<PAGE>
GE FUNDS
GE Funds (the "Trust") is an open-end management investment company that
offers a selection of diversified managed investment funds (each a "Fund" and
collectively the "Funds"), each having a distinct investment objective that
it seeks by following distinct investment policies. The Trust is currently
comprised of ten series, two of which (GE Mid-Cap Growth Fund and GE
International Fixed Income Fund) are not presently being offered. This
Prospectus describes the following eight Funds currently offered by the
Trust:
* GE U.S. EQUITY FUND'S investment objective is long-term growth
of capital which the Fund seeks to achieve through
investment primarily in equity securities of U.S. companies.
* GE GLOBAL EQUITY FUND'S investment objective is long-term
growth of capital which the Fund seeks to achieve by
investing primarily in foreign equity securities.
* GE INTERNATIONAL EQUITY FUND'S investment objective is long-
term growth of capital which the Fund seeks to achieve
by investing primarily in foreign equity securities.
* GE STRATEGIC INVESTMENT FUND'S investment objective is to
maximize total return which the Fund seeks to achieve by
following an asset allocation strategy contemplating shifts
among a range of investments.
* GE TAX-EXEMPT FUND'S investment objective is to seek as high a
level of current income exempt from federal income
taxation as is consistent with prudent investment management
and preservation of capital by investing in municipal
obligations (as defined in the Prospectus).
* GE FIXED INCOME FUND'S investment objective is to seek maximum
income consistent with prudent investment
management and the preservation of capital, which objective the
Fund seeks to achieve by investing in fixed income securities.
* GE SHORT-TERM GOVERNMENT FUND'S investment objective is to seek
a high level of income consistent with prudent investment
management and the preservation of capital, which objective
the Fund seeks to achieve by investing at least 65% of its
total assets in government securities (as defined in the
Prospectus).
* GE MONEY MARKET FUND'S investment objective is to seek a high
level of current income consistent with the preservation of
capital and maintenance of liquidity, which objective the Fund
seeks to achieve by investing in a defined group of
short-term, U.S. dollar denominated money market instruments.
This Prospectus briefly sets forth certain information about the Funds and
the Trust, including shareholder servicing and distribution fees and
expenses, that prospective investors will find helpful in making an
investment decision. Investors are encouraged to read this Prospectus
carefully and retain it for future reference.
AN INVESTMENT IN GE MONEY MARKET FUND AND GE SHORT-TERM
GOVERNMENT FUND IS
NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT.
ADDITIONALLY, NO
ASSURANCE CAN BE GIVEN THAT GE MONEY MARKET FUND WILL BE ABLE TO
MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER SHARE.
SHARES OF THE FUNDS ARE NOT DEPOSITS WITH OR OBLIGATIONS OF ANY
FINANCIAL
INSTITUTION, ARE NOT GUARANTEED OR ENDORSED BY ANY FINANCIAL
INSTITUTION OR
ITS AFFILIATES, AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT
AGENCY.
Additional information about the Funds and the Trust, contained in a
Statement of Additional Information dated the same date as this Prospectus,
has been filed with the Securities and Exchange Commission (the "SEC") and is
available upon request and without charge by calling the Trust at the
telephone number listed below or by contacting the Trust at the address
listed below. The Statement of Additional Information is incorporated in its
entirety by reference into this Prospectus.
GE INVESTMENT MANAGEMENT INCORPORATED
Investment Adviser and Administrator
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
PROSPECTUS
JANUARY 26, 1996
TABLE OF CONTENTS
Expense Information 2
The Multiple
Distribution System 11
Investment Objectives
and Management
Policies........ 11
Management of
the Trust....... 28
Purchase of Shares 31
Retirement Plans.. 35
Redemption of Shares 36
Exchange Privilege 39
Net Asset Value... 39
Dividends, Distributions
and Taxes....... 40
Custodian and
Transfer Agent.. 42
Distributor....... 42
The Funds'
Performance..... 42
Further Information:
Certain Investment
Techniques
and Strategies.. 46
Additional Matters 51
3003 Summer Street
Stamford, Connecticut 06905
(203)326-4040
1
<PAGE>
EXPENSE INFORMATION
The purpose of the following table is to assist an investor in understanding
the expenses that an investor in the Funds will bear directly or indirectly,
based upon the maximum sales charge or maximum contingent deferred sales
charge that may be incurred at the time of purchase and redemption and each
particular Fund's operating expenses for the most recent year.
FEE TABLE
<TABLE>
<CAPTION>
GE
GE GE Inter- GE
U.S. Global national Strategic
Equity Equity Equity Investment
Fund Fund Fund Fund
_______ _______ _______ _______
<S> <C> <C> <C> <C>
Shareholder Transaction
Expenses
Maximum Sales Load Imposed
on Purchases of Shares (as a
percentage of offering price):
Class A** 4.75% 4.75% 4.75% 4.75%
Class B None None None None
Class C None None None None
Class D None None None None
Maximum Sales Load Imposed
on Reinvested Dividends (as a
percentage of offering price):
Class A None None None None
Class B None None None None
Class C None None None None
Class D None None None None
Maximum Contingent Deferred
Sales Load (as a percentage of
redemption proceeds):
Class A*** 1.00% 1.00% 1.00% 1.00%
Class B** 4.00% 4.00% 4.00% 4.00%
Class C None None None None
Class D None None None None
Redemption Fees (as a percent-
age of amount redeemed):
Class A None None None None
Class B None None None None
Class C one None None None
Class D None None None None
Maximum Exchange Fee:
Class A None None None None
Class B None None None None
Class C None None None None
Class D None None None None
<CAPTION>
GE GE GE GE
Tax- Fixed Short-Term Money
Exempt Income Government Market
Fund Fund Fund Fund*
_______ _______ _______ _______
<S> <C> <C> <C> <C>
Shareholder Transaction
Expenses
Maximum Sales Load Imposed
on Purchases of Shares (as a
percentage of offering price):
Class A** 4.25% 4.25% 2.50% N/A
Class B None None None N/A
Class C None None None N/A
Class D None None None N/A
Maximum Sales Load Imposed
on Reinvested Dividends (as a
percentage of offering price):
Class A None None None N/A
Class B None None None N/A
Class C None None None N/A
Class D None None None N/A
Maximum Contingent Deferred
Sales Load (as a percentage of
redemption proceeds):
Class A*** 1.00% 1.00% 1.00% N/A
Class B** 3.00% 3.00% 3.00% N/A
Class C None None None N/A
Class D None None None N/A
Redemption Fees (as a percent-
age of amount redeemed):
Class A None None None N/A
Class B None None None N/A
Class C None None None N/A
Class D None None None N/A
Maximum Exchange Fee:
Class A None None None N/A
Class B None None None N/A
Class C None None None N/A
Class D None None None N/A
</TABLE>
* GE MONEY MARKET FUND DOES NOT CURRENTLY OFFER MULTIPLE CLASSES
OF SHARES
AND ACCORDINGLY DOES NOT PARTICIPATE IN THE MULTIPLE DISTRIBUTION
SYSTEM
(AS DEFINED BELOW). NO SALES CHARGES, REDEMPTION FEES OR EXCHANGE
FEES
ARE ASSESSED BY THE TRUST WITH RESPECT TO SHARES OF GE MONEY
MARKET FUND.
** THE SALES CHARGE AND CONTINGENT DEFERRED SALES CHARGE ("CDSC")
SET OUT
IN THE ABOVE TABLE ARE THE MAXIMUM CHARGES IMPOSED ON
PURCHASES OR
REDEMPTIONS OF SHARES AND INVESTORS MAY PAY ACTUAL CHARGES THAT
ARE LESS
DEPENDING ON THE AMOUNT PURCHASED AND IN THE CASE OF THE CLASS B
SHARES,
THE LENGTH OF TIME THE SHARES ARE HELD.
*** THE TRUST WILL IMPOSE A REDEMPTION FEE IN THE FORM OF A CDSC,
EQUAL TO
1% OF THE NET ASSET VALUE OF CLASS A SHARES IF THE SHARES BEING
REDEEMED
WERE REDEEMED WITHIN ONE YEAR OF PURCHASE AND WERE SUBJECT TO NO
FRONT-END
SALES LOAD UPON PURCHASE BY VIRTUE OF BEING PART OF A PURCHASE OF
$1 MILLION
OR MORE.
2
<PAGE>
<TABLE>
<CAPTION>
GE GE GE
U.S. Global Strategic
Equity Equity Investment
Fund Fund Fund
_____ ______ ___________
<S> <C> <C> <C>
Annual Fund Operating
Expenses
(as a percentage of average
net assets)
Advisory and Administration fees:
Class A .40% .75% .35%
Class B .40% .75% .35%
Class C .40% .75% .35%
Class D .40% .75% .35%
12b-1 fees:**
Class A .50% .50% .50%
Class B 1.00% 1.00% 1.00%
Class C .25% .25% .25%
Class D None None None
Other expenses
(after reimbursement):***
Class A .10% .35% .30%
Class B .10% .35% .30%
Class C .10% .35% .30%
Class D .10% .35% .30%
Total Operating Expenses
(after reimbursement):**
Class A 1.00% 1.60% 1.15%
Class B 1.50% 2.10% 1.65%
Class C .75% 1.35% .90%
Class D .50% 1.10% .65%
<CAPTION>
GE GE GE
Tax- Fixed Money
Exempt Income Market
Fund Fund Fund*
_____ ______ ___________
<S> <C> <C> <C>
Annual Fund Operating
Expenses
(as a percentage of average
net assets)
Advisory and Administration fees: .25%
Class A .35% .35%
Class B .35% .35%
Class C .35% .35%
Class D .35% .35%
12b-1 fees:** None
Class A .50% .50%
Class B 1.00% 1.00%
Class C .25% .25%
Class D None None
Other expenses
(after reimbursement):*** .20%
Class A .25% .25%
Class B .25% .25%
Class C .25% .25%
Class D .25% .25%
Total Operating Expenses
(after reimbursement):** .45%
Class A 1.10% 1.10%
Class B 1.60% 1.60%
Class C .85% .85%
Class D .60% .60%
</TABLE>
* GE MONEY MARKET FUND DOES NOT CURRENTLY OFFER MULTIPLE CLASSES
OF SHARES AND
ACCORDINGLY DOES NOT PARTICIPATE IN THE MULTIPLE DISTRIBUTION
SYSTEM (AS
DEFINED BELOW).
** INCLUDES SHAREHOLDER SERVICING AND DISTRIBUTION FEES BORNE BY A
FUND UNDER
AN AMENDED AND RESTATED SHAREHOLDER SERVICING AND DISTRIBUTION
PLAN ADOPTED
BY THE TRUST.
*** SEE FOOTNOTE THREE ON PAGE 5.
3
<PAGE>
<TABLE>
<CAPTION>
GE GE
International Short-Term
Equity Government
Fund Fund
___________ ___________
<S> <C> <C>
Annual Fund Operating
Expenses
(as a percentage of average
net assets)
Advisory fees:
Class A .75% .25%
Class B .75% .25%
Class C .75% .25%
Class D .75% .25%
Administration fees:
Class A .05% .05%
Class B .05% .05%
Class C .05% .05%
Class D .05% .05%
12b-1 fees:*
Class A .50% .50%
Class B 1.00% .85%
Class C .25% .25%
Class D None None
Other expenses
(after reimbursement):**
Class A .30% .15%
Class B .30% .15%
Class C .30% .15%
Class D .30% .15%
Total Operating Expenses
(after reimbursement):**
Class A 1.60% .95%
Class B 2.10% 1.30%
Class C 1.35% .70%
Class D 1.10% .45%
</TABLE>
____________
* INCLUDES SHAREHOLDER SERVICING AND DISTRIBUTION FEES BORNE BY A
FUND UNDER AN AMENDED AND RESTATED SHAREHOLDER SERVICING AND
DISTRIBUTION PLAN ADOPTED BY THE TRUST.
** SEE FOOTNOTE THREE ON NEXT PAGE.
The nature of the services provided to, and the advisory and administration
fees paid by, each Fund are described under "Management of the Trust."
"Other expenses" includes fees for shareholder services other than those
borne by a Fund under a shareholder servicing and distribution plan adopted
by the Trust, custodial fees, legal and accounting fees, printing costs and
registration fees, the costs of regulatory compliance, the costs associated
with maintaining the Trust's legal existence and the costs involved in
communicating with shareholders of the Funds. Long-term shareholders of
Class B shares may pay more than the economic equivalent of the maximum
front-end sales charge currently permitted by the rules of the National
Association of Securities Dealers, Inc. governing investment company sales
charges. See "Distributor." The Trust may, in its discretion, require that
proposed investments of $10 million or more in a particular Class of a
Participant Fund (as defined below), or in GE Money Market Fund, be made in
kind. In connection with any purchase in kind, an investor may bear
transaction costs, which may include broker's commissions and taxes or
governmental fees, domestic or foreign.
4
<PAGE>
Example***
The following example demonstrates the projected dollar amount of total
cumulative expenses that would be incurred over a one-year, three-year,
five-year and ten-year period with respect to a hypothetical investment in
each Fund. These amounts are based upon (1) payment by the Fund of operating
expenses at the levels set out in the table above and (2) the specific
assumptions stated below.
<TABLE>
<CAPTION>
A shareholder would pay the following
expenses on a $1,000 investment,
assuming (1) a 5% annual return and
(2) redemption at the end
of the time periods shown:
_________________________________________
1 Year 3 Years 5 Years 10 Years**
_________ _________ _________ ___________
<S> <C> <C> <C> <C>
GE U.S. Equity Fund:
Class A $57* $78 $100 $164
Class B $55 $67 $82 $179
Class C $8 $24 $42 $93
Class D $5 $16 $28 $63
GE Global Equity Fund:
Class A $63* $96 $130 $228
Class B $61 $86 $113 $243
Class C $14 $43 $74 $162
Class D $11 $35 $61 $134
GE International Equity Fund:
Class A $63* $96 $130 $228
Class B $61 $86 $113 $243
Class C $14 $43 $74 $162
Class D $11 $35 $61 $134
GE Strategic Investment Fund:
Class A $59* $82 $108 $181
Class B $57 $72 $90 $195
Class C $9 $29 $50 $111
Class D $7 $21 $36 $81
GE Tax-Exempt Fund:
Class A $53* $76 $101 $171
Class B $46 $70 $87 $190
Class C $9 $27 $47 $105
Class D $6 $19 $33 $75
GE Fixed Income Fund:
Class A $53* $76 $101 $171
Class B $46 $70 $87 $190
Class C $9 $27 $47 $105
Class D $6 $19 $33 $75
GE Short-Term Government Fund:
Class A $34* $55 $76 $139
Class B $43 $61 $71 $157
Class C $7 $22 $39 $87
Class D $5 $14 $25 $57
GE Money
Market Fund $5 $14 $25 $57
<CAPTION>
A shareholder would pay the
following expenses on
the same investment,
assuming no redemption:
_______________________________________
1 Year 3 Years 5 Years 10 Years**
_______ _______ ________ __________
<S> <C> <C> <C> <C>
GE U.S. Equity Fund:
Class A Same Same Same Same
Class B $15 $47 $82 $179
Class C Same Same Same Same
Class D Same Same Same Same
GE Global Equity Fund:
Class A Same Same Same Same
Class B $21 $66 $113 $243
Class C Same Same Same Same
Class D Same Same Same Same
GE International Equity Fund:
Class A Same Same Same Same
Class B $21 $66 $113 $243
Class C Same Same Same Same
Class D Same Same Same Same
GE Strategic Investment Fund:
Class A Same Same Same Same
Class B $17 $52 $90 $195
Class C Same Same Same Same
Class D Same Same Same Same
GE Tax-Exempt Fund:
Class A Same Same Same Same
Class B $16 $50 $87 $190
Class C Same Same Same Same
Class D Same Same Same Same
GE Fixed Income Fund:
Class A Same Same Same Same
Class B $16 $50 $87 $190
Class C Same Same Same Same
Class D Same Same Same Same
GE Short-Term Government Fund:
Class A Same Same Same Same
Class B $13 $41 $71 $157
Class C Same Same Same Same
Class D Same Same Same Same
GE Money
Market Fund Same Same Same Same
</TABLE>
The above example is intended to assist an investor in understanding various
costs and expenses that an investor in a
Fund will
bear directly or indirectly. Although the table assumes a 5% annual return,
a Fund's actual performance will vary and may result in an actual return that
is greater or less than 5%. THE EXAMPLE SHOULD NOT BE CONSIDERED TO BE A
REPRESENTATION OF PAST OR FUTURE EXPENSES OF A FUND; ACTUAL
EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN.
* EXPENSES SHOWN ABOVE WOULD BE INCREASED BY THE IMPOSITION OF
THE 1% CDSC
FOR REDEMPTIONS OF SHARES WHICH WERE NOT SUBJECT TO A FRONT-END
SALES
CHARGE BY VIRTUE OF BEING PART OF A PURCHASE OF $1 MILLION OR
MORE.
** EXPENSES FOR CLASS B SHARES SHOWN ABOVE REFLECT THE CONVERSION
OF CLASS
B SHARES INTO CLASS A SHARES AFTER SIX YEARS.
*** THE FEE TABLE AND THE EXAMPLE REFLECT A DETERMINATION BY THE
FUNDS'
INVESTMENT ADVISER AND ADMINISTRATOR TO VOLUNTARILY REDUCE OR
OTHERWISE
LIMIT "OTHER EXPENSES" OF GE MONEY MARKET FUND AND OF EACH CLASS
OF EACH
PARTICIPANT FUND (AS DEFINED BELOW), ON AN ANNUALIZED BASIS, TO
THE
FOLLOWING ANNUAL RATE OF THE VALUE OF THE FUND'S AVERAGE DAILY
NET
ASSETS: GE U.S. EQUITY FUND: CLASS A, CLASS B, CLASS C AND CLASS D -
.10%; GE GLOBAL EQUITY FUND: CLASS A, CLASS B, CLASS C AND CLASS D -
.35%; GE INTERNATIONAL EQUITY FUND: CLASS A, CLASS B, CLASS C AND
CLASS
D - .30%; GE STRATEGIC INVESTMENT FUND: CLASS A, CLASS B, CLASS C
AND
CLASS D - .30%; GE TAX-EXEMPT FUND: CLASS A, CLASS B, CLASS C AND
CLASS
D - .25%; GE FIXED INCOME FUND: CLASS A, CLASS B, CLASS C AND CLASS D
- - -
.25%; GE SHORT-TERM GOVERNMENT FUND: CLASS A, CLASS B, CLASS C AND
CLASS
D - .15% AND GE MONEY MARKET FUND - .20%. In the absence of this
determination, it is estimated that a Class "Other Expenses" would be
equal to the following annual rate of the value of the Fund's average
daily net assets: GE U.S. Equity Fund: Class A - .35%, Class B - 2.10%,
Class C - .54% and Class D - .31%; GE Global Equity Fund: Class A -
.92%, Class B - 1.75%, Class C - .42%, Class D - 1.00%; GE International
Equity Fund: Class A - .65%, Class B - 1.70%, Class C - 1.70%, Class D -
.38%; GE Strategic Investment Fund: Class A - .34%, Class B - 2.15%,
Class C - .43%, Class D - .62%; GE Tax-Exempt Fund: Class A - 2.15%,
Class B - 2.15%, Class C - .58%, Class D - 1.12%; GE Fixed Income Fund:
Class A - .33%, Class B - 2.15%, Class C - .35%, Class D - 2.15%; GE
Short-Term Government Fund: Class A 2.20%, Class B - 2.20%, Class C -
1.29%, Class D - .68%; and GE Money Market Fund's other expenses would
be .45% of the Fund's average daily net assets. Without this agreement,
under the assumption set forth in the example above, the expenses on a
$1,000 investment at the end of one, three, five and ten years,
respectively, would be as follows (assuming a redemption): GE U.S.
Equity Fund: Class A - $60, $85, $113, $191, Class B - $75, $127, $182,
$377, Class C - $12, $38, $65, $144, Class D - $7, $23, $40, $88; GE
Global Equity Fund: Class A - $68, $112, $158, $286, Class B - $75,
$127, $182, $377, Class C - $14, $45, $78, $170, Class D - $18, $55,
$95, $206; GE International Equity Fund: Class A - $66, $106, $148,
$264, Class B - $75, $127, $182, $377, Class C - $28, $85, $145, $308,
Class D - $12, $37, $65, $143; GE Strategic Investment Fund: Class A -
$59, $83, $110, $185, Class B - $75, $127, $182, $377, Class C - $11,
$33, $57, $126; Class D - $10, $31, $54, $119; GE Tax-Exempt Fund: Class
A - $72, $131, $193, $360, Class B - $65, $127, $182, $377, Class C -
$12, $37, $65, $143, Class D - $15, $46, $80, $176; GE Fixed Income
Fund: Class A - $54, $78, $105, $180, Class B - $65, $127, $182, $377,
Class C - $10, $30, $53, $117, Class D - $25, $78, $133, $284; GE Short-
Term Government Fund: Class A - $55, $115, $179, $348, Class B - $64,
$123, $175, $364, Class C - $19, $58, $100, $216, Class D - $10, $31,
$54, $120; and GE Money Market Fund - $7, $22, $39, and $87. Assuming no
redemption, the expenses would be the same for each Class of each Fund,
other than Class B and the expenses of Class B of each Fund (other than
GE Short-Term Government Fund) would be $35, $107, $182, $377 and the
expenses of Class B of GE Short-Term Government Fund would be $34, $103,
$175, $364.
5
<PAGE>
FINANCIAL HIGHLIGHTS
The tables below, which have been audited by the Trust's independent
accountants, Price Waterhouse LLP, whose report thereon appears in the
Trust's Annual Report dated September 30, 1995, (the "Annual Report") set
forth selected financial data for a Fund share outstanding throughout the
periods presented. The following information should be read in conjunction
with the Financial Statements and the Notes to the Financial Statements which
are incorporated by reference into the Statement of Additional Information.
Further information about the performance of the Funds is contained in the
Annual Report, copies of which may be obtained without charge upon request
made to the Trust by calling the toll free numbers listed on the back cover
page of the Prospectus or by writing to the Trust at the address listed on
the front cover page of the Prospectus.
Selected data based on a share outstanding during the period.
<TABLE>
<CAPTION>
Class A Class B
__________________ _________________
GE U.S. Equity Fund 9/30/95 9/30/94(b) 9/30/95 9/30/94
Inception date - 12/22/93 - 12/22/93
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $16.12 $16.48 $16.03 $16.41
Income (loss) from
investment operations:
Net investment income (2.54) 3.23 0.27 0.24
Net realized and
unrealized gains
(losses) on
investments 6.79 (3.22) 3.78 (0.25)
____ ____ ____
____
Total income (loss)
from investment
operations 4.25 0.01 4.05 (0.01)
____ ____ ____ ____
Less distributions:
From net investment
income 0.00 0.20 0.28 0.20
From capital gains 0.09 0.17 0.09 0.17
____ ____ ____ ____
Total distributions 0.09 0.37 0.37 0.37
____ ____ ____ ____
Net asset value, end
of period $20.28 $16.12 $19.71 $16.03
____ ____ ____ ____
____ ____ ____ ____
TOTAL RETURN at net
asset value(a) 26.52% (0.86%) 25.92% (0.09%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of
period (in thousands) $15,148 $1,214 $1,563 $91
Ratio of net investment
income to
average net assets* 1.85% 1.87% 1.29% 1.28%
Ratio of expenses to
average net assets* 1.00% 1.00% 1.50% 1.50%
Ratio of expenses to
average net assets
before voluntary
expense limitation* 1.25% 1.46% 3.50% 1.96%
Portfolio turnover rate 43% 51% 43% 51%
<CAPTION>
Class C Class D
__________________________ _________________
GE U.S. Equity Fund 9/30/95 9/30/94 9/30/93(c) 9/30/95 9/30/94
Inception date - - 1/5/93 - 11/29/93
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $16.13 $16.35 $15.00 $16.16 $16.37
Income (loss) from
investment operations:
Net investment income 0.17 1.00 0.12 0.38 0.32
Net realized and
unrealized gains
(losses) on
investments 4.06 (0.85) 1.23 3.88 (0.16)
____ ____ ____ ____ ____
Total income (loss)
from investment
operations 4.23 0.15 1.35 4.26 0.16
____ ____ ____ ____ ____
Less distributions:
From net investment
income 0.29 0.20 0.00 0.35 0.20
From capital gains 0.09 0.17 0.00 0.09 0.17
____ ____ ____ ____ ____
Total distributions 0.38 0.37 0.00 0.44 0.37
____ ____ ____ ____ ____
Net asset value,
end of period $19.98 $16.13 $16.35 $19.98 $16.16
____ ____ ____ ____ ____
____ ____ ____ ____ ____
TOTAL RETURN at net
asset value(a) 26.86% 0.88% 10.32% 27.14% 0.96%
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end
of period
(in thousands) $26,007 $16,382 $74,415 $128,247 $114,885
Ratio of net investment
income to
average net assets* 2.12% 2.11% 1.86% 2.36% 2.27%
Ratio of expenses
to average net assets* 0.75% 0.62% 0.50% 0.50% 0.50%
Ratio of expenses to
average net assets
before voluntary
expense limitation* 1.19% 1.21% 1.34% 0.71% 0.96%
Portfolio turnover rate 43% 51% 15% 43% 51%
</TABLE>
See notes accompanying financial highlights.
6
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
Class A Class B
__________________ _________________
GE Global Equity Fund 9/30/95 9/30/94(b) 9/30/95 9/30/94
Inception date - 12/22/93 - 12/22/93
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $19.34 $18.61 $19.32 $18.48
Income (loss) from
investment operations:
Net investment income
(loss) 0.10 0.03 0.00 (0.01)
Net realized and
unrealized gains
(losses) on
investments 1.22 0.91 1.23 1.06
____ ____ ____ ____
Total income (loss)
Total income (loss)
from investment
operations 1.32 0.94 1.23 1.05
____ ____ ____ ____
Less distributions:
From net investment
income 0.09 0.01 0.02 0.01
From capital gains 0.39 0.20 0.39 0.20
____ ____ ____ ____
Total distributions 0.48 0.21 0.41 0.21
____ ____ ____ ____
Net asset value, end
of period $20.18 $19.34 $20.14 $19.32
____ ____ ____ ____
____ ____ ____ ____
TOTAL RETURN at net
asset value(a) 7.16% 3.09% 6.62% 5.70%
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of
period (in thousands) $2,811 $694 $356 $128
Ratio of net investment
income to
average net assets* 0.47% 0.44% (0.11%) (0.08%)
Ratio of expenses to
average net assets* 1.60% 1.60% 2.10% 2.10%
Ratio of expenses to
average net assets
before voluntary
expense limitation* 2.17% 2.02% 3.50% 2.52%
Portfolio turnover rate 46% 26% 46% 26%
<CAPTION>
Class C Class D
__________________________ _________________
GE Global Equity Fund 9/30/95 9/30/94 9/30/93(c) 9/30/95 9/30/94
Inception date - - 1/5/93 - 11/29/93
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $19.40 $17.16 $15.00 $19.45 $17.49
Income (loss) from
investment operations:
Net investment income
(loss) 0.09 0.07 0.08 0.13 0.11
Net realized and
unrealized gains
(losses) on
investments 1.30 2.37 2.08 1.31 2.06
____ ____ ____ ____ ____
Total income (loss)
from investment
operations 1.39 2.44 2.16 1.44 2.17
____ ____ ____ ____ ____
Less distributions:
From net investment
income 0.09 0.00 0.00 0.13 0.01
From capital gains 0.39 0.20 0.00 0.39 0.20
____ ____ ____ ____ ____
Total distributions 0.48 0.20 0.00 0.52 0.21
____ ____ ____ ____ ____
Net asset value,
end of period $20.31 $19.40 $17.16 $20.37 $19.45
____ ____ ____ ____ ____
____ ____ ____ ____ ____
TOTAL RETURN at net
asset value(a) 7.47% 14.28% 14.10% 7.76% 12.43%
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of
period (in thousands) $23,683 $20,432 $11,999 $9,785 $10,504
Ratio of net investment
income to
average net assets* 0.59% 0.52% 1.00% 0.84% 0.82%
Ratio of expenses to
average net assets* 1.35% 1.31% 1.10% 1.10% 1.10%
Ratio of expenses to
average net assets
before voluntary
expense limitation* 1.42% 1.77% 2.19% 1.75% 1.52%
Portfolio turnover rate 46% 26% 28% 46% 26%
<CAPTION>
Class A Class B
__________________ _________________
GE International Equity Fund 9/30/95 9/30/94 9/30/95 9/30/94
Inception date - 3/2/94 - 3/2/94
<S> <C> <C> <C> <C>
Net asset value, beginning
of period $15.18 $15.00 $15.13 $15.00
Income (loss) from
investment operations:
Net investment income 0.09 0.06 0.01 0.00
Net realized and unrealized
gains (losses)
on investments 0.64 0.12 0.64 0.13
____ ____ ____ ____
Total income (loss)
from investment
operations 0.73 0.18 0.65 0.13
____ ____ ____ ____
Less distributions:
From net investment income 0.04 0.00 0.01 0.00
From capital gains 0.00 0.00 0.00 0.00
____ ____ ____ ____
Total distributions 0.04 0.00 0.01 0.00
____ ____ ____ ____
Net asset value, end of period $15.87 $15.18 $15.77 $15.13
____ ____ ____ ____
____ ____ ____ ____
TOTAL RETURN at net asset value(a) 4.87% 1.20% 4.33% 0.87%
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period
(in thousands) $3,948 $25 $57 $34
Ratio of net investment
income to
average net assets* 1.28% 1.01% 0.10% 0.47%
Ratio of expenses to
average net assets* 1.60% 1.60% 2.10% 2.10%
Ratio of expenses to
average net assets
before voluntary
expense limitation* 1.95% 1.93% 3.50% 2.43%
Portfolio turnover rate 27% 6% 27% 6%
<CAPTION>
Class C Class D
_________________ _________________
GE International Equity Fund 9/30/95 9/30/94 9/30/95 9/30/94
Inception date - 3/2/94 - 3/2/94
<S> <C> <C> <C> <C>
Net asset value, beginning of period $15.19 $15.00 $15.22 $15.00
Income (loss) from investment
operations:
Net investment income 0.12 0.00 0.12 0.10
Net realized and unrealized
gains (losses) on investments 0.65 0.19 0.70 0.12
____ ____ ____ ____
Total income (loss)
from investment
operations 0.77 0.19 0.82 0.22
____ ____ ____ ____
Less distributions:
From net investment income 0.08 0.00 0.10 0.00
From capital gains 0.00 0.00 0.00 0.00
____ ____ ____ ____
Total distributions 0.08 0.00 0.10 0.00
____ ____ ____ ____
Net asset value, end of period $15.88 $15.19 $15.94 $15.22
____ ____ ____ ____
____ ____ ____ ____
TOTAL RETURN at net asset value(a) 5.16% 1.27% 5.45% 1.47%
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period
(in thousands) $1,262 $481 $32,907 $26,460
Ratio of net investment income to
average net assets* 0.83% 0.66% 0.97% 1.52%
Ratio of expenses to average
net assets* 1.35% 1.35% 1.07% 1.10%
Ratio of expenses to
average net assets
before voluntary expense
limitation* 2.75% 1.68% 1.18% 1.43%
Portfolio turnover rate 27% 6% 27% 6%
</TABLE>
SEE NOTES ACCOMPANYING FINANCIAL HIGHLIGHTS.
7
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
Class A Class B
__________________ _________________
<S> <C> <C> <C> <C>
GE Strategic Investment Fund 9/30/95 9/30/94(b) 9/30/95 9/30/94
Inception date - 12/22/93 - 12/22/93
Net asset value,
beginning of period $15.71 $16.21 $15.62 $16.14
Income (loss) from
investment operations:
Net investment income 0.40 0.48 0.43 0.27
Net realized and
unrealized gains
(losses) on
investments 2.69 (0.65) 2.55 (0.46)
____ ____ ____ ____
Total income (loss)
from investment
operations 3.09 (0.17) 2.98 (0.19)
____ ____ ____ ____
Less distributions:
From net investment income 0.37 0.27 0.34 0.27
From capital gains 0.00 0.06 0.00 0.06
____ ____ ____ ____
Total distributions 0.37 0.33 0.34 0.33
____ ____ ____ ____
Net asset value, end of period $18.43 $15.71 $18.26 $15.62
____ ____ ____ ____
____ ____ ____ ____
TOTAL RETURN at net
asset value(a) 20.12% (1.32%) 19.53% (1.25%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period
(in thousands) $8,878 $1,104 $882 $150
Ratio of net investment
income to
average net assets* 2.95% 2.59% 2.46% 1.92%
Ratio of expenses to
average net assets* 1.15% 1.15% 1.65% 1.65%
Ratio of expenses to
average net assets
before voluntary
expense limitation* 1.19% 1.58% 3.50% 2.08%
Portfolio turnover rate 98% 68% 98% 68%
<CAPTION>
Class C Class D
___________________ _________________
GE Strategic Investment Fund 9/30/95 9/30/94 9/30/93(c) 9/30/95 9/30/94
Inception date - - 1/5/93 - 11/29/93
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $15.72 $16.08 $15.00 $15.74 $16.02
Income (loss) from
investment operations:
Net investment income 0.48 0.44 0.23 0.55 0.45
Net realized and
unrealized gains
(losses) on investments 2.64 (0.48) 0.85 2.62 (0.40)
____ ____ ____ ____ ____
Total income (loss)
from investment
operations 3.12 (0.04) 1.08 3.17 0.05
____ ____ ____ ____ ____
Less distributions:
From net investment income 0.38 0.26 0.00 0.42 0.27
From capital gains 0.00 0.06 0.00 0.00 0.06
____ ____ ____ ____ ____
Total distributions 0.38 0.32 0.00 0.42 0.33
____ ____ ____ ____ ____
Net asset value, end of period $18.46 $15.72 $16.08 $18.49 $15.74
____ ____ ____ ____ ____
____ ____ ____ ____ ____
TOTAL RETURN at net asset
value(a) 20.35% (0.27%) 8.06% 20.70% 0.25%
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period
(in thousands) $17,821 $13,018 $12,780 $18,665 $17,159
Ratio of net investment
income to
average net assets* 3.21% 2.62% 2.68% 3.46% 2.93%
Ratio of expenses to
average net assets* 0.90% 0.85% 0.65% 0.65% 0.65%
Ratio of expenses to
average net assets
before voluntary expense
limitation* 1.03% 1.33% 1.65% 0.97% 1.08%
Portfolio turnover rate 98% 68% 20% 98% 68%
</TABLE>
<TABLE>
<CAPTION>
Class A Class B
__________________ _________________
<S> <C> <C> <C> <C>
GE Tax-Exempt Fund 9/30/95 9/30/94(b) 9/30/95 9/30/94
Inception date - 12/22/93 - 12/22/93
Net asset value,
beginning of period $11.32 $12.31 $11.32 $12.30
Income (loss) from
investment operations:
Net investment income 0.53 0.39 0.47 0.34
Net realized and
unrealized gains
(losses) on investments 0.46 (1.00) 0.47 (0.98)
____ ____ ____ ____
Total income (loss) from investment
operations 0.99 (0.61) 0.94 (0.64)
____ ____ ____ ____
Less distributions:
From net investment income 0.54 0.38 0.48 0.34
From capital gains 0.00 0.00 0.00 0.00
____ ____ ____ ____
Total distributions 0.54 0.38 0.48 0.34
____ ____ ____ ____
Net asset value, end of period $11.77 $11.32 $11.78 $11.32
____ ____ ____ ____
____ ____ ____ ____
TOTAL RETURN at net asset
value(a) 8.96% (5.40%) 8.51% (5.28%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period
(in thousands) $389 $53 $689 $61
Ratio of net investment
income to
average net assets* 4.54% 4.34% 3.81% 3.68%
Ratio of expenses to average
net assets* 1.10% 1.10% 1.60% 1.60%
Ratio of expenses to
average net assets
before voluntary
expense limitation* 3.00% 1.58% 3.50% 2.08%
Portfolio turnover rate 86% 23% 86% 23%
</TABLE>
<TABLE>
<CAPTION>
Class C Class D
___________________ _________________
GE Tax-Exempt Fund 9/30/95 9/30/94 9/30/93(c) 9/30/95 9/30/94
Inception date - - 1/5/93 - 11/29/93
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $11.32 $12.36 $12.00 $11.32 $12.11
Income (loss) from
investment operations:
Net investment income 0.57 0.54 0.33 0.60 0.47
Net realized and
unrealized gains
(losses) on
investments 0.45 (1.06) 0.36 0.46 (0.80)
____ ____ ____ ____ ____
Total income (loss)
from investment
operations 1.02 (0.52) 0.69 1.06 (0.33)
____ ____ ____ ____ ____
Less distributions:
From net investment
income 0.57 0.52 0.33 0.60 0.46
From capital gains 0.00 0.00 0.00 0.00 0.00
____ ____ ____ ____ ____
Total distributions 0.57 0.52 0.33 0.60 0.46
____ ____ ____ ____ ____
Net asset value,
end of period $11.77 $11.32 $12.36 $11.78 $11.32
____ ____ ____ ____ ____
____ ____ ____ ____ ____
TOTAL RETURN at net
asset value(a) 9.23% (4.30%) 5.48% 9.59% (2.80%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period
(in thousands) $6,816 $6,917 $10,136 $3,905 $4,995
Ratio of net investment
income to
average net assets* 4.94% 4.41% 3.56% 5.20% 4.65%
Ratio of expenses to
average net assets* 0.85% 0.79% 0.60% 0.60% 0.60%
Ratio of expenses to
average net assets
before voluntary
expense limitation* 1.18% 1.33% 1.53% 1.47% 1.08%
Portfolio
turnover rate 86% 23% 29% 86% 23%
</TABLE>
SEE NOTES ACCOMPANYING FINANCIAL HIGHLIGHTS.
8
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
Class A Class B
__________________ _________________
GE Fixed Income Fund 9/30/95 9/30/94(b) 9/30/95 9/30/94
Inception date - 12/22/93 - 12/22/93
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $11.27 $12.19 $11.26 $12.15
Income (loss) from
investment operations:
Net investment income 0.73 0.47 0.65 0.42
Net realized and
unrealized gains
(losses) on investments 0.63 (0.84) 0.66 (0.81)
____ ____ ____ ____
Total income (loss)
from investment
operations 1.36 (0.37) 1.31 (0.39)
____ ____ ____ ____
Less distributions:
From net investment income 0.72 0.47 0.66 0.42
From capital gains 0.00 0.08 0.00 0.08
____ ____ ____ ____
Total distributions 0.72 0.55 0.66 0.50
____ ____ ____ ____
Net asset value, end of period $11.91 $11.27 $11.91 $11.26
_____ _____ ______ ______
_____ _____ ______ ______
TOTAL RETURN at net
asset value(a) 12.48% (3.02%) 11.98% (3.31%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period
(in thousands) $5,400 $26,023 $234 $65
Ratio of net investment
income to
average net assets* 6.22% 5.37% 5.57% 4.83%
Ratio of expenses to
average net assets* 1.08% 1.10% 1.60% 1.58%
Ratio of expenses to
average net assets
before voluntary
expense limitation* 1.18% 1.51% 3.50% 2.01%
Portfolio turnover rate 315% 298% 315% 298%
<CAPTION>
Class C Class D
___________________ _________________
GE Fixed Income Fund 9/30/95 9/30/94 9/30/93(c) 9/30/95 9/30/94
Inception date - - 1/5/93 - 11/29/93
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $11.27 $12.31 $12.00 $11.27 $12.17
Income (loss) from
investment operations:
Net investment income 0.73 0.61 0.36 0.77 0.55
Net realized and
unrealized gains
(losses) on investments 0.67 (0.96) 0.31 0.65 (0.83)
____ ____ ____ ____ ____
Total income (loss)
from investment
operations 1.40 (0.35) 0.67 1.42 (0.28)
____ ____ ____ ____ ____
Less distributions:
From net investment
income 0.75 0.61 0.36 0.77 0.54
From capital gains 0.00 0.08 0.00 0.00 0.08
____ ____ ____ ____ ____
Total distributions 0.75 0.69 0.36 0.77 0.62
____ ____ ____ ____ ____
Net asset value,
end of period $11.92 $11.27 $12.31 $11.92 $11.27
______ ______ ______ ______ ______
______ ______ ______ ______ ______
TOTAL RETURN at net
asset value(a) 12.81% (2.97%) 5.24% 13.10% (2.34%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of
period (in thousands) $21,401 $13,600 $11,485 $6,642 $2,732
Ratio of net investment
income to
average net assets* 6.37% 5.22% 3.87% 6.57% 5.40%
Ratio of expenses to
average net assets* 0.85% 0.79% 0.60% 0.59% 0.58%
Ratio of expenses to
average net assets
before voluntary
expense limitation* 0.95% 1.26% 1.63% 2.50% 1.01%
Portfolio turnover rate 315% 298% 68% 315% 298%
<CAPTION>
Class A Class B
__________________ _________________
GE Short-Term Government Fund 9/3/95 9/30/94 9/30/95 9/30/94
Inception date - 3/2/94 - 3/2/94
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $11.72 $12.00 $11.72 $12.00
Income (loss) from
investment operations:
Net investment income 0.64 0.35 0.59 0.33
Net realized and
unrealized gains
(losses) on investments 0.21 (0.30) 0.21 (0.31)
____ ____ ____ ____
Total income (loss)
from investment
operations 0.85 0.05 0.80 0.02
____ ____ ____ ____
Less distributions:
From net investment income 0.66 0.33 0.62 0.30
From capital gains 0.00 0.00 0.00 0.00
____ ____ ____ ____
Total distributions 0.66 0.33 0.62 0.30
____ ____ ____ ____
Net asset value, end of period $11.91 $11.72 $11.90 $11.72
______ ______ ______ ______
______ ______ ______ ______
TOTAL RETURN at net
asset value(a) 7.48% 0.40% 7.01% 0.20%
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period
(in thousands) $285 $35 $83 $25
Ratio of net investment
income to
average net assets* 5.27% 4.75% 5.07% 4.38%
Ratio of expenses to
average net assets* 0.95% 0.95% 1.30% 1.30%
Ratio of expenses to
average net assets
before voluntary
expense limitation* 3.00% 1.71% 3.35% 2.06%
Portfolio turnover rate 415% 146% 415% 146%
<CAPTION>
Class C Class D
___________________ _________________
GE Short-Term Government Fund 9/30/95 9/30/94 9/30/95 9/30/94
Inception date - 3/2/94 - 3/2/94
<S> <C> <C> <C> <C>
Net asset value, beginning of period $11.72 $12.00 $11.72 $12.00
Income (loss) from
investment operations:
Net investment income 0.66 0.36 0.69 0.39
Net realized and unrealized gains
(losses) on investments 0.22 (0.30) 0.21 (0.31)
____ ____ ____ ____
Total income (loss) from investment
operations 0.88 0.06 0.90 0.08
____ ____ ____ ____
Less distributions:
From net investment income 0.69 0.34 0.72 0.36
From capital gains 0.00 0.00 0.00 0.00
____ ____ ____ ____
Total distributions 0.69 0.34 0.72 0.36
____ ____ ____ ____
Net asset value, end of period $11.91 $11.72 $11.90 $11.72
______ ______ ______ ______
______ ______ ______ ______
TOTAL RETURN at net asset value(a) 7.74% 0.53% 7.92% 0.69%
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period
(in thousands) $2,437 $287 $8,048 $7,822
Ratio of net
investment income to
average net assets* 5.62% 5.18% 5.89% 5.32%
Ratio of expenses to
average net assets* 0.70% 0.70% 0.45% 0.45%
Ratio of expenses to
average net assets
before voluntary
expense limitation* 1.84% 1.46% 0.98% 1.21%
Portfolio turnover rate 415% 146% 415% 146%
</TABLE>
SEE NOTES ACCOMPANYING FINANCIAL HIGHLIGHTS.
9
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
GE Money Market Fund 9/30/95 9/30/94 9/30/93(c)
<S> <C> <C> <C>
INCEPTION DATE -- -- 1/5/93
Net asset value, beginning of period $1.00 $1.00 $1.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.05 0.03 0.02
Net realized and unrealized gains
(losses) on investments 0.00 0.00 0.00
_____ _____ _____
TOTAL INCOME (LOSS) FROM INVESTMENT
OPERATIONS 0.05 0.03 0.02
LESS DISTRIBUTIONS:
From net investment income 0.05 0.03 0.02
From capital gains 0.00 0.00 0.00
_____ _____ _____
Total distributions 0.05 0.03 0.02
_____ _____ _____
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00
_____ _____ _____
_____ _____ _____
TOTAL RETURN AT NET ASSET VALUE(A) 5.52% 3.31% 1.64%
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period
(in thousands) $71,664 $53,607 $17,197
Ratio of net investment income to
average net assets* 5.32% 3.41% 2.27%
Ratio of expenses to average net assets* 0.45% 0.45% 0.45%
Ratio of expenses to average net assets
before voluntary expense limitation* 0.70% 1.04% 1.48%
</TABLE>
_______________
(A) TOTAL RETURNS ARE HISTORICAL AND ASSUME CHARGES IN SHARE PRICE,
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, AND ASSUME NO SALES
CHARGE.
HAD THE ADVISOR NOT ABSORBED A PORTION OF EXPENSES, TOTAL RETURN
WOULD
HAVE BEEN LOWER. PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED.
(B) PER SHARE INFORMATION IS FOR THE PERIOD SINCE INCEPTION THROUGH
SEPTEMBER 30, 1994, AND THE TOTAL RETURN INFORMATION IS FOR THE
PERIOD
JANUARY 1, 1994, START OF INVESTMENT OPERATIONS, THROUGH SEPTEMBER
30,
1994.
(C) PER SHARE INFORMATION IS FOR THE PERIOD SINCE INCEPTION THROUGH
SEPTEMBER 30, 1993, AND THE TOTAL RETURN INFORMATION IS FOR THE
PERIOD
FEBRUARY 22, 1993, START OF INVESTMENT OPERATIONS, THROUGH
SEPTEMBER 30,
1993, EXCEPT FOR GE TAX-EXEMPT FUND, WHICH IS FROM FEBRUARY 26, 1993
THROUGH SEPTEMBER 30, 1993.
* ANNUALIZED FOR PERIODS LESS THAN ONE YEAR.
10
<PAGE>
THE MULTIPLE DISTRIBUTION SYSTEM
Pursuant to a multiple distribution system (the "Multiple Distribution
System"), the Trust offers investors in GE U.S. Equity Fund, GE Global Equity
Fund, GE International Equity Fund, GE Strategic Investment Fund, GE
Tax-Exempt Fund, GE Fixed Income Fund, and GE Short-Term Government Fund
(each a "Participant Fund" and together the "Participant Funds") different
methods of purchasing shares, thus enabling investors to choose the Class
that best suits their needs given the amount of purchase and intended length
of investment.
CLASS A SHARES. Class A shares are sold at net asset value per share plus a
maximum initial sales charge imposed at the time of purchase of 4.75% with
respect to GE U.S. Equity Fund, GE Global Equity Fund, GE International
Equity Fund and GE Strategic Investment Fund and 4.25% with respect to GE
Tax-Exempt Fund and GE Fixed Income Fund and 2.50% with respect to GE
Short-Term Government Fund. The initial sales charge may be reduced or
waived for certain purchases. Class A shares of a Participant Fund are
subject to an annual service fee of .25% of the value of the Participant
Fund's average daily net assets attributable to the Class and an annual
distribution fee of .25% of the value of the Participant Fund's average daily
net assets attributable to the Class. The annual service fee is used by GE
Investment Management Incorporated ("GEIM"), the Fund's investment adviser
and administrator, to compensate itself or others, including GE Investment
Services Inc., the distributor of the Funds' shares (the "Distributor"), for
services provided to shareholders of the
Class A shares. The distribution fee is used to compensate GEIM or to allow
GEIM to compensate others, including the
Distributor, for its expenses associated with activities that are primarily
intended to result in the sale of Class A shares of the Participant Funds.
The sales charge is retained by the Distributor, although a portion of the
sales charge may be paid to registered representatives or other dealers that
enter into selected dealer agreements with the Distributor. See "Purchase of
Shares" and "Redemption of Shares" below.
CLASS B SHARES. Class B shares are sold at net asset value per share subject
to a maximum 4.00% CDSC with respect to GE U.S. Equity Fund, GE Global Equity
Fund, GE International Equity Fund and GE Strategic Investment Fund and a
3.00% CDSC with respect to GE Tax-Exempt Fund, GE Fixed Income Fund and GE
Short-Term Government Fund, which is assessed only if the shareholder redeems
shares within the first four years of investment. This method of distribution
results in 100% of the investor's assets being used to acquire shares of the
Participant Fund. For each year of investment the applicable CDSC declines
each year in accordance with the tables set out below under "Redemption of
Shares - Redemptions in General." Class B shares of a Participant Fund,
other than GE Short-Term Government Fund, are subject to an annual service
fee of .25% and an annual distribution fee of .75% of the value of the
Participant Fund's average daily net assets attributable to the Class. In
the case of GE Short-Term Government Fund, Class B shares are subject to an
annual service fee of .25% and an annual distribution fee of .60% of the
value of GE Short-Term Government Fund's average daily net assets
attributable to the Class. Like the service fee and distribution fee
applicable to Class A shares, the Class B service fee and distribution fee is
used to compensate GEIM or to enable GEIM to compensate others with respect
to expenses associated with ongoing shareholder and distribution services
provided to shareholders of Class B shares. See "Purchase of Shares" and
"Redemption of Shares" below.
Six years after the date of purchase, Class B shares will convert
automatically to Class A shares, based on the relative net asset values of
shares of each Class, and will at that time be subject to a distribution fee
of .25% of the Participant Fund's net assets attributable to the Class (as
well as the service fee of .25% of the value of the Participant Fund's
average daily net assets attributable to the Class). The conversion of Class
B shares into Class A shares is subject to the continuing availability of an
opinion of counsel to the effect that the conversions will not constitute
taxable events for Federal tax purposes.
CLASS C SHARES. Class C shares of a Participant Fund are sold at net asset
value per share, subject only to an annual service fee of .25% of the value
of the Participant Fund's average daily net assets attributable to the Class.
No sales charge or CDSC will be imposed on Class C shares; however, Class C
shares are available only to a limited group of investors, including
employees of General Electric Company ("GE") or an affiliate of GE. For a
more complete description of Class C shares see "Purchase of Shares" below.
CLASS D SHARES. Class D shares of a Participant Fund are sold at net asset
value per share and are not subject to any sales charge, CDSC, service fee or
distribution fee. Class D shares are available only to certain institutional
investors described in detail under "Purchase of Shares" below.
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
Set forth below is a description of the investment objective and policies of
each Fund. The investment objective of a Fund may not be changed without the
approval of the holders of a majority of the Fund's outstanding voting
securities as defined in the Investment Company Act of 1940, as amended (the
"1940 Act"). Such a majority is defined in the 1940 Act as the lesser of (1)
67% or more of the shares present at a Fund
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meeting, if the holders of more than 50% of the outstanding shares of the Fund
are present or represented by proxy or (2) more than 50% of the outstanding
shares of the Fund. No assurance can be given that a Fund will be able to
achieve its investment objective.
GE U.S. EQUITY FUND
The investment objective of GE U.S. Equity Fund (the "U.S. Equity Fund") is
long-term growth of capital, which objective the Fund seeks to achieve
through investment primarily in equity securities of U.S. companies. In
pursuing its objective, the U.S. Equity Fund, under normal conditions,
invests at least 65% of its assets in equity securities, consisting of common
stocks and preferred stocks, and securities convertible into common stocks,
consisting of convertible bonds, convertible debentures, convertible notes,
convertible preferred stocks and warrants or rights issued by U.S. companies.
The equity securities issued by U.S. companies in which the U.S. Equity Fund
invests typically are traded on U.S. securities exchanges; those U.S. equity
securities held by the U.S. Equity Fund that are not exchange-traded are
non-publicly traded or traded in the U.S. over-the-counter market. Up to 15%
of the U.S. Equity Fund's assets may be invested in foreign securities. The
U.S. Equity Fund also may invest in securities of foreign issuers in the form
of depositary receipts. A more complete description of foreign securities
and depositary receipts and the risks and special considerations applicable
to them is included below under "Risk Factors and Special Considerations" and
in "Further Information: Certain Investment Techniques and Strategies."
The U.S. Equity Fund may, under normal market conditions, invest up to 35% of
its assets in notes, bonds and debentures issued by corporate or governmental
entities when GEIM determines that investing in these kinds of debt
securities is consistent with the Fund's investment objective of long-term
growth of capital. GEIM believes that such a determination could be made,
for example, upon the U.S. Equity Fund's investing in the debt securities of
a company whose securities GEIM anticipates will increase in value as a
result of a development particularly or uniquely applicable to the company,
such as a liquidation, reorganization, recapitalization or merger, material
litigation, technological breakthrough or new management or management
policies. In addition, GEIM believes such a determination could be made with
respect to an investment by the U.S. Equity Fund in debt instruments issued
by a governmental entity upon GEIM's concluding that the value of the
instruments will increase as a result of improvements or changes in public
finances, monetary policies, external accounts, financial markets, exchange
rate policies or labor conditions of the country in which the governmental
entity is located.
During normal market conditions, a portion of the U.S. Equity Fund's total
assets may be held in cash and/or invested in money market instruments of the
types described below under "Additional Investments - Money Market
Instruments" for cash management purposes, pending investment in accordance
with the Fund's investment objective and policies and to meet operating
expenses. During periods in which GEIM believes that investment
opportunities in the U.S. equity markets are diminished (due to either fundame
ntal changes in those markets or an anticipated general decline in the value
of U.S. equity securities), the U.S. Equity Fund may for temporary defensive
purposes hold cash and/or invest in the same types of money market
instruments without limitation. Included among the money market instruments
in which the U.S. Equity Fund may invest are repurchase agreements, the risks
and special considerations of which are described below under "Risk Factors
and Special Considerations - Repurchase and Reverse Repurchase Agreements."
To the extent that it holds cash or invests in money market instruments, the
U.S. Equity Fund may not achieve its investment objective of long-term growth
of capital.
The U.S. Equity Fund's investments in debt securities are limited to those
that are rated investment grade, except that up to 5% of the Fund's assets
may be invested in securities rated lower than investment grade. A security
is considered investment grade if it is rated at the time of purchase within
the four highest grades assigned by Standard & Poor's Corporation ("S&P") or
by Moody's Investors Service, Inc. ("Moody's") or has received an equivalent
rating from another nationally recognized statistical rating organization
("NRSRO") or, if unrated, is deemed by GEIM to be of comparable quality.
Risks and special considerations applicable to certain investment grade
obligations and obligations rated lower than investment grade are described
below under "Risk Factors and Special Considerations." A description of S&P
and Moody's ratings relevant to the U.S. Equity Fund's investments is
included as an Appendix to the Statement of Additional Information.
In managing the assets of the U.S. Equity Fund, GEIM uses a combination of
"value-oriented" and "growth-oriented" investing. Value-oriented investing
involves seeking securities that may have low price-to-earnings ratios, or
high yields, or that sell for less than intrinsic value as determined by
GEIM, or that appear attractive on a dividend discount model. These
securities generally are sold from the U.S. Equity Fund's portfolio when
their prices approach targeted levels. Growth-oriented investing generally
involves buying securities with above average earnings growth rates at
reasonable prices. The U.S. Equity Fund holds these securities until GEIM
determines that their growth prospects diminish or that they have become
overvalued when compared with alternative investments.
In investing on behalf of the U.S. Equity Fund, GEIM seeks to produce a
portfolio that GEIM believes will have similar characteristics to the
Standard & Poor's 500 Composite Stock Price Index (the "S&P Index"), by
virtue of blending investments in both "value" and "growth" securities.
Since the U.S. Equity Fund's strat-
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egy seeks to combine the basic elements of companies comprising the
S&P Index, but is designed to select investments deemed to be the
most attractive within each category, GEIM believes that the strategy
should be capable of outperforming the U.S. equity market as reflected
by the S&P Index on a total return basis.
The U.S. Equity Fund, in addition to investing as described above, may hold
the following types of instruments: non-publicly traded securities, illiquid
securities, and securities that are not registered under the Securities Act
of 1933, as amended (the "1933 Act"), but that can be sold to "qualified
institutional buyers" in accordance with Rule 144A under the 1933 Act (each,
a "Rule 144A Security" and collectively, "Rule 144A Securities"). In
addition, the U.S. Equity Fund may engage in the following types of
investment techniques and strategies: purchasing put and call options on
securities, writing put and call options on securities, purchasing put and
call options on securities indexes, entering into interest rate, financial
and stock or bond index futures contracts or related options that are traded
on a U.S. or foreign exchange or board of trade or in the over-the-counter
market, engaging in forward currency transactions, purchasing and writing put
and call options on foreign currencies, entering into securities transactions
on a when-issued or delayed-delivery basis and lending portfolio securities.
These other instruments, investment techniques and strategies have risks and
special considerations associated with them that are described below under
"Risk Factors and Special Considerations" and in "Further Information:
Certain Investment Techniques and Strategies."
GE GLOBAL EQUITY FUND
The investment objective of GE Global Equity Fund (the "Global Fund") is
long-term growth of capital, which the Fund seeks to achieve by investing
principally in foreign equity securities. In seeking its objective, the
Global Fund invests primarily in a portfolio of securities issued by
companies located in developed and developing countries throughout the world.
The Global Fund may also invest in securities of foreign issuers in the form
of depositary receipts. A more complete description of foreign securities
and depositary receipts and the risks and special considerations applicable
to them is included below under "Risk Factors and Special Considerations" and
in "Further Information: Certain Investment Techniques and Strategies."
Although the Global Fund is subject to no prescribed limits on geographic
asset distribution, under normal circumstances, at least 65% of the Fund's
assets are invested in the aggregate in no fewer than three different
countries. In addition, under normal circumstances, at least 80% of the
Global Fund's total assets are at any one time invested in companies or
governments of countries represented in the Morgan Stanley Capital
International World Index, a well-known index reflecting developed and
developing markets throughout the world.
The Global Fund, under normal conditions, invests at least 65% of its assets
in common stocks, preferred stocks, convertible debentures, convertible
notes, convertible preferred stocks and common stock purchase warrants or
rights, issued by established companies. The equity securities in which the
Global Fund invests are issued by foreign or U.S. companies and in most cases
are traded on foreign or U.S. securities exchanges.
The Global Fund may, under normal market conditions, invest up to 35% of its
assets in notes, bonds and debentures issued by corporate or governmental
entities when GEIM determines that investing in those kinds of debt
securities is consistent with the Fund's investment objective of long-term
growth of capital. GEIM believes that such a determination could be made,
for example, upon the Global Fund's investing in the debt securities of a
company whose securities GEIM anticipates will increase in value as a result
of a development particularly or uniquely applicable to the company, such as
a liquidation, reorganization, recapitalization or merger, material
litigation, technological breakthrough or new management or management
policies. In addition, GEIM believes such a determination could be made with
respect to an investment by the Global Fund in debt instruments issued by a
governmental entity upon GEIM's concluding that the value of the instruments
will increase as a result of improvements or changes in public finances,
monetary policies, external accounts, financial markets, exchange rate
policies or labor conditions of the country in which the governmental entity
is located.
The Global Fund's investments in debt instruments are generally limited to
those that are rated investment grade; up to 5% of the Fund's assets may be
invested in securities rated lower than investment grade. Risks and special
considerations applicable to certain investment grade obligations and
obligations rated below investment grade are described below under "Risk
Factors and Special Considerations."
In selecting investments on behalf of the Global Fund, GEIM seeks companies
that are expected to grow faster than relevant markets and whose securities
are available at a price that does not fully reflect the potential growth of
those companies. GEIM typically focuses on companies that possess one or
more of a variety of characteristics, including strong earnings growth
relative to price-to-earnings ratio, low price-to-book value, strong cash
flow, presence in an industry experiencing strong growth and high quality
management.
Although, under normal circumstances, the Global Fund invests principally in
securities of issuers located in a number of different countries as described
above, in the event of unstable market, economic, political or currency
conditions outside of the United States, the Fund may assume a temporary
defensive posture and restrict the securities markets in which its assets
will be invested. In that event, the Global Fund may, in seeking to achieve
its objective, invest all or a significant
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portion of its assets in securities of the types described above issued by U.S.
or Canadian entities.
During normal market conditions, a portion of the Global Fund's total assets
may be held in cash and/or invested in money market instruments of the types
described below under "Additional Investments -Money Market Instruments," for
cash management purposes, pending investment in accordance with the Fund's
investment objective and policies and to meet operating expenses. Under
unstable market, economic, political or currency conditions abroad, the
Global Fund may assume a temporary defensive posture and without limitation
hold cash and/or invest in such money market instruments. Included among the
money market instruments in which the Global Fund may invest are repurchase
agreements, the risks and special considerations of which are described below
under "Risk Factors and Special Considerations - Repurchase and Reverse
Repurchase Agreements." To the extent that it holds cash or invests in money
market instruments, the Global Fund may not achieve its investment objective
of long-term growth of capital.
The Global Fund, in addition to investing as described above, may hold the
following types of instruments: non-publicly traded securities, illiquid
securities, Rule 144A Securities and securities of other investment funds.
In addition, the Global Fund may engage in the following types of investment
techniques and strategies: purchasing put and call options on securities,
writing put and call options on securities, purchasing put and call options
on securities indexes, entering into interest rate, financial and stock or
bond index futures contracts or related options that are traded on a U.S. or
foreign exchange or board of trade or in the over-the-counter market,
engaging in forward currency transactions, purchasing and writing put and
call options on foreign currencies, entering into securities transactions on
a when-issued or delayed-delivery basis, lending portfolio securities and
selling securities short against the box. These other instruments,
investment techniques and strategies have risks and special considerations
associated with them that are described below under "Risk Factors and Special
Considerations" and in "Further Information: Certain Investment Techniques
and Strategies."
GE INTERNATIONAL EQUITY FUND
The investment objective of GE International Equity Fund (the "International
Fund") is long-term growth of capital, which the Fund seeks to achieve by
investing primarily in foreign equity securities. The International Fund may
invest in securities of companies and governments located in developed and
developing countries outside the United States. The International Fund may
also invest in securities of foreign issuers in the form of depositary
receipts. Investing in securities issued by foreign companies and
governments involves considerations and potential risks not typically
associated with investing in securities issued by the U.S. Government and
U.S. corporations. A more complete description of foreign securities and
depositary receipts and the risks and special considerations applicable to
them is included below under "Risk Factors and Special Considerations" and in
"Further Information: Certain Investment Techniques and Strategies." The
International Fund intends to position itself broadly among countries and
under normal circumstances, at least 65% of the Fund's assets will be invested
in securities of issuers collectively having their principal business
activities in no fewer than three different countries. The percentage of the
International Fund's assets invested in particular countries or regions of
the world will vary depending on political and economic conditions. An
issuer's domicile or nationality will be determined by reference to (a) the
country in which the issuer derives at least 50% of its revenues or profits
from goods produced or sold, investments made or services performed, or (b)
the country in which the issuer has at least 50% of its assets situated.
The International Fund, under normal conditions, invests at least 65% of its
assets in common stocks, preferred stocks, convertible debentures,
convertible notes, convertible preferred stocks and common stock purchase
warrants or rights, issued by companies believed by GEIM to have a potential
for superior growth in sales and earnings. In most cases these securities
are traded on foreign or U.S. exchanges. The International Fund will
emphasize established companies, although it may invest in companies of
varying sizes as measured by assets, sales or capitalization.
The International Fund may, under normal market conditions, invest up to 35%
of its assets in notes, bonds and debentures issued by corporate or
governmental entities when GEIM determines that investing in those kinds of
debt securities is consistent with the Fund's investment objective of long-ter
m capital appreciation. GEIM believes that such a determination could be
made, for example, upon the International Fund's investing in the debt
securities of a company whose securities GEIM anticipates will increase in
value as a result of a development particularly or uniquely applicable to the
company, such as a liquidation, reorganization, recapitalization or merger,
material litigation, technological breakthrough or new management or
management policies. In addition, GEIM believes such a determination could
be made with respect to an investment by the International Fund in debt
instruments issued by a governmental entity upon GEIM's concluding that the
value of the instruments will increase as a result of improvements or changes
in public finances, monetary policies, external accounts, financial markets,
exchange rate policies or labor conditions of the country in which the
governmental entity is located.
The International Fund's investments in debt securities are limited to those
that are rated investment grade; up to 5% of the Fund's assets may be
invested in securities rated lower than investment grade. Risks
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and special considerations applicable to certain investment grade obligations
and obligations rated below investment grade are described below under "Risk
Factors and Special Considerations."
In selecting investments on behalf of the International Fund, GEIM seeks
companies that are expected to grow faster than relevant markets and whose
securities are available at a price that does not fully reflect the potential
growth of those companies. GEIM typically focuses on companies that possess
one or more of a variety of characteristics, including strong earnings growth
relative to price-to-earnings and price-to-cash earnings ratios, low price-to-
book value, strong cash flow, presence in an industry experiencing strong
growth and high quality management.
Under normal circumstances, the International Fund invests in securities of
issuers located in a number of different countries located outside the United
States as described above, and may invest a portion of its total assets in
cash and/or money market instruments of the types described below under
"Additional Investments - Money Market Instruments" for cash management
purposes, pending investment in accordance with the Fund's investment
objective and policies and to meet operating expenses. During periods when
GEIM believes there are unstable market, economic, political or currency
conditions abroad, the Fund may assume a temporary defensive posture and (i)
restrict the securities markets in which its assets will be invested and
invest all or a significant portion of its assets in securities of the types
described above issued by companies incorporated in and/or having their
principal activities in the United States, or (ii) without limitation hold
cash and/or invest in money market instruments of the types described below
under "Additional Investments - Money Market Instruments." Included among
the money market instruments in which the International Fund may invest are
repurchase agreements, the risks and special considerations of which are
described below under "Risk Factors and Special Considerations - Repurchase
and Reverse Repurchase Agreements." To the extent that it holds cash or
invests in money market instruments, the International Fund may not achieve
its investment objective of long-term capital appreciation.
The International Fund, in addition to investing as described above, may hold
the following types of instruments: non-publicly traded securities, illiquid
securities, Rule 144A Securities and securities of other investment funds.
In addition, the International Fund may engage in the following types of
investment techniques and strategies: purchasing put and call options on
securities, writing put and call options on securities, purchasing put and
call options on securities indexes, entering into interest rate, financial
and stock or bond index futures contracts or related options that are traded
on a U.S. or foreign exchange or board of trade or in the over-the-counter
market, engaging in forward currency transactions, purchasing and writing put
and call options on foreign currencies, entering into securities transactions
on a when-issued or delayed-delivery basis, lending portfolio securities and
selling securities short against the box. These other instruments,
investment techniques and strategies have risks and special considerations
associated with them that are described below under "Risk Factors and Special
Considerations" and in "Further Information: Certain Investment Techniques
and Strategies."
GE STRATEGIC INVESTMENT FUND
The investment objective of GE Strategic Investment Fund (the "Strategic
Fund") is to maximize total return, consisting of capital appreciation and
current income. In seeking its objective, the Strategic Fund follows an
asset allocation strategy contemplating shifts among a range of investments.
This strategy may result in the Strategic Fund's experiencing a high
portfolio turnover rate. See "Portfolio Transactions and Turnover" below.
The Strategic Fund invests in the following classes of investments: common
stocks, preferred stocks, convertible securities and warrants issued by U.S.
and foreign companies; bonds, debentures, notes and convertible bonds issued
by U.S. and foreign companies; securities issued or guaranteed by the U.S.
Government or one of its agencies or instrumentalities ("Government
Securities"); Municipal Obligations (as defined below); obligations of
foreign governments or their agencies or instrumentalities; mortgage related
securities, adjustable rate mortgage related securities ("ARMs"),
collateralized mortgage related securities ("CMOs") and government stripped
mortgage related securities; asset-backed and receivable-backed securities;
and domestic and foreign money market instruments. The U.S. equity and debt
instruments in which the Strategic Fund invests are traded on U.S. securities
exchanges or in the U.S. over-the-counter market, except that the Fund may
invest up to 10% of its assets in non-publicly traded securities. In
addition, up to 20% of the Strategic Fund's total assets may be invested in
foreign securities that are listed on foreign securities exchanges or traded
in foreign over-the-counter markets. The Strategic Fund may also invest in
depositary receipts and indexed securities, the value of which is linked to
currencies, interest rates, commodities, indexes or other financial
indicators. Mortgage related securities, ARMs, CMOs, government stripped
mortgage related securities and asset-backed and receivable-backed securities
are subject to several risks, including the prepayment of principal. Other
risks and special considerations applicable to those instruments are
described in "Further Information: Certain Investment Techniques and Strategie
s." In addition, risks and special considerations applicable to investing in
non-publicly traded securities, foreign securities and depositary receipts
are described below under "Risk Factors and Special Considerations" and in
"Further Information: Certain Investment Techniques and Strategies."
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GEIM has broad latitude in selecting the classes of investments to which the
Strategic Fund's assets are committed. Although the Strategic Fund has the
authority to invest solely in equity securities, solely in debt securities,
solely in money market instruments or in any combination of these classes of
investments, GEIM anticipates that at most times the Fund will be invested in
a combination of equity and debt instruments.
The Strategic Fund's investments are designed to achieve favorable
performance with lower volatility than a fund that invests solely in equity
or debt securities. The weightings of equity and debt holdings for the
Strategic Fund are determined by GEIM at any given time in light of its
assessment of the attractiveness of each market. Although GEIM cannot
predict the mix of the Strategic Fund's investments at any one time, GEIM can
delineate certain situations that can lead to a shift in the mix of the Strate
gic Fund's investments. If, for example, the prices of U.S. equity
securities decline due to falling economic activity and profits, and if GEIM
determines that the condition is transitory, GEIM could allocate a major
portion of the Strategic Fund's assets to the equity market. If, on the
other hand, the prices of debt instruments are depressed by rising economic
activity combined with restrictive monetary or fiscal policies and GEIM
concludes that this condition is temporary, GEIM could allocate a major
portion of the Strategic Fund's assets to debt securities.
During normal market conditions, a portion of the Strategic Fund's total
assets may be held in cash and/or invested in money market instruments of the
types described below under "Additional Investments - Money Market
Instruments" for cash management purposes, pending investment in accordance
with the Fund's investment objective and policies and to meet operating
expenses. If GEIM determines that the outlook for equity and debt securities
is unfavorable, GEIM could cause a major portion of the Strategic Fund's
assets to be invested in such money market instruments. GEIM's decision that
the Strategic Fund invest in foreign securities would be predicated on the
outlook for the foreign securities markets of selected countries, the
underlying economies of those countries and the direction of the U.S. dollar
relative to the currencies of those countries.
The Strategic Fund generally seeks to invest in equity and debt securities
that GEIM has determined offer above average potential for total return. In
making this determination, GEIM will take into account factors including
earnings growth, industry attractiveness, company management,
price-to-earnings ratios, yield, price-to-book ratios and valuation of
assets.
The Strategic Fund typically purchases a debt security if GEIM believes that
the yield and potential for capital appreciation of the security are
sufficiently attractive in light of the risks of ownership of the security.
In determining whether the Strategic Fund should invest in particular debt
instruments, GEIM considers factors such as: the price, coupon and yield to
maturity; GEIM's assessment of the credit quality of the issuer; the issuer's
available cash flow and the related coverage ratios; the property, if any,
securing the obligation; and the terms of the debt securities, including the
subordination, default, sinking fund and early redemption provisions.
The Strategic Fund limits its purchases of debt instruments to those that are
rated within the six highest categories by S&P, Moody's or another NRSRO, or
if unrated, are deemed by GEIM to be of comparable quality. The Strategic
Fund will not purchase a debt security if, as a result of the purchase, more
than 25% of the Fund's total assets would be invested in securities rated BBB
by S&P or Baa by Moody's or, if unrated, deemed by GEIM to be of comparable
quality. In addition, the Strategic Fund will not purchase any obligation
rated BB or B by S&P or Ba or B by Moody's if, as a result of the purchase,
more than 10% of the Fund's total assets would be invested in obligations
rated in those categories or, if unrated, in obligations that are deemed by GE
IM to be of comparable quality. Risks and special considerations applicable
to certain investment grade obligations and obligations rated lower than
investment grade are described below under "Risk Factors and Special
Considerations." A description of S&P and Moody's ratings relevant to the
Strategic Fund's investments is included as an Appendix to the Statement of
Additional Information.
The Strategic Fund, in addition to investing as described above, may hold the
following types of instruments: repurchase agreements, illiquid securities,
Rule 144A Securities, securities of supranational agencies, securities of
other investment funds, zero coupon obligations, municipal leases, floating
and variable rate instruments, participation interests in certain Municipal
Obligations, Municipal Obligation components and custodial receipts. In
addition, the Strategic Fund may engage in the following types of investment
techniques and strategies: purchasing put and call options on securities,
writing put and call options on securities, purchasing put and call options
on securities indexes, entering into interest rate, financial and stock or
bond index futures contracts or related options that are traded on a U.S. or
foreign exchange or board of trade or in the over-the-counter market,
engaging in forward currency transactions, purchasing and writing put and
call options on foreign currencies, entering into securities transactions on
a when-issued or delayed-delivery basis, entering into mortgage dollar rolls
and lending portfolio securities. These other instruments, investment
techniques and strategies have risks and special considerations associated
with them that are described below under "Risk Factors and Special
Considerations" and in "Further Information: Certain Investment Techniques
and Strategies."
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GE TAX-EXEMPT FUND
The investment objective of GE Tax-Exempt Fund (the "Tax-Exempt Fund") is to
seek as high a level of current income exempt from Federal income taxation as
is consistent with prudent investment management and the preservation of
capital. The Tax-Exempt Fund seeks to achieve its objective by investing in
a diversified portfolio of debt obligations issued by, or on behalf of,
states, territories and possessions of the United States and the District of
Columbia and their political subdivisions, agencies and instrumentalities or
multi-state agencies or authorities, the interest from which debt obligations
is in the opinion of issuers' counsel, excluded from gross income for Federal
income tax purposes ("Municipal Obligations").
The Tax-Exempt Fund operates subject to a fundamental investment policy
providing that, under normal conditions, the Fund invests at least 80% of its
net assets in Municipal Obligations the income from which is not a specific
tax preference item for purposes of the Federal individual and corporate
alternative minimum tax. Under normal conditions, the Tax-Exempt Fund may
hold up to 20% of its total assets in cash or money market instruments,
including taxable money market instruments of the sort described below under
"Additional Investments - Money Market Instruments." In addition, the
Tax-Exempt Fund may take a temporary defensive posture and without limitation
may hold cash, or invest in short-term Municipal Obligations and/or money
market instruments of the type described below under "Additional Investments
- - - Money Market Instruments."
Municipal Obligations are classified as general obligation bonds, revenue
bonds and notes. General obligation bonds are secured by the issuer's pledge
of its full faith, credit and taxing power for the payment of principal and
interest. Revenue bonds are payable from the revenue derived from a
particular facility or class of facilities or, in some cases, from the
proceeds of a special excise or other specific revenue source but not from
the general taxing power. Notes are short-term obligations of issuing
municipalities or agencies and are sold in anticipation of a bond sale,
collection of taxes or receipt of other revenues. Municipal Obligations bear
fixed, floating and variable rates of interest. Variations exist in the
security of Municipal Obligations, both within a particular classification
and between classifications. Risks and special considerations applicable to
Municipal Obligations are described below under "Risk Factors and Special
Considerations."
The Tax-Exempt Fund has the authority to invest in Municipal Obligations that
are rated at the time of purchase within the six highest categories
established by S&P, Moody's or another NRSRO or which, although not rated,
are, in the opinion of GEIM, of comparative quality. The six highest ratings
currently assigned to municipal bonds by S&P are AAA, AA, A, BBB, BB and B
and by Moody's are Aaa, Aa, A, Baa, Ba and B. Obligations coming within the
highest four S&P and Moody's municipal bond ratings are considered investment
grade. Risks and special considerations applicable to certain investment
grade obligations and obligations rated lower than investment grade are
described below under "Risk Factors and Special Considerations." A
description of S&P and Moody's ratings relevant to the Tax-Exempt Fund's
investments is included as an Appendix to the Statement of Additional
Information.
Under normal conditions, at least 50% of the Tax-Exempt Fund's total assets
are invested in obligations rated A or better by S&P or Moody's. In
addition, the Tax-Exempt Fund limits its investments in obligations rated BBB
by S&P or Baa by Moody's to no more than 25% of its total assets and limits
its investments in obligations rated BB or B by S&P or Ba or B by Moody's to
no more than 10% of its total assets. No more than 25% of the Tax-Exempt
Fund's total assets may be invested in obligations that are not rated and no
non-rated obligation will be purchased by the Fund unless GEIM determines the
obligation to be of a quality comparable to an obligation rated B or better
by S&P or Moody's. For purposes of determining compliance with the
Tax-Exempt Fund's policies with respect to ratings, non-rated obligations are
included with rated obligations of comparable quality. If the S&P or Moody's
rating of a particular obligation is lowered, or if S&P or Moody's ceases to
rate the obligation, subsequent to that purchase by the Tax-Exempt Fund, GEIM
will consider the event in its determination of whether the Fund should
continue to hold the obligation; the Fund will not, however, be required to
sell the obligation in either case.
The Tax-Exempt Fund is authorized to invest in Municipal Obligations of all
maturities. The weighted average maturity of the Tax-Exempt Fund's portfolio
securities is anticipated to be approximately 20 years in favorable market
conditions.
The Tax-Exempt Fund, in addition to investing as described above, may hold
the following types of instruments: repurchase agreements, illiquid
securities, Rule 144A Securities, zero coupon obligations, municipal leases,
floating or variable rate instruments, participation interests in certain
Municipal Obligations, Municipal Obligation components and custodial
receipts. In addition, the Tax-Exempt Fund may engage in the following types
of investment techniques and strategies: purchasing put and call options on
securities, writing put and call options on securities, purchasing put and
call options on securities indexes, entering into interest rate, financial
and bond index futures contracts or related options that are traded on a U.S.
or foreign exchange or board of trade or in the over-the-counter market,
entering into securities transactions on a when-issued or delayed-delivery
basis and lending portfolio securities. These other instruments, investment
techniques and strategies have risks and special considerations associated
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with them that are described below under "Risk Factors and Special
Considerations" and in "Further Information: Certain Investment Techniques
and Strategies." In addition, income derived by the Tax-Exempt Fund with
respect to certain of these instruments, investment techniques and
strategies, will not be exempt from Federal income taxation.
GE FIXED INCOME FUND
The investment objective of GE Fixed Income Fund (the "Income Fund") is to
seek maximum income consistent with prudent investment management and the
preservation of capital. Capital appreciation with respect to the Income
Fund's portfolio securities may occur but is not an objective of the Fund.
In seeking to achieve its investment objective, the Income Fund invests in
the following types of fixed income instruments: Government Securities;
obligations of foreign governments or their agencies or instrumentalities;
bonds, convertible bonds, debentures, notes and non-convertible preferred
stocks issued by U.S. and foreign companies; mortgage related securities,
ARMs, CMOs and government stripped mortgage related securities; asset-backed
and receivable-backed securities; zero coupon obligations; floating and
variable rate instruments and money market instruments. The Income Fund may
also invest in indexed securities, the value of which is linked to
currencies, interest rates, commodities, indexes or other financial
indicators. Mortgage related securities, ARMs, CMOs, government stripped
mortgage related securities and asset-backed and receivable-backed securities
are subject to several risks, including the prepayment of principal. Other
risks and special considerations applicable to these instruments are
described in "Further Information: Certain Investment Techniques and
Strategies."
The Income Fund is subject to no limitation with respect to the maturities of
the instruments in which it may invest; the weighted average maturity of the
Fund's portfolio securities is anticipated to be approximately five to 10
years. The Income Fund's investments in bonds are limited to those that are
rated within the six highest categories by S&P, Moody's or another NRSRO, or
if unrated, are deemed by GEIM to be of comparable quality. Risks and
special considerations applicable to certain investment grade obligations and
obligations rated lower than investment grade are described below under "Risk
Factors and Special Considerations." A description of S&P and Moody's
ratings relevant to the Income Fund's investments is included as an Appendix
to the Statement of Additional Information.
The Income Fund will not purchase any obligation rated BBB by S&P or Baa by
Moody's if, as a result of the purchase, more than 25% of the Fund's total
assets would be invested in obligations rated in those categories or in
unrated obligations that are deemed by GEIM to be of comparable quality. In
addition, no obligation will be purchased by the Income Fund if, as a result
of the purchase, more than 10% of the Fund's total assets would be invested
in obligations rated BB or B by S&P or Ba or B by Moody's or in unrated
obligations that GEIM deems to be of comparable quality.
Up to 35% of the Income Fund's total assets may be invested in obligations of
foreign companies or foreign governments or their agencies and
instrumentalities. Investments in foreign companies and agencies or
instrumentalities of foreign governments made by the Income Fund usually will
involve currencies of foreign countries. Risks and special considerations
applicable to investing in foreign countries are described below under "Risk
Factors and Special Considerations." Further, under normal market conditions,
a substantial portion of the Income Fund's total assets may be invested in
money market instruments of the types described below under "Additional
Investments - Money Market Instruments" if such investment is deemed by GEIM
to be consistent with the investment objective of the Fund. In addition, for
cash management purposes, pending investment in accordance with the Fund's
investment objective and policies and to meet operating expenses, the Fund
may hold a small portion of its assets in cash. Moreover, when GEIM believes
that economic and other market conditions warrant, for temporary defensive
purposes, the Income Fund may hold cash or invest in such short-term money
market instruments without limitation.
The Income Fund, in addition to investing as described above, may hold the
following types of instruments: non-publicly traded securities, repurchase
agreements, illiquid securities, Rule 144A Securities, securities of
supranational agencies and securities of other investment funds. In
addition, the Income Fund may engage in the following types of investment
techniques and strategies: purchasing put and call options on securities,
writing put and call options on securities, purchasing put and call options
on securities indexes, entering into interest rate, financial and bond index
futures contracts or related options that are traded on a U.S. or foreign
exchange or board of trade or in the over-the-counter market, engaging in
forward currency transactions, purchasing and writing put and call options on
foreign currencies, entering into securities transactions on a when-issued or
delayed-delivery basis, entering into mortgage dollar rolls and lending
portfolio securities. These other instruments, investment techniques and
strategies have risks and special considerations associated with them that
are described below under "Risk Factors and Special Considerations" and in
"Further Information: Certain Investment Techniques and Strategies."
GE SHORT-TERM GOVERNMENT FUND
The investment objective of GE Short-Term Government Fund (the "Government
Fund") is to seek a high level of income consistent with prudent investment
management and the preservation of capi-
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tal. In seeking to achieve its investment objective, the Government Fund will
invest at least 65% of its total assets in Government Securities including
repurchase agreements secured by Government Securities. A more complete
description of the types of government securities to be invested in can be
found below under "Additional Investments - Money Market Instruments."
The Government Fund may invest the remainder of its assets in bonds,
convertible bonds, debentures, notes and non-convertible preferred stocks
issued by U.S. and foreign companies; obligations of foreign governments or
their agencies or instrumentalities; mortgage related securities, ARMs, CMOs
and government stripped mortgage related securities and asset-backed and
receivable-backed securities; zero coupon obligations (including zero coupon
municipal obligations); floating and variable rate instruments; and money
market instruments. The Government Fund may also invest in indexed
securities, the value of which is linked to currencies, interest rates,
commodities, indexes or other financial indicators. Mortgage related
securities, ARMs, CMOs, government stripped mortgage related securities and
asset-backed and receivable-backed securities are subject to several risks,
including the prepayment of principal. The debt securities in which the Fund
invests will only be purchased if, in the case of long-term securities, they
are rated investment grade by S&P or Moody's (or the equivalent from another
NRSRO) and short-term securities will only be purchased if they are rated A-1
by S&P or Prime-1 by Moody's (or the equivalent from another NRSRO) or, for
both short- and long-term securities, if unrated, deemed to be of equivalent
quality by GEIM. A description of S&P and Moody's ratings relevant to the
Government Fund's investments is included as an Appendix to the Statement of
Additional Information. Other risks and special considerations applicable to
these instruments are described in "Further Information: Certain Investment
Techniques and Strategies."
The dollar-weighted average maturity of the Government Fund's portfolio
securities is anticipated to be not more than three years. Within this
limitation the Government Fund may purchase individual securities with
effective maturities greater than three years as long as its average maturity
remains within this limit.
GEIM will seek to stabilize share price fluctuation by investing in
securities that are not highly sensitive to interest rate changes. In
selecting securities for the Government Fund, GEIM will attempt to maintain
the Fund's overall sensitivity to interest rates in a range similar to the
average for short- to intermediate-term government bonds with maturities of
one to four years. Under normal market conditions, the Government Fund may
invest a substantial portion of its assets in money market instruments of
the types described below under "Additional Investments -Money Market
Instruments," including short-term instruments with remaining maturities of
one year or less if such investment is deemed by GEIM to be consistent with
the investment objective of the Fund. In addition, for cash management
purposes the Government Fund may hold a small portion of its assets in cash.
Moreover, when GEIM believes that economic and other market conditions
warrant, for temporary defensive purposes, the Government Fund may hold cash
or invest in such short-term money market instruments without limitation.
The Government Fund, in addition to investing as described above, may hold
the following types of instruments: non-publicly traded securities,
repurchase agreements, illiquid securities, Rule 144A Securities and
securities of other investment funds. In addition, the Income Fund may
engage in the following types of investment techniques and strategies:
purchasing put and call options on securities, writing put and call options
on securities, purchasing put and call options on securities indexes, entering
into interest rate, financial and bond index futures contracts or related
options that are traded on a U.S. or foreign exchange or board of trade or in
the over-the-counter market, engaging in forward currency transactions,
purchasing and writing put and call options on foreign currencies, entering
into securities transactions on a when-issued or delayed-delivery basis,
entering into mortgage dollar rolls and lending portfolio securities. These
other instruments, investment techniques and strategies have risks and
special considerations associated with them that are described below under
"Risk Factors and Special Considerations" and in "Further Information:
Certain Investment Techniques and Strategies."
GE MONEY MARKET FUND
The investment objective of GE Money Market Fund (the "Money Market Fund") is
to seek a high level of current income consistent with the preservation of
capital and the maintenance of liquidity. In seeking its objective, the
Money Market Fund invests in the following U.S. dollar denominated,
short-term money market instruments: (1) Government Securities; (2) debt
obligations of banks, savings and loan institutions, insurance companies and
mortgage bankers; (3) commercial paper and notes, including those with
floating or variable rates of interest; (4) debt obligations of foreign
branches of U.S. banks, U.S. branches of foreign banks and foreign branches
of foreign banks; (5) debt obligations issued or guaranteed by one or more
foreign governments or any of their political subdivisions, agencies or
instrumentalities, including obligations of supranational entities; (6) debt
securities issued by foreign issuers; and (7) repurchase agreements.
The Money Market Fund limits its portfolio investments to securities that the
Trust's Board of Trustees determines present minimal credit risk and that are
"Eligible Securities" at the time of acquisition by the Fund. "Eligible
Securities" as used in this Prospectus means securities rated by the
"Requisite NRSROs" in
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one of the two highest short-term rating categories,
consisting of issuers that have received these ratings with respect to other
short-term debt securities and comparable unrated securities. "Requisite
NRSROs" means (1) any two NRSROs that have issued ratings with respect to a
security or class of debt obligations of an issuer or (2) one NRSRO, if only
one NRSRO has issued such a rating at the time that the Money Market Fund
acquires the security. Currently, six organizations are NRSROs: S&P,
Moody's, Fitch Investors Service, Inc., Duff and Phelps, Inc., IBCA Limited
and its affiliate, IBCA, Inc., and Thomson BankWatch Inc. A discussion of the
ratings categories is contained in the Appendix to the Statement of
Additional Information. By limiting its investments to Eligible Securities,
the Money Market Fund may not achieve as high a level of current income as a
fund investing in lower-rated securities.
The Money Market Fund may not invest more than 5% of its total assets in the
securities of any one issuer, except for Government Securities and except to
the extent permitted under rules adopted by the SEC under the 1940 Act. In
addition, the Money Market Fund may not invest more than 5% of its total
assets in Eligible Securities that have not received the highest rating from
the Requisite NRSROs and comparable unrated securities ("Second Tier
Securities"), and may not invest more than 1% of its total assets in the
Second Tier Securities of any one issuer. The Money Market Fund may invest
more than 5% (but not more than 25%) of the then-current value of the Fund's
total assets in the securities of a single issuer for a period of up to three
business days, so long as (1) the securities either are rated by the
Requisite NRSROs in the highest short-term rating category or are securities
of issuers that have received such ratings with respect to other short-term
debt securities or are comparable unrated securities and (2) the Fund does
not make more than one such investment at any one time. If the Money Market
Fund acquires securities that are unrated or that have been rated by a single
NRSRO, the acquisition must be approved or ratified by the Trust's Board of
Trustees. Determination of comparable quality is made by GEIM in accordance
with procedures established by the Board of Trustees. The Money Market Fund
invests only in instruments that have (or, pursuant to regulations adopted by
the SEC, are deemed to have) remaining maturities of 13 months or less at the
date of purchase (except securities subject to repurchase agreements),
determined in accordance with a rule promulgated by the SEC. The Money Market
Fund will maintain a dollar-weighted average portfolio maturity of 90 days or
less. The assets of the Money Market Fund are valued on the basis of
amortized cost, as described below under "Net Asset Value."
The Money Market Fund, in addition to investing as described above, may hold
Rule 144A Securities. In addition, the Money Market Fund may engage in the
following types of investment techniques and strategies: entering into
reverse repurchase agreements, entering into securities transactions on a
when-issued or delayed-delivery basis and lending portfolio securities.
These other instruments, investment techniques and strategies have risks and
special considerations associated with them that are described below under
"Risk Factors and Special Considerations" and in "Further Information:
Certain Investment Techniques and Strategies."
ADDITIONAL INVESTMENTS
Some or all of the Funds may invest in the types of instruments and engage in
the types of strategies described in detail below. These instruments and
strategies may be subject to the risks and special considerations described
below under "Risk Factors and Special Considerations."
The Trust's annual report for the fiscal year ended September 30, 1995
contains information regarding relevant market conditions and investment
strategies and techniques pursued by GEIM during such fiscal year and is
available to shareholders without charge upon request made to the Trust by
calling the toll free numbers listed on the back cover page of the Prospectus
or by writing to the Trust at the address listed on the front cover page of
the Prospectus.
MONEY MARKET INSTRUMENTS. Each Fund, other than the Money Market Fund, may
invest only in the following types of money market instruments: Government
Securities; obligations issued or guaranteed by foreign governments or by any
of their political subdivisions, authorities, agencies or instrumentalities;
bank obligations (including certificates of deposit, time deposits and
bankers' acceptances of foreign or domestic banks, domestic savings and loan
associations and other banking institutions having total assets in excess of
$500 million); commercial paper; and repurchase agreements.
Each of the Funds may invest in the following types of Government Securities:
debt obligations of varying maturities issued by the U.S. Treasury or issued
or guaranteed by the Federal Housing Administration, Farmers Home
Administration, Export-Import Bank of the United States, Small Business
Administration, Government National Mortgage Association ("GNMA"), General
Services Administration, Central Bank for Cooperatives, Federal Farm Credit
Banks, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation
("FHLMC"), Federal Intermediate Credit Banks, Federal Land Banks, Federal
National Mortgage Association ("FNMA"), Federal Deposit Insurance
Corporation, Maritime Administration, Tennessee Valley Authority, District of
Columbia Armory Board, Student Loan Marketing Association and Resolution
Trust Corporation. Direct obligations of the U.S. Treasury include a variety
of securities that differ in their interest rates, maturities and dates of
issuance. Certain of the Government Securities that may be held by the Funds
are instru-
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ments that are supported by the full faith and credit of the United
States, whereas other Government Securities that may be held by the Funds are
supported by the right of the issuer to borrow from the U.S. Treasury or are s
upported solely by the credit of the instrumentality. Because the U.S.
Government is not obligated by law to provide support to an instrumentality
that it sponsors, a Fund will invest in obligations issued by an
instrumentality of the U.S. Government only if GEIM determines that the
instrumentality's credit risk does not make its securities unsuitable for
investment by the Fund.
Each Fund, other than the Money Market Fund, may invest in money market
instruments issued or guaranteed by foreign governments or by any of their
political subdivisions, authorities, agencies or instrumentalities. The
International Fund, the Global Fund, the U.S. Equity Fund and the Tax-Exempt
Fund may invest in these instruments only if they are rated AAA or AA by S&P
or Aaa or Aa by Moody's or have received an equivalent rating from another
NRSRO, or if unrated, are deemed by GEIM to be of equivalent quality. The
Strategic Fund, the Income Fund and the Government Fund may invest in such
money market instruments if they are rated no lower than B by S&P or Moody's
or have received an equivalent rating from another NRSRO, or if unrated, are
deemed by GEIM to be of equivalent quality. Commercial paper held by a Fund,
other than the Money Market Fund, may be rated no lower than A-2 by S&P or
Prime-2 by Moody's or the equivalent from another NRSRO, or if unrated, must
be issued by an issuer having an outstanding unsecured debt issue then rated
within the three highest categories. A description of the rating systems of
Moody's and S&P is contained in an Appendix to the Statement of Additional
Information. At no time will the investments of a Fund, other than the Money
Market Fund, in bank obligations, including time deposits, exceed 25% of the
value of the Fund's assets.
REPURCHASE AND REVERSE REPURCHASE AGREEMENTS. Each Fund may engage in
repurchase agreement transactions with respect to instruments in which the
Fund is authorized to invest. The Funds may engage in repurchase agreement
transactions with certain member banks of the Federal Reserve System and with
certain dealers listed on the Federal Reserve Bank of New York's list of
reporting dealers. Under the terms of a typical repurchase agreement, which
is deemed a loan for purposes of the 1940 Act, a Fund would acquire an
underlying obligation for a relatively short period (usually from one to
seven days) subject to an obligation of the seller to repurchase, and the
Fund to resell, the obligation at an agreed-upon price and time, thereby
determining the yield during the Fund's holding period. This arrangement
results in a fixed rate of return that is not subject to market fluctuations
during the Fund's holding period. The value of the securities underlying a
repurchase agreement of a Fund are monitored on an ongoing basis by GEIM to
ensure that the value is at least equal at all times to the total amount of
the repurchase obligation, including interest. GEIM also monitors, on an
ongoing basis to evaluate potential risks, the creditworthiness of those
banks and dealers with which a Fund enters into repurchase agreements.
Income derived by the Tax-Exempt Fund when engaging in a repurchase agreement
is not exempt from Federal income taxation.
The Money Market Fund may engage in reverse repurchase agreements, subject to
its investment restrictions. A reverse repurchase agreement, which is
considered a borrowing by the Money Market Fund, involves a sale by the Fund
of securities that it holds concurrently with an agreement by the Fund to
repurchase the same securities at an agreed upon price and date. The Money
Market Fund uses the proceeds of reverse repurchase agreements to provide
liquidity to meet redemption requests and to make cash payments of dividends
and distributions when the sale of the Fund's securities is considered to be
disadvantageous. Cash, Government Securities or other liquid high grade debt
obligations equal in value to the Money Market Fund's obligations with
respect to reverse repurchase agreements are segregated and maintained with
the Trust's custodian or designated sub-custodian.
NON-PUBLICLY TRADED AND ILLIQUID SECURITIES. The U.S. Equity Fund, the
Global Fund, the International Fund, the Strategic Fund, the Income Fund and
the Government Fund may each invest up to 10% of its assets in non-publicly
traded securities. Non-publicly traded securities are securities that are sub
ject to contractual or legal restrictions on transfer, excluding for purposes
of this restriction, Rule 144A Securities that have been determined to be
liquid by the Trust's Board of Trustees based upon the trading markets for
the securities. In addition, each Fund, other than the Money Market Fund,
may invest up to 15% of its assets in "illiquid securities"; the Money Market
Fund may not, under any circumstance, invest in illiquid securities.
Illiquid securities are securities that cannot be disposed of by a Fund
within seven days in the ordinary course of business at approximately the
amount at which the Fund has valued the securities. Illiquid securities that
are held by a Fund take the form of options traded over-the-counter,
repurchase agreements maturing in more than seven days, certain mortgage
related securities and securities subject to restrictions on resale that GEIM
has determined are not liquid under guidelines established by the Trust's
Board of Trustees. In no event, however, will any Fund's investments in
illiquid and non-publicly traded securities, in the aggregate, exceed 15% of
its assets.
INDEXED SECURITIES. The Strategic Fund, the Income Fund and the Government
Fund may also invest in indexed securities, the value of which is linked to
currencies, interest rates, commodities, indexes or other financial
indicators ("reference instruments"). The interest rate or (unlike most
fixed income securities) the principal amount payable at maturity of an
indexed security may be increased or decreased, depending on changes in the
value of the reference
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instrument. Indexed securities may be positively or
negatively indexed, so that appreciation of the reference instrument may
produce an increase or a decrease in interest rate or value at maturity of
the security. In addition, the change in the interest rate or value at
maturity of the security may be some multiple of the change in value of the
reference instrument. Thus, in addition to the credit risk of the security's
issuer, the Funds will bear the market risk of the reference instrument.
PURCHASING PUT AND CALL OPTIONS ON SECURITIES. Each Fund, other than the
Money Market Fund, may purchase put and call options that are traded on a
U.S. or foreign securities exchange or in the over-the-counter market. A
Fund may utilize up to 10% of its assets to purchase put options on portfolio
securities and may do so at or about the same time that it purchases the
underlying security or at a later time. By buying a put, a Fund will seek to
limit its risk of loss from a decline in the market value of the security
until the put expires. Any appreciation in the value of the underlying
security, however, will be partially offset by the amount of the premium paid
for the put option and any related transaction costs. A Fund may utilize up
to 10% of its assets to purchase call options on portfolio securities. Call
options may be purchased by a Fund in order to acquire the underlying
securities for a price that avoids any additional cost that would result from
a substantial increase in the market value of a security. A Fund may also
purchase call options to increase its return at a time when the call is
expected to increase in value due to anticipated appreciation of the
underlying security. Prior to their expirations, put and call options may be
sold by a Fund in closing sale transactions, which are sales by the Fund,
prior to the exercise of options that it has purchased, of options of the
same series. Profit or loss from the sale will depend on whether the amount
received is more or less than the premium paid for the option plus the related
transaction costs. The aggregate value of the securities underlying the
calls or obligations underlying the puts, determined as of the date the
options are sold, shall not exceed 25% of the net assets of a Fund. In
addition, the premiums paid by a Fund in purchasing options on securities,
options on securities indexes, options on foreign currencies and options on
futures contracts will not exceed 20% of the Fund's net assets.
COVERED OPTION WRITING. Each Fund, other than the Money Market Fund, may
write covered put and call options on securities. A Fund will realize fees
(referred to as "premiums") for granting the rights evidenced by the options.
A put option embodies the right of its purchaser to compel the writer of the
option to purchase from the option holder an underlying security at a
specified price at any time during the option period. In contrast, a call
option embodies the right of its purchaser to compel the writer of the option
to sell to the option holder an underlying security at a specified price at
any time during the option period.
The Funds with option-writing authority write only covered options. A put or
call option written by a Fund will be deemed covered in any manner permitted
under the 1940 Act or the rules and regulations thereunder or any other
method determined by the SEC to be permissible. See "Strategies Available to
Some Buy Not All Funds - Covered Option Writing" in the Statement of
Additional Information for specific situations where put and call options
will be deemed to be covered by a Fund.
A Fund may engage in a closing purchase transaction to realize a profit, to
prevent an underlying security from being called or put or, in the case of a
call option, to unfreeze an underlying security (thereby permitting its sale
or the writing of a new option on the security prior to the outstanding
option's expiration). To effect a closing purchase transaction, a Fund would
purchase, prior to the holder's exercise of an option that the Fund has
written, an option of the same series as that on which the Fund desires to
terminate its obligation. The obligation of a Fund under an option that it
has written would be terminated by a closing purchase transaction, but the
Fund would not be deemed to own an option as the result of the transaction.
To facilitate closing purchase transactions, the Funds with option-writing
authority will ordinarily write options only if a secondary market for the
options exists on a U.S. or foreign securities exchange or in the
over-the-counter market.
Option writing for a Fund may be limited by position and exercise limits
established by U.S. securities exchanges and the National Association of
Securities Dealers, Inc. and by requirements of the Internal Revenue Code of
1986, as amended (the "Code"), for qualification as a regulated investment
company. In addition to writing covered put and call options to generate
current income, a Fund may enter into options transactions as hedges to
reduce investment risk, generally by making an investment expected to move in
the opposite direction of a portfolio position. A hedge is designed to
offset a loss on a portfolio position with a gain on the hedge position; at
the same time, however, a properly correlated hedge will result in a gain on
the portfolio position's being offset by a loss on the hedge position. No
Fund will enter into a transaction involving options for speculative
purposes.
SECURITIES INDEX OPTIONS. In seeking to hedge all or a portion of its
investments, a Fund, other than the Money Market Fund, may purchase and write
put and call options on securities indexes listed on U.S. or foreign
securities exchanges or traded in the over-the-counter market, which indexes
include securities held in the Fund's portfolio. The Funds with such option
writing authority may write only covered options. A Fund may also use
securities index options as a means of participating in a securities market
without making direct purchases of securities. No Fund will enter into a
transaction involving securities index options for speculative purposes.
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A securities index measures the movement of a certain group of securities by
assigning relative values to the securities included in the index. Options
on securities indexes are generally similar to options on specific
securities. Unlike options on securities, however, options on securities
indexes do not involve the delivery of an underlying security; the option in
the case of an option on a securities index represents the holder's right to
obtain from the writer in cash a fixed multiple of the amount by which the
exercise price exceeds (in the case of a call) or is less than (in the case
of a put) the closing value of the underlying securities index on the
exercise date.
A securities index option written by a Fund will be deemed covered in any
manner permitted under the 1940 Act or the rules and regulations thereunder
or any other method determined by the SEC to be permissible. See "Strategies
Available to Some But Not All Funds-Covered Option Writing" in the Statement
of Additional Information for specific situations where securities index
options will be deemed to be covered by a Fund. If the Fund has written a
securities index option, it may terminate its obligation by effecting a
closing purchase transaction, which is accomplished by purchasing an option
of the same series as the option previously written.
FUTURES AND OPTIONS ON FUTURES. Each Fund, other than the Money Market Fund,
may enter into interest rate, financial and stock or bond index futures
contracts or related options that are traded on a U.S. or foreign exchange or
board of trade approved by the Commodity Futures Trading Commission or in the
over-the-counter market. If entered into, these transactions will be made
solely for the purpose of hedging against the effects of changes in the value
of portfolio securities due to anticipated changes in interest rates and/or
market conditions, for duration management, or when the transactions are
economically appropriate to the reduction of risks inherent in the management
of the Fund involved. No Fund will enter into a transaction involving
futures and options on futures for speculative purposes.
A Fund may not enter into futures and options contracts for which aggregate
initial margin deposits and premiums paid for unexpired options exceed 5% of
the fair market value of the Fund's total assets, after taking into account
unrealized losses or profits on futures contracts or options on futures
contracts into which it has entered. The current view of the SEC staff is
that a Fund's long and short positions in futures contracts as well as put
and call options on futures written by it must be collateralized with cash or
certain liquid assets held in a segregated account or "covered" in a manner
similar to that for covered options on securities (see "Strategies Available
to Some But Not All Funds-Covered Option Writing" in the Statement of
Additional Information) and designed to eliminate any potential leveraging.
An interest rate futures contract provides for the future sale by one party
and the purchase by the other party of a specified amount of a particular
financial instrument (debt security) at a specified price, date, time and
place. Financial futures contracts are contracts that obligate the holder to
deliver (in the case of a futures contract that is sold) or receive (in the
case of a futures contract that is purchased) at a future date a specified
quantity of a financial instrument, specified securities, or the cash value
of a securities index. A municipal bond index futures contract is based on
an index of long-term, tax-exempt municipal bonds and a corporate bond index
futures contract is based on an index of corporate bonds. Stock index
futures contracts are based on indexes that reflect the market value of
common stock of the companies included in the indexes. An index futures
contract is an agreement pursuant to which two parties agree to take or make
delivery of an amount of cash equal to the difference between the value of
the index at the close of the last trading day of the contract and the price
at which the index contract was originally written. An option on an interest
rate or index futures contract generally gives the purchaser the right, in
return for the premium paid, to assume a position in a futures contract at a
specified exercise price at any time prior to the expiration date of the
option.
FORWARD CURRENCY TRANSACTIONS. The U.S. Equity Fund, the Global Fund, the
International Fund, the Strategic Fund, the Income Fund and the Government
Fund may each hold currencies to meet settlement requirements for foreign
securities and may engage in currency exchange transactions to protect
against uncertainty in the level of future exchange rates between a
particular foreign currency and the U.S. dollar or between foreign currencies
in which the Fund's securities are or may be denominated. No Fund will enter
into forward currency transactions for speculative purposes. Forward
currency contracts are agreements to exchange one currency for another at a
future date. The date (which may be any agreed-upon fixed number of days in
the future), the amount of currency to be exchanged and the price at which
the exchange will take place will be negotiated and fixed for the term of the
contract at the time that a Fund enters into the contract. Forward currency
contracts (1) are traded in a market conducted directly between currency trade
rs (typically, commercial banks or other financial institutions) and their
customers, (2) generally have no deposit requirements and (3) are typically
consummated without payment of any commissions. A Fund, however, may enter
into forward currency contracts requiring deposits or involving the payment
of commissions. To assure that a Fund's forward currency contracts are not
used to achieve investment leverage, cash or readily marketable securities
will be segregated with the Trust's custodian, or a designated sub-custodian,
in an amount at all times equal to or exceeding the Fund's commitment with
respect to the contracts.
Upon maturity of a forward currency contract, a Fund may (1) pay for and
receive the underlying currency, (2) negotiate with the dealer to roll over
the contract into a new forward currency contract with a new future
settlement date or (3) negotiate with the dealer
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to terminate the forward contract into an offset with the currency trader
providing for the Fund's paying or receiving
the difference between the exchange rate fixed in the contract and the then
current exchange rate. The Trust may also
be able to negotiate such an offset on behalf of a Fund prior to maturity of the
original forward contract. No
assurance can be given that new forward contracts or offsets will always be
available to a Fund.
In hedging a specific portfolio position, a Fund may enter into a forward
contract with respect to either the currency in which the position is
denominated or another currency deemed appropriate by GEIM. A Fund's
exposure with respect to forward currency contracts is limited to the amount
of the Fund's aggregate investments in instruments denominated in foreign
currencies.
OPTIONS ON FOREIGN CURRENCIES. The U.S. Equity Fund, the Global Fund, the
International Fund, the Strategic Fund, the Income Fund and the Government
Fund may each purchase and write put and call options on foreign currencies
for the purpose of hedging against declines in the U.S. dollar value of
foreign currency denominated securities and against increases in the U.S.
dollar cost of securities to be acquired by the Fund. The Funds with such
option writing authority may write only covered options. No Fund will enter
into a transaction involving options on foreign currencies for speculative
purposes. Options on foreign
currencies to be written or purchased by a Fund are traded on U.S. or foreign
exchanges or in the over-the-counter market. The Trust will limit the
premiums paid on a Fund's options on foreign currencies to 5% of the value of
the Fund's total assets.
INVESTMENT RESTRICTIONS
The Trust has adopted certain fundamental investment restrictions with
respect to each Fund that may not be changed without approval of a majority
of the Fund's outstanding voting securities (as defined in the 1940 Act).
Included among those fundamental restrictions are those listed below.
1. No Fund may borrow money, except that the Money Market Fund may enter into
reverse repurchase agreements, and except that each Fund may borrow from
banks for temporary or emergency (not leveraging) purposes, including the
meeting of redemption requests and cash payments of dividends and
distributions that might otherwise require the untimely disposition of
securities, in an amount not to exceed 33-1/3% of the value of the Fund's total
assets (including the amount borrowed) valued at market less liabilities (not
including the amount borrowed) at the time the borrowing is made. Whenever
borrowings, including reverse repurchase agreements, of 5% or more of a Fund's
total assets are outstanding, the Fund will not make any additional
investments.
2. No Fund may lend its assets or money to other persons, except through (a)
purchasing debt obligations, (b) lending portfolio securities in an amount
not to exceed 30% of the Fund's assets taken at market value, (c) entering
into repurchase agreements, (d) trading in financial futures contracts, index
futures contracts, securities indexes and options on financial futures
contracts, options on index futures contracts, options on securities and
options on securities indexes and (e) entering into variable rate demand
notes.
3. No Fund may purchase securities (other than Government Securities) of any
issuer if, as a result of the purchase, more than 5% of the Fund's total
assets would be invested in the securities of the issuer, except that up to
25% of the value of the total assets of each Fund, other than the Money
Market Fund, may be invested without regard to this limitation. All
securities of a foreign government and its agencies will be treated as a
single issuer for purposes of this restriction.
4. No Fund may purchase more than 10% of the voting securities of any one
issuer, or more than 10% of the outstanding securities of any class of
issuer, except that (a) this limitation is not applicable to a Fund's
investments in Government Securities and (b) up to 25% of the value of the
assets of a Fund, other than the Money Market Fund, may be invested without
regard to these 10% limitations. All securities of a foreign government and
its agencies will be treated as a single issuer for purposes of this
restriction.
5. No Fund may invest more than 25% of the value of its total assets in
securities of issuers in any one industry, except that the Tax-Exempt Fund
may invest more than 25% of the value of its total assets in securities
issued or guaranteed by a state, municipality or other political subdivision,
unless the securities are backed only by the assets and revenues of
non-governmental users. For purposes of this restriction, the term industry
will be deemed to include (a) the government of any country other than the
United States, but not the U.S. Government and (b) all supranational
organizations. In addition, securities held by the Money Market Fund that
are issued by domestic banks are excluded from this restriction. For
purposes of this investment restriction, the Trust may use the industry
classifications reflected by the S&P 500 Composite Stock Index, if applicable
at the time of determination. For all other portfolio holdings, the Trust
may use the Directory of Companies Required to File Annual Reports with the
SEC and Bloomberg Inc. In addition, the Trust may select its own industry
classifications, provided such classifications are reasonable.
Certain other investment restrictions adopted by the Trust with respect to
the Funds are described in the Statement of Additional Information.
RISK FACTORS AND SPECIAL CONSIDERATIONS
Investing in the Funds involves risk factors and special considerations, such
as those described below:
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GENERAL. GEIM's principal officers, directors, and portfolio managers serve
in similar capacities with respect to General Electric Investment Corporation
("GEIC"), which like GEIM is a wholly-owned subsidiary of GE. GEIM and GEIC
collectively provide investment management services to various institutional
accounts with total assets, as of December 29, 1995, in excess of $52.3
billion. An investment in shares of any Fund, however, should not be
considered to be a complete investment program.
DEBT INSTRUMENTS. A debt instrument held by a Fund will be affected by
general changes in interest rates that will in turn result in increases or
decreases in the market value of those obligations. The market value of debt
instruments in a Fund's portfolio can be expected to vary inversely to
changes in prevailing interest rates. In periods of declining interest
rates, the yield of a Fund holding a significant amount of debt instruments
will tend to be somewhat higher than prevailing market rates, and in periods
of rising interest rates, the Fund's yield will tend to be somewhat lower.
In addition, when interest rates are falling, money received by such a Fund
from the continuous sale of its shares will likely be invested in portfolio
instruments producing lower yields than the balance of its portfolio, thereby
reducing the Fund's current yield. In periods of rising interest rates, the
opposite result can be expected to occur.
CERTAIN INVESTMENT GRADE OBLIGATIONS. Although obligations rated BBB by S&P
or Baa by Moody's are considered investment grade, they may be viewed as
being subject to greater risks than other investment grade obligations.
Obligations rated BBB by S&P are regarded as having only an adequate capacity
to pay principal and interest and those rated Baa by Moody's are considered
medium-grade obligations that lack outstanding investment characteristics and
have speculative characteristics as well.
LOW-RATED SECURITIES. Certain Funds are authorized to invest in securities
rated lower than investment grade (sometimes referred to as "junk bonds").
Low-rated and comparable unrated securities (collectively referred to as
"low-rated" securities) likely have quality and protective characteristics
that, in the judgment of a rating organization, are outweighed by large
uncertainties or major risk exposures to adverse conditions, and are
predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal in accordance with the terms of the obligation.
Securities in the lowest rating categories may be in default or may present
substantial risks of default.
Although the market values of low-rated securities tend to react less to
fluctuations in interest rate levels than the market values of higher-rated
securities, the market values of certain low-rated securities tend to be more
sensitive to individual corporate developments and changes in economic
conditions than higher-rated securities. In addition, low-rated securities
generally present a higher degree of credit risk. Issuers of low-rated
securities are often highly leveraged and may not have more traditional
methods of financing available to them, so that their ability to service
their debt obligations during an economic downturn or during sustained
periods of rising interest rates may be impaired. The risk of loss due to
default by these issuers is significantly greater because low-rated
securities generally are unsecured and frequently are subordinated to the
prior payment of senior indebtedness. A Fund may incur additional expenses
to the extent that it is required to seek recovery upon a default in the
payment of principal or interest on its portfolio holdings. The existence of
limited markets for low-rated securities may diminish the Trust's ability to
obtain accurate market quotations for purposes of valuing the securities held
by a Fund and calculating the Fund's net asset value.
NON-PUBLICLY TRADED AND ILLIQUID SECURITIES. Non-publicly traded securities
may be less liquid than publicly traded securities. Although these
securities may be resold in privately negotiated transactions, the prices
realized from these sales could be less than those originally paid by a Fund.
In addition, companies whose securities are not publicly traded are not
subject to the disclosure and other investor protection requirements that may
be applicable if their securities were publicly traded. A Fund's investments
in illiquid securities are subject to the risk that should the Fund desire to
sell any of these securities when a ready buyer is not available at a price
that GEIM deems representative of their value, the value of the Fund's net
assets could be adversely affected.
REPURCHASE AND REVERSE REPURCHASE AGREEMENTS. A Fund entering into a
repurchase agreement will bear a risk of loss in the event that the other
party to the transaction defaults on its obligations and the Fund is delayed
or prevented from exercising its rights to dispose of the underlying
securities. The Fund will be, in particular, subject to the risk of a
possible decline in the value of the underlying securities during the period
in which the Fund seeks to assert its right to them, the risk of incurring
expenses associated with asserting those rights and the risk of losing all or
a part of the income from the agreement.
A reverse repurchase agreement involves the risk that the market value of the
securities retained by the Money Market Fund may decline below the price of the
securities the Fund has sold but is obligated to repurchase under the
agreement. In the event the buyer of securities under a reverse repurchase
agreement files for bankruptcy or becomes insolvent, the Money Market Fund's
use of the proceeds of the agreement may be restricted pending a determination
by the party, or its trustee or receiver, whether to enforce the Fund's
obligation to repurchase the securities.
WARRANTS. Because a warrant, which is a security permitting, but not
obligating, its holder to subscribe for another security, does not carry with
it the right to div-
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idends or voting rights with respect to the securities
that the warrant holder is entitled to purchase, and because a warrant does
not represent any rights to the assets of the issuer, a warrant may be
considered more speculative than certain other types of investments. In
addition, the value of a warrant does not necessarily change with the value of
the underlying security and a warrant ceases to have value if it is not
exercised prior to its expiration date. The investment by a Fund in warrants
valued at the lower of cost or market, may not exceed 5% of the value of the
Fund's net assets. Included within that amount, but not to exceed 2% of the
value of the Fund's net assets, may be warrants that are not listed on the
New York Stock Exchange, Inc. ("NYSE") or the American Stock Exchange.
Warrants acquired by a Fund in units or attached to securities may be deemed
to be without value.
INVESTMENT IN FOREIGN SECURITIES. Investing in securities issued by foreign
companies and governments involves considerations and potential risks not
typically associated with investing in obligations issued by the U.S.
Government and U.S. corporations. Less information may be available about
foreign companies than about U.S. companies, and foreign companies generally
are not subject to uniform accounting, auditing and financial reporting
standards or to other regulatory practices and requirements comparable to
those applicable to U.S. companies. The values of foreign investments are
affected by changes in currency rates or exchange control regulations,
restrictions or prohibitions on the repatriation of foreign currencies,
application of foreign tax laws, including withholding taxes, changes in
governmental administration or economic or monetary policy (in the United
States or abroad) or changed circumstances in dealings between nations.
Costs are also incurred in connection with conversions between various
currencies. In addition, foreign brokerage commissions are generally higher
than those charged in the United States and foreign securities markets may be
less liquid, more volatile and less subject to governmental supervision than
in the United States. Investments in foreign countries could be affected by
other factors not pres-ent in the United States, including expropriation,
confiscatory taxation, lack of uniform accounting and auditing standards,
limitations on the use or removal of funds or other assets (including the with
holding of dividends), and potential difficulties in enforcing contractual
obligations, and could be subject to extended clearance and settlement
periods.
CURRENCY EXCHANGE RATES. A Fund's share value may change significantly when
the currencies, other than the U.S. dollar, in which the Fund's portfolio
investments are denominated strengthen or weaken against the U.S. dollar.
Currency exchange rates generally are determined by the forces of supply and
demand in the foreign exchange markets and the relative merits of investments
in different countries as seen from an international perspective. Currency
exchange rates can also be affected unpredictably by intervention by U.S. or f
oreign governments or central banks or by currency controls or political
developments in the United States or abroad.
INVESTING IN DEVELOPING COUNTRIES. Investing in securities issued by
companies located in developing countries involves not only the risks
described above with respect to investing in foreign securities, but also
other risks, including exposure to economic structures that are generally less
diverse and mature than, and to political systems that can be expected to
have less stability than, those of developed countries. Other
characteristics of developing countries that may affect investment in their
markets include certain national policies that may restrict investment by
foreigners in issuers or industries deemed sensitive to relevant national
interests and the absence of developed legal structures governing private and
foreign investments and private property. The typically small size of the
markets for securities issued by companies located in developing countries
and the possibility of a low or nonexistent volume of trading in those
securities may also result in a lack of liquidity and in price volatility of
those securities.
MUNICIPAL OBLIGATIONS. Even though Municipal Obligations are
interest-bearing investments that promise a stable flow of income, their
prices are inversely affected by changes in interest rates and, therefore,
are subject to the risk of market price fluctuations. The values of
Municipal Obligations with longer remaining maturities typically fluctuate
more than those of similarly rated Municipal Obligations with shorter
remaining maturities. The values of fixed income securities also may be
affected by changes in the credit rating or financial condition of the
issuing entities.
Opinions relating to the validity of Municipal Obligations and to the
exemption of interest on them from Federal income taxes are rendered by bond
counsel to the respective issuers at the time of issuance. Neither the Trust
nor GEIM will review the proceedings relating to the issuance of Municipal
Obligations or the basis for opinions of counsel. The Tax-Exempt Fund may
invest without limit in debt obligations that are repayable out of revenues
generated from economically related projects or facilities or debt
obligations whose issuers are located in the same state. Sizable investments
in these obligations could involve an increased risk to the Tax-Exempt Fund
should any of the related projects or facilities experience financial
difficulties.
In past years, the U.S. Government has enacted various laws that have
restricted or diminished the income tax exemption on various types of
Municipal Obligations and may enact other similar laws in the future. If any
such laws are enacted that would reduce the availability of Municipal
Obligations for investment by the Tax-Exempt Fund so as to affect the Fund's
shareholders adversely, the Trust will reevaluate the Fund's investment
objective and policies and might submit possible
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changes in the Fund's structure to the Fund's shareholders for their
consideration. If legislation were enacted that would treat a type of
Municipal Obligation as taxable for Federal income tax purposes, the Trust
would treat the security as a permissible taxable money market instrument for
the Fund within the applicable limits set forth in this Prospectus.
COVERED OPTION WRITING. Upon the exercise of a put option written by a Fund,
the Fund may suffer a loss equal to the difference between the price at which
the Fund is required to purchase the underlying security and its market value
at the time of the option exercise, less the premium received for writing the
option. Upon the exercise of a call option written by a Fund, the Fund may
suffer a loss equal to the excess of the security's market value at the time
of the option's exercise over the Fund's acquisition cost of the security,
less the premium received for writing the option. In addition, no assurance
can be given that a Fund will be able to effect closing purchase transactions
at a desired time. The ability of a Fund to engage in closing transactions
with respect to options depends on the existence of a liquid secondary
market. Although a Fund will generally purchase or write securities options
only if a liquid secondary market appears to exist for the option purchased
or sold, no such secondary market may exist or the market may cease to exist.
A Fund will engage in hedging transactions only when deemed advisable by
GEIM. Successful use by a Fund of options will depend on GEIM's ability to
predict correctly movements in the direction of the securities underlying the
option used as a hedge. Losses incurred in hedging transactions and the
costs of these transactions will affect a Fund's performance.
SECURITIES INDEX OPTIONS. Securities index options are subject to position
and exercise limits and other regulations imposed by the exchange on which
they are traded. The ability of a Fund to engage in closing purchase
transactions with respect to securities index options depends on the
existence of a liquid secondary market. Although a Fund will generally
purchase or write securities index options only if a liquid secondary market
for the options purchased or sold appears to exist, no such secondary market
may exist, or the market may cease to exist at some future date, for some
options. No assurance can be given that a closing purchase transaction can
be effected when GEIM desires that a Fund engage in such a transaction.
FUTURES AND OPTIONS ON FUTURES. The use of futures contracts and options on
futures contracts as a hedging device involves several risks. No assurance
can be given that a correlation will exist between price movements in the
underlying securities or index and price movements in the securities that are
the subject of the hedge. Positions in futures contracts and options on
futures contracts may be closed out only on the exchange or board of trade on
which they were entered, and no assurance can be given that an active market
will exist for a particular contract or option at any particular time.
Furthermore, because any income earned from transactions in futures contracts
and related options will be taxable, GEIM anticipates that the Tax-Exempt
Fund will invest in these instruments only in unusual circumstances, such as
when GEIM anticipates a significant change in interest rates or market
conditions. Losses incurred in hedging transactions and the costs of these
transactions will affect a Fund's performance.
FORWARD CURRENCY TRANSACTIONS. In entering into forward currency contracts,
a Fund will be subject to a number of risks and special considerations. The
market for forward currency contracts, for example, may be limited with
respect to certain currencies. The existence of a limited market may in turn
restrict the Fund's ability to hedge against the risk of devaluation of
currencies in which the Fund holds a substantial quantity of securities. The
successful use of forward currency contracts as a hedging technique draws
upon GEIM's special skills and experience with respect to those instruments
and will usually depend upon GEIM's ability to forecast interest rate and
currency exchange rate movements correctly. Should interest or exchange
rates move in an unexpected manner, a Fund may not achieve the anticipated
benefits of forward currency contracts or may realize losses and thus be in a
less advantageous position than if those strategies had not been used. Many
forward currency contracts are subject to no daily price fluctuation limits
so that adverse market movements could continue with respect to those
contracts to an unlimited extent over a period of time. In addition, the
correlation between movements in the prices of those contracts and movements
in the prices of the currencies hedged or used for cover will not be perfect.
The Trust's ability to dispose of a Fund's positions in forward currency
contracts depends on the availability of active markets in those instruments,
and GEIM cannot now predict the amount of trading interest that may exist in
the future in forward currency contracts. Forward currency contracts may be
closed out only by the parties entering into an offsetting contract. As a
result, no assurance can be given that a Fund will be able to utilize these
contracts effectively for the intended purposes.
OPTIONS ON FOREIGN CURRENCIES. Like the writing of other kinds of options,
the writing of an option on a foreign currency constitutes only a partial
hedge, up to the amount of the premium received; a Fund could also be
required, with respect to any option it has written, to purchase or sell
foreign currencies at disadvantageous exchange rates, thereby incurring
losses. The purchase of an option on a foreign currency may constitute an
effective hedge against fluctuation in exchange rates, although in the event
of rate movements adverse to a Fund's position, the Fund could forfeit the
entire amount of the premium plus related transaction costs.
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INSTRUMENTS AND STRATEGIES INVOLVING SPECIAL RISKS. Certain instruments in
which the Funds can invest and certain investment strategies that the Funds
may employ could expose the Funds to various risks and special
considerations. The instruments presenting risks to a Fund that holds the
instruments are: Rule 144A Securities, depositary receipts, securities of
supranational agencies, securities of other investment funds, municipal
leases, floating and variable rate instruments, participation interests, zero
coupon obligations, Municipal Obligation components, custodial receipts,
mortgage related securities, government stripped mortgage related securities,
and asset-backed and receivable-backed securities. Among the risks that some
but not all of these instruments involve are lack of liquid secondary markets
and the risk of prepayment of principal. The investment strategies involving
special risks to some or all of the Funds are: engaging in when-issued or
delayed-delivery securities transactions, lending portfolio securities and
selling securities short against the box. Among the risks that some but not
all of these strategies involve are increased exposure to fluctuations in
market value of the securities and certain credit risks. See "Further
Information: Certain Investment Techniques and Strategies" for a more
complete description of these instruments and strategies.
PORTFOLIO TRANSACTIONS AND TURNOVER
The Board of Trustees of the Trust has determined that, to the extent
consistent with applicable provisions of the 1940 Act and rules thereunder,
transactions for a Fund may be executed through the Distributor, if, in the
judgment of GEIM, the use of the Distributor is likely to result in price and
execution at least as favorable to the Fund as those obtainable through other
qualified broker-dealers, and if, in the transaction, the Distributor charges
the Fund a fair and reasonable rate consistent with that payable by the Fund
to other broker-dealers on comparable transactions. Under rules adopted by
the SEC, the Distributor may not execute transactions for a Fund on the floor
of any national securities exchange, but may effect transactions by transmitti
ng orders for execution providing for clearance and settlement, and arranging
for the performance of those functions by members of the exchange not
associated with the Distributor. The Distributor will be required to pay
fees charged by those persons performing the floor brokerage elements out of
the brokerage compensation that it receives from a Fund.
The Trust cannot predict precisely the turnover rate for any Fund, but
expects that the annual turnover rate will generally not exceed 50% for the
U.S. Equity Fund, 50% for the Global Fund, 50% for the International Fund,
200% for the Strategic Fund, 200% for the Tax-Exempt Fund, 300% for the
Income Fund and 300% for the Government Fund. The portfolio turnover rate
for the Money Market Fund is expected to be zero for regulatory purposes.
For the fiscal year ended September 30, 1995, the actual portfolio turnover
rates of certain of the Funds were: the U.S. Equity Fund - 43%, the Global
Fund - 46%, the International Fund - 27%, the Strategic Fund -98%, the
Tax-Exempt Fund - 86%, the Income Fund - 315% and the Government Fund - 415%.
A 100% annual turnover rate would occur if all of a Fund's securities were
replaced one time during a period of one year. Short-term gains realized
from portfolio turnover are taxable to shareholders as ordinary income. In
addition, higher portfolio turnover rates can result in corresponding
increases in brokerage commissions. GEIM does not consider portfolio
turnover rate a limiting factor in making investment decisions on behalf of
any Fund consistent with the Fund's investment objective and policies.
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES
Overall responsibility for management and supervision of the Funds rests with
the Trust's Board of Trustees. The Trustees approve all significant
agreements between the Trust and the persons and companies that furnish
services to the Funds, including agreements with the Funds' investment
adviser and administrator, distributor, custodian and transfer agent. The
day-to-day operations of the Funds have been delegated to GEIM. The
Statement of Additional Information contains background information regarding
each Trustee and executive officer of the Trust.
INVESTMENT ADVISER AND ADMINISTRATOR
GEIM, located at 3003 Summer Street, P.O. Box 7900 Stamford, Connecticut
06904, serves as the investment adviser and administrator of each Fund.
GEIM, which was formed under the laws of Delaware in 1988, is a wholly-owned
subsidiary of GE and is a registered investment adviser under the Investment
Advisers Act of 1940, as amended.
GEIM has served as the investment adviser of the investment portfolios of
Variable Investment Trust, which are offered only to insurance company
separate accounts that fund certain variable annuity contracts, since their
inception in 1994, and other institutional accounts, including PaineWebber
Global Equity Fund, a series of Mitchell Hutchins/Kidder Peabody Investment
Trust, since its inception in 1991, the Global Growth Portfolio of
PaineWebber Series Trust and Global Small Cap Fund Inc. since March, 1995.
GEIM's principal officers and directors serve in similar capacities with
respect to GEIC, which like GEIM is a wholly-owned subsidiary of GE, and
which currently acts as the investment adviser of Elfun Global Fund, Elfun
Trusts, Elfun Income Fund, Elfun Money Market Fund, Elfun Tax-Exempt Income
Fund and Elfun Diversified Fund (collectively, the "Elfun Funds"). The first
Elfun Fund, Elfun Trusts, was established in 1935. Investment in the Elfun
Funds is generally limited to regular and senior members of the Elfun
Society,
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whose regular members are selected from active employees of GE
and/or its majority-owned subsidiaries, and whose senior Society members are
former members who have retired from those companies. In addition, under the
General Electric Savings and Security Program, GEIC serves as investment
adviser to the GE S&S Program Mutual Fund and GE S&S Long Term Interest Fund.
GEIC also serves as the investment adviser to the General Electric Pension
Trust. Through GEIM and GEIC and their predecessors, GE has almost 60 years
of investment management experience. GEIM and GEIC collectively provide
investment management services to various institutional accounts with total
assets, as of December 29, 1995, in excess of $52.3 billion, of which roughly
$10 billion is invested in mutual funds.
As a Fund's investment adviser, GEIM, subject to the supervision and
direction of the Trust's Board of Trustees, manages the Fund's portfolio in
accordance with its investment objective and stated policies, makes
investment decisions for the Fund and places purchase and sale orders for the
Fund's portfolio transactions. As a Fund's administrator, GEIM furnishes the
Trust with statistical and research data, clerical help and accounting, data
processing, bookkeeping, internal auditing services and certain other
services required by the Trust; prepares reports to the shareholders of the
Fund; and assists in the preparation of tax returns and reports to and
filings with the SEC and state securities law authorities. GEIM also pays
the salaries of all personnel employed by both it and the Trust and provides
each Fund with investment officers who are authorized by the Board of
Trustees to execute purchases and sales of securities on behalf of the Fund.
The Funds pay GEIM fees for advisory and administration services provided by
GEIM to the Funds that are accrued daily and paid monthly at the following
annual rates of the value of the Funds' average daily net assets: the U.S.
Equity Fund - .40%, the Global Fund - .75%, the International Fund - .80%,
the Strategic Fund - .35%, the Tax-Exempt Fund - .35%, the Income Fund -
.35%, the Government Fund - .30% and the Money Market Fund - .25%. The fees
paid by the Global Fund and the International Fund are higher than investment
management fees paid by most other mutual funds.
Although investment decisions for each Fund are made independently from those
of the other accounts managed by GEIM, investments of the type a Fund may
make may also be made by those other accounts, particularly in the case of
the U.S. Equity Fund because its investment strategy is employed by other
accounts managed by GEIM or GEIC. When a Fund and one or more other accounts
managed by GEIM are prepared to invest in, or desire to dispose of, the same
security, available investments or opportunities for sales will be allocated
in a manner believed by GEIM to be equitable to each. In some cases, this
procedure may adversely affect the price paid or received by a Fund or the
size of the position obtained or disposed of by a Fund.
The agreements governing the investment advisory services furnished to the
Trust by GEIM provide that, if GEIM ceases to act as the investment adviser
to the Trust, at GEIM's request, the Trust's license to use the initials "GE"
will terminate and the Trust will change the name of the Trust and the Funds
to a name not including the initials "GE."
PORTFOLIO MANAGEMENT
Eugene K. Bolton is responsible for the overall management of the domestic
equity investment process at GEIM and GEIC (GEIM, GEIC and their predecessors
are collectively referred to as "GE Investments"). In that capacity, which
he has served since the commencement of the Funds' operations, Mr. Bolton is
specifically responsible for selecting the Portfolio Managers for the U.S.
Equity Fund and for the equity related investments of the portfolio of the
Strategic Fund. He is also responsible for monitoring the investment
strategies employed by the Portfolio Managers of those Funds to ensure that
they are consistent with the Funds' investment objectives and policies. Mr.
Bolton has more than 11 years of investment experience and has held positions
with GE Investments since 1984. He is currently a Director and Executive
Vice President of GE Investments.
David B. Carlson is one of the five Portfolio Managers for the U.S. Equity
Fund and is also responsible for the management of the equity related
investments of the portfolio of the Strategic Fund. Mr. Carlson has served
those Funds as a Portfolio Manager since the commencement of their
operations. He has more than 13 years of investment experience and has held
positions with GE Investments since 1982. Mr. Carlson is currently a Senior
Vice President of GE Investments.
Christopher D. Brown is one of the five Portfolio Managers for the U.S.
Equity Fund and has served in that capacity since December 1995. He has ten
years of investment experience, and has held positions with GE Investments
since 1985. Mr. Brown is currently a Vice President of GEInvestments.
Peter J. Hathaway is one of the five Portfolio Managers for the U.S. Equity
Fund and has served in that capacity since the commencement of the Fund's
operations. He has more than 35 years of investment experience and has held
positions with GE Investments since 1985. Mr. Hathaway is currently a Senior
Vice President of GE Investments.
Robert R. Kaelin is the Portfolio Manager of the Tax-Exempt Fund and has
served in that capacity since the commencement of the Fund's operations. He
has more than 26 years of investment experience and has held positions with
GE Investments since 1984. Mr. Kaelin is currently a Senior Vice President
of GE Investments.
A. John Kohlhepp is one of the five Portfolio Managers for the U.S. Equity
Fund and has served in that capacity since the commencement of the Fund's
29
<PAGE>
operations. He has more than 36 years of investment experience and has held
positions with GE Investments since 1968. Mr. Kohlhepp is currently a Senior
Vice President of GE Investments.
Ralph R. Layman is the Portfolio Manager of the Global Fund and the
International Fund and has served in that capacity since the commencement of
the Funds' operations. He has more than 16 years of investment experience
and has held positions with GE Investments since 1991. From 1989 to 1991,
Mr. Layman served as an Executive Vice President, Partner and Portfolio
Manager of Northern Capital Management, and prior thereto, served as Vice
President and Portfolio Manager of Templeton Investment Counsel. Mr. Layman
is currently an Executive Vice President of GE Investments.
Robert A. MacDougall is the Portfolio Manager of the Fixed Income Fund and
the Government Fund and is also responsible for the management of fixed
income related investments of the portfolio of the Strategic Fund. Mr.
MacDougall has served those Funds as a Portfolio Manager since the
commencement of their operations. He has more than 12 years investment
experience and has held positions with GE Investments since 1986. Mr.
MacDougall is currently a Senior Vice President of GE Investments.
Paul C. Reinhardt is one of the five Portfolio Managers for the U.S. Equity
Fund and has served in that capacity since the commencement of the Fund's
operations. He has more than 14 years of investment experience and has held
positions with GE Investments since 1982. Mr. Reinhardt is currently a
Senior Vice President of GE Investments.
GEIM investment personnel may engage in securities transactions for their own
accounts pursuant to a code of ethics that establishes procedures for
personal investing and restricts certain transactions.
EXPENSES OF THE FUNDS
The Money Market Fund, as well as each Class of the Participant Funds, bears
its own expenses, which generally include all costs not specifically borne by
GEIM. Included among the Money Market Fund's expenses and/or the Class'
expenses are: a portion of the costs incurred in connection with the Class'
and/or the Trust's organization; investment advisory, administration and
distribution and shareholder servicing fees; fees paid to members of the
Trust's Board of Trustees who are not affiliated with GEIM or any of its
affiliates; fees for necessary professional and brokerage services; fees for
any pricing service; the costs of custody, transfer agency and recordkeeping
services; the costs of regulatory compliance; a portion of the costs
associated with maintaining the Trust's legal existence; and the costs of
corresponding with shareholders of the Funds. The Trust's agreements with
GEIM with respect to each Fund provide that GEIM will reimburse the Fund to
the extent required by applicable state laws for certain expenses that are
described in the Statement of Additional Information.
The Trust has adopted Shareholder Servicing and Distribution Plans (the
"Plans") pursuant to Rule 12b-1 under the 1940 Act with respect to each
Participant Fund. Under the Plans, the Trust will pay GEIM, with respect to
the Class A and Class B shares of a Participant Fund, fees for shareholder and
distribution services provided to those Classes of the Participant Fund, and
with respect to the Class C shares of a Participant Fund, the Trust will pay
GEIM a shareholder servicing fee, each at the annual rates set out above under
"The Multiple Distribution System" and as further described below under
"Purchase of Shares." Fees to be paid with respect to the Funds under the
Plans will be calculated daily and paid monthly by the Trust.
The annual fees payable with respect to each Class of a Participant Fund are
intended to compensate GEIM or enable GEIM to compensate other persons
("Service Providers") for providing ongoing servicing and/or maintenance of
the accounts of shareholders of the Participant Fund ("Shareholder Services")
and to compensate GEIM, or enable GEIM to compensate Service Providers,
including any distributor of shares of the Participant Fund, for providing
services that are primarily intended to result in, or that are primarily
attributable to, the sale of shares of the Participant Fund ("Selling
Services"). Shareholder Services means all forms of shareholder liaison
services, including, among other things, one or more of the following:
providing Class A, Class B or Class C shareholders of a Participant Fund with
(i) information on their investments; (ii) general information regarding
investing in mutual funds; (iii) periodic newsletters containing materials
relating to the Participant Fund or to investments in general in mutual
funds; (iv) periodic financial seminars designed to assist in the education
of shareholders with respect to mutual funds generally and the Participant
Fund specifically; (v) access to a telephone inquiry center relating to the
Participant Fund; and other similar services not otherwise required to be
provided by the Trust's custodian or transfer agent. Selling Services
include, but are not limited to: the printing and distribution to prospective
investors in the Participant Fund of prospectuses and statements of
additional information that are used in connection with sales of Class A and
Class B shares of the Participant Fund; the preparation, including printing,
and distribution of sales literature and media advertisements relating to the
Class A or Class B shares of the Participant Fund; and distributing Class A
or Class B shares of the Participant Fund. In providing compensation for
Selling Services in accordance with the Plans, GEIM is expressly authorized
(1) to make, or cause to be made, payments reflecting an allocation of
overhead and other office expenses related to the distribution of the Class A
or Class B shares of a Participant Fund; (2) to make, or cause to be made,
payments, or to provide for the reimbursement of expenses of, persons who
provide support services in
30
<PAGE>
connection with the distribution of the Class A or Class B shares of the
Participant Fund; and (3) to make, or cause to be made, payments to broker-
dealers who have sold Class A or Class B shares of the Participant Fund.
Payments under the Plans are not tied exclusively to the expenses for
shareholder servicing and distribution expenses actually incurred by GEIM or
any Service Provider, and the payments may exceed expenses actually incurred
by GEIM and/or a Service Provider. The Trust's Board of Trustees evaluates
the appropriateness of the Plans and its payment terms on a continuing basis
and in doing so considers all relevant factors, including the types and
extent of Shareholder Services and Selling Services provided by GEIM and/or
Service Providers and amounts GEIM and/or Service Providers receive under the
Plans.
PURCHASE OF SHARES
GENERAL
Fund shares are sold on a continuous basis by the Distributor. A purchase
order will be processed at the net asset value next determined with respect
to the Class of shares of the Participant Fund (or shares of the Money Market
Fund) being purchased after your purchase order (or your wire, if applicable)
has been received and accepted by State Street Bank and Trust Company ("State
Street"), the Trust's custodian and transfer agent. For a description of the
manner of calculating a Fund's net asset value, see "Net Asset Value."
The minimum initial investment in the Money Market Fund or in a Class of a
Participant Fund is $500 (or $250 in the case of individual retirement
accounts ("IRAs")) and the minimum for subsequent investments is $100. The
minimum for any purchase by payroll deduction (including initial investment)
is $25 per month. Purchase orders for shares of a Fund will be accepted by
the Trust only on a day on which the Fund's net asset value is calculated.
See "Net Asset Value" below. The Trust may in its discretion reject any
order for the purchase of shares of a Fund. For the convenience of
shareholders and in the interest of economy, the Trust will not issue
physical certificates representing shares in any Fund.
Shares of the Funds may be purchased directly from the Distributor or through
authorized broker-dealers, financial institutions or investment advisers
which have entered into sales agreements with the Distributor ("Authorized
Firms"), as follows:
THROUGH AUTHORIZED FIRMS. Initial purchases of shares through Authorized
Firms should be made with the assistance of a sales representative (a "Sales
Representative"). Subsequent investments may be made with a Sales
Representative or mailed directly to the Trust. When making subsequent
investments directly to the Trust, make your check payable to GEFunds and
clearly indicate your account number on the check.
Initial or subsequent purchases of shares through Authorized Firms can also
be made by Federal Funds wire, transferred along with proper instructions
directly to your account. Before an initial wire transfer can be accepted,
an account must be established for you. See your Sales Representative for
further instructions. Your financial institution may charge a fee for wiring
to your account.
If you purchase shares through a Sales Representative, your Authorized Firm
will be responsible for transmitting your order promptly to State Street.
You begin to earn income as of the first business day following the day State
Street has received payment for your order. Orders will be accepted only
upon receipt by State Street of all documentation required to be submitted in
connection with such order. If you purchase or redeem your shares through an
Authorized Firm, you may be subject to service fees imposed by that Firm.
Other investors not being assisted by a Sales Representative of an Authorized
Firm may purchase shares in a manner described below:
BY MAIL. Investors may send a check made payable to GEFunds in U.S. currency
along with account information and instructions to the Trust, at:
GE Funds
P.O. Box 8309
Boston, MA 02266-8325
For overnight package delivery:
GE Funds
c/o Boston Financial Data Services Inc.
Two Heritage Drive
Quincy, MA 02171
Investors should send all account information and instructions that are
accompanied by a check payable to GE Funds in payment for shares to the
Trust. A purchase of shares of a Fund will be effected in accordance with a
completed order at the Fund's net asset value next determined after receipt.
If the check used for the purchase does not clear, the Trust will cancel the
purchase and the investor may be liable for losses or fees incurred. Checks
are accepted subject to collection at full face value in U.S. funds and must
be drawn on a U.S. bank. Investors may obtain an account application
necessary to open an account by telephoning the Trust at the applicable toll
free number listed on the back cover of the Prospectus or by writing to the
Trust, at:
GE Funds
P.O. Box 120065
Stamford, CT 06912-0065
For overnight package delivery:
GE Funds
c/o Boston Financial Data Services Inc.
Two Heritage Drive
Quincy, MA 02171
31
<PAGE>
BY WIRE. Purchase orders for shares of a Fund may be transmitted by wire.
Wire orders will not be accepted until a completed account application in
proper form has been received by the Trust at the address set forth above.
After the Trust receives an application, an investor should then wire Federal
funds (minimum $1,000) to: State Street Bank and Trust Company (ABA
#0110-0002-8; DDA No. 9904-641-9) For: [Name of Fund] Account of:
[Investor's name, address and account number].
If a wire is received by the close of regular trading on the NYSE (currently
4:00 p.m. New York time), the shares will be priced according to the net
asset value of the Fund on that day. If a wire is received after the close of
regular trading on the NYSE, the shares will be priced as of the time the
Fund's net asset value per share is next determined. Payment for orders that
are not accepted will be returned to the prospective investor promptly.
BY DIRECT DEPOSIT PRIVILEGE. The Trust offers a Direct Deposit Privilege
(the "Privilege"), which enables investors to purchase shares of either the
Money Market Fund or of a particular Class of a Participant Fund (minimum of
$25) by having Federal salary, Social Security, or certain veterans',
military or other payments from the U.S. Government, or a GE employee's
payroll check, automatically deposited into their Fund account. An investor
may elect to deposit as much as desired. To enroll for the Privilege, an
investor must file with the Trust a completed Direct Deposit Sign Up Form for
each type of payment desired to be included in the Privilege. The
appropriate form may be obtained from the Trust. Death or legal incapacity
will terminate the Privilege for an investor. An investor may elect at any
time to terminate participation by notifying in writing the appropriate
Federal agency. Further, the Trust may terminate participation upon 30 days'
notice to the investor.
BY PAYROLL SAVINGS PLAN. The Payroll Savings Plan offered by the Trust
permits an investor to purchase shares of either the Money Market Fund or of
a particular Class of a Participant Fund (minimum of $25) automatically on a
regular basis. Depending upon the direct deposit program established with an
investor's employer, part or all of such investor's paycheck may be
transferred to an existing account electronically at each pay period (through
the Automated Clearing House). To establish a Payroll Savings Plan account,
an authorization form must be sent to the Trust at:
GE Funds
P.O. Box 120065
Stamford, CT 06912-0065
For overnight package delivery:
GE Funds
c/o Boston Financial Data Services Inc.
Two Heritage Drive
Quincy, MA 02171
The necessary authorization form may be obtained from the Trust. Investors
may change the amount of purchase or cancel the authorization only by written
notification to the Trust. The Trust may modify or terminate the Payroll
Savings Plan at any time or charge a service fee. No such fee currently is
contemplated.
BY AUTOMATIC INVESTMENT PLAN. Investors may arrange to make purchases of
shares automatically on a monthly basis by electronic funds transfer (minimum
$25 per transaction) from the checking, NOW, bank money market deposit
account or credit union account designated by the investor if their bank or
credit union is a member of an automated clearing house or by preauthorized
checks drawn on their bank or credit union account. Shareholders will
receive confirmations for transactions and a debit entry will appear on the
bank or credit union statement. To make arrangements for automatic monthly
investments, call the Trust at the applicable toll free number listed on the
back cover of the Prospectus for further information. Investors may change
the purchase amount or terminate this privilege at any time. The Trust may
modify or terminate this privilege at any time or charge a service fee;
however, no service fee is currently contemplated.
THE MULTIPLE DISTRIBUTION SYSTEM
As described above, under the Multiple Distribution System, Participant Funds
offer different methods of purchasing shares, enabling investors to choose
the Class that best suits their needs given the amount of purchase and
intended length of investment. The Distributor and other persons remunerated
on the basis of sales of shares may receive different levels of compensation
for selling one Class of shares over another.
When purchasing shares of a Participant Fund, investors are required to
specify whether the purchase is for Class A, Class B, Class C or Class D
shares, as described below. The Money Market Fund does not participate in
the Multiple Distribution System.
CLASS A SHARES. Class A shares will be offered to investors at their net
asset value next determined, plus a sales charge, if applicable. Class A
shares are subject to a service fee and a distribution fee, each at the
annual rate of .25% of the value of the average daily net assets attributable
to the Class. See "Management of the Trust." The sales charges payable upon
the purchase of Class A shares will vary with the amount of purchase as shown
in the tables set out on the following page:
32
<PAGE>
GE U.S. EQUITY FUND, GE GLOBAL EQUITY FUND, GE INTERNATIONAL EQUITY
FUND
AND GE STRATEGIC INVESTMENT FUND
<TABLE>
<CAPTION>
MAXIMUM DEALERS'
TOTAL FRONT-END SALES CHARGE REALLOWANCE**
_____________________________ ________________
AS A PERCENTAGE
AS A PERCENTAGE OF AS A PERCENTAGE
AMOUNT OF PURCHASE AT OF NET AMOUNT OF
OFFERING PRICE* OFFERING PRICE INVESTED OFFERING
PRICE
_________________________ _________________ __________________
________________
<S> <C> <C> <C>
Less than $50,000 4.75% 4.99% 4.25%
$50,000 but less
than $100,000 4.25 4.44 3.75
$100,000 but less
than $250,000 3.25 3.36 2.75
$250,000 but less
than $500,000 2.50 2.56 2.00
$500,000 but less
than $1,000,000 2.00 2.04 1.55
$1,000,000 or more 0 0 @
GE TAX-EXEMPT FUND AND GE FIXED INCOME FUND
MAXIMUM DEALERS'
TOTAL FRONT-END SALES CHARGE REALLOWANCE**
_____________________________ ________________
AS A PERCENTAGE
AS A PERCENTAGE OF AS A PERCENTAGE
AMOUNT OF PURCHASE AT OF NET AMOUNT OF
OFFERING PRICE* OFFERING PRICE INVESTED OFFERING
PRICE
_________________________ _________________ __________________
________________
<S> <C> <C> <C>
Less than $100,000 4.25% 4.44% 3.75%
$100,000 but less
than $250,000 3.25 3.36 2.75
$250,000 but less
than $500,000 2.50 2.56 2.00
$500,000 but less
than $1,000,000 2.00 2.04 1.55
$1,000,000 or more 0 0 @@
GE SHORT-TERM GOVERNMENT FUND
MAXIMUM DEALERS'
TOTAL FRONT-END SALES CHARGE REALLOWANCE**
_____________________________ ________________
AS A PERCENTAGE
AS A PERCENTAGE OF AS A PERCENTAGE
AMOUNT OF PURCHASE AT OF NET AMOUNT OF
OFFERING PRICE* OFFERING PRICE INVESTED OFFERING
PRICE
_________________________ _________________ __________________
________________
<S> <C> <C> <C>
Less than $100,000 2.50% 2.56% 2.25%
$100,000 but less
than $250,000 2.25 2.30 2.00
$250,000 but less
than $500,000 1.75 1.78 1.50
$500,000 but less
than $1,000,000 1.25 1.27 1.00
$1,000,000 or more 0 0 @@
</TABLE>
* THE DISTRIBUTOR HAS ADOPTED GUIDELINES DIRECTING SELLING
REPRESENTATIVES
THAT SINGLE INVESTMENTS OF $250,000 OR MORE SHOULD BE MADE IN CLASS A
SHARES.
** THE DISTRIBUTOR WILL REALLOW UP TO THE ENTIRE SALES CHARGE TO PNC
SECURITIES CORP. AND GNA SECURITIES INC. FOR THOSE SHARES SOLD TO
RETAIL
CUSTOMERS BY THOSE DEALERS. IN LIEU OF THIS ADDITIONAL REALLOWANCE,
THE
DISTRIBUTOR MAY OTHERWISE PAY OUT OF ITS OWN RESOURCES TO GNA
SECURITIES INC.
AN ADDITIONAL AMOUNT NOT TO EXCEED 1.50% ON THE SALE OF FUND SHARES
DEPENDING
ON CERTAIN VARIABLES, INCLUDING SALES VOLUME, CLASS OF FUND, AND
CLASS OF
FUND SHARES SOLD. THE STAFF OF THE SEC HAS INDICATED THAT DEALERS
WHO RECEIVE
MORE THAN 90% OF THE SALES CHARGE MAY BE CONSIDERED UNDERWRITERS
@ FOR PURCHASES IN EXCESS OF $1 MILLION, THE DISTRIBUTOR WILL PAY A
CONCESSION OF UP TO .70% TO THE SELLING DEALER.
@@ FOR PURCHASES IN EXCESS OF $1 MILLION, THE DISTRIBUTOR WILL PAY A
CONCESSION OF UP TO .60% TO THE SELLING DEALER.
No sales charge is imposed on Class A shares purchased through reinvestment
of dividends or capital gains distributions. In addition, Class A shares are
offered without any sales charge with respect to: (1) purchases of $1 million
or more of Class A shares by an investor, including an investment by a Class
D eligible employee retirement plan that seeks the additional services
provided to Class A Shareholders ("Class A Retirement Plans"), (2) all
purchases by Class ARetirement Plans which have 250 or more eligible
employees, (3) all purchases by Class ARetirement Plans, including Plans
purchasing less than $1 million of Class A shares which are made exclusively
through the Distributor and not through an Authorized Firm, (4) all purchases
directly by individuals who are not Class C eligible who may otherwise invest
in the Funds through defined contribution plans currently invested in the
Funds, and who purchase shares exclusively
33
<PAGE>
through the Distributor and not through an Authorized Firm, (5) all purchases
by officers, directors, employees and registered representatives of Authorized
Firms which have entered into sales agreements with the Distributor or
financial institutions through which shares of the Funds are being offered or
made available for sale, (6) all purchases through nondiscretionary investment
advisory programs made available by registered investment advisers or banks
approved by the Trust's Board of Trustees and (7) all purchases by certain
customers (the "Selected Customers") of GE who previously purchased Class A
shares during a special limited offering of Fund shares by the Distributor,
provided that the Selected Customer maintains an account with the Trust in its,
his or her name at the time of the current purchase and the investment is made
in that name, or as custodian for a minor or in an individual retirement
account for the Selected Customer.
Reduced sales charges are available under a combined right of accumulation
under which an investor may combine (1) the value of Class A shares held in
the Participant Fund, (2) the value of Class A shares held in another
Participant Fund with respect to which the investor has previously paid, or
is subject to the payment of, a sales charge, and (3) the value of Class A
shares being purchased. For example, if an investor owns shares of the
Global Fund and the Strategic Fund that have an aggregate value of $92,000,
and makes an additional investment in Class A shares of the Global Fund of
$15,000, the sales charge applicable to the additional investment would be
3.25% rather than the 4.75% normally charged on a $15,000 purchase. In
addition, Class ARetirement Plans may include, as part of the calculation of
accumulation benefits, purchases of shares of the Money Market Fund and
interests in other pooled investment vehicles, which are made available to
such investors and specified by the Distributor as eligible for accumulation
benefits in sales agreements with Authorized Firms.
By signing a Letter of Intent form, available from the Distributor, an
investor becomes eligible for the reduced sales load applicable to the total
number of Participant Fund Class A shares purchased in a 13-month period
(beginning up to 90 days prior to the date of execution of the Letter of
Intent), pursuant to the terms and under the conditions set forth in the
Letter of Intent. To compute the applicable sales load, the shares an
investor beneficially owns (on the date of submission of the Letter of
Intent) in any Participant Fund that may be used toward "right of
accumulation" benefits described above may be used as a credit toward
completion of the Letter of Intent.
State Street will hold in escrow 5% of the amount indicated in the Letter of
Intent for payment of a higher sales load if an investor does not purchase
the full amount indicated in the Letter of Intent. The escrow will be
released when an investor fulfills the terms of the Letter of Intent by
purchasing the specified amount. Assuming completion of the total minimum
investment specified under a Letter of Intent, an adjustment will be made to
reflect any reduced sales charge applicable to shares purchased during the
90-day period prior to the submission of the Letter of Intent. Additionally,
if the total purchases within the period exceed the amount specified in the
Letter of Intent, an adjustment will be made to reflect further reduced sales
charges applicable to such purchases. All such adjustments will be made in
the form of additional shares credited to the shareholder's account at the
then current offering price applicable to a single purchase of the total
amount of the total purchases. If total purchases are less than the amount
specified, an investor will be requested to remit an amount equal to the
difference between the sales load actually paid and the sales load applicable
to the aggregate purchases actually made. If such remittance is not received
within 20 days, State Street, as attorney-in-fact pursuant to the terms of
the Letter of Intent, will redeem an appropriate number of shares held in
escrow to realize the difference. Signing a Letter of Intent does not bind
an investor to purchase, or the Trust to sell, the full amount indicated at
the sales load in effect at the time of signing, but an investor must
complete the intended purchase to obtain the reduced sales load.
Participant Funds also offer a reinstatement privilege under which a
shareholder that has redeemed Class A shares may reinvest the proceeds from
the redemption without imposition of a sales charge, provided the
reinvestment is made within 60 days of the redemption. The tax status of a
gain realized on a redemption will not be affected by exercise of the
reinstatement privilege but a loss will be nullified if the reinvestment is
made within 30 days of redemption. See the Statement of Additional Informatio
n for the tax consequences when, within 90 days of a purchase of Class A
shares, the shares are redeemed and reinvested in a Participant Fund.
CLASS B SHARES. Investors are able to purchase Class B shares at their net
asset value per share next determined after a purchase order is received,
without imposition of any sales charge. A CDSC is imposed, however, on
certain redemptions of Class B shares. See "Redemption of Shares" below,
which provides a more complete description of the CDSC. Class B shares of a
Participant Fund, other than the Government Fund are subject to a service fee
at the annual rate of .25% and a distribution fee at the annual rate of .75%,
of the value of a Participant Fund's average daily net assets attributable to
the Class. In the case of the Government Fund, Class B shares are subject to
a service fee at the annual rate of .25% and a distribution fee at the annual
rate of .60% of the value of the Government Fund's average daily net assets
attributable to the Class. The Distributor has adopted guidelines, in view
of the relative sales charges, service fees and distribution fees, directing
its representatives and all selling agents that all purchases of shares
should be for Class A shares when the pur-
34
<PAGE>
chase is $250,000 or more by an investor not eligible to purchase Class C or
Class D shares. The Distributor reserves the right to vary these guidelines at
any time.
CLASS C SHARES. Class C shares will be offered at their net asset value per
share next determined after a purchase order is received, without imposition
of any sales charge or CDSC. Class C shares are subject to a service fee of
.25% of the net assets attributable to the Class. Class C shares are not
subject to any distribution fee, and are available exclusively to (1) holders
of shares of a Participant Fund or of the Money Market Fund that were issued
and outstanding on November 29, 1993 - the date the Multiple Distribution
System was implemented ("Existing Shares") who are not eligible to be holders
of Class D shares, (2) any family member of a holder of Existing Shares and
(3) employees, retirees, officers or directors of GE or an affiliate of
GE or any family member of any of those employees, retirees, officers or
directors, in each case, whether investing directly or indirectly through
their IRA. For purposes of this Prospectus, the term "family member"
includes, spouses and by reason of blood or marriage, parents, children,
siblings, grandparents and grandchildren. Also, for purposes of this
Prospectus, the term "employees, retirees, officers or directors of GE or an
affiliate of GE" includes (i) persons who are currently employed by GE or an
affiliate of GE (GE and its affiliates are hereinafter referred to as "GE"),
(ii) persons who have retired or will retire from GE, or (iii) persons who
are no longer employed by GE, but who have either retained a balance in the
GE S&S Program or were employed by GE for at least 20 consecutive years. Any
holder of Existing Shares falling within subcategory (1) above, who fully
redeems his or her Class C shares or whose shares are redeemed in accordance
with the involuntary redemption procedure set out below, will not have the
right to reinvest in Class C shares. See "Redemptions of Shares" below.
CLASS D SHARES. Class D shares will be offered without imposition of a sales
charge, CDSC, service fee or distribution fee exclusively to: banks,
insurance companies and industrial corporations each purchasing shares for
their own account; investment management programs of financial institutions
that contemplate purchasing shares of investment companies managed by an
adviser unaffiliated with the financial institution; financial institutions
investing in their fiduciary capacity on behalf of clients or customers;
tax-exempt investors, including defined benefit or contribution plans
(including plans meeting the requirements of Section 401(k) of the Code),
plans established under Section 403(b) of the Code, trusts established under
Section 501(c)(9) of the Code to fund the payment of certain welfare
benefits, charitable, religious and educational institutions, and foundations
and endowments of those investors; and investment companies not managed or
sponsored by GEIM or any affiliate of GEIM ("Institutional Investors"). Under
no circumstances are regular IRAs, simplified employee pension IRAs
("SEP-IRAs"), salary reduction SEP-IRAs and Keogh plans eligible to purchase
Class D shares. For purposes of this Prospectus, the term "industrial
corporation" is intended to mean any corporate entity employing 100 or more
persons but does not include professional corporations or corporations
established under Subchapter S of the Code. Investors eligible to purchase
Class D shares may not purchase any other Class of shares, except, as noted
above under "Class A Shares."
SUBSEQUENT PURCHASE OF SHARES
Investors may purchase additional shares of a Fund at any time by mail or by
telephone in the manner outlined above. All payments should clearly indicate
the investor's account number.
PURCHASES IN KIND
The Trust may, in its discretion, require that proposed investments of $10
million or more in a particular Class of a Participant Fund, or in the Money
Market Fund, be made in kind. This requirement is intended to minimize the
effect of transaction costs on existing shareholders of a Fund. Such
transaction costs, which may include broker's commissions and taxes or
governmental fees, domestic or foreign, as the case may be, may, in such
event, be borne by the proposed investor in shares of the Fund. Under these
circumstances, the Trust would inform the investor of the securities and
amounts that are acceptable to the Trust. The securities would then be
accepted by the Trust at their then market value in return for shares in the
Fund of an equal value.
RETIREMENT PLANS
Shares of each of the Funds, other than the Tax-Exempt Fund, are available
for purchase by IRAs, including IRAs established under the proprietary form
established by GEIM ("GE IRAs"), retirement plans for self-employed
individuals, 401(k) Plans, eligible deferred compensation plans meeting the
requirements of Section 457(b) of the Code, tax-exempt organizations
enumerated in Section 501(c)(3) of the Code and retirement plans qualified
under Section 403(b)(7) of the Code (collectively "Qualified Plans"). As set
out above under "Purchase of Shares - The Multiple Distribution System"
different types of Qualified Plans may be eligible to purchase different
Classes of a Participant Fund. Details about the procedure to be followed by
Qualified Plans in investing in the Funds are available through the
Distributor. Investors interested in establishing a GE IRA should contact
the Distributor at the applicable toll free number listed on the back cover
of the Prospectus to obtain the necessary documentation.
REDEMPTION OF SHARES
REDEMPTIONS IN GENERAL
Shares of the Money Market Fund, as well as shares of a Class of a
Participant Fund, may be redeemed on
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<PAGE>
any day on which the Fund's net asset value is calculated as described below
under "Net Asset Value." Redemption requests received in proper form prior to
the close of regular trading on the NYSE will be effected at the net asset
value per share determined on that day. Redemption requests received after the
close of regular trading on the NYSE will be effected at the net asset value as
next determined. The Trust normally transmits redemption proceeds within seven
days after receipt of a redemption request. If a shareholder holds shares in
more than one Class of a Participant Fund, any request for redemption must
specify the Class being redeemed. In the event of a failure to specify which
Class or if the investor owns fewer shares of the Class than specified, the
redemption request will be delayed until the Trust receives further
instructions. Redemption proceeds will be subject to no charge, except for
certain redemptions of Class A and Class B shares of a Participant Fund. A
shareholder who pays for shares of a Fund by personal check will receive the
proceeds of a redemption of those shares when the purchase check has been
collected, which may take up to 15 days or more. Shareholders who anticipate
the need for more immediate access to their investment should purchase shares
with Federal funds or bank wire or by a certified or cashier's check.
The Trust requires that a shareholder of the Money Market Fund maintain a
minimum investment in the Fund of $100, so care should be exercised to ensure
that redemptions do not reduce the shareholder's investment below this
minimum. Two exceptions exist to this minimum investment requirement: an
account established by a Qualified Plan and an account established by payroll
deductions which does not yet have a $100 account balance. In the case of a
payroll deduction account with a balance that has exceeded $100, however, the
shareholder is not permitted to redeem shares if the redemption would reduce
the account balance below $100 (except to close the account). If the
shareholder's account balance is less than $100 (except in the two cases
described above), the Trust may automatically redeem the shares of the Money
Market Fund in the account and remit the proceeds to the shareholder so long
as the shareholder is given 30 days' prior written notice of the action. In
addition, if the shareholder has checkwriting privileges, redemption of $100
or more may be made by writing a check either to the shareholder or to a
third party.
A holder of Existing Shares who would not otherwise be eligible to invest in
Class C shares by virtue of being an employee, retiree, officer or director
of GE or an affiliate of GE or a family member of any of those employees,
retirees, officers or directors, who fully redeems his account or whose
account balance is involuntarily redeemed by the Trust in the manner set out
below, will not remain eligible to thereafter invest in Class C shares; the
holder will instead be eligible to invest in either Class A or Class B shares
only.
A CDSC payable to the Distributor is imposed on certain redemptions of Class
A and Class B shares of a Participant Fund, however effected. No CDSC is
imposed on redemptions of shares that were purchased more than a fixed number
of years prior to the redemptions or on shares derived from reinvestment of
dividends or capital gains distributions. Furthermore, no CDSC will be
imposed on an amount that represents an increase in the value of the
shareholder's account resulting from capital appreciation. The amount of any
applicable CDSC will be calculated by multiplying the applicable percentage
charge by the lesser of (1) the net asset value of the Class A or Class B
shares at the time of purchase or (2) the net asset value of the Class A or
Class B shares at the time of redemption. In circumstances in which the CDSC
is imposed, the amount of the charge will depend on the number of years since
the shareholder made the purchase payment from which the amount is being
redeemed. Solely for purposes of determining the number of years since a
purchase payment, all purchase payments made during a month will be
aggregated and deemed to have been made on the first day of that month.
The CDSC on Class A shares is payable on the same terms and conditions as
would be applicable to Class B shares, except that the CDSC on Class A shares
is at a lower rate and for a shorter period than that imposed on Class B
shares (1% for redemptions only during the first year after purchase) and
except that Class A shares have no automatic conversion feature. The CDSC
applicable to Class A shares is calculated in the same manner as the CDSC
with respect to Class B shares and is waived in the same situations as with
respect to Class B shares.
The following table sets forth the CDSC rates applicable to redemptions of
Class B shares of the U.S. Equity Fund, the Global Fund, the International
Fund and the Strategic Fund:
<TABLE>
<CAPTION>
CDSC AS A %
YEAR SINCE PURCHASE OF AMOUNT
PAYMENT WAS MADE REDEEMED
______________________________________________________
<S> <C>
Within First Year 4.00%
Within Second Year 3.00%
Within Third Year 2.00%
Within Fourth Year 1.00%
Within Fifth Year 0.00%
Within Sixth Year 0.00%
</TABLE>
The following table sets forth the CDSC rates applicable to redemptions of
Class B shares of the Tax-Exempt Fund, the Income Fund and the Government
Fund:
<TABLE>
<CAPTION>
CDSC AS A %
YEAR SINCE PURCHASE OF AMOUNT
PAYMENT WAS MADE REDEEMED
______________________________________________________
<S> <C>
Within First Year 3.00%
Within Second Year 3.00%
Within Third Year 2.00%
Within Fourth Year 1.00%
Within Fifth Year 0.00%
Within Sixth Year 0.00%
</TABLE>
36
<PAGE>
Class B shares will automatically convert to Class A shares six years after
the date on which they were purchased and thereafter will no longer be
subject to the higher distribution fee applicable to such Class B shares, but
will be subject to the .25% distribution fee applicable with respect to Class
A shares.
In determining the applicability and rate of any CDSC to a redemption of
shares of a Fund, the Distributor will assume that a redemption is made first
of shares representing reinvestment of dividends and capital gain
distributions and then of other shares held by the shareholder for the
longest period of time. This assumption will result in the CDSC, if any,
being imposed at the lowest possible rate.
The Trust will waive the CDSC on redemptions of shares of the Funds upon the
death or disability of a shareholder if the redemption is made within one
year of death or disability of a shareholder. The CDSC would be waived when
the decedent or disabled person is either an individual shareholder or, in
the case of death, owns the shares with his or her spouse as a joint tenant
with right of survivorship, and when the redemption is made within one year
of the death or initial determination of disability. This waiver of the CDSC
would apply to a total or partial redemption but only to redemptions of
shares held at the time of the death or initial determination of disability.
The Trust will also waive the CDSC on redemptions of shares of the Funds
effected pursuant to a systematic withdrawal plan (see "Systematic Withdrawal
Plan" below), if the redemptions do not exceed 10% of the value of a
shareholder's account on an annual basis. Redemptions in excess of this
amount will be charged an applicable CDSC.
Shares of a Fund may be redeemed in the following ways:
REDEMPTIONS THROUGH AN AUTHORIZED FIRM
An investor whose shares are purchased with the assistance of a Sales
Representative may redeem all or part of his or her shares in accordance with
instructions pertaining to such accounts. If such investor is also the
shareholder of record of those accounts on the books of State Street, he or
she may redeem shares pursuant to the methods described below. Such an
investor using the redemption by mail or wire methods, must arrange with the
Authorized Firm for delivery of the required forms to State Street. It is
the responsibility of the Authorized Firm to transmit the redemption order
(and credit its customers' account with the redemption proceeds, if
applicable) on a timely basis.
REDEMPTION BY MAIL
Shares of a Fund may be redeemed by mail by making a written request for
redemption that (1) states the Class (if applicable) and the number of shares
or the specific dollar amount to be redeemed, (2) identifies the Fund or
Funds from which the number or dollar amount is to be redeemed, (3)
identifies the shareholder's account number and (4) is signed by each
registered owner of the shares exactly as the shares are registered and
sending the request to the Trust, at:
GE Funds
P.O. Box 8309
Boston, MA 02266-8325
For overnight package delivery:
GE Funds
c/o Boston Financial Data Services Inc.
Two Heritage Drive
Quincy, MA 02171
Signature guarantees arre required for all redemptions over $25,000. In
addition, signature guarantees are required for requests to have redemption
proceeds (1)mailed to an address other than the address of record, (2) paid
to other than the shareholder, (3) wired to a bank other than the bank of
record, or (4) mailed to an address that has been changed within 30 days of
the redemption request. All signature guarantees must be guaranteed by a
commercial bank, trust company, broker, dealer, credit union, national
securities exchange or registered association, clearing agency or savings
association. The Trust may require additional supporting documents for
redemptions made by corporations, executors, administrators, trustees,
guardians or persons utilizing a power of attorney. A request for redemption
will not be deemed to have been submitted until the Trust receives all
documents typically required to assure the safety of a particular account.
The Trust may waive the signature guarantee on a redemption of $25,000 or
less if it is able to verify the signatures of all registered owners from its
accounts.
REDEMPTION BY TELEPHONE
Shares of a Fund may be redeemed by telephone, unless the investor has
declined this option on the applicable section of the account application
form. Proceeds from a telephonic wire redemption request placed through a
customer service representative will be transferred by wire to the
shareholder's bank account (which has previously been identified in writing
to the Trust). Proceeds from a telephonic check redemption request placed
through the automated system will be sent by check to the shareholder's
address of record. The minimum telephonic wire redemption request is $1,000;
the minimum telephonic check redemption request is $500. If the account is
registered jointly in the name of more than one shareholder, only one
shareholder will be required to authorize redemption of shares by telephone,
and the Trust will be entitled to act upon telephonic instructions of any
shareholder of a joint account. Wire transfers will be made directly to the
account specified by the shareholder if that bank is a member of the Federal
Reserve System or to a correspondent bank if the bank holding the account is
not a member. Although the Trust imposes no fees on wire transfers, fees
normally wil
37
<PAGE>
be imposed by the bank and will be the responsibility of the
shareholder. Redemptions of shares of a Fund by a Qualified Plan may not be
effected by telephone.
Telephonic redemption requests should be made by calling the applicable toll
free number listed on the back cover page of the Prospectus. Confirmation of
telephonic redemptions will be sent within seven days of the date of
redemption but will normally be sent in less time. Wire transfer of funds
will be made within two business days following the telephonic request.
Dividends will be earned through and including the date of receipt of the
redemption request.
Telephone redemption requests may be difficult to implement in times of
drastic economic or market changes. In the event shareholders of the Funds
are unable to contact the Trust by telephone, shareholders should write to
the Trust at:
GE Funds
P.O. Box 8309
Boston, MA 02266-8325
For overnight package delivery:
GE Funds
c/o Boston Financial Data Services Inc.
Two Heritage Drive
Quincy, MA 02171
By making a telephonic redemption request, a shareholder authorizes the Trust
to act on the telephonic redemption instructions by any person representing
himself or herself to be the shareholder and believed by the Trust to be
genuine. The Trust will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine and the Trust's records of
such instructions will be binding. If the procedures, which include the use
of a personal identification number ("PIN") system and the provision of
written confirmation of transactions effected by telephone, were not employed
by the Trust, the Trust could be subject to liability for any loss resulting
from unauthorized or fraudulent instructions. As a result of compliance with
this policy, if the Trust follows the procedures outlined above and has a
good faith belief that the instructions it received were genuine, the
shareholder will bear the risk of loss in the event of a fraudulent
redemption transaction.
SYSTEMATIC WITHDRAWAL PLAN
The Trust's Systematic Withdrawal Plan permits investors in a Fund to request
withdrawal of a specified dollar amount (minimum of $50) on either a monthly
or quarterly basis if they have a $5,000 minimum account in a Class of a
Participant Fund or in the Money Market Fund. The maximum amount which may
be withdrawn under the Systematic Withdrawal Plan is 10% of the value of a
Shareholder's account on an annual basis. An application for the Systematic
Withdrawal Plan can be obtained from the Trust. The Systematic Withdrawal
Plan may be terminated at any time by the investor or the Trust.
INVOLUNTARY REDEMPTIONS
An account of a shareholder of a Fund with respect to a Class of shares (if
applicable) that is reduced by redemptions, and not by reason of market
fluctuations or by payroll deductions, to a value of $500 or less (or $100 in
the case of the Money Market Fund) may be redeemed by the Trust, but only
after the shareholder has been given notice of at least 30 days in which to
increase the balance in the account to more than $500. Proceeds of such a
redemption will be mailed to the shareholder.
DISTRIBUTIONS IN KIND
If the Trust's Board of Trustees determines that it would be detrimental to
the best interests of a Fund's shareholders to make a redemption payment
wholly in cash, the Trust may pay, in accordance with rules adopted by the
SEC, any portion of a redemption in excess of the lesser of $250,000 or 1% of
the Fund's net assets by a distribution in kind of portfolio securities in
lieu of cash. Redemptions failing to meet this threshold must be made in
cash. Portfolio securities issued in a distribution in kind will be deemed
by GEIM to be readily marketable. Shareholders receiving distributions in
kind of portfolio securities may incur brokerage commissions when
subsequently disposing of those securities.
CHECKWRITING PRIVILEGES
A shareholder of the Money Market Fund may request in an application form or
by letter sent to the Trust that he or she would like checkwriting
privileges, which are provided at no cost to the shareholder. The Trust will
provide redemption checks ("Checks") drawn on the shareholder's account.
Checks will be sent only to the shareholder of the account and only to the
address of record. The application or written request must be manually
signed by the shareholder. Checks may be made payable to the order of any
person in an amount of $100 or more. Dividends are earned until the Check
clears. When a Check is presented to State Street for payment, State Street,
as agent, will cause the Money Market Fund to redeem a sufficient number of
shares in the shareholder's account to cover the amount of the Check. After
clearance, the Check will be returned to the shareholder. Shareholders
generally will be subject to the same rules and regulations that State Street
applies to checking accounts. Unless otherwise specified in writing to the
Trust, only the signature of one shareholder of a joint account is required
on Checks.
Checks may not be written to redeem shares purchased by check until the
earlier of (1) the date that good funds are credited to State Street by its
correspondent bank or (2) 15 days from the date of receipt
38
<PAGE>
of the check utilized to purchase shares. If the amount of the Check is
greater than the value of the shares in a shareholder's account, the Check will
be returned marked "insufficient funds." Checks should not be used to close an
account. Checks written on amounts subject to the hold described above will be
returned marked "uncollected." If the Check does not clear, the shareholder
will be responsible for any loss that the Money Market Fund or State Street
incurs.
The Trust may modify or terminate the checkwriting privilege at any time on
30 days' notice to participating shareholders. The checkwriting privilege is
subject to State Street's rules and regulations and is governed by the
Massachusetts Uniform Commercial Code. All notices with respect to Checks
drawn on State Street must be given to State Street. Stop payment
instructions may be given by calling the applicable toll free number listed
on the back cover of the Prospectus.
EXCHANGE PRIVILEGE
Under an exchange privilege offered by the Trust, shares of each Class of a
Participant Fund may be exchanged for shares of the same Class of any other
Participant Fund at their respective net asset values. A holder of Existing
Shares of the Money Market Fund (other than an Institutional Investor or a
Class D eligible retirement plan) can exchange those Money Market Fund shares
for Class C shares of a Participant Fund. An Institutional Investor (other
than a Class D eligible retirement plan) can exchange shares of the Money
Market Fund for Class D shares of a Participant Fund. A Class D eligible
retirement plan can exchange shares of the Money Market Fund for Class A or
Class D shares of a Participant Fund, as selected by the plan sponsor,
depending upon whether the plan sponsor desires the additional services
provided to Class A shareholders. All other Money Market Fund shareholders
will be given the choice of receiving either Class A or Class B shares of a
Participant Fund upon the completion of an exchange. The privilege is
available to shareholders residing in any state in which shares of the Fund
being acquired may legally be sold. An exchange of shares is treated for
Federal income tax purposes as a redemption (that is, a sale) of shares given
in exchange by the shareholder, and an exchanging shareholder may, therefore,
realize a taxable gain or loss in connection with the exchange. An exchange
of shares may be made by calling or by writing the Trust. The Trust may,
upon 60 days prior written notice to the shareholders of a Fund, materially
modify or terminate the exchange privilege with respect to the Fund or impose
a charge of up to $5 for exchanges of shares of the Fund.
Shareholders who exchange their Class A or Class B shares for Money Market
Fund shares will be subject to the CDSC applicable to Class A or Class B
shares at the time the shareholder redeems such Money Market Fund shares.
Upon an exchange of Class A or Class B shares for Class A or Class B shares
(as applicable) of another Participant Fund, the new Class A or Class B
shares will be deemed to have been purchased on the same date as the Class A
or Class B shares of the Participant Fund which have been exchanged for CDSC
calculation purposes. However, a shareholder who exchanges his Class B
shares for shares of the Money Market Fund and then exchanges those Money
Market Fund shares for Class B shares will be subject to having the period of
time in which his shares were invested in the Money Market Fund tolled when
computing the applicable CDSC. Likewise, shareholders who exchange their
Class B shares of a Participant Fund with Class B shares of another
Participant Fund will be subject to the CDSC of the original Fund at the time
of redemption from the second Fund.
Class Ashares of the Participant Funds are available without a sales charge
through exchanges between Class A shares and shares of funds which were sold
by Authorized Firms and were subject to a sales charge. GEIM or its
affiliates may compensate selling dealers for their efforts in effecting
these exchanges at no additional cost to investors.
Shareholders of Investors Trust, a family of mutual funds distributed by GNA
Distributors, Inc., an affiliate of GEIM, who exchange into the Money Market
Fund will not be able to exchange from GE Money Market Fund into any other
Fund and will be charged the CDSC applicable to the Class B shares of the
applicable Investors Trust fund upon redemption from the Money Market Fund,
unless the shares are exchanged into shares of another Investors Trust fund.
Shares of the Funds purchased through a nondiscretionary investment advisory
program made available by a registered investment adviser or bank may only be
exchanged for shares of another Fund which has been specified under the
program.
Shareholders exercising the exchange privilege should review the prospectus
disclosure for the Fund they are considering investing in carefully prior to
making an exchange.
NET ASSET VALUE
Each Class' net asset value per share, as well as the Money Market Fund's net
asset value per share, is calculated on each day, Monday through Friday,
except on days on which the NYSE is closed. The NYSE is currently scheduled
to be closed on New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas, and on the preceding
Friday or subsequent Monday when one of these holidays falls on a Saturday or
Sunday, respectively.
Each Class' net asset value per share and the Money Market Fund's net asset
value per share are determined as of the close of regular trading on the NYSE
(currently 4:00 p.m., New York time). Net asset value
39
<PAGE>
per share of a Class is computed by dividing the value of the Participant
Fund's net assets attributable to that Class by the total number of shares
outstanding of that Class and the net asset value per share of the Money Market
Fund is computed by dividing the value of the Money Market Fund's net assets by
the total number of its shares outstanding. In general, a Fund's investments
will be valued at market value or, in the absence of market value, at fair
value as determined by or under the direction of the Trust's Board of Trustees.
The Trust will seek to maintain the Money Market Fund's net asset value at
$1.00 per share for purposes of purchases and redemptions, although no
assurance can be given that the Trust will be able to do so on a continuous
basis.
Securities that are primarily traded on a foreign exchange generally will
be valued for purposes of calculating a Fund's net asset value at the preceding
closing value of the securities on the exchange, except that, when an
occurrence subsequent to the time a value was so established is likely to
have changed that value, the fair market value of those securities will be
determined by consideration of other factors by or under the direction of the
Board of Trustees. A security that is primarily traded on a domestic or
foreign securities exchange will be valued at the last sale price on that
exchange or, if no sales occurred during the day, at the current quoted bid
price. An option that is written or purchased by a Fund generally will be
valued at the mean between the last asked and bid prices. The value of a
futures contract will be equal to the unrealized gain or loss on the contract
that is determined by marking the contract to the current settlement price
for a like contract on the valuation date of the futures contract. A
settlement price may not be used if the market makes a limit move with
respect to a particular futures contract or if the securities underlying the
futures contract experience significant price fluctuations after the determina
tion of the settlement price. When a settlement price cannot be used,
futures contracts will be valued at their fair market value as determined by
or under the direction of the Board of Trustees.
All assets and liabilities of a Fund initially expressed in foreign currency
values will be converted into U.S. dollar values at the mean between the bid
and offered quotations of the currencies against U.S. dollars as last quoted
by any recognized dealer. If the bid and offered quotations are not
available, the rate of exchange will be determined in good faith by the Board
of Trustees. In carrying out the Board's valuation policies, GEIM may
consult with an independent pricing service or services, retained by the
Trust. Further information regarding the Trust's valuation policies is
contained in the Statement of Additional Information.
All portfolio securities held by the Money Market Fund, and any short-term
investments of the other Funds that mature in 60 days or less, will be valued
on the basis of amortized cost (which involves valuing an investment at its
cost and, thereafter, assuming a constant amortization to maturity of any
discount or premium, regardless of the effect of fluctuating interest rates
on the market value of the investment) when the Trust's Board of Trustees
determines that amortized cost is fair value.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
Net investment income (that is, income other than long- and short-term
capital gains) and net realized long- and short-term capital gains are
determined separately for each Fund. Dividends of a Participant Fund or the
Money Market Fund which are derived from net investment income and
distributions of net realized long- and short-term capital gains paid by a
Fund to a shareholder will be automatically reinvested in additional shares
of the same Class of the Participant Fund or the Money Market Fund,
respectively, and deposited in the shareholder's account, unless the sharehold
er instructs the Trust, in writing, to pay all dividends and distributions in
cash. Shareholders may contact the Trust for details concerning this
election. However, if it is determined that the U.S. Postal Service cannot
properly deliver Fund mailings to a shareholder, the Fund may terminate the
shareholder's election to receive dividends and other distributions in cash.
Thereafter, the shareholder's subsequent dividends and other distributions
will be automatically reinvested in additional shares of the Fund until the
shareholder notifies the Fund in writing of his or her correct address and
requests in writing that the election to receive dividends and other
distributions in cash be reinstated. Dividends attributable to the
Tax-Exempt Fund, the Income Fund, the Government Fund and the Money Market
Fund are declared daily and paid monthly. Dividends attributable to the net
investment income of the U.S. Equity Fund, the Global Fund, the International
Fund and the Strategic Fund are declared and paid annually. If a shareholder
redeems all of his shares of the Tax-Exempt Fund, the Income Fund, the
Government Fund or the Money Market Fund at any time during a month, all
dividends to which the shareholder is entitled will be paid to the shareholder
along with the proceeds of his redemption. Written confirmations relating
to the automatic reinvestment of daily dividends will be sent to shareholders
within five days following the end of each quarter for the Tax-Exempt Fund,
the Income Fund and the Government Fund, and within five days following the
end of each month for the Money Market Fund. Distributions of any net
realized long-term and short-term capital gains earned by a Fund will be made
annually. These dividends and distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. All expenses of the Tax-Exempt Fund, the Income Fund,
the Government Fund and the Money Market Fund are accrued daily
40
<PAGE>
and deducted before declaration of dividends to shareholders. Earnings of the
Tax-Exempt Fund, the Income Fund, the Government Fund and the Money Market Fund
for Saturdays, Sundays and holidays will be declared as dividends on the
business day immediately preceding the Saturday, Sunday or holiday. As a
result of the different service, distribution and transfer agency fees
applicable to the Classes, the per share dividends and distributions on Class D
shares will be higher than those on Class C shares, which in turn will be
higher than those on Class A shares, which in turn will be higher than those on
Class B shares. See "Fee Table" and "Purchase of Shares - The Multiple
Distribution System."
Each Fund is subject to a 4% non-deductible excise tax measured with respect
to certain undistributed amounts of net investment income and capital gains.
If necessary to avoid the imposition of this tax, and if in the best
interests of the Fund's shareholders, the Trust will declare and pay
dividends of the Fund's net investment income and distributions of the Fund's
net capital gains more frequently than stated above.
TAXES
Each Fund is treated as a separate entity for Federal income tax purposes.
As a result, the amounts of net investment income and net realized capital
gains subject to tax are determined separately for each Fund (rather than on
a Trust-wide basis).
The Trust intends that each Fund qualify each year as a regulated investment
company under the Code. Dividends paid from a Fund's net investment income
and distributions of a Fund's net realized short-term capital gains will be
taxable to shareholders (other than Qualified Plans and other tax-exempt
investors) as ordinary income, regardless of how long shareholders have held
their shares of the Fund and whether the dividends or distributions are
received in cash or reinvested in additional shares of the Fund.
Distributions of a Fund's net realized long-term capital gains will be
taxable to shareholders as long-term capital gains, regardless of how long
shareholders have held their shares of the Fund and whether the distributions
are received in cash or are reinvested in additional shares of the Fund. In
addition, as a general rule, a shareholder's gain or loss on a sale or
redemption of shares of a Fund will be a long-term capital gain or loss if
the shareholder has held the shares for more than one year and will be a
short-term capital gain or loss if the shareholder has held the shares for
one year or less.
Dividends and distributions paid by the Tax-Exempt Fund, the Income Fund, the
Government Fund and the Money Market Fund, and distributions of capital gains
paid by all the Funds, will not qualify for the Federal dividends-received
deduction for corporations. Dividends paid by the U.S. Equity Fund, the
Global Fund and the Strategic Fund, to the extent derived from dividends
attributable to certain types of stock issued by U.S. corporations, will
qualify for the dividends-received deduction for corporations. Some states,
if certain asset and diversification requirements are satisfied, permit
shareholders to treat their portions of a Fund's dividends that are
attributable to interest on U.S. Treasury securities and certain Government
Securities as income that is exempt from state and local income taxes.
Dividends attributable to repurchase agreement earnings are, as a general
rule, subject to state and local taxation.
Dividends paid by the Tax-Exempt Fund that are derived from interest earned
on qualifying tax-exempt obligations are expected to be "exempt-interest"
dividends that shareholders may exclude from their gross income for Federal
income tax purposes if the Fund satisfies certain asset percentage
requirements. To the extent that the Tax-Exempt Fund invests in bonds, the
interest on which is a specific tax preference item for Federal income tax
purposes ("AMT-Subject Bonds"), any exempt-interest dividends derived from
interest on AMT-Subject Bonds will be a specific tax preference item for
purposes of the Federal individual and corporate alternative minimum taxes.
All exempt-interest dividends will be a component of the "current earnings"
adjustment item for purposes of the Federal corporate alternative minimum
income tax, and corporate shareholders may incur a larger Federal
environmental tax liability through the receipt of dividends and
distributions from the Tax-Exempt Fund.
Net investment income or capital gains earned by the Funds investing in
foreign securities may be subject to foreign income taxes withheld at the
source. The United States has entered into tax treaties with many foreign
countries that entitle the Funds to a reduced rate of tax or exemption from
tax on this related income and gains. The effective rate of foreign tax
cannot be determined at this time since the amount of these Funds' assets to
be invested within various countries is not now known. The Trust intends
that the Funds seek to operate so as to qualify for treaty-reduced rates of
tax when applicable. In addition, if a Fund qualifies as a regulated
investment company under the Code, if certain distribution requirements are
satisfied, and if more than 50% of the value of the Fund's assets at the
close of the taxable year consists of stocks or securities of foreign
corporations, the Trust may elect, for U.S. Federal income tax purposes, to
treat foreign income taxes paid by the Fund that can be treated as income
taxes under U.S. income tax principles as paid by its shareholders. The
Trust anticipates that the Global Fund and the International Fund will seek
to qualify for and make this election in most, but not necessarily all, of
its taxable years. If the Trust were to make an election with respect to a
Fund, an amount equal to the foreign income taxes paid by the Fund would be
included in the income of its shareholders and the shareholders would be
entitled to credit their portions of this amount against their U.S. tax
liabilities, if any, or to deduct those portions from their U.S. taxable
income, if any. Shortly after
41
<PAGE>
any year for which it makes an election, the Trust will report to the
shareholders of the Fund, in writing, the amount per share of foreign tax that
must be included in each shareholder's gross income and the amount that will be
available as a deduction or credit. No deduction for foreign taxes may be
claimed by a shareholder who does not itemize deductions. Certain limitations
will be imposed on the extent to which the credit (but not the deduction) for
foreign taxes may be claimed.
Statements as to the tax status of each shareholder's dividends and
distributions are mailed annually. Shareholders will also receive, as
appropriate, various written notices after the close of their Fund's taxable
year regarding the tax status of certain dividends and distributions that
were paid (or that are treated as having been paid) by the Fund to its
shareholders during the preceding taxable year, including the amount of
dividends that represents interest derived from Government Securities. Shareh
olders should consult with their own tax advisors with specific reference to
their own tax situations.
CUSTODIAN AND TRANSFER AGENT
State Street, located at 225 Franklin Street, Boston, Massachusetts 02101,
serves as the Trust's custodian and transfer agent, and is responsible for
receiving acceptance orders for the purchase of shares and processing
redemption requests.
DISTRIBUTOR
GE Investment Services Inc., located at 3003 Summer Street, P.O. Box 7900,
Stamford, Connecticut, 06904-7900, serves as distributor of the Funds'
shares. The Distributor, a wholly-owned subsidiary of GEIM, also serves as
Distributor for the Elfun Funds. GEIM or its affiliates, at their own
expense, may allocate portions of their revenues or other resources to assist
the Distributor in distributing shares of the Funds, by providing additional
promotional incentives to dealers. In some instances, these incentives may be
limited to certain dealers who have sold or may sell significant numbers of
shares of the Funds. The Distributor routinely offers dealers in Fund shares
the opportunity to participate in contests for which prizes include tickets to
theater and sporting events, dining, travel to meetings and conferences held in
locations remote from their offices and other items.
THE FUNDS' PERFORMANCE
Certain information about the Funds' performance is set out below. Further
information about the performance of the Funds is contained in the Trust's
Annual Report to shareholders which may be obtained upon request without
charge.
YIELD
The Trust may, from time to time, include the yield and effective yield of
the Money Market Fund in advertisements or reports to shareholders or
prospective investors. Current yield for the Money Market Fund will be based
upon income received by a hypothetical investment in a given seven-day period
(which period will be stated in the advertisement), and then "annualized"
(that is, assuming that the seven-day yield would be received for 52 weeks,
stated in terms of an annual percentage return on the investment).
"Effective yield" for the Money Market Fund will be calculated in a manner
similar to that used to calculate yield, but will reflect the compounding
effect of earnings on reinvested dividends. The seven-day current yield and
effective seven-day yield as of September 30, 1995 were 5.30% and 5.50%
respectively. Had GEIM not absorbed a portion of the Money Market Fund's
expenses, the Fund's seven-day yield and effective seven-day yield as of
September 30, 1995 would have been 4.90% and 5.00% respectively.
The Trust may, from time to time, advertise a 30-day "yield" for each Class
of a Participant Fund and an "equivalent taxable yield" for each Class of the
Tax-Exempt Fund. The yield of a Fund refers to the income generated by an
investment in a Class over the 30-day period identified in the advertisement
and is computed by dividing the net investment income per share earned by a
Class during the period by the net asset value per share for that Class on
the last day of the period. This income is "annualized" by assuming that the
amount of income is generated each month over a one-year period and is
compounded semi-annually. The annualized income is then shown as a
percentage of the Fund's net asset value. The 30-day yield for the period
ended September 30, 1995 for Class A, Class B, Class C and Class D shares,
respectively, of the Tax-Exempt Fund, the Government Fund and the Income Fund
was 4.36%, 4.05%, 4.80%, 5.05%; 5.25%, 5.06%, 5.63%, 5.88%; and 5.89%, 5.49%,
6.25%, 6.54%, respectively. Had GEIM not absorbed a portion of the
Tax-Exempt Fund's, the Government Fund's and the Income Fund's expenses, the
Tax-Exempt Fund's, the Government Fund's and the Income Fund's 30-day yield
for the period ended September 30, 1995 for Class A, Class B, Class C and
Class D shares, respectively, would have been 4.20%, 3.89%, 4.77%, 4.98%;
5.08%, 4.89%, 5.52%, 5.83%; and 5.88%, 5.33%, 6.24%, 6.38%.
EQUIVALENT TAXABLE YIELD
The equivalent taxable yield of the Tax-Exempt Fund demonstrates the yield on
a taxable investment necessary to produce an after-tax yield equal to the
Fund's tax-exempt yield. Equivalent taxable yield is calculated by
increasing the yield shown for the particular Class of the Tax-Exempt Fund,
calculated as described above, to the extent necessary to reflect the payment
of specified tax rates. Thus, the equivalent taxable yield of a Class of the
Tax-Exempt Fund will always exceed the Class' yield. Assuming an effective
tax rate of 39.6%, for the
42
<PAGE>
30-day period ended September 30, 1995, the
equivalent taxable yield of the Tax-Exempt Fund for Class A, Class B, Class C
and Class D shares, respectively, was 6.92%, 6.43%, 7.62% and 8.01%. Had
GEIM not absorbed a portion of the Tax-Exempt Fund's expenses, assuming an
effective tax rate of 39.6%, the equivalent taxable yield of the Tax-Exempt
Fund for the 30-day period ended September 30, 1995 for Class A, Class B,
Class C and Class D shares, respectively, would have been 6.88%, 6.39%, 7.58%
and 7.97%.
The table below shows individual taxpayers how to translate the tax savings
from investments such as the Tax-Exempt Fund into an equivalent return from a
taxable investment. The yields used below are for illustration only and are
not intended to represent current or future yields for the Tax-Exempt Fund,
which may be higher or lower than those shown.
FEDERAL TAXABLE EQUIVALENT YIELD TABLE -- 1995 RATES
<TABLE>
<CAPTION>
Federal Federal Marginal 4.00%
Taxpayer Taxable Tax Federal
Year Status Income Bracket Rate
____________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
1995 MARRIED $0-39,000 15.00% 15.00% 4.71%
$39,001-94,250 28.00% 28.00% 5.56%
$94,251-114,700 31.00% 31.00% 5.80%
$114,701-143,600 31.00% 31.93% 5.88%
$143,601-256,500 36.00% 37.08% 6.36%
OVER $256,500 39.60% 40.79% 6.76%
1995 SINGLE $0-23,350 15.00% 15.00% 4.71%
$23,351-56,550 28.00% 28.00% 5.56%
$56,551-114,700 31.00% 31.00% 5.80%
$114,701-117,950 31.00% 31.93% 5.88%
$117,951-256,500 36.00% 37.08% 6.36%
OVER $256,500 39.60% 40.79% 6.76%
<CAPTION>
Tax-Free Yield
4.50% 5.00% 5.50% 6.00%
Taxpayer
Year Status Taxable Equivalent Yield
<S> <C> <C> <C> <C> <C>
_____________________________________________________________________________
1995 MARRIED 5.29% 5.88% 6.47% 7.06%
6.25% 6.94% 7.64% 8.33%
6.52% 7.25% 7.97% 8.70%
6.61% 7.35% 8.08% 8.81%
7.15% 7.95% 8.74% 9.54%
7.60% 8.44% 9.29% 10.13%
SINGLE 5.29% 5.88% 6.47% 7.06%
6.25% 6.94% 7.64% 8.33%
6.52% 7.25% 7.97% 8.70%
6.61% 7.35% 8.08% 8.81%
7.15% 7.95% 8.74% 9.54%
7.60% 8.44% 9.29% 10.13%
<CAPTION>
Tax-Free Yield
6.50% 7.00% 7.50% 8.00%
Taxpayer
Year Status Taxable Equivalent Yield
<S> <C> <C> <C> <C> <C>
_____________________________________________________________________________
1995 MARRIED 7.65% 8.24% 8.82% 9.41%
9.03% 9.72% 10.42% 11.11%
9.42% 10.14% 10.87% 11.59%
9.55% 10.28% 11.02% 11.75%
10.33% 11.13% 11.92% 12.71%
10.98% 11.82% 12.67% 13.51%
SINGLE 7.65% 8.24% 8.82% 9.41%
9.03% 9.72% 10.42% 11.11%
9.42% 10.14% 10.87% 11.59%
9.55% 10.28% 11.02% 11.75%
10.33% 11.13% 11.92% 12.71%
10.98% 11.82% 12.67% 13.51%
</TABLE>
NOTE: THIS TABLE REFLECTS THE FOLLOWING:
1. THE ABOVE IS A FEDERAL TAXABLE EQUIVALENT YIELD TABLE ONLY. THE
EFFECT OF STATE INCOME TAX RATES HAS NOT BEEN FACTORED INTO THE
TAXABLE
EQUIVALENT YIELD CALCULATION.
2. TAXABLE INCOME EQUALS ADJUSTED GROSS INCOME LESS PERSONAL
EXEMPTIONS OF
$2,500 LESS THE STANDARD DEDUCTION OF $6,550 ON A JOINT RETURN OR
TOTAL
ITEMIZED DEDUCTIONS, WHICHEVER IS GREATER. HOWEVER, UNDER THE
PROVISIONS OF
THE OMNIBUS BUDGET RECONCILIATION ACT OF 1990, ITEMIZED DEDUCTIONS
ARE REDUCED
BY 3% OF THE AMOUNT OF A TAXPAYER'S AGI OVER $114,700. THIS IS
REFLECTED IN
THE BRACKETS ABOVE BY HIGHER EFFECTIVE FEDERAL TAX RATES.
FURTHERMORE,
PERSONAL EXEMPTIONS ARE PHASED OUT FOR THE AMOUNT OF A TAXPAYER'S
AGI OVER
$114,700 FOR SINGLE TAXPAYERS AND $173,050 FOR MARRIED TAXPAYERS
FILING
JOINTLY. THIS LATTER PROVISION IS NOT INCORPORATED INTO THE ABOVE
BRACKETS.
3. THIS TABLE REFLECTS THE TAX RATE INCREASE EFFECTIVE FOR TAX YEARS
BEGINNING AFTER DECEMBER 31, 1992 ENACTED AS PART OF THE OMNIBUS
BUDGET
RECONCILIATION ACT OF 1993. THE TAX INCREASES INCLUDED A RATE OF 36%
ON
TAXABLE INCOME OF SINGLE TAXPAYERS OVER $115,000 AND MARRIED
TAXPAYERS OVER
$143,600, AS WELL AS A 10% SURTAX IMPOSED ON ALL TAXPAYERS' TAXABLE
INCOME
OVER $250,000 (EXCEPT MARRIED FILING SEPARATELY). THIS IS REPRESENTED
BY AN
ADDITIONAL TAX BRACKET AT A RATE OF 39.6%.
4. NEW HIGHER FEDERAL ALTERNATIVE MINIMUM TAX RATES OF 26% AND 28%
ON BRACKETS
OF ALTERNATIVE MINIMUM TAXABLE INCOME ARE IMPOSED ON INDIVIDUALS.
THIS
PROVISION IS NOT INCORPORATED INTO THE TABLE.
43
<PAGE>
TOTAL RETURN
From time to time, the Trust may advertise an "average annual total return"
over various periods of time for each Class of a Participant Fund. This
total return figure shows an average percentage change in value of an
investment in the Class from the beginning date of the measuring period to
the ending date of the period. The figure reflects changes in the price of a
Fund's shares and assumes that any income, dividends and/or capital gains
distributions made by the Fund during the period are reinvested in shares of
the same Class. Figures will be given for recent one-, five- and 10-year
periods (if applicable), and may be given for other periods as well (such as
from commencement of a Fund's operations, or on a year-by-year basis). When
considering average annual total return figures for periods longer than one
year, investors should note that a Fund's annual total return for any one
year in the period might have been greater or less than the average for the
entire period.
The Trust may use "aggregate total return" figures for various periods,
representing the cumulative change in value of an investment in a Class of a
Participant Fund, for the specific period (again reflecting changes in the
Fund's share price and assuming reinvestment of dividends and distributions).
Aggregate total return will, in each case, be calculated with the effect of
the sales charge to which Class A shares of a Participant Fund are subject
and with the effect of any applicable CDSC for Class B shares, and may be
shown by means of schedules, charts or graphs, and may indicate subtotals of
the various components of total return (that is, the change in value of
initial investment, income dividends and capital gains distributions).
Aggregate total return may, in addition to the above method (but never
independent of the above method), be calculated without the effect of the
sales charge to which Class A shares of a Participant Fund are subject and
without the effect of any applicable CDSC for Class B shares. Because of the
differences in sales charges and distribution fees, the total returns for
each of the Classes will differ. Reflecting compounding over a longer period
of time, aggregate total return data generally will be higher than average
annual total return data, which reflects compounding of return. Certain of
the Participant Funds' total returns for the period ended September 30, 1995
were as follows:
TOTAL RATES OF RETURN(A)
<TABLE>
<CAPTION>
Period from Inception to September 30, 1995
______________________________________________________
Class A (b) Class B (c)
_________________ _________________
Reflects Exclusive Reflects Exclusive
Sales of Sales Sales of Sales
Fund Charge Charge Charge Charge
_____ _______ ________ ________ ________
<S> <C> <C> <C> <C>
U.S. Equity Fund 10.70% 13.82% 12.26% 13.84%
Global Fund 2.94% 5.86% 5.36% 6.98%
International Fund 0.68% 3.83% 1.41% 3.28%
Strategic Fund 7.19% 10.20% 8.21% 9.82%
Tax-Exempt Fund -.76% 1.75% -.05% 1.56%
Income Fund 2.50% 5.10% 2.97% 4.59%
Government Fund 3.25% 4.93% 2.66% 4.51%
<CAPTION>
Period from Inception to September 30, 1995
______________________________________________________
Fund Class C (d) Class D (e)
_____ ___________ ____________
<S> <C> <C>
U.S. Equity Fund 14.18% 14.53%
Global Fund 13.86% 10.99%
International Fund 4.06% 4.37%
Strategic Fund 10.52% 10.92%
Tax-Exempt Fund 3.84% 3.49%
Income Fund 5.59% 5.55%
Government Fund 5.18% 5.40%
<CAPTION>
Year ended September 30, 1995
___________________________________________________
Class A Class B
_________________ _________________
Reflects Exclusive Reflects Exclusive
Sales of Sales Sales of Sales
Fund Charge Charge Charge Charge
_____ _______ ________ ________ ________
<S> <C> <C> <C> <C>
U.S. Equity Fund 20.54% 26.52% 21.92% 25.92%
Global Fund 2.09% 7.16% 2.62% 6.62%
International Fund -.13% 4.87% -.33% 4.33%
Strategic Fund 14.44% 20.12% 15.53% 19.53%
Tax-Exempt Fund 4.35% 8.96% 5.51% 8.51%
Income Fund 7.70% 12.48% 8.98% 11.89%
Government Fund 4.79% 7.48% 4.01% 7.01%
<CAPTION>
Year ended September 30, 1995
Fund Class C Class D
_____ _______ _______
<S> <C> <C>
U.S. Equity Fund 26.86% 27.14%
Global Fund 7.47% 7.76%
International Fund 5.16% 5.45%
Strategic Fund 20.35% 20.70%
Tax-Exempt Fund 9.23% 9.59%
Income Fund 12.81% 13.10%
Government Fund 7.74% 7.92%
</TABLE>
(a) GEIM has agreed to waive or limit certain expenses as described on page 5
(footnote 3). GEIM may decide to terminate this agreement in the future. In the
absence of these waivers or expense limits, the returns would have been reduced
for all classes of each Fund by the following amounts for all the periods
depicted ended September 30, 1995: 0% to 2.5% for the U.S. Equity Fund, 0% to
1.5% for the Global Fund, 0% to 1.5% for the International Fund, 0% to 2.2% for
the Strategic Fund, 0% to 2.1% for the Tax-Exempt Fund, 0% to 2.2% for the
Income Fund and 0% to 2.3% for the Government Fund.
(b)For the period from January 1, 1994 (commencement of operations) to
September 30, 1995 with respect to the U.S. Equity Fund, the Global Fund, the
Strategic Fund, the Tax-Exempt Fund and the Income Fund and for the period from
March 2, 1994 (commencement of operations) to September 30, 1995 with respect
to the International Fund and the Government Fund.
(c)For the period from December 22, 1993 (commencement of operations) to
September 30, 1995 with respect to the U.S. Equity Fund, the Global Fund, the
Strategic Fund, the Tax-Exempt Fund and the Income Fund and for the period from
March 2, 1994 (commencement of operations) to September 30, 1995 with respect
to the International Fund and the Government Fund.
(d)For the period from February 22, 1993 (commencement of operations) to
September 30, 1995 with respect to the U.S. Equity Fund, the Global Fund, the
Strategic Fund and the Income Fund, for the period from February 26, 1993
(commencement of operations) to September 30, 1995 with respect to the Tax-
Exempt Fund and for the period from March 2, 1994 (commencement of operations)
to September 30, 1995 with respect to the International Fund and the Government
Fund.
(e)For the period from November 29, 1993 (commencement of operations) to
September 30, 1995 with respect to the U.S. Equity Fund, the Global Fund, the
Strategic Fund, the Tax-Exempt Fund and the Income Fund and for the period from
March 2, 1994 (commencement of operations) to September 30, 1995 with respect
to the International Fund and the Government Fund.
44
<PAGE>
The Trust may, in addition to quoting a Class' average annual and aggregate
total returns, advertise the actual annual and annualized total return
performance data for various periods of time. Actual annual and annualized
total returns may be calculated either with or without the effect of the
sales charge to which Class A shares are subject and with or without the
effect of any applicable CDSC for Class B shares, and may be shown by means
of schedules, charts or graphs. Actual annual or annualized total return
data generally will be lower than average annual total return data, which
reflects compounding of return.
Yield and total return figures are based on historical earnings and are thus
not intended to indicate future performances. The Statement of Additional
Information describes the method used to determine a Fund's yield and total
return.
COMPARATIVE PERFORMANCE INFORMATION
In reports or other communications to shareholders of a Fund or in
advertising materials, the Trust may compare the Fund's performance with (1)
the performance of other mutual funds as listed in the rankings prepared by
Lipper Analytical Services, Inc. or similar independent services that monitor
the performance of mutual funds, (2) various unmanaged indexes, including the
Russell Index, S&P Index, and the Dow Jones Industrial Average or (3) other
appropriate indexes of investment securities or with data developed by GEIM
derived from those indexes. The performance information may also include
evaluations of a Fund published by nationally recognized ranking services and
by financial publications that are nationally recognized, such as BARRON'S,
BUSINESS WEEK, FORBES, FORTUNE, INSTITUTIONAL INVESTOR, KIPLINGER'S
PERSONAL
FINANCE, MONEY, MORNINGSTAR MUTUAL FUND VALUES, THE NEW YORK
TIMES, THE WALL
STREET JOURNAL and USA TODAY. These ranking services or publications may
compare a Fund's performance to, or rank it within, a universe of mutual
funds with investment objectives and policies similar, but not necessarily
identical to, the Fund's. Such comparisons or rankings are made on the basis
of several factors, including objectives and policies, management style and
strategy, and portfolio composition, and may change over time if any of those
factors change.
45
<PAGE>
FURTHER INFORMATION: CERTAIN INVESTMENT TECHNIQUES AND STRATEGIES
The Funds may engage in a number of investment techniques and strategies,
including those described below. No Fund is under any obligation to use any
of the techniques or strategies at any given time or under any particular
economic condition. In addition, no assurance can be given that the use of
any practice will have its intended result or that the use of any practice
is, or will be, available to any Fund.
STRATEGIES AVAILABLE TO ALL FUNDS
WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES. To secure prices or yields
deemed advantageous at a particular time, a Fund may purchase securities on a
when-issued or delayed-delivery basis, in which case, delivery of the
securities occurs beyond the normal settlement period; no payment for or
delivery of the securities is made by, and no income accrues to, the Fund,
however, prior to the actual delivery or payment by the other party to the
transaction. Each Fund will enter into when-issued or delayed-delivery
transactions for the purpose of acquiring securities and not for the purpose
of leverage. When-issued securities purchased by a Fund may include
securities purchased on a "when, as and if issued" basis under which the
issuance of the securities depends on the occurrence of a subsequent event,
such as approval of a merger, corporate reorganization or debt restructuring.
Cash, Government Securities or other liquid, high-grade debt obligations in
an amount equal to the amount of each Fund's when-issued or delayed-delivery
purchase commitments will be segregated with the Trust's custodian, or with a
designated subcustodian, in order to avoid or limit any leveraging effect
that may arise in the purchase of a security pursuant to such a commitment.
Securities purchased on a when-issued or delayed-delivery basis may expose a
Fund to risk because the securities may experience fluctuations in value
prior to their delivery. Purchasing securities on a when-issued or
delayed-delivery basis can involve the additional risk that the return
available in the market when the delivery takes place may be higher than that
applicable at the time of the purchase. This characteristic of when-issued
and delayed-delivery securities could result in exaggerated movements in a
Fund's net asset value.
LENDING PORTFOLIO SECURITIES. Each Fund is authorized to lend its portfolio
securities to well-known and recognized U.S. and foreign brokers, dealers and
banks. These loans, if and when made, may not exceed 30% of a Fund's assets
taken at value. The Fund's loans of securities will be collateralized by
cash, letters of credit or Government Securities. Cash or instruments
collateralizing a Fund's loans of securities are segregated and maintained at
all times with the Trust's custodian, or with a designated sub-custodian, in
an amount at least equal to the current market value of the loaned
securities. In lending securities, a Fund will be subject to risks, which,
like those associated with other extensions of credit, include possible loss
of rights in the collateral should the borrower fail financially. Income
derived by the Tax-Exempt Fund on any loan of its portfolio securities will
not be exempt from Federal income taxation.
RULE 144A SECURITIES. Each of the Funds may purchase Rule 144A Securities.
Certain Rule 144A Securities may be considered illiquid and therefore subject
to a Fund's limitation on the purchase of illiquid securities, unless the
Trust's Board of Trustees determines on an ongoing basis that an adequate
trading market exists for the Rule 144A Securities. A Fund's purchase of
Rule 144A Securities could have the effect of increasing the level of
illiquidity in the Fund to the extent that qualified institutional buyers
become uninterested for a time in purchasing Rule 144A Securities held by the
Fund. The Board of Trustees has established standards and procedures for
determining the liquidity of a Rule 144A Security and monitors GEIM's
implementation of the standards and procedures. The ability to sell to
qualified institutional buyers under Rule 144A is a recent development and
GEIM cannot predict how this market will develop.
STRATEGIES AVAILABLE TO SOME BUT NOT ALL FUNDS
DEPOSITARY RECEIPTS. The U.S. Equity Fund, the Global Fund, the
International Fund and the Strategic Fund may each invest in securities of
foreign issuers in the form of American Depositary Receipts ("ADRs"), which
are U.S. dollar-denominated receipts typically issued by domestic banks or
trust companies that represent the deposit with those entities of securities
of a foreign issuer, and European Depositary Receipts ("EDRs"), which are
sometimes referred to as Continental Depositary Receipts ("CDRs"). ADRs are
publicly traded on exchanges or over-the-counter in the United States and are
issued through "sponsored" or "unsponsored" arrangements. In a sponsored ADR
arrangement, the foreign issuer assumes the obligation to pay some or all of
the depositary's transaction fees, whereas under an unsponsored arrangement,
the foreign issuer assumes no obligations and the depositary's transaction
fees are paid directly by the ADR holders. In addition, less information is
available in the United States about an unsponsored ADR than about a
sponsored ADR. The U.S. Equity Fund, the Global Fund, the International Fund
and the Strategic Fund may each invest in ADRs through both sponsored and
unsponsored arrangements. EDRs and CDRs are generally issued by foreign
banks and evidence ownership of either foreign or domestic securities.
SUPRANATIONAL AGENCIES. The Income Fund, the Strategic Fund and the Money
Market Fund may each invest up to 10% of its assets in securities of
supra-national agencies such as: the International Bank for Reconstruction
and Development (commonly referred to as the World Bank), which was chartered
to finance development projects in developing member countries; the European
Community, which is a twelve-nation organization engaged in cooperative
economic activi-
46
<PAGE>
ties; the European Coal and Steel Community, which is an economic
union of various European nations' steel and coal industries; and
the Asian Development Bank, which is an international development bank
established to lend funds, promote investment and provide technical
assistance to member nations in the Asian and Pacific regions. Securities of
supranational agencies are not considered Government Securities and are not
supported, directly or indirectly, by the U.S. Government.
INVESTMENTS IN OTHER INVESTMENT FUNDS. The Global Fund, the International
Fund, the Income Fund, the Government Fund and the Strategic Fund may each
invest in investment funds that invest principally in securities in which the
Fund is authorized to invest. Under the 1940 Act, a Fund may invest a
maximum of 10% of its total assets in the securities of other investment
companies. In addition, under the 1940 Act, not more than 5% of a Fund's
total assets may be invested in the securities of any one investment company,
and the Fund may not own more than 3% of the securities of any investment
company. To the extent a Fund invests in other investment companies, the
Fund's shareholders will incur certain duplicative fees and expenses,
including investment advisory fees.
MUNICIPAL LEASES. Among the Municipal Obligations in which the Tax-Exempt
Fund and the Strategic Fund may invest are municipal leases, which may take
the form of a lease or an installment purchase or conditional sales contract
to acquire a wide variety of equipment and facilities. Interest payments on
qualifying municipal leases are exempt from Federal income taxes and state
income taxes within the state of issuance. A Fund may invest in municipal
leases containing "non-appropriation" clauses that provide that the government
al issuer has no obligation to make future payments under the lease or
contract, unless money is appropriated for the purpose by the appropriate
legislative body on a yearly or other periodic basis.
Municipal leases that a Fund may acquire will be both rated and unrated.
Rated leases that may be held by a Fund include those rated investment grade
at the time of investment or those issued by issuers whose senior debt is
rated investment grade at the time of investment. Risks and special
considerations applicable to certain investment grade obligations are
described above under "Risk Factors and Special Considerations - Certain
Investment Grade Obligations." A Fund may acquire unrated issues that GEIM
deems to be comparable in quality to rated issues in which a Fund is
authorized to invest. A determination that an unrated lease obligation is
comparable in quality to a rated lease obligation and that there is a
reasonable likelihood that the lease will not be cancelled will be subject to
oversight and approval by the Trust's Board of Trustees.
Municipal leases held by a Fund will be considered illiquid securities
unless the Trust's Board of Trustees determines on an ongoing basis
that the leases are readily marketable. An unrated municipal lease
with a non-appropriation risk that is backed by an irrevocable bank letter
of credit or an insurance policy issued by a bank or insurer deemed by
GEIM to be of high quality and minimal credit risk, will not be deemed to be
illiquid solely because the underlying municipal lease is unrated, if GEIM
determines that the lease is readily marketable because it is backed by the
letter of credit or insurance policy.
Municipal leases in which a Fund may invest have special risks not normally
associated with Municipal Obligations. Municipal leases represent a type of
financing that has not yet developed the depth of marketability generally
associated with other Municipal Obligations. Moreover, although a municipal
lease will be secured by financed equipment or facilities, the disposition of
the equipment or facilities in the event of foreclosure might prove
difficult.
To limit the risks associated with municipal leases, a Fund will invest no
more than 5% of its total assets in those leases. In addition, a Fund will
purchase lease obligations that contain non-appropriation clauses when the
lease payments will commence amortization of principal at an early date
resulting in an average life of five years or less for the lease obligation.
FLOATING AND VARIABLE RATE INSTRUMENTS. The Strategic Fund, the Income Fund,
the Government Fund and the Money Market Fund may each invest in floating and
variable rate instruments. Income securities may provide for floating or
variable rate interest or dividend payments. The floating or variable rate
may be determined by reference to a known lending rate, such as a bank's
prime rate, a certificate of deposit rate or the London InterBank Offered
Rate (LIBOR). Alternatively, the rate may be determined through an auction
or remarketing process. The rate also may be indexed to changes in the
values of interest rate or securities indexes, currency exchange rate or
other commodities. The amount by which the rates paid on an income security
may increase or decrease may be subject to periodic or lifetime caps.
Floating and variable rate income securities include securities whose rates
vary inversely with changes in market rates of interest. Such securities may
also pay a rate of interest determined by applying a multiple to the variable
rate. The extent of increases and decreases in the value of securities whose
rates vary inversely with changes in market rates of interest generally will
be larger than comparable changes in the value of an equal principal amount
of a fixed rate security having similar credit quality, redemption provisions
and maturity.
The Tax-Exempt Fund and the Strategic Fund may purchase floating and variable
rate demand bonds and notes, which are Municipal Obligations ordinarily
having stated maturities in excess of one year but which permit their holder
to demand payment of principal at any time or at specified intervals.
Variable rate demand notes include master demand notes, which are obligations
that permit a Fund to invest fluctuating amounts, which may change daily
without penalty, pursuant to direct arrangements between the Fund, as lender,
and the borrower. These obligations have interest rates that fluctuate from
time to time and fre-
47
<PAGE>
quently are secured by letters of credit or other credit support
arrangements provided by banks. Use of letters of credit or other
credit support arrangements will not adversely affect the tax-exempt status
of variable rate demand notes. Because they are direct lending arrangements
between the lender and borrower, variable note demand notes generally will
not be traded and no established secondary market generally exists for them,
although they are redeemable at face value. If variable rate demand notes
are not secured by letters of credit or other credit support arrangements, a
Fund's right to demand payment will be dependent on the ability of the
borrower to pay principal and interest on demand. Each obligation purchased
by a Fund will meet the quality criteria established by GEIM for the purchase
of Municipal Obligations. GEIM, on behalf of a Fund, considers on an ongoing
basis the creditworthiness of the issuers of the floating and variable rate
demand obligations in the Fund's portfolio.
PARTICIPATION INTERESTS. The Tax-Exempt Fund and the Strategic Fund may
purchase from financial institutions participation interests in certain
Municipal Obligations. A participation interest gives the Fund an undivided
interest in the Municipal Obligation in the proportion that the Fund's
participation interest bears to the total principal amount of the Municipal
Obligation. These instruments may have fixed, floating or variable rates of
interest. If the participation interest is unrated, or has been given a
rating below one that is otherwise permissible for purchase by a Fund, the
participation interest will be backed by an irrevocable letter of credit or
guarantee of a bank that the Trust's Board of Trustees has determined meets
certain quality standards, or the payment obligation otherwise will be
collateralized by Government Securities. A Fund will have the right, with
respect to certain participation interests, to demand payment, on a specified
number of days' notice, for all or any part of the Fund's participation intere
st in the Municipal Obligation, plus accrued interest. The Trust intends
that a Fund exercise its right to demand payment only upon a default under
the terms of the Municipal Obligation, or to maintain or improve the quality
of its investment portfolio. A Fund will invest no more than 5% of the value
of its total assets in participation interests.
ZERO COUPON OBLIGATIONS. The Strategic Fund, the Income Fund and the
Government Fund may invest in zero coupon obligations. Zero coupon
securities generally pay no cash interest (or dividends in the case of
preferred stock) to their holders prior to maturity. Accordingly, such
securities usually are issued and traded at a deep discount from their face
or par value and generally are subject to greater fluctuations of market
value in response to changing interest rates than securities of comparable
maturities and credit quality that pay cash interest (or dividends in the
case of preferred stock) on a current basis. Although each of the Strategic
Fund, the Income Fund and the Government Fund will receive no payments on its
zero coupon securities prior to their maturity or disposition, it will be
required for federal income tax purposes generally to include in its
dividends each year an amount equal to the annual income that accrues on its
zero coupon securities. Such dividends will be paid from the cash assets of
the Fund, from borrowings or by liquidation of portfolio securities, if
necessary, at a time that the Fund otherwise would not have done so. To the
extent the Strategic Fund, the Income Fund and the Government Fund are
required to liquidate thinly traded securities, the Funds may be able to sell
such securities only at prices lower than if such securities were more widely
traded. The risks associated with holding securities that are not readily
marketable may be accentuated at such time. To the extent the proceeds from
any such dispositions are used by the Strategic Fund, the Income Fund or the
Government Fund to pay distributions, each of those Funds will not be able to
purchase additional income-producing securities with such proceeds, and as a
result its current income ultimately may be reduced.
The Tax-Exempt Fund, the Government Fund and the Strategic Fund may each
invest up to 10% of its assets in zero coupon Municipal Obligations. Zero
coupon Municipal Obligations are generally divided into two categories: "Pure
Zero Obligations," which are those that pay no interest for their entire life
and "Zero/Fixed Obligations," which pay no interest for some initial period
and thereafter pay interest currently. In the case of a Pure Zero
Obligation, the failure to pay interest currently may result from the
obligation's having no stated interest rate, in which case the obligation
pays only principal at maturity and is sold at a discount from its stated
principal. A Pure Zero Obligation may, in the alternative, provide for a
stated interest rate, but provide that no interest is payable until maturity,
in which case accrued, unpaid interest on the obligation may be capitalized
as incremental principal. The value to the investor of a zero coupon
Municipal Obligation consists of the economic accretion either of the
difference between the purchase price and the nominal principal amount (if no
interest is stated to accrue) or of accrued, unpaid interest during the
Municipal Obligation's life or payment deferral period.
MUNICIPAL OBLIGATION COMPONENTS. The Tax-Exempt Fund and the Strategic Fund
may each invest in Municipal Obligations the interest rate on which has been
divided by the issuer into two different and variable components, which
together result in a fixed interest rate. Typically, the first of the
components (the "Auction Component") pays an interest rate that is reset
periodically through an auction process, whereas the second of the components
(the "Residual Component") pays a residual interest rate based on the
difference between the total interest paid by the issuer on the Municipal
Obligation and the auction rate paid on the Auction Component. A Fund may
purchase both Auction and Residual Components. Because the interest rate
paid to holders of Residual Components is generally determined by subtracting
the interest rate paid to the holders of Auction Components from a fixed
amount, the interest rate paid to Residual Component holders will decrease as
the Auction Component's rate
48
<PAGE>
increases and decrease as the Auction Component's rate increases. Moreover,
the extent of the increases and decreases in market value of Residual
Components may be larger than comparable changes in the market value of an
equal principal amount of a fixed rate Municipal Obligation having similar
credit quality, redemption provisions and maturity.
CUSTODIAL RECEIPTS. The Tax-Exempt Fund and the Strategic Fund may each
acquire custodial receipts or certificates underwritten by securities dealers
or banks that evidence ownership of future interest payments, principal
payments, or both, on certain Municipal Obligations. The underwriter of
these certificates or receipts typically purchases Municipal Obligations and
deposits the obligations in an irrevocable trust or custodial account with a
custodian bank, which then issues receipts or certificates that evidence
ownership of the periodic unmatured coupon payments and the final principal
payment on the obligations. Custodial receipts evidencing specific coupon or
principal payments have the same general attributes as zero coupon Municipal
Obligations described above. Although under the terms of a custodial
receipt, a Fund would be typically authorized to assert its rights directly
against the issuer of the underlying obligation, the Fund could be required
to assert through the custodian bank those rights as may exist against the
underlying issuers. Thus, in the event the underlying issuer fails to pay
principal and/or interest when due, a Fund may be subject to delays, expenses
and risks that are greater than those that would have been involved if the
Fund had purchased a direct obligation of the issuer. In addition, in the
event that the trust or custodial account in which the underlying security
has been deposited is determined to be an association taxable as a
corporation, instead of a non-taxable entity, the yield on the underlying
security would be reduced in recognition of any taxes paid.
MORTGAGE RELATED SECURITIES. The mortgage related securities in which the
Strategic Fund, the Income Fund and the Government Fund will invest represent
pools of mortgage loans assembled for sale to investors by various
governmental agencies, such as GNMA, by government related organizations,
such as FNMA and FHLMC, as well as by private issuers, such as commercial
banks, savings and loan institutions, mortgage bankers and private mortgage
insurance companies. Several risks are associated with mortgage related
securities generally. The monthly cash inflow from the underlying loans, for
example, may not be sufficient to meet the monthly payment requirements of
the mortgage related security. Prepayment of principal by mortgagors or
mortgage foreclosures will shorten the term of the underlying mortgage pool
for a mortgage related security. Early returns of principal will affect the
average life of the mortgage related securities remaining in the Strategic
Fund, the Income Fund or the Government Fund. The occurrence of mortgage
prepayments is affected by factors including the level of interest rates,
general economic conditions, the location and age of the mortgage and other
social and demographic conditions. In periods of rising interest rates, the
rate of prepayment tends to decrease, thereby lengthening the average life of
a pool of mortgage related securities. Conversely, in periods of falling
interest rates the rate of prepayment tends to increase, thereby shortening
the average life of a pool. Reinvestment of prepayments may occur at higher
or lower interest rates than the original investment, thus affecting the
yield of the Strategic Fund, the Income Fund and the Government Fund.
Because prepayments of principal generally occur when interest rates are
declining, the Strategic Fund, the Income Fund and the Government Fund will
likely have to reinvest the proceeds of prepayments at lower interest rates
than those at which its assets were previously invested, resulting in a
corresponding decline in the Fund's yield. Thus, mortgage related securities
may have less potential for capital appreciation in periods of falling
interest rates than other fixed income securities of comparable maturity,
although those other fixed income securities may have a comparable risk of
decline in market value in periods of rising interest rates. To the extent
that the Strategic Fund, the Income Fund or the Government Fund purchases
mortgage related securities at a premium, unscheduled prepayments, which are
made at par, will result in a loss equal to any unamortized premium.
ARMs have interest rates that reset at periodic intervals, thereby allowing
the Strategic Fund, the Income Fund and the Government Fund to participate in
increases in interest rates through periodic adjustments in the coupons of
the underlying mortgages, resulting in both higher current yields and lower
price fluctuation than would be the case with more traditional long-term debt
securities. Furthermore, if prepayments of principal are made on the
underlying mortgages during periods of rising interest rates, the Strategic
Fund, the Income Fund or the Government Fund generally will be able to
reinvest these amounts in securities with a higher current rate of return.
Neither the Strategic Fund, the Income Fund nor the Government Fund, however,
will benefit from increases in interest rates to the extent that interest
rates rise to the point at which they cause the current yield of ARMs to
exceed the maximum allowable annual or lifetime reset limits (or "caps") for
a particular mortgage. In addition, fluctuations in interest rates above
these caps could cause ARMs to behave more like long-term fixed rate
securities in response to extreme movements in interest rates. As a result,
during periods of volatile interest rates, the Strategic Fund's, the Income
Fund's and the Government Fund's net asset values may fluctuate more than if
they did not purchase ARMs. Moreover, during periods of rising interest
rates, changes in the coupon of the adjustable rate mortgages will slightly
lag changes in market rates, creating the potential for some principal loss
for shareholders who redeem their shares of the Strategic Fund, the Income
Fund or the Government Fund before the interest rates on the underlying
mortgages are adjusted to reflect current market rates.
CMOs are obligations fully collateralized by a portfolio
49
<PAGE>
of mortgages or mortgage related securities. Payments of principal and
interest on the mortgages are passed through to the holders of the CMOs on the
same schedule as they are received, although certain classes of CMOs have
priority over others with respect to the receipt of prepayments on the
mortgages. Therefore, depending on the type of CMOs in which the Strategic
Fund, the Income Fund and the Government Fund invest, the investment may be
subject to a greater or lesser risk of prepayment than other types of mortgage
related securities.
Mortgage related securities may not be readily marketable. To the extent any
of these securities are not readily marketable in the judgment of GEIM, each
ofthe Strategic Fund, the Income Fund and the Government Fund limit their
investments in these securities, together with other illiquid instruments, to
not more than 15% of the value of its net assets.
GOVERNMENT STRIPPED MORTGAGE RELATED SECURITIES. The Strategic Fund, the
Income Fund and the Government Fund may invest in government stripped
mortgage related securities issued and guaranteed by GNMA, FNMA or FHLMC.
These securities represent beneficial ownership interests in either periodic
principal distributions ("principal-only") or interest distributions
("interest-only") on mortgage related certificates issued by GNMA, FNMA or
FHLMC. The certificates underlying the government stripped mortgage related
securities represent all or part of the beneficial interest in pools of
mortgage loans. The Strategic Fund, the Income Fund and the Government Fund
will invest in government stripped mortgage related securities in order to
enhance yield or to benefit from anticipated appreciation in value of the
securities at times when GEIM believes that interest rates will remain stable
or increase. In periods of rising interest rates, the expected increase in
the value of government stripped mortgage related securities may offset all
or a portion of any decline in value of the securities held by the Strategic
Fund, the Income Fund or the Government Fund.
Investing in government stripped mortgage related securities involves risks
normally associated with investing in mortgage related securities issued by
government or government related entities. In addition, the yields on
government stripped mortgage related securities are extremely sensitive to
the prepayment experience on the mortgage loans underlying the certificates
collateralizing the securities. If a decline in the level of prevailing
interest rates results in a rate of principal prepayments higher than
anticipated, distributions of principal will be accelerated, thereby reducing
the yield to maturity on interest-only government stripped mortgage related
securities and increasing the yield to maturity on principal-only government
stripped mortgage related securities. Sufficiently high prepayment rates
could result in the Strategic Fund's, the Income Fund's or the Government
Fund's not fully recovering its initial investment in an interest-only
government stripped mortgage related security. Under current market
conditions, the Strategic Fund, the Income Fund and the Government Fund
expect that investments in government stripped mortgage related securities
will consist primarily of interest-only securities. The sensitivity of an
interest-only security that represents the interest portion of a particular
class, as opposed to the interest portion of an entire pool, to interest rate
fluctuations, may be increased because of the characteristics of the
principal portion to which they relate. Government stripped mortgage related
securities are currently traded in an over-the-counter market maintained by
several large investment banking firms. No assurance can be given that the
Strategic Fund, the Income Fund or the Government Fund will be able to effect
a trade of a government stripped mortgage related security at a desired time.
The Strategic Fund, the Income Fund and the Government Fund will acquire
government stripped mortgage related securities only if a secondary market
for the securities exists at the time of acquisition. Except for government
stripped mortgage related securities based on fixed rate FNMA and FHLMC
mortgage certificates that meet certain liquidity criteria established by the
Trust's Board of Trustees, the Trust treats government stripped mortgage
related securities as illiquid and will limit each of the Strategic Fund's,
the Income Fund's and the Government Fund's investments in these securities,
together with other illiquid investments, to not more than 15% of its net
assets.
ASSET-BACKED AND RECEIVABLE-BACKED SECURITIES. The Strategic Fund, the
Income Fund and the Government Fund may invest in asset-backed and
receivable-backed securities. To date, several types of asset-backed and
receivable-backed securities have been offered to investors including
"Certificates for Automobile Receivables" ("CARssm") and interests in pools
of credit card receivables. CARssm represent undivided fractional interests
in a trust, the assets of which consist of a pool of motor vehicle retail
installment sales contracts and security interests in the vehicles securing
the contracts. Payments of principal and interest on CARssm are passed
through monthly to certificate holders and are guaranteed up to certain
amounts and for a certain time period by a letter of credit issued by a
financial institution unaffiliated with the trustee or originator of the
trust.
An investor's return on CARssm may be affected by early prepayment of
principal on the underlying vehicle sales contracts. If the letter of credit
is exhausted, the Strategic Fund, the Income Fund or the Government Fund may
be prevented from realizing the full amount due on a sales contract because
of state law requirements and restrictions relating to foreclosure sales of
vehicles and the availability of deficiency judgments following these sales,
because of depreciation, damage or loss of a vehicle, because of the
application of Federal and state bankruptcy and insolvency laws or other
factors. As a result, certificate holders may experience delays in payment
if the letter of credit is exhausted. Consistent with the Strategic Fund's,
the Income Fund's and the Government
50
<PAGE>
Fund's investment objective and policies and subject to the review and approval
of the Trust's Board of Trustees, the Strategic Fund, the Income Fund and the
Government Fund may also invest in other types of asset-backed and receivable-
backed securities.
MORTGAGE DOLLAR ROLLS. With respect to up to 25% of its total assets the
Strategic Fund may, and with respect to up to 10% of their total assets each
of the International Income Fund, the Income Fund and the Government Fund
may, enter into mortgage "dollar rolls" in which the Fund sells securities
for delivery in the current month and simultaneously contracts with the same
counterparty to repurchase similar (same type, coupon and maturity) but not
identical securities on a specified future date. The Fund loses the right to
receive principal and interest paid on the securities sold. However, the
Fund would benefit to the extent of any price received for the securities
sold and the lower forward price for the future purchase (often referred to
as the "drop") or fee income plus the interest earned on the cash proceeds of
the securities sold until the settlement date of the forward purchase.
Unless such benefits exceed the income, capital appreciation and gain or loss
due to mortgage repayments that would have been realized on the securities
sold as part of the mortgage dollar roll, the use of this technique will
diminish the investment performance of the Fund compared with what such
performance would have been without the use of mortgage dollar rolls. The
Fund will hold and maintain in a segregated account until the settlement date
cash or liquid, high grade debt securities in an amount equal to the forward
purchase price. The benefits derived from the use of mortgage dollar rolls
may depend upon GEIM's ability to predict correctly mortgage prepayments and
interest rates. There is no assurance that mortgage dollar rolls can be
successfully employed.
For financial reporting and tax purposes, each of the Strategic Fund, the
International Fund, the Income Fund and the Government Fund propose to treat
mortgage dollar rolls as two separate transactions; one involving the
purchase of a security and a separate transaction involving a sale. The
Funds do not currently intend to enter into mortgage dollar rolls that are
accounted for as a financing.
SHORT SALES AGAINST THE BOX. The Global Fund and the International Fund may
sell securities "short against the box." Whereas a short sale is the sale of
a security the Global Fund or the International Fund does not own, a short
sale is "against the box" if at all times during which the short position is
open, the Fund owns at least an equal amount of the securities or securities
convertible into, or exchangeable without further consideration for,
securities of the same issue as the securities sold short. Short sales
against the box are typically used by sophisticated investors to defer
recognition of capital gains or losses.
ADDITIONAL MATTERS
The Trust was formed as a business trust pursuant to a Declaration of Trust,
as amended from time to time (the "Declaration"), under the laws of The
Commonwealth of Massachusetts on August 10, 1992. The Declaration authorizes
the Trust's Board of Trustees to create separate series, and within each
series separate Classes, of an unlimited number of shares of beneficial
interest, par value $.001 per share. The International Fund and the
Government Fund were added as series of the Trust pursuant to an amendment to
the Declaration on March 1, 1994. GE Mid-Cap Growth Fund and GE
International Fixed Income Fund were added as series of the Trust on June 17,
1994, but are not presently being offered.
When issued, shares of a Fund will be fully paid and non-assessable. Shares
are freely transferable and have no preemptive, subscription or conversion
rights. Each Class represents an identical interest in a Fund's investment
portfolio. As a result, the Classes have the same rights, privileges and
preferences, except with respect to: (1) the designation of each Class; (2)
the sales arrangement; (3) the expenses allocable exclusively to each Class;
(4) voting rights on matters exclusively affecting a single Class; and (5)
the exchange privilege of each Class. The Board of Trustees does not
anticipate that there will be any conflicts among the interests of the
holders of the different Classes. The Trustees, on an ongoing basis, will
consider whether any conflict exists and, if so, take appropriate action.
Certain aspects of the shares may be changed, upon notice to Fund
shareholders, to satisfy certain tax regulatory requirements, if the change
is deemed necessary by the Trust's Board of Trustees.
When matters are submitted for shareholder vote, each shareholder of each
Fund will have one vote for each full share held and proportionate,
fractional votes for fractional shares held. In general, shares of each Fund
vote by individual Fund on all matters except (1) a matter affecting the
interests of one or more of the Funds, in which case only shares of the
affected Funds would be entitled to vote, (2) a matter affecting only the
interests of one Class, in which case only shares of the affected Class would
be entitled to vote, or (3) when the 1940 Act requires that shares of the
Funds be voted in the aggregate. Normally, no meetings of shareholders of
the Funds will be held for the purpose of electing Trustees of the Trust
unless and until such time as less than a majority of the Trustees holding
office have been elected by shareholders of the Trust, at which time the
Trustees then in office will call a shareholders' meeting for the election of
Trustees. Shareholders of record of no less than two-thirds of the
outstanding shares of the Trust may remove a Trustee through a declaration in
writing or by vote cast in person or by proxy at a meeting called for that
purpose. A meeting will be called for the purpose of voting on the removal
of a Trustee at the written request of holders of 10% of the Trust's
outstanding shares. Shareholders who satisfy certain criteria will be
assisted by the Trust
51
<PAGE>
in communicating with other shareholders in seeking the
holding of the meeting.
The Trust will send to each shareholder of each Fund a semiannual report and
an audited annual report, each of which includes a list of the investment
securities held by each Fund. Only one report each will be mailed to a
single address at which more than one shareholder with the same last name had
indicated mail is to be delivered. Shareholders may request additional copies
of any report by calling the toll free numbers listed on the back cover page
of the Prospectus or by writing to the Trust at the address set forth on the
front cover page of the Prospectus.
52
<PAGE>
GE FUNDS
* GE U.S. Equity Fund
* GE Global Equity Fund
* GE International Equity Fund
* GE Strategic Investment Fund
* GE Tax-Exempt Fund
* GE Fixed Income Fund
* GE Short-Term Government Fund
* GE Money Market Fund
For information contact your investment professional or
call the following toll free numbers:
Class A and Class B investors - 1-800-746-4417
Class C and Class D investors - 1-800-242-0134
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE
ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR
IN THE
STATEMENT OF ADDITIONAL INFORMATION INCORPORATED INTO THIS
PROSPECTUS BY
REFERENCE IN CONNECTION WITH THE OFFERING OF SHARES OF GE FUNDS,
AND IF
GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST
NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY GE FUNDS. THIS
PROSPECTUS DOES
NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO
WHOM,
AN OFFER MAY NOT LAWFULLY BE MADE.
GEF-PRO-1
<PAGE>
GE FUNDS
FORM N-1A
CROSS REFERENCE SHEET
_____________________________
Part A
Item No. Prospectus Heading
1. Cover Page Cover Page
2. Synopsis Expense Information
3. Condensed Financial
Information Expense Information
4. General Description of
Registration Cover Page; The Multiple
Distribution System;
Investment Objectives and
Management Policies;
Additional Matters;
Further Information:
Certain Investment
Techniques and Strategies
5. Management of the Fund Expense Information;
Investment Objectives and
Management Policies;
Management of the Trust;
Further Information:
Certain Investment
Techniques and Strategies
6.Capital Stock and Other
Securities Dividends;
Distributions and
Taxes; Additional
Matters
7. Purchase of Securities
Being offered Purchase of Shares;
Net Asset Value;
Distributor
8. Redemption or Repurchase Redemption of Shares
i
<PAGE>
9. Legal Proceedings Not applicable
10. Cover Page Cover Page
11. Table of Contents Contents
Part B Heading in Statement of
Item No. Additional Information
12. General Information
and History The Funds' Performance
13. Investment Objectives and
Policies Investment Objectives
and Management Policies;
Further Information:
Certain Investment
Techniques and Strategies
14. Management of the Fund Management of the Trust
15. Control Persons and Principal
Holders of Securities Principal Stockholders;
Management of the Trust
See Prospectus--
Additional Matters
16. Investment Advisory and
Other Services Management of the Trust
17. Brokerage Allocation
and Other Practices Investment Restrictions;
Management of the Trust
18. Capital Stock and Other
Securities Redemption of Shares
19. Purchase, Redemption and Pricing
of Securities Being Offered Purchase of Shares;
Redemption of Shares;
Net Asset Value
20. Tax Status Dividends, Distributions
and Taxes
21. Underwriters Not Applicable
22. Calculation of Performance
Data The Funds' Performance
ii
<PAGE>
23. Financial Statements Independent Accountants;
Financial Statements
Part C
Information required to be included in Part C is set forth after the
appropriate item, so numbered, in Part C to this Registration Statement.
iii
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
January 26, 1996
GE FUNDS
3003 Summer Street, Stamford, Connecticut 06905
For information, call (203) 326-4040
[] GE International Equity Fund [] GE International Fixed Income Fund
[] GE Global Equity Fund [] GE Tax-Exempt Fund
[] GE Mid-Cap Growth Fund [] GE Fixed Income Fund
[] GE U.S. Equity Fund [] GE Short-Term Government Fund
[]GE Strategic Investment Fund [] GE Money Market Fund
CONTENTS
Page
Investment Objectives and Management Policies 2
Investment Restrictions 13
Management of the Trust 19
Redemption of Shares 24
Exchange Privilege 25
Net Asset Value 25
Dividends, Distributions and Taxes 27
The Funds' Performance 30
Principal Stockholders 33
Additional Information 43
Counsel 43
Independent Accountants 43
Financial Statements 43
Appendix A-1
This Statement of Additional Information supplements the information
contained in the current Prospectus of GE Funds (the "Trust") dated January
26, 1996, and should be read in conjunction with the Prospectus. Copies of
the Prospectus describing the Funds offered by the Trust may be obtained
without charge by calling the Trust at the telephone number listed above.
Information regarding the status of shareholder accounts may be obtained by
calling the Trust at 1-800-746-4417 (Class A or Class B shareholders) or 1-
800-242-0134 (Class C or Class D shareholders) or by writing to the Trust at
P.O. Box 120065, Stamford, CT 06912-0065. This Statement of Additional
Information, although not a prospectus, is incorporated in its entirety by
reference into the Prospectus.
<PAGE>
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
The Prospectus dated January 26, 1996 discusses the investment objectives
and policies of the following eight managed investment funds currently offered
by the Trust: GE International Equity Fund (the "International Fund"), GE
Global Equity Fund (the "Global Fund"), GE U.S. Equity Fund (the "U.S. Equity
Fund"), GE Strategic Investment Fund (the "Strategic Fund"), GE Tax-Exempt
Fund (the "Tax-Exempt Fund"), GE Fixed Income Fund (the "Income Fund"), GE
Short-Term Government Fund (the "Government Fund") and GE Money Market Fund
(the "Money Market Fund"). The GE Mid-Cap Growth Fund (the "Mid-Cap Fund")
and the International Fixed Income Fund (the "International Income Fund" and
collectively with the International Fund, the Global Fund, the U.S. Equity
Fund, the Strategic Fund, the Tax-Exempt Fund, the Income Fund, the Government
Fund, the Money Market Fund and the Mid-Cap Fund, the "Funds"), two series of
the Trust, are not currently being offered by the Trust. Supplemental
information is set out below concerning certain of the securities and other
instruments in which the Funds may invest, the investment policies and
strategies that the Funds may utilize and certain risks attendant to those
investments, policies and strategies.
STRATEGIES AVAILABLE TO ALL FUNDS
WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES. When a Fund engages in
when-
issued or delayed-delivery securities transactions, it relies on the other
party to consummate the trade. Failure of the seller to do so may result in
the Fund's incurring a loss or missing an opportunity to obtain a price
considered to be advantageous.
LENDING PORTFOLIO SECURITIES. A Fund will adhere to the following
conditions whenever its portfolio securities are loaned: (1) the Fund must
receive at least 100% cash collateral or equivalent securities from the
borrower; (2) the borrower must increase the collateral whenever the market
value of the securities loaned rises above the level of the collateral; (3)
the Fund must be able to terminate the loan at any time; (4) the Fund must
receive reasonable interest on the loan, as well as any dividends, interest or
other distributions on the loaned securities, and any increase in market
value; (5) the Fund may pay only reasonable custodian fees in connection with
the loan; and (6) voting rights on the loaned securities may pass to the
borrower except that, if a material event adversely affecting the investment
in the loaned securities occurs, the Trust's Board of Trustees must terminate
the loan and regain the right to vote the securities. From time to time, a
Fund may pay a part of the
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interest earned from the investment of collateral
received for securities loaned to the borrower and/or a third party that is
unaffiliated with the Fund and is acting as a "finder."
BANK OBLIGATIONS. Domestic commercial banks organized under Federal law
are supervised and examined by the U.S. Comptroller of the Currency and are
required to be members of the Federal Reserve System and to be insured by the
Federal Deposit Insurance Corporation ("FDIC"). Foreign branches of U.S.
banks and foreign banks are not regulated by U.S. banking authorities and
generally are not bound by mandatory reserve requirements, loan limitations,
accounting, auditing and financial reporting standards comparable to U.S.
banks. Obligations of foreign branches of U.S. banks and foreign banks are
subject to the risks associated with investing in foreign securities
generally. These obligations entail risks that are different from those of
investments in obligations in domestic banks, including foreign economic and
political developments outside the United States, foreign governmental
restrictions that may adversely affect payment of principal and interest on
the obligations, foreign exchange controls and foreign withholding or other
taxes on income.
A U.S. branch of a foreign bank may or may not be subject to reserve
requirements imposed by the Federal Reserve System or by the state in which
the branch is located if the branch is licensed in that state. In addition,
branches licensed by the Comptroller of the Currency and branches licensed by
certain states ("State Branches") may or may not be required to: (1) pledge
to the regulator by depositing assets with a designated bank within the state,
an amount of its assets equal to 5% of its total liabilities; and (2) maintain
assets within the state in an amount equal to a specified percentage of the
aggregate amount of liabilities of the foreign bank payable at or through all
of its agencies or branches within the state. The deposits of State Branches
may not necessarily be insured by the FDIC. In addition, less information may
be available to the public about a U.S. branch of a foreign bank than about a
U.S. bank.
RATINGS AS INVESTMENT CRITERIA. The ratings of nationally recognized
statistical rating organizations ("NRSROs") such as Standard & Poor's
Corporation ("S&P") or Moody's Investors Service, Inc. ("Moody's") represent
the opinions of those organizations as to the quality of securities that they
rate. Although these ratings, which are relative and subjective and are not
absolute standards of quality, are used by GEIM as initial criteria for the
selection of portfolio securities on behalf of the Funds, GEIM also relies
upon its own analysis to evaluate potential investments.
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Subsequent to its purchase by a Fund, an issue of securities may cease to
be rated or its rating may be reduced below the minimum required for purchase
by the Fund. Although neither event will require the sale of the securities
by a Fund, other than the Money Market Fund, GEIM will consider the event in
its determination of whether the Fund should continue to hold the securities.
In the event of a lowering of the rating of a security held by the Money
Market Fund or a default by the issuer of the security, the Fund will dispose
of the security as soon as practicable, unless the Trust's Board of Trustees
determines that disposal of the security would not be in the best interests of
the Fund. To the extent that a NRSRO's ratings change as a result of a change
in the NRSRO or its rating system, the Funds will attempt to use comparable
ratings as standards for their investments in accordance with their investment
objectives and policies.
STRATEGIES AVAILABLE TO SOME BUT NOT ALL FUNDS
SECURITIES OF OTHER INVESTMENT COMPANIES. A Fund may invest in securities
of other investment companies to the extent permitted under the Investment
Company Act of 1940, as amended (the "1940 Act"). Presently, under the 1940
Act, a Fund may hold securities of another investment company in amounts which
(a) do not exceed 3% of the total outstanding voting stock of such company,
(b) do not exceed 5% of the value of the Fund's total assets and (c) when
added to all other investment company securities held by the Fund, do not
exceed 10% of the value of the Fund's total assets.
COVERED OPTION WRITING. The Funds with option-writing authority will
write only options that are covered. A call option written by a Fund will be
deemed covered (1) if the Fund owns the securities underlying the call or has
an absolute and immediate right to acquire those securities without additional
cash consideration upon conversion, or exchange of other securities held in
its portfolio, (2) if the Fund holds a call at the same exercise price for the
same exercise period and on the same securities as the call written, (3) in
the case of a call option on a stock index, if the Fund owns a portfolio of
securities substantially replicating the movement of the index underlying the
call option, or (4) if at the time the call is written, an amount of cash,
Government Securities or other liquid, high grade debt obligations, equal to
the fluctuating market value of the optioned securities, is segregated with
the Trust's custodian or with a designated sub-custodian. A put option will
be deemed covered (1) if, at the time the put is written, an amount of cash,
Government Securities or other liquid, high grade debt obligations having a
value at least equal
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to the exercise price of the underlying securities is segregated
with the Trust's custodian or with a designated sub-custodian, or
(2) if the Fund continues to own an equivalent number of puts of the same
"series" (that is, puts on the same underlying securities having the same
exercise prices and expiration dates as those written by the Fund), or an
equivalent number of puts of the same "class" (that is, puts on the same
underlying securities) with exercise prices greater than those that it has
written (or if the exercise prices of the puts it holds are less than the
exercise prices of those it has written, the difference is segregated with the
Trust's custodian or with a designated sub-custodian).
The principal reason for writing covered call options on a securities
portfolio is to attempt to realize, through the receipt of premiums, a greater
return than would be realized on the securities alone. In return for a
premium, the writer of a covered call option forfeits the right to any
appreciation in the value of the underlying security above the strike price
for the life of the option (or until a closing purchase transaction can be
effected). Nevertheless, the call writer retains the risk of a decline in the
price of the underlying security. Similarly, the principal reason for writing
covered put options is to realize income in the form of premiums. The writer
of a covered put option accepts the risk of a decline in the price of the
underlying security. The size of the premiums that a Fund may receive may be
adversely affected as new or existing institutions, including other investment
companies, engage in or increase their option-writing activities.
Options written by a Fund will normally have expiration dates between one
and nine months from the date written. The exercise price of the options may
be below, equal to or above the market values of the underlying securities at
the times the options are written. In the case of call options, these
exercise prices are referred to as "in-the-money," "at-the-money" and "out-of-
the-money," respectively.
So long as the obligation of a Fund as the writer of an option continues,
the Fund may be assigned an exercise notice by the broker-dealer through which
the option was sold, requiring the Fund to deliver, in the case of a call, or
take delivery of, in the case of a put, the underlying security against
payment of the exercise price. This obligation terminates when the option
expires or the Fund effects a closing purchase transaction. A Fund can no
longer effect a closing purchase transaction with respect to an option once it
has been assigned an exercise notice. To secure its obligation to deliver the
underlying security when it writes a call option, or to pay for the
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underlying security when it writes a put option, a Fund will be required to
deposit in escrow the underlying security or other assets in accordance with
the rules of the Options Clearing Corporation (the "Clearing Corporation") and
of the securities exchange on which the option is written.
An option position may be closed out only if a secondary market exists for
an option of the same series on a recognized securities exchange or in the
over-the-counter market. In light of the need for a secondary market in which
to close an option position, the Funds are expected to purchase only call or
put options issued by the Clearing Corporation. GEIM expects that the Funds
will write options, other than those on Government Securities, only on
national securities exchanges. Options on Government Securities may be
written by the Funds in the over-the-counter market.
A Fund may realize a profit or loss upon entering into closing
transactions. When a Fund has written an option, for example, it will realize
a profit if the cost of the closing purchase transaction is less than the
premium received upon writing the original option; the Fund will incur a loss
if the cost of the closing purchase transaction exceeds the premium received
upon writing the original option. When a Fund has purchased an option and
engages in a closing sale transaction, whether the Fund realizes a profit or
loss will depend upon whether the amount received in the closing sale
transaction is more or less than the premium the Fund initially paid for the
original option plus the related transaction costs.
STOCK INDEX OPTIONS. A Fund may purchase and write put and call options
on stock indexes or stock index futures contracts that are traded on a U.S.
exchange or board of trade or a foreign exchange, to the extent permitted
under rules and interpretations of the Commodity Futures Trading Commission
("CFTC"), as a hedge against changes in market conditions and interest rates,
and for duration management, and may enter into closing transactions with
respect to those options to terminate existing positions. A stock index
fluctuates with changes in the market values of the stocks included in the
index. Stock index options may be based on a broad or narrow market index or
on an industry or market segment.
The delivery requirements of options on stock indexes differ from options
on stock. Unlike a stock option, which contemplates the right to take or make
delivery of stock at a specified price, an option on a stock index gives the
holder the right to receive a cash "exercise settlement amount" equal to (1)
the amount, if any, by which the fixed exercise price of the
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option exceeds (in the case of a put) or is less than (in the case of a call)
the closing value of the underlying index on the date of exercise, multiplied
by (2) a fixed "index multiplier." Receipt of this cash amount will depend
upon the closing level of the stock index upon which the option is based being
greater than, in the case of a call, or less than, in the case of a put, the
exercise price of the option. The amount of cash received will be equal to the
difference between the closing price of the index and the exercise price of
the option expressed in dollars times a specified multiple. The writer of the
option is obligated, in return for the premium received, to make delivery of
this amount. The writer may offset its position in stock index options prior
to expiration by entering into a closing transaction on an exchange or it may
allow the option to expire unexercised.
The effectiveness of purchasing or writing stock index options as a
hedging technique will depend upon the extent to which price movements in the
portion of a securities portfolio being hedged correlate with price movements
of the stock index selected. Because the value of an index option depends
upon movements in the level of the index rather than the price of a particular
stock, whether a Fund realizes a gain or loss from the purchase or writing of
options on an index depends upon movements in the level of stock prices in the
stock market generally or, in the case of certain indexes, in an industry or
market segment, rather than movements in the price of a particular stock. As
a result, successful use by a Fund of options on stock indexes is subject to
GEIM's ability to predict correctly movements in the direction of the stock
market generally or of a particular industry. This ability contemplates
different skills and techniques from those used in predicting changes in the
price of individual stocks.
FUTURES CONTRACTS. No consideration is paid or received by a Fund upon
trading a futures contract. Upon entering into a futures contract, cash,
short-term Government Securities or other U.S. dollar-denominated, high-grade,
short-term money market instruments equal to approximately 1% to 10% of the
contract amount will be segregated with the Trust's custodian, or a designated
sub-custodian. This amount, which is subject to change by the exchange on
which the contract is traded, is known as "initial margin" and is in the
nature of a performance bond or good faith deposit on the contract that is
returned to the Fund upon termination of the futures contract, so long as all
contractual obligations have been satisfied; the broker will have access to
amounts in the margin account if the Fund fails to meet its contractual
obligations. Subsequent payments, known as "variation margin," to and from
the broker, will be made daily as
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the price of the securities underlying the futures contract fluctuates,
making the long and short positions in the contract more or less valuable,
a process known as "marking-to-market." At any time prior to the expiration
of a futures contract, a Fund may elect to close a position by taking an
opposite position, which will operate to terminate the Fund's existing
position in the contract.
Although the Trust intends that the Funds enter into futures contracts
only if an active market exists for the contracts, no assurance can be given
that an active market will exist for the contracts at any particular time.
Most U.S. futures exchanges and boards of trade limit the amount of
fluctuation permitted in futures contract prices during a single trading day.
Once the daily limit has been reached in a particular contract, no trades may
be made on that day at a price beyond that limit. Futures contract prices may
move to the daily limit for several consecutive trading days with little or no
trading, thereby preventing prompt liquidation of futures positions and
subjecting some futures traders to substantial losses. In such a case, and in
the event of adverse price movements, a Fund would be required to make daily
cash payments of variation margin. In such circumstances, an increase in the
value of the portion of the portfolio being hedged, if any, may partially or
completely offset losses on the futures contract.
If a Fund has hedged against the possibility of an increase in interest
rates adversely affecting the value of securities held in its portfolio and
rates decrease instead, the Fund will lose part or all of the benefit of the
increased value of securities that it has hedged because it will have
offsetting losses in its futures positions. In addition, in such situations,
if the Fund had insufficient cash, it may have to sell securities to meet
daily variation margins requirements at a time when it may be disadvantageous
to do so. These sales of securities may, but will not necessarily, be at
increased prices that reflect the decline in interest rates.
Options on Futures Contracts. An option on a futures contract, unlike
a direct investment in such a contract, gives the purchaser the right, in
return for the premium paid, to assume a position in the futures contract at a
specified exercise price at any time prior to the expiration date of the
option. Upon exercise of an option, the delivery of the futures position by
the writer of the option to the holder of the option will be accompanied by
delivery of the accumulated balance in the writer's futures margin account,
which represents the amount by which the market price of the futures contract
exceeds, in the case of a call, or is less than, in the case of a put, the
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exercise price of the option on the futures contract. The potential loss
related to the purchase of an option on futures contracts is limited to the
premium paid for the option (plus transaction costs). Because the price of
the option to the purchaser is fixed at the point of sale, no daily cash
payments are made to reflect changes in the value of the underlying contract.
The value of the option, however, does change daily and that change would be
reflected in the net asset value of the Fund holding the options.
FORWARD CURRENCY TRANSACTIONS. The cost to a Fund of engaging in currency
transactions varies with factors such as the currency involved, the length of
the contract period and the market conditions then prevailing. Because
transactions in currency exchange are usually conducted on a principal basis,
no fees or commissions are involved. The use of forward currency contracts
does not eliminate fluctuations in the underlying prices of the securities,
but it does establish a rate of exchange that can be achieved in the future.
In addition, although forward currency contracts limit the risk of loss due to
a decline in the value of the hedged currency, at the same time, they limit
any potential gain that might result should the value of the currency
increase. If a devaluation is generally anticipated, a Fund may not be able
to sell currency at a price above the anticipated devaluation level. A Fund
will not enter into a currency transaction if, as a result, it will fail to
qualify as a regulated investment company under the Internal Revenue Code of
1986, as amended (the "Code"), for a given year.
OPTIONS ON FOREIGN CURRENCIES. Certain transactions involving options on
foreign currencies are undertaken on contract markets that are not regulated
by the CFTC. Options on foreign currencies traded on national securities
exchanges are within the jurisdiction of the Securities and Exchange
Commission (the "SEC"), as are other securities traded on those exchanges. As
a result, many of the protections provided to traders on organized exchanges
will be available with respect to those transactions. In particular, all
foreign currency option positions entered into on a national securities
exchange are cleared and guaranteed by the Clearing Corporation, thereby
reducing the risk of counterparty default. In addition, a liquid secondary
market in options traded on a national securities exchange may exist,
potentially permitting a Fund to liquidate open positions at a profit prior to
exercise or expiration, or to limit losses in the event of adverse market
movements.
The purchase and sale of exchange-traded foreign currency options are
subject to the risks of the availability of a liquid secondary market as
described above, as well as the risks
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regarding adverse market movements, margining of options written, the nature
of the foreign currency market, possible intervention by governmental
authorities and the effects of other political and economic events. In
addition, exercise and settlement of exchange-traded foreign currency options
must be made exclusively through the Clearing Corporation, which has
established banking relationships in applicable foreign countries for this
purpose. As a result, the Clearing Corporation may, if it determines that
foreign governmental restrictions or taxes would prevent the orderly
settlement of foreign currency option exercises, or would result in undue
burdens on the Clearing Corporation or its clearing members, impose special
procedures on exercise and settlement, such as technical changes in the
mechanics of delivery of currency, the fixing of dollar settlement prices
or prohibitions on exercise.
Options on foreign currencies may be traded on foreign exchanges, to the
extent permitted by the CFTC. These transactions are subject to the risk of
governmental actions affecting trading in or the prices of foreign currencies
or securities. The value of these positions could also be adversely affected
by (1) other complex foreign political and economic factors, (2) lesser
availability of data on which to make trading decisions than in the United
States, (3) delays in a Fund's ability to act upon economic events occurring
in foreign markets during non-business hours in the United States, (4) the
imposition of different exercise and settlement terms and procedures and
margin requirements than in the United States and (5) lesser trading volume.
MUNICIPAL OBLIGATIONS. The term "Municipal Obligations" as used in the
Prospectus and this Statement of Additional Information means debt obligations
issued by, or on behalf of, states, territories and possessions of the United
States and the District of Columbia and their political subdivisions, agencies
and instrumentalities or multistate agencies or authorities, the interest from
which debt obligations is, in the opinion of bond counsel to the issuer,
excluded from gross income for Federal income tax purposes. Municipal
Obligations generally are understood to include debt obligations issued to
obtain funds for various public purposes, including the construction of a wide
range of public facilities, refunding of outstanding obligations, payment of
general operating expenses and extensions of loans to public institutions and
facilities. Private activity bonds that are issued by or on behalf of public
authorities to finance privately operated facilities are considered to be
Municipal Obligations if the interest paid on them qualifies as excluded from
gross income (but not necessarily from alternative minimum
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taxable income) for Federal income tax purposes in the opinion of bond counsel
to the issuer.
Municipal Obligations may be issued to finance life care facilities, which
are an alternative form of long-term housing for the elderly that offer
residents the independence of a condominium life-style and, if needed, the
comprehensive care of nursing home services. Bonds to finance these
facilities have been issued by various state industrial development
authorities. Because the bonds are secured only by the revenues of each
facility and not by state or local government tax payments, they are subject
to a wide variety of risks, including a drop in occupancy levels, the
difficulty of maintaining adequate financial reserves to secure estimated
actuarial liabilities, the possibility of regulatory cost restrictions applied
to health care delivery and competition from alternative health care or
conventional housing facilities.
Municipal leases are Municipal Obligations that may take the form of a
lease or an installment purchase contract issued by state and local
governmental authorities to obtain funds to acquire a wide variety of
equipment and facilities such as fire and sanitation vehicles, computer
equipment and other capital assets. These obligations have evolved to make it
possible for state and local government authorities to acquire property and
equipment without meeting constitutional and statutory requirements for the
issuance of debt. Thus, municipal leases have special risks not normally
associated with Municipal Obligations. These obligations frequently contain
"non-appropriation" clauses that provide that the governmental issuer of the
obligation has no obligation to make future payments under the lease or
contract unless money is appropriated for those purposes by the legislative
body on a yearly or other periodic basis. In addition to the non-
appropriation risk, municipal leases represent a type of financing that has
not yet developed the depth of marketability associated with other Municipal
Obligations. Moreover, although municipal leases will be secured by the
leased equipment, the disposition of the equipment in the event of foreclosure
might prove to be difficult.
Tax legislation in recent years has included several provisions that may
affect the supply of, and the demand for, Municipal Obligations, as well as
the tax-exempt nature of interest paid on those obligations. Neither the
Trust nor GEIM can predict with certainty the effect of recent tax law changes
upon the Municipal Obligation market, including the availability of
instruments for investment by a Fund. In addition, neither the Trust nor GEIM
can predict whether additional legislation
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adversely affecting the Municipal Obligation market will be enacted in the
future. The Trust monitors legislative developments and considers whether
changes in the objective or policies of a Fund need to be made in response
to those developments.
MORTGAGE RELATED SECURITIES. The average maturity of pass-through pools
of mortgage related securities in which certain of the Funds may invest varies
with the maturities of the underlying mortgage instruments. In addition, a
pool's stated maturity may be shortened by unscheduled payments on the
underlying mortgages. Factors affecting mortgage prepayments include the
level of interest rates, general economic and social conditions, the location
of the mortgaged property and age of the mortgage. Because prepayment rates
of individual mortgage pools vary widely, the average life of a particular
pool cannot be predicted accurately.
Mortgage related securities may be classified as private, governmental or
government-related, depending on the issuer or guarantor. Private mortgage
related securities represent pass-through pools consisting principally of
conventional residential mortgage loans created by non-governmental issuers,
such as commercial banks, savings and loan associations and private mortgage
insurance companies. Governmental mortgage related securities are backed by
the full faith and credit of the United States. GNMA, the principal U.S.
guarantor of these securities, is a wholly-owned U.S. government corporation
within the Department of Housing and Urban Development. Government-related
mortgage related securities are not backed by the full faith and credit of the
United States. Issuers include FNMA and FHLMC. FNMA is a government-
sponsored corporation owned entirely by private stockholders, which is subject
to general regulation by the Secretary of Housing and Urban Development.
Pass-through securities issued by FNMA are guaranteed as to timely payment of
principal and interest by FNMA. FHLMC is a corporate instrumentality of the
United States, the stock of which is owned by the Federal Home Loan Banks.
Participation certificates representing interests in mortgages from FHLMC's
national portfolio are guaranteed as to the timely payment of interest and
ultimate collection of principal by FHLMC.
Private, governmental or government-related entities may create mortgage
loan pools offering pass-through investments in addition to those described
above. The mortgages underlying these securities may be alternative mortgage
instruments, that is, mortgage instruments whose principal or interest
payments may vary or whose terms to maturity may be shorter than previously
customary. GEIM assesses new types of mortgage related
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securities as they are developed and offered to determine their appropriateness
for investment by the relevant Fund.
INVESTMENT RESTRICTIONS
Investment restrictions numbered 1 through 10 below have been adopted by
the Trust as fundamental policies of the Funds. Under the Investment Company
Act of 1940, as amended (the "1940 Act"), a fundamental policy may not be
changed with respect to a Fund without the vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of the Fund.
Investment restrictions 11 through 17 may be changed by a vote of the Board of
Trustees at any time.
1. No Fund may borrow money, except that the Money Market Fund may enter
into reverse repurchase agreements, and except that each Fund may borrow from
banks for temporary or emergency (not leveraging) purposes, including the
meeting of redemption requests and cash payments of dividends and
distributions that might otherwise require the untimely disposition of
securities, in an amount not to exceed 33-1/3% of the value of the Fund's
total assets (including the amount borrowed) valued at market less
liabilities (not including the amount borrowed) at the time the borrowing is
made. Whenever borrowings, including reverse repurchase agreements, of 5% or
more of a Fund's total assets are outstanding, the Fund will not make any
additional investments.
2. No Fund may lend its assets or money to other persons, except through
(a) purchasing debt obligations, (b) lending portfolio securities in an amount
not to exceed 30% of the Fund's assets taken at market value, (c) entering
into repurchase agreements (d) trading in financial futures contracts, index
futures contracts, securities indexes and options on financial futures
contracts, options on index futures contracts, options on securities and
options on securities indexes and (e) entering into variable rate demand
notes.
3. No Fund, other than the International Income Fund, may purchase
securities (other than Government Securities) of any issuer if, as a result of
the purchase, more than 5% of the Fund's total assets would be invested in the
securities of the issuer, except that up to 25% of the value of the total
assets of each Fund, other than the Money Market Fund, may be invested without
regard to this limitation. All securities of a foreign government and its
agencies will be treated as a single issuer for purposes of this restriction.
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4. No Fund, other than the International Income Fund, may purchase more
than 10% of the voting securities of any one issuer, or more than 10% of the
outstanding securities of any class of issuer, except that (a) this limitation
is not applicable to a Fund's investments in Government Securities and (b) up
to 25% of the value of the assets of a Fund, other than the Money Market Fund,
may be invested without regard to these 10% limitations. All securities of a
foreign government and its agencies will be treated as a single issuer for
purposes of this restriction.
5. No Fund may invest more than 25% of the value of its total assets in
securities of issuers in any one industry, except that the Tax-Exempt Fund may
invest more than 25% of the value of its total assets in securities issued or
guaranteed by a state, municipality or other political subdivision, unless the
securities are backed only by the assets and revenues of non-governmental
users. For purposes of this restriction, the term industry will be deemed to
include (a) the government of any one country other than the United States,
but not the U.S. Government and (b) all supranational organizations. In
addition, securities held by the Money Market Fund that are issued by domestic
banks are excluded from this restriction.
6. No Fund may underwrite any issue of securities, except to the extent
that the sale of portfolio securities in accordance with the Fund's investment
objective, policies and limitations may be deemed to be an underwriting, and
except that the Fund may acquire securities under circumstances in which, if
the securities were sold, the Fund might be deemed to be an underwriter for
purposes of the Securities Act of 1933, as amended.
7. No Fund may purchase or sell real estate or real estate limited
partnership interests, or invest in oil, gas or mineral leases, or mineral
exploration or development programs, except that a Fund may (a) invest in
securities secured by real estate, mortgages or interests in real estate or
mortgages, (b) purchase securities issued by companies that invest or deal in
real estate, mortgages or interests in real estate or mortgages, (c) engage in
the purchase and sale of real estate as necessary to provide it with an office
for the transaction of business or (d) acquire real estate or interests in
real estate securing an issuer's obligations, in the event of a default by
that issuer.
8. No Fund may make short sales of securities or maintain a short
position, unless at all times when a short position is open, the Fund owns an
equal amount of the securities or securities convertible into or exchangeable
for, without
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payment of any further consideration, securities of the same
issue as, and equal in amount to, the securities sold short.
9. No Fund may purchase securities on margin, except that a Fund may
obtain any short-term credits necessary for the clearance of purchases and
sales of securities. For purposes of this restriction, the deposit or payment
of initial or variation margin in connection with futures contracts, financial
futures contracts or related options, and options on securities, options on
securities indexes and options on currencies will not be deemed to be a
purchase of securities on margin by a Fund.
10. No Fund may invest in commodities, except that each Fund (other than
the Money Market Fund) may invest in futures contracts (including financial
futures contracts, index futures contracts or securities index futures
contracts) and related options and other similar contracts (including foreign
currency forward, futures and options contracts) as described in this
Statement of Additional Information and in the Prospectus.
11. No Fund may purchase or sell put options, call options, spreads or
combinations of put options, call options and spreads, except that (a) each
Fund, other than the Money Market Fund, may purchase and sell covered put and
call options on securities and stock indexes and futures contracts and options
on futures contracts; (b) the Tax-Exempt Fund may acquire stand-by commitments
and (c) the Money Market Fund may acquire "puts" and "unconditional puts" as
defined in Rule 2a-7 under the 1940 Act.
12. No Fund may purchase securities of other investment companies, other
than a security acquired in connection with a merger, consolidation,
acquisition, reorganization or offer of exchange and except as otherwise
permitted under the 1940 Act.
13. No Fund may invest in companies for the purpose of exercising control
or management.
14. No Fund may purchase securities (other than Government Securities)
if, as a result of the purchase, the Fund would then have more than 5% of its
total assets invested in securities of companies (including predecessors) that
have been in continuous operation for fewer than three years, except that in
the case of industrial revenue bonds purchased by the Tax-Exempt Fund, this
restriction will apply to the entity supplying the revenues from which the
issue is to be paid.
15. No Fund may purchase or retain securities of any company if, to the
knowledge of the Trust, any of the Trust's officers or Trustees or any officer
or director of GEIM
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<PAGE>
individually owns more than 1/2 of 1% of the outstanding
securities of the company and together they own beneficially more than 5% of
the securities.
16. No Fund may purchase warrants (other than warrants acquired by the
Fund as part of a unit or attached to securities at the time of purchase) if,
as a result, the investments (valued at the lower of cost or market) would
exceed 5% of the value of the Fund's net assets of which not more than 2% of
the value of the Fund's net assets may be invested in warrants not listed on
the New York Stock Exchange, Inc. (the "NYSE") or the American Stock Exchange.
For purposes of this restriction, warrants acquired by a Fund in units or
attached to securities may be deemed to be without value. The Money Market
Fund may not invest in any form of warrants.
17. No Fund may purchase illiquid securities if more than 15% of the
total assets of the Fund would be invested in illiquid securities; the Money
Market Fund will not purchase illiquid securities. For purposes of this
restriction, illiquid securities are securities that cannot be disposed of by
a Fund within seven days in the ordinary course of business at approximately
the amount at which the Fund has valued the securities.
18. No Fund may purchase restricted securities if more than 10% of the
total assets of the Fund would be invested in restricted securities.
Restricted securities are securities that are subject to contractual or legal
restrictions on transfer, excluding for purposes of this restriction,
restricted securities that are eligible for resale pursuant to Rule 144A under
the Securities Act of 1933, as amended ("Rule 144A Securities"), that have
been determined to be liquid by the Trust's Board of Trustees based upon the
trading markets for the securities. In no event, however, will any Fund's
investment in illiquid and non-publicly traded securities, in the aggregate,
exceed 15% of its assets. In addition, no Fund may invest more than 50% of
its net assets in securities of unseasoned issuers and restricted securities,
including for purposes of this restriction, Rule 144A Securities.
The Trust may make commitments more restrictive than the restrictions
listed above with respect to a Fund to permit the sale of shares of the Fund
in certain states. Should the Trust determine that any such commitment is no
longer in the best interests of a Fund and its shareholders, the Trust will
revoke the commitment by terminating the sale of shares of the Fund in the
state involved or may otherwise modify its commitment based on a change in the
state's restrictions. The percentage
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<PAGE>
limitations in the restrictions listed above apply at the time of purchases of
securities. For purposes of investment restriction number 5, the Trust may use
the industry classifications reflected by the S&P 500 Composite Stock Index, if
applicable at the time of determination. For all other portfolio holdings, the
Trust may use the Directory of Companies Required to File Annual Reports with
the SEC and Bloomberg Inc. In addition, the Trust may select its own industry
classifications, provided such classifications are reasonable.
PORTFOLIO TRANSACTIONS AND TURNOVER
Decisions to buy and sell securities for each Fund are made by GEIM,
subject to review by the Trust's Board of Trustees. Transactions on domestic
stock exchanges and some foreign stock exchanges involve the payment of
negotiated brokerage commissions. On exchanges on which commissions are
negotiated, the cost of transactions may vary among different brokers. On
most foreign exchanges, commissions are fixed. No stated commission will be
generally applicable to securities traded in U.S. over-the-counter markets,
but the prices of those securities include undisclosed commissions or mark-
ups. The cost of securities purchased from underwriters include an
underwriting commission or concession, and the prices at which securities are
purchased from and sold to dealers include a dealer's mark-up or mark-down.
Government Securities generally will be purchased on behalf of a Fund from
underwriters or dealers, although certain newly issued Government Securities
may be purchased directly from the U.S. Treasury or from the issuing agency or
instrumentality.
In selecting brokers or dealers to execute securities transactions on
behalf of a Fund, GEIM seeks the best overall terms available. In assessing
the best overall terms available for any transaction, GEIM considers factors
that it deems relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution capability of
the broker or dealer and the reasonableness of the commission, if any, for the
specific transaction and on a continuing basis. In addition, the investment
advisory agreement between the Trust and GEIM relating to each Fund authorizes
GEIM, on behalf of the Fund, in selecting brokers or dealers to execute a
particular transaction, and in evaluating the best overall terms available, to
consider the brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) provided to the Fund
and/or other accounts over which GEIM or its affiliates exercise investment
discretion. The fees under the investment advisory agreement relating to a
Fund will not be reduced by reason of the Fund's receiving brokerage and
research services. The Trust's Board of Trustees
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<PAGE>
periodically reviews the commissions paid by a Fund to determine if the
commissions paid over representative periods of time were reasonable in
relation to the benefits inuring to the Fund. Over-the-counter purchases and
sales on behalf of the Funds will be transacted directly with principal market
makers except in those cases in which better prices and executions may be
obtained elsewhere. A Fund will not purchase any security, including
Government Securities, during the existence of any underwriting or selling
group relating to the security of which any affiliate of the Fund or GEIM is a
member, except to the extent permitted under rules, interpretations or
exemptions of the SEC. All brokerage transaction commissions paid to
affiliates will be fair and reasonable to the shareholders.
The Money Market Fund may attempt to increase its yield by trading to take
advantage of short-term market variations, which trading would result in the
Fund's experiencing high portfolio turnover. Because purchases and sales of
money market instruments are usually effected as principal transactions,
however, this type of trading by the Money Market Fund will not result in the
Fund's paying high brokerage commissions.
During the fiscal year ended September 30, 1995, the International Fund,
the Global Fund, the U.S. Equity Fund and the Strategic Fund paid $78,872,
$118,140, $98,947 and $27,257, respectively, in commissions to broker-dealers
for execution of portfolio transactions. Of these amounts $60, $3,125,
$60,981 and $5,259 in brokerage transactions was paid by the International
Fund, the Global Fund, the U.S. Equity Fund and the Strategic Fund,
respectively, to a broker because of research services provided during the
past fiscal year. During the fiscal year ended September 30, 1994, the
International Fund, the Global Fund, the U.S. Equity Fund and the Strategic
Fund paid $97,673, $79,652, $168,891 and $28,280, respectively in commissions
to broker-dealers for execution of portfolio transactions. Of these amounts,
$89,877, $68,087, $75,178 and $11,853 in brokerage transactions was paid by
the International Fund, the Global Fund, the U.S. Equity Fund and the
Strategic Fund, respectively, to a broker because of research services
provided during the past fiscal year. The Tax-Exempt Fund, the Income Fund
and the Money Market Fund made no payments to broker-dealers for execution of
portfolio transactions during the 1995 or 1994 fiscal year. For the 1994
fiscal year, the Global Fund, the U.S. Equity Fund and the Strategic Fund paid
$30, $1,750 and $147, respectively, in brokerage commissions to Kidder,
Peabody & Co. Incorporated ("Kidder"), an affiliate of the Fund. In 1994,
Kidder received .04%, 1.04% and .52% of the brokerage commissions paid by the
Global Fund, the U.S. Equity Fund and the Strategic Fund, respectively, and
effected .04% 1.52% and .22% of the total dollar amount of transactions for
the Global Fund, the U.S.
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<PAGE>
Equity Fund and the Strategic Fund, respectively. The Funds made no payments
to Kidder for execution of portfolio transactions during 1995. During 1994,
General Electric Capital Services, Inc., a wholly-owned subsidiary of GE,
owned all of the outstanding stock of Kidder, Peabody Group Inc., the parent
company of Kidder.
MANAGEMENT OF THE TRUST
TRUSTEES AND OFFICERS
The names of the Trustees and executive officers of the Trust, their
addresses and their principal occupations during the past five years and their
other affiliations are shown below. The executive officers of the Trust are
employees of organizations that provide services to the Funds. An asterisk
appears before the name of each Trustee who is an "interested person" of the
Trust, as defined in the 1940 Act.
Age and Principal
Positions Held Occupations
Name and Address with Trust During Past Five Years
________________ ________________ ______________________
*Michael J. Cosgrove Chairman of the Age 46. Executive Vice
3003 Summer Street Board and President President - Mutual Funds
Stamford, CT 06905 of GEIM and General
Electric Investment
Corporation ("GEIC"), a
wholly-owned subsidiary
of General Electric
Company ("GE") that is
registered as an
investment adviser
under the Investment
Advisers Act of 1940,
as amended, since March
1993 (responsibilities
include general
management of all
mutual funds managed by
GEIM and GEIC) and
Director of GEIC and
Executive Vice
President and Director
of GEIM since 1988;
from 1988 until 1993,
Mr. Cosgrove served as
Executive Vice
President - Finance and
Administration of GEIM
and GEIC.
*Alan M. Lewis Trustee and Age 49. Executive Vice
3003 Summer Street Executive Vice President, General
Stamford, CT 06905 President Counsel and Secretary
of GEIM since 1988 and
of GEIC since October
1987.
19
<PAGE>
John R. Costantino Trustee Age 49. Managing
150 East 58th Street Director, Walden
New York, NY 10055 Partners, Ltd.,
consultants and
investors, since August
1992; President, CMG
Acquisition Corp.,
Inc., a holding
company, since 1988;
Vice Chairman,
Acoustiguide Holdings,
Inc., a holding
company, since 1989;
President CMG/IKH,
Inc., a holding
company, since 1991;
Director, Crossland
Federal Savings Bank, a
financial institution;
Director, Brooklyn
Bankcorp, Inc., a
financial institution;
Director, IK Holdings,
Inc., a holding company
since 1991; Director,
I. Kleinfeld & Son,
Inc., a retailer, since
1991; Director, High
Performance Appliances,
Inc., a distributor of
kitchen appliances
("HPA"), since 1991;
Director, HPA Hong
Kong, Ltd., a service
subsidiary of HPA,
since 1991; Director,
Lancit Media
Productions, Ltd., a
children's and family
television film and
videotape production
company, since 1995;
Partner, Costantino
Melamede-Greenberg
Investment Partners, a
general investment
partnership, from
September 1987 through
August 1992.
William J. Lucas Trustee Age 48. Vice President
Fairfield University Treasurer of Fairfield
North Benson Road University since 1983.
Fairfield, CT 06430
Robert P. Quinn Trustee Age 59. Retired since
490 Duck Pond Road 1983 from Salomon
Locust Valley, NY 11560 Brothers Inc.;
Director, GP Financial
Corp., a holding
company, since 1994;
Director, The
Greenpoint Savings
Bank, a financial
institution, since
1987.
*Jeffrey A. Groh Treasurer Age 33. Treasurer and
3003 Summer Street Controller of GEIM and
Stamford, CT 06905 GEIC since August 1994;
prior to August 1994,
was a Senior Manager in
Investment Company
Services Group and
certified public
accountant with Price
Waterhouse LLP.
20
<PAGE>
*Matthew J. Simpson Secretary Age 34. Vice President,
3003 Summer Street Associate
Stamford, CT 06905 General Counsel and
Assistant Secretary of
GEIM and GEIC since
October 1992; attorney
with the law firm of
Baker & McKenzie, April
1991 to October 1992;
prior to April 1991 was
an attorney with the
law firm of Spengler
Carlson Gubar Brodsky &
Frischling.
No employee of GE or any of its affiliates receives any compensation from the
Trust for acting as a Trustee or officer of the Trust. Each Trustee of the
Trust who is not a director, officer or employee of GEIM, GE Investment
Services Inc. (the "Distributor"), GE, or any affiliate of those companies,
receives an annual fee of $10,000 for services as Trustee. In addition, each
Trustee receives $500 for each meeting of the Trust's Board of Trustees
attended by the Trustee and is reimbursed for expenses incurred in connection
with attendance at Board meetings.
Trustees' Compensation
(for the last fiscal year)
Total Compensation for all
Total Compensation Investment Companies
Name of Trustee from the Trust Managed by GEIM or GEIC
_______________ _______________________ ___________________________
Michael J.Cosgrove None None+
Alan M. Lewis None None+
John R. Costantino $12,000 $17,000++
William J. Lucas $12,000 $17,000++
Robert P. Quinn $12,000 $17,000++
_______________________
+ Messrs. Cosgrove and Lewis serve as Trustees of two
investment companies advised by GEIM and of eight investment
companies advised by GEIC. They are considered to be interested
persons of each investment company advised by GEIM or GEIC, as
defined under Section 2(a)(19) of the 1940 Act, and accordingly,
serve as Trustees thereof without compensation.
++ Messrs. Costantino, Lucas and Quinn serve as Trustees of
two investment companies advised by GEIM and the compensation is
for their services as Trustees of both companies.
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<PAGE>
INVESTMENT ADVISER AND ADMINISTRATOR
GEIM, located at 3003 Summer Street, P.O. Box 7900, Stamford, Connecticut
06904, a wholly-owned subsidiary of GE, bears all expenses in connection with
the performance of its services as each Fund's investment adviser and
administrator. For the fiscal year ended September 30, 1995, the
International Fund, the Global Fund, the U.S. Equity Fund, the Strategic Fund,
the Tax-Exempt Fund, the Income Fund, the Government Fund and the Money Market
Fund paid $237,427, $249,803, $563,259, $127,625, $38,285, $85,281, $28,438
and $161,393, respectively, for investment advisory and administration
services. For the fiscal year ended September 30, 1994, the International
Fund, the Global Fund, the U.S. Equity Fund, the Strategic Fund, the Tax-
Exempt Fund, the Income Fund, the Government Fund and the Money Market Fund
paid $122,202, $173,762, $431,236, $80,973, $40,920, $117,064, $12,214 and
$81,491, respectively, for investment advisory and administration services.
For the fiscal year ended September 30, 1993, the Global Fund, the U.S. Equity
Fund, the Strategic Fund, the Tax-Exempt Fund, the Income Fund and the Money
Market Fund paid $36,124, $98,111, $19,393, $16,451, $17,904 and $15,920,
respectively, for advisory and administration services. Under its agreement
governing the investment advisory services it performs with respect to the
Funds, GEIM has agreed that, if in any fiscal year of a Fund, the aggregate
expenses of a Fund (including management fees, but excluding interest, taxes,
brokerage fees, fees paid with respect to each Fund other than the Money
Market Fund (individually a "Participant Fund" and collectively the
"Participant Funds"), pursuant to the Trust's Shareholder Servicing and
Distribution Plans adopted pursuant to Rule 12b-1 under the 1940 Act (the
"Plans"), and, with the prior written consent of the necessary state
securities commissions, extraordinary expenses) exceed the expense limitation
of any state having jurisdiction over the Trust, GEIM will reimburse the Trust
up to the amount of the Fund's investment advisory and administration fee. As
of the date of this Statement of Additional Information, the most restrictive
state expense limitation applicable to the Funds requires reimbursement of
expenses in any year that a Fund's expenses, subject to the limitation, exceed
2-1/2% of the first $30 million of the average daily value of the Fund's net
assets, 2% of the next $70 million of the average daily value of the Fund's
net assets and 1-1/2% of the remaining average daily value of the Fund's net
assets.
Under the Plans, the Trust pays GEIM, with respect to each Participant
Fund, (1) for shareholder services provided to the Class A, Class B and Class
C shares of the Participant Fund, an
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<PAGE>
annual feeof .25% of the value of the average daily net assets attributed to
the Class A, Class B and Class C shares of the Participant Fund,
respectively and (2) for distribution services provided to the Class A and
Class B shares of each Participant Fund other than the Government Fund, an
annual fee of .25% and .75% of the value of the average daily net assets of the
Participant Fund, respectively; or in the case of the Government Fund, an
annual fee of .25% and .60% of the value of the average daily net assets of the
Government Fund, respectively. Under their terms, the Plans continue from year
to year, provided their continuance is approved annually by vote of the Trust's
full Board of Trustees, as well as by a majority of the Trustees who are not
interested persons of the Trust and who have no direct or indirect financial
interest in the operation of the Plans or in any agreements related to them
(the "Independent Trustees"). The Plans may not be amended to increase
materially the amount of the fees paid under the Plans with respect to a Fund
without approval of shareholders of the Fund. In addition, all material
amendments of the Plans must be approved by the Trustees and Independent
Trustees in the manner described above. The Plans may be terminated with
respect to a Fund at any time, without penalty, by vote of a majority of the
Independent Trustees or by a vote of a majority of the outstanding voting
securities of a Fund (as defined in the 1940 Act). For the fiscal
year ended September 30, 1995, the International Fund, the Global Fund,
the U.S. Equity Fund, the Strategic Fund, the Tax-Exempt Fund, the Income Fund
and the Government Fund incurred $12,775, $65,971, $89,445, $64,199, $17,804,
$68,913, $4,527 and $0, respectively for service and distribution fees. For
the fiscal year ended September 30, 1994, the International Fund, the Global
Fund, the U.S. Equity Fund, the Strategic Fund, the Tax Exempt Fund, the
Income Fund and the Government Fund incurred $574, $40,788, $121,987, $34,206,
$18,934, $124,644 and $502, respectively, for service and distribution fees.
For the fiscal year ended September 30, 1993, the Global Fund, the U.S. Equity
Fund, the Strategic Fund, the Tax Exempt Fund and the Income Fund incurred
$11,967, $61,001, $13,753, $11,766 and $12,695 for service and distribution
fees, all of which were waived by GEIM.
During the fiscal year ended September 30, 1995, GEIM waived a total of
$66,501, $94,488, $348,302, $83,026, $76,006, $95,425, $76,414 and $165,031 of
expenses of the International Fund, the Global Fund, the U.S. Equity Fund, the
Strategic Fund, the Tax-Exempt Fund, the Income Fund, the Government Fund and
the Money Market Fund, respectively. During the fiscal year ended September
30, 1994, GEIM waived a total of $49,516, $102,700, $527,744, $105,756,
$60,529, $154,160, $30,600 and $191,863 of expenses of the International Fund,
the Global Fund, the U.S. Equity Fund, the Strategic Fund, the Tax-Exempt
Fund, the Income
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<PAGE>
Fund, the Government Fund and the Money Market Fund, respectively.
During the fiscal year ended September 30, 1993, GEIM waived a
total of $51,981, $205,198, $54,735, $43,599, $52,255 and $65,280 of expenses
of the Global Fund, the U.S. Equity Fund, the Strategic Fund, the Tax-Exempt
Fund, the Income Fund and the Money Market Fund, respectively.
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company ("State Street") is located at 225
Franklin Street, Boston, Massachusetts 02101 and serves as custodian and
transfer agent of the Funds' investments. Under its custodian contract with
the Trust, State Street is authorized to appoint one or more banking
institutions as subcustodians of assets owned by each Fund. For its custody
services, State Street receives monthly fees charged to the Funds based upon
the month-end, aggregate net asset value of the Funds, plus certain charges
for securities transactions. The assets of the Trust are held under bank
custodianship in accordance with the 1940 Act. As transfer agent, State
Street is responsible for processing redemption requests and crediting
dividends to the accounts of shareholders of the Funds.
DISTRIBUTOR
GE Investment Services Inc. serves as the distributor of shares of the
Funds on a best efforts basis.
REDEMPTION OF SHARES
Detailed information on how to redeem shares of a Fund is included in the
Prospectus. The right of redemption of shares of a Fund may be suspended or
the date of payment postponed (1) for any periods during which the NYSE is
closed (other than for customary weekend and holiday closings), (2) when
trading in the markets the Fund normally utilizes is restricted, or an
emergency, as defined by the rules and regulations of the SEC, exists, making
disposal of a Fund's investments or determination of its net asset value not
reasonably practicable or (3) for such other periods as the SEC by order may
permit for the protection of the Fund's shareholders. A shareholder who pays
for Fund shares by personal check will receive the proceeds of a redemption of
those shares when the purchase check has been collected, which may take up to
15 days or more. Shareholders who anticipate the need for more immediate
access to their investment should purchase shares with Federal funds or bank
wire or by a certified or cashier's check.
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<PAGE>
EXCHANGE PRIVILEGE
The exchange privilege described in the Prospectus enables a shareholder
of a Fund to acquire shares in a Fund having a different investment objective
and policies when the shareholder believes that a shift between Funds is an
appropriate investment decision. Upon receipt of proper instructions and all
necessary supporting documents, shares submitted for exchange are redeemed at
the then-current net asset value and the proceeds are immediately invested in
shares of the Fund being acquired. The Trust reserves the right to reject any
exchange request.
NET ASSET VALUE
The Trust will not calculate net asset value on certain holidays. On
those days, securities held by a Fund may nevertheless be actively traded, and
the value of the Fund's shares could be significantly affected.
Because of the need to obtain prices as of the close of trading on various
exchanges throughout the world, the calculation of the net asset value of the
Money Market Fund or a Class of certain Participant Funds may not take place
contemporaneously with the determination of the prices of many of their
portfolio securities used in the calculation. A security that is listed or
traded on more than one exchange is valued at the quotation on the exchange
determined to be the primary market for the security. All assets and
liabilities of the Funds initially expressed in foreign currency values will
be converted into U.S. dollar values at the mean between the bid and offered
quotations of the currencies against U.S. dollars as last quoted by any
recognized dealer. If these quotations are not available, the rate of
exchange will be determined in good faith by the Trust's Board of Trustees.
In carrying out the Board's valuation policies, GEIM may consult with one or
more independent pricing services ("Pricing Service") retained by the Trust.
Debt securities of U.S. issuers (other than Government Securities and
short-term investments), including Municipal Obligations, are valued by GEIM
after consultation with a Pricing Service. When, in the judgment of the
Pricing Service, quoted bid prices for investments of the Tax-Exempt Fund are
readily available and are representative of the bid side of the market, these
investments are valued at the mean between the quoted bid prices and asked
prices. Investments of the Tax-Exempt Fund that are not regularly quoted are
carried at fair value as determined by the Board of Trustees, which may rely
on the assistance of the Pricing Service. The procedures of the Pricing
Service are
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<PAGE>
reviewed periodically by GEIM under the general supervision and
responsibility of the Board of Trustees of the Trust.
The valuation of the portfolio securities of the Money Market Fund is
based upon amortized cost, which does not take into account unrealized capital
gains or losses. Amortized cost valuation involves initially valuing an
instrument at its cost and thereafter assuming a constant amortization to
maturity of any discount or premium, regardless of the effect of fluctuating
interest rates on the market value of the instrument. Although this method
provides certainty in valuation, it may result in periods during which value,
as determined by amortized cost, is higher or lower than the price the Money
Market Fund would receive if it sold the instrument.
The use of the amortized cost method of valuing the portfolio securities
of the Money Market Fund is permitted by a rule adopted by the SEC. Under
this rule, the Money Market Fund must maintain a dollar-weighted average
portfolio maturity of 90 days or less, purchase only instruments having
remaining maturities of 13 months or less, and invest only in "eligible
securities" as defined in the rule, which are determined by GEIM to present
minimal credit risks. Pursuant to the rule, GEIM has established procedures
designed to stabilize, to the extent reasonably possible, the Fund's price per
share as computed for the purpose of sales and redemptions at $1.00. These
procedures include review of the Money Market Fund's portfolio holdings at
such intervals as GEIM may deem appropriate, to determine whether the Fund's
net asset value calculated by using available market quotations or market
equivalents deviates from $1.00 per share based on amortized cost.
The rule regarding amortized cost valuation provides that the extent of
any deviation between the Money Market Fund's net asset value based upon
available market quotations or market equivalents and the $1.00 per share net
asset value based on amortized cost must be examined by the Trust's Board of
Trustees. In the event the Board of Trustees determines that a deviation
exists that may result in material dilution or other unfair results to
investors or existing shareholders of the Money Market Fund, the Board of
Trustees must, in accordance with the rule, cause the Fund to take such
corrective action as the Board of Trustees regards as necessary and
appropriate, including: selling portfolio instruments of the Fund prior to
maturity to realize capital gains or losses or to shorten average portfolio
maturity; withholding dividends or paying distributions from capital or
capital gains; redeeming shares in kind; or establishing a net asset value per
share by using available market quotations.
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<PAGE>
DIVIDENDS, DISTRIBUTIONS AND TAXES
Set forth below is a summary of certain Federal income tax considerations
generally affecting the Funds and their shareholders. The summary is not
intended as a substitute for individual tax planning, and shareholders are
urged to consult their tax advisors regarding the application of Federal,
state, local and foreign tax laws to their specific tax situations.
TAX STATUS OF THE FUNDS AND THEIR SHAREHOLDERS
Each Fund is treated as a separate entity for Federal income tax purposes.
Each Fund's net investment income and capital gains distributions are
determined separately from any other series that the Trust may designate.
The Trust intends for each Fund to continue to qualify each year as a
"regulated investment company" under the Code. If a Fund (1) is a regulated
investment company and (2) distributes to its shareholders at least 90% of its
net investment income (including for this purpose its net realized short-term
capital gains) and 90% of its tax-exempt interest income (reduced by certain
expenses), the Fund will not be liable for Federal income taxes to the extent
that its net investment income and its net realized long-term and short-term
capital gains, if any, are distributed to its shareholders. In addition, in
order to avoid a 4% excise tax, a Fund must declare, no later than December 31
and distribute no later than the following January 31, at least 98% of its
taxable ordinary income earned during the calendar year and 98% of its capital
gain net income for the year period ending on October 31 of such calendar
year. One requirement for qualification as a regulated investment company is
that each Fund must diversify its holdings so that, at the end of each
quarter, (i) at least 50% of the market value of the Fund's assets is
represented by cash and cash items, securities of other regulated investment
companies, U.S. government securities and other securities, with such other
securities limited for purposes of this calculation in respect of any one
issuer to an amount not greater than 5% of the value of the Fund's assets and
not greater than 10% of the outstanding voting securities of such issuer, and
(ii) not more than 25% of the value of its total assets is invested in the
securities of any one issuer or of two or more issuers that are controlled by
the Fund (within the meaning of Section 851(b)(4)(B) of the Code) that are
engaged in the same or similar trades or businesses or related trades or
businesses (other than Government Securities or the securities of other
regulated investment companies).
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<PAGE>
The requirements for qualification as a regulated investment company also
include two significant rules as to investment results. First, a Fund must
earn at least 90% of its gross income from dividends, interest, payments with
respect to securities loans, gains from the disposition of stock or securities
(including gains from related investments in foreign currencies) and income
(including gains from options, futures or forward contracts) derived with
respect to its business of investing in such stocks, securities or currencies
(the "90% Test"). Second, a Fund must derive less than 30% of its gross
income from the sale or other disposition of (i) stock or securities held for
less than three months, (ii) options futures, or forward contracts held for
less than three months (other than options, futures, or forward contracts on
foreign currencies), and (iii) foreign currencies (or options, futures or
forward contracts on foreign currencies) held for less than three months, but
only if such currencies (or options, future or forward contracts) are not
directly related to the Fund's principal business of investing in stock or
securities (or options and futures with respect to stocks or securities) (the
"30% Test").
The 30% Test will restrict the extent to which a Fund may, among other
things: (1) sell or purchase put options on securities held for less than
three months or purchase put options on substantially identical securities
(unless the option and the security are acquired on the same day); (2) write
options that expire in less than three months; and (3) close options that were
written or purchased within the preceding three months. For purposes of the
30% Test, a Fund's increases or decreases in value of short-term investment
positions that constitute certain designated hedging transactions may
generally be netted. The Trust does not expect that the 30% Test will
significantly affect the investment policies of any Fund.
A Fund's transactions in options and futures contracts are subject to
special provisions of the Code that, among other things, may affect the
character of gains and losses realized by the Fund (that is, may affect
whether gains or losses are ordinary or capital), accelerate recognition of
income to the Fund and defer losses of the Fund. These rules (1) could affect
the character, amount and timing of distributions to shareholders of a Fund,
(2) will require the Fund to "mark to market" certain types of the positions
in its portfolio (that is, treat them as if they were closed out) and (3) may
cause the Fund to recognize income without receiving cash with which to make
distributions in amounts necessary to satisfy the distribution requirements
for avoiding income and excise taxes described above and in the Prospectus.
The Trust seeks to monitor transactions of each Fund, will seek to make the
appropriate tax elections on behalf
-28-
<PAGE>
of the Fund and seeks to make the appropriate entries in the Fund's books and
records when the Fund acquires any option, futures contract or hedged
investment, to mitigate the effect of these rules and prevent disqualification
of the Fund as a regulated investment company.
In order for the Tax-Exempt Fund to pay exempt-interest dividends for any
taxable year, at the close of each taxable quarter, at least 50% of the
aggregate value of the Fund's portfolio must consist of exempt-interest
obligations. Within 60 days after the close of the taxable year of the Tax-
Exempt Fund, the Trust will notify the Fund's shareholders of the portion of
the dividends paid that constitutes an exempt-interest dividend with respect
to that taxable year. The percentage of total dividends paid by the Tax-
Exempt Fund with respect to any taxable year that qualifies as Federal exempt-
interest dividends will be the same for all shareholders receiving dividends
from the Fund for that year.
Interest on indebtedness incurred by a shareholder to purchase or carry
shares of the Tax-Exempt Fund is not deductible for income tax purposes if the
Fund distributes exempt-interest dividends during the shareholder's taxable
year. In addition, if a shareholder of the Tax-Exempt Fund holds shares for
six months or less, any loss on the sale or exchange of those shares will be
disallowed to the extent of the amount of exempt-interest dividends received
with respect to the shares.
As a general rule, a shareholder's gain or loss on a sale or redemption of
shares of a Fund will be a long-term capital gain or loss if the shareholder
has held the shares for more than one year. The gain or loss will be a short-
term capital gain or loss if the shareholder has held the shares for one year
or less.
The Fund's net realized long-term capital gains are distributed as
described in the Prospectus. The distributions ("capital gain dividends"), if
any, are taxable to a shareholder of a Fund as long-term capital gains,
regardless of how long a shareholder has held the shares, and will be
designated as capital gain dividends in a written notice mailed by the Trust
to the shareholders of the Fund after the close of the Fund's prior taxable
year. If a shareholder receives a capital gain dividend with respect to any
share of a Fund, and if the share is sold before it has been held by the
shareholder for six months or less, then any loss on the sale or exchange of
the share, to the extent of the capital gain dividend, will be treated as a
long-term capital loss. This rule will apply to a sale of shares of the Tax-
Exempt Fund only to the extent the loss is not disallowed under the provision
described above. Investors
-29-
<PAGE>
considering buying shares of a Fund on or just prior to the record date for a
taxable dividend or capital gain distribution should be aware that the amount
of the dividend or distribution payment will be a taxable dividend or
distribution payment.
Special rules contained in the Code apply when a shareholder of a Fund
disposes of shares of the Fund through a redemption or exchange within 90 days
of purchase and subsequently acquires shares of a Fund on which a sales charge
normally is imposed without paying a sales charge in accordance with the
exchange privilege described in the Prospectus. In these cases, any gain on
the disposition of the shares of the Fund will be increased, or loss
decreased, by the amount of the sales charge paid when the shares were
acquired, and that amount will increase the adjusted basis of the shares of
the Fund subsequently acquired. In addition, if shares of a Fund are
purchased within 30 days of redeeming shares at a loss, the loss will not be
deductible and instead will increase the basis of the newly purchased shares.
If a shareholder of a Fund fails to furnish the Trust with a correct
taxpayer identification number, fails to report fully dividend or interest
income, or fails to certify that he or she has provided a correct taxpayer
identification number and that he or she is not subject to "backup
withholding," then the shareholder may be subject to a 31% "backup
withholding" tax with respect to (1) taxable dividends and distributions from
the Fund and (2) the proceeds of any redemptions of shares of the Fund. An
individual's taxpayer identification number is his or her social security
number. The 31% backup withholding tax is not an additional tax and may be
credited against a taxpayer's regular Federal income tax liability.
THE FUNDS' PERFORMANCE
As noted in the Prospectus, the Trust, from time to time, may quote a
Fund's performance, in terms of the Money Market Fund's or a Class' yield
and/or total return, in reports or other communications to shareholders of the
Fund or in advertising material. To the extent that any advertisement or
sales literature of a Participant Fund describes the expenses or performance
of any Class, it will also disclose the expenses or performance for the other
Classes. Additional information regarding the manner in which performance
figures are calculated is provided below.
-30-
<PAGE>
YIELD
The yield for the Money Market Fund is computed by (1) determining the net
change in the value of a hypothetical preexisting account in the Fund having a
balance of one share at the beginning of a seven-calendar-day period for which
yield is to be quoted, (2) dividing the net change by the value of the account
at the beginning of the period to obtain the base period return, and (3)
annualizing the results (that is, multiplying the base period return by
365/7). The net change in the value of the account reflects the value of
additional shares purchased with dividends declared on the original share and
any such additional shares, but does not include realized gains and losses or
unrealized appreciation and depreciation. In addition, the Money Market Fund
may calculate a compound effective annualized yield by adding one to the base
period return (calculated as described above), raising the sum to a power
equal to 365/7 and subtracting one.
The 30-day yield figure described in the Prospectus is calculated for a
Class according to a formula prescribed by the SEC. The formula can be
expressed as follows:
Yield = 2[(a-b + 1)6-1]
cd
Where:
a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursement).
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends.
d = the maximum offering price per share on the last day of the period.
For the purpose of determining the interest earned (variable "a" in the
formula) on debt obligations that were purchased by a Fund at a discount or
premium, the formula generally calls for amortization of the discount or
premium; the amortization schedule will be adjusted monthly to reflect changes
in the market values of the debt obligations.
The Tax-Exempt Fund's tax equivalent yield is computed for a Class by
dividing that portion of the Fund's yield that is tax-exempt by one minus a
stated income tax rate and adding the
-31-
<PAGE>
product to that portion, if any, of the Fund's yield that is not tax-exempt.
Investors should recognize that, in periods of declining interest rates,
the yield will tend to be somewhat higher than prevailing market rates, and in
periods of rising interest rates the yield will tend to be somewhat lower. In
addition, when interest rates are falling, moneys received by a Fund from the
continuous sale of its shares will likely be invested in portfolio instruments
producing lower yields than the balance of the Fund's portfolio, thereby
reducing the current yield of the Fund. In periods of rising interest rates,
the opposite result can be expected to occur.
Yield information is useful in reviewing the performance of a Fund, but
because yields fluctuate, this information cannot necessarily be used to
compare an investment in shares of the Fund with bank deposits, savings
accounts and similar investment alternatives that often provide an agreed or
guaranteed fixed yield for a stated period of time. Shareholders of a Fund
should remember that yield is a function of the kind and quality of the
instruments in the Fund's portfolio, portfolio maturity, operating expenses
and market conditions.
AVERAGE ANNUAL TOTAL RETURN
The "average annual total return" figures described in the Prospectus, are
computed for a Class according to a formula prescribed by the SEC. The
formula can be expressed as follows:
P(1 + T)n = ERV
Where P = a hypothetical initial payment of $1,000;
T = average annual total return;
n = number of years; and
ERV = Ending Redeemable Value of a hypothetical $1,000 investment
made at the beginning of a 1-, 5- or 10-year period at the end
of a 1-, 5- or 10-year period (or fractional portion thereof),
assuming reinvestment of all dividends and distributions.
The ERV assumes complete redemption of the hypothetical investment at the
end of the measuring period.
AGGREGATE TOTAL RETURN
The "aggregate total return" figures described in the Prospectus represent
the cumulative change in the value of an
-32-
<PAGE>
investment in a Class for the
specified period are computed by the following formula:
Aggregate Total Return = ERV - P
P
Where P = a hypothetical initial payment of $1,000; and
ERV = Ending Redeemable Value of a hypothetical $1,000 investment
made at the beginning of a 1-, 5- or 10-year period at the end
of the 1-, 5- or 10-year period (or fractional portion
thereof), assuming reinvestment of all dividends and
distributions.
PRINCIPAL STOCKHOLDERS
GE, a New York corporation, is the only person known to the Trust to be a
control person of the Tax-Exempt Fund or the Government Fund. Aid Association
for Lutherans is the only person known to the Trust to be a control person of
the International Fund. So long as the above persons own in excess of 25% of
the amount of outstanding shares of any class of a Fund they will be deemed to
be control persons; however, assuming no further investment by these persons,
an increase in the amount of assets of the Fund will result in a diminution of
their holdings. The following persons are the only persons known by the Trust
to hold beneficially more than 5% of the outstanding shares of any class of
the Funds as of December 29, 1995:
<TABLE>
<CAPTION>
Class of Percent
Name and Address Shares Amount of of
of Record Owner Name of Fund Owned Ownership Class
<S> <C> <C> <C> <C>
General Electric Tax-Exempt A 4,477 shares 12.70%
Company Fund
2 Corporate Drive
Shelton, CT 06484
George N. Rohrbacher, Tax-Exempt A 4,359 shares 12.37%
Therese J. Rohrbacher, Fund
joint tenants
4473 Lindenhurst Lane
Las Vegas, NV 89120-4206
Frederick E. Hull, Tax-Exempt A 2,977 shares 8.45%
Connie M. Hull, Fund
joint tenants
124 Sigel Ave.
Battle Creek, MI
49017-1536
-33-
<PAGE>
Class of Percent
Name and Address Shares Amount of of
of Record Owner Name of Fund Owned Ownership Class
<S> <C> <C> <C> <C>
Kate Frazier Tax-Exempt A 8,274 shares 23.46%
Doty, Trustee Fund
Paul & Kate
Doty Family
Trust
U/A/D 10/3/90
3317 Windsor Road
Austin, TX
78703-2263
Leroy Bednar Tax-Exempt A 4,139 shares 11.74%
Lola Bednar, Fund
joint tenants
5304 N. Lamar
Austin, TX 76751-1823
Arlyne R. Dryer, Tax-Exempt A 5,264 shares 15.00%
Trustee Fund
Gene F. & Arlyne R.
Dryer Trust
U/A/D 2/10/87
12507 Pomerado Ct.
San Diego, CA 92128-2315
General Electric Tax-Exempt B 4,435 shares 5.96%
Company Fund
2 Corporate Drive
Shelton, CT 06484
Eleanor W. Ecker Tax-Exempt B 4,117 shares 5.54%
601 N. Rio Vista Blvd. Fund
#304
Ft. Lauderdale, FL
33301-2946
Helen A. Wickes Tax-Exempt B 6,917 shares 9.30%
1831 NE 38th St. Fund
#503
Ft. Lauderdale, FL
33308-6203
Lillian M. Salinger Tax-Exempt B 8,628 shares 11.60%
Shirley Salinger, Fund
joint tenants
19370 Collins Ave.
Apt. #522
N. Miami Beach, FL
33160-2248
Roswell C. Taite Tax-Exempt B 8,535 shares 11.47%
Fernie L. Taite, Fund
joint tenants
9108 Hilldale
Houston, TX 77055-7438
Harry B. Linnecke Tax-Exempt B 4,241 shares 5.70%
Norma J. Linnecke, Fund
trustees
Linnecke Family Trust
Dated 12/18/89
3310 Davis Lane
Reno, NV 89511-7956
Pamela G. Willson Tax-Exempt B 6,573 shares 8.84%
1435 Willow Creek Lane Fund
Gardnerville, NV
89410-5821
-34-
<PAGE>
Class of Percent
Name and Address Shares Amount of of
of Record Owner Name of Fund Owned Ownership Class
<S> <C> <C> <C> <C>
George Lewson Trust Tax-Exempt B 31,233 shares 5.15%
U/W/O Faye Lewson Fund
Samuel Schneeweiss
Trustee
41 E. 42nd St., Ste 1410
New York, NY 10017-5301
General Electric Tax-Exempt D 243,054 shares 99.30%
Company Fund
2 Corporate Drive
Shelton, CT 06484
State Street Bank Income Fund A 86,343 shares 16.56%
& Trust Co., as
Trustee Grampas & Co.
Trust
FBO Sage Technology
Master Trust
Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank Income Fund A 83,300 shares 16.00%
& Trust Co.
FBO Beamspeed and Co.
BG Automotive Motors Inc.
Master Trust Client
Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank Income Fund A 306,230 shares 58.70%
& Trust Co.
as Trustee
Beamsail & Co. -
Doubletree
Master Trust Client
Service
1 Enterprise Drive
North Quincy, MA 02171-2126
Wells Fargo Bank, as Income Fund A 27,278 shares 5.23%
Trustee
FBO Hubbell Inc. 401(k)
Attn SSP#0167-
112#6971
201 3rd Street 11th Floor
San Francisco, CA
94163-0001
Jason P. Zeringue Income Fund B 4,122 shares 9.34%
Sharma Zeringue,
tenants in common
811 Kenneth Boagni Dr.
#3
Carencro, LA 70570
Juan E. Baquera Income Fund B 2,468 shares 5.59%
2210 Enfield Road
Apt. #8
Austin, TX 78703-3241
-35-
<PAGE>
Class of Percent
Name and Address Shares Amount of of
of Record Owner Name of Fund Owned Ownership Class
<S> <C> <C> <C> <C>
State Street Bank Income Fund B 2,522 shares 5.72%
& Trust Co.
C/F The Rollover IRA
of
Leo E. Main
1124 Northampton
Kalamazoo, MI 49006-2778
State Street Bank Income Fund B 2,941 shares 6.66%
& Trust Co.
C/F the IRA of Joseph R.
Fruhauff
5560 SW 7th Street
Plantation, FL 33317-4306
State Street Bank Income Fund B 2,869 shares 6.55%
& Trust Co.
C/F the Rollover IRA
of
Dorothy F. Porter
840 El Cortez Way
Sparks, NV 89434-3402
Barbara Jampel, Income Fund B 2,546 shares 5.77%
Trustee
BJ Productions Inc.
Emp. Retir. T
3900 Pacheco Drive
Sherman Oaks, CA 91403-4419
Lilburn H. Smith and Income Fund B 2,385 shares 5.40%
Alma B. Smith, as
Trustees
Lilburn H. Smith Fam.
Trust
Date 12/18/73
12151 Dale St. #C222
Stanton, CA 90680-3844
State Street Bank Income Fund D 77,388 shares 13.92%
& Trust Co., as
Trustee
Eastmate & Co. Trust
FBO GE Capital Fleet
Services
Master Trust Client
Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank Income Fund D 435,167 shares 76.03%
& Trust
Co., Trustee
Benchside & Co. - GE Cap.
Asset
Maint. Master Trust
Client Service
One Enterprise Drive
N. Quincy, MA 02171-2126
-36-
<PAGE>
Class of Percent
Name and Address Shares Amount of of
of Record Owner Name of Fund Owned Ownership Class
<S> <C> <C> <C> <C>
State Street Bank & Trust Global Fund A 134,169 shares 89.24%
Co., as Trustee
Grampas & Co. Trust
FBO Sage Technology
Master Trust Client
Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
BHC Securities, Inc.
FAO 22417798
Attn: Mutual Funds Dept. Global Fund B 1,688 shares 8.54%
One Commerce Square
2005 Market Street
Philadelphia, PA 19103-7042
State Street Bank & Trust Global Fund B 2,786 shares 14.10%
Co.
C/F The IRA of Sharon L.
Giever
825 Boswell Lane
Kalamazoo, MI 49005-5405
Lilburn H. Smith and Global Fund B 1,388 shares 6.77%
Alma B. Smith, as
Trustees
Lilburn H. Smith Fam.
Trust Dated 12/18/73
U/A/D 7-28-87
12151 Dale Street #C222
Stanton, CA. 90680-3844
State Street Bank & Trust Global Fund D 150,902 shares 42.63%
Co., as
Trustee Eastmate & Co. Trust
FBO GE Capital Fleet
Services
Master Trust Client
Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
Boatmen's First National Global Fund D 177,467 shares 50.14%
Bank of
Kansas City,
as Trustee
ERC Thrift Plan
P.O. Box 14737
St. Louis, MO 63178-4737
State Street Bank & Trust Strategic Fund A 193,587 shares 36.37%
Co., as
Trustee Grampas & Co.
Trust
FBO Sage Technology
Master Trust Client
Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
-37-
<PAGE>
Class of Percent
Name and Address Shares Amount of of
of Record Owner Name of Fund Owned Ownership Class
<S> <C> <C> <C> <C>
State Street Bank & Trust Strategic Fund A 307,754 shares 57.83%
Co., as Trustee
Beamsail & Co.- Doubletree
Master Trust Client
Service
1 Enterprise Drive
North Quincy, MA 02171-2126
State Street Bank & Strategic Fund D 464,550 shares 55.39%
Trust Co.,
as Trustee Eastmate & Co.
FBO GE Capital Fleet
Services
Master Trust Client
Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank & Trust Strategic Fund D 289,025 shares 34.46%
Co., Trustee
Benchside & Co., - GE Cap.
Asset Maint.
Master Trust Client
Service
One Enterprise Drive
N. Quincy, MA 02171-2126
State Street Bank & Trust Equity Fund A 335,982 shares 39.69%
Co., as Trustee
Grampas & Co.
Trust FBO Sage
Technology
Master Trust Client
Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank & Trust Equity Fund A 92,165 shares 11.18%
Co.
F/B/O Beamspeed & Co.
BG Automotive Motors Inc.
Master Trust Client
Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank & Trust Equity Fund A 369,814 shares 43.91%
Co., as Trustee
Beamsail & Co.-
Doubletree
Master Trust Client
Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
-38-
<PAGE>
Class of Percent
Name and Address Shares Amount of of
of Record Owner Name of Fund Owned Ownership Class
<S> <C> <C> <C> <C>
State Street Bank & Trust Equity Fund D 576,948 shares 8.81%
Co., as Trustee
Eastmate & Co.
FBO GE Capital Fleet
Services
Master Trust Client
Services
1 Enterprise Drive
No. Quincy, MA 02171-2126
Montreal Trust Company, Equity Fund D 1,213,110 shares 18.53%
as Trustee
The Air Canada Pension
Trust Fund
U/A/D 10/1/72
1800 McGill College Avenue
Montreal, Quebec H3A
Bost & Co. Equity Fund D 631,978 shares 9.65%
Mutual Fund Operations
1 Cabot Road
Medford, MA 02155-5158
State Street Bank & Trust Equity Fund D 640,151 shares 9.78%
Co., Trustee
Benchside & Co. - GE Cap.
Asset Maint.
Master Trust Client
Service
One Enterprise Drive
N. Quincy, MA 02171-2126
Clark & Co. Equity Fund D 668,928 shares 10.22%
FBO UT O C Tanner
Pension
P. O. Box 39
Westerville, OH 43085-0039
State Street Bank Money Market -- 8,761,294 shares 11.47%
& Trust Co., as Trustee
Beamsail & Co. -
Doubletree
Master Trust Client
Service
1 Enterprise Drive
North Quincy, MA 02171-2126
State Street Bank Money Market -- 7,835,261 shares 10.26%
& Trust Co., as
Trustee
Eastmate & Co. Trust
FBO GE Capital Fleet
Services
Master Trust Client
Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
-39-
<PAGE>
Class of Percent
Name and Address Shares Amount of of
of Record Owner Name of Fund Owned Ownership Class
<S> <C> <C> <C> <C>
State Street Bank International A 253,272 shares 95.41%
& Trust Co., as Fund
Trustee
Beamsail & Co. -
Doubletree
Master Trust Client
Service
1 Enterprise Drive
North Quincy, MA 02171-2126
BHC Securities, Inc. International B 746 shares 19.51%
FAO 22402626 Fund
Attn: Mutual
Funds Dept.
One Commerce Square
2005 Market Street,
Suite 1200
Philadelphia, PA 19103-7042
State Street Bank International B 196 shares 5.13%
& Trust Co. Fund
C/F The IRA of
Robert D. Miller
P. O. Box 1569
Clarkesville, GA 30523-1569
State Street Bank International B 323 shares 8.45%
& Trust Co. Fund
C/F The SEP IRA of
Tyrone Dale Hailey
1174 South Diamond Bar
Blvd.
#522
Diamond Bar, CA 91765-2203
State Street Bank International B 285 shares 6.94%
& Trust Co. Fund
C/F The IRA of
Ada Marie Darling
748 Wheaton
Kalamazoo, MI 49008-1359
State Street Bank International B 218 shares 5.72%
& Trust Co. Fund
C/F The Rollover IRA
of
Robert A. Hackett
2130 Wisteria
Baton Rouge, LA 70606-5346
Leroy B. Daigle International B 312 shares 8.17%
1200 Mary Lee Fund
Franklin, LA 70536-3510
Margaret L. Cape International B 220 shares 5.75%
5975 E. Pacific Coast Fund
Hwy. #1
Long Beach, CA 90803-4950
-40-
<PAGE>
Class of Percent
Name and Address Shares Amount of of
of Record Owner Name of Fund Owned Ownership Class
<S> <C> <C> <C> <C>
State Street Bank International B 211 shares 5.53%
& Trust Co. Fund
C/F The IRA
of Antonio Reyes
1805 SW 97thTer.
Miramar, FL33025-1931
John H. Pender, International D 423,435 shares 16.68%
as Trustee Fund
Aid Association
for Lutherans
4321 North Ballard Road
Appleton, WI 54919-0001
Aid Association International D 1,854,263 shares 73.05%
for Lutherans Fund
4321 North Ballard Road
Appleton, WI 54919-0001
State Street Bank International D 256,528 shares 10.11%
& Trust Co., Fund
Trustee
Benchside & Co. - GE Cap.
Asset Maint.
Master Trust
Client Service
One Enterprise Drive
N. Quincy, MA 02171-2126
Ronald J. Felmus International C 17,241 shares 16.21%
& Veta Felmus, Fund
Trustees
Felmus Family
Residual Trust
U/A/D 5/9/79
22 Pine Circle South
Belleair, FL 34616
General Electric Company Government A 2,308 shares 9.05%
2 Corporate Drive Fund
Shelton, CT 06484
State Street Bank Government A 14,027 shares 54.98%
& Trust Co. Fund
FBO Beamspeed and Co.
BG Automotive Motors
Master Trust
Client Service
One Enterprise Drive
No. Quincy, MA 02171
Mary McKinney Government A 4,187 shares 16.41%
Dawn M. Clark, Fund
joint tenants
1517 Forest Trail
Austin, TX 78703-3229
Arlyne R. Dryer, Government A 4,205 shares 16.48%
Trustee Fund
Gene F. & Arlyne R.
Dryer Trust
U/A/D 2/10/87
12507 Pomerado Ct.
San Diego, CA 92128-2315
-41-
<PAGE>
Class of Percent
Name and Address Shares Amount of of
of Record Owner Name of Fund Owned Ownership Class
<S> <C> <C> <C> <C>
General Electric Government B 2,293 shares 32.36%
Company Fund
2 Corporate Drive
Shelton, CT 06484
Charles DiPasquale Government B 2,523 shares 35.63%
3181 Holiday Spring Fund
Blvd. Apt. #43
Margate, FL 33063-5464
Don L. Nelson Government B 1,284 shares 18.14%
150 S. Laurel Drive Fund
Margate, FL 33063-5370
Cathy Stockstill Government B 962 shares 13.59%
15149 Weddington St. Fund
Sherman Oaks, CA 91411-3944
John R. Costantino Government C 44,020 shares 17.50%
and Fund
Barbara C. Costantino
165-84 Street
Brooklyn, NY 11229-6604
Sandra L. Scherer and Government C 24,307 shares 9.67%
George E. Scherer II, Fund
as Trustees
Sandra L. Scherer
Revocable Trust
16301 Fairway Woods Drive
#804
Ft Myers, FL 33908-5333
General Electric Company Government D 375,144 shares 63.88%
2 Corporate Drive Fund
Shelton, CT 06484
State Street Bank Government D 212,078 shares 36.11%
& Trust Co., as Trustee Fund
Eastwall & Co. Trust
FBO GE Consulting
Master Trust
Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
</TABLE>
As of December 29, 1995, the current Trustees and officers of each Fund,
as a group, beneficially owned less than 1% of each Fund's outstanding shares
other than the Government Fund. As of that same date, the current Trustees
and officers of each Fund, as a group, beneficially owned 5.05% of the
outstanding shares of the Government Fund.
-42-
<PAGE>
ADDITIONAL INFORMATION
The Trust was organized as an unincorporated business trust under the laws
of The Commonwealth of Massachusetts pursuant to a Declaration of Trust dated
August 10, 1992, as amended from time to time (the "Declaration"). The
Government Fund and the International Fund were added as series of the Trust
pursuant to an amendment to the Declaration on March 1, 1994. The Mid-Cap
Fund and the International Income Fund are newly added series of the Trust
which were established pursuant to an amendment to the Declaration on June 17,
1994. In the interest of economy and convenience, certificates representing
shares of a Fund are not physically issued. State Street maintains a record
of each shareholder's ownership of shares of a Fund.
Massachusetts law provides that shareholders of the Funds could, under
certain circumstances be held personally liable for the obligations of the
Trust. The Declaration disclaims shareholder liability for acts or
obligations of the Trust, however, and requires that notice of the disclaimer
be given in each agreement, obligation or instrument entered into or executed
by the Trust or a Trustee of the Trust. The Declaration provides for
indemnification from the property of a Fund for all losses and expenses of any
shareholder of the Fund held personally liable for the obligations of the
Fund. Thus, the risk of a shareholder of a Fund's incurring financial loss on
account of shareholder liability is limited to circumstances in which the Fund
would be unable to meet its obligations, a possibility that the Trust's
management believes is remote. Upon payment of any liability incurred by a
Fund, the shareholder paying the liability will be entitled to reimbursement
from the general assets of the Fund. The Trustees intend to conduct the
operations of the Trust and the Funds in such a way so as to avoid, as far as
practicable, ultimate liability of the shareholders for liabilities of the
Funds.
COUNSEL
Willkie Farr & Gallagher, 153 East 53rd Street, New York, New York 10022,
serves as counsel for the Trust.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts 02110,
serves as independent accountants of the Trust.
FINANCIAL STATEMENTS
The Annual Report, dated September 30, 1995, which either accompanies this
Statement of Additional Information or has previously been provided to the
person to whom this Statement of Additional
-43-
<PAGE>
Information is being sent, is incorporated herein by reference with respect to
all information other than the information set forth in the Letter to
Shareholders included therein. The Trust will furnish, without charge, a copy
of the Annual Report, upon request to the Trust at P.O. Box 120065, Stamford,
CT 06912-0065, (203) 326-4040.
-44-
<PAGE>
APPENDIX
DESCRIPTION OF RATINGS
COMMERCIAL PAPER RATINGS
The rating A-1+ is the highest, and A-1 the second highest commercial
paper rating assigned by S&P. Paper rated A-1+ must have either the direct
credit support of an issuer or guarantor that possesses excellent long-term
operating and financial strength combined with strong liquidity
characteristics (typically, such issuers or guarantors would display credit
quality characteristics that would warrant a senior bond rating of AA or
higher) or the direct credit support of an issuer or guarantor that possesses
above average long-term fundamental operating and financing capabilities
combined with ongoing excellent liquidity characteristics. Paper rated A-1
must have the following characteristics: liquidity ratios are adequate to
meet cash requirements; long-term senior debt is rated A or better; the issuer
has access to at least two additional channels of borrowing; basic earnings
and cash flow have an upward trend with allowance made for unusual
circumstances; typically, the issuer's industry is well established and the
issuer has a strong position within the industry; and the reliability and
quality of management are unquestioned. Capacity for timely payment on issues
rated A-2 is satisfactory. However, the relative degree of safety is not as
high as issues designated "A-1."
The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings are the
following: (a) evaluation of the management of the issuer; (b) economic
evaluation of the issuer's industry or industries and an appraisal of
speculative-type risks that may be inherent in certain areas; (c) evaluation
of the issuer's products in relation to competition and customer acceptance;
(d) liquidity; (e) amount and quality of long-term debt; (f) trend of earnings
over a period of ten years; (g) financial strength of parent company and the
relationships that exist with the issue; and (h) recognition by the management
of obligations that may be present or may arise as a result of public interest
questions and preparations to meet the obligations.
Issuers rated Prime-2 (or supporting institutions) have a strong ability
for repayment of senior short-term debt obligations. This normally will be
evidenced by many of the characteristics cited above, but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity is
maintained.
-A-1-
<PAGE>
Short-term obligations, including commercial paper, rated A-1+ by IBCA
Limited or its affiliate IBCA Inc. are obligations supported by the highest
capacity for timely repayment. Obligations rated A-1 have a very strong
capacity for timely repayment. Obligations rated A-2 have a strong capacity
for timely repayment, although that capacity may be susceptible to adverse
changes in business, economic and financial conditions.
Fitch Investors Services, Inc. employs the rating F-1+ to indicate issues
regarded as having the strongest degree of assurance of timely payment. The
rating F-1 reflects an assurance of timely payment only slightly less in
degree than issues rated F-1+, while the rating F-2 indicates a satisfactory
degree of assurance of timely payment although the margin of safety is not as
great as indicated by the F-1+ and F-1 categories.
Duff & Phelps Inc. employs the designation of Duff 1 with respect to top
grade commercial paper and bank money instruments. Duff 1+ indicates the
highest certainty of timely payment: short-term liquidity is clearly
outstanding and safety is just below risk-free U.S. Treasury short-term
obligations. Duff 1- indicates high certainty of timely payment. Duff 2
indicates good certainty of timely payment; liquidity factors and company
fundamentals are sound.
Thompson BankWatch Inc. employs the rating TBW-1 to indicate issues having
a very high degree of likelihood of timely payment. TBW-2 indicates a strong
degree of safety regarding timely payment, however, the relative degree of
safety is not as high as for issues rated TBW-1. While the rating TBW-3
indicates issues that are more susceptible to adverse developments than
obligations with higher ratings, capacity to service principal and interest in
a timely fashion is considered adequate. The lowest rating category is TBW-4;
this rating is regarded as non-investment grade and, therefore, speculative.
Various NRSROs utilize rankings within ratings categories indicated by a
plus or minus sign. The Funds, in accordance with industry practice,
recognize such ratings within categories or gradations, viewing for example
S&P's ratings of A-1+ and A-1 as being in S&P's highest rating category.
DESCRIPTION OF S&P CORPORATE BOND RATINGS
AAA -- This is the highest rating assigned by S&P to a bond and indicates
an extremely strong capacity to pay interest and repay principal.
AA -- Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from AAA issues only in small degree.
-A-2-
<PAGE>
A -- Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than debt in higher rated
categories.
BBB -- Bonds rated BBB have an adequate capacity to pay interest and
repay principal. Adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for bonds in this category (even though they normally exhibit adequate
protection parameters) than for bonds in higher rated categories.
BB, B and CCC -- Bonds rated BB and B are regarded, on balance, as
predominately speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB represents a
lower degree of speculation than B, and CCC the highest degree of speculation.
While such bonds will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to adverse
conditions.
To provide more detailed indications of credit quality, the ratings from
AA to B may be modified by the addition of a plus or minus sign to show
relative standing within this major rating category.
DESCRIPTION OF MOODY'S CORPORATE BOND RATINGS
Aaa -- Bonds that are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred
to as "gilt edge." Interest payments are protected by a large or exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa -- Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present that make the long-term risks appear somewhat larger than in Aaa
securities.
A -- Bonds that are rated A possess favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may
be present that suggest a susceptibility to impairment sometime in the future.
Baa -- Bonds that are rated Baa are considered as medium-grade
obligations, that is, they are neither highly protected nor poorly
-A-3-
<PAGE>
secured. Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and in fact have speculative
characteristics as well.
Ba -- Bonds that are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds that are rated B generally lack characteristics of desirable
investments. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
Caa -- Bonds that are rated Caa are of poor standing. These issues may be
in default, or present elements of danger may exist with respect to principal
or interest.
Moody's applies numerical modifiers (1, 2 and 3) with respect to the bonds
rated Aa through B, The modifier 1 indicates that the bond being rated ranks
in the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the bond ranks in the
lower end of its generic rating category.
DESCRIPTION OF S&P MUNICIPAL BOND RATINGS
AAA -- Prime -- These are obligations of the highest quality. They have
the strongest capacity for timely payment of debt service.
General Obligation Bonds -- In a period of economic stress, the issuers
will suffer the smallest declines in income and will be least susceptible to
autonomous decline. Debt burden is moderate. A strong revenue structure
appears more than adequate to meet future expenditure requirements. Quality
of management appears superior.
Revenue Bonds -- Debt service coverage has been, and is expected to
remain, substantial. Stability of the pledged revenues is also exceptionally
strong due to the competitive position of the municipal enterprise or to the
nature of the revenues. Basic security provisions (including rate covenant,
earnings test for issuance of additional bonds, debt service reserve
requirements) are rigorous. There is evidence of superior management.
AA -- High Grade -- The investment characteristics of bonds in this group
are only slightly less marked than those of the prime
-A-4-
<PAGE>
quality issues. Bonds rated AA have the second strongest capacity for payment
of debt service.
A -- Good Grade -- Principal and interest payments on bonds in this
category are regarded as safe although the bonds are somewhat more susceptible
to the adverse effects of changes in circumstances and economic conditions
than bonds in higher rated categories. This rating describes the third
strongest capacity for payment of debt service. The ratings differ from the
two higher ratings of municipal bonds, because:
General Obligations Bonds -- There is some weakness, either in the local
economic base, in debt burden, in the balance between revenues and
expenditures, or in quality of management. Under certain adverse
circumstances, any one such weakness might impair the ability of the issuer to
meet debt obligations at some future date.
Revenue Bonds -- Debt service coverage is good, but not exceptional.
Stability of the pledged revenues could show some variations because of
increased competition or economic influences on revenues. Basic security
provisions, while satisfactory, are less stringent. Management performance
appears adequate.
BBB -- Medium Grade -- Of the investment grade ratings, this is the
lowest. Bonds in this group are regarded as having an adequate capacity to
pay interest and repay principal. Adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay interest
and repay principal for bonds in this category (even though they normally
exhibit adequate protection parameters) than for bonds in higher rated
categories.
General Obligation Bonds -- Under certain adverse conditions, several of
the above factors could contribute to a lesser capacity for payment of debt
service. The difference between A and BBB ratings is that the latter shows
more than one fundamental weakness, or one very substantial fundamental
weakness, whereas, the former shows only one deficiency among the factors
considered.
Revenue Bonds -- Debt coverage is only fair. Stability of the pledged
revenues could show substantial variations, with the revenue flow possibly
being subject to erosion over time. Basic security provisions are no more
than adequate. Management performance could be stronger.
BB, B, CCC and CC -- Bonds rated BB, B, CCC and CC are regarded, on
balance, as predominately speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB
includes the lowest degree of speculation and CC the highest degree of
speculation. While these bonds will likely have some
-A-5-
<PAGE>
quality and protective characteristics, these characteristics are outweighed by
large uncertainties or major risk exposures to adverse conditions.
C -- The rating C is reserved for income bonds on which no interest is
being paid.
D -- Bonds rated D are in default, and payment of interest and/or
repayment of principal is in arrears.
S&P's letter ratings may be modified by the addition of a plus or a minus
sign, which is used to show relative standing within the major rating
categories, except in the AAA-Prime Grade category.
DESCRIPTION OF S&P MUNICIPAL NOTE RATINGS
Municipal notes with maturities of three years or less are usually given
note ratings (designated SP-1, -2 or -3) to distinguish more clearly the
credit quality of notes as compared to bonds. Notes rated SP-1 have a very
strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics are given the
designation of SP-1+. Notes rated SP-2 have satisfactory capacity to pay
principal and interest.
DESCRIPTION OF MOODY'S MUNICIPAL BOND RATINGS
Aaa -- Bonds that are rated Aaa are judged to be the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such issues.
Aa -- Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities, or fluctuation of
protective elements may be of greater amplitude, or there may be other
elements present that make the long-term risks appear somewhat larger than in
Aaa securities.
A -- Bonds that are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may
be present that suggest a susceptibility to impairment sometime in the future.
-A-6-
<PAGE>
Baa -- Bonds that are rated Baa are considered as medium grade
obligations, that is, they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Ba -- Bonds that are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterize bonds in this class.
B -- Bonds that are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa -- Bonds that are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to
principal or interest.
Ca -- Bonds that are rated Ca represent obligations that are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C -- Bonds that are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through B. The modifier 1 indicates that the security
ranks in the higher end of its generic ratings category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the issue
ranks in the lower end of its generic ratings category.
DESCRIPTION OF MOODY'S MUNICIPAL NOTE RATINGS
Moody's ratings for state and municipal notes and other short-term loans
are designated Moody's Investment Grade (MIG) and for variable rate demand
obligations are designated Variable Moody's Investment Grade (VMIG). This
distinction recognizes the differences between short-term credit risk and
long-term risk. Loans bearing the designation MIG 1/VMIG 1 are the best
quality, enjoying strong protection from established cash flows of funds for
their servicing or from established and broad-based access to the market for
refinancing, or both. Loans bearing the designation MIG 2/VMIG 2 are of high
-A-7-
<PAGE>
quality, with margins of protection ample, although not as large as the
preceding group. Loans bearing the designation MIG 3/VMIG3 are of favorable
quality, with all security elements accounted for but lacking the undeniable
strength of the higher grades. Market access for refinancing, in particular,
is likely to be less well established. Loans bearing the designation MIG
4/VMIG 4 are of adequate quality. Protection commonly regarded as required of
an investment security is present and although not distinctly or predominantly
speculative, there is specific risk.
-A-8-
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements (for each of GE International Equity Fund
("International Fund"), GE Global Equity Fund ("Global Fund"), GE U.S. Equity
Fund ("U.S. Equity Fund"), GE Strategic Investment Fund ("Strategic Fund"), GE
Tax-Exempt Fund ("Tax-Exempt Fund"), GE Fixed Income Fund ("Income Fund"), GE
Short-Term Government Fund ("Government Fund") and GE Money Market Fund
("Money Market Fund") (collectively with GE International Fixed Income Fund
("International Income Fund") and GE Mid-Cap Growth Fund ("Mid-Cap Fund"), the
"Funds")):
(1) Financial Highlights for the period ended September
30, 1993, and for the fiscal years ended September 30, 1994 and
September 30, 1995.
(2) Statement of Assets and Liabilities as of September 30,
1995. **
(3) Statement of Operations for the fiscal year ended
September 30, 1995. **
(4) Statement of Changes in Net Assets for the fiscal years
ended September 30, 1994 and September 30, 1995. **
(5) Changes in Fund Shares for the fiscal years ended
September 30, 1994 and September 30, 1995. **
(6) Notes to Financial Statements. **
(7) Schedule of Investments as of September 30, 1995. **
(8) Notes to Schedules of Investments. **
(9) Report of Independent Accountants.**
_______________
** Incorporated by reference to the Trust's Annual Report to shareholders
for the period ended September 30, 1995.
-C-1-
<PAGE>
(b) Exhibits:
Exhibit No. Description of Exhibit
1(a) Declaration of Trust*
1(b) Certificate of Amendment of Declaration of Trust and
Change of Series Designation*
1(c) Form of Amendment to Declaration of Trust to add
Government Fund and International Fund*
1(d) Form of Amendment to Declaration of Trust to add
Mid-Cap Fund and Bond Fund*
2 By-Laws*
3 Inapplicable
4 Written Plan Adopted pursuant to Rule 18f-3 under the
Investment Company Act of 1940, as amended.*
5(a) Form of Investment Advisory and Administration
Agreement*
5(b) Form of Investment Advisory Agreement for Government
Fund and International Fund*
5(c) Form of Investment Advisory Agreement for Mid-Cap
Fund and International Income Fund*
6 Form of Distribution Agreement, as amended*
7 Inapplicable
8 Form of Custodian Contract*
9(a) Form of Transfer Agency and Service Agreement*
9(b) Form of Administration Agreement for Government Fund
and International Fund*
9(c) Form of Administration Agreement for Mid-Cap Fund
and International Income Fund*
______________
* Previously filed.
-C-2-
<PAGE>
10 Opinion of Willkie Farr & Gallagher including
consent*
10(b) Opinion of Bingham, Dana & Gould, including consent*
11 Consent of Price Waterhouse LLP
12 Inapplicable
13(a) Purchase Agreement*
13(b) Form of Purchase Agreement for Government Fund and International
Fund*
13(c) Form of Purchase Agreement for Mid-Cap Fund and International
Income Fund*
14 Inapplicable
15(a) Form of Amended and Restated Shareholder Servicing and
Distribution Plan*
15(b) Form of Shareholder Servicing and Distribution Plan for
Government Fund*
15(c) Form of Amended and Restated Shareholder Servicing and
Distribution Agreement*
15(d) Form of Shareholder Servicing and Distribution Agreement for
Government Fund*
16 Schedule of computation of performance data information
______________________
* Previously filed
-C-3-
<PAGE>
Item 25. Persons Controlled by or Under Common Control
with Registrant
See item 28.
Item 26. Number of Holders of Securities
Number of Record
Title of Class Holders as of December 29, 1995
Shares representing
beneficial interests,
par value $.001 per share
of:
Global Fund - Class A 205
Global Fund - Class B 97
Global Fund - Class C 3,853
Global Fund - Class D 21
International Fund - Class A 104
International Fund - Class B 41
International Fund - Class C 285
International Fund - Class D 23
U.S. Equity Fund - Class A 260
U.S. Equity Fund - Class B 372
U.S. Equity Fund - Class C 3,506
U.S. Equity Fund - Class D 43
Strategic Fund - Class A 170
Strategic Fund - Class B 193
Strategic Fund - Class C 2,350
Strategic Fund - Class D 25
Tax-Exempt Fund - Class A 36
Tax-Exempt Fund - Class B 46
Tax-Exempt Fund - Class C 730
Tax-Exempt Fund - Class D 9
Income Fund - Class A 52
Income Fund - Class B 59
Income Fund - Class C 1,690
Income Fund - Class D 29
Government Fund - Class A 25
Government Fund - Class B 13
Government Fund - Class C 168
Government Fund - Class D 12
Money Market Fund 5,012
-C-4-
<PAGE>
There will be no holders of the shares of beneficial interest, par value
$.001 per share, of the International Income Fund and the Mid-Cap Fund on the
date this Registration Statement becomes effective.
Item 27. Indemnification
Reference is made to Article IV of the Declaration of Trust of GE Funds
("Registrant") filed as Exhibit 1 to this Registra-tion Statement. Insofar as
indemnification for liability arising under the Securities Act of 1933, as
amended (the "Securities Act"), may be permitted for Trustees, officers and
controlling persons of Registrant pursuant to provisions of Registrant's
Declaration of Trust, or otherwise, Registrant has been advised that, in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by Registrant of expenses incurred or paid
by a Trustee, officer, or controlling person of Registrant in the successful
defense of any action, suit or proceeding) is asserted by such Trustee,
officer or controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
Reference is made to "Management of the Trust" in the Prospectus forming
Part A, and "The Management of the Trust" in the Statement of Additional
Information forming Part B, of this Registration Statement.
The list required by this Item 28 of officers and directors of GEIM,
together with information as to any other business, profession, vocation or
employment of a substantial nature engaged in by those officers and directors
during the past two years, is incorporated by reference to Schedules A and D
of Form ADV filed by GEIM pursuant to the Investment Advisers Act of 1940, as
amended (SEC File No. 801-31947).
Item 29. Principal Underwriters
(a) GE Investment Services Inc. ("GEIS") also serves as distributor for
Elfun Tax-Exempt Income Fund, Elfun Income Fund, Elfun Global Fund, Elfun
Money Market Fund, Elfun Trusts and Elfun Diversified Fund.
(b) The information required by this Item 29 with respect to each
director and Officer of GEIS is incorporated by reference to Schedule A
-C-5-
<PAGE>
of
Form BD filed by GEIS pursuant to the Securities Exchange Act of 1934 (SEC
File No. 8-45710).
(c) Inapplicable.
Item 30. Location of Accounts and Records
All accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940, as
amended (the "1940 Act"), and the rules thereunder, are maintained at the
offices of: Registrant located at 3003 Summer Street, Stamford, Connecticut
06905; State Street Bank and Trust Company ("State Street"), Registrant's
custodian and transfer agent, located at 225 Franklin Street, Boston,
Massachusetts 02101; and Boston Financial Data Services, Inc., a subsidiary of
State Street, located at 2 Heritage Drive, Quincy, Massachusetts 02171.
Item 31. Management Services
Inapplicable.
Item 32. Undertakings
(a) Registrant undertakes to call a meeting of the shareholders of each
Fund for the purpose of voting upon the question of removal of a trustee or
trustees of Registrant when requested in writing to do so by the holders of at
least 10% of Registrant's outstanding shares and, in connection with the
meeting, to comply with the provisions of Section 16(c) of the 1940 Act
relating to communications with the shareholders of certain common-law trusts.
(b) Not applicable.
(c) Registrant undertakes to furnish each person to whom a prospectus
is delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
-C-6-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, Registrant
certifies that it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933 and has duly caused this Amendment to its Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Stamford, State of Connecticut, on the 25th day of January, 1996.
By:/s/ Michael J. Cosgrove
Michael J. Cosgrove
President and Chairman
of the Board
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Amendment to Registrant's Registration Statement on Form N-1A
has been signed below by the following persons in the capacities and on the
dates indicated.
Signature Title Date
/s/ Michael J. Cosgrove January 25, 1996
Michael J. Cosgrove President and
Chairman of the Board
(Chief Executive Officer)
/s/ Alan M. Lewis January 25, 1996
Alan M. Lewis Executive Vice President
and Trustee
/s/ John Costantino January 25, 1996
John Costantino Trustee
/s/ William Lucas January 25, 1996
William Lucas Trustee
/s/ Robert Quinn January 25, 1996
Robert Quinn Trustee
/s/ Jeffrey A. Groh January 25, 1996
Jeffrey A. Groh Treasurer
(Chief Financial and
Accounting Officer)
<PAGE>
INDEX TO EXHIBITS
Page Number in
Sequential Numbering
Exhibit No. Description of Exhibit Sequence
1(a) Declaration of Trust*
1(b) Certificate of Amendment of
Declaration of Trust and Change
of Series Designation*
1(c) Form of Amendment to Declaration
of Trust to add Government Fund
and International Fund*
2 By-Laws*
4 Written Plan Adopted Pursuant to
Rule 18f-3 under the Investment
Company Act of 1940, as amended*
5(a) Form of Investment Advisory and
Administration Agreement*
5(b) Form of Investment Advisory
Agreement for Government Fund
and International Fund*
6 Form of Distribution Agreement,
as amended*
8 Form of Custodian Contract*
9(a) Form of Transfer Agency and
Service Agreement*
9(b) Form of Administration Agreement
for Government Fund and
International Fund*
10 Opinion of Willkie Farr & Gallagher,
including consent*
10(b) Opinion of Bingham, Dana & Gould,
including consent*
11 Consent of Price Waterhouse LLP
13(a) Purchase Agreement*
13(b) Form of Purchase Agreement for
Government Fund and International Fund*
15(a) Form of Amended and Restated
Shareholder Servicing and
Distribution Plan*
15(b) Form of Shareholder Servicing and
Distribution Plan for Government Fund*
15(c) Form of Amended and Restated Shareholder
Servicing and Distribution Agreement*
15(d) Form of Shareholder Servicing
and Distribution Agreement for
Government Fund*
16 Schedule of computation of performance
data information
__________________________
* Previously filed.
<PAGE>
EXHIBIT 11
Consent of Price Waterhouse LLP
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 17 to the Registration Statement on Form N-1A (the "Registration
Statement") of our report dated November 10, 1995, relating to the financial
statements and financial highlights appearing in the September 30, 1995 Annual
Report to Shareholders of GE Funds which is also incorporated by reference into
the Registration Statement. We also consent to the references to us under the
headings "Independent Accountants" in the Statement of Additional Information
and "Financial Highlights" in the Prospectus.
PRICE WATERHOUSE LLP
Boston, Massachusetts
January 26, 1996
<PAGE>
EXHIBIT 16
Statement of computation of performance data
<PAGE>
GE U.S. EQUITY FUND
Calculation of 1995 Total Return
This method compares a fund's net asset value (NAV), at the beginning and end
of a period with the results being expressed as a percent of the beginning net
asset value. The net asset value is adjusted to reflect the compounding effect
of reinvesting dividends as well as capital gains distributions, if any.
Dividends and distributions are reinvested on the ex-dividend date at the
Ex-dividend NAV.
The following computation illustrates this methology for 1995.
Factual Data
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
<S> <C> <C> <C> <C>
1.Opening NAV 16.12 16.03 16.13 16.16
2.Closing NAV 9/30/95 20.28 19.71 19.98 19.98
3.Income Distributions
Ex Date 12/28/94 12/28/94 12/28/94 12/28/94
Amount / Unit 0.08953 0.37096 0.37514 0.43867
NAV on ex-date 15.80 15.41 15.54 15.51
Income Sources
Ordinary Income 0 0.28143 0.28561 0.34914
Long Term Capital Gains 0.08953 0.08953 0.08953 0.08953
Computation
CLASS A CLASS C
<C> <C>
= (15.80+.0895) x(20.28) -1 = (15.54+.3751) x(19.98) -1
16.12 15.80 16.13 15.54
= 0.986 x 1.279 -1 = 0.987 x 1.286 -1
= .265 or 26.52% Rounded = .269 or 26.86% Rounded
CLASS B CLASS D
<C> <C>
= (15.41+.3710) x(19.71) -1 = (15.51+.4387) x(19.98) -1
16.03 15.41 16.16 15.51
= 0.984 x 1.279 -1 = 0.987 x 1.288 -1
= .259 or 25.92% Rounded = 1.27 or 27.14% Rounded
</TABLE>
<PAGE>
GE GLOBAL EQUITY FUND
Calculation of 1995 Total Return
This method compares a fund's net asset value (NAV), at the beginning and end
of a period with the results being expressed as a percent of the beginning net
asset value. The net asset value is adjusted to reflect the compounding effect
of reinvesting dividends as well as capital gains distributions, if any.
Dividends and distributions are reinvested on the ex-dividend date at the
Ex-dividend NAV.
The following computation illustrates this methology for 1995.
Factual Data
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
______________________________________________________________
<S> <C> <C> <C> <C>
1. Opening NAV 19.34 19.32 19.40 19.45
2. Closing NAV 9/30/95 20.18 20.14 20.31 20.37
3. Income Distributions
Ex Date 12/28/94 12/28/94 12/28/94 12/28/94
Amount / Unit 0.47921 0.40549 0.47366 0.51653
NAV on ex-date 17.76 17.79 17.84 17.85
INCOME SOURCES
Ordinary Income 0.09299 0.01927 0.08744 0.13031
Long Term
Capital Gains 0.38622 0.38622 0.38622 0.38622
Computation
CLASS A CLASS C
<C> <C>
= (17.76+.4792) x(20.18) -1 = (17.84+.4737) x(20.31) -1
19.34 17.76 19.40 17.84
= 0.943 x 1.136 -1 = 0.944 x 1.138 -1
= .072 or 7.16% Rounded = .075 or 7.47% Rounded
CLASS B CLASS D
<C> <C>
= (17.79+.4055) x(20.14) -1 = (17.85+.5165) x(20.37) -1
19.32 17.79 19.45 17.85
= 0.942 x 1.132 -1 = 0.944 x 1.141 -1
= .066 or 6.62% Rounded = .078 or 7.76% Rounded
</TABLE>
<PAGE>
GE INTERNATIONAL EQUITY FUND
Calculation of 1995 Total Return
This method compares a fund's net asset value (NAV), at the beginning and end
of a period with the results being expressed as a percent of the beginning net
asset value. The net asset value is adjusted to reflect the compounding effect
of reinvesting dividends as well as capital gains distributions, if any.
Dividends and distributions are reinvested on the ex-dividend date at the Ex-
dividend NAV.
The following computation illustrates this methology for 1995.
Factual Data
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
________________________________________________________
<S> <C> <C> <C> <C>
1.Opening NAV 15.18 15.13 15.19 15.22
2.Closing NAV 9/30/95 15.87 15.77 15.88 15.94
3.Income Distributions
Ex Date 12/28/94 12/28/94 12/28/94 12/28/94
Amount / Unit 0.04388 0.01395 0.08453 0.09881
NAV on ex-date 14.33 14.30 14.31 14.34
INCOME SOURCES
Ordinary Income 0.04388 0.01395 0.08453 0.09881
Long Term Capital
Gains 0 0 0 0
Computation
CLASS A CLASS C
<C> <C>
= (14.33+.0439) x(15.87) -1 = (14.31+.0845) x(15.88) -1
15.18 14.33 15.19 14.31
= 0.947 x 1.107 -1 = 0.948 x 1.110 -1
= .049 or 4.87% Rounded = .052or 5.16% Rounded
CLASS B CLASS D
<C> <C>
= (14.30+.0140) x(15.77) -1 = (14.31+.0988) x(15.94) -1
15.13 14.30 15.22 14.31
= 0.946 x 1.103 -1 = 0.947 x 1.114 -1
= .043or 4.33% Rounded = .055 or 5.45% Rounded
</TABLE>
<PAGE>
GE STRATEGIC INVESTMENT FUND
Calculation of 1995 Total Return
This method compares a fund's net asset value (NAV), at the beginning and end
of a period with the results being expressed as a percent of the beginning net
asset value. The net asset value is adjusted to reflect the compounding effect
of reinvesting dividends as well as capital gains distributions, if any.
Dividends and distributions are reinvested on the ex-dividend date at the
Ex-dividend NAV.
The following computation illustrates this methology for 1995.
Factual Data
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
______________________________________________________________
<S> <C> <C> <C> <C>
1.Opening NAV 15.71 15.62 15.72 15.74
2.Closing NAV 9/30/95 18.43 18.26 18.46 18.49
3.Income Distributions
Ex Date 12/28/94 12/28/94 12/28/94 12/28/94
Amount / Unit 0.36586 0.34308 0.38048 0.42106
NAV on ex-date 15.31 15.23 15.31 15.30
INCOME SOURCES
Ordinary Income 0.36586 0.34308 0.38048 0.42106
Long Term
Capital Gains 0 0 0 0
Computation
CLASS A CLASS C
<C> <C>
= (15.31+.3659) x(18.43) -1 = (15.31+.3805) x(18.46) -1
15.71 15.31 15.72 15.31
= 0.998 x 1.204 -1 = 0.998 x 1.206 -1
= .201 or 20.12% Rounded = .203 or 20.35% Rounded
CLASS B CLASS D
<C> <C>
= (15.23+.3431) x(18.26) -1 = (15.30+.4211) x(18.49) -1
15.62 15.23 15.74 15.30
= 0.997 x 1.199 -1 = 0.999 x 1.208 -1
= .195 or 19.53% Rounded = .207 or 20.70% Rounded
</TABLE>
<PAGE>
GE Funds Class A Returns
With Load
This method computes the performance of the fund when loads are included.
The following computation illustrates this methology for 1995.
A = Return without load for period
B = Maximum Load amount
C = Return with Load = A*(1-B)-B
<TABLE>
<CAPTION>
A B C
Return
Return Load With Load
<S> <C> <C> <C>
U.S. Equity Fund 3.47% 4.75% -1.45%
Global Fund 1.10% 4.75% -3.70%
International Fund 1.67% 4.75% -3.16%
Strategic Fund 2.56% 4.75% -2.31%
Tax Exempt Fund 0.36% 4.25% -3.90%
Income Fund 0.93% 4.25% -3.36%
Government Fund 0.44% 2.50% -2.07%
</TABLE>
<PAGE>
GE FUNDS CLASS B RETURNS
With Load
This method computes the performance of the fund when loads are included.
The following computation illustrates this methology for 1995.
A = Return without load for period
B = Maximum Load amount
C = NAV at Beginning of period
D = NAV at End of period
E = Return with Load = A - B IF NAV appreciates
= A-(B*D/C)if NAV depreciates
<TABLE>
<CAPTION>
A B C D E
Opening Ending Return
Return Load NAV NAV With Load
<S> <C> <C> <C> <C> <C>
U.S. Equity Fund 3.41% 4.00% 19.06 19.71 -0.59%
Global Fund 1.05% 4.00% 19.93 20.14 -2.95%
International Fund 1.61% 4.00% 15.52 15.77 -2.39%
Strategic Fund 2.53% 4.00% 17.81 18.26 -1.47%
Tax Exempt Fund 0.32% 3.00% 11.77 11.78 -2.68%
Income Fund 0.87% 3.00% 11.86 11.91 -2.13%
Government Fund 0.41% 3.00% 11.90 11.90 -2.59%
</TABLE>
CLASS C SINCE INCEPTION RETURNS
The since inception Returns for the GE Funds are average annual compounded
rates of return
Rates are calculated using the following geometric return formula
Geometric return = { (1+R1)x(1+R2)x(1+R3)....x(1+RN) } ^(1/M)-1
where
"R1,R2,R3...RN = Rate of return for periods 1,2,3 through N"
N = Number of periods
M = Number of years that comprise n periods
<TABLE>
<CAPTION>
R1 R2 R3 M Return
Prior Year Prior Year YTD Days in Number Since
Return Return Return Period of Years Inception
<S> <C> <C> <C> <C> <C> <C>
U.S. Equity Fund 10.32% 0.88% 26.86% 950 2.60274 14.18%
Global Fund 14.10% 14.28% 7.47% 950 2.60274 13.86%
Strategic Fund 8.06% -0.27% 20.35% 950 2.60274 10.52%
Tax Exempt Fund 5.48% -4.30% 9.23% 950 2.60274 3.84%
Income Fund 5.24% -2.97% 12.81% 950 2.60274 5.59%
</TABLE>
<PAGE>
GE MONEY MARKET FUND
7 Day Yield and Effective 7 Day Yield as of September 29, 1995.
<TABLE>
<CAPTION>
Daily Current
Daily Shares Income Rate 7 Day
Date Income Outstanding Per Share Yield
<S> <C> <C> <C> <C>
23-Sep 10,356.67 70,858,577.75 0.00014616
24-Sep 10,356.67 70,858,577.75 0.00014616
25-Sep 10,491.29 71,723,653.95 0.00014627
26-Sep 10,489.06 71,849,095.10 0.00014599
27-Sep 10,477.04 71,746,531.97 0.00014603
28-Sep 10,483.98 71,728,329.64 0.00014616
29-Sep 10,481.35 71,293,363.05 0.00014702 5.34%
0.001023792
GE MONEY MARKET FUND
7 Day Yield and Effective 7 Day Yield as of September 29, 1995.
Effective Adjusted Current Effective
7 Day Income Rate 7 Day 7 Day Daily
Date Yield Per Share Yield Yield Adjustment
<S> <C> <C> <C> <C> <C>
23-Sep 0.00013306 928.55
24-Sep 0.00013306 928.55
25-Sep 0.00013339 924.20
26-Sep 0.00013319 919.46
27-Sep 0.00013322 918.78
28-Sep 0.00013335 919.34
29-Sep 5.48% 0.00013412 4.87% 4.98% 919.44
0.000933378
</TABLE>
1) Input numbers for columns A,B,C,J
2) D = B/C
3) E = ((Sum of Column C)/7 Days)*365 Days
4) F = ((1+ Sum of Column C)*(365/7)) -1
5) G = (B-J)/C
6) H = ((Sum of Column G)/ 7 Days)*365 Days
7) I = ((1 + Sum of Column G)*(365/7)) -1
<PAGE>
GE SHORT TERM GOVERNMENT FUND
Year to Date percentage return equals
Ending Account Value -1
Beginning Account Value
where
Beginning Account Value = the net asset value (NAV) at the
beginning of the year multiplied by 1000
"beginning units" (a hypothetical number
of Units.)
Ending Account Value = Ending Units x NAV at the end of the year
Ending Units Beginning units + number of units purchased
month 1 + number of units purchased month 2 ...
...continued through month 12.
Income Units Purchased
Each Month = Total Income Earned that Month
NAV at end of month
Income Earned = Income per unit multiplied by total number of
units through end of prior months.
See attached Return calculations for the Period ending September 30, 1995
<PAGE>
<TABLE>
<CAPTION>
GE Short Term Fund A
Total Return for Fiscal Year Ended September 1995
A B C D E
Capital
Income per Gains Reinvest. Unit
Period Unit Unit Value Value
<S> <C> <C> <C> <C>
Sep-94 11.72
Oct-94 0.0515 11.69 11.69
Nov-94 0.0500 11.60 11.60
Dec-94 0.0768 11.55 11.55
Jan-95 0.0526 11.63 11.63
Feb-95 0.0519 11.71 11.71
Mar-95 0.0630 11.70 11.70
Apr-95 0.0519 11.76 11.76
May-95 0.0550 11.87 11.87
Jun-95 0.0524 11.90 11.90
Jul-95 0.0503 11.89 11.89
Aug-95 0.0520 11.91 11.91
Sep-95 0.0523 11.91 11.91
<CAPTION>
A F G H I
Capital Gains Income
Income Units Units Total
Period Earned Purchased Purchased Units
<S> <C> <C> <C> <C>
Sep-94 1000.000
Oct-94 51.500 0.000 4.405 1004.405
Nov-94 50.220 0.000 4.329 1008.735
Dec-94 77.471 0.000 6.707 1015.442
Jan-95 53.412 0.000 4.593 1020.035
Feb-95 52.940 0.000 4.521 1024.556
Mar-95 64.547 0.000 5.517 1030.073
Apr-95 53.461 0.000 4.546 1034.619
May-95 56.904 0.000 4.794 1039.413
Jun-95 54.465 0.000 4.577 1043.989
Jul-95 52.513 0.000 4.417 1048.406
Aug-95 54.517 0.000 4.577 1052.983
Sep-95 55.071 0.000 4.624 1057.607
<CAPTION>
A J K L
Current
Account Month YTD
Period Value Return Return
<S> <C> <C> <C>
Sep-94 11720.00
Oct-94 11741.50 0.18% 0.18%
Nov-94 11701.32 -0.34% -0.16%
Dec-94 11728.36 0.23% 0.07%
Jan-95 11863.01 1.15% 1.22%
Feb-95 11997.55 1.13% 2.37%
Mar-95 12051.85 0.45% 2.83%
Apr-95 12167.11 0.96% 3.81%
May-95 12337.83 1.40% 5.27%
Jun-95 12423.47 0.69% 6.00%
Jul-95 12465.55 0.34% 6.36%
Aug-95 12541.03 0.61% 7.01%
Sep-95 12596.10 0.44% 7.48%
</TABLE>
Annual return for one year equals:
(Ending Account Value - Beginning Account Value)/Beginning Account Value
1) Input numbers for columns A,B,C,D,E
A = Month - Year
B = Income per unit
C = Capital Gains per unit
D = Capital Gain Reinvestment NAV
E = NAV per unit at Month End
2) F = I^ * B, where I^ is from prior month
3) G = I^ *C/D, where I^ is from prior month
4) H = F/E
5) I = I^ + H, wher I^ is from prior month
6) J= E/I
7) K =(J-J^)/J^, where J^ is from prior month
8) L = ((L^ + 1)*(K + 1))-1, where L^ is from prior month
<PAGE>
GE Short Term Fund B
Total Return for Fiscal Year Ended September 1995
<TABLE>
<CAPTION>
A B C D E F G
Capital Capital Gains
Income per Gains Reinvest. Unit Income Units
Period Unit Unit Value Value Earned Purchased
<S> <C> <C> <C> <C> <C> <C>
Sep-94 11.72
Oct-94 0.0480 11.68 11.68 48.000 0.000
Nov-94 0.0466 11.59 11.59 46.792 0.000
Dec-94 0.0733 11.55 11.55 73.897 0.000
Jan-95 0.0491 11.63 11.63 49.814 0.000
Feb-95 0.0488 11.70 11.70 49.719 0.000
Mar-95 0.0597 11.70 11.70 61.078 0.000
Apr-95 0.0487 11.75 11.75 50.078 0.000
May-95 0.0515 11.87 11.87 53.177 0.000
Jun-95 0.0489 11.90 11.90 50.711 0.000
Jul-95 0.0467 11.89 11.89 48.629 0.000
Aug-95 0.0485 11.90 11.90 50.701 0.000
Sep-95 0.0488 11.90 11.90 51.223 0.000
GE Short Term Fund B
Total Return for Fiscal Year Ended September 1995
A H I J K L
Income Current
Units Total Account Month YTD
Period Purchased Units Value Return Return
<S> <C> <C> <C> <C> <C>
Sep-94 1000.000 11720.00
Oct-94 4.110 1004.110 11728.00 0.07% 0.07%
Nov-94 4.037 1008.147 11684.42 -0.37% -0.30%
Dec-94 6.398 1014.545 11717.99 0.29% -0.02%
Jan-95 4.283 1018.828 11848.97 1.12% 1.10%
Feb-95 4.249 1023.078 11970.01 1.02% 2.13%
Mar-95 5.220 1028.298 12031.09 0.51% 2.65%
Apr-95 4.262 1032.560 12132.58 0.84% 3.52%
May-95 4.480 1037.040 12309.66 1.46% 5.03%
Jun-95 4.261 1041.301 12391.48 0.66% 5.73%
Jul-95 4.090 1045.391 12429.70 0.31% 6.06%
Aug-95 4.261 1049.652 12490.86 0.49% 6.58%
Sep-95 4.304 1053.956 12542.08 0.41% 7.01%
</TABLE>
Annual return for one year equals:
(Ending Account Value - Beginning Account Value)/Beginning Account Value
1) Input numbers for columns A,B,C,D,E
A = Month - Year
B = Income per unit
C = Capital Gains per unit
D = Capital Gain Reinvestment NAV
E = NAV per unit at Month End
2) F = I^ * B, where I^ is from prior month
3) G = I^ *C/D, where I^ is from prior month
4) H = F/E
5) I = I^ + H, wher I^ is from prior month
6) J= E/I
7) K =(J-J^)/J^, where J^ is from prior month
8) L = ((L^ + 1)*(K + 1))-1, where L^ is from prior month
<PAGE>
GE Short Term Fund C
Total Return for Fiscal Year Ended September 1995
<TABLE>
<CAPTION>
A B C D E F
Capital
Income per Gains Reinvest. Unit Income
Period Unit Unit Value Value Earned
<S> <C> <C> <C> <C> <C>
Sep-94 11.72
Oct-94 0.0539 11.69 11.69 53.900
Nov-94 0.0523 11.60 11.60 52.541
Dec-94 0.0792 11.56 11.56 79.924
Jan-95 0.0550 11.64 11.64 55.883
Feb-95 0.0541 11.71 11.71 55.228
Mar-95 0.0661 11.71 11.71 67.790
Apr-95 0.0542 11.76 11.76 55.900
May-95 0.0576 11.88 11.88 59.680
Jun-95 0.0549 11.91 11.91 57.158
Jul-95 0.0529 11.90 11.90 55.330
Aug-95 0.0546 11.91 11.91 57.362
Sep-95 0.0548 11.91 11.91 57.836
<CAPTION>
A G H I J K L
Capital Gains Income Current
Units Units Total Account Month YTD
Period Purchased Purchased Units Value Return Return
<S> <C> <C> <C> <C> <C> <C>
Sep-94 1000.000 11720.00
Oct-94 0.000 4.611 1004.611 11743.90 0.20% 0.20%
Nov-94 0.000 4.529 1009.140 11706.03 -0.32% -0.12%
Dec-94 0.000 6.914 1016.054 11745.58 0.34% 0.22%
Jan-95 0.000 4.801 1020.855 11882.75 1.17% 1.39%
Feb-95 0.000 4.716 1025.571 12009.44 1.07% 2.47%
Mar-95 0.000 5.789 1031.360 12077.23 0.56% 3.05%
Apr-95 0.000 4.753 1036.114 12184.70 0.89% 3.96%
May-95 0.000 5.024 1041.137 12368.71 1.51% 5.54%
Jun-95 0.000 4.799 1045.937 12457.10 0.71% 6.29%
Jul-95 0.000 4.650 1050.586 12501.97 0.36% 6.67%
Aug-95 0.000 4.816 1055.402 12569.84 0.54% 7.25%
Sep-95 0.000 4.856 1060.259 12627.68 0.46% 7.74%
</TABLE>
Annual return for one year equals:
(Ending Account Value - Beginning Account Value)/Beginning Account Value
1) Input numbers for columns A,B,C,D,E
A = Month - Year
B = Income per unit
C = Capital Gains per unit
D = Capital Gain Reinvestment NAV
E = NAV per unit at Month End
2) F = I^ * B, where I^ is from prior month
3) G = I^ *C/D, where I^ is from prior month
4) H = F/E
5) I = I^ + H, wher I^ is from prior month
6) J= E/I
7) K =(J-J^)/J^, where J^ is from prior month
8) L = ((L^ + 1)*(K + 1))-1, where L^ is from prior month
<PAGE>
GE Short Term Fund D
Total Return for Fiscal Year Ended September 1995
<TABLE>
<CAPTION>
A B C D E F
Capital
Income per Gains Reinvest. Unit Income
Period Unit Unit Value Value Earned
<S> <C> <C> <C> <C> <C>
Sep-94 11.72
Oct-94 0.0564 11.68 11.68 56.400
Nov-94 0.0547 11.60 11.60 54.964
Dec-94 0.0816 11.55 11.55 82.381
Jan-95 0.0574 11.63 11.63 58.359
Feb-95 0.0563 11.71 11.71 57.523
Mar-95 0.0687 11.70 11.70 70.529
Apr-95 0.0564 11.75 11.75 58.242
May-95 0.0601 11.87 11.87 62.361
Jun-95 0.0573 11.90 11.90 59.756
Jul-95 0.0553 11.89 11.89 57.948
Aug-95 0.0571 11.90 11.90 60.113
Sep-95 0.0571 11.90 11.90 60.401
<CAPTION>
A G H I J K L
Capital Gains Income Current
Units Units Total Account Month YTD
Period Purchased Purchased Units Value Return Return
<S> <C> <C> <C> <C> <C> <C>
Sep-94 1000.000 11720.00
Oct-94 0.000 4.829 1004.829 11736.40 0.14% 0.14%
Nov-94 0.000 4.738 1009.567 11710.98 -0.22% -0.08%
Dec-94 0.000 7.133 1016.700 11742.88 0.27% 0.20%
Jan-95 0.000 5.018 1021.718 11882.57 1.19% 1.39%
Feb-95 0.000 4.912 1026.630 12021.83 1.17% 2.58%
Mar-95 0.000 6.028 1032.658 12082.10 0.50% 3.09%
Apr-95 0.000 4.957 1037.615 12191.97 0.91% 4.03%
May-95 0.000 5.254 1042.868 12378.85 1.53% 5.62%
Jun-95 0.000 5.022 1047.890 12469.89 0.74% 6.40%
Jul-95 0.000 4.874 1052.764 12517.36 0.38% 6.80%
Aug-95 0.000 5.051 1057.815 12588.00 0.56% 7.41%
Sep-95 0.000 5.076 1062.891 12648.40 0.48% 7.92%
</TABLE>
Annual return for one year equals:
(Ending Account Value - Beginning Account Value)/Beginning Account
Value
1) Input numbers for columns A,B,C,D,E
A = Month - Year
B = Income per unit
C = Capital Gains per unit
D = Capital Gain Reinvestment NAV
E = NAV per unit at Month End
2) F = I^ * B, where I^ is from prior month
3) G = I^ *C/D, where I^ is from prior month
4) H = F/E
5) I = I^ + H, wher I^ is from prior month
6) J= E/I
7) K =(J-J^)/J^, where J^ is from prior month
8) L = ((L^ + 1)*(K + 1))-1, where L^ is from prior month
<PAGE>
GE FIXED INCOME FUND
Year to Date percentage return equals
Ending Account Value -1
Beginning Account Value
where
Beginning Account Value = the net asset value (NAV) at the
beginning of the year multiplied by 1000
"beginning units" (a hypothetical number"
of Units.)
Ending Account Value = Ending Units x NAV at the end of the year
Ending Units Beginning units + number of units purchased
month 1 + number of units purchased month 2 ...
...continued through month 12.
Income Units Purchased
Each Month = Total Income Earned that Month
NAV at end of month
Income Earned = Income per unit multiplied by total number of
units through end of prior months.
See attached Return calculations for the Period ending September 30, 1995
<PAGE>
GE Fixed Income Class A
Total Return for Fiscal Year Ended September 1995
<TABLE>
<CAPTION>
A B C D E F
Capital
Income per Gains Reinvest. Unit Income
Period Unit Unit Value Value Earned
<S> <C> <C> <C> <C> <C>
Sep-94 11.27
Oct-94 0.0584 11.19 11.19 58.400
Nov-94 0.0576 11.11 11.11 57.901
Dec-94 0.0683 11.11 11.11 69.012
Jan-95 0.0594 11.24 11.24 60.389
Feb-95 0.0566 11.41 11.41 57.846
Mar-95 0.0643 11.42 11.42 66.042
Apr-95 0.0572 11.52 11.52 59.080
May-95 0.0601 11.88 11.88 62.384
Jun-95 0.0589 11.90 11.90 61.447
Jul-95 0.0591 11.79 11.79 61.961
Aug-95 0.0604 11.86 11.86 63.641
Sep-95 0.0599 11.91 11.91 63.436
<CAPTION>
A G H I J K L
Capital Gains Income Current
Units Units Total Account Month YTD
Period Purchased Purchased Units Value Return Return
<S> <C> <C> <C> <C> <C> <C>
Sep-94 1000.000 11270.00
Oct-94 0.000 5.219 1005.219 11248.40 -0.19% -0.19%
Nov-94 0.000 5.212 1010.431 11225.88 -0.20% -0.39%
Dec-94 0.000 6.212 1016.642 11294.90 0.61% 0.22%
Jan-95 0.000 5.373 1022.015 11487.45 1.70% 1.93%
Feb-95 0.000 5.070 1027.085 11719.04 2.02% 3.98%
Mar-95 0.000 5.783 1032.868 11795.35 0.65% 4.66%
Apr-95 0.000 5.128 1037.996 11957.72 1.38% 6.10%
May-95 0.000 5.251 1043.247 12393.78 3.65% 9.97%
Jun-95 0.000 5.164 1048.411 12476.09 0.66% 10.70%
Jul-95 0.000 5.255 1053.666 12422.73 -0.43% 10.23%
Aug-95 0.000 5.366 1059.032 12560.12 1.11% 11.45%
Sep-95 0.000 5.326 1064.359 12676.51 0.93% 12.48%
</TABLE>
(Ending Account Value - Beginning Account Value)/Beginning Account Value
1) Input numbers for columns A,B,C,D,E
A = Month - Year
B = Income per unit
C = Capital Gains per unit
D = Capital Gain Reinvestment NAV
E = NAV per unit at Month End
2) F = I^ * B, where I^ is from prior month
3) G = I^ *C/D, where I^ is from prior month
4) H = F/E
5) I = I^ + H, wher I^ is from prior month
6) J= E/I
7) K =(J-J^)/J^, where J^ is from prior month
8) L = ((L^ + 1)*(K + 1))-1, where L^ is from prior month
<PAGE>
GE Fixed Income Class B
Total Return for Fiscal Year Ended September 1995
<TABLE>
<CAPTION>
A B C D E F
Capital
Income per Gains Reinvest. Unit Income
Period Unit Unit Value Value Earned
<S> <C> <C> <C> <C> <C>
Sep-94 11.26
Oct-94 0.054 11.18 11.18 53.600
Nov-94 0.053 11.10 11.10 53.254
Dec-94 0.064 11.10 11.10 64.210
Jan-95 0.055 11.24 11.24 55.440
Feb-95 0.052 11.41 11.41 53.260
Mar-95 0.059 11.41 11.41 60.576
Apr-95 0.053 11.52 11.52 54.399
May-95 0.055 11.88 11.88 57.029
Jun-95 0.054 11.90 11.90 56.150
Jul-95 0.053 11.79 11.79 55.151
Aug-95 0.054 11.86 11.86 56.342
Sep-95 0.054 11.91 11.91 56.387
<CAPTION>
A G H I J K L
Capital Gains Income Current
Units Units Total Account Month YTD
Period Purchased Purchased Units Value Return Return
<S> <C> <C> <C> <C> <C> <C>
Sep-94 1000.000 11260.00
Oct-94 0.000 4.794 1004.794 11233.60 -0.23% -0.23%
Nov-94 0.000 4.798 1009.592 11206.47 -0.24% -0.48%
Dec-94 0.000 5.785 1015.377 11270.68 0.57% 0.09%
Jan-95 0.000 4.932 1020.309 11468.27 1.75% 1.85%
Feb-95 0.000 4.668 1024.977 11694.99 1.98% 3.86%
Mar-95 0.000 5.309 1030.286 11755.56 0.52% 4.40%
Apr-95 0.000 4.722 1035.008 11923.29 1.43% 5.89%
May-95 0.000 4.800 1039.808 12352.92 3.60% 9.71%
Jun-95 0.000 4.718 1044.527 12429.87 0.62% 10.39%
Jul-95 0.000 4.678 1049.205 12370.12 -0.48% 9.86%
Aug-95 0.000 4.751 1053.955 12499.91 1.05% 11.01%
Sep-95 0.000 4.734 1058.690 12608.99 0.87% 11.98%
</TABLE>
Annual return for one year equals:
(Ending Account Value - Beginning Account Value)/Beginning Account
Value
1) Input numbers for columns A,B,C,D,E
A = Month - Year
B = Income per unit
C = Capital Gains per unit
D = Capital Gain Reinvestment NAV
E = NAV per unit at Month End
2) F = I^ * B, where I^ is from prior month
3) G = I^ *C/D, where I^ is from prior month
4) H = F/E
5) I = I^ + H, wher I^ is from prior month
6) J= E/I
7) K =(J-J^)/J^, where J^ is from prior month
8) L = ((L^ + 1)*(K + 1))-1, where L^ is from prior month
<PAGE>
GE Fixed Income Class C
Total Return for Fiscal Year Ended September 1995
<TABLE>
<CAPTION>
A B C D E F
Capital
Income per Gains Reinvest. Unit Income
Period Unit Unit Value Value Earned
<S> <C> <C> <C> <C> <C>
Sep-94 11.27
Oct-94 0.0608 11.20 11.20 60.800
Nov-94 0.0599 11.11 11.11 60.225
Dec-94 0.0707 11.11 11.11 71.467
Jan-95 0.0617 11.25 11.25 62.766
Feb-95 0.0588 11.42 11.42 60.144
Mar-95 0.0669 11.42 11.42 68.782
Apr-95 0.0594 11.53 11.53 61.429
May-95 0.0627 11.89 11.89 65.175
Jun-95 0.0614 11.91 11.91 64.161
Jul-95 0.0604 11.80 11.80 63.441
Aug-95 0.0612 11.87 11.87 64.610
Sep-95 0.0608 11.92 11.92 64.519
<CAPTION>
A G H I J K L
Capital Gains Income Current
Units Units Total Account Month YTD
Period Purchased Purchased Units Value Return Return
<S> <C> <C> <C> <C> <C> <C>
Sep-94 1000.000 11270.00
Oct-94 0.000 5.429 1005.429 11260.80 -0.08% -0.08%
Nov-94 0.000 5.421 1010.849 11230.54 -0.27% -0.35%
Dec-94 0.000 6.433 1017.282 11302.00 0.64% 0.28%
Jan-95 0.000 5.579 1022.861 11507.19 1.82% 2.10%
Feb-95 0.000 5.267 1028.128 11741.22 2.03% 4.18%
Mar-95 0.000 6.023 1034.151 11810.00 0.59% 4.79%
Apr-95 0.000 5.328 1039.478 11985.19 1.48% 6.35%
May-95 0.000 5.482 1044.960 12424.57 3.67% 10.24%
Jun-95 0.000 5.387 1050.347 12509.63 0.68% 11.00%
Jul-95 0.000 5.376 1055.723 12457.54 -0.42% 10.54%
Aug-95 0.000 5.443 1061.167 12596.05 1.11% 11.77%
Sep-95 0.000 5.413 1066.579 12713.63 0.93% 12.81%
</TABLE>
Annual return for one year equals:
(Ending Account Value - Beginning Account Value)/Beginning Account Value
1) Input numbers for columns A,B,C,D,E
A = Month - Year
B = Income per unit
C = Capital Gains per unit
D = Capital Gain Reinvestment NAV
E = NAV per unit at Month End
2) F = I^ * B, where I^ is from prior month
3) G = I^ *C/D, where I^ is from prior month
4) H = F/E
5) I = I^ + H, wher I^ is from prior month
6) J= E/I
7) K =(J-J^)/J^, where J^ is from prior month
8) L = ((L^ + 1)*(K + 1))-1, where L^ is from prior month
<PAGE>
GE Fixed Income Class D
Total Return for Fiscal Year Ended September 1995
<TABLE>
<CAPTION>
A B C D E F
Capital
Income per Gains Reinvest. Unit Income
Period Unit Unit Value Value Earned
<S> <C> <C> <C> <C> <C>
Sep-94 11.27
Oct-94 0.0632 11.19 11.19 63.173
Nov-94 0.0622 11.11 11.11 62.585
Dec-94 0.0731 11.11 11.11 73.926
Jan-95 0.0641 11.25 11.25 65.248
Feb-95 0.0609 11.42 11.42 62.385
Mar-95 0.0695 11.42 11.42 71.554
Apr-95 0.0616 11.53 11.53 63.794
May-95 0.0651 11.89 11.89 67.815
Jun-95 0.0639 11.91 11.91 66.859
Jul-95 0.0629 11.80 11.80 66.243
Aug-95 0.0638 11.87 11.87 67.534
Sep-95 0.0636 11.92 11.92 67.597
<CAPTION>
A G H I J K L
Capital Gains Income Current
Units Units Total Account Month YTD
Period Purchased Purchased Units Value Return Return
<S> <C> <C> <C> <C> <C> <C>
Sep-94 1000.000 11270.00
Oct-94 0.000 5.645 1005.645 11253.17 -0.15% -0.15%
Nov-94 0.000 5.633 1011.279 11235.31 -0.16% -0.31%
Dec-94 0.000 6.654 1017.933 11309.23 0.66% 0.35%
Jan-95 0.000 5.800 1023.732 11516.99 1.84% 2.19%
Feb-95 0.000 5.463 1029.195 11753.41 2.05% 4.29%
Mar-95 0.000 6.266 1035.461 11824.96 0.61% 4.92%
Apr-95 0.000 5.533 1040.994 12002.66 1.50% 6.50%
May-95 0.000 5.704 1046.697 12445.23 3.69% 10.43%
Jun-95 0.000 5.614 1052.311 12533.03 0.71% 11.21%
Jul-95 0.000 5.614 1057.925 12483.51 -0.40% 10.77%
Aug-95 0.000 5.689 1063.614 12625.10 1.13% 12.02%
Sep-95 0.000 5.671 1069.285 12745.88 0.96% 13.10%
</TABLE>
Annual return for one year equals:
(Ending Account Value - Beginning Account Value)/Beginning Account Value
1) Input numbers for columns A,B,C,D,E
A = Month - Year
B = Income per unit
C = Capital Gains per unit
D = Capital Gain Reinvestment NAV
E = NAV per unit at Month End
2) F = I^ * B, where I^ is from prior month
3) G = I^ *C/D, where I^ is from prior month
4) H = F/E
5) I = I^ + H, wher I^ is from prior month
6) J= E/I
7) K =(J-J^)/J^, where J^ is from prior month
8) L = ((L^ + 1)*(K + 1))-1, where L^ is from prior month
<PAGE>
GE TAX EXEMPT FUND
Year to Date percentage return equals
Ending Account Value -1
Beginning Account Value
where
Beginning Account Value = the net asset value (NAV) at the
beginning of the year multiplied by 1000
beginning units" (a hypothetical number
of Units.)
Ending Account Value = Ending Units x NAV at the end of the year
Ending Units Beginning units + number of units purchased
month 1 + number of units purchased month 2 ...
...continued through month 12.
Income Units Purchased
Each Month = Total Income Earned that Month
NAV at end of month
Income Earned = Income per unit multiplied by total number of
units through end of prior months.
See attached Return calculations for the Period ending September 30, 1995
<PAGE>
GE Tax Exempt Fund A
Total Return for Fiscal Year Ended September 1995
<TABLE>
<CAPTION>
A B C D E F
Capital
Income per Gains Reinvest. Unit Income
Period Unit Unit Value Value Earned
<S> <C> <C> <C> <C> <C>
Sep-94 11.32
Oct-94 0.0438 11.05 11.05 43.800
Nov-94 0.0412 10.78 10.78 41.363
Dec-94 0.0434 10.93 10.93 43.739
Jan-95 0.0446 11.24 11.24 45.126
Feb-95 0.0419 11.54 11.54 42.563
Mar-95 0.0512 11.60 11.60 52.199
Apr-95 0.0429 11.54 11.54 43.930
May-95 0.0476 11.93 11.93 48.924
Jun-95 0.0457 11.67 11.67 47.158
Jul-95 0.0526 11.71 11.71 54.491
Aug-95 0.0502 11.76 11.76 52.238
Sep-95 0.0324 11.77 11.77 33.860
<CAPTION>
A G H I J K L
Capital Gains Income Current
Units Units Total Account Month YTD
Period Purchased Purchased Units Value Return Return
<S> <C> <C> <C> <C> <C> <C>
Sep-94 1000.000 11320.00
Oct-94 0.000 3.964 1003.964 11093.80 -2.00% -2.00%
Nov-94 0.000 3.837 1007.801 10864.09 -2.07% -4.03%
Dec-94 0.000 4.002 1011.803 11059.00 1.79% -2.31%
Jan-95 0.000 4.015 1015.817 11417.79 3.24% 0.86%
Feb-95 0.000 3.688 1019.506 11765.09 3.04% 3.93%
Mar-95 0.000 4.500 1024.006 11878.46 0.96% 4.93%
Apr-95 0.000 3.807 1027.812 11860.95 -0.15% 4.78%
May-95 0.000 4.101 1031.913 12310.72 3.79% 8.75%
Jun-95 0.000 4.041 1035.954 12089.59 -1.80% 6.80%
Jul-95 0.000 4.653 1040.608 12185.51 0.79% 7.65%
Aug-95 0.000 4.442 1045.050 12289.78 0.86% 8.57%
Sep-95 0.000 2.877 1047.926 12334.09 0.36% 8.96%
</TABLE>
Annual return for one year equals:
(Ending Account Value - Beginning Account Value)/Beginning Account Value
1) Input numbers for columns A,B,C,D,E
A = Month - Year
B = Income per unit
C = Capital Gains per unit
D = Capital Gain Reinvestment NAV
E = NAV per unit at Month End
2) F = I^ * B, where I^ is from prior month
3) G = I^ *C/D, where I^ is from prior month
4) H = F/E
5) I = I^ + H, wher I^ is from prior month
6) J= E/I
7) K =(J-J^)/J^, where J^ is from prior month
8) L = ((L^ + 1)*(K + 1))-1, where L^ is from prior month
<PAGE>
GE Tax Exempt Fund B
Total Return for Fiscal Year Ended September 1995
<TABLE>
<CAPTION>
A B C D E F
Capital
Income per Gains Reinvest. Unit Income
Period Unit Unit Value Value Earned
<S> <C> <C> <C> <C> <C>
Sep-94 11.32
Oct-94 0.0391 11.05 11.05 39.100
Nov-94 0.0368 10.78 10.78 36.930
Dec-94 0.0388 10.93 10.93 39.070
Jan-95 0.0399 11.24 11.24 40.321
Feb-95 0.0376 11.54 11.54 38.131
Mar-95 0.0460 11.60 11.60 46.802
Apr-95 0.0384 11.54 11.54 39.224
May-95 0.0425 11.93 11.93 43.557
Jun-95 0.0408 11.67 11.67 41.963
Jul-95 0.0477 11.71 11.71 49.232
Aug-95 0.0453 11.77 11.77 46.945
Sep-95 0.0276 11.78 11.78 28.712
<CAPTION>
A G H I J K L
Capital Gains Income Current
Units Units Total Account Month YTD
Period Purchased Purchased Units Value Return Return
<S> <C> <C> <C> <C> <C> <C>
Sep-94 1000.000 11320.00
Oct-94 0.000 3.538 1003.538 11089.10 -2.04% -2.04%
Nov-94 0.000 3.426 1006.964 10855.07 -2.11% -4.11%
Dec-94 0.000 3.575 1010.539 11045.19 1.75% -2.43%
Jan-95 0.000 3.587 1014.126 11398.78 3.20% 0.70%
Feb-95 0.000 3.304 1017.430 11741.15 3.00% 3.72%
Mar-95 0.000 4.035 1021.465 11848.99 0.92% 4.67%
Apr-95 0.000 3.399 1024.864 11826.93 -0.19% 4.48%
May-95 0.000 3.651 1028.515 12270.18 3.75% 8.39%
Jun-95 0.000 3.596 1032.111 12044.73 -1.84% 6.40%
Jul-95 0.000 4.204 1036.315 12135.25 0.75% 7.20%
Aug-95 0.000 3.989 1040.304 12244.37 0.90% 8.17%
Sep-95 0.000 2.437 1042.741 12283.49 0.32% 8.51%
</TABLE>
Annual return for one year equals:
(Ending Account Value - Beginning Account Value)/Beginning Account Value
1) Input numbers for columns A,B,C,D,E
A = Month - Year
B = Income per unit
C = Capital Gains per unit
D = Capital Gain Reinvestment NAV
E = NAV per unit at Month End
2) F = I^ * B, where I^ is from prior month
3) G = I^ *C/D, where I^ is from prior month
4) H = F/E
5) I = I^ + H, wher I^ is from prior month
6) J= E/I
7) K =(J-J^)/J^, where J^ is from prior month
8) L = ((L^ + 1)*(K + 1))-1, where L^ is from prior month
<PAGE>
GE Tax Exempt Fund C
Total Return for Fiscal Year Ended September 1995
<TABLE>
<CAPTION>
A B C D E F
Capital
Income per Gains Reinvest. Unit Income
Period Unit Unit Value Value Earned
<S> <C> <C> <C> <C> <C>
Sep-94 11.32
Oct-94 0.046 11.05 11.05 46.200
Nov-94 0.043 10.78 10.78 43.581
Dec-94 0.046 10.93 10.93 46.076
Jan-95 0.047 11.24 11.24 47.483
Feb-95 0.044 11.54 11.54 44.835
Mar-95 0.054 11.60 11.60 54.906
Apr-95 0.045 11.54 11.54 46.240
May-95 0.050 11.93 11.93 51.464
Jun-95 0.048 11.67 11.67 49.716
Jul-95 0.055 11.71 11.71 57.290
Aug-95 0.053 11.77 11.77 54.953
Sep-95 0.035 11.77 11.77 36.555
<CAPTION>
A G H I J K L
Capital Gains Income Current
Units Units Total Account Month YTD
Period Purchased Purchased Units Value Return Return
<S> <C> <C> <C> <C> <C> <C>
Sep-94 1000.000 11320.00
Oct-94 0.000 4.181 1004.181 11096.20 -1.98% -1.98%
Nov-94 0.000 4.043 1008.224 10868.65 -2.05% -3.99%
Dec-94 0.000 4.216 1012.439 11065.96 1.82% -2.24%
Jan-95 0.000 4.225 1016.664 11427.30 3.27% 0.95%
Feb-95 0.000 3.885 1020.549 11777.14 3.06% 4.04%
Mar-95 0.000 4.733 1025.282 11893.27 0.99% 5.06%
Apr-95 0.000 4.007 1029.289 11878.00 -0.13% 4.93%
May-95 0.000 4.314 1033.603 12330.88 3.81% 8.93%
Jun-95 0.000 4.260 1037.863 12111.86 -1.78% 7.00%
Jul-95 0.000 4.892 1042.756 12210.67 0.82% 7.87%
Aug-95 0.000 4.669 1047.425 12328.19 0.96% 8.91%
Sep-95 0.000 3.106 1050.530 12364.74 0.30% 9.23%
</TABLE>
Annual return for one year equals:
(Ending Account Value - Beginning Account Value)/Beginning Account Value
1) Input numbers for columns A,B,C,D,E
A = Month - Year
B = Income per unit
C = Capital Gains per unit
D = Capital Gain Reinvestment NAV
E = NAV per unit at Month End
2) F = I^ * B, where I^ is from prior month
3) G = I^ *C/D, where I^ is from prior month
4) H = F/E
5) I = I^ + H, wher I^ is from prior month
6) J= E/I
7) K =(J-J^)/J^, where J^ is from prior month
8) L = ((L^ + 1)*(K + 1))-1, where L^ is from prior month
<PAGE>
GE Tax Exempt Fund D
Total Return for Fiscal Year Ended September 1995
<TABLE>
<CAPTION>
A B C D E F
Capital
Income per Gains Reinvest. Unit Income
Period Unit Unit Value Value Earned
<S> <C> <C> <C> <C> <C>
Sep-94 11.32
Oct-94 0.049 11.05 11.05 48.600
Nov-94 0.046 10.78 10.78 45.801
Dec-94 0.048 10.93 10.93 48.415
Jan-95 0.049 11.24 11.24 49.843
Feb-95 0.046 11.54 11.54 47.111
Mar-95 0.056 11.60 11.60 57.516
Apr-95 0.047 11.54 11.54 48.659
May-95 0.053 11.93 11.93 54.115
Jun-95 0.051 11.67 11.67 52.386
Jul-95 0.058 11.71 11.71 59.996
Aug-95 0.055 11.77 11.77 57.575
Sep-95 0.037 11.78 11.78 39.158
<CAPTION>
A G H I J K L
Capital Gains Income Current
Units Units Total Account Month YTD
Period Purchased Purchased Units Value Return Return
<S> <C> <C> <C> <C> <C> <C>
Sep-94 1000.000 11320.00
Oct-94 0.000 4.398 1004.398 11098.60 -1.96% -1.96%
Nov-94 0.000 4.249 1008.647 10873.21 -2.03% -3.95%
Dec-94 0.000 4.430 1013.076 11072.93 1.84% -2.18%
Jan-95 0.000 4.434 1017.511 11436.82 3.29% 1.03%
Feb-95 0.000 4.082 1021.593 11789.19 3.08% 4.14%
Mar-95 0.000 4.958 1026.552 11908.00 1.01% 5.19%
Apr-95 0.000 4.217 1030.768 11895.06 -0.11% 5.08%
May-95 0.000 4.536 1035.304 12351.18 3.83% 9.11%
Jun-95 0.000 4.489 1039.793 12134.39 -1.76% 7.19%
Jul-95 0.000 5.123 1044.917 12235.97 0.84% 8.09%
Aug-95 0.000 4.892 1049.808 12356.24 0.98% 9.15%
Sep-95 0.000 3.324 1053.132 12405.90 0.40% 9.59%
</TABLE>
Annual return for one year equals:
(Ending Account Value - Beginning Account Value)/Beginning
Account Value
1) Input numbers for columns A,B,C,D,E
A = Month - Year
B = Income per unit
C = Capital Gains per unit
D = Capital Gain Reinvestment NAV
E = NAV per unit at Month End
2) F = I^ * B, where I^ is from prior month
3) G = I^ *C/D, where I^ is from prior month
4) H = F/E
5) I = I^ + H, wher I^ is from prior month
6) J= E/I
7) K =(J-J^)/J^, where J^ is from prior month
8) L = ((L^ + 1)*(K + 1))-1, where L^ is from prior month
<PAGE>
GE MONEY MARKET FUND
Year to Date percentage return equals
Ending Account Value -1
Beginning Account Value
where
Beginning Account Value = the net asset value (NAV) at the
beginning of the year multiplied by 1000
"beginning units" (a hypothetical number"
of Units.)
Ending Account Value = Ending Units x NAV at the end of the year
Ending Units Beginning units + number of units purchased
month 1 + number of units purchased month 2 ...
...continued through month 12.
Income Units Purchased
Each Month = Total Income Earned that Month
NAV at end of month
Income Earned = Income per unit multiplied by total number of
units through end of prior months.
See attached Return calculations for the Period ending September 30, 1995
<PAGE>
GE Money Market
Total Return for Fiscal Year Ended September 1995
<TABLE>
<CAPTION>
A B C D E F
Capital
Income per Gains Reinvest. Unit Income
Period Unit Unit Value Value Earned
<S> <C> <C> <C> <C> <C>
Sep-94 1.00 1.00
Oct-94 0.003798 1.00 1.00 3.798
Nov-94 0.003901 1.00 1.00 3.916
Dec-94 0.004386 1.00 1.00 4.420
Jan-95 0.004655 1.00 1.00 4.711
Feb-95 0.004322 1.00 1.00 4.395
Mar-95 0.005143 1.00 1.00 5.252
Apr-95 0.004409 1.00 1.00 4.526
May-95 0.004845 1.00 1.00 4.995
Jun-95 0.004614 1.00 1.00 4.780
Jul-95 0.004707 1.00 1.00 4.899
Aug-95 0.004624 1.00 1.00 4.835
Sep-95 0.004403 1.00 1.00 4.625
<CAPTION>
A G H I J K L
Capital Gains Income Current
Units Units Total Account Month YTD
Period Purchased Purchased Units Value Return Return
<S> <C> <C> <C> <C> <C> <C>
Sep-94 1000.000 1000.00
Oct-94 0.000 3.798 1003.798 1003.80 0.38% 0.38%
Nov-94 0.000 3.916 1007.714 1007.71 0.39% 0.77%
Dec-94 0.000 4.420 1012.134 1012.13 0.44% 1.21%
Jan-95 0.000 4.711 1016.845 1016.85 0.47% 1.68%
Feb-95 0.000 4.395 1021.240 1021.24 0.43% 2.12%
Mar-95 0.000 5.252 1026.492 1026.49 0.51% 2.65%
Apr-95 0.000 4.526 1031.018 1031.02 0.44% 3.10%
May-95 0.000 4.995 1036.013 1036.01 0.48% 3.60%
Jun-95 0.000 4.780 1040.793 1040.79 0.46% 4.08%
Jul-95 0.000 4.899 1045.692 1045.69 0.47% 4.57%
Aug-95 0.000 4.835 1050.528 1050.53 0.46% 5.05%
Sep-95 0.000 4.625 1055.153 1055.15 0.44% 5.52%
</TABLE>
Annual return for one year equals:
(Ending Account Value - Beginning Account Value)/Beginning Account Value
1) Input numbers for columns A,B,C,D,E
A = Month - Year
B = Income per unit
C = Capital Gains per unit
D = Capital Gain Reinvestment NAV
E = NAV per unit at Month End
2) F = I^ * B, where I^ is from prior month
3) G = I^ *C/D, where I^ is from prior month
4) H = F/E
5) I = I^ + H, wher I^ is from prior month
6) J= E/I
7) K =(J-J^)/J^, where J^ is from prior month
8) L = ((L^ + 1)*(K + 1))-1, where L^ is from prior month
<PAGE>
GE SHORT TERM GOVERNMENT FUND
30 Day SEC Yield Calculation
SEC Yield = 2 ((((A-B)/(C*D)+1)^6)-1)
Where:
A = Dividends and Intereset erarned during the period
B = Expenses accrued for the period
C = Average daily number of shares outstanding during the period that were
entitled to dividends
D = Offering price per unit on the last day of the period
E = SEC Yield using calculation shown above
"The calculation below is based on the 30 day period ending September 29,
1995."
The 30 Day SEC yield calculated below was
<TABLE>
<CAPTION>
A B C D E F
Average Without Cap
Accrued Shares Offering SEC SEC
Income Expenses Outstanding Price Yield Yield
<S> <C> <C> <C> <C> <C> <C>
Class A 1452.18 217.82 23410.779 12.19 5.25 5.08
Class B 225.01 45.87 3612.495 11.88 5.06 4.89
Class C 12406.86 1370.79 199922.841 11.90 5.63 5.52
Class D 41753.36 2966.21 673539.096 11.89 5.88 5.83
</TABLE>
<PAGE>
GE TAX EXEMPT FUND - EQUIVALENT TAXABLE YIELD
The equivalent taxable yield of the Tax Exempt Fund demonstrates the yield on a
taxble investment necessary to provide an after tax yield equal to the Fund's
tax exempt yield.
Calculation: Divide the portion of the yield that is tax exempt by 1 minus the
effective tax rate and add that product to the portion of the yield that is
taxable
<TABLE>
<CAPTION>
Input Fields A, B, C, F Fund
Level Class A Class B Class C Class D
<S> <C> <C> <C> <C> <C>
A) Total Income 549,458
B) Total Taxable Income 57,730
C) Total Tax Exempt 491,728
D) Tax Exempt Percentage 89.49% 89.49% 89.49% 89.49% 89.49%
E) Taxable Percentage 10.51% 10.51% 10.51% 10.51% 10.51%
F) SEC Yield 4.20% 3.89% 4.77% 4.98%
G) Portion of SEC
Yield that is Tax
Exempt = D * F 3.76% 3.48% 4.27% 4.46%
H) Portion of SEC
Yield that is
Taxable = E * F 0.44% 0.41% 0.50% 0.52%
I) 1- Effective Tax
Rate (1-.396) 60.40% 60.40% 60.40% 60.40% 60.40%
J) Tax Equivalent
Yield for Tax
Exempt Portion
= G / I 6.22% 5.76% 7.75% 7.38%
K) Tax Equivalent
Yield for Taxable
Portion = H 0.44% 0.41% 0.50% 0.52%
L) Total Tax
Equivalent Yield
= J + K 6.66% 6.17% 8.25% 7.90%
M) Expenses Borne
by Advisor -0.0395% -0.0395% -0.0395% -0.0395%
N) Yield Without
Expense Caps 6.62% 6.13% 8.21% 7.86%
</TABLE>
<PAGE>
GE TAX EXEMPT INCOME FUND
30 Day SEC Yield Calculation
SEC Yield = 2 ((((A-B)/(C*D)+1)^6)-1)
Where:
A = Dividends and Intereset erarned during the period
B = Expenses accrued for the period
C = Average daily number of shares outstanding during the period that were
entitled to dividends
D = Offering price per unit on the last day of the period
E = SEC Yield using calculation shown above
"The calculation below is based on the 30 day period ending September 29,
1995."
The 30 Day SEC yield calculated below was
<TABLE>
<CAPTION>
A B C D E F
Average Without Cap
Accrued Shares Offering SEC SEC
Income Expenses Outstanding Price Yield Yield
<S> <C> <C> <C> <C> <C> <C>
Class A 1515.28 290.65 27913.55 12.29 4.36 4.20
Class B 2472.78 681.29 43927.85 11.78 4.05 3.89
Class C 31407.53 4729.89 544109.29 11.77 4.80 4.77
Class D 18074.85 1922.55 330561.170 11.78 5.05 4.98
</TABLE>
