GE INSTITUTIONAL FUNDS, N-1A EL/A, 1997-09-17

GE INSTITUTIONAL FUNDS
N-1A EL/A, 1997-09-17

Previous: SYMPLEX COMMUNICATIONS CORP, 10QSB, 1997-09-17

Next: MEMBERS MUTUAL FUNDS, N-1A EL/A, 1997-09-17

File Nos. 333-29337, 811-08257

================================================================================

As filed with the Securities and Exchange Commission on September 17, 1997

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /

/X / Pre-Effective Amendment No. 1

/ / Post-Effective Amendment No. ____

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / /

/X / Amendment No. 1

(Check appropriate box or boxes)

...................................................................
GE INSTITUTIONAL FUNDS
3003 Summer Street
Stamford, Connecticut 06905
(203) 326-4040
(Registrant's Exact Name, Address and Telephone Number)
...................................................................
Matthew J. Simpson, Esq.
Vice President, Associate General Counsel & Assistant Secretary
GE Investment Management Incorporated
3003 Summer Street
Stamford, Connecticut 06905
...................................................................
(Name and Address of Agent for Service)

Copies to:

Stephen E. Roth, Esq.
Sutherland, Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, DC 20004-2404

Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.

Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the Registrant
declares that an indefinite amount of securities is being registered under the
Securities Act of 1933.

The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment that specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until the Registration Statement becomes
effective on such date as the Securities and Exchange Commission, acting
pursuant to Section 8(a) of the Securities Act of 1933, as amended, may
determine.

================================================================================

<PAGE>

GE INSTITUTIONAL FUNDS

FORM N-1A
CROSS REFERENCE SHEET
Pursuant to Rule 481(a) under the Securities Act of 1933

Showing Location of Information Required by Form N-1A in Part A (Prospectus)
and Part B (Statement of Additional Information) of the Registration Statement

Part A
Item No. Prospectus Heading
- -------- ------------------

1. Cover Page............................................. Cover Page

2. Synopsis..............................................Expense Information

3. Condensed Financial Information............ Expense Information

4. General Description of Registration........ Cover Page;
Investment Objectives and
Management Policies;
Investments in Debt Securities;
Cash Management Policies --
Non-Money Market Funds;
Additional Permitted Investments;
Additional Matters;
Appendix--
Further Information:
Certain Investment
Techniques and Strategies

5. Management of the Funds........................ Expense Information;
Investment Objectives and
Management Policies;
Management of the Trust;
Further Information:
Certain Investment
Techniques and Strategies

6. Capital Stock and Other Securities.......... Dividends;
Distributions and
Taxes; Additional Matters

<PAGE>

7. Purchase of Securities Being Offered.......... Purchase of Shares;
Net Asset Value;
Distributor

8. Redemption or Repurchase........................ Redemption of Shares

9. Legal Proceedings...................................... Not applicable

Part B Heading in Statement of
Item No. Additional Information
- -------- ----------------------

10. Cover Page............................................... Cover Page

11. Table of Contents....................................... Contents

12. General Information and History............. The Funds' Performance;
Additional Information

13. Investment Objectives and Policies.......... Investment Objectives
and Management Policies;
Appendix--Further Informa-
tion: Certain Investment
Techniques and Strategies

14. Management of the Funds........................ Management of the Trust

15. Control Persons and Principal
Holders of Securities.............................Principal Stockholders;
Management of the Trust
See Prospectus--
Additional Matters

16. Investment Advisory and Other Services...... Management of the Trust

17. Brokerage Allocation and Other Practices.... Investment Restrictions;
Management of the Trust

18. Capital Stock and Other Securities.......... Redemption of Shares;
Additional Information

<PAGE>

19. Purchase, Redemption and Pricing
of Securities Being Offered...................... Redemption of Shares;
Net Asset Value;
See Prospectus --
Purchase of Shares

20. Tax Status........................................Dividends, Distributions
and Taxes

21. Underwriters............................................. Not Applicable

22. Calculation of Performance Data.............. The Funds' Performance

23. Financial Statements..............................Independent Accountants;
Financial Statements

Part C

Information required to be included in Part C is set forth after the
appropriate item, so numbered, in Part C to this Registration Statement.

<PAGE>
GE Institutional Funds (the "Trust") is an open-end management investment
company that offers ten diversified managed investment funds (each, a "Fund" and
collectively, the "Funds"), each of which has two classes of shares -- the
Investment Class and the Service Class. Each Fund has a discrete investment
objective that it seeks to achieve by following distinct investment policies.
This Prospectus describes the Investment Class shares of the Funds.

The Investment Class shares and the Service Class shares are identical, except
as to the services offered, and the expenses borne, by each class. You may
obtain a copy of the prospectus describing the Service Class shares free of
charge by calling the telephone number listed below or writing the Trust at the
address listed below.

o Emerging Markets Fund's investment objective is long-term growth of
capital. The Fund seeks to achieve this objective by investing primarily in
equity securities of issuers that are located in emerging markets
countries.

o Premier Growth Equity Fund's investment objective is long-term growth of
capital and future income rather than current income. The Fund seeks to
achieve this objective by investing primarily in growth-oriented equity
securities.

o Mid-Cap Growth Fund's investment objective is long-term growth of capital.
The Fund seeks to achieve this objective by investing primarily in equity
securities of companies with medium-sized market capitalization that have
the potential for above-average growth.

o International Equity Fund's investment objective is long-term growth of
capital. The Fund seeks to achieve this objective by investing primarily in
foreign equity securities.

o Value Equity Fund's investment objective is long-term growth of capital and
future income rather than current income. The Fund seeks to achieve this
objective by investing primarily in equity securities of companies with
large-sized market capitalization that the Fund's management considers to
be undervalued by the market.

o U.S. Equity Fund's investment objective is long-term growth of capital. The
Fund seeks to achieve this objective by investing primarily in equity
securities of U.S. companies.

o S&P 500 Index Fund's investment objective is to provide growth of capital
and accumulation of income that corresponds to the investment return of the
Standard & Poor's 500 Composite Stock Price Index. The Fund seeks to
achieve this objective by investing in common stocks comprising that Index.

o Strategic Investment Fund's investment objective is to maximize total
return, consisting of capital appreciation and current income. The Fund
seeks to achieve this objective by following an asset allocation strategy
that provides diversification across a range of asset classes and
contemplates shifts among them from time to time.

o Income Fund's investment objective is to seek maximum income consistent
with prudent investment management and the preservation of capital. The
Fund seeks to achieve this objective by investing in fixed income
securities.

o Money Market Fund's investment objective is to seek a high level of current
income consistent with the preservation of capital and maintenance of
liquidity. The Fund seeks to achieve this objective by investing in U.S.
dollar denominated, short-term money market instruments.

This Prospectus briefly sets forth certain information about the Funds and the
Trust that prospective investors will find helpful in making an investment
decision. Investors are encouraged to read this Prospectus carefully and retain
it for future reference.

An investment in the Money Market Fund is neither insured nor guaranteed by the
U.S. Government, and there can be no assurance that this Fund will be able to
maintain a stable net asset value of $1.00 per share.

Shares of the Funds are not deposits with or obligations of any financial
institution, are not guaranteed or endorsed by any financial institution or its
affiliates, and are not insured by the Federal Deposit Insurance Corporation,
the Federal Reserve Board or any other government agency. There can be no
assurance that a Fund will achieve its investment objective.

Additional information about the Funds and the Trust, contained in a Statement
of Additional Information dated the same date as this Prospectus, has been filed
with the Securities and Exchange Commission (the "SEC") and is available upon
request and without charge by calling the Trust at the telephone number listed
below or by contacting the Trust at the address listed below. The SEC maintains
a Web site (http://www.sec.gov) that contains the Statement of Additional
Information, material incorporated by reference and other information regarding
the Funds and the Trust. The Statement of Additional Information is incorporated
in its entirety by reference into this Prospectus.

GE INVESTMENT MANAGEMENT INCORPORATED
Investment Adviser and Administrator

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

Prospectus

September ___, 1997

SUBJECT TO COMPLETION SEPTEMBER 17, 1997. INFORMATION CONTAINED HEREIN IS
SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE
SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME
THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL
THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

TABLE OF CONTENTS

EXPENSE INFORMATION.................................................. 1

INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES........................ 3

INVESTMENTS IN DEBT SECURITIES...................................... 10

CASH MANAGEMENT POLICIES - NON-MONEY MARKET FUNDS................... 11

ADDITIONAL PERMITTED INVESTMENTS.................................... 12

INVESTMENT RESTRICTIONS............................................. 15

MANAGEMENT OF THE TRUST............................................. 20

PURCHASE OF SHARES.................................................. 23

REDEMPTION OF SHARES................................................ 26

INVESTMENT SWITCHES................................................. 28

NET ASSET VALUE..................................................... 28

DIVIDENDS, DISTRIBUTIONS AND TAXES.................................. 29

CUSTODIAN AND TRANSFER AGENT........................................ 30

DISTRIBUTOR......................................................... 30

ADDITIONAL MATTERS.................................................. 30

APPENDIX ............................................................ i

3003 Summer Street
Stamford, Connecticut 06905
1-800-493-3042

<PAGE>

EXPENSE INFORMATION
- --------------------------------------------------------------------------------

Expenses are one of several factors to consider when investing in the Funds. The
following fee table and example are designed to assist you in understanding the
various costs and expenses that you will bear directly or indirectly as an
investor in the Investment Class shares of a Fund. Shareholder Transaction
Expenses are fees charged directly to you when you buy or sell Investment Class
shares. Annual Fund Operating Expenses are paid out of each Fund's assets and
include fees for portfolio management, maintenance of shareholder accounts,
accounting and other services.

Fee Table

Premier Interna- S&P Strategic
Emerging Growth Mid-Cap tional Value U.S. 500 Invest- Money
Markets Equity Growth Equity Equity Equity Index ment Income Market
Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund
------ ------ ------ ------ ------ ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Shareholder
Transaction
Expenses:

Maximum Sales
Load Imposed on
Purchases of
Shares (as a
percentage of
offering price) .. None None None None None None None None None None

Maximum
Contingent
Deferred Sales
Load ... None None None None None None None None None None

Purchase
Premium* (as a
percentage of
amount
invested) ... 1.25% .25% .40% .65% .25% .25% .25% .20% .10% None

Redemption Fee*
(as a percentage
of amount
redeemed) ... 1.25% .25% .40% .65% .25% .25% .25% .20% .10% None

</TABLE>
- ----------

* Purchase premiums and redemption fees apply only to purchases and
redemptions that are not in-kind ("cash transactions") of $5 million or
more with respect to each of the Emerging Markets and International Equity
Funds and $10 million or more with respect to each of the other non-money
market Funds (defined below). Purchase premiums and redemption fees do not
apply to "Investment Switches," which are purchases or redemptions of a
Fund that are offset by corresponding purchases or redemptions of
Investment Class shares of another Fund or the Service Class shares of the
same or another Fund. Purchase premiums, redemption fees and Investment
Switches are discussed below under "Purchase of Shares," "Redemption of
Shares," and "Redemption of Shares -- Investment Switches," respectively.

Purchase premiums and redemption fees are paid to, and retained by, a Fund
and are intended to allocate transaction costs caused by shareholder
activity to the shareholder generating the activity, rather than to the
Fund as a whole. The Trust may reduce purchase premium and/or redemption
fee amounts if GE Investment Management Incorporated ("GEIM") determines
that a purchase or sale results in minimum brokerage and/or other
transaction costs due to, for example, offsetting transactions or
redemptions or purchases made in-kind.

- 1 -

<PAGE>

Premier Mid- Interna- S&P Strategic
Emerging Growth Cap tional Value U.S. 500 Invest- Money
Markets Equity Growth Equity Equity Equity Index ment Income Market
Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund
--------- ------ ------ ------ ------ ------ ---- ---- ---- -----
Annual Fund
Operating
Expenses (as of
percentage of
net assets):
- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum
Advisory and
Administration
Fees ... 1.05%* .55%* .55%* .75%* .55%* .55%* .15%* .45%* .35%* .25%*

Other
Expenses ... None None None None None None None None None None

Total Operating
Expenses ... 1.05% .55% .55% .75% .55% .55% .15% .45% .35% .25%

</TABLE>

- ----------

* The advisory and administration fee shown is the maximum payable by the
Fund; this fee declines incrementally as the Fund's assets increase as
described under "Management of the Trust - Fee Structure."

The nature of the services provided to, and the advisory and administration fee
paid by, each Fund are described under "Management of the Trust." A Fund's
advisory and administration fee is intended to be a "unitary" fee that includes
any other operating expenses payable by a Fund, except for fees paid to the
Trust's independent Trustees, brokerage fees and expenses that are not normal
operating expenses of the Funds (such as extraordinary expenses, interest and
taxes). The amount shown as the advisory and administration fee for a Fund
reflects the highest fee payable, and does not reflect that the fee decreases
incrementally as Fund assets increase. Because the Funds have only recently
commenced operations, "Other Expenses" in the table above are based on estimated
amounts for the current fiscal year. "Other Expenses" include only Trustees'
fees payable to the Trust's independent Trustees, brokerage fees and expenses
that are not normal operating expenses of the Funds. This amount is expected to
be de minimus (less than .01%); therefore "Other Expenses" are reflected as
"None."

Example

The following example demonstrates the projected dollar amount of total
cumulative expenses that would be incurred over a one-year and three-year period
with respect to a hypothetical investment in each Fund. These amounts are based
upon (1) payment by the Fund of operating expenses at the levels set out in the
table above and (2) the specific assumptions stated below.

- 2 -

<PAGE>

You would pay the following
expenses on a $1,000 investment,
assuming (1) a 5% annual return and You would pay the following
(2) redemption at the end expenses on the same investment, assuming
of the time periods shown: no redemption:
1 Year 3 Years 1 Year 3 Years
------ ------- ------ -------
<S> <C> <C> <C> <C>
Emerging Markets Fund ..... $36 $58 $23 $45
Premier Growth Equity Fund.... $11 $23 $8 $20
Mid-Cap Growth Fund.... $14 $26 $10 $22
International Equity Fund.... $21 $37 $14 $30
Value Equity Fund..... $11 $23 $8 $20
U.S. Equity Fund..... $11 $23 $8 $20
S&P 500 Index Fund.... $7 $10 $4 $7
Strategic Investment Fund.... $9 $18 $7 $16
Income Fund.... $6 $13 $5 $12
Money Market Fund.... $3 $8 $3 $8

</TABLE>

The above example is intended to assist you in understanding various costs and
expenses that an investor in the Investment Class shares of a Fund will bear
directly or indirectly. Although the table assumes a 5% annual return, a Fund's
actual performance will vary and may result in an actual return that is greater
or less than 5%. The table assumes that any applicable purchase premiums and
redemption fees are charged to an investor, even though such premiums and
redemption fees are not applicable in all cases. The example should not be
considered to be a representation of past or future expenses of a Fund; actual
expenses may be greater or less than those shown.

INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
- --------------------------------------------------------------------------------

The Trust is a diversified, open-end management investment company that consists
of ten separate investment portfolios, each of which has two classes of shares
- -- the Investment Class and the Service Class. The Service Class shares differ
from the Investment Class shares in that an additional .25% shareholder
servicing and distribution fee is charged to each Fund with respect to Service
Class shares. This .25% fee is intended to compensate GEIM, or enable GEIM to
compensate other persons, for expenditures made on behalf of each Fund to obtain
certain shareholder services, including third-party record-keeping, transfer
agency, and ongoing services related to the maintenance of Service Class
shareholder accounts and to compensate GEIM, or enable GEIM to compensate other
persons, including GE Investment Services Inc. (the "Distributor"), for
providing certain services that are primarily intended to result in the sale of
Service Class shares of the Funds pursuant to a shareholder servicing and
distribution plan adopted in accordance with Rule 12b-1 under the Investment
Company Act of 1940, as amended (the "1940 Act"). The shareholder servicing and
distribution fee paid by the Service Class shares will cause such shares to have
a higher expense ratio and lower return than the Investment Class shares.

You should be aware that GE Funds, an investment company that is affiliated with
the Trust and also advised by GEIM, offers additional class options for
investors that may not meet the minimum investment requirements of the Funds
and/or require services not provided by the Funds, but that wish to invest in
portfolios (the "GE Funds") advised by GEIM with the same or similar investment
objectives and policies as those of the Funds. Class A shares of the GE Funds
would be suitable for investors that require "full service." Under the full
service option, GEIM, in conjunction with the employee retirement plan
record-keeping capabilities of State Street Bank and Trust Company ("State
Street"), provides record-keeping and other shareholder services (including
shareholder communication services) to investors in the Class A shares of the GE
Funds. Class D shares of the GE Funds would be suitable for investors that
require only advisory and administration services (similar to investors in the
Investment Class shares of the Funds) but that are not able to meet the minimum
investment requirements of the Funds, as well as for GE-affiliated employee
retirement plans that require the full service option. Because

- 3 -

<PAGE>

the GE Funds are marketed primarily to retail investors that generally invest
smaller amounts in such funds, the fees charged to investors in the GE Funds are
higher than those charged to investors in the corresponding Funds of the Trust.
You should evaluate the levels at which you intend to invest and your individual
shareholder services requirements to determine the class of shares of the Funds
or the GE Funds that best suit your needs at the lowest level of fees.

Set forth below is a description of the investment objective and policies of
each Fund. The investment objective of a Fund may not be changed without the
approval of the holders of a majority of the Fund's outstanding voting
securities as defined in the 1940 Act. Such a majority is defined in the 1940
Act as the lesser of (1) 67% or more of the shares present at a Fund meeting, if
the holders of more than 50% of the outstanding shares of the Fund are present
or represented by proxy or (2) more than 50% of the outstanding shares of the
Fund.

No assurance can be given that a Fund will be able to achieve its investment
objective.

Emerging Markets Fund

The investment objective of the Emerging Markets Fund is long-term growth of
capital. The Fund seeks to achieve this objective by investing, under normal
conditions, at least 65% of its total assets in equity securities of issuers
that are located in emerging markets countries. The determination of where an
issuer is located will be made by reference to the country in which the issuer:
(a) is organized; (b) derives at least 50% of its revenues or profits from goods
produced or sold, investments made or services performed; (c) has at least 50%
of its assets situated; or (d) has the principal trading market for its
securities (the "Country Identification Test").

GEIM allocates the Fund's assets among the selected emerging markets of newly
industrializing countries in Asia, Latin America, the Middle East, Southern
Europe, Eastern Europe (including the former republics of the Soviet Union and
the Eastern Bloc) and Africa. An emerging markets 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 emerging countries that are listed on the Morgan
Stanley Capital International Emerging Markets Index.

The Fund, from time to time, may invest all of its assets in a single country.
If the Fund invests all or a significant portion of its assets at any time in a
single country, events in that country are more likely to affect the Fund's
investments. GEIM bases its selection on certain relevant factors, including the
investment restrictions and tax barriers of a given country, the outlook for
economic growth, currency exchange rates, commodity prices, interest rates,
political factors and the stage of the local market cycle in the emerging
country.

Equity securities of emerging markets companies may include common stocks,
preferred stocks, convertible bonds, convertible debentures, convertible notes,
convertible preferred stocks and warrants or rights issued by foreign companies,
equity interests in foreign investment funds or trusts and foreign real estate
investment trust securities. The Fund may invest in American Depositary Receipts
("ADRs") (sometimes referred to as Continental Depositary Receipts, or "CDRs"),
European Depositary Receipts ("EDRs") and Global Depositary Receipts ("GDRs").

The Emerging Markets Fund, under normal market conditions, may invest up to 35%
of its assets in debt securities, including notes, bonds and debentures issued
by corporate or governmental entities when GEIM determines that investing in
those kinds of debt securities is consistent with the Fund's investment
objective of long-term growth of capital. GEIM believes that such a
determination could be made, for example, upon the Emerging Markets Fund's
investing in the debt securities of a company whose securities GEIM anticipates
will increase in value as a result of a development particularly or uniquely
applicable to the company. GEIM also believes such a determination could be made
with respect to an investment by the Emerging Markets Fund in debt instruments
issued by a governmental entity if GEIM's concludes that the value of the
instruments will increase as a result of improvements or changes in public
finances, monetary policies, external accounts, financial markets, exchange rate
policies or labor conditions of the country in which the governmental entity is
located.

In addition, the Emerging Markets Fund may sell securities short against the box
and may engage in certain investments discussed below under "Additional
Permitted Investments."

International Equity Fund

The investment objective of the International Equity Fund (the "International
Fund") is long-term growth of capital. The Fund seeks to achieve this objective
by investing primarily in foreign equity securities. The International Fund may
invest in securities of companies and governments located in developed and
developing countries outside the United States, and also may invest in
securities of foreign issuers in the form of depositary receipts. Investing in
securities issued by foreign companies and governments involves considerations
and potential risks not typically associated with investing in securities issued
by the U.S. Government and U.S. corporations. The International Fund intends to
position itself broadly among countries and, under normal circumstances, at
least 65% of the Fund's total assets will be invested

- 4 -

<PAGE>

in securities of issuers collectively in no fewer than three different countries
other than the United States. The percentage of the International Fund's assets
invested in particular countries or regions of the world will vary depending on
political and economic conditions. The determination of where an issuer is
located will be made by reference to the Country Identification Test, as set
forth above in "Investment Objectives and Management Policies--Emerging Markets
Fund."

In selecting investments on behalf of the International Fund, GEIM seeks
companies that are expected to grow faster than relevant markets and whose
securities are available at a price that does not fully reflect the potential
growth of those companies. GEIM typically focuses on companies that possess one
or more of a variety of characteristics, including strong earnings growth
relative to price-to-earnings and price- to-cash earnings ratios, low
price-to-book value, strong cash flow, presence in an industry experiencing
strong growth and high quality management.

The International Fund, under normal conditions, invests at least 65% of its
assets in common stocks, preferred stocks, convertible debentures, convertible
notes, convertible preferred stocks and warrants or rights, issued by companies
believed by GEIM to have a potential for superior growth in sales and earnings.
In most cases these securities are traded on foreign or U.S. exchanges or in the
U.S. or foreign over-the-counter markets. The International Fund will emphasize
established companies, although it may invest in companies of varying sizes as
measured by assets, sales or capitalization.

The International Fund, under normal market conditions, may invest up to 35% of
its assets in notes, bonds and debentures issued by corporate or governmental
entities when GEIM determines that investing in those kinds of debt securities
is consistent with the Fund's investment objective of long-term growth of
capital. GEIM believes that such a determination could be made, for example,
upon the International Fund's investing in the debt securities of a company
whose securities GEIM anticipates will increase in value as a result of a
development particularly or uniquely applicable to the company, such as a
liquidation, reorganization, recapitalization or merger, material litigation,
technological breakthrough or new management or management policies. In
addition, GEIM believes such a determination could be made with respect to an
investment by the International Fund in debt instruments issued by a
governmental entity upon GEIM's concluding that the value of the instruments
will increase as a result of improvements or changes in public finances,
monetary policies, external accounts, financial markets, exchange rate policies
or labor conditions of the country in which the governmental entity is located.

When GEIM believes there are unstable market, economic, political or currency
conditions abroad, the Fund may assume a temporary defensive posture and
restrict its investments to certain securities markets and/or invest all or a
significant portion of its assets in securities of the types described above
issued by companies incorporated in and/or having their principal activities in
the United States. In addition, the International Fund may sell securities short
against the box and may engage in certain investments discussed below under
"Additional Permitted Investments."

Mid-Cap Growth Fund

The investment objective of the Mid-Cap Growth Fund (the "Mid-Cap Fund") is
long-term growth of capital. The Mid-Cap Fund seeks to achieve this objective by
investing primarily in the equity securities of companies with medium-sized
market capitalization ("mid-cap") that have the potential for above-average
growth. The Fund, under normal market conditions, will invest at least 65% of
its total assets in a portfolio of equity securities of mid-cap companies traded
on U.S. securities exchanges or in the U.S. over-the-counter market, including
common stocks, preferred stocks, convertible preferred stocks, convertible
bonds, convertible debentures, convertible notes, ADRs and warrants or rights
issued by foreign and U.S. companies. The Fund defines a mid-cap company as one
whose securities are within the market capitalization range of stocks listed on
the S&P MidCap 400 Index (the "S&P 400 Index").

Mid-cap growth companies are often still in the early phase of their life
cycles. Accordingly, investing in mid-cap companies generally entails greater
risk exposure and volatility (meaning upward or downward price swings) than
investing in large, well-established companies. However, GEIM believes that
mid-cap companies may offer the potential for more rapid growth. See "Risk
Factors and Special Considerations - Smaller Companies."

GEIM will rely on its proprietary research to identify mid-cap companies with
potentially attractive growth prospects. These companies typically have one or
more of a variety of characteristics, including attractive products or services,
above average earnings growth potential, superior financial returns, strong
competitive position, shareholder focused management and sound balance sheets.
There is, of course, no guarantee that GEIM will be able to identify such
companies or that the Fund's investment in them will be successful.

- 5 -
<PAGE>

with the SEC and listed on a U.S. national securities exchange ("U.S. Listed
Securities") or traded on the Nasdaq National Market or the Nasdaq SmallCap
Market (collectively, "Nasdaq Traded Securities"); and (iii) bonds, notes and
debentures. The Mid-Cap Fund may sell securities short against the box and
engage in certain investments discussed below under "Additional Permitted
Investments."

Premier Growth Equity Fund

The investment objective of the Premier Growth Equity Fund (the "Premier Growth
Fund") is long-term growth of capital and future income rather than current
income. The Fund seeks to achieve this objective by investing primarily in
growth-oriented equity securities which, under normal market conditions, will
represent at least 65% of the Fund's assets. In pursuing its objective, the
Premier Growth Fund, under normal conditions, may invest in common stocks,
preferred stocks, convertible bonds, convertible debentures, convertible notes,
convertible preferred stocks and warrants or rights issued by U.S. and foreign
companies.

The Premier Growth Fund will seek to identify and invest in companies it
believes will offer potential for long-term growth of capital. These companies
typically would possess one or more of a variety of characteristics, including
high quality products and/or services, strong balance sheets, sustainable
internal growth, superior financial returns, competitive position in the
issuer's economic sector and shareholder-oriented management. While the Premier
Growth Fund may invest in companies of varying sizes as measured by assets,
sales or capitalization, a majority of its assets, under normal market
conditions, will be comprised of companies with relatively large capitalization.
In addition, the Premier Growth Fund normally will be invested in companies that
have above-average growth prospects and which are typically leaders in their
fields. The Fund generally will be diversified over a cross section of
industries.

Up to 25% of the Premier Growth Fund's total assets may be invested in foreign
securities, excluding, for purposes of this limitation, ADRs, U.S. Listed
Securities and Nasdaq Traded Securities. The equity securities in which the
Premier Growth Fund invests in most cases will be traded on domestic or foreign
securities exchanges, or traded in the domestic or foreign over-the-counter
markets. The Premier Growth Fund may invest up to 35% of its assets in bonds,
notes and debentures. For temporary defensive purposes, the Fund may invest in
fixed income securities without limitation. To the extent that the Fund invests
in fixed income securities, it may not achieve its investment objective. The
Premier Growth Fund also may engage in certain investments discussed below under
"Additional Permitted Investments."

Value Equity Fund

The investment objective of the Value Equity Fund (the "Value Fund") is
long-term growth of capital and future income rather than current income. The
Fund seeks to achieve this objective by investing primarily in equity securities
of companies with large-sized market capitalization that the Fund's management
considers to be undervalued by the market. Undervalued securities are those
selling for low prices given the fundamental characteristics of their issuers.
During normal market conditions, the Fund will invest at least 65% of its assets
in common stocks, preferred stocks, convertible bonds, convertible debentures,
convertible notes, convertible preferred stocks, and warrants or rights issued
by foreign and U.S. companies.

The Value Fund's investment philosophy is that the market tends to overreact to
both good and bad news about issuers. Companies experiencing faster than
expected growth tend to be overvalued as the market extrapolates current good
news well beyond a sustainable time-frame and correspondingly over-forecasts the
period and magnitude of decline of companies experiencing near term
difficulties. These difficulties can be driven by factors both internal and
external to the company. Internal factors may include operational mismanagement
or strategic mistakes. External factors may include a change in the economic
environment or a shift in the competitive dynamics of an industry. The Fund
attempts to identify firms that are out of favor for a variety of reasons and
select those which Fund management believes to be undervalued relative to their
true business prospects.

In accordance with this premise, GEIM will identify and select securities that
it believes are undervalued, using factors it considers indicative of
fundamental investment value including: (i) a low price/earnings ratio relative
to a normalized growth rate and/or Standard & Poor's 500 Composite Stock Price
Index (the "S&P 500 Index"); (ii) the potential for free cash flow generation
and prospects for dividend growth; (iii) a strong balance sheet with low
financial leverage; (iv) sustainable competitive advantages such as a franchise
brand name or dominant market position; (v) an experienced and capable
management team; (vi) improving returns on invested capital; and (vii) net asset
values in a restructuring/breakup analysis framework.

GEIM believes that such investments will position the Fund to benefit from a
positive change in business prospects from an issuing company that adopts a
turnaround strategy to increase/restore the earning power of the company.

- 6 -

<PAGE>

The Value Fund, under normal market conditions, may invest (i) up to 35% of its
assets in bonds, notes and debentures, and (ii) up to 25% of its assets in
foreign securities, excluding, for purposes of this limitation, ADRs, U.S.
Listed Securities and Nasdaq Traded Securities. The Fund may sell securities
short against the box and engage in certain investments discussed below under
"Additional Permitted Investments."

U.S. Equity Fund

The investment objective of the U.S. Equity Fund is long-term growth of capital.
The Fund seeks to achieve this objective by investing primarily in equity
securities of U.S. companies and, under normal conditions, it will invest at
least 65% of its assets in common stocks, preferred stocks, securities
convertible into common stocks, including convertible bonds, convertible
debentures, convertible notes, convertible preferred stocks, and warrants or
rights issued by U.S. companies. The U.S. Equity Fund typically will invest in
equity securities that are issued by U.S. companies and traded on U.S.
securities exchanges or in the U.S. over-the-counter market. Up to 15% of the
U.S. Equity Fund's assets may be invested in foreign securities. ADRs, U.S.
Listed Securities and Nasdaq Traded Securities will be included for purposes of
the Fund's 65% minimum described above, and excluded for purposes of the Fund's
15% maximum investments in foreign securities.

In managing the assets of the U.S. Equity Fund, GEIM uses a combination of
"value-oriented" and "growth-oriented" investing. Value- oriented investing
involves seeking securities that may have low price-to-earnings ratios, or high
yields, or that sell for less than intrinsic value as determined by GEIM, or
that appear attractive on a dividend discount model. The U.S. Equity Fund would
sell these securities when their prices approach targeted levels.
Growth-oriented investing generally involves buying securities with above
average earnings growth rates at reasonable prices. The U.S. Equity Fund holds
these securities until GEIM determines that their growth prospects diminish or
that they have become overvalued when compared with alternative investments.

In investing on behalf of the U.S. Equity Fund, GEIM seeks to produce a
portfolio that GEIM believes will have characteristics similar to the S&P 500
Index by virtue of blending investments in both "value" and "growth" securities.
Since the U.S. Equity Fund's strategy seeks to combine these basic elements, but
is designed to select investments deemed to be the most attractive within each
category, GEIM believes that the strategy should be capable of outperforming the
U.S. equity market as reflected by the S&P 500 Index on a total return basis.

The U.S. Equity Fund, under normal market conditions, may invest up to 35% of
its assets in notes, bonds and debentures issued by corporate or governmental
entities when GEIM determines that investing in these kinds of debt securities
is consistent with the Fund's investment objective of long-term growth of
capital. GEIM believes that such a determination could be made, for example,
upon the U.S. Equity Fund's investing in the debt securities of a company whose
securities GEIM anticipates will increase in value as a result of a development
particularly or uniquely applicable to the company, such as a liquidation,
reorganization, recapitalization or merger, material litigation, technological
breakthrough or new management or management policies. The U.S. Equity Fund also
may engage in certain investments discussed below under "Additional Permitted
Investments."

S&P 500 Index Fund

The investment objective of the S&P 500 Index Fund is to provide growth of
capital and accumulation of income that corresponds to the investment return of
the S&P 500 Index. The Fund seeks to achieve this objective by investing in
common stocks comprising that Index. Standard and Poor's Corporation ("Standard
& Poor's" or "S&P")1 chooses the 500 common stocks comprising the S&P 500 Index
on the basis of market values, industry diversification and other factors. Most
of the common stocks in the S&P 500 Index are issued by 500 of the largest
companies, in terms of the aggregate market value of their outstanding stock,
and such companies generally are listed on the New York Stock Exchange.
Additional common stocks that are not among the 500 largest market value stocks
are included in the S&P 500 Index for diversification purposes. S&P may, from
time to time, add common stocks to, or delete common stocks from, the S&P 500
Index.

- --------

1. Standard & Poor's,(R) S&P,(R) and S&P 500 (R) are trademarks of the
McGraw-Hill Companies, Inc. and have been licensed for use. The S&P 500
Index Fund is not sponsored, endorsed, sold or promoted by S&P, and S&P
makes no representation or warranty, express or implied, to the investors
of the Fund or any member of the public regarding the advisability of
investing in securities generally or in this Fund particularly or the
ability of the S&P 500 Index to track general stock market performance.

- 7 -

<PAGE>
The S&P 500 Index Fund will attempt to achieve its objective by replicating the
total return of the S&P 500 Index. To the extent that it can do so consistent
with the pursuit of its investment objective, it will attempt to keep
transaction costs low and minimize portfolio turnover. To achieve its investment
objective, the S&P 500 Index Fund will purchase equity securities that reflect,
as a group, the total investment return of the S&P 500 Index. Like the S&P 500
Index, the S&P 500 Index Fund will hold both dividend paying and non-dividend
paying common stocks comprising the S&P 500 Index.

Active portfolio management strategies are not used in making investment
decisions for the S&P 500 Index Fund. Rather, State Street Global Advisors
("SSGA"), the sub-adviser to the S&P 500 Index Fund, utilizes a passive
investment management approach. From time to time SSGA also may supplement this
passive approach by using statistical selection techniques to determine which
securities to purchase or sell for the Fund in order to replicate the investment
return of the S&P 500 Index over a period of time.

The S&P 500 Index Fund may choose not to invest in all the securities that
comprise the S&P 500 Index, and its holdings may differ by industry segment from
the S&P 500 Index. The Fund may compensate for the omission from its portfolio
of stocks that are included in the S&P 500 Index, or for purchasing securities
included in the Index in proportions that are different from their weightings in
the Index, by purchasing securities that may or may not be included in the S&P
500 Index but which have characteristics similar to the omitted securities (such
as stocks from the same or similar industry groups having a similar market
capitalization and other investment characteristics). In addition, from time to
time adjustments may be made in the S&P 500 Index Fund's holdings due to changes
in the composition or weighting of issues comprising the S&P 500 Index.

The S&P 500 Index Fund will attempt to achieve a correlation between its total
return and that of the S&P 500 Index of at least 0.95, without taking expenses
into account. A correlation of 1.00 would indicate perfect correlation, which
would be achieved when the S&P 500 Index Fund's net asset value, including the
value of its dividends and capital gain distributions, increases or decreases in
exact proportion to changes in the S&P 500 Index. SSGA will monitor the S&P 500
Index Fund's correlation to the S&P 500 Index and attempt to minimize any
"tracking error" (i.e., the statistical measure of the difference between the
investment results of the S&P 500 Index Fund and that of the S&P 500 Index).
However, brokerage and other transaction costs, as well as other Fund expenses,
in addition to potential tracking error, will tend to cause the S&P 500 Index
Fund's return to be lower than the return of the S&P 500 Index. There can be no
assurance as to how closely the S&P 500 Index Fund's performance will correspond
to the performance of the S&P 500 Index.

The S&P 500 Index Fund will not invest more than 35% of its total assets in (i)
stocks and other securities not included in the S&P 500 Index and (ii) foreign
securities, excluding, for purposes of this limitation, ADRs, U.S. Listed
Securities and Nasdaq Traded Securities. In this regard, the S&P 500 Index Fund
may temporarily invest cash balances, pending withdrawals or investments, in
high quality money market instruments. Nevertheless, the S&P 500 Index Fund will
not adopt a temporary defensive investment posture in times of generally
declining stock prices, and, therefore, investors will bear the risk of such
general stock market declines. The Fund also may engage in certain investments
discussed below under "Additional Permitted Investments."

Strategic Investment Fund

The investment objective of the Strategic Investment Fund (the "Strategic Fund")
is to maximize total return, consisting of capital appreciation and current
income. The Fund seeks to achieve this objective by following an asset
allocation strategy that provides diversification across a range of asset
classes and contemplates shifts among them from time to time. This strategy may
result in the Strategic Fund's experiencing a high portfolio turnover rate. See
"Portfolio Transactions and Turnover" below.

The Strategic Fund invests in the following classes of investments: common
stocks, preferred stocks, convertible securities and warrants or rights issued
by U.S. and foreign companies; bonds, debentures and notes issued by U.S. and
foreign companies; securities issued or guaranteed by the U.S. Government or one
of its agencies or instrumentalities ("U.S. Government Obligations"); debt
obligations issued by, or on behalf of, states, territories and possessions of
the United States and the District of Columbia and their political subdivisions,
agencies and instrumentalities or multi-state agencies or authorities, the
interest on which is, in the opinion of issuers' counsel, excluded from gross
income for Federal income tax purposes ("Municipal Obligations"); obligations of
foreign governments or their agencies or instrumentalities; mortgage related
securities, adjustable rate mortgage related securities ("ARMs"), collateralized
mortgage related securities ("CMOs") and government stripped mortgage related
securities; asset-backed and receivable-backed securities; and domestic and
foreign money market instruments. The U.S. equity and debt instruments in which
the Strategic Fund invests are traded on U.S. securities exchanges or in the
U.S. over-the-counter market, except that the Fund may invest up to 10% of its
assets in non-publicly traded securities. In addition, up to 30% of the
Strategic Fund's total assets may be invested in foreign securities, excluding,
for purposes of this limitation, ADRs, U.S. Listed Securities and Nasdaq Traded
Securities. The Strategic Fund also may invest in structured and indexed
securities, the value of which is linked to currencies, interest rates,
commodities, indexes or other financial indicators. Mortgage related

- 8 -
<PAGE>

securities, ARMs, CMOs, government stripped mortgage related securities and
asset-backed and receivable-backed securities are subject to several risks,
including the prepayment of principal.

The Strategic Fund generally seeks to invest in equity and debt securities that
GEIM has determined offer above average potential for total return. In making
this determination, GEIM will take into account factors including earnings
growth, industry attractiveness, company management, price-to-earnings ratios,
yield, price-to-book ratios and valuation of assets.

GEIM has broad latitude in selecting the classes of investments to which the
Strategic Fund's assets are committed. Although the Strategic Fund has the
authority to invest solely in equity securities, solely in debt securities,
solely in money market instruments or in any combination of these classes of
investments, GEIM anticipates that at most times the Fund will be invested in a
combination of equity and debt instruments.

The Strategic Fund's investments are designed to achieve favorable performance
with lower volatility than a fund that invests solely in equity or debt
securities. GEIM will determine the weightings of equity and debt holdings for
the Strategic Fund at any given time in light of its assessment of the
attractiveness of each market. Although GEIM cannot predict the mix of the
Strategic Fund's investments at any one time, GEIM can delineate certain
situations that can lead to a shift in the mix of the Strategic Fund's
investments. If, for example, the prices of U.S. equity securities decline due
to falling economic activity and profits, and GEIM determines that the condition
is transitory, GEIM could allocate a major portion of the Strategic Fund's
assets to the equity market. If, on the other hand, the prices of debt
instruments are depressed by rising economic activity combined with restrictive
monetary or fiscal policies, and GEIM concludes that this condition is
temporary, GEIM could allocate a major portion of the Strategic Fund's assets to
debt securities.

The Strategic Fund typically purchases a debt security if GEIM believes that the
yield and potential for capital appreciation of the security are sufficiently
attractive in light of the risks of ownership of the security. In determining
whether the Strategic Fund should invest in particular debt instruments, GEIM
considers factors such as: the price, coupon and yield to maturity; GEIM's
assessment of the credit quality of the issuer; the issuer's available cash flow
and the related coverage ratios; the property, if any, securing the obligation;
and the terms of the debt securities, including the subordination, default,
sinking fund and early redemption provisions.

GEIM's decision that the Strategic Fund invest in foreign securities would be
predicated on the outlook for the foreign securities markets of selected
countries, the underlying economies of those countries and the availability of
attractively priced individual securities.

In addition to investing as described above, the Fund may invest in municipal
leases, floating and variable rate instruments, participation interests in
certain Municipal Obligations, Municipal Obligation components, custody receipts
and zero coupon obligations and may enter into mortgage dollar rolls. The Fund
also may engage in certain investments discussed below under "Additional
Permitted Investments."

Income Fund

The investment objective of the Income Fund is to seek maximum income consistent
with prudent investment management and the preservation of capital. Capital
appreciation with respect to the Income Fund's portfolio securities may occur
but is not an objective of the Fund. In seeking to achieve its investment
objective, the Income Fund invests in the following types of fixed income
instruments: U.S. Government Obligations; obligations of foreign governments or
their agencies or instrumentalities; bonds, debentures, notes and
non-convertible preferred stocks issued by U.S. and foreign companies; mortgage
related securities, ARMs, CMOs and government stripped mortgage related
securities; asset-backed and receivable-backed securities; zero coupon
obligations; floating and variable rate instruments and money market
instruments. The Income Fund also may invest in depository receipts and
structured and indexed securities, the value of which is linked to currencies,
interest rates, commodities, indexes or other financial indicators. Mortgage
related securities, ARMs, CMOs, government stripped mortgage related securities
and asset-backed and receivable-backed securities are subject to several risks,
including the prepayment of principal.

The Income Fund is subject to no limitation with respect to the maturities of
the instruments in which it may invest; the weighted average maturity of the
Fund's portfolio securities is anticipated to be approximately five to 10 years.

Up to 35% of the Income Fund's total assets may be invested in foreign
securities, excluding, for purposes of this limitation, ADRs, U.S. Listed
Securities and Nasdaq Traded Securities. The Income Fund also may enter into
mortgage dollar rolls, and may engage in certain investments discussed below
under "Additional Permitted Investments." The Income Fund typically invests not
more than 35% of its assets in money market instruments if GEIM deems such
investments to be consistent with that Fund's investment objective. See "Cash
Management Policies -- Non-Money Market Funds," below.

- 9 -
<PAGE>
Money Market Fund

The investment objective of the Money Market Fund is to seek a high level of
current income consistent with the preservation of capital and the maintenance
of liquidity. The Money Market Fund seeks to achieve this objective by investing
in the following U.S. dollar denominated, short-term money market instruments:
(1) U.S. Government Obligations; (2) debt obligations of banks, savings and loan
institutions, insurance companies and mortgage bankers; (3) commercial paper and
notes, including those with floating or variable rates of interest; (4) debt
obligations of foreign branches of U.S. banks, U.S. branches of foreign banks
and foreign branches of foreign banks; (5) debt obligations issued or guaranteed
by one or more foreign governments or any of their political subdivisions,
agencies or instrumentalities, including obligations of supra-national entities;
(6) debt securities issued by foreign issuers; and (7) repurchase agreements.

The Money Market Fund limits its portfolio investments to securities that the
Trust's Board of Trustees determines present minimal credit risk and that are
"Eligible Securities" at the time of acquisition by the Fund. "Eligible
Securities" as used in this Prospectus means securities rated by the requisite
nationally recognized statistical rating organizations ("NRSROs") in one of the
two highest short-term rating categories, consisting of issuers that have
received these ratings with respect to other short-term debt securities and
comparable unrated securities. "Requisite NRSROs" means (1) any two NRSROs that
have issued ratings with respect to a security or class of debt obligations of
an issuer or (2) one NRSRO, if only one NRSRO has issued such a rating at the
time that the Money Market Fund acquires the security. Currently, six
organizations are NRSROs: S&P, Moody's Investors Service, Inc. ("Moody's"),
Fitch Investors Service, Inc., Duff and Phelps, Inc., IBCA Limited and its
affiliate, IBCA, Inc., and Thomson BankWatch Inc. A discussion of the ratings
categories is contained in the Appendix to the Statement of Additional
Information. By limiting its investments to Eligible Securities, the Money
Market Fund may not achieve as high a level of current income as a fund
investing in lower-rated securities.

The Money Market Fund may not invest more than 5% of its total assets in the
securities of any one issuer, except for U.S. Government Obligations and except
to the extent permitted under rules adopted by the SEC under the 1940 Act. In
addition, the Money Market Fund may not invest more than 5% of its total assets
in Eligible Securities that have not received the highest rating from the
Requisite NRSROs and comparable unrated securities ("Second Tier Securities"),
and may not invest more than the greater of $1,000,000 or 1% of its total assets
in the Second Tier Securities of any one issuer. The Money Market Fund may
invest more than 5% (but not more than 25%) of the then-current value of the
Fund's total assets in the securities of a single issuer for a period of up to
three business days, so long as (1) the securities either are rated by the
Requisite NRSROs in the highest short-term rating category or are securities of
issuers that have received such ratings with respect to other short-term debt
securities or are comparable unrated securities and (2) the Fund does not make
more than one such investment at any one time. Determinations of comparable
quality for purchases of unrated securities are made by GEIM in accordance with
procedures established by the Board of Trustees. The Money Market Fund invests
only in instruments that have (or, pursuant to regulations adopted by the SEC,
are deemed to have) remaining maturities of 13 months or less at the date of
purchase (except securities subject to repurchase agreements), determined in
accordance with a rule promulgated by the SEC. Up to 25% of the Money Market
Fund's total assets may be invested in foreign securities, excluding, for
purposes of this limitation, ADRs, U.S. Listed Securities and Nasdaq Traded
Securities. The Money Market Fund will maintain a dollar-weighted average
portfolio maturity of 90 days or less. The assets of the Money Market Fund are
valued on the basis of amortized cost, as described below under "Net Asset
Value." The Money Market Fund also may hold liquid Rule 144A Securities (See
"Additional Permitted Investments--Illiquid Investments and Restricted
Securities") and engage in certain investments discussed below under "Additional
Permitted Investments."

INVESTMENTS IN DEBT SECURITIES
- --------------------------------------------------------------------------------

Each of the Premier Growth Fund, the U.S. Equity Fund, the International Fund,
the S&P 500 Index Fund and the Value Fund limits investment in debt securities
to those that are rated investment grade, except that each such Fund may invest
up to 5% of such Fund's assets in securities rated lower than investment grade.
A security is considered investment grade if it is rated at the time of purchase
within the four highest grades assigned by S&P, Moody's or has received an
equivalent rating from another NRSRO or, if unrated, is deemed by GEIM to be of
comparable quality.

Each of the Strategic Fund, the Income Fund, the Emerging Markets Fund and the
Mid-Cap Fund limits its purchases of debt instruments to those that are rated
within the six highest categories by S&P, Moody's or another NRSRO, or if
unrated, are deemed by GEIM to be of comparable quality. Each of these Funds
will not purchase a debt security if, as a result of the purchase, more than 25%
of the Fund's total assets would be invested in securities rated BBB by S&P or
Baa by Moody's or, if unrated, deemed by GEIM to be of comparable quality. In
addition, each such Fund will not purchase any obligation rated BB or B by S&P
or Ba or B by Moody's if, as a result of the purchase, more than 10% of the
Fund's total assets would be invested in obligations rated in those categories
or, if unrated, in obligations that are

- 10 -

<PAGE>

deemed by GEIM to be of comparable quality. A description of S&P's and Moody's
ratings relevant to a Fund's investments is included as an Appendix to the
Statement of Additional Information.

CASH MANAGEMENT POLICIES - NON-MONEY MARKET FUNDS
- --------------------------------------------------------------------------------

The Money Market Fund's policies with respect to holding cash and investing in
money market instruments are described above. This section describes the cash
management policies of the other Funds (each, a "non-money market Fund").

A non-money market Fund, under normal circumstances, may hold cash and/or invest
in money market instruments in order to manage its cash, pending investment in
accordance with its investment objective and policies and to meet operating
expenses. The Income Fund typically invests not more than 35% of its assets in
money market instruments if GEIM deems such investments to be consistent with
that Fund's investment objective.

When GEIM believes that economic or other conditions warrant, a non-money market
Fund, other than the S&P 500 Index Fund, may assume a temporary defensive
posture and hold cash and/or invest in money market instruments without
limitation. To the extent that a Fund holds cash or invests in money market
instruments, it may not achieve its investment objective.

Types of Permitted Money Market Investments. Each non-money market Fund may
invest directly, or indirectly through its investment in the GEI Short-Term
Investment Fund (the "Investment Fund"), in the following types of money market
securities during normal market conditions and for temporary defensive purposes:

(i) U.S. Government Obligations (described below);

(ii) debt obligations of banks, savings and loan institutions, insurance
companies and mortgage bankers;

(iii) commercial paper and notes, including those with variable and
floating rates of interest;

(iv) debt obligations of foreign branches of U.S. banks, U.S. branches of
foreign banks and foreign branches of foreign banks;

(v) debt obligations issued or guaranteed by one or more foreign
governments or any of their political subdivisions, agencies or
instrumentalities, including obligations of supra-national entities;

(vi) debt securities issued by foreign issuers; and

(vii) repurchase agreements and reverse repurchase agreements (see "Risk
Factors and Special Considerations -- Repurchase and Reverse
Repurchase Agreements" below for a further description).

Each non-money market Fund may invest up to 25% of its assets in the Investment
Fund. The Investment Fund invests exclusively in the money market instruments
described in (i) through (vii) above, and serves as the investment vehicle that
facilitates the collective investment of the cash accounts of the non-money
market Funds and other entities advised by GEIM or General Electric Investment
Corporation ("GEIC", and together with GEIM collectively referred to as "GE
Investments"), a sister company of GEIM that is wholly-owned by General Electric
Company ("GE"). GEIM is the investment adviser to the Investment Fund, and
charges no advisory fee to the Investment Fund for these services. A non-money
market Fund would incur no sales charge and no distribution or service fees in
connection with its holdings in the Investment Fund.

A non-money market Fund may hold money market instruments that are rated no
lower than A-2 by S&P or Prime-2 by Moody's, or that have received an equivalent
rating from another NRSRO, or if unrated, are issued by an entity having an
outstanding unsecured debt issue rated within an NRSRO's three highest rating
categories. A description of the rating systems of Moody's and S&P is contained
in an Appendix to the Statement of Additional Information. At no time will a
non-money market Fund's investments in bank obligations, including time
deposits, exceed 25% of the value of the Fund's assets.

- 11 -

<PAGE>

ADDITIONAL PERMITTED INVESTMENTS
- --------------------------------------------------------------------------------

In addition to the investments discussed above, some or all of the Funds may
invest in the types of securities or may engage in investment techniques and
strategies discussed below.

Illiquid Investments and Restricted Securities. Each of the non-money market
Funds may invest up to 15% of its net assets in illiquid securities. Illiquid
securities are securities that a Fund cannot dispose of within seven days in the
ordinary course of business at approximately the amount at which the Fund has
valued the securities. Illiquid securities include options traded
over-the-counter, repurchase agreements maturing in more than seven days,
certain mortgage related securities, investment-only debt instruments,
principal- only debt instruments and restricted securities.

Each non-money market Fund may invest up to 10% of its assets in restricted
securities. A restricted security is one that has a contractual or legal
restriction on transfer or which is not registered for sale to the general
public under Securities Act of 1933, as amended (the "1933 Act"), excluding, for
purposes of this limitation, Rule 144A Securities (defined below) deemed to be
liquid. While restricted securities generally are considered illiquid, they may
be deemed to be liquid if (i) such securities may be sold to "qualified
institutional buyers" in accordance with Rule 144A under the 1933 Act ("Rule
144A Securities") and (ii) the Trust's Board of Trustees, or GEIM acting under
guidelines approved and monitored by the Board, determines that an adequate
trading market exists for such securities. If a Fund holds Rule 144A Securities,
the level of illiquidity in its portfolio may increase during periods when
qualified institutional buyers lose interest in purchasing those securities.

U.S. Government Obligations. Each Fund may invest in obligations issued by the
U.S. Government or by its agencies and instrumentalities (as defined above,
"U.S. Government Obligations"). Different types of U.S. Government Obligations
have different payment guarantees, if any. Some U.S. Government Obligations,
such as U.S. Treasury securities, are supported by the full faith and credit of
the U.S. government or U.S. Treasury guarantees. U.S. Treasury securities differ
in their interest rates, maturities and dates of issuance. Other U.S. Government
Obligations are backed by the right of the issuer or guarantor to borrow from
the U.S. Treasury; others, by the discretionary authority of the U.S. Government
to purchase obligations of the agency or instrumentality issuing the security;
and still others, only by the credit of the agency or instrumentality issuing
the obligation.

Where U.S. Government Obligations are not backed by the full faith and credit of
the United States, the investor must look principally to the agency or
instrumentality (which may be privately owned) issuing the obligations for
repayment. There is no guarantee that the U.S. Government would provide
financial support to its agencies or instrumentalities if it is not required to
do so. A Fund will invest in U.S. Government Obligations that are not backed by
full faith and credit of the U.S. Government only if GEIM determines that the
issuing agency's or instrumentality's credit risk make the obligations suitable
for Fund investment.

The types of U.S. Government Obligations in which the Funds may invest are
listed in the Statement of Additional Information.

Repurchase and Reverse Repurchase Agreements. Each Fund may enter into
repurchase agreements involving securities that are permitted investments for
that Fund. A repurchase agreement is a transaction in which a Fund purchases a
security at one price and the seller simultaneously agrees to buy back that
security at a higher price on a date that occurs within a relatively short time
period, usually one to seven days. Repurchase agreements allow a Fund to earn
income on idle cash at a fixed rate of return, and are treated as loans by the
Funds for purposes of the 1940 Act.

The Funds may engage in repurchase agreement transactions with certain Federal
Reserve System member banks and with certain dealers listed on the Federal
Reserve Bank of New York's list of reporting dealers. If a Fund enters into a
repurchase agreement, GEIM will monitor the value of the securities underlying
the agreement on an ongoing basis to ensure their value remains equal to the
total amount of the repurchase price (including interest). GEIM also monitors
the creditworthiness of the banks and dealers that enter into repurchase
agreements with the Funds in order to identify potential risks.

Each Fund may engage in reverse repurchase agreements, subject to its investment
restrictions. A reverse repurchase agreement involves the Fund selling
securities that it holds and concurrently agreeing to repurchase the same
securities at an agreed upon price and date. Reverse repurchase agreements are
considered to be borrowings by a Fund for purposes of the 1940 Act. A Fund will
enter into reverse repurchase agreements when it needs cash to meet redemption
requests or to pay dividends and distributions, but considers a sale of its
portfolio securities to be disadvantageous. Cash, U.S. Government Obligations or
other liquid assets equal in value to the Fund's obligations under outstanding
reverse repurchase agreements would be segregated and maintained with State
Street, the Trust's custodian and transfer agent, or a designated sub-custodian.

- 12 -

<PAGE>

Structured and Indexed Securities. The Strategic Fund and the Income Fund may
invest in structured and indexed securities. The value of the principal of
and/or interest on such securities is determined by reference to changes in the
value of specific currencies, interest rates, commodities, indexes or other
financial indicators (the "Reference") or the change in two or more References.
The interest rate or the principal amount payable upon maturity or redemption
may be increased or decreased depending upon changes in the applicable
Reference. The terms of structured and indexed securities may provide that in
certain circumstances no principal is due at maturity and, therefore, may result
in a loss of the Fund's investment. Structured and indexed securities may be
positively or negatively indexed, so that appreciation of the Reference may
produce an increase or a decrease in the interest rate or value of the security
at maturity. In addition, changes in interest rates or value of the security at
maturity may be some multiple of the change in value of the Reference.
Consequently, structured and indexed securities may entail a greater degree of
market risk than other types of debt securities because a Fund bears the risk of
the Reference. Structured and indexed securities may also be more volatile, less
liquid and more difficult to accurately price than less complex securities.

Certain of the other Funds may invest in other investment companies that issue
securities with values that are based on an underlying index. See "Appendix --
Further Information: Certain Investment Techniques and Strategies" for a further
discussion of such investments, which include WEBs, CountryBaskets and SPDRs.

Purchasing Put and Call Options on Securities. A non-money market Fund may
utilize up to 10% of its assets to purchase put options on portfolio securities
and an additional 10% of its assets to purchase call options on portfolio
securities. The aggregate value of the securities underlying the calls or
obligations underlying the puts, determined as of the date the options are sold,
shall not exceed 25% of the net assets of the Fund. In addition, the premiums
paid by a Fund in purchasing options on securities, options on securities
indexes, options on foreign currencies and options on futures contracts shall
not exceed 20% of the Fund's net assets.

An option holder has the right, but not the obligation, to buy or sell a
specified amount of securities or other assets on or before a fixed date at a
predetermined price. Each non-money market Fund may purchase put and call
options that are traded on a U.S. or foreign exchange or in the over-the-counter
market.

A put option is an option to sell. If GEIM believes that the market value of a
security a Fund owns will decline, the Fund may purchase a put option on that
security. The put option would allow the Fund to sell the security at a given
price during the option period and thereby limit its losses on the security. If
the underlying security appreciates, rather than depreciates, the Fund would
choose not to exercise the option, but any appreciation in the value of the
underlying security would be offset by the premium the Fund paid for the
relevant put option, plus any related transaction costs.

A call option is an option to buy. A Fund may purchase a call option on a
security when GEIM believes the market price of that security will increase. A
call option would allow the Fund to purchase the security at a set price during
the option period, and thereby limit its losses from rising prices. A Fund also
may purchase call options to increase its return at a time when the call is
expected to increase in value because the market anticipates the value of the
underlying security will increase.

Prior to the expiration of a put or a call option, the Fund may enter into a
closing sale transaction. In a closing sale the Fund sells an option having the
same features (i.e., is of the same series) as an option previously purchased.
Profit or loss from a closing transaction would depend on whether the amount
received is more or less than the premium paid for the option plus the related
transaction costs.

Covered Option Writing. Each non-money market Fund may write only covered put
and call options on securities. Covered puts involve a Fund selling to another
party the right to compel the Fund to purchase an underlying security from the
option holder at a specified price at any time during the option period. A
"covered" put generally means that the Fund segregates with its custodian cash
or liquid securities with a value at least equal to the exercise price of the
option. Covered calls involve a Fund selling the right to another party to
purchase securities that the Fund owns at a specified price at any time during
the option period. A "covered" call generally means that the Fund owns the
underlying securities. A Fund will realize fees (referred to as "premiums") for
granting the rights evidenced by these options.

A put or call option written by a Fund will be deemed covered in any manner
permitted under the 1940 Act or determined by the SEC to be permissible. See
"Strategies Available to Some But Not All Funds -- Covered Option Writing" in
the Statement of Additional Information for specific situations where put and
call options will be deemed to be covered by a Fund.

A Fund may engage in a closing purchase transaction to realize a profit, to
prevent an underlying security from being called or put or, in the case of a
call option, to unfreeze an underlying security (thereby allowing the Fund to
sell the security or write a new option prior to the outstanding option's
expiration). A Fund effects a closing purchase transaction by purchasing, prior
to the holder's exercise of an option written by the Fund, an option of the same
series as that on which the Fund desires to terminate its obligation. The
obligation of a Fund under an option that it has written would be terminated by
a closing purchase transaction, but the Fund would not be deemed to own an

- 13 -
<PAGE>

option as the result of the transaction. To facilitate closing purchase
transactions, the Funds with option-writing authority will ordinarily write
options only if a secondary market for the options exists on a U.S. or foreign
securities exchange or in the over-the-counter market.

Option writing for a Fund may be limited by position and exercise limits
established by U.S. securities exchanges and the National Association of
Securities Dealers, Inc. and by requirements of the Internal Revenue Code of
1986, as amended (the "Code") for qualification as a regulated investment
company. A Fund would enter into options transactions as hedges to reduce
investment risk, and a properly correlated hedge will result in a loss on the
portfolio position's being offset by a gain on the hedge position.

Securities Index Options. In attempting to hedge all or a portion of its
investments, a non-money market Fund may purchase and write put or call options
on securities indexes listed on U.S. or foreign securities exchanges or traded
in the over-the-counter market. A Fund would purchase or write index options
only with respect to those indexes that include securities of the type that the
Fund would invest in. As discussed above, a Fund with option writing authority
may write only covered options. In addition to investing in securities index
option for hedging purposes, the Funds may use such options as a means of
participating in a securities market without making direct purchases of
securities.

A securities index measures the movement of a certain group of securities by
assigning relative values to the securities included in the index. Investments
in options on securities indexes generally have return characteristics similar
to direct investments in the underlying instruments.

Unlike options on securities, options on securities indexes do not involve the
delivery of an underlying security. An option on a securities index represents
the holder's right to obtain from the writer, in cash, a fixed multiple of the
amount by which the exercise price exceeds (in the case of a call) or is less
than (in the case of a put) the closing value of the underlying securities index
on the exercise date.

If a Fund writes a securities index option, that option may be deemed covered in
any manner permitted under the 1940 Act or any other method the SEC determines
to be permissible. See "Strategies Available to Some But Not All Funds --
Covered Option Writing" in the Statement of Additional Information for specific
situations where securities index options will be deemed to be covered by a
Fund. If a Fund has written a securities index option, it may terminate its
obligation by effecting a closing purchase transaction, which is accomplished by
purchasing an option of the same series as the option previously written.

Futures and Options on Futures. Each non-money market Fund may enter into
interest rate, financial and stock or bond index futures contracts, or related
options, that are traded on a U.S. or foreign exchanges or traded on a board of
trade approved by the CFTC or in the over-the-counter market. The Funds would
engage in these transactions to hedge against the effects of changes in the
value of portfolio securities due to anticipated changes in interest rates
and/or market conditions, to gain market exposure for accumulating and residual
cash positions, for duration management, or when the transactions are
economically appropriate to the reduction of risks inherent in the management of
the Fund involved. No Fund will enter into a transaction involving futures and
options on futures for speculative purposes.

A Fund may not enter into futures and options contracts for which aggregate
initial margin deposits and premiums paid for unexpired options exceed 5% of the
fair market value of the Fund's total assets, after taking into account
unrealized losses or profits on futures contracts or options on futures
contracts into which it has entered. The current view of the SEC staff is that
an investment fund's long and short positions in futures contracts, as well as
put and call options on futures written by that fund, must be collateralized
with cash or other liquid assets and segregated with the fund's custodian or a
designated sub-custodian or "covered" in a manner similar to that for covered
options on securities (see "Strategies Available to Some But Not All Funds --
Covered Option Writing" in the Statement of Additional Information) and designed
to eliminate any potential leveraging.

An interest rate futures contract obligates the buyer to receive and the seller
to deliver a specified amount of a particular financial instrument (debt
security) at a specified price, date, time and place. Financial futures
contracts obligate the holder to deliver (in the case of a futures contract that
is sold) or receive (in the case of a futures contract that is purchased) at a
future date a specified quantity of a financial instrument, specified
securities, or the cash value of a securities index.

An index futures contract obligates the parties to contract to take or make
delivery of an amount of cash equal to the difference between the value of the
index at the close of the last trading day of the contract and the price at
which the index contract was originally written. A municipal bond index futures
contract is based on an index of long-term, tax-exempt municipal bonds; a
corporate bond index futures contract is based on an index of corporate bonds.
Stock index futures contracts are based on indexes that reflect the market value
of common stock of the companies included in the indexes. An option on an
interest rate or index futures contract generally gives the purchaser the right,
in return for the premium paid, to assume a position in a futures contract at a
specified exercise price at any time prior to the expiration date of the option.

- 14 -

<PAGE>

Forward Currency Transactions. Each non-money market Fund may hold currencies to
meet settlement requirements for foreign securities. Each non-money market Fund,
other than the S&P 500 Index Fund and Premier Growth Fund, may engage in
currency exchange transactions to manage currency risk, which is the risk that
fluctuations in exchange rates may adversely affect a Fund. No Fund will enter
into forward currency transactions for speculative purposes.

Forward currency contracts are agreements to purchase or sell a specific
quantity of a currency at a future date and at a price that is fixed at the time
that a Fund enters into the contract. Forward currency contracts are traded in a
market conducted directly between currency traders (typically, commercial banks
or other financial institutions) and their customers, generally have no deposit
requirements and are typically consummated without payment of any commissions. A
Fund, however, may enter into forward currency contracts requiring deposits or
involving the payment of commissions. To assure that a Fund's forward currency
contracts are not used to achieve investment leverage, cash or other liquid
assets will be segregated with State Street or a designated sub-custodian in an
amount at all times equal to or exceeding the Fund's commitment under the
contracts.

Upon maturity of a forward currency contract, a Fund may pay for and receive the
underlying currency, negotiate a roll over into a new forward currency contract
with a new settlement date, or negotiate a termination of the forward contract
into an offset whereby the Fund would pay the difference between the exchange
rate fixed in the contract and the then current exchange rate. The Trust also
may be able to negotiate such an offset on behalf of a Fund prior to maturity of
the original forward contract. No assurance can be given that new forward
contracts or offsets will always be available to a Fund.

In hedging a specific portfolio position, a Fund may enter into a forward
contract with respect to either the currency in which the position is
denominated or another currency deemed appropriate by GEIM. A Fund's exposure
with respect to forward currency contracts is limited to the amount of the
Fund's aggregate investments in instruments denominated in foreign currencies.

Options on Foreign Currencies. Each non-money market Fund, other than the
Premier Growth Fund, may purchase or write foreign currency options as a hedge
against variations in foreign exchange rates that would cause the U.S. dollar
value of securities denominated in foreign currency to decline or the cost of
securities to be acquired to increase. Foreign currency options provide the
holder of such options the right to buy or sell a currency at a fixed price on
or before a future date. The Funds may write only covered options, and no Fund
will enter into a transaction involving options on foreign currencies for
speculative purposes. The Funds will purchase or write options that are traded
on U.S. or foreign exchanges or in the over-the-counter market. The Trust will
limit the premiums paid on a Fund's options on foreign currencies to 5% of the
value of the Fund's total assets.

Additional Investment Techniques. Each Fund may enter into securities
transactions on a when-issued or delayed-delivery basis and may lend its
portfolio securities.

See "Risk Factors and Special Considerations" and "Appendix -- Further
Information: Certain Investment Techniques and Strategies" for a discussion of
the risks and special considerations associated with the additional investments
and investment techniques and strategies discussed above.

INVESTMENT RESTRICTIONS

The Trust has adopted certain fundamental investment restrictions with respect
to each Fund that may not be changed without approval of a majority of the
Fund's outstanding voting securities (as defined in the 1940 Act). Included
among those fundamental restrictions are those listed below.

1. No Fund may borrow money, except that a Fund may enter into reverse
repurchase agreements and may borrow from banks for temporary or emergency (not
leveraging) purposes, including the meeting of redemption requests and cash
payments of dividends and distributions that might otherwise require the
untimely disposition of securities, in an amount not to exceed 33-1/3% of the
value of the Fund's total assets (including the amount borrowed) valued at
market less liabilities (not including the amount borrowed) at the time the
borrowing is made. Whenever borrowings, including reverse repurchase agreements,
of 5% or more of a Fund's total assets are outstanding, the Fund will not make
any additional investments.

2. No Fund may purchase securities (other than U.S. Government Obligations) of
any issuer if, as a result of the purchase, more than 5% of the Fund's total
assets would be invested in the securities of the issuer, except that up to 25%
of the value of the total assets of each non- money market Fund may be invested
without regard to this limitation. All securities of a foreign government and
its agencies will be treated as a single issuer for purposes of this
restriction.

- 15 -

<PAGE>

3. No Fund may purchase more than 10% of the voting securities of any one
issuer, or more than 10% of the outstanding securities of any class of issuer,
except that (a) this limitation is not applicable to a Fund's investments in
U.S. Government Obligations and (b) up to 25% of the value of the assets of a
non-money market Fund may be invested without regard to these 10% limitations.
All securities of a foreign government and its agencies will be treated as a
single issuer for purposes of this restriction.

4. No Fund may invest more than 25% of the value of its total assets in
securities of issuers in any one industry. For purposes of this restriction, the
term industry will be deemed to include (a) the government of any country other
than the United States, but not the U.S. Government and (b) all supra-national
organizations. In addition, securities held by the Money Market Fund that are
issued by domestic banks are excluded from this restriction. For purposes of
this investment restriction, the Trust may use the industry classifications
reflected by the S&P 500 Index, if applicable at the time of determination. For
all other portfolio holdings, the Trust may use the Directory of Companies
Required to File Annual Reports with the SEC and Bloomberg Inc. In addition, the
Trust may select its own industry classifications, provided such classifications
are reasonable.

Certain other investment restrictions adopted by the Trust with respect to the
Funds are described in the Statement of Additional Information.

Risk Factors and Special Considerations

Investing in the Funds involves risk factors and special considerations, such as
those described below.

General. Investments in a Fund are not insured against loss of principal. As
with any investment portfolio, there can be no assurance that a Fund will
achieve its investment objective. Investing in shares of a Fund should not be
considered to be a complete investment program.

Equity Securities. A Fund's investments in common stocks and other equity
securities are subject to stock market risk, which is the risk that the value of
the equity securities the Fund holds may decline over short or even extended
periods. Equity securities also are subject to the risk that the value of a
particular issuer's securities will decline, even during periods when equity
securities traded in the stock market in general are rising.

Absence of Operating History. The Funds only recently commenced operations, and
therefore lack an operating history that shareholders may look to for purposes
of evaluating Fund performance.

Debt Instruments. A Fund's investments in debt securities are subject to
interest rate risk, which is the risk that increases in market interest rates
will adversely affect investments in such securities. The value of investments
in fixed income securities tend to decrease when interest rates rise and
increase when interest rates fall. Generally, the value of longer-term debt
instruments will tend to fluctuate more than shorter-term debt securities. In
addition, when interest rates are falling, the money a Fund receives from
continuously selling shares will likely be invested in portfolio instruments
producing lower yields than the balance of its portfolio, thereby reducing the
Fund's current yield. In periods of rising interest rates, the opposite result
can be expected to occur.

Credit Risk. The Funds may invest in debt securities that are not backed by the
U.S. government. Such securities are subject to credit risk, which is the risk
that the issuer may be unable to pay principal and/or interest when due.

Investment Grade Obligations. Obligations rated BBB by S&P or Baa by Moody's are
considered investment grade, but are somewhat riskier than higher-rated
investment grade obligations. Obligations rated BBB by S&P are regarded as
having only an adequate capacity to pay principal and interest, and those rated
Baa by Moody's are considered medium-grade obligations that lack outstanding
investment characteristics and have speculative characteristics as well.

Low-rated Securities. Certain Funds are authorized to invest in high-yield
securities that are rated lower than investment grade by the primary rating
agencies (e.g., are rated "BB" or lower by S&P and "Ba" or lower by Moody's).
These securities are sometimes referred to as "junk bonds," and are considered
to be speculative. Lower-rated and comparable unrated securities (collectively,
"low-rated" securities) provide poor protection for payment of principal and
interest. They generally are subject to greater risks of default than
higher-rated securities, and securities with the lowest ratings may be in
default or have a substantial risk of default. Low-rated securities generally
are unsecured and frequently are subordinated to the prior payment of senior
indebtedness. A Fund may incur additional expenses to the extent that it is
required to seek recovery upon a default.

- 16 -

<PAGE>
principal and interest payments when due (i.e., credit risk). Issuers of
low-rated securities are often highly leveraged and may not have access to more
traditional methods of financing. Accordingly, the ability of such issuers to
service their debt obligations during an economic downturn or during sustained
periods of rising interest rates may be impaired. These issuers tend to be more
vulnerable to real or perceived economic changes, political developments, new or
proposed laws and adverse publicity. The market for low-rated securities may be
thinner and less active than that for higher-rated securities, which may
adversely affect the price at which these securities may be sold. Thinner
markets may diminish a Fund's ability to obtain accurate market quotations for
purposes of valuing the portfolio securities and calculating a Fund's net asset
value.

Illiquid Securities. Illiquid securities may be difficult to resell, and a
Fund's net assets may be adversely affected if there is no ready buyer willing
to purchase the Fund's illiquid securities at a price GEIM deems representative
of their value.

Restricted Securities. Restricted securities are generally more illiquid than
publicly traded securities. The prices realized 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 disclosure and other investor protection requirements applicable
to publicly traded securities.

Smaller Companies. Smaller companies in which the Premier Growth Fund and the
Mid-Cap Fund may invest may involve greater risks than large, established
issuers. Such smaller companies may have limited product lines, markets or
financial resources and their securities may trade less frequently and in more
limited volume than the securities of larger or more established companies. As a
result, the prices of smaller companies may fluctuate to a greater degree than
the prices of securities of other issuers.

Repurchase and Reverse Repurchase Agreements. A Fund entering into a repurchase
agreement may suffer a loss if the other party to the transaction defaults on
its obligations and the Fund is delayed or prevented from exercising its rights
to dispose of the underlying securities. Specifically, there are risks that the
value of the underlying securities might decline while the Fund seeks to assert
its rights, that the Fund will incur additional expenses in asserting its
rights, and that the Fund may lose all or part of the income from the agreement.

A reverse repurchase agreement involves the risk that the market value of the
securities retained by a Fund may decline below the price of the securities the
Fund has sold but is obligated to repurchase under the agreement. In the event
the buyer of securities under a reverse repurchase agreement files for
bankruptcy or becomes insolvent, the Fund's use of the proceeds of the agreement
may be restricted pending a determination by the party, or its trustee or
receiver, whether to enforce the Fund's obligation to repurchase the securities.

Warrants. A warrant is a security that permits, but does not obligate, its
holder to subscribe for another security. Warrant holders do not have a right to
dividends or voting rights with respect to underlying securities, and warrants
do not represent any rights to the assets of the issuer. Therefore, a warrant
may be considered more speculative than certain other types of investments. In
addition, the value of a warrant does not necessarily change with the value of
the underlying security and a warrant ceases to have value if it is not
exercised prior to its expiration date. Warrants acquired by a Fund in units or
attached to securities may be deemed to be without value.

Rights. A right is a privilege granted to a corporation's existing shareholders
to purchase or subscribe to additional shares of stock at the time of a new
issuance, before the stock is offered to the general public. This allows the
stockholders to retain the same ownership percentage after the new stock
offering. Rights are freely transferable and generally entitle the holder to
purchase the stock at a price below the public offering price.

Investment in Foreign Securities. Investing in securities issued by foreign
companies and governments, including securities issued in the form of depositary
receipts, involves considerations and potential risks not typically associated
with investing in obligations issued by the U.S. Government and U.S.
corporations, including:

Regulatory Risks. Less information may be available about foreign companies than
about U.S. companies, and foreign companies generally are not subject to uniform
accounting, auditing and financial reporting standards or to other regulatory
practices and requirements applicable to U.S. companies. The values of foreign
investments are affected by changes in exchange control regulations; application
of foreign tax laws, including withholding taxes; changes in governmental
administration or economic or monetary policy (in the United States or abroad).

- 17 -
<PAGE>

U.S. dollar, the value of the foreign security increases. Conversely, if the
local currency weakens against the U.S. dollar, the value of the foreign
security would decline. U.S. dollar denominated securities of foreign issuers
also may be affected by currency risk. Currency exchange rates generally are
determined by the forces of supply and demand in the foreign exchange markets
and the relative merits of investments in different countries as seen from an
international perspective. Currency exchange rates can also be affected
unpredictably by intervention by U.S. or foreign governments or central banks or
by currency controls or political developments in the United States or abroad.

Market Risks. Foreign markets, particularly those of developing or emerging
countries, may be less liquid, more volatile and less subject to governmental
supervision than domestic markets. There may be difficulties in enforcing
contractual obligations and transactions could be subject to extended clearance
and settlement periods.

Political/Economic Risk. A foreign government might impose restrictions or
prohibitions on the repatriation of foreign currencies, limitations on the use
or removal of funds or other assets (including the withholding of dividends). It
may adopt confiscatory tax policies or expropriate the assets or operations of a
company in which the Fund invests. Changes in the relationship or dealings
between nations may affect a Fund's investments in foreign securities.

Transaction Costs. Transaction costs of buying and selling foreign securities,
including tax, brokerage and custody costs, generally are higher than those
involving domestic transactions. Costs are incurred in connection with
conversion between various currencies.

Investing in Developing or Emerging Markets. Investing in securities issued by
companies located in countries with emerging economies and/or securities markets
involves risks in addition to those described above with respect to investing in
foreign securities. The economic structures in these countries generally are
less diverse and mature than those in developed countries, and their political
systems are less stable. Other characteristics of developing countries that may
affect investment in their markets include certain national policies that may
restrict investment by foreigners in issuers or industries deemed sensitive to
relevant national interests and the absence of developed legal structures
governing private and foreign investments and private property.

The small size and inexperience of the securities markets in certain emerging or
developing countries and the low or nonexistent volume of trading in securities
in those countries may make investments in such countries illiquid and more
volatile than investments in Japan or most Western European countries. As a
result, a Fund investing in such countries may be required to establish special
custody or other arrangements before investing.

The former republics of the Soviet Union and the Eastern Bloc are emerging
markets countries that are undergoing a rapid transition from centralized,
planned economies to market-oriented economies. There can be no assurance that
such transition, including ongoing privatization efforts and recently
implemented economic reform programs, will continue. Moreover, there is a risk
that such countries might return to the centrally planned economies that existed
when they had a communist form of government. Investors should note that when
the former republics of the Soviet Union and the Eastern Bloc operated under
such centralized economies, they confiscated personal property and abrogated
property and other legal rights.

Investing in a Single Country. As discussed above, the Emerging Markets Fund
may, from time to time, invest all of its assets in a single emerging markets
country. There is a higher degree of risk associated with investing in one
country rather than diversifying investments among countries. If the Fund
invests all or a significant portion of its assets at any time in a single
country, events occurring in that country are more likely to effect the Fund's
investments. Specific risks associated with investing in a single country
include a greater effect on portfolio holdings of currency fluctuations and
country-specific economic, social or political factors.

Municipal Obligations. Even though Municipal Obligations are interest-bearing
investments that promise a stable flow of income, like other debt instruments
their prices are inversely affected by changes in interest rates and, therefore,
are subject to the risk of market price fluctuations. The values of Municipal
Obligations with longer remaining maturities typically fluctuate more than those
of similarly rated Municipal Obligations with shorter remaining maturities. The
values of fixed income securities also may be affected by changes in the credit
rating or financial condition of the issuing entities.

At the time of issuance, issuers of Municipal Obligations obtain opinions from
bond counsel addressing the validity of the Obligations and whether the interest
on such Obligations is exempt from Federal income taxes. Neither the Trust nor
GEIM will review the proceedings relating to the issuance of Municipal
Obligations or the basis for opinions of counsel. The U.S. Government has
enacted various laws that have restricted or diminished the income tax exemption
on various types of Municipal Obligations and may pass similar laws in the
future.

- 18 -

<PAGE>

Covered Option Writing. A Fund that writes puts and calls may experience losses
if GEIM or any sub-adviser of the Fund incorrectly predicts the direction in
which the market will move. If a Fund writes a put option obligating that Fund
to purchase a security at a certain price, the Fund may experience a loss if the
market price of the underlying security goes down. This is because the Fund
would be compelled to purchase a security at a price that is higher than market
price. The loss would be equal to the difference between the price at which the
Fund must purchase the underlying security and its market value at the time of
the option exercise, less the premium received for writing the option. Likewise,
the Fund would experience a loss if it wrote a call option and the price of the
underlying security rises. This is because the Fund would be obligated to sell a
security at a price that is lower than market price. The loss would be equal to
the excess of the security's market value at the time of the option's exercise
over the Fund's acquisition cost of the security, less the premium received for
writing the option.

In addition, no assurance can be given that a Fund will be able to close out an
options position at the desired time. A Fund's ability to enter into closing
purchase transactions depends upon the existence of a liquid secondary market.
While the Funds purchase or write options only when GEIM or any sub-adviser of
the Fund believes a liquid secondary market exists, there is a possibility that
this market may be absent or cease to exist, which would make it difficult or
impossible to close out a position when desired.

Securities Index Options. As with other options, a Fund's ability to close out
positions in securities index options depends upon the existence of a liquid
secondary market. Although a Fund will generally purchase or write securities
index options only if a liquid secondary market for the options purchased or
sold appears to exist, no such secondary market may exist, or the market may
cease to exist at a later date. In addition, securities exchanges impose
position and exercise limits and other regulations on options traded on those
exchanges. The absence of a liquid secondary market and possible
exchange-imposed limitations may make it difficult or impossible to close out a
position when desired.

Futures and Options on Futures. The use of futures contracts and options on
futures contracts as a hedging device involves several risks. No assurance can
be given that a correlation will exist between price movements in the underlying
securities or index and price movements in the securities that are the subject
of the hedge. Positions in futures contracts and options on futures contracts
may be closed out only on the exchange or board of trade on which they were
entered, and no assurance can be given that an active market will exist for a
particular contract or option at any particular time.

Forward Currency Transactions. The market for forward currency contracts, for
example, may be limited with respect to certain currencies. The existence of a
limited market may in turn restrict the Fund's ability to hedge against the risk
of devaluation of currencies in which the Fund holds a substantial quantity of
securities. The successful use of forward currency contracts as a hedging
technique draws upon the special skills and experience of GEIM or any
sub-adviser of the Fund with respect to those instruments and will usually
depend upon the ability of GEIM or any sub-adviser of the Fund to forecast
interest rate and currency exchange rate movements correctly. Should interest or
exchange rates move in an unexpected manner, a Fund may not achieve the
anticipated benefits of forward currency contracts or may realize losses and
thus be in a less advantageous position than if those strategies had not been
used. Many forward currency contracts are subject to no daily price fluctuation
limits so that adverse market movements could continue with respect to those
contracts to an unlimited extent over a period of time. In addition, the
correlation between movements in the prices of those contracts and movements in
the prices of the currencies hedged or used for cover will not be perfect.

The Trust's ability to dispose of a Fund's positions in forward currency
contracts depends on the availability of active markets in those instruments and
the amount of trading interest that may exist in the future in forward currency
contracts which cannot now be predicted. Forward currency contracts may be
closed out only by the parties entering into an offsetting contract. As a
result, no assurance can be given that a Fund will be able to utilize these
contracts effectively for the intended purposes.

Options on Foreign Currencies. Like the writing of other kinds of options, the
writing of an option on a foreign currency constitutes only a partial hedge, up
to the amount of the premium received; a Fund could also be required, with
respect to any option it has written, to purchase or sell foreign currencies at
disadvantageous exchange rates, thereby incurring losses. The purchase of an
option on a foreign currency may constitute an effective hedge against
fluctuation in exchange rates, although in the event of rate movements adverse
to a Fund's position, the Fund could forfeit the entire amount of the premium
plus related transaction costs.

Derivatives. Certain of the Funds' permitted investments constitute derivatives,
including forward currency exchange contracts, stock options, currency options,
securities index options, futures contracts, swaps and options on futures
contracts involving U.S. Government and foreign government securities and
currencies. Certain derivative securities can, under certain circumstances,
significantly increase an investor's exposure to market and other risks.

- 19 -

<PAGE>

Instruments and Strategies Involving Special Risks. Certain instruments in which
the Funds can invest and certain investment strategies that the Funds may employ
could expose the Funds to various risks and special considerations. The
instruments presenting risks to a Fund that holds the instruments are: Rule 144A
Securities, depositary receipts, debt obligations of supra-national agencies,
securities of other investment funds, municipal leases, floating and variable
rate instruments, participation interests, zero coupon obligations, Municipal
Obligation components, custody receipts, mortgage related securities, government
stripped mortgage related securities, and asset-backed and receivable-backed
securities. Among the risks that some but not all of these instruments involve
are lack of liquid secondary markets and the risk of prepayment of principal.
The investment strategies involving special risks to some or all of the Funds
are: engaging in when-issued or delayed-delivery securities transactions,
lending portfolio securities and selling securities short against the box. Among
the risks that some but not all of these strategies involve are increased
exposure to fluctuations in market value of the securities and certain credit
risks. See "Appendix -- Further Information: Certain Investment Techniques and
Strategies" for a more complete description of these instruments and strategies.

Portfolio Transactions and Turnover

The Board of Trustees of the Trust has determined that, to the extent consistent
with applicable provisions of the 1940 Act and rules thereunder, transactions
for a Fund may be executed through an affiliated broker-dealer if, in the
judgment of GEIM or any sub-adviser of the Fund, the use of such broker-dealer
is likely to result in price and execution at least as favorable to the Fund as
those obtainable through other qualified broker-dealers, and if, in the
transaction, such broker-dealer charges the Fund a fair and reasonable rate
consistent with that payable by the Fund to other broker-dealers on comparable
transactions. Under rules adopted by the SEC, such broker-dealer may not execute
transactions for a Fund on the floor of any national securities exchange, but
may effect transactions by transmitting orders for execution providing for
clearance and settlement, and arranging for the performance of those functions
by members of the exchange not associated with such broker-dealer. Such
broker-dealer will be required to pay fees charged by those persons performing
the floor brokerage elements out of the brokerage compensation that it receives
from a Fund.

The Trust cannot predict precisely the turnover rate for any Fund, but expects
that the annual turnover rate will generally not exceed 50% for the Emerging
Markets Fund, 50% for the Premier Growth Fund, 200% for the Mid-Cap Fund, 50%
for the International Fund, 30% for the Value Fund, 50% for the U.S. Equity
Fund, 25% for the S&P 500 Index Fund, 200% for the Strategic Fund, and 300% for
the Income Fund. The portfolio turnover rate for the Money Market Fund is
expected to be zero for regulatory purposes. A 100% annual turnover rate would
occur if all of a Fund's securities were replaced one time during a period of
one year. Short-term gains realized from portfolio turnover are taxable to
investors as ordinary income. In addition, higher portfolio turnover rates can
result in corresponding increases in brokerage commissions. GEIM does not
consider portfolio turnover rate a limiting factor in making investment
decisions on behalf of any Fund consistent with the Fund's investment objective
and policies. The Statement of Additional Information contains additional
information regarding portfolio transactions and turnover.

MANAGEMENT OF THE TRUST
- --------------------------------------------------------------------------------

Board of Trustees

Overall responsibility for management and supervision of the Funds rests with
the Trust's Board of Trustees. The Trustees approve all significant agreements
between the Trust and the persons and companies that furnish services to the
Funds, including agreements with the Funds' investment adviser and
administrator, distributor, custodian and transfer agent. The day-to-day
operations of the Funds have been delegated to GEIM. The Statement of Additional
Information contains background information regarding each Trustee and executive
officer of the Trust.

Investment Adviser and Administrator

GEIM, located at 3003 Summer Street, P.O. Box 7900 Stamford, Connecticut 06904,
serves as the investment adviser and administrator of each Fund. GEIM was formed
under the laws of Delaware in 1988, and is a wholly-owned subsidiary of GE and a
registered investment adviser under the Investment Advisers Act of 1940, as
amended.

GEIM's principal officers, directors, and portfolio managers serve in similar
capacities with GEIC. Like GEIM, GEIC is a wholly-owned subsidiary of GE.
Through GEIM and GEIC and their predecessors, GE has nearly 70 years of
investment management experience.

- 20 -

<PAGE>

GE Investments provides investment management services to various institutional
accounts with total assets as of June 30, 1997 in excess of $64 billion, of
which more than $12 billion was invested in mutual funds. GEIM or GEIC serves as
the investment adviser to the following entities:

GE Funds - GEIM has served as the investment adviser and administrator for GE
Funds since January 1993, when GE Funds commenced operations. GE Funds is an
open-end management investment company whose portfolios (as defined above, the
"GE Funds") are offered to individual retail and institutional investors. The GE
Funds are sold through a multiple distribution system that offers an investor
the option of choosing a class that best suits the investor's needs in terms of
purchase amount and the length of time the investor intends to hold GE Fund
shares.

GE Investments Funds, Inc. ("GEIFI Funds") - GEIM has served as the investment
adviser to the investment portfolios of GEIFI Funds since May 1, 1997. GEIFI
Funds is an open-end management investment company whose shares are currently
offered to insurance company separate accounts that fund certain variable
annuity and variable life contracts.

Other Institutional Accounts - GEIM has served as the sub-adviser to PaineWebber
Global Equity Fund, a series of PaineWebber Investment Trust, since its
inception in 1991, and to the Global Growth Portfolio of PaineWebber Series
Trust and Global Small Cap Fund Inc. since March 1995. GEIM has served as
sub-adviser to the International Equity Portfolio and the U.S. Equity Portfolio
of WRL Series Fund, Inc. since January 1997 and to the International Equity
Portfolio of IDEX Series Fund since February 1997. GEIM has also served as
investment adviser to the U.S. Government Money Market Fund and U.S. Treasury
Money Market Fund of Financial Investors Trust since March 1997.

The Elfun Funds - GEIC serves as the investment adviser to Elfun Global Fund,
Elfun Trusts, Elfun Income Fund, Elfun Money Market Fund, Elfun Tax-Exempt
Income Fund and Elfun Diversified Fund (collectively, the "Elfun Funds"). The
first Elfun Fund, Elfun Trusts, was established in 1935. Investment in the Elfun
Funds generally is limited to regular and senior members of the Elfun Society,
whose regular members are selected from active employees of GE and/or its
majority-owned subsidiaries, and whose senior Society members are former members
who have retired from those companies.

S&S Funds - Under the General Electric Savings and Security Program, GEIC serves
as investment adviser to the GE S&S Program Mutual Fund and GE S&S Long Term
Interest Fund. GEIC also serves as the investment adviser to the General
Electric Pension Trust.

GEIM and any sub-adviser of a Fund, subject to the supervision and direction of
the Trust's Board of Trustees, manages the Funds' portfolios in accordance with
the Funds' respective investment objectives and stated policies, makes
investment decisions for the Funds and places purchase and sale orders for the
Funds' portfolio transactions. GEIM or any sub-adviser of a Fund also pays the
salaries of all personnel employed by both it and the Trust and provides each
Fund with investment officers who are authorized by the Board of Trustees to
execute purchases and sales of securities on behalf of the Funds.

GEIM and any sub-adviser of a Fund makes investment decisions for each Fund
independently from its investment considerations with respect to the entities
that it manages. However, the Funds and these other entities may invest in the
same types of securities, particularly where they have the same or similar
investment objective or policies. When a Fund and one or more other accounts or
portfolios managed by GEIM or any sub-adviser of a Fund are prepared to invest
in, or desire to dispose of, the same security, available investments or sale
opportunities will be allocated in a manner that GEIM or any sub-adviser of a
Fund believes is equitable to each entity. In some cases, this procedure may
adversely affect the price a Fund pays or receives or the size of the position
obtained or disposed of by a Fund.

The agreements governing the investment advisory services furnished to the Trust
by GEIM provide that, if GEIM ceases to act as the investment adviser to the
Trust, at GEIM's request, the Trust's license to use the initials "GE" will
terminate and the Trust will change the name of the Trust and the Funds to a
name not including the initials "GE."

Fee Structure

Each Fund pays GEIM a combined fee for advisory and administrative services that
is accrued daily and paid monthly. The advisory agreement for each Fund
specifies the advisory fee and other expenses that the Fund must pay. The
advisory and administration fee for each Fund, except the S&P 500 Index Fund,
declines incrementally as Fund assets increase. This means that investors pay a
reduced fee with respect to Fund assets over a certain level, or "breakpoint."
The advisory and administration fee or fees for each Fund, and the relevant
breakpoints, are stated in the following schedule (fees are expressed as an
annual rate):

- 21 -

<PAGE>

Name of Fund Average Daily Net Assets of Fund Annual Rate Percentage (%)
- ------------ -------------------------------- --------------------------
<S> <C> <C>
Emerging Markets Fund First $50 million 1.05
Over $50 million .95
- -------------------------------------------- -------------------------------------------- --------------------------------
International Equity Fund First $25 million .75
Next $50 million .65
Over $75 million .55
- -------------------------------------------- -------------------------------------------- --------------------------------
Mid-Cap Fund First $25 million .55
Premier Growth Fund Next $25 million .45
Value Equity Fund Over $50 million .35
U.S. Equity Fund
- -------------------------------------------- -------------------------------------------- --------------------------------
S&P 500 Index Fund All assets .15
- -------------------------------------------- -------------------------------------------- --------------------------------
Strategic Investment Fund First $25 million .45
Next $25 million .40
Over $50 million .35
- -------------------------------------------- -------------------------------------------- --------------------------------
Income Fund First $25 million .35
Next $25 million .30
Next $50 million .25
Over $100 million .20
- -------------------------------------------- -------------------------------------------- --------------------------------

Money Market Fund First $25 million .25
Next $25 million .20
Next $50 million .15
Over $100 million .10

</TABLE>

From time to time, GEIM may waive or reimburse advisory or administrative fees
paid by a Fund.

Investment Sub-Adviser

SSGA is the investment sub-adviser to the S&P 500 Index Fund pursuant to an
investment sub-advisory agreement with GEIM. SSGA, a division of State Street,
is located at Two International Place, Boston, Massachusetts 02110. State Street
is a wholly-owned subsidiary of State Street Corporation, a publicly held bank
holding company. State Street, with over $292 billion under management as of
December 31, 1996, provides complete global investment management services from
offices in the United States, London, Sydney, Hong Kong, Tokyo, Toronto,
Montreal, Luxembourg, Melbourne, Paris, Dubai, Munich and Brussels. SSGA is also
the investment sub-adviser to the GEIFI Funds' S&P 500 Index Fund. GEIM pays
SSGA monthly compensation in the form of an investment sub-advisory fee at an
annual rate of .05% of the first $100 million, .04% of the next $200 million and
..03% for all amounts over $300 million, of the Fund's average daily net assets.

Portfolio Management

Eugene K. Bolton is responsible for the overall management of the domestic
equity investment process at GE Investments. Mr. Bolton has served in that
capacity since 1991. Mr. Bolton leads a team of portfolio managers for the U.S.
Equity Fund. In addition, Mr. Bolton has served in a similar capacity with
respect to the GE Funds' U.S. Equity Fund since the commencement of that Fund's
operations. Mr. Bolton has more than 12 years of investment experience and has
held positions with GE Investments since 1984. He is currently a Director and
Executive Vice President of GE Investments.

David B. Carlson is the Portfolio Manager of the Premier Growth Fund and is also
responsible for the management of the domestic equity related investments of the
portfolio of the Strategic Fund. Mr. Carlson has served those Funds since the
commencement of their operations. In addition, Mr. Carlson has served as the
Portfolio Manager to similar funds of GE Funds since the commencement of their
operations. He has more than 14 years of investment experience and has held
positions with GE Investments since 1982. Mr. Carlson is currently a Senior Vice
President of GE Investments.

- 22 -

<PAGE>

Peter J. Hathaway leads a team of portfolio managers for the Value Fund and has
served in that capacity since the commencement of that Fund's operations. In
addition, Mr. Hathaway has served in a similar capacity with respect to GE
Funds' Value Equity Fund since the commencement of that Fund's operations. He
has more than 36 years of investment experience and has held positions with GE
Investments since 1985. Mr. Hathaway is currently a Senior Vice President of GE
Investments.

Ralph R. Layman leads a team of portfolio managers for the International Fund
and the Emerging Markets Fund and also is responsible for the management of the
international equity-related investments of the Strategic Fund. Mr. Layman has
served those Funds since the commencement of their operations. In addition, Mr.
Layman has served in a similar capacity with respect to GE Funds' GE
International Equity Fund since the commencement of its operations and the GE
Strategic Investment Fund since September 1997. He has more than 18 years of
investment experience and has held positions with GE Investments since 1991.
From 1989 to 1991, Mr. Layman served as an Executive Vice President, Partner and
Portfolio Manager of Northern Capital Management, and prior thereto, served as
Vice President and Portfolio Manager of Templeton Investment Counsel. Mr. Layman
is currently a Director and Executive Vice President of GE Investments.

Robert A. MacDougall leads a team of portfolio managers for the Income Fund and
is also responsible for the management of fixed income related investments of
the portfolio of the Strategic Fund. Mr. MacDougall has served those Funds since
the commencement of their operations. In addition, Mr. MacDougall has served in
a similar capacity with respect to GE Funds' GE Fixed Income Fund and GE
Strategic Investment Fund since the commencement of their operations. He has
more than 13 years investment experience and has held positions with GE
Investments since 1986. Mr. MacDougall is currently a Director and Executive
Vice President of GE Investments.

Elaine G. Harris is the Portfolio Manager for the Mid-Cap Fund and has served in
that capacity since commencement of that Fund's operations. Ms. Harris also
serves as the Portfolio Manager for GE Funds' GE Mid-Cap Growth Fund. She has
more than 13 years of investment experience and has held positions with GE
Investments since 1993. From 1991 to 1993, Ms. Harris served as Senior Vice
President and Portfolio Manager at SunAmerica Asset Management and, prior
thereto, as Portfolio Manager at Alliance Capital Management Company and as an
analyst and subsequently, Portfolio Manager at Fidelity Investments. Ms. Harris
is currently a Senior Vice President of GE Investments.

James B. May leads a team of portfolio managers for the S&P 500 Index Fund. Mr.
May has been an investment officer and portfolio manager in the U.S. Structured
Products Group of State Street since 1994. From 1991 to 1993, Mr. May served as
an Investment Support Analyst in the U.S. Passive Service Group of State Street.
Mr. May holds a B.S. in finance from Bentley College and an M.B.A. from Boston
College.

GEIM investment personnel may engage in securities transactions for their own
accounts pursuant to a code of ethics that establishes procedures for personal
investing and restricts certain transactions.

Expenses of the Funds

Each Fund's Investment Class bears its own expenses, which generally include all
costs not specifically borne by GEIM. Specifically, expenses borne by a Fund
include: investment advisory and administration fees; shareholder servicing and
distribution fees; fees paid to members of the Trust's Board of Trustees who are
not affiliated with GEIM or any of its affiliates; fees for necessary brokerage
services; and expenses that are not normal operating expenses of the Funds (such
as extraordinary expenses, interest and taxes). GEIM pays any fees and expenses
in excess of its advisory and administration fee that are not borne by the
Funds. The annual fees payable with respect to each Fund are intended to
compensate GEIM for its advisory and administration services.

PURCHASE OF SHARES
- --------------------------------------------------------------------------------

Purchasing Shares - General Information

The Distributor offers Investment Class shares on a continuous basis. A purchase
order is processed at the net asset value next determined after the order (or
wire, if applicable) has been received and accepted by State Street, the Trust's
transfer agent. For a description of the manner of calculating a Fund's net
asset value, see "Net Asset Value." Shares are sold without the imposition of a
sales charge. However, a purchase premium (discussed below) may be imposed on
cash transactions.

- 23 -

<PAGE>

The Trust will accept purchase orders for shares only on each "Business Day,"
which is a day on which the Fund's net asset value is calculated as described
below under "Net Asset Value." The Trust, in its discretion, may reject any
order for the purchase of shares of a Fund. The Trust does not issue physical
certificates representing shares in any Fund.

You begin to earn income as of the first business day following the day State
Street has received payment for an order. Orders are accepted only upon receipt
by State Street of all documentation required to be submitted in connection with
such order. If you purchase or redeem shares through an Authorized Firm (defined
below), you may be subject to service fees imposed by that Firm.

Minimum Investment Requirement

This minimum investment is waived for each investor or group of related
investors (i) that has invested at least $100 million in one or more investment
portfolios or accounts that are advised by GEIM and/or GEIC, provided that at
least $35 million of this $100 million amount is invested in the Trust or (ii)
that has invested at least $5 billion in one or more investment portfolios or
accounts that are advised by GEIM and/or GEIC.

Letter of Intent. Investors or a group of related investors may meet the $35
million minimum investment requirement through a series of investments over a
period of no more than 13 months. To elect this alternative, the investor or
group must submit a letter to the Distributor indicating its commitment to
purchase at least $35 million in shares of a Fund over a 13-month period. If the
investor does not invest the required minimum amount within the 13-month period,
this investment in Investment Class shares will be exchanged for Class A shares
of a corresponding GE Fund, if a corresponding GE Fund exists and is
operational. Currently, the following Funds have corresponding, operational GE
Funds: the Premier Growth Fund, the U.S. Equity Fund, the International Fund,
the Value Fund, the Strategic Fund, the Mid-Cap Fund, the Income Fund and the
Money Market Fund. If there is no corresponding GE Fund at the time an
investment would otherwise be exchanged, then the Investment Class shares will
be redeemed and the proceeds distributed directly to the investor at the
applicable address of record. Redemption fees are charged in connection with
such exchanges and redemptions.

Eligible Investors

The Distributor offers Investment Class shares to certain investors that meet
the minimum investment requirements. The Trust was designed to appeal to
institutional investors such as corporations, foundations, endowments and trusts
established to fund employee benefit plans of various types as well as
charitable, religious and educational institutions. The Trust expects that most
of the time each Fund will have relatively few shareholders (as compared with
most mutual funds) but that these shareholders will invest substantial amounts
in a Fund. Typical institutional investors may include banks, insurance
companies, trusts that fund qualified pension and profit-sharing plans (Section
401 of the Code), trusts that fund government employer non-qualified deferred
compensation obligations (Section 457 of the Code), trusts that fund charitable,
religious and educational institutions (Section 501(c)(9) of the Code),
non-government employers seeking to fund non-qualified deferred compensation
obligations, and investment companies that are not affiliated persons of the
Trust (or affiliated persons of such persons).

How to Open an Account

You must establish an account before you purchase shares, and may do so either
by submitting an account application to the Distributor or the Transfer Agent
through an Authorized Firm (defined below). You may obtain an account
application by telephoning the Trust at 1-800- 439-3042 or by writing to the
Trust at:

GE Institutional Funds
P.O. Box 120065
Stamford, CT 06912-0065

- 24 -

<PAGE>

For overnight package delivery:

GE Institutional Funds
c/o National Financial Data Services Inc.
P.O. Box 419631
Kansas, MO 64141-6631

To open an account, complete and sign an application and furnish your taxpayer
identification number to the Trust. You also must certify whether or not you are
subject to withholding for failing to report income to the Internal Revenue
Service ("IRS").

How to Buy Shares

After a completed account application has been received and processed, you may
purchase Fund shares from the Distributor or through brokers, dealers, financial
institutions or investment advisers which have entered into sales agreements
with the Distributor ("Authorized Firms").

You may purchase shares through an Authorized Firm with the assistance of a
sales representative (a "Sales Representative") with that Authorized Firm. The
Authorized Firm will be responsible for transmitting your order promptly to the
transfer agent. Contact your Sales Representative for further instructions.

You also may purchase Service Class shares directly from the transfer agent by
wiring federal funds to: State Street Bank and Trust Company (ABA # 0110-0002-8)
For: [GE Institutional Funds-Name of Fund] Account of: [Your name, address and
account number]. If a wire is received by the close of regular trading on the
NYSE on a Business Day, the shares will be priced according to the net asset
value of the Fund on that day. If a wire is received after the close of regular
trading on the NYSE, the shares will be priced as of the time the Fund's net
asset value per share is next determined.

Payment for orders that are not accepted will be returned to you promptly. Your
financial institution may charge a fee for wiring your account.

Purchases In-Kind

Investors may purchase Investment Class shares in amounts of $5 million or more
with either cash or investment securities acceptable to the appropriate Fund.
The particular investment securities acceptable to a Fund may vary over time and
the Trust does not guarantee that any particular investment securities will be
accepted at any particular time or at all. Investors interested in purchasing
Investment Class shares with investment securities should contact their Sales
Representative or the Distributor for information about which securities a
particular Fund will accept. The Trust reserves the right to require the
Distributor to suspend the offering of Investment Class shares of the Emerging
Markets Fund or International Equity Fund for cash in amounts above $5 million
and of the other non-Money Market Funds in amounts above $10 million.

Purchase Premiums

The Trust will assess a purchase premium for cash purchases in amounts over $5
million for each of the Emerging Markets and International Funds, and over $10
million for each of the other non-money market Funds. The Trust will not assess
a purchase premium on Investment Switches (discussed below).

The Trust, from time to time, will establish the purchase premium to be paid by
a particular Fund. As with in-kind purchases discussed above, purchase premiums
paid to the Trust are intended to cover brokerage and other costs associated
with putting an investment to work in the relevant markets. The Trust may waive
or reduce the purchase premium if GEIM determines that such purchases result in
minimum brokerage and/or other transactions costs due to, for example,
offsetting transactions or redemptions or purchases made in-kind.

Both the Investment Class shares and the Service Class shares have the same
purchase premium, which is assessed on the entire amount purchased. The premium
currently in effect for each non-money market Fund is as follows:

- 25 -

<PAGE>

As a Percentage of
Net Amount Purchased
--------------------

Emerging Markets Fund................................ 1.25%
Premier Growth Equity Fund........................... .25%
Mid-Cap Growth Fund.................................. .40%
International Equity Fund............................ .65%
Value Equity Fund.................................... .25%
U.S. Equity Fund..................................... .25%
S&P 500 Index Fund................................... .25%
Strategic Investment Fund............................ .20%
Income Fund.......................................... .10%

REDEMPTION OF SHARES
- --------------------------------------------------------------------------------

On any Business Day, you may redeem all or a portion of your shares. Redemption
requests received in proper form prior to the close of regular trading on the
NYSE will be effected at the net asset value per share determined on that
Business Day. Redemption requests received after the close of regular trading on
the NYSE will be effected at the net asset value as next determined. The Trust
normally transmits redemption proceeds within seven days after receipt of a
redemption request. Redemption fees (discussed below) may be imposed on cash
transactions.

If you hold more than one class of shares, you must specify which class of
shares you are redeeming. Your redemption request might be delayed if you do not
specify the appropriate class of shares or if you own fewer shares than
specified in your redemption request.

Redemptions through an Authorized Firm

If you purchase shares through a Sales Representative, you may redeem your
shares in accordance with your Sales Representative's instructions. If State
Street's books reflect that you, and not your Sales Representative, is the
shareholder of record on your accounts, you also may redeem by mail or by wire,
as described below. Your Authorized Firm is responsible for transmitting a
redemption order (and crediting you with any redemption proceeds) on a timely
basis.

Redemption by Mail

If you are the shareholder of record on the books of State Street, you may
redeem shares by mail by a written redemption request that (1) states the class
and the number of shares or the specific dollar amount to be redeemed, (2)
identifies the Fund or Funds from which the number or dollar amount is to be
redeemed, (3) identifies your account number and (4) is signed by you or on your
behalf by an authorized person exactly as the shares are registered. Send the
request to the Trust at the appropriate address listed above under "How to Open
an Account."

Signature Guarantees

To protect your account, the Trust and the Distributor from fraud, signature
guarantees are required to enable the Trust to verify the identity of the person
authorizing a redemption from your account. Signature guarantees will be
required for redemptions over $50,000 and requests that redemption proceeds be
(1) mailed to an address other than the address of record, (2) paid to other
than the shareholder, (3) wired to a bank other than the bank of record, or (4)
mailed to an address that has been changed within 30 days of the redemption
request. All signature guarantees must be guaranteed by a commercial bank, trust
company, broker, dealer, credit union, national securities exchange or
registered association, clearing agency or savings association. The Trust may
require additional supporting documents for redemptions made by corporations,
executors, administrators, trustees, guardians or persons utilizing a power of
attorney. A request for redemption will not be deemed to have been submitted
until the Trust receives all documents typically required to assure the safety
of a particular account. The Trust may waive the signature guarantee on a
redemption of $50,000 or less if it is able to verify the signatures of all
registered owners from its accounts.

- 26 -

<PAGE>

Involuntary Exchanges or Redemptions

By investing in the Trust, you consent to involuntary exchanges and redemptions.
This means that if the value of your investment in the Funds falls below the
minimum requirements discussed above for more than 120 days because of
redemptions (and not because of market fluctuations or Investment Switches), the
Trust will involuntarily exchange your Investment Class shares for Class D
shares of a corresponding GE Fund if such a corresponding GE Fund exists and is
operational and you meet the eligibility requirements for such fund. If no such
GE Funds portfolio exists and is operational or you do not meet the eligibility
requirements for such fund, the Trust will involuntarily redeem your account.
The Trust will effect such exchange or involuntary redemption 30 days after the
Trust has sent you written notice, unless you increase your account to the
required minimum within such period.

More specifically, (i) if you have $100 million or more invested in funds
advised by GEIM and/or GEIC, then your shares will be exchanged or redeemed, as
applicable, if your investment in the Trust falls below $35 million for the
requisite 120-day period and you do not increase your account to the required
minimum within the requisite 30-day period following written notice of
deficiency, and (ii) if you have invested less than $100 million in funds
advised by GEIM and/or GEIC, your shares in a Fund will be exchanged or
redeemed, as applicable, if your investment in that Fund falls below $35 million
for that period and you do not increase your account to the required minimum
within the requisite 30-day period following written notice of deficiency.
Redemption fees are charged in connection with such involuntary exchanges and
cash redemptions. At your request, the Trust will effect an involuntary
redemption in-kind, and there would be no redemption fee charged on such in-kind
redemption. Proceeds of any such redemption will be mailed to you, reduced by
the amount of the redemption fee.

Distributions in-Kind

If the Trust's Board of Trustees determines that it would be detrimental to the
best interests of a Fund's shareholders to make a redemption payment wholly in
cash, the Trust may pay, in accordance with rules adopted by the SEC, any
portion of a redemption in excess of the lesser of $250,000 or 1% of the Fund's
net assets by a distribution in-kind of portfolio securities in lieu of cash.
Redemptions failing to meet this threshold must be made in cash. Portfolio
securities issued in a distribution in-kind will be deemed by GEIM to be readily
marketable. Shareholders receiving distributions in-kind of portfolio securities
may incur brokerage commissions when subsequently disposing of those securities.
A redemption fee will not be charged on distributions in-kind. In addition, the
Trust will redeem an investor's shares in-kind at the request of that investor.

Redemption Fees

The Trust will assess a redemption fee for cash redemptions in amounts over $5
million for each of the Emerging Markets and International Funds, and over $10
million for each of the other non-money market Funds. The Trust will not assess
a redemption fee on Investment Switches (discussed below). The proceeds from
shares redeemed will be reduced in an amount equal to such redemption fee. The
Trust will establish redemption fees from time to time, and like purchase
premiums and in-kind redemptions and purchases, such fees paid to the Trust are
intended to allocate brokerage and other costs to the appropriate investor. The
Trust may waive or reduce a redemption fee if GEIM determines a cash redemption
results in minimum brokerage and/or other transactions costs due to, for
example, offsetting transactions or subscriptions. Both the Investment Class
shares and the Service Class shares have the same redemption fee. The redemption
fee is assessed on the entire amount of shares being redeemed, and the fee
currently in effect for each Fund is as follows:

As a Percentage of
Net Amount Redeemed
-------------------

Emerging Markets Fund............................... 1.25%
Premier Growth Equity Fund.......................... .25%
Mid-Cap Growth Fund................................. .40%
International Equity Fund........................... .65%
Value Equity Fund................................... .25%
U.S. Equity Fund.................................... .25%
S&P 500 Index Fund.................................. .25%
Strategic Investment Fund......................... .20%
Income Fund......................................... .10%

- 27 -

<PAGE>

INVESTMENT SWITCHES
- --------------------------------------------------------------------------------

You may exchange Investment Class shares of a Fund for Investment Class shares
of another Fund or Service Class shares of the same or another Fund ("Investment
Switches"). Such Investment Switches are permitted provided the Fund is an
option available to you, you meet the minimum investment requirement for such
Fund and the shares of such Fund may legally be sold in your state of residence.
Purchase premiums and redemption fees will not be charged on Investment
Switches.

The Trust may, upon 60 days prior written notice to a Fund's shareholders,
terminate the Investment Switch privilege. An Investment Switch is treated for
Federal income tax purposes as a redemption (that is, a sale) of shares given in
exchange by you, and therefore you may experience a loss in connection with the
Investment Switch. You may conduct an Investment Switch by writing the Trust at
the appropriate address listed above under "How to Open an Account."

NET ASSET VALUE
- --------------------------------------------------------------------------------

Each class' net asset value per share is determined as of the close of regular
trading on the NYSE (currently 4:00 p.m., New York time) on each day the NYSE is
open by dividing the value of the Fund's net assets attributable to that class
by the total number of shares of that class outstanding. The NYSE is currently
open each day, Monday through Friday, except on the following holidays: New
Year's Day, Dr. Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas, and on
the preceding Friday or subsequent Monday when one of these holidays falls on a
Saturday or Sunday, respectively.

In general, a Fund's investments will be valued at market value or, in the
absence of market value, at fair value as determined by or under the direction
of the Trust's Board of Trustees. All portfolio securities held by the Money
Market Fund, and any short-term investments of the other Funds that mature in 60
days or less, will be valued on the basis of amortized cost, if the Board of
Trustees determines that amortized cost represents fair value. Amortized cost
involves valuing an investment at its cost and, thereafter, assuming a constant
amortization to maturity of any discount or premium, regardless of the effect of
fluctuating interest rates on the market value of the investment. The Trust will
seek to maintain the Money Market Fund's net asset value at $1.00 per share for
purposes of purchases and redemptions, although no assurance can be given that
the Trust will be able to do so on a continuous basis.

A security that is primarily traded on a domestic or foreign securities exchange
will be valued at the last sale price on that exchange or, if no sales occurred
during the day, at the current quoted bid price. An option that is written or
purchased by a Fund generally will be valued at the mean between the last asked
and bid prices. The value of a futures contract will be equal to the unrealized
gain or loss on the contract that is determined by marking the contract to the
current settlement price for a like contract on the valuation date of the
futures contract. A settlement price may not be used if the market makes a limit
move with respect to a particular futures contract or if the securities
underlying the futures contract experience significant price fluctuations after
the determination of the settlement price. When a settlement price cannot be
used, futures contracts will be valued at their fair market value as determined
by or under the direction of the Board of Trustees.

Securities that are primarily traded on a foreign exchange generally will be
valued for purposes of calculating a Fund's net asset value at the preceding
closing value of the securities on the exchange, except that, when an occurrence
subsequent to the time a value was so established is likely to have changed that
value, the fair market value of those securities will be determined by
consideration of other factors by or under the direction of the Board. Trading
in foreign markets may not take place on every NYSE business day. In addition,
trading may take place in various foreign markets on Saturdays or on other days
when the NYSE is not open and on which a Fund's net asset value is not
calculated. Therefore, such calculation does not take place contemporaneously
with the determination of the prices of many of the portfolio securities used in
such calculation and the value of a Fund's portfolio may be significantly
affected on days when shares of the Fund may not be purchased or redeemed.

All assets and liabilities of a Fund initially expressed in foreign currency
values will be converted into U.S. dollar values at the mean between the bid and
offered quotations of the currencies against U.S. dollars as last quoted by any
recognized dealer. If the bid and offered quotations are not available, the rate
of exchange will be determined in good faith by the Board of Trustees. In
carrying out the Board's valuation policies, GEIM may consult with an
independent pricing service or services, retained by the Trust. Further
information regarding the Trust's valuation policies is contained in the
Statement of Additional Information.

- 28 -

<PAGE>

DIVIDENDS, DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------

Dividends and Distributions

Dividends and capital gain distributions paid to you will be automatically
reinvested in shares of the same class. There is no purchase premium charged
with respect to reinvested dividends.

Dividends attributable to the Income Fund and the Money Market Fund are declared
daily and paid monthly. Dividends attributable to the net investment income of
each of the other Funds are declared and paid annually. If you redeem all of
your shares that you may own in the Income Fund or the Money Market Fund at any
time during a month, your dividends (if any) will be paid to you along with the
proceeds of your redemption.

The Trust will send you written confirmations relating to the automatic
reinvestment of daily dividends within five days following the end of each
quarter for the Income Fund, and within five days following the end of each
month for the Money Market Fund. Distributions of any net realized long-term and
short-term capital gains earned by a Fund will be made annually. Earnings of the
Income Fund and the Money Market Fund for Saturdays, Sundays and holidays will
be declared as dividends on the business day immediately preceding the Saturday,
Sunday or holiday. As a result of the different service fees applicable to the
Service Class shares, dividends and distributions will be higher for the
Investment Class shares. See "Fee Table" and "Purchase of Shares."

Each Fund is subject to a 4% non-deductible excise tax measured with respect to
certain undistributed amounts of net investment income and capital gains. If
necessary to avoid the imposition of this tax, and if in the best interests of
the Fund's shareholders, the Trust will declare and pay dividends and
distributions more frequently than stated above.

Taxes

The following discussion may not be relevant to tax-deferred retirement accounts
or other tax exempt investors, and is not a complete analysis of the federal tax
implications of investing in the Funds. You should consult your own tax advisor
regarding the application of Federal, state, local and foreign tax laws to your
specific tax situation.

Taxes on the Funds. The Trust intends that each Fund qualify as a separate
regulated investment company under the Code. As a regulated investment company,
each Fund should not be subject to federal income tax or federal excise taxes if
substantially all of its net investment income and net realized capital gains
are distributed within allowable time limits, as provided under the Code. It is
important that the Funds meet these time limits and the requirements for
qualifying as regulated investment companies under the Code so that any earnings
on your investment will not be taxed twice.

Net investment income or capital gains earned by a Fund from investing in
foreign securities may be subject to foreign income taxes withheld at the
source. The Trust intends that the Funds operate in a manner that they qualify
for foreign tax rates that have been reduced under tax treaties with the United
States. Provided certain requirements are met under the Code, a Fund may elect
to treat foreign income taxes paid by that Fund as passed through to
shareholders as a foreign tax credit. The Trust anticipates that each of the
International Fund and the Emerging Markets Fund will seek to qualify for and
make this election in most, but not necessarily all, of its taxable years. The
Trust will report to shareholders any amount per share that must be included in
gross income and that may be available as a credit or a deduction. You may not
claim a deduction for foreign taxes if you do not itemize deductions, and
certain limitations will be imposed on the extent to which the credit (but not
the deduction) for foreign taxes may be claimed.

Taxes on Distributions to Shareholders. Dividends and distributions you receive
from a Fund, whether reinvested or taken as cash, are subject to Federal income
tax. Dividends from a Fund's net investment income and distributions of the
Fund's short-term capital gains will be taxed as ordinary income, and
distributions of long-term capital gains will be taxed as long-term capital
gains, regardless of how long you have held your shares. As a general rule, any
gain or loss when you sell or redeem (including a redemption in-kind) your Fund
shares will be a long-term capital gain or loss if you have held your shares for
more than one year and a short-term capital gain or loss if you have held your
shares for one year or less. Some dividends received in January may be taxable
as if they had been paid the previous December.

- 29 -

<PAGE>

dividends-received deduction for corporations. Some states, if certain asset and
diversification requirements are satisfied, permit shareholders to treat their
portions of a Fund's dividends that are attributable to interest on U.S.
Treasury securities and certain U.S.
Government Obligations as income that is exempt from state and local income
taxes.

Statements regarding the tax status of income dividends and capital gains
distributions will be mailed to you on or before January 31st of each year.

CUSTODIAN AND TRANSFER AGENT
- --------------------------------------------------------------------------------

State Street, located at 225 Franklin Street, Boston, Massachusetts 02101,
serves as the Trust's custodian and transfer agent, and is responsible for
receiving acceptance orders for the purchase of shares and processing redemption
requests.

DISTRIBUTOR
- --------------------------------------------------------------------------------

GE Investment Services Inc., located at 3003 Summer Street, P.O. Box 7900,
Stamford, Connecticut, 06904-7900, serves as distributor of the Funds' shares.
The Distributor, a wholly-owned subsidiary of GEIM, also serves as Distributor
for the Elfun Funds and GE Funds. GEIM or its affiliates, at their own expense,
may allocate portions of their revenues or other resources to assist the
Distributor in distributing shares of the Funds, by providing additional
promotional incentives to dealers. In some instances, these incentives may be
limited to certain dealers who have sold or may sell significant numbers of
shares of the Funds. The Distributor routinely offers dealers in Fund shares the
opportunity to participate in contests for which prizes include tickets to
theater and sporting events, dining, travel to meetings and conferences held in
locations remote from their offices and other items.

ADDITIONAL MATTERS
- --------------------------------------------------------------------------------

The Trust was formed as a business trust under the laws of Delaware pursuant to
a Certificate of Trust on May 23, 1997. The Trust's Declaration of Trust dated
August 29, 1997, as amended from time to time (the "Declaration") authorizes the
Trust's Board of Trustees to create separate series, and within each series
separate classes, of an unlimited number of shares of beneficial interest, par
value $.001 per share. As of the date of this Prospectus, General Electric
Capital Assurance Company ("GE Assurance"), an indirect subsidiary of GE, owned
100% of the shares of the Trust. The shares were issued to GE Assurance for
providing the initial seed capital to the Trust. So long as GE Assurance owns
more than 25% of the outstanding voting securities of the Trust, it may be
deemed to control the Trust.

As issued, shares of a Fund will be fully paid and non-assessable. Shares are
freely transferable and have no preemptive, subscription or conversion rights.
Each of the Investment Class and the Service Class represents an identical
interest in a Fund's investment portfolio. As a result, the Classes have the
same rights, privileges and preferences, except with respect to: (1) the
designation of each Class; (2) the sales arrangement; (3) the expenses allocable
exclusively to each Class; and (4) voting rights on matters exclusively
affecting a single Class. The Board of Trustees does not anticipate that there
will be any conflicts among the interests of the holders of the two Classes. The
Trustees, on an ongoing basis, will consider whether any conflict exists and, if
so, take appropriate action. Certain aspects of the shares may be changed, upon
notice to Fund shareholders, to satisfy certain tax regulatory requirements, if
the Trust's Board of Trustees deems the change necessary.

When matters are submitted for shareholder vote, each shareholder of each Fund
will have one vote for each full share held and proportionate, fractional votes
for fractional shares held. In general, shares of each Fund vote by individual
Fund on all matters except (1) a matter affecting the interests of one or more
of the Funds, in which case only shares of the affected Funds would be entitled
to vote, (2) a matter affecting only the interests of one Class, in which case
only shares of the affected class would be entitled to vote, or (3) when the
1940 Act requires that shares of the Funds be voted in the aggregate.

Normally, no meetings of shareholders of the Funds will be held for the purpose
of electing Trustees unless and until such time as less than a majority of the
Trustees holding office have been elected by shareholders of the Trust, at which
time the Trustees then in office will call a shareholders' meeting for the
election of Trustees. Shareholders of record of no less than two-thirds of the
outstanding shares of the Trust may remove a Trustee through a declaration in
writing or by vote cast in person or by proxy at a meeting called for that
purpose. A

- 30 -

<PAGE>

meeting will be called for the purpose of voting on the removal of a Trustee at
the written request of holders of 30% of the Trust's outstanding shares.

Shareholders who satisfy certain criteria will be assisted by the Trust in
communicating with other shareholders in seeking the holding of the meeting.

The Trust only recently commenced operations and therefore has not yet generated
semi-annual and audited annual reports. Once semi-annual and audited annual
reports become available, the Trust will send you a copy of each report, each of
which includes a list of the investment securities held by each Fund in which
you have invested. Only one report each will be mailed to your address. You may
request additional copies of any report by calling the toll free number listed
on the back cover page of the Prospectus or by writing to the Trust at the
address set forth on the front cover page of the Prospectus.

- 31 -

<PAGE>

APPENDIX

FURTHER INFORMATION: CERTAIN INVESTMENT TECHNIQUES AND STRATEGIES

The Funds may engage in a number of investment techniques and strategies,
including those described below. No Fund is under any obligation to use any of
the techniques or strategies at any given time or under any particular economic
condition. No assurance can be given that the use of any practice will have its
intended result or that the use of any practice is, or will be, available to any
Fund.

Strategies Available to All Funds

When-Issued and Delayed-Delivery Securities. Each Fund may purchase when-issued
or delayed delivery securities, which means that delivery of and payment for the
securities will take place at a future time, i.e., beyond normal settlement. The
Funds purchase such securities to secure advantageous prices or yields, and not
for the purpose of leverage. When-issued securities purchased by a Fund may
include securities purchased on a "when, as and if issued" basis, meaning that
issuance of the securities depends on the occurrence of a subsequent event, such
as approval of a merger, corporate reorganization or debt restructuring.

The Funds do not earn interest or accrue income on when-issued or
delayed-delivery securities until settlement and bear the risk of market
fluctuation between the purchase and settlement dates. At the time of
settlement, a when-issued or delayed-delivery security may be valued at less
than its purchase price. In order to avoid the leveraging effect that may occur
with when-issued or delayed-delivery commitments, the Funds will maintain with
State Street, or with a designated sub-custodian, a separate account with a
segregated portfolio containing cash or other liquid assets in an amount equal
to the amount of such commitments.

Lending Portfolio Securities. Each Fund may lend its portfolio securities to
well-known and recognized U.S. and foreign brokers, dealers and banks. Such
loans may not exceed 30% of the Fund's assets, and must be collateralized by
cash, letters of credit or U.S. Government Obligations. Cash or instruments
collateralizing a Fund's loans of securities will be segregated and maintained
at all times with State Street, or with a designated sub-custodian, in an amount
at least equal to the current market value of the loaned securities. A Fund that
lends portfolio securities will be subject to the risk of loss of rights in the
collateral if the borrower fails financially.

Supra-national Agencies. Each Fund may invest in debt obligations of
supra-national agencies, which are agencies whose members make capital
contributions to support agency activities. Such agencies include the World
Bank, the European Coal and Steel Community, and the Asian Development Bank.
Debt obligations of supra-national agencies are not considered U.S. Government
Obligations and are not supported, directly or indirectly, by the U.S.
Government.

Strategies Available to Some But Not All Funds

Investments In Other Investment Companies. Each non-money market Fund, other
than the U.S. Equity Fund, may purchase securities of other investment
companies, provided that those other companies' investments are consistent with
the Fund's investment objective and policies and are permissible under the 1940
Act. Pursuant to the 1940 Act each Fund: (i) may invest a maximum of 10% of its
total assets in the securities of other investment companies; (ii) may not
invest more than 5% of its total assets in any one investment company; and (iii)
may not own more than 3% of the securities of any one investment company. The
non-money market Funds' investments in the Investment Fund are not considered
investment in another investment company for purposes of this paragraph and the
restrictions just described. To the extent a Fund invests in another investment
company, the Fund's shareholders will incur certain duplicative fees and
expenses, including two levels of investment advisory fees.

Depositary Receipts. Each non-money market Fund, may invest in American
Depositary Receipts, or "ADRs," European Depositary Receipts, or "EDRs"
(sometimes referred to as Continental Depositary Receipts, or "CDRs") and Global
Depositary Receipts, or "GDRs." Depositary receipts evidence an ownership
interest in securities of foreign corporations that are held on deposit with a
financial institution. ADRs are U.S. dollar-denominated receipts that represent
interests in shares of a foreign-based corporation held on deposit in a U.S.
bank or trust company. ADRs are traded on exchanges or over-the-counter in the
United States. EDRs represent interests in foreign or domestic securities held
in trust in a foreign bank, and are traded in European markets. EDRs may not
necessarily be denominated in the same currency as the securities they
represent. GDRs are receipts for shares in a foreign or domestic corporations
that are traded in capital markets around the world. While ADRs are intended to
permit foreign corporations to offer shares to Americans, and EDRs are designed
for use in European markets, GDRs allow companies to offer shares in many
markets. A Fund may purchase ADRs

- i -

<PAGE>

from institutions that are not sponsored by the issuer of the underlying foreign
securities, in which case the Fund may not receive as much information about the
ADRs that it would have received if had purchased them from a sponsored
depository.

WEBs and Other Index-related Securities. Each of the Emerging Markets Fund, the
International Fund and the Strategic Fund may invest in shares in a particular
series issued by Foreign Fund, Inc., an investment company whose shares also are
known as "World Equity Benchmark Shares" or "WEBS." WEBS have been listed for
trading on the American Stock Exchange, Inc. The Fund also may invest in shares
in a particular series issued by CountryBaskets Index Fund, Inc., or another
fund the shares of which are the substantial equivalent of WEBS. Each of the
U.S. Equity Fund, Premier Growth Fund, Value Fund and Strategic Fund may invest
in Standard & Poor's Depositary Receipts, or "SPDRs." SPDRs are securities that
represent ownership in a long-term unit investment trust that holds a portfolio
of common stocks designed to track the performance of the S&P 500 Index. A Fund
investing in a SPDR would be entitled to receive proportionate quarterly cash
distributions corresponding to the dividends that accrue to the S&P 500 stocks
in the underlying portfolio, less trust expenses.

Emerging Markets. The Emerging Markets Fund, the International Fund, the
Strategic Fund and the Income Fund each may invest more than 5% of its total
assets in securities of issuers located in one or more emerging markets
countries. The Mid-Cap Fund, the Premier Growth Fund, the Value Fund, the U.S.
Equity Fund and the S&P 500 Index Fund each may invest up to 5% of its total
assets in such securities. Emerging markets countries are located primarily in
Asia, Latin America, the Middle East, Southern Europe, Eastern Europe (including
the former republics of the Soviet Union and the Eastern Bloc) and Africa. Risks
and special considerations associated with investing in emerging markets
countries are discussed above under "Risk Factors and Special Considerations
- -Investing in Developing or Emerging Markets."

Municipal Leases. The Strategic Fund may invest in municipal leases, which may
take the form of a lease or an installment purchase or a conditional sales
contract to acquire equipment and facilities. Interest payments on qualifying
municipal leases are exempt from Federal income taxes and state income taxes
within the state of issuance. The Fund may hold municipal leases that are rated
investment grade (or its issuer's senior debt is rated investment grade) and
unrated, if GEIM (subject to oversight and approval by the Board of Trustees)
deems such unrated leases to be of comparable quality to rated issues. Risks and
special considerations applicable to certain investment grade obligations are
described above under "Risk Factors and Special Considerations - Certain
Investment Grade Obligations." Municipal leases will be considered illiquid
securities unless the Trust's Board of Trustees determines on an ongoing basis
that the leases are readily marketable.

Municipal leases have special risks. They represent a type of financing that has
not yet developed the depth of marketability generally associated with other
Municipal Obligations. Some municipal leases contain "non-appropriation"
clauses, which means that the governmental issuer is under no obligation to make
future payments under the lease or contract unless money is appropriated for
that purpose by the appropriate legislative body on a yearly or other periodic
basis. Moreover, although a municipal lease will be secured by financed
equipment or facilities, disposing of such collateral might prove difficult in
the event of foreclosure. To limit these risks, the Fund will invest no more
than 5% of its total assets in municipal leases. In addition, the Fund will
purchase leases with non-appropriation clauses only when the lease payments will
commence amortization of principal at an early date, so that the leases will
have an average life of five years or less.

Floating and Variable Rate Instruments. The Strategic Fund, the Income Fund and
the Money Market Fund each may invest in floating and variable rate instruments
(collectively, "adjustable rate securities"), which are securities with floating
or variable rates of interest or dividend payments. The floating or variable
rate is adjusted periodically according to a specified formula, which may be
determined by reference to a market interest rate or a some interest rate index,
or determined through an auction or re-marketing process. The variable and
floating rates of interest permit these Funds to take advantage of increases in
interest rates, and therefore these securities tend to be less sensitive than
fixed rate securities to interest rate changes and to have higher yields when
interest rates increase.

The amount by which the rates paid on an income security may increase or
decrease may be subject to periodic or lifetime reset limits (or "caps"), which
means that the interest rate does not increase beyond a certain level. If
interest rates exceed these levels, the values of certain capped adjustable rate
securities will fall. In addition, fluctuations in interest rates above these
caps could cause adjustable rate securities to behave more like fixed rate
securities in response to extreme movements in interest rates. Moreover, during
periods of rising interest rates, changes in the interest rate of an adjustable
rate security may lag changes in market rates.

The Strategic Fund and the Income Fund may invest in adjustable rate securities
that have interest rates that vary inversely with changes in market rates of
interest. Such securities also may pay a rate of interest determined by applying
a multiple to the variable rate. Increases and decreases in the value of
securities whose rates vary inversely with changes in market rates of interest
generally will be larger than

- ii -

<PAGE>

comparable changes in the value of an equal principal amount of a fixed rate
security having similar credit quality, redemption provisions and maturity.

The Strategic Fund may purchase floating and variable rate demand bonds and
notes, which are Municipal Obligations ordinarily having stated maturities in
excess of one year but which permit their holder to demand payment of principal
at any time or at specified intervals. Variable rate demand notes include master
demand notes, which permit the Fund to invest fluctuating amounts, which may
change daily without penalty, pursuant to direct arrangements between the Fund,
as lender, and the borrower. These obligations have interest rates that
fluctuate from time to time and frequently are secured by letters of credit or
other credit support arrangements provided by banks. Use of letters of credit or
other credit support arrangements will not adversely affect the tax-exempt
status of variable rate demand notes. Because they are direct lending
arrangements between the lender and borrower, variable rate demand notes
generally will not be traded and no established secondary market generally
exists for them, although they are redeemable at face value. If variable rate
demand notes are not secured by letters of credit or other credit support
arrangements, the Fund's right to demand payment will be dependent on the
ability of the borrower to pay principal and interest on demand. Each obligation
purchased by the Fund will meet the quality criteria established by GEIM for the
purchase of Municipal Obligations. GEIM, on behalf of the Fund, considers on an
ongoing basis the creditworthiness of the issuers of the floating and variable
rate demand obligations in the Fund's portfolio.

Participation Interests. The Strategic Fund may purchase participation interests
in certain Municipal Obligations from financial institutions. A participation
interest gives the Fund an undivided interest in the Municipal Obligation in the
proportion that the Fund's participation interest bears to the total principal
amount of the Municipal Obligation. These instruments may have fixed, floating
or variable rates of interest. If the participation interest is unrated, or has
been given a rating below one that is otherwise permissible for purchase by the
Fund, the participation interest will be backed by an irrevocable letter of
credit or guarantee of a bank that the Trust's Board of Trustees has determined
meets certain quality standards, or the payment obligation otherwise will be
collateralized by U.S. Government Obligations. The Fund will have the right,
with respect to certain participation interests, to demand payment, on a
specified number of days' notice, for all or any part of the Fund's
participation interest in the Municipal Obligation, plus accrued interest. The
Trust intends that the Fund exercise its right to demand payment only upon a
default under the terms of the Municipal Obligation, or to maintain or improve
the quality of its investment portfolio. The Fund will invest no more than 5% of
the value of its total assets in participation interests.

Zero Coupon Obligations. The U.S. Equity Fund, the Strategic Fund and the Income
Fund may invest in zero coupon obligations. Zero coupon obligations pay no
interest to their holders prior to maturity. Instead, the interest accrues (or
builds up) and is paid in a lump sum at maturity. Investors purchase zero coupon
obligations at a deep discount, or prices far lower than par value. Because zero
coupon securities bear no interest, they are more volatile than other
fixed-income securities. When interest rates rise, their values fall more
rapidly then securities paying interest on a current basis. Conversely, when
interest rates fall, the values of zero coupon bonds rise more rapidly then
securities paying interest on a current basis, because the zeros have locked in
a particular rate of reinvestment that becomes more attractive the further rates
fall.

Even though the Funds receive no payments on its zero coupon securities prior to
maturity or disposition, for federal income tax purposes they must distribute
income to shareholders as if payments had actually been made. Each Fund must pay
these dividends to shareholders from its cash assets, from borrowing or by
liquidating portfolio securities. The Fund may have to liquidate portfolio
securities at an inopportune time, such as when securities are thinly traded,
and therefore would sell securities at lower prices. Moreover, to the extent
that portfolio assets must be used to pay distributions, the Fund would lose the
opportunity to use those assets to purchase additional income-producing
securities, and therefore current income may be reduced.

The Strategic Fund may invest up to 10% of its assets in zero coupon Municipal
Obligations, which are generally divided into two categories: "Pure Zero
Obligations," which pay no interest for their entire life and "Zero/Fixed
Obligations," which pay no interest for some initial period and thereafter pay
interest currently. In the case of a Pure Zero Obligation, the failure to pay
interest currently may result from the obligation's having no stated interest
rate, in which case the obligation pays only principal at maturity and is sold
at a discount from its stated principal. A Pure Zero Obligation may, in the
alternative, provide for a stated interest rate, but provide that no interest is
payable until maturity, in which case accrued, unpaid interest on the obligation
may be capitalized as incremental principal. The value to the investor of a zero
coupon Municipal Obligation consists of the economic accretion either of the
difference between the purchase price and the nominal principal amount (if no
interest is stated to accrue) or of accrued, unpaid interest during the
Municipal Obligation's life or payment deferral period.

- iii -

<PAGE>

Municipal Obligation Components. The Strategic Fund may invest in Municipal
Obligations the interest rate on which has been divided by the issuer into two
different and variable components, which together result in a fixed interest
rate. Typically, the first of the components (the "Auction Component") pays an
interest rate that is reset periodically through an auction process, whereas the
second of the components (the "Residual Component") pays a residual interest
rate based on the difference between the total interest paid by the issuer on
the Municipal Obligation and the auction rate paid on the Auction Component. The
Fund may purchase both Auction and Residual Components. Because the interest
rate paid to holders of Residual Components is generally determined by
subtracting the interest rate paid to the holders of Auction Components from a
fixed amount, the interest rate paid to Residual Component holders will decrease
as the Auction Component's rate increases and increase as the Auction
Component's rate decreases. Moreover, the extent of the increases and decreases
in market value of Residual Components may be larger than comparable changes in
the market value of an equal principal amount of a fixed rate Municipal
Obligation having similar credit quality, redemption provisions and maturity.

Custody Receipts. The Strategic Fund may acquire custody receipts or
certificates underwritten by securities dealers or banks that evidence ownership
of future interest payments, principal payments, or both, on certain Municipal
Obligations. Similar to depositary receipts, the actual Municipal Obligations
are held in an irrevocable trust or custodial account with a custodian bank,
which then issues receipts or certificates that evidence ownership. Custody
receipts evidencing specific coupon or principal payments have the same general
attributes as zero coupon Municipal Obligations described above. Although under
the terms of a custody receipt, the Fund would be typically authorized to assert
its rights directly against the issuer of the underlying obligation, the Fund
could be required to assert through the custodian bank its rights against the
underlying issuers. Thus, in the event the underlying issuer fails to pay
principal and/or interest when due, the Fund may be subject to delays, expenses
and risks that are greater than those that would have been involved if the Fund
had purchased a direct obligation of the issuer.

Mortgage Related Securities. The mortgage related securities in which the
Strategic Fund and the Income Fund may invest represent pools of mortgage loans
assembled for sale to investors by various governmental agencies, such as GNMA,
by government related organizations, such as FNMA and FHLMC, as well as by
private issuers, such as commercial banks, savings and loan institutions,
mortgage bankers and private mortgage insurance companies.

Several risks are associated with mortgage related securities. The monthly cash
inflow from the underlying loans may be insufficient to meet the monthly payment
requirements of the mortgage related security. Early returns of principal (such
as from prepayments or foreclosures) will shorten the term of the underlying
mortgage pool for a mortgage related security and will affect the average life
of the mortgage related securities the Funds continue to hold. Factors affecting
the occurrence of mortgage prepayments include the level of interest rates,
general economic conditions, the location and age of the mortgaged property and
other social and demographic conditions. When interest rates fall, prepayments
tend to increase, and when they rise, prepayments tend to decrease.

Because prepayments of principal generally occur when interest rates are
declining, the Funds will likely have to reinvest the proceeds of prepayments at
lower interest rates than those at which its assets were previously invested,
resulting in a corresponding decline in the Fund's yield. Thus, mortgage related
securities may have less potential for capital appreciation in periods of
falling interest rates than other fixed income securities of comparable
maturity. To the extent that a Fund purchases mortgage related securities at a
premium, unscheduled prepayments, which are made at par, will result in a loss
equal to any unamortized premium.

Adjustable rate mortgages, or "ARMs" have interest rates that reset at periodic
intervals. The Funds may invest in ARMs that have maximum annual or lifetime
caps. ARMs have the advantages and risks associated with variable and floating
rate securities (including capped adjustable rate securities) discussed above.

Collateralized mortgage obligations, or "CMOs" are obligations fully
collateralized by a portfolio of mortgages or mortgage related securities.
Payments of principal and interest on the mortgages are passed through to the
holders of the CMOs on the same schedule as they are received, although certain
classes of CMOs have priority over others with respect to the receipt of
prepayments on the mortgages. Therefore, depending on the type of CMOs in which
the Strategic Fund and the Income Fund invest, the investment may be subject to
a greater or lesser risk of prepayment than other types of mortgage related
securities.

To the extent GEIM determines any mortgage related securities are not readily
marketable, each of the Funds would limit its investments in these securities,
together with other illiquid instruments, to not more than 15% of the value of
its net assets.
- iv -

<PAGE>

Government Stripped Mortgage Related Securities. The Strategic Fund and the
Income Fund each may invest in government stripped mortgage related securities
(i.e., the issuer has stripped the security into its interest and principal
components) issued and guaranteed by GNMA, FNMA or FHLMC. These securities
represent beneficial ownership interests in either periodic principal
distributions ("principal- only") or interest distributions ("interest-only") on
mortgage related certificates. The certificates underlying the government
stripped mortgage related securities represent all or part of the beneficial
interest in pools of mortgage loans. A Fund will invest in government stripped
mortgage related securities in order to enhance yield or to benefit from
anticipated appreciation in value of the securities at times when GEIM believes
that interest rates will remain stable or increase. In periods of rising
interest rates, the expected increase in the value of government stripped
mortgage related securities may offset all or a portion of any decline in value
of a Fund's securities.

Investing in government stripped mortgage related securities involves risks
normally associated with investing in mortgage related securities issued by
government or government related entities. In addition, the yields on government
stripped mortgage related securities are extremely sensitive to the prepayment
experience on the mortgage loans underlying the certificates collateralizing the
securities. If a decline in the level of prevailing interest rates results in a
rate of principal prepayments higher than anticipated, distributions of
principal will be accelerated, thereby reducing the yield to maturity on
interest-only government stripped mortgage related securities and increasing the
yield to maturity on principal-only government stripped mortgage related
securities. Sufficiently high prepayment rates could result in the Strategic
Fund or the Income Fund not fully recovering its initial investment in an
interest-only government stripped mortgage related security.

Under current market conditions, the Funds expect to invest in interest-only
government stripped mortgage related securities. Government stripped mortgage
related securities are currently traded in an over-the-counter market maintained
by several large investment banking firms. The Funds will acquire government
stripped mortgage related securities only if a secondary market for the
securities exists at the time of acquisition, but there can be no assurance that
either Fund will be able to effect a trade of such a security at a desired time.
Except for government stripped mortgage related securities based on fixed rate
FNMA and FHLMC mortgage certificates that meet certain liquidity criteria
established by the Trust's Board of Trustees, the Trust treats government
stripped mortgage related securities as illiquid and will limit each of the
Strategic Fund's and the Income Fund's investments in these securities, together
with other illiquid investments, to not more than 15% of its net assets.

Asset-Backed and Receivable-Backed Securities. The Strategic Fund and the Income
Fund each may invest in asset-backed and receivable-backed securities. These
instruments are secured by and payable from pools of assets, including credit
card receivables and pools of motor vehicle retail installment sales contracts
and security interests in the vehicles securing those contracts. A Fund's return
on an asset- or receivable-backed security may be adversely affected by early
prepayment of underlying sales contracts. In periods of falling interest rates,
there is a general tendency for prepayments to increase, shortening the average
maturity of an asset- or receivable-backed security making it difficult to lock
in higher interest rates. If a creditor defaults on an underlying sales
contract, asset- or receivable-backed securities might be adversely affected if
the full amount receivable on such contract cannot be realized.

Mortgage Dollar Rolls. The Strategic Fund and the Income Fund each may use up to
25% of its total assets to enter into mortgage "dollar rolls." A mortgage dollar
roll transaction requires a Fund to sell a security and simultaneously contract
with purchaser buy similar, but not identical, securities at some future date.
The Fund loses the right to principal and interest payments on the securities
sold. The Fund benefits from a dollar roll to the extent that (i) the price at
which the Fund sells the security exceeds the price at which it buys (i.e., the
"drop" price) similar securities in the future, and (ii) the Fund earns interest
on the cash proceeds from the sale. However, these gains are offset by foregone
interest income and capital appreciation on the securities sold. Therefore a
Fund's overall gains from mortgage dollar roll transactions depend upon GEIM's
ability to predict correctly mortgage prepayments and interest rates. To the
extent that GEIM incorrectly analyzes these factors, the Fund's investment
performance may be diminished compared to what it would have been without the
use of mortgage dollar rolls.

Short Sales Against the Box. The International Fund, the Value Fund, the Mid-Cap
Fund and the Emerging Markets Fund may sell securities "short against the box."
A short sale "against the box" means that at all times when the short position
is open, the Fund owns at least an equal amount of the securities, or securities
convertible into, or exchangeable without further consideration for, securities
of the same issue as the securities sold short. Short sales against the box are
typically used by sophisticated investors to defer recognition of capital gains
or losses.

- v -

<PAGE>

GE INSTITUTIONAL FUNDS

o Emerging Markets Fund
o Premier Growth Equity Fund
o Mid-Cap Growth Fund
o International Equity Fund
o Value Equity Fund
o U.S. Equity Fund
o S&P 500 Index Fund
o Strategic Investment Fund
o Income Fund
o Money Market Fund

For information contact your investment professional or call 1-800-493-3042

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN THE
STATEMENT OF ADDITIONAL INFORMATION INCORPORATED INTO THIS PROSPECTUS BY
REFERENCE IN CONNECTION WITH THE OFFERING OF SHARES OF GE INSTITUTIONAL FUNDS,
AND IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY GE INSTITUTIONAL FUNDS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, AN
OFFER MAY NOT LAWFULLY BE MADE.

<PAGE>
GE Institutional Funds (the "Trust") is an open-end management investment
company that offers ten diversified managed investment funds (each, a "Fund" and
collectively, the "Funds"), each of which has two classes of shares -- the
Service Class and the Investment Class. Each Fund has a discrete investment
objective that it seeks to achieve by following distinct investment policies.
This Prospectus describes the Service Class shares of the Funds.

The Service Class shares and the Investment Class shares are identical, except
as to the services offered, and the expenses borne, by each class. You may
obtain a copy of the prospectus describing the Investment Class shares free of
charge by calling the telephone number listed below or writing the Trust at the
address listed below.

o International Equity Fund's investment objective is long-term growth of
capital. The Fund seeks to achieve this objective by investing primarily in
foreign equity securities.

o U.S. Equity Fund's investment objective is long-term growth of capital. The
Fund seeks to achieve this objective by investing primarily in equity
securities of U.S. companies.

This Prospectus briefly sets forth certain information about the Funds and the
Trust, including shareholder servicing and distribution fees, that prospective
investors will find helpful in making an investment decision. Investors are
encouraged to read this Prospectus carefully and retain it for future reference.

GE INVESTMENT MANAGEMENT INCORPORATED
Investment Adviser and Administrator

Prospectus
September _____, 1997

TABLE OF CONTENTS

EXPENSE INFORMATION.........................................................1

INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES...............................3

CASH MANAGEMENT POLICIES - NON-MONEY MARKET FUNDS......................... 11

ADDITIONAL PERMITTED INVESTMENTS.......................................... 12

INVESTMENT RESTRICTIONS................................................... 15

MANAGEMENT OF THE TRUST....................................................20

PURCHASE OF SHARES ........................................................24

REDEMPTION OF SHARES.......................................................26

INVESTMENT SWITCHES........................................................28

NET ASSET VALUE............................................................28

DIVIDENDS, DISTRIBUTIONS AND TAXES.........................................29

CUSTODIAN AND TRANSFER AGENT...............................................30

DISTRIBUTOR................................................................30

ADDITIONAL MATTERS.........................................................31

3003 Summer Street
Stamford, Connecticut 06905
1-800-493-3042

<PAGE>

EXPENSE INFORMATION
- --------------------------------------------------------------------------------

Expenses are one of several factors to consider when investing in the Funds. The
following fee table and example are designed to assist you in understanding the
various costs and expenses that you will bear directly or indirectly as an
investor in the Service Class shares of a Fund. Shareholder Transaction Expenses
are fees charged directly to you when you buy or sell Service Class shares.
Annual Fund Operating Expenses are paid out of each Fund's assets and include
fees for portfolio management, maintenance of shareholder accounts, accounting
and other services.

Fee Table

Premier Interna- S&P Strategic
Emerging Growth Mid-Cap tional Value U.S. 500 Invest- Money
Markets Equity Growth Equity Equity Equity Index ment Income Market
Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Shareholder
Transaction
Expenses:
- ---------------------

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum Sales
Load Imposed on
Purchases of
Shares (as a
percentage of
offering price) ... None None None None None None None None None None

Maximum
Contingent
Deferred Sales
Load ..... None None None None None None None None None None

Purchase
Premium* (as a
percentage of
amount
invested) .... 1.25% .25% .40% .65% .25% .25% .25% .20% .10% None

Redemption Fee*
(as a percentage
of amount
redeemed) ..... 1.25% .25% .40% .65% .25% .25% .25% .20% .10% None

</TABLE>

- ----------
* Purchase premiums and redemption fees apply only to purchases and
redemptions that are not in-kind ("cash transactions") of $5 million or
more with respect to each of the Emerging Markets and International Equity
Funds and $10 million or more with respect to each of the other non-money
market Funds (defined below). Purchase premiums and redemption fees do not
apply to "Investment Switches," which are purchases or redemptions of a
Fund that are offset by corresponding purchases or redemptions of Service
Class shares of another Fund or the Investment Class shares of the same or
another Fund. Purchase premiums, redemption fees and Investment Switches
are discussed below under "Purchase of Shares," "Redemption of Shares" and
"Redemption of Shares -- Investment Switches," respectively.

-1-

<PAGE>

Premier Mid- Interna- S&P Strategic
Emerging Growth Cap tional Value U.S. 500 Invest- Money
Markets Equity Growth Equity Equity Equity Index ment Income Market
Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Annual Fund
Operating
Expenses (as of
percentage of
net assets):
- --------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum
Advisory and
Administration
Fees..... 1.05%* .55%* .55%* .75%* .55%* .55%* .15%* .45%* .35%* .25%*

Shareholder
Servicing and
Distribution
Fee** ..... .25% .25% .25% .25% .25% .25% .25% .25% .25% .25%

Other
Expenses ..... None None None None None None None None None None

Total Operating
Expenses ..... 1.30% .80% .80% 1.00% .80% .80% .40% .70% .60% .50%

</TABLE>

- ----------

** The .25% shareholder servicing and distribution fee is intended to
compensate GEIM, or enable GEIM to compensate other persons, for
expenditures made on behalf of each Fund, as discussed below under
"Investment Objectives and Management Policies."

The nature of the services provided to, and the advisory and administration fee
paid by, each Fund are described under "Management of the Trust." A Fund's
advisory and administration fee is intended to be a "unitary" fee that includes
any other operating expenses payable by a Fund, except for fees paid to the
Trust's independent Trustees, shareholder servicing and distribution fees,
brokerage fees and expenses that are not normal operating expenses of the Funds
(such as extraordinary expenses, interest and taxes). The amount shown as the
advisory and administration fee for a Fund reflects the highest fee payable, and
does not reflect that the fee decreases incrementally as Fund assets increase.
Because the Funds have only recently commenced operations, "Other Expenses" in
the table above are based on estimated amounts for the current fiscal year.
"Other Expenses" include only Trustees' fees payable to the Trust's independent
Trustees, brokerage fees and expenses that are not normal operating expenses of
the Funds. This amount is expected to be de minimus (less than .01%); therefore
"Other Expenses" are reflected as "None."

Example

-2-

<PAGE>

You would pay the following
expenses on a $1,000 investment,
assuming (1) a 5% annual return and You would pay the following
(2) redemption at the end expenses on the same investment, assuming
of the time periods shown: no redemption:
1 Year 3 Years 1 Year 3 Years
------ ------- ------ -------
<S> <C> <C> <C> <C>
Emerging Markets Fund ..... $38 $66 $26 $53
Premier Growth Equity Fund.... $13 $30 $11 $28
Mid-Cap Growth Fund.... $16 $33 $12 $29
International Equity Fund.... $23 $45 $17 $38
Value Equity Fund..... $13 $30 $11 $28
U.S. Equity Fund..... $13 $30 $11 $28
S&P 500 Index Fund.... $9 $18 $7 $15
Strategic Investment Fund.... $11 $26 $9 $24
Income Fund.... $8 $21 $7 $20
Money Market Fund.... $5 $16 $5 $16
</TABLE>

The above example is intended to assist you in understanding various costs and
expenses that an investor in the Service Class shares of a Fund will bear
directly or indirectly. Although the table assumes a 5% annual return, a Fund's
actual performance will vary and may result in an actual return that is greater
or less than 5%. The table assumes that any applicable purchase premiums and
redemption fees are charged to an investor, even though such premiums and
redemption fees are not applicable in all cases. The example should not be
considered to be a representation of past or future expenses of a Fund; actual
expenses may be greater or less than those shown.

INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
- --------------------------------------------------------------------------------

The Trust is a diversified, open-end management investment company that consists
of ten separate investment portfolios, each of which has two classes of shares
- -- the Service Class and the Investment Class. The Service Class shares differ
from the Investment Class shares in that an additional .25% shareholder
servicing and distribution fee is charged to each Fund with respect to Service
Class shares. This .25% fee is intended to compensate GEIM, or enable GEIM to
compensate other persons, for expenditures made on behalf of each Fund to obtain
certain shareholder services, including third-party record-keeping, transfer
agency, and ongoing services related to the maintenance of Service Class
shareholder accounts and to compensate GEIM, or enable GEIM to compensate other
persons, including GE Investment Services Inc. (the "Distributor"), for
providing certain services that are primarily intended to result in the sale of
Service Class shares of the Funds pursuant to a shareholder servicing and
distribution plan adopted in accordance with Rule 12b-1 under the Investment
Company Act of 1940, as amended (the "1940 Act"). The shareholder servicing and
distribution fee paid by the Service Class shares will cause such shares to have
a higher expense ratio and lower return than the Investment Class shares.

-3-

<PAGE>

the GE Funds are higher than those charged to investors in the corresponding
Funds of the Trust. You should evaluate the levels at which you intend to invest
and your individual shareholder services requirements to determine the class of
shares of the Funds or the GE Funds that best suit your needs at the lowest
level of fees.

Emerging Markets Fund

In addition, the Emerging Markets Fund may sell securities short against the box
and may engage in certain investments discussed below under "Additional
Permitted Investments."

International Equity Fund

-4-
<PAGE>

International Fund's assets invested in particular countries or regions of the
world will vary depending on political and economic conditions. The
determination of where an issuer is located will be made by reference to the
Country Identification Test, as set forth above, in "Investment Objectives and
Management Policies -- Emerging Markets Fund."

Mid-Cap Growth Fund

The Mid-Cap Fund may invest up to 35% of its assets in: (i) securities of
companies outside the capitalization range of the S&P 400 Index; (ii) foreign
securities, excluding, for purposes of this limitation, ADRs and securities of a
foreign issuer with a class of securities registered with the SEC and listed on
a U.S. national securities exchange ("U.S. Listed Securities") or traded on the
Nasdaq National Market or the

-5-
<PAGE>

Nasdaq SmallCap Market (collectively, "Nasdaq Traded Securities"); and (iii)
bonds, notes and debentures. The Mid-Cap Fund may sell securities short against
the box and engage in certain investments discussed below under "Additional
Permitted Investments."

Premier Growth Equity Fund

Value Equity Fund

-6-

<PAGE>

U.S. Equity Fund

In investing on behalf of the U.S. Equity Fund, GEIM seeks to produce a
portfolio that GEIM believes will have characteristics similar to the S&P 500
Index, by virtue of blending investments in both "value" and "growth"
securities. Since the U.S. Equity Fund's strategy seeks to combine these basic
elements, but is designed to select investments deemed to be the most attractive
within each category, GEIM believes that the strategy should be capable of
outperforming the U.S. equity market as reflected by the S&P 500 Index on a
total return basis.

S&P 500 Index Fund

The investment objective of the S&P 500 Index Fund is to provide growth of
capital and accumulation of income that corresponds to the investment return of
the S&P 500 Index. The Fund seeks to achieve this objective by investing in
common stocks comprising that Index. Standard and Poor's Corporation ("Standard
& Poor's" or "S&P") 1 chooses the 500 common stocks comprising the S&P 500 Index
on the basis of market values, industry diversification and other factors. Most
of the common stocks in the S&P 500 Index are issued by 500 of the largest
companies, in terms of the aggregate market value of their outstanding stock,
and such companies generally are listed on the New York Stock Exchange.
Additional common stocks that are not among the 500 largest market value stocks
are included in the S&P 500 Index for diversification purposes. S&P may, from
time to time, add common stocks to, or delete common stocks from, the S&P 500
Index.

- --------

1 S&P,(R) and S&P 500 (R) are trademarks of the McGraw-Hill Companies, Inc.
and have been licensed for use. The S&P 500 Index Fund is not sponsored,
endorsed, sold or promoted by S&P, and S&P makes no representation or
warranty, express or implied, to the investors of the Fund or any member of
the public regarding the advisability of investing in securities generally
or in this Fund particularly or the ability of the S&P 500 Index to track
general stock market performance.

-7-

<PAGE>
The S&P 500 Index Fund will attempt to achieve its objective by replicating the
total return of the S&P 500 Index. To the extent that it can do so consistent
with the pursuit of its investment objective, it will attempt to keep
transaction costs low and minimize portfolio turnover. To achieve its investment
objective, the S&P 500 Index Fund will purchase equity securities that reflect,
as a group, the total investment return of the S&P 500 Index. Like the S&P 500
Index, the S&P 500 Index Fund will hold both dividend paying and non- dividend
paying common stocks comprising the S&P 500 Index.

Strategic Investment Fund

-8-
<PAGE>

securities, ARMs, CMOs, government stripped mortgage related securities and
asset-backed and receivable-backed securities are subject to several risks,
including the prepayment of principal.

Income Fund

-9-
<PAGE>
Money Market Fund

The Money Market Fund may not invest more than 5% of its total assets in the
securities of any one issuer, except for U.S. Government Obligations and except
to the extent permitted under rules adopted by the SEC under the 1940 Act. In
addition, the Money Market Fund may not invest more than 5% of its total assets
in Eligible Securities that have not received the highest rating from the
Requisite NRSROs and comparable unrated securities ("Second Tier Securities"),
and may not invest more than the greater of $1,000,000 or 1% of its total assets
in the Second Tier Securities of any one issuer. The Money Market Fund may
invest more than 5% (but not more than 25%) of the then-current value of the
Fund's total assets in the securities of a single issuer for a period of up to
three business days, so long as (1) the securities either are rated by the
Requisite NRSROs in the highest short-term rating category or are securities of
issuers that have received such ratings with respect to other short-term debt
securities or are comparable unrated securities and (2) the Fund does not make
more than one such investment at any one time. Determinations of comparable
quality for purchases of unrated securities are made by GEIM in accordance with
procedures established by the Board of Trustees. The Money Market Fund invests
only in instruments that have (or, pursuant to regulations adopted by the SEC,
are deemed to have) remaining maturities of 13 months or less at the date of
purchase (except securities subject to repurchase agreements), determined in
accordance with a rule promulgated by the SEC. Up to 25% of the Money Market
Fund's total assets may be invested in foreign securities, excluding, for
purposes of this limitation, ADRs, U.S. Listed Securities and Nasdaq Traded
Securities. The Money Market Fund will maintain a dollar-weighted average
portfolio maturity of 90 days or less. The assets of the Money Market Fund are
valued on the basis of amortized cost, as described below under "Net Asset
Value." The Money Market Fund also may hold liquid Rule 144A Securities. (See
"Additional Permitted Investments - Illiquid Investments and Restricted
Securities") and engage in certain investments discussed below under "Additional
Permitted Investments."

INVESTMENTS IN DEBT SECURITIES
- --------------------------------------------------------------------------------

Each of the Premier Growth Fund, the U.S. Equity Fund, the International Fund,
the S&P 500 Index Fund and the Value Fund limits investment in debt securities
to those that are rated investment grade, except that each such Fund may invest
up to 5% of each such Fund's assets in securities rated lower than investment
grade. A security is considered investment grade if it is rated at the time of
purchase within the four highest grades assigned by S&P, Moody's or has received
an equivalent rating from another NRSRO or, if unrated, is deemed by GEIM to be
of comparable quality.

-10-
<PAGE>

deemed by GEIM to be of comparable quality. A description of S&P's and Moody's
ratings relevant to a Fund's investments is included as an Appendix to the
Statement of Additional Information.

CASH MANAGEMENT POLICIES - NON-MONEY MARKET FUNDS
- --------------------------------------------------------------------------------

(i) U.S. Government Obligations (described below);

(ii) debt obligations of banks, savings and loan institutions, insurance
companies and mortgage bankers;

(iii) commercial paper and notes, including those with variable and
floating rates of interest;

(iv) debt obligations of foreign branches of U.S. banks, U.S. branches of
foreign banks and foreign branches of foreign banks;

(v) debt obligations issued or guaranteed by one or more foreign
governments or any of their political subdivisions, agencies or
instrumentalities, including obligations of supra-national entities;

(vi) debt securities issued by foreign issuers; and

(vii) repurchase agreements and reverse repurchase agreements (see "Risk
Factors and Special Considerations -- Repurchase and Reverse
Repurchase Agreements" below for a further description).

-11-

<PAGE>

ADDITIONAL PERMITTED INVESTMENTS
- --------------------------------------------------------------------------------

In addition to the investments discussed above, some or all of the Funds may
invest in the types of securities or may engage in investment techniques and
strategies discussed below.

The types of U.S. Government Obligations in which the Funds may invest are
listed in the Statement of Additional Information.

-12-

<PAGE>

-13-
<PAGE>

Futures and Options on Futures. Each non-money market Fund may enter into
interest rate, financial and stock or bond index futures contracts or related
options, that are traded on a U.S. or foreign exchanges or traded on a board of
trade approved by the CFTC or in the over-the-counter market. The Funds would
engage in these transactions to hedge against the effects of changes in the
value of portfolio securities due to anticipated changes in interest rates
and/or market conditions, to gain market exposure for accumulating and residual
cash positions, for duration management, or when the transactions are
economically appropriate to the reduction of risks inherent in the management of
the Fund involved. No Fund will enter into a transaction involving futures and
options on futures for speculative purposes.

-14-

<PAGE>

Additional Investment Techniques. Each Fund may enter into securities
transactions on a when-issued or delayed-delivery basis and may lend its
portfolio securities.

INVESTMENT RESTRICTIONS

-15-

<PAGE>

Certain other investment restrictions adopted by the Trust with respect to the
Funds are described in the Statement of Additional Information.

Risk Factors and Special Considerations

Investing in the Funds involves risk factors and special considerations, such as
those described below.

Absence of Operating History. The Funds only recently commenced operations, and
therefore lack an operating history that shareholders may look to for purposes
of evaluating Fund performance.

-16-

<PAGE>

The market value of certain low-rated securities tends to be more sensitive to
individual corporate developments and changes in economic conditions than
higher-rated securities. In addition, low-rated securities generally are subject
to a greater risk that the issuer cannot meet principal and interest payments
when due (i.e., credit risk). Issuers of low-rated securities are often highly
leveraged and may not have access to more traditional methods of financing.
Accordingly, the ability of such issuers to service their debt obligations
during an economic downturn or during sustained periods of rising interest rates
may be impaired. These issuers tend to be more vulnerable to real or perceived
economic changes, political developments, new or proposed laws and adverse
publicity.

The market for low-rated securities may be thinner and less active than that for
higher-rated securities, which may adversely affect the price at which these
securities may be sold. Thinner markets may diminish a Fund's ability to obtain
accurate market quotations for purposes of valuing the portfolio securities and
calculating a Fund's net asset value.

-17-

<PAGE>

Currency Risks. The values of foreign investments are affected by changes in
currency rates or exchange control regulations. When a Fund holds a security
denominated in a local currency (rather than in U.S. dollars), it may convert
U.S. dollars into that local currency in order to purchase the security and
convert local currency back into dollars when the security is sold. The value of
the local currency relative to the U.S. dollar would affect the value of that
foreign security. For example, if the local currency gains strength against the
U.S. dollar, the value of the foreign security increases. Conversely, if the
local currency weakens against the U.S. dollar, the value of the foreign
security would decline. U.S. dollar denominated securities of foreign issuers
also may be affected by currency risk.

Currency exchange rates generally are determined by the forces of supply and
demand in the foreign exchange markets and the relative merits of investments in
different countries as seen from an international perspective. Currency exchange
rates can also be affected unpredictably by intervention by U.S. or foreign
governments or central banks or by currency controls or political developments
in the United States or abroad.

-18-

<PAGE>
At the time of issuance, issuers of Municipal Obligations obtain opinions from
bond counsel addressing the validity of the Obligations and whether the interest
on such Obligations is exempt from Federal income taxes. Neither the Trust nor
GEIM will review the proceedings relating to the issuance of Municipal
Obligations or the basis for opinions of counsel. The U.S. Government has
enacted various laws that have restricted or diminished the income tax exemption
on various types of Municipal Obligations and may pass similar laws in the
future.

-19-
<PAGE>

and foreign government securities and currencies. Certain derivative securities
can, under certain circumstances, significantly increase an investor's exposure
to market and other risks.

Instruments and Strategies Involving Special Risks. Certain instruments in which
the Funds can invest and certain investment strategies that the Funds may employ
could expose the Funds to various risks and special considerations. The
instruments presenting risks to a Fund that holds the instruments are: Rule 144A
Securities, depositary receipts, debt obligations of supra-national agencies,
securities of other investment funds, municipal leases, floating and variable
rate instruments, participation interests, zero coupon obligations, Municipal
Obligation components, custody receipts, mortgage related securities, government
stripped mortgage related securities, and asset-backed and receivable-backed
securities. Among the risks that some but not all of these instruments involve
are lack of liquid secondary markets and the risk of prepayment of principal.
The investment strategies involving special risks to some or all of the Funds
are: engaging in when-issued or delayed-delivery securities transactions,
lending portfolio securities and selling securities short against the box. Among
the risks that some but not all of these strategies involve are increased
exposure to fluctuations in market value of the securities and certain credit
risks. See "Appendix--Further Information: Certain Investment Techniques and
Strategies" for a more complete description of these instruments and strategies.

Portfolio Transactions and Turnover

MANAGEMENT OF THE TRUST
- --------------------------------------------------------------------------------

Board of Trustees

Investment Adviser and Administrator

-20-

<PAGE>

GE Investments provides investment management services to various institutional
accounts with total assets as of June 30, 1997, in excess of $64 billion, of
which more than $12 billion was invested in mutual funds. GEIM or GEIC serves as
the investment adviser to the following entities:

-21-

<PAGE>

Fee Structure

Name of Fund Average Daily Net Assets of Fund Annual Rate Percentage (%)
- ------------ -------------------------------- --------------------------

<S> <C> <C>
Emerging Markets Fund First $50 million 1.05
Over $50 million .95

- ------------------------------------------ ------------------------------------------ ------------------------------------------
International Equity Fund First $25 million .75
Next $50 million .65
Over $75 million .55

- ------------------------------------------ ------------------------------------------ ------------------------------------------
Mid-Cap Fund First $25 million .55
Premier Fund Growth Next $25 million .45
Value Equity Fund Over $50 million .35
U.S. Equity Fund
- ------------------------------------------ ------------------------------------------ ------------------------------------------
S&P 500 Index Fund All assets .15
- ------------------------------------------ ------------------------------------------ ------------------------------------------
Strategic Investment Fund First $25 million .45
Next $25 million .40
Over $50 million .35
- ------------------------------------------ ------------------------------------------ ------------------------------------------
Income Fund First $25 million .35
Next $25 million .30
Next $50 million .25
Over $100 million .20
- ------------------------------------------ ------------------------------------------ ------------------------------------------
Money Market Fund First $25 million .25
Next $25 million .20
Next $50 million .15
Over $100 million .10

</TABLE>

From time to time, GEIM may waive or reimburse advisory or administrative fees
paid by a Fund.

Investment Sub-Adviser

Portfolio Management

-22-

<PAGE>

Expenses of the Funds

Each Fund's Service Class bears its own expenses, which generally include all
costs not specifically borne by GEIM. Specifically, expenses borne by a Fund
include: investment advisory and administration fees; shareholder servicing and
distribution fees; fees paid to members of the Trust's Board of Trustees who are
not affiliated with GEIM or any of its affiliates; fees for necessary brokerage
services; and expenses that are not normal operating expenses of the Funds (such
as extraordinary expenses, interest and taxes). GEIM pays any fees and expenses
in excess of its advisory and administration fee that are not borne by the
Funds. The annual fees payable with respect to each Fund are intended to
compensate GEIM for its advisory and administration services.

The Trust has adopted a Shareholder Servicing and Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act with respect to each Fund. Under the
Plan, the Trust will pay GEIM, with respect to the Service Class shares of a
Fund, fees for shareholder and distribution services provided to that class of
shares at an annual rate of .25% of the value of the average daily net assets of
such Fund attributable to the Service Class shares. Fees to be paid with respect
to the Funds under the Plan will be calculated daily and paid monthly.

-23-

<PAGE>

The annual fees payable with respect to the Service Class shares of a Fund are
intended to compensate GEIM, or enable GEIM to compensate other persons
("Service Providers"), for providing ongoing servicing and/or maintenance of the
accounts of shareholders of the Fund ("Shareholder Services") and to compensate
GEIM, or enable GEIM to compensate Service Providers, including any distributor
of shares of the Fund, for providing services that are primarily intended to
result in, or that are primarily attributable to, the sale of shares of the Fund
("Selling Services"). Shareholder Services means all forms of shareholder
liaison services, including, among other things, providing Service Class
shareholders with one or more of the following: (i) information on their
investments; (ii) general information regarding investing in mutual funds; (iii)
periodic newsletters containing materials relating to the Fund or to investments
in general in mutual funds; (iv) periodic financial seminars designed to assist
in the education of shareholders with respect to mutual funds generally and the
Fund specifically; (v) access to a telephone inquiry center relating to the
Fund; (vi) sub-accounting and sub-account maintenance, servicing and transaction
processing and (vii) other similar services not otherwise required to be
provided by the Trust's custodian or transfer agent. Selling Services include,
but are not limited to, the printing and distribution to prospective investors
in the Fund of prospectuses and statements of additional information that are
used in connection with sales of the Service Class shares of the Fund; the
preparation, including printing and distribution of sales literature and media
advertisements relating to the Service Class shares of a Fund; and distributing
Service Class shares of the Fund. In providing compensation for Selling Services
in accordance with the Plan, GEIM is expressly authorized: (i) to make, or cause
to be made, payments reflecting an allocation of overhead and other office
expenses related to the distribution of the Service Class shares of the Fund;
(ii) to make, or cause to be made, payments to, or provide for the reimbursement
of expenses of, persons who provide support services in connection with the
distribution of the Service Class shares of the Fund; or (iii) to make, or cause
to be made, payments to financial intermediaries who have sold Service Class
shares of the Fund.

Payments under the Plan are not tied exclusively to the expenses for shareholder
servicing and distribution expenses actually incurred by GEIM or any Service
Provider, and the payments may exceed expenses actually incurred by a Service
Provider. The Trust's Board of Trustees evaluates the appropriateness of the
Plan and its payment terms on a continuing basis and in doing so considers all
relevant factors, including the types and extent of Shareholder Services
provided by GEIM and/or Service Providers and the amounts GEIM and/or Service
Providers receive under the Plan.

PURCHASE OF SHARES
- --------------------------------------------------------------------------------

Purchasing Shares - General Information

The Distributor offers Service Class shares on a continuous basis. A purchase
order is processed at the net asset value next determined after the order (or
wire, if applicable) has been received and accepted by State Street, the Trust's
transfer agent. For a description of the manner of calculating a Fund's net
asset value, see "Net Asset Value." Shares are sold without the imposition of a
sales charge. However, a purchase premium (discussed below) may be imposed on
cash transactions.

Minimum Investment Requirement

The minimum initial investment in each Fund is $35 million for each investor or
group of related investors. Related investors are investors that are affiliated
persons of each other within the meaning of the 1940 Act. There is no minimum
investment requirement for subsequent purchases. This minimum investment is
waived for each investor or group of related investors (i) that has invested at
least $100 million in one or more investment portfolios or accounts that are
advised by GEIM and/or GEIC, provided that at least $35 million of this $100
million amount is invested in the Trust or (ii) that has invested at least $5
billion in one or more investment portfolios or accounts that are advised by
GEIM and/or GEIC.

-24-
<PAGE>

required minimum amount within the 13-month period, this investment in Service
Class shares will be exchanged for Class A shares of a corresponding GE Fund, if
a corresponding GE Fund exists and is operational. Currently, the following
Funds have corresponding, operational GE Funds: the Premier Growth Fund, the
U.S. Equity Fund, the International Fund, the Value Fund, the Strategic Fund,
the Mid-Cap Fund, the Income Fund and the Money Market Fund. If there is no
corresponding GE Fund at the time an investment would otherwise be exchanged,
then the Service Class shares will be redeemed and the proceeds distributed
directly to the investor at the applicable address of record. Redemption fees
are charged in connection with such exchanges and redemptions.

Eligible Investors

The Distributor offers Service Class shares to certain investors that meet the
minimum investment requirements. The Trust was designed to appeal to
institutional investors such as corporations, foundations, endowments and trusts
established to fund employee benefit plans of various types as well as
charitable, religious and educational institutions. The Trust expects that most
of the time each Fund will have relatively few shareholders (as compared with
most mutual funds) but that these shareholders will invest substantial amounts
in a Fund. Typical institutional investors may include banks, insurance
companies, trusts that fund qualified pension and profit-sharing plans (Section
401 of the Code), trusts that fund government employer non-qualified deferred
compensation obligations (Section 457 of the Code), trusts that fund charitable,
religious and educational institutions (Section 501(c)(9) of the Code),
non-government employers seeking to fund non-qualified deferred compensation
obligations, and investment companies that are not affiliated persons of the
Trust (or affiliated persons of such persons).

How to Open an Account

GE Institutional Funds
P.O. Box 120065
Stamford, CT 06912-0065

For overnight package delivery:

GE Institutional Funds
c/o National Financial Data Services Inc.
P.O. Box 419631
Kansas, MO 64141-6631

How to Buy Shares

-25-

<PAGE>

Payment for orders that are not accepted will be returned to you promptly. Your
financial institution may charge a fee for wiring your account.

Purchases In-Kind

Investors may purchase Service Class shares in amounts of $5 million or more
with either cash or investment securities acceptable to the appropriate Fund.
The particular investment securities acceptable to a Fund may vary over time and
the Trust does not guarantee that any particular investment securities will be
accepted at any particular time or at all. Investors interested in purchasing
Service Class shares with investment securities should contact their Sales
Representative or the Distributor for information about which securities a
particular Fund will accept. The Trust reserves the right to require the
Distributor to suspend the offering of Service Class shares of the Emerging
Markets Fund or International Equity Fund for cash in amounts above $5 million
and of the other non-Money Market Funds in amounts above $10 million.

Purchase Premiums

Both the Service Class shares and the Investment Class shares have the same
purchase premium, which is assessed on the entire amount purchased. The premium
currently in effect for each non-money market Fund is as follows:

As a Percentage of
Net Amount Purchased
--------------------

Emerging Markets Fund............................... 1.25%
Premier Growth Equity Fund.......................... .25%
Mid-Cap Growth Fund................................. .40%
International Equity Fund........................... .65%
Value Equity Fund................................... .25%
U.S. Equity Fund.................................... .25%
S&P 500 Index Fund.................................. .25%
Strategic Investment Fund.......................... .20%
Income Fund......................................... .10%

REDEMPTION OF SHARES
- --------------------------------------------------------------------------------

-26-

<PAGE>

Redemptions through an Authorized Firm

Redemption by Mail

Signature Guarantees

Involuntary Exchanges or Redemptions

By investing in the Trust, you consent to involuntary exchanges and redemptions.
This means that if the value of your investment in the Funds falls below the
minimum requirements discussed above for more than 120 days because of
redemptions (and not because of market fluctuations or Investment Switches), the
Trust will involuntarily exchange your Service Class shares for Class A shares
of a corresponding GE Fund if such a corresponding GE Fund exists and is
operational and you meet the eligibility requirements for such fund. If no such
GE Funds portfolio exists and is operational or you do not meet the eligibility
requirements for such fund, the Trust will involuntarily redeem your account.
The Trust will effect such exchange or involuntary redemption 30 days after the
Trust has sent you written notice, unless you increase your account to the
required minimum within such period.

Distributions in-Kind

-27-

<PAGE>

disposing of those securities. A redemption fee will not be charged on
distributions in-kind. In addition, the Trust will redeem an investor's shares
in-kind at the request of that investor.

Redemption Fees

Both the Service Class shares and the Investment Class shares have the same
redemption fee. The redemption fee is assessed on the entire amount of shares
being redeemed, and the fee currently in effect for each Fund is as follows:

As a Percentage of
Net Amount Redeemed
-------------------

Emerging Markets Fund................................. 1.25%
Premier Growth Equity Fund ........................... .25%
Mid-Cap Growth Fund................................... .40%
International Equity Fund............................. .65%
Value Equity Fund..................................... .25%
U.S. Equity Fund...................................... .25%
S&P 500 Index Fund.................................... .25%
Strategic Investment Fund............................. .20%
Income Fund........................................... .10%

INVESTMENT SWITCHES
- --------------------------------------------------------------------------------

You may exchange Service Class shares of a Fund for Service Class shares of
another Fund or Investment Class shares of the same or another Fund ("Investment
Switches"). Such Investment Switches are permitted provided the Fund is an
option available to you, you meet the minimum investment requirement for such
Fund and the shares of such Fund may legally be sold in your state of residence.
Purchase premiums and redemption fees will not be charged on Investment
Switches.

NET ASSET VALUE
- --------------------------------------------------------------------------------

-28-

<PAGE>

investment. The Trust will seek to maintain the Money Market Fund's net asset
value at $1.00 per share for purposes of purchases and redemptions, although no
assurance can be given that the Trust will be able to do so on a continuous
basis.

Securities that are primarily traded on a foreign exchange generally will be
valued for purposes of calculating a Fund's net asset value at the preceding
closing value of the securities on the exchange, except that when an occurrence
subsequent to the time a value was so established is likely to have changed that
value, the fair market value of those securities will be determined by
consideration of other factors by or under the direction of the Board. Trading
in foreign markets may not take place on every NYSE business day. In addition,
trading may take place in various foreign markets on Saturdays or on other days
when the NYSE is not open and on which a Fund's net asset value is not
calculated. Therefore, such calculation does not take place contemporaneously
with the determination of the prices of many of the portfolio securities used in
such calculation and the value of a Fund's portfolio may be significantly
affected on days when shares of the Fund may not be purchased or redeemed.

DIVIDENDS, DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------

Dividends and Distributions

Dividends and capital gain distributions paid to you will be automatically
reinvested in shares of the same class. There is no purchase premium charged
with respect to reinvested dividends.

The Trust will send you written confirmations relating to the automatic
reinvestment of daily dividends within five days following the end of each
quarter for the Income Fund, and within five days following the end of each
month for the Money Market Fund. Distributions of any net realized long-term and
short-term capital gains earned by a Fund will be made annually. Earnings of the
Income Fund and the Money Market Fund for Saturdays, Sundays and holidays will
be declared as dividends on the business day immediately preceding the Saturday,
Sunday or holiday. As a result of the different service fees applicable to the
Investment Class shares, dividends and distributions will be higher for the
Investment Class shares. See "Fee Table" and "Purchase of Shares."

Taxes

-29-

<PAGE>

Dividends and distributions paid by the Income Fund and the Money Market Fund,
and distributions of capital gains paid by all the Funds, will not qualify for
the Federal dividends-received deduction for corporations. Dividends paid by the
Premier Growth Fund, the U.S. Equity Fund, the Mid-Cap Fund, the Strategic Fund,
the S&P 500 Index Fund, the International Fund, the Emerging Markets Fund and
the Value Fund, to the extent derived from dividends attributable to certain
types of stock issued by U.S. corporations, will qualify for the
dividends-received deduction for corporations. Some states, if certain asset and
diversification requirements are satisfied, permit shareholders to treat their
portions of a Fund's dividends that are attributable to interest on U.S.
Treasury securities and certain U.S. Government Obligations as income that is
exempt from state and local income taxes.

Statements regarding the tax status of income dividends and capital gains
distributions will be mailed to you on or before January 31st of each year.

CUSTODIAN AND TRANSFER AGENT
- --------------------------------------------------------------------------------

DISTRIBUTOR
- --------------------------------------------------------------------------------

-30-

<PAGE>

ADDITIONAL MATTERS
- --------------------------------------------------------------------------------

As issued, shares of a Fund will be fully paid and non-assessable. Shares are
freely transferable and have no preemptive, subscription or conversion rights.
Each of the Service Class and the Investment Class represents an identical
interest in a Fund's investment portfolio. As a result, the Classes have the
same rights, privileges and preferences, except with respect to: (1) the
designation of each Class; (2) the sales arrangement; (3) the expenses allocable
exclusively to each Class; and (4) voting rights on matters exclusively
affecting a single Class. The Board of Trustees does not anticipate that there
will be any conflicts among the interests of the holders of the two Classes. The
Trustees, on an ongoing basis, will consider whether any conflict exists and, if
so, take appropriate action. Certain aspects of the shares may be changed, upon
notice to Fund shareholders, to satisfy certain tax regulatory requirements, if
the Trust's Board of Trustees deems the change necessary.

Shareholders who satisfy certain criteria will be assisted by the Trust in
communicating with other shareholders in seeking the holding of the meeting.

-31-

<PAGE>

APPENDIX

FURTHER INFORMATION: CERTAIN INVESTMENT TECHNIQUES AND STRATEGIES

Strategies Available to All Funds

Strategies Available to Some But Not All Funds

-i-

<PAGE>

-ii-

<PAGE>

-iii-

<PAGE>

-iv-

<PAGE>

-v-

<PAGE>

GE INSTITUTIONAL FUNDS

For information contact your investment professional or call 1-800-493-3042.

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

September __, 1997

GE INSTITUTIONAL FUNDS

3003 Summer Street, Stamford, Connecticut 06905
For information, call 1-800-493-3042

* Emerging Markets Fund * U.S. Equity Fund
* Premier Growth Equity Fund * S&P 500 Index Fund
* Mid-Cap Growth Fund * Strategic Investment Fund
* International Equity Fund * Income Fund
* Value Equity Fund * Money Market Fund

This Statement of Additional Information supplements the information contained
in, and should be read in conjunction with, the current Prospectuses of GE
Institutional Funds (the "Trust"), each dated September __, 1997. Copies of the
Prospectuses may be obtained without charge by calling the Trust at the
telephone number listed above. Information regarding the status of shareholder
accounts may be obtained by calling the Trust at the telephone number listed
above or by writing to the Trust at P.O. Box 120065, Stamford, CT 06912-0065.
This Statement of Additional Information, although not a prospectus, is
incorporated in its entirety by reference into each Prospectus. Terms that are
defined in the Prospectuses shall have the same meanings in this Statement of
Additional Information.

<PAGE>

Contents

Page

Investment Objectives and Management Policies.............................1
Investment Restrictions..................................................12
Management of the Trust..................................................15
Compensation Table.......................................................19
Redemption of Shares.....................................................25
Investment Switches .....................................................26
Net Asset Value..........................................................26
Dividends, Distributions and Taxes.......................................28
The Funds' Performance...................................................31
Performance Calculation..................................................31
Principal Stockholders...................................................35
Additional Information...................................................36
Counsel..................................................................38
Independent Accountants..................................................38
Financial Statements.....................................................38
Appendix................................................................A-1

<PAGE>

INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES

The Prospectuses dated September __, 1997 discuss the investment objectives
and policies of the following ten managed investment funds currently offered by
the Trust: Emerging Markets Fund, Premier Growth Equity Fund (the "Premier
Growth Fund"), Mid-Cap Growth Fund (the "Mid-Cap Fund"), International Equity
Fund (the "International Fund"), Value Equity Fund (the "Value Fund"), U.S.
Equity Fund, S&P 500 Index Fund1, Strategic Investment Fund (the "Strategic
Fund"), Income Fund, and Money Market Fund. Supplemental information is set out
below concerning certain of the securities and other instruments in which the
Funds may invest, the investment policies and strategies that the Funds may
utilize and certain risks attendant to those investments, policies and
strategies.

Strategies Available to All Funds

When-Issued and Delayed-Delivery Securities. When-issued and
delayed-delivery securities transactions involve the purchase of a security with
payment and delivery at a future date. When a Fund engages in when-issued or
delayed-delivery securities transactions, it relies on the other party to
consummate the trade. Failure of the seller to do so may result in the Fund's
incurring a loss or missing an opportunity to obtain a price considered to be
advantageous.

- ----------

1. The S&P 500 Index Fund is not sponsored, endorsed, sold or promoted by
Standard & Poor's Corporation ("S&P"). S&P makes no representation or
warranty, express or implied, to the investors of the Fund or any member of
the public regarding the advisability of investing in securities generally
or in this Fund particularly or the ability of the S&P 500 Index to track
general stock market performance. S&P's only relationship to the Fund is
the licensing of certain trademarks and trade names of S&P and of the S&P
500 Index which is determined, composed and calculated by S&P without
regard to the Fund. S&P has no obligation to take the needs of the Fund or
the investors in the Fund into consideration in determining, composing or
calculating the S&P 500 Index. S&P is not responsible for and has not
participated in the determination of the prices or composition of the S&P
500 Index Fund or the timing of the issuance or sale of the shares of that
Fund. S&P has no obligation or liability in connection with the
administration, marketing or trading of the Fund.

S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500 INDEX
OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY ERRORS,
OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR IMPLIED,
AS TO THE RESULTS TO BE OBTAINED BY THE FUND, INVESTORS IN THE FUND, OR ANY
OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR ANY DATA INCLUDED
THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH
RESPECT TO THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY
OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL,
PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF
NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

<PAGE>

Securities of Other Investment Companies. A Fund other than the Money
Market Fund (each, a "non-money market Fund") and the U.S. Equity Fund may
invest in securities of other investment companies to the extent permitted under
the Investment Company Act of 1940, as amended (the "1940 Act"). Presently,
under the 1940 Act, a non-money market Fund may hold securities of another
investment company in amounts which (a) do not exceed 3% of the total
outstanding voting stock of such company, (b) do not exceed 5% of the value of
the Fund's total assets and (c) when added to all other investment company
securities held by the Fund, do not exceed 10% of the value of the Fund's total
assets. Each non-money market Fund may invest up to 25% of its assets in the GEI
Short-Term Investment Fund (the "Investment Fund"), an investment Fund advised
by GEIM. The Investment Fund was specifically created to serve as a vehicle for
the collective investment of cash balances of the investment portfolios of other
management investment companies and accounts advised by either GEIM or its
affiliate, General Electric Investment Corporation ("GEIC"). The Investment Fund
is not considered an investment in another investment company for purposes of
this restriction.

Lending Portfolio Securities. If a Fund loans its portfolio securities, it
will adhere to the following conditions: (a) the Fund must receive at least 100%
cash collateral or equivalent securities from the borrower; (b) the borrower
must increase the collateral whenever the market value of the securities loaned
rises above the level of the collateral; (c) the Fund must be able to terminate
the loan at any time; (d) the Fund must receive reasonable interest on the loan,
as well as any dividends, interest or other distributions on the loaned
securities, and any increase in market value; (e) the Fund may pay only
reasonable custodian fees in connection with the loan; and (f) voting rights on
the loaned securities may pass to the borrower except that, if a material event
adversely affecting the investment in the loaned securities occurs, the Trust's
Board of Trustees must terminate the loan and regain the right to vote the
securities. From time to time, a Fund may pay a part of the interest earned from
the investment of collateral received for securities loaned to the borrower
and/or a third party that is unaffiliated with the Fund and is acting as a
"finder."

Bank Obligations. Domestic commercial banks organized under Federal law are
supervised and examined by the U.S. Comptroller of the Currency and are required
to be members of the Federal Reserve System and to be insured by the Federal
Deposit Insurance Corporation ("FDIC"). Foreign branches of U.S. banks and
foreign banks are not regulated by U.S. banking authorities and generally are
not bound by mandatory reserve requirements, loan limitations, accounting,
auditing and financial reporting standards comparable to those binding U.S.
banks. Obligations of foreign branches of U.S. banks and foreign banks are
subject to the risks associated with investing in foreign securities generally.
These obligations entail risks that are different from those of investments in
obligations in domestic banks, including foreign economic and political
developments outside the United States, foreign governmental restrictions that
may adversely affect payment of principal and interest on the obligations,
foreign exchange controls and foreign withholding or other taxes on income.

<PAGE>

A U.S. branch of a foreign bank may or may not be subject to reserve
requirements imposed by the Federal Reserve System or by the state in which the
branch is located if the branch is licensed in that state. In addition, branches
licensed by the Comptroller of the Currency and branches licensed by certain
states ("State Branches") may or may not be required to: (a) pledge to the
regulator by depositing assets with a designated bank within the state, an
amount of its assets equal to 5% of its total liabilities; and (b) maintain
assets within the state in an amount equal to a specified percentage of the
aggregate amount of liabilities of the foreign bank payable at or through all of
its agencies or branches within the state. The deposits of State Branches may
not necessarily be insured by the FDIC. In addition, less information may be
available to the public about a U.S. branch of a foreign bank than about a U.S.
bank.

Ratings as Investment Criteria. The ratings of nationally recognized
statistical rating organizations ("NRSROs") such as S&P or Moody's Investors
Service, Inc. ("Moody's") represent the opinions of those organizations as to
the quality of securities that they rate. These ratings are relative, subjective
and are not absolute standards of quality. Although GEIM uses these ratings as
initial criteria for the selection of the Funds' portfolio securities, GEIM also
relies upon its own analysis to evaluate potential investments.

A Fund may purchase a security that subsequently ceases to be rated or is
downgraded to a rating below the minimum required for purchase by the Fund.
Although neither event will require a non-money market Fund to sell the
security, GEIM will consider the event in its determination of whether the Fund
should continue to hold the security. In the event of a lowering of the rating
of a security held by the Money Market Fund or a default by the issuer of the
security, that Fund will dispose of the security as soon as practicable, unless
the Trust's Board of Trustees determines that disposal of the security would not
be in the best interests of the Fund. To the extent that an NRSRO's ratings
change as a result of a change in the NRSRO or its rating system, the Funds will
attempt to use comparable ratings as standards for their investments in
accordance with their investment objectives and policies.

Supra-national Agencies. Supra-national agencies include: the International
Bank for Reconstruction and Development (commonly referred to as the World
Bank), which was chartered to finance development projects in developing member
countries; the European Community, which is a twelve-nation organization engaged
in cooperative economic activities; the European Coal and Steel Community, which
is an economic union of various European nations' steel and coal industries; and
the Asian Development Bank, which is an international development bank
established to lend funds, promote investment and provide technical assistance
to member nations in the Asian and Pacific regions. Debt obligations of
supra-national agencies are not considered U.S. Government Obligations and are
not supported, directly or indirectly, by the U.S. Government.

<PAGE>

Strategies Available to Some But Not All Funds

Covered Option Writing. The Funds with option-writing authority will write
(i.e., sell) only options that are covered. A call option written by a Fund will
be deemed covered (a) if the Fund owns the securities underlying the call or has
an absolute and immediate right to acquire those securities without additional
cash consideration upon conversion or exchange of other securities held in its
portfolio, (b) if the Fund holds a call at the same exercise price for the same
exercise period and on the same securities as the call written, (c) in the case
of a call option on a stock index, if the Fund owns a portfolio of securities
substantially replicating the movement of the index underlying the call option,
or (d) if at the time the call is written, an amount of cash, U.S. Government
Obligations or other liquid assets equal to the fluctuating market value of the
optioned securities, is segregated with the Trust's custodian or with a
designated sub-custodian. A put option will be deemed covered (a) if, at the
time the put is written, an amount of cash, U.S. Government Obligations or other
liquid assets, having a value at least equal to the exercise price of the
underlying securities is segregated with the Trust's custodian or with a
designated sub-custodian, or (b) if the Fund continues to own an equivalent
number of puts of the same "series" (that is, puts on the same underlying
securities having the same exercise prices and expiration dates as those written
by the Fund), or an equivalent number of puts of the same "class" (that is, puts
on the same underlying securities) with exercise prices greater than those that
it has written (or if the exercise prices of the puts it holds are less than the
exercise prices of those it has written, the difference is segregated with the
Trust's custodian or with a designated sub-custodian).

The principal reason for writing covered call options on a securities
portfolio is to attempt to make more money from the receipt of premiums than
would be realized on the securities alone. In return for a premium, the writer
of a covered call option forfeits the right to any appreciation in the value of
the underlying security above the strike price for the life of the option (or
until a closing purchase transaction can be effected). Nevertheless, the call
writer retains the risk of a decline in the price of the underlying security.
Similarly, the principal reason for writing covered put options is to realize
income in the form of premiums. The writer of a covered put option accepts the
risk of a decline in the price of the underlying security. The size of the
premiums that a Fund may receive may be adversely affected as new or existing
institutions, including other investment companies, engage in or increase their
option-writing activities.

Options written by a Fund will normally have expiration dates between one
and nine months from the date written. The exercise price of the options may be
below, equal to or above the market values of the underlying securities at the
times the options are written. The exercise prices relative to the market is
referred to as "in-the-money," "at-the-money" and "out-of-the-money,"
respectively. In-the-money options are those where the current market price is
above the strike price for calls and below it for puts. At-the-money options are
those where the current price and the strike price are the same.
Out-of-the-money options are those whose strike price is higher than its current
market value in the case of a call, or lower in the case of a put.

<PAGE>

So long as the obligation of a Fund as the writer of an option continues,
the Fund may be assigned an exercise notice by the broker-dealer through which
the option was sold, requiring the Fund to deliver, in the case of a call, or
take delivery of, in the case of a put, the underlying security against payment
of the exercise price. This obligation terminates when the option expires or the
Fund effects a closing purchase transaction. A Fund can no longer effect a
closing purchase transaction with respect to an option once it has been assigned
an exercise notice. To secure its obligation to deliver the underlying security
when it writes a call option, or to pay for the underlying security when it
writes a put option, a Fund will be required to deposit in escrow the underlying
security or other assets in accordance with the rules of the Options Clearing
Corporation (the "Clearing Corporation") and of the securities exchange on which
the option is written.

An option position may be closed out only if a secondary market exists for
an option of the same series on a recognized securities exchange or in the
over-the-counter market. In light of the need for a secondary market in which to
close an option position, the Funds are expected to purchase only call or put
options issued by the Clearing Corporation. GEIM expects that the Funds will
write options, other than those on U.S. Government Obligations, only on national
securities exchanges. Options on U.S. Government Obligations may be written by
the Funds in the over-the-counter market.

A Fund may realize a profit or loss upon entering into closing
transactions. When a Fund has written an option, it will realize a profit if the
cost of the closing purchase transaction is less than the premium received upon
writing the original option; the Fund will incur a loss if the cost of the
closing purchase transaction exceeds the premium received upon writing the
original option. When a Fund has purchased an option and engages in a closing
sale transaction, whether the Fund realizes a profit or loss will depend upon
whether the amount received in the closing sale transaction is more or less than
the premium the Fund initially paid for the original option plus the related
transaction costs.

Stock Index Options. Certain Funds may purchase and write put and call
options on stock indexes or stock index futures contracts that are traded on a
U.S. exchange or board of trade or a foreign exchange, to the extent permitted
under rules and interpretations of the Commodity Futures Trading Commission
("CFTC"), as a hedge against changes in market conditions and interest rates,
and for duration management, and may enter into closing transactions with
respect to those options to terminate existing positions. A stock index
fluctuates with changes in the market values of the stocks included in the
index. Stock index options may be based on a broad or narrow market index or on
an industry or market segment.

The delivery requirements of options on stock indexes differ from options
on stock. Unlike a stock option, which contemplates the right to take or make
delivery of stock at a specified price, an option on a stock index gives the
holder the right to receive a cash "exercise settlement amount" equal to (a) the
amount, if any, by which the fixed exercise price of the option exceeds (in the
case of a put) or is less than (in the case of a call) the closing value of the

<PAGE>

underlying index on the date of exercise, multiplied by (b) a fixed "index
multiplier." Receipt of this cash amount will depend upon the closing level of
the stock index upon which the option is based being greater than, in the case
of a call, or less than, in the case of a put, the exercise price of the option.
The amount of cash received will be equal to the difference between the closing
price of the index and the exercise price of the option expressed in dollars
times a specified multiple. The writer of the option is obligated, in return for
the premium received, to make delivery of this amount. The writer may offset its
position in stock index options prior to expiration by entering into a closing
transaction on an exchange or the purchaser may allow the option to expire
unexercised.

The effectiveness of purchasing or writing stock index options as a hedging
technique will depend upon the extent to which price movements in the portion of
a securities portfolio being hedged correlate with price movements of the stock
index selected. Because the value of an index option depends upon movements in
the level of the index rather than the price of a particular stock, whether a
Fund realizes a gain or loss from the purchase or writing of options on an index
depends upon movements in the level of stock prices in the stock market
generally or, in the case of certain indexes, in an industry or market segment,
rather than movements in the price of a particular stock. As a result,
successful use by a Fund of options on stock indexes is subject to GEIM's
ability to predict correctly movements in the direction of the stock market
generally or of a particular industry. This ability contemplates different
skills and techniques from those used in predicting changes in the price of
individual stocks.

Over-the-Counter ("OTC") Options. The Funds may purchase OTC or dealer
options or sell covered OTC options. Unlike exchange-listed options where an
intermediary or clearing corporation, such as the Clearing Corporation, assures
that all transactions in such options are properly executed, the responsibility
for performing all transactions with respect to OTC options rests solely with
the writer and the holder of those options. A listed call option writer, for
example, is obligated to deliver the underlying stock to the clearing
organization if the option is exercised, and the clearing organization is then
obligated to pay the writer the exercise price of the option. If a Fund were to
purchase a dealer option, however, it would rely on the dealer from whom it
purchased the option to perform if the option were exercised. If the dealer
fails to honor the exercise of the option by the Fund, the Fund would lose the
premium it paid for the option and the expected benefit of the transaction.

Listed options generally have a continuous liquid market while dealer
options have none. Consequently, a Fund will generally be able to realize the
value of a dealer option it has purchased only by exercising it or reselling it
to the dealer who issued it. Similarly, when a Fund writes a dealer option, it
generally will be able to close out the option prior to its expiration only by
entering into a closing purchase transaction with the dealer to which the Fund
originally wrote the option. Although the Funds will seek to enter into dealer
options only with dealers who will agree to and that are expected to be capable
of entering into closing transactions with the Funds, there can be no assurance
that a Fund will be able to liquidate a dealer option at a favorable price at
any time prior to expiration. The inability to enter into a closing transaction
may result in

<PAGE>

material losses to a Fund. Until a Fund, as a covered OTC call option writer, is
able to effect a closing purchase transaction, it will not be able to liquidate
securities (or other assets) used to cover the written option until the option
expires or is exercised. This requirement may impair a Fund's ability to sell
portfolio securities or, with respect to currency options, currencies at a time
when such sale might be advantageous. In the event of insolvency of the other
party, the Fund may be unable to liquidate a dealer option.

Futures Contracts. A Fund neither pays nor receives consideration upon
trading a futures contract. Upon entering into a futures contract, cash,
short-term U.S. Government Obligations or other U.S. dollar-denominated,
high-grade, short-term money market instruments, equal to approximately 1% to
10% of the contract amount, will be segregated with the Trust's custodian or a
designated sub-custodian. This amount, which is subject to change by the
exchange on which the contract is traded, is known as "initial margin" and is in
the nature of a performance bond or good faith deposit on the contract. The
initial margin is returned to the Fund upon termination of the futures contract,
so long as all contractual obligations have been satisfied. The broker will have
access to amounts in the margin account if the Fund fails to meet its
contractual obligations. Subsequent payments, known as "variation margin," to
and from the broker, will be made daily as the price of the securities
underlying the futures contract fluctuates, making the long and short positions
in the contract more or less valuable, a process known as "marking-to-market."
At any time prior to the expiration of a futures contract, a Fund may elect to
close a position by taking an opposite position, which will operate to terminate
the Fund's existing position in the contract.

Although the Trust intends that the Funds enter into futures contracts only
if an active market exists for the contracts, no assurance can be given that an
active market will exist for the contracts at any particular time. Most U.S.
futures exchanges and boards of trade limit the amount of fluctuation permitted
in futures contract prices during a single trading day. Once the daily limit has
been reached in a particular contract, no trades may be made on that day at a
price beyond that limit. Futures contract prices may move to the daily limit for
several consecutive trading days with little or no trading, thereby preventing
prompt liquidation of futures positions and subjecting some futures traders to
substantial losses. In such a case, and in the event of adverse price movements,
a Fund would be required to make daily cash payments of variation margin. In
such circumstances, an increase in the value of the portion of the portfolio
being hedged, if any, may partially or completely offset losses on the futures
contract.

If a Fund has hedged against the possibility of an increase in interest
rates and rates decrease instead, the Fund will lose part or all of the benefit
of the increased value of securities that it has hedged because it will have
offsetting losses in its futures positions. In addition, in such situations, if
the Fund had insufficient cash, it may have to sell securities to meet daily
variation margins requirements at a time when it may be disadvantageous to do
so. These sales of securities may, but will not necessarily, be at increased
prices that reflect the decline in interest rates.

<PAGE>

Options on Futures Contracts. An option on a futures contract, unlike a
direct investment in such a contract, gives the purchaser the right, in return
for the premium paid, to assume a position in the futures contract at a
specified exercise price at any time prior to the expiration date of the option.
Upon exercise of an option, the delivery of the futures position by the writer
of the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's futures margin account, which represents the
amount by which the market price of the futures contract exceeds, in the case of
a call, or is less than, in the case of a put, the exercise price of the option
on the futures contract. The potential loss related to the purchase of an option
on futures contracts is limited to the premium paid for the option (plus
transaction costs). Because the price of the option to the purchaser is fixed at
the point of sale, no daily cash payments are made to reflect changes in the
value of the underlying contract. The value of the option, however, does change
daily and that change would be reflected in the net asset value of the Fund
holding the options.

Forward Currency Transactions. The cost to a Fund of engaging in currency
transactions varies with factors such as the currency involved, the length of
the contract period and the market conditions then prevailing. Because
transactions in currency exchange are usually conducted on a principal basis, no
fees or commissions are involved. The use of forward currency contracts does not
eliminate fluctuations in the underlying prices of the securities, but it does
establish a rate of exchange that can be achieved in the future. In addition,
although forward currency contracts limit the risk of loss due to a decline in
the value of the hedged currency, at the same time they limit any potential gain
that might result should the value of the currency increase. If a devaluation is
generally anticipated, a Fund may not be able to sell currency at a price above
the anticipated devaluation level. A Fund will not enter into a currency
transaction if, as a result, it will fail to qualify as a regulated investment
company under the Internal Revenue Code of 1986, as amended (the "Code"), for a
given year.

Options on Foreign Currencies. Certain transactions involving options on
foreign currencies are undertaken on contract markets that are not regulated by
the CFTC. Options on foreign currencies traded on national securities exchanges
are within the jurisdiction of the Securities and Exchange Commission (the
"SEC"), as are other securities traded on those exchanges. As a result, many of
the protections provided to traders on organized exchanges will be available
with respect to those transactions. In particular, all foreign currency option
positions entered into on a national securities exchange are cleared and
guaranteed by the Clearing Corporation, thereby reducing the risk of
counterparty default. In addition, a liquid secondary market in options traded
on a national securities exchange may exist, potentially permitting a Fund to
liquidate open positions at a profit prior to exercise or expiration, or to
limit losses in the event of adverse market movements.

The purchase and sale of exchange-traded foreign currency options are
subject to the risks of the availability of a liquid secondary market as
described above, as well as the risks regarding adverse market movements,
margining of options written, the nature of the foreign currency market,
possible intervention by governmental authorities and the effects of other
political and

<PAGE>

economic events. In addition, exercise and settlement of exchange-traded foreign
currency options must be made exclusively through the Clearing Corporation,
which has established banking relationships in applicable foreign countries for
this purpose. As a result, the Clearing Corporation may, if it determines that
foreign governmental restrictions or taxes would prevent the orderly settlement
of foreign currency option exercises, or would result in undue burdens on the
Clearing Corporation or its clearing members, impose special procedures on
exercise and settlement, such as technical changes in the mechanics of delivery
of currency, the fixing of dollar settlement prices or prohibitions on exercise.

Options on foreign currencies may be traded on foreign exchanges, to the
extent permitted by the CFTC. These transactions are subject to the risk of
governmental actions affecting trading in or the prices of foreign currencies or
securities. The value of these positions could also be adversely affected by (a)
other complex foreign political and economic factors, (b) lesser availability of
data on which to make trading decisions than in the United States, (c) delays in
a Fund's ability to act upon economic events occurring in foreign markets during
non-business hours in the United States, (d) the imposition of different
exercise and settlement terms and procedures and margin requirements than in the
United States and (e) lesser trading volume.

Municipal Obligations. The term "Municipal Obligations" as used in the
Prospectus and this Statement of Additional Information means debt obligations
issued by, or on behalf of, states, territories and possessions of the United
States and the District of Columbia and their political subdivisions, agencies
and instrumentalities or multistate agencies or authorities, the interest from
which debt obligations is, in the opinion of bond counsel to the issuer,
excluded from gross income for Federal income tax purposes. Municipal
Obligations generally are understood to include debt obligations issued to
obtain funds for various public purposes, including the construction of a wide
range of public facilities, refunding of outstanding obligations, payment of
general operating expenses and extensions of loans to public institutions and
facilities. Private activity bonds that are issued by or on behalf of public
authorities to finance privately operated facilities are considered to be
Municipal Obligations if the interest paid on them qualifies as excluded from
gross income (but not necessarily from alternative minimum taxable income) for
Federal income tax purposes in the opinion of bond counsel to the issuer.

Municipal Obligations may be issued to finance life care facilities, which
are an alternative form of long-term housing for the elderly that offer
residents the independence of a condominium life-style and, if needed, the
comprehensive care of nursing home services. Bonds to finance these facilities
have been issued by various state industrial development authorities. Because
the bonds are secured only by the revenues of each facility and not by state or
local government tax payments, they are subject to a wide variety of risks,
including a drop in occupancy levels, the difficulty of maintaining adequate
financial reserves to secure estimated actuarial liabilities, the possibility of
regulatory cost restrictions applied to health care delivery and competition
from alternative health care or conventional housing facilities.

Municipal leases are Municipal Obligations that may take the form of a
lease or an

<PAGE>

installment purchase contract issued by state and local governmental authorities
to obtain funds to acquire a wide variety of equipment and facilities such as
fire and sanitation vehicles, computer equipment and other capital assets.
Although municipal lease obligations do not normally constitute general
obligations of the municipality, a lease obligation is ordinarily backed by the
municipality's agreement to make the payments due under the lease obligation.
These obligations have evolved to make it possible for state and local
government authorities to acquire property and equipment without meeting
constitutional and statutory requirements for the issuance of debt. Thus,
municipal leases have special risks not normally associated with Municipal
Obligations. These obligations frequently contain "non-appropriation" clauses
that provide that the governmental issuer of the obligation has no obligation to
make future payments under the lease or contract unless money is appropriated
for those purposes by the legislative body on a yearly or other periodic basis.
In addition to the non-appropriation risk, municipal leases represent a type of
financing that has not yet developed the depth of marketability associated with
other Municipal Obligations. Some municipal lease obligations may be, and could
become, illiquid. Moreover, although municipal leases will be secured by the
leased equipment, the disposition of the equipment in the event of foreclosure
might prove to be difficult.

Municipal lease obligations may be deemed to be illiquid as determined by
or in accordance with methods adopted by the Board. In determining the liquidity
and appropriate valuation of a municipal lease obligation, the following factors
relating to the security are considered, among others: (a) the frequency of
trades and quotes; (b) the number of dealers willing to purchase or sell the
security; (c) the willingness of dealers to undertake to make a market; (d) the
nature of the marketplace trades; and (e) the likelihood that the obligation
will continue to be marketable based on the credit quality of the municipality
or relevant obligor.

Tax legislation in recent years has included several provisions that may
affect the supply of, and the demand for, Municipal Obligations, as well as the
tax-exempt nature of interest paid on those obligations. Neither the Trust nor
GEIM can predict with certainty the effect of recent tax law changes upon the
Municipal Obligation market, including the availability of instruments for
investment by a Fund. In addition, neither the Trust nor GEIM can predict
whether additional legislation adversely affecting the Municipal Obligation
market will be enacted in the future. The Trust monitors legislative
developments and considers whether changes in the objective or policies of a
Fund need to be made in response to those developments.

Mortgage Related Securities. The average maturity of pass-through pools of
mortgage related securities in which certain of the Funds may invest varies with
the maturities of the underlying mortgage instruments. In addition, a pool's
stated maturity may be shortened by unscheduled payments on the underlying
mortgages. Factors affecting mortgage prepayments include the level of interest
rates, general economic and social conditions, the location of the mortgaged
property and age of the mortgage. Because prepayment rates of individual
mortgage pools vary widely, the average life of a particular pool cannot be
predicted accurately.

Mortgage related securities may be classified as private, governmental or

<PAGE>

government-related, depending on the issuer or guarantor. Private mortgage
related securities represent pass-through pools consisting principally of
conventional residential mortgage loans created by non-governmental issuers,
such as commercial banks, savings and loan associations and private mortgage
insurance companies. Governmental mortgage related securities are backed by the
full faith and credit of the United States. GNMA, the principal U.S. guarantor
of these securities, is a wholly-owned U.S. government corporation within the
Department of Housing and Urban Development. Government-related mortgage related
securities are not backed by the full faith and credit of the United States.
Issuers include FNMA and FHLMC. FNMA is a government-sponsored corporation owned
entirely by private stockholders, which is subject to general regulation by the
Secretary of Housing and Urban Development. Pass-through securities issued by
FNMA are guaranteed as to timely payment of principal and interest by FNMA.
FHLMC is a corporate instrumentality of the United States, the stock of which is
owned by the Federal Home Loan Banks. Participation certificates representing
interests in mortgages from FHLMC's national portfolio are guaranteed as to the
timely payment of interest and ultimate collection of principal by FHLMC.

Private, governmental or government-related entities may create mortgage
loan pools offering pass-through investments in addition to those described
above. The mortgages underlying these securities may be alternative mortgage
instruments, that is, mortgage instruments whose principal or interest payments
may vary or whose terms to maturity may be shorter than previously customary.
GEIM assesses new types of mortgage related securities as they are developed and
offered to determine their appropriateness for investment by the relevant Fund.

Asset-Backed and Receivable-Backed Securities. To date, several types of
asset-backed and receivable-backed securities have been offered to investors
including "Certificates for Automobile Receivables" ("CARssm") and interests in
pools of credit card receivables. CARssm represent undivided fractional
interests in a trust, the assets of which consist of a pool of motor vehicle
retail installment sales contracts and security interests in the vehicles
securing the contracts. Payments of principal and interest on CARssm are passed
through monthly to certificate holders and are guaranteed up to certain amounts
and for a certain time period by a letter of credit issued by a financial
institution unaffiliated with the trustee or originator of the trust.

An investor's return on CARssm may be affected by early prepayment of
principal on the underlying vehicle sales contracts. If the letter of credit is
exhausted, an investor may be prevented from realizing the full amount due on a
sales contract because of state law requirements and restrictions relating to
foreclosure sales of vehicles and the availability of deficiency judgments
following these sales, because of depreciation, damage or loss of a vehicle,
because of the application of Federal and state bankruptcy and insolvency laws
or other factors. As a result, certificate holders may experience delays in
payment if the letter of credit is exhausted.

<PAGE>

INVESTMENT RESTRICTIONS

Investment restrictions numbered 1 through 10 below have been adopted by
the Trust as fundamental policies of all of the Funds. Under the 1940 Act, a
fundamental policy may not be changed with respect to a Fund without the vote of
a majority of the outstanding voting securities (as defined in the 1940 Act) of
the Fund. Investment restrictions 11 through 14 may be changed by a vote of the
Board of Trustees at any time.

2. No Fund may lend its assets or money to other persons, except through
(a) purchasing debt obligations, (b) lending portfolio securities in an amount
not to exceed 30% of the Fund's total assets taken at market value, (c) entering
into repurchase agreements, (d) trading in financial futures contracts, index
futures contracts, securities indexes and options on financial futures
contracts, options on index futures contracts, options on securities and options
on securities indexes) and (e) entering into variable rate demand notes.

3. No Fund may purchase securities (other than U.S. Government Obligations)
of any issuer if, as a result of the purchase, more than 5% of the Fund's total
assets would be invested in the securities of the issuer, except that up to 25%
of the value of the total assets of each non-money market Fund may be invested
without regard to this limitation. All securities of a foreign government and
its agencies will be treated as a single issuer for purposes of this
restriction.

4. No Fund may purchase more than 10% of the voting securities of any one
issuer, or more than 10% of the outstanding securities of any class of issuer,
except that (a) this limitation is not applicable to a Fund's investments in
U.S. Government Obligations and (b) up to 25% of the value of the assets of a
non-money market Fund may be invested without regard to these 10% limitations.
All securities of a foreign government and its agencies will be treated as a
single issuer for purposes of this restriction.

5. No Fund may invest more than 25% of the value of its total assets in
securities of

<PAGE>

issuers in any one industry unless the securities are backed only by the assets
and revenues of non-governmental issuers. For purposes of this restriction, the
term industry will be deemed to include (a) the government of any one country
other than the United States, but not the U.S. Government and (b) all
supra-national organizations. In addition, securities held by the Money Market
Fund that are issued by domestic banks are excluded from this restriction.

6. No Fund may underwrite any issue of securities, except to the extent
that the sale of portfolio securities in accordance with the Fund's investment
objective, policies and limitations may be deemed to be an underwriting, and
except that the Fund may acquire securities under circumstances in which, if the
securities were sold, the Fund might be deemed to be an underwriter for purposes
of the Securities Act of 1933, as amended.

7. No Fund may purchase or sell real estate or real estate limited
partnership interests, or invest in oil, gas or mineral leases, or mineral
exploration or development programs, except that a Fund may (a) invest in
securities secured by real estate, mortgages or interests in real estate or
mortgages, (b) purchase securities issued by companies that invest or deal in
real estate, mortgages or interests in real estate or mortgages, (c) engage in
the purchase and sale of real estate as necessary to provide it with an office
for the transaction of business or (d) acquire real estate or interests in real
estate securing an issuer's obligations, in the event of a default by that
issuer.

8. No Fund may make short sales of securities or maintain a short position,
unless at all times when a short position is open, the Fund owns an equal amount
of the securities or securities convertible into or exchangeable for, without
payment of any further consideration, securities of the same issue as, and equal
in amount to, the securities sold short.

9. No Fund may purchase securities on margin, except that a Fund may
obtain any short-term credits necessary for the clearance of purchases and sales
of securities. For purposes of this restriction, the deposit or payment of
initial or variation margin in connection with futures contracts, financial
futures contracts or related options, and options on securities, options on
securities indexes and options on currencies will not be deemed to be a purchase
of securities on margin by a Fund.

10. No Fund may invest in commodities, except that each non-money market
Fund may invest in futures contracts (including financial futures contracts,
index futures contracts or securities index futures contracts) and related
options and other similar contracts (including foreign currency forward, futures
and options contracts) as described in this Statement of Additional Information
and in the Prospectus.

11. No Fund may invest in companies for the purpose of exercising control
or management.

<PAGE>

12. No Fund may purchase illiquid securities if more than 15% of the net
assets of the Fund would be invested in illiquid securities; the Money Market
Fund will not purchase illiquid securities. For purposes of this restriction,
illiquid securities are securities that cannot be disposed of by a Fund within
seven days in the ordinary course of business at approximately the amount at
which the Fund has valued the securities.

13. No Fund may purchase restricted securities if more than 10% of the
total assets of the Fund would be invested in restricted securities. Restricted
securities are securities that are subject to contractual or legal restrictions
on transfer, excluding for purposes of this restriction, restricted securities
that are eligible for resale pursuant to Rule 144A under the Securities Act of
1933, as amended ("Rule 144A Securities"), that have been determined to be
liquid by the Trust's Board of Trustees based upon the trading markets for the
securities.

14. No Fund may issue senior securities except as otherwise permitted by
the 1940 Act and as otherwise permitted herein.

The Trust may make commitments more restrictive than the restrictions
listed above with respect to a Fund to permit the sale of shares of the Fund in
certain states. Should the Trust determine that any such commitment is no longer
in the best interests of a Fund and its shareholders, the Trust will revoke the
commitment by terminating the sale of shares of the Fund in the state involved
or may otherwise modify its commitment based on a change in the state's
restrictions. The percentage limitations in the restrictions listed above apply
at the time of purchases of securities. For purposes of investment restriction
number 5, the Trust may use the industry classifications reflected by the S&P
500 Composite Stock Index, if applicable at the time of determination. For all
other portfolio holdings, the Trust may use the Directory of Companies Required
to File Annual Reports with the SEC and Bloomberg Inc. In addition, the Trust
may select its own industry classifications, provided such classifications are
reasonable.

Portfolio Transactions and Turnover

Decisions to buy and sell securities for each Fund are made by GEIM,
subject to review by the Trust's Board of Trustees. Transactions on domestic
stock exchanges and some foreign stock exchanges involve the payment of
negotiated brokerage commissions. On exchanges on which commissions are
negotiated, the cost of transactions may vary among different brokers. On most
foreign exchanges, commissions are fixed. No stated commission will be generally
applicable to securities traded in U.S. over-the-counter markets, but the prices
of those securities include undisclosed commissions or mark-ups. The cost of
securities purchased from underwriters include an underwriting commission or
concession, and the prices at which securities are purchased from and sold to
dealers include a dealer's mark-up or mark-down. U.S. Government Obligations
generally will be purchased on behalf of a Fund from underwriters or dealers,
although certain newly issued U.S. Government Obligations may be purchased
directly from the U.S. Treasury or from the issuing agency or instrumentality.

In selecting brokers or dealers to execute securities transactions on
behalf of a Fund, GEIM seeks the best overall terms available. In assessing the
best overall terms available for any transaction, GEIM considers factors that it
deems relevant, including the breadth of the market in the security, the price
of the security, the financial condition and execution capability of the broker

<PAGE>

or dealer and the reasonableness of the commission, if any, for the specific
transaction and on a continuing basis. In addition, the investment advisory
agreement between the Trust and GEIM relating to each Fund authorizes GEIM, on
behalf of the Fund, in selecting brokers or dealers to execute a particular
transaction, and in evaluating the best overall terms available, to consider the
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) provided to the Fund and/or other accounts
over which GEIM or its affiliates exercise investment discretion. The fees under
the investment advisory agreement relating to a Fund will not be reduced by
reason of the Fund's receiving brokerage and research services. The Trust's
Board of Trustees periodically reviews the commissions paid by a Fund to
determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits inuring to the Fund. Over-the-counter
purchases and sales on behalf of the Funds will be transacted directly with
principal market makers except in those cases in which better prices and
executions may be obtained elsewhere. A Fund will not purchase any security,
including U.S. Government Obligations, during the existence of any underwriting
or selling group relating to the security of which any affiliate of the Fund or
GEIM is a member, except to the extent permitted under rules, interpretations or
exemptions of the SEC. GEIM may select broker-dealers who are affiliated with
the Trust or GEIM. GEIM will pay brokerage commissions to affiliates only if it
believes that such commissions are fair and reasonable.

The Money Market Fund may attempt to increase its yield by trading to take
advantage of short-term market variations, which trading would result in the
Fund's experiencing high portfolio turnover. Because purchases and sales of
money market instruments are usually effected as principal transactions,
however, this type of trading by the Money Market Fund will not result in the
Fund's paying high brokerage commissions.

MANAGEMENT OF THE TRUST

Trustees and Officers

The names of the Trustees and executive officers of the Trust, their
addresses and their principal occupations during the past five years and their
other affiliations are shown below. The executive officers of the Trust are
employees of organizations that provide services to the Funds. An asterisk
appears before the name of each Trustee who is an "interested person" of the
Trust, as defined in the 1940 Act.

<PAGE>

Age and Principal Occupation(s)
Name and Address Positions Held with Trust During Past Five Years
- ---------------- ------------------------- -------------------------------

*Michael J. Cosgrove+ Chairman of the Board Age 48. President, GE Mutual Funds;
3003 Summer Street and President Executive Vice President - Mutual
Stamford, CT 06905 Funds of GEIM and GEIC, each a
wholly-owned subsidiary of General
Electric Company ("GE") that and each is
registered as an investment adviser
under the Investment Advisers Act of
1940, as amended, since March 1993
(responsibilities include general
management of all mutual funds managed
by GEIM and GEIC) and Director of GEIC
and Executive Vice President and
Director of GEIM since 1988; from 1988
until 1993, Mr. Cosgrove served as
Executive Vice President - Finance and
Administration of GEIM and GEIC.

*Alan M. Lewis+ Trustee and Executive Age 51. Executive Vice President,
3003 Summer Street Vice President General Counsel and Secretary of
Stamford, CT 06905 GEIM since 1988 and of GEIC since October 1987.

<PAGE>

John R. Costantino++ Trustee Age 51. Managing Director, Walden
150 East 58th Street Partners, Ltd., consultants and
New York, NY 10055 investors, since August 1992;
President, CMG Acquisition Corp., Inc.,
a holding company, since 1988; Vice
Chairman, Acoustiguide Holdings, Inc., a
holding company, since 1989; President
CMG/IKH, Inc., a holding company, since
1991; Director, Crossland Federal
Savings Bank, a financial institution;
Director, Brooklyn Bankcorp, Inc., a
financial institution; Director, IK
Holdings, Inc., a holding company, since
1991; Director, I. Kleinfeld & Son,
Inc., a retailer, since 1991; Director,
High Performance Appliances, Inc., a
distributor of kitchen appliances
("HPA"), since 1991; Director, HPA Hong
Kong, Ltd., a service subsidiary of HPA,
since 1991; Director, Lancit Media
Productions, Ltd., a children's and
family television film and videotape
production company, since 1995; Partner,
Costantino Melamede-Greenberg Investment
Partners, a general investment
partnership, from September 1987 through
August 1992.

William J. Lucas++ Trustee Age 50. Vice President and Treasurer
Fairfield University of Fairfield University since 1983.
North Benson Road
Fairfield, CT 06430

Robert P. Quinn++ Trustee Age 61. Retired since 1983 from
45 Shinnecock Road Salomon Brothers Inc.; Director, GP
Quogue, NY 11959 Financial Corp., a holding company,
since 1994; Director, The Greenpoint
Savings Bank, a financial institution,
since 1987.

<PAGE>

*Jeffrey A. Groh Treasurer Age 35. Vice President-Operations of
3003 Summer Street GEIM and GEIC since January 1997
Stamford, CT 06905 and Treasurer and Controller of GEIM
and GEIC since August 1994; prior to
August 1994, Senior Manager in
Investment Company Services Group and
certified public accountant with Price
Waterhouse LLP.

*Matthew J. Simpson Secretary Age 36. Vice President, Associate
3003 Summer Street General Counsel and Assistant
Stamford, CT 06905 Secretary of GEIM and GEIC since
October 1992; attorney with the law firm
of Baker & McKenzie, April 1991 to
October 1992; prior to April 1991, an
attorney with the law firm of Spengler
Carlson Gubar Brodsky & Frischling.

</TABLE>

- ----------

+ As of October 1, 1997, Messrs. Cosgrove and Lewis serve as Trustees of
three investment companies advised by GEIM and of eight investment
companies advised by GEIC. They are considered to be interested persons of
each investment company advised by GEIM or GEIC, as defined under Section
2(a)(19) of the 1940 Act, and accordingly, serve as Trustees thereof
without compensation.

++ Messrs. Costantino, Lucas and Quinn serve as Trustees of three investment
companies advised by GEIM and the compensation is for their services as
Trustees of all companies.

No employee of General Electric Company ("GE") or any of its affiliates receives
any compensation from the Trust for acting as a Trustee or officer of the Trust.
Each Trustee of the Trust who is not a director, officer or employee of GEIM, GE
Investment Services Inc. (the "Distributor"), GE, or any affiliate of those
companies, receives an annual fee of $5,000 for services as Trustee. In
addition, each Trustee receives $500 for each meeting of the Trust's Board of
Trustees attended by the Trustee and is reimbursed for expenses incurred in
connection with attendance at Board meetings.

<PAGE>

COMPENSATION TABLE*

Total Compensation for all
Investment Companies
Total Compensation from Managed by GEIM or
Name of Trustee the Trust GEIC
- --------------- --------- ----
<S> <C> <C>
Michael J. Cosgrove None None
Alan M. Lewis None None
John R. Costantino $5,000 $25,000
William J. Lucas $5,000 $25,000
Robert P. Quinn $5,000 $25,000
</TABLE>

- ----------
* The Trust has not yet completed a full fiscal year since its organization.
The amounts shown are estimates of future payments that will be received by
the Trustees for the fiscal year ended September 30, 1998. The Trustees
will not receive any pension or retirement benefits accrued as part of Fund
expenses.

Investment Adviser and Administrator

GEIM serves as the Trust's investment adviser and administrator. GEIM is
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended and is located at 3003 Summer Street, Stamford, Connecticut 06905.
GEIM, which was formed under the laws of Delaware in 1988, is a wholly owned
subsidiary of GE. GEIM currently provides advisory services with respect to a
number of other mutual funds and private institutional accounts. The
professionals responsible for the investment operations of GEIM serve in similar
capacities with respect to GEIC, a sister company of GEIM wholly owned by GE,
which provides investment advisory services with respect to GE's pension and
benefit plans and a number of funds offered exclusively to GE employees,
retirees and certain related persons. These funds include the Elfun family of
Funds (the first of which, Elfun Trusts, was established in 1935) and the funds
offered as part of GE's 401(k) program (also known as the GE Savings and
Security Program), which are referred to as the GE S&S Program Mutual Fund and
the GE S&S Long Term Interest Fund. The investment professionals at GEIM and
GEIC and their predecessors have managed GE's pension assets since 1927. GEIM
and GEIC managed assets in excess of $64 billion as of June 30, 1997, of which
more than $12 billion was invested in mutual fund assets.

<PAGE>

GEIM Investment Advisory and Administration Agreement

The duties and responsibilities of GEIM are specified in investment
advisory and administration agreements (each, an "Advisory Agreement" and
collectively, the "Advisory Agreements") between GEIM and the Trust on behalf of
the respective Funds. Under each Advisory Agreement, GEIM, subject to the
supervision of the Trust's Board of Trustees, provides a continuous investment
program for the relevant Fund's assets, including investment research and
management. GEIM determines from time to time what investments are purchased,
retained or sold by the Fund and places purchase and sale orders for the Fund's
investments. GEIM provides the Trust with all executive, administrative,
clerical and other personnel necessary to operate each Fund, and pays salaries
and other employment-related costs of employing these persons. GEIM furnishes
the Trust and each Fund with office space, facilities, and equipment and pays
the day-to-day expenses related to the operation of such space, facilities and
equipment. GEIM, as administrator, also: (a) maintains the books and records of
each Fund; (b) prepares reports to shareholders of each Fund; (c) prepares and
files tax returns for each Fund; (d) assists with the preparation and filing of
reports and the Trust's registration statement with the SEC; (e) provides
appropriate officers for the Trust; (f) provides administrative support
necessary for the Board of Trustees to conduct meetings; and (g) supervises and
coordinates the activities of other service providers, including independent
auditors, legal counsel, custodians, accounting service agents and transfer
agents.

GEIM is generally responsible for employing sufficient staff and consulting
with other persons that it determines to be necessary or useful in the
performance of its obligations under each Advisory Agreement. Each Advisory
Agreement obligates GEIM to provide services in accordance with the relevant
Fund's investment objective, policies and restrictions as stated in the Trust's
current registration statement, as amended from time to time, and to keep the
Trust informed of developments materially affecting that Fund, including
furnishing the Trust with whatever information and reports the Board of Trustees
reasonably requests.

<PAGE>

Except for those expenses assumed by a Fund as described below, GEIM bears
all of each Fund's expenses, including, but not limited to: charges and expense
of any registrar, the costs of custody, transfer agency and recordkeeping
services in connection with the Fund; registration costs of the Fund and its
shares under Federal and state securities laws; the cost and expense of
printing, including typesetting, and distributing of prospectuses describing the
Fund and supplements to those prospectuses to regulatory authorities and the
Fund's shareholders; all expenses incurred in conducting meetings of the Fund's
shareholders and meetings of the Board relating to the Fund, excluding fees paid
to members of the board who are not affiliated with GEIM or any of its
affiliates; all expenses incurred in preparing, printing and mailing proxy
statements and reports to shareholders of the Fund; all expenses incident to any
dividend, withdrawal or redemption options provided to Fund shareholders (except
for purchase premiums and redemption fees, if any, charged directly to
shareholders); charges and expenses of any outside service used for pricing the
Fund's portfolio securities and calculating the net asset value of the Fund's
shares; fees and expenses of legal counsel, including counsel to the members of
the Board who are not interested persons of the Fund, or GEIM, and independent
auditors; membership dues of industry associations; postage; insurance premiums
on property or personnel (including officers and Trustees) of the Trust that
inure to their benefit; and all other costs of the Fund's operations.

Each Fund will bear the following expenses: advisory and administration
fees described in that Fund's Advisory Agreement; shareholder servicing and
distribution fees under the terms of the shareholder servicing and distribution
plan adopted by the Trust with respect to the Fund pursuant to Rule 12b-1 under
the 1940 Act; brokerage fees and commissions and other expenses incurred in the
acquisition or disposition of any securities or other investments; fees and
travel expenses of members of the Board of Directors or members of any advisory
board or committee who are not affiliated with GEIM, or any of its affiliates;
and expenses that are not normal operating expenses of the Fund (such as
extraordinary expenses, interest and taxes).

Each Advisory Agreement permits GEIM, subject to the approval of the Board
of Trustees and other applicable legal requirements, to enter into any advisory
or sub-advisory agreement with affiliated or unaffiliated entities whereby such
entity would perform some or all of GEIM's responsibilities under the Advisory
Agreement. In this event, GEIM remains responsible for ensuring that these
entities perform the services that each undertakes pursuant to a sub- advisory
agreement.

Each Advisory Agreement provides that GEIM may render similar advisory and
administrative services to other clients so long as the services that it
provides under the Agreement are not impaired thereby. The Advisory Agreements
also provide that GEIM shall not be liable for any error of judgment or mistake
of law or for any loss incurred by a Fund in connection with GEIM's services
pursuant to the Agreement, except for a loss resulting from willful misfeasance,
bad faith or gross negligence in the performance of its duties or from reckless
disregard of its obligations and duties under the Agreement.

Each Advisory Agreement was approved by the Board of Trustees (including a
majority of Trustees who are not parties to such Agreement or interested
persons, as defined by the 1940 Act, of any such party) at a meeting held for
that purpose on September 10, 1997. Each Advisory Agreement is effective from
its date of execution, and continues in effect for an initial term and will
continue from year to year thereafter so long as its continuance is approved
annually by (a) the Board of Trustees or (b) a vote of a majority of the
relevant Fund's outstanding voting securities, provided that in either event the
continuance also is approved by the vote of a majority of the Trustees who are
not "interested persons," as such term is defined in the 1940 Act, in the
Agreement or of any party to the Agreement by a vote cast in person at meeting
called for the purpose of voting on such approval.

Each Advisory Agreement is not assignable and may be terminated without
penalty by either the Trust or GEIM upon no more than 60 days nor less than 30
days' written notice to the other or by vote of holders of a majority of the
relevant Fund's outstanding voting securities.

21
<PAGE>

GEIM Investment Advisory Fees

For its services to each Fund of the Trust, GEIM receives a monthly
advisory and administrative fee. The fee is deducted daily from the assets of
each of the Funds and paid to GEIM monthly. The advisory and administration fee
for each Fund, except the S&P 500 Index Fund, declines incrementally as Fund
assets increase. This means that investors pay a reduced fee with respect to
Fund assets over a certain level, or "breakpoint." The advisory and
administration fee or fees for each Fund. The fees payable to GEIM are based on
the average daily net assets of each Fund at the following rates:

Average Daily Net Annual Rate
Name of Fund Assets of Fund Percentage (%)*
- ------------------------------------------ ------------------------------------------ ------------------------------------------

<S> <C> <C>
Emerging Markets Fund First $50 million 1.05
Over $50 million .95

- ------------------------------------------ ------------------------------------------ ------------------------------------------
Premier Growth Fund First $25 million .55
Mid-Cap Fund Next $25 million .45
Value Fund Over $50 million .35
U.S. Equity Fund

- ------------------------------------------ ------------------------------------------ ------------------------------------------
International Fund First $25 million .75
Next $50 million .65
Over $75 million .55

- ------------------------------------------ ------------------------------------------ ------------------------------------------
S&P 500 Index Fund All assets .15

- ------------------------------------------ ------------------------------------------ ------------------------------------------
Strategic Fund First $25 million .45
Next $25 million .40
Over $100 million .35

- ------------------------------------------ ------------------------------------------ ------------------------------------------
Income Fund First $25 million .35
Next $25 million .30
Next $50 million .25
Over $100 million .20

- ------------------------------------------ ------------------------------------------ ------------------------------------------

<PAGE>

- ------------------------------------------ ------------------------------------------ ------------------------------------------

Average Daily Annual Rate
Name of Fund Net Assets of Fund Percentage (%)*
- ------------------------------------------ ------------------------------------------ ------------------------------------------

Money Market Fund First $25 million .25
Next $25 million .20
Next $50 million .15
Over $100 million .10
- ------------------------------------------ ------------------------------------------ ------------------------------------------
</TABLE>

- ----------

* From time to time, GEIM may waive or reimburse advisory or administrative
fees paid by a Fund.

The Advisory Agreement does not contain any provisions prescribing limits
on the operating expenses of the Trust or any Fund.

Investment Sub-Adviser

GEIM has retained State Street Global Advisors ("SSGA"), a division of
State Street Bank and Trust Company ("State Street"), as investment sub-adviser
to the S&P 500 Index Fund. SSGA and State Street are located at Two
International Place, Boston, Massachusetts 02110. State Street is a wholly-owned
subsidiary of State Street Corporation, a publicly held bank holding company.
State Street with over $292 billion under management as of December 31, 1996,
provides complete global investment management services from offices in the
United States, London, Sydney, Hong Kong, Tokyo, Montreal, Luxembourg,
Melbourne, Paris, Dubai, Munich and Brussels.

Investment Sub-Advisory Agreement

SSGA is the investment sub-adviser to the S&P 500 Index Fund pursuant to an
investment sub-advisory agreement with GEIM (the Sub-Advisory Agreement). The
Sub-Advisory Agreement was approved by the Board of Trustees, including a
majority of the Trustees who are not "interested persons," as such term is
defined in the 1940 Act, in the Agreement or of any party to the Agreement by a
vote cast in person at meeting called for the purpose of voting on such approval
on September 10, 1997.

The Sub-Advisory Agreement is not assignable and may be terminated without
penalty by either SSGA or GEIM upon sixty days written notice to the other or by
the Board of Trustees, or by the vote of a majority of the outstanding voting
securities of the S&P 500 Index Fund, on 60 days' written notice to SSGA. The
Agreement provides that SSGA may render similar sub- advisory services to other
clients so long as the services that it provides under the Agreement are not
impaired thereby. The Sub-Advisory Agreement also provides that SSGA shall not
be liable for any error of judgment or mistake of law or for any loss incurred
by the S&P 500 Index Fund

<PAGE>

in connection with SSGA's services pursuant to the Agreement, except for a loss
resulting from willful misfeasance, bad faith or gross negligence in the
performance of its duties or from reckless disregard of its obligations and
duties under the Agreement.

GEIM Investment Sub-Advisory Fee

For SSGA's services, GEIM pays SSGA monthly compensation in the form of an
investment sub-advisory fee. The fee is paid by GEIM monthly and is a percentage
of the average daily net assets of the Fund at the annual rate of .05% of the
first $100 million, .04% of the next $200 million and .03% for all amounts over
$300 million.

Securities Activities of GEIM and SSGA

Securities held by the Funds also may be held by other funds or
separate accounts for which GEIM or its affiliate, GEIC acts as an adviser.
Because of different investment objectives or other factors, a particular
security may be bought by GEIM or GEIC for one or more of their clients, when
one or more other clients are selling the same security. If purchases or sales
of securities for a Fund or other client of GEIM or GEIC arise for consideration
at or about the same time, transactions in such securities will be made, insofar
as feasible, for the Fund and other clients in a manner deemed equitable to all.
To the extent that transactions on behalf of more than one client of GEIM or
GEIC during the same period may increase the demand for securities being
purchased or the supply of securities being sold, there may be an adverse effect
on price.

On occasions when GEIM (under the supervision of the Board of Trustees)
deems the purchase or sale of a security to be in the best interests of the
Trust as well as other funds or accounts it may, to the extent permitted by
applicable laws and regulations, but will not be obligated to, aggregate the
securities to be sold or purchased for the Trust with those to be sold or
purchased for other funds or accounts in order to obtain favorable execution and
low brokerage commissions. In that event, allocation of the securities purchased
or sold, as well as the expenses incurred in the transaction, will be made by
GEIM in the manner it considers to be most equitable and consistent with its
fiduciary obligations to the Trust and to such other funds or accounts. In some
cases this procedure may adversely affect the size the position obtainable for a
Fund. Whenever SSGA simultaneously places orders to purchase or sell the same
security on behalf of the S&P 500 Index Fund and one or more other accounts
advised by SSGA, the orders will be allocated as to the price and amount among
all such accounts in a manner believed by SSGA to be equitable to each account.

Shareholder Servicing and Distribution Plan

The Trust's Board of Trustees adopted a Shareholder Servicing and
Distribution Plan with respect to the Trust's Service Class shares pursuant to
Rule 12b-1 under the 1940 Act (the

<PAGE>

"Plan"). Under the Plan, the Trust pays GEIM, with respect to the Service Class
shares of each Fund, an annual fee of .25% of the value of the average daily net
assets attributed to such Service Class shares. The shareholder servicing and
distribution fee is intended to (a) compensate GEIM, or enable GEIM to
compensate other persons ("Service Providers"), for providing ongoing servicing
and/or maintenance of the accounts of Service Class shareholders of a Fund and
(b) compensate GEIM, or enable GEIM to compensate Service Providers (including
any distributor of Service Class shares of the Fund), for providing services
primarily intended to result in, or are primarily attributable to, the sale of
Service Class shares.

The Plan was approved by the sole initial shareholder of the Trust. Under
its terms, the Plan continues from year to year, provided its continuance is
approved annually by vote of the Trust's full Board of Trustees, as well as by a
majority of the Trustees who are not interested persons of the Trust and who
have no direct or indirect financial interest in the operation of the Plan or in
any agreements related to the Plan ("Independent Trustees"). The Plan may not be
amended to increase materially the amount of the fees paid under the Plan with
respect to a Fund without approval of Service Class shareholders of the Fund. In
addition, all material amendments of the Plan must be approved by the Trustees
and Independent Trustees in the manner described above. The Plan may be
terminated with respect to a Fund at any time, without penalty, by vote of a
majority of the Independent Trustees or by a vote of a majority of the
outstanding voting securities of the Service Class shares of that Fund (as
defined in the 1940 Act).

Custodian and Transfer Agent

State Street, located at 225 Franklin Street, Boston, Massachusetts 02101,
serves as custodian and transfer agent of the Funds' investments. Under its
custodian contract with the Trust, State Street is authorized to appoint one or
more banking institutions as sub-custodians of assets owned by each Fund. For
its custody services, State Street receives monthly fees charged to the Funds
based upon the month-end, aggregate net asset value of the Funds, plus certain
charges for securities transactions. The assets of the Trust are held under bank
custodianship in accordance with the 1940 Act. As transfer agent, State Street
is responsible for processing redemption requests and crediting dividends to the
accounts of shareholders of the Funds.

Distributor

GE Investment Services Inc. serves as the distributor of shares of the
Funds on a best efforts basis.

REDEMPTION OF SHARES

Detailed information on how to redeem shares of a Fund is included in the
Prospectus. The right of redemption of shares of a Fund may be suspended or the
date of payment postponed (a) for any periods during which the NYSE is closed
(other than for customary weekend and holiday closings), (b) when trading in the
markets the Fund normally utilizes is restricted, or an

<PAGE>

emergency, as defined by the rules and regulations of the SEC, exists, making
disposal of a Fund's investments or determination of its net asset value not
reasonably practicable or (c) for such other periods as the SEC by order may
permit for the protection of the Fund's shareholders. As discussed in the
Prospectus, redemption fees will be charged with respect to cash redemptions.

INVESTMENT SWITCHES

As described in the Prospectuses, a shareholder of the Investment Class of
a Fund may exchange such shares for Investment Class shares of another Fund or
for Service Class shares of the same or another Fund ("Investment Switches").
Likewise, shareholders of the Service Class shares of a Fund may exchange such
shares for Service Class shares of another Fund or for Investment Class shares
of same or another Fund . Upon receipt of proper instructions and all necessary
supporting documents, and provided the Fund is an available option, the
shareholder meets the minimum investment requirement for the Fund that is the
"target" of the Investment Switch, and such Fund may be legally sold in the
shareholder's state of residence, shares subject to an Investment Switch would
be redeemed at the then-current net asset value and the proceeds would be
immediately invested in shares of the class being acquired. Purchase premiums
and redemption fees will not be charged on Investment Switches, and the Trust
reserves the right to reject any request for an Investment Switch. The Trust
may, upon 60 days prior written notice to a Fund's shareholders, terminate the
Investment Switch privilege.

NET ASSET VALUE

The Trust will not calculate net asset value on certain holidays
(currently, those holidays when the NYSE is closed). On those days, securities
held by a Fund may nevertheless be actively traded, and the value of the Fund's
shares could be significantly affected.

Because of the need to obtain prices as of the close of trading on various
exchanges throughout the world, the calculation of the net asset value of a
class of a Fund may not take place contemporaneously with the determination of
the prices of many of its portfolio securities used in the calculation. A
security that is listed or traded on more than one exchange is valued at the
quotation on the exchange determined to be the primary market for the security.
All assets and liabilities of the Funds initially expressed in foreign currency
values will be converted into U.S. dollar values at the mean between the bid and
offered quotations of the currencies against U.S. dollars as last quoted by any
recognized dealer. If these quotations are not available, the rate of exchange
will be determined in good faith by the Trust's Board of Trustees. In carrying
out the Board's valuation policies, GEIM may consult with one or more
independent pricing services (each, a "Pricing Service") retained by the Trust.

Debt securities of U.S. issuers (other than U.S. Government Obligations and
short-term investments), including Municipal Obligations, are valued by a dealer
or by a pricing service based

<PAGE>

upon a computerized matrix system, which considers market transactions and
dealer supplied valuations. Valuations for municipal bonds are obtained from a
qualified municipal bond pricing service; prices represent the mean of the
secondary market. GEIM, under the general supervision and responsibility of the
Board of Trustees, periodically reviews the procedures of the Pricing Service.

Under Rule 2a-7 of the 1940 Act, the Money Market Fund's portfolio
securities may be valued based upon amortized cost, which does not take into
account unrealized capital gains or losses. Amortized cost valuation involves
initially valuing an instrument at its cost and thereafter assuming a constant
amortization to maturity of any discount or premium, regardless of the effect of
fluctuating interest rates on the market value of the instrument. Although this
method provides certainty in valuation, it may result in periods during which
value, as determined by amortized cost, is higher or lower than the price the
Money Market Fund would receive if it sold the instrument.

The use of the amortized cost method of valuing the portfolio securities of
the Money Market Fund is permitted by a Rule 2a-7 under the 1940 Act. Under this
rule, the Money Market Fund must maintain a dollar-weighted average portfolio
maturity of 90 days or less, purchase only instruments having remaining
maturities of 397 days or less, and invest only in "eligible securities" as
defined in the rule, which are determined by GEIM to present minimal credit
risks. Pursuant to the rule, GEIM has established procedures designed to
stabilize, to the extent reasonably possible, the Fund's price per share as
computed for the purpose of sales and redemptions at $1.00. These procedures
include review of the Money Market Fund's portfolio holdings at such intervals
as GEIM may deem appropriate, to determine whether the Fund's net asset value
calculated by using available market quotations or market equivalents deviates
from $1.00 per share based on amortized cost.

The rule regarding amortized cost valuation provides that the extent of any
deviation between the Money Market Fund's net asset value based upon available
market quotations or market equivalents and the $1.00 per share net asset value
based on amortized cost must be examined by the Trust's Board of Trustees. In
the event the Board of Trustees determines that a deviation exists that may
result in material dilution or other unfair results to investors or existing
shareholders of the Money Market Fund, the Board of Trustees must, in accordance
with the rule, cause the Fund to take such corrective action as the Board of
Trustees regards as necessary and appropriate, including: selling portfolio
instruments of the Fund prior to maturity to realize capital gains or losses or
to shorten average portfolio maturity; withholding dividends or paying
distributions from capital or capital gains; redeeming shares in kind; or
establishing a net asset value per share by using available market quotations.

<PAGE>

DIVIDENDS, DISTRIBUTIONS AND TAXES

Set forth below is a summary of certain Federal income tax considerations
generally affecting the Funds and their shareholders. The summary is not
intended as a substitute for individual tax planning, and shareholders are urged
to consult their tax advisors regarding the application of Federal, state, local
and foreign tax laws to their specific tax situations.

Tax Status of the Funds and their Shareholders

Each Fund is treated as a separate entity for Federal income tax purposes.
Each Fund's net investment income and capital gains distributions are determined
separately from any other series that the Trust may designate.

The Trust intends for each Fund to continue to qualify each year as a
"regulated investment company" under the Code. If a Fund (a) is a regulated
investment company and (b) distributes to its shareholders at least 90% of its
net investment income (including for this purpose its net realized short-term
capital gains) and 90% of its tax-exempt interest income (reduced by certain
expenses), the Fund will not be liable for Federal income tax to the extent that
its net investment income and its net realized long-term and short-term capital
gains, if any, are distributed to its shareholders. In addition, in order to
avoid a 4% excise tax, a Fund must declare, no later than December 31 and
distribute no later than the following January 31, at least 98% of its taxable
ordinary income earned during the calendar year and 98% of its capital gain net
income for the year period ending on October 31 of such calendar year. One
requirement for qualification as a regulated investment company is that each
Fund must diversify its holdings so that, at the end of each quarter, (a) at
least 50% of the market value of the Fund's assets is represented by cash and
cash items, securities of other regulated investment companies, U.S. Government
Obligations and other securities, with such other securities limited for
purposes of this calculation in respect of any one issuer to an amount not
greater than 5% of the value of the Fund's assets and not greater than 10% of
the outstanding voting securities of such issuer, and (b) not more than 25% of
the value of its total assets is invested in the securities of any one issuer or
of two or more issuers that are controlled by the Fund (within the meaning of
Section 851(b)(4)(B) of the Code) that are engaged in the same or similar trades
or businesses or related trades or businesses (other than U.S. Government
Obligations or the securities of other regulated investment companies).

The requirements for qualification as a regulated investment company also
include two significant rules as to investment results. First, a Fund must earn
at least 90% of its gross income from dividends, interest, payments with respect
to securities loans, gains from the disposition of stock or securities
(including gains from related investments in foreign currencies) and income
(including gains from options, futures or forward contracts) derived with
respect to its business of investing in such stocks, securities or currencies
(the "90% Income Test"). Second, a Fund must derive less than 30% of its gross
income from the sale or other disposition of (a) stock or securities held for
less than three months, (b) options futures, or forward contracts held for less

<PAGE>

than three months (other than options, futures, or forward contracts on foreign
currencies), and (c) foreign currencies (or options, futures or forward
contracts on foreign currencies) held for less than three months, but only if
such currencies (or options, future or forward contracts) are not directly
related to the Fund's principal business of investing in stock or securities (or
options and futures with respect to stocks or securities) (the "30% Test").

The 30% Test will restrict the extent to which a Fund may, among other
things: (a) sell or purchase put options on securities held for less than three
months or purchase put options on substantially identical securities (unless the
option and the security are acquired on the same day); (b) write options that
expire in less than three months; and (c) close options that were written or
purchased within the preceding three months. For purposes of the 30% Test, a
Fund's increases or decreases in value of short-term investment positions that
constitute certain designated hedging transactions may generally be netted. The
Trust does not expect that the 30% Test will significantly affect the investment
policies of any Fund.

Dividends and distributions paid by the Income Fund and the Money Market
Fund, and distributions of capital gains paid by all the Funds, will not qualify
for the Federal dividends-received deduction for corporations. Dividends paid by
the Premier Fund, the U.S. Equity Fund, the Mid-Cap Fund, the Strategic Fund,
the S&P 500 Index Fund, the International Fund, the Emerging Markets Fund and
the Value Fund, to the extent derived from dividends attributable to certain
types of stock issued by U.S. corporations, will qualify for the
dividends-received deduction for corporations. Some states, if certain asset and
diversification requirements are satisfied, permit shareholders to treat their
portions of a Fund's dividends that are attributable to interest on U.S.
Treasury securities and certain U.S. Government Obligations as income that is
exempt from state and local income taxes. Dividends attributable to repurchase
agreement earnings are, as a general rule, subject to state and local taxation.

Net investment income or capital gains earned by the Funds investing in
foreign securities may be subject to foreign income taxes withheld at the
source. The United States has entered into tax treaties with many foreign
countries that entitle the Funds to a reduced rate of tax or exemption from tax
on this related income and gains. The effective rate of foreign tax cannot be
determined at this time since the amount of these Funds' assets to be invested
within various countries is not now known. The Trust intends that the Funds seek
to operate so as to qualify for treaty-reduced rates of tax when applicable. In
addition, if a Fund qualifies as a regulated investment company under the Code,
if certain distribution requirements are satisfied, and if more than 50% of the
value of the Fund's assets at the close of the taxable year consists of stocks
or securities of foreign corporations, the Trust may elect, for U.S. Federal
income tax purposes, to treat foreign income taxes paid by the Fund that can be
treated as income taxes under U.S. income tax principles as paid by its
shareholders. The Trust anticipates that each of the International Fund and the
Emerging Markets Fund will seek to qualify for and make this election in most,
but not necessarily all, of its taxable years. If the Trust were to make an
election with respect to a Fund, an amount equal to the foreign income taxes
paid by the Fund would be included in the income of its shareholders and the
shareholders would be entitled to credit their

<PAGE>

portions of this amount against their U.S. tax liabilities, if any, or to deduct
those portions from their U.S. taxable income, if any. Shortly after any year
for which it makes an election, the Trust will report to the shareholders of the
Fund, in writing, the amount per share of foreign tax that must be included in
each shareholder's gross income and the amount that will be available as a
deduction or credit. No deduction for foreign taxes may be claimed by a
shareholder who does not itemize deductions. Certain limitations will be imposed
on the extent to which the credit (but not the deduction) for foreign taxes may
be claimed.

A Fund's transactions in options and futures contracts are subject to
special provisions of the Code that, among other things, may affect the
character of gains and losses realized by the Fund (that is, may affect whether
gains or losses are ordinary or capital), accelerate recognition of income to
the Fund and defer losses of the Fund. These rules (a) could affect the
character, amount and timing of distributions to shareholders of a Fund, (b)
will require the Fund to "mark to market" certain types of the positions in its
portfolio (that is, treat them as if they were closed out) and (c) may cause the
Fund to recognize income without receiving cash with which to make distributions
in amounts necessary to satisfy the distribution requirements for avoiding
income and excise taxes described above and in the Prospectus. The Trust seeks
to monitor transactions of each Fund, will seek to make the appropriate tax
elections on behalf of the Fund and seeks to make the appropriate entries in the
Fund's books and records when the Fund acquires any option, futures contract or
hedged investment, to mitigate the effect of these rules and prevent
disqualification of the Fund as a regulated investment company.

As a general rule, a shareholder's gain or loss on a sale or redemption of
shares of a Fund will be a long-term capital gain or loss if the shareholder has
held the shares for more than one year. The gain or loss will be a short-term
capital gain or loss if the shareholder has held the shares for one year or
less.

A Fund's net realized long-term capital gains are distributed as described
in the Prospectus. The distributions ("capital gain dividends"), if any, are
taxable to a shareholder of a Fund as long-term capital gains, regardless of how
long a shareholder has held the shares, and will be designated as capital gain
dividends in a written notice mailed by the Trust to the shareholders of the
Fund after the close of the Fund's prior taxable year. If a shareholder receives
a capital gain dividend with respect to any share of a Fund, and if the share is
sold before it has been held by the shareholder for six months or less, then any
loss on the sale or exchange of the share, to the extent of the capital gain
dividend, will be treated as a long-term capital loss. Investors considering
buying shares of a Fund on or just prior to the record date for a taxable
dividend or capital gain distribution should be aware that the amount of the
dividend or distribution payment will be a taxable dividend or distribution
payment.

Special rules contained in the Code apply when a shareholder of a Fund
disposes of shares of the Fund through a redemption or exchange within 90 days
of purchase and subsequently acquires shares of a Fund on which a sales charge
normally is imposed without paying a sales charge in accordance with the
exchange privilege described in the Prospectus. In these cases, any

<PAGE>

gain on the disposition of the shares of the Fund will be increased, or loss
decreased, by the amount of the sales charge paid when the shares were acquired,
and that amount will increase the adjusted basis of the shares of the Fund
subsequently acquired. In addition, if shares of a Fund are purchased within 30
days of redeeming shares at a loss, the loss will not be deductible and instead
will increase the basis of the newly purchased shares.

If a shareholder of a Fund fails to furnish the Trust with a correct
taxpayer identification number, fails to report fully dividend or interest
income, or fails to certify that he or she has provided a correct taxpayer
identification number and that he or she is not subject to "backup withholding,"
then the shareholder may be subject to a 31% "backup withholding" tax with
respect to (a) taxable dividends and distributions from the Fund and (b) the
proceeds of any redemptions of shares of the Fund. An individual's taxpayer
identification number is his or her social security number. The 31% backup
withholding tax is not an additional tax and may be credited against a
taxpayer's regular Federal income tax liability.

THE FUNDS' PERFORMANCE

The Trust, from time to time, may quote a Fund's performance, in terms of a
class' yield and/or total return, in reports or other communications to
shareholders of the Fund or in advertising material. To the extent that any
advertisement or sales literature of a Fund describes the expenses or
performance of any class, it will also disclose the expenses or performance for
the other class. Additional information regarding the manner in which
performance figures are calculated is provided below.

PERFORMANCE CALCULATION

Yield

The Trust may, from time to time, include the yield and effective yield of
the each class of shares of the Money Market Fund in advertisements or reports
to shareholders or prospective investors. "Current yield" will be based upon the
income that a hypothetical investment in a class of shares of the Fund would
earn over a stated seven-day period. This amount would then be "annualized,"
which means the amount of income generated over that week is assumed to be
generated each week over a 52-week period and is shown as a percentage of the
investment. The Money Market Fund's "effective yield" will be calculated
similarly, but, when annualized, the income earned by an investment in the Fund
is assumed to be reinvested. The effective yield would be slightly higher than
the current yield because of the compounding effect of this presumed
reinvestment.

The yield for the Money Market Fund is computed by (a) determining the net
change in the value of a hypothetical preexisting account in the Fund having a
balance of one share at the

<PAGE>

beginning of a seven-calendar-day period for which yield is to be quoted, (b)
dividing the net change by the value of the account at the beginning of the
period to obtain the base period return, and (c) annualizing the results (that
is, multiplying the base period return by 365/7). The net change in the value of
the account reflects the value of additional shares purchased with dividends
declared on the original share and any such additional shares, but does not
include realized gains and losses or unrealized appreciation and depreciation.
In addition, the Money Market Fund may calculate a compound effective annualized
yield by adding one to the base period return (calculated as described above),
raising the sum to a power equal to 365/7 and subtracting one.

The Income Fund's yield is calculated using a standardized formula the
income component of which is computed from the yields to maturity of all debt
obligations in the Fund's portfolio based on the market value of such
obligations (with all purchases and sales of securities during such period
included in the income calculation on a settlement date basis). Yield quotations
will be computed based on a 30-day period by dividing (a) the net income based
on the yield to maturity of each security earned during the period by (b) the
average daily number of shares outstanding during the period that were entitled
to receive dividends multiplied by the offering price per share on the last day
of the period.

The 30-day yield figure is calculated for a each class of the Income Fund
according to a formula prescribed by the SEC. The formula can be expressed as
follows:

Yield = 2[(a-b + 1)6-1]
---
cd

Where:

a = dividends and interest earned during the period.

b = expenses accrued for the period (net of reimbursement).

c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.

d = the maximum offering price per share on the last day of the period.

For the purpose of determining the interest earned (variable "a" in the
formula) on debt obligations that were purchased by a Fund at a discount or
premium, the formula generally calls for amortization of the discount or
premium; the amortization schedule will be adjusted monthly to reflect changes
in the market values of the debt obligations.

Investors should recognize that, in periods of declining interest rates,
the yield will tend to be somewhat higher than prevailing market rates, and in
periods of rising interest rates the yield will tend to be somewhat lower. In
addition, when interest rates are falling, moneys received by a

<PAGE>

Fund from the continuous sale of its shares will likely be invested in portfolio
instruments producing lower yields than the balance of the Fund's portfolio,
thereby reducing the current yield of the Fund. In periods of rising interest
rates, the opposite result can be expected to occur.

Yield information is useful in reviewing the performance of a Fund, but
because yields fluctuate, this information cannot necessarily be used to compare
an investment in shares of the Fund with bank deposits, savings accounts and
similar investment alternatives that often provide an agreed or guaranteed fixed
yield for a stated period of time. Shareholders of a Fund should remember that
yield is a function of the kind and quality of the instruments in the Fund's
portfolio, portfolio maturity, operating expenses and market conditions.

Total Return

From time to time, the Trust may advertise a Fund's "average annual total
return," which represents the average annual compounded rates of return over
one-, five- and ten-year periods, or other periods, or over the life of the Fund
(as stated in the advertisement) for each class of shares of a Fund. This total
return figure shows an average percentage change in value of an investment in
the Fund from the beginning date of the measuring period to the ending date of
the period, reflects changes in the price of a class of shares and assumes that
any income, dividends and/or capital gains distributions made by the Fund during
the period are reinvested. When considering average annual total return figures
for periods longer than one year, investors should note that a Fund's annual
total return for any one year in the period might have been greater or less than
the average for the entire period.

The Trust may use "aggregate total return" in advertisements, which
represents the cumulative change in value of an investment in a class of shares
of a Fund for a specific period, and which reflects changes in the Fund's share
price and reinvestment of dividends and distributions. Aggregate total return
may be shown by means of schedules, charts or graphs, and may indicate subtotals
of the various components of total return (that is, the change in value of
initial investment, income dividends and capital gains distributions). Because
there is a .25% shareholder servicing fee imposed on the Service Class shares,
the total returns for each of the Investment Class and the Service Class will
differ. Aggregate total return data reflects compounding over a longer period of
time than does annual total return data, and therefore aggregate total return
will be higher.

The Trust also may advertise the actual annual and annualized total return
performance data for various periods of time, which may be shown by means of
schedules, charts or graphs. Actual annual or annualized total return data
generally will be lower than average annual total return data, because the
latter reflects compounding of return.

Yield and total return figures are based on historical earnings and are not
intended to indicate future performances.

<PAGE>

Distribution Rate

The Trust also may advertise the Income Fund's distribution rate and/or
effective distribution rate. The Fund's distribution rate differs from yield and
total return and therefore is not intended to be a complete measure of
performance.

The Income Fund's distribution rate measures dividends distributed for a
specified period. The Fund's distribution rate is computed by dividing the most
recent monthly distribution per share annualized by the current net asset value
per share. The Fund's effective distribution rate is computed by dividing the
distribution rate by the ratio used to annualize the distribution and
reinvesting the resulting amount for a full year on the basis of such ratio. The
effective distribution rate will be higher than the distribution rate because of
the compounding effect of the assumed reinvestment. The Fund's yield is
calculated using the standardized formula described above. In contrast, the
distribution rate is based on the Fund's last monthly distribution, which tends
to be relatively stable and may be more or less than the amount of net
investment income and short-term capital gain actually earned by the Fund during
the month.

Comparative Performance Information

In addition to the comparative information set forth under "Performance"
above and otherwise quoted in sales and advertising materials, the Trust may
compare the Fund's performance with (a) the performance of other mutual funds as
listed in the rankings prepared by Lipper Analytical Services, Inc. or similar
independent services that monitor the performance of mutual funds, (b) various
unmanaged indexes, including the Russell Index, S&P 500 Index, and the Dow Jones
Industrial Average or (c) other appropriate indexes of investment securities or
with data developed by GEIM derived from those indexes.

Performance information also may include evaluations of a Fund published by
nationally recognized ranking services and by financial publications that are
nationally recognized, such as Barron's, Business Week, Forbes, Fortune,
Institutional Investor, Kiplinger's Personal Finance, Money, Morningstar Mutual
Fund Values, The New York Times, The Wall Street Journal and USA Today. These
ranking services or publications may compare a Fund's performance to, or rank it
within, a universe of mutual funds with investment objectives and policies
similar, but not necessarily identical to, the Fund's. Such comparisons or
rankings are made on the basis of several factors, including the size of the
Fund, objectives and policies, management style and strategy, and portfolio
composition, and may change over time if any of those factors change.

Average Annual Total Return

The "average annual total return" figures for the Funds described in the
Prospectus, are computed for a class according to a formula prescribed by the
SEC. The formula can be expressed as follows:

<PAGE>

P(1 + T)n = ERV

Where P = a hypothetical initial payment of $1,000;

T = average annual total return;

n = number of years; and

ERV = Ending Redeemable Value of a hypothetical $1,000
investment made at the beginning of a 1-, 5- or
10-year period at the end of a 1-, 5- or 10-year
period (or fractional portion thereof), assuming
reinvestment of all dividends and distributions.

The ERV assumes complete redemption of the hypothetical investment at the end of
the measuring period.

Aggregate Total Return

The "aggregate total return" figures described in the Prospectus represent
the cumulative change in the value of an investment in a class for the specified
period are computed by the following formula:

Aggregate Total Return = ERV - P
-------
P

Where P = a hypothetical initial payment of $1,000; and

ERV = Ending Redeemable Value of a hypothetical $1,000
investment made at the beginning of a 1-, 5- or
10-year period at the end of the 1-, 5- or 10-year
period (or fractional portion thereof), assuming
reinvestment of all dividends and distributions.

PRINCIPAL STOCKHOLDERS

The Funds commenced operations as of the date of this Statement of
Additional Information. As of that date, General Electric Capital Assurance
Company ("GE Assurance"), an indirect subsidiary of GE, owned 100% of the shares
of the Trust. The shares were issued to GE Assurance for providing the initial
seed capital to the Trust. So long as GE Assurance owns more than 25% of the
outstanding voting securities of the Trust, it may be deemed to control the
Trust. As of the date of this Statement of Additional Information, the current
Trustees and officers of each Fund, as a group, beneficially owned less than 1%
of each Fund's outstanding shares.

<PAGE>

ADDITIONAL INFORMATION

Shares of Beneficial Interest

The Trust was organized as an unincorporated business trust under the laws
of Delaware pursuant to a Certificate of Trust dated May 23, 1997, as amended
from time to time. The Trust has no prior history. The Trust's Declaration of
Trust, dated August 29, 1997 (the "Declaration of Trust") permits the Trustees
to issue an unlimited number of full and fractional shares of beneficial
interest of the Trust par value .001 per share. Under the Declaration of Trust,
the Trustees have the authority to create and classify shares of beneficial
interest in separate series, without further action by shareholders. As of the
date of this Statement of Additional Information, the Trustees have authorized
shares of the ten Funds described in the Prospectuses. Additional series may be
added in the future. The Declaration of Trust also authorizes the Trustees to
classify and reclassify the shares of the Trust, or new series of the Trust,
into one or more classes. As of the date of this Statement of Additional
Information, the Trustees have authorized the issuance of two classes of shares
of the Funds, designated as the Investment Class shares and the Service Class
shares. State Street maintains a record of each shareholder's ownership of
shares of a Fund. The shares of each class of each Fund represent an equal
proportionate interest in the aggregate net assets attributable to that class of
that Fund. Holders of Service Class shares have certain exclusive voting rights
on matters relating to the Plan. The different classes of the Fund may bear
different expenses relating to the cost of holding shareholder meetings
necessitated by the exclusive voting rights of any class of shares. In the
interest of economy and convenience, certificates representing shares of a Fund
are not physically issued.

Dividends paid by each Fund, if any, with respect to each class of shares
will be calculated in the same manner, at the same time and on the same day and
will be in the same amount, except for differences resulting from the facts
that: (a) the distribution and service fees relating to Service Class shares
will be borne exclusively by that class; and (b) each of the Service Class
shares and the Investment Class shares will bear any other class expenses
properly allocable to such class of shares, subject to the requirements imposed
by the Internal Revenue Service on funds having a multiple-class structure.
Similarly, the NAV per share may vary depending on whether Service Class shares
or Investment Class shares are purchased. In the event of liquidation,
shareholders of each class of each Fund are entitled to share pro rata in the
net assets of the class of the Fund available for distribution to these
shareholders. Shares entitle their holders to one vote per share, are freely
transferable and have no preemptive, subscription or conversion rights. When
issued, shares are fully paid and non-assessable.

<PAGE>

Unless otherwise required by the 1940 Act or the Declaration of Trust, the
Trust has no intention of holding annual meetings of shareholders. Fund
shareholders may remove a Trustee by the affirmative vote of at least two-thirds
of the Trust's outstanding shares and the Trustees shall promptly call a meeting
for such purpose when requested to do so in writing by the record holders of not
less than 10% of the outstanding shares of the Trust.

Generally, Delaware business trust shareholders are not personally liable
for obligations of the Delaware business trust under Delaware law. The Delaware
Business Trust Act ("DBTA") provides that a shareholder of a Delaware business
trust shall be entitled to the same limitation of liability extended to
shareholders of private for-profit corporations. The Declaration expressly
provides that the Trust has been organized under the DBTA and that the
Declaration is to be governed by and interpreted in accordance with Delaware
law. It is nevertheless possible that a Delaware business trust, such as the
Trust, might become a party to an action in another state whose courts refuse to
apply Delaware law, in which case the Trust's shareholders could possibly be
subject to personal liability.

To guard against this risk, the Declaration: (a) contains an express
disclaimer of shareholder liability for acts or obligations of the Trust and
provides that notice of such disclaimer may be given in each agreement,
obligation and instrument entered into or executed by the Trust or its Trustees,
(b) provides for the indemnification out of Trust property of any shareholders
held personally liable for any obligations of the Trust or any Fund, and (c)
provides that the Trust shall, upon request, assume the defense of any claim
made against any shareholder for any act or obligation of the Trust and satisfy
any judgment thereon. Thus, the risk of a shareholder incurring financial loss
beyond his or her investment because of shareholder liability is limited to
circumstances in which all of the following factors are present: (a) a court
refuses to apply Delaware law; (b) the liability arose under tort law or, if
not, no contractual limitation of liability was in effect; and (c) the Trust
itself would be unable to meet its obligations. In the light of DBTA, the nature
of the Trust's business, and the nature of its assets, the risk of personal
liability to a shareholder is remote.

Limitation of Trustee and Officer Liability

The Declaration further provides that the Trust shall indemnify each of its
Trustees and officers against liabilities and expenses reasonably incurred by
them, in connection with, or arising out of, any action, suit or proceeding,
threatened against or otherwise involving such Trustee or officer, directly or
indirectly, by reason of being or having been a Trustee or officer of the Trust.
The Declaration does not authorize the Trust to indemnify any Trustee or officer
against any liability to which he or she would otherwise be subject by reason of
or for willful misfeasance, bad faith, gross negligence or reckless disregard of
such person's duties.

<PAGE>

Limitation of Interseries Liability

All persons dealing with a Fund must look solely to the property of that
particular Fund for the enforcement of any claims against that Fund, as neither
the Trustees, officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of a Fund or the Trust. No Fund is liable for
the obligations of any other Fund.

COUNSEL

Sutherland, Asbill & Brennan LLP, 1275 Pennsylvania Avenue, N.W.,
Washington, D.C. 20004-2404 serves as counsel for the Trust.

INDEPENDENT ACCOUNTANTS

Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts 02110,
serves as independent accountants of the Trust.

FINANCIAL STATEMENTS

The Trust recently commenced operations and has not been in operation long
enough to have generated audited financial statements. The Annual Report, when
issued, will contain financial statements and other information relevant to the
Trust. The Trust will furnish, without charge, a copy of the Annual Report (when
it is issued) upon request to the Trust at P.O. Box 120065, Stamford, CT
06912-0065, 1-800-493-3042.

<PAGE>

APPENDIX

DESCRIPTION OF RATINGS

Commercial Paper Ratings

The rating A-1+ is the highest, and A-1 the second highest commercial paper
rating assigned by S&P. Paper rated A-1+ must have either the direct credit
support of an issuer or guarantor that possesses excellent long-term operating
and financial strength combined with strong liquidity characteristics
(typically, such issuers or guarantors would display credit quality
characteristics that would warrant a senior bond rating of AA or higher) or the
direct credit support of an issuer or guarantor that possesses above average
long-term fundamental operating and financing capabilities combined with ongoing
excellent liquidity characteristics. Paper rated A-1 must have the following
characteristics: liquidity ratios are adequate to meet cash requirements;
long-term senior debt is rated A or better; the issuer has access to at least
two additional channels of borrowing; basic earnings and cash flow have an
upward trend with allowance made for unusual circumstances; typically, the
issuer's industry is well established and the issuer has a strong position
within the industry; and the reliability and quality of management are
unquestioned. Capacity for timely payment on issues rated A-2 is satisfactory.
However, the relative degree of safety is not as high as issues designated
"A-1."

The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings are the
following: (a) evaluation of the management of the issuer; (b) economic
evaluation of the issuer's industry or industries and an appraisal of
speculative-type risks that may be inherent in certain areas; (c) evaluation of
the issuer's products in relation to competition and customer acceptance; (d)
liquidity; (e) amount and quality of long-term debt; (f) trend of earnings over
a period of ten years; (g) financial strength of parent company and the
relationships that exist with the issue; and (h) recognition by the management
of obligations that may be present or may arise as a result of public interest
questions and preparations to meet the obligations.

Issuers rated Prime-2 (or supporting institutions) have a strong ability
for repayment of senior short-term debt obligations. This normally will be
evidenced by many of the characteristics cited above, but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.

Short-term obligations, including commercial paper, rated A-1+ by IBCA
Limited or its affiliate IBCA Inc. are obligations supported by the highest
capacity for timely repayment. Obligations rated A-1 have a very strong capacity
for timely repayment. Obligations rated A-2 have a strong capacity for timely
repayment, although that capacity may be susceptible to adverse changes in
business, economic and financial conditions.

A-1

<PAGE>

Fitch Investors Services, Inc. employs the rating F-1+ to indicate issues
regarded as having the strongest degree of assurance of timely payment. The
rating F-1 reflects an assurance of timely payment only slightly less in degree
than issues rated F-1+, while the rating F-2 indicates a satisfactory degree of
assurance of timely payment although the margin of safety is not as great as
indicated by the F-1+ and F-1 categories.

Duff & Phelps Inc. employs the designation of Duff 1 with respect to top
grade commercial paper and bank money instruments. Duff 1+ indicates the highest
certainty of timely payment: short-term liquidity is clearly outstanding and
safety is just below risk-free U.S. Treasury short-term obligations. Duff 1-
indicates high certainty of timely payment. Duff 2 indicates good certainty of
timely payment; liquidity factors and company fundamentals are sound.

Thompson BankWatch Inc. employs the rating TBW-1 to indicate issues having
a very high degree of likelihood of timely payment. TBW-2 indicates a strong
degree of safety regarding timely payment, however, the relative degree of
safety is not as high as for issues rated TBW-1. While the rating TBW-3
indicates issues that are more susceptible to adverse developments than
obligations with higher ratings, capacity to service principal and interest in a
timely fashion is considered adequate. The lowest rating category is TBW-4; this
rating is regarded as non-investment grade and, therefore, speculative.

Various NRSROs utilize rankings within ratings categories indicated by a
plus or minus sign. The Funds, in accordance with industry practice, recognize
such ratings within categories or gradations, viewing for example S&P's ratings
of A-1+ and A-1 as being in S&P's highest rating category.

Description of S&P Corporate Bond Ratings

AAA -- This is the highest rating assigned by S&P to a bond and indicates
an extremely strong capacity to pay interest and repay principal.

AA -- Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from AAA issues only in small degree.

A -- Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.

BBB -- Bonds rated BBB have an adequate capacity to pay interest and repay
principal. Adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity to pay interest and repay principal for bonds in
this category (even though they normally exhibit adequate protection parameters)
than for bonds in higher rated categories.

BB, B and CCC -- Bonds rated BB and B are regarded, on balance, as
predominately

A-2

<PAGE>

speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB represents a lower degree of
speculation than B, and CCC the highest degree of speculation. While such bonds
will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.

To provide more detailed indications of credit quality, the ratings from AA
to B may be modified by the addition of a plus or minus sign to show relative
standing within this major rating category.

Description of Moody's Corporate Bond Ratings

Aaa -- Bonds that are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

Aa -- Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present that
make the long-term risks appear somewhat larger than in Aaa securities.

A -- Bonds that are rated A possess favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present that
suggest a susceptibility to impairment sometime in the future.

Baa -- Bonds that are rated Baa are considered as medium-grade obligations,
that is, they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba -- Bonds that are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.

B -- Bonds that are rated B generally lack characteristics of desirable
investments. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

A-3

<PAGE>

Caa -- Bonds that are rated Caa are of poor standing. These issues may be
in default, or present elements of danger may exist with respect to principal or
interest.

Moody's applies numerical modifiers (1, 2 and 3) with respect to the bonds
rated Aa through B, The modifier 1 indicates that the bond being rated ranks in
the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the bond ranks in the lower
end of its generic rating category.

Description of S&P Municipal Bond Ratings

AAA -- Prime -- These are obligations of the highest quality. They have the
strongest capacity for timely payment of debt service.

General Obligation Bonds -- In a period of economic stress, the issuers
will suffer the smallest declines in income and will be least susceptible to
autonomous decline. Debt burden is moderate. A strong revenue structure appears
more than adequate to meet future expenditure requirements. Quality of
management appears superior.

Revenue Bonds -- Debt service coverage has been, and is expected to remain,
substantial. Stability of the pledged revenues is also exceptionally strong due
to the competitive position of the municipal enterprise or to the nature of the
revenues. Basic security provisions (including rate covenant, earnings test for
issuance of additional bonds, debt service reserve requirements) are rigorous.
There is evidence of superior management.

AA -- High Grade -- The investment characteristics of bonds in this group
are only slightly less marked than those of the prime quality issues. Bonds
rated AA have the second strongest capacity for payment of debt service.

A -- Good Grade -- Principal and interest payments on bonds in this
category are regarded as safe although the bonds are somewhat more susceptible
to the adverse effects of changes in circumstances and economic conditions than
bonds in higher rated categories. This rating describes the third strongest
capacity for payment of debt service. The ratings differ from the two higher
ratings of municipal bonds, because:

General Obligations Bonds -- There is some weakness, either in the local
economic base, in debt burden, in the balance between revenues and expenditures,
or in quality of management. Under certain adverse circumstances, any one such
weakness might impair the ability of the issuer to meet debt obligations at some
future date.

Revenue Bonds -- Debt service coverage is good, but not exceptional.
Stability of the pledged revenues could show some variations because of
increased competition or economic influences on revenues. Basic security
provisions, while satisfactory, are less stringent. Management performance
appears adequate.

A-4

<PAGE>

BBB -- Medium Grade -- Of the investment grade ratings, this is the lowest.
Bonds in this group are regarded as having an adequate capacity to pay interest
and repay principal. Adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for bonds in this category (even though they normally exhibit adequate
protection parameters) than for bonds in higher rated categories.

General Obligation Bonds -- Under certain adverse conditions, several of
the above factors could contribute to a lesser capacity for payment of debt
service. The difference between A and BBB ratings is that the latter shows more
than one fundamental weakness, or one very substantial fundamental weakness,
whereas, the former shows only one deficiency among the factors considered.

Revenue Bonds -- Debt coverage is only fair. Stability of the pledged
revenues could show substantial variations, with the revenue flow possibly being
subject to erosion over time. Basic security provisions are no more than
adequate. Management performance could be stronger.

BB, B, CCC and CC -- Bonds rated BB, B, CCC and CC are regarded, on
balance, as predominately speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB includes
the lowest degree of speculation and CC the highest degree of speculation. While
these bonds will likely have some quality and protective characteristics, these
characteristics are outweighed by large uncertainties or major risk exposures to
adverse conditions.

C -- The rating C is reserved for income bonds on which no interest is
being paid.

D -- Bonds rated D are in default, and payment of interest and/or repayment
of principal is in arrears.

S&P's letter ratings may be modified by the addition of a plus or a minus
sign, which is used to show relative standing within the major rating
categories, except in the AAA-Prime Grade category.

Description of S&P Municipal Note Ratings

Municipal notes with maturities of three years or less are usually given
note ratings (designated SP-1, -2 or -3) to distinguish more clearly the credit
quality of notes as compared to bonds. Notes rated SP-1 have a very strong or
strong capacity to pay principal and interest. Those issues determined to
possess overwhelming safety characteristics are given the designation of SP-1+.
Notes rated SP-2 have satisfactory capacity to pay principal and interest.

A-5

<PAGE>

Description of Moody's Municipal Bond Ratings

Aaa -- Bonds that are rated Aaa are judged to be the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

Aa -- Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, or fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present that make the long-term risks appear somewhat larger than in Aaa
securities.

A -- Bonds that are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present that suggest a susceptibility to impairment sometime in the future.

Baa -- Bonds that are rated Baa are considered as medium grade obligations,
that is, they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

B -- Bonds that are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Caa -- Bonds that are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Ca -- Bonds that are rated Ca represent obligations that are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.

C -- Bonds that are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.

A-6

<PAGE>

Moody's applies the numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through B. The modifier 1 indicates that the security
ranks in the higher end of its generic ratings category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the issue ranks
in the lower end of its generic ratings category.

Description of Moody's Municipal Note Ratings

Moody's ratings for state and municipal notes and other short-term loans
are designated Moody's Investment Grade (MIG) and for variable rate demand
obligations are designated Variable Moody's Investment Grade (VMIG). This
distinction recognizes the differences between short-term credit risk and
long-term risk. Loans bearing the designation MIG 1/VMIG 1 are the best quality,
enjoying strong protection from established cash flows of funds for their
servicing or from established and broad-based access to the market for
refinancing, or both. Loans bearing the designation MIG 2/VMIG 2 are of high
quality, with margins of protection ample, although not as large as the
preceding group. Loans bearing the designation MIG 3/VMIG3 are of favorable
quality, with all security elements accounted for but lacking the undeniable
strength of the higher grades. Market access for refinancing, in particular, is
likely to be less well established. Loans bearing the designation MIG 4/VMIG 4
are of adequate quality. Protection commonly regarded as required of an
investment security is present and although not distinctly or predominantly
speculative, there is specific risk.

A-7
<PAGE>
PART C

OTHER INFORMATION

Item 24. Financial Statements and Exhibits

Financial Statements:

Included in Part A:
None

Included in Part B:
Statement of Assets and Liabilities*
Report of Independent Auditors*

(b) Exhibits:

Exhibit No. Description of Exhibit
----------- ----------------------

1(a) Certificate of Trust, incorporated herein by reference to
this Form N-1A registration statement (File Nos. 333-29337;
811-08257), filed with the Securities and Exchange
Commission on June 16, 1997.

1(b) Declaration of Trust**

2 Inapplicable

3 Inapplicable

4 Inapplicable

5(a) Form of Investment Advisory and Administration Agreement
between GE Institutional Funds Emerging Markets Fund and GE
Investment Management Incorporated ("GEIM")*

5(b) Form of Investment Advisory and Administration Agreement
between GE Institutional Funds Premier Growth Equity Fund
and GEIM*

5(c) Form of Investment Advisory and Administration Agreement
between GE Institutional Funds Mid-Cap Growth Fund and GEIM*

5(d) Form of Investment Advisory and Administration Agreement
between GE Institutional Funds International Equity Fund and
GEIM*

<PAGE>

5(e) Form of Investment Advisory and Administration Agreement
between GE Institutional Funds Value Equity Fund and GEIM*

5(f) Form of Investment Advisory and Administration Agreement
between GE Institutional Funds U.S. Equity Fund and GEIM*

5(g) Form of Investment Advisory and Administration Agreement
between GE Institutional Funds S&P 500 Index Fund and GEIM*

5(h) Form of Investment Advisory and Administration Agreement
between GE Institutional Funds Strategic Investment Fund and
GEIM*

5(i) Form of Investment Advisory and Administration Agreement
between GE Institutional Funds Income Fund and GEIM*

5(j) Form of Investment Advisory and Administration Agreement
between GE Institutional Funds Money Market Fund and GEIM*

5(k) Form of Sub-Advisory Agreement between GEIM and State Street
Bank and Trust Company.*

6 Form of Distribution Agreement between the Trust and GE
Investment Services, Inc.*

7 Inapplicable

8 Custodian Contract*

9 Transfer Agency and Service Agreement*

10 Opinion of Counsel, including consent*

11 Consent of Independent Auditors*

12 Inapplicable

13 Purchase Agreement*

14 Inapplicable

15 Form of Shareholder Servicing and Distribution Plan Adopted
pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended*

16 Schedule of computation of performance data information*

<PAGE>

17 Financial Data Schedules*

18 Form of Multiple Class Plan for GE Institutional Funds
Adopted pursuant to Rule 18f-3 under the Investment Company
Act of 1940, as amended*

- ---------------------
* To be supplied by amendment

** Filed herewith.

Item 25. Persons Controlled by or Under Common Control with Registrant

[To Be Completed]

Item 26. Number of Holders of Securities

Number of Record
Title of Class Holders as of September 1997
-------------- ----------------------------------

Shares representing General Electric Capital Assurance Company
beneficial interests,
par value $.001 per share
of the Fund

Item 27. Indemnification

As a Delaware business trust, the operations of GE Institutional Funds
("Registrant") are governed by its Declaration of Trust dated August 29, 1997
(the "Declaration of Trust"). Generally, Delaware business trust shareholders
are not personally liable for obligations of the Delaware business trust under
Delaware law. The Delaware Business Trust Act (the DBTA) provides that a
shareholder of a trust shall be entitled to the same limitation of liability
extended to shareholders of private for-profit Delaware corporations.
Registrant's Declaration of Trust expressly provides that it has been organized
under the DBTA and that the Declaration of Trust is to be governed by Delaware
law. It is nevertheless possible that a Delaware business trust, such as
Registrant, might become a party to an action in another state whose courts
refuse to apply Delaware law, in which case Registrant's shareholders could be
subject to personal liability.

To protect Registrant's shareholders against the risk of personal
liability, the Declaration of Trust: (i) contains an express disclaimer of
shareholder liability for acts or obligations of Registrant and provides that
notice of such disclaimer may be given in each agreement, obligation and
instrument entered into or executed by Registrant or its Trustees; (ii) provides
for the indemnification out of Trust property of any shareholders held
personally liable for any obligations of Registrant or any series of Registrant;
and (iii) provides that Registrant shall, upon request, assume the defense of
any claim made against any shareholder for any act or obligation of Registrant
and satisfy any judgment thereon. Thus, the risk of a shareholder incurring
financial loss beyond his or her investment because of shareholder liability is
limited to circumstances in which all of the following factors are present: (i)
a court refuses to apply Delaware law; (ii) the

<PAGE>

liability arose under tort law or, if not, no contractual limitation of
liability was in effect; and (iii) Registrant itself would be unable to meet its
obligations. In the light of Delaware law, the nature of Registrant's business
and the nature of its assets, the risk of personal liability to a shareholder is
remote.

The Declaration of Trust further provides that Registrant shall indemnify
each of its Trustees and officers against liabilities and expenses reasonably
incurred by them, in connection with, or arising out of, any action, suit or
proceeding, threatened against or otherwise involving such Trustee or officer,
directly or indirectly, by reason of being or having been a Trustee or officer
of Registrant. The Declaration of Trust does not authorize Registrant to
indemnify any Trustee or officer against any liability to which he or she would
otherwise be subject by reason of or for willful misfeasance, bad faith, gross
negligence or reckless disregard of such person's duties.

Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to Trustees, officers and controlling persons, or
otherwise, Registrant has been advised that in the opinion of the Commission
such indemnification may be against public policy as expressed in the Act and
may be, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Registrant of expenses
incurred or paid by a Trustee, officer or controlling person of Registrant in
the successful defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

Item 28. Business and Other Connections of Investment Adviser

Reference is made to "Management of the Trust" in the Prospectus forming
Part A, and "The Management of the Trust" in the Statement of Additional
Information forming Part B, of this Registration Statement.

The list required by this Item 28 of officers and directors of GEIM, the
Funds' investment adviser, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by those
officers and directors during the past two years, is incorporated by reference
to Schedules A and D of the Forms ADV filed by GEIM pursuant to the Investment
Advisers Act of 1940, as amended (SEC File No. 801-31947).

Item 29. Principal Underwriters

(a) GE Investment Services Inc. ("GEIS") also serves as distributor for the
investment portfolios of GE Funds and GE Investments Funds, Inc. and for Elfun
Tax-Exempt Income Fund, Elfun Income Fund, Elfun Global Fund, Elfun Money Market
Fund, Elfun Trusts and Elfun Diversified Fund.

<PAGE>

(b) The information required by this Item 29 with respect to each director
and Officer of GEIS is incorporated by reference to Schedule A of Form BD filed
by GEIS pursuant to the Securities Exchange Act of 1934 (SEC File No. 8-45710).

Item 30. Location of Accounts and Records

All accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940, as
amended (the "1940 Act"), and the rules thereunder, are maintained at the
offices of: Registrant located at 3003 Summer Street, Stamford, Connecticut
06905; State Street Bank and Trust Company ("State Street"), Registrant's
custodian and transfer agent, located at 225 Franklin Street, Boston,
Massachusetts 02101; and National Financial Data Services Inc., an indirect
subsidiary of State Street, located at P.O. Box 419631, Kansas, MO 64141-6631.

Item 31. Management Services

Inapplicable.

Item 32. Undertakings

(a) Inapplicable

(b) Registrant undertakes to file a post-effective amendment containing
reasonably current financial statements that need not be certified, within four
to six months from the effective date of this Registration Statement.

(c) Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest annual report to shareholders,
upon request and without charge.

(d) Registrant undertakes to call a meeting of the shareholders of each
Fund for the purpose of voting upon the question of removal of a trustee or
trustees of Registrant when requested in writing to do so by the holders of at
least 10% of Registrant's outstanding shares and, in connection with the
meeting, to comply with the provisions of Section 16(c) of the 1940 Act relating
to communications with the shareholders of certain common-law trusts.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, Registrant has duly caused this
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Stamford, State of
Connecticut, on the 17th day of September, 1997.

By: /s/ Michael J. Cosgrove
----------------------------------
Michael J. Cosgrove
President and Chairman
of the Board

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment to the Registration Statement on Form N-1A has been
signed below by the following persons in the capacities and on the dates
indicated.

Signature Title Date
- --------- ----- ----

<S> <C> <C>
/s/ Michael J. Cosgrove Trustee, President and September 17, 1997
- -------------------------- Chairman of the Board
Michael J. Cosgrove (Chief Executive Officer)

/s/ Alan M. Lewis Trustee, September 17, 1997
- ----------------- Executive Vice President
Alan M. Lewis

/s/ John R. Costantino Trustee September 17, 1997
- ------------------------
John R. Costantino

/s/ William J. Lucas Trustee September 17, 1997
- --------------------
William J. Lucas

/s/ Robert P. Quinn Trustee September 17, 1997
- -------------------
Robert P. Quinn

/s/ Jeffrey A. Groh Treasurer September 17, 1997
- -------------------------- (Chief Financial and
Jeffrey A. Groh Accounting Officer)

</TABLE>

<PAGE>

EXHIBIT INDEX

EX-99.B1(b) Declaration of Trust

DECLARATION OF TRUST

GE INSTITUTIONAL FUNDS

Dated as of August 29, 1997

<PAGE>
TABLE OF CONTENTS

<S> <C> <C>
ARTICLE 1 Name and Definitions............................................................................1
1.1. Name...............................................................................................1
1.2. Definitions........................................................................................1

ARTICLE 2 Nature and Purpose of Trust.....................................................................2
2.1. Nature of Trust....................................................................................2
2.2. Purpose of Trust...................................................................................3
2.3. Interpretation of Declaration of Trust.............................................................3
2.3.1. Governing Instrument....................................................................3
2.3.2. No Waiver of Compliance with Applicable Law.............................................3
2.3.3. Power of the Trustees Generally.........................................................3

ARTICLE 3 Registered Agent; Offices.......................................................................3
3.1. Registered Agent...................................................................................3
3.2. Offices............................................................................................3

ARTICLE 4 Shares of Beneficial Interest...................................................................4
4.1. Shares of Beneficial Interest......................................................................4
4.2. Number of Authorized Shares........................................................................4
4.3. Ownership and Certification of Shares..............................................................4
4.4. Status of Shares...................................................................................4
4.4.1. Fully Paid and Non-assessable...........................................................4
4.4.2. Personal Property.......................................................................4
4.4.3. Party to Declaration of Trust...........................................................4
4.4.4. Death of Shareholder....................................................................4
4.4.5. Title to Trust; Right to Accounting.....................................................5
4.5. Determination of Shareholders......................................................................5
4.6. Shares Held by Trust...............................................................................5
4.7. Shares Held by Persons Related to Trust............................................................5
4.8. Preemptive and Appraisal Rights....................................................................5
4.9. Series and Classes of Shares.......................................................................5
4.9.1. Generally...............................................................................5
4.9.2. Establishment and Designation...........................................................6
4.9.3. Conversion Rights.......................................................................6
4.9.4. Separate and Distinct Nature............................................................6
4.9.5. Rights and Preferences..................................................................6
4.9.5.1. Assets and Liabilities "Belonging" to a Series...............................7
4.9.5.2. Treatment of Particular Items................................................7
4.9.5.3. Limitation on Interseries Liabilities........................................7
4.9.5.4. Dividends....................................................................8
4.9.5.5. Redemption by Shareholder....................................................8
4.9.5.6. Redemption by Trust..........................................................8
4.9.5.7. Prevention of Personal Holding Company Status................................8
4.9.5.8. Net Asset Value..............................................................9
4.9.5.9. Maintenance of Stable Net Asset Value........................................9
4.9.5.10. Transfer of Shares..........................................................9
4.9.5.11. Equality of Shares..........................................................9
4.9.5.12. Fractional Shares..........................................................10
4.9.6. Rights and Preferences of Classes......................................................10
<PAGE>

ARTICLE 5 Trustees.......................................................................................11
5.1. Management of the Trust...........................................................................11
5.2. Qualification.....................................................................................11
5.3. Number............................................................................................11
5.4. Term and Election.................................................................................11
5.5. Composition of the Board of Trustees..............................................................11
5.6. Resignation and Retirement........................................................................11
5.7. Removal...........................................................................................12
5.8. Vacancies.........................................................................................12
5.9. Ownership of Assets of the Trust..................................................................12
5.10. Powers...........................................................................................12
5.10.1. Bylaws................................................................................13
5.10.2. Officers, Agents, and Employees.......................................................13
5.10.3. Committees............................................................................13
5.10.3.1. Generally..................................................................13
5.10.3.2. Executive Committee........................................................13
5.10.4. Advisers, Administrators, Depositories, and Custodians................................13
5.10.5. Compensation..........................................................................14
5.10.6. Delegation of Authority...............................................................14
5.10.7. Suspension of Sales...................................................................14
5.11. Certain Additional Powers........................................................................14
5.11.1. Investments...........................................................................14
5.11.2. Disposition of Assets.................................................................14
5.11.3. Ownership.............................................................................14
5.11.4. Subscription..........................................................................15
5.11.5. Payment of Expenses...................................................................15
5.11.6. Form of Holding.......................................................................15
5.11.7. Reorganization, Consolidation, or Merger..............................................15
5.11.8. Compromise............................................................................15
5.11.9. Partnerships..........................................................................15
5.11.10. Borrowing............................................................................15
5.11.11. Guarantees...........................................................................16
5.11.12. Insurance............................................................................16
5.11.13. Indemnification......................................................................16
5.11.14. Pensions.............................................................................16
5.12. Meetings and Vote of Trustees....................................................................16
5.12.1. Regular Meetings......................................................................16
5.12.2. Special Meetings......................................................................16
5.12.3. Telephonic Meetings...................................................................17
5.12.4. Quorum................................................................................17
5.12.5. Required Vote.........................................................................17
5.12.6. Consent in Lieu of a Meeting..........................................................17

ARTICLE 6 Officers.......................................................................................17
6.1. Enumeration.......................................................................................17
6.2. Qualification.....................................................................................17
6.3. Election..........................................................................................18
6.4. Term of Office....................................................................................18
6.5. Powers............................................................................................18
6.6. Titles and Duties.................................................................................18
6.6.1. Chairperson of the Board; President....................................................18
6.6.2. Vice President.........................................................................18
6.6.3. Treasurer..............................................................................18
6.6.4. Assistant Treasurer....................................................................19
6.6.5. Secretary..............................................................................19
6.6.6. Assistant Secretary....................................................................19
6.6.7. Temporary Secretary....................................................................19
6.7. Resignation, Retirement, and Removal..............................................................19
6.8. Vacancies.........................................................................................20

ARTICLE 7 Transactions with Officers and Trustees........................................................20
7.1. Purchase and Redemption of Shares of the Trust....................................................20
7.2. Purchase and Sale of Other Securities.............................................................20
7.3. Concentration in Any One Issuer...................................................................20

ARTICLE 8 Service Providers..............................................................................20
8.1. Investment Adviser................................................................................20
8.2. Underwriter and Transfer Agent....................................................................20
8.3. Custodians........................................................................................21
8.4. Administrator.....................................................................................21
8.5. Other Contracts...................................................................................21
8.6. Parties to Contracts..............................................................................21

<PAGE>

ARTICLE 9 Shareholders' Voting Powers and Meetings.......................................................22
9.1. Voting Powers.....................................................................................22
9.1.1. Matters Requiring Shareholders Action..................................................22
9.1.2. Separate Voting by Series and Class....................................................22
9.1.3. Number of Votes........................................................................22
9.1.4. Cumulative Voting......................................................................23
9.1.5. Voting of Shares; Proxies..............................................................23
9.1.6. Actions Prior to the Issuance of Shares................................................23
9.2. Meetings of Shareholders..........................................................................23
9.2.1. Annual or Regular Meetings.............................................................23
9.2.2. Special Meetings.......................................................................23
9.2.3. Notice of Meetings.....................................................................23
9.2.4. Call of Meetings.......................................................................24
9.3. Record Dates......................................................................................24
9.4. Quorum............................................................................................24
9.5. Required Vote.....................................................................................24
9.6. Adjournments......................................................................................24
9.7. Actions by Written Consent........................................................................25
9.8. Inspection of Records.............................................................................25
9.9. Additional Provisions.............................................................................25

ARTICLE 10 Limitation of Liability and Indemnification....................................................25
10.1. General Provisions...............................................................................25
10.1.1. General Limitation of Liability.......................................................25
10.1.2. Notice of Limited Liability...........................................................25
10.1.3. Liability Limited to Assets of the Trust..............................................26
10.2. Liability of Trustees............................................................................26
10.2.1. Liability for Own Actions.............................................................26
10.2.2. Liability for Actions of Others.......................................................26
10.2.3. Advice of Experts and Reports of Others...............................................26
10.2.4. Bond..................................................................................26
10.2.5. Declaration of Trust Governs Issues of Liability......................................27
10.3. Liability of Third Persons Dealing with Trustees.................................................27
10.4. Liability of Shareholders........................................................................27
10.4.1. Limitation of Liability...............................................................27
10.4.2. Indemnification of Shareholders.......................................................27
10.5. Indemnification..................................................................................28
10.5.1. Indemnification of Covered Persons....................................................28
10.5.2. Exceptions............................................................................28
10.5.3. Rights of Indemnification.............................................................28
10.5.4. Expenses of Indemnification...........................................................29
10.5.5. Certain Defined Terms Relating to Indemnification.....................................29

ARTICLE 11 Termination or Reorganization..................................................................29
11.1. Termination of Trust or Series or Class..........................................................29
11.1.1. Termination...........................................................................30
11.1.2. Distribution of Assets................................................................30
11.1.3. Certificate of Cancellation...........................................................30
11.2. Sale of Assets...................................................................................30
11.3. Merger or Consolidation..........................................................................31
11.3.1. Authority to Merge or Consolidate.....................................................31
11.3.2. No Shareholder Approval Required......................................................31
11.3.3. Subsequent Amendments.................................................................31
11.3.4. Certificate of Merger or Consolidation................................................31

ARTICLE 12 Amendments.....................................................................................31
12.1. Generally........................................................................................31
12.2. Certificate of Amendment.........................................................................32
12.3. Prohibited Retrospective Amendments..............................................................32

ARTICLE 13 Miscellaneous Provisions.......................................................................32
13.1. Certain Internal References......................................................................32
13.2. Certified Copies.................................................................................32
13.3. Execution of Papers..............................................................................32
13.4. Fiscal Year......................................................................................32
13.5. Governing Law....................................................................................32
13.6. Headings.........................................................................................33
13.7. Resolution of Ambiguities........................................................................33
13.8. Seal.............................................................................................33
13.9. Severability.....................................................................................33
13.10. Signatures......................................................................................33

</TABLE>

<PAGE>

DECLARATION OF TRUST
OF
GE INSTITUTIONAL FUNDS

This DECLARATION OF TRUST of the GE Institutional Funds is made as of this
29th day of August, 1997 by the initial Trustees hereunder.

W I T N E S S E T H

WHEREAS, the Trustees desire to form a Delaware business trust for the
purpose of carrying on the business of an open-end management investment
company; and

WHEREAS, in furtherance of such purpose, the initial Trustees and any
successor Trustees elected in accordance with Article 5 hereof are acquiring and
may hereafter acquire assets which they will hold and manage as trustees of a
Delaware business trust in accordance with the provisions hereinafter set forth;
and

WHEREAS, this Trust is authorized to issue its shares of beneficial
interest in one or more separate series and classes of series, all in accordance
with the provisions set forth in this Declaration of Trust;

NOW, THEREFORE, the initial Trustees hereby declare that they and any
successor Trustees elected in accordance with Article 5 hereof will hold in
trust all cash, securities, and other assets which they may from time to time
acquire in any manner as Trustees hereunder, and that they and any successor
Trustees will manage and dispose of the same upon the following terms and
conditions for the benefit of the holders of shares of beneficial interest in
this Trust as hereinafter set forth.

ARTICLE 1
Name and Definitions

Section 1.1. Name. This Trust shall be known as GE Institutional Funds and
the Trustees shall conduct the business of the Trust under that name or any
other name or names as they may from time to time determine.

Section 1.2. Definitions. Whenever used herein, unless otherwise required
by the context or specifically provided below:

(a) The "Code" refers to the Internal Revenue Code of 1986 (and any
successor statute) and the rules and regulations thereunder, all as amended from
time to time.

(b) "Commission" shall mean the United States Securities and Exchange
Commission (or any successor agency thereto);

(c) The "DBTA" refers to the Delaware Business Trust Act, Chapter 38 of
Title 12 of the Delaware Code (and any successor statute), as amended from time
to time; and

<PAGE>

(d) "Declaration of Trust" or "Declaration" shall mean this Declaration of
Trust as amended or restated from time to time;

(e) The "1940 Act" refers to the Investment Company Act of 1940 (and any
successor statute) and the rules and regulations thereunder, all as amended from
time to time;

(f) "Person," "Interested Person," and "Principal Underwriter" shall have
the meanings given them in the 1940 Act;

(g) "Series" shall mean any of the separate series of Shares established
and designated under or in accordance with the provisions of Article 4 and to
which the Trustees have allocated assets and liabilities of the Trust in
accordance with Article 4;

(h) "Shares" shall mean the shares of beneficial interest in the Trust
described in Article 4 hereof and shall include fractional and whole Shares;

(i) "Shareholder" shall mean a beneficial owner of Shares;

(j) The "Trust" shall mean the Delaware business trust established by this
Declaration of Trust, as amended from time to time;

(k) "Trustee" and "Trustees" shall mean the signatories to this Declaration
of Trust so long as such signatories shall continue in office in accordance with
the terms hereof, and all other individuals who at the time in question have
been duly elected or appointed and qualified in accordance with Article 5 hereof
and are then in office;

ARTICLE 2
Nature and Purpose of Trust

Section 2.1. Nature of Trust. The Trust is a business trust of the type
referred to in the DBTA. The Trustees shall file a certificate of trust in
accordance with Section 3810 of the DBTA. The Trust is not intended to be, shall
not be deemed to be, and shall not be treated as, a general or a limited
partnership, joint venture, corporation or joint stock company, nor shall the
Trustees or Shareholders or any of them for any purpose be deemed to be, or be
treated in any way whatsoever as though they were, liable or responsible
hereunder as partners or joint venturers.

Section 2.2. Purpose of Trust. The purpose of the Trust is to engage in,
operate and carry on the business of an open-end management investment company
and to do any and all acts or things as are necessary, convenient, appropriate,
incidental or customary in connection therewith.

<PAGE>

Section 2.3. Interpretation of Declaration of Trust.

Section 2.3.1. Governing Instrument. This Declaration of Trust shall
be the governing instrument of the Trust and shall be governed by and
construed according to the laws of the State of Delaware.

Section 2.3.2. No Waiver of Compliance with Applicable Law. No
provision of this Declaration shall be effective to require a waiver of
compliance with any provision of the Securities Act of 1933, as amended, or
the 1940 Act, or of any valid rule, regulation or order of the Commission
thereunder.

Section 2.3.3. Power of the Trustees Generally. Except as otherwise
set forth herein, the Trustees may exercise all powers of trustees under
the DBTA on behalf of the Trust.

ARTICLE 3
Registered Agent; Offices

Section 3.1. Registered Agent. The name of the registered agent of the
Trust is Corporation Service Company and the registered agent's business address
in Delaware is 1013 Centre Road, Wilmington, Delaware 19805.

Section 3.2. Offices. The Trust shall maintain an office within the State
of Delaware which shall be identical to the business office of the Registered
Agent of the Trust as set forth in Section 3.1. The Trustees may, at any time,
establish branch or subordinate offices at any place or places where the Trust
intends to do business.

<PAGE>

ARTICLE 4
Shares of Beneficial Interest

Section 4.1. Shares of Beneficial Interest. The beneficial interests in the
Trust shall be divided into Shares, par value $.001 per share. The Trustees
shall have the authority from time to time to divide the Shares into two (2) or
more separate and distinct series of Shares ("Series") and to divide each such
Series of Shares into two (2) or more classes of Shares ("Classes"), all as
provided in Section 4.9 of this Article 4.

Section 4.2. Number of Authorized Shares. The Trustees are authorized
to issue an unlimited number of Shares. The Trustees may issue Shares for such
consideration and on such terms as they may determine (or for no consideration
if pursuant to a Share dividend or split), all without action or approval of the
Shareholders.

Section 4.3. Ownership and Certification of Shares. The Secretary of the
Trust, or the Trust's transfer or similar agent, shall record the ownership and
transfer of Shares of each Series and Class separately on the record books of
the Trust. The record books of the Trust, as kept by the Secretary of the Trust
or any transfer or similar agent, shall contain the name and address of and the
number of Shares held by each Shareholder, and such record books shall be
conclusive as to who are the holders of Shares and as to the number of Shares
held from time to time by such Shareholders. No certificates certifying the
ownership of Shares shall be issued except as the Trustees may otherwise
determine from time to time. The Trustees may make such rules as they consider
appropriate for the issuance of share certificates, transfer of Shares, and
similar matters for the Trust or any Series or Class.

Section 4.4. Status of Shares.

Section 4.4.1. Fully Paid and Non-assessable. All Shares when issued
on the terms determined by the Trustees shall be fully paid and
non-assessable.

Section 4.4.2. Personal Property. Shares shall be deemed to be
personal property giving only the rights provided in this Declaration of
Trust.

Section 4.4.3. Party to Declaration of Trust. Every Person by virtue
of having become registered as a Shareholder shall be held to have
expressly assented and agreed to the terms of this Declaration of Trust and
to have become a party thereto.

Section 4.4.4. Death of Shareholder. The death of a Shareholder during
the continuance of the Trust shall not operate to terminate the Trust nor
entitle the representative of any deceased Shareholder to an accounting or
to take any action in court or elsewhere against the Trust or the Trustees.
The representative shall be entitled to the same rights as the decedent
under this Trust.
<PAGE>

Section 4.4.5. Title to Trust; Right to Accounting. Ownership of
Shares shall not entitle the Shareholder to any title in or to the whole or
any part of the Trust property or right to call for a partition or division
of the same or for an accounting.

Section 4.5. Determination of Shareholders. The Trustees may from time to
time close the transfer books or establish record dates and times for the
purposes of determining the Shareholders entitled to be treated as such, to the
extent provided or referred to in Section 9.3.

Section 4.6. Shares Held by Trust. The Trustees may hold as treasury
shares, reissue for such consideration and on such terms as they may determine,
or cancel, at their discretion from time to time, any Shares of any Series or
Class reacquired by the Trust.

Section 4.7. Shares Held by Persons Related to Trust. Any Trustee, officer
or other agent of the Trust, and any organization in which any such person is
interested may acquire, own, hold and dispose of Shares to the same extent as if
such person were not a Trustee, officer or other agent of the Trust; and the
Trust may issue and sell or cause to be issued and sold and may purchase Shares
from any such person or any such organization subject only to the general
limitations, restrictions or other provisions applicable to the sale or purchase
of such Shares generally.

Section 4.8. Preemptive and Appraisal Rights. Shareholders shall not, as
Shareholders, have any right to acquire, purchase or subscribe for any Shares or
other securities of the Trust which it may hereafter issue or sell, other than
such right, if any, as the Trustees in their discretion may determine.
Shareholders shall have no appraisal rights with respect to their Shares and,
except as otherwise determined by resolution of the Trustees in their sole
discretion, shall have no exchange or conversion rights with respect to their
Shares. No action may be brought by a Shareholder on behalf of the Trust unless
Shareholders owning no less than a majority of the then outstanding Shares, or
Series or Class thereof, join in the bringing of such action. A Shareholder
shall not be entitled to participate in a derivative or class action lawsuit on
behalf of any other Series or any other Class or on behalf of the Shareholders
in any other Series or any other Class of the Trust than the Series or Class of
Shares owned by such Shareholder.

Section 4.9. Series and Classes of Shares.

Section 4.9.1. Generally. In addition to the Series and Classes
established and designated in Section 4.9.2, the Shares of the Trust shall
be divided into one or more separate and distinct Series or Classes of a
Series as the Trustees shall from time to time establish and designate.

<PAGE>

Section 4.9.2. Establishment and Designation. The Trustees shall have
exclusive power without the requirement of Shareholder approval to
establish and designate separate and distinct Series of Shares and with
respect to any Series of Shares, to establish and designate separate and
distinct Classes of Shares. The establishment and designation of any Series
(in addition to those established and designated in this Section below) or
Class shall be effective upon the execution by a majority of the Trustees
of an instrument setting forth such establishment and designation and the
relative rights and preferences of the Shares of such Series or Class, or
as otherwise provided in such instrument. Each such instrument shall have
the status of an amendment to this Declaration of Trust. Without limiting
the authority of the Trustees to establish and designate any further Series
or Classes, the Trustees hereby establish and designate the following ten
initial Series: Emerging Markets Fund, International Equity Fund, Mid-Cap
Growth Fund, Premier Growth Equity Fund, Value Equity Fund, U.S. Equity
Fund, S&P 500 Index Fund, Strategic Investment Fund, Income Fund and Money
Market Fund. The Shares of such initial Series shall be divided into two
initial Classes designated as "Investment Class" Shares and "Service Class"
Shares.

Section 4.9.3. Conversion Rights. Subject to compliance with the
requirements of the 1940 Act, the Trustees shall have the authority to
provide that holders of Shares of any Series or Class within a Series shall
have the right to convert such Shares into Shares of one or more other
Series or Classes in accordance with such requirements and procedures as
may be established by the Trustees.

Section 4.9.4. Separate and Distinct Nature. Each Series and Class,
including without limitation Series and Classes specifically established in
Section 4.9.2, shall be separate and distinct from any other Series and
Class and shall maintain separate and distinct records on the books of the
Trust, and the assets belonging to any such Series and Class shall be held
and accounted for separately from the assets of the Trust or any other
Series and Class.

Section 4.9.5. Rights and Preferences of Series. The Trustees shall
have exclusive power without the requirement of Shareholder approval to fix
and determine the relative rights and preferences as between the Shares of
the separate Series. The initial Series and any further Series that may
from time to time be established and designated by the Trustees shall
(unless the Trustees otherwise determine with respect to some further
Series at the time of establishing and designating the same) have relative
rights and preferences as set forth in this Section 4.9.5, subject to the
relative rights and preferences of Classes within each such Series as set
forth in Section 4.9.6.

Section 4.9.5.1. Assets and Liabilities "Belonging" to a Series. All
consideration received by the Trust for the issue or sale of Shares of a
particular Series, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits, and proceeds
thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall be
held and accounted for separately from the other assets of the Trust and of
every other Series and may be referred to herein as "assets belonging to"
that Series. The assets belonging to a particular Series shall belong to
that Series for all purposes, and to no other Series, subject only to the
rights of creditors of that Series. Such consideration, assets, income,
earnings, profits, and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or
payments which are not readily identifiable as belonging to any particular
Series (collectively "General Items"), the Trustees shall allocate to and
among any one or more of the Series in such manner and on such basis as
they, in their sole discretion, deem fair and equitable. Any General Items
so allocated to a particular Series shall belong to that Series. Each such
allocation by the Trustees shall be conclusive and binding upon all
Shareholders for all purposes. The assets belonging to each particular
Series shall be charged with the liabilities in respect of that Series and
all expenses, costs, charges and reserves attributable to that Series, and
any general liabilities, expenses, costs, charges or reserves of the Trust
which are not readily identifiable as belonging to any particular Series
shall be allocated and charged by the Trustees to and among any one or more
of the Series established and designated from time to time in such manner
and on such basis as the Trustees in their sole discretion deem fair and
equitable. Each allocation of liabilities, expenses, costs, charges and
reserves by the Trustees shall be conclusive and binding upon all
Shareholders for all purposes.

Section 4.9.5.2. Treatment of Particular Items. The Trustees shall
have full discretion, to the extent consistent with the 1940 Act and
consistent with generally accepted accounting principles, to determine
which items shall be treated as income and which items as capital; and each
such determination and allocation shall be conclusive and binding upon the
Shareholders.

<PAGE>

Section 4.9.5.3. Limitation on Interseries Liabilities. Subject to the
right of the Trustees in their discretion to allocate general liabilities,
expenses, costs, charges or reserves as provided in Section 4.9.5.1, the
debts, liabilities, obligations and expenses incurred, contracted for or
otherwise existing with respect to a particular Series shall be enforceable
against the assets of such Series only, and not against the assets of any
other Series. Notice of this limitation on liabilities between and among
Series shall be set forth in the certificate of trust of the Trust (whether
originally or by amendment) as filed or to be filed in the Office of the
Secretary of State of the State of Delaware pursuant to the DBTA, and upon
the giving of such notice in the certificate of trust, the statutory
provisions of Section 3804 of the DBTA relating to limitations on
liabilities between and among series (and the statutory effect under
Section 3804 of setting forth such notice in the certificate of trust)
shall become applicable to the Trust and each Series.

Section 4.9.5.4. Dividends. Dividends and capital gain distributions
on Shares of a particular Series may be paid with such frequency, in such
form, and in such amount as the Trustees may determine by resolution
adopted from time to time, or pursuant to a standing resolution or
resolutions adopted only once or with such frequency as the Trustees may
determine. All dividends and distributions on Shares of a particular Series
shall be distributed pro rata to the holders of Shares of that Series in
proportion to the number of Shares of that Series held by such holders at
the date and time of record established for the payment of such dividends
or distributions. Such dividends and distributions may be paid in cash,
property or additional Shares of that Series, or a combination thereof, as
determined by the Trustees or pursuant to any program that the Trustees may
have in effect at the time for the election by each Shareholder of the form
in which dividends or distributions are to be paid to that Shareholder. Any
such dividend or distribution paid in Shares shall be paid at the net asset
value thereof as determined in accordance with Section 4.9.5.8.

Section 4.9.5.5. Redemption by Shareholder. Each Shareholder shall
have the right at such times as may be permitted by the Trust and as
otherwise required by the 1940 Act to require the Trust to redeem all or
any part of such Shareholder's Shares of a Series at a redemption price per
Share equal to the net asset value per Share of such Series next determined
in accordance with Section 4.9.5.8 after the Shares are properly tendered
for redemption, less such redemption fee, if any, as may be established by
the Trustees in their sole discretion. Payment of the redemption price
shall be in cash; provided, however, that the Trust may, subject to the
requirements of the 1940 Act, make payment wholly or partly in securities
or other assets belonging to the Series of which the Shares being redeemed
are part at the value of such securities or assets used in such
determination of net asset value. Notwithstanding the foregoing, the Trust
may postpone payment of the redemption price and may suspend the right of
the holders of Shares of any Series to require the Trust to redeem Shares
of that Series during any period or at any time when and to the extent
permissible under any applicable provision of the 1940 Act.

Section 4.9.5.6. Redemption by Trust. The Trustees may cause the Trust
to redeem at net asset value the Shares of any Series held by a Shareholder
upon such conditions as may from time to time be determined by the
Trustees. Upon redemption of Shares pursuant to this Section 4.9.5.6, the
Trust shall promptly cause payment of the full redemption price to be made
to such Shareholder for Shares so redeemed, less any applicable redemption
fee.

<PAGE>

Section 4.9.5.7. Prevention of Personal Holding Company Status. The
Trust may reject any purchase order, refuse to transfer any Shares, and
compel the redemption of Shares if, in its opinion, any such rejection,
refusal, or redemption would prevent the Trust from becoming a personal
holding company as defined by the Code.

Section 4.9.5.8. Net Asset Value. The net asset value per Share of any
Series shall be determined in accordance with the methods and procedures
established by the Trustees from time to time and, to the extent required
by applicable law, as disclosed in the then current prospectus or statement
of additional information for the Series.

Section 4.9.5.9. Maintenance of Stable Net Asset Value. The Trustees
may determine to maintain the net asset value per Share of any Series at a
designated constant dollar amount and in connection therewith may adopt
procedures not inconsistent with the 1940 Act for the continuing
declarations of income attributable to that Series as dividends payable in
additional Shares of that Series at the designated constant dollar amount
and for the handling of any losses attributable to that Series. Such
procedures may provide that in the event of any loss each Shareholder shall
be deemed to have contributed to the capital of the Trust attributable to
that Series his or her pro rata portion of the total number of Shares
required to be canceled in order to permit the net asset value per Share of
that Series to be maintained, after reflecting such loss, at the designated
constant dollar amount. Each Shareholder of the Trust shall be deemed to
have agreed, by his or her investment in any Series with respect to which
the Trustees shall have adopted any such procedure, to make the
contribution referred to in the preceding sentence in the event of any such
loss. The Trustees may delegate any of their powers and duties under this
Section 4.9.5.9 with respect to appraisal of assets and liabilities in the
determination of net asset value or with respect to a suspension of the
determination of net asset value to an officer or officers or agent or
agents of the Trust designated from time to time by the Trustees.

Section 4.9.5.10. Transfer of Shares. Except to the extent that
transferability is limited by applicable law or such procedures as may be
developed from time to time by the Trustees or the appropriate officers of
the Trust, Shares shall be transferable on the records of the Trust only by
the record holder thereof or by his or her agent thereunto duly authorized
in writing, upon delivery to the Trustees or the Trust's transfer agent of
a duly executed instrument of transfer, together with a Share certificate,
if one is outstanding, and such evidence of the genuineness of each such
execution and authorization and of such other matters as may be required by
the Trustees. Upon such delivery the transfer shall be recorded on the
register of the Trust.

Section 4.9.5.11. Equality of Shares. All Shares of each particular
Series shall represent an equal proportionate interest in the assets
belonging to that Series (subject to the liabilities belonging to that
Series), and each Share of any particular Series shall be equal in this
respect to each other Share of that Series. This Section 4.9.5.11 shall not
restrict any distinctions otherwise permissible under this Declaration of
Trust with respect to any Classes within a Series.

Section 4.9.5.12. Fractional Shares. Any fractional Share of any
Series, if any such fractional Share is outstanding, shall carry
proportionately all the rights and obligations of a whole Share of that
Series, including rights and obligations with respect to voting, receipt of
dividends and distributions, redemption of Shares, and liquidation of the
Trust or any Series.

<PAGE>

Section 4.9.6. Rights and Preferences of Classes. The Trustees shall
have exclusive power without the requirement of Shareholder approval to fix
and determine the relative rights and preferences as between the separate
Classes within any Series. The initial Classes (Investment Class and
Service Class) and any further Classes that may from time to time be
established and designated by the Trustees shall (unless the Trustees
otherwise determine with respect to some further Class at the time of
establishing and designating the same) have relative rights and preferences
as set forth in this Section 4.9.6. If a Series is divided into multiple
Classes, the Classes may be invested with one or more other Classes in the
common investment portfolio comprising the Series. Notwithstanding the
provisions of Section 4.9.5, if two or more Classes are invested in a
common investment portfolio, the Shares of each such Class shall be subject
to the following preferences, conversion and other rights, voting powers,
restrictions, conditions of redemption, and, if there are other Classes
invested in a different investment portfolio comprising a different Series,
shall also be subject to the provisions of Section 4.9.5 at the Series
level as if the Classes invested in the common investment portfolio were
one Class:

(a) The income and expenses of the Series shall be allocated
among the Classes comprising the Series in such manner as may be
determined by the Trustees in accordance with applicable law;

(b) As more fully set forth in this Section 4.9.6, the
liabilities and expenses of the Classes comprising the Series shall be
determined separately from those of each other and, accordingly, the
net asset values, the dividends and distributions payable to
Shareholders, and the amounts distributable in the event of
liquidation of the Trust or termination of a Series to Shareholders
may vary within the Classes comprising the Series. Except for these
differences and certain other differences set forth in this Section
4.9.6 or elsewhere in this Declaration of Trust, the Classes
comprising a Series shall have the same preferences, conversion and
other rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption.

(c) The dividends and distributions of investment income and
capital gains with respect to the Classes comprising a Series shall be
in such amounts as may be declared from time to time by the Trustees,
and such dividends and distributions may vary among the Classes
comprising the Series to reflect differing allocations of the expenses
and liabilities of the Trust among the Classes and any resultant
differences between the net asset values per Share of the Classes, to
such extent and for such purposes as the Trustees may deem
appropriate. The allocation of investment income, capital gains,
expenses, and liabilities of the Trust among the Classes comprising a
Series shall be determined by the Trustees in a manner that is
consistent with applicable law.

<PAGE>

ARTICLE 5
Trustees

Section 5.1. Management of the Trust. The business and affairs of the Trust
shall be managed by the Trustees, and they shall have all powers necessary and
desirable to carry out that responsibility, including those specifically set
forth in Sections 5.10 and 5.11 herein.

Section 5.2. Qualification. Each Trustee shall be a natural person. A
Trustee need not be a Shareholder, a citizen of the United States, or a resident
of the State of Delaware.

Section 5.3. Number. The number of Trustees which shall constitute the
entire Board of Trustees shall initially be two (2) and thereafter shall be
fixed from time to time by resolution by a majority of the Trustees, provided,
however, that the number of Trustees shall in no event be less than one (1) nor
more than fifteen (15), but shall never be less than the minimum number
permitted by the DBTA. No decrease in the number of Trustees shall have the
effect of removing any Trustee from office prior to the expiration of his or her
term, but the number of Trustees may be decreased in conjunction with the
removal of a Trustee pursuant to Section 5.7.

Section 5.4. Term and Election. Each Trustee shall hold office until the
next meeting of Shareholders called for the purpose of considering the election
or re-election of such Trustee or of a successor to such Trustee, and until his
or her successor is elected and qualified, and any Trustee who is appointed by
the Trustees in the interim to fill a vacancy as provided hereunder shall have
the same remaining term as that of his or her predecessor, if any, or such term
as the Trustees may determine.

Section 5.5. Composition of the Board of Trustees. No election or
appointment of any Trustee shall take effect if such election or appointment
would cause the number of Trustees who are Interested Persons to exceed the
number permitted by Section 10 of the 1940 Act.

Section 5.6. Resignation and Retirement. Any Trustee may resign or retire
as a Trustee (without need for prior or subsequent accounting) by an instrument
in writing signed by such Trustee and delivered or mailed to the Chairman, if
any, the President, or the Secretary of the Trust. Such resignation or
retirement shall be effective upon such delivery, or at a later date according
to the terms of the instrument.

Section 5.7. Removal. Any Trustee may be removed with or without cause at
any time: (1) by written instrument signed by two-thirds (2/3) of the number of
Trustees in office prior to such removal, specifying the date upon which such
removal shall become effective, or (2) by the affirmative vote of Shareholders
holding not less than two-thirds (2/3) of Shares outstanding, cast in person or
by proxy at any meeting called for that purpose.

Section 5.8. Vacancies. Any vacancy or anticipated vacancy resulting for
any reason, including without limitation the death, resignation, retirement,
removal, or incapacity of any of the Trustees, or resulting from an increase in
the number of Trustees may (but need not unless required by the 1940 Act) be
filled by a majority of the Trustees then in office, subject to the provisions
of Section 16 of the 1940 Act, through the appointment in writing of such other
person as such remaining Trustees in their discretion shall determine. The
appointment shall be effective upon the written acceptance of the person named
therein to serve as a Trustee and agreement by such person to be bound by the
provisions of this Declaration of Trust, except that any such appointment in
anticipation of a vacancy occurring by reason of the resignation, retirement, or
increase in number of Trustees to be effective at a later date shall become
effective only at or after the effective date of such resignation, retirement,
or increase in number of Trustees.

<PAGE>

Section 5.9. Ownership of Assets of the Trust. The assets of the Trust
shall be held separate and apart from any assets now or hereafter held in any
capacity other than as Trustee hereunder by the Trustees or any successor
Trustees. Legal title to all the Trust property shall be vested in the Trust as
a separate legal entity under the DBTA, except that the Trustees shall have the
power to cause legal title to any Trust property to be held by or in the name of
one or more of the Trustees or in the name of any other Person on behalf of the
Trust on such terms as the Trustees may determine. In the event that title to
any part of the Trust property is vested in one or more Trustees, the right,
title and interest of the Trustees in the Trust property shall vest
automatically in each person who may hereafter become a Trustee upon his or her
due election and qualification. Upon the resignation, removal or death of a
Trustee he or she shall automatically cease to have any right, title or interest
in any of the Trust property, and the right, title and interest of such Trustee
in the Trust property shall vest automatically in the remaining Trustees. To the
extent permitted by law, such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered. No
Shareholder shall be deemed to have a severable ownership in any individual
asset of the Trust or any right of partition or possession thereof.

Section 5.10. Powers. Subject to the provisions of this Declaration of
Trust, the business of the Trust shall be managed by the Trustees, and they
shall have all powers necessary or convenient to carry out that responsibility
and the purpose of the Trust including, but not limited to, those enumerated in
this Section 5.10.

Section 5.10.1. Bylaws. The Trustees may adopt Bylaws not inconsistent with
this Declaration of Trust providing for the conduct of the business and affairs
of the Trust and may amend and repeal them to the extent that such Bylaws do not
reserve that right to the Shareholders. Nothing in this Declaration shall be
construed to require the adoption of Bylaws by the Trustees.

Section 5.10.2. Officers, Agents, and Employees. The Trustees may, as they
consider appropriate, elect and remove officers and appoint and terminate agents
and consultants and hire and terminate employees, any one or more of the
foregoing of whom may be a Trustee, and may provide for the compensation of all
of the foregoing.

Section 5.10.3. Committees.

Section 5.10.3.1. Generally. The Trustees, by vote of a majority
of the Trustees then in office, may elect from their number an Audit
Committee, Executive Committee, Nominating Committee, or any other
committee, and may delegate thereto some or all of their powers except
those which by law, by this Declaration of Trust, or by the Bylaws (if
any) may not be delegated. Except as the Trustees may otherwise
determine, any such committee may make rules for the conduct of its
business, but unless otherwise provided by the Trustees or in such
rules, its business shall be conducted so far as possible in the same
manner as is provided by this Declaration of Trust or the Bylaws (if
any) of the Trust for the Trustees themselves. All members of such
committees shall hold such offices at the pleasure of the Trustees.
The Trustees may abolish any committee at any time. Any committee to
which the Trustees delegate any of their powers or duties shall keep
records of its meetings and shall report its actions to the Trustees.
The Trustees shall have power to rescind any action of any committee,
but no such rescission shall have retroactive effect.

Section 5.10.3.2. Executive Committee. The Executive Committee,
if there shall be one, shall have all of the powers and authority of
the Trustees that may lawfully be exercised by an executive committee,
except the power to: (i) declare dividends or distributions on Shares;
(ii) issue Shares; (iii) recommend to the Shareholders any action
which requires the Shareholders' approval; or (iv) approve any merger,
reorganization, or share exchange which does not require Shareholder
approval. Notwithstanding the foregoing, the Trustees may limit the
powers and authority of the Executive Committee at any time.

<PAGE>

Section 5.10.4. Advisers, Administrators, Depositories, and
Custodians. The Trustees may, in accordance with Article 8, employ one
or more advisers, administrators, depositories, custodians, and other
persons and may authorize any depository or custodian to employ
subcustodians or agents and to deposit all or any part of such assets
in a system or systems for the central handling of securities and debt
instruments, retain transfer, dividend, accounting or shareholder
servicing agents or any of the foregoing, provide for the distribution
of Shares by the Trust through one or more distributors, principal
underwriters or otherwise, and set record dates or times for the
determination of Shareholders.

Section 5.10.5. Compensation. The Trustees may compensate or
provide for the compensation of the Trustees, officers, advisers,
administrators, custodians, other agents, consultants and employees of
the Trust or the Trustees on such terms as they deem appropriate.

Section 5.10.6. Delegation of Authority. In general, the Trustees
may delegate to any officer of the Trust, to any committee of the
Trustees and to any employee, adviser, administrator, distributor,
depository, custodian, transfer and dividend disbursing agent, or any
other agent or consultant of the Trust such authority, powers,
functions and duties as they consider desirable or appropriate for the
conduct of the business and affairs of the Trust, including without
implied limitation, the power and authority to act in the name of the
Trust and of the Trustees, to sign documents and to act as
attorney-in-fact for the Trustees.

Section 5.10.7. Suspension of Sales. The Trustees shall have the
authority to suspend or terminate the sales of Shares of any Series or
Class at any time or for such periods as the Trustees may from time to
time decide.

Section 5.11. Certain Additional Powers. Without limiting the foregoing and
to the extent not inconsistent with the 1940 Act, other applicable law, and the
fundamental policies and limitations of the applicable Series or Class, the
Trustees shall have power and authority for and on behalf of the Trust and each
separate Series or Class as enumerated in this Section 5.11.

Section 5.11.1. Investments. The Trustees shall have the power to
invest and reinvest cash and other property, and to hold cash or other
property uninvested without in any event being bound or limited by any
present or future law or custom in regard to investments by trustees.

Section 5.11.2. Disposition of Assets. The Trustees shall have
the power to sell, exchange, lend, pledge, mortgage, hypothecate,
write options on and lease any or all of the assets of the Trust.

<PAGE>

Section 5.11.3. Ownership. The Trustees shall have the power to
vote, give assent, or exercise any rights of ownership with respect to
securities or other property; and to execute and deliver proxies or
powers of attorney to such person or persons as the Trustees shall
deem proper, granting to such person or persons such power and
discretion with relation to securities or other property as the
Trustees shall deem proper.

Section 5.11.4. Subscription. The Trustees shall have the power
to exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities.

Section 5.11.5. Payment of Expenses. The Trustees shall have the
power to pay or cause to be paid all expenses, fees, charges, taxes
and liabilities incurred or arising in connection with the Trust or
any Series or Class thereof, or in connection with the management
thereof, including, but not limited to, the Trustees' compensation and
such expenses and charges for the Trust's officers, employees,
investment advisers, administrator, distributor, principal
underwriter, auditor, counsel, depository, custodian, transfer agent,
dividend disbursing agent, accounting agent, shareholder servicing
agent, and such other agents, consultants, and independent contractors
and such other expenses and charges as the Trustees may deem necessary
or proper to incur.

Section 5.11.6. Form of Holding. The Trustees shall have the
power to hold any securities or other property in a form not
indicating any trust, whether in bearer, unregistered or other
negotiable form, or in the name of the Trustees or of the Trust or of
any Series or in the name of a custodian, subcustodian or other
depositary or a nominee or nominees or otherwise.

Section 5.11.7. Reorganization, Consolidation, or Merger. The
Trustees shall have the power to consent to or participate in any plan
for the reorganization, consolidation or merger of any corporation or
issuer, any security of which is or was held in the Trust, and to
consent to any contract, lease, mortgage, purchase or sale of property
by such corporation or issuer, and to pay calls or subscriptions with
respect to any security held in the Trust.

Section 5.11.8. Compromise. The Trustees shall have the power to
arbitrate or otherwise adjust claims in favor of or against the Trust,
any Series, or Class on any matter in controversy, including but not
limited to claims for taxes.

Section 5.11.9. Partnerships. The Trustees shall have the power
to enter into joint ventures, general or limited partnerships and any
other combinations or associations.

Section 5.11.10. Borrowing. The Trustees shall have the power to
borrow funds and to mortgage and pledge the assets of the Trust or any
Series or any part thereof to secure obligations arising in connection
with such borrowing, consistent with the provisions of the 1940 Act.

<PAGE>

Section 5.11.11. Guarantees. The Trustees shall have the power to
endorse or guarantee the payment of any notes or other obligations of
any person; to make contracts of guaranty or suretyship, or otherwise
assume liability for payment thereof; and to mortgage and pledge the
Trust property (or Series property) or any part thereof to secure any
of or all such obligations.

Section 5.11.12. Insurance. The Trustees shall have the power to
purchase and pay for entirely out of Trust property such insurance as
they may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring
the assets of the Trust and payment of distributions and principal on
its portfolio investments, and insurance policies insuring the
Shareholders, Trustees, officers, employees, agents, consultants,
investment advisers, managers, administrators, distributors, principal
underwriters, or independent contractors, or any thereof (or any
person connected therewith), of the Trust individually against all
claims and liabilities of every nature arising by reason of holding,
being or having held any such office or position, or by reason of any
action alleged to have been taken or omitted by any such person in any
such capacity, including any action taken or omitted that may be
determined to constitute negligence, whether or not the Trust would
have the power to indemnify such person against such liability.

Section 5.11.13. Indemnification. The Trustees shall have the
power to indemnify any person with whom the Trust or any Series has
dealings, including the Investment Adviser, Administrator,
Distributor, Transfer Agent and selected dealers, to such extent as
the Trustees shall determine.

Section 5.11.14. Pensions. The Trustees shall have the power to
pay pensions for faithful service, as deemed appropriate by the
Trustees, and to adopt, establish and carry out pension,
profit-sharing, share bonus, share purchase, savings, thrift and other
retirement, incentive and benefit plans, including the purchasing of
life insurance and annuity contracts as a means of providing such
retirement and other benefits, for any or all of the Trustees,
officers, employees and agents of the Trust.

Section 5.12. Meetings and Vote of Trustees.

Section 5.12.1. Regular Meetings. The Trustees from time to time
may provide for the holding of regular meetings of the Trustees and
fix their time and place.

Section 5.12.2. Special Meetings. Special meetings of the
Trustees may be called by the President or Secretary of the Trust on
twenty-four (24) hours notice to each Trustee, either personally, by
mail, by telegram, or by facsimile transmission. Special meetings
shall be called by the President or Secretary in like manner and on
like notice on the written request of a majority of the Trustees then
in office or a majority of the members of any executive (or
comparable) committee of the Trustees.

Section 5.12.3. Telephonic Meetings. Trustees may participate in
a meeting of the Trustees by means of a conference telephone or
similar communications equipment by means of which all persons
participating in the meeting can hear each other at the same time.
Except to the extent that the 1940 Act has been interpreted otherwise,
participation by such means shall constitute presence in person at the
meeting.

Section 5.12.4. Quorum. A majority of the Trustees then in office
being present in person or by proxy shall constitute a quorum.

Section 5.12.5. Required Vote. Except as otherwise provided by
the 1940 Act or other applicable law, this Declaration of Trust, or
the Bylaws (if any), any action to be taken by the Trustees on behalf
of the Trust or any Series or Class may be taken by a majority of the
Trustees present at a meeting of Trustees at which a quorum is
present.

Section 5.12.6. Consent in Lieu of a Meeting. Except as otherwise
provided by the 1940 Act or other applicable law, the Trustees may, by
unanimous written consent of the Trustees then in office, take any
action which may have been taken at a meeting of the Trustees or any
committee thereof.

<PAGE>

ARTICLE 6
Officers

Section 6.1. Enumeration. The officers of the Trust shall be a President,
one or more Vice Presidents, a Treasurer, and a Secretary. The Trustees may also
appoint such other officers, including a Chairperson of the Board, Assistant
Treasurers, and/or Assistant Secretaries. The Trust may also have such agents as
the Trustees from time to time may in their discretion appoint. Any two or more
offices may be held by the same person except that the same person may not be
both President and Vice President, and that a person who holds more than one
office may not act in more than one capacity to execute, acknowledge, or verify
an instrument required by law to be executed, acknowledged, or verified by more
than one officer.

Section 6.2. Qualification. The Chairperson of the Board, if there shall be
one, shall be a Trustee and may, but need not be, a Shareholder. Any other
officer may, but need not be, a Trustee or Shareholder.

Section 6.3. Election. The President, Treasurer, and Secretary shall be
elected by the Trustees at the first meeting of the Trustees. Other officers, if
any, may be elected or appointed by the Trustees at any meeting of the Trustees
or at any other time. The President, all Vice Presidents, the Treasurer, and the
Secretary shall be elected at each annual meeting of the Trustees.

Section 6.4. Term of Office. The Chairperson of the Board, the President,
the Treasurer, and the Secretary shall hold office until their respective
successors are chosen and qualified, or in each case until he or she sooner
dies, resigns, is removed, or becomes disqualified. Each other officer shall
hold office and each agent shall retain authority at the pleasure of the
Trustees.

Section 6.5. Powers. Subject to the other provisions of these Bylaws, each
officer shall have, in addition to the duties and powers set forth herein and in
the Declaration of Trust, such duties and powers as are commonly incident to the
office occupied by such officer as if the Trust were organized as a Delaware
business corporation and such other duties and powers as the Trustees may from
time to time designate.

Section 6.6. Titles and Duties.

Section 6.6.1. Chairperson of the Board; President. Unless the
Trustees otherwise provide, the Chairperson of the Board, or, if there
is no Chairperson or in the absence of the Chairperson, the President,
shall preside at all meetings of the Shareholders and of the Trustees.
Unless the Trustees otherwise provide, the President shall be the
Chief Executive Officer of the Trust. The Chairperson of the Board and
the President shall each also perform such other duties and have such
other powers as the Board of Trustees may from time to time prescribe.

Section 6.6.2. Vice President. In the absence of the President or
in the event of his or her inability or refusal to act, the Vice
President, or if there is more than one Vice President, the Vice
Presidents in their order of election or in such other order as
determined by the Trustees, shall perform the duties of the President,
and when so acting shall have all the powers of and be subject to all
the restrictions upon the President. The Vice Presidents shall also
perform such other duties and have such other powers as the Board of
Trustees or the President may from time to time prescribe.

Section 6.6.3. Treasurer. The Treasurer shall be the chief
financial and accounting officer of the Trust, and shall, subject to
the provisions of the Declaration of Trust and to any arrangement made
by the Trustees with a custodian, investment adviser or manager, or
transfer, shareholder servicing or similar agent, be in charge of the
valuable papers, books of account and accounting records of the Trust.
The Treasurer shall also perform such other duties and have such other
powers as the Board of Trustees or the President may from time to time
prescribe.

<PAGE>

Section 6.6.4. Assistant Treasurer. In the absence of the
Treasurer or in the event of his or her inability or refusal to act,
the Assistant Treasurer, or if there is more than one, the Assistant
Treasurers in their order of election or in such other order as
determined by the Trustees, shall perform the duties of the Treasurer,
and when so acting shall have all the powers of and be subject to all
the restrictions upon the Treasurer. The Assistant Treasurers shall
also perform such other duties and have such other powers as the Board
of Trustees or the President may from time to time prescribe.

Section 6.6.5. Secretary. The Secretary shall record all
proceedings of the Shareholders and the Trustees in books to be kept
for such purposes, which books or a copy thereof shall be kept at the
principal office of the Trust or at such other place as designated by
the Trustees. The Secretary shall also perform such other duties and
have such other powers as the Board of Trustees or the President may
from time to time prescribe.

Section 6.6.6. Assistant Secretary. In the absence of the
Secretary or in the event of his or her inability or refusal to act,
the Assistant Secretary, or if there is more than one, the Assistant
Secretaries in their order of election or in such other order as
determined by the Trustees, shall perform the duties of the Secretary,
and when so acting shall have all the powers of and be subject to all
the restrictions upon the Secretary. The Assistant Secretaries shall
also perform such other duties and have such other powers as the Board
of Trustees or the President may from time to time prescribe.

Section 6.6.7. Temporary Secretary. In the absence of the
Secretary and all Assistant Secretaries from any meeting of the
Shareholders or Trustees, the Trustees may appoint a temporary
secretary at such meeting, who shall perform the duties of the
Secretary for the purposes of such meeting.

Section 6.7. Resignation, Retirement, and Removal. Any officer may resign
at any time by written instrument signed by him or her delivered to the
Chairperson of the Board, President, or Secretary or delivered to a meeting of
the Trustees. Such resignation shall be effective upon receipt unless specified
to be effective at some other time. The Trustees may remove any officer elected
by them with or without cause by the vote or written consent of a majority of
the Trustees then in office. To the extent that any officer or Trustee of the
Trust receives compensation from the Trust and except as may otherwise be
expressly provided in a written agreement with the Trust, no Trustee or officer
resigning and no officer removed shall have any right to any compensation for
any period following his or her resignation or removal, or any right to damages
on account of such removal.

Section 6.8. Vacancies. Any vacancy or anticipated vacancy resulting for
any reason, including without limitation the death, resignation, retirement,
removal, or incapacity of the Chairperson of the Board, the President, the
Treasurer, or the Secretary may be filled by a majority of the Trustees then in
office through the appointment in writing of such other person as such remaining
Trustees in their discretion shall determine. The appointment shall be effective
upon the written acceptance of the person named therein to serve as in the
capacity named therein. Other vacancies may be filled, if at all, by the
Trustees at a meeting of the Trustees or at any other time.

<PAGE>

ARTICLE 7
Transactions with Officers and Trustees

Section 7.1. Purchase and Redemption of Shares of the Trust. Any Trustee,
officer or other agent of the Trust may acquire, own and dispose of Shares to
the same extent as if he or she were not a Trustee, officer or agent, and the
Trustees may accept subscriptions to purchase Shares or orders to redeem Shares
from any firm or company in which any Trustee, officer or other agent of the
Trust may have an interest.

Section 7.2. Purchase and Sale of Other Securities. The Trust shall not
purchase any securities (other than Shares) from, or sell any securities (other
than Shares) to, any Trustee or officer of the Trust, or any director, trustee,
officer, or partner of any firm which acts as investment adviser or principal
underwriter for the Trust acting as principal, except to the extent permitted by
the 1940 Act or the rules or regulations thereunder or by appropriate order or
written advice of the Commission.

ARTICLE 8
Service Providers

Section 8.1. Investment Adviser. The Trust may enter into written contracts
with one or more persons to act as investment adviser or investment sub-adviser
to each of the Series, and as such, to perform such functions as the Trustees
may deem reasonable and proper, including, without limitation, investment
advisory, management, research, valuation of assets, clerical and administrative
functions, under such terms and conditions, and for such compensation, as the
Trustees may in their discretion deem advisable.

Section 8.2. Underwriter and Transfer Agent. The Trust may enter into
written contracts with one or more persons to act as principal underwriter or
underwriter or distributor whereby the Trust may either agree to sell Shares to
the other party or parties to the contract or appoint such other party or
parties its sales agent or agents for such Shares and with such other provisions
as the Trustees may deem reasonable and proper, and the Trustees may in their
discretion from time to time enter into transfer agency, dividend disbursement,
and/or shareholder service contract(s), in each case with such terms and
conditions, and providing for such compensation, as the Trustees may in their
discretion deem advisable.

Section 8.3. Custodians. The Trust may enter into written contracts with
one or more persons to act as custodian to perform such functions as the
Trustees may deem reasonable and proper, under such terms and conditions, and
for such compensation, as the Trustees may in their discretion deem advisable.
Each such custodian shall be a bank or trust company having an aggregate
capital, surplus, and undivided profits of at least five hundred thousand
dollars ($500,000).

Section 8.4. Administrator. The Trust may enter into written contracts with
one or more persons to act as an administrator to perform such functions,
including accounting functions, as the Trustees may deem reasonable and proper,
under such terms and conditions, and for such compensation, as the Trustees may
in their discretion deem advisable.

Section 8.5. Other Contracts. The Trust may enter into such other written
contracts as the Trustees deem necessary and desirable, including contracts with
one or more persons for the coordination or supervision of persons providing
services to the Trust under one or more of the contracts described in Sections
8.1, 8.2, 8.3, and 8.4.

Section 8.6. Parties to Contracts. Any contract of the character described
in Sections 8.1, 8.2, 8.3, and 8.4 or in Article 10 hereof may be entered into
with any corporation, firm, partnership, trust or association, including,
without limitation, the investment adviser, any investment sub-adviser, or any
affiliated person of the investment adviser or investment sub-adviser, although
one or more of the Trustees or officers of the Trust may be an officer,
director, trustee, shareholder, or member of such other party to the contract,
or may otherwise be interested in such contract, and no such contract shall be
invalidated or rendered voidable by reason of the existence of any such
relationship, nor shall any person holding such relationship be liable merely by
reason of such relationship for any loss or expense to the Trust under or by
reason of said contract or be accountable for any profit realized directly or
indirectly therefrom; provided, however, that the contract when entered into was
not inconsistent with the provisions of this Article 8, Article 10, or the
Bylaws (if any). The same person (including a firm, corporation, partnership,
trust or association) may provide more than one of the services identified in
this Article 8.

<PAGE>

ARTICLE 9
Shareholders' Voting Powers and Meetings

Section 9.1 Voting Powers. The Shareholders shall have power to vote only
with respect to matters expressly enumerated in Section 9.1.1 or with respect to
such additional matters relating to the Trust as may be required by the 1940
Act, this Declaration of Trust, the Bylaws (if any), any registration of the
Trust with the Commission or any state, or as the Trustees may otherwise deem
necessary or desirable.

Section 9.1.1. Matters Requiring Shareholders Action. Action by
the Shareholders shall be required as to the following matters:

(a) The election or removal of Trustees as provided in
Sections 5.4 and 5.7;

(b) The approval of a contract with a third party provider
of services as to which Shareholder approval is required by the
1940 Act;

(d) The amendment of this Declaration of Trust to the extent
and as may be provided by this Declaration of Trust or applicable
law; and

(e) Any court action, proceeding or claim brought or
maintained derivatively or as a class action on behalf of the
Trust, any Series or Class thereof or the Shareholders of the
Trust; provided, however, that a Shareholder of a particular
Series or Class shall not be entitled to vote upon a derivative
or class action on behalf of any other Series or Class or
Shareholder of any other Series or Class.

Section 9.1.2. Separate Voting by Series and Class. On any matter
submitted to a vote of the Shareholders, all Shares shall be voted
separately by individual Series, except: (i) when required by the 1940 Act,
Shares shall be voted in the aggregate and not by individual Series; and
(ii) when the Trustees have determined that the matter affects the
interests of more than one Series, then the Shareholders of all such Series
shall be entitled to vote thereon. The Trustees may also determine that a
matter affects only the interests of one or more Classes within a Series,
in which case any such matter shall only be voted on by such Class or
Classes.

Section 9.1.3. Number of Votes. On any matter submitted to a vote of
the Shareholders, each whole Share shall be entitled to one vote as to any
matter on which it is entitled to vote and each fractional Share shall be
entitled to a proportionate fractional vote.

Section 9.1.4. Cumulative Voting. There shall be no cumulative voting
in the election of Trustees.

Section 9.1.5. Voting of Shares; Proxies. Votes may be cast in person
or by proxy. A proxy with respect to Shares held in the name of two or more
persons shall be valid if executed by any one of them unless at or prior to
exercise of the proxy the Trust receives a specific written notice to the
contrary from any one of them. A proxy purporting to be executed by or on
behalf of a Shareholder shall be deemed valid unless challenged at or prior
to its exercise, and the burden of proving the invalidity of a proxy shall
rest on the challenger. No proxy shall be valid more than eleven months
after its date, unless it provides for a longer period.

Section 9.1.6. Actions Prior to the Issuance of Shares. Until Shares
are issued, the Trustees may exercise all rights of Shareholders and may
take any action required by law, this Declaration of Trust or the Bylaws
(if any) to be taken by Shareholders.

<PAGE>

Section 9.2. Meetings of Shareholders.

Section 9.2.1. Annual or Regular Meetings. No annual or regular
meetings of Shareholders are required to be held.

Section 9.2.2. Special Meetings. Special meetings of Shareholders may
be called by the President of the Trust or the Trustees from time to time
for the purpose of taking action upon any matter requiring the vote or
authority of the Shareholders as herein provided or upon any other matter
upon which Shareholder approval is deemed by the Trustees to be necessary
or desirable. A special meeting shall be called by the Secretary of the
Trust upon (i) the request of a majority of the Trustees then in office, or
(ii) the written request of Shareholders entitled to cast at least ten
percent (10%) of all the votes entitled to be cast at such meeting,
provided that (a) such request shall state the purpose or purposes of the
meeting and the matters proposed to be acted upon at such meeting, and (b)
the Shareholders requesting such meeting shall have paid to the Trust the
reasonably estimated cost of preparing and mailing the notice thereof,
which the Secretary shall determine and specify to such Shareholders. Upon
payment of these costs to the Trust, the Secretary shall notify each
Shareholder entitled to notice of the meeting. Unless requested by
Shareholders entitled to cast at least a majority of all the votes entitled
to be cast at such meeting, a special meeting need not be called to
consider any matter which is substantially the same as a matter voted on at
any special meeting of Shareholders held during the preceding twelve (12)
months.

Section 9.2.3. Notice of Meetings. Written notice of any meeting of
Shareholders shall be given or caused to be given by the Trustees by
mailing or transmitting such notice not less than ten (10) nor more than
ninety (90) days before such meeting, postage prepaid, stating the time,
place and purpose of the meeting, to each Shareholder at the Shareholder's
address as it appears on the records of the Trust.

Section 9.2.4. Call of Meetings. The Trustees shall promptly call and
give notice of a meeting of Shareholders for the purpose of voting upon
removal of any Trustee of the Trust when requested to do so in accordance
with Section 9.2.2. For all other matters, the Trustees shall call or give
notice of a meeting within thirty (30) days after written application by
Shareholders entitled to cast at least ten percent (10%) of all the votes
entitled to be cast on the matter requesting a meeting be called.

Section 9.3. Record Dates. For the purpose of determining the Shareholders
who are entitled to vote or act at any meeting or any adjournment thereof, or
who are entitled to participate in any dividend or distribution, or for the
purpose of any other action, the Trustees may from time to time fix a date and
time not more than ninety (90) days nor less than ten (10) days prior to any
meeting of Shareholders or other action as the date and time of record for the
determination of Shareholders entitled to vote at such meeting or any
adjournment thereof or to be treated as Shareholders of record for purposes of
such other action. Any Shareholder who was a Shareholder at the date and time so
fixed shall be entitled to vote at such meeting or any adjournment thereof or to
be treated as a Shareholder of record for purposes of such other action, even
though such Shareholder has since that date and time disposed of its Shares, and
no Shareholder becoming such after that date and time shall be so entitled to
vote at such meeting or any adjournment thereof or to be treated as a
Shareholder of record for purposes of such other action.

<PAGE>

Section 9.4. Quorum. Except as otherwise required by the 1940 Act or other
applicable law, this Declaration of Trust, or the Bylaws (if any) , the presence
in person or by proxy of Shareholders entitled to cast at least thirty percent
(30%) of the votes entitled to be cast on any particular matter shall be a
quorum as to such matter; provided, however, that any lesser number shall be
sufficient for matters upon which the Shareholders vote at adjournments.

Section 9.5. Required Vote. Notwithstanding any provision of law requiring
the authorization of any matter by a greater proportion, any matter upon which
the Shareholders vote shall be approved by the affirmative vote of a majority of
the votes cast on such matter at a meeting of the Shareholders at which a quorum
is present, except that Trustees shall be elected by the affirmative vote of a
plurality of the votes cast at such a meeting.

Section 9.6. Adjournments. Adjourned meetings may be held within a
reasonable time after the date set for the original meeting without the
necessity of further notice.

Section 9.7. Actions by Written Consent. Except as otherwise required by
the 1940 Act or other applicable law, this Declaration of Trust, or the Bylaws
(if any), any action taken by Shareholders may be taken without a meeting if
Shareholders entitled to cast at least a majority of all the votes entitled to
be cast on the matter (or such larger proportion thereof as shall be required by
the 1940 Act or by any express provision of this Declaration of Trust or the
Bylaws (if any)) consent to the action in writing and such written consents are
filed with the records of the meetings of Shareholders. Such consent shall be
treated for all purposes as a vote taken at a meeting of Shareholders.

Section 9.8. Inspection of Records. The records of the Trust shall be open
to inspection by Shareholders to the same extent as is required for stockholders
of a Delaware business corporation under the Delaware General Corporation Law.

Section 9.9. Additional Provisions. The Bylaws (if any) may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.

<PAGE>

ARTICLE 10
Limitation of Liability and Indemnification

Section 10.1. General Provisions.

Section 10.1.1. General Limitation of Liability. No personal liability
for any debt or obligation of the Trust shall attach to any Trustee of the
Trust. Without limiting the foregoing, a Trustee shall not be responsible
for or liable in any event for any neglect or wrongdoing of any officer,
agent, employee, investment adviser, sub-adviser, administrator, principal
underwriter or custodian of the Trust, nor shall any Trustee be responsible
or liable for the act or omission of any other Trustee. Every note, bond,
contract, instrument, certificate, Share or undertaking and every other act
or thing whatsoever executed or done by or on behalf of the Trust or the
Trustees or any Trustee in connection with the Trust shall be conclusively
deemed to have been executed or done only in or with respect to their, his
or her capacity as Trustees or Trustee and neither such Trustees or Trustee
nor the Shareholders shall be personally liable thereon.

Section 10.1.2. Notice of Limited Liability. Every note, bond,
contract, instrument, certificate or undertaking made or issued by the
Trustees or by any officers or officer may recite that the same was
executed or made by or on behalf of the Trust by them as Trustees or
Trustee or as officers or officer and not individually and that the
obligations of such instrument are not binding upon any of them or the
Shareholders individually but are binding only upon the assets and property
of the Trust or belonging to a Series thereof, and may contain such further
recitals as they, he or she may deem appropriate, but the omission thereof
shall not operate to bind any Trustees or Trustee or officers or officer or
Shareholders or Shareholder individually.

Section 10.1.3. Liability Limited to Assets of the Trust. All persons
extending credit to, contracting with or having any claim against the Trust
shall look only to the assets of the Trust or belonging to a Series
thereof, as appropriate, for payment under such credit, contract or claim,
and neither the Shareholders nor the Trustees nor any of the Trust's
officers, employees or agents, whether past, present or future, shall be
personally liable therefor.

Section 10.2. Liability of Trustees. The exercise by the Trustees of their
powers and discretion hereunder shall be binding upon the Trust, the
Shareholders, and any other person dealing with the Trust. The liability of the
Trustees, however, shall be limited by this Section 10.2.

Section 10.2.1. Liability for Own Actions. A Trustee shall be liable
to the Trust or the Shareholders only for his or her own willful
misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of the office of Trustee, and for nothing
else, and shall not be liable for errors of judgment or mistakes of fact or
law.

Section 10.2.2. Liability for Actions of Others. The Trustees shall
not be responsible or liable in any event for any neglect or wrongdoing of
any officer, agent, employee, consultant, adviser, administrative agent,
distributor, principal underwriter, custodian, transfer agent, dividend
disbursing agent, shareholder servicing agent, or accounting agent of the
Trust, nor shall any Trustee be responsible for any act or omission of any
other Trustee.

Section 10.2.3. Advice of Experts and Reports of Others. The Trustees
may take advice of counsel or other experts with respect to the meaning and
operation of this Declaration of Trust and their duties as Trustees
hereunder, and shall be under no liability for any act or omission in
accordance with such advice or for failing to follow such advice. In
discharging their duties, the Trustees, when acting in good faith, shall be
entitled to rely upon the books of account of the Trust and upon written
reports made to the Trustees by any officer appointed by them, any
independent public accountant and (with respect to the subject matter of
the contract involved) any officer, partner or responsible employee of any
other party to any contract entered into hereunder.

Section 10.2.4. Bond. The Trustees shall not be required to give any
bond as such, nor any surety if a bond is required.

Section 10.2.5. Declaration of Trust Governs Issues of Liability. The
provisions of this Declaration of Trust, to the extent that they restrict
the duties and liabilities of the Trustees otherwise existing at law or in
equity, are agreed by the Shareholders and all other Persons bound by this
Declaration of Trust to replace such other duties and liabilities of the
Trustees.

<PAGE>

Section 10.3. Liability of Third Persons Dealing with Trustees. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.

Section 10.4. Liability of Shareholders. Without limiting the provisions of
this Section 10.4 or the DBTA, the Shareholders shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations organized for profit under the General Corporation Law of the State
of Delaware.

Section 10.4.1. Limitation of Liability. No personal liability for any
debt or obligation of the Trust shall attach to any Shareholder or former
Shareholder of the Trust, and neither the Trustees, nor any officer,
employee or agent of the Trust shall have any power to bind any Shareholder
personally or to call upon any Shareholder for the payment of any sum of
money or assessment whatsoever other than such as the Shareholder may at
any time personally agree to pay by way of subscription for any Shares or
otherwise.

Section 10.4.2. Indemnification of Shareholders. In case any
Shareholder or former Shareholder of the Trust shall be held to be
personally liable solely by reason of being or having been a Shareholder
and not because of such Shareholder's acts or omissions or for some other
reason, the Shareholder or former Shareholder (or, in the case of a natural
person, his or her heirs, executors, administrators or other legal
representatives or, in the case of a corporation or other entity, its
corporate or other general successor) shall be entitled out of the assets
of the Trust to be held harmless from and indemnified against all loss and
expense arising from such liability; provided, however, there shall be no
liability or obligation of the Trust arising hereunder to reimburse any
Shareholder for taxes paid by reason of such Shareholder's ownership of any
Shares or for losses suffered by reason of any changes in value of any
Trust assets. The Trust shall, upon request by the Shareholder or former
Shareholder, assume the defense of any claim made against the Shareholder
for any act or obligation of the Trust and satisfy any judgment thereon.

<PAGE>

Section 10.5. Indemnification.

Section 10.5.1. Indemnification of Covered Persons. Subject to the
exceptions and limitations contained in Section 10.5.2, every person who
is, or has been, a Trustee, officer, employee or agent of the Trust,
including persons who serve at the request of the Trust as directors,
trustees, officers, employees or agents of another organization in which
the Trust has an interest as a shareholder, creditor or otherwise
(hereinafter referred to as a Covered Person"), shall be indemnified by the
Trust to the fullest extent permitted by law against liability and against
all expenses reasonably incurred or paid by him or her in connection with
any claim, action, suit or proceeding in which he or she becomes involved
as a party or otherwise by virtue of his or her being or having been such a
Trustee, director, officer, employee or agent and against amounts paid or
incurred by him or her in settlement thereof.

<PAGE>

Section 10.5.2. Exceptions. No indemnification shall be provided
hereunder to a Covered Person:

(a) For any liability to the Trust or its Shareholders arising
out of a final adjudication by the court or other body before which
the proceeding was brought that the Covered Person engaged in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office;

(b) With respect to any matter as to which the Covered Person
shall have been finally adjudicated not to have acted in good faith in
the reasonable belief that his or her action was in the best interests
of the Trust; or

(c) In the event of a settlement or other disposition not
involving a final adjudication (as provided in paragraph (a) or (b) of
this Section 10.5.2) and resulting in a payment by a Covered Person,
unless there has been either a determination that such Covered Person
did not engage in willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her
office by the court or other body approving the settlement or other
disposition, or a reasonable determination, based on a review of
readily available facts (as opposed to a full trial-type inquiry),
that he or she did not engage in such conduct, such determination
being made by: (i) a vote of a majority of the Disinterested Trustees
(as such term is defined in Section 10.5.5) acting on the matter
(provided that a majority of Disinterested Trustees then in office act
on the matter); or (ii) a written opinion of independent legal
counsel.

Section 10.5.3. Rights of Indemnification. The rights of
indemnification herein provided may be insured against by policies
maintained by the Trust, and shall be severable, shall not affect any other
rights to which any Covered Person may now or hereafter be entitled, shall
continue as to a person who has ceased to be a Covered Person, and shall
inure to the benefit of the heirs, executors and administrators of such a
person. Nothing contained herein shall affect any rights to indemnification
to which Trust personnel other than Covered Persons may be entitled by
contract or otherwise under law.

Section 10.5.4. Expenses of Indemnification. Expenses of preparation
and presentation of a defense to any claim, action, suit or proceeding
subject to a claim for indemnification under this Section 10.5 shall be
advanced by the Trust prior to final disposition thereof upon receipt of an
undertaking by or on behalf of the recipient to repay such amount if it is
ultimately determined that he or she is not entitled to indemnification
under this Section 10.5, provided that either:

(a) Such undertaking is secured by a surety bond or some other
appropriate security or the Trust shall be insured against losses
arising out of any such advances; or

(b) A majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then in office
act on the matter) or independent legal counsel in a written opinion
shall determine, based upon a review of the readily available facts
(as opposed to the facts available upon a full trial), that there is
reason to believe that the recipient ultimately will be found entitled
to indemnification.

<PAGE>

Section 10.5.5. Certain Defined Terms Relating to Indemnification. As
used in this Section 10.5, the following words shall have the meanings set
forth below:

(a) A "Disinterested Trustee" is one (i) who is not an Interested
Person of the Trust (including anyone, as such Disinterested Trustee,
who has been exempted from being an Interested Person by any rule,
regulation or order of the Commission), and (ii) against whom none of
such actions, suits or other proceedings or another action, suit or
other proceeding on the same or similar grounds is then or has been
pending;

(b) "Claim," "action," "suit" or "proceeding" shall apply to all
claims, actions, suits, proceedings (civil, criminal, administrative
or other, including appeals), actual or threatened; and

(c) "Liability" and "expenses" shall include without limitation,
attorneys' fees, costs, judgments, amounts paid in settlement, fines,
penalties and other liabilities.

ARTICLE 11
Termination or Reorganization

Section 11.1. Termination of Trust or Series or Class. Unless terminated as
provided herein, the Trust and each Series and Class designated and established
pursuant to this Declaration of Trust shall continue without limitation of time.

Section 11.1.1. Termination. Subject to approval by the affected
Shareholders, the Trust, any Series, or any Class (and the establishment
and designation thereof) may be terminated by an instrument executed by a
majority of the Trustees then in office; provided, however, that no
approval of affected Shareholders is necessary if a majority of the
Trustees then in office determines that the continuation of the Trust,
Series, or Class is not in the best interests of the Trust, such Series,
such Class, or the affected Shareholders as a result of factors or events
adversely affecting the ability of the Trust, Series, or Class to conduct
its business and operations in an economically viable manner.

Section 11.1.2. Distribution of Assets. Upon termination of the Trust
or any Series or Class, after paying or otherwise providing for all
charges, taxes, expenses and liabilities, whether due or accrued or
anticipated, as may be determined by the Trustees, the Trust shall, in
accordance with such procedures as the Trustees consider appropriate,
reduce the remaining assets of the Trust to distributable form in cash or
other securities, or any combination thereof, and distribute the proceeds
to the affected Shareholders in the manner set forth by resolution of the
Trustees. To the extent permitted by the 1940 Act or other applicable law,
the Trustees may require affected Shareholders to receive Shares of any
remaining Series or Class in lieu of such proceeds.

Section 11.1.3. Certificate of Cancellation. Upon termination of the
Trust, the Trustees shall file a certificate of cancellation in accordance
with Section 3810 of the DBTA.

<PAGE>

Section 11.2. Sale of Assets. The Trustees may sell, convey, or transfer
the assets of the Trust, or the assets belonging to any one or more Series, to
another trust, partnership, association or corporation organized under the laws
of any state of the United States, or to the Trust to be held as assets
belonging to another Series of the Trust, in exchange for cash, shares or other
securities (including, in the case of a transfer to another Series of the Trust,
Shares corresponding to such other Series) with such transfer either (i) being
made subject to, or with the assumption by the transferee of, the liabilities
belonging to each Series the assets of which are so transferred, or (ii) not
being made subject to, or not with the assumption of, such liabilities.
Following such transfer, the Trustees shall distribute such cash, Shares or
other securities (giving due effect to the assets and liabilities belonging to
and any other differences among the various Series the assets belonging to which
have so been transferred) among the Shareholders of the Series corresponding to
the Series the assets belonging to which have been so transferred. If all of the
assets of the Trust have been so transferred, the Trust shall be terminated
pursuant to Section 11.1.

Section 11.3. Merger or Consolidation.

Section 11.3.1. Authority to Merge or Consolidate. The Trust, or any
one or more Series, may, either as the successor, survivor, or
non-survivor, (i) consolidate with one or more other trusts, partnerships,
associations or corporations organized under the laws of the State of
Delaware or any other state of the United States, to form a new
consolidated trust, partnership, association or corporation under the laws
under which any one of the constituent entities is organized, or (ii) merge
into one or more other trusts, partnerships, associations or corporations
organized under the laws of the State of Delaware or any other state of the
United States, or have one or more such trusts, partnerships, associations
or corporations merged into it, any such consolidation or merger to be upon
such terms and conditions as are specified in an agreement and plan of
reorganization entered into by the Trust, or one or more Series as the case
may be, in connection therewith. The terms "merge" or "merger" as used
herein shall also include the purchase or acquisition of any assets of any
other trust, partnership, association or corporation which is an investment
company organized under the laws of the State of Delaware or any other
state of the United States.

Section 11.3.2. No Shareholder Approval Required. Any such
consolidation or merger shall not require the vote of the Shareholders
affected thereby, unless such vote is required by the 1940 Act or other
applicable laws, or unless such merger or consolidation would result in an
amendment of this Declaration of Trust which would otherwise require the
approval of such Shareholders.

Section 11.3.3. Subsequent Amendments. In accordance with Section
3815(f) of DBTA, an agreement of merger or consolidation may effect any
amendment to this Declaration of Trust or the Bylaws (if any) or effect the
adoption of a new declaration of trust or Bylaws (if any) of the Trust if
the Trust is the surviving or resulting business trust.

Section 11.3.4. Certificate of Merger or Consolidation. Upon
completion of the merger or consolidation, the Trustees shall file a
certificate of merger or consolidation in accordance with Section 3810 of
the DBTA.
<PAGE>

ARTICLE 12
Amendments

Section 12.1. Generally. Except as otherwise specifically provided herein
or as required by the 1940 Act or other applicable law, this Declaration of
Trust may be amended at any time by an instrument in writing signed by a
majority of the Trustees then in office.

Section 12.2. Certificate of Amendment. In the event of any amendment to
this Declaration of Trust which affects the certificate of trust filed by the
Trust in accordance with Section 2.1, the Trustees shall file a certificate of
amendment in accordance with Section 3810 of the DBTA.

Section 12.3. Prohibited Retrospective Amendments. No amendment of this
Declaration of Trust or repeal of any of its provisions shall limit or eliminate
the limitation of liability provided to Trustees and officers hereunder with
respect to any act or omission occurring prior to such amendment or repeal.

ARTICLE 13
Miscellaneous Provisions

Section 13.1. Certain Internal References. In this Declaration of Trust or
in any such amendment, references to this Declaration of Trust, and all
expressions like "herein," "hereof" and "hereunder," shall be deemed to refer to
this Declaration of Trust as a whole and as amended or affected by any such
amendment.

Section 13.2. Certified Copies. The original or a copy of this Declaration
of Trust and of each amendment hereto shall be kept in the office of the Trust
where it may be inspected by any Shareholder. Anyone dealing with the Trust may
rely on a certificate by an officer or Trustee of the Trust as to whether or not
any such amendments have been made and as to any matters in connection with the
Trust hereunder, and with the same effect as if it were the original, may rely
on a copy certified by an officer or Trustee of the Trust to be a copy of this
Declaration of Trust or of any such amendments.

Section 13.3. Execution of Papers. Except as the Trustees may generally or
in particular cases authorize the execution thereof in some other manner, all
deeds, leases, contracts, notes and other obligations made by the Trustees shall
be signed by the President, any Vice President, Treasurer, any Assistant
Treasurer, Secretary, or any Assistant Secretary, or any officer authorized to
do so by the Trustees or any of the foregoing.

Section 13.4. Fiscal Year. The fiscal year of the Trust shall end on
September 30, or such other date as fixed by resolution of the Trustees.

Section 13.5. Governing Law. This Declaration of Trust is executed and
delivered with reference to DBTA and the laws of the State of Delaware by all of
the Trustees whose signatures appear below, and the rights of all parties and
the validity and construction of every provision hereof shall be subject to and
construed according to DBTA and the laws of the State of Delaware (unless and to
the extent otherwise provided for and/or preempted by the 1940 Act or other
applicable federal securities laws); provided, however, that there shall not be
applicable to the Trust, the Trustees, or this Declaration of Trust (a) the
provisions of Section 3540 of Title 12 of the Delaware Code or (b) any
provisions of the laws (statutory or common) of the State of Delaware (other
than the DBTA) pertaining to trusts which are inconsistent with the rights,
duties, powers, limitations or liabilities of the Trustees set forth or
referenced in this Declaration of Trust. All references to sections of the DBTA
or the 1940 Act, or any rules or regulations thereunder, refer to such sections,
rules, or regulations in effect as of the date of this Declaration of Trust, or
any successor sections, rules, or regulations thereto.

<PAGE>

Section 13.6. Headings. Headings are placed herein for convenience of
reference only, and in case of any conflict, the text of this instrument, rather
than the headings, shall control. This instrument may be executed in any number
of counterparts, each of which shall be deemed an original.

Section 13.7. Resolution of Ambiguities. The Trustees may construe any of
the provisions of this Declaration insofar as the same may appear to be
ambiguous or inconsistent with any other provisions hereof, and any such
construction hereof by the Trustees in good faith shall be conclusive as to the
meaning to be given to such provisions. In construing this Declaration, the
presumption shall be in favor of a grant of power to the Trustees.

Section 13.8. Seal. No official seal of the Trust shall be required to
execute any instruments on behalf of the Trust in accordance with Section 13.3.

Section 13.9. Severability. The provisions of this Declaration of Trust are
severable, and if the Trustees shall determine, with the advice of counsel, that
any of such provision is in conflict with the 1940 Act, the DBTA, or with other
applicable laws and regulations, the conflicting provision shall be deemed never
to have constituted a part of this Declaration of Trust; provided, however, that
such determination shall not affect any of the remaining provisions of this
Declaration of Trust or render invalid or improper any action taken or omitted
prior to such determination. If any provision of this Declaration of Trust shall
be held invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such jurisdiction and
shall not in any manner affect such provision in any other jurisdiction or any
other provision of this Declaration of Trust in any jurisdiction.

Section 13.10. Signatures. To the extent permitted by applicable law, any
instrument signed pursuant to a validly executed power of attorney shall be
deemed to have been signed by the Trustee or officer executing the power of
attorney.

<PAGE>

IN WITNESS WHEREOF, the undersigned, being the initial Trustees of the
Trust, has executed this Declaration of Trust as of the date first written
above.

/s/ Michael J. Cosgrove
-------------------------------------
Michael J. Cosgrove, Trustee

/s/ Alan M. Lewis
-------------------------------------
Alan M. Lewis, Trustee