SEVEN SEAS SERIES FUND, 485BPOS, 1996-12-27

SEVEN SEAS SERIES FUND
485BPOS, 1996-12-27

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Filed Pursuant to Rule 485(b)

As filed with the Securities and Exchange Commission on December 27, 1996

Registration No. 33-19229; 811-5430
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ( X )
-----
Pre-Effective Amendment No. ( )
----- -----
Post-Effective Amendment No. 39 ( X )
---- -----

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 (X )
Amendment No. 41 ( X )
-- -----

(Check appropriate box or boxes)

SSgA FUNDS
(Exact Name of Registrant as Specified in Charter)

909 A Street
Tacoma, Washington 98402
(Address of Principal Executive Offices)

Registrant's telephone number, including area code: (206) 627-7001

Name and Address of Copies to:
- ------------------- ---------
Agent for Service:
- -----------------
Karl J. Ege Philip H. Newman, Esq.
Secretary and General Counsel Goodwin, Procter & Hoar
Frank Russell Investment Management Company Exchange Place
909 A Street Boston, Massachusetts 02109
Tacoma, Washington 98402

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

It is proposed that this filing will become effective under Rule 485:
( X ) immediately upon filing pursuant to paragraph (b)
( ) on (date) pursuant to paragraph (b)
( ) 60 days after filing pursuant to paragraph (a)
( ) on (date) pursuant to paragraph (a)(1)
( ) 75 days after filing pursuant to paragraph (a)(2)
( ) on (date) pursuant to paragraph (a)(2) of Rule 485

If appropriate, check the following:
( X ) This post-effective amendment designates a new effective date for
a previously filed post-effective amendment.

DECLARATION PURSUANT TO RULE 24f-2

Registrant has declared its intention to register under the Securities Act
of 1933 an indefinite number of shares of beneficial interest, par value of
$.001, of the SSgA Funds pursuant to Rule 24f-2(a)(1) under the Investment
Company Act of 1940, as amended. The Registrant filed its Rule 24f-2 notice for
the fiscal year ended August 31, 1996 on October 29, 1996.

<PAGE>

SSgA FUNDS

Form N-1A Cross Reference Sheet

Part A Item No.
and Caption Prospectus Caption
--------------- ------------------
<S> <C> <C>
1. Cover Page Cover Page

2. Synopsis Table of Contents; and
Fund Operating Expenses

3. Condensed Financial Information Fund Operating Expenses

4. General Description of Registrant

(a)(i) Summary (Classes B and C only);
SSgA Funds;
Additional Information -
Organization, Capitalization and
Voting

(a)(ii), (b) Summary (Classes B and C only);
Investment Objectives and Policies;
Investment Restrictions and
Policies; and Portfolio Maturity

5. Management of the Fund Summary (Classes B and C only);
General Management; Fund
Operating Expenses; and Portfolio
Maturity

6. Capital Stock and Other Securities

(a) Additional Information -
Organization, Capitalization and
Voting

(b) General Management

(d) Summary (Classes B and C only);
Additional Information - Organization,
Capitalization and Voting
<PAGE>

(e) Additional information - Reports
to Shareholders and Shareholder
Inquiries

(f) Dividends and Distributions

(g) Taxes

7. Purchase of Securities Being Offered

(a) Summary (Classes B and C only);
General Management - Distribution
Services and Shareholder Servicing
Arrangements

(b) Valuation of Fund Shares;
Purchase of Fund Shares

(d) Manner of Offering; Purchase
of Fund Shares

(e), (f) General Management - Distribution
Services and Shareholder Servicing
Arrangements

8. Redemption or Repurchase

(a) Summary (Classes B and C only);
Redemption of Fund Shares

(b) Not Applicable

(d) Redemption of Fund Shares

9. Pending Legal Proceedings Not Applicable

Part B Item No. Statement of Additional
and Caption Information Caption

10. Cover Page Cover Page

11. Table of Contents Table of Contents

12. General Information and History Not Applicable

<PAGE>

13. Investment Objectives and Policies

(a), (b), (c) Investments

(d) (Prospectus) - Portfolio
Maturity

14. Management of the Fund

(a), (b) Structure and Governance -
Trustees and Officers

15. Control Persons and Principal Holders
of Securities

(a), (b) Structure and Governance -
Controlling Shareholders;
Additional Information -
Organization, Capitalization and
Voting (Prospectus)

16. Investment Advisory and Other Services

(a), (b) Operation of Investment Company -
Adviser; General Management -
Advisory Agreement (Prospectus)

(d) Operation of Investment Company -
Administrator

(e) Not Applicable

(f) Operation of Investment Company -
Distribution Plan

(g) Not Applicable

(h), (i) Operation of Investment Company -
Custodian and Transfer Agent;
Additional Information - Custodian,
Transfer Agent and Accountants
(Prospectus)

<PAGE>

17. Brokerage Allocation
and Other Practices

(a), (b), (c) Operation of Investment Company -
Brokerage Practices

(d) Not Applicable

(e) Operation of Investment Company -
Brokerage Practices

18. Capital Stock and Other Securities

(a) Structure and Governance -
Organization and Business History

(b) Not Applicable

19. Purchase, Redemption and Pricing of
Securities Being Offered

(a), (b), (c) Operation of Investment Company -
Valuation of Fund Shares;
(Prospectus) - Valuation of Fund
Shares; Redemption of Shares;
Purchase of Fund Shares

20. Tax Status Taxes

21. Underwriters

(a) Operation of Investment Company -
Distribution Plan

(b), (c) Not Applicable

22. Calculation of Performance Data
Operation of Investment Company -
Yield and Total Return Quotations

23. Financial Statements Financial Statements

</TABLE>

Part C

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

<PAGE>

SSgA FUNDS

Contents of Registration Statement

This Registration Statement consists of the following papers and documents:

Cover Sheet

Form N-1A Cross Reference Sheet

Part A - Prospectuses

Part B - Statements of Additional Information

Part C - Other Information

Signature Page

Exhibits

<PAGE>

Filed pursuant to Rule 485(b)
File Nos. 33-19229; 811-5430

SSgA FUNDS
Two International Place, 35th Floor
Boston, Massachusetts 02110
(800) 647-7327

SSgA Funds (formerly known as The Seven Seas Series Fund) is a registered,
open-end investment company with multiple portfolios, each of which is a mutual
fund. The Funds' shares are offered without sales commissions. However, the
Funds pay certain distribution expenses under the Rule 12b-1 plan. This
Prospectus describes and offers shares of beneficial interest in the Funds
listed below:

Money Market Yield Plus Growth and Income
US Government Money Market Matrix Equity Intermediate
Tax Free Money Market S&P 500 Index Emerging Markets
Bond Market Small Cap Active International

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

INVESTMENTS IN THE FUNDS ARE NEITHER INSURED NOR GUARANTEED BY THE US
GOVERNMENT. THERE IS NO ASSURANCE THAT THE MONEY MARKET, U.S. GOVERNMENT MONEY
MARKET OR TAX FREE MONEY MARKET FUNDS WILL MAINTAIN A STABLE NET ASSET VALUE OF
$1.00 PER SHARE.

SHARES IN THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, STATE STREET BANK AND TRUST COMPANY, AND SHARES ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER AGENCY, AND INVOLVE INVESTMENT RISKS INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.

This Prospectus sets forth concisely the information about the Funds that a
prospective investor ought to know before investing. Please read and retain this
document for future reference. Additional information about the Funds has been
filed with the Securities and Exchange Commission in a Statements of Additional
Information dated December 27, 1996. The Statements of Additional Information
are incorporated herein by reference and is available without charge from the
Distributor at its address noted below or by calling (800) 647-7327.

<TABLE>
<CAPTION>
Investment Adviser, Custodian
and Transfer Agent: Distributor: Administrator:
<S> <C>
State Street Bank and Trust Russell Fund Distributors, Inc. Frank Russell Investment
Company Two International Place Management Company
225 Franklin Street 35th Floor 909 A Street
Boston, Massachusetts 02110 Boston, Massachusetts 02110 Tacoma, Washington 98402
</TABLE>

PROSPECTUS DATED DECEMBER 27, 1996

-1-
<PAGE>

Each Fund seeks to achieve a specific investment objective by using distinct
investment strategies:

The Money Market Fund seeks to maximize current income, to the extent consistent
with the preservation of capital and liquidity and the maintenance of a stable
$1.00 per share net asset value, by investing in dollar denominated securities
with remaining maturities of one year or less.

The US Government Money Market Fund seeks to maximize current income, to the
extent consistent with the preservation of capital and liquidity and the
maintenance of a stable $1.00 per share net asset value, by investing in
obligations of the US Government or its agencies or its instrumentalities with
remaining maturities of one year or less.

The Tax Free Money Market Fund seeks to maximize current income, exempt from
federal income taxes, to the extent consistent with the preservation of capital
and liquidity and the maintenance of a stable $1.00 per share net asset value.

The Yield Plus Fund seeks high current income and liquidity by investing
primarily in a diversified portfolio of high-quality debt securities and by
maintaining a portfolio duration of one year or less.

The Intermediate Fund seeks a high level of current income while preserving
principal by investing primarily in a diversified portfolio of debt securities
with a dollar-weighted average maturity between three and ten years.

The Bond Market Fund seeks to maximize total return by investing in fixed income
securities, including, but not limited to, those represented by the Lehman
Brothers Aggregate Bond Index.

The Growth and Income Fund seeks long-term capital growth, current income and
growth of income primarily through investments in equity securities.

The S&P 500 Index Fund seeks to replicate the total return of the Standard &
Poor's 500 Composite Stock Price Index.

The Matrix Equity Fund seeks to provide total returns that exceed over time the
S&P 500 Index through investment in equity securities.

The Small Cap Fund seeks to maximize total return through investment in equity
securities; at least 65% of total assets will be invested in securities issued
by smaller capitalized issuers.

The Active International Fund seeks to provide long-term capital growth by
investing primarily in securities of foreign issuers.

The Emerging Markets Fund seeks to provide maximum total return, primarily
through capital appreciation, by investing primarily in securities of foreign
issuers.

-2-
<PAGE>

TABLE OF CONTENTS

Page

Highlights.............................................................. 4

Fund Operating Expenses................................................. 5

Financial Highlights.................................................... 17

SSgA Funds.............................................................. 29

Manner of Offering...................................................... 29

Investment Objective, Policies and Restrictions......................... 29

Risk Factors............................................................ 45

Portfolio Maturity and Turnover......................................... 46

Dividends and Distributions............................................. 47

Taxes................................................................... 48

Valuation of Fund Shares................................................ 50

Purchase of Fund Shares................................................. 51

Redemption of Fund Shares............................................... 53

General Management...................................................... 55

Fund Expenses........................................................... 59

Performance Calculations................................................ 60

Additional Information.................................................. 61

Information Regarding Standard & Poor's Corporation..................... 63

-3-
<PAGE>

HIGHLIGHTS

Fund Operating Expenses summarize the fees paid by shareholders in each Fund and
the effect of these fees on a $1,000 investment. Pages 5 through 16.

Per Share Income and Capital Changes summarize significant financial information
of each Fund from the commencement of operations through the period shown. Pages
17 through 28.

Eligible Investors are principally those US or foreign institutional and retail
investors which invest for their own accounts or in a fiduciary or agency
capacity. The minimum initial investment is $1,000 (except IRA accounts, which
is $250), minimum subsequent investments are $100, and the minimum account size
is $1,000. Page 29.

Investment Objectives, Restrictions and Policies designated as "fundamental" may
not be changed without the approval of a majority of each respective Fund's
shareholders. Page 29.

Risk Factors apply to each Fund. There are investment risks in using futures
contracts and options as a hedging technique. Investments in foreign securities,
foreign currency and emerging markets countries also pose special risk that
investors should be aware of. Page 45.

Dividends and Distributions will be reinvested in additional shares unless a
shareholder elects to receive them in cash. Dividends from net investment income
and net short-term capital gains are declared and paid according to a schedule
set forth in this section. Distributions from net realized short- and long-term
capital gains (if any) are declared at least annually. Page 47.

Taxes on the Funds should be none. Taxable US shareholders of the Funds will be
subject to federal taxes on dividends and capital gains distributions, and may
be subject to state or local taxes. Page 48.

Valuation of Fund Shares occurs twice daily each business day for the Government
and Tax Free Funds. The Money Market Fund values shares once a day as of the
close of the New York Stock Exchange on the basis of fair market value on days
that the Exchange and Boston Federal Reserve are open for business. The Money
Market, Government and Tax Free Funds use the amortized cost pricing method to
attempt to maintain a stable $1.00 per share net asset value. All other Funds
value shares on each business day at the close of business of the New York Stock
Exchange on the basis of fair market value. Page 50.

Purchase of Fund Shares includes no sales commission. The purchase price is the
next computed net asset value. Shares are offered and orders to purchase are
accepted on each business day. However, certain distribution expenses may be
reimbursed to Russell Fund Distributors, Inc., the Funds' distributor, under an
existing 12b-1 plan. Page 51.

Redemption of Fund Shares may be requested on any business day. There is no
redemption charge. The redemption price is the next computed net asset value.
The Funds reserve the right to redeem in kind any redemption request of more
than $250,000 for each Fund. Page 53.

General Management is provided by Frank Russell Investment Management Company,
as the administrator, which is responsible for supervising the Funds'
operations; State Street Bank and Trust Company provides investment advisory
services. Page 55.

Fund Expenses are borne by each Fund, with the primary expense being an
investment advisory fee paid to the Advisor. Page 59.

Additional Information is also included in this Prospectus concerning the
custodian, transfer agent and independent accountants; and organization,
capitalization and voting. Page 61.

-4-
<PAGE>

FUND OPERATING EXPENSES
SSgA MONEY MARKET FUND
CLASS A SHARES

The purpose of the following table is to assist the investor in understanding
the various costs and expenses that an investor in Class A shares of the Money
Market Fund will incur directly or indirectly. THE EXAMPLES SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN. For additional information, see "General
Management."

Shareholder Transaction Expenses:
- ---------------------------------
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees None
Exchange Fee None

Annual Fund Operating Expenses:
- -------------------------------
(as a percentage of average daily net assets)

Advisory Fees .25%
12b-1 Fees(1) .06
Other Expenses .08
---

Total Operating Expenses(2) .39%

Examples: 1 year 3 years 5 years 10 years
- -------- ------ ------- ------- --------
You would pay the following expenses on a
$1,000 investment, assuming: (i) 5.0%
annual return; and (ii) redemption at the
end of each time period:
$ 4 $13 $22 $49
=== === === ===

The shares of the Fund are divided into three classes: Class A, Class B and
Class C. Class B and C shares are offered through separate prospectuses. Each
class of shares of the Fund is entitled to the same rights and privileges as all
other classes of shares of the Fund, provided however, that each class bears the
expenses related to its distribution and shareholder servicing arrangements and
certain other expenses attributable to the class. Annual distribution and
shareholder servicing expenses for Class A, Class B and Class C shares are equal
to approximately .06%, .31% and .56%, respectively, of the average daily net
asset value of the shares of the class. Total operating expenses for Class A,
Class B and Class C shares are equal to approximately .39%, .66% and .94%,
respectively, of the average daily net asset value of the shares of the class.

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

(1) Rule 12b-1 fees include expenses paid for shareholder servicing activities.

(2) Investors purchasing Fund shares through a financial intermediary, such as
a bank or an investment adviser, may also be required to pay additional
fees for services provided by the intermediary. Such investors should
contact the intermediary for information concerning what additional fees,
if any, will be charged.

-5-
<PAGE>

FUND OPERATING EXPENSES
SSgA US GOVERNMENT MONEY MARKET FUND
CLASS A SHARES

The purpose of the following table is to assist the investor in understanding
the various costs and expenses that an investor in Class A shares of the US
Government Money Market Fund will incur directly or indirectly. THE EXAMPLES
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. For additional information,
see "General Management."

Annual Fund Operating Expenses:
- -------------------------------
(as a percentage of average daily net assets)
Advisory Fees .25%
12b-1 Fees(1) .06
Other Expenses .09
---

Total Operating Expenses(2) .40%

Examples: 1 year 3 years 5 years 10 years
- -------- ------ ------- ------- --------
You would pay the following expenses on
a $1,000 investment, assuming: (i) 5%
annual return; and (ii) redemption at
the end of each time period:
$4 $13 $22 $51
== === === ===

The shares of the Fund are divided into three classes: Class A, Class B and
Class C. Class B and C shares are offered through separate prospectuses. Each
class of shares of the Fund is entitled to the same rights and privileges as all
other classes of shares of the Fund, provided however, that each class bears the
expenses related to its distribution and shareholder servicing arrangements and
certain other expenses attributable to the class. Annual distribution and
shareholder servicing expenses for Class A, Class B and Class C shares are equal
to approximately .06%, .31% and .56%, respectively, of the average daily net
asset value of the shares of the class. Total operating expenses for Class A,
Class B and Class C shares are equal to approximately .40%, .69% and .94%,
respectively, of the average daily net asset value of the shares of the class.

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

(1) Rule 12b-1 fees include expenses paid for shareholder servicing activities.

-6-
<PAGE>

FUND OPERATING EXPENSES
SSgA SERIES TAX FREE MONEY MARKET FUND
CLASS A SHARES

The following table is intended to assist the investor in understanding the
various costs and expenses that an investor in Class A shares of the Tax Free
Fund will incur directly or indirectly. THE EXAMPLES SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN. For additional information, see "General Management."

Annual Fund Operating Expenses:
- -------------------------------
(as a percentage of average daily net assets)
Advisory Fees .25%
12b-1 Fees(1) .09
Other Expenses .23
---

Total Operating Expenses(2) .57%

The shares of the Fund are divided into three classes: Class A, Class B and
Class C. Class B and C shares are offered through separate prospectuses. Each
class of shares of the Fund is entitled to the same rights and privileges as all
other classes of shares of the Fund, provided however, that each class bears the
expenses related to its distribution and shareholder servicing arrangements and
certain other expenses attributable to the class. Annual distribution and
shareholder servicing expenses for Class A, Class B and Class C shares are equal
to approximately .09%, .34% and .59%, respectively, of the average daily net
asset value of the shares of the class. Total operating expenses for Class A,
Class B and Class C shares are equal to approximately .57%, .82% and 1.07%,
respectively, of the average daily net asset value of the shares of the class.

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

(1) Rule 12b-1 fees may include expenses paid for shareholder servicing
activities.

-7-
<PAGE>

FUND OPERATING EXPENSES
SSgA YIELD PLUS FUND

The purpose of the following table is to assist the investor in understanding
the various costs and expenses that an investor in the Yield Plus Fund will
incur directly or indirectly. THE EXAMPLES SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN. For additional information, see "General Management."

Annual Fund Operating Expenses:
- -------------------------------
(as a percentage of average daily net assets)
Advisory Fees .25%
12b-1 Fee(1) .04
Other Expenses .07
---

Total Operating Expenses(1) .36%

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

(1) Rule 12b-1 fees may include expenses paid for shareholder servicing
activities.

Long-term shareholders of the Fund may pay more in Rule 12b-1 fees than the
economic equivalent of the maximum front-end sales charge permitted by the
National Association of Securities Dealers, Inc.

-8-
<PAGE>

FUND OPERATING EXPENSES AFTER FEE REIMBURSEMENT
SSgA INTERMEDIATE FUND

The following table is intended to assist the investor in understanding the
costs and expenses that an investor in the Intermediate Fund will incur directly
or indirectly. THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. For
additional information, see "General Management."

Annual Fund Operating Expenses:
(as a percentage of average daily net assets)
Advisory Fees (After Fee Reimbursement)(1) .02%
12b-1 Fees1, (2) .08
Other Expenses1 .50
---

Total Operating Expenses (After Fee Reimbursement)(1, 3) .60%
====

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

(1) Adviser has agreed to reimburse the Fund for all expenses in excess of .60%
of average daily net assets on an annual basis. The gross annual Advisory
fee expense before reimbursement would be .80% of average daily net assets.
The total operating expense of the Fund absent reimbursement would be 1.38%
of average daily net assets on an annual basis. The reimbursement will
continue until such time as the Board of Trustees of the Fund agrees to its
modification or elimination but is anticipated to be in effect for the
current fiscal year.

(2) Rule 12b-1 fees may include expenses paid for shareholder servicing
activities.

(3) The expense information in the table has been restated to reflect current
fees. Investors purchasing Fund shares through a financial intermediary,
such as a bank or an investment adviser, may also be required to pay
additional fees for services provided by the intermediary. Such investors
should contact the intermediary for information concerning what additional
fees, if any, will be charged.

Long-term shareholders of the Fund may pay more in Rule 12b-1 fees than the
economic equivalent of the maximum front-end sales charges permitted by the
National Association of Securities Dealers, Inc.

-9-
<PAGE>

FUND OPERATING EXPENSES AFTER FEE WAIVERS
SSgA BOND MARKET FUND

The following table is intended to assist the investor in understanding the
costs and expenses that an investor in the Bond Market Fund will incur directly
or indirectly. THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. For
additional information, see -- "General Management."

Annual Fund Operating Expenses:
- -------------------------------
(as a percentage of average daily net assets)
Advisory Fees (After Fee Waiver)(1 .00%
12b-1 Fees(2, 3) .05
Other Expenses(2) .45
---

Total Operating Expenses (After Fee Waivers)(1, 4) .50%
====

Examples: 1 year 3 years
- -------- ------ -------
You would pay the following expenses on
a $1,000 investment, assuming: (i) 5%
annual return; and (ii) redemption at
the end of each time period:
$5 $16
== ===

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

(1) The Adviser has voluntarily agreed to waive one-half of its advisory fee.
Additionally, the Adviser has agreed to waive up to the full amount of its
remaining Advisory fee to the extent that total expenses exceed .50% of
average daily net assets on an annual basis. The total operating expenses
of the Fund absent fee waivers would be .80% on an annual basis. The gross
annual Advisory fee before waivers would be .30% of average daily net
assets. The Advisory fee waiver agreement will be in effect for the current
fiscal year.

(2) The ratios for "12b-1 fees" and "other expenses" are based on estimated
amounts for the current fiscal year, with expected annual average net
assets of $40 million.

(3) Rule 12b-1 fees may include expenses paid for shareholder servicing
activities.

(4) Investors purchasing Fund shares through a financial intermediary, such as
a bank or an investment adviser, may also be required to pay additional
fees for services provided by the intermediary. Such investors should
contact the intermediary for information concerning what additional fees,
if any, will be charged. These fees would be in addition to any amounts
received by the financial intermediary under its Shareholder Servicing
Agreement with the Investment Company or Distributor. The Agreement
requires each financial intermediary to disclose to its clients any
compensation payable to it by the Investment Company or Distributor and any
other compensation payable by the client for various services provided in
connection with their accounts.

-10-
<PAGE>

FUND OPERATING EXPENSES AFTER FEE REIMBURSEMENT
SSgA GROWTH AND INCOME FUND

The following table is intended to assist the investor in understanding the
various costs and expenses that an investor in the Growth and Income Fund will
incur directly or indirectly. THE EXAMPLES SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN. For additional information, see "General Management."

Annual Fund Operating Expenses:
- -------------------------------
(as a percentage of average daily net assets)
Advisory Fees (After Fee Reimbursement)(1) .40%
12b-1 Fees(1, 2) .07
Other Expenses1 .48
---

Total Operating Expenses (After Fee Reimbursement)(1, 3) .95%
====

(1) The Adviser has agreed to reimburse the Fund for all expenses in excess of
.95% of average daily net assets on an annual basis. The gross annual
Advisory fee expense before reimbursement would be .85% of average daily
net assets. The total operating expenses of the Fund absent reimbursement
would be 1.40% of average daily net assets on an annual basis. This
reimbursement will continue until such time as the Board of Trustees agrees
to its modification or elimination but is anticipated to be in effect for
the current fiscal year.

(2) Rule 12b-1 fees may include expenses paid for shareholder servicing
activities.

-11-
<PAGE>

FUND OPERATING EXPENSES AFTER FEE WAIVER
SSgA S&P 500 INDEX FUND

The following table is intended to assist the investor in understanding the
various costs and expenses that an investor in the Index Fund will incur
directly or indirectly. THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN. For additional information, see "General Management."

Annual Fund Operating Expenses:
- -------------------------------
(as a percentage of average daily net assets)
Advisory Fees (After Fee Waiver)(1) .00%
12b-1 Fees(2) .05
Other Expenses .13
---

Total Operating Expenses (After Fee Waiver)(1, 3) .18%
====

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

(1) The Adviser voluntarily agrees to waive up to the full amount of its
Advisory fee of .10% of average daily net assets to the extent that total
expenses exceed .15% of average daily net assets on an annual basis. The
total operating expenses of the Fund absent the fee waiver would be .28% of
average daily net assets on an annual basis. The gross annual Advisory
expense before the fee waiver would be .10% of average daily net assets.
The Advisory fee waiver agreement will remain in effect for the current
fiscal year.

(2) Rule 12b-1 fees may include expenses paid for shareholder servicing
activities.

-12-
<PAGE>

FUND OPERATING EXPENSES AFTER FEE WAIVER
SSgA MATRIX EQUITY FUND

The following table is intended to assist the investor in understanding the
various costs and expenses that an investor in the Matrix Fund will incur
directly or indirectly. THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN. For additional information, see "General Management."

Annual Fund Operating Expenses:
- -------------------------------
(as a percentage of average daily net assets)
Advisory Fees (After Fee Waiver)(1) .38%
12b-1 Fees(2) .08
Other Expenses .20
---

Total Operating Expenses (After Fee Waiver)(1, 3) .66%
====

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

(1) The Adviser has voluntarily agreed to waive one-half of its advisory fee.
The gross annual Advisory expense before the waiver would be .75% of
average daily net assets. The total operating expense of the Fund absent
the fee waiver would be 1.04% of average daily net assets on an annual
basis. The Advisory fee waiver agreement will be in effect for the current
fiscal year.

(2) Rule 12b-1 fees may include expenses paid for shareholder servicing
activities.

Long-term shareholders of the Fund may pay more in Rule 12b-1 fees than the
economic equivalent of the maximum front-end sales charges permitted by National
Association of Securities Dealers, Inc.

-13-

<PAGE>

FUND OPERATING EXPENSES AFTER FEE REIMBURSEMENT
SSgA SMALL CAP FUND

The following table is intended to assist the investor in understanding the
various costs and expenses that an investor in the Small Cap Fund will incur
directly or indirectly. THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN. For additional information, see "General Management."

Shareholder Transaction Expenses:
- --------------------------------
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees None
Exchange Fee None

Annual Fund Operating Expenses:
- ------------------------------
(as a percentage of average daily net assets)
Advisory Fees (After Fee Reimbursement)1 .57%
12b-1 Fees1, 2 .10
Other Expenses1 .33
---
Total Operating Expenses (After Fee Reimbursement)1, 3 1.00%
=====

<TABLE>
<CAPTION>
Examples: 1 year 3 years 5 years 10 years
- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on
a $1,000 investment, assuming: (i) 5%
annual return; and (ii) redemption at
the end of each time period:
$10 $32 $55 $122
=== === === ====
</TABLE>

- ----------------
1 The Adviser has voluntarily agreed to reimburse the Fund for all expenses
in excess of 1.00% of average daily net assets on an annual basis. The
total operating expenses of the Fund absent reimbursement would be 1.18%
of average daily net assets on an annual basis. This agreement will remain
in effect for the current fiscal year. The gross annual Advisory expenses
before reimbursement would be .75% of average daily net assets.

2 Rule 12b-1 fees may include expenses paid for shareholder servicing
activities.

3 Investors purchasing Fund shares through a financial intermediary, such
as a bank or an investment adviser, may also be required to pay additional
fees for services provided by the intermediary. Such investors should
contact the intermediary for information concerning what additional
fees, if any, will be charged.

Long-term shareholders of the Fund may pay more in Rule 12b-1 fees that the
economic equivalent of the maximum front-end sales charges permitted by the
National Association of Securities Dealers, Inc.

-14-
<PAGE>

FUND OPERATING EXPENSES AFTER FEE WAIVER
SSgA ACTIVE INTERNATIONAL FUND

The following table is intended to assist the investor in understanding the
various costs and expenses that an investor in the Active International Fund
will incur directly or indirectly. THE EXAMPLES SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN. For additional information, see "General Management."

Annual Fund Operating Expenses:
- ------------------------------
(as a percentage of average daily net assets)
Advisory Fees (After Fee Waiver)1 .28%
12b-1 Fees2 .05
Other Expenses .67
---

Total Operating Expenses (After Fee Waiver)1,3 1.00%
=====

- ----------------
1 The Adviser voluntarily agrees to waive up to the full amount of its
Advisory fee of .75% of average daily net assets to the extent that total
expenses exceed 1.00% on an annual basis. The total operating expenses of
the Fund absent the fee waiver would be 1.47% of average daily net assets
on an annual basis. This agreement will remain in effect for the current
fiscal year.

2 Rule 12b-1 fees may include expenses paid for shareholder servicing
activities.

-15-
<PAGE>

FUND OPERATING EXPENSES AFTER FEE REIMBURSEMENT
SSgA EMERGING MARKETS FUND

The following table is intended to assist the investor in understanding the
various costs and expenses that an investor in the Emerging Markets Fund will
incur directly or indirectly. THE EXAMPLES SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN. For additional information, see "General Management."

Annual Fund Operating Expenses:
- ------------------------------
(as a percentage of average daily net assets)
Advisory Fees (After Fee Reimbursement)1 .33%
12b-1 Fees1, 2 .25
Other Expenses1 .67
---

Total Operating Expenses (After Fee Reimbursement)1, 3 1.25%
=====
<TABLE>
<CAPTION>

Examples: 1 year 3 years 5 years 10 years
- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on
a $1,000 investment, assuming: (i) 5%
annual return; and (ii) redemption at
the end of each time period:
$13 $40 $69 $151
=== === === ====
</TABLE>

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

1 The Adviser has voluntarily agreed to reimburse the Fund for all expenses
in excess of 1.25% of average daily net assets on an annual basis. The
gross annual Advisory fee expense before reimbursement would be .75% of
average daily net assets. The total operating expenses of the Fund absent
reimbursement would be 1.67% of average daily net assets on an annual
basis. This agreement will remain in effect for the current fiscal year.

2 Rule 12b-1 fees may include expenses paid for shareholder servicing
activities.

3 Investors purchasing Fund shares through a financial intermediary, such as
a bank or an investment adviser, may also be required to pay additional
fees for services provided by the intermediary. Such investors should
contact the intermediary for information concerning what additional fees,
if any, will be charged.

-16-
<PAGE>

FINANCIAL HIGHLIGHTS
SSgA MONEY MARKET FUND

The following table contains important financial information relating to the
Fund and has been audited by Coopers & Lybrand L.L.P., the Fund's independent
accountants. The table includes selected data for a Class A share outstanding
throughout each fiscal year or period ended August 31, and other performance
information derived from the financial statements. The Investment Company is
authorized to issue Class B and Class C shares of the Fund although shares have
not been offered on these classes as of the date of this Prospectus. The table
appears in the Fund's Annual Report and should be read in conjunction with the
Fund's financial statements and related notes, which are incorporated by
reference in the Statement of Additional Information and which appear, along
with the report of Coopers & Lybrand L.L.P., in the Fund's Annual Report to
Shareholders. More detailed information concerning the Fund's performance,
including a complete portfolio listing and audited financial statements, is
available in the Fund's Annual Report, which may be obtained without charge by
writing or calling the Distributor.

1996 1995 1994 1993 1992 1991 1990 1989 1988++
---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF YEAR $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
------- ------- ------- ------- ------- ------- ------- ------- -------

INCOME FROM INVEST-
MENT OPERATIONS:
Net investment
income .0524 .0538 .0330 .0320 .0458 .0686 .0817 .0883 .0239
------- ------- ------- ------- ------- ------- ------- ------- -------

LESS DISTRIBUTIONS:
Net investment
income (.0524) (.0538) (.0330) (.0320) (.0458) (.0686) (.0817) (.0883) (.0239)
------- ------- ------- ------- ------- ------- ------- ------- -------

NET ASSET VALUE,
END OF YEAR $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= ======= ======= ======= ======= =======

TOTAL RETURN (%)(a)
5.36 5.52 3.35 3.24 4.68 7.08 8.48 9.19 2.41

RATIOS(%)/SUPPLE-
MENTAL DATA:
Operating expenses,
net, to average
daily net assets (b) .39 .39 .36 .33 .35 .37 .37 .43 .44

Operating expenses,
gross, to average
daily net assets (b) .39 .39 .36 .38 .35 .38 .43 .51 .63

Net investment
income to average
daily net assets (b) 5.20 5.37 3.33 3.20 4.40 6.59 8.13 8.97 7.30

Net assets, end of
year ($000 omitted) 3,475,409 2,752,895 3,020,796 2,502,483 4,263,057 1,645,428 650,598 442,614 193,777

Per share amount of
fees waived
($ omitted) -- -- -- .0005 -- .0000 .0005 .0004 .0010

</TABLE>

- ----------------
++ For the period May 2, 1988 (commencement of operations) to August 31, 1988.
(a) Periods less than one year are not annualized.
(b) The ratios for the period ended August 31, 1988 are annualized.

-17-
<PAGE>

FINANCIAL HIGHLIGHTS
SSgA US GOVERNMENT MONEY MARKET FUND

1996 1995 1994 1993 1992 1991++
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF YEAR $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
------- ------- ------- ------- ------- -------

INCOME FROM INVEST-
MENT OPERATIONS:
Net investment income .0515 .0528 .0324 .0304 .0441 .0302
------- ------- ------- ------- ------- -------

LESS DISTRIBUTIONS:
Net investment income (.0515) (.0528) (.0324) (.0304) (.0441) (.0302)
------- ------- ------- ------- ------- -------

NET ASSET VALUE,
END OF YEAR $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= ======= =======

TOTAL RETURN (%)(a) 5.27 5.38 3.30 3.08 4.49 3.06

RATIOS (%)/SUPPLE-
MENTAL DATA:
Operating expenses, net,
to average daily net
assets (b) .40 .42 .38 .39 .41 .23
Operating expenses, gross
to average daily net
assets (b) .40 .42 .39 .46 .42 .43
Net investment income
to average daily net
assets (b) 5.12 5.37 3.27 3.04 4.26 5.94
Net assets, end of year
($000 omitted) 683,210 490,138 251,165 137,136 156,707 94,646
Per share amount of fees
waived ($ omitted) -- -- -- -- .0001 .0011
Per share amount of fees
reimbursed by Adviser
($ omitted) -- -- .0001 .0007 -- --

</TABLE>

- ----------------
++ For the period March 1, 1991 (commencement of operations) to August 31,
1991.
(a) Periods less than one year are not annualized.
(b) The ratios for the period ended August 31, 1991 are annualized.

-18-
<PAGE>

FINANCIAL HIGHLIGHTS
SSgA TAX FREE MONEY MARKET FUND

<TABLE>
<CAPTION>
1996 1995++
---- ----
<S> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.0000 $ 1.0000
---------- ----------

INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .0302 .0251
---------- ----------

LESS DISTRIBUTIONS:
Net investment income (.0302) (.0251)
---------- ----------

NET ASSET VALUE, END OF PERIOD $ 1.0000 $ 1.0000
========== ==========

TOTAL RETURN (%)(a) 3.07 2.54

RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net, to average
daily net assets (b) .57 .59
Operating expenses, gross, to average
daily net assets (b) .57 .60
Net investment income to average
daily net assets (b) 3.01 3.40
Net assets, end of year
($000 omitted) 45,061 42,607
Per share amount of fees waived
($ omitted) -- .0001

</TABLE>

- ----------------
++ For the period December 1, 1994 (commencement of operations) to
August 31, 1995.
(a) Periods less than one year are not annualized.
(b) The ratios for the period ended August 31, 1995 are annualized.

-19-
<PAGE>

FINANCIAL HIGHLIGHTS
SSgA YIELD PLUS FUND

The following table contains important financial information relating to the
Fund and has been audited by Coopers & Lybrand L.L.P., the Fund's independent
accountants. The table includes selected data for a share outstanding throughout
each fiscal year or period ended August 31, and other performance information
derived from the financial statements. The table appears in the Fund's Annual
Report and should be read in conjunction with the Fund's financial statements
and related notes, which are incorporated by reference in the Statement of
Additional Information and which appear, along with the report of Coopers &
Lybrand L.L.P., in the Fund's Annual Report to Shareholders. More detailed
information concerning the Fund's performance, including a complete portfolio
listing and audited financial statements, is available in the Fund's Annual
Report, which may be obtained without charge by writing or calling the
Distributor.

<TABLE>
<CAPTION>
1996 1995 1994 1993++
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF YEAR $ 10.00 $ 9.99 $ 10.01 $ 10.00
--------- --------- --------- ---------

INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .56 .56
.38 .27
Net realized and unrealized
gain (loss) on investments
.00 .02 (.02) .01
--------- --------- --------- ---------

Total From Investment Operations
.56 .58 .36 .28
--------- --------- --------- ---------

LESS DISTRIBUTIONS:
Net investment income (.56) (.56)
(.38) (.27)
In excess of net investment income -- (.00) -- --
In excess of net realized gain
on investments
-- (.01) -- --
--------- --------- --------- ---------

Total Distributions
(.56) (.57) (.38) (.27)
--------- --------- --------- ---------

NET ASSET VALUE, END OF YEAR $ 10.00 $ 10.00 $ 9.99 $ 10.01
========= ========= ========= =========

TOTAL RETURN (%)(a) 5.73 6.01 3.65 2.85

</TABLE>

- ----------------
++ For the period November 9, 1992 (commencement of operations) to August 31,
1993.
(a) Periods less than one year are not annualized.
(b) The ratios for the period ended August 31, 1993 are annualized.

-20-
<PAGE>

FINANCIAL HIGHLIGHTS
SSgA INTERMEDIATE FUND

The following table contains important financial information relating to the
Fund and has been audited by Coopers & Lybrand L.L.P., the Fund's independent
accountants. The table includes selected data for a share outstanding throughout
each fiscal year or period ended August 31, and other performance information
derived from the financial statements. The table appears in the Fund's Annual
Report and should be read in conjunction with the Fund's financial statements
and related notes, which are incorporated by reference in the Statement of
Additional Information and which appear, along with the report of Coopers &
Lybrand L.L.P., in the Fund's Annual Report to Shareholders. More detailed
information concerning the Fund's performance, including a complete portfolio
listing and audited financial statements, is available in the Fund's Annual
Report, which may be obtained without charge by writing or calling the
Distributor.

1996 1995 1994++
----------- ----------- ---------
<S> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF YEAR $ 9.72 $ 9.37 $ 10.00
----------- ----------- ---------

INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .53 .56 .42
Net realized and unrealized
gain (loss) on investments (.14) .34 (.76)
----------- ----------- ---------

Total From Investment Operations .39 .90 (.34)
----------- ----------- ---------

LESS DISTRIBUTIONS:
Net investment income (.54) (.55) (.29)
----------- ----------- ---------

NET ASSET VALUE, END OF YEAR $ 9.57 $ 9.72 $ 9.37
=========== =========== =========

TOTAL RETURN (%) 4.12 10.05 (3.42)

RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net, to average
daily net assets .60 .60 .60
Operating expenses, gross, to average
daily net assets 1.38 1.67 1.51
Net investment income to average
daily net assets 5.57 6.29 5.11
Portfolio turnover 221.73 26.31 15.70
Net assets, end of year
($000 omitted) 41,518 33,893 19,963
Per share amount of fees waived
($ omitted) -- -- .0002
Per share amount of fees reimbursed
by Adviser ($ omitted) .0743 .0946 .0753

</TABLE>

- ----------------
++ For the period September 1, 1993 (commencement of operations) to
August 31, 1994.

-21-
<PAGE>

FINANCIAL HIGHLIGHTS
SSgA BOND MARKET FUND

The following table contains important financial information relating to the
Fund and has been audited by Coopers & Lybrand L.L.P., the Fund's independent
accountants. The table includes selected data for a share outstanding throughout
each fiscal year or period ended August 31, and other performance information
derived from the financial statements. The table appears in the Fund's Annual
Report and should be read in conjunction with the Fund's financial statements
and related notes, which are incorporated by reference in the Statement of
Additional Information and which appear, along with the report of Coopers &
Lybrand L.L.P., in the Fund's Annual Report to Shareholders. More detailed
information concerning the Fund's performance, including a complete portfolio
listing and audited financial statements, is available in the Fund's Annual
Report, which may be obtained without charge by writing or calling the
Distributor.

1996++
----------
NET ASSET VALUE,
BEGINNING OF PERIOD $ 10.00
----------

INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .27
Net realized and unrealized gain (loss)
on investments
(.49)
----------

Total From Investment Operations (.22)
----------

LESS DISTRIBUTIONS:
Net investment income (.15)
----------

NET ASSET VALUE, END OF PERIOD $ 9.63
==========

TOTAL RETURN (%)(a) (2.19)

- ----------------
++ For the period February 7, 1996 (commencement of operations) to
August 31, 1996.
(a) Periods less than one year are not annualized.
(b) Annualized.

-22-
<PAGE>

FINANCIAL HIGHLIGHTS
SSgA GROWTH AND INCOME FUND

The following table contains important financial information relating to the
Fund and has been audited by Coopers & Lybrand L.L.P., the Fund's independent
accountants. The table includes selected data for a share outstanding throughout
each fiscal year or period ended August 31, and other performance information
derived from the financial statements. The table appears in the Fund's Annual
Report and should be read in conjunction with the Fund's financial statements
and related notes, which are incorporated by reference in the Statement of
Additional Information and which appear, along with the report of Coopers &
Lybrand L.L.P., in the Fund's Annual Report to Shareholders. More detailed
information concerning the Fund's performance, including a complete portfolio
listing and audited financial statements, is available in the Fund's Annual
Report, which may be obtained without charge by writing or calling the
Distributor.
<TABLE>
<CAPTION>
1996 1995 1994++

<S> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF YEAR $ 11.95 $ 10.51 $ 10.00
---------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .15 .18 .15
Net realized and unrealized
gain (loss) on investments 1.46 1.44
---------- ---------- ---------
.47

Total From Investment Operations 1.61 1.62
---------- ---------- ---------
.62

LESS DISTRIBUTIONS:
Net investment income (.16) (.18) (.11)

Net realized gain on investments (.04) -- --
---------- ---------- ---------
Total Distributions
(.20) (.18) (.11)
---------- ---------- ---------

NET ASSET VALUE, END OF YEAR $ 13.36 $ 11.95 $ 10.51

TOTAL RETURN (%)(a) 13.57 15.66 6.23

RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net, to average
daily net assets(b) .95 .95 .95
Operating expenses, gross, to
average daily net assets(b) 1.40 1.61 1.44
Net investment income to average
daily net assets(b) 1.15 1.72 1.75
Portfolio turnover(b) 38.34 39.32 36.48
Net assets, end of year
($000 omitted) 55,823 43,884 26,747
Per share amount of fees waived
($ omitted) -- -- .0002
Per share amount of fees reimbursed
by Adviser ($ omitted) .0574 .0685 .0418
Average commission rate paid per
share of security ($ omitted) .0436 N/A N/A

</TABLE>

- ----------
++ For the period September 1, 1993 (commencement of operations) to
August 31, 1994.
(a) Periods less than one year are not annualized.
(b) The ratios for the period ended August 31, 1994 are annualized.

-23-
<PAGE>

FINANCIAL HIGHLIGHTS
SSgA S&P 500 INDEX FUND

The following table contains important financial information relating to the
Fund and has been audited by Coopers & Lybrand L.L.P., the Fund's independent
accountants. The table includes selected data for a share outstanding throughout
each fiscal year or period ended August 31, and other performance information
derived from the financial statements. The table appears in the Fund's Annual
Report and should be read in conjunction with the Fund's financial statements
and related notes, which are incorporated by reference in the Statement of
Additional Information and which appear, along with the report of Coopers &
Lybrand L.L.P., in the Fund's Annual Report to Shareholders. More detailed
information concerning the Fund's performance, including a complete portfolio
listing and audited financial statements, is available in the Fund's Annual
Report, which may be obtained without charge by writing or calling the
Distributor.

1996 1995 1994 1993++
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF YEAR $ 12.81 $ 10.89 $ 10.72 $ 10.00
--------- --------- --------- --------

INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .32 .29 .26 .15
Net realized and unrealized
gain on investments 1.98 1.95 .29 .65
--------- --------- --------- --------

Total From Investment Operations 2.30 2.24 .55 .80
--------- --------- --------- --------

LESS DISTRIBUTIONS:
Net investment income (.31) (.29) (.26) (.08)
Net realized gain on investments (.39) (.03) (.07) --
In excess of net realized gain
on investments -- -- (.05) --
--------- --------- --------- --------

Total Distributions (.70) (.32) (.38) (.08)
--------- --------- --------- --------

NET ASSET VALUE, END OF YEAR $ 14.41 $ 12.81 $ 10.89 $ 10.72
========= ========= ========= ========

TOTAL RETURN (%)(a) 18.46 21.11 5.29 8.06

RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net, to
average daily net assets (b) .18 .19 .15 .15
Operating expenses, gross, to
average daily net assets (b) .28 .29 .25 .35
Net investment income to
average daily net assets (b) 2.32 2.76 2.69 3.02
Portfolio turnover (b) 28.72 38.56 7.97 48.10
Net assets, end of year ($000 704,683 545,200 361,712 238,666
omitted)
Per share amount of fees waived
($ omitted) .0135 .0107 .0030 .0027
Per share amount of fees reimbursed
by Adviser ($ omitted) -- -- .0067 .0071
Average commission rate paid per
share of security ($ omitted) .0115 N/A N/A N/A

</TABLE>

- ----------
++ For the period December 30, 1992 (commencement of operations) to
August 31, 1993.
(a) Periods less than one year are not annualized.
(b) The ratios for the period ended August 31, 1993 are annualized.

-24-
<PAGE>

FINANCIAL HIGHLIGHTS
SSgA MATRIX EQUITY FUND

The following table contains important financial information relating to the
Fund and has been audited by Coopers & Lybrand L.L.P., the Fund's independent
accountants. The table includes selected data for a share outstanding throughout
each fiscal year or period ended August 31, and other performance information
derived from the financial statements. The table appears in the Fund's Annual
Report and should be read in conjunction with the Fund's financial statements
and related notes, which are incorporated by reference in the Statement of
Additional Information and which appear, along with the report of Coopers &
Lybrand L.L.P., in the Fund's Annual Report to Shareholders. More detailed
information concerning the Fund's performance, including a complete portfolio
listing and audited financial statements, is available in the Fund's Annual
Report, which may be obtained without charge by writing or calling the
Distributor.

<TABLE>
<CAPTION>
1996 1995 1994 1993 1992++
---- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF YEAR $ 13.93 $ 12.06 $ 11.95 $ 9.78 $ 10.00
-------- -------- -------- ------- -------

INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .24 .28 .24 .18 .05

Net realized and unrealized gain
(loss) on investments
1.64 1.93 .28 2.17 (.27)
-------- -------- -------- ------- -------

Total From Investment Operations 1.88 2.21 .52 2.35 (.22)
-------- -------- -------- ------- -------

LESS DISTRIBUTIONS:
Net investment income (.24) (.28) (.23) (.18) --
Net realized gain on investments (1.44) (.06) (.09) -- --
In excess of net realized
gain on investments -- -- (.09) -- --
-------- -------- -------- ------- -------

Total Distributions (1.68) (.34) (.41) (.18) --
-------- -------- -------- ------- -------

NET ASSET VALUE,
END OF YEAR $ 14.13 $ 13.93 $ 12.06 $ 11.95 $ 9.78
======== ======== ======== ======= =======

TOTAL RETURN (%)(a) 14.67 18.81 4.41 24.24 (2.20)

RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net, to average
daily net assets (b) .66 .68 .58 .60 .18
Operating expenses, gross, to
average daily net assets (b) 1.04 1.06 .96 1.25 1.90
Net investment income to average
daily net assets (b) 1.76 2.25 2.16 2.13 2.69
Portfolio turnover (b) 150.68 129.98 127.20 57.65 None
Net assets, end of year
($000 omitted) 261,888 198,341 130,764 62,549 12,408
Per share amount of fees waived
($ omitted) .051 .046 .041 .0314 .0112
Per share amount of fees reimbursed
by Adviser ($ omitted) -- -- -- .0225 .0202
Average commission rate paid
per share of security ($ omitted) .040 N/A N/A N/A N/A
</TABLE>

- ----------
++ For the period May 4, 1992 (commencement of operations) to August 31,
1992.
(a) Periods less than one year are not annualized.
(b) The ratios for the period ended August 31, 1992 are annualized.

-25-
<PAGE>

FINANCIAL HIGHLIGHTS
SSgA SMALL CAP FUND

The following table contains important financial information relating to the
Fund and has been audited by Coopers & Lybrand L.L.P., the Fund's independent
accountants. The table includes selected data for a share outstanding throughout
each fiscal year or period ended August 31, and other performance information
derived from the financial statements. The table appears in the Fund's Annual
Report and should be read in conjunction with the Fund's financial statements
and related notes, which are incorporated by reference in the Statement of
Additional Information and which appear, along with the report of Coopers &
Lybrand L.L.P., in the Fund's Annual Report to Shareholders. More detailed
information concerning the Fund's performance, including a complete portfolio
listing and audited financial statements, is available in the Fund's Annual
Report, which may be obtained without charge by writing or calling the
Distributor.

<TABLE>
<CAPTION>
1996 1995+ 1994 1993 1992++
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF YEAR $ 14.42 $ 11.88 $ 12.24 $ 10.09 $ 10.00
--------- --------- --------- --------- ---------

INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .04 .13 .21 .22 .04
Net realized and unrealized
gain on investments 3.25 3.19 .24 2.14 .05
--------- --------- --------- --------- ---------

Total From Investment Operations 3.29 3.32 .45 2.36 .09
--------- --------- --------- --------- ---------

LESS DISTRIBUTIONS:
Net investment income (.07) (.15) (.21) (.21) --
Net realized gain on investments (.20) (.58) (.60) -- --
In excess of net realized gain on
investments -- (.05) -- -- --
--------- --------- --------- --------- ---------

Total Distributions (.27) (.78) (.81) (.21) --
--------- --------- --------- --------- ---------

NET ASSET VALUE, END OF YEAR $ 17.44 $ 14.42 $ 11.88 $ 12.24 $ 10.09
========= ========= ========= ========= =========

TOTAL RETURN (%)(a) 23.14 30.04 3.90 23.66 .90

RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net, to average
daily net assets (b) 1.00 .97 .30 .25 .25
Operating expenses, gross, to
average daily net assets (b) 1.18 1.58 .81 1.18 1.71
Net investment income to average
daily net assets (b) .26 .81 1.73 1.85 2.55
Portfolio turnover (b) 76.85 192.88 44.86 81.14 4.59
Net assets, end of year 55,208 23,301 25,716 34,815 9,392
($000 omitted)
Per share amount of fees waived
($ omitted) -- .0261 .0046 .0083 .0021
Per share amount of fees reimbursed
by Adviser ($ omitted) .0277 .0730 .0582 .1040 .0226
Average commission rate paid per
share of security ($ omitted) .0368 N/A N/A N/A N/A
</TABLE>

- ----------
+ Prior to November 22, 1994, the Fund was passively managed as the S&P Midcap
Index Fund.
++ For the period July 1, 1992 (commencement of operations) to August 31, 1992.
(a) Periods less than one year are not annualized.
(b) The ratios for the period ended August 31, 1992 are annualized.

-26-
<PAGE>

FINANCIAL HIGHLIGHTS
SSgA ACTIVE INTERNATIONAL FUND

The following table contains important financial information relating to the
Fund and has been audited by Coopers & Lybrand L.L.P., the Fund's independent
accountants. The table includes selected data for a share outstanding throughout
each fiscal year or period ended August 31, and other performance information
derived from the financial statements. The table appears in the Fund's Annual
Report and should be read in conjunction with the Fund's financial statements
and related notes, which are incorporated by reference in the Statement of
Additional Information and which appear, along with the report of Coopers &
Lybrand L.L.P., in the Fund's Annual Report to Shareholders. More detailed
information concerning the Fund's performance, including a complete portfolio
listing and audited financial statements, is available in the Fund's Annual
Report, which may be obtained without charge by writing or calling the
Distributor.

1996 1995++
---- ----
NET ASSET VALUE,
BEGINNING OF YEAR $ 10.89 $ 10.00
------- -------

INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .36 .03
Net realized and unrealized gain
(loss) on investments
.28 .86
--- ---

Total From Investment Operations
.64 .89
--- ---

Less distributions from net
investment income (a) (.57) --
----- --

NET ASSET VALUE, END OF PERIOD $ 10.96 $ 10.89

TOTAL RETURN (%) (b) 6.22 8.90

RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net, to average
daily net assets (c) 1.00 1.79
Operating expenses, gross, to
average daily net assets (c) 1.47 2.56
Net investment income to average
daily net assets (c) 1.16 1.11
Portfolio turnover (c) 22.02 7.17
Net assets, end of period
($000 omitted) 54,595 25,186
Per share amount of fees waived
($ omitted) .1459 .0207
Average commission rate paid per
share of security ($ omitted) (d) .0021 N/A

- ----------
++ For the period March 7, 1995 (commencement of operations) to August 31,
1995.
(a) Includes gains from foreign currency-related transactions.
(b) Periods less than one year are not annualized.
(c) Annualized.
(d) In certain foreign markets, the relationship between the translated US
dollar price per share of security and commission paid per share of
security may vary from that of domestic markets.

-27-
<PAGE>

FINANCIAL HIGHLIGHTS
SSgA EMERGING MARKETS FUND

The following table contains important financial information relating to the
Fund and has been audited by Coopers & Lybrand L.L.P., the Fund's independent
accountants. The table includes selected data for a share outstanding throughout
each fiscal year or period ended August 31, and other performance information
derived from the financial statements. The table appears in the Fund's Annual
Report and should be read in conjunction with the Fund's financial statements
and related notes, which are incorporated by reference in the Statement of
Additional Information and which appear, along with the report of Coopers &
Lybrand L.L.P., in the Fund's Annual Report to Shareholders. More detailed
information concerning the Fund's performance, including a complete portfolio
listing and audited financial statements, is available in the Fund's Annual
Report, which may be obtained without charge by writing or calling the
Distributor.

<TABLE>
<CAPTION>
1996 1995 1994++
---- ---- ----
<S> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF YEAR $ 10.30 $ 11.45 $ 10.00
-------- ------- --------

INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .11 .14 .05
Net realized and unrealized gain
(loss) on investments .68 (1.19) 1.40
-------- ------- --------

Total From Investment Operations .79 (1.05) 1.45
-------- ------- --------

LESS DISTRIBUTIONS:
Net investment income (.12) (.10) --
Net realized gain on investments (.10) -- --
-------- ------- --------
Total Distributions (.22) (.10) --
-------- ------- --------
NET ASSET VALUE, END OF YEAR $ 10.87 $ 10.30 $ 11.45
======== ======== ========

TOTAL RETURN (%) (a) 7.83 (9.28) 14.50

- ----------
++ For the period March 1, 1994 (commencement of operations) to August 31,
1994.
(a) Periods less than one year are not annualized.
(b) The ratios for the period ended August 31, 1994 are annualized.
(c) In certain foreign markets, the relationship between the translated US
dollar price per share of security and commission paid per share of
security may vary from that of domestic markets.

-28-
<PAGE>

SSgA FUNDS

SSgA Funds (the "Investment Company") is an open-end management investment
company that is organized as a Massachusetts business trust. In addition, each
series of the Investment Company is diversified as defined in the Investment
Company Act of 1940, as amended ("1940 Act"). As a "series" company, Investment
Company is authorized to issue an unlimited number of shares evidencing
beneficial interests in different investment portfolios. State Street Bank and
Trust Company ("State Street"), through its division, State Street Global
Advisers ("Adviser" or "SSgA"), is the Funds' Adviser. Through this Prospectus,
Investment Company offers shares in 12 separate, diversified funds
(collectively, the "Funds"):

(bullet) SSgA Money Market Fund ("Money Market Fund")
(bullet) SSgA US Government Money Market Fund ("Government Fund")
(bullet) SSgA Tax Free Money Market Fund ("Tax Free Fund")
(bullet) SSgA Bond Market Fund ("Bond Fund")
(bullet) SSgA Yield Plus Fund ("Yield Plus Fund")
(bullet) SSgA Matrix Equity Fund ("Matrix Fund")
(bullet) SSgA S&P 500 Index Fund ("Index Fund")
(bullet) SSgA Small Cap Fund ("Small Cap Fund")
(bullet) SSgA Growth and Income Fund ("Growth and Income Fund")
(bullet) SSgA Intermediate Fund ("Intermediate Fund")
(bullet) SSgA Emerging Markets Fund ("Emerging Markets Fund")
(bullet) SSgA Active International Fund ("Active International Fund").

MANNER OF OFFERING

Distribution and Eligible Investors. Shares of the Funds are offered
without a sales commission by Russell Fund Distributors, Inc. (the
"Distributor"), Investment Company's distributor, to US and foreign
institutional and retail investors which invest for their own account or in a
fiduciary or agency capacity. The Funds will incur distribution expenses under
their Rule 12b-1 plan. See "General Management -- Distribution Services and
Shareholder Servicing Arrangements."

INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS

Certain Funds have a fundamental investment objective which may be
changed only with the approval of a majority of the Fund's shareholders as
defined by the 1940 Act. Other Funds have a nonfundamental investment objective
which may be changed only with the approval of a majority of the Board of
Trustees; shareholders would receive at least 60 days prior notice of any change
to the nonfundamental objective. Whether a Fund's investment objective is
fundamental or nonfundamental is indicated below. There are also fundamental and
nonfundamental investment policies and restrictions, as described in this
section. There can be no assurance that any Fund will meet its stated investment
objective.

Investment Objectives and Policies
- ----------------------------------

Money Market Fund. The fundamental investment objective is to maximize
current income, to the extent consistent with the preservation of capital and
liquidity and the maintenance of a stable $1.00 per share net asset value, by
investing in dollar denominated securities with remaining maturities of one year
or less.

-29-
<PAGE>

The Fund attempts to meet its investment objective by investing in high
quality money market instruments. Such instruments include: (1) US Treasury
bills, notes and bonds; (2) other obligations issued or guaranteed as to
interest and principal by the US Government, its agencies, or instrumentalities;
(3) instruments of US and foreign banks, including certificates of deposit,
banker's acceptances and time deposits; these instruments may include Eurodollar
Certificates of Deposit, Eurodollar Time Deposits and Yankee Certificates of
Deposit; (4) commercial paper of US and foreign companies; (5) asset-backed
securities; (6) corporate obligations; (7) variable amount master demand notes;
and (8) repurchase agreements.

The Fund will limit its portfolio investments to those United States
dollar-denominated instruments which at the time of acquisition the Adviser
determines present minimal credit risk and which qualify as "eligible"
securities under the Securities and Exchange Commission rules applicable to
money market mutual funds. In general, eligible securities include securities
that: (1) are rated in the highest category by least two Nationally Recognized
Statistical Rating Organizations ("NRSRO"); (2) by one NRSRO, if only one rating
service has rated the security; or (3) if unrated, are of comparable quality, as
determined by the Adviser in accordance with procedures established by the Board
of Trustees. See the Statement of Additional Information ("SAI") for a
description of the securities ratings of debt instruments and commercial paper
by NRSROs.

Government Fund. The fundamental investment objective is to maximize
current income to the extent consistent with the preservation of capital and
liquidity, and the maintenance of a stable $1.00 per share net asset value, by
investing in obligations of the US Government or its agencies or
instrumentalities with remaining maturities of one year or less.

The Fund attempts to meet its investment objective by investing in
obligations issued or guaranteed as to principal and interest by the US
Government or its agencies or instrumentalities or in repurchase agreements
secured by such instruments. (See "Other Investment Policies -- US Government
Securities.") Under normal market conditions, the Government Fund will be 100%
invested in such securities.

Tax Free Fund. The fundamental investment objective is to seek to
maximize current income, exempt from federal income taxes, to the extent
consistent with the preservation of capital and liquidity, and the maintenance
of a stable $1.00 per share net asset value.

The Fund has a fundamental policy of investing at least 80% of its net
assets in federal tax exempt, high quality and short-term municipal securities
of all types under normal market conditions. These securities are issued by
states, municipalities and their political subdivisions and agencies and certain
territories and possessions of the United States. Investments may include
general obligation bonds and notes, revenue bonds and notes, commercial paper,
private placements, tender option bonds, private activity bonds, industrial
development bonds and municipal lease contracts. Securities purchased may bear
fixed, variable or floating rates of interest or may be zero coupon securities.
The Fund may buy or sell securities on a when-issued or forward commitment
basis.

The Fund may invest not more than 20% of its assets in federally
taxable money market instruments including securities issued by or guaranteed as
to principal and interest by the US government or its agencies or
instrumentalities, certificates of deposit, commercial paper and repurchase
agreements.

The Fund will invest in securities with remaining maturities of 397
days or less (as computed according to Rule 2a-7 of the 1940 Act) and will
maintain a dollar-weighted average maturity of 90 days or less. The Fund will
limit its portfolio investments to investment grade securities which at the time
of acquisition the Adviser determines present minimal credit risk and which: (1)
are rated in the highest category by least two NRSROs; (2) by one NRSRO, if only
one rating service has rated the security; or (3) if unrated, are of comparable
quality, as determined by the Adviser in accordance with procedures established
by the Board of Trustees.

-30-
<PAGE>

Yield Plus Fund. The nonfundamental investment objective is to seek
high current income and liquidity by investing primarily in a diversified
portfolio of high-quality debt securities and by maintaining a portfolio
duration of one year or less.

The Fund attempts to meet its objective by investing primarily in: (1)
US Government securities (including repurchase agreements relating to such
securities); (2) instruments of US and foreign banks, including ETDs, ECDs,
YCDs, certificates of deposit, time deposits, letters of credit and banker's
acceptances; (3) commercial paper, notes and bonds issued by foreign and
domestic corporations; (4) securities of foreign governments, agencies and
subdivisions of foreign governments and supranational organizations (such as the
World Bank); (5) asset-backed securities; (6) mortgage-related pass-through
securities; and (7) interest rate swaps.

The Fund limits its investments to bank instruments, mortgage-related
pass-through securities, asset-backed securities, commercial paper, corporate
notes and bonds and obligations of foreign governments and agencies and
subdivisions of foreign governments and supranational organizations that, at the
time of acquisition: (1) are rated in one of the four highest categories (or in
the case of commercial paper, in the two highest categories) by at least one
NRSRO; or (2) if not rated, are of comparable quality, as determined by the
Adviser, in accordance with procedures established by the Board of Trustees. All
securities may be either fixed income, zero coupon or variable- or floating-rate
securities and may be denominated in US dollars or selected foreign currencies.

The Fund will maintain a portfolio duration of one year or less.
Duration is a measure of the price sensitivity of a security to changes in
interest rates. Unlike maturity, which measures the period of time until final
payment is to be made on a security, duration measures the dollar-weighted
average maturity of a security's expected cash flows (i.e., interest and
principal payments), discounted to their present values, after giving effect to
all maturity shortening features, such as call or redemption rights. With
respect to a variable or floating-rate instrument, duration is adjusted to
indicate the price sensitivity of the instrument to changes in the interest rate
in effect until the next reset date. For substantially all securities, the
duration of a security is equal to or less than its stated maturity.

Intermediate Fund. The fundamental investment objective is to seek a
high level of current income while preserving principal by investing primarily
in a diversified portfolio of debt securities with a dollar-weighted average
maturity between three and ten years.

The Fund is structured around the Lehman Brothers Intermediate
Government/Corporate Bond Index (the "LBIGC Index"). Under normal market
conditions, the Fund attempts to meet its objective by investing at least 65% of
its total assets in: (1) US Government securities (including repurchase and
reverse repurchase agreements relating to such securities); (2) commercial
paper, notes and bonds (including convertible bonds) issued by foreign and
domestic corporations; (3) mortgage-related pass-through securities; (4)
asset-backed securities; and (5) instruments of US and foreign banks, including
Eurodollar Time Deposits, Eurodollar Certificates of Deposit, Yankee
Certificates of Deposit, certificates of deposit, time deposits, letters of
credit and banker's acceptances.

The Fund limits its portfolio investments in commercial paper and
corporate notes and bonds to those that, at the time of acquisition: (1) are
rated in one of the four highest categories (or in the case of commercial paper,
in the two highest categories) by at least one NRSRO; or (2) if not rated, are
of comparable quality, as determined by the Adviser.

The Fund will measure its performance against the LBIGC Index. The Fund
also intends to maintain an average maturity and duration similar to that of the
LBIGC Index. The duration of the LBIGC Index as of August 31, 1996 was 3.30
years. The LBIGC Index is described in more detail in "Other Investment
Policies."

Bond Market Fund. The nonfundamental investment objective is to
maximize total return by investing in fixed income securities, including, but
not limited to, those represented by the Lehman Brothers Aggregate Bond Index
(the "LBAB Index"). The LBAB Index is described in more detail in "Other
Investment Policies."

-31-
<PAGE>

Under normal market conditions, the Fund attempts to meet its objective
by investing at least 65% of its total assets in debt securities. The Fund may
make direct investments in: (1) US Government securities, including US Treasury
securities and other obligations issued or guaranteed as to interest and
principal by the US Government and its agencies and instrumentalities; (2)
corporate debt securities; (3) asset-backed securities; (4) mortgage-backed
securities including, but not limited to, collateralized mortgage obligations
and real estate mortgage investment conduits; (5) repurchase agreements; (6)
commercial paper, notes and bonds (including convertible bonds) issued by
foreign and domestic corporations; (7) mortgage-related pass-through securities;
(8) instruments of US and foreign banks, including Eurodollar Certificates of
Deposit, Eurodollar Time Deposits and Yankee Certificates of Deposit,
certificates of deposit, time deposits, letters of credit and banker's
acceptances; (9) financial futures and option contracts; (10) interest rate
exchange agreements and other swap agreements; (11) supranational and sovereign
debt obligations including subdivisions and agencies; and (12) other securities
and instruments deemed by the Adviser to have characteristics consistent with
the Fund's investment objective. Securities may be either fixed income, zero
coupon or variable or floating-rate and may be denominated in US dollars or
selected foreign currencies. As indicated above, the Fund may invest in
derivative securities, including futures and options, interest rate exchange
agreements and other swap agreements and collateralized mortgage obligations.

The Fund may invest in fixed-income securities to achieve its
investment objective. In periods of declining interest rates, the Fund's yield
(its income from portfolio investments over a stated period of time) may tend to
be higher than prevailing market rates, and in periods of rising interest rates,
the yield of the Fund may tend to be lower. Also when interest rates are
falling, the inflow of new money to the Fund from the continuous sales of its
shares will likely be invested in portfolio instruments producing lower yield
than the balance of the Fund's portfolio, thereby reducing the yield of the
Fund. In periods of rising interest rates, the opposite can be true. The net
asset value of the Fund investing in fixed-income securities also may change as
general levels of interest rates fluctuate. When interest rates increase, the
value of a portfolio of fixed-income securities can be expected to decline.
Conversely, when interest rates decline, the value of a portfolio of
fixed-income securities can be expected to increase.

The Fund limits its portfolio investments in corporate notes and bonds
to those that are rated investment-grade by an NRSRO or, if unrated, are
determined by the Adviser to be of comparable quality. Commercial paper must be
rated in one of the two highest categories by at least one NRSRO or, if unrated,
are determined by the Adviser to be of comparable quality. Investment-grade
securities include securities rated Baa3 by Moody's or BBB- by ("S&P") (and
securities of comparable quality), which securities have speculative
characteristics. If a security is downgraded and is no longer investment grade,
the Fund may continue to hold the security if the Adviser determines that such
action is in the best interest of the Fund and if the Fund would not, as a
result thereby, have more than 5% of its assets invested in noninvestment-grade
securities.

Growth and Income Fund. The fundamental investment objective is to
achieve long-term capital growth, current income and growth of income primarily
through investments in equity securities.

The Fund will invest at least 65% of its total assets in equity
securities. The Fund may invest in common and preferred stock, convertible
securities, rights and warrants. The Fund will invest in publicly traded
companies that are generally well-established, but may invest up to 5% of its
total assets in securities of any issuer which has been in operation for less
than three years. The balance of the Fund's assets may be invested in American
Depository Receipts, corporate bonds, debentures and notes and other debt
securities. Debt securities may include obligations of foreign issuers that are
US-dollar denominated. Except for convertible securities, any debt securities
purchased will have a dollar-weighted average maturity of 10 years or less. The
Fund will invest in investment grade bonds rated as such by an independent
rating agency or if unrated, of comparable quality as determined by the Adviser.
In addition, the Fund may invest temporarily for defensive purposes, without
limitation, in certain short-term fixed income securities. Such securities may
be used to invest uncommitted cash balances or to maintain liquidity to meet
shareholder redemptions. See ("Other Investment Policies - Cash Reserves.")

-32-
<PAGE>

The Fund's goal is to provide greater long-term returns than the
overall US equity market without incurring greater risks than those commonly
associated with investments in equity securities. For this purpose, the Fund
will measure its performance against the Standard & Poor's 500 Composite Stock
Price Index (the "S&P 500 Index").

The Fund's portfolio strategy combines market economics with
fundamental research. The Adviser begins by assessing current economic
conditions and forecasting economic expectations for the coming months. The
industry sectors of the S&P 500 Index are examined to determine the sector's
market capitalized weighting and to identify the performance of each sector
relative to the Index as a whole. A balance is determined for the portfolio,
giving greater weight to market sectors that are expected to outperform the
overall market. Stocks are then selected for each sector of the Fund's portfolio
based on the issuer's industry classification, the stock's historical
sensitivity to changing economic events and conditions and an assessment of the
stock's current valuation.

Index Fund. The fundamental investment objective is to seek to
replicate the total return of the S&P 500 Index.

The Fund is not managed according to traditional methods of "active"
investment management, which involve the buying and selling of securities based
upon economic, financial and market analysis and investment judgment. Instead,
the Fund utilizes a "passive" investment approach, attempting to duplicate the
investment performance of its benchmark index through automated statistical
analytic procedures.

The Fund intends to invest in all 500 stocks in the S&P 500 Index in
proportion to their weighting in the Index. No subscription for the Fund will be
accepted until Adviser has a reasonable basis to believe that the Fund will be
able to acquire substantially all 500 stocks in the Index. To the extent that
all 500 stocks cannot be purchased, the Fund will purchase a representative
sample of the stocks listed in the Index in proportion to their weightings. The
S&P 500 Index is described in more detail in "Other Investment Policies."

To the extent that the Fund seeks to replicate the S&P 500 Index using
such sampling techniques, a close correlation between the Fund's performance and
the performance of the Index is anticipated in both rising and falling markets.
The Fund will attempt to achieve a correlation between the performance of its
portfolio and that of the Index of at least 0.95, before deduction of Fund
expenses. A correlation of 1.00 would represent perfect correlation between
portfolio and index performance. It is anticipated that the correlation of the
Fund's performance to that of the Index will increase as the size of the Fund
increases. The Fund's ability to achieve significant correlation between Fund
and Index performance may be affected by changes in securities markets, changes
in the composition of the Index and the timing of purchases and redemptions of
Fund shares. Adviser will monitor correlation. Should the Fund fail to achieve
an appropriate level of correlation, Adviser will report to the Board of
Trustees, which will consider alternative arrangements.

The Fund will be substantially invested in the securities included in
the S&P 500 Index. However, the Fund may invest temporarily, without limitation,
in certain short-term fixed income securities. Such securities may be used to
invest uncommitted cash balances or to maintain liquidity to meet shareholder
redemptions. (See "Other Investment Policies -- Cash Reserves.") The Fund may
also invest temporarily in investment grade debt securities for defensive
purposes, including convertible debt securities. Other debt will typically
represent less than 10% of the Fund's assets.

Matrix Equity Fund. The fundamental investment objective is to provide
total returns that exceed over time the S&P 500 Index through investment in
equity securities.

-33-
<PAGE>

growth with its stock price within the context of its historical valuation. The
measure of Wall Street sentiment examines changes in Wall Street analysts'
earnings estimates and ranks stocks by the strength and consistency of those
changes. These two measures are combined to create a single composite score of
each stock's attractiveness. These scores are then plotted on a matrix according
to their relative attractiveness. Sector weights are maintained at a similar
level to that of the S&P 500 Index to avoid unintended exposure to factors such
as the direction of the economy, interest rates, energy prices and inflation.
The S&P 500 Index is described in more detail in "Other Investment Policies."

Under normal market conditions, the Fund will invest at least 65% of
its total assets in equity securities. However, the Fund may invest temporarily
for defensive purposes, without limitation, in certain short-term fixed income
securities. Such securities may be used to invest uncommitted cash balances or
to maintain liquidity to meet shareholder redemptions. (See "Other Investment
Policies -- Cash Reserves)."

In addition to the policies noted above, the Fund may invest in
obligations of foreign issuers which are US dollar denominated, American
Depository Receipts (ADRs), corporate bonds, debentures, notes and warrants.
Investment in each of these instruments will not exceed 5% of the Fund's total
assets.

Small Cap Fund. The nonfundamental investment objective is to maximize
total return through investment in equity securities; under normal market
conditions, at least 65% of total assets will be invested in securities of
smaller capitalized issuers.

Equity securities will be selected by the Fund on the basis of a
proprietary analytical model of Adviser. Each security will be ranked on the
basis of a single measure: the momentum of Wall Street sentiment. The measure
examines changes in Wall Street analyst's earnings estimates and ranks stocks by
the strength and consistency of those changes. Sector and industry weight are
maintained at a similar level to that of the Russell 2000(R) Index to avoid
unintended exposure to factors such as the direction of the economy, interest
rates, energy prices and inflation. The Russell 2000 Index is described in more
detail in "Other Investment Policies."

The Fund will invest primarily in a portfolio of smaller domestic
companies. Smaller companies will include those stocks with market
capitalization generally ranging in value from $50 million to $3 billion.
Investments in smaller companies may involve greater risks because these
companies generally have a limited track record and often experience higher
price volatility.

Under normal market conditions, the Fund will invest at least 65% of
its total assets in securities of smaller companies. However, the Fund may
invest in other equity securities and may temporarily for defensive purposes,
without limitation, in certain short-term investment grade debt securities. Such
securities may be used to invest uncommitted cash balances or to maintain
liquidity to meet shareholder redemptions. (See "Other Investment Policies --
Cash Reserves.") The Fund may also invest temporarily in investment grade debt
securities for defensive purposes, including convertible debt securities. Other
debt will typically represent less than 10% of the Fund's total assets.

Active International Fund. The nonfundamental investment objective is
to provide long-term capital growth by investing primarily in securities of
foreign issuers.

The Fund will attempt to meet its objective through the active
selection of countries, currencies and securities. The selection of investments
will be made through a proprietary, quantitative process developed by the
Adviser. Investments will be made in, but not limited to, countries included in
the Morgan Stanley Capital International Europe, Australia, Far East ("MSCI
EAFE") Index. The MSCI EAFE Index is described in more detail in "Other
Investment Policies."

-34-
<PAGE>

contracts and options on futures. For investment restrictions on the use of
these derivatives, please refer to the "Other Investment Policies" section.
However, the Fund may invest in other equity securities and may temporarily for
defensive purposes, without limitation, invest in certain short-term fixed
income securities. Such securities may be used to invest uncommitted cash
balances or to maintain liquidity to meet shareholder redemptions. (See "Other
Investment Policies -- Cash Reserves.")

The Fund may invest in common and preferred equity securities publicly
traded in the United States or in foreign countries. The Fund's equity
securities may be denominated in foreign currencies and may be held outside the
United States. The risks associated with investment in securities issued by
foreign governments and companies are described in "Risk Factors -- Foreign
Securities."

Of the fixed-income instruments used by the Fund, less than 5% will be
considered lower than investment-grade. Such securities are regarded as
speculative with respect to the issuer's capacity to pay interest and repay
principal in accordance with the terms of the obligation. These lower rated debt
securities may include obligations that are in default or that face the risk of
default with respect to principal or interest. Therefore, such securities are
sometimes referred to as "junk bonds."

Emerging Markets Fund. The fundamental investment objective is to
provide maximum total return, primarily through capital appreciation, by
investing primarily in securities of foreign issuers.

Under normal circumstances, the Fund will invest primarily in equity
securities issued by companies domiciled, or doing a substantial portion of
their business, in countries determined by the Adviser to have a developing or
emerging economy or securities market. The Fund will diversify investments
across many countries (typically at least 10) in order to reduce the volatility
associated with specific markets. The countries in which the Fund invests will
be expanded over time as the stock markets in other countries evolve and in
countries for which subcustodian arrangements are approved by the Fund's Board
of Trustees. Nearly all of the Fund's assets will be invested in equity
securities of emerging market countries (i.e., typically over 95%). Currently,
the definition of an emerging market is that gross domestic product per capita
is less than $8,000 per year. However, due to the status of a country's stock
market, the country may still qualify as an emerging market even if it exceeds
this amount. In determining securities in which to invest, the Adviser will
evaluate the countries' economic and political climates and take into account
traditional securities valuation methods, including (but not limited to) an
analysis of price in relation to assets, earnings, cash flows, projected
earnings growth, inflation, and interest rates. Liquidity and transaction costs
will also be considered.

The Fund may also invest in debt securities, including instruments
issued by emerging market companies, governments and their agencies, and
convertible debt securities. Debt securities will typically represent less than
10% of Fund assets. The Fund is likely to purchase debt securities which are not
investment grade debt, since much of the emerging market debt falls in this
category. These securities are subject to market and credit risk. These lower
rated debt securities (also referred to as "junk bonds") may include obligations
that are in default or that face the risk of default with respect to principal
or interest.

The Fund may invest in common and preferred equity securities publicly
traded in the United States or in foreign countries on developed or emerging
markets. The Fund's equity securities may be denominated in foreign currencies
and may be held outside the United States. Certain emerging markets are closed
in whole or part to the direct purchase of equity securities by foreigners. In
these markets, the Fund may be able to invest in equity securities solely or
primarily through foreign government authorized pooled investment vehicles.
Risks associated with investment in foreign companies are noted under "Risk
Factors -- Emerging Markets." The risks associated with investment in securities
issued by foreign governments and companies are described below in "Other
Investment Policies -- Foreign Government Securities."

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Investment Restrictions
- -----------------------

All Funds have fundamental investment restrictions, which may be
changed only with the approval of a majority of the Fund's shareholders as
defined in the 1940 Act. A more detailed discussion of the Fund's investment
restrictions and policies appears in the Statement of Additional Information.
Unless otherwise noted, the fundamental restrictions apply at the time an
investment is made. Each Fund may not:

1. Invest 25% or more of the value of its total assets in securities of
companies primarily engaged in any one industry (other than the US
Government, its agencies or instrumentalities). Concentration may
occur as a result of changes in the market value of portfolio
securities, but may not result from investment. With respect to the
Money Market and Government Funds, US banks and certain domestic
branches of foreign banks are not considered a single industry for
purposes of this restriction.

2. Borrow money (including reverse repurchase agreements), except as a
temporary measure for extraordinary or emergency purposes or to
facilitate redemptions (not for leveraging or investment), provided
that borrowings do not exceed an amount equal to 33-1/3% of the
current value of the Fund's assets taken at market value, less
liabilities other than borrowings. If at any time the Fund's
borrowings exceed this limitation due to a decline in net assets,
such borrowings will within three days be reduced to the extent
necessary to comply with this limitation. The Fund will not purchase
additional investments if borrowed funds (including reverse
repurchase agreements) exceed 5% of total assets.

3. Pledge, mortgage, or hypothecate its assets. However, the Fund may
pledge securities having a market value at the time of the pledge
not exceeding 33-1/3% of the value of the Fund's total assets to
secure permitted borrowings.

Other Investment Policies
- -------------------------

The investment policies described below reflect the Funds' current
policies, are not fundamental and may be changed by the Board of Trustees
without shareholder approval. Descriptions below are of policies which will from
time to time be used by at least 5% of the Fund's net assets. For more
information about some of the investment policies described below, or for
information about other policies that may be used by less than 5% of a Fund's
net assets, see the relevant SAI. To the extent consistent with each Fund's
investment objective and restrictions, the Funds (as indicated) may invest in
the following instruments and may use the following investment techniques:
US Government Securities (all Funds except Emerging Markets and Active
International). US Government securities include US Treasury bills, notes, and
bonds and other obligations issued or guaranteed as to interest and principal by
the US Government and its agencies or instrumentalities. Obligations issued or
guaranteed as to interest and principal by the US Government, its agencies or
instrumentalities include securities that are supported by the full faith and
credit of the United States Treasury, securities that are supported by the right
of the issuer to borrow from the United States Treasury, discretionary authority
of the US Government agency or instrumentality, and securities supported solely
by the creditworthiness of the issuer.

Repurchase Agreements (all Funds). Each Fund may enter into repurchase
agreements with banks and other financial institutions, such as broker-dealers.
In substance, a repurchase agreement is a loan for which the Fund receives
securities as collateral. Under a repurchase agreement, a Fund purchases
securities from a financial institution that agrees to repurchase the securities
at the Fund's original purchase price plus interest within a specified time
(normally one business day). No Fund will invest more than 10% of its net assets
(taken at current market value) in repurchase agreements maturing in more than
seven days. The Funds will limit repurchase transactions to those member banks
of the Federal Reserve System and broker-dealers whose creditworthiness Adviser
considers satisfactory. Should the counterparty to a transaction fail
financially, a Fund may encounter

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<PAGE>

delay and incur costs before being able to sell the securities. Further, the
amount realized upon the sale of the securities may be less than that necessary
to fully compensate a Fund.

Reverse Repurchase Agreements (all Funds). The Funds may enter into
reverse repurchase agreements under the circumstances described in "Investment
Restrictions." In substance, a reverse repurchase agreement is a borrowing for
which the Fund provides securities as collateral. Under a reverse repurchase
agreement, a Fund sells portfolio securities to a financial institution in
return for cash in an amount equal to a percentage of the portfolio securities'
market value and agrees to repurchase the securities at a future date at a
prescribed repurchase price equal to the amount of cash originally received plus
interest on such amount. A Fund retains the right to receive interest and
principal payments with respect to the securities while they are in the
possession of the financial institutions. Reverse repurchase agreements involve
the risk of default by the counterparty, which may adversely affect a Fund's
ability to reacquire the underlying securities.

Forward Commitments (all Funds except Emerging Markets). The Funds may
contract to purchase securities for a fixed price at a future date beyond
customary settlement time. When effecting such transactions, cash or marketable
securities held by a Fund of a dollar amount sufficient to make payment for the
portfolio securities to be purchased will be segregated on a Fund's records at
the trade date and maintained until the transaction is settled. The failure of
the other party to the transaction to complete the transaction may cause a Fund
to miss an advantageous price or yield. Forward commitments involve a risk of
loss if the value of the security to be purchased declines prior to the
settlement date, or if the other party fails to complete the transaction.

When-Issued Transactions (all Funds except Emerging Markets and Active
International). The Funds may purchase securities on a when-issued basis. In
these transactions, a Fund purchases securities with payment and delivery
scheduled for a future time. Until settlement, a Fund segregates cash and
marketable securities equal in value to its when-issued commitments. Between the
trade and settlement dates, a Fund bears the risk of any fluctuation in the
value of the securities. These transactions involve the additional risk that the
other party may fail to complete the transaction and cause a Fund to miss a
price or yield considered advantageous. A Fund will engage in when-issued
transactions only for the purpose of acquiring portfolio securities consistent
with its investment objective and policies and not for investment leverage. A
Fund will invest no more than 25% of its net assets in when-issued securities.

Illiquid Securities (all Funds). The Money Market, Government and Tax
Free Funds will invest no more than 10% of each of their net assets, and the
Bond, Yield Plus, Matrix, Index, Small Cap, Growth and Income, Intermediate,
Emerging Markets and Active International Funds will invest no more than 15% of
each of their net assets, in illiquid securities or securities that are not
readily marketable, including repurchase agreements and time deposits of more
than seven days' duration. The absence of a regular trading market for illiquid
securities imposes additional risks on investments in these securities. Illiquid
securities may be difficult to value and may often be disposed of only after
considerable expense and delay.

Variable Amount Master Demand Notes (all Funds except Tax Free,
Emerging Markets and Active International). Variable amount master demand notes
are unsecured obligations that are redeemable upon demand and are typically
unrated. These instruments are issued pursuant to written agreements between
their issuers and holders. The agreements permit the holders to increase
(subject to an agreed maximum) and the holders and issuers to decrease the
principal amount of the notes, and specify that the rate of interest payable on
the principal fluctuates according to an agreed formula.

Asset-Backed Securities (Money Market, Bond, Yield Plus and
Intermediate only). Asset-backed securities represent undivided fractional
interests in pools of instruments, such as consumer loans, and are similar in
structure to mortgage-related pass-through securities described below. Payments
of principal and interest are passed through to holders of the securities and
are typically supported by some form of credit enhancement, such as a letter of
credit, surety bond, limited guarantee by another entity or by priority to
certain of the borrower's other securities. The degree of credit enhancement
varies, generally applying only until exhausted and covering only a fraction of
the security's par value. If the credit enhancement of an asset-backed security
held by a Fund

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<PAGE>

has been exhausted, and if any required payments of principal and interest are
not made with respect to the underlying loans, a Fund may experience loss or
delay in receiving payment and a decrease in the value of the security. The
value of asset-backed securities is affected by changes in the market's
perception of the asset backing the security, changes in the creditworthiness of
the servicing agent for the instrument pool, the originator of the instruments
or the financial institution providing any credit enhancement, and the
expenditure of any portion of any credit enhancement. The risks of investing in
asset-backed securities are ultimately dependent upon payment of the underlying
instruments by the obligors, and a Fund would generally have no recourse against
the obligee of the instruments in the event of default by an obligor. The
underlying instruments are subject to prepayments.

Mortgage-Related Pass-Through Securities (Money Market, Government,
Bond, Yield Plus and Intermediate only). The Funds may invest in
mortgage-related securities, including Government National Mortgage Association
("GNMA") Certificates ("Ginnie Maes"), Federal Home Loan Mortgage Corporation
("FHLMC") Mortgage Participation Certificates ("Freddie Macs") and Federal
National Mortgage Association ("FNMA") Guaranteed Mortgage Pass-Through
Certificates ("Fannie Maes"). Mortgage pass-through certificates are
mortgage-backed securities representing undivided fractional interests in pools
of mortgage-backed loans. These loans are made by mortgage bankers, commercial
banks, savings and loan associations and other lenders. Ginnie Maes are
guaranteed by the full faith and credit of the US Government, but Freddie Macs
and Fannie Maes are not.

Zero Coupon Securities (Money Market, Government, Tax Free, Bond, Yield
Plus and Intermediate only). Zero coupon securities are notes, bonds and
debentures that: (1) do not pay current interest and are issued at a substantial
discount from par value; (2) have been stripped of their unmatured interest
coupons and receipts; or (3) pay no interest until a stated date one or more
years into the future. These securities also include certificates representing
interests in such stripped coupons and receipts. Generally, changes in interest
rates will have a greater impact on the market value of a zero coupon security
than on the market value of comparable securities that pay interest periodically
during the life of the instrument.

Variable and Floating Rate Securities (Money Market, Government, Tax
Free, Bond, Yield Plus and Intermediate only). A floating rate security provides
for the automatic adjustment of its interest rate whenever a specified interest
rate changes. A variable rate security provides for the automatic establishment
of a new interest rate on set dates. Interest rates on these securities are
ordinarily tied to, and are a percentage of, a widely recognized interest rate,
such as the yield on 90-day US Treasury bills or the prime rate of a specified
bank. These rates may change as often as twice daily. Generally, changes in
interest rates will have a smaller effect on the market value of variable and
floating rate securities than on the market value of comparable fixed income
obligations. Thus, investing in variable and floating rate securities generally
allows less opportunity for capital appreciation and depreciation than investing
in comparable fixed income securities.

Eurodollar Certificates of Deposit (ECDs), Eurodollar Time Deposits
(ETDs) and Yankee Certificates of Deposit (YCDs) (Money Market, Bond, Yield Plus
and Intermediate only). ECDs are US dollar denominated certificates of deposit
issued by foreign branches of domestic banks. ETDs are US dollar denominated
deposits in foreign branches of US banks and foreign banks. YCDs are US dollar
denominated certificates of deposit issued by US branches of foreign banks.

Different risks than those associated with the obligations of domestic
banks may exist for ECDs, ETDs and YCDs because the banks issuing these
instruments, or their domestic or foreign branches, are not necessarily subject
to the same regulatory requirements that apply to domestic banks, such as loan
limitations, examinations and reserve, accounting, auditing, recordkeeping and
public reporting requirements.

Securities Lending (all Funds except Emerging Markets). The Funds may
lend portfolio securities with a value of up to 33-1/3% of each of their total
assets. Such loans may be terminated at any time. A Fund will receive cash or US
Treasury bills, notes and bonds in an amount equal to at least 100% of the
current market value (on a daily marked-to-market basis) of the loaned
securities plus accrued interest. In a loan transaction, as

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<PAGE>

compensation for lending it securities, a Fund will receive a portion of the
dividends or interest accrued on the securities held as collateral or, in the
case of cash collateral, a portion of the income from the investment of such
cash. In addition, a Fund will receive the amount of all dividends, interest and
other distributions on the loaned securities. However, the borrower has the
right to vote the loaned securities. A Fund will call loans to vote proxies if a
material issue affecting the investment is to be voted upon. Should the borrower
of the securities fail financially, a Fund may experience delays in recovering
the securities or exercising its rights in the collateral. Loans are made only
to borrowers that are deemed by Adviser to be of good financial standing. In a
loan transaction, a Fund will also bear the risk of any decline in value of
securities acquired with cash collateral. A Fund will minimize this risk by
limiting the investment of cash collateral to high quality instruments of short
maturity.

Futures Contracts and Options on Futures (all Funds except Money
Market, Government and Tax Free). For hedging purposes, including protecting the
price or interest rate of a security that a Fund intends to buy, a Fund may
enter into futures contracts that relate to securities in which it may directly
invest and indices comprised of such securities and may purchase and write call
and put options on such contracts.

A financial futures contract is a contract to buy or sell a specified
quantity of financial instruments such as US Treasury bills, notes and bonds,
commercial paper and bank certificates of deposit or the cash value of a
financial instrument index at a specified future date at a price agreed upon
when the contract is made. Under such contracts no delivery of the actual
securities making up the index takes place. Rather, upon expiration of the
contract, settlement is made by exchanging cash in an amount equal to the
difference between the contract price and the closing price of the index at
expiration, net of variation margin previously paid.

Substantially all futures contracts are closed out before settlement
date or called for cash settlement. A futures contract is closed out by buying
or selling an identical offsetting futures contract. Upon entering into a
futures contract, a Fund is required to deposit an initial margin with Custodian
for the benefit of the futures broker. The initial margin serves as a "good
faith" deposit that a Fund will honor its futures commitments. Subsequent
payments (called "variation margin") to and from the broker are made on a daily
basis as the price of the underlying investment fluctuates.

Options on futures contracts give the purchaser the right to assume a
position at a specified price in a futures contract at any time before
expiration of the option contract.

When trading futures contracts, a Fund will not commit more than 5% of
the market value of its total assets to initial margin deposits on futures and
premiums paid for options on futures.

Options on Securities and Securities Indices (all Funds except Money Market,
Government and Tax Free). The Funds may write and purchase covered put and call
options on securities in which it may directly invest. Option transactions of a
Fund will be conducted so that the total amount paid on premiums for all put and
call options outstanding will not exceed 5% of the value of the Fund's total
assets. Further, a Fund will not write a put or call option or combination
thereof if, as a result, the aggregate value of all securities or collateral
used to cover its outstanding options would exceed 25% of the value of the
Fund's total assets.

The Funds may purchase or sell options on securities indices that are
comprised of securities in which the Funds may directly invest, subject to the
limitations set forth above and provided such options are traded on a national
securities exchange or in the over-the-counter market. Options on securities
indices are similar to options on securities except there is no transfer of a
security and settlement is in cash. A call option on a securities index grants
the purchaser of the call, for a premium paid to the seller, the right to
receive in cash an amount equal to the difference between the closing value of
the index and the exercise price of the option times a multiplier established by
the exchange upon which the option is traded.

Cash Reserves (all Funds except Money Market, Government and Tax Free).
For defensive purposes, the Funds may temporarily invest, without limitation, in
high quality short-term fixed income securities.

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<PAGE>

These securities include obligations issued or guaranteed as to principal and
interest by the US Government, its agencies or instrumentalities and repurchase
agreements collateralized by these obligations, commercial paper, bank
certificates of deposit, bankers' acceptances and time deposits. When using this
strategy, the weighted average maturity of securities held by a Fund will
decline, and thereby possibly cause its yield to decline as well.

American Depository Receipts (ADRs) (Index, Matrix, Small Cap Growth
and Income, Emerging Markets and Active International only) and European
Depository Receipts (EDRs) (Emerging Markets and Active International only). The
Funds may invest in securities of foreign issuers in the form of ADRs, EDRs and
similar instruments, or other securities convertible into securities of eligible
issuers. These securities may not necessarily be denominated in the same
currency as the securities for which they may be exchanged. Generally, ADRs, in
registered form, are designed for use in the US securities markets, and EDRs are
issued for trading primarily in European securities markets. ADRs are receipts
typically issued by a US bank or trust company evidencing ownership of the
underlying securities. ADRs represent the right to receive securities of foreign
issuers deposited in a domestic bank or a correspondent bank. ADRs do not
eliminate the risk inherent in investing in the securities of foreign issuers.
In general, there is a large liquid market in the US for many ADRs. The
information available for ADRs is subject to the accounting, auditing and
financial reporting standards of the domestic market or exchange on which they
are traded, which standards are more uniform and more exacting than those to
which many foreign issuers are subject. For purposes of a Fund's investment
policies, a Fund's investments in ADRs, EDRs and similar instruments will be
deemed to be investments in the equity securities representing securities of
foreign issuers into which they may be converted.

Warrants (Small Cap, Growth and Income, Emerging Markets and Active
International only). The Funds may invest in warrants which entitle the holder
to buy equity securities at a specific price for a specific period of time.
Warrants may be considered more speculative than certain other types of
investments in that they do not entitle a holder to dividends or voting rights
with respect to the securities which may be purchased nor do they represent any
rights in the assets of the issuing company. Also, the value of the warrant does
not necessarily change with the value of the underlying securities and a warrant
ceases to have value if it is not exercised prior to the expiration date. A Fund
will invest no more than 5% of the value of its net assets in warrants, or more
than 2% in warrants which are not listed on the New York or American Stock
Exchanges.

Convertible Securities (Growth and Income, Small Cap, Emerging Markets
and Active International only). The Funds may invest in convertible securities
of foreign or domestic issues. A convertible security is a fixed-income security
(a bond or preferred stock) which may be converted at a stated price within a
specified period of time into a certain quantity of the common stock of the same
or a different issuer. Convertible securities are senior to common stocks in a
corporation's capital structure but are usually subordinated to similar
nonconvertible securities. Convertible securities provide, through their
conversion feature, an opportunity to participate in capital appreciation
resulting from a market price advance in a convertible security's underlying
common stock. The price of a convertible security is influenced by the market
value of the underlying common stock and tends to increase as the market value
of the underlying stock rises, whereas it tends to decrease as the market value
of the underlying stock declines.

Interest Rate Swaps (Bond, Yield Plus and Intermediate only). The Funds
may enter into interest rate swap transactions with respect to any security it
is entitled to hold. Interest rate swaps involve the exchange by a Fund with
another party of their respective rights to receive interest, e.g., an exchange
of floating rate payments for fixed rate payments. The Funds expect to enter
into these transactions primarily to preserve a return or spread on a particular
investment or portion of its portfolio or to protect against any increase in the
price of securities it anticipates purchasing at a later date. The Funds intend
to use these transactions as a hedge and not as a speculative investment.

Mortgage-Backed Security Rolls (Bond and Intermediate only). The Funds
may enter into "forward roll" transactions with respect to mortgage-backed
securities issued by GNMA, FNMA or FHLMC. In a forward roll transaction, a Fund
will sell a mortgage security to a dealer or other permitted entity and
simultaneously agree to repurchase a similar security from the institution at a
later date at an agreed upon price. The mortgage

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<PAGE>

securities that are repurchased will bear the same interest rate as those sold,
but generally will be collateralized by different pools of mortgages with
different prepayment histories than those sold. There are two primary risks
associated with the roll market for mortgage-backed securities. First, the value
and safety of the roll depends entirely upon the counterparty's ability to
redeliver the security at the termination of the roll. Therefore, the
counterparty to a roll must meet the same credit criteria as any existing
repurchase counterparty. Second, the security which is redelivered at the end of
the roll period must be substantially the same as the initial security, i.e., it
must have the same coupon, be issued by the same agency and be of the same type,
have the same original stated term to maturity, be priced to result in similar
market yields and must be "good delivery." Within these parameters, however, the
actual pools that are redelivered could be less desirable than those originally
rolled, especially with respect to prepayment characteristics.

Preferred Stocks (All Funds except Money Market, Government, Tax Free
and Yield Plus). Preferred stock, unlike common stock, generally confers a
stated dividend rate payable from the corporation's earnings. Such preferred
stock dividends may be cumulative or noncumulative, fixed, participating,
auction rate or other. If interest rates rise, a fixed dividend on preferred
stocks may be less attractive, causing the price of preferred stocks to decline
either absolutely or relative to alternative investments. Preferred stock may
have mandatory sinking fund provisions, as well as provisions that allow the
issuer to call or redeem the stock. The rights to payment of preferred stocks
are generally subordinate to rights associated with a corporation's debt
securities.

Municipal Securities (Tax Free only). The Fund may purchase municipal
securities issued by or on behalf of public authorities to obtain funds to be
used for various public purposes, including general purpose financing for state
and local governments, refunding outstanding obligations, and financings for
specific projects or public facilities. General obligations are backed by the
full faith and credit of the issuer. These securities include tax anticipation
notes, bond anticipation notes and general obligation bonds. Revenue obligations
are backed by the revenues generated from a specific project or facility and
include project revenue bonds, such as private activity and industrial
development bonds. Private activity and industrial development bonds are
dependent on the ability of the facility's user to meet its financial
obligations and the value of any real or personal property pledged as security
for such payment. Private activity and industrial development bonds, although
issued by industrial development authorities, may be backed only by the assets
of the non-governmental users. Municipal notes are short-term instruments which
are issued and sold in anticipation of a bond sale, collection of taxes or
receipt of other revenues.

Some municipal securities are insured by private insurance companies,
while others may be supported by letters of credit furnished by domestic or
foreign banks. In determining the credit quality of insured or letter of credit
backed securities, the Adviser reviews the financial condition and
creditworthiness of such parties including insurance companies, banks and
corporations.

Municipal obligations involve possible risks, including being affected
by economic, business and political developments and being subject to provisions
of litigation, bankruptcy and other laws affecting the rights and remedies of
creditors. Future laws may be effected extending the time for payment of
principal and/or interest, or limiting the rights of municipalities to levy
taxes. For instance, legislative proposals are introduced from time to time to
restrict or eliminate the federal income tax exemption for municipal obligations
interest. If such legislation is adopted, the Board of Trustees will reevaluate
the fund's investment objective and may submit possible changes in the structure
of the Fund to its shareholders.

Municipal Leases (Tax Free only). The Fund may purchase participation
interests in municipal obligations, including municipal lease/purchase
agreements. Municipal leases are an undivided interest in a portion of an
obligation in the form of a lease or installment purchase issued by a state or
local government to acquire equipment or facilities. These instruments may have
fixed, floating or variable rates of interest, with remaining maturities of 13
months or less. Municipal leases may be backed by an irrevocable letter of
credit or guarantee of a bank, or the payment obligation otherwise may be
collateralized by US Government securities.

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<PAGE>

Certain participation interests may permit the Fund to demand payment on not
more than seven days' notice, for all or any part of the Fund's interest, plus
accrued interest.

Municipal leases frequently have special risks not normally associated
with general obligation or revenue bonds. Some leases or contracts include
"non-appropriation" clauses, which provide that the governmental issuer has no
obligation to make future payments under the lease or contract unless money is
appropriated for such purpose by the appropriate legislative body on a yearly or
other periodic basis. To reduce these risks, the Fund will only purchase
municipal leases subject to a non-appropriation clause when the payment of
principal and accrued interest is backed by a letter of credit or guarantee of a
bank.

Whether a municipal lease agreement will be considered illiquid for the
purpose of the Fund's restriction on investments in illiquid securities will be
determined by officers of the Investment Company in accordance with procedures
established by the Board of Trustees.

Tender Option Bonds (Tax Free only). A tender option is a municipal
obligation (generally held pursuant to a custodial arrangement) having a
relatively long maturity and bearing interest at a fixed rate substantially
higher than prevailing short-term tax exempt rates, that has been coupled with
the agreement of a third party, such as a bank, broker-dealer or other financial
institution, pursuant to which such institution grants the security holders the
option, at periodic intervals, to tender their securities to the institution and
receive the face value thereof. As consideration for providing the option, the
financial institution receives periodic fees equal to the difference between the
municipal obligation's fixed coupon rate and the rate, as determined by a
remarketing or similar agent at or near the commencement of such period, that
would cause the securities, coupled with the tender option, to trade at par on
the date of such determination. Thus, after payment of this fee, the security
holder effectively holds a demand obligation that bears interest at the
prevailing short-term tax exempt rate. Subject to applicable regulatory
requirements, the Fund may buy tender option bonds if the agreement gives the
Fund the right to tender the bond to its sponsor no less frequently than once
every 397 days. The Adviser will consider on an ongoing basis the
creditworthiness of the issuer of the underlying obligation, any custodian and
the third party provider of the tender option. In certain instances and for
certain tender option bonds, the option may be terminable in the event of a
default in payment of principal or interest on the underlying municipal
obligation and for other reasons.

Standby Commitments (Tax Free only). The Fund's investments may include
standby commitments, which are rights to resell municipal securities at
specified periods prior to their maturity dates to the seller or to some third
party at an agreed upon price or yield. Standby commitments may involve certain
expenses and risks, including the inability of the issuer of the commitment to
pay for the securities at the time the commitment is exercised,
non-marketability of the commitment, and difference between the duration of the
commitment and the maturity of the underlying security. The Fund will limit
standby commitment transactions to institutions which the Adviser believes
present minimal credit risk.

Tax Exempt Commercial Paper (Tax Free only). Tax exempt commercial
paper is a short-term obligation with a stated maturity of 365 days or less. It
is typically issued to finance seasonal working capital needs or as short-term
financing in anticipation of longer term financing. Each instrument may be
backed only by the credit of the issuer or may be backed by some form of credit
enhancement, typically in the form of a guarantee by a commercial bank.
Commercial paper backed by guarantees of foreign banks may involve additional
risk due to the difficulty of obtaining and enforcing judgments against such
banks and the generally less restrictive regulations to which such banks are
subject. The Fund will only invest in commercial paper rated at the time of
purchase not less than Prime-1 by Moody's, A-1 by S&P or F-1 by Fitch's Investor
Service ("Fitch").

Foreign Government Securities (Emerging Markets and Active
International only). Foreign government securities which the Funds may invest in
generally consist of obligations issued or backed by the national, state or
provincial government or similar political subdivisions or central banks in
foreign countries. Foreign government securities also include debt obligations
of supranational entities, which include international organizations designated
or backed by governmental entities to promote economic reconstruction or
development,

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<PAGE>

international banking institutions and related government agencies. These
securities also include debt securities of "quasi-government agencies" and debt
securities denominated in multinational currency units of an issuer. Neither
Fund will invest a material percentage of its assets in sovereign debt.

Foreign Currency Transactions (Bond, Yield Plus and Intermediate only).
The Funds may engage in foreign currency transactions as described below. The US
dollar value of assets held by a Fund may be affected favorably or unfavorably
by changes in foreign currency exchange rates and exchange control regulations,
and a Fund may incur costs in connection with conversions between various
currencies. The Funds will engage in foreign currency exchange transactions
either on a spot (i.e., cash) basis at the spot rate prevailing in the foreign
currency exchange market, through forward and futures contracts to purchase or
sell foreign currencies or by purchasing and writing put and call options on
foreign currencies. The Funds may purchase and write these contracts for the
purpose of protecting against declines in the dollar value of foreign securities
it holds and against increases in the dollar cost of foreign securities it plans
to acquire.

A forward foreign currency exchange contract is an obligation to
purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date upon which the parties enter the contract, at a
price set at the time the contract is made. These contracts are traded directly
between currency traders (usually large commercial banks) and their customers.
Foreign currency futures contracts are traded on exchanges and are subject to
procedures and regulations applicable to other futures contracts. Forward
foreign currency exchange contracts and foreign currency futures contracts may
protect a Fund from uncertainty in foreign currency exchange rates, and may also
limit potential gains from favorable changes in such rates.

Put and call options on foreign currencies are traded on securities and
commodities exchanges, in the over-the-counter market, and privately among major
recognized dealers in such options. The Funds may purchase and write these
options for the purpose of protecting against declines in the dollar value of
foreign securities it holds and against increases in the dollar cost of foreign
securities it plans to acquire. If a rise is anticipated in the dollar value of
a foreign currency in which securities to be acquired are denominated, the
increased cost of such securities may be offset in whole or in part by
purchasing calls or writing puts on that foreign currency. If a decline in the
dollar value of a foreign currency is anticipated, the decline in value of
portfolio securities denominated in that currency may be in whole or in part by
writing calls or purchasing puts on that foreign currency. However, certain
currency rate fluctuations would cause the option to expire unexercised, and
thereby cause a Fund to lose the premium it paid and its transaction costs.

Foreign Currency (Emerging Markets and Active International only). The
Funds have authority to deal in forward foreign currency exchange contracts
(including those involving the US dollar) as a hedge against possible variations
in the exchange rate between various currencies. This is accomplished through
individually negotiated contractual agreements to purchase or to sell a
specified currency at a specified future date and price set at the time of the
contract. A Fund's dealings in forward foreign currency exchange contracts may
be with respect to a specific purchase or sale of a security, or with respect to
its portfolio positions generally. A Fund is not obligated to hedge its
portfolio positions and will enter into such transactions only to the extent, if
any, deemed appropriate by Adviser. Forward commitments generally provide a
cost-effective way of defending against losses due to foreign currency
depreciation in which the securities are denominated.

In addition to the forward exchange contracts, the Emerging Markets and
Active International Funds may also purchase or sell listed or OTC foreign
currency options and foreign currency futures and related options as a short or
long hedge against possible variations in foreign currency exchange rates. The
cost to a Fund of engaging in foreign currency transactions varies with such
factors as the currencies involved, the length of the contract period and the
market conditions then prevailing. Transactions involving forward exchange
contracts and futures contracts and options thereon are subject to certain
risks. Put and call options on currency may also be used to hedge against
fluctuation in currency notes when forward contracts and/or futures are deemed
to be not cost effective. Options will not be used to provide leverage in any
way. See "Risk Factors -- Futures Contracts and Options on Futures" for further
discussion of the risks associated with such investment techniques.

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The Funds may not hedge their positions with respect to the currency of
a particular country to an extent greater than the aggregate market value (at
the time of making such sale) of the securities held in its portfolio
denominated or quoted in that particular foreign currency. Neither Fund will
enter into a position hedging commitment if, as a result thereof, it would have
more than 10% of the value of its assets committed to such contracts. Neither
Fund will enter into a forward contract with a term of more than one year.

Special Situations (Emerging Markets only). The Fund and the Adviser
believe that carefully selected investments in joint ventures, cooperatives,
partnerships, private placements, unlisted securities, and other similar
vehicles (collectively, "special situations") could enhance the Fund's capital
appreciation potential. These investments are generally illiquid. The Fund will
invest no more than 15% of its net assets in all types of illiquid securities or
securities that are not readily marketable, including special situations. The
Fund is not likely to hold illiquid securities initially. However, due to
foreign ownership restrictions, the Fund may invest periodically in illiquid
securities which are or become illiquid due to restrictions on foreign ownership
imposed by foreign governments. Said securities may be more difficult to price
and trade. The absence of a regular trading market for illiquid securities
imposes additional risks on investment in these securities. Illiquid securities
may be difficult to value and may often be disposed of only after considerable
expense and delay.

Purchase of Other Funds (all Funds). To the extent permitted under the
1940 Act and exemptive rules and orders thereunder, each Fund may seek to
achieve its investment objective by investing solely in the shares of other
investment companies that have substantially similar investment objectives and
policies.

The S&P 500 Index. The S&P 500 Index is composed of 500 common stocks
which are chosen by Standard & Poor's Corporation ("Standard & Poor's") to best
capture the price performance of a large cross-section of the US publicly traded
stock market. The Index is structured to approximate the general distribution of
industries in the US economy. The inclusion of a stock in the S&P 500 Index in
no way implies that Standard & Poor's believes the stock to be an attractive
investment, nor is Standard & Poor's a sponsor or in any way affiliated with the
Fund. The 500 securities, most of which trade on the New York Stock Exchange,
represent approximately 75% of the market value of all US common stocks. Each
stock in the S&P 500 Index is weighted by its market capitalization. That is,
each security is weighted by its total market value relative to the total market
values of all the securities in the Index. Component stocks included in the S&P
500 Index are chosen with the aim of achieving a distribution at the index level
representative of the various components of the US GNP and therefore do not
represent the 500 largest companies. Aggregate market value and trading activity
are also considered in the selection process. A limited percentage of the Index
may include Canadian securities. No other foreign securities are eligible for
inclusion.

The Lehman Brothers Aggregate Bond Index. The Bond Fund will measure
its performance against the Lehman Brothers Aggregate Bond Index (the "LBAB
Index"). The Fund also intends to maintain an average maturity and duration
similar to that of the LBAB Index. The duration of the LBAB Index as of August
31, 1996 was 4.77 years. The LBAB Index is made up of the Government/Corporate
Bond Index, the Mortgage-Backed Securities Index and the Asset-Backed Index. The
Government/Corporate Bond Index includes the Government and Corporate Bond
Indices. The LBAB Index includes fixed rate debt issues rated investment grade
or higher by Moody's, S&P or Fitch, in that order. All in the LBAB Index issues
have at least one year to maturity and an outstanding par value of at least $100
million.

The Russell 2000(R) Index. The Russell 2000 Index consists of the
smallest 2,000 companies in the Russell 3000(R) Index, representing
approximately 11% of the Russell 3000 Index total market capitalization. The

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Russell 3000 Index is composed of 3,000 large US companies, as determined by
market capitalization, representing approximately 98% of the total US equity
market. The purpose of the Russell 2000 Index is to provide a comprehensive
representation of the investable US small-capitalization equity market. The
average market capitalization is $421 million.

The Lehman Brothers Intermediate Government/Corporate Bond Index
("LBIGC Index"). The Intermediate Fund will measure its performance against, and
also intends to maintain an average maturity and duration similar to that of,
the LBIGC Index. The LBIGC Index is a subset of the Lehman Brothers
Government/Corporate Bond Index and it comprises all securities that appear in
this Index limited to those with maturities ranging from one to ten years only.
The LBIGC Index includes the Government and Corporate Bond Indices. The LBIGC
Index includes fixed rate debt issues rated investment-grade or higher by
Moody's, S&P or Fitch, in that order. All issues in the Index have at least one
year to maturity and an outstanding par value of at least $100 million.

The MSCI EAFE Index. The MSCI EAFE Index is an arithmetic, market
value-weighted average of the performance of over 1,000 securities listed on the
stock exchanges of the following countries: Australia, Austria, Belgium,
Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Malaysia,
Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland and the
United Kingdom. These are the countries listed in the MSCI EAFE Index as of the
date of this Prospectus. Countries may be added to or deleted from the list.

RISK FACTORS

Foreign Investments. Investment in securities of non-US issuers and
securities denominated in foreign currencies involve investment risks that are
different from those of US issuers, including: uncertain future political,
diplomatic and economic developments; possible imposition of exchange controls
or other governmental restrictions; less publicly available information; lack of
uniform accounting, auditing and financial reporting standards, practices and
requirements; lower trading volume, less liquidity and more volatility for
securities; less government regulation of securities exchanges, brokers and
listed companies; political or social instability; and the possibility of
expropriation or confiscatory taxation, each of which could adversely affect
investments in such securities. ADRs are subject to all of the above risks,
except the imposition of exchange controls, and currency fluctuations during the
settlement period.

Foreign Securities. Investors should consider carefully the substantial
risks involved in securities of companies and governments of foreign nations.
There may be less publicly available information about foreign companies
comparable to the reports and ratings published regarding US companies. Foreign
companies are not generally subject to uniform accounting, auditing and
financial reporting standards, and auditing practices and requirements may not
be comparable to those applicable to US companies. Many foreign markets have
substantially less volume than either the established domestic securities
exchanges or the OTC markets. Securities of some foreign companies are less
liquid and more volatile than securities of comparable US companies. Commission
rates in foreign countries, which may be fixed rather than subject to
negotiation as in the US, are likely to be higher. In many foreign countries
there is less government supervision and regulation of securities exchanges,
brokers and listed companies than in the US, and capital requirements for
brokerage firms are generally lower. Settlement of transactions in foreign
securities may, in some instances, be subject to delays and related
administrative uncertainties.

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<PAGE>

Emerging Markets. Investments in companies domiciled in emerging market
countries may be subject to additional risks. These risks include: (1) Volatile
social, political and economic conditions can cause investments in emerging or
developing markets exposure to economic structures that are generally less
diverse and mature. Emerging market countries can have political systems which
can be expected to have less stability than those of more developed countries.
The possibility may exist that recent favorable economic developments in certain
emerging market countries may be suddenly slowed or reversed by unanticipated
political or social events in such countries. Moreover, the economies of
individual emerging market countries may differ favorably or unfavorably from
the US economy in such respects as the rate of growth in gross domestic product,
the rate of inflation, capital reinvestment, resource self-sufficiency and
balance of payments position. (2) The small current size of the markets for such
securities and the currently low or nonexistent volume of trading can result in
a lack of liquidity and in greater price volatility. Until recently, there has
been an absence of a capital market structure or market-oriented economy in
certain emerging market countries. Because the Fund's securities will generally
be denominated in foreign currencies, the value of such securities to the Fund
will be affected by changes in currency exchange rates and in exchange control
regulations. A change in the value of a foreign currency against the US dollar
will result in a corresponding change in the US dollar value of the Fund's
securities. In addition, some emerging market countries may have fixed or
managed currencies which are not free-floating against the US dollar. Further,
certain emerging market currencies may not be internationally traded. Certain of
these currencies have experienced a steady devaluation relative to the US
dollar. Many emerging markets countries have experienced substantial, and in
some periods extremely high, rates of inflation for many years. Inflation and
rapid fluctuations in inflation rates have had, and may continue to have,
negative effects on the economies and securities markets of certain emerging
market countries. (3) The existence of national policies may restrict the Fund's
investment opportunities and may include restrictions on investment in issuers
or industries deemed sensitive to national interests. (4) Some emerging markets
countries may not have developed structures governing private or foreign
investment and may not allow for judicial redress for injury to private
property.

Foreign Currency. A Fund may be affected either favorably or
unfavorably by fluctuations in the relative rates of exchange between the
currencies of different nations, exchange control regulations and indigenous
economic and political developments. The Fund endeavors to buy and sell foreign
currencies on favorable terms. Such price spread on currency exchange (to cover
service charges) may be incurred, particularly when the Fund changes investments
from one country to another or when proceeds from the sale of shares in US
dollars are used for the purchase of securities in foreign countries. Also, some
countries may adopt policies which would prevent the Fund from repatriating
invested capital and dividends, withhold portions of interest and dividends at
the source, or impose other taxes, with respect to the Fund's investments in
securities of issuers of that country. There also is the possibility of
expropriation, nationalization, confiscatory or other taxation, foreign exchange
controls (which may include suspension of the ability to transfer currency from
a given country), default in foreign government securities, political or social
instability, or diplomatic developments that could adversely affect investments
in securities of issuers in those nations.

PORTFOLIO MATURITY AND TURNOVER

Money Market, Government and Tax Free Funds. These Funds must limit
investments to securities with remaining maturities of 397 days or less (as
calculated in accordance with Rule 2a-7 of the 1940 Act) and must maintain a
dollar-weighted average maturity of 90 days or less. These Funds will normally
hold portfolio instruments to maturity, but may dispose of them prior to
maturity if the Adviser finds it advantageous.

Index Fund. Ordinarily, securities will be sold from the Fund only to
reflect certain changes in its benchmark index (including mergers or changes in
the composition of the index) or to accommodate cash flows into and out of the
Fund while maintaining the similarity of the Fund to the benchmark index.
Accordingly, the turnover rate for the Fund is not expected to exceed 50%, a
generally lower turnover rate than for most actively managed investment
companies.

Bond, Yield Plus and Intermediate Funds. Because these Funds will
actively trade to benefit from short-term yield disparities among different
issues of fixed-income securities, or otherwise to increase income, the

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Funds may be subject to a greater degree of portfolio turnover than might be
expected from investment companies which invest substantially all of their
assets on a long-term basis. Portfolio turnover rates cannot be predicted, but
it is anticipated that the Funds will generally not exceed the following rates
(excluding securities having a maturity of one year or less):

(bullet) Bond --350% (This higher than average turnover rate is not
expected to materially affect the Fund's performance.)
(bullet) Yield Plus--100%
(bullet) Intermediate--250%

Matrix, Small Cap, Growth and Income, Emerging Markets and Active
International Funds. Portfolio turnover rates cannot be predicted, but it is
anticipated that these Funds will generally not exceed the following rates:

(bullet) Matrix--200%
(bullet) Small Cap--200%
(bullet) Growth and Income--80%
(bullet) Emerging Markets--50%
(bullet) Active International--80%
A high turnover rate (over 100%) will: (1) increase transaction
expenses which could adversely affect a Fund's performance; and (2) result in
increased brokerage commissions custodian fees and other transaction costs, and
the possibility of realized capital gains or losses.

The Adviser's sell discipline for the Emerging Markets and Active
International Funds' investment in emerging market companies is based on the
premise of a long-term investment horizon, however, sudden changes in valuation
levels arising from, for example, new macroeconomic policies, political
developments, and industry conditions could change the assumed time horizon.
Some countries impose restrictions on repatriation of capital and/or dividends
which would lengthen the Adviser's assumed time horizon in those countries.
Liquidity, volatility, and overall risk of a position are other factors
considered by the Adviser in determining the appropriate investment horizon.
Therefore, the Emerging Markets and Active International Funds may dispose of
securities without regard to the time they have been held when such action, for
defensive or other purposes, appears advisable.

The Funds may effect portfolio transactions with or through State
Street Brokerage Services, Inc., a affiliate of the Adviser, when the Adviser
determines that the Funds will receive competitive execution, price and
commissions.

DIVIDENDS AND DISTRIBUTIONS

The Board of Trustees intends to declare and pay dividends as noted in
the table below. Dividends will be paid from net investment income.

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- --------------------------- ----------------- ---------------------------------
Fund Dividends Dividends Paid
Declared
- --------------------------- ----------------- ---------------------------------
Money Market Daily Last business day of each month
- --------------------------- ----------------- ---------------------------------
Government Daily Last business day of each month
- --------------------------- ----------------- ---------------------------------
Tax Free Daily Last business day of each month
- --------------------------- ----------------- ---------------------------------
Yield Plus Daily Last business day of each month
- --------------------------- ----------------- ---------------------------------
Bond Quarterly Quarterly
- --------------------------- ----------------- ---------------------------------
Matrix Quarterly Quarterly
- --------------------------- ----------------- ---------------------------------
Index Quarterly Quarterly
- --------------------------- ----------------- ---------------------------------
Growth and Income Quarterly Quarterly
- --------------------------- ----------------- ---------------------------------
Intermediate Quarterly Quarterly
- --------------------------- ----------------- ---------------------------------
Small Cap Annually Annually
- --------------------------- ----------------- ---------------------------------
Emerging Markets Annually Annually
- --------------------------- ----------------- ---------------------------------
Active International Annually Annually
- --------------------------- ----------------- ---------------------------------

The Board of Trustees intends to declare distributions annually,
generally in mid-October. Distributions will be declared from net short- and
long-term capital gains, if any. It is intended that an additional distribution
may be declared and paid in December if required for the Funds to avoid the
imposition of a 4% federal excise tax on undistributed capital gains. The Money
Market, Government and Tax Free Funds do not expect any material long-term
capital gains or losses.

Dividends declared in October, November or December and payable to
shareholders of record in such months will be deemed for Federal income tax
purposes to have been paid by the Fund and received by shareholders on December
31 of that year if the dividend is paid prior to February 1 of the following
year.

Income dividend and capital gain distributions will be reinvested in
additional shares at their net asset value on the record date unless the
shareholder has elected to receive them in cash. Such election may be made by
giving 30 days' written notice to the Transfer Agent. If it is determined that
the US Postal Service cannot properly deliver Fund mailings to an investor, the
Fund will terminate the investor's election to receive dividends and other
distributions in cash. Thereafter, subsequent dividends and other distributions
will be automatically reinvested in additional shares of the relevant Fund until
the investor notifies the SSgA Funds in writing of the correct address and
request in writing that the election to receive dividends and other
distributions in cash be reinstated.

Except for the Money Market, Government and Tax Free Funds, any
dividend or capital gain distribution paid by the Fund shortly after a purchase
of shares will reduce the per share net asset value of the Fund by the amount of
the dividend or distribution. In effect, the payment will represent a return of
capital to the shareholder. However, the shareholder will be subject to taxes
with respect to such dividend or distribution.

Distribution Option. Investors can choose from four different
distribution options as indicated on the account Application:

(bullet) Reinvestment Option--Income dividend and capital gain
distributions will be automatically reinvested in additional
shares of a Fund. If the investor does not indicate a choice
on the Application, this option will be automatically
assigned.

(bullet) Income-Earned Option--Capital gain distributions will be
automatically reinvested, but a check or wire will be sent for
each income dividend distribution.

(bullet) Cash Option--A check or wire will be sent for each income
dividend and capital gain distribution.

(bullet) Direct Dividends Option--Income dividend and capital gain
distributions will be automatically invested in another
identically registered SSgA Fund.

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<PAGE>

Dividends which are declared daily and paid monthly will wire (if that
option is elected) the proceeds to a pre-designated bank on the first business
day of the following month in which the dividend is payable. All other
distributions will be sent to a pre-designated bank by the Automatic Clearing
House ("ACH") on the payable date.

TAXES

The following discussion is only a summary of certain federal income
tax issues generally affecting the Funds and their shareholders. Circumstances
among investors may vary and each investor is encouraged to discuss investment
in a Fund with the investor's tax adviser.

Each Fund intends to qualify as a regulated investment company ("RIC")
under Subchapter M of the Internal Revenue Code, as amended (the "Code"). As a
RIC, no Fund will be subject to federal income taxes to the extent it
distributes its net investment income and capital gain net income (capital gains
in excess of capital losses) to shareholders. The Board intends to distribute
each year substantially all of the Funds' net investment income and capital gain
net income. In addition, the Tax Free Fund intends to continue to qualify to pay
"exempt-interest" dividends, which requires, among other things, that at the
close of each quarter of its taxable year at least 50% of the value of its total
assets must consist of municipal securities.

Dividends from net investment income and distributions of net
short-term capital gains are taxable to shareholders as ordinary income under
federal income tax laws whether paid in cash or in additional shares.
Distributions from net long-term capital gains are taxable as long-term capital
gains regardless of the length of time a shareholder has held such shares and
whether paid in cash or additional shares.

Dividends and distributions may also be subject to state or local
taxes. Depending on the state tax rules pertaining to a shareholder, a portion
of the dividends paid by a Fund attributable to direct obligations of the US
Treasury and certain agencies may be exempt from state and local taxes.

Consistent with each Fund's investment policies, they may purchase
bonds at market discount (i.e., bonds with a purchase price less than original
issue price or adjusted issue price). If such bonds are subsequently sold at a
gain then a portion of that gain equal to the amount of market discount, which
should have been accrued through the sale date, will be reclassified as ordinary
income.

The sale of Fund shares by a shareholder is a taxable event and may
result in capital gain or loss. A capital gain or loss may be realized from an
ordinary redemption of shares or an exchange of shares between two mutual funds
(or two series of portfolios of a mutual fund). Any loss incurred on the sale or
exchange of Fund shares held for one year or more will be treated as a long-term
capital loss to the extent of capital gain dividends received with respect to
such shares. With respect to the Money Market, Government and Tax Free Funds, no
capital gain or loss is anticipated because these Funds seek to maintain a
stable $1.00 per share net asset value.

Shareholders will be notified after each calendar year of the amounts
of income dividend and net capital gain distributions and the percentage of a
Fund's income attributable to US Treasury and agency obligations. Each Fund is
required to withhold a legally determined portion of all taxable dividends,
distributions, and redemption proceeds payable to any noncorporate shareholder
that does not provide the Funds with the shareholder's correct taxpayer
identification number or certification that the shareholder is not subject to
backup withholding.

Tax Free Fund. Distributions that are designated by it as
"exempt-interest dividends" generally may be excluded from the shareholder's
gross income.

The Tax Free Fund may purchase certain private activity securities
whose interest is subject to the federal alternative minimum tax for
individuals. If the Tax Free Fund purchases such securities, investors who are
subject

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to the alternative minimum tax will be required to report a legally determined
portion of the Fund's dividends as a tax preference item in determining their
federal tax.

Foreign Income Taxes (Emerging Markets and Active International only).
Investment income received by the Funds from sources within foreign countries
may be subject to foreign income taxes withheld at the source. The United States
has entered into tax treaties with many foreign countries which would entitle a
Fund to a reduced rate of such taxes or exemption from taxes on such income. It
is impossible to determine the effective rate of foreign tax for a Fund in
advance since the amount of the assets to be invested within various countries
is not known.

If a Fund invests in an entity that is classified as a "passive foreign
investment company" ("PFIC") for federal income tax purposes, the application of
certain provisions of the Code applying to PFICs could result in the imposition
of certain federal income taxes on a Fund. It is anticipated that any taxes on a
Fund with respect to investments in PFICs would be insignificant. Under US
Treasury regulations issued in 1992 for PFICs, a Fund can elect to
mark-to-market its PFIC holdings in lieu of paying taxes on gains or
distributions therefrom. It is anticipated that any taxes on a Fund with respect
to investments in PFICs would be insignificant.

Foreign shareholders should consult with their tax advisers as to if
and how the federal income tax and its withholding requirements applies to them.

If more than 50% in value of a Fund's total assets at the close of any
taxable year consists of securities of foreign corporations, a Fund may file an
election with the Internal Revenue Service (the "Foreign Election") that would
permit shareholders to take a credit (or a deduction) for foreign income taxes
paid by a Fund. If the Foreign Election is made, shareholders would include in
their gross income both dividends received from a Fund and foreign income taxes
paid by a Fund. Shareholders of a Fund would be entitled to treat the foreign
income taxes withheld as a credit against their United States federal income
taxes, subject to the limitations set forth in the Internal Revenue Code with
respect to the foreign tax credit generally. Alternatively, shareholders could
treat the foreign income taxes withheld as a deduction from gross income in
computing taxable income rather than as a tax credit. It is anticipated that a
Fund will qualify to make the Foreign Election; however, a Fund cannot be
certain that it will be eligible to make such an election or that any particular
shareholder will be eligible for the foreign tax credit.

VALUATION OF FUND SHARES

Net Asset Value Per Share. Net asset value per share is computed by
dividing the current value of the Fund's assets, less its liabilities, by the
number of shares of the Fund outstanding and rounding to the nearest cent. The
Funds (except the Government and Tax Free--see below) determine net asset value
once each business day as of the close of the regular trading session of the New
York Stock Exchange (ordinarily 4 p.m. Eastern time). Except for the Money
Market Fund, a business day is one on which the New York Stock Exchange is open
for business.

The Government and Tax Free Funds determine net asset value twice each
business day, as of 12:00 noon Eastern time and as of the close of the regular
trading session of the New York Stock Exchange (ordinarily 4 p.m. Eastern time).
A business day is one on which the New York Stock Exchange and Federal Reserve
are open for business.

The Money Market Fund determines net asset value once each business day
as of the close of the regular trading session of the New York Stock Exchange
(ordinarily 4 p.m. Eastern time). A business day is one on which the New York
Stock Exchange and Federal Reserve are open for business.

Valuation of Money Market Fund Securities. The Money Market, Government
and Tax Free Funds seek to maintain a $1.00 per share net asset value and,
accordingly, uses the amortized cost valuation procedure to value its portfolio
instruments. The "amortized cost" valuation procedure initially prices an
instrument at its cost

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<PAGE>

and thereafter assumes a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument.

Valuation of Non-Money Market Fund Securities. With the exceptions
noted below, the Funds value portfolio securities at "market value." This
generally means that the equity and fixed income securities listed and traded
principally on any national securities exchange are valued on the basis of the
last sale price or, lacking any sales, at the closing bid price, on the primary
exchange on which the security is traded. United States equity and fixed income
securities traded principally over-the-counter and options are valued on the
basis of the last reported bid price. Futures contracts are valued on the basis
of the last reported sale price.

Because many fixed income securities do not trade each day, last sale
or bid prices are frequently not available. Fixed income securities therefore
may be valued using prices provided by a pricing service when such prices are
determined by Custodian to reflect the market value of such securities.

International securities traded on a national securities exchange are
valued on the basis of the last sale price. International securities traded
over-the-counter are valued on the basis of best bid or official bid, as
determined by the relevant securities exchange. In the absence of a last sale,
best or official bid price, such securities may be valued on the basis of prices
provided by a pricing service if those prices are believed to reflect the market
value of such securities.

Debt obligation securities maturing within 60 days of the valuation
date are valued at amortized cost unless the Board determines that amortized
cost does not represent their market value. The amortized cost valuation
procedure initially prices an instrument at its cost and thereafter assumes a
constant amortization to maturity of any discount or premium, regardless of the
impact of fluctuating interest rates on the market value of the instrument.
While the amortized cost 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 a Fund would receive if it sold the instrument.

The Funds value securities for which market quotations are not readily
available at "fair value," as determined in good faith pursuant to procedures
established by the Board of Trustees.

PURCHASE OF FUND SHARES

Minimum Initial and Subsequent Investments and Account Balance. Each
Fund requires a minimum initial investment of $1,000, with the exception of IRA
accounts, for which the minimum initial investment is $250. Subsequent
investments must be at least $100. An investment in a Fund (other than IRA
accounts) may be subject to redemption at the Fund's discretion if the account
balance is less than $1,000 as a result of shareholder redemptions. The Transfer
Agent will give shareholders 60 days' notice that the account will be closed
unless an investment is made to increase the account balance to the $1,000
minimum. Failure to bring the account balance to $1,000 may result in the
Transfer Agent closing the account at the net asset value ("NAV") next
determined on the day the account is closed and mailing the proceeds to the
shareholder's address shown on the Transfer Agent's records. The Fund reserves
the right to reject any purchase order. Investors purchasing Fund assets through
a pension or other participation plan should contact their plan administrator
for further information on purchases.

Offering Dates and Times. Fund shares may be purchased on any business
day without a sales commission. All purchases must be made in US dollars. With
the exceptions noted below, purchase orders in good form (described below) and
payments for Fund shares in Federal funds (or converted to Federal funds) must
be received by the Transfer Agent prior to 4:00 p.m. Eastern time to be
effective on the date received. With respect to the Government and Tax Free
Funds, purchase orders which are accepted: (1) prior to 12:00 noon Eastern time
will earn the dividend declared on the date of purchase; and (2) at or after
12:00 noon Eastern time will earn the dividend determined on the next day.

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The Funds reserve the right to reject any purchase order if payment for
Fund shares has not been received by the Transfer Agent prior to 4:00 p.m.
Eastern time.

Order and Payment Procedures. There are several ways to invest in the
Funds. The Funds require a purchase order in good form, which consists of a
completed and signed Application for each new account regardless of the
investment method. For additional information, including the IRA package,
additional Applications or other forms, call the Customer Service Department at
(800) 647-7327, or write: SSgA Funds, P.O. Box 8317, Boston, MA 02266-8317.

Mail. For new accounts, please mail the completed Application and check
in the return envelope provided. Additional investments should also be made by
check. Investors must include the Fund name and account number on their checks,
or use the remittance form attached to the confirmation statement (in the return
envelope provided). All checks should be made payable to the SSgA Funds (or in
the case of a retirement account, the check should be payable to the account's
custodian or trustee). All purchase requests should be mailed to one of the
following addresses:

Regular Mail: Registered, Express or Certified Mail:

SSgA Funds SSgA Funds
P.O. Box 8317 2 Heritage Drive
Boston, MA 02266-8317 North Quincy, MA 02171

All purchases made by check should be in US dollars from a US bank.
Third party checks and checks drawn on credit card accounts will not be
accepted. Normally, checks are converted to Federal funds within two business
days following receipt of the check. A purchase cannot be effective until
Federal funds are received. When purchases are made by check or periodic account
investment, payment for redemptions will be withheld until the check or account
clears, which may take up to 15 calendar days.

Telephone Exchange Privilege. Subject to each Fund's minimum investment
requirement, investors may exchange a minimum of $100 of their Fund shares
without charge for shares of any other SSgA Fund. To use this option, contact
the Customer Service Department at (800) 647-7327. Shares are exchanged on the
basis of relative net asset value per share. Exchanges may be made over the
phone if the registrations of the two accounts are identical. If the shares of
the Fund were purchased by check, the shares must have been present in an
account for 15 days before the exchange is made. The exchange privilege will
only be available in states which permit exchanges and may be modified or
terminated by the Fund upon 60 days' written notice to shareholders. For Federal
income tax purposes, an exchange constitutes a sale of shares, which may result
in a capital gain or loss to the shareholder.

Federal Funds Wire. An investor may purchase shares by wiring federal
funds to State Street, as Transfer Agent, by:

1. Telephoning the Customer Service Department at (800) 647-7327
between the hours of 8 a.m. and 4 p.m. Eastern time, and stating:
(a) the investor's account registration number, address and social
security or tax identification number; (b) the name of the Fund in
which the investment is to be made and the account number; and (c)
the amount being wired.

2. Instructing the wiring bank to wire federal funds to:

State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
ABA #0110-0002-8
DDA #9904-631-0
SSgA (Name of Fund) Fund(s)
Account Number and Registration

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<PAGE>

Failure to properly identify all wires, checks and transfers as
indicated above may cause the Transfer Agent to delay, reject and or incorrectly
apply the settlement of an investor's purchase.

Systematic Investment Plan. Investors can make regular investments in
the Funds with the Systematic Investment Plan by completing the appropriate
section of the Application and attaching a voided personal check. Investors may
make investments monthly, quarterly or annually by deducting $100 or more from
their bank checking accounts. An investor may change the amount or stop
systematic purchase at any time by calling the Customer Service Department at
(800) 647-7327. Investors must meet the minimum initial requirement per Fund
before establishing the Systematic Investment Plan. Shares will be purchased at
the offering price next determined following receipt of the order by the
Transfer Agent.

Systematic Exchange. The Funds offer the option of having a set amount
exchanged within the SSgA Funds for accounts with identical registrations.
Investors can choose the date, the frequency (monthly, quarterly or annually)
and the amount. Exchanges may be done among the SSgA Funds once the initial
investment per Fund has been satisfied.

Third Party Transactions. Investors purchasing Fund shares through a
program of services offered by a financial intermediary, such as a bank,
broker-dealer, investment adviser or others, may be required by the intermediary
to pay additional fees. Investors should contact the intermediary for
information concerning what additional fees, if any, may be charged.

In-Kind Exchange of Securities. The Transfer Agent may, at its
discretion, permit investors to purchase shares through the exchange of
securities they hold. Any securities exchanged must meet the investment
objective, policies and limitations of the Fund, must have a readily
ascertainable market value, must be liquid and must not be subject to
restrictions on resale. The market value of any securities exchanged, plus any
cash, must be at least $1 million. Shares purchased in exchange for securities
generally may not be redeemed or exchanged until the transfer has
settled--usually within 15 days following the purchase exchange.

The basis of the exchange will depend upon the relative net asset value
of the shares purchased and securities exchanged. Securities accepted by a Fund
will be valued in the same manner as the Fund values its assets. Any interest
earned on the securities following their delivery to the Transfer Agent and
prior to the exchange will be considered in valuing the securities. All
interest, dividends subscription or other rights attached to the securities
become the property of the Fund, along with the securities.

REDEMPTION OF FUND SHARES

Fund shares may be redeemed on any business day at the net asset value
next determined after the receipt of a redemption request by following one of
the methods described below. Payments will be made as soon as possible (but will
ordinarily not exceed seven days) and will be mailed to the shareholder's
address of record. Upon request, redemption proceeds will be wire transferred to
the shareholder's account at a domestic commercial bank that is a member of the
Federal Reserve System. Payment for redemption of shares by check may be
withheld for up to 15 days after the date or purchase to assure that the check
is honored. With respect to the Government, Tax Free Funds and Yield Plus Funds,
a dividend will be paid on shares redeemed if the redemption request is received
by State Street after 12:00 noon Eastern time. Redemption requests received
before 12:00 noon Eastern time will not be entitled to that day's dividend. With
respect to the Money Market Fund, no dividends will be paid on shares on the
date of redemption.

Checkwriting Service (Money Market, Government and Tax Free only). If
investors have authorized the check writing feature on the Application and have
completed the signature card, they may redeem shares in their account, provided
that the appropriate signatures are on the check. The minimum check amount is
$500.

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<PAGE>

There is a one-time service charge of $5 per Fund to establish this
feature, and investors may write an unlimited number of checks provided that the
account minimum of $1,000 per Fund is maintained.

Cash Sweep Program (Money Market, Government and Yield Plus only).
Money managers of master trust clients may participate in a cash sweep program
to automatically invest excess cash in the Money Market, Government or Yield
Plus Funds. A money manager must select the Fund, give authorization to complete
the Fund's Application and authorize the investment of excess cash into or the
withdrawal of required cash from the Fund on a daily basis. Where the Adviser
acts as the money manager, the Adviser will receive an advisory fee from the
client.

Telephone Redemption. Shareholders may normally redeem Fund shares by
telephoning the Customer Service Department at (800) 647-7327 between 8:00 a.m.
and 4:00 p.m. Eastern time. Shareholders must complete the appropriate section
of the application and attach a voided check (if applicable) before utilizing
this feature. The Fund and the Transfer Agent will employ reasonable procedures
to confirm that instructions communicated by telephone are properly authorized.
The Fund and the Transfer Agent will not be liable for executing instructions
that are deemed to be authorized after following reasonable procedures. These
procedures include recording telephonic instructions, mailing to the shareholder
a written confirmation of the transaction, performing a personal identity test
with private information not likely to be known by other individuals, and
restricting mailing of redemptions to the shareholder's address of record, if
the address has not been changed within 60 days of the redemption request.

(bullet) Money Market--Requests received via telephone prior to 4:00
p.m. Eastern time will be sent the same day according to
pre-designated instructions.

(bullet) Government and Tax Free--Requests received prior to 12:00 noon
Eastern time will have proceeds wired the same day. Requests
received after 12:00 noon Eastern time will have the shares
redeemed that day and the proceeds will be wired the following
business day.

(bullet) Yield Plus--Requests received prior to 12:00 noon Eastern time
will have the shares redeemed using that day's closing price
with the proceeds wired the same day, unless the request is
for 100% of the account. Because Yield Plus has a fluctuating
NAV, redemption requests for 100% of the account (if received
prior to 12:00 noon Eastern time) will have 100% of the shares
redeemed using that day's closing price, with 95% of the
proceeds being wired the same day and the remaining 5%
automatically wired the following business day. All requests
received after 12:00 noon Eastern time will have the shares
redeemed using that day's closing price and the proceeds wired
the following business day.

Redemption requests received prior to 12:00 noon Eastern time for the
Government, Tax Free and Yield Plus Funds will not be eligible for that day's
interest.

(bullet) All Other Funds--Requests must be received prior to 4:00 p.m.
The shares will be redeemed using that day's closing price,
and the proceeds will be wired the following business day.

Check. Proceeds less than $50,000 may be mailed only to the address
shown on the Transfer Agent's registration record, provided that the address has
not been changed within 60 days of the redemption request. Shares will be
redeemed using that day's closing price (NAV). All proceeds by check will
normally be sent the following business day. During periods of drastic economic
or market changes, shareholders using this method may encounter delays. In such
event, shareholders should consider using the mail redemption procedure
described below.

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<PAGE>

Mail. In certain circumstances, a shareholder will need to make a
request to sell shares in writing (please use the addresses for purchases by
mail listed under "Purchase of Fund Shares"). The shareholder may need to
include additional items with the request, as shown in the table below.
Shareholders may need to include a signature guarantee, which protects them
against fraudulent orders. A signature guarantee will be required if:

1. The shareholder's address of record has changed within the past 60
days;

2. The shareholder is redeeming more than $50,000 worth of shares; or

3. The shareholder is requesting payment other than by a check mailed
to the address of record and payable to the registered owner(s).

Signature guarantees can usually be obtained from the following
sources:

1. A broker or securities dealer, registered with a domestic stock
exchange;

2. A federal savings, cooperative or other type of bank;

3. A savings and loan or other thrift institution;

4. A credit union; or 5. A securities exchange or clearing agency.

Please check with the institution prior to signing to ensure that they
are an acceptable signature guarantor. A NOTARY PUBLIC CANNOT PROVIDE A
SIGNATURE GUARANTEE.

-55-
<PAGE>

<TABLE>
<CAPTION>
Seller Requirements for Written Requests
<S> <C>
Owner of individual, (bullet) Letter of instruction, signed by all persons
joint, sole authorized to sign for the account stating general
proprietorship, UGMA/UTMA titles/capacity, exactly as the account is
(custodial accounts for registered; and
minors) or general partner (bullet) Signature guarantee, if applicable (see above).
accounts
Owners of corporate or (bullet) Letter of instruction signed by authorized
association accounts person(s), stating capacity as indicated by the
corporate resolution;
(bullet) Corporate resolution, certified within the past 90
days; and
(bullet) Signature guarantee, if applicable (see above).

Owners or trustees of (bullet) Letter of instruction, signed by all trustees;
trust accounts (bullet) If the trustees are not named in the registration,
please provide a copy of the trust document certified
within the past 60 days; and
(bullet) Signature guarantee, if applicable (see above).

Joint tenancy shareholders (bullet) Letter of instruction signed by surviving tenant(s);
whose co-tenants are (bullet) Certified copy of the death certificate; and
deceased (bullet) Signature guarantee, if applicable (see above).

</TABLE>

Please contact the Customer Service Department at (800) 647-7327 for
questions and further instructions.

A Fund may pay any portion of the redemption amount in excess of
$250,000 by a distribution in kind of readily marketable securities from the
portfolio of the Fund in lieu of cash. Investors will incur brokerage charges on
the sale of these portfolio securities. The Funds reserve the right to suspend
the right of redemption or postpone the date of payment if emergency conditions,
as specified in the 1940 Act or as determined by the Securities and Exchange
Commission, should exist.

GENERAL MANAGEMENT

The Board of Trustees supervises the management, activities and affairs
of the Funds and has approved contracts with various financial organizations to
provide, among other services, day-to-day management required by the Funds.

Advisory Agreement. Investment Company employs State Street to furnish
investment services to each Fund. State Street is one of the largest providers
of securities processing and recordkeeping services for US mutual funds and
pension funds. State Street is a wholly owned subsidiary of State Street Boston
Corporation, a publicly held bank holding company. State Street, with over
$286.9 billion (US) under management as of September 30, 1996, provides complete
global investment management services from offices in the United States, London,
Sydney, Hong Kong, Tokyo, Toronto, Luxembourg, Melbourne, Montreal, Paris,
Dubai, Munich and Brussels.

The Adviser, subject to Board supervision, directs the investments of
each Fund in accordance with the Fund's investment objective, policies and
restrictions. The individuals primarily responsible for the portfolio

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<PAGE>

management of each Fund (except the Money Market, Government and Tax Free Funds)
are listed below. For these services, each Fund pays the Adviser a fee,
calculated daily and paid monthly, that on an annual basis is equal to the
following percentages of a Fund's average daily net assets:

(bullet) Index--0.10%
(bullet) Money Market, Government, Tax Free and Yield Plus--0.25% n
Bond--0.30%
(bullet) Matrix, Small Cap, Emerging Markets and Active
International--0.75%
(bullet) Intermediate--0.80%
(bullet) Growth and Income--0.85%

The Glass-Steagall Act prohibits a depository state chartered bank such
as Adviser from engaging in the business of issuing, underwriting, selling or
distributing certain securities. The activities of Adviser in informing its
customers of the Fund, performing investment and redemption services and
providing custodian, transfer, shareholder servicing, dividend disbursing and
investment advisory services may raise issues under these provisions. Adviser
has been advised by its counsel that its activities in connection with the Fund
are consistent with its statutory and regulatory obligations. THE SHARES OFFERED
BY THIS PROSPECTUS ARE NOT ENDORSED OR GUARANTEED BY STATE STREET OR ITS
AFFILIATES, ARE NOT DEPOSITS OR OBLIGATIONS OF STATE STREET OR ITS AFFILIATES,
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.

Changes in federal or state statutes and regulations relating to the
permissible activities of banks and their affiliates, as well as judicial or
administrative decisions or interpretations of such or future statutes and
regulations, could prevent Adviser from continuing to perform all or a part of
the above services for its customers and/or the Fund. If Adviser were prohibited
from serving the Fund in any of its present capacities, the Board of Trustees
would seek an alternative provider(s) of such services. In such event, changes
in the operation of the Fund may occur. It is not expected by Adviser that
existing shareholders would suffer any adverse financial consequences (if
another adviser with equivalent abilities is found) as a result of any of these
occurrences.

State Street may from time to time have discretionary authority over
accounts which invest in Investment Company shares. These accounts include
accounts maintained for securities lending clients and accounts which permit the
use of Investment Company portfolios as short-term cash sweep investments.
Shares purchased for all discretionary accounts are held of record by State
Street, who retains voting control of such shares. As of November 30, 1996,
State Street held of record less than 25% of the issued and outstanding shares
of Investment Company in connection with its discretionary accounts.
Consequently, State Street is not deemed to be a controlling person of
Investment Company for purposes of the 1940 Act.

Under the Adviser's Code of Ethics, the Adviser's employees in Boston
where investment management operations are conducted are only permitted to
engage in personal securities transactions which do not involve securities which
the Adviser had recommended for purchase or sale, or purchased or sold, on
behalf of its clients. Such employees must report their personal securities
transactions quarterly and supply broker confirmations to the Adviser.

Portfolio Management
- --------------------

Bond and Intermediate Funds. Mr. John P. Kirby, Assistant Vice
President. Mr. Kirby has been with State Street working with the Bond Fund since
1995. He has been the lead portfolio manager for the Intermediate Fund since
July 1996. Prior to joining State Street, Mr. Kirby was an account manager with
Lowell, Blake & Associates. Prior to that, Mr. Kirby was a portfolio manager at
One Federal Asset Management a Shawmut Bank subsidiary, and at Cambridge Port
Savings as an asset/liability risk specialist. In managing the Bond Fund, Mr.

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<PAGE>

Kirby is assisted by eight other portfolio managers. With respect to the
Intermediate Fund, two portfolio managers assist Mr. Kirby.

Yield Plus Fund. Ms. Rena Williams, Vice President. Ms. Williams joined
State Street in February 1994 as a Mutual Funds Unit Head with responsibility
for the SSgA money market funds and several short-term pooled funds. Prior to
joining State Street, Ms. Williams was a Vice President and Senior Portfolio
Manager with PNC Bank, where she managed a variety of money market funds and
open-end mutual funds, and created the firm's first taxable fixed-income funds
and corporate cash accounts. She has also worked with the Calvert Group,
investing for government and corporate money market funds. Ms. Williams holds a
BA in International Relations from the University of Virginia. There are eight
other portfolio managers who work with Ms. Williams in managing the Fund.

Matrix Fund. Mr. Douglas Holmes, Managing Director. Mr. Holmes has been
a portfolio manager with responsibility for investment decisions regarding the
Matrix Equity Fund since its inception in May 1992. Mr. Holmes has been with
State Street since 1984 and has managed State Street's matrix portfolios for the
past six years. There are four other portfolio managers working with Mr. Holmes
in managing the Fund.

Index Fund. Mr. James B. May, Assistant Vice President. Mr. May and has
been the lead portfolio manager for this Fund since May 1995, an investment
officer since January 1994 and a portfolio manager in the US Structured Products
Group of State Street since that time. From 1991 to 1993, he served as an
Investment Support Analyst in the US Passive Services Group of State Street
Global Advisors. There are four other portfolio managers who work with Mr. May
in managing the Fund.

Small Cap Fund. Mr. Jeffrey Adams, Vice President. Mr. Adams joined
State Street in 1990 and has been the lead portfolio manager for this Fund since
December 1994. From 1992 to 1994, he was a portfolio manager and from 1990 to
1992 he was an account administrator. There are four other portfolio managers
who work with Mr. Adams in managing the Fund.

Growth and Income Fund. Mr. Brenton H. Dickson, Senior Vice President.
Mr. Dickson has been the lead portfolio manager for this Fund since its
inception in September 1993. Mr. Dickson has been a manager in State Street's
Investment Research Division since 1981. He is a member of the board of
directors of the Boston Security Analyst Society and a portfolio manager of the
Personal Trust Stock Common Trust Funds. There are five other portfolio managers
who work with Mr. Dickson in managing the Fund.

Emerging Markets Fund. Mr. Robert E. Furdak, CFA, Managing Director.
Mr. Furdak has been the lead portfolio manager for this Fund since its inception
in March 1994. Mr. Furdak has been with State Street since 1989, working on the
non-US active equity team. There are seven other portfolio managers who work
with Mr. Furdak in managing the Fund.

Active International Fund. Mr. Robert Rubano, Assistant Vice President.
Mr. Rubano has been the lead portfolio manager for this Fund since its inception
in March 1995. Mr. Rubano has been with State Street since 1990 as a portfolio
manager of active international funds. There are seven other portfolio managers
who work with Mr. Rubano in managing the Fund.

Administration Agreement. Frank Russell Investment Management Company
("FRIMCo" or "Administrator") serves as the Funds' administrator. The
Administrator currently serves as investment manager and administrator to 28
mutual funds with assets of $9.0 billion as of October 31, 1996, and acts as
administrator to 17 mutual funds, including the Funds presented in this
Prospectus, with assets of $8.2 billion as of October 31, 1996.

Pursuant to the Administration Agreement with Investment Company, the
Administrator will: (1) supervise all aspects of the Funds' operations; (2)
provide the Funds with administrative and clerical services, including the
maintenance of certain of the Funds' books and records; (3) arrange the periodic
updating of the

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<PAGE>

Funds' prospectuses and any supplements thereto; (4) provide proxy materials and
reports to Fund shareholders and the Securities and Exchange Commission; and (5)
provide the Funds with adequate office space and all necessary office equipment
and services, including telephone service, heat, utilities, stationery supplies
and similar items. For these services, the Funds pay the Administrator a
combined fee that on an annual basis is equal to the following percentages of
their average aggregate daily net assets:

(bullet) All Funds (except Emerging Markets and Active International)
(bullet) To and including $500 million--.06%;
(bullet) Over $500 million to and including $1 billion--.05%; and
(bullet) Over $1 billion--.03%.

(bullet) Emerging Markets and Active International
(bullet) To and including $500 million--.07%;
(bullet) Over $500 million to and including $1 billion--.06%;
(bullet) Over $1 billion to and including $1.5 billion--.04%; and
(bullet) Over $1.5 billion--.03%.

The percentage of the fee paid by the each Fund is equal to the
percentage of average aggregate daily net assets that are attributable to that
Fund. Administrator will also receive reimbursement of expenses it incurs in
connection with establishing new investment portfolios. Further, the
administration fee paid by the Investment Company will be reduced by the sum of
certain distribution related expenses (up to a maximum of 10% of the asset-based
administration fee listed above).

The Administrator also provides administrative services in connection
with the registration of shares of Investment Company with those states in which
its shares are offered or sold. Compensation for such services is on a "time
spent" basis. Investment Company will pay all registration, exemptive
application, renewal and related fees and reasonable out-of-pocket expenses.

Officers and employees of the Administrator and Distributor are
permitted to engage in personal securities transactions subject to restrictions
and procedures set forth in the Confidentiality Manual and Code of Ethics
adopted by the Investment Company, Administrator and Distributor. Such
restrictions and procedures include substantially all of the recommendations of
the Advisory Group of the Investment Company Institute and comply with
Securities and Exchange Commission rules and regulations.

Distribution Services and Shareholder Servicing Arrangements. Pursuant
to the Distribution Agreement with Investment Company, Russell Fund
Distributors, Inc. ("Distributor"), a wholly owned subsidiary of the
Administrator, serves as distributor for all Fund shares.

The Funds have also adopted a distribution plan pursuant to Rule 12b-1
(the "Plan") under the 1940 Act. The purpose of the Plan is to provide for the
payment of certain Investment Company distribution and shareholder servicing
expenses. Under the Plan, Distributor will be reimbursed in an amount up to .25%
of the Fund's average annual net assets for distribution-related and shareholder
servicing expenses. Payments under the Plan will be made to Distributor to
finance activity that is intended to result in the sale and retention of Fund
shares including: (1) the costs of prospectuses, reports to shareholders and
sales literature; (2) advertising; and (3) expenses incurred in connection with
the promotion and sale of Fund shares, including Distributor's overhead expenses
for rent, office supplies, equipment, travel, communication, compensation and
benefits of sales personnel.

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<PAGE>

respect to Fund shares held by or for the customers of the Service
Organizations. Under the Service Agreements, the Service Organizations may
provide various services for such customers including: (1) answering inquiries
regarding a Fund; (2) assisting customers in changing dividend options, account
designations and addresses; (3) performing subaccounting for such customers; (4)
establishing and maintaining customer accounts and records; (5) processing
purchase and redemption transactions; (6) providing periodic statements showing
customers' account balances and integrating such statements with those of other
transactions and balances in the customers' other accounts serviced by the
Service Organizations; (7) arranging for bank wires transferring customers'
funds; and (8) such other services as the customers may request in connection
with the Fund, to the extent permitted by applicable statute, rule or
regulation. Service Organizations may receive from a Fund, for shareholder
servicing, a monthly fee at a rate that shall not exceed .20% per annum of the
average daily net asset value of a Fund's shares owned by or for shareholders
with whom the Service Organization has a servicing relationship. Banks and other
financial service firms may be subject to various state laws, and may be
required to register as dealers pursuant to state law.

Investment Company has entered into Service Agreements with Adviser,
State Street Brokerage Services, Inc. ("SSBSI"), Adviser's Metropolitan Division
of Commercial Banking ("Commercial Banking") and Adviser's Retirement Investment
Services Division ("RIS") to obtain the services described above with respect to
Fund shares held by or for customers. In return for these services, Investment
Company pays Adviser a fee in an amount that per annum is equal to .025% of the
average daily value of all Fund shares held by or for customers of Adviser, and
.175% of the average daily value of all Fund shares (except as noted below) held
by or for customers of SSBSI, Commercial Banking and RIS. The Investment Company
pays SSBSI no fee for the S&P 500 Index Fund; pays RIS a per annum fee equal to
.05% of the daily value of shares of the S&P 500 Index and Bond Market Funds;
and pays Commercial Banking a per annum fee equal to .05% of the daily value of
the shares of the S&P 500 Index, Bond Market and Tax Free Money Market Funds.

Payments to Distributor, as well as payments to Service Organizations
from a Fund, are not permitted by the Plan to exceed .25% of a Fund's average
net asset value per year. Any payments that are required to be made by the
Distribution Agreement and any Service Agreement but could not be made because
of the .25% limitation may be carried forward and paid in subsequent years so
long as the Plan is in effect. A Fund's liability for any such expenses carried
forward shall terminate at the end of two years following the year in which the
expenditure was incurred. Service Organizations will be responsible for prompt
transmission of purchase and redemption orders and may charge fees for their
services.

FUND EXPENSES

The Funds will pay all of their expenses other than those expressly
assumed by the Adviser and the Administrator. The Funds' principal expenses are
the annual advisory fee payable to the Adviser and distribution and shareholder
servicing expenses. Other expenses include: (1) amortization of deferred
organizational costs; (2) taxes, if any; (3) expenses for legal, auditing and
financial accounting services; (4) expense of preparing (including typesetting,
printing and mailing) reports, prospectuses and notices to existing
shareholders; (5) administrative fees; (6) custodian fees; (7) expense of
issuing and redeeming Fund shares; (8) the cost of registering Fund shares under
federal and state laws; (9) shareholder meetings and related proxy solicitation
expenses; (10) the fees, travel expenses and other out-of-pocket expenses of
Trustees who are not affiliated with Adviser or any of its affiliates; (11)
insurance, interest, brokerage and litigation costs; (12) extraordinary expenses
as may arise, including expenses incurred in connection with litigation
proceedings and claims and the legal obligations of Investment Company to
indemnify its Trustees, officers, employees, shareholders, distributors and
agents; and (13) other expenses properly payable by the Funds. Certain expenses
not directly attributable to any one Fund but applicable to all Funds, such as
Trustee fees, insurance, legal and other expenses will be allocated to each Fund
based on each Fund's net assets.

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PERFORMANCE CALCULATIONS

Yield
- -----

Money Market (Class A shares), Government (Class A shares), Tax Free
(Class A shares), Yield Plus, Bond and Intermediate Funds may from time to time
advertise their yields. Yield for each Fund is calculated as follows:

Money Market, Government and Tax Free Funds. The yield of each Fund
refers to the income generated by an investment in Class A shares of these Funds
over a seven-day period (which period will be stated in the advertisement). This
income is then annualized. That is, the amount of income generated by the
investment during that week is assumed to be generated each week over a 52-week
period and is shown as a percentage of the investment. The effective yield is
calculated similarly but, when annualized, the income earned by an investment in
a Fund is assumed to be reinvested. The effective yield will be slightly higher
than the yield because of the compounding effect of this assumed reinvestment.

With respect to the Tax Free Fund only, the tax-equivalent yield shows
the level of taxable yield needed to produce an after-tax equivalent to the Tax
Free Fund's tax-free yield. This is done by increasing the Fund's yield by the
amount necessary to reflect the payment of federal income tax (and state income
tax, if applicable) at a stated tax rate.

From time to time, the Money Market, Government and Tax Free Funds may
also report yield and effective yield (and tax-equivalent yield, with respect to
the Tax Free Fund) as calculated over a one-month period (which period will also
be stated in the advertisement). These one-month periods will be annualized
using the same method as described above for yields calculated on the basis of
seven-day periods. From time to time, yields calculated on a monthly basis may
also be linked to provide yield figures for periods greater than one month.

Bond, Yield Plus and Intermediate Funds. Yield is calculated by
dividing the net investment income per share earned during the most recent
30-day (or one-month) period by the maximum offering price per share on the last
day of the month. This income is then annualized. That is, the amount of income
generated by the investment during that 30-day period is assumed to be generated
each month over a 12-month period and is shown as a percentage of the
investment. For purposes of the yield calculation, interest income is computed
based on the yield to maturity of each debt obligation and dividend income is
computed based upon the stated dividend rate of each security in the Fund's
portfolio. The calculation includes all recurring fees that are charged to all
shareholder accounts.

Total Return
- ------------

From time to time, each Fund may advertise its total return. For the
Money Market, Government and Tax Free Funds, the total return calculation will
be based on the Class A shares of those Funds. The total return of a Fund is the
average annual compounded rate of return from a hypothetical investment in the
Fund over one-year, five-year and ten-year periods or for the life of the Fund
(as stated in the advertisement), assuming the reinvestment of all dividend and
capital gains distributions.

Comparative performance information may be used from time to time in
advertising or marketing Fund shares, including data (as applicable to each
respective Fund) from Lipper Analytical Services, Inc., IBC Donoghue's Money
Fund Report, the Bank Rate Monitor, Wall Street Journal Score Card, Morningstar,
Inc., S&P 500 Index, Russell 2000 Index, MSCI EAFE Index, LBAB Index or other
industry publications, business periodicals, rating services and market indices.
The Funds may also advertise nonstandardized performance information which is
for periods in addition to those required to be presented.

-61-
<PAGE>

Quoted yields, returns and other performance figures are based on
historical earnings and are not indications of future performance.

ADDITIONAL INFORMATION

Custodian, Transfer Agent and Independent Accountants. State Street
holds all portfolio securities and cash assets of the Funds, provides portfolio
recordkeeping services and serves as the Funds' transfer agent ("Transfer
Agent") and custodian ("Custodian"). State Street is authorized to deposit
securities in securities depositories or to use the services of subcustodians.
State Street has no responsibility for the supervision and management of the
Fund except as investment adviser. Coopers & Lybrand L.L.P., Boston,
Massachusetts, is Investment Company's independent accountants.

Reports to Shareholders and Shareholder Inquiries. Shareholders will
receive unaudited semiannual financial statements and annual financial
statements audited by Investment Company's independent accountants. Shareholder
inquiries regarding the Prospectus, financial statements and shareholder
balances may be made by calling the Distributor at (800) 647-7327.

Currently, shares of the Money Market, Government and Tax Free Funds
are divided into Class A, Class B and Class C. Each class of shares of the Fund
is entitled to the same rights and privileges as all other classes of those
Funds, provided however, that each class bears the expenses related to its
distribution and shareholder servicing arrangements, as well as other expenses
attributable to the class and unrelated to managing the Funds' portfolio
securities. The Investment Company has adopted a plan of distribution under rule
12b-1 for Class A shares. Similar plans have been adopted for Class B and Class
C shares. However, total payments under those plans are limited to .35% and .60%
annually of the average net asset value of the Class B and Class C shares,
respectively of these Funds. As a result of these plan and other class expenses,
the yield on Class B and Class C shares will be approximately .25% and .50%
lower, respectively, than the yield on Class A shares.

Each Fund share represents an equal proportionate interest in a Fund,
has a par value of $.001 per share and is entitled to such relative rights and
preferences and dividends and distributions earned on assets of the Fund as may
be declared by the Board of Trustees. Fund shares are fully paid and
nonassessable by the Investment Company and have no preemptive rights.

Each Fund share has one vote. There are no cumulative voting rights.
There is no annual meeting of shareholders, but special meetings may be held. On
any matter that affects only a particular investment fund, only shareholders of
that fund may vote unless otherwise required by the 1940 Act or the Master Trust
Agreement. The Trustees hold office for the life of the Trust. A Trustee may
resign or retire, and may be removed at any time by a vote of two-thirds of
Investment Company shares or by a vote of a majority of the Trustees. The
Trustees shall promptly call and give notice of a meeting of shareholders for
the purpose of voting upon removal of any Trustee when requested to do so in
writing by holders of not less than 10% of the shares then outstanding. A
vacancy on the Board of Trustees may be filled by the vote of a majority of the
remaining Trustees, provided that immediately thereafter at least two-thirds of
the Trustees have been elected by shareholders.

The Investment Company does not issue share certificates for the Funds.
The Transfer Agent sends shareholders statements concurrent with any transaction
activity, confirming all investments in or redemptions from their accounts. Each
statement also sets forth the balance of shares held in the account.

-62-
<PAGE>

Controlling Persons. As of November 30, 1996, the following
shareholders owned of record the stated percentage of outstanding shares of the
stated Funds, and are therefore deemed to be controlling persons of the
respective Funds:

(bullet) Tax Free. Clipper State Street, a fund of State Street Bank
and Trust Company; and State Street Bank and Trust
Company--52% and 29%, respectively;
(bullet) Yield Plus. Stock Performance Index Futures Fund CM18, a fund
of State Street Bank and Trust Company; and International
Clearing Stock Loan, a department of State Street Bank and
Trust Company-30% and 26%, respectively; and
(bullet) Emerging Markets. Charles Schwab & Company, Inc.--63%.

-63-
<PAGE>

INFORMATION REGARDING STANDARD & POOR'S CORPORATION

"Standard & Poor's," "S&P," "Standard & Poor's 500," and "500" are
trademarks of Standard & Poor's and have been licensed for use by SSgA Fund. The
Fund is not sponsored, endorsed, sold or promoted by Standard & Poor's. Standard
& Poor's makes no representation or warranty, express or implied, to the
shareholders of the Fund regarding the advisability of investing in securities
generally or in the Fund particularly or the ability of the S&P 500 Index to
track general stock market performance. Standard & Poor's only relationship to
the Fund is the licensing of the trademarks and tradenames of Standard & Poor's
including the S&P 500 Index, which is determined, composed and calculated by
Standard & Poor's without regard to the Fund. Standard & Poor's has no
obligation to take the needs of the shareholders of the Fund into consideration
in determining, composing or calculating this Index. Standard & Poor's is not
responsible for and has not participated in the determination of the prices and
amount of the Fund or the timing of the issuance or sale of the shares or in the
determination or calculation of the equation by which the shares of the Fund are
to be redeemed. Standard & Poor's has no obligation or liability in connection
with the administration, marketing or trading of the Fund.

STANDARD & POOR'S DOES NOT GUARANTEE THE ACCURACY AND/OR THE
COMPLETENESS OF THE INDEX OR ANY DATA INCLUDED THEREIN AND STANDARD & POOR'S
SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN.
STANDARD & POOR'S MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE
OBTAINED BY THE FUND OR THE SHAREHOLDERS OF THE FUND OR ANY OTHER PERSON OR
ENTITY FROM THE USE OF THE INDEX OR ANY DATA INCLUDED THEREIN. STANDARD & POOR'S
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 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING,
IN NO EVENT SHALL STANDARD & POOR'S HAVE ANY LIABILITY FOR ANY SPECIAL,
PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS) EVEN IF
NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES

-64-
<PAGE>

SSgA FUNDS
Two International Place, 35th Floor
Boston, Massachusetts 02110
CUSTOMER SERVICE: (800) 647-7327

INVESTMENT ADVISER, CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110

DISTRIBUTOR
Russell Fund Distributors, Inc.
Two International Place, 35th Floor
Boston, Massachusetts 02110

ADMINISTRATOR
Frank Russell Investment Management Company
909 A Street
Tacoma, Washington 98402

LEGAL COUNSEL
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109

INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109

-65-

<PAGE>

Filed pursuant to Rule 485(b)
File Nos. 33-19229; 811-5430

SSgA FUNDS
Two International Place, 35th Floor
Boston, Massachusetts 02110
(800) 647-7327

MONEY MARKET FUND

Class A Shares
--------------

SSgA Funds (formerly known as The Seven Seas Series Fund) is a registered,
open-end investment company with multiple portfolios, each of which is a mutual
fund. This Prospectus describes and offers shares of beneficial interest in one
of the mutual funds, the SSgA Money Market Fund (the "Money Market Fund" or
"Fund"). The Money Market Fund seeks to maximize current income, to the extent
consistent with the preservation of capital and liquidity and the maintenance of
a stable $1.00 per share net asset value, by investing in dollar denominated
securities with remaining maturities of one year or less. The Fund's shares are
offered without sales commissions. However, the Fund pays certain distribution
expenses under its Rule 12b-1 plan.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS ANY SUCH
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
INVESTMENTS IN THE FUND ARE NEITHER INSURED NOR GUARANTEED BY THE US
GOVERNMENT. THERE IS NO ASSURANCE THAT THE MONEY MARKET FUND WILL MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER SHARE.
SHARES IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, STATE STREET BANK AND TRUST COMPANY, AND SHARES ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER AGENCY, AND INVOLVE INVESTMENT RISKS INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor ought to know before investing. Please read and retain this
document for future reference. Additional information about the Fund has been
filed with the Securities and Exchange Commission in a Statement of Additional
Information dated December 27, 1996. The Statement of Additional Information is
incorporated herein by reference and is available without charge from the
Distributor at its address noted below or by calling (800) 647-7327.

<TABLE>
<CAPTION>
Investment Adviser, Custodian
and Transfer Agent: Distributor: Administrator:
<S> <C> <C>
State Street Bank and Trust Russell Fund Distributors, Inc. Frank Russell Investment
Company Two International Place Management Company
225 Franklin Street 35th Floor 909 A Street
Boston, Massachusetts 02110 Boston, Massachusetts 02110 Tacoma, Washington 98402
</TABLE>

PROSPECTUS DATED DECEMBER 27, 1996

-1-
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page

<S> <C>
Fund Operating Expenses................................................................................... 3

Financial Highlights...................................................................................... 4

SSgA Funds................................................................................................ 5

Manner of Offering........................................................................................ 5

Investment Objective, Policies and Restrictions........................................................... 5

Portfolio Maturity ....................................................................................... 8

Dividends and Distributions............................................................................... 8

Taxes..................................................................................................... 9

Valuation of Fund Shares.................................................................................. 10

Purchase of Fund Shares................................................................................... 10

Redemption of Fund Shares................................................................................. 12

General Management........................................................................................ 14

Fund Expenses............................................................................................. 17

Performance Calculations.................................................................................. 17

Additional Information.................................................................................... 18
</TABLE>

-2-
<PAGE>

FUND OPERATING EXPENSES

SSgA MONEY MARKET FUND
CLASS A SHARES

Shareholder Transaction Expenses:
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees None
Exchange Fee None

Annual Fund Operating Expenses:
(as a percentage of average daily net assets)

Advisory Fees .25%
12b-1 Fees1 .06
Other Expenses .08
---

Total Operating Expenses2 .39%

<TABLE>
<CAPTION>
Examples: 1 year 3 years 5 years 10 years
- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment, assuming: (i) 5.0%
annual return; and (ii) redemption at the
end of each time period: $ 4 $13 $22 $49
=== === === ===
</TABLE>

- ----------
1 Rule 12b-1 fees include expenses paid for shareholder servicing activities.
2 Investors purchasing Fund shares through a financial intermediary, such as a
bank or an investment adviser, may also be required to pay additional fees
for services provided by the intermediary. Such investors should contact the
intermediary for information concerning what additional fees, if any, will
be charged.

-3-
<PAGE>

FINANCIAL HIGHLIGHTS
SSgA MONEY MARKET FUND

<TABLE>
<CAPTION>
1996 1995 1994 1993 1992 1991 1990 1989 1988++
---- ---- ---- ---- ---- ---- ---- ---- ----

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF YEAR $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
------- ------- ------- ------- ------- ------- ------- ------- -------

INCOME FROM INVEST-
MENT OPERATIONS:
Net investment
income .0524 .0538 .0330 .0320 .0458 .0686 .0817 .0883 .0239
----- ----- ----- ----- ----- ----- ----- -----

LESS DISTRIBUTIONS:
Net investment (.0524) (.0538) (.0330) (.0320) (.0458) (.0686) (.0817) (.0883) (.0239)
income
------- ------- ------- -------

NET ASSET VALUE,
END OF YEAR $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= ======= ======= ======= ======= =======

TOTAL RETURN (%)(a)
5.36 5.52 3.35 3.24 4.68 7.08 8.48 9.19 2.41

RATIOS(%)/SUPPLE-
MENTAL DATA:
Operating expenses, net,
to average daily net
assets (b) .39 .39 .36 .33 .35 .37 .37 .43 .44
Operating expenses,
gross, to average
daily net assets (b) .39 .39 .36 .38 .35 .38 .43 .51 .63
Net investment income
to average daily
net assets (b) 5.20 5.37 3.33 3.20 4.40 6.59 8.13 8.97 7.30
Net assets, end
of year 3,475,409 2,752,895 3,020,796 2,502,483 4,263,057 1,645,428 650,598 442,614 193,777
($000 omitted)
Per share amount
of fees waived
($ omitted) -- -- -- .0005 -- .0000 .0005 .0004 .0010
</TABLE>

- ----------
++ For the period May 2, 1988 (commencement of operations) to August 31, 1988.
(a) Periods less than one year are not annualized.
(b) The ratios for the period ended August 31, 1988 are annualized.

-4-
<PAGE>

SSgA FUNDS

SSgA Funds (the "Investment Company") is an open-end management
investment company that is organized as a Massachusetts business trust. In
addition, each series of the Investment Company is diversified as defined in the
Investment Company Act of 1940, as amended ("1940 Act"). As a "series" company,
the Investment Company is authorized to issue an unlimited number of shares
evidencing beneficial interests in different investment portfolios. Through this
Prospectus, the Investment Company offers Class A shares in the Money Market
Fund. State Street Bank and Trust Company (the "Adviser" or "State Street")
serves as the investment adviser for the Fund.

MANNER OF OFFERING

Distribution and Eligible Investors. Shares of the Fund are offered
without a sales commission by Russell Fund Distributors, Inc. (the
"Distributor"), the Investment Company's distributor, to US and foreign
institutional and retail investors that invest for their own account or in a
fiduciary or agency capacity. The Fund will incur distribution expenses under
its Rule 12b-1 plan. See "General Management -- Distribution Services and
Shareholder Servicing Arrangements."

INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS

The Fund has a fundamental investment objective, which may be changed
only with the approval of a majority of the Fund's shareholders as defined by
the 1940 Act. There can be no assurance that the Fund will meet its investment
objective.

The Money Market Fund's fundamental investment objective is to maximize
current income, to the extent consistent with the preservation of capital and
liquidity and the maintenance of a stable $1.00 per share net asset value, by
investing in dollar denominated securities with remaining maturities of one year
or less.

The Fund attempts to meet its investment objective by investing in high
quality money market instruments. Such instruments include: (1) US Treasury
bills, notes and bonds; (2) other obligations issued or guaranteed as to
interest and principal by the US Government, its agencies, or instrumentalities;
(3) instruments of US and foreign banks, including certificates of deposit,
banker's acceptances and time deposits; these instruments may include Eurodollar
Certificates of Deposit ("ECDs"), Eurodollar Time Deposits ("ETDs") and Yankee
Certificates of Deposit ("YCDs"); (4) commercial paper of US and foreign
companies; (5) asset-backed securities; (6) corporate obligations; (7) variable
amount master demand notes; and (8) repurchase agreements.

The Fund will limit its portfolio investments to those United States
dollar-denominated instruments which at the time of acquisition the Adviser
determines present minimal credit risk and which qualify as "eligible"
securities under the Securities and Exchange Commission rules applicable to
money market mutual funds. In general, eligible securities include securities
that: (1) are rated in the highest category by at least two nationally
recognized statistical rating organizations ("NRSRO"); (2) by one NRSRO, if only
one rating service has rated the security; or (3) if unrated, are of comparable
quality, as determined by the Fund's Adviser in accordance with procedures
established by the Board of Trustees. See the Appendix in the Statement of
Additional Information for a description of a NRSRO.

Investment Policies
- -------------------

The investment policies described below reflect the Fund's current
practices, are not fundamental and may be changed by the Board of Trustees of
the Investment Company without shareholder approval. For more information on
these investment policies, please see the Statement of Additional Information.
To the extent consistent with the Fund's investment objective and restrictions,
the Fund may invest in the following instruments and may use the following
investment techniques:

-5-
<PAGE>

US Government Securities. US Government securities include US Treasury
bills, notes, and bonds and other obligations issued or guaranteed as to
interest and principal by the US Government and its agencies or
instrumentalities. Obligations issued or guaranteed as to interest and principal
by the US Government, its agencies or instrumentalities include securities that
are supported by the full faith and credit of the United States Treasury,
securities that are supported by the right of the issuer to borrow from the
United States Treasury, discretionary authority of the US Government agency or
instrumentality, and securities supported solely by the creditworthiness of the
issuer.

Repurchase Agreements. The Fund may enter into repurchase agreements
with banks and other financial institutions, such as broker-dealers. In
substance, a repurchase agreement is a loan for which the Fund receives
securities as collateral. Under a repurchase agreement, a Fund purchases
securities from a financial institution that agrees to repurchase the securities
at the Fund's original purchase price plus interest within a specified time
(normally one business day). The Fund will invest no more than 10% of its net
assets (taken at current market value) in repurchase agreements maturing in more
than seven days. The Fund will limit repurchase transactions to those member
banks of the Federal Reserve System and broker-dealers whose creditworthiness
the Adviser considers satisfactory. Should the counterparty to a transaction
fail financially, the Fund may encounter delay and incur costs before being able
to sell the securities. Further, the amount realized upon the sale of the
securities may be less than that necessary to fully compensate the Fund.

Reverse Repurchase Agreements. The Fund may enter into reverse
repurchase agreements under the circumstances described in "Investment
Restrictions." In substance, a reverse repurchase agreement is a borrowing for
which the Fund provides securities as collateral. Under a reverse repurchase
agreement, the Fund sells portfolio securities to a financial institution in
return for cash in an amount equal to a percentage of the portfolio securities'
market value and agrees to repurchase the securities at a future date at a
prescribed repurchase price equal to the amount of cash originally received plus
interest on such amount. The Fund retains the right to receive interest and
principal payments with respect to the securities while they are in the
possession of the financial institutions. Reverse repurchase agreements involve
the risk of default by the counterparty, which may adversely affect the Fund's
ability to reacquire the underlying securities.

Forward Commitments. The Fund may contract to purchase securities for a
fixed price at a future date beyond customary settlement time. When effecting
such transactions, cash or marketable securities held by the Fund of a dollar
amount sufficient to make payment for the portfolio securities to be purchased
will be segregated on the Fund's records at the trade date and maintained until
the transaction is settled. The failure of the other party to the transaction to
complete the transaction may cause the Fund to miss an advantageous price or
yield. The Fund bears the risk of price fluctuations during the period between
the trade and settlement dates.

When-Issued Transactions. The Fund may purchase securities on a
when-issued basis. In these transactions, a Fund purchases securities with
payment and delivery scheduled for a future time. Until settlement, the Fund
segregates cash and marketable securities equal in value to their when-issued
commitments. Between the trade and settlement dates, the Fund bears the risk of
any fluctuation in the value of the securities. These transactions involve the
additional risk that the other party may fail to complete the transaction and
cause the Fund to miss a price or yield considered advantageous. The Fund will
engage in when-issued transactions only for the purpose of acquiring portfolio
securities consistent with its investment objective and policies and not for
investment leverage. The Fund will not invest more than 25% of its net assets in
when-issued securities.

Illiquid Securities. The Fund will invest no more than 10% of its net
assets in illiquid securities or securities that are not readily marketable,
including repurchase agreements and time deposits of more than seven days'
duration. The absence of a regular trading market for illiquid securities
imposes additional risks on investments in these securities. Illiquid securities
may be difficult to value and may often be disposed of only after considerable
expense and delay.

-6-
<PAGE>

agreed maximum) and the holders and issuers to decrease the principal amount of
the notes, and specify that the rate of interest payable on the principal
fluctuates according to an agreed formula.

Asset-Backed Securities. Asset-backed securities represent undivided
fractional interests in pools of instruments, such as consumer loans, and are
similar in structure to mortgage-related pass-through securities described
below. Payments of principal and interest are passed through to holders of the
securities and are typically supported by some form of credit enhancement, such
as a letter of credit, surety bond, limited guarantee by another entity or by
priority to certain of the borrower's other securities. The degree of credit
enhancement varies, generally applying only until exhausted and covering only a
fraction of the security's par value. If the credit enhancement of an
asset-backed security held by the Fund has been exhausted, and if any required
payments of principal and interest are not made with respect to the underlying
loans, the Fund may experience loss or delay in receiving payment and a decrease
in the value of the security. Further details are set forth in the Statement of
Additional Information under "Investment Restrictions and Policies -- Investment
Policies."

Mortgage-Related Pass-Through Securities. The Fund may invest in
mortgage-related securities, including Government National Mortgage Association
("GNMA") Certificates ("Ginnie Maes"), Federal Home Loan Mortgage Corporation
("FHLMC") Mortgage Participation Certificates ("Freddie Macs") and Federal
National Mortgage Association ("FNMA") Guaranteed Mortgage Pass-Through
Certificates ("Fannie Maes"). Mortgage pass-through certificates are
mortgage-backed securities representing undivided fractional interests in pools
of mortgage-backed loans. These loans are made by mortgage bankers, commercial
banks, savings and loan associations and other lenders. Ginnie Maes are
guaranteed by the full faith and credit of the US Government, but Freddie Macs
and Fannie Maes are not.

Zero Coupon Securities. Zero coupon securities are notes, bonds and
debentures that: (1) do not pay current interest and are issued at a substantial
discount from par value; (2) have been stripped of their unmatured interest
coupons and receipts; or (3) pay no interest until a stated date one or more
years into the future. These securities also include certificates representing
interests in such stripped coupons and receipts. Generally, changes in interest
rates will have a greater impact on the market value of a zero coupon security
than on the market value of comparable securities that pay interest periodically
during the life of the instrument.

Variable and Floating Rate Securities. A floating rate security
provides for the automatic adjustment of its interest rate whenever a specified
interest rate changes. A variable rate security provides for the automatic
establishment of a new interest rate on set dates. Interest rates on these
securities are ordinarily tied to, and are a percentage of, a widely recognized
interest rate, such as the yield on 90-day US Treasury bills or the prime rate
of a specified bank. These rates may change as often as twice daily. Generally,
changes in interest rates will have a smaller effect on the market value of
variable and floating rate securities than on the market value of comparable
fixed income obligations. Thus, investing in variable and floating rate
securities generally allows less opportunity for capital appreciation and
depreciation than investing in comparable fixed income securities.

Eurodollar Certificates of Deposit, Eurodollar Time Deposits and Yankee
Certificates of Deposit. ECDs are US dollar denominated certificates of deposit
issued by foreign branches of domestic banks. ETDs are US dollar denominated
deposits in foreign branches of US banks and foreign banks. YCDs are US dollar
denominated certificates of deposit issued by US branches of foreign banks.

-7-
<PAGE>

collateral, a portion of the income from the investment of such cash. In
addition, the Fund will receive the amount of all dividends, interest and other
distributions on the loaned securities. However, the borrower has the right to
vote the loaned securities. The Fund will call loans to vote proxies if a
material issue affecting the investment is to be voted upon. Should the borrower
of the securities fail financially, the Fund may experience delays in recovering
the securities or exercising its rights in the collateral. Loans are made only
to borrowers that are deemed by the Adviser to be of good financial standing. In
a loan transaction, the Fund will also bear the risk of any decline in value of
securities acquired with cash collateral. The Fund will minimize this risk by
limiting the investment of cash collateral to high quality instruments of short
maturity.

Purchase of Other Funds. To the extent permitted under the 1940 Act and
exemptive rules and orders thereunder, the Fund may seek to achieve its
investment objective by investing solely in the shares of another investment
company that has a substantially similar investment objective and policies.

Investment Restrictions

The Fund has fundamental investment restrictions, which may be changed
only with the approval of a majority of the Fund's shareholders as defined in
the 1940 Act. A more detailed discussion of the Fund's investment restrictions
and policies appears in the Statement of Additional Information. Unless
otherwise noted, the fundamental restrictions apply at the time an investment is
made. The Fund may not:

1. Invest 25% or more of the value of its total assets in securities of
companies primarily engaged in any one industry (other than the US
Government, its agencies or instrumentalities). Concentration may
occur as a result of changes in the market value of portfolio
securities, but may not result from investment. US banks and certain
domestic branches of foreign banks are not considered a single
industry for purposes of this restriction.

PORTFOLIO MATURITY

The Fund must limit investments to securities with remaining maturities
of 397 days or less (as determined in accordance with the applicable SEC
regulations) and must maintain a dollar-weighted average maturity of 90 days or
less. The Fund normally holds portfolio instruments to maturity but may dispose
of them prior to maturity if the Adviser finds it advantageous.

DIVIDENDS AND DISTRIBUTIONS

The Board of Trustees intends to declare dividends on shares of the
Fund from net investment income daily and have them payable as of the last
business day of each month. Distributions will be made at least annually from
net short- and long-term capital gains, if any. In most instances, distributions
will be declared and paid in mid-October with additional distributions declared
and paid in December, if required, for the Fund to avoid

-8-
<PAGE>

imposition of a 4% federal excise tax on undistributed capital gains. The Fund
does not expect any material long-term capital gains or losses.

Dividends declared in October, November or December and payable to
shareholders of record in such months will be deemed to have been paid by the
Fund and received by shareholders on December 31 of that year if the dividend is
paid prior to February 1 of the following year.

Income dividend and capital gain distributions will be paid in
additional shares at their net asset value on the record date unless the
shareholder has elected to receive them in cash. Such election may be made by
giving 30 days' written notice to the Transfer Agent. If it is determined that
the US Postal Service cannot properly deliver Fund mailings to an investor, the
Fund will terminate the investor's election to receive dividends and other
distributions in cash. Thereafter, subsequent dividends and other distributions
will be automatically reinvested in additional shares of the relevant Fund until
the investor notifies the SSgA Funds in writing of the correct address and
request in writing that the election to receive dividends and other
distributions in cash be reinstated.

Distribution Option. Investors can choose from four different
distribution options as indicated on the account Application:

(bullet) Income-Earned Option--Capital gain distributions will be
automatically reinvested, but a check or wire will be sent for
each dividend distribution.

(bullet) Cash Option--A check or wire will be sent for each dividend
and capital gain distribution.

(bullet) Direct Dividends Option--Dividends and capital gain
distribution will be automatically invested in another
identically registered SSgA Fund.

The Transfer Agent will wire dividends (if that option is elected) to a
pre-designated bank on the first business day of the following month in which
the dividend is payable.

TAXES

The Fund may purchase bonds at market discount (i.e., bonds with a
purchase price less than original issue price or adjusted issue price). If such
bonds are subsequently sold at a gain then a portion of that gain equal to the
amount of market discount, which should have been accrued through the sale date,
will be taxable to shareholders as ordinary income.

Dividends and distributions may also be subject to state or local
taxes. Depending on the state tax rules pertaining to a shareholder, a portion
of the dividends paid by the Fund attributable to direct obligations of the US
Treasury and certain agencies may be exempt from state and local taxes.

-9-
<PAGE>

Shareholders will be notified after each calendar year of the amount of
income dividends and net capital gains distributed and the percentage of the
Fund's income attributable to US Treasury and agency obligations. The Fund is
required to withhold a legally determined portion of all taxable dividends,
distributions and redemption proceeds payable to any noncorporate shareholder
that does not provide the Fund with the shareholder's correct taxpayer
identification number or certification that the shareholder is not subject to
backup withholding.

The foregoing discussion is only a summary of certain federal income
tax issues generally affecting the Fund and its shareholders. Circumstances
among investors may vary and each investor is encouraged to discuss investment
in the Fund with the investor's tax adviser.

VALUATION OF FUND SHARES

Net Asset Value Per Share. Net asset value per share for each class of
shares of the Fund is computed by adding the value of all securities and other
assets of the Fund, deducting accrued liabilities allocated to the class,
dividing by the number of shares outstanding in a class and rounding to the
nearest cent. Class A shares of the Fund will determine net asset value once
each business day as of the close of the regular trading session of the New York
Stock Exchange (ordinarily 4 p.m. Eastern time). A business day is one on which
the New York Stock Exchange and Boston Federal Reserve are open for business.

Valuation of Fund Securities. The Fund seeks to maintain a $1.00 per
share net asset value and, accordingly, uses the amortized cost valuation method
to value its portfolio instruments. The amortized cost valuation method
initially prices an instrument at its cost and thereafter assumes a constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument.

PURCHASE OF FUND SHARES

Minimum Initial and Subsequent Investments and Account Balance. The
Fund requires a minimum initial investment of $1,000, with the exception of IRA
accounts, for which the minimum initial investment is $250. Subsequent
investments must be at least $100. An investment in the Fund (other than IRA
accounts) may be subject to redemption at the Fund's discretion if the account
balance is less than $1,000 as a result of shareholder redemptions. The Transfer
Agent will give shareholders 60 days' notice that the account will be closed
unless an investment is made to increase the account balance to the $1,000
minimum. Failure to bring the account balance to $1,000 may result in the
Transfer Agent closing the account at the net asset value ("NAV") next
determined on the day the account is closed and mailing the proceeds to the
shareholder's address shown on the Transfer Agent's records. The Fund reserves
the right to reject any purchase order. Investors purchasing Fund assets through
a pension or other participation plan should contact their plan administrator
for further information on purchases.

Offering Dates and Times. Fund shares may be purchased on any business
day without a sales commission. All purchases must be made in US dollars.
Purchase orders in good form (described below) and payments for Fund shares in
Federal funds (or converted to Federal funds) must be received by the Transfer
Agent prior to 4:00 p.m. Eastern time to be effective on the date received and
to be eligible to earn the dividend declared on date of purchase. The Fund
reserves the right to reject any purchase order if payment for Fund shares has
not been received by the Transfer Agent prior to 4:00 p.m. Eastern time.

Order and Payment Procedures. There are several ways to invest in the
Fund. The Fund requires a purchase order in good form, which consists of a
completed and signed Application for each new account regardless of the
investment method. For additional information, including the IRA package,
additional Applications or other forms, call the Customer Service Department at
(800) 647-7327, or write: SSgA Funds, P.O. Box 8317, Boston, MA 02266-8317.

-10-
<PAGE>

Regular Mail: Registered, Express or Certified Mail:

SSgA Funds SSgA Funds
P.O. Box 8317 2 Heritage Drive
Boston, MA 02266-8317 North Quincy, MA 02171

All purchases made by check should be in US dollars from a US bank.
Third party checks and checks drawn on credit card accounts will not be
accepted. Normally, checks are converted to Federal funds within two business
days following receipt of the check. A purchase cannot be effective until
Federal funds are received. When purchases are made by check or periodic account
investment, payment for redemptions may be withheld until the check or account
clears, which may take up to 15 calendar days.

Telephone Exchange Privilege. Subject to the Fund's minimum investment
requirement, investors may exchange a minimum of $100 of their Fund shares
without charge for shares of any other SSgA Fund. To use this option, contact
the Customer Service Department at (800) 647-7327. Shares are exchanged on the
basis of relative net asset value per share. Exchanges may be made over the
phone if the registrations of the two accounts are identical. If the shares of
the Fund were purchased by check, the shares must have been present in an
account for 15 days before the exchange is made. The exchange privilege will
only be available in states which permit exchanges and may be modified or
terminated by the Fund upon 60 days' written notice to shareholders. For Federal
income tax purposes, an exchange constitutes a sale of shares, which may result
in a capital gain or loss.

Federal Funds Wire. An investor may purchase shares by wiring federal
funds to State Street, as Transfer Agent, by:

2. Instructing the wiring bank to wire federal funds to:

State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
ABA #0110-0002-8
DDA #9904-631-0
SSgA Money Market Fund
Account Number and Registration

Failure to properly identify all wires, checks and transfers as
indicated above may cause the Transfer Agent to delay, reject and or incorrectly
apply the settlement of an investor's purchase.

Systematic Investment Plan. Investors can make regular investments in
the Fund with the Systematic Investment Plan by completing the appropriate
section of the Application and attaching a voided personal check. Investors may
make investments monthly, quarterly or annually by deducting $100 or more from
their bank checking accounts. An investor may change the amount or stop
systematic purchase at any time by calling the Customer Service Department at
(800) 647-7327. Investors must meet the Fund's minimum initial requirement

-11-
<PAGE>

before establishing the Systematic Investment Plan. Shares will be purchased at
the offering price next determined following receipt of the order by the
Transfer Agent.

Systematic Exchange. The Fund offers the option of having a set amount
exchanged within the SSgA Funds for accounts with identical registrations.
Investors can choose the date, the frequency (monthly, quarterly or annually)
and the amount. Exchanges may be done among the SSgA Funds once the initial
investment per Fund has been satisfied.

In Kind Exchange of Securities. The Transfer Agent may, at its
discretion, permit investors to purchase shares through the exchange of
securities they hold. Any securities exchanged must meet the investment
objective, policies and limitations of the Fund, must have a readily
ascertainable market value, must be liquid and must not be subject to
restrictions on resale. The market value of any securities exchanged, plus any
cash, must be at least $1 million. Shares purchased in exchange for securities
generally may not be redeemed or exchanged until the transfer has
settled--usually within 15 days following the purchase exchange.

The basis of the exchange will depend upon the relative net asset value
of the shares purchased and securities exchanged. Securities accepted by the
Fund will be valued in the same manner as the Fund values its assets. Any
interest earned on the securities following their delivery to the Transfer Agent
and prior to the exchange will be considered in valuing the securities. All
interest, dividends subscription or other rights attached to the securities
become the property of the Fund, along with the securities.

REDEMPTION OF FUND SHARES

Checkwriting Service. If investors have authorized the check writing
feature on the Application and have completed the signature card, they may
redeem shares in their account, provided that the appropriate signatures are on
the check. The minimum check amount is $500. There is a one-time service charge
of $5 per Fund to establish this feature, and investors may write an unlimited
number of checks provided that the account minimum of $1,000 per Fund is
maintained.

Cash Sweep Program. Money managers of master trust clients may
participate in a cash sweep program to automatically invest excess cash in the
Fund. A money manager must select the Fund, give authorization to complete the
Fund's Application and authorize the investment of excess cash into or the
withdrawal of required cash from the Fund on a daily basis. Where the Adviser
acts as the money manager, the Adviser will receive an advisory fee from the
client.

-12-
<PAGE>

include recording telephonic instructions, mailing to the shareholder a written
confirmation of the transaction, performing a personal identity test with
private information not likely to be known by other individuals, and restricting
mailing of redemptions to the shareholder's address of record, if the address
has not been changed within 60 days of the redemption request. Requests received
via telephone prior to 4:00 p.m. Eastern time will be sent the same day
according to pre-designated instructions.

DURING PERIODS OF DRASTIC ECONOMIC OR MARKET CHANGES, SHAREHOLDERS
USING THIS METHOD MAY ENCOUNTER DELAYS. IN SUCH EVENT, SHAREHOLDERS SHOULD
CONSIDER USING THE MAIL REDEMPTION PROCEDURE DESCRIBED BELOW.

1. The shareholder's address of record has changed within the past 60
days;

2. The shareholder is redeeming more than $50,000 worth of shares; or

3. The shareholder is requesting payment other than by a check mailed
to the address of record and payable to the registered owner(s).

Signature guarantees can usually be obtained from the following
sources:

1. A broker or securities dealer, registered with a domestic stock
exchange;

2. A federal savings, cooperative or other type of bank;

3. A savings and loan or other thrift institution;

4. A credit union; or

5. A securities exchange or clearing agency.

Please check with the institution prior to signing to ensure that they
are an acceptable signature guarantor. A NOTARY PUBLIC CANNOT PROVIDE A
SIGNATURE GUARANTEE.

<TABLE>
<CAPTION>
Seller Requirements for Written Requests

<S> <C> <C>
Owner of individual, (bullet) Letter of instruction, signed by all persons
joint, sole authorized to sign for the account stating general
proprietorship, UGMA/UTMA titles/capacity, exactly as the account is
(custodial accounts for registered; and
minors) or general partner (bullet) Signature guarantee, if applicable (see above).
accounts

-13-
<PAGE>

Owners of corporate or (bullet) Letter of instruction signed by authorized
association accounts person(s), stating capacity as indicated by the
corporate resolution;
(bullet) Corporate resolution, certified within the past 90
days; and
(bullet) Signature guarantee, if applicable (see above).

Joint tenancy shareholders (bullet) Letter of instruction signed by
whose co-tenants are surviving tenant(s);
deceased (bullet) Certified copy of the
death certificate; and
(bullet) Signature guarantee, if applicable
(see above).
</TABLE>

Please contact the Customer Service Department at (800) 647-7327 for
questions and further instructions.

The Fund may pay any portion of the redemption amount in excess of
$250,000 by a distribution in kind of readily marketable securities from the
portfolio of the Fund in lieu of cash. Investors will incur brokerage charges on
the sale of these portfolio securities. The Fund reserves the right to suspend
the right of redemption or postpone the date of payment if emergency conditions,
as specified in the 1940 Act or as determined by the Securities and Exchange
Commission, should exist.

GENERAL MANAGEMENT

The Board of Trustees supervises the management, activities and affairs
of the Fund and has approved contracts with various financial organizations to
provide, among other services, day-to-day management required by the Fund.

Advisory Agreement. The Investment Company employs State Street to
furnish investment services to the Fund. State Street is one of the largest
providers of securities processing and recordkeeping services for US mutual
funds and pension funds. State Street Global Advisors is the investment
management business of State Street, a 200 year old pioneer and leader in the
world of financial services. State Street is a wholly owned subsidiary of State
Street Boston Corporation, a publicly held bank holding company. State Street,
with over $286.9 billion (US) under management as of September 30, 1996,
provides complete global investment management services from offices in the
United States, London, Sydney, Hong Kong, Tokyo, Toronto, Luxembourg, Melbourne,
Montreal, Paris, Dubai, Munich and Brussels.

The Adviser, subject to Board supervision, directs the investments of
the Fund in accordance with the Fund's investment objective, policies and
restrictions. For these services, the Fund pays the Adviser a fee, calculated
daily and paid monthly, that on an annual basis is equal to .25% of the Fund's
average daily net assets.

-14-
<PAGE>

provisions. The Adviser has been advised by its counsel that its activities in
connection with the Fund are consistent with its statutory and regulatory
obligations. THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT ENDORSED OR
GUARANTEED BY STATE STREET OR ITS AFFILIATES, ARE NOT DEPOSITS OR OBLIGATIONS OF
STATE STREET OR ITS AFFILIATES, AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.

Changes in federal or state statutes and regulations relating to the
permissible activities of banks and their affiliates, as well as judicial or
administrative decisions or interpretations of such or future statutes and
regulations, could prevent the Adviser from continuing to perform all or a part
of the above services for its customers and/or the Fund. If the Adviser were
prohibited from serving the Fund in any of its present capacities, the Board of
Trustees would seek an alternative provider(s) of such services. In such event,
changes in the operation of the Fund may occur. It is not expected by the
Adviser that existing shareholders would suffer any adverse financial
consequences (if another adviser with equivalent abilities is found) as a result
of any of these occurrences.

State Street may from time to time have discretionary authority over
accounts which invest in Investment Company shares. These accounts include
accounts maintained for securities lending clients and accounts which permit the
use of Investment Company portfolios as short-term cash sweep investments.
Shares purchased for all discretionary accounts are held of record by State
Street, who retains voting control of such shares. As of November 30, 1996,
State Street held of record less than 25% of the issued and outstanding shares
of the Investment Company in connection with its discretionary accounts.
Consequently, State Street is not deemed to be a controlling person of the
Investment Company for purposes of the 1940 Act.

Pursuant to the Administration Agreement with the Investment Company,
Administrator will: (1) supervise all aspects of the Fund's operations; (2)
provide the Fund with administrative and clerical services, including the
maintenance of certain of the Fund's books and records; (3) arrange the periodic
updating of the Fund's Prospectuses and any supplements thereto; (4) provide
proxy materials and reports to Fund shareholders and the Securities and Exchange
Commission; and (5) provide the Fund with adequate office space and all
necessary office equipment and services, including telephone service, heat,
utilities, stationery supplies and similar items. For these services, the Fund
and the Investment Company's other domestic investment portfolios pay
Administrator a combined fee that on an annual basis is equal to the following
percentages of their average aggregate daily net assets: (1) $0 to and including
$500 million -- .06%; (2) over $500 million to and including $1 billion -- .05%;
and (3) over $1 billion -- .03%. The percentage of the fee paid by a particular
Fund is equal to the percentage of average aggregate daily net assets that are
attributable to that Fund. Administrator will also receive reimbursement of
expenses it incurs in connection with establishing new investment portfolios.
Further, the administration fee paid by the Investment Company will be reduced
by the sum of certain distribution related expenses (up to a maximum of 10% of
the asset-based administration fee listed above).

Administrator also provides administrative services in connection with
the registration of shares of the Investment Company with those states in which
its shares are offered or sold. Compensation for such services is on a "time
spent" basis. Investment Company will pay all registration, exemptive
application, renewal and related fees and reasonable out-of-pocket expenses.

-15-
<PAGE>

adopted by the Investment Company, Administrator and Distributor. Such
restrictions and procedures include substantially all of the recommendations of
the Advisory Group of the Investment Company Institute and comply with
Securities and Exchange Commission rules and regulations.

The Fund has adopted a distribution plan pursuant to Rule 12b-1 (the
"Plan") under the 1940 Act for the Class A shares. The purpose of the Plan is to
provide for the payment of certain Investment Company distribution and
shareholder servicing expenses. Under the Plan, the Distributor will be
reimbursed in an amount up to .25% of the Fund's average annual net assets for
distribution-related and shareholder servicing expenses. Payments under the Plan
will be made to the Distributor to finance activity that is intended to result
in the sale and retention of Fund shares including: (1) the costs of
prospectuses, reports to shareholders and sales literature; (2) advertising; and
(3) expenses incurred in connection with the promotion and sale of Fund shares,
including the Distributor's overhead expenses for rent, office supplies,
equipment, travel, communication, compensation and benefits of sales personnel.

Under the Plan, the Fund may also enter into agreements ("Service
Agreements") with financial institutions, which may include the Adviser
("Service Organizations"), to provide shareholder servicing with respect to Fund
shares held by or for the customers of the Service Organizations. Under the
Service Agreements, the Service Organizations may provide various services for
such customers including: answering inquiries regarding the Fund; assisting
customers in changing dividend options, account designations and addresses;
performing subaccounting for such customers; establishing and maintaining
customer accounts and records; processing purchase and redemption transactions;
providing periodic statements showing customers' account balances and
integrating such statements with those of other transactions and balances in the
customers' other accounts serviced by the Service Organizations; arranging for
bank wires transferring customers' funds; and such other services as the
customers may request in connection with the Fund, to the extent permitted by
applicable statute, rule or regulation. Service Organizations may receive from
the Fund, for shareholder servicing, a monthly fee at a rate that shall not
exceed .20% per annum of the average daily net asset value of the Fund's shares
owned by or for shareholders with whom the Service Organization has a servicing
relationship. Banks and other financial service firms may be subject to various
state laws, and may be required to register as dealers pursuant to state law.

Payments to the Distributor, as well as payments to Service
Organizations from the Fund, are not permitted by the Plan to exceed .25% per
year of the Fund's average net asset value per year. Any payments that are
required to be made by the Distribution Agreement and any Service Agreement but
could not be made because of the .25% limitation may be carried forward and paid
in subsequent years so long as the Plan is in effect. The Fund's liability for
any such expenses carried forward shall terminate at the end of two years
following the year in which the expenditure was incurred. Service Organizations
will be responsible for prompt transmission of purchase and redemption orders
and may charge fees for their services.

-16-
<PAGE>

FUND EXPENSES

The Fund will pay all of its expenses other than those expressly
assumed by the Adviser and Administrator. The Fund's principal expenses are the
annual advisory fee payable to the Adviser and distribution and shareholder
servicing expenses. Other expenses include: (1) amortization of deferred
organizational costs; (2) taxes, if any; (3) expenses for legal, auditing and
financial accounting services; (4) expense of preparing (including typesetting,
printing and mailing) reports, prospectuses and notices to existing
shareholders; (5) administrative fees; (6) custodian fees; (7) expense of
issuing and redeeming Fund shares; (8) the cost of registering Fund shares under
federal and state laws; (9) shareholder meetings and related proxy solicitation
expenses; (10) the fees, travel expenses and other out-of-pocket expenses of
Trustees who are not affiliated with the Adviser or any of its affiliates; (11)
insurance, interest, brokerage and litigation costs; (12) extraordinary expenses
as may arise, including expenses incurred in connection with litigation
proceedings and claims and the legal obligations of the Investment Company to
indemnify its Trustees, officers, employees, shareholders, distributors and
agents; and (13) other expenses properly payable by the Fund. Where any of these
other expenses are attributable to a particular class of shares, they will be
borne by the beneficial owners of such shares.

PERFORMANCE CALCULATIONS

From time to time the Fund may advertise the yield and effective yield
of its Class A shares. The yield of each Fund refers to the income generated by
an investment in Class A shares of the Fund over a seven-day period (which
period will be stated in the advertisement). This income is then annualized.
That is, the amount of income generated by the investment during that week is
assumed to be generated each week over a 52-week period and is shown as a
percentage of the investment. The effective yield is calculated similarly but,
when annualized, the income earned by an investment in the Fund is assumed to be
reinvested. The effective yield will be slightly higher than the yield because
of the compounding effect of this assumed reinvestment.

From time to time, the Fund may also report yield and effective yield
as calculated over a one-month period (which period will also be stated in the
advertisement). These one-month periods will be annualized using the same method
as described above for yields calculated on the basis of seven-day periods. From
time to time, yields calculated on a monthly basis may also be linked to provide
yield figures for periods greater than one month.

From time to time the Fund may advertise the total return of its Class
A Shares. The total return of the Fund is the average annual compounded rate of
return from a hypothetical investment in the Fund's Class A Shares over one-,
five- and ten-year periods or for the life of the Fund (as stated in the
advertisement), assuming the reinvestment of all dividends and capital gain
distributions.

Comparative performance information may be used from time to time in
advertising or marketing Fund shares, including data from Lipper Analytical
Services, Inc., IBC/Donoghue's Money Fund Report, the Bank Rate Monitor, Wall
Street Journal Score Card, Lehman Brothers Index or other industry publications,
business periodicals, rating services and market indices. The Fund may also
advertise nonstandardized performance information which is for periods in
addition to those required to be presented.

Quoted yields, total returns and other performance figures are based on
historical earnings and are not indications of future performance.

-17-
<PAGE>

ADDITIONAL INFORMATION

Custodian, Transfer Agent and Independent Accountants. State Street
holds all portfolio securities and cash assets of the Fund, provides portfolio
recordkeeping services and serves as the Fund's transfer agent ("Transfer
Agent") and custodian ("Custodian"). State Street is authorized to deposit
securities in securities depositories or to use the services of subcustodians.
State Street has no responsibility for the supervision and management of the
Fund except as investment adviser. Coopers & Lybrand L.L.P., Boston,
Massachusetts, is the Investment Company's independent accountants.

Reports to Shareholders and Shareholder Inquiries. Shareholders will
receive unaudited semiannual financial statements and annual financial
statements audited by the Investment Company's independent accountants.
Shareholder inquiries regarding the Prospectus, financial statements, or
shareholder balances may be made by calling (800) 647-7327.

Organization, Capitalization and Voting. The Investment Company was
organized as a Massachusetts business trust on October 3, 1987, and operates
under a First Amended and Restated Master Trust Agreement dated October 13,
1993, as amended. The Investment Company issues shares divisible into an
unlimited number of series (or funds), each of which is a separate trust under
Massachusetts law. The Money Market Fund is one such series. Shares of a fund
are entitled to such relative rights and preferences and dividends and
distributions earned on assets of the Fund as may be declared by the Board of
Trustees. Fund shares are fully paid and nonassessable by the Investment Company
and have no preemptive rights. The Investment Company is authorized to subdivide
each series into two or more classes of shares. Currently, shares of the Money
Market Fund are divided into Class A, Class B and Class C. Each class of shares
of the Fund is entitled to the same rights and privileges as all other classes
of that Fund, provided however, that each class bears the expenses related to
its distribution and shareholder servicing arrangements, as well as other
expenses attributable to the class and unrelated to managing the Fund's
portfolio securities. As described above, the Investment Company has adopted a
plan of distribution under rule 12b-1 for Class A shares. Similar plans have
been adopted for Class B and Class C shares. However, total payments under those
plans are limited to .35% and .60% annually of the average net asset value of
the Class B and Class C shares, respectively of the Fund. As a result of these
plan and other class expenses, the yield on Class B and Class C shares will be
approximately .25% and .50% lower, respectively, than the yield on Class A
shares.

Each Fund share has one vote. There are no cumulative voting rights.
There is no annual meeting of shareholders, but special meetings may be held. On
any matter that affects only a particular investment fund, only shareholders of
that fund may vote unless otherwise required by the 1940 Act or the Master Trust
Agreement. Further, any matter that affects only the holders of a particular
class of shares may be voted on only by such shareholders. Each class of shares
votes separately with respect to any Rule 12b-1 plan applicable to such class.
The Trustees hold office for the life of the Trust. A Trustee may resign or
retire, and may be removed at any time by a vote of two-thirds of Investment
Company shares or by a vote of a majority of the Trustees. The Trustees shall
promptly call and give notice of a meeting of shareholders for the purpose of
voting upon removal of any Trustee when requested to do so in writing by holders
of not less than 10% of the shares then outstanding. A vacancy on the Board of
Trustees may be filled by the vote of a majority of the remaining Trustees,
provided that immediately thereafter at least two-thirds of the Trustees have
been elected by shareholders.

The Investment Company does not issue share certificates for the Fund.
Transfer Agent sends monthly statements to shareholders of the Fund concurrent
with any transaction activity, confirming all investments in or redemptions from
their accounts. Each statement also sets forth the balance of shares held in the
account.

-18-
<PAGE>

SSgA FUNDS
Two International Place, 35th Floor
Boston, Massachusetts 02110

INVESTMENT ADVISER, CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110

DISTRIBUTOR
Russell Fund Distributors, Inc.
Two International Place, 35th Floor
Boston, Massachusetts 02110

ADMINISTRATOR
Frank Russell Investment Management Company
909 A Street
Tacoma, Washington 98402

LEGAL COUNSEL
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109

INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109

-19-

<PAGE>

SSgA FUNDS

SSgA Money Market Fund

SSgA US Government Money Market Fund

SSgA Tax Free Money Market Fund

SSgA S&P 500 Index Fund

SSgA Small Cap Fund

SSgA Matrix Equity Fund

SSgA Yield Plus Fund

SSgA Growth and Income Fund

SSgA Intermediate Fund

SSgA Active International Fund

SSgA Emerging Markets Fund

SSgA Bond Market Fund

-20-

<PAGE>

Filed pursuant to Rule 485(b)
File Nos. 33-19229; 811-5430

SSgA FUNDS
Two International Place, 35th Floor
Boston, Massachusetts 02110
(800) 647-7327

US GOVERNMENT MONEY MARKET FUND

Class A Shares
--------------

SSgA Funds (formerly known as The Seven Seas Series Fund) is a registered,
open-end investment company with multiple portfolios, each of which is a mutual
fund. This Prospectus describes and offers shares of beneficial interest in one
of the mutual funds, the SSgA US Government Money Market Fund (the "Government
Money Market Fund" or "Fund"). The Government Money Market Fund seeks to
maximize current income, to the extent consistent with the preservation of
capital and liquidity and the maintenance of a stable $1.00 per share net asset
value, by investing in obligations of the US Government or its instrumentalities
with remaining maturities of one year or less. The Fund's shares are offered
without sales commissions. However, the Fund pays certain distribution expenses
under its Rule 12b-1 plan.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS ANY SUCH
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
INVESTMENTS IN THE FUND ARE NEITHER INSURED NOR GUARANTEED BY THE US
GOVERNMENT. THERE IS NO ASSURANCE THAT THE GOVERNMENT MONEY MARKET FUND WILL
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
SHARES IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, STATE STREET BANK AND TRUST COMPANY, AND SHARES ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER AGENCY, AND INVOLVE INVESTMENT RISKS INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor ought to know before investing. Please read and retain this
document for future reference. Additional information about the Fund has been
filed with the Securities and Exchange Commission in a Statement of Additional
Information dated December 27, 1996. The Statement of Additional Information is
incorporated herein by reference and is available without charge from
Distributor at its address noted below or by calling (800) 647-7327.

PROSPECTUS DATED DECEMBER 27, 1996

-1-
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page

<S> <C>
Fund Operating Expenses................................................................................... 3

Financial Highlights...................................................................................... 4

SSgA Funds................................................................................................ 5

Manner of Offering........................................................................................ 5

Investment Objective, Policies and Restrictions........................................................... 5

Portfolio Maturity ....................................................................................... 8

Dividends and Distributions............................................................................... 8

Taxes..................................................................................................... 8

Valuation of Fund Shares.................................................................................. 9

Purchase of Fund Shares................................................................................... 9

Redemption of Fund Shares................................................................................. 11

General Management........................................................................................ 13

Fund Expenses............................................................................................. 15

Performance Calculations.................................................................................. 15

Additional Information.................................................................................... 16
</TABLE>

-2-
<PAGE>

FUND OPERATING EXPENSES
SSgA US GOVERNMENT MONEY MARKET FUND
CLASS A SHARES

The purpose of the following table is to assist the investor in understanding
the various costs and expenses that an investor in Class A shares of the US
Government Money Market Fund will incur directly or indirectly. The examples
should not be considered a representation of past or future expenses. Actual
expenses may be greater or less than those shown.
For additional information, see "General Management."

Shareholder Transaction Expenses:
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees None
Exchange Fee None

Annual Fund Operating Expenses:
(as a percentage of average daily net assets)
Advisory Fees .25%
12b-1 Fees1 .06
Other Expenses .09
---

Total Operating Expenses2 .40%
===

<TABLE>
<CAPTION>
Examples: 1 year 3 years 5 years 10 years
- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment, assuming: (i) 5% annual
return; and (ii) redemption at
the end of each time period: $4 $13 $22 $51
== === === ===
</TABLE>

The shares of the Fund are divided into three classes: Class A, Class B and
Class C. Class B and C shares are offered through separate prospectuses. Each
class of shares of the Fund is entitled to the same rights and privileges as all
other classes of shares of the Fund, provided however, that each class bears the
expenses related to its distribution and shareholder servicing arrangements and
certain other expenses attributable to the class. Annual distribution and
shareholder servicing expenses for Class A, Class B and Class C shares are equal
to approximately .06%, .31% and .56%, respectively, of the average daily net
asset value of the shares of the class. Total operating expenses for Class A,
Class B and Class C shares are equal to approximately .40%, .69% and .94%,
respectively, of the average daily net asset value of the shares of the class.

-3-
<PAGE>

FINANCIAL HIGHLIGHTS
SSgA US GOVERNMENT MONEY MARKET FUND

<TABLE>
<CAPTION>
1996 1995 1994 1993 1992 1991++
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF YEAR $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
------- ------- ------- ------- ------- -------

INCOME FROM INVEST-
MENT OPERATIONS:
Net investment income .0515 .0528 .0324 .0304 .0441 .0302
----- ---- ----- ---- ----- ---- ----- ---- ----- -----

LESS DISTRIBUTIONS:
Net investment income (.0515) (.0528) (.0324) (.0304) (.0441) (.0302)
------- -- ------- -- ------- -- ------- -- ------- -------

NET ASSET VALUE,
END OF YEAR $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= ======= =======

TOTAL RETURN (%)(a) 5.27 5.38 3.30 3.08 4.49 3.06

- ----------
++ For the period March 1, 1991 (commencement of operations) to August 31,
1991.
(a) Periods less than one year are not annualized.
(b) The ratios for the period ended August 31, 1991 are annualized.

-4-
<PAGE>

SSgA FUNDS

SSgA Funds ("Investment Company") is an open-end management investment
company that is organized as a Massachusetts business trust. In addition, each
series of the Investment Company is diversified as defined in the Investment
Company Act of 1940, as amended ("1940 Act"). As a "series" company, Investment
Company is authorized to issue an unlimited number of shares evidencing
beneficial interests in different investment portfolios. Through this
Prospectus, Investment Company offers Class A shares in the US Government Money
Market Fund. State Street Bank and Trust Company (the "Adviser" or "State
Street") serves as the investment adviser for the Fund.

MANNER OF OFFERING

Distribution and Eligible Investors. Shares of the Fund are offered
without a sales commission by Russell Fund Distributors, Inc. (the
"Distributor"), Investment Company's distributor, to US and foreign
institutional and retail investors that invest for their own account or in a
fiduciary or agency capacity. The Fund will incur distribution expenses under
its Rule 12b-1 plan. See "General Management -- Distribution Services and
Shareholder Servicing Arrangements."

INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS

The Government Money Market Fund's fundamental investment objective is to
maximize current income to the extent consistent with the preservation of
capital and liquidity, and the maintenance of a stable $1.00 per share net asset
value, by investing in obligations of the US Government or its agencies or
instrumentalities with remaining maturities of one year or less.

The Fund attempts to meet its investment objective by investing in
obligations issued or guaranteed as to principal and interest by the US
Government or its agencies or instrumentalities or in repurchase agreements
secured by such instruments. (See "Investment Policies -- US Government
Securities.") Under normal market conditions, the Government Money Market Fund
will be 100% invested in such securities.

Investment Policies
- -------------------

The investment policies described below reflect the Fund's current
practices, are not fundamental and may be changed by the Board of Trustees of
Investment Company without shareholder approval. For more information on these
investment policies, please see the Statement of Additional Information. To the
extent consistent with the Fund's fundamental investment objective and
restrictions, the Fund may invest in the following instruments and may use the
following investment techniques:

-5-
<PAGE>

more than seven days. The Fund will limit repurchase transactions to those
member banks of the Federal Reserve System and broker-dealers whose
creditworthiness Adviser considers satisfactory. Should the counterparty to a
transaction fail financially, the Fund may encounter delay and incur costs
before being able to sell the securities. Further, the amount realized upon the
sale of the securities may be less than that necessary to fully compensate the
Fund.

Variable Amount Master Demand Notes. Variable amount master demand
notes are unsecured obligations that are redeemable upon demand and are
typically unrated. These instruments are issued pursuant to written agreements
between their issuers and holders. The agreements permit the holders to increase
(subject to an agreed maximum) and the holders and issuers to decrease the
principal amount of the notes, and specify that the rate of interest payable on
the principal fluctuates according to an agreed formula.

-6-
<PAGE>

greater impact on the market value of a zero coupon security than on the market
value of compatible securities that pay interest periodically during the life of
the instrument.

Lending Portfolio Securities. The Fund may lend portfolio securities
with a value of up to 33-1/3% of its total assets. Such loans may be terminated
at any time. The Fund will receive cash or US Treasury bills, notes and bonds in
an amount equal to at least 100% of the current market value (on a daily
marked-to-market basis) of the loaned securities plus accrued interest. In a
loan transaction, as compensation for lending it securities, the Fund will
receive a portion of the dividends or interest accrued on the securities held as
collateral or, in the case of cash collateral, a portion of the income from the
investment of such cash. In addition, the Fund will receive the amount of all
dividends, interest and other distributions on the loaned securities. However,
the borrower has the right to vote the loaned securities. The Fund will call
loans to vote proxies if a material issue affecting the investment is to be
voted upon. Should the borrower of the securities fail financially, the Fund may
experience delays in recovering the securities or exercising its rights in the
collateral. Loans are made only to borrowers that are deemed by Adviser to be of
good financial standing. In a loan transaction, the Fund will also bear the risk
of any decline in value of securities acquired with cash collateral. The Fund
will minimize this risk by limiting the investment of cash collateral to high
quality instruments of short maturity.

Investment Restrictions

1. Invest 25% or more of the value of its total assets in securities of
companies primarily engaged in any one industry (other than the US
Government, its agencies or instrumentalities). Concentration may
occur as a result of changes in the market value of portfolio
securities, but may not result from investment. US banks and certain
domestic branches of foreign banks are not considered a single
industry for purposes of this restriction.

2. Borrow money (including reverse repurchase agreements), except as a
temporary measure for extraordinary or emergency purposes or to
facilitate redemptions (not for leveraging or investment), provided
that borrowings do not exceed an amount equal to 33-1/3% of the
current value of the Fund's assets taken at market value, less
liabilities other than borrowings. If at any time the Fund's
borrowings exceed this limitation due to a decline in net assets,
such borrowings will within three days be reduced to the extent
necessary to comply with this limitation. A Fund will not purchase
additional investments if borrowed funds (including reverse
repurchase agreements) exceed 5% of total assets.

-7-
<PAGE>

PORTFOLIO MATURITY

The Fund must limit investments to securities with remaining maturities
of 397 days or less (as determined in accordance with applicable SEC
regulations) and must maintain a dollar-weighted average maturity of 90 days or
less. The Fund normally holds portfolio instruments to maturity but may dispose
of them prior to maturity if Adviser finds it advantageous.

DIVIDENDS AND DISTRIBUTIONS

Distribution Option. Investors can choose from four different
distribution options as indicated on the account Application:

(bullet) Reinvestment Option--Dividends and capital gains distributions
will be automatically reinvested in additional shares of the
Fund. If the investor does not indicate a choice on the
Application, this option will be automatically assigned.
(bullet) Income-Earned Option--Capital gain distributions will be
automatically reinvested, but a check or wire will be sent for
each dividend distribution.
(bullet) Cash Option--A check or wire will be sent for each dividend
and capital gain distribution.
(bullet) Direct Dividends Option--Dividends and capital gain
distribution will be automatically invested in another
identically registered SSgA Fund.

The Transfer Agent will wire dividends (if that option is elected) to a
pre-designated bank on the first business day of the following month in which
the dividend is payable.

TAXES

-8-
<PAGE>

Dividends and distributions may also be subject to state or local taxes.
Depending on the state tax rules pertaining to a shareholder, a portion of the
dividends paid by the Fund attributable to direct obligations of the US Treasury
and certain agencies may be exempt from state and local taxes.

The sale of Fund shares by a shareholder is a taxable event and may result
in capital gain or loss. A capital gain or loss may be realized from an ordinary
redemption of shares or an exchange of shares between two mutual funds (or two
series of portfolios of a mutual fund). Any loss incurred on sale or exchange of
Fund shares held for one year or more will be treated as a long-term capital
loss to the extent of capital gain dividends received with respect to such
shares.

The foregoing discussion is only a summary of certain federal income tax
issues generally affecting the Fund and its shareholders. Circumstances among
investors may vary and each investor is encouraged to discuss investment in the
Fund with the investor's tax adviser.

VALUATION OF FUND SHARES

Net Asset Value Per Share. Net asset value per share for each class of
shares of the Fund is computed by adding the value of all securities and other
assets of the Fund, deducting accrued liabilities allocated to the class,
dividing by the number of shares outstanding in a class and rounding to the
nearest cent. The Fund determines net asset value twice each business day, as of
12:00 noon Eastern time and as of the close of the regular trading session of
the New York Stock Exchange (ordinarily 4:00 p.m. Eastern time). A business day
is one on which the New York Stock Exchange and Boston Federal Reserve are open
for business.

PURCHASE OF FUND SHARES

-9-
<PAGE>

12:00 noon Eastern time will earn the dividend determined on the next day. The
Fund reserves the right to reject any purchase order if payment for Fund shares
has not been received by the Transfer Agent prior to 4:00 p.m. Eastern time.

Regular Mail: Registered, Express or Certified Mail:

SSgA Funds SSgA Funds
P.O. Box 8317 2 Heritage Drive
Boston, MA 02266-8317 North Quincy, MA 02171

All purchases made by check should be in US dollars from a US bank.
Third party checks and checks drawn on credit card accounts will not be
accepted. Normally, checks are converted to Federal funds within two business
days following receipt of the check. A purchase cannot be effective until
Federal funds are received. When purchases are made by check or periodic account
investment, payment for redemptions may be withheld until the check or account
clears, which may take up to 15 calendar days.

Federal Funds Wire. An investor may purchase shares by wiring federal
funds to State Street, as Transfer Agent, by:

2. Instructing the wiring bank to wire federal funds to:

State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
ABA #0110-0002-8
DDA #9904-631-0
SSgA Government Fund
Account Number and Registration

Failure to properly identify all wires, checks and transfers as
indicated above may cause the Transfer Agent to delay, reject and or incorrectly
apply the settlement of an investor's purchase.

-10-
<PAGE>

REDEMPTION OF FUND SHARES

Fund shares may be redeemed on any business day at the net asset value
next determined after the receipt of a redemption request by following one of
the methods described below. Payments will be made as soon as possible (but will
ordinarily not exceed seven days) and will be mailed to the shareholder's
address of record. Upon request, redemption proceeds will be wire transferred to
the shareholder's account at a domestic commercial bank that is a member of the
Federal Reserve System. Payment for redemption of shares by check may be
withheld for up to 15 days after the date or purchase to assure that the check
is honored. A dividend will be paid on shares redeemed if the redemption request
is received by State Street after 12:00 noon Eastern time. Redemption requests
received before 12:00 noon Eastern time will not be entitled to that day's
dividend.

-11-
<PAGE>

by other individuals, and restricting mailing of redemptions to the
shareholder's address of record, if the address has not been changed within 60
days of the redemption request.

DURING PERIODS OF DRASTIC ECONOMIC OR MARKET CHANGES, SHAREHOLDERS USING THIS
METHOD MAY ENCOUNTER DELAYS. IN SUCH EVENT, SHAREHOLDERS SHOULD CONSIDER USING
THE MAIL REDEMPTION PROCEDURE DESCRIBED BELOW.

1. The shareholder's address of record has changed within the past 60
days;
2. The shareholder is redeeming more than $50,000 worth of shares; or
3. The shareholder is requesting payment other than by a check mailed
to the address of record and payable to the registered owner(s).

Signature guarantees can usually be obtained from the following
sources:

1. A broker or securities dealer, registered with a domestic stock
exchange;
2. A federal savings, cooperative or other type of bank;
3. A savings and loan or other thrift institution;
4. A credit union; or
5. A securities exchange or clearing agency.

Please check with the institution prior to signing to ensure that they
are an acceptable signature guarantor. A NOTARY PUBLIC CANNOT PROVIDE A
SIGNATURE GUARANTEE.

Seller Requirements for Written Requests
<S> <C>
Owner of individual, (bullet) Letter of instruction, signed by all persons authorized
joint, sole to sign for the account stating general titles/capacity,
proprietor-ship, exactly as the account is registered; and
UGMA/UTMA (custodial (bullet) Signature guarantee, if applicable (see above).
accounts for minors) or
general partner accounts
Owners of corporate or (bullet) Letter of instruction signed by authorized person(s),
association accounts stating capacity as indicated by the corporate resolution;
(bullet) Corporate resolution, certified within the past 90 days;
and

-12-
<PAGE>

(bullet) Signature guarantee, if applicable (see above).

Joint tenancy (bullet) Letter of instruction signed by surviving tenant(s);
share-holders whose (bullet) Certified copy of the death certificate; and
co-tenants are deceased (bullet) Signature guarantee, if applicable (see above).

</TABLE>

Please contact the Customer Service Department at (800) 647-7327 for
questions and further instructions.

GENERAL MANAGEMENT

Advisory Agreement. Investment Company employs State Street to furnish
investment services to the Fund. State Street is one of the largest providers of
securities processing and recordkeeping services for US mutual funds and pension
funds. State Street Global Advisors is the investment management business of
State Street, a 200 year old pioneer and leader in the world of financial
services. State Street is a wholly owned subsidiary of State Street Boston
Corporation, a publicly held bank holding company. State Street, with over
$286.9 billion (US) under management as of September 30, 1996, provides complete
global investment management services from offices in the United States, London,
Sydney, Hong Kong, Tokyo, Toronto, Luxembourg, Melbourne, Montreal, Paris,
Dubai, Munich and Brussels.

Adviser, subject to Board supervision, directs the investments of the
Fund in accordance with the Fund's investment objective, policies and
restrictions. For these services, the Fund pays Adviser a fee, calculated daily
and paid monthly, that on an annual basis is equal to .25% of the Fund's average
daily net assets.

The Glass-Steagall Act prohibits a depository state chartered bank such
as Adviser from engaging in the business of issuing, underwriting, selling or
distributing certain securities. The activities of Adviser in informing its
customers of the Fund, performing investment and redemption services and
providing custodian, transfer, shareholder servicing, dividend disbursing and
investment advisory services may raise issues under these provisions. Adviser
has been advised by its counsel that its activities in connection with the Fund
are consistent with its statutory and regulatory obligations. The shares offered
by this Prospectus are not endorsed or guaranteed by State Street or its
affiliates, are not deposits or obligations of State Street or its affiliates,
and are not insured by the Federal Deposit Insurance Corporation or any other
governmental agency.

-13-
<PAGE>

State Street may from time to time have discretionary authority over
accounts which invest in Investment Company shares. These accounts include
accounts maintained for securities lending clients and accounts which permit the
use of Investment Company portfolios as short-term cash sweep investments.
Shares purchased for all discretionary accounts are held of record by State
Street, who retains voting control of them. As of November 30, 1996, State
Street held of record less than 25% of the issued and outstanding shares of
Investment Company in connection with its discretionary accounts. Consequently,
State Street is not deemed to be a controlling person of Investment Company for
purposes of the 1940 Act.

Pursuant to the Administration Agreement with Investment Company,
Administrator will: (1) supervise all aspects of the Fund's operations; (2)
provide the Fund with administrative and clerical services, including the
maintenance of certain of the Fund's books and records; (3) arrange the periodic
updating of the Fund's prospectuses and any supplements thereto; (4) provide
proxy materials and reports to Fund shareholders and the Securities and Exchange
Commission; and (5) provide the Fund with adequate office space and all
necessary office equipment and services, including telephone service, heat,
utilities, stationery supplies and similar items. For these services, the Fund
and Investment Company's other domestic investment portfolios pay Administrator
a combined fee that on an annual basis is equal to the following percentages of
their average aggregate daily net assets: (1) $0 to and including $500 million
- -- .06%; (2) over $500 million to and including $1 billion -- .05%; and (3) over
$1 billion -- .03%. The percentage of the fee paid by a particular Fund is equal
to the percentage of average aggregate daily net assets that are attributable to
that Fund. Administrator will also receive reimbursement of expenses it incurs
in connection with establishing new investment portfolios. Further, the
administration fee paid by the Investment Company will be reduced by the sum of
certain distribution related expenses (up to a maximum of 10% of the asset-based
administration fee listed above).

Administrator also provides administrative services in connection with
the registration of shares of Investment Company with those states in which its
shares are offered or sold. Compensation for such services is on a "time spent"
basis. Investment Company will pay all registration, exemptive application,
renewal and related fees and reasonable out-of-pocket expenses.

Distribution Services and Shareholder Servicing Arrangements. Pursuant
to the Distribution Agreement with Investment Company, the Distributor, a wholly
owned subsidiary of Administrator, serves as distributor for all Fund shares.

The Fund has adopted a distribution plan pursuant to Rule 12b-1 (the
"Plan") under the 1940 Act for the Class A shares. The purpose of the Plan is to
provide for the payment of certain Investment Company distribution and
shareholder servicing expenses. Under the Plan, Distributor will be reimbursed
in an amount up to .25% of the Fund's average annual net assets for
distribution-related and shareholder servicing expenses. Payments under the Plan
will be made to Distributor to finance activity that is intended to result in
the sale and retention of Fund shares including: (1) the costs of prospectuses,
reports to shareholders and sales literature; (2) advertising; and (3) expenses
incurred in connection with the promotion and sale of Fund shares, including
Distributor's overhead expenses for rent, office supplies, equipment, travel,
communication, compensation and benefits of sales personnel.

-14-
<PAGE>

Under the Plan, the Fund may also enter into agreements ("Service
Agreements") with financial institutions, which may include Adviser ("Service
Organizations"), to provide shareholder servicing with respect to Fund shares
held by or for the customers of the Service Organizations. Under the Service
Agreements, the Service Organizations may provide various services for such
customers including: answering inquiries regarding the Fund; assisting customers
in changing dividend options, account designations and addresses; performing
subaccounting for such customers; establishing and maintaining customer accounts
and records; processing purchase and redemption transactions; providing periodic
statements showing customers' account balances and integrating such statements
with those of other transactions and balances in the customers' other accounts
serviced by the Service Organizations; arranging for bank wires transferring
customers' funds; and such other services as the customers may request in
connection with the Fund, to the extent permitted by applicable statute, rule or
regulation. Service Organizations may receive from the Fund, for shareholder
servicing, a monthly fee at a rate that shall not exceed .20% per annum of the
average daily net asset value of the Fund's shares owned by or for shareholders
with whom the Service Organization has a servicing relationship. Banks and other
financial service firms may be subject to various state laws, and may be
required to register as dealers pursuant to state law.

Payments to Distributor, as well as payments to Service Organizations
from the Fund, are not permitted by the Plan to exceed .25% per year of the
Fund's average net asset value per year. Any payments that are required to be
made by the Distribution Agreement and any Service Agreement but could not be
made because of the .25% limitation may be carried forward and paid in
subsequent years so long as the Plan is in effect. The Fund's liability for any
such expenses carried forward shall terminate at the end of two years following
the year in which the expenditure was incurred. Service Organizations will be
responsible for prompt transmission of purchase and redemption orders and may
charge fees for their services.

FUND EXPENSES

The Fund will pay all of its expenses other than those expressly
assumed by Adviser and Administrator. The Fund's principal expenses are the
annual advisory fee payable to Adviser and distribution and shareholder
servicing expenses. Other expenses include: (1) amortization of deferred
organizational costs; (2) taxes, if any; (3) expenses for legal, auditing and
financial accounting services; (4) expense of preparing (including typesetting,
printing and mailing) reports, prospectuses and notices to existing
shareholders; (5) administrative fees; (6) custodian fees; (7) expense of
issuing and redeeming Fund shares; (8) the cost of registering Fund shares under
federal and state laws; (9) shareholder meetings and related proxy solicitation
expenses; (10) the fees, travel expenses and other out-of-pocket expenses of
Trustees who are not affiliated with Adviser or any of its affiliates; (11)
insurance, interest, brokerage and litigation costs; (12) extraordinary expenses
as may arise, including expenses incurred in connection with litigation
proceedings and claims and the legal obligations of Investment Company to
indemnify its Trustees, officers, employees, shareholders, distributors and
agents; and (13) other expenses properly payable by the Fund. Where any of these
other expenses are attributable to a particular class of shares, they will be
borne by the beneficial owners of such shares.

PERFORMANCE CALCULATIONS

-15-
<PAGE>

investment. The effective yield is calculated similarly but, when annualized,
the income earned by an investment in the Fund is assumed to be reinvested. The
effective yield will be slightly higher than the yield because of the
compounding effect of this assumed reinvestment.

From time to time, the Fund may also report yield and effective yield as
calculated over a one-month period (which period will also be stated in the
advertisement). These one-month periods will be annualized using the same method
as described above for yields calculated on the basis of seven-day periods. From
time to time, yields calculated on a monthly basis may also be linked to provide
yield figures for periods greater than one month.

Quoted yields, total returns and other performance figures are based on
historical earnings and are not indications of future performance.

ADDITIONAL INFORMATION

Organization, Capitalization and Voting. Investment Company was
organized as a Massachusetts business trust on October 3, 1987, and operates
under a First Amended and Restated Master Trust Agreement dated October 13,
1993, as amended. Investment Company issues shares divisible into an unlimited
number of series (or funds), each of which is a separate trust under
Massachusetts law. The Government Money Market Fund is one such series. Shares
of a fund are entitled to such relative rights and preferences and dividends and
distributions earned on assets of the Fund as may be declared by the Board of
Trustees. Fund shares are fully paid and nonassessable by Investment Company and
have no preemptive rights. Investment Company is authorized to subdivide each
series into two or more classes of shares. Currently, shares of the Government
Money Market Fund are divided into Class A, Class B and Class C. Each class of
shares of the Fund is entitled to the same rights and privileges as all other
classes of that Fund, provided however, that each class bears the expenses
related to its distribution and shareholder servicing arrangements, as well as
other expenses attributable to the class and unrelated to managing the Fund's
portfolio securities. As described above, Investment Company has adopted a plan
of distribution under rule 12b-1 for Class A shares. Similar plans have been
adopted for Class B and Class C shares. However, total payments under those
plans are limited to .35% and .60% annually of the average net asset value of
the Class B and Class C shares, respectively of the Fund. As a result of these
plan and other class expenses, the yield on Class B and Class C shares will be
approximately .25% and .50% lower, respectively, than the yield on Class A
shares.

-16-
<PAGE>

Each Fund share has one vote. There are no cumulative voting rights.
There is no annual meeting of shareholders, but special meetings may be held. On
any matter that affects only a particular investment fund, only shareholders of
that fund may vote unless otherwise required by the 1940 Act or the Master Trust
Agreement. Further, any matter that affects only the holders of a particular
class of shares may be voted on only by such shareholders. Each class of shares
votes separately with respect to any Rule 12b-1 plan applicable to such class.
The Trustees hold office for the life of the Trust. A Trustee may resign or
retire, and may be removed at any time by a vote of two-thirds of Investment
Company shares or by a vote of a majority of the Trustees. The Trustees shall
promptly call and give notice of a meeting of shareholders for the purpose of
voting upon removal of any Trustee when requested to do so in writing by holders
of not less than 10% of the shares then outstanding. A vacancy on the Board of
Trustees may be filled by the vote of a majority of the remaining Trustees,
provided that immediately thereafter at least two-thirds of the Trustees have
been elected by shareholders.

Investment Company does not issue share certificates for the Fund.
Transfer Agent sends monthly statements to shareholders of the Fund concurrent
with any transaction activity, confirming all investments in or redemptions from
their accounts. Each statement also sets forth the balance of shares held in the
account.

-17-
<PAGE>

SSgA FUNDS
Two International Place, 35th Floor
Boston, Massachusetts 02110

INVESTMENT ADVISER, CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110

DISTRIBUTOR
Russell Fund Distributors, Inc.
Two International Place, 35th Floor
Boston, Massachusetts 02110

ADMINISTRATOR
Frank Russell Investment Management Company
909 A Street
Tacoma, Washington 98402

LEGAL COUNSEL
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109

INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109

-18-
<PAGE>

SSgA FUNDS

SSgA Money Market Fund

SSgA US Government Money Market Fund

SSgA Tax Free Money Market Fund

SSgA S&P 500 Index Fund

SSgA Small Cap Fund

SSgA Matrix Equity Fund

SSgA Yield Plus Fund

SSgA Growth and Income Fund

SSgA Intermediate Fund

SSgA Active International Fund

SSgA Emerging Markets Fund

SSgA Bond Market Fund

-19-

<PAGE>

Filed pursuant to Rule 485(b)
File Nos. 33-19229; 811-5430

THE SSgA FUNDS
Two International Place, 35th Floor
Boston, Massachusetts 02110
(800) 647-7327

MONEY MARKET FUNDS

Class B Shares
--------------

The SSgA Funds (formerly known as The Seven Seas Series Fund) are a
registered, open-end investment company with multiple portfolios, each of which
is a mutual fund. This Prospectus describes and offers Class B shares of
beneficial interest in the mutual funds listed below, each referred to as a
"Fund." Shares may not be purchased by individuals directly, but must be
purchased through a financial institution which is permitted by contract with
the Funds to offer the shares. This Prospectus should be read together with any
materials provided by such institution.
Each Fund seeks to achieve a specific investment objective by using
distinct investment strategies: The SSgA Money Market Fund seeks to
maximize current income, to the extent consistent with the preservation of
capital and liquidity and the maintenance of a stable $1.00 per share net asset
value, by investing in dollar denominated securities with remaining maturities
of one year or less.
The SSgA US Government Money Market Fund seeks to maximize current income,
to the extent consistent with the preservation of capital and liquidity and the
maintenance of a stable $1.00 per share net asset value, by investing in
obligations of the US Government or its instrumentalities with remaining
maturities of one year or less.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS ANY SUCH
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
INVESTMENTS IN THE MONEY MARKET FUND AND US GOVERNMENT MONEY MARKET FUND
ARE NEITHER INSURED NOR GUARANTEED BY THE US GOVERNMENT. THERE IS NO ASSURANCE
THAT EITHER THE MONEY MARKET FUND OR US GOVERNMENT MONEY MARKET FUND WILL
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
SHARES IN THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, STATE STREET BANK AND TRUST COMPANY, AND SHARES ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER AGENCY, AND INVOLVE INVESTMENT RISKS INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
This Prospectus sets forth concisely the information about the Funds that
a prospective investor ought to know before investing. Please read and retain
this document for future reference. Additional information about the Funds has
been filed with the Securities and Exchange Commission in a Statement of
Additional Information dated December 27, 1996. The Statement of Additional
Information is incorporated herein by reference and is available without charge
from Distributor at its address noted below or by calling (800) 647-7327.

<TABLE>
Investment Adviser, Custodian
and Transfer Agent: Distributor: Administrator:
<S> <C> <C>
State Street Bank and Trust Russell Fund Distributors, Inc. Frank Russell Investment
Company Two International Place Management Company
225 Franklin Street 35th Floor 909 A Street
Boston, Massachusetts 02110 Boston, Massachusetts 02110 Tacoma, Washington 98402
</TABLE>

PROSPECTUS DATED DECEMBER 27, 1996

-1-
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page

<S> <C>
Summary................................................................................................... 3

Fund Operating Expenses................................................................................... 4

Financial Highlights...................................................................................... 6

The SSgA Funds............................................................................................ 8

Manner of Offering........................................................................................ 8

Investment Objectives, Policies and Restrictions.......................................................... 8

Portfolio Maturity ....................................................................................... 10

Dividends and Distributions............................................................................... 11

Taxes..................................................................................................... 12

Valuation of Fund Shares.................................................................................. 13

Purchase of Fund Shares................................................................................... 13

Redemption of Fund Shares................................................................................. 14

General Management........................................................................................ 14

Fund Expenses............................................................................................. 16

Performance Calculations.................................................................................. 17

Additional Information.................................................................................... 17
</TABLE>

-2-
<PAGE>

SUMMARY

The following summary is qualified in its entirety by reference to the
more detailed information included elsewhere in the Prospectus.

Investment Objective. The Money Market Fund's investment objective is to
maximize current income, to the extent consistent with the preservation of
capital and liquidity and the maintenance of a stable $1.00 per share net asset
value, by investing in dollar denominated securities with remaining maturities
of one year or less. Such securities consist principally of: US Treasury bills,
notes and bonds; other obligations issued or guaranteed as to interest and
principal by the US Government, its agencies or instrumentalities; instruments
of US and foreign banks; and commercial paper of US and foreign companies.

The US Government Money Market Fund's investment objective is to maximize
current income, to the extent consistent with the preservation of capital and
liquidity and the maintenance of a stable $1.00 per share net asset value, by
investing in obligations of the US Government or its agencies or
instrumentalities with remaining maturities of one year or less. The Fund's
portfolio typically consists entirely of securities issued or guaranteed by the
US Government or its agencies or instrumentalities.

Dividends. Dividends from net investment income are declared daily and paid
monthly. Net capital gains, if any, are distributed annually.

Potential Investors. The Funds are designed to be an economical and efficient
means for retail investors to participate in professionally managed portfolios
of money market instruments. In this Prospectus, Class B shares of the Funds are
offered to customers of certain financial institutions ("Service Organizations")
who act as record holders of the shares and provide services to their customers
who invest in the Funds.

Purchases and Redemptions. Because shares of the Funds are offered through
Service Organizations, to purchase and redeem shares potential investors should
contact their Service Organizations for information regarding purchase and
redemption procedures. Shares may be purchased or redeemed at the net asset
value next determined after receipt of the order.

Investment Advisers. State Street Bank and Trust Company serves as investment
adviser to the Funds in return for a fee equal to .25% annually of each Fund's
average daily net assets.

Certain Class Information. The shares of each Fund are divided into three
classes: Class A, Class B and Class C. Class A shares are designed for
institutional investors. Class B shares are offered through Service
Organizations that provide certain account administration services. Class C
shares are offered through Service Organizations that provide certain account
administration and shareholder liaison services. Each class of shares of a Fund
is entitled to the same rights and privileges as all other classes of shares of
that Fund, provided however, that each class bears the expenses related to its
distribution and shareholder servicing arrangements and certain other expenses
attributable to the class. Annual distribution and shareholder servicing
expenses for Class A, Class B and Class C shares are equal to approximately
.06%, .31% and .56%, respectively, of the average daily net asset value of the
shares of the class. Total operating expenses for Class A, Class B and Class C
shares of the Money Market Fund are equal to approximately .39%, .66% and .94%,
respectively, of the average daily net asset value of the shares of the class.
Total operating expenses for Class A, Class B and Class C shares of the US
Government Money Market Fund are equal to approximately .40%, .69% and .94%,
respectively, of the average daily net asset value of the shares of the class.

-3-
<PAGE>

FUND OPERATING EXPENSES

THE SSgA MONEY MARKET FUND
CLASS B SHARES

The purpose of the following table is to assist the investor in understanding
the various costs and expenses that an investor in Class B shares of the Money
Market Fund will incur directly or indirectly. THE EXAMPLES SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN. For additional information, see "General
Management."

Shareholder Transaction Expenses:

Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees None
Exchange Fee None

Annual Fund Operating Expenses:
(as a percentage of average daily net assets)

Advisory Fees .25%
12b-1 Fees (including Shareholder Servicing .31
Fees)1,2
Other Expenses2 .10

Total Operating Expenses3 .66%

<TABLE>
<CAPTION>
Examples: 1 year 3 years 5 years 10 years
- -------- --------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment, assuming: (i) 5%
annual return; and (ii) redemption at the
end of each time period: $ 7 $21 $37 $82
=== === === ===
</TABLE>

-4-
<PAGE>

FUND OPERATING EXPENSES
THE SSgA US GOVERNMENT MONEY MARKET FUND
CLASS B SHARES

The purpose of the following table is to assist the investor in understanding
the various costs and expenses that an investor in Class B shares of the US
Government Money Market Fund will incur directly or indirectly. THE EXAMPLES
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. For additional information,
see "General Management."

Shareholder Transaction Expenses:

Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees None
Exchange Fee None

Annual Fund Operating Expenses:
(as a percentage of average daily net assets)

Advisory Fees .25%
12b-1 Fees (including Shareholder Servicing Fees)4,5 .31
Other Expenses2 .13
---

Total Operating Expenses6 .69%

<TABLE>
<CAPTION>
Examples: 1 year 3 years 5 years 10 years
- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment, assuming: (i) 5% annual
return; and (ii) redemption at
the end of each time period: $7 $22 $38 $86
== === === ===
</TABLE>

-5-
<PAGE>

FINANCIAL HIGHLIGHTS
THE SSgA MONEY MARKET FUND

<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF YEAR $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
------- ------- ------- ------- -------

INCOME FROM INVEST-
MENT OPERATIONS:
Net investment income .0524 .0538 .0330 .0320 .0458
------- ------- ------- ------- -------

LESS DISTRIBUTIONS:
Net investment income (.0524) (.0538) (.0330) (.0320) (.0458)
------- ------- ------- ------- -------

NET ASSET VALUE,
END OF YEAR $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= =======

TOTAL RETURN (%)(a) 5.36 5.52 3.35 3.24 4.68

RATIOS(%)/SUPPLE-
MENTAL DATA:
Operating expenses, net,
to average daily net
assets (b) .39 .39 .36 .33 .35
Operating expenses,
gross, to average daily
net assets (b) .39 .39 .36 .38 .35
Net investment income
to average daily net
assets (b) 5.20 5.37 3.33 3.20 4.40
Net assets, end of year
($000 omitted) 3,475,409 2,752,895 3,020,796 2,502,483 4,263,057
Per share amount of fees
waived ($ omitted) -- -- -- .0005 --
</TABLE>

<TABLE>
<CAPTION>
1991 1990 1989 1988++
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF YEAR $1.0000 $1.0000 $1.0000 $1.0000
------- ------- ------- -------

INCOME FROM INVEST-
MENT OPERATIONS:
Net investment income .0686 .0817 .0883 .0239
------- ------- ------- -------

LESS DISTRIBUTIONS:
Net investment income (.0686) (.0817) (.0883) (.0239)
------- ------- ------- -------

NET ASSET VALUE,
END OF YEAR $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= =======

TOTAL RETURN (%)(a) 7.08 8.48 9.19 2.41

RATIOS(%)/SUPPLE-
MENTAL DATA:
Operating expenses, net,
to average daily net
assets (b) .37 .37 .43 .44
Operating expenses,
gross, to average daily
net assets (b) .38 .43 .51 .63
Net investment income
to average daily net
assets (b) 6.59 8.13 8.97 7.30
Net assets, end of year
($000 omitted) 1,645,428 650,598 442,614 193,777
Per share amount of fees
waived ($ omitted) .0000 .0005 .0004 .0010
</TABLE>

-6-
<PAGE>

FINANCIAL HIGHLIGHTS
THE SSgA US GOVERNMENT MONEY MARKET FUND

INCOME FROM INVEST-
MENT OPERATIONS:
Net investment income .0515 .0528 .0324 .0304 .0441 .0302
------- ------- ------- ------- ------- -------

LESS DISTRIBUTIONS:
Net investment income (.0515) (.0528) (.0324) (.0304) (.0441) (.0302)
------- ------- ------- ------- ------- -------

NET ASSET VALUE,
END OF YEAR $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= ======= =======

TOTAL RETURN (%)(a) 5.27 5.38 3.30 3.08 4.49 3.06

- ----------
++ For the period March 1, 1991 (commencement of operations) to
August 31, 1991.
(a) Periods less than one year are not annualized.
(b) The ratios for the period ended August 31, 1991 are annualized.

-7-
<PAGE>

THE SSgA FUNDS

The SSgA Funds ("Investment Company") are an open-end management
investment company that is organized as a Massachusetts business trust. In
addition, each series of the Investment Company is diversified as defined in the
Investment Company Act of 1940, as amended ("1940 Act"). As a "series" company,
Investment Company is authorized to issue an unlimited number of shares
evidencing beneficial interests in different investment portfolios. Through this
Prospectus, Investment Company offers Class B shares in two such portfolios
(collectively, "Funds"): The SSgA Money Market Fund ("Money Market Fund") and
the SSgA Government Money Market Fund ("Government Money Market Fund"). State
Street Bank and Trust Company (the "Adviser" or "State Street") serves as the
investment adviser for each Fund.

MANNER OF OFFERING

The Funds are designed to be an economical and efficient means for
retail investors to participate in professionally managed portfolios of money
market instruments. Class B shares of the Funds are offered to customers of
certain financial institutions ("Service Organizations") that act as record
holders of shares and provide services to their customers who invest in the
Funds. Each Service Organization may set a minimum initial investment for its
customers and may redeem all shares in an investor's account if the value of
these shares falls below a predetermined amount.

INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS

Each Fund has a fundamental investment objective, which may be changed
only with the approval of a majority of the Fund's shareholders as defined by
the 1940 Act. There can be no assurance that either Fund will meet its
investment objective.

Money Market Fund

The Fund attempts to meet its investment objective by investing in high
quality money market instruments. Such instruments include: (1) US Treasury
bills, notes and bonds; (2) other obligations issued or guaranteed as to
interest and principal by the US Government, its agencies, or instrumentalities;
(3) instruments of US and foreign banks, including certificates of deposit,
banker's acceptances and time deposits; these instruments may include Eurodollar
Certificates of Deposit ("ECDs"), Eurodollar Time Deposits ("ETDs") and Yankee
Certificates of Deposit ("YCDs"); (4) commercial paper of US and foreign
companies; (5) asset-backed securities; (6) corporate obligations; (7) variable
amount master demand notes; and (8) repurchase agreements.

The Fund will limit its portfolio investments to those United States
dollar-denominated instruments which at the time of acquisition the Adviser
determines present minimal credit risk and which qualify as "eligible"
securities under the Securities and Exchange Commission rules applicable to
money market mutual funds. In general, eligible securities include securities
that: (1) are rated in the highest category by least two nationally recognized
statistical rating organizations ("NRSRO"); (2) by one NRSRO, if only one rating
services has rated the security; or (3) if unrated, are of comparable quality,
as determined by the Portfolio's Adviser in accordance with procedures
established by the Board of Trustees. See the Appendix in the Statement of
Additional Information for a description of a NRSRO.

Government Money Market Fund

-8-
<PAGE>

The Fund attempts to meet its investment objective by investing in
obligations issued or guaranteed as to principal and interest by the US
Government or its agencies or instrumentalities or in repurchase agreements
secured by such instruments. (See "Investment Policies -- US Government
Securities.") Under normal market conditions, the Government Money Market Fund
will be 100% invested in such securities.

Investment Policies

The investment policies described below reflect the Funds' current
practices, are not fundamental and may be changed by the Board of Trustees of
Investment Company without shareholder approval. To the extent consistent with
the Fund's investment objective and restrictions the Fund may invest in the
following instruments and may use the following investment techniques:

Repurchase Agreements. The Fund may enter into repurchase agreements
with banks and other financial institutions, such as broker-dealers. Under a
repurchase agreement, a Fund purchases securities from a financial institution
that agrees to repurchase the securities at the Fund's original purchase price
plus interest within a specified time (normally one business day). The Fund will
invest no more than 10% of its net assets (taken at current market value) in
repurchase agreements maturing in more than seven days. The Fund will limit
repurchase transactions to those member banks of the Federal Reserve System and
broker-dealers whose creditworthiness Adviser considers satisfactory. Should the
counterparty to a transaction fail financially, the Fund may encounter delay and
incur costs before being able to sell the securities. Further, the amount
realized upon the sale of the securities may be less than that necessary to
fully compensate the Fund.

Reverse Repurchase Agreements. The Fund may enter into reverse
repurchase agreements under the circumstances described in "Investment
Restrictions." Under a reverse repurchase agreement, the Fund sells portfolio
securities to a financial institution in return for cash in an amount equal to a
percentage of the portfolio securities' market value and agrees to repurchase
the securities at a future date at a prescribed repurchase price equal to the
amount of cash originally received plus interest on such amount. The Fund
retains the right to receive interest and principal payments with respect to the
securities while they are in the possession of the financial institutions.
Reverse repurchase agreements involve the risk of default by the counterparty,
which may adversely affect the Fund's ability to reacquire the underlying
securities.

Forward Commitments. Each Fund may contract to purchase securities for
a fixed price at a future date beyond customary settlement time. When effecting
such transactions, cash or liquid high quality debt obligations held by the Fund
of a dollar amount sufficient to make payment for the portfolio securities to be
purchased will be segregated on the Fund's records at the trade date and
maintained until the transaction is settled. The failure of the other party to
the transaction to complete the transaction may cause the Fund to miss an
advantageous price or yield. The Fund bears the risk of price fluctuations
during the period between the trade and settlement dates.

When-Issued Transactions. The Funds may purchase securities on a
when-issued basis. In these transactions, a Fund purchases securities with
payment and delivery scheduled for a future time. Until settlement, the Funds
segregate cash and marketable high quality debt securities equal in value to
their when-issued commitments. Between the trade and settlement dates, the Fund
bears the risk of any fluctuation in the value of the securities. These
transactions involve the additional risk that the other party may fail to
complete the transaction and cause the Fund to miss a price or yield considered
advantageous. Each Fund will engage in when-issued transactions only for the
purpose of acquiring portfolio securities consistent with its investment
objective and policies and not for investment leverage. The Funds will not
invest more than 25% of their net assets in when-issued securities.

-9-
<PAGE>

Illiquid Securities. Neither Fund will invest more than 10% of its net
assets in illiquid securities or securities that are not readily marketable,
including repurchase agreements and time deposits of more than seven days'
duration. The absence of a regular trading market for illiquid securities
imposes additional risks on investments in these securities. Illiquid securities
may be difficult to value and may often be disposed of only after considerable
expense and delay.

Asset-Backed Securities (Money Market Fund only). Asset-backed
securities represent undivided fractional interests in pools of instruments,
such as consumer loans, and are similar in structure to mortgage-related
pass-through securities described below. Payments of principal and interest are
passed through to holders of the securities and are typically supported by some
form of credit enhancement, such as a letter of credit, surety bond, limited
guarantee by another entity or by priority to certain of the borrower's other
securities. The degree of credit enhancement varies, generally applying only
until exhausted and covering only a fraction of the security's par value. If the
credit enhancement of an asset-backed security held by the Fund has been
exhausted, and if any required payments of principal and interest are not made
with respect to the underlying loans, the Fund may experience loss or delay in
receiving payment and a decrease in the value of the security. Further details
are set forth in the Statement of Additional Information under "Investment
Restrictions and Policies -- Investment Policies."

Mortgage-Related Pass-Through Securities. The Funds may invest in
mortgage-related securities, including Government National Mortgage Association
("GNMA") Certificates ("Ginnie Maes"), Federal Home Loan Mortgage Corporation
("FHLMC") Mortgage Participation Certificates ("Freddie Macs") and Federal
National Mortgage Association ("FNMA") Guaranteed Mortgage Pass-Through
Certificates ("Fannie Maes"). Mortgage pass-through certificates are
mortgage-backed securities representing undivided fractional interests in pools
of mortgage-backed loans. These loans are made by mortgage bankers, commercial
banks, savings and loan associations and other lenders. Ginnie Maes are
guaranteed by the full faith and credit of the US Government, but Freddie Macs
and Fannie Maes are not.

Eurodollar Certificates of Deposit, Eurodollar Time Deposits and Yankee
Certificates of Deposit (Money Market Fund only). ECDs are US dollar denominated
certificates of deposit issued by foreign branches of domestic banks. ETDs are
US dollar denominated deposits in foreign branches of US banks and foreign
banks. YCDs are US dollar denominated certificates of deposit issued by US
branches of foreign banks.

-10-
<PAGE>

Purchase of Other Funds. To the extent permitted under the 1940 Act and
exemptive rules and orders thereunder, the Funds may seek to achieve their
investment objectives by investing solely in the shares of another investment
company that has a substantially similar investment objective and policies.

Investment Restrictions

Each Fund has fundamental investment restrictions, which may be changed
only with the approval of a majority of the Fund's shareholders as defined in
the 1940 Act. A more detailed discussion of the Funds' investment restrictions
and policies appears in the Statement of Additional Information. Unless
otherwise noted, the fundamental restrictions apply at the time an investment is
made. Each Fund may not:

1. Invest 25% or more of the value of its total assets in securities of
companies primarily engaged in any one industry (other than the US
Government, its agencies or instrumentalities). Concentration may
occur as a result of changes in the market value of portfolio
securities, but may not result from investment. US banks and certain
domestic branches of foreign banks are not considered a single
industry for purposes of this restriction.

2. Borrow money (including reverse repurchase agreements), except as a
temporary measure for extraordinary or emergency purposes or to
facilitate redemptions (not for leveraging or investment), provided
that borrowings do not exceed an amount equal to 33-1/3% of the
current value of the Fund's assets taken at market value, less
liabilities other than borrowings. If at any time a Fund's
borrowings exceed this limitation due to a decline in net assets,
such borrowings will within three days be reduced to the extent
necessary to comply with this limitation. A Fund will not purchase
additional investments if borrowed funds (including reverse
repurchase agreements) exceed 5% of total assets.

3. Pledge, mortgage, or hypothecate its assets. However, a Fund may
pledge securities having a market value at the time of the pledge
not exceeding 33-1/3% of the value of the Fund's total assets to
secure permitted borrowings.

PORTFOLIO MATURITY

Each Fund must limit investments to securities with remaining
maturities of 397 days or less (as determined in accordance with applicable SEC
regulations) and must maintain a dollar-weighted average maturity of 90 days or
less. The Funds normally hold portfolio instruments to maturity, but may dispose
of them prior to maturity if Adviser finds it advantageous.

-11-
<PAGE>

DIVIDENDS AND DISTRIBUTIONS

Any dividend or capital gain distribution paid by the Fund shortly
after a purchase of shares will reduce the per share net asset value of the Fund
by the amount of the dividend or distribution. In effect, the payment will
represent a return of capital to the shareholder. However, the shareholder will
be subject to taxes with respect to such dividend or distribution.

Distribution Option. Investors can choose from four different
distribution options as indicated on the account Application:

(bullet) Income-Earned Option--Capital gain distributions will be
automatically reinvested, but a check or wire will be sent for
each dividend distribution.

(bullet) Cash Option--A check or wire will be sent for each dividend
and capital gain distribution.

(bullet) Direct Dividends Option--Dividends and capital gain
distribution will be automatically invested in another
identically registered SSgA Fund.

The Transfer Agent will wire dividends (if that option is elected) to a
pre-designated bank on the first business day of the following month in which
the dividend is payable.

TAXES

Each Fund intends to qualify as a regulated investment company ("RIC")
under Subchapter M of the Internal Revenue Code, as amended. As a RIC, each Fund
will not be subject to federal income taxes to the extent it distributes its net
investment income and capital gain net income (capital gains in excess of
capital losses) to its shareholders. The Board intends to distribute each year
substantially all of the Funds' net investment income and capital gain net
income.

-12-
<PAGE>

Dividends and distributions may also be subject to state or local taxes.
Depending on the state tax rules pertaining to a shareholder, a portion of the
dividends paid by a Fund attributable to direct obligations of the US Treasury
and certain agencies may be exempt from state and local taxes.

The sale of Fund shares by a shareholder is a taxable event and may result
in capital gain or loss. A capital gain or loss may be realized from an ordinary
redemption of shares or an exchange of shares between two mutual funds (or two
series of portfolios of a mutual fund). Any loss incurred on sale or exchange of
Fund shares held for one year or more will be treated as a long-term capital
loss to the extent of capital gain dividends received with respect to such
shares.

Shareholders will be notified after each calendar year of the amount of
income dividends and net capital gains distributed and the percentage of a
Fund's income attributable to US Treasury and agency obligations. The Funds are
required to withhold a legally determined portion of all taxable dividends,
distributions and redemption proceeds payable to any noncorporate shareholder
that does not provide the Funds with the shareholder's correct taxpayer
identification number or certification that the shareholder is not subject to
backup withholding.

VALUATION OF FUND SHARES

Net Asset Value Per Share. Net asset value per share for each class of
shares of a Fund is determined by adding the value of all securities and other
assets of the Fund, deducting accrued liabilities allocated to the class,
dividing by the number of shares outstanding in a class and rounding to the
nearest cent. The Funds determine net asset value twice each business day, as of
12:00 noon Eastern time and as of the close of the regular trading session of
the New York Stock Exchange (ordinarily 4:00 p.m. Eastern time). A business day
is one on which the New York Stock Exchange and Boston Federal Reserve are open
for business.

Valuation of Fund Securities. Each Fund seeks to maintain a $1.00 per
share net asset value and, accordingly, use the amortized cost valuation method
to value its portfolio instruments. The amortized cost valuation method
initially prices an instrument at its cost and thereafter assumes a constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument.

PURCHASE OF FUND SHARES

Shares are offered through Service Organizations, who act as record
holders of the shares and provide services to their customers who invest in
shares. To purchase shares, investors should contact a Service Organization and
follow its procedures for the purchase of shares. Beneficial ownership of shares
will be recorded by Service Organizations and reflected in account statements
provided to their customers.

Offering Dates and Times. Fund shares may be purchased on any business
day. All purchases must be made in US dollars. Purchase orders and payments for
Fund shares must be received by the Transfer Agent prior to 4:00 p.m. Eastern
time to be effective on the date received. The accompanying payment must be in
federal funds or converted into federal funds by the Transfer Agent before the
purchase order can be accepted. Purchase orders in good form are described
below. Purchase orders which are accepted: (1) prior to 12:00 noon Eastern time
will earn the dividend declared on the date of purchase; and (2) at or after
12:00 noon Eastern time will earn the dividend determined on the next day.

-13-
<PAGE>

Order and Payment Procedures. On behalf of their customers, Service
Organizations may purchase shares by wiring federal funds to State Street Bank
and Trust Company as Transfer Agent by:

1. Telephoning State Street Bank and Trust Company at (800) 647-7327
and providing: (1) the Service Organization's account registration
number, address and tax identification number; (2) the name of the
Fund to be invested in; (3) the amount being wired; (4) the name of
the wiring bank; and (5) the name and telephone number of the person
at the wiring bank to be contacted in connection with the order.

2. Instructing the wiring bank to wire federal funds to: State Street
Bank and Trust Company, Boston, MA (ABA #0110-00028), Attention:
SSgA Fund, Mutual Funds Service Division (DDA #9904-631-0). The wire
instructions should also include the name the account is registered
in, the account number and the name of the Fund to be invested in.

Each Fund reserves the right to reject any order.

Service Organizations may charge investors fees for certain services.
Investors should contact their Service Organization for information concerning
what additional fees, if any, may be charged.

Exchange Privilege. An investor's Service Organization may permit shares
of either Fund to be exchanged for shares of certain other investment
portfolios. Shares are exchanged on the basis of relative net asset value per
share. Investors should contact their Service Organizations for information
regarding exchange options and procedures and fees imposed in connection with
exchanges.

REDEMPTION OF FUND SHARES

Investors may redeem all or part of their shares in accordance with
instructions and limitations pertaining to their account at a Service
Organization. These procedures will vary according to the type of account and
the Service Organization involved, and investors should consult their account
managers in this regard. It is the responsibility of the Service Organizations
to transmit redemption orders to the Transfer Agent and credit their customers'
accounts with the redemption proceeds on a timely basis.

On behalf of their customers, Service Organizations may redeem Fund
shares on any business day at the net asset value next determined after the
receipt of a redemption request. Payment for redemption orders will be wired in
federal funds to the Service Organization's account at a domestic commercial
bank that is a member of the Federal Reserve System. The Funds reserve the right
to suspend redemptions or postpone the date of payment if emergency conditions,
as specified in the 1940 Act or determined by the Securities and Exchange
Commission, should exist.

A dividend will be paid on shares redeemed if the redemption request is
received by State Street Bank and Trust Company after 12:00 noon Eastern time.
Redemption requests received before 12:00 noon Eastern time will not be entitled
to that day's dividend.

GENERAL MANAGEMENT

Advisory Agreement. Investment Company employs State Street to furnish
investment services to the Funds. State Street is one of the largest providers
of securities processing and record keeping services for US mutual funds and
pension funds. State Street is a wholly owned subsidiary of State Street Boston
Corporation, a publicly held bank holding company. State Street, with over
$286.9 billion (US) under management as of September 30, 1996, provides complete
global investment management services from offices in the United States, London,
Sydney, Hong Kong, Tokyo, Toronto, Luxembourg, Melbourne, Montreal, Paris,
Dubai, Munich and Brussels.

-14-
<PAGE>

Adviser, subject to Board supervision, directs the investments of each
Fund in accordance with the Fund's investment objective, policies and
restrictions. For these services, each Fund pays Adviser a fee, calculated daily
and paid monthly, that on an annual basis is equal to .25% of the Fund's average
daily net assets.

The Glass-Steagall Act prohibits a depository state chartered bank such
as Adviser from engaging in the business of issuing, underwriting, selling or
distributing certain securities. The activities of Adviser in informing its
customers of the Funds, performing investment and redemption services and
providing custodian, transfer, shareholder servicing, dividend disbursing and
investment advisory services may raise issues under these provisions. Adviser
has been advised by its counsel that its activities in connection with the Funds
are consistent with its statutory and regulatory obligations. THE SHARES OFFERED
BY THIS PROSPECTUS ARE NOT ENDORSED OR GUARANTEED BY STATE STREET OR ITS
AFFILIATES, ARE NOT DEPOSITS OR OBLIGATIONS OF STATE STREET OR ITS AFFILIATES,
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.

Changes in federal or state statutes and regulations relating to the
permissible activities of banks and their affiliates, as well as judicial or
administrative decisions or interpretations of such or future statutes and
regulations, could prevent Adviser from continuing to perform all or a part of
the above services for its customers and/or the Funds. If Adviser were
prohibited from serving the Funds in any of its present capacities, the Board of
Trustees would seek an alternative provider(s) of such services. In such event,
changes in the operation of the Funds may occur. It is not expected by Adviser
that existing shareholders would suffer any adverse financial consequences (if
another adviser with equivalent abilities is found) as a result of any of these
occurrences.

State Street may from time to time have discretionary authority over
accounts which invest in Investment Company shares. These accounts include
accounts maintained for securities lending clients and accounts which permit the
use of Investment Company portfolios as short-term cash sweep investments.
Shares purchased for all discretionary accounts are held of record by State
Street who retains voting control of such shares. As of November 30, 1996, State
Street held of record less than 25% of the issued and outstanding shares of
Investment Company in connection with its discretionary accounts. Consequently,
State Street may be deemed to be a controlling person of Investment Company for
purposes of the 1940 Act.

Administration Agreement. Frank Russell Investment Management Company
("Administrator") serves as administrator of the Funds. Administrator currently
serves as investment manager and administrator to 28 mutual funds with assets of
$9.0 billion as of October 31, 1996, and acts as administrator to 17 mutual
funds, including those Funds presented in this Prospectus, with assets of $8.2
billion as of October 31, 1996.

Pursuant to the Administration Agreement with Investment Company,
Administrator will: (1) supervise all aspects of the Funds' operations; (2)
provide the Funds with administrative and clerical services, including the
maintenance of certain of the Funds' books and records; (3) arrange the periodic
updating of the Funds' prospectuses and any supplements thereto; (4) provide
proxy materials and reports to Fund shareholders and the Securities and Exchange
Commission; and (5) provide the Funds with adequate office space and all
necessary office equipment and services, including telephone service, heat,
utilities, stationery supplies and similar items. For these services, the Funds
and Investment Company's other domestic investment portfolios pay Administrator
a combined fee that on an annual basis is equal to the following percentages of
their average aggregate daily net assets: (1) $0 to and including $500 million
- -- .06%; (2) over $500 million to and including $1 billion -- .05%; and (3) over
$1 billion -- .03%. The percentage of the fee paid by a particular Fund is equal
to the percentage of average aggregate daily net assets that are attributable to
that Fund. Administrator will also receive reimbursement of expenses it incurs
in connection with establishing new investment portfolios. Further, the
administration fee paid by the Investment Company will be reduced by the sum of
certain distribution related expenses (up to a maximum of 10% of the asset-based
administration fee listed above).

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<PAGE>

Distribution Services and Shareholder Servicing Arrangements. Pursuant
to the Distribution Agreement with Investment Company, Russell Fund
Distributors, Inc. ("Distributor"), a wholly owned subsidiary of Administrator,
serves as distributor for all Fund shares.

The Funds have adopted a distribution plan pursuant to Rule 12b-1 (the
"Plan") under the 1940 Act for the Class B shares. The purpose of the Plan is to
provide for the payment of certain Investment Company distribution and
shareholder servicing expenses. Under the Plan, Distributor will be reimbursed
in an amount up to .35% of the net asset value of Class B shares of each Fund
for distribution-related and shareholder servicing expenses. Payments under the
Plan will be made to Distributor to finance activity that is intended to result
in the sale and retention of Fund shares including: (1) the costs of
prospectuses, reports to shareholders and sales literature; (2) advertising; and
(3) expenses incurred in connection with the promotion and sale of Fund shares,
including Distributor's overhead expenses for rent, office supplies, equipment,
travel, communication, compensation and benefits of sales personnel.

Under the Plan, the Funds may also enter into agreements ("Service
Agreements") with financial institutions, which may include Adviser ("Service
Organizations"), to provide distribution and shareholder services with respect
to Class B shares of the Funds held by or for the customers of the Service
Organizations. Under the Service Agreements, the Service Organizations may
provide various services for such customers including: processing customer
purchase and redemption requests; answering inquiries regarding the Funds;
assisting customers in changing dividend options, account designations and
addresses; performing subaccounting for such customers; establishing and
maintaining customer accounts and records; processing purchase and redemption
transactions; providing periodic statements showing customers' account balances
and integrating such statements with those of other transactions and balances in
the customers' other accounts serviced by the Service Organizations; arranging
for bank wires transferring customers' funds; transmitting proxy statements,
annual and semi-annual reports, prospectuses and other communications from the
Funds to customers; and such other services as the customers may request in
connection with the Funds, to the extent permitted by applicable statute, rule
or regulation. Service Organizations may receive from each Fund a monthly fee at
a rate that shall not exceed .25% per annum of the average daily net asset value
of the Fund's Class B shares owned by or for shareholders with whom the Service
Organization has a servicing relationship. Banks and other financial service
firms may be subject to various state laws, and may be required to register as
dealers pursuant to state law.

Payments to Distributor, as well as payments to Service Organizations
from a Fund, are not permitted by the Plan to exceed .35% per year of the
average net asset value of the Fund's Class B shares. Any payments that are
required to be made by the Distribution Agreement and any Service Agreement but
could not be made because of the .35% limitation may be carried forward and paid
in subsequent years so long as the Plan is in effect. A Fund's liability for any
such expenses may be carried forward indefinitely. Service Organizations will be
responsible for prompt transmission of purchase and redemption orders and may
charge fees for their services.

FUND EXPENSES

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<PAGE>

auditing and financial accounting services; (4) expense of preparing (including
typesetting, printing and mailing) reports, prospectuses and notices to existing
shareholders; (5) administrative fees; (6) custodian fees, (7) expense of
issuing and redeeming Fund shares; (8) the cost of registering Fund shares under
federal and state laws; (9) shareholder meetings and related proxy solicitation
expenses; (10) the fees, travel expenses and other out-of-pocket expenses of
Trustees who are not affiliated with Adviser or any of its affiliates; (11)
insurance, interest, brokerage and litigation costs; (12) extraordinary expenses
as may arise, including expenses incurred in connection with litigation
proceedings and claims and the legal obligations of Investment Company to
indemnify its Trustees, officers, employees, shareholders, distributors and
agents; and (13) other expenses properly payable by the Funds. Where any of
these other expenses are attributable to a particular class of shares, they will
be borne by the beneficial owners of such shares.

PERFORMANCE CALCULATIONS

From time to time the Funds may advertise the yield and effective yield of
their Class B shares. The yield of each Fund refers to the income generated by
an investment in Class B shares of the Fund over a seven-day period (which
period will be stated in the advertisement). This income is then annualized.
That is, the amount of income generated by the investment during that week is
assumed to be generated each week over a 52-week period and is shown as a
percentage of the investment. The effective yield is calculated similarly but,
when annualized, the income earned by an investment in each Fund is assumed to
be reinvested. The effective yield will be slightly higher than the yield
because of the compounding effect of this assumed reinvestment.

From time to time, the Funds may also report yield and effective yield as
calculated over a one-month period (which period will also be stated in the
advertisement). These one-month periods will be annualized using the same method
as described above for yields calculated on the basis of seven-day periods. From
time to time, yields calculated on a monthly basis may also be linked to provide
yield figures for periods greater than one month.

From time to time, the Funds may advertise the total return of their
Class B shares . The total return of a Fund is the average annual compounded
rate of return from a hypothetical investment in the Fund's Class B shares over
one, five and ten-year periods or for the life of the Fund (as stated in the
advertisement), assuming the reinvestment of all dividend and capital gain
distributions.

Comparative performance information may be used from time to time in
advertising or marketing Fund shares, including data from Lipper Analytical
Services, Inc., IBC/Donoghue's Money Fund Report, the Bank Rate Monitor, Wall
Street Journal Score Card, Lehman Brothers Index or other industry publications,
business periodicals, rating services and market indices. The Funds may also
advertise nonstandardized performance information which is for periods in
addition to those required to be presented.

Quoted yields, total returns and other performance figures are based on
historical earnings and are not indications of future performance.

ADDITIONAL INFORMATION

Custodian, Transfer Agent and Independent Accountants. State Street
holds all portfolio securities and cash assets of the Funds, provides portfolio
record keeping services and serves as the Funds' transfer agent ("Transfer
Agent") and custodian ("Custodian"). State Street is authorized to deposit
securities in securities depositories or to use the services of subcustodians.
State Street has no responsibility for the supervision and management of the
Funds except as investment adviser. Coopers & Lybrand L.L.P., Boston,
Massachusetts, is Investment Company's independent accountants.

Reports to Shareholders and Shareholder Inquiries. Shareholders will
receive unaudited semiannual financial statements and annual financial
statements audited by Investment Company's independent accountants. Potential
investors who wish to obtain more information about the Funds should contact a
Service Organization. Inquiries from Servicing Organizations regarding the
Prospectus and financial statements may be made by calling Distributor at (800)
647-7327.

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<PAGE>

Organization, Capitalization and Voting. Investment Company was
organized as a Massachusetts business trust on October 3, 1987 and operates
under a First Amended and Restated Master Trust Agreement dated October 13,
1993, as amended. Investment Company issues shares divisible into an unlimited
number of series (or funds), each of which is a separate trust under
Massachusetts law. The Money Market and Government Money Market Funds are two
such series. Shares of a Fund are entitled to such relative rights and
preferences and dividends and distributions earned on assets of the Fund as may
be declared by the Board of Trustees. Fund shares are fully paid and
nonassessable by Investment Company and have no preemptive rights. Investment
Company is authorized to subdivide each series into two or more classes of
shares. Currently, shares of the Money Market and Government Money Market Funds
are divided into Class A, Class B and Class C. Each class of shares of a Fund is
entitled to the same rights and privileges as all other classes of that Fund,
provided, however, that each class bears the expenses related to its
distribution and shareholder servicing arrangements, as well as other expenses
attributable to the class and unrelated to managing the Fund's portfolio
securities. As described above, Investment Company has adopted a plan of
distribution under rule 12b-1 for Class B shares. Similar plans have been
adopted for Class A and Class C shares. However, total payments under those
plans are limited to .25% and .60% annually of the average net asset value of
the Class A and Class C shares, respectively of a Fund. As a result of these
plan and other class expenses, the yield on Class B and Class C shares will be
approximately .25% and .50% lower, respectively, than the yield on Class A
shares.

Each Fund share has one vote. There are no cumulative voting rights.
There is no annual meeting of shareholders, but special meetings may be held. On
any matter that affects only a particular investment fund, only shareholders of
that fund may vote unless otherwise required by the 1940 Act or the Master Trust
Agreement. Further, any matter that affects only the holders of a particular
class of shares may be voted on only by such shareholders. Each class of shares
votes separately with respect to any Rule 12b-1 plan applicable to such class.
The Trustees hold office for the life of the Trust. A Trustee may resign or
retire, and may be removed at any time by a vote of two-thirds of Investment
Company shares or by vote of a majority of the Trustees. The Trustees shall
promptly call and give notice of a meeting of shareholders for the purpose of
voting upon removal of any Trustee when requested to do so in writing by holders
of not less than 10% of the shares then outstanding. A vacancy on the Board of
Trustees may be filled by the vote of a majority of the remaining Trustees,
provided that immediately thereafter at least two-thirds of the Trustees have
been elected by shareholders.

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<PAGE>

THE SSGA FUNDS
Two International Place, 35th Floor
Boston, Massachusetts 02110

INVESTMENT ADVISER, CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110

DISTRIBUTOR
Russell Fund Distributors, Inc.
Two International Place, 35th Floor
Boston, Massachusetts 02110

ADMINISTRATOR
Frank Russell Investment Management Company
909 A Street
Tacoma, Washington 98402

LEGAL COUNSEL
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109

INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109

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<PAGE>

Filed pursuant to Rule 485(b)
File Nos. 33-19229; 811-5430

THE SSgA FUNDS
Two International Place, 35th Floor
Boston, Massachusetts 02110
(800) 647-7327

MONEY MARKET FUNDS

Class C Shares
--------------

The SSgA Funds (formerly known as The Seven Seas Series Fund) is a
registered open-end investment company with multiple portfolios, each of which
is a mutual fund. This Prospectus describes and offers Class C shares of
beneficial interest in the mutual funds listed below, each referred to as a
"Fund." Shares may not be purchased by individuals directly, but must be
purchased through a financial institution which is permitted by contract with
the Funds to offer the shares. This Prospectus should be read together with any
materials provided by such institution.
Each Fund seeks to achieve a specific investment objective by using
distinct investment strategies: The SSgA Money Market Fund seeks to
maximize current income, to the extent consistent with the preservation of
capital and liquidity and the maintenance of a stable $1.00 per share net asset
value, by investing in dollar denominated securities with remaining maturities
of one year or less.
The SSgA US Government Money Market Fund seeks to maximize current income,
to the extent consistent with the preservation of capital and liquidity and the
maintenance of a stable $1.00 per share net asset value, by investing in
obligations of the US Government or its instrumentalities with remaining
maturities of one year or less.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS ANY SUCH
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
INVESTMENTS IN THE MONEY MARKET FUND AND US GOVERNMENT MONEY MARKET FUND
ARE NEITHER INSURED NOR GUARANTEED BY THE US GOVERNMENT. THERE IS NO ASSURANCE
THAT EITHER THE MONEY MARKET FUND OR US GOVERNMENT MONEY MARKET FUND WILL
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
SHARES IN THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, STATE STREET BANK AND TRUST COMPANY, AND SHARES ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER AGENCY, AND INVOLVE INVESTMENT RISKS INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
This Prospectus sets forth concisely the information about the Funds that
a prospective investor ought to know before investing. Please read and retain
this document for future reference. Additional information about the Funds has
been filed with the Securities and Exchange Commission in a Statement of
Additional Information dated December 27, 1996. The Statement of Additional
Information is incorporated herein by reference and is available without charge
from Distributor at its address noted below or by calling (800) 647-7327.

PROSPECTUS DATED DECEMBER 27, 1996

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<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page

<S> <C>
Summary................................................................................................... 3

Fund Operating Expenses................................................................................... 4

Financial Highlights...................................................................................... 6

The SSgA Funds............................................................................................ 8

Manner of Offering........................................................................................ 8

Investment Objectives, Policies and Restrictions.......................................................... 8

Portfolio Maturity ....................................................................................... 11

Dividends and Distributions............................................................................... 12