485APOS 1 d485apos.htm 485APOS 485APOS
Table of Contents

File Nos. 2-91369, 811-04041

As filed with the Securities and Exchange Commission on May 28, 2008

 

 

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM N-1A

 

  REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

  ¨  
  Pre-Effective Amendment No.   ¨  
  Post-Effective Amendment No. 41   x  
  and  
  REGISTRATION STATEMENT

UNDER

THE INVESTMENT COMPANY ACT OF 1940

  ¨  
  Amendment No. 42   x  
  (Check appropriate box or boxes)  

 

 

GE INVESTMENTS FUNDS, INC.

3001 Summer Street

Stamford, Connecticut 06905

(203) 326-4040

(Registrant’s Exact Name, Address and Telephone Number)

 

 

Jeanne M. La Porta, Esq.

Senior Vice President, Deputy General Counsel & Assistant Secretary

GE Asset Management Incorporated

3001 Summer Street

Stamford, Connecticut 06905

(Name and Address of Agent for Service)

Copy to:

David S. Goldstein, Esq.

Sutherland Asbill & Brennan LLP

1275 Pennsylvania Avenue, N.W.

Washington, DC 20004-2404

 

 

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

  ¨ Immediately upon Filing Pursuant to Paragraph (b) of Rule 485
  ¨ on (Date) Pursuant to Paragraph (b) of Rule 485
  ¨ 60 Days after Filing Pursuant to Paragraph (a)(1) of Rule 485
  ¨ on (Date) Pursuant to Paragraph (a)(1) of Rule 485
  x 75 Days after Filing Pursuant to Paragraph (a)(2) of Rule 485
  ¨ on (Date) Pursuant to Paragraph (a)(2) of Rule 485

If appropriate, check the following box:

 

  ¨ This post-effective amendment designates a new effective date for a previously filed post-effective amendment.

Title of Securities Being Registered: Shares of Common stock

 

 

 


Table of Contents

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED MAY 27, 2008

(with respect to Emerging Markets Equity Fund and High Yield Fund only)

GE Investments Funds, Inc.

Prospectus

May 1, 2008

(as supplemented August     , 2008)

 

 

Equity Funds

U.S. Equity Fund

S&P 500 Index Fund

Premier Growth Equity Fund

Core Value Equity Fund (formerly Value Equity Fund)

Mid-Cap Equity Fund

Small-Cap Equity Fund

International Equity Fund

Europe Equity Fund

Emerging Markets Equity Fund

 

 

Income Funds

Income Fund

High Yield Fund

 

 

Asset Allocation Funds

Total Return Fund — Class 1 and Class 3

 

 

Money Market Funds

Money Market Fund

 

 

Other Funds

Real Estate Securities Fund

 

 

Like all mutual funds, the GE Investments 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.

 

LOGO


Table of Contents

 

Contents

 

GE Investments

Funds, Inc.

Prospectus

 

Equity Funds

  3

U.S. Equity Fund

  4

S&P 500 Index Fund

  6

Premier Growth Equity Fund

  8

Core Value Equity Fund

  10

Mid-Cap Equity Fund

  12

Small-Cap Equity Fund

  14

International Equity Fund

  16

Europe Equity Fund

  18

Emerging Markets Equity Fund

  20
 

Income Funds

  21

Income Fund

  22

High Yield Fund

  24
 

Asset Allocation Funds

  25

Total Return Fund

  26
 

Money Market Funds

  29

Money Market Fund

  30
 

Other Funds

  33

Real Estate Securities Fund

  34
 

Fund Expenses

  36
 

More on Strategies, Risks and Disclosure of Portfolio Holdings

  40

Important Definitions

  40

More on Investment Strategies

  45

More on Risks

  50

Disclosure of Portfolio Holdings

  55

 

About the Investment Adviser

  57

Investment Adviser and Administrator

  57

Board of Director’s Approval of Investment Advisory Agreements

  58

About the Portfolio Managers

  59

About the Sub-Advisers

  63

Prior Performance Information

  68
 

Shares of the Fund

  70

Investor Service Plan

  70

Distribution and Service (12b-1) Plan

  70

Other Compensation Arrangements

  71

Distribution of Shares

  72

Purchase and Redemption of Shares

  72

Disruptive Trading Policy

  73

Contract Owner Voting Rights

  74

Plan Participant Voting Rights

  75
 

Dividends, Capital Gains and Other Tax Information

  76

Dividend and Capital Gains Distribution

  76

Taxes

  76
 

Calculating Share Value

  77
 

Financial Highlights

  79

 

Additional information regarding the GE Investments Funds, Inc. (each a “Fund” and collectively the “Funds”) is contained in the Statement of Additional Information (SAI) dated May 1, 2008 (as supplemented August     , 2008), which is incorporated by reference into (legally forms a part of) this Prospectus.

 

Shares of the Funds are available only through the purchase of certain variable annuity and variable life insurance contracts issued by various life insurance companies.

 

 


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2

 

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3

 

Equity Funds     

GE Investments

Funds, Inc.

Prospectus

 

 

An investment in a GE Investments Equity Fund is not a deposit of any bank and is not insured by the Federal Deposit Insurance Corporation or any other government agency. An investment in a GE Investments Equity Fund is subject to risk, including possible loss of principal invested.

Who may want to invest in a GE Investments Equity Fund?

 

GE Investments Equity Funds may be appropriate to support your variable contract if you:

n have a long-term investment goal

n are willing to accept higher short-term risk for potential long-term returns

n want to diversify a portfolio composed mostly of other types of investments

 

GE Investments Equity Funds may not be appropriate to support your variable contract if you want:

n to avoid potentially significant changes in the value of your investment

n a stable return on your investment

 

Equity funds generally invest in equity securities. Equity securities may include common stocks, preferred securities, depositary receipts, convertible securities, 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.

 

For a description of the terms in bold type, please refer to “More on Strategies, Risks and Disclosure of Portfolio Holdings” later in this Prospectus.

 


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4

 

GE Investments

Funds, Inc.

Prospectus

Equity Funds

 

U.S. Equity Fund

 

 

Investment Objective: Long-term growth of capital.

The Strategy

 

The U.S. Equity Fund invests at least 80% of its net assets in equity securities of issuers that are tied economically to the U.S. under normal circumstances. The portfolio managers use a Multi-Style® investment strategy that combines growth and value investment management styles. As a result, the portfolio has characteristics similar to the Standard & Poor’s 500® IndexSM (S&P 500® Index), including average market capitalization and dividend yield 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:

n attractive valuations

n financial strength

n high quality management focused on generating shareholder value

 

The Fund also may invest to a lesser extent in foreign securities 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 Fund’s 80% investment policy may be changed by the Directors on 60 days’ notice to shareholders.

 

The Risks

 

The principal risks of investing in the Fund are stock market risk and style risk (growth investing risk and value investing risk). To the extent that the portfolio managers invest in foreign securities or debt securities, the Fund would be subject to foreign exposure risk, bond market risk, interest rate risk and credit risk. The Fund may invest in derivative instruments that carry derivative instruments 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, Risks and Disclosure of Portfolio Holdings” later in this Prospectus.

 


Table of Contents

 

 

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 performance information presented does not include the fees and charges associated with the variable contracts, and returns would have been lower if those fees and charges were included.

 

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 19.89% for the quarter ended December 31, 1998. The Fund’s lowest return for a quarter during those periods was -16.11% for the quarter ended September 30, 2002. The Fund’s year-to-date return was -9.34% as of March 31, 2008.

 

The table opposite illustrates how the Fund’s average annual returns for different calendar periods compare to the returns of the S&P 500® Index. The table presents Fund returns net of Fund expenses. It assumes that you redeem your investment in the Fund at the end of each period.

 

The table does not provide information for Class 4 shares because Class 4 shares are new (inception date May 1, 2008) and have no performance history to date.

 

Calendar Year Total Returns

Class 1 Shares

 

LOGO

Average Annual Total Returns

(as of December 31, 2007)

 

    1 Year       5 Years       10 Years
U.S. Equity Fund Class 1   8.01%       11.38%       6.40%
S&P 500® Index1   5.50%       12.84%       5.91%

 

Both the bar chart and table assume reinvestment of dividends and distributions. GE Asset Management may have reimbursed certain expenses during the periods shown. Absent those reimbursements, the Fund’s total return would have been lower. Due to volatile market conditions, performance figures such as those shown in the bar chart and table may be significantly different if the bar chart and table covered more recent periods. As with all mutual funds, past performance is not an indication of future performance.

 

1 The returns of the S&P 500® Index do not include the effect of sales charges (if any), operating expenses of a mutual fund or taxes. If included, returns would have been lower.

All mutual funds use a standard formula to calculate total return. Total return measures the price change in a share assuming the reinvestment of all dividend income and capital gain distributions.

 


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6

 

GE Investments

Funds, Inc.

Prospectus

Equity Funds

 

S&P 500®

Index

Fund

 

 

Investment Objective: Growth of capital and accumulation of income that corresponds to the investment return of the Standard & Poor’s 500 Composite Stock Index.

The Strategy

 

The S&P 500 Index Fund invests at least 80% of its net assets in equity securities of companies contained in the Standard & Poor’s 500® IndexSM (S&P 500® Index).* The portfolio manager seeks to replicate the return of the S&P 500® Index while holding transaction costs low and minimizing portfolio turnover. The portfolio manager attempts to achieve a correlation between its total return and that of the S&P 500® Index of at least .95, without taking expenses into account.

 

The portfolio manager uses a passive management approach to replicate the weightings of all of the securities within the S&P 500® Index, and therefore, the Fund generally will hold all the securities in approximately the same capitalization weight as it appears in the S&P 500® Index. However, the portfolio manager may use statistical selection to determine which securities within the S&P 500® Index to purchase or sell for the Fund, which may cause the Fund’s weighting in particular industry segments to differ from those of the S&P 500® Index.

 

The Fund also may invest to a lesser extent in debt securities, foreign securities and other securities that are not in the S&P 500® Index. 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 will not adopt a temporary defensive strategy in times of declining stock prices and therefore you will bear the risk of such declines.

 

The Fund’s 80% investment policy may be changed by the Directors on 60 days’ notice to shareholders.

 

The Risks

 

The principal risks of investing in the Fund are stock market risk and the risk that the Fund’s return may not correlate exactly with that of the S&P 500® Index. To the extent that the portfolio manager invests in foreign securities and debt securities, the Fund would be subject to foreign exposure risk, interest rate risk and credit risk.

 

If you would like additional information regarding the Fund’s investment strategies and risks, including a description of the terms in bold type, please refer to “More on Strategies, Risks and Disclosure of Portfolio Holdings” later in this Prospectus.

 

* “Standard & Poor’s®”, “S&P®”, “S&P 500®”, “Standard & Poor’s 500” and “500” are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by GE Asset Management Incorporated. The S&P 500 Index Fund is not sponsored, endorsed, sold or promoted by Standard & Poor’s, and Standard & Poor’s makes no representation regarding the advisability of investing in the Fund. Please see the SAI for additional disclaimers and liabilities regarding Standard & Poor’s.

 


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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 performance information presented does not include the fees and charges associated with the variable contracts, and returns would have been lower if those fees and charges were included.

 

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 21.24% for the quarter ended December 31, 1998. The Fund’s lowest return for a quarter during those periods was -17.37% for the quarter ended September 30, 2002. The Fund’s year-to-date return was -9.58% as of March 31, 2008.

 

The table opposite illustrates how the Fund’s average annual returns for different calendar periods compare to the returns of the S&P 500® Index. The table presents Fund returns net of Fund expenses and assumes that you redeem your investment in the Fund at the end of each period.

 

Calendar Year Total Returns

Class 1 Shares

 

LOGO

Average Annual Total Returns

(as of December 31, 2007)

 

    1 Year       5 Years       10 Years
S&P 500 Index Fund   5.10%       12.43%       5.54%
S&P 500® Index1   5.50%       12.84%       5.91%

 

Both the bar chart and table assume reinvestment of dividends and distributions. GE Asset Management may have reimbursed certain expenses during the periods shown. Absent those reimbursements, the Fund’s total return would have been lower. Due to volatile market conditions, performance figures such as those shown in the bar chart and table may be significantly different if the bar chart and table covered more recent periods. As with all mutual funds, past performance is not an indication of future performance.

 

1 The returns of the S&P 500® Index do not include the effect of sales charges (if any), operating expenses of a mutual fund or taxes. If included, returns would have been lower.

 

All mutual funds use a standard formula to calculate total return. Total return measures the price change in a share assuming the reinvestment of all dividend income and capital gain distributions.

 


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8

 

GE Investments

Funds, Inc.

Prospectus

Equity Funds

 

Premier Growth Equity Fund

 

 

Investment Objective: Long-term growth of capital and future income rather than current income.

The Strategy

 

The Premier Growth Equity Fund invests at least 80% of its net assets in equity securities under normal circumstances. The Fund invests primarily in a limited number of large- and medium-sized companies that the portfolio manager believes have above-average growth histories and/or growth potential. In recent periods, the Fund has tended to emphasize larger companies. The portfolio manager selects 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 securities of companies with characteristics such as:

n above-average annual growth rates

n financial strength

n leadership in their respective industries

n high quality management focused on generating shareholder value

 

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 Fund’s 80% investment policy may be changed by the Directors on 60 days’ notice to shareholders.

 

The Risks

 

The principal risks of investing in the Fund are diversification risk, 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, bond market risk, interest rate risk and credit risk. The Fund may invest in derivative instruments that carry derivative instruments 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, Risks and Disclosure of Portfolio Holdings” later in this Prospectus.

 


Table of Contents

 

 

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 performance information presented does not include the fees and charges associated with the variable contracts, and returns would have been lower if those fees and charges were included.

 

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 23.96% for the quarter ended December 31, 1998. The Fund’s lowest return for a quarter during those periods was -17.06% for the quarter ended September 30, 2002. The Fund’s year-to-date return was -7.17% as of March 31, 2008.

 

The table opposite illustrates how the Fund’s average annual returns for different calendar periods compare to the returns of the S&P 500® Index. The table presents Fund returns net of Fund expenses. It assumes that you redeem your investment in the Fund at the end of each period.

 

The table does not provide performance information for Class 4 shares because Class 4 shares are new (inception date May 1, 2008) and have no performance history to date.

 

Calendar Year Total Returns

Class 1 Shares

 

LOGO

Average Annual Total Returns

(as of December 31, 2007)

 

    1 Year       5 Years       10 Years
Premier Growth Equity Fund        
Class 1   5.34%       9.93%       7.35%
S&P 500® Index1   5.50%       12.84%       5.91%

 

Both the bar chart and table assume reinvestment of dividends and distributions. GE Asset Management may have reimbursed certain expenses during the periods shown. Absent these reimbursements, the Fund’s total return would have been lower. Due to volatile market conditions, performance figures such as those shown in the bar chart and table may be significantly different if the bar chart and table covered more recent periods. As with all mutual funds, past performance is not an indication of future performance.

 

1 The returns of the S&P 500® Index do not include the effect of sales charges (if any), operating expenses of a mutual fund or taxes. If included, returns would have been lower. Since Inception returns for the S&P 500 Index are calculated from the month end nearest the Fund’s inception date.

 

All mutual funds use a standard formula to calculate total return. Total return measures the price change in a share assuming the reinvestment of all dividend income and capital gain distributions.

 

 

 


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10

 

GE Investments

Funds, Inc.

Prospectus

Equity Funds

 

Core Value Equity Fund

 

 

Investment Objective: Long-term growth of capital and future income.

The Strategy

 

The Core Value Equity Fund (formerly Value Equity Fund) invests at least 80% of its net assets in equity securities under normal circumstances. The Fund invests primarily in U.S. companies that the portfolio manager believes are undervalued by the market but have solid growth prospects. The portfolio manager employs a relative value approach to identify companies across all economic sectors which are undervalued relative to the market, their peers, their historical valuation or their growth rate. This approach results in a portfolio more broadly diversified across economic sectors and contrasts with other value investing approaches that focus on low absolute valuations and often result in a portfolio concentrated in fewer sectors. 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:

n low valuations in relation to their peers and the overall market

n the potential for long-term earnings growth

n above average dividend yields

n expectation of income in future periods

n strong management

 

n financial strength

n attractive upside potential and limited downside risk

n a catalyst such as changing industry fundamentals, introduction of a new product, a company restructuring, or a change in management

 

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 Fund’s 80% investment policy may be changed by the Directors on 60 days’ notice to shareholders.

 

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, bond market risk, interest rate risk and credit risk. The Fund may invest in derivative instruments that carry derivative instruments 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, Risks and Disclosure of Portfolio Holdings” later in this Prospectus.

 


Table of Contents

 

 

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 performance information presented does not include the fees and charges associated with the variable contracts, and returns would have been lower if those fees and charges were included.

 

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 13.84% for the quarter ended June 30, 2003. The Fund’s lowest return for a quarter during those periods was -16.57% for the quarter ended September 30, 2002. The Fund’s year-to-date return was -9.35% as of March 31, 2008.

 

The table opposite illustrates how the Fund’s average annual returns for different calendar periods compare to the returns of the S&P 500® Index. The table presents Fund returns net of Fund expenses. It assumes that you redeem your investment in the Fund at the end of each period.

 

The table does not provide performance information for Class 4 shares because Class 4 shares are new (inception date May 1, 2008) and have no performance history to date.

 

Calendar Year Total Returns

Class 1 Shares

 

LOGO

Average Annual Total Returns

(as of December 31, 2007)

 

    1 Year       5 Years       Since
Inception
1
Core Value Equity Fund Class 1   10.10%       12.91%       4.26%
S&P 500® Index2   5.50%       12.84%       1.83%

 

Both the bar chart and table assume reinvestment of dividends and distributions. GE Asset Management may have reimbursed certain expenses during the periods shown. Absent those reimbursements, the Fund’s total return would have been lower. Due to volatile market conditions, performance figures such as those shown in the bar chart and table may be significantly different if the bar chart and table covered more recent periods. As with all mutual funds, past performance is not an indication of future performance.

 

1 Inception date: Class 1 – April 28, 2000.

 

2 The returns of the S&P 500® Index do not include the effect of sales charges (if any), operating expenses of a mutual fund or taxes. If included, returns would have been lower. Since Inception returns for the S&P 500® Index are calculated from the month end nearest the Fund’s inception date.

 

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.

 


Table of Contents

 

 

12

 

GE Investments

Funds, Inc.

Prospectus

Equity Funds

 

Mid-Cap Equity Fund

 

 

Investment Objective: Long-term growth of capital and future income.

The Strategy

 

The Mid-Cap Equity Fund invests at least 80% of its net assets in equity securities of mid-cap companies under normal circumstances. The Fund invests primarily in mid-cap companies that the portfolio manager believes are undervalued by the market and have above-average growth potential. The Fund defines a mid-cap company as one with a market capitalization that falls between (a) the lower of the bottom of the Russell MidCap Index* or $1 billion and (b) the greater of the top of the Russell MidCap Index or $13 billion. As of December 31, 2007, the market capitalization of companies in the Russell MidCap Index ranged from $479 million to $41.6 billion**. The portfolio manager will not sell a stock merely because the market capitalization of a company in the portfolio moves outside of its capitalization range or because the index capitalization range changes. Stock selection is key to the performance of the Fund.

 

The portfolio manager seeks to identify companies with characteristics such as:

n above-average revenue and earnings growth

n attractive products or services

n financial strength

 

n strong competitive positions within their industries

n high quality management focused on generating shareholder value

n reasonable valuation

 

The portfolio manager also seeks to identify undervalued companies where a catalyst exists to recognize value or improve a company’s profitability. Examples of these catalysts are:

n new management

n industry consolidation

n 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 Fund’s 80% investment policy may be changed by the Directors on 60 days’ notice to shareholders.

 

The Risks

 

The principal risks of investing in the Fund are stock market risk and style risk (mid-cap company risk). To the extent that the portfolio manager invests in foreign securities, debt securities or initial public offerings of equity securities, the Fund would be subject to foreign exposure risk, bond market risk, interest rate risk, credit risk and initial public offering risk. The Fund may invest in derivative instruments that carry derivative instruments 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, Risks and Disclosure of Portfolio Holdings” later in this Prospectus.

 

* Russell Investment Group owns the Russell Index data, including all applicable trademarks and copyrights, used by GE Asset Management in these materials. Any unauthorized use or redistribution of such Russell Index data is strictly prohibited. Russell Investment Group is not responsible for the configuration of this material or for any inaccuracy in GE Asset Management’s presentation thereof.

 

** The Russell MidCap Index is constructed to provide a comprehensive and unbiased barometer for the mid-cap segment and is reconstituted annually by the Russell Investment Group to ensure larger stocks do not distort the performance and characteristics of the true mid-cap opportunity set. The capitalization range of the Russell MidCap Index, however, may change significantly intra-year due to changes in the market capitalization of securities held in the Russell MidCap Index.

 


Table of Contents

 

 

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 performance information presented does not include the fees and charges associated with the variable contracts, and returns would have been lower if those fees and charges were included.

 

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 18.07% for the quarter ended June 30, 2003. The Fund’s lowest return for a quarter during those periods was -18.02% for the quarter ended September 30, 2002. The Fund’s year-to-date return was -10.69% as of March 31, 2008.

 

The table opposite illustrates how the Fund’s average annual returns for different calendar periods compare to the returns of the Russell MidCap Index. The table presents Fund returns net of Fund expenses. It assumes that you redeem your investment in the Fund at the end of each period.

 

The table does not provide performance information for Class 4 shares because Class 4 shares are new (inception date May 1, 2008) and have no performance history to date.

 

Calendar Year Total Returns

Class 1 Shares

 

LOGO

 

Average Annual Total Returns

(as of December 31, 2007)

 

    1 Year       5 Years       10 Years
Mid-Cap Equity Fund Class 1   12.60%       16.04%       9.44%
Russell MidCap Index1   5.61%       18.22%       9.91%

 

Both the bar chart and table assume reinvestment of dividends and distributions. GE Asset Management may have reimbursed certain expenses during the periods shown. Absent those reimbursements, the Fund’s total return would have been lower. Due to volatile market conditions, performance figures such as those shown in the bar chart and table may be significantly different if the bar chart and table covered more recent periods. As with all mutual funds, past performance is not an indication of future performance.

 

1 The returns of the Russell MidCap Index do not include the effect of sales charges (if any), operating expenses of a mutual fund or taxes. If included, returns would have been lower. Since Inception returns for the Russell MidCap Index are calculated from the month end nearest the Fund’s inception date.

 

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.

 


Table of Contents

 

 

14

 

GE Investments

Funds, Inc.

Prospectus

Equity Funds

 

Small-Cap Equity Fund

 

 

Investment Objective: Long-term growth of capital.

The Strategy

 

The Small-Cap Equity Fund invests at least 80% of its net assets in equity securities of small-cap companies under normal circumstances. The Fund uses a multi-subadviser investment strategy that combines both growth and value investment management styles. As a result, this orientation will typically produce a portfolio that favors neither value nor growth style investing, and allows the Fund to benefit from both value and growth cycles in the marketplace. The Fund invests primarily in small-cap companies that the portfolio managers believe are either undervalued by the market or have solid growth prospects. The Fund defines a small-cap company as one with a market capitalization within the capitalization range of the Russell 2000® Index (Russell 2000 Index). As of December 31, 2007 the market capitalization of companies in the index ranged from $27 million to $8.4 billion*. The portfolio managers will not sell a stock merely because the market capitalization of a company in the portfolio moves outside of the capitalization range of the Russell 2000 Index or because the index capitalization range changes. Stock selection is key to the performance of the Fund.

 

The portfolio managers seek to identify securities of companies with characteristics such as:

n high quality management

n attractive products or services

n appropriate capital structure

n strong competitive positions in their industries

n management focused on generating shareholder value

n attractive valuation

n strong growth potential

 

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 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 80% investment policy may be changed by the Directors on 60 days’ notice to shareholders.

 

The Risks

 

The principal risks of investing in the Fund are stock market risk and style risk (small-cap company risk, growth investing risk and value investing risk). To the extent that the portfolio managers invest in foreign securities, debt securities, or initial public offerings of equity securities, the Fund would be subject to foreign exposure risk, bond market risk, interest rate risk, credit risk and initial public offerings 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, Risks and Disclosure of Portfolio Holdings” later in this Prospectus.

 

* The Russell 2000 Index is constructed to provide a comprehensive and unbiased small-cap barometer and is reconstituted annually by the Russell Investment Group to ensure larger stocks do not distort the performance and characteristics of the true small-cap opportunity set. The capitalization range of the Russell 2000 Index, however, may change significantly intra-year due to changes in the market capitalizations of securities held in the Russell 2000 Index.

 


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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 performance information presented does not include the fees and charges associated with the variable contracts, and returns would have been lower if those fees and charges were included.

 

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 14.16% for the quarter ended June 30, 2003. The Fund’s lowest return for a quarter during those periods was -15.22% for the quarter ended September 30, 2002. The Fund’s year-to-date return was -7.89% as of March 31, 2008.

 

The following table illustrates how the Fund’s average annual returns for different calendar periods compare to the returns of the Russell 2000 Index. The table presents Fund returns net of Fund expenses. It assumes that you redeem your investment in the Fund at the end of each period.

 

The table does not provide performance information for Class 4 shares because Class 4 shares are new (inception date May 1, 2008) and have no performance history.

 

Calendar Year Total Returns

Class 1 Shares

 

LOGO

Average Annual Total Returns

(as of December 31, 2007)

 

    1 Year       5 Years       Since
Inception
1
Small-Cap Equity Fund Class 1   2.39%       12.67%       9.07%
Russell 2000 Index2   -1.59%       16.24%       6.93%

 

Both the bar chart and table assume reinvestment of dividends and distributions. GE Asset Management may have reimbursed certain expenses during the periods shown. Absent those reimbursements, the Fund’s total return would have been lower. Due to volatile market conditions, performance figures such as those shown in the bar chart and table may be significantly different if the bar chart and table covered more recent periods. As with all mutual funds, past performance is not an indication of future performance.

 

1 Inception date: Class 1 – April 28, 2000.

 

2 The returns of the Russell 2000 Index do not include the effect of sales charges (if any), operating expenses of a mutual fund or taxes. If included, returns would have been lower. Since Inception returns for the Russell 2000 Index are calculated from the month end nearest the Fund’s inception date.

All mutual funds use a standard formula to calculate total return. Total return measures the price change in a share assuming the reinvestment of all dividend income and capital gain distributions.

 


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16

 

GE Investments

Funds, Inc.

Prospectus

Equity Funds

 

International Equity Fund

 

 

Investment Objective: Long-term growth of capital.

The Strategy

 

The International Equity Fund invests at least 80% of its net assets in equity securities under normal circumstances. The Fund invests primarily in companies in developed and developing countries outside the United States. The portfolio managers focus on companies that they expect will grow faster than relevant markets and whose security prices do 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:

n low valuation relative to their long-term cash earnings growth potential

n potential for significant improvement in the company’s business

n financial strength

n sufficient liquidity

 

The Fund also may invest to a lesser extent in debt securities and 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 Fund’s 80% investment policy may be changed by the Directors on 60 days’ notice to shareholders.

 

The Risks

 

The principal risks of investing in the Fund are stock market risk, foreign exposure risk, style risk (growth investing risk and mid-cap company risk) and emerging markets risk. To the extent that the portfolio managers invest in debt securities, the Fund would be subject to bond market risk, interest rate risk and credit risk. The Fund may invest in derivative instruments that carry derivative instruments 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, Risks and Disclosure of Portfolio Holdings” later in this Prospectus.

 


Table of Contents

 

 

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 performance information presented does not include the fees and charges associated with the variable contracts, and returns would have been lower if those fees and charges were included.

 

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 21.44% for the quarter ended December 31, 1999. The Fund’s lowest return for a quarter during those periods was -24.28% for the quarter ended September 30, 2002. The Fund’s year-to-date return was -7.57% as of March 31, 2008.

 

The following table illustrates how the Fund’s average annual returns for different calendar periods compare to the returns of the Morgan Stanley Capital InternationalSM Europe Australasia and Far East (MSCI® EAFE®) Index (MSCI EAFE Index). The table presents Fund returns net of Fund expenses. It assumes that you redeem your investment in the Fund at the end of each period.

 

The table does not provide performance information for Class 4 shares because Class 4 shares are new (inception date May 1, 2008) and have no performance history to date.

 

Calendar Year Total Returns

Class 1 Shares

 

LOGO

Average Annual Total Returns

(as of December 31, 2007)

 

    1 Year       5 Years       10 Years
International Equity Fund Class 1   22.98%       23.69%       8.84%
MSCI EAFE Index1   11.18%       21.59%       8.64%

 

Both the bar chart and table assume reinvestment of dividends and distributions. GE Asset Management may have reimbursed certain expenses during the periods shown. Absent those reimbursements, the Fund’s total return would have been lower. Due to volatile market conditions, performance figures such as those shown in the bar chart and table may be significantly different if the bar chart and table covered more recent periods. As with all mutual funds, past performance is not an indication of future performance.

 

1 The returns of the MSCI EAFE Index do not include the effect of sales charges (if any), operating expenses of a mutual fund or taxes. If included, returns would have been lower.

All mutual funds use a standard formula to calculate total return. Total return measures the price change in a share assuming the reinvestment of all dividend income and capital gain distributions.

 


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18

 

GE Investments

Funds, Inc.

Prospectus

Equity Funds

 

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 Europe Equity Fund invests at least 80% of its net assets in equity securities of issuers that are located in developed European countries under normal circumstances. The portfolio manager focuses 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 manager seeks to identify securities of growth companies with characteristics such as:

n low valuation relative to their long-term cash earnings growth potential

n potential for significant improvement in the company’s business

n financial strength

n sufficient liquidity

 

The Fund also may 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 manager 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 80% investment policy may be changed by the Directors on 60 days’ notice to shareholders.

 

The Risks

 

The principal risks of investing in the Fund are stock market risk, foreign exposure risk and style risk (growth investing risk, mid-cap company risk and small-cap company risk). To the extent that the portfolio manager invests in securities of emerging market countries and debt securities, the Fund would be subject to emerging markets risk, bond market risk, interest rate risk and credit risk. The Fund may invest in derivative instruments that carry derivative instruments 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, Risks and Disclosure of Portfolio Holdings” later in this Prospectus.

 

 

Fund Background

 

No performance figures are shown because the Fund has no operating history as of the date of this Prospectus, and is not currently being offered to investors.

 


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19

 

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Table of Contents

 

 

20

 

GE Investments

Funds, Inc.

Prospectus

Equity Funds

 

Emerging Markets Equity Fund

 

 

Investment Objective: Long-term growth of capital.

The Strategy

 

The Emerging Markets Equity Fund invests at least 80% of its net assets in equity securities of issuers that are located in emerging market countries under normal circumstances. The portfolio managers focus on companies whose security valuation they believe do not fully reflect the long-term growth potential of the company. Under normal circumstances, the Fund’s assets are invested in foreign securities of companies representing at least three different countries.

 

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 or 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 Free 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 companies with characteristics such as:

n low valuation relative to their long-term cash earnings growth potential

n potential for significant improvement in the company’s business

n financial strength

n 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 Fund’s 80% investment policy may be changed by the Directors on 60 days’ notice to shareholders.

 

The Risks

 

The principal risks of investing in the Fund are stock market risk, foreign exposure risk, emerging markets risk and style risk (mid-cap company risk and small-cap company risk). To the extent that the portfolio managers invest in debt securities, the Fund would be subject to bond market risk, interest rate risk and credit risk. The Fund may also invest in derivative instruments that carry derivative instruments risk.

 

The Fund may also be subject to valuation risk with respect to valuing certain Fund holdings.

 

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, Risks and Disclosure of Portfolio Holdings” later in this Prospectus.

 

 

Fund Background

 

No performance figures are shown because the Fund has no operating history as of the date of this Prospectus.

 


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21

 

Income

Funds

    

 

An investment in a GE Investments 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 Investments Income Fund is subject to risk, including possible loss of principal invested.

Who may want to invest in a GE Investments Income Fund?

 

The GE Investments Income Fund may be appropriate to support your variable contract if you:

n seek an investment derived from income bearing securities

n seek lower potential volatility than equity funds over the long term

n want to diversify a portfolio composed mostly of equity investments

 

The GE Investments Income Fund may not be appropriate to support your variable contract if you want:

n potential for high capital appreciation

 

Income funds generally invest in debt securities. Holders of debt securities typically 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 obligations, are sold at a discount from their face values instead of paying interest.

 

For a description of the terms in bold type, please refer to “More on Strategies, Risks and Disclosure of Portfolio Holdings” later in this Prospectus.

 


Table of Contents

 

 

22

 

GE Investments

Funds, Inc.

Prospectus

Income Funds

 

Income Fund

 

 

Investment Objective: Maximum income consistent with prudent investment management and the preservation of capital.

The Strategy

 

The Income Fund invests at least 80% of its net assets in debt securities under normal circumstances. 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, but is subject to no limitation with respect to the maturities of the instruments in which it may invest.

 

U.S. Government securities are securities that are issued and guaranteed as to principal and 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 U.S. Government, such as U.S. Treasury bills and notes and obligations of the Government National Mortgage Association (Ginnie Mae). Other U.S. Government securities are backed by the issuer’s right to borrow from the U.S. Treasury, such as Federal National Mortgage Association (Fannie Mae) securities, while some are backed only by the credit of the issuing organization, such as obligations of the Federal Home Loan Mortgage Corporation (Freddie Mac). Fannie Mae and Freddie Mac securities are not backed by the full faith and credit of the U.S. Government.

 

The portfolio managers seek to identify debt securities with characteristics such as:

n attractive yields and prices

n the potential for capital appreciation

n reasonable credit quality

 

The Fund also may invest to a lesser extent in asset-backed securities, high yield securities (also known as “junk bonds”) and foreign debt securities. The portfolio managers may use various investment techniques, including investments in derivative instruments, such as interest rate, currency, index and credit default swaps, to adjust the Fund’s investment exposure, but there is no guarantee that these techniques will work.

 

The Fund’s 80% investment policy may be changed by the Directors on 60 days’ notice to shareholders.

 

The Risks

 

The principal risks of investing in the Fund are bond market risk, interest rate risk, credit risk, prepayment risk and mortgage-backed securities risk. To the extent that the portfolio managers invest in asset-backed securities, foreign debt securities, high yield securities and companies that are located in developing countries outside the United States, the Fund would be subject to asset-backed securities risk, foreign exposure risk, high yield securities risk and emerging markets risk. The Fund may invest in derivative instruments that carry derivative instruments risk.

 

The Fund may also be subject to valuation risk with respect to valuing certain Fund holdings.

 

The Fund’s investment strategy may result in a high portfolio turnover rate, which may cause the Fund to experience increased transaction costs and impact the Fund’s performance. For more information on the risks associated with high portfolio turnover, please refer to “More on Strategies, Risks and Disclosure of Portfolio Holdings — More on Risks” later in this Prospectus.

 

If you would like additional information regarding the risks associated with this Fund, including a description of the terms in bold type, please refer to “More on Strategies, Risks and Disclosure of Portfolio Holdings” later in this Prospectus.

 


Table of Contents

 

 

23

 

Fund Performance

 

The bar chart and table opposite illustrate the short-term variability in the Fund’s performance and the Fund’s returns relative to a common measure of performance. The performance information presented does not include the fees and charges associated with the variable contracts, and returns would have been lower if those fees and charges were included.

 

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 4.40% for the quarter ended September 30, 2002. The Fund’s lowest return for a quarter during those periods was -2.48% for the quarter ended June 30, 2004. The Fund’s year-to-date return was 1.13% as of March 31, 2008.

 

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 presents Fund returns net of Fund expenses. It assumes that you redeem your investment in the Fund at the end of each period.

 

The table does not provide performance information for Class 4 shares because Class 4 shares are new (inception date May 1, 2008) and have no performance history to date.

 

Calendar Year Total Returns

Class 1 Shares

 

LOGO

Average Annual Total Returns

(as of December 31, 2007)

 

    1 Year       5 Years       10 Years
Income Fund
Class 1
  4.83%       3.65%       5.22%
LB Aggregate Bond Index1   6.97%       4.42%       5.97%

 

Both the bar chart and table assume reinvestment of dividends and distributions. GE Asset Management may have reimbursed certain expenses during the periods shown. Absent those reimbursements, the Fund’s total return would have been lower. Due to volatile market conditions, performance figures such as those shown in the bar chart and table may be significantly different if the bar chart and table covered more recent periods. As with all mutual funds, past performance is not an indication of future performance.

 

1 The returns of the LB Aggregate Bond Index do not include the effect of sales charges (if any), operating expenses of a mutual fund or taxes. If included, returns would have been lower.

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.

 


Table of Contents

 

 

24

 

GE Investments

Funds, Inc.

Prospectus

Income Funds

 

High Yield Fund

 

 

Investment Objective: Above-average total return over a market cycle of three to five years, consistent with reasonable risk.

 

The High Yield Fund invests at least 80% of its net assets in high yield securities (including bonds rated below investment grade, sometimes called “junk bonds”). The portfolio managers will not sell a particular security solely 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, 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 seeks 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 generally be greater than five years, but is subject to no limitation with respect to the maturities of the investments in which it may invest.

 

The portfolio management team uses analyses of economic and industry trends to determine the portfolio mix of “core” holdings and “opportunistic” holdings. A rigorous process utilizing fundamental, bottoms-up credit research underlies selection of each individual security holding. Individual securities are selected and monitored by an experienced team of fixed income portfolio managers and credit analysts who specialize in high yield corporate bonds. The team relies on the in-depth, fundamental 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 and emerging market securities. The Fund also may use derivative instruments to pursue its portfolio strategy. The portfolio management team may use various investment techniques, such as interest rate, currency, index and credit default swaps, to adjust the Fund’s investment exposure, but there is no guarantee that these techniques will work.

 

The Fund’s 80% investment policy may be changed by the Directors on 60 days’ notice to shareholders.

 

 

The Risks

 

The principal risk of investing in the Fund is high yield securities risk. The Fund is also subject to bond market risk, interest rate risk, credit risk, prepayment risk, mortgage-backed securities risk and style risk (high yield investing risk). To the extent that the Fund invests in foreign debt securities, the Fund would be subject to foreign exposure risk and emerging markets risk. The Fund may invest in derivative instruments that carry derivative instruments risk.

 

 

 

The Fund may also be subject to valuation risk with respect to valuing certain Fund holdings.

 

Because the Fund invests primarily in high yield securities that are considered speculative, investment in the Fund may not be suitable for all investors.

 

The Fund’s investment strategy may result in a high portfolio turnover rate, which may cause the Fund to experience increased transaction costs and impact the Fund’s performance. Shareholders may also incur increased taxes on their investment in the Fund. For more information on the risks associated with high portfolio turnover, please refer to “More on Strategies, Risks and Disclosure of Portfolio Holdings – More on Risks” later in this Prospectus.

 

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, Risks and Disclosure of Portfolio Holdings” later in this Prospectus.

 

 

Fund Background

 

No performance figures are shown because the Fund has no operating history as of the date of this Prospectus.

 


Table of Contents

 

 

25

 

Asset

Allocation

Funds

    

 

An investment in a GE Investments 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 government agency. An investment in the GE Investments Total Return Fund is subject to risk, including possible loss of principal invested.

Who may want to invest in the GE Investments Total Return Fund?

 

The Total Return Fund may be appropriate to support your variable contract if you:

n seek an investment derived from both capital appreciation and current income

n want a single diversified investment

 

The Total Return Fund is 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 mix of capital appreciation potential and income by investing in various combinations of individual Equity or Income Funds, the Total Return 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.

 

For a description of the terms in bold type, please refer to “More on Strategies, Risks and Disclosure of Portfolio Holdings” later in this Prospectus.

 


Table of Contents

 

 

26

 

GE Investments

Funds, Inc.

Prospectus

Asset Allocation

Funds

 

 

Total Return Fund

 

 

Investment Objective: The highest total return, composed of current income and capital appreciation, as is consistent with prudent investment risk.

 

The Strategy

 

The Total Return Fund invests primarily in a combination of equity securities and investment-grade debt securities. The Fund’s asset allocation process utilizes information from 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, foreign securities and cash 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:

n strong earnings growth

n favorable valuation

n attractive prices

n a presence in successful industries

n high quality management

 

The portfolio managers seek to identify debt securities with characteristics such as:

n attractive yields and prices

n the potential for capital appreciation

n reasonable credit quality

 

The portion of the Fund invested in debt securities normally has a weighted average maturity of approximately five to ten years, but is subject to no limitations with respect to the maturities of the instruments in which it may invest.

 

Under normal circumstances, the Fund may have a net cash level of up to 10% of its total assets.

 

The Fund may also invest to a lesser extent in high yield securities (also known as “junk bonds”). The portfolio managers may use various investment techniques, including investments in derivative instruments, such as interest rate, currency, index and credit default swaps, 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, style risk (mid-cap company risk, growth investing risk and value investing risk), foreign exposure risk, bond market risk, interest rate risk, credit risk, municipal obligations risk and prepayment risk. To the extent the portfolio managers invest in high yield securities, equity securities of companies that are located in developing countries outside the United States and initial public offerings of equity securities, the Fund would be subject to high yield securities risk, emerging markets risk and initial public offerings risk. The Fund may invest in derivative instruments that carry derivative instruments risk.

 

The Fund may also be subject to valuation risk with respect to valuing certain Fund holdings.

 

The Fund’s net cash position typically has less total return potential over time than the Fund’s other asset classes but at times may be relatively more attractive.

 

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 impact the Fund’s performance. For more information on the risks associated with high portfolio turnover, please refer to “More on Strategies, Risks and Disclosure of Portfolio Holdings — More on Risks” later in this Prospectus.

 

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, Risks and Disclosure of Portfolio Holdings” later in this Prospectus.

 


Table of Contents

 

 

27

 

Fund Performance

 

The bar chart and table opposite illustrate the short-term variability in the performance of the Fund’s shares. The performance information presented does not include the fees and charges associated with the variable contracts, and returns would have been lower if those fees and charges were included.

 

The bar chart illustrates how the Fund’s performance with respect to its Class 1 shares 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 with respect to its Class 1 shares was 11.84% for the quarter ended June 30, 2003. The Fund’s lowest return for a quarter with respect to its Class 1 shares during those periods was -9.22% for the quarter ended September 30, 2002. The Fund’s year-to-date return for Class 1 shares was -6.29% as of March 31, 2008.

 

The table opposite illustrates how the Fund’s Class 1 and Class 3 shares’ average annual returns for different calendar periods compare to the return of the S&P 500® Index and the return of the Lehman Brothers Aggregate Bond Index (LB Aggregate Bond Index). The table presents Fund returns net of Fund expenses. It assumes that you redeem your investment in the Fund at the end of each period.

 

Calendar Year Total Returns Class 1 Shares

 

LOGO

Average Annual Total Returns

(as of December 31, 2007)

 

    1 Year       5 Years       10 Years       Since
Inception
2
Total Return Fund Class 11   11.68%       11.38%       7.71%      
Class 3   11.56%                   11.26%
S&P 500® Index3   5.50%       12.84%       5.91%       12.09%
LB Aggregate Bond Index3   6.97%       4.42%       5.97%       7.96%

 

Both the bar chart and table assume reinvestment of dividends and distributions. GE Asset Management may have reimbursed certain expenses during the periods shown. Absent those reimbursements, the Fund’s total return would have been lower. Due to volatile market conditions, performance figures such as those shown in the bar chart and table may be significantly different if the bar chart and table covered more recent periods. As with all mutual funds, past performance is not an indication of future performance.

 

1 The performance returns for periods after May 1, 2006 reflect the impact of the Investor Service Plan fees imposed at the rate of 0.20% of the average daily net assets of the Total Return Fund attributable to Class 1 shares.

 

2 Inception date: Class 3 – May 1, 2006.

 

3 The returns of the S&P 500® Index and the LB Aggregate Bond Index do not include the effect of sales charges (if any), operating expenses of a mutual fund or taxes. If included, returns would have been lower. Since Inception returns for the S&P 500® Index and the LB Aggregate Bond Index are calculated from the month end nearest the Fund’s inception date.

All mutual funds 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.

 


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28

 

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29

 

Money

Market

Funds

    

 

Who may want to invest in the GE Investments Money Market Fund?

 

The Money Market Fund may be appropriate to support your variable contract if you:

n want an investment derived from modest, but regular income compared with other investments

n are investing for a short period of time

n want a stable investment

 

The Money Market Fund may not be appropriate to support your variable contract if you:

n want an investment derived from a potentially higher rate of return

n want a long-term investment

n seek capital appreciation

 

The Money Market Fund invests in short-term, high quality money market instruments. The Money Market Fund seeks to provide stability of principal and regular income. The income provided by the Money Market Fund varies with interest rate movements.

 

For a description of the terms in bold type, please refer to “More on Strategies, Risks and Disclosure of Portfolio Holdings” later in this Prospectus.

 


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30

 

GE Investments

Funds, Inc.

Prospectus

Money Market

Funds

 

Money

Market

Fund

 

 

Investment Objective: High level of current income consistent with the preservation of capital and maintenance of liquidity

The Strategy

 

The 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, asset-backed securities, foreign debt securities, Eurodollar deposits and domestic and foreign bank deposits.

 

U.S. Government securities are securities that are issued and guaranteed as to principal and 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 U.S. Government, such as U.S. Treasury bills and notes and obligations of the Government National Mortgage Association (Ginnie Mae). Other U.S. Government securities are backed by the issuer’s right to borrow from the U.S. Treasury, such as Federal National Mortgage Association (Fannie Mae) securities, while some are backed only by the credit of the issuing organization, such as obligations of the Federal Home Loan Mortgage Corporation (Freddie Mac). Fannie Mae and Freddie Mac securities are not backed by the full faith and credit of the U.S. Government.

 

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 weighted average maturity of the Fund’s portfolio to 90 days or less.

 

All of the Fund’s assets must be rated in the two highest short-term rating categories (or their unrated equivalents), and at least 95% of its assets must be rated in the highest rating category (or its unrated equivalent) by a nationally recognized statistical rating organization. Additional information about the money market instruments in which the Fund may invest, including rating categories, is contained in the SAI.

 

 

The Risks

 

The principal risks of investing in the Fund are bond market risk, interest rate risk, credit risk, asset-backed securities risk and foreign exposure risk. Changes in banking regulations or the economy can have a significant impact on the banking industry and, therefore, the Fund.

 

An investment in the Fund 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, Risks and Disclosure of Portfolio Holdings” later in this Prospectus.

 


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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 performance information presented does not include the fees and charges associated with the variable contracts, and returns would have been lower if those fees and charges were included.

 

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 1.60% for the quarter ended December 31, 2000. The Fund’s lowest return for a quarter during those periods was 0.16% for the quarter ended March 30, 2004. The Fund’s seven day current yield was 2.66% and the seven day effective yield was 2.70% as of March 31, 2008. “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 presents Fund returns net of Fund expenses. It assumes that you redeemed your investment in the Fund at the end of each period.

 

Calendar Year Total Returns

 

LOGO

Average Annual Total Returns

(as of December 31, 2007)

 

    1 Year       5 Years       10 Years
Money Market Fund   4.92%       2.80%       3.59%
90 Day T-Bill1   4.46%       2.98%       3.56%

 

Both the bar chart and table assume reinvestment of dividends and distributions. GE Asset Management may have reimbursed certain expenses during the periods shown. Absent those reimbursements, the Fund’s total return would have been lower. As with all mutual funds, past performance is not an indication of future performance.

 

1 The returns of the 90 Day T-Bill do not include the effect of sales charges (if any), operating expenses of a mutual fund or taxes. If included, returns would have been lower.

All mutual funds use a standard formula to calculate total return. Total return measures the price change in a share assuming the reinvestment of all dividend income and capital gain distributions.

 


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33

 

Other

Funds

    

 

 

An investment in the GE Investments Real Estate Securities 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 this Fund is subject to risk, including possible loss of principal invested.

 

Who may want to invest in the GE Investments Real Estate Securities Fund?

 

The Real Estate Securities Fund may be appropriate to support your variable contract if you:

n seek an investment derived from both current income and capital appreciation

n have a long-term investment goal

 

The Real Estate Securities Fund may not be an appropriate investment to support your variable contract if you:

n want any degree of market sector diversification in your investment

n are unwilling to accept potentially significant losses on your investment during periods (possibly extended periods) when real estate values or the fortunes of the real estate industry are in decline or depressed

 

The Real Estate Securities Fund is designed for investors who seek to allocate a portion of their variable contract investment to a fund that concentrates in investments in a wide range of equity securities and debt securities of issuers in the real estate industry.

 

For a description of the terms in bold type, please refer to “More on Strategies, Risks and Disclosure of Portfolio Holdings” later in this Prospectus.

 


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34

 

GE Investments

Funds, Inc.

Prospectus

Other Funds

 

Real Estate Securities

Fund

 

 

Investment Objective: Maximum total return through current income and capital appreciation.

The Strategy

 

The Real Estate Securities Fund invests at least 80% of its net assets in equity securities and debt securities of U.S. issuers that are principally engaged in or related to the real estate industry, including those that own significant real estate assets, under normal circumstances. The Fund does not invest directly in real estate.

 

The portfolio manager considers an issuer to be “principally engaged in” or “principally related to” the real estate industry if at least 50% of its assets (marked-to-market), gross income or net profits are attributable to development, ownership, construction, management or sale of residential, commercial or industrial real estate, or to products or services related to the real estate industry. Issuers engaged in the real estate industry include equity REITs, mortgage REITs, real estate brokers and developers, companies that manage real estate and companies that own substantial amounts of real estate. Issuers in businesses related to the real estate industry include manufacturers and distributors of building supplies and financial institutions that issue or service mortgages.

 

The Fund also may invest to a lesser extent in equity securities and debt securities of issuers outside the real estate industry as well as foreign securities. The Fund also may invest in high yield securities (also known as “junk bonds”). 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 is classified as a non-diversified fund as defined by the Investment Company Act of 1940, as amended (“1940 Act”). This means that the Fund may invest a greater percentage of its assets in a more limited number of issuers than a diversified fund, making it subject to diversification risk. However, notwithstanding the Fund's non-diversified classification, it is anticipated that the Fund will be managed in a diversified manner for substantial periods of time but with the flexibility to invest a greater portion of its assets in fewer issuers if the portfolio manager believes that market conditions warrant the management of the Fund in this manner.

 

The Fund’s 80% investment policy may be changed by the Directors on 60 days’ notice to shareholders.

 

The Risks

 

The principal risks of investing in the Fund are stock market risk, concentration risk, REIT-specific risk, real estate securities risk and diversification risk. To the extent that the portfolio manager invests in foreign securities or debt securities, the Fund would be subject to foreign exposure risk, bond market risk, interest rate risk and credit risk. To the extent that the portfolio manager invests in high yield securities, the Fund would be subject high yield 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, Risks and Disclosure of Portfolio Holdings” later in this Prospectus.

 


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35

 

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 performance information presented does not include the fees and charges associated with the variable contracts, and returns would have been lower if those fees and charges were included.

 

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 17.14% for the quarter ended December 31, 2004. The Fund’s lowest return for a quarter during those periods was -10.18% for the quarter ended September 30, 1998. The Fund’s year-to-date return was 2.76% as of March 31, 2008.

 

The table opposite illustrates how the Fund’s average annual returns for different calendar periods compare to the returns of the NAREIT Equity Index (NAREIT Equity Index). The table presents Fund returns net of Fund expenses. It assumes that you redeem your investment in the Fund at the end of each period.

 

The table does not provide performance information for Class 4 shares because Class 4 shares are new (inception date May 1, 2008) and have no performance history to date.

 

Calendar Year Total Returns1

Class 1 Shares

 

LOGO

Average Annual Total Returns

(as of December 31, 2007)

 

    1 Year       5 Years       10 Years
Real Estate Securities Fund Class 1   -14.86%       18.15%       10.71%
NAREIT Equity Index2   -15.69%       18.18%       10.49%

 

Both the bar chart and table assume reinvestment of dividends and distributions. GE Asset Management may have reimbursed certain expenses during the periods shown. Absent those reimbursements, the Fund’s total return would have been lower. Due to volatile market conditions, performance figures such as those shown in the bar chart and table may be significantly different if the bar chart and table covered more recent periods. As with all mutual funds, past performance is not an indication of future performance.

 

1 Urdang Securities Management, Inc. became sub-adviser to the Fund effective April 1, 2006 and the returns for the periods prior to such date reflect the Fund’s performance of the previous sub-adviser.

 

2 The returns of the NAREIT Equity Index does not include the effect of sales charges (if any), operating expenses of a mutual fund or taxes. If included, returns would have been lower.

 

All mutual funds use a standard formula to calculate total return. Total return measures the price change in a share assuming the reinvestment of all dividend income and capital gain distributions.

 


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36

 

GE Investments

Funds, Inc.

Prospectus

     Fund Expenses

 

For All Funds (Except Total Return Fund)

 

Shareholder Fees

No sales charge (load) is imposed on purchases of shares (or reinvested dividends), nor is a contingent deferred sales charge imposed upon redemption of shares (although your variable contract may impose such charges). The Funds also do not impose a redemption fee or an exchange fee.

 

Annual fund operating expenses are paid from a Fund’s assets and are reflected in the Fund’s share price and dividends. The fees and expenses reflected in the tables below do not include applicable variable contract fees and charges. If these fees and charges were included, the costs shown below would be higher.

                           

Annual Fund

Operating

Expenses

(as a percentage of

average net assets)

  U.S. Equity Fund   S&P 500 Index Fund 2   Premier Growth Equity Fund   Core Value Equity Fund   Mid-Cap Equity Fund   Small-Cap Equity Fund   Inter- national Equity Fund1     Europe Equity Fund 2   Emerging Markets Equity Fund   Income Fund   High Yield Fund   Money Market Fund1, 2   Real Estate Securities Fund1

Management Fees1

                                                     

All Classes

  0.55%   0.35%   0.65%   0.65%   0.65%   0.80%   1.00%     1.15%   1.05%   0.50%   0.60%   0.45%   0.84%

Distribution and Service (12b-1) Fees

                                                     

Class 1

  None   None   None   None   None   None   None     None   None   None   None   None   None

Class 4

  0.45%   N/A   0.45%   0.45%   0.45%   0.45%   0.45%     N/A   0.45%   0.45%   0.45%   N/A   0.45%

Other Expenses3, 4

                                                     

Class 1

  0.14%   0.04%   0.09%   0.22%   0.06%   0.08%   0.16%     None   0.45%   0.13%   0.39%   0.03%   0.08%

Class 45

  0.14%   N/A   0.09%   0.22%   0.06%   0.08%   0.16%     N/A   0.45%   0.13%   0.39%   N/A   0.08%

Acquired Fund Fees and Expenses6

                                                     

All Classes

  0.01%   0.01%   0.01%   0.02%   0.01%   0.01%   0.02%     None   None   0.07%   None   N/A  

Total Annual Fund Operating Expenses

                                                     

Class 1

  0.70%   0.40%   0.75%   0.89%   0.72%   0.89%   1.18%     1.15%   1.50%   0.70%   0.99%   0.48%   0.92%

Class 4

  1.15%   N/A   1.20%   1.34%   1.17%   1.34%   1.63%     N/A   1.95%   1.15%   1.44%   N/A   1.37%

Fees Reimbursed or Waived by the Adviser7

                                                     

All Classes

              0.21%     None   0.16%   0.04%   0.19%   N/A  

Net Annual Fund Operating Expenses

                                                     

Class 1

  0.70%   0.40%   0.75%   0.89%   0.72%   0.89%   0.97%     1.15%   1.34%   0.66%   0.80%   0.48%   0.92%

Class 4

  1.15%   N/A   1.20%   1.34%   1.17%   1.34%   1.42%     N/A   1.79%   1.11%   1.25%   N/A   1.37%

 

1 The nature of the services provided to, and the advisory and administration fees paid by each Fund are described under “About the Investment Adviser.” With respect to the International Equity Fund, Money Market Fund and Real Estate Securities Fund, the management fee fluctuates based upon the average daily net assets of each of these Funds and may be higher or lower than those shown above.

 

2 S&P 500 Index Fund, Europe Equity Fund and Money Market Fund do not offer Class 4 shares.

 

3 “Other Expenses” include all operating expenses of the Fund except Management Fees and Distribution and Service (12b-1) Fees. Expenses, other than those incurred by a specific Fund, are allocated pro rata among the Funds and their share classes, if any, based on net assets. Such expenses may include legal fees and costs associated with the independent directors. Fund specific expenses, such as auditing fees, custodial fees, registration fees, and transfer agent fees, are allocated to the Fund that incurs such expense pro rata based on net assets across share classes, if any. Other expense allocation methodologies may result in different expense ratios.

 


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37

 

 

4 The expense information shown in the table has been restated for each Fund (other than the S&P 500 Index Fund, Emerging Markets Equity Fund, High Yield Fund and the Money Market Fund) to reflect additional expenses that the Funds are expected to incur in the current fiscal year. For the S&P 500 Index Fund and the Money Market Fund, the figures above show actual expenses for the most recent fiscal year. The Europe Equity Fund does not show any “Other Expenses” because these Funds are not currently being offered to investors and do not have any operating history to date. Because the Emerging Markets Equity Fund and the High Yield Fund have had no operating history, the expense information in the table for these Funds are estimated and reflects each Fund’s anticipated expenses for the current fiscal year.

 

5 Because Class 4 shares is a new share class, the expense information in the table reflects Class 4 shares’ anticipated expenses based on Class 1 shares restated expense information for the current fiscal year.

 

6 “Acquired Fund Fees and Expenses” includes all fees and expenses associated with investments in investment companies, including ETFs and the GE Funds — GE Money Market Fund (the “GE Money Market Fund”), which serves as the cash sweep vehicle for each non-money market Fund. The amounts shown in the table above have been restated from the fiscal year ended December 31, 2007 to reflect estimated fees anticipated to be incurred in connection with each Fund’s investment in the GE Money Market Fund and are based on each Fund’s average monthly cash positions during the most recent fiscal year. Amounts less than 0.01% are shown as dashes (—) in the above table but are included in “Other Expenses.”

 

7 GE Asset Management will waive a portion of its management fee for each affiliated non-money market Fund in an amount equal to the management fees paid on its cash holdings invested in the GE Money Market Fund, if any. This amount is less than 0.01% for certain Funds, and is reflected as dashes (—) in the above table.

 

8 GE Asset Management has entered into a contractual arrangement with GE Investments Funds, Inc. (the “Company”) to limit the Management Fee charged to the International Equity Fund to 0.80% of the average daily net assets of the Fund (the “Management Fee Waiver Agreement”). Unless terminated or amended, the Management Fee Waiver Agreement will continue until April 30, 2009. The fee waiver will terminate automatically if the management agreement terminates. In addition, the Company may terminate the Management Fee Waiver Agreement without penalty upon 60 days written notice to GE Asset Management. The Management Fee Waiver Agreement may be amended by the mutual written consent of the Company and GE Asset Management.

 

9 GE Asset Management has entered into a contractual arrangement with the Emerging Markets Equity Fund and High Yield Fund to limit “Other Expenses” of each Fund on an annualized basis at or below a specified amount through April 30, 2010, and are given as follows: Emerging Markets Equity Fund — 0.29% and High Yield Fund — 0.20%. Expenses borne by GE Asset Management pursuant to the agreement may be reimbursed by these Funds up to three years from the date the expense was incurred. A reimbursement payment will not be made if it would cause a Fund to exceed its expense limit. This agreement can only be changed with the approval of the GE Investments Funds’ Board of Directors and GE Asset Management.

 


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38

 

GE Investments

Funds, Inc.

Prospectus

     Fund Expenses

 

Fund Expenses For Total Return Fund

 

Shareholder Fees

No sales charge (load) is imposed on purchases of Class 1 or Class 3 shares (or reinvested dividends), nor is a contingent deferred sales charge imposed upon redemption of such shares (although your variable contract may impose such charges). The Fund also does not impose a redemption fee or an exchange fee.

 

Annual fund operating expenses are paid from the Fund’s assets and are reflected in the Fund’s share price and dividends. The figures below show actual “Management Fees” and “Other Expenses” incurred by the Fund during the fiscal year ended December 31, 2007, and estimated “Acquired Fund Fees and Expenses.” The fees and expenses reflected in the tables below do not include applicable variable contract fees and charges. If these fees and charges were included, the costs shown below would be higher.

 

     

Annual Fund

Operating

Expenses

(as a percentage of

average net assets)

  Class 1   Class 3

Management Fees1

  0.32%   0.32%

Distribution and Service (12b-1) Fees

  None   0.30%

Other Expenses2,3

  0.24%   0.04%

Acquired Fund Fees and Expenses4

  0.05%   0.05%

Total Annual Fund Operating Expenses

  0.61%   0.71%

Fees Reimbursed or Waived by the Adviser5

  0.07%   0.07%

Net Annual Fund Operating Expenses

  0.54%   0.64%

 

1 The management fee fluctuates based upon the average daily net assets of the Total Return Fund and may be higher or lower than that shown above. The nature of the services provided to, and the advisory and administration fees paid by, the Fund are described under “About the Investment Adviser.”

 

2 The expense information reflects actual expenses incurred during the fiscal year ended December 31, 2007. Expenses for Class 1 shares also includes amounts incurred pursuant to the Investor Service Plan (0.20% of the average daily net assets of the Total Return Fund attributable to Class 1 shares).

 

3 “Other Expenses” include all operating expenses of the Total Return Fund except Management Fees and Distribution and Service (12b-1) Fees. Expenses, other than those incurred specifically by a Fund, are allocated pro rata among the Funds and their share classes, if any, based on net assets. Such expenses may include legal fees and costs associated with the independent directors. Fund specific expenses, such as auditing fees, custodial fees, registration fees, and transfer agent fees, are allocated to the Fund that incurs such expense and pro rata based on net assets across share classes. Other expense allocation methodologies may result in different expense ratios.

 

4 “Acquired Fund Fees and Expenses” includes all fees and expenses associated with investments in investment companies, including ETFs and the GE Money Market Fund, which serves as the cash sweep vehicle for each non-money market Fund. The amounts shown in the table above have been restated from the fiscal year ended December 31, 2007 to reflect estimated fees anticipated to be incurred in connection with the Total Return Fund’s investment in the GE Money Market Fund and are based on the Fund’s average monthly cash position during the most recent fiscal year.

 

5 Pursuant to an expense limitation agreement with the Company, GE Asset Management has agreed to limit total operating expenses charged to Total Return Fund assets attributable to its Class 1 and Class 3 shares (excluding certain expenses identified below) to 0.32% of the average daily net assets of the Fund attributable to such shares on an annual basis. Expenses excluded from the limitation are: class specific expenses (such as Investor Service Plan fees, Distribution and Service (12b-1) fees and, for Class 3 shares, printing costs), interest, taxes, brokerage commissions, other expenditures that are capitalized in accordance with generally accepted accounting principles, and extraordinary expenses not incurred in the ordinary course of the Total Return Fund’s business. Unless terminated or amended, the expense limitation agreement will continue until April 30, 2009. The agreement will terminate automatically if the management agreement terminates. The Company may terminate the expense limitation agreement without penalty upon 60 days written notice to GE Asset Management. The expense limitation agreement may be amended by the mutual written consent of the Company and GE Asset Management. In addition, GE Asset Management will waive a portion of its management fee for the Total Return Fund in an amount equal to the management fees paid to the GE Money Market Fund on its cash holdings invested in the GE Money Market Fund, if any.

 


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The Impact

of Fund

Expenses

 

The following example is 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 example does not reflect variable contract expenses, fees, and charges. If these expenses, fees, and charges were included, the costs shown below would be higher.

 

 

 

Example

You would pay the following expenses on a $10,000 investment, assuming redemption:

 

      1 Year    3 Years    5 Years    10 Years

U.S. Equity Fund

           

Class 1

   $ 71    $ 224    $ 390    $ 872

Class 4

     117      366      633      1,399

S&P 500 Index Fund

           
       40      128      223      504

Premier Growth Equity Fund

           

Class 1

     76      240      418      933

Class 4

     122      381      661      1,457

Core Value Equity Fund

           

Class 1

     90      284      493      1,096

Class 4

     136      424      734      1,612

Mid-Cap Equity Fund

           

Class 1

     74      231      402      898

Class 4

     119      372      645      1,424

Small-Cap Equity Fund

           

Class 1

     91      285      496      1,103

Class 4

     137      426      737      1,619

International Equity Fund

           

Class 1

     99      353      627      1,408

Class 4

     145      493      865      1,910

Emerging Markets Equity Fund

           

Class 1

     136      458      803      1,777

Class 4

     182      597      1,037      2,262

Income Fund

           

Class 1

     67      219      385      866

Class 4

     113      361      629      1,394

High Yield Fund

           

Class 1

     82      296      529      1,196

Class 4

     127      437      769      1,708

Total Return Fund*

           

Class 1

     56      189      335      760

Class 3

     66      221      390      880

Money Market Fund

           
       49      153      267      601

Real Estate Securities Fund

           

Class 1

     94      294      510      1,133

Class 4

     139      434      751      1,648

 

* The expenses shown for the Total Return Fund reflect GE Asset Management’s contractual agreement to reduce or otherwise limit Total Return Fund expenses for the first year of each period noted.

 


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40

 

GE Investments

Funds, Inc.

Prospectus

    

More on Strategies,

Risks and Disclosure

of Portfolio Holdings

 

Important Definitions

 

This section defines important terms that may be unfamiliar to an investor reading about the Funds:

 

90 Day T-Bill is an unmanaged measure/index of the performance of U.S. Treasury bills currently available in the marketplace having a remaining maturity of 90 days.

 

Asset-backed securities represent a participation in, or are secured by and payable from, a stream of payments generated by particular assets, such as commercial paper, credit card receivables, auto loans or home equity 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.

 

Common stock is a class of security representing equity ownership in a corporation. Holders of common stock have the right to elect directors and collect dividends. Common stock claims are subordinate to bondholder claims, preferred stockholders, and general creditors.

 

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 obligations, 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 instruments are instruments or contracts whose values are based on the performance of an underlying financial asset, currency or index and include futures contracts (on single stocks, on indices, currencies or bonds), options (on stocks, indices, currencies, futures contracts or bonds), forward currency transactions, swaps (including interest rate, currency, index and credit default swaps), interest-only and principal-only debt securities, certain mortgage-backed securities like collateralized mortgage obligations (CMOs), and structured and indexed 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.

 

Equitized cash is a technique that uses futures or other instruments to gain equity market exposure for holdings of cash and cash equiv-

 


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41

 

 

alents and/or money market instruments. The use of futures or other instruments would be subject to other applicable restrictions on the Fund’s investments.

 

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 or governments. They may include the following:

n 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

n Yankee Bonds, which are dollar-denominated securities issued by foreign issuers in the U.S.

n Debt securities denominated in currencies other than U.S. dollars

 

Foreign securities include interests in or obligations of entities located outside 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 (i) is organized, (ii) derives at least 50% of its revenues or profits from goods produced or sold, investments made or services performed, (iii) has at least 50% of its assets situated, or (iv) 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 contracts 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 contracts 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.

 

Government stripped mortgage-related securities are mortgage-backed securities that have been separated into their interest and principal components. They represent interests in distributions of interest on or principal underlying mortgage-backed securities.

 

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, preferred securities and convertible securities of corporations 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 similar quality. High yield securities include bonds rated below investment-grade, sometimes called “junk bonds”, and are considered speculative with respect to capacity to pay interest and repay principal in accordance with its terms. High yield securities generally entail more credit risk than higher-rated securities.

 

Illiquid investments are securities or other instruments that cannot be sold within seven days for a price approximately equal to the value it currently has on a Fund’s books. Illiquid investments may include repurchase agreements maturing in more than seven days, swaps, time deposits with a notice or demand period of more than seven days, certain over-the-counter option contracts (and segregated assets used to cover such options), participation interests in loans, and certain restricted securities.

 


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Industrial development bonds are considered municipal bonds if the interest paid is exempt from federal income tax. They are issued by or on behalf of public authorities to raise money to finance various privately operated facilities for business and manufacturing, housing, sports, and pollution control. These bonds may also be used to finance public facilities such as airports, mass transit systems, ports and parking. The payment of the principal and interest on such bonds is dependent solely on the ability of the facility’s user to meet its financial obligations and the pledge, if any, of real and personal property financed by the bond as security for those payments.

 

Investment-grade debt 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 considered by portfolio management to be of similar quality to such securities. Securities rated in the fourth highest grade have some speculative elements.

 

LB Aggregate Bond Index is a market value-weighted index of taxable investment-grade debt issues, including government, corporate, asset-backed and mortgage-backed securities, with maturities of one year or more. This index is designed to represent the performance of the U.S. investment-grade first-rate bond market.

 

Lehman Brothers U.S. Corporate High-Yield — 3% Issuer Capped Index is an index that covers the U.S. dollar-denominated, non-investment grade, fixed-rate, taxable corporate bond market. No one issuer comprises more than 3% of this Index.

 

MSCI® EAFE® Index is a market capitalization-weighted index of equity securities of companies domiciled in various countries. The index is designed to represent the performance of developed stock markets outside the U. S. and Canada and excludes certain market segments unavailable to U.S. based investors.

 

MSCI® Emerging Markets Free Index is a float-adjusted market capitalization index designed to measure equity market performance in global equity markets.

 

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, corporations and other entities. Each Fund may invest in money market instruments either directly or indirectly (other than the Money Market Fund) through investments in the GE Funds – GE Money Market Fund (GE Money Market Fund).

 

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), other government agencies and private issuers. They may also include collateralized mortgage obligations (CMOs), which are derivative instruments that are fully collateralized by a portfolio of mortgages or mortgage-related securities.

 

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 securities 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 that pay interest exempt from regular federal income taxes and, in some cases, from federal alternative minimum taxes. They include: (i) municipal leases; (ii) participation interests in municipal obligations, which are proportionate, undivided interests in municipal obligations; (iii) municipal obligation components, which are municipal obligations that have been divided into two components (one component pays interest at a rate adjusted periodically through an

 


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auction process, the second pays the residual rate after the auction rate is deducted from total interest payable); (iv) custodial receipts on municipal obligations, which evidence ownership of future interest payments, principal payments, or both, on certain municipal obligations; (v) tender option bonds; and (vi) industrial development bonds.

 

NAREIT Equity Index is an unmanaged index of all tax-qualified real estate investment trusts (REITs) listed on the New York Stock Exchange, American Stock Exchange and NASDAQ which have 75% or more of their gross invested book assets invested directly or indirectly in the equity ownership of real estate.

 

Net cash takes into account a Fund’s holdings of cash and cash equivalents and money market instruments as well as any adjustments for equitized cash and other assets and liabilities, such as pending securities settlements and liabilities associated with loans of portfolio securities.

 

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. A securities index option 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 put) or is less than (in the case of a call) 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.

 

Real Estate Investment Trusts (REITs) are pooled investment vehicles that invest primarily in income producing real estate or real estate related loans or interests therein. REITs are generally classified as Equity REITs or Mortgage REITs or a combination of Equity or Mortgage REITs. Equity REITs invest a majority of their assets directly in real property and derive income primarily from the collection of rents. Equity REITs can also realize capital gains by selling properties that have appreciated in value. Mortgage REITs invest the majority of their assets in real estate mortgages and derive income from the collection of interest payments.

 

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 investments may be difficult or impossible to sell when a Fund wants to sell them at a price at which the Fund values them.

 

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.

 

Rule 144A securities are restricted securities that may be sold to certain institutional purchasers under Rule 144A.

 

Russell 2000 Index is a market capitalization-weighted index consisting of 2,000 of the smallest U.S.-domiciled publicly traded common stocks that are included in the Russell 3000® Index. The Russell® 3000 Index comprises the 3,000 largest U.S. domiciled companies.

 

Russell MidCap Index is a market capitalization weighted index of the smallest 800 companies included in the Russell 1000 Index. The Russell

 


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GE Investments

Funds, Inc.

Prospectus

More on Strategies, Risks and Disclosure of Portfolio Holdings

 

 

1000 Index comprises the 1,000 largest U.S. domiciled companies.

 

S&P 500® Index is an unmanaged, market capitalization-weighted index of stocks of 500 large U.S. companies, which is widely used as a measure of large-cap U.S. stock market performance.

 

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 principal 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, but do not include securities issued by other investment companies.

 

Tender option bonds are long-term municipal obligations sold by a bank or other financial institution subject to a demand feature that gives the purchaser the right to sell them to the bank or other financial institution at par plus accrued interest at designated times (tender option). The interest rate on the bonds is typically reset at the end of the applicable interval in an attempt to cause the bonds to have a market value that approximates their par value, plus accrued interest. The tender option may not be exercisable in the event of a default on, or significant downgrading of, the underlying municipal obligation, and may be subject to other conditions. Therefore, a fund’s ability to exercise the tender option will be affected by the credit standing of both the bank or other financial institution involved and the issuer of the underlying securities.

 

U.S. Government securities are securities that are issued and guaranteed as to principal and 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 U.S. Government, such as U.S. Treasury bills and notes and obligations of the Government National Mortgage Association (Ginnie Mae). Other U.S. Government securities are backed by the issuer’s right to borrow from the U.S. Treasury, such as Federal National Mortgage Association (Fannie Mae) securities, while some are backed only by the credit of the issuing organization, such as obligations of the Federal Home Loan Mortgage Corporation (Freddie Mac). All U.S. Government securities are considered highly creditworthy. Fannie Mae and Freddie Mac securities are not backed by the full faith and credit of the U.S. Government.

 

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, prices of value stocks are lower than those of growth stocks.

 

Variable rate securities, which include floating and variable rate instruments, are securities that carry interest rates that fluctuate or 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 instruments and transactions such as buying and selling options and futures contracts, entering into forward currency transactions or swap agreements or contracts 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 instruments risk.

 


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Warrants are securities that are usually issued together with a bond or preferred securities, that permit 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 represents the length of time in days or years until the average security in a money market or income 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 a Fund. This measure indicates a money market fund or an income fund’s sensitivity to changes in interest rates. In general, the longer a Fund’s weighted average 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 are securities that pay no interest to their holders prior to maturity. Instead, interest is paid in a lump sum at maturity. They are purchased at a discount from par value, and generally are more volatile than other fixed income securities.

 

In addition to each Fund’s principal investment strategies described earlier

 

More on Investment Strategies

 

in this Prospectus, a Fund is permitted to use other securities, investment strategies and techniques in pursuit of its investment objective. No Fund is under any obligation to use any of these strategies or techniques 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.

 

Cash and Temporary Defensive Positions: Under normal circumstances, each Fund may hold cash and cash equivalents and/or money market instruments (i) pending investment, (ii) for investment purposes, (iii) for cash management purposes, (iv) to meet redemptions, and (v) to meet operating expenses. A Fund that invests in equity securities may equitize cash in order to gain equity market exposure with respect to such holdings of cash and cash equivalents and/or money market instruments.

 

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 (x) without limit hold cash and cash equivalents and/or invest in money market instruments, or (y) 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.

 

In addition, a Fund may hold cash and cash equivalents and/or invest in money market instruments under circumstances where the liquidation of a Fund has been approved by the Directors and therefore investments in accordance with the Fund’s investment objective and policies would no longer be appropriate.

 

Each Fund may invest in money market instruments either directly or indirectly (except for the Money Market Fund) through investment in the GE Money Market Fund. GE Asset Management will waive a portion of its management fee for each affiliated non-money market Fund in an amount equal to the management fees paid to the GE Money Market Fund on its cash holdings invested in the GE Money Market Fund, if any.

 

Before using the GE Money Market Fund for this purpose, certain Funds may have invested a portion of their cash in the GEI Investment Fund (formerly GEI Short-Term Investment Fund), which is a privately offered pooled investment trust managed by GE Asset Management. GE Asset Management charges no advisory fee to the GEI Investment Fund. Those Funds may continue to hold a small interest in the GEI Investment Fund.

 

To the extent that a Fund, other than the Money Market Fund, holds cash and cash equivalents and/or invests in money market instruments, it may not achieve its investment objective.

 


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Funds, Inc.

Prospectus

More on Strategies, Risks and

Disclosure of Portfolio Holdings

 

 

The following tables summarize some of 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.

 

 

    Borrowing    Repurchase Agreements    Reverse Repurchase Agreements    Restricted Securities and Illiquid Securities    Structured and Indexed Securities    Purchasing and Writing Securities Options    Purchasing and Writing Securities Index Options

U.S. Equity Fund

  33 1/3%    Yes    Yes    Yes    No    Yes    Yes

S&P 500 Index Fund

  20%    Yes    No    Yes    No    Yes    Yes

Premier Growth Equity Fund

  33 1/3%    Yes    Yes    Yes    No    Yes    Yes

Core Value Equity Fund

  33 1/3%    Yes    Yes    Yes    No    Yes    Yes

Mid-Cap Equity Fund

  10%    Yes    No    Yes    No    Yes    Yes

Small-Cap Equity Fund

  33 1/3%    Yes    Yes    Yes    No    Yes    Yes

International Equity Fund

  10%    Yes    No    Yes    No    Yes    Yes

Europe Equity Fund

  33 1/3%    Yes    Yes    Yes    Yes    Yes    Yes

Emerging Markets Equity Fund

  33 1/3%    Yes    Yes    Yes    Yes    Yes    Yes

Income Fund

  33 1/3%    Yes    Yes    Yes    Yes    Yes    Yes

High Yield Fund

  33 1/3%    Yes    Yes    Yes    Yes    Yes    Yes

Total Return Fund

  10%    Yes    No    Yes    Yes    Yes    Yes

Money Market Fund

  10%    Yes    No    Yes    No    No    No

Real Estate Securities Fund

  33 1/3%    Yes    Yes    Yes    Yes    Yes    Yes

 

 

 


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     Futures Contracts and Options on Futures Contracts    Forward Currency Transactions    Options on Foreign Currencies    Maximum Investment in Debt Securities    Maximum Investment in High Yield Securities    Maximum Investment in Foreign Securities      When- Issued and Delayed Delivery Securities

U.S. Equity Fund

   Yes    Yes    Yes    20%    5%    15% *    Yes

S&P 500 Index Fund

   Yes    No    No    20%    None    35%      Yes

Premier Growth Equity Fund

   Yes    No    No    20%    5%    25% *    Yes

Core Value Equity Fund

   Yes    Yes    Yes    20%    5%    25% *    Yes

Mid-Cap Equity Fund

   Yes    No    No    20%    15%    35%      Yes

Small-Cap Equity Fund

   No    No    No    20%    10%    10% *    Yes

International Equity Fund

   Yes    Yes    Yes    20%    5%    100%      Yes

Europe Equity Fund

   Yes    Yes    Yes    20%    15%    100%      Yes

Emerging Markets Equity Fund

   Yes    Yes    Yes    20%    10% in BB or B
by S&P or Ba or
B by Moody’s
or below or of
similar quality
   100%      Yes

Income Fund

   Yes    Yes    Yes    100% (maximum
of 25% BBB by
S&P or Baa by
Moody’s or
equivalent)
   20% in BB or B
by S&P or Ba or
B by Moody’s
or below or of
similar quality
   35% *    Yes

High Yield Fund

   Yes    Yes    Yes    100%    100%    35% *    Yes

Total Return

   Yes    Yes    Yes    100%    30%    35%      Yes

Money Market Fund

   No    No    No    100%    None    20% *    Yes

Real Estate Securities Fund

   Yes    No    No    100%    35%    20%      Yes

 

* This limitation excludes American Depositary Receipts and securities of a foreign issuer with a class of securities registered with the Securities and Exchange Commission (SEC) and listed on a U.S. national securities exchange.

 


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Funds, Inc.

Prospectus

More on Strategies, Risks and

Disclosure of Portfolio Holdings

 

 

    Lending Portfolio Securities    Rule 144A Securities    Obligations of Supranational Agencies Debt    Depositary Receipts    Securities of Other Investment Funds    Municipal Leases    Floating and Variable Rate Instruments      Participation Interests in Municipal Obligations

U.S. Equity Fund

  Yes    Yes    Yes    Yes    Yes    No    No *    No

S&P 500 Index Fund

  Yes    No    No    Yes    Yes    No    Yes      No

Premier Growth Equity Fund

  Yes    Yes    Yes    Yes    Yes    No    No *    No

Core Value Equity Fund

  Yes    Yes    Yes    Yes    Yes    No    No *    No

Mid-Cap Equity Fund

  Yes    Yes    Yes    Yes    Yes    No    No *    No

Small-Cap Equity Fund

  Yes    Yes    Yes    Yes    Yes    No    No *    No

International Equity Fund

  Yes    Yes    Yes    Yes    Yes    No    No *    No

Europe Equity Fund

  Yes    Yes    Yes    Yes    Yes    No    Yes      No

Emerging Markets Equity Fund

  Yes    Yes    Yes    Yes    Yes    No    No *    No

Income Fund

  Yes    Yes    Yes    Yes    Yes    No    Yes      No

High Yield Fund

  Yes    Yes    Yes    Yes    Yes    No    Yes      No

Total Return Fund

  Yes    No    Yes    Yes    Yes    No    Yes      No

Money Market Fund

  Yes    No    Yes    No    Yes    No    Yes      No

Real Estate Securities Fund

  Yes    Yes    Yes    Yes    Yes    No    Yes      No

 

* Excludes commercial paper and notes with variable and floating rates of interest.

 


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     Zero Coupon Obligation    Municipal Obligations Components    Custodial Receipts on Municipal Obligations    Mortgage Related Securities, including CMOs    Government Stripped Mortgage Related Securities    Asset Backed Securities and Receivable- Backed Securities    Mortgage Dollar Rolls    Short Sales Against the Box

U.S. Equity Fund

   Yes    No    No    Yes    No    No    No    Yes

S&P 500 Index Fund

   No    No    No    Yes    No    No    No    Yes

Premier Growth Equity Fund

   No    No    No    Yes    No    No    No    Yes

Core Value Equity Fund

   No    No    No    Yes    No    No    No    Yes

Mid-Cap Equity Fund

   Yes    No    No    Yes    Yes    Yes    Yes    Yes

Small-Cap Equity Fund

   No    No    No    Yes    No    No    Yes    Yes

International Equity Fund

   No    No    No    Yes    No    No    No    Yes

Europe Equity Fund

   No    No    No    Yes    No    No    No    Yes

Emerging Markets Equity Fund

   No    No    No    Yes    No    No    No    Yes

Income Fund

   Yes    No    No    Yes    Yes    Yes    Yes    Yes

High Yield Fund

   Yes    No    No    Yes    Yes    Yes    Yes    Yes

Total Return Fund

   Yes    Yes    Yes    Yes    Yes    Yes    Yes    Yes

Money Market Fund

   No    No    No    Yes    No    Yes    No    No

Real Estate Securities Fund

   No    No    No    Yes    Yes    Yes    Yes    Yes

 


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More on Risks

Like all mutual funds, investing in the GE Investments Funds involves risk factors and special considerations. A GE Investments Fund’s risk is defined primarily by its principal investment strategies, which are described earlier in this Prospectus. Investments in a GE Investments Fund are not insured against loss of principal. As with any mutual fund, there can be no assurance that a GE Investments Fund will achieve its investment objective. Investing in shares of a GE Investments Fund should not be considered a complete investment program. The share value of the Equity Funds, Income Funds, Total Return Fund and Real Estate Securities Fund will rise and fall. Although the Money Market Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.

 

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 — may help to 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 SAI, which is incorporated by reference into this Prospectus.

 

Asset-Backed Securities Risk: Asset-backed securities often are subject to more rapid repayment than their stated maturity dates indicate, due to changing economic conditions. To maintain its position in such securities, a Fund may reinvest the reductions in principal amounts resulting from the prepayments. Yields on those reinvested amounts are subject to prevailing market rates. Because prepayments of principal generally increase when rates are falling, a Fund generally has to reinvest proceeds from prepayments at lower rates. Also, because asset-backed securities often are secured by the loans underlying the securities, a Fund may lose money if there are defaults on the loans underlying the securities. Such defaults have become an increasing risk for asset-backed securities that are secured by home-equity loans related to sub-prime mortgage loans, especially in a declining residential real estate market. Investments in asset-backed securities may also be subject to valuation risk.

 

Bond Market Risk: Bond market risk is the risk that the value of debt securities may decline. Bond prices can change daily, sometimes rapidly, in response to issuer activity and general economic and credit market conditions. Bond prices can be volatile and there can be severe limitations in the ability to sell certain bonds, including those that are of higher credit quality, during periods of reduced credit market liquidity such as the one that the market is currently experiencing.

 

Credit Risk: The price of a bond is affected by the issuer’s or counterparty’s credit quality. Changes in an entity’s financial condition and general economic conditions can affect its ability to honor financial obligations and therefore its 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 Instruments Risk: A Fund’s use of various investment techniques may involve derivative instruments, such as swaps, options, futures and options on futures. A Fund may, but is not required to, use derivatives as a substitute for taking a long or short position in an underlying asset, to increase returns, or as part of a hedging strategy. A small investment in derivatives could have a potentially

 


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large impact on a Fund’s performance and its rate of income distributions for a particular period of time. The use of derivatives involves risks different from, or possibly greater than, the risks associated with investing directly in the underlying assets. Derivatives can be highly volatile, illiquid, subject to counterparty risk and difficult to value. There is also the risk that changes in the value of a derivative held by a Fund may not correlate with a Fund’s other investments which could impact Fund performance. A Fund may choose not to invest in derivative instruments because they may not be available, may be too costly to be used effectively or may be unable to be used for other reasons.

 

Diversification Risk: A non-diversified fund may invest in securities of a limited number of issuers to achieve a potentially greater investment return than a Fund that invests in a larger number of issuers. As a result, price movements of a single issuer’s securities will have a greater impact on such Fund’s net asset value causing it to fluctuate more than that of a more widely diversified Fund. The Real Estate Securities Fund is a non-diversified fund and is therefore subject to this risk. In addition, although each Fund other than the Real Estate Securities Fund is a diversified fund, the Premier Growth Equity Fund may be subject to some level of diversification risk.

 

Emerging Markets Risk: Emerging market securities bear most foreign exposure risks discussed below. In addition, there are greater risks involved in investing in emerging markets than in developed foreign markets. Specifically, the economic structures in emerging market countries are less diverse and mature than those in developed countries, and their political systems are less stable. Investments in 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 in 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 valuation risk and:

n 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.

n 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.

n 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.

 

Government Stripped Mortgage-Related Securities Risk: In addition to prepayment risk, the yields on

 


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government stripped mortgage-related securities are extremely sensitive to prepayment on the underlying mortgage loans. A rapid rate of principal payments will reduce the yield to maturity on interest only mortgage-related securities and increase the yield to maturity on principal only mortgage-related securities. If the underlying mortgage loans experience greater-than anticipated principal payments, a Fund may not recoup fully its initial investment in interest only mortgage-related securities. The market for such securities may be volatile and they are considered illiquid unless certain conditions are met. Investments in government stripped mortgage-related securities may also be subject to valuation risk.

 

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. Adverse publicity and investor perceptions, whether or not accurate, regarding below investment-grade securities may depress prices and diminish liquidity for such 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 secu-rities may be sold. Less active markets may diminish a Fund’s ability to obtain accurate market quotations when valuing the portfolio securities and thereby give rise to valuation risk. 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 Investments Risk: Illiquid investments 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, may not be able to sell the investment at all, or may be forced to forgo other investment opportunities, all of which may have an impact on returns of the Fund. Illiquid investments also may be subject to valuation risk.

 

Initial Public Offerings Risk: Certain Funds may purchase shares issued as part of, or a short period after, a company’s initial public offering (IPOs), and may dispose of those shares shortly after their acquisition. The purchase of shares issued in IPOs exposes a Fund to the risks associated with organizations that have little operating history as public companies, as well as to the risks associated with the sectors of the market in which the issuer operates. The market for IPO shares has been volatile, and share prices of newly-public companies have fluctuated significantly over short periods of time.

 

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.

 

Mortgage-Backed Securities Risk: Mortgage-backed securities that are collateralized by a portfolio of mortgages or mortgage-related securities depend on the payments of principal and interest made by or through the underlying assets, which may not be sufficient to meet the payment obligations of the mortgage-backed security. Prepayments of principal, which occur more frequently in falling interest rate conditions, may shorten the term and reduce the value of these securities. The quality and value of the underlying collateral may decline, or default, which has become an increasing risk for collateral related to

 


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sub-prime mortgage loans, especially in a declining residential real estate market. Further, these securities generally are privately sold and may not be readily marketable, particularly after a rapid decrease in value. Investments in mortgage-backed securities may also be subject to valuation risk.

 

Municipal Obligations Risk: Municipal obligations 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. The municipal obligations market is volatile and may be significantly affected by tax, legislative or political changes. Some municipal obligations are insured and guarantee the timely payment of interest and repayment of principal.

 

Portfolio Turnover Risk: Portfolio securities are sold whenever the portfolio manager believes it appropriate, regardless of how long the securities have been held. Each Income and Asset Allocation Fund’s investment program emphasizes active portfolio management with a sensitivity to short-term market trends and price changes in individual securities. Accordingly, the Income and Asset Allocation Funds expect to take frequent trading positions, resulting in portfolio turnover that may exceed those of most mutual funds of comparable size. Portfolio turnover generally involves some expense to the Funds, including brokerage commissions, dealer markups and other transactions costs, and may result in the recognition of capital gains that may be distributed to shareholders. Generally, portfolio turnover over 100% is considered high and increases these costs.

 

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.

 

Real Estate Securities Risk: The securities of issuers that own, construct, manage or sell residential, commercial or industrial real estate are subject to risks in addition to those of other issuers. Such risks include: changes in real estate values and property taxes, overbuilding, variations in rental income, interest rates and changes in tax and regulatory requirements, such as those relating to the environment. Performance of a particular real estate security also may depend on the structure, cash flow, and management skill of the particular company.

 

REIT-Specific Risk: Equity REITs may be affected by changes in the value of the underlying property owned by the trusts, while mortgage REITs may be affected by the quality of any credit extended. Further, equity and mortgage REITs are dependent upon management skill and are not diversified. Such trusts are also subject to heavy cash flow dependency, defaults by borrowers, self-liquidation, and the possibility of failing to qualify for special tax treatment under Subchapter M of the Internal Revenue Code and to maintain an exemption under the 1940 Act. For example, because the Real Estate Securities Fund may acquire debt securities of issuers primarily engaged in or related to the real estate industry, it also could conceivably own real estate directly as a result of a default on such securities. Any rental income or income from the disposition of such real estate could adversely affect its ability to retain its tax status as a regulated investment company, which would have adverse tax consequences on its shareholders. Finally, certain REITs may be self-liquidating in that a specific term of existence is provided

 


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GE Investments

Funds, Inc.

Prospectus

More on Strategies, Risks and Disclosure of Portfolio Holdings

 

 

for in the trust document. Such trusts run the risk of liquidating at an economically inopportune time.

 

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 may 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 that the Fund has previously sold but is later 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: Stock market risk is the risk that the value of equity securities may decline. Stock prices change daily, sometimes rapidly, in response to company activity and general economic and market conditions. Stock prices may decline in value even during periods when equity securities in general are rising or may not perform as well as the market in general. Stock prices may also experience greater volatility during periods of challenging market conditions such as the one that the market is currently experiencing. Additional stock market risk may be introduced when a particular equity security is traded on a foreign market. For more detail on the related risks involved in foreign markets, see Foreign Exposure Risk above.

 

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.

n 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.

n 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.

n Small-Cap Company Risk: Investing in securities of small-cap companies may involve greater risks than investing in larger, more established companies. 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 may offer potential for above-average returns, the companies may not succeed and their stock prices could decline significantly. Investments in small-cap companies may also be subject to valuation risk.

 


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n High Yield Investing Risk: The 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.

n 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 typically will underperform when growth investing is in favor.

 

Valuation Risk: Portfolio securities may be valued using techniques other than market quotations, under the circumstances described under the section “Calculating Share Value.” The value established for a portfolio security may be different than what would be produced through the use of another methodology or if it had been priced using market quotations. Portfolio securities that are valued using techniques other than market quotations, including “fair valued” securities, may be subject to greater fluctuation in their value from one day to the next than would be the case if market quotations were used. In addition, there is no assurance that a Fund could sell a portfolio security for the value established for it at any time and it is possible that a Fund would incur a loss because a portfolio secu-rity is sold at a discount to its established value.

 

GE Asset Management has adopted policies and procedures to protect the Funds’ portfolio information and to prevent the misuse of that information by a third party. GE Asset Management limits disclosure of portfolio information to situations it believes will not result in material harm or disadvantage to investors in the Funds. A description of the Funds’ policies and procedures relating to the disclosure of portfolio holdings is available in the Funds’ SAI.

 


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About the

Investment

Adviser

    

 

Investment Adviser and Administrator

 

GE Asset Management Incorporated (GE Asset Management), located at 3001 Summer Street, P.O. Box 7900, Stamford, Connecticut 06904-7900, 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. As of December 31, 2007, GE Asset Management had approximately $189 billion of assets under management, of which more than $24.3 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 certain subadvisers (out of the advisory fee that it receives), Palisade Capital Management, L.L.C., Champlain Investment Partners, LLC, GlobeFlex Capital, LP, SouthernSun Asset Management, Inc., Urdang Securities Management, Inc., and SSgA Funds Management, Inc., 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. The fees payable to GE Asset Management in connection with the Money Market Fund, Total Return Fund, International Equity Fund, and Real Estate Securities Fund are graduated so that increases in the respective Fund’s average annual net assets may result in a lower fee and decreases in a Fund’s average annual net assets may increase the fee.

 

Shareholders of the Small-Cap Equity Fund, Real Estate Securities Fund, Emerging Markets Equity Fund, Europe Equity Fund and High Yield Fund have approved a “manager of managers” arrangement that permits GE Asset Management, as each Fund’s investment adviser, to appoint and replace unaffiliated sub-advisers, and enter into and amend sub-advisory agreements with unaffiliated sub-advisers on behalf of the Fund without shareholder approval. The “manager of managers” arrangement is intended to enable the Fund to enhance performance by allowing GE Asset Management to employ sub-advisers best suited to the needs of the Fund without incurring the expense and delays associated with obtaining shareholder approval of sub-advisers and related sub-advisory agreements.

 

Employment of the “manager of managers” arrangement is contingent upon either (1) receipt of an exemptive order (Order) from the SEC permitting such an arrangement, or (2) the adoption by the SEC of proposed Rule 15a-5 under the 1940 Act which would permit such an arrangement (Rule). Under the “manager of managers” arrangement, shareholders would receive notice of, and information pertaining to, any new sub-advisory agreement and the fees payable thereunder, or any material change to an existing sub-advisory agreement. In particular, shareholders would receive the same information about a new sub-advisory agreement and a new sub-adviser that they would receive in a proxy statement related to their approval of a new sub-advisory agreement in the absence of a “manager of managers” arrangement. In each case, shareholders will receive such notice and information as required by the Order or the Rule, as applicable.

 


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GE Investments

Funds, Inc.

Prospectus

About the

Investment Adviser

 

Board of Director’s Approval of Investment Advisory Agreements

 

The Fund’s annual report to shareholders for the fiscal year ended December 31, 2007, contains a discussion regarding the basis for the Funds’ board of directors’ approval of all investment advisory contracts and sub-advisory contracts.

 

Pursuant to an expense limitation agreement with the Company, GE Asset Management has agreed to limit total operating expenses charged to Total Return Fund assets attributable to its Class 1 and Class 3 shares (excluding certain expenses identified below) to 0.32% of the average daily net assets of the Fund attributable to such shares on an annual basis. Expenses excluded from the limitation are: class specific expenses (such as Investor Service Plan fees, Distribution and Service (12b-1) fees, and, for Class 3 shares, printing costs), interest, taxes, brokerage commissions, other expenditures that are capitalized in accordance with generally accepted accounting principles, and extraordinary expenses not incurred in the ordinary course of the Total Return Fund’s business. Unless terminated or amended, the expense limitation agreement will continue until April 30, 2009. The agreement will terminate automatically if the management agreement terminates. In addition, the Company may terminate the expense limitation agreement without penalty upon 60 days written notice to GE Asset Management. The expense limitation agreement may be amended by the mutual written consent of the Company and GE Asset Management.

 

Investment Management Fee:

 

Each Fund pays GE Asset Management an investment management fee. The fee is accrued daily and paid monthly at the following rates:

 

U.S. Equity Fund

   0.55%

S&P 500 Index Fund

   0.35%

Premier Growth Equity Fund

   0.65%

Core Value Equity Fund

   0.65%

Mid-Cap Equity Fund

   0.65%

Small-Cap Equity Fund

   0.80%

International Equity Fund

    

First $100 million of average daily net assets

   1.00%

Next $100 million of average daily net assets

   0.95%

Over $200 million of average daily net assets

   0.90%

Europe Equity Fund

   1.15%

Emerging Markets Equity Fund

   1.05%

High Yield Fund

   0.60%

Income Fund

   0.50%

Total Return Fund and Money Market Fund

    

First $100 million of average daily net assets

   0.50%

Next $100 million of average daily net assets

   0.45%

Next $100 million of average daily net assets

   0.40%

Next $100 million of average daily net assets

   0.35%

Over $400 million of average daily net assets

   0.30%

Real Estate Securities Fund

    

First $100 million of average daily net assets

   0.85%

Next $100 million of average daily net assets

   0.80%

Over $200 million of average daily net assets

   0.75%

 

 


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About the Portfolio Managers

 

Each Fund is managed by either an individual portfolio manager who is primarily responsible for the day-to-day management of a Fund, or a team of portfolio managers, who are jointly and primarily responsible for the day-to-day management of a Fund. The portfolio managers of the Funds generally have final authority over all aspects of their portions of a Fund’s investment portfolio, including securities purchase and sale decisions, portfolio construction techniques and portfolio risk assessment. The following sets forth the roles of the primary portfolio managers of the specified Funds (except for the Money Market Fund) followed by biographical information for each portfolio manager.

 

Portfolio Management Teams

 

The U.S. Equity Fund is managed by a team of portfolio managers that includes George A. Bicher, Stephen V. Gelhaus, Thomas R. Lincoln and Paul C. Reinhardt. Each of the foregoing portfolio managers manages (or co-manages) one of three sub-portfolios, which comprise the Fund. The three sub-portfolios are managed independently of each other and the portfolio managers have full discretion over their sub-portfolio. The weightings to each sub-portfolio in the Fund, which can be changed at any time but generally remain stable for 18 to 24 months, are driven by the objective of keeping the Fund “style neutral” such that it combines growth and value investment management styles and does not tend to favor either style.

 

The Premier Growth Equity Fund is managed by David B. Carlson.

 

The Core Value Equity Fund is co-managed by Paul C. Reinhardt and Stephen V. Gelhaus. Messrs. Reinhardt and Gelhaus both manage the Fund as a collaborative team. Both portfolio managers have the authority to increase or decrease existing positions in the Fund; however, Mr. Reinhardt, as lead manager, is vested with the authority to purchase securities that are new to the Fund or to divest the Fund of its entire position in a security. Mr. Reinhardt also has veto authority over Mr. Gelhaus’ trade decisions.

 

The Small-Cap Equity Fund is managed by David Wiederecht who is vested with oversight authority over the Fund’s sub-advisers that provide day-to-day management of the assets of the Fund allocated to them. Mr. Wiederecht has full discretion in determining the assets that are allocated to each sub-adviser. The current sub-advisers of the Fund are as follows: Palisade Capital Management LLC; Champlain Investment Partners, LLC, GlobeFlex Capital, LP; and SouthernSun Asset Management, Inc. Additional information about each sub-adviser can be found under the section entitled “About the Sub-Adviser – Small-Cap Equity Fund” later in this Prospectus.

 

The Mid-Cap Equity Fund is managed by Diane M. Wehner.

 

The International Equity Fund is managed by a team of portfolio managers that includes Brian Hopkinson, Ralph R. Layman, Paul Nestro, Jonathan L. Passmore, Michael J. Solecki and Makoto Sumino. As lead portfolio manager for the Fund, Mr. Layman oversees the entire team and assigns a portion of the Fund to each manager, including himself. Each portfolio manager is limited to the management of his or her portion of the Fund, the size of the portion which Mr. Layman determines on an annual basis. The portfolio managers do not operate independently of each other, rather, the team operates collaboratively, communicating purchases or sales of securities on behalf of the Fund.

 

The Europe Equity Fund is managed by Paul Nestro and Michael J. Solecki. As lead portfolio manager for the Fund, Mr. Solecki oversees the entire team. Mr. Layman, in his role as Chief Investment Officer of the International Equity Team, allocates a portion of the Fund to each portfolio manager on an annual basis. The portfolio managers operate as a collaborative team, communicating purchases or sales of securities on behalf of the Fund.

 

The Emerging Markets Equity Fund is co-managed by Tory Brent Jones and Ping Zhou. Messrs. Jones and Zhou

 


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GE Investments

Funds, Inc.

Prospectus

About the

Investment Adviser

 

 

each independently manage approximately one-half of the portfolio; however, they operate as a collaborative team and inform each other of trades.

 

The Income Fund is managed by a team of portfolio managers that includes Paul M. Colonna, William M. Healey, Mark H. Johnson, James F. Palmieri, Lewis Tatananni and Vita Marie Pike. The team is led by Mr. Colonna, who is vested with oversight authority. Each portfolio manager is assigned a class of assets, the size of which are determined by team consensus and adjusted on a monthly basis, if necessary. Although each portfolio manager manages his or her asset class independent of the other team members, the team is highly collaborative and communicative.

 

The High Yield Fund is managed by Vita Marie Pike.

 

The Total Return Fund is managed by a team of portfolio managers that includes Paul M. Colonna, Ralph R. Layman, Thomas R. Lincoln, Judith A. Studer and Diane M. Wehner. Ms. Studer is vested with oversight authority for determining asset allocations for the Fund. Each of the foregoing portfolio managers is responsible for managing one of the four largest sub-portfolios: U.S. equity, U.S. mid-cap equity, international equity and fixed income. Mr. Lincoln manages the U.S. equity sub-portfolio, Ms. Wehner manages the U.S. mid-cap equity sub-portfolio, Mr. Layman manages the international equity sub-portfolio and Mr. Colonna manages the fixed income sub-portfolio, each with a team of portfolio managers and analysts. The sub-portfolios underlying the Fund are managed independently of each other and the portfolio managers have full discretion over their particular sub- portfolio; however, the portfolio management team is collaborative to ensure strict adherence to the Fund’s objective.

 

Portfolio Manager Biographies

 

The following sets forth biographical information for those individuals who are primarily responsible for managing the specified Fund’s investments. The portfolio managers may change from time to time. Except in the case of the Money Market Fund, the Statement of Additional Information (SAI) provides the following additional information about each portfolio manager (including those of the sub-advisers): (i) portfolio manager’s compensation; (ii) other accounts managed by each portfolio manager; and (iii) each portfolio manager’s ownership of shares of the Fund he/she manages, if any.

 

George A. Bicher is a Senior Vice President of GE Asset Management. Mr. Bicher is Director of the U.S. Equity Research Team and a portfolio manager for the U.S. Equity Fund. Mr. Bicher has held the position of equity research analyst since joining GE Asset Management in June 2002. Prior to joining GE Asset Management, he served in a number of positions at Deutsche Banc Alex Brown since 1994.

 

David B. Carlson is an Executive Vice President of GE Asset Management. He manages the overall U.S. equity investments for GE Asset Management. Mr. Carlson is the portfolio manager for the Premier Growth Equity Fund and has served in this capacity since the Fund’s commencement. Mr. Carlson joined GE Asset Management in 1982 as a securities analyst for investment operations. He became a Vice President for Mutual Fund Portfolios in 1987, a Senior Vice President in 1989, and Executive Vice President in 2003.

 

Paul M. Colonna is a Director and Executive Vice President of GE Asset Management and President — Fixed Income at GE Asset Management. Since January 2005, he has led the team of portfolio managers for the Income Fund and has been responsible for the fixed income portion of the Total Return Fund. Mr. Colonna became President — Fixed Income in March 2007. Prior to joining GE Asset Management in February 2000, Mr. Colonna was a senior portfolio manager with the Federal Home Loan Mortgage Corporation, overseeing the Mortgage Investment Group.

 


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Stephen V. Gelhaus is a Vice President of GE Asset Management. He has been a member of the portfolio management teams for the U.S. Equity Fund and the Core Value Equity Fund since January 2002. Mr. Gelhaus joined GE Asset Management in June 1991 and was a research analyst in the U.S. Equities group from 1995 through 2001 and became an associate portfolio manager for the Core Value Equity Fund in August 1999.

 

William M. Healey is a Senior Vice President of GE Asset Management. He has served on the portfolio management team for the Income Fund since September 1997. Prior to joining GE Asset Management, Mr. Healey spent over 10 years in the Fixed Income Group at MetLife.

 

Brian Hopkinson is a Senior Vice President of GE Asset Management. He has been a portfolio manager for the International Equity Fund since October 1996. Prior to joining GE Asset Management, Mr. Hopkinson worked for Fiduciary Trust International in both London and New York.

 

Mark H. Johnson is a Senior Vice President of GE Asset Management and Senior Portfolio Manager of Structured Products. He has been a member of the portfolio management team for the Income Fund since September 2007. Mr. Johnson joined GE in 1998 in its Employers Reinsurance Corporation as a taxable income portfolio manager. Mr. Johnson joined GE Asset Management as a Vice President and Portfolio Manager in 2002 and became a Senior Vice President and Senior Portfolio Manager of Structured Products in 2007.

 

Tory Brent Jones is a Vice President of GE Asset Management. He has been a portfolio manager for the Emerging Markets Equity Fund since January 2003. Mr. Jones joined GE Asset Management in June 1989 as Manager of the GE Dividend Reinvestment Program. Prior to joining the International Equity team in June 2000, he was a portfolio manager with the Fixed Income team specializing in commercial mortgage-backed and asset-backed securities.

 

Ralph R. Layman is a Director and Executive Vice President of GE Asset Management and President — International Equities at GE Asset Management. He manages the overall international equity investments for GE Asset Management. Mr. Layman has led the team of portfolio managers for the International Equity Fund and has been responsible for the international equity portion of the Total Return Fund since 1997. Mr. Layman joined GE Asset Management in 1991 as Senior Vice President for International Investments, became an Executive Vice President in 1992 and President, International Equities in March 2007.

 

Thomas R. Lincoln is a Senior Vice President of GE Asset Management. He has served on the portfolio management team for the U.S. Equity Fund and Total Return Fund since May 2007. Mr. Lincoln joined GE Asset Management in 1994 as a financial analyst in U.S. Equities. Mr. Lincoln became part of the investment management team for U.S. Equities at GE Asset Management in 1997 and a portfolio manager for U.S. Equities in 2003.

 

Paul Nestro is a Vice President of GE Asset Management. He has been a portfolio manager for the Europe Equity Fund since January 2005 and the International Equity Fund since February 2007. Mr. Nestro joined GE Asset Management in 1993 as a performance and attribution analyst in U.S. Equities. He became a senior performance and attribution analyst in 1994 and since 1996 has been an analyst and portfolio manager in the International Equities group.

 

James F. Palmieri is an Assistant Portfolio Manager of GE Asset Management. Since March 2006, he has managed the mortgage-backed securities sector for the Income Fund. Prior to joining GE Asset Management in March 2006, Mr. Palmieri was a Director of Investments for Constitution Corporate Federal Credit Union from February 2005 to March 2006 and a Portfolio Manager for CIGNA Investment Management from January 2000 to February 2005.

 

Jonathan L. Passmore is a Senior Vice President of GE Asset Management. He

 


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Funds, Inc.

Prospectus

About the

Investment Adviser

 

 

has served as a portfolio manager of the International Equity Fund since January 2002. Prior to joining GE Asset Management in January 2001, he was with Merrill Lynch for six years, most recently as Director, International Equity.

 

Vita Marie Pike is a Vice President of GE Asset Management. She has served on the portfolio management team for the Income Fund since June 2004 and High Yield Fund since its inception. Prior to joining GE Asset Management in January 2001, she was with Alliance Capital for over nine years serving in a number of different capacities including portfolio manager.

 

Paul C. Reinhardt is a Senior Vice President of GE Asset Management. He has been a portfolio manager for the U.S. Equity Fund since January 2001 and for the Core Value Equity Fund since April 2002. Mr. Reinhardt joined GE Asset Management in 1982 as an Equity Analyst and has been a portfolio manager since 1987.

 

Michael J. Solecki is a Senior Vice President of GE Asset Management. He has served as a portfolio manager of the International Equity Fund since September 1997 and portfolio manager of the Europe Equity Fund since the Fund’s commencement. He joined GE Asset Management in 1990 as an International Equity Analyst. He became a Vice President for Interna- tional Equity Portfolios in 1996 and Senior Vice President in 2000.

 

Judith A. Studer is a Director and Executive Vice President of GE Asset Management and President — U.S. Equities at GE Asset Management. She has led the team of portfolio managers for the Total Return Fund since July 2004. Ms. Studer joined GE Asset Management in August 1984. She became Senior Vice President — U.S. Equities in 1991, Senior Vice President — International Equities in 1995, President — Investment Strategies in March 2007 and President — U.S. Equities in June 2007.

 

Makoto Sumino is a Senior Vice President of GE Asset Management. He has been a member of the portfolio management team for the International Equity Fund since February 2007. Mr. Sumino joined GE Asset Management in September 1996 as a securities analyst and portfolio manager. He became Deputy Director of the International Equity Research Team in January 2001 and Director in April 2005.

 

Lewis Tatananni is a Senior Corporate Trader at GE Asset Management. He has been a member of the portfolio management team for the Income Fund since December 2007. Mr. Tatananni joined GE Asset Management in October 2002 and was responsible for executing the interest rate derivative hedging programs for GE Asset Management’s insurance clients. Mr. Tatananni joined GE in 1999 as an associate at GE Capital Treasury and was responsible for debt origination and derivative execution.

 

Diane M. Wehner is a Vice President of GE Asset Management and has served as portfolio manager of the Mid-Cap Equity Fund since September 2004 and Total Return Fund since January 2006. Before joining GE Asset Management, Ms. Wehner was a Vice President and Senior Portfolio Manager from January 1997 to June 2001, and associate portfolio manager from May 1995 to January 1997, with Benefit Capital Management Corporation. Ms. Wehner has served as an analyst/portfolio manager in the investment management industry since 1985.

 

David Wiederecht is an Executive Vice President – Investment Strategies at GE Asset Management since February 2008. He has been a portfolio manager of the Small-Cap Equity Fund since             , 2008. Mr. Wiederecht joined GE Asset Management in 1988 and has held various positions at GE Asset Management including Vice President – Alternative Investments/Private Equity/Hedge Fund from 1998 to 2004, and Managing Director—Alternative Investments from 2004 to 2008.

 

Ping Zhou is a Vice President of GE Asset Management. He has been a portfolio manager of the Emerging Markets Equity Fund since October 2002. He joined GE Asset Management in December 1997 as an International Equity Analyst.

 

 


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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 Asset 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 who are primarily responsible for the day-to-day management of the investment programs for the following Funds. The following sets forth biographical information for those individuals who are primarily responsible for managing the specified Fund’s investments. As with GE Asset Management’s portfolio managers, the sub-advisers may change the portfolio managers from time to time.

 

Shareholders of the Real Estate Securities Fund have approved a “manager of managers” arrangement that permits GE Asset Management, as the Fund’s investment manager, to appoint and replace unaffiliated sub-advisers, and enter into and amend sub-advisory agreements with unaffiliated sub-advisers on behalf of the Real Estate Securities Fund without shareholder approval. Employment of the “manager of managers” arrangement is contingent upon either (1) receipt of an exemptive order from the Securities and Exchange Commission (“SEC”) permitting such an arrangement, or (2) the adoption by the SEC of proposed Rule 15a-5 under the 1940 Act which would permit such an arrangement. Under this arrangement, in the event of a change in the sub-adviser to the Real Estate Securities Fund, variable contract owners invested in the Real Estate Securities Fund will be sent an information statement providing information about the new sub-adviser within 90 days of such change.

 

S&P 500 Index Fund

 

SSgA Funds Management, Inc. (SSgA FM)

State Street Financial Center

One Lincoln Street

Boston, MA 02111-2900

 

SSgA FM is registered with the SEC as an investment advisor under the Investment Advisers Act of 1940 and is a wholly-owned subsidiary of State Street Corporation, a publicly held bank holding company. As of December 31, 2007, SSgA FM had approximately $144 billion in assets under management. SSgA FM, State Street and other advisory affiliates of State Street make up State Street Global Advisors (SSgA), the investment management arm of State Street Corporation. As of December 31, 2007, SSgA had approximately $1.9 trillion in assets under management.

 

SSgA FM manages portfolios using a team of investment professionals. The team approach is used to create an environment that encourages the flow of investment ideas. The portfolio managers within the team work together in a cohesive manner to develop and enhance techniques that drive the investment process for the respective investment strategy. This approach requires portfolio managers to share a variety of responsibilities including investment strategy and analysis while retaining responsibility for the implementation of the strategy within any particular portfolio. The approach also enables the team to draw upon the resources of other groups within the firm. Each portfolio management team is overseen by the SSgA FM Investment Committee. Key professionals involved in the day-to-day portfolio management for the GE Funds portfolios include the following:

 

Karl Schneider is the lead portfolio manager for the Fund, and is a Vice President of SSgA and a Principal of SSgA FM. Karl joined the firm in 1996 and is a member of the firm’s Global Structured Products Team. Karl manages a variety of the firm’s domestic and international passive funds. Karl holds a BS degree in Finance and Investments from Babson College and an MS degree in Finance from Boston College. Additionally, he holds a Series 3 license from the National Futures Association.

 

John F. Tucker, CFA, is a Vice President of SSgA and a Principal of SSgA FM. John joined the firm in 1988 and is the Head of US Equity Markets in the Global Structured Products Team. He is also responsible for all derivative strategies and Exchange Traded Funds. John received a BA in Economics from Trinity College and an MS in Finance from Boston College. He is a member of the Boston Security Analysts Society and the CFA Institute.

 


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GE Investments

Funds, Inc.

Prospectus

About the

Investment Adviser

 

 

Small-Cap Equity Fund

 

The assets of the Small-Cap Equity Fund are allocated (Allocated Assets) and managed by each of the following sub-advisers: (i) Palisade Capital Management, L.L.C.; (ii) Champlain Investment Partners, LLC; (iii) GlobeFlex Capital, LP; and (iv) SouthernSun Asset Management, Inc. The following sets forth below the information for each sub-adviser:

 

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 $2.5 billion as of December 31, 2007. Palisade translates its experience from various institutional and private accounts to mutual fund portfolios it sub-advises for GE Asset Management. Palisade has managed the Small-Cap Equity Fund since inception.

 

Palisade is managed by Jack Feiler, Jeffrey Schwartz and Dennison T. (“Dan”) Veru, members of Palisade’s Investment Policy Committee. Prior to 2005, the Fund was managed by the entire Investment Policy Committee. Mr. Feiler, Mr. Schwartz and Mr. Veru are jointly and primarily responsible for the strategy of their Allocated Assets and the day-to-day management of their Allocated Assets is executed by Mr. Schwartz.

 

Jack Feiler, President and Chief Investment Officer, has more than 35 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. He has served as a portfolio manager of the Small-Cap Equity Fund since its inception. Prior to joining Palisade, Mr. Feiler was a Senior Vice President-Investments at Smith Barney from 1990 to 1995.

 

Jeffrey Schwartz, CFA, Senior Portfolio Manager, joined Palisade in October 2004. Prior to joining Palisade, Mr. Schwartz was Vice President and Senior Portfolio Manager of Safeco Asset Management from September 2003 to September 2004. From June 2001 to August 2003, Mr. Schwartz founded Nantucket Investment Research in Farmington Hills, MI, conducted independent investment research and was a private investor. From June 1992 until May 2001, Mr. Schwartz was at Munder Capital Management, most recently as a Senior Portfolio Manager and Principal.

 

Dennison T. (“Dan”) Veru is an Executive Vice President and Co-Chief Investment Officer of Palisade. Since joining Palisade in March 2000, Mr. Veru has been a member of the Investment Policy Committee. Mr. Veru became a principal of Palisade in July 2004. Since joining Palisade in March 2000, Mr. Veru has been a member of the Investment Policy Committee. Prior to joining Palisade, he was President and Director of Research of Awad Asset

 


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Management, a division of Raymond James & Associates. Mr. Veru has been a frequent guest on CNBC, CNN and Bloomberg television. Prior to Awad, Mr. Veru worked with the Palisade team from 1984 through 1992. Mr. Veru graduated from Franklin & Marshall College.

 

Champlain Investment Partners, LLC (Champlain)

346 Shelburne Road, 6th Floor

Burlington, Vermont 05401

 

Champlain is a registered investment adviser that was formed in 2004 to focus on managing core small and mid-cap strategies. As of March 31, 2008, Champlain had over $1.4 billion in assets under management. Champlain is managed by a team of investment professionals led by Scott T. Brayman, CFA, who is the co-founder of Champlain.

 

Scott T. Brayman, CFA, is the Managing Partner and Chief Investment Officer at Champlain and has more than 22 years of investment management experience. Mr. Brayman leads the investment team for both the small and mid-cap strategies at Champlain. Prior to joining Champlain in 2004, Mr. Brayman was a Senior Vice President at NL Capital Management, Inc. from 2003 to 2004, and served as a portfolio manager with Sentinel Advisers, Inc. from 1996 to 2004, where he was responsible for managing the small-cap and core mid-cap strategies. Mr. Brayman began his career as a credit analyst with the First National Bank of Maryland.

 

GlobeFlex Capital, LP (GlobeFlex)

4365 Executive Drive, Suite 720

San Diego, California 92121

 

GlobeFlex is a registered investment adviser that was formed in 1994 to specialize in equity management for the institutional marketplace, with a focus on both U.S. and international growth small and mid-cap companies. As of March 31, 2008, GlobeFlex had over $7 billion in assets under management, and with over 70 clients. GlobeFlex is managed by a team of investment professionals led by Robert J. Anslow, Jr., who is the co-founder of GlobeFlex.

 

Robert J. Anslow, Jr., is the Managing Partner and Chief Investment Officer at GlobeFlex and has more than 26 year of investment management experience. Prior to co-founding GlobeFlex in 1994, Mr. Anslow was a Director of the Systematic and Global Portfolio Management/Research Group at Nichlolas-Applegate Capital Management (“Nicholas-Applegate”) from 1986 to 1994, where he built the first systematic process for international investing. Prior to Nicholas-Applegate, Mr. Anslow was responsible for systematic portfolio management and research processes at two major investment institutions: the California Public Employee’s Retirement System (CalPERS) and BayBanks Investment Management of Boston.

 

SouthernSun Asset Management, Inc. (SouthernSun)

6000 Poplar Avenue, Suite 220

Memphis, Tennessee 38119

 


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GE Investments

Funds, Inc.

Prospectus

About the

Investment Adviser

 

 

SouthernSun is a registered investment adviser that was formed in 1989 to focus on both U.S. and international value small and mid-cap companies, serving the institutional marketplace. As of March 31, 2008, SouthernSun had over $1.275 billion in assets under management. SouthernSun is managed by a team of investment professionals led by Michael W. Cook, CFA, who is the founder of SouthernSun.

 

Michael W. Cook, CFA, is the Chief Executive Officer and Chief Investment Officer at SouthernSun and has more than 20 years of investment management experience. Prior to founding SouthernSun in 1989, Mr. Cook was a portfolio manager/analyst at Street Capital Management from 1986 to 1988, and was an account executive at Merrill Lynch from 1985 to 1986.

 


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Real Estate Securities Fund

 

Urdang Securities Management, Inc. (Urdang)

630 West Germantown Pike, Suite 300

Plymouth Meeting, PA 19462

 

Urdang is a wholly owned subsidiary of Urdang Capital Management, Inc. (Urdang Capital). Urdang Capital is wholly owned by The Bank of New York Mellon Corporation (BNY Mellon) and operates as part of BNY Mellon’s Asset Management Division. As a wholly owned subsidiary of Urdang Capital, Urdang is a second tier subsidiary of BNY Mellon’s. Urdang is a registered investment adviser that was formed in 1995 to focus exclusively on opportunities in the real estate securities market, including publicly traded real estate investment trusts (REITs). As of December 31, 2007, Urdang managed accounts invested in publicly-traded real estate securities with assets in the aggregate totaling approximately $2 billion.

 

The Real Estate Securities Fund is co-managed by Todd Briddell, CFA, Dean Frankel, CFA and Eric Rothman, CFA.

 

Todd Briddell is a Managing Director of Real Estate Securities and serves as Senior Portfolio Manager to the Fund. He co-founded Urdang Securities Management in 1995 and has over 14 years of real estate industry experience.

 

Dean Frankel joined the firm in 1997 and is a Portfolio Manager. He manages the firm’s proprietary research effort and oversees the firm’s trading activities.

 

Eric Rothman joined the firm in 2006 and is a Portfolio Manager. In his role as Portfolio Manager, Mr. Rothman is responsible for assisting Mr. Frankel, for the strategy for U.S. REITs, including market research and analysis of real estate securities. Prior to joining Urdang, Mr. Rothman was an equity research analyst at AEW Capital Management, L.P. from August 2006 to November 2006 and Wachovia Securities from February 2001 to August 2006.

 


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GE Investments Funds, Inc.

Prospectus

About the

Investment

Adviser

 

Prior Performance Information of GE Asset Management

(Investment Adviser to Emerging Markets Equity Fund)

 

The bar chart and table opposite illustrate the performance of a composite of certain private (Accounts) managed by GE Asset Management, the investment adviser to the Emerging Markets Equity Fund. For more information about GE Asset Management, see “About the Investment Adviser.” Each of the Accounts included in the composite has objectives, policies and strategies substantially similar to those of the Fund.

 

Unlike management of the private accounts included in the composite, GE Asset Management’s management of the Emerging Markets 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. In addition, the Fund generally experiences cash flows that are different from those of the private accounts, and may not initially invests in the same emerging market companies invested by 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 Returns1

(as of December 31, 2007)

 

LOGO

Average Annual Total Return

(as of December 31, 2007)

 

 

Period

  Composite —
Class 12
      MSCI
Emerging
Markets Free
Index3
1 Year   42.70%       39.40%
3 Years   38.90%       35.20%
5 Years   37.10%       37.00%
10 Years   15.60%       14.30%

 

GE Asset Management has prepared and presented the performance information in the bar chart in compliance with the Global Investment Performance Standards (GIPS®). Rates of return (which includes reinvestment of capital gains and income) are time-weighted and are presented net of commissions and transaction costs. Composite returns are calculated monthly in U.S. dollars by asset weighting account returns using beginning of month market values plus weighted cash flows, and are geometrically linked for quarterly and annual results. Certain clients incur contingent performance-based fees that are assessed when the account’s return exceeds a predetermined benchmark. Such performance fees are not included in determining the gross rates of return on the Composite. The Emerging Markets Composite includes all discretionary accounts using an emerging markets investment style and investing in emerging market companies. Portfolios in the Emerging Markets Composite may invest in derivative instruments. Accounts are managed to the MSCI Emerging Markets Free (EMF) Index. The Emerging Markets Composite was created in July 1996. New accounts are included in the Emerging Markets Composite the first full month under management in this style. Closed accounts are included through the last full month of management. The Emerging Markets Composite includes a portion of the U.S. General Electric Pension Trust, a non-fee paying portfolio. Minimum account size for inclusion in the Emerging Markets Composite is $5 million. A complete list and description of GE Asset Management’s composites and performance results is available upon request. Past performance is not necessarily a guide to future performance. The value of your investment may fall as well as rise and the investor may not get back the amount invested.

 

1 The bar chart provides gross of fee investment performance and does not reflect the deduction of investment management fees, custodial fees or other expenses. Performance returns would have been lower if those fees and charges were included.

 

2 The Emerging Markets Composite performance returns shown in the table above reflect the deduction of the estimated net annual operating expenses of the Emerging Markets Equity Fund – Class 1 shares, but do not reflect the imposition of sales charges, if any. Actual fees and expenses of the Accounts within the Emerging Markets Composite may have been more or less than those of the Fund. The Emerging Markets Composite performance returns do not represent the performance of the Emerging Markets Equity Fund, and should not be considered an indication of future performance of the Fund.

 

3 The MSCI EMF Index is an unmanaged equity index representing the investment opportunities available in emerging countries. It is provided to represent the investment environment existing for the time periods shown. For comparison purposes, the index is fully invested and dividends are reinvested. The index is presented net of foreign withholding taxes. Since withholding taxes vary according to the shareholder’s domicile, MSCI uses the most conservative rates applicable to foreigners in the calculation. Index performance has been linked in the same manner as the Emerging Markets Composite. The returns for this unmanaged index do not include any transaction costs, management fees or other costs. The returns for the MSCI EMF Index have been taken from Factset Research Systems. The index results have not been examined by the independent accountants.

 

Note A: The composite results are not required to be, and were not calculated in accordance with, SEC mandated mutual fund performance calculation methodology. The use of such methodology could yield a different result. As of December 31, 2007, the total assets of the composite were $1.39 billion.

 

 

 


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Prior Performance Information of GE Asset Management

(Investment Adviser to High Yield Fund)

 

The bar chart and table opposite illustrate the performance of a composite of certain private accounts (Accounts) managed by GE Asset Management, the investment adviser to the High Yield Fund. For more information about GE Asset Management, see “About the Investment Adviser.” Each of the Accounts included in the composite has objectives, policies and strategies substantially similar to those of the Fund.

 

Unlike management of the private accounts included in the composite, GE Asset Management’s management of the High Yield 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. 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 Returns1

(as of December 31, 2007)

LOGO

Average Annual Total Return

(as of December 31, 2007)

 

Period

  Composite —
Class 12
      Lehman Brothers
U.S. Corporate
High Yield —
3% Issuer
Capped Index3
1 Year   3.17%       2.08%
3 Years   5.61%       5.27%
5 Years   9.52%       10.83%
10 Years   5.98%       5.48%

 

GE Asset Management has prepared and presented the performance information in the bar chart and table in compliance with the Global Investment Performance Standards (GIPS®). Rates of return are time-weighted and are presented net of commissions and transaction costs. Composite returns are calculated in U.S. dollars using the aggregate method which combines the positions and flows of all component Accounts and calculates the returns and all other statistics as though the aggregate was one large individual portfolio. Composite returns are geometrically linked to get quarterly and annual results. The High Yield Composite 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 solely because it is no longer classified as high yield. The managers may sell the security if it has been upgraded to investment grade, fallen out of the Index (as defined below), or reached the set price target. The Composite may continue to hold the security if a better relative opportunity is not currently available. The Composite may also invest in investment grade securities and bank loans. The Composite seeks to achieve its objective by earning a high rate of current income, although the Composite may seek capital growth opportunities when consistent with its objective. The Index for this Composite is the Lehman High Yield 3% Issuer Capped Index. As of July 1, 2005, the Composite’s Index was changed to the Lehman High Yield 3% Issuer Capped Index from the Lehman High Yield Index. This change was made in order to utilize a benchmark that is more representative of the investment constraints of the High Yield Composite. The Composite was created in January 1993. New accounts are included in the Composite the first full month under management in this style. Closed accounts are included through the last full month of management. The Composite includes a portion of the U.S. GE Pension Trust, a non-fee paying portfolio. A complete list and description of GE Asset Management’s composites and performance results is available upon request. Past performance is not necessarily a guide to future performance. The value of your investment may fall as well as rise and the investor may not get back the amount invested.

 

1 The bar chart provides gross of fee investment performance and does not reflect the deduction of investment management fees, custodial fees or other expenses. Performance returns would have been lower if those fees and charges were included.

 

2 The High Yield Composite performance returns shown in the table above reflect the deduction of the estimated net annual operating expenses of the High Yield Fund – Class 1 shares, but do not reflect the imposition of sales charges, if any. Actual fees and expenses of the Accounts within the High Yield Composite may have been more or less than those of the Fund. The High Yield Composite performance returns do not represent the performance of the High Yield Fund, and should not be considered an indication of future performance of the Fund.

 

3 The Lehman High Yield 3% Issuer Capped Index is an unmanaged benchmark and does not reflect the actual cost of investing in high yield instruments. It is provided to represent the investment environment existing for the time periods shown. For comparison purposes, the index is fully invested and includes reinvestment of income. Index performance has been linked in the same manner as the High Yield Composite. The returns for this unmanaged index do not include any transaction costs, management fees or other costs. The returns for Lehman High Yield 3% Issuer Capped Index the have been taken from sources published by Lehman Brothers. The Lehman High Yield 3% Issuer Capped Index results have not been examined by the independent accountants.

 

Note: The composite results are not required to be, and were not calculated in accordance with, SEC mandated mutual fund performance calculation methodology. The use of such methodology could yield a different result. As of December 31, 2007, the total assets of the composite were $718.6 million.

 

 


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GE Investments

Funds, Inc.

Prospectus

     Shares of the Fund

 

Investor Service Plan

 

The Company has adopted an Investor Service Plan with respect to Class 1 shares of the Total Return Fund. Under the Investor Service Plan, the Company, on behalf of the Total Return Fund, may compensate a life insurance company issuing variable annuity contracts and variable life insurance contracts (variable contracts) that offer Class 1 shares of the Total Return Fund as an investment option, a third-party administrator for such insurance company, a retirement plan record keeper or administrator, or a transfer agent for certain services provided to owners of such variable contracts. The amount of compensation paid under the Investor Service Plan by the Total Return Fund’s Class 1 shares may not exceed the annual rate of 0.20% of the average daily net assets of the Total Return Fund attributable to such shares. The Investor Service Plan continues in effect with respect to the Total Return Fund from year to year so long as such continuance is approved annually by the Board of Directors. For more information about the Investor Service Plan, please see the statement of additional information (SAI) for the Funds.

 

Distribution and Service (12b-1) Plans

 

Total Return Fund

 

The Company has adopted a Distribution and Service (12b-1) Plan (the “Plan”) pursuant to Rule 12b-1 under the 1940 Act with respect to Class 3 shares of the Total Return Fund. Under the Plan, the Company, on behalf of the Total Return Fund, may compensate GE Investment Distributors, Inc. (GEID), the distributor of the shares of the Total Return Fund, for certain sales services provided by GEID or other broker dealers and investor services provided by GEID or other service providers relating to the Total Return Fund’s Class 3 shares, including services to owners or prospective owners of variable contracts issued by insurance companies that offer Class 3 shares of the Total Return Fund as an investment option under such variable contracts. The amount of compensation paid under the Class 3 Plan by the Fund’s Class 3 shares may not exceed 0.30% of the average daily net assets of the Fund attributable to such shares. The Plan continues in effect from year to year for so long as such continuance is approved annually by the Board of Directors, including by those directors who are not interested persons of the Company and who have no direct or indirect financial interest in the operation of the Plan or in any agreement related to it. Because these fees are paid out of the Total Return Fund’s assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges. For more information about the Plan, please see the statement of additional information (SAI) for the Funds.

 

Each Fund other than S&P 500 Index Fund, Total Return Fund and Money Market Fund

 

The Company has also adopted a Plan with respect to Class 4 shares of the following Funds: U.S. Equity Fund, Premier Growth Equity Fund, Core Value Equity Fund, Mid-Cap Equity Fund, Small-Cap Equity Fund, International Equity Fund, Emerging Markets Equity Fund, Income Fund, High Yield Fund and Real Estate Securities Fund. Under the Plan, the Company, on behalf of each of these Funds, may compensate GEID, the distributor of the shares of each applicable Fund, for certain sales services provided by GEID or other broker dealers and investor services provided by GEID or other service providers relating to each applicable Fund’s Class 4 shares, including services to owners or prospective owners of variable contracts issued by insurance companies that offer Class 4 shares of the Fund as an investment option under such variable contracts. The amount of compensation paid under the Class 4 Plan by each applicable Fund’s Class 4 shares may not exceed 0.45% of the average daily net assets of the Fund attributable to such

 


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shares. The Plan continues in effect from year to year so long as such continuance is approved annually by the Board of Directors, including by those directors who are not interested persons of the Company and who have no direct or indirect financial interest in the operation of the Plan or in any agreement related to it. Because these fees are paid out of the Fund’s assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges. For more information about the Plan, please see the statement of additional information (SAI) for the Funds.

 

 

Other Compensation Arrangements

 

GE Asset Management and its affiliates may, at their own expense and out of their own legitimate profits or other resources, pay additional compensation to insurance companies whose separate accounts invest in shares of the Funds or to distributors of variable contracts, for selling or servicing Fund shares. Firms that receive these payments may be affiliated with GE Asset Management. These payments may relate to selling and/or servicing activities such as maintaining accounts for, and communicating with, owners of variable annuity and variable life insurance contracts; aggregating, netting and transmission of orders; generating sales and other informational materials; individual or broad based marketing and sales activities; conferences; retention of assets; new sales of Fund shares and a wide range of other activities. The amount of such payments generally vary, and can include various initial and ongoing payments.

 

GE Asset Management and its affiliates also may pay financial consultants for products and/or services such as: (1) performance analytical software, (2) attendance at, or sponsorship of, professional conferences, (3) product evaluations and other types of investment consulting, and (4) asset-liability studies and other types of retirement plan consulting. GE Asset Management and its affiliates may provide non-cash compensation to such recipients including occasional gifts, meals, or other entertainment.

 

These activities may create, or may be viewed as creating, an incentive for such financial consultants (or their employees or associated persons) to recommend the Funds as investment options under variable contracts.

 

GE Asset Management does not direct the Funds’ portfolio securities transactions, or otherwise compensate insurance companies or distributors of variable contracts in connection with any Fund’s portfolio transactions, in consideration of sales of Fund shares.

 

Insurance companies sponsoring Accounts, distributors of variable contracts issued in connection with such Accounts, and financial consultants (including those affiliated with GE Asset Management) that receive these various types of payments may have a conflict of interest in promoting the Funds rather than other mutual funds available under a variable contract as an investment option, particularly if these payments exceed amounts paid by affiliated persons of such other mutual funds.

 

For more information about such payments, prospective owners of variable contracts should refer to the prospectus or other disclosure document for their contract or contact the broker-dealer selling the contract.

 


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GE Investments

Funds, Inc.

Prospectus

Shares of the Fund

 

Distribution of Shares

 

The Company does not offer its shares of capital stock directly to the general public. The Company currently offers shares of each class of its capital stock only to separate accounts (Accounts) of various life insurance companies as funding vehicles for certain variable contracts issued through the Accounts by such life insurance companies. Some of the Accounts currently are registered investment companies with the SEC. When shares of the Company are offered as a funding vehicle for such variable contracts, a separate prospectus describing the particular Account and variable contract being offered through that Account will accompany this prospectus. When shares of the Company are offered as a funding vehicle for those variable contracts that are offered through the Account that is not registered as an investment company, a separate disclosure document (rather than a prospectus) describing that Account and the variable contracts being offered through that Account will accompany this prospectus. The Company may, in the future, offer any class of its capital stock directly to qualified pension and retirement plans.

 

The Company currently offers four share classes of the Total Return Fund as investment options for variable contracts — Class 1, Class 2, Class 3 and Class 4. This prospectus only offers Class 1 and Class 3 shares of the Total Return Fund. Class 2 and Class 4 shares of the Total Return Fund are offered through separate prospectuses. The Company also currently offers two share classes (Class 1 and Class 4) of the following Funds as investment options for variable contracts — U.S. Equity Fund, Premier Growth Equity Fund, Core Value Equity Fund, Mid-Cap Equity Fund, Small-Cap Equity Fund, International Equity Fund, Emerging Markets Equity Fund, Income Fund, High Yield Fund and Real Estate Securities Fund. Each class of shares has different fees and expenses, and as a result, each class of shares will have different share prices and performance. Not all variable contracts offer every class of a Fund’s shares.

 

Shares of the Funds are sold in a continuous offering to the Accounts to support the variable contracts. Net purchase payments under the variable contracts are placed in one or more subaccounts of the Accounts, and the assets of each such subaccount are invested in the shares of the Fund corresponding to that subaccount. The Accounts purchase and redeem shares of the Funds for their subaccounts at a net asset value without sales or redemption charges.

 

The Company has entered into an agreement with the life insurance company sponsor of each Account (participation agreement) setting forth the terms and conditions pursuant to which the insurer will purchase and redeem shares of the Funds. In the event that the Company offers shares of one or more Funds to a qualified pension and retirement plan, it likely will enter into a similar participation agreement. The discussion that follows reflects the terms of the Company’s current participation agreements (which do not differ materially from one another).

 

 

Purchase and Redemption of Shares

 

For each day on which a Fund’s net asset value is calculated, the Accounts transmit to the Funds any orders to purchase or redeem shares of the Funds based on the net purchase payments, redemption (surrender) requests, and transfer requests from variable contract owners, annuitants and beneficiaries that have been processed on that day. Similarly, qualified pension and retirement plans may in the future transmit to the Funds any orders to purchase or redeem shares of the Fund(s) based on the instructions of plan trustees or participants. The Account purchases or redeems shares of each Fund at the Fund’s net asset value per share calculated as of the day the Company receives the order, although such purchases and redemptions may be executed the next morning. Money received by the Distributor or Transfer Agent from the Accounts for the purchase of shares of the International

 


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Equity Fund, Emerging Markets Equity Fund or Europe Equity Fund may be invested by the Funds on the day following the execution of such purchases. Payment for shares redeemed is made within seven days after receipt of a proper notice of redemption, except that the right of redemption may be suspended or payments postponed when permitted by applicable laws and regulations.

 

A potential for certain conflicts exists between the interests of variable annuity contract owners and variable life insurance contract owners. A potential for certain conflicts would also exist between the interests of any of these investors and participants in a qualified pension and retirement plan that might invest in the Funds. To the extent that such classes of investors are invested in the same Fund when a conflict of interest arises that might involve the Fund, one or more such classes of investors could be disadvantaged. The Company currently does not foresee any such disadvantage to owners of variable contracts or to plan participants. Nonetheless, the Board of Directors of the Company monitors the Funds for the existence of any irreconcilable material conflicts of interest. If such a conflict affecting owners of variable contracts is determined to exist, the life insurers investing in the Company will, to the extent reasonably practicable, take such action as is necessary to remedy or eliminate the conflict. If such a conflict were to occur, one or more of the Accounts might be required to withdraw its investment in one or more Funds or it may substitute shares of one Fund for another. This might force a Fund to sell its portfolio securities at a disadvantageous price.

 

The Company and the Distributor may reject any order to purchase shares of any Fund for any reason.

 

 

Disruptive Trading Policy

 

As investment vehicles for variable contracts, which are designed as long-term investments, the Funds are not appropriate for “market timing” or other types of frequent or short-term trading (“disruptive trading”).

 

Disruptive trading can adversely affect Fund performance and the interests of long-term investors by, among other things, interfering with efficient management of the Fund’s investment portfolio. Accordingly, the Company has adopted, and the Board of Directors has approved, policies and procedures reasonably designed to ensure that trading in Fund shares is monitored and, where disruptive trading is detected, action is taken to stop such activity. The Company reserves the right to amend these policies and procedures at any time without prior notice to the Accounts, their insurance company sponsors, or owners of variable contracts invested in one or more Funds.

 

Because the Funds only receive information about purchase payments, redemptions (surrenders) and transfers by variable contract owners, annuitants and beneficiaries when the Distributor requests such information for a specific period, the Funds and the Distributor rely primarily on the insurance company sponsor of an Account to prevent disruptive trading by variable contract owners. The insurance company sponsors of each Account have represented to us that they have policies and procedures in place to identify and deter disruptive trading by owners, annuitants and beneficiaries of their variable contracts. From time to time the Company may obtain assurances from the insurance company sponsors that such policies are effectively being enforced and also may investigate with an insurance company sponsor suspected instances of disruptive trading through that company’s variable contracts. Nonetheless, the Company, the Funds and the Distributor do not control any insurance company sponsor’s enforcement of its policies and procedures and cannot guarantee its success at identifying and deterring disruptive trading.

 


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GE Investments

Funds, Inc.

Prospectus

Shares of the Fund

 

 

Reservation of Rights to Reject Purchase Orders

 

The Funds reserve the right to reject any purchase order at any time for any reason without prior notice to the Accounts, the insurance company sponsors or the owners of variable contracts invested in one or more Funds.

 

Limitations on Ability to Prevent Disruptive Trading

 

Despite the efforts of the insurance company sponsor to protect the Funds from harm caused by disruptive trading, there is no guarantee that their policies and procedures will be effective. For example, owners of variable contracts that purposely engage in disruptive trading may employ strategies to avoid detection. Consequently, the insurance company sponsor may not be able to detect or stop disruptive trading until harm to the Funds has already occurred. In addition, the disruptive trading policies and procedures of an insurance company sponsor may differ materially from those applied by other insurance company sponsors.

 

Risks of Disruptive Trading

 

Disruptive trading, especially involving large dollar amounts, may adversely affect Fund performance and the interests of long-term investors by interfering with the efficient portfolio management and the implementation of long-term investment strategies. In particular, disruptive trading may:

n require a Fund to keep more assets in money market instruments or other liquid holdings than it would otherwise consider appropriate, causing the Fund to miss out on gains in a rising market;

n require a Fund to sell some of its investments sooner than it would otherwise consider appropriate in order to honor redemptions; and

n increase brokerage commissions and other portfolio transaction expenses by causing the Fund to buy and sell securities more frequently than it would otherwise consider appropriate as assets move in and out of the Fund.

 

Funds that invest in foreign securities may be particularly susceptible to disruptive trading because of investors attempting to engage in “time-zone” arbitrage, a trading strategy that exploits the fact that the closing prices of foreign securities owned by a Fund are established some time before the Fund calculates its own share value (which typically occurs at 4:00 p.m. Eastern Time). Funds that invest significantly in high-yield securities or small capitalization equity securities may be particularly susceptible to disruptive trading because of investors attempting to engage in “liquidity arbitrage,” a trading strategy that exploits knowledge of the value of securities and the fact that they are often infrequently traded. Such disruptive trading strategies may interfere with efficient management of a Fund’s portfolio to an even greater degree than other types of disruptive trading and may dilute the value of Fund shares held by other investors.

 

 

Contract Owner Voting Rights

 

With regard to Fund matters for which the 1940 Act requires a shareholder vote, life insurance companies sponsoring an Account holding shares of a Fund vote such shares in accordance with instructions received from the owners of variable contracts (or annuitants or beneficiaries thereunder) having a voting interest in that Account. Each share has one vote and votes are counted on an aggregate basis except:

(1) as to matters where the interests of the Fund differ from the interests of the Company’s other Funds (such as approval of an investment advisory agreement or a change in a Fund’s fundamental investment policies). In such a case, the voting is on a Fund-by-Fund basis.

(2) as to matters where the interests of one class of the Fund’s shares differ from the interests of the Fund’s other classes (such as approving a material change in the Distribution and Service (12b-1) Plan). In such a case, the voting is on a class-by-class basis.

 


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Fractional shares are counted. Shares held by an Account for which no instructions are received are voted by their insurance company sponsors for or against any propositions, or in abstention, in the same proportion as the shares for which instructions have been received.

 

Plan Participant Voting Rights

 

With regard to matters for which the 1940 Act requires a shareholder vote, trustees of qualified pension and retirement plans are expected to vote Fund shares held by their plans either in their own discretion or in accordance with instructions received from participants in such plans, depending on plan requirements.

 


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76

 

GE Investments

Funds, Inc.

Prospectus

    

Dividends,

Capital Gains

and Other Tax

Information

 

 

Dividend and Capital Gains Distribution

 

Each Fund intends to distribute substantially all of its net investment income annually. Each Fund also intends to distribute substantially all of its net realized capital gains annually. All income dividends and capital gains distributions made by a Fund are reinvested in shares of the same class of the Fund at the Fund’s net asset value.

 

Taxes

 

For federal income tax purposes, each Fund is treated as a separate entity. Each Fund has elected and intends to qualify each year as a “regulated investment company” under the Internal Revenue Code of 1986 as amended (Code). By so qualifying, a Fund is not subject to federal income taxes to the extent that all of its net investment income and net realized capital gains are distributed to the Accounts or to qualified pension and retirement plans.

 

Since the Accounts are the only shareholders of the Funds, no discussion is included herein as to the federal income tax consequences at the shareholder level. For information concerning the federal tax consequences to the purchasers of variable contracts, see the attached prospectus or other disclosure document for such contract.

 


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Calculating

Share Value

    

 

 

Fund shares are sold and redeemed at net asset value (NAV). The NAV of each Fund is calculated as of 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, but may also incorporate certain prices or values for securities as of a later time. The NYSE is closed on certain holidays listed in the SAI. The value of the portfolio securities held by each Fund may change on days when shareholders will not be able to purchase or redeem the Fund’s shares.

 

The NAV per share class for each Fund is determined by adding the value of the Fund’s investments, cash, and other assets attributable to that class, subtracting the liabilities, and then dividing the result by the number of that class’ outstanding shares.

 

A Fund’s portfolio securities are valued generally on the basis of market quotations. Equity securities generally are valued at the last reported sales price on the primary market in which they are traded. Portfolio securities listed on NASDAQ are valued using the NASDAQ Official Closing Price, which may not necessarily represent the last sale price. If no sales occurred on the exchange or NASDAQ that day, the portfolio security generally is valued using the last reported bid price.

 

Debt securities (other than short-term securities described below) generally are valued at an evaluated bid as reported by an independent pricing service. Values obtained from pricing services are based on various factors such as market transactions, dealer supplied valuations, security characteristics and other market data. In the absence of a reliable price from such a pricing service, debt securities may be valued based on dealer supplied valuations or quotations. Municipal obligations are valued at the quoted bid prices.

 

A Fund’s written or purchased options are valued at the last sales price, or if no sales occurred that day, at the last reported bid price.

 

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 at the time of purchase are valued on the basis of amortized cost. All assets and liabilities of the Funds initially expressed in foreign currency values will be converted into U.S. dollars at the WM/Reuters exchange rate computed at 11:00 a.m. Eastern time.

 

If prices are not readily available for a portfolio security, or if it is believed that a price for a portfolio security does not represent its fair value, the security may be valued using procedures approved by the Funds’ Board of Directors that are designed to establish its “fair” value. Those procedures require that the fair value of a security be established by the fair valuation committee. The fair valuation committee follows different protocols for different types of investments and circumstances. The fair value procedures may be used to value any investment of any Fund in the appropriate circumstances. Examples of the types of securities that may be fair valued include: thinly traded or illiquid investments, high yield securities or foreign securities. Investments that are fair valued are subject to valuation risk.

 

Foreign securities may be valued with the assistance of an independent fair value pricing service in circumstances where it is believed that they have been or would be materially affected by events occurring after the close of the portfolio security’s primary market and before the close of regular trading on the NYSE. This independent fair value pricing service uses a computerized system to appraise affected securities and portfolios taking into consideration various factors and the fair value of such securities may be something other than the last available quotation or other market price.

 

GE Asset Management may also separately monitor portfolio securities and, consistent with the Funds’ fair value procedures, apply a different value to a portfolio security than

 


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GE Investments

Funds, Inc.

Prospectus

Calculating

Share Value

 

 

would be applied had it been priced using market quotations or by an independent fair value pricing service.

 

Determining the fair value of securities involves the application of both subjective and objective considerations. Security values may differ depending on the methodology used to determine their values, and may differ from the last quoted sale or closing price. No assurance can be given that use of these valuation procedures will always better represent the price at which a Fund could sell the affected portfolio security.

 

Portfolio securities that are valued using techniques other than market quotations are subject to valuation risk.

 


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79

 

Financial

Highlights

    

 

 

The financial highlights tables that follow are intended to help you understand a Fund’s financial performance for the fiscal years ended December 31, except for Europe Equity Fund, Emerging Markets Equity Fund and High Yield Fund which have no operating history. With respect to each Fund other than the Total Return Fund, financial performance for Class 1 shares are presented. Financial highlights for Class 4 shares are not available because this share class was not offered prior to the date of this prospectus, and therefore, the share class does not have financial results for the reportable period. The S&P 500 Index Fund and Money Market Fund offer only one class of shares. With respect to the Total Return Fund, financial performance for both Class 1 and Class 3 shares are presented.

 

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). Financial highlight information has been derived from the Funds’ financial statements, which have been audited by KPMG LLP, independent registered public accounting firm, whose report, along with the Funds’ financial statements, are included in the Funds’ Annual Report, which is available on request.

 


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80

 

GE Investments

Funds, Inc.

Prospectus

Financial

Highlights

 

U.S. Equity Fund — Class 1

 

Years ended December 31

   2007    2006    2005    2004    2003

Inception date

               01/03/95

Net Asset Value, Beginning of Period

   $39.02    $34.06    $33.61    $31.48    $25.75

Income (Loss) from Investment Operations:

                        

Net Investment Income

   0.45    0.53    0.39    0.44    0.26

Net Realized and Unrealized Gains (Losses) on Investments

   2.70    4.96    0.46    2.13    5.73

Total Income (Loss) From Investment Operations

   3.15    5.49    0.85    2.57    5.99

Less Distributions from:

                        

Net investment income

   0.44    0.53    0.40    0.44    0.26

Net realized gains

   5.32            

Total Distributions

   5.76    0.53    0.40    0.44    0.26

Net Asset Value, End of Period

   $36.41    $39.02    $34.06    $33.61    $31.48
                          

Total Return (a)

   8.01%    16.12%    2.51%    8.17%    23.28%

Ratios/Supplemental Data:

                        

Net Assets, End of Period (in thousands)

   $77,777    $101,885    $98,883    $112,545    $114,123

Ratios to Average Net Assets:

                        

Net Investment Income

   0.94%    1.43%    1.06%    1.30%    0.95%

Expenses

   0.66%    0.63%    0.63%    0.63%    0.61%

Portfolio Turnover Rate

   55%    45%    40%    30%    39%

 

S&P 500 Index Fund — Class 1

 

Years ended December 31

   2007    2006    2005    2004    2003

Inception date

               04/15/85

Net Asset Value, Beginning of Period

   $26.06    $22.94    $22.30    $20.51    $16.18

Income (Loss) from Investment Operations:

                        

Net Investment Income

   0.47    0.42    0.36    0.36    0.24

Net Realized and Unrealized Gains (Losses) on Investments

   0.86    3.12    0.65    1.79    4.33

Total Income (Loss) From Investment Operations

   1.33    3.54    1.01    2.15    4.57

Less Distributions from:

                        

Net investment income

   0.47    0.42    0.37    0.36    0.24

Net realized gains

   0.40            

Total Distributions

   0.87    0.42    0.37    0.36    0.24

Net Asset Value, End of Period

   $26.52    $26.06    $22.94    $22.30    $20.51
                          

Total Return (a)

   5.10%    15.43%    4.51%    10.46%    28.27%

Ratios/Supplemental Data:

                        

Net Assets, End of Period (in thousands)

   $447,426    $497,105    $531,015    $601,008    $597,185

Ratios to Average Net Assets:

                        

Net Investment Income

   1.62%    1.58%    1.47%    1.62%    1.41%

Expenses

   0.39%    0.40%    0.40%    0.40%    0.37%

Portfolio Turnover Rate

   6%    4%    4%    5%    5%

 

See Notes to Financial Highlights

 


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81

 

Premier Growth Equity Fund — Class 1

 

Years ended December 31

   2007    2006    2005    2004    2003

Inception date

               12/12/97

Net Asset Value, Beginning of Period

   $82.17    $75.65    $74.95    $70.46    $54.74

Income (Loss) from Investment Operations:

                        

Net Investment Income

   0.23    0.35    0.24    0.47    0.11

Net Realized and Unrealized Gains (Losses) on Investments

   4.19    6.51    0.73    4.48    15.72

Total Income (Loss) From Investment Operations

   4.42    6.86    0.97    4.95    15.83

Less Distributions from:

                        

Net investment income

   0.23    0.34    0.27    0.46    0.11

Net realized gains

   7.41            

Total Distributions

   7.64    0.34    0.27    0.46    0.11

Net Asset Value, End of Period

   $78.95    $82.17    $75.65    $74.95    $70.46
                          

Total Return (a)

   5.34%    9.07%    1.29%    7.03%    28.91%

Ratios/Supplemental Data:

                        

Net Assets, End of Period (in thousands)

   $94,720    $110,538    $126,682    $137,801    $143,202

Ratios to Average Net Assets:

                        

Net Investment Income

   0.24%    0.41%    0.30%    0.62%    0.20%

Expenses

   0.72%    0.71%    0.71%    0.71%    0.70%

Portfolio Turnover Rate

   29%    27%    34%    22%    24%

 

Core Value Equity Fund — Class 1

 

Year ended December 31

   2007    2006    2005    2004    2003

Inception date

               04/28/2000

Net Asset Value, Beginning of Period

   $10.70    $10.01    $9.77    $9.02    $7.36

Income (Loss) from Investment Operations:

                        

Net Investment Income

   0.12    0.17    0.11    0.11    0.11

Net Realized and Unrealized Gains (Losses) on Investments

   0.97    1.62    0.29    0.75    1.66

Total Income (Loss) From Investment Operations

   1.09    1.79    0.40    0.86    1.77

Less Distributions from:

                        

Net investment income

   0.12    0.17    0.12    0.11    0.11

Net realized gains

   1.51    0.93    0.04      

Total Distributions

   1.63    1.10    0.16    0.11    0.11

Net Asset Value, End of Period

   $10.16    $10.70    $10.01    $9.77    $9.02
                          

Total Return (a)

   10.10%    17.85%    4.06%    9.57%    24.05%

Ratios/Supplemental Data:

                        

Net Assets, End of Period (in thousands)

   $37,765    $39,683    $37,115    $37,128    $29,989

Ratios to Average Net Assets:

                        

Net Investment Income

   0.96%    1.55%    1.13%    1.26%    1.16%

Expenses

   0.81%    0.81%    0.80%    0.80%    0.73%

Portfolio Turnover Rate

   45%    42%    36%    53%    78%

 

See Notes to Financial Highlights

 


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82

 

GE Investments

Funds, Inc.

Prospectus

Financial

Highlights

 

Mid-Cap Equity Fund — Class 1

 

Years ended December 31

   2007     2006    2005    2004    2003

Inception date

                05/01/97

Net Asset Value, Beginning of Period

   $18.19     $19.22    $18.33    $17.48    $13.30

Income (Loss) from Investment Operations:

                         

Net Investment Income

   0.08     0.23    0.05    0.17    0.19

Net Realized and Unrealized Gains (Losses) on Investments

   2.23     1.40    2.11    2.63    4.19

Total Income (Loss) From Investment Operations

   2.31     1.63    2.16    2.80    4.38

Less Distributions from:

                         

Net investment income

   0.07     0.22    0.06    0.14    0.18

Net realized gains

   3.13     2.44    1.21    1.81    0.02

Total Distributions

   3.20     2.66    1.27    1.95    0.20

Net Asset Value, End of Period

   $17.30     $18.19    $19.22    $18.33    $17.48
                           

Total Return (a)

   12.60% (c)   8.40%    11.74%    16.02%    32.94%

Ratios/Supplemental Data:

                         

Net Assets, End of Period (in thousands)

   $191,339     $199,311    $229,097    $239,831    $226,929

Ratios to Average Net Assets:

                         

Net Investment Income

   0.35%     1.01%    0.24%    0.89%    1.36%

Expenses

   0.70%     0.69%    0.70%    0.70%    0.69%

Portfolio Turnover Rate

   65%     29%    27%    78%    28%

 

Small-Cap Equity Fund — Class 1

 

Year ended December 31

   2007    2006    2005    2004    2003

Inception date

               04/28/00

Net Asset Value, Beginning of Period

   $14.39    $14.44    $13.62    $12.74    $10.27

Income (Loss) from Investment Operations:

                        

Net Investment Income

   0.06    0.05    0.02    0.08    0.02

Net Realized and Unrealized Gains (Losses) on Investments

   0.31    1.87    1.28    1.85    2.46

Total Income (Loss) From Investment Operations

   0.37    1.92    1.30    1.93    2.48

Less Distributions from:

                        

Net investment income

   0.06    0.04    0.03    0.07    0.01

Net realized gains

   2.53    1.93    0.45    0.98   

Total Distributions

   2.59    1.97    0.48    1.05    0.01

Net Asset Value, End of Period

   $12.17    $14.39    $14.44    $13.62    $12.74
                          

Total Return (a)

   2.39%    13.27%    9.53%    15.15%    24.11%

Ratios/Supplemental Data:

                        

Net Assets, End of Period (in thousands)

   $104,010    $127,381    $128,142    $117,158    $86,330

Ratios to Average Net Assets:

                        

Net Investment Income

   0.31%    0.31%    0.11%    0.67%    0.17%

Expenses

   0.87%    0.86%    0.86%    0.88%    0.86%

Portfolio Turnover Rate

   25%    52%    33%    101%    119%

 

See Notes to Financial Highlights

 


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83

 

International Equity Fund — Class 1

 

Years ended December 31

   2007    2006    2005    2004    2003

Inception date

               05/01/95

Net Asset Value, Beginning of Period

   $14.08    $11.42    $9.76    $8.52    $6.23

Income (Loss) from Investment Operations:

                        

Net Investment Income

   0.23    0.15    0.13    0.11    0.07

Net Realized and Unrealized Gains (Losses) on Investments

   2.98    2.67    1.65    1.24    2.29

Total Income (Loss) From Investment Operations

   3.21    2.82    1.78    1.35    2.36

Less Distributions from:

                        

Net investment income

   0.23    0.16    0.12    0.11    0.07

Net realized gains

   2.39            

Total Distributions:

   2.62    0.16    0.12    0.11    0.07

Net Asset Value, End of Period

   $14.67    $14.08    $11.42    $9.76    $8.52
                          

Total Return (a)

   22.98%    24.69%    18.19%    15.85%    37.91%

Ratios/Supplemental Data:

                        

Net Assets, End of Period (in thousands)

   $84,272    $80,648    $65,450    $55,714    $45,198

Ratios to Average Net Assets:

                        

Net Investment Income

   1.30%    1.16%    1.19%    1.31%    1.13%

Expenses

   1.13%    1.13%    1.25%    1.15%    1.07%

Portfolio Turnover Rate

   32%    34%    53%    38%    35%

 

Income Fund — Class 1

 

Years ended December 31

   2007    2006    2005     2004    2003

Inception date

                01/03/95

Net Asset Value, Beginning of Period

   $11.80    $11.84    $12.25     $12.61    $12.93

Income (Loss) from Investment Operations:

                         

Net Investment Income

   0.81    0.56    0.61     0.55    0.51

Net Realized and Unrealized Gains (Losses) on Investments

   (0.25)    (0.04)    (0.36)     (0.12)    (0.04)

Total Income (Loss) From Investment Operations

   0.56    0.52    0.25     0.43    0.47

Less Distributions from:

                         

Net investment income

   0.86    0.56    0.61     0.57    0.56

Net realized gains

         0.05     0.22    0.23

Return of capital

         0.00 (b)     

Total Distributions

   0.86    0.56    0.66     0.79    0.79

Net Asset Value, End of Period

   $11.50    $11.80    $11.84     $12.25    $12.61
                           

Total Return (a)

   4.83%    4.37%    2.04%     3.42%    3.60%

Ratios/Supplemental Data:

                         

Net Assets, End of Period (in thousands)

   $93,480    $126,732    $116,558     $135,172    $189,318

Ratios to Average Net Assets:

                         

Net Investment Income

   5.07%    5.07%    4.49%     3.82%    3.24%

Expenses

   0.61%    0.61%    0.60%     0.59%    0.55%

Portfolio Turnover Rate

   448%    270%    311%     343%    419%

 

See Notes to Financial Highlights

 


Table of Contents

 

 

84

 

GE Investments

Funds, Inc.

Prospectus

Financial

Highlights

 

Total Return Fund

 

    Class 1   Class 3

Years ended December 31

  2007     2006   2005   2004   2003   2007     2006

Inception date

            07/01/85       05/01/06

Net Asset Value, Beginning of Period

  $17.69     $16.04   $15.97   $15.09   $12.68   $17.69     $17.03

Income (Loss) from Investment Operations:

                               

Net Investment Income

  0.35     0.36   0.23   0.20   0.16   0.35     0.12

Net Realized and Unrealized Gains (Losses) on Investments

  1.71     1.84   0.36   1.04   2.41   1.69     1.10

Total Income (Loss) From Investment Operations

  2.06     2.20   0.59   1.24   2.57   2.04     1.22

Less Distributions from:

                               

Net investment income

  0.35     0.31   0.23   0.20   0.16   0.35     0.32

Net realized gains

  0.79     0.24   0.29   0.16     0.79     0.24

Total Distributions

  1.14     0.55   0.52   0.36   0.16   1.14     0.56

Net Asset Value, End of Period

  $18.61     $17.69   $16.04   $15.97   $15.09   $18.59     $17.69
                                 

Total Return (a)

  11.68% (d)   13.75%   3.67%   8.19%   20.31%   11.56% (d)   7.17%

Ratios/Supplemental Data:

                               

Net Assets, End of Period (in thousands)

  $1,525,002     $1,390,230   $959,531   $515,506   $225,867   $1,173,708     $396,349

Ratios to Average Net Assets:

                               

Net Investment Income

  2.20%     2.33%   1.89%   1.81%   1.58%   2.04%     2.09%

Net Expenses*

  0.52%     0.48%   0.45%   0.49%   0.53%   0.61%     0.62%

Gross Expenses*

  0.56%     0.53%   0.45%   0.49%   0.53%   0.65%     0.69%

Portfolio Turnover Rate

  176%     138%   146%   141%   115%   176%     138%

 

Money Market Fund

 

Years ended December 31

   2007    2006    2005     2004    2003  

Inception date

                07/01/85  

Net Asset Value, Beginning of Period

   $1.00    $1.00    $1.00     $1.00    $1.00  

Income from Investment Operations:

                           

Net Investment Income

   0.05    0.05    0.03     0.01    0.01  

Net Realized and Unrealized Gains on Investments

                0.00 (b)

Total Income From Investment Operations

   0.05    0.05    0.03     0.01    0.01  

Less Distributions from:

                           

Net investment income

   0.05    0.05    0.03     0.01    0.01  

Return of capital

         0.00 (b)       

Total Distributions

   0.05    0.05    0.03     0.01    0.01  

Net Asset Value, End of Period

   $1.00    $1.00    $1.00     $1.00    $1.00  
                             

Total Return (a)

   4.92%    4.65%    2.79%     0.95%    0.78%  

Ratios/Supplemental Data:

                           

Net Assets, End of Period (in thousands)