<PAGE>
As filed with the Securities and Exchange Commission
on June 24, 1997
Securities Act File No. 33-51308
Investment Company Act File No. 811-7142
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X /
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 21 /X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X /
Amendment No. 23 /X /
(Check appropriate box or boxes)
GE FUNDS
...............................................................
(Exact Name of Registrant as Specified in Charter)
3003 Summer Street
Stamford, Connecticut 06905
.................................................... .......................
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code:
(203) 326-4040
Matthew J. Simpson, Esq.
Vice President, Associate General Counsel & Assistant Secretary
GE Investment Management Incorporated
3003 Summer Street
Stamford, Connecticut 06905
.........................................................
(Name and Address of Agent for Service)
Copies to:
Burton M. Leibert, Esq.
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022-4669
Page 1 of Pages
Exhibit Index at Page __
<PAGE>
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.
It is proposed that this filing will become effective (check appropriate box):
- immediately upon filing pursuant to paragraph (b) [ ]
- on (date) pursuant to paragraph (b) [ ]
- 60 days after filing pursuant to paragraph (a)(1) [ ]
- on (date) pursuant to paragraph (a)(1) of Rule 485 [ ]
- 75 days after filing pursuant to paragraph (a)(2) [ ]
- on September 26, 1997 pursuant to paragraph (a)(2) of Rule 485 [X]
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a previously
filed post-effective amendment. [ ]
An indefinite number of Registrant's shares of beneficial interest have been
registered pursuant to Rule 24f-2 under the Investment Company Act of 1940, as
amended. The Rule 24f-2 Notice for Registrant's fiscal year ended September 30,
1996 was filed on November 19, 1996.
<PAGE>
GE FUNDS
FORM N-1A
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Part A
Item No. Prospectus Heading
- -------- ------------------
<S> <C> <C>
1. Cover Page.................................................... Cover Page
2. Synopsis...................................................... Expense Information
3. Condensed Financial Information............................... Expense Information
4. General Description of Registration........................... Cover Page; The Multiple Distribution
System; Investment Objectives and Management
Policies; Additional Matters; Further
Information: Certain Investment
Techniques and Strategies
5. Management of the Fund........................................ Expense Information;
Investment Objectives and Management
Policies;
Management of the Trust;
Further Information: Certain Investment
Techniques and Strategies
6. Capital Stock and Other Securities............................ Dividends;
Distributions and Taxes;
Additional Matters
7. Purchase of Securities Being offered.......................... Purchase of Shares;
Net Asset Value;
Distributor
8. Redemption or Repurchase...................................... Redemption of Shares
9. Legal Proceedings............................................. Not applicable
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
10. Cover Page.................................................... Cover Page
11. Table of Contents............................................. Contents
12. General Information and History............................... The Funds' Performance
13. Investment Objectives and Policies............................ Investment Objectives and Management
Policies;
Further Information: Certain
Investment Techniques and Strategies
14. Management of the Fund........................................ Management of the Trust
15. Control Persons and Principal Holders of Securities........... Principal Stockholders;
Management of the Trust
See Prospectus--Additional Matters
16. Investment Advisory and Other Services........................ Management of the Trust
17. Brokerage Allocation and Other Practices...................... Investment Restrictions;
Management of the Trust
18. Capital Stock and Other Securities............................ Redemption of Shares
19. Purchase, Redemption and Pricing of Purchase of Shares;
Securities Being Offered............. Redemption of Shares;
Net Asset Value
20. Tax Status.................................................... Dividends, Distributions and Taxes
21. Underwriters.................................................. Not Applicable
22. Calculation of Performance Data............................... The Funds' Performance
23. Financial Statements.......................................... Independent Accountants;
Financial Statements
</TABLE>
Part C
- ------
Information required to be included in Part C is set forth
after the appropriate item, so numbered, in Part C to this Registration
Statement.
<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.
<PAGE>
Subject to Completion, dated June 24, 1997
Prospectus
September 26, 1997
GE FUNDS
GE Funds (the "Trust") is an open-end management investment company that offers
a selection of diversified managed investment funds (each a "Fund" and
collectively the "Funds"), each having a distinct investment objective that it
seeks by following distinct investment policies. The Trust is currently
comprised of 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:
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.
GE U.S. Equity Fund's investment objective is long-term growth of
capital which the Fund seeks to achieve through investment primarily
in equity securities of U.S. companies.
GE 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.
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.
GE Global Equity Fund's investment objective is long-term growth of
capital which the Fund seeks to achieve by investing primarily in
foreign equity securities.
GE International Equity Fund's investment objective is long-term growth
of capital which the Fund seeks to achieve by investing primarily in
foreign equity securities.
GE Strategic Investment Fund's investment objective is to maximize total
return which the Fund seeks to achieve by following an asset
allocation strategy contemplating shifts among a range of investments.
GE Tax-Exempt Fund's investment objective is to 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.
GE Fixed Income Fund's investment objective is to seek maximum income
consistent with prudent investment management and the preservation of
capital, which objective the Fund seeks to achieve by investing in
fixed income securities.
GE 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.
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).
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.
<PAGE>
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.
<PAGE>
TABLE OF CONTENTS
Expense Information............................................................1
Financial Highlights...........................................................7
Performance...................................................................18
The Multiple Distribution System..............................................21
Investment Objectives and Management Policies.................................22
Management of the Trust.......................................................44
Purchase of Shares............................................................48
Retirement Plans..............................................................54
Redemption of Shares..........................................................54
Exchange Privilege............................................................59
Net Asset Value...............................................................60
Dividends, Distributions and Taxes............................................61
Custodian and Transfer Agent..................................................63
Distributor...................................................................63
Performance Calculation.......................................................63
Further Information:
Certain Investment Techniques And Strategies.........................67
Additional Matters............................................................73
3003 Summer Street
Stamford, Connecticut 06905
(203)326-4040
i
<PAGE>
EXPENSE INFORMATION
The purpose of the following table is to assist an investor in understanding the
expenses that an investor in the Funds will bear directly or indirectly, based
upon the maximum sales charge or maximum contingent deferred sales charge that
may be incurred at the time of purchase and redemption and each particular
Fund's operating expenses for the most recent year.
Fee Table
<TABLE>
<CAPTION>
GE GE GE GE GE GE
Premier Growth U.S. Equity Mid-Cap Value Global International
Equity Fund Fund Growth Fund Equity Fund Equity Equity 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% 4.75% 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.
<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 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 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.
2
<PAGE>
<TABLE>
<CAPTION>
GE
Premier GE GE GE
Growth GE Mid-Cap GE Global International
Equity U.S. Equity Growth Value Equity Equity Equity
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:
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 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 6.
3
<PAGE>
<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>
Annual Fund Operating
Expenses
(as a percentage of
average net assets)
Advisory and
Administration fees: .25%
Class A.............. .35% .35% .35% .40% .30%
Class B.............. .35% .35% .35% .40% .30%
Class C.............. .35% .35% .35% .40% .30%
Class D.............. .35% .35% .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% 1.10% 1.05% 1.10% .95%
Class B.............. 1.65% 1.60% 1.55% 1.60% 1.30%
Class C.............. .90% .85% .80% .85% .70%
Class D.............. .65% .60% .55% .60% .45%
</TABLE>
- -----------------
* With respect to 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 6.
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.
4
<PAGE>
Example +
The following example demonstrates the projected dollar amount of total
cumulative expenses that would be incurred over a one-year, three-year,
five-year and ten-year period with respect to a hypothetical investment in each
Fund. These amounts are based upon (1) payment by the Fund of operating expenses
at the levels set out in the table above and (2) the specific assumptions stated
below. 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
GE Government Securities Fund:
Class A................. $53* $76 N/A N/A Same Same N/A N/A
Class B................. $46 $70 N/A N/A $16 $50 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
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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 of Investors Trust 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>
GE Premier Growth Equity Fund.............13.77% 14.68% 2.15% 1.18%
GE U.S. Equity Fund.......................1.11% 1.83% .92% .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.....................3.41% 3.36% 1.45% 1.10%
GE International Equity Fund..............1.60% 4.29% 1.51% 1.10%
GE Strategic Investment Fund..............1.15% 1.88% .91% .65%
GE Tax-Exempt Fund........................2.29% 1.94% 1.19% .90%
GE Fixed Income Fund......................1.13% 2.13% .92% .60%
GE Government Securities Fund.............1.10% 1.60% 2.50% 2.50%
GE Short-Term Government Fund.............2.76% 7.28% 1.10% .72%
GE Money Market Fund.......................58% N/A N/A N/A
</TABLE>
6
<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 year or period 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. As of the date of
this Prospectus, 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
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 D shares, no financial highlights are presented
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
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 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. 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.
<TABLE>
<CAPTION>
Class A Class B Class C Class D
GE Premier Growth Equity Fund 3/31/97 3/31/97 3/31/97 3/31/97
(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 (0.71) (0.73) (0.70) (0.69)
operations _____ ______ ____ ______
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>
7
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
Class A Class B
----------------------------------------- ---------------------------------------
GE U.S. Equity Fund 3/31/97 3/31/97
(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
</TABLE>
<TABLE>
<CAPTION>
Class C Class D
--------------------------------------------------- --------------------------------------
GE U.S. Equity Fund 3/31/97 3/31/97
(continued) (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........... $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 1.28% 1.66% 2.12% 2.11% 1.86% 1.54% 1.90% 2.36% 2.27%
income*........
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 22% 49% 43% 51% 15% 22% 49% 43% 51%
rate.............
Average brokerage
commissions(d)... $.065 $.045 N/A N/A N/A $.065 $.045 N/A N/A
See notes accompanying financial highlights, page ___.
</TABLE>
8
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
Class A Class B
-------------------------------------------------- -------------------------------------------------
4/30/97 4/30/97
(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>
GE Mid-Cap
Growth Fund
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 $592
of period
(thousands).....
$8,630 $8,222 $5,986 $4,182 $3,261 $27,987 $27,616 $14,311 $5,857
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)% 5.04%
Net expenses* 1.35% 1.35% 1.35% 1.34% 1.39% 2.10% 2.10% 2.10% 2.09% (1.38)%
Gross expenses* 1.48% 1.70% 2.44% 3.53% 4.83% 2.23% 2.41% 3.19% 4.06% 1.86%
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
See notes accompanying financial highlights, page _____.
</TABLE>
<TABLE>
<CAPTION>
Class A Class B
4/30/97 4/30/97
(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
GE Value Equity Fund
<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
See notes accompanying financial highlights, page ____.
</TABLE>
9
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
Class A Class B
GE Global Equity Fund 3/31/97 3/31/97
(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 0.71 2.20 1.22 0.91 0.73 2.14 1.23 1.06
investments........ ---- ---- ---- ---- ---- ---- ---- ----
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
</TABLE>
<TABLE>
<CAPTION>
Class C Class D
GE Global Equity Fund 3/31/97 3/31/97
(continued) (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 $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* 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
See notes accompanying financial highlights, page _____.
</TABLE>
10
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
Class A Class B
GE
International 3/31/97 3/31/97
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 $.002 $.031 N/A N/A $.002 $.031 N/A N/A
commissions(d).....
</TABLE>
<TABLE>
<CAPTION>
Class C Class D
GE
International 3/31/97 3/31/97
Equity Fund (unaudited) 9/30/96(e) 9/30/95 9/30/94 (unaudited) 9/30/96(e) 9/30/95 9/30/94
(continued)
<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 (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% 1.18% 1.43%
Portfolio turnover
rate.. 28% 36% 27% 6% 28% 36% 27% 6%
Average brokerage $.002 $.031 N/A N/A $.002 $.031 N/A N/A
commissions(d).
See notes accompanying financial highlights, page _____.
</TABLE>
11
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
Class A Class B
GE Strategic 3/31/97 3/31/97
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 $32,573 $25,232 $8,778 $1,104 $4,318 $3,701 $882 $150
period (thousands)
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
</TABLE>
<TABLE>
<CAPTION>
Class C Class D
GE Strategic 3/31/97 3/31/97
Investment (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
Fund (continued)
<S> <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
See notes accompanying financial highlights, page _____.
</TABLE>
12
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
Class A Class B
4/30/97 4/30/97
GE Tax-Exempt 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. $11.42 $11.31 $10.59 $11.48 $11.50 $11.44 $11.32 $10.60 $11.48 $11.50
Income from investment
operations:
Net investment income.. 0.31 0.62 0.55 0.45 0.05 0.31 0.62 0.55 0.43 0.06
Net realized and
unrealized gains (losses)
on investments...... (0.05) 0.05 0.73 (0.78) 0.01 (0.05) 0.06 0.73 (0.82) (0.01)
_____ ______ _____ _____ _____ _____ _____ _____ _____ _____
Total income/(loss)
from investment
operations.......... 0.26 0.67 1.28 (0.33) 0.06 0.26 0.68 1.28 (0.39) (0.05)
_____ ______ _____ _____ _____ _____ _____ _____ _____ _____
Less distributions
from:
Net investment income... (0.28) (0.56) (0.55) (0.45) (0.05) (0.28) (0.56) (0.55) (0.43) (0.03)
In excess of net
investment income -- -- (0.01) (0.11) (0.02) -- -- (0.01) (0.06) (0.03)
Tax return of capital... -- -- -- -- (0.01) -- -- -- -- (0.01)
_____ ______ ______ ______ ______ _____ _____ _____ _____ ______
Total distributions..... (0.28) (0.56) (0.56) (0.56) (0.08) (0.28) (0.56) (0.56) (0.49) (0.07)
_____ ______ _____ _____ _____ _____ _____ _____ _____ ______
Net asset value,
end of period....... $11.40 $11.42 $11.31 $10.59 $11.48 $11.42 $11.44 $11.32 $10.60 $11.48
_____ ______ _____ _____ ______ _____ _____ _____ ______ ______
TOTAL RETURN(a)..... 2.26% 6.13% 12.24% (2.99)% 0.54% 2.26% 6.12% 12.33% (3.45)% 0.43%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period
(thousands)....... $16,100 $16,169 $16,025 $14,283 $15,136 $9,037 $9,184 $7,668 $4,990 $1,202
Ratios to average
daily net assets:
Net investment
income* 5.42% 5.42% 5.01% 4.08% 2.73% 5.42% 5.43% 5.01% 3.75% 2.27%
Net expenses* -- -- -- 0.77% 1.15% -- -- -- 1.14% 1.84%
Gross expenses* 1.51% 1.52% 1.81% 1.62% 2.09% 2.26% 2.26% 2.56% 2.30% 2.48%
Portfolio turnover rate* 8.62% 5.76% 24.95% -- -- 8.62% 5.76% 24.95% -- --
See notes accompanying financial highlights, page _____.
</TABLE>
13
<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 $11.62 $11.69 $11.91 $11.27 $11.64 $11.70 $11.91 $11.26
_____ ______ _____ _____ _____ _____ _____ _____
period..............
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%
</TABLE>
<TABLE>
<CAPTION>
Class C Class D
GE Fixed Income 3/31/97 3/31/97
Fund (continued) (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>
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>
See notes accompanying financial highlights, page _____.
14
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
Class A Class B
4/30/97 4/30/97
GE Government Securities (unaudited)10/31/96 10/31/9510/31/94 10/31/93 (unaudited)10/31/96 10/31/95
Fund
<S> <C> <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 $8.42
Income from investment
operations:
Net investment income
(loss).................. 0.28 0.62 0.58 0.70 0.12 0.25 0.55 0.51
Net realized and
unrealized gains
(losses) on investments.. (0.13) (0.22) 0.38 (1.60) (0.18) (0.13) (0.22) 0.41
_____ ______ ______ _____ _____ _____ _____ _____
Total income/(loss) from
investment
operations............... 0.15 0.40 0.96 (0.90) (0.06) 0.12 0.33 0.92
_____ ______ _____ _____ _____ _____ _____ _____
Less distributions from:
Net investment income....... (0.29) (0.54) (0.58) (0.70) (0.12) (0.26) (0.48) (0.52)
Net realized gains.......... -- -- -- (0.03) -- -- -- --
Tax return of capital....... -- (0.08) (0.11) (0.08) -- -- (0.07) (0.11)
_____ ______ _____ _____ _____ ______ ______ _____
Total distributions......... (0.29) (0.62) (0.69) (0.81) (0.12) (0.26) (0.55) (0.63)
_____ ______ _____ _____ _____ _____ ______ _____
Net asset value, end of
period................... $8.34 $8.48 $8.70 $8.43 $10.14 $8.35 $8.49 $8.71
_____ ______ _____ _____ _____ _____ ______ _____
TOTAL RETURN(a).............. 1.79% 4.80% 11.77% (9.17)% (0.60)% 1.40% 4.00% 11.19%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $28,547 $29,090 $26,889 $21,498 $1,470 $608,055 $747,216 $1,112,254
Ratios to average daily
net assets:
Net investment
income*................. 6.81% 6.59% 6.78% 7.09% 6.81% 6.04% 5.77% 6.08%
Net expenses*............. 1.03% 0.90% 1.01% 0.99% 0.95% 1.78% 1.69% 1.76%
Gross expenses*........... 1.03% 0.90% 1.01% 0.99% 0.95% 1.78% 1.69% 1.76%
Portfolio turnover rate*..... 67.58% 334.41% 315.71% 128.82% 75.96% 67.58% 334.41% 315.71%
</TABLE>
<TABLE>
<CAPTION>
Class B (continued)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GE Government Securities 10/31/94 10/31/93 10/31/92 10/31/91 10/31/90 10/31/89 10/31/88 10/31/87
Fund (continued)
Inception date -- -- -- -- -- -- -- 4/22/87
Net asset value, beginning
of period $10.14 $9.95 $9.98 $9.54 $9.70 $9.71 $9.62 $10.00
Income from investment
operations:
Net investment income
(loss)..................... 0.60 0.71 0.73 0.72 0.81 0.88 0.87 0.42
Net realized and
unrealized gains
(losses) on investments. (1.58) 0.20 0.03 0.56 (0.11) (0.01) 0.14 (0.36)
_____ _____ _____ _____ _____ _____ _____ _____
Total income/(loss) from
investment operations.... (0.98) 0.91 0.76 1.28 0.70 0.87 1.01 0.06
_____ _____ _____ _____ _____ _____ _____ _____
Less distributions from:
Net investment income....... (0.60) (0.71) (0.73) (0.72) (0.81) (0.88) (0.87) (0.42)
Net realized gains.......... (0.03) -- (0.06) (0.11) -- -- (0.05) (0.02)
Tax return of capital....... (0.11) -- -- (0.01) (0.05) -- -- --
_____ ______ _____ _____ _____ _____ _____ ______
Total distributions......... (0.74) (0.72) (0.79) (0.84) (0.86) (0.88) (0.92) (0.44)
_____ ______ _____ _____ _____ _____ _____ ______
Net asset value, end of
period $8.42 $10.14 $9.95 $9.98 $9.54 $9.70 $9.71 $9.62
_____ ______ _____ _____ _____ _____ _____ ______
TOTAL RETURN(a)............. (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) $1,252,348 $1,342,597 $785,851 $213,115 $72,261 $56,682 $34,887 $6,844
Ratios to average daily
net assets:
Net investment 6.45% 6.96% 7.08% 7.11% 8.32% 9.17% 9.20% 8.17%
income*................
Net expenses*.................1.76% 1.73% 1.64% 1.81% 1.59% 0.89% 0.50% 0.50%
Gross expenses*...............1.76% 1.73% 1.64% 1.81% 1.95% 2.08% 3.00% 5.75%
Portfolio turnover rate *......128.82% 75.96% 101.31% 111.97% 50.44% 37.23% 66.04% 159.76%
See notes accompanying financial highlights, page _____.
</TABLE>
15
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
Class A Class B
GE Short-Term 3/31/97 3/31/97
Government 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 $11.75 $11.78 $11.91 $11.72 $11.74 $11.78 $11.90 $11.72
______ ______ _____ _____ _____ _____ _____ _____
period..............
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
Ratio 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%
</TABLE>
<TABLE>
<CAPTION>
Class C Class D
GE Short-Term
Government Fund 3/31/97 3/31/97
(continued) (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 5.46% 5.28% 5.62% 5.18% 5.69% 5.54% 5.89% 5.32%
income*...........
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%
See notes accompanying financial highlights, page _____.
</TABLE>
16
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
3/31/97
(unaudited) 9/30/96 9/30/95 9/30/94 9/30/93(c)
GE Money
Market Fund
<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 0.00 0.05 0.05 0.03 0.02
Net realized
gains 0.02 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>
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, start of investment operations, through September 30, 1994.
(c) Per share information is for the period since inception through September
30, 1993, and the total return information is for the period February 22,
1993, start of investment operations, through September 30, 1993, except
for GE Tax-Exempt Fund, which is from February 26, 1993 through September
30, 1993.
(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.
17
<PAGE>
PERFORMANCE
The chart below shows each Fund's historical performance for the referenced
period compared to the historical performance of broad market indexes for the
same time period and of mutual funds (the "Elfun and S&S Funds") and
institutional private accounts having similar objectives for which the
investment adviser is either GEIM or General Electric Investment Corporation
("GEIC" and together with GEIM, "GE Investments"), a sister company of GEIM
wholly-owned by General Electric Company ("GE"). The professionals responsible
for the investment operations of GEIM and the GE Funds serve in similar
capacities with respect to GEIC. The data, calculated on an average annual total
return basis, is provided to illustrate the past performance of GE Investments
in managing accounts substantially similar to the GE Funds. These accounts
consist of separate and distinct portfolios and their performance is not
indicative of or a substitute for the past or future performance of the GE
Funds.
<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>
-- -- -- -- (12/31/96) -- -- (12/31/96)
GE Premier Growth Equity Fund
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
Elfun Trusts 16.78 21.91 16.22 13.50 N/A N/A N/A N/A
S&P 500 Index 19.81 22.30 16.43 13.36 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 12.56 18.98 15.97
(12/22/93) (12/22/93)
Class C 17.49 20.15 -- -- 16.28 N/A N/A N/A
(2/22/93)
Class D 17.71 20.43 -- -- 17.09 N/A N/A N/A
(11/29/93)
U.S. Multi-Style(R) Equity N/A N/A N/A N/A N/A (4/1/91) N/A N/A N/A
Composite
S&P 500 Index 19.81 22.30 16.43 13.36 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 5.36 5.79 5.67 7.11 N/A N/A N/A N/A
Government Bond Index
- ------------------------------ -------- -------- -------- --------- --------------- -------- -------- ---------------
- ------------------------------ -------- -------- -------- --------- --------------- -------- -------- ---------------
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 4.38 7.53 7.72
(12/22/93) (12/22/93)
Class C 9.25 8.62 -- -- 12.43 N/A N/A N/A
(2/22/93)
Class D 9.50 8.90 -- -- 10.66 N/A N/A N/A
(11/29/93)
Elfun Global Fund 10.37 10.06 13.23 -- 11.32 (1/1/88) N/A N/A N/A
Morgan Stanley World Index 9.35 12.79 12.79 8.41 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
International Equity N/A N/A N/A N/A N/A N/A N/A
Composite
Morgan Stanley EAFE Index 1.45 6.53 10.57 6.01 N/A N/A N/A N/A
- ------------------------------ -------- -------- -------- --------- --------------- -------- -------- ---------------
</TABLE>
18
<PAGE>
<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
- ------------------------------ -------- -------- -------- --------- --------------- -------- -------- ---------------
GE Strategic Investment Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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 6.20 13.01 10.61
(12/22/93) (12/22/93)
Class C 10.98 14.08 -- -- 11.39 N/A N/A N/A
(2/22/93)
Class D 11.35 14.40 -- -- 11.97 N/A N/A N/A
(11/29/93)
Elfun Diversified Fund 11.49 14.55 12.22 -- 11.64 (1/1/88) N/A N/A N/A
S&P 500 Index & LB Aggregate
Composite Index 13.85 16.12 12.73 11.31 N/A N/A N/A N/A
- ------------------------------ -------- -------- -------- --------- --------------- -------- -------- ---------------
GE Tax-Exempt Fund
Class C 3.77 2.75 -- -- 3.82 (2/26/93) N/A N/A N/A
Class D 3.95 -- -- -- 3.65 N/A N/A N/A
(11/29/93)
Elfun Tax-Exempt Income Fund 6.15 4.20 7.00 7.64 10.43 (1/1/80) N/A N/A N/A
Lehman Brothers Municipal 6.04 4.78 7.45 7.89 N/A N/A N/A N/A
Bond Index
- ------------------------------ -------- -------- -------- --------- --------------- -------- -------- ---------------
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 1.04 5.19 3.92
(12/22/93) (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 N/A N/A N/A
(11/29/93)
Elfun Income Fund 5.43 7.00 7.37 8.03 N/A N/A N/A N/A
S&S Long Term Interest Fund 5.54 7.14 7.36 8.16 N/A N/A N/A N/A
Lehman Brothers Aggregate
Bond Index 4.91 6.86 7.19 8.23 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
Elfun Money Market Fund 5.21 5.23 4.51 -- 5.13 (6/13/90) N/A N/A N/A
90 Day T-Bill 5.19 5.22 4.41 5.60 N/A N/A N/A N/A
- ------------------------------ -------- -------- -------- --------- --------------- -------- -------- ---------------
<CAPTION>
Average Annual Total Return (in %) (as of 4/30/97)
--------------------------------------------------------------------------------------
Load Adjusted
One Three Five Ten Since One Three Since
Year Year Year Year Inception Year Year Inception
- ------------------------------ -------- -------- -------- --------- --------------- -------- -------- ---------------
-- --
GE Mid-Cap Growth Fund
(Investors Trust Growth Fund)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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 N/A N/A
S&P 500 Index 25.12 24.15 17.11 14.12 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 16.89 N/A N/A N/A N/A N/A
S&P 500 Index 25.12 24.15 17.11 14.12 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 6.36 7.01 -- -- N/A N/A N/A N/A
Bond Index
- ------------------------------ -------- -------- -------- --------- --------------- -------- -------- ---------------
<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
- ----------------- --------- --------- --------- --------- --------- --------- ---------- --------- --------- ---------
GE Government
Securities Fund
(Investors
Trust
Government Fund)
Class A 6.42 4.33 -- -- 2.04 1.63 2.73 -- -- 0.75
(9/8/93) (9/8/93)
Class B 5.70 3.61 4.03 6.51 6.51 0.73 2.76 3.88 6.51 6.51
(4/22/87) (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>
19
<PAGE>
Notes to Performance
The composite performance data shown above for the International Equity
Composite was developed from the aggregate performance of various institutional
private accounts managed on a basis substantially similar to the GE
International Equity Fund; the U.S. Multi-Style(R) Equity Composite was
developed from the aggregate performance of various institutional private
accounts managed on a basis substantially similar to the GE U.S. Equity Fund.
The raw composite performance data was calculated in accordance with recommended
standards of the Association for Investment Management and Research and the
effect of fees was calculated as described below.
Custodial fees and expenses were not deducted from the composite results, but
management fees are reflected as follows: fees of all fee paying accounts were
deducted and, with respect to the non-fee paying GE-affiliated accounts, a
hypothetical fee equal to the highest annual rate that would have been charged
to a comparable fee paying account based on GE Investments' stated fee schedules
was deducted. The fees and expenses deducted from the composite performance data
generally are substantially lower than the expenses incurred by the
corresponding GE Funds and the composite performance figures would have been
lower if they were subject to the higher fees and expenses incurred by the GE
Funds. In addition, the composite performance might have been adversely affected
by the diversification requirements, tax restrictions and investment limitations
to which the GE Funds are subject, if the accounts within each composite had
been regulated as investment companies under the federal securities and tax
laws.
The 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 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.
There are no sales charges or transfer fees, and no redemption fees, imposed on
the Elfun or S&S Long Term Interest Funds' shares. The management fee charged to
these Funds is the reasonable cost, both direct and indirect, incurred in
providing management and advisory services. Consequently, the expenses incurred
by the Elfun and S&S Long Term Interest Funds generally are substantially lower
than those incurred by the corresponding GE Funds and their performance would
have been lower if they were subject to the higher fees and expenses incurred by
the GE Funds. GEIM has voluntarily agreed to reduce or otherwise limit certain
expenses of the GE Funds. Absent these limits, the GE Funds' performance would
have been lower. Also, certain of the results for Elfun Diversified, Elfun
Global, Elfun Money Market Funds and 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 Composite
Index). 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.
20
<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
21
<PAGE>
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.
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.
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.
To the extent that it holds cash or invests in fixed income securities or money
market instruments, the Premier Fund may not fully achieve its investment
objective.
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
22
<PAGE>
U.S. Equity Fund's assets may be invested in foreign securities, excluding, for
purposes of this limitation, 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"). A more
complete description of foreign securities and depositary receipts and the risks
and special considerations applicable to them is included below under "Risk
Factors and Special Considerations" and in "Further Information: Certain
Investment Techniques and Strategies."
In managing the assets of the U.S. Equity Fund, GEIM uses a combination of
"value-oriented" and "growth-oriented" investing. Value-oriented investing
involves seeking securities that may have low price-to-earnings ratios, or high
yields, or that sell for less than intrinsic value as determined by GEIM, or
that appear attractive on a dividend discount model. These securities generally
are sold from the U.S. Equity Fund's portfolio when their prices approach
targeted levels. Growth-oriented investing generally involves buying securities
with above average earnings growth rates at reasonable prices. The U.S. Equity
Fund holds these securities until GEIM determines that their growth prospects
diminish or that they have become overvalued when compared with alternative
investments.
In investing on behalf of the U.S. Equity Fund, GEIM seeks to produce a
portfolio that GEIM believes will have similar characteristics to the S&P 500
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.
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.
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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
securities of a foreign issuer with a class of securities registered with the
SEC 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.
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 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
securities of a foreign issuer with a class of securities registered with the
SEC 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.
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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.
Although, under normal circumstances, the Global Fund invests principally in
securities of issuers located in a number of different countries as described
above, in the event of unstable market, economic, political or currency
conditions outside of the United States, the Fund may assume a temporary
defensive posture and restrict the securities markets in which its assets will
be invested. In that event, the Global Fund may, in seeking to achieve its
objective, invest all or a significant portion of its assets in securities of
the types described above issued by U.S. or Canadian entities.
To the extent that it holds cash or invests in money market instruments, the
Global Fund may not achieve its investment objective of long-term growth of
capital.
GE International Equity Fund
The investment objective of GE International Equity Fund (the "International
Fund") is long-term growth of capital, which the Fund seeks to achieve by
investing primarily in foreign equity securities. The International Fund may
invest in securities of companies and governments located in developed and
developing countries outside the United States. The International Fund may also
invest in securities of foreign issuers in the form of depositary receipts.
Investing in securities issued by foreign companies and governments involves
considerations and potential risks not typically associated with investing in
securities issued by the U.S. Government and U.S. corporations. A more complete
description of foreign securities and depositary receipts and the risks and
special considerations applicable to them is included below under "Risk Factors
and Special Considerations" and in "Further Information: Certain Investment
Techniques and Strategies." The International Fund intends to position itself
broadly among countries and under normal circumstances, at least 65% of the
Fund's assets will be invested in securities of issuers collectively in no fewer
than three different countries. The percentage of the International Fund's
assets invested in particular countries or regions of the world will vary
depending on political and economic conditions. An issuer's domicile or
nationality will be determined by reference to 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.
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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.
To the extent that it holds cash or invests in money market instruments, the
International Fund may not achieve its investment objective of long-term capital
appreciation.
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 securities of a foreign issuer with a
class of securities registered with the SEC 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 depositary receipts are described below under "Risk Factors and Special
Considerations" and in "Further Information: Certain Investment Techniques and
Strategies."
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GEIM has broad latitude in selecting the classes of investments to which the
Strategic Fund's assets are committed. Although the Strategic Fund has the
authority to invest solely in equity securities, solely in debt securities,
solely in money market instruments or in any combination of these classes of
investments, GEIM anticipates that at most times the Fund will be invested in a
combination of equity and debt instruments.
The Strategic Fund's investments are designed to achieve favorable performance
with lower volatility than a fund that invests solely in equity or debt
securities. The weightings of equity and debt holdings for the Strategic Fund
are determined by GEIM at any given time in light of its assessment of the
attractiveness of each market. Although GEIM cannot predict the mix of the
Strategic Fund's investments at any one time, GEIM can delineate certain
situations that can lead to a shift in the mix of the 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 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
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source but not from the general taxing power. Notes are short-term obligations
of issuing municipalities or agencies and are sold in anticipation of a bond
sale, collection of taxes or receipt of other revenues. Municipal Obligations
bear fixed, floating and variable rates of interest. Variations exist in the
security of Municipal Obligations, both within a particular classification and
between classifications. 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, in
the opinion of Brown Brothers Harriman & Co. ("Brown Brothers"), the Fund's
sub-investment adviser, of comparative quality. 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(OMEGA) 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."
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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.
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 4 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.
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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; (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."
30
<PAGE>
Management Policies Common to the Funds
In addition to the investment policies described above, each GE 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. The extent
to which the following management policies are applicable to certain GE 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.
31
<PAGE>
<TABLE>
<CAPTION>
--------------------- ------------- ------------- ------------- -------------- ------------- -------------
Purchasing
Non-Publicly Purchasing and Writing
Reverse Traded and Structured and Writing Securities
Repurchase Repurchase Illiquid and Indexed Securities Index
Fund Agreements Agreements Securities Securities Options Options
--------------------- ------------- ------------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Premier Fund Yes No Yes No Yes Yes
--------------------- ------------- ------------- ------------- -------------- ------------- -------------
U.S. Equity Fund Yes No Yes No Yes Yes
--------------------- ------------- ------------- ------------- -------------- ------------- -------------
Mid-Cap Fund Yes No Yes No Yes Yes
--------------------- ------------- ------------- ------------- -------------- ------------- -------------
Value Fund Yes No Yes No Yes Yes
--------------------- ------------- ------------- ------------- -------------- ------------- -------------
Global Fund Yes No Yes No Yes Yes
--------------------- ------------- ------------- ------------- -------------- ------------- -------------
International Fund Yes No Yes No Yes Yes
--------------------- ------------- ------------- ------------- -------------- ------------- -------------
Strategic Fund Yes No Yes Yes Yes Yes
--------------------- ------------- ------------- ------------- -------------- ------------- -------------
Tax-Exempt Fund Yes Yes Yes No Yes Yes
--------------------- ------------- ------------- ------------- -------------- ------------- -------------
Income Fund Yes No Yes Yes Yes Yes
--------------------- ------------- ------------- ------------- -------------- ------------- -------------
Government Yes Yes Yes Yes Yes Yes
Securities Fund
--------------------- ------------- ------------- ------------- -------------- ------------- -------------
Short-Term Yes No Yes Yes Yes Yes
Government Fund
--------------------- ------------- ------------- ------------- -------------- ------------- -------------
Money Market Fund Yes Yes No No No No
--------------------- ------------- ------------- ------------- -------------- ------------- -------------
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
--------------------- ----------- ------------ ----------- --------------- -------------- ------------ ----------
Maximum
Maximum Investment in Maximum When-Issued
Futures Forward Options Investment in Below-Investment Investment and
and Currency on Investment Grade Debt in Foreign Delayed
Fund Options Transactions Foreign Grade Debt Securities Securities Delivery
on Currencies Securities
Futures
--------------------- ----------- ------------ ----------- --------------- -------------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Premier Fund Yes Yes No 35% 5% 25%* Yes
--------------------- ----------- ------------ ----------- --------------- -------------- ------------ ----------
U.S. Equity Fund Yes Yes Yes 35% 5% 15%* Yes
--------------------- ----------- ------------ ----------- --------------- -------------- ------------ ----------
Mid-Cap Fund Yes Yes Yes 35% (maximum 10% in BB or 35%* Yes
of 25% in BBB B by S&P or
by S&P, Baa Ba or B by
by Moody's or Moody's or
or equivalent) equivalent
--------------------- ----------- ------------ ----------- --------------- -------------- ------------ ----------
Value Fund Yes Yes Yes 35% 5% 35%* Yes
--------------------- ----------- ------------ ----------- --------------- -------------- ------------ ----------
Global Fund Yes Yes Yes 35% 5% No limit Yes
--------------------- ----------- ------------ ----------- --------------- -------------- ------------ ----------
International Fund Yes Yes Yes 35% 5% No limit Yes
--------------------- ----------- ------------ ----------- --------------- -------------- ------------ ----------
Strategic Fund Yes Yes Yes 100% (maximum 10% in BB or 30%* Yes
of 25% in BBB B by S&P or
by S&P or Baa Ba or B by
by Moody's or Moody's or
equivalent) equivalent
--------------------- ----------- ------------ ----------- --------------- -------------- ------------ ----------
Tax-Exempt Fund Yes No No 100% (maximum 5% in debt None Yes
of 10% in BBB downgraded
by S&P or Baa below
by Moody's or investment
equivalent) grade
subsequent
to purchase
--------------------- ----------- ------------ ----------- --------------- -------------- ------------ ----------
Income Fund Yes Yes Yes 100% (maximum 10% in BB or 35%* Yes
of 25% in BBB B by S&P or
by S&P or Baa Ba or B by
by Moody's or Moody's or
equivalent) equivalent
--------------------- ----------- ------------ ----------- --------------- -------------- ------------ ----------
Government Yes Yes Yes 100% (maximum None 35%* Yes
Securities Fund 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 Yes Yes Yes 35% None 35%* Yes
Government Fund
--------------------- ----------- ------------ ----------- --------------- -------------- ------------ ----------
Money Market Fund No No No 100% None None Yes
--------------------- ----------- ------------ ----------- --------------- -------------- ------------ ----------
</TABLE>
* This limitation excludes ADRs and securities of a foreign issuer with a class
of securities registered with the SEC and U.S. Listed Securities and Nasdaq
Traded Securities.
33
<PAGE>
<TABLE>
<CAPTION>
------------------ ---------- ----------- ---------- ------------ ---------- ---------- ----------- -------------
Securities Floating
Securities of Other and
Securities Rule 144A Depositary of Investment Municipal Variable Participation
Fund Lending Securities Receipts Supranational Funds Leases Rate Interests
Agencies Instruments
------------------ ---------- ----------- ---------- ------------ ---------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Premier Fund Yes Yes Yes No Yes No No No
------------------ ---------- ----------- ---------- ------------ ---------- ---------- ----------- -----------
U.S. Equity Fund Yes Yes Yes No No No No No
------------------ ---------- ----------- ---------- ------------ ---------- ---------- ----------- -----------
Mid-Cap Fund Yes Yes Yes No Yes No No No
------------------ ---------- ----------- ---------- ------------ ---------- ---------- ----------- -----------
Value Fund Yes Yes Yes No Yes No No No
------------------ ---------- ----------- ---------- ------------ ---------- ---------- ----------- -----------
Global Fund Yes Yes Yes No Yes No No No
------------------ ---------- ----------- ---------- ------------ ---------- ---------- ----------- -----------
International Yes Yes Yes No Yes No No No
Fund
------------------ ---------- ----------- ---------- ------------ ---------- ---------- ----------- -----------
Strategic Fund Yes Yes Yes Yes Yes Yes Yes Yes
------------------ ---------- ----------- ---------- ------------ ---------- ---------- ----------- -----------
Tax-Exempt Fund Yes Yes No No No Yes Yes Yes
------------------ ---------- ----------- ---------- ------------ ---------- ---------- ----------- -----------
Income Fund Yes Yes Yes Yes Yes No Yes No
------------------ ---------- ----------- ---------- ------------ ---------- ---------- ----------- -----------
Government Yes Yes Yes Yes Yes No Yes No
Securities Fund
------------------ ---------- ----------- ---------- ------------ ---------- ---------- ----------- -----------
Short-Term Yes Yes Yes Yes Yes No Yes No
Government Fund
------------------ ---------- ----------- ---------- ------------ ---------- ---------- ----------- -----------
Money Market Fund Yes Yes No Yes No No Yes No
------------------ ---------- ----------- ---------- ------------ ---------- ---------- ----------- -----------
<CAPTION>
------------------ ----------- ---------- ----------- ---------- ----------- ---------- ---------- --------------
Mortgage Government
Zero Related Stripped Mortgage
Coupon Municipal Securities,Mortgage Asset Dollar Selling
Obligations Obligation Custodial including Related Backed Rolls Short
Fund Components Receipts CMOs Securities Securities Against
the Box
------------------ ----------- ---------- ----------- ---------- ----------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Premier Fund No No No No No No No No
------------------ ----------- ---------- ----------- ---------- ----------- ---------- ---------- -----------
U.S. Equity Fund Yes No No No No No No No
------------------ ----------- ---------- ----------- ---------- ----------- ---------- ---------- -----------
Mid-Cap Fund No No No No No No No Yes
------------------ ----------- ---------- ----------- ---------- ----------- ---------- ---------- -----------
Value Fund No No No No No No No Yes
------------------ ----------- ---------- ----------- ---------- ----------- ---------- ---------- -----------
Global Fund No No No No No No No Yes
------------------ ----------- ---------- ----------- ---------- ----------- ---------- ---------- -----------
International No No No No No No No Yes
Fund
------------------ ----------- ---------- ----------- ---------- ----------- ---------- ---------- -----------
Strategic Fund Yes Yes Yes Yes Yes Yes Yes No
------------------ ----------- ---------- ----------- ---------- ----------- ---------- ---------- -----------
Tax-Exempt Fund Yes Yes Yes No No No No Yes
------------------ ----------- ---------- ----------- ---------- ----------- ---------- ---------- -----------
Income Fund Yes No No Yes Yes Yes Yes No
------------------ ----------- ---------- ----------- ---------- ----------- ---------- ---------- -----------
Government Yes No No Yes Yes Yes Yes Yes
Securities Fund
------------------ ----------- ---------- ----------- ---------- ----------- ---------- ---------- -----------
Short-Term Yes No Yes Yes Yes Yes Yes No
Government Fund
------------------ ----------- ---------- ----------- ---------- ----------- ---------- ---------- -----------
Money Market Fund No No No No No No No No
------------------ ----------- ---------- ----------- ---------- ----------- ---------- ---------- -----------
</TABLE>
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."
34
<PAGE>
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 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
35
<PAGE>
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 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
the Money Market Fund, involves a sale by the Fund of securities that it holds
concurrently with an agreement by the Fund to repurchase the same securities at
an agreed upon price and date. The Money Market Fund uses the proceeds of
reverse repurchase agreements to provide liquidity to meet redemption requests
and to make cash payments of dividends and distributions when the sale of the
Fund's securities is considered to be disadvantageous. Cash, Government
Securities or other liquid assets equal in value to the Money Market Fund's
obligations with respect to reverse repurchase agreements are segregated and
maintained with the Trust's custodian or designated sub-custodian.
Non-publicly Traded and Illiquid Securities. 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 the option
plus the related transaction costs. The
- --------
* As used in this Prospectus, the term "Investment Manager" shall refer to
GEIM or Brown Brothers, as applicable.
36
<PAGE>
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
37
<PAGE>
Fund has written a securities index option, it may terminate its obligation by
effecting a closing purchase transaction, which is accomplished by purchasing an
option of the same series as the option previously written.
Futures and Options on Futures. Each Fund, other than the Money Market Fund, may
enter into interest rate, financial and stock or bond index futures contracts or
related options that are traded on a U.S. or foreign exchange or board of trade
approved by the Commodity Futures Trading Commission or in the over-the-counter
market. If entered into, these transactions will be made solely for the purpose
of hedging against the effects of changes in the value of portfolio securities
due to anticipated changes in interest rates and/or market conditions, to gain
market exposure for accumulating and residual cash positions, for duration
management, or when the transactions are economically appropriate to the
reduction of risks inherent in the management of the Fund involved. No Fund will
enter into a transaction involving futures and options on futures for
speculative purposes.
A Fund may not enter into futures and options contracts for which aggregate
initial margin deposits and premiums paid for unexpired options exceed 5% of the
fair market value of the Fund's total assets, after taking into account
unrealized losses or profits on futures contracts or options on futures
contracts into which it has entered. The current view of the SEC staff is that a
Fund's long and short positions in futures contracts as well as put and call
options on futures written by it must be collateralized with cash or other
liquid assets and segregated with the Trust's custodian or a designated
sub-custodian or "covered" in a manner similar to that for covered options on
securities (see "Strategies Available to Some But Not All Funds--Covered Option
Writing" in the Statement of Additional Information) and designed to eliminate
any potential leveraging.
An interest rate futures contract provides for the future sale by one party and
the purchase by the other party of a specified amount of a particular financial
instrument (debt security) at a specified price, date, time and place. Financial
futures contracts are contracts that obligate the holder to deliver (in the case
of a futures contract that is sold) or receive (in the case of a futures
contract that is purchased) at a future date a specified quantity of a financial
instrument, specified securities, or the cash value of a securities index. A
municipal bond index futures contract is based on an index of long-term,
tax-exempt municipal bonds and a corporate bond index futures contract is based
on an index of corporate bonds. Stock index futures contracts are based on
indexes that reflect the market value of common stock of the companies included
in the indexes. An index futures contract is an agreement pursuant to which two
parties agree to take or make delivery of an amount of cash equal to the
difference between the value of the index at the close of the last trading day
of the contract and the price at which the index contract was originally
written. An option on an interest rate or index futures contract generally gives
the purchaser the right, in return for the premium paid, to assume a position in
a futures contract at a specified exercise price at any time prior to the
expiration date of the option.
Forward Currency Transactions. 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 of these Funds, other than the Premier Fund, may
engage in currency exchange transactions to protect against uncertainty in the
level of future exchange rates between a particular foreign currency and the
U.S. dollar or between foreign currencies in which the Fund's securities are or
may be denominated. No Fund will enter into forward currency transactions for
speculative purposes. Forward currency contracts are agreements to exchange one
currency for another at a future date. The date (which may be any agreed-upon
fixed number of days in the future), the amount of currency to be exchanged and
the price at which the exchange will take place will be negotiated and fixed for
the term of the contract at the time that a Fund enters into the contract.
Forward currency contracts (1) are traded in a market conducted directly between
currency traders (typically, commercial banks or other financial institutions)
and their customers, (2) generally have 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
38
<PAGE>
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.
Options on Foreign Currencies. Each Fund, other than 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 Tax-Exempt 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% (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 (except the Tax-Exempt Fund) will not
make any additional investments.
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. 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
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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 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 March 31,
1997, in excess of $58 billion. An investment in shares of any Fund, however,
should not be considered to be a complete investment program.
Debt Instruments. A debt instrument held by a Fund will be affected by general
changes in interest rates that will in turn result in increases or decreases in
the market value of those obligations. The market value of debt instruments in a
Fund's portfolio can be expected to vary inversely to changes in prevailing
interest rates. In periods of declining interest rates, the yield of a Fund
holding a significant amount of debt instruments will tend to be somewhat higher
than prevailing market rates, and in periods of rising interest rates, the
Fund's yield will tend to be somewhat lower. In addition, when interest rates
are falling, money received by such a Fund from the continuous sale of its
shares will likely be invested in portfolio instruments producing lower yields
than the balance of its portfolio, thereby reducing the Fund's current yield. In
periods of rising interest rates, the opposite result can be expected to occur.
Certain Investment Grade Obligations. Although obligations rated BBB by S&P or
Baa by Moody's are considered investment grade, they may be viewed as being
subject to greater risks than other investment grade obligations. Obligations
rated BBB by S&P are regarded as having only an adequate capacity to pay
principal and interest and those rated Baa by Moody's are considered
medium-grade obligations that lack outstanding investment characteristics and
have speculative characteristics as well.
Low-rated Securities. Certain Funds are authorized to invest in securities rated
lower than investment grade (sometimes referred to as "junk bonds"). Low-rated
and comparable unrated securities (collectively referred to as "low-rated"
securities) likely have quality and protective characteristics that, in the
judgment of a rating organization, are outweighed by large uncertainties or
major risk exposures to adverse conditions, and are predominantly speculative
with respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. Securities in the lowest rating
categories may be in default or may present substantial risks of default.
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
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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 the Money Market Fund may decline below the price of the
securities the Fund has sold but is obligated to repurchase under the agreement.
In the event the buyer of securities under a reverse repurchase agreement files
for bankruptcy or becomes insolvent, the Money Market Fund's use of the proceeds
of the agreement may be restricted pending a determination by the party, or its
trustee or receiver, whether to enforce the Fund's obligation to repurchase the
securities.
Warrants. Because a warrant, which is a security permitting, but not obligating,
its holder to subscribe for another security, does not carry with it the right
to dividends or voting rights with respect to the securities that the warrant
holder is entitled to purchase, and because a warrant does not represent any
rights to the assets of the issuer, a warrant may be considered more speculative
than certain other types of investments. In addition, the value of a warrant
does not necessarily change with the value of the underlying security and a
warrant ceases to have value if it is not exercised prior to its expiration
date. The investment by a Fund in warrants valued at the lower of cost or
market, may not exceed 5% of the value of the Fund's net assets. 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,
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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.
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
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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
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
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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.
MANAGEMENT OF THE TRUST
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.
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Investment Adviser and Administrator
GEIM, located at 3003 Summer Street, P.O. Box 7900 Stamford, Connecticut 06904,
serves as the investment adviser and administrator of each Fund. GEIM, which was
formed under the laws of Delaware in 1988, is a wholly-owned subsidiary of GE
and is a registered investment adviser under the Investment Advisers Act of
1940, as amended.
GEIM has served as the investment adviser of the 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, 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 March 31, 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 dated September 26, 1997, GEIM has
delegated to Brown Brothers its investment advisory responsibilities with
respect to the Tax-Exempt Fund. Accordingly, Brown Brothers periodically
consults 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 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"
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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)
The Tax-Exempt Fund's sub-adviser, Brown Brothers, located at 59 Wall Street,
New York, New York 10005, has been retained by GEIM to act as sub-investment
adviser of the Fund under a sub-investment advisory contract with GEIM. Brown
Brothers managed total assets in excess of $25 billion as of March 31, 1997.
Overall portfolio management strategy for the Tax-Exempt Fund is determined by
Brown Brothers. As sub-investment adviser, Brown Brothers is 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 receives 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 leads a team of portfolio managers for the Value Fund and has
served in that capacity since the commencement of the Fund's operations. He has
more than 36 years of investment experience and has held positions with GE
Investments since 1985. Mr. Hathaway is currently a Senior Vice President of GE
Investments.
Ralph R. Layman 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 has also been
responsible for the management of the international equity-related investments
of the Strategic Fund since 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 those Funds since the
commencement of their operations. He has more than 13 years investment
experience and has held positions with GE Investments since 1986. Mr. MacDougall
is currently a Director and Executive Vice President of GE Investments.
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Elaine G. Harris is the Portfolio Manager of the Mid-Cap Fund and has served in
that capacity since 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.
Michael J. Solecki has been the Co-Portfolio Manager of the Global Fund since
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, serves as the Tax-Exempt
Fund's portfolio manager. 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
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<PAGE>
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
and its payment terms on a continuing basis and in doing so considers all
relevant factors, including the types and extent of Shareholder Services and
Selling Services provided by GEIM and/or Service Providers and amounts GEIM
and/or Service Providers receive under the Plans.
PURCHASE OF SHARES
General
Fund shares are sold on a continuous basis by the Distributor. A purchase order
will be processed at the net asset value next determined with respect to the
Class of shares of the Participant Fund (or shares of the Money Market Fund)
being purchased after your purchase order (or your wire, if applicable) has been
received and accepted by State Street Bank and Trust Company ("State Street"),
the Trust's custodian and transfer agent. For a description of the manner of
calculating a Fund's net asset value, see "Net Asset Value."
The minimum initial investment in the Money Market Fund or in a Class of a
Participant Fund is $500 (or $250 in the case of individual retirement accounts
("IRAs")) and the minimum for subsequent investments is $100. The minimum for
any purchase by payroll deduction (including initial investment) is $25 per
month. Purchase orders for shares of a Fund will be accepted by the Trust only
on a day on which the Fund's net asset value is calculated. See "Net Asset
Value" below. The Trust may in its discretion reject any order for the purchase
of shares of a Fund. For the convenience of shareholders and in the interest of
economy, the Trust will not issue physical certificates representing shares in
any Fund.
Shares of the Funds may be purchased directly from the Distributor or through
authorized broker-dealers, financial institutions or investment advisers which
have entered into sales agreements with the Distributor ("Authorized Firms"), as
follows:
Through Authorized Firms. Initial purchases of shares through Authorized Firms
should be made with the assistance of a sales representative (a "Sales
Representative"). Subsequent investments may be made with a Sales Representative
or mailed directly to the Trust. When making subsequent investments directly to
the Trust, make your check payable to 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.
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<PAGE>
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 8309
Boston, MA 02266-8325
For overnight package delivery:
GE Funds
c/o Boston Financial Data Services Inc.
Two Heritage Drive
Quincy, MA 02171
Investors should send all account information and instructions that are
accompanied by a check payable to GE Funds in payment for shares to the Trust. A
purchase of shares of a Fund will be effected in accordance with a completed
order at the Fund's net asset value next determined after receipt. If the check
used for the purchase does not clear, the Trust will cancel the purchase and the
investor may be liable for losses or fees incurred. Checks are accepted subject
to collection at full face value in U.S. funds and must be drawn on a U.S. bank.
Investors may obtain an account application necessary to open an account by
telephoning the Trust at the applicable toll free number listed on the back
cover of the Prospectus or by writing to the Trust, at:
GE Funds
P.O. Box 120065
Stamford, CT 06912-0065
For overnight package delivery:
GE Funds
c/o Boston Financial Data Services Inc.
Two Heritage Drive
Quincy, MA 02171
By Wire. Purchase orders for shares of a Fund may be transmitted by wire. Wire
orders will not be accepted until a completed account application in proper form
has been received by the Trust at the address set forth above. After the Trust
receives an application, an investor should then wire Federal funds (minimum
$1,000) to: State Street Bank and Trust Company (ABA #0110-0002-8; DDA No.
9904-641-9) For: [Name of Fund] Account of:
[Investor's name, address and account number].
If a wire is received by the close of regular trading on the NYSE (currently
4:00 p.m. New York time), the shares will be priced according to the net asset
value of the Fund on that day. If a wire is received after the close of regular
trading on the NYSE, the shares will be priced as of the time the Fund's net
asset value per share is next determined. Payment for orders that are not
accepted will be returned to the prospective investor promptly.
By Direct Deposit Privilege. The Trust offers a Direct Deposit Privilege (the
"Privilege"), which enables investors to purchase shares of either the Money
Market Fund or of a particular Class of a Participant Fund (minimum of $25) by
having Federal salary, Social Security, or certain veterans', military or other
payments from the U.S. Government, or a GE employee's payroll check,
automatically deposited into their Fund account. An investor may elect to
deposit as much as desired. To enroll for the Privilege, an investor must file
with the Trust a completed Direct Deposit Sign Up Form for each type of payment
desired to be included in the Privilege. The appropriate form may be obtained
from the Trust. Death or legal incapacity will terminate the Privilege for
49
<PAGE>
an investor. An investor may elect at any time to terminate participation by
notifying in writing the appropriate Federal agency. Further, the Trust may
terminate participation upon 30 days' notice to the investor.
By Payroll Savings Plan. The Payroll Savings Plan offered by the Trust permits
an investor to purchase shares of either the Money Market Fund or of a
particular Class of a Participant Fund (minimum of $25) automatically on a
regular basis. Depending upon the direct deposit program established with an
investor's employer, part or all of such investor's paycheck may be transferred
to an existing account electronically at each pay period (through the Automated
Clearing House). To establish a Payroll Savings Plan account, an authorization
form must be sent to the Trust at:
GE Funds
P.O. Box 120065
Stamford, CT 06912-0065
For overnight package delivery:
GE Funds
c/o Boston Financial Data Services Inc.
Two Heritage Drive
Quincy, MA 02171
The necessary authorization form may be obtained from the Trust. Investors may
change the amount of purchase or cancel the authorization only by written
notification to the Trust. The Trust may modify or terminate the Payroll Savings
Plan at any time or charge a service fee. No such fee currently is contemplated.
By Automatic Investment Plan. Investors may arrange to make purchases of shares
automatically on a monthly basis by electronic funds transfer (minimum $25 per
transaction) from the checking, NOW, bank money market deposit account or credit
union account designated by the investor if their bank or credit union is a
member of an automated clearing house or by preauthorized checks drawn on their
bank or credit union account. Shareholders will receive confirmations for
transactions and a debit entry will appear on the bank or credit union
statement. To make arrangements for automatic monthly investments, call the
Trust at the applicable toll free number listed on the back cover of the
Prospectus for further information. Investors may change the purchase amount or
terminate this privilege at any time. The Trust may modify or terminate this
privilege at any time or charge a service fee; however, no service fee is
currently contemplated.
The Multiple Distribution System
As described above, under the Multiple Distribution System, Participant Funds
offer different methods of purchasing shares, enabling investors to choose the
Class that best suits their needs given the amount of purchase and intended
length of investment. The Distributor and other persons remunerated on the basis
of sales of shares may receive different levels of compensation for selling one
Class of shares over another.
When purchasing shares of a Participant Fund, investors are required to specify
whether the purchase is for Class A, Class B, Class C or Class D shares, as
described below. The Money Market Fund does not participate in the Multiple
Distribution System.
Class A Shares. Class A shares will be offered to investors at their net asset
value next determined, plus a sales charge, if applicable. Class A shares are
subject to a service fee and a distribution fee, each at the annual rate of .25%
of the value of the average daily net assets attributable to the Class. See
"Management of the Trust." The sales charges payable upon the purchase of Class
A shares will vary with the amount of purchase as shown in the tables set out as
follows:
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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>
Maximum Dealers'
Total Front-End Sales Charge Reallowance
-------------------------------------- ----------------
As a Percentage
As a Percentage of As a Percentage
Amount of Purchase at of Net Amount of
Offering Price* Offering Price Invested Offering Price
- -------------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C>
Less than $50,000............................ 4.75% 4.99% 4.25%
$50,000 but less than $100,000............... 4.25 4.44 3.75
$100,000 but less than $250,000.............. 3.25 3.36 2.75
$250,000 but less than $500,000.............. 2.50 2.56 2.00
$500,000 but less than $1,000,000............ 2.00 2.04 1.55
$1,000,000 or more........................... 0 0
</TABLE>
GE Tax-Exempt Fund, GE Government Securities Fund
and GE Fixed Income Fund
<TABLE>
<CAPTION>
Maximum Dealers'
Total Front-End Sales Charge Reallowance
-------------------------------------- ----------------
As a Percentage
As a Percentage of As a Percentage
Amount of Purchase at of Net Amount of
Offering Price* Offering Price Invested Offering Price
- --------------------------------------------- ---------------- --------------- ---------------
<S> <C> <C> <C>
Less than $100,000........................... 4.25% 4.44% 3.75%
$100,000 but less than $250,000.............. 3.25 3.36 2.75
$250,000 but less than $500,000.............. 2.50 2.56 2.00
$500,000 but less than $1,000,000............ 2.00 2.04 1.55
$1,000,000 or more........................... 0 0
</TABLE>
GE Short-Term Government Fund
<TABLE>
<CAPTION>
Maximum Dealers'
Total Front-End Sales Charge Reallowance
--------------------------------------- ----------------
As a Percentage
As a Percentage of As a Percentage
Amount of Purchase at of Net Amount of
Offering Price* Offering Price Invested Offering Price
- -------------------------------------------- ---------------- --------------- ---------------
<S> <C> <C> <C>
Less than $100,000........................... 2.50% 2.56% 2.25%
$100,000 but less than $250,000.............. 2.25 2.30 2.00
$250,000 but less than $500,000.............. 1.75 1.78 1.50
$500,000 but less than $1,000,000............ 1.25 1.27 1.00
$1,000,000 or more........................... 0 0
</TABLE>
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<PAGE>
* 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.
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
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<PAGE>
Letter of Intent, an adjustment will be made to reflect further reduced sales
charges applicable to such purchases. All such adjustments will be made in the
form of additional shares credited to the shareholder's account at the then
current offering price applicable to a single purchase of the total amount of
the total purchases. If total purchases are less than the amount specified, an
investor will be requested to remit an amount equal to the difference between
the sales load actually paid and the sales load applicable to the aggregate
purchases actually made. If such remittance is not received within 20 days,
State Street, as attorney-in-fact pursuant to the terms of the Letter of Intent,
will redeem an appropriate number of shares held in escrow to realize the
difference. Signing a Letter of Intent does not bind an investor to purchase, or
the Trust to sell, the full amount indicated at the sales load in effect at the
time of signing, but an investor must complete the intended purchase to obtain
the reduced sales load.
Participant Funds also offer a reinstatement privilege under which a shareholder
that has redeemed Class A shares may reinvest the proceeds from the redemption
without imposition of a sales charge, provided the reinvestment is made within
60 days of the redemption. The tax status of a gain realized on a redemption
will not be affected by exercise of the reinstatement privilege but a loss will
be nullified if the reinvestment is made within 30 days of redemption. See the
Statement of Additional Information for the tax consequences when, within 90
days of a purchase of Class A shares, the shares are redeemed and reinvested in
a Participant Fund.
Class B Shares. Investors are able to purchase Class B shares at their net asset
value per share next determined after a purchase order is received, without
imposition of any sales charge. A CDSC is imposed, however, on certain
redemptions of Class B shares. See "Redemption of Shares" below, which provides
a more complete description of the CDSC. Class B shares of a Participant Fund,
other than the 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
marriage, parents, children, siblings, grandparents and grandchildren. Also, for
purposes of this Prospectus, the term "employees, retirees, officers or
directors of GE or an affiliate of GE" includes (i) persons who are currently
employed by GE or an affiliate of GE (GE and its affiliates are hereinafter
referred to as "GE"), (ii) persons who have retired or will retire from GE, or
(iii) persons who are no longer employed by GE, but who have either retained a
balance in the GE S&S Program or were employed by GE for at least 20 consecutive
years. Any holder of Existing Shares falling within subcategory (1) above, who
fully redeems his or her Class C shares or whose shares are redeemed in
accordance with the involuntary redemption procedure set out below, will not
have the right to reinvest in Class C shares. See "Redemptions of Shares" below.
Class D Shares. Class D shares will be offered without imposition of a sales
charge, CDSC, service fee or distribution fee exclusively to: banks, insurance
companies and industrial corporations each purchasing shares for their own
account; investment management programs of financial institutions that
contemplate purchasing shares
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<PAGE>
of investment companies managed by an adviser unaffiliated with the financial
institution; financial institutions investing in their fiduciary capacity on
behalf of clients or customers; tax-exempt investors, including defined benefit
or contribution plans (including plans meeting the requirements of Section
401(k) of the Code), plans established under Section 403(b) of the Code, trusts
established under Section 501(c)(9) of the Code to fund the payment of certain
welfare benefits, charitable, religious and educational institutions, and
foundations and endowments of those investors; and investment companies not
managed or sponsored by GEIM or any affiliate of GEIM ("Institutional
Investors"). Under no circumstances are regular IRAs, simplified employee
pension IRAs ("SEP-IRAs"), salary reduction SEP-IRAs and Keogh plans eligible to
purchase Class D shares. For purposes of this Prospectus, the term "industrial
corporation" is intended to mean any corporate entity employing 100 or more
persons but does not include professional corporations or corporations
established under Subchapter S of the Code. Investors eligible to purchase Class
D shares may not purchase any other Class of shares, except as noted above under
"Class A Shares."
Subsequent Purchase of Shares
Investors may purchase additional shares of a Fund at any time by mail or by
telephone in the manner outlined above. All payments should clearly indicate the
investor's account number.
Purchases in Kind
The Trust may, in its discretion, require that proposed investments of $10
million or more in a particular Class of a Participant Fund, or in the Money
Market Fund, be made in kind. This requirement is intended to minimize the
effect of transaction costs on existing shareholders of a Fund. Such transaction
costs, which may include broker's commissions and taxes or governmental fees,
domestic or foreign, as the case may be, may, in such event, be borne by the
proposed investor in shares of the Fund. Under these circumstances, the Trust
would inform the investor of the securities and amounts that are acceptable to
the Trust. The securities would then be accepted by the Trust at their then
market value in return for shares in the Fund of an equal value.
RETIREMENT PLANS
Shares of each of the Funds, other than the Tax-Exempt Fund, are available for
purchase by IRAs, including IRAs established under the proprietary form
established by GEIM ("GE IRAs"), retirement plans for self-employed individuals,
401(k) Plans, eligible deferred compensation plans meeting the requirements of
Section 457(b) of the Code, tax-exempt organizations enumerated in Section
501(c)(3) of the Code and retirement plans qualified under Section 403(b)(7) of
the Code (collectively "Qualified Plans"). As set out above under "Purchase of
Shares -- The Multiple Distribution System" different types of Qualified Plans
may be eligible to purchase different Classes of a Participant Fund. Details
about the procedure to be followed by Qualified Plans in investing in the Funds
are available through the Distributor. Investors interested in establishing a GE
IRA should contact the Distributor at the applicable toll free number listed on
the back cover of the Prospectus to obtain the necessary documentation.
REDEMPTION OF SHARES
Redemptions in General
Shares of the Money Market Fund, as well as shares of a Class of a Participant
Fund, may be redeemed on any day on which the Fund's net asset value is
calculated as described below under "Net Asset Value." Redemption requests
received in proper form prior to the close of regular trading on the NYSE will
be effected at the net asset value per share determined on that day. Redemption
requests received after the close of regular trading on the NYSE will be
effected at the net asset value as next determined. The Trust normally transmits
redemption proceeds within seven days after receipt of a redemption request. If
a shareholder holds shares in more than one Class of a Participant Fund, any
request for redemption must specify the Class being redeemed. In the event of a
failure to specify which Class or if the investor owns fewer shares of the Class
than specified, the redemption request will be delayed until the Trust receives
further instructions. Redemption proceeds will be subject to no charge, except
for certain redemptions of Class A and Class B shares of a Participant Fund. A
shareholder who
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<PAGE>
pays for shares of a Fund by personal check will receive the proceeds of a
redemption of those shares when the purchase check has been collected, which may
take up to 15 days or more. Shareholders who anticipate the need for more
immediate access to their investment should purchase shares with Federal funds
or bank wire or by a certified or cashier's check.
The Trust requires that a shareholder of the Money Market Fund maintain a
minimum investment in the Fund of $100, so care should be exercised to ensure
that redemptions do not reduce the shareholder's investment below this minimum.
Two exceptions exist to this minimum investment requirement: an account
established by a Qualified Plan and an account established by payroll deductions
which does not yet have a $100 account balance. In the case of a payroll
deduction account with a balance that has exceeded $100, however, the
shareholder is not permitted to redeem shares if the redemption would reduce the
account balance below $100 (except to close the account). If the shareholder's
account balance is less than $100 (except in the two cases described above), the
Trust may automatically redeem the shares of the Money Market Fund in the
account and remit the proceeds to the shareholder so long as the shareholder is
given 30 days' prior written notice of the action. In addition, if the
shareholder has checkwriting privileges, redemption of $100 or more may be made
by writing a check either to the shareholder or to a third party.
A holder of Existing Shares who would not otherwise be eligible to invest in
Class C shares by virtue of being an employee, retiree, officer or director of
GE or an affiliate of GE or a family member of any of those employees, retirees,
officers or directors, who fully redeems his account or whose account balance is
involuntarily redeemed by the Trust in the manner set out below, will not remain
eligible to thereafter invest in Class C shares; the holder will instead be
eligible to invest in either Class A or Class B shares only.
A CDSC payable to the Distributor is imposed on certain redemptions of Class A
and Class B shares of a Participant Fund, however effected. No CDSC is imposed
on redemptions of shares that were purchased more than a fixed number of years
prior to the redemptions or on shares derived from reinvestment of dividends or
capital gains distributions. Furthermore, no CDSC will be imposed on an amount
that represents an increase in the value of the 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. Solely for purposes of determining the
number of years since a purchase payment, all purchase payments made during a
month will be aggregated and deemed to have been made on the first day of that
month.
The CDSC on Class A shares is payable on the same terms and conditions as would
be applicable to Class B shares, except that the CDSC on Class A shares is at a
lower rate and for a shorter period than that imposed on Class B shares (1% for
redemptions only during the first year after purchase) and except that Class A
shares have no automatic conversion feature. The CDSC applicable to Class A
shares is calculated in the same manner as the CDSC with respect to Class B
shares and is waived in the same situations as with respect to Class B shares.
The following table sets forth the CDSC rates applicable to redemptions of Class
B shares of the Premier Fund, the U.S. Equity Fund, the Mid-Cap Fund, the Value
Fund, the Global Fund, the International Fund and the Strategic Fund:
CDSC as a %
Year Since Purchase of Amount
Payment Was Made Redeemed
- ------------------------------------------------- ------------------------
Within First Year............................. 4.00%
Within Second Year............................ 3.00%
Within Third Year............................. 2.00%
Within Fourth Year............................ 1.00%
Within Fifth Year............................. 0.00%
Within Sixth Year............................. 0.00%
- ------------------------------------------------- ------------------------
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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:
CDSC as a %
Year Since Purchase of Amount
Payment Was Made Redeemed
- ------------------------------------------------- ------------------------
Within First Year............................. 3.00%
Within Second Year............................ 3.00%
Within Third Year............................. 2.00%
Within Fourth Year............................ 1.00%
Within Fifth Year............................. 0.00%
Within Sixth Year............................. 0.00%
- ------------------------------------------------- ------------------------
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.
CDSC as a %
Year Since Purchase of Amount
Payment Was Made Redeemed
- ------------------------------------------------- ------------------------
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%
- ------------------------------------------------- ------------------------
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 death or
initial determination of disability. This waiver of the CDSC would apply to a
total or partial redemption but only to redemptions of shares held at the time
of the death or initial determination of disability. The Trust will also waive
the CDSC on redemptions of shares of the Funds effected pursuant to a systematic
withdrawal plan (see "Systematic Withdrawal Plan" below), if the redemptions do
not exceed 10% of the value of a shareholder's account on an annual basis.
Redemptions in excess of this amount will be charged an applicable CDSC.
Shares of a Fund may be redeemed in the following ways:
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Redemptions through an Authorized Firm
An investor whose shares are purchased with the assistance of a Sales
Representative may redeem all or part of his or her shares in accordance with
instructions pertaining to such accounts. If such investor is also the
shareholder of record of those accounts on the books of State Street, he or she
may redeem shares pursuant to the methods described below. Such an investor
using the redemption by mail or wire methods, must arrange with the Authorized
Firm for delivery of the required forms to State Street. It is the
responsibility of the Authorized Firm to transmit the redemption order (and
credit its customers' account with the redemption proceeds, if applicable) on a
timely basis.
Redemption by Mail
Shares of a Fund may be redeemed by mail by making a written request for
redemption that (1) states the Class (if applicable) and the number of shares or
the specific dollar amount to be redeemed, (2) identifies the Fund or Funds from
which the number or dollar amount is to be redeemed, (3) identifies the
shareholder's account number and (4) is signed by each registered owner of the
shares exactly as the shares are registered and sending the request to the
Trust, at:
GE Funds
P.O. Box 8309
Boston, MA 02266-8325
For overnight package delivery:
GE Funds
c/o Boston Financial Data Services Inc.
Two Heritage Drive
Quincy, MA 02171
Signature guarantees are required for all redemptions over $25,000. In addition,
signature guarantees are required for requests to have redemption proceeds
(1)mailed to an address other than the address of record, (2) paid to other than
the shareholder, (3) wired to a bank other than the bank of record, or (4)
mailed to an address that has been changed within 30 days of the redemption
request. All signature guarantees must be guaranteed by a commercial bank, trust
company, broker, dealer, credit union, national securities exchange or
registered association, clearing agency or savings association. The Trust may
require additional supporting documents for redemptions made by corporations,
executors, administrators, trustees, guardians or persons utilizing a power of
attorney. A request for redemption will not be deemed to have been submitted
until the Trust receives all documents typically required to assure the safety
of a particular account. The Trust may waive the signature guarantee on a
redemption of $25,000 or less if it is able to verify the signatures of all
registered owners from its accounts.
Redemption by Telephone
Shares of a Fund may be redeemed by telephone, unless the investor has declined
this option on the applicable section of the account application form. Proceeds
from a telephonic wire redemption request placed through a customer service
representative will be transferred by wire to the shareholder's bank account
(which has previously been identified in writing to the Trust). Proceeds from a
telephonic check redemption request placed through the automated system will be
sent by check to the shareholder's address of record. The minimum telephonic
wire redemption request is $1,000; the minimum telephonic check redemption
request is $500. If the account is registered jointly in the name of more than
one shareholder, only one shareholder will be required to authorize redemption
of shares by telephone, and the Trust will be entitled to act upon telephonic
instructions of any shareholder of a joint account. Wire transfers will be made
directly to the account specified by the shareholder if that bank is a member of
the Federal Reserve System or to a correspondent bank if the bank holding the
account is not a member. Although the Trust imposes no fees on wire transfers,
fees normally will be
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imposed by the bank and will be the responsibility of the shareholder.
Redemptions of shares of a Fund by a Qualified Plan may not be effected by
telephone.
Telephonic redemption requests should be made by calling the applicable toll
free number listed on the back cover page of the Prospectus. Confirmation of
telephonic redemptions will be sent within seven days of the date of redemption
but will normally be sent in less time. Wire transfer of funds will be made
within two business days following the telephonic request. Dividends will be
earned through and including the date of receipt of the redemption request.
Telephone redemption requests may be difficult to implement in times of drastic
economic or market changes. In the event shareholders of the Funds are unable to
contact the Trust by telephone, shareholders should write to the Trust at:
GE Funds
P.O. Box 8309
Boston, MA 02266-8325
For overnight package delivery:
GE Funds
c/o Boston Financial Data Services Inc.
Two Heritage Drive
Quincy, MA 02171
By making a telephonic redemption request, a shareholder authorizes the Trust to
act on the telephonic redemption instructions by any person representing himself
or herself to be the shareholder and believed by the Trust to be genuine. The
Trust will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine and the Trust's records of such
instructions will be binding. If the procedures, which include the use of a
personal identification number ("PIN") system and the provision of written
confirmation of transactions effected by telephone, were not employed by the
Trust, the Trust could be subject to liability for any loss resulting from
unauthorized or fraudulent instructions. As a result of compliance with this
policy, if the Trust follows the procedures outlined above and has a good faith
belief that the instructions it received were genuine, the shareholder will bear
the risk of loss in the event of a fraudulent redemption transaction.
Systematic Withdrawal Plan
The Trust's Systematic Withdrawal Plan permits investors in a Fund to request
withdrawal of a specified dollar amount (minimum of $50) on either a monthly or
quarterly basis if they have a $5,000 minimum account in a Class of a
Participant Fund or in the Money Market Fund. The maximum amount which may be
withdrawn under the Systematic Withdrawal Plan is 10% of the value of a
Shareholder's account on an annual basis. An application for the Systematic
Withdrawal Plan can be obtained from the Trust. The Systematic Withdrawal Plan
may be terminated at any time by the investor or the Trust.
Involuntary Redemptions
An account of a shareholder of a Fund with respect to a Class of shares (if
applicable) that is reduced by redemptions, and not by reason of market
fluctuations or by payroll deductions, to a value of $500 or less (or $100 in
the case of the Money Market Fund) may be redeemed by the Trust, but only after
the shareholder has been given notice of at least 30 days in which to increase
the balance in the account to more than $500. Proceeds of such a redemption will
be mailed to the shareholder.
Distributions in Kind
If the 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
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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.
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
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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, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas, and on the preceding
Friday or subsequent Monday when one of these holidays falls on a Saturday or
Sunday, respectively.
Each Class' net asset value per share and the Money Market Fund's net asset
value per share are determined as of the close of regular trading on the NYSE
(currently 4:00 p.m., New York time). Net asset value per share of a Class is
computed by dividing the value of the Participant Fund's net assets attributable
to that Class by the total number of shares outstanding of that Class and the
net asset value per share of the Money Market Fund is computed by dividing the
value of the Money Market Fund's net assets by the total number of its shares
outstanding. In general, a Fund's investments will be valued at market value or,
in the absence of market value, at fair value as determined by or under the
direction of the 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
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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,
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. 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."
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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
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
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necessarily all, of its taxable years. If the Trust were to make an election
with respect to a Fund, an amount equal to the foreign income taxes paid by the
Fund would be included in the income of its shareholders and the shareholders
would be entitled to credit their portions of this amount against their U.S. tax
liabilities, if any, or to deduct those portions from their U.S. taxable income,
if any. Shortly after any year for which it makes an election, the Trust will
report to the shareholders of the Fund, in writing, the amount per share of
foreign tax that must be included in each shareholder's gross income and the
amount that will be available as a deduction or credit. No deduction for foreign
taxes may be claimed by a shareholder who does not itemize deductions. Certain
limitations will be imposed on the extent to which the credit (but not the
deduction) for foreign taxes may be claimed.
Statements as to the tax status of each shareholder's dividends and
distributions are mailed annually. Shareholders will also receive, as
appropriate, various written notices after the close of their Fund's taxable
year regarding the tax status of certain dividends and distributions that were
paid (or that are treated as having been paid) by the Fund to its shareholders
during the preceding taxable year, including the amount of dividends that
represents interest derived from Government Securities. Shareholders should
consult with their own tax advisors with specific reference to their own tax
situations.
CUSTODIAN AND TRANSFER AGENT
State Street, located at 225 Franklin Street, Boston, Massachusetts 02101,
serves as the Trust's custodian and transfer agent, and is responsible for
receiving acceptance orders for the purchase of shares and processing redemption
requests.
DISTRIBUTOR
GE Investment Services Inc., located at 3003 Summer Street, P.O. Box 7900,
Stamford, Connecticut, 06904-7900, serves as distributor of the Funds' shares.
The Distributor, a wholly-owned subsidiary of GEIM, also serves as Distributor
for the Elfun Funds. GEIM or its affiliates, at their own expense, may allocate
portions of their revenues or other resources to assist the Distributor in
distributing shares of the Funds, by providing additional promotional incentives
to dealers. In some instances, these incentives may be limited to certain
dealers who have sold or may sell significant numbers of shares of the Funds.
The Distributor routinely offers dealers in Fund shares the opportunity to
participate in contests for which prizes include tickets to theater and sporting
events, dining, travel to meetings and conferences held in locations remote from
their offices and other items.
PERFORMANCE CALCULATION
Certain information about the calculation of the Funds' performance is set out
below. Further information about the performance of the Funds is contained in
the Trust's Annual Report to shareholders which may be obtained upon request
without charge.
Yield
The Trust may, from time to time, include the yield and effective yield of the
Money Market Fund in advertisements or reports to shareholders or prospective
investors. Current yield for the Money Market Fund will be based upon income
received by a hypothetical investment in a given seven-day period (which period
will be stated in the advertisement), and then "annualized" (that is, assuming
that the seven-day yield would be received for 52 weeks, stated in terms of an
annual percentage return on the investment). "Effective yield" for the Money
Market Fund will be calculated in a manner similar to that used to calculate
yield, but will reflect the compounding effect of earnings on reinvested
dividends. The seven-day current yield and effective seven-day yield as of 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
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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.
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.
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FEDERAL TAXABLE EQUIVALENT YIELD TABLE -- 1997 RATES
<TABLE>
<CAPTION>
Tax-Free Yield
Federal Federal Marginal 4.00% 4.50% 5.00% 5.50% 6.00% 6.50% 7.00% 7.50% 8.00%
Taxpayer Taxable Tax Federal
Year Status Income Bracket Rate Taxable Equivalent Yield
- ----- -------- ------- ------- -------- ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 MARRIED $0-41,200 15.00% 15.00% 4.71% 5.29% 5.88% 6.47% 7.06% 7.65% 8.24% 8.82% 9.41%
$41,201-99,600 28.00% 28.00% 5.56% 6.25% 6.94% 7.64% 8.33% 9.03% 9.72% 10.42% 11.11%
$99,601-121,200 31.00% 31.00% 5.80% 6.52% 7.25% 7.97% 8.70% 9.42% 10.14% 10.87% 11.59%
$121,201-151,750 31.00% 31.93% 5.88% 6.61% 7.35% 8.08% 8.81% 9.55% 10.28% 11.02% 11.75%
$151,751-271,050 36.00% 37.08% 6.36% 7.15% 7.95% 8.74% 9.54% 10.33% 11.13% 11.92% 12.71%
OVER $271,050 39.60% 40.79% 6.76% 7.60% 8.44% 9.29% 10.13% 10.98% 11.82% 12.67% 13.51%
1996 SINGLE $0-24,650 15.00% 15.00% 4.71% 5.29% 5.88% 6.47% 7.06% 7.65% 8.24% 8.82% 9.41%
$24,651-59,750 28.00% 28.00% 5.56% 6.25% 6.94% 7.64% 8.33% 9.03% 9.72% 10.42% 11.11%
$59,751-121,200 31.00% 31.00% 5.80% 6.52% 7.25% 7.97% 8.70% 9.42% 10.14% 10.87% 11.59%
$121,201-124,650 31.00% 31.93% 5.88% 6.61% 7.35% 8.08% 8.81% 9.55% 10.28% 11.02% 11.75%
$124,651-271,050 36.00% 37.08% 6.36% 7.15% 7.95% 8.74% 9.54% 10.33% 11.13% 11.92% 12.71%
OVER $271,050 39.60% 40.79% 6.76% 7.60% 8.44% 9.29% 10.13% 10.98% 11.82% 12.67% 13.51%
</TABLE>
NOTE: THIS TABLE REFLECTS THE FOLLOWING:
1. THE ABOVE IS A FEDERAL TAXABLE EQUIVALENT YIELD TABLE ONLY. THE EFFECT
OF STATE INCOME TAX RATES HAS NOT BEEN FACTORED INTO THE TAXABLE
EQUIVALENT YIELD CALCULATION.
2. TAXABLE INCOME EQUALS ADJUSTED GROSS INCOME LESS PERSONAL EXEMPTIONS OF
$2,650 LESS THE STANDARD DEDUCTION OF $6,900 ON A JOINT RETURN OR TOTAL
ITEMIZED DEDUCTIONS, WHICHEVER IS GREATER. HOWEVER, UNDER THE
PROVISIONS OF THE OMNIBUS BUDGET RECONCILIATION ACT OF 1990, ITEMIZED
DEDUCTIONS ARE REDUCED BY 3% OF THE AMOUNT OF A TAXPAYER'S AGI OVER
$121,200. THIS IS REFLECTED IN THE BRACKETS ABOVE BY HIGHER EFFECTIVE
FEDERAL TAX RATES. FURTHERMORE, PERSONAL EXEMPTIONS ARE PHASED OUT FOR
THE AMOUNT OF A TAXPAYER'S AGI OVER $121,200 FOR SINGLE TAXPAYERS AND
$181,800 FOR MARRIED TAXPAYERS FILING JOINTLY.
THIS LATTER PROVISION IS NOT INCORPORATED INTO THE ABOVE BRACKETS.
3. INTEREST EARNED ON MUNICIPAL OBLIGATIONS MAY BE SUBJECT TO THE FEDERAL
ALTERNATIVE MINIMUM TAX. THIS PROVISION IS NOT INCORPORATED INTO
THE TABLE.
4. THE TAXABLE EQUIVALENT YIELD TABLE DOES NOT INCORPORATE THE EFFECT OF
GRADUATED RATE STRUCTURES IN DETERMINING YIELDS. INSTEAD THE TAX RATES
USED ARE THE HIGHEST RATES APPLICABLE TO THE INCOME LEVELS INDICATED
WITHIN EACH BRACKET.
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.
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The Trust may use "aggregate total return" figures for various periods,
representing the cumulative change in value of an investment in a Class of a
Participant Fund, for the specific period (again reflecting changes in the
Fund's share price and assuming reinvestment of dividends and distributions).
Aggregate total return will, in each case, be calculated with the effect of the
sales charge to which Class A shares of a Participant Fund are subject and with
the effect of any applicable CDSC for Class B shares, and may be shown by means
of schedules, charts or graphs, and may indicate subtotals of the various
components of total return (that is, the change in value of initial investment,
income dividends and capital gains distributions). Aggregate total return may,
in addition to the above method (but never independent of the above method), be
calculated without the effect of the sales charge to which Class A shares of a
Participant Fund are subject and without the effect of any applicable CDSC for
Class B shares. Because of the differences in sales charges and distribution
fees, the total returns for each of the Classes will differ. Reflecting
compounding over a longer period of time, aggregate total return data generally
will be higher than average annual total return data, which reflects compounding
of return. The Trust may, in addition to quoting a Class' average annual and
aggregate total returns, advertise the actual annual and annualized total return
performance data for various periods of time. Actual annual and annualized total
returns may be calculated either with or without the effect of the sales charge
to which Class A shares are subject and with or without the effect of any
applicable CDSC for Class B shares, and may be shown by means of schedules,
charts or graphs. Actual annual or annualized total return data generally will
be lower than average annual total return data, which reflects compounding of
return.
Yield and total return figures are based on historical earnings and are thus not
intended to indicate future performances. The Statement of Additional
Information describes the method used to determine a Fund's yield and total
return.
The Trust may also advertise a Fund's distribution rate and/or effective
distribution rate. The distribution rate of a Fund represents a measure of
dividends distributed for a specified period. The distribution rate of a Fund
differs from yield and total return and therefore is not intended to be a
complete measure of performance. A Fund's distribution rate is computed by
dividing the most recent monthly distribution per share annualized by the
current net asset value per share. A Fund's effective distribution rate is
computed by dividing the distribution rate by the ratio used to annualize the
distribution and reinvesting the resulting amount for a full year on the basis
of such ratio. The effective distribution rate will be higher than the
distribution rate because of the compounding effect of the assumed reinvestment.
A Fund's yield is calculated using a standardized formula the income component
of which is computed from the yields to maturity of all debt obligations in the
Fund's portfolio based on the market value of such obligations (with all
purchases and sales of securities during such period included in the income
calculation on a settlement date basis). In contrast, the distribution rate is
based on the Fund's last monthly distribution, which tends to be relatively
stable and may be more or less than the amount of net investment income and
short-term capital gain actually earned by the Fund during the month.
Comparative Performance Information
In addition to the comparative information set forth under "Performance" above
and otherwise quoted in sales and advertising materials, the Trust may compare
the Fund's performance with (1) the performance of other mutual funds as listed
in the rankings prepared by Lipper Analytical Services, Inc. or similar
independent services that monitor the performance of mutual funds, (2) various
unmanaged indexes, including the Russell Index, S&P Index, and the Dow Jones
Industrial Average or (3) other appropriate indexes of investment securities or
with data developed by GEIM derived from those indexes. The performance
information may also include evaluations of a Fund published by nationally
recognized ranking services and by financial publications that are nationally
recognized, such as Barron's, Business Week, Forbes, Fortune, Institutional
Investor, Kiplinger's Personal Finance, Money, Morningstar Mutual Fund Values,
The New York Times, The Wall Street Journal and USA Today. These ranking
services or publications may compare a Fund's performance to, or rank it within,
a universe of mutual funds with investment objectives and policies similar, but
not necessarily identical to, the Fund's. Such comparisons or rankings are made
on the basis of several factors, including objectives and policies, management
style and strategy, and portfolio composition, and may change over time if any
of those factors change.
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FURTHER INFORMATION: CERTAIN INVESTMENT TECHNIQUES AND STRATEGIES
The Funds may engage in a number of investment techniques and strategies,
including those described below. No Fund is under any obligation to use any of
the techniques or strategies at any given time or under any particular economic
condition. In addition, no assurance can be given that the use of any practice
will have its intended result or that the use of any practice is, or will be,
available to any Fund.
Strategies Available to All Funds
When-Issued and Delayed-Delivery Securities. To secure prices or yields deemed
advantageous at a particular time, a Fund may purchase securities on a
when-issued or delayed-delivery basis, in which case, delivery of the securities
occurs beyond the normal settlement period; no payment for or delivery of the
securities is made by, and no income accrues to, the Fund, however, prior to the
actual delivery or payment by the other party to the transaction. Each Fund will
enter into when-issued or delayed-delivery transactions for the purpose of
acquiring securities and not for the purpose of leverage. When-issued securities
purchased by a Fund may include securities purchased on a "when, as and if
issued" basis under which the issuance of the securities depends on the
occurrence of a subsequent event, such as approval of a merger, corporate
reorganization or debt restructuring. Cash or other liquid assets in an amount
equal to the amount of each Fund's when-issued or delayed-delivery purchase
commitments will be segregated with the Trust's custodian, or with a designated
subcustodian, in order to avoid or limit any leveraging effect that may arise in
the purchase of a security pursuant to such a commitment.
Securities purchased on a when-issued or delayed-delivery basis may expose a
Fund to risk because the securities may experience fluctuations in value prior
to their delivery. Purchasing securities on a when-issued or delayed-delivery
basis can involve the additional risk that the return available in the market
when the delivery takes place may be higher than that applicable at the time of
the purchase. This characteristic of when-issued and delayed-delivery securities
could result in exaggerated movements in a Fund's net asset value.
Lending Portfolio Securities. Each Fund is authorized to lend its portfolio
securities to well-known and recognized U.S. and foreign brokers, dealers and
banks. These loans, if and when made, may not exceed 30% of a Fund's assets
taken at value. The Fund's loans of securities will be collateralized by cash,
letters of credit or Government Securities. Cash or instruments collateralizing
a Fund's loans of securities are segregated and maintained at all times with the
Trust's custodian, or with a designated sub-custodian, in an amount at least
equal to the current market value of the loaned securities. In lending
securities, a Fund will be subject to risks, which, like those associated with
other extensions of credit, include possible loss of rights in the collateral
should the borrower fail financially. Income derived by the Tax-Exempt Fund on
any loan of its portfolio securities will not be exempt from Federal income
taxation.
Rule 144A Securities. Each of the Funds may purchase Rule 144A Securities.
Certain Rule 144A Securities may be considered illiquid and therefore subject to
a Fund's limitation on the purchase of illiquid securities, unless the 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
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<PAGE>
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 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, and other accounts advised
by GEIM or GEIC, is not considered an investment in another investment fund or
investment company for purposes of this paragraph and the restrictions just
described. To the extent a Fund invests in other investment companies, the
Fund's shareholders will incur certain duplicative fees and expenses, including
investment advisory fees.
Municipal Leases. Among the Municipal Obligations in which 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.
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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 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
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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 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.
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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 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
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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 its 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 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(sm)") and interests
in pools of credit card receivables. CARs(sm) 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(sm) 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(sm) 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.
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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 held on September 15, 1997, the shareholders of the Investors Trust
Funds, consisting of five series, voted on a plan of reorganization. As of the
date of this prospectus, GE Funds will acquire substantially all of the assets
of the Investors Trust Funds and the five series of Investors Trust will be
combined with five series of GE Funds as illustrated by the following table:
Investors Trust Funds GE Funds
Investors Trust Adjustable Rate Fund GE Short-Term Government Fund
Investors Trust Government Fund GE Government Securities Fund
Investors Trust Tax Free Fund GE Tax-Exempt Fund
Investors Trust Value Fund GE Value Equity Fund
Investors Trust Growth Fund GE Mid-Cap Growth Fund
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
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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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GE FUNDS
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
GE Short-Term Government Fund
GE Money Market Fund
For information contact your investment
professional or call the following toll
free numbers:
Class A and Class B investors --
1-800-746-4417
Class C and Class D investors --
1-800-242-0134
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN THE
STATEMENT OF ADDITIONAL INFORMATION INCORPORATED INTO THIS PROSPECTUS BY
REFERENCE IN CONNECTION WITH THE OFFERING OF SHARES OF GE FUNDS, AND IF GIVEN
OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY GE FUNDS. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, AN OFFER MAY NOT
LAWFULLY BE MADE.
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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 STATEMENT OF ADDITIONAL INFORMATION DOES NOT CONSTITUTE A
PROSPECTUS.
<PAGE>
Subject to completion, dated June 24, 1997
STATEMENT OF ADDITIONAL INFORMATION
September 26, 1997
GE FUNDS
3003 Summer Street, Stamford, Connecticut 06905
For information, call (203) 326-4040
* 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..............................1
Investment Restrictions...................................................11
Management of the Trust...................................................18
Redemption of Shares......................................................23
Exchange Privilege........................................................24
Dividends, Distributions and Taxes........................................25
The Funds' Performance....................................................29
Principal Stockholders....................................................31
Additional Information....................................................44
Counsel...................................................................44
Independent Accountants...................................................45
Financial Statements......................................................45
Appendix.................................................................A-1
This Statement of Additional Information supplements the
information contained in the current Prospectus of GE Funds (the "Trust") dated
September 26, 1997, and should be read in conjunction with the Prospectus.
Copies of the Prospectus describing the Funds offered by the Trust may be
obtained without charge by calling the Trust at the telephone number listed
above. Information regarding the status of shareholder accounts may be obtained
by calling the Trust at 1-800-746-4417 (Class A or Class B shareholders) or
1-800-242-0134 (Class C or Class D shareholders) or by writing to the Trust at
P.O. Box 120065, Stamford, CT 06912-0065. This Statement of Additional
Information, although not a prospectus, is incorporated in its entirety by
reference into the Prospectus.
<PAGE>
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
The Prospectus dated September 26, 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 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
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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 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
- -----------------------
* 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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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).
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,
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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.
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
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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 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.
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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 the portion of the
portfolio being hedged, if any, may partially or completely offset losses on the
futures contract.
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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 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
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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. Bonds to finance these
facilities have been issued by various state industrial development
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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 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 be deemed to include (a) the
government of any one country other than the United States, but
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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.
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.
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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. In no event, however, will
any Fund's investment in illiquid and non-publicly traded securities, in the
aggregate, exceed 15% of its assets.
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).
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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 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 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,
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.
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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 acquisition of assets.
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
the SEC and Bloomberg Inc. In addition, the Trust may select its own industry
classifications, provided such classifications are reasonable.
16
<PAGE>
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.
17
<PAGE>
The Money Market Fund may attempt to increase its yield by
trading to take advantage of short-term market variations, which trading would
result in the Fund's experiencing high portfolio turnover. Because purchases and
sales of money market instruments are usually effected as principal
transactions, however, this type of trading by the Money Market Fund will not
result in the Fund's paying high brokerage commissions.
During the fiscal year ended September 30, 1996, the
International Fund, the Global Fund, the U.S. Equity Fund and the Strategic Fund
paid $268,291, $100,049, $207,206 and $75,115, respectively, in commissions to
broker-dealers for execution of portfolio transactions. Of these amounts,
$8,052, $8,932, $41,107, and $6,464 in brokerage transactions was paid by the
International Fund, the Global Fund, the U.S. Equity Fund and the Strategic
Fund, respectively, to a broker because of research services provided during the
past fiscal year. During the fiscal year ended September 30, 1995, the
International Fund, the Global Fund, the U.S. Equity Fund and the Strategic Fund
paid $78,872, $118,140, $98,947 and $27,257, respectively, in commissions to
broker-dealers for execution of portfolio transactions. Of these amounts, $60,
$3,125, $60,981 and $5,259 in brokerage transactions was paid by the
International Fund, the Global Fund, the U.S. Equity Fund and the Strategic
Fund, respectively, to a broker because of research services provided during the
past fiscal year. During the fiscal year ended September 30, 1994, the
International Fund, the Global Fund, the U.S. Equity Fund and the Strategic Fund
paid $97,673, $79,652, $168,891 and $28,280, respectively in commissions to
broker-dealers for execution of portfolio transactions. Of these amounts,
$89,877, $68,087, $75,178 and $11,853 in brokerage transactions was paid by the
International Fund, the Global Fund, the U.S. Equity Fund and the Strategic
Fund, respectively, to a broker because of research services provided during the
past fiscal year. The Tax-Exempt Fund, the Income Fund 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.
18
<PAGE>
<TABLE>
<CAPTION>
Positions Held with Age and Principal Occupation(s)
Name and Address Trust During Past Five Years
---------------- ------------------- -------------------------------
<S> <C> <C>
*Michael J. Cosgrove Chairman of the Age 48. President, GE Mutual Funds; Executive Vice
3003 Summer Street Board and President President - Mutual Funds of GEIM and GEIC, a
Stamford, CT 06905 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, General Counsel and
3003 Summer Street Executive Vice Secretary of GEIM since 1988 and of GEIC since October
Stamford, CT 06905 President 1987.
John R. Costantino Trustee Age 51. Managing Director, Walden Partners, Ltd.,
150 East 58th Street consultants and investors, since August 1992;
New York, NY 10055 President, CMG Acquisition Corp., Inc., a holding
company, since 1988; Vice Chairman, Acoustiguide Holdings,
Inc., a holding company, since 1989; President
CMG/IKH, Inc., a holding company, since 1991;
Director, Crossland Federal Savings Bank, a
financial institution; Director, Brooklyn Bankcorp,
Inc., a financial institution; Director, IK
Holdings, Inc., a holding company since 1991;
Director, I. Kleinfeld & Son, Inc., a retailer,
since 1991; Director, High Performance Appliances,
Inc., a distributor of kitchen appliances ("HPA"),
since 1991; Director, HPA Hong Kong, Ltd., a service
subsidiary of HPA, since 1991; Director, Lancit
Media Productions, Ltd., a children's and family
television film and videotape production company,
since 1995; Partner, Costantino Melamede-Greenberg
Investment Partners, a general investment
partnership, from September 1987 through August
1992.
</TABLE>
19
<PAGE>
<TABLE>
<S> <C> <C>
William J. Lucas Trustee Age 50. Vice President and Treasurer of Fairfield
Fairfield University University since 1983.
North Benson Road
Fairfield, CT 06430
Robert P. Quinn Trustee Age 61. Retired since 1983 from Salomon Brothers
45 Shinnecock Road Inc.; Director, GP Financial Corp., a holding company,
Quogue, NY 11959 since 1994; Director, The Greenpoint Savings Bank, a
financial institution, since 1987.
Jeffrey A. Groh Treasurer Age 35. Vice President -- Operations of GEIM and GEIC
3003 Summer Street since January 1997 and Treasurer and Controller of
Stamford, CT 06905 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.
Matthew J. Simpson Secretary Age 36. Vice President, Associate General Counsel and
3003 Summer Street Assistant Secretary of GEIM and GEIC since October
Stamford, CT 06905 1992; attorney with the law firm of Baker & McKenzie,
April 1991 to October 1992; prior to April 1991 was an
attorney with the law firm of Spengler Carlson Gubar
Brodsky & Frischling.
</TABLE>
No employee of GE or any of its affiliates receives any compensation from the
Trust for acting as a Trustee or officer of the Trust. Each Trustee of the Trust
who is not a director, officer or employee of GEIM, GE Investment Services Inc.
(the "Distributor"), GE, or any affiliate of those companies, receives an annual
fee of $10,000 for services as Trustee. In addition, each Trustee receives $500
for each meeting of the Board attended by the Trustee and is reimbursed for
expenses incurred in connection with attendance at Board meetings.
20
<PAGE>
Trustees' Compensation
(for the fiscal year ended September 30, 1996)
<TABLE>
<CAPTION>
Total Compensation for all
Total Compensation Investment Companies Managed by
Name of Trustee from the Trust GEIM or GEIC
--------------- ------------------ -------------------------------
<S> <C> <C>
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++
</TABLE>
-----------------------
+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.
21
<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
22
<PAGE>
year ended September 30, 1994, the International Fund, the Global Fund, the U.S.
Equity Fund, the Strategic Fund, the Tax-Exempt Fund, the Income Fund and the
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, has been retained by GEIM to act as portfolio manager of the Tax-Exempt
Fund under a sub-investment advisory contract with GEIM dated September 26,
1997. Pursuant to the sub-investment advisory agreement, Brown Brothers bears
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 service based upon a computerized matrix
system, which considers market transactions and dealer supplied valuations.
Valuations for municipal bonds are obtained from a qualified
24
<PAGE>
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 contracts on foreign currencies) held for less than three months, but
only if such currencies (or
26
<PAGE>
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
were acquired by GE Funds 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:
Investors Trust 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
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
27
<PAGE>
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 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
28
<PAGE>
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 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.
- ---------------
* As used in this equation, "6" is an exponent.
29
<PAGE>
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.
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
- -----------------
** As used in this equation, "n" is an exponent.
30
<PAGE>
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.
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 May 23, 1997:
31
<PAGE>
<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 4,737 shares 10.18%
2 Corporate Drive
Shelton, CT 06484
George N. Rohrbacher, Therese J. Rohrbacher, joint tenants 4,359 shares 9.37%
4473 Lindenhurst Lane
Las Vegas, NV 89120-4206
Buford Parrish, Marjorie Parrish, Karen M. Schafer, JTWROS 8,495 shares 18.26%
2803 Regents Park
Austin, TX 78746
Kate Frazier Doty, Trustee 8,755 shares 18.82%
Paul & Kate Doty Family Trust
U/A/D 10/3/90
3317 Windsor Road
Austin, TX 78703-2263
Leroy Bednar, Lola Bednar, joint tenants 4,139 shares 8.90%
5304 N. Lamar
Austin, TX 76751-1823
Arlyne R. Dryer, Trustee 5,284 shares 11.36%
Gene F. & Arlyne R. Dryer Trust
U/A/D 2/10/87 12507 Pomerado Ct.
San Diego, CA 92128-2315
Robert H. Nagel, Mary E. Nagel, Jt ten 4,504 shares 9.66%
1953 Locarno Drive
Knoxville, TN 37914
Tax-Exempt Fund, Class B
Kenneth C. Cummings 7,922 shares 7.46%
242 W. Liberty Street
Reno, NV 89501
Margaret E. Cooper 8,596 shares 8.10%
2706 Biarritz Dr.
Palm Beach Garden, FL 33410
</TABLE>
32
<PAGE>
<TABLE>
<S> <C> <C>
Estelle M. Simon 6,314 shares 5.95%
417 N. Westphalia
Pewamo, MI 46873
Roswell C. Taite, Fernie L. Taite, joint tenants 8,971 shares 8.45%
9108 Hilldale
Houston, TX 77055-7438
Pamela G. Willson 5,417 shares 5.10%
1435 Willow Creek Lane
Gardnerville, NV 89410-5821
Roger W. Leroy, 5,772 shares 5.44%
Dorothea H. Leroy Jt. Ten.
2620 Bald Ridge Dr.
Cumming, GA 30131
Tax-Exempt Fund, Class D
General Electric Company 258,871 shares 99.30%
2 Corporate Drive 6th Floor
P.O. Box 861
Shelton, CT 06484
Income Fund, Class A
State Street Bank & Trust Co. 105,360 shares 8.11%
FBO Beamspeed and Co.
BG Automotive Motors Inc.
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank & Trust Co., as Trustee 336,787 shares 26.07%
Beamsail & Co. - Doubletree
Master Trust Client Service
1 Enterprise Drive
North Quincy, MA 02171-2126
Wells Fargo Bank, as Trustee 423,338 shares 32.57%
FBO Hubbell Inc. 401(k)
Attn SSP#0167-112#6971
201 3rd Street 11th Floor
San Francisco, CA 94163-0001
</TABLE>
33
<PAGE>
<TABLE>
<S> <C> <C>
State Street Bank & Trust Co., as Trustee 139,459 shares 10.73%
Granitecove & Co.-London Fog
Master Trust Client Service
1 Enterprise Drive
North Quincy, MA 02171-2126
State Street Bank & Trust Co., as Trustee 74,455 shares 5.73%
Granitepass & Co.
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. 9,004 shares 7.27%
C/F the IRA of Patricia L. Baldwin
61370 N. Main St.
Jones, MI 49061
State Street Bank & Trust Co., 7,169 shares 5.79%
Cust. for the IRA of Erwin L. Shannon
30666 Longnecker Road
Leonidas, MI 49066
Georgeann Pyke 6,519 shares 5.26%
1758 Jefferson Ave.
Glenview, IL 60025
Income Fund, Class D
State Street Bank & Trust Co., Trustee 426,161 shares 33.91%
Benchside & Co. - GE Cap. Asset Maint.
Master Trust Client Service
One Enterprise Drive
N. Quincy, MA 02171-2126
State Street Bank & Trust Co., as Trustee 160,940 shares 12.81%
Granitefront & Co.-Service America
Master Trust Client Service
1 Enterprise Drive
North Quincy, MA 02171-2126
State Street Bank & Trust Co., as Trustee 101,252 shares 8.06%
Pondway & Co.-GE Fleet/FGIC
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 131,466 shares 10.46%
Grampas & Co. Trust
FBO Ameridata Technology
Master Trust Client Service
1 Enterprise Drive
North Quincy, MA 02171-2126
State Street Bank & Trust Co., as Trustee 105,537 shares 8.40%
Eastmate & Co. Trust
FBO GE Capital Fleet Services
Master Trust Client Service
1 Enterprise Drive
North Quincy, MA 02171-2126
State Street Bank & Trust Co., Trustee 67,638 shares 5.38%
Granitebridge & Co. - Elana Moderato
Master Trust Client Services - W6C
One Enterprise Drive
North Quincy, MA 02171
Global Fund, Class A
West Carroll National Bank 8,439 shares 15.70%
401(k)
William E. Pratt
Attn: 401(k) Administrator
Personal and Confidential
P.O. Box 708
Oak Grove, LA 71263
James R. Boardwell, Kathryn J. Boardwell, Jt. Ten. 2,005 shares 6.18%
7460 Carefree Dr.
Whitehall, MI 49461
Richard Ellzey, Jean M. Ellzey, Jt. Ten. 2,260 shares 5.51%
1830 Popps Ferry Rd.
Biloxi, MS 39532
Global Fund, Class B
BHC Securities, Inc. 1,769 shares 5.51%
FAO 22402626
Attn: Mutual Funds Dept.
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7042
</TABLE>
35
<PAGE>
<TABLE>
<S> <C> <C>
State Street Bank & Trust Company 2,954 shares 9.10%
C/F The IRA of Sharon L. Giever
825 Boswell Lane
Kalamazoo, MI 49005
Global Fund, Class D
State Street Bank & Trust Co., as Trustee 232,501 shares 29.05%
Eastmate & Co. Trust
FBO GE Capital Fleet Services
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank & Trust Co., as Trustee 207,919 shares 25.96%
Grampas & Co. Trust
FBO Ameridata Technology
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
Boatmen's First Natl. Bank of KC 281,363 shares 35.16%
TTEE ERC Thrift Plan
P.O. Box 14737
St. Louis, MO 63178
Strategic Fund, Class A
State Street Bank & Trust Co., as Trustee 66,797 shares 6.82%
FBO Southwestern Medical Clinic
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank & Trust Co., as Trustee 396,130 shares 25.50%
Beamsail & Co.-Doubletree Master Trust Client Service
1 Enterprise Drive
North Quincy, MA 02171-2126
State Street Bank & Trust Company, as Trustee 413,439 shares 26.61%
Granitepass & Co.
FBOMcClaren/Hart Environmental Eng.
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171
</TABLE>
36
<PAGE>
<TABLE>
<S> <C> <C>
InvestCo Trust Co., Trustee 309,691 shares 19.94%
Compass Group USA Inc.: 401(k) Plan
PO Box 173707
Denver, CO 80217
T. Rowe Price Tr. co. Fiduciary Account 211,395 shares 13.61%
Compass Group 401(k) Plan
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 499,452 shares 34.65%
Eastmate & Co.
FBO GE Capital Fleet Services
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank & Trust Co., Trustee 356,350 shares 24.72%
Benchside & Co., - GE Cap. Asset Maint.
Master Trust Client Service
One Enterprise Drive
N. Quincy, MA 02171-2126
State Street Bank & Trust Co., Trustee 190,591 shares 13.22%
Granitefront & Co.-Service America
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171
State Street Bank & Trust Co. as Trustee 222,822 shares 15.46%
FBO Ameridata Technolocy
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171
Equity Fund, Class A
State Street Bank & Trust Company, as Trustee 191,604 shares 11.87%
Granitecove & Co.-London Fog
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171
</TABLE>
37
<PAGE>
<TABLE>
<S> <C> <C>
State Street Bank & Trust Company, as Trustee 139,617 shares 8.66%
FBO Southwestern Medical Clinic PC
Master Trust Client Service
6418 Deans Hill Road
Berrien Center, MI 49102
State Street Bank & Trust Co. 146,450 shares 9.07%
F/B/O Beamspeed & Co.
BG Automotive Motors Inc.
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank and Trust Co., as Trustee 201,266 shares 12.47%
Granitepass & Co.
FBO McClaren/Hart Envir. Eng.
Master Trust Client Service
1 Enterprise Drive.
No. Quincy, MA 02171
State Street Bank & Trust Co., as Trustee 569,012 shares 35.26%
Beamsail & Co.-Doubletree
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank & Trust Co., as Trustee 144,678 shares 8.96%
FBO Wavetek US Inc.
Master Trust Client Ser.-W6C
1 Enterprise Drive
No. Quincy, MA 02171
Equity Fund, Class D
State Street Bank & Trust Co., as Trustee 789,483 shares 10.48%
Eastmate & Co.
FBO GE Capital Fleet Services
Master Trust Client Services
1 Enterprise Drive
No. Quincy, MA 02171-2126
Bost & Co. 619,684 shares 8.23%
Mutual Fund Operations
P.O. Box 3198
Pittsburgh, PA 15230
</TABLE>
38
<PAGE>
<TABLE>
<S> <C> <C>
State Street Bank & Trust Co., Trustee 828,893 shares 11.00%
Benchside & Co. - GE Cap. Asset Maint.
Master Trust Client Service
One Enterprise Drive
N. Quincy, MA 02171-2126
Clark & Co. 742,342 shares 9.66%
FBO UT O C Tanner Pension
P. O. Box 39
Westerville, OH 43085-0039
Saul & Co. 847,264 shares 11.25%
FBO Stamford Hospital
Ret. Income Plan
c/o First Union National Bank
Fid Ops/Mutual Funds
NC11 51
Charlotte, NC 28288
Strafe & Co. 789,202 shares 10.21%
FAO Mead Corp. Foundation
235 W. Shrock Road
Mutual Fund 0390
Westerville, OH 43081
State Street Bank & Trust Co., as Trustee 505,464 shares 6.71%
Grampas & Co. Trust
FBO Ameridata Technology
Master Trust Client Service W6C
1 Enterprise Drive
No. Quincy, MA 02171
Saul & Co. 357,754 shares 5.15%
FBO Stamford Hospital Ret. Inc. c/o First Union National Bank
401 S. Tryon St.
NC1151
Charlotte, NC 28202
Boatmen's First Natl. Bank of KC 581,348 shares 7.72%
TTEE ERC Thrift Plan
P.O. Box 14737
St. Louis, MO 63178
</TABLE>
39
<PAGE>
<TABLE>
<S> <C> <C>
Money Market Fund
State Street Bank & Trust Co., as Trustee 8,947,081 shares 38.71%
Granitedock & Co.-Roper Corp.
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
International Fund, Class A
State Street Bank and Trust Co., as Trustee 72,155 shares 10.59%
Granitepass & Co.
FBO McClaren/Hart Environ. Eng.
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171
State Street Bank & Trust Co., as Trustee 330,114 shares 48.43%
Beamsail & Co. - Doubletree
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171
State Street Bank & Trust Co., Trustee 35,757 shares 5.25%
Granitecove & Co. - London Fog
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171
State Street Bank & Trust Co., Trustee 76,967 shares 11.29%
FBO Southwestern Medical
Clinic PC
Master Trust Client Service
6418 Deans Hill Road
Berrien Center, MI 49102
InvestCo Trust Co., Tree. 53,120 7.79%
Compass Group USA Inc. 401(K) Plan
P.O. Box 173707
Denver, CO 80217
International Fund, Class B
PaineWebber for the benefit of PaineWebber 2,341 shares 11.41%
CDN FBO Robert Frayn
P.O. Box 3321
Weehawken, NJ 07087
</TABLE>
40
<PAGE>
<TABLE>
<S> <C> <C>
State Street Bank & Trust Co. 2,509 shares 12.23%
C/F The IRA of Brenda J. Hetrick
3570 Freeman Ave.
Hamilton, OH 45015
International Fund, Class C
Ronald J. Felmus & Veta Felmus, Trustees 24,137 shares 8.82%
Felmus Family Residual Trust
U/A/D 5/9/79
22 Pine Circle South
Belleair, FL 34616
International Fund, Class D
John H. Pender, as Trustee 526,075 shares 14.29%
Aid Association for Lutherans
4321 North Ballard Road
Appleton, WI 54919-0001
Aid Association for Lutherans 2,606,597 shares 70.56%
4321 North Ballard Road
Appleton, WI 54919-0001
State Street Bank & Trust Co., Trustee 273,803 shares 7.41%
Benchside & Co. - GE Cap. Asset Maint.
Master Trust Client Service
One Enterprise Drive
N. Quincy, MA 02171-2126
Short-Term Government Fund, Class A
General Electric Company 2,414 shares 7.79%
2 Corporate Drive
Shelton, CT 06484
State Street Bank & Trust Co. 15,599 shares 28.67%
FBO Beamspeed and Co.
BG Automotive Motors
Master Trust Client Service
One Enterprise Drive
No. Quincy, MA 02171
Mary McKinney, Dawn M. Clark, 4,490 shares 6.92%
joint tenants
1517 Forest Trail
Austin, TX 78703-3229
</TABLE>
41
<PAGE>
<TABLE>
<S> <C> <C>
Arlyne R. Dryer, Trustee 4,205 shares 6.48%
Gene F. & Arlyne R. Dryer Trust
U/A/D 2/10/87 12507 Pomerado Ct.
San Diego, CA 92128-2315
Peter Schoenfeld Asset Mgmt (401K) Plan 11,428 shares 17.52%
William Popper
Personal and Confidential
787 Seventh Avenue, 3rd Floor
New York, NY 10019-8018
Attn: Peter M. Schoenfeld
State Street Bank & Trust Co. TTEE 22,218 shares 34.26
FBO Wavetek US Inc.
Master Trust Client Ser-WBC
1 Enterprise Drive
No. Quincy, MA 02171-2126
Short-Term Government Fund, Class B
Cathy Stockstill 1,027 shares 13.73%
15149 Wessington St.
Sherman Oaks, CA 91411
Don L. Nelson 1,721 shares 23.01%
150 S. Laurel Drive
Margate, FL 33063-5370
Maria Venturin 1,330 shares 17.79%
1016 N. 16th Ave. #2
Hollywood, FL 33020
Iris Powell 715 shares 9.56%
634 NW 4th Ct
Hallandale, FL 33009
Charles DiPasquale, 2,523 shares 33.72%
Carol Clark, Jt. Wros
P.O. Box 25611
Tamarac, FL 33320
Short-Term Government Fund, Class C
John R. Costantino and 47,347 shares 11.47%
Barbara C. Costantino
165-84 Street
Brooklyn, NY 11229-6604
</TABLE>
42
<PAGE>
<TABLE>
<S> <C> <C>
State Street Bank & Trust Co. 24,537 shares 5.95%
C/F the Rollover IRA of James L. Jackson
111 Crestwood Dr.
Parkersburg, WV 26101
Short-Term Government Fund, Class D
GE Capital Assurance Co. 396,287 shares 61.36%
Attn Treasury
601 Union Street
Seattle, WA
State Street Bank & Trust Co., Trustee 226,704 shares 35.41%
Eastwall & Co. Trust
FBO GE Consulting
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
Premier Fund, Class A
Randall D. Bryan, Kathryn L. Bryan Jt Ten 524 shares 5.77%
6620 Scarlett Drive
Prescott, AZ 36301-8583
GE Capital Assurance Co. 6,867 shares 73.31%
Attn: Treasury
501 Union Street
Seattle, WA 95101-2327
Premier Fund, Class B
State Street Bank & Trust Co. 997 shares 7.94%
Cust for the IRA of
Lynn D. Ferguson
5574 W. Colony Road
St. Johns, MI 48879
Chester and Helen Wolter Fam., Living Trust 1,831 shares 14.17%
Chester Leon Wolter TTEE
Helen Marie Wolter TTEE DTD 2-7-92
P.O. Box 65
Adin, CA 96006-0065
GE Capital Assurance Co. 6,667 shares 51.59%
Attn: Treasury
501 Union Street
Seattle, WA 95101-2327
</TABLE>
43
<PAGE>
<TABLE>
<S> <C> <C>
Premier Fund, Class C
William J. Conaty, Sue A. Conaty Jt Ten 14,829 shares 5.10%
111 Golden Pond Ln
Fairfield, CT 05430-2136
Premier Fund, Class D
GE Capital Assurance Co. 313,333 shares 99.69%
Attn: Treasury
801 Union Street
Seattle, WA 98101-2327
</TABLE>
As of May 23, 1997, the current Trustees and officers of each
Fund, as a group, beneficially owned less than 1% of each Fund's outstanding
shares.
ADDITIONAL INFORMATION
The Trust was organized as an unincorporated business trust
under the laws of The Commonwealth of Massachusetts pursuant to a Declaration of
Trust dated August 10, 1992, as amended from time to time (the "Declaration").
The 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 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.
44
<PAGE>
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, substantially all the assets of
which have been acquired by the Trust on 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, (203)
326-4040.
45
<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.
<PAGE>
Fitch Investors Services, Inc. employs the rating F-1+ to
indicate issues regarded as having the strongest degree of assurance of timely
payment. The rating F-1 reflects an assurance of timely payment only slightly
less in degree than issues rated F-1+, while the rating F-2 indicates a
satisfactory degree of assurance of timely payment although the margin of safety
is not as great as indicated by the F-1+ and F-1 categories.
Duff & Phelps Inc. employs the designation of Duff 1 with
respect to top grade commercial paper and bank money instruments. Duff 1+
indicates the highest certainty of timely payment: short-term liquidity is
clearly outstanding and safety is just below risk-free U.S. Treasury short-term
obligations. Duff 1- indicates high certainty of timely payment. Duff 2
indicates good certainty of timely payment; liquidity factors and company
fundamentals are sound.
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
A-2
<PAGE>
accordance with the terms of the obligation. BB represents a lower degree of
speculation than B, and CCC the highest degree of speculation. While such bonds
will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.
To provide more detailed indications of credit quality, the
ratings from AA to B may be modified by the addition of a plus or minus sign to
show relative standing within this major rating category.
Description of Moody's Corporate Bond Ratings
Aaa -- Bonds that are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a large or
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa -- Bonds that are rated Aa are judged to be of high quality
by all standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present that make the long-term risks appear somewhat larger than in Aaa
securities.
A -- Bonds that are rated A possess favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present that suggest a susceptibility to impairment sometime in the
future.
Baa -- Bonds that are rated Baa are considered as medium-grade
obligations, that is, they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba -- Bonds that are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and thereby
not well safeguarded during both good and bad times over the future. Uncertainty
of position characterizes bonds in this class.
B -- Bonds that are rated B generally lack characteristics of
desirable investments. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa -- Bonds that are rated Caa are of poor standing. These
issues may be in default, or present elements of danger may exist with respect
to principal or interest.
A-3
<PAGE>
Moody's applies numerical modifiers (1, 2 and 3) with respect
to the bonds rated Aa through B, The modifier 1 indicates that the bond being
rated ranks in the higher end of its generic rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the bond ranks
in the lower end of its generic rating category.
Description of S&P Municipal Bond Ratings
AAA -- Prime -- These are obligations of the highest quality.
They have the strongest capacity for timely payment of debt service.
General Obligation Bonds -- In a period of economic stress,
the issuers will suffer the smallest declines in income and will be least
susceptible to autonomous decline. Debt burden is moderate. A strong revenue
structure appears more than adequate to meet future expenditure requirements.
Quality of management appears superior.
Revenue Bonds -- Debt service coverage has been, and is
expected to remain, substantial. Stability of the pledged revenues is also
exceptionally strong due to the competitive position of the municipal enterprise
or to the nature of the revenues. Basic security provisions (including rate
covenant, earnings test for issuance of additional bonds, debt service reserve
requirements) are rigorous. There is evidence of superior management.
AA -- High Grade -- The investment characteristics of bonds in
this group are only slightly less marked than those of the prime quality issues.
Bonds rated AA have the second strongest capacity for payment of debt service.
A -- Good Grade -- Principal and interest payments on bonds in
this category are regarded as safe although the bonds are somewhat more
susceptible to the adverse effects of changes in circumstances and economic
conditions than bonds in higher rated categories. This rating describes the
third strongest capacity for payment of debt service. The ratings differ from
the two higher ratings of municipal bonds, because:
General Obligations Bonds -- There is some weakness, either in
the local economic base, in debt burden, in the balance between revenues and
expenditures, or in quality of management. Under certain adverse circumstances,
any one such weakness might impair the ability of the issuer to meet debt
obligations at some future date.
Revenue Bonds -- Debt service coverage is good, but not
exceptional. Stability of the pledged revenues could show some variations
because of increased competition or economic influences on revenues. Basic
security provisions, while satisfactory, are less stringent. Management
performance appears adequate.
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
A-4
<PAGE>
they normally exhibit adequate protection parameters) than for bonds in higher
rated categories.
General Obligation Bonds -- Under certain adverse conditions,
several of the above factors could contribute to a lesser capacity for payment
of debt service. The difference between A and BBB ratings is that the latter
shows more than one fundamental weakness, or one very substantial fundamental
weakness, whereas, the former shows only one deficiency among the factors
considered.
Revenue Bonds -- Debt coverage is only fair. Stability of the
pledged revenues could show substantial variations, with the revenue flow
possibly being subject to erosion over time. Basic security provisions are no
more than adequate. Management performance could be stronger.
BB, B, CCC and CC -- Bonds rated BB, B, CCC and CC are
regarded, on balance, as predominately speculative with respect to capacity to
pay interest and repay principal in accordance with the terms of the obligation.
BB includes the lowest degree of speculation and CC the highest degree of
speculation. While these bonds will likely have some quality and protective
characteristics, these characteristics are outweighed by large uncertainties or
major risk exposures to adverse conditions.
C -- The rating C is reserved for income bonds on which no
interest is being paid.
D -- Bonds rated D are in default, and payment of interest
and/or repayment of principal is in arrears.
S&P's letter ratings may be modified by the addition of a plus
or a minus sign, which is used to show relative standing within the major rating
categories, except in the AAA-Prime Grade category.
Description of S&P Municipal Note Ratings
Municipal notes with maturities of three years or less are
usually given note ratings (designated SP-1, -2 or -3) to distinguish more
clearly the credit quality of notes as compared to bonds. Notes rated SP-1 have
a very strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics are given the
designation of SP-1+. Notes rated SP-2 have satisfactory capacity to pay
principal and interest.
Description of Moody's Municipal Bond Ratings
Aaa -- Bonds that are rated Aaa are judged to be the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure.
A-5
<PAGE>
While the various protective elements are likely to change, such changes as can
be visualized are most unlikely to impair the fundamentally strong position of
such issues.
Aa -- Bonds that are rated Aa are judged to be of high quality
by all standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities, or fluctuation
of protective elements may be of greater amplitude, or there may be other
elements present that make the long-term risks appear somewhat larger than in
Aaa securities.
A -- Bonds that are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present that suggest a susceptibility to impairment sometime in the
future.
Baa -- Bonds that are rated Baa are considered as medium grade
obligations, that is, they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba -- Bonds that are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and thereby
not well safeguarded during both good and bad times over the future. Uncertainty
of position characterize bonds in this class.
B -- Bonds that are rated B generally lack characteristics of
the desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa -- Bonds that are rated Caa are of poor standing. Such
issues may be in default or there may be present elements of danger with respect
to principal or interest.
Ca -- Bonds that are rated Ca represent obligations that are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C -- Bonds that are rated C are the lowest rated class of
bonds, and issues so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 in each
generic rating classification from Aa through B. The modifier 1 indicates that
the security ranks in the higher end of its generic ratings category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the
issue ranks in the lower end of its generic ratings category.
A-6
<PAGE>
Description of Moody's Municipal Note Ratings
Moody's ratings for state and municipal notes and other
short-term loans are designated Moody's Investment Grade (MIG) and for variable
rate demand obligations are designated Variable Moody's Investment Grade (VMIG).
This distinction recognizes the differences between short-term credit risk and
long-term risk. Loans bearing the designation MIG 1/VMIG 1 are the best quality,
enjoying strong protection from established cash flows of funds for their
servicing or from established and broad-based access to the market for
refinancing, or both. Loans bearing the designation MIG 2/VMIG 2 are of high
quality, with margins of protection ample, although not as large as the
preceding group. Loans bearing the designation MIG 3/VMIG3 are of favorable
quality, with all security elements accounted for but lacking the undeniable
strength of the higher grades. Market access for refinancing, in particular, is
likely to be less well established. Loans bearing the designation MIG 4/VMIG 4
are of adequate quality. Protection commonly regarded as required of an
investment security is present and although not distinctly or predominantly
speculative, there is specific risk.
A-7
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
(I) (for each of GE International Equity Fund ("International
Fund"), GE Global Equity Fund ("Global Fund"), GE U.S. Equity Fund
("U.S. Equity Fund"), GE Strategic Investment Fund ("Strategic Fund"),
GE Fixed Income Fund ("Income Fund"), GE Short-Term Government Fund
("Short-Term Government Fund"), GE Money Market Fund ("Money Market
Fund") and GE Premier Growth Equity Fund (the "Premier Fund")
(unaudited for the six-month period ended March 31, 1997 only):
(1) Financial Highlights for the period ended September
30, 1993, for the three fiscal years ended
September 30, 1996* and for the six-month period
ended March 31, 1997 (unaudited)**.
(2) Statement of Assets and Liabilities as of September
30, 1996* and March 31, 1997 (unaudited)**.
(3) Statement of Operations for the fiscal year ended
September 30, 1996* and for the six-month period
ended March 31, 1997 (unaudited)**.
(4) Statement of Changes in Net Assets for the two
fiscal years ended September 30, 1996* and for the
six-month period ended March 31, 1997 (unaudited)**.
(5) Changes in Fund Shares for the two fiscal years
ended September 30, 1996* and for the six-month
period ended March 31, 1997 (unaudited)**.
(6) Notes to Financial Statements as of September 30,
1996* and as of March 31, 1997**.
(7) Schedule of Investments as of September 30, 1996*
and March 31, 1997 (unaudited)**.
(8) Notes to Schedules of Investments as of September
30, 1996* and March 31, 1997 (unaudited)**.
(9) Report of Independent Accountants.*
- ---------------
* Incorporated by reference to the Trust's Annual Report to shareholders
for the year ended September 30, 1996.
** Incorporated by reference to the Trust's Semi-Annual Report to
shareholders for the six-month period ended March 31, 1997.
C-1
<PAGE>
(II) (for each of Investors Trust Growth Fund, Investors Trust
Value Fund, Investors Trust Government Fund and Investors Trust Tax
Free Fund, predecessor funds to GE Mid-Cap Growth Fund, GE Value
Equity Fund (the "Value Equity Fund"), GE Government Securities Fund
(the "Government Securities Fund") and GE Tax-Exempt Fund (the
"Tax-Exempt Fund"), respectively):
(1)(a) All Funds except the Government Securities Fund:
Financial Highlights for the period ended October
31, 1993, for the three fiscal years ended October
31, 1996* and for the six-month period ended April
30, 1997 (unaudited)**.
(1)(b) The Government Securities Fund only: Financial
Highlights for the period ended October 31, 1987,
for the nine fiscal years ended October 31, 1996*
and for the six-month period ended April 30, 1997
(unaudited)**.
(2) Statements of Assets and Liabilities as of October
31, 1996* and April 30, 1997 (unaudited)**.
(3) Statements of Operations for the fiscal year ended
October 31, 1996* and for the six-month period ended
April 30, 1997 (unaudited)**.
(4) Statements of Changes in Net Assets for the two
fiscal years ended October 31, 1996* and for the
six-month period ended April 30, 1997 (unaudited)**.
(5) Changes in Fund Shares for the two fiscal years
ended October 31, 1996* and for the six-month period
ended April 30, 1997 (unaudited)**.
(6) Notes to Financial Statements as of October 31,
1996* and as of April 30, 1997 (unaudited)**.
(7) Schedules of Investments as of October 31, 1996* and
April 30, 1997 (unaudited)**.
(8) Notes to Schedules of Investments as of October 31,
1996* and April 30, 1997 (unaudited)**.
(9) Report of Independent Accountants.*
- ---------------
* Incorporated by reference to Investor Trust's Annual Report to
shareholders for the year ended October 31, 1996.
** Incorporated by reference to Investor Trust's Semi-Annual Report to
shareholders for the six-month period ended April 30, 1997.
C-2
<PAGE>
(b) Exhibits:
Exhibit No. Description of Exhibit
- ----------- ----------------------
1(a) Declaration of Trust*
1(b) Certificate of Amendment of Declaration of Trust and Change of
Series Designation*
1(c) Form of Amendment to Declaration of Trust to add Short-Term
Government Fund and International Fund*
1(d) Form of Amendment to Declaration of Trust to add Mid-Cap Fund and
International Income Fund*
1(e) Form of Amendment to Declaration of Trust to add Premier Fund*
1(f) Form of Amendment to Declaration of Trust to add Value Equity
Fund and Government Securities Fund
2 By-Laws*
3 Inapplicable
4 Written Plan Adopted pursuant to Rule 18f-3 under the Investment
Company Act of 1940, as amended.*
5(a) Form of Investment Advisory and Administration Agreement*
5(b) Form of Investment Advisory Agreement for Short-Term Government
Fund and International Fund*
5(c) Form of Investment Advisory Agreement for Mid-Cap Fund and
International Income Fund*
5(d) Form of Investment Advisory and Administration Agreement for
Premier Fund*
5(e) Form of Investment Advisory and Administration Agreement for
Value Equity Fund and Government Securities Fund
5(f) Form of Amended and Restated Investment Advisory and
Administration Agreement for Tax-Exempt Fund
5(g) Form of Sub-Investment Advisory Agreement for Tax-Exempt Fund
C-3
<PAGE>
6 Form of Distribution Agreement, as amended*
7 Inapplicable
8 Form of Custodian Contract*
9(a) Form of Transfer Agency and Service Agreement*
9(b) Form of Administration Agreement for Short-Term Government Fund
and International Fund*
9(c) Form of Administration Agreement for Mid-Cap Fund and
International Income Fund*
10(a) Opinion of Willkie Farr & Gallagher, including consent
10(b) Opinion of Bingham, Dana & Gould, including consent
11(a) Consent of Price Waterhouse LLP
11(b) Consent of Coopers & Lybrand L.L.P.
12 Inapplicable
13(a) Purchase Agreement*
13(b) Form of Purchase Agreement for Short-Term Government Fund and
International Fund*
13(c) Form of Purchase Agreement for Mid-Cap Fund and International
Income Fund*
14 Inapplicable
15(a) Form of Amended and Restated Shareholder Servicing and
Distribution Plan*
15(b) Form of Shareholder Servicing and Distribution Plan for
Short-Term Government Fund*
15(c) Form of Amended and Restated Shareholder Servicing and
Distribution Agreement*
15(d) Form of Shareholder Servicing and Distribution Agreement for
Short-Term Government Fund*
16 Schedule of computation of performance data information
17 Financial Data Schedules
- ------------
* Previously filed
C-4
<PAGE>
Item 25. Persons Controlled by or Under Common Control
with Registrant
See item 28.
Item 26. Number of Holders of Securities
<TABLE>
<CAPTION>
Number of Record Holders
Title of Class as of May 23, 1997
-------------- ------------------------
<S> <C>
Shares representing beneficial interests,
par value $.001 per share of:
Global Fund - Class A 386
Global Fund - Class B 204
Global Fund - Class C 4,652
Global Fund - Class D 243
International Fund - Class A 592
International Fund - Class B 106
International Fund - Class C 749
International Fund - Class D 25
U.S. Equity Fund - Class A 1,482
U.S. Equity Fund - Class B 1,324
U.S. Equity Fund - Class C 6,586
U.S. Equity Fund - Class D 399
Strategic Fund - Class A 689
Strategic Fund - Class B 622
Strategic Fund - Class C 3,263
Strategic Fund - Class D 267
Tax-Exempt Fund - Class A 46
Tax-Exempt Fund - Class B 72
Tax-Exempt Fund - Class C 802
Tax-Exempt Fund - Class D 9
Income Fund - Class A 530
Income Fund - Class B 160
Income Fund - Class C 2,120
Income Fund - Class D 246
Short-Term Government Fund - Class A 107
Short-Term Government Fund - Class B 23
Short-Term Government Fund - Class C 1305
Short-Term Government Fund - Class D 15
Premier Fund - Class A 32
Premier Fund - Class B 31
Premier Fund - Class C 602
Premier Fund - Class D 8
Money Market Fund 996
</TABLE>
There will be no holders of the shares of beneficial interest,
par value $.001 per share, of the International Income Fund, the Mid-Cap Fund,
the Value Equity Fund and the Government Securities Fund on the date this
Registration Statement becomes effective.
C-5
<PAGE>
Item 27. Indemnification
Reference is made to Article IV of the Declaration of Trust of GE Funds
("Registrant") filed as Exhibit 1 to this Registration Statement. Insofar as
indemnification for liability arising under the Securities Act, may be permitted
for Trustees, officers and controlling persons of Registrant pursuant to
provisions of Registrant's Declaration of Trust, or otherwise, Registrant has
been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Registrant of expenses
incurred or paid by a Trustee, officer, or controlling person of Registrant in
the successful defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
Item 28. Business and Other Connections of Investment Advisers
Reference is made to "Management of the Trust" in the Prospectus
forming Part A, and "The Management of the Trust" in the Statement of Additional
Information forming Part B, of this Registration Statement.
The list required by this Item 28 of officers and directors of GE
Investment Management Incorporated ("GEIM"), the Funds' investment adviser,
together with information as to any other business, profession, vocation or
employment of a substantial nature engaged in by those officers and directors
during the past two years, is incorporated by reference to Schedules A and D of
the Forms ADV filed by GEIM pursuant to the Investment Advisers Act of 1940, as
amended (SEC File No. 801-31947). Brown Brothers Harriman & Co. ("Brown
Brothers"), the Tax-Exempt Fund's sub-investment adviser, is a New York limited
partnership which conducts a general banking business and is a member of the New
York Stock Exchange, Inc. To the knowledge of the Funds, none of the general
partners or officers of Brown Brothers is engaged in any other business,
profession, vocation or employment of a substantial nature.
C-6
<PAGE>
Item 29. Principal Underwriters
(a) GE Investment Services Inc. ("GEIS") also serves as distributor for
Elfun Tax-Exempt Income Fund, Elfun Income Fund, Elfun Global Fund, Elfun Money
Market Fund, Elfun Trusts and Elfun Diversified Fund.
(b) The information required by this Item 29 with respect to each
director and officer of GEIS is incorporated by reference to Schedule A of Form
BD filed by GEIS pursuant to the Securities Exchange Act of 1934 (SEC File No.
8-45710).
(c) Inapplicable.
Item 30. Location of Accounts and Records
All accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940, as
amended (the "1940 Act"), and the rules thereunder, are maintained at the
offices of: Registrant located at 3003 Summer Street, Stamford, Connecticut
06905; State Street Bank and Trust Company ("State Street"), Registrant's
custodian and transfer agent, located at 225 Franklin Street, Boston,
Massachusetts 02101; and Boston Financial Data Services, Inc., a subsidiary of
State Street, located at 2 Heritage Drive, Quincy, Massachusetts 02171.
Item 31. Management Services
Inapplicable.
Item 32. Undertakings
(a) Registrant undertakes to call a meeting of the shareholders of each
Fund for the purpose of voting upon the question of removal of a trustee or
trustees of Registrant when requested in writing to do so by the holders of at
least 10% of Registrant's outstanding shares and, in connection with the
meeting, to comply with the provisions of Section 16(c) of the 1940 Act relating
to communications with the shareholders of certain common-law trusts.
(b) Not applicable.
(c) Registrant undertakes to furnish each person to whom a prospectus
is delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
(d) Registrant undertakes to file a post-effective amendment containing
reasonably current financial statements that need not be certified, relating to
Class C and D shares of the Mid-Cap Fund, the Value Equity Fund, the Tax-Exempt
Fund and the Government Securities Fund within four to six months from the
effective date of this Registration Statement.
C-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and the Investment Company Act of 1940, as
amended, Registrant has duly caused this Amendment to its Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Stamford, State of Connecticut, on the 23rd day of June, 1997.
By: /s/ Michael J. Cosgrove
Michael J. Cosgrove
President and Chairman
of the Board
Pursuant to the requirements of the Securities Act, this
Amendment to Registrant's Registration Statement on Form N-1A has been signed
below by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Michael J. Cosgrove June 23, 1997
Michael J. Cosgrove President and Chairman of the Board
(Chief Executive Officer)
/s/ Alan M. Lewis June 23, 1997
Alan M. Lewis Executive Vice President and Trustee
/s/ John R. Costantino June 23, 1997
John R. Costantino Trustee
/s/ William J. Lucas June 23, 1997
William J. Lucas Trustee
/s/ Robert P. Quinn June 23, 1997
Robert P. Quinn Trustee
/s/ Jeffrey A. Groh June 23, 1997
Jeffrey A. Groh Treasurer
(Chief Financial and
Accounting Officer)
C-8
</TABLE>
<PAGE>
List of Exhibits
Item 24(b): Title of Exhibit
- ---------- ----------------
1(f) Form of Amendment to Declaration of Trust to add Value
Equity Fund and Government Securities Fund
5(e) Form of Investment Advisory and Administration Agreement
for Value Equity Fund and Government Securities Fund
5(f) Form of Amended and Restated Investment Advisory and
Administration Agreement for Tax-Exempt Fund
5(g) Form of Sub-Investment Advisory Agreement for
Tax-Exempt Fund
10(a) Opinion of Willkie Farr & Gallagher, including consent
10(b) Opinion of Bingham, Dana & Gould, including consent
11(a) Consent of Price Waterhouse LLP
11(b) Consent of Coopers & Lybrand L.L.P.
16 Schedule of computation of performance data information
17 Financial Data Schedules
<PAGE>
GE FUNDS
INSTRUMENT EVIDENCING ESTABLISHMENT AND
DESIGNATION OF SERIES OF SHARES OF BENEFICIAL
INTEREST, $.001 PAR VALUE PER SHARE
WHEREAS, Section 5.11 of the Declaration of Trust dated August 10, 1992
(as amended from time to time the "Declaration") of GE Funds (the "Trust")
provides that the Trustees of the Trust may establish and designate new series
of shares and that such establishment and designation shall be effective upon
the execution of an instrument in writing by an officer of the Trust pursuant to
a vote of a majority of the Trustees of the Trust.
WHEREAS, the Board of Trustees of the Trust has heretofore established
and designated in the aggregate eleven (11) series of beneficial interest in the
Trust, with each such series having the relative rights and preferences as set
forth in paragraphs (a) through (f) of Section 5.11 of the Declaration (the
"Existing Series");
WHEREAS, by action of the Board of Trustees of the Trust taken at a
meeting held on May 15, 1997, two additional series of the Trust were
established and designated having the relative rights and preferences as set
forth in paragraphs (a) through (f) of Section 5.11 of the Declaration.
NOW, THEREFORE, in addition to the Existing Series, the following
series have been established effective as of the date set forth below:
GE Government Securities Fund
GE Value Equity Fund
each such series having the relative rights and preferences as set forth in
paragraphs (a) through (f) of Section 5.11 of the Declaration.
IN WITNESS WHEREOF, the undersigned, being the Secretary of the Trust
and acting pursuant to a vote of a majority of the Trustees of the Trust, has
hereunto set his hand this 30th day of May, 1997.
By: /s/ Matthew J. Simpson
Name: Matthew J. Simpson
Title: Secretary
<PAGE>
GE FUNDS
Establishment and Designation of Classes
The undersigned, being a duly authorized officer of GE Funds, a
Massachusetts business trust (the "Trust"), acting pursuant to Section 5.11 of
the Declaration of Trust dated August 10, 1992, as amended (the "Declaration"),
does hereby divide the shares of beneficial interest ("Shares") of the series of
the trust designated GE Government Securities Fund and GE Value Equity Fund
(each, a "Fund") to create four classes of Shares, within the meaning of Section
5.22 of the Declaration, as follows:
1. The four Classes of Shares are designated: Class A Shares, Class
B Shares, Class C Shares and Class D Shares;
2. Class A Shares, Class B Shares, Class C Shares and Class D Shares
shall be entitled to all the rights and preferences accorded to
Shares under the Declaration;
3. The prospective investors to whom Class A, Class B, Class C and
Class D Shares will each be offered, the purchase price of Class A
Shares, Class B Shares, Class C Shares and Class D Shares, the
method of determination of the net asset value of Class A Shares,
Class B Shares, Class C Shares and Class D Shares, the price,
terms and manner of redemption of Class A Shares, Class B Shares,
Class C Shares and Class D Shares, the conversion feature of Class
B Shares and the relative dividend rights of holders of Class
A Shares, Class B Shares, Class C Shares and Class D Shares will
be as set forth in the then currently effective prospectus and
statement of additional information of the Trust relating to the
Fund, as amended from time to time, under the Securities Act of
1933, as amended.
IN WITNESS WHEREOF, the undersigned has signed this instrument and has
caused a duplicate original to be lodged among the records of the Trust this
30th day of May, 1997.
By: /s/ Matthew J. Simpson
Name: Matthew J. Simpson
Title: Secretary
<PAGE>
GE FUNDS
GE VALUE EQUITY FUND
INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT
___________, 1997
GE Investment Management Incorporated
3003 Summer Street
P.O. Box 7900
Stamford, Connecticut 06904
Ladies and Gentlemen:
GE Funds, a business trust organized under the laws of The
Commonwealth of Massachusetts (the "Trust"), confirms its agreement with GE
Investment Management Incorporated ("GEIM") with respect to GEIM's serving as
the investment adviser and administrator of GE Value Equity Fund (the "Fund"), a
series of the Trust. Terms not defined herein have the meanings assigned to such
terms as set forth in the Trust's Registration Statement on Form N-1A, as
amended from time to time (the "Registration Statement"). GEIM agrees to provide
services upon the following terms and conditions:
Section 1. Services as Investment Adviser and Administrator.
(a) The Trust anticipates that the Fund will employ its
capital by investing and reinvesting in investments of the type specified in the
Trust's Declaration of Trust dated August 10, 1992, as amended from time to time
(the "Declaration of Trust"), in the Trust's By-Laws, as amended from time to
time (the "By-Laws"), and in the Trust's Registration Statement, and in the
manner and to the extent approved by the Board of Trustees of the Trust. Copies
of the Registration Statement, the Declaration of Trust and the By-Laws have
been submitted to GEIM.
(b) Subject to the supervision and direction of the Trust's
Board of Trustees, GEIM, as the Fund's investment adviser, will manage the
Fund's portfolio in accordance with the investment objective and policies of the
Fund as stated in the Registration Statement, will make investment decisions for
the Fund and will place purchase and sale orders for the Fund's portfolio
transactions.
(c) Subject to the supervision and direction of the Board of
Trustees, GEIM, as administrator will (1) furnish the
<PAGE>
Trust with statistical and research data, clerical help and accounting, data
processing, bookkeeping, internal auditing services and certain other services
required by the Trust; (2) prepare reports to the shareholders of the Funds; (3)
assist in the preparation of tax returns and reports to and filings with the
Securities and Exchange Commission (the "Commission") and state securities law
authorities.
(d) GEIM will, at its own expense, maintain sufficient staff,
and employ or retain sufficient personnel and consult with any other persons
that it determines may be necessary or useful to the performance of its
obligations under this Agreement.
(e) GEIM will keep the Trust informed of developments
materially affecting the Fund, and will, on its own initiative, furnish the
Trust from time to time with whatever information GEIM believes is appropriate
for this purpose.
(f) GEIM may delegate all or a portion of its duties under
this Agreement. GEIM will supervise, monitor and evaluate the services provided
by any service provider, including any sub-investment adviser retained by GEIM
pursuant to a sub-advisory agreement.
Section 2. Selection of Investments on Behalf of the Fund.
Unless otherwise set forth in the Registration Statement or
directed by the Trust, GEIM will, in selecting brokers or dealers to effect
transactions on behalf of the Fund select the best overall terms available. In
so doing, GEIM may consider the breadth of the market on 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. GEIM may also consider brokerage and
research services provided to the Funds and/or other accounts over which GEIM or
its affiliates exercise investment discretion. The Trust recognizes the
desirability of GEIM's having access to supplemental investment and market
research and security and economic analyses provided by brokers and that those
brokers may execute brokerage transactions at a higher cost to the Fund than
would be the case if the transactions were executed on the basis of the most
favorable price and efficient execution. The Trust, thus, authorizes GEIM, to
the extent permitted by applicable law and regulations, to pay higher brokerage
commissions for the purchase and sale of securities for the Fund to brokers who
provide supplemental investment and market research and security and economic
analyses, subject to review by the Trustees of the Trust and from time to time
with respect to the extent and continuation
2
<PAGE>
of this practice. The Trust understands that the services provided by those
brokers may be useful to GEIM in connection with its services to other clients.
Section 3. Costs and Expenses.
GEIM will bear the cost of rendering the services it is
obligated to provide under this Agreement and will, at its own expense, pay the
salaries of all officers and employees who are employed by both it and the
Trust. GEIM will provide the Fund with investment officers who are authorized by
the Trust's Board of Trustees to execute purchases and sales of securities on
behalf of the Fund and will employ a professional staff of portfolio managers
who draw upon a variety of sources for research information for the Fund. Other
expenses to be incurred in the operation of the Fund and not specifically borne
by GEIM will be borne by the Fund, including: shareholder servicing and
distribution fees under the terms of the shareholder servicing and distribution
plan adopted by the Trust with respect to the Fund pursuant to Rule 12b-1 (the
"Plan") under the Investment Company Act of 1940, as amended (the "1940 Act");
charges and expenses of any registrar, the costs of custody, transfer agency and
recordkeeping services in connection with the Fund; brokerage fees and
commissions; taxes; registration costs of the Fund and its shares under Federal
and state securities laws; the cost and expense of printing, including
typesetting, and distributing of prospectuses describing the Fund and
supplements to those prospectuses to regulatory authorities and the Fund's
shareholders; all expenses incurred in conducting meetings of the Fund's
shareholders and meetings of the Trust's Board of Trustees relating to the Fund,
including fees paid to members of the Trust's Board of Trustees who are not
affiliated with GEIM or any of its affiliates; all expenses incurred in
preparing, printing and mailing proxy statements and reports to shareholders of
the Fund; fees and travel expenses of members of the Trust's Board of Trustees
or members of any advisory board or committee who are not employees of GEIM, or
any of its affiliates; all expenses incident to any dividend, withdrawal or
redemption options provided to Fund shareholders; charges and expenses of any
outside service used for pricing the Fund's portfolio securities and calculating
the net asset value of the Fund's shares; fees and expenses of legal counsel,
including counsel to the members of the Trust's Board of Trustees who are not
interested persons of the Fund, or GEIM, and independent auditors; membership
dues of industry associations; interest on Fund borrowings; postage; insurance
premiums on property or personnel (including officers and Trustees) of the Trust
that inure to their benefit; extraordinary expenses (including, but not limited
to, legal claims and liabilities and litigation costs and any indemnification
relating thereto); and all other costs of the Fund's operations.
3
<PAGE>
Section 4. Compensation.
In consideration of services rendered pursuant to this
Agreement, the Trust will pay GEIM on the Trust's first business day of each
month a fee that is accrued daily at the annual rate of .55% of the value of the
Fund's average daily net assets for the previous month. For the purpose of
determining fees payable to GEIM under this Agreement, the value of the Fund's
net assets will be computed in the manner described in the Registration
Statement.
Section 5. Services to Other Companies or Accounts.
(a) The Trust understands and acknowledges that GEIM now acts
and will continue to act as investment manager or adviser to various fiduciary
or other managed accounts and the Trust has no objection to GEIM's so acting, so
long as that when the Fund and any account served by GEIM are prepared to invest
in, or desire to dispose of, the same security, available investments or
opportunities for sales will be allocated in a manner believed by GEIM to be
equitable to the Fund and the account. The Trust recognizes that, in some cases,
this procedure may adversely affect the price paid or received by the Fund or
the size of the position obtained or disposed of by the Fund.
(b) The Trust understands and acknowledges that the persons
employed by GEIM to assist in the performance of its duties under this Agreement
will not devote their full time to that service and agrees that nothing
contained in this Agreement will be deemed to limit or restrict the right of
GEIM or any affiliate of GEIM to engage in and devote time and attention to
other businesses or to render services of whatever kind or nature.
Section 6. Continuance and Termination of the Agreement.
(a) This Agreement will become effective as of the date the
Fund commences its investment operations and will continue for an initial
two-year term and will continue thereafter so long as the continuance is
specifically approved at least annually (a) by the Trustees of the Trust or (b)
by a vote of a majority of the Fund's outstanding voting securities, as defined
in the 1940 Act, provided that in either event the continuance is also approved
by a majority of the Trustees who are not "interested persons" (as defined in
the 1940 Act) of any party to this Agreement, by vote cast in person at a
meeting called for the purpose of voting on the approval.
4
<PAGE>
(b) This Agreement is terminable without penalty, by the
Trust on not more than 60 nor less than 30 days' written notice to GEIM, by vote
of holders of a majority of the Fund's outstanding voting securities, as defined
in the 1940 Act, or by GEIM on not more than 60 nor less than 30 days' notice to
the Trust.
(c) This Agreement will terminate automatically in the event
of its assignment (as defined in the 1940 Act or in rules adopted under the 1940
Act).
Section 7. Filing of Declaration of Trust.
The Trust represents that a copy of the Declaration of Trust
is on file with the Secretary of the Commonwealth of Massachusetts and with the
Boston City Clerk.
Section 8. Limitation of Liability.
(a) GEIM will exercise its best judgment in rendering the
services described in this Agreement, except that GEIM will not be liable for
any error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates, other than a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
GEIM in the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. Any person, even though also an
officer, director, employee or agent of GEIM, who may be or become an officer,
Trustee, employee or agent of the Trust, will be deemed, when rendering services
to the Trust or acting on any business of the Trust, to be rendering services
to, or acting solely for, the Trust and not as an officer, director, employee or
agent, or one under the control or direction of, GEIM even though paid by GEIM.
(b) The Trust and GEIM agree that the obligations of the
Trust under this Agreement will not be binding upon any of the Trustees,
shareholders, nominees, officers, employees or agents, whether past, present or
future, of the Trust, individually, but are binding only upon the assets and
property of the Fund, as provided in the Declaration of Trust. The execution and
delivery of this Agreement have been authorized by the Trustees of the Trust,
and signed by an authorized officer of the Trust, acting as such, and neither
the authorization by the Trustees nor the execution and delivery by the officer
will be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but will bind only the trust property of
the Trust as provided in the Declaration of Trust. No series of the Trust,
including the Fund, will be liable for any claims against any other series.
5
<PAGE>
Section 9. Dates.
This Agreement has been executed by the Trust and GEIM as of
_______________, 1997 and will become effective as of the date the Fund first
commences its investment operations.
Section 10. Miscellaneous.
The Trust recognizes that directors, officers and employees of
GEIM and its affiliates may from time to time serve as directors, trustees,
officers and employees of corporations, partnerships, group trusts and business
trusts (including other investment companies) and that such other entities may
include the initials "GE" or the words "General Electric" as part of their name,
and that GEIM or its affiliates may enter into distribution, investment advisory
or other agreements with such other corporations and trusts. If GEIM ceases to
act as the investment adviser to the Trust, the Trust agrees that, at GEIM's
request, the Trust's license to use the initials "GE" will terminate and that
the Trust will cease and discontinue completely further use of such initials and
will take all necessary action to change the name of the Trust and the Fund to a
name not including the initials "GE."
* * * * *
If the terms and conditions described above are in accordance
with your understanding, kindly indicate your acceptance of this Agreement by
signing and returning to us the enclosed copy this Agreement.
GE FUNDS
By: ____________________________
Name: Michael J. Cosgrove
Title: Chairman of the Board
and President
Accepted:
GE INVESTMENT MANAGEMENT INCORPORATED
By: _________________________________
Name: Alan M. Lewis
Title: Executive Vice President
6
<PAGE>
GE FUNDS
GE GOVERNMENT SECURITIES FUND
INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT
___________, 1997
GE Investment Management Incorporated
3003 Summer Street
P.O. Box 7900
Stamford, Connecticut 06904
Ladies and Gentlemen:
GE Funds, a business trust organized under the laws of The
Commonwealth of Massachusetts (the "Trust"), confirms its agreement with GE
Investment Management Incorporated ("GEIM") with respect to GEIM's serving as
the investment adviser and administrator of GE Government Securities Fund (the
"Fund"), a series of the Trust. Terms not defined herein have the meanings
assigned to such terms as set forth in the Trust's Registration Statement on
Form N-1A, as amended from time to time (the "Registration Statement"). GEIM
agrees to provide services upon the following terms and conditions:
Section 1. Services as Investment Adviser and Administrator.
(a) The Trust anticipates that the Fund will employ its
capital by investing and reinvesting in investments of the type specified in the
Trust's Declaration of Trust dated August 10, 1992, as amended from time to time
(the "Declaration of Trust"), in the Trust's By-Laws, as amended from time to
time (the "By-Laws"), and in the Trust's Registration Statement, and in the
manner and to the extent approved by the Board of Trustees of the Trust. Copies
of the Registration Statement, the Declaration of Trust and the By-Laws have
been submitted to GEIM.
(b) Subject to the supervision and direction of the Trust's
Board of Trustees, GEIM, as the Fund's investment adviser, will manage the
Fund's portfolio in accordance with the investment objective and policies of the
Fund as stated in the Registration Statement, will make investment decisions for
the Fund and will place purchase and sale orders for the Fund's portfolio
transactions.
(c) Subject to the supervision and direction of the Board of
Trustees, GEIM, as administrator will (1) furnish the
<PAGE>
Trust with statistical and research data, clerical help and accounting, data
processing, bookkeeping, internal auditing services and certain other services
required by the Trust; (2) prepare reports to the shareholders of the Funds; (3)
assist in the preparation of tax returns and reports to and filings with the
Securities and Exchange Commission (the "Commission") and state securities law
authorities.
(d) GEIM will, at its own expense, maintain sufficient staff,
and employ or retain sufficient personnel and consult with any other persons
that it determines may be necessary or useful to the performance of its
obligations under this Agreement.
(e) GEIM will keep the Trust informed of developments
materially affecting the Fund, and will, on its own initiative, furnish the
Trust from time to time with whatever information GEIM believes is appropriate
for this purpose.
(f) GEIM may delegate all or a portion of its duties under
this Agreement. GEIM will supervise, monitor and evaluate the services provided
by any service provider, including any sub-investment adviser retained by GEIM
pursuant to a sub-advisory agreement.
Section 2. Selection of Investments on Behalf of the Fund.
Unless otherwise set forth in the Registration Statement or
directed by the Trust, GEIM will, in selecting brokers or dealers to effect
transactions on behalf of the Fund select the best overall terms available. In
so doing, GEIM may consider the breadth of the market on 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. GEIM may also consider brokerage and
research services provided to the Funds and/or other accounts over which GEIM or
its affiliates exercise investment discretion. The Trust recognizes the
desirability of GEIM's having access to supplemental investment and market
research and security and economic analyses provided by brokers and that those
brokers may execute brokerage transactions at a higher cost to the Fund than
would be the case if the transactions were executed on the basis of the most
favorable price and efficient execution. The Trust, thus, authorizes GEIM, to
the extent permitted by applicable law and regulations, to pay higher brokerage
commissions for the purchase and sale of securities for the Fund to brokers who
provide supplemental investment and market research and security and economic
analyses, subject to review by the Trustees of the Trust and from time to time
with respect to the extent and continuation of this practice. The Trust
understands that the services
2
<PAGE>
provided by those brokers may be useful to GEIM in connection with its services
to other clients.
Section 3. Costs and Expenses.
GEIM will bear the cost of rendering the services it is
obligated to provide under this Agreement and will, at its own expense, pay the
salaries of all officers and employees who are employed by both it and the
Trust. GEIM will provide the Fund with investment officers who are authorized by
the Trust's Board of Trustees to execute purchases and sales of securities on
behalf of the Fund and will employ a professional staff of portfolio managers
who draw upon a variety of sources for research information for the Fund. Other
expenses to be incurred in the operation of the Fund and not specifically borne
by GEIM will be borne by the Fund, including: shareholder servicing and
distribution fees under the terms of the shareholder servicing and distribution
plan adopted by the Trust with respect to the Fund pursuant to Rule 12b-1 (the
"Plan") under the Investment Company Act of 1940, as amended (the "1940 Act");
charges and expenses of any registrar, the costs of custody, transfer agency and
recordkeeping services in connection with the Fund; brokerage fees and
commissions; taxes; registration costs of the Fund and its shares under Federal
and state securities laws; the cost and expense of printing, including
typesetting, and distributing of prospectuses describing the Fund and
supplements to those prospectuses to regulatory authorities and the Fund's
shareholders; all expenses incurred in conducting meetings of the Fund's
shareholders and meetings of the Trust's Board of Trustees relating to the Fund,
including fees paid to members of the Trust's Board of Trustees who are not
affiliated with GEIM or any of its affiliates; all expenses incurred in
preparing, printing and mailing proxy statements and reports to shareholders of
the Fund; fees and travel expenses of members of the Trust's Board of Trustees
or members of any advisory board or committee who are not employees of GEIM, or
any of its affiliates; all expenses incident to any dividend, withdrawal or
redemption options provided to Fund shareholders; charges and expenses of any
outside service used for pricing the Fund's portfolio securities and calculating
the net asset value of the Fund's shares; fees and expenses of legal counsel,
including counsel to the members of the Trust's Board of Trustees who are not
interested persons of the Fund, or GEIM, and independent auditors; membership
dues of industry associations; interest on Fund borrowings; postage; insurance
premiums on property or personnel (including officers and Trustees) of the Trust
that inure to their benefit; extraordinary expenses (including, but not limited
to, legal claims and liabilities and litigation costs and any indemnification
relating thereto); and all other costs of the Fund's operations.
3
<PAGE>
Section 4. Compensation.
In consideration of services rendered pursuant to this
Agreement, the Trust will pay GEIM on the Trust's first business day of each
month a fee that is accrued daily at the annual rate of .40% of the value of the
Fund's average daily net assets for the previous month. For the purpose of
determining fees payable to GEIM under this Agreement, the value of the Fund's
net assets will be computed in the manner described in the Registration
Statement.
Section 5. Services to Other Companies or Accounts.
(a) The Trust understands and acknowledges that GEIM now acts
and will continue to act as investment manager or adviser to various fiduciary
or other managed accounts and the Trust has no objection to GEIM's so acting, so
long as that when the Fund and any account served by GEIM are prepared to invest
in, or desire to dispose of, the same security, available investments or
opportunities for sales will be allocated in a manner believed by GEIM to be
equitable to the Fund and the account. The Trust recognizes that, in some cases,
this procedure may adversely affect the price paid or received by the Fund or
the size of the position obtained or disposed of by the Fund.
(b) The Trust understands and acknowledges that the persons
employed by GEIM to assist in the performance of its duties under this Agreement
will not devote their full time to that service and agrees that, nothing
contained in this Agreement will be deemed to limit or restrict the right of
GEIM or any affiliate of GEIM to engage in and devote time and attention to
other businesses or to render services of whatever kind or nature.
Section 6. Continuance and Termination of the Agreement.
(a) This Agreement will become effective as of the date the
Fund commences its investment operations and will continue for an initial
two-year term and will continue thereafter so long as the continuance is
specifically approved at least annually (a) by the Trustees of the Trust or (b)
by a vote of a majority of the Fund's outstanding voting securities, as defined
in the 1940 Act, provided that in either event the continuance is also approved
by a majority of the Trustees who are not "interested persons" (as defined in
the 1940 Act) of any party to this Agreement, by vote cast in person at a
meeting called for the purpose of voting on the approval.
4
<PAGE>
(b) This Agreement is terminable without penalty, by the
Trust on not more than 60 nor less than 30 days' written notice to GEIM, by vote
of holders of a majority of the Fund's outstanding voting securities, as defined
in the 1940 Act, or by GEIM on not more than 60 nor less than 30 days' notice to
the Trust.
(c) This Agreement will terminate automatically in the event
of its assignment (as defined in the 1940 Act or in rules adopted under the 1940
Act).
Section 7. Filing of Declaration of Trust.
The Trust represents that a copy of the Declaration of Trust
is on file with the Secretary of the Commonwealth of Massachusetts and with the
Boston City Clerk.
Section 8. Limitation of Liability.
(a) GEIM will exercise its best judgment in rendering the
services described in this Agreement, except that GEIM will not be liable for
any error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates, other than a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
GEIM in the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. Any person, even though also an
officer, director, employee or agent of GEIM, who may be or become an officer,
Trustee, employee or agent of the Trust, will be deemed, when rendering services
to the Trust or acting on any business of the Trust, to be rendering services
to, or acting solely for, the Trust and not as an officer, director, employee or
agent, or one under the control or direction of, GEIM even though paid by GEIM.
(b) The Trust and GEIM agree that the obligations of the
Trust under this Agreement will not be binding upon any of the Trustees,
shareholders, nominees, officers, employees or agents, whether past, present or
future, of the Trust, individually, but are binding only upon the assets and
property of the Fund, as provided in the Declaration of Trust. The execution and
delivery of this Agreement have been authorized by the Trustees of the Trust,
and signed by an authorized officer of the Trust, acting as such, and neither
the authorization by the Trustees nor the execution and delivery by the officer
will be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but will bind only the trust property of
the Trust as provided in the Declaration of Trust. No series of the Trust,
including the Fund, will be liable for any claims against any other series.
5
<PAGE>
Section 9. Dates.
This Agreement has been executed by the Trust and GEIM as of
_______________, 1997 and will become effective as of the date the Fund first
commences its investment operations.
Section 10. Miscellaneous.
The Trust recognizes that directors, officers and employees of
GEIM and its affiliates may from time to time serve as directors, trustees,
officers and employees of corporations, partnerships, group trusts and business
trusts (including other investment companies) and that such other entities may
include the initials "GE" or the words "General Electric" as part of their name,
and that GEIM or its affiliates may enter into distribution, investment advisory
or other agreements with such other corporations and trusts. If GEIM ceases to
act as the investment adviser to the Trust, the Trust agrees that, at GEIM's
request, the Trust's license to use the initials "GE" will terminate and that
the Trust will cease and discontinue completely further use of such initials and
will take all necessary action to change the name of the Trust and the Fund to a
name not including the initials "GE."
* * * *
If the terms and conditions described above are in accordance with your
understanding, kindly indicate your acceptance of this Agreement by signing and
returning to us the enclosed copy this Agreement.
GE FUNDS
By: ______________________________
Name: Michael J. Cosgrove
Title: Chairman of the Board
and President
Accepted:
GE INVESTMENT MANAGEMENT INCORPORATED
By: _________________________________
Name: Alan M. Lewis
Title: Executive Vice President
6
<PAGE>
GE FUNDS
GE TAX-EXEMPT FUND
AMENDED AND RESTATED INVESTMENT ADVISORY
AND ADMINISTRATION AGREEMENT
___________, 1997
GE Investment Management Incorporated
3003 Summer Street
P.O. Box 7900
Stamford, Connecticut 06904
Ladies and Gentlemen:
GE Funds, a business trust organized under the laws of The
Commonwealth of Massachusetts (the "Trust"), confirms its agreement with GE
Investment Management Incorporated ("GEIM") with respect to GEIM's serving as
the investment adviser and administrator of GE Tax-Exempt Fund (the "Fund"), a
series of the Trust. Terms not defined herein have the meanings assigned to such
terms as set forth in the Trust's Registration Statement on Form N-1A, as
amended from time to time (the "Registration Statement"). GEIM agrees to provide
services upon the following terms and conditions:
Section 1. Services as Investment Adviser and Administrator.
(a) The Trust anticipates that the Fund will employ its
capital by investing and reinvesting in investments of the type specified in the
Trust's Declaration of Trust dated August 10, 1992, as amended from time to time
(the "Declaration of Trust"), in the Trust's By-Laws, as amended from time to
time (the "By-Laws"), and in the Trust's Registration Statement, and in the
manner and to the extent approved by the Board of Trustees of the Trust. Copies
of the Registration Statement, the Declaration of Trust and the By-Laws have
been submitted to GEIM.
(b) Subject to the supervision and direction of the Trust's
Board of Trustees, GEIM, as the Fund's investment adviser, will manage the
Fund's portfolio in accordance with the investment objective and policies of the
Fund as stated in the Registration Statement, will make investment decisions for
the Fund and will place purchase and sale orders for the Fund's portfolio
transactions.
<PAGE>
(c) Subject to the supervision and direction of the Board of
Trustees, GEIM, as administrator will (1) furnish 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; (2)
prepare reports to the shareholders of the Funds; (3) assist in the preparation
of tax returns and reports to and filings with the Securities and Exchange
Commission (the "Commission") and state securities law authorities.
(d) GEIM will, at its own expense, maintain sufficient staff,
and employ or retain sufficient personnel and consult with any other persons
that it determines may be necessary or useful to the performance of its
obligations under this Agreement.
(e) GEIM will keep the Trust informed of developments
materially affecting the Fund, and will, on its own initiative, furnish the
Trust from time to time with whatever information GEIM believes is appropriate
for this purpose.
(f) GEIM may delegate all or a portion of its duties under
this Agreement. GEIM will supervise, monitor and evaluate the services provided
by any service provider, including any sub-investment adviser retained by GEIM
pursuant to a sub-advisory agreement.
Section 2. Selection of Investments on Behalf of the Fund.
Unless otherwise set forth in the Registration Statement or
directed by the Trust, GEIM will, in selecting brokers or dealers to effect
transactions on behalf of the Fund select the best overall terms available. In
so doing, GEIM may consider the breadth of the market on 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. GEIM may also consider brokerage and
research services provided to the Funds and/or other accounts over which GEIM or
its affiliates exercise investment discretion. The Trust recognizes the
desirability of GEIM's having access to supplemental investment and market
research and security and economic analyses provided by brokers and that those
brokers may execute brokerage transactions at a higher cost to the Fund than
would be the case if the transactions were executed on the basis of the most
favorable price and efficient execution. The Trust, thus, authorizes GEIM, to
the extent permitted by applicable law and regulations, to pay higher brokerage
commissions for the purchase and sale of securities for the Fund to brokers who
provide supplemental investment and market research and security and economic
analyses, subject to review by the Trustees of the Trust
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and from time to time with respect to the extent and continuation of this
practice. The Trust understands that the services provided by those brokers may
be useful to GEIM in connection with its services to other clients.
Section 3. Costs and Expenses.
GEIM will bear the cost of rendering the services it is
obligated to provide under this Agreement and will, at its own expense, pay the
salaries of all officers and employees who are employed by both it and the
Trust. GEIM will provide the Fund with investment officers who are authorized by
the Trust's Board of Trustees to execute purchases and sales of securities on
behalf of the Fund and will employ a professional staff of portfolio managers
who draw upon a variety of sources for research information for the Fund. Other
expenses to be incurred in the operation of the Fund and not specifically borne
by GEIM will be borne by the Fund, including: shareholder servicing and
distribution fees under the terms of the shareholder servicing and distribution
plan adopted by the Trust with respect to the Fund pursuant to Rule 12b-1 (the
"Plan") under the Investment Company Act of 1940, as amended (the "1940 Act");
charges and expenses of any registrar, the costs of custody, transfer agency and
recordkeeping services in connection with the Fund; brokerage fees and
commissions; taxes; registration costs of the Fund and its shares under Federal
and state securities laws; the cost and expense of printing, including
typesetting, and distributing of prospectuses describing the Fund and
supplements to those prospectuses to regulatory authorities and the Fund's
shareholders; all expenses incurred in conducting meetings of the Fund's
shareholders and meetings of the Trust's Board of Trustees relating to the Fund,
including fees paid to members of the Trust's Board of Trustees who are not
affiliated with GEIM or any of its affiliates; all expenses incurred in
preparing, printing and mailing proxy statements and reports to shareholders of
the Fund; fees and travel expenses of members of the Trust's Board of Trustees
or members of any advisory board or committee who are not employees of GEIM, or
any of its affiliates; all expenses incident to any dividend, withdrawal or
redemption options provided to Fund shareholders; charges and expenses of any
outside service used for pricing the Fund's portfolio securities and calculating
the net asset value of the Fund's shares; fees and expenses of legal counsel,
including counsel to the members of the Trust's Board of Trustees who are not
interested persons of the Fund, or GEIM, and independent auditors; membership
dues of industry associations; interest on Fund borrowings; postage; insurance
premiums on property or personnel (including officers and Trustees) of the Trust
that inure to their benefit; extraordinary expenses (including, but not limited
to, legal claims and liabilities and litigation costs and any
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indemnification relating thereto); and all other costs of the Fund's operations.
Section 4. Compensation.
In consideration of services rendered pursuant to this
Agreement, the Trust will pay GEIM on the Trust's first business day of each
month a fee that is accrued daily at the annual rate of .35% of the value of the
Fund's average daily net assets for the previous month. For the purpose of
determining fees payable to GEIM under this Agreement, the value of the Fund's
net assets will be computed in the manner described in the Registration
Statement.
Section 5. Excess Expense Reimbursement
If, in any fiscal year of the Fund, the aggregate expenses of
the Fund (including management fees, but excluding interest, taxes, brokerage
fees, fees paid with respect to the Fund pursuant to the Plan and, with the
prior written consent of the necessary state securities authorities,
extraordinary expenses) exceed the expense limitation of any state having
jurisdiction over the Trust, GEIM will reimburse the Trust up to the amount of
the Fund's investment advisory fee. The expense reimbursement payable under the
terms of this Section 5 will be estimated, reconciled and paid on a monthly
basis.
Section 6. Services to Other Companies or Accounts.
(a) The Trust understands and acknowledges that GEIM now acts
and will continue to act as investment manager or adviser to various fiduciary
or other managed accounts and the Trust has no objection to GEIM's so acting, so
long as that when the Fund and any account served by GEIM are prepared to invest
in, or desire to dispose of, the same security, available investments or
opportunities for sales will be allocated in a manner believed by GEIM to be
equitable to the Fund and the account. The Trust recognizes that, in some cases,
this procedure may adversely affect the price paid or received by the Fund or
the size of the position obtained or disposed of by the Fund.
(b) The Trust understands and acknowledges that the persons
employed by GEIM to assist in the performance of its duties under this Agreement
will not devote their full time to that service and agrees that, nothing
contained in this Agreement will be deemed to limit or restrict the right of
GEIM or any affiliate of GEIM to engage in and devote time and attention to
other businesses or to render services of whatever kind or nature.
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<PAGE>
Section 7. Continuance and Termination of the Agreement.
(a) This Agreement will become effective as of the date
hereof and will continue for an initial two-year term and will continue
thereafter so long as the continuance is specifically approved at least annually
(a) by the Trustees of the Trust or (b) by a vote of a majority of the Fund's
outstanding voting securities, as defined in the 1940 Act, provided that in
either event the continuance is also approved by a majority of the Trustees who
are not "interested persons" (as defined in the 1940 Act) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on the approval.
(b) This Agreement is terminable without penalty, by the
Trust on not more than 60 nor less than 30 days' written notice to GEIM, by vote
of holders of a majority of the Fund's outstanding voting securities, as defined
in the 1940 Act, or by GEIM on not more than 60 nor less than 30 days' notice to
the Trust.
(c) This Agreement will terminate automatically in the event
of its assignment (as defined in the 1940 Act or in rules adopted under the 1940
Act).
Section 8. Filing of Declaration of Trust.
The Trust represents that a copy of the Declaration of Trust
is on file with the Secretary of the Commonwealth of Massachusetts and with the
Boston City Clerk.
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<PAGE>
Section 9. Limitation of Liability.
(a) GEIM will exercise its best judgment in rendering the
services described in this Agreement, except that GEIM will not be liable for
any error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates, other than a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
GEIM in the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. Any person, even though also an
officer, director, employee or agent of GEIM, who may be or become an officer,
Trustee, employee or agent of the Trust, will be deemed, when rendering services
to the Trust or acting on any business of the Trust, to be rendering services
to, or acting solely for, the Trust and not as an officer, director, employee or
agent, or one under the control or direction of, GEIM even though paid by GEIM.
(b) The Trust and GEIM agree that the obligations of the
Trust under this Agreement will not be binding upon any of the Trustees,
shareholders, nominees, officers, employees or agents, whether past, present or
future, of the Trust, individually, but are binding only upon the assets and
property of the Fund, as provided in the Declaration of Trust. The execution and
delivery of this Agreement have been authorized by the Trustees of the Trust,
and signed by an authorized officer of the Trust, acting as such, and neither
the authorization by the Trustees nor the execution and delivery by the officer
will be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but will bind only the trust property of
the Trust as provided in the Declaration of Trust. No series of the Trust,
including the Fund, will be liable for any claims against any other series.
Section 10. Dates.
This Agreement has been executed by the Trust and GEIM as of
_______________, 1997.
Section 11. Miscellaneous.
The Trust recognizes that directors, officers and employees of
GEIM and its affiliates may from time to time serve as directors, trustees,
officers and employees of corporations, partnerships, group trusts and business
trusts (including other investment companies) and that such other entities may
include the initials "GE" or the words "General Electric" as part of their name,
and that GEIM or its affiliates may enter into distribution, investment advisory
or other agreements with such other corporations and trusts. If GEIM ceases to
act as the
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<PAGE>
investment adviser to the Trust, the Trust agrees that, at GEIM's request, the
Trust's license to use the initials "GE" will terminate and that the Trust will
cease and discontinue completely further use of such initials and will take all
necessary action to change the name of the Trust and the Fund to a name not
including the initials "GE."
* * * *
If the terms and conditions described above are in accordance with your
understanding, kindly indicate your acceptance of this Agreement by signing and
returning to us the enclosed copy this Agreement.
GE FUNDS
By: _____________________________
Name: Michael J. Cosgrove
Title: Chairman of the Board
and President
Accepted:
GE INVESTMENT MANAGEMENT INCORPORATED
By: _________________________________
Name: Alan M. Lewis
Title: Executive Vice President
7
<PAGE>
GE FUNDS
GE TAX-EXEMPT FUND
SUB-ADVISORY AGREEMENT
Agreement made as of ______________, 1997, between GE
INVESTMENT MANAGEMENT INCORPORATED ("GEIM"), a Delaware corporation, and BROWN
BROTHERS HARRIMAN & CO. (the "Sub-Adviser"), a New York partnership (the
"Agreement").
RECITALS
GEIM has entered into an Amended and Restated Investment
Advisory and Administration Agreement dated as of the date hereof, ("Advisory
Agreement") with GE Funds ("Trust"), an open-end management investment company
registered under the Investment Company Act of 1940, as amended ("1940 Act"),
with respect to GE Tax-Exempt Fund ("Fund"), a series of the Trust;
Pursuant to Section 1(f) of the Advisory Agreement, GEIM is
authorized to delegate its investment advisory responsibilities to other
investment advisers, subject to the requirements of the 1940 Act;
GEIM wishes to retain the Sub-Adviser to furnish certain
investment advisory services to GEIM and the Fund, and the Sub-Adviser is
willing to furnish those services; and
GEIM intends that this Agreement will become effective when
approved in accordance with Section 15 of the 1940 Act;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties agree as follows:
1. Appointment. GEIM hereby appoints the Sub-Adviser as a
sub-investment adviser with respect to the Fund's assets for the period and on
the terms set forth in this Agreement. The Sub-Adviser accepts that appointment
and agrees to render the services herein set forth, for the compensation herein
provided.
2. Duties as Sub-Adviser.
(a) Subject to the oversight and supervision of GEIM and the
Board, the Sub-Adviser will provide a continuous investment program for the
Fund's assets, including investment research and management. The Sub-Adviser
will determine from time to time what investments will be purchased, retained or
sold by the Fund. The Sub-Adviser will be responsible for placing purchase and
sell orders for Fund investments. The Sub-Adviser will consult with GEIM on a
macro level from time to time regarding matters pertaining to the Fund,
<PAGE>
including market strategy and portfolio characteristics such as the average
weighted maturity of the Fund's portfolio, duration of the Fund's portfolio and
the quality of Fund investments. The Sub-Adviser will provide services under
this Agreement in accordance with the Fund's investment objective, policies and
restrictions as stated in the Trust's current Registration Statement on Form
N-1A and any amendments or supplements thereto (the "Registration Statement")
and the Trust's Declaration of Trust and By-Laws ("Constituent Documents"). In
this connection and in connection with the further duties set forth in
paragraphs 2(b) - (g) below, the Sub-Adviser shall provide GEIM and the Board
with such periodic reports and documentation as GEIM or the Board shall request
regarding the Sub-Adviser's management of the Fund's assets and compliance with
the Registration Statement and all requirements hereunder.
(b) The Sub-Adviser shall carry out its responsibilities under
this Agreement in compliance with: (1) the Fund's investment objective, policies
and restrictions as set forth in the Registration Statement, (2) the Constituent
Documents, (3) such policies, procedures or directives as the Board may from
time to time establish or issue, and (4) applicable law and related regulations.
In particular, in carrying out its duties as Sub-Advisor, Sub-Adviser shall make
every effort to ensure the Fund continuously qualifies as a regulated investment
company under sub-chapter M of the Internal Revenue Code of 1986, as amended
(the "Code"). GEIM shall promptly notify the Sub-Adviser of changes to (1), (2)
or (3) above and shall notify the Sub-Adviser of changes to (4) above promptly
after it becomes aware of such changes.
(c) The Sub-Adviser shall take all actions which it considers
necessary to implement the investment objective and policies of the Fund, and in
particular, to place all orders for the purchase or sale of securities or other
investments for the Fund with brokers or dealers selected by it, and to that
end, the Sub-Adviser is authorized as the agent of the Trust to give
instructions to the Trust's custodian as to deliveries of securities or other
investments and payments of cash for the account of the Fund. In connection with
the selection of brokers or dealers and the placing of purchase and sale orders
with respect to investments of the Fund, the Sub-Adviser is directed at all
times to seek to obtain best execution and price within the policy guidelines
determined by the Board and set forth in the Registration Statement.
In addition to seeking the best price and execution, to the
extent covered by Section 28(e) of the Securities Exchange Act of 1934 (the
"1934 Act"), the Sub-Adviser is also authorized to take into consideration
research and statistical information and wire and other quotation services
provided by brokers and dealers to the Sub-Adviser. The Sub-Adviser is also
authorized to effect individual securities transactions at commission rates in
excess of the minimum commission rates available, if it determines in good faith
that such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the Sub-Adviser's overall
responsibilities with respect to the Fund. The policies with respect to
brokerage allocation, determined from time to time by the Board, are those
disclosed in the Registration Statement. The Sub-Adviser will periodically
evaluate the statistical data, research and other
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<PAGE>
investment services provided to it by brokers and dealers. Such services may be
used by the Sub-Adviser in connection with the performance of its obligations
under this Agreement or in connection with other advisory or investment
operations including using such information in managing its own accounts. The
Sub-Adviser is also authorized to use soft-dollar services as requested by the
Board from time to time. Whenever the Sub-Adviser simultaneously places orders
to purchase or sell the same security on behalf of the Fund and one or more
other accounts advised by the Sub-Adviser, the orders will be allocated as to
price and amount among all such accounts in a manner believed to be equitable by
the Sub-Adviser to each account.
(d) Subject to: (1) the requirement that the Sub-Adviser seek
to obtain best execution and price within the policy guidelines determined by
the Board and set forth in the Registration Statement, (2) the provisions of the
1940 Act and the Investment Advisers Act of 1940, as amended (the "Advisers
Act"), (3) the provisions of the 1934 Act, and (4) other applicable provisions
of law; the Sub-Adviser or an affiliated person of the Sub-Adviser or of GEIM
may act as broker for the Fund in connection with the purchase or sale of
securities or other investments for the Fund. Such brokerage services are not
within the scope of the duties of the Sub-Adviser under this Agreement. Subject
to the requirements of applicable law and any procedures adopted by the Board,
the Sub-Adviser or its affiliated persons may receive brokerage commissions,
fees or other remuneration from the Fund or the Trust for such services in
addition to the Sub-Adviser's fees for services under this Agreement.
(e) The Sub-Adviser will maintain all books and records
required to be maintained by the Trust pursuant to the 1940 Act and the rules
and regulations promulgated thereunder with respect to transactions on behalf of
the Fund, and will furnish the Board and GEIM with such periodic and special
reports as the Board or GEIM reasonably may request. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Sub-Adviser hereby agrees
that all records which it maintains for the Fund are the property of the Trust,
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
any records which it maintains for the Trust and which are required to be
maintained by Rule 31a-1 under the 1940 Act, and further agrees to surrender
promptly to the Trust any records which it maintains for the Trust upon request
by the Trust.
(f) At such times as shall reasonably be requested by the
Board or GEIM, the Sub-Adviser will provide the Board and GEIM with economic and
investment analyses and reports as well as quarterly reports setting forth the
Fund's performance and make available to the Board and GEIM any economic,
statistical and investment services normally available to institutional or other
customers of the Sub-Adviser. The Sub-Adviser will make available its officers
and employees to meet with the Board on reasonable notice to review the Fund's
investments.
(g) In accordance with procedures adopted by the Board, as
amended from time to time, the Sub-Adviser is responsible for assisting the
Board in determining the fair valuation of any illiquid portfolio securities and
will assist the Trust's accounting services agent
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<PAGE>
or GEIM to obtain independent sources of market value for all other portfolio
securities.
3. Further Duties. In all matters relating to the performance
of this Agreement, the Sub-Adviser will act in conformity with the Constituent
Documents and Registration Statement and with the written instructions and
directions of the Board and GEIM and will comply with the requirements of the
1940 Act, the Advisers Act, the rules under each, and Subchapter M of the Code
as applicable to regulated investment companies. In addition, the Sub-Adviser
will act in conformity with all other applicable federal and state laws and
regulations. GEIM agrees to provide to the Sub-Adviser copies of the Constituent
Documents, Registration Statement and any amendments or supplements to any of
these materials as soon as practicable after such materials become available.
4. Expenses. During the term of this Agreement, the
Sub-Adviser will bear all expenses incurred by it in connection with its
sub-investment advisory services under this Agreement.
5. Compensation.
For the services rendered, the facilities furnished and the
expenses assumed by the Sub-Adviser, the Adviser shall pay the Sub-Adviser no
later than the twentieth (20th) business day following the end of each calendar
month a fee based on the average daily net assets of the Fund at the following
annual rates:
.20% of the first $25,000,000; .175% of the next $25,000,000;
.15% of the next $50,000,000; and .125% of amounts in excess
of $100,000,000.
The Sub-Adviser's fee shall be paid by GEIM out of GEIM's
advisory fee, to the extent such fee is received by GEIM pursuant to the
Advisory Agreement. The Sub-Adviser's fee shall be accrued daily at 1/365th of
the applicable annual rate set forth above. For the purpose of accruing
compensation, the net assets of the Fund shall be determined in the manner and
on the dates set forth in the current prospectus of the Trust, and, on dates on
which the net assets are not so determined, the net asset value computation to
be used shall be as determined on the next day on which the net assets shall
have been determined. In the event of termination of this Agreement, all
compensation due through the date of termination will be calculated on a
pro-rated basis through the date of termination and paid within thirty business
days of the date of termination.
During any period when the determination of net asset value is
suspended, the net asset value of the Fund as of the last business day prior to
such suspension shall for this purpose be deemed to be the net asset value at
the close of each succeeding business day until it is again determined.
6. Limitation Of Liability. The Sub-Adviser shall not be
liable for any error
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<PAGE>
of judgment or mistake of law or for any loss suffered by the Fund, the Trust or
its shareholders or by GEIM in connection with the matters to which this
Agreement relates, except a loss resulting from willful misfeasance, bad faith
or gross negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations and duties under this Agreement.
7. Indemnification.
(a) GEIM agrees to indemnify the Sub-Adviser, its officers and
directors, and any person who controls the Sub-Adviser within the meaning of
Section 15 of the Securities Act of 1933, as amended ("1933 Act"), for any loss
or expense (including attorneys' fees) arising out of any claim, demand, action
or suit in the event that the Sub-Adviser has been found to be without fault and
GEIM has been found at fault (i) by the final judgment of a court of competent
jurisdiction or (ii) in any order of settlement of any claim, demand, action or
suit that has been approved by the Board of Directors of GEIM.
(b) The Sub-Adviser agrees to indemnify GEIM, its officers and
directors, and any person who controls GEIM within the meaning of Section 15 of
the 1933 Act for any loss or expense (including attorneys' fees) arising out of
any claim, demand, action or suit in the event that GEIM has been found to be
without fault and the Sub-Adviser has been found at fault (i) by the final
judgment of a court of competent jurisdiction or (ii) in any order of settlement
of any claim, demand, action or suit that has been approved by the Board of
Directors of the Sub-Adviser.
8. Representations of Sub-Adviser. The Sub-Adviser represents,
warrants and agrees as follows:
(a) The Sub-Adviser (i) is a "bank" as defined by the Advisers
Act and therefore is exempt from registration under the Advisers Act and will
continue to be a "bank" as defined by the Advisers Act and exempt from
registration under the Advisors Act for so long as this Agreement remains in
effect; (ii) is not prohibited by the 1940 Act or the Advisers Act from
performing the services contemplated by this Agreement; (iii) has met, and will
seek to continue to meet for so long as this Agreement remains in effect, any
other applicable federal or state requirements, or the applicable requirements
of any regulatory or industry self-regulatory agency, necessary to be met in
order to perform the services contemplated by this Agreement; (iv) has the
authority to enter into and perform the services contemplated by this Agreement
and the execution, delivery and performance by the Sub-Adviser of this Agreement
does not contravene or constitute a default under any agreement binding upon the
Sub-Adviser; (v) will promptly notify GEIM of the occurrence of any event that
would disqualify the Sub-Adviser from serving as an investment adviser of an
investment company pursuant to Section 9(a) of the 1940 Act or otherwise; (vi)
is either registered as a Commodity Trading Adviser under the Commodity Exchange
Act with the Commodity Futures Trading Commission and the National Futures
Association, or is exempt from such registration; and (vii) is duly organized
and validly existing under the Laws of the State of New York with the power to
own and possess its assets and carry
5
<PAGE>
on its business as it is now being conducted.
(b) The Sub-Adviser has adopted a written code of ethics
complying with the requirements of Rule 17j-1 under the 1940 Act and will
provide GEIM and the Board with a copy of that code of ethics, together with
evidence of its adoption. Within fifteen days of the end of the last calendar
quarter of each year that this Agreement is in effect, a general partner of the
Sub-Adviser shall certify to GEIM that the Sub-Adviser has complied with the
requirements of Rule 17j-1 during the previous year and that there has been no
violation of the Sub-Adviser's code of ethics or, if such a violation has
occurred, that appropriate action was taken in response to such violation. Upon
the written request of GEIM, the Sub-Adviser shall permit GEIM, its employees or
its agents to examine the reports required to be made to the Sub-Adviser by Rule
17j-1(c)(1) and all other records relevant to the Sub-Adviser's code of ethics.
(c) The Sub-Adviser will notify GEIM of any change of control
of the Sub-Adviser, including any change of its general partners or 25%
shareholders, as applicable, and any changes in the key personnel of the
Sub-Adviser, including in particular portfolio management personnel responsible
for the Fund's assets, in each case prior to or promptly after such change.
9. Representations and Warranties of GEIM. GEIM represents,
warrants and agrees that GEIM (i) is registered as an investment adviser under
the Advisers Act and will continue to be so registered for so long as this
Agreement remains in effect; (ii) is not prohibited by the 1940 Act or the
Advisers Act from performing the services contemplated by the Advisory
Agreement; (iii) has met, and will seek to continue to meet for so long as this
Agreement remains in effect, any other applicable federal or state requirements,
or the applicable requirements of any regulatory or industry self-regulatory
agency, necessary to be met in order to perform the services contemplated by the
Advisory Agreement; (iv) has the authority to enter into and perform the
services contemplated by the Advisory Agreement and the execution, delivery and
performance by GEIM of the Advisory Agreement does not contravene or constitute
a default under any agreement binding upon GEIM; (v) will promptly notify the
Adviser of the occurrence of any event that would disqualify GEIM from serving
as an investment adviser of an investment company pursuant to Section 9(a) of
the 1940 Act or otherwise; (vi) has filed a notice of exemption pursuant to Rule
4.14 under the Commodity Exchange Act with the Commodity Futures Trading
Commission and the National Futures Association, or is not required to file such
exemption; and (vii) is duly organized and validly existing under the laws of
the State of Delaware with the power to own and possess its assets and carry on
its business as it is now being conducted.
10. Survival of Representations and Warranties; Duty to Update
Information. All representations and warranties made by the Sub-Adviser and GEIM
pursuant to Sections 8 and 9, respectively, shall survive for the duration of
this Agreement and the parties hereto shall promptly notify each other in
writing upon becoming aware that any of the foregoing representations and
warranties are no longer true.
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<PAGE>
11. Duration and Termination.
(a) This Agreement shall become effective upon the date first
above written and will continue in effect until __________, 1999 and will
continue automatically thereafter so long as the continuance is specifically
approved at least annually (a) by the Board or (b) by a vote of a majority of
the Fund's outstanding voting securities, as defined in the 1940 Act, provided
that in either event the continuance is also approved by a majority of the Board
who are not "interested persons" (as defined in the 1940 Act) of any party to
this Agreement, by vote cast in person at a meeting called for the purpose of
voting on the approval.
(b) This Agreement may be terminated at any time without the
payment of any penalty, by the Board, or by vote of a majority of the Fund's
outstanding voting securities, on 60 days' written notice to the Sub-Adviser.
This Agreement may also be terminated, without the payment of any penalty, by
GEIM: (i) upon 60 days' written notice to the Sub-Adviser; (ii) upon material
breach by the Sub-Adviser of any of the representations and warranties set forth
in Paragraph 8 of this Agreement; or (iii) if the Sub-Adviser becomes unable to
discharge its duties and obligations under this Agreement, including
circumstances such as financial insolvency of the Sub-Adviser or other
circumstances that could adversely affect the Fund. The Sub-Adviser may
terminate this Agreement at any time, without the payment of a penalty, on 60
days' written notice to GEIM. This Agreement will terminate automatically in the
event of its assignment or upon termination of the Advisory Agreement.
12. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought, and no material amendment to
the terms of this Agreement shall be effective until approved by a vote of a
majority of the Fund's outstanding voting securities (unless the Trust receives
an SEC order or opinion of counsel permitting it to modify the Agreement without
such vote).
13. Governing Law. This Agreement shall be construed in
accordance with the 1940 Act and the laws of the State of New York, without
giving effect to the conflicts of laws principles thereof. To the extent that
the applicable laws of the State of New York conflict with the applicable
provisions of the 1940 Act, the latter shall control.
14. Miscellaneous. The captions in this Agreement are included
for convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto. As used in this Agreement, the terms "majority of
the outstanding voting securities," "affiliated person," "interested person,"
"assignment," "broker," "investment adviser," "net assets," "sale," "sell" and
"security" shall have the same meaning as such terms have in the
7
<PAGE>
1940 Act, subject to such exemption as may be granted by the SEC by any rule,
regulation or order. Where the effect of a requirement of the federal securities
laws reflected in any provision of this Agreement is made less restrictive by
rule, regulation or order of the SEC, whether of special or general application,
such provision shall be deemed to incorporate the effect of such rule,
regulation or order. This Agreement may be signed in counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their duly authorized signatories as of the date
and year first above written.
Attest: GE INVESTMENT MANAGEMENT INCORPORATED
BY:_______________________________
Name:
Title:
Attest: BROWN BROTHERS HARRIMAN & CO.
BY:_______________________________
Name:
Title:
8
<PAGE>
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022-4677
June 23, 1997
GE Funds
3003 Summer Street
Stamford, Connecticut 06905
Ladies and Gentlemen:
We have acted as counsel to GE Funds (the "Trust"), a business trust organized
under the laws of The Commonwealth of Massachusetts, in connection with the
preparation of Post-Effective Amendment No. 21 of the Trust's Registration
Statement on Form N-1A under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended (the "Registration Statement"), filed
with the Securities and Exchange Commission, relating to the offer and sale of
an indefinite number of shares of beneficial interest, par value $.001 per
share, of GE Government Securities Fund and GE Value Equity Fund (the "Funds").
We have examined copies of (1) the Trust's Declaration of Trust, as amended (the
"Declaration"), (2) the Instrument Evidencing Establishment and Designation of
Series of Shares of Beneficial Interest, establishing and designating the Funds
(the "Designation of Series"), (3) the Establishment and Designation of Classes,
establishing and designating four classes of shares of each Fund (the
"Designation of Classes"), (4) the Trust's By-Laws, (5) the votes of the
Trustees of the Trust taken on May 15, 1997 and June 4, 1997 and (6) other
records and documents that we have deemed necessary for the purposes of
providing the opinion stated below. We have also examined such other documents,
statutes and authorities as we have deemed necessary to form a basis for that
opinion.
In our examination of the materials described above, we have assumed the
genuineness of all signatures and the conformity to original documents of all
copies submitted to us. As to various questions of fact material to our
<PAGE>
GE Funds
June 23, 1997
Page 2
opinion, we have relied upon statements and certificates of officers and
representatives of the Trust and others. As to matters governed by the laws of
The Commonwealth of Massachusetts, we have relied on the opinion of Bingham,
Dana & Gould that is attached to this opinion.
Based upon and subject to the foregoing, we are of the opinion that the shares
of beneficial interest of each Fund, when issued and sold in accordance with the
terms of the Declaration, the Designation of Series, the Designation of Classes
and the Registration Statement, will be legally issued, fully paid and
non-assessable by the Trust, except that, shareholders of the Fund may under
certain circumstances be held personally liable for the obligations of the
Trust.
We consent to the filing of this letter as an exhibit to the Registration
Statement; the reference to us in the Statement of Additional Information
included as part of the Registration Statement; and the filing of this letter as
an exhibit to any application made by or on behalf of the Trust or any
distributor or dealer in connection with the registration of the Trust or the
shares of the Fund under the securities laws of any state or other jurisdiction.
Very truly yours,
/s/ Willkie Farr & Gallagher
<PAGE>
Bingham, Dana & Gould LLP
150 Federal Street
Boston, Massachusetts 02110-1726
June 23, 1997
GE Funds
3003 Summer Street
Stamford, CT 06905
Ladies and Gentlemen:
We have acted as special Massachusetts counsel for GE Funds (the
"Trust"), a Massachusetts business trust created under a written Declaration of
Trust dated August 10, 1992, as amended from time to time (the "Declaration of
Trust").
In connection with this opinion, we have examined the following
described documents:
(a) a certificate of the Secretary of State of the Commonwealth of
Massachusetts as to the existence of the Trust;
(b) a copy, as filed with the Secretary of State of the Commonwealth of
Massachusetts of the Trust's Declaration of Trust;
(c) a copy, as filed with the Secretary of the Commonwealth of
Massachusetts on June 2, 1997, of the Instrument Evidencing Establishment and
Designation of Series of Shares of Beneficial Interest, $.001 par value per
share, establishing and designating GE Government Securities Fund and GE Value
Equity Fund (the "Designation of Series");
(d) a copy, as filed with the Secretary of the Commonwealth of
Massachusetts on June 2, 1997, of the Establishment and Designation of Classes
of the series of the Trust designated GE Government Securities Fund and GE Value
Equity Fund, establishing and designating four classes of shares, Class A
shares, Class B shares, Class C shares and Class D shares (the "Designation of
Classes"); and
(e) A certificate executed by an appropriate officer of the Trust
certifying as to, and attaching copies of, the Trust's Declaration of Trust and
By-Laws and certain votes of the Trustees of the Trust authorizing the
establishment and designation of series and classes of shares, and the issuance
of an indefinite number of shares of beneficial interest of such series and
classes of shares.
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, 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.
<PAGE>
GE Funds
June 23, 1997
Page 2
This opinion is based entirely on our review of the documents listed
above. We have made no other review or investigation of any kind whatsoever, and
we have assumed, without independent inquiry, the accuracy of the information
set forth in such documents.
This opinion is limited solely to the laws of the Commonwealth of
Massachusetts (other than the Massachusetts Uniform Securities Act, as to which
we express no opinion) as applied by courts in such Commonwealth.
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 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."
2. The Class A shares, Class B shares, Class C shares and Class D
shares of the series of the Trust designated GE Government Securities Fund and
GE Value Equity Fund, when issued and sold in accordance with the Declaration of
Trust, the Designation of Series and Designation of Classes, will be legally
issued, fully paid and non-assessable, except that shareholders of the Trust may
under certain circumstances be held personally liable for the obligations of the
Trust.
We understand that Willkie Farr & Gallagher will rely on this opinion
in order to prepare an opinion to the Trust, which will be filed with the
Securities and Exchange Commission. We hereby consent to such use and filing of
this opinion.
Very truly yours,
/s/ Bingham, Dana & Gould LLP
BINGHAM, DANA & GOULD LLP
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 21 to the Registration Statement on Form N-1A (the "Registration
Statement") of our report dated November 12, 1996, relating to the financial
statements and financial highlights appearing in the September 30, 1996 Annual
Report to Shareholders of GE Funds which is also incorporated by reference into
the Registration Statement. We also consent to the references to us under the
headings "Independent Accountants" in the Statement of Additional Information
and "Financial Highlights" in the Prospectus.
/s/ Price Waterhouse
PRICE WATERHOUSE LLP
Boston, Massachusetts
June 20, 1997
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in Post-Effective
Amendment No. 21 under the Securities Act of 1933 to the Registration Statement
of GE Funds on Form N-1A of our report dated December 11, 1996, on our audits of
the financial statements and financial highlights of Investors Trust-Government
Fund, Growth Fund, Value Fund, and Tax Free Fund, which report is included in
the Annual Report to Shareholders for the fiscal year ended October 31, 1996
which is incorporated by reference in the Registration Statement. We also
consent to the reference to our Firm under the caption "Independent Accountants"
in the Registration Statement.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
June 23, 1997
<PAGE>
GE Funds Class A Returns With Load
This method computes the performance of the fund when loads are included. The
following computation illustrates this methology for 1996.
A = Return without load for period
B = Maximum Load amount
C = Return with Load = A*(1-B)-B
A B C
Return
Return Load With Load
------ ---- ---------
U.S. Equity Fund 18.36% 4.75% 12.74%
Global Fund 11.18% 4.75% 5.90%
International Fund 11.39% 4.75% 6.10%
Strategic Fund 13.35% 4.75% 7.96%
Income Fund 3.91% 4.25%-0.50%
Government Fund 4.63% 2.50% 2.01%
- --------------- ----- ----- -----
<PAGE>
GE Funds Class B Returns
With Load
This method computes the performance of the fund when loads are included. The
following computation illustrates this methology for 1996.
A = Return without load for period
B = Maximum Load amount
C = NAV at Beginning of period
D = NAV at End of period
E = Return with Load = A - B IF NAV appreciates
= A-(B*D/C)if NAV depreciates
----------------------------------------------------------------
A B C D E
Opening Ending Return
Return Load NAV NAV With Load
----------------------------------------------------------------
U.S. Equity Fund 17.78% 4.00% 19.71 22.57 13.78%
Global Fund 10.61% 4.00% 20.14 21.87 6.61%
International Fund 10.78% 4.00% 15.77 17.47 6.78%
Strategic Fund 12.73% 4.00% 18.26 20.04 8.73%
Income Fund 3.41% 3.00% 11.91 11.70 0.46%
Government Fund 4.35% 3.00% 11.90 11.78 1.38%
- --------------- ----- ----- ----- ----- -----
<PAGE>
Class C Since Inception Returns
The since inception Returns for the GE Funds are average annual compounded rates
of return Rates are calculated using the following geometric return formula
Geometric return = { (1+R1)x(1+R2)x(1+R3)....x(1+RN) } ^(1/M)-1
where
R1,R2,R3...RN = Rate of return for periods 1,2,3 through N
N = Number of periods
M = Number of years that comprise n periods
-----------------------------------------------------------
R1 R2 R3 R4 M Return
Prior Prior
Year Year YTD YTD Days in Number Since
Return Return Return Return Period of Years Inception
------ ------ ------ ------ ------ -------- ---------
U.S. Equity Fund 10.32% 0.8 26.86 18.70% 1316 3.60548 15.40%
Global Fund 14.10% 14.2 7.47 11.44% 1316 3.60548 13.16%
Strategic Fund 8.06% -0.27% 20.35 13.58% 1316 3.60548 11.34%
Tax Exempt Fund 5.48% -4.30% 9.23 3.77% 1316 3.60548 3.81%
Income Fund 5.24% -2.97% 12.81 4.10% 1316 3.60548 5.17%
International Fund 1.27% 5.1 11.54% 943 2.58356 6.89%
ST Government Fund 0.53% 7.7 4.98% 943 2.58356 5.10%
- ------------------ ----- --- ----- --- ------- -----
<PAGE>
GE U.S. Equity Fund
Calculation of 1996 Total Return
This method compares a fund's net asset value (NAV), at the
beginning and end of a period with the results being expressed as a
percent of the beginning net asset value. The net asset value is
adjusted to reflect the compounding effect of reinvesting dividends
as well as capital gains distributions, if any. Dividends and
distributions are reinvested on the ex-dividend date at the
Ex-dividend NAV.
The following computation illustrates this methology for 1996.
<TABLE>
<CAPTION>
Factual Data
<S> <C> <C> <C> <C>
Class A Class B Class C Class D
------------------------------------------------
1.Opening NAV 20.28 19.71 19.98 19.98
2.Closing NAV 9/30/96 23.34 22.57 23.02 23.03
3.Income Distributions
Ex Date 12/28/95 12/28/95 12/28/95 12/28/95
Amount / Unit 0.58839 0.57365 0.61605 0.65359
NAV on ex-date 20.68 20.07 20.36 20.33
Income Sources
Ordinary Income 0.32018 0.30544 0.34784 0.38538
Short Term Capital Gains 0.02167 0.02167 0.02167 0.02167
Long Term Capital Gains 0.24654 0.24654 0.24654 0.24654
Computation
Class A Class C
= (20.68+.5884) x(23.34) -1 = (20.36+.6161) x(23.02) -1
20.28 20.68 19.98 20.36
= 1.049 x 1.129 -1 = 1.050 x 1.130 -1
= .184 or 18.36% Rounded = .187 or 18.70% Rounded
Class B Class D
= (20.07+.5737) x(22.57) -1 = (20.33+.6536) x(23.03) -1
19.71 20.07 19.98 20.33
= 1.047 x 1.124 -1 = 1.050 x 1.133 -1
= .178 or 17.78% Rounded = 1.190 or 18.97% Rounded
</TABLE>
<PAGE>
GE International Equity Fund
Calculation of 1996 Total Return
This method compares a fund's net asset value (NAV), at the
beginning and end of a period with the results being expressed as a
percent of the beginning net asset value. The net asset value is
adjusted to reflect the compounding effect of reinvesting dividends
as well as capital gains distributions, if any. Dividends and
distributions are reinvested on the ex-dividend date at the
Ex-dividend NAV.
The following computation illustrates this methology for 1996.
<TABLE>
<CAPTION>
Factual Data
<S> <C> <C> <C> <C>
Class A Class B Class C Class D
------------------------------------------------------
1.Opening NAV 15.87 15.77 15.88 15.94
2.Closing NAV 9/30/96 17.65 17.47 17.65 17.76
3.Income Distributions
Ex Date 12/28/95 12/28/95 12/28/95 12/28/95
Amount / Unit 0.02506 0 0.05758 0.08175
NAV on ex-date 16.40 16.31 16.38 16.44
Income Sources
Ordinary Income 0.02506 0 0.05758 0.08175
Computation
Class A Class C
= (16.40+.0251) x(17.65) -1 = (16.38+.0576) x(17.65) -1
15.87 16.40 15.88 16.38
= 1.035 x 1.076 -1 = 1.035 x 1.078 -1
= .114 or 11.39% Rounded = .115 or 11.54% Rounded
Class B Class D
= (16.31+.0) x(17.47) -1 = (16.44+.0818) x(17.76) -1
15.77 16.31 15.94 16.44
= 1.034 x 1.071 -1 = 1.036 x 1.080 -1
= .108 or 10.78% Rounded = .120 or 11.97% Rounded
</TABLE>
<PAGE>
GE Global Equity Fund
Calculation of 1996 Total Return
This method compares a fund's net asset value (NAV), at the
beginning and end of a period with the results being expressed as a
percent of the beginning net asset value. The net asset value is
adjusted to reflect the compounding effect of reinvesting dividends
as well as capital gains distributions, if any. Dividends and
distributions are reinvested on the ex-dividend date at the
Ex-dividend NAV.
The following computation illustrates this methology for 1996.
<TABLE>
<CAPTION>
Factual Data
<S> <C> <C> <C> <C>
Class A Class B Class C Class D
------------------------------------------------------
1.Opening NAV 20.18 20.14 20.31 20.37
2.Closing NAV 9/30/96 22.01 21.87 22.18 22.25
3.Income Distributions
Ex Date 12/28/95 12/28/95 12/28/95 12/28/95
Amount / Unit 0.38443 0.36807 0.40771 0.45466
NAV on ex-date 19.86 19.81 19.98 20.00
Income Sources
Ordinary Income 0.01636 0 0.03964 0.08659
Long Term Capital Gains 0.36807 0.36807 0.36807 0.36807
Computation
Class A Class C
= (19.86+.3844) x(22.01) -1 = (19.98+.4077) x(22.18) -1
20.18 19.86 20.31 19.98
= 1.003 x 1.108 -1 = 1.004 x 1.110 -1
= .112 or 11.18% Rounded = 114 or 11.44% Rounded
Class B Class D
= (19.81+.3681) x(21.87) -1 = (20.00+.4547) x(22.25) -1
20.14 19.81 20.37 20.00
= 1.002 x 1.104 -1 = 1.004 x 1.113 -1
= .106 or 10.61% Rounded = .117 or 11.71% Rounded
</TABLE>
<PAGE>
GE Strategic Investment Fund
Calculation of 1996 Total Return
This method compares a fund's net asset value (NAV), at the beginning and end of
a period with the results being expressed as a percent of the beginning net
asset value. The net asset value is adjusted to reflect the compounding effect
of reinvesting dividends as well as capital gains distributions, if any.
Dividends and distributions are reinvested on the ex-dividend date at the
Ex-dividend NAV.
The following computation illustrates this methology for 1996.
Factual Data
Class A Class B Class C Class D
--------------------------------------------
1. Opening NAV 18.4 18.26 18.46 18.49
2. Closing NAV 9/30/96 20.3 20.04 20.38 20.44
3. Income Distributions
Ex Date 12/28/95 12/28/95 12/28/95 12/28/95
Amount / Unit 0.5 0.50 0.54 0.58100
NAV on ex-date 18.8 18.64 18.85 18.85
Income Sources
Ordinary Income 0.4 0.42 0.45 0.49605
Short Term Capital G 0.0 0.03 0.03 0.03642
Long Term Capital Ga 0.0 0.04 0.04 0.04853
Computation
Class A Class C
------- -------
= (18.83+.5183) x(20.33) -1 = (18.85+.5422) x(20.38) -1
18.43 18.83 18.46 18.85
= 1.050 x 1.080 -1 = 1.050 x 1.081 -1
= .134 or 13.35% Rounded = .136 or 13.58% Rounded
Class B Class D
------- -------
= (18.64+.5059) x(20.04) -1 = (18.85+.5810) x(20.44) -1
18.26 18.64 18.49 18.85
= 1.049 x 1.075 -1 = 1.051 x 1.084 -1
= .127 or 12.73% Rounded = .140 or 13.95% Rounded
<PAGE>
GE Fixed Income Fund
Year to Date percentage return equals
Ending Account Value -1
Beginning Account Value
where
Beginning Account Value = the net asset value
(NAV) at the beginning of the year
multiplied by 1000 "beginning units"
(a hypothetical number of Units.)
Ending Account Value = Ending Units x NAV at the end of the year
Ending Units Beginning units + number of units purchased
month 1 + number of units purchased month 2...
...continued through month 12.
Income Units Purchased
Each Month = Total Income Earned that Month
NAV at end of month
Income Earned = Income per unit multiplied
by total number of units through end
of prior months.
See attached Return calculations for the Period ending September 30, 1996
<PAGE>
GE Fixed Income Class A
Total Return for Fiscal Year Ended September 1996
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
A B C D E F G H I J K L
Capital Capital Gains Income Current
Income per Gains Reinvest. Unit Income Units Units Total Account Month YTD
Period Unit Unit Value Value Earned Purchased Purchased Units Value Return Return
- --------------------------------------------------------------------------------------------------------------------------
Sep-95 11.91 1000.000 11910.00
Oct-95 0.0584 12.00 12.00 58.400 0.000 4.867 1004.867 12058.40 1.25% 1.25%
Nov-95 0.0560 12.12 12.12 56.273 0.000 4.643 1009.510 12235.26 1.47% 2.73%
Dec-95 0.0640 12.22 12.22 64.609 0.000 5.287 1014.797 12400.82 1.35% 4.12%
Jan-96 0.0437 12.16 12.16 44.347 0.000 3.647 1018.444 12384.27 -0.13% 3.98%
Jan-96 0.0105 12.23 12.23 10.694 0.000 0.874 1019.318 12466.26 0.66% 4.67%
Feb-96 0.0446 12.03 12.03 45.462 0.000 3.779 1023.097 12307.86 -1.27% 3.34%
Feb-96 0.0073 11.94 11.94 7.469 0.000 0.626 1023.723 12223.25 -0.69% 2.63%
Mar-96 0.0438 11.85 11.85 44.839 0.000 3.784 1027.506 12175.95 -0.39% 2.23%
Mar-96 0.0104 11.79 11.79 10.686 0.000 0.906 1028.413 12124.99 -0.42% 1.81%
Apr-96 0.0449 11.69 11.69 46.176 0.000 3.950 1032.363 12068.32 -0.47% 1.33%
Apr-96 0.0091 11.66 11.66 9.395 0.000 0.806 1033.169 12046.75 -0.18% 1.15%
May-96 0.0476 11.67 11.67 49.179 0.000 4.214 1037.383 12106.26 0.49% 1.65%
May-96 0.0071 11.57 11.57 7.365 0.000 0.637 1038.019 12009.88 -0.80% 0.84%
Jun-96 0.0453 11.54 11.54 47.022 0.000 4.075 1042.094 12025.76 0.13% 0.97%
Jun-96 0.0097 11.65 11.65 10.108 0.000 0.868 1042.962 12150.50 1.04% 2.02%
Jul-96 0.0456 11.58 11.58 47.559 0.000 4.107 1047.069 12125.05 -0.21% 1.81%
Jul-96 0.0117 11.63 11.63 12.251 0.000 1.053 1048.122 12189.66 0.53% 2.35%
Aug-96 0.0475 11.67 11.67 49.786 0.000 4.266 1052.388 12281.37 0.75% 3.12%
Aug-96 0.0114 11.55 11.55 11.997 0.000 1.039 1053.427 12167.08 -0.93% 2.16%
Sep-96 0.0488 11.68 11.68 51.407 0.000 4.401 1057.828 12355.43 1.55% 3.74%
Sep-96 0.0092 11.69 11.69 9.732 0.000 0.833 1058.661 12375.74 0.16% 3.91%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Annual return for one year equals:
(Ending Account Value - Beginning Account Value)/Beginning Account Value
- --------------------------------------------------------------------------------
1) Input numbers for columns A,B,C,D,E
A = Month - Year
B = Income per unit
C = Capital Gains per unit
D = Capital Gain Reinvestment NAV
E = NAV per unit at Month End
2) F = I^ * B, where I^ is from prior month
3) G = I^ *C/D, where I^ is from prior month
4) H = F/E
5) I = I^ + H, where I^ is from prior month
6) J= E/I
7) K =(J-J^)/J^, where J^ is from prior month
8) L = ((L^ + 1)*(K + 1))-1, where L^ is from prior month
<PAGE>
GE Fixed Income Class B
Total Return for Fiscal Year Ended September 1996
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
A B C D E F G H I J K L
Capital Capital Gains Income Current
Income per Gains Reinvest. Unit Income Units Units Total Account Month YTD
Period Unit Unit Value Value Earned Purchased Purchased Units Value Return Return
- ---------------------------------------------------------------------------------------------------------------------------
Sep-95 11.91 1000.000 11910.00
Oct-95 0.0517 12.00 12.00 51.700 0.000 4.308 1004.308 12051.70 1.19% 1.19%
Nov-95 0.0494 12.12 12.12 49.613 0.000 4.093 1008.402 12221.83 1.41% 2.62%
Dec-95 0.0571 12.22 12.22 57.580 0.000 4.712 1013.114 12380.25 1.30% 3.95%
Jan-96 0.0374 12.17 12.17 37.890 0.000 3.113 1016.227 12367.48 -0.10% 3.84%
Jan-96 0.0091 12.23 12.23 9.248 0.000 0.756 1016.983 12437.71 0.57% 4.43%
Feb-96 0.0397 12.04 12.04 40.374 0.000 3.353 1020.337 12284.85 -1.23% 3.15%
Feb-96 0.0066 11.95 11.95 6.734 0.000 0.564 1020.900 12199.76 -0.69% 2.43%
Mar-96 0.0395 11.86 11.86 40.326 0.000 3.400 1024.300 12148.20 -0.42% 2.00%
Mar-96 0.0094 11.80 11.80 9.628 0.000 0.816 1025.116 12096.37 -0.43% 1.56%
Apr-96 0.0409 11.71 11.71 41.927 0.000 3.580 1028.697 12046.04 -0.42% 1.14%
Apr-96 0.0083 11.67 11.67 8.538 0.000 0.732 1029.428 12013.43 -0.27% 0.87%
May-96 0.0434 11.68 11.68 44.677 0.000 3.825 1033.253 12068.40 0.46% 1.33%
May-96 0.0065 11.58 11.58 6.716 0.000 0.580 1033.833 11971.79 -0.80% 0.52%
Jun-96 0.0414 11.56 11.56 42.801 0.000 3.702 1037.536 11993.92 0.18% 0.70%
Jun-96 0.0089 11.66 11.66 9.234 0.000 0.792 1038.328 12106.90 0.94% 1.65%
Jul-96 0.0417 11.60 11.60 43.298 0.000 3.733 1042.060 12087.90 -0.16% 1.49%
Jul-96 0.0108 11.64 11.64 11.254 0.000 0.967 1043.027 12140.84 0.44% 1.94%
Aug-96 0.0436 11.68 11.68 45.476 0.000 3.893 1046.921 12228.04 0.72% 2.67%
Aug-96 0.0104 11.56 11.56 10.888 0.000 0.942 1047.863 12113.29 -0.94% 1.71%
Sep-96 0.0449 11.70 11.70 47.049 0.000 4.021 1051.884 12307.04 1.60% 3.33%
Sep-96 0.0084 11.70 11.70 8.836 0.000 0.755 1052.639 12315.88 0.07% 3.41%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Annual return for one year equals:
(Ending Account Value - Beginning Account Value)/Beginning Account Value
- --------------------------------------------------------------------------------
1) Input numbers for columns A,B,C,D,E
A = Month - Year
B = Income per unit
C = Capital Gains per unit
D = Capital Gain Reinvestment NAV
E = NAV per unit at Month End
2) F = I^ * B, where I^ is from prior month
3) G = I^ *C/D, where I^ is from prior month
4) H = F/E
5) I = I^ + H, where I^ is from prior month
6) J= E/I
7) K =(J-J^)/J^, where J^ is from prior month
8) L = ((L^ + 1)*(K + 1))-1, where L^ is from prior month
<PAGE>
GE Fixed Income Class C
Total Return for Fiscal Year Ended September 1996
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
A B C D E F G H I J K L
Capital Capital Gains Income Current
Income per Gains Reinvest. Unit Income Units Units Total Account Month YTD
Period Unit Unit Value Value Earned Purchased Purchased Units Value Return Return
- --------------------------------------------------------------------------------------------------------------------------
Sep-95 11.92 1000.000 11920.00
Oct-95 0.0594 12.01 12.01 59.400 0.000 4.946 1004.946 12069.40 1.25% 1.25%
Nov-95 0.0569 12.13 12.13 57.181 0.000 4.714 1009.660 12247.17 1.47% 2.74%
Dec-95 0.0649 12.23 12.23 65.527 0.000 5.358 1015.018 12413.67 1.36% 4.14%
Jan-96 0.0436 12.17 12.17 44.255 0.000 3.636 1018.654 12397.02 -0.13% 4.00%
Jan-96 0.0106 12.24 12.24 10.798 0.000 0.882 1019.536 12479.13 0.66% 4.69%
Feb-96 0.0460 12.04 12.04 46.899 0.000 3.895 1023.432 12322.12 -1.26% 3.37%
Feb-96 0.0076 11.96 11.96 7.778 0.000 0.650 1024.082 12248.02 -0.60% 2.75%
Mar-96 0.0456 11.86 11.86 46.698 0.000 3.937 1028.019 12192.31 -0.45% 2.28%
Mar-96 0.0109 11.81 11.81 11.205 0.000 0.949 1028.968 12152.11 -0.33% 1.95%
Apr-96 0.0469 11.71 11.71 48.259 0.000 4.121 1033.089 12097.48 -0.45% 1.49%
Apr-96 0.0095 11.67 11.67 9.814 0.000 0.841 1033.930 12065.97 -0.26% 1.22%
May-96 0.0498 11.68 11.68 51.490 0.000 4.408 1038.339 12127.80 0.51% 1.74%
May-96 0.0075 11.58 11.58 7.788 0.000 0.672 1039.011 12031.75 -0.79% 0.94%
Jun-96 0.0473 11.55 11.55 49.145 0.000 4.255 1043.266 12049.72 0.15% 1.09%
Jun-96 0.0101 11.66 11.66 10.537 0.000 0.904 1044.170 12175.02 1.04% 2.14%
Jul-96 0.0477 11.59 11.59 49.807 0.000 4.297 1048.467 12151.74 -0.19% 1.94%
Jul-96 0.0122 11.64 11.64 12.791 0.000 1.099 1049.566 12216.95 0.54% 2.49%
Aug-96 0.0496 11.68 11.68 52.058 0.000 4.457 1054.023 12310.99 0.77% 3.28%
Aug-96 0.0119 11.56 11.56 12.543 0.000 1.085 1055.108 12197.05 -0.93% 2.32%
Sep-96 0.0508 11.70 11.70 53.600 0.000 4.581 1059.689 12398.37 1.65% 4.01%
Sep-96 0.0096 11.70 11.70 10.173 0.000 0.869 1060.559 12408.54 0.08% 4.10%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Annual return for one year equals:
(Ending Account Value - Beginning Account Value)/Beginning Account Value
- --------------------------------------------------------------------------------
1) Input numbers for columns A,B,C,D,E
A = Month - Year
B = Income per unit
C = Capital Gains per unit
D = Capital Gain Reinvestment NAV
E = NAV per unit at Month End
2) F = I^ * B, where I^ is from prior month
3) G = I^ *C/D, where I^ is from prior month
4) H = F/E
5) I = I^ + H, where I^ is from prior month
6) J= E/I
7) K =(J-J^)/J^, where J^ is from prior month
8) L = ((L^ + 1)*(K + 1))-1, where L^ is from prior month
<PAGE>
GE Fixed Income Class D
Total Return for Fiscal Year Ended September 1996
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
A B C D E F G H I J K L
Capital Capital Gains Income Current
Income per Gains Reinvest. Unit Income Units Units Total Account Month YTD
Period Unit Unit Value Value Earned Purchased Purchased Units Value Return Return
- ----------------------------------------------------------------------------------------------------------------------------
Sep-95 11.92 1000.000 11920.00
Oct-95 0.0623 12.01 12.01 62.300 0.000 5.187 1005.187 12072.30 1.28% 1.28%
Nov-95 0.0598 12.13 12.13 60.110 0.000 4.955 1010.143 12253.03 1.50% 2.79%
Dec-95 0.0680 12.23 12.23 68.690 0.000 5.616 1015.759 12422.74 1.38% 4.22%
Jan-96 0.0478 12.17 12.17 48.553 0.000 3.990 1019.749 12410.34 -0.10% 4.11%
Jan-96 0.0114 12.24 12.24 11.625 0.000 0.950 1020.699 12493.35 0.67% 4.81%
Feb-96 0.0490 12.04 12.04 50.014 0.000 4.154 1024.853 12339.23 -1.23% 3.52%
Feb-96 0.0080 11.95 11.95 8.199 0.000 0.686 1025.539 12255.19 -0.68% 2.81%
Mar-96 0.0483 11.86 11.86 49.534 0.000 4.177 1029.715 12212.42 -0.35% 2.45%
Mar-96 0.0115 11.80 11.80 11.842 0.000 1.004 1030.719 12162.48 -0.41% 2.03%
Apr-96 0.0491 11.70 11.70 50.608 0.000 4.325 1035.044 12110.02 -0.43% 1.59%
Apr-96 0.0099 11.66 11.66 10.247 0.000 0.879 1035.923 12078.86 -0.26% 1.33%
May-96 0.0521 11.68 11.68 53.972 0.000 4.621 1040.544 12153.55 0.62% 1.96%
May-96 0.0078 11.58 11.58 8.116 0.000 0.701 1041.245 12057.62 -0.79% 1.15%
Jun-96 0.0494 11.55 11.55 51.437 0.000 4.453 1045.698 12077.82 0.17% 1.32%
Jun-96 0.0105 11.65 11.65 10.980 0.000 0.942 1046.641 12193.37 0.96% 2.29%
Jul-96 0.0496 11.59 11.59 51.913 0.000 4.479 1051.120 12182.48 -0.09% 2.20%
Jul-96 0.0127 11.63 11.63 13.349 0.000 1.148 1052.268 12237.87 0.45% 2.67%
Aug-96 0.0515 11.67 11.67 54.192 0.000 4.644 1056.911 12334.16 0.79% 3.47%
Aug-96 0.0123 11.55 11.55 13.000 0.000 1.126 1058.037 12220.33 -0.92% 2.52%
Sep-96 0.0528 11.69 11.69 55.864 0.000 4.779 1062.816 12424.32 1.67% 4.23%
Sep-96 0.0100 11.69 11.69 10.628 0.000 0.909 1063.725 12434.95 0.09% 4.32%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Annual return for one year equals:
(Ending Account Value - Beginning Account Value)/Beginning Account Value
- --------------------------------------------------------------------------------
1) Input numbers for columns A,B,C,D,E
A = Month - Year
B = Income per unit
C = Capital Gains per unit
D = Capital Gain Reinvestment NAV
E = NAV per unit at Month End
2) F = I^ * B, where I^ is from prior month
3) G = I^ *C/D, where I^ is from prior month
4) H = F/E
5) I = I^ + H, where I^ is from prior month
6) J= E/I
7) K =(J-J^)/J^, where J^ is from prior month
8) L = ((L^ + 1)*(K + 1))-1, where L^ is from prior month
<PAGE>
GE Short Term Government Fund
Year to Date percentage return equals
Ending Account Value -1
Beginning Account Value
where
Beginning Account Value = the net asset value
(NAV) at the beginning of the year
multiplied by 1000 "beginning units"
(a hypothetical number of Units.)
Ending Account Value = Ending Units x NAV at the end of the year
Ending Units Beginning units + number of units purchased
month 1 + number of units purchased month 2 ...
...continued through month 12.
Income Units Purchased
Each Month = Total Income Earned that Month
NAV at end of month
Income Earned = Income per unit multiplied
by total number of units through end
of prior months.
See attached Return calculations for the Period ending September 30, 1996
<PAGE>
GE Short Term Fund A
Total Return for Fiscal Year Ended September 1996
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
A B C D E F G H I J K L
Capital Capital Gains Income Current
Income per Gains Reinvest. Unit Income Units Units Total Account Month YTD
Period Unit Unit Value Value Earned Purchased Purchased Units Value Return Return
- --------------------------------------------------------------------------------------------------------------------------
Sep-95 11.91 1000.000 11910.00
Oct-95 0.0534 11.94 11.94 53.400 0.000 4.472 1004.472 11993.40 0.70% 0.70%
Nov-95 0.0516 11.98 11.98 51.831 0.000 4.326 1008.799 12085.41 0.77% 1.47%
Dec-95 0.0576 11.93 11.93 0.000 58.350 4.891 1013.690 12093.32 0.07% 1.54%
Dec-95 0.0635 11.94 11.94 64.369 0.000 5.391 1019.081 12167.83 0.62% 2.16%
Jan-96 0.0412 11.95 11.95 41.986 0.000 3.513 1022.594 12220.00 0.43% 2.60%
Jan-96 0.0099 11.98 11.98 10.124 0.000 0.845 1023.439 12260.80 0.33% 2.95%
Feb-96 0.0414 11.93 11.93 42.370 0.000 3.552 1026.991 12252.00 -0.07% 2.87%
Feb-96 0.0062 11.88 11.88 6.367 0.000 0.536 1027.527 12207.02 -0.37% 2.49%
Mar-96 0.0378 11.83 11.83 38.841 0.000 3.283 1030.810 12194.49 -0.10% 2.39%
Mar-96 0.0091 11.82 11.82 9.380 0.000 0.794 1031.604 12193.56 -0.01% 2.38%
Apr-96 0.0394 11.78 11.78 40.645 0.000 3.450 1035.054 12192.94 -0.01% 2.38%
Apr-96 0.0081 11.77 11.77 8.384 0.000 0.712 1035.767 12190.97 -0.02% 2.36%
May-96 0.0424 11.78 11.78 43.917 0.000 3.728 1039.495 12245.25 0.45% 2.81%
May-96 0.0063 11.74 11.74 6.549 0.000 0.558 1040.052 12210.22 -0.29% 2.52%
Jun-96 0.0404 11.73 11.73 42.018 0.000 3.582 1043.634 12241.83 0.26% 2.79%
Jun-96 0.0080 11.77 11.77 8.349 0.000 0.709 1044.344 12291.93 0.41% 3.21%
Jul-96 0.0409 11.74 11.74 42.714 0.000 3.638 1047.982 12303.31 0.09% 3.30%
Jul-96 0.0098 11.76 11.76 10.270 0.000 0.873 1048.855 12334.54 0.25% 3.56%
Aug-96 0.0415 11.78 11.78 43.528 0.000 3.695 1052.551 12399.04 0.52% 4.11%
Aug-96 0.0097 11.74 11.74 10.210 0.000 0.870 1053.420 12367.15 -0.26% 3.84%
Sep-96 0.0415 11.79 11.79 43.717 0.000 3.708 1057.128 12463.54 0.78% 4.65%
Sep-96 0.0084 11.78 11.78 8.880 0.000 0.754 1057.882 12461.85 -0.01% 4.63%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Annual return for one year equals:
(Ending Account Value - Beginning Account Value)/Beginning Account Value
- --------------------------------------------------------------------------------
1) Input numbers for columns A,B,C,D,
A = Month - Year
B = Income per unit
C = Capital Gains per unit
D = Capital Gain Reinvestment NAV
E = NAV per unit at Month End
2) F = I^ * B, where I^ is from prior month
3) G = I^ *C/D, where I^ is from prior month
4) H = F/E
5) I = I^ + H, where I^ is from prior month
6) J= E/I
7) K =(J-J^)/J^, where J^ is from prior month
8) L = ((L^ + 1)*(K + 1))-1, where L^ is from prior month
<PAGE>
GE Short Term Fund B
Total Return for Fiscal Year Ended September 1996
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
A B C D E F G H I J K L
Capital Capital Gains Income Current
Income per Gains Reinvest. Unit Income Units Units Total Account Month YTD
Period Unit Unit Value Value Earned Purchased Purchased Units Value Return Return
- --------------------------------------------------------------------------------------------------------------------------
Sep-95 11.90 1000.000 11900.00
Oct-95 0.0498 11.93 11.93 49.800 0.000 4.174 1004.174 11979.80 0.67% 0.67%
Nov-95 0.0482 11.98 11.98 48.401 0.000 4.040 1008.215 12078.41 0.82% 1.50%
Dec-95 0.0576 11.93 11.93 0.000 58.317 4.888 1013.103 12086.32 0.07% 1.57%
Dec-95 0.0599 11.93 11.93 60.685 0.000 5.087 1018.189 12147.00 0.50% 2.08%
Jan-96 0.0383 11.94 11.94 38.997 0.000 3.266 1021.456 12196.18 0.40% 2.49%
Jan-96 0.0092 11.97 11.97 9.397 0.000 0.785 1022.241 12236.22 0.33% 2.83%
Feb-96 0.0385 11.93 11.93 39.356 0.000 3.299 1025.540 12234.69 -0.01% 2.81%
Feb-96 0.0058 11.87 11.87 5.948 0.000 0.501 1026.041 12179.10 -0.46% 2.34%
Mar-96 0.0350 11.83 11.83 35.911 0.000 3.036 1029.076 12173.97 -0.04% 2.30%
Mar-96 0.0084 11.81 11.81 8.644 0.000 0.732 1029.808 12162.04 -0.10% 2.20%
Apr-96 0.0366 11.77 11.77 37.691 0.000 3.202 1033.011 12158.53 -0.03% 2.17%
Apr-96 0.0075 11.76 11.76 7.748 0.000 0.659 1033.669 12155.95 -0.02% 2.15%
May-96 0.0393 11.77 11.77 40.623 0.000 3.451 1037.121 12206.91 0.42% 2.57%
May-96 0.0059 11.74 11.74 6.119 0.000 0.521 1037.642 12181.92 -0.20% 2.36%
Jun-96 0.0376 11.73 11.73 39.015 0.000 3.326 1040.968 12210.56 0.24% 2.60%
Jun-96 0.0075 11.76 11.76 7.807 0.000 0.664 1041.632 12249.59 0.32% 2.93%
Jul-96 0.0380 11.74 11.74 39.582 0.000 3.372 1045.004 12268.34 0.15% 3.09%
Jul-96 0.0091 11.75 11.75 9.510 0.000 0.809 1045.813 12288.30 0.16% 3.26%
Aug-96 0.0386 11.78 11.78 40.368 0.000 3.427 1049.240 12360.04 0.58% 3.86%
Aug-96 0.0090 11.73 11.73 9.443 0.000 0.805 1050.045 12317.02 -0.35% 3.50%
Sep-96 0.0386 11.78 11.78 40.532 0.000 3.441 1053.485 12410.06 0.76% 4.28%
Sep-96 0.0078 11.78 11.78 8.217 0.000 0.698 1054.183 12418.28 0.07% 4.35%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Annual return for one year equals:
(Ending Account Value - Beginning Account Value)/Beginning Account Value
- --------------------------------------------------------------------------------
1) Input numbers for columns A,B,C,D,E
A = Month - Year
B = Income per unit
C = Capital Gains per unit
D = Capital Gain Reinvestment NAV
E = NAV per unit at Month End
2) F = I^ * B, where I^ is from prior month
3) G = I^ *C/D, where I^ is from prior month
4) H = F/E
5) I = I^ + H, where I^ is from prior month
6) J= E/I
7) K =(J-J^)/J^, where J^ is from prior month
8) L = ((L^ + 1)*(K + 1))-1, where L^ is from prior month
<PAGE>
GE Short Term Fund C
Total Return for Fiscal Year Ended September 1996
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
A B C D E F G H I J K L
Capital Capital Gains Income Current
Income per Gains Reinvest. Unit Income Units Units Total Account Month YTD
Period Unit Unit Value Value Earned Purchased Purchased Units Value Return Return
- -------------------------------------------------------------------------------------------------------------------------
Sep-95 11.91 1000.000 11910.00
Oct-95 0.0560 11.95 11.95 56.000 0.000 4.686 1004.686 12006.00 0.81% 0.81%
Nov-95 0.0541 11.99 11.99 54.354 0.000 4.533 1009.219 12100.54 0.79% 1.60%
Dec-95 0.0576 11.94 11.94 0.000 58.374 4.889 1014.108 12108.45 0.07% 1.67%
Dec-95 0.0660 11.95 11.95 66.931 0.000 5.601 1019.709 12185.53 0.64% 2.31%
Jan-96 0.0432 11.95 11.95 44.051 0.000 3.686 1023.396 12229.58 0.36% 2.68%
Jan-96 0.0104 11.99 11.99 10.643 0.000 0.888 1024.283 12281.16 0.42% 3.12%
Feb-96 0.0434 11.94 11.94 44.454 0.000 3.723 1028.006 12274.40 -0.06% 3.06%
Feb-96 0.0066 11.88 11.88 6.785 0.000 0.571 1028.578 12219.50 -0.45% 2.60%
Mar-96 0.0398 11.84 11.84 40.937 0.000 3.458 1032.035 12219.30 0.00% 2.60%
Mar-96 0.0096 11.82 11.82 9.908 0.000 0.838 1032.873 12208.56 -0.09% 2.51%
Apr-96 0.0415 11.79 11.79 42.864 0.000 3.636 1036.509 12220.44 0.10% 2.61%
Apr-96 0.0085 11.78 11.78 8.810 0.000 0.748 1037.257 12218.89 -0.01% 2.59%
May-96 0.0446 11.78 11.78 46.262 0.000 3.927 1041.184 12265.15 0.38% 2.98%
May-96 0.0066 11.75 11.75 6.872 0.000 0.585 1041.769 12240.78 -0.20% 2.78%
Jun-96 0.0424 11.74 11.74 44.171 0.000 3.762 1045.531 12274.54 0.28% 3.06%
Jun-96 0.0084 11.78 11.78 8.782 0.000 0.746 1046.277 12325.14 0.41% 3.49%
Jul-96 0.0429 11.75 11.75 44.885 0.000 3.820 1050.097 12338.64 0.11% 3.60%
Jul-96 0.0103 11.76 11.76 10.816 0.000 0.920 1051.017 12359.95 0.17% 3.78%
Aug-96 0.0435 11.79 11.79 45.719 0.000 3.878 1054.894 12437.20 0.63% 4.43%
Aug-96 0.0102 11.74 11.74 10.760 0.000 0.917 1055.811 12395.22 -0.34% 4.07%
Sep-96 0.0435 11.80 11.80 45.928 0.000 3.892 1059.703 12504.50 0.88% 4.99%
Sep-96 0.0088 11.79 11.79 9.325 0.000 0.791 1060.494 12503.22 -0.01% 4.98%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Annual return for one year equals:
(Ending Account Value - Beginning Account Value)/Beginning Account Value
- --------------------------------------------------------------------------------
1) Input numbers for columns A,B,C,D,E
A = Month - Year
B = Income per unit
C = Capital Gains per unit
D = Capital Gain Reinvestment NAV
E = NAV per unit at Month End
2) F = I^ * B, where I^ is from prior month
3) G = I^ *C/D, where I^ is from prior month
4) H = F/E
5) I = I^ + H, where I^ is from prior month
6) J= E/I
7) K =(J-J^)/J^, where J^ is from prior month
8) L = ((L^ + 1)*(K + 1))-1, where L^ is from prior month
<PAGE>
GE Short Term Fund D
Total Return for Fiscal Year Ended September 1996
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
A B C D E F G H I J K L
Capital Capital Gains Income Current
Income per Gains Reinvest. Unit Income Units Units Total Account Month YTD
Period Unit Unit Value Value Earned Purchased Purchased Units Value Return Return
- --------------------------------------------------------------------------------------------------------------------------
Sep-95 11.90 1000.000 11900.00
Oct-95 0.0584 11.94 11.94 58.400 0.000 4.891 1004.891 11998.40 0.83% 0.83%
Nov-95 0.0565 11.98 11.98 56.776 0.000 4.739 1009.630 12095.37 0.81% 1.64%
Dec-95 0.0576 11.93 11.93 0.000 58.398 4.895 1014.525 12103.29 0.07% 1.71%
Dec-95 0.0685 11.94 11.94 69.495 0.000 5.820 1020.346 12182.93 0.66% 2.38%
Jan-96 0.0453 11.94 11.94 46.222 0.000 3.871 1024.217 12229.15 0.38% 2.77%
Jan-96 0.0109 11.98 11.98 11.164 0.000 0.932 1025.149 12281.28 0.43% 3.20%
Feb-96 0.0454 11.93 11.93 46.542 0.000 3.901 1029.050 12276.57 -0.04% 3.16%
Feb-96 0.0069 11.87 11.87 7.100 0.000 0.598 1029.648 12221.93 -0.45% 2.71%
Mar-96 0.0418 11.83 11.83 43.039 0.000 3.638 1033.286 12223.78 0.02% 2.72%
Mar-96 0.0100 11.81 11.81 10.333 0.000 0.875 1034.161 12213.45 -0.08% 2.63%
Apr-96 0.0434 11.78 11.78 44.883 0.000 3.810 1037.971 12227.30 0.11% 2.75%
Apr-96 0.0089 11.77 11.77 9.238 0.000 0.785 1038.756 12226.16 -0.01% 2.74%
May-96 0.0467 11.77 11.77 48.510 0.000 4.121 1042.878 12274.67 0.40% 3.15%
May-96 0.0069 11.74 11.74 7.196 0.000 0.613 1043.491 12250.58 -0.20% 2.95%
Jun-96 0.0444 11.73 11.73 46.331 0.000 3.950 1047.441 12286.48 0.29% 3.25%
Jun-96 0.0088 11.77 11.77 9.217 0.000 0.783 1048.224 12337.59 0.42% 3.68%
Jul-96 0.0449 11.74 11.74 47.065 0.000 4.009 1052.233 12353.21 0.13% 3.81%
Jul-96 0.0107 11.75 11.75 11.259 0.000 0.958 1053.191 12374.99 0.18% 3.99%
Aug-96 0.0455 11.78 11.78 47.920 0.000 4.068 1057.259 12454.51 0.64% 4.66%
Aug-96 0.0107 11.73 11.73 11.313 0.000 0.964 1058.223 12412.96 -0.33% 4.31%
Sep-96 0.0455 11.79 11.79 48.149 0.000 4.084 1062.307 12524.60 0.90% 5.25%
Sep-96 0.0092 11.78 11.78 9.773 0.000 0.830 1063.137 12523.75 -0.01% 5.24%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Annual return for one year equals:
(Ending Account Value - Beginning Account Value)/Beginning Account Value
- --------------------------------------------------------------------------------
1) Input numbers for columns A,B,C,D,E
A = Month - Year
B = Income per unit
C = Capital Gains per unit
D = Capital Gain Reinvestment NAV
E = NAV per unit at Month End
2) F = I^ * B, where I^ is from prior month
3) G = I^ *C/D, where I^ is from prior month
4) H = F/E
5) I = I^ + H, where I^ is from prior month
6) J= E/I
7) K =(J-J^)/J^, where J^ is from prior month
8) L = ((L^ + 1)*(K + 1))-1, where L^ is from prior month
<PAGE>
GE Short Term Government Fund
30 Day SEC Yield Calculation
SEC Yield = 2 ((((A-B)/(C*D)+1)^6)-1)
Where:
A = Dividends and Interest earned during the period
B = Expenses accrued for the period
C = Average daily number of shares outstanding during the period that were
entitled to dividends
D = Offering price per unit on the last day of the period
E = SEC Yield using calculation shown above
The calculation below is based on the 30 day period ending September 30, 1996.
The 30 Day SEC yield calculated below was
--------------------------------------------------------------------
A B C D E
Average
Accrued Shares Offering SEC
Income Expenses Outstanding Price Yield
--------------------------------------------------------------------
Class A 1764.68 266.42 28291.22 12.08 5.32
Class B 767.16 157.33 12305.33 11.79 5.10
Class C 18873.25 2120.80 302382.80 11.80 5.70
Class D 41096.88 3028.10 659002.34 11.79 5.95
- --------------------------------------------------------------------------------
<PAGE>
GE Tax Exempt Fund
Year to Date percentage return equals
Ending Account Value -1
Beginning Account Value
where
Beginning Account Value = the net asset value
(NAV) at the beginning of the year
multiplied by 1000 "beginning units"
(a hypothetical number of Units.)
Ending Account Value = Ending Units x NAV at the end of the year
Ending Units Beginning units + number of units purchased
month 1 + number of units purchased month 2...
...continued through month 12.
Income Units Purchased
Each Month = Total Income Earned that Month
NAV at end of month
Income Earned = Income per unit multiplied
by total number of units through end
of prior months.
See attached Return calculations for the Period ending September 30, 1996
<PAGE>
GE Tax Exempt Income Fund
30 Day SEC Yield Calculation
SEC Yield = 2 ((((A-B)/(C*D)+1)^6)-1)
Where:
A = Dividends and Interest earned during the period
B = Expenses accrued for the period
C = Average daily number of shares outstanding during the period that
were entitled to dividends
D = Offering price per unit on the last day of the period
E = SEC Yield using calculation shown above
The calculation below is based on the 30 day period ending September 30, 1996.
The 30 Day SEC yield calculated below was
-------------------------------------------------------------------
A B C D E
Average
Accrued Shares Offering SEC
Income Expenses Outstanding Price Yield
-------------------------------------------------------------------
Class C 31824.58 3057.84 643208.27 11.67 4.64
Class D 12504.46 600.65 252708.44 11.67 4.89
<PAGE>
GE Tax Exempt Fund - Equivalent Taxable Yield
The equivalent taxable yield of the Tax Exempt Fund demonstrates the yield on a
taxble investment necessary to provide an after tax yield equal to the Fund's
tax exempt yield.
Calculation: Divide the portion of the yield that is tax exempt by 1 minus the
effective tax rate and add that product to the portion of the yield that is
taxable
Input Fields A, B, C, F Fund
Level Class C Class D
- --------------------------------------------------------------------------------
A) Total Income 482,868
B) Total Taxable Income 21,487
C) Total Tax Exempt 461,381
D) Tax Exempt Percentage 95.55% 95.55% 95.55%
E) Taxable Percentage 4.45% 4.45%
F) SEC Yield 4.64% 4.89%
G) Portion of SEC Yield 4.43% 4.67%
H) Portion of SEC Yield 0.21% 0.22%
I) 1- Effective Tax Rate 60.40% 60.40%
J) Tax Equivalent Yield 7.34% 7.74%
K) Tax Equivalent Yield 0.21% 0.22%
L) Total Tax Equivalent 7.55% 7.95%
- ----------------------- ------ ----- -----
<PAGE>
GE Money Market Fund
Year to Date percentage return equals
Ending Account Value -1
Beginning Account Value
where
Beginning Account Value = the net asset value
(NAV) at the beginning of the year
multiplied by 1000 "beginning units"
(a hypothetical number of Units.)
Ending Account Value = Ending Units x NAV at the end of the year
Ending Units Beginning units + number of units purchased
month 1 + number of units purchased month 2 ...
...continued through month 12.
Income Units Purchased
Each Month = Total Income Earned that Month
NAV at end of month
Income Earned = Income per unit multiplied
by total number of units through end
of prior months.
See attached Return calculations for the Period ending September 30, 1996
<PAGE>
GE Money Market
Total Return for Fiscal Year Ended September 1996
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
A B C D E F G H I J K L
Capital Capital Gains Income Current
Income per Gains Reinvest. Unit Income Units Units Total Account Month YTD
Period Unit Unit Value Value Earned Purchased Purchased Units Value Return Return
- ---------------------------------------------------------------------------------------------------------------------------
Sep-95 1.00 1000.000 1000.00
Oct-95 0.0045 1.00 1.00 4.523 0.000 4.523 1004.523 1004.52 0.4523% 0.45%
Nov-95 0.0044 1.00 1.00 4.381 0.000 4.381 1008.904 1008.90 0.4361% 0.89%
Dec-95 0.0045 1.00 1.00 4.514 0.000 4.514 1013.418 1013.42 0.4474% 1.34%
Jan-96 0.0035 1.00 1.00 3.593 0.000 3.593 1017.011 1017.01 0.3546% 1.70%
Jan-96 0.0008 1.00 1.00 0.853 0.000 0.853 1017.864 1017.86 0.0839% 1.79%
Feb-96 0.0035 1.00 1.00 3.526 0.000 3.526 1021.390 1021.39 0.3464% 2.14%
Feb-96 0.0005 1.00 1.00 0.557 0.000 0.557 1021.946 1021.95 0.0545% 2.19%
Mar-96 0.0034 1.00 1.00 3.445 0.000 3.445 1025.391 1025.39 0.3371% 2.54%
Mar-96 0.0008 1.00 1.00 0.819 0.000 0.819 1026.211 1026.21 0.0799% 2.62%
Apr-96 0.0033 1.00 1.00 3.414 0.000 3.414 1029.625 1029.62 0.3327% 2.96%
Apr-96 0.0007 1.00 1.00 0.686 0.000 0.686 1030.311 1030.31 0.0666% 3.03%
May-96 0.0036 1.00 1.00 3.712 0.000 3.712 1034.023 1034.02 0.3603% 3.40%
May-96 0.0005 1.00 1.00 0.554 0.000 0.554 1034.577 1034.58 0.0536% 3.46%
Jun-96 0.0034 1.00 1.00 3.497 0.000 3.497 1038.075 1038.07 0.3380% 3.81%
Jun-96 0.0007 1.00 1.00 0.696 0.000 0.696 1038.770 1038.77 0.0670% 3.88%
Jul-96 0.0034 1.00 1.00 3.500 0.000 3.500 1042.270 1042.27 0.3369% 4.23%
Jul-96 0.0008 1.00 1.00 0.844 0.000 0.844 1043.114 1043.11 0.0810% 4.31%
Aug-96 0.0034 1.00 1.00 3.548 0.000 3.548 1046.662 1046.66 0.3401% 4.67%
Aug-96 0.0008 1.00 1.00 0.857 0.000 0.857 1047.519 1047.52 0.0819% 4.75%
Sep-96 0.0034 1.00 1.00 3.572 0.000 3.572 1051.091 1051.09 0.3410% 5.11%
Sep-96 0.0007 1.00 1.00 0.719 0.000 0.719 1051.810 1051.81 0.0684% 5.18%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Annual return for one year equals:
(Ending Account Value - Beginning Account Value)/Beginning Account Value
- --------------------------------------------------------------------------------
1) Input numbers for columns A,B,C,D,E
A = Month - Year
B = Income per unit
C = Capital Gains per unit
D = Capital Gain Reinvestment NAV
E = NAV per unit at Month End
2) F = I^ * B, where I^ is from prior month
3) G = I^ *C/D, where I^ is from prior month
4) H = F/E
5) I = I^ + H, where I^ is from prior month
6) J= E/I
7) K =(J-J^)/J^, where J^ is from prior month
8) L = ((L^ + 1)*(K + 1))-1, where L^ is from prior month
<PAGE>
GE Money Market Fund
7 Day Yield and Effective 7 Day Yield asof September 30, 1996.
Daily Current Effective
Daily Shares Income Rate 7 Day 7 Day
Date Income Outstanding Per Share Yield Yield
---- ------ ----------- --------- ----- -----
24-Sep 11,321.88 82,578,791 0.000137104
25-Sep 11,555.87 84,118,435 0.000137376
26-Sep 11,562.32 84,957,771 0.000136095
27-Sep 11,550.24 84,584,319 0.000136553
28-Sep 11,550.24 84,584,319 0.000136553
29-Sep 11,550.24 84,584,319 0.000136553
30-Sep 11,772.04 85,324,069 0.000137969 5.00% 5.12%
---------------------------------------------------------------------
0.000958203
---------------------------------------------------------------------
1) Input numbers for columns A,B,C
2) D = B/C
3) E = ((Sum of Column C)/7 Days)*365 Days
4) F = ((1+ Sum of Column C)*(365/7)) -1
<PAGE>
<TABLE>
<CAPTION>
INVESTORS TRUST
GOVERNMENT FUND
TOTAL RETURN FOR FISCAL YEAR ENDED OCTOBER 31, 1996
A B C D E F G H I J K L
- ----------------------------------------------------------------------------------------------------------------------------
Income Capital Capital Gains Income Current
Per Gains Reinvest Unit Income Units Units Total Account Month YTD
Period Unit Unit Value Value Earned Purchased Purchased Units Value Return Return
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Oct-95 8.70 1,000.000 8,700.00
Nov-95 0.0381 8.71 8.71 38.091 - 4.373 1,004.373 8,748.09 0.55% 0.55%
Nov-95 0.0169 8.76 8.76 16.943 - 1.934 1,006.307 8,815.25 0.77% 1.32%
Dec-95 0.0394 8.75 8.75 39.609 - 4,527 1,010.834 8,844.80 0.34% 1.66%
Dec-95 0.0181 8.81 8.81 18.335 - 2.081 1,012.915 8,923.78 0.89% 2.57%
Jan-96 0.0381 8.83 8.83 38.583 - 4.370 1,017.285 8,982.63 0.66% 3.25%
Jan-96 0.0181 8.83 8.83 18.452 - 2.090 1,019.375 9,001.08 0.21% 3.46%
Feb-96 0.0381 8.70 8.70 38.829 - 4,463 1,023.838 8,907.39 -1.04% 2.38%
Feb-96 0.0155 8.62 8.62 15.881 - 1,842 1,025.680 8,841.36 -0.74% 1.62%
Mar-96 0.0407 8.51 8.51 41.764 - 4,908 1,030.588 8,770.30 -0.80% 0.81%
Mar-96 0.0156 8.48 8.48 16.127 - 1,902 1,032.490 8,755.51 -0.17% 0.64%
Apr-96 0.0329 8.44 8.44 33.929 - 4,020 1,036.510 8,748.14 -0.08% 0.55%
Apr-96 0.0146 8.40 8.40 15.084 - 1,796 1,038.305 8,721.77 -0.30% 0.25%
May-96 0.0340 8.41 8.41 35.258 - 4.192 1,042.498 8,767.41 0.52% 0.77%
May-96 0.0156 8.31 8.31 16.313 - 1.963 1,044.461 8,679.47 -1.00% -0.24%
Jun-96 0.0329 8.27 8.27 34.323 - 4.150 1,048.611 8,672.01 -0.09% -0.32%
Jun-96 0.0146 8.35 8.35 15.260 - 1.828 1,050.439 8,771.16 1.14% 0.82%
Jul-96 0.0340 8.32 8.32 35.670 - 4.287 1,054.726 8,775.32 0.05% 0.87%
Jul-96 0.0156 8.32 8.32 16.505 - 1.984 1,056.710 8,791.82 0.19% 1.06%
Aug-96 0.0329 8.38 8.38 34.725 - 4.144 1,060.853 8,889.95 1.12% 2.18%
Aug-96 0.0157 8.25 8.25 16.605 - 2.013 1,062.866 8,768.65 -1.36% 0.79%
Sep-96 0.0345 8.29 8.29 36.646 - 4.421 1,067.287 8,847.81 0.90% 1.70%
Sep-96 0.0129 8.35 8.35 13.806 - 1.653 1,068.940 8,925.65 0.88% 2.59%
Oct-96 0.0340 8.42 8.42 36.298 - 4.311 1,073.251 9,036.77 1.24% 3.87%
Oct-96 0.0156 8.48 8.48 16.795 - 1.981 1,075.232 9,117.96 0.90% 4.80%
</TABLE>
- --------------------------------------------------------------------------------
Annual return for one year equals:
(Ending Account Value - Beginning Account Value)/Beginning
Account Value
- --------------------------------------------------------------------------------
1) Input numbers for Coums A,B,C,D,E
A = Month - Year B = Income per unit C = Capital Gains per
unit D = Capital Gain Reinvested NAV E = NAV per unit at
Month End
2) F = I(t) * B, where I(t) is from prior month
3) G = I(t) * C/D, where I(t) is from prior month
4) H = F/E
5) I = I(t) + H, where I(t) is from prior month
6) J = E/I
7) K = (J - J(t))/J, where J(t) is from prior month
8) L = ((L(t) - 1) * (K + 1) ) -1, where L(t) is from
prior month
<PAGE>
INVESTORS TRUST
GOVERNMENT FUND
TOTAL RETURN FOR FISCAL YEAR ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
A B C D E F G H I J K L
- ---------------------------------------------------------------------------------------------------------------------
Income Capital Capital Gain Income Current
Per Gains Reinvest Unit Income Units Units Total Account Month YTD
Period Unit Unit Value Value Earned Purchased Purchased Units Value Return Return
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Oct-95 8.71 1,000.000 8,710.00
Nov-95 0.0345 8.72 8.72 34.548 - 3.962 1,003.962 8,754.55 0.51% 0.51%
Nov-95 0.0153 8.77 8.77 15.361 - 1.751 1,005.713 8,820.11 0.75% 1.26%
Dec-95 0.0357 8.76 8.76 35.904 - 4.099 1,009.812 8,845.95 0.29% 1.56%
Dec-95 0.0165 8.82 8.82 16.613 - 1.884 1,011.696 8,923.16 0.87% 2.45%
Jan-96 0.0345 8.84 8.84 34.952 - 3.954 1,015.650 8,978.34 0.62% 3.08%
Jan-96 0.0165 8.83 8.83 16.709 - 1.892 1,017.542 8,984.89 0.07% 3.16%
Feb-96 0.0345 8.71 8.71 35.154 - 4.036 1,021.578 8,897.94 -0.97% 2.16%
Feb-96 0.0141 8.63 8.63 14.373 - 1.665 1,023.243 8,830.59 -0.76% 1.38%
Mar-96 0.0369 8.51 8.51 37.789 - 4.441 1,027.684 8,745.59 -0.96% 0.41%
Mar-96 0.0139 8.49 8.49 14.255 - 1.679 1,029.363 8,739.29 -0.07% 0.34%
Apr-96 0.0291 8.44 8.44 29.984 - 3.553 1,032.916 8,717.81 -0.25% 0.09%
Apr-96 0.0129 8.40 8.40 13.325 - 1.586 1,034.502 8,689.82 -0.32% -0.23%
May-96 0.0301 8.41 8.41 31.139 - 3.703 1,038.204 8,731.30 0.48% 0.24%
May-96 0.0139 8.32 8.32 14.401 - 1.731 1,039.935 8,652.26 -0.91% -0.66%
Jun-96 0.0291 8.28 8.28 30.292 - 3.658 1,043.594 8,640.96 -0.13% -0.79%
Jun-96 0.0129 8.36 8.36 13.462 - 1.610 1,045.204 8,737.91 1.12% 0.32%
Jul-96 0.0301 8.33 8.33 31.461 - 3.777 1,048.981 8,738.01 0.00% 0.32%
Jul-96 0.0139 8.33 8.33 14.550 - 1.747 1,050.728 8,752.56 0.17% 0.49%
Aug-96 0.0291 8.39 8.39 30.607 - 3.648 1,054.376 8,846.21 1.07% 1.56%
Aug-96 0.0139 8.26 8.26 14.629 - 1.771 1,056.147 8,723.77 -1.38% 0.16%
Sep-96 0.0306 8.30 8.30 32.278 - 3.889 1,060.036 8,798.30 0.85% 1.01%
Sep-96 0.0115 8.35 8.35 12.155 - 1.456 1,061.491 8,863.45 0.74% 1.76%
Oct-96 0.0301 8.43 8.43 31.951 - 3.790 1,065.282 8,980.32 1.32% 3.10%
Oct-96 0.0139 8.49 8.49 14.776 - 1.740 1,067.022 9,059.02 0.88% 4.00%
</TABLE>
- --------------------------------------------------------------------------------
Annual return for one year equals:
(Ending Account Value - Beginning Account Value)/Beginning Account Value
- --------------------------------------------------------------------------------
1) Input numbers for Coums A,B,C,D,E
A = Month - Year
B = Income per unit C = Capital Gains per unit D = Capital Gain
Reinvested NAV E = NAV per unit at Month End
2) F = I(t) * B, where I(t) is from prior month
3) G = I(t) * C/D, where I(t) is from prior month
4) H = F/E
5) I = I(t) + H, where I(t) is from prior month
6) J = E/I
7) K = (J - J(t))/J, where J(t) is from prior month
8) L = ((L(t) - 1) * (K + 1) ) -1, where L(t) is from prior month
<PAGE>
INVESTORS TRUST
GROWTH FUND
TOTAL RETURN FOR FISCAL YEAR ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
A B C D E F G H I J K L
- ------------------------------------------------------------------------------------------------------------------------
Income Capital Capital Gain Income Current
Per Gains Reinvest Unit Income Units Units Total Account Month YTD
Period Unit Unit Value Value Earned Purchased Purchased Units Value Return Return
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Oct-95 11.38 - - 1,000.000 11,380.00
Nov-95 - 11.37 11.37 0.000 - - 1,000.000 11,370.00 -0.09% -0.09%
Nov-95 - 11.68 11.68 0.000 - - 1,000.000 11,680.00 2.73% 2.64%
Dec-95 - 11.30 11.30 0.000 - - 1,000.000 11,300.00 -3.25% -0.70%
Dec-95 11.44 11.44 0.000 - - 1,000.000 11,440.00 1.24% 0.53%
Jan-96 11.12 11.12 0.000 - - 1,000.000 11,120.00 -2.80% -2.28%
Jan-96 11.74 11.74 0.000 - - 1,000.000 11,740.00 5.58% 3.16%
Feb-96 12.05 12.05 0.000 - - 1,000.000 12,050.00 2.64% 5.89%
Feb-96 11.99 11.99 0.000 - - 1,000.000 11,990.00 -0.50% 5.36%
Mar-96 12.09 12.09 0.000 - - 1,000.000 12,090.00 0.83% 6.24%
Mar-96 12.02 12.02 0.000 - - 1,000.000 12,020.00 -0.58% 5.62%
Apr-96 12.06 12.06 0.000 - - 1,000.000 12,060.00 0.33% 5.98%
Apr-96 12.33 12.33 0.000 - - 1,000.000 12,330.00 2.24% 8.35%
May-96 12.72 12.72 0.000 - - 1,000.000 12,720.00 3.16% 11.78%
May-96 12.77 12.77 0.000 - - 1,000.000 12,770.00 0.39% 12.21%
Jun-96 12.26 12.26 0.000 - - 1,000.000 12,260.00 -3.99% 7.73%
Jun-96 12.25 12.25 0.000 - - 1,000.000 12,250.00 -0.08% 7.64%
Jul-96 11.65 11.65 0.000 - - 1,000.000 11,650.00 -4.90% 2.37%
Jul-96 11.63 11.63 0.000 - - 1,000.000 11,630.00 -0.17% 2.20%
Aug-96 12.27 12.27 0.000 - - 1,000.000 12,270.00 5.50% 7.82%
Aug-96 12.24 12.24 0.000 - - 1,000.000 12,240.00 -0.24% 7.56%
Sep-96 13.12 13.12 0.000 - - 1,000.000 13,120.00 7.19% 15.29%
Sep-96 13.23 13.23 0.000 - - 1,000.000 13,230.00 0.84% 16.26%
Oct-96 13.35 13.35 0.000 - - 1,000.000 13,350.00 0.91% 17.31%
Oct-96 13.16 13.16 0.000 - - 1,000.000 13,160.00 -1.42% 15.64%
</TABLE>
- --------------------------------------------------------------------------------
Annual return for one year equals:
(Ending Account Value - Beginning Account Value)/Beginning Account Value
- --------------------------------------------------------------------------------
1) Input numbers for Coums A,B,C,D,E
A = Month - Year
B = Income per unit C = Capital Gains per unit D = Capital Gain
Reinvested NAV E = NAV per unit at Month End
2) F = I(t) * B, where I(t) is from prior month
3) G = I(t) * C/D, where I(t) is from prior month
4) H = F/E
5) I = I(t) + H, where I(t) is from prior month
6) J = E/I
7) K = (J - J(t))/J, where J(t) is from prior month
8) L = ((L(t) - 1) * (K + 1) ) -1, where L(t) is from prior month
<PAGE>
INVESTORS TRUST
GROWTH FUND
TOTAL RETURN FOR FISCAL YEAR ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
A B C D E F G H I J K L
- ------------------------------------------------------------------------------------------------------------------------------
Income Capital Capital Gain Income Current
Per Gains Reinvest Unit Income Units Units Total Account Month YTD
Period Unit Unit Value Value Earned Purchased Purchased Units Value Return Return
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Oct-95 11.21 1,000.000 11,210.00
Nov-95 - 11.19 11.19 0.000 - - 1,000.000 11,190.00 -0.18% -0.18%
Nov-95 - 11.49 11.49 0.000 - - 1,000.000 11,490.00 2.68% 2.50%
Dec-95 - 11.11 11.11 0.000 - - 1,000.000 11,110.00 -3.31% -0.89%
Dec-95 - 11.25 11.25 0.000 - - 1,000.000 11,250.00 1.26% 0.36%
Jan-96 - 10.93 10.93 0.000 - - 1,000.000 10,930.00 -2.84% -2.50%
Jan-96 - 11.54 11.54 0.000 - - 1,000.000 11,540.00 5.58% 2.94%
Feb-96 - 11.83 11.83 0.000 - - 1,000.000 11,830.00 2.51% 5.53%
Feb-96 - 11.77 11.77 0.000 - - 1,000.000 11,770.00 -0.51% 5.00%
Mar-96 - 11.87 11.87 0.000 - - 1,000.000 11,870.00 0.85% 5.89%
Mar-96 - 11.80 11.80 0.000 - - 1,000.000 11,800.00 -0.59% 5.26%
Apr-96 - 11.83 11.83 0.000 - - 1,000.000 11,830.00 0.25% 5.53%
Apr-96 - 12.10 12.10 0.000 - - 1,000.000 12,100.00 2.28% 7.94%
May-96 - 12.47 12.47 0.000 - - 1,000.000 12,470.00 3.06% 11.24%
May-96 - 12.52 12.52 0.000 - - 1,000.000 12,520.00 0.40% 11.69%
Jun-96 - 12.02 12.02 0.000 - - 1,000.000 12,020.00 -3.99% 7.23%
Jun-96 - 12.01 12.01 0.000 - - 1,000.000 12,010.00 -0.08% 7.14%
Jul-96 - 11.41 11.41 0.000 - - 1,000.000 11,410.00 -5.00% 1.78%
Jul-96 - 11.39 11.39 0.000 - - 1,000.000 11,390.00 -0.18% 1.61%
Aug-96 - 12.02 12.02 0.000 - - 1,000.000 12,020.00 5.53% 7.23%
Aug-96 - 11.99 11.99 0.000 - - 1,000.000 11,990.00 -0.25% 6.96%
Sep-96 - 12.84 12.84 0.000 - - 1,000.000 12,840.00 7.09% 14.54%
Sep-96 - 12.95 12.95 0.000 - - 1,000.000 12,950.00 0.86% 15.52%
Oct-96 - 13.06 13.06 0.000 - - 1,000.000 13,060.00 0.85% 16.50%
Oct-96 - 12.87 12.87 0.000 - - 1,000.000 12,870.00 -1.45% 14.81%
</TABLE>
- --------------------------------------------------------------------------------
Annual return for one year equals:
(Ending Account Value - Beginning Account Value)/Beginning Account Value
- --------------------------------------------------------------------------------
1) Input numbers for Coums A,B,C,D,E
A = Month - Year
B = Income per unit C = Capital Gains per unit D = Capital Gain
Reinvested NAV E = NAV per unit at Month End
2) F = I(t) * B, where I(t) is from prior month
3) G = I(t) * C/D, where I(t) is from prior month
4) H = F/E
5) I = I(t) + H, where I(t) is from prior month
6) J = E/I
7) K = (J - J(t))/J, where J(t) is from prior month
8) L = ((L(t) - 1) * (K + 1) ) -1, where L(t) is from prior month
<PAGE>
INVESTORS TRUST
VALUE FUND
TOTAL RETURN FOR FISCAL YEAR ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
A B C D E F G H I J K L
- ------------------------------------------------------------------------------------------------------------------------------
Income Capital Capital Gain Income Current
Per Gains Reinvest Unit Income Units Units Total Account Month YTD
Period Unit Unit Value Value Earned Purchased Purchased Units Value Return Return
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Oct-95 8.95 1,000.000 8,950.00
Nov-95 - 9.22 9.22 0.000 - - 1,000.000 9,220.00 3.02% 3.02%
Nov-95 - 9.24 9.24 0.000 - - 1,000.000 9,240.00 0.22% 3.24%
Dec-95 0.0324 0.07444 9.18 9.13 2.390 8.11 3.528 1,011.637 9,286.83 0.51% 3.76%
Dec-95 - 9.28 9.28 0.000 - - 1,011.637 9,387.99 1.09% 4.89%
Jan-96 - 9.18 9.18 0.000 - - 1,011.637 9,286.83 -1.08% 3.76%
Jan-96 - 9.56 9.56 0.000 - - 1,011.637 9,853.35 1.88% 10.09%
Feb-96 - 9.67 9.67 0.000 - - 1,011.637 9,782.53 -0.72% 9.30%
Mar-96 0.0210 9.74 9.72 1.254 - 2.182 1,013.819 9,874.60 0.94% 10.33%
Mar-96 - 9.67 9.67 0.000 - - 1,013.819 9,803.63 -0.72% 9.54%
Apr-96 - 9.68 9.68 0.000 - - 1,013.819 9,813.77 0.10% 9.65%
Apr-96 - 9.82 9.82 0.000 - - 1,013.819 9,955.71 1.45% 11.24%
May-96 - 10.09 10.09 0.000 - - 1,013.819 10,229.44 2.75% 14.30%
May-96 - 10.05 10.05 0.000 - - 1,013.819 10,188.89 -0.40% 13.84%
Jun-96 0.0345 9.91 9.93 4.978 - 3.530 1,017.349 10,081.93 -1.05% 12.65%
Jun-96 - 9.99 9.99 0.000 - - 1,017.349 10,163.32 0.81% 13.56%
Jul-96 - 9.56 9.56 0.000 - - 1,017.349 9,725.86 -4.30% 8.67%
Jul-96 - 9.61 9.61 0.000 - - 1,017.349 9,776.72 0.52% 9.24%
Aug-96 - 10.04 10.04 0.000 - - 1,017.349 10,214.18 4.47% 14.12%
Aug-96 - 9.80 9.80 0.000 - - 1,017.349 9,970.02 -2.39% 11.40%
Sep-96 - 10.44 10.44 0.000 - - 1,017.349 10,621.12 6.53% 18.67%
Sep-96 - 10.55 10.55 0.000 - - 1,017.349 10,733.03 1.05% 19.92%
Oct-96 - 10.95 10.95 0.000 - - 1,017.349 11,139.97 3.79% 24.47%
Oct-96 - 10.83 10.83 0.000 - - 1,017.349 11,017.89 -1.10% 23.10%
</TABLE>
- --------------------------------------------------------------------------------
Annual return for one year equals:
(Ending Account Value - Beginning Account Value)/Beginning Account Value
- --------------------------------------------------------------------------------
1) Input numbers for Coums A,B,C,D,E
A = Month - Year
B = Income per unit C = Capital Gains per unit D = Capital Gain
Reinvested NAV E = NAV per unit at Month End
2) F = I(t) * B, where I(t) is from prior month
3) G = I(t) * C/D, where I(t) is from prior month
4) H = F/E
5) I = I(t) + H, where I(t) is from prior month
6) J = E/I
7) K = (J - J(t))/J, where J(t) is from prior month
8) L = ((L(t) - 1) * (K + 1) ) -1, where L(t) is from prior month
<PAGE>
INVESTORS TRUST
VALUE FUND
TOTAL RETURN FOR FISCAL YEAR ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
A B C D E F G H I J K L
- ------------------------------------------------------------------------------------------------------------------------------
Income Capital Capital Gain Income Current
Per Gains Reinvest Unit Income Units Units Total Account Month YTD
Period Unit Unit Value Value Earned Purchased Purchased Units Value Return Return
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Oct-95 8.93 1,000.000 8,930.00
Nov-95 - 9.20 9.20 0.000 - - 1,000.000 9,200.00 3.02% 3.02%
Nov-95 - 9.22 9.22 0.000 - - 1,000.000 9,220.00 0.22% 3.25%
Dec-95 0.0147 0.07444 9.17 9.11 4.680 8.12 1,601 1,009.719 9,259.0 0.42% 3.69%
Dec-95 - 9.27 9.27 0.000 - - 1,009.719 9,360.09 1.09% 4.82%
Jan-96 - 9.17 9.17 0.000 - - 1,009.719 9,259.12 -1.08% 3.69%
Jan-96 - 9.54 9.54 0.000 - - 1,009.719 9,632.72 4.03% 7.87%
Feb-96 - 9.72 9.72 0.000 - - 1,009.719 9,814.47 1.89% 9.90%
Feb-96 - 9.64 9.64 0.000 - - 1,009.719 9,733.69 -0.82% 9.00%
Mar-96 0.0063 9.73 9.73 6.321 - 0.650 1,010.368 9,830.88 1.00% 10.09%
Mar-96 - 9.66 9.66 0.000 - - 1,010.368 9,760.16 -0.72% 9.30%
Apr-96 - 9.67 9.67 0.000 - - 1,010.368 9,770.26 0.10% 9.41%
Apr-96 - 9.80 9.80 0.000 - - 1,010.368 9,901.61 1.34% 10.88%
May-96 - 10.07 10.07 0.000 - - 1,010.368 10,174.41 2.76% 13.94%
May-96 - 10.02 10.02 0.000 - - 1,010.368 10,123.89 -0.50% 13.37%
Jun-96 0.0179 9.90 0.90 18.082 - 1.826 11,012.195 10,020.73 -1.02% 12.21%
Jun-96 - 9.98 9.98 0.000 - - 1,012.195 10,101.70 0.81% 13.12%
Jul-96 - 9.55 9.55 0.000 - - 1,012.195 9,666.46 -4.31% 8.25%
Jul-96 - 9.59 9.59 0.000 - - 1,012.195 9,706.95 0.42% 8.70%
Aug-96 - 10.01 10.01 0.000 - - 1,012.195 10,132.07 4.38% 13.46%
Aug-96 - 9.78 9.78 0.000 - - 1,012.195 9,899.26 -2.30% 10.85%
Sep-96 - 10.41 10.41 0.000 - - 1,012.195 10,536.95 6.44% 17.99%
Sep-96 - 10.51 10.51 0.000 - - 1,012.195 10,638.17 0.96% 19.13%
Oct-96 - 10.91 10.91 0.000 - - 1,012.195 11,043.04 3.81% 23.66%
Oct-96 - 10.79 10.79 0.000 - - 1,012.195 10,921.58 -1.10% 22.30%
</TABLE>
- --------------------------------------------------------------------------------
Annual return for one year equals:
(Ending Account Value - Beginning Account Value)/Beginning Account Value
- --------------------------------------------------------------------------------
1) Input numbers for Coums A,B,C,D,E
A = Month - Year
B = Income per unit C = Capital Gains per unit D = Capital Gain
Reinvested NAV E = NAV per unit at Month End
2) F = I(t) * B, where I(t) is from prior month
3) G = I(t) * C/D, where I(t) is from prior month
4) H = F/E
5) I = I(t) + H, where I(t) is from prior month
6) J = E/I
7) K = (J - J(t))/J, where J(t) is from prior month
8) L = ((L(t) - 1) * (K + 1) ) -1, where L(t) is from prior month
<PAGE>
INVESTORS TRUST
TAX FREE FUND
TOTAL RETURN FOR FISCAL YEAR ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
A B C D E F G H I J K L
- ------------------------------------------------------------------------------------------------------------------------------
Income Capital Capital Gain Income Current
Per Gains Reinvest Unit Income Units Units Total Account Month YTD
Period Unit Unit Value Value Earned Purchased Purchased Units Value Return Return
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Oct-95 11.30 1,000.000 11,300.00
Nov-95 0.0314 11.66 11.66 31.385 - 2.692 1,002.692 11,691.38 3.46% 3.46%
Nov-95 0.0139 11.44 11.44 13.936 - 1.218 1,003.910 11,484.73 -1.77% 1.63%
Dec-95 0.0324 11.46 11.46 32.558 - 2.841 1,060.751 11,537.37 0.46% 2.10%
Dec-95 0.0149 11.56 11.56 15.046 - 1.302 1,008.052 1,653.09 1.00% 3.12%
Jan-96 0.0314 11.56 11.56 31.638 - 2.737 1,010.789 1,684.72 0.27% 3.40%
Jan-96 0.0149 11.57 11.57 15.106 - 1.306 1,012.095 11,709.94 0.22% 3.63%
Feb-96 0.0314 11.54 11.54 31.764 - 2.753 1,014.847 11,711.34 0.01% 3.64%
Feb-96 0.0128 11.52 11.52 12.970 - 1.126 1,015.973 11,704.01 -0.06% 3.58%
Mar-96 0.0335 11.24 11.24 34.085 - 3.032 1,019.006 11,453.63 -2.14% 1.36%
Mar-96 0.0149 11.24 11.24 15.229 - 1.355 1,020.361 11,468.86 0.13% 1.49%
Apr-96 0.0314 11.19 11.19 32.024 - 2.862 1,023.223 11,449.86 -0.17% 1.33%
Apr-96 0.0139 11.18 11.18 14.222 - 1.272 1,024.495 11,453.85 0.03% 1.36%
May-96 0.0324 11.26 11.26 33.225 - 2.951 1,027.445 11,569.04 1.01% 2.38%
May-96 0.0149 11.18 11.18 15.355 - 1.272 1,028.819 11,502.20 -0.58% 1.79%
Jun-96 0.0314 11.11 11.11 32.289 - 2.906 1,031.725 11,462.47 -0.35% 1.44%
Jun-96 0.0139 11.20 11.20 14.340 - 1.280 1,033.006 11,569.66 0.94% 2.39%
Jul-96 0.0324 11.24 11.24 33.501 - 2.981 1,035.986 11,644.48 0.65% 3.05%
Jul-96 0.0149 11.32 11.32 15.483 - 1.368 1,037.354 11,742.85 0.84% 3.92%
Aug-96 0.0314 11.41 11.41 32.557 - 2.853 1,040.207 11,868.76 1.07% 5.03%
Aug-96 0.0149 11.30 11.30 15.546 - 1.376 1,041.583 11,769.89 -0.83% 4.16%
Sep-96 0.0314 11.30 11.30 32.690 - 2.893 1,044.476 11,802.58 0.28% 4.45%
Sep-96 0.0139 11.36 11.36 14.517 - 1.278 1,045.754 11,879.76 0.65% 5.13%
Oct-96 0.0324 11.39 11.39 33.915 - 2.978 1,048.731 11,945.05 0.55% 5.71%
Oct-96 0.0149 11.42 11.42 15.673 - 1.372 1,050.104 11,992.19 0.39% 6.13%
</TABLE>
- --------------------------------------------------------------------------------
Annual return for one year equals:
(Ending Account Value - Beginning Account Value)/Beginning Account Value
- --------------------------------------------------------------------------------
1) Input numbers for Coums A,B,C,D,E
A = Month - Year
B = Income per unit C = Capital Gains per unit D = Capital Gain
Reinvested NAV E = NAV per unit at Month End
2) F = I(t) * B, where I(t) is from prior month
3) G = I(t) * C/D, where I(t) is from prior month
4) H = F/E
5) I = I(t) + H, where I(t) is from prior month
6) J = E/I
7) K = (J - J(t))/J, where J(t) is from prior month
8) L = ((L(t) - 1) * (K + 1) ) -1, where L(t) is from prior month
<PAGE>
INVESTORS TRUST
TAX FREE FUND
TOTAL RETURN FOR FISCAL YEAR ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
A B C D E F G H I J K L
- ------------------------------------------------------------------------------------------------------------------------------
Income Capital Capital Gain Income Current
Per Gains Reinvest Unit Income Units Units Total Account Month YTD
Period Unit Unit Value Value Earned Purchased Purchased Units Value Return Return
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Oct-95 11.32 1,000.000 11,320.00
Nov-95 0.0314 11.37 11.37 31.385 - 2.760 1,002.760 11,401.38 0.72% 0.72%
Nov-95 0.0139 11.48 11.48 13.937 - 1.214 1,003.974 11,525.63 1.09% 1.82%
Dec-95 0.0324 11.48 11.48 32.560 - 2.836 1,006.811 11,558.19 0.28% 2.10%
Dec-95 0.0149 11.57 11.57 15.047 - 1.301 1,008.111 11,663.85 0.91% 3.04%
Jan-96 0.0314 11.57 11.57 31.639 - 2.735 1,010.846 11,695.49 0.27% 3.32%
Jan-96 0.0149 11.58 11.58 15.107 - 1.305 1,012.150 11,720.70 0.22% 3.54%
Feb-96 0.0314 11.56 11.56 31.766 - 2.748 1,014.898 11,732.22 0.10% 3.64%
Feb-96 0.0128 11.53 11.53 12.971 - 1.125 1,016.023 11,714.75 -0.15% 3.49%
Mar-96 0.0335 11.25 11.25 34.087 - 3.030 1,019.053 11,464.35 -2.14% 1.28%
Mar-96 0.0149 11.25 11.25 15.230 - 1.354 1,020.407 11,479.58 0.13% 1.41%
Apr-96 0.0314 11.21 11.21 32.025 - 2.857 1,023.264 11,470.79 -0.08% 1.33%
Apr-96 0.0139 11.20 11.20 14.222 - 1.270 1,024.534 11,474.78 0.03% 1.37%
May-96 0.0324 11.28 11.28 33.227 - 2.946 1,027.479 11,589.97 1.00% 2.38%
May-96 0.0149 11.19 11.19 15.356 - 1.372 1,028.852 11,512.85 -0.67% 1.70%
Jun-96 0.0314 11.12 11.12 32.290 - 2.904 1,031.755 11,473.12 -0.35% 1.35%
Jun-96 0.0139 11.22 11.22 14.340 - 1.278 1,033.033 11,590.64 1.02% 2.39%
Jul-96 0.0324 11.25 11.25 33.502 - 2.978 1,036.011 11,655.13 0.56% 2.96%
Jul-96 0.0149 11.33 11.33 15.483 - 1.367 1,037.378 11,753.49 0.84% 3.83%
Aug-96 0.0314 11.42 11.42 32.558 - 2.851 1,040.229 11,879.42 1.07% 4.94%
Aug-96 0.0149 11.31 11.31 15.546 - 1,375 1,041.604 11,780.54 -0.83% 4.07%
Sep-96 0.0314 11.32 11.32 32.691 - 2.888 1,044.491 11,823.64 0.37% 4.45%
Sep-96 0.0139 11.38 11.38 14.517 - 1.276 1,045,767 11,900.83 0.65% 5.13%
Oct-96 0.0324 11.40 11.40 33.915 - 2.975 1,048.742 11,955.66 0.46% 5.62%
Oct-96 0.0149 11.44 11.44 15.674 - 1.370 1,050.112 12,013.28 0.48% 6.12%
</TABLE>
- --------------------------------------------------------------------------------
Annual return for one year equals:
(Ending Account Value - Beginning Account Value)/Beginning Account Value
- --------------------------------------------------------------------------------
1) Input numbers for Coums A,B,C,D,E
A = Month - Year
B = Income per unit C = Capital Gains per unit D = Capital Gain
Reinvested NAV E = NAV per unit at Month End
2) F = I(t) * B, where I(t) is from prior month
3) G = I(t) * C/D, where I(t) is from prior month
4) H = F/E
5) I = I(t) + H, where I(t) is from prior month
6) J = E/I
7) K = (J - J(t))/J, where J(t) is from prior month
8) L = ((L(t) - 1) * (K + 1) ) -1, where L(t) is from prior month
<PAGE>
SEC YIELDS
INVESTORS TRUST
30 DAY SEC YIELD CALCULATION
FOR THE PERIOD ENDING OCTOBER 31, 1996
SEC Yield = 2 ((((A-B)/(C*D)+1)^6)-1)
Where:
A = Dividends and Interest earned during the period
B = Expenses accrued for the period
C = Average daily number of shares outstanding during the period
that were entitled to dividends
D = Offering price per unit on the last day of the period
E = SEC Yield using calculation shown above
The calculation below is based on the 30 day period ending October 31, 1996.
The 30 Day SEC yield calculated below was
<TABLE>
<CAPTION>
A B C D E
------------------------ ---------------------------------------------------------------------
Accrued Shares Offering SEC
Income Expenses Outstanding Price Yield
------------------------ ---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Government Fund
Class A 5,587.18 832.78 8.88 7.44%
Class B 143,574.59 36,780.22 3,432,462.489 8,348.00 7.05%
88,118,865.859
Adjustable Rate Fund
Class A 1,052.52 148.39 892,359.995 6.71 5.64%
Class B 251.97 63.56 213,552.520 6.41 5.16%
Tax Free Fund
Class A 2,432.95 - 1,415,604.813 5.24 5.24%
Class B 1,379.76 - 801,795.789 5.49 5.49%
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000891079
<NAME> GE FUNDS
<SERIES>
<NUMBER> 111
<NAME> GE PREMIER GROWTH EQUITY FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> DEC-31-1996
<PERIOD-END> MAR-31-1997
<INVESTMENTS-AT-COST> 8114
<INVESTMENTS-AT-VALUE> 7701
<RECEIVABLES> 112
<ASSETS-OTHER> 17
<OTHER-ITEMS-ASSETS> 14
<TOTAL-ASSETS> 7844
<PAYABLE-FOR-SECURITIES> 199
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 20
<TOTAL-LIABILITIES> 219
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 8059
<SHARES-COMMON-STOCK> 8
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 9
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (31)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (412)
<NET-ASSETS> 7625
<DIVIDEND-INCOME> 13
<INTEREST-INCOME> 13
<OTHER-INCOME> (1)
<EXPENSES-NET> (16)
<NET-INVESTMENT-INCOME> 9
<REALIZED-GAINS-CURRENT> (31)
<APPREC-INCREASE-CURRENT> (412)
<NET-CHANGE-FROM-OPS> (434)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 7625
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 29
<AVERAGE-NET-ASSETS> 106
<PER-SHARE-NAV-BEGIN> 15.000
<PER-SHARE-NII> .010
<PER-SHARE-GAIN-APPREC> (.720)
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 14.290
<EXPENSE-RATIO> 1.40
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000891079
<NAME> GE FUNDS
<SERIES>
<NUMBER> 112
<NAME> GE PREMIER GROWTH EQUITY FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> DEC-31-1996
<PERIOD-END> MAR-31-1997
<INVESTMENTS-AT-COST> 8114
<INVESTMENTS-AT-VALUE> 7701
<RECEIVABLES> 112
<ASSETS-OTHER> 17
<OTHER-ITEMS-ASSETS> 14
<TOTAL-ASSETS> 7844
<PAYABLE-FOR-SECURITIES> 199
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 20
<TOTAL-LIABILITIES> 219
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 8059
<SHARES-COMMON-STOCK> 7
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 9
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (31)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (412)
<NET-ASSETS> 7625
<DIVIDEND-INCOME> 13
<INTEREST-INCOME> 13
<OTHER-INCOME> (1)
<EXPENSES-NET> (16)
<NET-INVESTMENT-INCOME> 9
<REALIZED-GAINS-CURRENT> (31)
<APPREC-INCREASE-CURRENT> (412)
<NET-CHANGE-FROM-OPS> (434)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 7625
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 29
<AVERAGE-NET-ASSETS> 103
<PER-SHARE-NAV-BEGIN> 15.00
<PER-SHARE-NII> (.010)
<PER-SHARE-GAIN-APPREC> (.720)
<PER-SHARE-DIVIDEND> 0.000
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 14.270
<EXPENSE-RATIO> 1.90
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000891079
<NAME> GE FUNDS
<SERIES>
<NUMBER> 113
<NAME> GE PREMIER GROWTH EQUITY FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-20-1997
<PERIOD-START> DEC-31-1996
<PERIOD-END> MAR-31-1997
<INVESTMENTS-AT-COST> 8114
<INVESTMENTS-AT-VALUE> 7701
<RECEIVABLES> 112
<ASSETS-OTHER> 17
<OTHER-ITEMS-ASSETS> 14
<TOTAL-ASSETS> 7844
<PAYABLE-FOR-SECURITIES> 199
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 20
<TOTAL-LIABILITIES> 219
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 8059
<SHARES-COMMON-STOCK> 204
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 9
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (31)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (412)
<NET-ASSETS> 7625
<DIVIDEND-INCOME> 13
<INTEREST-INCOME> 13
<OTHER-INCOME> (1)
<EXPENSES-NET> (16)
<NET-INVESTMENT-INCOME> 9
<REALIZED-GAINS-CURRENT> (31)
<APPREC-INCREASE-CURRENT> (412)
<NET-CHANGE-FROM-OPS> (434)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 205
<NUMBER-OF-SHARES-REDEEMED> (1)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 7625
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 29
<AVERAGE-NET-ASSETS> 1398
<PER-SHARE-NAV-BEGIN> 15.000
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