<PAGE>
[GRAPHIC]
ELFUN LOGO
ELFUN FUNDS
ANNUAL REPORT
December 31, 1995
<PAGE>
UNDERSTANDING YOUR REPORT
Page
____
ELFUN FUNDS' SPECTRUM INSIDE FRONT COVER
HOW YOUR FUNDS MATCH UP WITH THE RISK/RETURN SPECTRUM
CHAIRMAN'S LETTER 1
DALE FREY ON MARKET EVENTS
REVIEW OF PERFORMANCE
AND SCHEDULES OF INVESTMENTS
ELFUN GLOBAL FUND 2
ELFUN TRUSTS 7
ELFUN DIVERSIFIED FUND 12
ELFUN TAX-EXEMPT INCOME FUND 20
ELFUN INCOME FUND . . 28
ELFUN MONEY MARKET FUND 35
PORTFOLIO MANAGERS DISCUSS YOUR FUNDS' RESULTS IN 1995
FINANCIAL STATEMENTS 41
FINANCIAL HIGHLIGHTS AND STATEMENTS OF ASSETS AND
LIABILITIES, OPERATIONS, AND CHANGES IN NET ASSETS
NOTES 50
NOTES TO THE FINANCIAL STATEMENTS
INDEPENDENT AUDITORS' REPORT 55
THE ACCOUNTANT'S OPINION
ELFUN FUNDS INVESTMENT TEAM . . 56
SHAREHOLDER INQUIRIES INSIDE BACK COVER
HOW YOU CAN OBTAIN MORE INFORMATION
_______________________________________________________________________________
ON THE COVER: GE Investments' portfolio managers are pictured making a trade
in one of our newly upgraded trading rooms. During 1995,
GE Investments made technological improvements in an effort
to create state-of-the-art trading facilities.
<PAGE>
INVESTMENT STRATEGY
_______________________________________________________________________________
CONSERVATIVE MODERATE AGGRESSIVE
FINDING THE RIGHT MIX OF RISK AND RETURN
_______________________________________________________________________________
MUTUAL FUND CATEGORIES POTENTIAL
RISK/RETURN
SPECTRUM
_______________________________________________________________________________
GLOBAL GROWTH This category includes international stock funds that invest in
common stocks and other equity securities of companies located primarily
outside the United States. Compared with domestic stocks, these funds offer
potentially higher returns, but carry additional risks.
Growth This category includes stock funds designed to pursue long-term
growth. Balanced and asset allocation funds investing in diversified
portfolios of bonds, other fixed income securities and money market
instruments, as well as stocks may also be included. Although stocks
historically have offered the greatest growth potential, they have fluctuated
more in price from day to day.
Income This category includes taxable or tax-exempt bond funds. Depending on
the types of bonds or other fixed income securities in which the funds
invest, these funds seek to provide a moderate to high level of current
income, while aiming to preserve an investor's original investment value.
Stability This category seeks to provide strong safety and stability of
principal while providing current income. Funds in this category are built
around high-quality, short-term securities with remaining maturities of 13
months or less.
<PAGE>
FINDING THE RIGHT MIX OF RISK AND RETURN
ELFUN FUNDS
_______________________________________________________________________________
ELFUN GLOBAL FUND
ELFUN TRUSTS
ELFUN DIVERSIFIED FUND
Each investor has a unique notion of what the "right" mix of risk and return
should be. You may, for example, be an investor who seeks to maintain the
highest possible degree of stability in your portfolio, and therefore favors
money market securities. Or, you may be at the opposite end of the spectrum -
someone who is willing to accept and tolerate higher degrees of risk in
exchange for the potential of higher returns offered by stocks. Because
higher returns generally mean greater price fluctuations and potential loss,
investment decisions will always revolve around this tradeoff.
ELFUN TAX-EXEMPT FUND
ELFUN INCOME FUND
To help you align your portfolio's particular blend of risk and return
with your investment preferences, Elfun Funds strives to offer an
evenly balanced array of investment options.
ELFUN MONEY MARKET FUND
As illustrated at left, each fund in the Elfun family of funds falls into
a distinct category that is designed to match up with the various stages of
the risk/return spectrum. Using this guide, you can fashion a diversified
portfolio to help you achieve your individual investment goals while
maintaining a level of risk acceptable to you. Through this type of
approach, Elfun Funds can truly be your core investment program.
<PAGE>
A LETTER FROM THE CHAIRMAN
DEAR SHAREHOLDER:
This past year marks some exciting changes at GE Investments. We have
devoted significant efforts and resources to improving our customer service
capabilities. Our GE Inquiry Center has been expanded to accommodate major
technology improvements. Each of our inquiry specialists has undergone
extensive training in order to provide you with more valuable information.
In addition, we continue to upgrade our trading areas with the latest
equipment for trading, news and information to assure that our analysts stay
on top of the markets. In the same spirit of change, you'll note some
improvements to this year's annual report. We have organized the report to
be more interesting and informative for you. For example, we added helpful
fund information on the inside front cover to guide you through the report.
Also, we have expanded our reviews of performance to include more fund
highlights.
PERFORMANCE HIGHLIGHTS
[GRAPHIC]
PHOTO OF DALE F. FREY
After weak financial performance in 1994, financial markets rebounded
tremendously in 1995, especially in the U.S. The Elfun Funds followed this
trend with Elfun Trusts leading the way in performance with an annual return
of 39.2%, the 3rd best year for the Fund since 1954. Elfun Diversified had
its best year ever, with a 27.1% return, benefiting from the Fund's
allocation in the U.S. stock market. The fixed income funds were boosted by
lower interest rates in 1995, with both Elfun Income (18.2% return) and Elfun
Tax-Exempt (17.3% return) achieving double digit performance.
All of the Elfun Funds, except Elfun Global, outperformed the
average of their peers' returns for the year, based on calculations by Lipper
Analytical Services, an independent mutual fund rating service.
Additionally, the 1995 annual returns of Elfun Trusts and Elfun Money Market
were in the top 10% of their Lipper peers.
The average total returns for each applicable Lipper category, and
complete details of each fund's performance can be found on various
performance review pages contained in this annual report.
MARKET OVERVIEW
Strong corporate earnings were reported throughout 1995, along with low
inflation and decreasing interest rates. Merger and acquisition activity
topped $450 billion for the year and cash flows into equity mutual funds
exceeded $100 billion, setting records for both measures. These factors drove
the S&P 500 up 37.6% for the year.
Bonds recovered after the worst market in history in 1994, reacting
well to indications of an economy under control. The 1995 returns were 18.5%,
as measured by the Lehman Brothers Aggregate Bond Index. The Lehman Brothers
Municipal Bond Index, returned 17.5% for the year, a strong performance
considering that tax reform concerns hovered over the tax-exempt market
throughout the year.
International equity market performance, as measured by the MSCI
EAFE Index, lagged the U.S. equity markets with a return of 11.2% for the
year. This underperformance was primarily driven by Japan, where weak
economic prospects and impending "bad debt" problems at financial
institutions held Japanese equities to only a 0.7% gain in 1995. European
markets posted a respectable return of 21.8% for the year. We believe
European companies continue to represent excellent global values as
cost-cutting efforts begin to pay off.
MARKET OUTLOOK
All in all, 1995 was a terrific year for the financial markets. Looking
forward, the potential certainly exists for a short-term market correction
given current high market valuation levels. Over the long term however,
lower interest rates, controlled inflation, and stable economic growth should
result in a continuation of long-term growth in the financial markets.
It was a pleasure to serve your investment needs in 1995 and we
look forward to helping you meet your financial objectives in 1996.
/s/ Dale F. Frey
Dale F. Frey
Chairman of the Board and President
GENERAL ELECTRIC INVESTMENTS CORPORATION
-1-
<PAGE>
Q
&
A
ELFUN TRUSTS
DAVID CARLSON MANAGES PENSION AND MUTUAL FUND PORTFOLIOS WITH TOTAL ASSETS OF
NEARLY $2 BILLION. HIS RESPONSIBILITIES INCLUDE MANAGING THE ELFUN TRUSTS AND
THE U.S. EQUITY PORTION OF ELFUN DIVERSIFIED FUND. DAVE JOINED GE IN 1980 ON
THE FINANCIAL MANAGEMENT PROGRAM. IN 1982, HE JOINED GE INVESTMENTS AS A
SECURITY ANALYST RESPONSIBLE FOR SEVERAL CONSUMER INDUSTRIES. IN 1988, DAVE
ASSUMED RESPONSIBILITY FOR MANAGING ELFUN TRUSTS. HE IS A TRUSTEE FOR THE GE
CANADA PENSION TRUST, A CHARTERED FINANCIAL ANALYST (CFA) AND A MEMBER OF THE
NEW YORK SOCIETY OF SECURITY ANALYSTS. DAVE IS A GRADUATE OF INDIANA
UNIVERSITY WITH A B.S. IN BUSINESS.
Q HOW DID ELFUN TRUSTS PERFORM COMPARED TO ITS BENCHMARKS IN 1995?
A Elfun Trusts posted a total return of 39.2% in 1995. Our Lipper peer group of
572 Growth funds posted an average return of 30.8% for the same period. The
S&P 500 returned 37.6%.
Q WHAT CAUSED ELFUN TRUSTS FAVORABLE PERFORMANCE WHEN COMPARED TO ITS BENCHMARK
AND PEERS?
A For some time now Elfun Trusts has maintained a large exposure to financial
and healthcare industries. Last year these stocks performed very well in the
market with many up in excess of 50%. In addition, we had a relatively small
exposure to the energy and basic material industries, and these industries
underperformed the market.
[GRAPHIC]
PHOTO OF DAVID CARLSON
Q ANY CHANGE IN INVESTMENT STRATEGY OVER THE LAST YEAR?
A The investment strategy for Elfun Trusts has essentially remained the same
for many years. The focus remains on quality growth stocks with strong
financial characteristics, dominant market position, and shareholder oriented
management. We cut back exposure to cyclical companies and added to those
which are less dependent on the economy. We target a double-digit growth
rate in earnings for the portfolio. Since we believe the S&P 500 has a 6-7%
growth rate over the long term, we believe the Trusts' portfolio is
positioned for superior growth to drive long term outperformance.
Q CAN YOU DESCRIBE THE STOCK SELECTION PROCESS IN GREATER DETAIL?
A The process is bottom-up oriented rather than top-down. Stocks are selected
on their individual merits, rather than a top-down view of the economy or
industries. We track a universe of 300 or so companies which meet the
quality constraints that would warrant inclusion in the portfolio. We run
valuation screens to assess relative attractiveness. Names are bought with a
long-term horizon in mind. As a result, our turnover (15-25% in recent
years) is very low by industry standards. As long as companies continue to
grow at attractive rates and the valuations remain reasonable, we will hold
individual stocks for many years.
Q WHAT IS THE OUTLOOK FOR THE FUND IN THE UPCOMING YEAR?
A We expect 1996 to be a year of increased volatility in the stock market.
Returns are likely to be much more modest in the coming years than the
double-digit returns we've enjoyed in the past, but we still believe the
stock market will outperform other asset classes over the long term. With
stock market valuations high on an historical basis, stock selection should
be the key to good performance in 1996. We will continue to emphasize this
approach, and we believe the Fund is well positioned for a strong year in
terms of relative performance.
-7-
<PAGE>
ELFUN TRUSTS
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT
[GRAPHIC]
LINE CHART
Data for line chart to follow:
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
FOR THE PERIODS ENDED DECEMBER 31, 1995
ONE FIVE TEN
YEAR YEAR YEAR
<S> <C> <C> <C>
Elfun Trusts 39.19% 16.32% 14.59%
S&P 500 37.61% 16.61% 14.82%
</TABLE>
INVESTMENT PROFILE
A Fund designed for investors who seek long-term growth of capital and future
income rather than current income through investment in domestic and foreign
securities. The Fund invests principally in common stocks or in securities
convertible into common stocks and may hold bonds, notes and other types of
securities.
TOP TEN LARGEST HOLDINGS
AS A PERCENTAGE OF NET ASSETS
AT DECEMBER 31, 1995
Federal National Mortgage Assoc. 3.28%
Travelers Group Inc. 2.89%
First Data Corp. 2.53%
Philip Morris Cos. Inc. 2.43%
Pepsico Inc. 2.34%
Johnson & Johnson 2.27%
Pfizer Inc. 2.15%
Dover Corp. 2.10%
Kimberly Clark Corp. 2.05%
Abbott Laboratories 2.04%
*Lipper Performance Comparison
BASED ON 12/31/95 TOTAL RETURNS
GROWTH PEER GROUP
<TABLE>
<CAPTION>
One Five Ten
Year Year Year
<S> <C> <C> <C>
Fund's rank in peer group: 51 103 39
Number of Funds in peer group: 572 237 153
Peer group average total return: 30.79% 16.37% 13.41%
Lipper categories in peer group: GROWTH
</TABLE>
*SEE NOTES TO PERFORMANCE FOR EXPLANATION OF PEER CATEGORIES.
See page 39 for Notes to Performance. Past performance is no guarantee of
future results.
-8-
<PAGE>
SCHEDULE OF INVESTMENTS (DOLLARS IN THOUSANDS) -- DECEMBER 31, 1995
ELFUN TRUSTS
[GRAPHIC]
PIE CHART
Data for pie chart to follow:
Cash & Other 3.8%
Consumer 37.9%
Technology 10.8%
Utilities 5.3%
Energy & Basic
Materials 10.3%
Captital Goods 11.7%
Finacial Services 20.2%
<TABLE>
<CAPTION>
Number
of Shares Value
__________________________________________________________
<S> <C> <C>
COMMON STOCK-97.7%
__________________________________________________________
[GRAPHIC]
ICON FOR BANKS &
FINANCIAL SERVICES
BANKS & FINANCIAL SERVICES-13.3%
American Express Co. 300,000 $12,412
Banque Nationale Paris 81,899 3,694(a)
Block H & R Inc. 45,000 1,823
Citicorp 220,000 14,795
Countrywide Credit
Industries 450,000 9,788
Federal National
Mortgage Assoc. 325,000 40,341
Morgan (J.P.) & Co. Inc. 160,000 12,840
Rollins Inc. 75,000 1,659
State Street Boston Corp. 305,000 13,725
Travelers Group Inc. 565,000 35,524
Wells Fargo & Co. 76,000 16,416
163,017
[GRAPHIC]
ICON FOR BROADCASTING,
ENTERTAINMENT & MEDIA
BROADCASTING, ENTERTAINMENT & MEDIA-11.2%
Capital Cities/ABC Inc. 172,000 21,220
Carmike Cinemas Inc. 25,000 563
Carnival Corp. (Class A) 150,000 3,656
Catalina Marketing Corp. 55,000 3,451
Circus Circus
Enterprises Inc. 75,000 2,091
Comcast Corp. (Class A) 585,000 10,640(a)
Disney (Walt) Co. 147,000 8,673
Donnelley (R.R.) & Sons Co. 300,000 11,812
Dun & Bradstreet Corp. 35,000 2,266
Gannett Inc. 155,000 9,513
Interpublic Group Cos. Inc. 135,000 5,856
Readers Digest Assoc. Inc.
(Class A) 35,000 1,794
Reuters Holdings 830,000 7,599
Reuters Holdings PLC ADR
(Class B) 440,000 24,255
Tele-Communications Inc. 158,750 4,266(a)
Tele-Communications Inc.
(Class A) 645,000 12,819(a)
Television Broadcasts
Ltd. ADR 275,000 980
Time Warner Inc. 155,000 5,871
137,325
BUILDING MATERIALS & CONSTRUCTION-0.2%
Hopewell Holdings 1,253,141 721
Hutchison Whampoa Ltd. 280,000 1,706
2,427
CHEMICAL-2.3%
Air Products &
Chemicals Inc. 130,000 6,857
Airgas Inc. 130,000 4,323(a)
Morton International Inc. 480,000 17,220
28,400
[GRAPHIC]
ICON CONSUMER RELATED
CONSUMER RELATED-7.8%
Anheuser Busch Cos. Inc. 93,000 6,219
Coca Cola Co. 39,000 2,896
Colgate Palmolive Co. 60,000 4,215
Duracell International Inc. 57,000 2,950
General Mills Inc. 65,000 3,754
McDonalds Corp. 265,000 11,958
Pepsico Inc. 515,000 28,775
Philip Morris Cos. Inc. 330,000 29,865
Procter & Gamble Co. 33,000 2,739
Scholastic Corp. 33,000 2,566(a)
95,937
DIVERSIFIED MANUFACTURING-7.7%
Allied Signal Inc. 495,000 23,513
Dover Corp. 700,000 25,812
Hanson PLC ADR 760,000 11,590
Loews Corp. 286,000 22,415
____________
See Notes to Schedule of Investments and Financial Statements
-9-
<PAGE>
ELFUN TRUSTS (DOLLARS IN THOUSANDS)
<CAPTION>
Number
of Shares Value
__________________________________________________________
<S> <C> <C>
Minnesota Mining &
Manufacturing 170,000 $11,263
94,593
[GRAPHIC]
ICON DRUGS, HEALTHCARE
& COSMETICS
DRUGS, HEALTHCARE & COSMETICS-16.1%
Abbott Laboratories 600,000 25,050
American Home Products Corp 150,000 14,550
American Medical Response 130,000 4,225(a)
Arbor Drugs Inc. 232,500 4,883
Arrow International Inc. 45,135 1,794
Avon Products Inc. 140,000 10,552
Bristol-Myers Squibb Co. 170,000 14,599
Cardinal Health Inc. 88,000 4,818
Dentsply International Inc. 90,000 3,600
Eli Lilly & Co. 190,000 10,687
FHP International Corp. 85,000 2,423(a)
Gillette Co. 90,000 4,691
International Flavours 40,000 1,920
Johnson & Johnson 325,000 27,828
Lincare Holdings Inc. 70,000 1,750(a)
Living Centers of
America Inc. 90,000 3,150
Merck & Co. Inc. 340,000 22,355
Pfizer Inc. 420,000 26,460
Smithkline Beecham PLC ADR 220,000 12,210
197,545
ELECTRICAL & ELECTRONICS-4.5%
AMP Inc. 310,000 11,896
Hewlett Packard Co. 55,000 4,606
Hubbell Inc. (Class A) 45,500 2,827
Hubbell Inc. (Class B) 230,000 15,122
Intel Corp. 235,000 13,336
Molex Inc. (Class A) 185,000 5,666
Sensormatic Electronics
Corp. 75,000 1,303
VLSI Technology Inc. 45,000 816(a)
55,572
[GRAPHIC]
ICON ENERGY & ENERGY RELATED
ENERGY & ENERGY RELATED-8.0%
Amoco Corp. 45,000 3,234
Anadarko Petroleum Co. 225,000 12,178
Atlantic Richfield Co. 108,000 11,961
Exxon Corp. 140,000 11,218
Petroleum Geo Services ADR 40,000 1,000(a)
Royal Dutch Petroleum Co. 155,000 21,874
Schlumberger Ltd. 260,000 18,005
Texaco Inc. 90,000 7,065
Unocal Corp. 405,000 11,796
98,331
FOREST PRODUCTS, PAPER & PACKAGING-2.0%
Kimberly Clark Corp. 305,000 25,239
INDUSTRIAL PRODUCTS & SERVICES-2.5%
Browning-Ferris
Industries Inc. 275,000 8,113
Flightsafety
International Inc. 57,000 2,864
Waste Management
International PLC ADR 175,000 1,881(a)
WMX Technologies Inc. 580,000 17,327
30,185
INSURANCE-5.2%
American International
Group Inc. 142,500 13,181
Chubb Corp. 110,000 10,643
General Reinsurance Corp. 85,000 13,175
Marsh & McLennan Cos. 130,000 11,537
TIG Holdings Inc. 160,000 4,560
UNUM Corp. 145,000 7,975
USF & G Corp.
(Cost $2,216 - 6/3/91) 187,110 3,000(h)
64,071
MERCHANDISING-1.8%
CUC International Inc. 30,000 1,024(a)
Giordano International 2,000,000 1,707
Home Depot Inc. 170,000 8,139
Toys +R Us 520,000 11,310(a)
22,180
OFFICE EQUIPMENT & SUPPLIES-6.5%
Automatic Data Processing Inc 230,000 17,077
Equifax Inc. 1,070,000 22,871
First Data Corp. 465,000 31,097
Microsoft Corp. 73,000 6,406(a)
Xerox Corp. 20,000 2,740
80,191
REAL ESTATE-0.2%
Debartolo Realty Corp. 90,000 1,170
Glimcher Realty Trust 65,000 1,121
2,291
____________
See Notes to Schedule of Investments and Financial Statements
-10-
<PAGE>
SCHEDULE OF INVESTMENTS
(DOLLARS IN THOUSANDS) -- DECEMBER 31, 1995
<CAPTION>
Number
of Shares Value
__________________________________________________________
<S> <C> <C>
TELEPHONE & UTILITIES-6.8%
Alleghany Corp. Delaware 34,000 $6,732
Airtouch Communications 455,000 12,854(a)
American Telephone &
Telegraph 230,000 14,892
Cellular Communications Inc. 150,000 7,463
GTE Corp. 235,000 10,340
International Cabletel Inc. 520,000 12,740(a)
MCI Communications Corp. 415,000 10,842
NYNEX Corp. 150,000 8,100
83,963
TRANSPORTATION-1.6%
Pittston Services Group 85,000 2,667
Union Pacific Corp. 260,000 17,160
19,827
TOTAL COMMON STOCK
(COST $651,763) 1,201,094
CONVERTIBLE PREFERRED STOCK-0.1%
__________________________________________________________
USF & G Corp. (Series B)
(COST $739 - 6/3/91) 7,500 1,000(h)
TOTAL INVESTMENTS IN SECURITIES
(COST $652,502) 1,202,094
<CAPTION>
Principal
Amount Value
__________________________________________________________
<S> <C> <C>
SHORT TERM INVESTMENTS-2.0%
U.S. GOVERNMENT AGENCIES-0.8%
Federal National Mortgage Assoc.
5.67% 01/19/96 $9,500 $ 9,473(d)
REPURCHASE AGREEMENT-1.2%
State Street Bank and Trust Co.
5.75% 01/02/96 $14,700 $14,700
(dated 12/29/95, proceeds
$14,709, collateralized by
$14,996 United States
Treasury Note, 9.25%, 2/01/16)
TOTAL SHORT TERM INVESTMENTS
(COST $24,173) 24,173
Expiration Number
Date/ of
Strike Price Contracts Value
___________________________________________________________________________
<S> <C> <C> <C>
CALL OPTIONS WRITTEN-0.0%
Disney (Walt) Co. Jan. 96/60.00 150 (13)
(Premium received $46)
OTHER ASSETS AND
LIABILITIES, NET 0.2% 2,112
NET ASSETS - 100% $1,228,366
___________________________________________________________________________
OTHER INFORMATION
The Elfun Trusts had the following short Futures Contracts open at
December 31, 1995:
<CAPTION>
Number
Expiration of Underlying Unrealized
Description Date Contracts Face Value Gain
_______________________________________________________________________________
<S> <C> <C> <C> <C>
S&P 500 March 1996 120 $37,107 $265
</TABLE>
ICONS REPRESENT THE TOP FIVE INDUSTRIES IN
ELFUN TRUSTS AT DECEMBER 31, 1995.
_____________
See Notes to Schedules of Investments and Financial Statements
-11-
<PAGE>
NOTES TO PERFORMANCE (UNAUDITED)
Total returns assume changes in share price and reinvestment of dividends
and capital gains. Investment returns and principal value on an investment
will fluctuate and you may have a loss or gain when you sell your shares.
A portion of the Elfun Tax-Exempt Fund's income may be subject to state,
federal and/or alternative minimum tax. Capital gains, if any, are subject to
capital gains tax.
The Standard & Poor's Composite Index of 500 Stocks (S&P 500), MSCI World
Index, Lehman Brothers Aggregate Bond Index (LBKL), and the 90 Day U.S.
Treasury Index (90 day T-bill) are unmanaged indices and do not reflect the
actual cost of investing in the instruments that comprise each index. The S&P
500 Index is a composite of the prices of 500 widely held U.S. stocks
recognized by investors to be representative of the stock market in general.
The MSCI World Index is a composite of 1,579 stocks of companies in 22
countries representing the European, Pacific Basin and American regions. The
MSCI World Index is widely used by global investors. The Lehman Brothers
Aggregate Bond Index is a composite index of short, medium, and long-term
bond performance and is widely recognized as a barometer of the bond market
in general. The Lehman Brothers Municipal Bond Index is a composite of
investment-grade (Baa or greater), fixed-rate municipal bonds with maturities
greater than two years and is considered to be representative of the
municipal bond market. The 90 Day U.S. Treasury Index is the average return
on three month U.S. Treasury Bills. The results shown for the foregoing
indices assume reinvestment of net dividends or interest.
Broad market index returns are calculated from the nearest month end to the
Funds' inception date for funds with less than ten years of performance. The
Donoghue yields represent the average yields of 772 taxable money market
funds.
The peer universe of funds used in our peer ranking calculation is based on
the blend of Lipper peer categories, as shown. This blend is the same as the
category blend used by the Wall Street Journal (except for the Elfun
Diversified Fund for which we use the specific Lipper peer group and Elfun
Money Market which is not in the Wall Street Journal). The actual number of
funds and numerical rankings in these universes could differ since the Wall
Street Journal excludes certain funds which do not meet their net asset or
shareholder publication thresholds. Lipper is an independent mutual fund
rating service located in Summit, Jersey.
General Electric Investment Corporation agreed to limit certain fees and
expenses of the Elfun Global, Elfun Diversified and Elfun Money Market Fund
in prior years, as described in detail in the Funds' prospectus. In the
absence of these limitations, the total returns for the Elfun Global and
Elfun Diversified Funds would have been lower for the 5 year and since
inception periods and for the Elfun Money Market Fund, the 5 year and since
inception period would have been 4.48% and 4.80% respectively.
The Funds' portfolios are actively managed and their composition will vary
over time. The specific holdings cited throughout the report are for
illustrative purposes only and may not represent current or future
investments of the Funds. They are not intended to constitute a
recommendation to purchase or sell any particular security. See the
prospectus for complete descriptions of investment objectives, policies and
permissible investments.
-39-
<PAGE>
NOTES TO SCHEDULE OF INVESTMENTS (DOLLARS IN THOUSANDS)
(a) Non-income producing security.
(b) Pursuant to Rule 144A of Securities Act of 1933, these securities may
be resold in transactions exempt from registration, normally to
qualified institutional buyers. At December 31, 1995, these securities
amounted to $1,253, $665 and $6,192 or 0.9%, 0.9% and 2.8% of net
assets for the Elfun Global Fund, Elfun Diversified Fund and Elfun
Income Fund, respectively.
(c) Settlement is on a delayed delivery or when issued basis with
final maturity to be announced (TBA) in the future.
(d) Coupon amount represents effective yield.
(e) Floating rate coupon. The stated rate represents the rate at
December 31, 1995.
(f) Principal only securities represent the right to receive the
monthly principal payments on an underlying pool of mortgages.
No payments of interest on the pool are passed through to the
principal only holder.
(g) Interest only securities represent the right to receive the
monthly interest payments on an underlying pool of mortgages.
Payments of principal on the pool reduce the value of the interest
only holding.
(h) Restricted securities. Securities are not registered under the
Securities Act of 1933, or have contractual or legal restrictions
to resale. Dates of acquisition and costs are shown in parentheses
after the titles of the restricted securities. The Fund does not
intend to register these securities and therefore should not bear
any costs of registration. These restricted securities are fair
valued by officers of the Funds under procedures authorized by the
Trustees. At December 31, 1995, the fair value of these restricted
securities represented $4,000 or 0.3% of net assets of Elfun Trusts.
(i) Adjustable rate mortgage coupon. The stated rate represents the rate
at December 31, 1995.
(j) All or a portion of security out on loan.
ABBREVIATIONS:
ITL -- Italian Lira
ADR -- American Depository Receipt
AMBAC -- AMBAC Indemnity Corporation
BIG -- Bond Investment Guarantee
FSA -- Financial Security Assurance
MBIA -- Municipal Bond Insurance Association
REMIC -- Real Estate Mortgage Investment Conduit
-40-
<PAGE>
FINANCIAL HIGHLIGHTS
SELECTED DATA BASED ON A SHARE OUTSTANDING DURING THE YEAR ENDED DECEMBER 31:
<TABLE>
<CAPTION>
ELFUN TRUSTS 1995 1994 1993 1992 1991
__________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $30.91 $33.76 $33.93 $33.05 $27.42
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.77 0.77 0.81 0.83 0.83
Net realized and unrealized
gains (losses) on investments 11.33 (0.68) 2.25 2.24 6.87
__________________________________________________________________________________________
TOTAL INCOME FROM
INVESTMENT OPERATIONS 12.10 0.09 3.06 3.07 7.70
__________________________________________________________________________________________
LESS DISTRIBUTIONS FROM:
Net investment income 0.77 0.77 0.80 0.83 0.83
Net realized gains 2.36 2.17 2.43 1.36 1.24
__________________________________________________________________________________________
TOTAL DISTRIBUTIONS 3.13 2.94 3.23 2.19 2.07
__________________________________________________________________________________________
NET ASSET VALUE, END OF YEAR $39.88 $30.91 $33.76 $33.93 $33.05
__________________________________________________________________________________________
TOTAL RETURN 39.19% 0.23% 8.98% 9.28% 28.17%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(in thousands) $1,228,366 $900,349 $937,676 $872,288 $789,879
Ratio of net investment income
to average net assets 2.08% 2.28% 2.29% 2.49% 2.67%
Ratio of expenses to
average net assets 0.13% 0.17% 0.11% 0.11% 0.13%
Portfolio turnover rate 15% 19% 18% 11% 14%
</TABLE>
___________________
SEE NOTES TO FINANCIAL STATEMENTS
-41-
<PAGE>
STATEMENT OF ASSETS
AND LIABILITIES
DECEMBER 31, 1995 (AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
ELFUN
TRUSTS
<S> <C>
ASSETS
Investments in securities, at market
(Cost $119,844, $652,502, $58,326,
$1,180,703, $252,350, and
$0, respectively) $1,202,094
Short term investments
(at amortized cost) 24,173
Cash 89
Foreign currency (cost $924,
$14, $123, $0, $0, and $0,
respectively) 14
Receivable for investments sold 0
Dividends receivable 2,153
Interest receivable 7
Tax reclaim receivable 5
Receivable for fund shares sold 688
Variation margin receivable 0
____________________________________________________
TOTAL ASSETS 1,229,223
____________________________________________________
LIABILITIES
Options written, at market
(Premium received $0, $46,
$0, $0, $0, and $0,
respectively) 13
Distributions payable to shareholders 3
Payable upon return of securities loaned 0
Payable for investments purchased 129
Payable for fund shares repurchased 181
Payable to GEIC 491
Variation margin payable 40
____________________________________________________
TOTAL LIABILITIES 857
____________________________________________________
NET ASSETS $1,228,366
____________________________________________________
NET ASSETS CONSIST OF:
Capital paid in $678,437
Undistributed net investment income 177
Accumulated net realized gain (loss) (138)
Net unrealized appreciation
(depreciation) on:
Investments 549,592
Futures 265
Written options 33
Foreign currency transactions 0
____________________________________________________
NET ASSETS $1,228,366
____________________________________________________
Shares outstanding (Par value
$10, $10, $10, $10,
$10, and $1, respectively) 30,800
Net asset value, offering
and redemption
price per share $39.88
</TABLE>
See Notes to Financial Statements
-44-
<PAGE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
ELFUN
TRUSTS
<S> <C>
INVESTMENT INCOME
INCOME:
Dividends $22,063
Interest 2,231
Less: Foreign taxes withheld (335)
________________________________________________
TOTAL INCOME 23,959
________________________________________________
EXPENSES:
Administrative expenses 503
Shareholder servicing agent expenses 160
Transfer agent expenses 382
Custody and accounting 195
Professional fees 38
Registration, filing, printing and
miscellaneous expenses 111
________________________________________________
TOTAL EXPENSES 1,389
________________________________________________
NET INVESTMENT INCOME 22,570
________________________________________________
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
REALIZED GAIN (LOSS) ON:
Investments 72,504
Futures (4,796)
Written options 10
Foreign currency transactions 7
INCREASE (DECREASE) IN
UNREALIZED APPRECIATION/
DEPRECIATION ON:
Investments 261,421
Futures 139
Written options 35
Foreign currency transactions 0
________________________________________________
Net realized and unrealized gain
(loss) on investments 329,320
________________________________________________
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $351,890
________________________________________________
</TABLE>
_____________
See Notes to Financial Statements
-46-
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
ELFUN
TRUSTS
1995 1994
_______________________________________________________________
<S> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS:
Net investment income $22,570 $21,039
Net realized gain (loss)
on investments,
futures, written options,
and foreign
currency transactions 67,725 59,683
Net increase (decrease) in
unrealized appreciation
/depreciation 261,595 (78,719)
_______________________________________________________________
Net increase (decrease)
from operations 351,890 2,003
_______________________________________________________________
DISTRIBUTIONS TO UNITHOLDERS FROM:
Net investment income (22,385) (21,027)
Net realized gains (68,891) (59,190)
_______________________________________________________________
TOTAL DISTRIBUTIONS (91,276) (80,217)
_______________________________________________________________
Increase (decrease) in
net assets from operations
and distributions 260,614 (78,214)
_______________________________________________________________
SHARE TRANSACTIONS:
Proceeds from sale of shares 54,091 39,095
Value of distributions
reinvested 65,390 56,739
Cost of shares redeemed (52,078) (54,947)
_______________________________________________________________
Net increase (decrease) from
share transactions 67,403 40,887
_______________________________________________________________
TOTAL INCREASE (DECREASE)
IN NET ASSETS 328,017 (37,327)
NET ASSETS
Beginning of year 900,349 937,676
_______________________________________________________________
End of year $1,228,366 $900,349
_______________________________________________________________
UNDISTRIBUTED (OVERDISTRIBUTED)
NET INVESTMENT
INCOME, END OF YEAR $177 $35
<CAPTION>
CHANGES IN FUND SHARES
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Shares sold 1,455 1,163
Issued for distributions reinvested 1,645 1,829
Shares redeemed (1,429) (1,639)
Net increase in Fund shares 1,671 1,353
_______________________________________________________________
</TABLE>
See Notes to Financial Statements
-48-
<PAGE>
NOTES TO FINANCIAL STATEMENTS (DECEMBER 31, 1995)
1. ORGANIZATION OF THE FUNDS
The Elfun Funds (the "Funds") are registered under the Investment Company Act
of 1940 (as amended) ("the 1940 Act") as diversified, open-end management
investment companies and are authorized to issue an unlimited number of
shares. The Funds operate as Employees' Securities Companies (as defined
in the 1940 Act) and as such are exempt from certain provisions of the
1940 Act.
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following summarizes the significant accounting policies of the Funds:
SECURITY VALUATION AND TRANSACTIONS
Securities for which exchange quotations are readily available are valued at
the last sale price, or if no sales occurred on that day, at the last quoted
bid price. Certain fixed income securities are valued by a dealer or by a
pricing service based upon a computerized matrix system, which considers
market transactions and dealer supplied valuations. Valuations for municipal
bonds are based on prices obtained from a qualified municipal bond pricing
service; prices represent the mean of the secondary market.
Futures contracts are valued at the settlement price established each day by
the board of trade or exchange on which they are principally traded. Options
traded on an exchange are valued using the last sale price or, in the absence
of a sale, the last offering price. Options traded over-the-counter are
valued using dealer-supplied valuations. Forward foreign currency contracts
are valued at the mean between the bid and the offered forward rates as last
quoted by a recognized dealer.
Short term investments maturing within 60 days are valued at amortized cost
or original cost plus accrued interest, each of which approximates market
value.
Portfolio positions which cannot be valued as set forth above are valued at
fair value determined under procedures approved by the Trustees.
Elfun Money Market Fund values its securities using the amortized cost
method, which values securities initially at cost and thereafter assumes a
constant amortization to maturity of any discount or premium. Amortized cost
approximates market value.
Transactions are accounted for as of the trade date. Cost is determined and
gains and losses are based upon the specific identification method for both
financial statement and federal tax purposes.
The Funds may purchase or sell securities on a when-issued or forward
commitment basis. Payment and delivery may take place a month or more after
the date of the transaction. The price of the underlying securities and the
date when the securities will be delivered and paid for are fixed at the time
the transaction is negotiated. This may increase the risk if the other party
involved in the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous yields. In connection with such
purchases the Funds are required to hold collateral (cash, U.S. Government
securities or other liquid, high grade debt obligations) with the Funds'
custodian sufficient to cover the purchase price, unless they enter into an
offsetting contract for the sale of equal securities and value.
FOREIGN CURRENCY
Accounting records of the Funds are maintained in U.S. dollars. Investment
securities and other assets and liabilities and purchases and sales of
investment securities are denominated in foreign currency and translated to
U.S. dollars at the prevailing exchange rate on the respective dates of such
transactions.
The Funds do not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations
are included with the
-50-
<PAGE>
NOTES TO FINANCIAL STATEMENTS (DECEMBER 31, 1995)
net realized and unrealized gain or loss from investments. Reported net
realized exchange gains or losses from foreign currency transactions
represent sale of foreign currencies, currency gains or losses between the
trade date and the settlement date on securities transactions, realized gains
and losses on forward foreign currency contracts, and the difference between
the amounts of dividends, interest, and foreign withholding taxes recorded on
the Fund's books, and the U.S. dollar equivalent of the amounts actually
received or paid. Net unrealized foreign exchange gains and losses arise
from changes in the value of assets and liabilities other than investments in
securities at fiscal year end, as a result of changes in the exchange rate.
INCOME TAXES
It is each Fund's policy to comply with all sections of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of
its taxable income, tax-exempt income, and gains to its shareholders and
therefore no provision for federal income tax has been made. Each Fund is
treated as a separate taxpayer for federal income tax purposes.
Capital loss carryovers are available to offset future realized capital
gains. To the extent that these carryover losses are used to offset future
capital gains, it is probable that the gains so offset will not be
distributed to shareholders because they would be taxable as ordinary income.
At December 31, 1995, the Elfun Income Fund had a capital loss carryover of
$614,528. The carryforward expires December 31, 2002.
INVESTMENT INCOME
Corporate actions (including cash dividends) are recorded net of
non-reclaimable tax withholdings on the ex-dividend date, except for certain
foreign securities for which corporate actions are recorded as soon as such
information is available. Interest income is recorded on the accrual basis.
All discounts and premiums on taxable bonds and premi
ums on tax exempt bonds are amortized to call or maturity date, whichever is
shorter using the effective yield method. On tax exempt bonds purchased
before May 1, 1993, only original issue discount is amortized. For tax exempt
bonds purchased after April 30, 1993, both market discount and original issue
discount are amortized.
EXPENSES
Expenses of the Funds which are directly identifiable to a specific Fund are
allocated to that Fund. Expenses which are not readily identifiable to a
specific Fund are allocated in such a manner as deemed equitable, taking into
consideration the nature and type of expense and the relative sizes of the
Funds. All expenses of the Funds are paid by the Investment Advisor and
reimbursed by the Funds.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
DISTRIBUTIONS TO SHAREHOLDERS
Elfun Tax-Exempt Income Fund, Elfun Income Fund and Elfun Money Market Fund
declare investment income dividends daily (paid monthly). Elfun Global Fund,
Elfun Trusts, and Elfun Diversified Fund declare and pay dividends of net
investment income annually. All Funds declare and pay net realized capital
gain distributions annually. The character of income and gains to be
distributed are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles. Reclassifications
are made to the Portfolios' capital accounts to reflect income and gains
available for distribution (or available capital loss carryovers) under
income tax regulations. The calculation of net investment
-51-
<PAGE>
NOTES TO FINANCIAL STATEMENTS (DECEMBER 31, 1995)
income per share in the Financial Highlights table excludes these
adjustments.
FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward".) is an agreement between two
parties to buy and sell a currency at a set price on a future date. The
market value of the Forward fluctuates with changes in currency exchange
rates. The Forward is marked-to-market daily and the change in the market
value is recorded by the Fund as an unrealized gain or loss. When the
Forward is closed, the Fund records a realized gain or loss equal to the
difference between the value at the time it was opened and the value at the
time it was closed. The Fund could be exposed to risk if a counterparty is
unable to meet the terms of the contract or if the value of the currency
changes unfavorably. The Fund may enter into Forwards in connection with
planned purchases and sales of securities, to hedge specific receivables or
payables against changes in future exchange rates or to hedge the U.S. dollar
value of portfolio securities denominated in a foreign currency.
REPURCHASE AGREEMENTS
The Funds' custodian takes possession of the collateral pledged for
investments in repurchase agreements on behalf of the Funds. It is the policy
of the Funds to value the underlying collateral daily on a mark-to-market
basis to determine that the value, including accrued interest, is at least
equal to the repurchase price. In the event of default of the obligation to
repurchase, the Funds have the right to liquidate the collateral and apply
the proceeds in satisfaction of the obligation.
FUTURES AND OPTIONS
The Funds, other than the Elfun Money Market Fund, may invest in futures
contracts and may purchase and write options. These investments involve, to
varying degrees, elements of market risk and risks in excess of the amount
recognized in the Statement of Assets and Liabilities. The face or contract
amounts reflect the extent of the involvement the Funds have in the
particular classes of instruments. Risks may be caused by an
imperfect correlation between movements in the price of the instruments
and the price of the underlying securities and interest rates.
Risks also may arise if there is an illiquid secondary market for the
instruments, or due to the inability of counterparties to perform. The Funds
will invest in these instruments to hedge against the effects of changes in
value of portfolio securities due to anticipated changes in interest rates
and/or market conditions, to equitize a cash position, for duration
management, or when the transactions are economically appropriate to the
reduction of risk inherent in the management of the Fund involved.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Fund each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as
unrealized gains and losses. The Fund recognizes a realized gain or loss
when the futures contract is closed. The Fund will realize a gain or loss
upon the expiration or closing of the option transaction. When an option is
exercised, the proceeds on sales for a written call option, the purchase cost
for a written put option, or the proceeds on the sale of the security for a
purchased put or cost of the security for a call option is adjusted by the
amount of premium received or paid.
SECURITY LENDING
The Funds may loan securities to well known and recognized U.S. and foreign
brokers and banks and receive a lenders fee. These fees are included in
interest income. The loans of securities will be collateralized by cash,
letters of credit or U.S. Government Securities. The collateral will be
segregated and maintained at all times with the custodian and must be equal
to the current value of the securities loaned. In the event the counterparty
-52-
<PAGE>
NOTES TO FINANCIAL STATEMENTS (DECEMBER 31, 1995)
(borrower) does not meet its contracted obligation to return the securities,
the Fund may be exposed to the risk of loss of reacquiring the loaned
securities at prevailing market prices.
OTHER
There are certain additional risks involved when investing in foreign
securities that are not inherent in domestic securities. These risks may
involve foreign currency exchange rate fluctuations, adverse political and
economic developments and the imposition of unfavorable foreign governmental
laws and restrictions.
3. FEES AND COMPENSATION PAID TO AFFILIATES
ADVISORY AND ADMINISTRATION FEES
During 1995 the Funds incurred expenses for the cost of services directed by
General Electric Company's wholly owned subsidiary, General Electric
Investment Corporation ("GEIC"), as Investment Advisor and for services GEIC
rendered as shareholder servicing agent. These expenses are included as
administrative expenses and shareholder servicing agent fees in the Statement
of Operations. The Trustees received no compensation as Trustees for the
Elfun Funds.
4. AGGREGATE UNREALIZED APPRECIATION AND DEPRECIATION
(DOLLARS IN THOUSANDS)
Aggregate gross unrealized appreciation/depreciation of investments for each
Fund at December 31, 1995, were as follows:
<TABLE>
<CAPTION>
GROSS GROSS NET
UNREALIZED UNREALIZED UNREALIZED
APPRECIATION DEPRECIATION APPRECIATION
__________________________________________________________________________
<S> <C> <C> <C>
Elfun Global Fund $ 23,483 $ 6,711 $ 16,772
Elfun Trusts 557,006 7,414 549,592
Elfun Diversified
Fund 15,269 861 14,408
Elfun Tax-Exempt
Income Fund 105,517 0 105,517
Elfun Income Fund 7,073 403 6,670
</TABLE>
The aggregate cost of each Fund's investments was substantially the same for
book and federal income tax purposes at December 31, 1995.
5. OPTIONS
(DOLLARS IN THOUSANDS)
During the year ended December 31, 1995 the following option contracts were
written:
<TABLE>
<CAPTION>
ELFUN TRUSTS ELFUN DIVERSIFIED FUND
________________________ ___________________________
NUMBER NUMBER
OF CONTRACTS PREMIUM OF CONTRACTS PREMIUM
_______________________________________________________________________________
<S> <C> <C> <C> <C>
Balance as of
December 31, 1994 100 $18 0 $0
Written 250 62 694 157
Closed and Expired (200) (34) (300) (155)
Exercised 0 0 (394) (2)
_____ ____ ____ ____
Balance as of
December 31, 1995 150 $46 0 $0
_____ ____ ____ ____
_____ ____ ____ ____
<CAPTION>
ELFUN INCOME FUND
________________________
NUMBER
OF CONTRACTS PREMIUM
____________________________________________________________
<S> <C> <C>
Balance as of
December 31, 1994 0 $ 0
Written 9,600 48
Closed and Expired (8,680) (44)
Exercised (920) (4)
______ _____
Balance as of
December 31, 1995 0 $ 0
______ _____
______ _____
</TABLE>
-53-
<PAGE>
NOTES TO FINANCIAL STATEMENTS (DECEMBER 31, 1995)
6. INVESTMENT TRANSACTIONS
(DOLLARS IN THOUSANDS)
The cost of purchases and the proceeds from sales of investments, other
than U.S. Government obligations, short-term investments and options,
for the year ended December 31, 1995, were:
<TABLE>
<CAPTION>
PURCHASES SALES
___________________________________________________________
<S> <C> <C>
Elfun Global Fund $73,633 $71,036
Elfun Trusts 152,278 160,471
Elfun Diversified Fund 19,008 16,175
Elfun Tax-Exempt
Income Fund 739,434 701,038
Elfun Income Fund 402,790 427,114
</TABLE>
The cost of purchases and the proceeds from sales of
long-term U.S. Government obligations for the year ended
December 31, 1995, were:
<TABLE>
<CAPTION>
PURCHASES SALES
____________________________________________________________
<S> <C> <C>
Elfun Trusts $ 0 $5,448
Elfun Diversified Fund 42,112 41,083
Elfun Income Fund 463,603 420,805
</TABLE>
7. SECURITY LENDING
At December 31, 1995, the Elfun Income Fund loaned securities having
a value, including accrued interest, of approximately $39,694,174
and received $40,478,335 in cash and letters of credit as collateral
for the loans. Cash collateral received is invested in high grade
liquid debt obligations and short term investments at December 31, 1995.
-54-
<PAGE>
INDEPENDENT AUDITORS' REPORT
[GRAPHIC]
Logo for KPMG Peat Marwick LLP
TO THE BOARD OF TRUSTEES AND
SHAREHOLDERS OF THE ELFUN MUTUAL FUNDS:
We have audited the accompanying statements of assets and liabilities of the
Elfun Global Fund, Elfun Trusts, Elfun Diversified Fund, Elfun Tax-Exempt
Income Fund, Elfun Income Fund and Elfun Money Market Fund, (the "Elfun
Funds"), including the schedules of investments as of December 31, 1995, and
the related statements of operations for the year then ended, the statements
of changes in net assets for each of the years in the two-year period then
ended, and the financial highlights for each of the years in the five-year
period then ended. These financial statements and financial highlights are
the responsibility of the Funds' management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1995, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Elfun Funds, the results of their operations, the changes in their net assets
and their financial highlights for the aforementioned periods, in conformity
with generally accepted accounting principles.
/s/KPMG Peat Marwick
KPMG Peat Marwick
New York, New York
February 8, 1996
-55-
<PAGE>
ELFUN FUNDS INVESTMENT TEAM
PORTFOLIO MANAGERS
ELFUN GLOBAL FUND
Ralph R. Layman
ELFUN TRUSTS
David B. Carlson
ELFUN DIVERSIFIED FUND
David B. Carlson
Robert A. MacDougall
ELFUN TAX-EXEMPT INCOME FUND
Robert R. Kaelin
ELFUN INCOME FUND
Robert A. MacDougall
ELFUN MONEY MARKET FUND
Robert A. MacDougall
TRUSTEES
Dale F. Frey
CHAIRMAN OF THE BOARD AND PRESIDENT,
GENERAL ELECTRIC INVESTMENT CORPORATION
Eugene K. Bolton
Michael J. Cosgrove
Ralph R. Layman
Alan M. Lewis
John H. Myers
Donald W. Torey
OFFICERS OF GENERAL ELECTRIC INVESTMENT CORPORATION
SECRETARY
Alan M. Lewis
INVESTMENT ADVISOR
General Electric Investment Corporation
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
CUSTODIAN
State Street Bank & Trust Company
SHAREHOLDER SERVICING AGENT
Address all inquiries to:
GE Investments
P.O. Box 8309
Boston, MA 02266-8309
-56-
<PAGE>
ELFUN FUNDS SERVICES
SERVICES FOR OUR SHAREHOLDERS:
Elfun Inquiry Center 1-800-242-0134
Dial Comm 8*225-4040
Toll 1-203-326-4040
AUDIO RESPONSE SYSTEM:
To obtain information and process account
transactions on your Elfun Funds:
* Call 1-800-242-0134
* Press 1 on your touch-tone phone to gain access
* Press 2 to obtain information on the Elfun Funds
* Then select an option below.
PERSONALIZED SERVICES:
Please press zero (0) on your touch-tone phone or please hold on your
rotary dial phone to speak directly to an Inquiry Specialist in order to
obtain:
* General Information
* Fund Exchanges
* Telephone Wire Redemption
* Change of Registration Instructions
* IRA Rollovers
* Check Reordering
DAILY VALUE, YIELDS/PERFORMANCE 1-800-843-3359
_______________________________________________________________
1 2 3
INFORMATION SPECIFIC ACCOUNT TRANSACTION
ONLY INFORMATION PROCESSING
_______________________________________________________________
1 1 1
TRANSFER ACCOUNT FUND
BY MAIL BALANCE EXCHANGES
_______________________________________________________________
2 2 2
REDEEM LAST REDEMPTIONS
BY MAIL TRANSACTION
_______________________________________________________________
3 3 3
CHANGE DUPLICATE DUPLICATE
ADDRESS STATEMENT TAX FORMS
_______________________________________________________________
4
PRICE QUOTES
LAST BUSINESS
DAY & PERSONAL
PRICE PORTFOLIO
_______________________________________________________________
<PAGE>
BULK RATE
U.S. POSTAGE
PAID
BOSTON, MA
PERMIT NO. 54201
ELFUN FUNDS
3003 SUMMER STREET
STAMFORD, CT 06904-7900
[GRAPHIC]
ELFUN LOGO
____________________________________________________________________________
Distributed by GE Investment Services Inc., member NASD and SIPC
