (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, 1999 and the Auditor's Report
thereon are incorporated by reference to the Trust's Annual Report. In addition,
the annual report dated October 31, 1996 for certain Investor Trust Funds which
are predecessor funds to the GE Mid-Cap Growth Fund, GE Value Equity Fund, GE
Tax-Exempt Fund, and GE Government Securities Fund is incorporated herein by
reference. Each of these Reports may be obtained without charge by calling the
Trust at the telephone number listed above. Information regarding the status of
shareholder accounts may be obtained by calling the Trust at the telephone
number listed above or by writing to the Trust at P.O. Box 120065, Stamford, CT
06912-0065. Terms that are defined in the Prospectus shall have the same
meanings in this SAI.
1
<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 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. 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,
1999, the market capitalization of companies in the Index ranged from $10
million to $13.04 billion.
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.
2
<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 Asset Management Incorporated ("GEAM"), 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 GEAM 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. In seeking
its investment objective, the Fund invests primarily in a variety of investment
grade 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.
Government Securities Fund. The investment objective of the
Government 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
3
<PAGE>
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 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.
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
4
<PAGE>
among them from time to time.
GEAM 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, GEAM 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 and techniques. The Funds are not obligated to pursue the following
strategies or techniques and do not represent that these strategies or
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.
The following tables summarize the investment techniques that may be
employed by a fund. Certain techniques and limitations may be changed at the
discretion of GE Asset Management. Percentage figures refer to the percentage of
a Fund's assets that may be invested in accordance with the indicated technique.
5
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Restricted Purchasing Purchasing
Reverse 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>
U.S. Equity Fund 33.33% Yes No Yes No Yes Yes
- --------------------------------------------------------------------------------------------------------------------------------
Premier Growth Equity 33.33% Yes No Yes No Yes Yes
Fund
- --------------------------------------------------------------------------------------------------------------------------------
Value Equity Fund 33.33% Yes Yes Yes No Yes Yes
- --------------------------------------------------------------------------------------------------------------------------------
Mid-Cap Growth Fund 33.33% Yes No Yes No Yes Yes
- --------------------------------------------------------------------------------------------------------------------------------
Mid-Cap Value Equity 33.33% Yes No Yes Yes Yes Yes
Fund
- --------------------------------------------------------------------------------------------------------------------------------
Small-Cap Value 33.33% Yes Yes Yes No Yes Yes
Equity Fund
- --------------------------------------------------------------------------------------------------------------------------------
Global Equity Fund 33.33% Yes No Yes No Yes Yes
- --------------------------------------------------------------------------------------------------------------------------------
International Equity 33.33% Yes No Yes No Yes Yes
Fund
- --------------------------------------------------------------------------------------------------------------------------------
Europe Equity Fund 33.33% Yes Yes Yes Yes Yes Yes
- --------------------------------------------------------------------------------------------------------------------------------
Emerging Markets Fund 33.33% Yes Yes Yes No Yes Yes
- --------------------------------------------------------------------------------------------------------------------------------
Fixed Income Fund 33.33% Yes No Yes Yes Yes Yes
- --------------------------------------------------------------------------------------------------------------------------------
Government Securities 33.33% Yes Yes Yes Yes Yes Yes
Fund
- --------------------------------------------------------------------------------------------------------------------------------
Short-Term Government 33.33% Yes No Yes Yes Yes Yes
Fund
- --------------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Fund 10% Yes Yes Yes No Yes Yes
- --------------------------------------------------------------------------------------------------------------------------------
High Yield Fund 33.33% Yes Yes Yes Yes Yes Yes
- --------------------------------------------------------------------------------------------------------------------------------
Strategic Investment 33.33% Yes No Yes Yes Yes Yes
Fund
- --------------------------------------------------------------------------------------------------------------------------------
Money Market Fund 33.33% Yes Yes No No No No
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Maximum Maximum When-Issued
Futures and Forward Options on Investment in Investment in and Delayed
Options on Currency Foreign Maximum Below-Investment Foreign Delivery
Futures Transactions Currencies Investment in Grade Debt Securities Securities
Debt Securities Securities
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. Equity Fund Yes Yes Yes 35% 5% 15%* Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Premier Growth Yes Yes No 35% 5% 25%* Yes
Equity Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Value Equity Fund Yes Yes Yes 35% 5% 25%* Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Mid-Cap Growth Fund Yes Yes Yes 35% (maximum 10% in BB or 35%* Yes
of 25% in BBB B by S&P or
by S&P, Baa Ba or B by
by Moody's or Moody's or
equivalent) equivalent
- ------------------------------------------------------------------------------------------------------------------------------------
Mid-Cap Value Yes Yes Yes 35% 15% in 15%* Yes
Equity Fund securities
rated BBB or
below by S&P
or Baa or
below by
Moody's or
equivalent
- ------------------------------------------------------------------------------------------------------------------------------------
Small-Cap Value No No No 35% 10% 10%* Yes
Equity Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Global Equity Fund Yes Yes Yes 35% 5% 100% Yes
- ------------------------------------------------------------------------------------------------------------------------------------
International Yes Yes Yes 35% 5% 100% Yes
Equity Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Europe Equity Fund Yes Yes Yes 35% 15% 100% Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Emerging Markets Yes Yes Yes 35% (maximum 10% in BB or 100% Yes
Fund of 25% in BBB B by S&P or
by S&P, Baa by Ba or B by
Moody's or Moody's or
equivalent) equivalent
- ------------------------------------------------------------------------------------------------------------------------------------
Fixed Income Fund Yes Yes Yes 100% (maximum 10% in BB or 35%* Yes
of 25% in BBB B by S&P or
by S&P or Baa Ba or B by
by Moody's or Moody's or
equivalent) equivalent
- ------------------------------------------------------------------------------------------------------------------------------------
100% (maximum
of 10% in BBB
by S&P or Baa
by Moody's or
Government equivalent;
Securities Fund Yes Yes Yes maximum of 25% None 35%* Yes
in A or lower
by S&P,
Moody's or
equivalent)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Maximum Maximum When-Issued
Futures and Forward Options on Investment in Investment in and Delayed
Options on Currency Foreign Maximum Below-Investment Foreign Delivery
Futures Transactions Currencies Investment in Grade Debt Securities Securities
Debt Securities Securities
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Short-Term Yes Yes Yes 100% None 35%* Yes
Government Fund
- ------------------------------------------------------------------------------------------------------------------------------------
5% in debt
100% (maximum downgraded
of 10% in BBB below
Tax-Exempt Fund Yes No No by S&P or Baa investment None Yes
by Moody's or grade
equivalent) subsequent to
purchase
- ------------------------------------------------------------------------------------------------------------------------------------
High Yield Fund Yes Yes Yes 100% 100% 35%* Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Strategic Yes Yes Yes 100% (maximum 10% in BB or 30%* Yes
Investment Fund of 25% in BBB B by S&P or
by S&P or Baa Ba or B by
by Moody's or Moody's or
equivalent) equivalent
- ------------------------------------------------------------------------------------------------------------------------------------
Money Market Fund No No No 100% None 25%* Yes
- ------------------------------------------------------------------------------------------------------------------------------------
</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.
8
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Debt Securities
Obligations of Floating and Participation
Lending Rule 144A of Other Variable Interests in
Portfolio Securities Supranational Depositary Investment Municipal Rate Municipal
Securities Agencies Receipts Funds Leases Instruments Obligations
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Equity Fund Yes Yes Yes Yes No No No* No
- ------------------------------------------------------------------------------------------------------------------------------------
Premier Growth Equity Yes Yes Yes Yes Yes No No* No
Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Value Equity Fund Yes Yes Yes Yes Yes No No* No
- ------------------------------------------------------------------------------------------------------------------------------------
Mid-Cap Growth Fund Yes Yes Yes Yes Yes No No* No
- ------------------------------------------------------------------------------------------------------------------------------------
Mid-Cap Value Equity Yes Yes Yes Yes Yes No No* No
Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Small-Cap Value Yes Yes Yes Yes Yes No No* No
Equity Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Global Equity Fund Yes Yes Yes Yes Yes No No* No
- ------------------------------------------------------------------------------------------------------------------------------------
International Equity Yes Yes Yes Yes Yes No No* No
Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Europe Equity Fund Yes Yes Yes Yes Yes No Yes No
- ------------------------------------------------------------------------------------------------------------------------------------
Emerging Markets Fund Yes Yes Yes Yes Yes No No* No
- ------------------------------------------------------------------------------------------------------------------------------------
Fixed Income Fund Yes Yes Yes Yes Yes No Yes No
- ------------------------------------------------------------------------------------------------------------------------------------
Government Securities Yes Yes Yes Yes Yes No Yes No
Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Short-Term Government Yes Yes Yes Yes Yes No Yes No
Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Fund Yes Yes Yes No Yes Yes Yes Yes
- ------------------------------------------------------------------------------------------------------------------------------------
High Yield Fund Yes Yes Yes Yes Yes No Yes No
- ------------------------------------------------------------------------------------------------------------------------------------
Strategic Investment Yes Yes Yes Yes Yes Yes Yes Yes
Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Money Market Fund Yes Yes Yes No No No Yes No
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Excludes commercial paper and notes with variable and floating rates of
interest.
9
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Mortgage Government Asset-Backed
Custodial Related Stripped Securities
Municipal Receipts on Securities, Mortgage and Short
Zero Coupon Obligations Municipal including Related Receivable- Mortgage Sales
Obligations Components Obligations CMOs Securities Backed Dollar Against
Securities Rolls the Box
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Equity Fund Yes No No No No No No No
- ------------------------------------------------------------------------------------------------------------------------------------
Premier Growth Equity No No No No No No No No
Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Value Equity Fund No No No No No No No Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Mid-Cap Growth Fund No No No No No No No Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Mid-Cap Value Equity Fund Yes No No No No No No Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Small-Cap Value Equity No No No No No No No Yes
Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Global Equity Fund No No No No No No No Yes
- ------------------------------------------------------------------------------------------------------------------------------------
International Equity Fund No No No No No No No Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Europe Equity Fund No No No No No No No Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Emerging Markets Fund No No No No No No No Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Fixed Income Fund Yes No No Yes Yes Yes Yes No
- ------------------------------------------------------------------------------------------------------------------------------------
Government Securities Yes No No Yes Yes Yes Yes Yes
Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Short-Term Government Yes No No Yes Yes Yes Yes No
Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Fund Yes Yes Yes No No No No Yes
- ------------------------------------------------------------------------------------------------------------------------------------
High Yield Fund Yes No No Yes Yes Yes Yes Yes
- ------------------------------------------------------------------------------------------------------------------------------------
Strategic Investment Fund Yes Yes Yes Yes Yes Yes Yes No
- ------------------------------------------------------------------------------------------------------------------------------------
Money Market Fund No No No No No No No No
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
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 GEAM 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
11
<PAGE>
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 GEAM 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 GEAM. No advisory fee is charged by
GEAM 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 GEAM, 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.
12
<PAGE>
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
13
<PAGE>
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.
14
<PAGE>
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
15
<PAGE>
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 GEAM cannot predict how this market will
develop.
16
<PAGE>
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
17
<PAGE>
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.
18
<PAGE>
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."
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.
19
<PAGE>
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 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
20
<PAGE>
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 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,
21
<PAGE>
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 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
22
<PAGE>
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 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
23
<PAGE>
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 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
24
<PAGE>
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.
25
<PAGE>
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
26
<PAGE>
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.
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 fluctuation limits so that adverse
market movements could continue with respect to those contracts to an unlimited
extent over a period of time. If a devaluation is generally anticipated, a Fund
may not be able to sell currency at a price above the anticipated devaluation
level. In
27
<PAGE>
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.
28
<PAGE>
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.
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.
29
<PAGE>
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 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
30
<PAGE>
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.
31
<PAGE>
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,
32
<PAGE>
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
33
<PAGE>
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,
34
<PAGE>
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
35
<PAGE>
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)
36
<PAGE>
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
37
<PAGE>
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
38
<PAGE>
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.
39
<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.
40
<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
41
<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
42
<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
43
<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.
44
<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.
45
<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 many
foreign exchanges, commissions are fixed and may be higher than for securities
traded on U.S. exchanges. Generally, no stated commissions are 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.
The following table shows the total amount of brokerage commissions paid by each
Fund over the past three fiscal years. Variations in the amount of brokerage
commissions paid by a Fund from year to year may result from changing asset
levels, market conditions or changes in the Investment Manager's outlook.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Fund Year ended Year ended Year ended
September 30, 1999 September 30, 1998 September 30, 1997
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Equity $603,739 $347,560 $218,896
- ------------------------------------------------------------------------------------------------------------
Premier Growth $88,942 $45,824 $14,844
- ------------------------------------------------------------------------------------------------------------
Value Equity $63,854 $53,784 $91,033
- ------------------------------------------------------------------------------------------------------------
Mid-Cap Growth $46,906 $29,220 $151,399
- ------------------------------------------------------------------------------------------------------------
Mid-Cap Value $22,182 N/A N/A
- ------------------------------------------------------------------------------------------------------------
Small-Cap Value $203,737 N/A N/A
- ------------------------------------------------------------------------------------------------------------
Global Equity $154,978 $196,841 $204,750
- ------------------------------------------------------------------------------------------------------------
International Equity $141,546 $261,481 $268,970
- ------------------------------------------------------------------------------------------------------------
Europe Equity $37,935 N/A N/A
- ------------------------------------------------------------------------------------------------------------
Emerging Markets Equity $89,704 N/A N/A
- ------------------------------------------------------------------------------------------------------------
Strategic Investment $106,613 $135,540 $91,950
- ------------------------------------------------------------------------------------------------------------
</TABLE>
46
<PAGE>
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. The
Investors Trust Tax 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.
In selecting brokers or dealers to execute securities transactions
on behalf of a Fund, the Investment Manager seeks the most favorable terms
available under the circumstances ("best execution"). In assessing the overall
terms available to ensure best execution 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
GEAM 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. Such services
include analyses and reports regarding issuers, industries, economic trends,
portfolio strategy, and may effect securities transactions and perform certain
functions related thereto. In addition, such services may include advice
concerning the advisability of investing in, purchasing or selling securities
and the availability of particular securities or buyers or sellers of
securities. The research services received from broker-dealers that execute
transactions on behalf of a Fund may be useful to the Investment Manager in
servicing that Fund as well as all of the Investment Manager's accounts and not
all of these services may be used in connection with the particular Fund or
Funds generating the commissions. Consistent with limits established by the
Federal Securities Laws, a Fund may pay a broker-dealer commissions for agency
transactions that exceed the amount of commissions charged by other
broker-dealers in recognition of their research and brokerage services. In
addition, subject to the overall policy of best execution, the investment
manager may consider sales of Fund shares in selecting brokers or dealers to
execute securities transactions on behalf of a Fund.
The following table shows the dollar amount of brokerage commissions
paid to firms that provided research and execution services and the approximate
dollar amount of transactions involved during the fiscal period ended September
30, 1999.
47
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Fund Commissions Paid to Firms for Total Amount of Transactions for
Brokerage and Research Services Brokerage and Research Services
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. Equity $73,600 $72,846,985
- ----------------------------------------------------------------------------------------------------------------
Premier Growth $7,989 $9,401,614
- ----------------------------------------------------------------------------------------------------------------
Value Equity $9,989 $9,590,583
- ----------------------------------------------------------------------------------------------------------------
Mid-Cap Growth $2,236 $1,354,197
- ----------------------------------------------------------------------------------------------------------------
Mid-Cap Value $1,375 $1,248,221
- ----------------------------------------------------------------------------------------------------------------
Global Equity $8,638 $8,335,342
- ----------------------------------------------------------------------------------------------------------------
International Equity $6,951 $4,056,770
- ----------------------------------------------------------------------------------------------------------------
Europe Equity $588 $327,261
- ----------------------------------------------------------------------------------------------------------------
Emerging Markets Equity $4,103 $1,167,100
- ----------------------------------------------------------------------------------------------------------------
Strategic Investment $10,106 $12,647,365
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
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. All brokerage commissions paid to
affiliates will be fair and reasonable. 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 generally may not execute transactions for a Fund on the floor of
any national securities exchange, but may effect transactions by transmitting
orders for execution providing for clearance and settlement, and arranging for
the performance of those functions by members of
48
<PAGE>
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.
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. Variations in portfolio
turnover rate may be due to fluctuations in shareholder purchase, exchange and
redemption transactions, market conditions or changes in the Investment
Manager's outlook. 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. The following table
provides the portfolio turnover rates for each Fund for the fiscal periods ended
September 30, 1999 and September 30, 1998.
- -------------------------------------------------------------------------------
Fund Portfolio Turnover for Portfolio Turnover for
Period Ended 9/30/99 Period Ended 9/30/98
- -------------------------------------------------------------------------------
U.S. Equity 46% 29%
- -------------------------------------------------------------------------------
Premier Growth 26% 35%
- -------------------------------------------------------------------------------
Value Equity 31% 40%
- -------------------------------------------------------------------------------
Mid-Cap Growth 48% 13%
- -------------------------------------------------------------------------------
Mid-Cap Value 17% N/A
- -------------------------------------------------------------------------------
Small-Cap Value 182% N/A
- -------------------------------------------------------------------------------
Global Equity 64% 71%
- -------------------------------------------------------------------------------
International Equity 51% 93%
- -------------------------------------------------------------------------------
Europe Equity 47% N/A
- -------------------------------------------------------------------------------
Emerging Markets Equity 59% N/A
- -------------------------------------------------------------------------------
Fixed Income 246% 219%
- -------------------------------------------------------------------------------
Government Securities 101% 64%
- -------------------------------------------------------------------------------
49
<PAGE>
- -------------------------------------------------------------------------------
Fund Portfolio Turnover for Portfolio Turnover for
Period Ended 9/30/99 Period Ended 9/30/98
- -------------------------------------------------------------------------------
Short-Term Government 118% 185%
- -------------------------------------------------------------------------------
Tax-Exempt 48% 74%
- -------------------------------------------------------------------------------
High Yield 27% N/A
- -------------------------------------------------------------------------------
Strategic Investment 109% 119%
- -------------------------------------------------------------------------------
Money Market N/A N/A
- -------------------------------------------------------------------------------
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
GEAM.
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 GEAM 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.
50
<PAGE>
Position(s) Held Age and Principal Occupation(s)
Name and Address With Trust During Past Five Years
- ---------------- ---------- ----------------------
*Michael J. Cosgrove Chairman of the Age 50. President, GE Asset
Board and Management Services of GE
President Financial Assurance Holdings,
Inc. ("GEFA"), an indirect
wholly-owned subsidiary of
General Electric Company
("GE"), since February 1997;
Vice President, GE Capital
Corporation, an indirect
wholly-owned subsidiary of GE,
since December 1999, Executive
Vice President - Mutual Funds
of GEAM 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 GEAM since
1988; from 1988 until 1993, Mr.
Cosgrove served as Executive
Vice President - Finance and
Administration of GEAM 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 53. Executive Vice
Executive Vice President, General Counsel and
President Secretary of GEAM since 1988
and of GEIC since October 1987.
John R. Costantino Trustee Age 53. Managing Director,
150 East 58th Street Walden Partners, Ltd.,
New York, NY 10055 consultants and investors,
since August 1992; President,
CMG Acquisition Corp., Inc., a
holding company, since 1988;
Vice Chairman, Acoustiguide
Holdings, Inc., a holding
company, since 1989; President
CMG/IKH, Inc., a holding
company, since 1991; Director,
Crossland Federal Savings Bank,
a financial institution;
Director, Brooklyn Bankcorp,
Inc., a financial institution;
Director, IK Holdings, Inc., a
holding company since 1991;
Director, I. Kleinfeld & Son,
Inc., a retailer, since 1991;
Director, High Performance
Appliances, Inc., a distributor
of kitchen appliances ("HPA"),
since 1991; Director, HPA Hong
Kong, Ltd., a service
subsidiary of HPA, since 1991;
Director, Lancit Media
Productions, Ltd., a children's
and family television film and
videotape production company,
since 1995.
51
<PAGE>
Position(s) Held Age and Principal Occupation(s)
Name and Address With Trust During Past Five Years
- ---------------- ---------- ----------------------
William J. Lucas Trustee Age 52. Vice President and
Fairfield University Treasurer of Fairfield
North Benson Road University since 1983.
Fairfield, CT 06430
Robert P. Quinn Trustee Age 63. Retired since 1983 from
45 Shinnecock Road Salomon Brothers Inc.;
Quogue, NY 11959 Director, GP Financial Corp.,
a holding company, since 1994;
Director, The Greenpoint
Savings Bank, a financial
institution, since 1987.
Michael Tansley Treasurer Age 35. Manager of Fund
Administration at GEAM 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 38. Vice President and
General Counsel, Investment
Services Group of GEFA since
February 1997; Vice President,
Associate General Counsel and
Assistant Secretary of GEAM and
GEIC since October 1992.
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 GEAM, 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.
52
<PAGE>
Trustees' Compensation
(for the fiscal year ended September 30, 1999)
Total Compensation Total Compensation from Investment
Name of Trustee From the Trust Companies Managed by GEAM or GEIC
- --------------- -------------- ----------------------------------
Michael J. Cosgrove None None+
Alan M. Lewis None None+
John R. Costantino $17,250 $25,250++
William J. Lucas $17,250 $25,250++
Robert P. Quinn $17,250 $25,250++
- -----------------------
+ As of September 30, 1999, Mr. Cosgrove served as Trustee or Director of
four investment companies advised by GEAM and of eight investment
companies advised by GEIC. Mr. Lewis serves as Trustee of three investment
companies advised by GEAM and eight investment companies advised by GEIC.
They are considered to be interested persons of each investment company
advised by GEAM 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, 1999, Messrs. Costantino, Lucas and Quinn served as
Trustees or Directors of four investment companies advised by GEAM and the
compensation is for their services as Trustees or Directors of these
companies.
Investment Adviser and Administrator
GEAM serves as the Trust's investment adviser and administrator.
GEAM 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. GEAM, 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. GEAM 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 GEAM serve in similar
capacities with respect to GEIC, a sister company of GEAM wholly owned by GE,
which provides investment advisory services with respect to GE's pension and
benefit plans and a number of funds offered exclusively to GE employees,
retirees and certain related persons. These funds include the Elfun family of
Funds (the first of which, Elfun Trusts, was established in 1935) and the funds
offered as part of GE's 401(k) program (also known as the GE Savings and
Security Program), which are referred to as the GE S&S Program Mutual Fund and
the GE S&S Long Term Interest Fund. The investment professionals at GEAM and
GEIC and their predecessors have managed GE's pension assets since 1927. GEAM
and GEIC oversaw more than
53
<PAGE>
$106 billion and managed assets in excess of $82 billion as of December 31,
1999, of which more than $18 billion was invested in mutual fund assets.
GEAM Investment Advisory and Administration Agreements
The duties and responsibilities of GEAM are specified in investment
advisory and administration agreements (each, an "Advisory Agreement" and
collectively, the "Advisory Agreements") between GEAM and the Trust on behalf of
the respective Funds. Under each Advisory Agreement, GEAM, 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. GEAM 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. GEAM 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. GEAM 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. GEAM, 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.
GEAM 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 GEAM 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 GEAM may render similar
advisory and administrative services to other clients so long as when a Fund or
any other client served by GEAM 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 GEAM to be equitable to the Fund. The Advisory
Agreements also provide that GEAM shall not be liable for any error of judgment
or mistake of law or for any loss incurred by a Fund in connection with GEAM's
services pursuant to the Agreement, except for a loss resulting from willful
misfeasance, bad faith or gross negligence in the performance of its duties or
from reckless disregard of its obligations and duties under the Agreement.
Each Advisory Agreement is effective from its date of execution, and
continues in effect for an initial two-year term and will continue from year to
year thereafter so long as its continuance is approved annually by (a) the Board
of Trustees or (b) a vote of a majority of the relevant Fund's outstanding
voting securities, provided that in either event the continuance also is
approved by the vote of a majority of the Trustees who are not parties to the
Agreement or
54
<PAGE>
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 GEAM 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 GEAM provide that, if GEAM ceases to act as the investment
adviser to the Trust, at GEAM'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 GEAM 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%.
GEAM has agreed to waive or reimburse the Funds for operating
expenses that exceed specified limits (exclusive of interest, taxes, securities
lending fees, brokerage commissions and extraordinary expenses) and, in some
cases, to waive a portion of its management fee. GEAM retains the right to be
repaid for these expense reimbursements to the extent that a Fund's expenses
fall below the limit. Expense reimbursements and management fee waivers by GEAM
will increase a Fund's return and repayment of the expense reimbursement by a
Fund will lower its return. The following table provides total investment
advisory and administration fees paid by each Fund, and, where applicable, total
fees and expenses waived for the last three fiscal years.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Fund Total Fees for Fees and Total Fees Fees and Total Fees for Fees and
Fiscal Year expenses for Fiscal expenses Fiscal Year expenses
ended waived Year ended waived ended waived
9/30/99 9/30/99 9/30/98 9/30/98 9/30/97 9/30/97
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Equity $2,639,031 $137,157 $1,859,219 $305,619 $1,218,687 $246,852
- --------------------------------------------------------------------------------------------------------------------
Premier Growth $392,543 $4,986 $143,798 $11,424 $43,759 $46,849
- --------------------------------------------------------------------------------------------------------------------
Value Equity $427,255 $8,803 $343,640 $3,378 $4,434 $0
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
55
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Mid-Cap Growth $226,763 $29,544 $251,052 $18,322 $2,854 $0
- --------------------------------------------------------------------------------------------------------------------
Mid-Cap Value $67,241 $39,172 N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Small-Cap Value $135,264 $57,123 N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Global Equity $430,835 $14,910 $405,430 $13,686 $382,192 $54,856
- --------------------------------------------------------------------------------------------------------------------
International $420,497 $23,259 $513,776 $18,400 $682,857 $18,715
Equity
- --------------------------------------------------------------------------------------------------------------------
Europe Equity $72,259 $35,207 N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Emerging Markets $103,321 $33,445 N/A N/A N/A N/A
Equity
- --------------------------------------------------------------------------------------------------------------------
Fixed Income $461,197 $38,513 $322,161 $24,174 $227,295 $55,467
- --------------------------------------------------------------------------------------------------------------------
Government $1,483,393 $144,751 $1,895,373 $68,899 $24,158 $0
Securities
- --------------------------------------------------------------------------------------------------------------------
Short-Term $77,782 $83,078 $72,503 $59,817 $33,016 $50,448
Government
- --------------------------------------------------------------------------------------------------------------------
Tax-Exempt $107,280 $48,378 $91,406 $35,084 $1,453 $126
- --------------------------------------------------------------------------------------------------------------------
High Yield $94,653 $45,089 N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
56
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Strategic $611,538 -- $478,553 $0 $368,324 $25,481
Investment
- --------------------------------------------------------------------------------------------------------------------
Money Market $436,186 $20,979 $308,751 $18,762 $252,319 $91,356
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
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 GEAM, 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 GEAM's responsibilities under
the Advisory Agreement. In this event, GEAM remains responsible for ensuring
that these entities perform the services that each undertakes pursuant to a
sub-advisory agreement. GEAM has engaged the following sub-advisers to manage
certain of the Funds.
Tax-Exempt Fund. Brown Brothers Harriman & Co. ("Brown Brothers"),
located at 59 Wall Street, New York, New York 10005, has been retained by GEAM
to act as sub-investment adviser of the Tax-Exempt Fund. Pursuant to the
sub-investment advisory agreement between Brown Brothers and GEAM, 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, GEAM (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.
57
<PAGE>
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 GEAM to act as sub-investment adviser of the Small-Cap Value Fund.
Pursuant to the sub-investment advisory agreement between Palisade and GEAM,
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, GEAM (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 GEAM, 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, GEAM
(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 GEAM, 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, GEAM (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 Asset
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 Asset Management upon 60 days' written notice to the other or
by the Board of Trustees, or by the vote of a majority of the outstanding voting
securities of 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.
58
<PAGE>
Securities Activities of the Investment Manager
Securities held by the Funds also may be held by other funds or
separate accounts for which the Investment Manager or GEIC acts as an adviser.
Because of different investment objectives or other factors, a particular
security may be bought by the Investment Manager or GEIC for one or more of
their clients, when one or more other clients are selling the same security. If
purchases or sales of securities for a Fund or other client of the Investment
Manager or GEIC arise for consideration at or about the same time, transactions
in such securities will be made, insofar as feasible, for the Fund and other
clients in a manner deemed equitable to all. To the extent that transactions on
behalf of more than one client of the Investment Manager or GEIC during the same
period may increase the demand for securities being purchased or the supply of
securities being sold, there may be an adverse effect on price.
On occasions when the Investment Manager (under the supervision of
the Board of Trustees) deems the purchase or sale of a security to be in the
best interests of the Trust as well as other funds or accounts 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 GE Investment Distributors, Inc. ("GEID") or
enable GEID 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 GEID, or enable GEID
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 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
59
<PAGE>
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, GEID 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 GEID or
any Service Provider, and the payments may exceed expenses actually incurred by
GEID 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 GEID and/or Service Providers and amounts GEID
and/or Service Providers receive under the Plans.
Under the Plans, the Trust pays GEID, 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;
or in the case of the Short-Term Government Fund, an annual fee of 0.60% and
0.75% of the value of the average daily net assets of Class B and Class C,
respectively.
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
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, 1999, $7,392,990 was
paid to GEID for distribution and shareholder servicing.
In addition to distribution and shareholder servicing fees paid
under the Plans,
60
<PAGE>
GEAM, GEID or their affiliates may, at their own expense, compensate certain
broker-dealers or other financial intermediaries for marketing, shareholder
servicing, recordkeeping and other services performed with respect to the Funds,
or any class of shares of the Funds. Such fees may be up to 0.35% of the average
annual value of accounts with the Funds maintained by such financial
intermediaries. The entity making such payments may do so out of its profits,
revenues or other sources.
Custodian, Transfer Agent and Dividend Paying 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.
61
<PAGE>
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 and Class B shares and up to
1.00% for 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 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) purchases representing reinvestment of dividends and
capital gains on Fund shares, (3) all purchases by Class A Retirement Plans
which have 250 or more eligible employees, (4) 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, (5) purchases directly by participants in defined contribution plans that
currently include the Funds as investment options, and who purchase shares
exclusively through GEID and not through an Authorized Firm, (6) all purchases
directly through GEID, (7) 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, (8) 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, GEAM or
GEID, requiring the Trust, GEAM or GEID to compensate the Financial Intermediary
for administrative, subaccounting, transfer agency and/or other services, (9)
all purchases resulting from offerings made to 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, (10) all purchases by certain customers
62
<PAGE>
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, (11) all purchases by certain of the GE LifeStyle Funds, a "fund
of funds" vehicle designed to invest in certain classes of the Funds (13) 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 (14) all purchases
made through an account with a broker-dealer with which the Distributor has an
agreement for the use of GE Funds in particular investment products or programs
on a load-waived basis.
As a GE employee, you and your family members may purchase Class A
shares directly from GEID without paying the sales charge typically associated
with buying Class A shares of a Fund through an investment professional. 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 former 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. The term "family member"
includes spouses and by reason of blood or marriage, parents, children,
siblings, 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
63
<PAGE>
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 purchasing through an
investment professional 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 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 a portion of the amount specified in the LOI in
the form of Fund shares which will be used to cover the applicable sales charge
if the letter is not satisfied. 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. 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
64
<PAGE>
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.
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
65
<PAGE>
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 GEAM or any affiliate of GEAM; and Financial Intermediaries that
have an agreement with the Trust, GEAM or GEID which does not require the Trust,
GEAM 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 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, Class B and Class C
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, GEAM or GEID 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 or
GEID. 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, GEAM or GEID.
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
66
<PAGE>
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. Subsequent purchases of Class A
shares in accounts initially established with a purchase through GEID may be
made without paying any initial sales charge.
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.
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
67
<PAGE>
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 10 business 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.
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, (3) shares purchased
directly through GEID or (4) 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.
68
<PAGE>
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:
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%
- --------------------------------------------------------------------------------
69
<PAGE>
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
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, (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, and (4) on redemptions of Class B or Class C shares effected
through the Systematic Withdrawal Plan to the extent such redemptions do not
exceed 10% of investor's initial account value.
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. 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. 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 customer's 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
70
<PAGE>
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 219631
Kansas City, MO 64121-9631
For overnight package delivery:
GE Funds
c/o National Financial Data Services Inc.
330 West 9th Street
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 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. Dividends will be earned through and including the date of receipt of the
redemption request. 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.
71
<PAGE>
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
transmission 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. Wire transfer of funds will be made within two business days
following the telephonic request.
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.
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 219631
Kansas City, MO 64121-9631
72
<PAGE>
For overnight package delivery:
GE Funds
c/o National Financial Data Services Inc.
330 West 9th Street
Kansas City, MO 64105
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 GEAM to be readily marketable.
Shareholders receiving distributions in kind of portfolio securities may incur
brokerage commissions when subsequently disposing of those securities.
73
<PAGE>
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
74
<PAGE>
The exchange privilege described in the Prospectus enables a
shareholder of a 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 shares purchased through a
Financial Intermediary, and 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
75
<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, GEAM
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 GEAM 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
76
<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 GEAM to present minimal credit risks. Pursuant
to the rule, GEAM 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 GEAM 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.
77
<PAGE>
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, the High
Yield 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 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
78
<PAGE>
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 measured 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.
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 elect to be treated as a
"regulated investment company" under the Code and to qualify as a "regulated
investment company" each year. If a Fund (1) qualifies as 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 long-term
and short-term capital gains for the 1-year period ending generally on October
31 of such calendar year. One requirement for
79
<PAGE>
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.
As of September 30, 1999, 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.
80
<PAGE>
Expiration Dates:
Fund Amount September 30,
- ---- ------ -------------
Tax-Exempt Fund $333,580 2004
Income Fund $182,527 2003
$38,636 2004
$445,270 2005
Government Securities Fund $78,123,796 2002
$107,525,597 2003
$1,748,819 2004
Money Market Fund $3,153 2003
$5,688 2005
Mid-Cap Growth Fund $1,693,901 2007
As a result of the Reorganization, the 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 the Investors Trust Tax Free Fund may be applied.
Accordingly, the Reorganization has the effect of reducing the carryforward
periods of the 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 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
81
<PAGE>
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)
could 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 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
82
<PAGE>
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.
83
<PAGE>
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 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 Money Market Fund's seven-day current yield and effective
seven-day yield as of September 30, 1999 were 4.89% and 5.01%, respectively. Had
GEAM not absorbed a portion of the Money Market Fund's expenses, the Fund's
seven-day yield and effective seven-day yield as of September 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:
84
<PAGE>
a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursement).
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends.
d = the maximum offering price per share on the last day of
the period.
For the purpose of determining the interest earned (variable "a" in
the formula) on debt obligations that were purchased by a Fund at a discount or
premium, the formula generally calls for amortization of the discount or
premium; the amortization schedule will be adjusted monthly to reflect changes
in the market values of the debt obligations.
Investors should recognize that, in periods of declining interest
rates, the yield will tend to be somewhat higher than prevailing market rates,
and in periods of rising interest rates the yield will tend to be somewhat
lower. In addition, when interest rates are falling, moneys received by a Fund
from the continuous sale of its shares will likely be invested in portfolio
instruments producing lower yields than the balance of the Fund's portfolio,
thereby reducing the current yield of the Fund. In periods of rising interest
rates, the opposite result can be expected to occur.
Yield information is useful in reviewing the performance of a Fund,
but because yields fluctuate, this information cannot necessarily be used to
compare an investment in shares of the Fund with bank deposits, savings accounts
and similar investment alternatives that often provide an agreed or guaranteed
fixed yield for a stated period of time. Shareholders of a 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 September 30, 1999 for Class
A, Class B and Class Y shares, respectively, of the Tax-Exempt Fund, Short-Term
Government Fund, Government Securities Fund and Income Fund were as follows:
Fund Class A Class B Class C Class Y
- ---- ------- ------- ------- -------
Tax-Exempt Fund 4.61% 4.14% - 5.17%
Short-Term Government Fund 5.21% 4.74% - 5.60%
Government Securities Fund 5.65% 5.30% - N/A
Income Fund 5.61% 5.11% - 6.12%
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, 1999 class of shares would have been lower.
85
<PAGE>
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 September 30, 1999, the equivalent taxable yield of the Tax-Exempt Fund
for Class A, Class B and Class Y shares, respectively, was 7.63%, 6.85%, and
8.56%. 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," 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.
86
<PAGE>
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 September 30,
1999 for Class A, Class B and Class Y shares, respectively, of each Participant
Fund was as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Load Adjusted
- ------------------------------------------------------------------------------------------------------------
Five Ten Since Five Ten Since Inception
Fund One Year Years Years Inception One Year Years Years Inception Date
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Equity
Class A 27.79% 23.22% - 19.04% 20.43% 21.78% - 17.98% 2/22/93
Class B 26.83% 22.29% - 19.01% 22.83% 22.29% - 19.01% 12/22/93
Class C - - - - - - - - 9/30/99
Class Y 28.14% 23.52% - 20.03% 28.14% 23.52% - 20.03% 11/29/93
- ------------------------------------------------------------------------------------------------------------
Tax-Exempt
Class A -1.84% 5.54% - 4.35 -6.05% 4.62% - 3.60% 9/8/93
Class B -2.34% 5.26% 4.01 -5.17% 5.26% - 4.01% 9/8/93
Class C - - - - - - - - 9/30/99
Class Y -1.37% - - -1.37% - - 0.00% 9/26/97
- ------------------------------------------------------------------------------------------------------------
S-T Government
Class A 2.52% 5.82% - 5.29% -0.06% 5.28% - 4.81% 3/2/94
Class B 1.91% 5.17% - 4.66% -1.01% 5.17% - 4.66% 3/2/94
Class C - - - - - - - - 9/30/99
Class Y 2.87% 6.08% - 5.56% 2.87% 6.08% - 5.56% 3/2/94
- ------------------------------------------------------------------------------------------------------------
Income
Class A -1.20% 6.92% - 5.53% -5.42% 6.00% - 4.84% 1/22/93
Class B -1.85% 6.17% - 4.71% -4.66% 6.17% - 4.71% 12/22/93
Class C - - - - - - - - 9/30/99
Class Y -0.87% 7.20% - 5.71% -0.87% 7.20% - 5.71% 11/29/93
- ------------------------------------------------------------------------------------------------------------
Global
Class A 36.89% 11.67% - 13.17% 29.04% 10.36% - 12.16% 2/22/93
Class B 35.85% 10.84% - 10.37% 31.85% 10.84% - 10.37% 12/22/93
Class C - - - - - - - - 9/30/99
Class Y 37.20% 11.96% - 12.39% 37.20% 11.96% - 12.39% 11/29/93
- ------------------------------------------------------------------------------------------------------------
</TABLE>
87
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
International
Class A 25.48% 9.80% - 8.98% 18.28% 8.51% - 7.82% 3/2/94
Class B 24.56% 8.98% - 8.18% 20.56% 8.98% - 8.18% 3/2/94
Class C - - - - - - - - 9/30/99
Class Y 25.72% 10.15% - 25.72% 10.15% - 0.00% 3/2/94
- ------------------------------------------------------------------------------------------------------------
Strategic
Class A 15.28% 15.36% - 12.69% 8.67% 14.00% - 11.68% 2/22/93
Class B 14.44% 14.48% - 12.18% 10.44% 14.48% - 12.18% 12/22/93
Class C - - - - - - - - 9/30/99
Class Y 15.56% 15.67% - 13.32% 15.56% 15.67% - 13.32% 11/29/93
- ------------------------------------------------------------------------------------------------------------
Premier
Class A 38.54% - - 26.79% 30.55% - - 24.07% 12/31/96
Class B 37.53% - - 25.84% 33.53% - - 25.35% 12/31/96
Class C - - - - - - - - 9/30/99
Class Y 38.92% - - 27.11% 38.92% - - 27.11% 12/31/96
- ------------------------------------------------------------------------------------------------------------
Gov't Securities
Class A -2.01% 6.41% - 3.60% -6.23% 5.49% - 2.86% 9/8/93
Class B -2.42% 5.76% 5.97% - -5.18% 5.76% 5.97% - 4/22/87
Class C - - - - - - - - 9/30/99
- ------------------------------------------------------------------------------------------------------------
Mid-Cap Growth
Class A 13.91% 14.29% - 12.10% 7.41% 12.93% - 11.01% 9/8/93
Class B 13.33% 13.55% - 11.38% 9.33% 13.55% - 11.38% 9/8/93
Class C - - - - - - - - 9/30/99
Class Y 14.58% - - -0.12% 14.58% - - -0.12% 12/31/98
- ------------------------------------------------------------------------------------------------------------
Value Equity
Class A 27.34% 22.90% - 18.39% 19.97% 21.45% - 17.24% 9/8/93
Class B 26.67% 22.09% - 17.65% 22.67% 22.09% - 17.65% 9/8/93
Class C - - - - - - - - 9/30/99
Class Y 27.85% - - 17.69% 27.85% - - 17.69% 1/5/98
- ------------------------------------------------------------------------------------------------------------
Mid-Cap Value
Class A - - - -1.70% - - - -7.35% 12/31/98
Class B - - - -2.30% - - - -6.21% 12/31/98
Class C - - - - - - - - 9/30/99
Class Y - - - -1.60% - - - -1.60% 12/31/98
- ------------------------------------------------------------------------------------------------------------
Small-Cap Value
Class A 22.28% - - 22.21% 15.25% - - 15.20% 9/30/98
Class B 21.37% - - 21.30% 1.37% - - 18.30% 9/30/98
Class C - - - - - - - - 9/30/99
Class Y 22.53% - - 22.46% 22.53% - - 22.46% 9/30/98
- ------------------------------------------------------------------------------------------------------------
Europe Equity
Class A - - - -0.70% - - - -6.41% 1/29/99
Class B - - - -1.20% - - - -5.15% 1/29/99
Class C - - - - - - - - 9/30/99
Class Y - - - -0.60% - - - -0.60% 1/29/99
- ------------------------------------------------------------------------------------------------------------
Emerging Mkts
Class A - - - 34.70% - - - 26.96% 1/29/99
Class B - - - 34.00% - - - 30.00% 1/29/99
Class C - - - - - - - - 9/30/99
Class Y - - - 34.90% - - - 34.90% 1/29/99
- ------------------------------------------------------------------------------------------------------------
High Yield
Class A - - - 0.53% - - - -3.70% 12/31/98
Class B - - - -0.03% - - - 2.89% 12/31/98
Class C - - - - - - - - 9/30/99
Class Y - - - 0.71% - - - 0.71% 12/31/98
- ------------------------------------------------------------------------------------------------------------
Money Market 4.68% 5.15% - 4.65% 4.68% 5.15% - 4.65% 2/22/93
- ------------------------------------------------------------------------------------------------------------
</TABLE>
88
<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.
GEAM 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.
90
<PAGE>
The Trust also may advertise the actual annual and annualized total
return performance data for various periods of time, which may be shown by means
of schedules, charts or graphs. Actual annual or annualized total return data
generally will be lower than average annual total return data because the latter
reflects compounding of return. 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.
91
<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 GEAM 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 of record more than 5% of the outstanding shares of any class of the Funds
as of December 31, 1999.
Name and Address Amount of Percent
of Record Owner Ownership of Class
- --------------- --------- --------
Premier Fund, Class A
State Street Bank & Trust Co., Trustee 175,289.08 5.77%
FBO Aggregate Industries Inc. shares
1 Enterprise Dr.
No. Quincy, MA 02171-2126
Premier Fund, Class C
GE Financial Assurance Co 2,696.91 6.89%
Connie Wong Investment Accounting shares
2 Union Square
601 Union St Ste 1300
Seattle, WA 98101-2341
92
<PAGE>
Miller Kagan Rodriguez & Silver 3,522.54 8.99%
Profit Sharing Plan shares
DTD 10/15/1970
Paul Herman & Robert Rodriguez TTE
75 Valencia Ave Ste 800
Coral Gables, FL 33134-6135
Premier Fund, Class Y
GE Financial Assurance Co. 338,016.37 43.06%
Attn: Connie Wong Investment Accounting shares
Two Union Square
601 Union Street, Suite 1300
Seattle, WA 98101-2327
State Street Bank & Trust Co. TTEE 59,009.36 7.52%
FBO GE Industrial Solutions shares
Master Trust Client Ser-W6C
1 Enterprise Dr.
No. Quincy, MA 02171-2126
State Street Bank & Trust Co. TTEE 281,303.12 35.83%
FBO GNA Savings Plan shares
Master Trust Client Ser-W6C
1 Enterprise Dr.
No. Quincy, MA 02171-2126
Mercantile Safe Dep & Trust Co TTEE 39,726.85 5.06%
London Fog Retirement Plan shares
Mercantile Safe Dep & Trust
Mutual Funds A/C 3412608
766 Old Hammonds Ferry Road
Linthieum, MD 21090
Premier Growth Equity Fund A
Moderate Strategy Lifestyle Fund 91,215.4150 14.73%
Omnibus Account - Underlying Fund shares
Attn: Mary Stone
GE Investment Services
300 Summer Street
Stamford, CT 06905-4316
GE Financial Assurance Co. 84,002.7980 13.56%
Connie Wong Investment Accounting shares
601 Union St. - Suite 1300
2 Union Square
Seattle, WA 98101-2023
93
<PAGE>
U.S. Equity Fund, Class A
State Street Bank & Trust Co TTEE 1,000,791.13 8.89%
FBO Promus Hotels shares
Master Trust Client Services-W6C
1 Enterprise Dr.
N. Quincy, MA 02171-2126
State St. Bank & Trust Co. 588,552.12 5.23%
FBO Aggregate Industries INC shares
1 Enterprise Dr.
N. Quincy, MA 02171-2126
U.S. Equity Fund, Class C
Painewebber FBO 5,438.37 6.70%
Comerica Bank & Tr TTEE shares
FBO Florence W Egan Family
Attn Kenneth P Smith
4830 W Kennedy Blvd Ste 480
Tampa, FL 33609-2548
Donaldson Lufkin Jenrette 5,650.81 6.96%
Securities Corp Inc. shares
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette 5,795.30 7.14%
Securities Corp Inc. shares
PO Box 2052
Jersey City, NJ 07303-2052
U.S. Equity Fund, Class Y
State Street Bank & Trust Co., as Trustee 1,647,147.31 14.36%
Eastmate & Co. shares
FBO GE Capital Fleet Services
Master Trust Client Services
1 Enterprise Drive
No. Quincy, MA 02171-2126
Bost & Co. 798,102.41 6.96%
Mutual Fund Operations shares
P.O. Box 3198
Pittsburgh, PA 15230
94
<PAGE>
State Street Bank & Trust Co., Trustee 1,975,861.76 17.23%
Benchside & Co. - GE Cap. Asset Maint. shares
Master Trust Client Service
One Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank & Trust Co., as Trustee 968,996.87 8.45%
Grampas & Co. Trust shares
FBO Ameridata Technology
Master Trust Client Service W6C
1 Enterprise Drive
No. Quincy, MA 02171
Saul & Co. 764,454.97 6.67%
FBO Stamford Hospital Ret. Inc. shares
c/o First Union National Bank
401 S. Tryon St.
NC1151
Charlotte, NC 28202
State Street Bank & Trust Co., as Trustee 2,436,705.51 21.25%
FBO Asset Management Plan for Affiliated GE Companies shares
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
Small Cap Value Equity Fund, Class A
GE Capital Assurance 793,737.50 56.50%
2 Union Square STE 1400 shares
601 Union St.
Seattle, WA 98101-2327
Small Cap Value Equity Fund, Class B
GE Capital Assurance 552,175.63 68.06%
2 Union Square STE 1400 shares
601 Union St.
Seattle, WA 98101-2327
Small Cap Value Equity Fund, Class C
GE Financial Assurance Co. 6,622.19 8.77%
Connie Wong Investment Accounting shares
2 Union Square
601 Union St Ste 1300
Seattle, WA 98101-2341
Legg Mason Wood Walker Inc 875.76 11.60%
302-17293-18 shares
PO Box 1476
Baltimore, MD 21203-1476
95
<PAGE>
Small Cap Value Equity Fund, Class Y
GE Capital Assurance 11,502.67 33.67%
2 Union Square STE 1400 shares
601 Union St.
Seattle, WA 98101-2327
State Street Bank & Trust Co TTEE 11,502.67 56.38%
FBO GNA Savings Plan shares
Master Trust Client SER-W6C
1 Enterprise Dr.
No. Quincy, MA 02171-2126
Mid-Cap Growth Fund, Class A
GNA Corporation 641,198.8580 36.81%
Attn: Investments shares
601 Union Street, #5600
Seattle, WA 98101-2336
Moderate Strategy Lifestyle Fund 129,508.51 7.44%
GE Investment Services shares
3003 Summer Street
Stamford, CT 06905-4316
Mid-Cap Growth Fund, Class C
GE Financial Assurance Co 7,918.55 89.30%
Connie Wong Investment Accounting shares
2 Union Square
601 union St Ste 1300
Seattle, WA 98101-2341
State Street Bank & Trust Cust 768.33 8.66%
Roth Conversion IRA 1999 shares
Caren M Woods
67 Highridge Dr
Monroe, CT 06468-2328
Mid-Cap Value Fund, Class A
General Electric Capital Assurance 20,108.23 18.62%
Attn Jerry Fulps shares
601 Union St Ste 1400
Seattle, WA 98101-2341
Fahnestock & Co Inc FBO 8,806.24 8.16%
A490075718 shares
Spectrulite Consortium Inc
125 Broad St
New York, NY 10004-2400
96
<PAGE>
State Street Bank & Trust Co 15,862.79 14.69%
C/F The Rollover IRA of shares
Leonard H Gambill
821 Cortez Ave.
Lady Lake, FL 32159-3051
Mid-Cap Value Fund, Class B
General Electric Capital Assurance 10,021.34 48.38%
Attn Jerry Fulps shares
601 Union St Ste 1400
Seattle, WA 98101-2341
Alan L.Peplow 2,197.44 10.61
Renee T. Peplow Jt Wros shares
1417 Humbolt Ave.
Youngstown, OH 44502-2754
Vernon Holtz Jr & 1,397.27 6.75%
Robin Holtz JTWROS shares
7820 Calle Lomas
Carlsbad, CA 92009-8679
State Street Bank & Trust Co 1,195.16 5.77%
IRA R/O Joanne M Holko shares
2150 Whispering Mdws NE
Warren OH 44483-3660
Legg Mason Wood Walker Inc 1,374.33 6.64%
371-00029-10 shares
PO Box 1476
Baltimore, MD 21203-1476
Mid-Cap Value Fund, Class C
GE Financial Assurance Co 7,220 28.14%
Connie Wong Investment Accounting shares
2 Union Square
601 Union St Ste 1300
Seattle, WA 98101-2341
Miller Kagan Rodriguez & Silver 9,756.08 38.02%
Profit Sharing Plan shares
DTD 10/15/1970
Paul Herman & Robert Rodriguez TTE
75 Valencia Ave Ste 800
Coral Gables, FL 33134-6135
97
<PAGE>
Painewebber FBO 3,117.35% 12.15%
Denver Internal Medicine Group PSP shares
& TR
FBO Alan J Spees MD
155 S Madison St Ste 210
Denver, CO 80209-3070
Painewebber for the Benefit of 2,642.53 10.29%
E.A. Haremza & Co. shares
A Partnership
1590 Yates St. #1006
Denver, CO 80204-1057
Painewebber FBO 2,912.72 11.35%
Lloyd Dale Ahnstedt & shares
Clare Mae Ahnstedt JTTEN
12551 Polo Pl
Broomfield, CO 80020-6104
Mid-Cap Value Fund, Class Y 1,035,338.08 100%
Colonial Penn Insurance Company shares
Attn: Jerry Fulps
601 Union St Ste 1400
Seattle, WA 98101-2341
Value Equity Fund, Class A
GNA Corporation 472,053.66 15.23%
Attn: Investments shares
601 Union Street, #5600
Seattle, WA 98101-2336
Moderate Strategy Lifestyle Fund 357,632.02 11.54%
GE Investment Services shares
3003 Summer Street
Stamford, CT 06905-4316
Value Equity Fund, Class C
GE Financial Assurance Co 6,239.60 17.64%
Connie Wong Investment Accounting shares
2 Union Square
601 Union St Ste 1300
Seattle, WA 98101-2341
Miller Kagan Rodgriguez & Silver 8,327.84 23.54%
Profit Sharing Plan shares
DTD10/15/1970
Paul Herman & Robert Rodgriguez TTE
75 Valencia Ave Ste 800
Coral Gables, FL 33134-6135
Painewebber FBO 2,141.68 6.05%
Cheryl Ann Warnecke shares
366 Hilkert Ct
Crystal Lake, IL 60014-5814
98
<PAGE>
Painewebber FBO 5,281.36 15.50%
Nancy Ann Wright shares
344 Springmoor Dr
Raleigh, NC 27615-7740
Painewebber FBO 3,148.81 8.90%
Painewebber Cust FBO shares
William J Alexander
PO Box 3321
Weehawken, NJ 07087-8154
Painewebber FBO 1,813.69 5.12%
Painewebber Cust FBO shares
Mary L Irwin
PO Box 3321
Weehawken, NJ 07087-8154
Nancy T Wierman TTEE 1,892.66 5.35%
Nancy T Wierman Living Tr shares
U/A DTD 08/28/1997
145 Lexington Ct
Sheboygan Fls, WI 53085-3327
Value Equity Fund, Class Y
Aggressive Allocation Lifestyle Fund 90,474.31 50.97%
Omnibus Account - Underlying Fund shares
Attn Mary Stone
GE Investment Services
3003 Summer St.
Stamford, CT 06905-4316
Moderate Allocation Lifestyle Fund 80,737.95 45.48%
Omnibus Account - Underlying fund shares
Attn Mary Stone
GE Investment Services
3003 Summer St
Stamford, CT 06905-4316
Global Fund, Class C
John A Stevenson Sr TTEE 194.02 5.30%
UA DTD 07/10/1989 shares
John A Stevenson Trust
11700 W Grand Ave
Northlake, IL 60164-1373
99
<PAGE>
GE Financial Assurance Co 3,069.31 83.94%
Connie Wong Investment Accounting shares
2 Union Square
601 Union St Ste 1300
Seattle, WA 98101-2341
Keith J Wheeler TTEE 388.05 10.61%
UA DTD 10/13/1999 shares
Paul G Wheeler Irrev Jacob Trust
942 Ridgelawn Trl
Batavia, IL 60510-8326
Global Fund, Class Y
State Street Bank & Trust Co., as Trustee 476,817.67 47.67%
Eastmate & Co. Trust shares
FBO GE Capital Fleet Services
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank & Trust Co., as Trustee 419,237.10 41.91%
Grampas & Co. Trust shares
FBO Ameridata Technology
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
International Fund, Class A
State Street Bank & Trust Co., as Trustee 107,786.24 5.67%
Granitepass & Co. shares
FBO McClaren/Hart Environ. Eng.
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171
Moderate Strategy Lifestyle Fund 419,017.49 22.04%
GE Investment Services shares
3003 Summer Street
Stamford, CT 06905-4316
State Street Bank & Trust Co. 167,294.32 8.80%
FBO Aggregate Industries INC shares
1 Enterprise Dr.
N. Quincy, MA 02171-2126
100
<PAGE>
Aggressive Strategy Lifestyle Fund 99,945.74 5.26%
Omnibus Account - Underlying Fund shares
Att Mary Stone
GE Investment Services
3003 Summer Street
Stamford, CT 06905-4316
International Fund, Class B
House of Platzl Inc. 11,327.43 12.32%
Herman Kahrs Trustee U/A Dtd. 6-1-85 shares
Defined Benefit Pension Trust
Call Hollow Road
Pomona, NY 10970
International Fund, Class C
GE Financial Assurance Co 4,179.25 43.98%
Connie Wong Investment Accounting shares
2 Union Square
601 Union St Ste 1300
Seattle, WA 98101-2341
State Street Bank & Trust Cust 2,236.36 23.53%
The Rollover IRA of shares
Michael Halpern
87 Cannon Royal Dr
Key West, FL 33040-7805
Margaret F Nathan TTEE 903.02 9.50%
UA DTD 01/15/1998 shares
Nathan Survivors Trust
7730 Kedvale Ave.
Skokie, IL 60076-3602
State Street Bank & Trust Co 548.25 5.77%
R/O IRA shares
Margaret F Nathan
7730 Kedvale Ave
Skokie, IL 60076-3602
Painewebber FBO 1,147.626 12.07%
Painewebber Cust FBO shares
Mary L Irwin
PO Box 3321
Weehawken, NJ 07087-8154
International Fund, Class Y
101
<PAGE>
State Street Bank & Trust Co. TTEE 339,385.38 28.02%
FBO Asset MNGT Plan For shares
Affiliated GE Companies
Master Trust Client Ser-W6C
1 Enterprise Dr.
N. Quincy, MA 02171-2126
Moderate Allocation Lifestyle Fund 99,026.52 8.17%
Omnibus Account - Underlying fund shares
Attn Mary Stone
GE Investment Services
3003 Summer St
Stamford, CT 06905-4316
Mercantile Safe Dep & Trust TTEE 61,823.20 5.10%
London Fog Retirement Plan shares
Mercantile Safe Dep & Trust
Mutual Funds A/C 3412608
766 Old Hammonds Ferry Rd
Linthieum, MD 21090
Aggressive Allocation Lifestyle Fd 115,191.33 9.51%
Omnibus Account - Underlying Fund shares
Attn Mary Stone
GE Investment Services
3003 Summer St
Stamford, CT 06905-4316
State Street Bank & Trust Co TTEE 392,804.56 32.43%
Benchside & Co. - GE Cap Asst Maint shares
Master Trust Client SER-W6C
1 Enterprise Dr
N. Quincy, MA 02171-2126
Europe Fund, Class A
General Electric Capital Assurance 20,103.01 20.68%
Attn Jerry Fulps shares
601 Union St Ste 1400
Seattle, WA 98101-2341
Michael D. Fraizer 14,934.90 15.36%
Elizabeth M Royer Fraizer JT WROS shares
8301 Paigley Pl
Richmond, VA 23229-8429
102
<PAGE>
Leonard J Berube 14,641.98 15.06%
2 Van Buren Rd shares
Glenville, NY 12302-4410
State Street Bank & Trust Co 8,197.92 8.43%
C/F The Rollover IRA of shares
Willem F Borman
209 Logwood Dr
Evansville, IN 47710-4405
State Street Bank & Trust Co 5,892.90 6.06%
C/F The Rollover IRA of shares
Frank L Judy
346 W Seatrail Dr
Sunset Beach, NC 28468-4441
Europe Fund, Class B
Miriam Connell 1,295.48 7.43%
5550 NE 26th Ave shares
Ft Lauderdale, FL 33308-3314
Legg Mason Wood Walker Inc 2,406.00 13.79%
394-73071-16 shares
PO Box 1476
Baltimore, MD 21203-1476
Raymond James & Assoc Inc FBO 2,990.41 17.14%
Fred L Metz Trust shares
UAD 2/21/92
809 Villa Ridge Rd
Falls Church, VA 22046-3664
Europe Fund, Class C
GE Financial Assurance Co 7,125.82 99.90%
Connie Wong Investment Accounting shares
2 Union Square
601 Union St Ste 1300
Seattle, WA 98101-2341
Europe Equity Fund, Class Y 1,020,678.79 100%
GE Life & Annuity Assurance Company shares
Attn Jerry Fulps
601 Union St Ste 1400
Seattle, WA 98101-2341
Emerging Markets Fund, Class A
General Electric Capital Assurance Company 21,386.23 11.9%
Attn Jerry Fulps shares
601 Union St Ste 1400
Seattle, WA 98101-2341
James H Jiranek 14,776.52 8.29%
1400 Alpine Rd shares
Wells ville, PA 17365-9644
103
<PAGE>
State Street Bank & Trust Co. 26,249.39 14.72%
C/F The Rollover IRA of shares
Leonard H. Gambill
821 Cortez Ave.
Lady Lake, FL 32159-3051
Emerging Markets Fund, Class B
General Electric Capital Assurance 10,705.55 49.74%
Attn Jerry Fulps shares
601 Union St Ste 1400
Seattle, WA 98101-2341
Miriam Connell 1,117.12 5.19%
5550 NE 26th Ave. shares
Ft. Lauderdale, FL 33308-3314
C.M. Kirtland 3,248.10 15.09%
9 N Parkway Square shares
4200 Northside Parkway
Atlanta, GA 30327-3054
Stuart Goldman 1,456.29 6.77%
Stephanie Goldman JT Ten shares
111 E Patcong Ave
Linwood, NJ 08221-2203
Emerging Markets Fund, Class C
GE Financial Assurance Co. 5,551.03 81.09%
Connie Wong Investment Accounting shares
2 Union Square
601 Union St Ste 1300
Seattle, WA 98101-2341
Painewebber FBO 1,288.81 18.82%
Painewebber Cust FBO shares
Mary L Irwin
PO Box 3321
Weehawken, NJ 07087-8154
Emerging Markets Fund, Class Y
General Electric Capital Assurance 1,082,112.88 100%
Attn Jerry Fulps shares
601 Union St Ste 1400
Seattle, WA 98101-2341
Strategic Fund, Class A
104
<PAGE>
State Street Bank & Trust Company, as Trustee 313,108.83 6.61%
Granitepass & Co. shares
FBO McClaren/Hart Environmental Eng.
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171
InvestCo Trust Co., Trustee 263,755.22 5.57%
Compass Group USA Inc.: 401(k) Plan shares
400 Colony Square, Suite 2200
1201 Peachtree Street, NE
Atlanta, GA 30361-3500
Strategic Fund, Class C
GE Financial Assurance Co 3,046.47 6.07%
Connie Wong Investment Accounting shares
2 Union St Ste 1300
Seattle, WA 98101-2341
Painewebber FBO 3,967.28 7.90%
Charlotte C Forbus TTEE shares
Charlotte C Forbus Revoc TR
U/A DTD 8/27/91
PO Box 11193
Jacksonville, FL 32239-1193
Painewebber FBO 8,179.96 16.29%
Painewebber Cust FBO shares
Elton R Witte
PO Box 3321
Weehawken, NJ 07087-8154
Painewebber FBO 4,419.45 8.80%
Shirley M Bilheimer TTEE shares
Shirley M Bilheimer Revoc TR
U/A DTD 08/25/98
4025 Ponce De Leon Ave
Jacksonville, FL 32217-3618
Painewebber FBO 2,632.89 5.24%
James F McClelland Jr shares
Judith R McClelland Jtten TBE
2075 Eventide Rd
Jacksonville, FL 32259-9236
105
<PAGE>
Painewebber FBO 4,850.58 9.66%
Painewebber Cust FBO shares
Marsha Bochenek R/O IRA
PO Box 3321
Weehawken, NJ 07087-8154
Painewebber FBO 4,297.47 8.56%
Fay H Hodell shares
Kathleen F Isger &
C/O Connie Cir
Orange Park, FL 32065-7229
Painewebber FBO 7,071.11 14.09%
Alfred M Salzer & shares
Mary Ann Salzer JTWROS
8407 Mathonia Ave
Jacksonville, FL 32211-5125
Painewebber FBO 3,798.48 7.56%
Susan Wise Dixon & Donald C shares
Wright TTEES of Robert
U/A DTD 2/11/83
2863 Forest Mill Ln
Jacksonville, FL 322578-5758
Painewebber FBO 3,147.41 6.27%
Elizabeth R Strickland & shares
Marsha Bochenek JTWROS
849 Duncan Rd
Daytona Beach, FL 32119-2605
Strategic Fund, Class Y
State Street Bank & Trust Co., as Trustee 677,244.23 25.88%
Eastmate & Co. shares
FBO GE Capital Fleet Services
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank & Trust Co., Trustee 785,415.77 30.01%
Benchside & Co., - GE Cap. Asset Maint. shares
Master Trust Client Service
One Enterprise Drive
No. Quincy, MA 02171-2126
106
<PAGE>
Pension Plan for Employees of Insulating 159,154.48 6.08%
Materials Incorporated shares
Jurg Brunner Trustee
1 West Campbell Road
Schenectady, NY 12306-2442
State Street Bank & Trust Co., as Trustee 397,256.14 15.18%
Grampas & Co. Trust shares
FBO Ameridata Technology
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank & Trust Co., as Trustee 272,981.74 10.43%
FBO Asset Management Plan for Affiliated GE Companies shares
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
Tax-Exempt Fund, Class A
Richard M Kelleher 180,948.83 11.87%
47 Crooked Ln shares
Duxbury, MA 02332-3903
Tax-Exempt Fund, Class C
GE Financial Assurance Co 6,349.83 99.89%
Connie Wong Investment Accounting shares
2 Union Square
601 Union St Ste 1300
Seattle, WA 98101-2341
Tax-Exempt Fund, Class Y
GE Asset Management Incorporated 2,023.51 96.64%
3003 Summer Street shares
Stamford, CT 06905-4316
Income Fund, Class A
Moderate Strategy Lifestyle Fund 867,778.5770 33.22%
GE Investment Services shares
3003 Summer Street
Stamford, CT 06905-4316
High Yield Fund Class A
General Electric Capital Assurance 21,498.69 6.81%
Attn Jerry Fulps shares
601 Union St Ste 1400
Seattle, WA 98101-2341
107
<PAGE>
Paul M Ostergard 18,167.72 5.76%
7 Club Ct shares
Pleasantville, NY 10570-2350
State Street Bank & Trust Co. 66,004.11 20.91%
C/F The Rollover IRA of shares
Joseph R. Royer
3095 N Course Dr Apt 1011
Pompano Beach, FL 33069-3306
State Street Bank & Trust Co. 22,237.52 7.04%
C/F The Rollover IRA of shares
William L. Walker
2586 Briarwood Dr
San Jose, CCA 95125-5014
State Street Bank & Trust Co 16,362.28 5.18%
C/F The Rollover IRA of shares
James C Henderson
125 Gainford Ct
Duluth, GA 30097-7807
High Yield Fund Class B
General Electric Capital Assurance 10,678.78 19.23%
Attn Jerry Fulps shares
601 Union St Ste 1400
Seattle, WA 98101-2341
State Street Bank & Trust Cust 3,155.17 5.68%
ITRA A/C shares
Peter N. Sabatini
28 Nourse St
Westborough, MA 01581-3559
State Street Bank & Trust Cust 3,943.25 7.10%
The Rollover IRA of shares
Albert A Hennings
1951 W 130th St
Hinckley, OH 44233-9511
State Street Bank & Trust Cust 4,905.73 8.83%
IRA A/C shares
James Dechellis
622 Washington St
East Walpole, MA 02032-1300
108
<PAGE>
BNY Clearing Services LLC 4,206.10 7.57%
A/C 5480-0507 shares
Ida B Miller
111 East Kilbourne Avenue
Milwaukee, WI 53202-6611
High Yield Fund Class C
Painewebber for the Benefit of 7,430.341 13.72%
Robert B Van Dyke & shares
Lenora M Van Dyke JTWROS
5821 Rover Drive
Jacksonville, FL 32244-1431
Painewebber FBO 11,971.10 22.10%
Dorothy Reindell Fulstone shares
Tod Elbert Allen Brown Jr
1559 Holly Oaks Lake Rd E
Jacksonville, FL 32225-4417
Painewebber FBO Estate of 6,191.95 11.43%
W Waddell Trustee shares
Esta W Wadell Trust UA DTD
9/25/96
4656 Golden Spike Ct
Jacksonville, FL 32257-3347
Painewebber FBO 25,799.80 47.64%
Gloria W Travassos shares
Alexandra C Maddox Ten Enrty
3243 Wilderness Dr.
Middleburg, FL 32068-4133
High Yield Fund Class Y
General Electric Capital Assurance 2,156,384.86 100%
Attn Jerry Fulps shares
601 Union St Ste 1400
Seattle, WA 98101-2341
Fixed Income Fund, Class C
GE Financial Assurance Co 6,016.55 99.89%
Connie Wong Investment Accounting shares
2 Union Square
601 Union St Ste 1300
Seattle, WA 98101-2341
Fixed Income Fund, Class D
109
<PAGE>
State Street Bank & Trust Co., Trustee 751,811.53 24.78%
Benchside & Co. - GE Cap. Asset Maint. shares
Master Trust Client Service
One Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank & Trust Co., as Trustee 262,052.09 8.64%
Grampas & Co. Trust shares
FBO Ameridata Technology
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank & Trust Co., as Trustee 404,517.53 13.34%
Eastmate & Co. Trust shares
FBO GE Capital Fleet Services
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank & Trust Co. TTEE 423,895.73 13.97%
FBO Asset Management Plan for shares
Affiliated GE Companies
Master Trust Client Ser-W6C
1 Enterprise Drive
No. Quincy, MA 02171-2126
Moderate Allocation Lifestyle Fund 231,433.14 7.63%
Omnibus Account - Underlying Fund shares
Attn Mary Stone
GE Investment Services
3003 Summer St
Stamford, CT 06905-4316
Mercantile Safe Dep & Trust TTEE 252,665.74 8.33%
London FOG Retirement Plan shares
Mercantile Safe DEP & Trust
Mutual Funds A/C 3412608
766 Old Hammonds Ferry Rd
Linthieum, MD 21090
Short-Term Government Fund, Class A
GNA Corporation 572,673.42 25.54%
Attn: Investments shares
601 Union Street #5600
Seattle, WA 98101-2336
110
<PAGE>
Moderate Strategy Lifestyle Fund 149,560.41 6.67%
GE Investment Services shares
3003 Summer Street
Stamford, CT 06905-4316
Fahnestock & Co Inc FBO 176,546.91 7.87%
A490075718 shares
Spectrulite Consortium Inc
125 Broad St
New York, NY 10004-2400
State Street Bank & Trust Cust 3,367.03 6.49%
The Rollover IRA of shares
Yo Iwai
4360 Santa Clara Ave.
Oxnard, CA 93030-8938
Short-Term Government Fund, Class B
Mary Marian Guidry Comeaux 8,088.62 15.60%
Krysten Comeaux UTMA shares
4797 Bridge Street Highway
St. Martinville, LA 70582-6103
Y Kendle 3,599.93 6.94%
545 Center St. shares
Watsonville, CA 95076-4409
Mildred H. Mooney 3,777.64 7.28%
93 Monroe Pkwy. shares
Rochester, NY 14618-3007
Donaldson Lufkin Jenrette 2,713.82 5.23%
Securities Corp. Inc. shares
PO Box 2052
Jersey City, NJ 07303-2052
Short-Term Government Fund, Class C
GE Financial Assurance Co 6048.48 53.17%
Connie Wong Investment Accounting shares
2 Union Square
601 Union St Ste 1300
Seattle, WA 98101-2341
Evelyn Garcia 866.37 7.61%
8716 SW 79th Pl shares
Miami, FL 33143-7039
111
<PAGE>
Southwest Securities Inc FBO 3,922.60 34.48%
Paul Comer
A/C 22287589
PO Box 509002
Dallas, TX 75250-9002
Short-Term Government Fund, Class Y
State Street Bank & Trust Co., Trustee 178,386.81 67.37%
Eastwall & Co. Trust shares
FBO GE Consulting
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
Moderate Allocation Lifestyle Fund 35,007.782 13.22%
Omnibus Account - Underlying Fund shares
Attn Mary Stone
GE Investment Services
3003 Summer St
Stamford, CT 06905-4316
Aggressive Allocation Lifestyle Fd 32,400.00 12.24%
Omnibus Account - Underlying Fund shares
Attn Mary Stone
GE Investment Services
3003 Summer ST
Stamford, CT 06905-4316
Government Securities Fund, Class C
GE Financial Assurance Co 8,688.92 89.675%
Connie Wong Investment Accounting shares
2 Union Square
601 Union St Ste 1300
Seattle, WA 98101-2341
Painewebber for the Benefit of 989.17 10.21%
John P. McNerney shares
TIC
1048 Sun Valley Drive
Annapolis, MD 21401-4843
Money Market Fund
State Street Bank & Trust Co TTEE 31,569,812.41 11.84%
FBO Promus Hotels shares
Master Trust Client Services-W6C
1 Enterprise Dr.
N. Quincy, MA 02171-2126
112
<PAGE>
Raytheon Company 30,000,000.00 11.25%
Raytheon Master Pension Trust shares
Executive Offices
141 Spring St.
Lexington, MA 02421-7899
As of December 31, 1999: (i) the current Trustees and officers of
the Trust, as a group, beneficially owned less than 1% of each Fund's
outstanding shares; (ii) GE Capital Assurance ("GECA"), a Delaware corporation,
owned 35.15% of the outstanding shares of the GE Small-Cap Value Fund; 83.96% of
the outstanding shares of the GE Emerging Markets Fund, and 81.82% of the
outstanding shares of the GE High Yield Fund, (iv) GE Life & Annuity Assurance
Company ("GELAAC"), a Virginia corporation, owned 89.31% of the outstanding
shares of the GE Europe Equity Fund, and (v) Colonial Penn Insurance Company
("Colonial Penn"), a Pennsylvania corporation, owned 87.03% of the outstanding
shares of the GE Mid-Cap Value Equity Fund. So long as GECA, GELAAC and Colonial
Penn own more than 25% of the outstanding shares of the referenced Funds, 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").
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
113
<PAGE>
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.
The Board of Trustees may amend the Declaration of Trust without the vote of
shareholders in order to conform the provisions to tax or regulatory
requirements, or to make other changes which do not materially affect the
rights of shareholders. In addition, the Trustees may reclassify and redesignate
any series or class of shares outstanding, as long as the action does not
materially adversely affect the rights of the affected shareholders.
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. PricewaterhouseCoopers LLP, 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.
114
<PAGE>
FINANCIAL STATEMENTS
The Annual Report dated September 30, 1999, which either accompanies
this SAI or has previously been provided to the person to whom this SAI is being
sent, is incorporated herein by reference with respect to all information other
than the information set forth in the Letter to Shareholders included in the
Reports. On June 11, 1999, the Board of Trustees of GE Funds approved a share
class redesignation (the "Redesignation") for each of the Funds, except the
Money Market Fund, effective September 17, 1999. The Redesignation will combine
each Fund's respective Class A and Class C shares into a single class and Class
D shares will be renamed Class Y shares. At the same time, the Trustees also
approved, effective September 17, 1999, a 0.25% reduction in the annual
distribution and shareholder servicing fee rate for Class A shareholders. 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 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.
115
<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
A-1
<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.
Description of S&P Municipal Bond Ratings
A-3
<PAGE>
AAA -- Prime -- These are obligations of the highest quality. They
have the strongest capacity for timely payment of debt service.
General Obligation Bonds -- In a period of economic stress, the
issuers will suffer the smallest declines in income and will be least
susceptible to autonomous decline. Debt burden is moderate. A strong revenue
structure appears more than adequate to meet future expenditure requirements.
Quality of management appears superior.
Revenue Bonds -- Debt service coverage has been, and is expected to
remain, substantial. Stability of the pledged revenues is also exceptionally
strong due to the competitive position of the municipal enterprise or to the
nature of the revenues. Basic security provisions (including rate covenant,
earnings test for issuance of additional bonds, debt service reserve
requirements) are rigorous. There is evidence of superior management.
AA -- High Grade -- The investment characteristics of bonds in this
group are only slightly less marked than those of the prime quality issues.
Bonds rated AA have the second strongest capacity for payment of debt service.
A -- Good Grade -- Principal and interest payments on bonds in this
category are regarded as safe although the bonds are somewhat more susceptible
to the adverse effects of changes in circumstances and economic conditions than
bonds in higher rated categories. This rating describes the third strongest
capacity for payment of debt service. The ratings differ from the two higher
ratings of municipal bonds, because:
General Obligations Bonds -- There is some weakness, either in the
local economic base, in debt burden, in the balance between revenues and
expenditures, or in quality of management. Under certain adverse circumstances,
any one such weakness might impair the ability of the issuer to meet debt
obligations at some future date.
Revenue Bonds -- Debt service coverage is good, but not exceptional.
Stability of the pledged revenues could show some variations because of
increased competition or economic influences on revenues. Basic security
provisions, while satisfactory, are less stringent. Management performance
appears adequate.
BBB -- Medium Grade -- Of the investment grade ratings, this is the
lowest. Bonds in this group are regarded as having an adequate capacity to pay
interest and repay principal. Adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay interest and
repay principal for bonds in this category (even though they normally exhibit
adequate protection parameters) than for bonds in higher rated categories.
General Obligation Bonds -- Under certain adverse conditions,
several of the above factors could contribute to a lesser capacity for payment
of debt service. The difference between A and BBB ratings is that the latter
shows more than one fundamental weakness, or one very substantial fundamental
weakness, whereas, the former shows only one deficiency among the factors
considered.
Revenue Bonds -- Debt coverage is only fair. Stability of the
pledged revenues
A-4
<PAGE>
could show substantial variations, with the revenue flow possibly being subject
to erosion over time. Basic security provisions are no more than adequate.
Management performance could be stronger.
BB, B, CCC and CC -- Bonds rated BB, B, CCC and CC are regarded, on
balance, as predominately speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB includes
the lowest degree of speculation and CC the highest degree of speculation. While
these bonds will likely have some quality and protective characteristics, these
characteristics are outweighed by large uncertainties or major risk exposures to
adverse conditions.
C -- The rating C is reserved for income bonds on which no interest
is being paid.
D -- Bonds rated D are in default, and payment of interest and/or
repayment of principal is in arrears.
S&P's letter ratings may be modified by the addition of a plus or a
minus sign, which is used to show relative standing within the major rating
categories, except in the AAA-Prime Grade category.
Description of S&P Municipal Note Ratings
Municipal notes with maturities of three years or less are usually
given note ratings (designated SP-1, -2 or -3) to distinguish more clearly the
credit quality of notes as compared to bonds. Notes rated SP-1 have a very
strong or strong capacity to pay principal and interest. Those issues determined
to possess overwhelming safety characteristics are given the designation of
SP-1+. Notes rated SP-2 have satisfactory capacity to pay principal and
interest.
Description of Moody's Municipal Bond Ratings
Aaa -- Bonds that are rated Aaa are judged to be the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa -- Bonds that are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities, or fluctuation
of protective elements may be of greater amplitude, or there 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) Form of 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*
<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*
(4) Amended and Restated Expense Limitation Agreement
(i) Opinion and Consent of Willkie Farr & Gallagher
(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) Written Plan Adopted pursuant to Rule 18f-3 under the
Investment Company Act of 1940, as amended*
- ------------
* Previously filed.
Item 24. Persons Controlled by or Under
Common Control with Registrant
See Item 26.
<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 Asset
Management Incorporated ("GEAM"), 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 GEAM 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
<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 International
Equity 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.
<PAGE>
Item 30. Undertakings
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant certifies that it
meets all of the requirements for effectiveness of this Amendment to the
Registration Statement pursuant to Rule 485(b) under the Securities Act and has
duly caused this Amendment to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Stamford, State of Connecticut, on
this 24th day of January, 2000.
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.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Michael J. Cosgrove President and January 24, 2000
- ----------------------- Chairman of the Board
Michael J. Cosgrove (Chief Executive Officer)
* Trustee January 24, 2000
- ---------------------------------------
John R. Costantino
/s/ Alan M. Lewis Trustee January 24, 2000
- ---------------------------------------
Alan M. Lewis
* Trustee January 24, 2000
- ---------------------------------------
William J. Lucas
* Trustee January 24, 2000
- ---------------------------------------
Robert P. Quinn
/s/ Michael Tansley Treasurer January 24, 2000
- --------------------------------------- (Chief Financial and
Michael Tansley Executive Officer
</TABLE>
* Signature affixed by Matthew J. Simpson pursuant to a power of attorney dated
December 9, 1998 filed herewith.
<PAGE>
/s/ Matthew J. Simpson
- ---------------------------------------
Matthew J. Simpson
<PAGE>
POWER OF ATTORNEY
I, the undersigned Director and/or Trustee of GE Funds, GE
Institutional Funds, GE Lifestyles Funds and GE Investments Funds, Inc. plus any
other investment company for which GE Investment Management, Inc. or an
affiliate acts as investment adviser and for which the undersigned individual
serves as Director and/or Trustee (collectively, the "Funds"), hereby constitute
and appoint Michael J. Cosgrove, Matthew J. Simpson, Jeanne M. LaPorta and Marc
R. Bryant, each of them singly, my true and lawful attorneys-in-fact, with full
power and substitution, and with full power to each of them, to sign for me and
in my name in the appropriate capacities, all Registration Statements of the
Funds on Forms N-1A and N-8A or any successor(s) thereto, any and all subsequent
Amendments, Pre-Effective Amendments, or Post-Effective Amendments to said
Registration Statements, any Registration Statements on Form N-14, and any
supplements or other instruments in connection therewith, and generally to do
all such things in my name necessary or appropriate, to comply with the
provisions of the Securities Act of 1933 and the Investment Company Act of 1940,
and all related requirements of the Securities and Exchange Commission. I hereby
ratify and confirm all that said attorneys-in-fact or their substitutes may do
or cause to be done by virtue hereof. This power of attorney is effective for
all documents filed on or after the date hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of the 9th day of December, 1998.
/s/JOHN R. COSTANTINO
---------------------
John R. Costantino
/s/WILLIAM J. LUCAS
---------------------
William J. Lucas
/s/ROBERT P. QUINN
---------------------
Robert P. Quinn
<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit No. Description of Exhibit
- ----------- ----------------------
(h)(4) Amended and Restated Expense Limitation Agreement
(i) Opinion and Consent of Willkie Farr & Gallagher
(j) Consent of PricewaterhouseCoopers LLP
<PAGE>
GE FUNDS
AMENDED AND RESTATED
EXPENSE LIMITATION AGREEMENT
AGREEMENT, dated as of December , 1999, among GE Funds, a
Massachusetts Business Trust, on behalf of its series portfolios listed on
Appendix A (the "Funds") and GE Investment Management Incorporated, a Delaware
Corporation ("GEIM").
WHEREAS, GEIM serves as investment adviser and administrator to
each of the Funds; and
WHEREAS, the parties to this Agreement have determined that it is in
their own interests to limit certain expenses that may be borne by each Fund and
desire to limit those expenses.
NOW, THEREFORE, in consideration of the mutual promises hereinafter
set forth, the parties to this Agreement agree as follows:
Section 1 "Other Expense" Limitation.
If, in any fiscal year, "other expenses" of a Fund exceed applicable
expense limitations set forth in Appendix B, the excess expenses shall be borne
by GEIM.
For purposes of this Agreement, "other expenses" of a Fund 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 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 organization, the costs
associated with maintaining the GE Funds' legal existence and the costs involved
in communicating with shareholders of the Funds.
Section 2 Amendment.
The provisions of this Agreement may be changed, waived or terminated from
time to time by the parties hereto. No provision of this Agreement may be so
changed, waived or terminated except by an instrument in writing signed by the
party against which such change, waiver or termination is sought.
<PAGE>
Section 3 Term.
This Agreement shall become effective January 28, 2000 and shall continue
until 120 days after each Fund's current fiscal year end, and thereafter shall
continue automatically for successive annual periods, provided such continuance
is specifically approved at least annually by the Board of Directors of the
Fund, provided that the continuance is also approved by a majority of the Board
of Directors who are not "interested persons" (as defined in the Investment
Company Act of 1940) of any party to this agreement.
Section 4 Governing Law.
This Agreement shall be governed in accordance with the laws of the State
of New York.
Section 5 Miscellaneous.
The parties hereto agree that this Agreement is for the benefit and
enjoyment of the parties, and that this Agreement confers no right upon any
shareholder of the Fund to enforce any provision of this Agreement.
**********************************
(signature page to follow)
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective duly authorized corporate officers and their
corporate seals to be hereunto affixed, as of the day and year first above
written.
GE Investment Management Incorporated
By:___________________________________
Name: Alan M. Lewis
Title: Executive Vice President
GE Funds
By:___________________________________
Name: Michael J. Cosgrove
Title: Chairman of the Board and President
<PAGE>
Appendix A
Series Portfolios of GE Funds (the "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
GE Fixed Income Fund
GE Government Securities Fund
GE Short-term Government Fund
GE Tax-Exempt Fund
GE High Yield Fund
GE Strategic Investment Fund
GE Money Market Fund
<PAGE>
Appendix B
Expense Limitations on "Other Expenses"
(as a percentage of average net assets)
- --------------------------------------------------------------------------------
GE U.S. Equity Fund
All classes 0.25%
- --------------------------------------------------------------------------------
GE Premier Growth Equity Fund
All Classes 0.30%
- --------------------------------------------------------------------------------
GE Value Equity Fund
All Classes 0.30%
- --------------------------------------------------------------------------------
GE Mid-Cap Growth Fund
All Classes 0.30%
- --------------------------------------------------------------------------------
GE Mid-Cap Value Equity Fund
All Classes 0.25%
- --------------------------------------------------------------------------------
GE Small-Cap Value Equity Fund
All Classes 0.20%
- --------------------------------------------------------------------------------
GE Global Equity Fund
All Classes 0.35%
- --------------------------------------------------------------------------------
GE International Equity Fund
All Classes 0.30%
- --------------------------------------------------------------------------------
GE Europe Equity Fund
All Classes 0.30%
- --------------------------------------------------------------------------------
GE Emerging Markets Fund
All Classes 0.30%
- --------------------------------------------------------------------------------
GE Fixed Income Fund
All Classes 0.20%
- --------------------------------------------------------------------------------
GE Government Securities Fund
All Classes 0.20%
- --------------------------------------------------------------------------------
GE Short-Term Government Fund
All Classes 0.15%
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
GE Tax-Exempt Fund
All Classes 0.25%
- --------------------------------------------------------------------------------
GE High Yield Fund
All Classes 0.20%
- --------------------------------------------------------------------------------
GE Strategic Investment Fund
All Classes 0.30%
- --------------------------------------------------------------------------------
GE Money Market Fund 0.25%
- --------------------------------------------------------------------------------
<PAGE>
January 21, 2000
GE Funds
3003 Summer Street
Stamford, Connecticut 06905
Ladies and Gentlemen:
We have acted as counsel to GE Funds (the "Trust"), a business trust organized
under the laws of The Commonwealth of Massachusetts, in connection with the
preparation of Post-Effective Amendment No. 30 of the Trust's Registration
Statement on Form N-1A under the Securities Act of 1933, as amended (SEC File
No. 33-51308), and Amendment No. 32 under the Investment Company Act of 1940, as
amended (SEC File No. 811-7142) (the "Registration Statement"), filed with the
Securities and Exchange Commission, relating to the offer and sale of an
indefinite number of shares of beneficial interest of the Trust.
We have examined copies of (1) the Trust's Declaration of Trust, as amended (the
"Declaration"), (2) the Instrument Evidencing Establishment and Designation of
Series of Shares of Beneficial Interest, establishing and designating the Funds,
(3) the Establishment and Designation of Classes, establishing and designating
four classes of shares of each Fund, (4) the Trust's By-Laws, and (5) other
records and documents that we have deemed necessary for the purposes of
providing the opinion stated below. We have also examined such other documents,
statutes and authorities as we have deemed necessary to form a basis for that
opinion.
In our examination of the materials described above, we have assumed the
genuineness of all signatures and the conformity to original documents of all
copies submitted to us. As to various questions of fact material to our opinion,
we have relied upon statements and certificates of officers and representatives
of the Trust and others.
Based upon and subject to the foregoing, we are of the opinion that the shares
of beneficial interest of each Fund, when issued and sold in accordance with the
<PAGE>
GE Funds
January 21, 2000
Page 2
Declaration will be legally issued, fully paid and non-assessable, except that
shareholders of the Trust may under certain circumstances be held personally
liable for the obligations of the Trust.
We consent to the filing of this letter as an exhibit to the Registration
Statement; the reference to us in the Statement of Additional Information
included as part of the Registration Statement; and the filing of this letter as
an exhibit to any application made by or on behalf of the Trust or any
distributor or dealer in connection with the registration of the Trust or the
shares of the Funds under the securities laws of any state or other
jurisdiction.
We are members of the Bar of the State of New York and do not hold ourselves out
as being conversant with the laws of any jurisdiction other than those of the
United States of America and the State of New York. We note that we are not
licensed to practice law in The Commonwealth of Massachusetts, and to the extent
that any opinion expressed herein involves the law of The Commonwealth of
Massachusetts, such opinion should be understood to be based solely upon the
opinion of Bingham Dana LLP, a copy of which is attached to this opinion.
Very truly yours,
/s/ Willkie Farr & Gallagher
<PAGE>
January 21, 2000
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019-6099
Re: GE Funds
Ladies and Gentlemen:
We have acted as special Massachusetts counsel for GE Funds (the "Trust"),
a Massachusetts business trust created under a written Declaration of Trust
dated August 10, 1992, as amended from time to time.
In connection with this opinion, we have examined the following described
documents:
(a) a certificate of the Secretary of State of the Commonwealth of
Massachusetts as to the existence of the Trust;
(b) a copy, as filed with the Secretary of State of the Commonwealth of
Massachusetts of the Trust's Declaration of Trust and all amendments thereto,
including instruments establishing and designating series of shares and
establishing and designating classes of shares (the "Declaration of Trust"); and
(c) A certificate executed by an appropriate officer of the Trust
certifying as to the Trust's Declaration of Trust and By-Laws and certain votes
of the Trustees of the Trust authorizing the issuance of an indefinite number of
shares of beneficial interest of such Trust (the "Shares").
In such examination, we have assumed the genuineness of all signatures,
the conformity to the originals of all of the documents reviewed by us as
copies, the authenticity and completeness of all original documents reviewed by
us in original or copy form and the legal competence of each individual
executing any document.
This opinion is based entirely on our review of the documents listed
above. We have made no other review or investigation of any kind whatsoever, and
we have
<PAGE>
Wilkie Farr & Gallagher
January 21, 2000
Page 2
assumed, without independent inquiry, the accuracy of the information
set forth in such documents.
This opinion is limited solely to the laws of the Commonwealth of
Massachusetts (other than the Massachusetts Uniform Securities Act, as to which
we express no opinion) as applied by courts in such Commonwealth.
We understand that all of the foregoing assumptions and limitations are
acceptable to you.
Based upon and subject to the foregoing, please be advised that it is our
opinion that:
1. The Trust is duly organized and existing under the Trust's Declaration
of Trust and the laws of the Commonwealth of Massachusetts as a voluntary
association with transferable shares of beneficial interest commonly referred to
as a "Massachusetts business trust."
2. The Shares, when issued and sold in accordance with the Declaration of
Trust, will be legally issued, fully paid and non-assessable, except that
shareholders of the Trust may under certain circumstances be held personally
liable for the obligations of the Trust.
We understand that Willkie Farr & Gallagher will rely on this opinion in
order to prepare an opinion to the Trust, which will be filed with the
Securities and Exchange Commission. We hereby consent to such use and filing of
this opinion.
Very truly yours,
/s/ Bingham Dana LLP
BINGHAM DANA LLP
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting part of this Post-Effective
Amendment No. 30 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated November 12, 1999, relating to the financial
statements and financial highlights appearing in the September 30, 1999 Annual
Report to the Shareholders of The GE Funds, which is also
incorporated by reference into the Registration Statement. We also consent to
the reference to us under the heading "Independent Accountants" in such
Statement of Additional Information and to the reference to us under the heading
"Financial Highlights" in such Prospectus.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
January 24, 2000
