<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 29, 1997
REGISTRATION NO. 333-28723
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
/X/ PRE-EFFECTIVE AMENDMENT NO. 1 / / POST-EFFECTIVE AMENDMENT NO.
------------------------
GE FUNDS
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
------------------------
AREA CODE AND TELEPHONE NUMBER: (203) 326-4040
3003 SUMMER STREET
STAMFORD, CONNECTICUT 06905
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
------------------------
MATTHEW J. SIMPSON, ESQ.
VICE PRESIDENT, ASSOCIATE GENERAL COUNSEL
AND ASSISTANT SECRETARY
GE INVESTMENT MANAGEMENT INCORPORATED
3003 SUMMER STREET
STAMFORD, CONNECTICUT 06905
(NAME AND ADDRESS OF AGENT FOR SERVICE)
------------------------
Copies to:
<TABLE>
<S> <C>
BURTON M. LEIBERT, ESQ. GEOFFREY R. T. KENYON, ESQ.
WILLKIE FARR & GALLAGHER GOODWIN, PROCTER & HOAR LLP
ONE CITICORP CENTER EXCHANGE PLACE
153 EAST 53RD STREET BOSTON, MASSACHUSETTS 02109-2881
NEW YORK, NEW YORK 10022
</TABLE>
------------------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as possible after the
effective date of this Registration Statement.
------------------------
Registrant has registered an indefinite amount of securities pursuant to a
declaration filed pursuant to Rule 24f-2 under the Investment Company Act of
1940, as amended; accordingly, no fee is payable herewith. Registrant's Rule
24f-2 Notice for the fiscal period ended September 30, 1996 was electronically
filed with the Securities and Exchange Commission on November 19, 1996.
------------------------
REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
GE FUNDS
FORM N-14 CROSS REFERENCE SHEET
PURSUANT TO RULE 481(A) UNDER THE SECURITIES ACT OF 1933, AS AMENDED
<TABLE>
<CAPTION>
PROSPECTUS/PROXY
PART A ITEM NO. AND CAPTION STATEMENT CAPTION
---------------------------------- -----------------------------------
<S> <C> <C>
Item 1. Beginning of Registration
Statement and Outside Front
Cover Page of Prospectus........ Cover Page; Cross Reference Sheet
Item 2. Beginning and Outside Back Cover
Page of Prospectus.............. Table of Contents
Item 3. Fee Table, Synopsis Information,
and Risk Factors................ Fee Table; Summary; Risk Factors;
Comparison of Investment Objectives
and Policies
Item 4. Information About the
Transaction..................... Summary; Reasons for the
Reorganization; Information About
the Reorganization; Information
on Shareholders' Rights; Exhibit
A (Agreement and Plan of
Reorganization)
Item 5. Information About the
Registrant...................... Cover Page; Summary; Information
About the Reorganization;
Comparison of Investment
Objectives and Policies;
Information on Shareholders'
Rights; Information About the
Acquiring Funds; Additional
Information About Investors Trust
and GE Funds; Prospectus of GE
Funds dated July 25, 1997
Item 6. Information About the Company
Being Acquired.................. Summary; Information About the
Reorganization; Comparison of
Investment Objectives and
Policies; Information on
Shareholders' Rights; Information
About the Acquired Funds;
Additional Information About
Investors Trust and GE Funds
Item 7. Voting Information................ Summary; Information About the
Reorganization; Information on
Shareholders' Rights; Voting
Information
Item 8. Interest of Certain Persons and
Experts......................... Financial Statements and Experts;
Legal Matters
Item 9. Additional Information Required
for Reoffering By Persons Deemed
to be Underwriters.............. Not Applicable
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ADDITIONAL
PART B ITEM NO. AND CAPTION INFORMATION CAPTION
---------------------------------- -----------------------------------
<S> <C> <C>
Item 10. Cover Page........................ Cover Page
Item 11. Table of Contents................. Cover Page
Item 12. Additional Information About the
Registrant...................... Cover Page; Statement of
Additional Information of GE
Funds dated July 25, 1997
Item 13. Additional Information About the
Company Being Acquired.......... Not Applicable
Item 14. Financial Statements.............. Annual Report of Investors Trust;
Semi-Annual Report of Investors
Trust; Annual Report of GE Funds;
Semi-Annual Report of GE Funds;
Pro Forma Financial Statements
<CAPTION>
PART C ITEM NO. AND CAPTION OTHER INFORMATION CAPTION
---------------------------------- -----------------------------------
<S> <C> <C>
Item 15. Indemnification................... Incorporated by reference to Part A
caption 'Information on
Shareholders' Rights Liability of
Trustees'
Item 16. Exhibits.......................... Exhibits
Item 17. Undertakings...................... Undertakings
</TABLE>
<PAGE>
GE FUNDS
CONTENTS OF
REGISTRATION STATEMENT
This Registration Statement contains the following pages and documents:
Front Cover
Contents Page
Cross Reference Sheet
Letter to Shareholders
Notes of Special Meeting
Part A - Prospectus/Proxy Statement
Part B - Statement of Additional Information
Part C - Other Information
Signature Page
Exhibits
<PAGE>
INVESTORS
TRUST(Trademark) M U T U A L TWO UNION SQUARE, P.O. BOX 490
F U N D S SEATTLE, WASHINGTON 98111-0490
1-800-426-5520
A SPECIAL NOTICE TO SHAREHOLDERS OF
INVESTORS TRUST ADJUSTABLE RATE FUND
INVESTORS TRUST GOVERNMENT FUND
INVESTORS TRUST TAX FREE FUND
INVESTORS TRUST VALUE FUND
INVESTORS TRUST GROWTH FUND
YOUR VOTE IS IMPORTANT
Dear Shareholder:
The Board of Trustees of Investors Trust has recently reviewed and
unanimously approved a proposal for an agreement and plan of reorganization
providing for the reorganization of Investors Trust Adjustable Rate Fund,
Investors Trust Government Fund, Investors Trust Tax Free Fund, Investors Trust
Value Fund and Investors Trust Growth Fund (each, an 'IT Fund', and
collectively, the 'IT Funds'), each a separate investment portfolio of Investors
Trust. We judge the proposal to be in the best interests of each IT Fund's
shareholders.
Under the terms of the proposed reorganization, GE Funds will acquire all
or substantially all of the assets of the IT Funds, in exchange for shares of GE
Funds and the assumption by GE Funds of certain liabilities of the IT Funds, as
follows:
o Shareholders of Investors Trust Adjustable Rate Fund will become
shareholders of GE Short-Term Government Fund.
o Shareholders of Investors Trust Government Fund will become
shareholders of a newly created series of GE Funds, to be known as GE
Government Securities Fund.
o Shareholders of Investors Trust Tax Free Fund will become
shareholders of GE Tax-Exempt Fund.
o Shareholders of Investors Trust Value Fund will become shareholders
of a newly created series of GE Funds, to be known as GE Value Equity Fund.
o Shareholders of Investors Trust Growth Fund will become shareholders
of GE Mid-Cap Growth Fund.
After the reorganization, each IT Fund would be liquidated and you would
become a shareholder of the respective GE Fund having received shares with an
aggregate value equivalent to the aggregate net asset value of your investment
in the IT Fund at the time of the transaction. No sales charge would be imposed
in the reorganization. It will be a condition of the reorganization that it will
be, in the opinion of counsel to GE Funds, free from federal income taxes to the
respective IT Fund and its shareholders and the respective GE Fund.
Each series of GE Funds will be the surviving fund and GE Investment
Management Incorporated, a wholly-owned subsidiary of General Electric Company
and GE Funds' current investment manager, will continue to serve as its
investment manager. GE Tax-Exempt Fund, however, has proposed to its
shareholders that Brown Brothers Harriman & Co., the current sub-investment
adviser of the IT Tax Free Fund, be appointed as its sub-investment adviser and
that certain investment policies and restrictions be amended to conform to those
of IT Tax Free Fund. The reorganization of IT Tax Free Fund will not take place
unless these proposals are approved by GE Tax-Exempt Fund's shareholders.
<PAGE>
As you may recall, GNA Capital Management, Inc., the investment adviser of
the IT Funds, and GNA Distributors, Inc., the distributor of the IT Funds, have
been indirect subsidiaries of General Electric Company since 1993. The proposal
to reorganize the IT Funds was developed in light of a decision to consolidate
the mutual fund management and distribution services of General Electric
Company's subsidiaries. In unanimously approving the proposed reorganization of
each IT Fund, the Board of Trustees of Investors Trust considered a number of
factors including the following:
o Immediately following the reorganization, most shareholders will
benefit from lower management fees and total expense ratios. The other
shareholders will experience identical fees, except for Class A
shareholders of the IT Government Fund and IT Growth Fund.
o The reorganization may result in increased economic efficiencies
through greater economies of scale.
o The reorganization will greatly expand the number and variety of
funds available to shareholders.
SPECIAL MEETING OF SHAREHOLDERS: YOUR VOTE IS IMPORTANT
To consider the proposed reorganization, we have called a Special Meeting
of Shareholders to be held on September 15, 1997. WE STRONGLY INVITE YOUR
PARTICIPATION BY ASKING YOU TO REVIEW, COMPLETE AND RETURN YOUR PROXY PROMPTLY.
Detailed information about the proposed reorganization is described in the
enclosed proxy statement. On behalf of the Board of Trustees, I thank you for
your participation as a shareholder and urge you to please exercise your right
to vote by completing, dating and signing the enclosed proxy card. A
self-addressed, postage-paid envelope has been enclosed for your convenience.
If you have any questions regarding the proposed transaction, please feel
free to call 1-800-493-3042 where an individual will be pleased to assist you.
IT IS VERY IMPORTANT THAT YOUR VOTING INSTRUCTIONS BE RECEIVED PROMPTLY.
Sincerely,
/s/ Geoffrey S. Stiff
--------------------------------------
Geoffrey S. Stiff
President and Chief Executive Officer
July 30, 1997
<PAGE>
INVESTORS TRUST
TWO UNION SQUARE
601 UNION STREET
SUITE 5600
SEATTLE, WASHINGTON 98101-2336
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 15, 1997
Notice is hereby given that a Special Meeting of Shareholders (the
'Meeting') of Investors Trust Adjustable Rate Fund, Investors Trust Government
Fund, Investors Trust Tax Free Fund, Investors Trust Value Fund and Investors
Trust Growth Fund, each a series of Investors Trust (each, an 'IT Fund' or an
'Acquired Fund'), will be held at the Tara Stamford Hotel, 2701 Summer Street,
Stamford, Connecticut 06905, on September 15, 1997, commencing at 2:00 p.m.
Eastern Time for the following purposes:
1. To consider and vote upon a proposal to approve or disapprove an
Agreement and Plan of Reorganization dated as of July 24, 1997 (the 'Plan')
and each of the transactions contemplated thereby providing for (i) the
acquisition of all or substantially all of the assets of each IT Fund by a
corresponding series of GE Funds (each an 'Acquiring Fund'), in exchange
for shares of the corresponding class of such Acquiring Fund and the
assumption by such Acquiring Fund of certain liabilities of such Acquired
Fund, and (ii) the distribution of shares of each Acquiring Fund to
shareholders of such Acquired Fund in liquidation of such Acquired Fund and
(iii) the subsequent termination of the Acquired Funds.
2. To transact such other business as may properly come before the
Meeting or any adjournment or adjournments thereof.
THE BOARD OF TRUSTEES OF INVESTORS TRUST UNANIMOUSLY RECOMMENDS
SHAREHOLDERS OF EACH IT FUND VOTE TO APPROVE THE PLAN.
The Board of Trustees of Investors Trust has fixed the close of business on
July 18, 1997 as the record date for the determination of shareholders of the
Acquired Funds entitled to notice of and to vote at the Meeting and any
adjournment or adjournments thereof.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY.
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE SPECIAL MEETING ARE URGED TO
SIGN AND RETURN WITHOUT DELAY THE ENCLOSED PROXY CARD IN THE ENCLOSED ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES, SO THAT THEIR SHARES
MAY BE REPRESENTED AT THE MEETING. INSTRUCTIONS FOR THE PROPER EXECUTION OF
PROXY CARDS ARE SET FORTH ON THE FOLLOWING PAGE. PROXIES MAY BE REVOKED AT ANY
TIME BEFORE THEY ARE EXERCISED BY THE SUBSEQUENT EXECUTION AND SUBMISSION OF A
REVISED PROXY, BY GIVING WRITTEN NOTICE OF REVOCATION TO INVESTORS TRUST AT ANY
TIME BEFORE THE PROXY IS EXERCISED OR BY VOTING IN PERSON AT THE MEETING.
By Order of the Board of Trustees
Edward J. Wiles, Jr.
Secretary
July 30, 1997
YOUR PROMPT ATTENTION TO THE ENCLOSED PROXY WILL HELP TO AVOID THE EXPENSE OF
FURTHER SOLICITATION.
<PAGE>
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance to
you and avoid the time and expense involved in validating your vote if you fail
to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party signing
should conform exactly to the name shown in the registration on the
proxy card.
3. All Other Accounts: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of
registration. For example:
<TABLE>
<CAPTION>
REGISTRATION VALID SIGNATURES
- ---------------------------------------- ----------------------------
<S> <C>
CORPORATE ACCOUNTS
(1) ABC Corp.......................... ABC Corp.
(2) ABC Corp.......................... John Doe, Treasurer
(3) ABC Corp.
c/o John Doe, Treasurer............ John Doe
(4) ABC Corp. Profit Sharing Plan..... John Doe, Trustee
TRUST ACCOUNTS
(1) ABC Trust......................... Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee
u/t/d 12/28/78..................... Jane B. Doe
CUSTODIAL OR ESTATE ACCOUNTS
(1) John B. Smith, Cust.
f/b/o John B. Smith, Jr. UGMA...... John B. Smith
(2) John B. Smith..................... John B. Smith, Jr., Executor
</TABLE>
<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.
SUBJECT TO COMPLETION, DATED JULY 29, 1997
COMBINED PROSPECTUS/PROXY STATEMENT DATED JULY 30, 1997
ACQUISITION OF THE ASSETS OF
INVESTORS TRUST ADJUSTABLE RATE FUND
INVESTORS TRUST GOVERNMENT FUND
INVESTORS TRUST TAX FREE FUND
INVESTORS TRUST VALUE FUND
INVESTORS TRUST GROWTH FUND
EACH A SEPARATE SERIES OF
INVESTORS TRUST
TWO UNION SQUARE
601 UNION STREET
SUITE 5600
SEATTLE, WASHINGTON 98101-2336
(800) 656-6626
BY AND IN EXCHANGE FOR SHARES OF
GE SHORT-TERM GOVERNMENT FUND
GE GOVERNMENT SECURITIES FUND
GE TAX-EXEMPT FUND
GE VALUE EQUITY FUND
GE MID-CAP GROWTH FUND
EACH A SEPARATE SERIES OF
GE FUNDS
3003 SUMMER STREET
STAMFORD, CONNECTICUT 06905
(800) 493-3042
This Combined Prospectus/Proxy Statement is being furnished to shareholders
of Investors Trust Adjustable Rate Fund, Investors Trust Government Fund,
Investors Trust Tax Free Fund, Investors Trust Value Fund and Investors Trust
Growth Fund (each, an 'IT Fund' or 'Acquired Fund'), each a separate series of
Investors Trust, in connection with the solicitation of proxies by the Board of
Trustees of Investors Trust for a proposed plan of reorganization to be
submitted to shareholders of the Acquired Funds for consideration at a Special
Meeting of Shareholders to be held on September 15, 1997 at 2:00 p.m.
Eastern Time (the 'Meeting'), at the Tara Stamford Hotel, 2701 Summer Street,
Stamford, Connecticut 06905, or any adjournment or adjournments thereof.
The Plan of Reorganization (the 'Plan') provides for all or substantially
all of the assets of each of the Acquired Funds to be acquired by a
corresponding series of GE Funds (each, an 'Acquiring Fund', and collectively,
the 'Acquiring Funds'), in exchange for shares of the corresponding class of
such Acquiring Fund and the assumption by such Acquiring Fund of scheduled
liabilities of such Acquired Fund. Each proposed transaction as to an IT Fund is
hereinafter referred to as a 'Reorganization' and the transactions are
collectively referred to as the 'Reorganizations'. Shares of the corresponding
class of each Acquiring Fund will be distributed to shareholders of the Acquired
Fund in liquidation of the Acquired Fund. As a result, upon completion of each
Reorganization, each Acquired Fund will cease to operate and the shareholders
will be shareholders of the corresponding Acquiring Fund. Each Reorganization is
a separate transaction and is not contingent upon any other Reorganization. As a
result of the Reorganization, shareholders of each Acquired Fund will receive
that number of shares of the corresponding class of the Acquiring Fund having an
aggregate value equal to the aggregate net asset value of such shareholder's
shares of the Acquired Fund of the respective class immediately prior to the
Reorganization. Holders of Class A shares of the Acquired Fund will receive
Class A shares of the Acquiring Fund, and no sales charge will be imposed on the
Class A shares of the Acquiring Fund received by the Acquired Fund Class A
shareholders. Holders of Class B shares of the Acquired Fund will receive Class
B shares of the Acquiring Fund. No contingent deferred sales charge ('CDSC')
will be imposed on Class B shares of an Acquired Fund upon consummation of the
Reorganization. However, the CDSC schedule
<PAGE>
which is applicable to Class B shares of an Acquired Fund will continue to apply
to Class B shares of an Acquiring Fund received in the Reorganization and, in
calculating the applicable CDSC payable upon the subsequent redemption of those
Class B shares and the timing of the automatic conversion of Class B shares into
Class A shares of GE Funds, the period during which an Acquired Fund shareholder
held Class B shares of the Acquired Fund will be counted. Each Reorganization is
structured to be tax-free for federal income tax purposes to each Acquiring
Fund, each Acquired Fund, and their respective shareholders. The Acquired Funds
currently neither offer nor have outstanding shares of any class, other than
Class A and Class B shares. In addition to Class A and Class B shares, the
Acquiring Funds currently offer and have outstanding Class C and Class D shares.
Class C shares are generally offered only to employees and retirees of GE or its
affiliates and their family members and Class D shares are generally offered
only to institutional investors.
Each Acquired Fund is a separate diversified investment portfolio of
Investors Trust, an open-end management investment company. Investors Trust
Adjustable Rate Fund seeks to produce a high level of current income consistent
with limiting fluctuations in net asset value of Fund shares by investing
primarily in adjustable rate securities. Investors Trust Government Fund seeks
to produce a high level of current income consistent with safety of principal by
investing primarily in Government Securities (as defined herein) having
remaining maturities of one year or more. Investors Trust Tax Free Fund seeks to
produce as high a level of income exempt from federal income tax as is
consistent with preservation of capital by investing substantially all of its
assets in tax-exempt debt obligations. Investors Trust Value Fund seeks to
provide long-term growth of capital and an above-average level of dividend
income by investing primarily in equity securities. Investors Trust Growth Fund
seeks to provide long-term growth of capital by investing substantially all of
its assets in common stocks.
Each Acquiring Fund is a separate diversified investment portfolio of GE
Funds, an open-end management investment company. GE Short-Term Government Fund
seeks a high level of income consistent with prudent investment management and
preservation of capital by investing primarily in Government Securities (as
defined herein). GE Government Securities Fund seeks a high level of current
income consistent with safety of principal by investing primarily in Government
Securities. GE Tax-Exempt Fund currently seeks 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 herein). (Subject to the approval of the current GE Tax-Exempt Fund
shareholders, this Fund's objective will be changed to one that seeks to produce
as high a level of income exempt from federal income tax as is consistent with
preservation of capital by investing substantially all of its assets in
tax-exempt debt obligations, which conforms exactly to the investment objective
of Investors Trust Tax Free Fund.) GE Value Equity Fund seeks long-term growth
of capital and future income by investing primarily in the equity securities of
undervalued companies with large-sized market capitalizations. GE Mid-Cap Growth
Fund seeks long-term growth of capital by investing primarily in equity
securities of companies with medium-sized market capitalizations that have the
potential for above-average growth.
GE Investment Management Incorporated ('GEIM') is the investment manager of
each of the Acquiring Funds and will continue to serve as such after the
Reorganization. Concurrently with the solicitation of this Combined
Prospectus/Proxy, existing shareholders of GE Tax-Exempt Fund are being asked to
approve the appointment of Brown Brothers Harriman & Co. ('Brown Brothers'), the
current sub-adviser to the IT Tax Free Fund, as its sub-investment adviser and
the amendment of certain investment policies and restrictions to conform to
those of Investors Trust Tax Free Fund. In addition to the approval of its own
shareholders, the consummation of the Reorganization of Investors Trust Tax Free
Fund is contingent upon the approval of these proposals by shareholders of GE
Tax-Exempt Fund.
The investment policies of the Acquiring Funds are substantially similar to
those of the Acquired Funds. Certain differences in the investment policies of
the Acquiring Funds and the Acquired Funds, however, are described under
'Comparison of Investment Objectives and Policies' in this Combined
Prospectus/Proxy Statement.
This Combined Prospectus/Proxy Statement, which should be retained for
future reference, sets forth concisely the information that an Acquired Fund
shareholder should know before voting on the Plan. Certain relevant documents
listed below, which have been filed with the Securities and Exchange Commission
('SEC'), are incorporated in whole or in part by reference. This Combined
Prospectus/Proxy Statement is expected to be first sent to shareholders on or
about July 31, 1997. A Statement of Additional Information dated July 30, 1997,
2
<PAGE>
relating to this Combined Prospectus/Proxy Statement and the Reorganizations,
has been filed with the SEC and is incorporated by reference into this Combined
Prospectus/Proxy Statement. A copy of such Statement of Additional Information
is available upon request and without charge by writing to the Acquired Funds at
the address listed on the cover page of this Combined Prospectus/Proxy Statement
or by calling 800-656-6626.
This Combined Prospectus/Proxy Statement is accompanied by a prospectus of
GE Funds dated July 25, 1997, which is incorporated herein by reference. This
prospectus has been prepared solely for distribution to record shareholders of
the Acquired Funds in connection with this Combined Prospectus/Proxy Statement
and not for distribution to the general public. GE Funds has registered with the
SEC two new series, GE Government Securities Fund and GE Value Equity Fund, and
disclosure concerning these Funds is not contained in the current GE Funds'
prospectus dated December 30, 1996. It is anticipated that these new Funds will
not commence operations until the completion of the respective Reorganizations.
Similarly, the current GE Funds' prospectus does not contain disclosure for GE
Mid-Cap Growth Fund because this Fund, although previously formed, will not
commence operations until the completion of the Reorganization of Investors
Trust Growth Fund.
This Combined Prospectus/Proxy Statement is IT Funds' proxy statement for
the Meeting and GE Funds' prospectus for the shares of the Acquiring Funds that
have been registered with the SEC and are to be issued in connection with the
respective Reorganization. Information concerning each Acquired Fund contained
in the Prospectus of each Acquired Fund dated March 1, 1997, as supplemented by
a Prospectus Supplement dated May 16, 1997, is incorporated in its entirety by
reference. Also accompanying this Combined Prospectus/Proxy Statement as Exhibit
A is a copy of the Agreement and Plan of Reorganization (the 'Plan') for the
proposed transaction.
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 COMBINED PROSPECTUS/PROXY STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS COMBINED PROSPECTUS/PROXY
STATEMENT AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY REFERENCE AND,
IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE FUNDS.
3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Additional Materials......................................... 4
Fee Tables................................................... 5
Summary...................................................... 12
Risk Factors................................................. 17
Reasons for the Reorganization............................... 17
Information About the Reorganization......................... 19
Information About the Acquiring Funds........................ 27
Information About the Acquired Funds......................... 34
Comparison of Investment Objectives and Policies............. 45
Information on Shareholders' Rights.......................... 54
Additional Information About Investors Trust and GE Funds.... 55
Other Business............................................... 56
Voting Information........................................... 56
Financial Statements and Experts............................. 57
Legal Matters................................................ 58
Exhibit A: Agreement and Plan of Reorganization.............. A-1
</TABLE>
ADDITIONAL MATERIALS
The following additional materials, which have been incorporated by
reference into the Statement of Additional Information dated July 30, 1997
relating to this Combined Prospectus/Proxy Statement and the Reorganization,
will be sent to all shareholders requesting a copy of such Statement of
Additional Information.
1. Statement of Additional Information of GE Funds dated July 25,
1997.
2. Annual Report of GE Funds for the fiscal year ended September 30,
1996.
3. Semi-Annual Report of GE Funds (unaudited) for the six-month period
ended March 31, 1997.
4. Annual Report of Investors Trust for the fiscal year ended October
31, 1996.
5. Semi-Annual Report of Investors Trust (unaudited) for the six-month
period ended April 30, 1997.
6. Pro Forma Financial Statements (unaudited).
4
<PAGE>
FEE TABLES
Following are tables showing costs and expenses of each Acquired Fund and
the Acquiring Fund and the pro forma costs and expenses expected to be incurred
by each Acquiring Fund after giving effect to the Reorganization, each based on
the maximum sales charge or maximum CDSC that may be incurred at the time of
purchase or redemption.
CLASS A SHARES
<TABLE>
<CAPTION>
IT ADJUSTABLE GE SHORT-TERM
RATE GOVERNMENT
FUND FUND PRO FORMA***
---------------- ------------- ------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on
purchases (as a percentage of
offering price).................... 4.50% 2.50% 2.50%
Maximum CDSC (as a percentage of
original cost or redemption
proceeds, whichever is lower)*..... 1.00% 1.00% 1.00%
ANNUAL OPERATING EXPENSES**
(as a percentage of average net
assets)
Management fees+...................... 0.40% 0.30% 0.30%
12b-1 fees............................ 0.15 0.50 0.50
Other expenses (after expense
reimbursements)****................ 0.40 0.15 0.15
----- ----- -----
TOTAL OPERATING EXPENSES (after expense
reimbursements)****................... 0.95% 0.95% 0.95%
----- ----- -----
----- ----- -----
</TABLE>
<TABLE>
<CAPTION>
IT GE
GOVERNMENT GOVERNMENT
FUND SECURITIES FUND PRO FORMA***
---------- --------------- ------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on
purchases (as a percentage of
offering price).................... 4.50% 4.25% 4.25%
Maximum CDSC (as a percentage of
original cost or redemption
proceeds, whichever is lower)*..... 1.00% 1.00% 1.00%
ANNUAL OPERATING EXPENSES**
(as a percentage of average net
assets)
Management fees+...................... 0.63% 0.40% 0.40%
12b-1 fees............................ 0.12 0.50 0.50
Other expenses (after expense
reimbursements)****................ 0.28 0.20 0.20
----- ----- -----
TOTAL OPERATING EXPENSES (after expense
reimbursements)****................... 1.03% 1.10% 1.10%
----- ----- -----
----- ----- -----
</TABLE>
<TABLE>
<CAPTION>
IT TAX FREE GE TAX-
FUND EXEMPT FUND PRO FORMA***
----------- ----------- ------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on
purchases (as a percentage of
offering price).................... 4.50% 4.25% 4.25%
Maximum CDSC (as a percentage of
original cost or redemption
proceeds, whichever is lower)*..... 1.00% 1.00% 1.00%
ANNUAL OPERATING EXPENSES**
(as a percentage of average net
assets)
Management fees+...................... 0.58% 0.00%++ 0.35%++
12b-1 fees............................ 0.18 0.50 0.50
Other expenses (after expense
reimbursements)****................ 0.39 0.25 0.25
---- ----- -----
TOTAL OPERATING EXPENSES (after expense
reimbursements)****................... 1.15%++ 0.75%++ 1.10%++
---- ----- -----
---- ----- -----
</TABLE>
5
<PAGE>
(CLASS A SHARES, CONTINUED)
<TABLE>
<CAPTION>
IT VALUE GE VALUE
FUND EQUITY FUND PRO FORMA***
-------- ----------- ------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on
purchases (as a percentage of
offering price).................... 4.50% 4.75% 4.75%
Maximum CDSC (as a percentage of
original cost or redemption
proceeds, whichever is lower)*..... 1.00% 1.00% 1.00%
ANNUAL OPERATING EXPENSES**
(as a percentage of average net
assets)
Management fees+...................... 0.80% 0.55% 0.55%
12b-1 fees............................ 0.07 0.50 0.50
Other expenses (after expense
reimbursements)****................ 0.48 0.30 0.30
---- ----- -----
TOTAL OPERATING EXPENSES (after expense
reimbursements)****................... 1.35% 1.35% 1.35%
---- ----- -----
---- ----- -----
</TABLE>
<TABLE>
<CAPTION>
IT GROWTH GE MID-CAP
FUND GROWTH FUND PRO FORMA***
--------- ----------- ------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on
purchases (as a percentage of
offering price).................... 4.50% 4.75% 4.75%
Maximum CDSC (as a percentage of
original cost or redemption
proceeds, whichever is lower)*..... 1.00% 1.00% 1.00%
ANNUAL OPERATING EXPENSES**
(as a percentage of average net
assets)
Management fees+...................... 0.80% 0.60% 0.60%
12b-1 fees............................ 0.10 0.50 0.50
Other expenses (after expense
reimbursements)****................ 0.45 0.30 0.30
---- ----- -----
TOTAL OPERATING EXPENSES (after expense
reimbursements)****................... 1.35% 1.40% 1.40%
---- ----- -----
---- ----- -----
</TABLE>
6
<PAGE>
CLASS B SHARES
<TABLE>
<CAPTION>
IT ADJUSTABLE GE SHORT-TERM
RATE GOVERNMENT
FUND FUND PRO FORMA***
---------------- ------------- ------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on
purchases (as a percentage of
offering price).................... None None None
Maximum CDSC (as a percentage of
original cost or redemption
proceeds, whichever is lower)*..... 5.00% 3.00% 3.00%
ANNUAL OPERATING EXPENSES**
(as a percentage of average net
assets)
Management fees+...................... 0.40% 0.30% 0.30%
12b-1 fees............................ 0.90 0.85 0.85
Other expenses (after expense
reimbursements) ****............... 0.40 0.15 0.15
---- ---- ----
TOTAL OPERATING EXPENSES (after expense
reimbursements)****................... 1.70% 1.30% 1.30%
---- ---- ----
---- ---- ----
</TABLE>
<TABLE>
<CAPTION>
IT GE
GOVERNMENT GOVERNMENT
FUND SECURITIES FUND PRO FORMA***
------------- --------------- ------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on
purchases (as a percentage of
offering price).................... None None None
Maximum CDSC (as a percentage of
original cost or redemption
proceeds, whichever is lower)*..... 5.00% 3.00% 3.00%
ANNUAL OPERATING EXPENSES**
(as a percentage of average net
assets)
Management fees+...................... 0.63% 0.40% 0.40%
12b-1 fees............................ 0.87 1.00 1.00
Other expenses (after expense
reimbursements)****................ 0.28 0.14 0.14
---- ---- ----
TOTAL OPERATING EXPENSES (after expense
reimbursements)****................... 1.78% 1.54% 1.54%
---- ---- ----
---- ---- ----
</TABLE>
<TABLE>
<CAPTION>
IT TAX FREE GE TAX-
FUND EXEMPT FUND PRO FORMA***
------------- --------------- ------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on
purchases (as a
percentage of offering price)...... None None None
Maximum CDSC (as a percentage of
original cost or redemption
proceeds, whichever is lower)*..... 5.00% 3.00% 3.00%
ANNUAL OPERATING EXPENSES**
(as a percentage of average net
assets)
Management fees+...................... 0.58 0.00%++ 0.35%++
12b-1 fees............................ 0.93 1.00 1.00
Other expenses (after expense
reimbursements)****................ 0.39 0.25 0.25
---- ---- ----
TOTAL OPERATING EXPENSES (after expense
reimbursements)****................... 1.90%++ 1.25%++ 1.60%++
---- ---- ----
---- ---- ----
</TABLE>
7
<PAGE>
(CLASS B SHARES, CONTINUED)
<TABLE>
<CAPTION>
GE VALUE
IT VALUE EQUITY
FUND FUND PRO FORMA***
------------- ------------- ------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on
purchases (as a percentage of
offering price).................... None None None
Maximum CDSC (as a percentage of
original cost or redemption
proceeds, whichever is lower)*..... 5.00% 4.00% 4.00%
ANNUAL OPERATING EXPENSES**
(as a percentage of average net
assets)
Management fees+...................... 0.80% 0.55% 0.55%
12b-1 fees............................ 0.82 1.00 1.00
Other expenses (after expense
reimbursements)****................ 0.48 0.30 0.30
---- ---- ----
TOTAL OPERATING EXPENSES (after expense
reimbursements)****................... 2.10% 1.85% 1.85%
---- ---- ----
---- ---- ----
</TABLE>
<TABLE>
<CAPTION>
GE MID-CAP
IT GROWTH GROWTH
FUND FUND PRO FORMA***
------------- ------------- ------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on
purchases (as a percentage of
offering price).................... None None None
Maximum CDSC (as a percentage of
original cost or redemption
proceeds, whichever is lower)*..... 5.00% 4.00% 4.00%
ANNUAL OPERATING EXPENSES**
(as a percentage of average net
assets)
Management fees+...................... 0.80% 0.60% 0.60%
12b-1 fees............................ 0.85 1.00 1.00
Other expenses (after expense
reimbursements)****................ 0.45 0.30 0.30
---- ---- ----
TOTAL OPERATING EXPENSES (after expense
reimbursements)****................... 2.10% 1.90% 1.90%
---- ---- ----
---- ---- ----
</TABLE>
- ------------------
* GE Funds and Investors Trust 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 are 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.
The sales charges and CDSCs set out in the tables above 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 Class B shares, the length of time the shares are held. Any CDSC
which is applicable to Class B shares of an Acquired Fund will continue to
apply to Class B shares of GE Funds received in the Reorganization and, in
calculating the applicable CDSC payable upon the subsequent redemption of
those Class B shares, the period during which an Acquired Fund shareholder
held Class B shares of the Acquired Fund will be counted until the
automatic conversion to Class A shares of GE Funds after eight years.
Purchases of Class B shares after the Reorganization will be subject to the
Acquiring Funds' CDSC schedule.
** Annual operating expenses (a) for shares of the Acquired Funds are based on
expenses for the six-month period ended April 30, 1997, (b) for shares of
the Acquiring Funds are based on expenses for the six-month period ended
March 31, 1997, and (c) for the pro forma financial figures are based on
estimated expenses of the Acquiring Funds for the year ended April 30,
1997, except for GE Short-Term Government Fund, which are based on
estimated expenses for the year ended March 31, 1997.
*** The pro forma financial figures are intended to provide shareholders with
information about the continuing impact of each Reorganization, other than
the Reorganization involving Investors Trust Adjustable Rate Fund and GE
Short-Term Government Fund, as if the Reorganization had taken place as of
May 1, 1996. The pro forma financial figures relating to the Reorganization
involving Investors Trust Adjustable Rate Fund and GE Short-Term Government
Fund are intended to provide shareholders with information about the
continuing impact of the Reorganization as if that Reorganization had taken
place as of April 1, 1996.
**** 'Other Expenses' for the Acquired Funds are based upon actual expenses,
after reimbursement by GNA Capital, incurred with respect to the Class A
and Class B shares during the fiscal year ended October 31, 1996. GNA
Capital has indicated that it intends to reimburse a portion of the
expenses of the Acquired Funds, other than IT Government Fund, at least
through October 31, 1997, so that the 'Total Fund Operating Expenses' of
each of those Funds will not exceed the amounts shown in the Fee Tables
above and note ++ below. IT Government Fund is not currently operating with
an expense cap.
8
<PAGE>
The actual 'Other Expenses' and 'Total Operating Expenses' for the six
months ended April 30, 1997 before such reimbursements were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
<S> <C> <C>
ADJUSTABLE RATE FUND
Other Expenses.......................................................................... 2.27% 2.26%
Total Operating Expenses................................................................ 2.82% 2.81%
TAX FREE FUND
Other Expenses.......................................................................... 0.75% 0.75%
Total Operating Expenses................................................................ 1.51% 2.26%
VALUE FUND
Other Expenses.......................................................................... 0.49% 0.49%
Total Operating Expenses................................................................ 1.36% 2.11%
GROWTH FUND
Other Expenses.......................................................................... 0.58% 0.58%
Total Operating Expenses................................................................ 1.48% 2.23%
</TABLE>
'Other Expenses' of Class A and Class B shares of each Acquiring Fund and
the pro forma financial figures also reflect a determination by GEIM to
reduce voluntarily or otherwise limit such expenses. If GEIM discontinued
these expense limits, it is estimated that 'Other Expenses' and 'Total
Operating Expenses' would be higher than the expense ratios reflected in
the Fee Tables above, and would be as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B
------- -------
<S> <C> <C>
SHORT-TERM GOVERNMENT FUND
Other Expenses.......................................................................... 0.39% 0.85%
Total Operating Expenses................................................................ 1.19% 2.00%
TAX-EXEMPT FUND
Other Expenses.......................................................................... 0.25% 0.31%
Total Operating Expenses................................................................ 1.10% 1.66%
VALUE EQUITY FUND
Other Expenses.......................................................................... 0.45% 0.32%
Total Operating Expenses................................................................ 1.50% 1.87%
MID-CAP GROWTH FUND
Other Expenses.......................................................................... 0.46% 0.41%
Total Operating Expenses................................................................ 1.56% 2.01%
</TABLE>
GEIM does not currently anticipate limiting the expenses of the Government
Securities Fund.
+ Management Fees incurred by GE Funds, as reflected in the pro forma
figures, consist of investment advisory and administration fees paid to
GEIM.
++ Although GNA Capital previously indicated that it intended to reimburse all
expenses of the Tax Free Fund at least through October 31, 1997, it
reserved the right to decrease the level of reimbursement at any time.
Effective June 22, 1997, GNA Capital decreased the reimbursement in the Tax
Free Fund to a level such that the expenses will not exceed 1.15% for Class
A shares and 1.90% for Class B shares.
GEIM has agreed to waive all Management fees, consisting of investment
advisory and administration fees, charged to GE Tax-Exempt Fund. In the
absence of this waiver, GE Tax-Exempt Fund would incur Management fees
equal to .35% and Total Operating Expenses as follows: Class A--1.10% and
Class B--1.60%. GEIM intends to commence charging the full amount of the
Management fee to GE Tax-Exempt Fund on or prior to the closing of the
Reorganization. Accordingly, the full amount of the Management fee is
reflected in the Fee Tables above and in the following examples. See
'Reasons for the Reorganization.'
9
<PAGE>
EXAMPLES
The following examples are intended to assist an investor in understanding
the various costs that an investor will bear directly or indirectly. The
examples assume payment of operating expenses at the levels set forth in the
tables above.
The examples also provide a means for the investor to compare expense
levels of funds with different fee structures over varying investment periods.
To facilitate such comparison, all funds are required to utilize a 5.00% annual
return assumption. However, each Fund's actual return will vary and may be
greater or less than 5.00%. THESE EXAMPLES SHOULD NOT BE CONSIDERED
REPRESENTATIONS OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN, WHICH ASSUME THAT GNA CAPITAL OR GEIM, AS THE CASE MAY
BE, CONTINUES TO REDUCE OR OTHERWISE LIMIT EXPENSES TO THE AMOUNT SHOWN IN THE
FEE TABLES ABOVE.
An investor would pay the following expenses on a $1,000 investment,
assuming (1) 5.00% annual return and (2) redemption at the end of each time
period:
<TABLE>
<CAPTION>
1 YEAR* 3 YEARS 5 YEARS 10 YEARS**
-------- ------- ------- ----------
<S> <C> <C> <C> <C>
CLASS A
Acquired Funds
IT Adjustable Rate Fund......... $ 54 $74 $ 95 $156
IT Government Fund.............. 55 77 101 169
IT Tax Free Fund................ 45 45 45 45
IT Value Fund................... 58 86 116 200
IT Growth Fund.................. 58 86 116 200
Acquiring Fund
GE Short-Term Government Fund... $ 34 $55 $ 76 $139
GE Government Securities Fund... 53 76 N/A N/A
GE Tax-Exempt Fund.............. 50 65 82 132
GE Value Equity Fund............ 61 88 N/A N/A
GE Mid-Cap Growth Fund.......... 61 90 N/A N/A
Pro Forma..........................
GE Short-Term Government Fund... $ 34 $55 $ 76 $139
GE Government Securities Fund... 53 76 N/A N/A
GE Tax-Exempt Fund.............. 53 76 101 171
GE Value Equity Fund............ 61 88 N/A N/A
GE Mid-Cap Growth Fund.......... 61 90 N/A N/A
CLASS B
Acquired Funds
IT Adjustable Rate Fund......... $ 67 $84 $ 102 $181
IT Government Fund.............. 68 87 108 193
IT Tax Free Fund................ 50 30 10 0
IT Value Fund................... 71 96 123 224
IT Growth Fund.................. 71 96 123 224
Acquiring Fund
GE Short-Term Government Fund... $ 43 $61 $ 71 $138
GE Government Securities Fund... 46 69 N/A N/A
GE Tax-Exempt Fund.............. 43 60 69 124
GE Value Equity Fund............ 59 78 N/A N/A
GE Mid-Cap Growth Fund.......... 59 80 N/A N/A
Pro Forma..........................
GE Short-Term Government Fund... $ 43 $61 $ 71 $138
GE Government Securities Fund... 46 69 N/A N/A
GE Tax-Exempt Fund.............. 46 70 87 164
GE Value Equity Fund............ 59 78 N/A N/A
GE Mid-Cap Growth Fund.......... 59 80 N/A N/A
</TABLE>
10
<PAGE>
An investor would pay the following expenses on the same investment,
assuming the same annual return and no redemption:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS**
------- ------- ------- ----------
<S> <C> <C> <C> <C>
CLASS A
Acquired Funds
IT Adjustable Rate Fund......... $54 $74 $ 95 $156
IT Government Fund.............. 55 77 101 169
IT Tax Free Fund................ 45 45 45 45
IT Value Fund................... 58 86 116 200
IT Growth Fund.................. 58 86 116 200
Acquiring Fund
GE Short-Term Government Fund... $34 $55 $ 76 $139
GE Government Securities Fund... 53 76 N/A N/A
GE Tax-Exempt Fund.............. 50 65 82 132
GE Value Equity Fund............ 61 88 N/A N/A
GE Mid-Cap Growth Fund.......... 61 90 N/A N/A
Pro Forma..........................
GE Short-Term Government Fund... $34 $55 $ 76 $139
GE Government Securities Fund... 53 76 N/A N/A
GE Tax-Exempt Fund.............. 53 76 101 171
GE Value Equity Fund............ 61 88 N/A N/A
GE Mid-Cap Growth Fund.......... 61 90 N/A N/A
CLASS B
Acquired Funds
IT Adjustable Rate Fund......... $17 $54 $ 92 $181
IT Government Fund.............. 18 57 98 193
IT Tax Free Fund................ 0 0 0 0
IT Value Fund................... 21 66 113 224
IT Growth Fund.................. 21 66 113 224
Acquiring Fund
GE Short-Term Government Fund... $13 $41 $ 71 $138
GE Government Securities Fund... 16 50 N/A N/A
GE Tax-Exempt Fund.............. 13 40 69 124
GE Value Equity Fund............ 19 58 N/A N/A
GE Mid-Cap Growth Fund.......... 19 60 N/A N/A
Pro Forma..........................
GE Short-Term Government Fund... $13 $41 $ 71 $138
GE Government Securities Fund... 16 49 N/A N/A
GE Tax-Exempt Fund.............. 16 50 87 164
GE Value Equity Fund............ 19 58 N/A N/A
GE Mid-Cap Growth Fund.......... 19 60 N/A N/A
</TABLE>
- ------------------
* Expenses shown above would be increased by the imposition of the 1% CDSC for
redemptions of Class A shares within one year of purchase 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 of the Acquired Funds and Pro Forma expenses
shown above reflect the conversion of Class B shares into Class A shares of
GE Funds after eight years. Expenses for Class B shares of the Acquiring
Funds shown above reflect the conversion of Class B shares into Class A
shares of the indicated fund after six years.
11
<PAGE>
SUMMARY
This summary is qualified in its entirety by reference to the additional
information contained elsewhere in this Combined Prospectus/Proxy Statement; the
Agreement and Plan of Reorganization, a copy of which is attached to this
Combined Prospectus/Proxy Statement as Exhibit A; the accompanying Prospectus of
GE Funds dated July 25, 1997; and the Prospectus of Acquired Funds dated March
1, 1997, as supplemented by a Prospectus Supplement dated May 16, 1997.
<TABLE>
<S> <C>
Proposed Reorganization....... The Plan provides for the transfer of all or
substantially all of the assets of each Acquired
Fund to a corresponding Acquiring Fund in
exchange for shares of the Acquiring Fund and the
assumption by the Acquiring Fund of certain
liabilities of the corresponding class of the
Acquired Fund. The Plan also calls for the
distribution of such shares of the Acquiring Fund
to the Acquired Fund's shareholders in
liquidation of the Acquired Fund. (The foregoing
proposed transaction for each Acquired Fund is
referred to in this Combined Prospectus/Proxy
Statement as a 'Reorganization' and collectively
as the 'Reorganizations.') As a result of each
Reorganization, shareholders of each Acquired
Fund will become the owner of that number of full
and fractional shares of the corresponding class
of the Acquiring Fund having an aggregate value
equal to the aggregate net asset value of such
shareholder's shares of the Acquired Fund of the
respective class of the Acquiring Fund.
(Shareholders of Class A or Class B shares of an
Acquired Fund will receive Class A or Class B
shares, respectively, of the Acquiring Fund.) See
'Information About the Reorganization--Plan of
Reorganization.'
For the reasons set forth below under 'Reasons
for the Reorganization,' the Board of Trustees of
Investors Trust, including the Trustees who are
not 'interested persons' of the Trust (the
'Independent Trustees'), as that term is defined
in the Investment Company Act of 1940, as amended
(the '1940 Act'), has concluded that each
Reorganization is in the best interests of the
shareholders of each Acquired Fund and that the
interests of each Acquired Fund's existing
shareholders will not be diluted as a result of
the transaction contemplated by the
Reorganization and therefore has submitted the
Plan for approval by the Acquired Fund's
shareholders. The Board of Trustees of GE Funds
has reached similar conclusions with respect to
each Acquiring Fund and has also approved each
Reorganization in respect of each Acquiring Fund.
Approval of a Reorganization will require the
affirmative vote of a majority of the total
number of votes entitled to be cast thereon, as
defined in the 1940 Act, of the outstanding
shares of each class of the Acquired Fund which
is the lesser of: (i) 67% of the voting
securities of each class of the Acquired Fund
present at the Meeting, if the holders of more
than 50% of the outstanding voting securities of
each class of the Acquired Fund are present or
represented by proxy, or (ii) more than 50% of
the outstanding shares of each class of the
Acquired Fund. For purposes of voting with
respect to a Reorganization, the Class A and
Class B shares of the Acquired Fund will vote
separately by class. See 'Voting Information.'
Tax Consequences.............. Completion of each Reorganization is conditioned
on the receipt of an opinion of counsel for the
Acquiring Funds that (i) no gain or loss
</TABLE>
12
<PAGE>
<TABLE>
<S> <C>
will be recognized by the Acquired Fund or its
shareholders for federal income tax purposes upon
the transfer of the Acquired Fund's assets to the
corresponding Acquiring Fund in exchange for
shares of the Acquiring Fund and the assumption
by the Acquiring Fund of certain liabilities,
(ii) no gain or loss will be recognized by the
Acquiring Fund upon receipt of the assets of the
corresponding Acquired Fund and the assumption by
the Acquiring Fund of certain liabilities, (ii)
the aggregate tax basis for the Acquiring Fund
shares received by each of the Acquired Fund
shareholders in the Reorganization will be the
same as the Acquired Fund shares held by the
shareholder prior to the Reorganization, and the
holding period of such Acquiring Fund shares will
include the period during which the Acquired Fund
shares were held by such shareholder, and (iv)
the tax basis of the assets acquired by the
Acquiring Fund will be the same as in the hands
of the Acquired Fund immediately prior to the
Reorganization, and the holding period of those
assets in the hands of the Acquiring Fund will
include the period during which those assets were
held by the Acquired Fund.
Investment Objectives and
Policies.................... Each Acquiring Fund and the corresponding
Acquired Fund have substantially similar
investment objectives, policies and restrictions.
Each Acquired Fund is a separate diversified
investment portfolio of Investors Trust, an
open-end investment company. Investors Trust
Adjustable Rate Fund seeks to produce a high
level of current income consistent with limiting
fluctuations in net asset value of Fund shares.
Investors Trust Government Fund seeks to produce
a high level of current income consistent with
safety of principal. Investors Trust Tax Free
Fund seeks to produce as high a level of income
exempt from federal income tax as is consistent
with preservation of capital. Investors Trust
Value Fund seeks to provide long-term growth of
capital and an above-average level of dividend
income by investing primarily in equity
securities. Investors Trust Growth Fund seeks to
provide long-term growth of capital.
Each Acquiring Fund is a separate diversified
investment portfolio of GE Funds, an open-end
management investment company. GE Short-Term
Government Fund seeks a high level of income
consistent with prudent investment management and
the preservation of capital. GE Government
Securities Fund seeks a high level of current
income consistent with safety of principal. GE
Tax-Exempt Fund currently seeks 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. (Subject to
the approval of the current GE Tax-Exempt Fund
shareholders, this Fund's objective will be
changed to one that seeks to produce as high a
level of income exempt from federal income tax as
is consistent with preservation of capital by
investing substantially all of its assets in
tax-exempt debt obligations, which conforms
exactly to the investment objective of Investors
Trust Tax Free Fund.) GE Value Equity Fund seeks
long-term growth of capital and future income. GE
Mid-Cap Growth Fund seeks long-term growth of
capital. For a discussion of the differences
between the investment policies of each Acquiring
Fund and the corresponding Acquired Fund, see
'Comparison of Investment Objectives and
Policies.'
</TABLE>
13
<PAGE>
<TABLE>
<S> <C>
Purchase and Redemption
Procedures.................. The purchase and redemption procedures available
to shareholders of the Acquiring Funds are
substantially similar to those of the Acquired
Funds. Purchase of shares of the Acquiring Funds
may be made through GE Funds' distributor, GE
Investment Services Inc. ('GEIS'), a wholly-owned
subsidiary of GE, at their respective public
offering prices (net asset value next determined
plus any applicable sales charge). Purchase of
shares of the Acquired Funds may be made through
Investors Trust's distributor, GNA Distributors,
Inc., at their respective public offering prices
(net asset value next determined plus any
applicable sales charge). It is currently
anticipated that, subsequent to the
Reorganization, GEIS will acquire certain assets
and liabilities of GNA Distributors, Inc. One
notable difference in the purchase procedures is
that, effective upon the completion of the
Reorganizations, GE Funds intends to increase its
minimum initial purchase requirement for
individual retirement accounts (IRAs) to $500.
Other minimum and maximum purchase and redemption
requirements may be changed at the discretion of
the GE Funds Board of Trustees, based upon
recommendations from Fund management. See the
accompanying Acquiring Funds' Prospectus under
the captions 'Purchase of Shares' and 'Redemption
of Shares.'
Class A shares of each Acquired Fund are sold
subject to a maximum initial sales charge of
4.50% of the public offering price. Class A
shares of GE Value Equity Fund and GE Mid-Cap
Growth Fund are sold subject to a maximum initial
sales charge of 4.75% of the public offering
price, Class A shares of GE Tax-Exempt Fund and
GE Government Securities Fund are sold subject to
a maximum initial sales charge of 4.25% of the
public offering price, and Class A shares of GE
Short-Term Government Fund are sold subject to a
maximum initial sales charge of 2.50% of the
public offering price. Class A shares of all
Acquiring Funds may be purchased at a reduced
sales charge or at net asset value, determined by
aggregating the dollar amount of a new purchase
and the total asset value of all Class A shares
of GE Funds held by such person and applying the
(reduced) sales charge applicable to such
aggregate. Purchases of Class A shares of either
an Acquiring Fund or an Acquired Fund, which when
combined with current holdings of such Fund's
Class A shares offered with a sales charge equal
or exceed $1,000,000 in the aggregate, will be
made at net asset value with no sales charge, but
will be subject to a CDSC of 1.00% on redemptions
made within one year.
Class B shares of both the Acquiring Funds and
the Acquired Funds are sold without an initial
sales charge but are subject to higher ongoing
expenses than Class A shares and are subject to a
CDSC payable upon certain redemptions. Class B
shares received in the Reorganization will
continue to be subject to the CDSC schedule
currently imposed by the Acquired Funds and will
automatically convert into Class A shares of GE
Funds after eight years. An investor's CDSC
longevity (i.e. years already subject to CDSC)
will be tracked by the Acquiring Funds' transfer
agent and will continue to apply to Class B
shares received in the Reorganization even if a
former Acquired Fund shareholder exchanges those
shares into another GE Fund. However, a
shareholder who exchanges Class B
</TABLE>
14
<PAGE>
<TABLE>
<S> <C>
shares for shares of GE Money Market Fund, a
series of GE Funds, and then exchanges those GE
Money Market Fund shares for Class B shares of
another GE Fund will be subject to having the
period of time in which such shareholder was
invested in GE Money Market Fund tolled when
computing applicable CDSCs.
See the 'Fee Tables' for a comparison of the
sales charges imposed by the IT Funds to those of
the Acquiring Funds.
Class A shares of both the Acquiring Funds and
the Acquired Funds may be redeemed at their
respective net asset values per share next
determined without charge, except that Class A
shares of both the Acquiring Funds and the
Acquired Funds originally acquired without
payment of a sales charge by reason of comprising
a $1,000,000 or more purchase will be subject to
a CDSC of 1.00% if such shares are redeemed
during the first 12 months following their
purchase. Shares of the Acquiring Funds may be
redeemed by mail or by telephone, or through a
sales representative of an authorized
broker-dealer, financial institution or
investment advisor which has entered into a sales
agreement with the Acquiring Funds' distributor
or through GE Funds' Systematic Withdrawal Plan
as described in the GE Funds' Prospectus. See
'Redemption of Shares' in the accompanying
Prospectus of the Acquiring Funds.
Both Class A and Class B shareholders of the IT
Funds will become subject to GE Funds' 12b-1
Plans upon consummation of the Reorganization.
Class A shares of each Acquiring Fund will be
subject to a 12b-1 fee equal to .50% of annual
average net assets, consisting of a .25% service
fee and a .25% distribution fee. Class B shares
of each Acquiring Fund, other than GE Short-Term
Government Fund, will be subject to a 12b-1 fee
equal to 1.00% of annual average net assets,
consisting of a .25% service fee and a .75%
distribution fee. Class B shares of GE Short-Term
Government Fund will be subject to a 12b-1 fee
equal to .85% of annual average net assets,
consisting of a .25% service fee and a .60%
distribution fee. Unlike the Acquired Funds'
12b-1 Plans, which are 'reimbursement-type'
plans, GE Funds' 12b-1 Plans are
'compensation-type' plans. As a result, payments
under the GE Funds' 12b-1 Plans are not tied
exclusively to the expenses of shareholder
servicing and distribution expense actually
incurred by GEIM or any service provider, and
payments may exceed expenses actually incurred.
Exchange Privileges........... The exchange privileges available to shareholders
of the Acquiring Fund are virtually identical to
those available to shareholders of the Acquired
Fund, except that, as a shareholder of the GE
Funds, investors will have a far more extensive
selection of funds into which exchanges at no
charge are permitted. Shareholders of both the
Acquired Fund and the Acquiring Fund may exchange
at net asset value all or a portion of their
shares for shares of the same class in any other
series of GE Funds. Any exchange will be a
taxable event for which a shareholder may have to
recognize a gain or a loss for federal income tax
purposes. No initial sales charge is imposed on
the shares being acquired in an exchange, and no
CDSC is imposed on the shares being disposed of
in the exchange. A sales charge differential,
however, may apply to subsequent exchanges of
</TABLE>
15
<PAGE>
<TABLE>
<S> <C>
Class A shares with other GE Funds that have a
lower initial sales charge than the Fund being
exchanged from. For purposes of computing the
CDSC that may be payable upon a disposition, the
Class B shares acquired in the exchange will be
deemed to have been purchased on the same date as
the Class B shares that were exchanged therefor
and will retain the CDSC schedule originally
applicable to those shares prior to the
Reorganization. See 'Exchange Privilege' in the
accompanying Prospectus of the Acquiring Funds.
Dividends..................... Dividends from net investment income and capital
gains of the Acquiring Funds are declared and
paid at the same times as the corresponding
Acquired Funds, except that Investors Trust Value
Fund declares and pays dividends quarterly,
whereas GE Value Equity Fund declares and pays
dividends annually. The GE Funds Board of
Trustees currently intends to maintain the level
of dividends paid to shareholders of the
Investors Trust Government Fund at the current
fixed rates. See the Acquiring Funds' Prospectus
under the caption 'Dividends, Distributions and
Taxes' for a description of the tax consequences
to shareholders resulting from this policy. With
respect to all Funds, unless a shareholder
otherwise instructs, dividends and capital gains
distributions will be reinvested automatically in
additional shares of the same class at net asset
value, subject to no sales charge or CDSC. The
distribution option currently in effect for a
shareholder of the Acquired Fund will remain in
effect after the Reorganization. After the
Reorganization, however, the former Acquired Fund
shareholders may change their distribution option
at any time. See 'Dividends and Distributions' in
the accompanying Prospectus of the Acquiring
Fund.
Shareholder Voting Rights..... Investors Trust and GE Funds are both registered
with the SEC as open-end, management investment
companies. Each Acquired Fund is a separate
series of Investors Trust, a Massachusetts
business trust having a Board of Trustees. Each
Acquiring Fund is a separate series of GE Funds,
also a Massachusetts business trust having a
Board of Trustees. None of the Funds holds a
meeting of shareholders annually, and there is
normally no meeting of shareholders held for the
purpose of electing Trustees unless and until
such time as less than a majority of the Fund's
Trustees holding office has been elected by
shareholders of such Fund. At that time, the
Fund's Trustees then in office will call a
shareholders' meeting for the election of
Trustees.
In addition, under the laws of the Commonwealth
of Massachusetts, shareholders of the Acquired
Funds do not have appraisal rights in connection
with a combination or acquisition of the assets
of a Fund by another entity. Shareholders of the
Acquired Funds may, however, redeem their shares
at net asset value (subject to any applicable
CDSC) prior to the date of the Reorganization.
For purposes of voting with respect to the
Reorganization, the Class A and Class B shares of
an Acquired Fund will vote separately by class.
See 'Information on Shareholders' Rights--Voting
Rights.'
</TABLE>
16
<PAGE>
RISK FACTORS
Due to the substantial similarities of investment objectives and policies
of the Acquiring Funds and the corresponding Acquired Funds, the investment
risks are substantially similar. Such risks are generally those typically
associated with investing in the types of securities in which the Funds invest.
There are several risks in connection with the use of certain portfolio
strategies by the Acquiring Funds, and where applicable, by the Acquired Funds.
These portfolio strategies include purchasing put and call options on
securities, writing put and call options on securities, purchasing put and call
options on securities indexes, entering into futures contracts or related
options, 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.
In certain instances, the Acquiring Funds may be exposed to additional
risks not applicable to the Acquired Funds. Unlike Investors Trust Government
Fund, GE Government Securities Fund may invest up to 35% of its assets in
foreign securities, and up to 10% of its assets in debt securities rated as low
as Baa by Moody's Investors Service, Inc. ('Moody's'), BBB by Standard & Poor's
Ratings Services ('S&P'), or comparably rated by another nationally recognized
statistical rating organization ('NRSRO'). In addition, GE Mid-Cap Growth Fund,
unlike Investors Trust Growth Fund, may invest a portion of its assets in debt
securities that are considered to be below investment grade. See the
accompanying Prospectus for a complete discussion of the risks of investing in
the Acquiring Funds, including risks associated with investing in foreign
securities and below investment grade debt securities.
REASONS FOR THE REORGANIZATION
The proposed Reorganizations were developed in light of a decision to
consolidate the mutual fund management and distribution services of General
Electric Company's subsidiaries. Consolidation of GE's investment advisory
businesses will provide greater efficiency in management and administration of
the Funds.
The Board of Trustees of Investors Trust has determined that it is
advantageous to combine the Acquired Funds with the Acquiring Funds. In reaching
this conclusion, the Board considered a number of factors including the
following:
1. THE REORGANIZATIONS WILL FULLY INTEGRATE THE IT FUNDS INTO GE FUNDS.
o Expanded Investment Options. The Reorganizations will greatly
expand the number and variety of funds available to the Acquired Funds'
shareholders through GE Funds' exchange privileges among twelve series of
GE Funds.
o GEIM's Investment Management Experience. GEIM, together with its
sister company, General Electric Investment Corporation ('GEIC'), has a
long and distinguished record of investment management spanning 70 years.
In addition to GE Funds, GEIM or GEIC is also responsible for the
management of the General Electric Pension Trust, the Elfun Funds, the
General Electric Savings & Security Program (GE's 401(k)) and other GE
assets, as well as assets of approximately 80 other funds, corporations,
employee benefit plans and private foundations. GEIM and GEIC collectively
provide investment management services to various institutional accounts
with total assets, as of June 30, 1997, in excess of $58 billion, of which
more than $12 billion is invested in mutual funds. As a result of these
significant responsibilities, GE is most attentive to ensuring that GEIM is
well staffed to make and implement investment decisions.
o Tax-Free Treatment. The Reorganizations will not be a taxable
events for federal income tax purposes to the Acquired Funds or their
respective shareholders, or to the Acquiring Funds, and it is a condition
to the closing of the Reorganizations that the Funds will receive legal
opinions stating that no recognition of gain or loss for federal income tax
purposes will occur as a result of the Reorganizations to any of the
shareholders.
o Continuity. The Funds have substantially similar investment
objectives and policies and have affiliated investment advisers and
distributors and the same custodian and accounting agent. In addition,
shareholder reports will continue in a form similar to the form that the
Acquired Fund shareholders are accustomed.
17
<PAGE>
o No Expenses Borne By Shareholders. The expenses of the
Reorganizations will be borne by GEIM, regardless of whether the
Reorganizations are consummated. GEIM will also bear the entire costs of
organizing GE Government Securities Fund and GE Value Equity Fund, the two
new series of GE Funds.
o No Sales Charge. No sales charge will be imposed in connection with
the Reorganizations.
2. THE REORGANIZATIONS MAY INCREASE ECONOMIC EFFICIENCIES OF THE ACQUIRED FUNDS
AND THE ACQUIRING FUNDS.
o Lower Fees. Most Acquired Fund shareholders will benefit
immediately from lower management fees and total expense ratios as a result
of the Reorganizations. The other Acquired Fund shareholders will
experience identical fees, except for Class A shareholders of the IT
Government Fund and IT Growth Fund.
o Possible Economies of Scale. Economies of scale may arise regarding
legal and auditing fees, custodian fees, other general operating expenses,
insurance premiums and printing costs.
3. THE REORGANIZATIONS COULD FACILITATE THE MARKETING OF THE FUNDS, THEREBY
BENEFITING EXISTING SHAREHOLDERS OF THE FUNDS.
o Consolidation of Distribution Efforts. Like mutual fund management,
distribution efforts for GE-affiliated mutual funds will be concentrated at
GEIM's and GEIS's headquarters. In addition, GEIS plans to acquire certain
assets and liabilities of GNA Distributors in the near future. After the
Reorganizations, the Acquiring Funds will receive the benefit of GE's
increased marketing efforts, eliminating duplication inherent in marketing
funds with similar investment objectives, which is anticipated to result in
steady growth of assets and economies of scale.
o Name Recognition. The retail orientation of the Funds depends on
investor recognition, which could be enhanced by association with the
'General Electric' or 'GE' names and logo. GEIM and GEIC have an explicit
license to use those names and logo.
o Enhanced Ability to Compete. The Reorganizations may place GE Funds
in a better position to compete for 401(k) plan assets due to a broader
range of investment alternatives, further enhancing the marketability of
the Funds.
At its May 16, 1997 meeting, the Board of Trustees of Investors Trust was
presented by GNA Capital with information reflecting operating expenses of the
Acquiring Funds and the Acquired Funds as of March 31, 1997. The Board was shown
pro forma financial information which indicated that, assuming the level of
assets for each Acquiring Fund after the Reorganization was the same as on March
31, 1997, with two exceptions, Class A and Class B shareholders of the Acquired
Funds should experience identical or a decrease in total operating expenses
after giving effect to fee waivers and expense reimbursements currently in
effect. Class A shareholders in Investors Trust Growth Fund and Investors Trust
Government Fund will experience an increase in their expenses of .05 and .07 of
1.00%, respectively. With respect to IT Tax Free Fund, the Board of Trustees
noted that the decrease in pro forma total operating expenses for GE Tax-Exempt
Fund from the total expense ratio for IT Tax Free Fund was based on the
cessation of the fee waiver and expense reimbursement commitments for Class A
and Class B shareholders of IT Tax Free Fund that took effect on June 22, 1997,
which now results in total operating expense ratios of 1.15% and 1.90%,
respectively. This information is reflected under the caption 'Fee Tables' in
this Combined Prospectus/Proxy Statement.
The Board also considered, among other things, information illustrating
that the pro forma total expense ratios payable by each Acquiring Fund following
the Reorganizations would in most cases be lower than the average total expense
ratios incurred by funds included in a survey using data prepared by Lipper
Analytical Services, Inc. (the 'Lipper Average') as of March 31, 1997 (giving
effect to fee waivers and expense reimbursements). Pro forma total operating
expenses of the Acquiring Funds following the Reorganization could be higher
than the Lipper Average after fee waivers and expense reimbursements benefiting
the other funds included in the Lipper Average.
The Board also considered that, when the Acquired Funds were originally
organized, the use of sub-advisers was deemed to be attractive both from a
performance and marketing perspective. In this regard, the Board considered the
view of GNA Capital and GEIM that strengthening ties to GE Funds and its asset
management and distribution team offers potential benefits to the shareholders
of the Acquired Funds that outweigh any advantages offered by the continued use
of sub-advisers for each of the Acquired Funds. Information was also
18
<PAGE>
presented to the Trustees that the Board of Trustees of GE Funds has determined,
subject to shareholder approval, to appoint Brown Brothers as sub-adviser for GE
Tax-Exempt Fund.
In light of the foregoing, the Board of Trustees of the Investors Trust,
including the Independent Trustees, has determined unanimously that it is in the
best interest of each Acquired Fund and its shareholders to effect the
Reorganizations and that the Reorganizations will not result in a dilution of
the interests of the Acquired Fund's shareholders.
The Board of Trustees of GE Funds has also determined that it is
advantageous to the Acquiring Funds to effect the Reorganizations. The GE Funds
Board of Trustees also considered the terms and conditions of the
Reorganizations and representations that the Reorganizations would be effected
as tax-free reorganizations. Accordingly, the Board of Trustees of GE Funds,
including a majority of the Independent Trustees, has determined that the
Reorganizations are in the best interests of each Acquiring Fund and its
shareholders and that the interests of the Acquiring Funds' shareholders would
not be diluted as a result of the Reorganizations.
INFORMATION ABOUT THE REORGANIZATION
Plan of Reorganization. The following summary of the Plan is qualified in
its entirety by reference to the Plan (Exhibit A hereto). The Plan provides that
GE Funds on behalf of the Acquiring Fund will acquire all or substantially all
of the assets of the Acquired Fund in exchange for shares of the Acquiring Fund
and the assumption by GE Funds on behalf of the Acquiring Fund of certain
liabilities of the Acquired Fund on September 26, 1997 or such later date as may
be agreed upon by the parties (the 'Closing Date').
Prior to the Closing Date, the Acquired Fund will endeavor to discharge all
of its known liabilities and obligations. The Acquiring Fund will not assume any
liabilities or obligations other than those reflected on an unaudited statement
of assets and liabilities of the Acquired Fund prepared as of the close of
regular trading on the New York Stock Exchange, currently 4:00 p.m., New York
City time, on the Closing Date. The number of full and fractional Class A and
Class B shares of the Acquiring Fund to be issued to the Acquired Fund's
shareholders will be determined on the basis of the Acquiring Fund's and the
Acquired Fund's relative net asset value per Class A and Class B shares,
respectively. The net asset value per share of each Class will be determined by
dividing the net assets of the Acquired Fund attributable to each Class by the
total number of outstanding shares of the relevant Class.
Each Acquired Fund and the Acquiring Fund will utilize the procedures set
forth in its respective Prospectus to determine the value of their respective
portfolio securities and to determine the aggregate value of each respective
Fund's portfolio. For a description of the valuation procedures, refer to each
Fund's respective Prospectus under the caption 'Net Asset Value.'
At or prior to the Closing Date, each Acquired Fund is required to declare
a dividend or dividends which, together with all previous such dividends, will
have the effect of distributing to their respective shareholders all taxable
income for the taxable year ending on or prior to the Closing Date (computed
without regard to any deduction for dividends paid). In addition, each Acquired
Fund's dividend will include its net capital gains realized in the taxable
period ending on or prior to the Closing Date (after reductions for any capital
loss carryforward).
As soon after the Closing Date as conveniently practicable, each Acquired
Fund will liquidate and distribute pro rata to shareholders of record as of the
close of business on the Closing Date the full and fractional shares of the
Acquiring Fund received by the Acquired Fund. Such liquidation and distribution
will be accomplished by the establishment of accounts in names of each Acquired
Fund's shareholders on the share records of the Acquiring Funds' transfer agent.
Each account will represent the respective pro rata number of full and
fractional shares of the Acquiring Fund due to each of the Acquired Fund's
shareholders. After such distribution and the winding up of its affairs,
Investors Trust will be dissolved and deregistered under the 1940 Act.
The consummation of the Reorganization is subject to the conditions set
forth in the Plan. Notwithstanding approval of the Acquired Funds' shareholders,
the Plan may be terminated at any time at or prior to the Closing Date: (i) by
mutual agreement of GE Funds on behalf of the Acquiring Funds and Investors
Trust on behalf of the Acquired Funds; (ii) by GE Funds on behalf of the
Acquiring Funds in the event that Investors Trust shall, or Investors Trust on
behalf of the Acquired Funds in the event that GE Funds shall, materially breach
any representation, warranty or agreement contained in the Plan to be performed
at or prior to the Closing Date; or
19
<PAGE>
(iii) by GE Funds on behalf of the Acquiring Funds, or by Investors Trust on
behalf of the Acquired Funds, if a condition to the Plan expressed to be
precedent to the obligations of the terminating party has not been met and it
reasonably appears that it will not or cannot be met.
Approval of the Plan will require the affirmative vote of a majority of the
total number of votes entitled to be cast thereon, as defined in the 1940 Act,
of the outstanding shares of each class of the Acquired Fund, each class voting
separately, which is the lesser of: (i) 67% of the voting securities of each
class of the Acquired Fund present at the Meeting, if the holders of more than
50% of the outstanding voting securities of the class are present or represented
by proxy, or (ii) more than 50% of the outstanding shares of each class of the
Acquired Fund. GE and its affiliates have stated their intention to vote all
shares of the Acquired Funds that they hold in favor of the proposed
Reorganization. If the Reorganization is not approved by shareholders of an
Acquired Fund, the Board of Trustees of Investors Trust will consider other
possible courses of action available to it. Each Reorganization is a separate
transaction and is not contingent upon any other Reorganization.
Description of the Acquiring Funds' Shares. Full and fractional shares of
beneficial interest of each Acquiring Fund will be issued to the corresponding
Acquired Fund in accordance with the procedures detailed in the Plan and as
described in the Acquiring Funds' Prospectus. In the interest of economy and
convenience, the Acquiring Funds do not physically issue share certificates. The
Acquiring Funds' transfer agent maintains a record of each shareholder's
ownership of shares. See 'Information on Shareholders' Rights' and the
Prospectus of the Acquiring Funds for additional information with respect to the
shares of the Acquiring Funds.
Federal Income Tax Consequences. Each Reorganization is intended to
qualify for federal income tax purposes as a tax-free reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as amended (the 'Code'). As
a condition to the closing of the Reorganization, the Acquiring Funds and the
Acquired Funds will each receive an opinion from Willkie Farr & Gallagher,
counsel to the Acquiring Funds, to the effect that, on the basis of the existing
provisions of the Code, U.S. Treasury regulations issued thereunder, current
administrative rules, pronouncements and court decisions, for federal income tax
purposes, upon consummation of the Reorganization:
(1) the transfer of all or substantially all of an Acquired Fund's
assets in exchange for the corresponding Acquiring Fund's shares and the
assumption by the Acquiring Fund of certain identified liabilities of the
corresponding Acquired Fund will constitute a 'reorganization' within the
meaning of Section 368(a)(1) of the Code, and the Acquiring Funds and the
Acquired Funds are each a 'party to a reorganization' within the meaning of
Section 368(b) of the Code;
(2) no gain or loss will be recognized by an Acquiring Fund upon the
receipt of the assets of the Acquired Fund solely in exchange for the
Acquiring Fund shares and the assumption by the Acquiring Fund of certain
identified liabilities of the corresponding Acquired Fund;
(3) no gain or loss will be recognized by the Acquired Fund upon the
transfer of the Acquired Fund's assets to the corresponding Acquiring Fund
in exchange for the Acquiring Fund shares and the assumption by the
Acquiring Fund of certain identified liabilities of the Acquired Fund or
upon the distribution (whether actual or constructive) of the Acquiring
Fund shares to the Acquired Fund's shareholders in exchange for their
shares of the Acquired Fund;
(4) no gain or loss will be recognized by shareholders of the Acquired
Fund upon the exchange of their Acquired Fund shares for the Acquiring Fund
shares and the assumption by the Acquiring Fund of certain identified
liabilities of the Acquired Fund;
(5) the aggregate tax basis for the Acquiring Fund shares received by
each shareholder of the corresponding Acquired Fund pursuant to the
Reorganization will be the same as the aggregate tax basis of the Acquired
Fund shares held by such shareholder immediately prior to the
Reorganization, and the holding period of shares of the Acquiring Fund to
be received by each Acquired Fund shareholder will include the period
during which Acquired Fund shares exchanged therefor were held by such
shareholder (provided that the Acquired Fund shares were held as capital
assets on the date of the Reorganization); and
(6) the tax basis of the Acquired Fund's assets acquired by the
corresponding Acquiring Fund will be the same as the tax basis of such
assets to the Acquired Fund immediately prior to the Reorganization, and
the holding period of the assets of the Acquired Fund in the hands of the
Acquiring Fund will include the period during which those assets were held
by the Acquired Fund.
20
<PAGE>
Shareholders of the Acquired Fund should consult their tax advisers
regarding the effect, if any, of the proposed Reorganization in light of their
individual circumstances. Since the foregoing discussion only relates to the
federal income tax consequences of the Reorganization, shareholders of the
Acquired Funds should also consult their tax advisers as to state and local tax
consequences, if any, of the Reorganization.
Capitalization. The following table shows the capitalization of the
Acquiring Funds and the Acquired Funds as of July 18, 1997 (the 'Record Date'),
and on a pro forma basis as of that date, giving effect to the proposed
acquisition of assets at net asset value.
<TABLE>
<CAPTION>
INVESTORS TRUST GE SHORT-TERM
ADJUSTABLE GOVERNMENT PRO FORMA FOR
RATE FUND FUND REORGANIZATION
(UNAUDITED) (UNAUDITED) (UNAUDITED)
--------------- ------------- --------------
(IN THOUSANDS, EXCEPT PER SHARE VALUES)
<S> <C> <C> <C>
CLASS A SHARES
Net assets.................... $ 5,987 $ 898 $ 6,885
Net asset value per share..... $ 6.45 $ 11.84 $ 11.84
Shares outstanding............ 928 76 581
CLASS B SHARES
Net assets.................... $ 1,132 $ 89 $ 1,221
Net asset value per share..... $ 6.45 $ 11.83 $ 11.83
Shares outstanding............ 175 8 103
</TABLE>
<TABLE>
<CAPTION>
INVESTORS TRUST GE
GOVERNMENT GOVERNMENT PRO FORMA FOR
FUND SECURITIES FUND REORGANIZATION
(UNAUDITED) (UNAUDITED) (UNAUDITED)
--------------- --------------- --------------
(IN THOUSANDS, EXCEPT PER SHARE VALUES)
<S> <C> <C> <C>
CLASS A SHARES
Net assets.................... $ 28,308 $ 0 $ 28,308
Net asset value per share..... $ 8.49 $ 0 $ 8.49
Shares outstanding............ 3,333 0 3,333
CLASS B SHARES
Net assets.................... $ 570,859 $ 0 $ 570,859
Net asset value per share..... $ 8.50 $ 0 $ 8.50
Shares outstanding............ 67,125 0 67,125
</TABLE>
<TABLE>
<CAPTION>
INVESTORS TRUST
TAX FREE GE TAX-EXEMPT PRO FORMA FOR
FUND FUND REORGANIZATION
(UNAUDITED) (UNAUDITED) (UNAUDITED)
--------------- ------------- --------------
(IN THOUSANDS, EXCEPT PER SHARE VALUES)
<S> <C> <C> <C>
CLASS A SHARES
Net assets.................... $ 16,440 $ 563 $ 17,003
Net asset value per share..... $ 11.68 $ 12.09 $ 11.68
Shares outstanding............ 1,407 47 1,456
CLASS B SHARES
Net assets.................... $ 9,166 $ 1,240 $ 10,406
Net asset value per share..... $ 11.70 $ 12.10 $ 11.70
Shares outstanding............ 783 102 889
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
GE VALUE
INVESTORS TRUST EQUITY PRO FORMA FOR
VALUE FUND FUND REORGANIZATION
(UNAUDITED) (UNAUDITED) (UNAUDITED)
--------------- ----------- --------------
(IN THOUSANDS, EXCEPT PER SHARE VALUES)
<S> <C> <C> <C>
CLASS A SHARES
Net assets.................... $ 8,097 $ 0 $ 8,097
Net asset value per share..... $ 13.35 $ 0 $ 13.35
Shares outstanding............ 607 0 607
CLASS B SHARES
Net assets.................... $ 48,432 $ 0 $ 48,432
Net asset value per share..... $ 13.26 $ 0 $ 13.26
Shares outstanding............ 3,652 0 3,652
</TABLE>
<TABLE>
<CAPTION>
GE MID-CAP
INVESTORS TRUST GROWTH PRO FORMA FOR
GROWTH FUND FUND REORGANIZATION
(UNAUDITED) (UNAUDITED) (UNAUDITED)
--------------- ----------- --------------
(IN THOUSANDS, EXCEPT PER SHARE VALUES)
<S> <C> <C> <C>
CLASS A SHARES
Net assets.................... $ 10,480 $ 0 $ 10,480
Net asset value per share..... $ 16.87 $ 0 $ 16.87
Shares outstanding............ 621 0 621
CLASS B SHARES
Net assets.................... $ 32,999 $ 0 $ 32,999
Net asset value per share..... $ 16.41 $ 0 $ 16.41
Shares outstanding............ 2,011 0 2,011
</TABLE>
As of the Record Date, except in the case of Class C shares of GE
Short-Term Government Fund, the officers and Trustees of GE Funds beneficially
owned as a group less than 1% of the outstanding shares of each class of the
Acquiring Funds, although GE's ownership of shares was substantial, as set forth
below. One of the Trustees owns 11.05% of the Class C shares of GE Short-Term
Government Fund. Except as set forth in the table below, to the best knowledge
of the Trustees of GE Funds, as of the Record Date, no shareholder or 'group'
(as that term is used in Section 13(d) of the Securities Exchange Act of 1934
(the 'Exchange Act')), owned beneficially or of record more than 5% of the
outstanding shares of a class of any Acquiring Fund. As of the Record Date, the
officers and Trustees of Investors Trust beneficially owned as a group less than
1% of the outstanding shares of each class of the Acquired Funds, although GE's
ownership of shares was substantial, as set forth below. Except as set forth in
the table below, to the best knowledge of the Trustees of Investors Trust, as of
the Record Date, no shareholder or 'group' (as that term is used in Section
13(d) of the Exchange Act) owned beneficially or of record more than 5% of the
outstanding shares of a class of any Acquired Fund. GE and its
22
<PAGE>
affiliates have stated their intention to vote all the shares of each Acquired
Fund that they hold in favor of the respective Reorganization.
<TABLE>
<CAPTION>
PERCENTAGE OF CLASS OWNED
OF RECORD OR BENEFICIALLY
--------------------------------------
NAME AND FUND AS OF THE UPON CONSUMMATION OF
ADDRESS AND CLASS RECORD DATE THE REORGANIZATION
- ------------------------------------------------- ------------------- ------------ -----------------------
<S> <C> <C> <C>
State Street Bank & Trust Co. GE Short-Term 25.06% 3.27%
FBO Beamspeed and Co. Government Fund,
BG Automotive Motors Class A
Master Trust Client Service
One Enterprise Drive
No. Quincy, MA 02171
Mary McKinney, Dawn M. Clark, GE Short-Term 5.97% .78%
joint tenants Government Fund,
1517 Forest Trail Class A
Austin, TX 78703-3229
Arlyne R. Dryer, Trustee GE Short-Term 5.55% .72%
Gene F. & Arlyne R. Dryer Trust Government Fund,
U/A/D 2/10/87 Class A
12507 Pomerado Ct.
San Diego, CA 92128-2315
Peter Schoenfeld Asset Mgmt (401K) Plan GE Short-Term 15.14% 1.98%
William Popper Government Fund,
Personal and Confidential Class A
787 Seventh Avenue, 3rd Floor
New York, NY 10019-8018
Attn: Peter M. Schoenfeld
State Street Bank & Trust Co. TTEE GE Short-Term 29.86% 3.90%
FBO Wavetek US Inc. Government Fund,
Master Trust Client Ser-WBC Class A
1 Enterprise Drive
No. Quincy, MA 02171-2126
Cathy Stockstill GE Short-Term 13.80% 1.00%
15149 Wessington St. Government Fund,
Sherman Oaks, CA 91411 Class B
Don L. Nelson GE Short-Term 22.94% 1.67%
150 S. Laurel Drive Government Fund,
Margate, FL 33063-5370 Class B
Maria Venturin GE Short-Term 17.83% 1.30%
1016 N. 16th Ave. #2 Government Fund,
Hollywood, FL 33020 Class B
Iris Powell GE Short-Term 9.61% .70%
634 NW 4th Ct Government Fund,
Hallandale, FL 33009 Class B
Charles DiPasquale, GE Short-Term 33.62% 2.45%
Carol Clark, Jt. Wros Government Fund,
P.O. Box 25611 Class B
Tamarac, FL 33320
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF CLASS OWNED
OF RECORD OR BENEFICIALLY
--------------------------------------
NAME AND FUND AS OF THE UPON CONSUMMATION OF
ADDRESS AND CLASS RECORD DATE THE REORGANIZATION
- ------------------------------------------------- ------------------- ------------ -----------------------
<S> <C> <C> <C>
John R. Costantino and GE Short-Term 11.05% 11.05%
Barbara C. Costantino Government Fund,
165-84 Street Class C
Brooklyn, NY 11229-6604
State Street Bank & Trust Co. GE Short-Term 5.72% 5.72%
C/F the Rollover IRA of James L. Jackson Government Fund,
111 Crestwood Dr. Class C
Parkersburg, WV 26101
GE Capital Assurance Co. GE Short-Term 61.55% 61.55%
Attn Treasury Government Fund,
601 Union Street Class D
Seattle, WA 98101-2327
State Street Bank & Trust Co., Trustee GE Short-Term 35.25% 35.25%
Eastwall & Co. Trust Government Fund,
FBO GE Consulting Class D
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
General Electric Company GE Tax-Exempt 10.24% .34%
2 Corporate Drive Fund, Class A
Shelton, CT 06484
George N. Rohrbacher, Therese J. Rohrbacher, GE Tax-Exempt 9.36% .31%
joint tenants Fund, Class A
4473 Lindenhurst Lane
Las Vegas, NV 89120-4206
Buford Parrish, Marjorie Parrish, Karen M. GE Tax-Exempt 18.24% .60%
Schafer, Fund, Class A
JTWROS
2803 Regents Park
Austin, TX 78746
Kate Frazier Doty, Trustee GE Tax-Exempt 18.93% .63%
Paul & Kate Doty Family Trust Fund, Class A
U/A/D 10/3/90
3317 Windsor Road
Austin, TX 78703-2263
Leroy Bednar, Lola Bednar, joint tenants GE Tax-Exempt 8.89% .29%
5304 N. Lamar Fund, Class A
Austin, TX 76751-1823
Arlyne R. Dryer, Trustee GE Tax-Exempt 11.35% .38%
Gene F. & Arlyne R. Dryer Trust Fund, Class A
U/A/D 2/10/87
12507 Pomerado Ct.
San Diego, CA 92128-2315
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF CLASS OWNED
OF RECORD OR BENEFICIALLY
--------------------------------------
NAME AND FUND AS OF THE UPON CONSUMMATION OF
ADDRESS AND CLASS RECORD DATE THE REORGANIZATION
- ------------------------------------------------- ------------------- ------------ -----------------------
<S> <C> <C> <C>
Robert H. Nagel, Mary E. Nagel, Jt ten GE Tax-Exempt 9.74% .32%
1953 Locarno Drive Fund, Class A
Knoxville, TN 37914
Kenneth C. Cummings GE Tax-Exempt 7.78% .93%
242 W. Liberty Street Fund, Class B
Reno, NV 89501
Margaret E. Cooper GE Tax-Exempt 8.39% 1.00%
2706 Biarritz Dr. Fund, Class B
Palm Beach Garden, FL 33410
Estelle M. Simon GE Tax-Exempt 6.20% .74%
417 N. Westphalia Fund, Class B
Pewamo, MI 46873
Roswell C. Taite, Fernie L. Taite, joint tenants GE Tax-Exempt 8.81% 1.05%
9108 Hilldale Fund, Class B
Houston, TX 77055-7438
General Electric Company GE Tax-Exempt 99.30% 99.30%
2 Corporate Drive Fund, Class D
Shelton, CT 06484
GNA Corporation IT Adjustable Rate 99.54% 86.50%
Two Union Square Fund, Class A
Seattle, WA 98101
Iakov Volovodovskii IT Adjustable Rate 10.29% 10.28%
2814 Bragg Street Fund, Class B
Brooklyn, NY 11235-1102
BA Investment Services, Inc. IT Adjustable Rate 8.53% 8.52%
555 California Avenue Fund, Class B
Fourth Floor
San Francisco, CA 94104
Krysten Comeaux IT Adjustable Rate 7.48% 7.47%
4797 Bridge Street Highway Fund, Class B
St. Martinville, LA 70582-6103
The Doves Rest. Property Trust IT Adjustable Rate 7.44% 7.44%
4735 Main Highway Fund, Class B
St. Martinville, LA 70582-6002
Howard Weinreib and IT Adjustable Rate 5.06% 5.06%
Gloria Gnee Fund, Class B
805 West Laguna Drive
Tempe, AZ 85282-4746
Sisters of Mercy Health Corp. IT Government 13.41% 13.41%
5301 E. Huron River Dr. Fund, Class A
P.O. Box 992
Ann Arbor, MI 48106-0992
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF CLASS OWNED
OF RECORD OR BENEFICIALLY
--------------------------------------
NAME AND FUND AS OF THE UPON CONSUMMATION OF
ADDRESS AND CLASS RECORD DATE THE REORGANIZATION
- ------------------------------------------------- ------------------- ------------ -----------------------
<S> <C> <C> <C>
Employers Reinsurance Corp. IT Tax Free Fund, 92.69% 89.58%
5200 Metcalf Class A
Overland Park, KS 66201
GNA Corporation IT Value Fund, 50.12% 50.12%
Two Union Square Class A
Seattle, WA 98101
GNA Corporation IT Growth Fund, 57.34% 57.34%
Two Union Square Class A
Seattle, WA 98101
</TABLE>
26
<PAGE>
INFORMATION ABOUT THE ACQUIRING FUNDS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF MARKET CONDITIONS AND PORTFOLIO REVIEW
(THROUGH MARCH 31, 1997)
MARKET OVERVIEW
The financial markets are off to a mixed start in 1997. Domestic equity
markets supported by good corporate earnings, strong mutual fund flows, and
continued signs of non-inflationary growth in the economy rallied to
record-highs by mid-February only, to give back much of their gains during the
last half of March due to interest rate concerns. These factors resulted in an
S&P 500 return of 2.6% for the first quarter of 1997 and brought the six-month
return to 11.2% for the period ended March 31, 1997.
The bond market reacted positively to the November election results during
the last quarter of 1996 but lost enthusiasm as a result of the 1997 first
quarter economic data. Recent reports suggested a bias towards stronger growth,
which convinced the Federal Reserve Board that a pre-emptive strike against
inflation was necessary to slow the economy. The Federal Reserve Board increased
short term rates .25% in March and appears ready to raise interest rates an
additional .25% to .50% during the coming months to further control economic
expansion. This interest rate pressure had a negative impact on the fixed income
market pushing the Lehman Brothers Aggregate Bond Index down .6% in the first
quarter of 1997 resulting in a 2.4% return for the six months ended March 31,
1997.
Municipal bonds began 1997 performing slightly better than taxable bonds on
a total return basis, with the Lehman Brothers Municipal Bond Index losing .2%
in the first quarter of 1997 and finishing the six months ended March 31, 1997
up 2.3%.
MARKET OUTLOOK
Management views the U.S. equity market with a sense of caution but
believes that continued earnings growth and a controlled inflation environment
will generate reasonable returns in a volatile market. Fixed income markets
provide additional diversification and an attractive risk-return tradeoff,
provided inflation remains subdued.
PORTFOLIO REVIEW AND PERFORMANCE
GE Tax-Exempt Fund. The Lehman Municipal Index returned 2.3% for the 6
months ended March 31, 1997. The Tax-Exempt Fund's Lipper peer group of 238
General Municipal funds had an average return of 2.0% for the same period while
Class A and Class B shares of the Tax-Exempt Fund returned 2.12% and 1.95%,
respectively, before sales charges, and -2.22% and -1.05%, respectively, after
sales charges.
The Fund's performance for the six months ended March 31, 1997 compared to
its benchmark and its peer group was due to its shorter than average duration.
As of March 31, the duration of the GE Tax-Exempt Fund's portfolio was 6.0 years
compared to the Lehman Municipal Bond Index with a duration of 7.27 years.
Duration is a measure of how sensitive an investment is to changes in interest
rates. The longer the duration of a portfolio the greater the impact of changes
in interest rates. By maintaining a lower duration, the impact of rising
interest rates on the GE Tax-Exempt Fund's portfolio was minimized.
In anticipation of higher interest rates, Management reduced the
portfolio's interest rate exposure. This was achieved by replacing securities
with low coupons and longer maturities with securities with shorter maturities
and higher coupons. This approach reduced portfolio duration from 8.5 years to 6
years by March 31, 1997. As a result, the Fund decreased its exposure to
interest rates and improved its income generating ability. A 10% cash position
was also maintained in order to further reduce the portfolio's interest rate
exposure. This higher cash position also provides the Fund with the flexibility
to react as investment opportunities arise during this period of interest rate
volatility.
The Federal Reserve's interest rate hike on March 26 was the most
significant event in the financial markets during the first quarter of 1997. The
potential for more such Federal Reserve action will weight heavily on the bond
markets. Investors will be reluctant to buy bonds as they try to assess the
likelihood that the Federal
27
<PAGE>
Reserve will continue to raise interest rates. Management believes that GE
Tax-Exempt Fund is well positioned to weather this uncertainty. The Fund's
shorter duration will minimize the impact of interest rate rises while the cash
position will allow it to take advantage of any buying opportunities arising
from Federal Reserve monetary policy changes.
Management also believes that the municipal market will continue to be
volatile during the next six months. The Federal Open Market Committee continues
to be aggressive in fighting inflation which means higher interest rates and
lower prices. As such, the Fund is positioned slightly shorter than the index
and peer group with respect to duration in order to minimize the impact of
rising interest rates. Cash will be recycled into higher coupon bonds with low
volatility to enhance the income generation in the Fund. New issue supply should
continue to be light. Refunding activity will decline as rising interest rates
make it uneconomical to retire old debt. This lack of supply should prevent
prices from declining too rapidly.
The major issue facing the municipal market in the coming year continues to
be tax reform. With the Republicans retaining control of Congress some form of
tax reform is expected, but not the broad based tax initiative that was
attempted during last term. There has been talk by the Republicans of setting
aside tax reform in exchange for other budget concessions by the Democrats.
GROWTH OF $10,000 INVESTED IN
CLASS A SHARES OF GE TAX-EXEMPT FUND VS. LEHMAN BROTHERS MUNICIPAL BOND INDEX*
(UNAUDITED)
JANUARY 1, 1994 -- MARCH 31, 1997
[LINE GRAPH APPEARS HERE]
NO LOAD LOAD INDEX
10000 10000 10000
Jan-94 10121.7 9691.53 10114
Feb-94 9772.1 9356.78 9852.05
Mar-94 9381.7 8982.98 9451.07
Apr-94 9453.19 9051.43 9531.4
May-94 9519.74 9115.15 9614.33
Jun-94 9430.35 9029.56 9555.68
Jul-94 9606.04 9197.78 9730.55
Aug-94 9633.41 9223.99 9764.5
Sep-94 9460.21 9058.15 9621.07
Oct-94 9271.19 8877.17 9449.81
Nov-94 9079.28 8693.41 9278.77
Dec-94 9242.16 8849.37 9482.9
Jan-95 9541.98 9136.44 9754.11
Feb-95 9832.24 9414.37 10037.96
Mar-95 9927.02 9505.13 10153.39
Apr-95 9912.33 9491.06 10165.58
May-95 10288.21 9850.96 10489.86
Jun-95 10103.43 9674.04 10398.6
Jul-95 10183.65 9750.85 10497.38
Aug-95 10270.83 9834.32 10630.7
Sep-95 10307.9 9869.82 10696.67
Oct-95 10434.07 9990.62 10852.79
Nov-95 10629.71 10177.95 11032.95
Dec-95 10746.85 10290.11 11138.86
Jan-96 10804.88 10345.68 11223.52
Feb-96 10618.72 10167.42 11147.2
Mar-96 10425.48 9982.39 11004.51
Apr-96 10381.69 9940.47 10973.7
May-96 10356.62 9916.46 10969.31
Jun-96 10455.1 10010.76 11088.88
Jul-96 10556.74 10108.08 11189.79
Aug-96 10523.08 10075.85 11187.55
Sep-96 10670.04 10217.23 11344.17
Oct-96 10801.26 10342.21 11472.36
Nov-96 10995.87 10528.54 11682.31
Dec-96 10933.04 10468.38 11633.24
Jan-97 10943.71 10478.6 11655.35
Feb-97 11028.3 10559.6 11762.57
Mar-97 10897.07 10433.94 11606.13
- --------
* Hypothetical illustration of $10,000 invested in Class A shares at inception
on January 1, 1994 assuming deduction of the maximum 4.25% sales charge at the
time of investment and reinvestment of dividends and capital gains (at net
asset value) through March 31, 1997.
The line graph above depicts the total growth (including reinvestment of
dividends and capital gains) of a hypothetical investment of $10,000 on January
1, 1994 in Class A shares of GE Tax-Exempt Fund as compared
28
<PAGE>
with the growth of a $10,000 investment in the Lehman Brothers Municipal Bond
Index on December 31, 1993. The plot points used to draw the line graphs were as
follows:
<TABLE>
<CAPTION>
GROWTH OF $10,000
GROWTH OF $10,000 INVESTMENT IN LEHMAN
INVESTMENT IN BROTHERS MUNICIPAL
DATE CLASS A SHARES BOND INDEX
------- ----------------- --------------------
<S> <C> <C>
1/1/94 $ 9,575.00 $ 10,000.00
9/30/94 $ 9,058.15 $ 9,621.07
9/30/95 $ 9,869.82 $ 10,697.67
9/30/96 $ 10,217.23 $ 11,344.17
3/31/97 $ 10,433.94 $ 11,606.13
</TABLE>
All figures represent past performance and are not a guarantee of future
results. See Notes to Performance.
GROWTH OF $10,000 INVESTED IN
CLASS B SHARES OF GE TAX-EXEMPT FUND VS. LEHMAN BROTHERS MUNICIPAL BOND INDEX*
(UNAUDITED)
DECEMBER 22, 1993 -- MARCH 31, 1997
[LINE GRAPH APPEARS HERE]
WITHOUT CDSC WITH CDSC INDEX
10000 10000 10000
Dec-93 10051.4 10051.4 10211
Jan-94 10169.5 10169.5 10327.41
Feb-94 9813.27 9813.27 10059.93
Mar-94 9417.1 9417.1 9650.49
Apr-94 9485 9485 9732.52
May-94 9547.7 9547.7 9817.19
Jun-94 9454.03 9454.03 9757.3
Jul-94 9626.19 9626.19 9935.86
Aug-94 9649.58 9649.58 9970.64
Sep-94 9472.13 9472.13 9824.07
Oct-94 9278.9 9278.9 9649.2
Nov-94 9083.11 9083.11 9474.55
Dec-94 9242.25 9242.25 9682.99
Jan-95 9538.19 9538.19 9959.92
Feb-95 9824.62 9824.62 10249.76
Mar-95 9914.81 9914.81 10367.63
Apr-95 9896.37 9896.37 10380.07
May-95 10267.28 10267.28 10711.2
Jun-95 10078.67 10078.67 10618.01
Jul-95 10154.36 10154.36 10718.88
Aug-95 10245.65 10245.65 10855.01
Sep-95 10278.33 10278.33 10923.4
Oct-95 10390.98 10390.98 11081.78
Nov-95 10581.55 10581.55 11265.74
Dec-95 10693.72 10693.72 11373.89
Jan-96 10755.74 10755.74 11460.34
Feb-96 10566.33 10566.33 11382.41
Mar-96 10369.91 10369.91 11236.71
Apr-96 10331.23 10331.23 11205.25
May-96 10293.11 10293.11 11200.77
Jun-96 10395.73 10395.73 11322.85
Jul-96 10492.29 10492.29 11425.89
Aug-96 10454.51 10454.51 11423.61
Sep-96 10587.69 10587.69 11583.54
Oct-96 10712.59 10712.59 11714.43
Nov-96 10910.16 10910.16 11928.81
Dec-96 10834.25 10834.25 11878.7
Jan-97 10849.43 10849.43 11901.27
Feb-97 10929.07 10929.07 12010.77
Mar-97 10794.68 10502.43 11851.02
- ------------------
* Hypothetical illustration of $10,000 invested in Class B shares at inception
on December 22, 1993 assuming deduction of the maximum 3.00% deferred sales
load on a complete redemption that received the price last calculated on the
last business day of the most recent fiscal period and assuming reinvestment
of dividends and capital gains (at net asset value) through March 31, 1997.
The line graph above depicts the total growth (including reinvestment of
dividends and capital gains) of a hypothetical investment of $10,000 on December
22, 1993 in Class B shares of GE Tax-Exempt Fund as
29
<PAGE>
compared with the growth of a $10,000 investment in the Lehman Brothers
Municipal Bond Index on December 31, 1993. The plot points used to draw the line
graphs were as follows:
<TABLE>
<CAPTION>
GROWTH OF $10,000
GROWTH OF $10,000 INVESTMENT IN LEHMAN
INVESTMENT IN BROTHERS MUNICIPAL
DATE CLASS B SHARES BOND INDEX
-------- ----------------- --------------------
<S> <C> <C>
12/22/93 $ 10,000.00 $ 10,000.00
9/30/94 $ 9,472.13 $ 9,824.07
9/30/95 $ 10,278.33 $ 10,923.40
9/30/96 $ 10,587.69 $ 11,583.54
3/31/97 $ 10,502.43 $ 11,851.02
</TABLE>
All figures represent past performance and are not a guarantee of future
results. See Notes to Performance.
GE Short-Term Government Fund. Data released in October and November 1996
showed that our economy was growing at a very modest pace and that inflation was
stable at low levels. Speculation of a possible easing of monetary policy drove
interest rates down .50% reaching a low in November of 5.6% on two year Treasury
notes and 6.4% on 30 year bonds. The economy subsequently picked up steam,
however, which rekindled fears of inflation among fixed income investors and
members of the Federal Reserve. Despite continued good inflation reports, the
Federal Reserve raised short term interest rates in March 1997 in a 'pre-
emptive' move to relieve building price pressures. As a result, yields on 2 year
Treasuries ended the six month period .30% higher at 6.4% while 30 year bond
yields hit 7.1%, about .20% higher than they were at the end of September 1996.
While rising interest rates improve income levels, they tend to have a negative
impact on net asset values (NAVs). This is reflected in the performance of the
Short-Term Government Fund.
The Lehman Brothers 1-3 year Government Index returned 2.6% and the Fund's
Lipper peer group of 186 Short-Term Government mutual funds averaged a return of
2.3%, while Class A shares and Class B shares of the Short-Term Government Fund
returned 2.57% and 2.31%, respectively, before sales charges, and .01% and -
.68%, after sales charges, respectively.
The Fund's performance is attributable to Management's strategy of holding
securities with yields higher than the index. This strategy paid off not only in
terms of greater income but also in better price performance as spreads to U.S.
Treasuries narrowed. Examples of these types of securities are adjustable rate
mortgage-backed securities and issues collateralized by assets such as
automobile loans.
30
<PAGE>
GROWTH OF $10,000 INVESTED IN
CLASS A SHARES OF GE SHORT-TERM GOVERNMENT FUND VS. LEHMAN BROTHERS 1-3 YEAR
GOVERNMENT BOND INDEX*
(UNAUDITED)
MARCH 2, 1994 -- MARCH 31, 1997
[LINE GRAPH APPEARS HERE]
NO LOAD LOAD INDEX
10,000.00 10,000.00 10,000.00
Mar-94 9,942.30 9,693.74 9,949.00
Apr-94 9,864.55 9,517.94 9,911.19
May-94 9,901.54 9,654.00 9,925.07
Jun-94 9,939.96 9,691.46 9,949.88
Jul-94 10,014.71 9,764.34 10,039.43
Aug-94 10,048.16 9,795.95 10,072.56
Sep-94 10,039.62 9,788.63 10,049.39
Oct-94 10,058.09 9,806.64 10,072.51
Nov-94 10,023.69 9,773.10 10,030.20
Dec-94 10,045.85 9,795.68 10,049.26
Jan-95 10,162.18 9,906.13 10,185.93
Feb-95 10,277.42 10,020.49 10,324.46
Mar-95 10,323.98 10,055.88 10,382.28
Apr-95 10,422.68 10,162.11 10,474.68
May-95 10,568.91 10,304.69 10,653.80
Jun-95 10,642.26 10,376.20 10,711.33
Jul-95 10,678.23 10,411.27 10,754.17
Aug-95 10,742.94 10,474.36 10,818.70
Sep-95 10,790.10 10,520.35 10,871.71
Oct-95 10,865.63 10,593.99 10,961.94
Nov-95 10,949.03 10,675.31 11,055.12
Dec-95 11,023.38 10,747.79 11,138.03
Jan-96 11,107.60 10,829.91 11,232.71
Feb-96 11,058.89 10,782.42 11,188.90
Mar-96 11,045.68 10,770.51 11,181.07
Apr-96 11,044.36 10,768.25 11,192.25
May-96 11,061.83 10,785.29 11,215.87
Jun-96 11,135.85 10,857.45 11,298.75
Jul-96 11,174.41 10,895.05 11,342.82
Aug-96 11,203.95 10,923.85 11,384.79
Sep-96 11,289.72 11,007.48 11,488.39
Oct-96 11,415.46 11,130.07 11,818.21
Nov-96 11,502.75 11,215.18 11,704.18
Dec-96 11,499.44 11,211.95 11,706.52
Jan-97 11,547.39 11,258.71 11,762.71
Feb-97 11,577.51 11,255.07 11,790.95
Mar-97 11,580.09 11,290.59 11,781.51
- ------------------
* Hypothetical illustration of $10,000 invested in Class A shares at inception
on March 2, 1994, assuming deduction of the maximum 2.50% sales charge at the
time of investment and reinvestment of dividends and capital gains (at net
asset value) through March 31, 1997.
The line graph above depicts the total growth (including reinvestment of
dividends and capital gains) of a hypothetical investment of $10,000 on March 2,
1994 in Class A shares of GE Short-Term Government Fund as compared with the
growth of a $10,000 investment in the Lehman Brothers 1-3 Year Government Bond
Index on February 28, 1994. The plot points used to draw the line graphs were as
follows:
<TABLE>
<CAPTION>
GROWTH OF $10,000
GROWTH OF $10,000 INVESTMENT IN LEHMAN
INVESTMENT IN BROTHERS 1-3 YEAR
DATE CLASS A SHARES GOVERNMENT BOND INDEX
------- ----------------- ---------------------
<S> <C> <C>
3/2/94 $ 9,750.00 $10,000.00
9/30/94 $ 9,788.63 $10,049.39
9/30/95 $ 10,520.35 $10,871.71
9/30/96 $ 11,007.48 $11,488.39
3/31/97 $ 11,290.59 $11,781.51
</TABLE>
All figures represent past performance and are not a guarantee of future
results. See Notes to Performance.
31
<PAGE>
GROWTH OF $10,000 INVESTED IN
CLASS B SHARES OF GE SHORT-TERM GOVERNMENT FUND VS. LEHMAN BROTHERS 1-3 YEAR
GOVERNMENT BOND INDEX*
(UNAUDITED)
MARCH 2, 1994 -- MARCH 31, 1997
[LINE GRAPH APPEARS HERE]
NO LOAD LOAD INDEX
10,000.00 10,000.00 10,000.00
Mar-94 9,939.30 9,939.30 9,949.00
Apr-94 9,867.04 9,867.04 9,911.19
May-94 9,892.79 9,892.79 9,925.07
Jun-94 9,936.92 9,936.92 9,949.88
Jul-94 10,000.31 10,000.31 10,039.43
Aug-94 10,030.91 10,030.91 10,072.56
Sep-94 10,019.58 10,019.58 10,049.39
Oct-94 10,025.39 10,026.39 10,072.51
Nov-94 9,989.09 9,989.09 10,030.20
Dec-94 10,017.76 10,017.76 10,049.26
Jan-95 10,129.76 10,129.76 10,185.93
Feb-95 10,233.19 10,233.19 10,324.46
Mar-95 10,285.38 10,285.38 10,382.28
Apr-95 10,372.18 10,372.18 10,474.68
May-95 10,523.62 10,523.62 10,653.80
Jun-95 10,593.60 10,593.60 10,711.33
Jul-95 10,626.23 10,626.23 10,754.17
Aug-95 10,575.51 10,575.51 10,818.70
Sep-95 10,722.29 10,722.29 10,871.71
Oct-95 10,794.24 10,794.24 10,961.94
Nov-95 10,883.08 10,883.08 11,055.12
Dec-95 10,944.67 10,944.67 11,138.03
Jan-96 11,025.12 11,025.12 11,232.71
Feb-96 10,973.63 10,973.63 11,188.90
Mar-96 10,958.27 10,958.27 11,181.07
Apr-96 10,952.79 10,952.79 11,192.25
May-96 10,976.18 10,976.18 11,216.87
Jun-96 11,037.10 11,037.10 11,298.75
Jul-96 11,072.02 11,072.02 11,342.82
Aug-96 11,097.95 11,097.95 11,384.79
Sep-96 11,189.26 11,189.26 11,488.39
Oct-96 11,310.49 11,310.49 11,618.21
Nov-96 11,384.17 11,384.17 11,704.18
Dec-96 11,377.44 11,377.44 11,705.52
Jan-97 11,421.49 11,421.49 11,762.71
Feb-97 11,457.87 11,457.87 11,790.95
Mar-97 11,447.24 11,153.74 11,781.51
- ------------------
* Hypothetical illustration of $10,000 invested in Class B shares at inception
on March 2, 1994, assuming deduction of the maximum 3.00% deferred sales load
on a complete redemption that received the price last calculated on the last
business day of the most recent fiscal period and assuming reinvestment of
dividends and capital gains (at net asset value) through March 31, 1997.
The line graph above depicts the total growth (including reinvestment of
dividends and capital gains) of a hypothetical investment of $10,000 on March 2,
1994 in Class B shares of GE Short-Term Government Fund as compared with the
growth of a $10,000 investment in the Lehman Brothers 1-3 Year Government Bond
Index on February 28, 1994. The plot points used to draw the line graphs were as
follows:
<TABLE>
<CAPTION>
GROWTH OF $10,000
GROWTH OF $10,000 INVESTMENT IN LEHMAN
INVESTMENT IN BROTHERS 1-3 YEAR
DATE CLASS B SHARES GOVERNMENT BOND INDEX
------- ----------------- ---------------------
<S> <C> <C>
3/2/94 $ 10,000.00 $10,000.00
9/30/94 $ 10,019.58 $10,049.39
9/30/95 $ 10,722.29 $10,871.71
9/30/96 $ 11,189.26 $11,488.39
3/31/97 $ 11,153.74 $11,781.51
</TABLE>
All figures represent past performance and are not a guarantee of future
results. See Notes to Performance.
32
<PAGE>
The chart below shows the historical performance of GE Short-Term
Government Fund and GE Tax-Exempt Fund for the referenced period compared to the
historical performance of broad market indexes for the same time period. GE
Government Securities Fund, GE Value Equity Fund and GE Mid-Cap Growth Fund will
not commence operations until the consummation of the Reorganization, and
accordingly, no performance information is currently available for these Funds.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN (IN %) (AS OF 3/31/97)
------------------------------------------------------------------------------
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 Short-Term Government Fund
Class A.................... 4.83 5.21 -- -- 4.88 (3/2/94) 2.21 4.34 4.01 (3/2/94)
Class B.................... 4.46 4.82 -- -- 4.49 (3/2/94) 1.48 4.52 4.19 (3/2/94)
Lehman Brothers 1-3 Year
Government Bond Index...... 5.36 5.79 5.67 7.11 N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------
GE Tax-Exempt Fund
Class A.................... 4.52 5.21 -- -- 2.68 (1/1/94) 0.08 3.60 1.31 (1/1/94)
Class B.................... 4.10 4.66 -- -- 2.37 (12/22/93) -1.10 4.35 2.09 (12/22/93)
Lehman Brothers Municipal
Bond Index................. 5.45 7.08 7.17 7.51 N/A N/A N/A N/A
</TABLE>
NOTES TO PERFORMANCE
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. GEIM has voluntarily agreed to reduce or otherwise limit certain
expenses of GE Short-Term Government Fund and GE Tax-Exempt Fund. Absent these
limits, each Fund's performance would have been lower. These limits may be
terminated at any time.
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. 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. The
results shown for the foregoing indexes assume the reinvestment of net
dividends.
The performance of each Fund's other classes of shares may be greater or
less than the performance of Class A shares or Class B shares indicated in the
above charts, depending on the sales charges and fees incurred by shareholders
investing in the other classes.
Investment returns and principal value will fluctuate, and redemption
values may be more or less than the original cost. No adjustments have been made
for shareholder tax liability on dividends or capital gains.
Shares of GE Short-Term Government Fund are neither insured nor guaranteed
by the U.S. Government and their prices will fluctuate with market conditions.
A portion of GE Tax-Exempt Fund's income may be subject to state, federal
and/or alternative minimum tax. Capital gains, if any, are subject to capital
gains tax.
The views expressed under 'Management's Discussion and Analysis of Market
Conditions and Portfolio Review' in this section reflect the judgment of GEIM as
of March 31, 1997 and are subject to change at any time without notice.
33
<PAGE>
INFORMATION ABOUT THE ACQUIRED FUNDS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF MARKET CONDITIONS AND PORTFOLIO REVIEW
(THROUGH APRIL 30, 1997)
INVESTORS TRUST ADJUSTABLE RATE FUND
Economic and Market Overview
Interest rates have trended upward over the latest six month period. Rising
concern over inflationary pressures due to a strengthening economy led up to the
25 basis point rate hike by the Federal Reserve Board (the 'Fed') in March. The
Fed's move appeared to be a preemptive strike against inflation. The current
economic picture supports moderate growth, although considerable uncertainty
remains regarding the timing and magnitude of future Fed moves. In general,
strong consumer spending and job growth in today's tight labor market are likely
to result in upward inflationary pressure. As this is yet to play out, interest
rates have fluctuated in about a 0.50% range.
As interest rates have drifted moderately higher, mortgage assets, ranging
from adjustable rate mortgages ('ARMs'), fixed rate pass-throughs and asset
backed securities, have benefited from declining prepayment risk and a
tightening spread environment. Additionally, declining market volatility has
reduced the value of embedded options; thereby decreasing the sector's overall
call risk. With increased demand for spread product and low supply, mortgage
assets performed well in the latest six months. The Fund's dominant position is
in the ARM sector which posted strong return performance relative to similar
duration Treasuries.
Portfolio Strategy
Reflecting our more defensive posture, the Fund's duration relative to the
ARM Index is neutral. The Fund's sub-adviser also concerned with potential
spread widening as a result of cap risk if rates rise significantly. As a
result, it has reduced the Fund's position in GNMA ARMs in favor of both fixed
rate pass-throughs and asset backeds. However, if bond yields continue to trade
in a moderate range, spread product, in general, should perform well.
Outlook
While economic growth was strong in the first quarter of 1997, it is likely
to moderate in the coming months. However, high employment, housing activity,
retail sales and consumer confidence continue to push economic growth ahead.
Despite continued positive inflation news, the economic picture supports our
bias toward moderately higher interest rates. In addition, the risk for growth
to be stronger than expected appears more likely than a substantial weakening in
the economy. Therefore, the sub-adviser is more defensive in its outlook and it
expects that current economic conditions will warrant another Fed hike before
year end.
34
<PAGE>
Performance of a $10,000 investment since inception of Investors Trust
Adjustable Rate Fund (9/8/93):
[LINE GRAPH APPEARS HERE]
MONTH ITARA ITARB LBARMI MGBARM
Aug 1993 10,000 10,000 10,000 10,000
Sep 1993 10,014 9,997 10,001 10,020
Oct 1993 10,026 10,003 10,005 10,039
Nov 1993 10,009 9,981 9,978 10,036
Dec 1993 10,072 10,052 10,053 10,063
Jan 1994 10,083 10,057 10,120 10,099
Feb 1994 10,021 10,006 10,088 10,089
Mar 1994 9,926 9,889 10,008 10,051
Apr 1994 9,850 9,807 9,955 10,018
May 1994 9,804 9,756 9,947 9,998
Jun 1994 9,791 9,736 9,969 10,002
Jul 1994 9,906 9,844 10,030 10,037
Aug 1994 9,926 9,858 10,079 10,033
Sep 1994 9,917 9,843 10,038 9,999
Oct 1994 9,876 9,796 10,030 9,961
Nov 1994 9,821 9,735 10,001 9,884
Dec 1994 9,863 9,771 10,054 9,803
Jan 1995 9,987 9,888 10,220 9,816
Feb 1995 10,127 10,021 10,426 9,906
Mar 1995 10,252 10,138 10,476 9,968
Apr 1995 10,326 10,205 10,587 10,017
May 1995 10,518 10,387 10,758 10,118
Jun 1995 10,560 10,423 10,803 10,107
Jul 1995 10,554 10,410 10,841 10,123
Aug 1995 10,642 10,490 10,908 10,174
Sep 1995 10,714 10,555 10,985 10,176
Oct 1995 10,785 10,618 11,053 10,145
Nov 1995 10,864 10,689 11,147 10,210
Dec 1995 10,929 10,746 11,232 10,246
Jan 1996 11,026 10,835 11,310 10,305
Feb 1996 11,005 10,802 11,335 10,306
Mar 1996 10,982 10,773 11,356 10,324
Apr 1996 11,014 10,781 11,370 10,352
May 1996 11,048 10,823 11,403 10,384
Jun 1996 11,119 10,886 11,484 10,442
Jul 1996 11,152 10,924 11,541 10,482
Aug 1996 11,220 10,966 11,610 10,529
Sep 1996 11,308 11,046 11,699 10,602
Oct 1996 11,429 11,157 11,833 10,690
Nov 1996 11,518 11,246 11,946 10,764
Dec 1996 11,541 11,268 11,984 10,783
Jan 1997 11,611 11,354 12,054 10,855
Feb 1997 11,667 11,409 12,122 10,904
Mar 1997 11,705 11,429 12,145 10,921
Apr 1997 11,798 11,520 12,239 10,994
Past performance is not indicative of future results. See Notes to
Performance following this section.
INVESTORS TRUST GOVERNMENT FUND
Economic and Market Overview
Stronger economic data and accompanying inflation fears caused U.S.
Treasury yields to rise for the majority of the six month period between
November 1, 1996 and April 30, 1997.
After reaching their lowest levels since March of 1996, Treasury yields
began rising, causing bond prices to fall, in December after Federal Reserve
Chairman Alan Greenspan's mention of 'irrational exuberance' in the financial
markets. Data indicating continued economic strength characterized the first
four months of 1997. Although inflationary measures such as commodity, producer
and consumer prices remained relatively stable, labor markets continued to
strengthen. For example, over 700,000 new jobs were created in the first
quarter. Therefore, although inflation was largely nonexistent, the combination
of a robust economy, tight labor markets and strong consumer confidence led the
Federal Reserve to raise the Federal funds rate by 25 basis points (.25%) at
their March 25 monetary policy meeting to subdue this growth and pre-emptively
fight inflation. Hints of moderating economic growth during April proved to be a
more accommodating environment for bonds, as Treasury yields fell towards
month-end in response to a strong dollar, rising stock market and optimism for a
balanced-budget agreement.
For the six month period, the yield of 5-year Treasury note rose 0.50% to
end April at 6.57%. However, the 5-year's yield reached a high of 6.85% in
mid-April before falling the last two weeks of the month as the likelihood
decreased for another interest rate hike by the Federal Reserve at their May
meeting. Over the six month period, spread product (bonds that offer yield
spreads over Treasuries) outperformed Treasuries. In particular, mortgage-backed
securities ('MBS') posted good relative performance primarily due to low
interest rate volatility and subdued refinancing concerns. Over the period, the
MBS market as measured by the Lehman Mortgage Index returned 2.63% versus the
Treasury market's return (measured by the Merrill Lynch 5-7 year Treasury Index)
of 1.04%.
35
<PAGE>
Portfolio Strategy
The Fund significantly reduced its U.S. Treasury holdings during the past
six months and reallocated those assets into high credit quality bonds which
offer higher yields than Treasuries. Specifically, the Fund's weightings in
Small Business Administration ('SBA') and Federal Housing Authority ('FHA')
Loans were increased. These asset classes offer attractive yield spreads over
comparable maturity Treasury securities, while typically providing more stable
cash flows than residential MBS. The Fund continues to emphasize seasoned, or
older, mortgage pass-through securities versus newly issued pass-throughs
because seasoned securities are expected to provide more prepayment stability
(and, therefore, more stable cash flows) over time.
The Fund's sub-adviser expects that both production and consumption will
continue to be strong in the coming months. However, the combined effects of
higher interest rates and already rising consumer debt should lead to more
moderate economic growth later in 1997. Despite inflation remaining relatively
low, the potential for future inflation exists. Therefore, the sub-adviser
maintains a cautious fundamental outlook for bonds. An additional 25 to 50 basis
points of interest rate increases by the Fed may still be necessary to temper
economic growth to a more sustainable rate, although the sub-adviser does not
believe that 1997 will see a repeat of the dramatic rise in short term interest
rates that the market witnessed in 1994.
Outlook
As discussed above, the Fund's allocation to U.S. Treasury securities has
been reduced in light of the sub-adviser's expectation for higher domestic bond
yields in the near future. Accordingly, the Fund is substantially invested in
mortgages and other spread product (SBA and FHA Project Loans, for example),
which the sub-adviser believes will provide higher total returns than Treasuries
while providing a higher level of income. The Fund's long-standing bias towards
seasoned mortgage pass-throughs remains intact, as market participants have
begun to value the relative prepayment stability of these bonds compared to
newly issued pass-throughs.
Performance of a $10,000 investment since inception of Investors Trust
Government Fund A shares (9/8/93):
[LINE GRAPH APPEARS HERE]
MONTH ITGOVA LBGBI MGBG
Aug 1993 10,000 10,000 10,000
Sep 1993 9,903 10,038 10,024
Oct 1993 9,940 10,076 10,044
Nov 1993 9,847 9,965 9,962
Dec 1993 9,910 10,004 10,005
Jan 1994 10,084 10,141 10,108
Feb 1994 9,853 9,926 9,948
Mar 1994 9,609 9,703 9,754
Apr 1994 9,480 9,626 9,667
May 1994 9,220 9,614 9,646
Jun 1994 9,162 9,592 9,622
Jul 1994 9,305 9,768 9,751
Aug 1994 9,248 9,770 9,759
Sep 1994 9,084 9,632 9,648
Oct 1994 9,029 9,626 9,634
Nov 1994 8,980 9,608 9,604
Dec 1994 9,060 9,667 9,655
Jan 1995 9,187 9,847 9,805
Feb 1995 9,321 10,058 9,997
Mar 1995 9,365 10,122 10,046
Apr 1995 9,470 10,254 10,156
May 1995 9,780 10,668 10,473
Jun 1995 9,842 10,750 10,530
Jul 1995 9,806 10,710 10,504
Aug 1995 9,904 10,835 10,612
Sep 1995 9,979 10,939 10,699
Oct 1995 10,091 11,106 10,826
Nov 1995 10,225 11,279 10,965
Dec 1995 10,350 11,439 11,095
Jan 1996 10,440 11,509 11,155
Feb 1996 10,255 11,274 10,974
Mar 1996 10,167 11,180 10,901
Apr 1996 10,128 11,109 10,842
May 1996 10,083 11,090 10,817
Jun 1996 10,189 11,233 10,927
Jul 1996 10,213 11,261 10,952
Aug 1996 10,186 11,236 10,937
Sep 1996 10,369 11,423 11,094
Oct 1996 10,592 11,674 11,297
Nov 1996 10,764 11,877 11,462
Dec 1996 10,663 11,756 11,372
Jan 1997 10,699 11,769 11,399
Feb 1997 10,730 11,786 11,418
Mar 1997 10,618 11,661 11,306
Apr 1997 10,782 11,828 11,446
36
<PAGE>
Performance of a $10,000 investment since inception of Investors Trust
Government Fund B shares (4/22/87):
[LINE GRAPH APPEARS HERE]
MONTH ITGOVB LBGBI MGBG
Mar 1987 10,000 10,000 10,000
Apr 1987 10,014 9,754 9,730
May 1987 9,946 9,712 9,691
Jun 1987 10,064 9,826 9,807
Jul 1987 10,010 9,805 9,806
Aug 1987 9,920 9,750 9,754
Sep 1987 9,654 9,561 9,559
Oct 1987 10,130 9,933 9,841
Nov 1987 10,202 9,982 9,914
Dec 1987 10,338 10,100 10,024
Jan 1988 10,668 10,431 10,315
Feb 1988 10,805 10,542 10,421
Mar 1988 10,746 10,434 10,343
Apr 1988 10,708 10,378 10,310
May 1988 10,614 10,305 10,259
Jun 1988 10,890 10,532 10,448
Jul 1988 10,851 10,461 10,417
Aug 1988 10,859 10,482 10,427
Sep 1988 11,060 10,710 10,611
Oct 1988 11,240 10,899 10,763
Nov 1988 11,142 10,770 10,679
Dec 1988 11,066 10,811 10,682
Jan 1989 11,223 10,948 10,797
Feb 1989 11,156 10,860 10,750
Mar 1989 11,161 10,926 10,786
Apr 1989 11,383 11,160 10,961
May 1989 11,654 11,423 11,182
Jun 1989 11,928 11,805 11,455
Jul 1989 12,120 12,054 11,637
Aug 1989 12,025 11,851 11,511
Sep 1989 12,078 11,902 11,561
Oct 1989 12,318 12,210 11,792
Nov 1989 12,447 12,329 11,894
Dec 1989 12,518 12,350 11,942
Jan 1990 12,441 12,174 11,812
Feb 1990 12,486 12,199 11,852
Mar 1990 12,532 12,196 11,867
Apr 1990 12,451 12,089 11,773
May 1990 12,759 12,426 12,063
Jun 1990 12,932 12,623 12,230
Jul 1990 13,136 12,784 12,390
Aug 1990 13,055 12,607 12,258
Sep 1990 13,149 12,728 12,350
Oct 1990 13,248 12,935 12,495
Nov 1990 13,469 13,222 12,747
Dec 1990 13,651 13,427 12,938
Jan 1991 13,827 13,571 13,068
Feb 1991 13,941 13,648 13,139
Mar 1991 14,012 13,718 13,198
Apr 1991 14,133 13,869 13,328
May 1991 14,215 13,923 13,394
Jun 1991 14,220 13,903 13,378
Jul 1991 14,406 14,069 13,547
Aug 1991 14,694 14,395 13,819
Sep 1991 14,952 14,697 14,077
Oct 1991 15,113 14,827 14,217
Nov 1991 15,210 14,975 14,336
Dec 1991 15,538 15,486 14,755
Jan 1992 15,433 15,244 14,543
Feb 1992 15,510 15,304 14,609
Mar 1992 15,394 15,215 14,538
Apr 1992 15,441 15,311 14,635
May 1992 15,698 15,594 14,866
Jun 1992 15,905 15,817 15,058
Jul 1992 16,229 16,215 15,324
Aug 1992 16,360 16,366 15,461
Sep 1992 16,474 16,597 15,626
Oct 1992 16,283 16,358 15,433
Nov 1992 16,251 16,330 15,418
Dec 1992 16,437 16,605 15,633
Jan 1993 16,702 16,958 15,889
Feb 1993 16,912 17,297 16,121
Mar 1993 16,969 17,354 16,173
Apr 1993 17,119 17,488 16,273
May 1993 17,138 17,469 16,264
Jun 1993 17,495 17,857 16,522
Jul 1993 17,549 17,966 16,595
Aug 1993 17,825 18,366 16,852
Sep 1993 17,754 18,436 16,893
Oct 1993 17,826 18,506 16,925
Nov 1993 17,630 18,302 16,788
Dec 1993 17,732 18,374 16,860
Jan 1994 18,014 18,626 17,033
Feb 1994 17,590 18,231 16,765
Mar 1994 17,160 17,821 16,437
Apr 1994 16,918 17,680 16,290
May 1994 16,442 17,657 16,255
Jun 1994 16,328 17,616 16,215
Jul 1994 16,572 17,940 16,431
Aug 1994 16,461 17,944 16,445
Sep 1994 16,158 17,691 16,259
Oct 1994 16,047 17,678 16,235
Nov 1994 15,969 17,647 16,184
Dec 1994 16,100 17,754 16,270
Jan 1995 16,296 18,085 16,523
Feb 1995 16,563 18,473 16,846
Mar 1995 16,631 18,590 16,930
Apr 1995 16,807 18,833 17,115
May 1995 17,346 19,592 17,648
Jun 1995 17,445 19,743 17,746
Jul 1995 17,370 19,670 17,701
Aug 1995 17,534 19,900 17,883
Sep 1995 17,655 20,091 18,029
Oct 1995 17,843 20,397 18,244
Nov 1995 18,068 20,715 18,477
Dec 1995 18,279 21,009 18,698
Jan 1996 18,405 21,137 18,799
Feb 1996 18,089 20,706 18,493
Mar 1996 17,902 20,534 18,370
Apr 1996 17,801 20,403 18,271
May 1996 17,730 20,368 18,228
Jun 1996 17,905 20,631 18,414
Jul 1996 17,935 20,682 18,456
Aug 1996 17,876 20,637 18,430
Sep 1996 18,162 20,979 18,695
Oct 1996 18,563 21,441 19,037
Nov 1996 18,830 21,814 19,316
Dec 1996 18,663 21,591 19,164
Jan 1997 18,714 21,615 19,209
Feb 1997 18,758 21,645 19,241
Mar 1997 18,548 21,416 19,052
Apr 1997 18,822 21,724 19,288
Past performance is not indicative of future results. See Notes to
Performance following this section.
37
<PAGE>
INVESTORS TRUST TAX FREE FUND
Economic and Market Overview
In November, municipal prices embarked on a heady rally as investors
focused on signs of weaker than expected U.S. economic activity; subdued, and
possibly overstated, inflation; a rising U.S. dollar; and an enhanced prospect
for deficit reduction. Yields fell by 0.15%-0.20% before Federal Reserve
Chairman Greenspan sobered expectations in early December, and profit-taking set
in. Amid strong export demand and construction activity, the U.S. economy
rebounded. Rising liquidity fueled domestic demand, while tightening labor
markets increased the upward pressure on prices. On March 25, 1997, the Federal
Reserve raised the funds rate by 0.25% to 5.50%, after keeping monetary policy
stable over the preceding 14 months. Municipal yields, which had been creeping
higher, jumped an additional 0.25%-0.35% following the Fed's rate hike.
Financing volume picked up as issuers hurried to market to lock in their
financing.
For the period, municipal rates rose on overnight maturities by 0.50%, on 5
year maturities by 0.40%, and on 15 year and longer maturities by 0.10%. The
0-30 year yield curve flattened by 0.28%. In the period, municipals outperformed
comparable maturity taxable bonds, such as Treasuries and corporates, and
municipals with higher coupons outperformed those with lower coupons.
Portfolio Strategy
During the last six months, the Fund's sub-adviser has taken on a
moderately defensive posture as yields initially fell, then rose. The Fund's
duration (sensitivity to changes in the level of interest rates) has been
reduced accordingly. The Fund began the period with average duration of 6.6
years and concluded with average duration of 5.7 years. On December 5, 1996, we
shifted from a moderately bullish stance to a neutral posture, feeling that
interest rates had little room to fall further. On March 5, 1997, the
sub-adviser was prompted by Greenspan's comments during his Humphrey-Hawkins
testimony to become more cautious. Anticipating that rates would shift upward,
the sub-adviser reduced the Fund's exposure and increased liquidity by selling
some intermediate maturities carrying lower (5.25%-6.10%) coupons and
redeploying their proceeds into overnight and cash-equivalent maturities. The
Fund's sub-adviser managed these sales transactions so as to avoid incurring net
capital gains tax liability, and continue to maintain a high credit quality and
high average coupon.
The Fund is now positioned with a duration that is moderately shorter than
the portfolio's 'neutral point' so as to benefit from the somewhat higher
interest rate environment the Fund's sub-adviser anticipates in the coming
quarter. The portfolio's duration is 5.7 years, or 95% of duration neutrality,
which is 6 years. Portfolio issues are concentrated in 7-20 year maturities so
as to lock in the high tax free yields of the steepest part of the yield curve
and to benefit from 'rolling down the yield curve' and from lower yields over
time. At the same time, cash equivalent securities now constitute over 8% of the
Fund. These will benefit from the higher interest rates and flatter yield curve
that the sub-adviser anticipates and will provide liquidity to lock in the
expected higher interest rates. Our average coupon is over 7%. The Fund's
sub-adviser prefers call-protected premium coupons for their greater tax-free
yields to maturity, and their more defensive characteristics. Further, they
avoid the unfavorable tax effects of market discount bonds. The Fund's average
credit quality is Aa+, with over 65% of the portfolio backed by U.S. Treasury
securities held in escrow. The Fund's high credit quality and broad geographical
diversification are designed to protect against 'event risk' that could arise
from a local economic/political development or from a natural disaster. The Fund
has no derivatives, Section 144A, or alternative minimum tax bonds in the Fund's
portfolio. The investment philosophy of the Fund's sub-adviser is to take
measured interest rate exposure using liquid, open-market debt of high quality
issuers.
Outlook
Secular (Long-term) themes remain supportive for bonds
o Fiscal Policy is restraining on a global basis
o Inflation is declining throughout the industrialized world
o Real interest rates remain high
38
<PAGE>
Cyclical (Short-term) themes are more mixed
Economic activity in the U.S. is showing remarkable resilience. Real GDP
growth surged 5.6% in the first quarter of 1997, outpacing the fourth quarter of
1996's already robust 3.8% rate. Strong employment and income growth and a
rising stock market have stimulated housing and consumer spending; moderate but
still positive corporate earnings growth continues to support capital spending.
The Fund's sub-adviser expects GDP growth in the second quarter to be above 3%.
For now, broader inflation measures remain stable. However, the absence of
slack in the economy could put further upward pressure on prices unless the Fed
is successful in slowing economic activity. The Fed, concerned about rising
labor costs and continued above-trend growth, has tightened pre-emptively in
order to keep inflation in check. The Fund's sub-adviser believes the Fed will
tighten by an additional 25-50 basis points by the end of the summer to slow
economic activity and to insure continued low rates of inflation.
Performance of a $10,000 investment since inception of Investors Trust Tax
Free Fund (9/8/93):
[LINE GRAPH APPEARS HERE]
MONTH ITTFA ITTFB LB10GOI MMBN
Aug 1993 10,000 10,000 10,000 10,000
Sep 1993 10,030 10,034 10,125 10,112
Oct 1993 10,054 10,043 10,138 10,132
Nov 1993 9,971 9,954 10,065 10,048
Dec 1993 10,162 10,147 10,278 10,231
Jan 1994 10,283 10,261 10,408 10,338
Feb 1994 10,011 9,983 10,081 10,099
Mar 1994 9,725 9,683 9,710 9,729
Apr 1994 9,712 9,673 9,830 9,767
May 1994 9,835 9,789 9,908 9,845
Jun 1994 9,795 9,743 9,854 9,799
Jul 1994 9,965 9,907 10,012 9,949
Aug 1994 9,998 9,940 10,061 9,976
Sep 1994 9,884 9,827 9,918 9,844
Oct 1994 9,753 9,697 9,788 9,693
Nov 1994 9,620 9,565 9,597 9,522
Dec 1994 9,793 9,737 9,755 9,715
Jan 1995 10,032 9,974 9,998 9,953
Feb 1995 10,296 10,236 10,288 10,206
Mar 1995 10,427 10,366 10,447 10,294
Apr 1995 10,432 10,371 10,453 10,305
May 1995 10,742 10,679 10,784 10,581
Jun 1995 10,614 10,561 10,710 10,502
Jul 1995 10,659 10,597 10,863 10,576
Aug 1995 10,809 10,746 11,012 10,681
Sep 1995 10,814 10,760 11,088 10,739
Oct 1995 10,946 10,892 11,205 10,876
Nov 1995 11,126 11,061 11,357 11,049
Dec 1995 11,289 11,223 11,427 11,154
Jan 1996 11,344 11,277 11,557 11,219
Feb 1996 11,339 11,272 11,521 11,156
Mar 1996 11,111 11,045 11,373 11,005
Apr 1996 11,096 11,041 11,325 10,968
May 1996 11,146 11,080 11,282 10,974
Jun 1996 11,211 11,155 11,387 11,062
Jul 1996 11,379 11,312 11,508 11,154
Aug 1996 11,406 11,338 11,505 11,154
Sep 1996 11,512 11,454 11,626 11,285
Oct 1996 11,621 11,562 11,775 11,397
Nov 1996 11,779 11,709 12,026 11,576
Dec 1996 11,746 11,676 11,972 11,540
Jan 1997 11,814 11,754 12,011 11,548
Feb 1997 11,951 11,890 12,131 11,640
Mar 1997 11,837 11,766 11,966 11,509
Apr 1997 11,884 11,823 12,045 11,587
Past performance is not indicative of future results. See Notes to
Performance following this section.
39
<PAGE>
INVESTORS TRUST VALUE FUND
Economic and Market Overview
The stock market experienced a strong six month showing, with the S&P 500
up 14.7%. It is evident that the larger, high quality companies continued to
drive the market over the past six months, with the S&P 400 mid cap index
returning only 6.8% and the Russell 2000 small cap index returning just 1.5%.
Indeed, the narrowness of the market is shown by the fact that the twenty
largest companies (ranked by market values as of 4/30/97) in the S&P 500
accounted for 51% of the index's return for the six-month period.
The interest rate increase in March added to the volatility of the markets
and further heightened the uncertainty surrounding possible future moves by the
Federal Reserve Bank. This environment has market participants continuing to
focus on higher quality, larger capitalization issues with solid fundamentals.
Portfolio Strategy
The Fund's focus on large, high quality consistent companies benefited
performance over the past six months, as these companies continued to perform
well.
The best and worst performing stocks held throughout the six months were:
<TABLE>
<CAPTION>
BEST WORST
------------------- -------------------------
<S> <C> <C> <C>
Microsoft.......... +77.1% Cisco Systems............ -16.4%
American Express... +40.9% PPG Industries........... - 3.5%
Intel.............. +39.5% Chase Manhattan.......... +8.8%
Exxon.............. +29.9% American Home Products... +9.3%
Campbell Soup...... +28.9% Kimberly Clark........... +10.9%
</TABLE>
The Fund has an overweighing in the defensive sector, emphasizing
consistent companies in the drug and household products industries. The Fund's
sub-adviser likes the drug industry because, with an aging population, it has a
high degree of confidence in the ability of these types of companies to produce
solid earnings growth in an uncertain environment (Eli Lilly, Pfizer, Bristol
Myers). The Fund's overweighing in the household product industry is an
outgrowth of the international growth potential and strong profit growth of
these dominant name brand players (Procter & Gamble, Gillette, Kimberly Clark).
As these companies became more aggressive with international volume growth the
result has been consistent double digit earnings and dividend growth for
shareholders.
The Fund continues to be underweight in the interest-sensitive sector. This
is mainly due to our lack of representation in the electric and gas utility
industries. The Fund has been under represented in these industries for a long
time, with the uncertainty of future earnings surrounding deregulation and other
looming legislative concerns. However, within the interest-sensitive sector, the
Fund remains attracted to American Express, Chase Manhattan, Banc One and
National City. With compelling valuations and improving business situations, the
Fund's sub-adviser feels these fundamentals continue to warrant positions.
The Fund is underweight in the energy sector due to the sub-adviser's
outlook for falling oil prices. Within the technology sector, the Fund is
underweight relative to the S&P 500, but continues to hold significant positions
in the high quality market leaders such as Intel, Microsoft and Compaq.
Going forward, the Fund's sub-adviser anticipates that the securities owned
by the Fund will benefit from the financial markets uncertainty surrounding
future interest rates and slowing corporate profit growth. This environment is
ideal, and the sub-adviser believes sustainable, for companies whose securities
are held by the Fund, that is high quality, blue-chip companies with consistent
earnings and dividend growth.
Outlook
Economic data indicates first quarter 1997 GDP growth of 5.6% was well
above the Fed's non-inflationary target of 2-2.5%. Even if this trend continues
into the second quarter, it is not sustainable. There are increasing indications
of a tightening labor market and wage costs continue to be a major watch signal
for the Federal Reserve, but the Fund's sub-adviser does not believe wage costs
will increase enough to be inflationary. The sub-
40
<PAGE>
adviser continues to feel that worker productivity will be strong and
inflationary pressures will remain moderate. The sub-adviser is projecting a
stable inflationary environment with the CPI remaining in the mid 2% range. The
Federal Reserve may increase rates again in the near term, which would put
short-term pressure on the markets, but longer term, any preemptive moves should
not be so severe as to push the economy into a recession.
In the judgment of the Fund's sub-adviser, as this is written, the stock
market is currently fairly valued relative to the fixed income markets. The
sub-adviser expects the uncertainty surrounding interest rates and slowing
corporate profit growth will continue to favor high quality, liquid companies
with consistent earnings and dividends for the remainder of 1997.
Performance of $10,000 investment since inception of Investors Trust Value
Fund (9/8/93):
[LINE GRAPH APPEARS HERE]
MONTH ITVA ITVB S&P500 MEI
Aug 1993 10,000 10,000 10,000 10,000
Sep 1993 10,040 10,067 9,926 10,009
Oct 1993 10,173 10,187 10,128 10,122
Nov 1993 10,093 10,107 10,032 9,964
Dec 1993 10,141 10,147 10,156 10,138
Jan 1994 10,208 10,200 10,496 10,420
Feb 1994 9,967 9,960 10,213 10,161
Mar 1994 9,574 9,556 9,768 9,762
Apr 1994 9,722 9,690 9,895 9,875
May 1994 9,789 9,757 10,057 9,968
Jun 1994 9,595 9,561 9,808 9,815
Jul 1994 9,837 9,789 10,133 10,070
Aug 1994 10,093 10,044 10,545 10,383
Sep 1994 9,925 9,873 10,291 10,193
Oct 1994 10,141 10,075 10,527 10,258
Nov 1994 9,831 9,766 10,140 9,871
Dec 1994 9,972 9,902 10,288 9,958
Jan 1995 10,231 10,145 10,556 10,148
Feb 1995 10,557 10,469 10,966 10,473
Mar 1995 10,731 10,626 11,290 10,717
Apr 1995 11,073 10,964 11,619 10,959
May 1995 11,414 11,289 12,078 11,292
Jun 1995 11,517 11,383 12,361 11,418
Jul 1995 11,832 11,695 12,773 11,712
Aug 1995 11,778 11,641 12,808 11,821
Sep 1995 12,289 12,140 13,344 12,217
Oct 1995 12,316 12,140 13,297 12,091
Nov 1995 12,715 12,534 13,883 12,618
Dec 1995 12,919 12,724 14,139 12,922
Jan 1996 13,309 13,095 14,626 13,228
Feb 1996 13,462 13,232 14,766 13,344
Mar 1996 13,491 13,268 14,908 13,524
Apr 1996 13,700 13,460 15,127 13,660
May 1996 14,021 13,763 15,517 13,867
Jun 1996 13,986 13,732 15,581 13,905
Jul 1996 13,454 13,196 14,888 13,412
Aug 1996 13,720 13,457 15,203 13,759
Sep 1996 14,770 14,462 16,058 14,285
Oct 1996 15,162 14,847 16,498 14,610
Nov 1996 16,239 15,893 17,750 15,420
Dec 1996 15,843 15,491 17,402 15,354
Jan 1997 16,953 16,563 18,483 15,891
Feb 1997 17,059 16,667 18,632 16,091
Mar 1997 16,253 15,863 17,857 15,609
Apr 1997 17,469 17,040 18,922 16,060
Past performance is not indicative of future results. See Notes to
Performance following this section.
41
<PAGE>
INVESTORS TRUST GROWTH FUND
Economic and Market Overview
The past six-month span has seen the U.S. equity market proceed down two
very different paths, a process that actually started late last summer. On the
one hand, the large, 'household name' stocks, like those that comprise the Dow
Jones Industrial Average and the Standard & Poor's 500 Composite Index, have
generally gone straight up, setting a string of new records for the underlying
indexes. Conversely, the secondary, more-speculative stocks, especially many of
those in the technology area, have lagged the broad market.
There are two principal components of that underperformance. First, the
stocks of some fine companies (especially in retailing and financial services)
have just not exhibited the upward price momentum of several of the 'household
name' stocks. And second, a number of technology issues have been savagely sold
off when earnings reports failed to exceed analysts' expectations, even when
earnings shortfalls were relatively minor.
Portfolio Strategy
As a growth vehicle, this Fund is overweighed in the speculative names,
especially, again, in technology stocks. That portfolio orientation has resulted
in a fairly sharp degree of underperformance relative to the popular benchmarks.
To counter the negative volatility that has unfolded over the last few months,
the Fund has moved into stocks in entirely new economic sectors--oilfield
services is a prominent example--but those moves were executed at points that
were unfavorable in terms of subsequent stock price developments.
In order to cushion the near-term volatility, the Fund's sub-adviser has
introduced incremental diversification into the portfolio: there are currently
about 80 stocks among our holdings, the vast majority of which each account for
less than 2% of net assets. The Fund also holds somewhat more cash than normal.
However, the Fund remains overweighed in the technology, financial-services, and
health-care stocks that the sub-adviser believes will be the engines of growth
in the U.S. economy as it enters the third millennium.
Outlook
In the relatively near term--say, through the third quarter of 1997--the
Fund's sub-adviser has a cautious outlook on U.S. equities. Financial market
participants are clearly focused on underlying economic fundamentals, the
Federal Reserve Board's interpretation of those fundamentals, and what all of
that means for interest rates. That translates into equity prices moving within
a broad trading range, defined roughly as 6300 to 7300 on the Dow Jones
Industrials. The sub-adviser does not foresee an immediate major correction in
stock prices, but also does not see the impetus that will drive them much
higher.
Longer term, the Fund's sub-adviser remains as bullish as ever. The
sub-adviser thinks the economy will continue to exhibit moderate growth, in an
environment of relatively low and stable rates of interest and inflation, for an
extended period into the future. That climate is ideal for growth investing.
42
<PAGE>
Performance of $10,000 investment since inception of Investors Trust Growth
Fund (9/8/93):
[LINE GRAPH APPEARS HERE]
MONTH ITGROA ITGROB S&P500 MG
Aug 1993 10,000 10,000 10,000 10,000
Sep 1993 10,400 10,412 9,926 10,112
Oct 1993 10,212 10,212 10,128 10,238
Nov 1993 10,047 10,047 10,032 10,036
Dec 1993 10,435 10,424 10,156 10,342
Jan 1994 10,788 10,765 10,496 10,663
Feb 1994 10,659 10,624 10,213 10,509
Mar 1994 9,847 9,824 9,768 10,011
Apr 1994 9,847 9,800 9,895 10,057
May 1994 9,812 9,765 10,057 10,079
Jun 1994 9,447 9,400 9,808 9,731
Jul 1994 9,657 9,610 10,133 9,987
Aug 1994 10,394 10,323 10,545 10,471
Sep 1994 10,251 10,180 10,291 10,293
Oct 1994 10,465 10,382 10,527 10,447
Nov 1994 10,180 10,097 10,140 10,047
Dec 1994 10,322 10,228 10,288 10,154
Jan 1995 10,394 10,299 10,556 10,215
Feb 1995 10,857 10,739 10,966 10,607
Mar 1995 11,106 10,976 11,290 10,904
Apr 1995 11,273 11,143 11,619 11,117
May 1995 11,581 11,439 12,078 11,426
Jun 1995 12,377 12,212 12,361 11,921
Jul 1995 13,244 13,055 12,773 12,516
Aug 1995 13,292 13,103 12,808 12,625
Sep 1995 13,743 13,542 13,344 12,968
Oct 1995 13,518 13,316 13,297 12,748
Nov 1995 13,874 13,649 13,883 13,223
Dec 1995 13,589 13,364 14,139 13,295
Jan 1996 13,945 13,708 14,626 13,560
Feb 1996 14,337 14,077 14,766 13,883
Mar 1996 14,278 14,017 14,908 14,034
Apr 1996 14,646 14,374 15,127 14,525
May 1996 15,169 14,872 15,517 14,903
Jun 1996 14,551 14,267 15,581 14,675
Jul 1996 13,815 13,530 14,888 13,789
Aug 1996 14,539 14,243 15,203 14,320
Sep 1996 15,715 15,383 16,058 15,119
Oct 1996 15,632 15,288 16,498 15,191
Nov 1996 16,570 16,191 17,750 16,059
Dec 1996 16,000 15,633 17,402 15,887
Jan 1997 16,689 16,286 18,483 16,620
Feb 1997 16,214 15,811 18,632 16,356
Mar 1997 15,430 15,051 17,857 15,599
Apr 1997 16,357 15,942 18,922 16,090
Past performance is not indicative of future results. See Notes to
Performance following this section.
43
<PAGE>
NOTES TO PERFORMANCE
Total returns assume changes in share price and reinvestment of dividends
and capital gains. Investment returns and principal values will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than the
original cost.
The total returns of Classes A and B did not include the reduction of the
maximum applicable sales charges (4.50% for Class A shares; 5.00% for Class B
shares). If total returns included the effects of these charges, the performance
figures for each class would have been lower. Additionally, GNA Capital has
agreed to waive or limit certain expenses as described in detail in the Acquired
Funds' Prospectus. Had GNA Capital not absorbed a portion of expenses, total
returns would have been lower.
The Lehman Brothers ARM Index, the Lehman Brothers Government Bond Index,
the Lehman Brothers 10-Year General Obligation Municipal Bond Index and the S&P
500 Stock Index are unmanaged indices and do not reflect the actual cost of
investing in the instruments that comprise each index. The results shown for the
foregoing indices assume reinvestment of net dividends.
The views expressed under 'Management's Discussion and Analysis of Market
Conditions' and 'Portfolio Review' in this section reflect those of GNA Capital
and each Acquired Fund's respective sub-adviser only through April 30, 1997. GNA
Capital's and the sub-advisers' views are subject to change at any time based on
market and other conditions.
44
<PAGE>
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
The following discussion comparing investment objectives, policies and
restrictions of the Acquiring Funds and the Acquired Funds is based upon and
qualified in its entirety by the disclosure in the prospectuses of the Acquiring
Funds and the Acquired Funds with respect to the Funds' respective investment
objective, policies and restrictions. For each of the Acquiring Funds and the
Acquired Funds, the investment objective of the Fund may not be changed without
the approval of the holders of a majority of the Fund's outstanding voting
securities as defined in the 1940 Act. Such a majority is defined in the 1940
Act as the lesser of (1) 67% or more of the shares present at a Fund meeting, if
the holders of more than 50% of the outstanding shares of the Fund are present
or represented by proxy or (2) more than 50% of the outstanding shares of the
Fund. For a full discussion of these issues as they relate to the Acquiring
Fund, refer to the Prospectus of the Acquiring Funds, which accompanies this
Prospectus/Proxy Statement, under the caption 'Investment Objectives and
Management Policies,' and for a discussion of these issues as they relate to the
Acquired Funds, refer to the Prospectus of the Acquired Funds under the caption
'Investment Objective and Policies.'
INVESTORS TRUST ADJUSTABLE RATE FUND AND GE SHORT-TERM GOVERNMENT FUND
INVESTORS TRUST ADJUSTABLE RATE FUND seeks to produce a high level of
current income consistent with limiting fluctuations in net asset value of Fund
shares. This Fund attempts to achieve its objective by investing primarily in
adjustable rate securities, including, but not limited to adjustable rate
mortgage securities. This Fund intends to invest at least 65% of the value of
its total assets in adjustable rate securities under normal market conditions.
At least 50% of this Fund's total assets must be invested in obligations issued
or guaranteed by the U.S. Government or one of its agencies or instrumentalities
('Government Securities') or securities that are collateralized by Government
Securities. This Fund concentrates at least 25% of its total assets in
asset-backed securities, including mortgage securities of governmental and
non-governmental issuers, collateralized mortgage obligations and other
asset-backed securities. This Fund expects to maintain an effective duration
ranging from one year to two and one-half years.
Investors Trust Adjustable Rate Fund may invest in high grade fixed and
adjustable rate mortgage and debt securities rated within the three highest
credit categories by Moody's, S&P or Fitch Investors Service ('Fitch'). This
Fund may also invest in short-term debt securities, such as commercial paper,
that are rated at least A3 by S&P or Fitch or Prime-3 by Moody's. In each case,
if the securities are unrated, the investment may still be made if determined by
the Fund's sub-adviser to be of equivalent quality.
GE SHORT-TERM GOVERNMENT FUND seeks a high level of income consistent with
prudent investment management and the preservation of capital. This Fund seeks
to achieve its objective by investing at least 65% of its total assets in
Government Securities including repurchase agreements secured by Government
Securities. The dollar-weighted average maturity of this Fund's portfolio
securities is anticipated to be not more than three years. Although they are
permissible investments, this Fund is not required to maintain a minimum
percentage of its total assets in mortgage related securities, including
adjustable rate mortgage securities, collateralized mortgage obligations and
government stripped mortgage related securities, or asset-backed securities.
The debt securities in which GE Short-Term Government Fund may invest will
only be purchased if, in the case of long-term securities, they are rated
investment grade by S&P or Moody's (the four highest credit categories) 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-term and long-term securities, if unrated,
deemed to be of equivalent quality by GEIM.
INVESTORS TRUST GOVERNMENT FUND AND GE GOVERNMENT SECURITIES FUND
INVESTORS TRUST GOVERNMENT FUND seeks to produce a high level of current
income consistent with safety of principal. This Fund attempts to achieve its
objective by investing primarily in Government Securities having remaining
maturities of one year or more. This Fund invests at least 65% of the value of
its total assets in Government Securities except during times when the adoption
of a temporary defensive position by investing more heavily in cash or
high-quality money market instruments is desirable due to prevailing market or
economic conditions. There is no limit on this Fund's investments in
mortgage-backed Government Securities and from time to time a majority of its
portfolio may be invested in such securities.
45
<PAGE>
The remainder of Investors Trust Government Fund's assets will be invested
in other debt instruments having a rating from S&P of AAA and cash or cash
equivalents. Cash equivalents, for purposes of this Fund, are highly liquid
instruments, which include commercial paper, having a rating from S&P of A-1 or
A-1+. Generally, this Fund expects to maintain an average duration of
approximately 4 years. This Fund is prohibited from investing in foreign
securities.
GE GOVERNMENT SECURITIES FUND will be a newly created series of GE Funds
and will commence operations upon the consummation of the Reorganization. The
Fund's investment objective will be substantially similar to that of Investors
Trust Government Fund and its investment policies will be substantially similar
to those of Investors Trust Government Fund, except as set forth below.
GE Government Securities Fund will be permitted to invest up to 35% of its
assets in each of commercial mortgage-backed securities and foreign securities.
This Fund may also invest in investment grade debt instruments rated as low as
Baa by Moody's or BBB by S&P, or considered to be investment grade by another
NRSRO. In addition, this Fund limits its investments in obligations rated Baa by
Moody's, BBB by S&P or comparably rated by another NRSRO to no more than 10% of
its total assets and limits its investments in debt instruments rated A or lower
by Moody's, S&P or comparably rated by another NRSRO to no more than 25% of its
total assets. Money market instruments and other cash equivalents in which this
Fund invests may be rated A-1+, A-1 or A-2 by S&P or Prime-1 or Prime-2 by
Moody's. Generally, this Fund expects to maintain an average duration of
approximately 3-6 years.
INVESTORS TRUST TAX FREE FUND AND GE TAX-EXEMPT FUND
Set forth below is a summary of Investors Trust Tax Free Fund's and GE
Tax-Exempt Fund's current investment objectives and policies. GEIM has proposed
to current shareholders of GE Tax-Exempt Fund certain changes to the investment
policies of GE Tax-Exempt Fund that have been approved by the GE Funds Board of
Trustees, so that it will be managed in a manner substantially similar to
Investors Trust Tax Free Fund. See the accompanying Prospectus of the Acquiring
Funds for a description of GE Tax-Exempt Fund's proposed investment objective
and policies after the Reorganization, which are subject to the approval of the
shareholders of GE Tax-Exempt Fund. In the absence of shareholder approval, the
current investment objectives and policies of the GE Tax-Exempt Fund will not be
changed.
INVESTORS TRUST TAX FREE FUND seeks to produce as high a level of income
exempt from federal income tax as is consistent with preservation of capital.
This Fund attempts to achieve its objective by investing substantially all of
its assets in tax-exempt debt obligations. It is a fundamental policy of this
Fund to invest its assets so that, during any fiscal year, at least 80% of the
income generated by the Fund is exempt from Federal personal income taxes and
federal alternative minimum tax.
Under normal market conditions, Investors Trust Tax Free Fund will invest
substantially all of its assets in tax-exempt debt obligations which at the time
of purchase are considered investment grade, i.e., rated AAA, AA, A or BBB by
S&P or Fitch or Aaa, Aa, A or Baa by Moody's, or which are not rated but
believed by the Fund's sub-adviser to be of comparable quality. This Fund will
limit its investment in bonds rated Baa by Moody's or BBB by S&P or Fitch, or
unrated securities of comparable investment quality, to 10% of its assets. In
the event the rating of a security is downgraded below investment grade, the
Fund's sub-adviser will determine whether the securities should be retained or
sold depending on an assessment of all facts and circumstances at that time. No
more than 5% of this Fund's net assets will remain invested in such downgraded
securities. This Fund is expected to have an effective duration ranging from 5
to 7 1/2 years.
GE TAX-EXEMPT FUND currently seeks as high a level of current income exempt
from federal income taxation as is consistent with prudent investment management
and preservation of capital. This Fund currently seeks to achieve its objective
by investing in a diversified portfolio of debt obligations issued by, or on
behalf of, states, territories and possessions of the United States and the
District of Columbia and their political subdivisions, agencies and
instrumentalities or multi-state agencies or authorities, the interest from
which debt obligations is, in the opinion of issuers' counsel, excluded from
gross income for Federal income tax purposes ('Municipal Obligations'). Similar
to Investors Trust Tax Free Fund, this Fund operates subject to a fundamental
policy providing that, under normal conditions, it invests at least 80% of its
net assets in Municipal
46
<PAGE>
Obligations the income from which is not a specific tax preference item for
purposes of the Federal individual and corporate alternative minimum tax.
GE 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.
Under normal conditions, at least 50% of this Fund's total assets are invested
in obligations rated A or better by S&P or Moody's. In addition, this 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 this 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 this 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 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 weighted average maturity of this Fund's
portfolio securities is anticipated to be approximately 20 years in favorable
market conditions.
INVESTORS TRUST VALUE FUND AND GE VALUE EQUITY FUND
INVESTORS TRUST VALUE FUND seeks to provide long-term growth of capital and
an above-average level of dividend income by investing primarily in equity
securities. Under normal market conditions, the Fund's sub-adviser will seek to
invest substantially all of the Fund's assets in a diversified portfolio of
equity securities. It is a fundamental policy of the Fund that under normal
market conditions at least 65% of the Fund's total assets will be invested in
equity securities. This Fund attempts to generate relatively high levels of
dividend income and provide the potential for capital appreciation. This Fund
seeks to provide higher total return than that of the S&P 500 Stock Index.
In seeking an above-average level of dividend income, Investors Trust Value
Fund will invest primarily in companies with established operating histories,
potential for dividend growth and low price-to-earnings ratios relative to the
S&P 500 Stock Index. This Fund's investments will tend to be in issuers with
medium to large capitalizations, although the Fund is not limited by issuer size
in selecting equity securities for investment. It is anticipated that a majority
of the equity securities in which this Fund invests will be listed on a national
securities exchange.
GE VALUE EQUITY FUND will be a newly created series of GE Funds and will
commence operations upon the consummation of the Reorganization. This Fund seeks
long-term growth of capital and future income by investing primarily in equity
securities of companies with large sized market capitalization that GEIM
considers to be undervalued by the market. Undervalued securities are those
selling for low prices given the fundamental strength of their issuers. It is
also a fundamental policy of this Fund that under normal market conditions at
least 65% of its total assets will be invested in equity securities and
securities convertible into equity securities.
GEIM will identify and select securities that it believes are undervalued,
using factors it considers indicative of fundamental investment value including:
(i) low price/earnings ratio relative to a normalized growth rate and/or the S&P
Index; (ii) the potential for free cash flow generation and prospects for
dividend growth; (iii) a strong balance sheet with low financial leverage; (iv)
sustainable competitive advantages such as a franchise brand name or dominant
market position; (v) an experienced and capable management team; (vi) improving
returns on invested capital; and (vii) net asset values in a
restructuring/breakup analysis framework.
GEIM believes that such investments will position this Fund to benefit from
a positive change in business prospects from an issuing company that adopts a
turnaround strategy to increase/restore the earning power of the company.
47
<PAGE>
INVESTORS TRUST GROWTH FUND AND GE MID-CAP GROWTH FUND
INVESTORS TRUST GROWTH FUND seeks to provide long-term growth of capital.
The Fund will seek to achieve its investment objective by investing
substantially all of its assets in common stocks under normal market conditions
but may from time to time invest in other equity securities including preferred
stock and warrants. This Fund attempts to achieve its objective by investing
primarily in equity securities of companies which, in the opinion of the Fund's
sub-adviser, have above-average prospects for growth. This Fund may also invest
less than 5% of its total assets in equity securities convertible into common
stocks.
In seeking long-term growth of capital, Investors Trust Growth Fund will
invest primarily in companies whose earnings and/or assets are expected to grow
at a rate above the average for the S&P 500 Stock Index over the long term.
Consequently, this Fund's sub-adviser seeks to identify those industries which
offer the greatest possibilities for profitable expansion and, within such
industries, those companies which appear most capable of sustained growth.
Investments may also be made in securities of companies which the sub-adviser
believes are selling below their intrinsic values or in securities of cyclical
companies which the sub-adviser believes are at a low point in their cycles. It
is anticipated that the Growth Fund will have a higher level of price volatility
than the S&P 500 Stock Index. Unlike GE Mid-Cap Growth Fund, this Fund's
investments will tend to be in issuers with small to medium capitalizations,
although it is not limited by issuer size in selecting equity securities for
investment. The sub-adviser considers issuers with small to medium
capitalization to be those companies which are less mature and have the
potential to grow substantially faster than the economy. Investments in these
securities may involve greater than average risks because of the limited
marketability of such securities and the possibility that their prices may
fluctuate more widely than the securities of larger, more established companies
or than the market as a whole. It is anticipated that a majority of the equity
securities in which the Growth Fund invests will be listed on a national
securities exchange.
In selecting securities for purchase or sale, Investors Trust Growth Fund's
sub-adviser, Value Line, Inc., relies on the Value Line Ranking System for
Timeliness which has evolved after many years of research and has been used in
substantially its present form since 1965. Since the Value Line Ranking System
is a proprietary securities selection program developed for exclusive use by
this Fund's sub-adviser, the securities selection process employed by GE Mid-Cap
Growth Fund will differ significantly.
GE MID-CAP GROWTH FUND seeks long-term growth of capital by investing
primarily in the equity securities stock of companies with medium-sized market
capitalizations ('mid-cap') that have the potential for above-average growth.
This Fund defines a mid-cap company as one whose securities are within the
market capitalization range of stocks listed on the S&P MidCap 400 Index.
When consistent with its investment objective, GE Mid-Cap Growth Fund may
invest up to 35% of its assets in debt securities, which investments are limited
to those that are rated within the six highest rating categories by S&P or by
Moody's or has received an equivalent rating from another NRSRO, or if unrated,
are deemed by GEIM to be of comparable quality.
Mid-cap growth companies are often still in the early phase of their life
cycle. Accordingly, investing in mid-cap companies generally entails greater
risk exposure and volatility than investing in large, well-established
companies. However, GEIM believes that mid-cap companies may offer the potential
for more rapid growth. GEIM will rely on its proprietary research to identify
mid-cap companies with potentially attractive growth prospects. These companies
typically would have one or more of a variety of characteristics, including
attractive products and services, above average earnings growth potential,
superior financial returns, strong competitive position, shareholder focused
management and sound balance sheets. There is, of course, no guarantee that GEIM
will be able to identify such companies or that the Fund's investments in them
will be successful.
INVESTMENT RESTRICTIONS OF THE ACQUIRED FUNDS
Investors Trust has adopted the following fundamental investment
restrictions for each of its Funds. Fundamental restrictions may not be changed
without approval of the holders of a majority of the Fund's outstanding shares
as defined by the 1940 Act. Non-fundamental investment restrictions may be
changed by the
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Board of Trustees of Investors Trust without a vote of the shareholders. So long
as these restrictions are in effect, the Acquired Funds may not:
1. Purchase more than 10% (with respect to IT Value Fund, 5%) of any class
of securities of any one issuer (except Government Securities). This restriction
is not fundamental for IT Government Fund.
2. Invest more than 5% of its total assets in the securities of any one
issuer (except Government Securities and options thereon) or in securities of
issuers (including predecessors, but excluding, with respect to IT Government
Fund and IT Tax Free Fund, the U.S. Government, its agencies and
instrumentalities) with less than three years of continuous operations, except,
for each Fund other than IT Government Fund, in the case of debt securities
rated BBB or higher by S&P or Baa or higher by Moody's, and except that this
restriction shall not apply to investments in Government Securities.
3. Issue senior securities, as defined in the 1940 Act, except as permitted
by Section 18(f)(2) of that Act and the rules under such Act, as set forth
herein, or as permitted by an SEC exemptive order.
4. Change the nature of its business so as to cease to be an investment
company.
5. With respect to IT Adjustable Rate Fund, IT Value Fund and IT Growth
Fund only, invest more than 5% of its total assets in warrants of all types, or
more than 2% of its total assets in warrants other than warrants attached to
other securities.
The following investment restrictions are fundamental only with respect to
IT Government Fund. Each other Acquired Fund has adopted the following
investment restrictions as non-fundamental policies. So long as these
restrictions are in effect, the relevant Fund may not:
6. Purchase or sell commodities (other than the options and futures
contracts) or real estate (other than securities secured by real estate or
interests therein, or issued by entities which invest in real estate or interest
therein), but it may lease office space for its own use and invest up to 5% of
its assets in publicly held real estate investment trusts.
7. Borrow amounts in excess of 10% of its total assets and then only as a
temporary measure for extraordinary or emergency purposes. The restriction shall
not prohibit entry into reverse repurchase agreements if as a result the Fund's
current obligations under such agreements would not exceed one-third of the
current market value of its total assets (less its liabilities other than under
reverse repurchase agreements).
8. Make loans, except that this restriction shall not prohibit the purchase
and holding of a portion of an issue of publicly distributed debt securities,
the lending of portfolio securities (not more than 5% of the Fund's net assets)
and the entry into repurchase agreements (not more than one-third of the current
market value of the Fund's total assets shall constitute secured 'loans' by the
Fund under repurchase agreements).
9. Engage in the business of underwriting securities of others, except that
Investors Trust may be deemed to be an underwriter under the Securities Act of
1933, as amended (the '1933 Act'), when it purchases or sells portfolio
securities.
10. Invest more than 25% (with respect to IT Value Fund, 20%) of its total
assets in any one industry (except Government Securities).
Other Non-Fundamental Investment Restrictions. Each of the Acquired Funds
has adopted the following investment restrictions as non-fundamental policies
and so long as these restrictions are in effect, each Acquired Fund may not: (1)
invest in the securities of an issuer for the purpose of exercising control or
management, but it may do so where it is deemed advisable to protect or enhance
the value of an existing investment; (2) purchase securities of any other
investment company, except in the open market in a transaction involving no
commission or profit to a sponsor or dealer (other than the customary brokerage
commission) and only to the extent of 10% of its assets or as part of a merger,
consolidation, reorganization, or acquisition of assets; (3) invest in or retain
the securities of any issuer, if, to the knowledge of Investors Trust, the
officers and trustees of Investors Trust who individually own in excess of 1/2
of 1% of the issuer's securities own more than 5% of such securities in the
aggregate; (4) invest in securities which are not registered under the 1933 Act
or the marketability of which is restricted, including, with respect to IT
Adjustable Rate Fund, IT Value Fund and IT Growth Fund, securities restricted as
to resale (limited to 5% of total assets), if as a result, more than 10% of its
total assets would consist
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of such securities; provided, however, that this restriction shall not apply to
securities which are not required to be registered under the 1933 Act, or to
repurchase agreements having less than seven days to maturity, reverse
repurchase agreements, firm commitment agreements, and futures contracts and
options thereon; (5) purchase securities on margin, except any short-term
credits which may be necessary for the clearance of transactions and the initial
or maintenance margin in connection with options and futures contracts and
related options; (6) make short sales of securities, unless the Fund owns 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; provided that, with respect to each Fund other than IT Government
Fund, this restriction shall not prohibit the use of options and futures
contracts for hedging purposes; (7) invest in real estate limited partnerships;
and (8) purchase any security while borrowings representing more than 5% of the
Fund's net assets (including loans, reverse repurchase agreements, forward rolls
or other borrowings) are outstanding.
Each of the Acquired Funds, other than IT Government Fund and IT Tax Free
Fund, has adopted the following investment restrictions as additional
non-fundamental policies, and so long as these restrictions are in effect, the
relevant Fund may not: (1) conduct arbitrage transactions (provided that
investments in futures and options for hedging purposes shall not be deemed
arbitrage transactions); (2) invest in oil, gas or other mineral leases or
exploration or development programs (provided that the Fund may invest in
securities issued by or which are based, directly or indirectly, on the credit
of companies which invest in or sponsor such programs); and (3) invest in
securities of foreign issuers other than through U.S. dollar denominated ADRs.
Only IT Government Fund has adopted a non-fundamental investment restriction
prohibiting the Fund from participating on a joint or joint and several basis in
any securities trading account; provided, however, that combining or 'bunching'
of orders of other accounts under the investment management of GNA Capital or
the Fund's sub-adviser shall not be considered participation in a joint
securities trading account.
Percentage Limitations. In connection with the investment restrictions of
each Fund, all percentage limitations apply only at the time a transaction is
entered into. Accordingly, if a percentage restriction is adhered to at the time
of investment, a later increase or decrease in the percentage which results from
a relative change in values or from a change in a Fund's net assets will not be
treated as a violation. Under the 1940 Act, each Fund will be required to
maintain an asset coverage of at least 300% for borrowings from a bank. In the
event that such asset coverage is below 300%, the Fund will be required to
reduce the amount of its borrowings to obtain 300% asset coverage, within three
days (not including Sundays and holidays) or such longer period as the rules and
regulations of the SEC prescribe.
INVESTMENT RESTRICTIONS OF THE ACQUIRING FUNDS
All Acquiring Funds except GE Tax-Exempt Fund: Investment restrictions
numbered 1 through 10 below have been adopted by GE Funds as fundamental
policies of the Acquiring Funds. Under the 1940 Act, a fundamental policy may
not be changed with respect to a Fund without the vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of the Fund.
Investment restrictions 11 through 17 may be changed by a vote of the GE Funds
Board of Trustees at any time.
1. No Fund may borrow money, except that GE Government Securities Fund and
GE Value Equity 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.
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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 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 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. 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.
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 1933 Act.
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 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 the Acquiring Funds' Prospectus and Statement of
Additional Information.
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
may purchase and sell covered put and call options on securities and stock
indexes and futures contracts and options on futures contracts; and (b) GE
Tax-Exempt Fund may acquire stand-by commitments.
12. No Fund may purchase securities of other investment companies, other
than a security acquired in connection with a merger, consolidation,
acquisition, reorganization or offer of exchange and except as otherwise
permitted under the 1940 Act.
13. No Fund may invest in companies for the purpose of exercising control
or management.
14. No Fund may purchase 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
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exceed 5% of the value of the Fund's net assets. For purposes of this
restriction, warrants acquired by a Fund in units or attached to securities may
be deemed to be without value.
15. No Fund may purchase illiquid securities if more than 15% of the total
assets of the Fund would be invested in 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.
16. 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
('Rule 144A Securities'), that have been determined to be liquid by the Board
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.
17. No Fund may issue senior securities except as otherwise permitted by
the 1940 Act and as otherwise permitted herein.
GE Tax-Exempt Fund only: Subject to shareholder approval, the following
investment restrictions will be applicable to GE Tax-Exempt Fund upon the
completion of the Reorganization.
Investment restrictions numbered 1 through 9 below will be fundamental
policies of GE Tax-Exempt Fund. Under the 1940 Act, a fundamental policy may not
be changed with respect to a Fund without the vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of the Fund.
Investment restrictions 10 through 15 will be subject to change by a vote of the
Board at any time. GE Tax-Exempt Fund may not:
1. Purchase more than 10% of any class of securities of any one issuer
(except Government Securities and securities fully collateralized by
Government Securities).
2. Invest more than 5% of its total assets in the securities of any
one issuer (except for Government Securities and securities fully
collateralized by Government Securities, and options thereon).
3. Issue senior securities, as defined in the 1940 Act, except as
permitted by Section 18(f)(2) of that Act or as permitted by an SEC
exemptive order.
4. Borrow amounts in excess of 10% of its total assets and then only
as a temporary measure for extraordinary or emergency purposes. This
restriction shall not prohibit entry into reverse repurchase agreements if
as a result the Tax-Exempt Fund's current obligations under such agreements
would not exceed one-third of the current market value of its total assets
(less its liabilities other than under reverse repurchase agreements).
5. 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 the Tax-Exempt 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.
6. Invest in commodities, except that the Tax-Exempt 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.
7. Make loans, except that this restriction shall not prohibit the
purchase and holding of a portion of an issue of publicly distributed debt
securities, the lending of portfolio securities (with respect to not more
than 5% of the Tax-Exempt Fund's net assets), the entry into repurchase
agreements (not more than one-third of the current market value of the
Tax-Exempt Fund's total assets shall constitute secured 'loans' by the Tax-
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Exempt Fund under repurchase agreements), 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 investing in variable rate
demand notes.
8. Invest more than 25% of the value of the Tax-Exempt Fund's total
assets in securities of issuers in any one industry, except 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.
9. Underwrite any issue of securities, except to the extent that the
sale of portfolio securities in accordance with the Tax-Exempt Fund's
investment objective, policies and limitations may be deemed to be an
underwriting, and except that the Tax-Exempt Fund may acquire securities
under circumstances in which, if the securities were sold, the Tax-Exempt
Fund might be deemed to be an underwriter for purposes of the 1933 Act.
10. Invest in the securities of an issuer for the purpose of
exercising control or management, but the Tax-Exempt Fund may do so where
it is deemed advisable to protect or enhance the value of an existing
investment.
11. Purchase securities of any other investment company, except in the
open market in a transaction involving no commission or profit to a sponsor
or dealer (other than the customary brokerage commission) and only to the
extent of 10% of the Tax-Exempt Fund's assets or as part of a merger,
consolidation, acquisition, reorganization or offer of exchange and except
as otherwise permitted under the 1940 Act.
12. Purchase restricted securities if more than 10% of the total
assets of the Tax-Exempt 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, repurchase agreements having less than seven days to maturity,
reverse repurchase agreements, firm commitment agreements, futures
contracts and options thereon, and Rule 144A Securities that have been
determined to be liquid by the Board based upon the trading markets for the
securities.
13. Purchase securities on margin, except any short-term credits which
may be necessary for the clearance of transactions and the initial or
maintenance margin in connection with options and futures contracts and
related options.
14. Make short sales of securities, unless the Tax-Exempt Fund owns 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; provided that this restriction shall not
prohibit the use of options and futures contracts for hedging purposes.
15. Purchase any security while borrowings representing more than 5%
of the Tax-Exempt Fund's net assets (including loans, reverse repurchase
agreements or other borrowings) are outstanding.
With respect to investment restriction No. 12 (No. 11 in the case of GE
Tax-Exempt Fund), investments by GE Funds 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 GE Funds and other accounts
advised by either GEIM or GEIC, is not considered an investment in another
investment company for purposes of this restriction.
The percentage limitations in the restrictions listed above apply at the
time of purchases of securities. For purposes of investment restriction No. 5
(No. 8 in the case of GE Tax-Exempt Fund), GE Funds 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, GE Funds may use
the Directory of Companies Required to File Annual Reports with the SEC and
Bloomberg Inc. In addition, GE Funds may select its own industry
classifications, provided such classifications are reasonable.
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INFORMATION ON SHAREHOLDERS' RIGHTS
General. Investors Trust and GE Funds are open-end, management investment
companies registered under the 1940 Act, which continuously offer to sell shares
at their current net asset value. Each Acquiring Fund is a series of GE Funds,
which was organized on August 10, 1992 under the laws of Massachusetts and is a
business entity commonly known as a 'Massachusetts business trust.' GE Funds is
governed by its Declaration of Trust, By-Laws and Trustees. Each Acquired Fund
is a series of Investors Trust, also a Massachusetts business trust, organized
on November 11, 1986, under its Amended and Restated Master Trust Agreement (the
'Declaration of Trust') and By-Laws, and Trustees. Each Fund is also governed by
Massachusetts state law and federal law. Each Acquired Fund has an unlimited
number of authorized shares without par value. The Trustees of Investors Trust
have authorized the issuance of five series of shares, each representing shares
in one of the five separate portfolios, and may authorize the issuance of
additional series of shares in the future. The beneficial interest in the
Acquiring Funds is divided into four classes of shares, all with a par value of
$.001 per share. The number of authorized shares of GE Funds that may be issued
is unlimited. The Trustees of GE Funds have authorized the issuance of thirteen
series of shares, each representing shares in one of thirteen separate
portfolios, one of which, GE International Fixed Income Fund, is not currently
being offered and may authorize the issuance of additional series of shares in
the future. In both the Acquiring Funds and the Acquired Funds, Class A shares
and Class B shares represent interests in the assets of the Fund and have
identical voting, dividend, liquidation and other rights on the same terms and
conditions except that expenses related to the distribution of each class of
shares are borne solely by each class and each class of shares has exclusive
voting rights with respect to provisions of each Fund's Rule 12b-1 distribution
plan which pertains to a particular class.
Trustees. The Declaration of Trust of Investors Trust provides that each
Trustee shall serve as a Trustee of Investors Trust during the lifetime of
Investors Trust and until its termination (as provided in the Declaration of
Trust), his death, resignation or removal. Any Trustee of the Investors Trust
may be removed by the vote of at least two-thirds of the number of Trustees
prior to such removal or by vote or written declaration of shareholders holding
not less than two-thirds of the shares of Investors Trust then outstanding. A
Trustee of GE Funds may be removed with cause by action of a majority of the
remaining Trustees or by action of a majority of the shares then outstanding at
a meeting of the shareholders. Vacancies on the Boards of either Investors Trust
or GE Funds may be filled by the respective Trustees remaining in office subject
to the 1940 Act. A meeting of shareholders will be required for the purpose of
electing additional Trustees whenever fewer than a majority of the Trustees then
in office were elected by shareholders.
Voting Rights. Neither the Acquired Fund nor the Acquiring Fund holds a
meeting of shareholders annually, and there normally is no meeting of
shareholders for the purpose of electing Trustees unless and until such time as
less than a majority of the Trustees holding office have been elected by
shareholders. A meeting of shareholders of an Acquiring Fund, for any purpose,
must be called upon the written request of shareholders holding at least 10% of
such Fund's outstanding shares. A meeting of shareholders of the Acquired Fund
may be called by the Trustees, who shall call such meeting for the purpose of
removing any Trustee upon written request of shareholders holding not less than
10% of the shares then outstanding. On each matter submitted to a vote of the
shareholders of the Acquired Funds or the Acquiring Funds, each shareholder is
entitled to one vote for each whole share owned and a proportionate, fractional
vote for each fractional share outstanding in the shareholder's name on the
Fund's books. With respect to Investors Trust, a majority of the votes cast on
an action at a shareholder meeting at which a quorum is present shall decide any
questions except that Trustees are elected by plurality or under circumstances
in which a different vote is required or permitted by any provision of the 1940
Act or other applicable law or as may otherwise be set forth in the Declaration
of Trust or By-Laws. Shares of each series or class of Investors Trust vote
separately except with respect to the election of Trustees or as otherwise
required by the 1940 Act. In addition, shareholders of a series of Investors
Trust are only permitted to vote on matters that affect the interest of the
series. Matters relating to GE Funds requiring a majority shareholder vote as
described in the Declaration of Trust shall be decided by affirmative vote of a
majority of the total number of votes entitled to be cast thereon, as defined in
the 1940 Act, which is the lesser of: (1) 67% of the voting securities of the
Funds present at the Meeting, if the holders of more than 50% of the outstanding
voting securities of the Funds are present or represented by proxy, or (ii) more
than 50% of the outstanding shares of the Funds. In cases where the vote is
submitted to the holders of one or more but not all series or classes, a
majority of the outstanding shares of the particular series or class affected by
the matter shall decide the matter.
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Liquidation or Termination. In the event of the liquidation or termination
of any of the portfolios of GE Funds or of Investors Trust, the shareholders of
the respective Fund are entitled to receive, when, and as declared by the
Trustees, as the case may be, the excess of the assets belonging to or allocable
to the particular portfolio or class over the liabilities belonging to the
liquidated or terminated portfolio of GE Funds or of Investors Trust, as the
case may be. The assets so distributed to shareholders of the liquidated or
terminated portfolio of GE Funds or Investors Trust will be distributed among
the shareholders in proportion to the number of shares of the particular class
held by them and recorded on the books of the liquidated or terminated portfolio
of GE Funds or Investors Trust, as the case may be.
Liability of Trustees. The Declaration of Trust of Investors Trust
provides that Investors Trust shall indemnify each Trustee and officer against
liabilities (including expenses of litigation) in connection with the defense or
disposition of any action, suit or other proceeding except under circumstances
in which the Trustee or officer did not act in good faith in the reasonable
belief that his action was in or not opposed to the best interest of Investors
Trust, or acted with willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her office.
The Declaration of Trust of GE Funds provides that Trustees and officers will be
indemnified for expenses incurred in connection with any claim, action suit or
proceeding against them unless it is determined that the person did not act in
good faith in the reasonable belief that the person's actions were in the best
interest of the GE Funds or the person's conduct is determined to constitute
willful misfeasance, bad faith, gross negligence or reckless disregard of the
person's duties in the conduct of his office. Under the Declaration of Trust of
Investors Trust and the Declaration of Trust and By-Laws of the GE Funds, a
Trustee will be personally liable only for his or her own willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee.
Rights of Inspection. Shareholders of GE Funds and Investors Trust have
the same inspection rights as are permitted shareholders of a Massachusetts
corporation under Massachusetts corporate law. Currently, each shareholder of a
Massachusetts corporation is permitted to inspect the records, accounts and
books of a corporation for any legitimate business purpose.
Shareholder Liability. Under Massachusetts law, shareholders of a
Massachusetts business trust may, under certain circumstances, be held
personally liable for the obligations of such Massachusetts business trust. GE
Funds' Declaration of Trust and Investors Trust's Declaration of Trust, however,
disclaim shareholder liability for acts or obligations of GE Funds or Investors
Trust, respectively, and provides that notice of such disclaimer be given in
each agreement, obligation or instrument entered into or executed by such fund.
GE Funds' Declaration of Trust and Investors Trust's Amended and Restated Master
Trust Agreement also provide for indemnification out of the property of GE Funds
or Investors Trust, respectively, for all losses and expenses of any shareholder
held personally liable for the obligations of such fund. Shares of the Acquiring
Funds issued to the shareholders of the Acquired Funds in the Reorganization
will be fully paid and nonassessable when issued, transferable without
restrictions and will have no preemptive rights.
The foregoing is only a summary of certain characteristics of the
operations of the Acquiring Funds and the Acquired Funds. The foregoing is not a
complete description of the documents cited. Shareholders should refer to the
provisions of the trust documents and state laws governing each Fund for a more
thorough description.
ADDITIONAL INFORMATION ABOUT INVESTORS TRUST AND GE FUNDS
INVESTORS TRUST. Information about the Acquired Funds is included in its
current Prospectus dated March 1, 1997, and in the Statement of Additional
Information of Investors Trust dated March 1, 1997, each as supplemented on May
16, 1997, that have been filed with the SEC, and is incorporated herein by
reference. A copy of the Prospectus and the Statement of Additional Information
are available upon request and without charge by writing to the Acquired Funds
at the address listed on the cover page of this Combined Prospectus/Proxy
Statement or by calling (800) 656-6626.
GE FUNDS. Information about GE Funds is incorporated herein by reference
from its Prospectus dated July 25, 1997, a copy of which accompanies this
Combined Prospectus/Proxy Statement, and the Statement of Additional Information
of GE Funds dated July 25, 1997. A copy of such Statement of Additional
Information is
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available upon request and without charge by writing to the Acquired Funds at
the address listed on the cover page of this Combined Prospectus/Proxy Statement
or by calling (800) 656-6626.
Both Investors Trust and GE Funds are subject to the informational
requirements of the Exchange Act and the 1940 Act, as applicable and in
accordance therewith file reports, proxy material, and other information with
the SEC. These materials can be inspected and copies obtained at the Public
Reference Facilities maintained by the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and with respect to Investors Trust, at the Pacific
Regional Office of the SEC at 5670 Wilshire Boulevard, 11th Floor, Los Angeles,
CA 90036, and with respect to GE Funds, at the New York Regional Office of the
SEC at 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of
such material can also be obtained from the Public Reference Branch, Office of
Consumer Affairs and Information Services, SEC, Washington, D.C. 20549 at
prescribed rates. The SEC also maintains a Web site (http://www.sec.gov) that
contains the Prospectuses, the Statements of Additional Information, material
incorporated by reference and other information regarding the Funds.
OTHER BUSINESS
The Trustees of Investors Trust do not intend to present any other business
at the Meeting. If, however, any other matters are properly brought before the
Meeting, the persons named in the accompanying form of proxy will vote thereon
in accordance with their judgment.
VOTING INFORMATION
This Combined Prospectus/Proxy Statement is furnished in connection with a
solicitation of proxies by the Board of Trustees of Investors Trust to be used
at the Special Meeting of Shareholders to be held at 2:00 p.m. on September 15,
1997, at the Tara Stamford Hotel, 2701 Summer Street, Stamford, Connecticut
06905, and at any adjournment or adjournments thereof. This Combined
Prospectus/Proxy Statement, along with a Notice of the Meeting and a proxy card,
is first being mailed to shareholders of the Acquired Funds on or about July 31,
1997. Only shareholders of record as of the close of business on the Record Date
will be entitled to notice of, and to vote at, the Meeting or any adjournment
thereof. The holders of a majority of the shares of each class of the Acquired
Fund outstanding at the close of business on the Record Date present in person
or represented by proxy will constitute a quorum for the Meeting. For purposes
of determining a quorum for transacting business at the Meeting, abstentions and
broker 'non-votes' (that is, proxies from brokers or nominees indicating that
such persons have not received instructions from the beneficial owner or other
persons entitled to vote shares on a particular matter with respect to which the
brokers or nominees do not have discretionary power) will be treated as shares
that are present but which have not been voted. For this reason, abstentions and
broker non-votes will have the effect of a 'no' vote for purposes of obtaining
the requisite approval of the Plan. If the enclosed form of proxy is properly
executed and returned in time to be voted at the Meeting, the proxies named
therein will vote the shares represented by the proxy in accordance with the
instructions marked thereon. Unmarked proxies will be voted FOR approval of the
proposed Reorganization and FOR approval of any other matters deemed
appropriate. A proxy may be revoked at any time on or before the Meeting by
written notice to the Secretary of the Acquired Funds, Edward J. Wiles, Jr., Two
Union Square, 601 Union Street, Suite 5600, Seattle, Washington 98101. Unless
revoked, all valid proxies will be voted in accordance with the specifications
thereon or, in the absence of such specifications, FOR approval of the Plan and
the Reorganization contemplated thereby.
Approval of the Plan will require the affirmative vote of a majority of the
total number of votes entitled to be cast thereon, as defined in the 1940 Act,
of the outstanding shares of each class of the Acquired Fund, voting separately
as a class, which is the lesser of: (1) 67% of the voting securities of the
particular class of the Acquired Fund present at the Meeting, if the holders of
more than 50% of the outstanding voting securities of the particular class of
the Acquired Fund are present or represented by proxy, or (ii) more than 50% of
the outstanding shares of the particular class of the Acquired Fund. For
purposes of voting with respect to the Reorganization, the Class A and Class B
shares of each Acquired Fund will vote separately. Fractional shares are
entitled to proportional voting rights. GE and its affiliates have stated their
intention to vote all the shares of the Acquired Funds that they hold in favor
of the proposed Reorganization.
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Proxy solicitations will be made primarily by mail, but proxy solicitations
also may be made by telephone, telegraph or personal interviews conducted by
officers and employees of GNA Capital and its affiliates and/or by the transfer
agent. In addition, Shareholder Communications Corporation ('SCC'), or an agent
of SCC, may call shareholders of the Acquired Funds to ask if they would be
willing to have their votes recorded by telephone. The latter telephone voting
procedure is designed to authenticate the shareholder's identity by asking the
shareholder to provide his or her social security number (in the case of an
individual) or taxpayer identification number (in the case of an entity). The
shareholder's telephone vote will be recorded and a confirmation will be sent to
the shareholder to ensure that the vote has been taken in accordance with the
shareholder's instructions. Although a shareholder's vote may be taken by
telephone, each shareholder of an Acquired Fund will receive a copy of this
Combined Prospectus/Proxy Statement and may vote by mail using the enclosed
proxy card. Investors Trust has been advised by Massachusetts counsel that this
telephonic voting system is not inconsistent with Massachusetts law. The
aggregate cost of solicitation of the shareholders of the Acquired Funds is
expected to be approximately $40,000. Expenses of the Reorganization, including
the costs of the proxy solicitation and the preparation of enclosures to the
Combined Prospectus/Proxy Statement, reimbursement of expenses of forwarding
solicitation material to beneficial owners of shares of the Acquired Funds and
expenses incurred in connection with the preparation of this Combined
Prospectus/Proxy Statement will be borne by GEIM. GEIM will bear the expenses
associated with the Reorganizations even if one or more Reorganizations are not
approved by the respective shareholders.
In the event that a quorum necessary for a meeting of shareholders of the
Acquired Fund is not present or sufficient votes to approve the Reorganization
are not received by September 15, 1997, the persons named as proxies may propose
one or more adjournments of the Meeting to permit further solicitation of
proxies. In determining whether to adjourn the Meeting, the following factors
may be considered: the percentage of votes actually cast, the percentage of
negative votes actually cast, the nature of any further solicitation and the
information to be provided to shareholders with respect to the reasons for the
solicitation. Any such adjournment will require an affirmative vote by the
holders of a majority of the shares of each class of the Acquired Fund present
in person or by proxy and entitled to vote at the Meeting. The persons named as
proxies will vote upon a decision to adjourn the Meeting.
The votes of the shareholders of the Acquiring Funds are not being
solicited by this Combined Prospectus/Proxy Statement.
FINANCIAL STATEMENTS AND EXPERTS
The statements of assets and liabilities of the Acquired Funds, including
the schedule of investments as of April 30, 1997 (unaudited) and the related
statements of operations for the six months then ended, the statements of
changes in net assets for the six months then ended and for the year ended
October 31, 1996, financial highlights for the six months ended April 30, 1997
and for each of the five years in the period ended October 31, 1996, for IT
Government Fund (Class B), and for each of the three years in the period ended
October 31, 1996 and for the period September 8, 1993 (commencement of
operations) to October 31, 1993 for IT Government Fund (Class A) and for each of
IT Adjustable Rate Fund, IT Tax Free Fund, IT Growth Fund and IT Value Fund
(Class A and B) and notes to financial statements have been incorporated by
reference into this Combined Prospectus/Proxy Statement.
The statements of assets and liabilities of the Acquired Funds, including
the schedules of investments, as of October 31, 1996 and the related statement
of operations for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended, the financial highlights for
each of the five years in the period then ended, for IT Government Fund (Class
B), and for each of the three years in the period ended October 31, 1996 and for
the period September 8, 1993 (commencement of operations) to October 31, 1993
for IT Government Fund (Class A) and for each of IT Adjustable Rate Fund, IT Tax
Free Fund, IT Growth Fund and IT Value Fund (Class A and B), notes to the
financial statements and the report of independent accountants have been
incorporated by reference into this Combined Prospectus/Proxy Statement in
reliance upon the report of Coopers & Lybrand, L.L.P., independent accountants,
given on the authority of such firm as experts in accounting and auditing.
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The statement of assets and liabilities of the GE Short-Term Government
Fund and GE Tax-Exempt Fund, including the schedule of investments, as of March
31, 1997 (unaudited), and the related statement of operations for the period
then ended have been incorporated by reference into this Combined
Prospectus/Proxy Statement. The statements of changes in net assets and
financial highlights for the year ended September 30, 1996 and, in the case of
GE Short-Term Government Fund, for the period from March 2, 1994 (commencement
of operations of GE Short-Term Government Fund) through September 30, 1995 and,
in the case of GE Tax-Exempt Fund, for the year ended September 30, 1995 and the
financial highlights for the period from December 22, 1993 (commencement of
operations of GE Tax-Exempt Fund) through September 30, 1994, have been
incorporated by reference into this Combined Prospectus/Proxy Statement in
reliance upon the report of Price Waterhouse LLP, independent accountants, and
upon the authority of such firm as experts in accounting and auditing. No
financial statements are available at this time for GE Government Securities
Fund, GE Value Equity Fund or GE Mid-Cap Growth Fund, which have not yet
commenced operations.
LEGAL MATTERS
Certain legal matters concerning the issuance of shares of the Acquiring
Funds will be passed upon by Willkie Farr & Gallagher, 153 East 53rd Street, New
York, New York 10022. In rendering such opinion, Willkie Farr & Gallagher may
rely on an opinion of Bingham, Dana & Gould as to certain matters under
Massachusetts law.
THE BOARD OF TRUSTEES OF INVESTORS TRUST, INCLUDING THE INDEPENDENT
TRUSTEES, UNANIMOUSLY RECOMMENDS APPROVAL OF THE PLAN, AND ANY UNMARKED PROXIES
WITHOUT INSTRUCTIONS TO THE CONTRARY WILL BE VOTED IN FAVOR OF APPROVAL OF THE
PLAN.
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EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the 'Agreement') is made as of
this 24th day of July, 1997, between and among GE Funds, a Massachusetts
business trust, on behalf of GE Mid-Cap Growth Fund, GE Tax-Exempt Fund, GE
Short-Term Government Fund, GE Value Equity Fund and GE Government Securities
Fund, each a series of shares of GE Funds (individually, each an 'Acquiring
Fund' and collectively, the 'Acquiring Funds'), and Investors Trust, a
Massachusetts business trust (the 'Trust'), on behalf of Investors Trust
Adjustable Rate Fund, Investors Trust Government Fund, Investors Trust Tax Free
Fund, Investors Trust Value Fund and Investors Trust Growth Fund, each a series
of shares of the Trust (individually, each an 'Acquired Fund' and collectively,
the 'Acquired Funds').
This Agreement is intended to be and is adopted as a plan of reorganization
and liquidation within the meaning of Section 368 (a)(1) of the United States
Internal Revenue Code of 1986, as amended (the 'Code'). The reorganization of
each Acquired Fund (each, a 'Reorganization' and collectively, the
'Reorganizations') will consist of the transfer of all or substantially all of
the assets of each Acquired Fund in exchange solely for shares of the
corresponding class of common stock (collectively, the 'Shares'), of the
Acquiring Fund corresponding thereto, as indicated in the table set forth in
Schedule A hereto, and the assumption by the Acquiring Fund of certain
liabilities of the corresponding Acquired Fund and the distribution, after the
Closing Date hereinafter referred to, of Acquiring Fund Shares to the
shareholders of the corresponding Acquired Fund in liquidation of the Acquired
Fund as provided herein, all upon the terms and conditions hereinafter set forth
in this Agreement.
WHEREAS, the Board of Trustees of the Trust, including a majority of the
Trustees who are not 'interested persons' of the Trust (as defined by the
Investment Company Act of 1940, as amended (the '1940 Act')), on behalf of each
Acquired Fund has determined that the exchange of all or substantially all of
the assets and certain of the liabilities of each Acquired Fund for the
corresponding Acquiring Fund Shares and the assumption of such liabilities by
the Acquiring Fund is in the best interests of the Acquired Fund's shareholders
and that the interests of the existing shareholders of the Acquired Fund would
not be diluted as a result of this transaction; and
WHEREAS, the Board of Trustees of GE Funds, including a majority of the
Trustees who are not 'interested persons' of GE Funds (as defined by the 1940
Act), on behalf of each Acquiring Fund has determined that the exchange of all
or substantially all of the assets of each Acquired Fund for the corresponding
Acquiring Fund Shares is in the best interests of the Acquiring Fund's
shareholders and that the interests of the existing shareholders of the
Acquiring Fund would not be diluted as a result of this transaction.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR ACQUIRING FUND SHARES
AND ASSUMPTION OF THE ACQUIRED FUND'S STATED LIABILITIES AND LIQUIDATION OF
THE ACQUIRED FUND
1.1. Subject to the terms and conditions herein set forth and on the basis
of the representations and warranties contained herein, the Trust agrees to
transfer each Acquired Fund's assets as set forth in paragraph 1.2 to the
corresponding Acquiring Fund identified in Schedule A, and GE Funds, on behalf
of such corresponding Acquiring Fund agrees in exchange therefor: (i) to deliver
to the Trust the number of Acquiring Fund Shares, including fractional Acquiring
Fund Shares, determined by dividing the value of the Acquired Fund's net assets
attributable to each class of shares, computed in the manner and as of the time
and date set forth in paragraph 2.1, by the net asset value of one Acquiring
Fund Share of the same class, computed in the manner and as of the time and date
set forth in paragraph 2.2; and (ii) to assume certain liabilities of the
Acquired Fund, as set forth in paragraph 1.3. Such transactions shall take place
at the closing provided for in paragraph 3.1 (the 'Closing').
1.2. (a) The assets of the Acquired Fund to be acquired by the
corresponding Acquiring Fund shall consist of all property including, without
limitation, all cash, securities and dividend or interest receivables which are
owned by the Acquired Fund and any deferred or prepaid expenses shown as an
asset on the books of the Acquired Fund on the closing date provided in
paragraph 3.1 (the 'Closing Date').
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(b) The Trust, on behalf of each Acquired Fund, has provided GE Funds, on
behalf of each Acquiring Fund, with a list of all of the corresponding Acquired
Fund's assets as of the date of execution of this Agreement. The Trust, on
behalf of each Acquired Fund, reserves the right to sell any of these securities
but will not, without the prior approval of GE Funds, acquire any additional
securities other than securities of the type in which each Acquiring Fund is
permitted to invest. The Trust, on behalf of each Acquired Fund, will, within a
reasonable time prior to the Closing Date, furnish GE Funds, on behalf of each
Acquiring Fund, with a list of the securities, if any, on the Acquired Fund's
list referred to in the first sentence of this paragraph which do not conform to
the Acquiring Fund's investment objective, policies and restrictions. In the
event that the Acquired Fund holds any investments which the corresponding
Acquiring Fund may not hold, the Acquired Fund will dispose of such securities
prior to the Closing Date. In addition, if it is determined that the portfolios
of the Acquired Fund and the corresponding Acquiring Fund, when aggregated,
would contain investments exceeding certain percentage limitations imposed upon
the Acquiring Fund with respect to such investments, the Acquired Fund, if
requested by the Acquiring Fund, will dispose of and/or reinvest a sufficient
amount of such investments as may be necessary to avoid violating such
limitations as of the Closing Date. The provisions of this Section 1.2(b) are
subject always to the fiduciary duty of the Acquired Fund's investment adviser.
1.3. The Trust, on behalf of each Acquired Fund, will endeavor to discharge
all the Acquired Funds' known liabilities and obligations prior to the Closing
Date. GE Funds, on behalf of each Acquiring Fund, shall assume all liabilities,
expenses, costs, charges and reserves reflected on an unaudited statement of
assets and liabilities of the corresponding Acquired Fund prepared by the Trust,
as of the Valuation Date (as defined in paragraph 2.1), in accordance with
generally accepted accounting principles consistently applied from the prior
audited period. GE Funds, on behalf of each Acquiring Fund, shall assume only
those liabilities of the corresponding Acquired Fund reflected in that unaudited
statement of assets and liabilities and shall not assume any other liabilities,
whether absolute or contingent, not reflected thereon.
1.4. As provided in paragraph 3.4, as soon after the applicable Closing
Date as is conveniently practicable (the 'Liquidation Date'), the Acquired Fund
will liquidate and distribute pro rata to the Acquired Fund's shareholders of
record determined as of the close of business on the Closing Date (the 'Acquired
Fund Shareholders') the Acquiring Fund Shares it receives pursuant to paragraph
1.1. Such liquidation and distribution will be accomplished by the transfer of
the Acquiring Fund Shares then credited to the account of the Acquired Fund on
the books of the Acquiring Fund to open accounts on the share records of the
Acquiring Fund in the name of the Acquired Fund's shareholders representing the
respective pro rata number of the Acquiring Fund Shares of the particular class
due such shareholders. All issued and outstanding shares of the Acquired Fund
will simultaneously be canceled on the books of the Trust, although share
certificates representing interests in the Acquired Fund will represent a number
of Acquiring Fund Shares after the Closing Date as determined in accordance with
Section 2.3. The Acquiring Fund shall not issue certificates representing the
Acquiring Fund Shares in connection with such exchange.
1.5. Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Fund's transfer agent. Shares of the Acquiring Fund will be issued in
the manner described in the Acquiring Funds' current prospectus and statement of
additional information.
1.6. Any transfer taxes payable upon issuance of the Acquiring Fund Shares
in a name other than the registered holder of the Acquired Fund Shares on the
books of the Acquired Fund as of that time shall, as a condition of such
issuance and transfer, be paid by the person to whom such Acquiring Fund shares
are to be issued and transferred.
1.7. Any reporting responsibility of the Acquired Fund is and shall remain
the responsibility of the Trust up to and including the applicable Closing Date
and such later dates on which the Acquired Fund is dissolved and deregistered.
As soon as reasonably practicable after the Closing Date, the Trust will take
all necessary steps to effect a dissolution and deregistration of the Acquired
Fund.
1.8. The failure of any Acquired Fund and its corresponding Acquiring Fund
to consummate a Reorganization shall not affect the consummation or validity of
a Reorganization with respect to any other Acquired Fund and its corresponding
Acquiring Fund, and each provision of this Agreement shall be construed to
effect this intent, including, without limitation, as the context requires,
construing the terms 'Acquiring Fund' and 'Acquired Fund' as meaning only that
series of GE Funds and the Trust, respectively, which are involved in a
Reorganization as of the applicable Closing Date.
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2. VALUATION
2.1. The value of each Acquired Fund's assets to be acquired hereunder
shall be the value of such assets computed as of the close of regular trading on
the New York Stock Exchange, Inc. (the 'NYSE') on the applicable Closing Date
(such time and date being hereinafter called the 'Valuation Date'), using the
valuation procedures set forth in the Trust's Amended and Restated Master Trust
Agreement (the 'Declaration of Trust') and the Acquired Fund's then current
prospectus or statement of additional information.
2.2. The net asset value of each class of Shares of the Acquiring Fund
shall be the net asset value per share computed as of the Valuation Date, using
the valuation procedures set forth in the Acquiring Fund's then current
prospectus or statement of additional information.
2.3. The number of Shares of each class of the Acquiring Fund to be issued
(including fractional shares, if any) in exchange for the corresponding Acquired
Fund's net assets shall be determined by dividing the value of the net assets of
the Acquired Fund attributable to the respective classes of Shares determined
using the same valuation procedures referred to in paragraph 2.1 by the net
asset value per Share of such class of the Acquiring Fund determined in
accordance with paragraph 2.2.
2.4. All computations of value shall be made by State Street Bank and Trust
Company ('State Street') in accordance with its regular practice as pricing
agent for the Acquired Fund and Acquiring Fund.
3. CLOSING AND CLOSING DATE
3.1. The Closing Date for each Reorganization shall be September 26, 1997,
or such later date as the parties to such Reorganization may agree to in
writing. All acts taking place at each Closing shall be deemed to take place
simultaneously as of the close of business on the applicable Closing Date unless
otherwise provided. Each Closing shall be held as of 10:00 a.m., at the offices
of Willkie Farr & Gallagher, 153 East 53rd Street, New York, New York 10022, or
at such other time and/or place as the parties may agree.
3.2. The custodian for GE Funds (the 'Custodian'), shall deliver at the
Closing a certificate of an authorized officer stating that: (a) the Acquired
Fund's portfolio securities, cash and any other assets shall have been delivered
in proper form to the corresponding Acquiring Fund within two business days
prior to or on the Closing Date and (b) all necessary taxes, including all
applicable federal and state stock transfer stamps, if any, shall have been
paid, or provision for payment shall have been made, in conjunction with the
delivery of portfolio securities.
3.3. In the event that on the Valuation Date (a) the NYSE or another
primary trading market for portfolio securities of the Acquiring Fund or the
Acquired Fund shall be closed to trading or trading thereon shall be restricted
or (b) trading or the reporting of trading on the NYSE or elsewhere shall be
disrupted so that accurate appraisal of the value of the net assets of the
Acquiring Fund or the Acquired Fund is impracticable, the applicable Closing
Date shall be postponed until the first business day after the day when trading
shall have been fully resumed and reporting shall have been restored.
3.4. The Trust, on behalf of the Acquired Fund, shall deliver at the
Closing a list of the names and addresses of the Acquired Fund's shareholders
and the number and class of outstanding Shares owned by each such shareholder
immediately prior to the Closing or provide evidence that such information has
been provided to GE Funds' transfer agent. GE Funds, on behalf of each Acquiring
Fund, shall issue and deliver a confirmation evidencing the Acquiring Fund
Shares to be credited to the corresponding Acquired Fund's account on the
Closing Date to the Secretary of the Trust or provide evidence satisfactory to
the Trust that such Acquiring Fund Shares have been credited to the Acquired
Fund's account on the books of the corresponding Acquiring Fund. At the Closing,
each party shall deliver to the relevant other parties such bills of sale,
checks, assignments, share certificates, if any, receipts or other documents as
such other party or its counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1. The Trust, on behalf of each Acquired Fund, represents and warrants to
GE Funds, on behalf of each corresponding Acquiring Fund as follows:
(a) The Trust is a Massachusetts business trust duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Massachusetts and each Acquired Fund is a validly existing series of shares
of the Trust representing interests in the Acquired Fund;
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(b) The Trust is a registered investment company classified as a
management company of the open-end type and its registration with the
Securities and Exchange Commission (the 'Commission') as an investment
company under the 1940 Act, is in full force and effect;
(c) The Trust is not, and the execution, delivery and performance of
this Agreement will not result, in a material violation of its Declaration
of Trust or By-Laws or of any agreement, indenture, instrument, contract,
lease or other undertaking to which the Trust or any Acquired Fund is a
party or by which either of them or their property is bound;
(d) The Acquired Fund has no contracts or other commitments (other
than this Agreement) which will be terminated with liability to the
Acquired Fund prior to the Closing Date;
(e) Except as otherwise disclosed in writing to and accepted by GE
Funds, no litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or to its
knowledge threatened against the Trust or any Acquired Fund or any of its
properties or assets which, if adversely determined, would materially and
adversely affect its or any Acquired Fund's financial condition or the
conduct of its business. The Trust knows of no facts which might form the
basis for the institution of such proceedings and is not party to or
subject to the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects its business or
the business of any Acquired Fund or its ability or the ability of any
Acquired Fund to consummate the transactions contemplated herein;
(f) The statements of assets and liabilities of each Acquired Fund for
the three fiscal years ended October 31, 1996 have been audited by Coopers
& Lybrand L.L.P., certified public accountants, and are in accordance with
generally accepted accounting principles consistently applied, and such
statements (copies of which have been furnished to GE Funds) fairly reflect
the financial condition of the Acquired Fund as of such dates, and there
are no known contingent liabilities of any Acquired Fund as of such dates
not disclosed therein;
(g) Since October 31, 1996, there has not been any material adverse
change in any Acquired Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business,
or any incurrence by the Acquired Fund of indebtedness maturing more than
one year from the date that such indebtedness was incurred, except as
otherwise disclosed to and accepted by the corresponding Acquiring Fund.
For the purposes of this subparagraph (g), a decline in net asset value per
share of the Acquired Fund shares shall not constitute a material adverse
change;
(h) At the applicable Closing Date, all federal and other tax returns
and reports of each Acquired Fund required by law to have been filed by
such dates shall have been filed, and all federal and other taxes shall
have been paid so far as due, or provision shall have been made for the
payment thereof and, to the best of the Trust's knowledge, no such return
is currently under audit and no assessment has been asserted with respect
to such returns;
(i) Each Acquired Fund has met and intends to continue until the
Closing Date to meet the requirements of Subchapter M of the Code for
qualification and treatment as a regulated investment company; to the best
of the Trust's knowledge, all of each Acquired Fund's issued and
outstanding shares have been offered and sold in compliance in all material
respects with applicable federal and state securities laws;
(j) All issued and outstanding shares of each class of the Acquired
Fund are, and at the applicable Closing Date all then issued and
outstanding shares of each class of each Acquired Fund will be, duly and
validly issued and outstanding, fully paid and non-assessable, recognizing
that under Massachusetts law shareholders of the Acquired Fund could under
certain circumstances be held personally liable for its obligations. All of
the issued and outstanding shares of the Acquired Fund will, at the time of
Closing, be held by the persons and in the amounts set forth in the records
of the transfer agent as provided in paragraph 3.4. The Acquired Fund does
not have outstanding any options, warrants or other rights to subscribe for
or purchase any of the Acquired Fund's shares, nor is there outstanding any
security convertible into or exchangeable for any Acquired Fund shares,
except for conversion rights of Class B shares and exchange rights as set
forth in the Trust's Registration Statement;
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(k) At the applicable Closing Date, the Trust will have good and
marketable title to each Acquired Fund's assets to be transferred to the
corresponding Acquiring Fund pursuant to paragraph 1.2 and full right,
power and authority to sell, assign, transfer and deliver such assets
hereunder and, upon delivery and payment for such assets, each Acquiring
Fund will acquire good and marketable title thereto, subject to no
restrictions on the full transfer thereof, including such restrictions as
might arise under the Securities Act of 1933, as amended (the '1933 Act'),
other than as disclosed to GE Funds;
(l) The execution, delivery and performance of this Agreement has been
duly authorized by all necessary actions on the part of the Trust's Board
of Trustees, and subject to the approval of the Acquired Fund's
shareholders and the receipt of any necessary exemptive relief or no-action
assurances requested from the Commission or its staff with respect to
Section 17(a) of the 1940 Act, this Agreement will constitute a valid and
binding obligation of the Trust, enforceable in accordance with its terms,
subject to enforcement of bankruptcy, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights and to
general equity principles;
(m) The information to be furnished by the Trust for use in no-action
letters, applications for exemptive orders, registration statements, proxy
materials and other documents which may be necessary in connection with the
transactions contemplated hereby shall be accurate and complete in all
material respects and shall comply in all material respects with federal
securities and other laws and regulations thereunder applicable thereto;
(n) The proxy statement of the Acquired Fund (the 'Proxy Statement')
to be included in the Registration Statement referred to in paragraph 5.7
(only insofar as the information therein relates to the Trust or the
Acquired Fund) will, on the effective date of the Registration Statement
and on the Closing Date, not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which such statements were made, not materially misleading; and
(o) The current prospectus and statement of additional information of
the Trust conform in all material respects to the applicable requirements
of the 1933 Act and the 1940 Act and the rules and regulations of the
Commission thereunder and do not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not materially misleading.
4.2. GE Funds, on behalf of each Acquiring Fund represents and warrants to
the corresponding Acquired Fund as follows:
(a) GE Funds is a Massachusetts business trust, duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Massachusetts and each Acquiring Fund is a validly existing series of
shares of GE Funds representing interests in the Acquiring Fund;
(b) GE Funds is a registered investment company classified as a
management company of the open-end type and its registration with the
Commission as an investment company under the 1940 Act is in full force and
effect;
(c) The current prospectus and statement of additional information of
GE Funds conform in all material respects to the applicable requirements of
the 1933 Act and the 1940 Act and the rules and regulations of the
Commission thereunder and do not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not materially misleading;
(d) At the Closing Date, GE Funds will have good and marketable title
to each Acquiring Funds' assets;
(e) GE Funds is not, and the execution, delivery and performance of
this Agreement will not result, in a material violation of its Declaration
of Trust or By-Laws or of any agreement, indenture, instrument, contract,
lease or other undertaking to which GE Funds or any Acquiring Fund is a
party or by which either of them or their property is bound;
(f) Except as otherwise disclosed in writing to and accepted by the
Trust, no litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending
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or threatened against GE Funds or any Acquiring Fund or any of its
properties or assets, which, if adversely determined would materially and
adversely affect its or any Acquiring Funds' financial condition or the
conduct of its business. GE Funds knows of no facts which might form the
basis for the institution of such proceedings and is not a party to or
subject to the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects its business or
the business of any Acquiring Fund or its ability or the ability of any
Acquired Fund to consummate the transactions contemplated herein;
(g) The statements of assets and liabilities of each Acquiring Fund
except GE Mid-Cap Growth Fund, GE Value Equity Fund and GE Government
Securities Fund, each of which is a newly offered series of GE Funds) for
the two fiscal years ended September 30, 1996, and the fiscal period or
periods from the commencement of any Acquiring Fund's operations through
September 30, 1996, have been audited by Price Waterhouse LLP, certified
public accountants, and are in accordance with generally accepted
accounting principles consistently applied, and such statements (copies of
which have been furnished to the Trust) fairly reflect the financial
condition of each Acquiring Fund as of such date, and there are no known
contingent liabilities of the Acquiring Fund as of such date not disclosed
therein;
(h) Since September 30, 1996, there has not been any material adverse
change with respect to any Acquiring Fund's financial condition, assets,
liabilities or business other than changes occurring in the ordinary course
of business, or any incurrence by any Acquiring Fund of indebtedness
maturing more than one year from the date that such indebtedness was
incurred. For the purposes of this subparagraph (h), a decline in net asset
value per share of the Acquiring Fund Shares shall not constitute a
material adverse change;
(i) At the Closing Date, all federal and other tax returns and reports
of each Acquiring Fund required by law then to be filed shall have been
filed, and all federal and other taxes shown as due on said returns and
reports shall have been paid or provision shall have been made for the
payment thereof and to the best of GE Funds' knowledge, no such return is
currently under audit and no assessment has been asserted with respect to
such returns;
(j) Each of GE Short-Term Government Fund and GE Tax-Exempt Fund have
met and intend to continue to meet, and each of GE Government Securities
Fund, GE Value Equity Fund and GE Mid-Cap Growth Fund intend to meet, the
requirements of Subchapter M of the Code for qualification and treatment as
a regulated investment company in the future;
(k) At the date hereof, all issued and outstanding Acquiring Fund
Shares are, and at the Closing Date all then issued and outstanding shares
of each class of each Acquiring Fund will be, duly and validly issued and
outstanding, fully paid and non-assessable, recognizing that under
Massachusetts law shareholders of an Acquiring Fund could under certain
circumstances be held personally liable for its obligations. The Acquiring
Fund does not have outstanding any options, warrants or other rights to
subscribe for or purchase any Acquiring Fund Shares, nor is there
outstanding any security convertible into or exchangeable for any Acquiring
Fund Shares except for conversion rights of Class B shares and exchange
rights as set forth in GE Funds' Registration Statement;
(l) The execution, delivery and performance of this Agreement shall
have been duly authorized prior to the Closing Date by all necessary
actions on the part of GE Funds' Board of Trustees and on the part of the
Acquiring Fund's shareholders, if any, and subject to the receipt of any
necessary exemptive relief or no-action assurances requested from the
Commission or its staff with respect to Section 17(a) of the 1940 Act this
Agreement will constitute a valid and binding obligation of the GE Funds
enforceable in accordance with its terms, subject to enforcement of
bankruptcy, insolvency, reorganization, moratorium and other laws relating
to or affecting creditors' rights and to general equity principles;
(m) The Acquiring Fund Shares to be issued and delivered to the
corresponding Acquired Fund, for the account of the Acquired Fund's
shareholders, pursuant to the terms of this Agreement, will at the Closing
Date have been duly authorized and, when so issued and delivered, will be
duly and validly issued Acquiring Fund Shares, and will be fully paid and
non-assessable, recognizing that under Massachusetts law shareholders of an
Acquiring Fund could under certain circumstances be held personally liable
for its obligations;
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(n) The information to be furnished by GE Funds for use in no-action
letters, applications for exemptive orders, registration statements, proxy
materials and other documents which may be necessary in connection with the
transactions contemplated hereby shall be accurate and complete in all
material respects and shall comply in all material respects with federal
securities and other laws and regulations applicable thereto;
(o) The Proxy Statement to be included in the Registration Statement
referred to in paragraph 5.7 (other than information that relates to the
Trust or the Acquired Funds) will, on the effective date of the
Registration Statement and on the Closing Date, not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which such statements were made, not materially
misleading; and
(p) GE Funds agrees to use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act and
such of the state Blue Sky or securities laws as it may deem appropriate in
order to continue its operations after the Closing Date.
5. COVENANTS OF THE TRUST, THE GE FUNDS, THE ACQUIRING FUNDS AND THE ACQUIRED
FUNDS
5.1. The Acquiring Fund and the Acquired Fund each will operate its
business in the ordinary course between the date hereof and the Closing Date. It
is understood that such ordinary course of business will include the declaration
and payment of customary dividends and distributions and any other dividends and
distributions deemed advisable, in each case payable either in cash or in
additional shares.
5.2. The Trust, on behalf of each Acquired Fund, will call a meeting of its
shareholders to consider and act upon this Agreement and to take all other
actions in co-ordination with the Acquired Funds necessary to obtain approval of
the transactions contemplated herein.
5.3. The Trust, on behalf of each Acquired Fund, covenants that the
Acquiring Fund Shares to be issued hereunder are not being acquired for the
purpose of making any distribution thereof other than in accordance with the
terms of this Agreement.
5.4. The Trust, on behalf of each Acquired Fund, will assist GE Funds in
obtaining such information as GE Funds reasonably requests concerning the
beneficial ownership of the Acquired Fund's Shares.
5.5. Subject to the provisions of this Agreement, GE Funds and the Trust
each will take, or cause to be taken, all action, and do or cause to be done,
all things reasonably necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement.
5.6. As promptly as practicable, but in any case within sixty days after
the Closing Date, the Trust shall furnish each Acquiring Fund, in such form as
is reasonably satisfactory to the Acquiring Fund, a statement of the earnings
and profits of the corresponding Acquired Fund for federal income tax purposes
which will be carried over to the Acquiring Fund as a result of Section 381 of
the Code, and which will be certified by the Acquired Fund's President and its
Treasurer.
5.7. The Trust will provide GE Funds with information reasonably necessary
for the preparation of a prospectus (the 'Prospectus') which will include the
Proxy Statement referred to in paragraph 4.1(n), all to be included in a
registration statement on Form N-14 of GE Funds (the 'Registration Statement'),
which information shall be in compliance with the 1933 Act, the Securities
Exchange Act of 1934 (the '1934 Act') and the 1940 Act in connection with the
meeting of the Trust's shareholders to consider approval of this Agreement and
the transactions contemplated herein.
5.8. As promptly as practicable, but in any case within thirty days of the
Closing Date, the Trust shall furnish GE Funds with a statement containing
information required for purposes of complying with Rule 24f-2 under the 1940
Act. A notice pursuant to Rule 24f-2 will be filed by GE Funds, on behalf of
each Acquiring Fund that has not commenced operations prior to the Closing,
offsetting redemptions by the corresponding Acquired Fund during the fiscal year
ending on or after the applicable Closing Date against sales of applicable
Acquiring Fund Shares and the Trust agrees that it will not net redemptions
during such period by any Acquired Fund against sales of shares of any other
series of the Trust.
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6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Trust to consummate the transactions provided for
herein with respect to each Acquired Fund shall be subject, at its election, to
the performance by GE Funds and the corresponding Acquiring Fund of all of the
obligations to be performed by it hereunder on or before the Closing Date and,
in addition thereto, the following further conditions:
6.1. All representations and warranties of GE Funds contained in this
Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the actions contemplated by this
Agreement, as of the Closing Date with the same force and effect as if made on
and as of the Closing Date;
6.2. GE Funds shall have delivered to the Trust a certificate executed in
its name, and on behalf of the Acquiring Fund, by its President or Vice
President and its Treasurer or Assistant Treasurer, in a form reasonably
satisfactory to the Trust and dated as of the Closing Date, to the effect that
the representations and warranties of the Acquiring Fund made in this Agreement
are true and correct at and as of the Closing Date, except as they may be
affected by the transactions contemplated by this Agreement and as to such other
matters as the Trust shall reasonably request; and
6.3. The Trust shall have received on the Closing Date a favorable opinion
from Willkie Farr & Gallagher, counsel to GE Funds, dated as of the Closing
Date, in a form reasonably satisfactory to the Trust, covering the following
points:
That (a) GE Funds is validly existing under the laws of the
Commonwealth of Massachusetts as a voluntary association with transferable
shares of beneficial interest commonly referred to as a 'Massachusetts
business trust' organized pursuant to the GE Funds Declaration of Trust,
has the power to own its properties and assets and to our knowledge to
carry on its business as presently conducted, as set forth in the Combined
Prospectus/Proxy Statement, (b) the Agreement has been duly authorized,
executed and delivered by GE Funds on behalf of each Acquiring Fund and,
assuming that the Prospectus, Registration Statement and Proxy Statement
comply with the 1933 Act, the 1934 Act and the 1940 Act and the rules and
regulations thereunder and, assuming due authorization, execution and
delivery of the Agreement by the other parties thereto, is a valid and
binding obligation of GE Funds enforceable against GE Funds in accordance
with its terms, subject to enforcement of bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting
creditors' rights generally and to general equity principles; (c) the
Acquiring Fund Shares to be issued to each corresponding Acquired Fund's
shareholders as provided by this Agreement are duly authorized and when
issued in accordance with the Declaration of Trust and By-Laws of GE Funds
in exchange for the net assets of the Acquired Funds as contemplated by
this Agreement will be validly issued and outstanding and are fully paid
and non-assessable, recognizing that under Massachusetts law shareholders
of an Acquiring Fund could under certain circumstances be held personally
liable for its obligations, and no shareholder of any Acquiring Fund has
any preemptive rights to subscription or purchase in respect thereof
pursuant to the Declaration of Trust or the By-Laws of GE Funds or pursuant
to the statutes of the Commonwealth of Massachusetts governing voluntary
associations with transferable shares, except for conversion rights granted
to the holders of Class B shares, and exchange rights set forth in the
Combined Prospectus/Proxy Statement, (d) the execution and delivery of this
Agreement did not, and the consummation of the transactions contemplated
hereby by GE Funds will not, result in a material violation of GE Funds'
Declaration of Trust or By-Laws or any provision of any agreement (known to
such counsel) to which GE Funds or any Acquiring Fund is a party or by
which it or its property is bound or, to the knowledge of such counsel,
result in the acceleration of any obligation or the imposition of any
penalty, under any agreement, judgment, or decree to which GE Funds or any
Acquiring Fund is a party or by which either of them or their properties
are bound; (e) to the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental authority of the United
States or the Commonwealth of Massachusetts is required for the
consummation by GE Funds and the Acquiring Fund of the actions contemplated
herein, except such as have been obtained under the 1933 Act, the 1934 Act
and the 1940 Act, and such as may be required under state securities law;
(f) only insofar as they relate to GE Funds and the Acquiring Fund, the
descriptions in the Proxy Statement of statutes, legal and governmental
proceedings and contracts and other documents, if any, are accurate and
fairly present the information required to be shown; (g) such counsel does
not know of any legal or governmental proceedings, only insofar as they
relate to GE Funds or the Acquiring Funds, existing on or before the
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effective date of the Registration Statement or the Closing Date required
to be described in the Registration Statement or to be filed as exhibits to
the Registration Statement which are not described and filed as required;
(h) GE Funds is registered as an investment company under the 1940 Act and
its registration with the Commission as an investment company under the
1940 Act is in full force and effect; (i) to the best knowledge of such
counsel, no litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or threatened as
to GE Funds, the Acquiring Funds or any of their properties or assets, and
neither GE Funds nor any Acquiring Fund is a party to or subject to the
provisions of any order, decree or judgment of any court or governmental
body which materially and adversely affects its business, other than as
previously disclosed in the Registration Statement; and (j) the
Registration Statement has become effective under the 1933 Act and, to such
counsel's knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose
have been instituted or are pending or contemplated under the 1933 Act.
In addition, such counsel also shall state that they have participated
in conferences with officers and other representatives of GE Funds and the
Acquiring Fund at which the contents of the Proxy Statement and related
matters were discussed and, although they are not passing upon and do not
assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Proxy Statement (except to the extent indicated
in paragraph (f) of their above opinion), on the basis of the foregoing
(relying as to materiality to a large extent upon the opinions of officers
and other representatives of the Acquiring Fund), no facts have come to
their attention that lead them to believe that the Proxy Statement as of
its date, as of the date of the Acquired Fund's shareholders meeting, and
as of the Closing Date, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein regarding
the GE Funds or the Acquiring Fund or necessary to make the statements
therein regarding GE Funds or the Acquiring Fund, in the light of the
circumstances under which they were made, not misleading.
Such opinion may state that such counsel does not express any opinion
or belief as to the financial statements or other financial data or as to
the information relating to the Acquired Fund, contained in the Proxy
Statement or Registration Statement, and that such opinion is solely for
the benefit of the Trust, its Trustees and its officers. Such counsel may
rely as to matters governed by the laws of the Commonwealth of
Massachusetts on an opinion of the Massachusetts counsel and/or
certificates of officers or trustees of each Acquiring Fund. Such opinion
also shall include such other matters incident to the transaction
contemplated hereby, as the Acquired Fund may reasonably request.
In this paragraph 6.3, references to the Proxy Statement include and
relate only to the text of such Proxy Statement and not to any exhibits or
attachments thereto or to any documents incorporated by reference therein.
6.4. The Acquired Fund shall have received from Price Waterhouse L.L.P. a
letter addressed to the Acquired Fund and dated as of the applicable Closing
Date stating that as of a date no more than three (3) business days prior to the
applicable Closing Date, Price Waterhouse L.L.P. performed limited procedures in
connection with the Acquiring Fund's most recent unaudited financial statements.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of GE Funds to complete the transactions provided for
herein with respect to each Acquiring Fund shall be subject, at its election, to
the performance by the corresponding Acquired Fund of all the obligations to be
performed by it hereunder on or before the Closing Date and, in addition
thereto, the following conditions:
7.1. All representations and warranties of the Trust contained in this
Agreement shall be true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated by
this Agreement, as of the Closing Date with the same force and effect as if made
on and as of the Closing Date;
7.2. The Trust shall have delivered to GE Funds a statement of the Acquired
Fund's assets and liabilities, together with a list of the Acquired Fund's
portfolio securities showing the tax costs of such securities by lot and the
holding periods of such securities, as of the Closing Date, certified by the
Treasurer or Assistant Treasurer of the Trust;
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7.3. The Trust shall have delivered to GE Funds on the Closing Date a
certificate executed in its name, and on behalf of the Acquired Fund, by its
President or Vice President and its Treasurer or Assistant Treasurer, in form
and substance satisfactory to GE Funds and dated as of the Closing Date, to the
effect that the representations and warranties of the Acquired Fund made in this
Agreement are true and correct at and as of the Closing Date, except as they may
be affected by the transactions contemplated by this Agreement, and as to such
other matters as GE Funds shall reasonably request;
7.4. GE Funds shall have received on the Closing Date a favorable opinion
of Goodwin, Procter & Hoar, counsel to the Trust, in a form satisfactory to the
Secretary of GE Funds, covering the following points:
That (a) the Trust is validly existing under the laws of the
Commonwealth of Massachusetts as a voluntary association with transferable
shares of beneficial interest commonly referred to as a 'Massachusetts
business trust' organized pursuant to the Trust's Declaration of Trust and
in good standing with the Office of the Secretary of the Commonwealth of
Massachusetts and has the power to own its properties and assets and to our
knowledge to carry on its business as presently conducted as set forth in
the Combined Prospectus/Proxy Statement; (b) the Agreement has been duly
authorized, executed and delivered by the Trust on behalf of each Acquired
Fund and, assuming that the Prospectus, the Registration Statement and the
Proxy Statement comply with the 1933 Act, the 1934 Act and the 1940 Act and
the rules and regulations thereunder and, assuming due authorization,
execution and delivery of the Agreement by the other parties hereto, is a
valid and binding obligation of the Trust enforceable against the Trust in
accordance with its terms, subject to enforcement of bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or
affecting creditors' rights generally and to general equity principles; (c)
the execution and delivery of the Agreement did not, and the consummation
of the transactions contemplated hereby by the Trust will not, result in a
material violation of the Trust's Declaration of Trust or By-Laws or any
provision of any agreement (known to such counsel) to which the Trust or
any Acquired Fund is a party or by which either of them or their properties
are bound or, to the knowledge of such counsel, result in the acceleration
of any obligation or the imposition of any penalty, under any agreement,
judgment or decree to which the Trust or any Acquired Fund is a party or by
which either of them or their properties are bound, (d) to the knowledge of
such counsel, no consent, approval, authorization or order of any court or
governmental authority of the United States or the Commonwealth of
Massachusetts is required for the consummation by the Trust and the
Acquired Funds of the transactions contemplated herein, except such as have
been obtained under the 1933 Act, the 1934 Act and the 1940 Act, and such
as may be required under state securities laws; (e) such counsel does not
know of any legal or governmental proceedings, only insofar as they relate
to the Trust or the Acquired Funds existing on or before the effective date
of the Registration Statement or the Closing Date, required to be described
in the Proxy Statement or to be filed as exhibits to the Registration
Statement which are not described and filed as required; (f) the Trust is
registered as an investment company under the 1940 Act and its registration
with the Commission as an investment company under the 1940 Act is in full
force and effect; and (g) to the best knowledge of such counsel, no
litigation or administrative proceeding or investigation of or before any
court or governmental body is presently pending or threatened as to the
Trust, the Acquired Funds or any of their respective properties or assets
and neither the Trust nor any Acquired Fund is a party to nor subject to
the provisions of any order, decree or judgment of any court or
governmental body which materially and adversely affects its business.
In this paragraph 7.4, references to the Proxy Statement include and
relate only to the text of such Proxy Statement and not to any exhibits or
attachments thereto or to any documents incorporated by reference therein.
7.5. The Trust shall have delivered to the Company, pursuant to paragraph
4.1(f), copies of financial statements of the Acquired Fund as of and for its
most recently completed fiscal year; and
7.6. The Acquiring Fund shall have received from Coopers & Lybrand L.L.P. a
letter addressed to the Acquiring Fund and dated as of the applicable Closing
Date stating that as of a date no more than three (3) business days prior to the
applicable Closing Date, Coopers & Lybrand L.L.P. performed limited procedures
in connection with the Trust's most recent unaudited financial statements.
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8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE
ACQUIRED FUND
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the Acquiring Fund, the Trust on behalf of the
corresponding Acquired Fund shall, and if any of such conditions do not exist on
or before the Closing Date with respect to the Acquired Fund, the corresponding
Acquiring Fund shall, at their respective option, not be required to consummate
the transactions contemplated by this Agreement:
8.1. The Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of the holders of the outstanding Shares of each
class of the Acquired Fund in accordance with the provisions of the Trust's
Declaration of Trust and applicable law and certified copies of the votes
evidencing such approval shall have been delivered to GE Funds;
8.2. The sub-advisory agreement with Brown Brothers Harriman & Co. with
respect to GE Tax-Exempt Fund and the modification of certain investment
policies and restrictions of the Tax-Exempt Fund shall have been approved by the
requisite vote of the holders of the outstanding Shares of GE Tax-Exempt Fund in
accordance with the provisions of GE Fund's Declaration of Trust and applicable
law and certified copies of the votes evidencing such approval shall have been
delivered to the Trust;
8.3. On the Closing Date no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with, this
Agreement or the transactions contemplated herein;
8.4. All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including those of
the Commission and of state blue sky and securities authorities, including
'no-action' positions of and exemptive orders from such federal and state
authorities) deemed necessary by GE Funds or the Trust to permit consummation,
in all material respects, of the transactions contemplated hereby shall have
been obtained, except where failure to obtain any such consent, order or permit
would not involve a risk of a material adverse effect on the assets or
properties of the Acquiring Funds or the Acquired Funds, provided that either
party hereto may for itself waive any of such conditions;
8.5. The Registration Statement shall have become effective under the 1933
Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act;
8.6. The Trust, on behalf of the Acquired Fund, shall have declared a
dividend or dividends which, together with all previous such dividends, shall
have the effect of distributing to the Acquired Fund's shareholders all of the
fund's investment company taxable income for all taxable years ending on or
prior to the Closing Date (computed without regard to any deduction for
dividends paid) and all of its net capital gain realized in all taxable years
ending on or prior to the Closing Date (after reduction for any capital loss
carryforward);
8.7. Each of GE Funds and the Trust shall have received a favorable opinion
of Willkie Farr & Gallagher, addressed to, and in form and substance
satisfactory to GE Funds on behalf of each Acquiring Fund, and the Trust on
behalf of each Acquired Fund, each such opinion substantially to the effect that
for federal income tax purposes:
(a) The transfer of all or substantially all of the Acquired Fund's
assets in exchange for the Acquiring Fund Shares and the assumption by the
Acquiring Fund of certain identified liabilities of the corresponding
Acquired Fund will constitute a 'reorganization' within the meaning of
Section 368(a)(1) of the Code and the Acquiring Fund and the corresponding
Acquired Fund are each a 'party to a reorganization' within the meaning of
Section 368(b) of the Code; (b) no gain or loss will be recognized by the
Acquiring Fund upon the receipt of the assets of the corresponding Acquired
Fund solely in exchange for the Acquiring Fund Shares and the assumption by
the Acquiring Fund of certain identified liabilities of the corresponding
Acquired Fund; (c) no gain or loss will be recognized by the Acquired Fund
upon the transfer of the Acquired Fund's assets to the corresponding
Acquiring Fund in exchange for the Acquiring Fund Shares and the assumption
by the Acquiring Fund of certain identified liabilities of the Acquired
Fund or upon the distribution (whether actual or constructive) of the
Acquiring Fund Shares to the Acquired Fund's shareholders in exchange for
their shares of the Acquired Fund; (d) no gain or loss will be recognized
by shareholders of the Acquired Fund upon the exchange of their Acquired
Fund shares for the Acquiring Fund
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Shares and the assumption by the Acquiring Fund of certain identified
liabilities of the Acquired Fund; (e) the aggregate tax basis for the
Acquiring Fund Shares received by each of the Acquired Fund's shareholders
pursuant to the Reorganization will be the same as the aggregate tax basis
of the Acquired Fund Shares held by such shareholder immediately prior to
the Reorganization, and the holding period of the Acquiring Fund Shares to
be received by each Acquired Fund shareholder will include the period
during which the Acquired Fund Shares exchanged therefor were held by such
shareholder (provided that the Acquired Fund Shares were held as capital
assets on the date of the Reorganization); and (f) the tax basis of the
Acquired Fund's assets acquired by the Acquiring Fund will be the same as
the tax basis of such assets to the Acquired Fund immediately prior to the
Reorganization, and the holding period of the assets of the Acquired Fund
in the hands of the Acquiring Fund will include the period during which
those assets were held by the Acquired Fund.
Notwithstanding anything herein to the contrary, neither GE Funds nor the
Trust may waive the conditions set forth in this paragraph 8.7;
8.8. The Board of Trustees of the Trust, including a majority of the
trustees who are not 'interested persons' of the Trust (as defined by the 1940
Act), shall have determined that this Agreement and the transactions
contemplated hereby are in the best interests of the Acquired Fund and that the
interests of the shareholders in the Acquired Fund would not be diluted as a
result of such transactions, and the Trust shall have delivered to the Acquiring
Fund at the applicable Closing, a certificate, executed by an officer, to the
effect that the condition described in this subparagraph has been satisfied; and
8.9. The Board of Trustees of GE Funds, including a majority of the
trustees who are not 'interested persons' of the Trust (as defined by the 1940
Act), shall have determined that this Agreement and the transactions
contemplated hereby are in the best interests of the Acquiring Fund and that the
interests of the shareholders in the Acquiring Fund would not be diluted as a
result of such transactions, and the Trust shall have delivered to the Acquired
Fund at the applicable Closing, a certificate, executed by an officer, to the
effect that the condition described in this subparagraph has been satisfied.
9. BROKERAGE FEES AND EXPENSES
9.1. GE Funds, on behalf of each Acquiring Fund, represents and warrants to
the corresponding Acquired Fund, and the Trust on behalf of the Acquired Fund
represents and warrants to each corresponding Acquiring Fund, that there are no
brokers or finders or other entities to receive any payments in connection with
the transactions provided for herein.
9.2. GE Investment Management Incorporated shall bear the ordinary and
reasonable expenses incurred in connection with the transactions contemplated by
this Agreement, whether or not consummated (excluding extraordinary expenses
such as litigation expenses, damages and other expenses not normally associated
with transactions of the type contemplated by this Agreement). These expenses
consist of: (i) expenses associated with preparing this Agreement and preparing
and filing the Registration Statement under the 1933 Act covering the Acquiring
Fund Shares to be issued in the Reorganization; (ii) expenses associated with
the preparation and filing of an exemptive application with the Commission on
behalf of GE Funds and the Trust seeking exemption from certain sections of the
1940 Act; (iii) registration or qualification fees and expenses of preparing and
filing such forms, if any, necessary under applicable state securities laws to
qualify the Acquiring Fund Shares to be issued in connection with the
Reorganization; (iv) postage; printing; accounting fees; and reasonable legal
fees incurred in connection with the transactions contemplated by this
Agreement; and (v) solicitation costs incurred in connection with the
shareholders meeting referred to in paragraph 5.2 hereof.
10. ENTIRE AGREEMENT
10.1. GE Funds itself and on behalf of each Acquiring Fund, and the Trust,
itself and on behalf of each Acquired Fund, agree that neither party has made
any representation, warranty or covenant not set forth herein and that this
Agreement constitutes the entire agreement among the parties.
A-12
<PAGE>
11. TERMINATION
11.1. This Agreement may be terminated at any time at or prior to the
Closing Date by: (1) mutual agreement of the Trust, on behalf of the Acquired
Fund, and GE Funds on behalf of the corresponding Acquiring Fund; (2) the Trust,
on behalf of the Acquired Fund, in the event GE Funds or the corresponding
Acquiring Fund shall, or GE Funds on behalf of the Acquiring Fund, in the event
the Trust or the corresponding Acquired Fund shall, materially breach any
representation, warranty or agreement contained herein to be performed at or
prior to the Closing Date; or (3) a condition herein expressed to be precedent
to the obligations of the terminating party or parties has not been met and it
reasonably appears that it will not or cannot be met.
11.2. In the event of any such termination, there shall be no liability for
damages on the part of either GE Funds or the Trust, or their respective
trustees or officers, to the other party or parties.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by the authorized officers of GE Funds
and the Trust; provided, however, that following the meeting of the Acquired
Fund's shareholders called by the Trust pursuant to paragraph 5.2 of this
Agreement no such amendment may have the effect of changing the provisions for
determining the number of the Acquiring Fund Shares to be issued to the
corresponding Acquired Fund's Shareholders under this Agreement to the detriment
of such shareholders without their further approval.
13. NOTICES
13.1. Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy or certified mail addressed to GE Funds and/or the Trust at:
GE Funds at:
Matthew J. Simpson, Esq.
Vice President and Associate General Counsel
GE Investments
3003 Summer Street
Stamford, Connecticut 06905
with a copy to:
Burton M. Leibert, Esq.
Willkie Farr & Gallagher
153 East 53rd Street
New York, New York 10022
or
The Trust at:
Edward J. Wiles, Jr.
Vice President and Secretary
GNA Capital Management, Inc.
Suite 5600
Two Union Square
601 Union Street
Seattle, Washington 98101
with a copy to:
Geoffrey R.T. Kenyon, Esq.
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109-2881
A-13
<PAGE>
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY
14.1. The article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.2. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
14.3. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
14.4. This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
14.4.1. It is expressly agreed that the rights and obligations hereunder of
each Acquiring Fund are separate from the rights and obligations of each other
Acquiring Fund, that the rights and obligations of each Acquired Fund are
separate from the rights and obligations of each other Acquired Fund, and that
neither the rights and obligations of the Acquiring Funds and GE Funds nor of
the Acquired Funds and the Trust shall be construed to be joint rights or
obligations of two or more of the Acquiring Funds or two or more of the Acquired
Funds, respectively, notwithstanding the fact that each of GE Funds, for itself
and on behalf of each of the Acquiring Funds, and the Trust, for itself and on
behalf of each of the Acquired Funds, have entered into this Agreement.
14.5. It is expressly agreed that the obligations of the Acquiring Funds
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of GE Funds personally, but bind only the trust
property of GE Funds and the Acquiring Funds, as provided in the Declaration of
Trust of GE Funds. The execution and delivery of this Agreement have been
authorized by the Trustees of GE Funds and executed by authorized officers of GE
Funds on behalf of the Acquiring Funds, acting as such, and neither such
authorization by such Trustees nor such execution and delivery by such officers
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property of
the Acquiring Funds as provided in the Declaration of Trust of GE Funds.
14.6. It is expressly agreed that the obligations of the Acquired Funds
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust personally, but bind only the trust
property of the Trust and the Acquired Funds, as provided in the Declaration of
Trust of the Trust. The execution and delivery of this Agreement have been
authorized by the Trustees of the Trust and executed by authorized officers of
the Trust on behalf of the Acquired Funds, acting as such, and neither such
authorization by such Trustees nor such execution and delivery by such officers
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property of
the Acquired Funds as provided in the Declaration of Trust of the Trust.
A-14
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its Chairman of the Board, President or Vice President and
attested to by its Secretary or Assistant Secretary.
GE FUNDS, for itself and on behalf of
GE Mid-Cap Growth Fund, GE Tax-Exempt Fund,
GE Short-Term Government Fund, GE Value
Equity Fund and GE Government Securities Fund
By: /s/ Michael J. Cosgrove
__________________________________
Name: Michael J. Cosgrove
Title: Chairman of the Board and President
Attest: /s/ Matthew J. Simpson
______________________________
Name: Matthew J. Simpson
Title: Secretary
INVESTORS TRUST, for itself and on
behalf of the Investors Trust Adjustable Rate
Fund, Investors Trust Government Fund,
Investors Trust Tax Free Fund, Investors Trust
Value Fund and Investors Trust Growth Fund
By: /s/ Geoffrey S. Stiff
__________________________________
Name: Geoffrey S. Stiff
Title: President and Chief Executive Officer
Attest: /s/ Karri J. Harrington
______________________________
Name: Karri J. Harrington
Title: Assistant Secretary
A-15
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
ACQUIRED FUNDS CORRESPONDING ACQUIRING FUND
(EACH A SERIES OF THE TRUST) (EACH A SERIES OF GE FUNDS)
- ---------------------------------------- ---------------------------------
<S> <C> <C> <C>
(1) Investors Trust Government Fund (1) GE Government Securities Fund
(2) Investors Trust Value Fund (2) GE Value Equity Fund
(3) Investors Trust Growth Fund (3) GE Mid-Cap Growth Fund
(4) Investors Trust Tax Free Fund (4) GE Tax-Exempt Fund
(5) Investors Trust Adjustable Rate Fund (5) GE Short-Term Government Fund
</TABLE>
<PAGE>
PROSPECTUS
OF
GE FUNDS
DATED JULY 25, 1997
<PAGE>
[LOGO] GE FUNDS
INFORMATION CONTAINED HEREIN IS INTENDED SOLELY FOR USE BY SHAREHOLDERS OF
INVESTORS TRUST SOLELY IN CONNECTION WITH THEIR CONSIDERATION OF THE PROPOSED
ACQUISITION OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF INVESTORS TRUST BY
CERTAIN SERIES OF GE FUNDS (THE 'REORGANIZATION'). THIS INFORMATION WILL BE
EFFECTIVE AS OF THE COMPLETION OF THE REORGANIZATION, EXPECTED TO OCCUR ON OR
ABOUT SEPTEMBER 26, 1997. AT THAT TIME, THREE SERIES OF GE FUNDS (THE 'TRUST')
ARE EXPECTED TO COMMENCE OPERATIONS: GE MID-CAP GROWTH FUND, GE VALUE EQUITY
FUND AND GE GOVERNMENT SECURITIES FUND. IN ADDITION, AT THAT TIME, SUBJECT TO
APPROVAL BY GE TAX-EXEMPT FUND'S SHAREHOLDERS OF RECORD ON JULY 11, 1997,
CERTAIN CHANGES TO THE INVESTMENT POLICIES AND RESTRICTIONS OF GE TAX-EXEMPT
FUND ARE EXPECTED TO BE IMPLEMENTED, AND BROWN BROTHERS HARRIMAN & CO. IS
EXPECTED TO COMMENCE SERVING AS SUB-INVESTMENT ADVISER OF THAT FUND. PERSONS
SEEKING TO INVEST IN ANY OF THE CURRENTLY AVAILABLE GE FUNDS SHOULD REQUEST A
COPY OF THE TRUST'S PROSPECTUS DATED DECEMBER 30, 1996 BY CALLING THE TRUST AT
(800) 242-0134 OR WRITING TO THE TRUST AT 3003 SUMMER STREET, STAMFORD,
CONNECTICUT 06905.
- --------------------------------------------------------------------------------
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 thirteen series, one of which (GE International Fixed Income Fund)
is not presently being offered. This Prospectus describes the following twelve
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 Mid-Cap Growth Fund's investment objective is long-term growth of capital
which the Fund seeks to achieve by investing primarily in equity securities
of companies with medium-sized market capitalization that have the potential
for above-average growth.
o GE Value Equity Fund's investment objective is long-term growth of capital
and future income which the Fund seeks to achieve by investing primarily in
equity securities of companies with large-sized market capitalization that
the Fund's management considers to be undervalued by the market.
o 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 produce as high a level of
income exempt from federal income tax as is consistent with preservation of
capital which the Fund attempts to achieve by investing substantially all of
its assets in tax-exempt debt obligations.
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 Government Securities Fund's investment objective is a high level of
current income consistent with safety of principal which the Fund attempts
to achieve by investing primarily in obligations issued or guaranteed by the
U.S. Government or by its agencies or instrumentalities.
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 primarily
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, GE GOVERNMENT SECURITIES 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 SEC maintains
a Web site (http://www.sec.gov) that contains the Statement of Additional
Information, material incorporated by reference and other information regarding
the Funds and the Trust. The Statement of Additional Information is incorporated
in its entirety by reference into this Prospectus.
GE INVESTMENT MANAGEMENT INCORPORATED
Investment Adviser and Administrator
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
PROSPECTUS
JULY 25, 1997
TABLE OF CONTENTS
Expense Information .............................. 2
Financial Highlights ............................. 8
Performance ...................................... 15
The Multiple Distribution System ................. 17
Investment Objectives and Management Policies .... 18
Management of the Trust .......................... 38
Purchase of Shares ............................... 41
Retirement Plans ................................. 46
Redemption of Shares ............................. 46
Exchange Privilege ............................... 50
Net Asset Value .................................. 50
Dividends, Distributions and Taxes ............... 51
Custodian and Transfer Agent ..................... 53
Distributor ...................................... 53
Performance Calculation .......................... 53
Further Information:
Certain Investment Techniques and Strategies ... 57
Additional Matters ............................... 62
3003 Summer Street
Stamford, Connecticut 06905
(800) 242-0134
1
- --------------------------------------------------------------------------------
<PAGE>
EXPENSE INFORMATION
- --------------------------------------------------------------------------------
The purpose of the following table is to assist an investor in understanding the
expenses that an investor in the Funds will bear directly or indirectly, based
upon the maximum sales charge or maximum contingent deferred sales charge that
may be incurred at the time of purchase and redemption and each particular
Fund's operating expenses for the most recent year.
FEE TABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GE
PREMIER GE GE GE
GROWTH GE MID-CAP VALUE GLOBAL GE
EQUITY U.S. EQUITY GROWTH EQUITY EQUITY INTERNATIONAL
FUND FUND FUND FUND FUND EQUITY FUND
-------- ------------ -------- --------- --------- --------------
<S> <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% 4.75%
Classes B, C and D.................... None None None None None None
Maximum Sales Load Imposed on Reinvested
Dividends (as a percentage of offering
price):
All Classes........................... None None None None None None
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%
Class B............................... 4.0% 4.0% 4.0% 4.0% 4.0% 4.0%
Classes C and D....................... None None None None None None
Redemption Fees (as a percentage of
amount redeemed):
All Classes........................... None None None None None None
Maximum Exchange Fee:
All Classes........................... None None None None None None
</TABLE>
- ------------------
* 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. A MAXIMUM CDSC OF 5% WILL BE IMPOSED ON CLASS B SHARES
ISSUED OR EXCHANGED IN CONNECTION WITH THE COMBINATION OF INVESTORS TRUST, A
FAMILY OF MUTUAL FUNDS DISTRIBUTED BY GNA DISTRIBUTORS, INC. ('INVESTORS
TRUST'), AN AFFILIATE OF GE INVESTMENT MANAGEMENT INCORPORATED ('GEIM'), GE
FUNDS' INVESTMENT ADVISER AND ADMINISTRATOR, WITH CERTAIN GE FUNDS. SEE
'REDEMPTION OF SHARES -- REDEMPTIONS IN GENERAL,' 'EXCHANGE PRIVILEGE' AND
'ADDITIONAL MATTERS.'
** 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 are
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>
FEE TABLE (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GE GE GE GE GE GE
STRATEGIC TAX- FIXED GOVERNMENT SHORT-TERM MONEY
INVESTMENT EXEMPT INCOME SECURITIES GOVERNMENT MARKET
FUND FUND FUND FUND FUND FUND***
----------- ------- ------- ----------- ----------- --------
<S> <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% 4.25% 4.25% 4.25% 2.50% N/A
Classes B, C and D.................... 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 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% N/A
Class B............................... 4.0% 3.0% 3.0% 3.0% 3.0% N/A
Classes C and D....................... None None None None None N/A
Redemption Fees (as a percentage of
amount redeemed):
All Classes........................... None None None None None N/A
Maximum Exchange Fee:
All Classes........................... None None None None None N/A
</TABLE>
- ------------------
* The sales charge and 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.
A MAXIMUM CDSC OF 5% WILL BE IMPOSED ON CLASS B SHARES ISSUED OR EXCHANGED
IN CONNECTION WITH THE COMBINATION OF INVESTORS TRUST WITH CERTAIN GE FUNDS.
SEE 'REDEMPTION OF SHARES -- REDEMPTIONS IN GENERAL,' 'EXCHANGE PRIVILEGE'
AND 'GENERAL INFORMATION.'
** 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.
*** 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.
3
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
GE
PREMIER GE GE GE GE
GROWTH U.S. MID-CAP VALUE GLOBAL GE
EQUITY EQUITY GROWTH EQUITY EQUITY INTERNATIONAL
FUND* FUND FUND* FUND FUND EQUITY FUND*
-------- ------ -------- ------ ------ --------------
<S> <C> <C> <C> <C> <C> <C>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net
assets)
Advisory and Administration fees:
Class A............................. .60% .40% .60% .55% .75% .80%
Class B............................. .60% .40% .60% .55% .75% .80%
Class C............................. .60% .40% .60% .55% .75% .80%
Class D............................. .60% .40% .60% .55% .75% .80%
12b-1 fees:
Class A............................. .50% .50% .50% .50% .50% .50%
Class B............................. 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Class C............................. .25% .25% .25% .25% .25% .25%
Class D............................. None None None None None None
Other expenses
(after reimbursement):
Class A............................. .30% .20% .30% .30% .35% .30%
Class B............................. .30% .20% .30% .30% .35% .30%
Class C............................. .30% .20% .30% .30% .35% .30%
Class D............................. .30% .20% .30% .30% .35% .30%
TOTAL OPERATING EXPENSES
(AFTER REIMBURSEMENT): +
Class A............................. 1.40% 1.10% 1.40% 1.35% 1.60% 1.60%
Class B............................. 1.90% 1.60% 1.90% 1.85% 2.10% 2.10%
Class C............................. 1.15% .85% 1.15% 1.10% 1.35% 1.35%
Class D............................. .90% .60% .90% .85% 1.10% 1.10%
</TABLE>
- ------------------
* With respect to GE Premier Growth Equity Fund, GE Mid-Cap Growth Fund, GE
International Equity Fund and GE Short-Term Government Fund, administration
fees (amounting to .05%) and advisory fees are imposed pursuant to separate
contracts.
+ See the '+' footnote on page 7.
4
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
GE
STRATEGIC GE GE GE GE GE
INVEST- TAX- FIXED GOVERNMENT SHORT-TERM MONEY
MENT EXEMPT INCOME SECURITIES GOVERNMENT MARKET
FUND FUND FUND FUND FUND* FUND
--------- ------ ------ ---------- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net
assets)
Advisory and Administration fees: .25%
Class A........................... .35% .00% ++ .35% .40% .30%
Class B........................... .35% .00% ++ .35% .40% .30%
Class C........................... .35% .00% ++ .35% .40% .30%
Class D........................... .35% .00% ++ .35% .40% .30%
12b-1 fees: None
Class A........................... .50% .50% .50% .50% .50%
Class B........................... 1.00% 1.00% 1.00% 1.00% .85%
Class C........................... .25% .25% .25% .25% .25%
Class D........................... None None None None None
Other expenses
(after reimbursement): .25%
Class A........................... .30% .25% .20% .20% .15%
Class B........................... .30% .25% .20% .20% .15%
Class C........................... .30% .25% .20% .20% .15%
Class D........................... .30% .25% .20% .20% .15%
TOTAL OPERATING EXPENSES
(AFTER REIMBURSEMENT): + .50%
Class A........................... 1.15% .75% 1.05% 1.10% .95%
Class B........................... 1.65% 1.25% 1.55% 1.60% 1.30%
Class C........................... .90% .50% .80% .85% .70%
Class D........................... .65% .25% .55% .60% .45%
</TABLE>
- ------------------
* With respect to GE Premier Growth Equity Fund, GE Mid-Cap Growth Fund, GE
International Equity Fund and GE Short-Term Government Fund, administration
fees (amounting to .05%) and advisory fees are imposed pursuant to separate
contracts.
+ See the '+' footnote on page 7.
++ GEIM has agreed to waive all the 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 equal to .35% and Total Operating
Expenses as follows: Class A--1.10%, Class B--1.60%, Class C--.85% and Class
D--.60%. GEIM intends to commence charging the full amount of the advisory
and administration fees on or prior to the completion of the Reorganization.
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,
including custodial fees, legal and accounting fees, printing costs and
registration fees, the costs of regulatory compliance and membership in the
mutual fund industry trade organization, 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.
5
- --------------------------------------------------------------------------------
<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. See the footnotes following the table.
<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 N/A N/A Same Same N/A N/A
Class B............................... $ 59 $80 N/A N/A $19 $60 N/A N/A
Class C............................... $ 12 $37 N/A N/A Same Same N/A N/A
Class D............................... $ 9 $29 N/A N/A Same Same N/A N/A
GE U.S. EQUITY FUND:
Class A............................... $ 58* $81 $ 105 $175 Same Same Same Same
Class B............................... $ 56 $70 $ 87 $164 $16 $50 $87 $164
Class C............................... $ 9 $27 $ 47 $105 Same Same Same Same
Class D............................... $ 6 $19 $ 33 $ 75 Same Same Same Same
GE MID-CAP GROWTH FUND:
Class A............................... $ 61* $90 N/A N/A Same Same N/A N/A
Class B............................... $ 59 $80 N/A N/A $19 $60 N/A N/A
Class C............................... $ 12 $37 N/A N/A Same Same N/A N/A
Class D............................... $ 9 $29 N/A N/A Same Same N/A N/A
GE VALUE EQUITY FUND:
Class A............................... $ 61* $88 N/A N/A Same Same N/A N/A
Class B............................... $ 59 $78 N/A N/A $19 $58 N/A N/A
Class C............................... $ 11 $35 N/A N/A Same Same N/A N/A
Class D............................... $ 9 $27 N/A N/A Same Same N/A N/A
GE GLOBAL EQUITY FUND:
Class A............................... $ 63* $96 $ 130 $228 Same Same Same Same
Class B............................... $ 61 $86 $ 113 $218 $21 $66 $113 $218
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 $218 $21 $66 $113 $218
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 $169 $17 $52 $90 $169
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 $164 $16 $50 $87 $164
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 $69 $ 84 $158 $16 $49 $84 $158
Class C............................... $ 8 $26 $ 44 $ 99 Same Same Same Same
Class D............................... $ 6 $18 $ 31 $ 69 Same Same Same Same
</TABLE>
6
- --------------------------------------------------------------------------------
<PAGE>
<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**
------ ------- ------- ---------- ------- -------- -------- -----------
GE GOVERNMENT SECURITIES FUND:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A............................... $ 53* $76 N/A N/A Same Same N/A N/A
Class B............................... $ 46 $69 N/A N/A $16 $49 N/A N/A
Class C............................... $ 9 $27 N/A N/A Same Same N/A N/A
Class D............................... $ 6 $19 N/A N/A Same Same N/A N/A
GE SHORT-TERM GOVERNMENT FUND:
Class A............................... $ 34* $55 $ 76 $139 Same Same Same Same
Class B............................... $ 43 $61 $ 71 $138 $13 $41 $71 $138
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. Class B shares received as a
result of the Reorganization will convert to Class A shares after eight
years.
+ The fee table and the example of expenses 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 'Total Operating
Expenses' would be equal to the annual rate of the value of the Fund's
average daily net assets as shown in the following table.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
GE Premier Growth Equity Fund........... 7.95% 10.28% 1.76% 1.20%
GE U.S. Equity Fund..................... 1.12% 1.91% .95% .60%
GE Mid-Cap Growth Fund.................. 1.56% 2.01% 2.50% 2.50%
GE Value Equity Fund.................... 1.50% 1.87% 2.50% 2.50%
GE Global Equity Fund................... 3.49% 3.44% 1.49% 1.10%
GE International Equity Fund............ 1.60% 4.31% 1.63% 1.10%
GE Strategic Investment Fund............ 1.15% 1.96% .95% .65%
GE Tax-Exempt Fund...................... 1.10% 1.67% 1.10% .77%
GE Fixed Income Fund.................... 1.14% 2.21% .95% .59%
GE Government Securities Fund........... 1.10% 1.60% 2.50% 2.50%
GE Short-Term Government Fund........... 1.20% 2.26% 1.10% .71%
GE Money Market Fund.................... N/A N/A N/A N/A .50%
</TABLE>
7
- --------------------------------------------------------------------------------
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected audited and unaudited 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 and the Trust's Semi-Annual Report dated March 31, 1997
(collectively, the 'Financial Reports'). The following audited data for the
fiscal years or periods ended September 30 and unaudited data for the six-month
period ended March 31, 1997 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 Financial Reports, 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.
The Financial Highlights for Class A and B shares of GE Mid-Cap Growth Fund, GE
Value Equity Fund, GE Tax-Exempt Fund and GE Government Securities Fund consist
of selected audited data for the fiscal years or period ended October 31, 1996
and selected unaudited data for the six-month period ended April 30, 1997 for
Investors Trust Growth Fund, Investors Trust Value Fund, Investors Trust Tax
Free Fund and Investors Trust Government Fund, respectively. On or about
September 26, 1997, the Trust, on behalf of GE Mid-Cap Growth Fund, GE Value
Equity Fund, GE Tax-Exempt Fund and GE Government Securities Fund, intends to
acquire all or substantially all the assets of Investors Trust Growth Fund,
Investors Trust Value Fund, Investors Trust Tax Free Fund and Investors Trust
Government Fund, respectively (each a series of Investors Trust). Because the
Investors Trust Funds did not offer Class C or Class D shares, no financial
information is reflected herein for those Classes, but will be provided in the
future. As of the same date, the Trust, on behalf of GE Short-Term Government
Fund, intends to acquire all or substantially all the assets of Investors Trust
Adjustable Rate Fund, also a series of Investors Trust. However, the following
financial data represents the financial highlights of GE Short-Term Government
Fund rather than those of Investors Trust Adjustable Rate Fund since the
financial statements of GE Short-Term Government Fund will survive the
transaction. Each of GE Mid-Cap Growth Fund, GE Value Equity Fund and GE
Government Securities Fund is expected to commence operations on or about
September 26, 1997. The contemplated transactions between certain series of GE
Funds and Investors Trust are referred to in this Prospectus as the
'Reorganization.'
The Trust hereby incorporates by reference into the Prospectus the Annual Report
for Investors Trust dated October 31, 1996 and the Semi-Annual Report for
Investors Trust dated April 30, 1997 (collectively, the 'IT Financial Reports')
with respect to Investors Trust Growth Fund, Investors Trust Value Fund,
Investors Trust Tax Free Fund and Investors Trust Government Fund. GEIM is not
the investment adviser or administrator of these Funds. Information pertaining
to these four Investors Trust Funds should be read in conjunction with the IT
Financial Statements and the Notes to the IT Financial Statements, which are
incorporated by reference into the Statement of Additional Information. Future
financial information for Class A and Class B shares as well as Class C and D
shares will be based exclusively on the performance and expenses of the GE
Funds, including the acquired assets. Further information about the performance
of these four Funds is contained in the IT Financial Reports, 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.
8
- --------------------------------------------------------------------------------
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS D
-----------------------------------------------------------
3/31/97 3/31/97 3/31/97 3/31/97
GE PREMIER GROWTH EQUITY FUND (unaudited) (unaudited) (unaudited) (unaudited)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCEPTION DATE 12/31/96 12/31/96 12/31/96 12/31/96
Net asset value, beginning of period.... $15.00 $15.00 $15.00 $15.00
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment income.................. 0.01 (0.01) 0.01 0.03
Net realized and unrealized gains
(losses) on investments.............. (0.72) (0.72) (0.71) (0.72)
- -------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM INVESTMENT
OPERATIONS............................. (0.71) (0.73) (0.70) (0.69)
- -------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income.................. 0.00 0.00 0.00 0.00
Net realized gains..................... 0.00 0.00 0.00 0.00
- -------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS..................... 0.00 0.00 0.00 0.00
- -------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD.......... $14.29 $14.27 $14.30 $14.31
- -------------------------------------------------------------------------------------------------------
TOTAL RETURN(A)......................... (4.73%) (4.87%) (4.67%) (4.60%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands).......................... $115 $106 $2,918 $4,486
RATIOS TO AVERAGE DAILY NET ASSETS:
Net investment income*................. 0.18% (0.32%) 0.47% 0.67%
Expenses*.............................. 1.40% 1.90% 1.15% 0.90%
Gross expenses*........................ 13.77% 14.68% 2.15% 1.18%
Portfolio turnover rate................ 8% 8% 8% 8%
Average brokerage commissions(d)....... $.049 $.049 $.049 $.049
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------------------------------------------------------------
3/31/97 3/31/97
GE U.S. EQUITY FUND (unaudited) 9/30/96(e) 9/30/95(e) 9/30/94(b) (unaudited) 9/30/96(e) 9/30/95(e) 9/30/94
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- 12/22/93 -- -- -- 12/22/93
Net asset value, beginning
of period................. $23.34 $20.28 $16.12 $16.48 $22.57 $19.71 $16.03 $16.41
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income..... 0.16 0.31 0.34 3.23 0.08 0.19 0.21 0.24
Net realized and
unrealized gains (losses)
on investments........... 2.32 3.34 3.91 (3.22) 2.25 3.25 3.84 (0.25)
- -------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS..... 2.48 3.65 4.25 0.01 2.33 3.44 4.05 (0.01)
- -------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income..... 0.28 0.32 0.00 0.20 0.17 0.31 0.28 0.20
Net realized gains........ 2.19 0.27 0.09 0.17 2.19 0.27 0.09 0.17
- -------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS........ 2.47 0.59 0.09 0.37 2.36 0.58 0.37 0.37
- -------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD.................... $23.35 $23.34 $20.28 $16.12 $22.54 $22.57 $19.71 $16.03
- -------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(A)............ 10.63% 18.36% 26.52% (0.86%) 10.31% 17.78% 25.92% (0.09%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands).............. $36,302 $34,523 $15,148 $1,214 $9,548 $7,194 $1,563 $91
RATIOS TO AVERAGE DAILY NET
ASSETS:
Net investment income*.... 1.03% 1.40% 1.85% 1.87% 0.53% 0.90% 1.29% 1.28%
Expenses*................. 1.00% 1.00% 1.00% 1.00% 1.50% 1.50% 1.50% 1.50%
Gross expenses*........... 1.11% 1.15% 1.25% 1.46% 1.83% 2.08% 3.50% 1.96%
Portfolio turnover rate... 22% 49% 43% 51% 22% 49% 43% 51%
Average brokerage
commissions(d)........... $.065 $.045 N/A N/A $.065 $.045 N/A N/A
<CAPTION>
CLASS C CLASS D
------------------------------------------------------------------------------------------------
3/31/97 3/31/97
GE U.S. EQUITY FUND (unaudited) 9/30/96(e) 9/30/95(e) 9/30/94 9/30/93(e) (unaudited) 9/30/96(e) 9/30/95 9/30/94
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- -- 1/5/93 -- -- -- 11/29/93
Net asset value, beginning
of period................. $23.02 $19.98 $16.13 $16.35 $15.00 $23.03 $19.98 $16.16 $16.37
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income..... 0.05 0.36 0.37 1.00 0.12 0.19 0.40 0.38 0.32
Net realized and
unrealized gains (losses)
on investments........... 2.42 3.30 3.86 (0.85) 1.23 2.32 3.31 3.88 (0.16)
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS..... 2.47 3.66 4.23 0.15 1.35 2.51 3.71 4.26 0.16
- ------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income..... 0.32 0.35 0.29 0.20 0.00 0.41 0.39 0.35 0.20
Net realized gains........ 2.19 0.27 0.09 0.17 0.00 2.19 0.27 0.09 0.17
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS........ 2.51 0.62 0.38 0.37 0.00 2.60 0.66 0.44 0.37
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD.................... $22.98 $23.02 $19.98 $16.13 $16.35 $22.94 $23.03 $19.98 $16.16
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(A)............ 10.75% 18.70% 26.86% 0.88% 10.32% 10.91% 18.97% 27.14% 0.96%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands).............. $67,313 $50,035 $26,007 $16,382 $74,415 $168,277 $144,470 $128,247 $114,885
RATIOS TO AVERAGE DAILY NET
ASSETS:
Net investment income*.... 1.28% 1.66% 2.12% 2.11% 1.86% 1.54% 1.90% 2.36% 2.27%
Expenses*................. 0.75% 0.75% 0.75% 0.62% 0.50% 0.50% 0.50% 0.50% 0.50%
Gross expenses*........... 0.92% 1.06% 1.19% 1.21% 1.34% 0.54% 0.59% 0.71% 0.96%
Portfolio turnover rate... 22% 49% 43% 51% 15% 22% 49% 43% 51%
Average brokerage
commissions(d)........... $.065 $.045 N/A N/A N/A $.065 $.045 N/A N/A
</TABLE>
See notes accompanying financial highlights.
9
- --------------------------------------------------------------------------------
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B
------------------------------------------------------------------------------------------------------------
GE MID-CAP GROWTH 4/30/97 4/30/97
FUND (unaudited) 10/31/96 10/31/95 10/31/94 10/31/93 (unaudited) 10/31/96 10/31/95 10/31/94 10/31/93
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- -- 9/8/93 -- -- -- -- 9/8/93
Net asset value,
beginning of
period............. $13.16 $11.38 $8.81 $8.69 $8.50 $12.87 $11.21 $8.74 $8.70 $8.50
INCOME FROM
INVESTMENT
OPERATIONS:
Net investment
income (loss).... (0.03) -- 0.01 (0.01) -- (0.08) (0.09) (0.05) (0.04) --
Net realized and
unrealized gains
(losses) on
investments...... 0.64 1.78 2.56 0.21 0.19 0.63 1.75 2.52 0.16 0.20
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME FROM
INVESTMENT
OPERATIONS......... 0.61 1.78 2.57 0.20 0.19 0.55 1.66 2.47 0.12 0.20
- ----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
FROM:
Net investment
income........... -- -- -- -- -- -- -- -- -- --
Net realized
gains............ -- -- -- -- -- -- -- -- -- --
In excess of net
realized gains... -- -- -- (0.08) -- -- -- -- (0.08) --
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL
DISTRIBUTIONS...... -- -- -- (0.08) -- -- -- -- (0.08) --
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END
OF PERIOD.......... $13.77 $13.16 $11.38 $8.81 $8.69 $13.42 $12.87 $11.21 $8.74 $8.70
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(A)..... 4.64% 15.64% 29.17% 2.48% 2.24% 4.27% 14.81% 28.26% 1.67% 2.35%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period
(thousands)...... $8,630 $8,222 $5,986 $4,182 $3,261 $27,987 $27,616 $14,311 $5,857 $592
RATIOS TO AVERAGE
DAILY NET ASSETS:
Net investment
income*.......... (0.47%) 0.03% 0.10% (0.11%) (0.30%) (1.21%) (0.73%) (0.66%) (0.82%) (1.38%)
Net expenses*...... 1.35% 1.35% 1.35% 1.34% 1.39% 2.10% 2.10% 2.10% 2.09% 1.86%
Gross expenses*.... 1.48% 1.70% 2.44% 3.53% 4.83% 2.23% 2.41% 3.19% 4.06% 5.04%
Portfolio turnover
rate............. 26.95% 40.89% 73.74% 100.41% 46.31% 26.95% 40.89% 73.74% 100.41% 46.31%
Average brokerage
commissions(d)... $0.050 $0.050 N/A N/A N/A $0.050 $0.050 N/A N/A N/A
<CAPTION>
CLASS A CLASS B
------------------------------------------------------------------------------------------------------------
4/30/97 4/30/97
GE VALUE EQUITY FUND (unaudited) 10/31/96 10/31/95 10/31/94 10/31/93 (unaudited) 10/31/96 10/31/95 10/31/94 10/31/93
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- -- 9/8/93 -- -- -- -- 9/8/93
Net asset value,
beginning of
period............. $10.83 $8.95 $7.51 $7.63 $7.50 $10.79 $8.93 $7.50 $7.64 $7.50
INCOME FROM
INVESTMENT
OPERATIONS:
Net investment
income (loss).... 0.04 0.05 0.14 0.13 0.01 (0.01) 0.04 0.07 0.08 (0.01)
Net realized and
unrealized gains
(losses) on
investments...... 1.53 1.99 1.45 (0.16) 0.12 1.53 1.93 1.45 (0.17) 0.15
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME/(LOSS)
FROM INVESTMENT
OPERATIONS......... 1.57 2.04 1.59 (0.03) 0.13 1.52 1.97 1.52 (0.09) 0.14
- ----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
FROM:
Net investment
income........... (0.04) (0.09) (0.15) (0.09) -- -- (0.04) (0.09) (0.05) --
Net realized
gains............ (0.87) (0.07) -- -- -- (0.87) (0.07) -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL
DISTRIBUTIONS...... (0.91) (0.16) (0.15) (0.09) -- (0.87) (0.11) (0.09) (0.05) --
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END
OF PERIOD.......... $11.49 $10.83 $8.95 $7.51 $7.63 $11.44 $10.79 $8.93 $7.50 $7.64
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(A)..... 15.22% 23.10% 21.45% (0.32%) 1.73% 14.77% 22.30% 20.50% (1.10%) 1.87%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period
(thousands)...... $6,982 $5,833 $4,083 $3,267 $2,249 $40,982 $33,318 $14,450 $7,970 $529
RATIOS TO AVERAGE
DAILY NET ASSETS:
Net investment
income*.......... 0.62% 1.03% 1.71% 1.92% 0.73% (0.13%) 0.23% 0.94% 1.09% (1.07%)
Net expenses*...... 1.35% 1.35% 1.35% 1.35% 1.42% 2.10% 2.10% 2.10% 2.10% 2.04%
Gross expenses*.... 1.36% 1.73% 2.43% 3.55% 6.37% 2.11% 2.40% 3.18% 4.02% 6.38%
Portfolio turnover
rate............. 33.45% 100.02% 27.41% 14.53% 6.04% 33.45% 100.02% 27.41% 14.53% 6.04%
Average brokerage
commissions(d)... $0.050 $0.050 N/A N/A N/A $0.050 $0.050 N/A N/A N/A
</TABLE>
See notes accompanying financial highlights.
10
- --------------------------------------------------------------------------------
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------------------------------------------------------------
GE GLOBAL 3/31/97 3/31/97
EQUITY FUND (unaudited) 9/30/96 9/30/95 9/30/94(b) (unaudited) 9/30/96 9/30/95 9/30/94
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- 12/22/93 -- -- -- 12/22/93
Net asset value, beginning of
period....................... $22.01 $20.18 $19.34 $18.61 $21.87 $20.14 $19.32 $18.48
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment income........ 0.04 0.02 0.10 0.03 (0.04) (0.04) 0.00 (0.01)
Net realized and unrealized
gains (losses) on
investments................ 0.71 2.20 1.22 0.91 0.73 2.14 1.23 1.06
- ----------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS........ 0.75 2.22 1.32 0.94 0.69 2.10 1.23 1.05
- ----------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income........ 0.00 0.02 0.09 0.01 0.00 0.00 0.02 0.01
Net realized gains........... 1.29 0.37 0.39 0.20 1.29 0.37 0.39 0.20
- ----------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS........... 1.29 0.39 0.48 0.21 1.29 0.37 0.41 0.21
- ----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD....................... $21.47 $22.01 $20.18 $19.34 $21.27 $21.87 $20.14 $19.32
- ----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(A)............... 3.39% 11.18% 7.16% 3.09% 3.13% 10.61% 6.62% 5.70%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands)................ $857 $4,054 $2,811 $694 $713 $600 $356 $128
RATIOS TO AVERAGE DAILY NET
ASSETS:
Net investment
income/(loss)*............. (0.08%) 0.12% 0.47% 0.44% (0.58%) (0.34%) (0.11%) (0.08%)
Expenses*.................... 1.60% 1.60% 1.60% 1.60% 2.10% 2.10% 2.10% 2.10%
Gross expenses*.............. 3.41% 1.90% 2.17% 2.02% 3.36% 3.50% 3.50% 2.52%
Portfolio turnover rate...... 34% 46% 46% 26% 34% 46% 46% 26%
Average brokerage
commissions(d)............. $.003 $.006 N/A N/A $.003 $.006 N/A N/A
<CAPTION>
CLASS C CLASS D
--------------------------------------------------------------------------------------------------
GE GLOBAL 3/31/97 3/31/97
EQUITY FUND (unaudited) 9/30/96 9/30/95 9/30/94 9/30/93(c) (unaudited) 9/30/96 9/30/95 9/30/94
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- -- 1/5/93 -- -- -- 12/29/93
Net asset value, beginning of
period....................... $22.18 $20.31 $19.40 $17.16 $15.00 $22.25 $20.37 $19.45 $17.49
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment income........ 0.01 0.06 0.09 0.07 0.08 0.04 0.13 0.13 0.11
Net realized and unrealized
gains (losses) on
investments................ 0.78 2.22 1.30 2.37 2.08 0.77 2.21 1.31 2.06
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS........ 0.79 2.28 1.39 2.44 2.16 0.81 2.34 1.44 2.17
- ----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income........ 0.06 0.04 0.09 0.00 0.00 0.17 0.09 0.13 0.01
Net realized gains........... 1.29 0.37 0.39 0.20 0.00 1.29 0.37 0.39 0.20
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS........... 1.35 0.41 0.48 0.20 0.00 1.46 0.46 0.52 0.21
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD....................... $21.62 $22.18 $20.31 $19.40 $17.16 $21.60 $22.25 $20.37 $19.45
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(A)............... 3.54% 11.44% 7.47% 14.28% 14.10% 3.64% 11.71% 7.76% 12.43%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands)................ $30,457 $28,682 $23,683 $20,432 $11,999 $16,963 $10,123 $9,785 $10,504
RATIOS TO AVERAGE DAILY NET
ASSETS:
Net investment
income/(loss)*............. 0.16% 0.33% 0.59% 0.52% 1.00% 0.43% 0.56% 0.84% 0.82%
Expenses*.................... 1.35% 1.35% 1.35% 1.31% 1.10% 1.10% 1.10% 1.10% 1.10%
Gross expenses*.............. 1.45% 1.60% 1.42% 1.77% 2.19% 1.10% 1.12% 1.75% 1.52%
Portfolio turnover rate...... 34% 46% 46% 26% 28% 34% 46% 46% 26%
Average brokerage
commissions(d)............. $.003 $.006 N/A N/A N/A $.003 $.006 N/A N/A
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------------------------------------------------------------
3/31/97 3/31/97
GE INTERNATIONAL EQUITY FUND (unaudited) 9/30/96(e) 9/30/95 9/30/94 (unaudited) 9/30/96(e) 9/30/95 9/30/94
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- 3/2/94 -- -- -- 3/2/94
Net asset value, beginning of
period....................... $17.65 $15.87 $15.18 $15.00 $17.47 $15.77 $15.13 $15.00
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment income........ (0.03) 0.07 0.09 0.06 (0.06) 0.05 0.01 0.00
Net realized and unrealized
gains (losses) on
investments................ 0.97 1.74 0.64 0.12 0.95 1.65 0.64 0.13
- ----------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS........ 0.94 1.81 0.73 0.18 0.89 1.70 0.65 0.13
- ----------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income........ 0.06 0.03 0.04 0.00 0.00 0.00 0.01 0.00
Net realized gains........... 0.50 0.00 0.00 0.00 0.50 0.00 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS........... 0.56 0.03 0.04 0.00 0.50 0.00 0.01 0.00
- ----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD....................... $18.03 $17.65 $15.87 $15.18 $17.86 $17.47 $15.77 $15.13
- ----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(A)............... 5.38% 11.39% 4.87% 1.20% 5.14% 10.78% 4.33% 0.87%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands)................ $11,962 $8,462 $3,948 $25 $339 $272 $57 $34
RATIOS TO AVERAGE DAILY NET
ASSETS:
Net investment income*....... (0.21%) 0.43% 1.28% 1.01% (0.72%) 0.28% 0.10% 0.47%
Expenses*.................... 1.60% 1.59% 1.60% 1.60% 2.10% 2.10% 2.10% 2.10%
Gross expenses*.............. 1.60% 1.66% 1.95% 1.93% 4.29% 3.50% 3.50% 2.43%
Portfolio turnover rate...... 28% 36% 27% 6% 28% 36% 27% 6%
Average brokerage
commissions(d)............. $.002 $.031 N/A N/A $.002 $.031 N/A N/A
<CAPTION>
CLASS C CLASS D
---------------------------------------------------------------------------------------
3/31/97 3/31/97
GE INTERNATIONAL EQUITY FUND (unaudited) 9/30/96(e) 9/30/95 9/30/94 (unaudited) 9/30/96(e) 9/30/95 9/30/94
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- 3/2/94 -- -- -- 3/2/94
Net asset value, beginning of
period....................... $17.65 $15.88 $15.19 $15.00 $17.76 $15.94 $15.22 $15.00
INCOME (LOSS) FROM INVESTMENT
Net investment income........ (0.01) 0.11 0.12 0.00 0.03 0.17 0.12 0.10
Net realized and unrealized
gains (losses) on
investments................ 0.98 1.72 0.65 0.19 0.98 1.73 0.70 0.12
- ----------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS........ 0.97 1.83 0.77 0.19 1.01 1.90 0.82 0.22
- ----------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income........ 0.03 0.06 0.08 0.00 0.14 0.08 0.10 0.00
Net realized gains........... 0.50 0.00 0.00 0.00 0.50 0.00 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS........... 0.53 0.06 0.08 0.00 0.64 0.08 0.10 0.00
- ----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD....................... $18.09 $17.65 $15.88 $15.19 $18.13 $17.76 $15.94 $15.22
- ----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(A)............... 5.61% 11.54% 5.16% 1.27% 5.74% 11.97% 5.45% 1.47%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands)................ $4,805 $3,230 $1,262 $481 $65,627 $63,225 $32,907 $26,460
RATIOS TO AVERAGE DAILY NET
ASSETS:
Net investment income*....... 0.04% 0.68% 0.83% 0.66% 0.34% 0.99% 0.97% 1.52%
Expenses*.................... 1.35% 1.35% 1.35% 1.35% 1.03% 1.03% 1.07% 1.10%
Gross expenses*.............. 1.51% 1.96% 2.75% 1.68% 1.03% 1.03% 1.18% 1.43%
Portfolio turnover rate...... 28% 36% 27% 6% 28% 36% 27% 6%
Average brokerage
commissions(d)............. $.002 $.031 N/A N/A $.002 $.031 N/A N/A
</TABLE>
See notes accompanying financial highlights.
11
- --------------------------------------------------------------------------------
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------------------------------------------------------------
3/31/97 3/31/97
GE STRATEGIC INVESTMENT FUND (unaudited) 9/30/96(e) 9/30/95(e) 9/30/94(b) (unaudited) 9/30/96(e) 9/30/95(e) 9/30/94
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- 12/22/93 -- -- -- 12/22/93
Net asset value, beginning
of period.................. $20.33 $18.43 $15.71 $16.21 $20.04 $18.26 $15.62 $16.14
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income...... 0.33 0.51 0.52 0.48 0.20 0.41 0.40 0.27
Net realized and unrealized
gains (losses) on
investments.............. 0.80 1.90 2.57 (0.65) 0.87 1.87 2.58 (0.46)
- --------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS...... 1.13 2.41 3.09 (0.17) 1.07 2.28 2.98 (0.19)
- --------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income...... 0.47 0.43 0.37 0.27 0.33 0.42 0.34 0.27
Net realized gains......... 0.25 0.08 0.00 0.06 0.25 0.08 0.00 0.06
- --------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS......... 0.72 0.51 0.37 0.33 0.58 0.50 0.34 0.33
- --------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD..................... $20.74 $20.33 $18.43 $15.71 $20.53 $20.04 $18.26 $15.62
- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(A)............. 5.52% 13.35% 20.12% (1.32%) 5.31% 12.73% 19.53% (1.25%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands).............. $32,573 $25,232 $8,778 $1,104 $4,318 $3,701 $882 $150
RATIOS TO AVERAGE DAILY NET
ASSETS:
Net investment income *.... 2.39% 2.60% 2.95% 2.59% 1.88% 2.11% 2.46% 1.92%
Expenses *................. 1.15% 1.12% 1.15% 1.15% 1.65% 1.65% 1.65% 1.65%
Gross expenses *........... 1.15% 1.15% 1.19% 1.58% 1.88% 2.10% 3.50% 2.08%
Portfolio turnover rate.... 57% 93% 98% 68% 57% 93% 98% 68%
Average brokerage
commissions(d)........... $.025 $.046 N/A N/A $.025 $.046 N/A N/A
<CAPTION>
CLASS C CLASS D
--------------------------------------------------------------------------------------------------
3/31/97 3/31/97
GE STRATEGIC INVESTMENT FUND (unaudited) 9/30/96(e) 9/30/95(e) 9/30/94 9/30/93(c) (unaudited) 9/30/96(e) 9/30/95 9/30/94
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- -- 1/5/93 -- -- -- 11/29/93
Net asset value, beginning
of period.................. $20.38 $18.46 $15.72 $16.08 $15.00 $20.44 $18.49 $15.74 $16.02
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income...... 0.22 0.54 0.53 0.44 0.23 0.27 0.63 0.55 0.45
Net realized and unrealized
gains (losses) on
investments.............. 0.94 1.92 2.59 (0.48) 0.85 0.92 1.90 2.62 (0.40)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS...... 1.16 2.46 3.12 (0.04) 1.08 1.19 2.53 3.17 0.05
- --------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income...... 0.49 0.46 0.38 0.26 0.00 0.56 0.50 0.42 0.27
Net realized gains......... 0.25 0.08 0.00 0.06 0.00 0.25 0.08 0.00 0.06
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS......... 0.74 0.54 0.38 0.32 0.00 0.81 0.58 0.42 0.33
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD..................... $20.80 $20.38 $18.46 $15.72 $16.08 $20.82 $20.44 $18.49 $15.74
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(A)............. 5.64% 13.58% 20.35% (0.27%) 8.06% 5.79% 13.95% 20.70% 0.25%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands).............. $31,684 $26,467 $17,821 $13,018 $12,780 $30,316 $36,162 $18,665 $17,159
RATIOS TO AVERAGE DAILY NET
ASSETS:
Net investment income *.... 2.62% 2.81% 3.21% 2.62% 2.68% 2.86% 3.16% 3.46% 2.93%
Expenses *................. 0.90% 0.90% 0.90% 0.85% 0.65% 0.65% 0.58% 0.65% 0.65%
Gross expenses *........... 0.91% 1.05% 1.03% 1.33% 1.65% 0.65% 0.59% 0.97% 1.08%
Portfolio turnover rate.... 57% 93% 98% 68% 20% 57% 93% 98% 68%
Average brokerage
commissions(d)........... $0.25 $.046 N/A N/A N/A $0.25 $.046 N/A N/A
</TABLE>
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------
4/30/97
GE TAX-EXEMPT FUND (unaudited) 10/31/96 10/31/95 10/31/94 10/31/93
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
INCEPTION DATE -- -- -- -- 9/8/93
Net asset value, beginning of period.... $11.42 $11.31 $10.59 $11.48 $11.50
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................. 0.31 0.62 0.55 0.45 0.05
Net realized and unrealized gains
(losses) on investments.............. (0.05) 0.05 0.73 (0.78) 0.01
- -----------------------------------------------------------------------------------------------
TOTAL INCOME/(LOSS) FROM INVESTMENT
OPERATIONS............................. 0.26 0.67 1.28 (0.33) 0.06
- -----------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income.................. (0.28) (0.56) (0.55) (0.45) (0.05)
In excess of net investment income..... -- -- (0.01) (0.11) (0.02)
Tax return of capital.................. -- -- -- -- (0.01)
- -----------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS..................... (0.28) (0.56) (0.56) (0.56) (0.08)
- -----------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD.......... $11.40 $11.42 $11.31 $10.59 $11.48
- -----------------------------------------------------------------------------------------------
TOTAL RETURN(A)......................... 2.26% 6.13% 12.24% (2.99%) 0.54%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands).......................... $16,100 $16,169 $16,025 $14,283 $15,136
RATIOS TO AVERAGE DAILY NET ASSETS:
Net investment income*................. 5.42% 5.42% 5.01% 4.08% 2.73%
Net expenses*.......................... -- -- -- 0.77% 1.15%
Gross expenses*........................ 1.51% 1.52% 1.81% 1.62% 2.09%
Portfolio turnover rate................ 8.62% 5.76% 24.95% -- --
<CAPTION>
CLASS B
-----------------------------------------------------
4/30/97
GE TAX-EXEMPT FUND (unaudited) 10/31/96 10/31/95 10/31/94 10/31/93
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- -- 9/8/93
Net asset value, beginning of period.... $11.44 $11.32 $10.60 $11.48 $11.50
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................. 0.31 0.62 0.55 0.43 0.06
Net realized and unrealized gains
(losses) on investments.............. (0.05) 0.06 0.73 (0.82) (0.01)
- ------------------------------------------------------------------------------------------------
TOTAL INCOME/(LOSS) FROM INVESTMENT
OPERATIONS............................. 0.26 0.68 1.28 (0.39) 0.05
- ------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income.................. (0.28) (0.56) (0.55) (0.43) (0.03)
In excess of net investment income..... -- -- (0.01) (0.06) (0.03)
Tax return of capital.................. -- -- -- -- (0.01)
- ------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS..................... (0.28) (0.56) (0.56) (0.49) (0.07)
- ------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD.......... $11.42 $11.44 $11.32 $10.60 $11.48
- ------------------------------------------------------------------------------------------------
TOTAL RETURN(A)......................... 2.26% 6.12% 12.33% (3.45%) 0.43%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands).......................... $9,037 $9,184 $7,668 $4,990 $1,202
RATIOS TO AVERAGE DAILY NET ASSETS:
Net investment income*................. 5.42% 5.43% 5.01% 3.75% 2.27%
Net expenses*.......................... -- -- -- 1.14% 1.84%
Gross expenses*........................ 2.26% 2.26% 2.56% 2.30% 2.48%
Portfolio turnover rate................ 8.62% 5.76% 24.95% -- --
</TABLE>
See notes accompanying financial highlights.
12
- --------------------------------------------------------------------------------
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------------------------------------------------------------
3/31/97 3/31/97
GE FIXED INCOME FUND (unaudited) 9/30/96 9/30/95 9/30/94(b) (unaudited) 9/30/96 9/30/95 9/30/94
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- 12/22/93 -- -- -- 12/22/93
Net asset value, beginning
of period.................. $11.69 $11.91 $11.27 $12.19 $11.70 $11.91 $11.26 $12.15
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income...... 0.34 0.65 0.73 0.47 0.31 0.60 0.65 0.42
Net realized and unrealized
gains (losses)
on investments............ (0.07) (0.19) 0.63 (0.84) (0.06) (0.20) 0.66 (0.81)
- --------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS...... 0.27 0.46 1.36 (0.37) 0.25 0.40 1.31 (0.39)
- --------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income...... 0.34 0.68 0.72 0.47 0.31 0.61 0.66 0.42
Net realized gains......... 0.00 0.00 0.00 0.08 0.00 0.00 0.00 0.08
- --------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS......... 0.34 0.68 0.72 0.55 0.31 0.61 0.66 0.50
- --------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD..................... $11.62 $11.69 $11.91 $11.27 $11.64 $11.70 $11.91 $11.26
- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(A)............. 2.32% 3.91% 12.48% (3.02%) 2.15% 3.41% 11.98% (3.31%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands)............... $15,020 $15,653 $5,400 $26,023 $1,518 $1,673 $234 $65
RATIOS TO AVERAGE DAILY NET
ASSETS:
Net investment income*..... 5.75% 5.66% 6.22% 5.37% 5.24% 5.19% 5.57% 4.83%
Expenses*.................. 1.10% 1.05% 1.08% 1.10% 1.60% 1.60% 1.60% 1.58%
Gross expenses*............ 1.13% 1.12% 1.18% 1.51% 2.13% 2.44% 3.50% 2.01%
Portfolio turnover rate..... 128% 275% 315% 298% 128% 275% 315% 298%
<CAPTION>
CLASS C CLASS D
--------------------------------------------------------------------------------------------------
3/31/97 3/31/97
GE FIXED INCOME FUND (unaudited) 9/30/96 9/30/95 9/30/94 9/30/93(c) (unaudited) 9/30/96 9/30/95 9/30/94
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- -- 1/5/93 -- -- -- 11/29/93
Net asset value, beginning
of period.................. $11.70 $11.92 $11.27 $12.31 $12.00 $11.69 $11.92 $11.27 $12.17
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income...... 0.35 0.69 0.73 0.61 0.36 0.37 0.72 0.77 0.55
Net realized and unrealized
gains (losses)
on investments............ (0.06) (0.21) 0.67 (0.96) 0.31 (0.06) (0.22) 0.65 (0.83)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS...... 0.29 0.48 1.40 (0.35) 0.67 0.31 0.50 1.42 (0.28)
- --------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income...... 0.35 0.70 0.75 0.61 0.36 0.37 0.73 0.77 0.54
Net realized gains......... 0.00 0.00 0.00 0.08 0.00 0.00 0.00 0.00 0.08
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS......... 0.35 0.70 0.75 0.69 0.36 0.37 0.73 0.77 0.62
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD..................... $11.64 $11.70 $11.92 $11.27 $12.31 $11.63 $11.69 $11.92 $11.27
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(A)............. 2.52% 4.10% 12.81% (2.97%) 5.24% 2.66% 4.32% 13.10% (2.34%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands)............... $30,343 $28,115 $21,401 $13,600 $11,485 $14,715 $19,098 $6,642 $2,732
RATIOS TO AVERAGE DAILY NET
ASSETS:
Net investment income*..... 5.98% 5.84% 6.37% 5.22% 3.87% 6.21% 6.14% 6.57% 5.40%
Expenses*.................. 0.85% 0.85% 0.85% 0.79% 0.60% 0.60% 0.55% 0.59% 0.58%
Gross expenses*............ 0.92% 0.99% 0.95% 1.26% 1.63% 0.60% 0.57% 2.50% 1.01%
Portfolio turnover rate..... 128% 275% 315% 298% 68% 128% 275% 315% 298%
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B
---------------------------------------------------------------------------
4/30/97 4/30/97
GE GOVERNMENT SECURITIES FUND (unaudited) 10/31/96 10/31/95 10/31/94 10/31/93 (unaudited) 10/31/96
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
INCEPTION DATE -- -- -- -- 9/8/93 -- --
Net asset value, beginning of
period....................... $8.48 $8.70 $8.43 $10.14 $10.32 $8.49 $8.71
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss)..................... 0.28 0.62 0.58 0.70 0.12 0.25 0.55
Net realized and unrealized
gains (losses) on
investments................ (0.13) (0.22) 0.38 (1.60) (0.18) (0.13) (0.22)
- -----------------------------------------------------------------------------------------------------------
TOTAL INCOME/(LOSS) FROM
INVESTMENT OPERATIONS........ 0.15 0.40 0.96 (0.90) (0.06) 0.12 0.33
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income........ (0.29) (0.54) (0.58) (0.70) (0.12) (0.26) (0.48)
An excess of net investment
income..................... -- -- -- -- -- -- --
Net realized gains........... -- -- -- (0.03) -- -- --
Tax return of capital........ -- (0.08) (0.11) (0.08) -- -- (0.07)
- -----------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS........... (0.29) (0.62) (0.69) (0.81) (0.12) (0.26) (0.55)
- -----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD....................... $8.34 $8.48 $8.70 $8.43 $10.14 $8.35 $8.49
- -----------------------------------------------------------------------------------------------------------
TOTAL RETURN(A)............... 1.79% 4.80% 11.77% (9.17%) (0.60%) 1.40% 4.00%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of period
(thousands)................ $28,547 $29,090 $26,889 $21,498 $1,470 $608,055 $747,216
RATIOS TO AVERAGE DAILY NET
ASSETS:
Net investment income*....... 6.81% 6.59% 6.78% 7.09% 6.81% 6.04% 5.77%
Net expenses*................ 1.03% 0.90% 1.01% 0.99% 0.95% 1.78% 1.69%
Gross expenses*.............. 1.03% 0.90% 1.01% 0.99% 0.95% 1.78% 1.69%
Portfolio turnover rate*...... 67.58% 334.41% 315.71% 128.82% 75.96% 67.58% 334.41%
<CAPTION>
CLASS B
--------------------------------------------------------------------------------------------------
GE GOVERNMENT SECURITIES FUND 10/31/95 10/31/94 10/31/93 10/31/92 10/31/91 10/31/90 10/31/89 10/31/88 10/31/87
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- -- -- -- -- -- 4/22/87
Net asset value, beginning of
period....................... $8.42 $10.14 $9.95 $9.98 $9.54 $9.70 $9.71 $9.62 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss)..................... 0.51 0.60 0.71 0.73 0.72 0.81 0.88 0.87 0.42
Net realized and unrealized
gains (losses) on
investments................ 0.41 (1.58) 0.20 0.03 0.56 (0.11) (0.01) 0.14 (0.36)
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME/(LOSS) FROM
INVESTMENT OPERATIONS........ 0.92 (0.98) 0.91 0.76 1.28 0.70 0.87 1.01 0.06
- ----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income........ (0.52) (0.60) (0.71) (0.73) (0.72) (0.81) (0.88) (0.87) (0.42)
An excess of net investment
income..................... -- -- (0.01) -- -- -- -- -- --
Net realized gains........... -- (0.03) -- (0.06) (0.11) -- -- (0.05) (0.02)
Tax return of capital........ (0.11) (0.11) -- -- (0.01) (0.05) -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS........... (0.63) (0.74) (0.72) (0.79) (0.84) (0.86) (0.88) (0.92) (0.44)
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD....................... $8.71 $8.42 $10.14 $9.95 $9.98 $9.54 $9.70 $9.71 $9.62
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(A)............... 11.19% (9.98%) 9.48% 7.74% 14.08% 7.55% 9.59% 10.96% 0.69%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of period
(thousands)................ $1,112,254 $1,252,348 $1,342,597 $785,851 $213,115 $72,261 $56,682 $34,887 $6,844
RATIOS TO AVERAGE DAILY NET
ASSETS:
Net investment income*....... 6.08% 6.45% 6.96% 7.08% 7.11% 8.32% 9.17% 9.20% 8.17%
Net expenses*................ 1.76% 1.76% 1.73% 1.64% 1.81% 1.59% 0.89% 0.50% 0.50%
Gross expenses*.............. 1.76% 1.76% 1.73% 1.64% 1.81% 1.95% 2.08% 3.00% 5.75%
Portfolio turnover rate*...... 315.71% 128.82% 75.96% 101.31% 111.97% 50.44% 37.23% 66.04% 159.76%
</TABLE>
See notes accompanying financial highlights.
13
- --------------------------------------------------------------------------------
<PAGE>
FINANCIAL HIGHLIGHTS (CONCLUDED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------------------------------------------------------------
GE SHORT-TERM GOVERNMENT 3/31/97 3/31/97
FUND (unaudited) 9/30/96 9/30/95 9/30/94 (unaudited) 9/30/96 9/30/95 9/30/94
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- 3/2/94 -- -- -- 3/2/94
Net asset value, beginning
of period.................. $11.78 $11.91 $11.72 $12.00 11.78 $11.90 $11.72 $12.00
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income...... 0.31 0.60 0.64 0.35 0.28 0.56 0.59 0.33
Net realized and unrealized
gains (losses) on
investments.............. (0.02) (0.06) 0.21 (0.30) (0.02) (0.05) 0.21 (0.31)
- --------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS...... 0.29 0.54 0.85 0.05 0.26 0.51 0.80 0.02
- --------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income...... 0.31 0.61 0.66 0.33 0.29 0.57 0.62 0.30
Net realized gains......... 0.01 0.06 0.00 0.00 0.01 0.06 0.00 0.00
- --------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS......... 0.32 0.67 0.66 0.33 0.30 0.63 0.62 0.30
- --------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD..................... $11.75 $11.78 $11.91 $11.72 $11.74 $11.78 $11.90 $11.72
- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(A)............. 2.57% 4.63% 7.48% 0.40% 2.31% 4.35% 7.01% 0.20%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands).............. $616 $340 $285 $35 $88 $145 $83 $25
RATIOS TO AVERAGE DAILY NET
ASSETS:
Net investment income*..... 5.26% 5.04% 5.27% 4.75% 4.85% 4.67% 5.07% 4.38%
Expenses*.................. 0.95% 0.95% 0.95% 0.95% 1.30% 1.30% 1.30% 1.30%
Gross expenses*............ 2.76% 3.00% 3.00% 1.71% 7.28% 3.35% 3.35% 2.06%
Portfolio turnover rate.... 94% 201% 415% 146% 94% 201% 415% 146%
<CAPTION>
CLASS C CLASS D
--------------------------------------------------------------------------------------
GE SHORT-TERM GOVERNMENT 3/31/97 3/31/97
FUND (unaudited) 9/30/96 9/30/95 9/30/94 (unaudited) 9/30/96 9/30/95 9/30/94
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- 3/2/94 -- -- 3/2/94
Net asset value, beginning
of period.................. $11.79 $11.91 $11.72 $12.00 $11.78 $11.90 $11.72 $12.00
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income...... 0.32 0.63 0.66 0.36 0.34 0.66 0.69 0.39
Net realized and unrealized
gains (losses) on
investments.............. (0.02) (0.05) 0.22 (0.30) (0.03) (0.05) 0.21 (0.31)
- ---------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS...... 0.30 0.58 0.88 0.06 0.31 0.61 0.90 0.08
- ---------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income...... 0.33 0.64 0.69 0.34 0.34 0.67 0.72 0.36
Net realized gains......... 0.01 0.06 0.00 0.00 0.01 0.06 0.00 0.00
- ---------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS......... 0.34 0.70 0.69 0.34 0.35 0.73 0.72 0.36
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD..................... $11.75 $11.79 $11.91 $11.72 $11.74 $11.78 $11.90 $11.72
- ---------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(A)............. 2.61% 4.98% 7.74% 0.53% 2.74% 5.24% 7.92% 0.69%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands).............. $4,819 $3,653 $2,437 $287 $7,530 $7,786 $8,048 $7,822
RATIOS TO AVERAGE DAILY NET
ASSETS:
Net investment income*..... 5.46% 5.28% 5.62% 5.18% 5.69% 5.54% 5.89% 5.32%
Expenses*.................. 0.70% 0.70% 0.70% 0.70% 0.45% 0.45% 0.45% 0.45%
Gross expenses*............ 1.10% 1.34% 1.84% 1.46% 0.72% 0.83% 0.98% 1.21%
Portfolio turnover rate.... 94% 201% 415% 146% 94% 201% 415% 146%
</TABLE>
<TABLE>
<CAPTION>
3/31/97
GE MONEY MARKET FUND (unaudited) 9/30/96 9/30/95 9/30/94 9/30/93(c)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- -- 1/5/93
Net asset value, beginning of period.... $1.00 $1.00 $1.00 $1.00 $1.00
INCOME (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment income.................. 0.02 0.05 0.05 0.03 0.02
Net realized and unrealized gains
(losses) on investments.............. 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME FROM INVESTMENT
OPERATIONS............................. 0.02 0.05 0.05 0.03 0.02
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income.................. 0.02 0.05 0.05 0.03 0.02
Net realized gains..................... 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS..................... 0.02 0.05 0.05 0.03 0.02
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD.......... $1.00 $1.00 $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(A)......................... 2.50% 5.18% 5.52% 3.31% 1.64%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands).......................... $104,626 $85,842 $71,664 $53,607 $17,197
RATIOS TO AVERAGE DAILY NET ASSETS:
Net investment income*................. 4.97% 5.06% 5.32% 3.41% 2.27%
Expenses*.............................. 0.45% 0.45% 0.45% 0.45% 0.45%
Gross expenses*........................ 0.58% 0.66% 0.70% 1.04% 1.48%
</TABLE>
- ------------------
(a) Total returns are historical and assume changes in share price,
reinvestment of dividends and capital gains, and no sales charge. Had the
advisor not absorbed a portion of expenses, total return would have been
lower. Periods less than one year are not annualized.
(b) Per share information is for the period since inception through September
30, 1994, and the total return information is for the period January 1,
1994, start of investment operations, through September 30, 1994.
(c) Per share information is for the period since inception through September
30, 1993, and the total return information is for the period February 22,
1993, start of investment operations, through September 30, 1993.
(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.
14
- --------------------------------------------------------------------------------
<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.
<TABLE>
<CAPTION>
Average Annual Total Return (in %) (as of 3/31/97)
----------------------------------------------------------------------
Load Adjusted
---------------------------------
One Three Since One Three Since
Year Year Inception Year Year Inception
---- ------ --------------- ---- ------ ---------------
<S> <C> <C> <C> <C> <C> <C>
GE Premier Growth Equity
Fund......................... -- -- (12/31/96) -- -- (12/31/96)
Class A...................... -- -- -4.73 -- -- -9.26
Class B...................... -- -- -4.87 -- -- -8.67
Class C...................... -- -- -4.67 N/A N/A N/A
Class D...................... -- -- -4.60 N/A N/A N/A
S&P 500 Index................. 19.81 22.30 N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------
GE U.S. Equity Fund
Class A...................... 17.05 19.91 16.49 (1/1/94) 11.49 17.99 14.76 (1/1/94)
Class B...................... 16.56 19.21 16.21 (12/22/93) 12.56 18.98 15.97 (12/22/93)
Class C...................... 17.49 20.15 16.28 (2/22/93) N/A N/A N/A
Class D...................... 17.71 20.43 17.09 (11/29/93) N/A N/A N/A
S&P 500 Index................. 19.81 22.30 N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------
GE Short-Term Government Fund
Class A...................... 4.83 5.21 4.88 (3/2/94) 2.21 4.34 4.01 (3/2/94)
Class B...................... 4.46 4.82 4.49 (3/2/94) 1.48 4.52 4.19 (3/2/94)
Class C...................... 5.09 5.48 5.13 (3/2/94) N/A -- N/A
Class D...................... 5.35 5.71 5.37 (3/2/94) N/A -- N/A
Lehman Brothers 1-3 Year
Government Bond Index........ 5.36 5.79 N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------
GE Global Equity Fund
Class A...................... 8.99 8.33 7.63 (1/1/94) 3.81 6.59 6.02 (1/1/94)
Class B...................... 8.38 7.81 7.98 (12/22/93) 4.38 7.53 7.72 (12/22/93)
Class C...................... 9.25 8.62 12.43 (2/22/93) N/A N/A N/A
Class D...................... 9.50 8.90 10.66 (11/29/93) N/A N/A N/A
Morgan Stanley Capital
International World Index.... 9.35 12.79 N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------
GE International Equity Fund
Class A...................... 9.86 8.50 7.39 (3/2/94) 4.64 6.75 5.71 (3/2/94)
Class B...................... 9.34 7.92 6.83 (3/2/94) 5.34 7.63 6.54 (3/2/94)
Class C...................... 10.23 8.72 7.64 (3/2/94) N/A N/A N/A
Class D...................... 10.54 9.09 7.98 (3/2/94) N/A N/A N/A
Morgan Stanley Capital
International EAFE Index..... 1.45 6.53 N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------
GE Strategic Investment Fund
Class A...................... 10.75 13.96 11.34 (1/1/94) 5.49 12.13 9.69 (1/1/94)
Class B...................... 10.20 13.27 10.87 (12/22/93) 6.20 13.01 10.61 (12/22/93)
Class C...................... 10.98 14.08 11.39 (2/22/93) N/A N/A N/A
11.97
Class D...................... 11.35 14.40 (11/29/93) N/A N/A N/A
S&P 500 Index & LB Aggregate
Composite Index.............. 13.85 16.12 N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------
GE Tax-Exempt Fund
Class C...................... 4.86 5.41 3.93 (2/26/93) N/A N/A N/A
Class D...................... 5.14 5.67 3.85 (11/29/93) N/A N/A N/A
Lehman Brothers Municipal Bond
Index........................ 5.45 7.08 N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------
GE Fixed Income Fund
Class A...................... 4.43 5.97 4.67 (1/1/94) -0.01 4.43 3.27 (1/1/94)
Class B...................... 4.00 5.49 4.19 (12/22/93) 1.04 5.19 3.92 (12/22/93)
Class C...................... 4.68 6.25 5.17 (2/22/93) N/A N/A N/A
Class D...................... 4.96 6.51 5.16 (11/29/93) N/A N/A N/A
Lehman Brothers Aggregate Bond
Index........................ 4.91 6.86 N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------
GE Money Market Fund.......... 5.06 5.04 4.43 (2/22/93) N/A N/A N/A
90 Day T-Bill................. 5.19 5.22 N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------
</TABLE>
15
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return (in %) (as of 4/30/97)
----------------------------------------------------------------------
Load Adjusted
---------------------------------
One Three Since One Three Since
Year Year Inception Year Year Inception
---- ------ --------------- ---- ------ ---------------
<S> <C> <C> <C> <C> <C> <C>
GE Mid-Cap Growth Fund
(Investors Trust Growth Fund)
Class A...................... 11.68 18.43 14.43 (9/8/93) 6.65 16.63 13.00 (9/8/93)
Class B...................... 10.91 17.61 13.63 (9/8/93) 5.91 16.86 13.24 (9/8/93)
S&P Mid-Cap 400 Index......... 5.30 14.18 N/A N/A N/A N/A
S&P 500 Index................. 25.12 24.15 N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------
GE Value Equity Fund
(Investors Trust Value Fund)
Class A...................... 27.52 21.58 16.52 (9/8/93) 21.78 19.73 15.07 (9/8/93)
Class B...................... 26.59 20.70 15.72 (9/8/93) 21.59 19.99 15.35 (9/8/93)
S&P/Barra 500 Value Index..... 19.83 21.08 N/A N/A N/A N/A
S&P 500 Index................. 25.12 24.15 N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------
GE Tax-Exempt Fund (Investors
Trust Tax Free Fund)
Class A...................... 7.07 6.95 4.83 (9/8/93) 2.25 5.32 3.53 (9/8/93)
Class B...................... 7.06 6.91 4.69 (9/8/93) 2.06 6.02 4.20 (9/8/93)
Lehman Brothers 10-Year
General Obligation Municipal
Bond Index................... 6.36 7.01 N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Return (in %) (as of 4/30/97)
----------------------------------------------------------------------------------------------------
Load Adjusted
-------------------------------------------------
One Three Five Ten Since One Three Five Ten Since
Year Year Year Year Inception Year Year Year Year Inception
----- ----- ----- ----- ----------------- ----- ----- ----- ----- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GE Government Securities Fund
(Investors Trust Government
Fund)
Class A...................... 6.42 4.33 -- -- 2.04 (9/8/93) 1.63 2.73 -- -- 0.75 (9/8/93)
Class B...................... 5.70 3.61 4.03 6.51 6.51 (4/22/87) 0.73 2.76 3.88 6.51 6.51 (4/22/87)
Lehman Brothers Government
Bond Index................... 6.48 7.11 7.25 8.34 N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTES TO PERFORMANCE
- --------------------------------------------------------------------------------
The performance data relating to Class A and B shares of GE Mid-Cap Growth Fund,
GE Value Equity Fund, GE Tax-Exempt Fund and GE Government Securities Fund
reflect the prior performance and expense ratios of Investors Trust Growth Fund,
Investors Trust Value Fund, Investors Trust Government Fund and Investors Trust
Tax Free Fund, respectively, each a series of Investors Trust, the assets of
which were acquired by the corresponding GE Fund. Because the Investors Trust
Funds did not offer Class C or D shares, no performance information is reflected
herein for those Classes, other than for GE Tax-Exempt Fund, which is a
currently operating series of GE Funds. With respect to Class C and D shares of
GE Tax-Exempt Fund, however, performance information for those Classes is
presented herein and is based upon the prior performance and expense ratios of
Class C and D of GE Tax-Exempt Fund. Future performance information for Class A
and B shares as well as Class C and D shares will be based exclusively on the
performance and expenses of the GE Funds, including the acquired assets.
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.
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 funds that were series of Investors Trust were
favorably affected by expense waivers or limitations.
The Standard & Poor's ('S&P') Composite Index of 500 stocks (S&P 500 Index), the
S&P Composite Index of 400 mid-cap stocks (S&P Mid-Cap 400 Index), the S&P/Barra
Composite Index of 500 value stocks (S&P/Barra 500 Value Index), 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), Lehman Brothers 1-3
Year Government Bond Index (LB 1-3), the Lehman Brothers 10-Year General
Obligation Municipal Bond Index and the Lehman Brothers Government Bond Index
are unmanaged indexes and do not reflect the actual cost of investing in the
instruments that comprise each index. The S&P 500 Index is a composite of the
prices of 500 widely held stocks recognized by investors to be representative of
the stock market in general. The S&P Mid-Cap 400 Index is a
capitalization-weighted index of 400 U.S. stocks with a median market
capitalization of approximately $700 million. The S&P/Barra 500 Value Index is a
capitalization-weighted index of all the stocks in the S&P 500 Index that have
low price-to-book ratios. 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. The Lehman Brothers 10-Year General Obligation
Municipal Bond Index is comprised of all municipal general obligation
investment-grade debt issues with maturities between 8 and 11 years and each
issue must be at least $50 million. The Lehman Brothers Government Bond Index is
comprised of all U.S. dollar fixed-rate U.S. agency and Treasury bond issues
(excluding stripped issues) with remaining maturities greater than one year and
with at least $100 million in outstanding issuance. S&P 500 Index & 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 Index, 40% LB Aggregate). 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.
16
- --------------------------------------------------------------------------------
<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 Mid-Cap Growth Fund, GE Value Equity Fund, GE Global Equity Fund, GE
International Equity Fund, GE Strategic Investment Fund, GE Tax-Exempt Fund, GE
Fixed Income Fund, GE Government Securities 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 Mid-Cap Growth
Fund, GE Value Equity Fund, GE Global Equity Fund, GE International Equity Fund
and GE Strategic Investment Fund; 4.25% with respect to GE Tax-Exempt Fund, GE
Fixed Income Fund and GE Government Securities 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 Mid-Cap Growth Fund, GE Value Equity Fund, GE Global Equity
Fund, GE International Equity Fund and GE Strategic Investment Fund and a
maximum 3.00% CDSC with respect to GE Tax-Exempt Fund, GE Fixed Income Fund, GE
Government Securities Fund and GE Short-Term Government Fund, which is assessed
only if the shareholder redeems shares within the first four years of
investment. Class B shares acquired or exchanged from shares of Investors Trust
are subject to a maximum CDSC of 5.00%, which is assessed only if such
shareholder redeems shares within the first five 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 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 the 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 (eight years in the case of shares acquired
or exchanged from shares of Investors Trust), 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.
17
- --------------------------------------------------------------------------------
<PAGE>
CLASS D SHARES. Class D shares of a Participant Fund are sold at net asset
value per share and are not subject to any sales charge, CDSC, service fee or
distribution fee. Class D shares are available only to certain institutional
investors described in detail under 'Purchase of Shares' below.
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
- --------------------------------------------------------------------------------
Set forth below is a description of the investment objective and policies of
each Fund. The investment objective of a Fund may not be changed without the
approval of the holders of a majority of the Fund's outstanding voting
securities as defined in the Investment Company Act of 1940, as amended (the
'1940 Act'). Such a majority is defined in the 1940 Act as the lesser of (1) 67%
or more of the shares present at a Fund 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, preferred
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 growth of
capital. These companies typically would possess one or more of a variety of
characteristics, including high quality products and/or services, strong balance
sheets, sustainable internal growth, superior financial returns, competitive
position in the issuer's economic sector and shareholder-oriented management.
While the Premier 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.
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. 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. American Depositary Receipts (i.e., 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, 'ADRs') and securities of
a foreign issuer with a class of securities registered with the SEC and listed
on a U.S. national securities exchange ('U.S. Listed Securities') or traded on
the Nasdaq National Market or the Nasdaq SmallCap Market (collectively 'Nasdaq
Traded Securities') will be included for purposes of the U.S. Equity Fund's 65%
minimum described above, and excluded for purposes of the Fund's 15% maximum in
investments in foreign securities. 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
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have similar characteristics to the S&P 500 Index, by virtue of blending
investments in both 'value' and 'growth' securities. Since the U.S. Equity
Fund's strategy seeks to combine these basic elements, but is designed to select
investments deemed to be the most attractive within each category, GEIM believes
that the strategy should be capable of outperforming the U.S. equity market as
reflected by the S&P 500 Index on a total return basis.
The U.S. Equity Fund 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.
GE MID-CAP GROWTH FUND
The investment objective of GE Mid-Cap Growth Fund (the 'Mid-Cap Fund') is
long-term growth of capital. The Fund seeks to achieve this objective by
investing primarily in the equity securities of companies with medium-sized
market capitalizations ('mid-cap') that have the potential for above-average
growth. The Fund, under normal market conditions, invests at least 65% of its
total assets in a portfolio of equity securities of mid-cap companies traded on
U.S. securities exchanges or in the U.S. over-the-counter market, including
common stocks, preferred stocks, convertible preferred stocks, convertible
bonds, convertible debentures, convertible notes, ADRs and warrants or rights
issued by U.S. and foreign companies. The Fund defines a mid-cap company as one
whose securities are within the market capitalization range of stocks listed on
the S&P MidCap 400 Index.
Mid-cap growth companies are often still in the early phase of their life cycle.
Accordingly, investing in mid-cap companies generally entails greater risk
exposure and volatility (meaning upward or downward price swings) than investing
in large, well-established companies. However, GEIM believes that mid-cap
companies may offer the potential for more rapid growth. See 'Risk Factors and
Special Considerations -- Small Companies.'
GEIM relies on its proprietary research to identify mid-cap companies with
potentially attractive growth prospects. These companies typically have one or
more of a variety of characteristics, including attractive products or services,
above average earnings growth potential, superior financial returns, strong
competitive position, shareholder focused management and sound balance sheets.
There is, of course, no guarantee that GEIM will be able to identify such
companies or that the Fund's investment in them will be successful.
The Mid-Cap Fund may invest up to 35% of its assets in (i) securities of
companies outside the capitalization range of the S&P Mid-Cap 400 Index; (ii)
foreign securities, excluding, for purposes of this limitation, ADRs and U.S.
Listed Securities and Nasdaq Traded Securities; and (iii) bonds, notes and
debentures.
GE VALUE EQUITY FUND
The investment objective of the GE Value Equity Fund (the 'Value Fund') is
long-term growth of capital and future income. The Fund seeks to achieve its
objective by investing primarily in equity securities of companies with large
sized market capitalization that GEIM considers to be undervalued by the market.
Undervalued securities are those selling for low prices given the fundamental
characteristics of their issuers. During normal market conditions, the Value
Fund invests at least 65% of its assets in common stocks, preferred stocks,
convertible bonds, convertible debentures, convertible notes, convertible
preferred stocks and warrants or rights issued by U.S. and foreign companies.
The Value Fund's investment philosophy is that the market tends to overreact to
both good and bad news about issuers. Companies experiencing faster than
expected growth tend to be overvalued as the market extrapolates current good
news well beyond a sustainable time-frame and correspondingly overforecasts the
period and magnitude of decline of companies experiencing near term
difficulties. These difficulties can be driven by factors both internal and
external to the company. Internal factors may include operational mismanagement
or strategic mistakes. External factors may include a change in the economic
environment or a shift in the competitive dynamics of an industry. The Fund
attempts to identify firms that are out of favor for a variety of reasons and
select those which GEIM believes to be undervalued relative to their true
business prospects.
In accordance with this premise, GEIM will identify and select securities that
it believes are undervalued, using factors it considers indicative of
fundamental investment value including: (i) low price/earnings ratio relative to
a normalized growth rate and/or the S&P 500 Index; (ii) the potential for free
cash flow generation and prospects for dividend growth; (iii) a strong balance
sheet with low financial leverage; (iv) sustainable competitive advantages such
as a
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franchise brand name or dominant market position; (v) an experienced and capable
management team; (vi) improving returns on invested capital; and (vii) net asset
values in a restructuring/breakup analysis framework.
GEIM believes that such investments will position the Value Fund to benefit from
a positive change in business prospects from an issuing company that adopts a
turnaround strategy to increase/restore the earning power of the company.
The Value Fund may, under normal market conditions, invest (i) up to 35% of its
assets in bonds, notes and debentures and (ii) up to 25% of its assets in
foreign securities excluding, for purposes of this limitation, ADRs and U.S.
Listed Securities and Nasdaq Traded Securities.
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. The determination of where an issuer is located will
be made by reference to the country in which the issuer (a) is organized, (b)
derives at least 50% of its revenues or profits from goods produced or sold,
investments made or services performed, (c) has at least 50% of its assets
situated or (d) has the principal trading market for its securities (the
'Country Identification Test'). 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.
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
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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 in no fewer than three different countries other than
the United States. The percentage of the International Fund's assets invested in
particular countries or regions of the world will vary depending on political
and economic conditions. The determination of where an issuer is located will be
made by reference to the Country Identification Test, as set out above, in
'Investment Objectives and Management Policies -- GE Global Equity Fund.'
In selecting investments on behalf of the International Fund, GEIM seeks
companies that are expected to grow faster than relevant markets and whose
securities are available at a price that does not fully reflect the potential
growth of those companies. GEIM typically focuses on companies that possess one
or more of a variety of characteristics, including strong earnings growth
relative to price-to-earnings and price-to-cash earnings ratios, low
price-to-book value, strong cash flow, presence in an industry experiencing
strong growth and high quality management.
The International Fund, under normal conditions, invests at least 65% of its
assets in common stocks, preferred stocks, convertible debentures, convertible
notes, convertible preferred stocks and 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 or in the U.S. over-the-counter market. 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 growth of
capital. GEIM believes that such a determination could be made, for example,
upon the International Fund's investing in the debt securities of a company
whose securities GEIM anticipates will increase in value as a result of a
development particularly or uniquely applicable to the company, such as a
liquidation, reorganization, recapitalization or merger, material litigation,
technological breakthrough or new management or management policies. In
addition, GEIM believes such a determination could be made with respect to an
investment by the International Fund in debt instruments issued by a
governmental entity upon GEIM's concluding that the value of the instruments
will increase as a result of improvements or changes in public finances,
monetary policies, external accounts, financial markets, exchange rate policies
or labor conditions of the country in which the governmental entity is located.
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.
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 that provides diversification across a range of asset classes and
contemplates shifts among them from time to time. This strategy may result in
the Strategic Fund's experiencing a high portfolio turnover rate. See 'Portfolio
Transactions and Turnover' below.
The Strategic Fund invests in the following classes of investments: common
stocks, preferred stocks, convertible securities and warrants or rights; 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 30% of the
Strategic Fund's total assets may be invested in foreign securities excluding,
for purposes of this limitation, ADRs and U.S. Listed Securities and Nasdaq
Traded Securities. The Strategic Fund may also invest in structured and indexed
securities, the value of which is linked to currencies, interest rates,
commodities, indexes or other financial indicators. Mortgage related securities,
ARMs, CMOs, government stripped mortgage related securities and asset-backed and
receivable-backed securities are subject to several risks, including the
prepayment of principal. 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
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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.
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.
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 cash and/or 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 availability of attractively priced
individual securities.
GE TAX-EXEMPT FUND
The investment objective and policies of GE Tax-Exempt Fund described in this
Prospectus have been modified to conform to those of Investors Trust Tax Free
Fund in connection with the Reorganization and are subject to the approval of
record shareholders of the GE Tax-Exempt Fund as of July 11, 1997. In the
absence of such approval, GE Tax-Exempt Fund will continue to be managed in the
manner described in GE Funds' current prospectus dated December 30, 1996.
The investment objective of GE Tax-Exempt Fund (the 'Tax-Exempt Fund') is to
seek as high a level of income exempt from Federal income taxation as is
consistent with preservation of capital.
The Tax-Exempt Fund operates subject to a fundamental investment policy
providing that it will invest its assets so that, during any fiscal year, at
least 80% of the income generated by the Fund is exempt from Federal personal
income taxes and the Federal alternative minimum tax. Under normal conditions,
the Tax-Exempt Fund may hold up to 10% 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.'
Debt obligations issued by, or on behalf of, states, territories and possessions
of the United States and the District of Columbia and their political
subdivisions, agencies and instrumentalities or multi-state agencies or
authorities, the interest from which debt obligations is in the opinion of
issuers' counsel, excluded from gross income for Federal income tax purposes
('Municipal Obligations') 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
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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. The Fund invests in
tax-exempt obligations of a broad range of issuers, consistent with prudent
regional diversification. Investors in certain states may be subject to state
taxation on all or a portion of the income and capital gains produced by such
securities. Risks and special considerations applicable to Municipal Obligations
are described below under 'Risk Factors and Special Considerations.'
Under normal market conditions, the Tax-Exempt Fund invests substantially all of
its assets in Municipal Obligations which, at the time of purchase, are
considered investment grade by Standard and Poor's Rating Services ('S&P'),
Moody's Investors Service, Inc. ('Moody's') or another nationally recognized
statistical rating organization ('NRSRO') or which, although not rated, are of
comparative quality in the opinion of Brown Brothers Harriman & Co. ('Brown
Brothers'), the Fund's sub-investment adviser (for information regarding the
commencement of Brown Brothers' advisory services, see 'Management of the
Trust -- Sub-Investment Adviser'). Bonds rated Baa by Moody's or BBB by S&P, or
comparably rated by another NRSRO, or unrated securities of comparable quality,
lack outstanding investment characteristics and in fact have speculative
characteristics as well, and changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to pay interest and
repay principal and investments of this type will be limited to 10% of the
Fund's assets. No more than 5% of the Fund's net assets will remain invested in
securities that are downgraded below investment grade subsequent to purchase by
the Fund.
The Tax-Exempt Fund is expected to have an effective duration ranging from 5 to
7 1/2 years. A bond's duration is the weighted average life of its principal and
interest payments and is often considered a useful indication of its price
volatility. The Fund is an appropriate investment for those investors who seek
tax-exempt income returns greater than those provided by tax free money market
funds and are able to accept fluctuation in the net asset value of their
investment. The Fund is designed to have smaller price fluctuations than
longer-term tax-free bond funds.
The Tax-Exempt Fund may invest in obligations which have fixed interest rates or
variable or floating interest rates, including short-term obligations which have
daily adjustable rates. Variable or floating rates may be adjusted in relation
to market rates for other instruments, prime rates, indices or similar
indicators. Certain of these adjustable obligations may carry a demand feature
that permits the Fund to receive the par value of the security upon demand prior
to maturity. These obligations may also be subject to prepayment without penalty
at the option of the issuer.
While the majority of the Tax-Exempt Fund's investments consist of tax-exempt
notes and bonds, the Fund may also invest in lease obligations or installment
purchase contract obligations, which are instruments supported by lease payments
made by a municipality ('municipal lease obligations').
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.
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.
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GE GOVERNMENT SECURITIES FUND
The investment objective of GE Government Securities Fund (the 'Government
Securities Fund') is a high level of current income consistent with safety of
principal.
The Government Securities Fund seeks to achieve its objective by investing
primarily in Government Securities having remaining maturities of one year or
more. The Fund invests at least 65% of the value of its total assets in U.S.
Government Securities, except during times when it adopts a temporary defensive
position by investing more heavily in cash or high-quality money market
instruments due to prevailing market or economic conditions. There is no limit
on the Fund's investments in mortgage-backed Government Securities and from
time-to-time a majority of the Fund's portfolio may be invested in such
securities.
The remainder of the Government Securities Fund's assets will be invested in
other debt instruments considered investment grade by S&P, Moody's or another
NRSRO. No more than 10% of the Fund's assets may be invested in debt instruments
rated Baa by Moody's, BBB by S&P or comparably rated by another NRSRO and no
more than 25% of the Fund's assets may be invested in debt instruments rated A
or lower by Moody's or S&P or comparably rated by another NRSRO. The Fund may
also invest in foreign securities and cash or cash equivalents. Cash
equivalents, for purposes of the Fund, are highly liquid instruments, which
include commercial paper, rated A-1+, A-1 or A-2 by S&P or Prime-1 or Prime-2 by
Moody's.
The composition and weighted average maturity of the Government Securities
Fund's portfolio will vary from time to time, based upon a determination of how
best to further the Fund's investment objective. The Fund is expected to have an
average duration of approximately 3 to 6 years. A bond's duration is the
weighted average life of its principal and interest payments and is often
considered a useful indication of its price volatility.
GE SHORT-TERM GOVERNMENT FUND
The investment objective of GE Short-Term Government Fund (the 'Short-Term
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 Fund will invest at least 65% of its total assets in
Government Securities including repurchase agreements secured by Government
Securities. A more complete description of the types of government securities to
be invested in can be found below under 'Additional Investments -- Money Market
Instruments.'
The Short-Term 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 Short-Term 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.
The dollar-weighted average maturity of the Short-Term Government Fund's
portfolio securities is anticipated to be not more than three years. Within this
limitation the 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 Short-Term 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 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.
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;
24
- --------------------------------------------------------------------------------
<PAGE>
(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
Board 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 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. 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.'
25
- --------------------------------------------------------------------------------
<PAGE>
MANAGEMENT POLICIES COMMON TO THE FUNDS
- --------------------------------------------------------------------------------
In addition to the investment policies described above, each Fund is authorized
to engage in certain strategies and techniques listed below. Some of these
strategies and techniques may be utilized only when a Fund has adopted a
defensive position; others may be employed only to limited degrees; still others
may be available only to hedge or balance other portfolio positions. For
example, during periods when GEIM believes there are unstable market, economic,
political or currency conditions domestically or abroad, GEIM may assume, on
behalf of a Fund, a temporary defensive posture and (i) without limitation hold
cash and/or invest in money market instruments of the types described below
under 'Additional Investments--Money Market Instruments,' or (ii) restrict the
securities markets in which the Fund's assets will be invested by investing
those assets in securities markets deemed by GEIM to be conservative in light of
the Fund's investment objective and policies. Under normal circumstances, each
Fund may invest a portion of its total assets in cash and/or money market
instruments for cash management purposes, pending investment in accordance with
the Fund's investment objective and policies and to meet operating expenses. To
the extent that a Fund, other than the Money Market Fund, holds cash or invests
in money market instruments, it may not achieve its investment objective. The
extent to which the following management policies are applicable to certain
Funds is summarized in the tables that follow. Percentage figures refer to the
percentage of a Fund's assets that may be invested in accordance with the
indicated policy.
<TABLE>
<CAPTION>
NON-PUBLICLY PURCHASING AND
REVERSE TRADED AND STRUCTURED AND WRITING
REPURCHASE REPURCHASE ILLIQUID INDEXED SECURITIES
AGREEMENTS AGREEMENTS SECURITIES SECURITIES OPTIONS
---------- ---------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C>
FUND
Premier Fund.................................... Yes No Yes No Yes
U.S. Equity Fund................................ Yes No Yes No Yes
Mid-Cap Fund.................................... Yes No Yes No Yes
Value Fund...................................... Yes Yes Yes No Yes
Global Fund..................................... Yes No Yes No Yes
International Fund.............................. Yes No Yes No Yes
Strategic Fund.................................. Yes No Yes Yes Yes
Tax-Exempt Fund................................. Yes Yes Yes No Yes
Income Fund..................................... Yes No Yes Yes Yes
Government Securities Fund...................... Yes Yes Yes Yes Yes
Short-Term Government Fund...................... Yes No Yes Yes Yes
Money Market Fund............................... Yes Yes No No No
<CAPTION>
PURCHASING AND
WRITING
SECURITIES
INDEX
OPTIONS
--------------
<S> <C>
FUND
Premier Fund.................................... Yes
U.S. Equity Fund................................ Yes
Mid-Cap Fund.................................... Yes
Value Fund...................................... Yes
Global Fund..................................... Yes
International Fund.............................. Yes
Strategic Fund.................................. Yes
Tax-Exempt Fund................................. Yes
Income Fund..................................... Yes
Government Securities Fund...................... Yes
Short-Term Government Fund...................... Yes
Money Market Fund............................... No
</TABLE>
26
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
MAXIMUM
INVESTMENT IN
FUTURES AND FORWARD OPTIONS ON MAXIMUM BELOW-INVESTMENT
OPTIONS ON CURRENCY FOREIGN INVESTMENT IN GRADE DEBT
FUTURES TRANSACTIONS CURRENCIES DEBT SECURITIES SECURITIES
----------- ------------ ---------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
FUND
Premier Fund...................... Yes Yes No 35% 5%
U.S. Equity Fund.................. Yes Yes Yes 35% 5%
Mid-Cap Fund...................... Yes Yes Yes 35% (maximum of 10% in BB or B by
25% in BBB by S&P or Ba or B by
S&P, Baa by Moody's or
Moody's or equivalent
equivalent)
Value Fund........................ Yes Yes Yes 35% 5%
Global Fund....................... Yes Yes Yes 35% 5%
International Fund................ Yes Yes Yes 35% 5%
Strategic Fund.................... Yes Yes Yes 100% (maximum 10% in BB or B by
of 25% in BBB S&P or Ba or B by
by S&P or Baa Moody's or
by Moody's or equivalent
equivalent)
Tax-Exempt Fund................... Yes No No 100% (maximum 5% in debt
of 10% in BBB downgraded below
by S&P or Baa investment grade
by Moody's or subsequent to
equivalent) purchase
Income Fund....................... Yes Yes Yes 100% (maximum 10% in BB or B by
of 25% in BBB S&P or Ba or B by
by S&P or Baa Moody's or
by Moody's or equivalent
equivalent)
Government Securities Fund........ Yes Yes Yes 100% (maximum None
of 10% in BBB
by S&P or Baa
by Moody's or
equivalent;
maximum of 25%
in A or lower
by S&P, Moody's
or equivalent)
Short-Term Government Fund........ Yes Yes Yes 100% None
Money Market Fund................. No No No 100% None
<CAPTION>
MAXIMUM WHEN-
INVESTMENT IN ISSUED AND
FOREIGN DELAYED
SECURITIES DELIVERY
------------- ----------
<S> <C> <C>
FUND
Premier Fund...................... 25%* Yes
U.S. Equity Fund.................. 15%* Yes
Mid-Cap Fund...................... 35%* Yes
Value Fund........................ 35%* Yes
Global Fund....................... No limit Yes
International Fund................ No limit Yes
Strategic Fund.................... 30%* Yes
Tax-Exempt Fund................... None Yes
Income Fund....................... 35%* Yes
Government Securities Fund........ 35%* Yes
Short-Term Government Fund........ 35%* Yes
Money Market Fund................. 25%* Yes
</TABLE>
- ------------------
* This limitation excludes ADRs and U.S. Listed Securities and Nasdaq Traded
Securities.
27
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
SECURITIES OF
PORTFOLIO SECURITIES OF OTHER
SECURITIES RULE 144A DEPOSITARY SUPRANATIONAL INVESTMENT MUNICIPAL
LENDING SECURITIES RECEIPTS AGENCIES FUNDS LEASES
---------- --------- ----------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
FUND
Premier Fund................. Yes Yes Yes No Yes No
U.S. Equity Fund............. Yes Yes Yes No No No
Mid-Cap Fund................. Yes Yes Yes No Yes No
Value Fund................... Yes Yes Yes No Yes No
Global Fund.................. Yes Yes Yes No Yes No
International Fund........... Yes Yes Yes No Yes No
Strategic Fund............... Yes Yes Yes Yes Yes Yes
Tax-Exempt Fund.............. Yes Yes No No No Yes
Income Fund.................. Yes Yes Yes Yes Yes No
Government Securities Fund... Yes Yes Yes Yes Yes No
Short-Term Government Fund... Yes Yes Yes Yes Yes No
Money Market Fund............ Yes Yes No Yes No No
<CAPTION>
FLOATING AND PARTICIPATION
VARIABLE INTERESTS IN
RATE MUNICIPAL
INSTRUMENTS SECURITIES
------------ -------------
<S> <C> <C>
FUND
Premier Fund................. No No
U.S. Equity Fund............. No No
Mid-Cap Fund................. No No
Value Fund................... No No
Global Fund.................. No No
International Fund........... No No
Strategic Fund............... Yes Yes
Tax-Exempt Fund.............. Yes Yes
Income Fund.................. Yes No
Government Securities Fund... Yes No
Short-Term Government Fund... Yes No
Money Market Fund............ Yes No
</TABLE>
<TABLE>
<CAPTION>
ASSET
BACKED
MUNICIPAL MORTGAGE GOVERNMENT SECURITIES
ZERO OBLIGA- CUSTODIAL RELATED STRIPPED AND
COUPON TION RECEIPTS ON SECURITIES, MORTGAGE RECEIVABLE-
OBLIGA- COMPO- MUNICIPAL INCLUDING RELATED BACKED
TIONS NENTS SECURITIES CMOS SECURITIES SECURITIES
---------- --------- ----------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
FUND
Premier Fund................. No No No No No No
U.S. Equity Fund............. Yes No No No No No
Mid-Cap Fund................. No No No No No No
Value Fund................... No No No No No No
Global Fund.................. No No No No No No
International Fund........... No No No No No No
Strategic Fund............... Yes Yes Yes Yes Yes Yes
Tax-Exempt Fund.............. Yes Yes Yes No No No
Income Fund.................. Yes No No Yes Yes Yes
Government Securities Fund... Yes No No Yes Yes Yes
Short-Term Government Fund... Yes No No Yes Yes Yes
Money Market Fund............ No No No No No No
<CAPTION>
SELLING
SHORT
MORTGAGE AGAINST
DOLLAR ROLLS THE BOX
------------ -------------
<S> <C> <C>
FUND
Premier Fund................. No No
U.S. Equity Fund............. No No
Mid-Cap Fund................. No Yes
Value Fund................... No Yes
Global Fund.................. No Yes
International Fund........... No Yes
Strategic Fund............... Yes No
Tax-Exempt Fund.............. No Yes
Income Fund.................. Yes No
Government Securities Fund... Yes Yes
Short-Term Government Fund... Yes No
Money Market Fund............ No No
</TABLE>
28
- --------------------------------------------------------------------------------
<PAGE>
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 (the '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 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 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. Money market
instruments 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 Tax-Exempt Fund and 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
29
- --------------------------------------------------------------------------------
<PAGE>
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 Value Fund, the Tax-Exempt Fund, the Government Securities Fund and the
Money Market Fund may engage in reverse repurchase agreements, subject to their
investment restrictions. A reverse repurchase agreement, which is considered a
borrowing by a 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 Value Fund, the Tax-Exempt Fund, the
Government Securities Fund and the Money Market Fund use 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 a 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. Each Fund, other than the Money
Market Fund, may 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
Board 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 the Investment Manager* has determined are not liquid under
guidelines established by the Board.
STRUCTURED AND INDEXED SECURITIES. Certain Funds may also invest in structured
and indexed securities, the value of which is linked to currencies, interest
rates, commodities, indexes or other financial indicators ('reference
instruments'). The interest rate or the principal amount payable at maturity or
redemption may be increased or decreased depending on changes in the value of
the reference instrument. Structured or 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
- ------------------
* As used in this Prospectus, the term 'Investment Manager' shall refer to GEIM
or Brown Brothers, as applicable.
30
- --------------------------------------------------------------------------------
<PAGE>
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, each Fund, other than the Money Market Fund, may purchase and write
put and call options on securities indexes listed on U.S. or foreign securities
exchanges or traded in the over-the-counter market, which indexes include
securities held in the Fund's portfolio. The Funds with such option writing
authority may write only covered options. A Fund may also use securities index
options as a means of participating in a securities market without making direct
purchases of securities.
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
31
- --------------------------------------------------------------------------------
<PAGE>
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. Each Fund, other than the Tax-Exempt Fund and
the Money Market Fund, may hold currencies to meet settlement requirements for
foreign securities and each Fund, other than the Premier Fund, the Tax-Exempt
Fund and the Money Market 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 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 the Investment Manager. 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.
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OPTIONS ON FOREIGN CURRENCIES. Each Fund, other than the Premier Fund, the
Tax-Exempt Fund and the Money Market Fund, may 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 Value Fund, the Tax-Exempt Fund,
the Government Securities Fund and the Money Market Fund may enter into reverse
repurchase agreements (subject to a limit of 33 1/3% in the case of the
Tax-Exempt Fund), 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% (10% in the case the Tax-Exempt Fund) 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
(subject to shareholder approval, the Tax-Exempt Fund will reclassify this
policy as non-fundamental).
2. 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 (a) up to 25% of
the value of the total assets of each Fund, other than the Tax-Exempt Fund and
the Money Market Fund, may be invested without regard to this limitation and (b)
this limitation is not applicable to the investment by the Tax-Exempt Fund in
securities fully collateralized by Government Securities and options thereon.
All securities of a foreign government and its agencies will be treated as a
single issuer for purposes of this restriction.
3. No Fund, other than the Tax-Exempt 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 Tax-Exempt Fund and the Money
Market Fund, may be invested without regard to these limitations. All securities
of a foreign government and its agencies will be treated as a single issuer for
purposes of this restriction. The Tax-Exempt Fund may not purchase more than 10%
of any class of securities of any one issuer (except Government Securities and
securities fully collateralized by Government Securities).
4. 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 Index, if applicable at
the time of determination. For all other portfolio holdings, the Trust may use
the Directory of Companies Required to File Annual Reports with the SEC and
Bloomberg Inc. In addition, the Trust may select its own industry
classifications, provided such classifications are reasonable.
Certain other investment restrictions adopted by the Trust with respect to the
Funds are described in the Statement of Additional Information.
RISK FACTORS AND SPECIAL CONSIDERATIONS
Investing in the Funds involves risk factors and special considerations, such as
those described below:
GENERAL. GEIM's principal officers, directors, and portfolio managers serve in
similar capacities with respect to General Electric Investment Corporation
('GEIC'), which like GEIM is a wholly-owned subsidiary of GE. GEIM and GEIC
collectively provide investment management services to various institutional
accounts with total assets, as of June 30, 1997, in excess of $58 billion. An
investment in shares of any Fund, however, should not be considered to be a
complete investment program.
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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.
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 the Investment Manager 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 a Fund may decline below the price of the securities the
Fund has sold but is obligated to repurchase under the agreement. In the event
the buyer of securities under a reverse repurchase agreement files for
bankruptcy or becomes insolvent, a 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
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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. Warrants acquired by a Fund in
units or attached to securities may be deemed to be without value.
SMALLER COMPANIES. Smaller companies in which the Premier Fund and the Mid-Cap
Fund may invest may involve greater risks than large, established issuers. Such
smaller companies may have limited product lines, markets or financial resources
and their securities may trade less frequently and in more limited volume than
the securities of larger or more established companies. As a result, the prices
of smaller companies may fluctuate to a greater degree than the prices of
securities of other issuers.
INVESTMENT IN FOREIGN SECURITIES. Investing in securities issued by foreign
companies and governments, including securities issued in the form of depositary
receipts, involves considerations and potential risks not typically associated
with investing in obligations issued by the U.S. Government and U.S.
corporations. 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 the
Investment Manager will review the proceedings relating to the issuance of
Municipal Obligations or the basis for opinions of counsel. The Tax-Exempt Fund
may invest without limit in debt obligations that are repayable out of revenues
generated from economically related projects or facilities or debt obligations
whose issuers are located in the same state. Sizable investments in these
obligations could involve an increased risk to the Tax-Exempt Fund should any of
the related projects or facilities experience financial difficulties.
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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.
The Tax-Exempt Fund intends to invest in Municipal Obligations of a broad range
of issuers, consistent with prudent regional diversification. Investors in
certain states may be subject to state taxation on all or a portion of the
income and capital gains produced by such securities.
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 the
Investment Manager. Successful use by a Fund of options will depend on the
Investment Manager'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 the Investment Manager
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, the Investment Manager of the Tax-Exempt Fund anticipates that the Fund
will invest in these instruments only in unusual circumstances, such as when the
Investment Manager 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 the Investment
Manager's special skills and experience with respect to those instruments and
will usually depend upon the Investment Manager'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
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movements in the prices of those contracts and movements in the prices of the
currencies hedged or used for cover will not be perfect.
The Trust's ability to dispose of a Fund's positions in forward currency
contracts depends on the availability of active markets in those instruments,
and the Investment Manager cannot predict the amount of trading interest that
may exist in the future in forward currency contracts. Forward currency
contracts may be closed out only by the parties entering into an offsetting
contract. As a result, no assurance can be given that a Fund will be able to
utilize these contracts effectively for the intended purposes.
OPTIONS ON FOREIGN CURRENCIES. Like the writing of other kinds of options, the
writing of an option on a foreign currency constitutes only a partial hedge, up
to the amount of the premium received; a Fund could also be required, with
respect to any option it has written, to purchase or sell foreign currencies at
disadvantageous exchange rates, thereby incurring losses. The purchase of an
option on a foreign currency may constitute an effective hedge against
fluctuation in exchange rates, although in the event of rate movements adverse
to a Fund's position, the Fund could forfeit the entire amount of the premium
plus related transaction costs.
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 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 the Investment Manager,
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, 200% for the Mid-Cap Fund, 30% for the Value
Fund, 50% for the Global Fund, 50% for the International Fund, 200% for the
Strategic Fund, 100% for the Tax-Exempt Fund, 300% for the Income Fund, 200% for
the Government Securities Fund and 300% for the Short-Term 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
Short-Term 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. The Investment
Manager 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.
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MANAGEMENT OF THE TRUST
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BOARD OF TRUSTEES
Overall responsibility for management and supervision of the Funds rests with
the Board. The Trustees approve all significant agreements between the Trust and
the persons and companies that furnish services to the Funds, including
agreements with the Funds' investment adviser and administrator, distributor,
custodian and transfer agent. The day-to-day operations of the Funds have been
delegated to GEIM. The Statement of Additional Information contains background
information regarding each Trustee and executive officer of the Trust.
INVESTMENT ADVISER AND ADMINISTRATOR
GEIM, located at 3003 Summer Street, P.O. Box 7900 Stamford, Connecticut 06904,
serves as the investment adviser and administrator of each Fund. GEIM, which was
formed under the laws of Delaware in 1988, is a wholly-owned subsidiary of GE
and is a registered investment adviser under the Investment Advisers Act of
1940, as amended.
GEIM has served as investment adviser of the U.S. Government Money Market Fund
and U.S. Treasury Money Market Fund of Financial Investors Trust since March
1997, and the investment portfolios of GE Investment Funds, Inc., which are
currently offered to insurance company separate accounts that fund certain
variable annuity and variable life contracts, since May 1997. GEIM has served as
sub-investment adviser to PaineWebber Global Equity Fund of PaineWebber
Investment Trust since its inception in 1991, the Global Growth Portfolio of
PaineWebber Series Trust and the Global Small Cap Fund Inc. since March 1995,
the International Equity and the U.S. Equity Portfolios of WRL Series Fund, Inc.
since January 1997 and the International Equity Portfolio of IDEX Series Fund
since February 1997. 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 June 30, 1997, in excess
of $58 billion, of which more than $12 billion is invested in mutual funds.
As a Fund's investment adviser, GEIM, subject to the supervision and direction
of the Board, 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. Pursuant
to a sub-investment advisory contract proposed to be entered into upon the
completion of the Reorganization, subject to shareholder approval, GEIM intends
to delegate to Brown Brothers its investment advisory responsibilities with
respect to the Tax-Exempt Fund. Accordingly, Brown Brothers will periodically
consult with GEIM regarding matters pertaining to the Tax-Exempt Fund, including
market strategy and portfolio characteristics such as average weighted maturity
and the quality of the Fund's investments. 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 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 Mid-Cap Fund -- .60%, the Value Fund -- .55%, the Global Fund --
.75%, the International Fund -- .80%, the Strategic Fund -- .35%, the Tax-Exempt
Fund -- .35%, the Income Fund -- .35%, the Government Securities Fund -- .40%,
the Short-Term Government Fund -- .30% and the Money Market Fund -- .25%.
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. 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
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<PAGE>
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.'
SUB-INVESTMENT ADVISER (TAX-EXEMPT FUND ONLY)
Subject to shareholder approval, Brown Brothers, located at 59 Wall Street, New
York, New York 10005, will be retained by GEIM to act as sub-investment adviser
of the Fund under a sub-investment advisory contract with GEIM, which is
expected to commence upon completion of the Reorganization. Brown Brothers
managed total assets in excess of $26 billion as of June 30, 1997. Overall
portfolio management strategy for the Tax-Exempt Fund is determined by Brown
Brothers. As sub-investment adviser, Brown Brothers will be responsible for the
actual investment management of the Tax-Exempt Fund's assets including the
responsibility for making decisions and placing orders to buy, sell or hold a
particular security, under the general supervision of GEIM and the Board.
Pursuant to the sub-investment advisory contract, Brown Brothers will consult
with GEIM from time to time regarding matters pertaining to the Tax-Exempt Fund,
and GEIM will have the right to terminate the sub-advisory contract upon 60
days' written notice to Brown Brothers.
For its services under the sub-advisory contract, Brown Brothers will receive
from GEIM a fee, payable monthly, based upon the Tax-Exempt Fund's average daily
net assets equal to an annual rate of .20% of the first $25 million; .175% of
the next $25 million; .15% of the next $50 million; and .125% of amounts in
excess of $100 million.
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 leads a team
of portfolio managers for the U.S. Equity Fund. Mr. Bolton has more than 12
years of investment experience and has held positions with GE Investments since
1984. He is currently a Director and Executive Vice President of GE Investments.
David B. Carlson is the Portfolio Manager of the Premier Fund and is also
responsible for the management of the domestic equity related investments of the
portfolio of the Strategic Fund. Mr. Carlson has served those Funds since the
commencement of their operations. He has more than 14 years of investment
experience and has held positions with GE Investments since 1982. Mr. Carlson is
currently a Senior Vice President of GE Investments.
Peter J. Hathaway will lead a team of portfolio managers for the Value Fund upon
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 leads a team of portfolio managers for the International Fund
and serves as a Co-Portfolio Manager of the Global Fund and has served those
Funds since the commencement of the Funds' operations. Mr. Layman will be
responsible for the management of the international equity-related investments
of the Strategic Fund beginning September 1997. 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 a Director and Executive Vice President of GE Investments.
Robert A. MacDougall leads a team of portfolio managers for the Government
Securities Fund, the Income Fund and the Short-Term Government Fund and is also
responsible for the management of the fixed income related investments of the
portfolio of the Strategic Fund. Mr. MacDougall has served the Income Fund and
the Short-Term Government Fund since the commencement of their operations and
will serve the Government Securities Fund upon the commencement of its
operations. He has more than 13 years investment experience and has held
positions with GE Investments since 1986. Mr. MacDougall is currently a Director
and Executive Vice President of GE Investments.
Elaine G. Harris will be the Portfolio Manager of the Mid-Cap Fund upon
commencement of the Fund's operations. Ms. Harris has more than 12 years of
investment experience and has held positions with GE Investments since 1993.
From 1991 to 1993, Ms. Harris served as Senior Vice President and Portfolio
Manager at SunAmerica Asset Management and, prior thereto, as Portfolio Manager
at Alliance Capital Management Company and in various positions at Fidelity
Management and Research Corporation. Ms. Harris is currently a Senior Vice
President of GE Investments.
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<PAGE>
Michael J. Solecki will be the Co-Portfolio Manager of the Global Fund beginning
September 1997. Mr. Solecki has more than six years of investment experience and
has held positions with GE Investments since 1990. Mr. Solecki is currently a
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.
Barbara A. Brinkley, a Manager of Brown Brothers and a member of its U.S. Bond
Policy Group and its Fixed Income Credit Committee, will serve as the Tax-Exempt
Fund's portfolio manager upon the completion of the Reorganization. Ms. Brinkley
has been employed by Brown Brothers since 1976. Throughout her career with Brown
Brothers, and during her previous four years with American Re-Insurance Company,
Ms. Brinkley has specialized as a municipal bond credit analyst, trader and
portfolio manager. Ms. Brinkley is a member and former chairman of the Municipal
Analysts Group of New York, and is a member of the Fixed Income Analysts
Society, Inc. Ms. Brinkley holds a B.A. degree from Smith College.
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:
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 Board 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 and membership in the mutual fund
industry's association; 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 has adopted Shareholder Servicing and Distribution Plans (the 'Plans')
pursuant to Rule 12b-1 under the 1940 Act with respect to each Participant Fund.
Under the Plans, the Trust will pay GEIM, with respect to the Class A and Class
B shares of a Participant Fund, fees for shareholder and distribution services
provided to those Classes of the Participant Fund, and with respect to the Class
C shares of a Participant Fund, the Trust will pay GEIM a shareholder servicing
fee, each at the annual rates set out above under 'The Multiple Distribution
System' and as further described below under 'Purchase of Shares.' Fees to be
paid with respect to the Funds under the Plans will be calculated daily and paid
monthly by the Trust.
The annual fees payable with respect to each Class of a Participant Fund are
intended to compensate GEIM or enable GEIM to compensate other persons ('Service
Providers') for providing ongoing servicing and/or maintenance of the accounts
of shareholders of the Participant Fund ('Shareholder Services') and to
compensate GEIM, or enable GEIM to compensate Service Providers, including any
distributor of shares of the Participant Fund, for providing services that are
primarily intended to result in, or that are primarily attributable to, the sale
of shares of the Participant Fund ('Selling Services'). Shareholder Services
means all forms of shareholder liaison services, including, among other things,
one or more of the following: providing Class A, Class B or Class C shareholders
of a Participant Fund with (i) information on their investments; (ii) general
information regarding investing in mutual funds; (iii) periodic newsletters
containing materials relating to the Participant Fund or to investments in
general in mutual funds; (iv) periodic financial seminars designed to assist in
the education of shareholders with respect to mutual funds generally and the
Participant Fund specifically; (v) access to a telephone inquiry center relating
to the Participant Fund; and other similar services not otherwise required to be
provided by the Trust's custodian or transfer agent. Selling Services include,
but are not limited to: the printing and distribution to prospective investors
in the Participant Fund of prospectuses and statements of additional information
that are used in connection with sales of Class A and Class B shares of the
Participant Fund; the preparation, including printing, and distribution of sales
literature and media advertisements relating to the Class A or Class B shares of
the Participant Fund; and distributing Class A or Class B shares of the
Participant Fund. In providing compensation for Selling Services in accordance
with the Plans, GEIM is expressly authorized (1) to make, or cause to be made,
payments reflecting an allocation of overhead and other office expenses related
to the distribution of the Class A or Class B shares of a Participant Fund; (2)
to make, or cause to be made, payments 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 Board evaluates the appropriateness of the Plans
40
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<PAGE>
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, including investments in individual retirement accounts
('IRAs'), is $500 and the minimum for subsequent investments is $100. The
minimum for any purchase by payroll deduction, provided the investor has made a
minimum initial investment of $500, 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, depending on the type of account, mailed directly to the Trust. When making
subsequent investments directly to the Trust, make your check payable to GE
Funds 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 GE Funds in U.S. currency
along with account information and instructions to the Trust, at:
GE Funds
P.O. Box 419631
Kansas City, MO 64141-6631
For overnight package delivery:
GE Funds
c/o National Financial Data Services Inc.
1004 Baltimore
Kansas City, MO 64105
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.
Third-party checks are not accepted by the Trust for payment of shares of a
Fund. A purchase of shares of a Fund will be effected in accordance with a
completed order at the Fund's net asset value next determined after receipt. If
the check used for the purchase does not clear, the Trust will cancel the
purchase and the investor may be liable for losses or fees incurred. Checks are
accepted subject to collection at full face value in U.S. funds and must be
drawn on a U.S. bank. Investors may obtain an account application necessary to
open an account by telephoning the Trust at the applicable toll free number
listed on the back cover of the Prospectus or by writing to the Trust, at:
GE Funds
P.O. Box 120065
Stamford, CT 06912-0065
For overnight package delivery:
GE Funds
c/o National Financial Data Services Inc.
1004 Baltimore
Kansas City, MO 64105
BY WIRE. Purchase orders for shares of a Fund may be transmitted by wire. Wire
orders will not be accepted
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<PAGE>
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 New York Stock
Exchange ('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 must also meet the
minimum initial investment criteria set forth above. An investor should consult
his or her employer for instructions. 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, provided the investor has met the minimum initial investment
criteria set forth above. 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 National Financial Data Services Inc.
1004 Baltimore
Kansas City, MO 64105
The necessary authorization form may be obtained from the Trust. Investors may
change the amount of purchase or cancel the authorization by written or
telephonic 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. Investors must also meet the minimum initial
investment criteria set forth above. 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.
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<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 as
follows:
GE PREMIER GROWTH EQUITY FUND, GE U.S. EQUITY FUND,
GE MID-CAP GROWTH FUND, GE VALUE EQUITY FUND,
GE GLOBAL EQUITY FUND, GE INTERNATIONAL EQUITY FUND AND
GE STRATEGIC INVESTMENT FUND
<TABLE>
<CAPTION>
TOTAL FRONT-END SALES CHARGE MAXIMUM DEALERS'
------------------------------------ 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, GE GOVERNMENT SECURITIES FUND
AND GE FIXED INCOME FUND
<TABLE>
<CAPTION>
TOTAL FRONT-END SALES CHARGE MAXIMUM DEALERS'
------------------------------------ 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>
TOTAL FRONT-END SALES CHARGE MAXIMUM DEALERS'
------------------------------------ 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
- ------------------------------------------------- --------------- --------------- ----------------
Less than $100,000............................... 2.50% 2.56% 2.25%
<S> <C> <C> <C>
$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.
+ 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.
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<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 A
Retirement Plans which have 250 or more eligible employees, (3) all purchases by
Class A Retirement 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 Board, (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 A Retirement 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,
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<PAGE>
but an investor must complete the intended purchase to obtain the reduced sales
load.
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 Short-Term 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 Short-Term 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 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
mar-
riage, 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 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
45
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<PAGE>
the case may be, may, in such event, be borne by the proposed investor in shares
of the Fund. Under these circumstances, the Trust would inform the investor of
the securities and amounts that are acceptable to the Trust. The securities
would then be accepted by the Trust at their then market value in return for
shares in the Fund of an equal value.
REINVESTMENT PRIVILEGE
Participant Funds also offer a reinstatement privilege under which a shareholder
that has redeemed Class A or Class B 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. A shareholder wishing to exercise this
privilege must do so in writing.
For purposes of determining the amount of any CDSCs payable on any subsequent
redemptions, the purchase payment made through exercise of the reinstatement
privilege will be deemed to have been made at the time of the initial purchase
(rather than at the time the reinstatement was effected). The tax status of a
gain realized on a redemption will not be affected by exercise of the
reinstatement privilege but a loss will be nullified if the reinvestment is made
within 30 days of redemption. See the Statement of Additional Information for
the tax consequences when, within 90 days of a purchase of Class A or Class B
shares, the shares are redeemed and reinvested in a Participant Fund.
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. See the GE
IRA Disclosure Statement and Custodial Account Agreement for a description of
the fees associated with establishing a GE IRA.
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. 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 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 a Fund maintain a minimum investment in
a Fund of $500, so care should be exercised to ensure that redemptions do not
reduce the shareholder's investment below this minimum. One exception exists to
this minimum investment requirement: an account established by a Qualified Plan
except GE IRAs. If the shareholder's account balance is less than $500 (except
in the case described above), the Trust may automatically redeem the shares of
the 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.
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
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<PAGE>
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 shares sold 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.
The CDSC on Class A shares is payable on the same terms and conditions as would
be applicable to Class B shares, except that the CDSC on Class A shares is at a
lower rate and for a shorter period than that imposed on Class B shares (1% for
redemptions only during the first year after purchase) and except that Class A
shares have no automatic conversion feature. The CDSC applicable to Class A
shares is calculated in the same manner as the CDSC with respect to Class B
shares and is waived in the same situations as with respect to Class B shares.
The following table sets forth the CDSC rates
applicable to redemptions of Class B shares of the Premier Fund, the U.S. Equity
Fund, the Mid-Cap Fund, the Value Fund, the Global Fund, the International Fund
and the Strategic Fund:
<TABLE>
<CAPTION>
CDSC AS A %
YEAR SINCE PURCHASE OF AMOUNT
PAYMENT WAS MADE REEDEEMED
<S> <C>
- ----------------------------------------------------------
Within First Year.......................... 4.00%
Within Second Year......................... 3.00%
Within Third Year.......................... 2.00%
Within Fourth Year......................... 1.00%
Within Fifth Year.......................... 0.00%
Within Sixth Year.......................... 0.00%
- ----------------------------------------------------------
</TABLE>
The following table sets forth the CDSC rates applicable to redemptions of Class
B shares of the Tax-Exempt Fund, the Income Fund, the Government Securities Fund
and the Short-Term Government Fund:
<TABLE>
<CAPTION>
CDSC AS A %
YEAR SINCE PURCHASE OF AMOUNT
PAYMENT WAS MADE REEDEEMED
<S> <C>
- ----------------------------------------------------------
Within First Year.......................... 3.00%
Within Second Year......................... 3.00%
Within Third Year.......................... 2.00%
Within Fourth Year......................... 1.00%
Within Fifth Year.......................... 0.00%
Within Sixth Year.......................... 0.00%
- ----------------------------------------------------------
</TABLE>
The following table sets forth the CDSC rates applicable to redemptions of any
Fund's Class B shares acquired, either by purchase or exchange, as a result of
the combination of the Investors Trust Funds with the Trust.
<TABLE>
<CAPTION>
CDSC AS A %
YEAR SINCE PURCHASE OF AMOUNT
PAYMENT WAS MADE REEDEEMED
<S> <C>
- ----------------------------------------------------------
Within First Year.......................... 5.00%
Within Second Year......................... 4.00%
Within Third Year.......................... 3.00%
Within Fourth Year......................... 2.00%
Within Fifth Year.......................... 1.00%
Within Sixth Year.......................... 0.00%
Within Seventh Year........................ 0.00%
Within Eighth Year......................... 0.00%
- ----------------------------------------------------------
</TABLE>
Class B shares will automatically convert to Class A shares six years (eight
years in the case of Class B shares acquired, either by purchase or exchange, as
a result of the combination of the Investors Trust Funds with the Trust) 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.
See 'Exchange Privilege' for the effect of exchanges on the CDSC applicable to
exchanged 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
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<PAGE>
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 representing a minimum
required distribution from an IRA effected pursuant to a systematic withdrawal
plan (see 'Systematic Withdrawal Plan' below).
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 419631
Kansas City, MO 64141-6631
For overnight package delivery:
GE Funds
c/o National Financial Data Services Inc.
1004 Baltimore
Kansas City, MO 64105
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 agency or savings association or by Managers of
Personnel Accounting of GE or their designated alternates. 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 in proper order typically required to assure the safety
of a particular account. The Trust may waive the signature guarantee on a
redemption of $50,000 or less if it is able to verify the signatures of all
registered owners from its accounts.
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). A fee of $10
will be charged for wire transfers of funds. 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 and
the maximum telephonic check redemption request is $50,000. 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
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<PAGE>
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 419631
Kansas City, MO 64141-6631
For overnight package delivery:
GE Funds
c/o National Financial Data Services Inc.
1004 Baltimore
Kansas City, MO 64105
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 $10,000 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 to a value of $500 or less may be redeemed by the Trust, but only
after the shareholder has been given notice of at least 30 days in which to
increase the balance in the account to more than $500. Proceeds of such a
redemption will be mailed to the shareholder.
DISTRIBUTIONS IN KIND
If the Board 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. Beginning on or about October 1, 1997, Checks
will generally not be returned to the shareholder after clearance, unless such
return is requested in writing by 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.
49
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<PAGE>
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 B shares of any Participant Fund acquired either by purchase or exchange,
as a result of the combination of the Investors Trust Funds with the Trust, will
be charged the CDSC applicable to the Class B shares that had been applicable to
the relevant Investors Trust Fund before the combination. Shareholders of the
Money Market Fund who acquired their shares by exchange from an Investors Trust
Fund will be charged the CDSC that had been applicable to the Class B shares of
the relevant Investors Trust Fund upon redemption from the Money Market 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.
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. GEIM or its affiliates may
compensate selling dealers for their efforts in effecting these exchanges at no
additional cost to investors.
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, Dr. Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas,
and on the preceding Friday or subsequent Monday when one of these holidays
falls on a Saturday or Sunday, respectively.
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
50
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<PAGE>
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 Board. 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. 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.
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. 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 Board determines that amortized cost is fair
value.
DIVIDENDS, DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
Net investment income (that is, income other than long- and short-term capital
gains) and net realized long- and short-term capital gains are determined
separately for each Fund. Dividends of a Participant Fund or the Money Market
Fund which are derived from net investment income and distributions of net
realized long- and short-term capital gains paid by a Fund to a shareholder will
be automatically reinvested in additional shares of the same Class of the
Participant Fund or the Money Market Fund, respectively, and deposited in the
shareholder's account, unless the shareholder instructs the Trust, in writing or
by telephone, 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 Securities
Fund, the Short-Term Government Fund and the Money Market Fund are declared
daily and paid monthly.
The Government Securities Fund will declare a distribution each day in an amount
based on periodic projections of its future net investment income and will pay
such distributions monthly. Consequently, the amount of each daily distribution
may differ from actual net investment income. The purpose of these distribution
procedures is to attempt to eliminate, to the extent possible, fluctuations in
the level of monthly distribution payments that might result if such Fund
declared dividends in the exact amount of its daily net investment income.
It is possible, however, as a result of this policy that total distributions in
a year could exceed the total of the Government Securities Fund's current year
net investment income and capital gains. If this should
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occur, a portion of the distributions received by shareholders of such Fund
could be a 'return of capital' for federal income tax purposes and thereby
reduce the shareholder's cost basis in shares of the Fund. If distributions are
received in additional shares rather than cash, the capital 'returned' would be
automatically reinvested. A shareholder's total cost basis in the Fund will
reflect the cost of the shareholders' original investment plus the amount of any
reinvestment.
Dividends attributable to the net investment income of the Premier Fund, the
U.S. Equity Fund, the Mid-Cap Fund, the Value 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 Securities Fund, the Short-Term 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, the Government
Securities Fund and the Short-Term 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
Securities Fund, the Short-Term 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 Securities
Fund, the Short-Term 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 Securities Fund the Short-Term 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 Mid-Cap Fund, the Value Fund 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
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extent that the Tax-Exempt Fund invests in bonds, the interest on which is a
specific tax preference item for Federal income tax purposes ('AMT-Subject
Bonds'), any exempt-interest dividends derived from interest on AMT-Subject
Bonds will be a specific tax preference item for purposes of the Federal
individual and corporate alternative minimum taxes. All exempt-interest
dividends will be a component of the 'current earnings' adjustment item for
purposes of the Federal corporate alternative minimum income tax, and corporate
shareholders may incur a larger Federal environmental tax liability through the
receipt of dividends and distributions from the Tax-Exempt Fund.
Net investment income or capital gains earned by the Funds investing in foreign
securities may be subject to foreign income taxes withheld at the source. The
United States has entered into tax treaties with many foreign countries that
entitle the Funds to a reduced rate of tax or exemption from tax on this related
income and gains. The effective rate of foreign tax cannot be determined at this
time since the amount of these Funds' assets to be invested within various
countries is not now known. The Trust intends that the Funds seek to operate so
as to qualify for treaty-reduced rates of tax when applicable. In addition, if a
Fund qualifies as a regulated investment company under the Code, if certain
distribution requirements are satisfied, and if more than 50% of the value of
the Fund's assets at the close of the taxable year consists of stocks or
securities of foreign corporations, the Trust may elect, for U.S. Federal income
tax purposes, to treat foreign income taxes paid by the Fund that can be treated
as income taxes under U.S. income tax principles as paid by its shareholders.
The Trust anticipates that the Global Fund and the International Fund will seek
to qualify for and make this election in most, but not necessarily all, of its
taxable years. If the Trust were to make an election with respect to a Fund, an
amount equal to the foreign income taxes paid by the Fund would be included in
the income of its shareholders and the shareholders would be entitled to credit
their portions of this amount against their U.S. tax liabilities, if any, or to
deduct those portions from their U.S. taxable income, if any. Shortly after 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
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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
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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
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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).
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'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 March 31, 1997 were 5.03% and 5.16%, 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 March 31, 1997 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 March 31, 1997 for Class
A, Class B, Class C and Class D shares, respectively, of the Short-Term
Government Fund and the Income Fund was 5.46%, 5.24%, 5.85%, 6.10%, and 5.81%,
5.56%, 6.33%, 6.59%, respectively. Had GEIM not absorbed a portion of the
Short-Term Government Fund's and the Income Fund's expenses, these Funds' 30-day
yield for the period ended March 31, 1997 for each class of shares would have
been lower.
The 30-day yield for the period ended April 30, 1997 for Class A and Class B
shares of the Tax-Exempt Fund was 5.27% and 5.53%, respectively, and the 30-day
yield for the period ended March 31, 1997 for Class C and Class D shares of the
Fund was 4.30% and 4.55%, respectively. Had the Tax-Exempt Fund's investment
adviser not absorbed a portion of the Fund's expenses, the Fund's 30-day yield
for the indicated period for the relevant 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 April 30, 1997, the equivalent taxable yield of the Tax-Exempt Fund
for Class A and Class B shares, respectively, was 8.72% and 9.16%, and the
equivalent taxable yield for the 30-day period ended March 31, 1997 for Class C
and Class D shares of the Fund was 7.07% and 7.48%, respectively. Had the
Tax-Exempt Fund's investment adviser not absorbed a portion of the Fund's
expenses, assuming an effective tax rate of 39.6%, the equivalent taxable yield
of the Tax-Exempt Fund for the indicated 30-day period for the relevant Class of
shares would have been lower.
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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
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<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>
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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.
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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,
56
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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.
FURTHER INFORMATION:
CERTAIN INVESTMENT TECHNIQUES AND STRATEGIES
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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 Board
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 has established standards and
procedures for determining the liquidity of a Rule 144A Security and monitors
the Investment Manager'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 (SEE CHARTS IN 'MANAGEMENT
POLICIES COMMON TO THE FUNDS')
DEPOSITARY RECEIPTS. Certain Funds may invest in securities of foreign issuers
in the form of ADRs 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. Each of
these Funds may invest in ADRs through both sponsored and unsponsored
arrangements. EDRs and CDRs are generally
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issued by foreign banks and evidence ownership of either foreign or domestic
securities.
SUPRANATIONAL AGENCIES. Certain Funds may invest up to 10% of their assets in
securities of supranational agencies such as: the International Bank for
Reconstruction and Development (commonly referred to as the World Bank), which
was chartered to finance development projects in developing member countries;
the European Community, which is a twelve-nation organization engaged in
cooperative economic 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. Certain Funds may 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 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 certain Funds 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 the Investment Manager
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 canceled will be subject to oversight and approval by
the Board.
Municipal leases held by a Fund will be considered illiquid securities unless
the Board 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 the Investment Manager 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 the Investment Manager 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. Certain Funds may 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
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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.
Certain Funds may purchase floating and variable rate demand bonds and notes,
which are Municipal Obligations ordinarily having stated maturities in excess of
one year but which permit their holder to demand payment of principal at any
time or at specified intervals. Variable rate demand notes include master demand
notes, which are obligations that permit a Fund to invest fluctuating amounts,
which may change daily without penalty, pursuant to direct arrangements between
the Fund, as lender, and the borrower. These obligations have interest rates
that fluctuate from time to time and 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 the Investment
Manager for the purchase of Municipal Obligations. The Investment Manager
considers on an ongoing basis the creditworthiness of the issuers of the
floating and variable rate demand obligations in the relevant Fund's portfolio.
PARTICIPATION INTERESTS. Certain Funds 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 Board 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. Certain Funds 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 these Funds 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 these Funds 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 these Funds 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 Short-Term 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
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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. Certain Funds may invest in Municipal
Obligations the interest rate on which has been divided by the issuer into two
different and variable components, which together result in a fixed interest
rate. Typically, the first of the components (the 'Auction Component') pays an
interest rate that is reset periodically through an auction process, whereas the
second of the components (the 'Residual Component') pays a residual interest
rate based on the difference between the total interest paid by the issuer on
the Municipal Obligation and the auction rate paid on the Auction Component. 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. Certain Funds may 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. Certain Funds may invest in mortgage related
securities which 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 these Funds. 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 these
Funds. Because prepayments of principal generally occur when interest rates are
declining, the 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 these Funds purchase mortgage related securities at a premium,
unscheduled
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<PAGE>
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
certain Funds 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,
these Funds generally will be able to reinvest these amounts in securities with
a higher current rate of return. None of these Funds, 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, these Funds' 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 these Funds 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 these Funds 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 the Investment
Manager, each of these Funds limits its investments in these securities,
together with other illiquid instruments, to not more than 15% (10% in the case
of the Tax-Exempt Fund) of the value of its net assets.
GOVERNMENT STRIPPED MORTGAGE RELATED SECURITIES.
Certain Funds 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. These Funds 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 these Funds.
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 these Funds' not
fully recovering their initial investment in an interest-only government
stripped mortgage related security. Under current market conditions, these Funds
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 these Funds will be
able to effect a trade of a government stripped mortgage related security at a
desired time. These Funds 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 Board, the Trust treats government stripped mortgage
related securities
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as illiquid and will limit each of these Funds' investments in these securities,
together with other illiquid investments, to not more than 15% of its net
assets.
ASSET-BACKED AND RECEIVABLE-BACKED SECURITIES.
Certain Funds 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'
('CARs(Service Mark)') and interests in pools of credit card receivables.
CARs(Service Mark) 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 CARs(Service Mark) 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 CARs(Service Mark) may be affected by early prepayment
of principal on the underlying vehicle sales contracts. If the letter of credit
is exhausted, these Funds may be prevented from realizing the full amount due on
a sales contract because of state law requirements and restrictions relating to
foreclosure sales of vehicles and the availability of deficiency judgments
following these sales, because of depreciation, damage or loss of a vehicle,
because of the application of Federal and state bankruptcy and insolvency laws
or other factors. As a result, certificate holders may experience delays in
payment if the letter of credit is exhausted. Consistent with each of these
Funds' investment objective and policies and subject to the review and approval
of the Board, these Funds may also invest in other types of asset-backed and
receivable-backed securities.
MORTGAGE DOLLAR ROLLS. Certain Funds may, with respect to up to 25% of their
total assets, 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 the Investment Manager'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 these Funds proposes 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. Certain Funds may sell securities 'short against
the box.' Whereas a short sale is the sale of a security a 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
Board 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 Short-Term Government Fund were added as series
of the Trust pursuant to an amendment to the Declaration on March 1, 1994. The
Mid-Cap Fund was added as a series of the Trust on June 17, 1994. The
International Fixed Income Fund was also added as a series of the Trust on June
17, 1994, but is 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. The Value Fund and the Government Securities Fund were added as series of
the Trust on June 2, 1997.
At a meeting to be held on September 15, 1997, the shareholders of the Investors
Trust Funds, consisting of five series, will vote on a plan of reorganization.
Upon completion of the Reorganization, GE Funds will acquire all or
substantially all of the assets of the Investors Trust Funds and the five
series of Investors
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<PAGE>
Trust will be combined with five series of GE Funds as illustrated by the
following table:
<TABLE>
<CAPTION>
INVESTORS TRUST FUNDS GE FUNDS
- --------------------------- -----------------------------------
<S> <C>
Adjustable Rate Fund Short-Term Government Fund
Government Fund Government Securities Fund
Tax Free Fund Tax-Exempt Fund
Value Fund Value Equity Fund
Growth Fund Mid-Cap Growth Fund
</TABLE>
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 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 Board.
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 all Funds vote as a single
class 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 or (2) when the 1940 Act requires that shares of the Funds be voted by
an individual Fund. Normally, no meetings of shareholders of the Funds will be
held for the purpose of electing Trustees of the Trust unless and until such
time as less than a majority of the Trustees holding office have been elected by
shareholders of the Trust, at which time the Trustees then in office will call a
shareholders' meeting for the election of Trustees. Shareholders of record of no
less than a majority of the outstanding shares of the Trust may remove a Trustee
for cause 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.
GE, a New York corporation, may be deemed to be a controlling person of the
Tax-Exempt Fund and Short-Term Government Fund; and Aid Association for
Lutherans may be deemed to be a controlling person of the International Fund.
Each of the persons listed above may be deemed to be a controlling person of the
relevant Fund because that person's beneficial ownership of the Fund exceeds 25%
of that Fund's voting securities.
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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<PAGE>
GE FUNDS
------------------------------------------------------------------------
o GE PREMIER GROWTH EQUITY FUND
o GE U.S. EQUITY FUND
o GE MID-CAP GROWTH FUND
o GE VALUE 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 GOVERNMENT SECURITIES FUND
o GE SHORT-TERM GOVERNMENT FUND
o GE MONEY MARKET FUND
For information, contact your investment professional or
call the Trust at 1-800-242-0134
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESEN-
TATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN THE STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED INTO THIS PROSPECTUS BY REFERENCE IN CONNEC-
TION 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 AUTHO-
RIZED 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 DATED JULY 30, 1997
ACQUISITION OF THE ASSETS OF
INVESTORS TRUST ADJUSTABLE RATE FUND
INVESTORS TRUST GOVERNMENT FUND
INVESTORS TRUST TAX FREE FUND
INVESTORS TRUST VALUE FUND
INVESTORS TRUST GROWTH FUND
EACH A SEPARATE SERIES OF
INVESTORS TRUST
TWO UNION SQUARE
601 UNION STREET
SUITE 5600
SEATTLE, WASHINGTON 98101-2336
(800) 656-6626
BY AND IN EXCHANGE FOR SHARES OF
GE SHORT-TERM GOVERNMENT FUND
GE GOVERNMENT SECURITIES FUND
GE TAX-EXEMPT FUND
GE VALUE EQUITY FUND
GE MID-CAP GROWTH FUND
EACH A SEPARATE SERIES OF
GE FUNDS
3003 SUMMER STREET
STAMFORD, CONNECTICUT 06905
(800) 493-3042
This Statement of Additional Information, relating specifically to the
proposed transfer of all or substantially all of the assets of Investors Trust
Adjustable Rate Fund, Investors Trust Government Fund, Investors Trust Tax Free
Fund, Investors Trust Value Fund and Investors Trust Growth Fund (the 'Acquired
Funds'), each a separate investment portfolio of Investors Trust, to GE
Short-Term Government Fund, GE Government Securities Fund, GE Tax-Exempt Fund,
GE Value Equity Fund and GE Mid-Cap Growth Fund, respectively (the 'Acquiring
Funds'), each a separate investment portfolio of GE Funds, in exchange for
shares of the Acquiring Funds and the assumption by GE Funds on behalf of the
Acquiring Funds of scheduled liabilities of the corresponding Acquired Fund,
consists of this cover page and the following described documents, each of which
accompanies this Statement of Additional Information and is incorporated herein
by reference.
1. Statement of Additional Information of GE Funds dated July 25,
1997.
<PAGE>
2. Annual Report of GE Funds for the fiscal year ended September 30,
1996.
3. Semi-Annual Report of GE Funds (unaudited) for the six-month period
ended March 31, 1997.
4. Annual Report of Investors Trust for the fiscal year ended October
31, 1996.
5. Semi-Annual Report of Investors Trust (unaudited) for the six-month
period ended April 30, 1997.
6. Pro Forma Financial Statements (unaudited).
This Statement of Additional Information is not a prospectus. A Combined
Prospectus/Proxy Statement, dated July 30, 1997, relating to the
above-referenced matter may be obtained without charge by calling or writing
either the Acquiring Funds or the Acquired Funds at the telephone numbers or
addresses set forth above. This Statement of Additional Information should be
read in conjunction with the Combined Prospectus/Proxy Statement dated.
The date of this Statement of Additional Information is July 30, 1997.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
OF
GE FUNDS
DATED JULY 25, 1997
<PAGE>
Information contained herein is intended solely for use by shareholders of
Investors Trust solely in connection with their consideration of the proposed
acquisition of all or substantially all of the assets of Investors Trust by
certain series of GE Funds (the "Reorganization"). This information will be
effective as of the completion of the Reorganization, expected to occur on or
about September 26, 1997. At that time, three series of GE Funds (the "Trust")
are expected to commence operations: GE Mid-Cap Growth Fund, GE Value Equity
Fund and GE Government Securities Fund. In addition, at that time, subject to
approval by GE Tax-Exempt Fund's shareholders of record on July 11, 1997,
certain changes to the investment policies and restrictions of GE Tax-Exempt
Fund are expected to be implemented, and Brown Brothers Harriman & Co. is
expected to commence serving as sub-investment adviser of that Fund. Persons
seeking to invest in any of the currently available GE Funds should request a
copy of the Trust's Prospectus dated December 30, 1996 by calling the Trust at
(800) 242-0134 or writing to the Trust at 3003 Summer Street, Stamford,
Connecticut 06905.
STATEMENT OF ADDITIONAL INFORMATION
July 25, 1997
GE FUNDS
3003 Summer Street, Stamford, Connecticut 06905
For information, call (800) 242-0134
* GE Premier Growth Equity Fund * GE Strategic Investment Fund
* GE U.S. Equity Fund * GE Tax-Exempt Fund
* GE Mid-Cap Growth Fund * GE Fixed Income Fund
* GE Value Equity Fund * GE Government Securities Fund
* GE Global Equity Fund * GE Short-Term Government Fund
* GE International Equity Fund * GE Money Market Fund
* GE International Income Fund
Contents
--------
Page
----
Investment Objectives and Management Policies......................... 2
Investment Restrictions............................................... 12
Management of the Trust............................................... 18
Redemption of Shares.................................................. 24
Exchange Privilege.................................................... 24
Dividends, Distributions and Taxes.................................... 26
The Funds' Performance................................................ 29
Principal Stockholders................................................ 32
Additional Information................................................ 45
Counsel............................................................... 46
Independent Accountants............................................... 46
Financial Statements.................................................. 46
Appendix.............................................................. A-1
This Statement of Additional Information supplements the
information contained in the current Prospectus of GE Funds (the "Trust") dated
July 25, 1997, and should be read
<PAGE>
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.
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
The Prospectus dated July 25, 1997 discusses the investment
objectives and policies of the following twelve managed investment funds offered
by the Trust: GE Premier Growth Equity Fund (the "Premier Fund"), GE U.S. Equity
Fund (the "U.S. Equity Fund"), GE Mid-Cap Growth Fund (the "Mid-Cap Fund"), GE
Value Equity Fund (the "Value Fund"), GE Global Equity Fund (the "Global Fund"),
GE International Equity Fund (the "International Fund"), GE Strategic Investment
Fund (the "Strategic Fund"), GE Tax-Exempt Fund (the "Tax-Exempt Fund"), GE
Fixed Income Fund (the "Income Fund"), GE Government Securities Fund (the
"Government Securities Fund"), GE Short-Term Government Fund (the "Short-Term
Government Fund") and GE Money Market Fund (the "Money Market Fund"). GE
International Fixed Income Fund (the "International Income Fund" and
collectively with the Premier Fund, the U.S. Equity Fund, the Mid-Cap Fund, the
Value Fund, the International Fund, the Global Fund, the Strategic Fund, the
Tax-Exempt Fund, the Income Fund, the Government Securities Fund, the Short-Term
Government Fund and the Money Market Fund, the "Funds"), another series of the
Trust, is 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 Funds 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 (the "Board") must
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terminate the loan and regain the right to vote the securities. From time to
time, a Fund may pay a part of the interest earned from the investment of
collateral received for securities loaned to the borrower and/or a third party
that is unaffiliated with the Fund and is acting as a "finder."
Bank Obligations. Domestic commercial banks organized under
Federal law are supervised and examined by the U.S. Comptroller of the Currency
and are required to be members of the Federal Reserve System and to be insured
by the Federal Deposit Insurance Corporation ("FDIC"). Foreign branches of U.S.
banks and foreign banks are not regulated by U.S. banking authorities and
generally are not bound by mandatory reserve requirements, loan limitations,
accounting, auditing and financial reporting standards comparable to 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
Ratings Services ("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 the Investment Manager* as
initial criteria for the selection of portfolio securities on behalf of the
Funds, the Investment Manager 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
- ---------------
* As used in this Statement of Additional Information, the term
"Investment Manager" shall refer to GE Investment Management
Incorporated, the GE Funds' investment adviser and administrator
("GEIM"), or Brown Brothers Harriman & Co. ("Brown Brothers"), the
sub-investment adviser to the Tax-Exempt Fund, as applicable.
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Market Fund, the Investment Manager 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 Board determines that disposal of the security would not
be in the best interests of the Fund. To the extent that a NRSRO's ratings
change as a result of a change in the NRSRO or its rating system, the Funds will
attempt to use comparable ratings as standards for their investments in
accordance with their investment objectives and policies.
Strategies Available to Some But Not All Funds
Securities of Other Investment Companies. A Fund may invest in
securities of other investment companies to the extent permitted under the
Investment Company Act of 1940, as amended (the "1940 Act"). Currently, 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,
securities issued or guaranteed by the U.S. Government or one of its agencies or
instrumentalities ("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).
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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. The Investment
Manager expects that the Funds will write options, other than those on
Government Securities, only on national securities exchanges. Options on
Government Securities may be written by the Funds in the over-the-counter
market.
A Fund may realize a profit or loss upon entering into closing
transactions. When a Fund has written an option, for example, it will realize a
profit if the cost of the closing purchase transaction is less than the premium
received upon writing the original option; the Fund will incur a loss if the
cost of the closing purchase transaction exceeds the premium received upon
writing the original option. When a Fund has purchased an option and engages in
a closing sale transaction, whether the Fund realizes a profit or loss will
depend upon whether the amount received in the closing sale transaction is more
or less than the premium the Fund initially paid for the original option plus
the related transaction costs.
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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 the Investment Manager'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.
OTC Options. The Funds may purchase OTC or dealer options or
sell covered OTC options. Unlike exchange-listed options where an intermediary
or clearing corporation, such as the Clearing Corporation, assures that all
transactions in such options are properly executed, the responsibility for
performing all transactions with respect to OTC options rests solely with the
writer and the holder of those options. A listed call option writer, for
example, is obligated to deliver the underlying stock to the clearing
organization if the option is exercised, and the clearing organization is then
obligated to pay the writer the exercise price of the option. If a Fund were to
purchase a dealer option, however, it would rely on the
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dealer from whom it purchased the option to perform if the option were
exercised. If the dealer fails to honor the exercise of the option by the Fund,
the Fund would lose the premium it paid for the option and the expected benefit
of the transaction.
Listed options generally have a continuous liquid market while
dealer options have none. Consequently, a Fund will generally be able to realize
the value of a dealer option it has purchased only by exercising it or reselling
it to the dealer who issued it. Similarly, when a Fund writes a dealer option,
it generally will be able to close out the option prior to its expiration only
by entering into a closing purchase transaction with the dealer to which the
Fund originally wrote the option. Although the Funds will seek to enter into
dealer options only with dealers who will agree to and that are expected to be
capable of entering into closing transactions with the Funds, there can be no
assurance that a Fund will be able to liquidate a dealer option at a favorable
price at any time prior to expiration. The inability to enter into a closing
transaction may result in material losses to a Fund. Until a Fund, as a covered
OTC call option writer, is able to effect a closing purchase transaction, it
will not be able to liquidate securities (or other assets) used to cover the
written option until the option expires or is exercised. This requirement may
impair a Fund's ability to sell portfolio securities or, with respect to
currency options, currencies at a time when such sale might be advantageous. In
the event of insolvency of the other party, the Fund may be unable to liquidate
a dealer option.
Futures Contracts. 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
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the portion of the portfolio being hedged, if any, may partially or completely
offset losses on the futures contract.
If a Fund has hedged against the possibility of an increase in
interest rates adversely affecting the value of securities held in its portfolio
and rates decrease instead, the Fund will lose part or all of the benefit of the
increased value of securities that it has hedged because it will have offsetting
losses in its futures positions. In addition, in such situations, if the Fund
had insufficient cash, it may have to sell securities to meet daily variation
margins requirements at a time when it may be disadvantageous to do so. These
sales of securities may, but will not necessarily, be at increased prices that
reflect the decline in interest rates.
Options on Futures Contracts. An option on a futures contract,
unlike a direct investment in such a contract, gives the purchaser the right, in
return for the premium paid, to assume a position in the futures contract at a
specified exercise price at any time prior to the expiration date of the option.
Upon exercise of an option, the delivery of the futures position by the writer
of the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's futures margin account, which represents the
amount by which the market price of the futures contract exceeds, in the case of
a call, or is less than, in the case of a put, the 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
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guaranteed by the Clearing Corporation, thereby reducing the risk of
counterparty default. In addition, a liquid secondary market in options traded
on a national securities exchange may exist, potentially permitting a Fund to
liquidate open positions at a profit prior to exercise or expiration, or to
limit losses in the event of adverse market movements.
The purchase and sale of exchange-traded foreign currency
options are subject to the risks of the availability of a liquid secondary
market as described above, as well as the risks regarding adverse market
movements, margining of options written, the nature of the foreign currency
market, possible intervention by governmental authorities and the effects of
other political and 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 comprehensive care of nursing home services.
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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. Although municipal lease obligations do not normally
constitute general obligations of the municipality, a lease obligation is
ordinarily backed by the municipality's agreement to make the payments due under
the lease obligation. These obligations have evolved to make it possible for
state and local government authorities to acquire property and equipment without
meeting constitutional and statutory requirements for the issuance of debt.
Thus, municipal leases have special risks not normally associated with Municipal
Obligations. These obligations frequently contain "non-appropriation" clauses
that provide that the governmental issuer of the obligation has no obligation to
make future payments under the lease or contract unless money is appropriated
for those purposes by the legislative body on a yearly or other periodic basis.
In addition to the non-appropriation risk, municipal leases represent a type of
financing that has not yet developed the depth of marketability associated with
other Municipal Obligations. Some municipal lease obligations may be, and could
become, illiquid. Moreover, although municipal leases will be secured by the
leased equipment, the disposition of the equipment in the event of foreclosure
might prove to be difficult.
Municipal lease obligations may be deemed to be illiquid as
determined by or in accordance with methods adopted by the Board. In determining
the liquidity and appropriate valuation of a municipal lease obligation, the
following factors relating to the security are considered, among others: (1) the
frequency of trades and quotes; (2) the number of dealers willing to purchase or
sell the security; (3) the willingness of dealers to undertake to make a market;
(4) the nature of the marketplace trades; and (5) the likelihood that the
obligation will continue to be marketable based on the credit quality of the
municipality or relevant obligor.
Tax legislation in recent years has included several
provisions that may affect the supply of, and the demand for, Municipal
Obligations, as well as the tax-exempt nature of interest paid on those
obligations. Neither the Trust nor the Investment Manager 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 the Investment Manager 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
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of the underlying mortgage instruments. In addition, a pool's stated maturity
may be shortened by unscheduled payments on the underlying mortgages. Factors
affecting mortgage prepayments include the level of interest rates, general
economic and social conditions, the location of the mortgaged property and age
of the mortgage. Because prepayment rates of individual mortgage pools vary
widely, the average life of a particular pool cannot be predicted accurately.
Mortgage related securities may be classified as private,
governmental or government-related, depending on the issuer or guarantor.
Private mortgage related securities represent pass-through pools consisting
principally of conventional residential mortgage loans created by
non-governmental issuers, such as commercial banks, savings and loan
associations and private mortgage insurance companies. Governmental mortgage
related securities are backed by the full faith and credit of the United States.
GNMA, the principal U.S. guarantor of these securities, is a wholly-owned U.S.
government corporation within the Department of Housing and Urban Development.
Government-related mortgage related securities are not backed by the full faith
and credit of the United States. Issuers include FNMA and FHLMC. FNMA is a
government-sponsored corporation owned entirely by private stockholders, which
is subject to general regulation by the Secretary of Housing and Urban
Development. Pass-through securities issued by FNMA are guaranteed as to timely
payment of principal and interest by FNMA. FHLMC is a corporate instrumentality
of the United States, the stock of which is owned by the Federal Home Loan
Banks. Participation certificates representing interests in mortgages from
FHLMC's national portfolio are guaranteed as to the timely payment of interest
and ultimate collection of principal by FHLMC.
Private, governmental or government-related entities may
create mortgage loan pools offering pass-through investments in addition to
those described above. The mortgages underlying these securities may be
alternative mortgage instruments, that is, mortgage instruments whose principal
or interest payments may vary or whose terms to maturity may be shorter than
previously customary. GEIM assesses new types of mortgage related securities as
they are developed and offered to determine their appropriateness for investment
by the relevant Fund.
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INVESTMENT RESTRICTIONS
All Funds except the Tax-Exempt Fund:
Investment restrictions numbered 1 through 10 below have been
adopted by the Trust as fundamental policies of all the Funds, except the
Tax-Exempt Fund. Under the 1940 Act, a fundamental policy may not be changed
with respect to a Fund without the vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Fund. Investment restrictions 11
through 17 may be changed by a vote of the Board at any time.
1. No Fund may borrow money, except that the Value Fund, the
Government Securities Fund and the Money Market Fund may enter into reverse
repurchase agreements, and except that each Fund may borrow from banks for
temporary or emergency (not leveraging) purposes, including the meeting of
redemption requests and cash payments of dividends and distributions that might
otherwise require the untimely disposition of securities, in an amount not to
exceed 33-1/3% of the value of the Fund's total assets (including the amount
borrowed) valued at market less liabilities (not including the amount borrowed)
at the time the borrowing is made. Whenever borrowings, including reverse
repurchase agreements, of 5% or more of a Fund's total assets are outstanding,
the Fund will not make any additional investments.
2. No Fund may lend its assets or money to other persons,
except through (a) purchasing debt obligations, (b) lending portfolio securities
in an amount not to exceed 30% of the Fund's assets taken at market value, (c)
entering into repurchase agreements (d) trading in financial futures contracts,
index futures contracts, securities indexes and options on financial futures
contracts, options on index futures contracts, options on securities and options
on securities indexes and (e) entering into variable rate demand notes.
3. No Fund, other than the International Income Fund, may
purchase securities (other than Government Securities) of any issuer if, as a
result of the purchase, more than 5% of the Fund's total assets would be
invested in the securities of the issuer, except that up to 25% of the value of
the total assets of each Fund, other than the Money Market Fund, may be invested
without regard to this limitation. All securities of a foreign government and
its agencies will be treated as a single issuer for purposes of this
restriction.
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, unless the securities are
backed only by the assets and revenues of non-governmental users. For purposes
of this restriction, the term industry will
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<PAGE>
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 (the
"1933 Act").
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 and (b) the Money Market Fund may acquire "puts"
and "unconditional puts" as defined in Rule 2a-7 under the 1940 Act.
13
<PAGE>
12. No Fund may purchase securities of other investment
companies, other than a security acquired in connection with a merger,
consolidation, acquisition, reorganization or offer of exchange and except as
otherwise permitted under the 1940 Act.
13. No Fund may invest in companies for the purpose of
exercising control or management.
14. No Fund may purchase 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. 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.
15. 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.
16. 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 1933 Act
("Rule 144A Securities"), that have been determined to be liquid by the Board
based upon the trading markets for the securities.
17. No Fund may issue senior securities except as otherwise
permitted by the 1940 Act and as otherwise permitted herein.
The Tax-Exempt Fund:
Investment restrictions numbered 1 through 9 below have been
adopted by the Trust as fundamental policies of the Tax-Exempt Fund. Under the
1940 Act, a fundamental policy may not be changed with respect to a Fund without
the vote of a majority of the outstanding voting securities (as defined in the
1940 Act) of the Fund. Investment restrictions 10 through 15 may be changed by a
vote of the Board at any time. The Tax-Exempt Fund may not:
1. Purchase more than 10% of any class of securities of any
one issuer (except Government Securities and securities fully collateralized by
Government Securities).
2. Invest more than 5% of its total assets in the securities
of any one issuer (except for Government Securities and securities fully
collateralized by Government Securities, and options thereon).
14
<PAGE>
3. Issue senior securities, as defined in the 1940 Act, except
as permitted by Section 18(f)(2) of that Act or as permitted by an SEC exemptive
order.
4. Borrow amounts in excess of 10% of its total assets and
then only as a temporary measure for extraordinary or emergency purposes. This
restriction shall not prohibit entry into reverse repurchase agreements if as a
result the Tax-Exempt Fund's current obligations under such agreements would not
exceed one-third of the current market value of its total assets (less its
liabilities other than under reverse repurchase agreements).
5. 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 the Tax-Exempt 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 interest
in real estate securing an issuer's obligations, in the event of a default by
that issuer.
6. Invest in commodities, except that the Tax-Exempt 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.
7. Make loans, except that this restriction shall not prohibit
the purchase and holding of a portion of an issue of publicly distributed debt
securities, the lending of portfolio securities (not more than 5% of the
Tax-Exempt Fund's net assets), the entry into repurchase agreements (not more
than one-third of the current market value of the Tax-Exempt Fund's total assets
shall constitute secured "loans" by the Tax-Exempt Fund under repurchase
agreements), 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
investing in variable rate demand notes.
8. Invest more than 25% of the value of the Tax-Exempt Fund's
total assets in securities of issuers in any one industry, except 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.
9. Underwrite any issue of securities, except to the extent
that the sale of portfolio securities in accordance with the Tax-Exempt Fund's
investment objective, policies and limitations may be deemed to be an
underwriting, and except that the Tax-Exempt Fund may acquire securities under
circumstances in which, if the securities were sold, the Tax-Exempt Fund might
be deemed to be an underwriter for purposes of the 1933 Act.
15
<PAGE>
10. Invest in the securities of an issuer for the purpose of
exercising control or management, but the Tax-Exempt Fund may do so where it is
deemed advisable to protect or enhance the value of an existing investment.
11. Purchase securities of any other investment company,
except in the open market in a transaction involving no commission or profit to
a sponsor or dealer (other than the customary brokerage commission) and only to
the extent of 10% of the Tax-Exempt Fund's assets or as part of a merger,
consolidation, acquisition, reorganization or offer of exchange and except as
otherwise permitted under the 1940 Act.
12. Purchase restricted securities if more than 10% of the
total assets of the Tax-Exempt 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,
repurchase agreements having less than seven days to maturity, reverse
repurchase agreements, firm commitment agreements, futures contracts and options
thereon, and Rule 144A Securities that have been determined to be liquid by the
Board based upon the trading markets for the securities.
13. Purchase securities on margin, except any short-term
credits which may be necessary for the clearance of transactions and the initial
or maintenance margin in connection with options and futures contracts and
related options.
14. Make short sales of securities, unless the Tax-Exempt Fund
owns 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; provided that this restriction shall not prohibit the
use of options and futures contracts for hedging purposes.
15. Purchase any security while borrowings representing more
than 5% of the Tax-Exempt Fund's net assets (including loans, reverse repurchase
agreements or other borrowings) are outstanding.
General
With respect to investment restriction No. 12 (No. 11 in the
case of the Tax-Exempt Fund), 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 percentage limitations in the restrictions listed above
apply at the time of purchases of securities. For purposes of investment
restriction No. 5 (No. 8 in the case of the Tax-Exempt Fund), 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
16
<PAGE>
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
the Investment Manager, subject to review by the Board. 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, the Investment Manager seeks the best overall
terms available. In assessing the best overall terms available for any
transaction, the Investment Manager 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 the Investment Manager relating to each Fund authorizes the Investment
Manager, 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 the Investment Manager 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 Board 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 the Investment Manager 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
17
<PAGE>
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 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 the Fund. In 1994, Kidder received .04%, 1.04% and
.52% of the brokerage commissions paid by the Global Fund, the U.S. Equity Fund
and the Strategic Fund, respectively, and effected .04%, 1.52% and .22% of the
total dollar amount of transactions for the Global Fund, the U.S. 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.
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<PAGE>
Positions Held Age and Principal Occupation(s)
Name and Address with Trust During Past Five Years
---------------- ------------ -------------------------------
*Michael J. Cosgrove Chairman of Age 48. President, GE Mutual Funds;
3003 Summer Street the Board Executive Vice President - Mutual Funds
Stamford, CT 06905 and President of GEIM and GEIC, a wholly-owned
subsidiary of General Electric Company
("GE") that is registered as an
investment adviser under the Investment
Advisers Act of 1940, as amended,
since March 1993 (responsibilities
include general management of all
mutual funds managed by GEIM and GEIC)
and Director of GEIC and Executive Vice
President and Director of GEIM since
1988; from 1988 until 1993, Mr. Cosgrove
served as Executive Vice President -
Finance and Administration of GEIM and
GEIC.
*Alan M. Lewis Trustee and Age 51. Executive Vice President,
3003 Summer Street Executive Vice General Counsel and Secretary of GEIM
Stamford, CT 06905 President since 1988 and of GEIC since October
1987.
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<PAGE>
John R. Costantino Trustee Age 51. Managing Director, Walden
150 East 58th Street Partners, Ltd., consultants and
New York, NY 10055 investors, since August 1992; President,
CMG Acquisition Corp., Inc., a holding
company, since 1988; Vice Chairman,
Acoustiguide Holdings, Inc., a holding
company, since 1989; President CMG/IKH,
Inc., a holding company, since 1991;
Director, Crossland Federal Savings Bank,
a financial institution; Director,
Brooklyn Bankcorp, Inc., a financial
institution; Director, IK Holdings, Inc.,
a holding company since 1991; Director,
I. Kleinfeld & Son, Inc., a retailer,
since 1991; Director, High Performance
Appliances, Inc., a distributor of
kitchen appliances ("HPA"), since 1991;
Director, HPA Hong Kong, Ltd., a service
subsidiary of HPA, since 1991; Director,
Lancit Media Productions, Ltd., a
children's and family television film
and videotape production company, since
1995; Partner, Costantino Melamede-
Greenberg Investment Partners, a general
investment partnership, from September
1987 through August 1992.
William J. Lucas Trustee Age 50. Vice President and Treasurer
Fairfield University of Fairfield University since 1983.
North Benson Road
Fairfield, CT 06430
Robert P. Quinn Trustee Age 61. Retired since 1983 from
45 Shinnecock Road Salomon Brothers Inc.; Director, GP
Quogue, NY 11959 Financial Corp., a holding company,
since 1994; Director, The Greenpoint
Savings Bank, a financial institution,
since 1987.
Jeffrey A. Groh Treasurer Age 35. Vice President -- Operations of
3003 Summer Street GEIM and GEIC since January 1997 and
Stamford, CT 06905 Treasurer and Controller of GEIM and
GEIC since August 1994; prior to August
1994, was a Senior Manager in Investment
Company Services Group and certified
public accountant with Price Waterhouse
LLP.
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<PAGE>
Matthew J. Simpson Secretary Age 36. Vice President, Associate
3003 Summer Street General Counsel and Assistant Secretary
Stamford, CT 06905 of GEIM and GEIC since October 1992;
attorney with the law firm of Baker &
McKenzie, April 1991 to October 1992;
prior to April 1991 was an attorney with
the law firm of Spengler Carlson Gubar
Brodsky & Frischling.
No employee of GE or any of its affiliates receives any compensation from the
Trust for acting as a Trustee or officer of the Trust. Each Trustee of the Trust
who is not a director, officer or employee of GEIM, GE Investment Services Inc.
(the "Distributor"), GE, or any affiliate of those companies, receives an annual
fee of $10,000 for services as Trustee. In addition, each Trustee receives $500
for each meeting of the Board 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
Name of Trustee from the Trust Managed by GEIM or GEIC
---------------- ------------------ --------------------------
Michael J. Cosgrove None None+
Alan M. Lewis None None+
John R. Costantino $12,000 $17,000++
William J. Lucas $12,000 $17,000++
Robert P. Quinn $12,000 $17,000++
- --------------
+ As of September 30, 1996, Messrs. Cosgrove and Lewis serve as Trustees of two
investment companies advised by GEIM and of eight investment companies
advised by GEIC. They are considered to be interested persons of each
investment company advised by GEIM or GEIC, as defined under Section 2(a)(19)
of the 1940 Act, and accordingly, serve as Trustees thereof without
compensation.
++ Messrs. Costantino, Lucas and Quinn serve as Trustees of two investment
companies advised by GEIM and the compensation is for their services as
Trustees of both companies.
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<PAGE>
Investment Adviser and Administrator
GEIM, located at 3003 Summer Street, P.O. Box 7900, Stamford,
Connecticut 06904, a wholly-owned subsidiary of GE, bears all expenses in
connection with the performance of its services as each Fund's investment
adviser and administrator. For the fiscal year ended September 30, 1996, the
International Fund, the Global Fund, the U.S. Equity Fund, the Strategic Fund,
the Tax-Exempt Fund, the Income Fund, the Short-Term 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 Short-Term 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 Short-Term 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.
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 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 Short-Term 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 Short-Term Government Fund, an annual fee of .25% and .60% of the
value of the average daily net assets of the Short-Term 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, 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 Short-Term 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 Short-Term 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
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<PAGE>
U.S. Equity Fund, the Strategic Fund, the Tax-Exempt Fund, the Income Fund and
the Short-Term Government Fund incurred $574, $40,788, $121,987, $34,206,
$18,934, $124,644 and $502, respectively, for service and distribution fees.
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 Short-Term
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 Short-Term 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 Short-Term
Government Fund and the Money Market Fund, respectively.
Sub-Investment Adviser (the Tax-Exempt Fund)
Brown Brothers, located at 59 Wall Street, New York, New York
10005, will be retained by GEIM, subject to shareholder approval, to act as
portfolio manager of the Tax-Exempt Fund under a sub-investment advisory
contract with GEIM which is expected to commence upon completion of the
Reorganization. Pursuant to the sub-investment advisory agreement, Brown
Brothers will bear all expenses in connection with the performance of its
services as the Tax-Exempt Fund's sub-investment adviser.
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.
23
<PAGE>
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 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 Board. 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
24
<PAGE>
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, 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.
The valuation of the portfolio securities of the Money Market
Fund is based upon amortized cost, which does not take into account unrealized
capital gains or losses. Amortized cost valuation involves initially valuing an
instrument at its cost and thereafter assuming a constant amortization to
maturity of any discount or premium, regardless of the effect of fluctuating
interest rates on the market value of the instrument. Although this method
provides certainty in valuation, it may result in periods during which value, as
determined by amortized cost, is higher or lower than the price the Money Market
Fund would receive if it sold the instrument.
The use of the amortized cost method of valuing the portfolio
securities of the Money Market Fund is permitted by a rule adopted by the SEC.
Under this rule, the Money Market Fund must maintain a dollar-weighted average
portfolio maturity of 90 days or less, purchase only instruments having
remaining maturities of 13 months or less, and invest only in "eligible
securities" as defined in the rule, which are determined by GEIM to present
minimal credit risks. Pursuant to the rule, GEIM has established procedures
designed to stabilize, to the extent reasonably possible, the Fund's price per
share as computed for the purpose of sales and redemptions at $1.00. These
procedures include review of the Money Market Fund's portfolio holdings at such
intervals as GEIM may deem appropriate, to determine whether the Fund's net
asset value calculated by using available market quotations or market
equivalents deviates from $1.00 per share based on amortized cost.
The rule regarding amortized cost valuation provides that the
extent of any deviation between the Money Market Fund's net asset value based
upon available market quotations or market equivalents and the $1.00 per share
net asset value based on amortized cost must be examined by the Board. In the
event the Board 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 must, in accordance with the rule, cause the Fund
to take such corrective action as the Board 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.
25
<PAGE>
DIVIDENDS, DISTRIBUTIONS AND TAXES
Set forth below is a summary of certain Federal income tax
considerations generally affecting the Funds and their shareholders. The summary
is not intended as a substitute for individual tax planning, and shareholders
are urged to consult their tax advisors regarding the application of Federal,
state, local and foreign tax laws to their specific tax situations.
Tax Status of the Funds and their Shareholders
Each Fund is treated as a separate entity for Federal income
tax purposes. Each Fund's net investment income and capital gains distributions
are determined separately from any other series that the Trust may designate.
The Trust intends for each Fund to continue to qualify each
year as a "regulated investment company" under the Code. If a Fund (1) is a
regulated investment company and (2) distributes to its shareholders at least
90% of its net investment income (including for this purpose its net realized
short-term capital gains) and 90% of its tax-exempt interest income (reduced by
certain expenses), the Fund will not be liable for Federal income taxes to the
extent that its net investment income and its net realized long-term and
short-term capital gains, if any, are distributed to its shareholders. In
addition, in order to avoid a 4% excise tax, a Fund must declare, no later than
December 31 and distribute no later than the following January 31, at least 98%
of its taxable ordinary income earned during the calendar year and 98% of its
capital gain net income for the year period ending on October 31 of such
calendar year. One requirement for qualification as a regulated investment
company is that each Fund must diversify its holdings so that, at the end of
each quarter, (i) at least 50% of the market value of the Fund's assets is
represented by cash and cash items, securities of other regulated investment
companies, U.S. government securities and other securities, with such other
securities limited for purposes of this calculation in respect of any one issuer
to an amount not greater than 5% of the value of the Fund's assets and not
greater than 10% of the outstanding voting securities of such issuer, and (ii)
not more than 25% of the value of its total assets is invested in the securities
of any one issuer or of two or more issuers that are controlled by the Fund
(within the meaning of Section 851(b)(4)(B) of the Code) that are engaged in the
same or similar trades or businesses or related trades or businesses (other than
Government Securities or the securities of other regulated investment
companies).
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
26
<PAGE>
contracts on foreign currencies) held for less than three months, but only if
such currencies (or options, future or forward contracts) are not directly
related to the Fund's principal business of investing in stock or securities (or
options and futures with respect to stocks or securities) (the "30% Test").
The 30% Test will restrict the extent to which a Fund may,
among other things: (1) sell or purchase put options on securities held for less
than three months or purchase put options on substantially identical securities
(unless the option and the security are acquired on the same day); (2) write
options that expire in less than three months; and (3) close options that were
written or purchased within the preceding three months. For purposes of the 30%
Test, a Fund's increases or decreases in value of short-term investment
positions that constitute certain designated hedging transactions may generally
be netted. The Trust does not expect that the 30% Test will significantly affect
the investment policies of any Fund.
As of October 31, 1996, certain series of Investors Trust that
are expected to be acquired by GE Funds pursuant to the Reorganization had net
tax basis capital loss carryforwards which may be applied against taxable gains
until their expiration date. The following table illustrates the carryforwards
that apply to these Investors Trust Funds:
Expiration Dates:
<TABLE>
<CAPTION>
Investors Trust Fund Amount September 30,
- -------------------- ------ -----------------
<S> <C> <C>
Adjustable Rate Fund $72,067 2001
114,498 2002
14,856 2003
Government Fund $87,661,793 2001
107,525,597 2002
1,748,819 2003
Tax Free Fund $176,173 2002
Growth Fund $201,507 2001
243,412 2003
</TABLE>
As a result of the Reorganization, certain, and perhaps all,
of the Investors Trust Funds will have a taxable year ending on the date of the
Reorganization, and the taxable year of each GE Fund in which the Reorganization
occurs will be a separate taxable year for purposes of determining the taxable
years in which carryforwards of an Investors Trust Fund may be applied.
Accordingly, the Reorganization will have the effect of reducing the
carryforward periods and such reduced periods are reflected in the foregoing
table of expiration dates on the assumption that the carryforward periods will
be affected for all Investor Trust Funds.
27
<PAGE>
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.
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
28
<PAGE>
considering buying shares of a Fund on or just prior to the record date for a
taxable dividend or capital gain distribution should be aware that the amount of
the dividend or distribution payment will be a taxable dividend or distribution
payment.
Special rules contained in the Code apply when a shareholder
of a Fund disposes of shares of the Fund through a redemption or exchange within
90 days of purchase and subsequently acquires shares of a Fund on which a sales
charge normally is imposed without paying a sales charge in accordance with the
exchange privilege described in the Prospectus. In these cases, any gain on the
disposition of the shares of the Fund will be increased, or loss decreased, by
the amount of the sales charge paid when the shares were acquired, and that
amount will increase the adjusted basis of the shares of the Fund subsequently
acquired. In addition, if shares of a Fund are purchased within 30 days of
redeeming shares at a loss, the loss will not be deductible and instead will
increase the basis of the newly purchased shares.
If a shareholder of a Fund fails to furnish the Trust with a
correct taxpayer identification number, fails to report fully dividend or
interest income, or fails to certify that he or she has provided a correct
taxpayer identification number and that he or she is not subject to "backup
withholding," then the shareholder may be subject to a 31% "backup withholding"
tax with respect to (1) taxable dividends and distributions from the Fund and
(2) the proceeds of any redemptions of shares of the Fund. An individual's
taxpayer identification number is his or her social security number. The 31%
backup withholding tax is not an additional tax and may be credited against a
taxpayer's regular Federal income tax liability.
THE FUNDS' PERFORMANCE
As noted in the Prospectus, the Trust, from time to time, may
quote a Fund's performance, in terms of the Money Market Fund's or a Class'
yield and/or total return, in reports or other communications to shareholders of
the Fund or in advertising material. To the extent that any advertisement or
sales literature of a Participant Fund describes the expenses or performance of
any Class, it will also disclose the expenses or performance for the other
Classes. Additional information regarding the manner in which performance
figures are calculated is provided below.
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
29
compound effective annualized yield by adding one to the base period return
(calculated as described above), raising the sum to a power equal to 365/7 and
subtracting one.
The 30-day yield figure described in the Prospectus is
calculated for a Class according to a formula prescribed by the SEC. The formula
can be expressed as follows:
Yield = 2[(a-b + 1)6-1]
---
cd
Where:
a = dividends and interest earned during the period.
b = expenses accrued for the period (net of
reimbursement).
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends.
d = the maximum offering price per share on the last day
of the period.
For the purpose of determining the interest earned (variable
"a" in the formula) on debt obligations that were purchased by a Fund at a
discount or premium, the formula generally calls for amortization of the
discount or premium; the amortization schedule will be adjusted monthly to
reflect changes in the market values of the debt obligations.
The Tax-Exempt Fund's tax equivalent yield is computed for a
Class by dividing that portion of the Fund's yield that is tax-exempt by one
minus a stated income tax rate and adding the 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.
30
<PAGE>
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:
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.
31
<PAGE>
PRINCIPAL STOCKHOLDERS
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 June 30, 1997:
<TABLE>
<CAPTION>
Name and Address Amount of Percent
of Record Owner Ownership of Class
- ---------------- --------- --------
<S> <C> <C>
Tax-Exempt Fund, Class A
General Electric Company 4,769 10.25%
2 Corporate Drive shares
Shelton, CT 06484
George N. Rohrbacher, Therese J. Rohrbacher, 4,359 9.37%
joint tenants 4473 Lindenhurst shares
Lane Las Vegas, NV 89120-4206
Buford Parrish, Marjorie Parrish, 8,494 18.26%
Karen M. Schafer, JTWROS shares
77-407 Pele Nike
Kaulua Kona, HI 96740
Kate Frazier Doty, Trustee 8,814 18.95%
Paul & Kate Doty Family Trust shares
U/A/D 10/3/90
3317 Windsor Road
Austin, TX 78703-2263
Leroy Bednar, Lola Bednar, joint tenants 4,139 8.90%
5304 N. Lamar shares
Austin, TX 76751-1823
Arlyne R. Dryer, Trustee 5,284 11.36%
Gene F. & Arlyne R. Dryer Trust shares
U/A/D 2/10/87 12507 Pomerado Ct.
San Diego, CA 92128-2315
Robert H. Nagel, Mary E. Nagel, Jt ten 4,534 9.75%
1953 Locarno Drive shares
Knoxville, TN 37914
</TABLE>
32
<PAGE>
<TABLE>
<S> <C> <C>
Tax-Exempt Fund, Class B
Kenneth C. Cummings 7,969 7.49%
242 W. Liberty Street shares
Reno, NV 89501
Margaret E. Cooper 8,598 8.09%
2706 Biarritz Dr. shares
Palm Beach Garden, FL 33410
Estelle M. Simon 6,537 5.97%
417 N. Westphalia
Pewamo, MI 46873
Roswell C. Taite, Fernie L. Taite, 9,025 8.49%
joint tenants shares
9108 Hilldale
Houston, TX 77055-7438
Pamela G. Willson 5,450 5.13%
1435 Willow Creek Lane shares
Gardnerville, NV 89410-5821
Roger W. Leroy, 5,806 5.46%
Dorothea H. Leroy Jt. Ten. shares
2620 Bald Ridge Dr.
Cumming, GA 30131
Tax-Exempt Fund, Class D
General Electric Company 260,841 99.30%
2 Corporate Drive 6th Floor shares
P.O. Box 861
Shelton, CT 06484
Income Fund, Class A
State Street Bank & Trust Co. 107,470 7.81%
FBO Beamspeed and Co. shares
BG Automotive Motors Inc.
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank & Trust Co., as Trustee 346,918 25.20%
Beamsail & Co. - Doubletree shares
Master Trust Client Service
1 Enterprise Drive
North Quincy, MA 02171-2126
</TABLE>
33
<PAGE>
<TABLE>
<S> <C> <C>
Wells Fargo Bank, as Trustee 433,161 31.46%
FBO Hubbell Inc. 401(k) shares
Attn SSP#0167-112#6971
201 3rd Street 11th Floor
San Francisco, CA 94163-0001
State Street Bank & Trust Co., as Trustee 139,577 10.14%
Granitecove & Co.-London Fog shares
Master Trust Client Service
1 Enterprise Drive
North Quincy, MA 02171-2126
State Street Bank & Trust Co., as Trustee 81,344 5.91%
Granitepass & Co. shares
FBP McClaren/Hart Environ.
Master Trust Client Services W6C
1 Enterprise Drive
No. Quincy, MA 02171
Income Fund, Class B
State Street Bank & Trust Co. 9,082 7.58%
C/F the IRA of Patricia L. Baldwin shares
61370 N. Main St.
Jones, MI 49061
State Street Bank & Trust Co., 7,174 5.99%
Cust. for the IRA of Erwin L. Shannon shares
30666 Longnecker Road
Leonidas, MI 49066
Georgeann Pyke 6,575 5.49%
1758 Jefferson Ave. shares
Glenview, IL 60025
Income Fund, Class D
State Street Bank & Trust Co., Trustee 447,720 34.65%
Benchside & Co. - GE Cap. Asset Maint. shares
Master Trust Client Service
One Enterprise Drive
N. Quincy, MA 02171-2126
State Street Bank & Trust Co., as Trustee 158,179 12.24%
Granitefront & Co.-Service America shares
Master Trust Client Service
1 Enterprise Drive
North Quincy, MA 02171-2126
</TABLE>
34
<PAGE>
<TABLE>
<S> <C> <C>
State Street Bank & Trust Co., as Trustee 100,159 7.75%
Pondway & Co.-GE Fleet/FGIC shares
Master Trust Client Service
1 Enterprise Drive
North Quincy, MA 02171-2126
State Street Bank & Trust Co., as Trustee 140,663 10.89%
Grampas & Co. Trust share
FBO Ameridata Technology
Master Trust Client Service
1 Enterprise Drive
North Quincy, MA 02171-2126
State Street Bank & Trust Co., as Trustee 114,434 8.86%
Eastmate & Co. Trust shares
FBO GE Capital Fleet Services
Master Trust Client Service
1 Enterprise Drive
North Quincy, MA 02171-2126
State Street Bank & Trust Co., Trustee 67,140 5.20%
Granitebridge & Co. - Elana Moderato shares
Master Trust Client Services - W6C
One Enterprise Drive
North Quincy, MA 02171
Global Fund, Class A
West Carroll National Bank 6,439 12.87%
401(k) shares
William E. Pratt
Attn: 401(k) Administrator
Personal and Confidential
P.O. Box 708
Oak Grove, LA 71263
State Street Bank & Trust Co., as Trustee 8,277 16.54%
FBO Insulating Materials Inc. shares
Master Trust Client Service - W6C
1 Enterprise Drive
North Quincy, MA 02171
</TABLE>
35
<PAGE>
<TABLE>
<S> <C> <C>
Global Fund, Class B
BHC Securities, Inc. 1,789 5.21%
FAO 22402626 shares
Attn: Mutual Funds Dept.
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7042
State Street Bank & Trust Company 2,954 8.60%
C/F The IRA of Sharon L. Giever shares
825 Boswell Lane
Kalamazoo, MI 49005
James R. Boardwell 2,006 5.84%
Kathryn J. Boardwell shares
7460 Carefree Drive
Whitehall, MI 49461-9506
Greg Spaulding 2,136 6.22%
Kelly Spaulding shares
7164 Beechmont Avenue, Suite 101
Cincinnati, OH 45230-4128
Global Fund, Class D
State Street Bank & Trust Co., as Trustee 235,359 28.97%
Eastmate & Co. Trust shares
FBO GE Capital Fleet Services
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank & Trust Co., as Trustee 216,833 26.69%
Grampas & Co. Trust shares
FBO Ameridata Technology
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
Boatmen's First Natl. Bank of KC 285,112 35.09%
TTEE ERC Thrift Plan shares
P.O. Box 14737
St. Louis, MO 63178
</TABLE>
36
<PAGE>
<TABLE>
<S> <C> <C>
Strategic Fund, Class A
State Street Bank & Trust Co., as Trustee 405,228 24.25%
Beamsail & Co.-Doubletree Master Trust shares
Client Service
1 Enterprise Drive
North Quincy, MA 02171-2126
State Street Bank & Trust Company, as Trustee 399,980 23.94%
Granitepass & Co. shares
FBOMcClaren/Hart Environmental Eng.
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171
InvestCo Trust Co., Trustee 300,252 17.97%
Compass Group USA Inc.: 401(k) Plan shares
PO Box 173707
Denver, CO 80217
T. Rowe Price Tr. co. Fiduciary Account 208,408 12.47%
Compass Group 401(k) Plan shares
c/o T. Rowe Price Tr. Co. Asset Recon.
PO box 17215
Baltimore, MD 21297
Strategic Fund, Class D
State Street Bank & Trust Co., as Trustee 501,947 34.55%
Eastmate & Co. shares
FBO GE Capital Fleet Services
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank & Trust Co., Trustee 357,250 24.59%
Benchside & Co., - GE Cap. Asset Maint. shares
Master Trust Client Service
One Enterprise Drive
N. Quincy, MA 02171-2126
State Street Bank & Trust Co., Trustee 185,703 12.78%
Granitefront & Co.-Service America shares
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171
</TABLE>
37
<PAGE>
<TABLE>
<S> <C> <C>
State Street Bank & Trust Co. as Trustee 236,382 16.27%
Grampas & Co. Trust shares
FBO Ameridata Technology
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171
Equity Fund, Class A
State Street Bank & Trust Company, as Trustee 190,872 10.77%
Granitecove & Co.-London Fog shares
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171
State Street Bank & Trust Company, as Trustee 150,324 8.48%
FBO Southwestern Medical Clinic PC shares
Master Trust Client Service
6418 Deans Hill Road
Berrien Center, MI 49102
State Street Bank & Trust Co. 149,039 8.41%
F/B/O Beamspeed & Co. shares
BG Automotive Motors Inc.
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank and Trust Co., as Trustee 202,989 11.45%
Granitepass & Co. shares
FBO McClaren/Hart Envir. Eng.
Master Trust Client Service
1 Enterprise Drive.
No. Quincy, MA 02171
State Street Bank & Trust Co., as Trustee 583,198 32.91%
Beamsail & Co.-Doubletree shares
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank & Trust Co., as Trustee 148,380 8.37%
FBO Wavetek US Inc. shares
Master Trust Client Ser.-W6C
1 Enterprise Drive
No. Quincy, MA 02171
</TABLE>
38
<PAGE>
<TABLE>
<S> <C> <C>
Equity Fund, Class D
State Street Bank & Trust Co., as Trustee 793,748 10.58%
Eastmate & Co. shares
FBO GE Capital Fleet Services
Master Trust Client Services
1 Enterprise Drive
No. Quincy, MA 02171-2126
Bost & Co. 619,684 8.26%
Mutual Fund Operations shares
P.O. Box 3198
Pittsburgh, PA 15230
State Street Bank & Trust Co., Trustee 833,704 11.11%
Benchside & Co. - GE Cap. Asset Maint. shares
Master Trust Client Service
One Enterprise Drive
N. Quincy, MA 02171-2126
Clark & Co. 713,692 9.51%
FBO UT O C Tanner Pension shares
P. O. Box 39
Westerville, OH 43085-0039
Saul & Co. 847,264 11.29%
FBO Stamford Hospital shares
Ret. Income Plan
c/o First Union National Bank
Fid Ops/Mutual Funds
NC11 51
Charlotte, NC 28288
Strafe & Co. 690,924 9.21%
FAO Mead Corp. Foundation shares
235 W. Shrock Road
Mutual Fund 0390
Westerville, OH 43081
State Street Bank & Trust Co., as Trustee 532,434 7.10%
Grampas & Co. Trust shares
FBO Ameridata Technology
Master Trust Client Service W6C
1 Enterprise Drive
No. Quincy, MA 02171
</TABLE>
39
<PAGE>
<TABLE>
<S> <C> <C>
Saul & Co. 387,754 5.17%
FBO Stamford Hospital Ret. Inc. shares
c/o First Union National Bank
401 S. Tryon St.
NC1151
Charlotte, NC 28202
Boatmen's First Natl. Bank of KC 585,165 7.80%
TTEE ERC Thrift Plan shares
P.O. Box 14737
St. Louis, MO 63178
Money Market Fund
State Street Bank & Trust Co., as Trustee 8,953,488 8.75%
Beamsail & Co - Doubletree shares
Master Trust Client Ser - W6C
1 Enterprise Drive
N. Quincy, MA 02171-2126
</TABLE>
40
<PAGE>
<TABLE>
<S> <C> <C>
International Fund, Class A
State Street Bank and Trust Co., as Trustee 70,310 9.82%
Granitepass & Co. shares
FBO McClaren/Hart Environ. Eng.
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171
State Street Bank & Trust Co., as Trustee 337,315 47.10%
Beamsail & Co. - Doubletree shares
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171
State Street Bank & Trust Co., Trustee 36,163 5.05%
Granitecove & Co. - London Fog shares
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171
State Street Bank & Trust Co., Trustee 76,540 10.69%
FBO Southwestern Medical shares
Clinic PC
Master Trust Client Service
6418 Deans Hill Road
Berrien Center, MI 49102
InvestCo Trust Co., Tree. 54,246 7.57%
Compass Group USA Inc. 401(K) Plan shares
P.O. Box 173707
Denver, CO 80217
International Fund, Class B
PaineWebber for the benefit of PaineWebber 2,341 11.39%
CDN FBO Robert Frayn shares
P.O. Box 3321
Weehawken, NJ 07087
</TABLE>
41
<PAGE>
<TABLE>
<S> <C> <C>
State Street Bank & Trust Co. 2,497 12.15%
C/F The IRA of Brenda J. Hetrick shares
3570 Freeman Ave.
Hamilton, OH 45015
International Fund, Class C
Ronald J. Felmus & Veta Felmus, Trustees 24,137 8.68%
Felmus Family Residual Trust shares
U/A/D 5/9/79
22 Pine Circle South
Belleair, FL 34616
International Fund, Class D
John H. Pender, as Trustee 528,076 14.59%
Aid Association for Lutherans shares
4321 North Ballard Road
Appleton, WI 54919-0001
Aid Association for Lutherans 2,606,597 72.00%
4321 North Ballard Road shares
Appleton, WI 54919-0001
State Street Bank & Trust Co., Trustee 273,122 7.54%
Benchside & Co. - GE Cap. Asset Maint. shares
Master Trust Client Service
One Enterprise Drive
N. Quincy, MA 02171-2126
Short-Term Government Fund, Class A
General Electric Company 2,414 7.79%
2 Corporate Drive shares
Shelton, CT 06484
State Street Bank & Trust Co. 19,246 25.24%
FBO Beamspeed and Co. shares
BG Automotive Motors
Master Trust Client Service
One Enterprise Drive
No. Quincy, MA 02171
Mary McKinney, Dawn M. Clark, 4,529 5.94%
joint tenants shares
1517 Forest Trail
Austin, TX 78703-3229
</TABLE>
42
<PAGE>
<TABLE>
<S> <C> <C>
Arlyne R. Dryer, Trustee 4,205 5.52%
Gene F. & Arlyne R. Dryer Trust shares
U/A/D 2/10/87
12507 Pomerado Ct.
San Diego, CA 92128-2315
Peter Schoenfeld Asset Mgmt (401K) Plan 11,480 15.06%
William Popper shares
Personal and Confidential
787 Seventh Avenue, 3rd Floor
New York, NY 10019-8018
Attn: Peter M. Schoenfeld
State Street Bank & Trust Co. TTEE 22,611 29.66%
FBO Wavetek US Inc. shares
Master Trust Client Ser-WBC
1 Enterprise Drive
No. Quincy, MA 02171-2126
Short-Term Government Fund, Class B
Cathy Stockstill 1,036 13.80%
15149 Wessington St. shares
Sherman Oaks, CA 91411
Don L. Nelson 1,722 22.94%
150 S. Laurel Drive shares
Margate, FL 33063-5370
Maria Venturin 1,338 17.83%
1016 N. 16th Ave. #2 shares
Hollywood, FL 33020
Iris Powell 721 9.61%
634 NW 4th Ct shares
Hallandale, FL 33009
Charles DiPasquale, 2,523 33.62%
Carol Clark, Jt. Wros shares
P.O. Box 25611
Tamarac, FL 33320
Short-Term Government Fund, Class C
John R. Costantino and 47,783 11.24%
Barbara C. Costantino shares
165-84 Street
Brooklyn, NY 11229-6604
</TABLE>
43
<PAGE>
<TABLE>
<S> <C> <C>
State Street Bank & Trust Co. 24,763 5.83%
C/F the Rollover IRA of James L. Jackson shares
111 Crestwood Dr.
Parkersburg, WV 26101
Short-Term Government Fund, Class D
GE Capital Assurance Co. 400,107 61.48%
Attn Treasury shares
601 Union Street
Seattle, WA
State Street Bank & Trust Co., Trustee 229,850 35.32%
Eastwall & Co. Trust shares
FBO GE Consulting
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
Premier Fund, Class A
State Street Bank & Trust Co., Trustee 81,263 89.73%
FBO Insulating Materials Inc. shares
Master Trust Client Ser - W6C
1 Enterprise Dr.
No. Quincy, MA 02171-2126
GE Capital Assurance Co. 6,667 7.36%
Attn: Treasury shares
501 Union Street
Seattle, WA 95101-2327
Premier Fund, Class B
State Street Bank & Trust Co. 987 7.51%
Cust for the IRA of shares
Lynn D. Ferguson
5574 W. Colony Road
St. Johns, MI 48879
Chester and Helen Wolter Fam., Living Trust 1,831 13.92%
Chester Leon Wolter TTEE shares
Helen Marie Wolter TTEE DTD 2-7-92
P.O. Box 65
Adin, CA 96006-0065
GE Capital Assurance Co. 6,667 50.67%
Attn: Treasury shares
501 Union Street
Seattle, WA 95101-2327
</TABLE>
44
<PAGE>
<TABLE>
<S> <C> <C>
Premier Fund, Class C
William J. Conaty, Sue A. Conaty Jt Ten 14,829 5.10%
111 Golden Pond Ln shares
Fairfield, CT 05430-2136
Premier Fund, Class D
GE Capital Assurance Co. 313,333 99.89%
Attn: Treasury shares
801 Union Street
Seattle, WA 98101-2327
As of June 30, 1997, except in the case of Class C shares of
the Short-Term Government Fund, the current Trustees and officers of each Fund,
as a group, beneficially owned less than 1% of each Fund's outstanding shares.
One of the Trustees owned 11.24% of the Class C shares of the Short-Term
Government Fund, as of June 30, 1997.
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 Short-Term 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
was added as a series of the Trust pursuant to an amendment to the Declaration
on July 22, 1996. The Value Fund and the Government Securities Fund are newly
added series of the Trust which were established pursuant to an amendment to the
Declaration on June 2, 1997. 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
45
<PAGE>
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. Coopers &
Lybrand L.L.P., One Post Office Square, Boston, Massachusetts 02109, served as
independent accountants to Investors Trust, all or substantially all the assets
of which are expected to be acquired by the Trust on or about September 26,
1997.
FINANCIAL STATEMENTS
The Annual Report dated September 30, 1996 and the Semi-Annual
Report dated March 31, 1997, which either accompany this Statement of Additional
Information or have previously been provided to the person to whom this
Statement of Additional Information is being sent, are incorporated herein by
reference with respect to all information other than the information set forth
in the Letter to Shareholders included in the Annual Report. The Annual Report
dated October 31, 1996 and the Semi-Annual Report dated April 30, 1997 for
Investors Trust Growth Fund, Investors Trust Value Fund, Investors Trust Tax
Free Fund and Investors Trust Government Fund, which are the predecessor funds
to the Mid-Cap Fund, the Value Fund, the Tax-Exempt Fund and the Government
Securities Fund, respectively (collectively with the Annual and Semi-Annual
Report for GE Funds, the "Financial Reports"), are incorporated herein by
reference. The International Income Fund has not yet commenced operations and
has no assets as of the date of this Statement of Additional Information. The
Trust will furnish, without charge, a copy of the Financial Reports, upon
request to the Trust at P.O. Box 120065, Stamford, CT 06912-0065, (800)
242-0134.
46
<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.
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
<PAGE>
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.
Thomson 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 degree of speculation than B, and CCC the highest degree of
speculation. While such bonds will likely have some quality
A-2
<PAGE>
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.
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
A-3
<PAGE>
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.
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.
A-4
<PAGE>
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 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.
A-5
<PAGE>
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.
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
A-6
<PAGE>
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>
ANNUAL REPORT
OF
GE FUNDS
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1996
<PAGE>
LOGO
GE Funds
ANNUAL REPORT
September 30, 1996
- --------------------------------------------------------------------------------
UNDERSTANDING YOUR REPORT
- --------------------------------------------------------------------------------
President's Letter 1
Review of Performance and Schedules of Investments
Portfolio managers discuss your Funds and what we invested in and why
GE International Funds 3 - 10
GE U.S. Equity Fund 11 - 16
GE Strategic Investment Fund 17 - 23
GE Tax-Exempt Fund 24 - 27
GE Fixed Income Funds 28 - 38
Notes to Performance and
Schedules of Investments 39
Financial Statements 40 - 51
Financial Highlights and Statements of Assets and
Liabilities, Operations, and Changes in Net Assets
Notes 52 - 57
Notes to the Financial Statements
Report of Independent Accountants 58
The accountants' opinion
GE Funds Investment Team 60
Shareholder Inquiries Inside Back Cover
How you can obtain more information
On the Cover: GE Investments' portfolio management teams at work.
Top Rated GE Funds
By Morningstar
Through September 30, 1996
* * * *
3 year
GE U.S. Equity - C rated among 1708 Equity funds
GE Strategic Investment - C
rated among 3059 Hybrid funds
* * * *
1 year GE U.S. Equity - C rated among 3006
Equity funds GE Strategic Investment - C rated among 5251 Hybrid funds
* * *
3 year GE Fixed Income - C rated among 948 Fixed Income funds
GE Global Equity - C rated among 1708 Equity funds
* * *
1 year
GE Fixed Income - C rated among 1506 Fixed Income funds
GE Global Equity - C rated among 3006 Equity funds
Morningstar is an independent fund ranking company that seeks to provide a
non-bias rating system used in making investment decisions. A fund is rated in
its investment class on a scale of one to five stars through the evaluation of
the historical balance of risk and return.
Morningstar proprietary ratings reflect historical risk-adjusted performance
through September 30, 1996. The ratings are subject to change every month.
Morningstar ratings are calculated from a fund's three-, five- and ten-year
returns (with fee and sales charge adjustments) in excess of 10-day Treasury
T-bill returns. The one-year rating is calculated using the same methodology,
but is not a component of a fund's overall rating. Ten percent of the funds in a
rating category receive five stars, the next 22.5% receive four stars and the
next 35% receive three stars.
The GE Funds ratings above are based on Class C performance, the only class of
shares with at least three years of performance history. Class C shares are
offered without any front-end or back-end sales charge. The other Fund classes
share a common portfolio of securities with Class C. Star ratings for the other
classes may vary. No class of GE Funds has either a five or ten year performance
history. Investment return and principal value of an investment wll fluctuate
and you may have a gain or loss when you sell your shares. The advisor has
voluntarily agreed to waive and/or bear certain fees and expenses. Without these
provisions, which may be terminated in the future, the results may have been
lower. Returns assume changes in share price and reinvestment of dividend and
capital gain. Past performance is no guarantee of future results.
<PAGE>
A Letter from the President
Dear Shareholder:
We are pleased to provide you with the 1996 annual report. This past year
brought excitement in the financial markets as well as in the GE Funds. We saw
continued growth in the Funds' assets and an increased focus was placed on
customer service.
I want to take this opportunity to thank you for your response to our customer
satisfaction survey. The survey enabled us to identify your expectations and
helped point us to areas that require enhancements.
We learned that approximately 94% of respondents were satisfied with GE
Investments and areas presenting an opportunity for improvement included a more
user friendly automated response system and increased investment options.
As a result, we are in the process of revamping the automated response system
(please refer to the inside back cover for further details). We continue to
strengthen our customer service operations and coming in the next year, we plan
to expand our fund offerings. We will keep you informed about our new funds.
Performance Highlights
As the performance profiles which begin on page 4 demonstrate, the GE Funds'
Family generated attractive returns for our shareholders. Four of our Funds with
equity exposure, namely GE International Equity Fund, GE Global Equity Fund, GE
U.S. Equity Fund and GE Strategic Investment Fund, all had favorable years with
double digit returns. Once again, the majority of our Fund classes, excluding
loads, outperformed their peers for the year, based on averages calculated by
Lipper Analytical Services, an independent mutual fund rating service. The
Lipper Analytical Services average total returns for each category and complete
details on each Fund's performance, including reductions for the effect of
loads, can be found on the various Fund profiles contained in this annual
report.
We are also proud to inform you that many of our GE Funds are now rated by
Morningstar, an independent fund ranking company which analyzes risk-adjusted
performance in order to provide a non-basis rating system. You may have noticed
the inside front cover of this report which shows our top rated funds with a
three year track record. The other classes of shares will become eligible for
Morningstar's rating system in January as they reach the three year criteria.
Market Overview
The U.S. equity market continued to forge ahead during 1996, supported by
unprecedented cash flows into stock mutual funds. September's strong finish in
the equity market masked the short-term volatility which occurred during the
year. A surge in economic activity spilled over from the beginning of 1996 into
the summer months. This sparked inflation concerns that sent the S&P down over
4% in July and triggered trading-curbs for a record eight consecutive days. The
enormous inflows into equity mutual funds slowed to a halt during this sell-off,
only to rebound impressively in August and September. This brought year-to-date
inflows to a record $179 billion through September. The stock market ended the
fiscal year buoyed by the recovering supply-demand balance, high consumer
confidence, and good corporate earnings. The S&P 500 index returned 20.3% for
the twelve months ended September 30, 1996.
1
<PAGE>
A strong economy continues to concern the bond market, with returns adversely
impacted by higher employment and fears of rising wages. The Lehman Brothers
Bond Index returned 4.9% for the twelve months ending September 30, 1996.
Municipal bonds performed slightly better than taxable bonds on a total return
basis, with the Lehman Brothers Municipal Bond Index rising 6.0% for the twelve
months ended September 30, 1996.
International equity market performance, as measured by the Morgan Stanley EAFE
Index, lagged the U.S. market with a twelve month return of 8.6%. Positive
economic news from Hong Kong and mainland China has been offset by Japan's
continuing economic difficulties, with Japanese shares falling 5.6% in the third
quarter of 1996. European shares were bolstered by positive German economic
data, though this, too, has been offset by the difficult economic climate in
France. Nevertheless, we continue to hold a favorable view of overseas markets,
particularly those in Europe where rates have room to come down and profits are
expected to accelerate.
Market Outlook
Though the economy continues to show resiliency, we do not expect growth to
continue at the level experienced in the first half of 1996. The domestic equity
market is at or near record levels in both absolute terms and as measured by
dividend yield and other traditional valuation tools, suggesting greater
vulnerability to a near term correction. The bond market will continue to
fluctuate with changing perceptions of inflation, economic activity, and Federal
Reserve policy. Overseas equity markets continue to offer opportunities for
attractive growth potential and good value. We expect international markets to
perform well, as long as the U.S. market remains stable. We appreciate your
investment in the GE Funds and we will continue to dedicate ourselves to helping
you meet your financial needs.
Michael J. Cosgrove
Mike Cosgrove is responsible for the marketing, product development and sales of
the GE Funds.
In Mike's previous position as Chief Financial Officer of GE Investments and
Assistant Treasurer-GE Company, he had financial responsibility for all assets
under GE Investments' management. Within his Treasury scope, he had
responsibility for GE Shareholder Services, Commercial Paper and the Company
Cash Management System. Mike joined GE in 1970. After completing the Financial
Management Program he held a number of managerial positions in finance and sales
in the International Operation, including serving as its Vice President and
Treasurer and later as the Vice President - Countertrade and Barter for GE
Trading Company.
Mike is a Trustee of the GE Pension Trust and GE's employee savings program and
serves on GE Investments' Asset Allocation Committee.
He graduated from Fordham University in 1970 with a B.S. degree in Economics and
received his M.B.A. degree from St. John's University in 1973.
2
<PAGE>
GE International Funds
Q&A
Ralph Layman manages the international equity operation with total assets of
almost $8 billion. His responsibilities include managing the GE Global Equity
and International Equity Funds. Prior to joining GE Investments in 1991, Ralph
was Executive Vice President and Director of International Equity Operations at
Northern Capital Management. Previously, he was a Vice President and Portfolio
Manager at Templeton Investment Counsel, Inc. He was instrumental in forming
Templeton's Emerging Markets Fund, the first listed emerging markets equity fund
in the U.S. Ralph is a Trustee of the GE Pension Trust, GE's employee savings
program, and serves on the GE Investments' Asset Allocation Committee. He is a
Chartered Financial Analyst (CFA), a charter member of the International Society
of Security Analysts and a member of the New York Society of Security Analysts.
Ralph is a graduate of the University of Wisconsin with a B.S. in Economics and
a M.S. in Finance.
Q. How did the GE International Equity and GE Global Equity Funds' industry
benchmarks and Lipper peers perform for the fiscal year ended September 30,
1996?
A. The GE International Equity Fund's benchmark, the MSCI EAFE Index, returned
8.6% for the 12 months ended September 30, 1996. Our Lipper peer group of
582 International Stock Funds returned an average of 9.0% for the same
period. The GE Global Equity Fund's benchmark, the MSCI World Index,
returned 13.7% for the year ended September 30, 1996 and our Lipper peer
group of 174 Global Stock Funds returned 13.0% for the same period. Refer
to the following page, for GE International Equity Fund, and page 8 for GE
Global Equity Fund, to see how your class of shares performed compared to
the above benchmarks.
Q. What were the primary performance drivers?
A. Our company-specific philosophy has resulted in the Funds having an
overweight position, as compared to the index, in Europe and an underweight
position in Japan. France (+18% return), the Netherlands (+21% return), and
Hong Kong (+23% return) all contributed to the Fund's strong performance
for the year ending September 1996. The Funds benefited from an
underweighting in Japan, which improved only 0.4% vs. Europe's performance
of +14.8%. We continue to believe company valuations in Japan are stretched
compared to their long-term growth rates. For the year ending September
1996, the U.S. market increased 20.3% as measured by the S&P 500. The
Global Equity Fund's underweighting of the U.S. market has hurt
performance. Our underweighting of the U.S. market is a direct result of
our undervalued growth philosophy. We continue to find better relative
values in companies outside of the U.S. The strong U.S. dollar over the
past year has had a positive impact on our global companies in the
portfolio.
Q. Which stocks have you liked?
A. The weightings of the Funds are driven by our stock selection. In the past
quarter, we have found several investments in the U.K. that we believe are
attractive. Granada is a hotel group that has successfully diversified into
the media industry and computer rental/services. Siebe is a top engineering
firm specializing in process control systems. Management seems committed to
growing the business and to creating value for shareholders. Outside of
Europe, we have trimmed our exposure to Mexico, and have taken a small
position in Peru. Telefonica del Peru is the local fixed-line phone
monopoly, and the company should benefit from the nation's high growth
rate, and stable regulatory environment.
Q. What is the outlook for the Funds and how have you positioned them going
forward?
A. We remain optimistic regarding our European overweight. In recent months,
we have noticed that the `restructuring of Europe', a theme we have
discussed here before, has received greater attention from both the media
and our peers. We are well-positioned to benefit from this trend, and
believe that our emphasis on stock-picking will serve us well in this
environment.
Outside Europe, we continue to underweight Japan. On a company-by-company
basis, we are not convinced that Japanese firms are taking the steps needed
to boost their profitability. On the macro side, we are looking for signs
that the economy can expand without the aid of government spending. This
will become particularly important if Parliamentary elections delay the
passage of the next fiscal stimulus package.
We continue to search for attractive stocks in the U.S., for the GE Global
Equity Fund, but we remain underweighted in the market due to the expensive
valuations.
3
<PAGE>
GE International Equity Fund
- --------------------------------------------------------------------------------
Top Ten Largest Holdings
at September 30, 1996
- --------------------------------------------------------------------------------
Total S.A. 2.68%
Veba AG 2.60%
Sandoz AG (Regd.) 2.35%
DDI Corp. 2.31%
Brambles Industries Ltd. 2.30%
Carrefour S.A. 2.23%
Siebe 2.14%
Siemens AG 2.06%
ABB AG 2.01%
Canon Inc. 1.88%
- --------------------------------------------------------------------------------
Investment Profile
A mutual fund designed for investors who seek long-term growth of capital by
investing primarily in foreign equity securities.
* Lipper Performance Comparison
International Stock Peer Group
Based on 10/1/95 -- 9/30/96 total returns
Number of Funds in peer group: 582
Peer group average total return: 9.0%
Lipper categories in peer group: International, European Region, Pacific Region,
Pacific Ex-Japan, Japanese, Latin America, Canadian, Emerging Markets,
International Small Company
*See notes to performance for explanation of peer categories
See page 39 for Notes to Performance. Past performance is no guarantee of future
results.
Comparison of Change in Value of a $10,000 Investment
- --------------------------------------------------------------------------------
Class A Shares
QUARTERLY w/o load with load EAFE
- --------- -------- --------- ----
3/2/94 10000 10000 10000
3/31/94 9753.33 9290.05 9569.11
6/30/94 9753.32 9290.04 10057.82
9/30/94 10119.99 9639.29 10067.63
12/30/94 9622.69 9165.62 9965.09
3/31/95 9682.87 9222.94 10150.54
6/30/95 10298.07 9808.92 10224.17
9/30/95 10612.37 10108.28 10650.7
12/30/95 11003.64 10480.96 11082.14
3/30/96 11338.5 10799.92 11402.31
6/30/96 11700.15 11144.39 11582.47
9/30/96 11820.71 11259.23 11568.12
Average Annual
Total Return
One Since
Year Inception
---- ---------
GE Int'l Equity 11.39% 6.70%
GE Int'l Equity w/load 6.10% 4.70%
MSCI EAFE 8.62% 5.81%
- --------------------------------------------------------------------------------
Class B Shares
QUARTERLY w/o load with load EAFE
- --------- -------- --------- ----
3/2/94 10000 10000 10000
3/31/94 9753.33 9753.33 9569.11
6/30/94 9740 9740 10057.82
9/30/94 10086.65 10086.65 10067.63
12/30/94 9582.65 9582.65 9965.09
3/31/95 9629.36 9629.36 10150.54
6/30/95 10223.29 10223.29 10224.17
9/30/95 10523.58 10523.58 10650.7
12/30/95 10897.29 10897.29 11082.14
3/30/96 11210.92 11210.92 11402.31
6/30/96 11557.93 11557.93 11582.47
9/30/96 11658.03 11458.03 11568.12
Average Annual
Total Return
One Since
Year Inception
---- ---------
GE Int'l Equity 10.78% 6.13%
GE Int'l Equity w/load 6.78% 5.40%
MSCI EAFE 8.62% 5.81%
- --------------------------------------------------------------------------------
Class C Shares
QUARTERLY w/o load EAFE
- --------- -------- ----
3/2/94 10000 10000
3/31/94 9760 9569.11
6/30/94 9760 10057.82
9/30/94 10126.66 10067.63
12/30/94 9636.58 9965.09
3/31/95 9703.64 10150.54
6/30/95 10320.59 10224.17
9/30/95 10649.18 10650.7
12/30/95 11036.55 11082.14
3/30/96 11379.76 11402.31
6/30/96 11756.63 11582.47
9/30/96 11877.76 11568.12
Average Annual
Total Return
One Since
Year Inception
---- ---------
GE Int'l Equity 11.54% 6.90%
MSCI EAFE 8.62% 5.81%
- --------------------------------------------------------------------------------
Class D Shares
QUARTERLY w/o load EAFE
- --------- -------- ----
3/2/94 10000 10000
3/31/94 9760 9569.11
6/30/94 9773.34 10057.82
9/30/94 10146.67 10067.63
12/30/94 9666.15 9965.09
3/31/95 9733.29 10150.54
6/30/95 10357.55 10224.17
9/30/95 10699.89 10650.7
12/30/95 11103.89 11082.14
3/30/96 11461.43 11402.31
6/30/96 11845.95 11582.47
9/30/96 11980.87 11568.12
Average Annual
Total Return
One Since
Year Inception
---- ---------
GE Int'l Equity 11.97% 7.26%
MSCI EAFE 8.62% 5.81%
4
<PAGE>
Schedule of Investments -- September 30, 1996
GE INTERNATIONAL EQUITY FUND
Europe 61.4%
Other Regions 3.7%
Japan 17.1%
Pacific Rim 14.0%
Cash & Other 3.8%
- --------------------------------------------------------------------------------
Number
of Shares Value
- --------------------------------------------------------------------------------
Common Stock -- 96.2%
Australia -- 3.7%
Brambles Industries Ltd. 106,377 $1,726,353
Burns Philip & Co. 585,153 833,815
F.H. Faulding & Co. Ltd. 34,333 236,732
2,796,900
Austria -- 3.5%
Bohler Uddeholm 2,410 192,513
Creditanstalt Bankverein 10,603 470,871
Flughafen Wien AG 5,018 264,425
OMV AG 3,553 357,218
VA Technologie AG 10,470 1,364,434
2,649,461
Denmark -- 1.7%
Den Danske Bank 13,459 980,933
ISS (Series B) 2,040 52,230
Tele Danmark AS (Series B) 5,370 254,811
1,287,974
Finland -- 0.7%
Metra AB 2,877 164,897
Valmet Corp. 22,076 363,651
528,548
France -- 10.0%
Alcatel Alsthom 6,743 568,498
Carrefour S.A 2,992 1,679,181
Coflexip ADR 19,198 417,556 (a)
Eaux (Cie Generale) 6,121 664,772
Lyonnaise Des Eaux S.A 154 13,774 (a)
Lyonnaise Des Eaux S.A 7,331 655,681
Technip 580 52,987
Thomson CSF 258 7,642
Total S.A. (Class B) 25,600 2,014,597
Usinor Sacilor 32,355 499,215
Valeo 17,070 941,485
7,515,388
Germany -- 9.7%
Deutsche Bank AG 3,726 175,453
Dresdner Bank AG 4,693 123,649
Gehe AG 15,746 1,051,865
Sap AG 7,205 1,210,349
SGL Carbon 10,430 1,215,888
Siemens AG 29,455 1,552,131
Veba AG 37,325 1,953,152
7,282,487
Hong Kong -- 3.7%
Consolidated Electric Power 119,100 251,815
Giordano International 633,000 556,627
Hopewell Holdings 826,000 467,315
HSBC Holdings 53,800 998,358
Television Broadcasts Ltd. ADR 145,000 539,086
2,813,201
Indonesia -- 1.3%
Astra International 311,500 610,127
Mulia Industrindo 140,000 140,120
PT Tambang Timah GDR 12,783 215,394 (b)
PT Tambang Timah GDR 330 5,560
971,201
Italy -- 2.7%
ARN Mondadori Edit 3,196 23,185
Edison SPA 60,295 375,644
ENI Spa 52,818 269,941
Gucci Group N.V. ADR 384 27,840
IMI 198 1,682
Istituto Mobiliare Italiano ADR 6,469 164,959 (a)
Sasib SPA 88,474 156,242
Telecom Italia Mobile 466,328 1,034,754
2,054,247
Japan -- 17.1%
Canon Inc. 72,000 1,412,903
Credit Saison Co. 46,600 1,114,892
DDI Corp. 215 1,735,798
Denso Corp. 39,000 870,161
Ito Yokado Co. 17,000 964,247
Izumi Co. 4,000 70,968
Murata Manufacturing Co. 32,000 1,141,219
Nintendo Co. 5,000 320,341
Nippon Express Co. 44,000 402,151
Omron Corp. 30,000 561,828
Rohm Co. 16,000 1,007,885
Secom Co. 22,000 1,389,785
Sega Enterprises 8,000 347,670
Suzuki Motor Corp. 107,000 1,303,943
Tokyo Steel Manufacturing 13,000 229,480
12,873,271
- ----------
See Notes to Schedule of Investments and Financial Statements
5
<PAGE>
GE International Equity Fund
- --------------------------------------------------------------------------------
Number
of Shares Value
- --------------------------------------------------------------------------------
Malaysia -- 0.7%
AMMB Holdings Berhad 23,000 $ 167,012
Telekom Malaysia 44,000 387,967
554,979
Mexico -- 1.4%
Grupo Carso S.A. de C.V. (Series A) 54,369 249,815
Grupo Carso S.A. de C.V. ADR 39,861 371,704
Grupo Financiero Bancomer S.A
ADR (Series B) 673 6,992 (a)
Grupo Financiero Bancomer S.A. ADR
(Series C) 26,063 250,856 (a,b)
Grupo Televisa S.A. De C.V. ADR 4,802 138,658 (a)
Invercorporacion S.A. de C.V 54,369 7,271 (a)
1,025,296
Netherlands -- 5.7%
IHC Caland N.V 20,163 1,060,715
ING Groep N.V 21,209 661,272
Nutricia Verenigde Bedrijven 3,528 465,539
Polygram N.V 15,766 881,872
Toolex Alpha N.V 719 16,178 (a)
Unilever N.V 1,540 242,864
Wolters Kluwer 7,355 924,582
4,253,022
New Zealand -- 0.4%
Carter Holt Harvey Ltd. 138,504 304,990
Panama -- 0.2%
Pan American Beverages Inc.
(Class A) 2,771 113,957
Peru -- 0.9%
Telefonica del Peru S.A. ADR
(Class B) 29,463 673,966
Philippines -- 1.6%
Metro Bank & Trust Co. 19,075 454,427
San Miguel Corp. 223,180 731,598
1,186,025
Portugal -- 1.2%
Banco Comercial Portugues ADR 31,825 385,878
BCO Comercial Portugues 42,678 515,435
901,313
Singapore -- 0.9%
Singapore Airlines Ltd. 64,000 645,363
South Africa -- 1.2%
Iscor Ltd. 1,040,905 686,059
Malbak 43,761 183,282
869,341
South Korea -- 1.1%
Korea Electric Power 26,033 860,413
Spain -- 1.7%
Argentaria S.A 3,721 154,076
Banco Popular (Regd.) 1,035 190,115
Empresa Nacional de Electric ADR 2,253 42,526
Repsol S.A 27,093 889,885
1,276,602
Sweden -- 4.9%
Astra AB (Series B) 15,960 656,299
Autoliv AB 31,695 1,367,916
Electrolux AB (Series B) 14,589 820,077
Kinnevik Investment (Series B) 12,783 333,719
Linjebuss (Series A) 12,382 137,335
LM Ericsson Telephone (Series B) 7,826 197,224
Netcom Systems AB (Series B) 12,783 143,712 (a)
3,656,282
Switzerland -- 9.3%
ABB AG 1,235 1,509,313
Danzas Holdings (Regd.) 327 341,276
Lindt & Spruengli AG 10 187,221
Nestle S.A. (Regd.) 1,075 1,197,299
Roche Holdings AG 133 978,534
Sandoz AG (Regd.) 1,471 1,764,919
Schw Ruckversicher (Regd.) 980 1,032,154
Valora Holding AG (Regd.) 94 16,326
7,027,042
Thailand -- 0.6%
Banpu Public Co. Ltd. 5,900 128,992
Siam Cement Co. Ltd. 4,200 171,098
Thai Farmers Bank 16,830 177,360
477,450
United Kingdom -- 10.3%
Airtours PLC 89,675 845,659
BPB Industries 56,154 328,715
Cordiant 311,314 548,174 (a)
EMI Group 14,322 299,262
Granada Group 69,929 937,458
Medeva 348,278 1,392,785
Railtrack Group 154,114 727,271
Reed International 44,401 821,443
Siebe 101,944 1,607,585
Thorn 38,097 216,752
Waste Management International
PLC ADR 1,155 5,206
7,730,310
Total Common Stock
(Cost $66,572,016) 72,329,029
- ----------
See Notes to Schedule of Investments and Financial Statements
6
<PAGE>
Schedule of Investments -- September 30, 1996
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
Convertible Bonds -- 0.0%
Sasib
9.25% 12/31/97
(Cost $43,124) ITL 65,000,000 $ 23,150
Total Investments in Securities
(Cost $66,615,140) 72,352,179
Short Term Investments -- 2.1%
Repurchase Agreement -- 2.1%
State Street Bank and Trust Co.
5.40% 10/01/96
(Cost $1,580,000) $ 1,580,000 1,580,000
(dated 09/30/96, proceeds $1,580,237,
collateralized by $1,613,528 United States
Treasury Note, 8.375%, 08/15/08)
Other Assets and Liabilities, net 1.7% 1,257,372
NET ASSETS -- 100% $75,189,551
- ----------
See Notes to Schedule of Investments and Financial Statements
7
<PAGE>
GE Global Equity Fund
- --------------------------------------------------------------------------------
Top Ten Largest Holdings
at September 30, 1996
Total S.A. 3.07%
Allied Signal Inc. 2.47%
First Data Corp. 2.32%
Colgate Palmolive Co. 2.32%
DDI Corp. 2.17%
Veba AG 2.14%
Telecom Italia Mobile 2.13%
Siebe 2.05%
Citicorp 2.03%
Sandoz AG (Regd.) 1.99%
- --------------------------------------------------------------------------------
Investment Profile
A mutual fund designed for investors who seek long-term growth of capital by
investing primarily in equity securities of global companies.
* Lipper Performance Comparison
Global Stock Peer Group
Based on 10/1/95 -- 9/30/96
total returns
Number of Funds
in peer group: 174
Peer group average
total return: 13.0%
Lipper categories
in peer group: Global, Global
Small Company
*See notes to performance for explanation of peer categories
See page 39 for Notes to Performance. Past performance is no guarantee of future
results.
Comparison of Change in Value of a $10,000 Investment
- --------------------------------------------------------------------------------
Class A Shares
w/o load w/load MSCI
-------- ------ ----
1/1/94 $ 10,000 $ 10,000 $ 10,000
3/94 9,989.33 9,514.83 10,060.53
Jun 30, 94 9,872.06 9,403.14 10,362.27
9/94 10,309.17 9,819.49 10,584.52
Dec 31, 94 9,771.67 9,307.51 10,507.72
3/95 9,979.69 9,505.66 10,999.19
Jun 30, 95 10,795.37 10,282.59 11,468.06
9/95 11,047.19 10,522.45 12,108.59
Dec 31, 95 11,099.2 10,571.99 12,694.07
Mar 30, 96 11,651.65 11,098.2 13,200.83
Jun 30, 96 12,081.33 11,507.47 13,583.25
9/96 12,282.23 11,698.82 13,763.66
Average Annual
Total Return
One Since
Year Inception
---- ---------
GE Global Equity 11.18% 7.76%
GE Global Equity w/load 5.90% 5.86%
MSCI World 13.66% 12.32%
- --------------------------------------------------------------------------------
Class B Shares
w/o load w/load MSCI
-------- ------ ----
12/22/93 $ 10,000 $ 10,000 $ 10,000
12/93 10,263.26 10,263.26 10,000
3/94 10,257.78 10,257.78 10,060.53
Jun 30, 94 10,137.42 10,137.42 10,362.27
9/94 10,569.61 10,569.61 10,584.52
Dec 31, 94 10,004.78 10,004.78 10,507.72
3/95 10,206.22 10,206.22 10,999.19
Jun 30, 95 11,023.16 11,023.16 11,468.06
9/95 11,269.36 11,269.36 12,108.59
Dec 31, 95 11,307.77 11,307.77 12,694.07
Mar 30, 96 11,860.62 11,860.62 13,200.83
Jun 30, 96 12,276.68 12,276.68 13,583.25
9/96 12,464.76 12,264.76 13,63.66
Average Annual
Total Return
One Since
Year Inception
---- ---------
GE Global Equity 10.61% 8.25%
GE Global Equity w/load 6.61% 7.63%
MSCI World 13.66% 12.32%
- --------------------------------------------------------------------------------
Class C Shares
w/o load MSCI
-------- ----
2/22/93 $10,000 $10,000
10,000 10,000
10,405.58 10,578.82
10,585.11 11,218.33
9/93 11,409.58 11,744.47
12,608.53 11,934.23
12,615.25 12,006.47
12,480.83 12,366.58
9/94 13,038.67 12,631.81
12,370.65 12,540.16
12,646.61 13,126.68
13,681.53 13,686.25
9/95 14,012.7 14,450.67
14,087.43 15,137.47
14,798.5 15,754.18
15,347.65 16,210.57
9/96 15,615.16 16,425.88
Average Annual
Total Return
One Since
Year Inception
---- ---------
GE Global Equity 11.44% 13.14%
MSCI World 13.66% 14.83%
- --------------------------------------------------------------------------------
Class D Shares
w/o load MSCI
-------- ----
11/29/93 $10,000 $10,000
12/93 10,855.63 10,486.97
3/94 10,861.41 10,550.45
6/94 10,757.37 10,866.89
9/94 11,242.92 11,099.95
12/94 10,670.15 11,019.42
3/95 10,919.95 11,534.82
6/95 11,824 12,026.53
9/95 12,115.44 12,698.25
12/95 12,184.04 13,301.75
3/96 12,810.58 13,843.68
6/96 13,297.2 14,244.72
9/96 13,534.42 14,433.92
Average Annual
Total Return
One Since
Year Inception
---- ---------
GE Global Equity 11.71% 11.25%
MSCI World 13.66% 13.79%
8
<PAGE>
Schedule of Investments -- September 30, 1996
GE GLOBAL EQUITY FUND
GE Global Equity Fund
Europe 43.2%
United States 23.9%
Other Regions 6.6%
Japan 11.0%
Pacific Rim 9.8%
Cash & Other 5.5%
- --------------------------------------------------------------------------------
Number
of Shares Value
- --------------------------------------------------------------------------------
Common Stock -- 94.5%
Australia -- 0.8%
Burns Philip & Co. 250,506 $ 356,959
Austria -- 3.5%
Creditanstalt Bankverein 5,474 243,096
Flughafen Wien AG 3,074 161,985
OMV AG 3,514 353,298
VA Technologie AG 5,946 774,873
1,533,252
Brazil -- 1.4%
Brasmotor S.A 1,221,161 443,701
Ceval Alimentos S.A 16,590,712 152,730
596,431
Finland -- 0.9%
Valmet Corp. 22,801 375,594
France -- 8.7%
Carrefour S.A 1,404 787,958
Coflexip ADR 29,272 636,666 (a)
Technip 4,371 399,318
Total S.A. (Class B) 16,931 1,332,388
Valeo 11,648 642,438
3,798,768
Germany -- 4.6%
Gehe AG 9,199 614,512
Sap AG 2,817 473,220
Veba AG 17,769 929,821
2,017,553
Hong Kong -- 4.6%
Consolidated Electric Power 231,500 489,464
Giordano International 602,000 529,368
HSBC Holdings 24,400 452,787
Television Broadcasts Ltd. ADR 143,000 531,650
2,003,269
Indonesia -- 1.1%
Astra International 220,000 430,909
Steady Safe 81,200 52,432
483,341
Italy -- 3.3%
IMI 27,028 229,603
Industrie Natuzzi Spa ADR 4,348 202,182
Istituto Mobiliare Italiano ADR 2,391 60,970
Telecom Italia Mobile 416,834 924,930
1,417,685
Japan -- 11.0%
Canon Inc. 31,000 608,333
Credit Saison Co. 21,700 519,167
DDI Corp. 117 944,597
Ito Yokado Co. 7,000 397,043
Murata Manufacturing Co. 10,000 356,631
Omron Corp. 16,000 299,641
Rohm Co. 6,000 377,957
Secom Co. 9,000 568,548
Sega Enterprises 4,000 173,835
Suzuki Motor Corp. 44,000 536,201
4,781,953
Malaysia -- 0.9%
AMMB Holdings Berhad 51,200 371,784
Mexico -- 2.2%
Grupo Carso S.A. de C.V. (Series A) 62,659 287,906
Grupo Carso S.A. de C.V. ADR 16,253 151,559
Grupo Financiero Bancomer S.A
ADR (Series C) 25,404 244,514 (a,b)
Grupo Televisa S.A. De C.V. ADR 9,356 270,154 (a)
Invercorporacion S.A. de C.V 62,659 8,380 (a)
962,513
Netherlands -- 2.7%
ING Groep N.V 21,268 663,112
Nutricia Verenigde Bedrijven 2,296 302,970
Polygram N.V 3,476 194,430
1,160,512
Norway -- 1.2%
Petroleum Geo Services 20,362 544,656 (a)
Panama -- 0.9%
Banco Latinoamericano de
Exportaciones S.A. (Class E) 3,528 198,009
Pan American Beverages Inc.
(Class A) 4,943 203,281
401,290
- ----------
See Notes to Schedule of Investments and Financial Statements
9
<PAGE>
GE Global Equity Fund
- --------------------------------------------------------------------------------
Number
of Shares Value
- --------------------------------------------------------------------------------
Peru -- 0.9%
Telefonica del Peru S.A
ADR (Class B) 17,742 $ 405,848
Philippines -- 1.7%
Pilipino Telephone 142,400 195,403 (a)
San Miguel Corp. 163,070 534,554
729,957
South Africa -- 1.1%
Iscor Ltd. 700,854 461,932
Spain -- 0.9%
Repsol S.A 12,122 398,154
Sweden -- 1.7%
Autoliv AB 16,988 733,181
Switzerland -- 7.1%
ABB AG 529 646,499
Nestle S.A. (Regd.) 578 643,757
Roche Holdings AG 56 412,014
Sandoz AG (Regd.) 721 865,062
Schw Ruckversicher (Regd.) 366 385,478
Tag Heuer 671 131,506 (a)
3,084,316
Thailand -- 0.8%
Thai Farmers Bank 31,220 329,006
United Kingdom -- 8.6%
BPB Industries 79,847 467,409
EMI 14,935 312,071
Granada Group 32,326 433,358
Medeva 133,938 535,626
Reed International 44,840 829,565
Siebe 56,387 889,183
Thorn 50,108 285,088
3,752,300
United States -- 23.9%
Airgas Inc. 33,686 854,782 (a)
Allied Signal Inc. 16,294 1,073,367
Avery Dennison Corp. 3,858 214,119
Chrysler Corp. 9,942 284,590
Citicorp 9,721 880,966
Colgate Palmolive Co. 11,582 1,006,186
Ecolab Inc. 22,279 751,916
First Data Corp. 12,334 1,006,763
General Nutrition Cos. Inc. 6,998 122,902 (a)
Intel Corp. 4,500 429,469
Medaphis Corp. 8,872 133,080 (a)
Motorola Inc. 11,600 598,850
Sears Roebuck & Co. 5,792 259,192
Sensormatic Electronics Corp. 22,801 407,568
Sunrise Medical Inc. 11,478 182,213 (a)
Toys `R Us 18,077 526,493 (a)
Travelers Group Inc. 11,909 585,030
Tyco International Ltd. 5,537 238,783
Ucar International Inc. 16,929 685,624 (a)
Zebra Technologies Corp. (Class A) 6,027 154,442 (a)
10,396,335
Total Investments in Securities
(Cost $35,615,016) 41,096,589
Principal
Amount Value
- --------------------------------------------------------------------------------
Short Term Investments -- 4.8%
- --------------------------------------------------------------------------------
U.S. Government Agency -- 1.2%
Federal Home Loan Mortgage Corp.
5.23% 10/15/96 $500,000 $498,983(d)
Repurchase Agreement -- 3.6%
State Street Bank and Trust Co.
5.40% 10/01/96
(Cost $1,580,000) 1,580,000 1,580,000
(dated 09/30/96, proceeds $1,580,237,
collateralized by $1,613,528 United States
Treasury Note, 8.375%, 08/15/08)
Total Short Term Investments
(Cost $2,078,983) 2,078,983
Other Assets and Liabilities, net 0.7% 283,783
NET ASSETS --- 100% $43,459,355
- ----------
See Notes to Schedule of Investments and Financial Statements
10
<PAGE>
GE U.S. Equity Fund
Q&A
Gene Bolton is responsible for the overall management of the U.S. equity
operation at GE Investments with total assets of over $23 billion. His
responsibilities include overseeing the portfolio management team of the GE U.S.
Equity Fund listed on page 60. Gene joined GE in 1964. After completing GE's
Financial Management Program he held a number of financial and strategic
planning positions in the U.S. and Europe. Joining GE Investments in 1984 as
Chief Financial Officer, he moved to equities as a Portfolio Manager in 1986 and
was named to his present position in 1991. Gene is a Trustee of the GE Pension
Trust and GE's employee savings program, as well as Chairman of the Asset
Allocation Committee of GE Investments. He also serves as a Trustee of the
Investment Management Workshop, sponsored by the Association for Investment
Management and Research. Gene is a graduate of Mundelein College with a B.A. in
Business Management.
Q. How did the GE U.S. Equity Fund's industry benchmark and Lipper peers
perform for the fiscal year ended September 30, 1996?
A. The S&P 500 returned 20.3% for the twelve months ended September 30, 1996.
Our Lipper peer group of 546 Growth & Income Funds had an average return of
17.4% for the same period. Refer to the following page to see how your
class of shares performed compared to these benchmarks.
Q. What drove the Fund's performance?
A. The GE U.S. Equity Fund rose strongly in the twelve months ended September
30, 1996, outperforming the average of our Lipper peer group of Growth and
Income Funds and trailing the S&P 500 modestly. Our performance was helped
by our overweighting in Capital Goods and our underweighting in Utilities.
Capital Goods was the best performing sector in the past year while
Utilities were weak performers due to concerns of rising competition from
deregulation. Our performance versus the S&P 500 was hurt by an
underweighting in the Consumer- Stable sector, particularly in beverages,
as well as the Technology sector. In both cases we believe valuations of
some of the leadership stocks are excessive.
Q. What has your investment strategy been?
A. We employ what is known as a "bottom up" strategy. This means we build our
portfolio company by company, buying stocks with attractive growth
prospects and reasonable valuations. We do not spend a lot of time trying
to forecast the economy, or selecting sectors or industries that might do
well in a given economic scenario, as might be done in a "top down"
strategy. Rather we place heavy emphasis on research, taking a very
fundamental approach to investing. We make a concerted effort to understand
each company that we invest in, including growth potential, earnings
drivers, and the strength of the management team. Industry and Sector
weightings are a fallout from this fundamental research process and reflect
attractive stocks rather than a view as to how the sector will do. Thus our
portfolio is made up of a collection of investments we find attractive that
can stand on their own, not depending on an economic forecast to make them
attractive over the long term.
Q. Which investments stand out?
A. We continue to be overweighted in financial stocks such as insurance
companies and banks. The reason is that there are many financial stocks
that offer both strong growth characteristics and attractive valuations.
Because financial stocks are often complicated businesses that are not
easily understood, they frequently sell at valuation levels lower than
might be expected considering their past and projected growth rates. We use
our fundamental research approach to understand the complexities of the
financial industry and believe we are able to sort out the attractive,
growing stocks from the ones that just offer a low valuation.
Q. What is the outlook for the Fund?
A. We expect volatility to increase in the stock market over the next six to
twelve months as a result of slower earnings growth and high valuations. We
believe the GE U.S. Equity Fund is well positioned for good relative
performance in this environment.
11
<PAGE>
GE U.S. Equity Fund
Top Ten Largest Holdings
at September 30, 1996
- --------------------------------------------------------------------------------
AT&T 1.68%
Exxon Corp. 1.65%
IBM 1.55%
Federal National Mtg. Assn. 1.51%
Allied Signal Inc. 1.51%
Bristol-Myers Squibb Co. 1.49%
Intel Corp. 1.43%
Pepsico Inc. 1.41%
Merck & Co. Inc. 1.36%
Travelers Group Inc. 1.35%
Investment Profile
A mutual fund designed for investors who seek long-term growth of capital by
primarily investing in a diversified portfolio of growth and value stocks and
other equity securities of U.S. companies.
* Lipper Performance Comparison
Growth and Income Peer Group
Based on 10/1/95 -- 9/30/96
total returns
Number of Funds in peer group: 546
Peer group average total return: 17.4%
Lipper categories in peer group: Growth & Income,
S&P 500 Index
*See notes to performance for explanation of peer categories
See page 39 for Notes to Performance. Past performance is no guarantee of future
results.
Comparison of Change in Value of a $10,000 Investment
- --------------------------------------------------------------------------------
Class A Shares
w/o load w/load S&P
-------- ------ ---
1/1/94 10,000 10,000 10,000
3/94 9,526.45 9,073.94 9,618.15
Jun 30, 94 9,544.89 9,091.51 9,657.88
9/94 9,913.9 9,442.99 10,132.9
Dec 31, 94 9,765.97 9,302.09 10,129.82
3/95 10,668.97 10,162.19 11,116.13
Jun 30, 95 11,677.1 11,122.44 12,175.41
9/95 12,542.98 11,947.19 13,145.54
Dec 31, 95 13,192.46 12,565.81 13,927.96
Mar 30, 96 14,032.09 13,365.57 14,685.15
Jun 30, 96 14,528.24 13,838.15 15,348.14
9/96 14,846.29 14,141.09 15,818.4
Average Annual
Total Return
One Since
Year Inception
---- ---------
GE U.S. Equity 18.36% 15.45%
GE U.S. Equity w/load 12.74% 13.43%
S&P 500 20.33% 18.15%
- --------------------------------------------------------------------------------
Class B Shares
w/o load w/load S&P
-------- ------ ---
12/22/93 $ 10,000 $ 10,000 $ 10,000
12/93 10,133.91 10,133.91 10,000
3/94 9,647.78 96,47.78 9,618.15
Jun 30, 94 9,641.56 9,641.56 9,657.88
9/94 9,990.57 9,990.57 10,132.9
Dec 31, 94 9,835.35 9,835.35 10,129.82
3/95 10,728.9 10,728.9 11,116.13
Jun 30, 95 11,724.56 11,724.56 12,175.41
9/95 12,579.81 12,579.81 13,145.54
Dec 31, 95 13,215.1 13,215.1 13,927.96
Mar 30, 96 14,022.58 14,022.58 14,685.15
Jun 30, 96 14,514.96 14,514.96 15,348.14
9/96 14,816.95 14,616.95 15,818.4
Average Annual
Total Return
One Since
Year Inception
---- ---------
GE U.S. Equity 17.78% 15.19%
GE U.S. Equity w/load 13.78% 14.64%
S&P 500 20.33% 18.15%
- --------------------------------------------------------------------------------
Class C Shares
w/o load S&P
-------- ---
2/22/93 $10,000 $10,000
10,519.58 10,216.1
10,681.52 10,268.05
9/93 11,032.38 10,530.86
11,218.84 10,775.93
10,701.37 10,364.46
10,715.17 10,407.27
9/94 11,129.16 10,919.15
10,973.84 10,915.83
11,991.38 11,978.67
13,136.11 13,120.14
9/95 14,118.31 14,165.55
14,865.82 15,008.68
15,797.66 15,824.63
16,387.34 16,539.05
9/96 16,758.61 17,045.81
Average Annual
Total Return
One Since
Year Inception
---- ---------
GE U.S. Equity 18.70% 15.38%
S&P 500 20.33% 15.92%
- --------------------------------------------------------------------------------
Class D Shares
w/o load S&P
-------- ---
11/29/93 $10,000 $10,000
12/93 10,158.53 10,123.4
3/94 9,696.21 9,736.84
6/94 9,714.95 9,777.06
9/94 10,096.06 10,257.94
12/94 9,964.02 10,254.82
3/95 10,889.12 11,253.31
6/95 11,936.28 12,325.65
9/95 12,835.67 13,307.76
12/95 13,520.19 14,099.83
3/96 14,388.82 14,866.37
6/96 14,925.9 15,537.53
9/96 15,270.71 16,013.6
Average Annual
Total Return
One Since
Year Inception
---- ---------
GE U.S. Equity 18.97% 16.08%
S&P 500 20.33% 18.03%
12
<PAGE>
Schedule of Investments -- September 30, 1996
GE U.S. EQUITY FUND
U.S. Equity Fund
Energy & Basic Material 14.0%
Consumer 16.9%
Capital Goods 12.1%
Healthcare 11.0%
Financial Services 15.5%
Retail Trade 4.6%
Technology 9.2%
Transportation 1.8%
Utilities 8.5%
Cash and Other 6.4%
- --------------------------------------------------------------------------------
Number
of Shares Value
- --------------------------------------------------------------------------------
Common Stock -- 93.6%
Basic Materials -- 4.5%
Air Products & Chemicals Inc. 15,482 $ 901,826
Airgas Inc. 6,376 161,791 (a)
Avery Dennison Corp. 3,054 169,497
Barrick Gold Corp. 11,454 287,782
Du Pont de Nemours (E.I.) 34,648 3,057,686
Eastman Chemical Co. 4,582 267,474
FMC Corp. 4,582 311,003 (a)
Freeport McMoran Copper & Gold
(Class A) 14,127 416,746
Grace (W.R.) & Co. 2,642 140,026
Hoechst AG 2,291 83,544
IMC Global Inc. 8,113 317,421
International Paper Co. 3,971 168,767
Lubrizol Corp. 3,052 87,745
Mead Corp. 15,558 912,088
Millenium Chemical Inc. 1,050 26,906
Morton International Inc. 22,213 882,967
Newmont Mining Corp. 13,936 658,476
Olin Corp. 1,336 112,224
Placer Dome Inc. 2,291 54,125
PPG Industries Inc. 1,527 83,031
Rayonier Inc. 4,855 192,986
Santa Fe Pacific Gold Corp. 8,401 105,013
Weyerhaeuser Co. 25,773 1,188,780
10,587,904
Capital Goods -- 12.1%
ABB AG 611 746,713
Allied Signal Inc. 54,097 3,563,640
AMP Inc. 23,744 920,080
Boeing Co. 6,372 602,154
Browning-Ferris Industries Inc. 12,966 324,150
Caterpillar Inc. 1,527 115,098
Cooper Industries Inc. 6,094 263,565
Corning Inc. 4,103 160,017
Deere & Co. 40,008 1,680,336
Dover Corp. 35,313 1,686,196
EG & G Inc. 12,199 218,057
Emerson Electric Co. 34,366 3,097,236
General Dynamics Corp. 3,055 210,413
General Motors Corp. (Class H) 1,717 99,157
General Signal Corp. 11,071 487,124
Grainger (W.W.) Inc. 764 53,671
Hanson PLC ADR 32,644 403,969
Hubbell Inc. (Class B) 59,667 2,207,679
Ingersoll Rand Co. 9,604 456,190
Lockheed Martin Corp. 15,749 1,419,379
Martin Marietta Materials Inc. 2,482 53,053
Masco Corp. 10,692 320,760
McDonnell Douglas Corp. 17,181 902,002
Minnesota Mining & Manufacturing 12,103 845,697
Molex Inc. (Class A) 6,109 206,179
Parker Hannifin Corp. 1,527 64,134
Philips Electronics N.V 5,344 191,716
Raytheon Co. 5,535 307,884
Rockwell International Corp. 4,963 279,789
Sherwin Williams Co. 4,246 196,908
Stewart & Stevenson Services Inc. 6,037 130,550
Tecumseh Products Co. (Class A) 3,167 171,810
Tenneco Inc. 10,117 507,115
Textron Inc. 25,696 2,184,160
Timken Co. 7,636 299,713
Tyco International Ltd. 2,902 125,149
Ucar International Inc. 4,093 165,767 (a)
United Technologies Corp. 13,714 1,647,394
Waste Management International PLC ADR 4,349 39,141 (a)
Wheelabrator Technologies Inc. 7,636 116,449
WMX Technologies Inc. 33,789 1,110,813
28,581,007
Consumer - Cyclical -- 7.9%
ADT Ltd. 7,644 146,192 (a)
American Greetings Corp. (Class A) 7,895 225,994
American Medical Response 3,436 123,696 (a)
Armstrong World Industries Inc. 8,017 500,060
Carmike Cinemas Inc. 645 14,916 (a)
Carnival Corp. (Class A) 5,918 183,458
Catalina Marketing Corp. 2,290 121,943 (a)
Circus Circus Enterprises Inc. 15,041 532,075 (a)
Comcast Corp. (Class A) 38,574 593,075
CUC International Inc. 725 28,909 (a)
Disney (Walt) Co. 20,838 1,320,608
Donnelley (R.R.) & Sons Co. 15,842 510,905
Dun & Bradstreet Corp. 9,354 557,732
Eastman Kodak Co. 29,429 2,310,176
Eaton Corp. 4,391 265,107
Ecolab Inc. 4,055 136,856
Flightsafety International Inc. 3,627 161,855
Ford Motor Co. 48,372 1,511,625
Gannett Inc. 18,758 1,320,094
General Motors Corp. 23,926 1,148,448
Goodyear Tire & Rubber Co. 19,091 880,572
- ----------
See Notes to Schedule of Investments and Financial Statements
13
<PAGE>
GE U.S. Equity Fund
- --------------------------------------------------------------------------------
Number
of Shares Value
- --------------------------------------------------------------------------------
Harman International Industries Inc. 2,863 $ 139,571
International Cabletel Inc. 32,242 826,201 (a)
Interpublic Group Cos. Inc. 11,889 561,755
ITT Corp. (new) 1,336 58,283 (a)
ITT Industries Inc. 13,708 330,706
Knight Ridder Inc. 3,154 116,698
McDonalds Corp. 26,703 1,265,055
Merrill Lynch & Co. Inc. 5,755 115,100
Metromedia International Group Inc. 3,627 38,537 (a)
National Service Industries Inc. 10,762 376,670
Readers Digest Association Inc. (Class A) 1,336 54,609
Rollins Inc. 764 15,376
Rubbermaid Inc. 3,028 74,186
Scholastic Corp. 2,291 166,098 (a)
Stanhome Inc. 6,464 186,648
Tele-Communications Inc. (Series A) 26,917 402,073 (a)
Tele-Communications Inc. Liberty
Media Group (Series A) 22,623 647,583 (a)
Time Warner Inc. 15,242 588,722
Viacom Inc. (Class B) 5,345 189,748 (a)
18,747,915
Consumer - Stable -- 9.0%
Anheuser Busch Cos. Inc. 73,994 2,784,024
Archer-Daniels Midland Co. 19,042 366,559
Avon Products Inc. 10,309 511,584
Cardinal Health Inc. 2,673 220,857
Coca Cola Co. 1,336 67,969
Colgate Palmolive Co. 14,338 1,245,614
ConAgra Inc. 10,450 514,662
CPC International Inc. 11,454 857,618
Crown Cork & Seal Inc. 2,290 105,626
Dole Food Inc. 3,638 152,796
Duracell International Inc. 2,100 134,663
General Mills Inc. 11,452 691,414
Gillette Co. 2,073 149,515
International Flavours 5,154 224,843
Kellogg Co. 5,249 361,525
Kimberly Clark Corp. 22,481 1,981,138
Nestle S.A. (Regd.) 408 454,417
Owens Illinois Inc. 11,447 200,323 (a)
Pepsico Inc. 117,604 3,322,313
Philip Morris Cos. Inc. 33,556 3,011,651
Procter & Gamble Co. 30,136 2,938,260
Quilmes Industrial S.A. ADR 2,864 29,714
Ralston Purina Co. 3,818 261,533
Sara Lee Corp. 7,571 270,663
Sysco Corp. 8,576 288,368
Tambrands Inc. 2,768 116,602
21,264,251
Energy -- 9.5%
Amerada Hess Corp. 3,055 161,533
Amoco Corp. 30,239 2,131,849
Anadarko Petroleum Co. 8,556 478,066
Atlantic Richfield Co. 2,214 282,285
Baker Hughes Inc. 19,285 585,782
British Petroleum PLC ADR 2,098 262,250
Burlington Resources Inc. 27,104 1,202,740
Diamond Offshore Drilling Inc. 2,482 136,510 (a)
Dresser Industries Inc. 7,430 221,043
Exxon Corp. 46,710 3,888,607
Halliburton Co. 6,058 312,744
Horsham Corp. 4,773 77,561
Louisiana Land & Exploration Co. 3,628 190,924
Mobil Corp. 13,401 1,551,166
Nabors Industries Inc. 16,387 223,273 (a)
Occidental Petroleum Corp. 13,302 310,934
Petroleum Geo Services ADR 382 10,410 (a)
Phillips Petroleum Co. 8,442 360,896
Royal Dutch Petroleum Co. ADR 19,995 3,121,719
Santa Fe Energy Resources Inc. 5,558 79,202 (a)
Schlumberger Ltd. 32,055 2,708,647
Texaco Inc. 24,531 2,256,852
Tosco Corp. 4,773 261,918
Total S.A. ADR 10,182 398,371
Unocal Corp. 27,085 975,060
USX Marathon Group 14,203 307,140
22,497,482
Financial -- 10.1%
American Express Co. 34,240 1,583,600
Bank of Boston Corp. 14,915 863,206
Bank of New York Inc. 18,326 538,326
BankAmerica Corp. 7,628 626,449
Beneficial Corp. 15,009 863,017
Boatmen's Bancshares Inc. 11,454 639,992
Camden Property Trust 1,908 48,893
Chase Manhattan Corp. 9,258 741,797
Citicorp 30,391 2,754,184
CMAC Investment Corp. 3,864 245,364
Countrywide Credit Industries 8,590 220,119
Dean Witter Discover & Co. 23,290 1,280,950
Dime Bancorp Inc. (new) 8,209 109,795 (a)
Edwards A G Inc. 5,842 170,148
Federal National Mortgage Assoc 102,475 3,573,816
First Chicago Corp. 3,818 172,765
Manufactured Home Communities Inc. 1,633 31,435
Mellon Bank Corp. 10,774 638,359
Merrill Lynch & Co. Inc. 3,436 225,488
Morgan (J.P.) & Co. Inc. 14,355 1,275,801
Morgan Stanley Group Inc. 4,000 199,000
NationsBank Corp. 4,437 385,464
Oasis Residential Inc. 2,577 56,372
Simon DeBartolo Group Inc. 2,838 72,369
Standard Federal Bancorporation 4,963 227,057
State Street Boston Corp. 7,636 438,116
T. Rowe Price & Associates 4,581 148,883
Transamerica Corp. 4,333 302,768
Travelers Group Inc. 64,785 3,182,563
United States Bancorp 11,072 437,344
Wells Fargo & Co. 6,758 1,757,080
23,810,520
- ----------
See Notes to Schedule of Investments and Financial Statements
14
<PAGE>
GE U.S. Equity Fund
- --------------------------------------------------------------------------------
Number
of Shares Value
- --------------------------------------------------------------------------------
Healthcare -- 11.0%
Abbott Laboratories 48,847 $2,405,715
Allergan Inc. 34,198 1,303,799
American Home Products Corp. 45,346 2,890,807
Arrow International Inc. 8,323 287,144
Baxter International Inc. 18,040 843,370
Bristol-Myers Squibb Co. 36,400 3,508,050
Columbia HCA Healthcare Corp. 954 54,259
Dentsply International Inc. 2,172 96,654
Eli Lilly & Co. 23,519 1,516,975
FHP International Corp. 8,206 306,699 (a)
Fresenius Medical Care Inc. AG ADR 96 2,225
Johnson & Johnson 55,132 2,825,515
Lincare Holdings Inc. 2,291 91,640 (a)
Living Centers of America Inc. 3,816 95,400 (a)
Merck & Co. Inc. 45,793 3,222,682
Pfizer Inc. 25,487 2,016,659
Pharmacia & Upjohn Inc. 10,695 441,169
Scherer (R.P.) Corp. Delaware 6,729 328,039 (a)
Schering Plough Corp. 24,169 1,486,393
Smithkline Beecham PLC ADR 33,071 2,013,197
St. Jude Medical Inc. 2,775 112,041 (a)
Watson Pharmaceuticals Inc. 1,146 42,975
25,891,407
Insurance -- 5.4%
American International Group Inc. 28,982 2,919,936
Chubb Corp. 4,772 219,512
General Reinsurance Corp. 7,834 1,110,470
ITT Hartford Group Inc. 10,538 621,742
Lincoln National Corp. 21,782 955,685
Loews Corp. 21,571 1,669,056
Marsh & McLennan Cos 9,927 964,160
Provident Cos. Inc. 20,620 773,250
Providian Corp. 18,399 791,157
Reliastar Financial Corp. 5,903 280,393
St. Paul Cos. Inc. 9,372 520,146
TIG Holdings Inc. 49,299 1,478,970
UNUM Corp. 5,441 348,904
12,653,381
Retail Trade -- 4.6%
Albertsons Inc. 2,749 115,802
American Stores Co. 19,033 761,320
Arbor Drugs Inc. 11,454 249,125
Charming Shoppes Inc. 20,902 125,412
Circuit City Stores Inc. 7,635 275,814
Dayton Hudson Corp. 9,162 302,346
Eckerd Jack Corp. 4,963 138,964 (a)
Federated Department Stores Inc. 27,199 911,166 (a)
General Nutrition Cos. Inc. 3,628 63,717 (a)
Home Depot Inc. 18,903 1,075,108
Lowes Cos. Inc. 3,818 156,061
May Department Stores Co. 4,200 204,225
Melville Corp. 5,154 227,420
Office Max Inc. 3,245 45,430 (a)
Penney J C Inc. 3,436 185,974
Price Costco Inc. 19,296 395,568 (a)
Sears Roebuck & Co. 46,389 2,075,908
Toys `R Us 23,099 672,758 (a)
Wal Mart Stores Inc. 106,985 2,821,729
10,803,847
Software & Services -- 3.0%
Automatic Data Processing Inc. 26,700 1,164,787
Computer Associates International Inc. 22,233 1,328,422
Equifax Inc. 55,933 1,475,233
First Data Corp. 18,899 1,542,631
Intuit Inc. 573 18,050
Microsoft Corp. 1,814 239,221 (a)
Reuters Holdings PLC ADR (Class B) 18,516 1,282,233
7,050,577
Technology -- 6.2%
3Com Corp. 7,446 447,225 (a)
Amdahl Corp. 7,411 69,941 (a)
Applied Materials Inc. 9,488 262,106 (a)
Cisco Systems Inc. 10,500 651,656
DSC Communications Corp. 3,913 98,314
Hewlett Packard Co. 63,248 3,083,340
Intel Corp. 35,319 3,370,757
International Business Machines 29,478 3,670,011
Motorola Inc. 15,554 802,975
Northern Telecom Ltd. 8,210 474,128
Perkin Elmer Corp. 4,646 268,887
Pitney Bowes Inc. 4,314 227,024
Sensormatic Electronics Corp. 764 13,657
Varian Associates Inc. 20,713 994,224
Wallace Computer Series Inc. 2,748 77,631
Xerox Corp. 4,964 266,195
14,778,071
Transportation -- 1.8%
America West Airlines Inc. (Class B) 3,436 40,373 (a)
AMR Corp. 2,115 168,407 (a)
Burlington Northern Santa Fe 13,459 1,135,603
Canadian Pacific Ltd. 33,637 777,856
Continental Airlines Inc. (Class B) 3,436 76,881 (a)
CSX Corp. 11,309 571,104
Delta Air Lines Inc. 3,817 274,824
Pittston Brinks Group 4,200 131,775
Union Pacific Corp. 15,424 1,129,808
4,306,631
Utilities -- 8.5%
Airtouch Communications Inc. 49,911 1,378,791 (a)
Allegheny Power Systems Inc. 5,728 166,112
American Electric Power Inc. 7,636 310,213
American Telephone & Telegraph 76,010 3,971,522
Bellsouth Corp. 29,605 1,095,385
CMS Energy Corp. 7,300 219,913
Dominion Resources Inc. 14,127 533,294
Duke Power Co. 13,317 620,905
Eastern Enterprises 8,018 302,680
Enron Corp. 1,145 46,659
- ----------
See Notes to Schedule of Investments and Financial Statements
15
<PAGE>
GE U.S. Equity Fund
- --------------------------------------------------------------------------------
Number
of Shares Value
- --------------------------------------------------------------------------------
Enserch Corp. 15,173 $ 316,736
Florida Progress Corp. 7,704 261,936
FPL Group Inc. 16,593 717,647
Frontier Corp. 6,491 172,823
GTE Corp. 73,331 2,823,243
MCI Communications Corp. 43,990 1,127,244
Niagara Mohawk Power Corp. 15,252 122,016
NIPSCO Industries Inc. 4,582 163,807
NYNEX Corp. 14,730 640,755
Pacificorp 38,559 795,279
Pinnacle West Capital Corp. 15,325 454,003
Portland General Corp. 3,053 117,159
Public Service Co. Colorado 8,400 298,200
SBC Communications Inc. 28,254 1,359,724
Scana Corp. 4,066 106,733
Sonat Inc. 12,599 557,506
Southern Co. 41,234 932,919
Texas Utilities Co. 5,727 226,932
U.S. West Inc. 11,847 352,448
20,192,584
Total Common Stock
(Cost $182,584,064) 221,165,577
Principal
Amount Value
- --------------------------------------------------------------------------------
Convertible Bonds -- 0.3%
- --------------------------------------------------------------------------------
ADT Operations Inc.
3.81% 07/06/10 $217,000 129,115 (d)
Charming Shoppes Inc.
7.50% 07/15/06 106,000 112,360
Continental Airlines Inc.
6.75% 04/15/06 172,000 164,260 (b)
Federated Department Stores Inc.
5.00% 10/01/03 80,000 89,400
Republic of Italy
5.00% 06/28/01 170,000 170,425
Valhi Inc.
7.67% 10/20/07 126,000 54,810 (d)
Total Convertible Bonds
(Cost $697,902) 720,370
- --------------------------------------------------------------------------------
Number
of Shares Value
- --------------------------------------------------------------------------------
Preferred Stock -- 0.6%
- --------------------------------------------------------------------------------
Airtouch Communications
(Class B), 6.00% 3,454 99,734
Airtouch Communications
(Class C), 4.25% 2,218 105,632
BCP International Ltd.
(Class A), 8.00% 3,808 188,972
Continental Airlines
Finance Trust, 8.50% 3,436 188,980 (b)
Fresenius National Medical
Care Inc. AG 2,642 502
International Paper
Capital Trust, 5.25% 3,577 169,907
Jefferson Pilot Corp., 7.25% 565 47,601
Occidental Petroleum Corp., 7.75% 7,323 411,919 (b)
Santa Fe Energy Resources
Inc. (Series A), 8.25% 3,752 86,296
St. Paul Capital LLC, 6.00% 508 27,305
Unocal Capital Trust, 6.25% 1,580 82,753 (a)
Total Preferred Stock
(Cost $1,363,882) 1,409,601
Total Investments in Securities
(Cost $184,645,848) 223,295,548
Principal
Amount Value
- --------------------------------------------------------------------------------
Short Term Investments -- 4.8%
- --------------------------------------------------------------------------------
Time Deposit -- 0.2%
State Street Cayman Islands
5.50% 10/01/96 $485,000 485,000
Repurchase Agreement -- 4.6%
State Street Bank and Trust Co.
5.40% 10/01/96
(Cost $10,880,000) 10,880,000 10,880,000
(dated 09/30/96, proceeds $10,881,632,
collateralized by $11,101,292 United
States Treasury Note, 8.375%, 08/15/08)
Total Short Term Investments
(Cost $11,365,000) 11,365,000
Other Assets and Liabilities, net 0.7% 1,561,472
NET ASSETS -- 100% $236,222,020
Other Information
- --------------------------------------------------------------------------------
The GE U.S. Equity Fund had the following long Futures Contracts open at
September 30, 1996:
Number
Expiration of Underlying Unrealized
Description Date Contracts Face Value Gain
- --------------------------------------------------------------------------------
S&P 500 Dec. 1996 20 $6,914,000 $119,100
- ----------
See Notes to Schedule of Investments and Financial Statements
16
<PAGE>
GE Strategic Investment Fund
Q&A
David Carlson manages pension and mutual fund portfolios with total assets of
over $2 billion. His responsibilities include managing Elfun Trusts and the U.S.
equity portions of the Elfun Diversified and the GE Strategic Investment Funds.
Dave also manages a portfolio for the GE Pension Trust. Dave joined GE in 1980
on the Financial Management Program. In 1982, he joined GE Investments as a
Security Analyst responsible for several consumer industries. In 1988, Dave
assumed responsibility for managing Elfun Trusts. He is a Trustee for the GE
Canada Pension Trust, a Chartered Financial Analyst (CFA) and a member of the
New York Society of Security Analysts. Dave is a graduate of Indiana University
with a B.S. in Business.
Dave shares portfolio management responsibility for the GE Strategic Investment
Fund with Bob MacDougall, who manages the fixed income portion of the Fund's
portfolio. Please refer to page 28 for Bob's biographical details.
Q. How did the GE Strategic Investment Fund's industry benchmarks and Lipper
peers perform for the fiscal year ended September 30, 1996?
A. For this type of fund, you need to look at how both the stock and bond
markets performed. For the year ending September 30, 1996, U.S. stocks were
up 20.3% (S&P 500), international stocks up 8.6% (MSCI EAFE), and bonds up
4.9% (LB Aggregate). Please refer to specific discussions of the industry
benchmarks which are included in the respective Q & A sections for the GE
International Funds, GE U.S. Equity Fund and the GE Fixed Income Funds.
Peer Balanced Funds as tracked by Lipper Analytical Services now number 265
funds and the average Balanced Fund returned 12.5%. All classes of the GE
Strategic Investment Fund outperformed this average return. Refer to the
following page to see how your class of shares performed.
Q. How was the outperformance achieved?
A. Clearly, U.S. stocks were the place to be last year, but we believe our
U.S. stock exposure was below that of the average fund in our peer group.
Fortunately, security selection within each asset class was positive and
accounted for our outperformance relative to peer funds.
Q. What was the asset mix at fiscal year end and how did it change during the
year?
A. The following table shows the asset mix at year end and a comparison with
last year.
Asset Class 9/30/96 9/30/95
----------- ------- -------
U.S. Stocks 45% 43%
International Stocks 14 14
Fixed Income 30 29
Cash 11 14
The asset allocation remained fairly constant throughout the year. U.S.
equities at 45% remain below the more normal 50-60% range that we have
targeted for the long term. This is due to our concern over the valuation
of the U.S. stock market.
Q. How do you decide how much should be in each asset class?
A. We have an asset allocation committee that meets monthly to set the asset
allocation for the GE Pension Fund, Elfun Diversified Fund and GE Strategic
Investment Fund. We employ various quantitative models to assess the
relative attractiveness of the markets and set targets for the funds. We
have a team approach to portfolio management with the security selection
done by the managers who specialize in each asset class. We will react to
opportunities that the market volatility presents us over time.
Q. What is the outlook for the Fund?
A. We would characterize the current posture of the Fund as slightly more
defensive than the average fund in our peer group. This is due to our
cautious stance on the U.S. stock market at present levels. Our focus
remains on achieving long term outperformance through superior security
selection within each asset class, and correctly positioning the Fund
through our asset allocation process.
17
<PAGE>
GE Strategic Investment Fund
- --------------------------------------------------------------------------------
Top Ten Largest Holdings
at September 30, 1996
- --------------------------------------------------------------------------------
GNMA Pool 8 1/2% 10/15/2017 2.85%
U.S. Treasury Note 7.00% 7/15/2006 2.27%
SPDR Trust 1.87%
Federal National Mtg. Assn 1.52%
Travelers Group Inc. 1.39%
First Data Corp. 1.29%
Dover Corp. 1.20%
Reuters Hldgs PLC ADR (ClassB) 1.17%
Allied Signal Inc. 1.15%
Johnson & Johnson 1.06%
- --------------------------------------------------------------------------------
Investment Profile
A mutual fund designed for investors who seek to maximize total return through
asset allocation designed to achieve capital appreciation primarily from common
stocks and other equity securities and current income from bonds and other fixed
income securities.
* Lipper Performance Comparison
Balanced Peer Group
Based on 10/1/95 -- 9/30/96
total returns
Number of Funds in category: 265
Peer group average total return: 12.5%
Lipper categories in peer group: Balanced
*See notes to performance for explanation of peer categories
See page 39 for Notes to Performance. Past performance is no guarantee of future
results.
Comparison of Change in Value of a $10,000 Investment
- --------------------------------------------------------------------------------
Class A Shares
w/o load w/load LB Agg. S&P 500
-------- ------ ------- -------
1/1/94 $ 10,000 $ 10,000 $ 10,000 $ 10,000
9,579.14 9,124.13 9,712.67 9,618.15
9,579.14 9,124.13 9,612.81 9,657.88
9/94 9,868.08 9,399.35 9,671.58 10,132.9
9,820.91 9,354.42 9,708.14 10,129.82
10,509.08 10,009.9 10,197.82 11,116.13
11,274.43 10,738.89 10,819.18 12,175.41
9/94 11,853.26 11,290.23 11,031.99 13,145.54
12,476.93 11,884.27 11,501.83 13,927.96
12,800.75 12,192.71 11,296.66 14,685.15
13,144.39 12,520.04 11,361.16 15,348.14
9/96 13,435.17 12,796.99 11,570.35 15,818.4
Average Annual
Total Return
One Since
Year Inception
---- ---------
GE Strategic 13.35% 11.34%
GE Strategic w/load 7.96% 9.39%
S&P 500 20.33% 18.15%
LB Aggregate 4.90% 5.45%
- --------------------------------------------------------------------------------
Class B Shares
w/o load w/load LB Agg. S&P 500
-------- ------ ------- -------
$10,000 $10,000 $10,000 $10,000
12/31/93 10,070.87 10,070.87 10,000 10,000
9,640.98 9,640.98 9,712.67 9,618.15
9,640.98 9,640.98 9,612.81 9,657.88
9/94 9,874.9 9,874.9 9,671.58 10,132.9
9,819.38 9,819.38 9,708.14 101,29.82
10,491.68 10,491.68 10,197.82 11,116.13
11,241.55 11,241.55 10,819.18 12,175.41
9/95 11,803.95 11,803.95 11,031.99 13,145.54
12,409.85 12,409.85 11,501.83 13,927.96
12,715.28 12,715.28 11,296.66 14,685.15
13,033.99 13,033.99 11,361.16 15,348.14
9/96 13,306.23 13,106.23 11,570.35 15,818.4
Average Annual
Total Return
One Since
Year Inception
---- ---------
GE Strategic 12.73% 10.82%
GE Strategic w/load 8.73% 10.23%
S&P 500 20.33% 18.15%
LB Aggregate 4.90% 5.45%
- --------------------------------------------------------------------------------
Class C Shares
w/o load LB Agg S&P 500
-------- ------ -------
2/22/93 $10,000 $10,000 $10,000
10,309.14 10,042 10,216.1
10,436.83 10,308.71 10,268.05
9/93 10,806.46 10,577.38 10,530.86
10,928.42 10,583.12 10,775.93
10,482.79 10,279.04 10,364.46
10,462.21 10,173.36 10,407.27
9/94 10,777.59 10,235.55 10,919.15
10,729.24 10,274.25 10,915.83
11,488.09 10,792.48 11,978.67
12,331.24 11,450.07 13,120.14
9/95 12,970.65 11,675.28 14,165.55
13,654.56 12,172.53 15,008.68
14,023.21 11,955.39 15,824.63
14,399.09 12,023.65 16,539.05
9/96 14,731.61 12,245.04 17,045.81
Average Annual
Total Return
One Since
Year Inception
---- ---------
GE Strategic 13.58% 11.33%
S&P 500 20.33% 15.92%
LB Aggregate 4.90% 5.81%
- --------------------------------------------------------------------------------
Class D Shares
w/o load LB Agg S&P 500
-------- ------ -------
11/29/93 $10,000 $10,000 $10,000
10,152.68 10,054 10,123.4
9,745.04 9,765.12 9,736.84
9,732.3 9,664.72 9,777.06
9/94 10,025.3 9,723.81 10,257.94
9,993.6 9,760.57 10,254.94
10,700.41 10,252.89 11,253.31
11,498.86 10,877.6 12,325.65
9/95 12,100.96 11,091.56 13,307.76
12,750.55 11,563.94 14,099.83
13,101.36 11,357.66 14,866.37
13,472.41 11,422.51 15,537.53
9/96 13,789.47 11,632.83 16,013.6
Average Annual
Total Return
One Since
Year Inception
---- ---------
GE Strategic 13.95% 11.98%
S&P 500 20.33% 18.03%
LB Aggregate 4.90% 5.48%
18
<PAGE>
Schedule of Investments -- September 30, 1996
GE STRATEGIC INVESTMENT FUND
GE Strategic Fund
Domestic Equity 44.4%
Foreign Equity 13.8%
Bonds and Notes 30.4%
Cash and Other 11.4%
- --------------------------------------------------------------------------------
Number
of Shares Value
- --------------------------------------------------------------------------------
Common Stock -- 57.6%
Basic Materials -- 1.5%
Air Products & Chemicals Inc. 5,000 $ 291,250
Airgas Inc. 5,800 147,175 (a)
Carter Holt Harvey Ltd. 35,778 78,784
Morton International Inc. 15,000 596,250
SGL Carbon 1,582 184,423
Tokyo Steel Manufacturing 6,000 105,914
1,403,796
Capital Goods -- 7.2%
ABB AG 210 256,644
Alcatel Alsthom 72 6,070
Alleghany Corp. 1,020 209,100
Allied Signal Inc. 16,000 1,054,000
AMP Inc. 8,900 344,875
Browning-Ferris Industries Inc. 7,600 190,000
Denso Corp. 6,000 133,871
Dover Corp. 23,000 1,098,250
Eaux (Cie Generale) 1,055 114,579
Emerson Electric Co. 2,500 225,313
Grupo Carso S.A. de C.V. ADR 1,178 10,985
Hanson PLC ADR 17,100 211,613
Hubbell Inc. (Class B) 18,000 666,000
Lyonnaise Des Eaux S.A 1,195 106,880
Molex Inc. (Class A) 9,000 303,750
Sasib 8,779 15,503 (a)
Siam Cement Co. Ltd. 200 8,148
Siebe 8,838 139,369
Siemens AG 4,338 228,591
Technip 1,405 128,355
Tyco International Ltd. 3,800 163,875
VA Technologie AG 1,596 207,988
Valeo 3,468 191,275
Valmet Corp. 5,088 83,813
Waste Management International PLC ADR 3,265 29,385 (a)
WMX Technologies Inc. 13,500 443,813
6,572,045
Consumer -- Cyclical -- 6.0%
American Medical Response 5,000 180,000 (a)
Canon Inc. 11,000 215,860
Carmike Cinemas Inc. 500 11,563 (a)
Carnival Corp. (Class A) 7,000 217,000
Catalina Marketing Corp. 3,000 159,750 (a)
Circus Circus Enterprises Inc. 6,000 212,250 (a)
Comcast Corp. (Class A) 18,000 276,750
CUC International Inc. 700 27,912 (a)
Disney (Walt) Co. 10,000 633,750
Donnelley (R.R.) & Sons Co. 5,000 161,250
Electrolux AB (Series B) 24 1,349
Flightsafety International Inc. 5,000 223,125
Gannett Inc. 3,800 267,425
Granada Group 9,143 122,570
Harman International Industries Inc. 4,000 195,000
International Cabletel Inc. 20,000 512,500 (a)
Interpublic Group Cos. Inc. 4,400 207,900
McDonalds Corp. 6,500 307,937
Polygram N.V 2,267 126,805
Readers Digest Association Inc. (Class A) 1,800 73,575
Reed International 11,649 215,513
Scholastic Corp. 2,300 166,750 (a)
Sega Enterprises 3,000 130,376
Suzuki Motor Corp. 15,000 182,796
Tele-Communications Inc. (Class A) 6,000 171,750 (a)
Tele-Communications Inc. Liberty
Media Group (Series A) 20,000 298,750 (a)
Television Broadcasts Ltd. ADR 24,000 89,228
Time Warner Inc. 3,800 146,775
5,536,209
Consumer -- Stable -- 5.0%
Anheuser Busch Cos. Inc. 7,600 285,950
Avon Products Inc. 6,400 317,600
Cardinal Health Inc. 2,400 198,300
Coca Cola Co. 1,500 76,313
Colgate Palmolive Co. 1,200 104,250
Duracell International Inc. 3,000 192,375
Gillette Co. 2,500 180,312
International Flavours 2,200 95,975
Kimberly Clark Corp. 9,000 793,125
Nestle S.A. (Regd.) 109 121,401
Nutricia Verenigde Bedrijven 2,016 266,022
Pan American Beverages Inc.
(Class A) 1,420 58,398
Pepsico Inc. 25,400 717,550
Philip Morris Cos. Inc. 9,500 852,625
Procter & Gamble Co. 1,200 117,000
San Miguel Corp. 53,000 173,737
4,550,933
- ----------
See Notes to Schedule of Investments and Financial Statements
19
<PAGE>
GE Strategic Investment Fund
- --------------------------------------------------------------------------------
Number
of Shares Value
- --------------------------------------------------------------------------------
Energy -- 5.3%
Amoco Corp. 1,700 $ 119,850
Anadarko Petroleum Co. 4,300 240,263
Atlantic Richfield Co. 2,300 293,250
Coflexip ADR 5,666 123,236 (a)
ENI Spa (Regd.) 22,631 115,662
Exxon Corp. 5,500 457,875
OMV AG 1,175 118,134
Repsol S.A 6,742 221,445
Royal Dutch Petroleum Co. ADR 5,000 780,625
Schlumberger Ltd. 10,000 845,000
Texaco Inc. 4,600 423,200
Total S.A. (Class B) 3,317 261,032
Unocal Corp. 13,000 468,000
Veba AG 6,447 337,360
4,804,932
Financial -- 6.9%
American Express Co. 6,500 300,625
Banco Comercial Portugues ADR 9,317 112,969
Citicorp 8,000 725,000
Countrywide Credit Industries 10,000 256,250
Den Danske Bank 2,015 146,859
Deutsche Bank AG 1,629 76,708
Federal National Mortgage Assoc 40,000 1,395,000
Grupo Financiero Bancomer
ADR (Series C) 6,028 58,019 (a,b)
HSBC Holdings 7,600 141,032
IMI 17,327 147,193
ING Groep N.V 4,821 150,313
Morgan (J.P.) & Co. Inc. 3,000 266,625
State Street Boston Corp. 8,000 459,000
Thai Farmers Bank 10,600 111,706
Travelers Group Inc. 26,000 1,277,250
Wells Fargo & Co. 2,800 728,000
6,352,549
Healthcare -- 7.8%
Abbott Laboratories 18,000 886,500
Allergan Inc. 2,200 83,875
American Home Products 10,000 637,500
Arrow International Inc. 2,500 86,250
Astra AB (Series B) 2,698 110,946
Bristol-Myers Squibb Co. 6,000 578,250
Columbia HCA Healthcare Corp. 2,000 113,750
Dentsply International Inc. 2,000 89,000
Eli Lilly & Co. 5,600 361,200
Gehe AG 1,860 124,252
Johnson & Johnson 19,000 973,750
Lincare Holdings Inc. 2,500 100,000 (a)
Living Centers of America Inc. 5,000 125,000 (a)
Medeva 59,589 238,300
Merck & Co. Inc. 10,000 703,750
Pfizer Inc. 11,500 909,937
Roche Holdings AG 15 110,361
Sandoz AG (Regd.) 215 257,959
Smithkline Beecham PLC ADR 6,600 401,775
St. Jude Medical Inc. 5,000 201,875 (a)
7,094,230
Insurance -- 3.1%
American International Group Inc. 4,500 453,375
Chubb Corp. 5,000 230,000
General Reinsurance Corp. 3,500 496,125
Loews Corp. 10,000 773,750
Marsh & McLennan Cos 3,800 369,075
Schw Ruckversicher (Regd.) 76 80,045
TIG Holdings Inc. 8,000 240,000
UNUM Corp. 3,700 237,262
2,879,632
Miscellaneous -- 1.9%
SPDR Trust 25,000 1,715,625
Retail Trade -- 2.3%
Arbor Drugs Inc. 8,500 184,875
Carrefour S.A 557 312,601
Credit Saison Co. 4,800 114,839
EMI Group 6,632 138,578
General Nutrition Cos. Inc. 5,000 87,812 (a)
Giordano International 86,000 75,624
Home Depot Inc. 3,800 216,125
Ito Yokado Co. 4,000 226,882
Izumi Co. 8,000 141,935
Thorn 6,632 37,733
Toys `R Us 18,000 524,250 (a)
2,061,254
Software & Services -- 4.7%
Automatic Data Processing Inc. 14,000 610,750
Equifax Inc. 35,000 923,125
First Data Corp. 14,500 1,183,562
Microsoft Corp. 1,900 250,563 (a)
Reuters Holdings PLC ADR (Class B) 15,500 1,073,375
Sap AG 1,343 225,607
4,266,982
Technology -- 2.0%
Brambles Industries Ltd. 12,722 206,461
Cisco Systems Inc. 4,000 248,250 (a)
Hewlett Packard Co. 3,400 165,750
Intel Corp. 6,500 620,344
Murata Manufacturing Co. 4,000 142,652
Rohm Co. 3,000 188,978
Secom Co. 3,000 189,516
Wolters Kluwer 802 100,818
1,862,769
Transportation -- 1.0%
Burns Philip & Co. 81,402 115,994
IHC Caland N.V 2,517 132,412
Pittston Brinks Group 5,500 172,562
Union Pacific Corp. 7,000 512,750
933,718
- ----------
See Notes to Schedule of Investments and Financial Statements
20
<PAGE>
Schedule of Investments -- September 30, 1996
- --------------------------------------------------------------------------------
Number
of Shares Value
- --------------------------------------------------------------------------------
Utilities -- 2.9%
Airtouch Communications Inc. 22,000 $ 607,750 (a)
American Telephone & Telegraph 6,100 318,725
DDI Corp. 42 339,086
Edison Spa 18,963 118,141
GTE Corp. 8,900 342,650
MCI Communications Corp. 12,800 328,000
NYNEX Corp. 2,000 87,000
Stet 34,365 119,231
Telecom Italia Mobile 78,445 174,065
Telefonica del Peru S.A. ADR (Class B) 4,713 107,810
Telekom Malaysia 16,000 141,079
2,683,537
Total Common Stock
(Cost $41,735,321) 52,718,211
Principal
Amount Value
- --------------------------------------------------------------------------------
Bonds and Notes -- 30.4%
- --------------------------------------------------------------------------------
U.S. Treasuries -- 7.2%
U.S. Treasury Bonds
6.00% 02/15/26 $ 967,000 849,751
8.125% 08/15/19 738,000 825,291
12.00% 05/15/05 - 08/15/13 360,000 498,563
2,173,605
U.S. Treasury Notes
5.125% 02/28/98 300,000 296,484
6.00% 08/15/99 360,000 357,469
6.125% 08/31/98 122,000 122,038
6.625% 06/30/01 564,000 567,435
6.75% 04/30/00 954,000 965,028
7.00% 07/15/06 2,040,000 2,082,391
4,390,845
Total U.S. Treasuries
(Cost $6,578,107) 6,564,450
Asset Backed -- 0.5%
Advanta Mortgage Loan Trust Corp.
6.30% 07/25/25 27,306 25,667
AT & T Universal Card Master Trust
5.95% 10/17/02 20,000 19,475
CIT RV Trust
5.40% 12/15/11 34,593 33,610
Discover Card Master Trust
6.20% 05/16/06 70,000 66,675
First Plus Home Improvement Loan Trust
7.80% 03/20/16 44,000 44,261
Fleetwood Credit Grantor Trust
6.90% 03/15/12 67,000 67,262
Lehman FHA Title I Loan Trust
7.83% 09/25/17 40,000 40,524
Premier Auto Trust
6.50% 03/06/00 50,000 50,172
Standard Credit Card Master Trust
6.75% 06/07/00 50,000 50,328
The Money Store Home Equity Trust
7.50% 01/15/26 49,000 48,640
7.90% 10/15/22 29,000 29,435
Total Asset Backed
(Cost $475,214) 476,049
<PAGE>
Corporate Notes -- 5.8%
American Home Products
7.70% 02/15/00 200,000 205,986
Argentaria Capital Fund
6.375% 02/14/06 50,000 46,125
Arkla Inc.
8.875% 07/15/99 75,000 79,028
BCH Cayman Islands
8.25% 06/15/04 25,000 26,008
Bell Telephone Co - Canada
9.50% 10/15/10 150,000 177,100
BHP Finance USA
6.42% 03/01/26 40,000 38,798
Blockbuster Entertainment
6.625% 02/15/98 175,000 174,368
Capital One Bank
6.43% 06/29/98 150,000 149,416
Carter Holt Harvey Ltd.
8.875% 12/01/04 200,000 218,374
Central Maine Power Co.
7.40% 06/02/98 200,000 199,518
China International Trust &
Investment Corp.
9.00% 10/15/06 65,000 69,400
Citicorp
8.625% 12/01/02 100,000 107,549
Developers Diversified
7.00% 03/05/01 115,000 112,055
Dresser Industries Inc.
7.60% 08/15/96 50,000 49,109
Finova Capital Corp.
6.375% 10/15/00 150,000 147,381
Ford Motor Co.
7.25% 10/01/08 80,000 79,646
9.95% 02/15/32 205,000 257,154
Freeport McMoran Resource Partner
7.00% 02/15/08 35,000 32,279
Freeport Term Malta Ltd.
7.50% 03/29/09 55,000 55,405 (b)
General Motors Corp.
8.89% 08/18/03 30,000 32,719
Great Atlantic & Pacific Tea Inc.
9.125% 01/15/98 100,000 102,736
HSBC Finance Nederland B.V.
7.40% 04/15/03 100,000 100,451 (b)
Hydro Quebec
8.05% 07/07/24 75,000 79,741
Ikon Capital Resource Inc.
6.90% 05/03/00 100,000 99,673
ING Bank
7.25% 06/12/06 40,000 39,700
- ----------
See Notes to Schedule of Investments and Financial Statements
21
<PAGE>
GE Strategic Investment Fund
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
ITT Corp. (new)
6.25% 11/15/00 $ 35,000 $ 33,999
Joy Technologies Inc.
10.25% 09/01/03 100,000 109,000
Kingdom of Sweden
10.25% 11/01/15 50,000 61,292
Korea Electric Power Corp.
7.75% 04/01/13 28,000 27,752
Landeskreditbank Baden
7.875% 04/15/04 40,000 42,004
Lehman Brothers Inc.
7.00% 05/24/00 150,000 149,320
Loewen Group Interest
7.50% 04/15/01 55,000 54,725 (b)
Mayne Nickless Ltd.
8.65% 04/15/02 50,000 53,417 (b)
New York Taxable General Obligation
6.10% 02/01/98 100,000 99,225
News America Holdings Inc.
9.125% 10/15/99 150,000 159,333
North Atlantic Energy Corp.
9.05% 06/01/02 141,000 139,105
Nova Scotia Province of Canada
9.125% 05/01/21 45,000 52,144
Ontario Province of Canada
6.125% 06/28/00 250,000 246,110
Oslo Seismic
8.28% 06/01/11 100,000 101,010 (b)
Paramount Communications Inc.
5.875% 07/15/00 150,000 143,169
Pennzoil Co.
10.625% 06/01/01 50,000 54,190
Peoples Republic of China
7.75% 07/05/06 50,000 50,192
Philip Morris Cos. Inc.
6.95% 06/01/06 75,000 75,387
Reliance Industries Ltd.
10.375% 06/24/16 30,000 30,620 (b)
Republic of Columbia
7.25% 02/15/03 35,000 33,110
Republic of Poland
3.75% 10/27/14 50,000 39,781
RHG Finance Corp.
8.875% 10/01/05 85,000 88,408
RJR Nabisco Inc.
8.00% 07/15/01 125,000 124,099
Taubman Realty Group L.P.
8.00% 06/15/99 80,000 80,938
TCI Communications Inc.
6.275% 09/15/03 40,000 40,000
6.69% 03/31/06 100,000 98,117
Tele-Communications Inc.
8.25% 01/15/03 85,000 85,637
Tenaga Nasional Berhad
7.50% 01/15/96 25,000 22,514 (b)
Thai Farmers Bank Public Ltd.
8.25% 08/21/16 100,000 97,344 (b)
United Co. Financial Corp.
7.00% 07/15/98 150,000 150,133
Yale University Notes
7.375% 04/15/96 65,000 63,408
Total Corporate Notes
(Cost $5,296,745) 5,285,202
<PAGE>
Mortgage-Backed -- 16.9%
Federal Home Loan Mortgage Corp.
6.50% 03/01/04 - 04/01/11 200,164 195,036
7.00% 11/01/09 - 05/01/10 55,704 55,408
7.50% 06/01/23 - 02/01/26 442,496 439,431
8.00% 10/01/25 - 02/01/26 696,245 703,639
9.00% 04/01/16 - 06/01/21 500,937 526,042
1,919,556
Federal National Mortgage Assoc.
6.00% 03/01/09 - 04/01/09 165,782 158,737
6.50% 01/01/04 16,436 16,151
7.00% TBA 98,000 94,570 (c)
8.00% 12/01/24 580,609 586,775
8.00% TBA 360,000 363,206 (c)
8.50% 04/01/17 29,750 30,746
9.00% 08/01/24 - 07/01/26 417,491 435,502
9.50% 04/01/25 266,511 284,333
9.50% TBA 404,000 431,270 (c)
2,401,290
Government National Mortgage Assoc.
6.00% 09/20/26 404,000 401,600
6.00% TBA 55,000 54,502 (c,e)
6.50% TBA 55,000 55,172 (c,e)
7.00% 05/15/23 - 12/15/23 1,470,632 1,423,979
7.50% 04/15/22 - 12/15/23 2,236,576 2,220,809
8.50% 10/15/17 2,490,028 2,606,487
9.00% TBA 121,000 128,260 (c)
9.50% 12/15/09 149,559 161,337
7,052,146
Collateralized Mortgage Obligations
Aetna Commercial Mortgage Trust
6.422% 12/26/30 173,325 171,592
American Southwest Financial Securities Corp.
7.30% 10/17/01 28,576 28,656
Asset Securitization Corp.
7.10% 08/13/29 49,415 48,983
Collateralized Mortgage Obligation Trust
5.93% 09/01/15 43,295 36,086 (d,f)
7.36% 11/01/18 42,470 26,332 (d,f)
8.00% 01/01/17 133,312 135,058
Community Program Loan Trust
4.50% 10/01/18 170,000 141,791
CS First Boston Mortgage Securities Corp.
6.425% 08/20/30 93,365 92,781
DLJ Mortgage Acceptance Corp.
6.65% 12/17/27 33,509 33,100 (b)
6.85% 12/17/27 123,000 118,195 (b)
7.50% 02/18/03 92,846 93,890
7.58% 03/13/28 50,000 50,110 (b)
8.75% 06/28/26 112,744 113,378 (b)
- ----------
See Notes to Schedule of Investments and Financial Statements
22
<PAGE>
Schedule of Investments -- September 30, 1996
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
FDIC REMIC Trust
7.85% 09/25/25 $ 55,734 $ 56,265
Federal Home Loan Mortgage Corp.
7.00% 07/01/26 773,492 285,709 (g)
8.00% 04/15/20 30,000 30,487
1009.00% 09/15/21 928 37,438 (g)
Federal National Mortgage Assoc.
6.19% 08/25/23 127,131 87,561 (d,f)
7.41% 03/25/21 95,000 95,623
8.00% 07/01/24 145,761 48,237 (g)
8.50% 03/01/17 - 07/25/22 211,465 67,170 (g)
8.58% 09/25/23 147,948 85,348 (d,f)
9.60% 09/25/23 195,000 109,200 (d,f)
Federal National Mortgage Assoc. REMIC
6.965% 07/25/10 40,000 39,100
6.97% 07/25/20 101,000 79,790 (d,f)
7.43% 09/25/22 100,704 76,976 (d,f)
8.58% 09/25/23 41,105 23,712 (d,f)
LB Commercial Conduit Mortgage Trust
7.144% 08/25/04 260,727 261,216
Merrill Lynch Mortgage Investor's Inc.
7.098% 05/25/15 45,712 45,383
7.252% 06/15/21 132,611 133,564
Mid-State Trust
8.33% 04/01/30 630,720 656,245
Morgan Stanley Capital Inc.
6.476% 10/15/10 98,907 96,342 (b)
7.51% 11/15/05 137,057 138,428 (b)
Provident Bank Home Equity Loan Trust
7.60% 09/01/06 75,000 75,188
Rural Housing Trust
6.33% 04/01/26 176,243 171,044
Sawgrass Finance REMIC Trust
6.45% 01/20/06 60,000 58,819
Structured Asset Securities Corp.
8.495% 04/25/27 150,948 153,590 (d)
Vornado Finance Corp.
6.36% 12/01/00 105,000 102,637 (b)
4,105,024
Total Mortgage-Backed
(Cost $15,463,843) 15,478,016
Total Bonds and Notes
(Cost $27,813,909) 27,803,717
Convertible Bonds -- 0.0%
- --------------------------------------------------------------------------------
Sasib
9.25% 12/31/97
(Cost $8,270) ITL 15,000,000 5,342
- --------------------------------------------------------------------------------
Number
of Shares Value
- --------------------------------------------------------------------------------
Preferred Stock -- 0.6%
- --------------------------------------------------------------------------------
Airtouch Communications Inc.
(Class B), 6.00% 3,676 $ 106,144
Airtouch Communications Inc.
(Class C), 4.25% 2,361 112,443
Appalachian Power Co.
(Series A), 8.25% 500 12,375 (a)
Central Hispano Capital, 9.43% 2,000 52,000
Entergy Gulf States Inc., $1.75 2,875 70,852
Equity Residential Properties
Trust, 9.125% 1,900 47,975 (a)
Grand Metropolitan Delaware, 9.42% 1,500 41,625
Hibernia Corp., 6.90% 1,900 95,000
Post Properties Inc., 8.50% 780 39,000
Total Preferred Stock
(Cost $560,084) 577,414
Total Investments in Securities
(Cost $70,117,584) 81,104,684
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
Short Term Investments -- 12.5%
- --------------------------------------------------------------------------------
U.S. Government Agencies -- 8.7%
Federal Home Loan Mortgage Corp.
5.23% 10/15/96 $2,000,000 1,995,932 (d)
5.28% 10/10/96 2,300,000 2,296,964 (d)
5.38% 10/18/96 - 11/08/96 3,670,000 3,657,695 (d)
7,950,591
Repurchase Agreement -- 3.8%
State Street Bank and Trust Co.
5.40% 10/01/96
(Cost $3,540,000) 3,540,000 3,540,000
(dated 09/30/96, proceeds $3,540,531,
collateralized by $3,613,860 United States
Treasury Note, 8.375%, 08/15/08)
Total Short Term Investments
(Cost $11,490,591) 11,490,591
Other Assets and Liabilities, net (1.1%) (1,033,521)
NET ASSETS -- 100% $91,561,754
- ----------
See Notes to Schedule of Investments and Financial Statements
23
<PAGE>
GE Tax-Exempt Fund
Q&A
Effective in February, 1996 Stella Lou assumed management responsibility for the
GE Tax-Exempt Fund. Stella has 11 years of investment experience and has been
with GE Investments since 1994. Prior to joining GE Investments, she was a Vice
President and Portfolio Manager for Alliance Capital Management in New York.
Stella graduated from Cornell University with a B.S. degree in Applied Economics
and received her M.B.A. degree in Finance from New York University.
Q. How did the GE Tax-Exempt Fund's industry benchmark and Lipper peer group
perform for the fiscal year ended September 30, 1996?
A. The Lehman Municipal Index returned 6.0% for the 12 months ended September
30, 1996. Our Lipper peer group of 230 General Municipal funds had an
average return of 5.6% for the same period. Refer to the following page to
see how your class of shares performed.
Q. Why did the Fund underperform its benchmark and peers?
A. The GE Tax-Exempt Fund underperformed its benchmarks because the Fund had a
longer average duration than the benchmarks during the first quarter. The
longer duration is caused by owning securities with longer maturities that
are purchased to maximize the tax exempt income to the Fund. As interest
rates rise, a longer duration causes the portfolio market value to decline
by a greater amount than those of its peers with shorter durations. This
was the case for GE Tax-Exempt Fund for the first quarter of 1996. Quality
is also a contributing factor to the performance. The GE Tax-Exempt Fund
has a high average quality rating of Aa1/AA while the benchmark has an
average quality rating of A1/AA2. This lower average rating reflects the
greater risk and volatility of the benchmark performance.
Q. What has your investment strategy been?
A. The strategy for this Fund has been to purchase discounted securities in
the 15 to 20 year maturity range and premium, noncallable bonds in the 10
year range. This strategy has allowed the Fund to maximize its income
earning power and still have a measure of protection during periods of
rising interest rates. The cash position averaged 10% for the second half
of fiscal 1996 as a cushion against the potential of rising interest rates.
During fiscal 1995-96 interest rates fluctuated dramatically as economic
data vacillated between signs of rapid growth and a moderate slowdown.
Q. How did this past year's economic events impact the Fund?
A. A lack of firm economic direction had the biggest impact on the portfolio
during the last fiscal year. In the first quarter of 1996, the portfolio
was positioned for a decline in interest rates. When the February
unemployment figures showed stronger than expected growth in the economy,
the portfolio market value declined in response. Subsequently, April
unemployment indicated a significantly slower economy causing interest
rates to fall and positively impact the portfolio. Many of the monthly
economic indicators this year have vacillated between showing an
inflationary or a slowing economic environment. This type of seesawing
between inflationary and slowing economic activity made positioning the
portfolio difficult at best. The portfolio holdings were adapted to take a
more conservative stance until more definitive signs of market direction
appear.
Q. What is the outlook for the Fund? How have you positioned the Fund going
forward?
A. The municipal market will continue to be volatile during the next fiscal
year. New issue municipal supply is expected to remain light as
municipalities have no imperative need to issue debt and are attempting to
reign in spending. As such, the Fund is positioned slightly longer than the
index and peer group with respect to duration. The cash position is
currently intended to be maintained at around 5%. This will enable the Fund
to take advantage of declining interest rates as demand for municipals
increases. The major issue facing the municipal market in the coming year
will be tax reform. We don't expect any major action by President Clinton
until he establishes his Cabinet and his agenda for the second term. With
Republicans retaining control of Congress, we can expect some form of tax
reform to materialize but not until they address the Presidential agenda.
24
<PAGE>
GE Tax-Exempt Fund
Quality Ratings
at September 30, 1996
Percent of
Moody's Ratings+ Market Value
---------------- ------------
Aaa 53.6%
Aa 44.2%
A 2.2%
100.0%
+ Moody's Investors Service, Inc. is a nationally recognized statistical
rating organization.
Investment Profile
A mutual fund designed for investors who seek a high level of current income
exempt from federal income taxes while preserving capital by investing primarily
in municipal obligations.
* Lipper Performance Comparison
General Municipal Peer Group
Based on 10/1/95 -- 9/30/96
total returns
Number of Funds in category: 230
Peer group average total return: 5.6%
Lipper categories in peer group: General Municipal
*See notes to performance for explanation of peer categories
See page 39 for Notes to Performance. Past performance is no guarantee of future
results.
Comparison of Change in Value of a $10,000 Investment
- --------------------------------------------------------------------------------
Class A Shares
w/o load w/load LBMI
-------- ------ ----
1/1/94 $10,000 $10,000 $10,000
9,381.7 8,982.98 9,451.07
9,430.35 9,029.56 9,555.68
9/94 9,460.21 9,058.15 9,621.07
9,242.16 8,849.37 9,482.9
9,927.02 9,505.13 10,153.39
10,103.43 9,674.04 10,398.6
9/95 10,307.9 9,869.82 10,697.67
10,746.85 10,290.11 11,138.86
10,425.48 9,982.39 11,004.51
10,455.1 10,010.76 11,088.88
9/96 10,670.74 10,217.23 11,344.17
Average Annual
Total Return
One Since
Year Inception
---- ---------
GE Tax-Exempt 3.52% 2.39%
GE Tax-Exempt w/load -0.88% 0.78%
LBMI 6.04% 4.70%
- --------------------------------------------------------------------------------
Class B Shares
w/o load w/load LBMI
-------- ------ ----
12/22/93 $10,000 $10,000 $10,000
10,051.4 10,051.4 10,000
9,417.1 9,417.1 9,451.07
9,454.03 9,454.03 9,555.68
9/94 9,472.13 9,472.13 9,621.07
9,242.25 9,242.25 9,482.9
9,914.81 9,914.81 10,153.39
10,078.67 10,078.67 10,398.6
9/95 10,278.33 10,278.33 10,697.67
10,693.72 10,693.72 11,138.86
10,369.91 10,369.91 11,004.51
10,395.73 10,395.73 11,088.88
9/96 10,587.69 10,387.69 11,344.17
Average Annual
Total Return
One Since
Year Inception
---- ---------
GE Tax-Exempt 3.01% 2.08%
GE Tax-Exempt w/load 0.04% 1.42%
LBMI 6.04% 4.70%
- --------------------------------------------------------------------------------
Class C Shares
w/o load LBMI
-------- ----
2/26/93 $10,000 $10,000
9,875.35 9,894
10,206.4 10,217.73
9/93 10,547.64 10,562.88
10,651.9 10,711.15
9,998.34 10,123.18
10,056.31 10,235.23
9/94 10,094.5 10,305.27
9,867.99 10,157.28
10,605.66 10,875.45
10,800.67 11,138.1
9/95 11,025.98 11458.44
11,502.77 11,931.01
11,165.7 11,787.1
11,213.29 11,877.46
9/96 11,441.42 12,150.92
Average Annual
Total Return
One Since
Year Inception
---- ---------
GE Tax-Exempt 3.77% 3.82%
LBMI 6.04% 5.58%
- --------------------------------------------------------------------------------
Class D Shares
11/29/93 10000 10000
10237.01 10211
9614.93 9650.49
9676.76 9757.3
9/94 9719.61 9824.07
9507.55 9682.99
10224.66 10367.63
10419.08 10618.01
9/95 10652.21 10923.4
11110.3 11373.89
10791.47 11236.71
10844.99 11322.54
9/96 11073.04 11583.54
Average Annual
Total Return
One Since
Year Inception
---- ---------
GE Tax-Exempt 3.95% 3.65%
LBMI 6.04% 5.31%
25
<PAGE>
Schedule of Investments -- September 30, 1996
GE TAX-EXEMPT FUND
Water and Sewer 4.7%
Health 7.7%
General Obligations 34.2%
Transportation 2.2%
Industrial Development 3.2%
Education 15.9%
Cash and Other 2.8%
Electric Utility 5.5%
Sales Tax 12.3%
Lease Revenue 11.5%
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds -- 97.2%
Arizona -- 8.5%
Arizona Transportation Board Excise Tax
Rev. - Sales Tax, AMBAC Insured
5.60% 07/01/02 $500,000 $ 523,150
Maricopa County Elementary School
G.O., AMBAC Insured
6.30% 07/01/07 500,000 546,515
1,069,665
Connecticut -- 7.7%
Connecticut State Health & Educational Facility
Rev. - Educ., MBIA Insured
5.125% 11/01/13 500,000 475,660
Connecticut State Health & Educational
Facility Rev. - Health, MBIA Insured
5.50% 07/01/12 500,000 494,765
970,425
Georgia -- 3.9%
Georgia State G.O.
5.00% 08/01/10 500,000 483,960
Hawaii-- 4.0%
Hawaii State G.O.
4.50% 06/01/01 500,000 497,065
Indiana -- 6.1%
Indiana Health Facility Hospital Rev. - Health
5.25% 11/01/15 500,000 464,675
Indiana University Rev. - Educ.
6.00% 11/15/14 290,000 300,257
764,932
Kentucky -- 2.6%
Louisville & Jefferson County Kentucky
Rev. - Sewer, MBIA Insured
5.30% 05/15/19 345,000 331,366
Maryland -- 4.2%
Baltimore County G.O.
5.50% 08/01/04 500,000 519,930
Massachusetts -- 2.1%
Massachusetts State Water & Sewer
Rev. - Water & Sewer
6.00% 11/01/06 250,000 262,705
Michigan -- 6.1%
Michigan State Underground Storage Tank
Rev. - Sales Tax, AMBAC Insured
6.00% 05/01/04 500,000 529,255
Okemos Public School District
Rev. - Educ., MBIA Insured
5.88% 05/01/16 750,000 241,162 (d)
770,417
Mississipi -- 3.9%
Mississippi State G.O.
5.10% 11/15/10 500,000 483,365
Missouri -- 3.9%
Missouri State Environmental
Improvement & Energy Rev. - Electric
5.25% 12/01/09 500,000 492,960
Montana -- 3.8%
Montana State University
Rev. - Educ., MBIA Insured
5.25% 11/15/13 500,000 481,925
New Jersey -- 6.0%
New Jersey Building Auth. Rev. - Muni. Bldg.
5.00% 06/15/12 500,000 468,395
New Jersey Tpke. Auth.
Rev. - Trans., AMBAC Insured
6.50% 01/01/16 250,000 279,425
747,820
Ohio -- 6.0%
Ohio State Building Authority
Rev. - Muni. Bldg., AMBAC Insured
5.50% 04/01/16 500,000 491,780
Ohio State Public Facilities
Rev. - Educ., AMBAC Insured
5.40% 11/01/07 250,000 254,113
745,893
Oregon -- 3.9%
Portland G.O.
5.375% 06/01/13 500,000 494,270
- ----------
See Notes to Schedule of Investments and Financial Statements
26
<PAGE>
Schedule of Investments -- September 30, 1996
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
Pennsylvania -- 3.9%
Pennsylvania Intergovernmental Co-op.
Rev. - Sales Tax, MBIA Insured
5.60% 06/15/15 $500,000 $489,185
South Dakota -- 3.8%
South Dakota State Building Authority
Rev. - Muni. Bldg., AMBAC Insured
5.20% 12/01/09 500,000 480,160
Tennessee -- 3.2%
Sullivan County Tennessee Industrial Development
Rev. - Industrial Development, VRDN
3.90% 10/01/16 400,000 400,000
Texas -- 8.1%
Houston G.O.
6.00% 04/01/04 500,000 530,930
University of Texas Rev.- Educ.
5.10% 08/15/08 500,000 487,375
1,018,305
Virginia -- 1.6%
Peninsula Ports Authority Virginia Coal Term
Rev. - Electrical Utility, VRDN
3.85% 07/01/16 200,000 200,000
Wisconsin -- 3.9%
Wisconsin State G.O.
5.30% 11/01/11 500,000 493,340
Total Investments in Securities
(Cost $12,044,928) 12,197,688
Other Assets and Liabilities,
net 2.8% 345,286
NET ASSETS -- 100% $12,542,974
- ----------
See Notes to Schedule of Investments and Financial Statements
27
<PAGE>
GE Fixed Income Funds
Q&A
Bob MacDougall leads the taxable fixed income team at GE Investments. Assets
under management exceed $13 billion. His responsibilities include managing the
GE Fixed Income, GE Short-Term Government and GE Money Market Funds. Bob joined
GE Investments in 1986 as Mutual Fund Portfolio Manager and was named to his
present position in 1992. Previously he was with GE's Corporate Treasury
Operation managing the Company's $2 billion portfolio of marketable securities
and supporting the Treasurer in the areas of debt management and capital
structure planning. Prior to that, Bob held various financial management
positions since joining GE in 1973. He holds Bachelor's and Master's degrees in
Business Administration from the University of Massachusetts.
Q. Describe this year's bond market.
A. The past 12 months comprised three distinct periods in the bond market.
First, 1995's market rally continued throughout the fourth quarter. It then
reversed course in the first quarter of 1996 as rates rose 1 percentage
point on renewed inflation concerns raised by stronger than expected
economic activity. Finally, the past six months have witnessed the market
trading in a narrow range around 7% on the long bond. Sentiment seems to
change almost daily over whether the economy is too strong, too weak or
just right - prompting references to Goldilocks. In this environment our
focus is to seek to add yield to the portfolio by overweighting
mortgage-backed securities and by prudently selecting lower rated corporate
bonds.
GE Fixed Income Fund
Q. How did the GE Fixed Income Fund's peers and industry benchmark perform for
the fiscal year?
A. For the year ending September 30, 1996 the Lehman Aggregate Bond Index
returned 4.9% while our peer group of 132 Intermediate Maturity U.S.
Government Bond funds averaged a 3.8% return for the same period. Refer to
the following page to see how your class of shares performed compared to
these benchmarks.
Q. What drove the Fund's performance?
A. The Fund's duration (interest rate exposure) hurt performance as interest
rates rose earlier in the year but this was more than offset by favorable
sector allocation (mortgage-backed securities and corporate bonds) and good
security selection.
GE Short-Term Government Fund
Q. How did the GE Short-Term Government Fund's peers and industry benchmark
perform for the fiscal year?
A. The Lehman Brothers 1-3 year Government Index returned 5.7% for the year
ended September 30, 1996 while the average return of the 161 Short-Term
U.S. Government Bond funds in our peer group was 4.6%. Refer to page 34 to
see how your class of shares performed compared to these benchmarks.
Q. Discuss the Fund's performance.
A. The Fund takes less interest rate risk than GE Fixed Income because of its
shorter average maturity. That is why, in a rising rate environment, it
does better even though its yield is lower. Our allocation to
mortgage-backed securities was also a plus.
GE Money Market Fund
Q. How did the GE Money Market Fund's peers and industry benchmark perform for
the fiscal year?
A. The average return of 287 peer Money Market funds for the past 12 months
was 4.9% versus 5.2% for 90 day Treasury Bills. Our return of 5.2% put us
in the top 20% of the peer group.
Q. What is your approach in this Fund?
A. The strategy for this Fund is to provide a competitive money market yield
while minimizing the interest rate risk inherent in the other two fixed
income funds. Our average maturity is generally between 30 and 60 days and
our portfolio contains only high quality liquid securities.
28
<PAGE>
GE Fixed Income Fund
Quality Ratings
at September 30, 1996
Percent of
Moody's Ratings+ Market Value
---------------- ------------
Aaa 79.6%
Aa 1.1%
A 7.1%
Baa 6.8%
Ba 5.4%
100.0%
+ Moody's Investors Service, Inc. is a nationally recognized statistical
rating organization.
Investment Profile
A mutual fund designed for investors who seek high current income and
preservation of capital by investing primarily in a variety of fixed income
securities.
* Lipper Performance Comparison
Intermediate Government Peer Group
Based on 10/1/95 -- 9/30/96
total returns
Number of Funds in peer group: 132
Peer group average total return: 3.8%
Lipper categories in peer group: Intermediate U.S. Government,
Intermediate
U.S. Treasury
*See notes to performance for explanation of peer categories
See page 39 for Notes to Performance. Past performance is no guarantee of future
results.
Comparison of Change in Value of a $10,000 Investment
- --------------------------------------------------------------------------------
Class A Shares
w/o load w/load LB Aggr.
-------- ------ --------
1/1/94 $10,000 $10,000 $10,000
9,746.86 9,332.62 9,712.67
9,654.97 9,244.63 9,612.81
9/94 9,698.17 9,286 9,671.58
9,719.6 9,306.52 9,708.14
10,150.16 9,718.78 10,197.82
10,735.92 10,279.64 10,819.18
9/95 10,908.39 10,444.78 11,031.99
11,357.95 10,875.24 11,501.83
11,105.43 10,633.45 11,296.66
11,128.73 10,655.76 11,361.16
9/96 11,335.09 10,853.35 11,570.35
Average Annual
Total Return
One Since
Year Inception
---- ---------
GE Fixed Income 3.91% 4.66%
GE Fixed Income w/load -0.50% 3.01%
LB Aggregate 4.90% 5.45%
- --------------------------------------------------------------------------------
Class B Shares
w/o load w/load LB Aggr.
-------- ------ --------
12/22/93 $10,000 $10,000 $10,000
10,020.6 10,020.6 10,000
9,742.02 9,742.02 9,712.67
9,638.19 9,638.19 9,612.81
9/94 9,669.13 9,669.13 9,671.58
9,678.39 9,678.39 9,708.14
10,094.77 10,094.77 10,197.82
10,673.82 10,673.82 10,819.18
9/95 10,827.5 10,827.5 11,031.99
11,255.17 11,255.17 11,501.83
10,997.08 10,997.08 11,296.66
11,006.6 11,006.6 11,361.16
9/96 11,196.65 10,996.65 11,570.35
Average Annual
Total Return
One Since
Year Inception
---- ---------
GE Fixed Income 3.41% 4.15%
GE Fixed Income w/load 0.46% 3.51%
LB Aggregate 4.90% 5.45%
- --------------------------------------------------------------------------------
Class C Shares
w/o load LB Aggr
-------- -------
2/22/93 $10,000 $10,000
10,081.05 10,042
10,293.97 10,308.71
9/93 10,524 10,577.38
10,521.85 10,583.12
10,249.59 10,279.04
10,159.39 10,173.36
9/94 10,211.26 10,235.55
10,240.36 10,274.25
10,700.74 10,792.48
11,334.65 11,450.07
9/95 11,519.5 11,675.28
11,996.49 12,172.53
11,743.72 11,955.39
11,765.79 12,023.65
9/96 11,991.43 12,245.04
Average Annual
Total Return
One Since
Year Inception
---- ---------
GE Fixed Income 4.10% 5.16%
LB Aggregate 4.90% 5.81%
- --------------------------------------------------------------------------------
Class D Shares
w/o load LB Aggr
-------- -------
11/29/93 $10,000 $10,000
10,043.77 10,054
9,790 9,765.12
9,709.77 9,664.72
9/94 9,765.5 9,723.81
9,799.5 9,760.57
10,246.42 10,252.89
10,859.91 10,877.6
9/95 11,044.37 11,091.56
11,510.21 11,563.94
11,269.08 11,357.94
11,297.78 11,422.51
9/96 11,521.71 11,632.83
Average Annual
Total Return
One Since
Year Inception
---- ---------
GE Fixed Income 4.32% 5.11%
LB Aggregate 4.90% 5.48%
29
<PAGE>
Schedule of Investments -- September 30, 1996
- --------------------------------------------------------------------------------
GE FIXED INCOME FUND
U.S. Treasuries 19.6%
Corporate Notes 19.3%
Mortgage Backed 55.4%
Cash and Other 5.7%
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
Bonds and Notes -- 95.9%
- --------------------------------------------------------------------------------
U.S. Treasuries -- 19.6%
U.S. Treasury Bonds
6.00% 02/15/26 $1,753,000 $1,540,449
8.125% 08/15/19 1,170,000 1,308,387
12.00% 05/15/05 - 08/15/13 465,000 645,899
3,494,735
U.S. Treasury Notes
5.125% 02/28/98 2,000,000 1,976,560
6.00% 08/15/99 1,450,000 1,439,807
6.125% 05/15/98 - 08/31/98 805,000 805,339
6.625% 06/30/01 2,314,000 2,328,092
7.00% 07/15/06 2,582,000 2,635,654
9,185,452
Total U.S. Treasuries
(Cost $12,703,004) 12,680,187
Asset Backed-- 0.2%
Advanta Mortgage Loan Trust Corp.
6.30% 07/25/25 54,610 51,334
Lehman FHA Title I Loan Trust
7.83% 09/25/17 80,000 81,048
Total Asset Backed
(Cost $132,266) 132,382
Corporate Notes -- 19.3%
American Home Products
7.70% 02/15/00 100,000 102,993
Argentaria Capital Fund
6.375% 02/14/06 120,000 110,700
Arkla Inc.
8.875% 07/15/99 150,000 158,056
BCH Cayman Islands
8.25% 06/15/04 125,000 130,038
Bell Telephone Co - Canada
9.50% 10/15/10 375,000 442,751
Bell Telephone Co. - Pennsylvania
8.35% 12/15/30 75,000 85,286
BHP Finance USA
6.42% 03/01/26 45,000 43,648
Blockbuster Entertainment
6.625% 02/15/98 500,000 498,195
Capital One Bank
6.43% 06/29/98 400,000 398,444
8.125% 03/01/00 400,000 413,308
Central Maine Power Co.
7.40% 06/02/98 125,000 124,699
China International Trust & Investment Corp.
9.00% 10/15/06 325,000 346,999
China Light & Power Ltd.
7.50% 04/15/06 150,000 147,944
Conseco Inc.
10.50% 12/15/04 100,000 115,484
Continental Cablevision Inc.
8.30% 05/15/06 130,000 134,436
Delta Air Lines Inc.
7.79% 12/01/98 125,000 127,173
Developers Diversified
7.00% 03/05/01 300,000 292,317
Dresser Industries Inc.
7.60% 08/15/96 113,000 110,985
Federated Department Stores Inc.
8.50% 06/15/03 110,000 112,721
Finova Capital Corp.
6.375% 10/15/00 100,000 98,254
Ford Motor Credit Co.
7.25% 10/01/08 200,000 199,114
9.95% 02/15/32 95,000 119,169
Freeport McMoran Resource Partner
7.00% 02/15/08 150,000 138,339
Freeport Term Malta Ltd.
7.50% 03/29/09 150,000 151,104 (b)
General Motors Corp.
8.89% 08/18/03 100,000 109,062
Great Atlantic & Pacific Tea Inc.
9.125% 01/15/98 100,000 102,736
HSBC Finance Nederland B.V.
7.40% 04/15/03 150,000 150,676 (b)
Hydro Quebec
8.25% 04/15/26 250,000 259,120
11.75% 02/01/12 165,000 228,832
Ikon Capital Resource Inc.
6.90% 05/03/00 200,000 199,346
ING Bank
7.25% 06/12/06 150,000 148,875
ITT Corp. (new)
6.25% 11/15/00 75,000 72,854
Joy Technologies Inc.
10.25% 09/01/03 200,000 218,000
Kingdom of Sweden
10.25% 11/01/15 395,000 484,207
Korea Electric Power Corp.
7.75% 04/01/13 114,000 112,990
Landeskreditbank Baden
7.875% 04/15/04 160,000 168,014
- ----------
See Notes to Schedule of Investments and Financial Statements
30
<PAGE>
Schedule of Investments -- September 30, 1996
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
Lehman Brothers Inc.
7.00% 05/24/00 $170,000 $169,230
Liberty Mutual Insurance Co.
8.20% 05/04/07 150,000 156,924 (b)
8.50% 05/15/25 100,000 104,536 (b)
Loewen Group Interest
7.50% 04/15/01 125,000 124,375 (b)
Lumbermans Mutual Casualty Co.
9.15% 07/01/26 150,000 156,639 (b)
Mayne Nickless Ltd.
8.65% 04/15/02 100,000 106,833 (b)
Merrill Lynch & Co. Inc.
6.64% 09/19/02 90,000 88,315
Metropolitan Life Insurance Co.
7.80% 11/01/25 250,000 243,555 (b)
Midland Bank PLC
6.95% 03/15/11 310,000 293,139
National Bank of Hungary
8.875% 11/01/13 140,000 142,516
New York Taxable General Obligation
6.10% 02/01/98 150,000 148,838
North Atlantic Energy Corp.
9.05% 06/01/02 178,000 175,608
Nova Scotia Province of Canada
9.125% 05/01/21 105,000 121,670
Oryx Energy Co.
10.00% 06/15/99 150,000 158,830
Oslo Seismic
8.28% 06/01/11 135,000 136,364 (b)
Pennzoil Co.
10.625% 06/01/01 150,000 162,570
Peoples Republic of China
7.75% 07/05/06 105,000 105,403
Philip Morris Cos. Inc.
6.95% 06/01/06 250,000 251,290
Reliance Industries Ltd.
10.375% 06/24/16 100,000 102,068 (b)
Republic of Columbia
7.25% 02/15/03 100,000 94,599
Republic of Poland
3.75% 10/27/14 110,000 87,519
RHG Finance Corp.
8.875% 10/01/05 75,000 78,008
RJR Nabisco Inc.
8.00% 07/15/01 300,000 297,837
Taubman Realty Group L.P.
8.00% 06/15/99 160,000 161,875
TCI Communications Inc.
6.275% 09/15/03 30,000 30,000
6.69% 03/31/06 125,000 122,646
Tele-Communications Inc.
8.25% 01/15/03 70,000 70,525
8.75% 08/01/15 50,000 48,615
9.25% 04/15/02 100,000 106,032
Tenaga Nasional Berhad
7.50% 01/15/96 285,000 256,662 (b)
Thai Farmers Bank Public Ltd.
8.25% 08/21/16 170,000 165,485 (b)
Time Warner Entertainment Co. L.P.
10.15% 05/01/12 75,000 87,970
Time Warner Inc.
7.95% 02/01/00 150,000 153,451
Toledo Edison Co.
7.38% 03/31/00 250,000 235,787
United Co. Financial Corp.
7.00% 07/15/98 300,000 300,267
Viacom Inc.
7.75% 06/01/05 250,000 241,505
Yale University Notes
7.375% 04/15/96 100,000 97,550
Total Corporate Notes
(Cost $12,579,264) 12,441,905
Mortgage-Backed -- 55.4%
Federal Home Loan Mortgage Corp.
6.50% 03/01/04 - 04/01/11 544,784 529,303
7.00% 11/01/09 - 05/01/10 127,110 126,435
7.50% 06/01/23 - 02/01/26 532,791 527,365
8.00% 03/01/07 - 10/01/25 943,611 953,694
8.00% 08/01/08 25,669 26,259
8.75% 04/01/08 56,031 58,423
9.00% 12/01/16 552,893 580,449
9.50% 04/01/21 49,077 52,672
2,854,600
Federal National Mortgage Assoc.
6.00% 03/01/09 - 07/01/09 307,255 294,238
6.50% 01/01/04 48,401 47,561
7.00% TBA 1,835,000 1,770,775 (c)
7.50% 02/01/14 29,747 29,815
8.00% 12/01/24 1,054,773 1,065,975
8.00% TBA 738,000 744,573 (c)
8.50% 04/01/17 118,999 122,984
9.00% 12/01/24 - 02/01/25 980,078 1,022,604
9.50% 05/01/20 - 03/01/25 597,451 637,913
9.50% TBA 2,282,000 2,436,035 (c)
8,172,473
Government National Mortgage Assoc.
6.00% TBA 495,000 490,514 (c,e)
6.00% 07/20/26 - 08/20/26 823,693 821,951 (e)
6.50% TBA 495,000 496,547 (c,e)
7.00% 05/15/23 - 12/15/23 4,234,773 4,101,398
7.50% 03/15/22 - 12/15/23 6,197,426 6,154,932
8.00% 06/15/23 360,418 365,824
8.50% 10/15/17 1,150,927 1,204,756
9.00% 11/15/19 198,595 209,579
9.00% TBA 177,000 187,620 (c)
9.50% 12/15/09 454,163 489,928
14,523,049
- ----------
See Notes to Schedule of Investments and Financial Statements
31
<PAGE>
G.E. Fixed Income Fund
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
Collateralized Mortgage Obligations
Aetna Commercial Mortgage Trust
6.425% 12/26/30 $451,355 $446,842
American Southwest Financial
Securities Corp.
7.30% 10/17/01 47,626 47,760
Asset Securitization Corp.
7.10% 08/13/29 112,667 111,681
Collateralized Mortgage Obligation Trust
5.93% 09/01/15 119,647 99,726 (d,f)
7.36% 11/01/18 117,368 72,768 (d,f)
8.00% 01/01/17 755,434 765,331
Community Program Loan Trust
4.50% 10/01/18 300,000 250,219
CS First Boston Mortgage Securities Corp.
6.425% 08/20/30 140,047 139,172
DLJ Mortgage Acceptance Corp.
6.65% 12/17/27 73,719 72,820 (b)
6.85% 12/17/27 303,000 291,164 (b)
7.50% 02/18/03 208,170 210,512
7.58% 03/13/28 130,000 130,285 (b)
8.72% 06/28/26 284,448 286,048 (b)
FDIC REMIC Trust
7.85% 09/25/25 130,047 131,286
Federal Home Loan Mortgage Corp.
7.00% 07/01/26 955,140 352,805 (g)
8.00% 04/15/20 70,000 71,138
1009.00% 09/15/21 2,537 102,403 (g)
Federal National Mortgage Assoc.
6.19% 08/25/23 289,677 199,515 (d,f)
7.41% 03/25/21 245,000 246,608
8.00% 07/01/24 332,699 110,100 (g)
8.50% 03/01/17 - 07/25/22 554,543 175,912 (g)
8.58% 09/25/23 332,534 191,830 (d,f)
9.60% 09/25/23 87,000 48,720 (d,f)
Federal National Mortgage Assoc. REMIC
6.965% 07/25/10 80,000 78,200
6.97% 07/25/20 255,000 201,450 (d,f)
7.43% 09/25/22 277,315 211,973 (d,f)
8.58% 09/25/23 92,389 53,297 (d,f)
LB Commercial Conduit Mortgage Trust
7.144% 08/25/04 683,805 685,087
Merrill Lynch Mortgage Investor's Inc.
7.098% 05/25/15 251,796 249,987
7.252% 06/15/21 977,878 984,906
Mid-State Trust
8.33% 04/01/30 1,341,664 1,395,959
Morgan Stanley Capital Inc.
6.476% 10/15/10 158,252 154,147 (b)
7.51% 11/15/05 213,531 215,666 (b)
Provident Bank Home Equity Loan Trust
7.60% 10/25/12 170,000 170,425
Rural Housing Trust
6.33% 04/01/26 458,563 445,036
Sawgrass Finance REMIC Trust
6.45% 01/20/06 100,000 98,031
Structured Asset Securities Corp.
8.495% 04/25/27 474,270 482,570
Vornado Finance Corp.
6.36% 12/01/00 210,000 205,275 (b)
10,186,654
Total Mortgage-Backed
(Cost $35,681,201) 35,736,776
Foreign Denominated Notes-- 1.4%
Dutch Government
8.50% 06/01/06 NLG 336,000 231,690
Kingdom of Belgium
6.50% 03/31/05 BEL 10,261,000 335,832
Kingdom of Denmark
8.00% 03/15/06 DKK 1,904,000 348,061
Total Foreign Denominated Notes
(Cost $937,896) 915,583
Total Bonds and Notes
(Cost $62,033,631) 61,906,833
- --------------------------------------------------------------------------------
Number
of Shares
- --------------------------------------------------------------------------------
Preferred Stock -- 1.2%
Appalachian Power Co.
(Series A), 8.25% 1,450 35,888
Central Hispano Capital,
9.43% 4,800 124,800
Entergy Gulf States Inc.,
$1.75 6,435 158,584
Equity Residential Properties
Trust, 9.125% 4,250 107,312
Grand Metropolitan Delaware,
9.42% 3,500 97,125
Hibernia Corp., 6.9% 3,300 165,000
Post Properties Inc., 8.50% 1,720 86,000
Total Preferred Stock
(Cost $764,007) 774,709
Total Investments in Securities
(Cost $62,797,638) 62,681,542
- ----------
See Notes to Schedule of Investments and Financial Statements
32
<PAGE>
Schedule of Investments -- September 30, 1996
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
Short Term Investments -- 10.1%
- --------------------------------------------------------------------------------
U.S. Government Agencies and
Certificates of Deposits -- 7.4%
Deutsche Bank AG
5.75% 10/01/96 $ 590,000 $590,000
Federal Home Loan Mortgage Corp.
5.23% 10/15/96 500,000 498,983 (d)
5.38% 10/18/96 3,100,000 3,092,124 (d)
Federal National Mortgage Assoc.
5.20% 10/16/96 600,000 598,700 (d)
4,779,807
Repurchase Agreement -- 2.7%
State Street Bank and Trust Co.
5.40% 10/01/96
(Cost $1,700,000) 1,700,000 1,700,000
(dated 09/30/96, proceeds $1,700,255,
collateralized by $1,735,095 United States
Treasury Note, 8.375%, 08/15/08)
Total Short Term Investments
(Cost $6,479,807) 6,479,807
Other Assets and Liabilities,
net (7.2%) (4,622,122)
NET ASSETS -- 100% $64,539,227
FORWARD FOREIGN CURRENCY CONTRACTS
- --------------------------------------------------------------------------------
At September 30, 1996, the outstanding forward foreign currency contracts, which
contractually obligate the GE Fixed Income Fund to deliver currencies at a
specified date, were as follows:
U.S. $ Cost U.S. $
Foreign Currency Foreign on Origination Current Unrealized
Sales Contracts Currency Date Value Appreciation
- --------------------------------------------------------------------------------
BEL, expiring
10/28/96 10,825,950 $348,325 $345,006 $3,319
DKK, expiring
10/28/96 2,110,880 363,945 360,813 3,132
NLG, expiring
10/28/96 481,150 284,200 281,514 2,686
-------- -------- ------
$996,470 $987,333 $9,137
======== ======== ======
- ----------
See Notes to Schedule of Investments and Financial Statements
33
<PAGE>
GE Short-Term Government Fund
TWO YEAR TREASURY NOTE YIELD HISTORY
10/1/95 -- 9/30/96
30-Sep-95 5.851%
6-Oct-96 5.724%
13-Oct-96 5.655%
20-Oct-96 5.713%
27-Oct-96 5.617%
3-Nov-96 5.473%
10-Nov-96 5.522%
17-Nov-96 5.443%
24-Nov-96 5.484%
1-Dec-96 5.316%
8-Dec-96 5.391%
15-Dec-96 5.365%
22-Dec-96 5.3%
29-Dec-96 5.15%
6-Oct-96 5.724%
20-Oct-96 5.713%
3-Nov-96 5.473%
17-Nov-96 5.443%
1-Dec-96 5.316%
15-Dec-96 5.365%
29-Dec-96 5.15%
5-Jan-96 5.174%
12-Jan-96 5.164%
19-Jan-96 5.026%
26-Jan-96 5.05%
2-Feb-96 4.908%
9-Feb-96 4.873%
16-Feb-96 4.922%
23-Feb-96 5.127%
1-Mar-96 5.25%
8-Mar-96 5.736%
15-Mar-96 5.871%
22-Mar-96 5.746%
29-Mar-96 5.76%
5-Apr-96 6.06%
12-Apr-96 5.937%
19-Apr-96 5.908%
26-Apr-96 5.925%
3-May-96 6.179%
10-May-96 6.044%
17-May-96 6.019%
24-May-96 6.002%
31-May-96 6.236%
7-Jun-96 6.34%
14-Jun-96 6.264%
21-Jun-96 6.301%
28-Jun-96 6.106%
5-Jul-96 6.428%
12-Jul-96 6.282%
19-Jul-96 6.203%
26-Jul-96 6.275%
2-Aug-96 5.911%
9-Aug-96 5.898%
16-Aug-96 5.929%
23-Aug-96 6.116%
30-Aug-96 6.337%
6-Sep-96 6.32%
13-Sep-96 6.115%
20-Sep-96 6.244%
27-Sep-96 6.067%
Investment Profile
A mutual fund designed for investors who seek high current income and
preservation of capital by investing primarily in short-term U.S. Government
securities.
* Lipper Performance Comparison
Short-Term U.S. Government Peer Group
Based on 10/1/95 -- 9/30/96
total returns
Number of Funds in category: 161
Peer group average total return: 4.6%
Lipper categories in peer group: Short-Term U.S. Treasury,
Short U.S. Government,
Short-Intermediate U.S. Government
*See notes to performance for explanation of peer categories
See page 39 for Notes to Performance. Past performance is no guarantee of future
results.
Comparison of Change in Value of a $10,000 Investment
- --------------------------------------------------------------------------------
Class A Shares
QUARTERLY w/o load with load LB 1-3
- --------- -------- --------- ------
3/2/94 $10,000 $10,000 $10,000
Mar 31, 94 9,942.3 9,693.74 9,949
Jun 30, 94 9,939.96 9,691.46 9,949.88
9/94 10,039.62 9,788.63 10,049.39
Dec 30, 94 10,046.85 9,795.68 10,049.26
Mar 31, 95 10,323.98 10,065.88 10,382.28
Jun 30, 95 10,642.26 10,376.2 10,711.33
9/95 10,790.1 10,520.35 10,871.71
Dec 30, 95 11,023.38 10,747.79 11,138.03
Mar 30, 96 11,046.68 10,770.51 11,181.07
Jun 30, 96 11,135.85 10,857.45 11,298.75
9/96 11,289.72 11,007.48 11,488.39
Average Annual
Total Return
One Since
Year Inception
---- ---------
GE Short Term Gov't 4.63% 4.81%
GE Short Term Gov't w/load 2.01% 3.79%
LB 1-3 YR. 5.66% 5.53%
- --------------------------------------------------------------------------------
Class B Shares
QUARTERLY w/o load with load LB 1-3
- --------- -------- --------- ------
3/2/94 $10,000 $10,000 $10,000
Mar 31, 94 9,939.3 9,939.3 9,949
Jun 30, 94 9,936.92 9,936.92 9,949.88
9/94 10,019.58 10,019.58 10,049.39
Dec 30, 94 10,017.76 10,017.76 10,049.26
Mar 31, 95 10,285.38 10,285.38 10,382.28
Jun 30, 95 10,593.6 10,593.6 10,711.33
9/95 10,722.29 10,722.29 10,871.71
Dec 30, 95 10,944.67 10,944.67 11,138.03
Mar 30, 96 10,958.27 10,958.27 11,181.07
Jun 30, 96 11,037.1 11,037.1 11,298.75
9/96 11,189.26 10,989.26 11,488.39
Average Annual
Total Return
One Since
Year Inception
---- ---------
GE Short Term Gov't 4.35% 4.45%
GE Short Term Gov't w/load 1.38% 3.73%
LB 1-3 YR. 5.66% 5.53%
- --------------------------------------------------------------------------------
Class C Shares
QUARTERLY w/o load LB 1-3
- --------- -------- ------
3/2/94 $10,000 $10,000
Mar 31, 94 9,942.8 9,949
Jun 30, 94 9,955.14 9,949.88
9/94 10,052.77 10,049.39
Dec 30, 94 10,074.78 10,049.26
Mar 31, 95 10,359.1 10,382.28
Jun 30, 95 10,684.97 10,711.33
9/95 10,831.26 10,871.71
Dec 30, 95 11,081.52 11,138.03
Mar 30, 96 11,102.52 11,181.07
Jun 30, 96 11,208.51 11,298.75
9/96 11,370.47 11,488.39
Average Annual
Total Return
One Since
Year Inception
---- ---------
GE Short Term Gov't 4.98% 5.10%
LB 1-3 YR. 5.66% 5.53%
- --------------------------------------------------------------------------------
Class D Shares
QUARTERLY w/o load LB 1-3
- --------- -------- ------
3/2/94 $10,000 $10,000
Mar 31, 94 9,946.3 9,949
Jun 30, 94 9,964.81 9,949.88
9/94 10,068.86 10,049.39
Dec 30, 94 10,088.45 10,049.26
Mar 31, 95 10,379.78 10,382.28
Jun 30, 95 10,712.87 10,711.33
9/95 10,866.25 10,871.71
Dec 30, 95 11,124.38 11,138.03
Mar 30, 96 11,152.31 11,181.07
Jun 30, 96 11,265.73 11,298.75
9/96 11,435.67 11,488.39
Average Annual
Total Return
One Since
Year Inception
---- ---------
GE Short Term Gov't 5.24% 5.34%
LB 1-3 YR. 5.66% 5.53%
34
<PAGE>
Schedule of Investments -- September 30, 1996
GE SHORT-TERM GOVERNMENT FUND
U.S. Governments 70.8%
Corporate Notes 12.6%
Asset Backed 4.9%
Cash and Other 3.4%
Mortgage-Backed 8.3%
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
Bonds and Notes -- 96.6%
- --------------------------------------------------------------------------------
U.S. Governments -- 70.8%
Federal Home Loan Mortgage Corp.
6.00% 12/01/08 $136,409 $132,685
8.00% 08/01/03 386,214 394,542
527,227
Federal Home Loan Mortgage Corp. REMIC
543.497% 09/15/05 254 2,792 (g)
1002.00% 07/15/06 520 10,507 (g)
13,299
Federal National Mortgage Assoc.
7.151% 07/01/22 31,194 31,755 (e)
7.191% 05/01/21 172,467 179,905 (e)
8.159% 12/01/27 41,077 41,899 (e)
8.394% 12/01/17 50,551 52,242 (e)
8.885% 10/01/21 75,160 77,615 (e)
383,416
Federal National Mortgage Assoc. REMIC
7.26% 11/25/06 76,394 67,990 (d,f)
7.95% 11/25/19 73,095 73,980
141,970
Government National Mortgage Assoc.
6.50% 03/20/25 293,966 297,641 (e)
7.125% 05/20/22 - 06/20/24 548,163 556,728 (e)
7.25% 09/20/18 - 08/20/22 484,540 493,851 (e)
1,348,220
Tennessee Valley Authority
5.98% 04/01/36 300,000 301,257
U.S. Treasury Notes
5.00% 01/31/98 2,690,000 2,656,805
5.125% 02/28/98 350,000 345,898
5.50% 02/28/99 1,200,000 1,181,436
6.00% 08/15/99 505,000 501,450
6.125% 08/31/98 1,045,000 1,045,324
5,730,913
Total U.S. Governments
(Cost $8,481,651) 8,446,302
Asset Backed -- 4.9%
CIT RV Trust
5.40% 12/15/11 69,187 67,219
Fleetwood Credit Grantor Trust
6.00% 01/15/08 94,803 94,092
6.75% 10/17/11 88,399 88,510
6.90% 03/15/12 28,000 28,109
Ford Credit Auto Owner Trust
6.50% 11/15/99 110,000 110,377
Lehman FHA Title I Loan Trust
7.30% 05/25/17 89,296 89,464
Standard Credit Card Master Trust
4.65% 03/07/99 100,000 99,656
Total Asset Backed
(Cost $578,478) 577,427
Corporate Notes -- 12.6%
A T & T Capital Corp.
7.59% 01/31/97 100,000 100,590
Advanta Corp.
5.125% 11/15/96 100,000 99,901
Central Maine Power Co.
7.40% 06/02/98 100,000 99,759
First USA Bank
6.125% 10/30/97 100,000 100,032
General Motors Acceptance Corp.
8.375% 01/19/99 100,000 103,811
Great Atlantic & Pacific Tea Inc.
9.125% 01/15/98 168,000 172,596
Great Northern Nekoosa Corp.
9.125% 02/01/98 100,000 103,260
Lehman Brothers Holdings Inc.
6.875% 06/08/98 150,000 150,718
New York Taxable General Obligation
6.10% 02/01/98 100,000 99,225
News America Holdings Inc.
9.125% 10/15/99 110,000 116,844
Province of Manitoba
6.125% 05/28/98 125,000 124,710
Republic of Columbia
8.75% 10/06/99 50,000 51,438
Salomon Inc.
6.70% 12/01/98 75,000 74,906
United Co. Financial Corp.
7.00% 07/15/98 100,000 100,089
Total Corporate Notes
(Cost $1,501,272) 1,497,879
Mortgage-Backed -- 8.3%
Collateralized Mortgage Obligations
FDIC REMIC Trust
7.85% 09/25/25 139,336 140,664
Merrill Lynch Mortgage Investor's Inc.
7.252% 06/15/21 44,204 44,521
Rural Housing Trust
6.33% 04/01/26 121,547 117,961
- ----------
See Notes to Schedule of Investments and Financial Statements
35
<PAGE>
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
Salomon Brothers Mortgage
Securities Inc.
6.469% 01/20/28 $389,694 $385,188
Structured Asset Securities Corp.
6.87% 08/25/26 16,601 16,621
7.75% 02/25/28 283,590 286,603
Total Mortgage-Backed
(Cost $1,000,061) 991,558
Total Investments in Securities
(Cost $11,561,462) 11,513,166
- --------------------------------------------------------------------------------
Short Term Investments -- 2.6%
- --------------------------------------------------------------------------------
Repurchase Agreement -- 2.6%
State Street Bank and Trust Co.
5.40% 10/01/96
(Cost $310,000) 310,000 310,000
(dated 09/30/96, proceeds $310,047,
collateralized by $320,495 United
States Treasury Note, 8.375%, 08/15/08)
Other Assets and Liabilities,
net 0.8% 100,682
NET ASSETS -- 100% $11,923,848
- ----------
See Notes to Schedule of Investments and Financial Statements
36
<PAGE>
GE Money Market Fund
Investment Profile
A mutual fund designed for investors who seek current income and liquidity while
preserving their capital by investing in short-term, high grade money market
securities.
* Lipper Performance Comparison
Money Market Peer Group
Based on 10/1/95 -- 9/30/96
total returns
Number of Funds in peer group: 287
Peer group average total return: 4.9%
Lipper categories in peer group: Money Market
*See notes to performance for explanation of peer categories
See page 39 for Notes to Performance. Past performance is no guarantee of future
results.
Comparison of Change in Value of a $10,000 Investment
GE MONEY 90 DAY
MARKET T-BILL
------ ------
2/22/93 $10,000 $10,000
10,000 10,000
10,028.72 10,031
10,094.88 10,105.41
9/93 10,164.21 10,190.53
10,236.25 10,276.37
10,307.06 10,359.83
10,392.39 10,466.9
9/94 10,500.2 10,595.12
10627.61 10,737.72
10778.38 10,901.76
10928.54 11,069.41
9/95 11079.32 11,226.22
11227.98 11,388.65
11369.71 11,539.64
11509.01 11,691.47
9/96 11653.48 11,840.58
Average Annual
Total Return
One Since
Year Inception
---- ---------
GE Money Market 5.18% 4.33%
90 Day T-Bill 5.21% 4.82%
Fund Yield
Fund Donoghue
---- --------
7 day current 5.0% 4.9%
7 day effective 5.1% 5.0%
Current yield represents income earned on an investment in the Money Market Fund
for a seven day period and then annualized.
Effective yield is calculated similarly but is slightly higher because it
reflects the compounding effect of earnings on reinvested dividends.
An investment in the GE Money Market Fund is neither insured nor guaranteed by
the U.S. Government, and no assurance can be given that the GE Money Market Fund
will be able to maintain a stable net asset value of $1.00 per share.
Class Structure
The following describes each of the class definitions for the GE Funds' multiple
class structure, which is described in greater detail in the Funds' Prospectus.
Be sure to reference your appropriate performance chart.
Class A Shares are offered with a front-end load (as described in Note 1 of the
Notes to Financial Statements) through authorized dealers and are available to
anyone not eligible to invest in Class C or Class D. These shares are also
available to certain employee retirement plans seeking the additional services
available to Class A investors. The load is waived in certain instances as
described in the prospectus.
Class B Shares are offered with a back-end load through authorized dealers and
are available to anyone not eligible to invest in Class C or Class D. The
maximum contingent deferred sales load imposed on redemptions of this class of
shares (as a percentage of redemption proceeds) is 4.00% for equity funds and
3.00% for fixed income funds.
Class C Shares are no load shares available only to a limited group of investors
including employees and retirees of GE, and their family members.
Class D Shares are no load shares available only to certain qualified
institutions, including employee retirement plans that do not seek the
additional services available to Class A investors.
37
<PAGE>
Schedule of Investments -- September 30, 1996
GE MONEY MARKET FUND
U.S. Governments 32.2%
Certificates of Deposit and Other 35.6%
Commercial Paper 32.2%
- --------------------------------------------------------------------------------
Principal Amortized
Amount Cost
- --------------------------------------------------------------------------------
Short Term Investments -- 99.3%
- --------------------------------------------------------------------------------
U.S. Governments (d) -- 32.2%
Federal Farm Credit Bank
5.23% 10/15/96 $2,190,000 $2,185,546
Federal Home Loan Bank
5.34% 11/18/96 3,520,000 3,494,937
5.49% 03/06/97 3,300,000 3,221,493
6,716,430
Federal Home Loan Mortgage Corp.
5.26% 10/15/96 4,200,000 4,191,409
5.28% 10/10/96 2,200,000 2,197,096
5.38% 11/08/96 3,050,000 3,032,679
5.65% 10/01/96 530,000 530,000
9,951,184
Federal National Mortgage Assoc.
5.19% 11/27/96 2,220,000 2,201,757
5.25% 10/01/96 3,280,000 3,280,000
5.29% 12/17/96 3,360,000 3,322,019
8,803,776
Total U.S. Governments
(Cost $27,656,936) 27,656,936
Commercial Paper -- 32.2%
First Union Corp.
5.32% 10/17/96 3,360,000 3,352,056
Halifax Building Society
5.286% 11/15/96 3,300,000 3,278,195
Koch Industries
5.85% 10/01/96 3,000,000 3,000,000
Merrill Lynch & Co. Inc.
5.32% 10/01/96 2,300,000 2,300,000
Morgan (J.P.) & Co. Inc.
5.29% 10/04/96 2,910,000 2,908,717
Nationsbank Corp.
5.47% 10/18/96 3,350,000 3,341,347
Norwest Corp.
5.42% 10/22/96 3,090,000 3,080,230
Toronto Dominion Bank
5.45% 10/15/96 3,100,000 3,093,430
Union Bank of Switzerland
5.85% 10/01/96 3,310,000 3,310,000
Total Commercial Paper
(Cost $27,663,975) 27,663,975
Certificates of Deposit -- 34.7%
Algemene Bank Nederland N.V.
5.34% 10/03/96 3,300,000 3,300,000
Bank of Montreal
5.39% 11/26/96 3,200,000 3,200,000
Bank of Nova Scotia
5.43% 10/01/96 3,400,000 3,400,000
Bayerische Hypotheken Bank
5.40% 11/12/96 3,300,000 3,300,000
Bayerische Vereinsbank AG
5.37% 11/15/96 2,940,000 2,940,000
Deutsche Bank AG
5.34% 12/04/96 3,200,000 3,200,000
Dresdner Bank AG
5.40% 11/14/96 3,300,000 3,300,000
Royal Bank of Canada
5.35% 11/27/96 2,820,000 2,820,000
Societe Generale
5.50% 01/02/97 1,000,000 1,000,000
Swiss Bank
5.52% 12/20/96 3,300,000 3,300,000
Total Certificates of Deposit
(Cost $29,760,000) 29,760,000
Time Deposits -- 0.2%
State Street Cayman Islands
5.50% 10/01/96
(Cost $140,000) 140,000 140,000
Total Short Term Investments
(Cost $85,220,911) 85,220,911
Other Assets and Liabilities,
net 0.7% 620,774
NET ASSETS -- 100% $85,841,685
- ----------
See Notes to Schedule of Investments and Financial Statements
38
<PAGE>
Notes to Performance (unaudited)
Total returns assume changes in share price and reinvestment of dividends and
capital gains. Investment returns and net asset value on an investment will
fluctuate and you may have a loss or gain when you sell your shares. Classes A
and B assume the reduction of the maximum applicable sales charges as described
in Note 1 of the Notes to Financial Statements.
Shares of the GE Short-Term Government Fund are neither insured nor guaranteed
by the U.S. Government and their prices will fluctuate with market conditions.
A portion of the GE Tax-Exempt Fund's income may be subject to state, federal
and/or alternative minimum tax. Capital gains, if any, are subject to capital
gains tax.
GEIM has voluntarily agreed to waive and/or bear certain fees and Fund expenses.
Without these provisions, the returns (and/or yields) would have been lower.
These provisions may be terminated in the future.
The Standard & Poor's Composite Index of 500 Stocks (S&P 500), MSCI World Index,
MSCI Europe Australia Far East Index (MSCI EAFE), Lehman Brothers Aggregate Bond
Index (LB Aggregate), Lehman Brothers Municipal Bond Index (LBMI), Lehman
Brothers 1-3 Year Government Bond Index (LB 1-3 YR.) and the 90 Day U.S.
Treasury Index (90 Day T-Bill) are unmanaged indices and do not reflect the
actual cost of investing in the instruments that comprise each index. The S&P
500 Index is a composite of the prices of 500 widely held U.S. stocks recognized
by investors to be representative of the stock market in general. The MSCI World
Index is a composite of 1,561 stocks of companies in 22 countries representing
the European, Pacific Basin and American regions. The MSCI World Index is widely
used by global investors. The MSCI EAFE is a composite of 1,103 stocks of
companies in 20 countries located in Europe, Australia, New Zealand and the Far
East. The Lehman Brothers Aggregate Bond Index is a composite index of short,
medium, and long-term bond performance and is widely recognized as a barometer
of the bond market in general. The Lehman Brothers Municipal Bond Index is a
composite of investment-grade (Baa or greater), fixed-rate municipal bonds with
maturities greater than two years and is considered to be representative of the
municipal bond market. The LB 1-3 Year Government Bond Index is a composite of
government and U.S. Treasury obligations with maturities of 1-3 years. The 90
Day U.S. Treasury Index is the average return on three month U.S. Treasury
Bills. The results shown for the foregoing indices assume reinvestment of net
dividends or interest. Broad market index returns are calculated from the
nearest month end to the Funds' inception date. The majority of the broad market
returns are not available from the Funds' commencement of investment operations
through September 30, 1996. The Donahue yields represent the average yields of
814 taxable money market funds.
The peer universe of funds used in our peer ranking calculation is based on the
blend of Lipper peer categories, as shown. This blend is the same as the
category blend used by the Wall Street Journal (except for the GE Strategic
Investment Fund for which we use the specific Lipper peer group and the GE Money
Market Fund which is not in the Wall Street Journal). The actual number of funds
and numerical rankings in the Lipper and Wall Street Journal universes could
differ since the Wall Street Journal excludes certain funds which do not meet
their net asset or shareholder publication thresholds. Lipper is an independent
mutual fund rating service located in Summit, New Jersey.
The views expressed in this document reflect our judgement as of the publication
date and are subject to change at any time without notice. The securities cited
may not represent future holdings and should not be considered as a
recommendation to purchase or sell a particular security. See the prospectus for
complete descriptions of investment objectives, policies, risks and permissible
investments.
Notes to Schedules of Investments
(a) Non-income producing security.
(b) Pursuant to Rule 144A of the Securities Act of 1933, these securities may
be resold in transactions exempt from registration, normally to qualified
institutional buyers. At September 30, 1996, these securities amounted to
$466,250, $244,514, $765,159, $1,225,695 and $3,210,626 or 0.6%, 0.6%,
0.3%, 1.3%, and 5.0% of net assets for the GE International Equity, GE
Global Equity, GE U.S. Equity, GE Strategic Investment and GE Fixed Income
Funds, respectively.
(c) Settlement is on a delayed delivery or when issued basis with final
maturity to be announced (TBA) in the future.
(d) Coupon amount represents effective yield.
(e) Adjustable rate mortgage coupon. The stated rate represents the rate at
September 30, 1996.
(f) Principal only securities represent the right to receive the monthly
principal payments on an underlying pool of mortgages. No payments of
interest on the pool are passed through to the principal only holder.
(g) Interest only securities represent the right to receive the monthly
interest payments on an underlying pool of mortgages. Payments of principal
on the pool reduce the value of the interest only holding.
Abbreviations:
Currency Terms
BEL -- Belgian Franc
DKK -- Danish Krone
ITL -- Italian Lira
NLG -- Netherlands Guilder
ADR -- American Depository Receipt
AMBAC -- AMBAC Indemnity Corporation
GDR -- Global Depository Receipt
MBIA -- Municipal Bond Insurance Association
REMIC -- Real Estate Mortgage Investment Conduit
VRDN -- Variable Rate Demand Note
WT -- Warrant
Tax Information (unaudited)
Of the dividends paid from net investment income by the GE Tax-Exempt Fund for
the fiscal year ended September 30, 1996, 95.69% represented exempt interest
dividends for Federal income tax purposes.
39
<PAGE>
Financial Highlights
Selected data based on a share outstanding throughout the period(s) indicated
</TABLE>
<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>
<PAGE>
<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>
- ----------
See Notes to Financial Highlights and Financial Statements
40
<PAGE>
Financial Highlights
Selected data based on a share outstanding throughout the period(s) indicated
<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>
<PAGE>
<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>
- ----------
See Notes to Financial Highlights and Financial Statements
41
<PAGE>
Financial Highlights (continued)
Selected data based on a share outstanding throughout the period(s) indicated
<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>
<PAGE>
<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>
- ----------
See Notes to Financial Highlights and Financial Statements
42
<PAGE>
Financial Highlights (continued)
Selected data based on a share outstanding throughout the period(s) indicated
<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>
<PAGE>
<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
<PAGE>
Statements Of Assets
And Liabilities September 30, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
GE GE GE
INTERNATIONAL GLOBAL U.S.
EQUITY EQUITY EQUITY
FUND FUND FUND
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in securities, at market (cost $66,615,140,
$35,615,016, $184,645,848, $70,117,584, $12,044,928,
$62,797,638, $11,561,462, and $0, respectively) $ 72,352,179 $ 41,096,589 $223,295,548
Short term investments (at amortized cost) 1,580,000 2,078,983 11,365,000
Cash 0 0 16,064
Foreign currency (cost $960,413, $272,388,
$406, $143,781, $0, $0, $0,
and $0, respectively) 952,823 271,534 405
Receivable for investments sold 142,168 51,287 287,809
Income receivables 258,586 132,308 426,042
Receivable for fund shares sold 87,625 20,535 1,349,131
Receivable on forward foreign currency contracts 0 0 0
Deferred organizational costs 48,296 26,797 41,625
- -------------------------------------------------------------------------------------------------------------------
Total assets 75,421,677 43,678,033 236,781,624
- -------------------------------------------------------------------------------------------------------------------
LIABILITIES
Distributions payable to shareholders 0 0 0
Payable for investments purchased 112,668 133,303 353,459
Payable for fund shares repurchased 3,636 18,606 78,671
Payable to GEIM 115,057 64,915 127,474
Payable to custodian 765 1,854 0
- -------------------------------------------------------------------------------------------------------------------
Total liabilities 232,126 218,678 559,604
- -------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 75,189,551 $ 43,459,355 $236,222,020
===================================================================================================================
NET ASSETS CONSIST OF:
Capital paid in $ 67,224,609 $ 35,372,173 $174,390,310
Undistributed net investment income 484,828 107,597 2,857,691
Accumulated net realized gain (loss) 1,750,374 2,498,694 20,205,114
Net unrealized appreciation / (depreciation) on:
Investments 5,737,039 5,481,573 38,649,700
Futures 0 0 119,100
Written options 0 0 0
Foreign currency transactions (7,299) (682) 105
- -------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 75,189,551 $ 43,459,355 $236,222,020
===================================================================================================================
Class A:
Net assets $ 8,461,947 $ 4,054,663 $ 34,523,068
Shares outstanding ($.001 par value) 479,531 184,261 1,478,987
Net asset value per share $ 17.65 $ 22.01 $ 23.34
Maximum offering price per share $ 18.53 $ 23.11 $ 24.50
Class B:
Net assets $ 272,194 $ 599,838 $ 7,193,625
Shares outstanding ($.001 par value) 15,579 27,425 318,747
Net asset value per share* $ 17.47 $ 21.87 $ 22.57
Class C:
Net assets $ 3,230,410 $ 28,681,675 $ 50,034,782
Shares outstanding ($.001 par value) 182,985 1,293,185 2,173,778
Net asset value per share $ 17.65 $ 22.18 $ 23.02
Class D:
Net assets $ 63,225,000 $ 10,123,179 $144,470,545
Shares outstanding ($.001 par value) 3,560,095 454,974 6,272,480
Net asset value per share $ 17.76 $ 22.25 $ 23.03
</TABLE>
* Redemption price per share is equal to net asset value per share less any
applicable contingent deferred sales charge.
** GE Money Market Fund is a no load fund offering only one class of shares to
all investors.
- ----------
See Notes to Financial Statements.
44
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
GE GE GE GE GE
STRATEGIC TAX- FIXED SHORT-TERM MONEY
INVESTMENT EXEMPT INCOME GOVERNMENT MARKET
FUND FUND FUND FUND FUND**
- -------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
$ 81,104,684 $ 12,197,688 $ 62,681,542 $ 11,513,166 $ 0
11,490,591 0 6,479,807 310,000 85,220,911
1,325 84,127 1,024,764 8,677 4,920
142,807 0 0 0 0
389,012 565,844 2,469,560 17,019 0
444,638 200,324 720,204 103,399 177,994
19,511 11,555 35,043 2,466 749,738
0 0 9,137 0 0
26,798 21,853 31,739 48,295 21,853
- -------------------------------------------------------------------------------------------------
93,619,366 13,081,391 73,451,796 12,003,022 86,175,416
- -------------------------------------------------------------------------------------------------
0 8,028 52,321 9,380 57,774
1,954,592 500,390 8,785,082 17,000 0
28,603 5,607 12,336 147 223,212
74,417 24,392 62,830 52,647 52,745
0 0 0 0 0
- -------------------------------------------------------------------------------------------------
2,057,612 538,417 8,912,569 79,174 333,731
- -------------------------------------------------------------------------------------------------
$ 91,561,754 $ 12,542,974 $ 64,539,227 $ 11,923,848 $ 85,841,685
=================================================================================================
$ 77,937,249 $ 12,955,373 $ 68,528,850 $ 11,959,198 $ 85,805,725
1,623,000 44,788 95,901 22,580 44,818
1,015,111 (609,947) (3,978,654) (9,634) (8,858)
10,987,100 152,760 (116,096) (48,296) 0
0 0 0 0 0
0 0 0 0 0
(706) 0 9,226 0 0
- -------------------------------------------------------------------------------------------------
$ 91,561,754 $ 12,542,974 $ 64,539,227 $ 11,923,848 $ 85,841,685
=================================================================================================
$ 25,231,655 $ 536,849 $ 15,652,888 $ 339,526 $ 0
1,241,211 46,010 1,339,392 28,810 0
$ 20.33 $ 11.67 $ 11.69 $ 11.78 $ 0
$ 21.34 $ 12.19 $ 12.21 $ 12.08 $ 0
$ 3,700,795 $ 1,318,566 $ 1,673,148 $ 145,164 $ 0
184,645 112,872 142,959 12,324 0
$ 20.04 $ 11.68 $ 11.70 $ 11.78 $ 0
$ 26,466,866 $ 7,727,634 $ 28,114,641 $ 3,653,363 $ 85,841,685
1,298,772 662,201 2,403,229 309,790 85,850,615
$ 20.38 $ 11.67 $ 11.70 $ 11.79 $ 1.00
$ 36,162,438 $ 2,959,925 $ 19,098,550 $ 7,785,795 $ 0
1,769,483 253,604 1,633,266 660,802 0
$ 20.44 $ 11.67 $ 11.69 $ 11.78 $ 0
</TABLE>
45
<PAGE>
Statements Of Operations
For the year ended September 30, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
GE GE GE
INTERNATIONAL GLOBAL U.S.
EQUITY EQUITY EQUITY
FUND FUND FUND
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Income:
Dividends $ 1,179,977 $ 599,600 $ 4,435,493
Interest 140,684 98,183 632,975
Less: Foreign taxes withheld (142,115) (53,874) (41,456)
- --------------------------------------------------------------------------------------------------------
Total income 1,178,546 643,909 5,027,012
- --------------------------------------------------------------------------------------------------------
Expenses:
Advisory and administration fees 464,327 287,004 836,061
Distribution fees
Class A 28,518 16,518 123,210
Class B 1,879 4,691 43,357
Class C 5,389 64,606 95,381
Blue Sky
Class A 7,393 7,228 8,411
Class B 6,515 6,621 6,573
Class C 9,369 21,392 15,808
Class D 22,191 11,800 48,597
Transfer agent
Class A 3,793 7,706 15,867
Class B 1,924 4,374 16,401
Class C 6,836 82,174 81,766
Class D 16,833 2,313 9,989
Trustees' fees 3,935 3,008 15,306
Custody and accounting 6,839 5,220 26,565
Professional fees 40,783 31,180 158,683
Registration 7,082 5,414 27,553
Amortization of deferred organization
expense 18,347 19,402 30,016
Other 14,870 11,372 57,861
- --------------------------------------------------------------------------------------------------------
Total expenses before waiver 666,823 592,023 1,617,405
Less: Expenses waived or borne by
the advisor (24,972) (85,533) (309,241)
- --------------------------------------------------------------------------------------------------------
Net expenses 641,851 506,490 1,308,164
- --------------------------------------------------------------------------------------------------------
Net investment income 536,695 137,419 3,718,848
========================================================================================================
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Realized gain (loss) on:
Investments 2,140,832 2,608,823 20,483,986
Futures 0 0 888,676
Written options 0 0 31,735
Foreign currency transactions (69,965) (43,438) (4,017)
Increase (decrease) in unrealized
appreciation/depreciation on:
Investments 3,648,065 1,436,241 10,336,087
Futures 0 0 120,150
Written options 0 0 4,320
Foreign currency transactions (10,228) 1,375 (198)
- --------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments 5,708,704 4,003,001 31,860,739
- --------------------------------------------------------------------------------------------------------
Net increase in net assets
resulting from operations $ 6,245,399 $ 4,140,420 $ 35,579,587
========================================================================================================
</TABLE>
- ----------
See Notes to Financial Statements.
46
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
GE GE GE GE GE
STRATEGIC TAX- FIXED SHORT-TERM MONEY
INVESTMENT EXEMPT INCOME GOVERNMENT MARKET
FUND FUND FUND FUND FUND
- -------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
$ 763,219 $ 0 $ 14,209 $ 0 $ 0
1,862,384 641,858 3,684,621 688,149 4,521,005
(30,172) 0 (375) (262) 0
- -------------------------------------------------------------------------------------------
2,595,431 641,858 3,698,455 687,887 4,521,005
- -------------------------------------------------------------------------------------------
243,374 42,029 192,880 34,453 205,219
70,248 2,322 62,401 1,743 0
24,715 11,328 10,963 1,163 0
56,162 18,259 63,128 7,883 0
8,385 6,581 9,886 6,540 0
6,647 6,551 6,555 6,529 0
17,070 15,734 20,045 10,420 38,976
15,442 11,394 7,273 16,166 0
14,371 1,295 5,274 1,449 0
8,769 2,063 3,575 824 0
49,616 16,391 43,827 4,535 159,234
17,000 319 3,828 947 0
4,231 1,069 3,081 966 6,405
7,353 1,858 5,359 1,678 11,120
43,846 11,097 31,955 10,021 66,426
7,614 1,927 5,549 1,741 11,534
19,401 15,866 22,941 18,348 15,866
15,987 4,034 11,650 3,656 24,250
- -------------------------------------------------------------------------------------------
630,231 170,117 510,170 129,062 539,030
(53,026) (74,915) (56,349) (66,598) (169,636)
- -------------------------------------------------------------------------------------------
577,205 95,202 453,821 62,464 369,394
- -------------------------------------------------------------------------------------------
2,018,226 546,656 3,244,634 625,423 4,151,611
===========================================================================================
1,142,947 57,428 (1,228,965) (1,342) (5,488)
0 0 6,476 0 0
(132,368) 0 0 0 0
(8,335) 0 54,512 0 0
5,541,959 (157,166) (607,341) (58,761) 0
0 0 0 0 0
38,144 0 0 0 0
3,601 0 6,950 0 0
- -------------------------------------------------------------------------------------------
6,585,948 (99,738) (1,768,368) (60,103) (5,488)
- -------------------------------------------------------------------------------------------
$ 8,604,174 $ 446,918 $ 1,476,266 $ 565,320 $ 4,146,123
===========================================================================================
</TABLE>
47
<PAGE>
Statement Of Changes
In Net Assets
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
GE GE GE
INTERNATIONAL GLOBAL U.S.
EQUITY EQUITY EQUITY
FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended
September September September September September September
30, 1996 30, 1995 30, 1996 30, 1995 30, 1996 30, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income $ 536,695 $ 292,459 $ 137,419 $ 216,432 $ 3,718,848 $ 3,231,756
Net realized gain (loss) on investments,
futures, written options, and
foreign currency transactions 2,070,867 (337,917) 2,565,385 415,492 21,400,380 1,669,029
Net increase (decrease) in unrealized
appreciation/depreciation 3,637,837 1,716,419 1,437,616 1,771,654 10,460,359 29,031,181
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase from operations 6,245,399 1,670,961 4,140,420 2,403,578 35,579,587 33,931,966
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income
Class A (6,640) (85) (2,429) (4,762) (262,767) 0
Class B 0 (45) 0 (213) (33,028) (2,872)
Class C (5,998) (4,356) (47,344) (101,076) (515,508) (300,089)
Class D (206,019) (171,765) (29,722) (77,394) (2,441,173) (2,525,130)
Net realized gains
Class A 0 0 (54,657) (19,779) (220,116) (12,003)
Class B 0 0 (7,141) (4,264) (29,002) (914)
Class C 0 0 (439,601) (446,448) (397,494) (94,068)
Class D 0 0 (126,339) (229,385) (1,698,965) (647,519)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (218,657) (176,251) (707,233) (883,321) (5,598,053) (3,582,595)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from
operations and distributions 6,026,742 1,494,710 3,433,187 1,520,257 29,981,534 30,349,371
- ------------------------------------------------------------------------------------------------------------------------------------
Share transactions:
Proceeds from sale of shares
Class A 4,999,853 4,108,324 1,784,436 2,331,228 20,169,488 12,433,013
Class B 264,006 65,940 248,489 260,340 5,416,144 1,432,986
Class C 2,057,845 1,027,313 6,612,036 6,650,382 22,892,916 8,583,711
Class D 46,890,336 17,424,643 4,132,262 3,165,696 64,219,284 66,777,376
Value of distributions reinvested
Class A 6,640 85 56,966 24,540 483,588 12,000
Class B 0 45 7,140 4,476 62,916 3,784
Class C 5,587 4,212 477,266 533,926 897,146 386,529
Class D 206,019 171,765 156,060 306,780 4,140,136 3,144,247
Cost of shares redeemed
Class A (1,078,451) (576,926) (903,662) (374,151) (4,687,102) (680,682)
Class B (65,189) (46,018) (53,819) (58,967) (409,610) (80,582)
Class C (327,094) (295,940) (4,463,175) (5,042,589) (5,137,572) (3,885,378)
Class D (21,970,397) (12,205,061) (4,662,441) (4,445,663) (72,772,334) (80,082,954)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from
share transactions 30,989,155 9,678,382 3,391,558 3,355,998 35,275,000 8,044,050
- ------------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 37,015,897 11,173,092 6,824,745 4,876,255 65,256,534 38,393,421
NET ASSETS
Beginning of period 38,173,654 27,000,562 36,634,610 31,758,355 170,965,486 132,572,065
- ------------------------------------------------------------------------------------------------------------------------------------
End of period $ 75,189,551 $ 38,173,654 $ 43,459,355 $ 36,634,610 $236,222,020 $170,965,486
====================================================================================================================================
Undistributed net investment
income, end of period $ 484,828 $ 218,407 $ 107,597 $ 78,059 $ 2,857,691 $ 2,397,013
</TABLE>
* GE Money Market Fund is a no load Fund offering only one class of shares to
all investors
- ----------
See Notes to Financial Statements.
48
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
GE GE GE GE GE
STRATEGIC TAX- FIXED SHORT-TERM MONEY
INVESTMENT EXEMPT INCOME GOVERNMENT MARKET
FUND FUND FUND FUND FUND*
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended
September September September September September September September September September September
30, 1996 30, 1995 30, 1996 30, 1995 30, 1996 30, 1995 30, 1996 30, 1995 30, 1996 30, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 2,018,226 $ 1,196,476 $ 546,656 $ 549,458 $ 3,244,634 $ 1,542,054 $ 625,423 $ 553,483 $ 4,151,611 $ 3,466,116
1,002,244 296,527 57,428 (518,751) (1,167,977) (911,507) (1,342) 92,476 (5,488) 0
5,583,704 5,579,652 (157,166) 926,079 (600,391) 1,964,369 (58,761) 87,066 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
8,604,174 7,072,655 446,918 956,786 1,476,266 2,594,916 565,320 733,025 4,146,123 3,466,116
- ------------------------------------------------------------------------------------------------------------------------------------
(224,561) (29,230) (20,080) (5,971) (709,900) (306,883) (17,871) (4,851) 0 0
(36,223) (5,064) (43,346) (4,896) (57,106) (7,292) (6,475) (2,070) 0 0
(480,651) (340,668) (333,411) (313,359) (1,490,082) (1,099,467) (169,713) (86,748) (4,151,611) (3,466,116)
(515,952) (460,723) (149,794) (225,257) (1,011,836) (142,189) (442,799) (480,304) 0 0
(44,020) 0 0 0 0 0 (1,457) 0 0 0
(7,310) 0 0 0 0 0 (405) 0 0 0
(89,301) 0 0 0 0 0 (13,646) 0 0 0
(88,357) 0 0 0 0 0 (33,443) 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
(1,486,375) (835,685) (546,631) (549,483) (3,268,924) (1,555,831) (685,809) (573,973) (4,151,611) (3,466,116)
- ------------------------------------------------------------------------------------------------------------------------------------
7,117,799 6,236,970 (99,713) 407,303 (1,792,658) 1,039,085 (120,489) 159,052 (5,488) 0
- ------------------------------------------------------------------------------------------------------------------------------------
17,883,706 7,182,929 184,398 332,712 14,465,090 5,700,365 729,588 247,621 0 0
2,827,055 786,579 910,235 629,874 1,637,270 255,439 89,871 70,000 0 0
8,576,408 4,463,118 2,158,514 1,118,157 10,046,924 8,923,222 1,743,456 2,185,367 177,814,977 185,442,103
25,183,286 7,201,248 0 0 20,655,949 6,272,781 1,694,811 167,065 0 0
268,659 29,239 10,092 3,506 690,901 300,894 14,905 4,195 0 0
42,201 5,063 28,592 4,370 47,491 6,850 4,689 2,041 0 0
553,077 327,979 272,411 257,523 1,206,983 912,679 174,763 84,867 3,800,372 3,344,476
472,353 460,719 147,775 225,255 991,882 141,112 469,809 480,184 0 0
(3,072,661) (535,113) (42,587) (2,873) (4,397,297) (26,636,640) (684,827) (3,158) 0 0
(281,702) (131,483) (289,191) (10,148) (211,360) (100,613) (30,407) (15,199) 0 0
(2,710,357) (2,565,433) (1,436,700) (1,692,201) (4,014,201) (3,031,354) (666,107) (152,811) (167,432,164)(170,729,355)
(11,444,286) (8,746,818) (1,100,006) (1,500,060) (8,464,459) (2,526,883) (2,349,374) (544,992) 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
38,297,739 8,478,027 843,533 (633,885) 32,655,173 (9,782,148) 1,191,177 2,525,180 14,183,185 18,057,224
- ------------------------------------------------------------------------------------------------------------------------------------
45,415,538 14,714,997 743,820 (226,582) 30,862,515 (8,743,063) 1,070,688 2,684,232 14,177,697 18,057,224
46,146,216 31,431,219 11,799,154 12,025,736 33,676,712 42,419,775 10,853,160 8,168,928 71,663,988 53,606,764
- ------------------------------------------------------------------------------------------------------------------------------------
$ 91,561,754 $ 46,146,216 $12,542,974 $11,799,154 $64,539,227 $33,676,712 $11,923,848 $10,853,160 $85,841,685 $71,663,988
====================================================================================================================================
$ 1,623,000 $ 955,672 $ 44,788 $ 32,478 $ 95,901 $ 47,858 $ 22,580 $ 15,666 $ 44,818 $ 32,532
</TABLE>
49
<PAGE>
Statement of Changes
In Net Assets (continued)
Changes In Fund Shares
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
GE GE GE
INTERNATIONAL GLOBAL U.S.
EQUITY EQUITY EQUITY
FUND FUND FUND
- --------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended
September September September September September September
30, 1996 30, 1995 30, 1996 30, 1995 30, 1996 30, 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A:
Shares sold by subscription 294,637 284,516 85,979 121,585 920,456 708,859
Issued for distributions reinvested 405 6 2,868 1,382 23,382 760
Shares redeemed (64,247) (37,459) (43,891) (19,572) (211,845) (37,975)
- --------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in Fund shares 230,795 247,063 44,956 103,395 731,993 671,644
================================================================================================================================
CLASS B:
Shares sold by subscription 15,817 4,284 11,994 13,889 255,210 77,863
Issued for distributions reinvested 0 3 360 252 3,135 246
Shares redeemed (3,843) (2,941) (2,589) (3,099) (18,909) (4,451)
- --------------------------------------------------------------------------------------------------------------------------------
Net increase in Fund shares 11,974 1,346 9,765 11,042 239,436 73,658
================================================================================================================================
CLASS C:
Shares sold by subscription 122,659 67,513 319,353 349,633 1,066,216 489,072
Issued for distributions reinvested 341 295 23,887 30,042 44,064 24,846
Shares redeemed (19,472) (20,008) (216,093) (266,651) (238,075) (227,802)
- --------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in Fund shares 103,528 47,800 127,147 113,024 872,205 286,116
================================================================================================================================
CLASS D:
Shares sold by subscription 2,756,412 1,129,189 197,330 167,151 3,068,016 3,838,354
Issued for distributions reinvested 12,531 11,978 7,803 17,187 203,647 202,724
Shares redeemed (1,273,543) (814,812) (230,524) (244,112) (3,416,836) (4,733,502)
- --------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in Fund shares 1,495,400 326,355 (25,391) (59,774) (145,173) (692,424)
================================================================================================================================
</TABLE>
* GE Money Market Fund is a no load Fund offering only one class of shares to
all investors.
- ----------
See Notes to Financial Statements.
50
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
GE GE GE GE GE
STRATEGIC TAX- FIXED SHORT-TERM MONEY
INVESTMENT EXEMPT INCOME GOVERNMENT MARKET
FUND FUND FUND FUND FUND*
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended
September September September September September September September September September September
30, 1996 30, 1995 30, 1996 30, 1995 30, 1996 30, 1995 30, 1996 30, 1995 30, 1996 30, 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
906,804 435,194 15,739 28,305 1,202,556 495,095 61,992 20,854 0 0
14,267 1,910 857 304 58,607 26,214 1,258 354 0 0
(156,140) (31,089) (3,612) (244) (375,267) (2,376,760) (58,394) (265) 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
764,931 406,015 12,984 28,365 885,896 (1,855,451) 4,856 20,943 0 0
====================================================================================================================================
148,617 45,807 76,606 53,644 137,322 22,118 7,523 5,935 0 0
2,264 332 2,434 377 4,042 589 396 174 0 0
(14,530) (7,429) (24,675) (860) (18,027) (8,853) (2,586) (1,280) 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
136,351 38,710 54,365 53,161 123,337 13,854 5,333 4,829 0 0
====================================================================================================================================
443,753 272,667 183,515 97,435 843,984 774,361 146,513 185,888 177,814,977 185,465,791
29,341 21,452 23,130 22,483 101,965 78,996 14,742 7,195 3,800,372 3,320,860
(139,805) (157,028) (123,355) (151,987) (338,433) (264,064) (56,042) (13,001) (167,432,164) (170,729,355)
- ------------------------------------------------------------------------------------------------------------------------------------
333,289 137,091 83,290 (32,069) 607,516 589,293 105,213 180,082 14,183,185 18,057,296
====================================================================================================================================
1,328,680 415,926 0 0 1,711,763 527,225 142,334 14,219 0 0
25,058 30,112 12,532 19,730 84,091 12,081 39,635 40,870 0 0
(593,811) (526,586) (90,536) (129,315) (719,913) (224,431) (197,251) (46,499) 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
759,927 (80,548) (78,004) (109,585) 1,075,941 314,875 (15,282) 8,590 0 0
====================================================================================================================================
</TABLE>
51
<PAGE>
Notes to Financial Statements -- September 30, 1996
- --------------------------------------------------------------------------------
1. Organization of the Funds
GE Funds (the "Trust") is registered under the Investment Company Act of 1940
(as amended) as an open-end management investment company. The Trust was
organized as a Massachusetts business trust on August 10, 1992, and is
authorized to issue an unlimited number of shares. It is comprised of eleven
investment portfolios (the "Funds") only eight of which are currently being
offered, as follows: GE International Equity Fund, GE Global Equity Fund, GE
U.S. Equity Fund, GE Strategic Investment Fund, GE Tax-Exempt Fund, GE Fixed
Income Fund, GE Short-Term Government Fund and GE Money Market Fund. The Funds
(except GE Money Market Fund) are presently authorized to issue four classes of
shares.
Between the Funds' effective date (January 5, 1993) and the commencement of
investment operations, the Funds' adviser absorbed all expenses. The
commencement dates were as follows: GE International Equity Fund - Classes A, B,
C, and D and GE Short-Term Government Fund - Classes A, B, C, and D - March 2,
1994; Class A, all other funds - January 1, 1994; Class B, all other funds -
December 22, 1993; Class D, all other funds - November 29, 1993; Class C, GE
Tax-Exempt Fund - February 26, 1993; Class C, all other funds, including the
single class of the GE Money Market Fund - February 22, 1993.
Maximum Sales Load Imposed on Purchases of Class A Shares
(as a percentage of offering price):
4.75% 4.25% 2.50%
- --------------------------------------------------------------------------------
GE International Equity Fund GE Tax-Exempt Fund GE Short-Term
GE Global Equity Fund GE Fixed Income Fund Government Fund
GE U.S. Equity Fund
GE Strategic Investment Fund
Maximum Contingent Deferred Sales Load
(as a percentage of redemption proceeds):
1.00% 3.00% 4.00%
- --------------------------------------------------------------------------------
Class A* All funds -- --
Class B -- GE Tax-Exempt Fund GE International Equity Fund
GE Fixed Income Fund GE Global Equity Fund
GE Short-Term GE U.S. Equity Fund
Government Fund GE Strategic Investment Fund
The maximum contingent deferred sales load for Class B redemptions for all
Funds, after the first year, is as follows: 3.00% within the second year, 2.00%
within the third year, 1.00% within the fourth year, and 0.00% thereafter.
No sales charges or redemption fees are assessed by the Trust with respect to
Class C and Class D shares and shares of GE Money Market Fund.
* Imposed only for shares redeemed within one year of purchase which were
subject to no front end sales charge by virtue of being part of a purchase
of $1 million or more.
2. Summary of Significant Accounting Policies
The following summarizes the significant accounting policies of the Trust:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results may differ from those estimates.
Security Valuation and Transactions
Securities for which exchange quotations are readily available are valued at the
last sale price, or if no sales occurred on that day, at the last quoted bid
price. Certain fixed income securities are valued by a dealer or by a pricing
service based upon a computerized matrix system, which considers market
transactions and dealer supplied valuations. Valuations for municipal bonds are
based on prices obtained from a qualified municipal bond pricing service; prices
represent the mean of the secondary market.
Futures contracts are valued at the settlement price established each day by the
board of trade or exchange on which they are principally traded. Options that
are written or purchased are valued using the mean between the last asked and
bid prices. Forward foreign currency contracts are valued at the mean between
the bid and the offered forward rates as last quoted by a recognized dealer.
Short term investments maturing within 60 days are valued at amortized cost or
original cost plus accrued interest, each of which approximates fair value.
52
<PAGE>
Notes to Financial Statements -- September 30, 1996
- --------------------------------------------------------------------------------
Portfolio positions which cannot be valued as set forth above are valued at fair
value determined under procedures approved by the Trustees.
GE Money Market Fund values its securities using the amortized cost method,
which values securities initially at cost and thereafter assumes a constant
amortization to maturity of any discount or premium. Amortized cost approximates
market value.
Transactions are accounted for as of the trade date. Cost is determined and
gains and losses are based upon the specific identification method for both
financial statement and federal tax purposes.
The Funds will accrue distribution fees, blue sky fees and transfer agent fees
to the respective class. Each Fund's income, expenses (other than the fees
mentioned above) and realized and unrealized gains and losses are allocated
proportionally each day among the classes based upon the relative net assets of
each class.
Foreign Currency
Accounting records of the Funds are maintained in U.S. dollars. Investment
securities and other assets and liabilities and purchases and sales of
investment securities denominated in a foreign currency are translated to U.S.
dollars at the prevailing exchange rate on the respective dates of such
transactions.
The Funds do not isolate the portion of the results of operations resulting from
changes in foreign exchange rates on investments from the fluctuations arising
from changes in market prices of securities held. Such fluctuations are included
in the net realized and unrealized gain or loss from investments. Reported net
realized exchange gains or losses from foreign currency transactions represent
sale of foreign currencies, currency gains or losses between the trade date and
the settlement date on securities transactions, realized gains and losses on
forward foreign currency contracts, and the difference between the amounts of
dividends, interest, and foreign withholding taxes recorded on the Funds' books,
and the U.S. dollar equivalent of the amounts actually received or paid. Net
unrealized foreign exchange gains and losses arise from changes in the value of
assets and liabilities, other than investments in securities at fiscal year end,
as a result of changes in the exchange rate.
Income Taxes
It is each Fund's policy to comply with all sections of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income, tax-exempt income, and gains to its shareholders and, therefore,
no provision for federal income tax has been made. Each Fund is treated as a
separate taxpayer for federal income tax purposes.
Capital loss carryovers are available to offset future realized capital gains.
To the extent that these carryover losses are used to offset future capital
gains, it is probable that the gains so offset will not be distributed to
shareholders because they would be taxable as ordinary income. At September 30,
1996, the Funds had capital loss carryovers as follows:
Fund Amount Expires
- --------------------------------------------------------------------------------
GE Tax-Exempt Fund $ 56,890 2002
97,452 2003
455,605 2004
GE Fixed Income Fund 2,559,595 2003
38,636 2004
GE Short-Term Government Fund 161 2004
GE Money Market Fund 3,370 2003
Any net capital and currency losses incurred after October 31, within the Fund's
tax year, are deemed to arise on the first day of the Fund's next tax year if
the Fund so elects to defer such losses. The Funds incurred and elected to defer
net capital and currency losses as follows, during the period in fiscal 1996:
GE Fixed Income Fund $1,366,561
GE Short-Term Government Fund 443
GE Money Market Fund 5,488
Investment Income
Corporate actions (including cash dividends) are recorded net of nonreclaimable
tax withholdings on the ex-dividend date, except for certain foreign securities
for which corporate actions are recorded as soon as such information is
available. Interest income is recorded on the accrual basis. All discounts and
premiums on taxable bonds and premiums on tax exempt bonds are amortized to call
or maturity date, whichever is shorter using the effective yield method. For tax
exempt bonds purchased before May 1, 1993, only original issue discount is
amortized. For tax exempt bonds purchased after April 30, 1993, both market
discount and original issue discount are amortized.
53
<PAGE>
Notes to Financial Statements -- September 30, 1996
- --------------------------------------------------------------------------------
Expenses
Expenses of the Trust which are directly identifiable to a specific Fund are
allocated to that Fund. Expenses which are not readily identifiable to a
specific Fund are allocated in such a manner as deemed equitable, taking into
consideration the nature and type of expense and the relative sizes of the
Funds. All expenses of the Funds are paid by the Investment Adviser and
reimbursed by the Funds up to the voluntary expense limitations.
Distributions to Shareholders
GE Tax-Exempt Fund, GE Fixed Income Fund, GE Short-Term Government Fund and GE
Money Market Fund declare investment income dividends daily and pay monthly. GE
International Equity Fund, GE Global Equity Fund, GE U.S. Equity Fund and GE
Strategic Investment Fund declare and pay dividends of net investment income
annually. All Funds declare and pay net realized capital gain distributions
annually. The character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. These differences include treatment of realized and
unrealized gains and losses on forward foreign currency transactions, paydown
gains and losses on mortgage-backed securities, losses on wash sale
transactions, and deferred organization expenses. Reclassifications are made to
the Funds' capital accounts to reflect income and gains available for
distribution (or available capital loss carryovers) under income tax
regulations. The calculation of net investment income per share in the Financial
Highlights table excludes these adjustments.
Deferred Organizational Costs
Organizational expenses applicable to the Funds have been deferred and are being
amortized on a straight-line basis over a period of five years from commencement
of investment operations.
When Issued Securities
The Funds may purchase or sell securities on a when-issued or forward commitment
basis. Payment and delivery may take place a month or more after the date of the
transaction. The price of the underlying securities and the date when the
securities will be delivered and paid for are fixed at the time the transaction
is negotiated. This may increase the risk if the other party involved in the
transaction fails to deliver and causes the Fund to subsequently invest at less
advantageous yields. In connection with such purchases, the Fund is required to
hold liquid assets as collateral with the Funds' custodian sufficient to cover
the purchase price, unless they enter into an offsetting contract for the sale
of equal securities and value.
Forward Foreign Currency Contracts
A forward foreign currency contract ("Forward") is an agreement between two
parties to buy and sell a currency at a set price on a future date. The market
value of the Forward fluctuates with changes in currency exchange rates. The
Forward is marked-to-market daily and the change in the market value is recorded
by the Fund as an unrealized gain or loss. When the Forward is closed, the Fund
records a realized gain or loss equal to the difference between the value at the
time it was opened and the value at the time it was closed. The Fund could be
exposed to risk if a counterparty is unable to meet the terms of the contract or
if the value of the currency changes unfavorably. The Fund may enter into
Forwards in connection with planned purchases and sales of securities, to hedge
specific receivables or payables against changes in future exchange rates or to
hedge the U.S. dollar value of portfolio securities denominated in a foreign
currency.
Repurchase Agreements
The Funds' custodian takes possession of the collateral pledged for investments
in repurchase agreements on behalf of the Funds. It is the policy of the Funds
to value the underlying collateral daily on a mark-to-market basis to determine
that the value, including accrued interest, is at least equal to the repurchase
price. In the event of default of the obligation to repurchase, the Funds have
the right to liquidate the collateral and apply the proceeds in satisfaction of
the obligation.
54
<PAGE>
Notes to Financial Statements -- September 30, 1996
- --------------------------------------------------------------------------------
Futures and Options
The Funds, other than the GE Money Market Fund, may invest in futures contracts
and purchase and write options. These investments involve, to varying degrees,
elements of market risk and risks in excess of the amount recognized in the
Statements of Assets and Liabilities. The face or contract amounts reflect the
extent of the involvement the Funds have in the particular classes of these
instruments. Risks may be caused by an imperfect correlation between movements
in the price of the instruments and the price of the underlying securities and
interest rates. Risks also may arise if there is an illiquid secondary market
for the instruments, or an inability of counterparties to perform. The Funds
will invest in these instruments for the following reasons: to hedge against the
effects of changes in value of portfolio securities due to anticipated changes
in interest rates and/or market conditions, to equitize a cash position, for
duration management, or when the transactions are economically appropriate to
reduce the risk inherent in the management of the Fund involved.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the futures contract is
closed. The Fund will realize a gain or loss upon the expiration or closing of
an option transaction. When an option is exercised, the proceeds on sales for a
written call option, the purchase cost for a written put option, or the proceeds
on the sale of the security for a purchased put or cost of the security for a
call option is adjusted by the amount of premium received or paid.
Other
There are certain additional risks involved when investing in foreign securities
that are not inherent in domestic securities. These risks may involve foreign
currency exchange rate fluctuations, adverse political and economic developments
and the imposition of unfavorable foreign governmental laws and restrictions.
3. Fees and Compensation Paid to Affiliates
Advisory and Administration Fees
Compensation of GE Investment Management Incorporated ("GEIM"), the Fund's
Investment Adviser and Administrator, a wholly owned subsidiary of General
Electric Company, for investment advisory and administrative services, is paid
monthly based on the average daily net assets of each Fund. Such advisory and
administration fees are based on the annual rates listed in the table below.
Until further notice, GEIM has agreed to reduce other operating expenses
(exclusive of advisory, administration and distribution fees) for each Fund as
indicated in the following table:
Annualized based on average daily net assets
Advisory and Limitation of Other
Administration Fees Operating Expenses
- --------------------------------------------------------------------------------
GE International Equity Fund .80% .30%
GE Global Equity Fund .75% .35%
GE U.S Equity Fund .40% .10%
GE Strategic Investment Fund .35% .30%
GE Tax-Exempt Fund .35%* .25%
GE Fixed Income Fund .35% .25%
GE Short-Term Government Fund .30% .15%
GE Money Market Fund .25% .20%
* Effective July 18, 1996, GEIM agreed to waive the advisory and
administration fees for the GE Tax-Exempt Fund until further notice.
Distribution Fee
The Funds have adopted a Shareholder Servicing and Distribution Plan ("the
Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940 with
respect to each Fund except the GE Money Market Fund. Each Fund pays GE
Investment Services Inc. ("GEIS"), a wholly owned subsidiary of GEIM and the
Funds' principal underwriter, a monthly fee for shareholder and distribution
services provided, at an annual rate of .50% of the average daily net assets of
Class A of all applicable Funds, 1.00% for Class B of all applicable Funds
(except GE Short-Term Government Fund which is .85%), and .25% for Class C of
all applicable Funds. Currently Class D is not subject to a 12b-1 fee plan.
55
<PAGE>
Notes to Financial Statements -- September 30, 1996
- --------------------------------------------------------------------------------
Other
The Funds pay no compensation to their Trustees who are employees of GEIM.
Trustees who are not GEIM employees receive an annual fee of $10,000 and an
additional fee of $500 for each Trustees' meeting attended.
For the year ended September 30, 1996, GEIS acting as underwriter received net
commissions of $6,764 from the sale of Class A shares and $24,142 in contingent
deferred sales charges from redemptions of Class A and Class B shares.
GNA Corporation, a wholly owned subsidiary of General Electric Company, acts as
Blue Sky administrator for the GE Funds. Fees paid to GNA of approximately
$40,000, are included in Blue Sky expenses in the Statement of Operations.
4. Aggregate Unrealized Appreciation and Depreciation
Aggregate gross unrealized appreciation/(depreciation) of investments for each
Fund at September 30, 1996, were as follows:
Net
Gross Gross Unrealized
Unrealized Unrealized Appreciation
Appreciation Depreciation (Depreciation)
- --------------------------------------------------------------------------------
GE International
Equity Fund $ 8,874,318 $3,137,279 $ 5,737,039
GE Global Equity
Fund 7,237,238 1,755,665 5,481,573
GE U.S. Equity
Fund 40,674,584 2,024,884 38,649,700
GE Strategic
Investment Fund 11,886,661 899,561 10,987,100
GE Tax-Exempt
Fund 199,353 46,593 152,760
GE Fixed
Income Fund 342,151 458,247 (116,096)
GE Short-Term
Government Fund 20,771 69,067 (48,296)
The aggregate cost of each Fund's investments was substantially the same for
book and federal income tax purposes at September 30, 1996.
5. Options
During the period ended September 30, 1996, the following option contracts were
written:
GE U.S. Equity Fund GE Strategic Investment Fund
----------------------- ----------------------------
Number Number
of Contracts Premium of Contracts Premium
- --------------------------------------------------------------------------------
Balance as of
September
30, 1995 19 $ 11,280 39 $ 73,981
Written 214 66,008 0 0
Closed and
Expired (154) (45,326) (39) (73,981)
Exercised (79) (31,962) (0) (0)
- --------------------------------------------------------------------------------
Balance as
of September
30, 1996 0 $ 0 0 $ 0
================================================================================
6. Investment Transactions
The cost of purchases and the proceeds from sales of investments, other than
U.S. Government obligations, short-term securities and options, for the period
ended September 30, 1996, were:
Purchases Sales
- --------------------------------------------------------------------------------
GE International
Equity Fund $ 50,434,243 $ 19,555,870
GE Global
Equity Fund 19,180,450 16,801,890
GE U.S. Equity Fund 130,107,932 97,361,589
GE Strategic
Investment Fund 35,998,709 13,260,079
GE Tax-Exempt Fund 18,971,661 16,545,279
GE Fixed Income Fund 35,249,406 19,219,177
GE Short-Term
Government Fund 3,098,583 2,089,053
56
<PAGE>
The cost of purchases and the proceeds from sales of long-term U.S. Government
obligations for the period ended September 30, 1996, were:
Purchases Sales
- --------------------------------------------------------------------------------
GE U.S. Equity Fund $ 1,034,822 $ 423,304
GE Strategic
Investment Fund 55,300,788 44,340,890
GE Fixed Income Fund 143,977,297 125,945,501
GE Short-Term
Government Fund 21,098,755 20,276,852
7. Beneficial Interest
The schedule below shows the number of shareholders each owning 5% or more of a
Fund and the total percentage of the Fund held by such shareholders.
5% or Greater Shareholders
--------------------------
Number % of Fund Held
- --------------------------------------------------------------------------------
GE International Equity Fund 4 85%
GE Global Equity Fund 3 28%
GE U.S. Equity Fund 6 43%
GE Strategic Investment Fund 5 56%
GE Tax-Exempt Fund 1 24%
GE Fixed Income Fund 4 36%
GE Short-Term Government Fund 2 63%
GE Money Market Fund 1 10%
At September 30, 1996, GE Company owned 24% and 39%, respectively, of the shares
outstanding of the GE Tax-Exempt and GE Short-Term Government Funds.
57
<PAGE>
Report of Independent Accountants
TO THE SHAREHOLDERS AND TRUSTEES OF GE FUNDS
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of GE International Equity Fund, GE
Global Equity Fund, GE U.S. Equity Fund, GE Strategic Investment Fund, GE
Tax-Exempt Fund, GE Fixed Income Fund, GE Short-Term Government Fund and GE
Money Market Fund, each a series of GE Funds (the "Trust"), at September 30,
1996, and the results of their operations, the changes in their net assets and
the financial highlights for the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Trust's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at September 30, 1996 by
correspondence with the custodian and brokers, and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
November 12, 1996
58
<PAGE>
GE Funds Investment Team
Portfolio Managers
GE International Equity Fund
GE Global Equity Fund
Ralph R. Layman
GE U.S. Equity Fund
Eugene K. Bolton
Christopher D. Brown
David B. Carlson
Peter J. Hathaway
A. John Kohlhepp
Paul C. Reinhardt
GE Strategic Investment Fund
David B. Carlson
Robert A. MacDougall
GE Tax-Exempt Fund
Stella V. Lou
GE Fixed Income Fund
GE Short-Term Government Fund
GE Money Market Fund
Robert A. MacDougall
Investment Adviser
and Administrator
GE Investment Management Incorporated
Trustees
Michael J. Cosgrove
John R. Costantino
Alan M. Lewis
William J. Lucas
Robert P. Quinn
Secretary
Matthew J. Simpson
Treasurer
Jeffrey A. Groh
Distributor
GE Investment Services Inc.
Member NASD and SIPC
Counsel
Willkie Farr & Gallagher
Custodian
State Street Bank & Trust Company
Independent Accountants
Price Waterhouse LLP
Officers of the Investment Adviser
Dale F. Frey, Chairman of the Board and President
Eugene K. Bolton, EVP, Domestic Equities
Michael J. Cosgrove, EVP, Mutual Funds
Ralph R. Layman, EVP, International Equities
Alan M. Lewis, EVP, General Counsel and Secretary
John H. Myers, EVP, Fixed Income and Alternative Investments
Geoffrey R. Norman, EVP, Institutional Marketing
Don W. Torey, EVP, Finance and Administration
60
<PAGE>
Shareholder Inquiries
Shareholder Services has embarked on an ambitious program of service upgrades
which will be apparent to all our shareholders in the coming months. Among the
areas of improvement will be our telephone technology, account transactional
processing and universal availability of our daily fund prices in the media. Our
first order of business is to redesign and improve the Automated Voice Response
System, which is accessed nearly one million times a year (over 3,500 calls per
day). These numbers show us that our shareholders have readily utilized this
service in making investment decisions.
The new user-friendly Automated Voice Response System, which will be available
24 hours a day, 7 days a week, is in the planning stage. Here is a brief list of
the various functions expected to be included in the final version, which will
have more simplified and understandable menu selection:
* Obtain information on prices, yields and returns - current as well as
historic
* Create a personal portfolio to hear prices, yields and returns only of
those funds you own or funds you may wish to track
* Obtain account balance - individual investments and total portfolio
Shortly before the conversion occurs, shareholders will receive a brochure with
detailed instructions on how to use the new System.
We hope you will be as excited as we are by this service upgrade once you have
experienced it. We welcome your comments and suggestions.
Class A and B investor: Call your investment professional or 1-800-735-4547
Class C investor: Call the GE Funds Inquiry Center at 1-800-242-0134
Address inquiries regarding
the Funds to: Address inquiries regarding your account to:
GE Funds GE Funds
3003 Summer Street P.O. Box 8309
P.O. Box 120065 Boston, MA 02266-8309
Stamford, CT 06912-0065
Class D investor: Contact your designated GE Investment's
account representative
401(k) plan investor: Call your company's designated plan number
- --------------------------------------------------------------------------------
This report has been prepared for shareholders and may be distributed to others
only if preceded or accompanied by a current prospectus.
<PAGE>
GE Funds
3003 Summer Street
Stamford, CT 06904-7900
Bulk Rate
U.S. Postage
PAID
Canton, MA
Permit No. 313
Distributed by GE Investment Services Inc., member NASD and SIPC
<PAGE>
SEMI-ANNUAL REPORT
OF
GE FUNDS
FOR THE SIX-MONTH PERIOD ENDED MARCH 31, 1997
<PAGE>
[LOGO]
GE Funds
Semi-Annual Report
March 31, 1997
<PAGE>
- --------------------------------------------------------------------------------
Understanding Your Report
- --------------------------------------------------------------------------------
President's Letter 1
Review of Performance and Schedules of Investments
Portfolio managers discuss your Funds and what we
invested in and why
GE International Funds 3
GE Premier Growth Equity Fund 10
GE U.S. Equity Fund 13
GE Strategic Investment Fund 19
GE Tax-Exempt Fund 27
GE Fixed Income Funds 31
Notes to Performance 41
Notes to Schedules of Investments 42
Financial Statements 43
Financial Highlights and Statements of Assets and
Liabilities, Operations, and Changes in Net Assets
Notes 60
Notes to the Financial Statements
GE Funds Investment Team 68
Shareholder Inquiries Inside Back Cover
How you can obtain more information
<PAGE>
Top Rated GE Funds
By Morningstar
Through March 31, 1997
* * * * *
Overall and 3 year Ratings
Rated among 1919 Domestic Equity Funds
GE US Equity - D
- --------------------------------------------------------------------------------
* * * *
Overall and 3 year Ratings
Funds Number of Funds
Fund/Class Peer Group in Peer Group
- ---------- ---------- -------------
GE International Equity - D
GE Global Equity - C & D International Equity 478
GE US Equity - A, B & C
GE Strategic Inv't. - C & D Domestic Equity 1919
GE Short-Term Gov't. - C & D Taxable Bond 1172
- --------------------------------------------------------------------------------
* * * *
1 Year Rating
Funds Number of Funds
Fund/Class Peer Group in Peer Group
- ---------- ---------- -------------
GE International Equity - D International Equity 939
GE US Equity - B, C & D Domestic Equity 3048
GE Tax-Exempt - C & D Municipal Bond 1751
GE Short-Term Gov't. - C & D Taxable Bond 1696
- --------------------------------------------------------------------------------
Morningstar is an independent fund ranking company that seeks to provide a
non-biased rating system used in making investment decisions. A fund is rated in
its investment class on a scale of one to five stars through the evaluation of
the historical balance of risk and return.
Morningstar proprietary ratings reflect historical risk-adjusted performance
through March 31, 1997. The ratings are subject to change every month.
Morningstar ratings are calculated from a fund's three-, five- and ten-year
returns (with fee and sales charge adjustments) in excess of 90-day T-bill
returns. The one-year rating is calculated using the same methodology, but is
not a component of a fund's overall rating. Ten percent of the funds in a rating
category receive five stars, the next 22.5% receive four stars and the next 35%
receive three stars.
The GE Funds ratings above are based on three years of performance history. No
class of GE Funds has either a five or ten year performance history. Star
ratings for the classes of shares not shown above were lower than those shown.
Investment return and principal value of an investment will fluctuate and you
may have a gain or loss when you sell your shares. The adviser has voluntarily
agreed to waive and/or bear certain fees and expenses. Without these provisions,
which may be terminated in the future, the results may have been lower. Returns
assume changes in share price and reinvestment of dividends and capital gains.
Past performance is no guarantee of future results.
<PAGE>
A Letter from the President
Dear Shareholder:
We are pleased to provide you with the GE Funds 1997 semi-annual report. The new
year has continued to bring exciting changes to the GE Funds. We are proud to
announce the addition of a new growth equity product to our family of funds. The
GE Premier Growth Equity Fund provides the opportunity to invest in the stocks
of growing companies with the objective of long-term growth of capital and
future income. Please refer to the portfolio manager's review of performance for
specific investment considerations. The introduction of this Fund is part of our
commitment to provide you with a diverse array of investment options.
Performance Highlights
Despite the volatile equity markets, our GE U.S. Equity Fund and GE Strategic
Investment Fund were able to achieve double digit returns for the year ended
March 31, 1997 (excluding loads).
The GE Family of funds continued to generate competitive returns for its
shareholders in 1997. The majority of our fund classes excluding loads,
outperformed the average returns of their peers on a six month, one year and
three year basis, as measured at March 31, by Lipper Analytical Services, an
independent mutual fund rating service. The Lipper Analytical Services average
total returns for each category and complete details on each fund's performance,
including reductions for the effect of loads, can be found on the various fund
performance profiles contained in this semi-annual report.
Additionally, our Funds received many favorable star ratings from Morningstar,
an independent fund ranking company which analyzes risk-adjusted performance
providing a non-biased ranking system. Refer to the inside front cover of this
report to see our Morningstar rankings.
Market Overview
The financial markets are off to a mixed start in 1997. Domestic equity markets
supported by good corporate earnings, strong mutual fund flows, and continued
signs of non-inflationary growth in the economy, rallied to record-highs by mid-
February, only to give back much of their gains during the last half of March
due to interest rate concerns. These factors resulted in an S&P 500 return of
2.6% for the first quarter of 1997 and brought the six-month return to 11.2% for
the period ended March 31, 1997.
The bond market reacted positively to the November election results during the
last quarter of 1996 but lost enthusiasm as a result of the 1997 first quarter
economic data. Recent reports suggested a bias towards stronger growth, which
convinced the Federal Reserve Board that a pre-emptive strike against inflation
was necessary to slow the economy. The Fed increased short term rates .25% in
March and appears ready to raise interest rates an additional .25% to .50%
during the coming months to further control economic expansion. This interest
rate pressure had a negative impact on the fixed income market pushing the
Lehman Brothers Aggregate Bond Index down .6% in the first quarter of 1997
resulting in a 2.4% return for the six months ended March 31, 1997.
[PHOTO OF MICHAEL J. COSGROVE]
1
<PAGE>
A LETTER FROM THE PRESIDENT (CONTINUED)
Municipal bonds began 1997 performing slightly better than taxable bonds on a
total return basis, with the Lehman Brothers Municipal Bond Index losing .2% in
the first quarter of 1997 and finishing the six months ended March 31, 1997 up
2.3%.
Outside the U.S., financial markets also lagged somewhat, with the Morgan
Stanley EAFE Index losing 1.6% in the first quarter of 1997 and remaining flat
for the six months ended March 31, 1997. Progress towards European Union,
productivity improvements, and a strong U.S. dollar continue to support European
share prices. Japan remains the world's underperformer, down 11.8% for the three
months and 22.0% for the six months ended March 31, 1997, respectively. We
continue to hold a favorable view of continental Europe, where corporate
restructuring efforts are underway and valuations are more attractive.
Market Outlook
We view the U.S. equity market with a sense of caution but believe that
continued earnings growth and a controlled inflation environment will generate
reasonable returns in a volatile market. International markets continue to offer
opportunities for attractive returns. Investors are encouraged by low interest
rates, benign inflation, and a renewed emphasis on shareholder value, even
though recently, local returns have been offset by the strength of the dollar.
Fixed income markets provide additional diversification and an attractive
risk-return tradeoff, provided inflation remains subdued.
As always, it is our pleasure to serve you, and we will continue to be dedicated
to helping you meet your financial objectives.
Sincerely,
/S/ SIGNATURE
- ----------------------
Michael J. Cosgrove
Mike Cosgrove is responsible for the marketing, product development and sales of
the GE Funds, and is a Trustee of the GE Pension Trust and GE's employee savings
program.
In Mike's previous position as Chief Financial Officer of GE Investments and
Assistant Treasurer-GE Company, he had financial responsibility for all assets
under GE Investments' management. Mike joined GE in 1970. After completing the
GE Financial Management Program he held a number of managerial positions in
finance and sales in the International Operation, including serving as Vice
President and Treasurer and later as the Vice President - Countertrade and
Barter for GE Trading Company.
Mike graduated from Fordham University in 1970 with a B.S. degree in Economics
and received his M.B.A. degree from St. John's University in 1973.
See page 41 for Notes to Performance.
2
<PAGE>
GE INTERNATIONAL FUNDS
Q&A
Ralph Layman manages the international equity team of GE Investments with total
assets of over $8 billion. Prior to joining GE Investments in 1991, Ralph was
Executive Vice President and Director of International Equity Operations at
Northern Capital Management. Previously, he was a Vice President and Portfolio
Manager at Templeton Investment Counsel, Inc. He was instrumental in forming
Templeton's Emerging Markets Fund, the first listed emerging markets equity fund
in the U.S. Ralph is a Trustee of the GE Pension Trust and GE's employee savings
program, and serves on the GE Investments' Asset Allocation Committee. He is a
Chartered Financial Analyst (CFA), a charter member of the International Society
of Security Analysts and a member of the New York Society of Security Analysts.
Ralph is a graduate of the University of Wisconsin with a B.S. in Economics and
a M.S. in Finance.
Q. How did GE International & GE Global Equity Funds' industry benchmarks and
Lipper peers perform for the six months ended March 31, 1997?
A. The GE International Equity Fund's benchmark, the MSCI EAFE Index, remained
flat for the six months ended March 31, 1997. Our Lipper peer group of 782
International Stock Funds returned an average of 5.7% for the same period.
The GE Global Equity Fund's benchmark, MSCI World Index, returned 4.9% for
the six months ended March 31, 1997. Our Lipper peer group of 210 Global
Stock Funds returned an average of 4.5% for the same period. Refer to the
following page for the GE International Equity Fund and page 7 for GE
Global Equity Fund, to see how your class of shares performed compared to
the above benchmarks.
Q. What drove the Funds' performance?
A. Stock selection drives our country allocation and our performance. Our
approach proved advan-tageous in Japan, where we have been underweighted in
one of the world's worst performing markets in the past six months (-22%).
More importantly, we have avoided Japan's financial sector, which has led
the decline. Japanese banks have been plagued with large non-performing
loans and questionable management oversight. In Europe, our performance has
been hampered by the strong U.S. dollar, which dampens our returns once
they are translated back into our local currency. We generally do not hedge
our currency exposure, preferring instead to buy quality exporters which we
believe are likely to benefit from a strong U.S. dollar (see the discussion
below on Novartis). For the GE Global Equity Fund, we have maintained our
underweight stance towards the U.S. It is our contention the U.S. indices
do not give a clear impression of what has been happening in the market,
where many quality names have fallen 20% or more from their highs. This has
provided us with some opportunities to add new names to the Fund, although
we remain cautious on the outlook for the large-cap, "nifty-fifty" stocks
(largest U.S. companies), especially in light of the recent change in Fed
policy.
Q. Which investments stand out?
A. Over the past six months, the Funds have benefited from our holdings in
Novartis, a merger between two Swiss pharmaceutical companies, Sandoz and
Ciba-Geigy. Novartis epitomizes two trends we are seeing in Europe;
corporate restructurings and strong exports. The company's profits have
been aided by cost savings and synergies related to the merger, while its
revenues have been boosted by a stronger U.S. dollar. Another favorite
worldwide would include HSBC Holdings, one of Asia's strongest banking
franchises. HSBC is well-positioned in China and other Asian markets, and
seems to have regained its focus on its core banking business.
Q. What is outlook for the Funds and how have you positioned them going
forward?
A. Looking ahead, we still feel there is good value in Europe and the emerging
markets. Europe merits an overweight position as we feel we are in the
early stages of the restructuring movement. While we have low expectations
for economic growth in these countries, we believe the region's economies
have bottomed and should improve going forward. We expect to remain
underweighted in Japan while we await signs that the government will tackle
the structural problems in its economy. As for the U.S., we believe a
two-tier market has developed. Many quality second-tier names have already
corrected, providing us with some opportunities. We remain more cautious on
the index names, however, and continue to take profits from our holdings
among the "nifty-fifty." We believe at some point the performance of these
names must revert back to the mean, and we wonder if further interest rate
increases may act as the catalyst for this move. In this environment, our
stock picking philosophy should prove rewarding, as investors are forced to
differentiate between their names.
[PHOTO OF RALPH LAYMAN]
3
<PAGE>
GE International Equity Fund
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
Europe 61.0%
Cash & Other 5.1%
Other Regions 5.4%
Japan 13.9%
Pacific Rim 14.6%
- --------------------------------------------------------------------------------
Average Annual Total Return %
for the periods ended March 31, 1997
- --------------------------------------------------------------------------------
Since
6 Mo. 1 Yr. 3 Yr. Inception Commencement
- --------------------------------------------------------------------------------
Class A 5.38% 9.86% 8.50% 7.39% 3/2/94
- --------------------------------------------------------------------------------
Class A* 0.38% 4.64% 6.75% 5.71% 3/2/94
- --------------------------------------------------------------------------------
Class B 5.14% 9.34% 7.92% 6.83% 3/2/94
- --------------------------------------------------------------------------------
Class B* 1.14% 5.34% 7.63% 6.54% 3/2/94
- --------------------------------------------------------------------------------
Class C 5.61% 10.23% 8.72% 7.64% 3/2/94
- --------------------------------------------------------------------------------
Class D 5.74% 10.54% 9.09% 7.98% 3/2/94
- --------------------------------------------------------------------------------
MSCI EAFE 0.00% 1.45% 6.53%
================================================================================
* With Load
<PAGE>
INVESTMENT PROFILE
A mutual fund designed for investors who seek
long-term growth of capital by investing primarily
in foreign equity securities.
================================================================================
GE INTERNATIONAL EQUITY FUND
TOP TEN LARGEST HOLDINGS AT MARCH 31, 1997
================================================================================
Novartis AG 2.52%
- --------------------------------------------------------------------------------
Total S.A. (Class B) 2.48%
- --------------------------------------------------------------------------------
Medeva 2.21%
- --------------------------------------------------------------------------------
Siebe 2.02%
- --------------------------------------------------------------------------------
Canon Inc. 1.94%
- --------------------------------------------------------------------------------
Carrefour 1.87%
- --------------------------------------------------------------------------------
ABB AG 1.87%
- --------------------------------------------------------------------------------
Airtours PLC 1.84%
- --------------------------------------------------------------------------------
HSBC Holdings PLC 1.82%
- --------------------------------------------------------------------------------
Telecom Italia Mobile 1.73%
================================================================================
* Lipper Performance Comparison
International Stock Peer Group
Based on average annual total returns for the periods ending March 31, 1997
Six One Three
Months Year Year
Number of Funds
in peer group: 782 686 314
Peer group average
total return: 5.7% 8.9% 6.0%
Lipper categories
in peer group: International, European Region,
Pacific Region, Pacific Ex-Japan,
Japanese, Latin America,
Canadian, Emerging Markets,
International Small Company
* See Notes to Performance for explanation of peer categories
See page 41 for Notes to Performance.
Past performance is no guarantee of future results.
4
<PAGE>
Schedule of Investments March 31, 1997 (unaudited)
GE INTERNATIONAL EQUITY FUND
Number
of Shares Value
- --------------------------------------------------------------------------------
Common Stock -- 94.9%
- --------------------------------------------------------------------------------
Australia -- 3.1%
Brambles Industries Ltd. 59,559 $ 979,110
Burns Philip & Co. 611,712 1,021,438
Coca Cola Amatil Ltd. 38,669 367,683
F.H. Faulding & Co. Ltd. 36,134 212,453
2,580,684
Austria -- 2.8%
Creditanstalt Bankverein 8,930 345,429
Flughafen Wien AG 5,018 228,708
OMV AG 3,648 431,823
VA Technologie AG 9,114 1,343,441
2,349,401
Brazil -- 1.1%
Telecomunicacoes
de Sao Paulo S.A. 3,526,245 895,459
Canada -- 0.6%
Bombardier Inc. 26,062 470,603
Denmark -- 1.6%
Den Danske Bank 13,251 1,194,610
Tele Danmark AS (Series B) 2,315 121,408
1,316,018
Finland -- 1.0%
Merita Ltd. 46,224 157,300
Metra AB 948 55,412
Pohjola Insurance Group 8,144 218,451
Valmet Corp. 23,033 410,349
841,512
[GRAPHIC OF FLAG OF FRANCE]
France -- 10.9%
Alcatel Alsthom 11,700 1,412,877
AXA-UAP 8,182 542,552
Carrefour 2,486 1,545,752
Coflexip ADR 19,983 614,477(a)
Lyonnaise Des Eaux S.A. 6,674 683,507
Michelin CGDE 9,465 563,905
Total S.A. (Class B) 23,704 2,055,656
Usinor Sacilor 26,081 427,367
Valeo 17,756 1,196,067
9,042,160
GRAPHIC OF FLAG OF GERMANY]
Germany -- 9.4%
BASF AG 16,381 618,707
Deutsche Bank AG 2,805 157,907
Dresdner Bank AG 9,234 328,283
Fresenius Medical Care Inc.
AG ADR 10,506 912,651(a)
Gehe AG 15,294 1,049,858
Mannesmann AG 3,254 1,244,636
SGL Carbon 10,369 1,423,562
Siemens AG 20,911 1,127,038
<PAGE>
Number
of Shares Value
- --------------------------------------------------------------------------------
Veba AG 15,491 $ 877,173
7,739,815
Greece -- 0.5%
Alpha Credit Bank 5,616 412,336
Alpha Credit Bank (Rts.) 4,493 35,828
448,164
Hong Kong -- 4.9%
Cheung Kong (Holdings) Ltd. 84,000 739,866
China Resources Enterprise Ltd. 36,000 77,587
Giordano International 607,000 368,178
Hong Kong & Shang Hot 85,000 134,377
HSBC Holdings PLC 64,787 1,504,983
Johnson Electric Holdings 91,500 232,626
Lai Sun Development Co. Ltd. 109,000 126,602
Lai Sun Hotels International Ltd. 21,888 0
New World Development Co. Ltd. 65,150 351,449
Television Broadcasts Ltd. ADR 126,000 512,215
4,047,883
India -- 0.5%
BSES Ltd. 7,640 160,440
Tata Engineering &
Locomotive Co. Ltd. GDR 6,621 86,073(b)
Tata Engineering &
Locomotive Co. Ltd. GDR 6,442 83,746
Videsh Sanchar Nigam Ltd. GDR 2,550 44,752(b)
375,011
Indonesia -- 1.8%
Astra International 313,000 1,016,826
PT Mulia Industrindo 361,000 233,049
PT Tambang Timah GDR 13,622 211,141(b)
1,461,016
Italy -- 3.0%
Edison SPA 99,111 529,662
ENI SPA 54,976 279,455
Gucci Group N.V. ADR 1,783 128,599
Industrie Natuzzi Spa 5,324 127,110
Telecom Italia Mobile 496,237 1,428,663
2,493,489
[GRAPHIC OF FLAG OF JAPAN]
Japan -- 13.9%
Canon Inc. 75,000 1,607,100
Credit Saison Co. 64,285 1,174,772
DDI Corp. 180 1,136,735
Denso Corp. 10,000 196,491
Honda Motor Co. 40,000 1,193,499
Murata Manufacturing Co. 30,000 1,077,060
NEC Corp. 67,000 758,470
NTT Data Communications
Systems Co. 27 718,283
Promise Co. 5,700 238,748
Rohm Co. 17,000 1,253,659
Sega Enterprises 3,100 77,707
Sony Corp. 14,500 1,014,191
Sumitomo Realty & Development 23,000 154,734
Suzuki Motor Corp. 59,000 572,491
Tokyo Steel Manufacturing 29,300 289,043
11,462,983
- ----------
See Notes to Schedule of Investments and Financial Statements
5
<PAGE>
GE International Equity Fund March 31, 1997 (unaudited)
Number
of Shares Value
- --------------------------------------------------------------------------------
Malaysia -- 0.8%
AMMB Holdings Berhad 34,000 $ 282,613
AMMB Holdings Berhad (Rts.) 68,000 7,683
Telekom Malaysia 46,000 358,229
648,525
Mexico -- 0.9%
Gruma S.A. de C.V. 3,398 16,305
Grupo Carso S.A. de C.V. ADR 41,833 500,950
Grupo Financiero Bancomer
S.A. ADR (Series C) 22,016 151,366(a,b)
Grupo Televisa S.A. de C.V. ADR 3,723 92,610(a)
761,231
Netherlands -- 4.9%
IHC Caland N.V. 20,531 1,096,884
ING Groep N.V. 30,671 1,208,524
Nutricia Verenigde Bedrijven 1,561 241,370
PolyGram N.V. 20,512 1,031,342
Wolters Kluwer 4,205 506,484
4,084,604
New Zealand -- 0.1%
Carter Holt Harvey Ltd. 45,600 96,617
Panama -- 0.5%
Panamerican Beverages Inc.
(Class A) 7,950 426,319
Peru -- 1.0%
Telefonica del Peru
S.A. ADR (Class B) 38,300 852,175
Philippines -- 1.4%
Metro Bank & Trust Co. 19,800 514,432
San Miguel Corp. 177,180 614,905
1,129,337
Portugal -- 1.1%
Banco Comercial Portugues 42,231 629,975
Banco Comercial Portugues ADR 21,429 313,399
943,374
Singapore -- 0.5%
DBS Land Ltd. 68,960 235,834
Singapore Airlines Ltd. 25,000 200,762
436,596
South Africa -- 1.3%
Iscor 1,076,467 876,859
Malbak 45,562 226,805
1,103,664
South Korea -- 1.0%
Korea Electric Power 27,227 790,510
Spain -- 2.0%
Banco Popular (Regd.) 1,077 193,788
<PAGE>
Number
of Shares Value
- --------------------------------------------------------------------------------
Banco Santander S.A. 4,646 $ 320,641
Repsol S.A. 26,628 1,112,052
1,626,481
Sweden -- 3.7%
Astra AB (Series B) 2,480 116,661
Autoliv AB 32,991 1,424,969
Electrolux AB (Series B) 11,147 710,000
Kinnevik Investment (Series B) 13,305 372,526
LM Ericsson Telephone (Series B) 8,147 287,567
Netcom Systems AB (Series B) 11,689 172,171(a)
3,083,894
[GRAPHIC OF FLAG OF SWITZERLAND]
Switzerland -- 8.5%
ABB AG 1,285 1,544,858
Danzas Holdings (Regd.) 325 318,676
Nestle S.A. (Regd.) 810 948,471
Novartis AG 1,681 2,086,356
Roche Holdings AG 134 1,158,881
Schw Ruckversicher (Regd.) 616 654,955
Zurich Versicherungsgesellschaft 1,095 344,708
7,056,905
Thailand -- 0.5%
Banpu Public Co. Ltd. 6,200 90,773
Siam Cement Co. Ltd. 2,800 72,926
Thai Farmers Bank 32,731 213,120
376,819
[GRAPHIC OF FLAG OF UNITED KINGDOM]
United Kingdom -- 11.6%
Airtours PLC 93,337 1,520,297
Cordiant 324,031 645,076(a)
EMI Group 8,357 152,895
Granada Group 86,369 1,305,908
Medeva 363,667 1,830,900
Railtrack Group PLC 125,917 934,330
Reed International 64,587 1,188,027
Siebe 98,887 1,669,267
Thorn 111,956 303,928
9,550,628
Total Investments in Securities
(Cost $69,618,366) 78,491,877
Principal
Amount Value
- --------------------------------------------------------------------------------
Short Term Investments -- 3.9%
- --------------------------------------------------------------------------------
Repurchase Agreement -- 3.9%
State Street Bank and Trust Co.
6.25% 04/01/97
(Cost $3,230,000) $3,230,000 3,230,000
(dated 03/31/97, proceeds $3,230,561,
collateralized by $3,299,796 United
States Treasury Note, 9.875%, 11/15/15)
Other Assets and Liabilities, net 1.2% 1,010,776
- --------------------------------------------------------------------------------
NET ASSETS - 100% $82,732,653
================================================================================
4
[GRAPHIC OF FLAG OF JAPAN]
- --------------------------------------------------------------------------------
Icons represent the top five country weightings in the
GE International Equity Fund at March 31, 1997.
6
<PAGE>
GE Global Equity Fund
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
EUROPE 42.6%
UNITED STATES 27.9%
JAPAN 8.8%
PACIFIC RIM 9.6%
CASH & OTHER 5.4%
OTHER REGIONS 5.7%
- --------------------------------------------------------------------------------
Average Annual Total Return %
for the periods ended March 31, 1997
- --------------------------------------------------------------------------------
Since
6 Mo. 1 Yr. 3 Yr. Inception Commencement
- --------------------------------------------------------------------------------
Class A 3.39% 8.99% 8.33% 7.63% 1/1/94
- --------------------------------------------------------------------------------
Class A* - 1.52% 3.81% 6.59% 6.02% 1/1/94
- --------------------------------------------------------------------------------
Class B 3.13% 8.38% 7.81% 7.98% 12/22/93
- --------------------------------------------------------------------------------
Class B* - 0.76% 4.38% 7.53% 7.72% 12/22/93
- --------------------------------------------------------------------------------
Class C 3.54% 9.25% 8.62% 12.43% 2/22/93
- --------------------------------------------------------------------------------
Class D 3.64% 9.50% 8.90% 10.66% 11/29/93
- --------------------------------------------------------------------------------
MSCI World 4.88% 9.35% 12.79%
================================================================================
* With Load
<PAGE>
INVESTMENT PROFILE
A mutual fund designed for investors who seek
long-term growth of capital by investing primarily in
equity securities of global companies.
================================================================================
GE GLOBAL EQUITY FUND
TOP TEN LARGEST HOLDINGS AT MARCH 31, 1997
================================================================================
Novartis AG 2.70%
- --------------------------------------------------------------------------------
First Data Corp. 2.35%
- --------------------------------------------------------------------------------
AlliedSignal Inc. 2.34%
- --------------------------------------------------------------------------------
HSBC Holdings PLC 2.21%
- --------------------------------------------------------------------------------
Telecom Italia Mobile 2.07%
- --------------------------------------------------------------------------------
Total S.A. (Class B) 1.89%
- --------------------------------------------------------------------------------
ING Groep N.V. 1.87%
- --------------------------------------------------------------------------------
Ecolab Inc. 1.86%
- --------------------------------------------------------------------------------
Citicorp 1.79%
- --------------------------------------------------------------------------------
UCAR International Inc. 1.75%
================================================================================
* Lipper Performance Comparison
Global Stock Peer Group
Based on average annual total returns for the periods ending March 31, 1997
Six One Three
Months Year Year
Number of Funds
in peer group: 210 191 112
Peer group average
total return: 4.5% 10.4% 10.6%
Lipper categories
in peer group: Global, Global Small Company
* See Notes to Performance for explanation of peer categories
See page 41 for Notes to Performance.
Past performance is no guarantee of future results.
7
<PAGE>
Schedule of Investments March 31, 1997 (unaudited)
GE GLOBAL EQUITY FUND
Number
of Shares Value
- --------------------------------------------------------------------------------
Common Stock -- 94.6%
- --------------------------------------------------------------------------------
Australia -- 1.6%
Burns Philip & Co. 336,382 $ 561,692
Coca Cola Amatil Ltd. 22,035 209,519
771,211
Austria -- 1.8%
Flughafen Wien AG 3,317 151,180
VA Technologie AG 4,845 714,173
865,353
Brazil -- 1.2%
Ceval Alimentos S.A. 2,488,212 26,778
Telecomunicacoes
de Sao Paulo S.A. 2,289,610 581,426
608,204
Canada -- 0.3%
Bombardier Inc. 8,243 149,142
Finland -- 2.3%
Merita Ltd. 56,243 191,395
Sampo Insurance Co. Ltd. 5,260 483,293
Valmet Corp. 25,713 458,094
1,132,782
[GRAPHIC OF FLAG OF FRANCE]
France -- 7.2%
AXA-UAP 3,707 245,813
Carrefour 1,214 754,844
Coflexip ADR 19,573 601,870(a)
Michelin CGDE 8,049 479,542
Total S.A. (Class B) 10,654 923,935
Valeo 7,695 518,345
3,524,349
Germany -- 5.4%
BASF AG 7,101 268,203
Fresenius Medical Care Inc.
AG ADR 6,874 594,033(a)
Gehe AG 6,886 472,690
Mannesmann AG 1,866 713,734
Veba AG 10,831 613,302
2,661,962
Greece -- 0.7%
Alpha Credit Bank 4,401 323,132
Alpha Credit Bank (Rts.) 3,521 28,077
351,209
Hong Kong -- 4.1%
Cheung Kong (Holdings) Ltd. 38,000 334,701
Giordano International 576,000 349,375
HSBC Holdings PLC 46,708 1,085,013
Television Broadcasts Ltd. ADR 58,000 235,781
2,004,870
<PAGE>
Number
of Shares Value
- --------------------------------------------------------------------------------
Indonesia -- 1.4%
Astra International 132,000 $ 428,821
Steady Safe 193,700 229,923
658,744
Italy -- 3.7%
Edison SPA 54,320 290,293
Industrie Natuzzi Spa 21,688 517,801
Telecom Italia Mobile 351,789 1,012,798
1,820,892
[GRAPHIC OF FLAG OF JAPAN]
Japan -- 8.8%
Canon Inc. 34,000 728,552
Credit Saison Co. 27,025 493,867
DDI Corp. 126 795,714
Honda Motor Co. 17,000 507,237
NTT Data Communications
Systems Co. 16 425,649
Rohm Co. 7,000 516,212
Sega Enterprises 1,900 47,627
Sony Corp. 7,100 496,604
Suzuki Motor Corp. 33,000 320,207
4,331,669
Malaysia -- 1.0%
AMMB Holdings Berhad 55,000 457,168
AMMB Holdings Berhad (Rts.) 110,000 12,428
469,596
Mexico -- 1.1%
Gruma S.A. de C.V. 1,766 8,474
Grupo Carso S.A. de C.V.
(Series A) 31,216 149,791
Grupo Carso S.A. de C.V. ADR 3,440 41,194
Grupo Financiero Bancomer
S.A. ADR (Series C) 22,741 156,352(a,b)
Grupo Televisa S.A. de C.V. ADR 6,881 171,165(a)
526,976
Netherlands -- 2.7%
ING Groep N.V. 23,299 918,047
PolyGram N.V. 7,832 393,792
1,311,839
Norway -- 1.0%
Petroleum Geo Services 11,702 511,439(a)
Panama -- 1.2%
Banco Latinoamericano de
Exportaciones S.A. (Class E) 4,338 204,971
Panamerican Beverage Inc.
(Class A) 7,394 396,503
601,474
Peru -- 1.1%
Telefonica del Peru S.A. ADR
(Class B) 25,143 559,432
Philippines -- 1.0%
Pilipino Telephone 87,700 52,391(a)
San Miguel Corp. 125,700 436,243
488,634
- ----------
See Notes to Schedule of Investments and Financial Statements
8
<PAGE>
Schedule of Investments March 31, 1997 (unaudited)
Number
of Shares Value
- --------------------------------------------------------------------------------
Portugal --0.5%
Telecel-Comunicacoes Pessoais S.A. 2,922 $ 239,737(a)
South Africa -- 0.8%
Iscor 468,490 381,619
Spain -- 1.6%
Banco Santander S.A. 3,745 258,459
Repsol S.A. 13,078 546,170
804,629
Sweden -- 1.6%
Autoliv AB 18,328 791,635
[GRAPHIC OF FLAG OF SWITZERLAND]
Switzerland -- 7.1%
ABB AG 566 680,459
Novartis AG 1,065 1,321,814
Roche Holdings AG 61 527,550
Schw Ruckversicher (Regd.) 510 542,252
Tag Heuer International S.A. ADR 3,184 420,956(a)
3,493,031
Thailand -- 0.5%
Thai Farmers Bank 33,700 219,430
[GRAPHIC OF FLAG OF UNITED KINGDOM]
United Kingdom -- 7.0%
Granada Group 50,882 769,341
Medeva 144,616 728,077
Railtrack Group PLC 39,430 292,579
Reed International 34,921 642,344
Siebe 43,816 739,638
Thorn 93,512 253,858
3,425,837
[GRAPHIC OF FLAG OF UNITED STATES]
United States -- 27.9%
Airgas Inc. 32,481 548,117(a)
Airtouch Communications Inc. 30,421 699,683(a)
AlliedSignal Inc. 16,118 1,148,407
Avery Dennison Corp. 8,326 320,551
Citicorp 8,118 878,773
Colgate Palmolive Co. 4,604 458,674
Ecolab Inc. 24,036 913,368
Electronic Data Systems Corp. 18,855 761,271
First Data Corp. 33,922 1,149,108
Harman International
Industries Inc. 18,056 604,876
Home Depot Inc. 10,223 546,930
Intel Corp. 3,338 464,399
Motorola Inc. 12,640 763,140
Scherer (R.P.) Corp. Delaware 13,275 688,641(a)
Sears Roebuck & Co. 16,694 838,873
Sensormatic Electronics Corp. 24,599 415,108
Toys'R Us Inc. 8,816 246,848(a)
Travelers Group Inc. 17,131 820,147
Tyco International Ltd. 5,974 328,570
UCAR International Inc. 21,609 856,257(a)
Zebra Technologies Corp. (Class A) 9,030 207,690(a)
13,659,431
<PAGE>
Number
of Shares Value
- --------------------------------------------------------------------------------
Total Investments in Securities
(Cost $40,459,987) $46,365,126
Principal
Amount Value
- --------------------------------------------------------------------------------
Short Term Investments -- 3.3%
- --------------------------------------------------------------------------------
Repurchase Agreement -- 3.3%
State Street Bank and Trust Co.
6.25% 04/01/97
(Cost $1,620,000) $1,620,000 1,620,000
(dated 03/31/97, proceeds 1,620,281,
collateralized by $1,656,445
United States Treasury Note,
9.875%, 11/15/15)
Other Assets and Liabilities, net 2.1% 1,005,057
- --------------------------------------------------------------------------------
NET ASSETS - 100% $48,990,183
================================================================================
[GRAPHIC OF FLAG OF UNITED STATES]
Icons represent the top five country weightings in the
GE Global Equity Fund at March 31, 1997.
- ----------
See Notes to Schedule of Investments and Financial Statements
9
<PAGE>
GE PREMIER GROWTH EQUITY FUND
Q&A
David Carlson manages pension and mutual fund portfolios with total assets of
over $4 billion. Dave joined GE in 1980 on the GE Financial Management Program.
In 1982, he joined GE Investments as a Security Analyst responsible for several
consumer industries. In 1988, Dave assumed responsibility for managing Elfun
Trusts. He is a Trustee for the GE Canada Pension Trust, a Chartered Financial
Analyst (CFA) and a member of the New York Society of Security Analysts. Dave is
a graduate of Indiana University with a B.S. in Business.
Q. How did the GE Premier Growth Equity Fund's industry benchmark and Lipper
peers perform for the three months ended March 31, 1997?
A. GE Premier Growth Equity Fund commenced investment operations on December
31, 1996, so we only have one quarter's data. For the three months ended
March 31, 1997, the S&P 500 rose 2.6% while our Lipper peer group of 843
Growth Funds posted an average return of -1.3%. Refer to the following page
to see how your class of shares in the GE Premier Growth Equity Fund
compared to these benchmarks.
Q. Why did the Fund's performance trail that of the S&P 500?
A. A look at the major stock market indices for the first quarter of 1997
shows that the large capitalization indices such as the Dow and the S&P 500
outperformed the broad market overall. For example, the NASDAQ index was
down 5.4% in the quarter. In addition, there were several holdings in the
GE Premier Growth Equity Fund which fell sharply in the quarter. With
approximately 30 holdings in the portfolio, the volatility of returns in
any one quarter can be fairly significant.
Q. What is the strategy of the GE Premier Growth Equity Fund?
A. GE Premier Growth Equity Fund is a growth fund that we believe will have
certain aggressive growth characteristics. We seek companies with the
following characteristics: high quality products/services with a leading
market share in their industries, strong financial characteristics
sustainable internal growth and superior financial returns (i.e.), a growth
rate of 15% or better, and well-regarded management. Initially, we plan to
limit the number of holdings to 30-40 names. We will invest in companies of
varying sizes, although a majority of the portfolio will be comprised of
companies with relatively large capitalizations. The portfolio will
typically be overweighted in growth industries such as Technology and
Healthcare, and underweighted in slow-growing industries such as Utilities
and Basic materials. We expect the turnover to be low by industry
standards, as our philosophy favors a buy and hold approach.
Q. What is the outlook for GE Premier Growth Equity Fund?
A. Currently, the portfolio holds 33 stocks; 5 Healthcare stocks, 3 Technology
stocks, 3 Software/services stocks, 3 Financial stocks, 2 Retail stocks, 2
cellular stocks, and the rest in a variety of industries. As of mid-to late
April the cash weighting in the portfolio is approximately 8%, slightly
higher than normal due to our concerns about the valuation level of the
U.S. market. We believe these companies can grow at a mid-teens or better
rate regardless of the strength in the economy or the level of interest
rates, and we believe the superior growth rate will drive superior
performance over the long term.
[PHOTO OF DAVID CARLSON]
10
<PAGE>
GE Premier Growth Equity Fund
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
ENERGY & BASIC MATERIALS 5.8%
CONSUMER 24.2%
CAPITAL GOODS 6.7%
HEALTHCARE 12.6%
FINANCIAL SERVICES 7.2%
RETAIL 5.2%
TECHNOLOGY 16.9%
Utilities 5.8%
Cash & Other 11.6%
Miscellaneous 4.0%
- --------------------------------------------------------------------------------
Total Return %
for the period ended March 31, 1997
- --------------------------------------------------------------------------------
Since
Inception Commencement
- --------------------------------------------------------------------------------
Class A - 4.73% 12/31/96
- --------------------------------------------------------------------------------
Class A* - 9.26% 12/31/96
- --------------------------------------------------------------------------------
Class B - 4.87% 12/31/96
- --------------------------------------------------------------------------------
Class B* - 8.67% 12/31/96
- --------------------------------------------------------------------------------
Class C - 4.67% 12/31/96
- --------------------------------------------------------------------------------
Class D - 4.60% 12/31/96
- --------------------------------------------------------------------------------
S&P 500 2.61%
================================================================================
* With Load
<PAGE>
INVESTMENT PROFILE
A mutual fund designed for investors who seek long-term growth of capital and
future income by primarily investing in growth-oriented equity securities.
================================================================================
GE PREMIER GROWTH EQUITY FUND
TOP TEN LARGEST HOLDINGS AT MARCH 31, 1997
================================================================================
SPDR Trust 3.96%
- --------------------------------------------------------------------------------
Interpublic Group Cos. Inc. 3.46%
- --------------------------------------------------------------------------------
Dover Corp. 3.44%
- --------------------------------------------------------------------------------
First Data Corp. 3.33%
- --------------------------------------------------------------------------------
Schlumberger Ltd. 3.24%
- --------------------------------------------------------------------------------
Molex Inc. (Class A) 3.21%
- --------------------------------------------------------------------------------
Reuters Holdings PLC ADR (Class B) 3.21%
- --------------------------------------------------------------------------------
Automatic Data Processing Inc. 3.19%
- --------------------------------------------------------------------------------
Lincare Holdings Inc. 3.03%
- --------------------------------------------------------------------------------
CUC International Inc. 2.95%
================================================================================
* Lipper Performance Comparison
Growth Peer Group
Based on total returns for the period ending March 31, 1997
Three
Months
Number of Funds
in peer group: 843
Peer group average
total return: -1.3%
Lipper categories
in peer group: Growth
* See Notes to Performance for explanation of peer categories
See page 41 for Notes to Performance.
Past performance is no guarantee of future results.
11
<PAGE>
Schedule of Investments March 31, 1997 (unaudited)
GE PREMIER GROWTH EQUITY FUND
Number
of Shares Value
- --------------------------------------------------------------------------------
Common Stock -- 88.4%
- --------------------------------------------------------------------------------
Basic Materials -- 2.6%
Airgas Inc. 12,000 $ 202,500
Capital Goods -- 6.7%
Dover Corp. 5,000 262,500
Molex Inc. (Class A) 7,000 245,000
507,500
[GRAPHIC OF MONEY]
Consumer - Cyclical -- 24.2%
Automatic Data Processing Inc. 5,800 242,875
Carnival Corp. (Class A) 6,000 222,000
Catalina Marketing Corp. 5,500 223,437(a)
Circus Circus Enterprises Inc. 7,000 182,000(a)
Comcast UK Cable Partners Ltd.
(Class A) 11,000 122,375(a)
CUC International Inc. 10,000 225,000(a)
Harman International
Industries Inc. 5,200 174,200
Interpublic Group Cos. Inc. 5,000 263,750
Tele-Communications Inc.
Liberty Media Group (Series A) 9,600 191,400(a)
1,847,037
Energy -- 3.2%
Schlumberger Ltd. 2,300 246,675
[GRAPHIC OF DOLLAR SIGN]
Financial -- 7.2%
Citicorp 2,000 216,500
Travelers Group Inc. 4,000 191,500
Wells Fargo & Co. 500 142,063
550,063
[GRAPHIC]
Healthcare -- 12.6%
Cardinal Health Inc. 4,000 217,500
Columbia/HCA Healthcare Corp. 4,000 134,500
Johnson & Johnson 4,200 222,075
Lincare Holdings Inc. 5,600 231,000(a)
Scherer (R.P.) Corp. Delaware 3,000 155,625(a)
960,700
Miscellaneous -- 4.0%
SPDR Trust 4,000 301,875
Retail Trade -- 5.2%
Arbor Drugs Inc. 10,500 183,750
Home Depot Inc. 4,000 214,000
397,750
[GRAPHIC OF DISKETTES]
Software & Services -- 9.2%
First Data Corp. 7,500 254,062
Microsoft Corp. 2,200 201,713(a)
Reuters Holdings PLC ADR
(Class B) 4,200 244,387
700,162
Number
of Shares Value
- --------------------------------------------------------------------------------
[GRAPHIC OF COMPUTER]
Technology -- 7.7%
Applied Materials Inc. 4,500 $ 208,687(a)
Cisco Systems Inc. 3,800 182,875(a)
Intel Corp. 1,400 194,775
586,337
Utilities -- 5.8%
Airtouch Communications Inc. 9,000 207,000(a)
NTL Inc. 8,500 179,563(a)
Vanguard Cellular Systems Inc.
(Class A) 5,000 55,000(a)
441,563
Total Investments in Securities
(Cost $7,154,782) 6,742,162
<PAGE>
Principal
Amount Value
- --------------------------------------------------------------------------------
Short Term Investments -- 12.6%
- --------------------------------------------------------------------------------
U.S. Government Agencies -- 9.2%
Federal Home Loan Bank
5.41% 04/17/97 $200,000 199,519(d)
Federal National Mortgage Assoc.
5.46% 04/10/97 500,000 499,318(d)
698,837
Repurchase Agreement -- 3.4%
State Street Bank and Trust Co.
6.25% 04/01/97
(Cost $260,000) 260,000 260,000
(dated 03/31/97, proceeds $260,045,
collateralized by $268,436 United
States Treasury Note, 9.875%, 11/15/15)
Total Short Term Investments
(Cost $958,837) 958,837
Other Assets and Liabilities, net (1.0%) (76,404)
- --------------------------------------------------------------------------------
NET ASSETS -- 100% $7,624,595
================================================================================
[GRAPHIC OF DISKETTES]
Icons represent the top five industry weightings in the
GE Premier Growth Equity Fund at March 31, 1997.
- ----------
See Notes to Schedule of Investments and Financial Statements
12
<PAGE>
GE U.S. EQUITY FUND
Q&A
Gene Bolton is responsible for the overall management of the U.S. equity
operation at GE Investments with total assets of over $24 billion. His
responsibilities include overseeing the portfolio management team of the GE U.S.
Equity Fund listed on page 66. Gene joined GE in 1964. After completing GE's
Financial Management Program he held a number of financial and strategic
planning positions in the U.S. and Europe. Joining GE Investments in 1984 as
Chief Financial Officer, he moved to equities as a Portfolio Manager in 1986 and
was named to his present position in 1991. Gene is a Trustee of the GE Pension
Trust and GE's employee savings program, as well as Chairman of the Asset
Allocation Committee of GE Investments. He also serves as a Trustee of the
Investment Management Workshop, sponsored by the Association for Investment
Management and Research. Gene is a graduate of Mundelein College with a B.A. in
Business Management.
Q. How did the GE U.S. Equity Fund's industry benchmark and Lipper peers
perform for the six months ended March 31, 1997?
A. The S&P 500 returned 11.2% for the six months ended March 31, 1997. Our
Lipper peer group of 648 Growth and Income Funds had an average return of
8.9% for the same period. Refer to the following page to see how your class
of shares in the GE U.S. Equity Fund performed compared to these
benchmarks.
Q. What were the primary performance drivers?
A. The Fund lagged the S&P 500 for the six months ended March 31, 1997, but
outperformed the average of its Lipper peer Growth & Income Funds. For the
past three years over seventy-five percent of general equity mutual funds
have underperformed the S&P 500 largely because of the narrowness of market
leadership and the relative weakness of smaller capitalization stocks. Our
strong performance relative to peers resulted from an overweighting in
Financial, Energy and selected Capital Goods and Consumer-Stable stocks,
and an underweighting in Utility and Consumer-Cyclical sectors. In the
Financial sector, Travelers Group, Dean Witter Discover & Co., and Citicorp
were leaders while Schlumberger was a particularly strong performer in the
Energy sector. Textron and United Technologies turned in good performances
in the Capital Goods sector while Bristol-Myers Squibb and Smithkline
Beecham were leading Healthcare stocks in the Consumer-Stable sector. In
the Technology sector our concern with valuations has kept us underweighted
in some strong performers such as Microsoft, and we were hurt by our
position in Reuters Holdings which underperformed even though fundamentals
remain strong.
Q. What has your investment strategy been?
A. Our strategy is to add value through stock selection by attempting to
identify companies with shareholder oriented managements, strong financials
and attractive valuations. We concentrate our efforts on fundamental
company research and do not try to time the stock market or rotate from one
"hot" sector to another. I lead a team of four portfolio managers, two of
whom focus principally on growth stocks and two who have a more
value-oriented approach. This results in a broadly diversified portfolio
that we believe can do well versus the market, regardless of the economic
environment. The portfolio managers, supported by a team of industry
analysts, focus on finding stocks that they believe will outperform the
market over the next three to five years.
Q. What industries have you liked?
A. As mentioned above, we are overweighted in the Financial, Capital Goods and
Energy sectors. These are the areas in which our managers are finding the
best values on a stock-by-stock basis. Within the Financial sector we
continue to find value in the insurance industry as well as with selected
financial service companies and money center banks. In Capital Goods we are
overweighted in a diverse group of companies that still look attractive
versus the market. Within the Energy sector, our principal thrust is in the
oil services industry which we believe is particularly attractive because
of strong demand and little excess capacity.
Q. What is the outlook for the Fund?
A. With most valuation measures at or near record levels, we believe the
upside is limited for the stock market in 1997. We also expect volatility
to increase and stock selection, as opposed to sector rotation, to be the
key to good performance. Given our emphasis on high quality companies with
attractive valuations, we believe the portfolio is well positioned for good
relative performance in the coming year.
[PHOTO OF GENE BOLTON]
13
<PAGE>
GE U.S. EQUITY FUND
PORTFOLIO COMPOSITION
RETAIL 4.3%
CONSUMER 17.1%
FINANCIAL SERVICES 17.8%
HEALTHCARE 11.4%
ENERGY & BASIC MATERIALS 14.8%
CAPITAL GOODS 11.4%
TECHNOLOGY 10.4%
UTILITIES 7.1%
CASH & OTHER 4.2%
TRANSPORTATION 1.5%
- --------------------------------------------------------------------------------
Average Annual Total Return %
for the periods ended March 31, 1997
- --------------------------------------------------------------------------------
Since
6 Mo. 1 Yr. 3Yr Inception Commencement
- --------------------------------------------------------------------------------
Class A 10.63% 17.05% 19.91% 16.49% 1/1/94
- --------------------------------------------------------------------------------
Class A* 5.37% 11.49% 17.99% 14.76% 1/1/94
- --------------------------------------------------------------------------------
Class B 10.31% 16.56% 19.21% 16.21% 12/22/93
- --------------------------------------------------------------------------------
Class B* 6.32% 12.56% 18.98% 15.97% 12/22/93
- --------------------------------------------------------------------------------
Class C 10.75% 17.49% 20.15% 16.28% 2/22/93
- --------------------------------------------------------------------------------
Class D 10.91% 17.71% 20.43% 17.09% 11/29/93
- --------------------------------------------------------------------------------
S&P 500 11.23% 19.81% 22.30%
================================================================================
* With Load
<PAGE>
INVESTMENT PROFILE
A mutual fund designed for investors who seek long-term growth of capital by
primarily investing in a diversified portfolio of growth and value stocks of
U.S. companies.
================================================================================
GE U.S. EQUITY FUND
TOP TEN LARGEST HOLDINGS AT MARCH 31, 1997
================================================================================
Intel Corp. 2.18%
- --------------------------------------------------------------------------------
Exxon Corp. 2.08%
- --------------------------------------------------------------------------------
Travelers Group Inc. 1.94%
- --------------------------------------------------------------------------------
Citicorp 1.78%
- --------------------------------------------------------------------------------
Federal National Mortgage Assoc. 1.75%
- --------------------------------------------------------------------------------
Bristol-Myers Squibb Co. 1.71%
- --------------------------------------------------------------------------------
AlliedSignal Inc. 1.69%
- --------------------------------------------------------------------------------
Philip Morris Cos. Inc. 1.53%
- --------------------------------------------------------------------------------
American International Group Inc. 1.50%
- --------------------------------------------------------------------------------
Pepsico Inc. 1.48%
================================================================================
* Lipper Performance Comparison
Growth and Income Peer Group
Based on average annual total returns for the periods ending March 31, 1997
Six One Three
Months Year Year
Number of Funds
in peer group: 648 594 383
Peer group average
total return: 8.9% 15.8% 18.2%
Lipper categories
in peer group: Growth & Income, S&P 500 Index
* See Notes to Performance for explanation of peer categories
See page 41 for Notes to Performance.
Past performance is no guarantee of future results.
14
<PAGE>
Schedule of Investments March 31, 1997 (unaudited)
GE U.S. EQUITY FUND
Number
of Shares Value
- --------------------------------------------------------------------------------
Common Stock -- 95.1%
- --------------------------------------------------------------------------------
Basic Materials -- 4.2%
Air Products & Chemicals Inc. 11,509 $ 781,173
Airgas Inc. 17,682 298,384(a)
Barrick Gold Corp. 12,437 295,379
Du Pont de Nemours (E.I.) & Co. 36,712 3,891,472
Eastman Chemical Co. 4,976 267,460
FMC Corp. 5,285 323,706
Freeport McMoran Copper &
Gold Inc. (Class A) 12,884 378,468
Hoechst AG 3,109 125,907
IMC Global Inc. 9,333 337,155
Mead Corp. 13,724 727,372
Morton International Inc. 38,657 1,633,258
Newmont Mining Corp. 15,335 594,231
Potash Corp. of Saskatchewan Inc 688 52,288
PPG Industries Inc. 2,382 128,628
Rayonier Inc. 11,307 421,186
Santa Fe Pacific Gold Corp. 29,718 490,347
Weyerhaeuser Co. 23,695 1,057,389
11,803,803
[GRAPHIC OF CAPITAL GOODS]
Capital Goods -- 11.4%
AlliedSignal Inc. 66,860 4,763,775
AMP Inc. 18,435 633,703
Armstrong World Industries Inc. 8,704 563,584
Avery Dennison Corp. 6,631 255,294
Boeing Co. 4,175 411,759
Browning-Ferris Industries Inc. 20,665 596,702
Corning Inc. 7,368 326,955
Deere & Co. 35,573 1,547,425
Dover Corp. 67,125 3,524,062
Emerson Electric Co. 81,502 3,667,590
General Signal Corp. 10,070 393,989
Hubbell Inc. (Class B) 71,129 3,005,200
Lockheed Martin Corp. 12,815 1,076,460
Mannesmann AG 417 159,500
Martin Marietta Materials Inc. 16,947 436,385
Masco Corp. 4,146 148,220
McDonnell Douglas Corp. 9,578 584,258
Minnesota Mining &
Manufacturing 7,501 633,835
Molex Inc. (Class A) 12,034 421,190
National Service Industries Inc. 8,291 324,385
Newport News Shipbuilding Inc. 2,986 43,297
Parker Hannifin Corp. 3,439 147,017
Sherwin Williams Co. 14,372 388,044
Textron Inc. 35,563 3,734,115
Timken Co. 8,291 443,569
Tyco International Ltd. 5,300 291,500
Ucar International Inc. 4,347 172,250(a)
United Technologies Corp. 32,215 2,424,179
Waste Management International
PLC ADR 7,933 59,498(a)
Wheelabrator Technologies Inc. 8,291 108,819
<PAGE>
Number
of Shares Value
- --------------------------------------------------------------------------------
WMX Technologies Inc. 30,027 $ 919,577
32,206,136
Consumer - Cyclical -- 7.3%
ACNielson Corp. 17,194 257,910(a)
Automatic Data Processing Inc. 42,489 1,779,227
Carnival Corp. (Class A) 11,298 418,026
Catalina Marketing Corp. 5,895 239,484(a)
Circus Circus Enterprises Inc. 29,445 765,570(a)
Comcast Corp. (Class A) 46,698 788,029
Comcast UK Cable Partners Ltd.
(Class A) 12,771 142,077(a)
CUC International Inc. 9,578 215,505(a)
Disney (Walt) Co. 38,839 2,835,247
Donnelley (R.R.) & Sons Co. 704 24,552
Dun & Bradstreet Corp. 11,391 289,047
Eastman Kodak Co. 25,796 1,957,271
Federal-Mogul Corp. 5,158 127,016
Ford Motor Co. 33,063 1,037,352
Gannett Inc. 23,720 2,036,955
General Motors Corp. 14,187 785,605
Goodyear Tire & Rubber Co. 6,877 359,323
Harman International
Industries Inc. 6,877 230,380
Interpublic Group Cos. Inc. 26,986 1,423,511
ITT Industries Inc. 4,563 102,097
Knight Ridder Inc. 6,385 254,602
McDonalds Corp. 30,042 1,419,485
Metromedia International
Group Inc. 6,621 57,520(a)
Readers Digest Assoc. Inc. (Class A) 1,719 49,421
Scholastic Corp. 9,904 279,788(a)
Tele-Communications Inc.
(Series A) 51,443 617,316(a)
Tele-Communications Inc. Liberty
Media Group (Series A) 49,525 987,405(a)
Time Warner Inc. 13,179 569,992
Viad Corp. 10,561 168,976
Xerox Corp. 7,150 406,656
20,625,345
[GRAPHIC OF CONSUMER ICON]
Consumer - Stable -- 9.8%
Anheuser Busch Cos. Inc. 71,543 3,013,749
Archer-Daniels Midland Co. 24,847 444,140
Avon Products Inc. 17,094 897,435
Coca Cola Co. 2,436 136,112
Colgate Palmolive Co. 15,075 1,501,847
Conagra Inc. 16,382 888,723
CPC International Inc. 16,176 1,326,432
General Mills Inc. 11,509 714,997
Gillette Co. 5,894 428,052
International Flavours 8,115 355,031
Kellogg Co. 4,146 278,818
Kimberly Clark Corp. 30,794 3,060,154
Nestle S.A. (Regd.) 441 516,390
Pepsico Inc. 128,021 4,176,685
Philip Morris Cos. Inc. 37,623 4,293,725(h)
Procter & Gamble Co. 29,074 3,343,510
Ralston Purina Co. 9,058 707,656
Sara Lee Corp. 22,350 905,175
Sysco Corp. 7,368 251,433
Unilever N.V. 1,474 274,532
27,514,596
- ----------
See Notes to Schedule of Investments and Financial Statements
15
<PAGE>
GE U.S. EQUITY FUND March 31, 1997 (unaudited)
Number
of Shares Value
- --------------------------------------------------------------------------------
[GRAPHIC OF GAS PUMP]
Energy -- 10.5%
Amoco Corp. 33,348 $ 2,888,770
Anadarko Petroleum Co. 9,618 539,810
Atlantic Richfield Co. 4,534 612,090
Baker Hughes Inc. 25,960 996,215
British Petroleum PLC ADR 2,511 344,635
Burlington Resources Inc. 29,324 1,253,601
Diamond Offshore Drilling Inc. 2,210 151,385(a)
Elf Aquitaine S.A. 3,807 187,495
Exxon Corp. 54,405 5,862,139
Halliburton Co. 7,673 519,846
Louisiana Land & Exploration Co. 3,438 162,875
Mobil Corp. 16,367 2,137,939
Nabors Industries Inc. 17,796 347,022(a)
Royal Dutch Petroleum Co. ADR 23,116 4,045,300
Schlumberger Ltd. 38,161 4,092,767
Texaco Inc. 22,296 2,441,412
Tosco Corp. 12,789 364,487
Total S.A. (Class B) 11,066 468,922
Union Pacific Resources
Group Inc. 19,682 526,493
Unocal Corp. 37,297 1,421,948
Valero Energy Corp. 2,088 75,951
29,441,102
[GRAPHIC OF DOLLAR SIGN]
Financial -- 11.8%
American Express Co. 43,594 2,610,191
Bank of Boston Corp. 16,201 1,085,467
Bank of New York Inc. 19,500 716,625
BankAmerica Corp. 4,740 477,555
Bankers Trust New York Corp. 3,142 257,644
Barnett Banks Inc. 2,947 137,036
Beneficial Corp. 10,314 666,542
Chase Manhattan Corp. 12,772 1,195,778
Citicorp 46,378 5,020,418
CMAC Investment Corp. 8,395 280,183
Countrywide Credit Industries 15,674 387,932
Dean Witter Discover & Co. 34,384 1,199,142
Echelon International Corp. 1 18(a)
Edwards A.G. Inc. 7,461 229,426
Federal National Mortgage Assoc. 136,410 4,927,811
ING Groep N.V. 4,431 174,594
Manufactured Home
Communities Inc. 5,008 109,550
Mellon Bank Corp. 10,989 799,450
Merrill Lynch & Co. Inc. 3,733 320,571
Morgan (J.P.) & Co. Inc. 16,629 1,633,799
Morgan Stanley Group Inc. 12,923 759,226
Norwest Corp. 982 45,418
Salomon Inc. 4,769 237,854
Standard Federal Bancorporation 5,388 312,504
State Street Boston Corp. 11,548 801,143
T. Rowe Price & Associates 4,667 173,262
Travelers Group Inc. 114,119 5,463,447
Trizec Hahn Corp. 6,631 148,369
United States Bancorp 8,596 459,886
Wells Fargo & Co. 9,063 2,575,025
33,205,866
<PAGE>
Number
of Shares Value
- --------------------------------------------------------------------------------
[GRAPHIC OF HEALTHCARE]
Healthcare -- 11.4%
Abbott Laboratories 65,659 $ 3,685,111
Allergan Inc. 26,033 758,211
American Home Products Corp. 52,801 3,168,060
Amgen Inc. 4,390 245,291(a)
Arrow International Inc. 2,648 80,102
Baxter International Inc. 13,803 595,254
Bristol-Myers Squibb Co. 81,364 4,800,476
Cardinal Health Inc. 8,355 454,303
Columbia/HCA Healthcare Corp. 6,385 214,696
Dentsply International Inc. 3,964 198,200
Eli Lilly & Co. 19,554 1,608,316
Forest Labs Inc. 1,596 60,050(a)
Johnson & Johnson 68,139 3,602,850
Lincare Holdings Inc. 6,631 273,529(a)
Living Centers of America Inc. 9,579 330,476(a)
Merck & Co. Inc. 48,137 4,055,542
Pfizer Inc. 32,035 2,694,944
Scherer (R.P.) Corp. Delaware 15,266 791,924(a)
Schering Plough Corp. 21,257 1,546,447
Smithkline Beecham PLC ADR 34,089 2,386,230
St. Jude Medical Inc. 2,088 69,687(a)
Watson Pharmaceuticals Inc. 15,964 570,713(a)
32,190,412
Insurance -- 5.9%
American International Group Inc. 35,872 4,210,476
Chubb Corp. 8,709 469,197
Equitable Cos. Inc. (Series B) 2,948 80,333
Everest Reinsurance Holdings 3,144 92,355
General Reinsurance Corp. 11,744 1,855,552
ITT Hartford Group Inc. 7,186 518,290
Lincoln National Corp. 24,182 1,293,737
Loews Corp. 30,143 2,678,959
Marsh & McLennan Cos. Inc. 12,610 1,428,083
Provident Cos. Inc. 22,531 1,233,572
Providian Corp. 7,520 402,320
Reliastar Financial Corp. 2,701 159,697
TIG Holdings Inc. 54,741 1,738,027
UNUM Corp. 6,317 461,141
16,621,739
Retail Trade -- 4.3%
American Stores Co. 12,437 553,446
Arbor Drugs Inc. 28,647 501,323
Costco Cos. Inc. 21,613 597,059(a)
Dayton Hudson Corp. 17,939 748,953
Federated Department Stores Inc. 23,077 758,656(a)
Home Depot Inc. 29,089 1,556,261
K Mart Corp. 4,912 59,558(a)
Lowes Cos. Inc. 12,240 457,470
May Department Stores Co. 3,438 156,429
Office Max Inc. 6,081 79,053(a)
Penney J.C. Inc. 6,033 287,322
Sears Roebuck & Co. 43,523 2,187,031
Toys OR Us Inc. 42,185 1,181,180(a)
Wal Mart Stores Inc. 108,025 3,011,197
12,134,938
- ----------
See Notes to Schedule of Investments and Financial Statements
16
<PAGE>
Schedule of Investments March 31, 1997 (unaudited)
Number
of Shares Value
- --------------------------------------------------------------------------------
Technology - Computer Software & Services -- 3.6%
Computer Associates
International Inc. 21,430 $ 833,091
Electronic Data Systems Corp. 11,169 450,948
Equifax Inc. 90,410 2,463,673
First Data Corp. 101,014 3,421,849
Informix Corp. 4,146 62,708(a)
Intuit Inc. 4,878 113,414(a)
Microsoft Corp. 6,621 607,063(a)
Reuters Holdings PLC ADR
(Class B) 35,057 2,039,879
9,992,625
Technology - Electronics & Equipment -- 6.4%
3Com Corp. 4,175 136,731(a)
Applied Materials Inc. 12,958 600,927(a)
Cisco Systems Inc. 15,472 744,590(a)
DSC Communications Corp. 5,404 113,146(a)
Hewlett Packard Co. 68,508 3,648,051
Intel Corp. 44,194 6,148,490
International Business Machines 28,573 3,925,216
Lucent Technologies Inc. 6,528 344,352
Motorola Inc. 76 4,589
NCR Corp. 982 34,616(a)
Northern Telecom Ltd. 5,894 385,320
Perkin Elmer Corp. 737 47,444
Pitney Bowes Inc. 10,907 640,786
Rockwell International Corp. 2,999 194,560
Storage Technology Corp. 4,054 159,120(a)
Varian Associates Inc. 15,154 810,739
17,938,677
Transportation -- 1.4%
Burlington Northern Santa Fe 14,540 1,075,960
Canadian Pacific Ltd. 31,944 766,656
Continental Airlines Inc.
(Class B) 16,848 528,606(a)
Delta Air Lines Inc. 4,146 348,782
Pittston Brinks Group 8,351 210,863
Union Pacific Corp. 19,741 1,120,302
4,051,169
Utilities -- 7.1%
360 Communications Co. 3,193 55,079(a)
Airtouch Communications Inc. 103,339 2,376,797(a)
Allegheny Power Systems Inc. 6,533 193,540
American Electric Power Inc. 17,192 709,170
American Telephone &
Telegraph Corp. 38,005 1,320,674
Bellsouth Corp. 30,882 1,304,764
CMS Energy Corp. 3,438 113,024
Duke Power Co. 21,367 942,819
El Paso Natural Gas Co. 5,894 333,748
Florida Progress Corp. 16,210 492,379
FPL Group Inc. 14,431 636,768
GTE Corp. 78,608 3,665,098
Illinova Corp. 6,385 146,057
MCI Communications Corp. 30,856 1,099,245
<PAGE>
Number
of Shares Value
- --------------------------------------------------------------------------------
NTL Inc. 57,441 $ 1,213,441(a)
NYNEX Corp. 15,826 722,061
Pacificorp 31,928 682,461
Pinnacle West Capital Corp. 11,052 332,942
Public Service Co. Colorado 9,122 353,478
SBC Communications Inc. 29,924 1,574,750
Scana Corp. 4,416 112,056
Sonat Inc. 13,685 745,832
Southern Co. 15,060 318,143
Sprint Corp. 4,912 223,496
Vanguard Cellular Systems Inc.
(Class A) 28,981 318,791(a)
19,986,613
Total Common Stock
(Cost $218,833,523) 267,713,021
Principal
Amount Value
- --------------------------------------------------------------------------------
Convertible Bonds -- 0.1%
- --------------------------------------------------------------------------------
Berkshire Hathaway Inc. Delaware
1.00% 12/02/01 $116,000 117,740
Continental Airlines Inc.
6.75% 04/15/06 15,000 18,450
6.75% 04/15/06 172,000 206,400(a,b)
Total Convertible Bonds
(Cost $297,830) 342,590
Number
of Shares Value
- --------------------------------------------------------------------------------
Preferred Stock -- 0.6%
- --------------------------------------------------------------------------------
Airtouch Communications Inc.
(Class B), 6.00% 4,534 116,184
Kmart Financing, 7.75% 982 52,537
Microsoft Corp. (Series A), $2.20 14,441 1,171,526
Occidental Petroleum Corp., $3.88 5,310 307,980(b)
Total Preferred Stock
(Cost $1,630,789) 1,648,227
Total Investments in Securities
(Cost $220,762,142) 269,703,838
- ----------
See Notes to Schedule of Investments and Financial Statements
17
<PAGE>
GE U.S. Equity Fund March 31, 1997 (unaudited)
Principal
Amount Value
- --------------------------------------------------------------------------------
Short Term Investments -- 4.2%
- --------------------------------------------------------------------------------
Time Deposit -- 0.2%
State Street Cayman Islands $485,000 $ 485,000
6.50% 04/01/97
Repurchase Agreement -- 4.0%
State Street Bank and Trust Co.
6.25% 04/01/97
(Cost $11,350,000) 11,350,000 11,350,000
(dated 03/31/97, proceeds $11,351,970,
collateralized by $11,582,023 United
States Treasury Note, 9.875%, 11/15/15)
Total Short Term Investments
(Cost $11,835,000) 11,835,000
Other Assets and Liabilities, net 0.0% (99,240)
- --------------------------------------------------------------------------------
NET ASSETS -- 100% $281,439,598
================================================================================
Other Information
- --------------------------------------------------------------------------------
The GE U.S. Equity Fund had the following long Futures Contracts open at March
31, 1997:
Number
Expiration of Underlying Unrealized
Description Date Contracts Face Value Loss
- --------------------------------------------------------------------------------
S&P 500 June 1997 19 $ 7,201,000 $ 414,750
[GRAPHIC OF CAPITAL GOODS]
Icons represent the top five industry weightings in the
GE U.S. Equity Fund at March 31, 1997.
- ----------
See Notes to Schedule of Investments and Financial Statements
18
<PAGE>
GE STRATEGIC INVESTMENT FUND
Q&A
David Carlson and Bob MacDougall share portfolio management responsibility for
the GE Strategic Investment Fund. Dave Carlson manages the equity portion and
Bob MacDougall manages the fixed income portion of the fund. Please refer to
page 10 for Dave's biographical details and page 31for Bob's biographical
details.
Q. How did GE Strategic Investment Fund's Lipper and industry benchmarks
perform for the six months ended March 31, 1997?
A. Our 322 peer Balanced funds as tracked by Lipper Analytical Services, had
an average return of 5.4% for the six months ended March 31, 1997. Looking
at the various asset classes, U.S. stocks (S&P 500) returned 11.2%,
international stocks MSCIEAFE had a 0.0% return, and bonds (LB Agg.)
returned 2.4% for the same period. Refer to the following page to see how
your class of shares in the GE Strategic Investment Fund compared to these
benchmarks.
Q. What is the current breakdown among U.S. stocks, international stocks,
bonds, and cash, and has this changed in the last six months?
A. Currently, U.S. stocks comprise 40% of the total Fund, international stocks
18%, bonds 31% and cash 11%. The only significant change over the last six
months is the lowering of U.S. stocks (from 45%) and the increase in
international stocks (from 14%). We continue to believe that the U.S.
market is expensive relative to the international markets, so U.S. stocks
are at a lower than normal level. The cash weighting is higher than normal
due in part to the full valuation of the stock market and the near term
risk that the Federal Reserve will continue to raise interest rates.
Q. You have made few changes in asset mix over the last two years. Should
investors expect fairly stable levels of asset mix or do you envision
greater changes in the future?
A. We have a rigorous analytical approach to asset allocation. The asset
allocation committee that sets the policy for the GE Pension Trust also
sets the policy for the GE Strategic Investment Fund as well. They employ a
variety of quantitative models that compare stocks versus bonds, U.S.
stocks versus international stocks, and all long duration assets versus
cash. Essentially, they assess the risk/reward offered in each market and
recommend an appropriate weight for each asset class. Volatility has been
fairly low in recent years so the changes have been few. If volatility
increases, the weightings will change more significantly and more
frequently.
Q. What is the outlook for the GE Strategic Investment Fund?
A. We would characterize the positioning of the GE Strategic Investment Fund
as somewhat defensive. Equities are lower than normal and cash is higher
than normal. At the time this is written, we are expecting at least one
more upward move in interest rates by the Federal Reserve. Stocks and bonds
do not typically do well when the Fed is tightening. Within each asset
class the focus remains the same; find high quality instruments at
attractive valuation levels. Should the market sell off in the coming
months, we believe we are in excellent position to take advantage of the
volatility.
[PHOTO OF DAVID CARLSON AND BOB MACDOUGALL]
19
<PAGE>
GE STRATEGIC INVESTMENT FUND
PORTFOLIO COMPOSITION
DOMESTIC EQUITY 40.4%
FOREIGN EQUITY 18.4%
BONDS AND NOTES 30.6%
CASH & OTHER 10.6%
- --------------------------------------------------------------------------------
Average Annual Total Return %
for the periods ended March 31, 1997
- --------------------------------------------------------------------------------
Since
6 Mo. 1 Yr. 3Yr Inception Commencement
- --------------------------------------------------------------------------------
Class A 5.52% 10.75% 13.96% 11.34% 1/1/94
- --------------------------------------------------------------------------------
Class A* 0.51% 5.49% 12.13% 9.69% 1/1/94
- --------------------------------------------------------------------------------
Class B 5.31% 10.20% 13.27% 10.87% 12/22/93
- --------------------------------------------------------------------------------
Class B* 1.31% 6.20% 13.01% 10.61% 12/22/93
- --------------------------------------------------------------------------------
Class C 5.64% 10.98% 14.08% 11.39% 2/22/93
- --------------------------------------------------------------------------------
Class D 5.79% 11.35% 14.40% 11.97% 11/29/93
- --------------------------------------------------------------------------------
LB Agg. 2.43% 4.91% 6.86%
- --------------------------------------------------------------------------------
S&P 500 11.23% 19.81% 22.30%
================================================================================
* With Load
<PAGE>
INVESTMENT PROFILE
A mutual fund designed for investors who seek to maximize total return through
asset allocation designed to achieve capital appreciation primarily from common
stocks and other equity securities and current income from bonds and other fixed
income securities.
================================================================================
GE STRATEGIC INVESTMENT FUND
TOP TEN LARGEST HOLDINGS AT MARCH 31, 1997
================================================================================
Gov't Nat'l Mortgage Assoc. 8.5% 10/15/17 2.46%
- --------------------------------------------------------------------------------
U.S. Treasury Note 6.5% 10/15/06 1.47%
- --------------------------------------------------------------------------------
U.S. Treasury Bond 6.5% 11/15/26 1.42%
- --------------------------------------------------------------------------------
First Data Corp. 1.34%
- --------------------------------------------------------------------------------
Travelers Group Inc. 1.26%
- --------------------------------------------------------------------------------
U.S. Treasury Note 5.875% 2/15/00 1.25%
- --------------------------------------------------------------------------------
Dover Corp. 1.22%
- --------------------------------------------------------------------------------
Federal National Mtg. Assn. 1.21%
- --------------------------------------------------------------------------------
AlliedSignal Inc. 1.15%
- --------------------------------------------------------------------------------
Schlumberger Ltd. 1.08%
================================================================================
* Lipper Performance Comparison
Balanced Peer Group
Based on average annual total returns for the periods ending March 31, 1997
Six One Three
Months Year Year
Number of Funds
in peer group: 322 294 177
Peer group average
total return: 5.4% 10.7% 12.8%
Lipper categories
in peer group: Balanced
* See Notes to Performance for explanation of peer categories
See page 41 for Notes to Performance.
Past performance is no guarantee of future results.
20
<PAGE>
Schedule of Investments March 31, 1997 (unaudited)
GE STRATEGIC INVESTMENT FUND
Number
of Shares Value
- --------------------------------------------------------------------------------
Common Stock -- 58.2%
- --------------------------------------------------------------------------------
Basic Materials -- 1.9%
Air Products & Chemicals Inc. 5,000 $ 339,375
Airgas Inc. 10,000 168,750(a)
Banpu Co. 1,200 17,569
BASF AG 3,255 122,940
Carter Holt Harvey Ltd. 9,061 19,198
Iscor Ltd. 213,917 174,251
Morton International Inc. 15,000 633,750
PT Tambang Timah GDR 2,707 40,605(b)
SGL Carbon 2,061 282,955
Tokyo Steel Manufacturing 5,800 57,217
1,856,610
[GRAPHIC OF CAPITAL GOODS]
Capital Goods -- 7.9%
ABB AG 255 306,567
Alcatel Alsthom 2,325 280,764
Alleghany Corp. Delaware 1,040 216,923
AlliedSignal Inc. 16,000 1,140,000
AMP Inc. 8,900 305,938
Astra International 62,500 203,040
Bombardier Inc. 5,180 93,536
Browning-Ferris Industries Inc. 5,000 144,375
Denso Corp. 2,000 39,298
Dover Corp. 23,000 1,207,500
Emerson Electric Co. 5,000 225,000
Grupo Carso S.A. de C.V. ADR 8,314 99,560
Hubbell Inc. (Class B) 18,225 770,006
Lyonnaise Des Eaux S.A. 1,326 135,800
Mannesmann AG 647 247,474
Metra AB 188 10,989
Molex Inc. (Class A) 9,000 315,000
NEC Corp. 14,000 158,486
PT Mulia Industrindo 73,000 47,126
Siam Cement Co. Ltd. 600 15,627
Siebe 19,651 331,720
Siemens AG 4,155 223,942
Tata Engineering &
Locomotive Co. Ltd. GDR 1,311 16,388(b)
Tata Engineering &
Locomotive Co. Ltd. GDR 1,280 16,000
Tyco International Ltd. 3,800 209,000
VA Technologie AG 1,811 266,949
Valeo 3,529 237,718
Valmet Corp. 4,577 81,542(a)
Waste Management International
PLC ADR 3,265 24,488(a)
WMX Technologies Inc. 12,500 382,812
7,753,568
[GRAPHIC OF MONEY]
Consumer - Cyclical -- 7.3%
Airtours PLC 18,548 302,114
Autoliv AB 6,556 283,171
Automatic Data Processing Inc. 15,000 628,125
<PAGE>
Number
of Shares Value
- --------------------------------------------------------------------------------
Canon Inc. 15,000 $ 321,420
Carnival Corp. (Class A) 7,000 259,000
Catalina Marketing Corp. 3,000 121,875(a)
Circus Circus Enterprises Inc. 8,000 208,000(a)
Comcast Corp. (Class A) 18,000 303,750
Comcast UK Cable Partners Ltd.
(Class A) 7,000 77,875(a)
CUC International Inc. 4,500 101,250(a)
Disney (Walt) Co. 9,000 657,000
Electrolux AB (Series B) 2,216 141,146
EMI Group 1,660 30,371
Gannett Inc. 3,800 326,325
Granada Group 17,205 260,141
Grupo Television S.A. de C.V. ADR 740 18,407(a)
Gucci Group N.V. ADR 355 25,604
Harman International
Industries Inc. 4,000 134,000
Honda Motor Co. 8,000 238,700
Hong Kong & Shang Hot 17,000 26,875
Industrie Natuzzi Spa 1,058 25,260
Interpublic Group Cos. Inc. 7,000 369,250
Johnson Electric Holdings 15,500 39,407
Kinnevik Investment (Series B) 2,644 74,029
McDonalds Corp. 6,500 307,125
Michelin CGDE 1,865 111,113
Polygram N.V. 4,076 204,941
Promise Co. 1,100 46,074
Reed International 12,835 236,090
Saatchi & Saatchi 64,392 128,191(a)
Scholastic Corp. 2,219 62,687
Sega Enterprises 600 15,040
Sony Corp. 3,700 258,794
Suzuki Motor Corp. 12,000 116,439
Tele-Communications Inc.
(Class A) 20,000 240,000(a)
Tele-Communications Inc. Liberty
Media Group (Series A) 10,000 199,375(a)
Television Broadcasts Ltd. ADR 25,000 101,630
Time Warner Inc. 3,800 164,350
7,164,944
Consumer - Stable -- 4.7%
Anheuser Busch Cos. Inc. 7,600 320,150
Avon Products Inc. 6,400 336,000
Coca Cola Amatil Ltd. 7,643 72,673
Coca Cola Co. 1,500 83,813
Colgate Palmolive Co. 1,200 119,550
Gehe AG (WT) 3,039 208,612
Gillette Co. 4,300 312,288
Gruma S.A. de C.V. 676 3,244
International Flavours 2,200 96,250
Kimberly Clark Corp. 9,000 894,375
Nestle S.A. (Regd.) 161 188,523
Nutricia Verenigde Bedrijven 310 47,934
Panamerican Beverages Inc.
(Class A) 1,695 90,894
Pepsico Inc. 19,000 619,875
Philip Morris Cos. Inc. 9,000 1,027,125
Procter & Gamble Co. 1,200 138,000
San Miguel Corp. 35,100 121,815
4,681,121
- ----------
See Notes to Schedule of Investments and Financial Statements
21
<PAGE>
GE Strategic Investment Fund March 31, 1997 (unaudited)
Number
of Shares Value
- --------------------------------------------------------------------------------
[GRAPHIC OF GAS PUMP]
Energy -- 5.5%
Amoco Corp. 1,700 $ 147,263
Anadarko Petroleum Co. 4,300 241,338
Atlantic Richfield Co. 2,300 310,500
Coflexip ADR 3,971 122,108(a)
ENI Spa (Regd.) 10,925 55,534
Exxon Corp. 5,500 592,625
OMV AG 725 85,820
Repsol S.A. 5,292 221,007
Royal Dutch Petroleum Co. ADR 5,000 875,000
Schlumberger Ltd. 10,000 1,072,500
Texaco Inc. 4,600 503,700
Total S.A. (Class B) 4,710 408,460
Union Pacific Resources
Group Inc. 5,928 158,574
Unocal Corp. 13,000 495,625
Veba AG 3,079 174,347
5,464,401
[GRAPHIC OF DOLLAR SIGN]
Financial -- 7.4%
Alpha Credit Bank 1,588 116,570
Alpha Credit Bank (Rts.) 895 7,137
American Express Co. 6,000 359,250
AMMB Holdings Berhad 6,800 56,522
AMMB Holdings Berhad (Rts.) 13,600 1,537
Banco Comercial Portugues ADR 12,628 187,084
Banco Popular (Regd.) 214 38,506
Banco Santander S.A. 885 61,078
Cheung Kong Holdings 16,000 140,927
China Resources Development 8,000 17,242
Citicorp 8,000 866,000
Countrywide Credit Industries 10,000 247,500
DBS Land 14,000 47,878
Den Danske Bank 2,633 237,371
Deutsche Bank AG 557 31,356
Dresdner Bank AG 1,835 65,237
Federal National Mortgage Assoc. 33,000 1,192,125
Grupo Financiero Bancomer
S.A. ADR (Series C) 5,180 35,620(a,b)
HSBC Holdings PLC 12,899 299,640
ING Groep N.V. 6,147 242,209
Lai Sun Development 22,000 25,553
Lai Sun Hotels International Ltd. 4,418 0(a)
Merita Ltd. 9,186 31,260
Metro Bank & Trust Co. 3,900 101,328
Morgan (J.P.) & Co. Inc. 3,000 294,750
New World Development Corp. 11,775 63,520
State Street Boston Corp. 8,000 555,000
Sumitomo Realty & Development 5,000 33,638
Thai Farmers Bank 6,500 42,323
Travelers Group Inc. 26,000 1,244,750
Wells Fargo & Co. 2,400 681,900
7,324,811
[GRAPHIC OF HEALTHCARE]
Healthcare -- 8.4%
Abbott Laboratories 17,000 954,125
American Home Products Corp. 10,000 600,000
Arrow International Inc. 2,500 75,625
Bristol-Myers Squibb Co. 12,000 708,000
<PAGE>
Number
of Shares Value
- --------------------------------------------------------------------------------
Cardinal Health Inc. 5,250 $ 285,469
Columbia/HCA Healthcare Corp. 4,500 151,313
Dentsply International Inc. 2,000 100,000
Eli Lilly & Co. 5,200 427,700
Faulding (F.H.) & Co. 7,181 42,221
Fresenius Medical Care Inc.
AG ADR 855 81,963(a)
Johnson & Johnson 19,000 1,004,625
Lincare Holdings Inc. 4,000 165,000(a)
Living Centers of America Inc. 3,000 103,500(a)
Medeva 72,269 363,842
Merck & Co. Inc. 10,000 842,500
Novartis AG 334 414,541(a)
Pfizer Inc. 10,500 883,312
Roche Holdings AG 27 233,506
Scherer (R.P.) Corp. Delaware 3,000 155,625
Smithkline Beecham PLC ADR 6,600 462,000
St. Jude Medical Inc. 2,000 66,750(a)
Watson Pharmaceuticals Inc. 5,000 178,750(a)
8,300,367
Insurance -- 3.3%
American International Group Inc. 4,500 528,188
AXA-UAP 1,625 107,754
Chubb Corp. 5,000 269,375
General Reinsurance Corp. 3,500 553,000
Loews Corp. 8,000 711,000
Marsh & McLennan Cos. Inc. 3,800 430,350
Pohjola 1,618 43,401
Schw Ruckversicher (Regd.) 123 130,778
TIG Holdings Inc. 9,000 285,750
UNUM Corp. 2,000 146,000
Zurich Versicherungsgesellechaft 218 68,627
3,274,223
Retail Trade -- 1.6%
Arbor Drugs Inc. 12,750 223,125
Carrefour 495 307,782
Credit Saison Co. 12,650 231,172
Giordano International 94,000 57,016
Home Depot Inc. 3,800 203,300
Tag Heuer International S.A. ADR 608 80,384(a)
Thorn 10,669 28,963
Toys'R Us Inc. 16,000 448,000(a)
1,579,742
Software & Services -- 3.7%
Equifax Inc. 34,000 926,500
First Data Corp. 39,000 1,321,125
Intuit Inc. 3,000 69,750(a)
Microsoft Corp. 3,800 348,413
NTT Data Corp. 6 159,618
Reuters Holdings PLC ADR
(Class B) 15,000 872,812
3,698,218
Technology -- 2.2%
Applied Materials Inc. 2,000 92,750(a)
Brambles Industries Ltd. 11,548 189,841
Cisco Systems Inc. 4,000 192,500(a)
- ----------
See Notes to Schedule of Investments and Financial Statements
22
<PAGE>
Schedule of Investments March 31, 1997 (unaudited)
Number
of Shares Value
- --------------------------------------------------------------------------------
Hewlett Packard Co. 3,400 $ 181,050
Intel Corp. 6,500 904,313
Murata Manufacturing Co. 7,000 251,314
Rohm Co. 3,000 221,234
Wolters Kluwer 836 100,694
2,133,696
Transportation -- 1.1%
Burns Philip & Co. 119,080 198,840
IHC Caland N.V. 4,080 217,977
Pittston Brinks Group 5,500 138,875
Railtrack Group PLC 25,022 185,669
Singapore Airlines Ltd. 5,000 40,152
Union Pacific Corp. 5,700 323,475
1,104,988
Utilities -- 3.2%
Airtouch Communications Inc. 31,000 713,000(a)
BSES 1,518 31,878(a)
DDI Corp. 37 233,662
Edison SPA 19,696 105,258
GTE Corp. 5,000 233,125
Korea Electric Power 5,411 157,103
LM Ericsson Telephone (Series B) 1,619 57,146
MCI Communications Corp. 7,500 267,188
Netcom Systems AB (Series B) 2,323 34,216(a)
NTL Inc. 22,000 464,750(a)
NYNEX Corp. 2,000 91,250
Tele Danmark AS (Series B) 460 24,124
Telecom Italia Mobile 98,613 283,906
Telecomunicacoes de
Sao Paulo S.A. 700,745 177,948
Telefonica del Peru S.A. ADR
(Class B) 7,229 160,845
Telekom Malaysia 9,000 70,089
Vanguard Cellular Systems Inc.
(Class A) 5,000 55,000(a)
Videsh Sanchar Nigam Ltd. GDR 507 8,898(b)
3,169,386
Total Common Stock
(Cost $43,922,790) 57,506,075
Principal
Amount Value
- --------------------------------------------------------------------------------
Bonds and Notes -- 30.6%
- --------------------------------------------------------------------------------
Federal Agency -- 0.2%
Federal National Mortgage Assoc.
6.375% 01/16/02
(Cost $224,703) $ 225,000 220,289
U.S. Treasuries -- 12.0%
U.S. Treasury Bonds
5.63% 04/02/98 631,000 594,762
6.50% 11/15/26 1,523,000 1,402,104(h)
6.75% 08/15/26 860,000 814,850(h)
8.125% 08/15/19 787,000 863,489(h)
<PAGE>
Principal
Amount Value
- --------------------------------------------------------------------------------
12.00% 05/15/05 $182,000 $ 238,249(h)
12.50% 08/15/14 121,000 173,464(h)
13.75% 08/15/04 233,000 323,760(h)
4,410,678
U.S. Treasury Notes
5.625% 02/28/01 238,000 229,187(h)
5.875% 10/31/98 - 02/15/00 2,789,000 2,752,724(h)
6.00% 09/30/98 682,000 679,013(h)
6.25% 01/31/02 - 02/28/02 1,168,000 1,142,860(h)
6.50% 10/15/06 1,504,000 1,457,240(h)
6.625% 07/31/01 630,000 626,850(h)
7.75% 12/31/99 566,000 582,182(h)
7,470,056
Total U.S. Treasuries
(Cost $12,162,794) 11,880,734
Asset Backed -- 0.5%
Advanta Mortgage Loan Trust Corp.
6.30% 07/25/25 24,119 23,251
First Plus Home Improvement Loan Trust
7.80% 03/20/16 44,000 44,076
Lehman FHA Title I Loan Trust
7.83% 09/25/17 40,000 40,150
Premier Auto Trust
6.50% 03/06/00 50,000 50,031
Provident Bank Home Equity Loan Trust
6.72% 01/25/13 242,203 238,267
The Money Store Home Equity Trust
7.50% 01/15/26 49,000 48,326
7.90% 10/15/22 29,000 29,290
Total Asset Backed
(Cost $476,335) 473,391
Corporate Notes -- 6.2%
Abbey National PLC
7.35% 10/29/49 30,000 29,237
AFC Capital Trust
8.207% 02/03/27 100,000 98,256(b)
Aon Capital Trust
8.205% 01/01/27 100,000 98,620(b)
Argentaria Capital Fund
6.375% 02/14/06 60,000 55,275
Bancomer S.A.
9.00% 06/01/00 45,000 45,169(b)
BCH Cayman Islands
8.25% 06/15/04 25,000 25,670
Bell Telephone Co. - Canada
9.50% 10/15/10 150,000 173,669
BT Preferred Capital Trust
7.875% 02/25/27 120,000 112,199
Capital One Bank
6.43% 06/29/98 150,000 149,685
Carter Holt Harvey Ltd.
8.875% 12/01/04 200,000 215,032
Central Maine Power Co.
7.40% 06/02/98 200,000 201,000
China International Trust &
Investment Corp.
9.00% 10/15/06 65,000 70,113
- ----------
See Notes to Schedule of Investments and Financial Statements
23
<PAGE>
GE Strategic Investment Fund March 31, 1997 (unaudited)
Principal
Amount Value
- --------------------------------------------------------------------------------
Circus Circus Enterprises Inc.
6.70% 11/15/2096 $ 70,000 $ 66,947
Citicorp
8.625% 12/01/02 100,000 106,448
Continental Cablevision Inc.
8.50% 09/15/01 70,000 73,110
Dao Heng Bank Ltd.
7.75% 01/24/07 100,000 97,459(b)
Deutsche Bank Financial Inc.
6.70% 12/13/06 85,000 80,746
Developers Diversified Realty Corp.
7.00% 03/05/01 115,000 112,419
Dresser Industries Inc.
7.60% 08/15/2096 50,000 48,629
Empresa Nacional De Electricid
7.875% 02/01/27 70,000 67,589
8.125% 02/01/2097 65,000 63,591
FBOP Capital Trust
10.20% 02/06/27 85,000 82,294(b)
Federated Department Stores Inc.
10.00% 02/15/01 190,000 205,078
First Security Capital
8.41% 12/15/26 41,000 40,838(b)
Freeport Term Malta Ltd.
7.50% 03/29/09 55,000 54,676(b)
Freeport-McMoran Resource
Partners L.P.
7.00% 02/15/08 35,000 32,892
Guangdong International Trust &
Investment Corp.
8.75% 10/24/16 50,000 50,867
HSBC Finance Nederland B.V.
7.40% 04/15/03 100,000 99,182(b)
Hydro-Quebec
8.05% 07/07/24 95,000 100,415
8.25% 04/15/26 50,000 50,668
Ikon Capital Resource Inc.
6.96% 03/27/01 200,000 199,022
Israel Electric Corp. Ltd.
8.10% 12/15/2096 25,000 24,160(b)
ITT Corp. (new)
6.25% 11/15/00 31,000 29,898
Korea Electric Power Corp.
7.75% 04/01/13 48,000 47,485
Landeskreditbank Baden
7.875% 04/15/04 40,000 41,428
Lehman Brothers Holdings Inc.
6.90% 03/30/01 160,000 157,978
Loewen Group International Inc.
7.50% 04/15/01 105,000 104,081
Morgan Stanley Finance PLC
8.03% 02/28/17 40,000 38,796
New York State Dormitory
Authority Revenues
6.32% 04/01/99 90,000 89,157
News America Holdings Inc.
8.15% 10/17/36 270,000 255,401
North Atlantic Energy Corp.
9.05% 06/01/02 88,000 86,567
<PAGE>
Principal
Amount Value
- --------------------------------------------------------------------------------
Ontario Province of Canada
6.125% 06/28/00 $ 250,000 $245,325
Oryx Energy Co.
9.50% 11/01/99 75,000 78,254
10.00% 06/15/99 100,000 104,987
Paramount Communications Inc.
5.875% 07/15/00 150,000 143,289
Pennzoil Co.
10.625% 06/01/01 50,000 53,214
Petroleos Mexicanos
7.75% 10/29/99 50,000 49,875(b)
Philip Morris Cos. Inc.
7.20% 02/01/07 30,000 28,852
Provident Capital Trust
8.60% 12/01/26 35,000 33,937(b)
Reliance Industries Ltd.
10.375% 06/24/16 40,000 43,185(b)
10.50% 08/06/46 30,000 31,718(b)
Republic of Columbia
7.25% 02/15/03 35,000 33,304
Republic of Panama
7.875% 02/13/02 100,000 96,500(b)
Republic of Poland
3.75% 10/27/14 50,000 39,875
Riggs Capital Trust
8.625% 12/31/26 40,000 39,608(b)
RJR Nabisco Inc.
8.00% 07/15/01 125,000 124,234
Southern Investments UK PLC
6.375% 11/15/01 75,000 72,476
Sovereign Capital Trust
9.00% 04/01/27 105,000 102,453(b)
Taubman Realty Group L.P.
8.00% 06/15/99 80,000 81,117
TCI Communications Inc.
6.69% 03/31/06 100,000 97,683
Tele-Communications Inc.
8.25% 01/15/03 85,000 85,019
Tenet Healthcare Corp.
8.00% 01/15/05 70,000 67,375
Time Warner, Inc.
6.10% 12/30/01 180,000 169,002
Total Access Communication PLC
7.625% 11/04/01 185,000 181,922(b)
United Co. Financial Corp.
7.00% 07/15/98 150,000 149,841
WorldCom Inc.
7.55% 04/01/04 105,000 104,826
Yale University Notes
7.375% 04/15/2096 65,000 62,096
Total Corporate Notes
(Cost $6,187,477) 6,101,713
Mortgage-Backed -- 11.7%
Federal Home Loan Mortgage Corp.
6.50% 03/01/04 25,289 24,811
8.00% 10/01/25 - 02/01/26 640,301 644,604
9.00% 04/01/16 - 04/01/25 490,050 515,386
9.00% 06/01/21 89,002 94,351(h)
1,279,152
- ----------
See Notes to Schedule of Investments and Financial Statements
24
<PAGE>
Schedule of Investments March 31, 1997 (unaudited)
Principal
Amount Value
- --------------------------------------------------------------------------------
Federal National Mortgage Assoc.
6.50% 01/01/04 $ 14,843 $ 14,554
8.50% 12/01/24 246,375 252,687
8.50% 04/01/17 27,340 28,290(h)
9.00% 10/01/24 115,310 120,805
416,336
Government National Mortgage Assoc.
7.00% TBA 236,000 226,707(c)
7.50% 04/15/22 - 11/15/24 1,573,211 1,551,854
7.50% TBA 518,000 508,126(c)
8.00% 01/15/23 - 12/15/23 523,817 528,401
8.50% 10/15/17 2,324,549 2,435,709
9.00% 02/15/17 121,000 128,713
9.50% 12/15/09 136,915 147,258
5,526,768
Mid-State Trust
8.33% 04/01/30 699,391 722,230
Collateralized Mortgage Obligations
Aetna Commercial Mortgage Trust
6.42% 12/26/30 44,529 44,279
Asset Securitization Corp.
7.41% 01/13/30 120,000 121,219
Collateralized Mortgage Obligation Trust
7.22% 11/01/18 40,401 25,301(d,f)
8.16% 09/01/15 38,187 30,167(d,f)
Community Program Loan Trust
4.50% 10/01/18 170,000 141,658
CS First Boston Mortgage Securities Corp.
6.425% 08/20/30 65,035 64,608
DLJ Mortgage Acceptance Corp.
6.65% 12/17/27 32,456 31,807(b)
6.85% 12/17/27 123,000 118,964(b)
7.29% 11/12/21 40,000 39,675(b)
Federal Home Loan Mortgage Corp.
8.00% 04/15/20 30,000 30,253
1009.00% 09/15/21 876 36,092(g)
Federal National Mortgage Assoc.
6.965% 07/25/10 40,000 38,637
7.00% 10/17/06 190,000 189,109
7.00% 09/01/23 - 10/01/23 772,319 271,798(g)
7.148% 10/17/09 81,000 79,839
7.165% 01/17/13 82,000 81,026
7.351% 08/17/08 169,000 167,284
7.41% 03/25/21 95,000 94,466
8.00% 02/01/23 159,993 55,498(g)
8.50% 03/01/17 - 07/25/22 196,787 64,193(g)
9.00% 05/25/22 90,351 30,578(g)
9.76% 09/25/23 147,948 79,568(d,f)
10.45% 09/25/23 195,000 99,694(d,f)
Federal National Mortgage Assoc. REMIC
3.60% 12/25/22 3,175 3,155(d,f)
6.71% 08/25/23 127,131 87,800(d,f)
6.84% 12/25/22 85,539 59,877(d,f)
6.856% 06/17/11 61,000 59,037
7.18% 07/25/20 101,000 83,451(d,f)
7.63% 09/25/22 90,871 69,289(d,f)
9.76% 09/25/23 41,105 22,107(d,f)
13.29% 10/25/23 79,774 53,448(d,f)
<PAGE>
Principal
Amount Value
- --------------------------------------------------------------------------------
GMAC Commercial Mortgage Securities Inc.
6.79% 10/15/28 $ 99,300 $ 96,243
LB Commercial Conduit Mortgage Trust
7.144% 08/25/04 255,921 253,522
7.416% 10/25/26 49,684 49,676
Merrill Lynch Mortgage Investor's Inc.
7.098% 05/25/15 45,280 45,110
7.46% 06/15/21 118,011 118,141
Morgan Stanley Capital Inc.
6.476% 10/15/10 139,217 135,215(b)
Sawgrass Finance REMIC Trust
6.45% 01/20/06 60,000 58,706
Structured Asset Securities Corp.
1.34% 02/25/28 1,038,177 53,207(g)
8.495% 04/25/27 140,222 142,807
9.087% 09/25/31 240,191 251,751
Vornado Finance Corp.
6.36% 12/01/00 105,000 102,637(b)
3,680,892
Total Mortgage-Backed
(Cost $11,698,938) 11,625,378
Total Bonds and Notes
(Cost $30,750,247) 30,301,505
Number
of Shares Value
- --------------------------------------------------------------------------------
Preferred Stock -- 0.6%
- --------------------------------------------------------------------------------
Airtouch Communications Inc.
(Class B), 6.00% 3,000 76,875
Central Hispano Capital, 9.43% 1,330 35,245
Entergy Gulf States Inc., $1.75 2,875 71,628
Fresenius Medical Care Inc.
AG ADR 1,233 99,424(a)
Grand Metropolitan Delaware,
9.42% 1,500 41,625
National Rural Utilities Cooperative
Finance Corp., 8.00% 375 9,187
Norwest Corp./Marquette Real
Estate Funding Corp., 13.70% 250 241,687(b)
Security Capital
Industrial Trust, 8.54% 1,185 56,820
Total Preferred Stock
(Cost $643,792) 632,491
Total Investments in Securities
(Cost $75,316,829) 88,440,071
- ----------
See Notes to Schedule of Investments and Financial Statements
25
<PAGE>
GE Strategic Investment Fund March 31, 1997 (unaudited)
Principal
Amount Value
- --------------------------------------------------------------------------------
Short Term Investments -- 12.3%
- --------------------------------------------------------------------------------
U.S. Government Agencies -- 7.7%
Federal Home Loan Bank
5.41% 04/17/97 $2,000,000 $ 1,995,191(d)
Federal Home Loan Mortgage Corp.
5.44% 04/18/97 1,590,000 1,585,976(d)
6.50% 04/01/97 1,000,000 1,000,000(d)
Federal National Mortgage Assoc.
5.46% 04/10/97 3,000,000 2,995,905(d)
7,577,072
Repurchase Agreement -- 4.6%
State Street Bank and Trust Co.
6.25% 04/01/97
(Cost $4,530,000) 4,530,000 4,530,000
(dated 03/31/97, proceeds
$4,530,786, collateralized by
$4,622,334 United States Treasury
Note, 9.875%, 11/15/15)
Total Short Term Investments
(Cost $12,107,072) 12,107,072
Number
Expiration Date/ of
Strike Price Contracts Value
- --------------------------------------------------------------------------------
Put Options Written -- 0.0%
- --------------------------------------------------------------------------------
U.S. Treasury Notes Apr. 97/94.13 263 (1,151)
(Premium $(904))
Other Assets and Liabilities, net (1.7%) (1,654,602)
- --------------------------------------------------------------------------------
NET ASSETS -- 100% $98,891,390
================================================================================
[GRAPHIC OF MONEY]
Icons represent the top five industry weightings in the
GE Strategic Investment Fund as of March 31, 1997.
- ----------
See Notes to Schedule of Investments and Financial Statements
26
<PAGE>
GE TAX-EXEMPT FUND
Q&A
Effective in February, 1996 Stella Lou assumed management responsibility for the
GE Tax-Exempt Fund. Stella has 11 years of investment experience and has been
with GE Investments since 1994. Prior to joining GE Investments, she was a Vice
President and Portfolio Manager for Alliance Capital Management in New York.
Stella graduated from Cornell University with a B.S. degree in Applied Economics
and received her M.B.A. degree in Finance from New York University.
Q. How did the GE Tax-Exempt Fund's industry benchmark and Lipper peer group
perform for the six months ended March 31, 1997?
A. The Lehman Municipal Index returned 2.3% for the 6 months ended March 31,
1997. Our Lipper peer group of 238 General Municipal funds had an average
return of 2.0% for the same period. Refer to the following page to see how
your class of shares in the GE Tax-Exempt Fund performed compared to these
benchmarks.
Q. Why did the Fund over or under perform its benchmark and peers?
A. The Fund's strong performance for the six months ended March 31, 1997,
compared to its benchmark and its peer group was due to its shorter than
average duration. As of March 31, the duration of the GE Tax-Exempt Fund's
portfolio was 6.0 years compared to the Lehman Municipal Bond Index with a
duration of 7.27 years. Duration is a measure of how sensitive an
investment is to changes in interest rates. The longer the duration of a
portfolio the greater the impact of changes in interest rates. By
maintaining a lower duration, the impact of rising interest rates on the GE
Tax-Exempt Fund's portfolio was minimized.
Q. What has your investment strategy been?
A. In anticipation of higher interest rates, we reduced the portfolio's
interest rate exposure. This was achieved by replacing securities with low
coupons and longer maturities with securities with shorter maturities and
higher coupons. This approach reduced portfolio duration from 8.5 years to
6 years by March 31, 1997. As a result, the Fund decreased its exposure to
interest rates and improved its income generating ability. A 10% cash
position was also maintained in order to further reduce the portfolio's
interest rate exposure. This higher cash position also provides the Fund
with the flexibility to react as investment opportunities arise during this
period of interest rate volatility.
Q. How did interest rate changes impact the Fund?
A. The Federal Reserve's interest rate hike on March 26 was the most
significant event in the financial markets during the first quarter of
1997. The potential for more such Federal Reserve action will weigh heavily
on the bond markets. Investors will be reluctant to buy bonds as they try
to assess the likelihood that the Federal Reserve will continue to raise
interest rates. We believe the GE Tax-Exempt Fund is well positioned to
weather this uncertainty. The portfolio's shorter duration will minimize
the impact of interest rate rises while the cash position will allow it to
take advantage of any buying opportunities arising from Federal Reserve
monetary policy changes.
Q. What is the outlook for the Fund and how have you positioned the Fund going
forward?
A. The municipal market will continue to be volatile during the next six
months. The Federal Open Market Committee continues to be aggressive in
fighting inflation which means higher interest rates and lower prices. As
such, the Fund is positioned slightly shorter than the index and peer group
with respect to duration in order to minimize the impact of rising interest
rates. Cash will be recycled into higher coupon bonds with low volatility
to enhance the income generation in the Fund. New issue supply should
continue to be light. Refunding activity will decline as rising interest
rates make it uneconomical to retire old debt. This lack of supply should
prevent prices from declining too rapidly.
The major issue facing the municipal market in the coming year continues to
be tax reform. With the Republicans retaining control of Congress we can
expect some form of tax reform to materialize but not the broad based tax
initiative that we saw during last term. There has been talk of setting
aside tax reform, by the Republicans, in exchange for other budget
concessions by the Democrats.
[PHOTO OF STELLA LOU]
27
<PAGE>
GE TAX-EXEMPT FUND
PORTFOLIO COMPOSITION
GENERAL OBLIGATION 38.2%
CASH & OTHER 5.1%
SALES TAX SPECIAL 18.3%
EDUCATION 8.4%
LEASE REVENUE 11.7%
TRANSPORTATION 5.4%
WATER & SEWER 2.1%
HOUSING 2.8%
HEALTH 8.0%
- --------------------------------------------------------------------------------
Average Annual Total Return %
for the periods ended March 31, 1997
- --------------------------------------------------------------------------------
Since
6 Mo. 1 Yr. 3Yr Inception Commencement
- --------------------------------------------------------------------------------
Class A 2.12% 4.52% 5.12% 2.68% 1/1/94
- --------------------------------------------------------------------------------
Class A* - 2.22% 0.08% 3.60% 1.31% 1/1/94
- --------------------------------------------------------------------------------
Class B 1.95% 4.10% 4.66% 2.37% 12/22/93
- --------------------------------------------------------------------------------
Class B* - 1.05% 1.10% 4.35% 2.09% 12/22/93
- --------------------------------------------------------------------------------
Class C 2.34% 4.86% 5.41% 3.93% 2/26/93
- --------------------------------------------------------------------------------
Class D 2.46% 5.14% 5.67% 3.85% 11/29/93
- --------------------------------------------------------------------------------
LBMI 2.31% 5.45% 7.08%
================================================================================
* With Load
INVESTMENT PROFILE
A mutual fund designed for investors who seek a high level of current
income exempt from federal income taxes while preserving capital by
investing primarily in municipal obligations.
================================================================================
QUALITY RATINGS
AT MARCH 31, 1997
================================================================================
Percent of
Moody's Ratings+ Market Value
- --------------------------------------------------------------------------------
Aaa 70.5%
- --------------------------------------------------------------------------------
Aa 27.4%
- --------------------------------------------------------------------------------
A 2.1%
- --------------------------------------------------------------------------------
+ Moody's Investors Service, Inc. is a nationally recognized statistical
rating organization.
* Lipper Performance Comparison
General Municipal Peer Group
Based on average annual total returns for the periods ending March 31, 1997
Six One Three
Months Year Year
Number of Funds
in peer group: 238 228 165
Peer group average
total return: 2.0% 4.8% 6.1%
Lipper categories
in peer group: General Municipal
* See Notes to Performance for explanation of peer categories
See page 41 for Notes to Performance.
Past performance is no guarantee of future results.
28
<PAGE>
Schedule of Investments March 31, 1997 (unaudited)
GE TAX-EXEMPT FUND
Principal
Amount Value
- --------------------------------------------------------------------------------
Municipal Bonds -- 94.9%
- --------------------------------------------------------------------------------
[GRAPHIC OF ARIZONA STATE]
Arizona -- 8.6%
Arizona Transportation Board
Rev. - Sales Tax, AMBAC Insured
5.60% 07/01/02 $ 500,000 $ 518,310
Maricopa County Elementary School
G.O., AMBAC Insured
6.30% 07/01/07 500,000 547,785
1,066,095
California -- 4.0%
Los Angeles California Regional Airport
Rev. - Lease Rev., VRDN
3.80% 12/01/24 500,000 500,000
Colorado -- 4.0%
Colorado State Rev. - Sales Tax
4.50% 06/27/97 500,000 500,735
[GRAPHIC OF CONNECTICUT STATE]
Connecticut -- 8.1%
Connecticut State G.O., AMBAC Insured
5.50% 01/01/03 500,000 515,070
Connecticut State Health & Educational Fac. Auth.
Rev. - Health, MBIA Insured
5.50% 07/01/12 500,000 495,880
1,010,950
Delaware -- 4.0%
Wilmington Delaware Hospital
Rev. - Health, VRDN
3.80% 07/01/11 500,000 500,000
Illinois -- 4.2%
Chicago Illinois G.O., FGIC Insured
6.00% 01/01/08 500,000 525,830
Indiana -- 2.4%
Indiana University Rev. - Education
6.00% 11/15/14 290,000 297,546
Maryland -- 4.2%
Baltimore County G.O.
5.50% 08/01/04 500,000 517,935
Massachusetts -- 2.1%
Massachusetts State Water & Sewer
Rev. - Water & Sewer
6.00% 11/01/06 250,000 262,223
<PAGE>
Principal
Amount Value
- --------------------------------------------------------------------------------
Michigan -- 4.3%
Michigan State Underground Storage Tank
Rev. - Sales Tax, AMBAC Insured
6.00% 05/01/04 $ 500,000 $ 531,615
Minnesota -- 4.1%
Minnesota State G.O.
6.60% 08/01/98 500,000 516,870
Nebraska -- 2.7%
Lancaster County Nebraska
School District G.O.
5.00% 07/15/09 350,000 335,695
[GRAPHIC OF NEW JERSEY STATE]
New Jersey -- 6.0%
New Jersey Building Auth.
Rev. - Lease Rev.
5.00% 06/15/12 500,000 469,525
New Jersey Tpke. Auth.
Rev. - Trans., AMBAC Insured
6.50% 01/01/16 250,000 276,497
746,022
New York -- 2.0%
Westchester County New York G.O.
4.90% 11/15/97 250,000 251,985
[GRAPHIC OF OHIO STATE]
Ohio -- 5.9%
Ohio State Building Authority
Rev. - Lease Rev., AMBAC Insured
5.50% 04/01/16 500,000 484,540
Ohio State Public Facilities
Rev. - Education, AMBAC Insured
5.40% 11/01/07 250,000 253,240
737,780
Oregon -- 2.0%
Portland G.O.
5.375% 06/01/13 250,000 244,308
Pennsylvania -- 3.9%
Pennsylvania Intergovernmental Co-op.
Rev. - Sales Tax, MBIA Insured
5.60% 06/15/15 500,000 484,430
Tennessee -- 3.2%
Metropolitan Nashville Airport Authority
Rev. - Trans., VRDN
3.80% 10/01/12 400,000 400,000
- ----------
See Notes to Schedule of Investments and Financial Statements
29
<PAGE>
GE Tax-Exempt Fund March 31, 1997 (unaudited)
Principal
Amount Value
- --------------------------------------------------------------------------------
[GRAPHIC OF TEXAS STATE]
Texas -- 12.4%
Dallas Texas G.O.
5.50% 02/15/01 $ 500,000 $ 515,565
Houston G.O.
6.00% 04/01/04 500,000 531,020
University of Texas Rev. - Education
5.10% 08/15/08 500,000 492,345
1,538,930
West Virginia -- 2.8%
West Virginia Housing Development
Fund Rev. - Housing
5.60% 11/01/11 355,000 353,931
Wisconsin -- 4.0%
Wisconsin State G.O.
5.30% 11/01/11 500,000 494,975
Total Investments in Securities
(Cost $11,677,288) 11,817,855
Other Assets and Liabilities, net 5.1% 636,142
- --------------------------------------------------------------------------------
NET ASSETS - 100% $12,453,997
================================================================================
[GRAPHIC OF CONNECTICUT STATE]
Icons represent the top five state weightings in the
GE Tax-Exempt Fund as of March 31, 1997.
- ----------
See Notes to Schedule of Investments and Financial Statements
30
<PAGE>
GE FIXED INCOME FUNDS
Q&A
Bob MacDougall leads the fixed income team at GE Investments. Assets under
management exceed $19 billion. Bob joined GE Investments in 1986 as Mutual Fund
Portfolio Manager, became Senior Vice President - Fixed Income in 1992 and was
named to his present position in 1997. Previously he was with GE's Corporate
Treasury Operation managing the Company's $2 billion portfolio of marketable
securities and supporting the Treasurer in the areas of debt management and
capital structure planning. Prior to that, Bob held various financial management
positions since joining GE in 1973. He holds Bachelor's and Master's degrees in
Business Administration from the University of Massachusetts.
Q. Describe what happened in the fixed income markets over the past six
months.
A. Data released in October and November 1996 showed that our economy was
growing at a very modest pace and that inflation was stable at low levels.
Speculation of a possible easing of monetary policy drove interest rates
down .50% reaching a low in November of 5.6% on two year Treasury notes and
6.4% on 30 year bonds. The economy subsequently picked up steam, however,
which rekindled fears of inflation among fixed income investors and members
of the Federal Reserve. Despite continued good inflation reports, the Fed
raised short term interest rates in March 1997 in a "pre-emptive" move to
relieve building price pressures. As a result, yields on 2 year Treasuries
ended the six month period .30% higher at 6.4% while 30 year bond yields
hit 7.1%, about .20% higher than they were at the end of September 1996.
While rising interest rates improve income levels, they tend to have a
negative impact on net asset values (NAVs). This is reflected in the
performance of our fixed income funds each of which targets a different
level of interest rate risk (duration).
GE Fixed Income Fund
Q. How did the GE Fixed Income Fund's market benchmark and Lipper peer group
perform for the six months ended March 31, 1997?
A. The Lehman Brothers Aggregate Bond Index returned 2.4%, while the average
return for the 142 Intermediate Maturity U.S. Government Bond mutual funds
tracked by Lipper was 1.9%. Refer to the following page to see how your
class of shares in the GE Fixed Income Fund performed compared to these
benchmarks.
Q. What drove the Fund's performance?
A. Our portfolio is well-diversified, holding U.S. Treasuries, Mortgage-backed
securities issued by U.S. Government agencies and corporate bonds. During
this period, our allocation to corporate bonds performed well compared with
both the corporate sector of the index as well as the overall index.
GE Short-Term Government Fund
Q. How did the GE Short-Term Government Fund's benchmarks perform for the six
months ended March 31, 1997?
A. The Lehman Brothers 1-3 year Government Index returned 2.6%. Our Lipper
peer group of 186 Short-Term Government mutual funds averaged a return of
2.3%. Refer to page 37 to see how your class of shares in the GE Short-Term
Government Fund performed compared with these benchmarks.
Q. To what do you attribute this performance?
A. Our strategy of holding securities with yields higher than the index paid
off not only in terms of greater income but also in better price
performance as spreads to U.S. Treasuries narrowed. Examples of these types
of securities are adjustable rate mortgage-backed securities and issues
collateralized by assets such as automobile loans.
GE Money Market Fund
Q. How did the GE Money Market Fund perform relative to its benchmarks for the
six months ended March 31, 1997?
A. The GE Money Market Fund had a total return of 2.5% for the six months
ended March 31, 1997. For this same period, 90-day Treasury Bills returned
2.6% and the average return of the 302 Money Market funds reported by
Lipper was 2.4%. Our approach of maintaining a very high quality portfolio
and holding the average maturity of the Fund below 60 days was applied
consistently during this period.
Q. What is your outlook?
A. The Fed's "pre-emptive" tightening, while painful in the short run, is good
news for bond investors with a long investment horizon because real returns
will be maximized with low stable rates of inflation.
[PHOTO OF BOB MACDOUGALL]
31
<PAGE>
GE FIXED INCOME FUND
PORTFOLIO COMPOSITION
CASH & OTHER 11.1%
U.S. TREASURIES 30.5%
CORPORATE NOTES 19.7%
MORTGAGE-BACKED 38.7%
- --------------------------------------------------------------------------------
Average Annual Total Return %
for the periods ended March 31, 1997
- --------------------------------------------------------------------------------
Since
6 Mo. 1 Yr. 3Yr Inception Commencement
- --------------------------------------------------------------------------------
Class A 2.32% 4.43% 5.97% 4.67% 1/1/94
- --------------------------------------------------------------------------------
Class A* - 2.03% - 0.01% 4.43% 3.27% 1/1/94
- --------------------------------------------------------------------------------
Class B 2.15% 4.00% 5.49% 4.19% 12/22/93
- --------------------------------------------------------------------------------
Class B* - 0.83% 1.04% 5.19% 3.92% 12/22/93
- --------------------------------------------------------------------------------
Class C 2.52% 4.68% 6.25% 5.17% 2/22/93
- --------------------------------------------------------------------------------
Class D 2.66% 4.96% 6.51% 5.16% 11/29/93
- --------------------------------------------------------------------------------
LB Agg. 2.43% 4.91% 6.86%
================================================================================
* With Load
INVESTMENT PROFILE
A mutual fund designed for investors who seek high current income and
preservation of capital by investing primarily in fixed income securities
including government and corporate bonds and asset- and mortgage-backed
securities.
================================================================================
QUALITY RATINGS
AT MARCH 31, 1997
================================================================================
Percent of
Moody's Ratings+ Market Value
- --------------------------------------------------------------------------------
Aaa 80.2%
- --------------------------------------------------------------------------------
Aa 2.0%
- --------------------------------------------------------------------------------
A 5.5%
- --------------------------------------------------------------------------------
Baa 7.0%
- --------------------------------------------------------------------------------
Ba 5.0%
- --------------------------------------------------------------------------------
B 0.3%
================================================================================
+ Moody's Investors Service, Inc. is a nationally recognized statistical
rating organization.
* Lipper Performance Comparison
Intermediate Government Peer Group
Based on average annual total returns for the periods ending March 31, 1997
Six One Three
Months Year Year
Number of Funds
in peer group: 142 132 90
Peer group average
total return: 1.9% 3.8% 5.3%
Lipper categories
in peer group: Intermediate U.S. Government,
Intermediate U.S. Treasury
* See Notes to Performance for explanation of peer categories
See page 41 for Notes to Performance.
Past performance is no guarantee of future results.
32
<PAGE>
Schedule of Investments March 31, 1997 (unaudited)
GE FIXED INCOME FUND
Principal
Amount Value
- --------------------------------------------------------------------------------
Bonds and Notes -- 92.2%
- --------------------------------------------------------------------------------
Federal Agency -- 0.7%
Federal National Mortgage Assoc.
6.375% 01/16/02
(Cost $414,452) $ 415,000 $ 406,311
U.S. Treasuries -- 30.5%
U.S. Treasury Bonds
5.63% 04/02/98 1,007,000 949,168
6.50% 11/15/26 2,317,000 2,133,077(h)
6.75% 08/15/26 883,000 836,643(h)
8.125% 08/15/19 1,665,000 1,826,821(h)
12.00% 05/15/05 358,000 468,643(h)
12.50% 08/15/14 602,000 863,021(h)
13.75% 08/15/04 428,000 594,719(h)
7,672,092
U.S. Treasury Notes
5.625% 02/28/01 398,000 383,262(h)
5.875% 10/31/98 - 02/15/00 3,208,000 3,172,356(h)
6.00% 09/30/98 1,522,000 1,515,334(h)
6.25% 01/31/02 - 02/28/02 1,983,000 1,940,589(h)
6.625% 07/31/01 1,567,000 1,559,165(h)
7.75% 12/31/99 2,445,000 2,514,903(h)
11,085,609
Total U.S. Treasuries
(Cost $19,119,456) 18,757,701
Asset Backed -- 0.2%
Advanta Mortgage Loan Trust Corp.
6.30% 07/25/25 48,237 46,500
Lehman FHA Title I Loan Trust
7.83% 09/25/17 80,000 80,300
Total Asset Backed
(Cost $126,164) 126,800
Corporate Notes -- 19.7%
Abbey National PLC
7.35% 10/29/49 110,000 107,203
AFC Capital Trust
8.207% 02/03/27 165,000 162,122(b)
Aon Capital Trust
8.205% 01/01/27 105,000 103,551(b)
Argentaria Capital Fund
6.375% 02/14/06 160,000 147,400
Bancomer S.A.
9.00% 06/01/00 100,000 100,375(b)
BCH Cayman Islands
8.25% 06/15/04 125,000 128,351
Bell Telephone Co. - Canada
9.50% 10/15/10 265,000 306,814
<PAGE>
Principal
Amount Value
- --------------------------------------------------------------------------------
Bell Telephone Co. - Pennsylvania
8.35% 12/15/30 $ 75,000 $ 83,957
BT Preferred Capital Trust
7.875% 02/25/27 240,000 224,398
Capital One Bank
6.43% 06/29/98 300,000 299,370
Central Maine Power Co.
7.40% 06/02/98 125,000 125,625
China International Trust & Investment Corp.
9.00% 10/15/06 170,000 183,372
China Light & Power Ltd.
7.50% 04/15/06 150,000 147,767
Circus Circus Enterprises Inc.
6.70% 11/15/2096 150,000 143,459
Conseco Inc.
10.50% 12/15/04 100,000 114,849
Continental Cablevision Inc.
8.30% 05/15/06 130,000 134,582
8.50% 09/15/01 125,000 130,554
Dao Heng Bank Ltd.
7.75% 01/24/07 100,000 97,459(b)
Delta Air Lines Inc.
7.79% 12/01/98 125,000 127,084
Deutsche Bank Financial Inc.
6.70% 12/13/06 655,000 622,217
Developers Diversified Realty Corp.
7.00% 03/05/01 300,000 293,268
Dresser Industries Inc.
7.60% 08/15/2096 113,000 109,900
Empresa Nacional De Electricid
7.875% 02/01/27 120,000 115,867
8.125% 02/01/2097 100,000 97,832
FBOP Capital Trust
10.20% 02/06/27 65,000 62,931(b)
Federated Department Stores Inc.
8.50% 06/15/03 110,000 113,614
10.00% 02/15/01 95,000 102,539
First Security Capital
8.41% 12/15/26 90,000 89,645(b)
Freeport Term Malta Ltd.
7.50% 03/29/09 150,000 149,117(b)
Freeport-McMoran Resource Partners L.P.
7.00% 02/15/08 150,000 140,967
Guangdong International Trust & Investment Corp.
8.75% 10/24/16 105,000 106,821
HSBC Finance Nederland B.V.
7.40% 04/15/03 150,000 148,773(b)
Hydro-Quebec
8.05% 07/07/24 60,000 63,420
8.25% 04/15/26 360,000 364,806
11.75% 02/01/12 75,000 101,087
Israel Electric Corp. Ltd.
8.10% 12/15/2096 240,000 231,936(b)
ITT Corp. (new)
6.25% 11/15/00 63,000 60,760
- ----------
See Notes to Schedule of Investments and Financial Statements
33
<PAGE>
GE Fixed Income Fund March 31, 1997 (unaudited)
Principal
Amount Value
- --------------------------------------------------------------------------------
Korea Electric Power Corp.
7.75% 04/01/13 $ 164,000 $ 162,242
Landeskreditbank Baden
7.875% 04/15/04 160,000 165,710
Lehman Brothers Holdings Inc.
6.90% 03/30/01 210,000 207,346
Liberty Mutual Insurance Co.
8.20% 05/04/07 125,000 129,658(b)
Loewen Group International Inc.
7.50% 04/15/01 225,000 223,031
Lumbermans Mutual Casualty Co.
9.15% 07/01/26 150,000 156,510(b)
Metropolitan Life Insurance Co.
7.80% 11/01/25 250,000 238,247(b)
Midland Bank PLC
6.95% 03/15/11 310,000 287,782
Morgan Stanley Finance PLC
8.03% 02/28/17 90,000 87,291
National Bank of Hungary
8.875% 11/01/13 90,000 93,531
New York State Dormitory Authority Revenues
6.32% 04/01/99 200,000 198,126
News America Holdings Inc.
8.15% 10/17/36 125,000 118,241
North Atlantic Energy Corp.
9.05% 06/01/02 166,000 163,298
Oryx Energy Co.
9.50% 11/01/99 150,000 156,507
10.00% 06/15/99 150,000 157,480
Pennzoil Co.
10.625% 06/01/01 150,000 159,642
Petroleos Mexicanos
7.75% 10/29/99 100,000 99,750(b)
Philip Morris Cos. Inc.
7.20% 02/01/07 100,000 96,174
Provident Capital Trust
8.60% 12/01/26 70,000 67,875(b)
PSI Energy Inc.
6.25% 12/15/98 100,000 98,973
Reliance Industries Ltd.
10.375% 06/24/16 105,000 113,361(b)
10.50% 08/06/46 85,000 89,868(b)
Republic of Columbia
7.25% 02/15/03 100,000 95,154
Republic of Panama
7.875% 02/13/02 200,000 193,000(b)
Republic of Poland
3.75% 10/27/14 110,000 87,725
Riggs Capital Trust
8.625% 12/31/26 90,000 89,119(b)
RJR Nabisco Inc.
8.00% 07/15/01 300,000 298,161
Southern Investments UK PLC
6.375% 11/15/01 120,000 115,962
<PAGE>
Principal
Amount Value
- --------------------------------------------------------------------------------
Taubman Realty Group L.P.
8.00% 06/15/99 $ 160,000 $ 162,234
TCI Communications Inc.
6.69% 03/31/06 125,000 122,104
Tele-Communications Inc.
8.25% 01/15/03 70,000 70,015
9.25% 04/15/02 100,000 105,108
Tenet Healthcare Corp.
8.00% 01/15/05 120,000 115,500
Time Warner Entertainment Co. L.P.
10.15% 05/01/12 75,000 87,578
Time Warner Inc.
6.10% 12/30/01 100,000 93,890
7.95% 02/01/00 150,000 153,076
Toledo Edison Co.
7.38% 03/31/00 250,000 242,275
Total Access Communication PLC
7.625% 11/04/01 155,000 152,421(b)
United Co. Financial Corp.
7.00% 07/15/98 300,000 299,682
Viacom Inc.
7.75% 06/01/05 250,000 241,440
WorldCom Inc.
7.55% 04/01/04 200,000 199,668
Yale University Notes
7.375% 04/15/2096 100,000 95,533
Total Corporate Notes
(Cost $12,327,646) 12,134,080
Mortgage-Backed -- 38.7%
Federal Home Loan Mortgage Corp.
6.50% 03/01/04 74,483 73,075
8.00% 03/01/07 - 10/01/25 899,483 905,822
8.75% 04/01/08 51,956 54,051
9.00% 12/01/16 - 04/01/25 1,155,328 1,214,451
9.50% 04/01/21 43,580 46,998(h)
2,294,397
Federal National Mortgage Assoc.
6.50% 01/01/04 43,709 42,860
7.50% 02/01/14 27,039 26,871
8.50% 12/01/24 543,133 557,048
8.50% 04/01/17 109,358 113,158(h)
9.00% 10/01/24 211,662 221,747
961,684
Government National Mortgage Assoc.
6.00% 08/20/26 612,981 620,742(e)
7.00% TBA 436,000 418,832(c)
7.50% 05/15/22 - 11/15/24 5,355,000 5,278,642
7.50% TBA 1,285,000 1,260,504(c)
8.00% 05/15/22 - 12/15/23 1,876,355 1,893,294
8.50% 10/15/17 1,074,436 1,125,815
9.00% 02/15/17 177,000 188,282
9.00% 11/15/19 176,233 187,026(h)
9.50% 12/15/09 414,779 446,413
11,419,550
- ----------
See Notes to Schedule of Investments and Financial Statements
34
<PAGE>
Schedule of Investments March 31, 1997 (unaudited)
Principal
Amount Value
- --------------------------------------------------------------------------------
Mid-State Trust
8.33% 04/01/30 $ 1,297,976 $ 1,340,363
Collateralized Mortgage Obligations
Aetna Commercial Mortgage Trust
6.42% 12/26/30 115,944 115,292
Collateralized Mortgage Obligation Trust
7.22% 11/01/18 111,649 69,920(d,f)
8.16% 09/01/15 105,530 83,369(d,f)
Community Program Loan Trust
4.50% 10/01/18 300,000 249,984
CS First Boston Mortgage Securities Corp.
6.425% 08/20/30 97,553 96,913
DLJ Mortgage Acceptance Corp.
6.65% 12/17/27 71,403 69,975(b)
7.29% 11/12/21 87,000 86,293(b)
Federal Home Loan Mortgage Corp.
8.00% 04/15/20 70,000 70,591
1009.00% 09/15/21 2,396 98,723(g)
Federal National Mortgage Assoc.
6.965% 07/25/10 80,000 77,275
7.00% 10/17/06 352,000 350,350
7.00% 09/01/23 - 10/01/23 1,060,545 373,232(g)
7.148% 10/17/09 176,000 173,470
7.165% 01/17/13 153,000 151,183
7.351% 08/17/08 313,000 309,821
7.41% 03/25/21 245,000 243,622
8.00% 02/01/23 366,436 127,107(g)
8.50% 03/01/17 - 07/25/22 516,014 172,207(g)
9.00% 05/25/22 166,593 56,381(g)
9.76% 09/25/23 332,534 178,841(d,f)
10.45% 09/25/23 87,000 44,479(d,f)
Federal National Mortgage Assoc. REMIC
3.60% 12/25/22 5,854 5,818(d,f)
6.71% 08/25/23 289,677 200,058(d,f)
6.84% 12/25/22 157,736 110,415(d,f)
6.856% 06/17/11 132,000 127,751
7.18% 07/25/20 255,000 208,144(d,f)
7.63% 09/25/22 250,236 190,805(d,f)
9.76% 09/25/23 92,389 49,688(d,f)
13.29% 10/25/23 175,428 117,537(d,f)
GMAC Commercial Mortgage Securities Inc.
6.79% 10/15/28 124,125 120,304
LB Commercial Conduit Mortgage Trust
7.144% 08/25/04 671,189 664,896
7.416% 10/25/26 113,279 113,261
Merrill Lynch Mortgage Investor's Inc.
7.098% 05/25/15 249,041 248,107
7.46% 06/15/21 865,954 866,901
Morgan Stanley Capital Inc.
6.476% 10/15/10 233,336 226,628(b)
Sawgrass Finance REMIC Trust
6.45% 01/20/06 100,000 97,844
Structured Asset Securities Corp.
1.34% 02/25/28 2,126,793 108,998(g)
8.495% 04/25/27 440,569 448,692
<PAGE>
Principal
Amount Value
- --------------------------------------------------------------------------------
9.087% 09/25/31 $ 509,206 $ 533,711
Vornado Finance Corp.
6.36% 12/01/00 210,000 205,275(b)
7,843,861
Total Mortgage-Backed
(Cost $24,043,209) 23,859,855
Foreign Denominated Notes -- 2.4%
Dutch Government
6.00% 01/15/06 NLG 526,000 286,489
Federal Republic of Germany
6.25% 04/26/06 DEM 448,000 276,992
Government of Canada
7.00% 12/01/06 CAD 473,000 348,130
Kingdom of Belgium
7.00% 05/15/06 BEL 9,310,000 292,480
Kingdom of Denmark
8.00% 03/15/06 DKK 1,678,000 286,843
Total Foreign Denominated Notes
(Cost $1,589,976) 1,490,934
Total Bonds and Notes
(Cost $57,620,903) 56,775,681
Number
of Shares Value
- --------------------------------------------------------------------------------
Preferred Stock -- 1.6%
- --------------------------------------------------------------------------------
Central Hispano Capital, 9.43% 3,200 84,800
Entergy Gulf States Inc., $1.75 6,435 160,322
Grand Metropolitan Delaware,
9.42% 3,500 97,125
National Rural Utilities Cooperative
Finance Corp., 8.00% 1,088 26,656
Norwest Corp./Marquette Real
Estate Funding Corp., 13.70% 500 483,375(b)
Security Capital Industrial Trust,
8.54% 2,620 125,626
Total Preferred Stock
(Cost $988,263) 977,904
Total Investments in Securities
(Cost $58,609,166) 57,753,585
Principal
Amount Value
- --------------------------------------------------------------------------------
Short Term Investments -- 11.7%
- --------------------------------------------------------------------------------
U.S. Government Agencies -- 7.1%
Federal Home Loan Mortgage Corp.
5.44% 04/18/97 $1,410,000 1,406,431(d)
6.50% 04/01/97 1,000,000 1,000,000(d)
Federal National Mortgage Assoc.
5.46% 04/10/97 2,000,000 1,997,270(d)
4,403,701
- ----------
See Notes to Schedule of Investments and Financial Statements
35
<PAGE>
GE Fixed Income Fund March 31, 1997 (unaudited)
Principal
Amount Value
- --------------------------------------------------------------------------------
Repurchase Agreement -- 4.6%
State Street Bank and Trust Co.
6.25% 04/01/97
(Cost $2,820,000) $2,820,000 $ 2,820,000
(dated 03/31/97, proceeds
$2,820,490, collateralized by
$2,880,775 United States Treasury
Note, 9.875%, 11/15/15)
Total Short Term Investments
(Cost $7,223,701) 7,223,701
Number
Expiration Date/ of
Strike Price Contracts Value
- --------------------------------------------------------------------------------
Put Options Written -- 0.0%
- --------------------------------------------------------------------------------
U.S. Treasury Notes Apr. 97/94 .13 484 (2,118)
(Premium $(1664))
Other Assets and Liabilities, net (5.5%) (3,379,217)
- --------------------------------------------------------------------------------
NET ASSETS -- 100% $61,595,951
================================================================================
FORWARD FOREIGN CURRENCY CONTRACTS
- --------------------------------------------------------------------------------
At March 31, 1997, the outstanding forward foreign currency contracts, which
contractually obligate the GE Fixed Income Fund to deliver currencies at a
specified date, were as follows:
<TABLE>
<CAPTION>
U.S. $ Cost U.S. $ Unrealized
Foreign on Origination Current Appreciation
Foreign Currency Sale Contracts Currency Date Value (Depreciation)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BEL, expiring 05/02/97 10,617,800 $ 305,241 $ 309,306 $ (4,065)
CAD, expiring 05/02/97 499,100 363,246 361,277 1,969
DEM, expiring 04/28/97 28,000 16,582 16,819 (237)
DEM, expiring 05/02/97 460,475 273,429 276,676 (3,247)
DKK, expiring 05/02/97 1,836,480 285,700 289,461 (3,761)
NLG, expiring 05/02/97 545,325 288,227 291,419 (3,192)
---------- ---------- --------
$1,532,425 $1,544,958 $(12,533)
========== ========== ========
</TABLE>
- ----------
See Notes to Schedule of Investments and Financial Statements
36
<PAGE>
GE Short-Term Government Fund
Portfolio Composition
U.S. GOVERNMENTS 70.7%
ASSET BACKED 5.2%
CASH & OTHER 5.0%
CORPORATES NOTES 10.2%
MORTGAGE-BACKED 8.9%
- --------------------------------------------------------------------------------
Average Annual Total Return %
for the periods ended March 31, 1997
- --------------------------------------------------------------------------------
Since
6 Mo. 1 Yr. 3Yr Inception Commencement
- --------------------------------------------------------------------------------
Class A 2.57% 4.83% 5.21% 4.88% 3/2/94
- --------------------------------------------------------------------------------
Class A* 0.01% 2.21% 4.34% 4.01% 3/2/94
- --------------------------------------------------------------------------------
Class B 2.31% 4.46% 4.82% 4.49% 3/2/94
- --------------------------------------------------------------------------------
Class B* - 0.68% 1.48% 4.52% 4.19% 3/2/94
- --------------------------------------------------------------------------------
Class C 2.61% 5.09% 5.48% 5.13% 3/2/94
- --------------------------------------------------------------------------------
Class D 2.74% 5.35% 5.71% 5.37% 3/2/94
- --------------------------------------------------------------------------------
LB 1-3 Yr.+ 2.55% 5.36% 5.79%
================================================================================
* With Load
+ Lehman Brothers 1-3 Year Government Bond Index
INVESTMENT PROFILE
A mutual fund designed for investors who seek high current income and
preservation of capital by investing primarily in short-term U.S.
Government securities.
[LINEGRAPH]
2 YEAR TREASURY NOTE YIELD HISTORY
04/01/96 - 03/31/97
High 6.43% Low 5.60% Avg. 6.02%
* Lipper Performance Comparison
Short-Term U.S. Government Peer Group
Based on average annual total returns for the periods ending March 31, 1997
Six One Three
Months Year Year
Number of Funds
in peer group: 186 175 127
Peer group average
total return: 2.3% 4.5% 5.1%
Lipper categories
in peer group: Short-Term U.S. Treasury,
Short U.S. Government,
Short-Intermediate U.S. Government
* See Notes to Performance for explanation of peer categories
See page 41 for Notes to Performance.
Past performance is no guarantee of future results.
37
<PAGE>
Schedule of Investments March 31, 1997 (unaudited)
GE SHORT-TERM GOVERNMENT FUND
Principal
Amount Value
- --------------------------------------------------------------------------------
Bonds and Notes -- 95.0%
- --------------------------------------------------------------------------------
U.S. Governments -- 70.7%
Federal Home Loan Mortgage Corp.
6.00% 12/01/08 $ 116,589 $ 113,345(h)
8.00% 08/01/03 332,747 339,090
452,435
Federal Home Loan Mortgage Corp. REMIC
543.497% 09/15/05 225 2,552(g)
1002.00% 07/15/06 451 9,378(g)
11,930
Federal National Mortgage Assoc.
6.521% 09/17/04 261,345 257,180
6.88% 11/17/02 150,000 149,156
7.00% 10/17/06 75,000 74,649
7.373% 08/17/03 304,664 307,139
9.00% 08/01/10 347,976 364,578
1,152,702
Federal National Mortgage Assoc. REMIC
7.06% 11/25/06 63,009 57,023(d,f)
7.95% 11/25/19 55,037 55,363
112,386
Government National Mortgage Assoc.
6.50% 02/20/23 500,805 508,787(e)
7.125% 09/20/18 - 06/20/24 1,927,442 1,975,828(e)
9.00% 08/15/09 - 12/15/09 1,009,057 1,062,096
3,546,711
U.S. Treasury Notes
5.50% 02/28/99 186,000 182,920(h)
5.875% 10/31/98 185,000 183,642(h)
6.00% 09/30/98 1,875,000 1,866,787(h)
6.125% 08/31/98 713,000 711,439(h)
6.25% 06/30/98 1,000,000 1,000,470(h)
3,945,258
Total U.S. Governments
(Cost $9,276,157) 9,221,422
Asset Backed -- 5.2%
Chase Manhatten Auto Owner Trust
6.25% 11/15/00 50,000 49,662
CIT RV Owner Trust
5.40% 12/15/11 209,074 204,684
Fleetwood Credit Grantor Trust
6.00% 01/15/08 84,809 84,013
6.75% 10/17/11 78,273 78,029
6.90% 03/15/12 25,231 25,121
Ford Credit Auto Owner Trust
6.50% 11/15/99 60,000 60,075
Lehman FHA Title I Loan Trust
7.30% 05/25/17 76,092 76,163
Provident Bank Home Equity Loan Trust
6.72% 01/25/13 96,881 95,307
Total Asset Backed
(Cost $675,676) 673,054
Corporate Notes -- 10.2%
Central Maine Power Co.
7.40% 06/02/98 100,000 100,500
<PAGE>
Principal
Amount Value
- --------------------------------------------------------------------------------
First USA Bank
6.125% 10/30/97 $ 100,000 $ 99,917
General Motors Acceptance Corp.
8.375% 01/19/99 100,000 102,894
Great Atlantic & Pacific Tea Inc.
9.125% 01/15/98 168,000 171,496
Great Northern Nekoosa Corp.
9.125% 02/01/98 100,000 102,147
Lehman Brothers Holdings Inc.
6.875% 06/08/98 150,000 150,575
New York State Dormitory Authority Revenues
6.32% 04/01/99 40,000 39,625
New York Taxable General Obligation
6.10% 02/01/98 100,000 99,481
News America Holdings Inc.
9.125% 10/15/99 110,000 115,482
Province of Manitoba
6.125% 05/28/98 125,000 124,656
Republic of Columbia
8.75% 10/06/99 50,000 52,188
Salomon Inc.
6.70% 12/01/98 75,000 74,882
United Co. Financial Corp.
7.00% 07/15/98 100,000 99,894
Total Corporate Notes
(Cost $1,336,069) 1,333,737
Mortgage-Backed -- 8.9%
Collateralized Mortgage Obligations
Merrill Lynch Mortgage Investor's Inc.
7.46% 06/15/21 39,337 39,380
Morgan (J.P.) Commercial Mortgage Finance Corp.
6.939% 12/26/28 173,180 172,097
Morgan Stanley Capital Inc.
6.85% 02/15/20 115,000 114,569
Salomon Brothers Mortgage Securities Inc.
6.469% 01/20/28 380,414 374,708
8.125% 11/01/12 38,607 38,728
Structured Asset Securities Corp.
6.75% 06/25/30 227,882 225,674
9.087% 09/25/31 192,153 201,401
Total Mortgage-Backed
(Cost $1,182,214) 1,166,557
Total Investments in Securities
(Cost $12,470,116) 12,394,770
- --------------------------------------------------------------------------------
Short Term Investments -- 4.2%
- --------------------------------------------------------------------------------
Repurchase Agreement -- 4.2%
State Street Bank and Trust Co.
6.25% 04/01/97
(Cost $550,000) 550,000 550,000
(dated 03/31/97, proceeds
$550,095, collateralized by
$563,060 United States Treasury
Note, 9.875%, 11/15/15)
Other Assets and Liabilities, net 0.8% 108,317
- --------------------------------------------------------------------------------
NET ASSETS -- 100% $13,053,087
================================================================================
- ----------
See Notes to Schedule of Investments and Financial Statements
38
<PAGE>
GE MONEY MARKET FUND
PORTFOLIO COMPOSITION
U.S. GOVERNMENTS 45.3%
COMMERCIAL PAPER 28.0%
CERTIFICATE OF DEPOSITS 26.7%
- --------------------------------------------------------------------------------
Average Annual Total Return %
for the periods ended March 31, 1997
- --------------------------------------------------------------------------------
Since
6 Mo. 1 Yr. 3Yr Inception Commencement
- --------------------------------------------------------------------------------
Fund 2.50% 5.06% 5.04% 4.43% 2/22/93
- --------------------------------------------------------------------------------
90 Day T-Bill 2.55% 5.19% 5.22%
================================================================================
INVESTMENT PROFILE
A mutual fund designed for investors who seek current income and liquidity
while preserving their capital by investing in short-term, high grade money
market securities.
FUND YIELD
as of March 31, 1997
- --------------------------------------------------------------------------------
Fund Donoghue
- --------------------------------------------------------------------------------
7 day current 5.0 5.0
7 day effective 5.2 5.1
Current yield represents income earned on an investment in the
Money Market Fund for a seven day period and then annualized.
Effective yield is calculated similarly but is slightly higher because it
reflects the compounding effect of earnings on reinvested dividends.
An investment in the GE Money Market Fund is neither insured nor guaranteed
by the U.S. Government, and no assurance can be given that the GE Money Market
Fund will be able to maintain a stable net asset value of $1.00 per share.
* Lipper Performance Comparison
Money Market Peer Group
Based on average annual total returns for the periods ending March 31, 1997
Six One Three
Months Year Year
Number of Funds
in peer group: 302 292 225
Peer group average
total return: 2.4% 4.8% 4.8%
Lipper categories
in peer group: Money Market
* See Notes to Performance for explanation of peer categories
See page 41 for Notes to Performance.
Past performance is no guarantee of future results.
39
<PAGE>
Schedule of Investments March 31, 1997 (unaudited)
GE MONEY MARKET FUND
Principal Amortized
Amount Cost
- --------------------------------------------------------------------------------
Short Term Investments -- 100.4%
- --------------------------------------------------------------------------------
U.S. Governments(d) -- 45.3%
Federal Agricultural Mortgage Corp.
5.69% 06/13/97 $ 3,000,000 $ 2,966,663
Federal Farm Credit Bank
5.53% 04/23/97 3,400,000 3,388,718
Federal Home Loan Mortgage Corp.
5.43% 06/13/97 4,810,000 4,759,086
5.67% 04/17/97 3,400,000 3,391,825
5.70% 04/18/97 4,310,000 4,298,918
6.50% 04/01/97 8,160,000 8,160,000
20,609,829
Federal National Mortgage Assoc.
5.34% 05/12/97 2,810,000 2,793,343
5.39% 04/16/97 2,350,000 2,344,859
5.42% 06/13/97 1,470,000 1,454,306
5.44% 06/17/97 5,500,000 5,438,240
5.59% 05/02/97 - 05/09/97 5,250,000 5,221,782
5.72% 07/09/97 3,200,000 3,151,380
20,403,910
Total U.S. Governments
(Cost $47,369,120) 47,369,120
Commercial Paper(d) -- 28.0%
Abbey National PLC
5.34% 05/22/97 3,900,000 3,870,883
Bank of Montreal
5.37% 04/09/97 2,500,000 2,497,028
Chase Manhattan Corp.
5.31% 05/27/97 3,900,000 3,868,271
Halifax Building Society
5.32% 04/14/97 3,700,000 3,692,959
Merrill Lynch & Co. Inc.
5.40% 05/20/97 4,000,000 3,970,927
Norwest Corp.
5.31% 05/29/97 3,900,000 3,867,138
Republic National Bank
5.30% 05/23/97 3,900,000 3,870,538
Toronto Dominion Bank
5.33% 04/17/97 3,700,000 3,691,317
Total Commercial Paper
(Cost $29,329,061) 29,329,061
Certificates of Deposit -- 27.1%
Algemene Bank Nederland N.V.
5.38% 05/06/97 3,800,000 3,800,000
Bayerische Vereinsbank AG
5.34% 04/07/97 3,650,000 3,650,000
<PAGE>
Principal Amortized
Amount Cost
- --------------------------------------------------------------------------------
Credit Suisse
5.34% 05/12/97 $ 2,000,000 $ 2,000,000
Deutsche Bank AG
5.32% 04/15/97 3,700,000 3,700,000
Dresdner Bank AG
5.31% 05/28/97 3,900,000 3,900,000
Royal Bank of Canada
5.38% 06/13/97 4,020,000 4,020,000
Societe Generale
5.40% 04/11/97 3,550,000 3,550,000
Swiss Bank Corp.
5.40% 04/03/97 3,700,000 3,700,000
Total Certificates of Deposit
(Cost $28,320,000) 28,320,000
Total Short Term Investments
(Cost $105,018,181) 105,018,181
Other Assets and Liabilities, net (0.4%) (391,741)
- --------------------------------------------------------------------------------
NET ASSETS -- 100% $104,626,440
================================================================================
- ----------
See Notes to Schedule of Investments and Financial Statements
40
<PAGE>
Notes to Performance (unaudited)
Average annual total returns take into account changes in share price and assume
reinvestment of dividends and capital gains. Investment returns and net asset
value on an investment will fluctuate and you may have a loss or gain when you
sell your shares. Classes A and B are shown both without the sales charge and
also assuming the reduction of the returns by the maximum applicable sales
charges as described in Note 1 of the Notes to Financial Statements.
Shares of the GE Short-Term Government Fund are neither insured nor guaranteed
by the U.S. Government and their prices will fluctuate with market conditions.
A portion of the GE Tax-Exempt Fund's income may be subject to state, federal
and/or alternative minimum tax. Capital gains, if any, are subject to capital
gains tax.
GE Investment Management Incorporated ("GEIM") has voluntarily agreed to waive
and/or bear certain fees and Fund expenses. Without these provisions, the
returns (and/or yields) would have been lower. These provisions may be
terminated in the future.
The Standard & Poor's Composite Index of 500 Stocks (S&P 500), Morgan Stanley
Capital International Index (MSCI World), Morgan Stanley Capital International
Europe Australia Far East Index (MSCI EAFE), Lehman Brothers Aggregate Bond
Index (LB Aggregate), Lehman Brothers Municipal Bond Index (LBMI), Lehman
Brothers 1-3 Year Government Bond Index (LB 1-3 YR.) and the 90 Day U.S.
Treasury Index (90 Day T-Bill) are unmanaged indices and do not reflect the
actual cost of investing in the instruments that comprise each index. The S&P
500 Index is a composite of the prices of 500 widely held U.S. stocks recognized
by investors to be representative of the stock market in general. The MSCI World
Index is a composite of 1,557 stocks of companies in 22 countries representing
the European, Pacific Basin and American regions. The MSCI World Index is widely
used by global investors. The MSCI EAFE is a composite of 1,093 stocks of
companies in 20 countries located in Europe, Australasia, New Zealand and the
Far East. The LB Aggregate Bond Index is a composite index of short-, medium-,
and long-term bond performance and is widely recognized as a barometer of the
bond market in general. The LBMI Index is a composite of investment-grade (Baa
or greater), fixed-rate municipal bonds with maturities greater than two years
and is considered to be representative of the municipal bond market. The LB 1-3
Year Government Bond Index is a composite of government and U.S. Treasury
obligations with maturities of 1-3 years. The 90 Day U.S. T-Bill is the average
return on three month U.S. Treasury Bills. The results shown for the foregoing
indices assume reinvestment of net dividends or interest. Broad market index
returns are calculated from the month end nearest to the Funds' inception date.
The majority of the broad market returns are not available from the Funds'
commencement of investment operations through March 31, 1997. The Donahue yields
represent the average yields of 815 taxable money market funds.
The peer universe of funds used in our peer ranking calculation is based on the
blend of Lipper peer categories, as shown. This blend is the same as the
category blend used by the Wall Street Journal (except for the GE Strategic
Investment Fund for which we use the specific Lipper peer group and the GE Money
Market Fund which is not in the Wall Street Journal). The actual number of funds
and numerical rankings in the Lipper and Wall Street Journal universes could
differ since the Wall Street Journal excludes certain funds which do not meet
their net asset or shareholder publication thresholds. Lipper is an independent
mutual fund rating service.
The views expressed in this document reflect our judgment as of the publication
date and are subject to change at any time without notice. The securities cited
may not represent future holdings and should not be considered as a
recommendation to purchase or sell a particular security. See the prospectus for
complete descriptions of investment objectives, policies, risks and permissible
investments.
41
<PAGE>
Notes to Schedules of Investments
(a) Non-income producing security.
(b) Pursuant to Rule 144A of the Securities Act of 1933, these securities may
only be resold in transactions exempt from registration, normally to
qualified institutional buyers. At March 31, 1997, these securities
amounted to $493,332; $156,352; $514,380; $1,991,348; and $3,547,264 or
0.6%, 0.3%, 0.2%, 2.0%, and 5.8% of net assets for the GE International
Equity, GE Global Equity, GE U.S. Equity, GE Strategic Investment and GE
Fixed Income Funds, respectively.
(c) Settlement is on a delayed delivery or when-issued basis with final
maturity to be announced (TBA) in the future.
(d) Coupon amount represents effective yield.
(e) Adjustable rate mortgage coupon. The stated rate represents the rate at
March 31, 1997.
(f) Principal only securities represent the right to receive the monthly
principal payments on an underlying pool of mortgages. No payments of
interest on the pool are passed through to the "principal only" holder.
(g) Interest only securities represent the right to receive the monthly
interest payments on an underlying pool of mortgages. Payments of principal
on the pool reduce the value of the interest only holding.
(h) At March 31, 1997, all or a portion of this security was pledged to cover
collateral requirements for futures, options and TBA's.
Abbreviations:
ADR -- American Depositary Receipt
AMBAC -- AMBAC Indemnity Corporation
FGIC -- Financial Guarantee Insurance Corporation
GDR -- Global Depository Receipt
G.O. -- General Obligation
MBIA -- Municipal Bond Investors Assurance
Corporation
REMIC -- Real Estate Mortgage Investment Conduit
VRDN -- Variable Rate Demand Note
Rts. -- Rights
WT -- Warrant
Currency Terms:
BEL -- Belgian Franc
CAD -- Canadian Dollar
DEM -- Deutsche Mark
DKK -- Danish Krone
NLG -- Netherlands Guilder
42
<PAGE>
Financial Highlights
Selected data based on a share outstanding throughout the period(s)
indicated (March 31, 1997 data is unaudited)
GE International Equity Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Class B
- -----------------------------------------------------------------------------------------------------------------------------------
3/31/97 9/30/96(c) 9/30/95 9/30/94 3/31/97 9/30/96(c) 9/30/95 9/30/94
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Inception date -- -- -- 3/2/94 -- -- -- 3/2/94
Net asset value, beginning of period $17.65 $15.87 $15.18 $15.00 $17.47 $15.77 $15.13 $15.00
Income (loss) from investment operations:
Net investment income (0.03) 0.07 0.09 0.06 (0.06) 0.05 0.01 0.00
Net realized and unrealized
gains (losses) on investments 0.97 1.74 0.64 0.12 0.95 1.65 0.64 0.13
- -----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment operations 0.94 1.81 0.73 0.18 0.89 1.70 0.65 0.13
- -----------------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.06 0.03 0.04 0.00 0.00 0.00 0.01 0.00
Net realized gains 0.50 0.00 0.00 0.00 0.50 0.00 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions 0.56 0.03 0.04 0.00 0.50 0.00 0.01 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $18.03 $17.65 $15.87 $15.18 $17.86 $17.47 $15.77 $15.13
===================================================================================================================================
TOTAL RETURN (a) 5.38% 11.39% 4.87% 1.20% 5.14% 10.78% 4.33% 0.87%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $11,962 $8,462 $3,948 $25 $339 $272 $57 $34
Ratio of net investment income
to average net assets* (0.21%) 0.43% 1.28% 1.01% (0.72%) 0.28% 0.10% 0.47%
Ratio of expenses to average net assets* 1.60% 1.59% 1.60% 1.60% 2.10% 2.10% 2.10% 2.10%
Ratio of expenses to average net assets
before voluntary expense limitation* 1.60% 1.66% 1.95% 1.93% 4.29% 3.50% 3.50% 2.43%
Portfolio turnover rate 28% 36% 27% 6% 28% 36% 27% 6%
Average brokerage commissions (b) $.002 $.031 N/A N/A $.002 $.031 N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class C Class D
- ------------------------------------------------------------------------------------------------------------------------------------
3/31/97 9/30/96(c) 9/30/95 9/30/94 3/31/97 9/30/96(c) 9/30/95 9/30/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Inception date -- -- -- 3/2/94 -- -- -- 3/2/94
Net asset value, beginning of period $17.65 $15.88 $15.19 $15.00 $17.76 $15.94 $15.22 $15.00
Income (loss) from investment operations:
Net investment income (0.01) 0.11 0.12 0.00 0.03 0.17 0.12 0.10
Net realized and unrealized
gains (losses) on investments 0.98 1.72 0.65 0.19 0.98 1.73 0.70 0.12
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment operations 0.97 1.83 0.77 0.19 1.01 1.90 0.82 0.22
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.03 0.06 0.08 0.00 0.14 0.08 0.10 0.00
Net realized gains 0.50 0.00 0.00 0.00 0.50 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions 0.53 0.06 0.08 0.00 0.64 0.08 0.10 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $18.09 $17.65 $15.88 $15.19 $18.13 $17.76 $15.94 $15.22
====================================================================================================================================
TOTAL RETURN (a) 5.61% 11.54% 5.16% 1.27% 5.74% 11.97% 5.45% 1.47%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $4,805 $3,230 $1,262 $481 $65,627 $63,225 $32,907 $26,460
Ratio of net investment income
to average net assets* 0.04% 0.68% 0.83% 0.66% 0.34% 0.99% 0.97% 1.52%
Ratio of expenses to average net assets* 1.35% 1.35% 1.35% 1.35% 1.03% 1.03% 1.07% 1.10%
Ratio of expenses to average net assets
before voluntary expense limitation* 1.51% 1.96% 2.75% 1.68% 1.03% 1.03% 1.18% 1.43%
Portfolio turnover rate 28% 36% 27% 6% 28% 36% 27% 6%
Average brokerage commissions (b) $.002 $.031 N/A N/A $.002 $.031 N/A N/A
</TABLE>
- ----------
See Notes to Financial Highlights on page 51 and Notes to Financial Statements
43
<PAGE>
Financial Highlights (continued)
Selected data based on a share outstanding throughout the period(s) indicated
(March 31, 1997 data is unaudited)
GE Global Equity Fund
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Class B
- ------------------------------------------------------------------------------------------------------------------------------------
3/31/97 9/30/96 9/30/95 9/30/94(d) 3/31/97 9/30/96 9/30/95 9/30/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Inception date -- -- -- 12/22/93 -- -- -- 12/22/93
Net asset value, beginning of period $22.01 $20.18 $19.34 $18.61 $21.87 $20.14 $19.32 $18.48
Income (loss) from investment operations:
Net investment income 0.04 0.02 0.10 0.03 (0.04) (0.04) 0.00 (0.01)
Net realized and unrealized
gains (losses) on investments 0.71 2.20 1.22 0.91 0.73 2.14 1.23 1.06
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations 0.75 2.22 1.32 0.94 0.69 2.10 1.23 1.05
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.00 0.02 0.09 0.01 0.00 0.00 0.02 0.01
Net realized gains 1.29 0.37 0.39 0.20 1.29 0.37 0.39 0.20
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions 1.29 0.39 0.48 0.21 1.29 0.37 0.41 0.21
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $21.47 $22.01 $20.18 $19.34 $21.27 $21.87 $20.14 $19.32
====================================================================================================================================
TOTAL RETURN (a) 3.39% 11.18% 7.16% 3.09% 3.13% 10.61% 6.62% 5.70%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $857 $4,054 $2,811 $694 $713 $600 $356 $128
Ratio of net investment income/(loss)
to average net assets* (0.08%) 0.12% 0.47% 0.44% (0.58%) (0.34%) (0.11%) (0.08%)
Ratio of expenses to average net assets* 1.60% 1.60% 1.60% 1.60% 2.10% 2.10% 2.10% 2.10%
Ratio of expenses to average net assets
before voluntary expense limitation* 3.41% 1.90% 2.17% 2.02% 3.36% 3.50% 3.50% 2.52%
Portfolio turnover rate 34% 46% 46% 26% 34% 46% 46% 26%
Average brokerage commissions (b) $.003 $.006 N/A N/A $.003 $.006 N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
<PAGE>
Class C Class D
- ------------------------------------------------------------------------------------------------------------------------------------
3/31/97 9/30/96 9/30/95 9/30/94 9/30/93(e) 3/31/97 9/30/96 9/30/95 9/30/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 1/5/93 -- -- -- 11/29/93
Net asset value, beginning of period $22.18 $20.31 $19.40 $17.16 $15.00 $22.25 $20.37 $19.45 $17.49
Income (loss) from investment operations:
Net investment income 0.01 0.06 0.09 0.07 0.08 0.04 0.13 0.13 0.11
Net realized and unrealized
gains (losses) on investments 0.78 2.22 1.30 2.37 2.08 0.77 2.21 1.31 2.06
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations 0.79 2.28 1.39 2.44 2.16 0.81 2.34 1.44 2.17
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.06 0.04 0.09 0.00 0.00 0.17 0.09 0.13 0.01
Net realized gains 1.29 0.37 0.39 0.20 0.00 1.29 0.37 0.39 0.20
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions 1.35 0.41 0.48 0.20 0.00 1.46 0.46 0.52 0.21
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $21.62 $22.18 $20.31 $19.40 $17.16 $21.60 $22.25 $20.37 $19.45
====================================================================================================================================
TOTAL RETURN (a) 3.54% 11.44% 7.47% 14.28% 14.10% 3.64% 11.71% 7.76% 12.43%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $30,457 $28,682 $23,683 $20,432 $11,999 $16,963 $10,123 $9,785 $10,504
Ratio of net investment income/(loss)
to average net assets* 0.16% 0.33% 0.59% 0.52% 1.00% 0.43% 0.56% 0.84% 0.82%
Ratio of expenses to average net assets* 1.35% 1.35% 1.35% 1.31% 1.10% 1.10% 1.10% 1.10% 1.10%
Ratio of expenses to average net assets
before voluntary expense limitation* 1.45% 1.60% 1.42% 1.77% 2.19% 1.10% 1.12% 1.75% 1.52%
Portfolio turnover rate 34% 46% 46% 26% 28% 34% 46% 46% 26%
Average brokerage commissions (b) $.003 $.006 N/A N/A N/A $.003 $.006 N/A N/A
</TABLE>
- ----------
See Notes to Financial Highlights on page 51 and Notes to Financial Statements
44
<PAGE>
Financial Highlights (continued)
Selected data based on a share outstanding throughout the period(s)
indicated (March 31, 1997 data is unaudited) GE Premier Growth Equity Fund
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Class A Class B Class C Class D
3/31/97 3/31/97 3/31/97 3/31/97
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Inception date 12/31/96 12/31/96 12/31/96 12/31/96
Net asset value, beginning of period $15.00 $15.00 $15.00 $15.00
Income (loss) from investment operations:
Net investment income 0.01 (0.01) 0.01 0.03
Net realized and unrealized
gains (losses) on investments (0.72) (0.72) (0.71) (0.72)
- --------------------------------------------------------------------------------------------------------------
Total income (loss) from investment operations (0.71) (0.73) (0.70) (0.69)
- --------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.00 0.00 0.00 0.00
Net realized gains 0.00 0.00 0.00 0.00
- --------------------------------------------------------------------------------------------------------------
Total distributions 0.00 0.00 0.00 0.00
- --------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.29 $14.27 $14.30 $14.31
==============================================================================================================
TOTAL RETURN (a) (4.73%) (4.87%) (4.67%) (4.60%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $115 $106 $2,918 $4,486
Ratio of net investment income
to average net assets* 0.18% (0.32%) 0.47% 0.67%
Ratio of expenses to average net assets* 1.40% 1.90% 1.15% 0.90%
Ratio of expenses to average net assets
before voluntary expense limitation* 13.77% 14.68% 2.15% 1.18%
Portfolio turnover rate 8% 8% 8% 8%
Average brokerage commissions (b) $.049 $.049 $.049 $.049
- --------------------------------------------------------------------------------------------------------------
</TABLE>
[PHOTO OF BUILDING]
- ----------
See Notes to Financial Highlights on page 51 and Notes to Financial Statements
45
<PAGE>
Financial Highlights (continued)
Selected data based on a share outstanding throughout the period(s)
indicated (March 31, 1997 data is unaudited)
GE U.S. Equity Fund
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Class B
- ------------------------------------------------------------------------------------------------------------------------------------
3/31/97 9/30/96(c) 9/30/95(c) 9/30/94(d) 3/31/97 9/30/96(c) 9/30/95(c) 9/30/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Inception date -- -- -- 12/22/93 -- -- -- 12/22/93
Net asset value, beginning of period $23.34 $20.28 $16.12 $16.48 $22.57 $19.71 $16.03 $16.41
Income (loss) from investment operations:
Net investment income 0.16 0.31 .34 3.23 0.08 0.19 0.21 0.24
Net realized and unrealized
gains (losses) on investments 2.32 3.34 3.91 (3.22) 2.25 3.25 3.84 (0.25)
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations 2.48 3.65 4.25 0.01 2.33 3.44 4.05 (0.01)
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.28 0.32 0.00 0.20 0.17 0.31 0.28 0.20
Net realized gains 2.19 0.27 0.09 0.17 2.19 0.27 0.09 0.17
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions 2.47 0.59 0.09 0.37 2.36 0.58 0.37 0.37
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $23.35 $23.34 $20.28 $16.12 $22.54 $22.57 $19.71 $16.03
====================================================================================================================================
TOTAL RETURN (a) 10.63% 18.36% 26.52% (0.86%) 10.31% 17.78% 25.92% (0.09%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $36,302 $34,523 $15,148 $1,214 $9,548 $7,194 $1,563 $91
Ratio of net investment income
to average net assets* 1.03% 1.40% 1.85% 1.87% 0.53% 0.90% 1.29% 1.28%
Ratio of expenses to average net assets* 1.00% 1.00% 1.00% 1.00% 1.50% 1.50% 1.50% 1.50%
Ratio of expenses to average net assets
before voluntary expense limitation* 1.11% 1.15% 1.25% 1.46% 1.83% 2.08% 3.50% 1.96%
Portfolio turnover rate 22% 49% 43% 51% 22% 49% 43% 51%
Average brokerage commissions (b) $.065 $.045 N/A N/A $.065 $.045 N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class C Class D
- ------------------------------------------------------------------------------------------------------------------------------------
3/31/97 9/30/96(c) 9/30/95(c) 9/30/94 9/30/93(e) 3/31/97 9/30/96(c) 9/30/95 9/30/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 1/5/93 -- -- -- 11/29/93
Net asset value, beginning of period $23.02 $19.98 $16.13 $16.35 $15.00 $23.03 $19.98 $16.16 $16.37
Income (loss) from investment operations:
Net investment income 0.05 0.36 0.37 1.00 0.12 0.19 0.40 0.38 0.32
Net realized and unrealized
gains (losses) on investments 2.42 3.30 3.86 (0.85) 1.23 2.32 3.31 3.88 (0.16)
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations 2.47 3.66 4.23 0.15 1.35 2.51 3.71 4.26 0.16
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.32 0.35 0.29 0.20 0.00 0.41 0.39 0.35 0.20
Net realized gains 2.19 0.27 0.09 0.17 0.00 2.19 0.27 0.09 0.17
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions 2.51 0.62 0.38 0.37 0.00 2.60 0.66 0.44 0.37
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $22.98 $23.02 $19.98 $16.13 $16.35 $22.94 $23.03 $19.98 $16.16
====================================================================================================================================
TOTAL RETURN (a) 10.75% 18.70% 26.86% 0.88% 10.32% 10.91% 18.97% 27.14% 0.96%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $67,313 $50,035 $26,007 $16,382 $74,415 $168,277 $144,470 $128,247 $114,885
Ratio of net investment income
to average net assets* 1.28% 1.66% 2.12% 2.11% 1.86% 1.54% 1.90% 2.36% 2.27%
Ratio of expenses to
average net assets* 0.75% 0.75% 0.75% 0.62% 0.50% 0.50% 0.50% 0.50% 0.50%
Ratio of expenses to
average net assets
before voluntary expense limitation* 0.92% 1.06% 1.19% 1.21% 1.34% 0.54% 0.59% 0.71% 0.96%
Portfolio turnover rate 22% 49% 43% 51% 15% 22% 49% 43% 51%
Average brokerage commissions (b) $.065 $.045 N/A N/A N/A $.065 $.045 N/A N/A
</TABLE>
- ----------
See Notes to Financial Highlights on page 51 and Notes to Financial Statements
46
<PAGE>
Financial Highlights (continued)
Selected data based on a share outstanding throughout the period(s)
indicated (March 31, 1997 data is unaudited) GE Strategic Investment Fund
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Class B
- ------------------------------------------------------------------------------------------------------------------------------------
3/31/97 9/30/96(c) 9/30/95(c) 9/30/94(d) 3/31/97 9/30/96(c) 9/30/95(c) 9/30/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Inception date -- -- -- 12/22/93 -- -- -- 12/22/93
Net asset value, beginning of period $20.33 $18.43 $15.71 $16.21 $20.04 $18.26 $15.62 $16.14
Income (loss) from investment operations:
Net investment income 0.33 0.51 0.52 0.48 0.20 0.41 0.40 0.27
Net realized and unrealized
gains (losses) on investments 0.80 1.90 2.57 (0.65) 0.87 1.87 2.58 (0.46)
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations 1.13 2.41 3.09 (0.17) 1.07 2.28 2.98 (0.19)
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.47 0.43 0.37 0.27 0.33 0.42 0.34 0.27
Net realized gains 0.25 0.08 0.00 0.06 0.25 0.08 0.00 0.06
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions 0.72 0.51 0.37 0.33 0.58 0.50 0.34 0.33
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $20.74 $20.33 $18.43 $15.71 $20.53 $20.04 $18.26 $15.62
====================================================================================================================================
TOTAL RETURN (a) 5.52% 13.35% 20.12% (1.32%) 5.31% 12.73% 19.53% (1.25%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $32,573 $25,232 $8,778 $1,104 $4,318 $3,701 $882 $150
Ratio of net investment income
to average net assets* 2.39% 2.60% 2.95% 2.59% 1.88% 2.11% 2.46% 1.92%
Ratio of expenses to average net assets* 1.15% 1.12% 1.15% 1.15% 1.65% 1.65% 1.65% 1.65%
Ratio of expenses to average net assets
before voluntary expense limitation* 1.15% 1.15% 1.19% 1.58% 1.88% 2.10% 3.50% 2.08%
Portfolio turnover rate 57% 93% 98% 68% 57% 93% 98% 68%
Average brokerage commissions (b) $.025 $.046 N/A N/A $.025 $.046 N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class C Class D
- ------------------------------------------------------------------------------------------------------------------------------------
3/31/97 9/30/96(c) 9/30/95(c) 9/30/94 9/30/93(e) 3/31/97 9/30/96(c) 9/30/95 9/30/94
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 1/5/93 -- -- -- 11/29/93
Net asset value, beginning of period $20.38 $18.46 $15.72 $16.08 $15.00 $20.44 $18.49 $15.74 $16.02
Income (loss) from investment
operations:
Net investment income 0.22 0.54 0.53 0.44 0.23 0.27 0.63 0.55 0.45
Net realized and unrealized
gains (losses) on investments 0.94 1.92 2.59 (0.48) 0.85 0.92 1.90 2.62 (0.40)
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations 1.16 2.46 3.12 (0.04) 1.08 1.19 2.53 3.17 0.05
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.49 0.46 0.38 0.26 0.00 0.56 0.50 0.42 0.27
Net realized gains 0.25 0.08 0.00 0.06 0.00 0.25 0.08 0.00 0.06
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions 0.74 0.54 0.38 0.32 0.00 0.81 0.58 0.42 0.33
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $20.80 $20.38 $18.46 $15.72 $16.08 $20.82 $20.44 $18.49 $15.74
====================================================================================================================================
TOTAL RETURN (a) 5.64% 13.58% 20.35% (0.27%) 8.06% 5.79% 13.95% 20.70% 0.25%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $31,684 $26,467 $17,821 $13,018 $12,780 $30,316 $36,162 $18,665 $17,159
Ratio of net investment income
to average net assets* 2.62% 2.81% 3.21% 2.62% 2.68% 2.86% 3.16% 3.46% 2.93%
Ratio of expenses to
average net assets* 0.90% 0.90% 0.90% 0.85% 0.65% 0.65% 0.58% 0.65% 0.65%
Ratio of expenses to
average net assets
before voluntary expense
limitation* 0.91% 1.05% 1.03% 1.33% 1.65% 0.65% 0.59% 0.97% 1.08%
Portfolio turnover rate 57% 93% 98% 68% 20% 57% 93% 98% 68%
Average brokerage commissions (b) $.025 $.046 N/A N/A N/A $.025 $.046 N/A N/A
</TABLE>
- ----------
See Notes to Financial Highlights on page 51 and Notes to Financial Statements
47
<PAGE>
Financial Highlights (continued)
Selected data based on a share outstanding throughout the period(s) indicated
(March 31, 1997 data is unaudited)
GE Tax-Exempt Fund
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Class B
- ------------------------------------------------------------------------------------------------------------------------------------
3/31/97 9/30/96 9/30/95 9/30/94(d) 3/31/97 9/30/96 9/30/95 9/30/94
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Inception date -- -- -- 12/22/93 -- -- -- 12/22/93
Net asset value, beginning of period $11.67 $11.77 $11.32 $12.31 $11.68 $11.78 $11.32 $12.30
Income (loss) from investment operations:
Net investment income 0.25 0.51 0.53 0.39 0.22 0.45 0.47 0.34
Net realized and unrealized
gains (losses) on investments 0.00 (0.10) 0.46 (1.00) 0.01 (0.10) 0.47 (0.98)
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations 0.25 0.41 0.99 (0.61) 0.23 0.35 0.94 (0.64)
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.25 0.51 0.54 0.38 0.22 0.45 0.48 0.34
Net realized gains 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions 0.25 0.51 0.54 0.38 0.22 0.45 0.48 0.34
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.67 $11.67 $11.77 $11.32 $11.69 $11.68 $11.78 $11.32
====================================================================================================================================
TOTAL RETURN (a) 2.12% 3.52% 8.96% (5.40%) 1.95% 3.01% 8.51% (5.28%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $541 $537 $389 $53 $1,243 $1,318 $689 $61
Ratio of net investment income
to average net assets* 4.29% 4.33% 4.54% 4.34% 3.78% 3.83% 3.81% 3.68%
Ratio of expenses to average net assets* 0.75% 1.02% 1.10% 1.10% 1.25% 1.52% 1.60% 1.60%
Ratio of expenses to average net assets
before voluntary expense limitation* 2.29% 2.85% 3.00% 1.58% 1.94% 2.41% 3.50% 2.08%
Portfolio turnover rate 70% 145% 86% 23% 70% 145% 86% 23%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class C Class D
- ------------------------------------------------------------------------------------------------------------------------------------
3/31/97 9/30/96 9/30/95 9/30/94 9/30/93(e) 3/31/97 9/30/96 9/30/95 9/30/94
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 1/5/93 -- -- -- 11/29/93
Net asset value, beginning of period $11.67 $11.77 $11.32 $12.36 $12.00 $11.67 $11.78 $11.32 $12.11
Income (loss) from investment operations:
Net investment income 0.26 0.53 0.57 0.54 0.33 0.28 0.58 0.60 0.47
Net realized and unrealized
gains (losses) on investments 0.01 (0.09) 0.45 (1.06) 0.36 0.01 (0.12) 0.46 (0.80)
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations 0.27 0.44 1.02 (0.52) 0.69 0.29 0.46 1.06 (0.33)
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.26 0.54 0.57 0.52 0.33 0.28 0.57 0.60 0.46
Net realized gains 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions 0.26 0.54 0.57 0.52 0.33 0.28 0.57 0.60 0.46
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.68 $11.67 $11.77 $11.32 $12.36 $11.68 $11.67 $11.78 $11.32
====================================================================================================================================
TOTAL RETURN (a) 2.34% 3.77% 9.23% (4.30%) 5.48% 2.46% 3.95% 9.59% (2.80%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $7,638 $7,728 $6,816 $6,917 $10,136 $3,032 $2,960 $3,905 $4,995
Ratio of net investment income
to average net assets* 4.54% 4.57% 4.94% 4.41% 3.56% 4.80% 4.83% 5.20% 4.65%
Ratio of expenses to average net assets* 0.50% 0.78% 0.85% 0.79% 0.60% 0.25% 0.53% 0.60% 0.60%
Ratio of expenses to average net assets
before voluntary expense limitation* 0.84% 1.34% 1.18% 1.33% 1.53% 0.55% 1.03% 1.47% 1.08%
Portfolio turnover rate 70% 145% 86% 23% 29% 70% 145% 86% 23%
</TABLE>
- ----------
See Notes to Financial Highlights on page 51 and Notes to Financial Statements
48
<PAGE>
Financial Highlights (continued)
Selected data based on a share outstanding throughout the period(s) indicated
(March 31, 1997 data is unaudited)
GE Fixed Income Fund
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Class B
- ------------------------------------------------------------------------------------------------------------------------------------
3/31/97 9/30/96 9/30/95 9/30/94(d) 3/31/97 9/30/96 9/30/95 9/30/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Inception date -- -- -- 12/22/93 -- -- -- 12/22/93
Net asset value, beginning of period $11.69 $11.91 $11.27 $12.19 $11.70 $11.91 $11.26 $12.15
Income (loss) from investment operations:
Net investment income 0.34 0.65 0.73 0.47 0.31 0.60 0.65 0.42
Net realized and unrealized
gains (losses) on investments (0.07) (0.19) 0.63 (0.84) (0.06) (0.20) 0.66 (0.81)
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations 0.27 0.46 1.36 (0.37) 0.25 0.40 1.31 (0.39)
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.34 0.68 0.72 0.47 0.31 0.61 0.66 0.42
Net realized gains 0.00 0.00 0.00 0.08 0.00 0.00 0.00 0.08
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions 0.34 0.68 0.72 0.55 0.31 0.61 0.66 0.50
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.62 $11.69 $11.91 $11.27 $11.64 $11.70 $11.91 $11.26
====================================================================================================================================
TOTAL RETURN (a) 2.32% 3.91% 12.48% (3.02%) 2.15% 3.41% 11.98% (3.31%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $15,020 $15,653 $5,400 $26,023 $1,518 $1,673 $234 $65
Ratio of net investment income
to average net assets* 5.75% 5.66% 6.22% 5.37% 5.24% 5.19% 5.57% 4.83%
Ratio of expenses to average net assets* 1.10% 1.05% 1.08% 1.10% 1.60% 1.60% 1.60% 1.58%
Ratio of expenses to average net assets
before voluntary expense limitation* 1.13% 1.12% 1.18% 1.51% 2.13% 2.44% 3.50% 2.01%
Portfolio turnover rate 128% 275% 315% 298% 128% 275% 315% 298%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class C Class D
- ------------------------------------------------------------------------------------------------------------------------------------
3/31/97 9/30/96 9/30/95 9/30/94 9/30/93(e) 3/31/97 9/30/96 9/30/95 9/30/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 1/5/93 -- -- -- 11/29/93
Net asset value, beginning of period $11.70 $11.92 $11.27 $12.31 $12.00 $11.69 $11.92 $11.27 $12.17
Income (loss) from investment operations:
Net investment income 0.35 0.69 0.73 0.61 0.36 0.37 0.72 0.77 0.55
Net realized and unrealized
gains (losses) on investments (0.06) (0.21) 0.67 (0.96) 0.31 (0.06) (0.22) 0.65 (0.83)
- ------------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations 0.29 0.48 1.40 (0.35) 0.67 0.31 0.50 1.42 (0.28)
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.35 0.70 0.75 0.61 0.36 0.37 0.73 0.77 0.54
Net realized gains 0.00 0.00 0.00 0.08 0.00 0.00 0.00 0.00 0.08
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions 0.35 0.70 0.75 0.69 0.36 0.37 0.73 0.77 0.62
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.64 $11.70 $11.92 $11.27 $12.31 $11.63 $11.69 $11.92 $11.27
====================================================================================================================================
TOTAL RETURN (a) 2.52% 4.10% 12.81% (2.97%) 5.24% 2.66% 4.32% 13.10% (2.34%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $30,343 $28,115 $21,401 $13,600 $11,485 $14,715 $19,098 $6,642 $2,732
Ratio of net investment income
to average net assets* 5.98% 5.84% 6.37% 5.22% 3.87% 6.21% 6.14% 6.57% 5.40%
Ratio of expenses to average net assets* 0.85% 0.85% 0.85% 0.79% 0.60% 0.60% 0.55% 0.59% 0.58%
Ratio of expenses to average net assets
before voluntary expense limitation* 0.92% 0.99% 0.95% 1.26% 1.63% 0.60% 0.57% 2.50% 1.01%
Portfolio turnover rate 128% 275% 315% 298% 68% 128% 275% 315% 298%
</TABLE>
- ----------
See Notes to Financial Highlights on page 51 and Notes to Financial Statements
49
<PAGE>
Financial Highlights (continued)
Selected data based on a share outstanding throughout the period(s)
indicated (March 31, 1997 data is unaudited)
GE Short-Term Government Fund
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class A Class B
- ------------------------------------------------------------------------------------------------------------------------------------
3/31/97 9/30/96 9/30/95 9/30/94 3/31/97 9/30/96 9/30/95 9/30/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Inception date -- -- -- 3/2/94 -- -- -- 3/2/94
Net asset value, beginning of period $11.78 $11.91 $11.72 $12.00 $11.78 $11.90 $11.72 $12.00
Income (loss) from investment operations:
Net investment income 0.31 0.60 0.64 0.35 0.28 0.56 0.59 0.33
Net realized and unrealized
gains (losses) on investments (0.02) (0.06) 0.21 (0.30) (0.02) (0.05) 0.21 (0.31)
- ------------------------------------------------------------------------------------------------------------------------------------
Total income from investment operations 0.29 0.54 0.85 0.05 0.26 0.51 0.80 0.02
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.31 0.61 0.66 0.33 0.29 0.57 0.62 0.30
Net realized gains 0.01 0.06 0.00 0.00 0.01 0.06 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions 0.32 0.67 0.66 0.33 0.30 0.63 0.62 0.30
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.75 $11.78 $11.91 $11.72 $11.74 $11.78 $11.90 $11.72
====================================================================================================================================
TOTAL RETURN (a) 2.57% 4.63% 7.48% 0.40% 2.31% 4.35% 7.01% 0.20%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $616 $340 $285 $35 $88 $145 $83 $25
Ratio of net investment income
to average net assets* 5.26% 5.04% 5.27% 4.75% 4.85% 4.67% 5.07% 4.38%
Ratio of expenses to average net assets* 0.95% 0.95% 0.95% 0.95% 1.30% 1.30% 1.30% 1.30%
Ratio of expenses to average net assets
before voluntary expense limitation* 2.76% 3.00% 3.00% 1.71% 7.28% 3.35% 3.35% 2.06%
Portfolio turnover rate 94% 201% 415% 146% 94% 201% 415% 146%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class C Class D
- ------------------------------------------------------------------------------------------------------------------------------------
3/31/97 9/30/96 9/30/95 9/30/94 3/31/97 9/30/96 9/30/95 9/30/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Inception date -- -- -- 3/2/94 -- -- -- 3/2/94
Net asset value, beginning of period $11.79 $11.91 $11.72 $12.00 $11.78 $11.90 $11.72 $12.00
Income (loss) from investment operations:
Net investment income 0.32 0.63 0.66 0.36 0.34 0.66 0.69 0.39
Net realized and unrealized
gains (losses) on investments (0.02) (0.05) 0.22 (0.30) (0.03) (0.05) 0.21 (0.31)
- ------------------------------------------------------------------------------------------------------------------------------------
Total income from investment operations 0.30 0.58 0.88 0.06 0.31 0.61 0.90 0.08
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.33 0.64 0.69 0.34 0.34 0.67 0.72 0.36
Net realized gains 0.01 0.06 0.00 0.00 0.01 0.06 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions 0.34 0.70 0.69 0.34 0.35 0.73 0.72 0.36
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $11.75 $11.79 $11.91 $11.72 $11.74 $11.78 $11.90 $11.72
====================================================================================================================================
TOTAL RETURN (a) 2.61% 4.98% 7.74% 0.53% 2.74% 5.24% 7.92% 0.69%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $4,819 $3,653 $2,437 $287 $7,530 $7,786 $8,048 $7,822
Ratio of net investment income
to average net assets* 5.46% 5.28% 5.62% 5.18% 5.69% 5.54% 5.89% 5.32%
Ratio of expenses to average net assets* 0.70% 0.70% 0.70% 0.70% 0.45% 0.45% 0.45% 0.45%
Ratio of expenses to average net assets
before voluntary expense limitation* 1.10% 1.34% 1.84% 1.46% 0.72% 0.83% 0.98% 1.21%
Portfolio turnover rate 94% 201% 415% 146% 94% 201% 415% 146%
</TABLE>
- ----------
See Notes to Financial Highlights on page 51 and Notes to Financial Statements
50
<PAGE>
Financial Highlights (continued)
Selected data based on a share outstanding throughout the
period(s) indicated (March 31, 1997 data is unaudited)
GE Money Market Fund
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
3/31/97 9/30/96 9/30/95 9/30/94 9/30/93(e)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inception date -- -- -- -- 1/5/93
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
Income (loss) from investment operations:
Net investment income 0.02 0.05 0.05 0.03 0.02
Net realized and unrealized
gains (losses) on investments 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Total income from investment operations 0.02 0.05 0.05 0.03 0.02
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.02 0.05 0.05 0.03 0.02
Net realized gains 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions 0.02 0.05 0.05 0.03 0.02
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00
====================================================================================================================================
TOTAL RETURN (a) 2.50% 5.18% 5.52% 3.31% 1.64%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $104,626 $85,842 $71,664 $53,607 $17,197
Ratio of net investment income
to average net assets* 4.97% 5.06% 5.32% 3.41% 2.27%
Ratio of expenses to average net assets* 0.45% 0.45% 0.45% 0.45% 0.45%
Ratio of expenses to average net assets
before voluntary expense limitation* 0.58% 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) 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. Mark-ups, mark-downs and spreads on shares
traded on a principal basis are not included unless they are disclosed on
confirmations prepared in accordance with rule 10b-10 under the 1934 Act.
(c) 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.
(d) 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.
(e) 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.
* Annualized for periods less than one year.
- ----------
See Notes to Financial Statements
51
<PAGE>
STATEMENTS OF ASSETS
AND LIABILITIES March 31, 1997 (unaudited)
<TABLE>
<CAPTION>
GE GE GE GE
INTERNATIONAL GLOBAL PREMIER GROWTH U.S.
EQUITY EQUITY EQUITY EQUITY
FUND FUND FUND** FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at market (cost
$69,618,366; $40,459,987; $7,154,782;
$220,762,142; $75,316,829; $11,677,288;
$58,609,166; $12,470,116; and $0, respectively) $ 78,491,877 $ 46,365,126 $ 6,742,162 $ 269,703,838
Short term investments (at amortized cost) 3,230,000 1,620,000 958,837 11,835,000
Cash 43,850 43,406 16,593 34,899
Foreign currency (cost $705,251; $871,296; $0, $680;
$125,909; $0; $119; $0; and $0, respectively) 710,515 877,061 0 652
Receivable for investments sold 446,714 210,234 0 566,084
Income receivables 244,823 122,505 7,472 432,102
Receivable for fund shares sold 72,960 65,027 104,370 454,745
Deferred organizational costs 39,149 17,122 14,076 26,657
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets 83,279,888 49,320,481 7,843,510 283,053,977
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Options written, at market
(Premium received $0, $0, $0, $0, $904,
$0, $1,664, $0, and $0, respectively) 0 0 0 0
Distributions payable to shareholders 0 0 0 0
Payable for investments purchased 415,364 242,646 199,121 769,821
Payable for fund shares repurchased 20,567 24,692 0 528,638
Payable to GEIM 111,304 62,960 19,794 149,670
Variation margin payable 0 0 0 166,250
Payable to custodian 0 0 0 0
Payable on forward foreign currency contracts 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 547,235 330,298 218,915 1,614,379
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 82,732,653 $ 48,990,183 $ 7,624,595 $ 281,439,598
====================================================================================================================================
NET ASSETS CONSIST OF:
Capital paid in $ 73,024,762 $ 42,158,855 $ 8,058,669 $ 220,990,908
Undistributed (overdistributed) net investment income 105,807 3,543 9,493 926,746
Accumulated net realized gain (loss) 732,977 919,819 (30,947) 10,995,836
Net unrealized appreciation / (depreciation) on:
Investments 8,873,511 5,905,139 (412,620) 48,941,696
Futures 0 0 0 (414,750)
Written options 0 0 0 0
Foreign currency transactions (4,404) 2,827 0 (838)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 82,732,653 $ 48,990,183 $ 7,624,595 $ 281,439,598
====================================================================================================================================
Class A:
Net assets $ 11,961,918 $ 856,762 $ 114,743 $ 36,301,834
Shares outstanding ($.001 par value) 663,348 39,912 8,029 1,554,546
Net asset value per share $ 18.03 $ 21.47 $ 14.29 $ 23.35
Maximum offering price per share $ 18.93 $ 22.54 $ 15.00 $ 24.51
Class B:
Net assets $ 338,705 $ 712,633 $ 106,179 $ 9,547,796
Shares outstanding ($.001 par value) 18,961 33,499 7,439 423,504
Net asset value per share* $ 17.86 $ 21.27 $ 14.27 $ 22.54
Class C:
Net assets $ 4,805,425 $ 30,457,193 $ 2,917,494 $ 67,312,515
Shares outstanding ($.001 par value) 265,574 1,408,998 204,017 2,929,265
Net asset value per share $ 18.09 $ 21.62 $ 14.30 $ 22.98
Class D:
Net assets $ 65,626,605 $ 16,963,595 $ 4,486,179 $ 168,277,453
Shares outstanding ($.001 par value) 3,620,698 785,274 313,536 7,335,628
Net asset value per share $ 18.13 $ 21.60 $ 14.31 $ 22.94
</TABLE>
- ----------
* Redemption price per share is equal to net asset value per share less any
applicable contingent deferred sales charge.
** For the period December 31, 1996 (inception) thru March 31, 1997.
*** GE Money Market Fund is a no load fund offering only one class of shares to
all investors.
- ----------
See Notes to Financial Statements
52
<PAGE>
<TABLE>
<CAPTION>
GE GE GE GE GE
STRATEGIC TAX- FIXED SHORT-TERM MONEY
INVESTMENT EXEMPT INCOME GOVERNMENT MARKET
FUND FUND FUND FUND FUND***
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 88,440,071 $ 11,817,855 $ 57,753,585 $ 12,394,770 $ 0
12,107,072 0 7,223,701 550,000 105,018,181
0 0 56,952 60,535 46,388
127,438 0 123 0 0
787,598 518,706 1,547,981 200,130 0
515,489 191,807 772,406 99,759 223,443
125,271 5,948 120,254 42,338 309,438
17,123 13,942 20,300 39,148 13,941
- ---------------------------------------------------------------------------------------------------------------------------
102,120,062 12,548,258 67,495,302 13,386,680 105,611,391
- ---------------------------------------------------------------------------------------------------------------------------
1,151 0 2,118 0 0
0 8,690 59,364 12,184 86,266
3,018,144 0 5,647,935 274,883 0
123,288 0 125,798 2,402 845,983
72,605 16,734 51,603 44,124 52,702
0 0 0 0 0
13,484 68,837 0 0 0
0 0 12,533 0 0
- ---------------------------------------------------------------------------------------------------------------------------
3,228,672 94,261 5,899,351 333,593 984,951
- ---------------------------------------------------------------------------------------------------------------------------
$ 98,891,390 $ 12,453,997 $ 61,595,951 $ 13,053,087 $ 104,626,440
===========================================================================================================================
$ 83,593,962 $ 12,870,809 $ 65,934,686 $ 13,154,692 $ 104,602,966
690,266 32,503 3,848 (6,596) 32,532
1,483,875 (589,882) (3,471,927) (19,663) (9,058)
13,123,242 140,567 (855,581) (75,346) 0
0 0 0 0 0
(247) 0 (454) 0 0
292 0 (14,621) 0 0
- ---------------------------------------------------------------------------------------------------------------------------
$ 98,891,390 $ 12,453,997 $ 61,595,951 $ 13,053,087 $ 104,626,440
===========================================================================================================================
$ 32,572,979 $ 540,684 $ 15,020,260 $ 615,681 $ 0
1,570,283 46,313 1,292,261 52,418 0
$ 20.74 $ 11.67 $ 11.62 $ 11.75 $ 0
$ 21.77 $ 12.19 $ 12.14 $ 12.05 $ 0
$ 4,318,071 $ 1,243,461 $ 1,517,658 $ 87,677 $ 0
210,337 106,386 130,385 7,469 0
$ 20.53 $ 11.69 $ 11.64 $ 11.74 $ 0
$ 31,684,049 $ 7,638,104 $ 30,342,627 $ 4,819,197 $ 104,626,440
1,522,940 654,161 2,607,867 410,005 104,635,570
$ 20.80 $ 11.68 $ 11.64 $ 11.75 $ 1.00
$ 30,316,291 $ 3,031,748 $ 14,715,406 $ 7,530,532 $ 0
1,455,971 259,612 1,265,316 641,270 0
$ 20.82 $ 11.68 $ 11.63 $ 11.74 $ 0
</TABLE>
53
<PAGE>
STATEMENTS OF OPERATIONS
For the six months ended March 31, 1997 (unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
GE GE GE GE
INTERNATIONAL GLOBAL PREMIER GROWTH U.S.
EQUITY EQUITY EQUITY EQUITY
FUND FUND FUND* FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Income:
Dividends $ 502,438 $ 319,404 $ 13,290 $ 2,414,736
Interest 97,490 57,006 12,748 303,093
Less: Foreign taxes withheld (56,223) (22,247) (697) (9,795)
- ------------------------------------------------------------------------------------------------------------------------------------
Total income 543,705 354,163 25,341 2,708,034
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses:
Advisory and administration fees 316,490 174,983 9,398 534,387
Distribution fees
Class A 25,334 1,925 131 81,392
Class B 1,497 3,295 256 43,644
Class C 5,034 37,493 862 75,943
Blue Sky fees
Class A 3,296 3,921 2,310 5,654
Class B 2,617 3,126 2,310 3,914
Class C 3,218 8,064 2,310 7,435
Class D 9,615 4,923 2,311 18,753
Transfer agent fees
Class A 5,570 3,850 924 9,886
Class B 923 1,728 924 9,829
Class C 3,483 38,665 924 40,835
Class D 24,202 11,113 924 5,624
Trustees' fees 2,275 1,308 237 7,153
Custody and accounting expenses 4,458 2,564 499 14,029
Professional fees 22,600 12,987 2,288 71,049
Registration expenses 3,209 1,845 337 10,093
Amortization of deferred organization
expense 9,147 9,675 924 14,968
Other expenses 8,079 4,646 826 25,408
- ------------------------------------------------------------------------------------------------------------------------------------
Total expenses before waiver 451,047 326,111 28,695 979,996
Less: Expenses waived or borne by
the advisor (6,456) (26,467) (12,847) (111,594)
- ------------------------------------------------------------------------------------------------------------------------------------
Net expenses 444,591 299,644 15,848 868,402
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income 99,114 54,519 9,493 1,839,632
====================================================================================================================================
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Realized gain (loss) on:
Investments 1,269,557 1,104,361 (30,947) 12,204,144
Futures 0 0 0 1,285,548
Written options 0 0 0 1,401
Foreign currency transactions (47,265) (40,448) 0 (2,526)
Increase (decrease) in unrealized
appreciation/depreciation on:
Investments 3,136,472 423,566 (412,620) 10,291,996
Futures 0 0 0 (533,850)
Written options 0 0 0 0
Foreign currency transactions 2,895 3,509 0 (943)
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments 4,361,659 1,490,988 (443,567) 23,245,770
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ 4,460,773 $ 1,545,507 $ (434,074) $25,085,402
====================================================================================================================================
</TABLE>
* For the period December 31, 1996 (inception) thru March 31, 1997.
** GE Money Market Fund is a no load fund offering only one class of shares to
all investors.
- ----------
See Notes to Financial Statements
54
<PAGE>
<TABLE>
<CAPTION>
GE GE GE GE GE
STRATEGIC TAX- FIXED SHORT-TERM MONEY
INVESTMENT EXEMPT INCOME GOVERNMENT MARKET
FUND FUND FUND** FUND FUND**
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 423,435 $ 0 $ 23,998 $ 0 $ 0
1,299,875 312,942 2,149,634 387,175 2,496,511
(11,923) 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
1,711,387 312,942 2,173,632 387,175 2,496,511
- ------------------------------------------------------------------------------------------------------------------------------------
169,931 22,054 111,579 18,896 115,166
65,552 1,359 35,991 1,180 0
20,541 6,269 7,986 448 0
37,870 9,737 37,227 5,403 0
4,610 3,539 6,531 3,287 0
3,237 3,274 3,139 2,852 0
5,587 5,785 4,464 4,213 17,245
7,069 4,460 4,588 6,038 0
18,951 591 3,215 713 0
5,049 1,000 1,928 236 0
23,648 7,752 21,436 2,179 81,765
25,402 224 5,365 533 0
2,771 374 1,900 360 2,570
5,430 733 3,723 707 5,045
27,521 3,709 18,890 3,579 25,518
3,908 527 2,682 511 3,627
9,675 7,911 11,439 9,147 7,912
9,837 1,328 6,755 1,281 9,125
- ------------------------------------------------------------------------------------------------------------------------------------
446,589 80,626 288,838 61,563 267,973
(6,835) (47,507) (16,410) (26,172) (60,685)
- ------------------------------------------------------------------------------------------------------------------------------------
439,754 33,119 272,428 35,391 207,288
- ------------------------------------------------------------------------------------------------------------------------------------
1,271,633 279,823 1,901,204 351,784 2,289,223
====================================================================================================================================
1,709,546 20,065 295,456 5,712 (200)
994 0 1,988 0 0
1,147 0 2,461 0 0
(8,175) 0 152,237 0 0
2,136,142 (12,193) (739,485) (27,050) 0
0 0 0 0 0
(247) 0 (454) 0 0
998 0 (23,847) 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
3,840,405 7,872 (311,644) (21,338) (200)
- ------------------------------------------------------------------------------------------------------------------------------------
$ 5,112,038 $ 287,695 $ 1,589,560 $ 330,446 $ 2,289,023
====================================================================================================================================
</TABLE>
55
<PAGE>
STATEMENTS OF CHANGES
IN NET ASSETS
<TABLE>
<CAPTION>
GE GE GE GE
INTERNATIONAL GLOBAL PREMIER GROWTH U.S.
EQUITY EQUITY EQUITY EQUITY
FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended Period Ended Six Months Ended Year Ended
March 31, 1997 September March 31,1997 September March 31, 1997* March 31, 1997 September
(unaudited) 30, 1996 (unaudited) 30, 1996 (unaudited) (unaudited) 30, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income $ 99,114 $ 536,695 $ 54,519 $ 137,419 $ 9,493 $1,839,632 $ 3,718,848
Net realized gain
(loss) on investments,
futures, written
options, and
foreign currency
transactions 1,222,292 2,070,867 1,063,913 2,565,385 (30,947) 13,488,567 21,400,380
Net increase (decrease)
in unrealized
appreciation/
depreciation 3,139,367 3,637,837 427,075 1,437,616 (412,620) 9,757,203 10,460,359
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
from operations 4,460,773 6,245,399 1,545,507 4,140,420 (434,074) 25,085,402 35,579,587
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to
shareholders from:
Net investment income
Class A (31,255) (6,640) 0 (2,429) 0 (332,785) (262,767)
Class B 0 0 0 0 0 (58,927) (33,028)
Class C (6,212) (5,998) (75,298) (47,344) 0 (758,606) (515,508)
Class D (492,285) (206,019) (111,661) (29,722) 0 (2,607,415) (2,441,173)
Net realized gains
Class A (262,419) 0 (41,620) (54,657) 0 (2,630,802) (220,116)
Class B (8,157) 0 (36,858) (7,141) 0 (765,822) (29,002)
Class C (106,194) 0 (1,688,506) (439,601) 0 (5,196,483) (397,494)
Class D (1,792,954) 0 (832,366) (126,339) 0 (14,080,728) (1,698,965)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (2,699,476) (218,657) (2,786,309) (707,233) 0 (26,431,568) (5,598,053)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in
net assets from
operations and
distributions 1,761,297 6,026,742 (1,240,802) 3,433,187 (434,074) (1,346,166) 29,981,534
- ------------------------------------------------------------------------------------------------------------------------------------
Share transactions:
Proceeds from sale
of shares
Class A 4,106,843 4,999,853 265,852 1,784,436 120,390 10,027,635 20,169,488
Class B 66,746 264,006 118,900 248,489 111,533 2,074,280 5,416,144
Class C 1,744,293 2,057,845 3,386,350 6,612,036 3,145,003 16,244,760 22,892,916
Class D 31,529,240 46,890,336 7,679,290 4,132,262 4,703,150 23,548,676 64,219,284
Value of distributions
reinvested
Class A 293,144 6,640 41,520 56,966 0 2,963,444 483,588
Class B 6,989 0 36,754 7,140 0 808,910 62,916
Class C 107,547 5,587 1,735,843 477,266 0 5,853,741 897,146
Class D 2,285,228 206,019 944,022 156,060 0 16,688,105 4,140,136
Cost of shares redeemed
Class A (1,127,842) (1,078,451) (3,490,068) (903,662) 0 (11,031,571) (4,687,102)
Class B (14,250) (65,189) (24,353) (53,819) 0 (454,719) (409,610)
Class C (377,475) (327,094) (2,598,277) (4,463,175) (21,407) (4,256,077) (5,137,572)
Class D (32,838,658) (21,970,397) (1,324,203) (4,662,441) 0 (15,903,440) (72,772,334)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
from share
transactions 5,781,805 30,989,155 6,771,630 3,391,558 8,058,669 46,563,744 35,275,000
- ------------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease)
in net assets 7,543,102 37,015,897 5,530,828 6,824,745 7,624,595 45,217,578 65,256,534
NET ASSETS
Beginning of period 75,189,551 38,173,654 43,459,355 36,634,610 0 236,222,020 170,965,486
- ------------------------------------------------------------------------------------------------------------------------------------
End of period $82,732,653 $75,189,551 $48,990,183 $43,459,355 $7,624,595 $281,439,598 $236,222,020
====================================================================================================================================
Undistributed (overdistributed)
net investment income,
end of period $ 105,807 $ 484,828 $ 3,543 $ 107,597 $ 9,493 $ 926,746 $ 2,857,691
</TABLE>
* For the period December 31, 1996 (inception) thru March 31, 1997.
** GE Money Market Fund is a no load fund offering only one class of shares to
all investors.
- ----------
See Notes to Financial Statements
56 &
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
GE GE GE GE GE
STRATEGIC TAX- FIXED SHORT-TERM MONEY
INVESTMENT EXEMPT INCOME GOVERNMENT MARKET
FUND FUND FUND FUND FUND**
- ----------------------------------------------------------------------------------------------------------------------------------
Six Months Year Six Months Year Six Months Year Six Months Year Six Months Year
Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended
March 31, Sept. 30, March 31, Sept. 30, March 31, Sept. 30, March 31, Sept. 30, March 31, Sept. 30,
1997 1996 1997 1996 1997 1996 1997 1996 1997 1996
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
- ---------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 1,271,633 $2,018,226 $ 279,823 $ 546,656 $1,901,204 $3,244,634 $ 351,784 $625,423 $2,289,223 $4,151,611
1,703,512 1,002,244 20,065 57,428 452,142 (1,167,977) 5,712 (1,342) (200) (5,488)
2,136,893 5,583,704 (12,193) (157,166) (763,786) (600,391) (27,050) (58,761) 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
5,112,038 8,604,174 287,695 446,918 1,589,560 1,476,266 330,446 565,320 2,289,023 4,146,123
- ----------------------------------------------------------------------------------------------------------------------------------
(461,097) (224,561) (11,455) (20,080) (418,928) (709,900) (12,654) (17,871) 0 0
(63,980) (36,223) (23,296) (43,346) (42,454) (57,106) (2,648) (6,475) 0 0
(691,773) (480,651) (173,959) (333,411) (900,371) (1,490,082) (121,478) (169,713) (2,289,223) (4,151,611)
(1,079,566) (515,952) (71,113) (149,794) (567,528) (1,011,836) (225,831) (442,799) 0 0
(243,915) (44,020) 0 0 0 0 (468) (1,457) 0 0
(48,212) (7,310) 0 0 0 0 (143) (405) 0 0
(353,335) (89,301) 0 0 0 0 (5,468) (13,646) 0 0
(478,496) (88,357) 0 0 0 0 (9,662) (33,443) 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
(3,420,374) (1,486,375) (279,823) (546,631) (1,929,281) (3,268,924) (378,352) (685,809) (2,289,223) (4,151,611)
- ----------------------------------------------------------------------------------------------------------------------------------
1,691,664 7,117,799 7,872 (99,713) (339,721) (1,792,658) (47,906) (120,489) (200) (5,488)
- ----------------------------------------------------------------------------------------------------------------------------------
14,086,393 17,883,706 4,173 184,398 2,477,573 14,465,090 353,280 729,588 0 0
644,764 2,827,055 109,850 910,235 140,452 1,637,270 1,508 89,871 0 0
5,831,703 8,576,408 530,281 2,158,514 5,067,765 10,046,924 1,412,039 1,743,456 114,082,444 177,814,977
7,116,788 25,183,286 25 0 4,261,135 20,655,949 4,700,097 1,694,811 0 0
703,419 268,659 5,847 10,092 412,744 690,901 11,373 14,905 0 0
111,422 42,201 16,965 28,592 38,596 47,491 1,543 4,689 0 0
1,017,042 553,077 144,346 272,411 735,237 1,206,983 117,554 174,763 2,179,275 3,800,372
1,558,067 472,353 70,871 147,775 568,867 991,882 227,163 469,809 0 0
(7,854,385) (3,072,661) (6,416) (42,587) (3,438,536) (4,397,297) (85,800) (684,827) 0 0
(221,581) (281,702) (202,692) (289,191) (327,727) (211,360) (60,504) (30,407) 0 0
(2,110,512) (2,710,357) (770,096) (1,436,700) (3,370,824) (4,014,201) (342,471) (666,107) (97,476,764) (167,432,164)
(15,245,148) (11,444,286) (3) (1,100,006) (9,168,837) (8,464,459) (5,158,637) (2,349,374) 0 0
- ----------------------------------------------------------------------------------------------------------------------------------
5,637,972 38,297,739 (96,849) 843,533 (2,603,555) 32,655,173 1,177,145 1,191,177 18,784,955 14,183,185
- ----------------------------------------------------------------------------------------------------------------------------------
7,329,636 45,415,538 (88,977) 743,820 (2,943,276) 30,862,515 1,129,239 1,070,688 18,784,755 14,177,697
91,561,754 46,146,216 12,542,974 11,799,154 64,539,227 33,676,712 11,923,848 10,853,160 85,841,685 71,663,988
- ----------------------------------------------------------------------------------------------------------------------------------
$98,891,390 $91,561,754 $12,453,997 $12,542,974 $61,595,951 $64,539,227 $13,053,087 $11,923,848 $104,626,440 $85,841,685
==================================================================================================================================
$ 690,266 $ 1,623,000 $ 32,503 $ 44,788 $ 3,848 $ 95,901 $ (6,596) $ 22,580 $ 32,532 $ 44,818
</TABLE>
57
<PAGE>
STATEMENT OF CHANGES
IN NET ASSETS (continued)
CHANGES IN FUND SHARES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
GE GE GE GE
INTERNATIONAL GLOBAL PREMIER GROWTH U.S.
EQUITY EQUITY EQUITY EQUITY
FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended Period Ended Six Months Ended Year Ended
March 31,1997 September March 31,1997 September March 31,1997* March 31,1997 September
(unaudited) 30, 1996 (unaudited) 30, 1996 (unaudited) (unaudited) 30, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A:
Shares sold by subscription 230,398 294,637 12,069 85,979 8,029 414,920 920,456
Issued for distributions
reinvested 16,627 405 1,932 2,868 0 127,023 23,382
Shares redeemed (63,208) (64,247) (158,350) (43,891) 0 (466,384) (211,845)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in Fund shares 183,817 230,795 (144,349) 44,956 8,029 75,559 731,993
====================================================================================================================================
CLASS B:
Shares sold by subscription 3,792 15,817 5,465 11,994 7,439 88,333 255,210
Issued for distributions
reinvested 400 0 1,724 360 0 35,856 3,135
Shares redeemed (810) (3,843) (1,115) (2,589) 0 (19,432) (18,909)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in Fund shares 3,382 11,974 6,074 9,765 7,439 104,757 239,436
====================================================================================================================================
CLASS C:
Shares sold by subscription 97,562 122,659 152,898 319,353 205,405 677,954 1,066,216
Issued for distributions
reinvested 6,083 341 80,285 23,887 0 255,064 44,064
Shares redeemed (21,056) (19,472) (117,370) (216,093) (1,388) (177,531) (238,075)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in Fund shares 82,589 103,528 115,813 127,147 204,017 755,487 872,205
====================================================================================================================================
CLASS D:
Shares sold by subscription 1,763,561 2,756,412 346,415 197,330 313,536 995,069 3,068,016
Issued for distributions
reinvested 129,182 12,531 43,705 7,803 0 729,057 203,647
Shares redeemed (1,832,140) (1,273,543) (59,820) (230,524) 0 (660,978) (3,416,836)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in Fund shares 60,603 1,495,400 330,300 (25,391) 313,536 1,063,148 (145,173)
====================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
GE GE GE GE GE
STRATEGIC TAX- FIXED SHORT-TERM MONEY
INVESTMENT EXEMPT INCOME GOVERNMENT MARKET
FUND FUND FUND FUND FUND**
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Year Six Months Year Six Months Year Six Months Year Six Months Year
Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended
March 31, Sept. 30, March 31, Sept. 30, March 31, Sept. 30, March 31, Sept. 30, March 31, Sept. 30,
1997 1996 1997 1996 1997 1996 1997 1996 1997 1996
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
676,044 906,804 353 15,739 209,717 1,202,556 29,903 61,992 0 0
33,689 14,267 496 857 34,862 58,607 962 1,258 0 0
(380,661) (156,140) (546) (3,612) (291,710) (375,267) (7,257) (58,394) 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
329,072 764,931 303 12,984 (47,131) 885,896 23,608 4,856 0 0
====================================================================================================================================
30,981 148,617 9,227 76,606 11,836 137,322 127 7,523 0 0
5,385 2,264 1,437 2,434 3,255 4,042 131 396 0 0
(10,674) (14,530) (17,150) (24,675) (27,665) (18,027) (5,113) (2,586) 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
25,692 136,351 (6,486) 54,365 (12,574) 123,337 (4,855) 5,333 0 0
====================================================================================================================================
275,070 443,753 44,971 183,515 427,112 843,984 119,173 146,513 114,082,444 177,814,977
48,594 29,341 12,233 23,130 62,039 101,965 9,931 14,742 2,179,275 3,800,372
(99,496) (139,805) (65,244) (123,355) (284,513) (338,433) (28,889) (56,042) (97,476,764) (167,432,164)
- ------------------------------------------------------------------------------------------------------------------------------------
224,168 333,289 (8,040) 83,290 204,638 607,516 100,215 105,213 18,784,955 14,183,185
====================================================================================================================================
341,558 1,328,680 2 0 360,663 1,711,763 397,301 142,334 0 0
74,406 25,058 6,006 12,532 47,994 84,091 19,207 39,635 0 0
(729,476) (593,811) (0) (90,536) (776,607) (719,913) (436,040) (197,251) 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
(313,512) 759,927 6,008 (78,004) (367,950) 1,075,941 (19,532) (15,282) 0 0
====================================================================================================================================
</TABLE>
* For the period December 31, 1996 (inception) through March 31, 1997.
** GE Money Market Fund is a no load Fund offering only one class of shares to
all investors.
- ----------
See Notes to Financial Statements
58 & 59
<PAGE>
Notes to Financial Statements -- March 31, 1997 (unaudited)
1. Organization of the Funds
GE Funds (the "Trust") is registered under the Investment Company Act of 1940
(as amended) as an open-end management investment company. The Trust was
organized as a Massachusetts business trust on August 10, 1992, and is
authorized to issue an unlimited number of shares. It is comprised of eleven
investment portfolios (the "Funds") only nine of which are currently being
offered, as follows: GE International Equity Fund, GE Global Equity Fund, GE
Premier Growth Equity Fund, GE U.S. Equity Fund, GE Strategic Investment Fund,
GE Tax-Exempt Fund, GE Fixed Income Fund, GE Short-Term Government Fund and GE
Money Market Fund. The Funds (except GE Money Market Fund) are presently
authorized to issue four classes of shares.
The commencement dates of the Funds were as follows:
GE Premier Growth Equity - Class A, B,C, and D - December 31, 1996; GE
International Equity Fund - Classes A, B, C, and D and GE Short-Term Government
Fund - Classes A, B, C, and D - March 2, 1994; Class A, all other funds -
January 1, 1994; Class B, all other funds - December 22, 1993; Class D, all
other funds - November 29, 1993; Class C, GE Tax-Exempt Fund - February 26,
1993; Class C, all other funds, including the single class of the GE Money
Market Fund - February 22, 1993. Between certain of the Funds' which effective
date was January 5, 1993 and the commencement of investment operations date was
March 2, 1994, the Funds' adviser absorbed all expenses.
Maximum Sales Load Imposed on Purchases of Class A Shares (as a percentage of
offering price):
4.75% 4.25% 2.50%
- --------------------------------------------------------------------------------
GE International Equity Fund GE Tax-Exempt Fund GE Short-Term
Government Fund
GE Global Equity Fund GE Fixed Income Fund
GE Premier Growth Equity Fund
GE U.S. Equity Fund
GE Strategic Investment Fund
Maximum Contingent Deferred Sales Load (as a percentage of redemption proceeds):
1.00% 3.00% 4.00%
- -----------------------------------------------------------------------
Class A* All funds -- --
Class B -- GE Tax-Exempt Fund GE International Equity Fund
GE Fixed Income Fund GE Global Equity Fund
GE Short-Term GE Premier Growth Equity
Government Fund Fund
GE U.S. Equity Fund
GE Strategic Investment Fund
The maximum contingent deferred sales load for Class B redemptions for all
Funds, after the first year, is as follows: 3.00% within the second year, 2.00%
within the third year, 1.00% within the fourth year, and 0.00% thereafter.
No sales charges or redemption fees are assessed by the Trust with respect to
Class C and Class D shares and shares of GE Money Market Fund. Class C shares
pay for certain shareholder servicing fees as described in note 3 below.
* Imposed only for shares redeemed within one year of purchase which were
subject to no front end sales charge by virtue of being part of a purchase
of $1 million or more.
2. Summary of Significant Accounting Policies
The following summarizes the significant accounting policies of the Trust: Class
C shares pay for certain shareholders servicing fees as described
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results may differ from those estimates.
60
<PAGE>
Notes to Financial Statements -- March 31, 1997 (unaudited)
Security Valuation and Transactions
Securities for which exchange quotations are readily available are valued at the
last sale price, or if no sales occurred on that day, at the last quoted bid
price. Certain fixed income securities are valued by a dealer or by a pricing
service based upon a computerized matrix system, which considers market
transactions and dealer supplied valuations. Valuations for municipal bonds are
based on prices obtained from a qualified municipal bond pricing service; prices
represent the mean of the secondary market.
Futures contracts are valued at the settlement price established each day by the
board of trade or exchange on which they are principally traded. Options that
are written or purchased are valued using the mean between the last asked and
bid prices. Forward foreign currency contracts are valued at the mean between
the bid and the offered forward rates as last quoted by a recognized dealer.
Short term investments maturing within 60 days are valued at amortized cost or
original cost plus accrued interest, each of which approximates fair value.
Portfolio positions which cannot be valued as set forth above are valued at fair
value determined under procedures approved by the Trustees.
GE Money Market Fund values its securities using the amortized cost method,
which values securities initially at cost and thereafter assumes a constant
amortization to maturity of any discount or premium. Amortized cost approximates
fair value.
Transactions are accounted for as of the trade date. Cost is determined and
gains and losses are based upon the specific identification method for both
financial statement and federal tax purposes.
The Funds will accrue distribution fees, blue sky fees and transfer agent fees
to the respective class. Each Fund's income, expenses (other than the fees
mentioned above) and realized and unrealized gains and losses are allocated
proportionally each day among the classes based upon the relative net assets of
each class.
Foreign Currency
Accounting records of the Funds are maintained in U.S. dollars. Investment
securities and other assets and liabilities and purchases and sales of
investment securities denominated in a foreign currency are translated to U.S.
dollars at the prevailing exchange rate on the respective dates of such
transactions.
The Funds do not isolate the portion of the results of operations resulting from
changes in foreign exchange rates on investments from the fluctuations arising
from changes in their market prices. Such fluctuations are included in net
realized and unrealized gain or loss from investments. Reported net realized
exchange gains or losses from foreign currency transactions represent sale of
foreign currencies, currency gains or losses between the trade date and the
settlement date on securities transactions, realized gains and losses on forward
foreign currency contracts, and the difference between the amounts of dividends,
interest, and foreign withholding taxes recorded on the Fund's books, and the
U.S. dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the value of assets and
liabilities, other than investments in securities at fiscal year end, as a
result of changes in exchange rates.
Income Taxes
It is each Fund's policy to comply with all sections of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income, tax-exempt income, and gains to its shareholders and, therefore,
no provision for federal income tax has been made. Each Fund is treated as a
separate taxpayer for federal income tax purposes.
61
<PAGE>
Notes to Financial Statements -- March 31, 1997 (unaudited)
Capital loss carryovers are available to offset future realized capital gains.
To the extent that these carryover losses are used to offset future capital
gains, it is probable that the gains so offset will not be distributed to
shareholders because they would be taxable as ordinary income. At March 31,
1997, the Funds had capital loss carryovers as follows:
Fund Amount Expires
- --------------------------------------------------------------------------------
GE Tax-Exempt Fund $ 56,890 2002
97,452 2003
455,605 2004
GE Fixed Income Fund 2,559,595 2003
38,636 2004
GE Short-Term Government Fund 161 2004
GE Money Market Fund 3,370 2003
Any net capital and currency losses incurred after October 31, within the Fund's
tax year, are deemed to arise on the first day of the Fund's next tax year if
the Fund so elects to defer such losses. The Funds incurred and elected to defer
capital losses as follows:
GE Fixed Income Fund $ 1,366,561
GE Short-Term Government Fund 443
GE Money Market Fund 5,488
Investment Income
Corporate actions (including cash dividends) are recorded net of nonreclaimable
tax withholdings on the ex-dividend date, except for certain foreign securities
for which corporate actions are recorded as soon after ex-dividend date as such
information is available. Interest income is recorded on the accrual basis. All
discounts and premiums on taxable bonds and premiums on tax exempt bonds are
amortized to call or maturity date, whichever is shorter using the effective
yield method. On tax exempt bonds purchased before May 1, 1993, only original
issue discount is amortized. For tax exempt bonds purchased after April 30,
1993, both market discount and original issue discount are amortized.
Expenses
Expenses of the Trust which are directly identifiable to a specific Fund are
allocated to that Fund. Expenses which are not readily identifiable to a
specific Fund are allocated in such a manner as deemed equitable, taking into
consideration the nature and type of expense and the relative sizes of the
Funds. All expenses of the Funds are paid by the Investment Adviser and
reimbursed by the Funds up to the voluntary expense limitations.
Distributions to Shareholders
GE Tax-Exempt Fund, GE Fixed Income Fund, GE Short-Term Government Fund and GE
Money Market Fund declare investment income dividends daily and pay monthly. GE
International Equity Fund, GE Global Equity Fund, GE Premier Growth Equity Fund,
GE U.S. Equity Fund and GE Strategic Investment Fund declare and pay dividends
of net investment income annually. All Funds declare and pay net realized
capital gain distributions annually. The character of income and gains to be
distributed are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. These differences include
treatment of realized and unrealized gains and losses on forward foreign
currency transactions, paydown gains and losses on mortgage-backed securities,
losses on wash sale transactions, and deferred organization expenses.
Reclassifications are made to the Funds' capital accounts to reflect income and
gains available for distribution (or available capital loss carryovers) under
income tax regulations. The calculation of net investment income per share in
the Financial Highlights table excludes these adjustments.
Deferred Organizational Costs
Organizational expenses applicable to the Funds have been deferred and are being
amortized on a straight-line basis over a period of five years from commencement
of investment operations.
62
<PAGE>
Notes to Financial Statements -- March 31, 1997 (unaudited)
When-Issued Securities
The Funds may purchase or sell securities on a when-issued or forward commitment
basis. Payment and delivery may take place a month or more after the date of the
transaction. The price of the underlying securities and the date when the
securities will be delivered and paid for are fixed at the time the transaction
is negotiated. This may increase the risk if the other party involved in the
transaction fails to deliver and causes the Fund to subsequently invest at less
advantageous yields. In connection with such purchases, the Fund is required to
hold liquid assets as collateral with the Funds' custodian sufficient to cover
the purchase price, unless they enter into an offsetting contract for the sale
of equal securities and value.
Forward Foreign Currency Contracts
A forward foreign currency contract ("Forward") is an agreement between two
parties to buy and sell a currency at a set price on a future date. The market
value of the Forward fluctuates with changes in currency exchange rates. The
Forward is marked-to-market daily and the change in the market value is recorded
by the Fund as an unrealized gain or loss. When the Forward is closed, the Fund
records a realized gain or loss equal to the difference between the value at the
time it was opened and the value at the time it was closed. The Fund could be
exposed to risk if a counterparty is unable to meet the terms of the contract or
if the value of the currency changes unfavorably. The Fund may enter into
Forwards in connection with planned purchases and sales of securities, to hedge
specific receivables or payables against changes in future exchange rates or to
hedge the U.S. dollar value of portfolio securities denominated in a foreign
currency.
Repurchase Agreements
The Funds' custodian takes possession of the collateral pledged for investments
in repurchase agreements on behalf of the Funds. It is the policy of the Funds
to value the underlying collateral daily on a mark-to-market basis to determine
that the value, including accrued interest, is at least equal to the repurchase
price. In the event of default of the obligation to repurchase, the Funds have
the right to liquidate the collateral and apply the proceeds in satisfaction of
the obligation.
Futures and Options
The Funds, other than the GE Money Market Fund, may invest in futures contracts
and purchase and write options. These investments involve, to varying degrees,
elements of market risk and risks in excess of the amount recognized in the
Statements of Assets and Liabilities. The face or contract amounts reflect the
extent of the involvement the Funds have in the particular classes of these
instruments. Risks may be caused by an imperfect correlation between movements
in the price of the instruments and the price of the underlying securities and
interest rates. Risks also may arise if there is an illiquid secondary market
for the instruments, or an inability of counterparties to perform. The Funds may
invest in these instruments for the following reasons: to hedge against the
effects of changes in value of portfolio securities due to anticipated changes
in interest rates and/or market conditions, to equitize a cash position, for
duration management, or when the transactions are economically appropriate to
reduce the risk inherent in the management of the Fund involved.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the futures contract is
closed. The Fund will realize a gain or loss upon the expiration or closing of
an option transaction. When an option is exercised, the proceeds on sales for a
written call option, the purchase cost for a written put option, or the proceeds
on the sale of the security for a purchased put or cost of the security for a
call option is adjusted by the amount of premium received or paid.
63
<PAGE>
Notes to Financial Statements -- March 31, 1997 (unaudited)
Security Lending
The Funds may loan securities to well known and recognized U.S. and foreign
brokers and banks and receive a lenders fee. These fees are included in interest
income. The loans of securities will be collateralized by cash, letters of
credit or U.S. Government securities. The collateral will be segregated and
maintained at all times with the custodian and must be equal to the current
value of the securities loaned. In the event the counterparty (borrower) does
not meet its contracted obligation to return the securities, the Fund may be
exposed to the risk of loss of reacquiring the loaned securities at prevailing
market prices.
Other
There are certain additional risks involved when investing in foreign securities
that are not inherent in domestic securities. These risks may involve foreign
currency exchange rate fluctuations, adverse political and economic developments
and the imposition of unfavorable foreign governmental laws and restrictions.
3. Fees and Compensation Paid to Affiliates
Advisory and Administration Fees
Compensation of GEIM, the Fund's Investment Adviser and Administrator, a
wholly-owned subsidiary of General Electric Company, for investment advisory and
administrative services, is paid monthly based on the average daily net assets
of each Fund. Such advisory and administration fees are based on the annual
rates listed in the table below. Until further notice, GEIM has agreed to reduce
other operating expenses (exclusive of advisory, administration and distribution
fees) for each Fund as indicated in the following table:
Annualized based on average daily net assets
Advisory and Limitation of Other
Administration Fees Operating Expenses
- --------------------------------------------------------------------------------
GE International Equity Fund .80% .30%
GE Global Equity Fund .75% .35%
GE Premier Growth Equity Fund .60% .30%
GE U.S Equity Fund .40% .10%
GE Strategic Investment Fund .35% .30%
GE Tax-Exempt Fund* .35% .25%
GE Fixed Income Fund .35% .20%
GE Short-Term Government Fund .30% .15%
GE Money Market Fund .25% .25%
* Effective July 18, 1996, GEIM agreed to waive the advisory and
administration fees for the GE Tax-Exempt Fund until further notice.
Distribution and Shareholder Servicing Fees
The Funds have adopted a Shareholder Servicing and Distribution Plan ("the
Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940 with
respect to each Fund except the GE Money Market Fund. Each Fund pays GE
Investment Services Inc. ("GEIS"), a wholly-owned subsidiary of GEIM and the
Funds' principal underwriter, a monthly fee for distribution and/or shareholder
services provided, at an annual rate of .50% of the average daily net assets of
Class A of all applicable Funds, 1.00% for Class B of all applicable Funds
(except GE Short-Term Government Fund which is .85%), and .25% for Class C of
all applicable Funds. Currently Class D is not subject to a 12b-1 fee plan.
64
<PAGE>
Notes to Financial Statements -- March 31, 1997 (unaudited)
Other
The Funds pay no compensation to their Trustees who are employees of GEIM.
Trustees who are not GEIM employees receive an annual fee of $10,000 and an
additional fee of $500 for each Trustees' meeting attended.
For the period ended March 31, 1997, GEIS acting as underwriter received net
commissions of $4,993 from the sale of Class A shares and $26,615 in contingent
deferred sales charges from redemptions of Class A and Class B shares.
GNA Corporation, a wholly owned subsidiary of General Electric Company, acts as
Blue Sky administrator for the GE Funds. Fees paid to GNA of approximately
$40,000 are included in blue sky fees in the Statements of Operations.
4. Aggregate Unrealized Appreciation and Depreciation
Aggregate gross unrealized appreciation/(depreciation) of investments for each
Fund at March 31, 1997, were as follows:
Net
Gross Gross Unrealized
Unrealized Unrealized Appreciation
Appreciation Depreciation (Depreciation)
- --------------------------------------------------------------------------------
GE International
Equity Fund $ 12,368,792 $ 3,495,281 $ 8,873,511
GE Global
Equity Fund 7,607,570 1,702,431 5,905,139
GE Premier Growth
Equity Fund 153,372 565,992 (412,620)
GE U.S.
Equity Fund 52,351,912 3,410,216 48,941,696
GE Strategic
Investment Fund 14,790,462 1,667,220 13,123,242
GE Tax-Exempt
Fund 159,605 19,038 140,567
GE Fixed Income
Fund 195,623 1,051,204 (855,581)
GE Short-Term
Government Fund 19,129 94,475 (75,346)
<PAGE>
The aggregate cost of each Fund's investments was substantially the same for
book and federal income tax purposes at March 31, 1997.
5. Options
During the period ended March 31, 1997, the following option contracts were
written:
GE U.S. Equity Fund GE Strategic Investment Fund
- --------------------------------------------------------------------------------
Number Number
of Contracts Premium of Contracts Premium
- --------------------------------------------------------------------------------
Balance as of
September
30, 1996 0 $ 0 0 $ 0
Written 11 1,867 264 2,050
Closed and
Expired (8) (1,401) (1) (1,146)
Exercised (3) (466) (0) (0)
- --------------------------------------------------------------------------------
Balance as of
March 31, 1997 0 $ 0 263 $ 904
================================================================================
GE Fixed Income Fund
- ---------------------------------------
Number
of Contracts Premium
- ---------------------------------------
Balance as of
September
30, 1996 0 $ 0
Written 3,004 4,125
Closed and
Expired (2,520) (2,461)
Exercised (0) (0)
- --------------------------------------
Balance as of
March 31, 1997 484 $ 1,664
======================================
65
<PAGE>
Notes to Financial Statements -- March 31, 1997 (unaudited)
6. Investment Transactions
The cost of purchases and the proceeds from sales of investments, other than
U.S. Government securities, short term securities and options, for the period
ended March 31, 1997, were:
Purchases Sales
- --------------------------------------------------------------------------------
GE International
Equity Fund $ 22,853,679 $ 21,119,727
GE Global Equity Fund 18,606,634 14,875,815
GE Premier Growth
Equity Fund 7,641,274 455,545
GE U.S. Equity Fund 78,892,583 56,272,576
GE Strategic Investment
Fund 18,468,298 16,627,870
GE Tax-Exempt Fund 8,662,948 9,047,150
GE Fixed Income Fund 12,541,198 13,397,061
GE Short-Term
Government Fund 2,361,811 2,000,230
The cost of purchases and the proceeds from sales of long term U.S. Government
securities for the period ended March 31, 1997, were:
Purchases Sales
- --------------------------------------------------------------------------------
GE U.S. Equity Fund $ 1,472,297 $ 182,084
GE Strategic Investment
Fund 35,551,478 33,126,261
GE Fixed Income Fund 66,723,474 68,619,994
GE Short-Term
Government Fund 10,476,424 9,487,607
7. Beneficial Interest
The schedule below shows the number of shareholders each owning 5% or more of a
Fund and the total percentage of the Fund held by such shareholders.
5% or Greater Shareholders
- --------------------------------------------------------------------------------
Number % of Fund Held
- --------------------------------------------------------------------------------
GE International Equity Fund 4 82%
GE Global Equity Fund 3 31%
GE Premier Growth Equity Fund 1 59%
GE U.S. Equity Fund 6 38%
GE Strategic Investment Fund 5 42%
GE Tax-Exempt Fund 1 25%
GE Fixed Income Fund 3 23%
GE Short-Term Government Fund 2 56%
GE Money Market Fund 1 9%
At March 31, 1997, GE Company owned 25% of the shares outstanding of the GE
Tax-Exempt Fund; and GE Capital Assurance Company, an indirect wholly owned
subsidiary of GE Company, owned 61% and 35%, respectively, of the shares
outstanding of the GE Premier Growth Equity and GE Short-Term Government Funds.
66
<PAGE>
[This Page Left Intentionally Blank]
67
<PAGE>
GE Funds Investment Team
Portfolio Managers
GE International Equity Fund
GE Global Equity Fund
Ralph R. Layman
GE U.S. Equity Fund
Eugene K. Bolton
Christopher D. Brown
David B. Carlson
Peter J. Hathaway
Paul C. Reinhardt
GE Premier Growth Equity Fund
David B. Carlson
GE Strategic Investment Fund
David B. Carlson
Robert A. MacDougall
GE Tax-Exempt Fund
Stella V. Lou
GE Fixed Income Fund
GE Short-Term Government Fund
GE Money Market Fund
Robert A. MacDougall
Investment Adviser
and Administrator
GE Investment Management Incorporated
Trustees
Michael J. Cosgrove
John R. Costantino
Alan M. Lewis
William J. Lucas
Robert P. Quinn
Secretary
Matthew J. Simpson
Treasurer
Jeffrey A. Groh
Distributor
GE Investment Services Inc.
Member NASD and SIPC
Counsel
Willkie Farr & Gallagher
Custodian
State Street Bank & Trust Company
Independent Accountants
Price Waterhouse LLP
Officers of the Investment Adviser
John H. Meyers, Chairman of the Board and President
Eugene K. Bolton, EVP, Domestic Equities
Michael J. Cosgrove, EVP, Mutual Funds
Ralph R. Layman, EVP, International Equities
Alan M. Lewis, EVP, General Counsel and Secretary
Robert A. MacDougall, EVP, Fixed Income
Geoffrey R. Norman, EVP, Institutional Marketing
Don W. Torey, EVP, Finance and Administration
68
<PAGE>
Shareholder Inquiries
Everyone breathes a sigh of relief at the end of tax season. For the inquiry
center representatives, it means we can step back and assess how we handled the
enormous call volume which comes into our center between January and the middle
of April. This year our numbers reflect many of the quality upgrades we
implemented as a result of a needs assessment conducted at the end of 1996's tax
season.
We see, for example, that while our call volume was 57,000 an increase of 10%
versus the same period last year, we were able to answer 99% of all incoming
calls, cutting our rate of abandoned calls in half from their level in 1996. Our
figures also show that the average speed of answering a call was under 10
seconds.
What do these numbers mean to the shareholder trying to get answers? It means
you can expect to reach a representative quickly...which is what we're all
about.
In upcoming weeks, you can also expect to receive information on the newly
streamlined automated voice response system. Research conducted while preparing
for the redesign of the system clearly showed our shareholders' frustration at
not being able to immediately access a representative. Among many other
improvements, the new system will enable you to dial "O" at any time during the
menu to speak with a representative.
Thank you for your continued confidence in GE Investments. Your comments and
suggestions are always welcome.
Class A, B and C investors:
For questions regarding the Funds or your account call your investment
professional or call the GE Funds Inquiry Center at 1-800-242-0134
Address inquiries regarding Address inquiries regarding your
the Funds to: account to:
GE Funds GE Funds
3003 Summer Street P.O. Box 8309
P.O. Box 120065 Boston, MA 02266-8309
Stamford, CT 06912-0065
Class D investor: Contact your designated GE Investments account representative
401(k) plan investor: Call your company's designated plan number
- --------------------------------------------------------------------------------
This report has been prepared for shareholders and may be distributed to others
only if preceded or accompanied by a current prospectus.
<PAGE>
GE Funds
3003 Summer Street
Stamford, CT 06904-7900
Bulk Rate
U.S. Postage
PAID
Canton, MA
Permit No. 313
Distributed by GE Investment Services Inc., member NASD and SIPC
<PAGE>
ANNUAL REPORT
OF
INVESTORS TRUST
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1996
<PAGE>
[Investors Trust Logo here]
FAMILY OF FUNDS
ANNUAL REPORT
October 31, 1996
Dear Valued Shareholder: [PHOTO]
I am pleased to present this annual report which includes financial market
reviews, performance reviews, portfolio commentaries, and the financial
statements and financial highlights for each of the Investors Trust Mutual Funds
for the fiscal year ended October 31, 1996.
In September of this year the Adjustable Rate, Growth, Tax Free, and Value funds
all surpassed an important mutual fund milestone--a three-year performance
history. Organizations that rate or rank mutual funds typically require a three
year track record before recognizing funds in their rating systems.
Looking back at the U.S. fixed income and equity market performances over the
past three years helps reinforce the idea that successful investing requires
diversification and patience. Calendar year 1994 presented most fixed income and
domestic equity fund investors with negative total returns. Those who remained
invested throughout 1995 enjoyed some of the best fixed income and equity fund
total returns in history. The financial markets through the first ten months of
1996 have provided most fixed income fund investors with total returns in line
with historical averages and domestic equity fund investors with total returns
above the historical averages.
What does this mean to Investors Trust Mutual Funds shareholders? Variations in
fixed income and equity market total returns during the past three years
demonstrate the importance of appropriately diversifying investments and
aligning the objectives of your investments with your financial goals. Review
your financial goals and objectives at least annually and, if necessary, with
your investment representative's assistance, make adjustments to your investment
mix. As a service to shareholders, each Investors Trust Mutual Fund allows
exchanges to other Investors Trust Mutual Funds free of charge (although such
exchanges are taxable events). I encourage you to take advantage of this service
if your investment needs or goals have changed since first purchasing an
Investors Trust fund.
If you have questions about the information contained in this report, please
contact your investment representative or call Investors Trust Services at
1-800-656-6626 and press 2 on your phone at the prompt.
Thank you for investing with Investors Trust.
Sincerely,
/s/ Patrick E. Welch
- --------------------
Patrick E. Welch
Chairman
THE INVESTORS TRUST FAMILY OF FUNDS IS OFFERED BY GNA DISTRIBUTORS, INC.
<PAGE>
2 Investors Trust Mutual Funds
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
-----------------
PAGE
----
Chairman's Message................................................... 1
Table of Contents.................................................... 2
Listing of Trustees and Officers..................................... 3
Adviser's Market Review.............................................. 5
Sub-Adviser Commentaries and Performance Graphs
Adjustable Rate Fund............................................... 6
Government Fund.................................................... 8
Tax Free Fund...................................................... 11
Value Fund......................................................... 13
Growth Fund........................................................ 15
Notes to Performance................................................. 17
Investment Portfolios
Adjustable Rate Fund............................................... 18
Government Fund.................................................... 21
Tax Free Fund...................................................... 26
Value Fund......................................................... 35
Growth Fund........................................................ 38
Financial Statements................................................. 43
Financial Highlights................................................. 50
Notes to Financial Statements........................................ 52
Report of Independent Accountants.................................... 60
Tax Information...................................................... 61
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Mutual Funds 3
- --------------------------------------------------------------------------------
INVESTORS TRUST MUTUAL FUNDS
ADJUSTABLE RATE FUND o GOVERNMENT FUND o TAX FREE FUND o VALUE FUND o GROWTH
FUND
Annual Report
TRUSTEES AND OFFICERS
PATRICK E. WELCH
Trustee, Chairman of
the Board,
President and CEO
PIERCE T. LINDBERG
Trustee
EDWARD R. MCMILLAN
Trustee
DOUGLAS H. PEDERSEN
Trustee
GEOFFREY S. STIFF
Senior Vice President
and Treasurer
CHARLES A. KAMINSKI
Senior Vice President
VICTOR C. MOSES
Senior Vice President
THOMAS W. CASEY
Vice President
STEPHEN N. DEVOS
Vice President and
Controller
SCOTT A. CURTIS
Vice President
EDWARD J. WILES, JR.
Vice President and Secretary
KARRI J. HARRINGTON
Assistant Secretary
SUB-ADVISERS
ADJUSTABLE RATE FUND
STANDISH, AYER & WOOD, INC.
Boston, Massachusetts
GOVERNMENT FUND
BLACKROCK FINANCIAL
MANAGEMENT, INC.
New York, New York
TAX FREE FUND
BROWN BROTHERS HARRIMAN
& CO.
New York, New York
VALUE FUND
DUFF & PHELPS INVESTMENT
MANAGEMENT CO.
Chicago, Illinois
GROWTH FUND
VALUE LINE, INC.
New York, New York
ADVISER
GNA CAPITAL
MANAGEMENT, INC.
Seattle, Washington
DISTRIBUTOR
GNA DISTRIBUTORS, INC.
Seattle, Washington
COUNSEL
GOODWIN, PROCTER & HOAR
Boston, Massachusetts
CUSTODIAN & TRANSFER AGENT
STATE STREET BANK AND TRUST
COMPANY
Boston, Massachusetts
INDEPENDENT ACCOUNTANTS
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
This report is prepared for the shareholders of the Investors Trust Mutual
Funds. It is not authorized for use as an offer of sale or a solicitation of an
offer to buy shares of the Funds unless accompanied or preceded by the Trust's
current prospectus.
<PAGE>
4 Investors Trust Mutual Funds
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(This Page Intentionally Left Blank)
<PAGE>
Investors Trust Mutual Funds 5
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FINANCIAL MARKET REVIEW
GNA CAPITAL MANAGEMENT, INC., ADVISER
During the fiscal year ended October 31, 1996, the financial markets
continued to provide participants with a roller coaster ride that has
been characteristic of the markets for the last few years.
Market perception of the economy went from slowing growth in the first
few months, to accelerating growth for several months, to moderate growth
at the end of the period. Annualized quarterly GDP growth rates, in fact,
turned out to be +0.30%, +2.00%, +4.70%, and +2.20% for 4Q95--3Q96.
Intermediate and long maturity interest rates first declined, then rose,
then declined again, as investors believed inflation would rise and fall
with economic growth. Because of the close connection between inflation
expectations and interest rates, the bond market had a volatile year. The
5-year Treasury's yield started the period at 5.81%, declined to 5.13% in
mid-February, rose to 6.85% in mid-June, and then declined to 6.07% at
the end of the period. Bond prices move in the opposite direction of
interest rates and mirrored these moves.
Inflation, as measured by the change in the Consumer Price Index,
seemed to remain under control, ending the period at a year-over-year
rate of +3.00%, up only slightly from a year earlier. In this
environment, the bond market, as measured by the Lehman Brothers
Aggregate Bond Index, had a total return of +5.12%, as bond price
declines somewhat offset coupon income for the year.
In the equity market, stock prices were propelled higher by
expectations of increasing corporate profits. Major market indexes moved
to record highs periodically throughout the year. The Dow Jones
Industrial Average moved up from 4,755 at the beginning of the year to
6,029 at the end of the year, with the only real setback being a roughly
400 point correction during the May--July period. In this environment,
the broader stock market, as measured by the S&P 500 Stock Index, had a
total return of +24.08%, well above the long-term average. The averages
mask, however, immediate and precipitous declines in those companies'
stocks whose earnings disappointed Wall Street analysts' expectations.
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<PAGE>
6 Investors Trust Adjustable Rate Fund
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FROM THE ADJUSTABLE RATE FUND SUB-ADVISER
STANDISH, AYER & WOOD, INC.
PORTFOLIO MANAGER: LORI DRISCOLL
Q. WHAT HAPPENED IN THE MARKET DURING THE PAST TWELVE MONTHS?
A. Over the last 12 months, bond yields have fluctuated significantly.
During the first quarter of 1996, interest rates rose mostly in response
to stronger job growth, a pick up in retail sales and high consumer
confidence. With a modestly improving economic picture, the market
shifted from expectations of a Fed ease to a Fed tightening. Despite low
inflation levels, tight labor markets, combined with the economic
rebound, spurred inflationary fears. By mid-year the bearish market
sentiment began to turn. The Fed delayed any tightening moves until
further signs confirmed the strength of the recovery. As a result, the
market adjusted to a neutral Fed policy and yield levels peaked in
August. The subsequent decline in Treasury yields has been driven by
weaker job growth and continued low inflation.
Q. WHAT HAPPENED IN THE FUND DURING THE PAST SIX AND TWELVE MONTH
PERIOD?
A. Over the last year, adjustable rate mortgages ("ARMs") have benefited
from favorable market conditions. With fairly low new originations in
ARMs, there has been relatively minimal supply for the market to absorb.
Additionally, increased demand for floating rate products as rates rose
helped narrow spreads. Also enhancing returns has been declining
prepayment risk as higher interest rates diminished refinancing activity.
Finally, compared to 1994's extreme move, this year's moderate rise in
rates had little impact on the implicit cap risk (see Note (d) on page
20) in the ARM sector. Altogether, adjustable rate mortgage returns
benefited from slower prepayments and positive market technicals,
reflected by tighter yield spreads relative to Treasuries during the
year.
Q. WHAT IS YOUR CURRENT MARKET OUTLOOK?
A. Given the more recent indications of moderating economic growth and
continued good inflation news, lower interest rates could be sustained in
the near term. However, consumer spending is likely to pick up as the
holiday season approaches, particularly if consumer confidence remains
high. Constrained by an already tight labor market and relatively high
capacity utilization, any signs of strong economic growth could renew
inflation concerns. Additionally, some indications of recovery in global
economies could result in upward pressure on interest rates. Finally,
there has been sizeable foreign buying of U.S. Treasuries. The eventual
sale of these positions could result in higher yield levels in the coming
months.
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<PAGE>
Investors Trust Adjustable Rate Fund 7
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Q. HOW HAVE YOU POSITIONED THE FUND TO BENEFIT FROM YOUR MARKET OUTLOOK?
A. Throughout the past year, the Adjustable Rate Fund has maintained its
ARM position with a slight bias toward the GNMA sector. Typically, GNMA
ARMs offer an attractive yield advantage over FHLMC and FNMA counterparts
to compensate investors for modestly greater cap risk. Given our
expectation of moderate rate moves in either direction until a clearer
economic picture emerges, today's level of cap risk in the ARM sector is
marginal. Under this scenario, adjustable rate mortgage returns should
benefit from stable to slightly tighter yield spreads.
In the fixed rate sector, we continue to find attractive
opportunities, particularly in home equity asset backed securities. These
bonds are AAA rated with minimal prepayment risk and short durations.
Seasoned premium pass-throughs also offer good value as they benefit from
slower prepayments. With fairly stable durations, we still find
attractive spread opportunities in this sector.
In the coming year, we expect the portfolio to continue to benefit
from its yield advantage in high quality spread products.
[graph goes here]
Performance of a $10,000 investment since inception of the Investors Trust
Adjustable Rate Fund (9/8/93)
<TABLE>
<CAPTION>
Lehman Brothers Investors Trust Investors Trust Morningstar Govt. Bond-
ARM Index Adjustable Rate Fund - A Shares Adjustable Rate Fund - B Shares ARM Fund Average
(ending value: $11,833) (ending value: $11,429) (ending value: $11,157) (ending value: $10,703)
<S> <C>
9/8/93 $10,000 $10,000 $10,000 $10,000
10/93 $10,005 $10,026 $10,003 $10,034
12/93 $10,053 $10,072 $10,052 $10,057
2/94 $10,088 $10,021 $10,006 $10,084
4/94 $ 9,955 $ 9,850 $ 9,807 $10,018
6/94 $ 9,969 $ 9,791 $ 9,736 $10,001
8/94 $10,079 $ 9,926 $ 9,858 $10,034
10/94 $10,030 $ 9,876 $ 9,796 $ 9,963
12/94 $10,054 $ 9,863 $ 9,771 $ 9,804
2/95 $10,426 $10,127 $10,021 $ 9,904
4/95 $10,587 $10,326 $10,205 $10,015
6/95 $10,803 $10,560 $10,423 $10,107
8/95 $10,908 $10,642 $10,490 $10,174
10/95 $11,053 $10,785 $10,618 $10,162
12/95 $11,232 $10,929 $10,746 $10,261
2/96 $11,335 $11,005 $10,802 $10,322
4/96 $11,370 $11,014 $10,781 $10,366
6/96 $11,484 $11,119 $10,886 $10,458
8/96 $11,610 $11,220 $10,966 $10,543
10/96 $11,833 $11,429 $11,157 $10,703
</TABLE>
Average Annual Total Return %
for the period ended October 31, 1996
Since
1 yr 3 yr Inception
Class A 5.81% 4.41% 4.28%
Class B 5.02% 3.69% 3.52%
Past Performance is not indicative of future results. See Notes to Performance
(page 17).
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<PAGE>
8 Investors Trust Government Fund
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FROM THE GOVERNMENT FUND SUB-ADVISER
BLACKROCK FINANCIAL MANAGEMENT, INC.
PORTFOLIO MANAGERS: KEITH ANDERSON AND ANDREW PHILLIPS
Q. WHAT HAPPENED IN THE MARKET OVER THE PAST TWELVE MONTHS?
A. Significant swings in the pace of U.S. economic growth influenced the
performance of the fixed income markets during the year ended October 31,
1996. Throughout the fourth quarter of 1995 and through the first six
weeks of 1996, weak inflationary data and sluggish retail demand spurred
two reductions of short term interest rates totaling 50 basis points
(0.50%) by the Federal Reserve to 5.25%. However, the economic climate
was altered significantly during mid-February, as data suggesting a
pick-up in growth caused market participants to consider the potential
for increased inflationary pressures.
Economic growth continued to accelerate during the second quarter of
1996, as the sharp decline in interest rates throughout 1995 further
stimulated spending and buoyed consumer confidence. Economic growth as
measured by Gross Domestic Product (GDP) was measured at an annualized
4.7% for the quarter, which led investors to believe that the Federal
Reserve would be forced to raise interest rates for the first time in
over a year to curb the pace of the economy. However, the pace of
economic growth has slowed during the past few months to the 2.0%-2.5%
level, which is considered the non-inflationary trendline pace for the
U.S. economic growth. Softer economic data and continued moderation in
the broad inflation measures during the third quarter allowed the Fed to
leave short term interest rates unchanged at their August and September
policy meetings.
Yields of most maturity Treasuries posted minimal net changes over
the past twelve months. As an example, the yield of the 5-Year Treasury
note ended October 1996 at 6.07%, 26 basis points higher than the October
31, 1995 closing yield of 5.81%. However, the modest net change in yield
levels masks considerable intra-year movements. After falling to a low of
5.13% in mid-February, the yield of the 5-year Treasury rose to 6.82% in
July in response to stronger economic data before rallying to 6.07% at
the end of the period. The market for mortgage-backed securities (MBS)
posted strong performance versus the broader investment grade bond market
during 1996. Prepayments, as measured by the MBA Refinancing Index,
displayed considerable stability as homeowners refinanced their mortgages
at a relatively stable rate. An equally important contributor to mortgage
performance was a strong technical environment, as new issue supply
declined from its May peak. Additionally, financial institution demand
for MBS increased in light of an overall scarcity of high quality fixed
income products with a yield advantage over Treasuries.
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<PAGE>
Investors Trust Government Fund 9
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Q. WHAT HAPPENED IN THE FUND DURING THE PAST SIX AND TWELVE MONTH
PERIODS?
A. The Fund entered the fiscal year with approximately a two-thirds
allocation to mortgage-backed securities and maintained this exposure
through the April 30 semi-annual period. During the past six months,
however, BlackRock has taken on a defensive outlook on the mortgage
market and the Fund's mortgage exposure has been reduced accordingly. The
most significant reduction occurred in the adjustable rate mortgage (ARM)
sector. After consistently maintaining between a 15% and 20% stake in
ARMs in the first half of the fiscal year, the Fund eliminated its
position over the past six months in response to price appreciation and
tightening yield spreads. Within the mortgage pass-through sector, the
Fund has emphasized seasoned pass-throughs over generic, or newly issued,
pass-throughs by doubling its seasoned pass-through allocation between
April 30, 1996 and October 31, 1996. The overall reduction in mortgage
securities has allowed for an increase in the Fund's allocation to
Treasuries and Agency bonds. In particular, the Fund has purchased 10-
and 20-year Small Business Administration Loans (SBAs) and FHA Project
Loans, both of which offer agency credit quality, attractive yield
spreads over Treasuries and relatively strong prepayment protection.
Q. WHAT IS YOUR CURRENT MARKET OUTLOOK?
A. BlackRock maintains a positive view on the bond market. The rationale
behind the Fed's decision not to raise interest rates appears to focus on
the benign inflation data released during the third quarter. The decline
in September job growth after two significant increases further supported
the Fed's inaction. On balance, the outlook for moderate inflation
remains intact, suggesting that further declines in interest rates are
likely. In addition to the favorable fundamental backdrop, foreign demand
for U.S. bonds has increased due to the renewed attractiveness of the
U.S. bond market on a global basis.
Q. HOW HAVE YOU POSITIONED THE FUND TO BENEFIT FROM YOUR MARKET OUTLOOK?
A. As discussed above, the Fund has reduced the mortgage overweighting
that had been in place through much of 1996 as BlackRock has adopted a
less positive view of that sector. In addition to the tight yield spread
levels at which mortgages are currently trading, our anticipation of a
pick-up in interest rate volatility has led to the decision to
underweight the mortgages. The Fund's remaining mortgage holdings
emphasize seasoned securities, which are expected to provide more
prepayment stability should interest rates decline significantly.
Additionally, as of October 31, 1996 the Fund had taken a modestly
aggressive duration stance, reflecting BlackRock's positive views on
interest rates.
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<PAGE>
10 Investors Trust Government Fund
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[graph goes here]
Performance of a $10,000 investment since inception of the Investors Trust
Government Fund A Shares (9/8/93)
<TABLE>
<CAPTION>
Lehman Brothers Morningstar Government Bond - Investors Trust
Government Bond Index General Fund Average Government Fund - A Shares
(ending value: $11,674) (ending value: $11,294) (ending value: $10,592)
<S> <C>
9/8/93 $10,000 $10,000 $10,000
10/93 $10,076 $10,044 $ 9,940
12/93 $10,004 $10,005 $ 9,910
2/94 $ 9,926 $ 9,948 $ 9,853
4/94 $ 9,626 $ 9,666 $ 9,480
6/94 $ 9,592 $ 9,623 $ 9,162
8/94 $ 9,770 $ 9,759 $ 9,248
10/94 $ 9,626 $ 9,635 $ 9,029
12/94 $ 9,667 $ 9,656 $ 9,060
2/95 $10,058 $ 9,996 $ 9,321
4/95 $10,254 $10,156 $ 9,470
6/95 $10,750 $10,530 $ 9,842
8/95 $10,835 $10,612 $ 9,904
10/95 $11,106 $10,825 $10,091
12/95 $11,439 $11,094 $10,350
2/96 $11,274 $10,974 $10,255
4/96 $11,109 $10,844 $10,128
6/96 $11,233 $10,928 $10,189
8/96 $11,236 $10,939 $10,186
10/96 $11,674 $11,294 $10,592
</TABLE>
Average Annual Total Return %
for the period ended October 31, 1996
Since
1 yr 3yr Inception
Class A 4.80% 2.09% 1.79%
[graph goes here]
Performance of a $10,000 investment since inception of the Investors Trust
Government Fund B Shares (4/22/87)
Average Annual Total Return %
for the period ended October 31, 1996
Since
1 yr 3yr Inception
Class B 4.00% 1.35% 6.70%
<TABLE>
<CAPTION>
Lehman Brothers Morningstar Government Bond - Investors Trust
Government Bond Index General Fund Average Government Fund - B Shares
(ending value: $20,979) (ending value: $18,687) (ending value: $18,162)
<S> <C>
4/22/87 $10,000 $10,000 $10,000
10/31/87 $ 9,933 $ 9,839 $10,130
4/30/88 $10,378 $10,313 $10,708
10/31/88 $10,899 $10,767 $11,240
4/30/89 $11,160 $10,961 $11,383
10/31/89 $12,210 $11,794 $12,318
4/30/90 $12,089 $11,772 $12,451
10/31/90 $12,935 $12,495 $13,248
4/30/91 $13,869 $13,327 $14,133
10/31/91 $14,827 $14,217 $15,113
4/30/92 $15,311 $14,632 $15,441
10/31/92 $16,358 $15,431 $16,283
4/30/93 $17,488 $16,267 $17,119
10/31/93 $18,506 $16,917 $17,826
4/30/94 $17,680 $16,281 $16,918
10/31/94 $17,678 $16,230 $16,047
4/30/95 $18,833 $17,106 $16,807
10/31/95 $20,397 $18,234 $17,843
4/30/96 $20,403 $18,265 $17,801
10/31/96 $21,441 $19,023 $18,583
</TABLE>
Past performance is not indicative of future results. See Notes to Performance
(page 17).
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<PAGE>
Investors Trust Tax Free Fund 11
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FROM THE TAX FREE FUND SUB-ADVISER
BROWN BROTHERS HARRIMAN & CO.
PORTFOLIO MANAGER: BARBARA BRINKLEY
Q. WHAT HAPPENED IN THE MARKET DURING THE PAST TWELVE MONTHS?
A. Slow growth and falling interest rates at the end of 1995 planted the
seeds for a rebounding economy in the spring of 1996. Brisk economic
activity, tightening labor markets and rising oil prices heightened
inflationary concerns and provoked expectations of a more restrictive
monetary policy, causing bond prices to sink at mid-year. More recently,
the resultant rise in mortgage rates and burgeoning personal debt levels
have slowed consumer spending, while weaker government spending and a
widening trade gap have restrained GDP growth. As evidence of a slower
economic pace has unfolded, bond prices have rallied.
During our fiscal year, Aaa municipal yields first sank by 30-35
basis points through January; rose 55-65 basis points through June; then
fell by 25 basis points through October, 1996. For the fiscal period, Aaa
municipal yields are 5-10 basis points higher for 2-10 year maturities
and 5-10 basis points lower for maturities beyond 10 years.
Intermediate and longer maturity municipals performed well relative
to comparable maturity taxable securities. As tax reform worries
dissipated and modestly higher yields provoked strong investor demand for
tax-sheltered income, the yield ratios of municipals to treasuries
dropped to their lowest levels in a year.
Q. WHAT IS YOUR CURRENT MARKET OUTLOOK?
A. The U.S. economy is in the midst of a slowdown in real GDP growth,
from nearly 5% in the second quarter to less than 2% in the third and
fourth quarters, 1996. Consumer spending and government spending have
weakened after a second quarter surge, while a widening trade gap is also
restraining GDP. Resilient housing activity, and support from capital
spending and inventory investment, will cushion some of the slowdown we
expect in other sectors. Overall, inflation should remain around 3%.
Should growth muddle along at the 1%-2% pace we project, the Fed's next
move may be to ease monetary policy at some point in 1997.
Q. HOW HAVE YOU POSITIONED THE FUND TO BENEFIT FROM YOUR MARKET OUTLOOK?
A. The portfolio is now positioned with a duration that is moderately
longer than the portfolio's "neutral point" to benefit from the lower
interest rate environment we anticipate in the coming quarters. The
portfolio's duration is 6.6 years, or 110% of duration neutrality, which
is 6 years. Portfolio issues are concentrated in 7-20 year maturities to
lock in the high
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<PAGE>
12 Investors Trust Tax Free Fund
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tax free yields of the steepest part of the yield curve, and to benefit
from lower yields and from "rolling down the yield curve" over time. Our
average coupon is over 7%.
We prefer call-protected premium coupons for their greater tax-free
yields to maturity, and their more defensive characteristics. Further,
they avoid the unfavorable tax effects of market discount bonds. Our
average credit quality is Aa+, with over 65% of the portfolio backed by
U.S. Treasury securities held in escrow. Our high credit quality and
broad geographical diversification are designed to protect against "event
risk" that could arise from a local economic/political development or
from a natural disaster. We manage our sales transactions to avoid
incurring net capital gains tax liability. We have no derivatives or
alternative minimum tax bonds in the Fund's portfolio.
[graph goes here]
Performance of a $10,000 investment since inception of the Investors Trust
Tax Free Fund (9/8/93)
<TABLE>
<CAPTION>
Lehman Brothers 10-Year General Investors Trust Investors Trust Morningstar Municipal Bond -
Obligation Municipal Bond Index Tax Free Fund - A Shares Tax Free Fund - B Shares National Fund Average
(ending value: $11,775) (ending value: $11,621) (ending value: $11,582) (ending value: $11,396)
<S> <C>
9/8/96 $10,000 $10,000 $10,000 $10,000
10/93 $10,138 $10,054 $10,043 $10,128
12/93 $10,278 $10,162 $10,147 $10,226
2/94 $10,081 $10,011 $ 9,983 $10,094
4/94 $ 9,830 $ 9,712 $ 9,673 $ 9,763
6/94 $ 9,854 $ 9,795 $ 9,743 $ 9,795
8/94 $10,061 $ 9,998 $ 9,940 $ 9,973
10/94 $ 9,788 $ 9,753 $ 9,697 $ 9,689
12/94 $ 9,755 $ 9,793 $ 9,737 $ 9,711
2/95 $10,288 $10,296 $10,236 $10,202
4/95 $10,453 $10,432 $10,371 $10,299
6/95 $10,710 $10,614 $10,561 $10,495
8/95 $11,012 $10,809 $10,746 $10,673
10/95 $11,205 $10,946 $10,892 $10,870
12/95 $11,427 $11,289 $11,223 $11,148
2/96 $11,521 $11,339 $11,272 $11,148
4/96 $11,325 $11,096 $11,041 $10,963
6/96 $11,387 $11,211 $11,155 $11,061
8/96 $11,505 $11,406 $11,338 $11,154
10/96 $11,775 $11,621 $11,562 $11,396
</TABLE>
Average Annual Total Return %
for the period ended October 31, 1996
Since
1 yr 3yr Inception
Class A 6.13% 4.94% 4.88%
Class B 6.12% 4.80% 4.71%
Past performance is not indicative of future results. See Notes to Performance
(page 17).
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<PAGE>
Investors Trust Value Fund 13
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FROM THE VALUE FUND SUB-ADVISER
DUFF & PHELPS INVESTMENT MANAGEMENT
PORTFOLIO MANAGER: CARL FAUST
Q. WHAT HAPPENED IN THE MARKET DURING THE PAST TWELVE MONTHS?
A. The stock market experienced another good year with the S&P 500 up
24.2% for the year and 9.1% over the six months ended 10/31/96. The past
6 months could be characterized as a turbulent period in which the equity
markets experienced a flight to quality based on concerns regarding
economic growth and inflation. While the markets experienced a modest
correction, ranging from 3-9% in July, most markets recovered in August
and September as signs of slower economic growth became more evident.
Q. WHAT HAPPENED IN THE FUND DURING THE PAST SIX AND TWELVE MONTHS?
A. We have taken larger positions in companies for which we have a high
degree of confidence. These larger positions benefited the fund (General
Electric, Chase Manhattan).
The best and worst performing stocks held throughout the year:
12 Months 6 Months
- --------------------------------- -----------------------------------------
Best Worst Best Worst
- -------------- -------------- ----------------- ---------------------
Intel +57% MASCO +11% Intel +62% May Dept. Store -7%
Gillette +54% AMEX +15% Compaq +48% Pepsi -6%
MBNA +53% Mobil +15% MBNA +33% Halliburton -1%
GE +52% Exxon +16% Campbell +28% Mobil +1%
Q. WHAT IS YOUR CURENT MARKET OUTLOOK?
A. We expect growth will slow during the balance of 1996 leading to
slower profit growth in 1997. We also expect inflation to increase
modestly to 2.9% in 1996 from just 2.5% in 1995. The Federal Reserve may
be forced to raise interest rates in late 1996 or early 1997 based on
economic growth and higher inflation.
As this is written, the stock market is slightly under-valued
relative to the fixed income markets. We expect investors will continue
shifting toward high quality companies with consistent earnings growth
prospects as profit growth slows in 1997.
Q. HOW HAVE YOU POSITIONED THE FUND TO BENEFIT FROM YOUR MARKET OUTLOOK?
A. We have increased our overweighting in the defensive sector, mainly
in the drug and household product industries. Drug companies should
benefit from strong new product pipelines, favorable demographics and
less turmoil on the legislative front. We increased our
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<PAGE>
14 Investors Trust Value Fund
- --------------------------------------------------------------------------------
overweighting in diversified chemical and industrial companies and moved
away from aluminum and steel companies.
We are underweighted in both energy and interest sensitive sectors.
Going forward, energy related stocks are unlikely to outperform the S&P
500 due to deregulation and unsustainable high energy prices. Within the
interest sensitive sector, we remain attracted to bank stocks. Chase
Manhattan remains a significant position in the fund and continues to
benefit from improving fundamentals and the merger with Chemical Bank.
Our emphasis on large capitalization, high quality companies with
consistent earnings growth prospects should continue delivering strong
relative performance. The portfolio should also benefit from a continued
reduction in the overall number of holdings and increased positions in
stocks in which we have the highest degree of confidence.
[graph goes here]
Performance of a $10,000 investment since inception of the Investors Trust
Value Fund (9/8/93)
<TABLE>
<CAPTION>
Standard & Poor's Investors Trust Value Investors Trust Value Morningstar Equity Income
500 Stock Index Fund-A Shares Fund-B Shares Fund Average
(ending value: $16,500) (ending value: $15,162) (ending value: $14,847) (ending value: $14,539)
<S> <C>
9/8/96 $10,000 $10,000 $10,000 $10,000
10/93 $10,128 $10,173 $10,187 $10,119
12/93 $10,156 $10,141 $10,147 $10,127
2/94 $10,213 $ 9,967 $ 9,960 $10,144
4/94 $ 9,895 $ 9,722 $ 9,690 $ 9,857
6/94 $ 9,808 $ 9,595 $ 9,561 $ 9,792
8/94 $10,545 $10,093 $10,044 $10,360
10/94 $10,527 $10,141 $10,075 $10,237
12/94 $10,288 $ 9,972 $ 9,902 $ 9,940
2/95 $10,966 $10,557 $10,469 $10,455
4/95 $11,619 $11,073 $10,964 $10,928
6/95 $12,361 $11,517 $11,383 $11,382
8/95 $12,808 $11,778 $11,641 $11,781
10/95 $13,297 $12,316 $12,140 $12,050
12/95 $14,139 $12,919 $12,724 $12,882
2/96 $14,766 $13,462 $13,232 $13,297
4/96 $15,127 $13,700 $13,460 $13,604
6/96 $15,581 $13,986 $13,732 $13,845
8/96 $15,203 $13,720 $13,457 $13,702
10/96 $16,500 $15,162 $14,847 $14,539
</TABLE>
Average Annual Total Return %
for the period ended October 31, 1996
Since
1 yr 3yr Inception
Class A 23.10% 14.23% 14.13%
Class B 22.30% 13.38% 13.37%
Past performance is not indicative of future results. See Notes to Performance
(page 17).
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Growth Fund 15
- --------------------------------------------------------------------------------
FROM THE GROWTH FUND SUB-ADVISER
VALUE LINE, INC.
PORTFOLIO MANAGER: ALAN HOFFMAN
Q. WHAT HAPPENED IN THE MARKET DURING THE PAST TWELVE MONTHS? WHAT
HAPPENED IN THE FUND DURING THE PAST SIX AND TWELVE MONTHS?
A. The defining characteristic of the equity markets over the last year
has been volatility. While stock prices have generally moved higher over
the period (recently setting new records for the major market indexes),
there have been a few significant downdrafts, including the technology
sell-off that commenced in the last quarter of 1995 and the overall
market correction of this past summer.
The Fund's performance reflected and amplified the general contour
of the market. Because of our overweighted position in technology stocks,
that sector helped the Fund significantly during periods of rising prices
and hurt us during market selloffs. On balance, our technology exposure
was a net positive over the past year.
Q. WHAT IS YOUR CURRENT MARKET OUTLOOK?
A. Recently released data support our forecast that the U.S. economy
will continue on a track of moderate growth and relatively low interest
and inflation rates. If there is a risk to this outlook, it's probably
that it's too optimistic: there's some evidence that the economy is
slowing, which could provoke the Federal Reserve to adopt a more
accommodative monetary posture. All of this, of course, suggests a
healthy environment for growth equities. And while we believe that the
long-term direction for stocks--especially the high-quality growth names
in which the Fund specializes--is up, market volatility will be a fact of
life for the foreseeable future.
Q. HOW HAVE YOU POSITIONED THE FUND TO BENEFIT FROM YOUR MARKET OUTLOOK?
A. We are almost fully invested in stocks ranked 1 or 2 by the Value
Line Timeliness Ranking system, which has a 31-year record of identifying
stocks that, as a group, tend to outperform the broad market averages. In
terms of specific economic sectors, we have significant exposure to
financial services and the health-care/drug area, and we continue to
believe that high-tech stocks will form a structural foundation of the
portfolio, reflecting those companies' importance in worldwide economic
growth.
- --------------------------------------------------------------------------------
<PAGE>
16 Investors Trust Growth Fund
- --------------------------------------------------------------------------------
[graph goes here]
Performance of a $10,000 investment since inception of the Investors Trust
Growth Fund (9/8/93)
<TABLE>
<CAPTION>
Standard & Poor's Investors Trust Growth Investors Trust Growth Morningstar Growth
500 Stock Index Fund-A Shares Fund-B Shares Fund Average
(ending value: $16,500) (ending value: $15,632) (ending value: $15,288) (ending value: $15,190)
<S> <C>
9/8/93 $10,000 $10,000 $10,000 $10,000
10/93 $10,212 $10,212 $10,238 $10,128
12/93 $10,435 $10,424 $10,343 $10,156
2/94 $10,659 $10,624 $10,507 $10,213
4/94 $ 9,847 $ 9,800 $10,058 $ 9,895
6/94 $ 9,447 $ 9,400 $ 9,734 $ 9,808
8/94 $10,394 $10,323 $10,475 $10,545
10/94 $10,465 $10,382 $10,450 $10,527
12/94 $10,322 $10,228 $10,155 $10,288
2/95 $10,857 $10,739 $10,606 $10,966
4/95 $11,273 $11,143 $11,119 $11,619
6/95 $12,377 $12,212 $11,922 $12,361
8/95 $13,292 $13,103 $12,627 $12,808
10/95 $13,518 $13,316 $12,753 $13,297
12/95 $13,589 $13,364 $13,297 $14,139
2/96 $14,337 $14,077 $13,885 $14,766
4/96 $14,646 $14,374 $14,529 $15,127
6/96 $14,551 $14,267 $14,675 $15,581
8/96 $14,539 $14,243 $14,320 $15,203
10/96 $15,632 $15,288 $15,190 $16,500
</TABLE>
Average Annual Total Return %
for the period ended October 31, 1996
Since
1 yr 3yr Inception
Class A 15.64% 15.25% 15.24%
Class B 14.81% 14.40% 14.43%
Past performance is not indicative of future results. See Notes to Performance
(page 17).
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Mutual Funds 17
- --------------------------------------------------------------------------------
NOTES TO PERFORMANCE
Total returns assume changes in share price and reinvestment of dividends and
capital gains. Investment returns and principal values will fluctuate, so that
an investor's shares, when redeemed, may be worth more or less than the original
cost.
The total returns of classes A and B shown do not include any reduction for
the maximum applicable sales charges. If total returns included the effects of
these charges, the performance figures for each class would have been lower.
- --------------------------------------------------------------------------------
<PAGE>
18 Investors Trust Adjustable Rate Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ---------- ----------
<S> <C>
LONG-TERM GOVERNMENT AGENCY SECURITIES 85.3
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (A)(B)-4.8
9.000%, with various maturity dates to October 15, 2016
(Cost $338,271)............................................ 318,176 341,131
----------
FEDERAL HOME LOAN MORTGAGE CORPORATION (A)(B)-3.1
7.500%, with various maturity dates to September 1, 2000
(Cost $222,044)............................................ 217,757 221,907
----------
FEDERAL HOME LOAN MORTGAGE CORPORATION
ADJUSTABLE RATE MORTGAGES (A)(B)(D)-15.0
7.258%, with a maturity date of June 1, 2024...................... 201,667 205,952
7.351%, with a maturity date of January 1, 2023................... 125,426 126,857
7.610%, with a maturity date of January 1, 2023................... 107,162 110,494
7.812%, with a maturity date of August 1, 2023.................... 193,067 198,558
7.825%, with various maturity dates to January 1, 2024............ 180,726 184,874
7.987%, with a maturity date of August 1, 2023.................... 228,313 235,591
----------
Total Federal Home Loan Mortgage Corporation
Adjustable Rate Mortgages
(Cost $1,052,680).......................................... 1,062,326
----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
ADJUSTABLE RATE MORTGAGES (A)(B)(D)-6.8
4.131%, with a maturity date of April 1, 2026..................... 271,554 267,098
6.954%, with a maturity date of May 1, 2021....................... 206,502 211,728
----------
Total Federal National Mortgage Association
Adjustable Rate Mortgages
(Cost $471,409)............................................ 478,826
----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
ADJUSTABLE RATE MORTGAGES (A)(B)(D)-55.6
5.000%, with a maturity date of October 20, 2025.................. 558,358 556,873
5.500%, with a maturity date of November 20, 2024................. 243,284 244,425
6.000%, with various maturity dates to April 20, 2024............. 355,709 355,592
6.500%, with various maturity dates to August 20, 2025............ 1,004,372 1,016,503
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Adjustable Rate Fund 19
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ---------- ----------
<S> <C>
7.000%, with various maturity dates to September 20, 2024......... 611,078 620,862
7.125%, with various maturity dates to August 20, 2024............ 617,748 630,445
7.250%, with various maturity dates to September 20, 2023......... 503,302 512,770
----------
Total Government National Mortgage Association
Adjustable Rate Mortgages
(Cost $3,806,202).......................................... 3,937,470
----------
Total Long-Term Government Agency Securities
(Cost $5,890,606).......................................... 6,041,660
----------
COLLATERALIZED MORTGAGE OBLIGATIONS 7.9
THE MONEY STORE HOME EQUITY TRUST (A)(B)(C)-2.0
6.850%, with a maturity date of June 15, 2019..................... 140,000 139,737
----------
RESOLUTION TRUST CORPORATION MORTGAGE PASS-THROUGHS (A)(B)(C)-5.9
8.000%, with a maturity date of September 25, 2021................ 227,609 229,885
9.000%, with a maturity date of September 25, 2028................ 187,617 193,011
----------
422,896
----------
Total Collateralized Mortgage Obligations
(Cost $559,723)............................................ 562,633
----------
ASSET-BACKED SECURITIES 4.8
Citibank Credit Card Master Trust, Zero Coupon February 7, 2003
[Certificate Series 1996 1 Class A]............................. 225,000 171,421
Household Finance Corporation, 5.800%, May 20, 2008
[1993-1 Class A2]............................................... 95,152 95,509
Equicon Loan Trust, 5.850%, November 18, 2012
[Series 1993-1 Class A]......................................... 74,818 74,070
----------
Total Asset-Backed Securities
(Cost $345,642)............................................ 341,000
----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
20 Investors Trust Adjustable Rate Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET NUMBER MARKET
ASSETS OF SHARES VALUE ($)
-------- --------- ----------
<S> <C>
MONEY MARKET MUTUAL FUNDS 1.6
The Seven Seas Series Money Market Fund [Class A].................... 70,486 70,486
The Seven Seas Series US Government Money Market Fund................ 43,070 43,070
----------
Total Money Market Mutual Funds
(Cost $113,556)............................................... 113,556
-------- ----------
SUMMARY
Total investments
(Cost $6,909,527) (E)......................................... 99.6 7,058,849
Other assets and liabilities, net.................................... 0.4 26,477
-------- ----------
NET ASSETS................................................................ 100.0 $7,085,326
-------- ----------
-------- ----------
</TABLE>
- ------------
NOTES:
(A) The investments in mortgage-backed securities are interests in separate
pools of mortgages. All such issues which have similar coupon rates have
been aggregated for financial statement presentation purposes.
(B) Effective maturities for all securities may be shorter than indicated due
to prepayments.
(C) Risks associated with Collateralized Mortgage Obligations ("CMOs")--The
net asset value of the Fund is sensitive to interest rate fluctuations.
CMOs are obligations collateralized by a portfolio of mortgages or
mortgage-related securities. Payments of principal and interest on the
mortgages are passed through to the holder of the CMOs as they are
received, but certain classes of CMOs have priority over others with
respect to the receipt of prepayments on the mortgages. Therefore, an
investment in a CMO may be subject to a greater or lesser risk of
prepayment than other types of mortgage-related securities and this
uncertainty results in greater price volatility.
(D) Risks associated with Adjustable Rate Mortgage securities ("ARMs")--Most
ARMs are subject to limits on coupon changes ("caps" and "floors"). Coupon
caps/floors limit the amount the coupon can adjust on coupon reset dates,
or over the life of the loan. If interest rates change quickly, an
adjustable rate mortgage's coupon adjustment may be constrained by its
periodic or lifetime limit. For example, if rates rise quickly, since the
coupon rate cannot reset to equal the market rates, or at least cannot do
so immediately, an investment in an ARM may be subject to a decline in
price, despite the fact that ARM securities are often represented to have
less price risk than fixed rate securities. Until, and if, the ARM's
coupon rate can adjust to equal current market rates, it will be subject
to price variations, despite being an "adjustable rate" security. This
exposure is called "cap risk". Conversely, an ARM may benefit from the
floor on its rate adjustments if market rates drop below the minimum rate
the ARM may pay.
(E) See Note 3 in the notes to financial statements for cost for federal
income tax purposes and related gross unrealized appreciation
(depreciation).
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Government Fund 21
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ----------- ------------
<S> <C>
LONG-TERM GOVERNMENT AND AGENCY SECURITIES 101.6
FEDERAL HOME LOAN MORTGAGE CORPORATION (A)(B)-27.6
4.500%, with a maturity date of November 15, 2020............. 2,000,000 1,686,240
5.500%, with a maturity date of December 1, 2008.............. 4,320,770 4,108,750
6.500%, with various maturity dates to February 1, 2026....... 113,299,057 111,523,995
7.500%, with various maturity dates to October 1, 2026........ 90,973,203 92,208,389
9.000%, with a maturity date of December 1, 2014.............. 3,507,071 3,684,318
10.000%, with various maturity dates to December 1, 2020....... 700,393 762,777
10.500%, with various maturity dates to August 1, 2019......... 253,264 278,456
12.000%, with a maturity date of August 1, 2014................ 6,599 7,215
12.500%, with various maturity dates to September 1, 2014...... 109,134 127,199
13.000%, with a maturity date of January 1, 2013............... 40,257 44,757
------------
Total Federal Home Loan Mortgage Corporation
(Cost $215,745,359)..................................... 214,432,096
------------
UNITED STATES TREASURY BONDS-11.4
6.750%, with a maturity date of August 15, 2026............... 10,050,000 10,169,294
11.625%, with a maturity date of November 15, 2002............. 61,500,000 78,268,590
------------
Total United States Treasury Bonds
(Cost $87,326,739)...................................... 88,437,884
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
REAL ESTATE MORTGAGE INVESTMENT CONDUITS [REMIC] (B)(C)-1.5
8.400%, with a maturity date of August 25, 2019
[Series 1989-54 Class E]
(Cost $10,892,957)...................................... 10,800,000 11,370,348
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (A)(B)-6.3
3.500%, with a maturity date of October 25, 2021.............. 14,200,000 11,386,625
6.500%, with various maturity dates to May 1, 2024............ 10,179,941 9,815,322
9.000%, with various maturity dates to July 1, 2021........... 3,090,977 3,272,021
10.000%, with various maturity dates to June 1, 2025........... 22,211,444 24,462,951
------------
Total Federal National Mortgage Association
(Cost $47,725,577)...................................... 48,936,919
------------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
22 Investors Trust Government Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ----------- ------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION MEDIUM TERM NOTES-15.6
<S> <C>
10.450%, with a maturity date of October 13, 2015.............. 10,000,000 13,621,800
11.875%, with a maturity date of May 19, 2000.................. 40,000,000 47,195,600
12.000%, with a maturity date of November 13, 2000 (D)......... 50,000,000 60,273,500
------------
Total Federal National Mortgage Association
Medium Term Notes
(Cost $120,542,600)..................................... 121,090,900
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (A)(B)-13.1
6.500%, with various maturity dates to April 15, 2024......... 20,673,188 19,906,574
7.000%, with various maturity dates to April 15, 2026......... 38,124,552 37,481,176
8.000%, with various maturity dates to March 15, 2026......... 38,453,126 39,501,290
8.500%, with various maturity dates to March 15, 2023......... 825,864 861,233
9.000%, with a maturity date of May 15, 2013.................. 247,932 265,788
9.500%, with various maturity dates to December 15, 2017...... 3,073,743 3,349,189
10.500%, with various maturity dates to December 15, 2019...... 111,676 124,391
12.500%, with a maturity date of April 15, 2015................ 16,117 19,103
------------
Total Government National Mortgage Association
(Cost $100,523,354)..................................... 101,508,744
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION
MULTICLASS MORTGAGE PARTICIPATION CERTIFICATE (B)(C)-0.4
9.500%, with a maturity date of January 15, 2019
[Series 38 Class C]
(Cost $3,584,463)....................................... 3,490,736 3,553,988
------------
FINANCING CORPORATION-5.4
9.650%, with a maturity date of November 2, 2018.............. 2,020,000 2,602,326
10.700%, with a maturity date of October 6, 2017............... 28,165,000 39,325,381
------------
Total Financing Corporation
(Cost $37,252,781)...................................... 41,927,707
------------
UNITED STATES TREASURY NOTES-5.7
6.500%, with various maturity dates to October 15, 2006
(Cost $43,343,026)...................................... 43,620,000 44,232,984
------------
SMALL BUSINESS ADMINISTRATION NOTES (B)-7.2
6.950%, with a maturity date of September 1, 2015............. 11,813,940 11,784,406
7.350%, with a maturity date of August 1, 2005................ 12,580,000 12,737,250
7.550%, with a maturity date of June 1, 2016.................. 8,393,000 8,608,071
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Government Fund 23
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ----------- ------------
<S> <C>
7.600%, with a maturity date of May 1, 2016................... 4,000,000 4,090,000
7.700%, with a maturity date of July 1, 2016.................. 6,000,000 6,189,375
8.100%, with a maturity date of March 1, 2015................. 9,561,253 10,003,461
8.500%, with a maturity date of January 1, 2015............... 2,341,108 2,505,717
------------
Total Small Business Administration Notes
(Cost $55,424,616)...................................... 55,918,280
------------
FEDERAL HOUSING ADMINISTRATION PROJECT LOANS (B)(H)-6.6
7.875%, with various maturity dates to January 1, 2038........ 14,142,756 14,150,954
7.900%, with a maturity date of September 1, 2037............. 7,719,100 7,706,074
8.000%, with a maturity date of July 1, 2037.................. 5,680,346 5,708,748
8.250%, with a maturity date of September 1, 2034............. 5,271,183 5,398,846
8.500%, with various maturity dates to September 25, 2037..... 10,243,200 10,377,642
8.750%, with a maturity date of June 25, 2035................. 4,193,281 4,364,943
9.250%, with a maturity date of March 1, 2037................. 3,051,950 3,238,882
------------
Total Federal Housing Administration Project Loans
(Cost $50,179,047)...................................... 50,946,089
------------
NEW YORK CITY MORTGAGE LOAN TRUST (C)-0.8
6.750%, with a maturity date of June 25, 2006
(Cost $6,116,533)....................................... 6,314,043 6,289,379
------------
Total Long-Term Government and Agency Securities
(Cost $778,657,052)..................................... 788,645,318
------------
SHORT TERM INVESTMENTS 0.3
FEDERAL HOME LOAN BANK DISCOUNT NOTE-0.3
5.450% (G), with a maturity date of November 1, 1996
(Cost $2,495,000)....................................... 2,495,000 2,495,000
------------
Total Short Term Investments
(Cost $2,495,000)....................................... 2,495,000
-------- ------------
SUMMARY
Total investments before outstanding options written on futures
contracts (Cost $781,152,052) (E)............................ 101.9 791,140,318
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
24 Investors Trust Government Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ----------- ------------
<S> <C>
OUTSTANDING OPTIONS WRITTEN ON FUTURES CONTRACTS 0.0
186 contracts of call options written on United States Treasury
Bond Futures at $114 expiring 11/16/96 (Premiums received
$210,994).................................................... (116,250)
------------
SUMMARY
Total investments, net of outstanding options written on
futures contracts............................................ 101.9 791,024,068
Other assets and liabilities, net.............................. (1.9) (14,718,513)
-------- ------------
NET ASSETS.......................................................... 100.0 $776,305,555
-------- ------------
-------- ------------
</TABLE>
- ------------
NOTES:
(A) The investments in mortgage-backed securities are interests in separate
pools of mortgages. All such issues which have similar coupon rates, have
been aggregated for financial statement presentation purposes.
(B) Effective maturities for all securities may be shorter than indicated due
to prepayments.
(C) Risks associated with Collateralized Mortgage Obligations ("CMOs")--The
net asset value of the Fund is sensitive to interest rate fluctuations.
CMOs are obligations collateralized by a portfolio of mortgages or
mortgage-related securities. Payments of principal and interest on the
mortgages are passed through to the holder of the CMOs as they are
received, but certain classes of CMOs have priority over others with
respect to the receipt of prepayments on the mortgages. Therefore, an
investment in a CMO may be subject to a greater or lesser risk of
prepayment than other types of mortgage-related securities and this
uncertainty results in greater price volatility.
(D) Collateral for open futures and options contracts (Note 3).
(E) See Note 3 in notes to financial statements for cost for federal income
tax purposes and related gross unrealized appreciation (depreciation).
(F) At October 31, 1996, open futures contracts sold short were as follows:
<TABLE>
<CAPTION>
CONTRACTS EXPIRATION MARKET UNREALIZED
SOLD DESCRIPTION DATE VALUE DEPRECIATION
--------- ----------------------------------------------- ----------- ----------- ------------
<S> <C>
178 U.S. Treasury Bond Futures Dec. 96 $20,114,000 $ (882,598)
----------- ------------
----------- ------------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Government Fund 25
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
(G) Yield to maturity, unaudited.
(H) Federal Housing Administration ("FHA") project loans--These securities are
pass-throughs or participation certificates backed by the U.S. Department
of Housing and Urban Development ("HUD"). Although HUD insures the project
loan collateral, it does not guarantee timely payment of principal and
interest on the securities. Project loans held by the Fund are structured
as Construction Loan Certificates/Permanent Loan Certificates
("CLCs/PLCs"). The Fund purchases a project loan by committing to fund
construction costs on a monthly basis until the project is built (CLCs).
As of October 31, 1996, the Fund had project loan---CLC payables of
$22,762,906 as stated in the Statement of Assets and Liabilities. When
construction is completed, the Fund's cumulative monthly construction
financing payments are rolled into permanent mortgages on the buildings
(PLCs). As of October 31, 1996, the Fund held $16,726,525 of PLCs.
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
26 Investors Trust Tax Free Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ---------- -----------
<S> <C>
LONG-TERM MUNICIPAL INVESTMENTS 98.1
ALABAMA-0.3
Birmingham Alabama North Medical Clinic Board Revenue,
6.625%, April 1, 2000*.......................................... 75,000 80,382
-----------
ALASKA-0.1
North Slope Borough Alaska, 10.000%, June 30, 2001* (a)........... 30,000 36,766
-----------
ARIZONA-0.8
Maricopa County Arizona, 6.250%, July 1, 2002 (a)................. 175,000 189,700
-----------
ARKANSAS-2.8
Arkansas Housing Development Agency,
8.375%, July 1, 2010*........................................... 250,000 307,678
Arkansas Housing Development Agency,
8.375%, July 1, 2011*........................................... 205,000 267,697
Pulaski County Arkansas Hospital Revenue,
9.250%, March 1, 2010*.......................................... 105,000 135,051
-----------
710,426
-----------
CALIFORNIA-4.8
California State, 8.750%, May 1, 2004............................. 110,000 136,902
Sacramento California Municipal Utility District Electric Revenue,
9.000%, April 1, 2013 [Series M]*............................... 620,000 816,459
San Diego California Hospital Revenue,
8.875%, February 1, 2011*....................................... 210,000 268,739
-----------
1,222,100
-----------
COLORADO-3.4
Colorado Springs Utilities Revenue,
8.500%, November 15, 2011*...................................... 100,000 126,916
Denver Colorado City and County Single-Family Mortgage Revenue,
7.000%, August 1, 2010 [Series 1978A]*.......................... 475,000 537,097
Loveland Colorado, 8.875%, November 1, 2005*...................... 165,000 205,689
-----------
869,702
-----------
CONNECTICUT-4.9
Connecticut State Health and Educational Facility Authority,
7.000%, July 1, 2012*........................................... 725,000 816,154
Connecticut State Housing Finance Authority,
6.050%, May 15, 2014............................................ 410,000 417,987
-----------
1,234,141
-----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Tax Free Fund 27
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ---------- -----------
<S> <C>
DELAWARE-0.9
Delaware Transportation Authority Transportation Systems Revenue,
6.100%, July 1, 2002............................................ 110,000 117,913
Georgetown Delaware, 6.800%, June 1, 2001** (a)................... 100,000 109,382
-----------
227,295
-----------
FLORIDA-6.9
Broward County Florida General Obligation,
6.200%, January 1, 2007 [Series C].............................. 25,000 26,687
Dade County Florida Health Facilities Authority Hospital Revenue,
6.400%, May 1, 2001* (a)........................................ 100,000 108,297
Florida State, Turnpike-Department of Transportation, Broward
County Expressway, 10.000%, July 1, 2014........................ 235,000 352,808
Florida State, Department of General Services, Broward County
Expresssway Revenue, 6.500%, July 1, 2003 [Series A]............ 675,000 690,134
Florida State, Jacksonville Transportation Authority,
5.900%, July 1, 2004............................................ 200,000 213,032
Gainesville Florida Utilities Systems Revenue,
8.125%, October 1, 2014*........................................ 175,000 219,952
Jacksonville Florida Electric Authority Revenue,
6.500%, October 1, 2003 [Series 10]............................. 135,000 148,365
-----------
1,759,275
-----------
GEORGIA-2.3
Clarke County Georgia Hospital Authority Revenue,
9.875%, January 1, 2006* (a).................................... 80,000 105,286
Columbus Georgia Medical Center Hospital Authority Revenue,
7.750%, July 1, 2010*........................................... 285,000 341,276
Gwinnett County Georgia Water and Sewage Authority Water Revenue,
9.600%, October 1, 2004*........................................ 115,000 145,145
-----------
591,707
-----------
HAWAII-0.9
Honolulu Hawaii City and County,
7.250%, July 1, 2002............................................ 200,000 226,210
-----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
28 Investors Trust Tax Free Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ---------- -----------
IDAHO-2.4
<S> <C>
Idaho Falls Idaho Electric Revenue,
10.375%, April 1, 2007**........................................ 425,000 605,255
-----------
ILLINOIS-4.9
Chicago Illinois Motor Fuel Tax Revenue,
6.500%, January 1, 2001** (a)................................... 20,000 21,511
Chicago Illinois Public Building Revenue,
7.500%, January 1, 2002* (a).................................... 500,000 542,965
Chicago Illinois Wastewater Transmission Revenue,
6.300%, January 1, 2003** (a)................................... 20,000 21,983
Des Plaines Illinois Hospital Facility Revenue,
10.750%, July 1, 2002**......................................... 115,000 149,713
Schaumburg Illinois, 6.000%, December 1, 2005..................... 430,000 453,676
Waukegan Illinois Water and Sewer Revenue,
7.500%, May 1, 2006*............................................ 50,000 58,658
-----------
1,248,506
-----------
INDIANA-2.0
Highland Indiana School Building Corporation,
7.000%, January 15, 2002**...................................... 400,000 450,864
Indiana University Revenue,
10.125%, July 1, 2001 [Series N]**.............................. 35,000 43,167
-----------
494,031
-----------
IOWA-4.4
Muscatine Iowa Electric Revenue,
9.700%, January 1, 2013*........................................ 815,000 1,112,230
-----------
KENTUCKY-1.4
Kentucky State Turnpike Authority Economic Development,
5.625%, July 1, 2010 (a)........................................ 355,000 363,119
-----------
LOUISIANA-2.8
Jefferson Parish Louisiana Hospital Service,
7.250%, January 1, 2009*........................................ 625,000 706,756
-----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Tax Free Fund 29
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ---------- -----------
<S> <C>
MAINE-0.8
Maine Municipal Bond Bank, 7.100%, November 1, 1999 [Series D]**.. 10,000 10,964
Maine Municipal Bond Bank, 7.200%, November 1, 2000 [Series B]**.. 65,000 72,650
Maine Municipal Bond Bank Sewer and Water Revenue,
7.200%, November 1, 2001 [Series A]**........................... 100,000 113,522
-----------
197,136
-----------
MASSACHUSETTS-4.7
Massachusetts Bay Transportation Authority,
7.250%, March 1, 2003 [Series A] (a)............................ 100,000 109,944
Massachusetts State, 6.750%, August 1, 2009 [Series C] (a)........ 250,000 276,820
Massachusetts State Port Authority Revenue,
13.000%, July 1, 2013*.......................................... 475,000 800,674
-----------
1,187,438
-----------
MICHIGAN-2.4
Michigan State Hospital Finance Authority Revenue,
7.125%, May 1, 2009*............................................ 335,000 378,969
Michigan State Hospital Finance Authority Revenue,
9.000%, May 1, 2008*............................................ 170,000 220,539
-----------
599,508
-----------
MINNESOTA-1.4
Rochester Minnesota Health Care Facilities Revenue,
6.250%, November 15, 2014....................................... 300,000 316,245
Western Minnesota Municipal Power Agency, Minnesota Power Supply,
10.250%, January 1, 1999 [Series A]** (a)....................... 25,000 28,120
-----------
344,365
-----------
MISSISSIPI-1.0
Mississippi State, 6.200%, February 1, 2008*...................... 225,000 245,605
-----------
MISSOURI-0.1
Lees Summit Missouri Water and Sewer Revenue,
10.000%, July 1, 2000 [Series 1984 A]** (a)..................... 20,000 23,722
-----------
NEVADA-0.7
Clark County Nevada School District, 8.250%, May 1, 2000.......... 150,000 168,168
-----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
30 Investors Trust Tax Free Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ---------- -----------
<S> <C>
NEW HAMPSHIRE-0.1
New Hampshire Municipal Bond Bank State Guaranteed,
6.800%, January 15, 2000 [Series B]**........................... 25,000 27,236
-----------
NEW JERSEY-1.2
Atlantic County New Jersey Improvement Authority Lease Revenue,
7.400%, March 1, 2012* (a)...................................... 170,000 201,681
New Jersey Economic Development Authority Market,
7.000%, July 1, 2004 (a)........................................ 100,000 113,074
-----------
314,755
-----------
NEW MEXICO-2.6
Farmington New Mexico Power Revenue,
9.875%, July 1, 2005**.......................................... 400,000 538,568
Farmington New Mexico Utility Systems Revenue,
9.875%, January 1, 2008* (a).................................... 100,000 132,180
-----------
670,748
-----------
NEW YORK-7.2
New York City, 6.000%, August 1, 2006* (a)........................ 300,000 305,517
New York State, 7.100%, March 1, 2001**........................... 50,000 55,803
New York State Dormitory Authority Revenue,
7.375%, July 1, 2016*........................................... 315,000 370,371
New York State Dormitory Authority Revenue,
7.500%, May 15, 2011............................................ 165,000 192,758
New York State Environmental Facilities Corporation,
6.800%, November 15, 2010....................................... 200,000 226,560
New York State Housing Finance Agency,
6.400%, November 1, 2003 [Series A]*............................ 175,000 186,095
New York State Local Government Assistance,
6.750%, April 1, 2002 [Series A]................................ 45,000 48,961
New York State Local Government Assistance,
7.250%, April 1, 2007........................................... 350,000 391,800
New York State Local Government Assistance Corporation,
6.000%, April 1, 2005 [Series C]................................ 50,000 53,065
-----------
1,830,930
-----------
NORTH CAROLINA-3.8
North Carolina Municipal Power Agency Number One Catawba, 10.500%,
January 1, 2010*................................................ 685,000 954,993
-----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Tax Free Fund 31
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ---------- -----------
<S> <C>
OHIO-2.2
Columbus Ohio, 5.250%, September 15, 2011......................... 270,000 268,604
Columbus Ohio, 6.000%, July 1, 2008 [Series 2].................... 50,000 52,274
Ohio State Water Development Authority Revenue,
7.000%, December 1, 2009* (a)................................... 200,000 228,094
-----------
548,972
-----------
PENNSYLVANIA-5.4
Allegheny County Pennsylvania Hospital Development Authority,
7.375%, July 1, 2012 [Series N]*................................ 150,000 174,831
Pennsylvania Intergovernmental Cooperative Authority,
6.800%, June 15, 2002**......................................... 50,000 55,418
Pennsylvania State Turnpike Commission Turnpike Revenue,
7.150%, December 1, 2001 [Series J]** (a)....................... 25,000 28,390
Philadelphia Pennsylvania Hospitals and Higher Education
Facilities, 6.500%, February 15, 2002 [Series A]**.............. 325,000 358,459
Philadelphia Pennsylvania Hospitals Authority Revenue,
9.875%, July 1, 2005**.......................................... 170,000 228,033
Philadelphia Pennsylvania Regional Port Authority Lease Revenue,
7.150%, August 1, 2000** (a).................................... 30,000 32,820
Pittsburgh Pennsylvania Water and Sewer Authority, Water and
Sewer, 7.250%, September 1, 2014*............................... 425,000 493,863
-----------
1,371,814
-----------
PUERTO RICO-1.5
Puerto Rico Commonwealth Aqueduct and Sewer Authority Revenue,
10.250%, July 1, 2009*.......................................... 270,000 374,131
-----------
RHODE ISLAND-3.1
Convention Center Authority Rhode Island Revenue,
6.300%, May 15, 2001 [Series A]** (a)........................... 45,000 49,026
Convention Center Authority Rhode Island Revenue,
6.700%, May 15, 2001 [Series A]** (a)........................... 625,000 690,863
Rhode Island Depositors Economic Protection,
7.100%, August 1, 2001 [Series A]** (a)......................... 35,000 39,400
-----------
779,289
-----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
32 Investors Trust Tax Free Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ---------- -----------
<S> <C>
SOUTH CAROLINA-2.9
South Carolina State Public Service Authority Revenue,
6.500%, July 1, 2002 [Series D]** (a)........................... 195,000 217,021
Spartanburg South Carolina Waterworks Revenue,
6.000%, June 1, 2005............................................ 500,000 528,120
-----------
745,141
-----------
TENNESSEE-0.3
Metropolitan Government Nashville and Davidson,
9.600%, July 1, 2005 [Series N]*................................ 65,000 86,312
-----------
TEXAS-4.0
Arlington Texas Independent School District,
5.900%, February 15, 2003....................................... 350,000 369,271
Austin Texas Utility Systems Revenue,
7.250%, November 15, 2003....................................... 50,000 53,562
Austin Texas Utility Systems Revenue,
9.500%, May 15, 2000 [Series A]**............................... 65,000 75,718
Austin Texas Utility Systems Revenue,
10.750%, May 15, 2000**......................................... 30,000 36,146
Austin Texas Utility Systems Revenue,
11.125%, November 15, 1999**.................................... 35,000 41,746
Gulf Coast Waste Disposal Authority Texas,
8.375%, June 1, 2005*........................................... 100,000 123,102
Houston Texas Water Systems Revenue,
7.300%, December 1, 2006*....................................... 100,000 118,385
Lamar University Texas Revenue, 7.000%, April 1, 2006*............ 35,000 40,319
San Antonio Texas Water Revenue, 7.125%, May 1, 1999** (a)........ 25,000 27,074
Texas A&M University Revenue, 9.400%, June 1, 2004*............... 40,000 51,572
Texas A&M University Revenue, 9.400%, June 1, 2006*............... 55,000 73,284
-----------
1,010,179
-----------
UTAH-1.1
Intermountain Power Agency Utah Power Supply,
7.200%, July 1, 1999 [Series A]**............................... 10,000 10,930
Utah State Municipal Finance Cooperative Local Government Revenue,
7.000%, June 1, 2001** (a)...................................... 250,000 277,980
-----------
288,910
-----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Tax Free Fund 33
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ---------- -----------
<S> <C>
VIRGINIA-0.5
Richmond Virginia Metropolitan Authority Expressway Revenue,
7.000%, October 15, 2013* (a)................................... 115,000 126,816
-----------
WASHINGTON-4.4
Municipality of Metropolitan Seattle Sewer Revenue,
6.875%, January 1, 2000 [Series T]** (a)........................ 40,000 43,639
Snohomish County Washington Public Utility District
Number 001, 6.375%, January 1, 2005*............................ 20,000 21,697
Washington State, 6.100%, February 1, 2005 [Series A]............. 200,000 212,238
Washington State Public Power Supply Systems Nuclear,
5.300%, July 1, 2009 [Series C]................................. 750,000 726,420
Washington State Public Power Supply Systems Nuclear,
7.200%, July 1, 2002 [Series B]................................. 100,000 109,211
-----------
1,113,205
-----------
WEST VIRGINIA-0.7
Wood County West Virginia Building Commission Revenue,
6.625%, January 1, 2006* (a).................................... 165,000 178,604
-----------
Total Long-Term Municipal Investments
(Cost $24,573,477)......................................... 24,865,578
-------- -----------
SUMMARY
Total investments
(Cost $24,573,477) (b)..................................... 98.1 24,865,578
Other assets and liabilities, net................................. 1.9 487,506
-------- -----------
NET ASSETS............................................................. 100.0 $25,353,084
-------- -----------
-------- -----------
</TABLE>
- ------------
NOTES:
* Escrowed to maturity: Bonds which are collateralized by U.S. Treasury
securities which are held in escrow by a trustee and used to pay principal
and interest on such bonds.
** Prerefunded: Bonds which are collateralized by U.S. Treasury securities
which are held in escrow and are used to pay principal and interest on the
tax-exempt issue and to retire the bonds at the earliest refunding date.
(a) The security is insured by either FGIC, MBIA, or AMBAC.
(b) See Note 3 in notes to financial statements for cost for federal income
tax purposes and related unrealized appreciation (depreciation).
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
34 Investors Trust Tax Free Fund
- --------------------------------------------------------------------------------
OTHER INFORMATION (UNAUDITED):
The composition of long-term municipal investments as a percentage of net
assets, is as follows:
S&P/MOODY'S RATING % OF NET ASSETS
--------------------------------- ---------------
AAA or Aaa 71.5%
AA or Aa 18.5%
A 3.8%
BBB or Baa 0.8%
Unrated securities of comparable
investment quality as above 3.5%
The Fund had insurance concentrations of 5% or greater as of October 31,
1996 (as a percentage of net assets) as follows:
MBIA 8.7%
AMBAC 7.6%
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Value Fund 35
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996
<TABLE>
<CAPTION>
% OF NET NUMBER MARKET
ASSETS OF SHARES VALUE ($)
-------- ---------- -----------
<S> <C>
COMMON STOCKS 99.6
BASIC INDUSTRIES-7.7
CHEMICALS-7.7%
DuPont (EI) deNemours & Company................................ 18,800 1,743,700
Morton International, Incorporated............................. 10,300 405,563
PPG Industries, Incorporated................................... 14,800 843,600
-----------
2,992,863
-----------
CAPITAL GOODS-9.9
AGRICULTURAL MACHINERY-1.3%
Deere & Company................................................ 12,500 521,875
-----------
ELECTRICAL EQUIPMENT-8.6%
Emerson Electric Company....................................... 17,300 1,539,700
General Electric Company....................................... 18,900 1,828,575
-----------
3,368,275
-----------
3,890,150
-----------
CONGLOMERATES-3.8
Minnesota Mining & Manufacturing Company....................... 19,300 1,478,863
-----------
CONSUMER BASICS-26.9
DRUGS & HEALTH CARE-16.9%
American Home Products Corporation............................. 20,100 1,231,125
Bristol Myers Squibb Company................................... 13,500 1,427,625
Eli Lilly & Company............................................ 22,500 1,586,250
Pfizer, Incorporated........................................... 14,700 1,216,425
Schering Plough Corporation.................................... 18,100 1,158,400
-----------
6,619,825
-----------
FOOD & BEVERAGES-4.7%
Campbell Soup Company.......................................... 5,900 472,000
CPC International, Incorporated................................ 10,100 796,637
PepsiCo, Incorporated.......................................... 18,800 556,950
-----------
1,825,587
-----------
HOUSEHOLD PRODUCTS-5.3%
Kimberly Clark Corporation..................................... 12,700 1,184,275
Procter & Gamble Company....................................... 8,900 881,100
-----------
2,065,375
-----------
10,510,787
-----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
36 Investors Trust Value Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET NUMBER MARKET
ASSETS OF SHARES VALUE ($)
-------- ---------- -----------
<S> <C>
CONSUMER NON-DURABLE GOODS-11.2
COSMETICS & TOILETRIES-5.4%
Avon Products, Incorporated.................................... 19,500 1,057,875
Gillette Company............................................... 14,100 1,053,975
-----------
2,111,850
-----------
PHOTOGRAPHY-2.1%
Eastman Kodak Company.......................................... 10,500 837,375
-----------
RETAIL TRADE-3.7%
May Department Stores Company.................................. 21,100 999,613
Walgreen Company............................................... 11,900 449,225
-----------
1,448,838
-----------
4,398,063
-----------
ENERGY-9.1
INTERNATIONAL OIL-8.1%
Exxon Corporation.............................................. 6,400 567,200
Mobil Corporation.............................................. 5,000 583,750
Royal Dutch Petroleum Company.................................. 5,700 942,637
Texaco, Incorporated........................................... 10,600 1,077,225
-----------
3,170,812
-----------
PETROLEUM SERVICES-1.0%
Halliburton Company............................................ 6,900 390,713
-----------
3,561,525
-----------
FINANCE-12.3
BANKS-9.1%
Chase Manhattan Corporation.................................... 22,400 1,920,800
National City Corporation...................................... 37,700 1,635,237
-----------
3,556,037
-----------
FINANCIAL SERVICES-2.3%
American Express Company....................................... 8,100 380,700
MBNA Corporation............................................... 13,650 515,287
-----------
895,987
-----------
INSURANCE-0.9%
American International Group, Incorporated..................... 3,500 380,188
-----------
4,832,212
-----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Value Fund 37
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET NUMBER MARKET
ASSETS OF SHARES VALUE ($)
-------- ---------- -----------
<S> <C>
GENERAL BUSINESS-0.9
NEWSPAPERS-0.9%
Gannett Company, Incorporated.................................. 4,800 364,200
-----------
SHELTER-3.0
CONSTRUCTION MATERIALS-3.0%
Masco Corporation.............................................. 37,000 1,160,875
-----------
TECHNOLOGY-14.8
AEROSPACE-3.8%
Boeing Company................................................. 15,600 1,487,850
-----------
COMPUTERS & BUSINESS EQUIPMENT-5.6%
Cisco Systems, Incorporated (a)................................ 9,100 563,062
Compaq Computer Corporation (a)................................ 6,100 424,713
Pitney Bowes, Incorporated..................................... 21,400 1,195,725
-----------
2,183,500
-----------
ELECTRONICS-2.5%
Intel Corporation.............................................. 9,000 988,875
-----------
SOFTWARE-2.9%
Microsoft Corporation (a)...................................... 5,300 727,425
Oracle Systems Corporation (a)................................. 10,000 423,124
-----------
1,150,549
-----------
5,810,774
-----------
Total Common Stocks (Cost $33,955,195)......................... 39,000,312
-----------
MONEY MARKET MUTUAL FUNDS 1.9
The Seven Seas Series US Government Money Market Fund.......... 100 100
The Seven Seas Series Money Market Fund [Class A].............. 723,950 723,950
-----------
Total Money Market Mutual Funds
(Cost $724,050)......................................... 724,050
-------- -----------
SUMMARY
Total investments
(Cost $34,679,245) (b).................................. 101.5 39,724,362
Other assets and liabilities, net.............................. (1.5) (573,319)
-------- -----------
NET ASSETS.......................................................... 100.0 $39,151,043
-------- -----------
-------- -----------
</TABLE>
- ------------
NOTES:
(a) Non-income producing security.
(b) See Note 3 in notes to financial statements for cost for federal income tax
purposes and related gross unrealized appreciation (depreciation).
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
38 Investors Trust Growth Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996
<TABLE>
<CAPTION>
% OF NET NUMBER MARKET
ASSETS OF SHARES VALUE ($)
-------- ---------- -----------
<S> <C>
COMMON STOCKS 94.9
BASIC INDUSTRIES-6.1
CHEMICALS-4.3%
Airgas, Incorporated (a)....................................... 20,000 452,500
Millipore Corporation.......................................... 8,000 280,000
Monsanto Company............................................... 10,000 396,250
Praxair, Incorporated.......................................... 9,000 398,250
-----------
1,527,000
-----------
CONSTRUCTION-0.8%
Texas Industries, Incorporated................................. 5,000 283,750
-----------
CONTAINERS & GLASS-1.0%
Sealed Air Corporation (a)..................................... 9,600 373,200
-----------
2,183,950
-----------
CAPITAL GOODS-4.1
AGRICULTURAL MACHINERY-0.8%
Deere & Company................................................ 7,200 300,600
-----------
CONSTRUCTION & MINING EQUIPMENT-1.4%
Dover Corporation.............................................. 10,000 513,750
-----------
ELECTRICAL EQUIPMENT-1.0%
Boston Scientific Corporation (a).............................. 6,300 342,562
-----------
INDUSTRIAL MACHINERY-0.9%
Thermo Electron Corporation.................................... 9,000 328,500
-----------
1,485,412
-----------
CONGLOMERATES-1.6
Danaher Corporation............................................ 13,600 555,900
-----------
CONSUMER BASICS-18.7
DRUGS & HEALTH CARE-14.6%
Amgen, Incorporated (a)........................................ 8,000 490,500
Genzyme Corporation (a)........................................ 12,000 276,000
HBO & Company.................................................. 5,200 312,650
HealthCare Compare Corporation (a)............................. 6,500 286,000
Invacare Corporation........................................... 14,000 392,000
Johnson & Johnson.............................................. 6,400 315,200
Medtronic, Incorporated........................................ 8,000 515,000
Merck & Company, Incorporated.................................. 4,000 296,500
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Growth Fund 39
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET NUMBER MARKET
ASSETS OF SHARES VALUE ($)
-------- ---------- -----------
<S> <C>
Omnicare, Incorporated......................................... 10,200 277,950
Oxford Health Plans, Incorporated (a).......................... 8,600 391,300
Pfizer, Incorporated........................................... 5,600 463,400
Schering Plough Corporation.................................... 6,000 384,000
Stryker Corporation............................................ 16,000 476,000
U.S. Surgical Corporation...................................... 8,700 364,312
-----------
5,240,812
-----------
FOOD & BEVERAGES-1.7%
Coca-Cola Company.............................................. 6,800 343,400
PepsiCo, Incorporated.......................................... 9,300 275,513
-----------
618,913
-----------
HOUSEHOLD PRODUCTS-1.2%
Tupperware Corporation......................................... 8,400 431,550
-----------
RETAIL GROCERY-1.2%
Great Atlantic & Pacific Tea, Incorporated..................... 13,800 414,000
-----------
6,705,275
-----------
CONSUMER DURABLE GOODS-2.5
AUTOMOBILES-1.6%
Harley Davidson, Incorporated.................................. 12,200 550,525
-----------
HOUSEHOLD APPLIANCES & HOME FURNISHINGS-0.9%
Black & Decker Corporation..................................... 8,800 328,900
-----------
879,425
-----------
CONSUMER NON-DURABLE GOODS-9.1
APPAREL & TEXTILES-1.8%
Albany International Corporation............................... 13,100 294,750
Nike, Incorporated............................................. 6,000 353,250
-----------
648,000
-----------
COSMETICS & TOILETRIES-1.2%
Gillette Company............................................... 6,000 448,500
-----------
RETAIL TRADE-6.1%
CompUSA, Incorporated (a)...................................... 8,000 370,000
Dollar General Corporation..................................... 11,337 314,602
Gap, Incorporated.............................................. 10,800 313,200
Home Depot, Incorporated....................................... 7,500 410,625
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
40 Investors Trust Growth Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET NUMBER MARKET
ASSETS OF SHARES VALUE ($)
-------- ---------- -----------
<S> <C>
Kohl's Corporation (a)......................................... 11,200 403,200
Petsmart, Incorporated (a)..................................... 13,600 367,200
-----------
2,178,827
-----------
3,275,327
-----------
CONSUMER SERVICES-4.1
HOTELS & RESTAURANTS-4.1%
Applebee's International, Incorporated......................... 13,000 316,875
Hilton Hotels Corporation...................................... 10,800 328,050
La Quinta Inns, Incorporated................................... 19,800 396,000
McDonald's Corporation......................................... 9,800 434,875
-----------
1,475,800
-----------
FINANCE-12.9
BANKS-6.6%
Bank of Boston Corporation..................................... 6,000 384,000
Citicorp....................................................... 3,500 346,500
Fifth Third Bancorp............................................ 9,000 563,625
Star Banc Corporation.......................................... 5,400 486,000
Zions Bancorporation........................................... 6,400 579,200
-----------
2,359,325
-----------
FINANCIAL SERVICES-2.5%
Finova Group, Incorporated..................................... 9,000 555,750
Green Tree Financial Corporation............................... 9,000 356,625
-----------
912,375
-----------
INSURANCE-3.8%
American International Group, Incorporated..................... 3,600 391,050
MGIC Investment Corporation.................................... 7,600 521,550
SunAmerica, Incorporated....................................... 12,000 450,000
-----------
1,362,600
-----------
4,634,300
-----------
GENERAL BUSINESS-9.5
BUSINESS SERVICES-7.5%
CUC International, Incorporated (a)............................ 18,000 441,000
First Data Corporation......................................... 4,500 358,875
FIserv, Incorporated (a)....................................... 14,800 567,950
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Growth Fund 41
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET NUMBER MARKET
ASSETS OF SHARES VALUE ($)
-------- ---------- -----------
<S> <C>
Manpower, Incorporated......................................... 8,000 227,000
Olsten Corporation............................................. 13,800 276,000
Omnicom Group.................................................. 8,000 398,000
Robert Half International, Incorporated (a).................... 10,300 413,287
-----------
2,682,112
-----------
COMMUNICATION SERVICES-0.2%
Loral Space & Communications (a)............................... 5,000 79,375
-----------
OFFICE FURNISHINGS & SUPPLIES-1.8%
Danka Business Systems......................................... 9,400 372,475
Staples, Incorporated (a)...................................... 13,500 251,437
-----------
623,912
-----------
3,385,399
-----------
TECHNOLOGY-24.6
AEROSPACE-1.0%
McDonnell Douglas Corporation.................................. 6,600 359,700
-----------
COMPUTERS & BUSINESS EQUIPMENT-9.0%
3Com Corporation (a)........................................... 12,000 811,500
Cabletron Systems, Incorporated (a)............................ 4,000 249,500
Ceridian Corporation (a)....................................... 8,000 397,000
Cisco Systems, Incorporated (a)................................ 5,600 346,500
Dell Computer Corporation (a).................................. 6,000 488,250
EMC Corporation Massachusetts (a).............................. 13,500 354,375
Hewlett Packard Company........................................ 5,600 247,100
Sun Microsystems, Incorporated (a)............................. 5,400 329,400
-----------
3,223,625
-----------
ELECTRONICS-4.1%
Avnet, Incorporated............................................ 6,000 302,250
Checkpoint Systems, Incorporated (a)........................... 18,500 413,938
Intel Corporation.............................................. 4,000 439,500
Newbridge Networks Corporation (a)............................. 10,000 316,250
-----------
1,471,938
-----------
SOFTWARE-6.6%
America Online, Incorporated (a)............................... 30,000 813,750
Computer Associates International, Incorporated................ 6,750 399,094
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
42 Investors Trust Growth Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET NUMBER MARKET
ASSETS OF SHARES VALUE ($)
-------- ---------- -----------
<S> <C>
Microsoft Corporation (a)...................................... 2,500 343,125
Oracle Systems Corporation (a)................................. 9,000 380,812
Parametric Technology Corporation (a).......................... 9,000 439,875
-----------
2,376,656
-----------
TELECOMMUNICATION EQUIPMENT-3.9%
ADC Telecommunications, Incorporated (a)....................... 8,000 547,000
Andrew Corporation (a)......................................... 6,750 329,063
Tellabs, Incorporated (a)...................................... 6,000 510,750
-----------
1,386,813
-----------
8,818,732
-----------
TRANSPORTATION-0.9
RAILROADS & EQUIPMENT-0.9%
Wisconsin Central Transportation Corporation (a)............... 9,000 324,000
-----------
UTILITIES-0.8
TELEPHONE-0.8%
Cincinnati Bell, Incorporated.................................. 6,000 296,250
-----------
Total Common Stocks
(Cost $25,358,154)...................................... 34,019,770
-----------
MONEY MARKET MUTUAL FUNDS 5.1
The Seven Seas Series US Government Money Market Fund.......... 534,112 534,112
The Seven Seas Series Money Market Fund [Class A].............. 1,295,182 1,295,182
-----------
Total Money Market Mutual Funds
(Cost $1,829,294)....................................... 1,829,294
-------- -----------
SUMMARY
Total investments
(Cost $27,187,448) (b).................................. 100.0 35,849,064
Other assets and liabilities, net.............................. 0.0 (11,055)
-------- -----------
NET ASSETS.......................................................... 100.0 $35,838,009
-------- -----------
-------- -----------
</TABLE>
- ------------
NOTES:
(a) Non-income producing security.
(b) See Note 3 in notes to financial statements for cost for federal income tax
purposes and related gross unrealized appreciation (depreciation).
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Mutual Funds 43
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
<TABLE>
<CAPTION>
ADJUSTABLE
RATE GOVERNMENT TAX FREE VALUE GROWTH
FUND FUND FUND FUND FUND
---------- ------------ ----------- ----------- -----------
<S> <C>
ASSETS
Investments at market value
(identified cost $6,909,527,
$781,152,052, $24,573,477,
$34,679,245 and $27,187,448,
respectively) (Notes 2 and 3)....... $7,058,849 $791,140,318 $24,865,578 $39,724,362 $35,849,064
Cash.................................. 37 8,343 42,129 27 107
Receivables:
Fund shares sold................. -- 12,182 15,002 20,657 8,481
Dividends........................ 495 -- -- 38,479 20,284
Interest......................... 44,328 13,139,876 510,978 -- --
Investments sold................. -- 18,310 -- -- 310,827
Adviser (Note 4)................. -- -- 6,060 -- --
Deferred organization costs
(Note 2)............................ 22,929 -- 22,929 22,929 22,929
Prepaid expenses...................... 9,187 30,167 10,940 7,975 8,819
---------- ------------ ----------- ----------- -----------
Total assets.......................... 7,135,825 804,349,196 25,473,616 39,814,429 36,220,511
---------- ------------ ----------- ----------- -----------
LIABILITIES
Payables:
Fund shares redeemed............. -- 2,110,484 -- 28,964 6,134
Investments purchased............ -- -- 34,157 549,712 295,797
Project loans payable............ -- 22,762,906 -- -- --
Dividends........................ 10,566 1,280,667 32,476 -- --
Adviser (Note 4)................. 16,573 37,252 -- 1,332 465
Options written outstanding at
market value (premiums received
$210,994) (Note 3)............. -- 116,250 -- -- --
Daily variation margin on open
futures contracts (Notes 2
and 3)......................... -- 74,084 -- -- --
Accrued distribution fee and
shareholder service fee
(Note 4)....................... 5,213 829,714 22,249 33,962 32,304
Accrued management fee
(Note 4)....................... 2,404 416,759 12,114 26,001 24,196
Other accrued expenses........... 15,743 415,525 19,536 23,415 23,606
---------- ------------ ----------- ----------- -----------
Total liabilities..................... 50,499 28,043,641 120,532 663,386 382,502
---------- ------------ ----------- ----------- -----------
NET ASSETS............................ $7,085,326 $776,305,555 $25,353,084 $39,151,043 $35,838,009
---------- ------------ ----------- ----------- -----------
---------- ------------ ----------- ----------- -----------
(continued)
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
44 Investors Trust Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
ADJUSTABLE
RATE GOVERNMENT TAX FREE VALUE GROWTH
FUND FUND FUND FUND FUND
---------- ------------ ----------- ----------- -----------
<S> <C>
NET ASSETS CONSIST OF (Note 2):
Undistributed (accumulated
distributions in excess of) net
investment income (loss)....... $ 5,778 $ (1,280,667) $ 98,471 $ -- $ --
Accumulated net realized gains
(losses)....................... (201,421) (200,317,153) (176,173) 3,192,378 (444,919)
Unrealized appreciation
(depreciation) on:
Investments (Note 3)........... 149,322 9,988,266 292,101 5,045,117 8,661,616
Options contracts (Note 3)..... -- 94,744 -- -- --
Futures contracts (Note 3)..... -- (882,598) -- -- --
Shares of beneficial interest.... 7,131,647 968,702,963 25,138,685 30,913,548 27,621,312
---------- ------------ ----------- ----------- -----------
NET ASSETS............................ $7,085,326 $776,305,555 $25,353,084 $39,151,043 $35,838,009
---------- ------------ ----------- ----------- -----------
---------- ------------ ----------- ----------- -----------
CLASS A:
NET ASSETS............................ $5,716,731 $ 29,089,852 $16,168,645 $ 5,833,420 $ 8,221,647
---------- ------------ ----------- ----------- -----------
---------- ------------ ----------- ----------- -----------
Outstanding shares of beneficial
interest (No par value)............. 892,360 3,430,652 1,415,605 538,603 624,874
Net asset value and redemption price
per share........................... $ 6.41 $ 8.48 $ 11.42 $ 10.83 $ 13.16
Maximum offering price per share
(100/95.5 of net asset value per
share).............................. $ 6.71 $ 8.88 $ 11.96 $ 11.34 $ 13.78
CLASS B:
NET ASSETS............................ $1,368,595 $747,215,703 $ 9,184,439 $33,317,623 $27,616,362
---------- ------------ ----------- ----------- -----------
---------- ------------ ----------- ----------- -----------
Outstanding shares of beneficial
interest (No par value)............. 213,553 88,035,826 803,108 3,088,365 2,146,351
Net asset value, offering and
redemption price per share
(Note 4)............................ $ 6.41 $ 8.49 $ 11.44 $ 10.79 $ 12.87
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Mutual Funds 45
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
ADJUSTABLE
RATE GOVERNMENT TAX FREE VALUE GROWTH
FUND FUND FUND FUND FUND
---------- ------------ ----------- ----------- -----------
<S> <C>
INVESTMENT INCOME:
Interest.................................. $ 449,677 $ 71,074,981 $ 1,347,773 $ 756 $ 51,386
Dividends................................. 11,093 -- -- 642,114 336,734
---------- ------------ ----------- ----------- -----------
Total Income.............................. 460,770 71,074,981 1,347,773 642,870 388,120
---------- ------------ ----------- ----------- -----------
EXPENSES:
Management fee (Note 4)............... 29,290 5,871,824 144,121 219,848 226,411
Distribution fees--Class B (Note 4)... 12,974 6,955,987 65,843 168,697 158,897
Shareholder servicing fees (Note 4):
Class A............................ 4,757 10,269 29,133 6,064 8,890
Class B............................ 2,104 811,242 15,601 19,891 23,350
Transfer agent fee.................... 46,727 1,071,262 52,332 77,045 79,163
Custodian fee......................... 72,209 428,032 90,472 76,613 74,894
Amortization of organization costs
(Note 2)........................... 12,447 -- 12,447 12,447 12,447
Registration fees..................... 19,575 -- 20,915 23,540 23,279
Shareholder reports................... 1,394 178,173 5,956 11,069 12,250
Professional fees..................... 1,240 135,495 3,653 3,768 3,966
Insurance............................. 509 72,284 1,545 1,502 1,489
Trustees' fees and expenses........... 51 5,285 180 241 265
Other................................. -- 321,817 -- 5,881 6,622
---------- ------------ ----------- ----------- -----------
Total expenses before reimbursement from
Adviser................................. 203,277 15,861,670 442,198 626,606 631,923
Reimbursement of expenses from Adviser
(Note 4)................................ (120,599) -- (442,198) (86,354) (90,565)
---------- ------------ ----------- ----------- -----------
Expenses, net............................. 82,678 15,861,670 -- 540,252 541,358
---------- ------------ ----------- ----------- -----------
Net investment income (loss).............. 378,092 55,213,311 1,347,773 102,618 (153,238)
---------- ------------ ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) from:
Investment transactions (Notes 2 and
3)................................. (12,778) 5,292,635 192 3,192,415 (243,412)
Option contracts...................... -- (1,289,801) -- -- --
Futures contracts..................... -- (7,988,014) -- -- --
Net increase (decrease) in unrealized
appreciation (depreciation) during the
year from:
Investment transactions............... 31,768 (15,982,620) 115,799 2,432,088 4,436,873
Option contracts...................... -- (252,124) -- -- --
Futures contracts..................... -- (1,545,243) -- -- --
---------- ------------ ----------- ----------- -----------
Net realized and unrealized gain (loss) on
investments............................. 18,990 (21,765,167) 115,991 5,624,503 4,193,461
---------- ------------ ----------- ----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS.............................. $ 397,082 $ 33,448,144 $ 1,463,764 $ 5,727,121 $ 4,040,223
---------- ------------ ----------- ----------- -----------
---------- ------------ ----------- ----------- -----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
46
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
ADJUSTABLE RATE FUND
-----------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
---------------- ----------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)..................................................... $ 378,092 $ 348,384
Net realized gain (loss) from:
Investment transactions........................................................ (12,778) (114,498)
Option contracts............................................................... -- --
Futures contracts.............................................................. -- --
Net increase (decrease) in unrealized appreciation (depreciation) during the year
from:
Investment transactions........................................................ 31,768 399,103
Option contracts............................................................... -- --
Futures contracts.............................................................. -- --
---------------- ----------------
Net increase in net assets resulting from operations.............................. 397,082 632,989
---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 2):
Net investment income
Class A........................................................................ (298,845) (255,493)
Class B........................................................................ (79,247) (86,152)
Distributions in excess of net investment income
Class A........................................................................ -- --
Class B........................................................................ -- --
Net realized gains
Class A........................................................................ -- --
Class B........................................................................ -- --
Tax return of capital
Class A........................................................................ -- --
Class B........................................................................ -- --
---------------- ----------------
Total distributions to shareholders.............................................. (378,092) (341,645)
---------------- ----------------
Increase (decrease) in net assets from operations, net of distributions to
shareholders................................................................... 18,990 291,344
---------------- ----------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Mutual Funds 47
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GOVERNMENT FUND TAX FREE FUND VALUE FUND
- ----------------------------------- ----------------------------------- -----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995 OCTOBER 31, 1996 OCTOBER 31, 1995 OCTOBER 31, 1996 OCTOBER 31, 1995
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S> <C>
$ 55,213,311 $ 72,865,401 $ 1,347,773 $ 1,059,944 $ 102,618 $ 164,706
5,292,635 (91,789,975) 192 (176,365) 3,192,415 259,945
(1,289,801) 3,752,499 -- -- -- --
(7,988,014) (19,046,779) -- -- -- --
(15,982,620) 162,482,101 115,799 1,523,607 2,432,088 2,455,927
(252,124) (103,818) -- -- -- --
(1,545,243) (521,730) -- -- -- --
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
33,448,144 127,637,699 1,463,764 2,407,186 5,727,121 2,880,578
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
(1,692,150) (1,526,928) (789,946) (757,133) (42,207) (66,092)
(52,573,700) (70,538,669) (428,491) (302,811) (80,140) (128,160)
-- -- -- (5,654) (2,142) --
-- -- -- (1,064) (4,066) --
-- -- -- -- (35,364) --
-- -- -- -- (131,342) --
(258,257) (350,222) -- -- -- --
(8,023,827) (15,756,626) -- -- -- --
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
(62,547,934) (88,172,445) (1,218,437) (1,066,662) (295,261) (194,252)
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
(29,099,790) 39,465,254 245,327 1,340,524 5,431,860 2,686,326
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
</TABLE>
GROWTH FUND
- -----------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
- ---------------- ----------------
$ (153,238) $ (58,950)
(243,412) 342,457
-- --
-- --
4,436,873 3,431,356
-- --
-- --
- ---------------- ----------------
4,040,223 3,714,863
- ---------------- ----------------
-- --
-- --
-- --
-- --
-- --
-- --
-- --
-- --
- ---------------- ----------------
-- --
- ---------------- ----------------
4,040,223 3,714,863
- ---------------- ----------------
(CONTINUED)
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
48
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
<TABLE>
<CAPTION>
ADJUSTABLE RATE FUND
-----------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
---------------- ----------------
<S> <C>
SHARE TRANSACTIONS:
Proceeds from sale of shares
Class A........................................................................ $ 27,226 $ 92,790
Class B........................................................................ 389,371 621,653
Reinvestment of distributions
Class A........................................................................ 295,536 255,434
Class B........................................................................ 71,484 75,951
Cost of shares redeemed
Class A........................................................................ (96,085) (155,685)
Class B........................................................................ (955,523) (1,331,051)
---------------- ----------------
Net increase (decrease) in net assets resulting from share transactions
Class A........................................................................ 226,677 192,539
Class B........................................................................ (494,668) (633,447)
---------------- ----------------
Total.......................................................................... (267,991) (440,908)
---------------- ----------------
INCREASE (DECREASE) IN NET ASSETS................................................. (249,001) (149,564)
Net assets at beginning of year................................................... 7,334,327 7,483,891
---------------- ----------------
NET ASSETS AT END OF YEAR......................................................... $7,085,326 $7,334,327
---------------- ----------------
---------------- ----------------
Undistributed (accumulated distributions in excess of) net investment income
(loss) at end of year........................................................... $ 5,778 $ (7,886)
---------------- ----------------
---------------- ----------------
FUND SHARE INFORMATION:
Shares sold
Class A........................................................................ 4,278 14,962
Class B........................................................................ 60,938 100,668
Shares issued upon reinvestment of distributions
Class A........................................................................ 46,300 40,886
Class B........................................................................ 11,196 12,183
Shares redeemed
Class A........................................................................ (15,068) (24,589)
Class B........................................................................ (150,064) (214,247)
---------------- ----------------
Increase (decrease) in Fund shares outstanding
Class A........................................................................ 35,510 31,259
---------------- ----------------
---------------- ----------------
Class B........................................................................ (77,930) (101,396)
---------------- ----------------
---------------- ----------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Mutual Funds 49
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GOVERNMENT FUND TAX FREE FUND VALUE FUND
- ----------------------------------- ----------------------------------- -----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995 OCTOBER 31, 1996 OCTOBER 31, 1995 OCTOBER 31, 1996 OCTOBER 31, 1995
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S> <C>
$ 11,137,901 $ 8,609,994 $ 309,165 $ 880,743 $ 1,029,337 $ 672,875
9,242,327 27,416,014 2,631,898 3,589,195 18,661,475 6,719,785
902,225 756,378 23,330 29,828 79,393 65,700
31,218,929 44,126,875 317,971 235,800 204,072 122,526
(9,198,287) (4,698,858) (351,480) (139,636) (319,837) (554,145)
(377,040,027) (250,379,643) (1,516,101) (1,516,243) (4,468,090) (2,417,639)
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
2,841,839 4,667,514 (18,985) 770,935 788,893 184,430
(336,578,771) (178,836,754) 1,433,768 2,308,752 14,397,457 4,424,672
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
(333,736,932) (174,169,240) 1,414,783 3,079,687 15,186,350 4,609,102
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
(362,836,722) (134,703,986) 1,660,110 4,420,211 20,618,210 7,295,428
1,139,142,277 1,273,846,263 23,692,974 19,272,763 18,532,833 11,237,405
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
$ 776,305,555 $1,139,142,277 $ 25,353,084 $ 23,692,974 $ 39,151,043 $ 18,532,833
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
$ (1,280,667) $ (2,160,157) $ 98,471 $ (30,865) $ -- $ 19,703
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
1,317,620 1,000,291 27,357 78,630 106,358 81,551
1,073,669 3,226,626 231,317 324,101 1,904,118 836,647
106,174 88,729 2,058 2,699 8,436 8,245
3,657,994 5,183,091 28,018 21,419 21,842 15,288
(1,082,308) (549,320) (30,937) (12,988) (32,438) (68,803)
(44,378,475) (29,418,333) (133,485) (139,086) (455,044) (297,365)
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
341,486 539,700 (1,522) 68,341 82,356 20,993
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
(39,646,812) (21,008,616) 125,850 206,434 1,470,916 554,570
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
</TABLE>
GROWTH FUND
-----------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
---------------- ----------------
$ 1,707,031 $ 808,948
14,887,732 8,349,943
-- --
-- --
(528,656) (252,247)
(4,565,508) (2,363,580)
---------------- ----------------
1,178,375 556,701
10,322,224 5,986,363
---------------- ----------------
11,500,599 6,543,064
---------------- ----------------
15,540,822 10,257,927
20,297,187 10,039,260
---------------- ----------------
$ 35,838,009 $ 20,297,187
---------------- ----------------
---------------- ----------------
$ -- $ --
---------------- ----------------
---------------- ----------------
142,429 76,934
1,254,875 851,970
-- --
-- --
(43,333) (25,720)
(385,371) (245,024)
---------------- ----------------
99,096 51,214
---------------- ----------------
---------------- ----------------
869,504 606,946
---------------- ----------------
---------------- ----------------
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
50
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The Financial Highlights set forth below include selected data for a share
outstanding throughout each period and other performance information derived
from the financial statements.
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS DISTRIBUTIONS TO SHAREHOLDERS
-------------------------------------- ----------------------------------------------
NET ASSET NET NET REALIZED TOTAL IN EXCESS NET IN EXCESS OF
VALUE AT INVESTMENT AND UNREALIZED FROM NET OF NET REALIZED NET REALIZED
PERIOD BEGINNING INCOME GAINS (LOSSES) INVESTMENT INVESTMENT INVESTMENT CAPITAL CAPITAL
ENDED OF PERIOD (LOSS) ON INVESTMENTS OPERATIONS INCOME INCOME GAINS GAINS
-------------- --------- ---------- -------------- ---------- ---------- ---------- -------- ------------
<S> <C>
ADJUSTABLE RATE FUND
Class A Oct-31-96 $ 6.39 $ 0.33 $ 0.03 $ 0.36 $(0.34) $-- $-- $--
Oct-31-95 6.14 0.31 0.24 0.55 (0.30) -- -- --
Oct-31-94 6.49 0.25 (0.35) (0.10) (0.23) (0.01) -- --
Oct-31-93(a) 6.50 0.03 (0.01) 0.02 (0.03) -- -- --
------------------------------------------------------------------------------------------------------------------
Class B Oct-31-96 6.39 0.28 0.03 0.31 (0.29) -- -- --
Oct-31-95 6.14 0.26 0.24 0.50 (0.25) -- -- --
Oct-31-94 6.48 0.21 (0.34) (0.13) (0.19) (0.01) -- --
Oct-31-93(a) 6.50 0.02 (0.02) -- (0.02) -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
GOVERNMENT FUND
Class A Oct-31-96 8.70 0.62 (0.22) 0.40 (0.54) -- -- --
Oct-31-95 8.43 0.58 0.38 0.96 (0.58) -- -- --
Oct-31-94 10.14 0.70 (1.60) (0.90) (0.70) -- (0.03) --
Oct-31-93(a) 10.32 0.12 (0.18) (0.06) (0.12) -- -- --
------------------------------------------------------------------------------------------------------------------
Class B Oct-31-96 8.71 0.55 (0.22) 0.33 (0.48) -- -- --
Oct-31-95 8.42 0.51 0.41 0.92 (0.52) -- -- --
Oct-31-94 10.14 0.60 (1.58) (0.98) (0.60) -- (0.03) --
Oct-31-93 9.95 0.71 0.20 0.91 (0.71) (0.01) -- --
Oct-31-92 9.98 0.73 0.03 0.76 (0.73) -- (0.06) --
- ----------------------------------------------------------------------------------------------------------------------------
TAX FREE FUND
Class A Oct-31-96 11.31 0.62 0.05 0.67 (0.56) -- -- --
Oct-31-95 10.59 0.55 0.73 1.28 (0.55) (0.01) -- --
Oct-31-94 11.48 0.45 (0.78) (0.33) (0.45) (0.11) -- --
Oct-31-93(a) 11.50 0.05 0.01 0.06 (0.05) (0.02) -- --
------------------------------------------------------------------------------------------------------------------
Class B Oct-31-96 11.32 0.62 0.06 0.68 (0.56) -- -- --
Oct-31-95 10.60 0.55 0.73 1.28 (0.55) (0.01) -- --
Oct-31-94 11.48 0.43 (0.82) (0.39) (0.43) (0.06) -- --
Oct-31-93(a) 11.50 0.06 (0.01) 0.05 (0.03) (0.03) -- --
- ----------------------------------------------------------------------------------------------------------------------------
VALUE FUND
Class A Oct-31-96 8.95 0.05 1.99 2.04 (0.09) (0.00) (0.07) --
Oct-31-95 7.51 0.14 1.45 1.59 (0.15)(f) -- (f) -- --
Oct-31-94 7.63 0.13 (0.16) (0.03) (0.09) -- -- --
Oct-31-93(a) 7.50 0.01 0.12 0.13 -- -- -- --
------------------------------------------------------------------------------------------------------------------
Class B Oct-31-96 8.93 0.04 1.93 1.97 (0.04) (0.00) (0.07) --
Oct-31-95 7.50 0.07 1.45 1.52 (0.09)(f) -- (f) -- --
Oct-31-94 7.64 0.08 (0.17) (0.09) (0.05) -- -- --
Oct-31-93(a) 7.50 (0.01) 0.15 0.14 -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
GROWTH FUND
Class A Oct-31-96(e) 11.38 0.00 1.78 1.78 -- -- -- --
Oct-31-95 8.81 0.01 2.56 2.57 -- -- -- --
Oct-31-94 8.69 (0.01) 0.21 0.20 -- -- -- (0.08)
Oct-31-93(a) 8.50 -- 0.19 0.19 -- -- -- --
------------------------------------------------------------------------------------------------------------------
Class B Oct-31-96(e) 11.21 (0.09) 1.75 1.66 -- -- -- --
Oct-31-95 8.74 (0.05) 2.52 2.47 -- -- -- --
Oct-31-94 8.70 (0.04) 0.16 0.12 -- -- -- (0.08)
Oct-31-93(a) 8.50 -- 0.20 0.20 -- -- -- --
</TABLE>
TAX
PERIOD RETURN TOTAL
ENDED OF CAPITAL DISTRIBUTIONS
-------------- ---------- -------------
ADJUSTABLE RATE FUND
Class A Oct-31-96 $-- $ (0.34)
Oct-31-95 -- (0.30)
Oct-31-94 (0.01) (0.25)
Oct-31-93(a) -- (0.03)
--------------
Class B Oct-31-96 -- (0.29)
Oct-31-95 -- (0.25)
Oct-31-94 (0.01) (0.21)
Oct-31-93(a) -- (0.02)
- ------------------------
GOVERNMENT FUND
Class A Oct-31-96 (0.08) (0.62)
Oct-31-95 (0.11) (0.69)
Oct-31-94 (0.08) (0.81)
Oct-31-93(a) -- (0.12)
--------------
Class B Oct-31-96 (0.07) (0.55)
Oct-31-95 (0.11) (0.63)
Oct-31-94 (0.11) (0.74)
Oct-31-93 -- (0.72)
Oct-31-92 -- (0.79)
- ------------------------
TAX FREE FUND
Class A Oct-31-96 -- (0.56)
Oct-31-95 -- (0.56)
Oct-31-94 -- (0.56)
Oct-31-93(a) (0.01) (0.08)
--------------
Class B Oct-31-96 -- (0.56)
Oct-31-95 -- (0.56)
Oct-31-94 -- (0.49)
Oct-31-93(a) (0.01) (0.07)
- ------------------------
VALUE FUND
Class A Oct-31-96 -- (0.16)
Oct-31-95 -- (0.15)
Oct-31-94 -- (0.09)
Oct-31-93(a) -- --
--------------
Class B Oct-31-96 -- (0.11)
Oct-31-95 -- (0.09)
Oct-31-94 -- (0.05)
Oct-31-93(a) -- --
- ------------------------
GROWTH FUND
Class A Oct-31-96(e) -- --
Oct-31-95 -- --
Oct-31-94 -- (0.08)
Oct-31-93(a) -- --
--------------
Class B Oct-31-96(e) -- --
Oct-31-95 -- --
Oct-31-94 -- (0.08)
Oct-31-93(a) -- --
- ------------
(a) For the period September 8, 1993 (commencement of operations) to October
31,1993.
(b) Annualized.
(c) Total returns are historical and assume changes in share price and
reinvestment of dividends and capital gains. The maximum applicable sales
charge on Class A shares of each Fund was not reflected in total return
calculations. A contingent deferred sales charge on Class B shares of each
Fund of 5% the first year, declining by 1% per year for five years, was not
reflected in total return calculations. Had the adviser not absorbed a
portion of expenses, total return would have been lower. Periods less than
one year are not annualized.
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Mutual Funds 51
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIOS AND SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
RATIOS TO AVERAGE
DAILY NET ASSETS (%) (b)
NET INCREASE NET ASSET ---------------------------------
(DECREASE) VALUE AT INVESTMENT NET ASSETS, REIMBURSEMENT
IN NET ASSET END TOTAL NET GROSS INCOME PORTFOLIO END OF PERIOD OF EXPENSES
VALUE OF PERIOD RETURN (%) (c) EXPENSES EXPENSES (LOSS), NET TURNOVER (%) (MILLIONS) FROM ADVISOR
- ------------ --------- -------------- -------- -------- ----------- ------------ ------------- -------------
<S> <C>
$ 0.02 $ 6.41 5.81 0.95 2.55 5.35 39.49 $ 5.7 $ 0.098
0.25 6.39 9.20 0.95 2.96 4.91 53.07 5.5 0.126
(0.35) 6.14 (1.49) 0.95 2.86 4.04 115.55 5.1 0.120
(0.01) 6.49 0.26 0.98 3.24 2.78 0.34 5.1 0.003
- ----------------------------------------------------------------------------------------------------------------------------
0.02 6.41 5.02 1.70 3.51 4.58 39.49 1.4 0.109
0.25 6.39 8.39 1.70 3.71 4.18 53.07 1.8 0.124
(0.34) 6.14 (2.07) 1.70 3.51 3.48 115.55 2.4 0.108
(0.02) 6.48 0.03 1.61 3.58 2.57 0.34 0.1 0.003
- ----------------------------------------------------------------------------------------------------------------------------
(0.22) 8.48 4.80 0.90 0.90 6.59 334.41 29.1 N/A
0.27 8.70 11.77 1.01 1.01 6.78 315.71 27.0 N/A
(1.71) 8.43 (9.17) 0.99 0.99 7.09 128.82 22.0 N/A
(0.18) 10.14 (0.60) 0.95 0.95 6.81 75.96 1.0 N/A
- ----------------------------------------------------------------------------------------------------------------------------
(0.22) 8.49 4.00 1.69 1.69 5.77 334.41 747.2 N/A
0.29 8.71 11.19 1.76 1.76 6.08 315.71 1,112.0 N/A
(1.72) 8.42 (9.98) 1.76 1.76 6.45 128.82 1,252.0 N/A
0.19 10.14 9.48 1.73 1.73 6.96 75.96 1,343.0 N/A
(0.03) 9.95 7.74 1.64 1.64 7.08 101.31 786.0 N/A
- ----------------------------------------------------------------------------------------------------------------------------
0.11 11.42 6.13 -- 1.52 5.42 5.76 16.2 0.172
0.72 11.31 12.24 -- 1.81 5.01 24.95 16.0 0.199
(0.89) 10.59 (2.99) 0.77 1.62 4.08 -- 14.3 0.094
(0.02) 11.48 0.54 1.15 2.09 2.73 -- 15.1 0.002
- ----------------------------------------------------------------------------------------------------------------------------
0.12 11.44 6.12 -- 2.26 5.43 5.76 9.2 0.257
0.72 11.32 12.33 -- 2.56 5.01 24.95 7.7 0.287
(0.88) 10.60 (3.45) 1.14 2.30 3.75 -- 5.0 0.122
(0.02) 11.48 0.43 1.84 2.48 2.27 -- 1.2 0.003
- ----------------------------------------------------------------------------------------------------------------------------
1.88 10.83 23.10 1.35 1.73 1.03 100.02 5.8 0.018
1.44 8.95 21.45 1.35 2.43 1.71 27.41 4.1 0.086
(0.12) 7.51 (0.32) 1.35 3.55 1.92 14.53 3.2 0.165
0.13 7.63 1.73 1.42 6.37 0.73 6.04 2.2 0.008
- ----------------------------------------------------------------------------------------------------------------------------
1.86 10.79 22.30 2.10 2.40 0.23 100.02 33.3 0.050
1.43 8.93 20.50 2.10 3.18 0.94 27.41 14.4 0.083
(0.14) 7.50 (1.10) 2.10 4.02 1.09 14.53 8.0 0.163
0.14 7.64 1.87 2.04 6.38 (1.07) 6.04 0.5 0.002
- ----------------------------------------------------------------------------------------------------------------------------
1.78 13.16 15.64 1.35 1.70 0.03 40.89 8.2 0.043
2.57 11.38 29.17 1.35 2.44 0.10 73.74 6.0 0.100
0.12 8.81 2.48 1.34 3.53 (0.11) 100.41 4.2 0.182
0.19 8.69 2.24 1.39 4.83 (0.30) 46.31 3.3 0.006
- ----------------------------------------------------------------------------------------------------------------------------
1.66 12.87 14.81 2.10 2.41 (0.73) 40.89 27.6 0.037
2.47 11.21 28.26 2.10 3.19 (0.66) 73.74 14.3 0.082
0.04 8.74 1.67 2.09 4.06 (0.82) 100.41 5.8 0.176
0.20 8.70 2.35 1.86 5.04 (1.38) 46.31 0.6 0.001
</TABLE>
AVERAGE
COMMISSION
RATE (d)
----------
N/A
N/A
N/A
N/A
- ---------
N/A
N/A
N/A
N/A
- ---------
N/A
N/A
N/A
N/A
- ---------
N/A
N/A
N/A
N/A
N/A
- ---------
N/A
N/A
N/A
N/A
- ---------
N/A
N/A
N/A
N/A
- ---------
$0.050
N/A
N/A
N/A
- ---------
$0.050
N/A
N/A
N/A
- ---------
$0.050
N/A
N/A
N/A
- ---------
$0.050
N/A
N/A
N/A
- ------------
(d) For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share of security trades on
which commissions are charged.
(e) Per share amounts were calculated under a methodology using the monthly
average of shares outstanding during the period.
(f) Certain amounts have been reclassified to conform with current year
presentations.
- --------------------------------------------------------------------------------
<PAGE>
52 Investors Trust Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION. Investors Trust (the "Trust") is organized as a Massachusetts
Business Trust and is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company. The Trust is
a series of funds, currently comprised of five investment portfolios (the
"Funds"), four of which commenced operations as of September 8, 1993 the
Adjustable Rate Fund, the Tax Free Fund, the Value Fund and the Growth Fund, and
one, the Government Fund, which commenced operations as of April 22, 1987.
Under the Trust's Multiple Class Distribution System (the "Multiple Class
Arrangement"), the Funds currently offer to the general public two classes of
shares of beneficial interest, no par value, which may be purchased at a price
equal to the next determined net asset value per share plus a sales charge
which, at the election of the purchaser, may be imposed (i) at the time of
purchase (Class A shares) or (ii) on a deferred basis (Class B shares).
Class B shares, including a pro rata portion of the shares received as
distributions with respect to such shares, will automatically convert to Class A
shares of the Funds at the end of eight years following the issuance of the
Class B shares. The date of issuance for purposes of conversion of shares in the
Government Fund which were held on September 7, 1993 shall be the original date
of acquisition of such shares.
2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of the Funds' financial
statements in accordance with generally accepted accounting principles, requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. The following is a
summary of significant accounting policies followed consistently by the Funds.
SECURITIES VALUATION. Securities (including options) listed or traded on an
exchange or quoted on NASDAQ are valued at their last sale prices prior to the
time when assets are valued. Lacking any sales on that day, securities are
valued at the mean between the current closing bid and asked prices. Other
securities for which market quotations are readily available are valued at the
mean of the bid and asked quotations quoted prior to the time when assets are
valued ("market value"). Certain securities (including most tax-exempt debt
obligations) are valued primarily utilizing such pricing services as may be
deemed appropriate. The pricing services utilize information with respect to
market transactions, quotations from dealers and various relationships among
securities in determining value and may provide prices determined as of times
prior to the close of the New York Stock Exchange. Investments in certain
long-term debt securities not traded in an organized market are valued primarily
based on market quotations provided by recognized dealers of such securities.
Other securities for which market quotations are not readily available, such as
restricted securities, or where pricing occurs during periods of market
disruption, are valued in good faith by or under the authority of the Trustees
of the Trust. Short-term investments maturing within 60 days are valued at
original cost plus accreted discount or accrued interest which approximates
market value.
SECURITIES TRANSACTIONS AND RELATED INVESTMENT INCOME. Sales and purchases
are accounted for as of trade date. Realized securities gains or losses are
determined using the identified cost method for both financial and tax
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Mutual Funds 53
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED
reporting purposes. Dividend income is recorded on the ex-dividend date.
Interest income is accrued pro rata to maturity. Original issue discount is
accreted for financial and tax accounting purposes. All premiums on securities
in the Tax Free Fund are amortized for financial and tax accounting purposes.
FUTURES CONTRACTS. Each of the Funds may purchase and sell futures contracts,
subject to certain limitations. The Government Fund uses interest rate futures
contracts as a hedge against changes in interest rates. Upon entering into a
futures contract, each Fund is required to deposit with a broker an amount
("initial margin") equal to a certain percentage of the face amount of the
futures contract. Subsequent payments ("variation margin") are made or received
by the Fund each day, dependent on the daily fluctuations in the value of the
unrealized gains and losses by the Fund. If the Fund enters into a closing
transaction, the Fund will realize, for book purposes, a gain or loss equal to
the difference between the value of the futures contract to sell and the futures
contract to buy. The Fund may be subject to risk upon entering into futures
contracts resulting from the imperfect correlation of prices between the futures
and securities markets.
OPTIONS ON FUTURES CONTRACTS. Each Fund may purchase and sell listed call and
put options on futures contracts. The Government Fund uses options on interest
rate futures contracts as a hedge against changes in interest rates. Options are
valued in accordance with the security valuations policies described above.
Transactions in options on futures contracts involve similar risks to those on
futures contracts.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS. Each Fund may enter into firm
commitment agreements ("TBA" or "when-issued" purchases) for the purchase of
securities at an agreed-upon price on a specified future date. A Fund will not
enter into such agreements for the purpose of investment leverage.
Liability for the purchase price and all the rights and risks of ownership of
the securities accrue to a Fund at the time it becomes obligated to purchase the
securities, although delivery and payment occur at a later date, generally
within 45 days (but not to exceed 120 days) of the date of the commitment to
purchase. Accordingly, if the market price of the security should decline, the
effect of the agreement would be to obligate the Fund to purchase the security
at the price above the current market price on the date of delivery and payment.
During the time the Fund is obligated to purchase such securities, it will
segregate with the Custodian U.S. government securities, cash or cash
equivalents (or a receivable for investment sold in connection therewith) of an
aggregate current value sufficient to make payment for the securities.
REPURCHASE AGREEMENTS. Each Fund may enter into repurchase agreements in
order to generate additional income. Each repurchase agreement entered into by a
Fund will provide that the value of the collateral underlying the repurchase
agreement will always be at least 102% of the repurchase price, including
accrued interest, except for repurchase agreements entered into with a
broker/dealer or bank whose unsecured debt is rated AAA or whose commercial
paper is rated A-1+ by Standard and Poor's in which case the value of the
collateral will always be at least 100% of the repurchase price, including
accrued interest. A Fund will not enter into a repurchase agreement having more
than seven days remaining to maturity if, as a result, such agreements, together
with any other securities which are not readily marketable, would exceed 10% of
the net assets of the
- --------------------------------------------------------------------------------
<PAGE>
54 Investors Trust Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED
Fund. In addition, not more than one-third of the current market value of the
Fund's total assets shall constitute secured "loans" by the Fund under
repurchase agreements.
FEDERAL INCOME TAXES. As a Massachusetts Business Trust, each Fund is a
separate corporate taxpayer and determines its net investment income and capital
gains (or losses) and the amounts to be distributed to the Fund's shareholders
without regard to the income and capital gains (or losses) of the other Funds.
It is the intent of the Funds to comply with the requirements of the Internal
Revenue Code which are applicable to regulated investment companies and to
distribute substantially all of their taxable income to their shareholders.
Accordingly, the Funds paid no federal taxes and no federal income or excise tax
provisions were required. For Federal income tax purposes, any futures contracts
or options on futures contracts which remain open at fiscal year-end are
marked-to-market and the resultant net gain or loss is included in Federal
taxable income. As of October 31, 1996, the Funds had net tax basis capital loss
carryforwards which may be applied against taxable gains until their expiration
date as follows:
EXPIRATION
DATES
FUND AMOUNT OCTOBER 31,
- ------------------------------------------ ------------ -----------
Adjustable Rate Fund...................... $ 72,067 2002
114,498 2003
14,856 2004
Government Fund........................... 87,661,793 2002
107,525,597 2003
1,748,819 2004
Tax Free Fund............................. 176,173 2003
Growth Fund............................... 201,507 2002
243,412 2004
DISTRIBUTION OF INCOME AND GAINS. The Government and Tax Free Funds will
declare a distribution each day in an amount based on periodic projections of
their future net investment income and will pay such distributions monthly.
Consequently, the amount of each daily distribution may differ from actual net
investment income. Net investment income for the Adjustable Rate Fund is
declared as dividends to shareholders of record as of the close of business each
day and is paid to shareholders monthly. Distributions of net investment income
are declared and paid, quarterly for the Value Fund and annually for the Growth
Fund. Distributions from net short-term realized gains are declared and paid,
annually. During any particular year, net realized gains from investment
transactions in excess of any available capital loss carryforwards, would be
taxable to the Funds if not distributed and, therefore, will be declared and
paid to their shareholders annually.
CAPITAL ACCOUNTS. The Funds report the undistributed net investment income
(accumulated net investment loss) and accumulated net realized gain (loss)
accounts on a basis approximating amounts available for future tax distributions
(or to offset future taxable realized gains when a capital loss carryforward is
available).
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Mutual Funds 55
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED
Accordingly, the Funds may periodically make reclassifications among certain
capital accounts without impacting the net asset values of the Funds.
DEFERRED ORGANIZATIONAL AND REGISTRATION COSTS. Costs incurred by a Fund in
connection with its organization and registration of shares have been deferred
and are being amortized on a straight-line basis over a period 60 months from
commencement of investment operations. Costs incurred for subsequent
registration of shares will be amortized on a straight-line basis over the
lesser of the duration of the registration period or 12 months.
EXPENSES. Expenses such as management fees, distribution fees, custodian
fees, transfer agent fees, and registration fees are charged directly to each
Fund, while indirect expenses, such as shareholder reports, professional fees,
trustee fees and expenses, and insurance are allocated among the Funds
principally based on their relative average net assets. Portfolio-level expenses
are allocated to each class of shares based upon the relative percentage of
current net assets of dividend-eligible shares. All expenses that are directly
attributable to a specific class of shares, such as legal expenses and Trustees'
fees incurred as a result of issues relating solely to one class and
distribution fees, are allocated to that class.
3. PURCHASES AND SALES OF SECURITIES. The cost of purchases and the proceeds
from sales and paydowns of investments other than U.S. Government and agency
securities, short term investments and options, for the fiscal year ended
October 31, 1996 were as follows:
FUND PURCHASES SALES PAYDOWNS
- ---------------------------------- ----------- ----------- --------
Adjustable Rate Fund.............. $ 1,040,844 $ 57,270 $133,435
Tax Free Fund..................... 3,163,620 1,396,281 --
Value Fund........................ 42,477,688 26,426,690 --
Growth Fund....................... 22,978,051 10,581,445 --
The cost of purchases and the proceeds from sales and paydowns of long-term
U.S. Government and agency securities, for the fiscal year ended October 31,
1996, were as follows:
FUND PURCHASES SALES PAYDOWNS
- ------------------------- -------------- -------------- -----------
Adjustable Rate Fund..... $ 2,698,026 $ 2,777,943 $ 1,094,069
Government Fund.......... 3,211,045,385 3,499,386,818 68,232,279
Value Fund............... 61,850 502,115 --
- --------------------------------------------------------------------------------
<PAGE>
56 Investors Trust Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED
Transactions in options written on U.S. Treasury bond futures for the
Government Fund were as follows:
NUMBER OF NET
CONTRACTS OF PREMIUMS
WRITTEN OPTIONS RECEIVED
--------------- --------
Outstanding at October 31,1995................... -- $ --
Written.......................................... 235 263,617
Terminated in closing purchase transactions...... (49) (52,623)
------ --------
Outstanding at October 31,1996................... 186 $210,994
------ --------
------ --------
At October 31, 1996 the security pledged to cover margin requirements for open
futures contracts on United States Treasury Bonds and for open option contracts
on United States Treasury Bond Futures for the Government Fund was as follows:
DESCRIPTION FACE VALUE MARKET VALUE
- -------------------------------------------------- ---------- ------------
Federal National Mortgage Association Medium Term
Note, 12.000%, 11/13/00......................... $2,500,000 $3,013,675
---------- ------------
---------- ------------
Aggregate federal income tax cost and gross unrealized appreciation
(depreciation) of investments for each Fund at October 31, 1996 was as follows:
<TABLE>
<CAPTION>
FEDERAL GROSS GROSS NET
INCOME UNREALIZED UNREALIZED UNREALIZED
FUND TAX COST APPRECIATION (DEPRECIATION) APPRECIATION
- ------------------------------------------- ------------ ------------ -------------- ------------
<S> <C> <C> <C> <C>
Adjustable Rate Fund....................... $ 6,909,785 $ 172,292 $ (23,228) $ 149,064
Government Fund............................ 785,320,850 13,173,237 (7,353,769) 5,819,468
Tax Free Fund.............................. 24,573,477 378,030 (85,929) 292,101
Value Fund................................. 34,691,453 5,077,167 (44,258) 5,032,909
Growth Fund................................ 27,187,448 9,492,489 (830,873) 8,661,616
</TABLE>
4. MANAGEMENT, DISTRIBUTION AND TRUSTEES' FEES. Under Advisory agreements
between the Funds and GNA Capital Management, Inc. ("the Adviser"), each Fund
agrees to pay the Adviser a fee based on its average daily net assets as
follows:
ADJUSTABLE RATE FUND. The Adviser's fee is calculated at an annual rate of
.40% of the average daily net assets.
GOVERNMENT FUND. The Adviser's fee is calculated based upon the Fund's
average daily net assets, equal to an annual rate of .65% of the first $500
million, .60% of the next $250 million, .55% of the next $500 million, .50% of
the next $250 million and .45% of average daily net assets over $1.5 billion.
For the fiscal year
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Mutual Funds 57
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED
ended October 31, 1996, the Adviser's fee was equivalent to an annual effective
rate of .62% of the Fund's average daily net assets.
TAX FREE FUND. The Adviser's fee is calculated based upon the Fund's average
daily net assets, equal to an annual rate of .60% of the first $20 million, .50%
of the next $80 million and .45% of average daily net assets in excess of $100
million. For the fiscal year ended October 31, 1996, the Adviser's fee was
equivalent to an annual effective rate of .58% of the Fund's average daily net
assets.
VALUE FUND. The Adviser's fee is calculated based upon the Fund's average
daily net assets, equal to an annual rate of .80% of the first $100 million and
.70% of average daily net assets in excess of $100 million.
GROWTH FUND. The Adviser's fee is calculated based upon the Fund's average
daily net assets, equal to an annual rate of .80% of the first $100 million and
.70% of average daily net assets in excess of $100 million.
The Adviser has agreed to reimburse the Classes of the following Funds, for
expenses incurred by the Classes to the extent that such expenses exceed the
following percentages of average daily net assets during the fiscal year ended
October 31, 1996:
FUND CLASS A CLASS B
- --------------------------------------------- ------- -------
Adjustable Rate Fund......................... 0.95% 1.70%
Value Fund................................... 1.35% 2.10%
Growth Fund.................................. 1.35% 2.10%
The Adviser did not reimburse any expenses of the Government Fund, but
reimbursed all of the expenses of the Tax Free Fund during the fiscal year ended
October 31, 1996.
The expense reimbursement may be extended or modified by the Adviser. The
reimbursement for expenses by the Adviser is being offset by the payables to the
Adviser monthly. Any amount due from the Adviser in excess of the amounts due to
the Adviser is settled in cash within 15 days following month end.
The Funds' Advisory agreements also provide that if, in any fiscal year, the
total of certain specified expenses of any of the Funds exceed the expense
limitations applicable to the Funds imposed by the securities regulations of any
state in which they are then registered to sell shares, the Adviser will waive
all or a portion of its management fee equal to such excess. The Adviser is only
required to reimburse the Funds for any expenses which exceed state expense
limitations up to the amount of management fees paid or payable by the Funds
during such fiscal year.
- --------------------------------------------------------------------------------
<PAGE>
58 Investors Trust Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED
The Adviser has retained the following portfolio managers (the "Sub-Advisers")
for the Funds. These Sub-Advisers are responsible for the actual investment
management of the Fund's assets (including the placement of brokerage orders),
under the general supervision of the Adviser and the Board of Trustees.
FUND SUB-ADVISER
- ------------------------------------ -----------------------------------------
Adjustable Rate Fund................ Standish, Ayer & Wood, Inc.
Government Fund..................... BlackRock Financial Management, Inc.
Tax Free Fund....................... Brown Brothers Harriman & Co.
Value Fund.......................... Duff & Phelps Investment Management, Inc.
Growth Fund......................... Value Line, Inc.
GNA Distributors, Inc. (the "Distributor") receives monthly distribution fees
from the Funds calculated at the annual rate of .75% of the average daily net
assets of Class B shares pursuant to Rule 12b-1 of the Investment Company Act of
1940, as amended. Shareholder servicing fees are also imposed on both Class A
and Class B shares of the Funds equal to specified costs incurred by the
Distributor, but in no event to exceed .25% of the average daily net assets of
each of the Funds with respect to each class. The shareholder servicing fees are
in addition to the .75% distribution fees imposed on Class B. The Distributor
has agreed that the .75% of average daily net assets on Class B shares will only
be assessed on any shareholder's shares for a limited period of time. Once Class
B shares automatically convert to Class A shares of the Funds, after eight
years, such shareholders will be subject only to the shareholder servicing fee
of .25% maximum applicable to Class A shares under the 12b-1 Plan.
With respect to Class B shares, a contingent deferred sales charge
("withdrawal fee") of 5% the first year, declining by 1% per year for five
years, is imposed on any redemption which reduces the current value of the
account to an amount which is lower than the dollar amount of all payments
during the preceding five years. Withdrawal fees are paid to and retained by the
Distributor. These fees permit the Distributor to recover its sales-related
expenses (such as the 4% of the purchase price paid to dealers who sell Class B
shares of the Fund, printing fees, and marketing and advertising expenses). In
the event the Distributor is not fully reimbursed for such expenses incurred in
any fiscal year of the Fund, the Distributor shall be entitled to carryforward
such expenses to subsequent fiscal years for submission to the Fund for payment,
subject always to the .75% of Class B net assets annual maximum expenditure
allowed by the Fund's Plan. The cumulative reimbursable amount is increased by
an interest factor which is intended to replicate the Distributor's cost of
funds for financing advances made under the Plan. The Trustees or a majority of
the Fund's shareholders have the right, however, to terminate the Plan and all
payments thereunder at any time. The Fund will not be obligated to reimburse the
Distributor for carryover expenses subsequent to the Plan's termination or
noncontinuance. The
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Mutual Funds 59
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED
total amounts of carryover expenses outstanding since inception of the Plan as
of October 31, 1996 for which the Distributor intends to seek repayment from the
Funds are as follows:
FUND AMOUNT
- ---------------------------------------------------- -----------
Government Fund..................................... $27,432,834
Tax Free Fund....................................... 357,069
Value Fund.......................................... 778,494
Growth Fund......................................... 730,091
Each Fund pays each Trustee not affiliated with the Adviser its proportionate
share of: (1) an annual fee of $4,000; and (2) a fee of $500 for each meeting of
the Board of Trustees attended plus all reasonable expenses associated with
attendance at such meetings. The proportionate rate is allocated among the Funds
principally based on their relative net assets. No remuneration is paid by the
Funds to any Trustee or officer of the Funds who is affiliated with the Adviser.
5. SHARES OF BENEFICIAL INTEREST. At October 31, 1996 GNA Corporation, the
parent company of the Funds' Adviser, owned the following number of Class A
shares and a nominal amount of Class B shares of the Funds:
CLASS A
FUND SHARES
- ------------------------------------------------------ -------
Adjustable Rate Fund.................................. 888,726
Value Fund............................................ 280,001
Growth Fund........................................... 356,355
At October 31, 1996, Employers Reinsurance Corporation, a wholly-owned
financial subsidiary of General Electric Capital Services Corporation, an
affiliate of GNA Corporation, owned 1,304,348 Class A shares of the Tax Free
Fund.
- --------------------------------------------------------------------------------
<PAGE>
60 Investors Trust Mutual Funds
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of Investors Trust:
We have audited the accompanying statements of assets and liabilities of each
of the series of Investors Trust (in this report comprised of the Adjustable
Rate Fund, the Government Fund, the Tax Free Fund, the Value Fund and the Growth
Fund (the "Funds")) including the investment portfolios, as of October 31, 1996,
and the related statements of operations for the fiscal year then ended, the
statements of changes in net assets for each of the two fiscal years in the
period then ended and the financial highlights for each of the periods indicated
therein. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1996 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Funds enumerated above as of October 31, 1996, the results of their operations
for the fiscal year then ended, the changes in their net assets for each of the
two fiscal years in the period then ended and the financial highlights for each
of the periods indicated therein in conformity with generally accepted
accounting principles.
Boston Massachusetts /s/ COOPERS & Lybrand L.L.P.
December 11, 1996
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Mutual Funds 61
- --------------------------------------------------------------------------------
TAX INFORMATION, UNAUDITED
Of the dividends paid by the Tax Free Fund from net investment income for the
fiscal year ended October 31, 1996, 100% constituted exempt interest dividends
for regular federal income tax purposes.
For the fiscal year ended October 31, 1996, the Value Fund paid a long-term
capital gain distribution of $0.05 per share, with an ex-dividend date of
December 21, 1995.
For the fiscal year ended October 31, 1996, 99.3% and 97.8% of the applicable
dividends distributed by the Growth and Value Funds, respectively, qualifies for
the dividends-received deduction for corporate shareholders.
Please consult a tax adviser if you have any question about federal or state
income tax laws, or on how to prepare your tax returns. If you have specific
questions about your Fund account, please consult your investment representative
or call toll free 1-800-656-6626 and press #2.
- --------------------------------------------------------------------------------
<PAGE>
[GNA LOGO HERE] GNA DISTRIBUTORS, INC.
A GE CAPITAL SERVICES COMPANY
Two Union Square o P.O. Box 490
Seattle, Washington 98111-0490
--------------------------------------------------------------------------
BULK RATE
U.S. POSTAGE
PAID
PERMIT #1193
RICHMOND, VA
--------------------------------------------------------------------------
[INVESTORS TRUST LOGO HERE]
FAMILY OF FUNDS
ANNUAL REPORT
-------------
October 31, 1996
ADJUSTABLE RATE FUND
GOVERNMENT FUND
TAX FREE FUND
VALUE FUND
GROWTH FUND
THE INVESTORS TRUST FAMILY OF FUNDS
IS OFFERED BY GNA DISTRIBUTORS, INC.
<PAGE>
SEMI-ANNUAL REPORT
OF
INVESTORS TRUST
FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 1997
<PAGE>
[logo]
Two Union Square o P.O. Box 490
Seattle, Washington 98111-0490
[LOGO]
FAMILY OF FUNDS
SEMI-ANNUAL REPORT
---------------------------------------------------------------------------
April 30, 1997
ADJUSTABLE RATE FUND
GOVERNMENT FUND
TAX FREE FUND
VALUE FUND
GROWTH FUND
The Investors Trust Family of Funds
is offered by GNA Distributors, Inc.
<PAGE>
[LOGO]
FAMILY OF FUNDS
SEMI-ANNUAL REPORT
- -------------------------------------------------------------------------------
April 30, 1997
Dear Valued Shareholder:
I am pleased to present this semi-annual report, which includes financial market
reviews, performance reviews, portfolio commentaries, and the financial
highlights of each of the Investors Trust Mutual Funds for the six month period
ending April 30, 1997.
In addition, I am also pleased to report that on May 16, 1997, the Investors
Trust Board of Trustees unanimously approved an Agreement and Plan of
Reorganization regarding the proposed combination of the Investors Trust Funds
with similar GE Funds (the "Agreement"). Pursuant to the Agreement and subject
to shareholder approval, each Investors Trust Fund will transfer substantially
all of its assets to a GE Fund having generally similar investment objectives
and policies in exchange for shares of that GE Fund.
Later this summer you will receive a combined proxy/prospectus which addresses
the details of the proposed merger and its benefits to shareholders. Please read
the documents carefully and return your completed and signed proxy form in the
envelope provided. A shareholders meeting to vote on the proposal has been
tentatively scheduled for mid-September in Seattle.
If you have questions regarding the information contained in this semi-annual
report, please contact your investment representative or call Investors Trust
Services at 1-800-656-6626 and press 2 on your phone at the prompt. From July
14, 1997, the hours of operation for Investors Trust Services will be 8:00 am -
6:00 pm (eastern).
Thank you for investing with Investors Trust Mutual Funds.
Sincerely,
/s/ Geoffrey S. Stiff
- ---------------------
Geoffrey S. Stiff
President
The Investors Trust Family of Funds is offered by GNA Distributors, Inc.
<PAGE>
2 Investors Trust Mutual Funds
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
----
Letter from the President................................................ 1
Table of Contents........................................................ 2
Listing of Trustees and Officers......................................... 3
Financial Market Review.................................................. 5
Sub-Adviser Commentaries and Performance Graphs
Adjustable Rate Fund................................................... 6
Government Fund........................................................ 8
Tax Free Fund.......................................................... 11
Value Fund............................................................. 14
Growth Fund............................................................ 17
Notes to Performance..................................................... 20
Investment Portfolios
Adjustable Rate Fund................................................... 21
Government Fund........................................................ 25
Tax Free Fund.......................................................... 30
Value Fund............................................................. 38
Growth Fund............................................................ 42
Financial Statements..................................................... 47
Financial Highlights..................................................... 54
Notes to Financial Statements............................................ 56
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Mutual Funds 3
- --------------------------------------------------------------------------------
INVESTORS TRUST MUTUAL FUNDS
ADJUSTABLE RATE FUND o GOVERNMENT FUND o TAX FREE FUND o VALUE FUND o GROWTH
FUND
Semi-Annual Report
TRUSTEES AND OFFICERS
EDWARD R. MCMILLAN
Trustee, Chairman of
the Board
PIERCE T. LINDBERG
Trustee
DOUGLAS H. PEDERSEN
Trustee
GEOFFREY S. STIFF
President and CEO
CHARLES A. KAMINSKI
Senior Vice President
VICTOR C. MOSES
Senior Vice President
THOMAS W. CASEY
Vice President
and Treasurer
STEPHEN N. DEVOS
Vice President
and Controller
EDWARD J. WILES, JR.
Vice President
and Secretary
SCOTT A. CURTIS
Vice President
KARRI J. HARRINGTON
Assistant Secretary
SUB-ADVISERS
ADJUSTABLE RATE FUND
STANDISH, AYER & WOOD, INC.
Boston, Massachusetts
GOVERNMENT FUND
BLACKROCK FINANCIAL
MANAGEMENT, INC.
New York, New York
TAX FREE FUND
BROWN BROTHERS HARRIMAN
& CO.
New York, New York
VALUE FUND
DUFF & PHELPS INVESTMENT
MANAGEMENT CO.
Chicago, Illinois
GROWTH FUND
VALUE LINE, INC.
New York, New York
ADVISER
GNA CAPITAL
MANAGEMENT, INC.
Seattle, Washington
DISTRIBUTOR
GNA DISTRIBUTORS, INC.
Seattle, Washington
COUNSEL
GOODWIN, PROCTER & HOAR
Boston, Massachusetts
CUSTODIAN & TRANSFER AGENT
STATE STREET BANK AND TRUST
COMPANY
Boston, Massachusetts
INDEPENDENT ACCOUNTANTS
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
This report is prepared for the shareholders of the Investors Trust Mutual
Funds. It is not authorized for use as an offer of sale or a solicitation of an
offer to buy shares of the Funds unless accompanied or preceded by the Trust's
current prospectus.
<PAGE>
4 Investors Trust Mutual Funds
- --------------------------------------------------------------------------------
(This Page Intentionally Left Blank)
<PAGE>
Investors Trust Mutual Funds 5
- --------------------------------------------------------------------------------
FINANCIAL MARKET REVIEW
GNA Capital Management, Inc., Adviser
During the six month period ended April 30, 1997, financial market
participants were presented with conflicting economic signals, but
signals which on balance pointed to increasing economic growth.
Annualized quarterly GDP growth rates were +2.1%, +3.8%, and +5.6% for
the third quarter of 1996 through the first quarter of 1997,
respectively. As often happens during a period of increasing economic
growth, fears of future inflation increased, and this caused intermediate
and long-term interest rates to rise. In late March, the Federal Reserve
increased short-term interest rates by .25% in what was viewed as a
pre-emptive strike against future inflation. Meanwhile, through it all,
inflation, as measured by the change in the Consumer Price Index, rose
somewhat and then declined, ending the period at a year-over-year rate of
+2.5%, down from a comparable level of +3.0% in October, 1996. With fears
of future inflation aroused, but with actual, backward-looking inflation
seemingly under control, market participants are left to ponder what, if
any, monetary policy actions the Federal Reserve will take during the
remainder of 1997.
As mentioned above, intermediate and long-term interest rates rose over
the last six months. Specifically, the 5-year Treasury yield rose from
6.07% to 6.57%, up .50%, and the 30-year yield rose from 6.64% to 6.95%,
up .31%. Bond prices, which move in the opposite direction of yield
changes, declined. In this environment, the bond market, as measured by
the Lehman Brothers Aggregate Bond Index, had a total return of +1.7%, as
bond price declines somewhat offset coupon income for the six month
period.
In the equity market, stock prices were propelled higher by increasing
corporate profits. Major market indexes moved to record highs
periodically throughout the period, although interrupted by a roughly 10%
correction from mid-March through mid-April. In this environment, the
stock market, as measured by the S&P 500 Stock Index, had a total return
of +14.7%, well above the long-term average for the six month period.
- --------------------------------------------------------------------------------
<PAGE>
6 Investors Trust Adjustable Rate Fund
- --------------------------------------------------------------------------------
FROM THE ADJUSTABLE RATE FUND SUB-ADVISER
Standish, Ayer & Wood, Inc.
Portfolio Manager: Lori Driscoll
Q. What happened in the market during the past six months?
A. Interest rates have trended upward over the latest six month period.
Rising concern over inflationary pressures due to a strengthening economy
led up to the Fed's 25 basis point rate hike in March. The Fed's move
appeared to be a pre-emptive strike against inflation. The current
economic picture supports moderate growth, although considerable
uncertainty remains regarding the timing and magnitude of future Fed
moves. In general, strong consumer spending and job growth in today's
tight labor market are likely to result in upward inflationary pressure.
As this is yet to play out, interest rates have fluctuated in about a
0.50% range.
Q. What happened in the Fund during the past six month period?
A. As interest rates have drifted moderately higher, mortgage assets,
ranging from adjustable rate mortgages ("ARMs"), fixed rate pass-throughs
and asset-backed securities,
PERFORMANCE OF A $10,000 INVESTMENT SINCE INCEPTION (9/8/93) OF THE INVESTORS
TRUST ADJUSTABLE RATE FUND
[Graph here]
<TABLE>
<CAPTION>
Investors Trust Investors Trust
Adjustable Rate Adjustable Rate Lehman Brothers Morningstar Govt.
Fund-A Shares Fund-B Shares ARM Index Bond-ARM Fund Average
(ending value: $11,798) (ending value: $11,520) (ending value: $12,239) (ending value: $10,994)
<S> <C>
8/93 10,000 10,000 10,000 10,000
9/93 10,014 9,997 10,001 10,020
10/93 10,026 10,003 10,005 10,039
11/93 10,009 9,981 9,978 10,036
12/93 10,072 10,052 10,053 10,063
1/94 10,083 10,057 10,120 10,099
2/94 10,021 10,006 10,088 10,089
3/94 9,926 9,889 10,008 10,051
4/94 9,850 9,807 9,955 10,018
5/94 9,804 9,756 9,947 9,998
6/94 9,791 9,736 9,969 10,002
7/94 9,906 9,844 10,030 10,037
8/94 9,926 9,858 10,079 10,033
9/94 9,917 9,843 10,038 9,999
10/94 9,876 9,796 10,030 9,961
11/94 9,821 9,735 10,001 9,884
12/94 9,863 9,771 10,054 9,803
1/95 9,987 9,888 10,220 9,816
2/95 10,127 10,021 10,426 9,906
3/95 10,252 10,138 10,476 9,968
4/95 10,326 10,205 10,587 10,017
5/95 10,518 10,387 10,758 10,118
6/95 10,560 10,423 10,803 10,107
7/95 10,554 10,410 10,841 10,123
8/95 10,642 10,490 10,908 10,174
9/95 10,714 10,555 10,985 10,176
10/95 10,785 10,618 11,053 10,145
11/95 10,864 10,689 11,147 10,210
12/95 10,929 10,746 11,232 10,246
1/96 11,026 10,835 11,310 10,305
2/96 11,005 10,802 11,335 10,306
3/96 10,982 10,773 11,356 10,324
4/96 11,014 10,781 11,370 10,352
5/96 11,048 10,823 11,403 10,384
6/96 11,119 10,886 11,484 10,442
7/96 11,152 10,924 11,541 10,482
8/96 11,220 10,966 11,610 10,529
9/96 11,308 11,046 11,699 10,602
10/96 11,429 11,157 11,833 10,690
11/96 11,518 11,246 11,946 10,764
12/96 11,541 11,268 11,984 10,783
1/97 11,611 11,354 12,054 10,855
2/97 11,667 11,409 12,122 10,904
3/97 11,705 11,429 12,145 10,921
4/97 11,798 11,520 12,239 10,994
Past performance is not indicative of future results. See Notes to Performance (page 20).
</TABLE>
Average Annual Total Return %
for the period ended April 30, 1997
Since
1 yr 3 yr Inception
---- ---- ---------
Class A 7.12% 6.15% 4.59%
Class B 6.72% 5.49% 3.93%
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Adjustable Rate Fund 7
- --------------------------------------------------------------------------------
have benefited from declining prepayment risk and a tightening spread
environment. Additionally, declining market volatility has reduced the
value of embedded options; thereby decreasing the sector's overall call
risk. With increased demand for spread product and low supply, mortgage
assets performed well in the latest six months. The Fund's dominant
position is in the ARM sector which posted strong return performance
relative to similar duration Treasuries.
Q. What is your current market outlook?
A. While economic growth was strong in the first quarter of 1997, it is
likely to moderate in the coming months. However, high employment,
housing activity, retail sales and consumer confidence continue to push
economic growth ahead. Despite continued positive inflation news, the
economic picture supports our bias toward moderately higher interest
rates. In addition, the risk for growth to be stronger than expected
appears more likely than a substantial weakening in the economy.
Therefore, we are more defensive in our outlook and we expect that
current economic conditions will warrant another Fed hike before year
end.
Q. How have you positioned the Fund to benefit from your market outlook?
A. Reflecting our more defensive posture, the Fund's duration relative
to the ARM Index is neutral. We are also concerned with potential spread
widening as a result of cap risk if rates rise significantly. As a
result, we have reduced our position in GNMA ARMs in favor of both fixed
rate pass-throughs and asset-backeds. However, if bond yields continue to
trade in a moderate range, spread product, in general, should perform
well.
- --------------------------------------------------------------------------------
<PAGE>
8 Investors Trust Government Fund
- --------------------------------------------------------------------------------
FROM THE GOVERNMENT FUND SUB-ADVISER
BlackRock Financial Management, Inc.
Portfolio Managers: Keith Anderson and Andrew Phillips
Q. What happened in the market during the past six months?
A. Stronger economic data and accompanying inflation fears caused U.S.
Treasury yields to rise for the majority of the six month period between
November 1, 1996 and April 30, 1997.
After reaching their lowest levels since March of 1996, Treasury
yields began rising in December after Federal Reserve Chairman Alan
Greenspan's mention of "irrational exuberance" in the financial markets.
Data indicating continued economic strength characterized the first four
months of 1997. Although inflationary measures such as commodity,
producer and consumer prices remained relatively stable, labor markets
continued to strengthen. For example, over 700,000 new jobs were created
in the first quarter. Therefore, although inflation was largely
nonexistent, the combination of a robust economy, tight labor markets and
strong consumer confidence led the Federal Reserve to raise the Federal
funds rate by 25 basis points (.25%) at their March 25 monetary policy
meeting to subdue this growth and pre-emptively fight inflation. Hints of
moderating economic growth during April proved to be a more accommodating
environment for bonds, as Treasury yields fell towards month-end in
response to a strong dollar, rising stock market and optimism for a
balanced-budget agreement.
For the six month period, the yield of the 5-year Treasury note rose
0.50% to end April at 6.57%. However, the 5-year's yield reached a high
of 6.85% in mid-April before falling the last two weeks of the month as
the likelihood decreased for another interest rate hike by the Federal
Reserve at their May meeting. Over the six month period, spread product
(bonds that offer yield spreads over Treasuries) outperformed Treasuries.
In particular, mortgage-backed securities ("MBS") posted good relative
performance primarily due to low interest rate volatility and subdued
refinancing concerns. Over the period, the MBS market as measured by the
Lehman Mortgage Index returned 2.63% versus the Treasury market's return
(measured by the Merrill Lynch 5-7 year Treasury Index) of 1.04%.
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Government Fund 9
- --------------------------------------------------------------------------------
Q. What happened in the Fund during the past six month period?
A. The Fund significantly reduced its U.S. Treasury holdings during the
past six months and reallocated those assets into high credit quality
bonds which offer higher yields than Treasuries. Specifically, the Fund's
weightings in Small Business Administration ("SBA") and Federal Housing
Authority ("FHA") Loans were increased. These asset classes offer
attractive yield spreads over comparable maturity Treasury securities
while typically providing more stable cash flows than residential MBS.
The Fund continues to emphasize seasoned, or older, mortgage pass-through
securities versus newly issued pass-throughs because seasoned securities
are expected to provide more prepayment stability (and therefore more
stable cash flows) over time.
PERFORMANCE OF A $10,000 INVESTMENT SINCE INCEPTION (9/8/93) OF THE INVESTORS
TRUST GOVERNMENT FUND A SHARES
[GRAPH]
<TABLE>
<CAPTION>
Investors Trust Lehman Brothers Morningstar Government
Government Fund-A Shares Government Bond Index Bond-General Fund Average
(ending value: $10,782) (ending value: $11,828) (ending value: $11,446)
<S> <C>
8/93 10,000 10,000 10,000
9/93 9,903 10,038 10,024
10/93 9,940 10,076 10,044
11/93 9,847 9,965 9,962
12/93 9,910 10,004 10,005
1/94 10,084 10,141 10,108
2/94 9,853 9,926 9,948
3/94 9,609 9,703 9,754
4/94 9,480 9,626 9,667
5/94 9,220 9,614 9,646
6/94 9,162 9,592 9,622
7/94 9,305 9,768 9,751
8/94 9,248 9,770 9,759
9/94 9,084 9,632 9,648
10/94 9,029 9,626 9,634
11/94 8,980 9,608 9,604
12/94 9,060 9,667 9,655
1/95 9,187 9,847 9,805
2/95 9,321 10,058 9,997
3/95 9,365 10,122 10,046
4/95 9,470 10,254 10,156
5/95 9,780 10,668 10,473
6/95 9,842 10,750 10,530
7/95 9,806 10,710 10,504
8/95 9,904 10,835 10,612
9/95 9,979 10,939 10,699
10/95 10,091 11,106 10,826
11/95 10,225 11,279 10,965
12/95 10,350 11,439 11,095
1/96 10,440 11,509 11,155
2/96 10,255 11,274 10,974
3/96 10,167 11,180 10,901
4/96 10,128 11,109 10,842
5/96 10,083 11,090 10,817
6/96 10,189 11,233 10,927
7/96 10,213 11,261 10,952
8/96 10,186 11,236 10,937
9/96 10,369 11,423 11,094
10/96 10,592 11,674 11,297
11/96 10,764 11,877 11,462
12/96 10,663 11,756 11,372
1/97 10,699 11,769 11,399
2/97 10,730 11,786 11,418
3/97 10,618 11,661 11,306
4/97 10,782 11,828 11,446
Past Performance is not indicative of future results. See Notes to Performance (page 20).
</TABLE>
Average Annual Total Return %
for the period ended April 30, 1997
Since
1 yr 3 yr Inception
---- ---- ---------
Class A 6.42% 4.33% 2.04%
- --------------------------------------------------------------------------------
<PAGE>
10 Investors Trust Government Fund
- --------------------------------------------------------------------------------
PERFORMANCE OF A $10,000 INVESTMENT SINCE INCEPTION (4/22/87) OF THE INVESTORS
TRUST GOVERMENT FUND B SHARES
[GRAPH]
<TABLE>
<CAPTION>
Investors Trust Government Lehman Brothers Morningstar Government
Fund-B Shares Government Bond Index Bond-General Fund Average
(ending value: $18,822) (ending value: $21,724) (ending value: $19,288)
<S> <C>
3/87 10,000 10,000 10,000
4/87 10,014 9,754 9,730
5/87 9,946 9,712 9,691
6/87 10,064 9,826 9,807
7/87 10,010 9,805 9,806
8/87 9,920 9,750 9,754
9/87 9,654 9,561 9,559
10/87 10,130 9,933 9,841
11/87 10,202 9,982 9,914
12/87 10,338 10,100 10,024
1/88 10,668 10,431 10,315
2/88 10,805 10,542 10,421
3/88 10,746 10,434 10,343
4/88 10,708 10,378 10,310
5/88 10,614 10,305 10,259
6/88 10,890 10,532 10,448
7/88 10,851 10,461 10,417
8/88 10,859 10,482 10,427
9/88 11,060 10,710 10,611
10/88 11,240 10,899 10,763
11/88 11,142 10,770 10,679
12/88 11,066 10,811 10,682
1/89 11,223 10,948 10,797
2/89 11,156 10,860 10,750
3/89 11,161 10,926 10,786
4/89 11,383 11,160 10,961
5/89 11,654 11,423 11,182
6/89 11,928 11,805 11,455
7/89 12,120 12,054 11,637
8/89 12,025 11,851 11,511
9/89 12,078 11,902 11,561
10/89 12,318 12,210 11,792
11/89 12,447 12,329 11,894
12/89 12,518 12,350 11,942
1/90 12,441 12,174 11,812
2/90 12,486 12,199 11,852
3/90 12,538 12,196 11,867
4/90 12,451 12,089 11,773
5/90 12,759 12,426 12,063
6/90 12,932 12,623 12,230
7/90 13,136 12,784 12,390
8/90 13,055 12,607 12,258
9/90 13,149 12,728 12,350
10/90 13,248 12,935 12,495
11/90 13,469 13,222 12,747
12/90 13,651 13,427 12,938
1/91 13,827 13,571 13,068
2/91 13,941 13,648 13,139
3/91 14,012 13,718 13,198
4/91 14,133 13,869 13,328
5/91 14,215 13,923 13,394
6/91 14,220 13,903 13,378
7/91 14,406 14,069 13,547
8/91 14,694 14,395 13,819
9/91 14,952 14,697 14,077
10/91 15,113 14,827 14,217
11/91 15,210 14,975 14,336
12/91 15,538 15,486 14,755
1/92 15,433 15,244 14,543
2/92 15,510 15,304 14,609
3/92 15,394 15,215 14,538
4/92 15,441 15,311 14,635
5/92 15,698 15,594 14,866
6/92 15,905 15,817 15,058
7/92 16,229 16,215 15,324
8/92 16,360 16,366 15,461
9/92 16,474 16,597 15,626
10/92 16,283 16,358 15,433
11/92 16,251 16,330 15,418
12/92 16,437 16,605 15,633
1/93 16,702 16,958 15,889
2/93 16,912 17,297 16,121
3/93 16,969 17,354 16,173
4/93 17,119 17,488 16,273
5/93 17,138 17,469 16,264
6/93 17,495 17,857 16,522
7/93 17,549 17,966 16,595
8/93 17,825 18,366 16,852
9/93 17,754 18,436 16,893
10/93 17,826 18,506 16,925
11/93 17,630 18,302 16,788
12/93 17,732 18,374 16,860
1/94 18,014 18,626 17,033
2/94 17,590 18,231 16,765
3/94 17,160 17,821 16,437
4/94 16,918 17,680 16,290
5/94 16,442 17,657 16,255
6/94 16,328 17,616 16,215
7/94 16,572 17,940 16,431
8/94 16,461 17,944 16,445
9/94 16,518 17,691 16,259
10/94 16,047 17,678 16,235
11/94 15,969 17,647 16,184
12/94 16,100 17,754 16,270
1/95 16,296 18,085 16,523
2/95 16,563 18,473 16,846
3/95 16,631 18,590 16,930
4/95 16,807 18,833 17,115
5/95 17,346 19,592 17,648
6/95 17,445 19,743 17,746
7/95 17,370 19,670 17,701
8/95 17,534 19,900 17,883
9/95 17,655 20,091 18,029
10/95 17,843 20,397 18,244
11/95 18,068 20,715 18,477
12/95 18,279 21,009 18,698
1/96 18,405 21,137 18,799
2/96 18,089 20,706 18,493
3/96 17,902 20,534 18,370
4/96 17,801 20,403 18,271
5/96 17,730 20,368 18,228
6/96 17,905 20,631 18,414
7/96 17,935 20,682 18,456
8/96 17,876 20,367 18,430
9/96 18,162 20,979 18,695
10/96 18,563 21,441 19,037
11/96 18,830 21,814 19,316
12/96 18,663 21,591 19,164
1/97 18,714 21,615 19,209
2/97 18,758 21,645 19,241
3/97 18,548 21,416 19,052
4/97 18,822 21,724 19,288
Past performance is not indicative of future results. See Notes to Performance (page 20).
</TABLE>
Average Annual Total Return %
for the period ended April 30, 1997
Since
1 yr 3 yr Inception
---- ---- ---------
Class B 5.70% 3.61% 6.51%
Q. What is your current market outlook?
A. BlackRock expects that both production and consumption will
continue to be strong in the coming months. However, the combined
effects of higher interest rates and already rising consumer debt
should lead to more moderate economic growth later in 1997.
Despite inflation remaining relatively low, the potential for
future inflation exists. Therefore, BlackRock currently maintains
a cautious fundamental outlook for bonds. An additional 25 to 50
basis points of interest rate increases by the Fed may still be
necessary to temper economic growth to a more sustainable rate,
although BlackRock does not believe that 1997 will be a repeat of
the dramatic rise in short term interest rates that the market
witnessed in 1994.
Q. How have you positioned the Fund to benefit from your market
outlook?
A. As discussed above, the Fund's allocation to U.S. Treasury
securities has been reduced in light of BlackRock's expectation
for higher domestic bond yields in the near future. Accordingly,
the Fund is substantially invested in mortgages and other spread
product (SBA and FHA Project Loans, for example), which we believe
will provide higher total returns than Treasuries while providing
a higher level of income. The Fund's long-standing bias towards
seasoned mortgage pass-throughs remains intact, as market
participants have begun to value the relative prepayment stability
of these bonds compared to newly issued pass-throughs.
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Tax Free Fund 11
- --------------------------------------------------------------------------------
FROM THE TAX FREE FUND SUB-ADVISER
Brown Brothers Harriman & Co.
Portfolio Manger: Barbara Brinkley
Q. What happened in the market during the past six months?
A. In November, municipal prices embarked on a heady rally as investors
focused on signs of weaker than expected U.S. economic activity;
subdued,--and possibly overstated,--inflation; a rising U.S. dollar; and
an enhanced prospect for deficit reduction. Yields fell by 0.15%-0.20%
before Federal Reserve Chairman Greenspan sobered expectations in early
December, and profit-taking set in. Amid strong export demand and
construction activity, the U.S. economy rebounded. Rising liquidity
fueled domestic demand, while tightening labor markets increased the
upward pressure on prices. On March 25, the Federal Reserve raised the
funds rate by 0.25% to 5.50%, after keeping monetary policy stable over
the preceding 14 months. Municipal yields, which had been creeping
higher, jumped an additional 0.25%-0.35% following the Fed's rate hike.
Financing volume picked up as issuers hurried to market to lock in their
financing.
For the period, municipal rates rose on overnight maturities
by 0.50%, on 5 year maturities by 0.40%, and on 15 year and longer
maturities by 0.10%. The 0-30 year yield curve flattened by 0.28%.
In the period, municipals outperformed comparable maturity taxable
bonds, such as Treasuries and corporates, and municipals with
higher coupons outperformed those with lower coupons.
Q. What happened in the Fund during the past six month period?
A. During the last six months, we have taken on a moderately
defensive posture as yields initially fell, then rose. The Fund's
duration (sensitivity to changes in the level of interest rates)
has been reduced accordingly. On December 5, 1996, we shifted from
a moderately bullish stance to a neutral posture, feeling that
interest rates had little room to fall further. On March 5, 1997,
we were prompted by Greenspan's comments during his Humphrey-
- --------------------------------------------------------------------------------
<PAGE>
12 Investors Trust Tax Free Fund
- --------------------------------------------------------------------------------
Hawkins testimony to become more cautious. Anticipating that rates
would shift upward, we reduced our exposure and increased our
liquidity by selling some intermediate maturities carrying lower
(5.25%-6.10%) coupons and redeploying their proceeds into
overnight and cash-equivalent maturities. We managed these sales
transactions so as to avoid incurring net capital gains tax
liability, and continue to maintain a high credit quality and high
average coupon.
PERFORMANCE OF A $10,000 INVESTMENT SINCE INCEPTION (9/8/93) OF
THE INVESTORS TRUST TAX FREE FUND
[GRAPH]
<TABLE>
<CAPTION>
Investors Trust Tax Free Investors Trust Government Lehman Brothers Morningstar Government
Fund-A Shares Fund-B Shares Government Bond Index Bond-General Fund Average
(ending value:$11,884) (ending value: $18,823) (ending value: $12,045) (ending value: $11,587)
<S> <C>
8/93 10,000 10,000 10,000 10,000
9/93 10,030 10,034 10,125 10,112
10/93 10,054 10,043 10,138 10,132
11/93 9,971 9,954 10,065 10,048
12/93 10,162 10,147 10,278 10,231
1/94 10,283 10,261 10,408 10,338
2/94 10,011 9,983 10,081 10,099
3/94 9,725 9,683 9,710 9,729
4/94 9,712 9,673 9,830 9,767
5/94 9,835 9,789 9,908 9,845
6/94 9,795 9,743 9,854 9,799
7/94 9,965 9,907 10,012 9,949
8/94 9,998 9,940 10,061 9,976
9/94 9,884 9,827 9,918 9,844
10/94 9,753 9,697 9,788 9,693
11/94 9,620 9,565 9,594 9,522
12/94 9,793 9,737 9,755 9,715
1/95 10,032 9,974 9,998 9,953
2/95 10,296 10,236 10,288 10,206
3/95 10,427 10,366 10,447 10,294
4/95 10,432 10,371 10,453 10,305
5/95 10,742 10,679 10,784 10,581
6/95 10,614 10,561 10,710 10,502
7/95 10,659 10,597 10,863 10,576
8/95 10,809 10,746 11,012 10,681
9/95 10,814 10,760 11,088 10,739
10/95 10,946 10,892 11,205 10,876
11/95 11,126 11,061 11,357 11,049
12/95 11,289 11,223 11,427 11,154
1/96 11,344 11,277 11,557 11,219
2/96 11,339 11,272 11,521 11,156
3/96 11,111 11,045 11,373 11,005
4/96 11,096 11,041 11,325 10,968
5/96 11,146 11,080 11,282 10,974
6/96 11,211 11,155 11,387 11,062
7/96 11,379 11,312 11,508 11,154
8/96 11,406 11,338 11,505 11,154
9/96 11,512 11,454 11,626 11,285
10/96 11,621 11,562 11,775 11,397
11/96 11,779 11,709 12,026 11,576
12/96 11,746 11,676 11,972 11,540
1/97 11,814 11,754 12,011 11,548
2/97 11,951 11,890 12,131 11,640
3/97 11,837 11,766 11,966 11,509
4/97 11,884 11,823 12,045 11,587
Past Performance is not indicative of future results. See Notes to Performance (page 20).
</TABLE>
Average Annual Total Return %
for the period ended April 30, 1997
Since
1 yr 3 yr Inception
Class A 7.07% 6.95% 4.83%
Class B 7.06% 6.91% 4.69%
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Tax Free Fund 13
- --------------------------------------------------------------------------------
Q. What is your current market outlook?
A. Secular (Long-term) themes remain supportive for bonds
-- Fiscal Policy is restraining on a global basis
-- Inflation is declining throughout the industrialized world
-- Real interest rates remain high
Cyclical (Short-term) themes are more mixed
-- Economic activity in the U.S. is showing remarkable
resilience. Real GDP growth surged 5.6% in the first
quarter of 1997, outpacing the fourth quarter of 1996's
already robust 3.8% rate. Strong employment and income
growth and a rising stock market have stimulated housing
and consumer spending; moderate but still positive
corporate earnings growth continues to support capital
spending. We expect GDP growth in the second quarter to be
above 3%.
For now, broader inflation measures remain stable.
However, the absence of slack in the economy could put
further upward pressure on prices unless the Fed is
successful in slowing economic activity. The Fed,
concerned about rising labor costs and continued
above-trend growth, has tightened pre-emptively in order
to keep inflation in check. We believe the Fed will
tighten by an additional 25-50 basis points by the end of
the summer to slow economic activity and to insure
continued low rates of inflation.
Q. How have you positioned the Fund to benefit from your market
outlook?
A. The Fund is now positioned with a duration that is moderately
shorter than the portfolio's "neutral point" so as to benefit from
the somewhat higher interest rate environment we anticipate in the
coming quarter. The portfolio's duration is 5.7 years, or 95% of
duration neutrality, which is 6 years. Portfolio issues are
concentrated in 7-20 year maturities so as to lock in the high tax
free yields of the steepest part of the yield curve and to benefit
from "rolling down the yield curve" and from lower yields over
time. At the same time, cash equivalent securities now constitute
over 8% of the Fund. These will benefit from the higher interest
rates and flatter yield curve we anticipate and provide liquidity
to lock in the expected higher interest rates. Our average coupon
is over 7%. We prefer call-protected premium coupons for their
greater tax-free yields to maturity, and their more defensive
characteristics. Further, they avoid the unfavorable tax effects
of market discount bonds. Our average credit quality is Aa+, with
over 65% of the portfolio backed by U.S. Treasury securities held
in escrow. Our high credit quality and broad geographical
diversification are designed to protect against "event risk" that
could arise from a local economic/political development or from a
natural disaster. We have no derivatives, Section 144A (restricted
securities), or alternative minimum tax bonds in the Fund's
portfolio. Our investment philosophy is to take measured interest
rate exposure using liquid, open-market debt of high quality
issuers.
- --------------------------------------------------------------------------------
<PAGE>
14 Investors Trust Value Fund
- --------------------------------------------------------------------------------
FROM THE VALUE FUND SUB-ADVISER
Duff & Phelps Investment Management, Co.
Portfolio Manager: Jeffrey E. Simmons
Q. What happened in the market during the past six months?
A. The stock market experienced a strong six month showing with
the S&P 500 up 14.7%. It is evident that the larger, high quality
companies continued to drive the market over the past six months,
with the S&P 400 mid cap index returning only 6.8% and the Russell
2000 small cap index returning just 1.5%. Indeed, the narrowness
of the market is shown by the fact that the twenty largest
companies (ranked by market values as of 4/30/97) in the S&P 500
accounted for 51% of the index's return for the six month period.
The interest rate increase in March added to the volatility
of the markets and further heightened the uncertainty surrounding
possible future moves by the Federal Reserve Bank. This
environment has market participants continuing to focus on higher
quality, larger capitalization issues with solid fundamentals.
Q. What happened in the Fund during the past six month period?
A. The Value Fund's focus on large, high quality consistent
companies benefited performance over the past six months, as these
companies continued to perform well.
The best and worst performing stocks held throughout the six
months were:
<TABLE>
<CAPTION>
Best Worst
- ---------------------------- ------------------------------
<S> <C> <C> <C>
Microsoft +77.1% Cisco Systems -16.4%
American Express +40.9% PPG Industries -3.5%
Intel +39.5% Chase Manhattan +8.8%
Exxon +29.9% American Home Products +9.3%
Campbell Soup +28.9% Kimberly Clark +10.9%
</TABLE>
Q. What is your current market outlook?
A. Economic data indicates first quarter 1997 GDP growth of 5.6%
was well above the Fed's non-inflationary target of 2-2.5%. Even
if this trend continues into the second quarter, it is not
sustainable. There are increasing indications of a tightening
labor market and wage costs continue to be a major watch signal
for the Federal Reserve, but we do not believe wage costs will
increase enough to be inflationary. We continue to feel that
worker productivity will be strong and inflationary pressures will
remain moderate. We are projecting a stable inflationary
environment with the CPI remaining in the mid 2% range. The
Federal Reserve may increase rates again in the near term, which
would put short-term pressure on the markets, but in the longer
term, any pre-emptive moves should not be so severe as to push the
economy into a recession.
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Value Fund 15
- --------------------------------------------------------------------------------
In our judgment, as this is written, the stock market is
currently fairly valued relative to the fixed income markets. We
expect the uncertainty surrounding interest rates and slowing
corporate profit growth will continue to favor high quality,
liquid companies with consistent earnings and dividends for the
remainder of 1997.
PERFORMANCE OF A $10,000 INVESTMENT SINCE INCEPTION (9/8/93) OF
THE INVESTORS TRUST TAX FREE FUND
[GRAPH]
<TABLE>
<CAPTION>
Investors Trust Value Investors Trust Value Standard & Poor's 500 Morningstar Equity
Fund-A Shares Fund-B Shares Stock Index Income Fund Average
(ending value:$17,469) (ending value: $17,040) (ending value: $18,922) (ending value: $16,060)
<S> <C>
8/93 10,000 10,000 10,000 10,000
9/93 10,040 10,067 9,926 10,009
10/93 10,173 10,187 10,128 10,122
11/93 10,093 10,107 10,032 9,964
12/93 10,141 10,147 10,156 10,138
1/94 10,208 10,200 10,496 10,420
2/94 9,967 9,960 10,213 10,161
3/94 9,574 9,556 9,768 9,762
4/94 9,722 9,960 9,895 9,875
5/94 9,789 9,757 10,057 9,968
6/94 9,595 9,561 9,808 9,815
7/94 9,837 9,789 10,133 10,070
8/94 10,093 10,044 10,545 10,383
9/94 9,925 9,873 10,291 10,193
10/94 10,141 10,075 10,527 10,258
11/94 9,831 9,766 10,140 9,871
12/94 9,972 9,902 10,288 9,958
1/95 10,231 10,145 10,556 10,148
2/95 10,557 10,469 10,966 10,473
3/95 10,731 10,626 11,290 10,717
4/95 11,073 10,964 11,619 10,959
5/95 11,414 11,289 12,078 11,292
6/95 11,517 11,383 12,361 11,418
7/95 11,832 11,695 12,773 11,712
8/95 11,778 11,641 12,808 11,821
9/95 12,289 12,140 13,344 12,217
10/95 12,316 12,140 13,297 12,091
11/95 12,715 12,534 13,883 12,618
12/95 12,919 12,724 14,139 12,922
1/96 13,309 13,095 14,626 13,228
2/96 13,462 13,232 14,766 13,344
3/96 13,491 13,268 14,908 13,524
4/96 13,700 13,460 15,127 13,660
5/96 14,021 13,763 15,517 13,867
6/96 13,986 13,732 15,581 13,905
7/96 13,454 13,196 14,888 13,412
8/96 13,720 13,457 15,203 13,759
9/96 14,770 14,462 16,058 14,285
10/96 15,162 14,847 16,498 14,610
11/96 16,239 15,893 17,750 15,420
12/96 15,843 15,491 17,402 15,354
1/97 16,953 16,563 18,483 15,891
2/97 17,059 16,667 18,632 16,091
3/97 16,253 15,863 17,857 15,609
4/97 17,469 17,040 18,922 16,060
Past Performance is not indicative of future results. See Notes to Performance (page 20).
</TABLE>
Average Annual Total Return %
for the period ended April 30, 1997
Since
1 yr 3 yr Inception
Class A 27.52% 21.58% 16.52%
Class B 26.59% 20.70% 15.72%
Q. How have you positioned the Fund to benefit from your market
outlook?
A. We have an overweighting in the defensive sector, emphasizing
consistent companies in the drug and household products
industries. We like the drug industry because with an aging
population we have a high degree of confidence in the ability of
these types of companies to produce solid earnings growth in an
uncertain environment (Eli Lilly, Pfizer, Bristol Myers). Our
overweighting in the household product industry is an outgrowth of
the international growth potential and strong profit growth of
these dominant name brand players (Procter & Gamble, Gillette,
Kimberly Clark). As these companies became more aggressive with
international volume growth the result has been consistent double
digit earnings and dividend growth for shareholders.
- --------------------------------------------------------------------------------
<PAGE>
16 Investors Trust Value Fund
- --------------------------------------------------------------------------------
We continue to be underweight in the interest-sensitive
sector. This is mainly due to our lack of representation in the
electric and gas utility industries. We have been under
represented in these industries for a long time, with the
uncertainty of future earnings surrounding deregulation and other
looming legislative concerns. However within the
interest-sensitive sector we remain attracted to American Express,
Chase Manhattan, Banc One, and National City. With compelling
valuations and improving business situations we feel these
fundamentals continue to warrant positions.
We are underweighted in the energy sector due to our outlook
for falling oil prices. Within the technology sector we are
underweighted relative to the S&P 500, but we continue to hold
significant positions in the high quality market leaders such as
Intel, Microsoft and Compaq.
Going forward, we anticipate the companies we own in the
Value Fund will benefit from the financial markets uncertainty
surrounding future interest rates and slowing corporate profit
growth. This environment is ideal, and we believe sustainable, for
companies that are in the Value Fund; that is high quality,
blue-chip companies with consistent earnings and dividend growth.
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Growth Fund 17
- --------------------------------------------------------------------------------
FROM THE GROWTH FUND SUB-ADVISER
Value Line, Inc.
Portfolio Manager: Alan Hoffman
Q. What happened in the market during the past six months?
A. The past six month span has seen the U.S. equity market
proceed down two very different paths, a process that actually
started late last summer. On the one hand, the large, "household
name" stocks, like those that comprise the Dow Jones Industrial
Average and the Standard & Poor's 500 Composite Index, have
generally gone straight up, setting a string of new records for
the underlying indexes. Conversely, the secondary,
more-speculative stocks, especially many of those in the
technology area, have lagged the broad market by a good margin.
There are two principal components of that underperformance.
First, the stocks of some fine companies (especially in retailing
and financial services) have just not exhibited the upward price
momentum of several of the "household name" stocks. And second, a
number of technology issues have been savagely sold off when
earnings reports failed to exceed analysts' expectations, even
when earnings shortfalls were relatively minor.
Q. What happened in the Fund during the past six month period?
A. As a growth vehicle, our Fund is overweighted in the
speculative names, especially, again, in technology stocks. That
portfolio orientation has resulted in a fairly sharp degree of
underperformance relative to the popular benchmarks. To counter
the negative volatility that has unfolded over the last few
months, we have moved into stocks in entirely new economic
- --------------------------------------------------------------------------------
<PAGE>
18 Investors Trust Growth Fund
- --------------------------------------------------------------------------------
sectors--oilfield services is a prominent example--but those moves
were executed at points that were unfavorable in terms of
subsequent stock price developments.
PERFORMANCE OF A $10,000 INVESTMENT SINCE INCEPTION (9/8/93) OF
THE INVESTORS TRUST GROWTH FUND
[GRAPH]
<TABLE>
<CAPTION>
Investors Trust Growth Investors Trust Growth Standard & Poor's 500 Morningstar Growth
Fund-A Shares Fund-B Shares Stock Index Fund Average
(ending value:$16,357) (ending value: $15,942) (ending value: $18,922) (ending value: $16,090)
<S> <C>
8/93 10,000 10,000 10,000 10,000
9/93 10,400 10,412 9,926 10,112
10/93 10,212 10,212 10,128 10,238
11/93 10,047 10,047 10,032 10,036
12/93 10,435 10,424 10,156 10,342
1/94 10,788 10,765 10,496 10,663
2/94 10,659 10,624 10,213 10,509
3/94 9,847 9,824 9,768 10,011
4/94 9,847 9,800 9,895 10,057
5/94 9,812 9,765 10,057 10,079
6/94 9,447 9,400 9,808 9,731
7/94 9,657 9,610 10,133 9,987
8/94 10,394 10,323 10,545 10,471
9/94 10,251 10,180 10,291 10,293
10/94 10,465 10,382 10,527 10,447
11/94 10,180 10,097 10,140 10,047
12/94 10,322 10,228 10,288 10,154
1/95 10,394 10,299 10,556 10,215
2/95 10,857 10,739 10,966 10,607
3/95 11,106 10,976 11,290 10,904
4/95 11,273 11,143 11,619 11,117
5/95 11,581 11,439 12,078 11,426
6/95 12,377 12,212 12,361 11,921
7/95 13,244 13,055 12,773 12,516
8/95 13,292 13,103 12,808 12,625
9/95 13,743 13,542 13,344 12,968
10/95 13,518 13,316 13,297 12,748
11/95 13,874 13,649 13,883 13,223
12/95 13,589 13,364 14,139 13,295
1/96 13,945 13,708 14,626 13,560
2/96 14,337 14,077 14,766 13,883
3/96 14,278 14,017 14,908 14,034
4/96 14,646 14,374 15,127 14,525
5/96 15,169 14,872 15,517 14,903
6/96 14,551 14,267 15,581 14,675
7/96 13,815 13,530 14,888 13,789
8/96 14,539 14,243 15,203 14,320
9/96 15,715 15,383 16,058 15,119
10/96 15,632 15,288 16,498 15,191
11/96 16,570 16,191 17,750 16,059
12/96 16,000 15,633 17,402 15,887
1/97 16,689 16,286 18,483 16,620
2/97 16,214 15,811 18,632 16,356
3/97 15,430 15,051 17,857 15,599
4/97 16,357 15,942 18,922 16,090
Past Performance is not indicative of future results. See Notes to Performance (page 20).
</TABLE>
Average Annual Total Return %
for the period ended April 30, 1997
Since
1 yr 3 yr Inception
Class A 11.68% 18.43% 14.43%
Class B 10.91% 17.61% 13.63%
Q. What is your current market outlook?
A. In the relatively near term--say, through the third quarter
of 1997--we have a cautious outlook on U.S. equities. Financial
market participants are clearly focused on underlying economic
fundamentals, the Federal Reserve Board's interpretation of those
fundamentals,
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Growth Fund 19
- --------------------------------------------------------------------------------
and what all of that means for interest rates. We think that that
translates into equity prices moving within a broad trading range,
defined roughly as 6300 to 7300 on the Dow Jones Industrials. In
other words, we don't foresee an immediate major correction in
stock prices, but we also don't see the impetus that will drive
them much higher.
Longer term, we remain as bullish as ever. We think the
economy will continue to exhibit moderate growth, in an
environment of relatively low and stable rates of interest and
inflation, for an extended period into the future. That climate is
ideal for growth investing.
Q. How have you positioned the Fund to benefit from your market
outlook?
A. In order to cushion the near-term volatility, we have
introduced incremental diversification into the portfolio: there
are currently about 80 stocks among our holdings, the vast
majority of which each account for less than 2% of net assets. We
also hold somewhat more cash than normal. However, to capture the
longer-term growth implicit in the Fund's mandate, we remain
overweighted in the technology, financial-services, and
health-care stocks that we believe will be the engines of growth
in the U.S. economy as it enters the third millennium.
- --------------------------------------------------------------------------------
<PAGE>
20 Investors Trust Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO PERFORMANCE
Total returns are historical and assume changes in share price and
reinvestment of dividends and capital gains. Investment returns and principal
values will fluctuate so that an investor's shares, when redeemed, may be worth
more or less than the original cost.
The total returns of classes A and B shown do not include the reduction of the
maximum applicable sales charges (4.50% for Class A shares; 5.00% for Class B
shares). If total returns included the effects of these charges, the performance
figures for each class would have been lower. Additionally, the Adviser has
agreed to waive or limit certain expenses as described in detail in the Funds'
Prospectuses. Had the Adviser not absorbed a portion of expenses, total returns
would have been lower.
The Lehman Brothers ARM Index, the Lehman Brothers Government Bond Index, the
Lehman Brothers 10-Year General Obligation Municipal Bond Index and the S&P 500
Stock Index are unmanaged indices and do not reflect the actual cost of
investing in the instruments that comprise each index. The results shown for the
foregoing indices assume reinvestment of net dividends.
The views expressed in this report reflect those of the Adviser and
Sub-Advisers only through April 30, 1997, the end of the period of this report.
The Adviser's and Sub-Advisers' views are subject to change at any time based on
market and other conditions.
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Adjustable Rate Fund 21
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
April 30, 1997 (unaudited)
<TABLE>
<CAPTION>
% of Net Principal Market
Assets Amount ($) Value ($)
-------- ---------- ----------
<S> <C> <C> <C>
LONG-TERM GOVERNMENT AGENCY SECURITIES 82.5
Federal Home Loan Mortgage Corporation
Adjustable Rate Mortgages (b)(d)-16.9
5.695%, with a maturity date of November 1, 2026.................. 96,902 98,417
6.907%, with a maturity date of April 1, 2026..................... 123,925 126,462
7.341%, with a maturity date of June 1, 2024...................... 159,727 164,519
7.654%, with a maturity date of January 1, 2023................... 96,915 100,307
7.770%, with a maturity date of October 1, 2022................... 65,165 67,222
7.818%, with a maturity date of August 1, 2023.................... 176,663 183,399
7.851%, with a maturity date of January 1, 2023................... 124,196 126,331
7.882%, with a maturity date of January 1, 2024................... 99,216 101,665
7.985%, with a maturity date of August 1, 2023.................... 211,992 220,737
----------
Total Federal Home Loan Mortgage Corporation
Adjustable Rate Mortgages
(Cost $1,173,763).......................................... 1,189,059
----------
Federal National Mortgage Association
Adjustable Rate Mortgages (b)(d)-6.4
4.804%, with a maturity date of April 1, 2026..................... 240,524 242,066
6.953%, with a maturity date of May 1, 2021....................... 205,037 210,708
----------
Total Federal National Mortgage Association
Adjustable Rate Mortgages
(Cost $439,452)............................................ 452,774
----------
Government National Mortgage Association
Adjustable Rate Mortgages (a)(b)(d)-52.8
6.000%, with various maturity dates to October 20, 2025........... 884,110 891,646
6.500%, with various maturity dates to August 20, 2025............ 1,134,516 1,154,522
6.875%, with various maturity dates to October 20, 2024........... 58,856 60,228
7.000%, with various maturity dates to September 20, 2024......... 536,757 549,761
7.125%, with various maturity dates to August 20, 2024............ 1,033,077 1,062,182
----------
Total Government National Mortgage Association
Adjustable Rate Mortgages
(Cost $3,564,931)............................................ 3,718,339
----------
Government National Mortgage Association (a)(b)-4.3
9.000%, with various maturity dates to October 15, 2016
(Cost $299,939)............................................ 282,129 300,416
----------
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
22 Investors Trust Adjustable Rate Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
April 30, 1997 (unaudited), continued
<TABLE>
<CAPTION>
% of Net Principal Market
Assets Amount ($) Value ($)
-------- ---------- ----------
Federal Home Loan Mortgage Corporation
<S> <C> <C> <C>
Real Estate Mortgage Investment Conduits [REMIC] (b)(c)--2.1
6.250%, with a maturity date of September 15, 2018
[Series 1714 Class E]
(Cost $148,810)............................................ 150,000 147,609
----------
Total Long-Term Government Agency Securities
(Cost $5,626,895).......................................... 5,808,197
----------
NON-AGENCY MORTGAGES 4.8
Resolution Trust Corporation Mortgage Pass-Throughs (b)(c)-4.8
8.000%, with a maturity date of September 25, 2021
[Series 92-M4 Class A1].................................... 166,712 167,701
9.000%, with a maturity date of September 25, 2028
[Series 91-6 Class C1]..................................... 167,426 171,245
----------
Total Resolution Trust Corporation Mortgage Pass-Throughs
(Cost $338,006)............................................ 338,946
----------
Total Non-Agency Mortgages
(Cost $338,006)............................................ 338,946
----------
ASSET-BACKED SECURITIES 7.8
AFC Home Equity Loan Trust, 8.000%, December 25, 2024
[Series 94-3 Class 1A]..................................... 120,527 122,190
Citibank Credit Card Master Trust, Zero Coupon February 7, 2003
[Series 96-1 Class A]...................................... 225,000 174,726
Old Stone Credit Corporation Home Equity Loan Trust,
6.300%, September 25, 2007 [Series 92-3 Class A2]............... 111,625 110,788
The Money Store Home Equity Trust, 6.850%, June 15, 2019
[Series 96-A Class A5] (b)(c).............................. 140,000 139,146
----------
Total Asset-Backed Securities
(Cost $552,997)............................................ 546,850
----------
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
Investors Trust Adjustable Rate Fund 23
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
April 30, 1997 (unaudited), continued
<TABLE>
<CAPTION>
% of Net Principal Market
Assets Amount ($) Value ($)
-------- ---------- ----------
SHORT-TERM INVESTMENTS 4.2
<S> <C> <C> <C>
Commercial Paper-1.4
General Electric Capital Corporation
5.550%, with a maturity date of May 1, 1997
(Cost $100,000)............................................ 100,000 100,000
----------
</TABLE>
<TABLE>
<CAPTION>
Number
of Shares
---------
<S> <C> <C> <C>
Money Market Mutual Funds-2.8
SSgA Money Market Fund [Class A]..................................... 177,806 177,806
SSgA US Government Money Market Fund................................. 19,558 19,558
----------
Total Money Market Mutual Funds
(Cost $197,364)............................................... 197,364
Total Short-Term Investments
(Cost $297,364)............................................... 297,364
-------- ----------
Summary
Total investments
(Cost $6,815,262) (e)......................................... 99.3 6,991,357
Other assets and liabilities, net.................................... 0.7 46,431
-------- ----------
Net assets................................................................ 100.0 $7,037,788
-------- ----------
-------- ----------
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
24 Investors Trust Adjustable Rate Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
April 30, 1997 (unaudited), continued
- ------------
NOTES:
(a) The investments in mortgage-backed securities are interests in separate
pools of mortgages. All such issues which have the same coupon rates have
been aggregated for financial statement presentation purposes.
(b) Effective maturities for all securities may be shorter than indicated due
to prepayments.
(c) Risks associated with Collateralized Mortgage Obligations ("CMOs")--The
net asset value of the Fund is sensitive to interest rate fluctuations.
CMOs are obligations collateralized by a portfolio of mortgages or
mortgage-related securities. Payments of principal and interest on the
mortgages are passed through to the holder of the CMOs as they are
received, but certain classes of CMOs have priority over others with
respect to the receipt of prepayments on the mortgages. Therefore, an
investment in a CMO may be subject to a greater or lesser risk of
prepayment than other types of mortgage-related securities and this
uncertainty results in greater price volatility.
(d) Risks associated with Adjustable Rate Mortgage securities ("ARMs")--Most
ARMs are subject to limits on coupon changes ("caps" and "floors"). Coupon
caps/floors limit the amount the coupon can adjust on coupon reset dates,
or over the life of the loan. If interest rates change quickly, an
adjustable rate mortgage's coupon adjustment may be constrained by its
periodic or lifetime limit. For example, if rates rise quickly, since the
coupon rate cannot reset to equal the market rates, or at least cannot do
so immediately, an investment in an ARM may be subject to a decline in
price, despite the fact that ARM securities are often represented to have
less price risk than fixed rate securities. Until, and if, the ARM's coupon
rate can adjust to equal current market rates, it will be subject to price
variations, despite being an "adjustable rate" security. This exposure is
called "cap risk". Conversely, an ARM may benefit from the floor on its
rate adjustments if market rates drop below the minimum rate the ARM may
pay.
(e) See Note 3 in the Notes to Financial Statements for cost for federal
income tax purposes and related gross unrealized appreciation
(depreciation).
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
Investors Trust Government Fund 25
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
April 30, 1997 (unaudited)
<TABLE>
<CAPTION>
% of Net Principal Market
Assets Amount ($) Value ($)
-------- ----------- ------------
<S> <C> <C> <C>
LONG-TERM GOVERNMENT AND AGENCY SECURITIES 96.9
Federal Home Loan Mortgage Corporation (a)(b)-24.6
5.500%, with a maturity date of December 1, 2008.............. 4,094,536 3,838,628
6.500%, with various maturity dates to February 1, 2027....... 62,644,547 60,462,082
7.000%, with various maturity dates to February 1, 2027....... 1,446,030 1,403,994
7.500%, with various maturity dates to September 1, 2026...... 86,862,533 87,352,041
9.000%, with a maturity date of December 1, 2014.............. 3,460,726 3,616,424
10.000%, with various maturity dates to June 1, 2020........... 26,495 27,834
------------
Total Federal Home Loan Mortgage Corporation
(Cost $158,664,460)..................................... 156,701,003
------------
United States Treasury Bonds-4.7
6.625%, with a maturity date of February 15, 2027............. 13,500,000 12,953,655
11.875%, with a maturity date of November 15, 2003............. 13,500,000 17,182,935
------------
Total United States Treasury Bonds
(Cost $30,447,102)...................................... 30,136,590
------------
Federal National Mortgage Association
Real Estate Mortgage Investment Conduits [REMIC] (b)(c)-4.0
3.500%, with a maturity date of October 25, 2021
[Series 96-14 Class M]....................................... 14,200,000 11,302,312
5.000%, with a maturity date of January 25, 2023
[Series 93-210 Class A]...................................... 3,237,060 2,834,301
8.400%, with a maturity date of August 25, 2019
[Series 89-54 Class E]....................................... 10,800,000 11,090,196
------------
Total Federal National Mortgage Association
Real Estate Mortgage Investment Conduits [REMIC]
(Cost $25,148,122)...................................... 25,226,809
------------
Federal National Mortgage Association (a)(b)-4.5
6.500%, with various maturity dates to February 1, 2026....... 1,738,340 1,647,551
7.000%, with various maturity dates to February 1, 2027....... 24,643,934 23,890,689
9.000%, with various maturity dates to July 1, 2021........... 2,833,733 2,999,348
------------
Total Federal National Mortgage Association
(Cost $28,621,025)...................................... 28,537,588
------------
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
26 Investors Trust Government Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
April 30, 1997 (unaudited), continued
<TABLE>
<CAPTION>
% of Net Principal Market
Assets Amount ($) Value ($)
-------- ----------- ------------
Federal National Mortgage Association Medium Term Notes-18.4
<S> <C> <C> <C>
10.450%, with a maturity date of October 13, 2015.............. 10,000,000 13,251,600
11.875%, with a maturity date of May 19, 2000.................. 40,000,000 45,762,400
12.000%, with a maturity date of November 13, 2000 (f)......... 50,000,000 58,343,500
------------
Total Federal National Mortgage Association
Medium Term Notes
(Cost $120,542,600)..................................... 117,357,500
------------
Government National Mortgage Association (a)(b)-15.7
6.500%, with various maturity dates to April 15, 2024......... 20,118,832 19,073,532
7.000%, with various maturity dates to April 15, 2026......... 34,821,733 33,765,490
7.500%, with a maturity date of May 15, 2027 (e).............. 6,120,000 6,066,450
8.000%, with various maturity dates to March 15, 2026......... 36,471,763 37,148,081
8.500%, with various maturity dates to March 15, 2023......... 756,890 786,281
9.000%, with a maturity date of May 15, 2013.................. 244,280 259,758
9.500%, with various maturity dates to December 15, 2017...... 2,755,607 2,986,976
------------
Total Government National Mortgage Association
(Cost $100,206,062)..................................... 100,086,568
------------
Federal Home Loan Mortgage Corporation
Multiclass Mortgage Participation Certificates (b)(c)-0.7
4.500%, with a maturity date of November 15, 2020
[Series 1262 Class H]................................... 2,000,000 1,673,740
9.500%, with a maturity date of January 15, 2019
[Series 38 Class C]..................................... 2,340,771 2,371,482
------------
Total Federal Home Loan Mortgage Corporation
Multiclass Mortgage Participation Certificates (b)(c)
(Cost $4,026,282)....................................... 4,045,222
------------
Financing Corporation-6.4
9.650%, with a maturity date of November 2, 2018.............. 2,020,000 2,531,626
10.700%, with a maturity date of October 6, 2017............... 28,165,000 38,366,081
------------
Total Financing Corporation
(Cost $37,252,781)...................................... 40,897,707
------------
Small Business Administration Loans (b)-8.6
6.950%, with a maturity date of November 1, 2016
[Series 96-20 Class K].................................. 7,000,000 6,888,398
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
Investors Trust Government Fund 27
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
April 30, 1997 (unaudited), continued
<TABLE>
<CAPTION>
% of Net Principal Market
Assets Amount ($) Value ($)
-------- ----------- ------------
7.150%, with a maturity date of March 1, 2017
[Series 97-20 Class C].................................. 5,000,000 4,991,146
<S> <C> <C> <C>
7.350%, with a maturity date of August 1, 2005
[Series 95-P10 Class C1]................................ 12,502,866 12,465,748
7.550%, with a maturity date of June 1, 2016
[Series 96-20 Class F].................................. 8,264,440 8,372,156
7.600%, with a maturity date of May 1, 2016
[Series 96-20 Class E].................................. 3,944,617 4,007,407
7.700%, with a maturity date of July 1, 2016
[Series 96-20 Class G].................................. 5,915,036 6,038,349
8.100%, with a maturity date of March 1, 2015
[Series 95-20 Class C].................................. 9,293,088 9,641,497
8.150%, with a maturity date of February 1, 2015
[Series 95-20 Class B].................................. 1,947,580 2,034,225
------------
Total Small Business Administration Loans
(Cost $54,460,683)...................................... 54,438,926
------------
Federal Housing Administration Project Loans (i)-8.4
Construction Loan Certificates--"CLC"s
Elton Home, 9.250%, March 1, 2037.............................. 3,051,950 3,262,248
Messenger House Care, 8.500%, July 31, 2021.................... 7,475,200 7,704,128
Northfield Commons, 7.900%, September 1, 2037.................. 7,719,100 7,753,358
Pine Creek, 8.500%, July 31, 2036.............................. 2,768,000 2,866,610
University Park, 7.875%, January 1, 2038....................... 7,224,340 7,219,825
Willow Creek, 8.000%, July 1, 2037............................. 5,680,346 5,753,128
------------
34,559,297
------------
Permanent Loan Certificates--"PLC"s
Hudson Apartments, 8.200%, October 1, 2021..................... 2,254,072 2,306,903
Lakeland Nursing, 7.875%, December 1, 2034..................... 6,905,788 6,946,794
Shelby Manor, 8.750%, June 25, 2035............................ 4,187,229 4,382,198
Village Green, 8.250%, September 1, 2034....................... 5,261,211 5,396,850
------------
19,032,745
------------
Total Federal Housing Administration Project Loans
(Cost $52,446,558)...................................... 53,592,042
------------
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
28 Investors Trust Government Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
April 30, 1997 (unaudited), continued
<TABLE>
<CAPTION>
% of Net Principal Market
Assets Amount ($) Value ($)
-------- ----------- ------------
New York City Mortgage Loan Trust (d)-0.9
<S> <C> <C> <C>
6.750%, with a maturity date of June 25, 2006
(Cost $5,890,309)....................................... 6,080,496 5,951,285
------------
Total Long-Term Government and Agency Securities
(Cost $617,705,984)..................................... 616,971,240
------------
SHORT TERM INVESTMENTS 3.6
Federal Home Loan Bank Discount Note-3.6
5.280%, with a maturity date of May 1, 1997
(Cost $22,680,000)...................................... 22,680,000 22,680,000
------------
Total Short Term Investments
(Cost $22,680,000)...................................... 22,680,000
-------- ------------
Summary
Total investments (Cost $640,385,984) (g)...................... 100.5 639,651,240
Other assets and liabilities, net.............................. (0.5) (3,049,636)
-------- ------------
Net assets.......................................................... 100.0 $636,601,604
-------- ------------
-------- ------------
</TABLE>
- ------------
NOTES:
(a) The investments in mortgage-backed securities are interests in separate
pools of mortgages. All such issues which have the same coupon rates, have
been aggregated for financial statement presentation purposes.
(b) Effective maturities for all securities may be shorter than indicated due
to prepayments.
(c) Risks associated with Collateralized Mortgage Obligations ("CMOs")--The net
asset value of the Fund is sensitive to interest rate fluctuations. CMOs
are obligations collateralized by a portfolio of mortgages or
mortgage-related securities. Payments of principal and interest on the
mortgages are passed through to the holder of the CMOs as they are
received, but certain classes of CMOs have priority over others with
respect to the receipt of prepayments on the mortgages. Therefore, an
investment in a CMO may be subject to a greater or lesser risk of
prepayment than other types of mortgage-related securities and this
uncertainty results in greater price volatility.
(d) 144A Securities--These securities are private placement securities and can
be considered restricted since resale of such securities are only allowed
to certain qualified institutional buyers. Because the disposition of these
securities are restricted, such securities could possibly become illiquid
in particular circumstances.
(e) To be announced ("TBA" Forward Commitment Transactions) securities (Note
2).
(f) Collateral for open futures contracts (Note 3).
(g) See Note 3 in the Notes to Financial Statements for cost for federal income
tax purposes and related gross unrealized appreciation (depreciation).
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
Investors Trust Government Fund 29
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
April 30, 1997 (unaudited), continued
(h) At April 30, 1997, open futures contracts purchased were as follows:
<TABLE>
<CAPTION>
Contracts Expiration Market Unrealized
Purchased Description Date Value Depreciation
--------- ---------------------------------------------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
251 U.S. Treasury Note and Bond Futures June 97 $26,918,531 $ (155,280)
----------- ------------
----------- ------------
</TABLE>
(i) Federal Housing Administration ("FHA") project loans--These securities are
pass-throughs or participation certificates backed by the U.S. Department
of Housing and Urban Development ("HUD"). Although HUD insures the project
loan collateral, it does not guarantee timely payment of principal and
interest on the securities. Project loans held by the Fund are structured
as Construction Loan Certificates/Permanent Loan Certificates
("CLCs/PLCs"). The Fund purchases a project loan by committing to fund
construction costs on a monthly basis until the project is built (CLCs).
When construction is completed, the Fund's cumulative monthly construction
financing payments are rolled into permanent mortgages on the buildings
(PLCs).
As of April 30, 1997, the Fund had committed to fund construction costs as
follows:
<TABLE>
<CAPTION>
Principal Market
Description Amount Value
- ------------------------------------------------------------------- ---------- ----------
<S> <C> <C> <C>
Elton Home, 9.250%, March 1, 2037............................. $ 165,898 $ 169,371
Messenger House Care, 8.500%, July 31, 2021................... 2,191,356 2,211,055
Northfield Commons, 7.900%, September 1, 2037................. 1,093,312 1,109,558
Pine Creek, 8.500%, July 31, 2036............................. 790,512 796,796
University Park, 7.875%, January 1, 2038...................... 3,524,314 3,498,047
Willow Creek, 8.000%, July 1, 2037............................ 910,040 933,816
----------
$8,718,643
----------
----------
</TABLE>
These costs are stated in the Statement of Assets and Liabilities as
Project Loans Payable.
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
30 Investors Trust Tax Free Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
April 30, 1997 (unaudited)
<TABLE>
<CAPTION>
% of Net Principal Market
Assets Amount ($) Value ($)
-------- ---------- -----------
<S> <C> <C> <C>
LONG-TERM MUNICIPAL INVESTMENTS 89.3
Alabama-0.3
Birmingham Alabama North Medical Clinic Board Revenue,
6.625%, April 1, 2000*.......................................... 75,000 79,060
-----------
Alaska-0.1
North Slope Borough Alaska, 10.000%, June 30, 2001* (b)........... 30,000 35,745
-----------
Arizona-0.7
Maricopa County Arizona, 6.250%, July 1, 2002 (b)................. 175,000 186,153
-----------
Arkansas-3.1
Arkansas Housing Development Agency,
8.375%, July 1, 2010*........................................... 270,000 331,460
Arkansas Housing Development Agency,
8.375%, July 1, 2011*........................................... 235,000 301,406
Pulaski County Arkansas Hospital Revenue,
9.250%, March 1, 2010*.......................................... 105,000.. 134,504
-----------
767,370
-----------
California-4.9
California State, 8.750%, May 1, 2004............................. 110,000 133,938
Sacramento California Municipal Utility District Electric Revenue,
9.000%, April 1, 2013 [Series M]*............................... 620,000 816,620
San Diego California Hospital Revenue,
8.875%, February 1, 2011*....................................... 210,000 267,891
-----------
1,218,449
-----------
Colorado-3.5
Colorado Springs Utilities Revenue,
8.500%, November 15, 2011*...................................... 100,000 125,867
Denver Colorado City and County Single-Family Mortgage Revenue,
7.000%, August 1, 2010 [Series 1978A]*.......................... 490,000 553,915
Loveland Colorado, 8.875%, November 1, 2005*...................... 165,000 202,066
-----------
881,848
-----------
Connecticut-4.9
Connecticut State Health and Educational Facility Authority,
7.000%, July 1, 2012*........................................... 725,000 816,778
Connecticut State Housing Finance Authority,
6.050%, May 15, 2014............................................ 410,000 414,596
-----------
1,231,374
-----------
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
Investors Trust Tax Free Fund 31
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
April 30, 1997 (unaudited), continued
<TABLE>
<CAPTION>
% of Net Principal Market
Assets Amount ($) Value ($)
-------- ---------- -----------
Delaware-0.9
<S> <C> <C> <C>
Delaware Transportation Authority Transportation Systems Revenue,
6.100%, July 1, 2002............................................ 110,000 116,006
Georgetown Delaware, 6.800%, June 1, 2001** (b)................... 100,000 107,604
-----------
223,610
-----------
Florida-6.1
Broward County Florida General Obligation,
6.200%, January 1, 2007 [Series C].............................. 25,000 26,478
Dade County Florida Health Facilities Authority Hospital Revenue,
6.400%, May 1, 2001* (b)........................................ 100,000 106,025
Florida State, Department of General Services, Broward County
Expressway Revenue, 6.500%, July 1, 2003 [Series A]............. 675,000 690,066
Florida State, Turnpike-Department of Transportation,
Broward County Expressway, 10.000%, July 1, 2014................ 235,000 347,734
Gainesville Florida Utilities Systems Revenue,
8.125%, October 1, 2014*........................................ 175,000 219,426
Jacksonville Florida Electric Authority Revenue,
6.500%, October 1, 2003 [Series 10]............................. 135,000 146,768
-----------
1,536,497
-----------
Georgia-2.3
Clarke County Georgia Hospital Authority Revenue,
9.875%, January 1, 2006* (b).................................... 80,000 103,513
Columbus Georgia Medical Center Hospital Authority Revenue,
7.750%, July 1, 2010*........................................... 285,000 341,011
Gwinnett County Georgia Water and Sewage Authority Water Revenue,
9.600%, October 1, 2004*........................................ 115,000 143,296
-----------
587,820
-----------
Hawaii-0.9
Honolulu Hawaii City and County,
7.250%, July 1, 2002 [Series A]................................. 200,000 221,168
-----------
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
32 Investors Trust Tax Free Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
April 30, 1997 (unaudited), continued
<TABLE>
<CAPTION>
% of Net Principal Market
Assets Amount ($) Value ($)
-------- ---------- -----------
Idaho-3.1
<S> <C> <C> <C>
Idaho Falls Idaho Electric Revenue,
10.375%, April 1, 2007**........................................ 560,000 783,938
-----------
Illinois-1.0
Chicago Illinois Motor Fuel Tax Revenue,
6.500%, January 1, 2001** (b)................................... 20,000 21,192
Chicago Illinois Wastewater Transmission Revenue,
6.300%, January 1, 2003** (b)................................... 20,000 21,663
Des Plaines Illinois Hospital Facility Revenue,
10.750%, July 1, 2002**......................................... 115,000 145,139
Waukegan Illinois Water and Sewer Revenue,
7.500%, May 1, 2006*............................................ 50,000 58,145
-----------
246,139
-----------
Indiana-0.2
Indiana University Revenue,
10.125%, July 1, 2010 [Series N]**.............................. 35,000 41,948
-----------
Iowa-4.4
Muscatine Iowa Electric Revenue,
9.700%, January 1, 2013*........................................ 815,000 1,107,854
-----------
Louisiana-2.7
Jefferson Parish Louisiana Hospital Service,
7.250%, January 1, 2009*........................................ 600,000 677,100
-----------
Maine-0.8
Maine Municipal Bond Bank, 7.100%, November 1, 1999 [Series D]**.. 10,000 10,788
Maine Municipal Bond Bank, 7.200%, November 1, 2000 [Series B]**.. 65,000 71,341
Maine Municipal Bond Bank Sewer and Water Revenue,
7.200%, November 1, 2001 [Series A]**........................... 100,000 111,145
-----------
193,274
-----------
Massachusetts-4.8
Massachusetts Bay Transportation Authority,
7.250%, March 1, 2003 [Series A] (b)............................ 100,000 108,302
Massachusetts State, 6.750%, August 1, 2009 [Series C] (b)........ 250,000 271,608
Massachusetts State Port Authority Revenue,
13.000%, July 1, 2013*.......................................... 500,000 833,895
-----------
1,213,805
-----------
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
Investors Trust Tax Free Fund 33
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
April 30, 1997 (unaudited), continued
<TABLE>
<CAPTION>
% of Net Principal Market
Assets Amount ($) Value ($)
-------- ---------- -----------
<S> <C> <C> <C>
Michigan-2.7
Michigan State Hospital Finance Authority Revenue,
7.125%, May 1, 2009*............................................ 380,000 429,940
Michigan State Hospital Finance Authority Revenue,
9.000%, May 1, 2008*............................................ 195,000 250,257
-----------
680,197
-----------
Minnesota-1.3
Rochester Minnesota Health Care Facilities Revenue,
6.250%, November 15, 2014....................................... 300,000 314,292
-----------
Mississipi-1.3
Mississippi State, 6.200%, February 1, 2008*...................... 300,000 327,831
-----------
Missouri--0.1
Lees Summit Missouri Water and Sewer Revenue,
10.000%, July 1, 2000 [Series 1984-A]** (b)..................... 20,000 23,098
-----------
New Hampshire-0.1
New Hampshire Municipal Bond Bank State Guaranteed,
6.800%, January 15, 2000 [Series B]**........................... 25,000 26,812
-----------
New Jersey-1.5
Atlantic County New Jersey Improvement Authority Lease Revenue,
7.400%, March 1, 2012 [Series A]* (b)........................... 225,000 267,417
New Jersey Economic Development Authority Market,
7.000%, July 1, 2004 [Series A] (b)............................. 100,000 111,154
-----------
378,571
-----------
New Mexico-2.6
Farmington New Mexico Power Revenue,
9.875%, July 1, 2005**.......................................... 400,000 527,332
Farmington New Mexico Utility Systems Revenue,
9.875%, January 1, 2008*(b)..................................... 100,000 131,531
-----------
658,863
-----------
New York-9.7
Erie County New York Water Authority Water Revenue,
6.000%, December 1, 2008 [Series A]* (b)........................ 400,000 423,988
New York City, 6.000%, August 1, 2006 [Series D]* (b)............. 300,000 303,645
New York State, 7.100%, March 1, 2001**........................... 50,000 55,018
New York State Dormitory Authority Revenue,
7.375%, July 1, 2016*........................................... 470,000 559,803
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
34 Investors Trust Tax Free Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
April 30, 1997 (unaudited), continued
<TABLE>
<CAPTION>
% of Net Principal Market
Assets Amount ($) Value ($)
-------- ---------- -----------
<S> <C> <C> <C>
New York State Dormitory Authority Revenue,
7.500%, May 15, 2011............................................ 165,000 190,133
New York State Environmental Facilities Corporation,
6.800%, November 15, 2010....................................... 200,000 222,836
New York State Housing Finance Agency,
6.400%, November 1, 2003 [Series A]*............................ 175,000 184,852
New York State Local Government Assistance,
6.750%, April 1, 2002 [Series A]................................ 45,000 48,905
New York State Local Government Assistance,
7.250%, April 1, 2007 [Series B]**.............................. 350,000 387,957
New York State Local Government Assistance Corporation,
6.000%, April 1, 2005 [Series C]................................ 50,000 52,505
-----------
2,429,642
-----------
North Carolina-5.0
North Carolina Municipal Power Agency Number One Catawba,
10.500%, January 1, 2010*....................................... 915,000 1,256,460
-----------
Ohio-1.1
Columbus Ohio, 6.000%, July 1, 2008 [Series 2].................... 50,000 52,978
Ohio State Water Development Authority Revenue,
7.000%, December 1, 2009 [Series I]* (b)........................ 200,000 228,174
-----------
281,152
-----------
Pennsylvania-7.1
Allegheny County Pennsylvania Hospital Development Authority,
7.375%, July 1, 2012 [Series N]*................................ 150,000 175,103
Pennsylvania Intergovernmental Cooperative Authority,
6.800%, June 15, 2002**......................................... 50,000 54,374
Pennsylvania State Turnpike Commission Turnpike Revenue,
7.150%, December 1, 2001 [Series J]** (b)....................... 25,000 27,848
Philadelphia Pennsylvania Hospitals and Higher Education
Facilities, 6.500%, February 15, 2002 [Series A]**.............. 325,000 352,384
Philadelphia Pennsylvania Hospitals Authority Revenue,
9.875%, July 1, 2005**.......................................... 480,000 631,666
Philadelphia Pennsylvania Regional Port Authority Lease Revenue,
7.150%, August 1, 2000** (b).................................... 30,000 32,237
Pittsburgh Pennsylvania Water and Sewer Authority, Water and
Sewer, 7.250%, September 1, 2014*............................... 425,000 499,651
-----------
1,773,263
-----------
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
Investors Trust Tax Free Fund 35
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
April 30, 1997 (unaudited), continued
<TABLE>
<CAPTION>
% of Net Principal Market
Assets Amount ($) Value ($)
-------- ---------- -----------
<S> <C> <C> <C>
Puerto Rico-1.9
Puerto Rico Commonwealth Aqueduct and Sewer Authority
Revenue, 10.250%, July 1, 2009*................................. 340,000 466,432
-----------
Rhode Island-0.3
Convention Center Authority Rhode Island Revenue,
6.300%, May 15, 2001 [Series A]** (b)........................... 45,000 48,281
Rhode Island Depositors Economic Protection,
7.100%, August 1, 2001 [Series A]** (b)......................... 35,000 38,703
-----------
86,984
-----------
South Carolina-2.9
South Carolina State Public Service Authority Revenue,
6.500%, July 1, 2002 [Series D]** (b)........................... 195,000 212,583
Spartanburg South Carolina Waterworks Revenue,
6.000%, June 1, 2005............................................ 500,000 524,470
-----------
737,053
-----------
Tennessee-0.3
Metropolitan Government Nashville and Davidson,
9.600%, July 1, 2005 [Series N]*................................ 65,000 84,549
-----------
Texas-3.5
Arlington Texas Independent School District,
5.900%, February 15, 2003....................................... 350,000 363,699
Austin Texas Utility Systems Revenue,
7.250%, November 15, 2003....................................... 50,000 52,666
Austin Texas Utility Systems Revenue,
10.750%, May 15, 2000**......................................... 30,000 35,087
Gulf Coast Waste Disposal Authority Texas,
8.375%, June 1, 2005*........................................... 100,000 121,148
Houston Texas Water Systems Revenue,
7.300%, December 1, 2006*....................................... 100,000 116,926
Lamar University Texas Revenue, 7.000%, April 1, 2006*............ 35,000 39,851
San Antonio Texas Water Revenue, 7.125%, May 1, 1999** (b)........ 25,000 26,636
Texas A&M University Revenue, 9.400%, June 1, 2004*............... 40,000 50,412
Texas A&M University Revenue, 9.400%, June 1, 2006*............... 55,000 72,061
-----------
878,486
-----------
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
36 Investors Trust Tax Free Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
April 30, 1997 (unaudited), continued
<TABLE>
<CAPTION>
% of Net Principal Market
Assets Amount ($) Value ($)
-------- ---------- -----------
<S> <C> <C> <C>
Utah-1.1
Intermountain Power Agency Utah Power Supply,
7.200%, July 1, 1999 [Series A]**............................... 10,000 10,742
Utah State Municipal Finance Cooperative Local Government Revenue,
7.000%, June 1, 2001** (b)...................................... 250,000 272,720
-----------
283,462
-----------
Virginia-0.5
Richmond Virginia Metropolitan Authority Expressway Revenue,
7.000%, October 15, 2013* (b)................................... 115,000 126,778
-----------
Washington-0.7
Municipality of Metropolitan Seattle Sewer Revenue,
6.875%, January 1, 2000 [Series T]** (b)........................ 40,000 42,977
Snohomish County Washington Public Utility District
Number 001, 6.375%, January 1, 2005*............................ 20,000 21,286
Washington State Public Power Supply Systems Nuclear,
7.200%, July 1, 2002 [Series B]................................. 100,000 107,151
-----------
171,414
-----------
West Virginia-0.9
Wood County West Virginia Building Commission Revenue,
6.625%, January 1, 2006* (b).................................... 215,000 230,729
-----------
Total Long-Term Municipal Investments
(Cost $22,210,933)......................................... 22,449,220
-----------
SHORT-TERM MUNICIPAL INVESTMENTS 8.8
Los Angeles Regional Airports Improvement Corporation,
3.950%, (a) May 1, 1997......................................... 700,000 700,000
Massachusetts State, 3.850%, (a) May 1, 1997 [Series B]........... 1,000,000 1,000,000
New York City, 4.000%, (a) May 1, 1997............................ 400,000 400,000
New York City, 4.000%, (a) May 1, 1997............................ 100,000 100,000
-----------
Total Short-Term Municipal Investments
(Cost $2,200,000).......................................... 2,200,000
-------- -----------
Summary
Total investments
(Cost $24,410,933) (c)..................................... 98.1 24,649,220
Other assets and liabilities, net................................. 1.9 488,478
-------- -----------
Net assets............................................................. 100.0 $25,137,698
-------- -----------
-------- -----------
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
Investors Trust Tax Free Fund 37
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
April 30, 1997 (unaudited), continued
- ------------
NOTES:
* Escrowed to maturity: Bonds which are collateralized by U.S. Treasury
securities which are held in escrow by a trustee and used to pay principal
and interest on such bonds.
** Pre-refunded: Bonds which are collateralized by U.S. Treasury securities
which are held in escrow and are used to pay principal and interest on the
tax-exempt issue and to retire the bonds at the earliest refunding date.
(a) Coupon rate is reset daily.
(b) The security is insured by FGIC, MBIA, or AMBAC.
(c) See Note 3 in the Notes to Financial Statements for cost for federal
income tax purposes and related unrealized appreciation (depreciation).
Other Information:
The composition of long-term municipal investments as a percentage of net
assets, is as follows:
<TABLE>
<CAPTION>
S&P/Moody's Rating % of Net Assets
- --------------------------------- ---------------
<S> <C>
AAA or Aaa 63.5%
AA or Aa 11.7%
A 13.9%
BBB or Baa 3.0%
Unrated securities of comparable
investment quality as above 6.0%
</TABLE>
The Fund had insurance concentrations of 5% or greater as of April 30, 1997
(as a percentage of net assets) as follows:
<TABLE>
<S> <C>
AMBAC 8.3%
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
38 Investors Trust Value Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
April 30, 1997 (unaudited)
<TABLE>
<CAPTION>
% of Net Number Market
Assets of Shares Value ($)
-------- ---------- -----------
<S> <C> <C> <C>
COMMON STOCKS 99.6
Basic Industries-7.1
Diversified-1.3%
Corning, Incorporated.......................................... 13,000 627,250
-----------
Chemicals-5.8%
DuPont (EI) deNemours & Company................................ 18,800 1,995,150
PPG Industries, Incorporated................................... 14,800 804,750
-----------
2,799,900
-----------
3,427,150
-----------
Capital Goods-8.1
Electrical Equipment-8.1%
Emerson Electric Company....................................... 35,600 1,806,700
General Electric Company....................................... 18,900 2,095,537
-----------
3,902,237
-----------
Conglomerates-3.9
Minnesota Mining & Manufacturing Company....................... 21,300 1,853,100
-----------
Consumer Basics-28.6
Drugs & Health Care-14.1%
American Home Products Corporation............................. 29,400 1,947,750
Bristol Myers Squibb Company................................... 23,600 1,545,800
Eli Lilly & Company............................................ 22,500 1,977,187
Pfizer, Incorporated........................................... 13,700 1,315,200
-----------
6,785,937
-----------
Food & Beverages-2.9%
Campbell Soup Company.......................................... 10,800 552,150
PepsiCo, Incorporated.......................................... 23,800 830,025
-----------
1,382,175
-----------
Household Products-9.6%
Colgate Palmolive Company...................................... 13,300 1,476,300
Kimberly Clark Corporation..................................... 38,800 1,988,500
Procter & Gamble Company....................................... 8,900 1,119,175
-----------
4,583,975
-----------
Tobacco-2.0%
Philip Morris Companies, Incorporated.......................... 25,000 984,375
-----------
13,736,462
-----------
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
Investors Trust Value Fund 39
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
April 30, 1997 (unaudited), continued
<TABLE>
<CAPTION>
% of Net Number Market
Assets of Shares Value ($)
-------- ---------- -----------
<S> <C> <C> <C>
Consumer Non-Durable Goods-8.5
Cosmetics & Toiletries-5.7%
Avon Products, Incorporated.................................... 32,200 1,984,325
Gillette Company............................................... 9,000 765,000
-----------
2,749,325
-----------
Retail Trade-2.8%
Dayton Hudson Corporation...................................... 17,500 787,500
Walgreen Company............................................... 11,900 547,400
-----------
1,334,900
-----------
4,084,225
-----------
Consumer Services-0.8
Air Travel-0.8%
AMR Corporation (a)............................................ 4,000 372,500
-----------
Energy-7.0
International Oil-6.0%
Exxon Corporation.............................................. 28,000 1,585,500
Mobil Corporation.............................................. 9,700 1,261,000
-----------
2,846,500
-----------
Petroleum Services-1.0%
Halliburton Company............................................ 6,900 487,313
-----------
3,333,813
-----------
Finance-12.6
Banks-9.7%
Banc One Corporation........................................... 35,000 1,483,125
Chase Manhattan Corporation.................................... 13,400 1,241,175
National City Corporation...................................... 39,700 1,935,375
-----------
4,659,675
-----------
Financial Services-2.0%
American Express Company....................................... 14,300 942,012
-----------
Insurance-0.9%
American International Group, Incorporated..................... 3,500 449,750
-----------
6,051,437
-----------
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
40 Investors Trust Value Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
April 30, 1997 (unaudited), continued
<TABLE>
<CAPTION>
% of Net Number Market
Assets of Shares Value ($)
-------- ---------- -----------
<S> <C> <C> <C>
General Business-0.9
Newspapers-0.9%
Gannett Company, Incorporated.................................. 4,800 418,800
-----------
Shelter-2.9
Construction Materials-2.9%
Masco Corporation.............................................. 37,000 1,396,750
-----------
Technology-13.5
Computers & Business Equipment-6.3%
Cisco Systems, Incorporated (a)................................ 9,100 470,925
Compaq Computer Corporation (a)................................ 6,100 520,787
Pitney Bowes, Incorporated..................................... 32,000 2,048,000
-----------
3,039,712
-----------
Electronics-4.5%
Intel Corporation.............................................. 14,100 2,159,063
-----------
Software-2.7%
Microsoft Corporation (a)...................................... 10,600 1,287,900
-----------
6,486,675
-----------
Utilities-5.7
Telephone-5.7%
Ameritech Corporation.......................................... 28,100 1,717,613
Bell Atlantic Corporation...................................... 15,000 1,007,670
-----------
2,725,283
-----------
Total Common Stocks
(Cost $38,636,983)...................................... 47,788,432
-----------
MONEY MARKET MUTUAL FUNDS 0.3
SSgA Money Market Fund [Class A]............................... 151,394 151,394
SSgA US Government Money Market Fund........................... 115 115
-----------
Total Money Market Mutual Funds
(Cost $151,509)......................................... 151,509
-------- -----------
Summary
Total investments
(Cost $38,788,492) (b).................................. 99.9 47,939,941
Other assets and liabilities, net.............................. 0.1 24,189
-------- -----------
Net assets.......................................................... 100.0 $47,964,130
-------- -----------
-------- -----------
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
Investors Trust Value Fund 41
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
April 30, 1997 (unaudited), continued
- ------------
NOTES:
(a) Non-income producing security.
(b) See Note 3 in the Notes to Financial Statements for cost for federal income
tax purposes and related gross unrealized appreciation (depreciation).
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
42 Investors Trust Growth Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
April 30, 1997 (unaudited)
<TABLE>
<CAPTION>
% of Net Number Market
Assets of Shares Value ($)
-------- ---------- -----------
<S> <C> <C> <C>
COMMON STOCKS 95.2
Basic Industries-5.5
Chemicals-2.4%
Monsanto Company............................................... 10,000 427,500
Praxair, Incorporated.......................................... 9,000 464,625
-----------
892,125
-----------
Containers & Glass-2.2%
Coca-Cola Enterprises, Incorporated............................ 6,100 368,288
Sealed Air Corporation (a)..................................... 9,600 444,000
-----------
812,288
-----------
Paper & Forest Products-0.9%
Albany International Corporation............................... 16,000 322,000
-----------
2,026,413
-----------
Capital Goods-0.9
Agricultural Machinery-0.9%
Deere & Company................................................ 7,200 331,200
-----------
Conglomerates-1.7
Danaher Corporation............................................ 13,600 613,700
-----------
Consumer Basics-15.8
Drugs & Health Care-14.6%
Amgen, Incorporated............................................ 8,000 471,000
Boston Scientific Corporation (a).............................. 6,300 303,975
Guidant Corporation............................................ 5,600 382,200
HBO & Company.................................................. 5,200 278,200
Johnson & Johnson.............................................. 6,400 392,000
Medtronic, Incorporated........................................ 8,000 554,000
Merck & Company, Incorporated.................................. 4,000 362,000
Omnicare, Incorporated......................................... 10,200 248,625
Oxford Health Plans, Incorporated (a).......................... 15,900 1,047,413
Pfizer, Incorporated........................................... 5,600 537,600
Schering Plough Corporation.................................... 6,000 480,000
U.S. Surgical Corporation...................................... 8,700 297,975
-----------
5,354,988
-----------
Food & Beverages-1.2%
Coca-Cola Company.............................................. 6,800 432,650
-----------
5,787,638
-----------
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
Investors Trust Growth Fund 43
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
April 30, 1997 (unaudited), continued
<TABLE>
<CAPTION>
% of Net Number Market
Assets of Shares Value ($)
-------- ---------- -----------
<S> <C> <C> <C>
Consumer Durable Goods-2.3
Automobiles-2.3%
Harley Davidson, Incorporated.................................. 12,200 481,900
Lear Corporation (a)........................................... 10,400 371,800
-----------
853,700
-----------
Consumer Non-Durable Goods-11.3
Apparel & Textiles-2.1%
Nike, Incorporated............................................. 6,000 337,500
Wolverine World Wide, Incorporated............................. 10,600 426,650
-----------
764,150
-----------
Cosmetics & Toiletries-1.4%
Gillette Company............................................... 6,000 510,000
-----------
Retail Trade-7.8%
CompUSA, Incorporated (a)...................................... 16,000 308,000
Dollar General Corporation..................................... 14,171 448,158
Gap, Incorporated.............................................. 10,800 344,250
Home Depot, Incorporated....................................... 7,500 435,000
Kohl's Corporation (a)......................................... 11,200 547,400
Petsmart, Incorporated (a)..................................... 25,000 420,312
Tiffany & Company.............................................. 9,100 360,588
-----------
2,863,708
-----------
4,137,858
-----------
Consumer Services-1.4
Hotels & Restaurants-1.4%
McDonald's Corporation......................................... 9,800 525,525
-----------
Energy-6.0
Domestic Oil-0.9%
Louisiana Land & Exploration Company........................... 6,500 325,000
-----------
Gas Exploration-1.1%
BJ Services Company (a)........................................ 8,200 386,425
-----------
Petroleum Services-4.0%
Smith International, Incorporated (a).......................... 12,200 577,975
Transocean Offshore, Incorporated.............................. 9,000 545,625
Western Atlas, Incorporated (a)................................ 5,600 347,200
-----------
1,470,800
-----------
2,182,225
-----------
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
44 Investors Trust Growth Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
April 30, 1997 (unaudited), continued
<TABLE>
<CAPTION>
% of Net Number Market
Assets of Shares Value ($)
-------- ---------- -----------
<S> <C> <C> <C>
Finance-18.9
Banks-9.3%
BankBoston Corporation......................................... 6,000 436,500
Citicorp....................................................... 3,500 394,187
Fifth Third Bancorp............................................ 9,000 671,625
Norwest Corporation............................................ 8,400 418,950
Star Banc Corporation.......................................... 16,200 688,500
Zions Bancorporation........................................... 6,400 809,600
-----------
3,419,362
-----------
Financial Services-6.4%
American Express Company....................................... 6,100 401,837
CUC International, Incorporated (a)............................ 18,000 380,250
Finova Group, Incorporated..................................... 9,000 617,625
Franklin Resources, Incorporated............................... 6,500 384,313
Green Tree Financial Corporation............................... 9,000 266,625
The Money Store, Incorporated.................................. 13,400 289,775
-----------
2,340,425
-----------
Insurance-3.2%
MGIC Investment Corporation.................................... 7,600 617,500
SunAmerica, Incorporated....................................... 12,000 552,000
-----------
1,169,500
-----------
6,929,287
-----------
General Business-6.1
Business Services-4.6%
First Data Corporation......................................... 9,000 310,500
FIserv, Incorporated (a)....................................... 14,800 558,700
Omnicom Group.................................................. 8,000 424,000
Robert Half International, Incorporated (a).................... 10,300 404,275
-----------
1,697,475
-----------
Communication Services-0.8%
Ascend Communications, Incorporated (a)........................ 4,400 201,300
Loral Space & Communications (a)............................... 5,000 73,125
-----------
274,425
-----------
Office Furnishings & Supplies-0.7%
Staples, Incorporated (a)...................................... 13,500 243,000
-----------
2,214,900
-----------
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
Investors Trust Growth Fund 45
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
April 30, 1997 (unaudited), continued
<TABLE>
<CAPTION>
% of Net Number Market
Assets of Shares Value ($)
-------- ---------- -----------
<S> <C> <C> <C>
Technology-22.3
Aerospace-1.1%
McDonnell Douglas Corporation.................................. 6,600 391,875
-----------
Computers & Business Equipment-7.5%
Cisco Systems, Incorporated (a)................................ 5,600 289,800
Dell Computer Corporation (a).................................. 12,000 1,004,250
EMC Corporation Massachusetts (a).............................. 13,500 491,062
Gateway 2000, Incorporated (a)................................. 6,400 351,200
Hewlett Packard Company........................................ 5,600 294,000
Sun Microsystems, Incorporated (a)............................. 10,800 311,175
-----------
2,741,487
-----------
Electronics-3.6%
Adaptec, Incorporated (a)...................................... 10,400 384,800
Intel Corporation.............................................. 4,000 612,500
Newbridge Networks Corporation (a)............................. 10,000 317,500
-----------
1,314,800
-----------
Software-7.0%
BMC Software, Incorporated (a)................................. 8,000 346,000
Computer Associates International, Incorporated................ 6,750 351,000
McAfee Associates, Incorporated (a)............................ 8,700 485,025
Microsoft Corporation (a)...................................... 5,000 607,500
Oracle Systems Corporation (a)................................. 9,000 357,750
Parametric Technology Corporation (a).......................... 9,000 407,250
-----------
2,554,525
-----------
Telecommunication Equipment-3.1%
ADC Telecommunications, Incorporated (a)....................... 16,000 418,000
Andrew Corporation (a)......................................... 10,125 250,594
Tellabs, Incorporated (a)...................................... 12,000 478,500
-----------
1,147,094
-----------
8,149,781
-----------
Transportation-0.8
Railroads & Equipment-0.8%
Wisconsin Central Transportation Corporation (a)............... 9,000 294,750
-----------
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
46 Investors Trust Growth Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
April 30, 1997 (unaudited), continued
<TABLE>
<CAPTION>
% of Net Number Market
Assets of Shares Value ($)
-------- ---------- -----------
<S> <C> <C> <C>
Utilities-2.2
Electric-1.3%
AES Corporation (a)............................................ 7,100 463,275
-----------
Telephone-0.9%
Cincinnati Bell, Incorporated.................................. 6,000 336,000
-----------
799,275
-----------
Total Common Stocks
(Cost $24,966,735)...................................... 34,846,252
-----------
MONEY MARKET MUTUAL FUNDS 5.0
SSgA Money Market Fund [Class A]............................... 1,145,415 1,145,415
SSgA US Government Money Market Fund........................... 707,934 707,934
-----------
Total Money Market Mutual Funds
(Cost $1,853,349)....................................... 1,853,349
-------- -----------
Summary
Total investments
(Cost $26,820,084) (b).................................. 100.2 36,699,601
Other assets and liabilities, net.............................. (0.2) (83,051)
-------- -----------
Net assets.......................................................... 100.0 $36,616,550
-------- -----------
-------- -----------
</TABLE>
- ------------
NOTES:
(a) Non-income producing security.
(b) See Note 3 in the Notes to Financial Statements for cost for federal income
tax purposes and related gross unrealized appreciation (depreciation).
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
Investors Trust Mutual Funds 47
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
April 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Adjustable
Rate Government Tax Free Value Growth
Fund Fund Fund Fund Fund
---------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Assets
Investments at market value
(identified cost $6,815,262,
$640,385,984, $24,410,933,
$38,788,492 and $26,820,084,
respectively) (Notes 2 and 3)....... $6,991,357 $639,651,240 $24,649,220 $47,939,941 $36,699,601
Cash.................................. 55 26,740 77,561 24 3
Receivables:
Fund shares sold................. -- 16,552 3,000 59,435 747
Dividends........................ 599 -- -- 59,631 17,722
Interest......................... 43,522 10,090,934 470,217 -- --
Investments sold................. -- 5,883,743 -- 1,027,507 --
Adviser (Note 4)................. 10,334 -- 35,729 -- 3,188
Deferred organization costs
(Note 2)............................ 16,730 -- 16,730 16,730 16,730
Prepaid expenses...................... 11,120 7,281 11,835 9,969 8,583
---------- ------------ ----------- ----------- -----------
Total assets.......................... 7,073,717 655,676,490 25,264,292 49,113,237 36,746,574
---------- ------------ ----------- ----------- -----------
Liabilities
Payables:
Fund shares redeemed............. -- 1,492,820 -- 46,716 47,673
Investments purchased............ -- 6,070,506 38,700 1,007,670 --
Project loans payable............ -- 8,718,643 -- -- --
Dividends........................ 9,676 994,454 31,021 -- --
Adviser (Note 4)................. -- -- -- 1,129 --
Daily variation margin on open
futures contracts (Notes 2
and 3)........................... -- 93,188 -- -- --
Accrued distribution fee and
shareholder service fee
(Note 4)......................... 4,518 799,972 21,317 35,212 30,298
Accrued management fee
(Note 4)......................... 2,318 335,273 11,686 29,514 23,154
Other accrued expenses................ 19,417 570,030 23,870 28,866 28,899
---------- ------------ ----------- ----------- -----------
Total liabilities..................... 35,929 19,074,886 126,594 1,149,107 130,024
---------- ------------ ----------- ----------- -----------
Net assets............................ $7,037,788 $636,601,604 $25,137,698 $47,964,130 $36,616,550
---------- ------------ ----------- ----------- -----------
---------- ------------ ----------- ----------- -----------
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
48 Investors Trust Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
April 30, 1997 (unaudited), continued
<TABLE>
<CAPTION>
Adjustable
Rate Government Tax Free Value Growth
Fund Fund Fund Fund Fund
---------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net assets consist of (Note 2):
Undistributed (accumulated
distributions in excess of) net
investment income (loss)......... $ 1,880 $ (1,667,053) $ 167,433 $ (27,903) $ (190,177)
Accumulated net realized gains
(losses)......................... (201,217) (201,178,464) (231,717) 1,814,670 68,076
Unrealized appreciation
(depreciation) on:
Investments (Note 3)............. 176,095 (734,744) 238,287 9,151,449 9,879,517
Futures contracts (Note 3)....... -- (155,280) -- -- --
Shares of beneficial interest......... 7,061,030 840,337,145 24,963,695 37,025,914 26,859,134
---------- ------------ ----------- ----------- -----------
Net assets............................ $7,037,788 $636,601,604 $25,137,698 $47,964,130 $36,616,550
---------- ------------ ----------- ----------- -----------
---------- ------------ ----------- ----------- -----------
Class A:
Net Assets............................ $5,905,774 $ 28,546,905 $16,100,337 $ 6,982,166 $ 8,629,890
---------- ------------ ----------- ----------- -----------
---------- ------------ ----------- ----------- -----------
Outstanding shares of beneficial
interest (No par value).......... 918,888 3,422,003 1,411,919 607,753 626,643
Net asset value and redemption price
per share........................ $ 6.43 $ 8.34 $ 11.40 $ 11.49 $ 13.77
Maximum offering price per share
(100/95.5 of net asset value per
share)........................... $ 6.73 $ 8.73 $ 11.94 $ 12.03 $ 14.42
Class B:
Net Assets............................ $1,132,014 $608,054,699 $ 9,037,361 $40,981,964 $27,986,660
---------- ------------ ----------- ----------- -----------
---------- ------------ ----------- ----------- -----------
Outstanding shares of beneficial
interest (No par value).......... 176,126 72,800,685 791,433 3,583,038 2,085,680
Net asset value, offering and
redemption price per share
(Note 4)....................... $ 6.43 $ 8.35 $ 11.42 $ 11.44 $ 13.42
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
Investors Trust Mutual Funds 49
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
For the six month period ended April 30, 1997 (unaudited)
<TABLE>
<CAPTION>
Adjustable Government Tax Free Value Growth
Rate Fund Fund Fund Fund Fund
---------- ------------ --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Investment income:
Interest....................................... $226,512 $ 27,462,174 $ 683,602 $ -- $ 2,167
Dividends...................................... 3,680 -- -- 427,204 159,673
---------- ------------ --------- ---------- ----------
Total Income................................... 230,192 27,462,174 683,602 427,204 161,840
---------- ------------ --------- ---------- ----------
Expenses:
Management fee (Note 4).................... 13,871 2,227,655 72,926 173,416 146,304
Distribution fee-Class B (Note 4).......... -- 2,525,189 34,237 138,663 105,268
Shareholder servicing fees (Note 4):
Class A................................. 4,391 17,634 14,825 2,230 4,082
Class B................................. 882 413,037 8,408 12,930 13,467
Transfer agent fee......................... 23,098 458,275 25,667 38,408 38,698
Custodian fee.............................. 37,607 184,427 45,320 37,672 36,956
Amortization of organization costs
(Note 2)................................ 6,199 -- 6,199 6,199 6,199
Registration fees.......................... 9,042 12,077 9,688 10,619 10,567
Shareholder reports........................ 1,439 93,629 2,872 6,430 7,414
Professional fees.......................... 552 68,056 1,920 2,513 2,413
Insurance.................................. 198 23,474 667 832 861
Trustees' fees and expenses................ 66 8,027 229 300 289
Other...................................... 289 121,647 1,672 3,193 3,144
---------- ------------ --------- ---------- ----------
Total expenses before reimbursement from
Adviser...................................... 97,634 6,153,127 224,630 433,405 375,662
Reimbursement of expenses from Adviser
(Note 4)..................................... (64,708) -- (224,630) (1,969) (23,645)
---------- ------------ --------- ---------- ----------
Expenses, net.................................. 32,926 6,153,127 -- 431,436 352,017
---------- ------------ --------- ---------- ----------
Net investment income (loss)................... 197,266 21,309,047 683,602 (4,232) (190,177)
---------- ------------ --------- ---------- ----------
Realized and unrealized gain (loss) on
investments
Net realized gain (loss) from:
Investment transactions
(Notes 2 and 3)......................... 204 (950,766) (55,544) 1,826,916 512,995
Option contracts........................... -- 497,790 -- -- --
Futures contracts.......................... -- (408,335) -- -- --
Net increase (decrease) in unrealized
appreciation (depreciation) during the
period from:
Investment transactions.................... 26,773 (10,723,010) (53,814) 4,106,332 1,217,901
Option contracts........................... -- (94,744) -- -- --
Futures contracts.......................... -- 727,318 -- -- --
---------- ------------ --------- ---------- ----------
Net realized and unrealized gain (loss) on
investments.................................. 26,977 (10,951,747) (109,358) 5,933,248 1,730,896
---------- ------------ --------- ---------- ----------
Net increase in net assets resulting from
operations................................... $224,243 $ 10,357,300 $ 574,244 $5,929,016 $1,540,719
---------- ------------ --------- ---------- ----------
---------- ------------ --------- ---------- ----------
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
50
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Adjustable Rate Fund
----------------------------------
Six Month
Period Ended
April 30, 1997 Year Ended
(Unaudited) October 31, 1996
-------------- ----------------
<S> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss)..................................................... $ 197,266 $ 378,092
Net realized gain (loss) from:
Investment transactions........................................................ 204 (12,778)
Option contracts............................................................... -- --
Futures contracts.............................................................. -- --
Net increase (decrease) in unrealized appreciation (depreciation) during the
period from:
Investment transactions........................................................ 26,773 31,768
Option contracts............................................................... -- --
Futures contracts.............................................................. -- --
-------------- ----------------
Net increase in net assets resulting from operations.............................. 224,243 397,082
-------------- ----------------
Distributions to shareholders from (Note 2):
Class A
Net investment income.......................................................... (167,111) (298,845)
Distributions in excess of net investment income............................... -- --
Net realized gains............................................................. -- --
Tax return of capital.......................................................... -- --
-------------- ----------------
Distributions to Class A shareholders.......................................... (167,111) (298,845)
-------------- ----------------
Class B
Net investment income.......................................................... (34,053) (79,247)
Distributions in excess of net investment income............................... -- --
Net realized gains............................................................. -- --
Tax return of capital.......................................................... -- --
-------------- ----------------
Distributions to Class B shareholders............................................ (34,053) (79,247)
-------------- ----------------
Total distributions to shareholders.............................................. (201,164) (378,092)
-------------- ----------------
Increase (decrease) in net assets resulting from operations,
net of distributions to shareholders............................................ 23,079 18,990
-------------- ----------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Mutual Funds 51
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Government Fund Tax Free Fund Value Fund Growth Fund
- --------------------------------- --------------------------------- --------------------------------- --------------
Six Month Six Month Six Month Six Month
Period Ended Period Ended Period Ended Period Ended
April 30, 1997 Year Ended April 30, 1997 Year Ended April 30, 1997 Year Ended April 30, 1997
(Unaudited) October 31, 1996 (Unaudited) October 31, 1996 (Unaudited) October 31, 1996 (Unaudited)
- -------------- ---------------- -------------- ---------------- -------------- ---------------- --------------
<S> <C> <C> <C> <C> <C> <C>
$ 21,309,047 $ 55,213,311 $ 683,602 $ 1,347,773 $ (4,232) $ 102,618 $ (190,177)
(950,766) 5,292,635 (55,544) 192 1,826,916 3,192,415 512,995
497,790 (1,289,801) -- -- -- -- --
(408,335) (7,988,014) -- -- -- -- --
(10,723,010) (15,982,620) (53,814) 115,799 4,106,332 2,432,088 1,217,901
(94,744) (252,124) -- -- -- -- --
727,318 (1,545,243) -- -- -- -- --
- -------------- ---------------- -------------- ---------------- -------------- ---------------- --------------
10,357,300 33,448,144 574,244 1,463,764 5,929,016 5,727,121 1,540,719
- -------------- ---------------- -------------- ---------------- -------------- ---------------- --------------
(1,005,197) (1,692,150) (392,336) (789,946) (21,440) (42,207) --
-- -- -- -- -- (2,142) --
-- -- -- -- (475,283) (35,364) --
-- (258,257) -- -- -- -- --
- -------------- ---------------- -------------- ---------------- -------------- ---------------- --------------
(1,005,197) (1,950,407) (392,336) (789,946) (496,723) (79,713) --
- -------------- ---------------- -------------- ---------------- -------------- ---------------- --------------
(20,690,236) (52,573,700) (222,304) (428,491) (2,231) (80,140) --
-- -- -- -- -- (4,066) --
-- -- -- -- (2,729,341) (131,342) --
-- (8,023,827) -- -- -- -- --
- -------------- ---------------- -------------- ---------------- -------------- ---------------- --------------
(20,690,236) (60,597,527) (222,304) (428,491) (2,731,572) (215,548) --
- -------------- ---------------- -------------- ---------------- -------------- ---------------- --------------
(21,695,433) (62,547,934) (614,640) (1,218,437) (3,228,295) (295,261) --
- -------------- ---------------- -------------- ---------------- -------------- ---------------- --------------
)
(11,338,133 (29,099,790) (40,396) 245,327 2,700,721 5,431,860 1,540,719
- -------------- ---------------- -------------- ---------------- -------------- ---------------- --------------
Year Ended
October 31, 1996
- ----------------
$ (153,238)
(243,412)
--
--
4,436,873
--
--
- ----------------
4,040,223
- ----------------
--
--
--
--
- ----------------
--
- ----------------
--
--
--
--
- ----------------
--
- ----------------
--
- ----------------
4,040,223
- ----------------
</TABLE>
(continued)
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
52
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS, continued
<TABLE>
<CAPTION>
Adjustable Rate Fund
---------------------------------
Six Month
Period Ended
April 30, 1997 Year Ended
(Unaudited) October 31, 1996
-------------- ----------------
<S> <C> <C>
Share transactions:
Class A
Proceeds from sale of shares..................................................... $ 6,768 $ 27,226
Reinvestment of distributions.................................................... 166,576 295,536
Cost of shares redeemed.......................................................... (2,988) (96,085)
-------------- ----------------
Net increase (decrease) in net assets resulting
from share transactions........................................................ 170,356 226,677
-------------- ----------------
Class B
Proceeds from sale of shares..................................................... 269,522 389,371
Reinvestment of distributions.................................................... 29,054 71,484
Cost of shares redeemed.......................................................... (539,549) (955,523)
-------------- ----------------
Net increase (decrease) in net assets resulting
from share transactions........................................................ (240,973) (494,668)
-------------- ----------------
Total net increase (decrease) in net assets
resulting from share transactions................................................ (70,617) (267,991)
-------------- ----------------
Increase (decrease) in net assets................................................... (47,538) (249,001)
Net assets at beginning of period................................................... 7,085,326 7,334,327
-------------- ----------------
Net assets at end of period......................................................... $7,037,788 $7,085,326
-------------- ----------------
-------------- ----------------
Undistributed (accumulated distributions in excess of)
net investment income (loss) at end of period..................................... $ 1,880 $ 5,778
-------------- ----------------
-------------- ----------------
Fund Share Information:
Class A
Shares sold...................................................................... 1,054 4,278
Shares issued upon reinvestment of distributions................................. 25,939 46,300
Shares redeemed.................................................................. (465) (15,068)
-------------- ----------------
Increase (decrease) in Fund shares outstanding................................... 26,528 35,510
-------------- ----------------
-------------- ----------------
Class B
Shares sold...................................................................... 41,952 60,938
Shares issued upon reinvestment of distributions................................. 4,523 11,196
Shares redeemed.................................................................. (83,902) (150,064)
-------------- ----------------
Increase (decrease) in Fund shares outstanding................................... (37,427) (77,930)
-------------- ----------------
-------------- ----------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Mutual Funds 53
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Government Fund Tax Free Fund Value Fund Growth Fund
- --------------------------------- --------------------------------- --------------------------------- --------------
Six Month Six Month Six Month Six Month
Period Ended Period Ended Period Ended Period Ended
April 30, 1997 Year Ended April 30, 1997 Year Ended April 30, 1997 Year Ended April 30, 1997
(Unaudited) October 31, 1996 (Unaudited) October 31, 1996 (Unaudited) October 31, 1996 (Unaudited)
- -------------- ---------------- -------------- ---------------- -------------- ---------------- --------------
<S> <C> <C> <C> <C> <C> <C>
$ 4,650,654 $ 11,137,901 $ 36,648 $ 309,165 $ 488,767 $ 1,029,337 $ 458,647
514,630 902,225 15,269 23,330 496,574 79,393 --
(5,224,724) (9,198,287) (93,442) (351,480) (235,399) (319,837) (433,171)
- -------------- ---------------- -------------- ---------------- -------------- ---------------- --------------
)
(59,440 2,841,839 (41,525) (18,985) 749,942 788,893 25,476
- -------------- ---------------- -------------- ---------------- -------------- ---------------- --------------
1,028,780 9,242,327 671,703 2,631,898 6,097,391 18,661,475 2,639,041
10,880,444 31,218,929 157,299 317,971 2,619,315 204,072 434
(140,215,602) (377,040,027) (962,467) (1,516,101) (3,354,282) (4,468,090) (3,427,129)
- -------------- ---------------- -------------- ---------------- -------------- ---------------- --------------
(128,306,378) (336,578,771) (133,465) 1,433,768 5,362,424 14,397,457 (787,654)
- -------------- ---------------- -------------- ---------------- -------------- ---------------- --------------
(128,365,818) (333,736,932) (174,990) 1,414,783 6,112,366 15,186,350 (762,178)
- -------------- ---------------- -------------- ---------------- -------------- ---------------- --------------
(139,703,951) (362,836,722) (215,386) 1,660,110 8,813,087 20,618,210 778,541
776,305,555 1,139,142,277 25,353,084 23,692,974 39,151,043 18,532,833 35,838,009
- -------------- ---------------- -------------- ---------------- -------------- ---------------- --------------
$ 636,601,604 $ 776,305,555 $ 25,137,698 $ 25,353,084 $ 47,964,130 $ 39,151,043 $ 36,616,550
- -------------- ---------------- -------------- ---------------- -------------- ---------------- --------------
- -------------- ---------------- -------------- ---------------- -------------- ---------------- --------------
$ (1,667,053) $ (1,280,667) $ 167,433 $ 98,471 $ (27,903) -- $ (190,177)
- -------------- ---------------- -------------- ---------------- -------------- ---------------- --------------
- -------------- ---------------- -------------- ---------------- -------------- ---------------- --------------
550,797 1,317,620 3,199 27,357 43,639 106,358 33,561
61,157 106,174 1,335 2,058 46,980 8,436 --
(620,603) (1,082,308) (8,220) (30,937) (21,469) (32,438) (31,792)
- -------------- ---------------- -------------- ---------------- -------------- ---------------- --------------
(8,649) 341,486 (3,686) (1,522) 69,150 82,356 1,769
- -------------- ---------------- -------------- ---------------- -------------- ---------------- --------------
- -------------- ---------------- -------------- ---------------- -------------- ---------------- --------------
122,446 1,073,669 58,631 231,317 551,320 1,904,118 197,566
1,290,909 3,657,994 13,720 28,018 248,004 21,842 32
(16,648,496) (44,378,475) (84,026) (133,485) (304,651) (455,044) (258,269)
- -------------- ---------------- -------------- ---------------- -------------- ---------------- --------------
(15,235,141) (39,646,812) (11,675) 125,850 494,673 1,470,916 (60,671)
- -------------- ---------------- -------------- ---------------- -------------- ---------------- --------------
- -------------- ---------------- -------------- ---------------- -------------- ---------------- --------------
Year Ended
October 31, 1996
- ----------------
$ 1,707,031
--
(528,656)
- ----------------
1,178,375
- ----------------
14,887,732
--
(4,565,508)
- ----------------
10,322,224
- ----------------
11,500,599
- ----------------
15,540,822
20,297,187
- ----------------
$ 35,838,009
- ----------------
- ----------------
--
- ----------------
- ----------------
142,429
--
(43,333)
- ----------------
99,096
- ----------------
- ----------------
1,254,875
--
(385,371)
- ----------------
869,504
- ----------------
- ----------------
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
54
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The Financial Highlights set forth below include selected data for a share
outstanding throughout each period and other performance information derived
from the financial statements.
<TABLE>
<CAPTION>
Distributions to
Income From Investment Operations Shareholders
-------------------------------------------- -------------------------
Net Asset Net Net Realized Total In excess
Value at Investment and Unrealized from Net of Net
Period Beginning Income Gains (Losses) Investment Investment Investment
Ended of Period (Loss) on Investments Operations Income Income
-------------- --------- ---------- -------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Adjustable Rate Fund
Class A Apr-30-97(a) $ 6.41 $ 0.18 $ 0.02 $ 0.20 $(0.18) $--
Oct-31-96 6.39 0.33 0.03 0.36 (0.34) --
Oct-31-95 6.14 0.31 0.24 0.55 (0.30) --
Oct-31-94 6.49 0.25 (0.35) (0.10) (0.23) (0.01)
Oct-31-93(b) 6.50 0.03 (0.01) 0.02 (0.03) --
----------------------------------------------------------------------------------------------------------
Class B Apr-30-97(a) 6.41 0.18 0.02 0.20 (0.18) --
Oct-31-96 6.39 0.28 0.03 0.31 (0.29) --
Oct-31-95 6.14 0.26 0.24 0.50 (0.25) --
Oct-31-94 6.48 0.21 (0.34) (0.13) (0.19) (0.01)
Oct-31-93(b) 6.50 0.02 (0.02) -- (0.02) --
- -----------------------------------------------------------------------------------------------------------------------------------
Government Fund
Class A Apr-30-97(a) 8.48 0.28 (0.13) 0.15 (0.29) --
Oct-31-96 8.70 0.62 (0.22) 0.40 (0.54) --
Oct-31-95 8.43 0.58 0.38 0.96 (0.58) --
Oct-31-94 10.14 0.70 (1.60) (0.90) (0.70) --
Oct-31-93(b) 10.32 0.12 (0.18) (0.06) (0.12) --
----------------------------------------------------------------------------------------------------------
Class B Apr-30-97(a) 8.49 0.25 (0.13) 0.12 (0.26) --
Oct-31-96 8.71 0.55 (0.22) 0.33 (0.48) --
Oct-31-95 8.42 0.51 0.41 0.92 (0.52) --
Oct-31-94 10.14 0.60 (1.58) (0.98) (0.60) --
Oct-31-93 9.95 0.71 0.20 0.91 (0.71) (0.01)
Oct-31-92 9.98 0.73 0.03 0.76 (0.73) --
- -----------------------------------------------------------------------------------------------------------------------------------
Tax Free Fund
Class A Apr-30-97(a) 11.42 0.31 (0.05) 0.26 (0.28) --
Oct-31-96 11.31 0.62 0.05 0.67 (0.56) --
Oct-31-95 10.59 0.55 0.73 1.28 (0.55) (0.01)
Oct-31-94 11.48 0.45 (0.78) (0.33) (0.45) (0.11)
Oct-31-93(b) 11.50 0.05 0.01 0.06 (0.05) (0.02)
----------------------------------------------------------------------------------------------------------
Class B Apr-30-97(a) 11.44 0.31 (0.05) 0.26 (0.28) --
Oct-31-96 11.32 0.62 0.06 0.68 (0.56) --
Oct-31-95 10.60 0.55 0.73 1.28 (0.55) (0.01)
Oct-31-94 11.48 0.43 (0.82) (0.39) (0.43) (0.06)
Oct-31-93(b) 11.50 0.06 (0.01) 0.05 (0.03) (0.03)
- -----------------------------------------------------------------------------------------------------------------------------------
Value Fund
Class A Apr-30-97(a) 10.83 0.04 1.53 1.57 (0.04) --
Oct-31-96 8.95 0.05 1.99 2.04 (0.09) --
Oct-31-95 7.51 0.14 1.45 1.59 (0.15) --
Oct-31-94 7.63 0.13 (0.16) (0.03) (0.09) --
Oct-31-93(b) 7.50 0.01 0.12 0.13 -- --
----------------------------------------------------------------------------------------------------------
Class B Apr-30-97(a) 10.79 (0.01) 1.53 1.52 -- --
Oct-31-96 8.93 0.04 1.93 1.97 (0.04) --
Oct-31-95 7.50 0.07 1.45 1.52 (0.09) --
Oct-31-94 7.64 0.08 (0.17) (0.09) (0.05) --
Oct-31-93(b) 7.50 (0.01) 0.15 0.14 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Growth Fund
Class A Apr-30-97(a) 13.16 (0.03) 0.64 0.61 -- --
Oct-31-96(f) 11.38 0.00 1.78 1.78 -- --
Oct-31-95 8.81 0.01 2.56 2.57 -- --
Oct-31-94 8.69 (0.01) 0.21 0.20 -- --
Oct-31-93(b) 8.50 -- 0.19 0.19 -- --
----------------------------------------------------------------------------------------------------------
Class B Apr-30-97(a) 12.87 (0.08) 0.63 0.55 -- --
Oct-31-96(f) 11.21 (0.09) 1.75 1.66 -- --
Oct-31-95 8.74 (0.05) 2.52 2.47 -- --
Oct-31-94 8.70 (0.04) 0.16 0.12 -- --
Oct-31-93(b) 8.50 -- 0.20 0.20 -- --
<CAPTION>
Net In excess of
Realized Net Realized Tax
Capital Capital Return Total
Gains Gains of Capital Distributions
-------- ------------ ---------- -------------
<S> <C> <C> <C> <C>
Adjustable Rate Fund
Class A $-- $-- $-- $ (0.18)
-- -- -- (0.34)
-- -- -- (0.30)
-- -- (0.01) (0.25)
-- -- -- (0.03)
Class B -- -- -- (0.18)
-- -- -- (0.29)
-- -- -- (0.25)
-- -- (0.01) (0.21)
-- -- -- (0.02)
- ---------------------
Government Fund
Class A -- -- -- (0.29)
-- -- (0.08) (0.62)
-- -- (0.11) (0.69)
(0.03) -- (0.08) (0.81)
-- -- -- (0.12)
Class B -- -- -- (0.26)
-- -- (0.07) (0.55)
-- -- (0.11) (0.63)
(0.03) -- (0.11) (0.74)
-- -- -- (0.72)
(0.06) -- -- (0.79)
- ---------------------
Tax Free Fund
Class A -- -- -- (0.28)
-- -- -- (0.56)
-- -- -- (0.56)
-- -- -- (0.56)
-- -- (0.01) (0.08)
Class B -- -- -- (0.28)
-- -- -- (0.56)
-- -- -- (0.56)
-- -- -- (0.49)
-- -- (0.01) (0.07)
- ---------------------
Value Fund
Class A (0.87) -- -- (0.91)
(0.07) -- -- (0.16)
-- -- -- (0.15)
-- -- -- (0.09)
-- -- -- --
Class B (0.87) -- -- (0.87)
(0.07) -- -- (0.11)
-- -- -- (0.09)
-- -- -- (0.05)
-- -- -- --
- ---------------------
Growth Fund
Class A -- -- -- --
-- -- -- --
-- -- -- --
-- (0.08) -- (0.08)
-- -- -- --
Class B -- -- -- --
-- -- -- --
-- -- -- --
-- (0.08) -- (0.08)
-- -- -- --
</TABLE>
- ------------
(a) For the six month period ended April 30, 1997 (unaudited).
(b) For the period September 8, 1993 (commencement of operations) to October 31,
1993.
(c) Annualized.
(d) Total returns are historical and assume changes in share price and
reinvestment of dividends and capital gains. The maximum applicable sales
charge on Class A shares of each Fund was not reflected in total return
calculations. A contingent deferred sales charge on Class B shares of each
Fund of 5% the first year, declining by 1% per year for five years, was not
reflected in total return calculations. Additionally, the Adviser has agreed
to waive or limit certain expenses as described in detail in the Funds'
Prospectuses. Had the Adviser not absorbed a portion of expenses, total
return would have been lower. Periods less than one year are not annualized.
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Mutual Funds 55
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratios and Supplemental Data
------------------------------------------------------------------------
Ratios to average
daily net assets (%) (c)
Net Increase Net Asset -------------------------------------
(Decrease) Value at Investment Net Assets,
in Net Asset End Total Net Gross Income Portfolio end of period
Value of Period Return (%) (d) Expenses Expenses (Loss), Net Turnover (%) (millions)
- ------------ --------- -------------- -------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 0.02 $ 6.43 3.23 0.95 2.82 5.69 7.78 $ 5.9
0.02 6.41 5.81 0.95 2.55 5.35 39.49 5.7
0.25 6.39 9.20 0.95 2.96 4.91 53.07 5.5
(0.35) 6.14 (1.49) 0.95 2.86 4.04 115.55 5.1
(0.01) 6.49 0.26 0.98 3.24 2.78 0.34 5.1
- --------------------------------------------------------------------------------------------------------------------------
0.02 6.43 3.23 0.95 2.81 5.68 7.78 1.1
0.02 6.41 5.02 1.70 3.51 4.58 39.49 1.4
0.25 6.39 8.39 1.70 3.71 4.18 53.07 1.8
(0.34) 6.14 (2.07) 1.70 3.51 3.48 115.55 2.4
(0.02) 6.48 0.03 1.61 3.58 2.57 0.34 0.1
- --------------------------------------------------------------------------------------------------------------------------
(0.14) 8.34 1.79 1.03 1.03 6.81 67.58 28.5
(0.22) 8.48 4.80 0.90 0.90 6.59 334.41 29.1
0.27 8.70 11.77 1.01 1.01 6.78 315.71 27.0
(1.71) 8.43 (9.17) 0.99 0.99 7.09 128.82 22.0
(0.18) 10.14 (0.60) 0.95 0.95 6.81 75.96 1.0
- --------------------------------------------------------------------------------------------------------------------------
(0.14) 8.35 1.40 1.78 1.78 6.04 67.58 608.1
(0.22) 8.49 4.00 1.69 1.69 5.77 334.41 747.2
0.29 8.71 11.19 1.76 1.76 6.08 315.71 1,112.0
(1.72) 8.42 (9.98) 1.76 1.76 6.45 128.82 1,252.0
0.19 10.14 9.48 1.73 1.73 6.96 75.96 1,343.0
(0.03) 9.95 7.74 1.64 1.64 7.08 101.31 786.0
- --------------------------------------------------------------------------------------------------------------------------
(0.02) 11.40 2.26 -- 1.51 5.42 8.62 16.1
0.11 11.42 6.13 -- 1.52 5.42 5.76 16.2
0.72 11.31 12.24 -- 1.81 5.01 24.95 16.0
(0.89) 10.59 (2.99) 0.77 1.62 4.08 -- 14.3
(0.02) 11.48 0.54 1.15 2.09 2.73 -- 15.1
- --------------------------------------------------------------------------------------------------------------------------
(0.02) 11.42 2.26 -- 2.26 5.42 8.62 9.0
0.12 11.44 6.12 -- 2.26 5.43 5.76 9.2
0.72 11.32 12.33 -- 2.56 5.01 24.95 7.7
(0.88) 10.60 (3.45) 1.14 2.30 3.75 -- 5.0
(0.02) 11.48 0.43 1.84 2.48 2.27 -- 1.2
- --------------------------------------------------------------------------------------------------------------------------
0.66 11.49 15.22 1.35 1.36 0.62 33.45 7.0
1.88 10.83 23.10 1.35 1.73 1.03 100.02 5.8
1.44 8.95 21.45 1.35 2.43 1.71 27.41 4.1
(0.12) 7.51 (0.32) 1.35 3.55 1.92 14.53 3.2
0.13 7.63 1.73 1.42 6.37 0.73 6.04 2.2
- --------------------------------------------------------------------------------------------------------------------------
0.65 11.44 14.77 2.10 2.11 (0.13) 33.45 41.0
1.86 10.79 22.30 2.10 2.40 0.23 100.02 33.3
1.43 8.93 20.50 2.10 3.18 0.94 27.41 14.4
(0.14) 7.50 (1.10) 2.10 4.02 1.09 14.53 8.0
0.14 7.64 1.87 2.04 6.38 (1.07) 6.04 0.5
- --------------------------------------------------------------------------------------------------------------------------
0.61 13.77 4.64 1.35 1.48 (0.47) 26.95 8.6
1.78 13.16 15.64 1.35 1.70 0.03 40.89 8.2
2.57 11.38 29.17 1.35 2.44 0.10 73.74 6.0
0.12 8.81 2.48 1.34 3.53 (0.11) 100.41 4.2
0.19 8.69 2.24 1.39 4.83 (0.30) 46.31 3.3
- --------------------------------------------------------------------------------------------------------------------------
0.55 13.42 4.27 2.10 2.23 (1.21) 26.95 28.0
1.66 12.87 14.81 2.10 2.41 (0.73) 40.89 27.6
2.47 11.21 28.26 2.10 3.19 (0.66) 73.74 14.3
0.04 8.74 1.67 2.09 4.06 (0.82) 100.41 5.8
0.20 8.70 2.35 1.86 5.04 (1.38) 46.31 0.6
Reimbursement Average
of expenses Commission
from Adviser Rate (e)
- ------------- ----------
$0.059 N/A
0.098 N/A
0.126 N/A
0.120 N/A
0.003 N/A
0.060 N/A
0.109 N/A
0.124 N/A
0.108 N/A
0.003 N/A
N/A N/A
N/A N/A
N/A N/A
N/A N/A
N/A N/A
N/A N/A
N/A N/A
N/A N/A
N/A N/A
N/A N/A
N/A N/A
0.086 N/A
0.172 N/A
0.199 N/A
0.094 N/A
0.002 N/A
0.129 N/A
0.257 N/A
0.287 N/A
0.122 N/A
0.003 N/A
0.001 $0.050
0.018 0.050
0.086 N/A
0.165 N/A
0.008 N/A
0.001 0.050
0.050 0.050
0.083 N/A
0.163 N/A
0.002 N/A
0.009 0.050
0.043 0.050
0.100 N/A
0.182 N/A
0.006 N/A
0.009 0.050
0.037 0.050
0.082 N/A
0.176 N/A
0.001 N/A
</TABLE>
- ------------
(e) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share of security
trades on which commissions are charged.
(f) Per share amounts were calculated under a methodology using the monthly
average of shares outstanding during the period.
- --------------------------------------------------------------------------------
<PAGE>
56 Investors Trust Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited)
1. Organization. Investors Trust (the "Trust") is organized as a Massachusetts
Business Trust and is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company. The Trust is
a series of funds, currently comprised of five investment portfolios (the
"Funds"), four of which commenced operations as of September 8, 1993 (the
Adjustable Rate Fund, the Tax Free Fund, the Value Fund and the Growth Fund),
and one, (the Government Fund), which commenced operations as of April 22, 1987.
Under the Trust's Multiple Class Distribution System (the "Multiple Class
Arrangement"), the Funds currently offer to the general public two classes of
shares of beneficial interest, no par value, which may be purchased at a price
equal to the next determined net asset value per share plus a sales charge
which, at the election of the purchaser, may be imposed (i) at the time of
purchase (Class A shares) or (ii) on a deferred basis (Class B shares).
Class B shares, including a pro rata portion of the shares received as
distributions with respect to such shares, will automatically convert to Class A
shares of the Funds at the end of eight years following the issuance of the
Class B shares. The date of issuance for purposes of conversion of shares in the
Government Fund which were held on September 7, 1993 shall be the original date
of acquisition of such shares.
2. Significant Accounting Policies. The preparation of the Funds' financial
statements in accordance with generally accepted accounting principles, requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. The following is a
summary of significant accounting policies followed consistently by the Funds.
Securities Valuation. Securities (including options) listed or traded on an
exchange or quoted on NASDAQ are valued at their last sale prices prior to the
time when assets are valued. Lacking any sales on that day, securities are
valued at the mean between the current closing bid and asked prices. Other
securities for which market quotations are readily available are valued at the
mean of the bid and asked quotations quoted prior to the time when assets are
valued ("market value"). Certain securities (including most tax-exempt debt
obligations) are valued primarily utilizing such pricing services as may be
deemed appropriate. The pricing services utilize information with respect to
market transactions, quotations from dealers and various relationships among
securities in determining value and may provide prices determined as of times
prior to the close of the New York Stock Exchange. Investments in certain
long-term debt securities not traded in an organized market are valued primarily
based on market quotations provided by recognized dealers of such securities.
Other securities for which market quotations are not readily available, such as
restricted securities, or where pricing occurs during periods of market
disruption, are valued in good faith by or under the authority of the Trustees
of the Trust. Short-term investments maturing within 60 days are valued at
original cost plus accreted discount or accrued interest which approximates
market value.
Securities Transactions and Related Investment Income. Sales and purchases
are accounted for as of trade date. Realized securities gains or losses are
determined using the identified cost method for both financial and tax
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Mutual Funds 57
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited), continued
reporting purposes. Dividend income is recorded on the ex-dividend date.
Interest income is accrued pro rata to maturity. Original issue discount is
accreted for financial and tax accounting purposes. All premiums on securities
in the Tax Free Fund are amortized for financial and tax accounting purposes.
Futures Contracts. Each of the Funds may purchase and sell futures contracts,
subject to certain limitations. The Government Fund uses interest rate futures
contracts as a hedge against changes in interest rates. Upon entering into a
futures contract, each Fund is required to deposit with a broker an amount
("initial margin") equal to a certain percentage of the face amount of the
futures contract. Subsequent payments ("variation margin") are made or received
by the Fund each day, dependent on the daily fluctuations in the value of the
unrealized gains and losses by the Fund. If the Fund enters into a closing
transaction, the Fund will realize, for book purposes, a gain or loss equal to
the difference between the value of the futures contract to sell and the futures
contract to buy. The Fund may be subject to risk upon entering into futures
contracts resulting from the imperfect correlation of prices between the futures
and securities markets.
Options on Futures Contracts. Each Fund may purchase and sell listed call and
put options on futures contracts. The Government Fund uses options on interest
rate futures contracts as a hedge against changes in interest rates. Options are
valued in accordance with the security valuations policies described above.
Transactions in options on futures contracts involve similar risks to those on
futures contracts.
Securities Purchased on a When-Issued Basis. Each Fund may enter into firm
commitment agreements ("TBA" or "when-issued" purchases) for the purchase of
securities at an agreed-upon price on a specified future date. A Fund will not
enter into such agreements for the purpose of investment leverage.
Liability for the purchase price and all the rights and risks of ownership of
the securities accrue to a Fund at the time it becomes obligated to purchase the
securities, although delivery and payment occur at a later date, generally
within 45 days (but not to exceed 120 days) of the date of the commitment to
purchase. Accordingly, if the market price of the security should decline, the
effect of the agreement would be to obligate the Fund to purchase the security
at the price above the current market price on the date of delivery and payment.
During the time the Fund is obligated to purchase such securities, it will
segregate with the Custodian U.S. government securities, cash or cash
equivalents (or a receivable for investment sold in connection therewith) of an
aggregate current value sufficient to make payment for the securities.
Repurchase Agreements. Each Fund may enter into repurchase agreements in
order to generate additional income. Each repurchase agreement entered into by a
Fund will provide that the value of the collateral underlying the repurchase
agreement will always be at least 102% of the repurchase price, including
accrued interest, except for repurchase agreements entered into with a
broker/dealer or bank whose unsecured debt is rated AAA or whose commercial
paper is rated A-1+ by Standard and Poor's in which case the value of the
collateral will always be at least 100% of the repurchase price, including
accrued interest. A Fund will not enter into a repurchase agreement having more
than seven days remaining to maturity if, as a result, such agreements, together
with any other securities which are not readily marketable, would exceed 10% of
the net assets of the
- --------------------------------------------------------------------------------
<PAGE>
58 Investors Trust Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited), continued
Fund. In addition, not more than one-third of the current market value of the
Fund's total assets shall constitute secured "loans" by the Fund under
repurchase agreements.
Federal Income Taxes. As a Massachusetts Business Trust, each Fund is a
separate taxpayer and determines its net investment income and capital gains (or
losses) and the amounts to be distributed to the Fund's shareholders without
regard to the income and capital gains (or losses) of the other Funds. It is the
intent of the Funds to comply with the requirements of the Internal Revenue Code
which are applicable to regulated investment companies and to distribute
substantially all of their taxable income to their shareholders. Accordingly,
the Funds paid no federal taxes and no federal income or excise tax provisions
were required. For Federal income tax purposes, any futures contracts or options
on futures contracts which remain open at fiscal year-end are marked-to-market
and the resultant net gain or loss is included in Federal taxable income. As of
October 31, 1996, the Funds had net tax basis capital loss carryforwards which
may be applied against taxable gains until their expiration dates as follows:
<TABLE>
<CAPTION>
Expiration
Dates
Fund Amount October 31,
- ----------------------------------------------------- ------------ -----------
<S> <C> <C>
Adjustable Rate Fund................................. $ 72,067 2002
114,498 2003
14,856 2004
Government Fund...................................... 87,661,793 2002
107,525,597 2003
1,748,819 2004
Tax Free Fund........................................ 176,173 2003
Growth Fund.......................................... 201,507 2002
243,412 2004
</TABLE>
Distribution of Income and Gains. The Government and Tax Free Funds currently
declare a distribution each day in an amount based on periodic projections of
their future net investment income and will pay such distributions monthly.
Consequently, the amount of each daily distribution may differ from actual net
investment income. Net investment income for the Adjustable Rate Fund is
declared as dividends to shareholders of record as of the close of business each
day and is paid to shareholders monthly. Distributions of net investment income
are declared and paid, quarterly for the Value Fund and annually for the Growth
Fund. Distributions from net short-term realized gains are declared and paid,
annually. During any particular year, net realized gains from investment
transactions in excess of any available capital loss carryforwards, would be
taxable to the Funds if not distributed and, therefore, will be declared and
paid to their shareholders annually.
Capital Accounts. The Funds report the undistributed net investment income
(accumulated net investment loss) and accumulated net realized gain (loss)
accounts on a basis approximating amounts available for future tax distributions
(or to offset future taxable realized gains when a capital loss carryforward is
available).
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Mutual Funds 59
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited), continued
Accordingly, the Funds may periodically make reclassifications among certain
capital accounts without impacting the net asset values of the Funds.
Deferred Organizational and Registration Costs. Costs incurred by a Fund in
connection with its organization and registration of shares have been deferred
and are being amortized on a straight-line basis over a period 60 months from
commencement of investment operations. Costs incurred for subsequent
registration of shares will be amortized on a straight-line basis over the
lesser of the duration of the registration period or 12 months.
Expenses. Expenses such as management fees, distribution fees, custodian
fees, transfer agent fees, and registration fees are charged directly to each
Fund, while indirect expenses, such as shareholder reports, professional fees,
trustee fees and expenses, and insurance are allocated among the Funds
principally based on their relative average net assets. Portfolio-level expenses
are allocated to each class of shares based upon the relative percentage of
current net assets of dividend-eligible shares. All expenses that are directly
attributable to a specific class of shares, such as legal expenses and Trustees'
fees incurred as a result of issues relating solely to one class and
distribution fees, are allocated to that class.
3. Purchases and Sales of Securities. The cost of purchases and the proceeds
from sales and paydowns of investments other than U.S. Government and agency
securities, short term investments and options, for the six months ended April
30, 1997 were as follows:
<TABLE>
<CAPTION>
Fund Purchases Sales Paydowns
- ----------------------------------- ------------ ------------ -----------
<S> <C> <C> <C>
Adjustable Rate Fund............... $ 244,318 $ 161,165 $ 101,323
Tax Free Fund...................... 2,095,076 4,277,602 --
Value Fund......................... 17,316,645 14,461,773 --
Growth Fund........................ 9,276,280 10,180,696 --
</TABLE>
The cost of purchases and the proceeds from sales and paydowns of long-term
U.S. Government and agency securities, for the six months ended April 30, 1997,
were as follows:
<TABLE>
<CAPTION>
Fund Purchases Sales Paydowns
- ----------------------------------- ------------ ------------ -----------
<S> <C> <C> <C>
Adjustable Rate Fund............... $ 532,031 $ 367,164 $ 431,051
Government Fund.................... 478,901,520 621,903,553 17,208,937
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
60 Investors Trust Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited), continued
Transactions in options written on U.S. Treasury bond futures for the
Government Fund were as follows:
<TABLE>
<CAPTION>
Number of Net
contracts of premiums
Written Options received
--------------- --------
<S> <C> <C>
Outstanding at October 31, 1996..................... 186 $210,994
Exercised........................................... (186) (210,994)
--------------- --------
Outstanding at April 30, 1997....................... -- $ --
--------------- --------
--------------- --------
</TABLE>
At April 30, 1997 the security pledged to cover margin requirements for open
futures contracts on United States Treasury Bonds for the Government Fund was as
follows:
<TABLE>
<CAPTION>
Description Face value Market value
- ------------------------------------------------------ ---------- ------------
<S> <C> <C>
Federal National Mortgage Association Medium Term
Note, 12.000%, 11/13/00............................. $2,500,000 $2,917,175
---------- ------------
---------- ------------
</TABLE>
Aggregate gross unrealized appreciation (depreciation) of investments for each
Fund at April 30, 1997 was as follows:
<TABLE>
<CAPTION>
Net
Gross Gross Unrealized
Unrealized Unrealized Appreciation
Fund Appreciation (Depreciation) (Depreciation)
- ---------------------------------- ------------ -------------- --------------
<S> <C> <C> <C>
Adjustable Rate Fund.............. $ 194,074 $ (17,979) $ 176,095
Government Fund................... 8,449,607 (9,184,351) (734,744)
Tax Free Fund..................... 315,849 (77,562) 238,287
Value Fund........................ 9,311,143 (159,694) 9,151,449
Growth Fund....................... 10,537,244 (657,727) 9,879,517
</TABLE>
The aggregate cost of each Fund's investments was substantially the same for
book and federal income tax purposes at April 30, 1997.
4. Management, Distribution and Trustees' Fees. Under Advisory agreements
between the Funds and GNA Capital Management, Inc. (the "Adviser"), each Fund
agrees to pay the Adviser a fee based on its average daily net assets as
follows:
Adjustable Rate Fund. The Adviser's fee is calculated at an annual rate of
.40% of the average daily net assets.
Government Fund. The Adviser's fee is calculated based upon the Fund's
average daily net assets, equal to an annual rate of .65% of the first $500
million, .60% of the next $250 million, .55% of the next
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Mutual Funds 61
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited), continued
$500 million, .50% of the next $250 million and .45% of average daily net assets
over $1.5 billion. For the six months ended April 30, 1997, the Adviser's fee
was equivalent to an annual effective rate of .63% of the Fund's average daily
net assets.
Tax Free Fund. The Adviser's fee is calculated based upon the Fund's average
daily net assets, equal to an annual rate of .60% of the first $20 million, .50%
of the next $80 million and .45% of average daily net assets in excess of $100
million. For the six months ended April 30, 1997, the Adviser's fee was
equivalent to an annual effective rate of .58% of the Fund's average daily net
assets.
Value Fund. The Adviser's fee is calculated based upon the Fund's average
daily net assets, equal to an annual rate of .80% of the first $100 million and
.70% of average daily net assets in excess of $100 million.
Growth Fund. The Adviser's fee is calculated based upon the Fund's average
daily net assets, equal to an annual rate of .80% of the first $100 million and
.70% of average daily net assets in excess of $100 million.
The Adviser has agreed to reimburse the Classes of the following Funds, for
expenses incurred by the Classes to the extent that such expenses exceed the
following percentages of average daily net assets during the six months ended
April 30, 1997:
<TABLE>
<CAPTION>
Fund Class A Class B
- --------------------------------------------------------------- ------- -------
<S> <C> <C>
Adjustable Rate Fund........................................... 0.95% 0.95%
Value Fund..................................................... 1.35% 2.10%
Growth Fund.................................................... 1.35% 2.10%
</TABLE>
The Adviser did not reimburse any expenses of the Government Fund, but
reimbursed all of the expenses of the Tax Free Fund during the six months ended
April 30, 1997.
The expense reimbursement may be extended or modified by the Adviser. The
reimbursement for expenses by the Adviser is being offset by the payables to the
Adviser monthly. Any amount due from the Adviser in excess of the amounts due to
the Adviser is settled in cash within 15 days following month end.
The Adviser has retained the following portfolio managers (the "Sub-Advisers")
for the Funds. These Sub-Advisers are responsible for the actual investment
management of the Fund's assets (including the placement of brokerage orders),
under the general supervision of the Adviser and the Board of Trustees.
<TABLE>
<CAPTION>
Fund Sub-Adviser
- ------------------------------------- ----------------------------------------
<S> <C>
Adjustable Rate Fund................. Standish, Ayer & Wood, Inc.
Government Fund...................... BlackRock Financial Management, Inc.
Tax Free Fund........................ Brown Brothers Harriman & Co.
Value Fund........................... Duff & Phelps Investment Management Co.
Growth Fund.......................... Value Line, Inc.
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
62 Investors Trust Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited), continued
GNA Distributors, Inc. (the "Distributor") receives monthly distribution fees
from the Funds (except from the Adjustable Rate Fund as noted below) calculated
at the annual rate of .75% of the average daily net assets of Class B shares
pursuant to Rule 12b-1 of the Investment Company Act of 1940, as amended. In
accordance with the Distribution Agreement, the aggregate of all payments
received by the Distributor did not exceed, at any time, the aggregate of all
expenses incurred by the Distributor that were related to sales. Shareholder
servicing fees are also imposed on both Class A and Class B shares of the Funds
equal to specified costs incurred by the Distributor, but in no event to exceed
.25% of the average daily net assets of each of the Funds with respect to each
class. The shareholder servicing fees are in addition to the .75% distribution
fees imposed on Class B. The Distributor has agreed that the .75% of average
daily net assets on Class B shares will only be assessed on any shareholder's
shares for a limited period of time. Once Class B shares automatically convert
to Class A shares of the Funds, after eight years, such shareholders will be
subject only to the shareholder servicing fee of .25% maximum applicable to
Class A shares under the 12b-1 Plan.
For the six months ended April 30, 1997, the Adjustable Rate Fund was not
charged any distribution fee by the Distributor since there was no carry forward
of distribution expenses as at November 1, 1996 for the Fund and no expenses
were incurred during the six month period.
With respect to Class B shares, a contingent deferred sales charge
("withdrawal fee") of 5% the first year, declining by 1% per year for five
years, is imposed on any redemption which reduces the current value of the
account to an amount which is lower than the dollar amount of all payments
during the preceding five years. Withdrawal fees are paid to and retained by the
Distributor. These fees permit the Distributor to recover its sales-related
expenses (such as the 4% of the purchase price paid to dealers who sell Class B
shares of the Fund, printing fees, and marketing and advertising expenses). In
the event the Distributor is not fully reimbursed for such expenses incurred in
any fiscal year of the Fund, the Distributor shall be entitled to carryforward
such expenses to subsequent fiscal years for submission to the Fund for payment,
subject always to the .75% of Class B net assets annual maximum expenditure
allowed by the Fund's Plan. The cumulative reimbursable amount is increased by
an interest factor which is intended to replicate the Distributor's cost of
funds for financing advances made under the Plan. The Trustees or a majority of
the Fund's shareholders have the right, however, to terminate the Plan and all
payments thereunder at any time. The Fund will not be obligated to reimburse the
Distributor for carryover expenses subsequent to the Plan's termination or
noncontinuance. The total amounts of carryover expenses outstanding since
inception of the Plan as of April 30,1997 for which the Distributor intends to
seek repayment from the Funds are as follows:
<TABLE>
<CAPTION>
Fund Amount
- --------------------------------------------------------------------- -----------
<S> <C>
Adjustable Rate Fund................................................. $ --
Government Fund...................................................... 24,294,289
Tax Free Fund........................................................ 332,829
Value Fund........................................................... 642,100
Growth Fund.......................................................... 612,377
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Mutual Funds 63
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited), continued
Each Fund pays each Trustee not affiliated with the Adviser its proportionate
share of: (1) an annual fee of $4,000; and (2) a fee of $500 for each meeting of
the Board of Trustees attended plus all reasonable expenses associated with
attendance at such meetings. The proportionate rate is allocated among the Funds
principally based on their relative net assets. No remuneration is paid by the
Funds to any Trustee or officer of the Funds who is affiliated with the Adviser.
5. Shares of Beneficial Interest. At April 30, 1997, GNA Corporation, the
parent company of the Funds' Adviser, owned the following number of Class A
shares and a nominal amount of Class B shares of the Funds:
<TABLE>
<CAPTION>
Class A
Fund Shares
- ------------------------------------------------------------------------- -------
<S> <C>
Adjustable Rate Fund..................................................... 914,590
Value Fund............................................................... 304,092
Growth Fund.............................................................. 356,355
</TABLE>
At April 30, 1997, Employers Reinsurance Corporation, a wholly-owned financial
subsidiary of General Electric Capital Services Corporation, an affiliate of GNA
Corporation, owned 1,304,348 Class A shares of the Tax Free Fund.
6. Subsequent Event. On May 16, 1997, the Board of Trustees of Investors Trust
unanimously approved an Agreement and Plan of Reorganization (the "Agreement")
relating to the proposed combination of each series of Investors Trust (each an
"Investors Trust Fund") with a series of GE Funds (each a "GE Fund"). GNA
Capital Management, Inc., the investment adviser to each of the Investors Trust
Funds, and GE Investment Management Incorporated ("GEIM"), the investment
adviser to each of the GE Funds, are both indirect wholly owned subsidiaries of
General Electric Company.
Pursuant to the Agreement, each Investors Trust Fund will transfer
substantially all of its assets to a GE Fund having generally similar investment
objectives and policies in exchange for shares of the GE Fund and the assumption
by the GE Fund of certain liabilities of the Investors Trust Fund. Following the
exchange, the Investors Trust Fund will distribute the shares of the GE Fund to
its shareholders pro rata, in liquidation of the Investors Trust Fund. The
effectiveness of these transactions as to each Investors Trust Fund is subject
to the satisfaction of a number of conditions, including approval by
shareholders of each class of such Fund. It is currently anticipated that these
matters will be submitted for a vote at a meeting of shareholders to be held in
mid-September 1997.
On May 16, 1997, GNA Capital Management, Inc. notified the Board of Trustees
that effective June 22, 1997, it will decrease the level of reimbursement for
the Tax Free Fund. The decreased reimbursement will limit the "Total Fund
Operating Expenses" of the Fund so that the expenses will not exceed 1.15% for
Class A shares and 1.90% for Class B shares. Additionally, effective June 22,
1997, the actual net investment income for the Tax Free Fund will be declared
daily as dividends.
- --------------------------------------------------------------------------------
<PAGE>
PRO FORMA FINANCIAL STATEMENTS
<PAGE>
GE SHORT-TERM GOVERNMENT FUND
INVESTORS TRUST ADJUSTABLE RATE FUND
PRO FORMA COMBINING STATEMENT OF OPERATIONS
FOR THE TWELVE MONTH PERIOD ENDING MARCH 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
GE SHORT-TERM INVESTORS TRUST
GOVERNMENT ADJUSTABLE RATE PRO FORMA PRO FORMA
FUND FUND ADJUSTMENTS COMBINED
------------- --------------- ----------- ----------
(HISTORICAL) (HISTORICAL)
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Interest............................................. $ 738,892 $ 452,985 $1,191,877
Dividends............................................ 0 11,093 11,093
------------- --------------- ----------- ----------
Total Income......................................... 738,892 464,078 0 1,202,970
------------- --------------- ----------- ----------
EXPENSES
Management fee..................................... 36,520 28,502 $ (7,134)(a) 57,888
Distribution fees
Class A.......................................... 1,083 0 14,233 (a) 15,316
Class B.......................................... 789 (646) 9,304 (a) 9,447
Shareholder servicing fees
Class A.......................................... 1,083 7,946 6,287 (a) 15,316
Class B.......................................... 329 2,757 850 (a) 3,936
Class C.......................................... 9,713 N/A 9,713
Transfer agent fee................................. 7,774 37,863 (38,685)(b) 6,952
Custodian fee...................................... 1,712 71,947 (50,899)(b) 22,760
Amortization of organization costs................. 18,321 12,451 (12,451)(b) 18,321
Registration fees.................................. 37,973 17,932 (26,008)(b) 29,897
Shareholder reports................................ 2,607 2,799 (1,680)(b) 3,726
Professional fees.................................. 8,590 (3,972) 2,282 (b) 6,900
Insurance.......................................... 232 370 (395)(b) 207
Trustees' fees and expenses........................ 843 104 (423)(b) 524
Other.............................................. 297 (1,227) 1,275 (b) 345
------------- --------------- ----------- ----------
Total expenses before reimbursement from Adviser..... 127,866 176,826 (103,444) 201,248
Reimbursement of expenses from Adviser............... (60,065) (101,930) 101,307 (c) (60,688)
------------- --------------- ----------- ----------
Expenses, net........................................ 67,801 74,896 (2,137) 140,561
------------- --------------- ----------- ----------
Net investment income (loss)......................... 671,091 389,182 2,137 (d) 1,062,410
------------- --------------- ----------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) from investment
transactions ...................................... (80,728) (2,820) (83,548)
Net increase (decrease) in unrealized
appreciation (depreciation) during the year
from investment transactions....................... 30,045 58,482 88,527
------------- --------------- ----------- ----------
Net realized and unrealized gain (loss) on
investments........................................ (50,683) 55,662 0 4,979
------------- --------------- ----------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS......................................... $ 620,408 $ 444,844 $ 2,137 $1,067,389
------------- --------------- ----------- ----------
------------- --------------- ----------- ----------
</TABLE>
- ------------------
Notes to Pro Forma Statements:
(a) reflects management and 12b-1 fee agreements of surviving Fund
(b) net expense decrease due to expected savings when Funds combine
(c) reflects cap on total expenses of surviving Fund as follows: Class A - .95%
and Class B - 1.30%
(d) impact of total expense adjustments not reflected in undistributed net
investment income as the Fund distributes substantially all its net
investment income
F-1
<PAGE>
GE SHORT-TERM GOVERNMENT FUND
INVESTORS TRUST ADJUSTABLE RATE FUND
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES
AT MARCH 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
GE SHORT-TERM INVESTORS TRUST
GOVERNMENT ADJUSTABLE RATE PRO FORMA PRO FORMA
FUND FUND ADJUSTMENTS COMBINED
------------- --------------- ----------- ----------
(HISTORICAL) (HISTORICAL)
<S> <C> <C> <C> <C>
ASSETS
Investments at market value (identified cost
$19,788,595)................................... $12,944,770 $ 6,928,216 $19,872,986
Cash............................................. 60,535 54 60,589
Receivables:
Fund shares sold............................... 42,338 0 42,338
Dividends...................................... 0 0 0
Interest....................................... 99,759 43,757 143,516
Investments sold............................... 200,130 0 200,130
Adviser........................................ 0 10,957 10,957
Deferred organization costs...................... 39,148 17,757 $ (17,757)(e) 39,148
Receivable from Advisor.......................... 0 0 17,757 (e) 17,757
Prepaid Expenses................................. 0 8,998 8,998
------------- --------------- ----------- -----------
Total assets..................................... 13,386,680 7,009,739 0 20,396,419
------------- --------------- ----------- -----------
LIABILITIES
Payables:
Fund shares redeemed........................... 2,402 0 2,402
Investments purchased.......................... 274,883 0 274,883
Dividends...................................... 12,184 10,470 22,654
Accrued distribution fee and shareholder
service fee................................. 0 3,087 3,087
Accrued management fee......................... 3,315 4,532 7,847
Other accrued expenses......................... 40,809 22,577 63,386
------------- --------------- ----------- -----------
Total liabilities................................ 333,593 40,666 0 374,259
------------- --------------- ----------- -----------
NET ASSETS....................................... $13,053,087 $ 6,969,073 $ 0 $20,022,160
------------- --------------- ----------- -----------
------------- --------------- ----------- -----------
NET ASSETS CONSIST OF:
Undistributed (accumulated distributions in
excess of) net investment income (loss)........ (6,596) 1,880 (4,716)
Accumulated net realized gains (losses).......... (19,663) (201,195) (220,858)
Unrealized appreciation (depreciation) on:
Investments.................................... (75,346) 159,737 84,391
Shares of beneficial interest.................... 13,154,692 7,008,651 20,163,343
------------- --------------- ----------- -----------
NET ASSETS....................................... $13,053,087 $ 6,969,073 $ 0 $20,022,160
------------- --------------- ----------- -----------
------------- --------------- ----------- -----------
</TABLE>
- ------------------
Notes to Pro Forma Statements:
(e) adjustment for the reimbursement of deferred organization costs of the
Acquired Fund
F-2
<PAGE>
GE SHORT-TERM GOVERNMENT FUND
INVESTORS TRUST ADJUSTABLE RATE FUND
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES--(CONTINUED)
AT MARCH 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
GE SHORT-TERM INVESTORS TRUST
GOVERNMENT ADJUSTABLE RATE PRO FORMA PRO FORMA
FUND FUND ADJUSTMENTS COMBINED
------------- --------------- ----------- ----------
(HISTORICAL) (HISTORICAL)
<S> <C> <C> <C> <C>
CLASS A:
NET ASSETS......................................... $ 615,681 $ 5,863,347 $6,479,028
--------------- --------------- ----------
--------------- --------------- ----------
Outstanding shares of beneficial interest (No
par value)....................................... 52,418 914,404 (415,415) 551,407
Net asset value and redemption price per share..... $ 11.75 $ 6.41 $ 11.75
Maximum offering price per share (100/97.5 of net
asset value per share)........................... $ 12.05 $ 6.71 $ 12.05
CLASS B:
NET ASSETS......................................... $ 87,677 $ 1,105,726 $1,193,403
--------------- --------------- ----------
--------------- --------------- ----------
Outstanding shares of beneficial interest (No
par value)....................................... 7,469 172,434 (78,240) 101,663
Net asset value, offering and redemption price per
share............................................ $ 11.74 $ 6.41 $ 11.74
CLASS C:*
NET ASSETS......................................... $ 4,819,197 $ 0 $4,819,197
--------------- --------------- ----------
--------------- --------------- ----------
Outstanding shares of beneficial interest (No
par value)....................................... 410,005 0 410,005
Net asset value, offering and redemption price per
share............................................ $ 11.75 $ 0 $ 11.75
CLASS D:*
Net Assets......................................... $ 7,530,532 $ 0 $7,530,532
--------------- --------------- ----------
--------------- --------------- ----------
Outstanding shares of beneficial interest (No
par value)....................................... 641,270 0 641,270
Net asset value, offering and redemption price per
share............................................ $ 11.74 $ 0 $ 11.74
</TABLE>
- ------------------
* Classes C and D are not part of the reorganization. These classes are
presented to show the completeness of the Fund.
F-3
<PAGE>
INVESTORS TRUST TAX FREE FUND
GE TAX-EXEMPT FUND
PRO FORMA COMBINING STATEMENT OF OPERATIONS
FOR THE TWELVE MONTH PERIOD ENDING APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
INVESTORS TRUST GE
TAX FREE TAX-EXEMPT PRO FORMA PRO FORMA
FUND FUND ADJUSTMENTS COMBINED
--------------- --------------- ----------- ----------
(HISTORICAL) (HISTORICAL)
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest.......................................... $ 1,409,473 $ 627,446 $2,036,919
Dividends......................................... 0 0 0
--------------- --------------- ----------- ----------
Total income...................................... 1,409,473 627,446 0 2,036,919
--------------- --------------- ----------- ----------
EXPENSES
Management fee.................................. 145,715 43,278 $ (58,441)(a) 130,552
Distribution fees
Class A....................................... 0 1,330 40,294 (a) 41,624
Class B....................................... 67,905 9,523 (31)(a) 77,397
Shareholder servicing fees
Class A....................................... 23,652 1,330 16,642 (a) 41,624
Class B....................................... 13,263 3,174 9,362 (a) 25,799
Class C....................................... N/A 18,977 18,977
Transfer agent fee.............................. 43,057 19,777 (39,400)(b) 23,434
Custodian fee................................... 88,110 1,860 (64,790)(b) 25,180
Amortization of organization costs.............. 12,453 15,849 (15,849)(b) 12,453
Registration fees............................... 18,713 37,999 (23,998)(b) 32,714
Shareholder reports............................. 9,685 2,704 (5,396)(b) 6,993
Professional fees............................... (1,919) 8,925 5,944 (b) 12,950
Insurance....................................... 1,302 233 (1,146)(b) 389
Trustees' fees and expenses..................... 227 882 (125)(b) 984
Other........................................... (1,546) 283 1,911 (b) 648
--------------- --------------- ----------- ----------
Total expenses before reimbursement from
Adviser......................................... 420,617 166,124 (135,023) 451,718
Reimbursement of expenses from Adviser............ (420,617) (91,978) 490,102 (c) (22,493)
--------------- --------------- ----------- ----------
Expenses, net..................................... (0) 74,146 355,079 429,226
--------------- --------------- ----------- ----------
Net investment income (loss)...................... 1,409,473 553,300 (355,079)(d) 1,607,694
--------------- --------------- ----------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) from investment
transactions.................................... (66,155) (116,195) (182,350)
Net increase (decrease) in unrealized
appreciation (depreciation) during the year
from investment transactions.................... 379,795 260,592 640,387
--------------- --------------- ----------- ----------
Net realized and unrealized gain (loss) on
investments..................................... 313,640 144,397 458,037
--------------- --------------- ----------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS...................................... $ 1,723,113 $ 697,697 ($355,079) $2,065,731
--------------- --------------- ----------- ----------
--------------- --------------- ----------- ----------
</TABLE>
- ------------------
Notes to Pro Forma Statements:
(a) reflects new management and 12b-1 agreements
(b) net expense decrease due to expected savings when Funds combine
(c) reflects cap on total expenses of surviving Fund as follows: Class A-1.10%
and Class B-1.60%
(d) impact of total expense adjustments not reflected in undistributed net
investment income as the Fund distributes substantially all of its net
investment income
F-4
<PAGE>
INVESTORS TRUST TAX FREE FUND
GE TAX-EXEMPT FUND
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES
AT APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
INVESTORS TRUST GE
TAX FREE TAX-EXEMPT PRO FORMA PRO FORMA
FUND FUND ADJUSTMENTS COMBINED
--------------- --------------- ----------- ----------
(HISTORICAL) (HISTORICAL)
<S> <C> <C> <C> <C>
ASSETS
Investments at market value (identified cost
$36,576,219).................................... $24,649,220 $12,339,501 $36,988,721
Cash.............................................. 77,561 0 77,561
Receivables:
Fund shares sold................................ 3,000 1,459 4,459
Interest........................................ 470,217 226,617 696,834
Adviser......................................... 35,729 9,942 45,671
Deferred organization costs....................... 16,730 21,853 $ (21,853)(e) 16,730
Receivable from Advisor........................... 0 0 21,853 (e) 21,853
Prepaid Expenses.................................. 11,835 0 11,835
--------------- --------------- ----------- -----------
Total assets...................................... 25,264,292 12,599,372 0 37,863,664
--------------- --------------- ----------- -----------
LIABILITIES
Payables:
Investments purchased........................... 38,700 0 38,700
Dividends....................................... 31,021 4,879 35,900
Accrued distribution fee and shareholder service
fee.......................................... 21,317 377 21,694
Accrued management fee.......................... 11,686 34,384 46,070
Other accrued expenses.......................... 23,870 0 23,870
Payable to custodian............................ 0 13,909 13,909
--------------- --------------- ----------- -----------
Total liabilities................................. 126,594 53,549 0 180,143
--------------- --------------- ----------- -----------
NET ASSETS........................................ $25,137,698 $12,545,823 $ 0 $37,683,521
--------------- --------------- ----------- -----------
--------------- --------------- ----------- -----------
NET ASSETS CONSIST OF:
Undistributed (accumulated distributions in
excess of) net investment income (loss)...... 167,433 32,503 199,936
Accumulated net realized gains (losses)......... (231,717) (598,331) (830,048)
Unrealized appreciation (depreciation) on:
Investments.................................. 238,287 174,215 412,502
Shares of beneficial interest................ 24,963,695 12,937,436 37,901,131
--------------- --------------- ----------- -----------
NET ASSETS........................................ $25,137,698 $12,545,823 $ 0 $37,683,521
--------------- --------------- ----------- -----------
--------------- --------------- ----------- -----------
</TABLE>
- ------------------
Notes to Pro Forma Statements:
(e) adjustment for the reimbursement of deferred organization costs of the
Acquiring Fund.
F-5
<PAGE>
INVESTORS TRUST TAX FREE FUND
GE TAX-EXEMPT FUND
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES--CONTINUED
AT APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
INVESTORS TRUST GE
TAX FREE TAX-EXEMPT PRO FORMA PRO FORMA
FUND FUND ADJUSTMENTS COMBINED
--------------- --------------- ----------- ----------
(HISTORICAL) (HISTORICAL)
<S> <C> <C> <C> <C>
CLASS A:
NET ASSETS........................................ $16,100,337 $ 543,520 $16,643,857
--------------- --------------- -----------
--------------- --------------- -----------
Outstanding shares of beneficial interest (No par
value).......................................... 1,411,919 46,463 $ 1,201 1,459,583
Net asset value and redemption price per share.... $ 11.40 $ 11.70 $ 11.40
Maximum offering price per share (100/95.75 of net
asset value per share).......................... $ 11.94 $ 12.22 $ 11.91
CLASS B:
NET ASSETS........................................ $ 9,037,361 $ 1,249,202 $10,286,563
--------------- --------------- -----------
--------------- --------------- -----------
Outstanding shares of beneficial interest (No par
value).......................................... 791,433 106,664 2,733 900,830
Net asset value, offering and redemption price per
share........................................... $ 11.42 $ 11.71 $ 11.42
CLASS C:*
NET ASSETS........................................ $ 0 $ 7,702,491 $ 0 $ 7,702,491
--------------- --------------- ----------- -----------
--------------- --------------- ----------- -----------
Outstanding shares of beneficial interest (No par
value).......................................... 0 658,380 0 658,380
Net asset value, offering and redemption price per
share........................................... $ 0 $ 11.70 $ 11.70
CLASS D:*
NET ASSETS........................................ $ 0 $ 3,050,610 $ 0 $ 3,050,610
--------------- --------------- ----------- -----------
--------------- --------------- ----------- -----------
Outstanding shares of beneficial interest (No par
value).......................................... 0 260,706 0 260,706
Net asset value, offering and redemption price per
share........................................... $ 0 $ 11.70 $ 11.70
</TABLE>
- ------------------
Notes to Pro Forma Statements:
* Classes C and D are not part of the reorganization. These classes are
presented to show the completeness of the Fund.
F-6
<PAGE>
PRO FORMA FOOTNOTES OF REORGANIZATIONS OF GE SHORT-TERM GOVERNMENT FUND AND
INVESTORS TRUST ADJUSTABLE RATE FUND, AND INVESTORS TRUST TAX FREE FUND AND GE
TAX-EXEMPT FUND
MARCH 31, 1997 AND APRIL 30, 1997, RESPECTIVELY
1. BASIS OF COMBINATION
The accompanying pro forma financial statements are presented to show the
effect of the proposed acquisition of Investors Trust Adjustable Rate Fund (the
'IT Adjustable Rate Fund'), by the GE Short-Term Government Fund, as if such
acquisition had taken place as of April 1, 1996; and the proposed acquisition of
the Investors Trust Tax Free Fund (the 'IT Tax Free Fund') by GE Tax-Exempt Fund
(collectively, the 'Funds'), as if such acquisition had taken place as of May 1,
1996. While the GE Tax-Exempt Fund is the Acquiring Fund, in accordance with
generally accepted accounting principles, it has been determined that the
financial records of the IT Tax Free Fund will survive the reorganization.
Under the terms of the Plan of Reorganization the combination of the GE
Short-Term Government Fund and the IT Adjustable Rate Fund, and the GE
Tax-Exempt Fund and the IT Tax Free Fund, will be treated as a tax-free business
combination and accordingly will be accounted for by a method of accounting for
tax free mergers of investment companies (sometimes referred to as the pooling
without restatement method). The acquisition would be accomplished by an
acquisition of the net assets of the IT Adjustable Rate Fund and the IT Tax Free
Fund, in exchange for shares of the GE Short-Term Government Fund and the GE
Tax-Exempt Fund, respectively, at net asset value. The statements of assets and
liabilities and the related statements of operations of the IT Adjustable Rate
Fund and the GE Short-Term Government Fund, and the IT Tax Free Fund and the GE
Tax-Exempt Fund have been combined as of and for the twelve-month periods ended
March 31, 1997 and April 30, 1997, respectively. The pro forma financial
statements have been adjusted to reflect the anticipated fee arrangements for
the surviving entity including anticipated voluntary fee waivers. The pro forma
combined investment portfolio, statement of assets and liabilities and statement
of operations should be read in conjunction with the historical financial
statements of the Funds incorporated by reference in the Statement of Additional
Information. With certain limited exceptions, GE Investment Management
Incorporated ('GEIM'), GE Funds' Investment Adviser and Administrator, a wholly
owned subsidiary of General Electric Company, is liable for the expenses
incurred in connection with the Reorganization, which are estimated to be
$320,000.
2. SECURITY VALUATION
Certain fixed income securities are valued by a dealer or by a pricing
service based upon a computerized matrix system, which considers market
transactions and dealer-supplied valuations. Valuations for municipal bonds are
based on prices obtained from a qualified municipal bond pricing service; prices
represent the mean of the secondary market.
Short-term investments maturing within 60 days are valued at amortized cost
or original cost plus accrued interest, each of which approximates fair value.
Portfolio positions which cannot be valued as set forth above are valued at
fair value under procedures approved by the Trustees.
3. FEES AND EXPENSES
Expenses of the Trust which are directly identifiable to a specific Fund
are allocated to that Fund. Expenses which are not readily identifiable to a
specific Fund are allocated in such a manner as deemed equitable, taking into
consideration the nature and type of expense and the relative sizes of the
Funds. All expenses of the Funds are paid by the Investment Adviser and
reimbursed by the Funds up to the voluntary expense limitations.
F-7
<PAGE>
PRO FORMA FOOTNOTES OF REORGANIZATIONS OF GE SHORT-TERM GOVERNMENT FUND AND
INVESTORS TRUST ADJUSTABLE RATE FUND, AND INVESTORS TRUST TAX FREE FUND AND GE
TAX-EXEMPT FUND--(CONTINUED)
MARCH 31, 1997 AND APRIL 30, 1997, RESPECTIVELY
3. FEES AND EXPENSES--(CONTINUED)
Advisory and Administrative Fees
Compensation of GEIM for investment advisory and administrative services is
paid monthly based on the average daily net assets of the Fund. The GE
Short-Term Government Fund pays GEIM a management fee of 0.30%. The IT Tax Free
Fund pays GEIM a management fee of 0.35%. Effective July 18, 1996, GEIM agreed
to waive the advisory and administration fees until further notice. On or prior
to the closing of the Reorganization, GEIM intends to commence charging the full
amount of the advisory and administration fee.
Distribution Fee
The Funds have adopted a Shareholder Servicing and Distribution Plan (the
'Plan') pursuant to Rule 12b-1 under the Investment Company Act of 1940 (as
amended). The Funds pay GE Investment Services Inc. ('GEIS'), a wholly owned
subsidiary of GEIM and the Fund's principal underwriter, a monthly fee for
shareholder and distribution services provided, at an annual rate of 0.50% of
the average daily net assets of Class A, 0.85% for the GE Short-Term Government
Fund and 1.00% for the IT Tax Free Fund for Class B and 0.25% for Class C.
Currently Class D is not subject to a 12b-1 fee plan.
Deferred Organizational Costs
Organizational expenses applicable to the GE Short-Term Government and IT
Tax Free Funds have been deferred and are being amortized on a straight-line
basis over a period of five years from commencement of investment operations.
4. PRO FORMA ADJUSTMENTS
The accompanying Pro Forma financial statements reflect changes in fund
shares and expenses as if the reorganizations had taken place on April 1, 1996
and May 1, 1996, respectively.
The pro forma net asset value per share assumes the issuance of shares
which would have been issued at March 31, 1997 by GE Short-Term Government Fund
and April 30, 1997 by GE Tax-Exempt Fund, respectively, had the proposed
reorganization taken place on such date. The amount of additional shares assumed
to be issued was calculated based on the pro forma combined net assets at March
31, 1997 for GE Short-Term Government Fund and April 30, 1997 for GE Tax-Exempt
Fund, respectively, and the per share net asset value of the GE Short-Term
Government Fund and the GE Tax-Exempt Fund, respectively.
F-8
<PAGE>
THE PRO FORMA COMBINED INVESTMENT PORTFOLIO
GE SHORT-TERM GOVERNMENT FUND AND
INVESTORS TRUST ADJUSTABLE RATE FUND
MARCH 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
GE SHORT-TERM INVESTORS TRUST
GOVERNMENT FUND ADJUSTABLE RATE FUND
------------------------ ----------------------- PRO FORMA COMBINED
65.1% 34.9% -------------------------------------
PRINCIPAL MARKET PRINCIPAL MARKET % OF NET PRINCIPAL MARKET
AMOUNT ($) VALUE ($) AMOUNT ($) VALUE ($) ASSETS AMOUNT ($) VALUE ($)
---------- ---------- ---------- --------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BONDS AND NOTES 95.0
GOVERNMENT SECURITIES 75.3
Federal Home Loan Mortgage Corp.
6.00% 12/1/08 116,589 113,345 116,589 113,345
8.00% 8/1/03 332,747 339,090 332,747 339,090
-----------
452,435
-----------
Federal Home Loan Mortgage Corp.
Adjustable Rate Mortgages
4.91% 4/1/26 124,584 125,985 124,584 125,985
5.72% 11/1/26 97,362 98,062 97,362 98,062
7.23% 6/1/24 164,212 169,216 164,212 169,216
7.35% 1/1/23 124,819 126,692 124,819 126,692
7.64% 1/1/23 97,003 99,822 97,003 99,822
7.77% 10/1/22 66,190 67,887 66,190 67,887
7.82% 8/1/23 178,313 184,247 178,313 184,247
7.88% 1/1/24 99,296 101,297 99,296 101,297
7.98% 8/1/23 212,753 220,399 212,753 220,399
-----------
1,193,607
-----------
Federal Home Loan Mortgage Corp. REMIC
6.25% 9/15/18 150,000 146,952 150,000 146,952
543.50% 9/15/05 225 2,552 225 2,552
1002.00% 7/15/06 451 9,378 451 9,378
-----------
158,882
-----------
Federal National Mortgage Assoc.
6.52% 9/17/04 261,345 257,180 261,345 257,180
6.88% 11/17/02 150,000 149,156 150,000 149,156
7.00% 10/17/06 75,000 74,649 75,000 74,649
7.37% 8/17/03 304,664 307,139 304,664 307,139
9.00% 8/1/10 347,976 364,578 347,976 364,578
-----------
1,152,702
-----------
Federal National Mortgage Assoc.
Adjustable Rate Mortgages
4.28% 4/1/26 247,837 248,147 247,837 248,147
6.95% 5/1/21 205,285 210,867 205,285 210,867
-----------
459,014
-----------
Federal National Mortgage Assoc. REMIC
7.06% 11/25/06 63,009 57,023 63,009 57,023
7.95% 11/25/19 55,037 55,363 55,037 55,363
-----------
112,386
-----------
Government National Mortgage Assoc.
Adjustable Rate Mortgages
6.00% 10/20/25 889,484 892,562 889,484 892,562
6.50% 2/20/23 500,805 508,787 500,805 508,787
6.50% 8/20/25 1,146,249 1,167,781 1,146,249 1,167,781
6.88% 10/20/24 59,771 60,963 59,771 60,963
7.00% 9/20/24 543,781 555,400 543,781 555,400
7.13% 5/20/22 103,257 105,628 103,257 105,628
7.13% 6/20/23 693,137 708,733 693,137 708,733
7.13% 6/20/24 410,426 422,225 410,426 422,225
</TABLE>
F-9
<PAGE>
THE PRO FORMA COMBINED INVESTMENT PORTFOLIO
GE SHORT-TERM GOVERNMENT FUND AND
INVESTORS TRUST ADJUSTABLE RATE FUND--(CONTINUED)
MARCH 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
GE SHORT-TERM INVESTORS TRUST
GOVERNMENT FUND ADJUSTABLE RATE FUND
------------------------ ----------------------- PRO FORMA COMBINED
65.1% 34.9% -------------------------------------
PRINCIPAL MARKET PRINCIPAL MARKET % OF NET PRINCIPAL MARKET
AMOUNT ($) VALUE ($) AMOUNT ($) VALUE ($) ASSETS AMOUNT ($) VALUE ($)
---------- ---------- ---------- --------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7.13% 7/20/22 272,523 278,868 272,523 278,868
7.13% 8/20/22 218,683 224,219 218,683 224,219
7.13% 8/20/24 1,049,083 1,075,145 1,049,083 1,075,145
7.13% 9/20/18 229,416 236,155 229,416 236,155
-----------
6,236,466
-----------
<CAPTION>
Government National Mortgage Assoc.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9.00% 8/15/09 556,814 584,132 556,814 584,132
9.00% 12/15/09 452,243 477,964 452,243 477,964
9.00% 10/15/16 283,073 300,960 283,073 300,960
-----------
1,363,056
-----------
<CAPTION>
U.S. Treasury Notes
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5.50% 2/28/99 186,000 182,920 186,000 182,920
5.88% 10/31/98 185,000 183,642 185,000 183,642
6.00% 9/30/98 1,875,000 1,866,787 1,875,000 1,866,787
6.13% 8/31/98 713,000 711,439 713,000 711,439
6.25% 6/30/98 1,000,000 1,000,470 1,000,000 1,000,470
-----------
3,945,258
-----------
TOTAL LONG-TERM GOVERNMENT SECURITIES
(COST $14,961,804) 15,073,806
-----------
<CAPTION>
NON-AGENCY MORTGAGES 1.7
Resolution Trust Corporation
Mortgage Pass-Throughs
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8.00% 9/25/21 176,052 176,821 176,052 176,821
9.00% 9/25/28 170,868 174,339 170,868 174,339
-----------
TOTAL NON-AGENCY MORTGAGES
(COST $350,898) 351,160
-----------
<CAPTION>
ASSET BACKED SECURITIES 5.5
Chase Manhattan Auto Owner Trust
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6.25% 11/15/00 50,000 49,662 50,000 49,662
<CAPTION>
Citibank Credit Card Master Trust
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6.93% 2/7/03 225,000 172,757 225,000 172,757
<CAPTION>
CIT RV Owner Trust
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5.40% 12/15/11 209,074 204,684 209,074 204,684
<CAPTION>
Fleetwood Credit Grantor Trust
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6.00% 1/15/08 84,809 84,013 84,809 84,013
6.75% 10/17/11 78,273 78,029 78,273 78,029
6.90% 3/15/12 25,231 25,121 25,231 25,121
<CAPTION>
Ford Credit Auto Owner Trust
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6.50% 11/15/99 60,000 60,075 60,000 60,075
<CAPTION>
Lehman FHA Title I Loan Trust
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7.30% 5/25/17 76,092 76,163 76,092 76,163
<CAPTION>
Old Stone Credit Corporation Home Equity Loan Trust
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6.30% 9/25/07 114,905 114,043 114,905 114,043
</TABLE>
F-10
<PAGE>
THE PRO FORMA COMBINED INVESTMENT PORTFOLIO
GE SHORT-TERM GOVERNMENT FUND AND
INVESTORS TRUST ADJUSTABLE RATE FUND--(CONTINUED)
MARCH 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
GE SHORT-TERM INVESTORS TRUST
GOVERNMENT FUND ADJUSTABLE RATE FUND
------------------------ ----------------------- PRO FORMA COMBINED
65.1% 34.9% -------------------------------------
PRINCIPAL MARKET PRINCIPAL MARKET % OF NET PRINCIPAL MARKET
AMOUNT ($) VALUE ($) AMOUNT ($) VALUE ($) ASSETS AMOUNT ($) VALUE ($)
---------- ---------- ---------- --------- -------- ---------- -----------
Provident Bank Home Equity Loan Trust
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6.72% 1/25/13 96,881 95,307 96,881 95,307
The Money Store Home Equity Trust
6.85% 6/15/19 140,000 139,475 140,000 139,475
-----------
TOTAL ASSET BACKED SECURITIES
(COST $1,109,213) 1,099,329
-----------
<CAPTION>
CORPORATE NOTES 6.7
Central Maine Power Co.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7.40% 6/2/98 100,000 100,500 100,000 100,500
<CAPTION>
First USA Bank
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6.13% 10/30/97 100,000 99,917 100,000 99,917
<CAPTION>
General Motors Acceptance Corp.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8.38% 1/19/99 100,000 102,894 100,000 102,894
<CAPTION>
Great Atlantic & Pacific Tea Inc.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9.13% 1/15/98 168,000 171,496 168,000 171,496
<CAPTION>
Great Northern Nekoosa Corp.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9.13% 2/1/98 100,000 102,147 100,000 102,147
<CAPTION>
Lehman Brothers Holdings Inc.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6.88% 6/8/98 150,000 150,575 150,000 150,575
<CAPTION>
New York State Dormitory Authority Revenues
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6.32% 4/1/99 40,000 39,625 40,000 39,625
<CAPTION>
New York Taxable General Obligation
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6.10% 2/1/98 100,000 99,481 100,000 99,481
<CAPTION>
News America Holdings Inc.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9.13% 10/15/99 110,000 115,482 110,000 115,482
<CAPTION>
Province of Manitoba
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6.13% 5/28/98 125,000 124,656 125,000 124,656
<CAPTION>
Republic of Columbia
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8.75% 10/6/99 50,000 52,188 50,000 52,188
<CAPTION>
Salomon Inc.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6.70% 12/1/98 75,000 74,882 75,000 74,882
<CAPTION>
United Co. Financial Corp.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7.00% 7/15/98 100,000 99,894 100,000 99,894
-----------
TOTAL CORPORATE NOTES
(COST $1,336,069) 1,333,737
-----------
<CAPTION>
MORTGAGE-BACKED SECURITIES 5.8
Collateralized Mortgage Obligations
Merrill Lynch Mortgage Investor's Inc.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7.46% 6/15/21 39,337 39,380 39,337 39,380
<CAPTION>
Morgan (J.P.) Commercial Mortgage Finance Corp.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6.94% 12/26/28 173,180 172,097 173,180 172,097
<CAPTION>
Morgan Stanley Capital Inc.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6.85% 2/15/20 115,000 114,569 115,000 114,569
<CAPTION>
Salomon Brothers Mortgage Securities Inc.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6.47% 1/20/28 380,414 374,708 380,414 374,708
8.13% 11/1/12 38,607 38,728 38,607 38,728
<CAPTION>
Structured Asset Securities Corp.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6.75% 6/25/30 227,882 225,674 227,882 225,674
9.09% 9/25/31 192,153 201,401 192,153 201,401
-----------
TOTAL MORTGAGE-BACKED SECURITIES
(COST $1,182,214) 1,166,557
-----------
</TABLE>
F-11
<PAGE>
THE PRO FORMA COMBINED INVESTMENT PORTFOLIO
GE SHORT-TERM GOVERNMENT FUND AND
INVESTORS TRUST ADJUSTABLE RATE FUND--(CONTINUED)
MARCH 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
GE SHORT-TERM INVESTORS TRUST
GOVERNMENT FUND ADJUSTABLE RATE FUND
------------------------ ----------------------- PRO FORMA COMBINED
65.1% 34.9% -------------------------------------
PRINCIPAL MARKET PRINCIPAL MARKET % OF NET PRINCIPAL MARKET
AMOUNT ($) VALUE ($) AMOUNT ($) VALUE ($) ASSETS AMOUNT ($) VALUE ($)
---------- ---------- ---------- --------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
TOTAL INVESTMENTS IN
SECURITIES (COST
$18,940,198) 19,024,589
-----------
MONEY MARKET MUTUAL FUNDS 1.5
SSgA Money Market Fund [Class A] 278,924 278,924 278,924 278,924
SSgA US Government Money Market Fund 19,473 19,473 19,473 19,473
-----------
TOTAL MONEY MARKET MUTUAL FUNDS
(COST $298,397) 298,397
-----------
SHORT TERM INVESTMENTS 2.8
REPURCHASE AGREEMENT--
State Street Bank and Trust Co.
6.25% 4/1/97
(Cost $550,000) 550,000 550,000 550,000 550,000
-----------
(dated 03/31/97, proceeds $550,095,
collateralized by $563,060 United States
Treasury Note, 9.875%, 11/15/15)
TOTAL INVESTMENTS 12,944,770 6,928,216 99.3 19,872,986
(COST $19,788,595)
OTHER ASSETS AND LIABILITIES, NET 0.7 149,174
-------- -----------
NET ASSETS 100.0 $20,022,160
-------- -----------
-------- -----------
</TABLE>
F-12
<PAGE>
THE PRO FORMA COMBINED INVESTMENT PORTFOLIO
INVESTORS TRUST TAX FREE FUND AND GE TAX-EXEMPT FUND
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
INVESTORS TRUST
TAX FREE FUND GE TAX-EXEMPT FUND
------------------------ ----------------------- PRO FORMA COMBINED
- -------------------- 66.6% 33.4% -----------------------
MUNICIPAL PRINCIPAL MARKET PRINCIPAL MARKET % OF NET PRINCIPAL MARKET
INVESTMENTS RATE MATURITY AMOUNT ($) VALUE ($) AMOUNT ($) VALUE ($) ASSETS AMOUNT ($) VALUE ($)
- -------------------- ------ -------- ---------- ------------ ---------- ----------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ALABAMA............. 0.2
Birmingham Alabama
North Medical
Clinic Board
Rev............... 6.63% 4/1/00 75,000 79,060 75,000 79,060
-----------
ALASKA.............. 0.1
North Slope Borough
Alaska G.O., AMBAC
Insured........... 10.00% 6/30/01 30,000 35,745 30,000 35,745
-----------
ARIZONA............. 3.3
Arizona Trans. Board
Rev.-Sales Tax,
AMBAC Insured..... 5.60% 7/1/02 500,000 518,270 500,000 518,270
Maricopa County
Arizona G.O., FGIC
Insured........... 6.25% 7/1/02 175,000 186,153 175,000 186,153
Maricopa County
Elem. School G.O.,
AMBAC Insured..... 6.30% 7/1/07 500,000 547,890 500,000 547,890
-----------
1,252,313
-----------
ARKANSAS............ 2.0
Arkansas Housing
Development
Agency............ 8.38% 7/1/10 270,000 331,460 270,000 331,460
Arkansas Housing
Development
Agency............ 8.38% 7/1/11 235,000 301,406 235,000 301,406
Pulaski County
Arkansas Hospital
Rev............... 9.25% 3/1/10 105,000 134,504 105,000 134,504
-----------
767,370
-----------
CALIFORNIA.......... 5.1
California State
G.O............... 8.75% 5/1/04 110,000 133,938 110,000 133,938
Los Angeles Regional
Airports Lease
Rev............... 3.95% 12/1/24 700,000 700,000 700,000 700,000
Sacramento
California Utility
Electric Rev...... 9.00% 4/1/13 620,000 816,621 620,000 816,621
San Diego California
Hospital Rev...... 8.88% 2/1/11 210,000 267,891 210,000 267,891
-----------
1,918,450
-----------
COLORADO............ 3.7
Colorado Springs
Utilities Rev..... 8.50% 11/15/11 100,000 125,867 100,000 125,867
Colorado State
Rev.-Sales Tax.... 4.50% 6/27/97 500,000 500,335 500,000 500,335
Denver Colorado City
& County Mortgage
Rev............... 7.00% 8/1/10 490,000 553,915 490,000 553,915
Loveland Colorado
Rev............... 8.88% 11/1/05 165,000 202,066 165,000 202,066
-----------
1,382,183
-----------
CONNECTICUT......... 6.0
Connecticut St.
Rev., AMBAC
Insured........... 5.50% 1/1/03 500,000 514,875 500,000 514,875
Connecticut St.
Health & Educ.
Rev.-Health, MBIA
Insured........... 5.50% 7/1/12 500,000 498,430 500,000 498,430
Connecticut St.
Health & Educ.
Rev............... 7.00% 7/1/12 725,000 816,778 725,000 816,778
Connecticut State
Housing Finance
Authority......... 6.05% 5/15/14 410,000 414,596 410,000 414,596
-----------
2,244,679
-----------
</TABLE>
F-13
<PAGE>
THE PRO FORMA COMBINED INVESTMENT PORTFOLIO
INVESTORS TRUST TAX FREE FUND AND GE TAX-EXEMPT FUND--(CONTINUED)
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
INVESTORS TRUST
TAX FREE FUND GE TAX-EXEMPT FUND
- -------------------- ----------------------- ----------------------- PRO FORMA COMBINED
MUNICIPAL 66.6% 33.4% -----------------------
INVESTMENTS PRINCIPAL MARKET PRINCIPAL MARKET % OF NET PRINCIPAL MARKET
(CONTINUED) RATE MATURITY AMOUNT ($) VALUE ($) AMOUNT ($) VALUE ($) ASSETS AMOUNT ($) VALUE ($)
- -------------------- ------ -------- ---------- ----------- ---------- ----------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DELAWARE............ 1.9
Delaware
Transportation
Auth. Rev......... 6.10% 7/1/02 110,000 116,006 110,000 116,006
Georgetown Delaware
G.O., AMBAC
Insured........... 6.80% 6/1/21 100,000 107,604 100,000 107,604
Wilmington Delaware
Hospital Rev.-
Health, VRDN...... 3.95% 7/1/11 500,000 500,000 500,000 500,000
-----------
723,610
-----------
FLORIDA............. 4.1
Broward County
Florida G. O...... 6.20% 1/1/07 25,000 26,478 25,000 26,478
Dade County Florida
Health Fac. Auth.
Hospital Rev...... 6.40% 5/1/01 100,000 106,025 100,000 106,025
Florida State
G.O............... 6.50% 7/1/03 675,000 690,066 675,000 690,066
Florida State
G.O............... 10.00% 7/1/14 235,000 347,734 235,000 347,734
Gainesville Florida
Utilities Systems
Rev............... 8.13% 10/1/14 175,000 219,426 175,000 219,426
Jacksonville Florida
Electric Authority
Rev............... 6.50% 10/1/03 135,000 146,768 135,000 146,768
-----------
1,536,497
-----------
GEORGIA............. 1.6
Clarke County
Georgia Hospital
Authority Rev..... 9.88% 1/1/06 80,000 103,513 80,000 103,513
Columbus Georgia
Medical Center
Hospital Auth.
Rev............... 7.75% 7/1/10 285,000 341,011 285,000 341,011
Gwinnett County
Georgia
Water & Sewage
Auth. Rev......... 9.60% 10/1/04 115,000 143,296 115,000 143,296
-----------
587,820
-----------
HAWAII.............. 0.6
Honolulu Hawaii City
and
County G.O........ 7.25% 7/1/02 200,000 221,168 200,000 221,168
-----------
IDAHO............... 2.1
Idaho Falls Idaho
Electric Rev...... 10.38% 4/1/13 560,000 783,938 560,000 783,938
-----------
ILLINOIS............ 2.1
Chicago Illinois
G.O............... 6.00% 1/1/08 500,000 528,175 500,000 528,175
Chicago Illinois
Motor Fuel Tax
Rev., AMBAC
Insured........... 6.50% 1/1/16 20,000 21,192 20,000 21,192
Chicago Illinois
Wastewater
Transmiss. Rev.,
FGIC Insured...... 6.30% 1/1/12 20,000 21,663 20,000 21,663
Des Plaines Illinois
Hospital Facility
Rev............... 10.75% 1/1/14 115,000 145,139 115,000 145,139
Waukegan Illinois
Water and Sewer
Rev............... 7.50% 5/1/06 50,000 58,145 50,000 58,145
-----------
774,314
-----------
INDIANA............. 0.9
Indiana University
Rev............... 10.13% 7/1/10 35,000 41,948 35,000 41,948
Indiana University
Rev. - Education.. 6.00% 11/15/14 290,000 298,746 290,000 298,746
-----------
340,694
-----------
IOWA................ 2.9
Muscatine Iowa
Electric Rev...... 9.70% 1/1/13 815,000 1,107,854 815,000 1,107,854
-----------
</TABLE>
F-14
<PAGE>
THE PRO FORMA COMBINED INVESTMENT PORTFOLIO
INVESTORS TRUST TAX FREE FUND AND GE TAX-EXEMPT FUND--(CONTINUED)
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
INVESTORS TRUST
TAX FREE FUND GE TAX-EXEMPT FUND
- -------------------- ----------------------- ----------------------- PRO FORMA COMBINED
MUNICIPAL 66.6% 33.4% -----------------------
INVESTMENTS PRINCIPAL MARKET PRINCIPAL MARKET % OF NET PRINCIPAL MARKET
(CONTINUED) RATE MATURITY AMOUNT ($) VALUE ($) AMOUNT ($) VALUE ($) ASSETS AMOUNT ($) VALUE ($)
- -------------------- ------ -------- ---------- ----------- ---------- ----------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
KANSAS.............. 1.4
Wichita Kansas
G.O............... 5.50% 12/1/98 500,000 510,000 500,000 510,000
-----------
LOUISIANA........... 1.8
Jefferson Parish
Louisiana Hospital
Rev............... 7.25% 1/1/09 600,000 677,100 600,000 677,100
-----------
MAINE............... 0.5
Maine Municipal Bond
Bank Rev.......... 7.10% 11/1/07 10,000 10,788 10,000 10,788
Maine Municipal Bond
Bank Rev.......... 7.20% 11/1/20 65,000 71,341 65,000 71,341
Maine Municipal Bond
Bank Sewer & Water
Rev............... 7.20% 11/1/13 100,000 111,145 100,000 111,145
-----------
193,274
-----------
MARYLAND............ 1.4
Baltimore County
G.O............... 5.50% 8/1/04 500,000 518,055 500,000 518,055
-----------
MASSACHUSETTS....... 6.5
Massachusetts Bay
Transportation
Auth. Rev......... 7.25% 3/1/03 100,000 108,302 100,000 108,302
Massachusetts State
Port Authority
Rev............... 13.00% 7/1/13 500,000 833,895 500,000 833,895
Massachusetts State
G.O............... 3.85% 12/1/97 1,000,000 1,000,000 1,000,000 1,000,000
Massachusetts State
G.O., AMBAC
Insured........... 6.75% 8/1/09 250,000 271,607 250,000 271,607
Massachusetts State
Water & Sewer
Rev............... 6.00% 11/1/06 250,000 263,223 250,000 263,223
-----------
2,477,027
-----------
MICHIGAN............ 3.2
Michigan State
Hospital Finance
Auth. Rev......... 7.13% 5/1/09 380,000 429,940 380,000 429,940
Michigan State
Hospital Finance
Auth. Rev......... 9.00% 5/1/08 195,000 250,257 195,000 250,257
Michigan St. Storage
Tank Rev.-Sales
Tax, AMBAC
Insured........... 6.00% 5/1/04 500,000 531,605 500,000 531,605
-----------
1,211,802
-----------
MINNESOTA........... 2.2
Rochester Minnesota
Health Care
Facilities Rev.... 6.25% 11/15/14 300,000 314,292 300,000 314,292
Minnesota State
G.O............... 6.60% 8/1/98 500,000 515,825 500,000 515,825
-----------
830,117
-----------
MISSISSIPPI......... 0.9
Mississippi State
G.O............... 6.20% 2/1/08 300,000 327,831 300,000 327,831
-----------
MISSOURI............ 0.1
Lees Summit Missouri
Water
and Sewer Rev..... 10.00% 7/1/14 20,000 23,098 20,000 23,098
-----------
NEBRASKA............ 0.9
Lancaster County
Nebraska School
District G.O...... 5.00% 7/15/09 350,000 337,582 350,000 337,582
-----------
NEW HAMPSHIRE....... 0.1
New Hampshire
Municipal Bond
Bank State Rev.... 6.80% 1/15/09 25,000 26,812 25,000 26,812
-----------
</TABLE>
F-15
<PAGE>
THE PRO FORMA COMBINED INVESTMENT PORTFOLIO
INVESTORS TRUST TAX FREE FUND AND GE TAX-EXEMPT FUND--(CONTINUED)
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
INVESTORS TRUST
TAX FREE FUND GE TAX-EXEMPT FUND
- -------------------- ----------------------- ----------------------- PRO FORMA COMBINED
MUNICIPAL 66.6% 33.4% -----------------------
INVESTMENTS PRINCIPAL MARKET PRINCIPAL MARKET % OF NET PRINCIPAL MARKET
(CONTINUED) RATE MATURITY AMOUNT ($) VALUE ($) AMOUNT ($) VALUE ($) ASSETS AMOUNT ($) VALUE ($)
- -------------------- ------ -------- ---------- ----------- ---------- ----------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NEW JERSEY.......... 3.0
Atlantic County New
Jersey Improv.
Auth. Lease
Rev............... 7.40% 3/1/12 225,000 267,417 225,000 267,417
New Jersey Building
Auth. Rev.-Lease
Rev............... 5.00% 6/15/12 500,000 472,085 500,000 472,085
New Jersey Economic
Development
Auth.............. 7.00% 7/1/04 100,000 111,154 100,000 111,154
New Jersey Tpke.
Auth. Rev.-Trans.,
AMBAC Insured..... 6.50% 1/1/16 250,000 275,815 250,000 75,815
-----------
1,126,471
-----------
NEW MEXICO.......... 1.7
Farmington New
Mexico Power
Rev............... 9.88% 1/1/13 400,000 527,332 400,000 527,332
Farmington New
Mexico Utility
Systems Rev....... 9.88% 1/1/08 100,000 131,531 100,000 131,531
-----------
658,863
-----------
NEW YORK............ 9.7
Erie County New York
Water Auth. Water
Rev............... 6.00% 12/1/08 400,000 423,988 400,000 423,988
Municipal Assistance
Corp. Rev.-Sales
Tax............... 6.90% 7/1/97 500,000 502,230 500,000 502,230
New York City
G.O............... 4.00% 8/1/21 400,000 400,000 400,000 400,000
New York City
G.O............... 4.00% 8/1/23 100,000 100,000 100,000 100,000
New York City
G.O............... 6.00% 8/1/06 300,000 303,645 300,000 303,645
New York State
G.O............... 7.10% 3/1/04 50,000 55,018 50,000 55,018
New York State
Dormitory
Authority Rev..... 7.38% 7/1/16 470,000 559,803 470,000 559,803
New York State
Dormitory
Authority Rev..... 6.75% 5/15/11 165,000 190,133 165,000 190,133
New York State
Environmental
Facilities Corp.
Rev............... 6.80% 11/15/10 200,000 222,836 200,000 222,836
New York State
Housing Finance
Agency Rev........ 6.40% 11/1/03 175,000 184,852 175,000 184,852
New York State Local
Government
Assistance
Rev. ............ 7.25% 4/1/07 350,000 387,957 350,000 387,957
New York State Local
Government
Assistance
Rev. ............ 6.00% 4/1/05 50,000 52,505 50,000 52,505
New York State Local
Government
Assistance
Rev. ............ 6.75% 4/1/02 45,000 48,905 45,000 48,905
Westchester County
New York G.O...... 4.90% 11/15/97 250,000 251,627 250,000 251,627
-----------
3,683,499
-----------
NORTH CAROLINA...... 3.3
North Carolina
Municipal Power
Agency Catawba
Rev............... 10.50% 1/1/10 915,000 1,256,460 915,000 1,256,460
-----------
OHIO................ 2.7
Columbus Ohio
G.O............... 6.00% 7/1/08 50,000 52,978 50,000 52,978
Ohio State Building
Auth. Rev.-Lease
Rev., AMBAC
Insured........... 5.50% 4/1/16 500,000 487,920 500,000 487,920
Ohio State Public
Fac. Rev.-
Education, AMBAC
Insured........... 5.40% 11/1/07 250,000 254,253 250,000 254,253
Ohio State Water
Development
Authority Rev..... 7.00% 12/1/09 200,000 228,174 200,000 228,174
-----------
1,023,325
-----------
</TABLE>
F-16
<PAGE>
THE PRO FORMA COMBINED INVESTMENT PORTFOLIO
INVESTORS TRUST TAX FREE FUND AND GE TAX-EXEMPT FUND--(CONTINUED)
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
INVESTORS TRUST
TAX FREE FUND GE TAX-EXEMPT FUND
- -------------------- ----------------------- ----------------------- PRO FORMA COMBINED
MUNICIPAL 66.6% 33.4% -----------------------
INVESTMENTS PRINCIPAL MARKET PRINCIPAL MARKET % OF NET PRINCIPAL MARKET
(CONTINUED) RATE MATURITY AMOUNT ($) VALUE ($) AMOUNT ($) VALUE ($) ASSETS AMOUNT ($) VALUE ($)
- -------------------- ------ -------- ---------- ----------- ---------- ----------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OREGON.............. 0.7
Portland Oregon
G.O............... 5.38% 6/1/13 250,000 245,895 250,000 245,895
-----------
PENNSYLVANIA........ 6.0
Allegheny County
Pennsylvania
Hospital Dev.
Auth. Rev......... 7.38% 7/1/12 150,000 175,103 150,000 175,103
Pennsylvania
Intergovern'tal.
Co-op. Rev.-Sales
Tax,
MBIA Insured...... 5.60% 6/15/15 500,000 487,750 500,000 487,750
Pennsylvania
Intergovernmental
Co-op Auth.
Rev............... 6.80% 6/15/12 50,000 54,374 50,000 54,374
Pennsylvania State
Turnpike
Commission
Turnpike Rev...... 7.15% 12/1/11 25,000 27,848 25,000 27,848
Philadelphia
Pennsylvania
Hospitals & Higher
Education Fac.
Rev............... 6.50% 2/15/21 325,000 352,384 325,000 352,384
Philadelphia
Pennsylvania
Hospitals
Authority Rev..... 9.88% 7/1/10 480,000 631,666 480,000 631,666
Philadelphia
Pennsylvania
Regional Port
Auth. Lease
Rev............... 7.15% 8/1/20 30,000 32,237 30,000 32,237
Pittsburgh
Pennsylvania Water
and Sewer
Authority Rev..... 7.25% 9/1/14 425,000 499,651 425,000 499,651
-----------
2,261,013
-----------
PUERTO RICO......... 1.2
Puerto Rico
Commonwealth
Aqueduct & Sewer
Auth. Rev......... 10.25% 7/1/09 340,000 466,432 340,000 466,432
-----------
RHODE ISLAND........ 0.2
Convention Center
Auth. Rhode Island
Rev., MBIA
Insured........... 6.30% 5/15/04 45,000 48,281 45,000 48,281
Rhode Island
Depositors
Economic
Protection Rev.... 7.10% 8/1/18 35,000 38,703 35,000 38,703
-----------
86,984
-----------
SOUTH CAROLINA...... 2.0
South Carolina State
Public Service
Authority Rev..... 6.50% 7/1/24 195,000 212,583 195,000 212,583
Spartanburg South
Carolina
Waterworks Rev.... 6.00% 6/1/05 500,000 524,470 500,000 524,470
-----------
737,053
-----------
TENNESSEE........... 1.3
Metropolitan
Government
Electric Rev...... 9.60% 7/1/05 65,000 84,549 65,000 84,549
Metropolitan
Nashville Airport
Auth. Rev.-Trans.,
VRDN.............. 3.95% 10/1/12 400,000 400,000 400,000 400,000
-----------
484,549
-----------
</TABLE>
F-17
<PAGE>
THE PRO FORMA COMBINED INVESTMENT PORTFOLIO
INVESTORS TRUST TAX FREE FUND AND GE TAX-EXEMPT FUND--(CONTINUED)
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
INVESTORS TRUST
TAX FREE FUND GE TAX-EXEMPT FUND
- -------------------- ----------------------- ----------------------- PRO FORMA COMBINED
MUNICIPAL 66.6% 33.4% -----------------------
INVESTMENTS PRINCIPAL MARKET PRINCIPAL MARKET % OF NET PRINCIPAL MARKET
(CONTINUED) RATE MATURITY AMOUNT ($) VALUE ($) AMOUNT ($) VALUE ($) ASSETS AMOUNT ($) VALUE ($)
- -------------------- ------ -------- ---------- ----------- ---------- ----------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TEXAS............... 6.3
Arlington Texas
Independent School
District Rev...... 5.90% 2/15/03 350,000 363,699 350,000 363,699
Austin Texas Utility
Systems Rev....... 7.25% 11/15/03 50,000 52,666 50,000 52,666
Austin Texas Utility
Systems Rev., BIG
Insured........... 10.75% 5/15/15 30,000 35,087 30,000 35,087
Grapevine Texas
Industrial
Development Corp.
Rev.-Trans........ 3.95% 12/1/24 500,000 500,000 500,000 500,000
Gulf Coast Texas
Waste Disposal
Auth. Rev......... 8.38% 6/1/05 100,000 121,148 100,000 121,148
Houston Texas
G.O............... 6.00% 4/1/04 500,000 530,965 500,000 530,965
Houston Texas Water
Systems Rev....... 7.30% 12/1/06 100,000 116,926 100,000 116,926
Lamar University
Texas Rev......... 7.00% 4/1/06 35,000 39,851 35,000 39,851
San Antonio Texas
Water Rev......... 7.13% 5/1/16 25,000 26,636 25,000 26,636
Texas A&M University
Rev............... 9.40% 6/1/04 40,000 50,412 40,000 50,412
Texas A&M University
Rev............... 9.40% 6/1/06 55,000 72,061 55,000 72,061
University of Texas
Rev.-Education.... 5.10% 8/15/08 500,000 495,310 500,000 495,310
-----------
2,404,761
-----------
UTAH................ 0.8
Intermountain Power
Agency Utah
Rev.-Power........ 7.20% 7/1/11 10,000 10,742 10,000 10,742
Utah State Municipal
Finance
Co-op Rev......... 7.00% 6/1/16 250,000 272,720 250,000 272,720
-----------
283,462
-----------
VIRGINIA............ 0.3
Richmond Virginia
Metropolitan Auth.
Expressway Rev.... 7.00% 10/15/13 115,000 126,778 115,000 126,778
-----------
WASHINGTON.......... 0.5
Municipality of
Metropolitan
Seattle Sewer
Rev............... 6.88% 1/1/31 40,000 42,977 40,000 42,977
Snohomish County
Washington Public
Utility Rev....... 6.38% 1/1/05 20,000 21,286 20,000 21,286
Washington State
Public Power
Systems Nuclear
Rev............... 7.20% 7/1/02 100,000 107,151 100,000 107,151
-----------
171,414
-----------
WEST VIRGINIA....... 1.6
West Virginia
Housing
Development Fund
Rev.-Housing...... 5.60% 11/1/11 355,000 354,645 355,000 354,645
Wood County West
Virginia Building
Commission Rev.... 6.63% 1/1/06 215,000 230,729 215,000 230,729
----------- -----------
585,374
-----------
WISCONSIN........... 1.3
Wisconsin State
G.O............... 5.30% 11/1/11 500,000 497,995 500,000 497,995
----------- -----------
TOTAL INVESTMENTS
(COST
$36,576,219)...... $24,649,220 $12,339,501 98.2 36,988,721
----------- -----------
----------- -----------
OTHER ASSETS AND
LIABILITIES,
NET............... 1.8 694,800
-------- -----------
NET ASSETS.......... 100.0 $37,683,521
-------- -----------
-------- -----------
</TABLE>
F-18
<PAGE>
GE FUNDS
PART C
OTHER INFORMATION
ITEM 15. INDEMNIFICATION
The response to this item is incorporated by reference to 'Liability of
Trustees' under the caption 'Information on Shareholder's Rights' in Part A of
this Registration Statement.
ITEM 16. EXHIBITS
References are to Registrant's Registration Statement on Form N-1A as filed
with the Securities and Exchange Commission (File Nos. 33-51308 and 811-7142)
(the 'Registration Statement').
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------- ----------------------------------------------------------------------
<S> <C>
(1)(a) -- Declaration of Trust dated as of August 10, 1992 is incorporated by
reference to the initial Registration Statement.
(1)(b) -- Certificate of Amendment to Declaration of Trust and Change of
Series Designation is incorporated by reference to Exhibit (1)(b)
to Pre-Effective Amendment No. 3 to the Registration Statement.
(1)(c) -- Instrument of the Trustees Establishing and Designating Classes of
Shares of GE Short-Term Government Fund and GE International Equity
Fund is incorporated herein by reference to Exhibit 1(c) to
Post-Effective Amendment No. 9 to the Registration Statement.
(1)(d) -- Instrument of the Trustees Establishing and Designating Classes of
Shares of GE Mid-Cap Growth Fund and GE International Fixed Income
Fund is incorporated by reference to Exhibit 1(d) to Post-Effective
Amendment No. 12 to the Registration Statement.
(1)(e) -- Instrument of the Trustees Establishing and Designating Classes of
Shares of GE Premier Growth Equity Fund is incorporated herein by
reference to Exhibit 1(e) to Post-Effective Amendment No. 18 to the
Registration Statement.
(1)(f) -- Instrument of the Trustees Establishing and Designating Classes of
Shares of GE Government Securities Fund and GE Value Equity Fund is
incorporated by reference to Exhibit 1(f) to Post-Effective
Amendment No. 21 to the Registration Statement.
(2) -- By-Laws are incorporated by reference to Exhibit 2 to the initial
Registration Statement.
(3) -- Not Applicable.
(4) -- Agreement and Plan of Reorganization (included as Exhibit A to
Registrant's Prospectus/Proxy Statement contained in Part A of this
Registration Statement).*
(5) -- Not Applicable.
(6)(a) -- Investment Advisory and Administration Agreement relating to
Registrant's initial six series is incorporated herein by reference
to Exhibit 5 to Pre-Effective Amendment No. 3 to the Registration
Statement.
(6)(b) -- Investment Advisory Agreement for GE Short-Term Government Fund and
GE International Equity Fund is incorporated herein by reference to
Exhibit 5(b) to Post-Effective Amendment No. 9 of the Registration
Statement.
6(c) -- Investment Advisory Agreement for GE Mid-Cap Growth Fund and GE
International Fixed Income Fund is incorporated herein by reference
to Exhibit 5(c) to Post-Effective Amendment No. 12 of the
Registration Statement.
6(d) -- Investment Advisory and Administration Agreement for GE Premier
Growth Equity Fund is incorporated herein by reference to Exhibit
5(d) to Post-Effective Amendment No. 18 of the Registration
Statement.
6(e) -- Investment Advisory and Administration Agreement for GE Government
Securities Fund and GE Value Equity Fund is incorporated herein by
reference to Exhibit 5(e) to Post-Effective Amendment No. 21 of the
Registration Statement.
6(f) -- Amended and Restated Investment Advisory and Administration
Agreement for GE Tax-Exempt Fund is incorporated herein by
reference to Exhibit 5(f) to Post-Effective Amendment No. 21 of the
Registration Statement.
6(g) -- Sub-Investment Advisory Agreement for GE Tax-Exempt Fund is
incorporated herein by reference to Exhibit 5(g) to Post-Effective
Amendment No. 21 of the Registration Statement.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------- ----------------------------------------------------------------------
<S> <C>
(7) -- Form of Distribution Agreement, as amended, between Registrant and
GE Investment Services Inc. is incorporated by reference to Exhibit
6 to Post-Effective Amendment No. 5 to the Registration Statement.
(8) -- Not Applicable.
(9) -- Form of Custodian Contract between Registrant and State Street Bank
and Trust Company is incorporated by reference to Exhibit 8 to
Pre-Effective Amendment No. 3 to the Registration Statement.
(10)(a) -- Form of Amended and Restated Shareholder Servicing and Distribution
Plan is incorporated herein by reference to Exhibit 15(a) to
Post-Effective Amendment No. 5 to the Registration Statement.
(10)(b) -- Form of Shareholder Servicing and Distribution Plan for GE
Short-Term Government Fund is incorporated herein by reference to
Exhibit 15(b) to Post-Effective Amendment No. 9 to the Registration
Statement.
(10)(c) -- Form of Amended and Restated Shareholder Servicing and Distribution
Agreement is incorporated herein by reference to Exhibit 15(c) to
Post-Effective Amendment No. 5 to the Registration Statement.
(10)(d) -- Form of Shareholder Servicing and Distribution Agreement for GE
Short-Term Government Fund is incorporated by reference herein to
Exhibit 15(d) to Post-Effective Amendment No. 9 to the Registration
Statement.
10(e) -- Written Plan adopted pursuant to Rule 18f-3 under the Investment
Company Act of 1940, as amended, is incorporated by reference
herein to Exhibit 4 to Post-Effective Amendment No. 16 to the
Registration Statement.
(11)(a) -- Opinion and Consent of Willkie Farr & Gallagher with respect to
legality.*
(11)(b) -- Opinion and Consent of Bingham, Dana & Gould with respect to
certain matters under Massachusetts law.*
(12) -- Opinions of Willkie Farr & Gallagher with respect to tax matters.*
(13) -- Not Applicable.
(14)(a) -- Consent of Price Waterhouse LLP.*
(14)(b) -- Consent of Coopers & Lybrand L.L.P.*
(15) -- Not Applicable.
(16) -- Not Applicable.
(17)(a) -- Form of Proxy Cards.*
(17)(b) -- Registrant's Declaration pursuant to Rule 24f-2 is incorporated by
reference to its initial Registration Statement.
</TABLE>
- ------------------
* Filed herewith.
ITEM 17. UNDERTAKINGS
(1) The undersigned Registrant agrees that prior to any public reoffering of the
securities registered through the use of a prospectus which is a part of
this Registration Statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) under the Securities Act of
1933, the reoffering prospectus will contain the information called for by
the applicable registration form for reofferings by persons who may be
deemed underwriters, in addition to the information called for by the other
items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is filed under
paragraph (1) above will be filed as a part of an amendment to the
Registration Statement and will not be used until the amendment is
effective, and that, in determining any liability under the Securities Act
of 1933, each post-effective amendment shall be deemed to be a new
registration statement for the securities offered therein, and the offering
of the securities at that time shall be deemed to be the initial bona fide
offering of them.
C-2
<PAGE>
SIGNATURES
AS REQUIRED BY THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS
BEEN SIGNED ON BEHALF OF THE REGISTRANT, IN THE CITY OF STAMFORD AND STATE OF
CONNECTICUT ON THE 28TH DAY OF JULY, 1997.
GE FUNDS
By: /s/ MICHAEL J. COSGROVE
----------------------------------
Michael J. Cosgrove
President and Chairman of the Board
AS REQUIRED BY THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS
BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES
INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------- -------------------------- ------------
<S> <C> <C>
/s/ MICHAEL J. COSGROVE President and Chairman of July 28, 1997
- ------------------------- the Board
Michael J. Cosgrove
/s/ ALAN M. LEWIS Executive Vice President July 28, 1997
- ------------------------- and Trustee
Alan M. Lewis
/s/ JOHN R. COSTANTINO Trustee July 28, 1997
- -------------------------
John R. Costantino
/s/ WILLIAM J. LUCAS Trustee July 28, 1997
- -------------------------
William J. Lucas
/s/ ROBERT P. QUINN Trustee July 28, 1997
- -------------------------
Robert P. Quinn
/s/ JEFFREY A. GROH Treasurer (Chief Financial July 28, 1997
- ------------------------- and Accounting Officer)
Jeffrey A. Groh
</TABLE>
C-3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------------------------------------------------------------
<S> <C> <C>
(4) Agreement and Plan of Reorganization (included as Exhibit A to
Registrant's Prospectus/Proxy Statement contained in Part A of
this Registration Statement)
11(a) Opinion and Consent of Willkie Farr & Gallagher with respect to
legality
11(b) Opinion and Consent of Bingham, Dana & Gould with respect to
certain matters under Massachusetts law
12 Opinions of Willkie Farr & Gallagher with respect to tax matters
14(a) Consent of Price Waterhouse LLP
14(b) Consent of Coopers & Lybrand L.L.P.
17(a) Forms of Proxy Cards
</TABLE>
<PAGE>
EXHIBIT 11(a)
[LETTERHEAD OF WILLKIE FARR & GALLAGHER]
July 28, 1997
Investors Trust
Two Union Square
601 Union Street
Suite 5600
Seattle, Washington 98101-2336
Ladies and Gentlemen:
We have acted as counsel for GE Short-Term Government Fund, GE Government
Securities Fund, GE Tax-Exempt Fund, GE Value Equity Fund and GE Mid-Cap Growth
Fund (each an "Acquiring Fund," and, collectively, the "Acquiring Funds"), each
of which is a series of GE Funds, a business trust organized under the laws of
The Commonwealth of Massachusetts (the "Trust"), in connection with the
acquisition of all or substantially all of the respective assets of Investors
Trust Adjustable Rate Fund, Investors Trust Government Fund, Investors Trust Tax
Free Fund, Investors Trust Value Fund and Investors Trust Growth Fund (each an
"Acquired Fund," and, collectively, the "Acquired Funds"), each of which is a
series of Investors Trust, a business trust organized under the laws of The
Commonwealth of Massachusetts, in exchange for Class A and Class B shares of
beneficial interest, par value $.001 per share, of the corresponding Acquiring
Fund, and the assumption by GE Funds on behalf of the Acquiring Funds of
scheduled liabilities of the Acquired Funds pursuant to an Agreement and Plan of
Reorganization dated as of July 24, 1997 (the "Agreement") between Investors
Trust on behalf of the Acquired Funds and GE Funds on behalf of the Acquiring
Funds. Capitalized terms used herein have the same meanings ascribed to them in
the Agreement unless defined otherwise herein.
As counsel for the Acquiring Funds, we have examined the GE Funds' Declaration
of Trust, as amended to date (the "Declaration of Trust"), the By-Laws, as
amended to date, the Registration Statement on Form N-14, including any
amendments thereto (the "Registration Statement"), the Combined Prospectus/Proxy
Statement constituting a part thereof, and the Agreement, and have examined and
relied upon such records of GE Funds and other documents and certificates with
respect to factual matters as we have deemed necessary to render the opinions
expressed herein.
<PAGE>
Investors Trust
July 28, 1997
Page 2
We have assumed without independent verification the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals and the conformity with originals of all
documents submitted to us as copies. We are members of the Bar of the State of
New York and we express no opinion as to any matters governed by any laws other
than the laws of the State of New York and the federal laws of the United States
of America, except as to matters relating to the laws of The Commonwealth of
Massachusetts. As to matters of Massachusetts law, we have relied solely on the
opinion of Bingham, Dana & Gould LLP with respect to the matters addressed
therein, which is satisfactory to us in form and scope and a copy of which is
annexed hereto.
Based upon the foregoing, and subject to the limitations stated above, we are of
the opinion that (a) GE Funds is duly organized and existing under GE Funds'
Declaration of Trust and the laws of The Commonwealth of Massachusetts as a
voluntary association with transferable shares of beneficial interest commonly
referred to as a "Massachusetts business trust"; (b) GE Funds is an open-end
management investment company registered under the Investment Company Act of
1940, as amended; and (c) the shares of the Acquiring Funds to be issued, when
issued and sold in accordance with GE Funds' Declaration and By-Laws and for the
consideration described in the Agreement, will be legally issued, fully paid and
non-assessable, except that, as set forth in the Registration Statement,
shareholders of an Acquiring Fund may under certain circumstances be held
personally liable for its obligations.
This opinion is furnished by us as counsel to the Acquiring Funds, is solely for
the benefit of Investors Trust on behalf of the Acquired Funds, its trustees and
officers in connection with the above-described transaction and may not be
relied upon for any other purpose or by any other person. We hereby consent to
the filing of this opinion as an exhibit to the Registration Statement on Form
N-14 and to the use of our name and any reference to our firm in the
Registration Statement or the Prospectus/Proxy Statement constituting a part
thereof.
Very truly yours,
/s/ Willkie Farr & Gallagher
<PAGE>
Exhibit 11(b)
[LETTERHEAD OF BINGHAM, DANA & GOULD]
July 28, 1997
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022-4677
Re: GE Funds
Ladies and Gentlemen:
We have acted as special Massachusetts counsel to GE Funds, a
Massachusetts business trust (the "Trust"), in connection with the Trust's
Registration Statement on Form N-14 filed with the Securities and Exchange
Commission on June 6, 1997 (the "Original Filing"), as such Registration
Statement is proposed to be amended by Pre-Effective Amendment No. 1 filed with
the Securities and Exchange Commission on or about July 28, 1997 ("Amendment No.
1") (as proposed to be amended, the "Registration Statement"), with respect to
the shares of beneficial interest, par value $.001 per share (the "Shares") of
its series GE Short-Term Government Fund, GE Government Securities Fund, GE
Tax-Exempt Fund, GE Value Equity Fund and GE Mid-Cap Growth Fund (each, an
"Acquiring Fund") to be issued in exchange for all or substantially all of the
assets of, respectively, Investors Trust Adjustable Rate Fund, Investors Trust
Government Fund, Investors Trust Tax Free Fund, Investors Trust Value Fund and
Investors Trust Growth Fund, each a series of Investors Trust, a Massachusetts
business trust (each, an "Acquired Fund") as described in the Registration
Statement. You have requested that we deliver this opinion to you, as special
counsel to the Trust, for use by you in connection with your opinion to the
Trust with respect to the Shares.
In connection with the furnishing of this opinion, we have examined the
following 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 (the "Declaration");
<PAGE>
Willkie Farr & Gallagher
July 28, 1997
Page 2
(c) a copy of each Instrument Evidencing Establishment and
Designation of Series of the Trust on file with the office of the
Secretary of State of the Commonwealth of Massachusetts (the
"Designation of Series");
(d) a copy of each Establishment and Designation of
Classes of the Trust on file with the office of the Secretary of
State of the Commonwealth of Massachusetts (the "Designation of
Classes");
(e) a certificate executed by an appropriate officer of the
Trust, certifying as to, and attaching copies of, the Trust's
Declaration, Designation of Series, Designation of Classes, By-Laws,
and certain resolutions adopted by the Trustees of the Trust;
(f) a conformed copy of the Original Filing;
(g) a printer's proof dated July 18, 1997 of Amendment No. 1;
and
(h) a copy of the Agreement and Plan of Reorganization entered
into by the Trust, on behalf of each of the Acquiring Funds, providing
for (a) the acquisition by each Acquiring Fund of all or substantially
all of the assets of the corresponding Acquired Fund in exchange for
the Shares and the Acquiring Fund's assumption of certain of the
liabilities of the corresponding Acquired Fund and (b) the pro rata
distribution of the Shares to the holders of the shares of the
corresponding Acquired Fund in liquidation of the Acquired Funds, in
the form included in the printer's proof referred to in paragraph (g)
above (the "Agreement and Plan of Reorganization").
In such examination, we have assumed the genuineness of all signatures,
the conformity to the originals of all of the documents reviewed by us as
copies, including conformed 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. We have assumed that
Amendment No. 1 to the Registration Statement as filed with the Securities and
Exchange Commission will be in substantially the form of the printer's proof
referred to in paragraph (g) above, and that the Agreement and Plan of
Reorganization has been duly completed, executed and delivered by the parties
thereto in substantially the form of the copy referred to in paragraph (h)
above.
This opinion is based entirely on our review of the documents listed
above and such investigation of law as we have deemed necessary or appropriate.
We have made no
<PAGE>
Willkie Farr & Gallagher
July 28, 1997
Page 3
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 internal substantive laws of the
Commonwealth of Massachusetts as applied by courts located in such Commonwealth,
to the extent that same may apply to or govern the transactions covered by this
opinion, except that we express no opinion as to any Massachusetts securities
law.
We understand that all of the foregoing assumptions and limitations are
acceptable to you.
Based upon and subject to the foregoing, please be advised that it is
our opinion that:
1. The Trust is duly organized and existing under the Trust's
Declaration and the laws of the Commonwealth of Massachusetts as a voluntary
association with transferable shares of beneficial interest commonly referred to
as a "Massachusetts business trust."
2. The Shares, when issued and sold in accordance with the Trust's
Declaration and By-Laws and for the consideration described in the Agreement and
Plan of Reorganization, will be legally issued, fully paid and non-assessable,
except that, as set forth in the Registration Statement, shareholders of the
Acquiring Fund may under certain circumstances be held personally liable for its
obligations.
We hereby consent to your reliance on this opinion in connection with
your opinion to the Trust with respect to the Shares, to the reference to our
name in the Registration Statement under the heading "Legal Matters" and to the
filing of this opinion as an exhibit to the Registration Statement.
Very truly yours,
/s/ BINGHAM, DANA & GOULD LLP
BINGHAM, DANA & GOULD LLP
<PAGE>
[WILLKIE FARR & GALLAGHER LETTERHEAD]
July 28, 1997
Investors Trust
Two Union Square
601 Union Street
Suite 5600
Seattle, Washington 98101-2336
Ladies and Gentlemen:
You have asked us for our opinion concerning certain federal income tax
consequences to (a) GE Short-Term Government Fund, GE Government Securities
Fund, GE Tax-Exempt Fund, GE Value Equity Fund, and GE Mid-Cap Growth Fund (each
an "Acquiring Fund," and, together, the "Acquiring Funds"), each of which is a
series of GE Funds, (b) Investors Trust Adjustable Rate Fund, Investors Trust
Government Fund, Investors Trust Tax Free Fund, Investors Trust Value Fund, and
Investors Trust Growth Fund (each an "Acquired Fund," and, together, the
"Acquired Funds"), each of which is a series of Investors Trust, and (c) holders
of shares of beneficial interest in each Acquired Fund (the "Acquired Fund
Shareholders") when the holders of Class A shares and Class B shares in each
Acquired Fund receive Class A shares and Class B shares in the corresponding
Acquiring Fund, respectively (all such shares of each Acquiring Fund referred to
hereinafter as the "Acquiring Fund Shares"), in liquidation of their interests
in the relevant Acquired Fund pursuant to an acquisition by each Acquiring Fund
of all or substantially all of the assets of the corresponding Acquired Fund in
exchange for the Acquiring Fund Shares and the assumption by each such Acquiring
Fund of scheduled liabilities of the corresponding Acquired Fund and the
subsequent liquidation of each Acquired Fund and distribution in liquidation of
the Acquiring Fund Shares to the Acquired Fund Shareholders (the
"Reorganizations"), all pursuant to an agreement and plan of reorganization (the
"Plan of Reorganization").
We have reviewed such documents and materials as we have considered necessary
for the purpose of rendering this opinion. In rendering this opinion, we assume
that such documents as yet unexecuted will, when executed, conform in all
material respects to the proposed forms of such documents that we have examined.
In addition, we assume the genuineness of all signatures, the capacity of each
party executing a document so to execute that document, the authenticity of all
documents submitted to us as originals and the conformity to original documents
of all documents submitted to us as certified or photostatic copies.
<PAGE>
We have made inquiry as to the underlying facts which we considered to be
relevant to the conclusions set forth in this letter. The opinions expressed in
this letter are based upon certain factual statements relating to the Acquired
Funds and the Acquiring Funds set forth in the Registration Statement on Form
N-14 (the "Registration Statement") filed by GE Funds on behalf of the Acquiring
Funds with the Securities and Exchange Commission and representations that
will be made in letters from the Acquired Funds and the Acquiring Funds
addressed to us for our use in rendering a final opinion. We have no reason to
believe that these representations and facts will not be valid, but we have not
attempted and will not attempt to verify independently any of these
representations and facts, and this opinion is based upon the assumption that
each of them is accurate. This opinion is also based on the assumptions that (i)
transactions between an Acquiring Fund and an "affiliate" (as such term is
defined in the Investment Company Act of 1940, as amended (the "Act")) involving
the purchase or sale of securities will satisfy the requirements of Rule
17a-7(b) under the Act, and (ii) all other transactions by an Acquiring Fund
involving the purchase or sale of securities will be made for fair value, as
determined in accordance with Section 2(a)(41) of the Act. Based on information
received from the Acquired Funds and the Acquiring Funds, we have no reason to
believe that we will not be able to render this opinion as a final opinion at
the Closing. Capitalized terms used herein and not otherwise defined shall have
the meaning given them in the Registration Statement.
The conclusions expressed herein are based upon the Internal Revenue Code of
1986 (the "Code"), Treasury regulations issued thereunder, published rulings and
procedures of the Internal Revenue Service and judicial decisions, all as in
effect on the date of this letter.
Based upon the foregoing, it is our opinion that:
(1) The transfer of all or substantially all of each Acquired Fund's assets in
exchange for shares of the corresponding Acquiring Fund and the assumption by
the corresponding Acquiring Fund of scheduled liabilities of the Acquired Fund
will constitute a "reorganization" within the meaning of Section 368(a)(1)(D) of
the Code, and each Acquired Fund and its corresponding Acquiring Fund is a
"party to a reorganization" within the meaning of Section 368(b) of the Code.
(2) No gain or loss will be recognized by any Acquiring Fund upon the receipt
of the assets of its corresponding Acquired Fund in exchange for Acquiring Fund
Shares and the assumption by the Acquiring Fund of certain scheduled liabilities
of the corresponding Acquired Fund.
(3) No gain or loss will be recognized by any Acquired Fund upon the transfer
of its assets in exchange for shares of its corresponding Acquiring Fund and the
assumption by that Acquiring
<PAGE>
Fund of certain scheduled liabilities of the relevant Acquired Fund or upon the
distribution (whether actual or constructive) of Acquiring Fund Shares to
Acquired Fund Shareholders.
(4) No gain or loss will be recognized by the Acquired Fund Shareholders upon
the exchange of their shares of the relevant Acquired Fund for shares of the
corresponding Acquiring Fund.
(5) The aggregate tax basis of Acquiring Fund Shares received by each Acquired
Fund Shareholder pursuant to a Reorganization will be the same as the aggregate
tax basis of the shares of the Acquired Fund surrendered therefor, and the
holding period of the Acquiring Fund Shares to be received by each Acquired Fund
Shareholder will include the period during which the shares of the Acquired Fund
exchanged therefor were held by such Acquired Fund Shareholder (provided the
shares of the Acquired Fund were held as capital assets on the date of the
Reorganization).
(6) The tax basis to each Acquiring Fund of the relevant Acquired Fund's assets
acquired in the respective Reorganization will be the same as the tax basis of
such assets to the relevant Acquired Fund immediately prior to the
Reorganization, and the holding period of the assets of the Acquired Fund
acquired in the Reorganization will include the period during which those assets
were held by the Acquired Fund.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name and any reference to our firm
in the Registration Statement or in the Prospectus/Proxy Statement constituting
a part thereof.
Very truly yours,
<PAGE>
[WILLKIE FARR & GALLAGHER LETTERHEAD]
July 28, 1997
GE Funds
3003 Summer Street
Stamford, Connecticut 06905
Ladies and Gentlemen:
You have asked us for our opinion concerning certain federal income tax
consequences to (a) GE Short-Term Government Fund, GE Government Securities
Fund, GE Tax-Exempt Fund, GE Value Equity Fund, and GE Mid-Cap Growth Fund (each
an "Acquiring Fund," and, together, the "Acquiring Funds"), each of which is a
series of GE Funds, (b) Investors Trust Adjustable Rate Fund, Investors Trust
Government Fund, Investors Trust Tax Free Fund, Investors Trust Value Fund, and
Investors Trust Growth Fund (each an "Acquired Fund," and, together, the
"Acquired Funds"), each of which is a series of Investors Trust, and (c) holders
of shares of beneficial interest in each Acquired Fund (the "Acquired Fund
Shareholders") when the holders of Class A shares and Class B shares in each
Acquired Fund receive Class A shares and Class B shares in the corresponding
Acquiring Fund, respectively (all such shares of each Acquiring Fund referred to
hereinafter as the "Acquiring Fund Shares"), in liquidation of their interests
in the relevant Acquired Fund pursuant to an acquisition by each Acquiring Fund
of all or substantially all of the assets of the corresponding Acquired Fund in
exchange for the Acquiring Fund Shares and the assumption by each such Acquiring
Fund of scheduled liabilities of the corresponding Acquired Fund and the
subsequent liquidation of each Acquired Fund and distribution in liquidation of
the Acquiring Fund Shares to the Acquired Fund Shareholders (the
"Reorganizations"), all pursuant to an agreement and plan of reorganization (the
"Plan of Reorganization").
We have reviewed such documents and materials as we have considered necessary
for the purpose of rendering this opinion. In rendering this opinion, we assume
that such documents as yet unexecuted will, when executed, conform in all
material respects to the proposed forms of such documents that we have examined.
In addition, we assume the genuineness of all signatures, the capacity of each
party executing a document so to execute that document, the authenticity of all
documents submitted to us as originals and the conformity to original documents
of all documents submitted to us as certified or photostatic copies.
We have made inquiry as to the underlying facts which we considered to be
relevant to the conclusions set forth in this
<PAGE>
letter. The opinions expressed in this letter are based upon certain factual
statements relating to the Acquired Funds and the Acquiring Funds set forth in
the Registration Statement on Form N-14 (the "Registration Statement") filed by
GE Funds on behalf of the Acquiring Funds with the Securities and Exchange
Commission and representations that will be made in letters from the Acquired
Funds and the Acquiring Funds addressed to us for our use in rendering a final
opinion. We have no reason to believe that these representations and facts
will not be valid, but we have not attempted and will not attempt to verify
independently any of these representations and facts, and this opinion is based
upon the assumption that each of them is accurate. This opinion is also based on
the assumptions that (i) transactions between an Acquiring Fund and an
"affiliate" (as such term is defined in the Investment Company Act of 1940, as
amended (the "Act")) involving the purchase or sale of securities will satisfy
the requirements of Rule 17a-7(b) under the Act, and (ii) all other transactions
by an Acquiring Fund involving the purchase or sale of securities will be made
for fair value, as determined in accordance with Section 2(a)(41) of the Act.
Based on information received from the Acquired Funds and the Acquiring Funds,
we have no reason to believe that we will not be able to render this opinion as
a final opinion at the Closing. Capitalized terms used herein and not otherwise
defined shall have the meaning given them in the Registration Statement.
The conclusions expressed herein are based upon the Internal Revenue Code of
1986 (the "Code"), Treasury regulations issued thereunder, published rulings and
procedures of the Internal Revenue Service and judicial decisions, all as in
effect on the date of this letter.
Based upon the foregoing, it is our opinion that:
(1) The transfer of all or substantially all of each Acquired Fund's assets in
exchange for shares of the corresponding Acquiring Fund and the assumption by
the corresponding Acquiring Fund of scheduled liabilities of the Acquired Fund
will constitute a "reorganization" within the meaning of Section 368(a)(1)(D) of
the Code, and each Acquired Fund and its corresponding Acquiring Fund is a
"party to a reorganization" within the meaning of Section 368(b) of the Code.
(2) No gain or loss will be recognized by any Acquiring Fund upon the receipt
of the assets of its corresponding Acquired Fund in exchange for Acquiring Fund
Shares and the assumption by the Acquiring Fund of certain scheduled liabilities
of the corresponding Acquired Fund.
(3) No gain or loss will be recognized by any Acquired Fund upon the transfer
of its assets in exchange for shares of its corresponding Acquiring Fund and the
assumption by that Acquiring Fund of certain scheduled liabilities of the
relevant Acquired
<PAGE>
Fund or upon the distribution (whether actual or constructive) of Acquiring Fund
Shares to Acquired Fund Shareholders.
(4) No gain or loss will be recognized by the Acquired Fund Shareholders upon
the exchange of their shares of the relevant Acquired Fund for shares of the
corresponding Acquiring Fund.
(5) The aggregate tax basis of Acquiring Fund Shares received by each Acquired
Fund Shareholder pursuant to a Reorganization will be the same as the aggregate
tax basis of the shares of the Acquired Fund surrendered therefor, and the
holding period of the Acquiring Fund Shares to be received by each Acquired Fund
Shareholder will include the period during which the shares of the Acquired Fund
exchanged therefor were held by such Acquired Fund Shareholder (provided the
shares of the Acquired Fund were held as capital assets on the date of the
Reorganization).
(6) The tax basis to each Acquiring Fund of the relevant Acquired Fund's assets
acquired in the respective Reorganization will be the same as the tax basis of
such assets to the relevant Acquired Fund immediately prior to the
Reorganization, and the holding period of the assets of the Acquired Fund
acquired in the Reorganization will include the period during which those assets
were held by the Acquired Fund.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name and any reference to our firm
in the Registration Statement or in the Prospectus/Proxy Statement constituting
a part thereof.
Very truly yours,
<PAGE>
EXHIBIT 14(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference into the
Prospectus/Proxy Statement (the 'Prospectus/Proxy') constituting part of this
Registration Statement on Form N-14 (the 'Registration Statement') of GE Funds
of our report dated November 12, 1996 on 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 reference to our Firm under the heading
'Financial Statements and Experts' in the Prospectus/Proxy.
/s/ Price Waterhouse LLP
- -----------------------------------
PRICE WATERHOUSE LLP
Boston, Massachusetts 02110
July 28, 1997
<PAGE>
EXHIBIT 14(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the following with respect to the Registration Statement on
Form N-14 under the Securities Act of 1933, as amended, of GE Funds, with
respect to the transfer of substantially all assets and liabilities of each
series of Investors Trust.
1. The incorporation by reference of our report dated December 11, 1996
into this Combined Prospectus/Proxy Statement of GE Funds.
2. The reference to our Firm under the heading 'Financial Statements and
Experts' in the aforementioned Combined Prospectus/Proxy Statement of GE Funds.
/s/ Coopers & Lybrand L.L.P.
--------------------------------------
COOPERS & LYBRAND L.L.P.
One Post Office Square
Boston, Massachusetts 02109
July 28, 1997
<PAGE>
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" THE PROPOSAL.
PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN
YOUR PROXY IN THE ENCLOSED ENVELOPE TODAY!
Please detach at perforation before mailing.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
PROXY PROXY
INVESTORS TRUST GROWTH FUND
a separate investment portfolio of
INVESTORS TRUST
THIS PROXY IS BEING SOLICITED BY THE BOARD OF TRUSTEES. The undersigned holder
of shares of the above named Fund, a separate investment portfolio of Investors
Trust, hereby appoints Edward J. Wiles, Jr. and Edward R. McMillan, attorneys
and proxies for the undersigned with full powers of substitution and revocation,
to represent the undersigned and to vote on behalf of the undersigned all shares
of the above named Fund that the undersigned is entitled to vote at the Special
Meeting of Shareholders of the above named Fund to be held at the Tara Stamford
Hotel, 2701 Summer Street, Stamford, Connecticut 06905 on September 15, 1997 at
2:00 p.m. Eastern Time, and any adjournment or adjournments thereof. The
undersigned hereby acknowledges receipt of the Notice of Special Meeting and
Combined Prospectus/Proxy Statement dated July 30, 1997 and hereby instructs
said attorneys and proxies to vote said shares as indicated herein. In their
discretion, the proxies are authorized to vote upon such other business as may
properly come before the Special Meeting. A majority of the proxies present and
acting at the Special Meeting in person or by substitute (or, if only one shall
be so present, then that one) shall have and may exercise all the power and
authority of said proxies hereunder. The undersigned hereby revokes any proxy
previously given.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS ON THIS PROXY CARD. If joint
owners, EITHER may sign this Proxy. When
signing as attorney, executor,
administrator, trustee, guardian or
corporate officer, please give your full
title.
DATE , 1997
-------------------------------
-----------------------------------------
-----------------------------------------
Signature(s) Title(s), if applicable A
<PAGE>
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" THE PROPOSAL.
PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN
YOUR PROXY IN THE ENCLOSED ENVELOPE TODAY!
Please detach at perforation before mailing.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
THIS PROXY, IF PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
SHAREHOLDER AS SIGNED ON THE REVERSE SIDE OF THIS CARD. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR APPROVAL OF THE PROPOSAL. PLEASE MARK YOUR VOTE
BELOW IN BLUE OR BLACK INK. DO NOT USE RED INK. EXAMPLE: /X/
1. To approve the Agreement and Plan of Reorganization dated as of July 24,
1997 providing for (i) the acquisition of all or substantially all of the
assets of Investors Trust Growth Fund ("Growth Fund") by GE Mid-Cap Growth
Fund ("Mid-Cap Growth Fund"), a separate investment portfolio of GE Funds,
in exchange for shares of Mid-Cap Growth Fund and the assumption by GE Funds
on behalf of Mid-Cap Growth Fund of scheduled liabilities of Growth Fund,
(ii) the distribution to shareholders of Growth Fund of such shares of
Mid-Cap Growth Fund in liquidation of Growth Fund and (iii) the subsequent
termination of Growth Fund.
FOR / / AGAINST / / ABSTAIN / /
A
<PAGE>
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" THE PROPOSAL.
PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN
YOUR PROXY IN THE ENCLOSED ENVELOPE TODAY!
Please detach at perforation before mailing.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
PROXY PROXY
INVESTORS TRUST VALUE FUND
a separate investment portfolio of
INVESTORS TRUST
THIS PROXY IS BEING SOLICITED BY THE BOARD OF TRUSTEES. The undersigned holder
of shares of the above named Fund, a separate investment portfolio of Investors
Trust, hereby appoints Edward J. Wiles, Jr. and Edward R. McMillan, attorneys
and proxies for the undersigned with full powers of substitution and revocation,
to represent the undersigned and to vote on behalf of the undersigned all shares
of the above named Fund that the undersigned is entitled to vote at the Special
Meeting of Shareholders of the above named Fund to be held at the Tara Stamford
Hotel, 2701 Summer Street, Stamford, Connecticut 06905 on September 15, 1997 at
2:00 p.m. Eastern Time, and any adjournment or adjournments thereof. The
undersigned hereby acknowledges receipt of the Notice of Special Meeting and
Combined Prospectus/Proxy Statement dated July 30, 1997 and hereby instructs
said attorneys and proxies to vote said shares as indicated herein. In their
discretion, the proxies are authorized to vote upon such other business as may
properly come before the Special Meeting. A majority of the proxies present and
acting at the Special Meeting in person or by substitute (or, if only one shall
be so present, then that one) shall have and may exercise all the power and
authority of said proxies hereunder. The undersigned hereby revokes any proxy
previously given.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS ON THIS PROXY CARD. If joint
owners, EITHER may sign this Proxy. When
signing as attorney, executor,
administrator, trustee, guardian or
corporate officer, please give your full
title.
DATE , 1997
-------------------------------
-----------------------------------------
-----------------------------------------
Signature(s) Title(s), if applicable B
<PAGE>
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" THE PROPOSAL.
PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN
YOUR PROXY IN THE ENCLOSED ENVELOPE TODAY!
Please detach at perforation before mailing.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
THIS PROXY, IF PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
SHAREHOLDER AS SIGNED ON THE REVERSE SIDE OF THIS CARD. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR APPROVAL OF THE PROPOSAL. PLEASE MARK YOUR VOTE
BELOW IN BLUE OR BLACK INK. DO NOT USE RED INK. EXAMPLE: /X/
1. To approve the Agreement and Plan of Reorganization dated as of July 24,
1997 providing for (i) the acquisition of all or substantially all of the
assets of Investors Trust Value Fund ("Value Fund") by GE Value Equity Fund
("Value Equity Fund"), a separate investment portfolio of GE Funds, in
exchange for shares of Value Equity Fund and the assumption by GE Funds on
behalf of Value Equity Fund of scheduled liabilities of Value Fund, (ii) the
distribution to shareholders of Value Fund of such shares of Value Equity
Fund in liquidation of Value Fund and (iii) the subsequent termination of
Value Fund.
FOR / / AGAINST / / ABSTAIN / /
B
<PAGE>
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" THE PROPOSAL.
PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN
YOUR PROXY IN THE ENCLOSED ENVELOPE TODAY!
Please detach at perforation before mailing.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
PROXY PROXY
INVESTORS TRUST TAX FREE FUND
a separate investment portfolio of
INVESTORS TRUST
THIS PROXY IS BEING SOLICITED BY THE BOARD OF TRUSTEES. The undersigned holder
of shares of the above named Fund, a separate investment portfolio of Investors
Trust, hereby appoints Edward J. Wiles, Jr. and Edward R. McMillan, attorneys
and proxies for the undersigned with full powers of substitution and revocation,
to represent the undersigned and to vote on behalf of the undersigned all shares
of the above named Fund that the undersigned is entitled to vote at the Special
Meeting of Shareholders of the above named Fund to be held at the Tara Stamford
Hotel, 2701 Summer Street, Stamford, Connecticut 06905 on September 15, 1997 at
2:00 p.m. Eastern Time, and any adjournment or adjournments thereof. The
undersigned hereby acknowledges receipt of the Notice of Special Meeting and
Combined Prospectus/Proxy Statement dated July 30, 1997 and hereby instructs
said attorneys and proxies to vote said shares as indicated herein. In their
discretion, the proxies are authorized to vote upon such other business as may
properly come before the Special Meeting. A majority of the proxies present and
acting at the Special Meeting in person or by substitute (or, if only one shall
be so present, then that one) shall have and may exercise all the power and
authority of said proxies hereunder. The undersigned hereby revokes any proxy
previously given.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS ON THIS PROXY CARD. If joint
owners, EITHER may sign this Proxy. When
signing as attorney, executor,
administrator, trustee, guardian or
corporate officer, please give your full
title.
DATE , 1997
-------------------------------
-----------------------------------------
-----------------------------------------
Signature(s) Title(s), if applicable C
<PAGE>
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" THE PROPOSAL.
PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN
YOUR PROXY IN THE ENCLOSED ENVELOPE TODAY!
Please detach at perforation before mailing.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
THIS PROXY, IF PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
SHAREHOLDER AS SIGNED ON THE REVERSE SIDE OF THIS CARD. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR APPROVAL OF THE PROPOSAL. PLEASE MARK YOUR VOTE
BELOW IN BLUE OR BLACK INK. DO NOT USE RED INK. EXAMPLE: /X/
1. To approve the Agreement and Plan of Reorganization dated as of July 24,
1997 providing for (i) the acquisition of all or substantially all of the
assets of Investors Trust Tax Free Fund ("Tax Free Fund") by GE Tax-Exempt
Fund ("Tax-Exempt Fund"), a separate investment portfolio of GE Funds, in
exchange for shares of Tax-Exempt Fund and the assumption by GE Funds on
behalf of Tax-Exempt Fund of scheduled liabilities of Tax Free Fund, (ii) the
distribution to shareholders of Tax Free Fund of such shares of Tax-Exempt
Fund in liquidation of Tax Free Fund and (iii) the subsequent termination of
Tax Free Fund.
FOR / / AGAINST / / ABSTAIN / /
C
<PAGE>
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" THE PROPOSAL.
PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN
YOUR PROXY IN THE ENCLOSED ENVELOPE TODAY!
Please detach at perforation before mailing.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
PROXY PROXY
INVESTORS TRUST GOVERNMENT FUND
a separate investment portfolio of
INVESTORS TRUST
THIS PROXY IS BEING SOLICITED BY THE BOARD OF TRUSTEES. The undersigned holder
of shares of the above named Fund, a separate investment portfolio of Investors
Trust, hereby appoints Edward J. Wiles, Jr. and Edward R. McMillan, attorneys
and proxies for the undersigned with full powers of substitution and revocation,
to represent the undersigned and to vote on behalf of the undersigned all shares
of the above named Fund that the undersigned is entitled to vote at the Special
Meeting of Shareholders of the above named Fund to be held at the Tara Stamford
Hotel, 2701 Summer Street, Stamford, Connecticut 06905 on September 15, 1997 at
2:00 p.m. Eastern Time, and any adjournment or adjournments thereof. The
undersigned hereby acknowledges receipt of the Notice of Special Meeting and
Combined Prospectus/Proxy Statement dated July 30, 1997 and hereby instructs
said attorneys and proxies to vote said shares as indicated herein. In their
discretion, the proxies are authorized to vote upon such other business as may
properly come before the Special Meeting. A majority of the proxies present and
acting at the Special Meeting in person or by substitute (or, if only one shall
be so present, then that one) shall have and may exercise all the power and
authority of said proxies hereunder. The undersigned hereby revokes any proxy
previously given.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS ON THIS PROXY CARD. If joint
owners, EITHER may sign this Proxy. When
signing as attorney, executor,
administrator, trustee, guardian or
corporate officer, please give your full
title.
DATE , 1997
-------------------------------
-----------------------------------------
-----------------------------------------
Signature(s) Title(s), if applicable D
<PAGE>
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" THE PROPOSAL.
PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN
YOUR PROXY IN THE ENCLOSED ENVELOPE TODAY!
Please detach at perforation before mailing.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
THIS PROXY, IF PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
SHAREHOLDER AS SIGNED ON THE REVERSE SIDE OF THIS CARD. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR APPROVAL OF THE PROPOSAL. PLEASE MARK YOUR VOTE
BELOW IN BLUE OR BLACK INK. DO NOT USE RED INK. EXAMPLE: /X/
1. To approve the Agreement and Plan of Reorganization dated as of July 24,
1997 providing for (i) the acquisition of all or substantially all of the
assets of Investors Trust Government Fund ("IT Government Fund") by GE
Government Securities Fund ("GE Government Securities Fund"), a separate
investment portfolio of GE Funds, in exchange for shares of GE Government
Securities Fund and the assumption by GE Funds on behalf of GE Government
Securities Fund of scheduled liabilities of IT Government Fund, (ii) the
distribution to shareholders of IT Government Fund of such shares of GE
Government Securities Fund in liquidation of IT Government Fund and (iii) the
subsequent termination of IT Government Fund.
FOR / / AGAINST / / ABSTAIN / /
D
<PAGE>
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" THE PROPOSAL.
PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN
YOUR PROXY IN THE ENCLOSED ENVELOPE TODAY!
Please detach at perforation before mailing.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
PROXY PROXY
INVESTORS TRUST ADJUSTABLE RATE FUND
a separate investment portfolio of
INVESTORS TRUST
THIS PROXY IS BEING SOLICITED BY THE BOARD OF TRUSTEES. The undersigned holder
of shares of the above named Fund, a separate investment portfolio of Investors
Trust, hereby appoints Edward J. Wiles, Jr. and Edward R. McMillan, attorneys
and proxies for the undersigned with full powers of substitution and revocation,
to represent the undersigned and to vote on behalf of the undersigned all shares
of the above named Fund that the undersigned is entitled to vote at the Special
Meeting of Shareholders of the above named Fund to be held at the Tara Stamford
Hotel, 2701 Summer Street, Stamford, Connecticut 06905 on September 15, 1997 at
2:00 p.m. Eastern Time, and any adjournment or adjournments thereof. The
undersigned hereby acknowledges receipt of the Notice of Special Meeting and
Combined Prospectus/Proxy Statement dated July 30, 1997 and hereby instructs
said attorneys and proxies to vote said shares as indicated herein. In their
discretion, the proxies are authorized to vote upon such other business as may
properly come before the Special Meeting. A majority of the proxies present and
acting at the Special Meeting in person or by substitute (or, if only one shall
be so present, then that one) shall have and may exercise all the power and
authority of said proxies hereunder. The undersigned hereby revokes any proxy
previously given.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS ON THIS PROXY CARD. If joint
owners, EITHER may sign this Proxy. When
signing as attorney, executor,
administrator, trustee, guardian or
corporate officer, please give your full
title.
DATE , 1997
-------------------------------
-----------------------------------------
-----------------------------------------
Signature(s) Title(s), if applicable E
<PAGE>
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" THE PROPOSAL.
PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN
YOUR PROXY IN THE ENCLOSED ENVELOPE TODAY!
Please detach at perforation before mailing.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
THIS PROXY, IF PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
SHAREHOLDER AS SIGNED ON THE REVERSE SIDE OF THIS CARD. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR APPROVAL OF THE PROPOSAL. PLEASE MARK YOUR VOTE
BELOW IN BLUE OR BLACK INK. DO NOT USE RED INK. EXAMPLE: /X/
1. To approve the Agreement and Plan of Reorganization dated as of July 24,
1997 providing for (i) the acquisition of all or substantially all of the
assets of Investors Trust Adjustable Rate Fund ("Adjustable Rate Fund") by GE
Short-Term Government Fund ("Short-Term Government Fund"), a separate
investment portfolio of GE Funds, in exchange for shares of Short-Term
Government Fund and the assumption by GE Funds on behalf of Short-Term
Government Fund of scheduled liabilities of Adjustable Rate Fund, (ii) the
distribution to shareholders of Adjustable Rate Fund of such shares of
Short-Term Government Fund in liquidation of Adjustable Rate Fund and (iii)
the subsequent termination of Adjustable Rate Fund.
FOR / / AGAINST / / ABSTAIN / /
E
