As filed with the Securities and Exchange Commission
on January 26, 1998
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. 23 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X /
Amendment No. 25 /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 January 28, 1998 pursuant to paragraph (b) __X__
60 days after filing pursuant to paragraph (a)(1) _____
on (date) pursuant to paragraph (a)(1) _____
75 days after filing pursuant to paragraph (a)(2) _____
on (date) pursuant to paragraph (a)(2) of Rule 485 _____
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a previously
filed post-effective amendment. _____
Title of Securities Being Registered: Shares of beneficial interest, par value
$0.001 per share.
<PAGE>
GE FUNDS
FORM N-1A
CROSS REFERENCE SHEET
PART A
ITEM NO. PROSPECTUS HEADING
1. Cover Page............................. Cover Page
2. Synopsis............................... Expense Information
3. Condensed Financial Information........ Expense Information
4. General Description of Registration.... Cover Page; The Multiple
Distribution System;
Investment Objectives and
Management Policies;
Additional Matters;
Further Information: Certain
Investment Techniques and
Strategies
5. Management of the Fund.................. Expense Information;
Investment Objectives and
Management Policies;
Management of the Trust;
Further Information: Certain
Investment Techniques and
Strategies
6. Capital Stock and Other Securities...... Dividends;
Distributions and Taxes;
Additional Matters
7. Purchase of Securities Being offered.... Purchase of Shares;
Net Asset Value;
Distributor
8. Redemption or Repurchase............... Redemption of Shares
9. Legal Proceedings...................... Not applicable
10. Cover Page............................. Cover Page
<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 Principal Stockholders;
Holders of Securities.................. 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 Purchase of Shares;
of 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
<PAGE>
[LOGO]
GE Funds
- --------------------------------------------------------------------------------
GE Funds
Prospectus
January 28, 1998
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
Prospectus begins on page 1.
<PAGE>
[LOGO]
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:
o GE Premier Growth Equity Fund's investment objective is long-term growth of
capital and future income rather than current income which the Fund seeks
to achieve by investing primarily in growth-oriented equity securities.
o GE U.S. Equity Fund's investment objective is long-term growth of capital
which the Fund seeks to achieve through investment primarily in equity
securities of U.S. companies.
o GE Mid-Cap Growth Fund's investment objective is long-term growth of
capital which the Fund seeks to achieve by investing primarily in equity
securities of companies with medium-sized market capitalization that have
the potential for above-average growth.
o GE Value Equity Fund's investment objective is long-term growth of capital
and future income which the Fund seeks to achieve by investing primarily in
equity securities of companies with large-sized market capitalization that
the Fund's management considers to be undervalued by the market.
o GE Global Equity Fund's investment objective is long-term growth of capital
which the Fund seeks to achieve by investing primarily in foreign equity
securities.
o GE International Equity Fund's investment objective is long-term growth of
capital which the Fund seeks to achieve by investing primarily in foreign
equity securities.
o GE Strategic Investment Fund's investment objective is to maximize total
return which the Fund seeks to achieve by following an asset allocation
strategy contemplating shifts among a range of investments.
o GE Tax-Exempt Fund's investment objective is to produce as high a level of
income exempt from federal income tax as is consistent with preservation of
capital which the Fund attempts to achieve by investing substantially all
of its assets in tax-exempt debt obligations.
o GE Fixed Income Fund's investment objective is to seek maximum income
consistent with prudent investment management and the preservation of
capital, which objective the Fund seeks to achieve by investing in fixed
income securities.
o GE Government Securities Fund's investment objective is a high level of
current income consistent with safety of principal which the Fund attempts
to achieve by investing primarily in Government Securities (as defined in
the Prospectus).
o GE Short-Term Government Fund's investment objective is to seek a high
level of income consistent with prudent investment management and the
preservation of capital, which objective the Fund seeks to achieve by
investing primarily in Government Securities (as defined in the
Prospectus).
o GE Money Market Fund's investment objective is to seek a high level of
current income consistent with the preservation of capital and maintenance
of liquidity, which objective the Fund seeks to achieve by investing in a
defined group of short-term, U.S. dollar denominated money market
instruments.
This Prospectus briefly sets forth certain information about the Funds and the
Trust, including shareholder servicing and distribution fees and expenses, that
prospective investors will find helpful in making an investment decision.
Investors are encouraged to read this Prospectus carefully and retain it for
future reference.
AN INVESTMENT IN GE MONEY MARKET FUND, GE GOVERNMENT SECURITIES FUND AND GE
SHORT-TERM GOVERNMENT FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. ADDITIONALLY, NO ASSURANCE CAN BE GIVEN THAT GE MONEY MARKET FUND
WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
SHARES OF THE FUNDS ARE NOT DEPOSITS WITH OR OBLIGATIONS OF ANY FINANCIAL
INSTITUTION, ARE NOT GUARANTEED OR ENDORSED BY ANY FINANCIAL INSTITUTION OR ITS
AFFILIATES, AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY.
Additional information about the Funds and the Trust, contained in a Statement
of Additional Information dated the same date as this Prospectus, has been filed
with the Securities and Exchange Commission (the "SEC") and is available upon
request and without charge by calling the Trust at the telephone number listed
below or by contacting the Trust at the address listed below. The SEC maintains
a Web site (http://www.sec.gov) that contains the Statement of Additional
Information, material incorporated by reference and other information regarding
the Funds and the Trust. The Statement of Additional Information is incorporated
in its entirety by reference into this Prospectus.
GE INVESTMENT MANAGEMENT INCORPORATED
Investment Adviser and Administrator
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
PROSPECTUS
January 28, 1998
TABLE OF CONTENTS
Expense Information ............ 2
Financial Highlights ........... 8
Performance .................... 21
The Multiple Distribution
System ........................ 23
Investment Objectives
and Management
Policies ...................... 24
Management of the Trust ........ 42
Purchase of Shares ............. 45
Retirement Plans ............... 51
Redemption of Shares ........... 51
Exchange Privilege ............. 54
Net Asset Value ................ 55
Dividends, Distributions
and Taxes ..................... 56
Custodian and Transfer
Agent ......................... 58
Distributor .................... 58
Performance Calculation ........ 58
Further Information:
Certain Investment
Techniques And
Strategies .................... 61
Additional Matters ............. 66
3003 Summer Street
Stamford, Connecticut 06905
(800) 242-0134
<PAGE>
EXPENSE INFORMATION
================================================================================
The purpose of the following table is to assist an investor in understanding the
expenses that an investor in the Funds will bear directly or indirectly, based
upon the maximum sales charge or maximum contingent deferred sales charge that
may be incurred at the time of purchase and redemption and each particular
Fund's operating expenses for the most recent year.
FEE TABLE
================================================================================
<TABLE>
<CAPTION>
GE
Premier GE GE GE
Growth GE Mid-Cap Value Global GE
Equity U.S. Equity Growth Equity Equity International
Fund Fund Fund Fund Fund Equity Fund
---- ---- ---- ---- ---- -----------
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES*
Maximum Sales Load Imposed
on Purchases of Shares (as a
percentage of offering price):
Class A** 5.75% 5.75% 5.75% 5.75% 5.75% 5.75%
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>
- ----------
* Certain broker-dealers and financial institutions also may charge their
clients fees in connection with investments in the Funds, which fees are
not reflected in the fee 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 FORMERLY 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" AND
"EXCHANGE PRIVILEGE."
*** Except for redemptions pursuant to a systematic withdrawal plan, the Trust
will impose a redemption fee in the form of a CDSC, equal to 1% of the net
asset value of Class A shares if the shares being redeemed are redeemed
within one year of purchase and were subject to no front-end sales load
upon purchase by virtue of being part of a purchase of $1 million or more.
2
<PAGE>
FEE TABLE (CONTINUED)
================================================================================
<TABLE>
<CAPTION>
GE GE GE GE GE GE
Strategic Tax- Fixed Government Short-Term Money
Investment Exempt Income Securities Government Market
Fund Fund Fund Fund Fund Fund+
---- ---- ---- ---- ---- -----
SHAREHOLDER TRANSACTION EXPENSES*
<S> <C> <C> <C> <C> <C> <C>
Maximum Sales Load Imposed on
Purchases of Shares
(as a percentage of
offering price):
Class A** 5.75% 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>
- ----------
* Certain broker-dealers and financial institutions also may charge their
clients fees in connection with investments in the Funds, which fees are
not reflected in the fee table.
** The sales charge and CDSC set out in the above table are the maximum
charges imposed on purchases or redemptions of shares and investors may pay
actual charges that are less depending on the amount purchased and in the
case of the Class B shares, the length of time the shares are held. A
MAXIMUM CDSC OF 5% WILL BE IMPOSED ON CLASS B SHARES ISSUED OR EXCHANGED IN
CONNECTION WITH THE COMBINATION OF INVESTORS TRUST WITH CERTAIN GE FUNDS.
SEE "REDEMPTION OF SHARES -- REDEMPTIONS IN GENERAL" AND "EXCHANGE
PRIVILEGE."
*** Except for redemptions pursuant to a systematic withdrawal plan, the Trust
will impose a redemption fee in the form of a CDSC, equal to 1% of the net
asset value of Class A shares if the shares being redeemed were redeemed
within one year of purchase and were subject to no front-end sales load
upon purchase by virtue of being part of a purchase of $1 million or more.
+ GE Money Market Fund does not currently offer multiple classes of shares
and accordingly does not participate in the Multiple Distribution System
(as defined below). No sales charges, redemption fees or exchange fees are
assessed by the Trust with respect to shares of GE Money Market Fund.
3
<PAGE>
<TABLE>
<CAPTION>
GE
Premier GE GE GE
Growth GE Mid-Cap Value Global GE
Equity U.S. Equity Growth Equity Equity International
Fund* Fund Fund* Fund Fund Equity Fund*
----- ---- ----- ---- ---- ------------
<S> <C> <C> <C> <C> <C> <C>
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% .10% .30% .30% .35% .30%
Class B .30% .10% .30% .30% .35% .30%
Class C .30% .10% .30% .30% .35% .30%
Class D .30% .10% .30% .30% .35% .30%
TOTAL OPERATING EXPENSES
(AFTER REIMBURSEMENT): +
Class A 1.40% 1.00% 1.40% 1.35% 1.60% 1.60%
Class B 1.90% 1.50% 1.90% 1.85% 2.10% 2.10%
Class C 1.15% .75% 1.15% 1.10% 1.35% 1.35%
Class D .90% .50% .90% .85% 1.10% 1.10%
</TABLE>
- ----------
* With respect to GE Premier Growth Equity Fund, GE Mid-Cap Growth Fund, GE
International Equity Fund and GE Short-Term Government Fund, administration
fees (amounting to .05%) and advisory fees are imposed pursuant to separate
contracts.
+ See the "+" footnote on page 7.
4
<PAGE>
<TABLE>
<CAPTION>
GE 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 Premier Growth Equity Fund, GE Mid-Cap Growth Fund, GE
International Equity Fund and GE Short-Term Government Fund, administration
fees (amounting to .05%) and advisory fees are imposed pursuant to separate
contracts.
+ See the "+" footnote on page 7.
The nature of the services provided to, and the advisory and administration fees
paid by, each Fund are described under "Management of the Trust." "Other
expenses" includes fees for shareholder services other than those borne by a
Fund under a shareholder servicing and distribution plan adopted by the Trust,
including custodial fees, legal and accounting fees, printing costs and
registration fees, the costs of regulatory compliance and membership in the
mutual fund industry trade organization, the costs associated with maintaining
the Trust's legal existence and the costs involved in communicating with
shareholders of the Funds. Long-term shareholders of Class B shares may pay more
than the economic equivalent of the maximum front-end sales charge currently
permitted by the rules of the National Association of Securities Dealers, Inc.
governing investment company sales charges. See "Distributor." The Trust may, in
its discretion, require that proposed investments of $10 million or more in a
particular Class of a Participant Fund (as defined below), or in GE Money Market
Fund, be made in kind. In connection with any purchase in kind, an investor may
bear transaction costs, which may include broker's commissions and taxes or
governmental fees, domestic or foreign.
5
<PAGE>
EXAMPLE +
The following example demonstrates the projected dollar amount of total
cumulative expenses that would be incurred over a one-year, three-year,
five-year and ten-year period with respect to a hypothetical investment in each
Fund. These amounts are based upon (1) payment by the Fund of operating expenses
at the levels set out in the table above and (2) the specific assumptions stated
below. See the footnotes following the table.
<TABLE>
<CAPTION>
A shareholder would pay the following
expenses on a $1,000 investment, A shareholder would pay the
assuming (1) a 5% annual return and following expenses on
(2) redemption at the end the same investment,
of the time periods shown: assuming no redemption:
----------------------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years** 1 Year 3 Years 5 Years 10 Years**
------ ------- ------- ---------- ------ ------- ------- ----------
GE PREMIER GROWTH EQUITY FUND:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A $ 71* $ 99 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 $ 67* $ 89 $110 $173 Same Same Same Same
Class B $ 55 $ 67 $ 82 $153 $15 $47 $82 $153
Class C $ 8 $ 24 $ 42 $ 93 Same Same Same Same
Class D $ 5 $ 16 $ 28 $ 63 Same Same Same Same
GE MID-CAP GROWTH FUND:
Class A $ 71* $ 99 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 $ 70* $ 98 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 $ 73* $105 $140 $237 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 $ 73* $105 $140 $237 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 $ 69* $ 92 $117 $189 Same Same Same Same
Class B $ 57 $ 72 $ 90 $169 $17 $52 $90 $169
Class C $ 9 $ 29 $ 50 $111 Same Same Same Same
Class D $ 7 $ 21 $ 36 $ 81 Same Same Same Same
GE TAX-EXEMPT FUND:
Class A $ 53* $ 76 $101 $171 Same Same Same Same
Class B $ 46 $ 70 $ 87 $164 $16 $50 $87 $164
Class C $ 9 $ 27 $ 47 $105 Same Same Same Same
Class D $ 6 $ 19 $ 33 $ 75 Same Same Same Same
GE FIXED INCOME FUND:
Class A $ 53* $ 74 $ 98 $165 Same Same Same Same
Class B $ 46 $ 69 $ 84 $158 $16 $49 $84 $158
Class C $ 8 $ 26 $ 44 $ 99 Same Same Same Same
Class D $ 6 $ 18 $ 31 $ 69 Same Same Same Same
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
A shareholder would pay the following
expenses on a $1,000 investment, A shareholder would pay the
assuming (1) a 5% annual return and following expenses on
(2) redemption at the end the same investment,
of the time periods shown: assuming no redemption:
-------------------------- -----------------------
1 Year 3 Years 5 Years 10 Years** 1 Year 3 Years 5 Years 10 Years**
------ ------- ------- ---------- ------ ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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
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 (as defined below) 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, as of September 30,
1997, Class "Total Operating Expenses" would be equal to the annual
percentage rate of the value of the Fund's average daily net assets as
shown in the following table.
<TABLE>
<CAPTION>
Class A Class B Class C Class D
------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
GE Premier Growth Equity Fund 4.09% 9.30% 1.62% 1.17%
GE U.S. Equity Fund 1.11% 1.88% 0.93% 0.52%
GE Mid-Cap Growth Fund 1.46% 2.21% 1.13% 1.15%
GE Value Equity Fund 1.33% 2.07% 1.11% 1.73%
GE Global Equity Fund 3.10% 3.33% 1.45% 1.10%
GE International Equity Fund 1.60% 4.12% 1.58% 1.01%
GE Strategic Investment Fund 1.15% 1.93% 0.94% 0.65%
GE Tax-Exempt Fund 1.57% 2.32% 0.80% 0.56%
GE Fixed Income Fund 1.14% 2.19% 0.96% 0.59%
GE Government Securities Fund 0.88% 1.63% 0.99% 1.55%
GE Short-Term Government Fund 2.19% 7.77% 1.07% 0.68%
GE Money Market Fund N/A N/A N/A N/A 0.56%
</TABLE>
7
<PAGE>
FINANCIAL HIGHLIGHTS
The tables below provide selected audited data for a Fund share outstanding
throughout the periods presented. The Trust refers to and hereby incorporates by
reference into the Prospectus, the Trust's Annual Report dated September 30,
1997 (the "Annual Report"). The following audited data should be read in
conjunction with the Financial Statements and the Notes to the Financial
Statements which are incorporated by reference into the Statement of Additional
Information. Further information about the performance of the Funds is contained
in the Annual Report, copies of which may be obtained without charge upon
request made to the Trust by calling the toll free number 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.
On September 26, 1997, the Trust, on behalf of GE Mid-Cap Growth Fund, GE Value
Equity Fund, GE Tax-Exempt Fund, GE Government Securities Fund and GE Short-Term
Government Fund, acquired all or substantially all of the assets of Investors
Trust Growth Fund, Investors Trust Value Fund, Investors Trust Tax Free Fund,
Investors Trust Government Fund and Investors Trust Adjustable Rate Fund,
respectively (each a series of Investors Trust). The financial information
reflected herein for periods prior to September 26, 1997 for Class A and Class B
shares of GE Mid-Cap Growth Fund, GE Value Equity Fund, GE Tax-Exempt Fund and
GE Government Securities Fund represents the financial highlights of Investors
Trust Growth Fund, Investors Trust Value Fund, Investors Trust Tax Free Fund and
Investors Trust Government Fund, respectively, since the financial statements of
those funds carry over to the relevant GE Fund following the Reorganization; the
financial highlights shown for GE Short-Term Government Fund reflect only that
Fund's past financial history, since the financial statements of the relevant
Investors Trust Fund do not carry over. Because the Trust did not offer Class C
or Class D shares of GE Mid-Cap Growth Fund, GE Value Equity Fund and GE
Government Securities Fund as of September 30, 1997, no financial information is
reflected herein for those Classes, but will be provided in the future. Each of
GE Mid-Cap Growth Fund, GE Value Equity Fund and GE Government Securities Fund
commenced operations on September 26, 1997. The transactions between certain
series of GE Funds and Investors Trust are referred to in this Prospectus as the
"Reorganization."
The Trust hereby incorporates by reference into the Prospectus the Annual Report
for Investors Trust dated October 31, 1996 (the "IT Annual Report") with respect
to Investors Trust Growth Fund, Investors Trust Value Fund, Investors Trust Tax
Free Fund and Investors Trust Government Fund. GEIM was not the investment
adviser or administrator of these funds. Information pertaining to these four
Investors Trust Funds should be read in conjunction with the IT Financial
Statements and the Notes to the IT Financial Statements, which are incorporated
by reference into the Statement of Additional Information. Future financial
information for Class A and Class B shares as well as Class C and Class D shares
will be based exclusively on the performance and expenses of the GE Funds,
including the acquired assets. Further information about the performance of
these four Investors Trust Funds is contained in the IT Annual Report, copies of
which may be obtained without charge upon request made to the Trust by calling
the toll free number listed on the back cover page of the Prospectus or by
writing to the Trust at the address listed on the front cover page of the
Prospectus.
8
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
GE PREMIER GROWTH EQUITY FUND
- ------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C CLASS D
9/30/97(c, h) 9/30/97(c, h) 9/30/97(c, h) 9/30/97(c, h)
- ------------------------------------------------------------------------------------------------------------------------
<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 (0.04) (0.09) 0.00 0.04
Net realized and unrealized
gains (losses) on investments 3.35 3.34 3.35 3.34
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS)
FROM INVESTMENT OPERATIONS 3.31 3.25 3.35 3.38
- ------------------------------------------------------------------------------------------------------------------------
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 $18.31 $18.25 $18.35 $18.38
========================================================================================================================
TOTAL RETURN (a) 22.07% 21.67% 22.33% 22.53%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $1,395 $447 $7,287 $5,770
Ratios to average net assets:
Net investment income* (0.34%) (0.76%) (0.03%) 0.31%
Expenses* 1.40% 1.90% 1.15% 0.90%
Gross Expenses* 4.09% 9.30% 1.62% 1.17%
Portfolio turnover rate 17% 17% 17% 17%
Average brokerage commissions (b) $.053 $.053 $.053 $.053
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
See notes accompanying financial highlights.
9
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
GE U.S. EQUITY FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B
9/30/97(c) 9/30/96(c) 9/30/95(c) 9/30/94(d) 9/30/97(c) 9/30/96(c) 9/30/95(c) 9/30/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- 12/22/93 -- -- -- 12/22/93
Net asset value,
beginning of period $23.34 $20.28 $16.12 $16.48 $22.57 $19.71 $16.03 $16.41
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income 0.23 0.31 0.34 3.23 0.11 0.19 0.21 0.24
Net realized and unrealized
gains (losses) on investments 8.33 3.34 3.91 (3.22) 8.03 3.25 3.84 (0.25)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 8.56 3.65 4.25 0.01 8.14 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 $29.43 $23.34 $20.28 $16.12 $28.35 $22.57 $19.71 $16.03
====================================================================================================================================
TOTAL RETURN (a) 39.44% 18.36% 26.52% (0.86%) 38.75% 17.78% 25.92% (0.09%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $65,535 $34,523 $15,148 $1,214 $14,380 $7,194 $1,563 $91
Ratios to average net assets:
Net investment income* 0.93% 1.40% 1.85% 1.87% 0.44% 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% 1.88% 2.08% 3.50% 1.96%
Portfolio turnover rate 38% 49% 43% 51% 38% 49% 43% 51%
Average brokerage commissions (b) $.069 $.045 N/A N/A $.069 $.045 N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS C CLASS D
9/30/97(c) 9/30/96(c) 9/30/95(c) 9/30/94 9/30/93(e) 9/30/97(c) 9/30/96(c) 9/30/95 9/30/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- -- 1/5/93 -- -- -- 11/29/93
Net asset value,
beginning of period $23.02 $19.98 $16.13 $16.35 $15.00 $23.03 $19.98 $16.16 $16.37
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income 0.30 0.36 0.37 1.00 0.12 0.37 0.40 0.38 0.32
Net realized and
unrealized gains
(losses) on investments 8.19 3.30 3.86 (0.85) 1.23 8.19 3.31 3.88 (0.16)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS)
FROM INVESTMENT OPERATIONS 8.49 3.66 4.23 0.15 1.35 8.56 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 $29.00 $23.02 $19.98 $16.13 $16.35 $28.99 $23.03 $19.98 $16.16
====================================================================================================================================
TOTAL RETURN (a) 39.76% 18.70% 26.86% 0.88% 10.32% 40.16% 18.97 27.14% 0.96%
RATIOS/SUPPLEMENTAL DATA:
Net assets,
end of period
(in thousands) $97,886 $50,035 $26,007 $16,382 $74,415 $212,957 $144,470 $128,247 $114,885
Ratios to average
net assets:
Net investment income* 1.18% 1.66% 2.12% 2.11% 1.86% 1.45% 1.90% 2.36% 2.27%
Expenses* 0.75% 0.75% 0.75% 0.62% 0.50% 0.50% 0.50% 0.50% 0.50%
Gross Expenses* 0.93% 1.06% 1.19% 1.21% 1.34% 0.52% 0.59% 0.71% 0.96%
Portfolio turnover rate 38% 49% 43% 51% 15% 38% 49% 43% 51%
Average brokerage
commissions (b) $.069 $.045 N/A N/A N/A $.069 $.045 N/A N/A
</TABLE>
- ----------
See notes accompanying financial highlights.
10
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
GE MID-CAP GROWTH FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------------------------
9/30/97(f) 10/31/96 10/31/95 10/31/94 10/31/93
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- -- 9/8/93
Net asset value, beginning of period $13.16 $11.38 $8.81 $8.69 $8.50
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (0.07) 0.00 0.01 (0.01) 0.00
Net realized and unrealized
gains (losses) on investments 4.52 1.78 2.56 0.21 0.19
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM INVESTMENT OPERATIONS 4.45 1.78 2.57 0.20 0.19
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income 0.00 0.00 0.00 0.00 0.00
In excess of net realized gains 0.00 0.00 0.00 0.08 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 0.00 0.00 0.00 0.08 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $17.61 $13.16 $11.38 $8.81 $8.69
====================================================================================================================================
TOTAL RETURN (a) 33.81% 15.64% 29.17% 2.48% 2.24%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $10,885 $8,222 $5,986 $4,182 $3,261
Ratios to average net assets:
Net investment income* (0.51%) 0.03% 0.10% (0.11%) (0.30%)
Expenses* 1.31% 1.35% 1.35% 1.34% 1.39%
Gross Expenses* 1.46% 1.70% 2.44% 3.53% 4.83%
Portfolio turnover rate 139% 41% 74% 100% 46%
Average brokerage commissions(b) $.067 $.050 N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS B
- ------------------------------------------------------------------------------------------------------------------------------------
9/30/97(f) 10/31/96 10/31/95 10/31/94 10/31/93
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- -- 9/8/93
Net asset value, beginning of period $12.87 $11.21 $8.74 $8.70 $8.50
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (0.18) (0.09) (0.05) (0.04) 0.00
Net realized and unrealized
gains (losses) on investments 4.42 1.75 2.52 0.16 0.20
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM INVESTMENT OPERATIONS 4.24 1.66 2.47 0.12 0.20
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income 0.00 0.00 0.00 0.00 0.00
In excess of net realized gains 0.00 0.00 0.00 0.08 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 0.00 0.00 0.00 0.08 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $17.11 $12.87 $11.21 $8.74 $8.70
====================================================================================================================================
TOTAL RETURN (a) 33.02% 14.81% 28.26% 1.67% 2.35%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $32,280 $27,616 $14,311 $5,857 $592
Ratios to average net assets:
Net investment income* (1.26%) (0.73%) (0.66%) (0.82%) (1.38%)
Expenses* 2.06% 2.10% 2.10% 2.09% 1.86%
Gross Expenses* 2.21% 2.41% 3.19% 4.06% 5.04%
Portfolio turnover rate 139% 41% 74% 100% 46%
Average brokerage commissions (b) $.067 $.050 N/A N/A N/A
</TABLE>
- ----------
See notes accompanying financial highlights.
11
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
GE VALUE EQUITY FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------------------------
9/30/97(f) 10/31/96 10/31/95 10/31/94 10/31/93
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- -- 9/8/93
Net asset value, beginning of period $10.83 $8.95 $7.51 $7.63 $7.50
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.07 0.05 0.14 0.13 0.01
Net realized and unrealized
gains (losses) on investments 3.59 1.99 1.45 (0.16) 0.12
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM INVESTMENT OPERATIONS 3.66 2.04 1.59 (0.03) 0.13
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income 0.04 0.09 0.15 0.09 0.00
Net realized gains 0.87 0.07 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 0.91 0.16 0.15 0.09 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $13.58 $10.83 $8.95 $7.51 $7.63
====================================================================================================================================
TOTAL RETURN (a) 36.18% 23.10% 21.45% (0.32%) 1.73%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $8,236 $5,833 $4,083 $3,267 $2,249
Ratios to average net assets:
Net investment income* 0.63% 1.03% 1.71% 1.92% 0.73%
Expenses* 1.30% 1.35% 1.35% 1.35% 1.42%
Gross Expenses* 1.33% 1.73% 2.43% 3.55% 6.37%
Portfolio turnover rate 131% 100% 27% 15% 6%
Average brokerage commissions (b) $.046 $.050 N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS B
- ------------------------------------------------------------------------------------------------------------------------------------
9/30/97(f) 10/31/96 10/31/95 10/31/94 10/31/93
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- -- 9/8/93
Net asset value, beginning of period $10.79 $8.93 $7.50 $7.64 $7.50
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (0.01) 0.04 0.07 0.08 (0.01)
Net realized and unrealized
gains (losses) on investments 3.57 1.93 1.45 (0.17) 0.15
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM INVESTMENT OPERATIONS 3.56 1.97 1.52 (0.09) 0.14
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income 0.00 0.04 0.09 0.05 0.00
Net realized gains 0.87 0.07 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 0.87 0.11 0.09 0.05 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $13.48 $10.79 $8.93 $7.50 $7.64
====================================================================================================================================
TOTAL RETURN (a) 35.23% 22.30% 20.50% (1.10%) 1.87%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $46,035 $33,318 $14,450 $7,970 $529
Ratios to average net assets:
Net investment income* (0.12%) 0.23% 0.94% 1.09% (1.07%)
Expenses* 2.05% 2.10% 2.10% 2.10% 2.04%
Gross Expenses* 2.07% 2.40% 3.18% 4.02% 6.38%
Portfolio turnover rate 131% 100% 27% 15% 6%
Average brokerage commissions (b) $.046 $.050 N/A N/A N/A
</TABLE>
- ----------
See notes accompanying financial highlights.
12
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
================================================================================
<TABLE>
<CAPTION>
GE GLOBAL EQUITY FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B
- ------------------------------------------------------------------------------------------------------------------------------------
9/30/97 9/30/96 9/30/95 9/30/94(d) 9/30/97 9/30/96 9/30/95 9/30/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- 12/22/93 -- -- -- 12/22/93
Net asset value,
beginning of period $22.01 $20.18 $19.34 $18.61 $21.87 $20.14 $19.32 $18.48
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income 0.00 0.02 0.10 0.03 (0.08) (0.04) 0.00 (0.01)
Net realized and unrealized
gains (losses) on investments 3.89 2.20 1.22 0.91 3.82 2.14 1.23 1.06
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS)
FROM INVESTMENT OPERATIONS 3.89 2.22 1.32 0.94 3.74 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 $24.61 $22.01 $20.18 $19.34 $24.32 $21.87 $20.14 $19.32
====================================================================================================================================
TOTAL RETURN (a) 18.51% 11.18% 7.16% 3.09% 17.92% 10.61% 6.62% 5.70%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $1,524 $4,054 $2,811 $694 $877 $600 $356 $128
Ratios to average net assets:
Net investment income* (0.09%) 0.12% 0.47% 0.44% (0.52%) (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* 3.10% 1.90% 2.17% 2.02% 3.33% 3.50% 3.50% 2.52%
Portfolio turnover rate 70% 46% 46% 26% 70% 46% 46% 26%
Average brokerage commissions (b) $.006 $.006 N/A N/A $.006 $.006 N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS C CLASS D
- ------------------------------------------------------------------------------------------------------------------------------------
9/30/97 9/30/96 9/30/95 9/30/94 9/30/93(e) 9/30/97 9/30/96 9/30/95 9/30/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- -- 1/5/93 -- -- -- 11/29/93
Net asset value,
beginning of period $22.18 $20.31 $19.40 $17.16 $15.00 $22.25 $20.37 $19.45 $17.49
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income 0.04 0.06 0.09 0.07 0.08 0.10 0.13 0.13 0.11
Net realized and unrealized
gains (losses)
on investments 3.94 2.22 1.30 2.37 2.08 3.94 2.21 1.31 2.06
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 3.98 2.28 1.39 2.44 2.16 4.04 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 $24.81 $22.18 $20.31 $19.40 $17.16 $24.83 $22.25 $20.37 $19.45
====================================================================================================================================
TOTAL RETURN (a) 18.82% 11.44% 7.47% 14.28% 14.10% 19.14% 11.71% 7.76% 12.43%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $35,120 $28,682 $23,683 $20,432 $11,999 $22,642 $10,123 $9,785 $10,504
Ratios to
average net assets:
Net investment income* 0.24% 0.33% 0.59% 0.52% 1.00% 0.48% 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 70% 46% 46% 26% 28% 70% 46% 46% 26%
Average brokerage
commissions (b) $.006 $.006 N/A N/A N/A $.006 $.006 N/A N/A
</TABLE>
- ----------
See notes accompanying financial highlights.
13
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
================================================================================
<TABLE>
<CAPTION>
GE INTERNATIONAL EQUITY FUND
====================================================================================================================================
CLASS A CLASS B
- ------------------------------------------------------------------------------------------------------------------------------------
9/30/97 9/30/96(c) 9/30/95 9/30/94 9/30/97 9/30/96(c) 9/30/95 9/30/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- 3/2/94 -- -- -- 3/2/94
Net asset value, beginning of period $17.65 $15.87 $15.18 $15.00 $17.47 $15.77 $15.13 $15.00
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income 0.01 0.07 0.09 0.06 (0.06) 0.05 0.01 0.00
Net realized and unrealized
gains (losses) on investments 3.16 1.74 0.64 0.12 3.11 1.65 0.64 0.13
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 3.17 1.81 0.73 0.18 3.05 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 $20.26 $17.65 $15.87 $15.18 $20.02 $17.47 $15.77 $15.13
====================================================================================================================================
TOTAL RETURN (a) 18.41% 11.39% 4.87% 1.20% 17.86% 10.78% 4.33% 0.87%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $17,270 $8,462 $3,948 $25 $455 $272 $57 $34
Ratios to average net assets:
Net investment income* 0.20% 0.43% 1.28% 1.01 (0.30%) 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 4.12% 3.50% 3.50% 2.43%
Portfolio turnover rate 51% 36% 27% 6% 51% 36% 27% 6%
Average brokerage commissions (b) $.021 $.031 N/A N/A $.021 $.031 N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS C CLASS D
- ------------------------------------------------------------------------------------------------------------------------------------
9/30/97 9/30/96(C) 9/30/95 9/30/94 9/30/97 9/30/96(C) 9/30/95 9/30/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- 3/2/94 -- -- -- 3/2/94
Net asset value, beginning of period $17.65 $15.88 $15.19 $15.00 $17.76 $15.94 $15.22 $15.00
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income 0.05 0.11 0.12 0.00 0.13 0.17 0.12 0.10
Net realized and unrealized
gains (losses) on investments 3.19 1.72 0.65 0.19 3.18 1.73 0.70 0.12
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS)
FROM INVESTMENT OPERATIONS 3.24 1.83 0.77 0.19 3.31 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 $20.36 $17.65 $15.88 $15.19 $20.43 $17.76 $15.94 $15.22
====================================================================================================================================
TOTAL RETURN (a) 18.79% 11.54% 5.16% 1.27 19.16% 11.97% 5.45% 1.47%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $6,152 $3,230 $1,262 $481 $75,098 $63,225 $32,907 $26,460
Ratios to average net assets:
Net investment income* 0.45% 0.68% 0.83% 0.66% 0.76% 0.99% 0.97% 1.52%
Expenses* 1.35% 1.35% 1.35% 1.35% 1.01% 1.03% 1.07% 1.10%
Gross Expenses* 1.58% 1.96% 2.75% 1.68% 1.01% 1.03% 1.18% 1.43%
Portfolio turnover rate 51% 36% 27% 6% 51% 36% 27% 6%
Average brokerage commissions (b) $.021 $.031 N/A N/A $.021 $.031 N/A N/A
</TABLE>
- ----------
See notes accompanying financial highlights.
14
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
GE STRATEGIC INVESTMENT FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B
- ------------------------------------------------------------------------------------------------------------------------------------
9/30/97(c) 9/30/96(c) 9/30/95(c) 9/30/94(d) 9/30/97(c) 9/30/96(c) 9/30/95(c) 9/30/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- 12/22/93 -- -- -- 12/22/93
Net asset value, beginning of period $20.33 $18.43 $15.71 $16.21 $20.04 $18.26 $15.62 $16.14
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income 0.53 0.51 0.52 0.48 0.42 0.41 0.40 0.27
Net realized and unrealized
gains (losses) on investments 3.87 1.90 2.57 (0.65) 3.82 1.87 2.58 (0.46)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 4.40 2.41 3.09 (0.17) 4.24 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 $24.01 $20.33 $18.43 $15.71 $23.70 $20.04 $18.26 $15.62
====================================================================================================================================
TOTAL RETURN (a) 22.16% 13.35% 20.12% (1.32%) 21.57% 12.73% 19.53% (1.25%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $39,731 $25,232 $8,778 $1,104 $5,685 $3,701 $882 $150
Ratios to average net assets:
Net investment income* 2.42% 2.60% 2.95% 2.59% 1.92% 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% 1.93% 2.10% 3.50% 2.08%
Portfolio turnover rate 106% 93% 98% 68% 106% 93% 98% 68%
Average brokerage commissions (b) $.027 $.046 N/A N/A $.027 $.046 N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS C CLASS D
- ------------------------------------------------------------------------------------------------------------------------------------
9/30/97(c) 9/30/96(c) 9/30/95(c) 9/30/94 9/30/93(e) 9/30/97(c) 9/30/96(c) 9/30/95 9/30/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- -- 1/5/93 -- -- -- 11/29/93
Net asset value,
beginning of period $20.38 $18.46 $15.72 $16.08 $15.00 $20.44 $18.49 $15.74 $16.02
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income 0.59 0.54 0.53 0.44 0.23 0.64 0.63 0.55 0.45
Net realized and unrealized
gains (losses) on
investments 3.88 1.92 2.59 (0.48) 0.85 3.89 1.90 2.62 (0.40)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 4.47 2.46 3.12 (0.04) 1.08 4.53 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 $24.11 $20.38 $18.46 $15.72 $16.08 $24.16 $20.44 $18.49 $15.74
====================================================================================================================================
TOTAL RETURN (A) 22.45% 13.58% 20.35% (0.27%) 8.06% 22.76% 13.95 20.70% 0.25%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $40,516 $26,467 $17,821 $13,018 $12,780 $37,924 $36,162 $18,665 $17,159
Ratios to average
net assets:
Net investment income* 2.66% 2.81% 3.21% 2.62% 2.68% 2.90% 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* 0.94% 1.05% 1.03% 1.33% 1.65% 0.65% 0.59% 0.97% 1.08%
Portfolio turnover rate 106% 93% 98% 68% 20% 106% 93% 98% 68%
Average brokerage
commissions (b) $.027 $.046 N/A N/A N/A $.027 $.046 N/A N/A
</TABLE>
- ----------
See notes accompanying financial highlights.
15
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
GE TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
CLASS A CLASS B
- ------------------------------------------------------------------------------------------------------------------------------------
9/30/97(f) 10/31/96 10/31/95 10/31/94 10/31/93 9/30/97(f) 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 (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income 0.53 0.62 0.55 0.45 0.05 0.51 0.62 0.55 0.43 0.06
Net realized and
unrealized gains
(losses) on
investments 0.22 0.05 0.73 (0.78) 0.01 0.21 0.06 0.73 (0.82) (0.01)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS)
FROM INVESTMENT
OPERATIONS 0.75 0.67 1.28 (0.33) 0.06 0.72 0.68 1.28 (0.39) 0.05
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income 0.54 0.56 0.55 0.45 0.05 0.53 0.56 0.55 0.43 0.03
In excess of net
investment income 0.00 0.00 0.01 0.11 0.02 0.00 0.00 0.01 0.06 0.03
Tax return of Capital 0.00 0.00 0.00 0.00 0.01 0.00 0.00 0.00 0.00 0.01
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 0.54 0.56 0.56 0.56 0.08 0.53 0.56 0.56 0.49 0.07
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $11.63 $11.42 $11.31 $10.59 $11.48 $11.63 $11.44 $11.32 $10.60 $11.48
====================================================================================================================================
TOTAL RETURN (a) 6.77% 6.13% 12.24% (2.99%) 0.54% 6.46% 6.12% 12.33% (3.45%) 0.43%
RATIOS/SUPPLEMENTAL DATA:
Net assets,
end of period
(in thousands) $16,542 $16,169 $16,025 $14,283 $15,136 $10,133 $9,184 $7,668 $4,990 $1,202
Ratios to average
net assets:
Net investment income* 5.01% 5.42% 5.01% 4.08% 2.73% 4.79% 5.43% 5.01% 3.75% 2.27%
Expenses* 0.35% 0.00% 0.00% 0.77% 1.15% 0.57% 0.00% 0.00% 1.14% 1.84%
Gross Expenses* 1.57% 1.52% 1.81% 1.62% 2.09% 2.32% 2.26% 2.56% 2.30% 2.48%
Portfolio turnover rate 13% 6% 25% 0% 0% 13% 6% 25% 0% 0%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS C CLASS D
- ------------------------------------------------------------------------------------------------------------------------------------
9/30/97(g) 9/30/97(g)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCEPTION DATE 9/26/97* 9/26/97*
Net asset value, beginning of period 12.08 12.09
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.02 0.02
Net realized and unrealized gains (losses) on investments 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM INVESTMENT OPERATIONS 0.02 0.02
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income 0.01 0.01
Net realized gains 0.00 0.00
Return of Capital 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 0.01 0.01
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD 12.09 12.10
====================================================================================================================================
TOTAL RETURN (a) 0.11% 0.11%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $ 8,032 $ 3,216
Ratios to average net assets:
Net investment income* 4.04% 4.31%
Expenses* 0.74% 0.54%
Gross Expenses* 0.76% 0.56%
Portfolio turnover rate 13% 13%
</TABLE>
- ----------
See notes accompanying financial highlights.
16
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
GE FIXED INCOME FUND
- --------------------------------------------------------------------------------
CLASS A CLASS B
- ------------------------------------------------------------------------------------------------------------------------------------
9/30/97 9/30/96 9/30/95 9/30/94(d) 9/30/97 9/30/96 9/30/95 9/30/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- 12/22/93 -- -- -- 12/22/93
Net asset value, beginning of period $11.69 $11.91 $11.27 $12.19 $11.70 $11.91 $11.26 $12.15
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.69 0.65 0.73 0.47 0.63 0.60 0.65 0.42
Net realized and unrealized
gains (losses) on investments 0.35 (0.19) 0.63 (0.84) 0.36 (0.20) 0.66 (0.81)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 1.04 0.46 1.36 (0.37) 0.99 0.40 1.31 (0.39)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income 0.68 0.68 0.72 0.47 0.63 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 0.68 0.68 0.72 0.55 0.63 0.61 0.66 0.50
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $12.05 $11.69 $11.91 $11.27 $12.06 $11.70 $11.91 $11.26
====================================================================================================================================
TOTAL RETURN (a) 9.19% 3.91% 12.48% (3.02%) 8.64% 3.41% 11.98% (3.31%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $18,617 $15,653 $5,400 $26,023 $1,401 $1,673 $234 $65
Ratios to average net assets:
Net investment income* 5.81% 5.66% 6.22% 5.37% 5.17% 5.19% 5.57% 4.83%
Expenses* 1.09% 1.05% 1.08% 1.10% 1.56% 1.60% 1.60% 1.58%
Gross Expenses* 1.14% 1.12% 1.18% 1.51% 2.19% 2.44% 3.50% 2.01%
Portfolio turnover rate 258% 275% 315% 298% 258% 275% 315% 298%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS C CLASS D
- ------------------------------------------------------------------------------------------------------------------------------------
9/30/97 9/30/96 9/30/95 9/30/94 9/30/93(e) 9/30/97 9/30/96 9/30/95 9/30/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- -- 1/5/93 -- -- -- 11/29/93
Net asset value,
beginning of period $11.70 $11.92 $11.27 $12.31 $12.00 $11.69 $11.92 $11.27 $12.17
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income 0.72 0.69 0.73 0.61 0.36 0.75 0.72 0.77 0.55
Net realized and unrealized
gains (losses) on investments 0.35 (0.21) 0.67 (0.96) 0.31 0.35 (0.22) 0.65 (0.83)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 1.07 0.48 1.40 (0.35) 0.67 1.10 0.50 1.42 (0.28)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income 0.71 0.70 0.75 0.61 0.36 0.74 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 0.71 0.70 0.75 0.69 0.36 0.74 0.73 0.77 0.62
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $12.06 $11.70 $11.92 $11.27 $12.31 $12.05 $11.69 $11.92 $11.27
====================================================================================================================================
TOTAL RETURN (a) 9.45% 4.10% 12.81% (2.97%) 5.24% 9.74% 4.32% 13.10% (2.34%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $35,097 $28,115 $21,401 $13,600 $11,485 $16,229 $19,098 $6,642 $2,732
Ratios to
average net assets:
Net investment income* 6.17% 5.84% 6.37% 5.22% 3.87% 5.97% 6.14% 6.57% 5.40%
Expense* 0.85% 0.85% 0.85% 0.79% 0.60% 0.56% 0.55% 0.59% 0.58%
Gross Expenses* 0.96% 0.99% 0.95% 1.26% 1.63% 0.59% 0.57% 2.50% 1.01%
Portfolio turnover rate 258% 275% 315% 298% 68% 258% 275% 315% 298%
</TABLE>
- ----------
See notes accompanying financial highlights.
17
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
GE GOVERNMENT SECURITIES FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A
- ------------------------------------------------------------------------------------------------------------------------------------
9/30/97(f) 10/31/96 10/31/95 10/31/94 10/31/93
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- -- 9/8/93
Net asset value, beginning of period $8.48 $8.70 $8.43 $10.14 $10.32
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.53 0.62 0.58 0.70 0.12
Net realized and unrealized
gains (losses) on investments 0.05 (0.22) 0.38 (1.60) (0.18)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM INVESTMENT OPERATIONS 0.58 0.40 0.96 (0.90) (0.06)
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income 0.53 0.54 0.58 0.70 0.12
Net realized gains 0.00 0.00 0.00 0.03 0.00
Tax return of capital 0.00 0.08 0.11 0.08 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 0.53 0.62 0.69 0.81 0.12
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $8.53 $8.48 $8.70 $8.43 $10.14
====================================================================================================================================
TOTAL RETURN (a) 7.13% 4.80% 11.77% (9.17%) (0.60%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $24,027 $29,090 $26,889 $21,498 $1,470
Ratios to average net assets:
Net investment income* 6.91% 6.59% 6.78% 7.09% 6.81%
Expenses* 0.88% 0.90% 1.01% 0.99% 0.95%
Gross Expenses* 0.88% 0.90% 1.01% 0.99% 0.95%
Portfolio turnover rate 110% 334% 316% 129% 76%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS B
- ------------------------------------------------------------------------------------------------------------------------------------
9/30/97(f) 10/31/96 10/31/95 10/31/94 10/31/93 10/31/92 10/31/91 10/31/90 10/31/89
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- -- -- -- -- -- --
Net asset value,
beginning of period $8.49 $8.71 $8.42 $10.14 $9.95 $9.98 $9.54 $9.70 $9.71
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income 0.47 0.55 0.51 0.60 0.71 0.73 0.72 0.81 0.88
Net realized and
unrealized
gains (losses) on
investments 0.05 (0.22) 0.41 (1.58) 0.20 0.03 0.56 (0.11) (0.01)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 0.52 0.33 0.92 (0.98) 0.91 0.76 1.28 0.70 0.87
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income 0.47 0.48 0.52 0.60 0.71 0.73 0.72 0.81 0.88
In excess of net
investment income 0.00 0.00 0.00 0.00 0.01 0.00 0.00 0.00 0.00
Net realized gains 0.00 0.00 0.00 0.03 0.00 0.06 0.11 0.00 0.00
Tax return of capital 0.00 0.07 0.11 0.11 0.00 0.00 0.01 0.05 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 0.47 0.55 0.63 0.74 0.72 0.79 0.84 0.86 0.88
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $8.54 $8.49 $8.71 $8.42 $10.14 $9.95 $9.98 $9.54 $9.70
====================================================================================================================================
TOTAL RETURN (a) 6.36% 4.00% 11.19% (9.98%) 9.48% 7.74% 14.08% 7.55% 9.59%
RATIOS/SUPPLEMENTAL DATA:
Net assets,
end of period
(in thousands) $523,303 $747,216 $1,112,254 $1,252,348 $1,342,597 $785,851 $213,115 $72,261 $56,682
Ratios to average
net assets:
Net investment income* 6.15% 5.77% 6.08% 6.45% 6.96% 7.08% 7.11% 8.32% 9.17%
Expenses* 1.63% 1.69% 1.76% 1.76% 1.73% 1.64% 1.81% 1.59% 0.89%
Gross Expenses* 1.63% 1.69% 1.76% 1.76% 1.73% 1.64% 1.81% 1.95% 2.08%
Portfolio turnover rate 110% 334% 316% 129% 76% 101.31% 111.97% 50.44% 37.23%
</TABLE>
CLASS B
- --------------------------------------------------------------------------------
10/31/88 10/31/87
- --------------------------------------------------------------------------------
INCEPTION DATE -- 4/22/87
Net asset value,
beginning of period $9.62 $10.00
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:
Net investment income 0.87 0.42
Net realized and
unrealized
gains (losses) on
investments 0.14 (0.36)
- --------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 1.01 0.06
- --------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income 0.87 0.42
In excess of net
investment income 0.00 0.00
Net realized gains 0.05 0.02
Tax return of capital 0.00 0.00
- --------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 0.92 0.44
- --------------------------------------------------------------------------------
NET ASSET VALUE,
END OF PERIOD $9.71 $9.62
================================================================================
TOTAL RETURN (a) 10.96% 0.69%
RATIOS/SUPPLEMENTAL DATA:
Net assets,
end of period
(in thousands) $34,887 $6,844
Ratios to average
net assets:
Net investment income* 9.20% 8.17%
Expenses* 0.50% 0.50%
Gross Expenses* 3.00% 5.75%
Portfolio turnover rate 66.04% 159.76%
- ----------
See notes accompanying financial highlights.
18
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
GE SHORT-TERM GOVERNMENT FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B
- ------------------------------------------------------------------------------------------------------------------------------------
9/30/97 9/30/96 9/30/95 9/30/94 9/30/97 9/30/96 9/30/95 9/30/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- 3/2/94 -- -- -- 3/2/94
Net asset value, beginning of period $11.78 $11.91 $11.72 $12.00 $11.78 $11.90 $11.72 $12.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.65 0.60 0.64 0.35 0.61 0.56 0.59 0.33
Net realized and unrealized
gains (losses) on investments 0.07 (0.06) 0.21 (0.30) 0.06 (0.05) 0.21 (0.31)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME FROM INVESTMENT OPERATIONS 0.72 0.54 0.85 0.05 0.67 0.51 0.80 0.02
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income 0.64 0.61 0.66 0.33 0.60 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 0.65 0.67 0.66 0.33 0.61 0.63 0.62 0.30
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $11.85 $11.78 $11.91 $11.72 $11.84 $11.78 $11.90 $11.72
====================================================================================================================================
TOTAL RETURN (a) 6.30% 4.63% 7.48% 0.40% 5.84% 4.35% 7.01% 0.20%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $7,298 $340 $285 $35 $1,031 $145 $83 $25
Ratios to average net assets:
Net investment income* 5.24% 5.04% 5.27% 4.75% 4.84% 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* 2.19% 3.00% 3.00% 1.71% 7.77% 3.35% 3.35% 2.06%
Portfolio turnover rate 265% 201% 415% 146% 265% 201% 415% 146%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS C CLASS D
- ------------------------------------------------------------------------------------------------------------------------------------
9/30/97 9/30/96 9/30/95 9/30/94 9/30/97 9/30/96 9/30/95 9/30/94
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- 3/2/94 -- -- -- 3/2/94
Net asset value, beginning of period $11.79 $11.91 $11.72 $12.00 $11.78 $11.90 $11.72 $12.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.67 0.63 0.66 0.36 0.70 0.66 0.69 0.39
Net realized and unrealized
gains (losses) on investments 0.08 (0.05) 0.22 (0.30) 0.08 (0.05) 0.21 (0.31)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME FROM INVESTMENT OPERATIONS 0.75 0.58 0.88 0.06 0.78 0.61 0.90 0.08
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income 0.67 0.64 0.69 0.34 0.70 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 0.68 0.70 0.69 0.34 0.71 0.73 0.72 0.36
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $11.86 $11.79 $11.91 $11.72 $11.85 $11.78 $11.90 $11.72
====================================================================================================================================
TOTAL RETURN (a) 6.57% 4.98% 7.74% 0.53% 6.83% 5.24% 7.92% 0.69%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) $5,319 $3,653 $2,437 $287 $7,717 $7,786 $8,048 $7,822
Ratios to average net assets:
Net investment income* 5.57% 5.28% 5.62% 5.18% 5.80% 5.54% 5.89% 5.32%
Expenses* 0.70% 0.70% 0.70% 0.70% 0.45% 0.45% 0.45% 0.45%
Gross Expenses* 1.07% 1.34% 1.84% 1.46% 0.68% 0.83% 0.98% 1.21%
Portfolio turnover rate 265% 201% 415% 146% 265% 201% 415% 146%
</TABLE>
- ----------
See notes accompanying financial highlights.
19
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
GE MONEY MARKET FUND
- ------------------------------------------------------------------------------------------------------------------------------------
9/30/97 9/30/96 9/30/95 9/30/94 9/30/93(e)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCEPTION DATE -- -- -- -- 1/5/93
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.05 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 0.05 0.05 0.05 0.03 0.02
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income 0.05 0.05 0.05 0.03 0.02
Net realized gains 0.00 0.00 0.00 0.00 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 0.05 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) 5.14% 5.18% 5.52% 3.31% 1.64%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $114,030 $85,842 $71,664 $53,607 $17,197
Ratios to average net assets:
Net investment income* 5.04% 5.06% 5.32% 3.41% 2.27%
Expenses* 0.47% 0.45% 0.45% 0.45% 0.45%
Gross Expenses* 0.56% 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 adviser not absorbed a portion of expenses, total return would have
been lower. Periods less than one year are not annualized.
(b) For the fiscal years beginning on or after September 1, 1995, a Fund is
required to disclose its average commission rate per share for trades on
which commissions are charged. Mark-ups, mark-downs and spreads on shares
traded on a principal basis are not included unless they are disclosed on
confirmations prepared in accordance with Rule 10b-10 under the Securities
Exchange Act of 1934, as amended.
(c) Per share data is based on average shares outstanding during the period.
(d) Per share information is for the period since inception through September
30, 1994, and the total return information is for the period January 1,
1994, commencement of investment operations, through September 30, 1994.
(e) Per share information is for the period since inception through September
30, 1993, and the total return information is for the period February 22,
1993, commencement of investment operations, through September 30, 1993.
(f) For the period November 1, 1996 thru September 30, 1997. See Note 9 in the
Notes to Financial Statements for further information.
(g) For the period September 27, 1997 thru September 30, 1997. See Note 9 in
the Notes to Financial Statements for further information.
(h) For the period December 31, 1996 (commencement of operations) thru
September 30, 1997.
* Annualized for periods less than one year.
20
<PAGE>
PERFORMANCE
The chart below shows each Fund's historical performance for the referenced
period compared to the historical performance of broad market indexes for the
same time period.
<TABLE>
<CAPTION>
Average Annual Total Return (in %) (as of 9/30/97)
---------------------------------------------------------------------------------------------------------
Load Adjusted
-------------------------------------------------
One Three Five Ten Since One Three Five Ten Since
Year Year Year Year Inception Year Year Year Year Inception
---- ---- ---- ---- --------- ---- ---- ---- ---- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GE Premier Growth
Equity Fund
Class A N/A N/A N/A N/A 22.07 (12/31/96) N/A N/A N/A N/A 15.05 (12/31/96)
Class B N/A N/A N/A N/A 21.67 (12/31/96) N/A N/A N/A N/A 17.67 (12/31/96)
Class C N/A N/A N/A N/A 22.33 (12/31/96) N/A N/A N/A N/A N/A
Class D N/A N/A N/A N/A 22.53 (12/31/96) N/A N/A N/A N/A N/A
S&P 500 Index N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
GE U.S. Equity Fund
Class A 39.44 27.82 N/A N/A 21.41 (1/1/94) 31.42 25.32 N/A N/A 19.51 (1/1/94)
Class B 38.75 27.19 N/A N/A 21.00 (12/22/93) 34.75 26.78 N/A N/A 20.88 (12/22/93)
Class C 39.76 28.15 N/A N/A 20.28 (2/22/93) N/A N/A N/A N/A N/A
Class D 40.16 28.46 N/A N/A 21.92 (11/29/93) N/A N/A N/A N/A N/A
S&P 500 Index 40.49 29.92 N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
GE Mid-Cap Growth Fund
(formerly Investors
Trust Growth Fund)
Class A 33.11 26.84 N/A N/A 19.88 (9/8/93) 25.45 24.36 N/A N/A 18.15 (9/8/93)
Class B 32.20 25.94 N/A N/A 19.05 (9/8/93) 28.20 25.52 N/A N/A 19.05 (9/8/93)
S&P Mid-Cap 400 Index 37.09 23.79 N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
GE Value Equity Fund
(formerly Investors
Trust Value Fund)
Class A 39.80 27.66 N/A N/A 19.50 (9/8/93) 31.76 25.16 N/A N/A 17.77 (9/8/93)
Class B 38.84 26.69 N/A N/A 18.68 (9/8/93) 34.84 26.28 N/A N/A 18.68 (9/8/93)
S&P 500/Barra
Value Index 39.22 28.24 N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
GE Global Equity Fund
Class A 18.51 12.19 N/A N/A 10.53 (1/1/94) 11.70 9.99 N/A N/A 8.80 (1/1/94)
Class B 17.92 11.62 N/A N/A 10.73 (12/22/93) 13.92 11.08 N/A N/A 10.55 (12/22/93)
Class C 18.82 12.48 N/A N/A 14.35 (2/22/93) N/A N/A N/A N/A N/A
Class D 19.14 12.77 N/A N/A 13.25 (11/29/93) N/A N/A N/A N/A N/A
Morgan Stanley
Capital International
World Index 24.11 17.30 N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
GE International Equity Fund
Class A 18.41 11.42 N/A N/A 9.85 (3/2/94) 11.61 9.24 N/A N/A 8.05 (3/2/94)
Class B 17.86 10.85 N/A N/A 9.28 (3/2/94) 13.86 10.31 N/A N/A 9.05 (3/2/94)
Class C 18.79 11.69 N/A N/A 10.09 (3/2/94) N/A N/A N/A N/A N/A
Class D 19.16 12.06 N/A N/A 10.46 (3/2/94) N/A N/A N/A N/A N/A
Morgan Stanley
Capital International
EAFE Index 12.17 8.83 N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
GE Strategic Investment Fund
Class A 22.16 18.48 N/A N/A 14.13 (1/1/94) 15.14 16.17 N/A N/A 12.34 (1/1/94)
Class B 21.57 17.88 N/A N/A 13.57 (12/22/93) 17.57 17.40 N/A N/A 13.40 (12/22/93)
Class C 22.45 18.73 N/A N/A 13.65 (2/22/93) N/A N/A N/A N/A N/A
Class D 22.76 19.08 N/A N/A 14.69 (11/29/93) N/A N/A N/A N/A N/A
S&P 500 Index 40.49 29.92 N/A N/A N/A N/A N/A N/A N/A N/A
Lehman Brothers
Aggregate
Bond Index 9.74 9.50 N/A N/A N/A N/A N/A N/A N/A N/A
S&P 500 Index &
Lehman Brothers
Aggregate Bond Index 28.19 21.75 N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
GE Tax-Exempt Fund
(formerly Investors
Trust Tax Free Fund)
Class A 7.78 7.86 N/A N/A 5.44 (9/8/93) 3.20 6.31 N/A N/A 4.32 (9/8/93)
Class B 7.47 7.79 N/A N/A 5.23 (9/8/93) 4.47 7.21 N/A N/A 5.23 (9/8/93)
Class C N/A N/A N/A N/A 0.11 (9/26/97) N/A N/A N/A N/A N/A
Class D N/A N/A N/A N/A 0.11 (9/26/97) N/A N/A N/A N/A N/A
Lehman Brothers 10-Year
General Obligation
Municipal Bond Index 9.69 8.74 N/A N/A N/A N/A N/A N/A N/A N/A
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return (in %) (as of 9/30/97)
---------------------------------------------------------------------------------------------------------
Load Adjusted
-------------------------------------------------
One Three Five Ten Since One Three Five Ten Since
Year Year Year Year Inception Year Year Year Year Inception
---- ---- ---- ---- --------- ---- ---- ---- ---- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GE Fixed Income Fund
Class A 9.19 8.47 N/A N/A 5.85 (1/1/94) 4.55 6.91 N/A N/A 4.62 (1/1/94)
Class B 8.64 7.95 N/A N/A 5.32 (12/23/93) 5.64 7.38 N/A N/A 5.10 (12/23/93)
Class C 9.45 8.73 N/A N/A 6.07 (2/22/93) N/A N/A N/A N/A N/A
Class D 9.74 8.99 N/A N/A 6.30 (11/29/93) N/A N/A N/A N/A N/A
Lehman Brothers
Aggregate Bond Index 9.74 9.50 N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
GE Government
Securities Fund
(formerly Investors
Trust Government Fund)
Class A 9.44 7.64 N/A N/A 3.12 (9/8/93) 4.78 6.09 N/A N/A 2.02 (9/8/93)
Class B 8.71 6.90 3.68 7.61 6.81 (4/22/87) 5.71 6.31 3.68 7.61 6.81 (4/22/87)
Lehman Brothers Government
Bond Index 9.15 8.98 6.65 9.13 N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
GE Short-Term
Government Fund
Class A 6.30 6.13 N/A N/A 5.23 (3/2/94) 3.65 5.24 N/A N/A 4.48 (3/2/94)
Class B 5.84 5.73 N/A N/A 4.84 (3/2/94) 2.84 5.13 N/A N/A 4.59 (3/2/94)
Class C 6.57 6.42 N/A N/A 5.51 (3/2/94) N/A N/A N/A N/A N/A
Class D 6.83 6.66 N/A N/A 5.75 (3/2/94) N/A N/A N/A N/A N/A
Lehman Brothers 1-3 Year
Government Bond Index 6.89 6.91 N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
GE Money Market Fund 5.14 5.28 N/A N/A 4.51 (2/22/93) N/A N/A N/A N/A N/A
90 Day T-Bill 5.17 5.35 N/A N/A N/A N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
================================================================================
NOTES TO PERFORMANCE
================================================================================
For periods prior to September 26, 1997, 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 Tax Free Fund and Investors Trust Government Fund, respectively, each a
series of Investors Trust, the assets of which were acquired by the
corresponding GE Fund. GE Mid-Cap Growth Fund, GE Value Equity Fund and GE
Government Securities Fund did not offer Class C or D shares during the fiscal
year ended September 30, 1997, therefore no performance data is shown for Class
C or D shares of those Funds. Because the performance data relating to Class C
and D shares of GE Tax-Exempt Fund is limited to the period from September 26,
1997 to September 30, 1997 and the performance data relating to GE Premier
Growth Equity Fund is limited to the period from December 31, 1996 to September
30, 1997, each reflects the "Aggregate Total Return" rather than the "Average
Annual Total Return" for the respective periods.
The performance data has been calculated to assume the current maximum sales
charges imposed by GE Funds, which are generally higher than the sales charges
formerly imposed by GE Funds.
The mutual fund results are net of fees and expenses and assume changes in share
price, reinvestment of dividends and capital gains, and, if applicable, the
deduction of any sales charges as set forth under the "Load Adjusted" column.
GEIM has voluntarily agreed to reduce or otherwise limit certain expenses of the
GE Funds. Also, certain of the results for funds that were series of Investors
Trust were favorably affected by expense waivers or limitations. Absent these
limits, the GE Funds' and Investors Trust Funds' performance would have been
lower.
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
Bond Index simulates a blended return which is representative of the approximate
asset allocation mix of the GE Strategic Investment Fund for the periods
presented (composed of 60% S&P 500 Index, 40% LB Aggregate). The actual
allocation mix of this Fund may have varied from time to time. The results shown
for the foregoing indexes assume the reinvestment of net dividends.
22
<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 5.75% 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 Distributors, Inc., the distributor of the Funds' shares
(the "Distributor"), for services provided to shareholders of the Class A
shares. The distribution fee is used to compensate GEIM or to allow GEIM to
compensate others, including the Distributor, for its expenses associated with
activities that are primarily intended to result in the sale of Class A shares
of the Participant Funds. The sales charge is retained by the Distributor,
although a portion of the sales charge may be paid to registered representatives
or other dealers that enter into selected dealer agreements with the
Distributor. See "Purchase of Shares" and "Redemption of Shares" below.
CLASS B SHARES. Class B shares are sold at net asset value per share subject to
a maximum 4.00% CDSC with respect to GE Premier Growth Equity Fund, GE U.S.
Equity Fund, GE Mid-Cap Growth Fund, GE Value Equity Fund, GE Global Equity
Fund, GE International Equity Fund and GE Strategic Investment Fund and a
maximum 3.00% CDSC with respect to GE Tax-Exempt Fund, GE Fixed Income Fund, GE
Government Securities Fund and GE Short-Term Government Fund, which is assessed
only if the shareholder redeems shares within the first four years of
investment. Class B shares acquired or exchanged from shares of Investors Trust
are subject to a maximum CDSC of 5.00%, which is assessed only if such
shareholder redeems shares within the first five years of investment. This
method of distribution results in 100% of the investor's assets being used to
acquire shares of the Participant Fund. For each year of investment, the
applicable CDSC declines in accordance with the tables set out below under
"Redemption of Shares--Redemptions in General." Class B shares of a Participant
Fund, other than GE Short-Term Government Fund, are subject to an annual service
fee of .25% and an annual distribution fee of .75% of the value of the
Participant Fund's average daily net assets attributable to the Class. In the
case of GE Short-Term Government Fund, Class B shares are subject to an annual
service fee of .25% and an annual distribution fee of .60% of the value of the
Fund's average daily net assets attributable to the Class. Like the service fee
and distribution fee applicable to Class A shares, the Class B service fee and
distribution fee is used to compensate GEIM or to enable GEIM to compensate
others with respect to expenses associated with ongoing shareholder and
distribution services provided to shareholders of Class B shares. See "Purchase
of Shares" and "Redemption of Shares" below.
Six years after the date of purchase (eight years in the case of shares acquired
or exchanged from shares of Investors Trust), Class B shares will convert
automatically to Class A shares, based on the relative net asset values of
shares of each Class, and will at that time be subject to a distribution fee of
.25% of the Participant Fund's net assets attributable to the Class (as well as
the service fee of .25% of the value of the Participant Fund's average daily net
assets attributable to the Class). The conversion of Class B shares into Class A
shares is subject to the continuing availability of an opinion of counsel to the
effect that the conversions will not constitute taxable events for Federal tax
purposes.
CLASS C SHARES. Class C shares of a Participant Fund are sold at net asset value
per share, subject only to an annual service fee of .25% of the value of the
Participant Fund's average daily net assets attributable to the Class. No sales
charge or CDSC will be imposed on Class C shares; however, Class C shares are
available only to a limited group of investors, including employees of GE or an
affiliate of GE and certain other individual investors as described in greater
detail under "Purchase of Shares" below.
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 greater detail under "Purchase of Shares" below.
23
<PAGE>
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
================================================================================
Set forth below is a description of the investment objective and policies of
each Fund. The investment objective of a Fund may not be changed without the
approval of the holders of a majority of the Fund's outstanding voting
securities as defined in the Investment Company Act of 1940, as amended (the
"1940 Act"). Such a majority is defined in the 1940 Act as the lesser of (1) 67%
or more of the shares present at a Fund meeting, if the holders of more than 50%
of the outstanding shares of the Fund are present or represented by proxy or (2)
more than 50% of the outstanding shares of the Fund. No assurance can be given
that a Fund will be able to achieve its investment objective.
GE PREMIER GROWTH EQUITY FUND
The investment objective of GE Premier Growth Equity Fund (the "Premier Fund")
is long-term growth of capital and future income rather than current income. The
Fund seeks to achieve this objective through investment primarily in
growth-oriented equity securities which, under normal market conditions, will
represent at least 65% of the Fund's assets. In pursuing its objectives, the
Premier Fund, under normal conditions, may invest in common stocks, preferred
stocks, convertible bonds, convertible debentures, convertible notes,
convertible preferred stocks and warrants or rights issued by U.S. and foreign
companies.
In attempting to achieve its objective, the Premier Fund will seek to identify
and invest in companies it believes will offer potential for long-term growth of
capital. These companies typically would possess one or more of a variety of
characteristics, including high quality products and/or services, strong balance
sheets, sustainable internal growth, superior financial returns, competitive
position in the issuer's economic sector and shareholder-oriented management.
While the Premier Fund may invest in companies of varying sizes as measured by
assets, sales or capitalization, a majority of its assets will, under normal
market conditions, be comprised of companies with relatively large
capitalizations. In addition, the Premier Fund will normally be invested in
companies that have above-average growth prospects and which are typically
leaders in their fields. The Fund will generally be diversified over a cross
section of industries.
GE U.S. EQUITY FUND
The investment objective of GE U.S. Equity Fund (the "U.S. Equity Fund") is
long-term growth of capital, which objective the Fund seeks to achieve through
investment primarily in equity securities of U.S. companies. In pursuing its
objective, the U.S. Equity Fund, under normal conditions, invests at least 65%
of its assets in equity securities, consisting of common stocks and preferred
stocks, and securities convertible into common stocks, consisting of convertible
bonds, convertible debentures, convertible notes, convertible preferred stocks
and warrants or rights. The equity securities issued by U.S. companies in which
the U.S. Equity Fund invests typically are traded on U.S. securities exchanges;
those U.S. equity securities held by the U.S. Equity Fund that are not
exchange-traded are non-publicly traded or traded in the U.S. over-the-counter
market. Up to 15% of the U.S. Equity Fund's assets may be invested in foreign
securities. American Depositary Receipts (i.e., U.S. dollar-denominated receipts
typically issued by domestic banks or trust companies that represent the deposit
with those entities of securities of a foreign issuer, "ADRs") and securities of
a foreign issuer with a class of securities registered with the SEC and listed
on a U.S. national securities exchange ("U.S. Listed Securities") or traded on
the Nasdaq National Market or the Nasdaq SmallCap Market (collectively "Nasdaq
Traded Securities") will be included for purposes of the U.S. Equity Fund's 65%
minimum described above, and excluded for purposes of the Fund's 15% maximum in
investments in foreign securities. A more complete description of foreign
securities and depositary receipts and the risks and special considerations
applicable to them is included below under "Risk Factors and Special
Considerations" and in "Further Information: Certain Investment Techniques and
Strategies."
In managing the assets of the U.S. Equity Fund, GEIM uses a combination of
"value-oriented" and "growth-oriented" investing. Value-oriented investing
involves seeking securities that may have low price-to-earnings ratios, or high
yields, or that sell for less than intrinsic value as determined by GEIM, or
that appear attractive on a dividend discount model. These securities generally
are sold from the U.S. Equity Fund's portfolio when their prices approach
targeted levels. Growth-oriented investing generally involves buying securities
with above average earnings growth rates at reasonable prices. The U.S. Equity
Fund holds these securities until GEIM determines that their growth prospects
diminish or that they have become overvalued when compared with alternative
investments.
In investing on behalf of the U.S. Equity Fund, GEIM seeks to produce a
portfolio that GEIM believes will 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
24
<PAGE>
investing in the debt securities of a company whose securities GEIM anticipates
will increase in value as a result of a development particularly or uniquely
applicable to the company, such as a liquidation, reorganization,
recapitalization or merger, material litigation, technological breakthrough or
new management or management policies.
GE MID-CAP GROWTH FUND
The investment objective of GE Mid-Cap Growth Fund (the "Mid-Cap Fund") is
long-term growth of capital. The Fund seeks to achieve this objective by
investing primarily in the equity securities of companies with medium-sized
market capitalizations ("mid-cap") that have the potential for above-average
growth. The Fund, under normal market conditions, invests at least 65% of its
total assets in a portfolio of equity securities of mid-cap companies traded on
U.S. securities exchanges or in the U.S. over-the-counter market, including
common stocks, preferred stocks, convertible preferred stocks, convertible
bonds, convertible debentures, convertible notes, ADRs and warrants or rights
issued by U.S. and foreign companies. The Fund defines a mid-cap company as one
whose securities are within the market capitalization range of stocks listed on
the S&P MidCap 400 Index.
Mid-cap growth companies are often still in the early phase of their life cycle.
Accordingly, investing in mid-cap companies generally entails greater risk
exposure and volatility (meaning upward or downward price swings) than investing
in large, well-established companies. However, GEIM believes that mid-cap
companies may offer the potential for more rapid growth. See "Risk Factors and
Special Considerations--Small Companies."
GEIM relies on its proprietary research to identify mid-cap companies with
potentially attractive growth prospects. These companies typically have one or
more of a variety of characteristics, including attractive products or services,
above average earnings growth potential, superior financial returns, strong
competitive position, shareholder focused management and sound balance sheets.
There is, of course, no guarantee that GEIM will be able to identify such
companies or that the Fund's investment in them will be successful.
The Mid-Cap Fund may invest up to 35% of its assets in (i) securities of
companies outside the capitalization range of the S&P Mid-Cap 400 Index; (ii)
foreign securities, excluding, for purposes of this limitation, ADRs and U.S.
Listed Securities and Nasdaq Traded Securities; and (iii) bonds, notes and
debentures.
GE VALUE EQUITY FUND
The investment objective of the GE Value Equity Fund (the "Value Fund") is
long-term growth of capital and future income. The Fund seeks to achieve its
objective by investing primarily in equity securities of companies with large
sized market capitalization that GEIM considers to be undervalued by the market.
Undervalued securities are those selling for low prices given the fundamental
characteristics of their issuers. During normal market conditions, the Value
Fund invests at least 65% of its assets in common stocks, preferred stocks,
convertible bonds, convertible debentures, convertible notes, convertible
preferred stocks and warrants or rights issued by U.S. and foreign companies.
The Value Fund's investment philosophy is that the market tends to overreact to
both good and bad news about issuers. Companies experiencing faster than
expected growth tend to be overvalued as the market extrapolates current good
news well beyond a sustainable time-frame and correspondingly overforecasts the
period and magnitude of decline of companies experiencing near term
difficulties. These difficulties can be driven by factors both internal and
external to the company. Internal factors may include operational mismanagement
or strategic mistakes. External factors may include a change in the economic
environment or a shift in the competitive dynamics of an industry. The Fund
attempts to identify firms that are out of favor for a variety of reasons and
select those which GEIM believes to be undervalued relative to their true
business prospects.
In accordance with this premise, GEIM will identify and select securities that
it believes are undervalued, using factors it considers indicative of
fundamental investment value including: (i) low price/earnings ratio relative to
a normalized growth rate and/or the S&P 500 Index; (ii) the potential for free
cash flow generation and prospects for dividend growth; (iii) a strong balance
sheet with low financial leverage; (iv) sustainable competitive advantages such
as a franchise brand name or dominant market position; (v) an experienced and
capable management team; (vi) improving returns on invested capital; and (vii)
net asset values in a restructuring/breakup analysis framework.
GEIM believes that such investments will position the Value Fund to benefit from
a positive change in business prospects from an issuing company that adopts a
turnaround strategy to increase/restore the earning power of the company.
The Value Fund may, under normal market conditions, invest (i) up to 35% of its
assets in bonds, notes and debentures and (ii) up to 25% of its assets in
foreign securities excluding, for purposes of this limitation, ADRs and U.S.
Listed Securities and Nasdaq Traded Securities.
GE GLOBAL EQUITY FUND
The investment objective of GE Global Equity Fund (the "Global Fund") is
long-term growth of capital, which the Fund seeks to achieve by investing
principally in foreign equity securities. In seeking its objective, the Global
Fund invests primarily in a portfolio of securities issued by companies located
in developed and developing countries throughout the world. The Global Fund may
also invest in securities of foreign issuers in the form of depositary receipts.
A more complete description of foreign securities and depositary receipts and
the risks and special considerations
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applicable to them is included below under "Risk Factors and Special
Considerations" and in "Further Information: Certain Investment Techniques and
Strategies." Although the Global Fund is subject to no prescribed limits on
geographic asset distribution, under normal circumstances, at least 65% of the
Fund's assets are invested in the aggregate in no fewer than three different
countries. The determination of where an issuer is located will be made by
reference to the country in which the issuer (a) is organized, (b) derives at
least 50% of its revenues or profits from goods produced or sold, investments
made or services performed, (c) has at least 50% of its assets situated or (d)
has the principal trading market for its securities (the "Country Identification
Test"). In addition, under normal circumstances, at least 80% of the Global
Fund's total assets are at any one time invested in companies or governments of
countries represented in the Morgan Stanley Capital International World Index, a
well-known index reflecting developed and developing markets throughout the
world.
In selecting investments on behalf of the Global Fund, GEIM seeks companies that
are expected to grow faster than relevant markets and whose securities are
available at a price that does not fully reflect the potential growth of those
companies. GEIM typically focuses on companies that possess one or more of a
variety of characteristics, including strong earnings growth relative to
price-to-earnings ratio, low price-to-book value, strong cash flow, presence in
an industry experiencing strong growth and high quality management.
The Global Fund, under normal conditions, invests at least 65% of its assets in
common stocks, preferred stocks, convertible debentures, convertible notes,
convertible preferred stocks and warrants or rights, issued by established
companies. The equity securities in which the Global Fund invests are issued by
foreign or U.S. companies and in most cases are traded on foreign or U.S.
securities exchanges.
The Global Fund may, under normal market conditions, invest up to 35% of its
assets in notes, bonds and debentures issued by corporate or governmental
entities when GEIM determines that investing in those kinds of debt securities
is consistent with the Fund's investment objective of long-term growth of
capital. GEIM believes that such a determination could be made, for example,
upon the Global Fund's investing in the debt securities of a company whose
securities GEIM anticipates will increase in value as a result of a development
particularly or uniquely applicable to the company, such as a liquidation,
reorganization, recapitalization or merger, material litigation, technological
breakthrough or new management or management policies. In addition, GEIM
believes such a determination could be made with respect to an investment by the
Global Fund in debt instruments issued by a governmental entity upon GEIM's
concluding that the value of the instruments will increase as a result of
improvements or changes in public finances, monetary policies, external
accounts, financial markets, exchange rate policies or labor conditions of the
country in which the governmental entity is located.
GE INTERNATIONAL EQUITY FUND
The investment objective of GE International Equity Fund (the "International
Fund") is long-term growth of capital, which the Fund seeks to achieve by
investing primarily in foreign equity securities. The International Fund may
invest in securities of companies and governments located in developed and
developing countries outside the United States. The International Fund may also
invest in securities of foreign issuers in the form of depositary receipts.
Investing in securities issued by foreign companies and governments involves
considerations and potential risks not typically associated with investing in
securities issued by the U.S. Government and U.S. corporations. A more complete
description of foreign securities and depositary receipts and the risks and
special considerations applicable to them is included below under "Risk Factors
and Special Considerations" and in "Further Information: Certain Investment
Techniques and Strategies." The International Fund intends to position itself
broadly among countries and under normal circumstances, at least 65% of the
Fund's assets will be invested in securities of issuers collectively in no fewer
than three different countries other than the United States. The percentage of
the International Fund's assets invested in particular countries or regions of
the world will vary depending on political and economic conditions. The
determination of where an issuer is located will be made by reference to the
Country Identification Test, as set out above, in "Investment Objectives and
Management Policies--GE Global Equity Fund."
In selecting investments on behalf of the International Fund, GEIM seeks
companies that are expected to grow faster than relevant markets and whose
securities are available at a price that does not fully reflect the potential
growth of those companies. GEIM typically focuses on companies that possess one
or more of a variety of characteristics, including strong earnings growth
relative to price-to-earnings and price-to-cash earnings ratios, low
price-to-book value, strong cash flow, presence in an industry experiencing
strong growth and high quality management.
The International Fund, under normal conditions, invests at least 65% of its
assets in common stocks, preferred stocks, convertible debentures, convertible
notes, convertible preferred stocks and 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
foreign or U.S. over-the-counter markets. 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 govern-
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mental entities when GEIM determines that investing in those kinds of debt
securities is consistent with the Fund's investment objective of long-term
growth of capital. GEIM believes that such a determination could be made, for
example, upon the International Fund's investing in the debt securities of a
company whose securities GEIM anticipates will increase in value as a result of
a development particularly or uniquely applicable to the company, such as a
liquidation, reorganization, recapitalization or merger, material litigation,
technological breakthrough or new management or management policies. In
addition, GEIM believes such a determination could be made with respect to an
investment by the International Fund in debt instruments issued by a
governmental entity upon GEIM's concluding that the value of the instruments
will increase as a result of improvements or changes in public finances,
monetary policies, external accounts, financial markets, exchange rate policies
or labor conditions of the country in which the governmental entity is located.
Under normal circumstances, the International Fund invests in securities of
issuers located in a number of different countries located outside the United
States as described above.
GE STRATEGIC INVESTMENT FUND
The investment objective of GE Strategic Investment Fund (the "Strategic Fund")
is to maximize total return, consisting of capital appreciation and current
income. In seeking its objective, the Strategic Fund follows an asset allocation
strategy that provides diversification across a range of asset classes and
contemplates shifts among them from time to time. This strategy may result in
the Strategic Fund's experiencing a high portfolio turnover rate. See "Portfolio
Transactions and Turnover" below.
The Strategic Fund invests in the following classes of investments: common
stocks, preferred stocks, convertible securities and warrants or rights; bonds,
debentures and notes issued by U.S. and foreign companies; securities issued or
guaranteed by the U.S. Government or one of its agencies or instrumentalities
("Government Securities"); Municipal Obligations (as defined below); obligations
of foreign governments or their agencies or instrumentalities; mortgage related
securities, adjustable rate mortgage related securities ("ARMs"), collateralized
mortgage related securities ("CMOs") and government stripped mortgage related
securities; asset-backed and receivable-backed securities; and domestic and
foreign money market instruments. The U.S. equity and debt instruments in which
the Strategic Fund invests are traded on U.S. securities exchanges or in the
U.S. over-the-counter market, except that the Fund may invest up to 10% of its
assets in non-publicly traded securities. In addition, up to 30% of the
Strategic Fund's total assets may be invested in foreign securities excluding,
for purposes of this limitation, ADRs and U.S. Listed Securities and Nasdaq
Traded Securities. The Strategic Fund may also invest in structured and indexed
securities, the value of which is linked to currencies, interest rates,
commodities, indexes or other financial indicators. Mortgage related securities,
ARMs, CMOs, government stripped mortgage related securities and asset-backed and
receivable-backed securities are subject to several risks, including the
prepayment of principal. Other risks and special considerations applicable to
those instruments are described in "Further Information: Certain Investment
Techniques and Strategies." In addition, risks and special considerations
applicable to investing in non-publicly traded securities, foreign securities
and depositary receipts are described below under "Risk Factors and Special
Considerations" and in "Further Information: Certain Investment Techniques and
Strategies."
GEIM has broad latitude in selecting the classes of investments to which the
Strategic Fund's assets are committed. Although the Strategic Fund has the
authority to invest solely in equity securities, solely in debt securities,
solely in money market instruments or in any combination of these classes of
investments, GEIM anticipates that at most times the Fund will be invested in a
combination of equity and debt instruments.
The Strategic Fund's investments are designed to achieve favorable performance
with lower volatility than a fund that invests solely in equity or debt
securities. The weightings of equity and debt holdings for the Strategic Fund
are determined by GEIM at any given time in light of its assessment of the
attractiveness of each market. Although GEIM cannot predict the mix of the
Strategic Fund's investments at any one time, GEIM can delineate certain
situations that can lead to a shift in the mix of the Strategic Fund's
investments. If, for example, the prices of U.S. equity securities decline due
to falling economic activity and profits, and if GEIM determines that the
condition is transitory, GEIM could allocate a major portion of the Strategic
Fund's assets to the equity market. If, on the other hand, the prices of debt
instruments are depressed by rising economic activity combined with restrictive
monetary or fiscal policies and GEIM concludes that this condition is temporary,
GEIM could allocate a major portion of the Strategic Fund's assets to debt
securities.
The Strategic Fund generally seeks to invest in equity and debt securities that
GEIM has determined offer above average potential for total return. In making
this determination, GEIM will take into account factors including earnings
growth, industry attractiveness, company management, price-to-earnings ratios,
yield, price-to-book ratios and valuation of assets.
The Strategic Fund typically purchases a debt security if GEIM believes that the
yield and potential for capital appreciation of the security are sufficiently
attractive in light of the risks of ownership of the security. In determining
whether the Strategic Fund should invest in particular debt instruments, GEIM
considers factors such as: the price, coupon and yield to maturity; GEIM's
assessment of the credit quality of the issuer;
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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 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 of
comparative quality in the opinion of Brown Brothers Harriman & Co. ("Brown
Brothers"), the Fund's sub-investment adviser. Bonds rated Baa by Moody's or BBB
by S&P, or comparably rated by another NRSRO, or unrated securities of
comparable quality, lack outstanding investment characteristics and in fact have
speculative characteristics as well, and changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to pay interest and
repay principal and investments of this type will be limited to 10% of the
Fund's assets. No more than 5% of the Fund's net assets will remain invested in
securities that are downgraded below investment grade subsequent to purchase by
the Fund.
The Tax-Exempt Fund is expected to have an effective duration ranging from 5 to
7 1/2 years. A bond's duration is the weighted average life of its principal and
interest payments and is often considered a useful indication of its price
volatility. The Fund is an appropriate investment for those investors who seek
tax-exempt income returns greater than those provided by tax free money market
funds and are able to accept fluctuation in the net asset value of their
investment. The Fund is designed to have smaller price fluctuations than
longer-term tax-free bond funds.
The Tax-Exempt Fund may invest in obligations which have fixed interest rates or
variable or floating interest rates, including short-term obligations which have
daily adjustable rates. Variable or floating rates may be adjusted in relation
to market rates for other instruments, prime rates, indices or similar
indicators. Certain of these adjustable obligations may carry a demand feature
that permits the Fund to receive the par value of the security upon demand prior
to maturity. These obligations may also be subject to prepayment without penalty
at the option of the issuer.
While the majority of the Tax-Exempt Fund's investments consist of tax-exempt
notes and bonds, the Fund may also invest in lease obligations or installment
purchase contract obligations, which are instruments supported by lease payments
made by a municipality ("municipal lease obligations").
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GE FIXED INCOME FUND
The investment objective of GE Fixed Income Fund (the "Income Fund") is to seek
maximum income consistent with prudent investment management and the
preservation of capital. Capital appreciation with respect to the Income Fund's
portfolio securities may occur but is not an objective of the Fund. In seeking
to achieve its investment objective, the Income Fund invests in the following
types of fixed income instruments: Government Securities; obligations of foreign
governments or their agencies or instrumentalities; bonds, debentures, notes and
non-convertible preferred stocks issued by U.S. and foreign companies; mortgage
related securities, ARMs, CMOs and government stripped mortgage related
securities; asset-backed and receivable-backed securities; zero coupon
obligations; floating and variable rate instruments and money market
instruments. The Income Fund may also invest in depositary receipts and
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 these instruments are described in "Further Information: Certain
Investment Techniques and Strategies."
The Income Fund is subject to no limitation with respect to the maturities of
the instruments in which it may invest; the weighted average maturity of the
Fund's portfolio securities is anticipated to be approximately five to 10 years.
Under normal market conditions, a substantial portion of the Income Fund's total
assets may be invested in money market instruments of the types described below
under "Additional Investments -- Money Market Instruments" if such investment is
deemed by GEIM to be consistent with the investment objective of the Fund.
GE GOVERNMENT SECURITIES FUND
The investment objective of GE Government Securities Fund (the "Government
Securities Fund") is a high level of current income consistent with safety of
principal.
The Government Securities Fund seeks to achieve its objective by investing
primarily in Government Securities having remaining maturities of one year or
more. The Fund invests at least 65% of the value of its total assets in U.S.
Government Securities, except during times when it adopts a temporary defensive
position by investing more heavily in cash or high-quality money market
instruments due to prevailing market or economic conditions. There is no limit
on the Fund's investments in mortgage-backed Government Securities and from
time-to-time a majority of the Fund's portfolio may be invested in such
securities.
The remainder of the Government Securities Fund's assets will be invested in
other debt instruments considered investment grade by S&P, Moody's or another
NRSRO. No more than 10% of the Fund's assets may be invested in debt instruments
rated Baa by Moody's, BBB by S&P or comparably rated by another NRSRO and no
more than 25% of the Fund's assets may be invested in debt instruments rated A
or lower by Moody's or S&P or comparably rated by another NRSRO. The Fund may
also invest in foreign securities and cash or cash equivalents. Cash
equivalents, for purposes of the Fund, are highly liquid instruments, which
include commercial paper, rated A-1+, A-1 or A-2 by S&P or Prime-1 or Prime-2 by
Moody's.
The composition and weighted average maturity of the Government Securities
Fund's portfolio will vary from time to time, based upon a determination of how
best to further the Fund's investment objective. The Fund is expected to have an
average duration of approximately 3 to 6 years. A bond's duration is the
weighted average life of its principal and interest payments and is often
considered a useful indication of its price volatility.
GE SHORT-TERM GOVERNMENT FUND
The investment objective of GE Short-Term Government Fund (the "Short-Term
Government Fund") is to seek a high level of income consistent with prudent
investment management and the preservation of capital. In seeking to achieve its
investment objective, the Fund will invest at least 65% of its total assets in
Government Securities including repurchase agreements secured by Government
Securities. A more complete description of the types of government securities to
be invested in can be found below under "Additional Investments -- Money Market
Instruments."
The Short-Term Government Fund may invest the remainder of its assets in bonds,
convertible bonds, debentures, notes and non-convertible preferred stocks issued
by U.S. and foreign companies; obligations of foreign governments or their
agencies or instrumentalities; mortgage related securities, ARMs, CMOs and
government stripped mortgage related securities and asset-backed and
receivable-backed securities; zero coupon obligations (including zero coupon
municipal obligations); floating and variable rate instruments; and money market
instruments. The Short-Term Government Fund may also invest in depositary
receipts and 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. 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
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securities, if unrated, deemed to be of equivalent quality by GEIM.
The dollar-weighted average maturity of the Short-Term Government Fund's
portfolio securities is anticipated to be not more than three years. Within this
limitation the Fund may purchase individual securities with effective maturities
greater than three years as long as its average maturity remains within this
limit.
GEIM will seek to stabilize share price fluctuation by investing in securities
that are not highly sensitive to interest rate changes. In selecting securities
for the Short-Term Government Fund, GEIM will attempt to maintain the Fund's
overall sensitivity to interest rates in a range similar to the average for
short- to intermediate-term government bonds with maturities of one to four
years. Under normal market conditions, the Fund may invest a substantial portion
of its assets in money market instruments of the types described below under
"Additional Investments -- Money Market Instruments," including short-term
instruments with remaining maturities of one year or less if such investment is
deemed by GEIM to be consistent with the investment objective of the Fund.
GE MONEY MARKET FUND
The investment objective of GE Money Market Fund (the "Money Market Fund") is to
seek a high level of current income consistent with the preservation of capital
and the maintenance of liquidity. In seeking its objective, the Money Market
Fund invests in the following U.S. dollar denominated, short-term money market
instruments: (1) Government Securities; (2) debt obligations of banks, savings
and loan institutions, insurance companies and mortgage bankers; (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."
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MANAGEMENT POLICIES COMMON TO THE FUNDS
================================================================================
In addition to the investment policies described above, each Fund is authorized
to engage in certain strategies and techniques listed below. Some of these
strategies and techniques may be utilized only when a Fund has adopted a
defensive position; others may be employed only to limited degrees; still others
may be available only to hedge or balance other portfolio positions. For
example, during periods when GEIM believes there are unstable market, economic,
political or currency conditions domestically or abroad, GEIM may assume, on
behalf of a Fund, a temporary defensive posture and (i) without limitation hold
cash and/or invest in money market instruments of the types described below
under "Additional Investments -- Money Market Instruments," or (ii) restrict the
securities markets in which the Fund's assets will be invested by investing
those assets in securities markets deemed by GEIM to be conservative in light of
the Fund's investment objective and policies. Under normal circumstances, each
Fund may invest a portion of its total assets in cash and/or money market
instruments for cash management purposes, pending investment in accordance with
the Fund's investment objective and policies and to meet operating expenses. To
the extent that a Fund, other than the Money Market Fund, holds cash or invests
in money market instruments, it may not achieve its investment objective. The
extent to which the following management policies are applicable to certain
Funds is summarized in the tables that follow. Percentage figures refer to the
percentage of a Fund's assets that may be invested in accordance with the
indicated policy.
<TABLE>
<CAPTION>
Purchasing and
Non-Publicly Purchasing and Writing
Reverse Traded and Structured and Writing Securities
Repurchase Repurchase Illiquid Indexed Securities Index
Agreements Agreements Securities Securities Options Options
---------- ---------- ---------- ---------- ------- -------
FUND
<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 Yes 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 Securities Fund Yes Yes Yes Yes Yes Yes
Short-Term Government Fund Yes No Yes Yes Yes Yes
Money Market Fund Yes Yes No No No No
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
Maximum When-
Investment in Maximum Issued and
Futures and Forward Options on Maximum Below-Investment Investment in Delayed
Options on Currency Foreign Investment in Grade Debt Foreign Delivery
Futures Transactions Currencies Debt Securities Securities Securities Securities
------- ------------ ---------- --------------- ---------- ---------- ----------
FUND
<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 of 10% in BB or B by 35%* Yes
25% in BBB by S&P or Ba or B by
S&P, Baa by Moody's or
Moody's or equivalent
equivalent)
Value Fund Yes Yes Yes 35% 5% 25%* 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 B by 30%* Yes
of 25% in BBB S&P or Ba or B by
by S&P or Baa Moody's or
by Moody's or equivalent
equivalent)
Tax-Exempt Fund Yes No No 100% (maximum 5% in debt None Yes
of 10% in BBB downgraded below
by S&P or Baa investment grade
by Moody's or subsequent to
equivalent) purchase
Income Fund Yes Yes Yes 100% (maximum 10% in BB or B by 35%* Yes
of 25% in BBB S&P or Ba or B by
by S&P or Baa Moody's or
by Moody's or equivalent
equivalent)
Government
Securities Fund Yes Yes Yes 100% (maximum None 35%* Yes
of 10% in BBB
by S&P or Baa
by Moody's or
equivalent;
maximum of 25%
in A or lower
by S&P, Moody's
or equivalent)
Short-Term
Government Fund Yes Yes Yes 100% None 35%* Yes
Money Market Fund No No No 100% None 25%* Yes
</TABLE>
- ----------
* This limitation excludes ADRs and U.S. Listed Securities and Nasdaq Traded
Securities.
32
<PAGE>
<TABLE>
<CAPTION>
Debt Securities Floating and Participation
Lending Obligations of of Other Variable Interests in
Portfolio Rule 144A Supranational Depositary Investment Municipal Rate Municipal
Securities Securities Agencies Receipts Funds Leases Instruments Obligations
---------- ---------- -------- -------- ----- ------ ----------- -----------
FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Premier Fund Yes Yes Yes Yes Yes No No * No
U.S. Equity Fund Yes Yes Yes Yes No No No * No
Mid-Cap Fund Yes Yes Yes Yes Yes No No * No
Value Fund Yes Yes Yes Yes Yes No No * No
Global Fund Yes Yes Yes Yes Yes No No * No
International Fund Yes Yes Yes Yes Yes No No * No
Strategic Fund Yes Yes Yes Yes Yes Yes Yes Yes
Tax-Exempt Fund Yes Yes Yes No Yes Yes Yes Yes
Income Fund Yes Yes Yes Yes Yes No Yes No
Government
Securities
Fund Yes Yes Yes Yes Yes No Yes No
Short-Term
Government
Fund Yes Yes Yes Yes Yes No Yes No
Money Market Fund Yes Yes Yes No No No Yes No
</TABLE>
<TABLE>
<CAPTION>
Asset
Backed
Municipal Mortgage Government Securities
Zero Obliga- Custodial Related Stripped and Short
Coupon tion Receipts on Securities, Mortgage Receivable- Sales
Obliga- Compo- Municipal including Related Backed Mortgage Against
tions nents Obligations CMOs Securities Securities Dollar Rolls the Box
----- ----- ----------- ---- ---------- ---------- ------------ -------
FUND
<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 Fund No No No No No No No Yes
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 Securities
Fund Yes No No Yes Yes Yes Yes Yes
Short-Term Government
Fund Yes No No Yes Yes Yes Yes No
Money Market Fund No No No No No No No No
</TABLE>
- ----------
* Excludes commercial paper and notes with variable and floating rates of
interest.
33
<PAGE>
ADDITIONAL INVESTMENTS
================================================================================
Some or all of the Funds may invest in the types of instruments and engage in
the types of strategies described in detail below. These instruments and
strategies may be subject to the risks and special considerations described
below under "Risk Factors and Special Considerations."
The Annual Report contains information regarding relevant market conditions and
investment strategies and techniques pursued by GEIM and is available to
shareholders without charge upon request made to the Trust by calling the toll
free number 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% (5% in the case of the Tax-Exempt Fund) 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 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
34
<PAGE>
ensure that the value is at least equal at all times to the total amount of the
repurchase obligation, including interest. GEIM also monitors, on an ongoing
basis to evaluate potential risks, the creditworthiness of those banks and
dealers with which a Fund enters into repurchase agreements. Income derived by
the Tax-Exempt Fund when engaging in a repurchase agreement is not exempt from
Federal income taxation.
The Value Fund, the Tax-Exempt Fund, the Government Securities Fund and the
Money Market Fund may engage in reverse repurchase agreements, subject to their
investment restrictions. A reverse repurchase agreement, which is considered a
borrowing by a Fund, involves a sale by the Fund of securities that it holds
concurrently with an agreement by the Fund to repurchase the same securities at
an agreed upon price and date. The Value Fund, the Tax-Exempt Fund, the
Government Securities Fund and the Money Market Fund use the proceeds of reverse
repurchase agreements to provide liquidity to meet redemption requests and to
make cash payments of dividends and distributions when the sale of the Fund's
securities is considered to be disadvantageous. Cash, Government Securities or
other liquid assets equal in value to a Fund's obligations with respect to
reverse repurchase agreements are segregated and maintained with the Trust's
custodian or designated sub-custodian.
NON-PUBLICLY TRADED AND ILLIQUID SECURITIES. Each Fund, other than the Money
Market Fund, may invest up to 10% of its assets in non-publicly traded
securities. Non-publicly traded securities are securities that are subject to
contractual or legal restrictions on transfer, excluding for purposes of this
restriction, Rule 144A Securities that have been determined to be liquid by the
Board based upon the trading markets for the securities. In addition, each Fund,
other than the Money Market Fund, may invest up to 15% (10% in the case of the
Tax-Exempt Fund) 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.
- ----------
* As used in this Prospectus, the term "Investment Manager" shall refer to
GEIM or Brown Brothers, as applicable.
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 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
35
<PAGE>
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. for qualification as a regulated investment company. In
addition to writing covered put and call options to generate current income, a
Fund may enter into options transactions as hedges to reduce investment risk,
generally by making an investment expected to move in the opposite direction of
a portfolio position. A hedge is designed to offset a loss on a portfolio
position with a gain on the hedge position; at the same time, however, a
properly correlated hedge will result in a gain on the portfolio position's
being offset by a loss on the hedge position.
SECURITIES INDEX OPTIONS. In seeking to hedge all or a portion of its
investments, each Fund, other than the Money Market Fund, may purchase and write
put and call options on securities indexes listed on U.S. or foreign securities
exchanges or traded in the over-the-counter market, which indexes include
securities held in the Fund's portfolio. The Funds with such option writing
authority may write only covered options. A Fund may also use securities index
options as a means of participating in a securities market without making direct
purchases of securities.
A securities index measures the movement of a certain group of securities by
assigning relative values to the securities included in the index. Options on
securities indexes are generally similar to options on specific securities.
Unlike options on securities, however, options on securities indexes do not
involve the delivery of an underlying security; the option in the case of an
option on a securities index represents the holder's right to obtain from the
writer in cash a fixed multiple of the amount by which the exercise price
exceeds (in the case of a call) or is less than (in the case of a put) the
closing value of the underlying securities index on the exercise date.
A securities index option written by a Fund will be deemed covered in any manner
permitted under the 1940 Act or the rules and regulations thereunder or any
other method determined by the SEC to be permissible. See "Strategies Available
to Some But Not All Funds -- Covered Option Writing" in the Statement of
Additional Information for specific situations where securities index options
will be deemed to be covered by a Fund. If the Fund has written a securities
index option, it may terminate its obligation by effecting a closing purchase
transaction, which is accomplished by purchasing an option of the same series as
the option previously written.
FUTURES AND OPTIONS ON FUTURES. Each Fund, other than the Money Market Fund, may
enter into interest rate, financial and stock or bond index futures contracts or
related options that are traded on a U.S. or foreign exchange or board of trade
approved by the Commodity Futures Trading Commission or in the 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
36
<PAGE>
party of a specified amount of a particular financial instrument (debt security)
at a specified price, date, time and place. Financial futures contracts are
contracts that obligate the holder to deliver (in the case of a futures contract
that is sold) or receive (in the case of a futures contract that is purchased)
at a future date a specified quantity of a financial instrument, specified
securities, or the cash value of a securities index. A municipal bond index
futures contract is based on an index of long-term, tax-exempt municipal bonds
and a corporate bond index futures contract is based on an index of corporate
bonds. Stock index futures contracts are based on indexes that reflect the
market value of common stock of the companies included in the indexes. An index
futures contract is an agreement pursuant to which two parties agree to take or
make delivery of an amount of cash equal to the difference between the value of
the index at the close of the last trading day of the contract and the price at
which the index contract was originally written. An option on an interest rate
or index futures contract generally gives the purchaser the right, in return for
the premium paid, to assume a position in a futures contract at a specified
exercise price at any time prior to the expiration date of the option.
FORWARD CURRENCY TRANSACTIONS. Each Fund, other than the Tax-Exempt Fund and the
Money Market Fund, may hold currencies to meet settlement requirements for
foreign securities and each Fund, other than the Premier Fund, the Tax-Exempt
Fund and the Money Market Fund, may engage in currency exchange transactions to
protect against uncertainty in the level of future exchange rates between a
particular foreign currency and the U.S. dollar or between foreign currencies in
which the Fund's securities are or may be denominated. No Fund will enter into
forward currency transactions for speculative purposes. Forward currency
contracts are agreements to exchange one currency for another at a future date.
The date (which may be any agreed-upon fixed number of days in the future), the
amount of currency to be exchanged and the price at which the exchange will take
place will be negotiated and fixed for the term of the contract at the time that
a Fund enters into the contract. Forward currency contracts (1) are traded in a
market conducted directly between currency traders (typically, commercial banks
or other financial institutions) and their customers, (2) generally have no
deposit requirements and (3) are typically consummated without payment of any
commissions. A Fund, however, may enter into forward currency contracts
requiring deposits or involving the payment of commissions. To assure that a
Fund's forward currency contracts are not used to achieve investment leverage,
cash or other liquid assets will be segregated with the Trust's custodian or a
designated sub-custodian in an amount at all times equal to or exceeding the
Fund's commitment with respect to the contracts.
Upon maturity of a forward currency contract, a Fund may (1) pay for and receive
the underlying currency, (2) negotiate with the dealer to roll over the contract
into a new forward currency contract with a new future settlement date or (3)
negotiate with the dealer to terminate the forward contract into an offset with
the currency trader providing for the Fund's paying or receiving the difference
between the exchange rate fixed in the contract and the then current exchange
rate. The Trust may also be able to negotiate such an offset on behalf of a Fund
prior to maturity of the original forward contract. No assurance can be given
that new forward contracts or offsets will always be available to a Fund.
In hedging a specific portfolio position, a Fund may enter into a forward
contract with respect to either the currency in which the position is
denominated or another currency deemed appropriate by the Investment Manager. A
Fund's exposure with respect to forward currency contracts is limited to the
amount of the Fund's aggregate investments in instruments denominated in foreign
currencies.
OPTIONS ON FOREIGN CURRENCIES. Each Fund, other than the Premier Fund, the
Tax-Exempt Fund and the Money Market Fund, may purchase and write put and call
options on foreign currencies for the purpose of hedging against declines in the
U.S. dollar value of foreign currency denominated securities and against
increases in the U.S. dollar cost of securities to be acquired by the Fund. The
Funds with such option writing authority may write only covered options. No Fund
will enter into a transaction involving options on foreign currencies for
speculative purposes. Options on foreign currencies to be written or purchased
by a Fund are traded on U.S. or foreign exchanges or in the over-the-counter
market. The Trust will limit the premiums paid on a Fund's options on foreign
currencies to 5% of the value of the Fund's total assets.
INVESTMENT RESTRICTIONS
The Trust has adopted certain fundamental investment restrictions with respect
to each Fund that may not be changed without approval of a majority of the
Fund's outstanding voting securities (as defined in the 1940 Act). Included
among those fundamental restrictions are those listed below.
1. No Fund may borrow money, except that the Value Fund, the Tax-Exempt Fund,
the Government Securities Fund and the Money Market Fund may enter into reverse
repurchase agreements (subject to a limit of 33 1/3% in the case of the
Tax-Exempt Fund), and except that each Fund may borrow from banks for temporary
or emergency (not leveraging) purposes, including the meeting of redemption
requests and cash payments of dividends and distributions that might otherwise
require the untimely disposition of securities, in an amount not to exceed 33
1/3% (10% in the case the Tax-Exempt Fund) of the value of the Fund's total
assets (including the amount borrowed) valued at market less liabilities (not
including the amount borrowed) at the time the borrowing is made.
37
<PAGE>
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 (in the case of the Tax-Exempt Fund, this policy is
non-fundamental).
2. No Fund may purchase securities (other than Government Securities) of any
issuer if, as a result of the purchase, more than 5% of the Fund's total assets
would be invested in the securities of the issuer, except that (a) up to 25% of
the value of the total assets of each Fund, other than the Tax-Exempt Fund and
the Money Market Fund, may be invested without regard to this limitation and (b)
this limitation is not applicable to the investment by the Tax-Exempt Fund in
securities fully collateralized by Government Securities. 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. For purposes
of this restriction, the term industry will be deemed to include (a) the
government of any country other than the United States, but not the U.S.
Government and (b) all supranational organizations. In addition, securities held
by the Money Market Fund that are issued by domestic banks are excluded from
this restriction. For purposes of this investment restriction, the Trust may use
the industry classifications reflected by the S&P 500 Index, if applicable at
the time of determination. For all other portfolio holdings, the Trust may use
the Directory of Companies Required to File Annual Reports with the SEC and
Bloomberg Inc. In addition, the Trust may select its own industry
classifications, provided such classifications are reasonable.
Certain other investment restrictions adopted by the Trust with respect to the
Funds are described in the Statement of Additional Information.
RISK FACTORS AND SPECIAL CONSIDERATIONS
Investing in the Funds involves risk factors and special considerations, such as
those described below:
GENERAL. GEIM's principal officers, directors, and portfolio managers serve in
similar capacities with respect to General Electric Investment Corporation
("GEIC", and together with GEIM collectively referred to as "GE Investments"),
which like GEIM is a wholly-owned subsidiary of General Electric Company ("GE").
GEIM and GEIC collectively provide investment management services to various
institutional accounts with total assets, as of September 30, 1997, in excess of
$69 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
lever-
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aged and may not have more traditional methods of financing available to them,
so that their ability to service their debt obligations during an economic
downturn or during sustained periods of rising interest rates may be impaired.
The risk of loss due to default by these issuers is significantly greater
because low-rated securities generally are unsecured and frequently are
subordinated to the prior payment of senior indebtedness. A Fund may incur
additional expenses to the extent that it is required to seek recovery upon a
default in the payment of principal or interest on its portfolio holdings. The
existence of limited markets for low-rated securities may diminish the Trust's
ability to obtain accurate market quotations for purposes of valuing the
securities held by a Fund and calculating the Fund's net asset value.
NON-PUBLICLY TRADED AND ILLIQUID SECURITIES. Non-publicly traded securities may
be less liquid than publicly traded securities. Although these securities may be
resold in privately negotiated transactions, the prices realized from these
sales could be less than those originally paid by a Fund. In addition, companies
whose securities are not publicly traded are not subject to the disclosure and
other investor protection requirements that may be applicable if their
securities were publicly traded. A Fund's investments in illiquid securities are
subject to the risk that should the Fund desire to sell any of these securities
when a ready buyer is not available at a price that the Investment Manager deems
representative of their value, the value of the Fund's net assets could be
adversely affected.
REPURCHASE AND REVERSE REPURCHASE AGREEMENTS. A Fund entering into a repurchase
agreement will bear a risk of loss in the event that the other party to the
transaction defaults on its obligations and the Fund is delayed or prevented
from exercising its rights to dispose of the underlying securities. The Fund
will be, in particular, subject to the risk of a possible decline in the value
of the underlying securities during the period in which the Fund seeks to assert
its right to them, the risk of incurring expenses associated with asserting
those rights and the risk of losing all or a part of the income from the
agreement.
A reverse repurchase agreement involves the risk that the market value of the
securities retained by a Fund may decline below the price of the securities the
Fund has sold but is obligated to repurchase under the agreement. In the event
the buyer of securities under a reverse repurchase agreement files for
bankruptcy or becomes insolvent, a Fund's use of the proceeds of the agreement
may be restricted pending a determination by the party, or its trustee or
receiver, whether to enforce the Fund's obligation to repurchase the securities.
WARRANTS. Because a warrant, which is a security permitting, but not obligating,
its holder to subscribe for another security, does not carry with it the right
to dividends or voting rights with respect to the securities that the warrant
holder is entitled to purchase, and because a warrant does not represent any
rights to the assets of the issuer, a warrant may be considered more speculative
than certain other types of investments. In addition, the value of a warrant
does not necessarily change with the value of the underlying security and a
warrant ceases to have value if it is not exercised prior to its expiration
date. The investment by a Fund in warrants valued at the lower of cost or
market, may not exceed 5% of the value of the Fund's net assets. Warrants
acquired by a Fund in units or attached to securities may be deemed to be
without value.
SMALLER COMPANIES. Smaller companies in which the Premier Fund and the Mid-Cap
Fund may invest may involve greater risks than large, established issuers. Such
smaller companies may have limited product lines, markets or financial resources
and their securities may trade less frequently and in more limited volume than
the securities of larger or more established companies. As a result, the prices
of smaller companies may fluctuate to a greater degree than the prices of
securities of other issuers.
INVESTMENT IN FOREIGN SECURITIES. Investing in securities issued by foreign
companies and governments, including securities issued in the form of depositary
receipts, involves considerations and potential risks not typically associated
with investing in obligations issued by the U.S. Government and U.S.
corporations. Less information may be available about foreign companies than
about U.S. companies, and foreign companies generally are not subject to uniform
accounting, auditing and financial reporting standards or to other regulatory
practices and requirements comparable to those applicable to U.S. companies. The
values of foreign investments are affected by changes in currency rates or
exchange control regulations, restrictions or prohibitions on the repatriation
of foreign currencies, application of foreign tax laws, including withholding
taxes, changes in governmental administration or economic or monetary policy (in
the United States or abroad) or changed circumstances in dealings between
nations. Costs are also incurred in connection with conversions between various
currencies. In addition, foreign brokerage commissions are generally higher than
those charged in the United States and foreign securities markets may be less
liquid, more volatile and less subject to governmental supervision than in the
United States. Investments in foreign countries could be affected by other
factors not present in the United States, including expropriation, confiscatory
taxation, lack of uniform accounting and auditing standards, limitations on the
use or removal of funds or other assets (including the withholding of
dividends), and potential difficulties in enforcing contractual obligations, and
could be subject to extended clearance and settlement periods.
CURRENCY EXCHANGE RATES. A Fund's share value may change significantly when the
currencies, other than the U.S. dollar, in which the Fund's portfolio
investments are denominated, strengthen or weaken against the U.S. dollar.
Currency exchange rates generally are determined by the forces of supply and
demand in the
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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
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
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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 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, debt obligations 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
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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, 1997 and September
30, 1996, the actual portfolio turnover rates of the following Funds were,
respectively: the U.S. Equity Fund -- 38% and 49%, the Global Fund -- 70% and
46%, the International Fund -- 51% and 36%, the Strategic Fund -- 106% and 93%,
the Income Fund -- 258% and 275% and the Short-Term Government Fund -- 265% and
201%. For the fiscal periods ended September 30, 1997 and October 31, 1996, the
actual portfolio turnover rates of the following Funds, were, respectively: the
Mid-Cap Fund -- 139% and 41%, the Value Fund -- 131% and 100%, the Tax-Exempt
Fund -- 13% and 6% and the Government Securities Fund -- 110% and 334%. For the
period from December 31, 1996 to September 30, 1997, the actual portfolio
turnover rate for the Premier Fund was 17%. 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
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BOARD OF TRUSTEES
Overall responsibility for management and supervision of the Funds rests with
the Board. The Trustees approve all significant agreements between the Trust and
the persons and companies that furnish services to the Funds, including
agreements with the Funds' investment adviser and administrator, distributor,
custodian and transfer agent. The day-to-day operations of the Funds have been
delegated to GEIM. The Statement of Additional Information contains background
information regarding each Trustee and executive officer of the Trust.
INVESTMENT ADVISER AND ADMINISTRATOR
GEIM, located at 3003 Summer Street, P.O. Box 7900 Stamford, Connecticut 06904,
serves as the investment adviser and administrator of each Fund. GEIM, which was
formed under the laws of Delaware in 1988, is a wholly-owned subsidiary of GE
and is a registered investment adviser under the Investment Advisers Act of
1940, as amended.
GEIM has served as investment adviser of the U.S. Government Money Market Fund
and U.S. Treasury Money Market Fund of Financial Investors Trust since March
1997, and the investment portfolios of GE Investment Funds, Inc., which are
currently offered to insurance company separate accounts that fund certain
variable annuity and variable life contracts, since May 1997. GEIM has also
served as the investment adviser to the GE Institutional Funds, which are
offered to institutional investors, since their inception in November 1997. GEIM
has served as sub-investment adviser to PaineWebber Global Equity Fund of
PaineWebber Investment Trust since its inception in 1991, the Global Growth
Portfolio of PaineWebber Series Trust and the Global Small Cap Fund Inc. since
March 1995, the International Equity and the U.S. Equity Portfolios of WRL
Series Fund, Inc. since January 1997 and the International Equity Portfolio of
IDEX Series Fund since February 1997. GEIM's principal officers and directors
serve in similar capacities with respect to GEIC, which like GEIM is a
wholly-owned subsidiary of GE, and which currently acts as the investment
adviser of Elfun Global Fund, Elfun Trusts, Elfun Income Fund, Elfun Money
Market Fund, Elfun Tax-Exempt Income Fund and Elfun Diversified Fund
(collectively, the "Elfun Funds"). The first Elfun Fund, Elfun Trusts, was
established in 1935. Investment in the Elfun Funds is generally limited to
regular and senior members of the Elfun Society, whose regular members are
selected from active employees of GE and/or its majority-owned subsidiaries, and
whose senior Society members are former members who have retired from those
companies. In addition, under the General Electric Savings and Security Program,
GEIC serves as investment adviser to the GE S&S Program Mutual Fund and GE S&S
Long Term Interest Fund. GEIC also serves as the investment adviser to the
General Electric Pension Trust. Through GE Investments and its predecessors, GE
has over 70 years of investment management experience. GEIM and GEIC
collectively provide investment management services to various institutional
accounts with total assets, as of September 30, 1997, in excess of $69 billion,
of which more than $13 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, GEIM has delegated to Brown Brothers its
investment advisory responsibilities with respect to the Tax-Exempt Fund.
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Accordingly, Brown Brothers will periodically consult with GEIM regarding
matters pertaining to the Tax-Exempt Fund, including market strategy and
portfolio characteristics such as average weighted maturity and the quality of
the Fund's investments. As a Fund's administrator, GEIM furnishes the Trust with
statistical and research data, clerical help and accounting, data processing,
bookkeeping, internal auditing services and certain other services required by
the Trust; prepares reports to the shareholders of the Fund; and assists in the
preparation of tax returns and reports to and filings with the SEC and state
securities law authorities. GEIM also pays the salaries of all personnel
employed by both it and the Trust and provides each Fund with investment
officers who are authorized by the Board to execute purchases and sales of
securities on behalf of the Fund. The Funds pay GEIM fees for advisory and
administration services provided by GEIM to the Funds that are accrued daily and
paid monthly at the following annual rates of the value of the Funds' average
daily net assets: the Premier Fund -- .60%; the U.S. Equity Fund -- .40%, the
Mid-Cap Fund -- .60%, the Value Fund -- .55%, the Global Fund -- .75%, the
International Fund -- .80%, the Strategic Fund -- .35%, the Tax-Exempt Fund --
.35%, the Income Fund -- .35%, the Government Securities Fund -- .40%, the
Short-Term Government Fund -- .30% and the Money Market Fund -- .25%.
Although investment decisions for each Fund are made independently from those of
the other accounts managed by GEIM, investments of the type a Fund may make may
also be made by those other accounts. When a Fund and one or more other accounts
managed by GEIM are prepared to invest in, or desire to dispose of, the same
security, available investments or opportunities for sales will be allocated in
a manner believed by GEIM to be equitable to each. In some cases, this procedure
may adversely affect the price paid or received by a Fund or the size of the
position obtained or disposed of by a Fund.
The agreements governing the investment advisory services furnished to the Trust
by GEIM provide that, if GEIM ceases to act as the investment adviser to the
Trust, at GEIM's request, the Trust's license to use the initials "GE" will
terminate and the Trust will change the name of the Trust and the Funds to a
name not including the initials "GE."
SUB-INVESTMENT ADVISER (TAX-EXEMPT FUND ONLY)
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 Tax-Exempt Fund under a
sub-investment advisory contract with GEIM. Brown Brothers managed total assets
in excess of $27.4 billion as of September 30, 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 will receive
from GEIM a fee, payable monthly, based upon the Tax-Exempt Fund's average daily
net assets equal to an annual rate of .20% of the first $25 million; .175% of
the next $25 million; .15% of the next $50 million; and .125% of amounts in
excess of $100 million.
PORTFOLIO MANAGEMENT
Eugene K. Bolton is responsible for the overall management of the domestic
equity investment process at GE Investments and leads a team of portfolio
managers for the U.S. Equity Fund. He has served in that capacity since the
commencement of the Funds' operations. Mr. Bolton has more than 13 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
Strategic Fund. Mr. Carlson has served those Funds since the commencement of
their operations. He has more than 15 years of investment experience and has
held positions with GE Investments since 1982. Mr. Carlson is currently a Senior
Vice President of GE Investments.
Peter J. Hathaway is the Portfolio Manager of the Value Fund and has served in
that capacity since the commencement of the Fund's operations. He has more than
37 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 is also
responsible for the management of the international equity-related investments
of the Strategic Fund and has served in that capacity since September 1997. He
has more than 19 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.
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Robert A. MacDougall leads a team of portfolio managers for the Government
Securities Fund, the Income Fund, the Short-Term Government Fund and the Money
Market 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 each of these Funds since the commencement of their operations. He has
more than 14 years investment experience and has held positions with GE
Investments since 1986. Mr. MacDougall is currently a Director and Executive
Vice President of GE Investments.
Elaine G. Harris 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 14 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 is Co-Portfolio Manager of the Global Fund and has served the
Fund in that capacity since September 1997. Mr. Solecki has more than seven
years of investment experience and has held positions with GE Investments since
1990. Mr. Solecki is currently a Vice President of GE Investments.
Barbara A. Brinkley, a Manager of Brown Brothers and a member of its U.S. Bond
Policy Group and its Fixed Income Credit Committee, is the Portfolio Manager of
the Tax-Exempt Fund and has served in that capacity since September 1997. 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.
Investment personnel at GEIM and Brown Brothers may engage in securities
transactions for their own accounts each pursuant to a code of ethics that
establishes procedures for personal investing and restricts certain
transactions.
EXPENSES OF THE FUNDS
The Money Market Fund, as well as each Class of the Participant Funds, bears its
own expenses, which generally include all costs not specifically borne by GEIM.
Included among the Money Market Fund's expenses and/or the Class' expenses are:
costs incurred in connection with the Class' and/or the Trust's organization;
investment advisory, administration and distribution and shareholder servicing
fees; fees paid to members of the Board who are not affiliated with GEIM or any
of its affiliates; fees for necessary professional and brokerage services; fees
for any pricing service; the costs of custody, transfer agency and recordkeeping
services; the costs of regulatory compliance and membership in the mutual fund
industry's association; a portion of the costs associated with maintaining the
Trust's legal existence; and the costs of corresponding with shareholders of the
Funds.
The Trust has adopted Shareholder Servicing and Distribution Plans (the "Plans")
pursuant to Rule 12b-1 under the 1940 Act with respect to each Participant Fund.
Under the Plans, the Trust will pay GEIM, with respect to the Class A and Class
B shares of a Participant Fund, fees for shareholder and distribution services
provided to those Classes of the Participant Fund, and with respect to the Class
C shares of a Participant Fund, the Trust will pay GEIM a shareholder servicing
fee, each at the annual rates set out above under "The Multiple Distribution
System" and as further described below under "Purchase of Shares." Fees to be
paid with respect to the Funds under the Plans will be calculated daily and paid
monthly by the Trust.
The annual fees payable with respect to each Class of a Participant Fund are
intended to compensate GEIM or enable GEIM to compensate other persons ("Service
Providers") for providing ongoing servicing and/or maintenance of the accounts
of shareholders of the Participant Fund ("Shareholder Services") and to
compensate GEIM, or enable GEIM to compensate Service Providers, including any
distributor of shares of the Participant Fund, for providing services that are
primarily intended to result in, or that are primarily attributable to, the sale
of shares of the Participant Fund ("Selling Services"). Shareholder Services
means all forms of shareholder liaison services, including, among other things,
one or more of the following: providing Class A, Class B or Class C shareholders
of a Participant Fund with (i) information on their investments; (ii) general
information regarding investing in mutual funds; (iii) periodic newsletters
containing materials relating to the Participant Fund or to investments in
general in mutual funds; (iv) periodic financial seminars designed to assist in
the education of shareholders with respect to mutual funds generally and the
Participant Fund specifically; (v) access to a telephone inquiry center relating
to the Participant Fund; and other similar services not otherwise required to be
provided by the Trust's custodian or transfer agent. Selling Services include,
but are not limited to: the printing and distribution to prospective investors
in the Participant Fund of prospectuses and statements of additional information
that are used in connection with sales of Class A and Class B shares of the
Participant Fund; the preparation, including printing, and distribution of sales
literature and media advertisements relating to the Class A or Class B shares of
the Participant Fund; and distributing Class A or Class B shares of the
Participant Fund. In providing compensation for Selling Services in accordance
with the Plans, GEIM is expressly authorized (1) to make, or cause to
44
<PAGE>
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, including investments in Regular Individual Retirement
Accounts, Roth Individual Retirement Accounts and Education Individual
Retirement Accounts (collectively, "IRAs"), is $500 and the minimum for
subsequent investments is $100. The minimum for any purchase by payroll
deduction, provided the investor has made a minimum initial investment of $500,
is $25 per month. Purchase orders for shares of a Fund will be accepted by the
Trust only on a day on which the Fund's net asset value is calculated. See "Net
Asset Value" below. The Trust may in its discretion reject any order for the
purchase of shares of a Fund. For the convenience of shareholders and in the
interest of economy, the Trust will not issue physical certificates representing
shares in any Fund.
Shares of the Funds may be purchased directly from the Distributor or through
authorized broker-dealers, financial institutions or investment advisers which
have entered into sales agreements with the Distributor ("Authorized Firms"), as
follows:
THROUGH AUTHORIZED FIRMS. Initial purchases of shares through Authorized Firms
should be made with the assistance of a sales representative (a "Sales
Representative"). Subsequent investments may be made with a Sales Representative
or, depending on the type of account, mailed directly to the Trust. When making
subsequent investments directly to the Trust, make your check payable to GE
Funds and clearly indicate your account number on the check.
Initial or subsequent purchases of shares through Authorized Firms can also be
made by Federal Funds wire, transferred along with proper instructions directly
to your account. Before an initial wire transfer can be accepted, an account
must be established for you. See your Sales Representative for further
instructions. Your financial institution may charge a fee for wiring to your
account.
If you purchase shares through a Sales Representative, your Authorized Firm will
be responsible for transmitting your order promptly to State Street. You begin
to earn income as of the first business day following the day State Street has
received payment for your order. Orders will be accepted only upon receipt by
State Street of all documentation required to be submitted in connection with
such order. If you purchase or redeem your shares through an Authorized Firm,
you may be subject to service fees imposed by that Firm.
Other investors not being assisted by a Sales Representative of an Authorized
Firm may purchase shares in a manner described below:
BY MAIL. Investors may send a check made payable to GE Funds in U.S. currency
along with account information and instructions to the Trust, at:
GE Funds
P.O. Box 419631
Kansas City, MO 64141-6631 For overnight package delivery:
GE Funds
c/o National Financial Data Services Inc.
1004 Baltimore
Kansas City, MO 64105
Investors should send all account information and instructions that are
accompanied by a check payable to GE Funds in payment for shares to the Trust.
Third-party checks or endorsed checks are not accepted by the Trust for payment
of shares of a Fund. A purchase of shares of a Fund will be effected in
accordance with a completed order at the Fund's net asset value next determined
after receipt. If the check used for the purchase does not clear, the Trust will
cancel the purchase and the investor may be liable for losses or fees incurred.
Checks are accepted subject to collection at full face value in U.S. funds and
must be drawn on a U.S. bank. Investors may obtain an account application
necessary to open an account by telephoning the Trust at the applicable toll
free number listed on the back cover of the Prospectus or by writing to the
Trust, at:
45
<PAGE>
GE Funds
P.O. Box 120065
Stamford, CT 06912-0065
For overnight package delivery:
GE Funds
c/o National Financial Data Services Inc.
1004 Baltimore
Kansas City, MO 64105
BY WIRE. Purchase orders for shares of a Fund may be transmitted by wire. Wire
orders will not be accepted until a completed account application in proper form
has been received by the Trust at the address set forth above. After the Trust
receives an application, an investor should then wire Federal funds (minimum
$1,000) to: State Street Bank and Trust Company (ABA #0110-0002-8; DDA No.
9904-641-9) For: [Name of Fund] Account of: [Investor's name, address and
account number].
If a wire is received by the close of regular trading on the New York Stock
Exchange ("NYSE") (currently 4:00 p.m. New York time), the shares will be priced
according to the net asset value of the Fund on that day. If a wire is received
after the close of regular trading on the NYSE, the shares will be priced as of
the time the Fund's net asset value per share is next determined. Payment for
orders that are not accepted will be returned to the prospective investor
promptly.
BY DIRECT DEPOSIT PRIVILEGE. The Trust offers a Direct Deposit Privilege (the
"Privilege"), which enables investors to purchase shares of either the Money
Market Fund or of a particular Class of a Participant Fund (minimum of $25) by
having Federal salary, Social Security, or certain veterans', military or other
payments from the U.S. Government, or a GE employee's payroll check,
automatically deposited into their Fund account. An investor must also meet the
minimum initial investment criteria set forth above. An investor should consult
his or her employer for instructions. Death or legal incapacity will terminate
the Privilege for an investor. An investor may elect at any time to terminate
participation by notifying in writing the appropriate Federal agency. Further,
the Trust may terminate participation upon 30 days' notice to the investor.
BY PAYROLL SAVINGS PLAN. The Payroll Savings Plan offered by the Trust permits
an investor to purchase shares of either the Money Market Fund or of a
particular Class of a Participant Fund (minimum of $25) automatically on a
regular basis, provided the investor has met the minimum initial investment
criteria set forth above. Depending upon the direct deposit program established
with an investor's employer, part or all of such investor's paycheck may be
transferred to an existing account electronically at each pay period (through
the Automated Clearing House). To establish a Payroll Savings Plan account, an
authorization form must be sent to the Trust at:
GE Funds
P.O. Box 120065
Stamford, CT 06912-0065
For overnight package delivery:
GE Funds
c/o National Financial Data Services Inc.
1004 Baltimore
Kansas City, MO 64105
The necessary authorization form may be obtained from the Trust. Investors may
change the amount of purchase or cancel the authorization by written or
telephonic notification to the Trust. The Trust may modify or terminate the
Payroll Savings Plan at any time or charge a service fee. No such fee currently
is contemplated.
BY AUTOMATIC INVESTMENT PLAN. Investors may arrange to make purchases of shares
automatically on a monthly basis by electronic funds transfer (minimum $25 per
transaction) from the checking, NOW, bank money market deposit account or credit
union account designated by the investor if their bank or credit union is a
member of an automated clearing house or by preauthorized checks drawn on their
bank or credit union account. Investors must also meet the minimum initial
investment criteria set forth above. Shareholders will receive confirmations for
transactions and a debit entry will appear on the bank or credit union
statement. To make arrangements for automatic monthly investments, call the
Trust at the applicable toll free number listed on the back cover of the
Prospectus for further information. Investors may change the purchase amount or
terminate this privilege at any time. The Trust may modify or terminate this
privilege at any time or charge a service fee; however, no service fee is
currently contemplated.
THE MULTIPLE DISTRIBUTION SYSTEM
As described above, under the Multiple Distribution System, Participant Funds
offer different methods of purchasing shares, enabling investors to choose the
Class that best suits their needs given the amount of purchase and intended
length of investment. The Distributor and other persons remunerated on the basis
of sales of shares may receive different levels of compensation for selling one
Class of shares over another.
When purchasing shares of a Participant Fund, investors are required to specify
whether the purchase is for Class A, Class B, Class C or Class D shares, as
described below. The Money Market Fund does not participate in the Multiple
Distribution System.
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:
46
<PAGE>
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 5.75% 6.10% 5.25%
$50,000 but less than $100,000 4.25 4.44 3.75
$100,000 but less than $250,000 3.25 3.36 2.75
$250,000 but less than $500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.55
$1,000,000 or more 0 0 +
GE Tax-Exempt Fund, GE Government Securities Fund
and GE Fixed Income Fund
Maximum Dealers'
Total Front-End Sales Charge Reallowance*
---------------------------- ------------
As a Percentage
As a Percentage of As a Percentage
Amount of Purchase at of Net Amount of
Offering Price** Offering Price Invested Offering Price
---------------- -------------- -------- --------------
<S> <C> <C> <C>
Less than $100,000 4.25% 4.44% 3.75%
$100,000 but less than $250,000 3.25 3.36 2.75
$250,000 but less than $500,000 2.50 2.56 2.00
$500,000 but less than $1,000,000 2.00 2.04 1.55
$1,000,000 or more 0 0 ++
</TABLE>
GE Short-Term Government Fund
<TABLE>
<CAPTION>
Maximum Dealers'
Total Front-End Sales Charge Reallowance*
---------------------------- ------------
As a Percentage
As a Percentage of As a Percentage
Amount of Purchase at of Net Amount of
Offering Price** Offering Price Invested Offering Price
---------------- -------------- -------- --------------
<S> <C> <C> <C>
Less than $100,000 2.50% 2.56% 2.25%
$100,000 but less than $250,000 2.25 2.30 2.00
$250,000 but less than $500,000 1.75 1.78 1.50
$500,000 but less than $1,000,000 1.25 1.27 1.00
$1,000,000 or more 0 0 ++
</TABLE>
- ----------
* The staff of the SEC has indicated that dealers who receive more than 90%
of the sales charge may be considered underwriters.
** 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.
47
<PAGE>
No sales charge is imposed on Class A shares purchased through reinvestment of
dividends or capital gains distributions. In addition, Class A shares are
offered without any sales charge with respect to: (1) purchases of $1 million or
more of Class A shares by an investor, including an investment by a Class D
eligible employee retirement plan that seeks the additional services provided to
Class A Shareholders ("Class A Retirement Plans"), (2) all purchases by Class A
Retirement Plans which have 250 or more eligible employees, (3) all purchases by
Class A Retirement Plans, including Plans purchasing less than $1 million of
Class A shares of the Funds and which have less than 250 employees if such Plans
purchase Class A shares exclusively through the Distributor and not through an
Authorized Firm, (4) all purchases directly by individuals who are not Class C
eligible who may otherwise invest in the Funds through defined contribution
plans currently invested in the Funds, and who purchase shares exclusively
through the Distributor and not through an Authorized Firm, (5) all purchases by
officers, directors, employees and registered representatives of Authorized
Firms which have entered into sales agreements with the Distributor or financial
institutions through which shares of the Funds are being offered or made
available for sale, (6) all purchases made through certain broker-dealers,
financial institutions, recordkeepers and other financial intermediaries who
charge a management, consulting or other fee for their services (each, a
"Financial Intermediary," collectively, the "Financial Intermediaries") and who
have an agreement with or among the Trust, GEIM or the Distributor, requiring
the Trust, GEIM or the Distributor to compensate the Financial Intermediary for
administrative, subaccounting, transfer agency and/or other services, (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 IRA 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 IRA 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 5.75%
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 completing the appropriate section of the account application and by
fulfilling a Letter of Intent ("LOI"), 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 LOI). By marking the LOI section on the account application
and by signing the account application, the investor indicates that he or she
understands and agrees to the terms of the LOI and is bound by the provisions
described below.
Each purchase of shares of a Participant Fund made during the 13-month period
will be made subject to the sales charge applicable to a single transaction of
the total dollar amount indicated by the LOI, as described in the tables set out
above. It is the investor's responsibility at the time of purchase to specify
the account numbers that should be considered in determining the appropriate
sales charge and to indicate that the purchase is pursuant to an LOI. The
applicable sales charge may be further reduced pursuant to the "right of
accumulation" described above provided State Street is advised of all other
accounts at the time of the investment. Shares acquired through reinvestment of
dividends and capital gains distributions will not be applied to the LOI. At any
time during the 13-month period after meeting the original obligation, an
investor may revise his or her intended investment amount upward by submitting a
written and signed request. In such event, all subsequent purchases will be
treated as a new LOI (including escrow of additional Fund shares) except that
the original expiration date of the LOI will remain unchanged. Purchases made
within 90 days before signing an LOI may be applied toward completion of the LOI
provided State Street is advised of the date of the first purchase to be applied
toward the completion of the LOI. The LOI effective date will be the date of the
first purchase within the 90-day period. Purchases made more than 90 days before
signing an LOI will be applied toward completion of the LOI based on the value
of the shares purchased calculated at the offering price on the effective date
of the LOI.
Out of the initial purchase (or subsequent purchases, if necessary), State
Street will hold in escrow 5.75% of the amount specified in the LOI in the form
of Fund
48
<PAGE>
shares. All dividends and capital gains on the escrowed shares will be credited
to the investor's account. All shares purchased, including those escrowed, will
be registered in the investor's name. If the total investment specified under
the LOI is completed within the 13-month period, the escrowed shares will be
promptly released. Assuming completion of the minimum investment under the LOI,
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 LOI.
Additionally, if the total number of shares purchased within the period exceeds
the amount specified in the LOI, 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. If the intended investment is not completed, 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 the Distributor does not receive such unpaid sales
charge within 20 days, the investor, by marking the LOI section on the account
application, irrevocably constitutes and appoints State Street as his or her
attorney-in-fact to redeem any and all escrowed shares sufficient to cover the
unpaid sales charge. Full shares and any cash proceeds for a fractional share
remaining after such redemptions will be released from escrow.
If at any time before completing the LOI, an investor wishes to cancel the
agreement, an investor must give written notice to the Distributor. The
Distributor may withdraw an investor's LOI privilege for future purchases if an
investor requests State Street to liquidate or transfer beneficial ownership of
Fund shares. An LOI 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.
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 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 a defined contribution plan sponsored by GE or
an affiliate of GE 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 "Redemption 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; 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 Internal Revenue Code of 1986, as amended (the "Code")), plans
estab-
49
<PAGE>
lished 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; investment companies not managed or sponsored by
GEIM or any affiliate of GEIM; and Financial Intermediaries that have an
agreement with the Trust, GEIM or the Distributor which does not require the
Trust, GEIM or the Distributor to compensate the Financial Intermediary for its
services for initial purchases by their clients or customers equal to or
exceeding $250,000 per Participant Fund (the "Minimum Purchase Requirement") and
any subsequent purchases by such clients or customers who have already met the
Minimum Purchase Requirement ("Institutional Investors"). The Minimum Purchase
Requirement for clients or customers of Financial Intermediaries is waived for
purchases by certain non-qualified deferred compensation plans (such as
supplemental employee retirement plans) and tax-exempt customers, including, but
not limited to, defined benefit or defined contribution plans meeting the
requirements of Section 401(a) of the Code (including 401(k) plans), retirement
plans for self-employed individuals, plans established under Section 403(b) of
the Code and plans meeting the requirements of Section 457(b) of the Code. IRAs,
simplified employee pension IRAs ("SEP-IRAs"), salary reduction SEP-IRAs and
Keogh plans are only eligible to purchase Class D shares through Financial
Intermediaries. 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."
PURCHASES THROUGH INTERMEDIARIES
Class A and Class D shares of each Participant Fund and shares of GE Money
Market Fund are available to clients and customers of Financial Intermediaries
as provided above. Certain features of each Fund, such as initial and subsequent
investment minimums, redemption fees and certain operational procedures, may be
modified or waived subject to agreement with or among the Trust, GEIM or the
Distributor and such Financial Intermediaries. Financial Intermediaries may
impose transaction or administrative charges or other direct fees, which charges
or fees would not be imposed if Fund shares are purchased or redeemed directly
from the Trust. Therefore, a client or customer should contact their investment
adviser and/or Financial Intermediary acting on his or her behalf concerning the
fees (if any) charged in connection with a purchase or redemption of Fund shares
and should read this Prospectus in light of the terms governing his or her
account with the Financial Intermediary. Financial Intermediaries will be
responsible for promptly reporting client or customer purchase and redemption
orders to the Trust in accordance with their agreements with their clients or
customers and their agreements with or among the Trust, GEIM or the Distributor.
The Trust has authorized certain Financial Intermediaries and their authorized
designees to accept purchase and redemption orders on behalf of the Trust. The
Trust is deemed to have received a purchase or redemption order when a Financial
Intermediary or its authorized designee accepts the order from its client or
customer. Orders received in such a manner will be priced according to the net
asset value of the Fund next determined after the order is received by the
Financial Intermediary or its authorized designee.
SUBSEQUENT PURCHASE OF SHARES
Investors may purchase additional shares of a Fund at any time in the manner
outlined above. All payments should clearly indicate the investor's account
number.
PURCHASES IN KIND
The Trust may, in its discretion, require that proposed investments of $10
million or more in a particular Class of a Participant Fund, or in the Money
Market Fund, be made in kind. This requirement is intended to minimize the
effect of transaction costs on existing shareholders of a Fund. Such transaction
costs, which may include broker's commissions and taxes or governmental fees,
domestic or foreign, as 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.
REINSTATEMENT PRIVILEGE
Participant Funds also offer a reinstatement privilege under which a shareholder
that has redeemed Class A or Class B shares may reinvest the proceeds from the
redemption without imposition of a sales charge, provided the reinvestment is
made within 60 days of the redemption. A shareholder wishing to exercise this
privilege must do so in writing.
For purposes of determining the amount of any CDSCs payable on any subsequent
redemptions, the purchase payment made through exercise of the reinstatement
privilege will be deemed to have been made at the time of the initial purchase
(rather than at the time the reinstatement was effected). The tax status of a
gain realized on a redemption will not be affected by exercise of the
reinstatement privilege but a loss will be nullified if the reinvestment is made
within 30 days of redemption. See the Statement of Additional Information for
the tax consequences when, within 90 days of a purchase of Class A or Class B
shares, the shares are redeemed and reinvested in a Participant Fund.
50
<PAGE>
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 forms
established by GEIM ("GE IRAs"), retirement plans for self-employed individuals,
401(k) Plans, eligible deferred compensation plans meeting the requirements of
Section 457(b) of the Code, tax-exempt organizations enumerated in Section
501(c)(3) of the Code and retirement plans qualified under Section 403(b)(7) of
the Code (collectively "Qualified Plans"). As set out above under "Purchase of
Shares -- The Multiple Distribution System" different types of Qualified Plans
may be eligible to purchase different Classes of a Participant Fund. Details
about the procedure to be followed by Qualified Plans in investing in the Funds
are available through the Distributor. Investors interested in establishing a GE
IRA should contact the Distributor at the applicable toll free number listed on
the back cover of the Prospectus to obtain the necessary documentation. See the
Disclosure Statement and Custodial Account Agreement relating to your GE IRA for
a description of the fees associated with establishing a GE IRA.
REDEMPTION OF SHARES
================================================================================
REDEMPTIONS IN GENERAL
Shares of the Money Market Fund, as well as shares of a Class of a Participant
Fund, may be redeemed on any day on which the Fund's net asset value is
calculated as described below under "Net Asset Value." Redemption requests
received in proper form prior to the close of regular trading on the NYSE will
be effected at the net asset value per share determined on that day. Redemption
requests received after the close of regular trading on the NYSE will be
effected at the net asset value as next determined. The Trust normally transmits
redemption proceeds within seven days after receipt of a redemption request. If
a shareholder holds shares in more than one Class of a Participant Fund, any
request for redemption must specify the Class being redeemed. In the event of a
failure to specify which Class or if the investor owns fewer shares of the Class
than specified, the redemption request will be delayed until the Trust receives
further instructions. Redemption proceeds will be subject to no charge, except
for certain redemptions of Class A and Class B shares of a Participant Fund. In
addition, if the shareholder has checkwriting privileges, redemption of $100 or
more may be made by writing a check either to the shareholder or to a third
party. A shareholder who pays for shares of a Fund by personal check will
receive the proceeds of a redemption of those shares when the purchase check has
been collected, which may take up to 15 days or more. Shareholders who
anticipate the need for more immediate access to their investment should
purchase shares with Federal funds or bank wire or by a certified or cashier's
check.
The Trust requires that a shareholder of a Fund maintain a minimum investment in
a Fund of $500, so care should be exercised to ensure that redemptions do not
reduce the shareholder's investment below this minimum. One exception exists to
this minimum investment requirement: an account established by a Qualified Plan.
If the shareholder's account balance is less than $500 (except in the case
described above), the Trust may automatically redeem the shares of the Fund in
the account and remit the proceeds to the shareholder so long as the shareholder
is given 30 days' prior written notice of the action.
A holder of Existing Shares who would not otherwise be eligible to invest in
Class C shares by virtue of being an employee, retiree, officer or director of
GE or an affiliate of GE or a family member of any of those employees, retirees,
officers or directors, who fully redeems his account or whose account balance is
involuntarily redeemed by the Trust in the manner set out below, will not remain
eligible to thereafter 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. Class A and Class B
shares that are redeemed will not be subject to a CDSC to the extent that the
value of such shares represents (1) shares that were purchased more than a fixed
number of years prior to the redemptions, (2) reinvestment of dividends or
capital gains distributions or (3) capital appreciation of shares redeemed. The
amount of any applicable CDSC will be calculated by multiplying the applicable
percentage charge by the lesser of (1) the net asset value of the Class A or
Class B shares at the time of purchase or (2) the net asset value of the Class A
or Class B shares at the time of redemption. In circumstances in which the CDSC
is imposed, the amount of the charge will depend on the number of years since
the shareholder made the purchase payment from which the amount is being
redeemed.
The CDSC on Class A shares is payable on the same terms and conditions as would
be applicable to Class B shares, except that the CDSC on Class A shares is at a
lower rate and for a shorter period than that imposed on Class B shares (1% for
redemptions only during the first year after purchase) and except that Class A
shares have no automatic conversion feature. The CDSC applicable to Class A
shares is calculated in the same manner as the CDSC with respect to Class B
shares and is waived in the same situations as with respect to Class B shares.
The following table sets forth the CDSC rates applicable to redemptions of Class
B shares of the Premier Fund, the U.S. Equity Fund, the Mid-Cap Fund, the
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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%
- --------------------------------------------------------------------------------
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 certain Funds:
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 certain Funds)
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 Class A or Class B 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
Class A or Class B shares held at the time of the death or initial determination
of disability. The Trust will also waive the CDSC (1) on redemptions of Class A
or Class B shares of the Funds representing a minimum required distribution from
an IRA effected pursuant to a systematic withdrawal plan (see "Systematic
Withdrawal Plan" below) and (2) on redemptions of Class A shares being redeemed
within one year of purchase that were subject to no front-end sales load upon
purchase by virtue of being part of a purchase of $1 million or more provided
the redemption is pursuant to a Systematic Withdrawal Plan.
Shares of a Fund may be redeemed in the following ways:
REDEMPTIONS THROUGH AN AUTHORIZED FIRM
An investor whose shares are purchased with the assistance of a Sales
Representative may redeem all or part of his or her shares in accordance with
instructions pertaining to such accounts. If such investor is also the
shareholder of record of those accounts on the books of State Street, he or she
may redeem shares pursuant to the methods described below. Such an investor
using the redemption by mail or wire methods, must arrange with the Authorized
Firm for delivery of the required forms to State Street. It is the
responsibility of the Authorized Firm to transmit the redemption order (and
credit its customers' account with the redemption proceeds, if applicable) on a
timely basis.
REDEMPTION BY MAIL
Shares of a Fund may be redeemed by mail by making a written request for
redemption that (1) states the Class (if applicable) and the number of shares or
the specific dollar amount to be redeemed, (2) identifies the Fund or Funds from
which the number or dollar amount is to be redeemed, (3) identifies the
shareholder's account number and (4) is signed by each
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<PAGE>
registered owner of the shares exactly as the shares are registered and sending
the request to the Trust, at:
GE Funds
P.O. Box 419631
Kansas City, MO 64141-6631
For overnight package delivery:
GE Funds
c/o National Financial Data Services Inc.
1004 Baltimore
Kansas City, MO 64105
Signature guarantees are required for all redemptions over $50,000. In addition,
signature guarantees are required for requests to have redemption proceeds (1)
mailed to an address other than the address of record, (2) paid to other than
the shareholder, (3) wired to a bank other than the bank of record, or (4)
mailed to an address that has been changed within 30 days of the redemption
request. All signature guarantees must be guaranteed by a commercial bank, trust
company, broker, dealer, credit union, national securities exchange or
registered association, clearing agency or savings association or by Managers of
Personnel Accounting of GE or their designated alternates. The Trust may require
additional supporting documents for redemptions made by corporations, executors,
administrators, trustees, guardians or persons utilizing a power of attorney. A
request for redemption will not be deemed to have been submitted until the Trust
receives all documents in proper order typically required to assure the safety
of a particular account. The Trust may waive the signature guarantee on a
redemption of $50,000 or less if it is able to verify the signatures of all
registered owners from its accounts.
REDEMPTION BY TELEPHONE
Shares of a Fund may be redeemed by telephone, unless the investor has declined
this option on the applicable section of the account application form. Proceeds
from a telephonic wire redemption request placed through a customer service
representative will be transferred by wire to the shareholder's bank account
(which has previously been identified in writing to the Trust). A fee of $10
will be charged for wire transfers of funds by the Trust. 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. Fees on wire transfers may also be imposed
by the bank and will be the responsibility of the shareholder. Proceeds from a
telephonic check redemption request placed through the automated system will be
sent by check to the shareholder's address of record. The minimum telephonic
wire redemption request is $1,000; the minimum telephonic check redemption
request is $500 and the maximum telephonic check redemption request is $50,000.
If the account is registered jointly in the name of more than one shareholder,
only one shareholder will be required to authorize redemption of shares by
telephone, and the Trust will be entitled to act upon telephonic instructions of
any shareholder of a joint account. 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 419631
Kansas City, MO 64141-6631
For overnight package delivery:
GE Funds
c/o National Financial Data Services Inc.
1004 Baltimore
Kansas City, MO 64105
By making a telephonic redemption request, a shareholder authorizes the Trust to
act on the telephonic redemption instructions by any person representing himself
or herself to be the shareholder and believed by the Trust to be genuine. The
Trust will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine and the Trust's records of such
instructions will be binding. If the procedures, which include the use of a
personal identification number ("PIN") system and the provision of written
confirmation of transactions effected by telephone, were not employed by the
Trust, the Trust could be subject to liability for any loss resulting from
unauthorized or fraudulent instructions. As a result of compliance with this
policy, if the Trust follows the procedures outlined above and has a good faith
belief that the instructions it received were genuine, the shareholder will bear
the risk of loss in the event of a fraudulent redemption transaction.
SYSTEMATIC WITHDRAWAL PLAN
The Trust's Systematic Withdrawal Plan permits investors in a Fund to request
withdrawal of a specified dollar amount (minimum of $50) on either a monthly or
quarterly basis if they have a $10,000 minimum account in a Class of a
Participant Fund or in the Money Market Fund. The maximum amount which may be
withdrawn under the Systematic Withdrawal Plan is 10% of the value of a
Shareholder's account on an annual basis. An application for the Systematic
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<PAGE>
Withdrawal Plan can be obtained from the Trust. The Systematic Withdrawal Plan
may be terminated at any time by the investor or the Trust.
INVOLUNTARY REDEMPTIONS
An account of a shareholder of a Fund with respect to a Class of shares (if
applicable) that is reduced by redemptions, and not by reason of market
fluctuations to a value of $500 or less may be redeemed by the Trust, but only
after the shareholder has been given notice of at least 30 days in which to
increase the balance in the account to more than $500. An account established
through a Qualified Plan will not be involuntary redeemed. Proceeds of such a
redemption will be mailed to the shareholder.
DISTRIBUTIONS IN KIND
If the Board determines that it would be detrimental to the best interests of a
Fund's shareholders to make a redemption payment wholly in cash, the Trust may
pay, in accordance with rules adopted by the SEC, any portion of a redemption in
excess of the lesser of $250,000 or 1% of the Trust'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. 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 shares. Upon an exchange
of Class A or Class B
54
<PAGE>
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 A or Class B shares for shares of the Money Market Fund and
then exchanges those Money Market Fund shares for Class A or 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 A or Class B shares of a Participant Fund
with Class A or 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 certain Funds,
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 Financial
Intermediary may only be exchanged for shares of another Fund which is offered
by that Financial Intermediary.
Class A shares of the Participant Funds are available without a sales charge
through exchanges between Class A shares and shares of funds which were sold by
Authorized Firms and were subject to a sales charge. GEIM or its affiliates may
compensate selling dealers for their efforts in effecting these exchanges at no
additional cost to investors.
Shareholders exercising the exchange privilege should review the prospectus
disclosure for the Fund they are considering investing in carefully prior to
making an exchange.
NET ASSET VALUE
================================================================================
Each Class' net asset value per share, as well as the Money Market Fund's net
asset value per share, is calculated on each day, Monday through Friday, except
on days on which the NYSE is closed. The NYSE is currently scheduled to be
closed on New Year's Day, Dr. Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas,
and on the preceding Friday or subsequent Monday when one of these holidays
falls on a Saturday or Sunday, respectively.
Each Class' net asset value per share and the Money Market Fund's net asset
value per share are determined as of the close of regular trading on the NYSE
(currently 4:00 p.m., New York time). Net asset value per share of a Class is
computed by dividing the value of the Participant Fund's net assets attributable
to that Class by the total number of shares outstanding of that Class and the
net asset value per share of the Money Market Fund is computed by dividing the
value of the Money Market Fund's net assets by the total number of its shares
outstanding. In general, a Fund's investments will be valued at market value or,
in the absence of market value, at fair value as determined by or under the
direction of the Board. The Trust will seek to maintain the Money Market Fund's
net asset value at $1.00 per share for purposes of purchases and redemptions,
although no assurance can be given that the Trust will be able to do so on a
continuous basis.
Securities that are primarily traded on a foreign exchange generally will be
valued for purposes of calculating a Fund's net asset value at the preceding
closing value of the securities on the exchange, except that, when an occurrence
subsequent to the time a value was so established is likely to have changed that
value, the fair market value of those securities will be determined by
consideration of other factors by or under the direction of the Board. A
security that is primarily traded on a domestic or foreign securities exchange
will be valued at the last sale price on that exchange or, if no sales occurred
during the day, at the current quoted bid price. An option that is written or
purchased by a Fund generally will be valued at the mean between the last asked
and bid prices. The value of a futures contract will be equal to the unrealized
gain or loss on the contract that is determined by marking the contract to the
current settlement price for a like contract on the valuation date of the
futures contract. A settlement price may not be used if the market makes a limit
move with respect to a particular futures contract or if the securities
underlying the futures contract experience significant price fluctuations after
the determination of the settlement price. When a settlement price cannot be
used, futures contracts will be valued at their fair market value as determined
by or under the direction of the Board.
All assets and liabilities of a Fund initially expressed in foreign currency
values will be converted into U.S. dollar values at the mean between the bid and
offered quotations of the currencies against U.S. dollars as last quoted by any
recognized dealer. If the bid and offered quotations are not available, the rate
of exchange will be determined in good faith by the Board. In carrying out the
Board's valuation policies, GEIM may consult with an independent pricing service
or services, retained by the Trust. Further information regarding the Trust's
valuation policies is contained in the Statement of Additional Information.
All portfolio securities held by the Money Market Fund, and any short-term
investments of the other Funds that mature in 60 days or less, will be valued on
the basis of amortized cost (which involves valuing an investment at its cost
and, thereafter, assuming a con-
55
<PAGE>
stant amortization to maturity of any discount or premium, regardless of the
effect of fluctuating interest rates on the market value of the investment) when
the Board determines that amortized cost is fair value.
DIVIDENDS, DISTRIBUTIONS
AND TAXES
================================================================================
DIVIDENDS AND DISTRIBUTIONS
Net investment income (that is, income other than long- and short-term capital
gains) and net realized long- and short-term capital gains are determined
separately for each Fund. Dividends of a Participant Fund or the Money Market
Fund which are derived from net investment income and distributions of net
realized long- and short-term capital gains paid by a Fund to a shareholder will
be automatically reinvested in additional shares of the same Class of the
Participant Fund or the Money Market Fund, respectively, and deposited in the
shareholder's account, unless the shareholder instructs the Trust, in writing or
by telephone, to pay all dividends and distributions in cash. Shareholders may
contact the Trust for details concerning this election. However, if it is
determined that the U.S. Postal Service cannot properly deliver Fund mailings to
a shareholder, the Fund may terminate the shareholder's election to receive
dividends and other distributions in cash. Thereafter, the shareholder's
subsequent dividends and other distributions will be automatically reinvested in
additional shares of the Fund until the shareholder notifies the Fund in writing
of his or her correct address and requests in writing that the election to
receive dividends and other distributions in cash be reinstated. No interest
will accrue on amounts represented by uncashed dividend, distribution or
redemption checks. Dividends attributable to the Tax-Exempt Fund, the Income
Fund, the Government Securities Fund, the Short-Term Government Fund and the
Money Market Fund are declared daily and paid monthly.
The Government Securities Fund will declare a distribution each day in an amount
based on periodic projections of its future net investment income and will pay
such distributions monthly. Consequently, the amount of each daily distribution
may differ from actual net investment income. The purpose of these distribution
procedures is to attempt to eliminate, to the extent possible, fluctuations in
the level of monthly distribution payments that might result if such Fund
declared dividends in the exact amount of its daily net investment income.
It is possible, however, as a result of this policy that total distributions in
a year could exceed the total of the Government Securities Fund's current year
net investment income and capital gains. If this should occur, a portion of the
distributions received by shareholders of such Fund could be a nontaxable
"return of capital" for federal income tax purposes and thereby reduce the
shareholder's cost basis in shares of the Fund. If distributions are received in
additional shares rather than cash, the capital "returned" would be
automatically reinvested. In general, a shareholder's total cost basis in the
Fund will reflect the cost of the shareholders' original investment plus the
amount of any reinvestment.
Dividends attributable to the net investment income of the Premier Fund, the
U.S. Equity Fund, the Mid-Cap Fund, the Value Fund, the Global Fund, the
International Fund and the Strategic Fund are declared and paid annually. If a
shareholder redeems all of his shares of the Tax-Exempt Fund, the Income Fund,
the Government Securities Fund, the Short-Term Government Fund or the Money
Market Fund at any time during a month, all dividends to which the shareholder
is entitled will be paid to the shareholder along with the proceeds of his
redemption. Written confirmations relating to the automatic reinvestment of
daily dividends will be sent to shareholders within five days following the end
of each quarter for the Tax-Exempt Fund, the Income Fund, the Government
Securities Fund and the Short-Term Government Fund, and within five days
following the end of each month for the Money Market Fund. Distributions of any
net realized long-term and short-term capital gains earned by a Fund will be
made annually. These dividends and distributions are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles. All expenses of the Tax-Exempt Fund, the Income Fund, the Government
Securities Fund, the Short-Term Government Fund and the Money Market Fund are
accrued daily and deducted before declaration of dividends to shareholders.
Earnings of the Tax-Exempt Fund, the Income Fund, the Government Securities
Fund, the Short-Term Government Fund and the Money Market Fund for Saturdays,
Sundays and holidays will be declared as dividends on the business day
immediately preceding the Saturday, Sunday or holiday. As a result of the
different service, distribution and transfer agency fees applicable to the
Classes, the per share dividends and distributions on Class D shares will be
higher than those on Class C shares, which in turn will be higher than those on
Class A shares, which in turn will be higher than those on Class B shares. See
"Fee Table" and "Purchase of Shares -- The Multiple Distribution System."
Each Fund is subject to a 4% non-deductible excise tax measured with respect to
certain undistributed amounts of net investment income and capital gains. If
necessary to avoid the imposition of this tax, and if in the best interests of
the Fund's shareholders, the Trust will declare and pay dividends of the Fund's
net investment income and distributions of the Fund's net capital gains more
frequently than stated above.
TAXES
Each Fund is treated as a separate entity for Federal income tax purposes. As a
result, the amounts of net
56
<PAGE>
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, and distributions of a Fund's net realized long-term capital
gains will be taxable to shareholders as long-term capital gains, in each case
regardless of how long shareholders have held their shares of the Fund and
whether the dividends or distributions are received in cash or are reinvested in
additional shares of the Fund. The Funds will provide information relating to
that portion of a "capital gain dividend" that may be treated by investors as
eligible for the reduced capital gains rate for capital assets held for more
than 18 months. 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. In the case of the Tax-Exempt Fund, a
loss on the sale or redemption of shares held by the shareholder for six months
or less will be disallowed to the extent of any exempt-interest dividend
received by the shareholder with respect to those shares. Further, any loss
realized upon the sale or redemption of any Fund shares within six months from
the date of their purchase will be treated as a long-term capital loss to the
extent of any amounts treated as distributions of long-term capital gain during
such six-month period with respect to such shares.
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, may 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 other 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 quarterly 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.
Net investment income or capital gains earned by the Funds investing in foreign
securities may be subject to foreign income taxes withheld at the source. The
United States has entered into tax treaties with many foreign countries that
entitle the Funds to a reduced rate of tax or exemption from tax on this related
income and gains. The effective rate of foreign tax cannot be determined at this
time since the amount of these Funds' assets to be invested within various
countries is not now known. The Trust intends that the Funds seek to operate so
as to qualify for treaty-reduced rates of tax when applicable. In addition, if a
Fund qualifies as a regulated investment company under the Code, if certain
distribution requirements are satisfied, and if more than 50% of the value of
the Fund's assets at the close of the taxable year consists of stocks or
securities of foreign corporations, the Trust may elect, for U.S. Federal income
tax purposes, to treat foreign income taxes paid by the Fund that can be treated
as income taxes under U.S. income tax principles as paid by its shareholders.
The Trust anticipates that the Global Fund and the International Fund will seek
to qualify for and make this election in most, but not necessarily all, of its
taxable years. If the Trust were to make an election with respect to a Fund, an
amount equal to the foreign income taxes paid by the Fund would be included in
the income of its shareholders and the shareholders would be entitled to credit
their portions of this amount against their U.S. tax liabilities, if any, or to
deduct those portions from their U.S. taxable income, if any. Shortly after any
year for which it makes an election, the Trust will report to the shareholders
of the Fund, in writing, the amount per share of foreign tax that must be
included in each shareholder's gross income and the amount that will be
available as a deduction or credit. No deduction for foreign taxes may be
claimed by a shareholder who does not itemize deductions. Certain limitations
will be imposed on the extent to which the credit (but not the deduction) for
foreign taxes may be claimed.
The Funds may be required to withhold for U.S. federal income tax purposes 31%
of all distributions payable to shareholders who fail to provide the Funds with
their correct taxpayer identification number or to make required certifications,
or who have been noti-
57
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fied by the U.S. Internal Revenue Service that they are subject to backup
withholding.
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 Distributors, Inc., located at 777 Long Ridge Road, Stamford,
Connecticut, 06927, serves as distributor of the Funds' shares. The Distributor,
an indirect wholly-owned subsidiary of General Electric Company, also serves as
Distributor for GE Institutional Funds, GE LifeStyle Funds, GE Investments
Funds, Inc. and Elfun Funds. GEIM or its affiliates, at their own expense, may
allocate portions of their revenues or other resources to assist the Distributor
in distributing shares of the Funds, by providing additional promotional
incentives to dealers. In some instances, these incentives may be limited to
certain dealers who have sold or may sell significant numbers of shares of the
Funds. The Distributor routinely offers dealers in Fund shares the opportunity
to participate in contests for which prizes include tickets to theater and
sporting events, dining, travel to meetings and conferences held in locations
remote from their offices and other items.
PERFORMANCE CALCULATION
================================================================================
Certain information about the calculation of the Funds' performance is set out
below. Further information about the performance of the Funds is contained in
the Trust's Annual Report to shareholders which may be obtained upon request
without charge.
YIELD
The Trust may, from time to time, include the yield and effective yield of the
Money Market Fund in advertisements or reports to shareholders or prospective
investors. Current yield for the Money Market Fund will be based upon income
received by a hypothetical investment in a given seven-day period (which period
will be stated in the advertisement), and then "annualized" (that is, assuming
that the seven-day yield would be received for 52 weeks, stated in terms of an
annual percentage return on the investment). "Effective yield" for the Money
Market Fund will be calculated in a manner similar to that used to calculate
yield, but will reflect the compounding effect of earnings on reinvested
dividends. The seven-day current yield and effective seven-day yield as of
September 30, 1997 were 5.11% and 5.24%, respectively. Had GEIM not absorbed a
portion of the Money Market Fund's expenses, the Fund's seven-day yield and
effective seven-day yield as of September 30, 1997 would have been lower.
The Trust may, from time to time, advertise a 30-day "yield" for each Class of a
Participant Fund and an "equivalent taxable yield" for each Class of the Tax-
Exempt Fund. The yield of a Fund refers to the income generated by an investment
in a Class over the 30-day period identified in the advertisement and is
computed by dividing the net investment income per share earned by a Class
during the period by the net asset value per share for that Class on the last
day of the period. This income is "annualized" by assuming that the amount of
income is generated each month over a one-year period and is compounded
semi-annually. The annualized income is then shown as a percentage of the Fund's
net asset value. The 30-day yield for the period ended September 30, 1997 for
Class A, Class B, Class C and Class D shares, respectively, of the Tax-Exempt
Fund, the Short-Term Government Fund and the Income Fund was 4.25%, 3.92%,
4.51%, 4.76%; 5.39%, 5.14%, 5.89%, 6.15%; and 5.35%, 5.11%, 5.88%, 6.13%,
respectively. The 30-day yield for the period ended September 30, 1997 for Class
A and Class B shares of the Government Securities Fund was 6.80% and 6.38%,
respectively. Had the Funds' investment adviser not absorbed a portion of the
Tax-Exempt Fund's, the Government Securities Fund's, the Short-Term Government
Fund's and the Income Fund's expenses, these Funds' 30-day yield for the period
ended September 30, 1997 for each class of shares would have been lower.
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<PAGE>
EQUIVALENT TAXABLE YIELD
The equivalent taxable yield of the Tax-Exempt Fund demonstrates the yield on a
taxable investment necessary to produce an after-tax yield equal to the Fund's
tax-exempt yield. Equivalent taxable yield is calculated by increasing the yield
shown for the particular Class of the Tax-Exempt Fund, calculated as described
above, to the extent necessary to reflect the payment of specified tax rates.
Thus, the equivalent taxable yield of a Class of the Tax-Exempt Fund will always
exceed the Class' yield. Assuming an effective tax rate of 39.6%, for the 30-day
period ended September 30, 1997, the equivalent taxable yield of the Tax-Exempt
Fund for Class A, Class B, Class C and Class D shares, respectively, was 7.04%,
6.49%, 7.47% and 7.88%. 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.
FEDERAL TAXABLE EQUIVALENT YIELD TABLE -- 1998 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>
1998 MARRIED $0-42,350 15.00% 15.00% 4.71% 5.29% 5.88% 6.47% 7.06% 7.65% 8.24% 8.82% 9.41%
$42,351-102,300 28.00% 28.00% 5.56% 6.25% 6.94% 7.64% 8.33% 9.03% 9.72% 10.42% 11.11%
$102,301-124,500 31.00% 31.00% 5.80% 6.52% 7.25% 7.97% 8.70% 9.42% 10.14% 10.87% 11.59%
$124,501-155,950 31.00% 31.93% 5.88% 6.61% 7.35% 8.08% 8.81% 9.55% 10.28% 11.02% 11.75%
$155,951-278,450 36.00% 37.08% 6.36% 7.15% 7.95% 8.74% 9.54% 10.33% 11.13% 11.92% 12.71%
OVER $278,450 39.60% 40.79% 6.76% 7.60% 8.44% 9.29% 10.13% 10.98% 11.82% 12.67% 13.51%
1998 SINGLE $0-25,350 15.00% 15.00% 4.71% 5.29% 5.88% 6.47% 7.06% 7.65% 8.24% 8.82% 9.41%
$25,351-61,400 28.00% 28.00% 5.56% 6.25% 6.94% 7.64% 8.33% 9.03% 9.72% 10.42% 11.11%
$61,401-124,500 31.00% 31.00% 5.80% 6.52% 7.25% 7.97% 8.70% 9.42% 10.14% 10.87% 11.59%
$124,501-128,100 31.00% 31.93% 5.88% 6.61% 7.35% 8.08% 8.81% 9.55% 10.28% 11.02% 11.75%
$128,101-278,450 36.00% 37.08% 6.36% 7.15% 7.95% 8.74% 9.54% 10.33% 11.13% 11.92% 12.71%
OVER $278,450 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
$2,700 less the standard deduction ($4,250 on a single return and $7,100 on
a joint return) or total itemized deductions, whichever is greater.
However, under the provisions of the Omnibus Budget Reconciliation Act of
1990, certain itemized deductions are reduced by 3% of the amount of a
taxpayer's AGI over $124,500. This is reflected in the income brackets
above by higher marginal Federal rates. Furthermore, personal exemptions
are phased out for the amount of a taxpayer's AGI over $124,500 for single
taxpayers and $186,800 for married taxpayers filing jointly. This latter
provision is not incorporated into the above brackets.
3. Interest earned on municipal obligations may be subject to the federal
alternative minimum tax. This provision is not incorporated into the table.
4. The taxable equivalent yield table does not incorporate the effect of
graduated rate structures in determining yields. Instead the tax rates used
are the highest rates applicable to the income levels indicated within each
bracket.
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<PAGE>
TOTAL RETURN
From time to time, the Trust may advertise an "average annual total return" over
various periods of time for each Class of a Participant Fund. This total return
figure shows an average percentage change in value of an investment in the Class
from the beginning date of the measuring period to the ending date of the
period. The figure reflects changes in the price of a Fund's shares and assumes
that any income, dividends and/or capital gains distributions made by the Fund
during the period are reinvested in shares of the same Class. Figures will be
given for recent one-, five- and 10-year periods (if applicable), and may be
given for other periods as well (such as from commencement of a Fund's
operations, or on a year-by-year basis). When considering average annual total
return figures for periods longer than one year, investors should note that a
Fund's annual total return for any one year in the period might have been
greater or less than the average for the entire period. The Trust may use
"aggregate total return" figures for various periods, representing the
cumulative change in value of an investment in a Class of a Participant Fund,
for the specific period (again reflecting changes in the Fund's share price and
assuming reinvestment of dividends and distributions). Aggregate total return
will, in each case, be calculated with the effect of the sales charge to which
Class A shares of a Participant Fund are subject and with the effect of any
applicable CDSC for Class B shares, and may be shown by means of schedules,
charts or graphs, and may indicate subtotals of the various components of total
return (that is, the change in value of initial investment, income dividends and
capital gains distributions). Aggregate total return may, in addition to the
above method (but never independent of the above method), be calculated without
the effect of the sales charge to which Class A shares of a Participant Fund are
subject and without the effect of any applicable CDSC for Class B shares.
Because of the differences in sales charges and distribution fees, the total
returns for each of the Classes will differ. Reflecting compounding over a
longer period of time, aggregate total return data generally will be higher than
average annual total return data, which reflects compounding of return. 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
(SEE CHARTS IN "MANAGEMENT POLICIES
COMMON TO THE FUNDS")
================================================================================
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% (5% in the case of the
Tax-Exempt Fund) 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.
SUPRANATIONAL AGENCIES. Each Fund may invest up to 10% of its assets in debt
obligations 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. Debt obligations of
supranational agencies are not considered Government Securities and are not
supported, directly or indirectly, by the U.S. Government.
STRATEGIES AVAILABLE TO SOME BUT
NOT ALL 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
61
<PAGE>
unsponsored arrangement, the foreign issuer assumes no obligations and the
depositary's transaction fees are paid directly by the ADR holders. In addition,
less information is available in the United States about an unsponsored ADR than
about a sponsored ADR. Each of these Funds may invest in ADRs through both
sponsored and unsponsored arrangements. EDRs and CDRs are generally issued by
foreign banks and evidence ownership of either foreign or domestic securities.
INVESTMENTS IN OTHER INVESTMENT FUNDS. Certain Funds may invest in investment
funds that invest principally in securities in which the Fund is authorized to
invest. Under the 1940 Act, a Fund may invest a maximum of 10% of its total
assets in the securities of other investment companies. In addition, under the
1940 Act, not more than 5% of a Fund's total assets may be invested in the
securities of any one investment company, and the Fund may not own more than 3%
of the securities of any investment company. Investments by the Funds (other
than the Money Market Fund) in the Investment Fund is not considered an
investment in another investment fund or investment company for purposes of this
paragraph and the restrictions just described. To the extent a Fund invests in
other investment companies, the Fund's shareholders will incur certain
duplicative fees and expenses, including investment advisory fees.
MUNICIPAL LEASES. Among the Municipal Obligations in which certain Funds may
invest are municipal leases, which may take the form of a lease or an
installment purchase or conditional sales contract to acquire a wide variety of
equipment and facilities. Interest payments on qualifying municipal leases are
exempt from Federal income taxes and state income taxes within the state of
issuance. A Fund may invest in municipal leases containing "non-appropriation"
clauses that provide that the governmental issuer has no obligation to make
future payments under the lease or contract, unless money is appropriated for
the purpose by the appropriate legislative body on a yearly or other periodic
basis.
Municipal leases that a Fund may acquire will be both rated and unrated. Rated
leases that may be held by a Fund include those rated investment grade at the
time of investment or those issued by issuers whose senior debt is rated
investment grade at the time of investment. Risks and special considerations
applicable to certain investment grade obligations are described above under
"Risk Factors and Special Considerations -- Certain Investment Grade
Obligations." A Fund may acquire unrated issues that the Investment Manager
deems to be comparable in quality to rated issues in which a Fund is authorized
to invest. A determination that an unrated lease obligation is comparable in
quality to a rated lease obligation and that there is a reasonable likelihood
that the lease will not be canceled will be subject to oversight and approval by
the Board.
Municipal leases held by a Fund will be considered illiquid securities unless
the Board determines on an ongoing basis that the leases are readily marketable.
An unrated municipal lease with a non-appropriation risk that is backed by an
irrevocable bank letter of credit or an insurance policy issued by a bank or
insurer deemed by the Investment Manager to be of high quality and minimal
credit risk, will not be deemed to be illiquid solely because the underlying
municipal lease is unrated, if the Investment Manager determines that the lease
is readily marketable because it is backed by the letter of credit or insurance
policy.
Municipal leases in which a Fund may invest have special risks not normally
associated with Municipal Obligations. Municipal leases represent a type of
financing that has not yet developed the depth of marketability generally
associated with other Municipal Obligations. Moreover, although a municipal
lease will be secured by financed equipment or facilities, the disposition of
the equipment or facilities in the event of foreclosure might prove difficult.
To limit the risks associated with municipal leases, a Fund will invest no more
than 5% of its total assets in those leases. In addition, a Fund will purchase
lease obligations that contain non-appropriation clauses when the lease payments
will commence amortization of principal at an early date resulting in an average
life of five years or less for the lease obligation.
FLOATING AND VARIABLE RATE INSTRUMENTS. Certain Funds may invest in floating and
variable rate instruments. Income securities may provide for floating or
variable rate interest or dividend payments. The floating or variable rate may
be determined by reference to a known lending rate, such as a bank's prime rate,
a certificate of deposit rate or the London InterBank Offered Rate (LIBOR).
Alternatively, the rate may be determined through an auction or remarketing
process. The rate also may be indexed to changes in the values of interest rate
or securities indexes, currency exchange rate or other commodities. The amount
by which the rates paid on an income security may increase or decrease may be
subject to periodic or lifetime caps. Floating and variable rate income
securities include securities whose rates vary inversely with changes in market
rates of interest. Such securities may also pay a rate of interest determined by
applying a multiple to the variable rate. The extent of increases and decreases
in the value of securities whose rates vary inversely with changes in market
rates of interest generally will be larger than comparable changes in the value
of an equal principal amount of a fixed rate security having similar credit
quality, redemption provisions and maturity.
The Tax-Exempt Fund and Strategic Fund may purchase floating and variable rate
demand bonds and notes, which are Municipal Obligations ordinarily having stated
maturities in excess of one year but which permit their holder to demand payment
of principal at any time or at specified intervals. Variable rate demand notes
include master demand notes, which are obligations that permit a Fund to invest
fluctuating amounts, which may change daily without penalty, pur-
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<PAGE>
suant 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 rate demand notes generally will not be traded and no established
secondary market generally exists for them, although they are redeemable at face
value. If variable rate demand notes are not secured by letters of credit or
other credit support arrangements, a Fund's right to demand payment will be
dependent on the ability of the borrower to pay principal and interest on
demand. Each obligation purchased by a Fund will meet the quality criteria
established by the Investment Manager for the purchase of Municipal Obligations.
The Investment Manager considers on an ongoing basis the creditworthiness of the
issuers of the floating and variable rate demand obligations in the relevant
Fund's portfolio.
PARTICIPATION INTERESTS. Certain Funds may purchase from financial institutions
participation interests in certain Municipal Obligations. A participation
interest gives the Fund an undivided interest in the Municipal Obligation in the
proportion that the Fund's participation interest bears to the total principal
amount of the Municipal Obligation. These instruments may have fixed, floating
or variable rates of interest. If the participation interest is unrated, or has
been given a rating below one that is otherwise permissible for purchase by a
Fund, the participation interest will be backed by an irrevocable letter of
credit or guarantee of a bank that the Board has determined meets certain
quality standards, or the payment obligation otherwise will be collateralized by
Government Securities. A Fund will have the right, with respect to certain
participation interests, to demand payment, on a specified number of days'
notice, for all or any part of the Fund's participation interest in the
Municipal Obligation, plus accrued interest. The Trust intends that a Fund
exercise its right to demand payment only upon a default under the terms of the
Municipal Obligation, or to maintain or improve the quality of its investment
portfolio. A Fund will invest no more than 5% of the value of its total assets
in participation interests.
ZERO COUPON OBLIGATIONS. Certain Funds may invest in zero coupon obligations.
Zero coupon securities generally pay no cash interest (or dividends in the case
of preferred stock) to their holders prior to maturity. Accordingly, such
securities usually are issued and traded at a deep discount from their face or
par value and generally are subject to greater fluctuations of market value in
response to changing interest rates than securities of comparable maturities and
credit quality that pay cash interest (or dividends in the case of preferred
stock) on a current basis. Although each of these Funds will receive no payments
on its zero coupon securities prior to their maturity or disposition, it will be
required for federal income tax purposes generally to include in its dividends
each year an amount equal to the annual income that accrues on its zero coupon
securities. Such dividends will be paid from the cash assets of the Fund, from
borrowings or by liquidation of portfolio securities, if necessary, at a time
that the Fund otherwise would not have done so. To the extent these Funds are
required to liquidate thinly traded securities, the Funds may be able to sell
such securities only at prices lower than if such securities were more widely
traded. The risks associated with holding securities that are not readily
marketable may be accentuated at such time. To the extent the proceeds from any
such dispositions are used by these Funds to pay distributions, each of those
Funds will not be able to purchase additional income-producing securities with
such proceeds, and as a result its current income ultimately may be reduced.
The Tax-Exempt Fund, the Short-Term Government Fund and the Strategic Fund may
each invest up to 10% of its assets in zero coupon Municipal Obligations. Zero
coupon Municipal Obligations are generally divided into two categories: "Pure
Zero Obligations," which are those that pay no interest for their entire life
and "Zero/Fixed Obligations," which pay no interest for some initial period and
thereafter pay interest currently. In the case of a Pure Zero Obligation, the
failure to pay interest currently may result from the obligation's having no
stated interest 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 inter-
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est rate paid to Residual Component holders will decrease as the Auction
Component's rate increases and decrease as the Auction Component's rate
increases. Moreover, the extent of the increases and decreases in market value
of Residual Components may be larger than comparable changes in the market value
of an equal principal amount of a fixed rate Municipal Obligation having similar
credit quality, redemption provisions and maturity.
CUSTODIAL RECEIPTS. Certain Funds may acquire custodial receipts or certificates
underwritten by securities dealers or banks that evidence ownership of future
interest payments, principal payments, or both, on certain Municipal
Obligations. The underwriter of these certificates or receipts typically
purchases Municipal Obligations and deposits the obligations in an irrevocable
trust or custodial account with a custodian bank, which then issues receipts or
certificates that evidence ownership of the periodic unmatured coupon payments
and the final principal payment on the obligations. Custodial receipts
evidencing specific coupon or principal payments have the same general
attributes as zero coupon Municipal Obligations described above. Although under
the terms of a custodial receipt a Fund would be typically authorized to assert
its rights directly against the issuer of the underlying obligation, the Fund
could be required to assert through the custodian bank those rights as may exist
against the underlying issuers. Thus, in the event the underlying issuer fails
to pay principal and/or interest when due, a Fund may be subject to delays,
expenses and risks that are greater than those that would have been involved if
the Fund had purchased a direct obligation of the issuer. In addition, in the
event that the trust or custodial account in which the underlying security has
been deposited is determined to be an association taxable as a corporation,
instead of a non-taxable entity, the yield on the underlying security would be
reduced in recognition of any taxes paid.
MORTGAGE RELATED SECURITIES. Certain Funds may invest in mortgage related
securities which represent pools of mortgage loans assembled for sale to
investors by various governmental agencies, such as GNMA, by government related
organizations, such as FNMA and FHLMC, as well as by private issuers, such as
commercial banks, savings and loan institutions, mortgage bankers and private
mortgage insurance companies. Several risks are associated with mortgage related
securities generally. The monthly cash inflow from the underlying loans, for
example, may not be sufficient to meet the monthly payment requirements of the
mortgage related security. Prepayment of principal by mortgagors or mortgage
foreclosures will shorten the term of the underlying mortgage pool for a
mortgage related security. Early returns of principal will affect the average
life of the mortgage related securities remaining in these Funds. The occurrence
of mortgage prepayments is affected by factors including the level of interest
rates, general economic conditions, the location and age of the mortgage and
other social and demographic conditions. In periods of rising interest rates,
the rate of prepayment tends to decrease, thereby lengthening the average life
of a pool of mortgage related securities. Conversely, in periods of falling
interest rates the rate of prepayment tends to increase, thereby shortening the
average life of a pool. Reinvestment of prepayments may occur at higher or lower
interest rates than the original investment, thus affecting the yield of these
Funds. Because prepayments of principal generally occur when interest rates are
declining, the Fund will likely have to reinvest the proceeds of prepayments at
lower interest rates than those at which its assets were previously invested,
resulting in a corresponding decline in the Fund's yield. Thus, mortgage related
securities may have less potential for capital appreciation in periods of
falling interest rates than other fixed income securities of comparable
maturity, although those other fixed income securities may have a comparable
risk of decline in market value in periods of rising interest rates. To the
extent that these Funds purchase mortgage related securities at a premium,
unscheduled 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,
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depending on the type of CMOs in which these Funds invest, the investment may be
subject to a greater or lesser risk of prepayment than other types of mortgage
related securities.
Mortgage related securities may not be readily marketable. To the extent any of
these securities are not readily marketable in the judgment of the Investment
Manager, each of these Funds limits its investments in these securities,
together with other illiquid instruments, to not more than 15% (10% in the case
of the Tax-Exempt Fund) of the value of its net assets.
GOVERNMENT STRIPPED MORTGAGE RELATED SECURITIES. Certain Funds may invest in
government stripped mortgage related securities issued and guaranteed by GNMA,
FNMA or FHLMC. These securities represent beneficial ownership interests in
either periodic principal distributions ("principal-only") or interest
distributions ("interest-only") on mortgage related certificates issued by GNMA,
FNMA or FHLMC. The certificates underlying the government stripped mortgage
related securities represent all or part of the beneficial interest in pools of
mortgage loans. These Funds will invest in government stripped mortgage related
securities in order to enhance yield or to benefit from anticipated appreciation
in value of the securities at times when GEIM believes that interest rates will
remain stable or increase. In periods of rising interest rates, the expected
increase in the value of government stripped mortgage related securities may
offset all or a portion of any decline in value of the securities held by these
Funds.
Investing in government stripped mortgage related securities involves risks
normally associated with investing in mortgage related securities issued by
government or government related entities. In addition, the yields on government
stripped mortgage related securities are extremely sensitive to the prepayment
experience on the mortgage loans underlying the certificates collateralizing the
securities. If a decline in the level of prevailing interest rates results in a
rate of principal prepayments higher than anticipated, distributions of
principal will be accelerated, thereby reducing the yield to maturity on
interest-only government stripped mortgage related securities and increasing the
yield to maturity on principal-only government stripped mortgage related
securities. Sufficiently high prepayment rates could result in these Funds' not
fully recovering their initial investment in an interest-only government
stripped mortgage related security. Under current market conditions, these Funds
expect that investments in government stripped mortgage related securities will
consist primarily of interest-only securities. The sensitivity of an
interest-only security that represents the interest portion of a particular
class, as opposed to the interest portion of an entire pool, to interest rate
fluctuations, may be increased because of the characteristics of the principal
portion to which they relate. Government stripped mortgage related securities
are currently traded in an over-the-counter market maintained by several large
investment banking firms. No assurance can be given that these Funds will be
able to effect a trade of a government stripped mortgage related security at a
desired time. These Funds will acquire government stripped mortgage related
securities only if a secondary market for the securities exists at the time of
acquisition. Except for government stripped mortgage related securities based on
fixed rate FNMA and FHLMC mortgage certificates that meet certain liquidity
criteria established by the Board, the Trust treats government stripped mortgage
related securities 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" ("CARsSM") and interests in
pools of credit card receivables. CARsSM represent undivided fractional
interests in a trust, the assets of which consist of a pool of motor vehicle
retail installment sales contracts and security interests in the vehicles
securing the contracts. Payments of principal and interest on CARsSM are passed
through monthly to certificate holders and are guaranteed up to certain amounts
and for a certain time period by a letter of credit issued by a financial
institution unaffiliated with the trustee or originator of the trust.
An investor's return on CARsSM may be affected by early prepayment of principal
on the underlying vehicle sales contracts. If the letter of credit is exhausted,
these Funds may be prevented from realizing the full amount due on a sales
contract because of state law requirements and restrictions relating to
foreclosure sales of vehicles and the availability of deficiency judgments
following these sales, because of depreciation, damage or loss of a vehicle,
because of the application of Federal and state bankruptcy and insolvency laws
or other factors. As a result, certificate holders may experience delays in
payment if the letter of credit is exhausted. Consistent with each of these
Funds' investment objective and policies and subject to the review and approval
of the Board, these Funds may also invest in other types of asset-backed and
receivable-backed securities.
MORTGAGE DOLLAR ROLLS. Certain Funds may, with respect to up to 25% of their
total assets, enter into mortgage "dollar rolls" in which the Fund sells
securities for delivery in the current month and simultaneously contracts with
the same counterparty to repurchase similar (same type, coupon and maturity) but
not identical securities on a specified future date. The Fund loses the right to
receive principal and interest paid on the securities sold. However, the Fund
would benefit to the extent of any price received for the securities sold and
the lower forward price for the future purchase (often referred to as the
"drop") or fee income plus the interest earned on the cash pro-
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ceeds 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.
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.
Currently, thirteen series of the Trust have been authorized.
When issued, shares of a Fund will be fully paid and non-assessable. Shares are
freely transferable and have no preemptive, subscription or conversion rights.
Each Class represents an identical interest in a Fund's investment portfolio. As
a result, the Classes have the same rights, privileges and preferences, except
with respect to: (1) the designation of each Class; (2) the sales arrangement;
(3) the expenses allocable exclusively to each Class; (4) voting rights on
matters exclusively affecting a single Class; and (5) the exchange privilege of
each Class. The Board does not anticipate that there will be any conflicts among
the interests of the holders of the different Classes. The Trustees, on an
ongoing basis, will consider whether any conflict exists and, if so, take
appropriate action. Certain aspects of the shares may be changed, upon notice to
Fund shareholders, to satisfy certain tax regulatory requirements, if the change
is deemed necessary by the Board.
When matters are submitted for shareholder vote, each shareholder of each Fund
will have one vote for each full share held and proportionate, fractional votes
for fractional shares held. In general, shares of all Funds vote as a single
class on all matters except (1) a matter affecting the interests of one or more
of the Funds, in which case only shares of the affected Funds would be entitled
to vote or (2) when the 1940 Act requires that shares of the Funds be voted by
an individual Fund. Normally, no meetings of shareholders of the Funds will be
held for the purpose of electing Trustees of the Trust unless and until such
time as less than a majority of the Trustees holding office have been elected by
shareholders of the Trust, at which time the Trustees then in office will call a
shareholders' meeting for the election of Trustees. Shareholders of record of no
less than a majority of the outstanding shares of the Trust may remove a Trustee
for cause through a declaration in writing or by vote cast in person or by proxy
at a meeting called for that purpose. A meeting will be called for the purpose
of voting on the removal of a Trustee at the written request of holders of 10%
of the Trust's outstanding shares. Shareholders who satisfy certain criteria
will be assisted by the Trust in communicating with other shareholders in
seeking the holding of the meeting.
GE Financial Assurance Co. may be deemed to be a controlling person of the
Premier Fund; GNA Corporation may be deemed to be a controlling person of the
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 number listed on the back cover page of the
Prospectus or by writing to the Trust at the address set forth on the front
cover page of the Prospectus.
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GE FUNDS
o GE Premier Growth Equity Fund
o GE U.S. Equity Fund
o GE Mid-Cap Growth Fund
o GE Value Equity Fund
o GE Global Equity Fund
o GE International Equity Fund
o GE Strategic Investment Fund
o GE Tax-Exempt Fund
o GE Fixed Income Fund
o GE Government Securities Fund
o GE Short-Term Government Fund
o GE Money Market Fund
For information, contact your investment professional or
call the Trust at 1-800-242-0134
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN THE
STATEMENT OF ADDITIONAL INFORMATION INCORPORATED INTO THIS PROSPECTUS BY
REFERENCE IN CONNECTION WITH THE OFFERING OF SHARES OF GE FUNDS, AND IF
GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY GE FUNDS. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM,
AN OFFER MAY NOT LAWFULLY BE MADE.
GEF PRO-1
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
January 28, 1998
GE FUNDS
3003 Summer Street, Stamford, Connecticut 06905
For information, call (800) 242-0134
* GE Premier Growth Equity Fund * GE Strategic Investment Fund
* GE U.S. Equity Fund * GE Tax-Exempt Fund
* GE Mid-Cap Growth Fund * GE Fixed Income Fund
* GE Value Equity Fund * GE Government Securities Fund
* GE Global Equity Fund * GE Short-Term Government Fund
* GE International Equity Fund * GE Money Market Fund
* GE International Income Fund
CONTENTS
PAGE
Investment Objectives and Management Policies...................2
Investment Restrictions........................................11
Management of the Trust........................................18
Redemption of Shares...........................................24
Exchange Privilege.............................................24
Net Asset Value................................................24
Dividends, Distributions and Taxes.............................26
The Funds' Performance.........................................29
Principal Stockholders.........................................31
Additional Information.........................................45
Counsel........................................................45
Independent Accountants........................................45
Financial Statements...........................................46
Appendix......................................................A-1
This Statement of Additional Information supplements the information
contained in the current Prospectus of GE Funds (the "Trust") dated January 28,
1998, 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 1-800-242-0134 or by writing to the Trust at P.O. Box 120065, Stamford,
CT 06912-0065. This Statement of Additional Information, although not a
prospectus, is incorporated in its entirety by reference into the Prospectus.
<PAGE>
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
The Prospectus dated January 28, 1998 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 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
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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 comparable ratings as standards for
their investments in accordance with their investment objectives and policies.
- ----------
* 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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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,
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
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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 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
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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.
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,
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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.
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
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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 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
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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 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.
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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 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.
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Mortgage related securities may be classified as private, governmental or
government-related, depending on the issuer or guarantor. Private mortgage
related securities represent pass-through pools consisting principally of
conventional residential mortgage loans created by non-governmental issuers,
such as commercial banks, savings and loan associations and private mortgage
insurance companies. Governmental mortgage related securities are backed by the
full faith and credit of the United States. GNMA, the principal U.S. guarantor
of these securities, is a wholly-owned U.S. government corporation within the
Department of Housing and Urban Development. Government-related mortgage related
securities are not backed by the full faith and credit of the United States.
Issuers include FNMA and FHLMC. FNMA is a government-sponsored corporation owned
entirely by private stockholders, which is subject to general regulation by the
Secretary of Housing and Urban Development. Pass-through securities issued by
FNMA are guaranteed as to timely payment of principal and interest by FNMA.
FHLMC is a corporate instrumentality of the United States, the stock of which is
owned by the Federal Home Loan Banks. Participation certificates representing
interests in mortgages from FHLMC's national portfolio are guaranteed as to the
timely payment of interest and ultimate collection of principal by FHLMC.
Private, governmental or government-related entities may create mortgage
loan pools offering pass-through investments in addition to those described
above. The mortgages underlying these securities may be alternative mortgage
instruments, that is, mortgage instruments whose principal or interest payments
may vary or whose terms to maturity may be shorter than previously customary.
GEIM assesses new types of mortgage related securities as they are developed and
offered to determine their appropriateness for investment by the relevant Fund.
INVESTMENT RESTRICTIONS
ALL FUNDS EXCEPT THE TAX-EXEMPT FUND:
Investment restrictions numbered 1 through 10 below have been adopted by
the Trust as fundamental policies of all the Funds, except the Tax-Exempt Fund.
Under the 1940 Act, a fundamental policy may not be changed with respect to a
Fund without the vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Fund. Investment restrictions 11 through 17 may
be changed by a vote of the Board at any time.
1. No Fund may borrow money, except that the Value Fund, the Government
Securities Fund and the Money Market Fund may enter into reverse repurchase
agreements, and except that each Fund may borrow from banks for temporary or
emergency (not leveraging) purposes, including the meeting of redemption
requests and cash payments of dividends and distributions that might otherwise
require the untimely disposition of securities, in an amount not to exceed
33-1/3% of the value of the Fund's total assets (including the amount borrowed)
valued at market less liabilities (not including the amount borrowed) at the
time the borrowing is made. Whenever borrowings, including reverse repurchase
agreements, of 5% or more of a Fund's total assets are outstanding, the Fund
will not make any additional investments.
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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. For purposes of this restriction, the
term industry will be deemed to include (a) the government of any one country
other than the United States, but not the U.S. Government and (b) all
supranational organizations. In addition, securities held by the Money Market
Fund that are issued by domestic banks are excluded from this restriction.
6. No Fund may underwrite any issue of securities, except to the extent
that the sale of portfolio securities in accordance with the Fund's investment
objective, policies and limitations may be deemed to be an underwriting, and
except that the Fund may acquire securities under circumstances in which, if the
securities were sold, the Fund might be deemed to be an underwriter for purposes
of the Securities Act of 1933, as amended (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
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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.
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
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144A under the 1933 Act ("Rule 144A Securities"), that have been determined to
be liquid by the Board based upon the trading markets for the securities.
17. No Fund may issue senior securities except as otherwise permitted by
the 1940 Act and as otherwise permitted herein.
THE TAX-EXEMPT FUND:
Investment restrictions numbered 1 through 9 below have been adopted by the
Trust as fundamental policies of the Tax-Exempt Fund. Under the 1940 Act, a
fundamental policy may not be changed with respect to a Fund without the vote of
a majority of the outstanding voting securities (as defined in the 1940 Act) of
the Fund. Investment restrictions 10 through 15 may be changed by a vote of the
Board at any time. The Tax-Exempt Fund may not:
1. Purchase more than 10% of any class of securities of any one issuer
(except Government Securities and securities fully collateralized by Government
Securities).
2. Invest more than 5% of its total assets in the securities of any one
issuer (except for Government Securities and securities fully collateralized by
Government Securities, and options thereon).
3. Issue senior securities, as defined in the 1940 Act, except as permitted
by Section 18(f)(2) of that Act or as permitted by an SEC exemptive order.
4. Borrow amounts in excess of 10% of its total assets and then only as a
temporary measure for extraordinary or emergency purposes. This restriction
shall not prohibit entry into reverse repurchase agreements if as a result the
Tax-Exempt Fund's current obligations under such agreements would not exceed
one-third of the current market value of its total assets (less its liabilities
other than under reverse repurchase agreements).
5. Purchase or sell real estate or real estate limited partnership
interests, or invest in oil, gas or mineral leases, or mineral exploration or
development programs, except that the Tax-Exempt Fund may (a) invest in
securities secured by real estate, mortgages or interests in real estate or
mortgages, (b) purchase securities issued by companies that invest or deal in
real estate, mortgages or interests in real estate or mortgages, (c) engage in
the purchase and sale of real estate as necessary to provide it with an office
for the transaction of business or (d) acquire real estate or interest in real
estate securing an issuer's obligations, in the event of a default by that
issuer.
6. Invest in commodities, except that the Tax-Exempt Fund may invest in
futures contracts (including financial futures contracts, index futures
contracts or securities index futures contracts) and related options and other
similar contracts (including foreign currency forward, futures and options
contracts) as described in this Statement of Additional Information and in the
Prospectus.
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7. Make loans, except that this restriction shall not prohibit the purchase
and holding of a portion of an issue of publicly distributed debt securities,
the lending of portfolio securities (not more than 5% of the Tax-Exempt Fund's
net assets), the entry into repurchase agreements (not more than one-third of
the current market value of the Tax-Exempt Fund's total assets shall constitute
secured "loans" by the Tax-Exempt Fund under repurchase agreements), trading in
financial futures contracts, index futures contracts, securities indexes and
options on financial futures contracts, options on index futures contracts,
options on securities and options on securities indexes and investing in
variable rate demand notes.
8. Invest more than 25% of the value of the Tax-Exempt Fund's total assets
in securities of issuers in any one industry, except securities issued or
guaranteed by a state, municipality or other political subdivision, unless the
securities are backed only by the assets and revenues of non-governmental users.
For purposes of this restriction, the term industry will be deemed to include
(a) the government of any one country other than the United States, but not the
U.S. Government, and (b) all supranational organizations.
9. Underwrite any issue of securities, except to the extent that the sale
of portfolio securities in accordance with the Tax-Exempt Fund's investment
objective, policies and limitations may be deemed to be an underwriting, and
except that the Tax-Exempt Fund may acquire securities under circumstances in
which, if the securities were sold, the Tax-Exempt Fund might be deemed to be an
underwriter for purposes of the 1933 Act.
10. Invest in the securities of an issuer for the purpose of exercising
control or management, but the Tax-Exempt Fund may do so where it is deemed
advisable to protect or enhance the value of an existing investment.
11. Purchase securities of any other investment company, except in the open
market in a transaction involving no commission or profit to a sponsor or dealer
(other than the customary brokerage commission) and only to the extent of 10% of
the Tax-Exempt Fund's assets or as part of a merger, consolidation, acquisition,
reorganization or offer of exchange and except as otherwise permitted under the
1940 Act.
12. Purchase restricted securities if more than 10% of the total assets of
the Tax-Exempt Fund would be invested in restricted securities. Restricted
securities are securities that are subject to contractual or legal restrictions
on transfer, excluding, for purposes of this restriction, repurchase agreements
having less than seven days to maturity, reverse repurchase agreements, firm
commitment agreements, futures contracts and options thereon, and Rule 144A
Securities that have been determined to be liquid by the Board based upon the
trading markets for the securities.
13. Purchase securities on margin, except any short-term credits which may
be necessary for the clearance of transactions and the initial or maintenance
margin in connection with options and futures contracts and related options.
14. Make short sales of securities, unless the Tax-Exempt Fund owns an
equal amount of the securities or securities convertible into or exchangeable
without further
15
<PAGE>
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.
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
16
<PAGE>
dealers to execute a particular transaction, and in evaluating the best overall
terms available, to consider the brokerage and research services (as those terms
are defined in Section 28(e) of the Securities Exchange Act of 1934) provided to
the Fund and/or other accounts over which the Investment Manager or its
affiliates exercise investment discretion. The fees under the investment
advisory agreement relating to a Fund will not be reduced by reason of the
Fund's receiving brokerage and research services. The Board periodically reviews
the commissions paid by a Fund to determine if the commissions paid over
representative periods of time were reasonable in relation to the benefits
inuring to the Fund. Over-the-counter purchases and sales on behalf of the Funds
will be transacted directly with principal market makers except in those cases
in which better prices and executions may be obtained elsewhere. A Fund will not
purchase any security, including Government Securities, during the existence of
any underwriting or selling group relating to the security of which any
affiliate of the Fund or the Investment Manager is a member, except to the
extent permitted under rules, interpretations or exemptions of the SEC. All
brokerage transaction commissions paid to affiliates will be fair and reasonable
to the shareholders.
The Money Market Fund may attempt to increase its yield by trading to take
advantage of short-term market variations, which trading would result in the
Fund's experiencing high portfolio turnover. Because purchases and sales of
money market 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 period ended September 30, 1997, the International Fund,
the Global Fund, the U.S. Equity Fund, the Strategic Fund, the Premier Fund, the
Mid-Cap Fund and the Value Fund paid $268,970, $204,750,$218,896, $91,950,
$14,844, $151,399 and $91,033, respectively, in commissions to broker-dealers
for execution of portfolio transactions. Of these amounts, $27,952, $12,456,
$44,847, $8,178, $4,050, $0 and $88 in brokerage transactions was paid by the
International Fund, the Global Fund, the U.S. Equity Fund, the Strategic Fund,
the Premier Fund, the Mid-Cap Fund and the Value Fund, respectively, to a broker
because of research services provided during the past fiscal year. 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. The Income Fund, the
Government Securities Fund, the Short-Term Government Fund and the Money Market
Fund made no payments to broker-dealers for execution of portfolio transactions
during the 1997, 1996 or 1995 fiscal year. The Tax-Exempt Fund made no payments
to broker-dealers for execution of portfolio transactions during 1997.
17
<PAGE>
For the period from November 1, 1996 to September 26, 1997, Investors Trust
Growth Fund (the "IT Growth Fund"), Investors Trust Value Fund (the "IT Value
Fund") and Investors Trust Government Fund (the "IT Government Fund"),
predecessor funds to the Mid-Cap Fund, the Value Fund and the Government
Securities Fund, paid $31,146, $33,834 and $0, respectively in commissions to
broker-dealers for execution of portfolio transactions. During the fiscal year
ended October 31, 1996, the IT Growth Fund, the IT Value Fund and the IT
Government Fund paid $31,672, $60,237 and $30,581, respectively in commissions
to broker-dealers for execution of portfolio transactions. During the fiscal
year ended October 31, 1995, the IT Growth Fund, the IT Value Fund and the IT
Government Fund paid $26,331, $13,026 and $64,521, respectively in commissions
to broker-dealers for execution of portfolio transactions. The Investors Trust
Tax Free Fund (the "IT Tax Free Fund"), predecessor Fund to the Tax-Exempt Fund,
made no payments to broker-dealers for execution of portfolio transactions
during 1997, 1996 or 1995. The IT Growth Fund, the IT Value Fund, the IT
Government Fund and the IT Tax Free Fund made no payments for research services
in 1997, 1996 or 1995.
MANAGEMENT OF THE TRUST
TRUSTEES AND OFFICERS
The names of the Trustees and executive officers of the Trust, their
addresses and their principal occupations during the past five years and their
other affiliations are shown below. The executive officers of the Trust are
employees of organizations that provide services to the Funds. An asterisk
appears before the name of each Trustee who is an "interested person" of the
Trust, as defined in the 1940 Act.
<TABLE>
<CAPTION>
POSITIONS HELD AGE AND PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH TRUST DURING PAST FIVE YEARS
---------------- ---------- ----------------------
<S> <C> <C>
*Michael J. Cosgrove Chairman Age 48. President, GE
3003 Summer Street of the Investment Services Group of
Stamford, CT 06905 Board and GE Financial Assurance
President Holdings, Inc., since February
1997, an indirect wholly-owned
subsidiary of General Electric
Company ("GE"); Executive Vice
President - Mutual Funds of
GEIM and GEIC, wholly-owned
subsidiaries of GE that are
registered as investment
advisers under the Investment
Advisers Act of 1940, as
amended, since March 1993
(responsibilities include
general management of all
mutual fund sales and
management); Director of GEIC
and GEIM since 1988; from 1988
until 1993, Mr. Cosgrove
served as Executive Vice
President - Finance and
Administration of GEIM and
GEIC.
18
<PAGE>
*Alan M. Lewis Trustee and Age 51. Executive Vice
3003 Summer Street Executive President, General Counsel and
Stamford, CT 06905 Vice Secretary of GEIM since 1988
President and of GEIC since October 1987.
John R. Costantino Trustee Age 51. Managing Director,
150 East 58th Street Walden Partners, Ltd.,
New York, NY 10055 consultants and investors,
since August 1992; President, CMG
Acquisition Corp., Inc., a holding company,
since 1988; Vice Chairman, Acoustiguide
Holdings, Inc., a holding company, since
1989; President CMG/IKH, Inc., a holding
company, since 1991; Director, Crossland
Federal Savings Bank, a financial
institution; Director, Brooklyn Bankcorp,
Inc., a financial institution; Director, IK
Holdings, Inc., a holding company since
1991; Director, I. Kleinfeld & Son, Inc., a
retailer, since 1991; Director, High
Performance Appliances, Inc., a distributor
of kitchen appliances ("HPA"), since 1991;
Director, HPA Hong Kong, Ltd., a service
subsidiary of HPA, since 1991; Director,
Lancit Media Productions, Ltd., a children's
and family television film and videotape
production company, since 1995; Partner,
Costantino Melamede-Greenberg Investment
Partners, a general investment partnership,
from September 1987 through August 1992.
William J. Lucas Trustee Age 50. Vice President and
Fairfield University Treasurer of Fairfield
North Benson Road University since 1983.
Fairfield, CT 06430
Robert P. Quinn Trustee Age 61. Retired since 1983
45 Shinnecock Road from Salomon Brothers Inc.;
Quogue, NY 11959 Director, GP Financial Corp.,
a holding company, since 1994; Director, The
Greenpoint Savings Bank, a financial
institution, since 1987.
19
<PAGE>
Jeffrey A. Groh Treasurer Age 35. Vice President --
3003 Summer Street Operations of GEIM and GEIC
Stamford, CT 06905 since January 1997 and
Treasurer and Controller of GEIM and GEIC
since August 1994; prior to August 1994, was
a Senior Manager in Investment Company
Services Group and certified public
accountant with Price Waterhouse LLP.
Matthew J. Simpson Secretary Age 36. Vice President and
3003 Summer Street General Counsel, Investment
Stamford, CT 06905 Services Group of GEFA since
February 1997; Vice President, Associate
General Counsel and Assistant Secretary of
GEIM and GEIC since October 1992; attorney
with the law firm of Baker & McKenzie, April
1991 to October 1992; prior to April 1991
was an attorney with the law firm of
Spengler Carlson Gubar Brodsky & Frischling.
</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 Distributors,
Inc. (the "Distributor"), GE, or any affiliate of those companies, receives an
annual fee of $10,000 for services as Trustee. In addition, each Trustee
receives $500 for each meeting of the Board attended by the Trustee and is
reimbursed for expenses incurred in connection with attendance at Board
meetings.
Trustees' Compensation
(for the fiscal year ended September 30, 1997)
TOTAL COMPENSATION FOR ALL
TOTAL COMPENSATION INVESTMENT COMPANIES
NAME OF TRUSTEE FROM THE TRUST MANAGED BY GEIM OR GEIC
--------------- -------------- -----------------------
Michael J. Cosgrove None None+
Alan M. Lewis None None+
John R. Costantino $12,000 $25,000++
William J. Lucas $17,000++ $25,000++
Robert P. Quinn $12,000 $25,000++
20
<PAGE>
- ----------
+ As of September 30, 1997, Mr. Cosgrove served as Trustee or Director of four
investment companies advised by GEIM and of eight investment companies
advised by GEIC. Mr. Lewis serves as Trustee of three investment companies
advised by GEIM and 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.
++ As of September 30, 1997, Messrs. Costantino, Lucas and Quinn served as
Trustees or Directors of four investment companies advised by GEIM and the
compensation is for their services as Trustees or Directors of these
companies.
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 period ended September 30, 1997, the International
Fund, the Premier Fund, the Mid-Cap Fund, the Value Fund, the Global Fund, the
U.S. Equity 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 paid to GEIM $682,857, $43,759, $2,854, $4,434, $382,192, $1,218,687,
$368,324, $1,453, $227,295, $24,158, $33,016 and $252,319, respectively, for
investment advisory and administration services. 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.
GNA Capital Management, Inc. ("GNA Capital"), a wholly-owned subsidiary of
GNA Corporation, located at Suite 5600, Two Union Square, 601 Union Street,
Seattle, Washington 98101, was, prior to September 26, 1997, the investment
adviser to the IT Growth Fund, the IT Value Fund, the IT Government Fund and the
IT Tax Free Fund. For the period from November 1, 1996 to September 26, 1997,
the IT Growth Fund, the IT Value Fund, the IT Government Fund and the IT Tax
Free Fund paid to GNA Capital $281,759, $351,339, $3,792,436 and $132,688,
respectively, for investment advisory services. For the fiscal year ended
October 31, 1996, the IT Growth Fund, the IT Value Fund, the IT Government Fund
and the IT Tax Free Fund paid to GNA Capital $226,411, $219,848, $5,871,824 and
$29,290, respectively, for investment advisory services. For the fiscal year
ended October 31, 1995, the IT Growth Fund, the IT Value Fund, the IT Government
Fund and the IT Tax Free Fund paid to GNA Capital
21
<PAGE>
$114,802, $117,557, $7,200,544 and $125,333, respectively, for investment
advisory 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, 1997, the International Fund, the Premier Fund,
the Mid-Cap Fund, the Value Fund, the Global Fund, the U.S. Equity 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 paid to GEIM
$76,089, $11,095, $4,160, $5,565, $91,613, $486,898, $288,279, $2,235, $170,613,
$59,075, $16,281 and $0, respectively for service and distribution fees. 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 paid to GEIM $35,786, $85,815, $261,948,
$151,125, $31,909, $136,492, $10,789 and $0, respectively for service and
distribution fees.
For the period from November 1, 1996 to September 26, 1997, the IT Growth
Fund, the IT Value Fund, the IT Government Fund and the IT Tax Free Fund paid to
GNA Distributors, Inc. ("GNA Distributors"), the Investors Trust Funds'
distributor, $215,634, $297,186, $4,326,442 and $94,063, respectively for
service and distribution fees. For the fiscal year ended October 31, 1996, the
IT Growth Fund, the IT Value Fund, the IT Government Fund and the IT Tax Free
Fund paid to GNA Distributors $191,137, $194,652, $7,777,498, and $110,577,
respectively for service and distribution fees. For the fiscal year ended
October 31, 1995, the IT Growth Fund, the IT Value Fund, the IT Government Fund
and the IT Tax Free Fund paid to GNA Distributors $104,093, $113,823,
$11,0578,477 and $98,096, respectively for service and distribution fees.
During the fiscal period ended September 30, 1997, GEIM waived a total of
$18,715, $46,849, $0, $0, $54,856, $246,852, $25,481, $126, $55,467, $0, $50,448
and
22
<PAGE>
$91,356 of expenses of the International Fund, the Premier Fund, the Mid-Cap
Fund, the Value Fund, the Global Fund, the U.S. Equity 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, respectively. 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.
For the period from November 1, 1996 to September 26, 1997, GNA Capital
reimbursed a total of $53,838, $10,220, $0 and $328,817 of expenses of the IT
Growth Fund, the IT Value Fund, the Government Securities Fund and the IT
Tax-Free Fund, respectively. During the fiscal year ended October 30, 1996, GNA
Capital reimbursed a total of $90,565, $86,354, $0 and $442,198 of expenses of
the IT Growth Fund, the IT Value Fund, the Government Securities Fund and the IT
Tax-Free Fund, respectively. During the fiscal year ended October 30, 1995, GNA
Capital reimbursed a total of $157,159, $157,786, $0 and $428,046 of expenses of
the IT Growth Fund, the IT Value Fund, the Government Securities Fund and the IT
Tax-Free 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 sub-investment adviser of the Tax-Exempt Fund.
Pursuant to the sub-investment advisory agreement between Brown Brothers and
GEIM, Brown Brothers bears all expenses in connection with the performance of
its services as the Tax-Exempt Fund's sub-investment adviser.
During the fiscal period ended September 30, 1997, GEIM paid to Brown
Brothers $795 for sub-investment advisory and administration services. For the
period from November 1, 1996 to September 26, 1997, GNA Capital paid to Brown
Brothers $63,908 for sub-investment advisory services.
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.
23
<PAGE>
DISTRIBUTOR
GE Investment Distributors, Inc. serves as the distributor of shares of the
Funds on a best efforts basis.
REDEMPTION OF SHARES
Detailed information on how to redeem shares of a Fund is included in the
Prospectus. The right of redemption of shares of a Fund may be suspended or the
date of payment postponed (1) for any periods during which the NYSE is closed
(other than for customary weekend and holiday closings), (2) when trading in the
markets the Fund normally utilizes is restricted, or an emergency, as defined by
the rules and regulations of the SEC, exists, making disposal of a Fund's
investments or determination of its net asset value not reasonably practicable
or (3) for such other periods as the SEC by order may permit for the protection
of the Fund's shareholders. A shareholder who pays for Fund shares by personal
check will receive the proceeds of a redemption of those shares when the
purchase check has been collected, which may take up to 15 days or more.
Shareholders who anticipate the need for more immediate access to their
investment should purchase shares with Federal funds or bank wire or by a
certified or cashier's check.
EXCHANGE PRIVILEGE
The exchange privilege described in the Prospectus enables a shareholder of
a Fund to acquire shares in a Fund having a different investment objective and
policies when the shareholder believes that a shift between Funds is an
appropriate investment decision. Upon receipt of proper instructions and all
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
24
<PAGE>
policies, GEIM may consult with one or more independent pricing services
("Pricing Service") retained by the Trust.
Debt securities of U.S. issuers (other than Government Securities and
short-term investments), including Municipal Obligations, are valued by a dealer
or by a pricing service based upon a computerized matrix system, which considers
market transactions and dealer supplied valuations. Valuations for municipal
bonds are obtained from a qualified municipal bond pricing service; prices
represent the mean of the secondary market. When, in the judgment of the Pricing
Service, quoted bid prices for investments of the Tax-Exempt Fund are readily
available and are representative of the bid side of the market, these
investments are valued at the mean between the quoted bid prices and asked
prices. Investments of the Tax-Exempt Fund that are not regularly quoted are
carried at fair value as determined by the Board, 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 1-year period ending generally 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).
Another requirement for qualification as a regulated investment company is
that each 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").
26
<PAGE>
As of September 30, 1997, certain series of Investors Trust Funds acquired
by GE Funds pursuant to the Reorganization had net tax basis capital loss
carryforwards which may be applied against taxable gains until their expiration
date. The following table illustrates the carryforwards that apply to these
Investors Trust Funds:
EXPIRATION DATES:
INVESTORS TRUST FUND AMOUNT SEPTEMBER 30,
- -------------------- ------ -------------
Adjustable Rate Fund $44,539 2001
114,498 2002
14,856 2003
Government Fund $87,336,523 2002
107,525,597 2003
1,748,819 2004
Tax Free Fund $176,173 2002
As a result of the Reorganization, each of Investors Trust Adjustable Rate
Fund and Investors Trust Tax Free Fund had a taxable year ending on the date of
the Reorganization, and the taxable year of each respective acquiring GE Fund in
which the Reorganization occurs will be a separate taxable year for purposes of
determining the taxable years in which carryforwards of these two Investors
Trust Funds may be applied. Accordingly, the Reorganization has the effect of
reducing the carryforward periods of Investors Trust Adjustable Rate Fund and
Investors Trust Tax Free Fund. Such reduced periods are reflected in the
foregoing table of expiration dates.
A Fund's transactions in options and futures contracts are subject to
special provisions of the Code that, among other things, may affect the
character of gains and losses realized by the Fund (that is, may affect whether
gains or losses are ordinary or capital), accelerate recognition of income to
the Fund and defer losses of the Fund. These rules (1) could affect the
character, amount and timing of distributions to shareholders of a Fund, (2)
will require the Fund to "mark to market" certain types of the positions in its
portfolio (that is, treat them as if they were closed out) and (3) may cause the
Fund to recognize income without receiving cash with which to make distributions
in amounts necessary to satisfy the distribution requirements for avoiding
income and excise taxes described above and in the Prospectus. The Trust seeks
to monitor transactions of each Fund, will seek to make the appropriate tax
elections on behalf of the Fund and seeks to make the appropriate entries in the
Fund's books and records when the Fund acquires any option, futures contract or
hedged investment, to mitigate the effect of these rules and prevent
disqualification of the Fund as a regulated investment company.
In order for the Tax-Exempt Fund to pay exempt-interest dividends for any
taxable year, at the close of each taxable quarter, at least 50% of the
aggregate value of the Fund's portfolio must consist of exempt-interest
obligations. Within 60 days after the close of
27
<PAGE>
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 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.
28
<PAGE>
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.
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
29
<PAGE>
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
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.
30
<PAGE>
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 December 29, 1997:
NAME AND ADDRESS AMOUNT OF PERCENT
OF RECORD OWNER OWNERSHIP OF CLASS
- ---------------- --------- --------
TAX-EXEMPT FUND, CLASS A
Employers Reinsurance Corporation 354,434 73.61%
AFS Fund shares
Attn: Investment Department
5200 Metcalf
P.O. Box 2991
Overland Park, KS 66201-1391
TAX-EXEMPT FUND, CLASS D
GE Investment Management Incorporated 1,828 96.58%
3003 Summer Street shares
Stamford, CT 06905-4316
31
<PAGE>
INCOME FUND, CLASS A
State Street Bank & Trust Co. 110,592 6.53%
FBO Beamspeed and Co. shares
BG Automotive Motors Inc.
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank & Trust Co., as Trustee 367,958 21.74%
Beamsail & Co. - Doubletree shares
Master Trust Client Service
1 Enterprise Drive
North Quincy, MA 02171-2126
Wells Fargo Bank, as Trustee 469,890 27.76%
FBO Hubbell Inc. 401(k) shares
507025 MF 9139-027
PO Box 9800
Calabasas, CA 91372-0800
State Street Bank & Trust Co., as Trustee 137,931 8.15%
Granitecove & Co.-London Fog shares
Master Trust Client Service
1 Enterprise Drive
North Quincy, MA 02171-2126
State Street Bank & Trust Co., as Trustee 86,637 5.12%
Granitepass & Co. shares
FBP McClaren/Hart Environ.
Master Trust Client Services W6C
1 Enterprise Drive
No. Quincy, MA 02171
INCOME FUND, CLASS B
State Street Bank & Trust Co. 9,321 7.90%
C/F the IRA of Patricia L. Baldwin shares
61370 N. Main St.
Jones, MI 49061
State Street Bank & Trust Co., 7,028 5.96%
Cust. for the IRA of Erwin L. Shannon shares
30666 Longnecker Road
Leonidas, MI 49066
32
<PAGE>
Georgeann Pyke 6,748 5.72%
1758 Jefferson Ave. shares
Glenview, IL 60025
INCOME FUND, CLASS D
State Street Bank & Trust Co., Trustee 477,944 34.47%
Benchside & Co. - GE Cap. Asset Maint. shares
Master Trust Client Service
One Enterprise Drive
N. Quincy, MA 02171-2126
State Street Bank & Trust Co., as Trustee 142,941 10.01%
Granitefront & Co.-Service America shares
Master Trust Client Service
1 Enterprise Drive
North Quincy, MA 02171-2126
State Street Bank & Trust Co., as Trustee 72,462 5.07%
Granitebridge & Co. - Elano Aggressive shares
Master Trust Client Ser
ivce - WGC Aggressivevice - WGC
1 Enterprise Drive
North Quincy, MA 02171-2126
State Street Bank & Trust Co., as Trustee 165,972 11.62%
Grampas & Co. Trust shares
FBO Ameridata Technology
Master Trust Client Service
1 Enterprise Drive
North Quincy, MA 02171-2126
State Street Bank & Trust Co., as Trustee 233,289 16.34%
Eastmate & Co. Trust shares
FBO GE Capital Fleet Services
Master Trust Client Service
1 Enterprise Drive
North Quincy, MA 02171-2126
State Street Bank & Trust Co., Trustee 78,946 5.53%
Granitebridge & Co. - Elano Moderate shares
Master Trust Client Services - W6C
One Enterprise Drive
North Quincy, MA 02171
33
<PAGE>
GLOBAL FUND, CLASS A
West Carroll National Bank 9,243 13.19%
401(k) shares
William E. Pratt
Attn: 401(k) Administrator
Personal and Confidential
P.O. Box 708
Oak Grove, LA 71263
Richard C. Ellzey 4,976 7.10%
Jean M. Ellzey JT Ten shares
1830 Popps Ferry Road
Biloxi, MS 39532-2104
State Street Bank & Trust Co., as Trustee 19,311 27.56%
FBO Insulating Materials Inc. shares
Master Trust Client Service - W6C
1 Enterprise Drive
North Quincy, MA 02171
GLOBAL FUND, CLASS B
State Street Bank & Trust Company 3,207 7.12%
C/F The IRA of Sharon L. Giever shares
825 Boswell Lane
Kalamazoo, MI 49005
James R. Boardwell 2,253 5.00%
Kathryn J. Boardwell shares
7460 Carefree Drive
Whitehall, MI 49461-9506
Greg Spaulding 2,413 5.36%
Kelly Spaulding shares
7164 Beechmont Avenue, Suite 101
Cincinnati, OH 45230-4128
GLOBAL FUND, CLASS D
State Street Bank & Trust Co., as Trustee 313,758 30.04%
Eastmate & Co. Trust shares
FBO GE Capital Fleet Services
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
34
<PAGE>
State Street Bank & Trust Co., as Trustee 273,397 26.17%
Grampas & Co. Trust shares
FBO Ameridata Technology
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
Boatmen's First Natl. Bank of KC 388,698 37.21%
TTEE ERC Thrift Plan shares
P.O. Box 14737
St. Louis, MO 63178
STRATEGIC FUND, CLASS A
State Street Bank & Trust Co., as Trustee 441,438 24.24%
Beamsail & Co.-Doubletree Master Trust Client Service shares
1 Enterprise Drive
North Quincy, MA 02171-2126
State Street Bank & Trust Company, as Trustee 365,579 22.07%
Granitepass & Co. shares
FBO McClaren/Hart Environmental Eng.
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171
InvestCo Trust Co., Trustee 288,012 15.81%
Compass Group USA Inc.: 401(k) Plan shares
400 Colony Square, Suite 2200
1201 Peachtree Street, NE
Atlanta, GA 30361-3500
T. Rowe Price Tr. Co. Fiduciary Account 196,176 10.77%
Compass Group 401(k) Plan shares
c/o T. Rowe Price Tr. Co. Asset Recon.
PO Box 17215
Baltimore, MD 21297
State Street Bank & Trust Co., as Trustee 102,859 5.65%
Atlantis Plastics Inc. shares
Master Client Trust Services - W6C
1 Enterprise Drive
North Quincy, MA 02171-2126
35
<PAGE>
STRATEGIC FUND, CLASS D
State Street Bank & Trust Co., as Trustee 559,952 32.46%
Eastmate & Co. shares
FBO GE Capital Fleet Services
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank & Trust Co., Trustee 367,180 21.29%
Benchside & Co., - GE Cap. Asset Maint. shares
Master Trust Client Service
One Enterprise Drive
N. Quincy, MA 02171-2126
State Street Bank & Trust Co., Trustee 176,929 10.26%
Granitefront & Co.-Service America shares
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171
Pension Plan for Employees of Insulating 142,924 8.29%
Materials Incorporated shares
Jurg Brunner Trustee
1 West Campbell Road
Schenectady, NY 12306-2442
State Street Bank & Trust Co. as Trustee 269,096 15.60%
Grampas & Co. Trust shares
FBO Ameridata Technology
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171
EQUITY FUND, CLASS A
State Street Bank & Trust Company, as Trustee 212,196 8.43%
Granitecove & Co.-London Fog shares
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171
State Street Bank & Trust Company, as Trustee 166,072 6.60%
FBO Southwestern Medical Clinic PC shares
Master Trust Client Service
6418 Deans Hill Road
Berrien Center, MI 49102
36
<PAGE>
State Street Bank & Trust Co. 174,384 6.93%
F/B/O Beamspeed & Co. shares
BG Automotive Motors Inc.
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank and Trust Co., as Trustee 256,391 10.18%
Granitepass & Co. shares
FBO McClaren/Hart Envir. Eng.
Master Trust Client Service
1 Enterprise Drive.
No. Quincy, MA 02171
State Street Bank & Trust Co., as Trustee 689,072 27.37%
Beamsail & Co.-Doubletree shares
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
State Street Bank & Trust Co., as Trustee 170,292 6.76%
FBO Wavetek US Inc. shares
Master Trust Client Ser.-W6C
1 Enterprise Drive
No. Quincy, MA 02171
State Street Bank & Trust Co., as Trustee 287,742 11.43%
FBO The Bardon Group Inc. shares
1 Enterprise Drive
North Quincy, MA 02171-2126
EQUITY FUND, CLASS D
State Street Bank & Trust Co., as Trustee 1,328,955 16.10%
Eastmate & Co. shares
FBO GE Capital Fleet Services
Master Trust Client Services
1 Enterprise Drive
No. Quincy, MA 02171-2126
Bost & Co. 646,011 7.83%
Mutual Fund Operations shares
P.O. Box 3198
Pittsburgh, PA 15230
37
<PAGE>
State Street Bank & Trust Co., Trustee 934,070 11.32%
Benchside & Co. - GE Cap. Asset Maint. shares
Master Trust Client Service
One Enterprise Drive
N. Quincy, MA 02171-2126
Clark & Co. 773,163 9.37%
FBO UT O C Tanner Pension shares
P.O. Box 39
Westerville, OH 43085-0039
Strafe & Co. 763,254 9.25%
FAO Mead Corp. Foundation shares
235 W. Shrock Road
Mutual Fund 0390
Westerville, OH 43081
State Street Bank & Trust Co., as Trustee 649,760 7.87%
Grampas & Co. Trust shares
FBO Ameridata Technology
Master Trust Client Service W6C
1 Enterprise Drive
No. Quincy, MA 02171
Saul & Co. 705,257 8.54%
FBO Stamford Hospital Ret. Inc. shares
c/o First Union National Bank
401 S. Tryon St.
NC1151
Charlotte, NC 28202
Boatmen's First Natl. Bank of KC 714,642 7.66%
TTEE ERC Thrift Plan shares
P.O. Box 14737
St. Louis, MO 63178
MONEY MARKET FUND
State Street Bank & Trust Co., as Trustee 8,757,138 7.41%
Beamsail & Co - Doubletree shares
Master Trust Client Ser - W6C
1 Enterprise Drive
N. Quincy, MA 02171-2126
38
<PAGE>
INTERNATIONAL FUND, CLASS A
State Street Bank and Trust Co., as Trustee 90,246 9.75%
Granitepass & Co. shares
FBO McClaren/Hart Environ. Eng.
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171
State Street Bank & Trust Co., as Trustee 354,534 38.31%
Beamsail & Co. - Doubletree shares
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171
State Street Bank & Trust Co., Trustee 80,197 8.67%
FBO Southwestern Medical shares
Clinic PC
Master Trust Client Service
6418 Deans Hill Road
Berrien Center, MI 49102
InvestCo Trust Co., Trustee 51,370 5.55%
Compass Group USA Inc. 401(K) Plan Alan II shares
400 Colony Square, Suite 2200
1201 Peachtree Street, NE
Atlanta, GA 30361-3500
State Street Bank & Trust Co., Trustee 80,395 8.69%
FBO The Bardon Group Inc. shares
1 Enterprise Drive
North Quincy, MA 02171-2126
INTERNATIONAL FUND, CLASS B
PaineWebber for the benefit of PaineWebber 2,341 7.72%
CDN FBO Robert Frayn shares
P.O. Box 3321
Weehawken, NJ 07087
State Street Bank & Trust Co. 2,497 8.23%
C/F The IRA of Brenda J. Hetrick shares
3570 Freeman Ave.
Hamilton, OH 45015
39
<PAGE>
State Street Bank & Trust Co., Custodian 2,168 10.45%
for IRA Rollover of Patricia A. Conley shares
24808 Riverview Dr.
Columbia Station, OH 44028-9530
INTERNATIONAL FUND, CLASS C
Ronald J. Felmus & Veta Felmus, Trustees 24,859 8.07%
Felmus Family Residual Trust shares
U/A/D 5/9/79
22 Pine Circle South
Belleair, FL 34616
INTERNATIONAL FUND, CLASS D
John H. Pender, as Trustee 545,594 14.22%
Aid Association for Lutherans shares
4321 North Ballard Road
Appleton, WI 54919-0001
Aid Association for Lutherans 2,693,065 70.19%
4321 North Ballard Road shares
Appleton, WI 54919-0001
State Street Bank & Trust Co., Trustee 284,041 7.40%
Benchside & Co. - GE Cap. Asset Maint. shares
Master Trust Client Service
One Enterprise Drive
N. Quincy, MA 02171-2126
SHORT-TERM GOVERNMENT FUND, CLASS A
GNA Corporation 518,019 83.55%
Attn: Investments shares
601 Union Street #5600
Seattle, WA 98101-2336
SHORT-TERM GOVERNMENT FUND, CLASS B
Abel Rosario 4,361 5.16%
74 Post Avenue, Apt. 2F shares
New York, NY 10034-4707
Howard Weinhaus 4,989 5.90%
Gloria Ghee shares
85 Laguna Drive
Tempe, AZ 85282-4746
40
<PAGE>
BA Investment Services, Inc. 9,181 10.86%
FBO 711745021 shares
185 Berry St., 3rd Fl., #2640
San Francisco, CA 94107-1729
Mary Marian Guidry Comeaux 7,367 8.72%
Krysten Comeaux UTMA shares
4797 Bridge Street Highway
St. Martinville, LA 70582-6103
SHORT-TERM GOVERNMENT FUND, CLASS C
John R. Costantino and 48,007 8.37%
Barbara C. Costantino shares
2 Sutton Place South, Apt. 5c/d
NY, NY 10022
SHORT-TERM GOVERNMENT FUND, CLASS D
GE Financial Assurance Co. 413,205 63.22%
Attn: Treasury shares
Two Union Square
601 Union Street
Seattle, WA 98101-2327
State Street Bank & Trust Co., Trustee 215,169 32.92%
Eastwall & Co. Trust shares
FBO GE Consulting
Master Trust Client Service
1 Enterprise Drive
No. Quincy, MA 02171-2126
PREMIER FUND, CLASS A
State Street Bank & Trust Co., Trustee 33,481 29.48%
FBO The Bardon Group Inc.
1 Enterprise Dr.
North Quincy, MA 02171-2126
State Street Bank & Trust Co., Trustee 65,983 58.09%
FBO Insulating Materials Inc. shares
Master Trust Client Ser - W6C
1 Enterprise Dr.
No. Quincy, MA 02171-2126
41
<PAGE>
GE Financial Assurance Co. 6,773 5.96%
Attn: Treasury shares
601 Union Street, Suite 1300
Seattle, WA 98101-2023
PREMIER FUND, CLASS B
GE Financial Assurance Co. 6,773 16.21%
Attn: Treasury shares
601 Union Street, Suite 1300
Seattle, WA 98101-2023
Roger W. Leroy 2,385 5.71%
Dorthea H. Leroy Jt. Ten shares
2620 Bold Ridge Drive
Cumming, GA 30046-8470
PaineWebber 2,909 6.96%
FBO Haymor Finance Co. Inc. shares
2920 Breckenridge Dr.
Pensacola, FL 32526-2903
PREMIER FUND, CLASS D
GE Financial Assurance Co. 319,287 99.80%
Attn: Treasury shares
Two Union Square
601 Union Street, Suite 1300
Seattle, WA 98101-2327
GOVERNMENT SECURITIES FUND, CLASS C
State Street Bank & Trust Co. 908 5.31%
C/F The Rollover IRA of shares
Paul Clifford
89 Grant Street
Leominster, MA 01453-5113
Steven R. Anastasio 2,019 11.82%
Susan S. Anastasio JT Ten shares
19145 Foxgreen Cir
Leesburg, VA 20175-9150
State Street Bank & Trust Co. 1,610 9.42%
C/F The Rollover IRA of shares
Byungchae Kim
1040 Putnam Blvd.
Wallingford, PA 19086-6746
42
<PAGE>
State Street Bank & Trust Co. 4,530 26.51%
C/F The Rollover IRA of shares
Max G. Walker
7386 Village Dr.
Mason, OH 45040-1496
State Street Bank & Trust Co. 8,020 46.94%
C/F The Rollover IRA of shares
Robert C. Burke
5428 Hartford Dr.
Fort Wayne, IN 46835-4263
VALUE FUND, CLASS A
GNA Corporation 440,249 50.79%
Attn: Investments shares
601 Union Street, #5600
Seattle, WA 98101-2336
VALUE FUND, CLASS C
State Street Bank & Trust Co. 4,410 6.45%
C/F The Rollover IRA of shares
Kenneth N. Mitchell
9640 Mitchell Rd.
Union City, PA 16438-9737
State Street Bank & Trust Co. 6,177 8.99%
C/F The Rollover IRA of shares
Mildred J. Shidler
1131 Legion Ct.
Holland, MI 49423-6673
State Street Bank & Trust Co. 5,810 8.46%
C/F The Rollover IRA of shares
Robert C. Burke
5428 Hartford Dr.
Fort Wayne, IN 46835-4263
State Street Bank & Trust Co. 21,823 31.76%
C/F The Rollover IRA of shares
Nathan R. Whetten
159 Eastside Dr.
Ballston Lake, NY 12019-2119
State Street Bank & Trust Co. 5,610 8.16%
C/F The Rollover IRA of shares
Kenneth R. Simpson
2415 Merriwood Dr.
Louisville, KY 40299-1730
43
<PAGE>
MID-CAP FUND, CLASS A
GNA Corporation 636,558 57.17%
Attn: Investments shares
601 Union Street, #5600
Seattle, WA 98101-2336
MID-CAP FUND, CLASS C
State Street Bank & Trust Co. 25,831 7.40%
C/F The Rollover IRA of shares
Richard B. Clough
31 Otis Rd.
Somersworth, NH 03878-2313
State Street Bank & Trust Co. 26,681 7.65%
C/F The Rollover IRA of shares
Richard E. Zauner
4206 Oakhurst Dr.
Fort Wayne, IN 46815-5248
State Street Bank & Trust Co. 19,820 5.68%
C/F The Rollover IRA of shares
Julian O. Rellora
1686 Providence Ave.
Schenectady, NY 12309-3937
State Street Bank & Trust Co. 18,313 5.25%
C/F The Rollover IRA of shares
John D. Jevitz
2 Valley View Lane
Ottawa, IL 61350-1155
State Street Bank & Trust Co. 54,874 15.73%
C/F The Rollover IRA of shares
Nathan R. Whetten
159 Eastside Dr.
Ballston Lake, NY 12019-2119
As of December 29, 1997, except in the case of Class C shares of the
Short-Term Government Fund, the current Trustees and officers of the Trust, as a
group, beneficially owned less than 1% of each Fund's outstanding shares. One of
the Trustees owned 8.37% of the Class C shares of the Short-Term Government
Fund, as of December 29, 1997.
44
<PAGE>
ADDITIONAL INFORMATION
The Trust was organized as an unincorporated business trust under the laws
of The Commonwealth of Massachusetts pursuant to a Declaration of Trust dated
August 10, 1992, as amended from time to time (the "Declaration"). The U.S.
Equity Fund was established as a series of the Trust on August 24, 1992. The
Global Fund, the Strategic Fund, the Tax-Exempt Fund, the Income Fund and the
Money Market Fund were added as series of the Trust on November 11, 1992. The
Short-Term Government Fund and the International Fund were added as series of
the Trust on March 1, 1994. The Mid-Cap Fund and the International Income Fund
were added as series of the Trust on June 17, 1994. The Premier Fund was added
as a series of the Trust on July 22, 1996. The Value Fund and the Government
Securities Fund were added as series of the Trust on June 2, 1997. In the
interest of economy and convenience, physical certificates representing shares
of a Fund are not 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 permits notice of the disclaimer be given in each
agreement, obligation or instrument entered into or executed by the Trust or a
Trustee of the Trust. The Declaration provides for indemnification from the
property of a Fund for all losses and expenses of any shareholder of the Fund
held personally liable for the obligations of the Fund. Thus, the risk of a
shareholder of a Fund's incurring financial loss on account of shareholder
liability is limited to circumstances in which the Fund would be unable to meet
its obligations, a possibility that the Trust's management believes is remote.
Upon payment of any liability incurred by a Fund, the shareholder paying the
liability will be entitled to reimbursement from the general assets of the Fund.
The Trustees intend to conduct the operations of the Trust and the Funds in such
a way so as to avoid, as far as practicable, ultimate liability of the
shareholders for liabilities of the Funds.
COUNSEL
Willkie Farr & Gallagher, 153 East 53rd Street, New York, New York 10022,
serves as counsel for the Trust.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts 02110,
serves as independent accountants of the Trust. Coopers & Lybrand L.L.P., One
Post Office Square, Boston, Massachusetts 02109, served as independent
accountants to Investors Trust, all or substantially all the assets of which
were acquired by the Trust on September 26, 1997.
44
<PAGE>
FINANCIAL STATEMENTS
The Annual Report dated September 30, 1997, which either accompanies this
Statement of Additional Information or has previously been provided to the
person to whom this Statement of Additional Information is being sent, is
incorporated herein by reference with respect to all information other than the
information set forth in the Letter to Shareholders included in the Annual
Report. The Annual Report dated October 31, 1996 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 Report for GE Funds, the "Financial Reports"), are
incorporated herein by reference. The International Income Fund has not yet
commenced operations and has no assets as of the date of this Statement of
Additional Information. The Trust will furnish, without charge, a copy of the
Financial Reports, upon request to the Trust at P.O. Box 120065, Stamford, CT
06912-0065, (800) 242-0134.
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.
Fitch Investors Services, Inc. employs the rating F-1+ to indicate issues
regarded as having the strongest degree of assurance of timely payment. The
rating F-1
<PAGE>
reflects an assurance of timely payment only slightly less in degree than issues
rated F-1+, while the rating F-2 indicates a satisfactory degree of assurance of
timely payment although the margin of safety is not as great as indicated by the
F-1+ and F-1 categories.
Duff & Phelps Inc. employs the designation of Duff 1 with respect to top
grade commercial paper and bank money instruments. Duff 1+ indicates the highest
certainty of timely payment: short-term liquidity is clearly outstanding and
safety is just below risk-free U.S. Treasury short-term obligations. Duff 1-
indicates high certainty of timely payment. Duff 2 indicates good certainty of
timely payment; liquidity factors and company fundamentals are sound.
Thomson BankWatch Inc. employs the rating TBW-1 to indicate issues having a
very high degree of likelihood of timely payment. TBW-2 indicates a strong
degree of safety regarding timely payment, however, the relative degree of
safety is not as high as for issues rated TBW-1. While the rating TBW-3
indicates issues that are more susceptible to adverse developments than
obligations with higher ratings, capacity to service principal and interest in a
timely fashion is considered adequate. The lowest rating category is TBW-4; this
rating is regarded as non-investment grade and, therefore, speculative.
Various NRSROs utilize rankings within ratings categories indicated by a
plus or minus sign. The Funds, in accordance with industry practice, recognize
such ratings within categories or gradations, viewing for example S&P's ratings
of A-1+ and A-1 as being in S&P's highest rating category.
DESCRIPTION OF S&P CORPORATE BOND RATINGS
AAA -- This is the highest rating assigned by S&P to a bond and indicates
an extremely strong capacity to pay interest and repay principal.
AA -- Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from AAA issues only in small degree.
A -- Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB -- Bonds rated BBB have an adequate capacity to pay interest and repay
principal. Adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity to pay interest and repay principal for bonds in
this category (even though they normally exhibit adequate protection parameters)
than for bonds in higher rated categories.
BB, B and CCC -- Bonds rated BB and B are regarded, on balance, as
predominately speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB represents a lower
degree of speculation than B, and CCC the highest degree of speculation. While
such bonds will likely have some quality
A-2
<PAGE>
and protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.
To provide more detailed indications of credit quality, the ratings from AA
to B may be modified by the addition of a plus or minus sign to show relative
standing within this major rating category.
DESCRIPTION OF MOODY'S CORPORATE BOND RATINGS
Aaa -- Bonds that are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present that
make the long-term risks appear somewhat larger than in Aaa securities.
A -- Bonds that are rated A possess favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present that
suggest a susceptibility to impairment sometime in the future.
Baa -- Bonds that are rated Baa are considered as medium-grade obligations,
that is, they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba -- Bonds that are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds that are rated B generally lack characteristics of desirable
investments. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa -- Bonds that are rated Caa are of poor standing. These issues may be
in default, or present elements of danger may exist with respect to principal or
interest.
Moody's applies numerical modifiers (1, 2 and 3) with respect to the bonds
rated Aa through B, The modifier 1 indicates that the bond being rated ranks in
the higher end
A-3
<PAGE>
of its generic rating category; the modifier 2 indicates a mid-range ranking;
and the modifier 3 indicates that the bond ranks in the lower end of its generic
rating category.
DESCRIPTION OF S&P MUNICIPAL BOND RATINGS
AAA -- Prime -- These are obligations of the highest quality. They have the
strongest capacity for timely payment of debt service.
General Obligation Bonds -- In a period of economic stress, the issuers
will suffer the smallest declines in income and will be least susceptible to
autonomous decline. Debt burden is moderate. A strong revenue structure appears
more than adequate to meet future expenditure requirements. Quality of
management appears superior.
Revenue Bonds -- Debt service coverage has been, and is expected to remain,
substantial. Stability of the pledged revenues is also exceptionally strong due
to the competitive position of the municipal enterprise or to the nature of the
revenues. Basic security provisions (including rate covenant, earnings test for
issuance of additional bonds, debt service reserve requirements) are rigorous.
There is evidence of superior management.
AA -- High Grade -- The investment characteristics of bonds in this group
are only slightly less marked than those of the prime quality issues. Bonds
rated AA have the second strongest capacity for payment of debt service.
A -- Good Grade -- Principal and interest payments on bonds in this
category are regarded as safe although the bonds are somewhat more susceptible
to the adverse effects of changes in circumstances and economic conditions than
bonds in higher rated categories. This rating describes the third strongest
capacity for payment of debt service. The ratings differ from the two higher
ratings of municipal bonds, because:
General Obligations Bonds -- There is some weakness, either in the local
economic base, in debt burden, in the balance between revenues and expenditures,
or in quality of management. Under certain adverse circumstances, any one such
weakness might impair the ability of the issuer to meet debt obligations at some
future date.
Revenue Bonds -- Debt service coverage is good, but not exceptional.
Stability of the pledged revenues could show some variations because of
increased competition or economic influences on revenues. Basic security
provisions, while satisfactory, are less stringent. Management performance
appears adequate.
BBB -- Medium Grade -- Of the investment grade ratings, this is the lowest.
Bonds in this group are regarded as having an adequate capacity to pay interest
and repay principal. Adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for bonds in this category (even though they normally exhibit adequate
protection parameters) than for bonds in higher rated categories.
A-4
<PAGE>
General Obligation Bonds -- Under certain adverse conditions, several of
the above factors could contribute to a lesser capacity for payment of debt
service. The difference between A and BBB ratings is that the latter shows more
than one fundamental weakness, or one very substantial fundamental weakness,
whereas, the former shows only one deficiency among the factors considered.
Revenue Bonds -- Debt coverage is only fair. Stability of the pledged
revenues could show substantial variations, with the revenue flow possibly being
subject to erosion over time. Basic security provisions are no more than
adequate. Management performance could be stronger.
BB, B, CCC and CC -- Bonds rated BB, B, CCC and CC are regarded, on
balance, as predominately speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB includes
the lowest degree of speculation and CC the highest degree of speculation. While
these bonds will likely have some quality and protective characteristics, these
characteristics are outweighed by large uncertainties or major risk exposures to
adverse conditions.
C -- The rating C is reserved for income bonds on which no interest is
being paid.
D -- Bonds rated D are in default, and payment of interest and/or repayment
of principal is in arrears.
S&P's letter ratings may be modified by the addition of a plus or a minus
sign, which is used to show relative standing within the major rating
categories, except in the AAA-Prime Grade category.
DESCRIPTION OF S&P MUNICIPAL NOTE RATINGS
Municipal notes with maturities of three years or less are usually given
note ratings (designated SP-1, -2 or -3) to distinguish more clearly the credit
quality of notes as compared to bonds. Notes rated SP-1 have a very strong or
strong capacity to pay principal and interest. Those issues determined to
possess overwhelming safety characteristics are given the designation of SP-1+.
Notes rated SP-2 have satisfactory capacity to pay principal and interest.
DESCRIPTION OF MOODY'S MUNICIPAL BOND RATINGS
Aaa -- Bonds that are rated Aaa are judged to be the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa -- Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds.
A-5
<PAGE>
They are rated lower than the best bonds because margins of protection may not
be as large as in Aaa securities, or fluctuation of protective elements may be
of greater amplitude, or there may be other elements present that make the
long-term risks appear somewhat larger than in Aaa securities.
A -- Bonds that are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present that suggest a susceptibility to impairment sometime in the future.
Baa -- Bonds that are rated Baa are considered as medium grade obligations,
that is, they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba -- Bonds that are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterize bonds in this class.
B -- Bonds that are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa -- Bonds that are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca -- Bonds that are rated Ca represent obligations that are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.
C -- Bonds that are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through B. The modifier 1 indicates that the security
ranks in the higher end of its generic ratings category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the issue ranks
in the lower end of its generic ratings category.
DESCRIPTION OF MOODY'S MUNICIPAL NOTE RATINGS
Moody's ratings for state and municipal notes and other short-term loans
are designated Moody's Investment Grade (MIG) and for variable rate demand
obligations are designated Variable Moody's Investment Grade (VMIG). This
distinction recognizes the differences between short-term credit risk and
long-term risk. Loans bearing the designation MIG 1/VMIG 1 are the best quality,
enjoying strong protection from established cash flows of
A-6
<PAGE>
funds for their servicing or from established and broad-based access to the
market for refinancing, or both. Loans bearing the designation MIG 2/VMIG 2 are
of high quality, with margins of protection ample, although not as large as the
preceding group. Loans bearing the designation MIG 3/VMIG3 are of favorable
quality, with all security elements accounted for but lacking the undeniable
strength of the higher grades. Market access for refinancing, in particular, is
likely to be less well established. Loans bearing the designation MIG 4/VMIG 4
are of adequate quality. Protection commonly regarded as required of an
investment security is present and although not distinctly or predominantly
speculative, there is specific risk.
<PAGE>
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.
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"), GE Premier Growth Equity Fund (the "Premier
Fund"), GE Mid-Cap Growth Fund ("Mid-Cap Fund"), GE Value Equity Fund ("Value
Fund"), GE Government Securities Fund ("Government Securities Fund") and GE
Tax-Exempt Fund ("Tax-Exempt Fund" and together with the International Fund,
Global Fund, U.S. Equity Fund, Strategic Fund, Income Fund, Short-Term
Government Fund, Money Market Fund, Premier Fund, Mid-Cap Fund, Value Fund and
Government Securities Fund, the "Funds"):
(1)(a) Financial Highlights for the period ended September 30, 1993 and
for the four fiscal years ended September 30, 199 7 (for all
Funds except Premier Fund, Mid-Cap Fund, Value Fund and
Government Securities Fund)*.
(1)(b) Premier Fund only:
Financial Highlights for the fiscal period ended September 30,
1997*.
(1)(c) Mid-Cap Fund, Value Fund and Government
Securities Funds
only:
Financial Highlights for the fiscal period ended September 30,
1997 (for Class A and Class B shares only)*.
(2) Statement of Assets and Liabilities as of September 30, 199 7
(for all Funds except Class C and Class D shares of Mid-Cap Fund,
Value Fund and Government Securities Fund)*.
(3) Statement of Operations for the fiscal period ended September 30,
1997 (for all Funds except Class C and Class D shares of Mid-Cap
Fund, Value Fund and Government Securities Fund)*.
(4) Statement of Changes in Net Assets for the fiscal year ended
September 30, 1996 (for all Funds
<PAGE>
except Premier Fund, Mid-Cap Fund, Value Fund and Government
Securities Fund)*, for the fiscal year ended September 30, 1997
(for all Funds except Class C and Class D shares of Mid-Cap Fund,
Value Fund and Government Securities Fund)*.
(5) Changes in Fund Shares for the fiscal year ended September 30,
1996 (for all Funds except Premier Fund, Mid-Cap Fund, Value Fund
and Government Securities Fund)*, for the fiscal year ended
September 30, 1997 (for all Funds except Class C and Class D
shares of Mid-Cap Fund, Value Fund and Government Securities
Fund)*.
(6) Notes to Financial Statements as of September 30, 199 7 (for all
Funds except Class C and Class D shares of Mid-Cap Fund, Value
Fund and Government Securities Fund)*.
(7) Schedule of Investments as of September 30, 199 7 (for all Funds
except Class C and Class D shares of Mid-Cap Fund, Value Fund and
Government Securities Fund)*.
(8) Notes to Schedules of Investments as of September 30, 1997 (for
all Funds except Class C and Class D shares of Mid-Cap Fund,
Value Fund and Government
Securities Fund)*.
(9) Report of Independent Accountants*.
- ---------------
* Incorporated in Parts A and B of the Registration Statement by reference to
the Trust's Annual Report to shareholders for the fiscal year ended
September 30, 1997.
C-2
<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 Mid-Cap Fund, Value Fund, Government Securities Fund
and Tax-Exempt Fund, respectively):
(1)(a) All Funds except Government Securities Fund: Financial Highlights
for the period ended October 31, 1993, for the three fiscal years
ended October 31, 1996*.
(1)(b) Government Securities Fund only:
Financial Highlights for the period ended October
31, 1987**, for the nine fiscal years ended
October 31, 1996*.
(2) Statements of Assets and Liabilities as of
October 31, 1996*.
(3) Statements of Operations for the fiscal year
ended October 31, 1996*.
(4) Statements of Changes in Net Assets for the two
fiscal years ended October 31, 1996*.
(5) Changes in Fund Shares for the two fiscal years ended October
31, 1996*.
(6) Notes to Financial Statements as of October 31,
1996*.
(7) Schedules of Investments as of October 31, 1996*.
(8) Notes to Schedules of Investments as of October
31, 1996*.
(9) Report of Independent Accountants.*
- ---------------
* Incorporated in Parts A and B of the Registration Statement by reference to
Investors Trust's Annual Report to shareholders for the fiscal year ended
October 31, 1996.
** Incorporated in Parts A and B of the Registration Statement by reference to
Investors Trust's Annual Report to shareholders for the year ended October
31, 1995.
C-3
<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
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*
6 Form of Distribution Agreement, as amended*
C-4
<PAGE>
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 Consent of Willkie Farr & Gallagher
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-5
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL
WITH REGISTRANT
See item 28.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
Number of Record Holders
as of
Title of Class December 29, 1997
-------------- -----------------
Shares representing beneficial interests,
par value $.001 per share of:
Global Fund - Class A 394
Global Fund - Class B 206
Global Fund - Class C 4,493
Global Fund - Class D 257
International Fund - Class A 650
International Fund - Class B 133
International Fund - Class C 836
International Fund - Class D 38
U.S. Equity Fund - Class A 1,682
U.S. Equity Fund - Class B 1,601
U.S. Equity Fund - Class C 7,319
U.S. Equity Fund - Class D 459
Strategic Fund - Class A 991
Strategic Fund - Class B 763
Strategic Fund - Class C 3,417
Strategic Fund - Class D 306
Tax-Exempt Fund - Class A 89
Tax-Exempt Fund - Class B 438
Tax-Exempt Fund - Class C 750
Tax-Exempt Fund - Class D 8
Income Fund - Class A 584
Income Fund - Class B 142
Income Fund - Class C 2,170
Income Fund - Class D 249
Short-Term Government Fund - Class A 129
Short-Term Government Fund - Class B 103
Short-Term Government Fund - Class C 350
Short-Term Government Fund - Class D 15
Premier Fund - Class A 59
Premier Fund - Class B 112
Premier Fund - Class C 1,026
C-6
<PAGE>
Premier Fund - Class D 12
Government Securities Fund - Class A 1,782
Government Securities Fund - Class B 38,791
Government Securities Fund - Class C 0
Government Securities Fund - Class D 0
Value Equity Fund - Class A 445
Value Equity Fund - Class B 3,797
Value Equity Fund - Class C 36
Value Equity Fund - Class D 3
Mid-Cap Fund - Class A 675
Mid-Cap Fund - Class B 0
Mid-Cap Fund - Class C 53
Mid-Cap Fund - Class D 2
Money Market Fund 8,747
There are no holders of the shares of beneficial interest, par value $.001
per share, of the International Income Fund on the date this Registration
Statement becomes effective.
ITEM 27. INDEMNIFICATION
Reference is made to Article IV of the Declaration of Trust of GE Funds
("Registrant") filed as Exhibit 1 to this 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.
C-7
<PAGE>
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-8
<PAGE>
ITEM 29. PRINCIPAL UNDERWRITERS
(a) GE Investment Distributors, Inc. ("GEID") also serves as distributor
for GE Investments Funds, Inc., GE Institutional Funds, GE LifeStyle Funds,
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 GEID is incorporated by reference to Schedule A of Form BD filed
by GEID 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; 777 Long Ridge Road, Stamford, Connecticut 06927; State Street Bank and
Trust Company ("State Street"), Registrant's custodian and transfer agent,
located at 225 Franklin Street, Boston, Massachusetts 02101; and National
Financial Data Services Inc., a subsidiary of State Street, located at P.O. Box
419631, Kansas City, Missouri 64141-6631.
ITEM 31. MANAGEMENT SERVICES
Inapplicable.
ITEM 32. UNDERTAKINGS
(a) Registrant undertakes to call a meeting of the shareholders of each
Fund for the purpose of voting upon the question of removal of a trustee or
trustees of Registrant when requested in writing to do so by the holders of at
least 10% of Registrant's outstanding shares and, in connection with the
meeting, to comply with the provisions of Section 16(c) of the 1940 Act relating
to communications with the shareholders of certain common-law trusts.
(b) Not applicable.
(c) Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest annual report to shareholders,
upon request and without charge.
C-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, Registrant certifies that it
meets all of the requirements for effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933, as amended, and has
duly caused this Amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Stamford,
State of Connecticut, on the 22nd day of January, 1998.
By: /s/ MICHAEL J. COSGROVE
---------------------------------
Michael J. Cosgrove
President and Chairman
of the Board
C-10
<PAGE>
Pursuant to the requirements of the Securities Act, as amended, this
Amendment to Registrant's Registration Statement on Form N-1A has been signed
below by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
/S/ MICHAEL J. COSGROVE President and Chairman of January 22, 1998
- -------------------------- the Board (Chief Executive
Michael J. Cosgrove Officer)
/S/ ALAN M. LEWIS Executive Vice President January 22, 1998
- -------------------------- and Trustee
Alan M. Lewis
/S/ JOHN R. COSTANTINO Trustee January 22, 1998
- --------------------------
John R. Costantino
/S/ WILLIAM J. LUCAS Trustee January 22, 1998
- --------------------------
William J. Lucas
/S/ ROBERT P. QUINN Trustee January 22, 1998
- --------------------------
Robert P. Quinn
/S/ JEFFREY A. GROH Treasurer January 22, 1998
- -------------------------- (Chief Financial and
Jeffrey A. Groh Accounting Officer)
C-11
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
- ----------- ----------------------
10 Consent of Willkie Farr & Gallagher
11(a) Consent of Price Waterhouse LLP
11(b) Consent of Coopers & Lybrand L.L.P.
17 Financial Data Schedules
Exhibit 10
CONSENT OF COUNSEL
GE FUNDS
We hereby consent to being named in the Statement of Additional Information
included in Post-Effective Amendment No. 23 (Securities Act File No.
33-51308) and Amendment No. 25 (Investment Company Act File No. 811-7142)
(collectively, the "Amendment") to the Registration Statement on Form N-1A,
of GE Funds (the "Trust") under the caption "Counsel" and to the Trust's
filing a copy of this Consent as an exhibit to the Amendment.
/s/ Willkie Farr & Gallagher
------------------------------
Willkie Farr & Gallagher
January 21, 1998
New York, New York
Exhibit 11(a)
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. 23 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated November 14, 1997, relating to the financial
statements and financial highlights appearing in the September 30, 1997 Annual
Report to Shareholders of the GE Funds, which are also incorporated by reference
into the Registration Statement. We also consent to the reference to us under
the heading "Independent Accountants" in the Statement of Additional
Information.
PRICE WATERHOUSE LLP
Boston Massachusetts
January 21, 1998
Exhibit 11(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Trustees of GE Funds:
We consent to the incorporation by reference in Post-Effective Amendment
No. 23 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 references to our Firm under the caption "Independent
Accountants" in the Registration Statement.
COOPERS & LYBRAND, L.L.P.
Boston, Massachusetts
January 21, 1998
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