As filed with the Securities and Exchange Commission
on December 30, 1996
Securities Act File No. 33-51308
Investment Company Act File No. 811-7142
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 20 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
Amendment No. 22 / X /
(Check appropriate box or boxes)
GE FUNDS
...................................................................
(Exact Name of Registrant as Specified in Charter)
3003 Summer Street
Stamford, Connecticut 06905
....................................... ........................
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (203) 326-4040
Matthew J. Simpson, Esq.
Vice President, Associate General Counsel & Assistant Secretary
GE Investment Management Incorporated
3003 Summer Street
Stamford, Connecticut 06905
.........................................
(Name and Address of Agent for Service)
Copies to:
Burton M. Leibert, Esq.
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022-4669
Page 1 of Pages
Exhibit Index at Page __
<PAGE>
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.
It is proposed that this filing will become effective (check appropriate box):
immediately upon filing pursuant to paragraph (b) _X_
on (date) pursuant to paragraph (b) ___
60 days after filing pursuant to paragraph (a)(1) ___
on December 30, 1996 pursuant to paragraph (a)(1) of Rule 485 ___
75 days after filing pursuant to paragraph (a)(2) ___
on (date) pursuant to paragraph (a)(2) of Rule 485 ___
If appropriate, check the following box:
This post-effective amendment designates a new
effective date for a previously filed post-effective amendment. ___
An indefinite number of Registrant's shares of beneficial interest have been
registered pursuant to Rule 24f-2 under the Investment Company Act of 1940, as
amended. The Rule 24f-2 Notice for Registrant's fiscal year ended September 30,
1996 was filed on November 19, 1996.
<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
ii
<PAGE>
21. Underwriters....................... Not Applicable
22. Calculation of Performance
Data............................. The Funds' Performance
23. Financial Statements............... Independent Accountants;
Financial Statements
Part C
- ------
Information required to be included in Part C is set forth after the
appropriate item, so numbered, in Part C to this Registration Statement.
iii
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
iv
<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 eleven 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 nine Funds currently offered by the Trust:
o GE Premier Growth Equity Fund's investment objective is long-term
growth of capital and future income rather than current income which
the Fund seeks to achieve by investing primarily in growth-oriented
equity securities.
o 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.
o 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.
o 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.
o 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.
o 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).
o 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.
o 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).
o 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.
<PAGE>
Prospectus
December 30, 1996
TABLE OF CONTENTS
Expense Information...... 2
Performance.............. 11
The Multiple
Distribution System.... 13
Investment Objectives
and Management
Policies............... 13
Management of
the Trust.............. 31
Purchase of Shares ...... 34
Retirement Plans......... 39
Redemption of Shares..... 39
Exchange Privilege....... 42
Net Asset Value.......... 43
Dividends, Distributions
and Taxes.............. 43
Custodian and
Transfer Agent......... 45
Distributor.............. 45
Performance
Calculation............ 45
Further Information:
Certain Investment
Techniques
and Strategies......... 48
Additional Matters....... 54
3003 Summer Street
Stamford, Connecticut 06905
(203)326-4040
<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
Premier GE GE Inter- GE GE GE GE GE
Growth U.S. Global national Strategic Tax- Fixed Short-Term Money
Equity Equity Equity Equity Investment Exempt Income Government Market
Fund Fund Fund Fund Fund Fund Fund Fund Fund*
------- ------- ------- ----------------------------- -------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load
Imposed on Purchases of Shares
(as a percentage of
offering price):
Class A** 4.75% 4.75% 4.75% 4.75% 4.75% 4.25% 4.25% 2.50% N/A
Classes B, C and D None None None None None None None None N/A
Maximum Sales Load Imposed on
Reinvested Dividends
(as a percentage of
offering price):
All Classes None None None None None None None None N/A
Maximum Contingent Deferred
Sales Load (as a percentage
of redemption proceeds):
Class A*** 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% N/A
Class B** 4.0% 4.0% 4.0% 4.0% 4.0% 3.0% 3.0% 3.0% N/A
Classes C and D None None None None None None None None N/A
Redemption Fees (as a percentage
of amount redeemed):
All Classes None None None None None None None None N/A
Maximum Exchange Fee:
All Classes None None None None None 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 GE GE GE
U.S. Global Strategic Tax- Fixed Money
Equity Equity Investment Exempt Income Market
Fund Fund Fund Fund Fund Fund*
------ ------- ------------ -------- ------- --------
<S> <C> <C> <C> <C> <C>
Annual Fund Operating Expenses
(as a percentage of average net assets)
Advisory and Administration fees: .25%
Class A .40% .75% .35% .00%+ .35%
Class B .40% .75% .35% .00%+ .35%
Class C .40% .75% .35% .00%+ .35%
Class D .40% .75% .35% .00%+ .35%
12b-1 fees: None
Class A .50% .50% .50% .50% .50%
Class B 1.00% 1.00% 1.00% 1.00% 1.00%
Class C .25% .25% .25% .25% .25%
Class D None None None None None
Other expenses
(after reimbursement):** .25%
Class A .10% .35% .30% .25% .20%
Class B .10% .35% .30% .25% .20%
Class C .10% .35% .30% .25% .20%
Class D .10% .35% .30% .25% .20%
Total Operating Expenses
(after reimbursement):** .50%
Class A 1.00% 1.60% 1.15% .75%+ 1.05%
Class B 1.50% 2.10% 1.65% 1.25%+ 1.55%
Class C .75% 1.35% .90% .50%+ .80%
Class D .50% 1.10% .65% .25%+ .55%
</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).
** See the third footnote on page 5.
+ Until further notice, the Fund's investment adviser has agreed to waive
all Advisory and Administration fees charged to GE Tax-Exempt Fund. In the
absence of this waiver, GE Tax-Exempt Fund would incur Advisory and
Administration fees as follows: Class A, Class B, Class C and Class D --
.35%; and Total Operating Expenses (after reimbursement) as follows: Class
A -- 1.10%, Class B -- 1.60%, Class C -- .85%, and Class D -- .60%.
3
<PAGE>
GE GE GE
Premier International Short-Term
Growth Equity Equity Government
Fund Fund Fund
---- ---- ----
Annual Fund Operating Expenses
(as a percentage of average
net assets)
Advisory fees:
Class A .55% .75% .25%
Class B .55% .75% .25%
Class C .55% .75% .25%
Class D .55% .75% .25%
Administration fees:
Class A .05% .05% .05%
Class B .05% .05% .05%
Class C .05% .05% .05%
Class D .05% .05% .05%
12b-1 fees:
Class A .50% .50% .50%
Class B 1.00% 1.00% .85%
Class C .25% .25% .25%
Class D None None None
Other expenses
(after reimbursement):*
Class A .30% .30% .15%
Class B .30% .30% .15%
Class C .30% .30% .15%
Class D .30% .30% .15%
Total Operating Expenses
(after reimbursement):*
Class A 1.40% 1.60% .95%
Class B 1.90% 2.10% 1.30%
Class C 1.15% 1.35% .70%
Class D .90% 1.10% .45%
- ----------
* See the third footnote 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, A shareholder would pay the
assuming (1) a 5% annual return and following expenses on
(2) redemption at the end the same investment,
of the time periods shown: assuming no redemption:
---------------------------------------- -------------------------------------
1 Year 3 Years 5 Years 10 Years** 1 Year 3 Years 5 Years 10 Years**
-------------------------------------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GE Premier Growth Equity Fund:
Class A $61* $90 $120 $207 Same Same Same Same
Class B $59 $80 $103 $222 $19 $60 $103 $222
Class C $12 $37 $ 63 $140 Same Same Same Same
Class D $ 9 $29 $ 50 $111 Same Same Same Same
GE U.S. Equity Fund:
Class A $57* $78 $100 $164 Same Same Same Same
Class B $55 $67 $ 82 $179 $15 $47 $82 $179
Class C $ 8 $24 $ 42 $ 93 Same Same Same Same
Class D $ 5 $16 $ 28 $ 63 Same Same Same Same
GE Global Equity Fund:
Class A $63* $96 $130 $228 Same Same Same Same
Class B $61 $86 $113 $243 $21 $66 $113 $243
Class C $14 $43 $ 74 $162 Same Same Same Same
Class D $11 $35 $ 61 $134 Same Same Same Same
GE International Equity Fund:
Class A $63* $96 $130 $228 Same Same Same Same
Class B $61 $86 $113 $243 $21 $66 $113 $243
Class C $14 $43 $ 74 $162 Same Same Same Same
Class D $11 $35 $ 61 $134 Same Same Same Same
GE Strategic Investment Fund:
Class A $59* $82 $108 $181 Same Same Same Same
Class B $57 $72 $ 90 $195 $17 $52 $90 $195
Class C $ 9 $29 $ 50 $111 Same Same Same Same
Class D $ 7 $21 $ 36 $ 81 Same Same Same Same
GE Tax-Exempt Fund:
Class A $53* $76 $101 $171 Same Same Same Same
Class B $46 $70 $ 87 $190 $16 $50 $87 $190
Class C $ 9 $27 $ 47 $105 Same Same Same Same
Class D $ 6 $19 $ 33 $ 75 Same Same Same Same
GE Fixed Income Fund:
Class A $53* $74 $ 98 $165 Same Same Same Same
Class B $46 $59 $ 84 $185 $16 $49 $84 $185
Class C $ 8 $26 $ 44 $ 99 Same Same Same Same
Class D $ 6 $18 $ 31 $ 69 Same Same Same Same
GE Short-Term Government Fund:
Class A $34* $55 $ 76 $139 Same Same Same Same
Class B $43 $61 $ 71 $157 $13 $41 $71 $157
Class C $ 7 $22 $ 39 $ 87 Same Same Same Same
Class D $ 5 $14 $ 25 $ 57 Same Same Same Same
GE Money Market Fund $ 5 $16 $ 28 $ 63 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. 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 Premier Growth Equity Fund: Class A -- .20%, Class B
-- 4.54%, Class C -- .61%, Class D -- .20%; GE U.S. Equity Fund: Class A --
1.15%, Class B -- 2.08%, Class C -- 1.06% and Class D -- .59%; GE Global
Equity Fund: Class A -- 1.90%, Class B -- 3.50%, Class C -- 1.60%, Class D
-- 1.12%; GE International Equity Fund: Class A -- 1.66%, Class B -- 3.50%,
Class C -- 1.96%, Class D -- 1.03%; GE Strategic Investment Fund: Class A
-- 1.15%, Class B -- 2.10%, Class C -- 1.05%, Class D -- .59%; GE
Tax-Exempt Fund: Class A -- 2.85%, Class B -- 2.41%, Class C -- 1.34%,
Class D -- 1.03%; GE Fixed Income Fund: Class A -- 1.12%, Class B -- 2.44%,
Class C -- .99%, Class D -- .57%; GE Short-Term Government Fund: Class A
3.00%, Class B -- 3.35%, Class C -- 1.34%, Class D -- .83%; and GE Money
Market Fund's other expenses would be .66% of the Fund's average daily net
assets.Effective January 2, 1997, the Funds' investment adviser and
administrator has decreased the expense limitation applicable to GE Fixed
Income Fund by .05% to .20% and increased the expense limitation applicable
to the GE Money Market Fund by .05% to .25%, as reflected in the table on
page 3.
5
<PAGE>
Financial Highlights
================================================================================
Selected audited data for a Fund share outstanding throughout the periods
presented are as shown below. The Trust refers to and hereby incorporates by
reference into the Prospectus, the Trust's Annual Report dated September 30,
1996 (the "Annual Report"). 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. GE Premier Growth Equity Fund is a newly added
series of the Trust and is expected to commence investment operations on
December 31, 1996.
<TABLE>
<CAPTION>
Class A Class B
------- -------
GE U.S. Equity Fund 9/30/96(e) 9/30/95(e) 9/30/94(b) 9/30/96(e) 9/30/95(e) 9/30/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Inception date -- -- 12/22/93 -- -- 12/22/93
Net asset value, beginning of period $20.28 $16.12 $16.48 $19.71 $16.03 $16.41
Income (loss) from investment operations:
Net investment income 0.31 .34 3.23 0.19 0.21 0.24
Net realized and unrealized
gains (losses) on investments 3.34 3.91 (3.22) 3.25 3.84 (0.25)
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations 3.65 4.25 0.01 3.44 4.05 (0.01)
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.32 0.00 0.20 0.31 0.28 0.20
Net realized gains 0.27 0.09 0.17 0.27 0.09 0.17
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions 0.59 0.09 0.37 0.58 0.37 0.37
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $23.34 $20.28 $16.12 $22.57 $19.71 $16.03
====================================================================================================================================
TOTAL RETURN (a) 18.36% 26.52% (0.86%) 17.78% 25.92% (0.09%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $34,523 $15,148 $1,214 $7,194 $1,563 $91
Ratio of net investment income
to average net assets* 1.40% 1.85% 1.87% 0.90% 1.29% 1.28%
Ratio of expenses to average net assets* 1.00% 1.00% 1.00% 1.50% 1.50% 1.50%
Ratio of expenses to average net assets
before voluntary expense limitation* 1.15% 1.25% 1.46% 2.08% 3.50% 1.96%
Portfolio turnover rate 49% 43% 51% 49% 43% 51%
Average brokerage commissions (d) $.045 N/A N/A $.045 N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class C Class D
------- -------
GE U.S. Equity Fund 9/30/96(e) 9/30/95(e) 9/30/94 9/30/93(c) 9/30/96(e) 9/30/95 9/30/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Inception date -- -- -- 1/5/93 -- -- 11/29/93
Net asset value, beginning of period $19.98 $16.13 $16.35 $15.00 $19.98 $16.16 $16.37
Income (loss) from investment operations:
Net investment income 0.36 0.37 1.00 0.12 0.40 0.38 0.32
Net realized and unrealized
gains (losses) on investments 3.30 3.86 (0.85) 1.23 3.31 3.88 (0.16)
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations 3.66 4.23 0.15 1.35 3.71 4.26 0.16
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.35 0.29 0.20 0.00 0.39 0.35 0.20
Net realized gains 0.27 0.09 0.17 0.00 0.27 0.09 0.17
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions 0.62 0.38 0.37 0.00 0.66 0.44 0.37
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $23.02 $19.98 $16.13 $16.35 $23.03 $19.98 $16.16
====================================================================================================================================
TOTAL RETURN (a) 18.70% 26.86% 0.88% 10.32% 18.97% 27.14% 0.96%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $50,035 $26,007 $16,382 $74,415 $144,470 $128,247 $114,885
Ratio of net investment income
to average net assets* 1.66% 2.12% 2.11% 1.86% 1.90% 2.36% 2.27
Ratio of expenses to average net assets* 0.75% 0.75% 0.62% 0.50% 0.50% 0.50% 0.50%
Ratio of expenses to average net assets
before voluntary expense limitation* 1.06% 1.19% 1.21% 1.34% 0.59% 0.71% 0.96%
Portfolio turnover rate 49% 43% 51% 15% 49% 43% 51%
Average brokerage commissions (d) $.045 N/A N/A N/A $.045 N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
See notes accompanying financial highlights.
6
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Class A Class B
------- -------
GE Global Equity Fund 9/30/96 9/30/95 9/30/94(b) 9/30/96 9/30/95 9/30/94
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Inception date -- -- 12/22/93 -- -- 12/22/93
Net asset value, beginning of period $20.18 $19.34 $18.61 $20.14 $19.32 $18.48
Income (loss) from investment operations:
Net investment income 0.02 0.10 0.03 (0.04) 0.00 (0.01)
Net realized and unrealized
gains (losses) on investments 2.20 1.22 0.91 2.14 1.23 1.06
- -------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations 2.22 1.32 0.94 2.10 1.23 1.05
- -------------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.02 0.09 0.01 0.00 0.02 0.01
Net realized gains 0.37 0.39 0.20 0.37 0.39 0.20
- -------------------------------------------------------------------------------------------------------------------------------
Total distributions 0.39 0.48 0.21 0.37 0.41 0.21
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $22.01 $20.18 $19.34 $21.87 $20.14 $19.32
===============================================================================================================================
TOTAL RETURN (a) 11.18% 7.16% 3.09% 10.61% 6.62% 5.70%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $4,054 $2,811 $694 $600 $356 $128
Ratio of net investment income/(loss)
to average net assets* 0.12% 0.47% 0.44% (0.34%) (0.11%) (0.08%)
Ratio of expenses to average net assets* 1.60% 1.60% 1.60% 2.10% 2.10% 2.10%
Ratio of expenses to average net assets
before voluntary expense limitation* 1.90% 2.17% 2.02% 3.50% 3.50% 2.52%
Portfolio turnover rate 46% 46% 26% 46% 46% 26%
Average brokerage commissions (d) $.006 N/A N/A $.006 N/A N/A
Class C Class D
------- -------
GE Global Equity Fund 9/30/96 9/30/95 9/30/94 9/30/93(c) 9/30/96 9/30/95 9/30/94
- ----------------------------------------------------------------------------------------------------------------------------------
Inception date -- -- -- 1/5/93 -- -- 11/29/93
Net asset value, beginning of period $20.31 $19.40 $17.16 $15.00 $20.37 $19.45 $17.49
Income (loss) from investment operations:
Net investment income 0.06 0.09 0.07 0.08 0.13 0.13 0.11
Net realized and unrealized
gains (losses) on investments 2.22 1.30 2.37 2.08 2.21 1.31 2.06
- ----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations 2.28 1.39 2.44 2.16 2.34 1.44 2.17
- ----------------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.04 0.09 0.00 0.00 0.09 0.13 0.01
Net realized gains 0.37 0.39 0.20 0.00 0.37 0.39 0.20
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions 0.41 0.48 0.20 0.00 0.46 0.52 0.21
Net asset value, end of period $22.18 $20.31 $19.40 $17.16 $22.25 $20.37 $19.45
==================================================================================================================================
TOTAL RETURN (a) 11.44% 7.47% 14.28% 14.10% 11.71% 7.76% 12.43%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $28,682 $23,683 $20,432 $11,999 $10,123 $9,785 $10,504
Ratio of net investment income/(loss)
to average net assets* 0.33% 0.59% 0.52% 1.00% 0.56% 0.84% 0.82%
Ratio of expenses to average net assets* 1.35% 1.35% 1.31% 1.10% 1.10% 1.10% 1.10%
Ratio of expenses to average net assets
before voluntary expense limitation* 1.60% 1.42% 1.77% 2.19% 1.12% 1.75% 1.52%
Portfolio turnover rate 46% 46% 26% 28% 46% 46% 26%
Average brokerage commissions (d) $.006 N/A N/A N/A $.006 N/A N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class A Class B
------- -------
GE International Equity Fund 9/30/96(e) 9/30/95 9/30/94 9/30/96(e) 9/30/95 9/30/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Inception date -- -- 3/2/94 -- -- 3/2/94
Net asset value, beginning of period $15.87 $15.18 $15.00 $15.77 $15.13 $15.00
Income (loss) from investment operations:
Net investment income 0.07 0.09 0.06 0.05 0.01 0.00
Net realized and unrealized
gains (losses) on investments 1.74 0.64 0.12 1.65 0.64 0.13
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations 1.81 0.73 0.18 1.70 0.65 0.13
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.03 0.04 0.00 0.00 0.01 0.00
Net realized gains 0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions 0.03 0.04 0.00 0.00 0.01 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $17.65 $15.87 $15.18 $17.47 $15.77 $15.13
====================================================================================================================================
TOTAL RETURN (a) 11.39% 4.87% 1.20% 10.78% 4.33% 0.87%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $8,462 $3,948 $25 $272 $57 $34
Ratio of net investment income
to average net assets* 0.43% 1.28% 1.01% 0.28% 0.10% 0.47%
Ratio of expenses to average net assets* 1.59% 1.60% 1.60% 2.10% 2.10% 2.10%
Ratio of expenses to average net assets
before voluntary expense limitation* 1.66% 1.95% 1.93% 3.50% 3.50% 2.43%
Portfolio turnover rate 36% 27% 6% 36% 27% 6%
Average brokerage commissions (d) $.031 N/A N/A $.031 N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Class C Class D
------- -------
GE International Equity Fund 9/30/96(e) 9/30/95 9/30/94 9/30/96(e) 9/30/95 9/30/94
- ------------------------------------------------------------------------------------------------------------------------------------
Inception date -- -- 3/2/94 -- -- 3/2/94
Net asset value, beginning of period $15.88 $15.19 $15.00 $15.94 $15.22 $15.00
Income (loss) from investment operations:
Net investment income 0.11 0.12 0.00 0.17 0.12 0.10
Net realized and unrealized
gains (losses) on investments 1.72 0.65 0.19 1.73 0.70 0.12
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations 1.83 0.77 0.19 1.90 0.82 0.22
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.06 0.08 0.00 0.08 0.10 0.00
Net realized gains 0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions 0.06 0.08 0.00 0.08 0.10 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $17.65 $15.88 $15.19 $17.76 $15.94 $15.22
====================================================================================================================================
TOTAL RETURN (a) 11.54% 5.16% 1.27% 11.97% 5.45% 1.47%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $3,230 $1,262 $481 $63,225 $32,907 $26,460
Ratio of net investment income
to average net assets* 0.68% 0.83% 0.66% 0.99% 0.97% 1.52%
Ratio of expenses to average net assets* 1.35% 1.35% 1.35% 1.03% 1.07% 1.10%
Ratio of expenses to average net assets
before voluntary expense limitation* 1.96% 2.75% 1.68% 1.03% 1.18% 1.43%
Portfolio turnover rate 36% 27% 6% 36% 27% 6%
Average brokerage commissions (d) $.031 N/A N/A $.031 N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
See notes accompanying financial highlights.
7
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Class A Class B
------- -------
GE Strategic Investment Fund 9/30/96(e) 9/30/95(e) 9/30/94(b) 9/30/96(e) 9/30/95(e) 9/30/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Inception date -- -- 12/22/93 -- -- 12/22/93
Net asset value, beginning of period $18.43 $15.71 $16.21 $18.26 $15.62 $16.14
Income (loss) from investment operations:
Net investment income 0.51 0.52 0.48 0.41 0.40 0.27
Net realized and unrealized
gains (losses) on investments 1.90 2.57 (0.65) 1.87 2.58 (0.46)
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations 2.41 3.09 (0.17) 2.28 2.98 (0.19)
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.43 0.37 0.27 0.42 0.34 0.27
Net realized gains 0.08 0.00 0.06 0.08 0.00 0.06
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions 0.51 0.37 0.33 0.50 0.34 0.33
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $20.33 $18.43 $15.71 $20.04 $18.26 $15.62
====================================================================================================================================
TOTAL RETURN (a) 13.35% 20.12% (1.32%) 12.73% 19.53% (1.25%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $25,232 $8,778 $1,104 $3,701 $882 $150
Ratio of net investment income
to average net assets* 2.60% 2.95% 2.59% 2.11% 2.46% 1.92%
Ratio of expenses to average net assets* 1.12% 1.15% 1.15% 1.65% 1.65% 1.65%
Ratio of expenses to average net assets
before voluntary expense limitation* 1.15% 1.19% 1.58% 2.10% 3.50% 2.08%
Portfolio turnover rate 93% 98% 68% 93% 98% 68%
Average brokerage commissions (d) $.046 N/A N/A $.046 N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Class C Class D
------- -------
GE Strategic Investment Fund 9/30/96(e) 9/30/95(e) 9/30/94 9/30/93(c) 9/30/96(e) 9/30/95 9/30/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Inception date -- -- -- 1/5/93 -- -- 11/29/93
Net asset value, beginning of period $18.46 $15.72 $16.08 $15.00 $18.49 $15.74 $16.02
Income (loss) from investment operations:
Net investment income 0.54 0.53 0.44 0.23 0.63 0.55 0.45
Net realized and unrealized
gains (losses) on investments 1.92 2.59 (0.48) 0.85 1.90 2.62 (0.40)
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations 2.46 3.12 (0.04) 1.08 2.53 3.17 0.05
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.46 0.38 0.26 0.00 0.50 0.42 0.27
Net realized gains 0.08 0.00 0.06 0.00 0.08 0.00 0.06
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions 0.54 0.38 0.32 0.00 0.58 0.42 0.33
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $20.38 $18.46 $15.72 $16.08 $20.44 $18.49 $15.74
====================================================================================================================================
TOTAL RETURN (a) 13.58% 20.35% (0.27%) 8.06% 13.95% 20.70% 0.25%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $26,467 $17,821 $13,018 $12,780 $36,162 $18,665 $17,159
Ratio of net investment income
to average net assets* 2.81% 3.21% 2.62% 2.68% 3.16% 3.46% 2.93%
Ratio of expenses to average net assets* 0.90% 0.90% 0.85% 0.65% 0.58% 0.65% 0.65%
Ratio of expenses to average net assets
before voluntary expense limitation* 1.05% 1.03% 1.33% 1.65% 0.59% 0.97% 1.08%
Portfolio turnover rate 93% 98% 68% 20% 93% 98% 68%
Average brokerage commissions (d) $.046 N/A N/A N/A $.046 N/A N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class A Class B
------- -------
GE Tax-Exempt Fund 9/30/96 9/30/95 9/30/94(b) 9/30/96 9/30/95 9/30/94
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Inception date -- -- 12/22/93 -- -- 12/22/93
Net asset value, beginning of period $11.77 $11.32 $12.31 $11.78 $11.32 $12.30
Income (loss) from investment operations:
Net investment income 0.51 0.53 0.39 0.45 0.47 0.34
Net realized and unrealized
gains (losses) on investments (0.10) 0.46 (1.00) (0.10) 0.47 (0.98)
- ---------------------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations 0.41 0.99 (0.61) 0.35 0.94 (0.64)
- ---------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.51 0.54 0.38 0.45 0.48 0.34
Net realized gains 0.00 0.00 0.00 0.00 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions 0.51 0.54 0.38 0.45 0.48 0.34
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.67 $11.77 $11.32 $11.68 $11.78 $11.32
===========================================================================================================================
TOTAL RETURN (a) 3.52% 8.96% (5.40%) 3.01% 8.51% (5.28%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $537 $389 $53 $1,318 $689 $61
Ratio of net investment income
to average net assets* 4.33% 4.54% 4.34% 3.83% 3.81% 3.68%
Ratio of expenses to average net assets* 1.02% 1.10% 1.10% 1.52% 1.60% 1.60%
Ratio of expenses to average net assets
before voluntary expense limitation* 2.85% 3.00% 1.58% 2.41% 3.50% 2.08%
Portfolio turnover rate 145% 86% 23% 145% 86% 23%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class C Class D
------- -------
GE Tax-Exempt Fund 9/30/96 9/30/95 9/30/94 9/30/93(c) 9/30/96 9/30/95 9/30/94
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Inception date -- -- -- 1/5/93 -- -- 11/29/93
Net asset value, beginning of period $11.77 $11.32 $12.36 $12.00 $11.78 $11.32 $12.11
Income (loss) from investment operations:
Net investment income 0.53 0.57 0.54 0.33 0.58 0.60 0.47
Net realized and unrealized
gains (losses) on investments (0.09) 0.45 (1.06) 0.36 (0.12) 0.46 (0.80)
- ----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations 0.44 1.02 (0.52) 0.69 0.46 1.06 (0.33)
- ----------------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.54 0.57 0.52 0.33 0.57 0.60 0.46
Net realized gains 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total distributions 0.54 0.57 0.52 0.33 0.57 0.60 0.46
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.67 $11.77 $11.32 $12.36 $11.67 $11.78 $11.32
==================================================================================================================================
TOTAL RETURN (a) 3.77% 9.23% (4.30%) 5.48% 3.95% 9.59% (2.80%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $7,728 $6,816 $6,917 $10,136 $2,960 $3,905 $4,995
Ratio of net investment income
to average net assets* 4.57% 4.94% 4.41% 3.56% 4.83% 5.20% 4.65%
Ratio of expenses to average net assets* 0.78% 0.85% 0.79% 0.60% 0.53% 0.60% 0.60%
Ratio of expenses to average net assets
before voluntary expense limitation* 1.34% 1.18% 1.33% 1.53% 1.03% 1.47% 1.08%
Portfolio turnover rate 145% 86% 23% 29% 145% 86% 23%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
See notes accompanying financial highlights.
8
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Class A Class B
------- -------
GE Fixed Income Fund 9/30/96 9/30/95 9/30/94(b) 9/30/96 9/30/95 9/30/94
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Inception date -- -- 12/22/93 -- -- 12/22/93
Net asset value, beginning of period $11.91 $11.27 $12.19 $11.91 $11.26 $12.15
Income (loss) from investment operations:
Net investment income 0.65 0.73 0.47 0.60 0.65 0.42
Net realized and unrealized
gains (losses) on investments (0.19) 0.63 (0.84) (0.20) 0.66 (0.81)
- ----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations 0.46 1.36 (0.37) 0.40 1.31 (0.39)
- ----------------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.68 0.72 0.47 0.61 0.66 0.42
Net realized gains 0.00 0.00 0.08 0.00 0.00 0.08
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions 0.68 0.72 0.55 0.61 0.66 0.50
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.69 $11.91 $11.27 $11.70 $11.91 $11.26
==================================================================================================================================
TOTAL RETURN (a) 3.91% 12.48% (3.02%) 3.41% 11.98% (3.31%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $15,653 $5,400 $26,023 $1,673 $234 $65
Ratio of net investment income
to average net assets* 5.66% 6.22% 5.37% 5.19% 5.57% 4.83%
Ratio of expenses to average net assets* 1.05% 1.08% 1.10% 1.60% 1.60% 1.58%
Ratio of expenses to average net assets
before voluntary expense limitation* 1.12% 1.18% 1.51% 2.44% 3.50% 2.01%
Portfolio turnover rate 275% 315% 298% 275% 315% 298%
</TABLE>
<TABLE>
<CAPTION>
Class C Class D
------- -------
GE Fixed Income Fund 9/30/96 9/30/95 9/30/94 9/30/93(c) 9/30/96 9/30/95 9/30/94
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Inception date -- -- -- 1/5/93 -- -- 11/29/93
Net asset value, beginning of period $11.92 $11.27 $12.31 $12.00 $11.92 $11.27 $12.17
Income (loss) from investment operations:
Net investment income 0.69 0.73 0.61 0.36 0.72 0.77 0.55
Net realized and unrealized
gains (losses) on investments (0.21) 0.67 (0.96) 0.31 (0.22) 0.65 (0.83)
- ----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations 0.48 1.40 (0.35) 0.67 0.50 1.42 (0.28)
- ----------------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.70 0.75 0.61 0.36 0.73 0.77 0.54
Net realized gains 0.00 0.00 0.08 0.00 0.00 0.00 0.08
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions 0.70 0.75 0.69 0.36 0.73 0.77 0.62
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.70 $11.92 $11.27 $12.31 $11.69 $11.92 $11.27
==================================================================================================================================
TOTAL RETURN (a) 4.10% 12.81% (2.97%) 5.24% 4.32% 13.10% (2.34%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $28,115 $21,401 $13,600 $11,485 $19,098 $6,642 $2,732
Ratio of net investment income
to average net assets* 5.84% 6.37% 5.22% 3.87% 6.14% 6.57% 5.40%
Ratio of expenses to average net assets* 0.85% 0.85% 0.79% 0.60% 0.55% 0.59% 0.58%
Ratio of expenses to average net assets
before voluntary expense limitation* 0.99% 0.95% 1.26% 1.63% 0.57% 2.50% 1.01%
Portfolio turnover rate 275% 315% 298% 68% 275% 315% 298%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class A Class B
------- -------
GE Short-Term Government Fund 9/30/96 9/30/95 9/30/94 9/30/96 9/30/95 9/30/94
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Inception date -- -- 3/2/94 -- -- 3/2/94
Net asset value, beginning of period $11.91 $11.72 $12.00 $11.90 $11.72 $12.00
Income (loss) from investment operations:
Net investment income 0.60 0.64 0.35 0.56 0.59 0.33
Net realized and unrealized
gains (losses) on investments (0.06) 0.21 (0.30) (0.05) 0.21 (0.31)
- -----------------------------------------------------------------------------------------------------------------------
Total income from
investment operations 0.54 0.85 0.05 0.51 0.80 0.02
- -----------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.61 0.66 0.33 0.57 0.62 0.30
Net realized gains 0.06 0.00 0.00 0.06 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------
Total distributions 0.67 0.66 0.33 0.63 0.62 0.30
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.78 $11.91 $11.72 $11.78 $11.90 $11.72
=======================================================================================================================
TOTAL RETURN (a) 4.63% 7.48% 0.40% 4.35% 7.01% 0.20%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $340 $285 $35 $145 $83 $25
Ratio of net investment income
to average net assets* 5.04% 5.27% 4.75% 4.67% 5.07% 4.38%
Ratio of expenses to average net assets* 0.95% 0.95% 0.95% 1.30% 1.30% 1.30%
Ratio of expenses to average net assets
before voluntary expense limitation* 3.00% 3.00% 1.71% 3.35% 3.35% 2.06%
Portfolio turnover rate 201% 415% 146% 201% 415% 146%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Class C Class D
------- -------
GE Short-Term Government Fund 9/30/96 9/30/95 9/30/94 9/30/96 9/30/95 9/30/94
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Inception date -- -- 3/2/94 -- -- 3/2/94
Net asset value, beginning of period $11.91 $11.72 $12.00 $11.90 $11.72 $12.00
Income (loss) from investment operations:
Net investment income 0.63 0.66 0.36 0.66 0.69 0.39
Net realized and unrealized
gains (losses) on investments (0.05) 0.22 (0.30) (0.05) 0.21 (0.31)
- -----------------------------------------------------------------------------------------------------------------------
Total income from
investment operations 0.58 0.88 0.06 0.61 0.90 0.08
- -----------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.64 0.69 0.34 0.67 0.72 0.36
Net realized gains 0.06 0.00 0.00 0.06 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------
Total distributions 0.70 0.69 0.34 0.73 0.72 0.36
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.79 $11.91 $11.72 $11.78 $11.90 $11.72
=======================================================================================================================
TOTAL RETURN (a) 4.98% 7.74% 0.53% 5.24% 7.92% 0.69%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $3,653 $2,437 $287 $7,786 $8,048 $7,822
Ratio of net investment income
to average net assets* 5.28% 5.62% 5.18% 5.54% 5.89% 5.32%
Ratio of expenses to average net assets* 0.70% 0.70% 0.70% 0.45% 0.45% 0.45%
Ratio of expenses to average net assets
before voluntary expense limitation* 1.34% 1.84% 1.46% 0.83% 0.98% 1.21%
Portfolio turnover rate 201% 415% 146% 201% 415% 146%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
See notes accompanying financial highlights.
9
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
GE Money Market Fund 9/30/96 9/30/95 9/30/94 9/30/93(c)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Inception date -- -- -- 1/5/93
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00
Income (loss) from investment operations:
Net investment income 0.05 0.05 0.03 0.02
Net realized and unrealized
gains (losses) on investments 0.00 0.00 0.00 0.00
- --------------------------------------------------------------------------------------------------------------------
Total income from investment operations 0.05 0.05 0.03 0.02
- --------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.05 0.05 0.03 0.02
Net realized gains 0.00 0.00 0.00 0.00
- --------------------------------------------------------------------------------------------------------------------
Total distributions 0.05 0.05 0.03 0.02
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.00 $1.00 $1.00 $1.00
====================================================================================================================
TOTAL RETURN (a) 5.18% 5.52% 3.31% 1.64%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $85,842 $71,664 $53,607 $17,197
Ratio of net investment income
to average net assets* 5.06% 5.32% 3.41% 2.27%
Ratio of expenses to average net assets* 0.45% 0.45% 0.45% 0.45%
Ratio of expenses to average net assets
before voluntary expense limitation* 0.66% 0.70% 1.04% 1.48%
</TABLE>
- ----------
Notes to Financial Highlights
(a) Total returns are historical and assume changes 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, commencement 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, commencement of investment operations, through September 30, 1993,
except for GE Tax-Exempt Fund, which is from February 26, 1993 through
September 30, 1993.
(d) For the fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades on
which commissions are charged. This rate does not reflect mark-ups,
mark-downs or spreads on shares traded on a principal basis.
(e) Per share data is based on average shares outstanding during the period.
Certain reclassifications have been made to prior year balances to conform
to the classifications used in 1996.
* Annualized for periods less than one year.
See Notes to Financial Statements
10
<PAGE>
Performance
================================================================================
The chart below shows each Fund's historical performance for the referenced
period compared to the historical performance of broad market indexes for the
same time period and of mutual funds (the "Elfun and S&S Funds") and
institutional private accounts having similar objectives for which the
investment advisor is either GE Investment Management Incorporated ("GEIM"), the
GE Funds investment adviser and administrator, or General Electric Investment
Corporation ("GEIC", and together with GEIM collectively referred to as "GE
Investments"), a sister company of GEIM wholly-owned by General Electric Company
("GE"). The professionals responsible for the investment operations of GEIM and
the GE Funds serve in similar capacities with respect to GEIC. The data,
calculated on an average annual total return basis, is provided to illustrate
the past performance of GE Investments in managing accounts substantially
similar to the GE Funds. These accounts consist of separate and distinct
portfolios and their performance is not indicative of or a substitute for the
past or future performance of the GE Funds. As of September 30, 1996, GE Premier
Growth Equity Fund (the "Premier Fund") had not yet commenced investment
operations and therefore had no performance record of its own.
<TABLE>
<CAPTION>
Average Annual Total Return (in%) (as of 9/30/96)
----------------------------------------------------------------------------------
Load Adjusted
---------------------------
One Three Five Ten Since One Three Since
Year Year Year Year Inception Year Year Inception
------ ------ ------ ------ ---------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GE Premier Growth Equity Fund
Class A -- -- -- -- -- -- -- --
Class B -- -- -- -- -- -- -- --
Class C -- -- -- -- -- N/A N/A N/A
Class D -- -- -- -- -- N/A N/A N/A
Elfun Trusts 22.36 18.04 15.52 14.71 N/A N/A N/A N/A
S&P 500 Index 20.33 17.41 15.23 14.95 N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------------
GE U.S. Equity Fund
Class A 18.36 -- -- -- 15.45 (1/1/94) 12.74 -- 13.43 (1/1/94)
Class B 17.78 -- -- -- 15.19 (12/22/93) 13.78 -- 14.64 (12/22/93)
Class C 18.70 14.95 -- -- 15.38 (2/22/93) N/A N/A N/A
Class D 18.97 -- -- -- 16.08 (11/29/93) N/A N/A N/A
U.S. Multi-Style(R)Equity Composite 19.15 15.32 14.64 N/A 14.32 (4/1/91) N/A N/A N/A
S&P 500 Index 20.33 17.41 15.23 14.95 N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------------
GE Short-Term Government Fund
Class A 4.63 -- -- -- 4.81 (3/2/94) 2.01 -- 3.79 (3/2/94)
Class B 4.35 -- -- -- 4.45 (3/2/94) 1.38 -- 3.73 (3/2/94)
Class C 4.98 -- -- -- 5.10 (3/2/94) N/A -- N/A
Class D 5.24 -- -- -- 5.34 (3/2/94) N/A -- N/A
Lehman Brothers 1-3 Year
Government Bond Index 5.66 4.96 5.93 7.16 N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------------
GE Global Equity Fund
Class A 11.18 -- -- -- 7.76 (1/1/94) 5.90 -- 5.86 (1/1/94)
Class B 10.61 -- -- -- 8.25 (12/22/93) 6.61 -- 7.63 (12/22/93)
Class C 11.44 11.03 -- -- 13.14 (2/22/93) N/A N/A N/A
Class D 11.71 -- -- -- 11.25 (11/29/93) N/A N/A N/A
Elfun Global Fund 12.45 12.57 13.11 -- 11.46 (1/1/88) N/A N/A N/A
Morgan Stanley World Index 13.66 11.83 10.73 10.58 N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------------
GE International Equity Fund
Class A 11.39 -- -- -- 6.70 (3/2/94) 6.10 -- 4.70 (3/2/94)
Class B 10.78 -- -- -- 6.13 (3/2/94) 6.78 -- 5.40 (3/2/94)
Class C 11.54 -- -- -- 6.90 (3/2/94) N/A N/A N/A
Class D 11.97 -- -- -- 7.26 (3/2/94) N/A N/A N/A
International Equity Composite 11.41 11.19 10.31 N/A 7.66 (4/1/91) N/A N/A N/A
Morgan Stanley EAFE Index 8.62 8.07 8.17 8.67 N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------------
11
<PAGE>
Average Annual Total Return (in%) (as of 9/30/96)
----------------------------------------------------------------------------------
Load Adjusted
---------------------------
One Three Five Ten Since One Three Since
Year Year Year Year Inception Year Year Inception
------ ------ ------ ------ ---------- ------ ------ ----------
GE Strategic Investment Fund
Class A 13.35 -- -- -- 11.34 (1/1/94) 7.96 -- 9.39 (1/1/94)
Class B 12.73 -- -- -- 10.82 (12/22/93) 8.73 -- 10.23 (12/22/93)
Class C 13.58 10.88 -- -- 11.33 (2/22/93) N/A N/A N/A
Class D 13.95 -- -- -- 11.98 (11/29/93) N/A N/A N/A
Elfun Diversified Fund 14.07 11.79 11.83 -- 11.61 (1/1/88) N/A N/A N/A
S&P 500 & LB Aggregate Index Composite 14.16 12.45 12.12 12.43 N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------------
GE Tax-Exempt Fund
Class A 3.52 -- -- -- 2.39 (1/1/94) -0.88 -- 0.78 (1/1/94)
Class B 3.01 -- -- -- 2.08 (12/22/93) 0.04 -- 1.42 (12/22/93)
Class C 3.77 2.75 -- -- 3.82 (2/26/93) N/A N/A N/A
Class D 3.95 -- -- -- 3.65 (11/29/93) N/A N/A N/A
Elfun Tax-Exempt Income Fund 6.15 4.20 7.00 7.64 10.43 (1/1/80) N/A N/A N/A
Lehman Brothers Municipal Bond Index 6.04 4.78 7.45 7.89 N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------------
GE Fixed Income Fund
Class A 3.91 -- -- -- 4.66 (1/1/94) -0.50 -- 3.01 (1/1/94)
Class B 3.41 -- -- -- 4.15 (12/22/93) 0.46 -- 3.51 (12/22/93)
Class C 4.10 4.45 -- -- 5.16 (2/22/93) N/A N/A N/A
Class D 4.32 -- -- -- 5.11 (11/29/93) N/A N/A N/A
Elfun Income Fund 5.10 5.13 7.52 8.20 10.53 (12/31/83) N/A N/A N/A
S&S Long Term Interest Fund 5.20 5.20 7.56 8.38 N/A N/A N/A N/A
Lehman Brothers Aggregate Bond Index 4.90 5.01 7.46 8.66 N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------------
GE Money Market Fund 5.18 4.66 -- -- 4.33 (2/22/93) N/A N/A N/A
Elfun Money Market Fund 5.32 4.93 4.51 -- 5.12 (6/13/90) N/A N/A N/A
90 Day T-Bill 5.21 4.89 4.32 5.62 N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes to Performance
================================================================================
The composite performance data shown above for the International Equity
Composite was developed from the aggregate performance of various institutional
private accounts managed on a basis substantially similar to the GE
International Equity Fund; the U.S. Multi-Style(R) Equity Composite was
developed from the aggregate performance of various institutional private
accounts managed on a basis substantially similar to the GE U.S. Equity Fund.
The raw composite performance data was calculated in accordance with recommended
standards of the Association for Investment Management and Research and the
effect of fees was calculated as described below.
Custodial fees and expenses were not deducted from the composite results, but
management fees are reflected as follows: fees of all fee paying accounts were
deducted and, with respect to the non-fee paying GE-affiliated accounts, a
hypothetical fee equal to the highest annual rate that would have been charged
to a comparable fee paying account based on GE Investments' stated fee schedules
was deducted. The fees and expenses deducted from the composite performance data
generally are substantially lower than the expenses incurred by the
corresponding GE Funds and the composite performance figures would have been
lower if they were subject to the higher fees and expenses incurred by the GE
Funds. In addition, the composite performance might have been adversely affected
by the diversification requirements, tax restrictions and investment limitations
to which the GE Funds are subject, if the accounts within each composite had
been regulated as investment companies under the federal securities and tax
laws.
The mutual fund results are net of fees and expenses and assume changes in share
price, reinvestment of dividends and capital gains, and, if applicable, the
deduction of any sales charges as set forth under the "Load Adjusted" column.
There are no sales charges or transfer fees, and no redemption fees, imposed on
the Elfun or S&S Long Term Interest Funds' shares. The management fee charged to
these Funds is the reasonable cost, both direct and indirect, incurred in
providing management and advisory services. Consequently, the expenses incurred
by the Elfun and S&S Long Term Interest Funds generally are substantially lower
than those incurred by the corresponding GE Funds and their performance would
have been lower if they were subject to the higher fees and expenses incurred by
the GE Funds. GEIM has voluntarily agreed to reduce or otherwise limit certain
expenses of the GE Funds. Absent these limits, the GE Funds' performance would
have been lower. Also, certain of the results for Elfun Diversified, Elfun
Global and Elfun Money Market Funds were favorably affected by expense waivers
or limitations.
The Standard & Poor's Composite Index of 500 stocks (S&P 500), Morgan Stanley
Capital International World Index (MSCI World), Morgan Stanley Capital
International EAFE Index (MSCI EAFE), Lehman Brothers Aggregate Bond Index (LB
Aggregate), the Lehman Brothers Municipal Bond Index (LBMI) and Lehman Brothers
1-3 Year Government Bond Index (LB 1-3) are unmanaged indexes and do not reflect
the actual cost of investing in the instruments that comprise each index. The
S&P 500 is a composite of the prices of 500 widely held stocks recognized by
investors to be representative of the stock market in general. MSCI World Index
is a composite of 1,561 stocks in companies from 22 countries representing the
European, Pacific Basin and American regions. MSCI EAFE Index is a composite of
1,103 stocks of companies from 20 countries representing stock markets of
Europe, Australasia, New Zealand and Far East. LB Aggregate is a composite index
of short-, medium-, and long-term bond performance and is widely recognized as a
barometer of the bond market in general. LBMI is a composite of investment
grade, fixed rate municipal bonds and is considered to be representative of the
municipal bond market. The LB 1-3 is a composite of government and U.S. Treasury
obligations with maturities of 1-3 years. S&P 500 & LB Aggregate Composite Index
simulates a blended return which is representative of the approximate asset
allocation mix of the GE Strategic Investment Fund for the periods presented
(composed of 60% S&P 500, 40% LBKL). The actual allocation mix of this Fund may
have varied from time to time. The results shown for the foregoing indexes
assume the reinvestment of net dividends.
12
<PAGE>
THE MULTIPLE DISTRIBUTION SYSTEM
================================================================================
Pursuant to a multiple distribution system (the "Multiple Distribution System"),
the Trust offers investors in GE Premier Growth Equity Fund, 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 Premier Growth Equity Fund, 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 GEIM 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 Premier Growth Equity Fund, 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 GE or an
affiliate of GE and certain other individual investors as described in greater
detail under "Purchase of Shares" below on page 34.
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 on page 34.
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
13
<PAGE>
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 Premier Growth Equity Fund
The investment objective of GE Premier Growth Equity Fund (the "Premier Fund")
is long term growth of capital and future income rather than current income. The
Fund seeks to achieve this objective through investment primarily in
growth-oriented equity securities which, under normal market conditions, will
represent at least 65% of the Fund's assets. In pursuing its objectives, the
Premier Fund, under normal conditions, may invest in common stocks, prefered
stocks, convertible bonds, convertible debentures, convertible notes,
convertible preferred stocks and warrants or rights issued by U.S. and foreign
companies.
In attempting to achieve its objective, the Premier Fund will seek to identify
and invest in companies it believes will offer potential for long-term capital
appreciation. These companies typically would possess one or more of a variety
of characteristics, including high quality products and/or services, strong
balance sheets, sustainable internal growth, superior financial returns,
competitive position in the issuer's economic sector and shareholder-oriented
management. While the Premier Fund may invest in companies of varying sizes as
measured by assets, sales or capitalization, a majority of its assets will,
under normal market conditions, be comprised of companies with relatively large
capitalizations. In addition, the Premier Fund will normally be invested in
companies that have above-average growth prospects and which are typically
leaders in their fields. The Fund will generally be diversified over a cross
section of industries.
Up to 25% of the Premier Fund's total assets may be invested in foreign
securities. The Premier Fund may also invest in securities of foreign issuers in
the form of depositary receipts. The equity securities in which the Premier Fund
invests will in most cases be traded on domestic or foreign securities
exchanges, or traded in the domestic or foreign over-the-counter markets. A more
complete description of foreign securities 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."
During periods in which GEIM believes that there will be a market decline in
particular securities, it may, for temporary defensive purposes, hold cash
and/or invest in fixed-income securities or money market instruments of the
types described below under "Additional Investments -- Money Market Instruments"
without limitation. In addition, during normal market conditions, a portion of
the Premier Fund's total assets may be held in cash and/or invested in these
money market instruments for cash management purposes, pending investment in
accordance with the Fund's investment objective and policies and to meet
operating expenses. Included among the money market instruments in which the
Premier 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 fixed income securities or money market
instruments, the Premier Fund may not fully achieve its investment objective.
The Premier 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 Ratings Services, a Division
of The McGraw-Hill Companies, Inc. ("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
Premier Fund's investments is included as an Appendix to the Statement of
Additional Information.
In addition to investing as described above, the Premier Fund may hold the
following types of instruments: non-publicly traded securities, illiquid
securities, 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 l44A under the 1933 Act (each, a "Rule 144A
Security" and collectively "Rule 144A Securities") and securities of other
investment funds.
The Premier Fund may also 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, 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."
14
<PAGE>
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."
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 S&P 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 strategy
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 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 fundamental 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 S&P or Moody's or has received an equivalent
rating from another 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.
15
<PAGE>
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, Rule 144A Securities and zero coupon obligations. 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.
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.
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."
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 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,
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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.
In selecting investments on behalf of the International Fund, GEIM seeks
companies that are expected to grow faster than relevant markets and whose
securities are available at a price that does not fully reflect the potential
growth of those companies. GEIM typically focuses on companies that possess one
or more of a variety of characteristics, including strong earnings growth
relative to price-to-earnings and price-to-cash earnings ratios, low
price-to-book value, strong cash flow, presence in an industry experiencing
strong growth and high quality management.
The International Fund, under normal conditions, invests at least 65% of its
assets in common stocks, preferred stocks, convertible debentures, convertible
notes, convertible preferred stocks and 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-term 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
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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."
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 and notes issued by U.S. and foreign
companies; securities issued or guaranteed by the U.S. Government or one of its
agencies or instrumentalities ("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 Strategies." 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."
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.
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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 Strategic 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.
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.
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 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 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 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."
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
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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 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.
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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, 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 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
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 capital. 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."
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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 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. 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 Government 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 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
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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 the greater of $1,000,000 or 1% of its total assets in the
Second Tier Securities of any one issuer. The Money Market Fund may invest more
than 5% (but not more than 25%) of the then-current value of the Fund's total
assets in the securities of a single issuer for a period of up to three business
days, so long as (1) the securities either are rated by the Requisite NRSROs in
the highest short-term rating category or are securities of issuers that have
received such ratings with respect to other short-term debt securities or are
comparable unrated securities and (2) the Fund does not make more than one such
investment at any one time. Determinations of comparable quality for purchases
of unrated securities are made by GEIM in accordance with procedures established
by the Board of Trustees. The Money Market Fund invests only in instruments that
have (or, pursuant to regulations adopted by the SEC, are deemed to have)
remaining maturities of 13 months or less at the date of purchase (except
securities subject to repurchase agreements), determined in accordance with a
rule promulgated by the SEC. 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 Annual Report contains information regarding relevant market conditions and
investment strategies and techniques pursued by GEIM 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. The types of money market instruments in which each
Fund, other than the Money Market Fund, may invest directly or indirectly
through its investment in the GEI Short-Term Investment Fund described below are
as follows: (i) Government Securities, (ii) debt obligations of banks, savings
and loan institutions, insurance companies and mortgage bankers, (iii)
commercial paper and notes, including those with variable and floating rates of
interest, (iv) debt obligations of foreign branches of U.S. banks, U.S. branches
of foreign banks and foreign branches of foreign banks, (v) debt obligations
issued or guaranteed by one or more foreign governments or any of their
political subdivisions, agencies or instrumentalities, including obligations of
supranational entities, (vi) debt securities issued by foreign issuers and (vii)
repurchase agreements. Each Fund, other than the Money Market Fund, may also
invest in the GEI Short-Term Investment Fund (the "Investment Fund"), an
investment fund created specifically to serve as a vehicle for the collective
investment of cash balances of the Funds (other than the Money Market Fund) and
other accounts advised by GEIM or its affiliate, GEIC. The Investment Fund
invests exclusively in the money market instruments described in (i) through
(vii) above. The Investment Fund is advised by GEIM. No advisory fee is charged
by GEIM to the Investment Fund, nor will a Fund incur any sales charge,
redemption fee, distribution fee or service fee in connection with its
investments in the Investment Fund. Each Fund, other than the Money Market Fund,
may invest up to 25% of its assets in the Investment Fund.
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
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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
instruments 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
supported 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 Premier
Fund, 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 assets 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 Premier Fund, 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 subject 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 may 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
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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
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 But
Not All Funds -- Covered Option Writing" in the Statement of Additional
Information for specific situations where put and call options will be deemed to
be covered by a Fund.
A Fund may engage in a closing purchase transaction to realize a profit, to
prevent an underlying security from being called or put or, in the case of a
call option, to unfreeze an underlying security (thereby 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.
Securities Index Options. In seeking to hedge all or a portion of its
investments, a Fund, other than the
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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.
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, to gain
market exposure for accumulating and residual cash positions, for duration
management, or when the transactions are economically appropriate to the
reduction of risks inherent in the management of the Fund involved. No Fund will
enter into a transaction involving futures and options on futures for
speculative purposes.
A Fund may not enter into futures and options contracts for which aggregate
initial margin deposits and premiums paid for unexpired options exceed 5% of the
fair market value of the Fund's total assets, after taking into account
unrealized losses or profits on futures contracts or options on futures
contracts into which it has entered. The current view of the SEC staff is that 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 other
liquid assets and segregated with the Trust's custodian or a designated
sub-custodian or "covered" in a manner similar to that for covered options on
securities (see "Strategies Available to Some But Not All Funds--Covered Option
Writing" in the Statement of Additional Information) and designed to eliminate
any potential leveraging.
An interest rate futures contract 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 Premier Fund, 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 each of the Funds, other than the Premier Fund, 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 traders (typically, commercial banks or other financial institutions)
and their customers, (2) generally have
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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 other liquid assets 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 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 determina-
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tion. For all other portfolio holdings, the Trust may use the Directory of
Companies Required to File Annual Reports with the SEC and Bloomberg Inc. In
addition, the Trust may select its own industry classifications, provided such
classifications are reasonable.
Certain other investment restrictions adopted by the Trust with respect to the
Funds are described in the Statement of Additional Information.
Risk Factors and Special Considerations
Investing in the Funds involves risk factors and special considerations, such as
those described below:
General. GEIM's principal officers, directors, and portfolio managers serve in
similar capacities with respect to 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 September
30, 1996, in excess of $56 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
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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 dividends 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 present 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 withholding 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 foreign
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
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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 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.
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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.
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 transmitting orders for
execution providing for clearance and settlement, and arranging for the
performance of those functions by members of the exchange not associated with
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 Premier
Fund, 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 years ended September 30, 1996 and September 30, 1995
the actual portfolio turnover rates of certain of the Funds were, respectively:
the U.S. Equity Fund -- 49% and 43%, the Global Fund -- 46% and 46%, the
International Fund -- 36% and 27%, the Strategic Fund -- 93% and 98%, the
Tax-Exempt Fund -- 145% and 86%, the Income Fund -- 275% and 315% and the
Government Fund -- 201% and 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.
The Statement of Additional Information contains additional information
regarding portfolio transactions and turnover.
MANAGEMENT OF THE TRUST
================================================================================
Board of Trustees
Overall responsibility for management and supervision of the Funds rests with
the Trust's Board of Trustees. The Trustees approve all significant agreements
between the Trust and the persons and companies that furnish services to the
Funds, including agreements with the Funds' investment adviser and
administrator, distributor, custodian and transfer agent. The day-to-day
operations of the Funds have been delegated to GEIM. The Statement of Additional
Information contains background information regarding each Trustee and executive
officer of the Trust.
Investment Adviser and Administrator
GEIM, located at 3003 Summer Street, P.O. Box 7900 Stamford, Connecticut 06904,
serves as the investment adviser and administrator of each Fund. GEIM, 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.
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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 and variable life contracts, since
their inception in 1994, and other institutional accounts, including PaineWebber
Global Equity Fund, a series of PaineWebber 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, 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 GE Investments and its predecessors, GE
has nearly 70 years of investment management experience. GEIM and GEIC
collectively provide investment management services to various institutional
accounts with total assets, as of September 30, 1996, in excess of $56 billion,
of which more than $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 Premier Fund -- .60%; 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 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 12 years of investment experience and has held positions with GE
Investments since 1984. He is currently a Director and Executive Vice President
of GE Investments.
Christopher D. Brown is one of the four Portfolio Managers for the U.S. Equity
Fund and has served in that capacity since December 1995. He has more than ten
years of investment experience, and has held positions with GE Investments since
1985. Mr. Brown is currently a Vice President of GEInvestments.
David B. Carlson is the Portfolio Manager of the Premier Fund and is one of the
four 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
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more than 14 years of investment experience and has held positions with GE
Investments since 1982. Mr. Carlson is currently a Senior Vice President of GE
Investments.
Peter J. Hathaway is one of the four 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 36 years of investment experience and has held positions with
GE Investments since 1985. Mr. Hathaway is currently a Senior Vice President of
GE Investments.
Ralph R. Layman 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 17 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.
Stella V. Lou is the Portfolio Manager of the Tax-Exempt Fund and has served in
that capacity since February 1996. She has more than 12 years of investment
experience and has held positions with GE Investments since 1994. Ms. Lou is
currently a 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 13 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 four 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 15 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
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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 to, or
to provide for the reimbursement of expenses of, persons who provide support
services in 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 col-
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lection 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
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.
35
<PAGE>
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:
GE Premier Growth Equity Fund, 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 +
</TABLE>
GE Tax-Exempt Fund and GE Fixed Income 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 $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 ++
</TABLE>
GE Short-Term Government 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 $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.
36
<PAGE>
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 of the Funds and which have less than 250 employees if such Plans
purchase Class A shares 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
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, banks or
brokers approved by the Trust's Board of Trustees, (7) all purchases resulting
from offerings made to selected customers of certain subsidiaries and divisions
of GE, including any subsequent purchases by persons who invest through such
offerings, provided that any such person maintains an account with the Trust in
its, his or her name at the time of the subsequent purchase and the investment
is made in that name, or as custodian for a minor or in an individual retirement
account for the customer, (8) all purchases by certain customers of GE who
previously purchased Class A shares during a special limited offering of such
shares by the Distributor, provided that the 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 customer and (9) all purchases by certain of the GE
LifeStyle Funds, a "fund of funds" vehicle designed to invest in certain classes
of the Funds.
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 redemp-
37
<PAGE>
tion 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 Information 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 purchase 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, (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 and (4) certain other persons
who previously purchased Class C shares during a special limited offering of
such shares by the Distributor, provided that the person maintains an account
with the Trust in its, his or her name at the time of such additional purchase
or exchange and the investment is made in that name, or as custodian for a minor
or in an individual retirement account for such person. 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 circum-
38
<PAGE>
stances, 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 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
39
<PAGE>
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 Premier Fund, the U.S. Equity Fund, the Global Fund, the
International Fund and the Strategic Fund:
CDSC as a %
Year Since Purchase of Amount
Payment Was Made Redeemed
- --------------------------------------------------------------------------------
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%
- --------------------------------------------------------------------------------
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:
CDSC as a %
Year Since Purchase of Amount
Payment Was Made Redeemed
- --------------------------------------------------------------------------------
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%
- --------------------------------------------------------------------------------
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 are 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
40
<PAGE>
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 will 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.
41
<PAGE>
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 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 A shares 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.
42
<PAGE>
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 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 determination of the settlement price. When a settlement
price cannot be used, futures contracts will be valued at their fair market
value as determined by or under the direction of the Board of Trustees.
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
43
<PAGE>
Participant Fund or the Money Market Fund, respectively, and deposited in the
shareholder's account, unless the shareholder 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 Premier Fund, 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 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 (including a redemption in kind) 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 Premier Fund, 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"),
44
<PAGE>
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 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. Shareholders 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.
PERFORMANCE CALCULATION
================================================================================
Certain information about the calculation of 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, 1996 were 5.00% and 5.12%
45
<PAGE>
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, 1996 would have been lower.
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, 1996 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 4.20%, 3.90%, 4.64%, 4.89%;
5.31%, 5.10%, 5.70%, 5.95%; and 5.91%, 5.68%, 6.43%, 6.68%, 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, 1996 for each
class of shares would have been lower.
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 30-day
period ended September 30, 1996, the equivalent taxable yield of the Tax-Exempt
Fund for Class A, Class B, Class C and Class D shares, respectively, was 6.64%,
6.17%, 7.34% and 7.74%. 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 June 30, 1996 would have been
lower.
46
<PAGE>
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 -- 1997 RATES
<TABLE>
<CAPTION>
Tax-Free Yield
Federal Federal Marginal 4.00% 4.50% 5.00% 5.50% 6.00% 6.50% 7.00% 7.50% 8.00%
Taxpayer Taxable Tax Federal
Year Status Income Bracket Rate Taxable Equivalent Yield
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 MARRIED $0-41,200 15.00% 15.00% 4.71% 5.29% 5.88% 6.47% 7.06% 7.65% 8.24% 8.82% 9.41%
$41,201-99,600 28.00% 28.00% 5.56% 6.25% 6.94% 7.64% 8.33% 9.03% 9.72% 10.42% 11.11%
$99,601-121,200 31.00% 31.00% 5.80% 6.52% 7.25% 7.97% 8.70% 9.42% 10.14% 10.87% 11.59%
$121,201-151,750 31.00% 31.93% 5.88% 6.61% 7.35% 8.08% 8.81% 9.55% 10.28% 11.02% 11.75%
$151,751-271,050 36.00% 37.08% 6.36% 7.15% 7.95% 8.74% 9.54% 10.33% 11.13% 11.92% 12.71%
OVER $271,050 39.60% 40.79% 6.76% 7.60% 8.44% 9.29% 10.13% 10.98% 11.82% 12.67% 13.51%
1996 SINGLE $0-24,650 15.00% 15.00% 4.71% 5.29% 5.88% 6.47% 7.06% 7.65% 8.24% 8.82% 9.41%
$24,651-59,750 28.00% 28.00% 5.56% 6.25% 6.94% 7.64% 8.33% 9.03% 9.72% 10.42% 11.11%
$59,751-121,200 31.00% 31.00% 5.80% 6.52% 7.25% 7.97% 8.70% 9.42% 10.14% 10.87% 11.59%
$121,201-124,650 31.00% 31.93% 5.88% 6.61% 7.35% 8.08% 8.81% 9.55% 10.28% 11.02% 11.75%
$124,651-271,050 36.00% 37.08% 6.36% 7.15% 7.95% 8.74% 9.54% 10.33% 11.13% 11.92% 12.71%
OVER $271,050 39.60% 40.79% 6.76% 7.60% 8.44% 9.29% 10.13% 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
$2,650 LESS THE STANDARD DEDUCTION OF $6,900 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 $121,200. 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 $121,200 FOR SINGLE TAXPAYERS AND $181,800 FOR MARRIED
TAXPAYERS FILING JOINTLY. THIS LATTER PROVISION IS NOT INCORPORATED INTO
THE ABOVE BRACKETS.
3. INTEREST EARNED ON MUNICIPAL OBLIGATIONS MAY BE SUBJECT TO THE FEDERAL
ALTERNATIVE MINIMUM TAX. THIS PROVISION IS NOT INCORPORATED INTO THE TABLE.
4. THE TAXABLE EQUIVALENT YIELD TABLE DOES NOT INCORPORATE THE EFFECT OF
GRADUATED RATE STRUCTURES IN DETERMINING YIELDS. INSTEAD THE TAX RATES USED
ARE THE HIGHEST RATES APPLICABLE TO THE INCOME LEVELS INDICATED WITHIN EACH
BRACKET.
47
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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.
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.
The Trust may also advertise a Fund's distribution rate and/or effective
distribution rate. The distribution rate of a Fund represents a measure of
dividends distributed for a specified period. The distribution rate of a Fund
differs from yield and total return and therefore is not intended to be a
complete measure of performance. A Fund's distribution rate is computed by
dividing the most recent monthly distribution per share annualized by the
current net asset value per share. A Fund's effective distribution rate is
computed by dividing the distribution rate by the ratio used to annualize the
distribution and reinvesting the resulting amount for a full year on the basis
of such ratio. The effective distribution rate will be higher than the
distribution rate because of the compounding effect of the assumed reinvestment.
A Fund's yield is calculated using a standardized formula the income component
of which is computed from the yields to maturity of all debt obligations in the
Fund's portfolio based on the market value of such obligations (with all
purchases and sales of securities during such period included in the income
calculation on a settlement date basis). In contrast, the distribution rate is
based on the Fund's last monthly distribution, which tends to be relatively
stable and may be more or less than the amount of net investment income and
short-term capital gain actually earned by the Fund during the month.
Comparative Performance Information
In addition to the comparative information set forth under "Performance" above
and otherwise quoted in sales and advertising materials, the Trust may compare
the Fund's performance with (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.
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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 or other liquid assets 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 Premier Fund, the U.S. Equity Fund, the Global Fund,
the International Fund, the Strategic Fund, the Income Fund and the Government
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 Premier Fund, the U.S. Equity
Fund, the Global Fund, the International Fund, the Strategic Fund, the Income
Fund and the Government 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, the Government 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
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projects in developing member countries; the European Community, which is a
twelve-nation organization engaged in cooperative economic activities; the
European Coal and Steel Community, which is an economic union of various
European nations' steel and coal industries; and the Asian Development Bank,
which is an international development bank established to lend funds, promote
investment and provide technical assistance to member nations in the Asian and
Pacific regions. 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 Premier Fund, 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.
Investments by the Funds (other than the Money Market Fund) in the Investment
Fund, and other accounts advised by GEIM or GEIC, is not considered an
investment in another investment fund or investment company for purposes of this
paragraph and the restrictions just described. 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 governmental 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 hav-
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ing 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
frequently are secured by letters of credit or other credit support arrangements
provided by banks. Use of letters of credit or other credit support arrangements
will not adversely affect the tax-exempt status of variable rate demand notes.
Because they are direct lending arrangements between the lender and borrower,
variable 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 interest 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 U.S. Equity Fund, 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 U.S. Equity Fund, 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 U.S. Equity Fund, 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 U.S. Equity Fund, 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
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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 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
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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 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
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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 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 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 assets 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 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.
The Premier Fund was added as a series of the Trust pursuant to an amendment to
the Declaration on July 22, 1996.
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
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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 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.
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GE FUNDS
================================================================================
o GE Premier Growth Equity Fund
o GE U.S. Equity Fund
o GE Global Equity Fund
o GE International Equity Fund
o GE Strategic Investment Fund
o GE Tax-Exempt Fund o GE Fixed Income Fund
o GE Short-Term Government Fund
o 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.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
December 30, 1996
GE FUNDS
3003 Summer Street, Stamford, Connecticut 06905
For information, call (203) 326-4040
* GE Premier Growth Equity Fund * GE International Fixed Income
* GE International Equity Fund 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...................................................11
Management of the Trust...................................................17
Redemption of Shares......................................................23
Exchange Privilege........................................................23
Net Asset Value...........................................................24
Dividends, Distributions and Taxes........................................25
The Funds' Performance....................................................38
Principal Stockholders....................................................31
Additional Information....................................................40
Counsel...................................................................40
Independent Accountants...................................................40
Financial Statements......................................................40
Appendix.................................................................A-1
This Statement of Additional Information supplements the information
contained in the current Prospectus of GE Funds (the "Trust") dated December 30,
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 December 30, 1996 discusses the investment objectives
and policies of the following nine managed investment funds currently offered by
the Trust: GE Premier Growth Equity Fund (the "Premier Fund"), 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 GE International Fixed Income
Fund (the "International Income Fund" and collectively with the Premier Fund,
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
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."
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<PAGE>
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.
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
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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. Investments by the Fund (other than the Money
Market Fund) in the GEI Short-Term Investment Fund, an investment Fund advised
by GEIM, created specifically to serve as a vehicle for the collective
investment of cash balances of the Funds (other than the Money Market Fund) and
other accounts advised by either GEIM or its affiliate, General Electric
Investment Corporation ("GEIC"), is not considered an investment in another
investment company for purposes of this restriction.
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 assets equal to the fluctuating market value of the
optioned securities, is segregated with the Trust's custodian or with a
designated sub-custodian. A put option will be deemed covered (1) if, at the
time the put is written, an amount of cash, Government Securities or other
liquid assets having a value at least equal to the exercise price of the
underlying securities is segregated with the Trust's custodian or with a
designated sub-custodian, or (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).
4
<PAGE>
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 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
5
<PAGE>
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 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.
6
<PAGE>
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 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.
7
<PAGE>
Options on Futures Contracts. An option on a futures contract, unlike a
direct investment in such a contract, gives the purchaser the right, in return
for the premium paid, to assume a position in the futures contract at a
specified exercise price at any time prior to the expiration date of the option.
Upon exercise of an option, the delivery of the futures position by the writer
of the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's futures margin account, which represents the
amount by which the market price of the futures contract exceeds, in the case of
a call, or is less than, in the case of a put, the exercise price of the option
on the futures contract. The potential loss related to the purchase of an option
on futures contracts is limited to the premium paid for the option (plus
transaction costs). Because the price of the option to the purchaser is fixed at
the point of sale, no daily cash payments are made to reflect changes in the
value of the underlying contract. The value of the option, however, does change
daily and that change would be reflected in the net asset value of the Fund
holding the options.
Forward Currency Transactions. The cost to a Fund of engaging in currency
transactions varies with factors such as the currency involved, the length of
the contract period and the market conditions then prevailing. Because
transactions in currency exchange are usually conducted on a principal basis, no
fees or commissions are involved. The use of forward currency contracts does not
eliminate fluctuations in the underlying prices of the securities, but it does
establish a rate of exchange that can be achieved in the future. In addition,
although forward currency contracts limit the risk of loss due to a decline in
the value of the hedged currency, at the same time, they limit any potential
gain that might result should the value of the currency increase. If a
devaluation is generally anticipated, a Fund may not be able to sell currency at
a price above the anticipated devaluation level. A Fund will not enter into a
currency transaction if, as a result, it will fail to qualify as a regulated
investment company under the Internal Revenue Code of 1986, as amended (the
"Code"), for a given year.
Options on Foreign Currencies. Certain transactions involving options on
foreign currencies are undertaken on contract markets that are not regulated by
the CFTC. Options on foreign currencies traded on national securities exchanges
are within the jurisdiction of the Securities and Exchange Commission (the
"SEC"), as are other securities traded on those exchanges. As a result, many of
the protections provided to traders on organized exchanges will be available
with respect to those transactions. In particular, all foreign currency option
positions entered into on a national securities exchange are cleared and
guaranteed by the Clearing Corporation, thereby reducing the risk of
counterparty default. In addition, a liquid secondary market in options traded
on a national securities exchange may exist, potentially permitting a Fund to
liquidate open positions at a profit prior to exercise or expiration, or to
limit losses in the event of adverse market movements.
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<PAGE>
The purchase and sale of exchange-traded foreign currency options are
subject to the risks of the availability of a liquid secondary market as
described above, as well as the risks regarding adverse market movements,
margining of options written, the nature of the foreign currency market,
possible intervention by governmental authorities and the effects of other
political and 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 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
9
<PAGE>
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 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.
10
<PAGE>
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 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
11
<PAGE>
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.
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.
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<PAGE>
7. No Fund may purchase or sell real estate or real estate limited
partnership interests, or invest in oil, gas or mineral leases, or mineral
exploration or development programs, except that a Fund may (a) invest in
securities secured by real estate, mortgages or interests in real estate or
mortgages, (b) purchase securities issued by companies that invest or deal in
real estate, mortgages or interests in real estate or mortgages, (c) engage in
the purchase and sale of real estate as necessary to provide it with an office
for the transaction of business or (d) acquire real estate or interests in real
estate securing an issuer's obligations, in the event of a default by that
issuer.
8. No Fund may make short sales of securities or maintain a short position,
unless at all times when a short position is open, the Fund owns an equal amount
of the securities or securities convertible into or exchangeable for, without
payment of any further consideration, securities of the same issue as, and equal
in amount to, the securities sold short.
9. No Fund may purchase securities on margin, except that a Fund may obtain
any short-term credits necessary for the clearance of purchases and sales of
securities. For purposes of this restriction, the deposit or payment of initial
or variation margin in connection with futures contracts, financial futures
contracts or related options, and options on securities, options on securities
indexes and options on currencies will not be deemed to be a purchase of
securities on margin by a Fund.
10. No Fund may invest in commodities, except that each 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.
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<PAGE>
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 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.
19. No Fund may issue senior securities except as otherwise permitted by
the 1940 Act and as otherwise permitted herein.
14
<PAGE>
With respect to investment restriction No. 12, investments by the Funds
(other than the Money Market Fund) in the GEI Short-Term Investment Fund, an
investment Fund advised by GEIM, created specifically to serve as a vehicle for
the collective investment of cash balances of the Funds (other than the Money
Market Fund) and other accounts advised by either GEIM or GEIC, is not
considered an investment in another investment company for purposes of this
restriction.
The Trust may make commitments more restrictive than the restrictions
listed above with respect to a Fund to permit the sale of shares of the Fund in
certain states. Should the Trust determine that any such commitment is no longer
in the best interests of a Fund and its shareholders, the Trust will revoke the
commitment by terminating the sale of shares of the Fund in the state involved
or may otherwise modify its commitment based on a change in the state's
restrictions. The percentage limitations in the restrictions listed above apply
at the time of purchases of securities. For purposes of investment restriction
number 5, the Trust may use the industry classifications reflected by the S&P
500 Composite Stock Index, if applicable at the time of determination. For all
other portfolio holdings, the Trust may use the Directory of Companies Required
to File Annual Reports with the SEC and Bloomberg Inc. In addition, the Trust
may select its own industry classifications, provided such classifications are
reasonable.
Portfolio Transactions and Turnover
Decisions to buy and sell securities for each Fund are made by GEIM,
subject to review by the Trust's Board of Trustees. Transactions on domestic
stock exchanges and some foreign stock exchanges involve the payment of
negotiated brokerage commissions. On exchanges on which commissions are
negotiated, the cost of transactions may vary among different brokers. On most
foreign exchanges, commissions are fixed. No stated commission will be generally
applicable to securities traded in U.S. over-the-counter markets, but the prices
of those securities include undisclosed commissions or mark-ups. The cost of
securities purchased from underwriters include an underwriting commission or
concession, and the prices at which securities are purchased from and sold to
dealers include a dealer's mark-up or mark-down. 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
15
<PAGE>
Fund authorizes GEIM, on behalf of the Fund, in selecting brokers or dealers to
execute a particular transaction, and in evaluating the best overall terms
available, to consider the brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934) provided to the
Fund and/or other accounts over which GEIM or its affiliates exercise investment
discretion. The fees under the investment advisory agreement relating to a Fund
will not be reduced by reason of the Fund's receiving brokerage and research
services. The Trust's Board of Trustees periodically reviews the commissions
paid by a Fund to determine if the commissions paid over representative periods
of time were reasonable in relation to the benefits inuring to the Fund.
Over-the-counter purchases and sales on behalf of the Funds will be transacted
directly with principal market makers except in those cases in which better
prices and executions may be obtained elsewhere. A Fund will not purchase any
security, including 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, 1996, the International Fund,
the Global Fund, the U.S. Equity Fund and the Strategic Fund paid $268,291,
$100,049, $207,206 and $75,115, respectively, in commissions to broker-dealers
for execution of portfolio transactions. Of these amounts $8,052, $8,932,
$41,107, and $6,464 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, 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
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<PAGE>
and the Money Market Fund made no payments to broker-dealers for execution of
portfolio transactions during the 1996, 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 theFund. 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. Equity Fund and the Strategic Fund, respectively. The Funds made no
payments to Kidder for execution of portfolio transactions during 1996 or 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.
<TABLE>
<CAPTION>
Positions Held Age and Principal Occupation(s)
Name and Address with Trust During Past Five Years
- ---------------- ---------- ----------------------
<S> <C> <C>
*Michael J. Cosgrove Chairman of the Age 46. Executive Vice President - Mutual
3003 Summer Street Board and President Funds of GEIM and General Electric
Stamford, CT 06905 Investment Corporation ("GEIC"), a
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.
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<PAGE>
Positions Held Age and Principal Occupation(s)
Name and Address with Trust During Past Five Years
- ---------------- ---------- ----------------------
*Alan M. Lewis Trustee and Age 50. Executive Vice President, General
3003 Summer Street Executive Vice Counsel and Secretary of GEIM since 1988 and
Stamford, CT 06905 President of GEIC since October 1987.
John R. Costantino Trustee Age 50. Managing Director, Walden Partners, Ltd.,
150 East 58th Street consultants and investors, since August 1992;
New York, NY 10055 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 49. Vice President and Treasurer of
Fairfield University Fairfield University since 1983.
North Benson Road
Fairfield, CT 06430
Robert P. Quinn Trustee Age 60. Retired since 1983 from Salomon Brothers Inc.;
45 Shinnecock Road Director, GP Financial Corp., a holding company, since 1994;
Quogue, NY 11959 Director, The Greenpoint Savings Bank, a financial institution,
since 1987.
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<PAGE>
Positions Held Age and Principal Occupation(s)
Name and Address with Trust During Past Five Years
- ---------------- ---------- ----------------------
*Jeffrey A. Groh Treasurer Age 34. Treasurer and Controller of GEIM
3003 Summer Street and GEIC since August 1994; prior to August
Stamford, CT 06905 1994, was a Senior Manager in Investment
Company Services Group and certified public
accountant with Price Waterhouse LLP.
*Matthew J. Simpson Secretary Age 35. Vice President, Associate General
3003 Summer Street Counsel and Assistant Secretary of GEIM and
Stamford, CT 06905 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.
</TABLE>
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 fiscal year ended September 30, 1996)
Total Compensation for all
Total Compensation Investment Companies Managed by
Name of Trustee from the Trust 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++
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<PAGE>
- ----------
+ 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.
20
<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, 1996, 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
$464,327, $287,004, $836,061, $243,374, $42,029, $192,880, $34,453 and $205,219,
respectively, for investment advisory and administration services. 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 annual fee of .25% of the value of the
average daily net assets attributed to the Class A, Class B and Class C shares
21
<PAGE>
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, 1996, 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 $35,786, $85,815, $261,948, $151,125, $31,909,
$136,492, $10,789 and $0, respectively for service and distribution fees. 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, 1996, GEIM waived a total of
$24,972, $85,533, $309,241, $53,026, $74,915, $56,349, $66,598 and $169,636 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,
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 Fund, the Government Fund
22
<PAGE>
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.
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
23
<PAGE>
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 a dealer
or by a pricing service based upon a computerized matrix system, which considers
market transactions and dealer supplied valuations. Valuations for municipal
bonds are obtained from a qualified municipal bond pricing service; prices
represent the mean of the secondary market. 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
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
24
<PAGE>
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.
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.
25
<PAGE>
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).
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
26
<PAGE>
(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 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.
27
<PAGE>
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 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
28
<PAGE>
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.
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.
29
<PAGE>
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 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 for the Funds described in the
Prospectus, are computed for a Class according to a formula prescribed by the
SEC. The formula can be expressed as follows:
P(1 + T)n = ERV
Where P = a hypothetical initial payment of $1,000;
T = average annual total return;
n = number of years; and
ERV = Ending Redeemable Value of a hypothetical $1,000
investment made at the beginning of a 1-, 5- or
10-year period at the end of a 1-, 5- or 10-year
period (or fractional portion thereof), assuming
reinvestment of all dividends and distributions.
The ERV assumes complete redemption of the hypothetical investment at the
end of the measuring period.
Aggregate Total Return
The "aggregate total return" figures described in the Prospectus
represent the cumulative change in the value of an investment in a Class for the
specified period are computed by the following formula:
30
<PAGE>
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 and 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 3, 1996:
<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 Company Tax-Exempt A 4,654 shares 10.07%
2 Corporate Drive Fund
Shelton, CT 06484
George N. Rohrbacher, Tax-Exempt Fund A 4,359 shares 9.43%
Therese J. Rohrbacher,
joint tenants
4473 Lindenhurst Lane
Las Vegas, NV 89120-4206
Buford Parrish, Marjorie Parrish, Tax-Exempt Fund A 8,495 shares 18.38%
Karen M. Schafer, Jt. Wros
2803 Regents Park
Austin, TX 78746
Kate Frazier Doty, Trustee Tax-Exempt Fund A 8,602 shares 18.61%
Paul & Kate Doty Family
Trust
U/A/D 10/3/90
3317 Windsor Road
Austin, TX 78703-2263
Leroy Bednar Tax-Exempt Fund A 4,139 shares 8.96%
Lola Bednar,
joint tenants
5304 N. Lamar
Austin, TX 76751-1823
31
<PAGE>
Class of Percent
Name and Address Shares Amount of of
of Record Owner Name of Fund Owned Ownership Class
- --------------- ------------ ----- --------- -----
Arlyne R. Dryer, Trustee Tax-Exempt Fund A 5,284 shares 11.43%
Gene F. & Arlyne R.
Dryer Trust
U/A/D 2/10/87
12507 Pomerado Ct.
San Diego, CA 92128-2315
Robert H. Nagel, Mary E. Nagel, Tax-Exempt Fund A 4,426 shares 9.58%
Jt ten
1953 Locarno Drive
Knoxville, TN 37914
Kenneth C. Cummings Tax-Exempt Fund B 7,801 shares 7.21%
242 W. Liberty Street
Reno, NV 89501
Margaret E. Cooper Tax-Exempt Fund B 8,598 shares 7.95%
2706 Biarritz Dr.
Palm Bch Garden, FL
33410
Lillian M. Salinger Tax-Exempt Fund B 8,801 shares 8.14%
Shirley Salinger, joint tenants
19370 Collins Ave.
Apt. #522
N. Miami Beach, FL 33160-2248
Roswell C. Taite Tax-Exempt Fund B 8,834 shares 8.17%
Fernie L. Taite,
joint tenants
9108 Hilldale
Houston, TX 77055-7438
Pamela G. Willson Tax-Exempt Fund B 6,002 shares 5.55%
1435 Willow Creek Lane
Gardnerville, NV 89410-5821
Roger W. Leroy Tax-Exempt Fund B 5,683 shares 5.25%
Dorothea H. Leroy Jt. Ten.
2620 Bald Ridge Dr.
Cumming, GA 30131
General Electric Company Tax-Exempt Fund D 253,841 shares 99.30%
2 Corporate Drive 6th Floor
P.O. Box 861
Shelton, CT 06484
State Street Bank & Trust Income Fund A 97,535 shares 8.15%
Co.
FBO Beamspeed and Co.
BG Automotive Motors Inc.
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank & Trust Income Fund A 332,924 shares 27.82%
Co., as Trustee
Beamsail & Co. - Doubletree
Master Trust Client Service
1 Enterprise Drive
North Quincy, MA 02171-2126
32
<PAGE>
Class of Percent
Name and Address Shares Amount of of
of Record Owner Name of Fund Owned Ownership Class
- --------------- ------------ ----- --------- -----
Wells Fargo Bank, as Trustee Income Fund A 425,387 shares 35.55%
FBO Hubbell Inc. 401(k)
Attn SSP#0167-112#6971
201 3rd Street 11th Floor
San Francisco, CA 94163-0001
State Street Bank & Trust Income Fund A 154,944 shares 12.95%
Co., as Trustee
Granitecove & Co.-London Fog
Master Trust Client Service
1 Enterprise Drive
North Quincy, MA 02171-2126
State Street Bank & Trust Co., Income Fund A 65,361 shares 5.46%
as Trustee
Granitepass & Co.
FBP McClaren/Hart Environ.
Master Trust Client Services W6C
1 Enterprise Drive
No. Quincy, MA 02171
State Street Bank & Trust Income Fund B 8,806 shares 6.51%
Co.
C/F the IRA of Patricia L. Baldwin
61370 N. Main St.
Jones, MI 49061
State Street Bank & Trust Income Fund B 7,122 shares 5.27%
Co., Cust. for the IRA of
Erwin L. Shannon
30666 Longnecker Road
Leonidas, MI 49066
State Street Bank & Trust Income Fund B 7,754 shares 5.74%
Co.
Cust. for Rollover IRA of Elmo Freeland
2490 Washington Rd.
Pentwater, MI 49449
State Street Bank & Trust Income Fund D 403,689 shares 22.99%
Co., Trustee
Benchside & Co. - GE Cap.
Asset Maint.
Master Trust Client Service
One Enterprise Drive
N. Quincy, MA 02171-2126
State Street Bank & Trust Income Fund D 772,144 shares 43.97%
Co., as Trustee
Granitefront & Co.-Service America
Master Trust Client Service
1 Enterprise Drive
North Quincy, MA 02171-2126
State Street Bank & Trust Income Fund D 99,819 shares 5.68%
Co., as Trustee
Pondway & Co.-GE Fleet/FGIC
Master Trust Client Service
1 Enterprise Drive
North Quincy, MA 02171-2126
33
<PAGE>
Class of Percent
Name and Address Shares Amount of of
of Record Owner Name of Fund Owned Ownership Class
- --------------- ------------ ----- --------- -----
State Street Bank & Trust Income Fund D 113,225 shares 6.45%
Co., as Trustee
Grampas & Co. Trust
FBO Ameridata Technology
Master Trust Client Service
1 Enterprise Drive
North Quincy, MA 02171-2126
State Street Bank & Trust Income Fund D 93,890 shares 5.35%
Co., as Trustee
Eastmate & Co. Trust
FBO GE Capital Fleet Services
Master Trust Client Service
1 Enterprise Drive
North Quincy, MA 02171-2126
West Carroll National Bank Global Fund A 5,504 shares 17.20%
401(k)
William E. Pratt
Attn: 401(k) Administrator
Personal and Confidential
P.O. Box 708
Oak Grove, LA 71263
BHC Securities, Inc. Global Fund B 1,687 shares 5.92%
FAO 22402626
Attn: Mutual Funds Dept.
One Commerce Square
2005 Market Street,
Suite 1200
Philadelphia, PA 19103-7042
State Street Bank & Trust Company Global Fund B 2,786 shares 9.77%
C/F The IRA of Sharon L. Giever
825 Boswell Lane
Kalamazoo, MI 49005
State Street Bank & Trust Global Fund D 197,922 shares 30.94%
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 & Trust Global Fund D 159,870 shares 24.99%
Co., as Trustee
Grampas & Co. Trust
FBO Ameridata Technology
Master Trust Client
Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
Boatmen's First Natl. Bank of KC Global Fund D 224,820 shares 35.14%
TTEE ERC Thrift Plan
P.O. Box 14737
St. Louis, MO 63178
34
<PAGE>
Class of Percent
Name and Address Shares Amount of of
of Record Owner Name of Fund Owned Ownership Class
- --------------- ------------ ----- --------- -----
State Street Bank & Trust Strategic Fund A 66,797 shares 6.82%
Co., as Trustee
FBO Southwestern Medical Clinic
Master Trust Client
Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank & Trust Co., Strategic Fund A 368,563 shares 37.62%
as Trustee
Beamsail & Co.-Doubletree Master Trust
Client Service
1 Enterprise Drive
North Quincy, MA 02171-2126
State Street Bank & Trust Company, Strategic Fund A 438,090 shares 44.71%
as Trustee
Granitepass & Co.
FBOMcClaren/Hart Environmental Eng.
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171
State Street Bank & Strategic Fund D 481,940 shares 24.82%
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 351,796 shares 18.11%
Co., Trustee
Benchside & Co., - GE Cap.
Asset Maint.
Master Trust Client
Service
One Enterprise Drive
N. Quincy, MA 02171-2126
State Street Bank & Trust Co., Trustee Strategic Fund D 746,943 shares 38.46%
Granitefront & Co.-Service America
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171
State Street Bank & Trust Co. as Trustee Strategic Fund D 203,044 shares 10.45%
FBO Ameridata Technolocy
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171
State Street Bank & Trust Company, as Equity Fund A 163,063 shares 13.72%
Trustee
Granitecove & Co.-London Fog
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171
35
<PAGE>
Class of Percent
Name and Address Shares Amount of of
of Record Owner Name of Fund Owned Ownership Class
- --------------- ------------ ----- --------- -----
State Street Bank & Trust Company, Equity Fund A 125,877 shares 10.59%
as Trustee
FBO Southwestern Medical Clinic PC
Master Trust Client Service
6418 Deans Hill Road
Berrien Center, MI 49102
State Street Bank & Trust Equity Fund A 119,672 shares 10.07%
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 and Trust Co., Equity Fund A 161,721 shares 13.61%
as Trustee
Granitepass & Co.
FBO McClaren/Hart Envir. Eng.
Master Trust Client Service
1 Enterprise Drive.
No. Quincy, MA 02171
State Street Bank & Trust Equity Fund A 488,269 shares 41.08%
Co., as Trustee
Beamsail & Co.-Doubletree
Master Trust Client
Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank & Trust Equity Fund D 683,343 shares 10.46%
Co., as Trustee
Eastmate & Co.
FBO GE Capital Fleet
Services
Master Trust Client
Services
1 Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank & Trust Co., Trustee Equity Fund D 345,533 shares 5.29%
Pondway & Co.-GE Fleet/FGIC
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171
Bost & Co. Equity Fund D 586,523 shares 8.98%
Mutual Fund Operations
P.O. Box 3198
Pittsburgh, PA 15230
State Street Bank & Trust Equity Fund D 769,469 shares 11.78%
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
- --------------- ------------ ----- --------- -----
Clark & Co. Equity Fund D 723,632 shares 11.08%
FBO UT O C Tanner
Pension
P. O. Box 39
Westerville, OH 43085-0039
Saul & Co. Equity Fund D 839,076 shares 12.85%
FBO Stamford Hospital
Ret. Income Plan
c/o First Union National Bank
Fid Ops/Mutual Funds
NC11 51
Charlotte, NC 28288
Strafe & Co. Equity Fund D 690,815 shares 10.58%
FAO Mead Corp. Foundation
235 W. Shrock Road
Mutual Fund 0390
Westerville, OH 43081
State Street Bank & Trust Co., Equity Fund D 369,656 shares 5.66%
as Trustee
Grampas & Co. Trust
FBO Ameridata Technology
Master Trust Client Service W6C
1 Enterprise Drive
No. Quincy, MA 02171
Saul & Co. Equity Fund D 353,825 shares 5.43%
FBO Stamford Hospital Ret. Inc. c/o
First Union National Bank
401 S. Tryon St.
NC1151
Charlotte, NC 28202
Boatmen's First Natl. Bank of KC Equity Fund D 347,605 shares 5.32%
TTEE ERC Thrift Plan
P.O. Box 14737
St. Louis, MO 63178
State Street Bank & Trust Money Market Fund -- 3,988,077 shares 6.17%
Co., as Trustee
Granitedock & Co.-Roper Corp.
Master Trust Client
Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank and Trust Co., International Fund A 54,333 shares 10.57%
as Trustee
Granitepass & Co.
FBO McClaren/Hart Environ. Eng.
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171
State Street Bank & Trust Co., International Fund A 307,678 shares 59.85%
as Trustee
Beamsail & Co. - Doubletree
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171
37
<PAGE>
Class of Percent
Name and Address Shares Amount of of
of Record Owner Name of Fund Owned Ownership Class
- --------------- ------------ ----- --------- -----
State Street Bank & Trust Co., Trustee International Fund A 28,343 shares 5.51%
Granitecove & Co. - London Fog
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171
State Street Bank & Trust International Fund A 80,884 shares 15.73%
Co., Trustee
FBO Southwestern Medical
Clinic PC
Master Trust Client Service
6418 Deans Hill Road
Berrien Center, MI 49102
PaineWebber for the benefit of International Fund B 2,341 shares 14.42%
Painewebber
CDN FBO Robert Frayn
P.O. Box 3321
Weehawken, NJ 07087
State Street Bank & Trust International Fund B 2,516 shares 15.50%
Co.
C/F The IRA of Brenda J. Hetrick
3570 Freeman Ave.
Hamilton, OH 45015
John H. Pender, as International Fund D 509,791 shares 14.11%
Trustee
Aid Association for Lutherans
4321 North Ballard Road
Appleton, WI 54919-0001
Aid Association for International Fund D 2,516,344 shares 69.63%
Lutherans
4321 North Ballard Road
Appleton, WI 54919-0001
State Street Bank & Trust International Fund D 272,993 shares 7.55%
Co., Trustee
Benchside & Co. - GE Cap.
Asset Maint.
Master Trust Client Service
One Enterprise Drive
N. Quincy, MA 02171-2126
Ronald J. Felmus & International Fund C 23,439 shares 11.58%
Veta Felmus, Trustees
Felmus Family Residual
Trust
U/A/D 5/9/79
22 Pine Circle South
Belleair, FL 34616
General Electric Company Government Fund A 2,414 shares 7.79%
2 Corporate Drive
Shelton, CT 06484
State Street Bank & Trust Government Fund A 16,635 shares 53.67%
Co.
FBO Beamspeed and Co.
BG Automotive Motors
Master Trust Client Service
One Enterprise Drive
No. Quincy, MA 02171
38
<PAGE>
Class of Percent
Name and Address Shares Amount of of
of Record Owner Name of Fund Owned Ownership Class
- --------------- ------------ ----- --------- -----
Mary McKinney Government Fund A 4,381 shares 14.13%
Dawn M. Clark,
joint tenants
1517 Forest Trail
Austin, TX 78703-3229
Arlyne R. Dryer, Trustee Government Fund A 4,205 shares 13.57%
Gene F. & Arlyne R.
Dryer Trust
U/A/D 2/10/87 12507 Pomerado Ct.
San Diego, CA 92128-2315
Cathy Stockstill Government Fund B 1,004 shares 10.31%
15149 Wessington St.
Sherman Oaks, CA 91411
General Electric Company Government Fund B 2,391 shares 24.57%
2 Corporate Drive
Shelton, CT 06484
Don L. Nelson Government Fund B 1,719 shares 17.66%
150 S. Laurel Drive
Margate, FL 33063-5370
Maria Venturin Government Fund B 1,296 shares 13.32%
1016 N. 16th Ave. #2
Hollywood, FL 33020
Iris Powell Government Fund B 699 shares 7.18%
634 NW 4th Ct
Hallandale, FL 33009
Charles DiPasquale Government Fund B 2,523 shares 25.92%
Carol Clark, Jt. Wros
P.O. Box 25611
Tamarac, FL 33320
John R. Costantino and Government Fund C 46,155 shares 12.88%
Barbara C. Costantino
165-84 Street
Brooklyn, NY 11229-6604
State Street Bank & Trust Co. Government Fund C 23,919 shares 6.68%
C/F the Rollover IRA of James L. Jackson
111 Crestwood Dr.
Parkersburg, WV 26101
General Electric Company Government Fund D 394,237 shares 60.01%
2 Corporate Drive
Shelton, CT 06484
State Street Bank & Trust Co., Government Fund D 242,273 shares 36.88%
as Trustee
Eastwall & Co. Trust
FBO GE Consulting
Master Trust Client
Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
</TABLE>
39
<PAGE>
As of December 2, 1996, the current Trustees and officers of each Fund,
as a group, beneficially owned less than 1% of each Fund's outstanding shares.
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 were added as series of the Trust pursuant to
an amendment to the Declaration on June 17, 1994. The Premier Fund is a newly
added series of the Trust which was established pursuant to an amendment to the
Declaration on July 22, 1996. 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, 1996, which either accompanies
this Statement of Additional Information or has previously been provided to the
person to whom this Statement of Additional Information is being sent, is
incorporated herein by reference with respect to all information other than the
information set forth in
40
<PAGE>
the Letter to Shareholders included in the Annual Report. The Premier Fund is a
newly added series of the Trust and has no assets as of the date of this
Statement of Additional Information. 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.
41
<PAGE>
APPENDIX
DESCRIPTION OF RATINGS
Commercial Paper Ratings
The rating A-1+ is the highest, and A-1 the second highest commercial paper
rating assigned by S&P. Paper rated A-1+ must have either the direct credit
support of an issuer or guarantor that possesses excellent long-term operating
and financial strength combined with strong liquidity characteristics
(typically, such issuers or guarantors would display credit quality
characteristics that would warrant a senior bond rating of AA or higher) or the
direct credit support of an issuer or guarantor that possesses above average
long-term fundamental operating and financing capabilities combined with ongoing
excellent liquidity characteristics. Paper rated A-1 must have the following
characteristics: liquidity ratios are adequate to meet cash requirements;
long-term senior debt is rated A or better; the issuer has access to at least
two additional channels of borrowing; basic earnings and cash flow have an
upward trend with allowance made for unusual circumstances; typically, the
issuer's industry is well established and the issuer has a strong position
within the industry; and the reliability and quality of management are
unquestioned. Capacity for timely payment on issues rated A-2 is satisfactory.
However, the relative degree of safety is not as high as issues designated
"A-1."
The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings are the
following: (a) evaluation of the management of the issuer; (b) economic
evaluation of the issuer's industry or industries and an appraisal of
speculative-type risks that may be inherent in certain areas; (c) evaluation of
the issuer's products in relation to competition and customer acceptance; (d)
liquidity; (e) amount and quality of long-term debt; (f) trend of earnings over
a period of ten years; (g) financial strength of parent company and the
relationships that exist with the issue; and (h) recognition by the management
of obligations that may be present or may arise as a result of public interest
questions and preparations to meet the obligations.
Issuers rated Prime-2 (or supporting institutions) have a strong ability
for repayment of senior short-term debt obligations. This normally will be
evidenced by many of the characteristics cited above, but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
Short-term obligations, including commercial paper, rated A-1+ by IBCA
Limited or its affiliate IBCA Inc. are obligations supported by the highest
capacity for timely repayment. Obligations rated A-1 have a very strong capacity
for timely repayment. Obligations rated A-2 have a strong capacity for timely
repayment, although that capacity may be susceptible to adverse changes in
business, economic and financial conditions.
A-1
<PAGE>
Fitch Investors Services, Inc. employs the rating F-1+ to indicate issues
regarded as having the strongest degree of assurance of timely payment. The
rating F-1 reflects an assurance of timely payment only slightly less in degree
than issues rated F-1+, while the rating F-2 indicates a satisfactory degree of
assurance of timely payment although the margin of safety is not as great as
indicated by the F-1+ and F-1 categories.
Duff & Phelps Inc. employs the designation of Duff 1 with respect to top
grade commercial paper and bank money instruments. Duff 1+ indicates the highest
certainty of timely payment: short-term liquidity is clearly outstanding and
safety is just below risk-free U.S. Treasury short-term obligations. Duff 1-
indicates high certainty of timely payment. Duff 2 indicates good certainty of
timely payment; liquidity factors and company fundamentals are sound.
Thompson BankWatch Inc. employs the rating TBW-1 to indicate issues having
a very high degree of likelihood of timely payment. TBW-2 indicates a strong
degree of safety regarding timely payment, however, the relative degree of
safety is not as high as for issues rated TBW-1. While the rating TBW-3
indicates issues that are more susceptible to adverse developments than
obligations with higher ratings, capacity to service principal and interest in a
timely fashion is considered adequate. The lowest rating category is TBW-4; this
rating is regarded as non-investment grade and, therefore, speculative.
Various NRSROs utilize rankings within ratings categories indicated by a
plus or minus sign. The Funds, in accordance with industry practice, recognize
such ratings within categories or gradations, viewing for example S&P's ratings
of A-1+ and A-1 as being in S&P's highest rating category.
Description of S&P Corporate Bond Ratings
AAA -- This is the highest rating assigned by S&P to a bond and indicates
an extremely strong capacity to pay interest and repay principal.
AA -- Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from AAA issues only in small degree.
A -- Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB -- Bonds rated BBB have an adequate capacity to pay interest and repay
principal. Adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity to pay interest and repay principal for bonds in
this category (even though they normally exhibit adequate protection parameters)
than for bonds in higher rated categories.
BB, B and CCC -- Bonds rated BB and B are regarded, on balance, as
predominately speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB represents a lower
A-2
<PAGE>
degree of speculation than B, and CCC the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
To provide more detailed indications of credit quality, the ratings from AA
to B may be modified by the addition of a plus or minus sign to show relative
standing within this major rating category.
Description of Moody's Corporate Bond Ratings
Aaa -- Bonds that are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present that
make the long-term risks appear somewhat larger than in Aaa securities.
A -- Bonds that are rated A possess favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present that
suggest a susceptibility to impairment sometime in the future.
Baa -- Bonds that are rated Baa are considered as medium-grade obligations,
that is, they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba -- Bonds that are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds that are rated B generally lack characteristics of desirable
investments. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
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.
A-3
<PAGE>
Moody's applies numerical modifiers (1, 2 and 3) with respect to the bonds
rated Aa through B, The modifier 1 indicates that the bond being rated ranks in
the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the bond ranks in the lower
end of its generic rating category.
Description of S&P Municipal Bond Ratings
AAA -- Prime -- These are obligations of the highest quality. They have the
strongest capacity for timely payment of debt service.
General Obligation Bonds -- In a period of economic stress, the issuers
will suffer the smallest declines in income and will be least susceptible to
autonomous decline. Debt burden is moderate. A strong revenue structure appears
more than adequate to meet future expenditure requirements. Quality of
management appears superior.
Revenue Bonds -- Debt service coverage has been, and is expected to remain,
substantial. Stability of the pledged revenues is also exceptionally strong due
to the competitive position of the municipal enterprise or to the nature of the
revenues. Basic security provisions (including rate covenant, earnings test for
issuance of additional bonds, debt service reserve requirements) are rigorous.
There is evidence of superior management.
AA -- High Grade -- The investment characteristics of bonds in this group
are only slightly less marked than those of the prime quality issues. Bonds
rated AA have the second strongest capacity for payment of debt service.
A -- Good Grade -- Principal and interest payments on bonds in this
category are regarded as safe although the bonds are somewhat more susceptible
to the adverse effects of changes in circumstances and economic conditions than
bonds in higher rated categories. This rating describes the third strongest
capacity for payment of debt service. The ratings differ from the two higher
ratings of municipal bonds, because:
General Obligations Bonds -- There is some weakness, either in the local
economic base, in debt burden, in the balance between revenues and expenditures,
or in quality of management. Under certain adverse circumstances, any one such
weakness might impair the ability of the issuer to meet debt obligations at some
future date.
Revenue Bonds -- Debt service coverage is good, but not exceptional.
Stability of the pledged revenues could show some variations because of
increased competition or economic influences on revenues. Basic security
provisions, while satisfactory, are less stringent. Management performance
appears adequate.
A-4
<PAGE>
BBB -- Medium Grade -- Of the investment grade ratings, this is the lowest.
Bonds in this group are regarded as having an adequate capacity to pay interest
and repay principal. Adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for bonds in this category (even though they normally exhibit adequate
protection parameters) than for bonds in higher rated categories.
General Obligation Bonds -- Under certain adverse conditions, several of
the above factors could contribute to a lesser capacity for payment of debt
service. The difference between A and BBB ratings is that the latter shows more
than one fundamental weakness, or one very substantial fundamental weakness,
whereas, the former shows only one deficiency among the factors considered.
Revenue Bonds -- Debt coverage is only fair. Stability of the pledged
revenues could show substantial variations, with the revenue flow possibly being
subject to erosion over time. Basic security provisions are no more than
adequate. Management performance could be stronger.
BB, B, CCC and CC -- Bonds rated BB, B, CCC and CC are regarded, on
balance, as predominately speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB includes
the lowest degree of speculation and CC the highest degree of speculation. While
these bonds will likely have some quality and protective characteristics, these
characteristics are outweighed by large uncertainties or major risk exposures to
adverse conditions.
C -- The rating C is reserved for income bonds on which no interest is
being paid.
D -- Bonds rated D are in default, and payment of interest and/or repayment
of principal is in arrears.
S&P's letter ratings may be modified by the addition of a plus or a minus
sign, which is used to show relative standing within the major rating
categories, except in the AAA-Prime Grade category.
Description of S&P Municipal Note Ratings
Municipal notes with maturities of three years or less are usually given
note ratings (designated SP-1, -2 or -3) to distinguish more clearly the credit
quality of notes as compared to bonds. Notes rated SP-1 have a very strong or
strong capacity to pay principal and interest. Those issues determined to
possess overwhelming safety characteristics are given the designation of SP-1+.
Notes rated SP-2 have satisfactory capacity to pay principal and interest.
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
A-5
<PAGE>
and principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, or fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present that make the long-term risks appear somewhat larger than in Aaa
securities.
A -- Bonds that are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present that suggest a susceptibility to impairment sometime in the future.
Baa -- Bonds that are rated Baa are considered as medium grade obligations,
that is, they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
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.
A-6
<PAGE>
Description of Moody's Municipal Note Ratings
Moody's ratings for state and municipal notes and other short-term loans
are designated Moody's Investment Grade (MIG) and for variable rate demand
obligations are designated Variable Moody's Investment Grade (VMIG). This
distinction recognizes the differences between short-term credit risk and
long-term risk. Loans bearing the designation MIG 1/VMIG 1 are the best quality,
enjoying strong protection from established cash flows of funds for their
servicing or from established and broad-based access to the market for
refinancing, or both. Loans bearing the designation MIG 2/VMIG 2 are of high
quality, with margins of protection ample, although not as large as the
preceding group. Loans bearing the designation MIG 3/VMIG3 are of favorable
quality, with all security elements accounted for but lacking the undeniable
strength of the higher grades. Market access for refinancing, in particular, is
likely to be less well established. Loans bearing the designation MIG 4/VMIG 4
are of adequate quality. Protection commonly regarded as required of an
investment security is present and although not distinctly or predominantly
speculative, there is specific risk.
A-7
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(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, for the
fiscal years ended September 30, 1994*, September 30, 1995* and for
September 30, 1996*.
(2) Statement of Assets and Liabilities as of September 30, 1996*.
(3) Statement of Operations for the fiscal year ended September 30, 1996.*
(4) Statement of Changes in Net Assets for fiscal years ended September
30, 1994*, September 30, 1995* and September 30, 1996*.
(5) Changes in Fund Shares for the fiscal years ended September 30, 1994*,
September 30, 1995* and September 30, 1996*.
(6) Notes to Financial Statements to the Annual Report.*
(7) Schedule of Investments as of September 30, 1996.*
(8) Notes to Schedules of Investments as of September 30, 1996.*
(9) Report of Independent Accountants.*
- ----------
* Incorporated by reference to the Trust's Annual Report to shareholders for
the period ended September 30, 1996.
C-1
<PAGE>
(b) Exhibits:
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C>
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*
1(e) Form of Amendment to Declaration of Trust to add the Premier 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*
5(d) Form of Investment Advisory and Administration Agreement for the Premier 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*
- ----------
* Previously filed.
C-2
<PAGE>
Exhibit No. Description of Exhibit
----------- ----------------------
9(c) Form of Administration Agreement for Mid-Cap Fund and International Income Fund*
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
</TABLE>
- ----------
* 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 3, 1996
-------------- ------------------------------
Shares representing beneficial interests,
par value $.001 per share of:
Global Fund - Class A 363
Global Fund - Class B 174
Global Fund - Class C 4,265
Global Fund - Class D 228
International Fund - Class A 243
International Fund - Class B 81
International Fund - Class C 560
International Fund - Class D 21
U.S. Equity Fund - Class A 915
U.S. Equity Fund - Class B 1,095
U.S. Equity Fund - Class C 5,350
U.S. Equity Fund - Class D 257
Strategic Fund - Class A 506
Strategic Fund - Class B 537
Strategic Fund - Class C 2,847
Strategic Fund - Class D 223
Tax-Exempt Fund - Class A 45
Tax-Exempt Fund - Class B 70
Tax-Exempt Fund - Class C 759
Tax-Exempt Fund - Class D 8
Income Fund - Class A 271
Income Fund - Class B 158
Income Fund - Class C 1,941
Income Fund - Class D 198
Government Fund - Class A 33
Government Fund - Class B 16
Government Fund - Class C 247
Government Fund - Class D 12
Money Market Fund 6,190
There will be no holders of the shares of beneficial interest, par value
$.001 per share, of the International Income Fund, the Mid-Cap Fund and the
Premier Fund on the date this Registration Statement becomes effective.
C-4
<PAGE>
Item 27. Indemnification
Reference is made to Article IV of the Declaration of Trust of GE Funds
("Registrant") filed as Exhibit 1 to this Registration 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 of Form BD filed
by GEIS pursuant to the Securities Exchange Act of 1934 (SEC File No. 8-45710).
(c) Inapplicable.
C-5
<PAGE>
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.
(d) Registrant undertakes to file a post-effective amendment containing
reasonably current financial statements that need not be certified, within four
to six months from the effective date of this Registration Statement.
C-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 27th day of December, 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 December 27, 1996
- --------------------------
Michael J. Cosgrove President and
Chairman of the Board
(Chief Executive Officer)
/s/ Alan M. Lewis December 27, 1996
- --------------------------
Alan M. Lewis Executive Vice President
and Trustee
/s/ John R. Costantino December 27, 1996
- --------------------------
John R. Costantino Trustee
/s/ William J. Lucas December 27, 1996
- --------------------------
William J. Lucas Trustee
/s/ Robert P. Quinn December 27, 1996
- --------------------------
Robert P. Quinn Trustee
/s/ Jeffrey A. Groh December 27, 1996
- --------------------------
Jeffrey A. Groh Treasurer
(Chief Financial and
Accounting Officer)
<PAGE>
Exhibit 10
[Letterhead of Willkie Farr & Gallagher]
December 27, 1996
GE Funds
3003 Summer Street
Stamford, Connecticut 06905
Ladies and Gentlemen:
We have acted as counsel to GE Funds (the "Trust"), a business trust organized
under the laws of The Commonwealth of Massachusetts, in connection with the
preparation of Post-Effective Amendment No. 20 of the Trust's Registration
Statement on Form N-1A under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended (the "Registration Statement"), filed
with the Securities and Exchange Commission, relating to the offer and sale of
an indefinite number of shares of beneficial interest, par value $.001 per
share, of GE Premier Growth Equity Fund (the "Fund").
We have examined copies of the Trust's Declaration of Trust, as amended (the
"Declaration"), the Trust's By-Laws (the "By-Laws"), the votes of the Trustees
of the Trust taken on July 11, 1996 and September 11, 1996 and other records and
documents that we have deemed necessary for the purposes of providing the
opinion stated below. We have also examined such other documents, statutes and
authorities as we have deemed necessary to form a basis for that opinion,
including a certificate of the Secretary of State of The Commonwealth of
Massachusetts certifying as to the existence of the Trust.
In our examination of the materials described above, we have assumed the
genuineness of all signatures and the conformity to original documents of all
copies submitted to us. As to various questions of fact material to our opinion,
we have relied upon statements and certificates of officers and representatives
of the Trust and others. As to matters governed by the laws of The Commonwealth
of Massachusetts, we have relied on the opinion of Bingham, Dana & Gould that is
attached to this opinion.
Based upon and subject to the foregoing, we are of the opinion that the shares
of the Fund, when issued and sold in accordance with the terms of the
Declaration and By-Laws and the Registration Statement, will be legally issued,
fully paid and non-assessable by the Trust, except that, as described in the
Registration Statement, shareholders of the Fund may under certain circumstances
be held personally liable for the obligations of the Trust.
We consent to the filing of this letter as an exhibit to the Registration
Statement; the reference to us in the Statement of Additional Information
included as part of the Registration Statement; and the filing of this letter as
an exhibit to any application made by or on behalf of the Trust or any
distributor or dealer in connection with the registration or qualification of
the Trust or the shares of the Fund under the securities laws of any state or
other jurisdiction.
Very truly yours,
Willkie Farr & Gallagher
<PAGE>
Exhibit 10(b)
[Letterhead of Bingham, Dana & Gould]
December 27, 1996
GE Funds
3003 Summer Street
Stamford, Connecticut 06905
Ladies and Gentlemen:
We have acted as special Massachusetts counsel for GE Funds, a Massachusetts
business trust (the "Trust"), created under a written Declaration of Trust dated
August 10, 1992, as amended (the "Trust Agreement").
In connection with this opinion, we have examined the following described
documents:
(a) a certificate of the Secretary of State of The Commonwealth of Massachusetts
as to the existence of the Trust;
(b) a copy, certified by the Secretary of State of The Commonwealth of
Massachusetts, of the Trust's Declaration of Trust and of all amendments thereto
on file in the office of the Secretary of State;
(c) A Certificate executed by Matthew J. Simpson, Secretary of the Trust,
certifying as to, and attaching copies of, the Trust's By-Laws and certain votes
of the Trustees of the Trust authorizing the issuance of an indefinite number of
shares of beneficial interest of GE Premier Growth Equity Fund (the "Fund"), a
series of the Trust.
In such exmaination, we have assumed the genuineness of all signatures, the
conformity to the originals of all of the documents reviewed by us as copies,
the authenticity and completeness of all original documents reviewed by us in
original or copy form and the legal competence of each individual executing any
document.
This opinion is based entirely on our review of the documents listed above. We
have made no other review or investigation of any kind whatsoever, and we have
assumed, without independent inquiry, the accuracy of the information set forth
in such documents.
This opinion is limited solely to the laws of The Commonwealth of Massachusetts
(other than the Massachusetts Uniform Securities Act, as to which we express no
opinion) as applied by courts in such Commonwealth, to the extent such laws may
apply to or govern the matters covered by this opinion.
We understand that all of the foregoing assumptions and limitations are
acceptable to you.
<PAGE>
Based upon and subject to the foregoing, please be advised that it is our
opinion that the shares of beneficial interest of the Fund, when issued and sold
in accordance with the Trust Agreement, By-Laws and Registration Statement, as
amended, will be legally issued, fully paid and non-assessable. Shareholders of
the Trust may under certain circumstances be held personally liable for the
Trust's obligations.
We understand that Willkie Farr & Gallagher will rely on this opinion in order
to prepare an opinion to the Trust, which will be filed with the Securities and
Exchange Commission. We hereby consent to such use and filing of this opinion.
Sincerely
Bingham, Dana & Gould LLP
Exhibit 11
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. 20 to the Registration Statement on Form N-1A (the "Registration
Statement") of our report dated November 12, 1996 relating to the financial
statements and financial highlights appearing in the September 30, 1996 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
December 30, 1996
Exhibit 16
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 1996.
A = Return without load for period
B = Maximum Load amount
C = Return with Load = A*(1-B)-B
- ------------------------------------------------------------------
A B C
Return
Return Load With Load
- ------------------------------------------------------------------
U.S. Equity Fund 18.36% 4.75% 12.74%
Global Fund 11.18% 4.75% 5.90%
International Fund 11.39% 4.75% 6.10%
Strategic Fund 13.35% 4.75% 7.96%
Tax Exempt Fund 3.52% 4.25% -0.88%
Income Fund 3.91% 4.25% -0.50%
Government Fund 4.63% 2.50% 2.01%
- ------------------------------------------------------------------
<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 1996.
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
- --------------------------------------------------------------------------------
A B C D E
Opening Ending Return
Return Load NAV NAV With Load
- --------------------------------------------------------------------------------
U.S. Equity Fund 17.78% 4.00% 19.71 22.57 13.78%
Global Fund 10.61% 4.00% 20.14 21.87 6.61%
International Fund 10.78% 4.00% 15.77 17.47 6.78%
Strategic Fund 12.73% 4.00% 18.26 20.04 8.73%
Tax Exempt Fund 3.01% 3.00% 11.78 11.68 0.04%
Income Fund 3.41% 3.00% 11.91 11.70 0.46%
Government Fund 4.35% 3.00% 11.90 11.78 1.38%
- --------------------------------------------------------------------------------
<PAGE>
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 R4 M Return
Prior Year Prior Year YTD YTD Days in Number Since
Return Return Return Return Period of Years Inception
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. Equity Fund 10.32% 0.88% 26.86% 18.70% 1316 3.60548 15.38%
Global Fund 14.10% 14.28% 7.47% 11.44% 1316 3.60548 13.14%
Strategic Fund 8.06% -0.27% 20.35% 13.58% 1316 3.60548 11.33%
Tax Exempt Fund 5.48% -4.30% 9.23% 3.77% 1316 3.60548 3.82%
Income Fund 5.24% -2.97% 12.81% 4.10% 1316 3.60548 5.16%
International Fund 1.27% 5.16% 11.54% 943 2.58356 6.90%
ST Government Fund 0.53% 7.74% 4.98% 943 2.58356 5.10%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GE U.S. Equity Fund
Calculation of 1996 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 1996.
Factual Data
<TABLE>
<CAPTION>
Class A Class B Class C Class D
---------------------------------------------------------
<C> <C> <C> <C> <C>
1.Opening NAV 20.28 19.71 19.98 19.98
2.Closing NAV 9/30/96 23.34 22.57 23.02 23.03
3.Income Distributions
Ex Date 12/28/95 12/28/95 12/28/95 12/28/95
Amount / Unit 0.58839 0.57365 0.61605 0.65359
NAV on ex-date 20.68 20.07 20.36 20.33
Income Sources
Ordinary Income 0.32018 0.30544 0.34784 0.38538
Short Term Capital Gains 0.02167 0.02167 0.02167 0.02167
Long Term Capital Gains 0.24654 0.24654 0.24654 0.24654
</TABLE>
Computation
Class A Class C
= (20.68+.5884) x(23.34) -1 = (20.36+.6161) x(23.02) -1
------------ ------- ------------- -------
20.28 20.68 19.98 20.36
= 1.049 x 1.129 -1 = 1.050 x 1.130 -1
= .184 or 18.36% Rounded = .187 or 18.70% Rounded
Class B Class D
= (20.07+.5737) x(22.57) -1 = (20.33+.6536) x(23.03) -1
------------ ------- ------------- -------
19.71 20.07 19.98 20.33
= 1.047 x 1.124 -1 = 1.050 x 1.133 -1
= .178 or 17.78% Rounded = 1.190 or 18.97% Rounded
<PAGE>
GE International Equity Fund
Calculation of 1996 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 1996.
Factual Data
<TABLE>
<CAPTION>
Class A Class B Class C Class D
--------------------------------------------------------
<C> <C> <C> <C> <C>
1.Opening NAV 15.87 15.77 15.88 15.94
2.Closing NAV 9/30/96 17.65 17.47 17.65 17.76
3.Income Distributions
Ex Date 12/28/95 12/28/95 12/28/95 12/28/95
Amount / Unit 0.02506 0 0.05758 0.08175
NAV on ex-date 16.40 16.31 16.38 16.44
Income Sources
Ordinary Income 0.02506 0 0.05758 0.08175
</TABLE>
Computation
Class A Class C
= (16.40+.0251) x(17.65) -1 = (16.38+.0576) x(17.65) -1
------------ ------- ------------- -------
15.87 16.40 15.88 16.38
= 1.035 x 1.076 -1 = 1.035 x 1.078 -1
= .114 or 11.39% Rounded = .115 or 11.54% Rounded
Class B Class D
= (16.31+.0) x(17.47) -1 = (16.44+.0818) x(17.76) -1
------------ ------- ------------- -------
15.77 16.31 15.94 16.44
= 1.034 x 1.071 -1 = 1.036 x 1.080 -1
= .108 or 10.78% Rounded = .120 or 11.97% Rounded
<PAGE>
GE Global Equity Fund
Calculation of 1996 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 1996.
Factual Data
<TABLE>
<CAPTION>
Class A Class B Class C Class D
--------------------------------------------------------
<C> <C> <C> <C> <C>
1.Opening NAV 20.18 20.14 20.31 20.37
2.Closing NAV 9/30/96 22.01 21.87 22.18 22.25
3.Income Distributions
Ex Date 12/28/95 12/28/95 12/28/95 12/28/95
Amount / Unit 0.38443 0.36807 0.40771 0.45466
NAV on ex-date 19.86 19.81 19.98 20.00
Income Sources
Ordinary Income 0.01636 0 0.03964 0.08659
Long Term Capital Gains 0.36807 0.36807 0.36807 0.36807
</TABLE>
Computation
Class A Class C
= (19.86+.3844) x(22.01) -1 = (19.98+.4077) x(22.18) -1
------------ ------- ------------- -------
20.18 19.86 20.31 19.98
= 1.003 x 1.108 -1 = 1.004 x 1.110 -1
= .112 or 11.18% Rounded = 114 or 11.44% Rounded
Class B Class D
= (19.81+.3681) x(21.87) -1 = (20.00+.4547) x(22.25) -1
------------ ------- ------------- -------
20.14 19.81 20.37 20.00
= 1.002 x 1.104 -1 = 1.004 x 1.113 -1
= .106 or 10.61% Rounded = .117 or 11.71% Rounded
<PAGE>
GE Strategic Investment Fund
Calculation of 1996 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 1996.
Factual Data
<TABLE>
<CAPTION>
Class A Class B Class C Class D
--------------------------------------------------------
<C> <C> <C> <C> <C>
1.Opening NAV 18.43 18.26 18.46 18.49
2.Closing NAV 9/30/96 20.33 20.04 20.38 20.44
3.Income Distributions
Ex Date 12/28/95 12/28/95 12/28/95 12/28/95
Amount / Unit 0.51831 0.50592 0.54218 0.58100
NAV on ex-date 18.83 18.64 18.85 18.85
Income Sources
Ordinary Income 0.43336 0.42097 0.45723 0.49605
Short Term Capital Gains 0.03642 0.03642 0.03642 0.03642
Long Term Capital Gains 0.04853 0.04853 0.04853 0.04853
</TABLE>
Computation
Class A Class C
= (18.83+.5183) x(20.33) -1 = (18.85+.5422) x(20.38) -1
------------ ------- ------------- -------
18.43 18.83 18.46 18.85
= 1.050 x 1.080 -1 = 1.050 x 1.081 -1
= .134 or 13.35% Rounded = .136 or 13.58% Rounded
Class B Class D
= (18.64+.5059) x(20.04) -1 = (18.85+.5810) x(20.44) -1
------------ ------- ------------- -------
18.26 18.64 18.49 18.85
= 1.049 x 1.075 -1 = 1.051 x 1.084 -1
= .127 or 12.73% Rounded = .140 or 13.95% Rounded
<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, 1996
<PAGE>
GE Fixed Income Class A
Total Return for Fiscal Year Ended September 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
A B C D E F G H I J K L
Capital Capital Gains Income Current
Income per Gains Reinvest. Unit Income Units Units Total Account Month YTD
Period Unit Unit Value Value Earned Purchased Purchased Units Value Return Return
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sep-95 11.91 1000.000 11910.00
Oct-95 0.0584 12.00 12.00 58.400 0.000 4.867 1004.867 12058.40 1.25% 1.25%
Nov-95 0.0560 12.12 12.12 56.273 0.000 4.643 1009.510 12235.26 1.47% 2.73%
Dec-95 0.0640 12.22 12.22 64.609 0.000 5.287 1014.797 12400.82 1.35% 4.12%
Jan-96 0.0437 12.16 12.16 44.347 0.000 3.647 1018.444 12384.27 -0.13% 3.98%
Jan-96 0.0105 12.23 12.23 10.694 0.000 0.874 1019.318 12466.26 0.66% 4.67%
Feb-96 0.0446 12.03 12.03 45.462 0.000 3.779 1023.097 12307.86 -1.27% 3.34%
Feb-96 0.0073 11.94 11.94 7.469 0.000 0.626 1023.723 12223.25 -0.69% 2.63%
Mar-96 0.0438 11.85 11.85 44.839 0.000 3.784 1027.506 12175.95 -0.39% 2.23%
Mar-96 0.0104 11.79 11.79 10.686 0.000 0.906 1028.413 12124.99 -0.42% 1.81%
Apr-96 0.0449 11.69 11.69 46.176 0.000 3.950 1032.363 12068.32 -0.47% 1.33%
Apr-96 0.0091 11.66 11.66 9.395 0.000 0.806 1033.169 12046.75 -0.18% 1.15%
May-96 0.0476 11.67 11.67 49.179 0.000 4.214 1037.383 12106.26 0.49% 1.65%
May-96 0.0071 11.57 11.57 7.365 0.000 0.637 1038.019 12009.88 -0.80% 0.84%
Jun-96 0.0453 11.54 11.54 47.022 0.000 4.075 1042.094 12025.76 0.13% 0.97%
Jun-96 0.0097 11.65 11.65 10.108 0.000 0.868 1042.962 12150.50 1.04% 2.02%
Jul-96 0.0456 11.58 11.58 47.559 0.000 4.107 1047.069 12125.05 -0.21% 1.81%
Jul-96 0.0117 11.63 11.63 12.251 0.000 1.053 1048.122 12189.66 0.53% 2.35%
Aug-96 0.0475 11.67 11.67 49.786 0.000 4.266 1052.388 12281.37 0.75% 3.12%
Aug-96 0.0114 11.55 11.55 11.997 0.000 1.039 1053.427 12167.08 -0.93% 2.16%
Sep-96 0.0488 11.68 11.68 51.407 0.000 4.401 1057.828 12355.43 1.55% 3.74%
Sep-96 0.0092 11.69 11.69 9.732 0.000 0.833 1058.661 12375.74 0.16% 3.91%
- ---------------------------------------------------------------------------------------------------------------------------------
</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, where 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 1996
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
A B C D E F G H I J K L
Capital Capital Gains Income Current
Income per Gains Reinvest. Unit Income Units Units Total Account Month YTD
Period Unit Unit Value Value Earned Purchased Purchased Units Value Return Return
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sep-95 11.91 1000.000 11910.00
Oct-95 0.0517 12.00 12.00 51.700 0.000 4.308 1004.308 12051.70 1.19% 1.19%
Nov-95 0.0494 12.12 12.12 49.613 0.000 4.093 1008.402 12221.83 1.41% 2.62%
Dec-95 0.0571 12.22 12.22 57.580 0.000 4.712 1013.114 12380.25 1.30% 3.95%
Jan-96 0.0374 12.17 12.17 37.890 0.000 3.113 1016.227 12367.48 -0.10% 3.84%
Jan-96 0.0091 12.23 12.23 9.248 0.000 0.756 1016.983 12437.71 0.57% 4.43%
Feb-96 0.0397 12.04 12.04 40.374 0.000 3.353 1020.337 12284.85 -1.23% 3.15%
Feb-96 0.0066 11.95 11.95 6.734 0.000 0.564 1020.900 12199.76 -0.69% 2.43%
Mar-96 0.0395 11.86 11.86 40.326 0.000 3.400 1024.300 12148.20 -0.42% 2.00%
Mar-96 0.0094 11.80 11.80 9.628 0.000 0.816 1025.116 12096.37 -0.43% 1.56%
Apr-96 0.0409 11.71 11.71 41.927 0.000 3.580 1028.697 12046.04 -0.42% 1.14%
Apr-96 0.0083 11.67 11.67 8.538 0.000 0.732 1029.428 12013.43 -0.27% 0.87%
May-96 0.0434 11.68 11.68 44.677 0.000 3.825 1033.253 12068.40 0.46% 1.33%
May-96 0.0065 11.58 11.58 6.716 0.000 0.580 1033.833 11971.79 -0.80% 0.52%
Jun-96 0.0414 11.56 11.56 42.801 0.000 3.702 1037.536 11993.92 0.18% 0.70%
Jun-96 0.0089 11.66 11.66 9.234 0.000 0.792 1038.328 12106.90 0.94% 1.65%
Jul-96 0.0417 11.60 11.60 43.298 0.000 3.733 1042.060 12087.90 -0.16% 1.49%
Jul-96 0.0108 11.64 11.64 11.254 0.000 0.967 1043.027 12140.84 0.44% 1.94%
Aug-96 0.0436 11.68 11.68 45.476 0.000 3.893 1046.921 12228.04 0.72% 2.67%
Aug-96 0.0104 11.56 11.56 10.888 0.000 0.942 1047.863 12113.29 -0.94% 1.71%
Sep-96 0.0449 11.70 11.70 47.049 0.000 4.021 1051.884 12307.04 1.60% 3.33%
Sep-96 0.0084 11.70 11.70 8.836 0.000 0.755 1052.639 12315.88 0.07% 3.41%
- ---------------------------------------------------------------------------------------------------------------------------------
</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, where 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 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
A B C D E F G H I J K L
Capital Capital Gains Income Current
Income per Gains Reinvest. Unit Income Units Units Total Account Month YTD
Period Unit Unit Value Value Earned Purchased Purchased Units Value Return Return
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sep-95 11.92 1000.000 11920.00
Oct-95 0.0594 12.01 12.01 59.400 0.000 4.946 1004.946 12069.40 1.25% 1.25%
Nov-95 0.0569 12.13 12.13 57.181 0.000 4.714 1009.660 12247.17 1.47% 2.74%
Dec-95 0.0649 12.23 12.23 65.527 0.000 5.358 1015.018 12413.67 1.36% 4.14%
Jan-96 0.0436 12.17 12.17 44.255 0.000 3.636 1018.654 12397.02 -0.13% 4.00%
Jan-96 0.0106 12.24 12.24 10.798 0.000 0.882 1019.536 12479.13 0.66% 4.69%
Feb-96 0.0460 12.04 12.04 46.899 0.000 3.895 1023.432 12322.12 -1.26% 3.37%
Feb-96 0.0076 11.96 11.96 7.778 0.000 0.650 1024.082 12248.02 -0.60% 2.75%
Mar-96 0.0456 11.86 11.86 46.698 0.000 3.937 1028.019 12192.31 -0.45% 2.28%
Mar-96 0.0109 11.81 11.81 11.205 0.000 0.949 1028.968 12152.11 -0.33% 1.95%
Apr-96 0.0469 11.71 11.71 48.259 0.000 4.121 1033.089 12097.48 -0.45% 1.49%
Apr-96 0.0095 11.67 11.67 9.814 0.000 0.841 1033.930 12065.97 -0.26% 1.22%
May-96 0.0498 11.68 11.68 51.490 0.000 4.408 1038.339 12127.80 0.51% 1.74%
May-96 0.0075 11.58 11.58 7.788 0.000 0.672 1039.011 12031.75 -0.79% 0.94%
Jun-96 0.0473 11.55 11.55 49.145 0.000 4.255 1043.266 12049.72 0.15% 1.09%
Jun-96 0.0101 11.66 11.66 10.537 0.000 0.904 1044.170 12175.02 1.04% 2.14%
Jul-96 0.0477 11.59 11.59 49.807 0.000 4.297 1048.467 12151.74 -0.19% 1.94%
Jul-96 0.0122 11.64 11.64 12.791 0.000 1.099 1049.566 12216.95 0.54% 2.49%
Aug-96 0.0496 11.68 11.68 52.058 0.000 4.457 1054.023 12310.99 0.77% 3.28%
Aug-96 0.0119 11.56 11.56 12.543 0.000 1.085 1055.108 12197.05 -0.93% 2.32%
Sep-96 0.0508 11.70 11.70 53.600 0.000 4.581 1059.689 12398.37 1.65% 4.01%
Sep-96 0.0096 11.70 11.70 10.173 0.000 0.869 1060.559 12408.54 0.08% 4.10%
- -----------------------------------------------------------------------------------------------------------------------------------
</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, where 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 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
A B C D E F G H I J K L
Capital Capital Gains Income Current
Income per Gains Reinvest. Unit Income Units Units Total Account Month YTD
Period Unit Unit Value Value Earned Purchased Purchased Units Value Return Return
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sep-95 11.92 1000.000 11920.00
Oct-95 0.0623 12.01 12.01 62.300 0.000 5.187 1005.187 12072.30 1.28% 1.28%
Nov-95 0.0598 12.13 12.13 60.110 0.000 4.955 1010.143 12253.03 1.50% 2.79%
Dec-95 0.0680 12.23 12.23 68.690 0.000 5.616 1015.759 12422.74 1.38% 4.22%
Jan-96 0.0478 12.17 12.17 48.553 0.000 3.990 1019.749 12410.34 -0.10% 4.11%
Jan-96 0.0114 12.24 12.24 11.625 0.000 0.950 1020.699 12493.35 0.67% 4.81%
Feb-96 0.0490 12.04 12.04 50.014 0.000 4.154 1024.853 12339.23 -1.23% 3.52%
Feb-96 0.0080 11.95 11.95 8.199 0.000 0.686 1025.539 12255.19 -0.68% 2.81%
Mar-96 0.0483 11.86 11.86 49.534 0.000 4.177 1029.715 12212.42 -0.35% 2.45%
Mar-96 0.0115 11.80 11.80 11.842 0.000 1.004 1030.719 12162.48 -0.41% 2.03%
Apr-96 0.0491 11.70 11.70 50.608 0.000 4.325 1035.044 12110.02 -0.43% 1.59%
Apr-96 0.0099 11.66 11.66 10.247 0.000 0.879 1035.923 12078.86 -0.26% 1.33%
May-96 0.0521 11.68 11.68 53.972 0.000 4.621 1040.544 12153.55 0.62% 1.96%
May-96 0.0078 11.58 11.58 8.116 0.000 0.701 1041.245 12057.62 -0.79% 1.15%
Jun-96 0.0494 11.55 11.55 51.437 0.000 4.453 1045.698 12077.82 0.17% 1.32%
Jun-96 0.0105 11.65 11.65 10.980 0.000 0.942 1046.641 12193.37 0.96% 2.29%
Jul-96 0.0496 11.59 11.59 51.913 0.000 4.479 1051.120 12182.48 -0.09% 2.20%
Jul-96 0.0127 11.63 11.63 13.349 0.000 1.148 1052.268 12237.87 0.45% 2.67%
Aug-96 0.0515 11.67 11.67 54.192 0.000 4.644 1056.911 12334.16 0.79% 3.47%
Aug-96 0.0123 11.55 11.55 13.000 0.000 1.126 1058.037 12220.33 -0.92% 2.52%
Sep-96 0.0528 11.69 11.69 55.864 0.000 4.779 1062.816 12424.32 1.67% 4.23%
Sep-96 0.0100 11.69 11.69 10.628 0.000 0.909 1063.725 12434.95 0.09% 4.32%
- -------------------------------------------------------------------------------------------------------------------------------
</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, where 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
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, 1996
<PAGE>
GE Short Term Fund A
Total Return for Fiscal Year Ended September 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
A B C D E F G H I J K L
Capital Capital Gains Income Current
Income per Gains Reinvest. Unit Income Units Units Total Account Month YTD
Period Unit Unit Value Value Earned Purchased Purchased Units Value Return Return
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sep-95 11.91 1000.000 11910.00
Oct-95 0.0534 11.94 11.94 53.400 0.000 4.472 1004.472 11993.40 0.70% 0.70%
Nov-95 0.0516 11.98 11.98 51.831 0.000 4.326 1008.799 12085.41 0.77% 1.47%
Dec-95 0.0576 11.93 11.93 0.000 58.350 4.891 1013.690 12093.32 0.07% 1.54%
Dec-95 0.0635 11.94 11.94 64.369 0.000 5.391 1019.081 12167.83 0.62% 2.16%
Jan-96 0.0412 11.95 11.95 41.986 0.000 3.513 1022.594 12220.00 0.43% 2.60%
Jan-96 0.0099 11.98 11.98 10.124 0.000 0.845 1023.439 12260.80 0.33% 2.95%
Feb-96 0.0414 11.93 11.93 42.370 0.000 3.552 1026.991 12252.00 -0.07% 2.87%
Feb-96 0.0062 11.88 11.88 6.367 0.000 0.536 1027.527 12207.02 -0.37% 2.49%
Mar-96 0.0378 11.83 11.83 38.841 0.000 3.283 1030.810 12194.49 -0.10% 2.39%
Mar-96 0.0091 11.82 11.82 9.380 0.000 0.794 1031.604 12193.56 -0.01% 2.38%
Apr-96 0.0394 11.78 11.78 40.645 0.000 3.450 1035.054 12192.94 -0.01% 2.38%
Apr-96 0.0081 11.77 11.77 8.384 0.000 0.712 1035.767 12190.97 -0.02% 2.36%
May-96 0.0424 11.78 11.78 43.917 0.000 3.728 1039.495 12245.25 0.45% 2.81%
May-96 0.0063 11.74 11.74 6.549 0.000 0.558 1040.052 12210.22 -0.29% 2.52%
Jun-96 0.0404 11.73 11.73 42.018 0.000 3.582 1043.634 12241.83 0.26% 2.79%
Jun-96 0.0080 11.77 11.77 8.349 0.000 0.709 1044.344 12291.93 0.41% 3.21%
Jul-96 0.0409 11.74 11.74 42.714 0.000 3.638 1047.982 12303.31 0.09% 3.30%
Jul-96 0.0098 11.76 11.76 10.270 0.000 0.873 1048.855 12334.54 0.25% 3.56%
Aug-96 0.0415 11.78 11.78 43.528 0.000 3.695 1052.551 12399.04 0.52% 4.11%
Aug-96 0.0097 11.74 11.74 10.210 0.000 0.870 1053.420 12367.15 -0.26% 3.84%
Sep-96 0.0415 11.79 11.79 43.717 0.000 3.708 1057.128 12463.54 0.78% 4.65%
Sep-96 0.0084 11.78 11.78 8.880 0.000 0.754 1057.882 12461.85 -0.01% 4.63%
- ------------------------------------------------------------------------------------------------------------------------------------
</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, where 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 1996
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
A B C D E F G H I J K L
Capital Capital Gains Income Current
Income per Gains Reinvest. Unit Income Units Units Total Account Month YTD
Period Unit Unit Value Value Earned Purchased Purchased Units Value Return Return
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sep-95 11.90 1000.000 11900.00
Oct-95 0.0498 11.93 11.93 49.800 0.000 4.174 1004.174 11979.80 0.67% 0.67%
Nov-95 0.0482 11.98 11.98 48.401 0.000 4.040 1008.215 12078.41 0.82% 1.50%
Dec-95 0.0576 11.93 11.93 0.000 58.317 4.888 1013.103 12086.32 0.07% 1.57%
Dec-95 0.0599 11.93 11.93 60.685 0.000 5.087 1018.189 12147.00 0.50% 2.08%
Jan-96 0.0383 11.94 11.94 38.997 0.000 3.266 1021.456 12196.18 0.40% 2.49%
Jan-96 0.0092 11.97 11.97 9.397 0.000 0.785 1022.241 12236.22 0.33% 2.83%
Feb-96 0.0385 11.93 11.93 39.356 0.000 3.299 1025.540 12234.69 -0.01% 2.81%
Feb-96 0.0058 11.87 11.87 5.948 0.000 0.501 1026.041 12179.10 -0.46% 2.34%
Mar-96 0.0350 11.83 11.83 35.911 0.000 3.036 1029.076 12173.97 -0.04% 2.30%
Mar-96 0.0084 11.81 11.81 8.644 0.000 0.732 1029.808 12162.04 -0.10% 2.20%
Apr-96 0.0366 11.77 11.77 37.691 0.000 3.202 1033.011 12158.53 -0.03% 2.17%
Apr-96 0.0075 11.76 11.76 7.748 0.000 0.659 1033.669 12155.95 -0.02% 2.15%
May-96 0.0393 11.77 11.77 40.623 0.000 3.451 1037.121 12206.91 0.42% 2.57%
May-96 0.0059 11.74 11.74 6.119 0.000 0.521 1037.642 12181.92 -0.20% 2.36%
Jun-96 0.0376 11.73 11.73 39.015 0.000 3.326 1040.968 12210.56 0.24% 2.60%
Jun-96 0.0075 11.76 11.76 7.807 0.000 0.664 1041.632 12249.59 0.32% 2.93%
Jul-96 0.0380 11.74 11.74 39.582 0.000 3.372 1045.004 12268.34 0.15% 3.09%
Jul-96 0.0091 11.75 11.75 9.510 0.000 0.809 1045.813 12288.30 0.16% 3.26%
Aug-96 0.0386 11.78 11.78 40.368 0.000 3.427 1049.240 12360.04 0.58% 3.86%
Aug-96 0.0090 11.73 11.73 9.443 0.000 0.805 1050.045 12317.02 -0.35% 3.50%
Sep-96 0.0386 11.78 11.78 40.532 0.000 3.441 1053.485 12410.06 0.76% 4.28%
Sep-96 0.0078 11.78 11.78 8.217 0.000 0.698 1054.183 12418.28 0.07% 4.35%
- ----------------------------------------------------------------------------------------------------------------------------------
</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, where 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 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
A B C D E F G H I J K L
Capital Capital Gains Income Current
Income per Gains Reinvest. Unit Income Units Units Total Account Month YTD
Period Unit Unit Value Value Earned Purchased Purchased Units Value Return Return
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sep-95 11.91 1000.000 11910.00
Oct-95 0.0560 11.95 11.95 56.000 0.000 4.686 1004.686 12006.00 0.81% 0.81%
Nov-95 0.0541 11.99 11.99 54.354 0.000 4.533 1009.219 12100.54 0.79% 1.60%
Dec-95 0.0576 11.94 11.94 0.000 58.374 4.889 1014.108 12108.45 0.07% 1.67%
Dec-95 0.0660 11.95 11.95 66.931 0.000 5.601 1019.709 12185.53 0.64% 2.31%
Jan-96 0.0432 11.95 11.95 44.051 0.000 3.686 1023.396 12229.58 0.36% 2.68%
Jan-96 0.0104 11.99 11.99 10.643 0.000 0.888 1024.283 12281.16 0.42% 3.12%
Feb-96 0.0434 11.94 11.94 44.454 0.000 3.723 1028.006 12274.40 -0.06% 3.06%
Feb-96 0.0066 11.88 11.88 6.785 0.000 0.571 1028.578 12219.50 -0.45% 2.60%
Mar-96 0.0398 11.84 11.84 40.937 0.000 3.458 1032.035 12219.30 0.00% 2.60%
Mar-96 0.0096 11.82 11.82 9.908 0.000 0.838 1032.873 12208.56 -0.09% 2.51%
Apr-96 0.0415 11.79 11.79 42.864 0.000 3.636 1036.509 12220.44 0.10% 2.61%
Apr-96 0.0085 11.78 11.78 8.810 0.000 0.748 1037.257 12218.89 -0.01% 2.59%
May-96 0.0446 11.78 11.78 46.262 0.000 3.927 1041.184 12265.15 0.38% 2.98%
May-96 0.0066 11.75 11.75 6.872 0.000 0.585 1041.769 12240.78 -0.20% 2.78%
Jun-96 0.0424 11.74 11.74 44.171 0.000 3.762 1045.531 12274.54 0.28% 3.06%
Jun-96 0.0084 11.78 11.78 8.782 0.000 0.746 1046.277 12325.14 0.41% 3.49%
Jul-96 0.0429 11.75 11.75 44.885 0.000 3.820 1050.097 12338.64 0.11% 3.60%
Jul-96 0.0103 11.76 11.76 10.816 0.000 0.920 1051.017 12359.95 0.17% 3.78%
Aug-96 0.0435 11.79 11.79 45.719 0.000 3.878 1054.894 12437.20 0.63% 4.43%
Aug-96 0.0102 11.74 11.74 10.760 0.000 0.917 1055.811 12395.22 -0.34% 4.07%
Sep-96 0.0435 11.80 11.80 45.928 0.000 3.892 1059.703 12504.50 0.88% 4.99%
Sep-96 0.0088 11.79 11.79 9.325 0.000 0.791 1060.494 12503.22 -0.01% 4.98%
- ------------------------------------------------------------------------------------------------------------------------------------
</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, where 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 1996
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
A B C D E F G H I J K L
Capital Capital Gains Income Current
Income per Gains Reinvest. Unit Income Units Units Total Account Month YTD
Period Unit Unit Value Value Earned Purchased Purchased Units Value Return Return
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sep-95 11.90 1000.000 11900.00
Oct-95 0.0584 11.94 11.94 58.400 0.000 4.891 1004.891 11998.40 0.83% 0.83%
Nov-95 0.0565 11.98 11.98 56.776 0.000 4.739 1009.630 12095.37 0.81% 1.64%
Dec-95 0.0576 11.93 11.93 0.000 58.398 4.895 1014.525 12103.29 0.07% 1.71%
Dec-95 0.0685 11.94 11.94 69.495 0.000 5.820 1020.346 12182.93 0.66% 2.38%
Jan-96 0.0453 11.94 11.94 46.222 0.000 3.871 1024.217 12229.15 0.38% 2.77%
Jan-96 0.0109 11.98 11.98 11.164 0.000 0.932 1025.149 12281.28 0.43% 3.20%
Feb-96 0.0454 11.93 11.93 46.542 0.000 3.901 1029.050 12276.57 -0.04% 3.16%
Feb-96 0.0069 11.87 11.87 7.100 0.000 0.598 1029.648 12221.93 -0.45% 2.71%
Mar-96 0.0418 11.83 11.83 43.039 0.000 3.638 1033.286 12223.78 0.02% 2.72%
Mar-96 0.0100 11.81 11.81 10.333 0.000 0.875 1034.161 12213.45 -0.08% 2.63%
Apr-96 0.0434 11.78 11.78 44.883 0.000 3.810 1037.971 12227.30 0.11% 2.75%
Apr-96 0.0089 11.77 11.77 9.238 0.000 0.785 1038.756 12226.16 -0.01% 2.74%
May-96 0.0467 11.77 11.77 48.510 0.000 4.121 1042.878 12274.67 0.40% 3.15%
May-96 0.0069 11.74 11.74 7.196 0.000 0.613 1043.491 12250.58 -0.20% 2.95%
Jun-96 0.0444 11.73 11.73 46.331 0.000 3.950 1047.441 12286.48 0.29% 3.25%
Jun-96 0.0088 11.77 11.77 9.217 0.000 0.783 1048.224 12337.59 0.42% 3.68%
Jul-96 0.0449 11.74 11.74 47.065 0.000 4.009 1052.233 12353.21 0.13% 3.81%
Jul-96 0.0107 11.75 11.75 11.259 0.000 0.958 1053.191 12374.99 0.18% 3.99%
Aug-96 0.0455 11.78 11.78 47.920 0.000 4.068 1057.259 12454.51 0.64% 4.66%
Aug-96 0.0107 11.73 11.73 11.313 0.000 0.964 1058.223 12412.96 -0.33% 4.31%
Sep-96 0.0455 11.79 11.79 48.149 0.000 4.084 1062.307 12524.60 0.90% 5.25%
Sep-96 0.0092 11.78 11.78 9.773 0.000 0.830 1063.137 12523.75 -0.01% 5.24%
- ---------------------------------------------------------------------------------------------------------------------------------
</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, where 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 Interest earned 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 30, 1996.
The 30 Day SEC yield calculated below was
- --------------------------------------------------------------------------------
A B C D E
Average
Accrued Shares Offering SEC
Income Expenses Outstanding Price Yield
- --------------------------------------------------------------------------------
Class A 1764.68 266.42 28291.22 12.08 5.32
Class B 767.16 157.33 12305.33 11.79 5.10
Class C 18873.25 2120.80 302382.80 11.80 5.70
Class D 41096.88 3028.10 659002.34 11.79 5.95
- --------------------------------------------------------------------------------
<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, 1996
<PAGE>
GE Tax Exempt Fund A
Total Return for Fiscal Year Ended September 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
A B C D E F G H I J K L
Capital Capital Gains Income Current
Income per Gains Reinvest. Unit Income Units Units Total Account Month YTD
Period Unit Unit Value Value Earned Purchased Purchased Units Value Return Return
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sep-95 11.77 1000.000 11770.00
Oct-95 0.0441 11.87 11.87 44.100 0.000 3.715 1003.715 11914.10 1.22% 1.22%
Nov-95 0.0425 12.05 12.05 42.658 0.000 3.540 1007.255 12137.43 1.87% 3.12%
Dec-95 0.0428 12.14 12.14 43.111 0.000 3.551 1010.806 12271.19 1.10% 4.26%
Jan-96 0.0364 12.06 12.06 36.793 0.000 3.051 1013.857 12227.12 -0.36% 3.88%
Jan-96 0.0088 12.16 12.16 8.922 0.000 0.734 1014.591 12337.43 0.90% 4.82%
Feb-96 0.0351 11.99 11.99 35.612 0.000 2.970 1017.561 12200.56 -1.11% 3.66%
Feb-96 0.0056 11.91 11.91 5.698 0.000 0.478 1018.040 12124.85 -0.62% 3.01%
Mar-96 0.0351 11.71 11.71 35.733 0.000 3.052 1021.091 11956.98 -1.38% 1.59%
Mar-96 0.0083 11.65 11.65 8.475 0.000 0.727 1021.819 11904.19 -0.44% 1.14%
Apr-96 0.0344 11.59 11.59 35.151 0.000 3.033 1024.851 11878.03 -0.22% 0.92%
Apr-96 0.0068 11.56 11.56 6.969 0.000 0.603 1025.454 11854.25 -0.20% 0.72%
May-96 0.0371 11.62 11.62 38.044 0.000 3.274 1028.728 11953.82 0.84% 1.56%
May-96 0.0053 11.49 11.49 5.452 0.000 0.475 1029.203 11825.54 -1.07% 0.47%
Jun-96 0.0325 11.46 11.46 33.449 0.000 2.919 1032.122 11828.11 0.02% 0.49%
Jun-96 0.0065 11.56 11.56 6.709 0.000 0.580 1032.702 11938.03 0.93% 1.43%
Jul-96 0.0336 11.60 11.60 34.699 0.000 2.991 1035.693 12014.04 0.64% 2.07%
Jul-96 0.0087 11.63 11.63 9.011 0.000 0.775 1036.468 12054.12 0.33% 2.41%
Aug-96 0.0354 11.68 11.68 36.691 0.000 3.141 1039.609 12142.64 0.73% 3.17%
Aug-96 0.0078 11.55 11.55 8.109 0.000 0.702 1040.311 12015.60 -1.05% 2.09%
Sep-96 0.0349 11.64 11.64 36.307 0.000 3.119 1043.431 12145.53 1.08% 3.19%
Sep-96 0.0071 11.67 11.67 7.408 0.000 0.635 1044.065 12184.24 0.32% 3.52%
- ------------------------------------------------------------------------------------------------------------------------------------
</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, where 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 1996
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
A B C D E F G H I J K L
Capital Capital Gains Income Current
Income per Gains Reinvest. Unit Income Units Units Total Account Month YTD
Period Unit Unit Value Value Earned Purchased Purchased Units Value Return Return
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sep-95 11.78 1000.000 11780.00
Oct-95 0.0391 11.87 11.87 39.100 0.000 3.294 1003.294 11909.10 1.10% 1.10%
Nov-95 0.0377 12.05 12.05 37.824 0.000 3.139 1006.433 12127.52 1.83% 2.95%
Dec-95 0.0377 12.14 12.14 37.943 0.000 3.125 1009.558 12256.04 1.06% 4.04%
Jan-96 0.0323 12.06 12.06 32.609 0.000 2.704 1012.262 12207.88 -0.39% 3.63%
Jan-96 0.0078 12.17 12.17 7.896 0.000 0.649 1012.911 12327.13 0.98% 4.64%
Feb-96 0.0309 11.99 11.99 31.299 0.000 2.610 1015.521 12176.10 -1.23% 3.36%
Feb-96 0.0049 11.92 11.92 4.976 0.000 0.417 1015.939 12109.99 -0.54% 2.80%
Mar-96 0.0311 11.71 11.71 31.596 0.000 2.698 1018.637 11928.24 -1.50% 1.26%
Mar-96 0.0074 11.66 11.66 7.538 0.000 0.646 1019.284 11884.85 -0.36% 0.89%
Apr-96 0.0305 11.60 11.60 31.088 0.000 2.680 1021.964 11854.78 -0.25% 0.63%
Apr-96 0.0060 11.58 11.58 6.132 0.000 0.530 1022.493 11840.47 -0.12% 0.51%
May-96 0.0329 11.63 11.63 33.640 0.000 2.893 1025.386 11925.23 0.72% 1.23%
May-96 0.0047 11.50 11.50 4.819 0.000 0.419 1025.805 11796.75 -1.08% 0.14%
Jun-96 0.0286 11.47 11.47 29.338 0.000 2.558 1028.362 11795.32 -0.01% 0.13%
Jun-96 0.0057 11.58 11.58 5.862 0.000 0.506 1028.869 11914.30 1.01% 1.14%
Jul-96 0.0297 11.61 11.61 30.557 0.000 2.632 1031.501 11975.72 0.52% 1.66%
Jul-96 0.0077 11.65 11.65 7.943 0.000 0.682 1032.182 12024.93 0.41% 2.08%
Aug-96 0.0315 11.69 11.69 32.514 0.000 2.781 1034.964 12098.73 0.61% 2.71%
Aug-96 0.0069 11.57 11.57 7.141 0.000 0.617 1035.581 11981.67 -0.97% 1.71%
Sep-96 0.0309 11.65 11.65 31.999 0.000 2.747 1038.328 12096.52 0.96% 2.69%
Sep-96 0.0063 11.68 11.68 6.541 0.000 0.560 1038.888 12134.21 0.31% 3.01%
- -----------------------------------------------------------------------------------------------------------------------------------
</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, where 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 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
A B C D E F G H I J K L
Capital Capital Gains Income Current
Income per Gains Reinvest. Unit Income Units Units Total Account Month YTD
Period Unit Unit Value Value Earned Purchased Purchased Units Value Return Return
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sep-95 11.77 1000.000 11770.00
Oct-95 0.0466 11.87 11.87 46.600 0.000 3.926 1003.926 11916.60 1.25% 1.25%
Nov-95 0.0450 12.05 12.05 45.177 0.000 3.749 1007.675 12142.48 1.90% 3.16%
Dec-95 0.0454 12.14 12.14 45.748 0.000 3.768 1011.443 12278.92 1.12% 4.32%
Jan-96 0.0385 12.06 12.06 38.941 0.000 3.229 1014.672 12236.95 -0.34% 3.97%
Jan-96 0.0093 12.16 12.16 9.436 0.000 0.776 1015.448 12347.85 0.91% 4.91%
Feb-96 0.0372 11.99 11.99 37.775 0.000 3.151 1018.599 12213.00 -1.09% 3.76%
Feb-96 0.0059 11.92 11.92 6.010 0.000 0.504 1019.103 12147.71 -0.53% 3.21%
Mar-96 0.0371 11.71 11.71 37.809 0.000 3.229 1022.332 11971.50 -1.45% 1.71%
Mar-96 0.0088 11.65 11.65 8.997 0.000 0.772 1023.104 11919.16 -0.44% 1.27%
Apr-96 0.0362 11.59 11.59 37.036 0.000 3.196 1026.300 11894.81 -0.20% 1.06%
Apr-96 0.0071 11.56 11.56 7.287 0.000 0.630 1026.930 11871.31 -0.20% 0.86%
May-96 0.0390 11.63 11.63 40.050 0.000 3.444 1030.374 11983.24 0.94% 1.81%
May-96 0.0056 11.49 11.49 5.770 0.000 0.502 1030.876 11844.76 -1.16% 0.64%
Jun-96 0.0342 11.46 11.46 35.256 0.000 3.076 1033.952 11849.09 0.04% 0.67%
Jun-96 0.0069 11.57 11.57 7.134 0.000 0.617 1034.569 11969.96 1.02% 1.70%
Jul-96 0.0356 11.60 11.60 36.831 0.000 3.175 1037.744 12037.83 0.57% 2.28%
Jul-96 0.0091 11.63 11.63 9.443 0.000 0.812 1038.556 12078.40 0.34% 2.62%
Aug-96 0.0373 11.68 11.68 38.738 0.000 3.317 1041.872 12169.07 0.75% 3.39%
Aug-96 0.0083 11.56 11.56 8.648 0.000 0.748 1042.621 12052.69 -0.96% 2.40%
Sep-96 0.0366 11.64 11.64 38.160 0.000 3.278 1045.899 12174.26 1.01% 3.43%
Sep-96 0.0075 11.67 11.67 7.844 0.000 0.672 1046.571 12213.48 0.32% 3.77%
- ------------------------------------------------------------------------------------------------------------------------------------
</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, where 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 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
A B C D E F G H I J K L
Capital Capital Gains Income Current
Income per Gains Reinvest. Unit Income Units Units Total Account Month YTD
Period Unit Unit Value Value Earned Purchased Purchased Units Value Return Return
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sep-95 11.78 1000.000 11780.00
Oct-95 0.0492 11.87 11.87 49.200 0.000 4.145 1004.145 11919.20 1.18% 1.18%
Nov-95 0.0474 12.05 12.05 47.596 0.000 3.950 1008.095 12147.54 1.92% 3.12%
Dec-95 0.0480 12.14 12.14 48.389 0.000 3.986 1012.081 12286.66 1.15% 4.30%
Jan-96 0.0405 12.06 12.06 40.989 0.000 3.399 1015.479 12246.68 -0.33% 3.96%
Jan-96 0.0098 12.16 12.16 9.952 0.000 0.818 1016.298 12358.18 0.91% 4.91%
Feb-96 0.0392 11.99 11.99 39.839 0.000 3.323 1019.621 12225.25 -1.08% 3.78%
Feb-96 0.0063 11.92 11.92 6.424 0.000 0.539 1020.159 12160.30 -0.53% 3.23%
Mar-96 0.0391 11.71 11.71 39.888 0.000 3.406 1023.566 11985.96 -1.43% 1.75%
Mar-96 0.0093 11.65 11.65 9.519 0.000 0.817 1024.383 11934.06 -0.43% 1.31%
Apr-96 0.0384 11.59 11.59 39.336 0.000 3.394 1027.777 11911.93 -0.19% 1.12%
Apr-96 0.0076 11.57 11.57 7.811 0.000 0.675 1028.452 11899.19 -0.11% 1.01%
May-96 0.0414 11.63 11.63 42.578 0.000 3.661 1032.113 12003.47 0.88% 1.90%
May-96 0.0060 11.49 11.49 6.193 0.000 0.539 1032.652 11865.17 -1.15% 0.72%
Jun-96 0.0364 11.46 11.46 37.589 0.000 3.280 1035.932 11871.78 0.06% 0.78%
Jun-96 0.0073 11.57 11.57 7.562 0.000 0.654 1036.586 11993.30 1.02% 1.81%
Jul-96 0.0376 11.60 11.60 38.976 0.000 3.360 1039.946 12063.37 0.58% 2.41%
Jul-96 0.0096 11.64 11.64 9.983 0.000 0.858 1040.803 12114.95 0.43% 2.84%
Aug-96 0.0395 11.68 11.68 41.112 0.000 3.520 1044.323 12197.69 0.68% 3.55%
Aug-96 0.0088 11.56 11.56 9.190 0.000 0.795 1045.118 12081.56 -0.95% 2.56%
Sep-96 0.0388 11.64 11.64 40.551 0.000 3.484 1048.602 12205.72 1.03% 3.61%
Sep-96 0.0080 11.67 11.67 8.389 0.000 0.719 1049.321 12245.57 0.33% 3.95%
- ------------------------------------------------------------------------------------------------------------------------------------
</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, where 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 Income Fund
30 Day SEC Yield Calculation
SEC Yield = 2 ((((A-B)/(C*D)+1)^6)-1)
Where:
A = Dividends and Interest earned 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 30, 1996.
The 30 Day SEC yield calculated below was
- --------------------------------------------------------------------------------
A B C D E
Average
Accrued Shares Offering SEC
Income Expenses Outstanding Price Yield
- --------------------------------------------------------------------------------
Class A 2248.03 323.96 45442.33 12.19 4.20
Class B 5578.80 1340.02 112643.62 11.68 3.90
Class C 31824.58 3057.84 643208.27 11.67 4.64
Class D 12504.46 600.65 252708.44 11.67 4.89
- --------------------------------------------------------------------------------
<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 482,868
B) Total Taxable Income 21,487
C) Total Tax Exempt 461,381
D) Tax Exempt Percentage 95.55% 95.55% 95.55% 95.55% 95.55%
E) Taxable Percentage 4.45% 4.45% 4.45% 4.45% 4.45%
F) SEC Yield 4.20% 3.90% 4.64% 4.89%
G) Portion of SEC Yield that is Tax Exempt = D * F 4.01% 3.73% 4.43% 4.67%
H) Portion of SEC Yield that is Taxable = E * F 0.19% 0.17% 0.21% 0.22%
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 6.64% 6.17% 7.34% 7.74%
K) Tax Equivalent Yield for Taxable Portion = H 0.19% 0.17% 0.21% 0.22%
L) Total Tax Equivalent Yield = J + K 6.83% 6.34% 7.55% 7.95%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<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, 1996
<PAGE>
GE Money Market
Total Return for Fiscal Year Ended September 1996
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<CAPTION>
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A B C D E F G H I J K L
Capital Capital Gains Income Current
Income per Gains Reinvest. Unit Income Units Units Total Account Month YTD
Period Unit Unit Value Value Earned Purchased Purchased Units Value Return Return
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sep-95 1.00 1000.000 1000.00
Oct-95 0.0045 1.00 1.00 4.523 0.000 4.523 1004.523 1004.52 0.4523% 0.45%
Nov-95 0.0044 1.00 1.00 4.381 0.000 4.381 1008.904 1008.90 0.4361% 0.89%
Dec-95 0.0045 1.00 1.00 4.514 0.000 4.514 1013.418 1013.42 0.4474% 1.34%
Jan-96 0.0035 1.00 1.00 3.593 0.000 3.593 1017.011 1017.01 0.3546% 1.70%
Jan-96 0.0008 1.00 1.00 0.853 0.000 0.853 1017.864 1017.86 0.0839% 1.79%
Feb-96 0.0035 1.00 1.00 3.526 0.000 3.526 1021.390 1021.39 0.3464% 2.14%
Feb-96 0.0005 1.00 1.00 0.557 0.000 0.557 1021.946 1021.95 0.0545% 2.19%
Mar-96 0.0034 1.00 1.00 3.445 0.000 3.445 1025.391 1025.39 0.3371% 2.54%
Mar-96 0.0008 1.00 1.00 0.819 0.000 0.819 1026.211 1026.21 0.0799% 2.62%
Apr-96 0.0033 1.00 1.00 3.414 0.000 3.414 1029.625 1029.62 0.3327% 2.96%
Apr-96 0.0007 1.00 1.00 0.686 0.000 0.686 1030.311 1030.31 0.0666% 3.03%
May-96 0.0036 1.00 1.00 3.712 0.000 3.712 1034.023 1034.02 0.3603% 3.40%
May-96 0.0005 1.00 1.00 0.554 0.000 0.554 1034.577 1034.58 0.0536% 3.46%
Jun-96 0.0034 1.00 1.00 3.497 0.000 3.497 1038.075 1038.07 0.3380% 3.81%
Jun-96 0.0007 1.00 1.00 0.696 0.000 0.696 1038.770 1038.77 0.0670% 3.88%
Jul-96 0.0034 1.00 1.00 3.500 0.000 3.500 1042.270 1042.27 0.3369% 4.23%
Jul-96 0.0008 1.00 1.00 0.844 0.000 0.844 1043.114 1043.11 0.0810% 4.31%
Aug-96 0.0034 1.00 1.00 3.548 0.000 3.548 1046.662 1046.66 0.3401% 4.67%
Aug-96 0.0008 1.00 1.00 0.857 0.000 0.857 1047.519 1047.52 0.0819% 4.75%
Sep-96 0.0034 1.00 1.00 3.572 0.000 3.572 1051.091 1051.09 0.3410% 5.11%
Sep-96 0.0007 1.00 1.00 0.719 0.000 0.719 1051.810 1051.81 0.0684% 5.18%
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</TABLE>
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Annual return for one year equals:
(Ending Account Value - Beginning Account Value)/Beginning Account Value
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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, where 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
7 Day Yield and Effective 7 Day Yield as of September 30, 1996.
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Daily Current Effective
Daily Shares Income Rate 7 Day 7 Day
Date Income Outstanding Per Share Yield Yield
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24-Sep 11,321.88 82,578,791.08 0.000137104
25-Sep 11,555.87 84,118,435.54 0.000137376
26-Sep 11,562.32 84,957,771.34 0.000136095
27-Sep 11,550.24 84,584,319.24 0.000136553
28-Sep 11,550.24 84,584,319.24 0.000136553
29-Sep 11,550.24 84,584,319.24 0.000136553
30-Sep 11,772.04 85,324,069.40 0.000137969 5.00% 5.12%
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0.000958203
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1) Input numbers for columns A,B,C
2) D = B/C
3) E = ((Sum of Column C)/7 Days)*365 Days
4) F = ((1+ Sum of Column C)*(365/7)) -1
<PAGE>
GE Tax Exempt Fund - Equivalent Taxable Yield
<TABLE>
<CAPTION>
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Class A Class B Class C Class D
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<S> <C> <C> <C> <C> <C>
A) Total Income 482,868
B) Total Taxable Income 21,487
C) Total Tax Exempt 461,381
D) Tax Exempt Percentage = C/A 95.55%
E) Taxable Percent = B/A 4.45%
F) SEC Yield 4.20% 3.90% 4.64% 4.89%
G) Portion of Yield that is Tax Exempt = D * F 4.01% 3.73% 4.43% 4.67%
H) Portion of Yield that is Taxable = E * F 0.19% 0.17% 0.21% 0.22%
I) Effective Tax Rate (1-.396) 60.40%
J) Tax Equivalent Yield for Tax Exempt Portion = G / I 6.64% 6.17% 7.34% 7.74%
K) Tax Equivalent Yield for Taxable Portion = H 0.19% 0.17% 0.21% 0.22%
L) Total Tax Equivalent Yield = J + K 6.83% 6.34% 7.55% 7.95%
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</TABLE>
