SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
Annual Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
(Mark One)
/x/ Annual report pursuant to Section 15(d) of the Securities Exchange
Act of 1934 (No Fee Required)
For the fiscal year ended December 31, 1996
OR
/ / Transition report pursuant to Section 15(d) of the Securities Exchange
Act of 1934 (No Fee Required)
For the transition period from ___ to ___
Commission file number 1-35
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
GE Savings and Security Program
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
General Electric Company
3135 Easton Turnpike, Fairfield, Connecticut 06431
<PAGE>
REQUIRED INFORMATION
A. Financial Statements and Schedules:
Independent Auditors' Report 3
Statements of Net Assets Available for Plan
Benefits as of December 31, 1996 and 1995 4
Statements of Changes in Net Assets Available for
Plan Benefits for the Years Ended December 31, 1996 and 1995 5
Notes to Financial Statements 6-20
Schedule I Item 27a - Schedule of Assets
Held for Investment Purposes as of December 31, 1996 21-32
B. Exhibits
(23) Consent of Independent Auditors
(99) GE S&S Program Mutual Funds 1996 Annual Report
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act
of 1934, the trustees (or other persons who administer the employee benefit
plan) have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
GE Savings and Security Program
(Name of Plan)
Date June 25, 1997 Philip D. Ameen
-------------- Vice President and Comptroller
<PAGE>
1
GE SAVINGS AND SECURITY PROGRAM
Financial Statements and Supplemental Schedule
December 31, 1996 and 1995
(With Independent Auditors' Report Thereon)
<PAGE>
2
GE SAVINGS AND SECURITY PROGRAM
December 31, 1996 and 1995
Table of Contents
Page
Number(s)
---------
Independent Auditors' Report 3
Statements of Net Assets Available for Plan
Benefits as of December 31, 1996 and 1995 4
Statements of Changes in Net Assets Available for
Plan Benefits for the Years Ended December 31, 1996 and 1995 5
Notes to Financial Statements 6-20
Schedule I Item 27a - Schedule of Assets
Held for Investment Purposes as of December 31, 1996 21-32
<PAGE>
3
Independent Auditors' Report
General Electric Company, as administrator
GE Savings and Security Program:
We have audited the accompanying statements of net assets available for plan
benefits of GE Savings and Security Program (the "Plan") as of December 31, 1996
and 1995, and the related statements of changes in net assets available for plan
benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 1996 and 1995, and the changes in net assets available for plan
benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information included in
Schedule I is presented for the purpose of additional analysis and is not a
required part of the basic financial statements, but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The Fund Information in note 7 to the financial statements is presented
for purposes of additional analysis rather than to present the net assets
available for plan benefits and changes in net assets available for plan
benefits of each fund. The supplemental schedule and Fund Information have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
KPMG Peat Marwick LLP
May 15, 1997
<PAGE>
4
GE SAVINGS AND SECURITY PROGRAM
Statements of Net Assets Available for Plan Benefits
December 31, 1996 and 1995
(in thousands)
<TABLE>
<CAPTION>
Assets 1996 1995
------ ---- ----
<S> <C> <C>
Investments at fair value (Cost: $ 9,438,475 and
$8,597,689, respectively) (note 3):
General Electric Company common stock (note 6) $ 8,555,781 $ 5,898,864
Registered investment companies:
S&S Long Term Interest Fund 2,014,089 2,235,430
S&S Program Mutual Fund 1,512,913 1,225,729
U.S. government and agency debt obligations 738,821 750,090
Loans to participants (note 4) 383,826 345,925
Corporate bonds and notes 244,266 433,058
U.S. Savings Bonds (Series E & EE) 241,024 266,983
Short term money market instruments 449,641 423,288
Loans secured by mortgages 123,471 74,215
Other 18,925 24,906
------------- --------------
Total investments 14,282,757 11,678,488
------------- --------------
Accrued dividends and interest 54,851 49,980
Due from brokers 46 391
Other assets 3,990 15,773
------------- --------------
Total assets 14,341,644 11,744,632
------------- --------------
Liabilities
Liability for collateral deposits (note 3) 9,000 185,772
Other liabilities 25,395 9,385
------------- --------------
Total liabilities 34,395 195,157
------------- --------------
Net assets available for plan benefits (note 7) $ 14,307,249 $ 11,549,475
============= ==============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
5
GE SAVINGS AND SECURITY PROGRAM
Statements of Changes in Net Assets Available for Plan Benefits
Years Ended December 31, 1996 and 1995
(in thousands)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Additions to net assets attributed to:
Investment income:
Net realized and unrealized appreciation
in value of investments (note 6) $ 2,336,624 $ 2,177,950
Interest and dividend income:
General Electric Company common stock 147,877 130,191
Registered investment companies 296,377 281,159
Interest 118,528 118,201
------------- --------------
2,899,406 2,707,501
Contributions and other additions:
Employee contributions 489,924 434,813
Employer contributions 175,998 168,213
------------- --------------
665,922 603,026
------------- --------------
Total additions 3,565,328 3,310,527
Deductions from net assets attributed to:
Participant withdrawals (807,554) (866,684)
------------- --------------
Net increase 2,757,774 2,443,843
Net assets available for plan benefits (note 7):
Beginning of year 11,549,475 9,105,632
------------- --------------
End of year $ 14,307,249 $ 11,549,475
============= ==============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
6
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements
December 31, 1996 and 1995
(1) Description of the Plan
-----------------------
GE Savings and Security Program (the "Plan") is a defined contribution
plan sponsored by General Electric Company and its participating
affiliates (the "Company"). The Plan is subject to applicable provisions
of the Employee Retirement Income Security Act of 1974 ("ERISA"). The
Trustees of the Plan are officers of General Electric Investment Company
(GEIC), a wholly owned subsidiary of General Electric Company. State
Street Bank and Trust Company and The Bank of New York are the primary
custodians for Plan assets.
The following description of the Plan is provided for general information
purposes only. The complete terms of the Plan are provided in the GE
Savings and Security Program document (the "Plan Document"). Benefits,
vesting provisions and effects of plan termination are included in plan
handbooks and other material distributed to participants.
Employee Contributions and Investment Funds
-------------------------------------------
Eligible employees of the Company may participate in the Plan by
investing a portion of their earnings (generally up to 7% with Company
partial matching and an additional 10% without any Company matching) in
one or more of the following funds or investments through a trust
established to administer the investment of program funds:
(a) General Electric Company common stock (the "GE Stock Fund" or "GE
common stock").
(b) S&S Long Term Interest Fund (the "LT Fund") -- consists of investments
in long term bonds and short-term notes through a registered
investment company.
(c) S&S Program Mutual Fund (the "Mutual Fund") -- consists primarily of
investments in common stock through a registered investment company.
(d) S&S Short Term Interest Fund (the "ST Fund") -- consists primarily of
investments in securities of the U.S. government and its agencies and
corporate bonds.
(e) S&S Money Market Fund (the "MM Fund") -- consists of investments in
short term money market instruments.
(f) United States Savings Bonds ("U.S. Bond Fund") -- consists of
individual participants' investments in U.S. Savings Bonds. Pending
accumulation of sufficient individual funds, investments are made in
short term money market instruments.
The S&S Holding Period Interest Fund (the "HP Fund") was terminated
effective January 1, 1995. All remaining assets were transferred to the
S&S Long Term Interest Fund as of the effective date.
<PAGE>
7
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements
Eligible employees may elect to apply either 0.5% or 1.0% of earnings to
purchase life insurance. The benefit obligations of such purchased life
insurance contracts rest with the insurer, Metropolitan Life Insurance
Company as of January 1, 1996, and Aetna Life Insurance Co. ("Aetna")
prior to January 1, 1996. Accordingly, such life insurance contracts are
not included in the Plan's net assets available for plan benefits.
Payments to the insurer of contributions received from employees for life
insurance contracts were $11.7 million and $11.9 million in 1996 and
1995, respectively. Total life insurance in force amounted to $4.6
billion and $4.7 billion at December 31, 1996 and 1995, respectively.
Participants may elect, up to twelve times a year, to switch their
investment in an investment fund (in increments of 10%) to another
investment fund that is presently available to accept new funds.
The Internal Revenue Code sets out maximum limits on participant pre-tax
contributions. The limit was $9,500 and $9,240 for 1996 and 1995,
respectively.
Employer Contributions
----------------------
The Plan generally provides for Company matching contributions of 50% of
employees' contributions of up to 7% of their earnings which may be
invested at the election of the participant in any one of the investment
funds except for United States Savings Bonds and life insurance.
Rollovers and Transfers from Other Qualified Plans
--------------------------------------------------
Subject to Company approval, participants may elect rollovers of amounts
attributable to other plans in accordance with the Internal Revenue Code.
For the years ended December 31, 1996 and 1995, transfers from other
qualified plans accounted for $39.6 million and $15.1 million,
respectively, of employee contributions included in the statements of
changes in net assets available for plan benefits.
Withdrawals
-----------
Subject to certain limitations prescribed by the Plan and Internal
Revenue Code, participants may elect retirement or other termination
withdrawals in either lump sum or partial payments and currently employed
participants may make up to seven withdrawals per year or certain
hardship withdrawals from their participant accounts. Partial payments
are limited to four per year and a minimum of $500 each.
<PAGE>
8
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements
Loans to Participants
---------------------
The Plan permits participants, under certain circumstances, to borrow a
minimum of $500 from their participant accounts. Subject to certain
Internal Revenue Code and Plan limits, such loans cannot exceed 50% of
the participant's available account value, as defined in the Plan
Document (or, if less, $50,000 adjusted for prior loans). The interest
rate applicable to participant loans is based on the monthly average of
the composite yield on corporate bonds, as published by Moody's Investors
Service, for the month that is two months before the month in which the
loan is requested.
A participant may have no more than two outstanding loans from the Plan
at any time and may not obtain more than one such loan during any
calendar year.
Loans are repaid with interest in equal payments over the term of the
loan by payroll deductions, personal check or other such methods as may
be required. Participants may repay the entire principal amount by check
with written notice and without penalty beginning three months after the
date of the loan.
In the event of a loan default, as defined by the Internal Revenue
Service, the Plan will report the amount of the loan principal and
accrued interest as a withdrawal.
Vesting
-------
Participants are fully vested in their employee and employer
contributions.
Plan Termination
----------------
Although the Company has not expressed any intent to do so, it has the
right under the Plan to discontinue its contributions, and to terminate
the Plan subject to the provisions of ERISA. If the Plan is terminated,
each participant's interest will be payable in full according to Plan
provisions.
Administrative Costs
--------------------
Direct administrative costs of the Plan are generally borne by the
Company. Administrative costs include investment management,
recordkeeping, and transaction processing fees.
<PAGE>
9
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements
(2) Summary of Significant Accounting Policies
------------------------------------------
(a) Basis of Accounting
-------------------
The accompanying financial statements have been prepared on the
accrual basis of accounting.
(b) Investments
-----------
Plan investments are stated at fair value. General Electric
Company common stock is valued at the closing price on the New
York Stock Exchange Composite Transactions. Investments in
registered investment companies are valued at the Plan's pro rata
share of the current fair value of the net assets of such
companies. Long term U.S. government, agency and corporate debt,
notes, bonds, and loans secured by mortgages are valued at current
quoted market prices. Short term money market instruments, U.S.
government, agency and corporate notes are valued at cost plus
accrued interest which approximates fair value. U.S. Savings Bonds
are valued at the current cash redemption value published by the
U.S. Treasury Department.
Investment transactions are recorded on a trade date basis.
Dividends on General Electric Company common stock are recorded as
of the record date. Interest income is earned from settlement date
and recognized on the accrual basis.
The LT Fund may use various financial instruments, particularly
forward foreign currency contracts, options, and futures, commonly
referred to as derivatives, to manage its risk. The LT Fund does
not engage in trading, market-making or other speculative
activities in the derivatives markets. Established practices
require that derivative financial instruments relate to specific
asset, liability, or equity transactions or to currency exposures.
More detailed information regarding these financial instruments,
as well as the strategies and policies for their use, is contained
in the audited financial statements of the LT Fund which is
distributed annually to participants.
(c) Management Estimates and Assumptions
------------------------------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect reported amounts and
related disclosures. Actual results could differ from those
estimates.
(d) Reclassifications
-----------------
Certain prior year amounts have been reclassified to conform to
current year presentation.
<PAGE>
10
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements
(3) Investments
-----------
The Plan held the following individual investments whose aggregate fair
value equaled or exceeded 5% of the Plan's net assets at December 31,
1996 and 1995:
Fair Value
(in thousands)
1996
----
GE common stock 86,531,291 shares $ 8,555,781
S&S Long Term
Interest Fund 178,554,162 shares 2,014,089
S&S Program
Mutual Fund 33,222,274 shares 1,512,913
1995
----
GE common stock 81,928,670 shares $ 5,898,864
S&S Long Term
Interest Fund 192,875,745 shares 2,235,430
S&S Program
Mutual Fund 29,757,927 shares 1,225,729
Audited financial statements of the LT Fund and the Mutual Fund are
distributed annually to participants.
The ST Fund, may, from time to time, lend securities to certain unrelated
brokers. In the event the counterparty does not meet its contracted
obligation to return securities used, the Fund may be exposed to the risk
of reacquiring the securities at prevailing market prices in order to
satisfy its obligations. The ST Fund receives collateral in the form of
cash or securities, which may be supplemented by letters of credit, in an
amount generally in excess of the market value of securities loaned. The
ST Fund monitors the market value of the securities loaned on a daily
basis with additional collateral obtained or refunded as necessary. The
value of loaned securities, primarily U.S. Treasury obligations, amounted
to $9 million and $186 million at December 31, 1996 and 1995,
respectively. The value of cash collateral obtained and reinvested in
short term investments is reflected as a liability in the Plan's
financial statements.
<PAGE>
11
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements
(4) Loans to Participants
---------------------
The following table summarizes the changes in loans to participants.
Year Ended December 31
----------------------
1996 1995
---- ----
(in thousands)
Loan balance - beginning of year $ 345,925 $ 288,410
Loans made 197,241 195,502
Less: Loan repayments
- Reinvestments (149,961) (126,459)
- Withdrawals (9,379) (11,528)
----------- -----------
Loan balance - end of year $ 383,826 $ 345,925
=========== ===========
(5) Tax Status
----------
The Internal Revenue Service has determined and informed the Company by a
letter dated July 19, 1995, that the Plan is qualified and the trust
established under the Plan is tax-exempt, under the appropriate sections
of the Code.
The portion of a participant's compensation contributed to the Plan as a
pre-tax contribution and the Company's matching contribution are not
subject to Federal income tax when such contributions are credited to
participant accounts, subject to certain limitations. These amounts and
any investment earnings may be included in the participant's gross
taxable income for the year in which such amounts are withdrawn from the
Plan.
<PAGE>
12
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements
(6) General Electric Company Common Stock
-------------------------------------
The Plan holds shares of General Electric Company common stock and
recorded dividend income, net realized gains on sale and net unrealized
appreciation in value of these securities. Such net realized gains and
net unrealized appreciation were $2.3 billion and $1.7 billion for the
years ended December 31, 1996 and 1995, respectively.
(7) Fund Information - Net Assets Available for Plan Benefits and Changes
In Net Assets Available for Plan Benefits
---------------------------------------------------------------------
The following pages summarize the net assets available for plan benefits
and changes in net assets available for plan benefits for each investment
fund or type of asset of the Plan as of and for the years ended
December 31, 1996 and 1995.
<PAGE>
13
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements
Net Assets Available for Plan Benefits
December 31, 1996
(in thousands except participant unit value)
<TABLE>
<CAPTION>
Assets GE Stock Fund LT Fund Mutual Fund ST Fund MM Fund
- - ------ ------------- ------- ----------- ------- -------
<S> <C> <C> <C> <C> <C>
Investments at fair value $8,555,781 $2,014,089 $1,512,913 $ 844,031 $ 719,706
Accrued dividends and interest 41,052 -- -- 11,593 2,197
Due from brokers -- -- -- 46 --
Other assets 3,990 -- -- -- --
---------- ---------- ---------- ---------- ----------
Total assets 8,600,823 2,014,089 1,512,913 855,670 721,903
---------- ---------- ---------- ---------- ----------
Liabilities
Liability for collateral deposits -- -- -- 9,000 --
Other liabilities -- -- -- 2,505 19,681
---------- ---------- ---------- ---------- ----------
Total liabilities -- -- -- 11,505 19,681
---------- ---------- ---------- ---------- ----------
Net assets available for plan benefits $8,600,823 $2,014,089 $1,512,913 $ 844,165 $ 702,222
========== ========== ========== ========== ==========
Participant units outstanding 86,572 178,554 33,222 82,277 70,222
Participant unit value $ 99.35<F1>$ 11.28 $ 45.54 $ 10.26 $ 10.00
========== ========== ========== ========== ==========
(Continued)
<FN>
<F1> Participant unit value includes the value of a share of GE stock of
$98.875 and the unit value of accrued dividends in the fund.
</TABLE>
<PAGE>
14
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements
Net Assets Available for Plan Benefits, Continued
December 31, 1996
(in thousands except participant unit value)
<TABLE>
<CAPTION>
Total Loan and
Investment Other Program
Assets U.S. Bonds Funds Accounts Total
- - ------ ---------- ----- -------- -----
<S> <C> <C> <C> <C>
Investments at fair value $ 248,350 $ 13,894,870 $ 387,887 $14,282,757
Accrued dividends and interest - 54,842 9 54,851
Due from brokers - 46 - 46
Other assets - 3,990 - 3,990
------------- ------------- ---------- ------------
Total assets 248,350 13,953,748 387,896 14,341,644
------------- ------------- ---------- ------------
Liabilities
Liability for collateral deposits - 9,000 - 9,000
Other liabilities - 22,186 3,209 25,395
------------- ------------- ---------- ------------
Total liabilities - 31,186 3,209 34,395
------------- ------------- ---------- ------------
Net assets available for plan benefits $ 248,350 $ 13,922,562 $ 384,687 $ 14,307,249
============= ============= ========== ============
Participant units outstanding *
Participant unit value $ *
============
<FN>
* Not applicable as individual participant values are determined based upon the
time at which investments are made.
</TABLE>
<PAGE>
15
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements
Net Assets Available for Plan Benefits
December 31, 1995
(in thousands except participant unit value)
<TABLE>
<CAPTION>
Assets GE Stock Fund LT Fund Mutual Fund ST Fund MM Fund
- - ------ ------------- ------- ----------- ------- -------
<S> <C> <C> <C> <C> <C>
Investments at fair value $5,898,864 $2,235,430 $1,225,729 $1,035,855 $658,302
Accrued dividends and interest 35,203 - - 12,565 2,186
Due from brokers - - - 391 -
Other assets 15,576 296 416 413 50
----------- ----------- ----------- ----------- ---------
Total assets 5,949,643 2,235,726 1,226,145 1,049,224 660,538
----------- ----------- ----------- ----------- ---------
Liabilities
Liability for collateral deposits - - - 185,772 -
Other liabilities - - - 1,654 7,731
----------- ----------- ----------- ----------- ---------
Total liabilities - - - 187,426 7,731
----------- ----------- ----------- ----------- ---------
Net assets available for plan benefits $5,949,643 $2,235,726 $ 1,226,145 $ 861,798 $652,807
========== ========== =========== =========== ========
Participant units outstanding 82,145 192,901 29,768 83,346 65,280
Participant unit value $ 72.43<F2> $ 11.59 $ 41.19 $ 10.34 $ 10.00
=========== =========== ========== =========== ========
(Continued)
<FN>
<F1> Participant unit value includes the value of a share of GE stock of
$72.00 and the unit value of accrued dividends in the fund.
</TABLE>
<PAGE>
16
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements
Net Assets Available for Plan Benefits, Continued
December 31, 1995
(in thousands except participant unit value)
<TABLE>
<CAPTION>
Loan and
Total Other Program
Assets U.S. Bonds Investment Funds Accounts Total
- - ------ ---------- ---------------- -------- -----
<S> <C> <C> <C> <C>
Investments at fair value $ 275,448 $ 11,329,628 $ 348,860 $ 11,678,488
Accrued dividends and interest - 49,954 26 49,980
Due from brokers - 391 - 391
Other assets - 16,751 (978) 15,773
------------- -------------- ----------- -------------
Total assets 275,448 11,396,724 347,908 11,744,632
------------- -------------- ----------- -------------
Liabilities
Liability for collateral deposits - 185,772 - 185,772
Other liabilities - 9,385 - 9,385
------------- -------------- ----------- -------------
Total liabilities - 195,157 - 195,157
------------- -------------- ----------- -------------
Net assets available for plan benefits $ 275,448 $ 11,201,567 $ 347,908 $ 11,549,475
============ ============== =========== =============
Participant units outstanding *
Participant unit value $ *
============
<FN>
* Not applicable as individual participant values are determined based upon the
time at which investments are made.
</TABLE>
<PAGE>
17
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements
Changes in Net Assets Available for Plan Benefits
December 31, 1996
(in thousands)
<TABLE>
<CAPTION>
GE Stock Fund LT Fund Mutual Fund ST Fund MM Fund
------------- ------- ----------- ------- -------
<S> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income:
Net realized and unrealized appreciation (depreciation)
in value of investments $ 2,263,074 $ (60,404) $ 128,982 $ (6,634) $ --
Interest and dividends 147,877 140,217 156,160 51,745 39,705
----------- ----------- ----------- ----------- -----------
2,410,951 79,813 285,142 45,111 39,705
----------- ----------- ----------- ----------- -----------
Contributions:
Employee 267,556 49,749 86,256 50,688 19,437
Employer 115,465 14,621 20,765 17,587 7,560
----------- ----------- ----------- ----------- -----------
383,021 64,370 107,021 68,275 26,997
----------- ----------- ----------- ----------- -----------
Total additions 2,793,972 144,183 392,163 113,386 66,702
----------- ----------- ----------- ----------- -----------
Deductions from and other changes in net assets attributed to:
Withdrawals including transfers to other qualified plans (394,805) (141,587) (83,355) (62,008) (75,042)
Net loan transactions 12,032 (13,452) (7,157) (5,637) (2,642)
Interfund transfers 239,981 (210,781) (14,883) (63,374) 60,397
----------- ----------- ----------- ----------- -----------
Total deductions and other changes in net assets (142,792) (365,820) (105,395) (131,019) (17,287)
----------- ----------- ----------- ----------- -----------
Net increase (decrease) 2,651,180 (221,637) 286,768 (17,633) 49,415
Net assets available for plan benefits:
Beginning of year 5,949,643 2,235,726 1,226,145 861,798 652,807
----------- ----------- ----------- ----------- -----------
End of year $ 8,600,823 $ 2,014,089 $ 1,512,913 $ 844,165 $ 702,222
=========== =========== =========== =========== ===========
(Continued)
</TABLE>
<PAGE>
18
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements
Changes in Net Assets Available for Plan Benefits, Continued
December 31, 1996
(in thousands)
<TABLE>
<CAPTION>
Total Loan and
Investment Other Program
U.S. Bonds Funds Accounts Total
---------- ----- -------- -----
<S> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income:
Net realized and unrealized appreciation (depreciation)
in value of investments $ 12,715 $ 2,337,733 $ (1,109) $ 2,336,624
Interest and dividends -- 535,704 27,078 562,782
------------ ------------ ------------ ------------
12,715 2,873,437 25,969 2,899,406
------------ ------------ ------------ ------------
Contributions:
Employee 16,238 489,924 -- 489,924
Employer -- 175,998 -- 175,998
------------ ------------ ------------ ------------
16,238 665,922 -- 665,922
------------ ------------ ------------ ------------
Total additions 28,953 3,539,359 25,969 3,565,328
------------ ------------ ------------ ------------
Deductions from and other changes in net assets attributed to:
Withdrawals including transfers to other qualified plans (41,378) (798,175) (9,379) (807,554)
Net loan transactions (3,333) (20,189) 20,189 --
Interfund transfers (11,340) -- -- --
------------ ------------ ------------ ------------
Total deductions and other changes in net assets (56,051) (818,364) 10,810 (807,554)
------------ ------------ ------------ ------------
Net increase (decrease) (27,098) 2,720,995 36,779 2,757,774
Net assets available for plan benefits:
Beginning of year 275,448 11,201,567 347,908 11,549,475
------------ ------------ ------------ ------------
End of year $ 248,350 $ 13,922,562 $ 384,687 $ 14,307,249
============ ============ ============ ============
</TABLE>
<PAGE>
19
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements
Changes in Net Assets Available for Plan Benefits
December 31, 1995
(in thousands)
<TABLE>
<CAPTION>
GE Stock Fund LT Fund Mutual Fund ST Fund MM Fund
------------- ------- ----------- ------- -------
<S> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income:
Net realized and unrealized appreciation
in value of investments $ 1,725,197 $ 207,125 $ 198,119 $ 32,912 $ --
Interest and dividends 130,191 155,386 125,773 55,170 39,626
----------- ----------- ----------- ----------- -----------
1,855,388 362,511 323,892 88,082 39,626
----------- ----------- ----------- ----------- -----------
Contributions:
Employee 220,632 52,236 67,002 56,933 16,538
Employer 103,588 16,161 17,937 20,744 6,234
----------- ----------- ----------- ----------- -----------
324,220 68,397 84,939 77,677 22,772
----------- ----------- ----------- ----------- -----------
Total additions 2,179,608 430,908 408,831 165,759 62,398
----------- ----------- ----------- ----------- -----------
Deductions from and other changes in net assets attributed to:
Withdrawals including transfers to other qualified plans (339,711) (181,172) (89,239) (83,312) (110,415)
Net loan transactions (5,608) (18,177) (6,557) (10,342) (1,403)
Interfund transfers (140,101) 22,250 32,766 (19,147) 166,529
----------- ----------- ----------- ----------- -----------
Total deductions and other changes in net assets (485,420) (177,099) (63,030) (112,801) 54,711
----------- ----------- ----------- ----------- -----------
Net increase (decrease) 1,694,188 253,809 345,801 52,958 117,109
Net assets available for plan benefits:
Beginning of year 4,255,455 1,981,917 880,344 808,840 535,698
----------- ----------- ----------- ----------- -----------
End of year $ 5,949,643 $ 2,235,726 $ 1,226,145 $ 861,798 $ 652,807
=========== =========== =========== =========== ===========
(Continued)
</TABLE>
<PAGE>
20
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements
Changes in Net Assets Available for Plan Benefits, Continued
December 31, 1995
(in thousands)
<TABLE>
<CAPTION>
Total Loan and
Investment Other Program
U.S. Bonds HP Fund Funds Accounts Total
---------- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income:
Net realized and unrealized appreciation
in value of investments $ 14,041 $ -- $ 2,177,394 $ 556 $ 2,177,950
Interest and dividends -- -- 506,146 23,405 529,551
--------- --------- ------------ ---------- ------------
14,041 -- 2,683,540 23,961 2,707,501
--------- --------- ------------ ---------- ------------
Contributions:
Employee 21,472 -- 434,813 -- 434,813
Employer 3,549 -- 168,213 -- 168,213
--------- --------- ------------ ---------- ------------
25,021 -- 603,026 -- 603,026
--------- --------- ------------ ---------- ------------
Total additions 39,062 -- 3,286,566 23,961 3,310,527
--------- --------- ------------ ---------- ------------
Deductions from and other changes in net assets attributed to:
Withdrawals including transfers to other qualified plans (51,307) -- (855,156) (11,528) (866,684)
Net loan transactions (3,593) -- (45,680) 45,680 --
Interfund transfers (11,640) (50,657) -- -- --
--------- --------- ------------ ---------- ------------
Total deductions and other changes in net assets (66,540) (50,657) (900,836) 34,152 (866,684)
--------- --------- ------------ ---------- ------------
Net increase (decrease) (27,478) (50,657) 2,385,730 58,113 2,443,843
Net assets available for plan benefits:
Beginning of year 302,926 50,657 8,815,837 289,795 9,105,632
--------- --------- ------------ ---------- ------------
End of year $ 275,448 $ -- $ 11,201,567 $ 347,908 $ 11,549,475
========= ========= ============ ========== ============
</TABLE>
<PAGE>
21
Schedule I
GE SAVINGS AND SECURITY PROGRAM
Item 27A -- Schedule of Assets Held for Investment Purposes
December 31, 1996
<TABLE>
<CAPTION>
Description Cost Market
- - ----------- ---- ------
Employer Securities
- - -------------------
<S> <C> <C> <C>
CORPORATE STOCKS - COMMON
GENERAL ELECTRIC COMPANY (86,531,291 shares) $3,970,246,304 $8,555,781,408
-------------- --------------
Shares of Registered Investment Companies
- - -----------------------------------------
S&S LONG TERM INTEREST FUND (178,554,162 shares) 2,034,433,480 2,014,088,719
S&S PROGRAM MUTUAL FUND (33,222,274 shares) 1,301,728,848 1,512,912,632
--------------- ---------------
Total Registered Investment Companies 3,336,162,328 3,527,001,351
-------------- ---------------
</TABLE>
<PAGE>
22
Schedule I, Continued
GE SAVINGS AND SECURITY PROGRAM
Item 27A -- Schedule of Assets Held for Investment Purposes
December 31, 1996
<TABLE>
<CAPTION>
Description
- - -----------
Debt Securities
- - ---------------
Issuer
- - ------ Coupon
Rate Maturity Cost Market
---- -------- ---- ------
U.S. Government and Agency Debt Obligations
- - -------------------------------------------
<S> <C> <C> <C> <C>
UNITED STATES TREAS NTS 6.125% 8/31/98 $83,558,981 $83,706,205
UNITED STATES TREAS NTS 5.500% 2/28/99 73,243,543 73,166,221
UNITED STATES TREAS NTS 6.125% 3/31/98 56,171,772 56,371,524
UNITED STATES TREAS NTS 5.125% 2/28/98 50,967,446 50,767,481
FEDERAL NATL MTG ASSN DISC NTS * 2/18/97 33,246,533 33,246,533
FEDERAL NATL MTG ASSN DISC NTS * 5/12/97 32,011,974 32,011,974
FEDERAL NATL MTG ASSN * 1/3/97 31,760,698 31,760,698
UNITED STATES TREAS NTS 6.000% 8/15/99 31,558,860 31,354,982
FEDERAL HOME LN BK CONS DSC NT * 3/6/97 30,202,320 30,202,320
FEDERAL HOME LN MTG DISC NTS * 1/2/97 28,495,868 28,495,868
FNMA POOL 9.000% 8/1/10 27,300,630 27,212,252
FEDERAL HOME LN BK CONS DSC NT * 1/9/97 26,938,715 26,938,715
FED HM LN PC 8.000% 8/1/03 26,713,322 26,721,439
FEDERAL HOME LN MTG DISC NTS * 2/10/97 25,530,485 25,530,485
FEDERAL NATL MTG ASSN GTD VARIABLE 8/17/03 22,679,728 22,812,641
FEDERAL HOME LN BK CONS DISC NTS 5.210% 1/16/97 22,251,590 22,251,590
FEDERAL HOME LN MTG DISC NTS 5.700% 1/2/97 21,416,609 21,416,609
FEDERAL NATL MTG ASSN DISC NTS 5.230% 2/26/97 13,618,299 13,618,299
FEDERAL HOME LN MTG DISC NTS 5.700% 1/2/97 11,248,219 11,248,219
GNMA POOL VARIABLE 8/20/22 9,057,657 9,081,248
UNITED STATES TREAS NTS 5.875% 11/15/99 8,752,617 8,740,690
GNMA POOL VARIABLE 5/20/22 8,115,237 8,166,479
<FN>
*These are discounted instruments and therefore coupon rate does not apply
</TABLE>
<PAGE>
23
Schedule I, Continued
GE SAVINGS AND SECURITY PROGRAM
Item 27A -- Schedule of Assets Held for Investment Purposes
December 31, 1996
<TABLE>
<CAPTION>
Description
- - -----------
Debt Securities
- - ---------------
Issuer
- - ------ Coupon
Rate Maturity Cost Market
---- -------- ---- ------
U.S. Government and Agency Debt Obligations (continued)
- - -------------------------------------------------------
<S> <C> <C> <C> <C>
FEDERAL HOME LN MTG DISC NTS 5.220% 6/13/97 $ 7,810,920 $ 7,810,920
FEDERAL HOME LN MTG DISC NTS * 3/7/97 7,657,563 7,657,563
FEDERAL HOME LN BK CONS DSC NT * 1/3/97 7,577,793 7,577,793
FEDERAL HOME LN BK CONS DSC NT * 3/5/97 7,045,423 7,045,423
FEDERAL NATL MTG ASSN * 11/25/06 5,859,548 5,467,543
FEDERAL NATL MTG ASSN DISC NT * 1/16/97 5,078,876 5,078,876
FED HM LN PC 7.500% 11/1/08 3,384,459 3,282,146
GNMA POOL VARIABLE 6/20/24 3,002,981 3,006,199
FNMA POOL VARIABLE 12/1/27 2,881,690 2,872,942
FNMA POOL VARIABLE 5/1/21 2,659,843 2,698,625
FNMA POOL VARIABLE 7/1/22 2,509,600 2,499,975
GNMA POOL VARIABLE 9/20/18 2,443,434 2,441,549
FED HM LN PC 6.000% 12/1/08 2,149,665 2,170,157
FNMA POOL VARIABLE 12/1/17 1,186,155 1,194,976
FNMA POOL VARIABLE 10/1/21 1,169,013 1,163,009
FEDERAL HOME LN MTG PC GTD VARIABLE 7/15/06 352,500 922,070
FNMA POOL 6.000% 5/1/01 840,819 856,209
FEDERAL HOME LN MTG PC GTD VARIABLE 9/15/05 100,534 253,023
------------- ------------
Total U.S .Government and Agency Debt Obligations 738,551,919 738,821,470
------------- ------------
<FN>
*These are discounted instruments and therefore coupon rate does not apply
</TABLE>
<PAGE>
24
Schedule I, Continued
GE SAVINGS AND SECURITY PROGRAM
Item 27A -- Schedule of Assets Held for Investment Purposes
December 31, 1996
<TABLE>
<CAPTION>
Description
- - -----------
Coupon
Rate Maturity Cost Market
---- -------- ---- ------
Loans to Participants
- - ---------------------
<S> <C> <C> <C> <C>
VARIOUS 6.97 - 12.5% 12-54 months, $383,826,197 $383,826,197
------------ ------------
or 5-15 years
for principal
residence
loans
Debt Securities
- - ---------------
Issuer
- - ------
Corporate Bonds and Notes - Preferred
- - -------------------------------------
FORD CR AUTO OWNER TR 1996 A 6.500% 11/15/99 16,184,435 16,301,225
CHASE MANHATTAN AUTO OWNER TR 5.950% 11/15/00 14,943,120 14,893,938
STANDARD CR CARD MASTER TR I 4.650% 2/7/97 12,385,111 12,388,344
FIRST DEP MASTER TR 6.050% 8/15/02 10,486,157 10,513,125
CHASE MANHATTAN CORP NEW 7.500% 12/1/97 8,081,329 8,099,520
KOREA DEV BK 5.875% 12/1/98 6,054,513 6,066,816
FLEETWOOD CR 6.000% 1/15/08 5,847,532 5,859,376
SOUTHERN CA EDISON CO 6.125% 7/15/97 4,977,495 5,008,650
DISCOVER CARD MASTER TR I 5.400% 11/16/01 4,909,095 4,943,750
LEHMAN BROTHERS HLDGS INC 6.840% 9/25/98 4,250,000 4,282,215
PREMIER AUTO TR 6.500% 3/6/00 3,995,684 4,027,480
LEHMAN FHA TITLE I LN TR 7.300% 5/25/17 3,130,744 3,156,552
ELECTRONIC DATA SYS CORP 6.850% 5/15/00 2,998,309 3,037,800
LEHMAN BROTHERS HLDGS INC 6.875% 6/8/98 2,000,000 2,017,860
FLEETWOOD CR GRANTOR TR 6.900% 3/15/12 1,892,519 1,912,588
CIT RV OWNER TR 5.400% 12/15/11 1,283,629 1,266,031
------------ ------------
Total Corporate Bonds and Notes - Preferred 103,419,672 103,775,270
------------ ------------
</TABLE>
<PAGE>
25
Schedule I, Continued
GE SAVINGS AND SECURITY PROGRAM
Item 27A -- Schedule of Assets Held for Investment Purposes
December 31, 1996
<TABLE>
<CAPTION>
Description
- - -----------
Debt Securities
- - ---------------
Issuer
- - ------ Coupon
Rate Maturity Cost Market
---- -------- ---- ------
Corporate Bonds and Notes - All Other
- - -------------------------------------
<S> <C> <C> <C> <C>
GMAC PASS THRU TR 6.375% 09/30/98 $16,477,103 $16,528,050
A T + T CAP CORP MTN BK ENTRY 7.590% 01/31/97 9,999,856 10,013,800
GREAT ATLANTIC + PAC TEA INC 9.125% 01/15/98 9,949,002 10,000,673
MANITOBA PROV CDA MTN BK ENT 6.125% 05/28/98 8,860,802 8,895,324
BLOCKBUSTER ENTERTAINMENT 6.625% 02/15/98 8,633,016 8,555,428
FIRST USA BANK 6.125% 10/30/97 7,993,673 8,012,640
TELE COMMUNICATIONS INC MTN 7.130% 02/02/98 7,268,737 7,363,802
PENNZOIL CO 10.625% 06/01/01 7,270,764 7,255,296
TIME WARNER INC 7.450% 02/01/98 6,016,818 6,066,060
SALOMON INC 6.700% 12/01/98 5,925,000 5,947,397
TELE COMMUNICATIONS INC 9.875% 04/01/98 5,193,196 5,195,150
AMR CORP DEL 7.750% 12/01/97 5,030,588 5,066,300
PSI PASS THRU ASSET TR 6.250% 12/15/98 4,991,782 4,993,350
HENDERSON LAND FIN 6.000% 12/08/98 4,837,173 4,931,250
ARKLA INC MTN BOOK ENTRY 8.740% 05/14/98 4,858,253 4,893,260
GREAT NORTHN NEKOOSA CORP 9.125% 02/01/98 4,428,418 4,427,323
ARKLA INC 8.875% 07/15/99 4,327,418 4,374,017
ORYX ENERGY CO 9.500% 11/01/99 4,220,796 4,243,400
</TABLE>
<PAGE>
26
Schedule I, Continued
GE SAVINGS AND SECURITY PROGRAM
Item 27A -- Schedule of Assets Held for Investment Purposes
December 31, 1996
<TABLE>
<CAPTION>
Description
- - -----------
Debt Securities
- - ---------------
Issuer
- - ------ Coupon
Rate Maturity Cost Market
---- -------- ---- ------
<S> <C> <C> <C> <C>
Corporate Bonds and Notes - All Other (continued)
NEWS AMER HLDGS INC 9.125% 10/15/99 $ 4,228,222 $ 4,150,786
PETROLEOS MEXICANOS 7.750% 10/29/99 4,117,188 4,109,531
UNITED COS FINL CORP 7.000% 07/15/98 3,448,543 3,466,801
DIGITAL EQUIP CORP 7.000% 11/15/97 2,009,445 2,001,339
------------ ------------
Total Corporate Bonds and Notes - All Other 140,085,793 140,490,977
------------ ------------
Total Corporate Bonds and Notes 243,505,465 244,266,247
------------- ------------
</TABLE>
<PAGE>
27
Schedule I, Continued
GE SAVINGS AND SECURITY PROGRAM
Item 27A -- Schedule of Assets Held for Investment Purposes
December 31, 1996
<TABLE>
<CAPTION>
Description
- - -----------
U.S. Savings Bonds (Series E and EE)
- - ------------------------------------
Issuer Units Cost Market
- - ------ ----- ---- ------
<C> <C> <C> <C>
1959 US SAVINGS BOND E SERIES 139 $ 2,606 $ 22,907
1960 US SAVINGS BOND E SERIES 124 2,325 20,071
1961 US SAVINGS BOND E SERIES 118 2,212 18,869
1962 US SAVINGS BOND E SERIES 173 3,244 27,188
1963 US SAVINGS BOND E SERIES 199 3,731 30,713
1964 US SAVINGS BOND E SERIES 241 4,519 36,513
1965 US SAVINGS BOND E SERIES 253 4,744 33,311
1967 US SAVINGS BOND E SERIES 674 12,637 83,729
1968 US SAVINGS BOND E SERIES 1,079 20,231 134,457
1969 US SAVINGS BOND E SERIES 1,325 24,844 161,317
1970 US SAVINGS BOND E SERIES 1,590 29,812 189,705
1971 US SAVINGS BOND E SERIES 2,167 40,631 218,670
1972 US SAVINGS BOND E SERIES 2,700 50,625 264,276
1973 US SAVINGS BOND E SERIES 4,053 75,994 384,996
1974 US SAVINGS BOND E SERIES 6,541 122,644 590,650
1975 US SAVINGS BOND E SERIES 8,716 163,425 759,464
1976 US SAVINGS BOND E SERIES 11,682 219,038 982,347
1977 US SAVINGS BOND E SERIES 16,905 316,969 1,349,899
1978 US SAVINGS BOND E SERIES 27,521 516,019 1,859,799
1979 US SAVINGS BOND E SERIES 46,770 876,938 3,083,202
</TABLE>
<PAGE>
28
Schedule I, Continued
GE SAVINGS AND SECURITY PROGRAM
Item 27A -- Schedule of Assets Held for Investment Purposes
December 31, 1996
<TABLE>
<CAPTION>
Description
- - -----------
U.S. Savings Bonds (Series E and EE) (continued)
- - ------------------------------------------------
Issuer Units Cost Market
- - ------ ----- ---- ------
<C> <C> <C> <C>
1980 US SAVINGS BOND EE SERIES 17,913 $ 895,650 $ 3,132,889
1981 US SAVINGS BOND EE SERIES 18,158 907,900 2,832,793
1982 US SAVINGS BOND EE SERIES 20,716 1,035,800 2,980,814
1983 US SAVINGS BOND EE SERIES 37,823 1,891,150 4,681,721
1984 US SAVINGS BOND EE SERIES 39,242 1,962,100 4,499,005
1985 US SAVINGS BOND EE SERIES 52,704 2,635,200 5,781,393
1986 US SAVINGS BOND EE SERIES 123,244 6,162,200 12,728,932
1987 US SAVINGS BOND EE SERIES 131,268 6,563,400 11,511,210
1988 US SAVINGS BOND EE SERIES 159,012 7,950,600 13,054,755
1989 US SAVINGS BOND EE SERIES 229,179 11,458,950 17,590,371
1990 US SAVINGS BOND EE SERIES 234,284 11,714,200 16,938,735
1991 US SAVINGS BOND EE SERIES 247,994 12,399,700 16,908,652
1992 US SAVINGS BOND EE SERIES 410,301 20,515,050 25,919,132
1993 US SAVINGS BOND EE SERIES 295,177 14,758,850 17,077,943
1994 US SAVINGS BOND EE SERIES 646,854 32,342,700 35,680,177
1995 US SAVINGS BOND EE SERIES 447,638 22,381,900 23,835,163
1996 US SAVINGS BOND EE SERIES 308,748 15,437,400 15,618,209
---------- ------------- -------------
Total U.S. Savings Bonds 3,553,225 173,505,938 241,023,977
---------- ------------- ------------
</TABLE>
<PAGE>
29
Schedule I, Continued
GE SAVINGS AND SECURITY PROGRAM
Item 27A -- Schedule of Assets Held for Investment Purposes
December 31, 1996
<TABLE>
<CAPTION>
Description
- - -----------
Short Term Money Market Instruments
- - -----------------------------------
Coupon
Issuer Rate Maturity Cost Market
- - ------ ---- -------- ---- ------
Interest Bearing Time Deposits and Commercial Paper
- - ---------------------------------------------------
<S> <C> <C> <C> <C>
ABBEY NATL PLC 5.270% 02/18/97 $ 36,273,316 $ 36,273,316
BANK OF MONTREAL 5.562% 01/08/97 2,000,000 2,000,000
CHASE MANHATTAN CORP 5.300% 01/15/97 33,840,108 33,840,108
FIRST UNION CORP 5.290% 02/19/97 32,017,791 32,017,791
FORD MTR CR CO 5.600% 01/06/97 1,998,444 1,998,444
MERRILL LYNCH + CO INC 5.300% 02/14/97 38,667,885 38,667,885
MORGAN J P + CO INC 5.300% 01/16/97 32,069,024 32,069,024
NORWEST CORP 5.300% 01/17/97 32,393,515 32,393,515
SAN PAOLO 7.250% 01/02/97 8,998,188 8,998,188
SAN PAOLO 5.812% 01/02/97 2,000,000 2,000,000
STATE STREET CAYMAN ISLANDS 6.250% 01/02/97 3,380,000 3,380,000
UBS FINANCE DELAWARE INC 6.200% 01/02/97 11,997,933 11,997,933
------------- ------------
Total Interest Bearing Time Deposits and Commercial Paper 235,636,204 235,636,204
------------ ------------
</TABLE>
<PAGE>
30
Schedule I, Continued
GE SAVINGS AND SECURITY PROGRAM
Item 27A -- Schedule of Assets Held for Investment Purposes
December 31, 1996
<TABLE>
<CAPTION>
Description
- - -----------
Short Term Money Market Instruments
- - -----------------------------------
Coupon
Issuer Rate Maturity Cost Market
- - ------ ---- -------- ---- ------
Certificates of Deposit
- - -----------------------
<S> <C> <C> <C> <C>
DRESDNER BK AG 5.360% 02/11/97 $ 36,200,000 $ 36,200,000
ALGEMENE BK NEDERLAND N V 5.380% 01/17/97 35,490,000 35,490,000
SOCIETE GENERALE 5.500% 01/02/97 33,200,000 33,200,000
BAYERISCHE HYPOTHEKEN BANK 5.350% 02/21/97 32,640,000 32,640,000
BANK OF NOVA SCOTIA 5.510% 01/06/97 31,500,000 31,500,000
TORONTO DOMINION BK 5.385% 02/03/97 31,500,000 31,500,000
CREDIT SUISSE 5.360% 02/11/97 7,000,000 7,000,000
ROYAL BANK OF CANADA 5.350% 03/13/97 6,430,000 6,430,000
------------- -------------
Total Certificates of Deposit 213,960,000 213,960,000
------------- -------------
Non-Interest Bearing Cash
- - -------------------------
NON-INTEREST BEARING CASH 44,683 44,683
------------- -------------
Total Short Term Money Market Instruments 449,640,887 449,640,887
------------- -------------
</TABLE>
<PAGE>
31
Schedule I, Continued
GE SAVINGS AND SECURITY PROGRAM
Item 27A -- Schedule of Assets Held for Investment Purposes
December 31, 1996
<TABLE>
<CAPTION>
Description
- - -----------
Coupon
Issuer Rate Maturity Cost Market
- - ------ ---- -------- ---- ------
Loans Secured by Mortgages
- - --------------------------
<S> <C> <C> <C> <C>
SALOMON BROS MTG SECS VII INC 6.469% 01/20/28 $ 29,678,133 $ 29,652,009
FEDERAL NATL MTG ASSN GTD VARIABLE 09/17/04 18,696,249 18,589,157
STRUCTURED ASSET SECS CORP 7.750% 02/25/28 17,730,116 17,617,831
STRUCTURED ASSET SECS CORP VARIABLE 06/25/30 15,812,005 15,748,146
STRUCTURED ASSET SECS CORP VARIABLE 09/25/31 14,501,082 14,312,589
TMS HOME EQUITY LN TR 5.675% 02/15/09 8,782,645 8,458,783
FLEETWOOD CR CORP GRANTOR TST 6.750% 10/17/11 6,571,155 6,614,013
ADVANTA MTG LN TR 6.300% 07/25/25 4,473,988 4,340,548
HOME EQUITY LOAN 4.650% 12/20/08 2,959,067 2,914,926
MERRILL LYNCH MTG INVS INC VARIABLE 06/15/21 2,546,262 2,572,757
CS FIRST BOSTON MTG SECS CORP 6.425% 08/20/30 1,414,212 1,425,362
SALOMON BROS MTG SECS II INC 8.125% 11/01/12 1,270,354 1,224,454
------------- -------------
Total Loans Secured by Mortgages 124,435,268 123,470,575
------------ ------------
</TABLE>
<PAGE>
32
Schedule I, Continued
GE SAVINGS AND SECURITY PROGRAM
Item 27A -- Schedule of Assets Held for Investment Purposes
December 31, 1996
<TABLE>
<CAPTION>
Description
- - -----------
Coupon
Issuer Rate Maturity Cost Market
- - ------ ---- -------- ---- ------
Other
- - -----
<S> <C> <C> <C> <C>
MEXICO UNITED MEXICAN STATES VARIABLE 07/21/97 $ 8,000,000 $ 8,222,500
COLUMBIA REP 8.750% 10/06/99 4,033,902 4,127,750
NEW YORK N Y 6.100% 02/01/98 3,991,923 3,997,720
NEW YORK ST DORM AUTH REVS 6.320% 04/01/99 2,575,000 2,577,318
--------------- -----------------
Total Other 18,600,825 18,925,288
--------------- -----------------
Total Investments $ 9,438,475,131 $ 14,282,757,400
=============== ==================
</TABLE>
Exhibit 23
Consent of Independent Auditors
The Board of Directors
General Electric Company
We consent to incorporation by reference in the Registration Statements (Nos.
33-47500 and 333-23767) on Form S-8 of General Electric Company of our report
dated May 15, 1997, relating to the financial statements and supplemental
schedule of GE Savings and Security Program as of and for the years ended
December 31, 1996 and 1995, which appears in the December 31, 1996 annual report
on Form 11-K of General Electric Company
KPMG Peat Marwick LLP
New York, New York
June 25, 1997
[GE LOGO]
S&S PROGRAM
[PHOTO]
MUTUAL FUNDS ANNUAL REPORT & S&SP DISCLOSURE DOCUMENT
DECEMBER 31, 1996
<PAGE>
<TABLE>
<CAPTION>
Understanding Your Report
Page
- - ----------------------------------------------------------------------
<S> <C> <C>
Chairman's Letter 1 Dale Frey on market events
Review of Performance and Portfolio managers discuss your Funds'
Schedules of Investments results in 1996
S&S Program Mutual Fund 3
S&S Long Term Interest Fund 10
Financial Statements 20 Financial Highlights and Statements
of Assets and Liabilities, Operations,
and Changes in Net Assets
Notes 25 Notes to the Financial Statements
Independent Auditors' Report 29 The Auditors' Opinion
GE S&S Program Supplementary Information 30
Schedules of Investments
S&S Short Term Interest Fund 31
S&S Money Market Fund 34
Supplemental Information 35 Illustrations of the relative market
value of investments offered
under the S&S Program based on
historical earnings.
Disclosure Statement 37 Information about the S&S Program
investment alternatives.
S&S Mutual Funds' Investment Team 48
Shareholder Services Inside back cover How you can obtain
more information
</TABLE>
- - --------------------------------------------------------------------------------
On the Cover: Featured are employees greeting visitors in the GE Investments'
lobby.
<PAGE>
A Letter from the Chairman
Dear Shareholder:
I am pleased to provide you with the 1996 Annual Report. This past year brought
excitement in the financial markets as well as at GE Investments.
This annual report letter will be my last to you as Chairman, as I look forward
to my retirement from GE Investments. I appreciate having had the opportunity to
serve the Savings and Security Program participants over the past 12 years, and
I would like to take this opportunity to introduce you to my successor, John
Myers. John is a 10 year seasoned veteran at GE Investments, and has over 25
years experience at General Electric Company.
PERFORMANCE HIGHLIGHTS
The performance profiles, which begin on page 4, demonstrate that the S&S Funds
generated attractive returns in 1996.
The S&S Program Mutual Fund achieved a 23.1% annual total return, benefiting
from the strength of the 1996 equity markets. This return put the Fund in the
top 25% of its peers, as measured by Lipper Analytical Services, an independent
mutual fund rating service.
S&S Long Term Interest Fund also had a good year considering the difficult 1996
bond market, ending the year with a 4.2% return. This put the Fund in the top 5%
of its peers as measured by Lipper Analytical Services.
The Lipper Analytical Services average total returns for each category and
complete details on each Fund's performance can be located on the various
performance review pages of this annual report.
MARKET OVERVIEW
1996 proved to be another solid year in the financial markets. Low inflation,
good corporate earnings, and a post-election rally all contributed to strong
performance. The supply-demand balance also remained favorable, with annual
merger and acquisition activity topping $650 billion, and cash inflows into
equity mutual funds exceeding $200 billion, setting new records for both
measures. These factors drove the S&P 500 up 23.1% for the year.
International equity market performance, as measured by the Morgan Stanley EAFE
Index, lagged the U.S. market with full year returns of 6.0%. Despite cautious
optimism that Japan may be emerging from recession, the Japanese market
underperformed significantly, declining 15.5% in 1996. European shares continue
to take their lead from the U.S. markets with German, French and U.K. markets
rising 13.6%, 21.2% and 27.4%, respectively for the year.
In the first half of 1996, fixed income returns were adversely impacted due to
concerns over a strong economy. Rates declined in the second half as inflation
fears and election uncertainties subsided allowing the bond market to return
3.6% for the year as measured by the Lehman Brothers Aggregate Bond Index.
[PHOTO OF DALE F. FREY]
1
<PAGE>
A LETTER FROM THE CHAIRMAN (CONTINUED)
MARKET OUTLOOK
Our outlook on the domestic equity market is cautious. The U.S. market remains
at or near record levels when measured by dividend yield and other traditional
valuation methods, suggesting greater vulnerability to a possible correction. In
the new year, we foresee a moderate acceleration of domestic economic growth, a
stable interest rate environment, and continued low inflation.
At GE Investments, it was our pleasure to serve your investment needs in 1996
and we look forward to helping you meet your financial objectives in 1997.
Sincerely,
/s/ Dale F. Frey
Chairman of the Board and President
General Electric Investment Corporation
Introducing GE Investments' New Chairman
Dear Shareholder:
I am excited about the opportunity of serving you as Chairman of GE Investments.
GE Investments has become a leader in investment management because of its
diversified multi-asset base, its solid performance and its strong management
team. I hope to build upon the outstanding organization developed under Dale
Frey's leadership over the last twelve years, and offer you continued high
quality service and investment management results. I am honored to be appointed
as the leader of this exciting organization and I look forward to delivering
continued, strong investment performance to our shareholders.
Sincerely,
/s/ John H. Myers
John Myers is a seasoned veteran of GE's financial community and of GE
Investments. John, previously Executive Vice President of GE Investments, began
his GE career in 1970 after serving as an officer in the U.S. Navy. He
progressed through several global financial assignments in GE corporate staff
and GE Power Systems before joining GE Investments in 1986. John serves on the
Board of Directors of Doubletree Hotels Corporation. He holds a B.S. in
Mathematics from Wagner College, where he serves on the Board of Trustees.
[PHOTO OF JOHN H. MYERS]
2
<PAGE>
S&S Program Mutual Fund
Q&A
Gene Bolton is responsible for the overall management of the U.S. equity
operation at GE Investments with total assets of over $24 billion. His
responsibilities include overseeing the portfolio management team of the S&S
Program Mutual Fund listed on page 48 Gene joined GE in 1964. After completing
GE's Financial Management Program he held a number of financial and strategic
planning positions in the U.S. and Europe. Joining GE Investments in 1984 as
Chief Financial Officer, he moved to equities as a Portfolio Manager in 1986 and
was named to his present position in 1991. Gene is a Trustee of the GE Pension
Trust and GE's employee savings program. He also serves as a Trustee of the
Investment Management Workshop, sponsored by the Association for Investment
Management and Research. Gene is a graduate of Mundelein College with a B.A. in
Business and Management.
Q. How did the S&S Program Mutual Fund perform compared to its benchmarks in
1996?
A. The S&S Program Mutual Fund had a return of 23.1% in 1996. The S&P 500 also
returned 23.1% for the same period. Our Lipper peer group of 570 Growth and
Income mutual funds had a return of 20.9%.
Q. Why did the Fund meet its benchmark and outperform peers?
A. The Fund performed in line with the S&P 500 in 1996 and was in the top
quartile among its Lipper peer Growth and Income funds. 1996 was the third
year in a row in which more than three quarters of general equity mutual
funds underperformed the S&P 500, largely because of the narrowness of
market leadership and the relative weakness of smaller capitalization
stocks. Our relatively strong performance resulted from an overweighting in
Energy, Financial and selected Capital Goods stocks, and an underweighting
in the Utilities and Consumer-Cyclical sectors. In the Energy area,
Schlumberger Ltd. was a particularly strong performer while Citicorp and
Travelers Group were leaders in the Financial sector. AlliedSignal, Textron
and Dover Corp. turned in very strong performances in the Capital Goods
sector. On the negative side, our concern about valuation levels limited
our participation in some good performing stocks such as Microsoft and
Coca-Cola.
Q. What has your investment strategy been?
A. Our objective is to add value through stock selection which we try to
accomplish by identifying companies with shareholder oriented managements,
strong financials and attractive valuations. We concentrate our efforts on
fundamental company research and do not try to time the stock market or
rotate from one "hot" sector to another. We have four portfolio managers,
two of whom focus principally on growth stocks and two who have a more
value-oriented approach. This results in a broadly diversified portfolio
that we believe can do well versus the market regardless of the economic
environment. The portfolio managers, supported by a team of industry
analysts, focus on finding stocks that they believe will outperform the
market over the next three to five years.
Q. What industries have you liked?
A. As mentioned above, we remain overweighted in the Financial, Capital Goods
and Energy sectors. These are the areas in which our managers are able to
find the best values on a stock-by-stock basis. Within the Financial sector
we continue to find value in the insurance industry as well as with
selected financial service companies and money center banks. In Capital
Goods we are overweighted in a diverse group of companies that, despite big
price moves in 1996, still look attractive versus the market. Within the
Energy sector our principal thrust is in the oil services industry which we
think looks particularly attractive because of strong demand and little
excess capacity.
Q. What is the outlook for the Fund in the upcoming year?
A. With most valuation measures at or near record levels, we believe the
upside is limited for the stock market in 1997. We also expect volatility
to increase and stock selection, as opposed to sector rotation, to be the
key to good performance. Given our emphasis on high quality companies with
attractive valuations, we believe the portfolio is well positioned for good
relative performance in the coming year.
[PHOTO OF GENE BOLTON]
3
<PAGE>
S&S Program Mutual Fund
Comparison of Change in Value of a $10,000 Investment
- - --------------------------------------------------------------------------------
S&S Program Mutual S&P 500
------------------ -------
'86 $10,000 $10,000
'87 9,979 10,511
'88 11,479 12,261
'89 14,922 16,128
'90 14,505 15,618
'91 18,741 20,395
'92 20,265 21,971
'93 22,590 24,171
'94 22,192 24,485
'95 30,352 33,664
'96 37,348 41,444
- - --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
for the periods ending December 31, 1996
One Five Ten
Year Year Year
---- ---- ----
S&S Program Mutual 23.05% 14.79% 14.09%
S&P 500 23.11% 15.24% 15.28%
- - --------------------------------------------------------------------------------
INVESTMENT PROFILE
A Fund designed for investors who seek long-term growth of capital and income.
The Fund invests principally in domestic common stocks or in securities
convertible into common stocks. Cash, preferred stocks, bonds and foreign
securities can also be held.
*Lipper Performance Comparison
Based on 12/31/96 total returns
Growth and Income Peer Group
One Five Ten
Year Year Year
---- ---- ----
Fund's rank in peer group: 138 81 37
Number of Funds in peer group: 570 228 127
Peer group average total return: 20.9% 14.0% 13.2%
Lipper categories in peer group: Growth and Income,
S&P 500 Index
* See notes to performance for explanation of peer categories.
- - --------------------------------------------------------------------------------
Top Ten Largest Holdings
as a percentage of net asset value
at December 31, 1996
================================================================================
Travelers Group Inc. 2.1%
Intel Corp. 2.0%
Exxon Corp. 2.0%
Federal National Mortgage Assoc. 1.9%
AlliedSignal Inc. 1.8%
Citicorp 1.8%
Philip Morris Cos. Inc. 1.7%
Bristol-Myers Squibb Co. 1.6%
Emerson Electric Co. 1.6%
International Business Machines 1.6%
- - --------------------------------------------------------------------------------
See page 18 for Notes to Performance. Past performance is no guarantee of future
results.
4
<PAGE>
Schedule of Investments (dollars in thousands) -- December 31, 1996
S&S PROGRAM MUTUAL FUND
- - --------------------------------------------------------------------------------
Energy & Basic Material 14.9%
Consumer 14.5%
Capital Goods 12.9%
Healthcare 14.0%
Financial Services 18.5%
Retail Trade 4.0%
Technology 10.4%
Transportation 1.4%
Utilities 7.1%
Cash & Other 2.3%
- - --------------------------------------------------------------------------------
Number
of Shares Value
- - --------------------------------------------------------------------------------
Common Stock -- 97.7%
- - --------------------------------------------------------------------------------
Basic Materials -- 4.5%
Air Products & Chemicals Inc. 123,702 $ 8,551
Airgas Inc. 120,250 2,645(a)
Avery Dennison Corp. 70,234 2,485
Barrick Gold Corp. 131,687 3,786
Du Pont de Nemours
(E.I.) & Co. 405,369 38,257
Eastman Chemical Co. 52,675 2,910
FMC Corp. 55,968 3,925
Freeport McMoran Copper &
Gold Inc. (Class A) 162,414 4,568
Hoechst AG 32,921 1,555
IMC Global Inc. 95,472 3,735
Mead Corp. 141,823 8,243
Morton International Inc. 391,106 15,938
Newmont Mining Corp. 181,291 8,113
PPG Industries Inc. 25,209 1,415
Rayonier Inc. 116,312 4,463
Santa Fe Pacific Gold Corp. 171,417 2,636
Weyerhaeuser Co. 244,866 11,600
124,825
[ICON] Capital Goods -- 12.9%
ABB AG 4,168 5,185
AlliedSignal Inc. 764,894 51,248
AMP Inc. 196,238 7,531
Armstrong World
Industries Inc. 89,947 6,251
Boeing Co. 51,816 5,512
Browning-Ferris Industries Inc. 196,898 5,169
Caterpillar Inc. 17,558 1,321
Cooper Industries Inc. 42,841 1,805
Corning Inc. 76,818 3,553
Deere & Co. 362,934 14,744
Dover Corp. 662,065 33,269
Eaton Corp. 46,876 3,270
Emerson Electric Co. 454,721 43,994
General Signal Corp. 137,173 5,864
Hanson PLC ADR 387,950 2,619
Hubbell Inc. (Class B) 730,082 31,576
Ingersoll Rand Co. 70,658 3,144
Lockheed Martin Corp. 125,551 11,488
Mannesmann AG 3,292 1,427
Martin Marietta Materials Inc. 158,027 3,674
Masco Corp. 42,841 1,542
McDonnell Douglas Corp. 113,550 7,267
Minnesota Mining &
Manufacturing Co. 91,535 7,586
Molex Inc. (Class A) 115,225 4,105
National Service
Industries Inc. 85,683 3,202
Newport News
Shipbuilding Inc. 31,976 480(a)
Parker Hannifin Corp. 24,144 936
Sherwin Williams Co. 47,884 2,681
Tenneco Inc. 72,748 3,283(a)
Textron Inc. 396,957 37,413
Timken Co. 87,791 4,027
Tyco International Ltd. 54,770 2,896
Ucar International Inc. 47,057 1,770(a)
United Technologies Corp. 340,526 22,475
Waste Management
International PLC ADR 81,977 645
Wheelabrator
Technologies Inc. 87,791 1,427
WMX Technologies Inc. 466,789 15,229
359,608
[ICON] Consumer - Cyclical -- 8.0%
ACNielsen Corp. 98,766 1,494(a)
American Greetings
Corp. (Class A) 35,115 996
- - ----------
See Notes to Schedules of Investments and Financial Statements
5
<PAGE>
S&S Program Mutual Fund (dollars in thousands) -- December 31, 1996
Number
of Shares Value
- - --------------------------------------------------------------------------------
American Medical Response 126,850 $ 4,123(a)
Automatic Data Processing Inc. 384,609 16,490
Carnival Corp. (Class A) 111,570 3,682
Catalina Marketing Corp. 43,146 2,378(a)
Circus Circus Enterprises Inc. 216,999 7,459 (a)
Comcast Corp. (Class A) 482,575 8,596
Comcast UK Cable Partners
Ltd. (Class A) 50,760 692(a)
CUC International Inc. 20,558 488(a)
Disney (Walt) Co. 431,389 30,035
Donnelley (R.R.) & Sons Co. 34,263 1,075
Dun & Bradstreet Corp. 116,324 2,763
Eastman Kodak Co. 278,520 22,351
Federal-Mogul Corp. 26,338 579
Ford Motor Co. 408,770 13,030
Gannett Inc. 258,825 19,380
General Motors Corp. 159,133 8,872
Goodyear Tire & Rubber Co. 106,088 5,450
Harman International
Industries Inc. 54,009 3,004
International Cabletel Inc. 552,624 13,954(a)
Interpublic Group Cos. Inc. 253,495 12,041
ITT Industries Inc. 75,023 1,838
Knight Ridder Inc. 47,156 1,804
McDonalds Corp. 302,124 13,671
Metromedia International
Group Inc. 68,424 676(a)
Readers Digest Assoc. Inc.
(Class A) 25,177 1,013
Rubbermaid Inc. 34,809 792
Scholastic Corp. 41,320 2,779(a)
TCI Satellite Entertainment
Inc. (Class A) 33,799 334(a)
Tele-Communications Inc.
(Series A) 496,027 6,479(a)
Tele-Communications Inc. Liberty
Media Group (Series A) 342,224 9,775(a)
Time Warner Inc. 136,189 5,107
223,200
Consumer - Stable -- 6.5%
Anheuser Busch Cos. Inc. 736,984 29,479
Archer-Daniels Midland Co. 218,930 4,816
Avon Products Inc. 176,645 10,091
Coca Cola Co. 25,177 1,325
Columbia/HCA
Healthcare Corp. 50,405 2,054
Conagra Inc. 72,841 3,624
CPC International Inc. 128,575 9,964
General Mills Inc. 118,931 7,537
Gillette Co. 28,832 2,242
International Flavours 83,856 3,773
Kellogg Co. 43,896 2,881
Nestle S.A. 4,684 5,029(a)
Pepsico Inc. 1,416,509 41,433
Philip Morris Cos. Inc. 427,196 48,113
Ralston Purina Co. 43,896 3,221
Sara Lee Corp. 132,991 4,954
180,536
[ICON] Energy -- 10.4%
Amerada Hess Corp. 30,726 1,778
Amoco Corp. 340,803 27,435
Anadarko Petroleum Co. 99,388 6,435
Atlantic Richfield Co. 41,775 5,535
Baker Hughes Inc. 234,207 8,080
British Petroleum PLC ADR 26,338 3,724
Burlington Resources Inc. 284,561 14,335
Diamond Offshore
Drilling Inc. 28,533 1,626(a)
Elf Aquitaine ADR 26,338 1,192
Exxon Corp. 562,218 55,097
Halliburton Co. 81,206 4,893
Louisiana Land &
Exploration Co. 32,537 1,745
Mobil Corp. 165,376 20,217
Nabors Industries Inc. 188,400 3,627(a)
Royal Dutch Petroleum
Co. ADR 238,877 40,788
Schlumberger Ltd. 394,354 39,386
Texaco Inc. 241,567 23,704
Tosco Corp. 54,869 4,341
Total S.A. ADR 117,172 4,716
Union Pacific Resources
Group Inc. 198,352 5,802
Unocal Corp. 385,421 15,658
290,114
- - ----------
See Notes to Schedules of Investments and Financial Statements
6
<PAGE>
Schedule of Investments (dollars in thousands)
Number
of Shares Value
- - --------------------------------------------------------------------------------
[ICON] Financial -- 12.4%
American Express Co. 482,626 $ 27,268
Bank of Boston Corp. 167,417 10,757
Bank of New York Inc. 200,604 6,770
BankAmerica Corp. 47,156 4,704
Bankers Trust New York Corp. 10,333 891
Beneficial Corp. 112,027 7,100
Boatmen's Bancshares Inc. 123,448 7,962
Chase Manhattan Corp. 85,683 7,647
Citicorp 488,154 50,280
CMAC Investment Corp. 88,852 3,265
Countrywide Credit Industries 161,975 4,637
Dean Witter Discover & Co. 261,363 17,315
Echelon International Corp. 6,139 96(a)
Edwards A.G. Inc. 79,012 2,657
Federal National
Mortgage Assoc. 1,425,238 53,090
Mellon Bank Corp. 130,634 9,275
Merrill Lynch & Co. Inc. 39,506 3,220
Morgan (J.P.) & Co. Inc. 212,431 20,739
Morgan Stanley Group Inc. 46,145 2,636
Salomon Inc. 50,481 2,379
Standard Federal
Bancorporation 57,064 3,245
State Street Boston Corp. 144,006 9,288
T. Rowe Price & Associates 52,674 2,291
Travelers Group Inc. 1,262,606 57,291
Trizec Hahn Corp. 61,454 1,352
United States Bancorp 94,376 4,241
Wells Fargo & Co. 94,820 25,578
345,974
[ICON] Healthcare -- 14.0%
Abbott Laboratories 682,367 34,630
Allergan Inc. 291,768 10,394
American Home
Products Corp. 552,878 32,412
Arrow International Inc. 48,591 1,397
Baxter International Inc. 142,636 5,848
Bristol-Myers Squibb Co. 423,085 46,011
Cardinal Health Inc. 86,343 5,029
Colgate Palmolive Co. 162,838 15,022
Dentsply International Inc. 40,963 1,946
Duracell International Inc. 39,593 2,767
Eli Lilly & Co. 237,658 17,349
Johnson & Johnson 704,143 35,031
Kimberly Clark Corp. 302,783 28,840
Lincare Holdings Inc. 57,562 2,360(a)
Living Centers of America Inc. 83,094 2,306(a)
Merck & Co. Inc. 500,443 39,660
Pfizer Inc. 344,508 28,551
Procter & Gamble Co. 324,103 34,841
Scherer (R.P.) Corp. Delaware 86,256 4,334(a)
Schering Plough Corp. 231,313 14,978
Smithkline Beecham PLC ADR 361,443 24,578
St. Jude Medical Inc. 21,573 920(a)
Watson Pharmaceuticals Inc. 73,297 3,294(a)
392,498
Insurance -- 6.1%
Aetna Inc. 4,390 351
American International
Group Inc. 380,846 41,227
Chubb Corp. 89,997 4,837
Everest Reinsurance Holdings 29,054 835
General Reinsurance Corp. 131,511 20,746
ITT Hartford Group Inc. 70,252 4,742
Lincoln National Corp. 248,727 13,058
Loews Corp. 320,779 30,233
Marsh & McLennan Cos. Inc. 134,362 13,974
Navigators Group Inc. 12,292 224(a)
Provident Cos. Inc. 254,752 12,324
Providian Corp. 77,714 3,993
TIG Holdings Inc. 560,656 18,992
UNUM Corp. 83,043 6,000
171,536
Retail Trade -- 4.0%
American Stores Co. 128,524 5,253
Arbor Drugs Inc. 296,032 5,144
CVS Corp. 52,677 2,179
Dayton Hudson Corp. 179,995 7,065
Eckerd Jack Corp. 25,858 827(a)
Federated Department
Stores Inc. 200,350 6,837(a)
General Nutrition Cos. Inc. 68,424 1,155(a)
Home Depot Inc. 295,575 14,816
Lowes Cos. Inc. 30,856 1,095
- - ----------
See Notes to Schedules of Investments and Financial Statements
7
<PAGE>
S&S Program Mutual Fund (dollars in thousands) -- December 31, 1996
Number
of Shares Value
- - --------------------------------------------------------------------------------
May Department Stores Co. 46,090 $ 2,155
Office Max Inc. 62,841 668(a)
Penney J.C. Inc. 39,505 1,926
Price Costco Inc. 234,842 5,900(a)
Sears Roebuck & Co. 427,958 19,740
Toys `R Us Inc. 440,902 13,227(a)
Wal Mart Stores Inc. 1,078,447 24,669
112,656
Software & Services -- 3.6%
Computer Associates
International Inc. 212,075 10,551
Electronic Data Systems Corp. 82,485 3,568
Equifax Inc. 859,468 26,321
First Data Corp. 730,639 26,668
Informix Corp. 43,896 894(a)
Intuit Inc. 50,405 1,588(a)
Microsoft Corp. 68,424 5,654(a)
Reuters Holdings PLC ADR
(Class B) 323,900 24,778
100,022
Technology -- 6.8%
3Com Corp. 81,419 5,974(a)
Applied Materials Inc. 123,748 4,447(a)
Cisco Systems Inc. 148,270 9,434(a)
DSC Communications Corp. 51,576 922(a)
Hewlett Packard Co. 698,509 35,100
Intel Corp. 435,165 56,979
International Business
Machines 288,520 43,567
Lucent Technologies Inc. 67,460 3,120
Motorola Inc. 75,734 4,648
Northern Telecom Ltd. 64,821 4,011
Perkin Elmer Corp. 9,644 568
Pitney Bowes Inc. 64,567 3,519
Rockwell International Corp. 61,454 3,741(a)
Storage Technology Corp. 29,191 1,390(a)
Varian Associates Inc. 154,513 7,861
Xerox Corp. 75,703 3,984
189,265
Transportation -- 1.4%
Burlington Northern Santa Fe 153,194 13,232
Canadian Pacific Ltd. 224,918 5,960
Continental Airlines Inc.
(Class B) 44,995 1,271(a)
Delta Air Lines Inc. 43,896 3,111
Pittston Brinks Group 79,236 2,140
Union Pacific Corp. 223,750 13,453
39,167
Utilities -- 7.1%
Airtouch Communications Inc. 941,502 23,773(a)
Allegheny Power Systems Inc. 69,137 2,100
American Electric Power Inc. 103,629 4,262
American Telephone &
Telegraph Corp. 631,099 27,453
Bellsouth Corp. 286,134 11,553
Duke Power Co. 148,676 6,876
El Paso Natural Gas Co. 10,818 546
Enron Corp. 13,168 568
Florida Progress Corp. 103,360 3,333
FPL Group Inc. 164,767 7,579
Frontier Corp. 74,624 1,688
GTE Corp. 876,377 39,875
MCI Communications Corp. 550,695 18,001
Mobile Telecommunication
Technologies Corp. 41,702 354(a)
NYNEX Corp. 152,077 7,319
Pacificorp 329,940 6,764
Pinnacle West Capital Corp. 73,907 2,347
Portland General Corp. 23,043 968
Public Service Co. Colorado 96,570 3,754
SBC Communications Inc. 308,062 15,942
Scana Corp. 46,750 1,251
Sonat Inc. 141,417 7,283
Southern Co. 155,630 3,521
Vanguard Cellular Systems
Inc. (Class A) 93,906 1,479(a)
198,589
Total Common Stock
(Cost $1,984,873) 2,727,990
- - ----------
See Notes to Schedules of Investments and Financial Statements
8
<PAGE>
Schedule of Investments (dollars in thousands)
- - --------------------------------------------------------------------------------
Principal
Amount Value
- - --------------------------------------------------------------------------------
Convertible Bonds -- 0.2%
Ames Department Stores Inc.
1.00% 03/08/00 $ 79 $ 0(a)
Berkshire Hathaway Inc. Delaware
1.00% 12/02/01 1,195 1,112
Charming Shoppes Inc.
7.50% 07/15/06 978 973
Continental Airlines Inc.
6.75% 04/15/06 1,977 2,229(b)
Total Convertible Bonds
(Cost $4,395) 4,314
- - --------------------------------------------------------------------------------
Number
of Shares Value
- - --------------------------------------------------------------------------------
Preferred Stock -- 0.7%
- - --------------------------------------------------------------------------------
Airtouch Communications Inc.
(Class B), 6.00% 46,851 1,276
Airtouch Communications Inc.
(Class C), 4.25% 36,488 1,651
Continental Airlines Finance
Trust, 8.50% 8,779 586
Continental Airlines Finance
Trust, 8.50% 39,506 2,637(b)
Microsoft Corp. (Series A),
2.20% 131,468 10,534(a)
Occidental Petroleum Corp.,
7.75% 54,872 3,128(b)
Total Preferred Stock
(Cost $19,168) 19,812
Total Investments in Securities
(Cost $2,008,436) 2,752,116
- - --------------------------------------------------------------------------------
Principal
Amount Value
- - --------------------------------------------------------------------------------
Short Term Investments -- 1.4%
- - --------------------------------------------------------------------------------
Repurchase Agreement -- 1.4%
State Street Bank and Trust Co.
6.00% 01/02/97
(Cost $37,460) $37,460 $ 37,460
(dated 12/31/96, proceeds
$37,472, collateralized
by $38,209 United States
Treasury Note, 6.25%, 06/30/98)
Other Assets and Liabilities,
net 0.0% 1,254
----------
NET ASSETS - 100% $2,790,830
==========
[ICON] Icons represent the top five industry weightings in the S&S Program
Mutual Fund at December 31, 1996.
- - ----------
See Notes to Schedules of Investments and Financial Statements
9
<PAGE>
S&S LONG TERM INTEREST FUND
Q&A
Bob MacDougall leads the fixed income team at GE Investments. Assets under
management exceed $19 billion. His responsibilities include managing the S&S
Long Term Interest Fund. Bob joined GE Investments in 1986 as Mutual Fund
Portfolio Manager, became Senior Vice President - Fixed Income in 1992 and was
named to his present position in 1997. Previously he was with GE's Corporate
Treasury Operation managing the Company's $2 billion portfolio of marketable
securities and supporting the Treasurer in the areas of debt management and
capital structure planning. Prior to that, Bob held various financial management
positions since joining GE in 1973. He holds Bachelor's and Master's degrees in
Business Administration from the University of Massachusetts.
Q. How did the S&S Long Term Interest Fund perform compared to its benchmarks
in 1996?
A. The S&S Long Term Interest Fund had a total return of 4.2% in 1996,
consisting of income of 6.9% offset partially by a 2.7% price decline. This
compares with a 3.6% return for the Lehman Brothers Aggregate Bond Index
and an average return of 2.6% for the 130 mutual funds included in our
Lipper Intermediate Bond fund peer group.
Q. What happened in the bond market during the past twelve months?
A. Entering 1996, interest rates were rather low with long Treasury bonds
yielding just under 6%. Moderate economic growth and stable inflation had
rallied the bond market in 1995. Despite an easing of monetary policy in
January, interest rates rose in the first half reaching a high of 7.2% in
June. Stronger economic activity renewed fears of inflation. During the
summer months the market traded in a .40% range around 7% as the economic
data gave conflicting signals and no clear trend emerged.
The resolution of election uncertainties and signs of a slowdown rallied
bonds in the fall with the yield on long Treasuries dropping to 6.35% in
early December. As the year ended, however, rates were headed back up.
Inflation remains under control but with low unemployment and little excess
industrial capacity, investors are wary of any indications of above trend
economic growth.
Q. What was your strategy in 1996?
A. In anticipation of the Federal Reserve reducing rates we lengthened our
average maturity early in the year which unfortunately hurt performance
when rates rose. This prompted us to shorten to a market neutral duration
position which we then held for the remainder of the year. Happily our
sector allocation which was heavily overweight in mortgage backed
securities and, to a lesser extent, corporate bonds boosted performance.
Not only did these sectors provide more yield than U.S. Treasuries but
favorable supply/demand technicals allowed them to also have better price
performance.
Q. What is your current market outlook?
A. As mentioned above the market is very sensitive to the perceived level of
economic activity despite continued reports of mild inflation. As we enter
1997 the latest batch of statistics are foretelling higher growth which is
pushing yields higher. In 1996 we saw that this market action had a
self-correcting effect on the economy. We think that a similar pattern
could emerge this year. With little to no price appreciation expected, we
look to maintain our yield sector overweights and earn the coupon in 1997.
[PHOTO OF BOB MACDOUGALL]
10
<PAGE>
S&S Long Term Interest Fund
Comparison of Change in Value of a $10,000 Investment
- - --------------------------------------------------------------------------------
S&S Long Term LB Aggregate
------------- ------------
'86 $10,000 $10,000
'87 10,069 10,275
'88 10,811 11,085
'89 12,382 12,696
'90 13,546 13,830
'91 15,717 16,043
'92 16,805 17,229
'93 18,453 18,908
'94 17,992 18,356
'95 21,290 21,749
'96 22,191 22,538
- - --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
for the periods ending December 31, 1996
One Five Ten
Year Year Year
---- ---- ----
S&S Long Term 4.23% 7.14% 8.30%
LB Aggregate 3.63% 7.04% 8.47%
- - --------------------------------------------------------------------------------
INVESTMENT PROFILE
A Fund designed for investors who seek a high interest rate of return over a
long-term period consistent with prudent management and preservation of capital.
The Fund invests principally in obligations of the U.S. Government, corporate
bonds, notes and other types of fixed income investments.
- - --------------------------------------------------------------------------------
*Lipper Performance Comparison
Based on 12/31/96 total returns
Intermediate Bond Peer Group
One Five Ten
Year Year Year
---- ---- ----
Fund's rank in peer group: 7 4 1
Number of Funds in peer group: 130 40 11
Peer group average total return: 2.6% 5.7% 7.3%
Lipper categories in peer group: Intermediate U.S. Government,
Intermediate U.S. Treasury
*See notes to performance for explanation of peer categories.
Quality Ratings as of December 31, 1996
================================================================================
Percent of
Moody's Ratings + Market Value
- - --------------------------------------------------------------------------------
Aaa 80.2%
Aa 0.7%
A 6.4%
Baa 7.1%
Ba 5.0%
B 0.1%
NR 0.5%
- - --------------------------------------------------------------------------------
+ Moody's Investors Service, Inc. is a nationally recognized statistical
rating organization.
See page 18 for Notes to Performance.
Past performance is no guarantee of future results.
11
<PAGE>
Schedule of Investments (dollars in thousands) -- December 31, 1996
S&S Long Term Interest Fund
- - --------------------------------------------------------------------------------
U.S. Treasuries 38.3%
Corporate Notes 21.4%
Mortgage Backed 36.3%
Cash & Other 4.0%
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Principal
Amount Value
- - --------------------------------------------------------------------------------
Bonds and Notes -- 99.7%
- - --------------------------------------------------------------------------------
U.S. Treasuries -- 38.3%
U.S. Treasury Bonds
6.75% 08/15/26 $119,881 $ 120,781(j)
8.125% 08/15/19 99,160 114,700(j)
11.25% 02/15/15 28,096 41,490(i)
12.00% 05/15/05 7,315 9,933(j)
286,904
U.S. Treasury Notes
5.625% 02/28/01 62,532 61,291(j)
5.875% 11/15/99 80,676 80,361(i)
5.875% 10/31/98 61,683 61,673(j)
6.00% 12/31/01 42,341 42,182
6.125% 08/31/98 208,310 209,220(j)
6.25% 10/31/01 25,219 25,243(i)
6.375% 09/30/01 23,370 23,509(j)
6.50% 10/15/06 38,102 38,311(i)
6.625% 07/31/01 36,890 37,478
6.625% 06/30/01 26,734 27,164(j)
6.75% 04/30/00 93,884 95,659(j)
7.75% 12/31/99 95,865 100,269(j)
802,360
Total U.S. Treasuries
(Cost $1,086,922) 1,089,264
- - --------------------------------------------------------------------------------
Principal
Amount Value
- - --------------------------------------------------------------------------------
Asset Backed -- 1.2%
Advanta Mortgage Loan Trust Corp.
6.30% 07/25/25 $4,691 $ 4,551
Lehman FHA Title I Loan Trust
7.83% 09/25/17 3,760 3,852
MBNA Master Credit Card Trust
5.53% 11/15/01 8,027 8,024(e)
Provident Bank Home Equity Loan Trust
7.60% 10/25/12 7,301 7,395
Standard Credit Card Master Trust
5.82% 05/07/00 9,000 9,006(e)
Total Asset Backed
(Cost $32,781) 32,828
Corporate Notes -- 21.4%
Abbey National PLC
7.35% 10/29/49 5,390 5,452
Amerco Inc.
7.10% 10/02/06 2,960 3,033
Argentaria Capital Fund
6.375% 02/14/06 6,730 6,372
Banco Nacional De Comercio Corp.
7.25% 02/02/04 5,100 4,501
Barnett Capital Trust
7.95% 12/01/26 3,870 3,829(b)
BCH Cayman Islands
8.25% 06/15/04 5,800 6,125
Bell Telephone Co. - Canada
9.50% 10/15/10 14,270 17,214
Bell Telephone Co. - Pennsylvania
8.35% 12/15/30 9,625 11,311
Camden Property Trust
7.00% 11/15/06 3,880 3,764
Capital One Bank
6.43% 06/29/98 4,000 4,003
Central Maine Power Co.
7.40% 06/02/98 1,475 1,484
China International Trust & Investment Corp.
9.00% 10/15/06 11,640 12,856
China Light & Power Ltd.
7.50% 04/15/06 4,900 4,941
Circus Circus Enterprises Inc.
6.70% 11/15/2096 7,145 7,027
- - ----------
See Notes to Schedules of Investments and Financial Statements
12
<PAGE>
Schedule of Investments (dollars in thousands)
- - --------------------------------------------------------------------------------
Principal
Amount Value
- - --------------------------------------------------------------------------------
Conseco Inc.
10.50% 12/15/04 $ 4,000 $ 4,721
Continental Cablevision Inc.
8.30% 05/15/06 5,430 5,784
Delta Air Lines Inc.
7.79% 12/01/98 9,000 9,186
Deutsche Bank Financial Inc.
6.70% 12/13/06 9,100 8,930
Developers Diversified Realty Corp.
7.00% 03/05/01 4,900 4,876
Dresser Industries Inc.
7.60% 08/15/2096 5,040 5,145
Enersis S.A.
7.40% 12/01/16 3,160 3,066
Federated Department Stores Inc.
8.50% 06/15/03 4,250 4,426
10.00% 02/15/01 6,365 6,914
First Security Capital
8.41% 12/15/26 3,867 3,953(b)
Ford Motor Credit Co.
5.75% 02/22/99 10,000 10,015(e)
Freeport Term Malta Ltd.
7.50% 03/29/09 7,945 8,157(b)
Freeport-McMoran
Resource Partners L.P.
7.00% 02/15/08 4,100 3,911
General Motors Corp.
8.89% 08/18/03 3,800 4,192
Guangdong International Trust
& Investment Corp.
8.75% 10/24/16 4,600 4,734
HSBC America Capital Trust
7.808% 12/15/26 4,220 4,131(b)
HSBC Finance Nederland B.V.
7.40% 04/15/03 4,450 4,534(b)
Hydro-Quebec
8.05% 07/07/24 7,920 8,708
8.25% 04/15/26 6,680 7,148
11.75% 02/01/12 9,610 13,510
Israel Elec Corp. Ltd.
8.10% 12/15/2096 11,585 11,574(b)
ITT Corp. (new)
6.25% 11/15/00 9,920 9,760
Joy Technologies Inc.
10.25% 09/01/03 8,150 8,944
Korea Electric Power Corp.
7.75% 04/01/13 6,435 6,637
Landeskreditbank Baden
7.875% 04/15/04 7,650 8,150
Lehman Brothers Holdings Inc.
6.84% 09/25/98 8,700 8,766
7.00% 05/24/00 11,000 11,050
Liberty Mutual Insurance Co.
8.20% 05/04/07 6,075 6,451(b)
8.50% 05/15/25 6,450 6,917(b)
Loewen Group International Inc.
7.50% 04/15/01 5,600 5,620
Lumbermans Mutual Casualty Co.
9.15% 07/01/26 4,700 5,103(b)
Mayne Nickless Ltd.
8.65% 04/15/02 4,000 4,310(b)
Merrill Lynch & Co. Inc.
5.762% 05/19/98 36,105 36,193(e)
Metropolitan Life Insurance Co.
7.80% 11/01/25 6,100 6,111(b)
Midland Bank PLC
6.95% 03/15/11 5,200 5,017
Morgan Stanley Finance PLC
8.03% 02/28/17 3,860 3,870
Morgan Stanley Group, Inc.
5.762% 03/01/99 17,700 17,742(e)
Multiva Mexico Trust Corp.
9.75% 06/09/97 4,700 4,418(b)
National Bank Hungary
8.875% 11/01/13 4,870 5,275
New York State Dormitory Authority Revenues
6.32% 04/01/99 8,660 8,668
News America Holdings Inc.
8.15% 10/17/36 12,355 12,148
Niagara Mohawk Power Corp.
8.77% 01/01/18 3,962 3,797
North Atlantic Energy Corp.
9.05% 06/01/02 13,022 13,106
Oryx Energy Co.
9.50% 11/01/99 5,025 5,331
10.00% 06/15/99 3,000 3,200
Oslo Seismic
8.28% 06/01/11 6,180 6,424(b)
- - ----------
See Notes to Schedules of Investments and Financial Statements
13
<PAGE>
S&S Long Term Interest Fund (dollars in thousands) -- December 31, 1996
- - --------------------------------------------------------------------------------
Principal
Amount Value
- - --------------------------------------------------------------------------------
Paramount Communications Inc.
5.875% 07/15/00 $ 3,200 $ 3,091
Pennzoil Co.
10.625% 06/01/01 6,450 6,985
Petroleos Mexicanos
7.75% 10/29/99 7,565 7,537(b)
8.00% 07/01/98 4,235 4,272(b)
Philip Morris Cos. Inc.
6.95% 06/01/06 9,425 9,537
Provident Capital Trust
8.60% 12/01/26 3,090 3,134(b)
PSI Energy Inc.
6.25% 12/15/98 4,300 4,294
Reliance Industries Ltd.
10.375% 06/24/16 4,615 4,983(b)
10.50% 08/06/46 3,850 4,120(b)
Republic of Columbia
7.25% 02/15/03 4,000 3,902
Republic of Poland
3.75% 10/27/14 4,700 3,977
Riggs Capital Trust
8.625% 12/31/26 3,860 3,896(b)
Southern Investments UK PLC
6.375% 11/15/01 5,570 5,497
Taubman Realty Group L.P.
8.00% 06/15/99 10,450 10,675
TCI Communications Inc.
6.69% 03/31/06 7,045 6,977
Tele-Communications Inc.
8.25% 01/15/03 4,415 4,458
9.25% 04/15/02 4,200 4,449
Thai Farmers Bank Ltd.
8.25% 08/21/16 5,700 5,736(b)
Time Warner Entertainment Co. L.P.
10.15% 05/01/12 6,875 8,246
Time Warner Inc.
7.95% 02/01/00 8,200 8,468
Toledo Edison Co.
7.38% 03/31/00 10,750 10,537
Total Access Communication Public Co. Ltd.
7.625% 11/04/01 3,855 3,870(b)
Union Electric Co.
7.69% 12/15/36 3,850 3,795
United Air Lines Inc.
10.67% 05/01/04 $ 3,040 $ 3,595
United Co. Financial Corp.
7.00% 07/15/98 3,600 3,618
Viacom Inc.
7.75% 06/01/05 14,575 14,352
Yale University Notes
7.375% 04/15/2096 12,065 12,241
Total Corporate Notes
(Cost $602,314) 608,777
Mortgage-Backed -- 36.3%
Federal Home Loan Mortgage Corp.
6.25% 11/01/12 321 316
6.50% 11/01/03 - 04/01/11 18,594 18,342
6.75% 10/01/03 - 03/01/06 502 498
7.00% 02/01/09 - 05/01/10 11,772 11,821
7.25% 04/01/04 1,478 1,496
7.50% 12/01/05 - 06/01/24 6,058 6,087
7.50% 06/01/23 22,575 22,695(j)
7.75% 05/01/08 837 859
8.00% 12/01/00 - 05/01/09 3,999 4,118
8.00% 01/01/07 - 08/01/08 13,696 14,108(j)
8.25% 05/01/12 644 662
8.50% 08/01/01 - 04/01/12 3,206 3,332
8.50% 06/01/06 - 01/01/08 11,862 12,366(j)
8.75% 08/01/05 - 11/01/09 6,099 6,368
9.00% 10/01/09 - 11/01/16 8,454 8,975
112,043
Federal National Mortgage Assoc.
6.00% 08/01/08 - 07/01/09 26,397 25,625
6.50% 01/01/04 - 06/01/14 15,756 15,433
7.00% 07/01/23 - 12/01/26 34,625 33,872
7.00% TBA 434 425(c)
7.50% 11/01/22 - 04/01/24 31,616 31,734
8.50% 08/01/11 - 12/01/24 4,827 5,038
8.50% 07/01/17 - 06/01/22 1,567 1,638
9.00% 02/01/09 - 04/01/22 18,371 19,545
9.50% 09/01/21 - 06/01/22 97 106
133,416
Government National Mortgage Assoc.
7.00% 04/15/23 - 12/15/23 44,635 43,889
7.50% 02/15/22 - 06/15/24 171,997 172,814
- - ----------
See Notes to Schedules of Investments and Financial Statements
14
<PAGE>
Schedule of Investments (dollars in thousands)
- - --------------------------------------------------------------------------------
Principal
Amount Value
- - --------------------------------------------------------------------------------
Government National Mortgage Assoc. (continued)
8.00% 08/15/18 - 12/15/23 $75,588 $ 77,547
8.25% 05/15/08 424 443
8.50% 10/15/17 21,932 23,252
9.00% 06/15/16 - 12/15/19 23,121 24,755
9.00% TBA 7,870 8,453(c)
9.50% 12/15/09 29,088 31,708
382,861
Mid-State Trust
8.33% 04/01/30 63,022 66,410
Collateralized Mortgage Obligations
Aetna Commercial Mortgage Trust
6.422% 12/26/30 3,490 3,492
American Housing Trust
14, 148% 01/25/21 4 1,382(g)
Collateralized Mortgage Obligation Trust
6.52% 09/01/15 5,549 4,657(d,f)
6.73% 11/01/18 5,674 3,777(d,f)
CS First Boston Mortgage Securities Corp.
6.425% 08/20/30 4,587 4,581
DLJ Mortgage Acceptance Corp.
6.65% 12/17/27 6,160 6,170(b)
6.85% 12/17/27 13,877 13,847(b)
7.29% 11/12/21 3,863 3,959(b)
8.72% 06/28/26 12,767 12,971(b)
Federal Home Loan Mortgage Corp.
7.00% 07/01/26 38,711 13,404(g,j)
7.50% 04/15/21 11,168 11,297
8.00% 04/15/20 6,860 6,950
1009% 09/15/21 113 4,059(g)
Federal National Mortgage Assoc.
6.965% 07/25/10 10,190 10,152
7.12% 09/25/23 14,690 9,365(d,f)
7.41% 03/25/21 11,665 11,971
8.00% 02/01/23 19,906 6,121(g)
8.50% 03/01/17 - 07/25/22 25,314 7,571(g)
Federal National Mortgage Assoc. REMIC
6.61% 08/25/23 15,404 11,370(d,f)
6.78% 09/25/22 11,974 9,560(d,f)
6.856% 06/17/11 5,790 5,804
7.12% 09/25/23 4,081 2,602(d,f)
7.14% 07/25/20 11,621 9,704(d,f)
10.88% 10/25/23 7,741 5,941(d,f)
GMAC Commercial Mortgage Securities Inc.
6.79% 10/15/28 5,591 5,591
LB Commercial Conduit Mortgage Trust
7.141% 08/25/04 7,476 7,581
7.416% 10/25/26 10,231 10,452
Merrill Lynch Mortgage Investor's Inc.
7.113% 05/25/15 9,983 10,120
7.252% 06/15/21 16,845 17,124
Morgan Stanley Capital Inc.
7.218% 10/15/10 7,652 7,581(b)
Residential Resources Inc.
8.00% 10/01/18 4,710 4,797
Salomon Brothers Mortgage Securities Inc.
8.125% 11/01/12 4,587 4,686
Sawgrass Finance REMIC Trust
6.45% 01/20/06 11,550 11,481
Structured Asset Securities Corp.
1.331% 02/25/28 97,196 5,073(g)
8.495% 04/25/27 24,516 25,221
9.087% 09/25/31 22,872 23,880
Vornado Finance Corp.
6.36% 12/01/00 23,125 22,901(b)
337,195
Total Mortgage-Backed
(Cost $1,019,515) 1,031,925
Foreign Denominated Notes -- 2.5%
Dutch Government
6.00% 01/15/06 NLG 23,239 13,770
Federal Republic of Germany
6.25% 04/26/06 DEM 19,805 13,303
Government of Canada
7.00% 12/01/06 CAD 20,900 15,919
Kingdom of Belgium
7.00% 05/15/06 BEL 411,400 14,004
Kingdom of Denmark
8.00% 03/15/06 DKK 74,145 13,845
Total Foreign Denominated Notes
(Cost $70,230) 70,841
Total Bonds and Notes
(Cost $2,811,762) 2,833,635
- - ----------
See Notes to Schedules of Investments and Financial Statements
15
<PAGE>
S&S Long Term Interest Fund (dollars in thousands) -- December 31, 1996
- - --------------------------------------------------------------------------------
Number of
Shares Value
- - --------------------------------------------------------------------------------
Preferred Stock -- 1.0%
- - --------------------------------------------------------------------------------
Appalachian Power Co.
(Series A), 8.25% 37,025 $ 930
Entergy Gulf States Inc., $1.75 286,715 7,190
Equity Residential Properties
Trust, 9.125% 188,950 4,865
Grand Metropolitan Delaware,
9.42% 154,000 4,312
National Rural Utilities Cooperative
Finance Corp., 8.00% 55,537 1,382(a)
Security Capital Industrial
Trust, 8.54% 115,300 5,848(a)
Swire Pacific Offshore Financing
Ltd., 9.33% 160,000 4,178(b)
Total Preferred Stock
(Cost $27,913) 28,705
Total Investments in Securities
(Cost $2,839,675) 2,862,340
- - --------------------------------------------------------------------------------
Principal
Amount Value
- - --------------------------------------------------------------------------------
Short Term Investments -- 4.3%
- - --------------------------------------------------------------------------------
Certificates of Deposits and Time Deposits -- 3.9%
Dresdner Bank AG
7.00% 02/01/97 $27,350 27,350
Prudential Funding Corp.
7.00% 02/01/97 43,610 43,602
San Paolo
7.25% 01/02/97 38,970 38,962
State Street Cayman Islands
6.25% 01/02/97 500 500
110,414
- - --------------------------------------------------------------------------------
Principal
Amount Value
- - --------------------------------------------------------------------------------
Repurchase Agreement -- 0.4%
State Street Bank and Trust Co.
6.00% 01/02/97
(Cost $12,140) $12,140 $ 12,140
(dated 12/31/96, proceeds
$12,144, collateralized by
$12,292 United States
Treasury Note, 6.25%, 06/30/98)
Total Short Term Investments
(Cost $122,554) 122,554
Other Assets and Liabilities,
net (5.0%) (142,551)
----------
NET ASSETS -- 100% $2,842,343
==========
Other Information
- - --------------------------------------------------------------------------------
The S&S Long Term Interest Fund had the following short Futures Contract open at
December 31, 1996:
Number
Expiration of Underlying Unrealized
Description Date Contracts Face Value Gain
- - --------------------------------------------------------------------------------
U.S. Treasury March 1997 367 $41,333 $229
- - ----------
See Notes to Schedules of Investments and Financial Statements
16
<PAGE>
Schedule of Invetments (dollars in thousands)
FORWARD FOREIGN CURRENCY CONTRACTS
- - --------------------------------------------------------------------------------
At December 31, 1996, the outstanding forward foreign currency contracts, which
contractually obligate the S&S Long Term Interest Fund to deliver currencies at
a specified date, were as follows:
U.S. $ Cost U.S. $
Foreign Currency Foreign on Origination Current Unrealized
Sale Contracts Currency Date Value Appreciation
- - --------------------------------------------------------------------------------
BEL, expiring
01/28/97 457,639 $14,683 $14,453 $ 230
CAD, expiring
01/28/97 21,509 15,965 15,737 228
DEM, expiring
01/28/97 21,087 13,904 13,729 175
DKK, expiring
01/28/97 85,085 14,641 14,465 176
NLG, expiring
01/15/97 1,394 820 808 12
NLG, expiring
01/28/97 23,471 13,827 13,619 208
------- ------ ------
$73,840 $72,811 $1,029
======= ======= ======
- - ----------
See Notes to Schedules of Investments and Financial Statements
17
<PAGE>
Notes to Performance (unaudited)
Total returns assume changes in share price and reinvestment of dividends and
capital gains. Investment returns and net asset value on an investment will
fluctuate and you may have a loss or gain when you sell your shares.
The Standard & Poor's Composite Index of 500 Stocks (S&P 500), and the Lehman
Brothers Aggregate Bond Index (LB Aggregate), are unmanaged indices and do not
reflect the actual cost of investing in the instruments that comprise each
index. The S&P 500 Index is a composite of the prices of 500 widely held U.S.
stocks recognized by investors to be representative of the stock market in
general. The LB Aggregate Bond Index is a composite index of short-, medium-,
and long-term bond performance and is widely recognized as a barometer of the
bond market in general. The results shown for the foregoing indices assume
reinvestment of net dividends or interest. Broad market index returns are
calculated from the nearest month end to the Funds' inception date. The majority
of the broad market returns are not available from the Funds' commencement of
investment operations through December 31, 1996.
The peer universe of funds used in our peer ranking calculation is based on the
blend of Lipper peer categories, as shown. This blend is the same as the
category blend used by the Wall Street Journal. The actual number of funds and
numerical rankings in the Lipper and Wall Street Journal universes could differ
since the Wall Street Journal excludes certain funds which do not meet their net
asset or shareholder publication thresholds. Lipper is an independent mutual
fund rating service located in Summit, New Jersey.
The views expressed in this document reflect our judgment as of the publication
date and are subject to change at any time without notice. The securities cited
may not represent future holdings and should not be considered as a
recommendation to purchase or sell a particular security. See the GE S&S Program
Disclosure Statement for more complete descriptions of investment objectives,
policies, risks and permissible investments.
18
<PAGE>
Notes to Schedules of Investments (dollars in thousands)
(a) Non-income producing security.
(b) Pursuant to Rule 144A of Securities Act of 1933, these securities may be
resold in transactions exempt from registration, normally to qualified
institutional buyers. At December 31, 1996, these securities amounted to
$7,994 and $185,067 or 0.3% and 6.5% of net assets for the S&S Program
Mutual Fund and S&S Long Term Interest Fund, respectively.
(c) Settlement is on a delayed delivery or when-issued basis with final
maturity to be announced (TBA) in the future.
(d) Coupon amount represents effective yield.
(e) Floating rate coupon. The stated rate represents the rate at December 31,
1996.
(f) Principal only securities represent the right to receive the monthly
principal payments on an underlying pool of mortgages. No payments of
interest on the pool are passed through to the principal only holder.
(g) Interest only securities represent the right to receive the monthly
interest payments on an underlying pool of mortgages. Payments of principal
on the pool reduce the value of the interest only holding.
(h) Adjustable rate mortgage coupon. The stated rate represents the rate at
December 31, 1996.
(i) All or a portion of security out on loan.
(j) At December 31, 1996 all or a portion of this security was pledged to cover
collateral requirements for futures, options and TBA's.
Abbreviations:
ADR -- American Depositary Receipt
REMIC -- Real Estate Mortgage Investment Conduit
Currency Terms:
BEL -- Belgian Franc
CAD -- Canadian Dollar
DEM -- Deutsche Mark
DKK -- Danish Krone
NLG -- Netherland Guilder
19
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data based on a share outstanding during the year ended December 31:
<TABLE>
<CAPTION>
S&S Program Mutual Fund 1996 1995 1994 1993 1992
- - ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $41.19 $33.59 $37.01 $37.21 $37.97
Income (loss) from investment operations:
Net investment income 0.97 1.00 1.00 1.04 1.09
Net realized and unrealized
gains (losses) on investments 8.63 11.33 (1.65) 3.23 2.00
- - ---------------------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations 9.60 12.33 (0.65) 4.27 3.09
- - ---------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.96 1.00 1.00 1.04 1.09
Net realized gains 4.29 3.73 1.71 3.43 2.76
Tax basis return of capital 0.00 0.00 0.06 0.00 0.00
- - ---------------------------------------------------------------------------------------------------------------------------
Total distributions 5.25 4.73 2.77 4.47 3.85
- - ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $45.54 $41.19 $33.59 $37.01 $37.21
===========================================================================================================================
TOTAL RETURN(a) 23.05% 36.77% (1.76%) 11.47% 8.14%
RATIOS / SUPPLEMENTAL DATA:
Net assets, end of year
(in thousands) $2,790,830 $2,314,537 $1,717,813 $1,805,194 $1,570,664
Ratio of net investment income
to average net assets 2.10% 2.48% 2.70% 2.67% 2.91%
Ratio of expenses to average net assets 0.12% 0.12% 0.13% 0.11% 0.11%
Portfolio turnover rate 36% 47% 33% 37% 40%
Average brokerage commission(b) $0.072 N/A N/A N/A N/A
</TABLE>
- - ----------
See Notes to Schedules of Investments and Financial Statements
20
<PAGE>
Financial Highlights (continued)
Selected data based on a share outstanding during the year ended December 31:
<TABLE>
<CAPTION>
S&S Long Term Interest Fund 1996 1995 1994 1993 1992
- - ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $11.59 $10.52 $11.64 $11.82 $12.03
Income (loss) from investment operations:
Net investment income 0.77 0.80 0.74 0.77 0.89
Net realized and unrealized
gains (losses) on investments (0.31) 1.07 (1.03) 0.36 (0.10)
- - ---------------------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations 0.46 1.87 (0.29) 1.13 0.79
- - ---------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income 0.77 0.80 0.74 0.77 0.89
Net realized gains 0.00 0.00 0.09 0.54 0.11
- - ---------------------------------------------------------------------------------------------------------------------------
Total distributions 0.77 0.80 0.83 1.31 1.00
- - ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $11.28 $11.59 $10.52 $11.64 $11.82
===========================================================================================================================
TOTAL RETURN(a) 4.23% 18.34% (2.50%) 9.80% 6.92%
RATIOS / SUPPLEMENTAL DATA:
Net assets, end of year
(in thousands) $2,842,343 $3,096,022 $2,806,433 $3,238,094 $3,053,167
Ratio of net investment income
to average net assets 6.87% 7.18% 6.66% 6.36% 7.55%
Ratio of expenses to
average net assets 0.13% 0.11% 0.11% 0.07% 0.07%
Portfolio turnover rate 194% 314% 219% 154% 45%
</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.
(b) For the fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades on
which commissions are charged. Mark-ups, mark-downs, and spreads on shares
traded on a principal basis are not included unless they are disclosed on
confirmations prepared in accordance with rule 10b-10 under the 1934 Act.
- - ----------
See Notes to Financial Statements
21
<PAGE>
STATEMENTS OF ASSETS
AND LIABILITIES December 31, 1996 (Amounts in thousands)
<TABLE>
<CAPTION>
S&S PROGRAM S&S LONG TERM
MUTUAL FUND INTEREST FUND
----------- -------------
<S> <C> <C>
ASSETS
Investments in securities, at market
(Cost $2,008,436 and $2,839,675, respectively) $ 2,752,116 $ 2,862,340
Short term investments (at amortized cost) 37,460 122,554
Cash 150 108
Foreign currency (Cost $475 and $0, respectively) 474 0
Receivable for investments sold 3,389 68,960
Income receivables 4,882 37,815
Receivable on forward foreign currency contracts 0 1,029
Variation margin receivable 0 459
- - ---------------------------------------------------------------------------------------------------------------------
Total assets 2,798,471 3,093,265
- - ---------------------------------------------------------------------------------------------------------------------
LIABILITIES
Distributions payable to shareholders 0 3,078
Payable upon return of securities loaned 0 190,774
Payable for investments purchased 5,341 50,846
Payable for fund shares repurchased 423 3,969
Payable to GEIC 1,877 2,255
- - ---------------------------------------------------------------------------------------------------------------------
Total liabilities 7,641 250,922
- - ---------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 2,790,830 $ 2,842,343
=====================================================================================================================
NET ASSETS CONSIST OF:
Capital paid in 2,050,209 2,861,346
Undistributed net investment income 897 1,959
Accumulated net realized loss (3,951) (44,862)
Net unrealized appreciation/(depreciation) on:
Investments 743,680 22,665
Futures 0 229
Foreign currency transactions (5) 1,006
- - ---------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 2,790,830 $ 2,842,343
=====================================================================================================================
Shares outstanding ($25.00 and $10.00 par value,
respectively) 61,277 252,091
Net asset value, offering and redemption
price per share $ 45.54 $ 11.28
</TABLE>
- - ----------
See Notes to Financial Statements
22
<PAGE>
STATEMENTS OF OPERATIONS
For the year ended December 31, 1996 (Amounts in thousands)
<TABLE>
<CAPTION>
S&S PROGRAM S&S LONG TERM
MUTUAL FUND INTEREST FUND
----------- -------------
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividends $ 54,597 $ 1,083
Interest 2,809 201,547
Less: Foreign taxes withheld (465) (18)
- - -------------------------------------------------------------------------------------------------------------------
Total income 56,941 202,612
- - -------------------------------------------------------------------------------------------------------------------
Expenses:
Administrative expenses 1,756 1,941
Shareholder servicing agent expenses 453 478
Transfer agent fees 320 606
Custody and accounting expenses 268 390
Professional fees 71 90
Registration, filing, printing and
miscellaneous expenses 96 127
- - -------------------------------------------------------------------------------------------------------------------
Total expenses 2,964 3,632
- - -------------------------------------------------------------------------------------------------------------------
Net investment income 53,977 198,980
===================================================================================================================
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Realized gain (loss) on:
Investments 241,661 (7,714)
Futures 0 (8,471)
Written options 0 106
Foreign currency transactions (67) 3,746
Increase (decrease) in unrealized appreciation/
(depreciation) on:
Investments 236,645 (72,461)
Futures 0 (1,925)
Foreign currency transactions (5) 997
- - -------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments 478,234 (85,722)
- - -------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations $532,211 $113,258
===================================================================================================================
</TABLE>
- - ----------
See Notes to Financial Statements
23
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1995 (Amounts in thousands)
<TABLE>
<CAPTION>
S&S PROGRAM S&S LONG TERM
MUTUAL FUND INTEREST FUND
1996 1995 1996 1995
- - ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income $ 53,977 $ 50,909 $ 198,980 $ 214,297
Net realized gain (loss) on investments,
futures, written options and
foreign currency transactions 241,594 188,346 (12,333) 93,677
Net increase (decrease) in unrealized
appreciation/(depreciation) 236,640 387,530 (73,389) 193,192
- - ---------------------------------------------------------------------------------------------------------------------------
Net increase from operations 532,211 626,785 113,258 501,166
Distributions to unitholders from:
Net investment income (53,080) (50,794) (199,141) (214,631)
Net realized gains (237,331) (189,197) 0 0
- - ---------------------------------------------------------------------------------------------------------------------------
Total distributions (290,411) (239,991) (199,141) (214,631)
Increase (decrease) in net assets from
operations and distributions 241,800 386,794 (85,883) 286,535
- - ---------------------------------------------------------------------------------------------------------------------------
Share transactions:
Proceeds from sale of shares 194,738 139,552 208,396 173,063
Value of distributions reinvested 268,219 221,934 188,128 206,902
Cost of shares redeemed (228,464) (151,556) (564,320) (376,911)
- - ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from
share transactions 234,493 209,930 (167,796) 3,054
- - ---------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 476,293 596,724 (253,679) 289,589
NET ASSETS
Beginning of year 2,314,537 1,717,813 3,096,022 2,806,433
- - ---------------------------------------------------------------------------------------------------------------------------
End of year $2,790,830 $2,314,537 $ 2,842,343 $ 3,096,022
===========================================================================================================================
Undistributed net investment
income, end of year $ 897 $ 67 $ 1,959 $ 61
CHANGES IN FUND SHARES
Shares sold 4,338 3,396 18,569 15,429
Issued for distributions reinvested 5,778 5,404 16,794 18,554
Shares redeemed (5,029) (3,745) (50,311) (33,615)
- - ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in fund shares 5,087 5,055 (14,948) 368
===========================================================================================================================
</TABLE>
- - ----------
See Notes to Financial Statements
24
<PAGE>
Notes To Financial Statements -- December 31, 1996
1. Organization of the Funds
The S&S Program Mutual Fund and S&S Long Term Interest Fund (the "Funds") are
registered under the Investment Company Act of 1940 (as amended) ("the 1940
Act") as open-end management investment companies and are authorized to issue an
unlimited number of shares. The Funds are two of the investment options offered
under the GE Savings & Security Program ("Program"). The Program, through a
trust, owns 54% of the S&S Program Mutual Fund and 71% of the S&S Long Term
Interest Fund. The Funds operate as Employees' Securities Companies (as defined
in the 1940 Act) and as such are exempt from certain provisions of the 1940 Act.
2. Summary of Significant Accounting Policies
The following summarizes the significant accounting policies of the Funds:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results may differ from those estimates.
Security Valuation and Transactions
Securities for which exchange quotations are readily available are valued at the
last sale price, or if no sales occurred on that day, at the last quoted bid
price. Certain fixed income securities are valued by a dealer or by a pricing
service based upon a computerized matrix system, which considers market
transactions and dealer supplied valuations.
Futures contracts are valued at the settlement price established each day by the
board of trade or exchange on which they are principally traded. Options that
are written or purchased are valued using the mean between the last asked and
bid prices. Forward foreign currency contracts are valued at the mean between
the bid and the offered forward rates as last quoted by a recognized dealer.
Short term investments maturing within 60 days are valued at amortized cost or
original cost plus accrued interest, each of which approximates fair value.
Portfolio positions which cannot be valued as set forth above are valued at fair
value determined under procedures approved by the Trustees.
Transactions are accounted for as of the trade date. Cost is determined and
gains and losses are based upon the specific identification method for both
financial statement and federal tax purposes.
Foreign Currency
Accounting records of the Funds are maintained in U.S. dollars. Investment
securities and other assets and liabilities and purchases and sales of
investment securities denominated in a foreign currency are translated to U.S.
dollars at the prevailing exchange rate on the respective dates of such
transactions.
The Funds do not isolate the portion of the results of operations resulting from
changes in foreign exchange rates on investments from the fluctuations arising
from changes in their market prices. Such fluctuations are included in net
realized and unrealized gain or loss from investments. Reported net realized
exchange gains or losses from foreign currency transactions represent sale of
foreign currencies, currency gains or losses between the trade date and the
settlement date on securities transactions, realized gains and losses on forward
foreign currency contracts, and the difference between the amounts of dividends,
interest, and foreign withholding taxes recorded on the Fund's books, and the
U.S. dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the value of assets and
liabilities, other than investments in securities at fiscal year end, as a
result of changes in exchange rates.
Income Taxes
It is each Fund's policy to comply with all sections of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income and gains to its shareholders and, there-
25
<PAGE>
Notes To Financial Statements -- December 31, 1996
fore, no provision for federal income tax has been made. Each Fund is treated as
a separate taxpayer for federal income tax purposes. Capital loss carryovers are
available to offset future realized capital gains. To the extent that these
carryover losses are used to offset future capital gains, it is probable that
the gains so offset will not be distributed to shareholders because they would
be taxable as ordinary income. At December 31, 1996, the S&S Long Term Interest
Fund had a capital loss carryover of $46,213,465 of which $28,180,824 expires
December 31, 2002 and $18,032,641 expires December 31, 2004.
Investment Income
Corporate actions (including cash dividends) are recorded net of nonreclaimable
tax withholdings on the ex-dividend date, except for certain foreign securities
for which corporate actions are recorded as soon after ex-dividend date as such
information is available. Interest income is recorded on the accrual basis. All
discounts and premiums on taxable bonds are amortized to call or maturity date,
whichever is shorter using the effective yield method.
Expenses
Expenses of the Funds which are directly identifiable to a specific Fund are
allocated to that Fund. Expenses which are not readily identifiable to a
specific Fund are allocated in such a manner as deemed equitable, taking into
consideration the nature and type of expense and the relative sizes of the
Funds. All expenses of the Funds are paid by the Investment Adviser and
reimbursed by the Funds.
Distributions to Shareholders
The S&S Long Term Interest Fund declares investment income dividends daily and
pays monthly. The S&S Program Mutual Fund declares and pays dividends of net
investment income annually. Both Funds declare and pay net realized capital gain
distributions annually. The character of income and gains to be distributed are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences include treatment of
realized and unrealized gains and losses on forward foreign currency
transactions, paydown gains and losses on mortgage-backed securities and losses
on wash sale transactions. Reclassifications are made to the Funds' capital
accounts to reflect income and gains available for distribution (or available
capital loss carryovers) under income tax regulations. The calculation of net
investment income per share in the Financial Highlights table excludes these
adjustments.
When-Issued Securities
The Funds may purchase or sell securities on a when-issued or forward commitment
basis. Payment and delivery may take place a month or more after the date of the
transaction. The price of the underlying securities and the date when the
securities will be delivered and paid for are fixed at the time the transaction
is negotiated. This may increase the risk if the other party involved in the
transaction fails to deliver and causes the Fund to subsequently invest at less
advantageous yields. In connection with such purchases, the Fund is required to
hold liquid assets as collateral with the Funds' custodian sufficient to cover
the purchase price, unless they enter into an offsetting contract for the sale
of equal securities and value.
Forward Foreign Currency Contracts
A forward foreign currency contract ("Forward") is an agreement between two
parties to buy and sell a currency at a set price on a future date. The market
value of the Forward fluctuates with changes in currency exchange rates. The
Forward is marked-to-market daily and the change in the market value is recorded
by the Fund as an unrealized gain or loss. When the Forward is closed, the Fund
records a realized gain or loss equal to the difference between the value at the
time it was opened and the value at the time it was closed. The Fund could be
exposed to risk if a counterparty is unable to meet the terms of the contract or
if the value of the currency changes unfavorably. The Fund may enter into
Forwards in connection with planned purchases and sales of securities, to hedge
specific receivables or payables against changes in future exchange rates or to
hedge the U.S. dollar value of portfolio securities denominated in a foreign
currency.
26
<PAGE>
Notes To Financial Statements -- December 31, 1996
Repurchase Agreements
The Funds' custodian takes possession of the collateral pledged for investments
in repurchase agreements on behalf of the Funds. It is the policy of the Funds
to value the underlying collateral daily on a mark-to-market basis to determine
that the value, including accrued interest, is at least equal to the repurchase
price. In the event of default of the obligation to repurchase, the Funds have
the right to liquidate the collateral and apply the proceeds in satisfaction of
the obligation.
Futures and Options
The Funds may invest in futures contracts and purchase and write options. These
investments involve, to varying degrees, elements of market risk and risks in
excess of the amount recognized in the Statements of Assets and Liabilities. The
face or contract amounts reflect the extent of the involvement the Funds have in
the particular classes of instruments. Risks may be caused by an imperfect
correlation between movements in the price of the instruments and the price of
the underlying securities and interest rates. Risks also may arise if there is
an illiquid secondary market for the instruments, or an inability of
counterparties to perform. The Funds may invest in these instruments for the
following reasons: to hedge against the effects of changes in value of portfolio
securities due to anticipated changes in interest rates and/or market
conditions, to equitize a cash position, for duration management, or when the
transactions are economically appropriate to reduce the risk inherent in the
management of the Fund involved.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily change in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the futures contract is
closed. The Fund will realize a gain or loss upon the expiration or closing of
the option transaction. When an option is exercised, the proceeds on sales for a
written call option, the purchase cost for a written put option, or the proceeds
on the sale of the security for a purchased put or cost of the security for a
call option are adjusted by the amount of premium received or paid.
Security Lending
The Funds may loan securities to well known and recognized U.S. and foreign
brokers and banks and receive a lenders fee. These fees are included in interest
income. The loans of securities will be collateralized by cash, letters of
credit or U.S. Government securities. The collateral will be segregated and
maintained at all times with the custodian and must be equal to the current
value of the securities loaned. In the event the counterparty (borrower) does
not meet its contracted obligation to return the securities, the Fund may be
exposed to the risk of loss of reacquiring the loaned securities at prevailing
market prices.
Other
There are certain additional risks involved when investing in foreign securities
that are not inherent in domestic securities. These risks may involve foreign
currency exchange rate fluctuations, adverse political and economic developments
and the imposition of unfavorable foreign governmental laws and restrictions.
3. Fees and Compensation Paid to Affiliates
Advisory and Administration Fees
During 1996 the Funds incurred expenses for the cost of services rendered by
General Electric Company's wholly owned subsidiary, General Electric Investment
Corporation ("GEIC"), as Investment Adviser and for services GEIC rendered as
shareholder servicing agent. These expenses are included as administrative
expenses and shareholder servicing agent fees in the Statements of Operations.
The Trustees received no compensation as trustees for the Funds.
27
<PAGE>
Notes To Financial Statements -- December 31, 1996
4. Aggregate Unrealized Appreciation and Depreciation
(Dollars in Thousands)
Aggregate gross unrealized appreciation/(depreciation) of investments for each
Fund at December 31, 1996, were as follows:
Gross Gross Net
Unrealized Unrealized Unrealized
Appreciation Depreciation Appreciation
- - --------------------------------------------------------------------------------
S&S Program
Mutual Fund $ 754,040 $ 10,360 $ 743,680
S&S Long Term
Interest Fund 35,047 12,382 22,665
The aggregate cost of each Fund's investments was substantially the same for
book and federal income tax purposes at December 31, 1996.
5. Options
(Dollars in Thousands)
During the year ended December 31, 1996, the following option contracts were
written:
S&S Long Term Interest Fund
- - --------------------------------------------------------------------------------
Number
of Contracts Premium
- - --------------------------------------------------------------------------------
Balance as of
December 31, 1995 0 $ 0
Written 109 106
Closed and Expired (109) (106)
Exercised 0 0
------- -------
Balance as of
December 31, 1996 0 $ 0
======= =======
6. Investment Transactions
(Dollars in Thousands)
The cost of purchases and the proceeds from sales of investments, other than
U.S. Government securities, short term securities and options, for the year
ended December 31, 1996, were:
Purchases Sales
- - --------------------------------------------------------------------------------
S&S Program
Mutual Fund $ 894,130 $ 895,190
S&S Long Term
Interest Fund 1,318,807 1,261,589
The cost of purchases and the proceeds from sales of long term U.S. Government
securities for the year ended December 31, 1996, were:
Purchases Sales
- - --------------------------------------------------------------------------------
S&S Program
Mutual Fund $ 11,813 $ 6,139
S&S Long Term
Interest Fund 4,700,580 4,701,720
7. Security Lending
At December 31, 1996, the S&S Long Term Interest Fund loaned securities having a
value, including accrued interest, of approximately $187,515,260 and received
$198,984,002 in cash and letters of credit as collateral for the loans. Cash
collateral received is invested in high grade liquid debt obligations and short
term investments at December 31, 1996.
28
<PAGE>
Independent Auditors' Report
[LOGO]
To the Board of Trustees and Shareholders
of the GE S&S Mutual Funds:
We have audited the accompanying statements of assets and liabilities of the GE
S&S Program Mutual Fund and GE S&S Long Term Interest Fund, including the
schedules of investments, as of December 31, 1996, and the related statements of
operations for the year then ended, the statements of changes in net assets for
each of the years in the two-year period then ended, and the financial
highlights for each of the years in the five-year period then ended. These
financial statements and financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of GE S&S
Program Mutual Fund and GE S&S Long Term Interest Fund as of December 31, 1996,
the results of their operations for the year then ended, the changes in their
net assets for each of the years in the two-year period then ended, and their
financial highlights for each of the years in the five-year period then ended,
in conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
New York, New York
February 11, 1997
29
<PAGE>
GE S&S Program Supplementary Information -- Introduction
The following information is provided for participants in the GE Savings &
Security Program and supplements the description of the Program as it appears in
the GE Employee Benefits Summary Plan Description booklet, as amended (GE
Benefits Handbook).
The Schedules of Investments for the S&S Short Term Interest Fund and S&SMoney
Market Fund have been included as an additional feature.
Following the Schedules of Investments are two tables designed to illustrate the
relative market value of investments offered under the Program. Performance data
information is based upon historical earnings and is not intended to indicate
future performance. The notes are an integral part of these tables.
The Supplemental Information and Schedules of Investments have not been audited.
30
<PAGE>
Schedule of Investments (dollars in thousands) -- December 31, 1996
(unaudited)
S&S SHORT TERM INTEREST FUND
- - --------------------------------------------------------------------------------
Principal
Amount Value
- - --------------------------------------------------------------------------------
Bonds and Notes -- 96.3%
- - --------------------------------------------------------------------------------
U.S. Treasuries -- 36.0%
U.S. Treasury Notes
5.125% 02/28/98 $ 51,095 $ 50,767(j)
5.50% 02/28/99 73,789 73,166(j)
5.875% 11/15/99 8,775 8,741
6.00% 08/15/99 31,360 31,355(j)
6.125% 03/31/98 - 08/31/98 139,442 140,078(j)
Total U.S. Treasuries
(Cost $304,253) 304,107
Asset Backed -- 11.6%
Advanta Mortgage Loan Trust Corp.
6.30% 07/25/25 4,473 4,341
Chase Manhattan Auto Owner Trust
5.95% 11/15/00 14,950 14,894
CIT RV Owner Trust
5.40% 12/15/11 1,284 1,266
Discover Card Master Trust
5.40% 11/16/01 5,000 4,944
First Deposit Master Trust
6.05% 08/15/02 10,500 10,513
Fleetwood Credit Grantor Trust
6.00% 01/15/08 5,887 5,859
6.75% 10/17/11 6,575 6,614
6.90% 03/15/12 1,895 1,913
Ford Credit Auto Owner Trust
6.50% 11/15/99 16,190 16,301
HFC Home Equity Loan
4.65% 12/20/08 2,957 2,915
Lehman FHA Title I Loan Trust
7.30% 05/25/17 3,131 3,157
Premier Auto Trust
6.50% 03/06/00 4,000 4,027
Standard Credit Card Master Trust
4.65% 03/07/99 12,400 12,388
The Money Store Home Equity Trust
5.675% 02/15/09 8,783 8,459
Total Asset Backed
(Cost $97,845) 97,591
Corporate Notes -- 22.2%
A T & T Capital Corp.
7.59% 01/31/97 10,000 10,014
AMR Corp.
7.75% 12/01/97 5,000 5,066
Arkla Inc.
8.74% 05/14/98 4,750 4,893
8.875% 07/15/99 4,150 4,374
Blockbuster Entertainment Corp.
6.625% 02/15/98 8,555 8,555
Chase Manhattan Corp. New
7.50% 12/01/97 8,000 8,100
Digital Equipment Corp.
7.00% 11/15/97 2,000 2,001
Electronic Data Systems Corp.
6.85% 05/15/00 3,000 3,038(b)
First USA Bank
6.125% 10/30/97 8,000 8,013
GMAC Pass-Through Trust
6.375% 09/30/98 16,500 16,528(b)
Great Atlantic & Pacific Tea Inc.
9.125% 01/15/98 9,750 10,001
Great Northern Nekoosa Corp.
9.125% 02/01/98 4,300 4,427
Henderson Land Finance
6.00% 12/08/98 5,000 4,931
Korea Development Bank
5.875% 12/01/98 6,100 6,067
Lehman Brothers Holdings Inc.
6.84% 09/25/98 4,250 4,282
6.875% 06/08/98 2,000 2,018
Manitoba Province of Canada
6.125% 05/28/98 8,875 8,895
Mexico United Mexican States
11.25% 07/21/97 8,000 8,223(b)
New York State Dormitory Authority Revenues
6.32% 04/01/99 2,575 2,577
- - ----------
See Notes to Schedules of Investments
31
<PAGE>
S&S Short Term Interest Fund (dollars in thousands) -- December 31, 1996
- - --------------------------------------------------------------------------------
Principal
Amount Value
- - --------------------------------------------------------------------------------
New York Taxable General Obligation
6.10% 02/01/98 $ 4,000 $ 3,998
News America Holdings Inc.
9.125% 10/15/99 3,890 4,151
Oryx Energy Co.
9.50% 11/01/99 4,000 4,243
Pennzoil Co.
10.625% 06/01/01 6,700 7,255
Petroleos Mexicanos
7.75% 10/29/99 4,125 4,110(b)
PSI Energy Inc.
6.25% 12/15/98 5,000 4,993
Republic of Columbia
8.75% 10/06/99 3,950 4,128
Salomon Inc.
6.70% 12/01/98 5,925 5,947
Southern California Edison Co.
6.125% 07/15/97 5,000 5,009
Tele-Communications Inc.
7.13% 02/02/98 7,300 7,364
9.875% 04/01/98 5,000 5,195
Time Warner Inc.
7.45% 02/01/98 6,000 6,066
United Co. Financial Corp.
7.00% 07/15/98 3,450 3,467
Total Corporate Notes
(Cost $187,048) 187,929
Mortgage-Backed -- 26.5%
Federal Home Loan Mortgage Corp.
6.00% 12/01/08 2,218 2,170
7.50% 11/01/08 3,258 3,282
8.00% 08/01/03 25,975 26,722
32,174
- - --------------------------------------------------------------------------------
Principal
Amount Value
- - --------------------------------------------------------------------------------
Federal National Mortgage Assoc.
6.00% 05/01/01 $ 871 $ 856
7.151% 07/01/22 2,465 2,500(h)
7.191% 05/01/21 2,586 2,699(h)
8.159% 12/01/27 2,799 2,873(h)
8.394% 12/01/17 1,152 1,195(h)
8.885% 10/01/21 1,131 1,163(h)
9.00% 08/01/10 25,710 27,212
38,498
Government National Mortgage Assoc.
7.125% 05/20/22 - 06/20/24 10,939 11,172(h)
7.25% 09/20/18 - 08/20/22 11,275 11,523(h)
22,695
Collateralized Mortgage Obligations
CS First Boston Mortgage Securities Corp.
6.425% 08/20/30 1,427 1,425
Federal Home Loan Mortgage Corp. REMIC
543.498% 09/15/05 24 253(g)
1002% 07/15/06 47 922(g)
Federal National Mortgage Assoc.
6.521% 09/17/04 18,583 18,589
7.373% 08/17/03 22,249 22,813
Federal National Mortgage Assoc. REMIC
6.38% 11/25/06 6,008 5,468(d,f)
Merrill Lynch Mortgage Investor's Inc.
7.218% 06/15/21 2,531 2,573
Salomon Brothers Mortgage Securities Inc.
6.469% 01/20/28 29,754 29,652
8.125% 11/01/12 1,198 1,224
Structured Asset Securities Corp.
6.75% 06/25/30 15,733 15,748(b)
7.75% 02/25/28 17,368 17,618
9.087% 09/25/31 13,709 14,313
130,598
Total Mortgage-Backed
(Cost $224,152) 223,965
Total Investments in Securities
(Cost $813,298) 813,592
- - ----------
See Notes to Schedules of Investments
32
<PAGE>
Schedule of Investments (dollars in thousands)
(unaudited)
- - --------------------------------------------------------------------------------
Principal
Amount Value
- - --------------------------------------------------------------------------------
Short Term Investments -- 3.6%
- - --------------------------------------------------------------------------------
U.S. Government Agencies and
Certificates of Deposits -- 3.6%
Federal Home Loan Mortgage Corp.
5.70% 01/02/97 $ 21,420 $ 21,417
San Paolo
7.25% 01/02/97 9,000 8,998
Total Short Term Investments
(Cost $30,415) 30,415
Other Assets and Liabilities,
net 0.1% 558
----------
NET ASSETS -- 100% $ 844,565
==========
- - ----------
See Notes to Schedules of Investments
33
<PAGE>
Schedule of Investments (dollars in thousands) -- December 31, 1996
(unaudited)
S&S MONEY MARKET FUND
- - --------------------------------------------------------------------------------
Principal Amortized
Amount Cost
- - --------------------------------------------------------------------------------
Short Term Investments -- 102.3%
- - --------------------------------------------------------------------------------
U.S. Governments(d) -- 41.3%
Federal Home Loan Bank
5.19% 03/05/97 $ 7,110 $ 7,045
5.22% 01/09/97 26,970 26,939
5.24% 01/03/97 7,580 7,578
5.27% 01/16/97 22,300 22,252
5.49% 03/06/97 30,500 30,202
94,016
Federal Home Loan Mortgage Corp.
5.19% 03/07/97 7,730 7,658
5.22% 01/02/97 - 06/13/97 36,500 36,307
5.24% 02/10/97 25,680 25,530
5.70% 01/02/97 11,250 11,248
80,743
Federal National Mortgage Assoc.
5.21% 05/12/97 32,630 32,012
5.23% 02/18/97 - 02/26/97 47,210 46,865
5.25% 01/16/97 5,090 5,079
5.27% 01/03/97 31,770 31,760
115,716
Total U.S. Governments
(Cost $290,475) 290,475
Commercial Paper (d) -- 30.6%
Abbey National PLC
5.27% 02/18/97 36,530 36,273
Chase Manhattan Corp.
5.30% 01/15/97 33,910 33,840
First Union Corp.
5.29% 02/19/97 32,250 32,018
Merrill Lynch & Co. Inc.
5.30% 02/14/97 38,920 38,668
Morgan (J.P.) & Co. Inc.
5.30% 01/16/97 32,140 32,069
Norwest Corp.
5.30% 01/17/97 32,470 32,394
UBS Finance Delaware Inc.
6.20% 01/02/97 10,000 9,998
Total Commercial Paper
(Cost $215,260) 215,260
Certificate of Deposits -- 30.4%
Algemene Bank Nederland N.V.
5.38% 01/17/97 35,490 35,490
Bank of Nova Scotia
5.51% 01/06/97 31,500 31,500
Bayerische Hypotheken Bank
5.35% 02/21/97 32,640 32,640
Credit Suisse
5.36% 02/11/97 7,000 7,000
Dresdner Bank AG
5.36% 02/11/97 36,200 36,200
Royal Bank of Canada
5.35% 03/13/97 6,430 6,430
Societe Generale
5.50% 01/02/97 33,200 33,200
Toronto Dominion Bank
5.385% 02/03/97 31,500 31,500
Total Certificate of Deposits
(Cost $213,960) 213,960
Total Short Term Investments
(Cost $719,695) 719,695
Other Assets and Liabilities,
net (2.3%) (16,062)
--------
NET ASSETS -- 100% $703,633
========
- - ----------
See Notes to Schedules of Investments
35
<PAGE>
GE S&S Program Supplemental Information
(unaudited)
Investment at $100 per Month
The first table illustrates the cumulative value at each year end of an assumed
investment in the amount of $100 per month. The table covers an investment
beginning January 1, 1994, in U.S. Savings Bonds ("Bonds"), GE Common Stock
("Stock"), S&S Program Mutual Fund ("Mutual Fund"), S&S Short Term Interest Fund
("ST Fund"), S&S Long Term Interest Fund("LT Fund"), and S&S Money Market Fund
("MM Fund").
<TABLE>
<CAPTION>
VALUE OF INVESTMENT OF $100 PER MONTH (a)
Investment Beginning January 1, 1994
Bonds Stock Mutual Fund
------------------------- ------------------------- --------------------------
Cumulative Redemption Market Value Value
Amount Value Including Including
At Year Invested Cumulative Including Cumulative Reinvested Cumulative Reinvested
Ended In Each Accrued Accrued Reinvested Dividends Reinvested Distributions
Dec. 31 Media Interest Interest Dividends (b)(c) Distributions (b)(d)
- - ---------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
1994 $1,200 $ 22 $1,222 $ 13 $1,251 $ 83 $1,195
1995 2,400 93 2,493 67 3,296 383 2,996
1996 3,600 227 3,827 162 6,034 893 5,037
</TABLE>
<TABLE>
<CAPTION>
ST Fund LT Fund MM Fund
------------------------- -------------------------- --------------------------
Cumulative Value Value
Amount Including Cumulative Including Value
At Year Invested Cumulative Reinvested Reinvested Reinvested Cumulative Including
Ended In Each Accrued Interest Distributions Distributions Accrued Reinvested
Dec. 31 Media Interest (b) (d) (b) (d) (b) (d) Interest Interest
- - ---------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
1994 $1,200 $ 39 $1,216 $ 52 $1,221 $ 31 $1,231
1995 2,400 166 2,608 195 2,720 145 2,545
1996 3,600 373 3,997 426 4,089 323 3,923
</TABLE>
Notes:
(a) The Program provides for Proportionate Company Payments in addition to
Employee Contributions. The amounts shown are simply for illustrative
purposes and do not reflect any such Proportionate Company Payments.
(b) Cumulative values include the year-end market value of Stock and the share
price of Mutual Fund, ST Fund, and LT Fund Shares purchased through the
reinvestment of income and dividends, as the case may be. Capital gains
distributions of $1.71, $3.73, and $4.29 per unit were paid on Mutual Fund
Shares in 1994, 1995, and 1996, respectively, and capital gain
distributions of $0.09, $0.00, and $0.00 per share were paid on LT Fund
Shares in 1994, 1995, and 1996, respectively.
(c) The market value of Stock is based on the closing price as of year end, as
reported by the Consolidated Tape of New York Stock Exchange listed shares.
(d) The value of Mutual Fund, ST Fund, and LT Fund Shares is based on the Share
Price as of year end. Share Price, which is equal to the net asset value
per share, is determined in accordance with Section III of the Rules of the
Funds.
35
<PAGE>
GE S&S Program Supplemental Information
(unaudited)
$1,000 Investment
This table illustrates the value at year end of an assumed investment of $1,000
made on January 1, 1994 in Bonds, Stock, Mutual Fund, ST Fund, LT Fund, and MM
Fund.
<TABLE>
<CAPTION>
VALUE OF INVESTMENT OF $1,000
Investment Made on January 1, 1994
Bonds Stock Mutual Fund
------------------------- ------------------------- --------------------------
Redemption Market Value Value
Value Including Including
At Year Cumulative Including Cumulative Reinvested Cumulative Reinvested
Ended Accrued Accrued Reinvested Dividends Reinvested Distributions
Dec. 31 Interest Interest Dividends (b)(c) Distributions (b)(d)
- - ---------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
1994 $ 41 $1,041 $ 28 $1,001 $ 75 $ 982
1995 83 1,083 60 1,452 213 1,344
1996 126 1,126 98 2,036 384 1,653
- - ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ST Fund LT Fund MM Fund
------------------------- ------------------------- --------------------------
Value Value Redemption
Including Including Value
At Year Cumulative Reinvested Cumulative Reinvested Cumulative Including
Ended Accrued Interest Reinvested Distributions Accrued Reinvested
Dec. 31 Interest (b)(d) Distributions (b)(d) Interest Interest
- - ---------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
1994 $ 57 $1,016 $ 74 $ 974 $ 43 $1,043
1995 127 1,128 150 1,154 107 1,107
1996 199 1,191 229 1,202 169 1,169
- - ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
GE S&S Program Mutual Fund and S&S Long Term Interest
Fund Operating Expenses (as a percentage of average net
assets) for the year ended December 31, 1996:
Mutual Fund LT Fund
- - --------------------------------------------------------------------------------
Management Expenses .07% .07%
Other Expenses .05% .06%
------- -------
Total Fund Operating Expenses .12% .13%
======= =======
The following expenses would be paid on a $1,000 investment assuming 5%
annual return:
1 Year 3 Years 5 Years 10 Years
- - --------------------------------------------------------------------------------
Mutual Fund $1 $4 $7 $15
LT Fund 1 4 7 17
The purpose of this table is to assist the investor in understanding the
expenses that an investor in the Fund will bear indirectly. This example should
not be considered a representation of past or future expenses. Actual expenses
may be greater or lesser than those shown.
36
<PAGE>
GE S&S Program Disclosure Statement
GE SAVINGS AND SECURITY
PROGRAM
The GE Savings and Security Program (the "S&SP") is designed to comply with
Section 404(c) of the Employee Retirement Income Security Act, which sets forth
certain rights and responsibilities for fiduciaries. In the S&SP, you -- not the
Company, the Trustees or anyone else -- control your own investments. You have a
diverse choice of investment options and the ability to make frequent changes,
depending on your personal savings strategy. As a result, the fiduciaries of the
S&SP will not be liable for losses occurring to your account because of your
investment control.
This document sets forth information about the investment alternatives
available to participants of the S&SP and is being provided to assist them in
making informed investment decisions. This document is intended to constitute
part of the information required to be provided to participants by Section
404(c) of the Employee Retirement Income Security Act and Title 29 of the Code
of Federal Regulations Section 2550.404c-1. For a description of certain
information available to participants of the S&SP, see "Additional Information"
below. The term "participants" when used herein refers to participants and/or
beneficiaries of the S&SP, as the case may be.
The S&SP provides employees of General Electric Company (the "Company") and
its participating affiliates an opportunity for convenient, regular and
substantial personal savings. Subject to certain restrictions more fully
described in the GE Benefits Handbook, the S&SP enables employees to invest
their savings in one or more of the following investment media:
a. Common Stock of the Company ("Stock");
b. GE S&S Program Mutual Fund (the "Mutual Fund");
c. GE S&S Short Term Interest Fund (the "ST Fund");
d. GE S&S Long Term Interest Fund (the "LT Fund");
e. GE S&S Money Market Fund (the "MM Fund" and, collectively with the Mutual
Fund, the ST Fund, and the LT Fund, the "Funds");
f. United States Savings Bonds ("Bonds"); and
g. Life Insurance.
DESCRIPTION OF INVESTMENT
ALTERNATIVES
I. Bonds
The Bonds in which participants may invest are Series "EE" Savings Bonds
issued by the U.S. Treasury. Such purchase may be made only from the
participant's after-tax savings. The option to purchase Bonds under the S&SP is
subject to numerous restrictions which are more fully described in the GE
Benefits Handbook.
II. Stock
The participants may invest in shares of Stock. The Stock held in a
participant's account will increase or decrease in value depending on how well
the Stock performs in the stock market. Participants should be aware that an
investment in stock of any company, including the Stock, may be subject to
greater market volatility than investing in a diversified portfolio of
securities. There are no restrictions on the exercise of voting, tender or
similar rights appurtenant to a participant's investment in Stock. The option to
purchase Stock under the S&SP is more fully described in the GE Benefits
Handbook.
It is the policy of the Trustees of the S&SP that information relating to
participant transactions and voting with respect to Stock in the S&SP shall be
maintained in confidence. While participants may easily access information
relating to their own accounts, third party access to participant information is
restricted through the use of PIN numbers. In addition, those individuals whose
jobs require them to have access to S&SP records are instructed concerning the
confidential nature of this information. The Trustees
37
<PAGE>
GE S&S Program Disclosure Statement
of the S&SP (c/o General Electric Investment Corporation, 3003 Summer Street,
Stamford, CT 06905 (203-326-2300)) are responsible for monitoring compliance
with the procedures established to provide for the confidentiality of this
information.
Resale of Shares Acquired Pursuant to the Plan.
Officers of the Company may reoffer or resell Stock acquired pursuant to
the S&SP only in connection with a separate registration statement which has
been declared effective under the Securities Act of 1933, as amended (the "1933
Act"), an amendment to the current Registration Statement on Form S-8 of the
S&SP, or pursuant to an available exemption under the 1933 Act, including the
exemption provided by Rule 144 or any successor provisions thereunder
(hereinafter referred to as "Rule 144"), subject to certain limitations set
forth in Rule 144 but without regard to the two-year holding period provided for
under Rule 144. Officers of the Company who acquire Stock pursuant to the S&SP
should consult with their assigned counsel to ascertain whether or not their
position within the Company requires compliance with the resale restrictions
described above.
III. Life Insurance
Any participant may elect to apply 1% or 1/2% of his or her earnings to the
purchase of life insurance. Such purchase shall be from the participant's
after-tax savings. The option to purchase life insurance under the S&SP and the
benefits payable thereunder are more fully described in the GE Benefits
Handbook.
IV. Investments in the Funds
A. Investment Objectives and Policies
1. GE S&S Program Mutual Fund
The moneys received by the Mutual Fund will be invested principally in
common stock and in securities convertible into common stock. Purchases will be
made principally on the basis of opportunities for long-term growth of capital
and income. The Mutual Fund may keep a portion of its assets in cash or invest
the same in short-term obligations, including repurchase agreements. Investments
may also be made in preferred stocks and in debt securities when such
investments appear consistent with the long-term objectives of the Mutual Fund.
Securities may be sold without regard to the length of time they have been held;
however, they will not be purchased for trading purposes.
Although the Mutual Fund is expected to invest primarily in securities
issued by U.S. companies, the Mutual Fund may also invest in foreign securities,
including securities of foreign issuers in the form of depositary receipts.
Additional instruments in which the Mutual Fund may invest include, but are not
limited to, securities rated lower than investment grade, non-publicly traded
securities, illiquid securities and securities that are not registered under the
the 1933 Act, but that can be sold to "qualified institutional buyers" in
accordance with Rule 144A ("Rule 144A Securities"). In addition, the Mutual Fund
may engage in certain investment techniques and strategies, which may include
entering into securities transactions on a when-issued or delayed-delivery
basis. These instruments, investment techniques and strategies have risks and
special considerations associated with them that are described below under "Risk
Factors and Special Considerations."
2. GE S&S Short Term Interest Fund
The moneys received by the ST Fund will be invested in debt obligations of
the U.S. Government and its instrumentalities, banks and corporations, and
contracts with insurance companies. Investments will be made principally with
the objective of preserving principal and achieving a market-related interest
rate of return. Nevertheless, the ST Fund may keep a portion of its assets in
cash or invest the same in appropriate short-term obligations or in
intermediate-term obligations when such investments appear consistent with the
objective of the ST Fund. Securities may be sold without regard to the length of
time held; however, they will not be purchased for trading purposes.
38
<PAGE>
GE S&S Program Disclosure Statement
3. GE S&S Long Term Interest Fund
The LT Fund portfolio will be invested with the objective of achieving a
high interest rate of return over a long-term period consistent with a degree of
risk determined by the Trustees of the LT Fund to be acceptable for the LT Fund
from time to time in their absolute discretion and consistent with prudent
investment management and preservation of capital. The moneys received by the LT
Fund will be invested in debt securities consisting of corporate bonds and
debentures acquired in the public market or in private transactions, real estate
sale-leasebacks and real estate mortgages secured by net credit leases,
obligations of the U.S. Government and its instrumentalities, contracts with
insurance companies, preferred stock and other types of fixed income
investments. In order to meet the requirements of the LT Fund, the LT Fund may
keep a portion of its assets in cash or in appropriate short-term or
intermediate-term obligations. The LT Fund may participate in any available
futures market with respect to the above investments in order to reduce
uncertainties associated with interest rate fluctuations to the extent such
participation is permitted by law and consistent with the objectives of the LT
Fund. The Trustees of the LT Fund shall comply with the limitations on gross
income and the requirements with respect to the categories and diversification
of LT Fund assets as are applicable to regulated investment companies under the
Internal Revenue Code of 1986, as amended, and shall comply with the
requirements applicable to registered investment companies under the Investment
Company Act of 1940, as amended (the "1940 Act"), unless expressly excepted
therefrom. Any requirements with respect to categories and diversification shall
be determined by reference to the market value of the LT Fund at the time of
acquisition of the proposed investments. The LT Fund portfolio will be
diversified.
Additional instruments in which the LT Fund may invest include, but are not
limited to, obligations issued by foreign companies or foreign governments or
their agencies or instrumentalities, securities rated lower than investment
grade, non-publicly traded securities, repurchase agreements, illiquid
securities, Rule 144A Securities, securities of supranational agencies, zero
coupon obligations, floating and variable rate instruments, mortgage related
securities, adjustable rate mortgage ARMs, CMOs, government stripped mortgage
related securities, asset-backed and receivable-backed securities.
The LT Fund may also invest in indexed securities, the value of which is
linked to currencies, interest rates, commodities, indexes or other financial
indicators. In addition, the LT Fund may engage in certain investment techniques
and strategies, which may include purchasing and writing put and call options on
securities, purchasing put and call options on securities indexes, entering into
interest rate, financial and bond index futures contracts or related options
that are traded on a U.S. or foreign exchange or board of trade or in the
over-the-counter market, engaging in forward currency transactions, purchasing
and writing put and call options on foreign currencies, entering into securities
transactions on a when-issued or delayed-delivery basis, entering into mortgage
dollar rolls and lending portfolio securities. These other instruments,
investment techniques and strategies have risks and special considerations
associated with them that are described below under "Risk Factors and Special
Considerations."
4. GE S&S Money Market Fund
The investment objective of the MM Fund is to seek as high a level of
current income as is consistent with the preservation of capital and liquidity
within the standards prescribed by the Trustees of General Electric Savings &
Security Trust. The moneys received by the MM Fund will be invested in money
market instruments and in other debt securities maturing in one year or less.
Such instruments may include debt obligations of the U.S. Government and its
instrumentalities, debt obligations of banks, savings and loan associations and
corporations, and investments in other money market funds. Such instruments may
also include commercial paper and notes, including those with floating or
variable rates of interest, debt obligations of foreign branches of foreign
banks, debt obligations issued or guaranteed
39
<PAGE>
GE S&S Program Disclosure Statement
by one or more foreign governments or any of their political subdivisions,
agencies or instrumentalities, including obligations of supranational entities,
debt securities issued by foreign issuers, and repurchase agreements.
Nevertheless, the Fund may keep a portion of its assets in cash. The MM Fund may
participate in any available futures market with respect to the above
investments in order to reduce uncertainties associated with interest rate
fluctuations to the extent such participation is permitted by law and consistent
with the objectives of the MM Fund.
The MM Fund, in addition to investing as described above, may hold Rule
144A Securities. In addition, the MM Fund may engage in certain investment
techniques and strategies, which may include entering into reverse repurchase
agreements, entering into securities transactions on a when-issued or
delayed-delivery basis and lending portfolio securities. These other
instruments, investment techniques and strategies have risks and special
considerations associated with them that are described below under "Risk Factors
and Special Considerations."
B. Investment Restrictions
1. The Mutual Fund
Investments by the Mutual Fund shall be subject to the following
restrictions:
a. Moneys in the Mutual Fund will not be used in the underwriting of
securities or for the purchase of real estate, interests in real
estate, investment trusts, commodities or commodity contracts, or
invested in companies for the purpose of exercising control or
management, or invested in securities of registered investment
companies.
b. Moneys in the Mutual Fund will not be lent to others, although they
may be applied to the purchase of bonds and debt securities of a type
publicly distributed or customarily purchased by institutional
investors.
c. The Mutual Fund will not acquire any securities if immediately after
such acquisition and as a result thereof (a) the Mutual Fund would
hold more than 10% of the outstanding voting securities of any issuer,
(b) more than 5% of the value of the total assets in the Mutual Fund
would be represented by the securities of any one issuer (except
securities of the U.S. Government and its instrumentalities), (c) more
than 25% of the value of the total assets in the Mutual Fund would be
invested in any particular industry, (d) more than 5% of the value of
the total assets in the Mutual Fund would be invested in issuers which
(including predecessors) have not been in continuous operation for at
least three years.
d. The Mutual Fund will not invest in securities of the Company or its
affiliates, or in securities of the investment manager, and will not
during the existence of any underwriting syndicate purchase any
securities for which its investment manager is acting as principal
underwriter. For purposes of this restriction, purchases of securities
from underwriting syndicates in which PaineWebber Incorporated, an
affiliate of the Funds' investment adviser, General Electric
Investment Corporation ("GEIC"), is a participant are not prohibited
provided such investments are made in accordance with the 1940 Act and
the rules thereunder.
e. The Mutual Fund will not purchase from or sell any of its portfolio
securities to the Company or its affiliates or its investment manager
or any officer or director of either.
f. The Mutual Fund will not engage in margin transactions or short sales
or participate in a joint trading account.
g. The Mutual Fund will not invest in puts, calls or similar options.
h. The Mutual Fund will not mortgage or pledge any of its assets, except
the Mutual Fund may borrow money from the GE Savings and Security
Trust and secure repayment by pledging assets of the Mutual Fund.
40
<PAGE>
GE S&S Program Disclosure Statement
2. The ST Fund, the LT Fund and the MM Fund
The ST Fund, the LT Fund and the MM Fund will not:
a. purchase securities on margin or sell short or participate in a joint
trading account;
b. deal in options to buy or sell securities except to the extent
permitted by law;
c. borrow money or property except as a temporary measure to meet the
cash or administrative needs of such Funds. In no event will the
amount of such borrowings exceed 10% of such Funds' total assets taken
at market value at the time of such borrowing;
d. make cash loans to others except through the purchase of debt
securities in accordance with such Funds' investment objectives;
e. invest directly in real estate (except as specified in Paragraph A.3.
above with respect to investments of the LT Fund) or invest in
interests in oil, gas or other mineral lease or production agreements;
f. act as an underwriter of securities for other issuers except that such
Fund may acquire securities under circumstances where if they are
later resold it may be deemed to be an underwriter under the 1933 Act;
g. purchase securities for the purpose of exercising control or
management;
h. pledge, mortgage or hypothecate any of its assets except, that, to
secure borrowings permitted by subparagraph c, it may pledge
securities which, together with all such securities previously so
pledged, at the time of pledge, do not exceed 10% of such Funds` total
assets;
i. unless otherwise permitted by law, purchase from or sell directly to
any of its officers or Trustees or the officers or directors of GEIC,
or any other affiliate (as defined in the 1940 Act) of such Fund or
any affiliate of such affiliate, portfolio securities or other
property of such Fund; or
j. unless otherwise permitted by law, invest in securities of the Company
or its affiliates, or in securities of an investment manager of such
Fund and will not during the existence of any underwriting syndicate
purchase any securities for which its investment manager is acting as
principal underwriter. For purposes of this restriction, purchases of
securities from underwriting syndicates in which PaineWebber
Incorporated, an affiliate of GEIC, is a participant are not
prohibited provided such investments are made in accordance with the
1940 Act and the rules thereunder.
In addition to the foregoing, the LT Fund will not:
a. purchase any security if as a result of such purchase more than 25% of
its total assets would be invested in a particular industry;
b. purchase any security if as a result of such purchase more than 25% of
its total assets would be subject to legal or contractual restrictions
on resale; or
c. invest in the securities of registered investment companies.
41
<PAGE>
GE S&S Program Disclosure Statement
C. Risk Factors and Special Considerations
Investing in the Funds involves risk factors and special considerations,
such as those described below:
General. An investment in any Fund should not be considered to be a
complete investment program.
Debt Instruments. Each of the Funds is authorized to invest in 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. The Mutual Fund, the ST Fund and the
LT Fund may each invest in obligations rated BBB by S&P or Baa by Moody's.
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. The Mutual Fund, the ST Fund and the LT Fund are
authorized to invest in securities rated lower than investment grade (sometimes
referred to as "junk bonds"). Low-rated and comparable unrated securities
(collectively referred to as "low-rated" securities) likely have quality and
protective characteristics that, in the judgment of a rating organization, are
outweighed by large uncertainties or major risk exposures to adverse conditions,
and are predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal in accordance with the terms of the obligation.
Securities in the lowest rating categories may be in default or may present
substantial risks of default.
Although the market values of low-rated securities tend to react less to
fluctuations in interest rate levels than the market values of higher-rated
securities, the market values of certain low-rated securities tend to be more
sensitive to individual corporate developments and changes in economic
conditions than higher-rated securities. In addition, low-rated securities
generally present a higher degree of credit risk. Issuers of low-rated
securities are often highly leveraged and may not have more traditional methods
of financing available to them, so that their ability to service their debt
obligations during an economic downturn or during sustained periods of rising
interest rates may be impaired. The risk of loss due to default by these issuers
is significantly greater because low-rated securities generally are unsecured
and frequently are subordinated to the prior payment of senior indebtedness. A
Fund may incur additional expenses to the extent that it is required to seek
recovery upon a default in the payment of principal or interest on its portfolio
holdings. The existence of limited markets for low-rated securities may diminish
a Fund's ability to obtain accurate market quotations for purposes of valuing
the securities held by the Fund and calculating the Fund's net asset value.
Non-Publicly Traded and Illiquid Securities. The Mutual Fund, the ST Fund
and the LT Fund may each invest in non-publicly traded securities 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,
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GE S&S Program Disclosure Statement
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 GEIC deems
representative of their value, the value of the Fund's net assets could be
adversely affected.
Repurchase and Reverse Repurchase Agreements. The Mutual Fund, the ST Fund,
the LT Fund and the MM Fund may enter into 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. A 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.
The MM Fund may enter into reverse repurchase agreements. A reverse
repurchase agreement involves the risk that the money market value of the
securities retained by the MM Fund may decline below the price of the securities
the Fund has sold but is obligated to repurchase under the agreement. In the
event the buyer of securities under a reverse repurchase agreement files for
bankruptcy or becomes insolvent, the MM 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. The Mutual Fund may invest in 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. Warrants acquired by the
Mutual Fund in units or attached to securities may be deemed to be without
value.
Investment in Foreign Securities. Each Fund may invest in securities issued
by foreign companies and foreign governments or their agencies or
instrumentalities. Investing in securities issued by foreign companies and
governments involves considerations and potential risks not typically associated
with investing in obligations issued by the U.S. Government and U.S.
corporations. Less information may be available about foreign companies than
about U.S. companies, and foreign companies generally are not subject to uniform
accounting, auditing and financial reporting standards or to other regulatory
practices and requirements comparable to those applicable to U.S. companies. The
values of foreign investments are affected by changes in currency rates or
exchange control regulations, restrictions or prohibitions on the repatriation
of foreign currencies, application of foreign tax laws, including withholding
taxes, changes in governmental administration or economic 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.
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GE S&S Program Disclosure Statement
A Fund's unit value may change significantly when the currencies, other
than the U.S. dollar, in which the Fund's portfolio investments are denominated
strengthen or weaken against the U.S. dollar. Currency exchange rates generally
are determined by the forces of supply and demand in the foreign exchange
markets and the relative merits of investments in different countries as seen
from an international perspective. Currency exchange rates can also be affected
unpredictably by intervention by U.S. or foreign governments or central banks or
by currency controls or political developments in the United States or abroad.
Covered Option Writing. The ST Fund and the LT Fund may purchase and write
put and call options on securities. Upon the exercise of a put option written by
the ST Fund or the LT 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 the ST Fund or the LT 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 from
writing the option. In addition, no assurance can be given that the ST Fund or
the LT Fund will be able to effect closing purchase transactions at a desired
time. The ability of the ST Fund and the LT Fund to engage in closing
transactions with respect to options depends on the existence of a liquid
secondary market. Although the ST Fund and the LT 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.
The ST Fund and the LT Fund will engage in hedging transactions only when
deemed advisable by GEIC. Successful use by the ST Fund and the LT Fund of
options will depend on GEIC'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
the Fund's performance.
Securities Index Options. The ST Fund and the LT Fund may each purchase
options on securities indexes. 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 the ST Fund and the LT Fund to engage in closing
purchase transactions with respect to securities index options depends on the
existence of a liquid secondary market. Although the ST Fund and the LT 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 GEIC desires that the ST Fund or the LT Fund
engage in such a transaction.
Futures and Options on Futures. The ST Fund and the LT Fund may invest in
financial and bond index futures or related options. The uses 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.
Losses incurred in hedging transactions and the costs of these transactions will
affect the Fund's performance.
Forward Currency Transactions. The ST Fund and the LT Fund may engage in
forward currency transactions. In entering into forward currency contracts, the
ST Fund and the LT 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
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GE S&S Program Disclosure Statement
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
GEIC's special skills and experience with respect to those instruments and will
usually depend upon GEIC's ability to forecast interest rate and currency
exchange rate movements correctly. Should interest or exchange rates move in an
unexpected manner, the ST Fund and the LT 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.
GEIC's ability to dispose of the ST Fund's or the LT Fund's positions in
forward currency contracts depends on the availability of active markets in
those instruments, and GEIC cannot now predict the amount of trading interest
that may exist in the future in forward currency contracts. Forward currency
contracts may be closed out only by the parties entering into an offsetting
contract. As a result, no assurance can be given that the ST Fund or the LT Fund
will be able to utilize these contracts effectively for the intended purposes.
Options on Foreign Currencies. The ST Fund and the LT Fund may purchase and
write put and call 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; the ST Fund or
the LT 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 the Fund's position, the Fund could
forfeit the entire amount of the premium plus related transaction costs.
Cash Management of the ST and LT Funds The ST Fund and the LT Fund may
invest, directly or indirectly through investment in the GEI Short-Term
Investment Fund described below, in the following types of money market
instruments (i) securities issued or guaranteed by the U.S. Government or one of
its agencies or instrumentalities, (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. The ST Fund and the LT Fund may also invest in the GEI
Short-Term Investment Fund (the"Investment Fund"), an investment fund created
specifically to serve as a vehicle for the collective investment of cash
balances of the ST Fund, the LT Fund and other accounts advised by either GEIC
or its affiliate, GE Investment Management Incorporated ("GEIM"). By using the
Investment Fund, a Fund's cash position is exposed to potentially broader
diversification, lower transaction cost and better investment opportunity than
would be the case if it were invested separately without the potential benefits
of such a large cash pool.
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.
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GE S&S Program Disclosure Statement
Although, during normal market conditions, the uninvested cash balances of
the ST Fund and the LT Fund are generally expected to be relatively small, each
such Fund is authorized to invest up to 25% of its assets in the Investment Fund
if the size of the cash balance so warrants.
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 include Rule
144A Securities, depositary receipts, securities of supranational agencies,
securities of other investment funds, floating and variable rate instruments,
zero coupon obligations, mortgage related securities, ARMs, CMOs, 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
include engaging in when-issued or delayed-delivery securities transactions,
entering into mortgage dollar rolls and lending portfolio securities. Among the
risks that some, but not all, of these strategies involve are the increased
exposure to fluctuations in market value of the securities and certain credit
risks.
D. Investment Adviser
GEIC, located at 3003 Summer Street, Stamford, Connecticut 06905, serves as
the investment adviser of each Fund. GEIC is a wholly owned subsidiary of the
Company and is a registered investment adviser under the Investment Advisers Act
of 1940, as amended.
INVESTMENT INSTRUCTIONS
Participants in the S&SP elect the investment media in which they wish to
invest and may change their investment options or their rate of savings in
accordance with the procedures set forth in the GE Benefits Handbook.
Participants may transfer savings from one investment option to another up to 12
times each calendar year. For more information regarding investment
instructions, see the GE Benefits Handbook.
FEES AND EXPENSES
The fees and expenses of each of the investment alternatives are set forth
in the Annual Report of the S&SP. There are no transaction fees charged to the
Funds or to a participant's account balance in connection with purchases or
sales of interests in investment alternatives.
ADDITIONAL INFORMATION
The Trustees of the S&SP are responsible for providing certain additional
information to you, either directly or upon your request. The information
provided directly to you is contained in the Annual Report of the S&SP and
includes (i) a description of the annual operating expenses of each investment
alternative with respect to which expenses are incurred and the aggregate amount
of such expenses expressed as a percentage of average net assets, (ii) copies of
available financial statements relating to the investment alternatives, (iii) a
list of the securities comprising the portfolio of each Fund and the value of
such securities, and, with respect to each asset which is a fixed rate
investment contract issued by a bank, savings and loan association or insurance
company, the name of the issuer, the term and the rate of return on the
contract, and (iv) the investment performance of each Fund. The information
available to you upon your request is information concerning the value of units
in each of the Funds or shares of the Company, as well as the value of such
units or shares held in a participant's account, which may be obtained at
anytime by calling 1-800-432-4313. The address and telephone number of the
Trustees of the S&SP are c/o General Electric Investment Corporation, 3003
Summer Street, Stamford, CT 06905 (203-326-2300).
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S&S Mutual Funds Investment Team
Portfolio Managers
S&S Program Mutual Fund
Eugene K. Bolton
David B. Carlson
Peter J. Hathaway
Paul C. Reinhardt
Christopher Brown
S&S Long Term Interest Fund
Robert A. MacDougall
Officers of the Investment Adviser
John H. Myers, Trustee,
Chairman of the Board and President, General Electric Investment Corporation
Eugene K. Bolton, Trustee, EVP, Domestic Equities
Michael J. Cosgrove, Trustee, EVP, Mutual Funds
Ralph R. Layman, Trustee, EVP, International Equities
Alan M. Lewis, Trustee, EVP, General Counsel and Secretary
Robert A. MacDougall, Trustee, EVP, Fixed Income
Geoffrey R. Norman, EVP, Institutional Marketing
Donald W. Torey, Trustee, EVP, Finance and Administration
Investment Adviser
General Electric Investment Corporation
Independent Auditors
KPMG Peat Marwick LLP
Custodian
State Street Bank & Trust Company
Shareholder Servicing Agent Address all inquiries outside the S&SP to:
GE Investments
P.O. Box 8309
Boston, MA 02266-8309
Address all inquiries inside the S&SP to:
GE S&SP Transaction Processing Center
P.O. Box 44079
Jacksonville, FL 32231-4079
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Shareholder Services
Daily Value, Yields/Performance: 1-800-843-3359
INSIDE THE SAVINGS & SECURITY PROGRAM (S&SP)
Shares held inside the Savings & Security Program (401(k)) have been
credited to your account as a result of contributions and investments
earnings. If you are a current employee, the annual "Your Personal Share"
statement summarizes your account balance in S&SP. Participants may obtain
information and process account transactions on their Funds held inside the
Program by calling:
GE S&SP Transaction Processing Center: 1-800-432-4313
OUTSIDE THE S&SP
When shares have been distributed to you from the Savings & Security
Program, your account balance and tax information are provided by GE
Investments. Shareholders of S&S Program Mutual and S&S Long Term Interest
Funds outside the Program may obtain information on their Funds by calling:
Shareholder Services: 1-800-242-0134
<PAGE>
GE S&S FUNDS
3003 SUMMER STREET
STAMFORD, CT. 06904-7900
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