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, 1997
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: Page
----
Independent Auditors' Report ........................................ 3
Statements of Net Assets Available for Plan
Benefits as of December 31, 1997 and 1996 ....................... 4
Statements of Changes in Net Assets Available for
Plan Benefits for the Years Ended December 31, 1997 and 1996 .... 5
Notes to Financial Statements ....................................... 6-18
Schedule I Line 27a - Schedule of Assets
Held for Investment Purposes as of December 31, 1997 ............ 19-30
Schedule II Line 27d - Schedule of Reportable Transactions .......... 31
B. Exhibits
(23) Consent of Independent Auditors
(99) GE S&S Program Mutual Funds 1997 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 29, 1998 /s/ Philip D. Ameen
------------- ------------------------------
Vice President and Comptroller
<PAGE>
GE SAVINGS AND SECURITY PROGRAM
Financial Statements and Supplemental Schedule
December 31, 1997 and 1996
(With Independent Auditors' Report Thereon)
<PAGE>
GE SAVINGS AND SECURITY PROGRAM
December 31, 1997 and 1996
Table of Contents
Page
Number(s)
---------
Independent Auditors' Report 3
Statements of Net Assets Available for Plan
Benefits as of December 31, 1997 and 1996 4
Statements of Changes in Net Assets Available for
Plan Benefits for the Years Ended December 31, 1997 and 1996 5
Notes to Financial Statements 6-18
Schedule I Line 27a - Schedule of Assets
Held for Investment Purposes as of December 31, 1997 19-30
Schedule II Line 27d - Schedule of Reportable Transactions 31
<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, 1997
and 1996, 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, 1997 and 1996, 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
Schedules I and II 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. These supplemental schedules are the responsibility of the Plan's
management. 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 schedules 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.
April 17, 1998
<PAGE>
4
GE SAVINGS AND SECURITY PROGRAM
Statements of Net Assets Available for Plan Benefits
December 31, 1997 and 1996
(in thousands)
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Assets
- ------
Investments at fair value (Cost: $11,016,601 and
$9,438,475, respectively) (note 3):
General Electric Company common stock (note 6) $12,535,932 $ 8,555,781
Registered investment companies:
S&S Long Term Interest Fund 1,992,480 2,014,089
S&S Program Mutual Fund 2,061,263 1,512,913
U.S. government and agency debt obligations 753,020 738,821
Loans to participants (note 4) 411,689 383,826
Corporate bonds and notes 256,116 244,266
U.S. Savings Bonds (Series E & EE) 214,819 241,024
Short-term money market instruments 654,141 449,641
Loans secured by mortgages 161,434 123,471
Other 15,873 18,925
----------- -----------
Total investments 19,056,767 14,282,757
----------- -----------
Accrued dividends and interest 56,753 54,851
Due from brokers 120,550 46
Other assets -- 3,990
----------- -----------
Total assets 19,234,070 14,341,644
----------- -----------
Liabilities
- -----------
Due to brokers 119,566 --
Liability for collateral deposits (note 3) 15,452 9,000
Other liabilities 31,098 25,395
----------- -----------
Total liabilities 166,116 34,395
----------- -----------
Net assets available for plan benefits (note 7) $19,067,954 $14,307,249
=========== ===========
</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, 1997 and 1996
(in thousands)
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Additions to net assets attributed to:
Investment income:
Net realized and unrealized appreciation
in value of investments $ 4,352,773 $ 2,336,624
Interest and dividends:
General Electric Company common stock 183,845 159,372
Registered investment companies 383,454 296,377
Interest 138,867 118,528
------------ ------------
5,058,939 2,910,901
------------ ------------
Contributions:
Employee 560,560 489,924
Employer 195,590 175,998
------------ ------------
756,150 665,922
------------ ------------
Total additions 5,815,089 3,576,823
Deductions from net assets attributed to:
Participant withdrawals (1,054,384) (819,049)
------------ ------------
Net increase 4,760,705 2,757,774
Net assets available for plan benefits (note 7):
Beginning of year 14,307,249 11,549,475
------------ ------------
End of year $ 19,067,954 $ 14,307,249
============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
6
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements
December 31, 1997 and 1996
(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
Corporation (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 in other materials 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 primarily
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.
Prior to January 1, 1998, eligible employees could elect to apply either
0.5% or 1.0% of earnings to purchase life insurance. The benefit
obligations of such purchased life insurance contracts rested with the
insurer, Metropolitan Life Insurance Company. 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 $11.8 million and $11.7
million in 1997 and 1996, respectively. Total life insurance in force
amounted to $4.5 billion and $4.6 billion at December 31, 1997 and 1996,
respectively. Effective January 1, 1998, the life insurance option was
removed from the Plan.
<PAGE>
7
Except for the United States Savings Bond Fund, 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 for both 1997 and 1996.
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, 1997 and 1996, transfers from other
qualified plans accounted for $45.1 million and $39.6 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, terminated 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.
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 generally 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 prepay 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.
<PAGE>
8
Vesting
-------
Participants are fully vested in their employee and employer
contributions.
Plan Termination and Amendment
------------------------------
Although the General Electric Company has not expressed any intent to do
so, it has the right under the Plan (subject to applicable contractual
requirements) to discontinue contributions, and to terminate the Plan in
accordance with the provisions of ERISA. If the Plan is terminated, each
participant's interest will be payable in full according to the Plan
provisions. The General Electric Company also has the right under the
Plan (subject to applicable contractual requirements) to amend and
replace it for any reason.
Administrative Costs
--------------------
Direct administrative costs of the Plan are generally borne by the
Company. Administrative costs include investment management,
recordkeeping, and transaction processing fees.
(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 closing price on
NASDAQ. Long-term U.S. government, agency and corporate debt,
notes, bonds, and loans secured by mortgages are valued at current
quoted market prices. Loans to participants bear interest at
market rates and cost plus accrued interest approximates fair
value. Short-term money market instruments, U.S. government,
agency and corporate notes are valued at amortized cost, 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 are
distributed annually to participants.
<PAGE>
9
(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.
(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,
1997 and 1996:
Fair Value
--------------
(in thousands)
1997
----
GE common stock 170,847,453 shares $12,535,932
S&S Long Term Interest Fund 172,508,886 shares 1,992,480
S&S Program Mutual Fund 38,847,786 shares 2,061,263
1996
----
GE common stock 173,062,582 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
* Number of shares has been adjusted for the 2-for-1 stock split
effective on April 28, 1997.
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 $15.5 million and $9.0 million at December 31, 1997 and 1996,
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>
10
(4) Loans to Participants
---------------------
The following table summarizes the changes in loans to participants.
Year Ended December 31
----------------------
1997 1996
---- ----
(in thousands)
Loan balance - beginning of year $ 383,826 $ 345,925
Loans made 207,315 197,241
Less: Loan repayments
- Reinvestments (170,274) (149,961)
- Withdrawals (9,178) (9,379)
--------- ---------
Loan balance - end of year $ 411,689 $ 383,826
========= =========
(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 Plan has been amended since that date. However, counsel
for the Plan has no reason to believe that those amendments have
adversely affected the validity of the determination letters and a
request for a new determination letter for the Plan will be submitted to
the Internal Revenue Service.
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.
(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 $4.0 billion and $2.3 billion for the
years ended December 31, 1997 and 1996, 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, 1997 and 1996.
<PAGE>
11
<TABLE>
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements
Net Assets Available for Plan Benefits
December 31, 1997
(in thousands except participant unit value and number of participants)
<CAPTION>
Assets GE Stock Fund LT Fund Mutual Fund ST Fund MM Fund
- ------ ------------- ------- ----------- ------- -------
<S> <C> <C> <C> <C> <C>
Investments at fair value $12,535,932 $1,992,480 $2,061,263 $854,299 $977,462
Accrued dividends and interest 46,070 -- -- 9,244 1,435
Due from brokers -- -- -- 120,550 --
----------- ---------- ---------- -------- --------
Total assets 12,582,002 1,992,480 2,061,263 984,093 978,897
----------- ---------- ---------- -------- --------
Liabilities
- -----------
Due to brokers -- -- -- 119,566 --
Liability for collateral deposits -- -- -- 15,452 --
Other liabilities 9,558 -- -- 1,804 18,088
----------- ---------- ---------- -------- --------
Total liabilities 9,558 -- -- 136,822 18,088
----------- ---------- ---------- -------- --------
Net assets available for plan benefits $12,572,444 $1,992,480 $2,061,263 $847,271 $960,809
=========== ========== ========== ======== ========
Participant units outstanding 170,717 172,509 38,848 82,419 96,080
=========== ========== ========== ======== ========
Participant unit value 73.64<F1> $ 11.55 $ 53.06 $ 10.28 $ 10.00
=========== ========== ========== ======== ========
Number of participants 180,616 91,722 82,920 66,596 55,594
=========== ========== ========== ======== ========
(Continued)
<FN>
<F1> Participant unit value includes the value of a share of GE stock of $73.375 and the unit value
of accrued dividends in the fund.
</FN>
</TABLE>
<PAGE>
12
<TABLE>
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements
Net Assets Available for Plan Benefits, Continued
December 31, 1997
(in thousands except participant unit value and number of participants)
<CAPTION>
Total Loan and
U.S. Savings Investment Other Program
Assets Bond Fund Funds Accounts Total
- ------ ------------ ---------- ------------- -----
<S> <C> <C> <C> <C>
Investments at fair value $221,160 $18,642,596 $414,171 $19,056,767
Accrued dividends and interest -- 56,749 4 56,753
Due from brokers -- 120,550 -- 120,550
-------- ----------- -------- -----------
Total assets 221,160 18,819,895 414,175 19,234,070
-------- ----------- -------- -----------
Liabilities
- -----------
Due to brokers -- 119,566 -- 119,566
Liability for collateral deposits -- 15,452 -- 15,452
Other liabilities -- 29,450 1,648 31,098
-------- ----------- -------- -----------
Total liabilities -- 164,468 1,648 166,116
-------- ----------- -------- -----------
Net assets available for plan benefits $221,160 $18,655,427 $412,527 $19,067,954
======== =========== ======== ===========
Participant units outstanding *
========
Participant unit value *
========
Number of participants 30,812
========
* Not applicable as individual participant values are determined based upon the time at which
investments are made.
</TABLE>
<PAGE>
13
<TABLE>
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements
Net Assets Available for Plan Benefits
December 31, 1996
(in thousands except participant unit value and number of participants)
<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 173,144<F1> 178,554 33,222 82,277 70,222
========== ========== ========== ======== ========
Participant unit value $ 49.67<F2> $ 11.28 $ 45.54 $ 10.26 $ 10.00
========== ========== ========== ======== ========
Number of participants 164,638 99,961 75,987 72,553 57,168
========== ========== ========== ======== ========
(Continued)
<FN>
<F1> Participant units have been adjusted for the 2-for-1 stock split effective on April 28, 1997.
<F2> Participant unit value includes the value of a share of GE stock of $49.4375 and the unit value of
accrued dividends in the fund.
</FN>
</TABLE>
<PAGE>
14
<TABLE>
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 and number of participants)
<CAPTION>
Total Loan and
U.S. Savings Investment Other Program
Assets Bond Fund 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 *
========
Number of participants 34,413
========
* Not applicable as individual participant values are determined based upon the time at which
investments are made.
</TABLE>
<PAGE>
15
<TABLE>
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements
Changes in Net Assets Available for Plan Benefits
December 31, 1997
(in thousands)
<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 $ 4,037,449 $ 46,813 $ 255,484 $ 1,853 $ --
Interest and dividends 183,845 133,465 249,989 55,154 54,944
------------ ----------- ----------- --------- ---------
4,221,294 180,278 505,473 57,007 54,944
------------ ----------- ----------- --------- ---------
Contributions:
Employee 342,972 44,306 96,192 43,329 19,231
Employer 139,992 12,222 21,773 14,581 7,022
------------ ----------- ----------- --------- ---------
482,964 56,528 117,965 57,910 26,253
------------ ----------- ----------- --------- ---------
Total additions 4,704,258 236,806 623,438 114,917 81,197
Deductions from and other changes in net
assets attributed to:
Participant withdrawals (590,554) (134,272) (107,341) (59,956) (116,907)
Net loan transactions 21,216 (10,054) (9,838) (2,607) (5,286)
Interfund transfers (163,299) (114,089) 42,091 (49,248) 299,583
Total deductions and other changes ------------ ----------- ----------- --------- ---------
in net assets (732,637) (258,415) (75,088) (111,811) 177,390
------------ ----------- ----------- --------- ---------
Net increase (decrease) 3,971,621 (21,609) 548,350 3,106 258,587
Net assets available for plan benefits:
Beginning of year 8,600,823 2,014,089 1,512,913 844,165 702,222
------------ ----------- ----------- --------- ---------
End of year $ 12,572,444 $ 1,992,480 $ 2,061,263 $ 847,271 $ 960,809
============ =========== =========== ========= =========
(Continued)
</TABLE>
<PAGE>
16
<TABLE>
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements
Changes in Net Assets Available for Plan Benefits, Continued
December 31, 1997
(in thousands)
<CAPTION>
Total Loan and
U.S. Savings Investment Other Program
Bond Fund Funds Accounts Total
------------ ---------- ------------- -----
<S> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income:
Net realized and unrealized appreciation
in value of investments $ 11,174 $ 4,352,773 $ -- $ 4,352,773
Interest and dividends -- 677,397 28,769 706,166
----------- ------------ ----------- ------------
11,174 5,030,170 28,769 5,058,939
----------- ------------ ----------- ------------
Contributions:
Employee 14,530 560,560 -- 560,560
Employer -- 195,590 -- 195,590
----------- ------------ ----------- ------------
14,530 756,150 -- 756,150
----------- ------------ ----------- ------------
Total additions 25,704 5,786,320 28,769 5,815,089
Deductions from and other changes in net
assets attributed to:
Participant withdrawals (36,176) (1,045,206) (9,178) (1,054,384)
Net loan transactions (1,680) (8,249) 8,249 --
Interfund transfers (15,038) -- -- --
----------- ------------ ----------- ------------
Total deductions and other changes
in net assets (52,894) (1,053,455) (929) (1,054,384)
----------- ------------ ----------- ------------
Net increase (decrease) (27,190) 4,732,865 27,840 4,760,705
Net assets available for plan benefits:
Beginning of year 248,350 13,922,562 384,687 14,307,249
----------- ------------ ----------- ------------
End of year $ 221,160 $ 18,655,427 $ 412,527 $ 19,067,954
=========== ============ =========== ============
</TABLE>
<PAGE>
17
<TABLE>
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements
Changes in Net Assets Available for Plan Benefits
December 31, 1996
(in thousands)
<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 159,372 140,217 156,160 51,745 39,705
----------- ----------- ----------- --------- ---------
2,422,446 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 2,805,467 144,183 392,163 113,386 66,702
Deductions from and other changes in net
assets attributed to:
Participant withdrawals (406,300) (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 (154,287) (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
<TABLE>
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements
Changes in Net Assets Available for Plan Benefits, Continued
December 31, 1996
(in thousands)
<CAPTION>
Total Loan and
U.S. Savings Investment Other Program
Bond Fund 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 -- 547,199 27,078 574,277
----------- ------------ ----------- ------------
12,715 2,884,932 25,969 2,910,901
----------- ------------ ----------- ------------
Contributions:
Employee 16,238 489,924 -- 489,924
Employer -- 175,998 -- 175,998
----------- ------------ ----------- ------------
16,238 665,922 -- 665,922
----------- ------------ ----------- ------------
Total additions 28,953 3,550,854 25,969 3,576,823
Deductions from and other changes in net
assets attributed to:
Participant withdrawals (41,378) (809,670) (9,379) (819,049)
Net loan transactions (3,333) (20,189) 20,189 --
Interfund transfers (11,340) -- -- --
----------- ------------ ----------- ------------
Total deductions and other changes
in net assets (56,051) (829,859) 10,810 (819,049)
----------- ------------ ----------- ------------
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
Schedule I
GE SAVINGS AND SECURITY PROGRAM
Line 27a - Schedule of Assets Held for Investment Purposes
December 31, 1997
<TABLE>
<CAPTION>
Description
- -----------
Employer Securities Cost Market
- ------------------- ---- ------
<S> <C> <C> <C>
CORPORATE STOCKS - COMMON
GENERAL ELECTRIC COMPANY (170,847,453 shares) $4,983,561,420 $12,535,931,840
-------------- ---------------
Shares of Registered Investment Companies
- -----------------------------------------
S&S LONG TERM INTEREST FUND (172,508,886 shares) 1,965,221,342 1,992,480,112
S&S PROGRAM MUTUAL FUND (38,847,786 shares) 1,668,955,112 2,061,262,989
-------------- ---------------
Total Registered Investment Companies 3,634,176,454 4,053,743,101
-------------- ---------------
</TABLE>
<PAGE>
20
Schedule I (Continued)
GE SAVINGS AND SECURITY PROGRAM
Line 27a - Schedule of Assets Held for Investment Purposes
December 31, 1997
<TABLE>
<CAPTION>
Description
- -----------
Debt
- ---- Coupon
Issuer Rate Maturity Cost Market
- ------ ---- -------- ---- ------
U.S. Government and Agency Debt Obligations
- -------------------------------------------
<S> <C> <C> <C> <C>
UNITED STATES TREAS NTS 5.750% 11/15/00 $138,542,998 $138,673,836
FEDERAL HOME LN MTG DISC NTS * 3/10/98 44,928,805 44,928,805
FEDERAL NATL MTG ASSN DISC NTS * 2/20/98 44,651,875 44,651,875
FEDERAL HOME LN MTG DISC NTS * 2/11/98 44,599,104 44,599,104
FEDERAL HOME LN BK CONS DSC NTS * 6/10/98 35,315,111 35,315,111
FEDERAL NATL MTG ASSN DISC NTS * 1/7/98 34,966,867 34,966,867
FEDERAL NATL MTG ASSN 5.960% 7/23/99 34,646,919 34,711,034
GNMA POOL 9.000% 8/15/09 31,612,503 31,536,455
GNMA POOL 9.500% 12/15/09 29,719,450 29,973,203
FEDERAL HOME LN MTG DISC NTS * 1/2/98 27,895,350 27,895,350
GNMA POOL 9.000% 12/15/09 27,391,989 27,321,551
FEDERAL FARM CR BK CONS DSC NT * 4/7/98 26,096,570 26,096,570
FNMA POOL 9.000% 8/1/10 22,382,704 22,329,481
FED HM LN PC 8.000% 8/1/03 19,319,458 19,199,655
UNITED STATES TREAS NTS 5.875% 8/31/99 18,255,017 18,336,030
FEDERAL HOME LN BK CONS DSC NT * 1/14/98 17,774,756 17,774,756
FEDERAL NATL MTG ASSN GTD 7.378% 8/17/03 16,633,232 16,777,678
FED HM LN PC 6.590% 9/1/02 16,423,956 16,458,741
FEDERAL NATL MTG ASSN DISC NTS * 1/12/98 16,442,422 16,442,422
FEDERAL NATL MTG ASSN DISC NTS * 2/6/98 15,395,324 15,395,324
FEDERAL NATL MTG ASSN DISC NTS * 1/8/98 14,983,463 14,983,463
*These are discounted instruments and therefore coupon rate does not apply.
</TABLE>
<PAGE>
21
<TABLE>
Schedule I (Continued)
GE SAVINGS AND SECURITY PROGRAM
Line 27a - Schedule of Assets Held for Investment Purposes
December 31, 1997
<CAPTION>
Description
- -----------
Debt
- ---- Coupon
Issuer Rate Maturity Cost Market
- ------ ---- -------- ---- ------
<S> <C> <C> <C> <C>
U.S. Government and Agency Debt Obligations
(continued)
- -------------------------------------------
FEDERAL NATL MTG ASSN GTD 6.529% 9/17/04 $14,212,763 $14,205,089
FEDERAL NATL MTG ASSN DISC NTS * 6/19/98 13,637,871 13,637,871
FEDERAL NATL MTG ASSN 6.881% 11/17/06 9,344,373 9,434,854
FEDERAL HOME LN MTG DISC * 1/26/98 7,968,889 7,968,889
GNMA POOL 9.500% 12/15/09 4,988,138 5,031,458
GNMA POOL 9.500% 12/15/09 4,718,725 4,762,158
FEDERAL NATL MTG ASSN GTD 7.000% 6/18/20 4,566,488 4,608,652
FEDERAL HOME LN MTG DISC NTS * 2/17/98 3,971,226 3,971,226
FEDERAL NATL MTG ASSN * 11/25/06 3,897,803 3,513,134
FED HM LN PC 7.500% 11/1/08 2,455,714 2,404,477
FEDERAL HOME LN BK CONS DSC NT * 1/2/98 2,059,708 2,059,708
FED HM LN PC 6.000% 12/1/08 1,508,989 1,548,740
FEDERAL HOME LN MTG PC GTD Variable 7/15/06 24,486 685,516
FNMA POOL 6.000% 5/1/01 605,648 624,938
FEDERAL HOME LN MTG PC GTD Variable 9/15/05 4,301 196,373
----------- -----------
Total U.S. Government and Agency Debt
Obligations 751,942,995 753,020,394
----------- -----------
*These are discounted instruments and therefore coupon rate does not apply.
</TABLE>
<PAGE>
22
<TABLE>
Schedule I (Continued)
GE SAVINGS AND SECURITY PROGRAM
Line 27a - Schedule of Assets Held for Investment Purposes
December 31, 1997
<CAPTION>
Description
- ----------- Coupon
Loans to Participants Rate Maturity Cost Market
- --------------------- ---- -------- ---- ------
<S> <C> <C> <C> <C>
VARIOUS 6.97-12.5% 12-54 months or $411,689,385 $411,689,385
5-15 years for ------------ ------------
principal
residence loans
Debt Securities
- ---------------
Issuer
- ------
Corporate Bonds and Notes - Preferred
- -------------------------------------
GMAC PASSTHRU TR 6.375% 9/30/98 16,489,932 16,535,805
FIRST DEPOSIT 5.750% 6/15/01 10,493,747 10,490,130
PREMIER AUTO TR 6.340% 1/6/02 9,965,953 10,013,646
FORD MTR CR MEDIUM TERM NTS VARIABLE 5/23/02 9,942,260 9,967,018
SALOMON INC 6.700% 12/1/98 5,925,000 5,956,877
DISCOVER CARD MASTER TR I 5.400% 11/16/01 4,956,563 4,970,300
LEHMAN BROTHERS HLDGS INC 6.840% 9/25/98 4,250,000 4,271,038
CARCO AUTO LN MASTER TR 6.689% 8/15/04 3,361,000 3,371,503
ELECTRONIC DATA SYS CORP 6.850% 5/15/00 2,998,771 3,054,030
LEHMAN FHA TITLE I LN TR 7.300% 5/25/17 2,167,395 2,186,159
LEHMAN BROTHERS HLDGS INC 6.875% 6/8/98 2,000,000 2,006,680
------------ ------------
Total Corporate Bonds and Notes - Preferred 72,550,621 72,823,186
------------ ------------
</TABLE>
<PAGE>
23
<TABLE>
Schedule I (Continued)
GE SAVINGS AND SECURITY PROGRAM
Line 27a - Schedule of Assets Held for Investment Purposes
December 31, 1997
<CAPTION>
Description
- -----------
Debt Securities
- --------------- Coupon
Issuer Rate Maturity Cost Market
- ------ ---- -------- ---- ------
Corporate Bonds and Notes - All Other
- -------------------------------------
<S> <C> <C> <C> <C>
AMERICA WEST AIRLS PASS THRU 6.860% 7/2/04 $11,993,520 $11,959,200
NABISCO PASS THROUGH ASSET TR 6.300% 8/26/99 9,992,576 10,016,400
WOOLWORTH CORP 7.000% 6/1/00 9,888,022 9,975,686
NATIONAL CITY CAP TR I 6.750% 6/1/29 9,847,842 9,924,860
TELE COMMUNICATIONS INC MTN VARIABLE 12/20/00 9,923,132 9,911,589
GREAT ATLANTIC + PAC TEA INC 9.125% 1/15/98 9,757,434 9,756,338
LONG ISLAND LTG CO 7.300% 7/15/99 9,120,392 9,119,250
NWCG HLDGS CORP * 6/15/99 8,930,422 9,018,583
MANITOBA PROV CDA MTN BK ENT 6.125% 5/28/98 8,870,781 8,882,810
BLOCKBUSTER ENTERTAINMENT 6.625% 2/15/98 8,563,661 8,554,316
TELE COMMUNICATIONS INC MTN 7.130% 2/2/98 7,297,442 7,303,431
PENNZOIL CO 10.625% 6/1/01 7,034,296 7,069,103
VIDEOTRON HOLDINGS 11.125% 7/1/04 6,376,567 6,572,112
TIME WARNER PASS THRU ASSET TR 4.900% 7/29/99 5,866,085 5,880,660
TELE COMMUNICATIONS INC 9.875% 4/1/98 5,039,290 5,042,350
PSI PASS THRU ASSET TR 6.250% 12/15/98 4,995,866 5,005,400
HENDERSON LAND FIN 6.000% 12/8/98 4,918,384 4,956,250
IKON CAP INC MED TERM NTS 6.270% 7/19/99 4,905,326 4,913,671
ARKLA INCMTN BOOK ENTRY 8.740% 5/14/98 4,779,988 4,786,860
ARKLA INC 8.875% 7/15/99 4,261,174 4,316,830
GREAT NORTHN NEKOOSA CORP 9.125% 2/1/98 4,310,166 4,309,116
ORYX ENERGY CO 9.500% 11/1/99 4,147,828 4,193,080
PETROLEOS MEXICANOS 7.750% 10/29/99 4,119,765 4,145,625
* These are discounted instruments and therefore coupon rate does not apply.
</TABLE>
<PAGE>
24
<TABLE>
Schedule I (Continued)
GE SAVINGS AND SECURITY PROGRAM
Line 27a - Schedule of Assets Held for Investment Purposes
December 31, 1997
<CAPTION>
Description
- -----------
Debt Securities
- --------------- Coupon
Issuer 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 $ 4,112,780 $ 4,068,823
PETROLEOS MEXICANOS 7.600% 6/15/00 4,000,000 3,880,000
KOREA DEV BK 9.600% 12/1/00 3,180,383 2,680,290
BANCO HIPOTECATIO NACIONAL 8.000% 6/4/99 2,164,843 2,116,288
NIAGARA MOHAWK PWR CORP 9.500% 6/1/00 2,122,494 2,116,080
VORNADO FIN CORP 6.360% 12/1/00 2,003,048 2,000,625
CLEVELAND ELEC ILLUM CO 7.190% 7/1/00 805,000 816,922
------------ ------------
Total Corporate Bonds and Notes - All Other 183,328,507 183,292,548
------------ ------------
Total Corporate Bonds and Notes 255,879,128 256,115,734
------------ ------------
</TABLE>
<PAGE>
25
Schedule I (Continued)
GE SAVINGS AND SECURITY PROGRAM
Line 27a - Schedule of Assets Held for Investment Purposes
December 31, 1997
Description
- -----------
U.S. Savings Bonds (Series E and EE)
- ------------------------------------
Issuer Units Cost Market
- ------ ----- ---- ------
1959 US SAVINGS BOND E SERIES 122 $ 2,288 $ 21,263
1960 US SAVINGS BOND E SERIES 109 2,044 18,719
1961 US SAVINGS BOND E SERIES 98 1,838 16,621
1962 US SAVINGS BOND E SERIES 151 2,831 25,173
1963 US SAVINGS BOND E SERIES 175 3,281 28,661
1964 US SAVINGS BOND E SERIES 221 4,144 35,528
1965 US SAVINGS BOND E SERIES 233 4,369 32,367
1968 US SAVINGS BOND E SERIES 999 18,731 129,519
1969 US SAVINGS BOND E SERIES 1,266 23,738 160,340
1970 US SAVINGS BOND E SERIES 1,526 28,613 189,429
1971 US SAVINGS BOND E SERIES 2,034 38,138 216,294
1972 US SAVINGS BOND E SERIES 2,502 46,913 259,805
1973 US SAVINGS BOND E SERIES 3,764 70,575 379,300
1974 US SAVINGS BOND E SERIES 5,956 111,675 570,567
1975 US SAVINGS BOND E SERIES 7,808 146,400 721,886
1976 US SAVINGS BOND E SERIES 10,400 195,000 927,904
1977 US SAVINGS BOND E SERIES 14,362 269,288 1,217,120
1978 US SAVINGS BOND E SERIES 23,169 434,419 1,635,441
1979 US SAVINGS BOND E SERIES 39,047 732,131 2,678,219
<PAGE>
26
Schedule I (Continued)
GE SAVINGS AND SECURITY PROGRAM
Line 27a - Schedule of Assets Held for Investment Purposes
December 31, 1997
Description
- -----------
U.S. Savings Bonds (Series E and EE) (continued)
- ------------------------------------------------
Issuer Units Cost Market
- ------ ----- ---- ------
1980 US SAVINGS BOND EE SERIES 15,147 $ 757,350 $ 2,811,005
1981 US SAVINGS BOND EE SERIES 15,106 755,300 2,501,060
1982 US SAVINGS BOND EE SERIES 17,378 868,900 2,653,296
1983 US SAVINGS BOND EE SERIES 32,359 1,617,950 4,224,469
1984 US SAVINGS BOND EE SERIES 33,581 1,679,050 4,022,514
1985 US SAVINGS BOND EE SERIES 43,941 2,197,050 5,014,043
1986 US SAVINGS BOND EE SERIES 108,854 5,442,700 11,726,318
1987 US SAVINGS BOND EE SERIES 114,225 5,711,250 10,468,064
1988 US SAVINGS BOND EE SERIES 138,164 6,908,200 11,943,590
1989 US SAVINGS BOND EE SERIES 197,724 9,886,200 16,099,724
1990 US SAVINGS BOND EE SERIES 201,237 10,061,850 15,435,337
1991 US SAVINGS BOND EE SERIES 211,991 10,599,550 15,339,131
1992 US SAVINGS BOND EE SERIES 352,782 17,639,100 24,011,443
1993 US SAVINGS BOND EE SERIES 250,560 12,528,000 15,212,773
1994 US SAVINGS BOND EE SERIES 205,467 10,273,350 11,800,691
1995 US SAVINGS BOND EE SERIES 456,027 20,603,550 22,894,259
1996 US SAVINGS BOND EE SERIES 292,280 14,614,000 15,461,217
1997 US SAVINGS BOND EE SERIES 275,754 13,787,700 13,935,642
------------ -----------
Total US Savings Bonds 148,067,466 214,818,732
------------ -----------
<PAGE>
27
Schedule I (Continued)
GE SAVINGS AND SECURITY PROGRAM
Line 27a - Schedule of Assets Held for Investment Purposes
December 31, 1997
Description
- -----------
Short-Term Money Market Instruments
- -----------------------------------
Coupon
Issuer Rate Maturity Cost Market
- ------ ---- -------- ---- ------
Interest Bearing Time Deposits and
Commerical Paper
- ----------------------------------
MORGAN J P + CO INC 5.750% 2/3/98 $45,359,650 $45,359,650
MERRILL LYNCH + CO INC 5.770% 1/30/98 44,790,838 44,790,838
ASSOC CORP OF NORTH AMER 5.720% 3/16/98 44,470,900 44,470,900
HALIFAX PLC YRS 1+2 5.670% 3/20/98 44,447,175 44,447,175
SWISS BANK CORP NY BRANCH 5.770% 3/17/98 42,940,000 42,940,000
NORWEST CORP 5.700% 1/23/98 41,853,700 41,853,700
CHASE MANHATTAN CORP BA 5.660% 2/24/98 39,422,438 39,422,438
TORONTO DOMINION BK 5.660% 2/18/98 38,209,453 38,209,453
DRESDNER BK AG 5.620% 1/22/98 34,300,000 34,300,000
BANK OF MONTREAL 5.610% 1/8/98 34,250,000 34,250,000
ABBEY NATL NO AMERICA * 1/9/98 34,207,911 34,207,911
CREDIT SUISSE 5.600% 2/12/98 32,863,877 32,863,877
NATIONSBANK CORP 5.600% 2/12/98 25,214,184 25,214,184
DEUTSCHE BK AG 5.600% 1/2/98 20,910,000 20,910,000
FIRST UNION CORP 5.680% 2/2/98 19,899,022 19,899,022
INTL BK FOR RECON + DEV DSC NT * 3/13/98 16,698,064 16,698,064
*These are discounted instruments and therefore coupon rate does not apply.
<PAGE>
28
Schedule I (Continued)
GE SAVINGS AND SECURITY PROGRAM
Line 27a - Schedule of Assets Held for Investment Purposes
December 31, 1997
Description
- -----------
Short-Term Money Market Instruments
- -----------------------------------
Coupon
Issuer Rate Maturity Cost Market
- ------ ---- -------- ---- ------
Interest Bearing Time Deposits
and Commercial Paper (continued)
- -----------------------------------
CREDIT SUISSE 5.740% 2/6/98 $ 12,527,676 $ 12,527,676
BANK OF MONTREAL 5.870% 1/8/98 11,300,000 11,300,000
ABBEY NATL PLC 5.790% 1/9/98 11,235,525 11,235,525
NATIONSBANK CORP 5.700% 2/12/98 9,933,500 9,933,500
DEUTSCHE BK AG 5.840% 1/2/98 7,000,000 7,000,000
DRESDNER BK AG 5.780% 1/22/98 6,600,000 6,600,000
DRESDNER BK AG 5.720% 1/22/98 4,700,000 4,700,000
UBS FINANCE DELAWARE INC 6.750% 1/2/98 4,659,126 4,659,126
GOLDMAN SACHS GROUP LP 5.950% 1/5/98 3,997,356 3,997,356
NORWEST CORP 5.780% 1/23/98 3,587,284 3,587,284
STATE STREET CAYMAN ISLANDS 6.500% 1/2/98 110,000 110,000
------------ ------------
Total Interest Bearing Time Deposits
and Commercial Paper 635,487,679 635,487,679
------------ ------------
Short-Term Investment Fund
- --------------------------
GEI SHORT TERM INVESTMENT FD VARIABLE N/A 18,528,004 18,528,004
------------ ------------
Non-Interest Bearing Cash
- -------------------------
NON-INTEREST BEARING CASH 125,403 125,403
------------ ------------
Total Short-Term Money Market Instruments 654,141,086 654,141,086
------------ ------------
<PAGE>
29
Schedule I (Continued)
GE SAVINGS AND SECURITY PROGRAM
Line 27a - Schedule of Assets Held for Investment Purposes
December 31, 1997
<TABLE>
<CAPTION>
Description
- ----------- Coupon
Issuer Rate Maturity Cost Market
- ------ ---- -------- ---- ------
Loans Secured by Mortgages
- --------------------------
<S> <C> <C> <C> <C>
BCF L L C 7.050% 12/25/08 $ 28,399,999 $ 28,466,510
SALOMON BROS MTG SECS VII INC 6.469% 1/20/28 28,281,218 28,387,288
STRUCTURED ASSET SECS CORP VARIABLE 6/25/30 21,775,473 21,757,909
ASSET SECURITIZATION CORP 6.500% 2/14/41 9,798,941 9,814,152
GS MTG SECS CORP II 6.940% 7/13/30 9,776,545 9,812,665
FLEETWOOD CR GRANTOR TR 6.400% 5/15/13 9,282,645 9,343,544
CALIFORNIA INFRA + ECONOMIC 6.170% 3/25/03 7,799,557 7,822,386
TMS HOME EQUITY LN TR 5.675% 2/15/09 6,833,165 6,585,667
MORGAN STANLEY CAP I INC 6.850% 2/15/20 6,295,711 6,371,149
GREEN TREE RECREATIONAL EQUIP 6.490% 2/15/18 5,973,462 5,996,785
PROVIDENT BK HOME EQUITY LN TR 7.180% 4/21/13 5,411,346 5,460,192
DLJ MTG ACCEP CORP 6.990% 2/15/05 4,894,039 4,906,681
CAPITAL ASSET RESH FDG LP 6.400% 12/15/04 4,874,238 4,878,047
ADVANTA MTG LN TR 6.300% 7/25/25 3,567,516 3,505,700
LOEWEN PASS THRU ASSET TR 6.700% 10/1/99 3,442,471 3,433,785
SALOMON BROS MTG SECS II 8.125% 11/1/12 3,170,137 3,133,430
HFC HOME EQUITY LOAN 4.650% 12/20/08 1,344,494 1,327,593
CS FIRST BOSTON MTG SECS CORP 6.425% 8/20/30 426,520 430,151
------------ ------------
Total Loans Secured by Mortgages 161,347,477 161,433,634
------------ ------------
</TABLE>
<PAGE>
30
Schedule I (Continued)
GE SAVINGS AND SECURITY PROGRAM
Line 27a - Schedule of Assets Held for Investment Purposes
December 31, 1997
<TABLE>
<CAPTION>
Description
- ----------- Coupon
Issuer Rate Maturity Cost Market
- ------ ---- -------- ---- ------
Other
- -----
<S> <C> <C> <C> <C>
ARGENTINA REP VARIABLE 11/30/02 $ 5,215,335 $5,222,458
COLUMBIA REP 8.750% 10/6/99 4,005,531 4,067,789
NEW YORK NY 6.100% 2/1/98 3,689,468 3,689,926
NEW YORK ST DORM AUTH REVS 6.320% 4/1/99 2,575,000 2,582,236
NEW YORK NY 6.100% 2/1/98 309,955 310,081
--------------- ---------------
Total Other 15,795,289 15,872,490
--------------- ---------------
Total Investments $11,016,600,700 $19,056,766,396
=============== ===============
</TABLE>
<PAGE>
31
Schedule II
GE SAVINGS AND SECURITY PROGRAM
Line 27d -Schedule of Reportable Transactions
Year Ended December 31, 1997
A. Single Transaction in Excess of 5% ($717,082,186) of the Current Value of
Plan Assets at the Beginning of the Plan Year: NONE.
B. Series of Non-Security Transactions With the Same Party, Aggregating over
5% ($717,082,186) of Current Value of Plan Assets at the Beginning of the
Year: NONE.
C. Series of Transactions with Respect to Securities of the Same Issuer,
Aggregating over 5% ($717,082,186) of the Current Value of Plan Assets at
the Beginning of the Plan Year: NONE.
D. Securities Transactions within the Plan Year with or in Conjunction with a
Person in an Amount in Excess of 5% ($717,082,186) of the Current Value of
Plan Assets at the Beginning of the Plan Year: NONE.
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
General Electric Company
We consent to the 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 April 17, 1998, relating to the financial statements and
supplemental schedules of GE Savings and Security Program as of and for the
years ended December 31, 1997 and 1996, which appear in the December 31, 1997
annual report on Form 11-K of General Electric Company.
Albany, New York
June 29, 1998
EXHIBIT 99
S&S PROGRAM
MUTUAL FUNDS
ANNUAL REPORT &
S&SP DISCLOSURE
DOCUMENT
DECEMBER 31, 1997
<PAGE>
Understanding Your Report
Page
- --------------------------------------------------------------------------------
Chairman's Letter 1
John Myers on market events
Review of Performance and
Schedules of Investments
Portfolio managers discuss your
Funds' results in 1997
S&S Program Mutual Fund 3
S&S Long Term Interest Fund 10
Notes to Performance 18
Notes to Schedules of Investments 19
Financial Statements 20
Financial Highlights and Statements
of Assets and Liabilities, Operations,
and Changes in Net Assets
Notes to Financial Statements 25
Independent Auditors' Report 29
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&SMutual Funds'
Investment Team 48
Shareholder Services Inside back cover
How you can obtain more information
Highly Rated S&S Funds
BY MORNINGSTAR
Through December 31, 1997
- --------------------------------------------------------------------------------
NUMBER
FUND OF FUNDS STAR
(CATEGORY) IN CATEGORY RATING
- --------------------------------------------------------------------------------
S&S Program Mutual -- (Domestic Equity)
- --------------------------------------------------------------------------------
Overall 2332 ****
3 year 2332 *****
5 year 1292 ****
10 year 676 ****
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S&S Long Term Interest -- (Taxable Bonds)
- --------------------------------------------------------------------------------
Overall 1371 ****
3 year 1371 ****
5 year 771 ****
10 year 323 ****
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Morningstar is an independent fund ranking company that seeks to provide a
non-biased rating system used in making investment decisions. A fund is rated in
its investment class on a scale of one to five stars through the evaluation of
the historical balance of risk and return.
Morningstar proprietary ratings reflect historical risk-adjusted performance
through December 31, 1997. The ratings are subject to change every month.
Morningstar ratings are calculated from a fund's three-, five- and ten-year
returns (with fee and sales charge adjustments) in excess of 90-day Treasury
bill returns. Ten percent of the funds in a rating category receive five stars,
the next 22.5% receive four stars and the next 35% receive three stars. Returns
assume changes in share price and reinvestment of dividends and capital gains.
Past performance is no guarantee of future results.
<PAGE>
A LETTER FROM THE CHAIRMAN
DEAR SHAREHOLDER:
The U.S. equity and fixed income markets were very strong during 1997. Despite
the volatility in the fourth quarter, the U.S. equity market as measured by the
S&P 500 was up 33.3% for 1997 marking the first time in history that the U.S.
equity market was up more than 20% for three consecutive years. The bond markets
were strong, primarily due to the positive news on the inflation front. The
international markets experienced periods of high volatility driven by
uncertainty in the Asian markets which started in Southeast Asia and then moved
on to Hong Kong and Korea. The international markets ended up 1.8% for the year
as measured by the EAFE Index (Europe, Australia, Far East).
PERFORMANCE HIGHLIGHTS
In an environment marked by periods of market volatility, the S&S funds
performed relatively well in 1997. Both S&S Program Mutual Fund and S&S Long
Term Interest Fund beat the average return of their peers for 1997 according to
Lipper Analytical Services, an independent mutual fund rating service. S&S
Program Mutual Fund was in the top 25% of its Lipper peer group for the 1, 5,
and 10 year periods and achieved a return of 33.1% for the year. S&S Long Term
was in the top 10% of its Lipper peer group for the 1, 5, and 10 year periods.
Additionally, both funds received favorable Morningstar ratings as presented on
the inside front cover of this report.
The average returns for each applicable Lipper category and complete details on
each funds' performance can be found on the performance review pages included in
this annual report.
CURRENT MARKET OUTLOOK
The fundamentals for higher U.S. stock prices still appear to be in place.
Long-term interest rates are low, corporate earnings are still for the most part
solid, and inflation which grew by its lowest margin in 11 years in 1997,
remains under control with few signs of picking up steam. Valuations, however,
are at or near historical highs. With the uncertainty of how
[GRAPHIC OMITTED]
[PHOTO OF John Myers]
1
<PAGE>
A LETTER FROM THE CHAIRMAN (CONTINUED)
the economic problems in Asia will impact the global economy, stock selection
will become increasingly important in 1998. Maintaining a long-term investment
perspective is important in all market environments but it's particularly
important when markets are likely to be volatile. The foreign markets are likely
to continue to experience above average volatility, however, strong companies
with solid fundamentals can still be found.
Sincerely,
/s/John Myers
John Myers
Chairman of the Board and President
General Electric Investment Corporation
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.
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 $28 billion. His
responsibilities include overseeing the portfolio management team of the S&S
Program Mutual Fund. 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 BENCHMARK AND
LIPPER PEER GROUP FOR THE ONE-YEAR PERIOD ENDED DECEMBER 31, 1997?
A. The S&S Program Mutual Fund posted a total return of 33.07%. This compares
with a 33.29% return for the Standard & Poor's 500 Index. Our Lipper peer
group of 677 Growth and Income funds posted an average return of 27.7% for
the same period.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE?
A. Financial services companies, an area where the fund is well represented,
recorded superior investment results due to ongoing consolidation within
the industry and a sharp decline in interest rates. The yield on the
30-year Treasury Bond fell from 6.64% at the start of the year to 5.92% on
December 31, 1997. Healthcare stocks also enjoyed solid gains. These stocks
did particularly well when the economy's growth prospects came into
question as a result of the economic and currency crisis in Asia.
Healthcare stocks are less sensitive to economic downturns than most other
industry groups. We also enjoyed good performance from our investments in
electric and telephone utilities, which benefited from the decline in
interest rates. As uncertainty in the market increased late in the year, we
added to our positions in utility stocks.
Q. WHICH INVESTMENTS RECORDED GOOD INVESTMENT RESULTS?
A. Three of our better investments in the financial services sector included
Morgan Stanley, Dean Witter, Federal National Mortgage Association and
Travelers Group. Several of our healthcare holdings performed especially
well, particularly the large, blue-chip companies, such as Bristol-Myers
and Johnson & Johnson. We also enjoyed good performance from Schlumberger.
During the year, investors focused on the fact that energy demand has been
rising, but the supply of available drilling equipment has not, which
enables oil service companies to command higher prices. We believe this
trend will continue well into 1998.
Q. WHAT IS YOUR OUTLOOK FOR THE FUND?
A. In general, the foundation of the U.S. economy remains solid. Inflation,
which grew at 1.7% in 1997, its lowest annual rate in more than a decade,
is still under control. Interest rates remain low and corporate earnings
have been strong but, the economic and currency problems in Asia have
investors concerned about the future earnings of American corporations.
Thus, while companies that meet analysts' earnings estimates should do
well, companies that fall short of earnings expectations are likely to see
their values decrease markedly. Given this backdrop, we expect above
average market volatility in the coming months. We intend to use market
declines to add to positions of high-quality investments that meet our
strict investment criteria. We will continue to make long-term investments
in what we consider to be financially sound, well-managed companies with
good prospects for solid earnings growth and greater market share in their
areas of operation.
[GRAPHIC OMITTED]
[PHOTO OF Gene Bolton]
3
<PAGE>
S&S PROGRAM MUTUAL FUND
Comparison of Change in Value of a $10,000 Investment
[GRAPHIC OMITTED]
S&S PROGRAM MUTUAL S&P 500
Dec-87 10000 10000
Dec-88 11502.81 11664.54
Dec-89 14953.96 15343.32
Dec-90 14535.91 14858.2
Dec-91 18782.54 19401.24
Dec-92 20310.38 20900.74
Dec-93 22639.84 22992.73
Dec-94 22241.12 23291.23
Dec-95 30418.52 32024.19
Dec-96 37430.58 39425.84
Dec-97 49810.61 52552.27
AVERAGE ANNUAL TOTAL RETURN
for the periods ended December 31, 1997
One Five Ten
Year Year Year
- --------------------------------------------------------------------------------
S&S Program Mutual 33.07% 19.65% 17.42%
S&P 500 33.29% 20.25% 18.05%
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 Average Annual Total Returns
for the periods ended 12/31/97
Growth and Income Peer Group
One Five Ten
Year Year Year
- --------------------------------------------------------------------------------
Fund's rank in peer group: 74 69 23
Number of Funds in peer group: 677 271 140
Peer group average total return: 27.7% 18.2% 15.8%
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 assets
at December 31, 1997
- --------------------------------------------------------------------------------
Federal National Mortgage Assoc. 2.2%
- --------------------------------------------------------------------------------
Travelers Group Inc. 2.1%
- --------------------------------------------------------------------------------
Bristol-Myers Squibb Co. 2.0%
- --------------------------------------------------------------------------------
International Business Machines 1.8%
- --------------------------------------------------------------------------------
AlliedSignal Inc. 1.8%
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Johnson & Johnson 1.7%
- --------------------------------------------------------------------------------
Schlumberger Ltd. 1.7%
- --------------------------------------------------------------------------------
Exxon Corp. 1.7%
- --------------------------------------------------------------------------------
Dover Corp. 1.6%
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Du Pont de Nemours (E.I.) & Co. 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, 1997
S&S Program Mutual Fund
[GRAPHIC OMITTED]
Energy & Basic Material 14.4%
Consumer 17.1%
Capital Goods 11.2%
Healthcare 12.3%
Financial Services 18.7%
Retail Trade 4.6%
Technology 10.3%
Transportation 2.0%
Utilities 7.4%
Cash & Other 2.0%
Number
of Shares Value
- --------------------------------------------------------------------------------
Common Stock -- 97.4%
- --------------------------------------------------------------------------------
Basic Materials -- 3.9%
Air Products & Chemicals Inc. 154,793 $ 12,732
Airgas Inc. 287,764 4,029(a)
Barrick Gold Corp. 200,184 3,728
Champion International Corp. 62,558 2,835
Du Pont de Nemours (E.I.)
& Co. 959,733 57,644
FMC Corp. 34,676 2,334(a)
IMC Global Inc. 175,161 5,737
Mead Corp. 279,658 7,830
Morton International Inc. 450,114 15,473
Newmont Mining Corp. 407,675 11,976
PPG Industries Inc. 27,525 1,572
Rayonier Inc. 150,937 6,424
Union Camp Corp. 52,548 2,821
W.R. Grace & Co. 35,324 2,841
Weyerhaeuser Co. 106,419 5,221
143,197
[GRAPHIC OMITTED]
Capital Goods -- 11.2%
AlliedSignal Inc. 1,652,215 64,333
AMP Inc. 97,130 4,079
Armstrong World Industries Inc. 54,900 4,104
Avery Dennison Corp. 80,323 3,594
Boeing Co. 138,313 6,769
Browning-Ferris Industries Inc. 210,580 7,791
Cooper Industries Inc. 150,138 7,357
Number
of Shares Value
- --------------------------------------------------------------------------------
Corning Inc. 75,069 $ 2,787
Deere & Co. 374,945 21,864
Dover Corp. 1,659,572 59,952
Emerson Electric Co. 856,312 48,328
Hubbell Inc. (Class B) 882,586 43,523
Jacobs Engineering Group Inc. 30,029 762(a)
Lockheed Martin Corp. 95,580 9,415
Mannesmann AG 4,254 2,150
Martin Marietta Materials Inc. 329,569 12,050
Masco Corp. 40,037 2,037
Molex Inc. (Class A) 241,303 6,937
National Service Industries Inc. 69,166 3,428
Parker Hannifin Corp. 76,275 3,499
Raytheon Co. 3,351 165
Sherwin-Williams Co. 530,060 14,709
Textron Inc. 679,408 42,463
Timken Co. 105,097 3,613
Tyco International Ltd. 108,000 4,867
U.S.A. Waste Services Inc. 95,088 3,732(a)
United Technologies Corp. 275,932 20,091
Waste Management Inc. 140,129 3,854
408,253
Consumer - Cyclical -- 8.2%
ACNielsen Corp. 342,815 8,356(a)
Automatic Data Processing Inc. 502,963 30,869
Carnival Corp. (Class A) 123,611 6,845
Catalina Marketing Corp. 77,572 3,588(a)
Cendant Corp. 207,691 7,139(a)
Circus Circus Enterprises Inc. 317,792 6,515(a)
Comcast Corp. (Class A) 432,648 13,655
Comcast UK Cable Partners Ltd.
(Class A) 142,631 1,346(a)
Disney (Walt) Co. 455,499 45,123
Echlin Inc. 41,172 1,490
Federal-Mogul Corp. 50,046 2,027
Ford Motor Co. 298,474 14,532
Gannett Inc. 504,564 31,188
General Motors Corp. 52,549 3,186
Goodyear Tire & Rubber Co. 82,395 5,242
Harman International
Industries Inc. 122,614 5,203
Interpublic Group Cos. Inc. 476,819 23,752
ITT Industries Inc. 121,362 3,808
- ----------
See Notes to Schedules of Investments and Financial Statements
5
<PAGE>
S&S PROGRAM MUTUAL FUND (DOLLARS IN THOUSANDS) -- DECEMBER 31, 1997
Number
of Shares Value
- --------------------------------------------------------------------------------
Knight Ridder Inc. 40,037 $ 2,082
McDonald's Corp. 311,086 14,854
Metromedia International
Group Inc. 67,462 641(a)
Nine West Group Inc. 50,046 1,298(a)
Stanley Works 228,743 10,794
Tele-Communications Inc.
(Series A) 477,939 13,352(a)
Tele-Communications Inc.
Liberty Media Group
(Series A) 157,645 5,715(a)
Tele-Communications TCI
Ventures Group 108,600 3,075(a)
Time Warner Inc. 134,273 8,325
Viad Corp. 112,604 2,175
Xerox Corp. 299,561 22,111
298,286
[GRAPHIC OMITTED] Consumer - Stable -- 8.9%
Anheuser Busch Cos. Inc. 695,395 30,597
Archer-Daniels Midland Co. 257,737 5,590
Avon Products Inc. 175,712 10,784
Coca Cola Co. 24,823 1,654
Colgate-Palmolive Co. 206,590 15,184
Conagra Inc. 300,276 9,853
CPC International Inc. 161,494 17,401
General Mills Inc. 140,129 10,037
Gillette Co. 47,544 4,775
Hershey Foods Corp. 59,155 3,664
International Flavours 50,697 2,611
International Multifoods Corp. 42,539 1,204
Kellogg Co. 62,558 3,104
Kimberly Clark Corp. 739,541 36,469
Nestle S.A. (Regd.) 4,489 6,725
Pepsico Inc. 1,239,288 45,157
Philip Morris Cos. Inc. 935,860 42,406
Procter & Gamble Co. 445,691 35,572
Ralston Purina Co. 143,882 13,372
Sara Lee Corp. 350,066 19,713
Sysco Corp. 87,580 3,990
Unilever N.V 103,096 6,437
326,299
Number
of Shares Value
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED] Energy -- 10.5%
Amoco Corp. 273,201 $ 23,256
Anadarko Petroleum Co. 94,165 5,715
Atlantic Richfield Co. 300,654 24,090
Baker Hughes Inc. 434,175 18,941
British Petroleum PLC ADR 159,541 12,713
Burlington Resources Inc. 467,426 20,947
Diamond Offshore Drilling Inc. 50,046 2,408
Elf Aquitaine S.A. ADR 42,539 2,494
Exxon Corp. 986,907 60,386
Halliburton Co. 100,091 5,199
Mobil Corp. 479,190 34,592
Nabors Industries Inc. 307,607 9,670(a)
Pennzoil Co. 17,927 1,198
Royal Dutch Petroleum Co. ADR 740,288 40,114
Schlumberger Ltd. 776,960 62,545
Texaco Inc. 384,253 20,894
Tosco Corp. 95,087 3,596
Total S.A. ADR 160,147 8,888
Union Pacific Resources
Group Inc. 170,645 4,138
Unocal Corp. 421,898 16,375
Valero Energy Corp. 90,083 2,832
Western Atlas Inc. 32,530 2,407(a)
383,398
[GRAPHIC OMITTED] Financial -- 12.4%
American Express Co. 417,521 37,264
AmSouth Bancorp 55,051 2,990
Bank of New York Inc. 238,401 13,783
BankAmerica Corp. 198,552 14,494
BankBoston Corp. 232,714 21,861
Barnett Banks Inc. 45,042 3,237
Chase Manhattan Corp. 149,692 16,391
Citicorp 427,626 54,068
CMAC Investment Corp. 7,202 435
Countrywide Credit Industries 94,161 4,037
Crestar Financial Corp. 58,876 3,356
Edwards A.G. Inc. 114,030 4,533
Federal National Mortgage Assoc 1,393,679 79,527
First Chicago NBD Corp. 58,863 4,915
Fleet Financial Group Inc. 55,714 4,175
Green Tree Financial Corp. 14,713 385
ING Groep N.V. ADR 105,611 4,469
- ----------
See Notes to Schedules of Investments and Financial Statements
6
<PAGE>
SCHEDULE OF INVESTMENTS (DOLLARS IN THOUSANDS)
Number
of Shares Value
- --------------------------------------------------------------------------------
Mellon Bank Corp. 149,304 $ 9,051
Merrill Lynch & Co. Inc. 65,060 4,745
Morgan Stanley, Dean Witter 758,196 44,828
Norwest Corp. 110,101 4,253
State Street Corp. 177,663 10,338
Summit Bancorp 87,581 4,664
T. Rowe Price & Associates 47,544 2,989
Travelers Group Inc. 1,412,843 76,117
Trizec Hahn Corp. 67,562 1,567
United States Bancorp 57,553 6,442
Wells Fargo & Co. 58,404 19,824
454,738
[GRAPHIC OMITTED] Healthcare -- 12.3%
Abbott Laboratories 722,616 47,376
Allergan Inc. 526,738 17,679
American Home Products Corp. 120,400 9,211
Baxter International Inc. 140,629 7,093
Bristol-Myers Squibb Co. 779,267 73,738
Cardinal Health Inc. 285,262 21,430
Dentsply International Inc. 170,157 5,190
Eli Lilly & Co. 105,095 7,317
Johnson & Johnson 957,407 63,069
Lincare Holdings Inc. 117,608 6,704(a)
Merck & Co. Inc. 527,988 56,099
Pfizer Inc. 580,533 43,286
Scherer (R.P.) Corp. 219,452 13,387(a)
Schering Plough Corp. 378,584 23,519
Smithkline Beecham PLC ADR 439,027 22,582
Sun Healthcare Group Inc. 127,618 2,473(a)
Sybron International Corp. 75,070 3,524(a)
Tenet Healthcare Corp. 85,079 2,818(a)
Watson Pharmaceuticals Inc. 735,678 23,863(a)
450,358
Insurance -- 6.3%
AEGON N.V 22,723 2,037
American International
Group Inc. 372,157 40,472
Chubb Corp. 279,006 21,100
CIGNA Corp. 27,525 4,763
Equitable Cos. Inc. 50,046 2,490
General Reinsurance Corp. 186,656 39,571
Hartford Financial Services
Group Inc. 57,553 5,385
Number
of Shares Value
- --------------------------------------------------------------------------------
Jefferson-Pilot Corp. 29,408 $ 2,290
Lincoln National Corp. 192,677 15,053
Loews Corp. 329,803 35,000
Marsh & McLennan Cos. Inc. 302,778 22,576
Provident Cos. Inc. 560,515 21,650
Reliastar Financial Corp. 204,838 8,437
TIG Holdings Inc. 170,736 5,666
UNUM Corp. 108,700 5,911
232,401
Retail Trade -- 4.6%
American Stores Co. 253,433 5,211
Arbor Drugs Inc. 416,632 7,708
Costco Cos. Inc. 202,686 9,045(a)
Dayton Hudson Corp. 242,723 16,384
Federated Department
Stores Inc. 268,746 11,573(a)
Home Depot Inc. 438,728 25,830
Lowes Cos. Inc. 215,197 10,262
Sears Roebuck & Co. 537,461 24,320
Toys 'R Us Inc. 393,101 12,358(a)
Wal Mart Stores Inc. 1,187,025 46,813
169,504
Technology - Electronics and Equipment -- 5.7%
Analog Devices Inc. 30,027 831(a)
Applied Materials Inc. 110,101 3,317(a)
Cisco Systems Inc. 447,739 24,961(a)
Compaq Computer Corp. 35,031 1,977
Hewlett Packard Co. 305,280 19,080
Intel Corp. 728,420 51,172
International Business Machines 622,257 65,065
Perkin Elmer Corp. 77,822 5,530
Pitney Bowes Inc. 250,215 22,504
Storage Technology Corp. 57,553 3,565(a)
Sun Microsystems Inc. 120,111 4,789(a)
Varian Associates Inc. 144,763 7,320
210,111
Technology - Software & Services -- 4.0%
Computer Associates
International Inc. 359,109 18,988
Equifax Inc. 1,318,682 46,731
First Data Corp. 1,573,684 46,030
Microsoft Corp. 52,965 6,846(a)
- ----------
See Notes to Schedules of Investments and Financial Statements
7
<PAGE>
S&S PROGRAM MUTUAL FUND (DOLLARS IN THOUSANDS) -- DECEMBER 31, 1997
Number
of Shares Value
- --------------------------------------------------------------------------------
Reuters Holdings PLC ADR
(Class B) 372,196 $ 24,658
UNOVA Inc. 81,525 1,340(a)
144,593
Transportation -- 2.0%
Burlington Northern Santa Fe 251,481 23,372
Canadian Pacific Ltd. 562,661 15,333
Continental Airlines Inc.
(Class B) 344,783 16,593(a)
Delta Air Lines Inc. 40,037 4,764
GATX Corp. 11,760 853
Laidlaw Inc. 62,557 852
Pittston Brinks Group 100,093 4,029
Union Pacific Corp. N.V 92,585 5,781
71,577
Utilities -- 7.4%
360 Communications Co. 25,023 505(a)
Airtouch Communications Inc. 1,158,565 48,153(a)
American Electric Power Inc. 228,945 11,819
American Telephone &
Telegraph Corp. 276,758 16,951
Bell Atlantic Corp. 253,698 23,087
Bellsouth Corp. 339,662 19,127
CMS Energy Corp. 100,093 4,410
Duke Energy Corp. 260,404 14,420
El Paso Natural Gas Co. 65,060 4,326
Florida Progress Corp. 176,562 6,930
FPL Group Inc. 150,789 8,925
GTE Corp. 208,953 10,918
MCN Corp. 75,069 3,031
New Century Energies Inc. 110,101 5,278
Northern States Power Co. 42,539 2,478
NTL Inc. 628,780 17,527(a)
PG&E Corp. 67,562 2,056
Pinnacle West Capital Corp. 66,561 2,821
SBC Communications Inc. 472,462 34,608
Sonat Inc. 150,138 6,869
Sprint Corp. 123,611 7,247
U.S. WEST Communications
Group 141,223 6,373
WorldCom Inc. 400,368 12,111(a)
269,970
Total Common Stock
(Cost $2,350,981) 3,562,685
Principal
Amount Value
- --------------------------------------------------------------------------------
Convertible Bonds -- 0.0%
- --------------------------------------------------------------------------------
Ames Department Stores Inc.
1.00% 03/08/00
(Cost $352) $ 79 $ 0(a)
Number
of Shares Value
- --------------------------------------------------------------------------------
Preferred Stock -- 0.6%
- --------------------------------------------------------------------------------
Airtouch Communications Inc.
(Class B), 6.00% 17,667 629
Microsoft Corp. (Series A),
$2.20 245,414 22,057
Total Preferred Stock
(Cost $21,026) 22,686
Total Investments in Securities
(Cost $2,372,359) 3,585,371
Principal
Amount Value
- --------------------------------------------------------------------------------
Short-Term Investments -- 1.9%
- --------------------------------------------------------------------------------
U.S. Government Agencies
Federal National Mortgage Assoc.
5.47% 02/06/98 $ 10,570 10,512
5.48% 01/12/98 3,290 3,284
5.57% 02/20/98 10,000 9,923
5.67% 01/08/98 5,000 4,994
5.68% 01/07/98 15,000 14,987
Total U.S. Government Agencies 43,700
- ----------
See Notes to Schedules of Investments and Financial Statements
8
<PAGE>
SCHEDULE OF INVESTMENTS (DOLLARS IN THOUSANDS)
Principal
Amount Value
- --------------------------------------------------------------------------------
Repurchase Agreement
State Street Bank and Trust Co.
6.00% 01/02/98 $ 27,000 $ 27,000
(dated 12/31/97, proceeds
$27,009, collateralized by
$27,542 United States
Treasury Notes, 6.375%, 1/15/00)
Total Short-Term Investments
(Cost $70,700) 70,700
Other Assets and Liabilities,
net 0.1% 2,733
- --------------------------------------------------------------------------------
NET ASSETS -- 100% $3,658,804
================================================================================
[ICON OMITTED] ICONS REPRESENT THE TOP FIVE INDUSTRY WEIGHTINGS IN THE
S&S PROGRAM MUTUAL FUND AT DECEMBER 31, 1997.
- ----------
See Notes to Schedules of Investments and Financial Statements
9
<PAGE>
S&S LONG TERM INTEREST FUND
Q&A
Robert MacDougall leads the fixed income team at GE Investments. Assets under
management exceed $23 billion. His responsibilities include leading the
portfolio management team for 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
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 BENCHMARK
AND LIPPER PEER GROUP FOR THE ONE-YEAR PERIOD ENDED DECEMBER 31, 1997?
A. The S&S Long Term Interest Fund posted a total return of 9.53%. This
compares with a 9.65% return for the Lehman Brothers Aggregate Bond Index.
Our Lipper peer group of 137 Intermediate U.S. Taxable Bond funds posted an
average return of 8.1% for the same period.
[GRAPHIC OMITTED]
[PHOTO OF Robert MacDougall]
Q. WHAT HAPPENED IN THE BOND MARKET DURING THE PAST TWELVE MONTHS?
A. Throughout much of 1997, interest rates trended lower and bond prices moved
higher. The year began with the economy showing signs of strength, raising
concerns about higher inflation. In turn, the Federal Reserve (the "Fed")
raised short-term interest rates by one-quarter of one percent in March. It
was the Fed's first rate hike in approximately two years and the only
change in monetary policy by the Fed in 1997. The economy showed signs of
slowing in April through July. In late July, the bond market received a big
boost when Fed chairman Mr. Greenspan gave a generally positive forecast
for both the financial markets and the economy during his Humphrey-Hawkins
testimony before the Senate. In August, inflationary concerns re-ignited on
a slightly stronger-than-expected employment report for July and a robust
increase in orders of goods reported by the National Association of
Purchasing Managers. In September, however, those concerns abated on news
that the economy was growing moderately and inflation was under control.
Concerns about the future growth potential of countries along the Pacific
Rim and its impact on the global economy sent interest rates tumbling in
October and throughout most of November and December.
Q. WHAT DROVE THE FUND'S PERFORMANCE?
A. The fund's sector allocation was largely responsible for its performance.
Early in the year, the fund's overweighted positions in corporate bonds and
mortgage backed securities contributed significantly to performance. In
1997, corporate bonds produced the best investment results compared with
Treasuries and mortgage backed securities. The fund's decision to increase
its exposure to Treasuries in July and September also contributed favorably
to its investment results, as Treasuries outperformed mortgage securities
during that period.
Q. WHAT IS YOUR OUTLOOK?
A. Our forecast remains favorable. Real rates of return on fixed-income
securities remain attractive compared to other markets. The federal budget
deficit is declining, which means the government is likely to issue fewer
bonds in the future, and when the supply of available bonds decreases,
prices generally rise. Although the U.S. economy is still growing at a
healthy pace, the problems in Asia are likely to keep inflation under
control, which should translate to good news for fixed-income securities.
10
<PAGE>
S&S LONG TERM INTEREST FUND
Comparison of Change in Value of a $10,000 Investment
[GRAPHIC OMITTED]
S&S LONG TERM LB AGGREGATE
Dec-87 10000 10000
Dec-88 10736.53 10788.97
Dec-89 12296.92 12356.53
Dec-90 13452.84 13460.53
Dec-91 15609.15 15614.29
Dec-92 16689.47 16768.82
Dec-93 18325.93 18403.91
Dec-94 17867.56 17866.78
Dec-95 21143.49 21167.87
Dec-96 22037.29 21933.01
Dec-97 24138.68 24057.05
AVERAGE ANNUAL TOTAL RETURN
for the periods ended December 31, 1997
One Five Ten
Year Year Year
- --------------------------------------------------------------------------------
S&S Long Term 9.53% 7.66% 9.21%
LB Aggregate 9.65% 7.49% 9.18%
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 Average Annual Total Returns
for the periods ended 12/31/97
Intermediate U.S. Taxable Bond Peer Group
One Five Ten
Year Year Year
Fund's rank in peer group: 13 3 1
Number of Funds in peer group: 137 56 17
Peer group average total return: 8.1% 6.1% 7.9%
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, 1997
- --------------------------------------------------------------------------------
Percent of
Moody's Ratings + Market Value
- --------------------------------------------------------------------------------
Aaa 77.5%
- --------------------------------------------------------------------------------
Aa 3.4%
- --------------------------------------------------------------------------------
A 4.7%
- --------------------------------------------------------------------------------
Baa 6.5%
- --------------------------------------------------------------------------------
Ba 7.0%
- --------------------------------------------------------------------------------
B 0.9%
- --------------------------------------------------------------------------------
+ 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, 1997
S&S Long Term Interest Fund
[GRAPHIC OMITTED]
U.S. Governments 39.5%
Corporate Notes 22.9%
Mortgage Backed 31.4%
Cash & Other 6.2%
Principal
Amount Value
- --------------------------------------------------------------------------------
Bonds and Notes -- 101.5%
- --------------------------------------------------------------------------------
Federal Agencies -- 3.4%
Federal Home Loan Bank
6.15% 10/23/00 $ 7,000 $ 6,998
6.172% 11/24/00 10,355 10,358
17,356
Small Business Administration
6.55% 10/01/17 - 12/01/17 8,732 8,747
Federal National Mortgage Assoc.
5.96% 07/23/99 23,525 23,580
5.82% 08/25/99 16,790 16,798
6.41% 07/08/02 12,595 12,825
6.99% 07/09/07 14,870 15,244
68,447
Total Federal Agencies
(Cost $93,746) 94,550
U.S. Treasuries -- 36.2%
U.S. Treasury Bonds
13.75% 08/15/04 46,600 66,755(j)
12.00% 05/15/05 5,127 7,012(j)
12.50% 08/15/14 12,487 19,302(j)
10.625% 08/15/15 76,515 115,000(j)
6.625% 02/15/27 54,598 59,273(j)
6.375% 08/15/27 1,630 1,719(j)
6.125% 11/15/27 92,136 94,684(i)
363,745
Principal
Amount Value
- --------------------------------------------------------------------------------
U.S. Treasury Notes
6.00% 06/30/99 $ 53,682 $ 53,950
5.875% 01/31/99 - 08/31/99 203,413 203,990
5.625% 11/30/99 124,310 124,193(i)
7.75% 12/31/99 70,967 73,728(j)
5.75% 11/15/00 34,589 34,654(i)
6.25% 04/30/01 45,377 46,086
6.625% 07/31/01 43,135 44,348
6.375% 09/30/01 7,330 7,481
5.75% 11/30/02 10,317 10,326(i)
5.625% 12/31/02 13,479 13,428
6.50% 08/15/05 2,800 2,922(i,j)
6.625% 05/15/07 3,915 4,144
6.125% 08/15/07 18,915 19,438(i)
638,688
U.S. Treasury STRIP
6.02% 08/15/11 37,187 16,590(d,j)
Total U.S. Treasuries
(Cost $999,019) 1,019,023
Asset Backed -- 5.3%
Advanta Mortgage Loan Trust Corp.
6.30% 07/25/25 3,740 3,676
California Infrastructure
6.42% 12/26/09 2,567 2,597
Carco Auto Loan Master Trust
6.689% 08/15/04 10,885 10,919
First USA Credit Card Trust
6.12% 04/15/01 26,297 26,305
Fleetwood Credit Grantor Trust
6.40% 05/15/13 5,191 5,219
Ford Credit Auto Loan Master
Trust Series (Class A)
5.927% 07/15/01 5,614 5,621(e)
Green Tree Recreational,
Equipment & Consumer Trust
6.49% 02/25/18 5,284 5,303
IMC Home Equity Loan Trust
7.23% 05/20/27 5,627 5,773
Iroquois Trust
6.68% 11/10/03 8,487 8,505(b)
6.75% 06/25/07 8,357 8,387(b)
MBNA Master Credit Card Trust
6.295% 01/15/02 8,797 8,808(e)
6.15% 03/15/03 29,000 29,045(e)
- ----------
See Notes to Schedules of Investments and Financial Statements
12
<PAGE>
SCHEDULE OF INVESTMENTS (DOLLARS IN THOUSANDS)
Principal
Amount Value
- --------------------------------------------------------------------------------
Signet Master Trust
6.18% 09/16/02 $ 11,791 $ 11,806(e)
Standard Credit Card Master Trust
6.36% 05/07/00 9,300 9,300(e)
Tiers Trust
6.68% 11/17/03 6,778 6,802
Total Asset Backed
(Cost $147,870) 148,066
Corporate Notes -- 22.9%
Abbey National PLC
7.35% 10/29/49 6,488 6,793(d)
AFC Capital Trust
8.207% 02/03/27 7,235 7,969
Associated Estates Realty Corp.
6.18% 09/27/99 8,148 8,168
Banco Hipotecario Nacional
8.00% 06/04/99 6,820 6,667(b)
Bancomer S.A.
9.00% 06/01/00 6,975 6,940(b)
Bank Austria AG
7.25% 02/15/17 7,000 7,371
Bell Telephone Co. - Canada
9.50% 10/15/10 4,410 5,504
Bell Telephone Co. - Pennsylvania
8.35% 12/15/30 9,014 11,229
BT Preferred Capital Trust
7.875% 02/25/27 10,892 11,337
China International Trust &
Investment Corp.
9.00% 10/15/06 4,405 4,609
Circus Circus Enterprises Inc.
6.70% 11/15/96 7,145 7,137
Cleveland Electric Illuminating Co.
7.19% 07/01/00 2,550 2,588
Columbia University
6.83% 12/15/20 4,000 4,149
Conseco Inc.
8.70% 11/15/26 6,729 7,523
Continental Cablevision Inc.
8.50% 09/15/01 5,825 6,187
8.30% 05/15/06 8,433 9,204
CSX Corp.
7.05% 05/01/02 2,520 2,583
Principal
Amount Value
- --------------------------------------------------------------------------------
DDR Pass-Through Asset Trust
7.125% 03/15/02 $ 11,170 $ 11,340(b)
Delta Air Lines Inc.
7.79% 12/01/98 5,465 5,541
Deutsche Bank Financial Inc.
6.70% 12/13/06 3,375 3,422
Empresa Nacional De Electricidad
8.125% 02/01/2097 5,000 5,190
Energy Group Overseas
7.375% 10/15/17 6,400 6,615(b)
Farmers Insurance Exchange
8.625% 05/01/24 4,895 5,663(b)
FBOP Capital Trust
10.20% 02/06/27 1,300 1,501(b)
Federated Department Stores Inc.
10.00% 02/15/01 5,800 6,371
Felcor Suites Ltd.
7.375% 10/01/04 4,000 3,990(b)
First Security Capital
8.41% 12/15/26 3,867 4,236
Ford Motor Credit Corp.
7.32% 05/23/02 13,835 13,999
Freeport Term Malta Ltd.
7.50% 03/29/09 7,945 8,367(b)
Fujian International Trust &
Investment Corp.
7.375% 08/25/07 2,490 2,363(b)
Greenpoint Bank
6.70% 07/15/02 4,600 4,636
Gruma SA de CV
7.625% 10/15/07 1,600 1,575(b)
Guangdong International
Trust & Investment Corp.
8.875% 05/22/07 4,640 4,147(b)
8.75% 10/24/16 5,320 5,490(b)
Heritage Media Corp.
8.75% 02/15/06 4,600 4,893
Hydro-Quebec
8.05% 07/07/24 7,418 8,540
8.25% 04/15/26 6,680 7,788
Ikon Capital Resource Inc.
6.27% 07/19/99 4,000 4,011
Ikon Office Solutions Inc.
6.75% 12/01/25 4,370 4,219
- ----------
See Notes to Schedules of Investments and Financial Statements
13
<PAGE>
S&S LONG TERM INTEREST FUND (DOLLARS IN THOUSANDS) -- DECEMBER 31, 1997
Principal
Amount Value
- --------------------------------------------------------------------------------
Industrial Finance Corp.
7.00% 08/04/07 $ 8,341 $ 7,924(b)
Israel Electric Corp. Ltd.
8.10% 12/15/96 11,585 11,984(b)
Korea Development Bank
7.125% 09/17/01 1,800 1,509
6.625% 11/21/03 5,045 3,925
7.375% 09/17/04 1,675 1,341
Korea Electric Power Corp.
7.75% 04/01/13 6,435 4,636
Landeskreditbank Baden
7.875% 04/15/04 7,165 7,815
LCI International Inc.
7.25% 06/15/07 4,060 4,207
Lehman Brothers Holdings Inc.
6.90% 03/30/01 8,138 8,269
Liberty Mutual Insurance Co.
8.20% 05/04/07 6,075 6,733(b)
Loewen Group International Inc.
6.70% 10/01/99 10,067 10,020(b)
7.50% 04/15/01 11,589 11,743(b)
Long Island Lighting
7.30% 07/15/99 5,515 5,588
Meditrust
7.114% 08/15/04 5,070 5,121
Merita Bank Ltd.
7.15% 12/29/49 6,375 6,476(b)
Merrill Lynch & Co. Inc.
5.938% 05/19/98 17,870 17,879
6.008% 01/22/99 6,215 6,244
MIC Financing Trust
8.375% 02/01/27 7,120 7,478(b)
Morgan Stanley Finance PLC
8.03% 02/28/17 3,860 4,096
National Westminster Bank PLC
7.75% 04/29/49 6,654 7,166
New Jersey Economic Development Authority
7.425% 02/15/29 4,255 4,698
New York State Dormitory Authority Revenue
6.32% 04/01/99 8,110 8,133
News America Holdings Inc.
8.15% 10/17/36 9,033 9,786
Niagara Mohawk Power Corp.
9.50% 06/01/00 3,000 3,174
Principal
Amount Value
- --------------------------------------------------------------------------------
Norfolk Southern Corp.
7.90% 05/15/2097 $ 10,774 $ 12,233
North Atlantic Energy Corp.
9.05% 06/01/02 6,936 7,128
NRG Energy Inc.
7.50% 06/15/07 5,880 6,078(b)
NWCG Holding Corp.
6.33% 06/15/99 9,300 8,502(d)
Oryx Energy Co.
10.00% 06/15/99 7,350 7,675
9.50% 11/01/99 5,025 5,268
Paramount Communications Inc.
5.875% 07/15/00 3,200 3,130
Petroleos Mexicanos
8.00% 07/01/98 4,235 4,256(b)
7.75% 10/29/99 7,565 7,603(b)
Philip Morris Cos. Inc.
7.20% 02/01/07 3,770 3,890
PSI Energy Inc.
6.25% 12/15/98 4,300 4,305
Reliance Industries Ltd.
10.50% 08/06/46 3,850 3,962(b)
Republic New York Corp.
7.20% 07/15/2097 5,155 5,379
Republic of Argentina
9.50% 11/30/02 5,700 5,668
Republic of Columbia
7.25% 02/15/03 4,000 3,918
Republic of Panama
7.875% 02/13/02 4,000 3,870(b)
Riggs Capital Trust
8.625% 12/31/26 3,860 4,096(b)
St. George Funding Co.
8.485% 12/31/49 9,085 9,906(b)
Sun Life Canada Capital Trust
8.526% 05/29/49 7,390 8,159(b)
Taubman Realty Group L.P.
8.00% 06/15/99 9,787 10,006
TCI Communications Inc.
8.65% 09/15/04 4,415 4,837
Tele-Communications Inc.
6.469% 12/20/00 5,049 5,091
9.25% 04/15/02 4,200 4,610
Tenet Healthcare Corp.
8.00% 01/15/05 5,815 5,917
- ----------
See Notes to Schedules of Investments and Financial Statements
14
<PAGE>
SCHEDULE OF INVESTMENTS (DOLLARS IN THOUSANDS)
Principal
Amount Value
- --------------------------------------------------------------------------------
Time Warner Entertainment Co. L.P.
10.15% 05/01/12 $ 6,438 $ 8,234
Time Warner Inc.
4.90% 07/29/99 14,565 14,275(b)
6.10% 12/30/01 3,800 3,724(b)
Toledo Edison Co.
7.38% 03/31/00 10,067 10,174
Total Access Communication PLC
7.625% 11/04/01 3,855 2,043(b)
Transamerica Capital
7.625% 11/15/37 6,800 7,071(b)
Triton Energy Ltd.
8.75% 04/15/02 7,258 7,450
Universal Outdoor Inc.
9.75% 10/15/06 2,850 3,199
Viacom Inc.
7.75% 06/01/05 13,650 13,883
Videotron Holdings PLC
11.00% 08/15/05 4,000 3,538
Washington Mutual Capital
8.375% 06/01/27 6,015 6,631
Waterford Funding Corp.
8.09% 01/02/17 1,160 1,213
Yale University Notes
7.375% 04/15/96 11,299 12,511
TOTAL CORPORATE NOTES
(Cost $629,121) 645,233
Mortgage Backed -- 31.4%
Federal Home Loan Mortgage Corp.
7.50% 06/01/10 32,146 33,078
9.00% 05/01/16-11/01/16 6,234 6,674
9.00% 12/01/24 11,065 11,823
9.00% 04/01/25 10,315 11,014
62,589
Federal National Mortgage Assoc.
6.50% 01/01/04 1,810 1,815
9.00% 02/01/09 190 201
9.00% 05/01/10 44 46
9.00% 09/01/13 929 984
9.00% 01/01/14 - 08/01/14 5,948 6,373
6.50% 06/01/14 11,963 11,970
9.00% 05/01/15 - 12/01/15 257 271
9.00% 07/01/16 - 10/01/16 180 192
Principal
Amount Value
- --------------------------------------------------------------------------------
8.50% 09/01/16 $ 219 $ 231
9.00% 01/01/17 - 08/01/17 576 615
9.00% 03/01/18 - 05/01/18 462 499
9.00% 02/01/19 - 09/01/19 4,500 4,853
9.00% 02/01/21 - 06/01/21 343 369
8.50% 04/01/21 - 10/01/21 881 929
9.50% 09/01/21 55 60
9.00% 03/01/22 - 04/01/22 1,546 1,667
9.50% 05/01/22 - 06/01/22 28 30
8.50% 06/01/22 - 12/01/22 621 653
8.50% 01/01/23 - 02/01/23 1,865 1,965
8.00% 08/01/24 1 1
8.50% 10/01/24 - 11/01/24 5 5
9.00% 10/01/24 15,980 17,034
9.00% 05/01/25 23,789 25,357
5.22% 07/01/26 3,327 2,546(d)
7.00% 08/01/27 - 10/01/27 116,542 47,022
6.154% 03/01/33 8,724 8,721(h)
6.193% 05/01/36 12,193 12,190(h)
6.196% 05/01/36 27,344 27,335(h)
6.50% TBA 25,500 25,492(c)
7.00% TBA 113,469 114,320(c)
313,746
Government National Mortgage Assoc.
9.00% 06/15/16 - 12/15/16 1,062 1,155
9.00% 01/15/17 - 12/15/17 14,664 15,970
8.50% 10/15/17 17,764 18,986
9.00% 04/15/18 - 11/15/18 2,486 2,703
8.00% 08/15/18 130 136
9.00% 07/15/19 - 12/15/19 6,154 6,683
8.00% 10/15/19 561 587
8.00% 07/15/21 - 12/15/21 549 572
8.00% 01/15/22 - 12/15/22 7,982 8,321
8.00% 01/15/23 - 12/15/23 38,662 40,267
6.50% 01/15/24 - 12/15/24 24,275 24,072
119,452
Collateralized Mortgage Obligations
American Housing Trust
9.50% 01/25/21 4 1,173(d,g)
Amresco Commercial
Mortgage Funding Corp.
6.73% 06/17/29 6,881 6,944
- ----------
See Notes to Schedules of Investments and Financial Statements
15
<PAGE>
S&S LONG TERM INTEREST FUND (DOLLARS IN THOUSANDS) -- DECEMBER 31, 1997
Principal
Amount Value
- --------------------------------------------------------------------------------
Asset Securitization Corp.
6.50% 12/14/02 $ 5,037 $ 5,078
BCF
7.22% 11/25/28 16,978 17,190
7.25% 11/25/28 10,341 9,935
5.476% 11/25/38 7,113 7,095
BHN Mortgage Trust
7.916% 07/25/09 3,296 3,219(b)
7.54% 05/31/17 4,713 4,523(b)
Collateralized Mortgage
Obligation Trust
5.46% 09/01/15 4,292 3,781(d,f)
5.75% 11/01/18 5,122 3,728(d,f)
CS First Boston Mortgage
Securities Corp.
6.425% 08/20/30 1,383 1,383
DLJ Mortgage Acceptance Corp.
6.65% 12/17/27 5,569 5,616(b)
Federal Home Loan
Mortgage Corp.
8.00% 04/15/20 6,626 6,893
7.50% 04/15/21 11,525 11,813
4.95% 04/01/27 51,462 37,133(d,f)
Federal National Mortgage Assoc.
7.148% 10/17/09 7,315 7,583
8.50% 03/01/17 - 04/01/17 8,534 2,198(g)
8.50% 01/01/18 984 254(g)
7.00% 06/18/20 14,976 15,090(b)
7.41% 03/25/21 11,665 12,343
9.00% 05/25/22 6,507 1,730(g)
8.50% 07/25/22 11,563 3,167(g)
6.00% 08/25/23 19,963 5,839(g)
5.15% 12/15/24 19,963 13,494(d,f)
5.05% 04/01/27 4,772 3,701(d,f)
Federal National Mortgage
Assoc. REMIC
7.623% 12/17/04 7,841 8,191(d)
6.856% 06/17/11 5,790 5,888(d)
6.909% 06/25/16 16,498 16,890
6.82% 07/25/20 10,648 9,895(d,f)
5.67% 12/25/22 6,435 5,177(d,f)
GS Mortgage Securities Corp.
6.46% 07/13/30 8,178 8,336
Mid State Trust
7.54% 07/01/35 2,753 2,889
Principal
Amount Value
- --------------------------------------------------------------------------------
Morgan Stanley Capital Inc.
6.86% 05/15/06 $ 9,808 $ 9,995(b)
6.504% 10/15/10 10,171 10,218(b)
6.59% 10/03/30 3,347 3,382
Residential Assets Securitization Trust
7.75% 04/25/27 17,637 18,266
7.50% 08/25/27 10,377 10,797
Residential Resources Inc.
8.00% 10/01/18 3,909 3,937
Salomon Brothers Mortgage Securities Inc.
8.125% 11/01/12 3,626 3,726
7.00% 07/25/24 6,474 6,412
7.00% 10/01/27 8,212 8,227
Sawgrass Finance REMIC Trust
6.45% 01/20/06 10,944 11,047
Structured Asset Securities Corp.
5.65% 01/25/00 4,443 4,443(b)
6.79% 06/12/04 5,025 5,132
6.287% 06/15/15 3 3(b)
8.495% 04/25/27 20,320 21,057
10.25% 02/25/28 82,825 4,323(d)
Vornado Finance Corp.
6.36% 12/01/00 20,964 20,970(b)
390,104
Total Mortgage Backed
(Cost $873,327) 885,891
Foreign Denominated Notes -- 2.3%
Dutch Government
5.75% 02/15/07 NLG 23,888 12,134
Federal Republic of Germany
6.00% 07/04/07 DEM 20,211 11,801
Government of Canada
7.00% 12/01/06 CAD 20,900 16,034
Kingdom of Belgium
6.25% 03/28/07 BEL 430,745 12,336
Kingdom of Denmark
7.00% 11/15/07 DKK 77,601 12,433
TOTAL FOREIGN DENOMINATED NOTES
(Cost $62,583) 64,738
Total Bonds and Notes
(Cost $2,805,666) 2,857,501
- ----------
See Notes to Schedules of Investments and Financial Statements
16
<PAGE>
SCHEDULE OF INVESTMENTS (DOLLARS IN THOUSANDS)
Number
of Shares Value
- --------------------------------------------------------------------------------
Preferred Stock -- 1.5%
- --------------------------------------------------------------------------------
Entertainment Property
Inc., 14.25% 6,000 $ 5,671(b)
Home Ownership, 13.33% 9,170 8,918(b)
New Plan Realty Trust, 7.80% 145,118 7,528
News Corp. Exchange
Trust, 5.00% 46,040 3,188(b)
Pinto Totta International
Finance Ltd., 7.47% 6,691 6,959(a,b)
Repsol International Capital
Ltd., 7.45% 161,000 4,055
Simon DeBartolo Group Inc.
(Series C), 7.89% 129,425 6,714
Total Preferred Stock
(Cost $42,244) 43,033
Total Investments in Securities
(Cost $2,847,910) 2,900,534
Principal
Amount Value
- --------------------------------------------------------------------------------
Short-Term Investments -- 9.3%
- --------------------------------------------------------------------------------
U.S. Government Agencies (d)
Federal Home Loan Bank
5.10% 01/02/98 $ 18,000 17,997
Federal Home Loan Mortgage Corp.
6.00% 01/02/98 42,050 42,043
5.60% 01/26/98 122,245 121,764
Total U.S. Government Agencies 181,804
Number
of Shares Value
- --------------------------------------------------------------------------------
GEI Short Term
Investment Fund 80,089 80,089
Total Short-Term Investments
(Cost $261,893) 261,893
Expiration Date/ Number of
Strike Price Contracts Value
- --------------------------------------------------------------------------------
Call Options Written -- 0.0%
- --------------------------------------------------------------------------------
U.S. Treasury
Bond Jan. 98/106.19 22,755,000 $ (38)
U.S. Treasury
Bond Jan. 98/105.50 22,300,000 (82)
Total Call Options Written
(Premium $(153)) (120)
- --------------------------------------------------------------------------------
Put Options Written -- 0.0%
- --------------------------------------------------------------------------------
U.S. Treasury
Bond Jan. 98/100.19 22,755,000 (66)
U.S. Treasury
Bond Jan. 98/99.50 22,300,000 (89)
Total Put Options Written
(Premium $(162)) (155)
Other Assets and Liabilities, net (12.3%) (343,373)
----------
NET ASSETS -- 100% $2,818,779
==========
FORWARD FOREIGN CURRENCY CONTRACTS
- --------------------------------------------------------------------------------
At December 31, 1997, the outstanding forward foreign currency contracts, which
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
01/12/98 471,199 $ 12,917 $ 12,726 $ 191
CAD, expiring
01/12/98 23,069 16,298 16,150 145
DEM, expiring
01/12/98 21,601 12,217 12,016 201
DKK, expiring
01/12/98 84,455 12,572 12,335 238
NLG, expiring
01/12/98 25,635 12,872 12,652 222
-------- -------- -----
$ 66,876 $ 65,879 $ 997
======== ======== =====
- ----------
See Notes to Schedules of Investments and Financial Statements
17
<PAGE>
NOTES TO PERFORMANCE (UNAUDITED)
Total returns take into account changes in share price and assume reinvestment
of dividends and capital gains, if any. 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 ("S&P") Composite Index of 500 stocks (S&P 500 Index) 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
stocks recognized by investors to be representative of the stock market in
general. LB Aggregate is a composite index of short-, medium-, and long-term
bond performance and is widely recognized as a barometer of the bond market in
general. The majority of the broad market returns are not available from the
funds' commencement of investment operations through December 31, 1997. The
results shown for the foregoing indices assume the reinvestment of net dividends
or interest and are unaudited.
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 number of shareholder publication thresholds. Lipper is an independent
mutual fund rating service.
The views expressed in this document reflect our judgment as of the publication
date and are subject to change at any time without notice. The securities cited
may not represent future holdings and should not be considered as a
recommendation to purchase or sell a particular security. See the GE S&S Program
Disclosure Statement for 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 the Securities Act of 1933, these securities may
be resold in transactions exempt from registration, normally to qualified
institutional buyers. At December 31, 1997, these securities amounted to
$317,764 or 11.3% of net assets for the S&S Long Term Interest Fund. These
securities have been determined to be liquid using guidelines established
by the Trustees.
(c) Settlement is on a delayed delivery or when-issued basis with final
maturity to be announced (TBA) in the future.
(d) Rate represents effective yield.
(e) Floating rate coupon. The stated rate represents the rate at December 31,
1997.
(f) Principal only securities represent the right to receive the monthly
principal payments on an underlying pool of mortgages. No payments of
interest on the pool are passed through to the "principal only" holder.
(g) Interest only securities represent the right to receive the monthly
interest payments on an underlying pool of mortgages. Payments of principal
on the pool reduce the value of the interest only holding.
(h) Adjustable rate mortgage coupon. The stated rate represents the rate at
December 31, 1997.
(i) All or a portion of security out on loan.
(j) At December 31, 1997 all or a portion of this security was pledged to cover
collateral requirements for futures, options or TBA's.
ABBREVIATIONS:
ADR -- American Depositary Receipt
Regd -- Registered
REMIC -- Real Estate Mortgage
Investment Conduit
STRIPS -- Separate Trading of Registered
Interest and Principal of Securities
CURRENCY TERMS:
BEL -- Belgian Franc
CAD -- Canadian Dollar
DEM -- Deutsche Mark
DKK -- Danish Krone
NLG -- Netherlands 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 1997 1996 1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $45.54 $41.19 $33.59 $37.01 $37.21
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.87 0.97 1.00 1.00 1.04
Net realized and unrealized
gains (losses) on investments 14.04 8.63 11.33 (1.65) 3.23
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 14.91 9.60 12.33 (0.65) 4.27
- -------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income 0.87 0.96 1.00 1.00 1.04
Net realized gains 6.52 4.29 3.73 1.71 3.43
Tax return of capital 0.00 0.00 0.00 0.06 0.00
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 7.39 5.25 4.73 2.77 4.47
- -------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $53.06 $45.54 $41.19 $33.59 $37.01
===============================================================================================================================
TOTAL RETURN(a) 33.07% 23.05% 36.77% (1.76%) 11.47%
RATIOS / SUPPLEMENTAL DATA:
Net assets, end of year
(in thousands) $3,658,804 $2,790,830 $2,314,537 $1,717,813 $1,805,194
Ratios to average net assets:
Net investment income 1.60% 2.10% 2.48% 2.70% 2.67%
Expenses 0.08% 0.12% 0.12% 0.13% 0.11%
Portfolio turnover rate 31% 36% 47% 33% 37%
Average brokerage commission(b) $0.057 $0.072 N/A N/A N/A
</TABLE>
- ----------
See Notes to Financial Highlights and Financial Statements
20
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data based on a share outstanding during the year ended December 31:
<TABLE>
<CAPTION>
S&S Long Term Interest Fund 1997 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $11.28 $11.59 $10.52 $11.64 $11.82
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.76 0.77 0.80 0.74 0.77
Net realized and unrealized
gains (losses) on investments 0.27 (0.31) 1.07 (1.03) 0.36
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 1.03 0.46 1.87 (0.29) 1.13
- ------------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income 0.76 0.77 0.80 0.74 0.77
Net realized gains 0.00 0.00 0.00 0.09 0.54
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 0.76 0.77 0.80 0.83 1.31
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $11.55 $11.28 $11.59 $10.52 $11.64
====================================================================================================================================
TOTAL RETURN(a) 9.53% 4.23% 18.34% (2.50%) 9.80%
RATIOS / SUPPLEMENTAL DATA:
Net assets, end of year
(in thousands) $2,818,779 $2,842,343 $3,096,022 $2,806,433 $3,238,094
Ratios to average net assets:
Net investment income 6.70% 6.87% 7.18% 6.66% 6.36%
Expenses 0.11% 0.13% 0.11% 0.11% 0.07%
Portfolio turnover rate 218% 194% 314% 219% 154%
</TABLE>
- ----------
NOTES TO FINANCIAL HIGHLIGHTS
(a) Total returns are historical and assume changes in share price and
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 Securities
Act of 1934.
- ----------
See Notes to Financial Highlights and Financial Statements
21
<PAGE>
STATEMENTS OF ASSETS
AND LIABILITIES December 31, 1997 (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 $2,372,359 and $2,847,910, respectively) $3,585,371 $2,900,534
Short term investments (at amortized cost) 70,700 261,893
Cash 32 3,298
Foreign currency (Cost $49 and $12, respectively) 49 12
Receivable for investments sold 0 32,214
Income receivables 3,994 36,721
Receivable for fund shares sold 752 0
Receivable on forward foreign currency contracts 0 997
- -----------------------------------------------------------------------------------
TOTAL ASSETS 3,660,898 3,235,669
- -----------------------------------------------------------------------------------
LIABILITIES
Options written, at market (Premium received
$0 and $315, respectively) 0 275
Distributions payable to shareholders 0 2,887
Payable upon return of securities loaned 0 192,574
Payable for investments purchased 0 216,216
Payable for fund shares redeemed 58 2,508
Payable to GEIC 2,036 2,430
- -----------------------------------------------------------------------------------
TOTAL LIABILITIES 2,094 416,890
- -----------------------------------------------------------------------------------
NET ASSETS $3,658,804 $2,818,779
===================================================================================
NET ASSETS CONSIST OF:
Capital paid in $2,448,111 $2,769,532
Undistributed net investment income 754 4,512
Accumulated net realized loss (3,073) (8,919)
Net unrealized appreciation on:
Investments 1,213,012 52,624
Written options 0 40
Foreign currency related transactions 0 990
- -----------------------------------------------------------------------------------
NET ASSETS $3,658,804 $2,818,779
===================================================================================
Shares outstanding ($25.00 and $10.00 par value,
respectively) 68,953 243,970
Net asset value, offering and redemption
price per share $53.06 $11.55
</TABLE>
- ----------
See Notes to Financial Statements
22
<PAGE>
STATEMENTS OF OPERATIONS
For the year ended December 31, 1997 (Amounts in thousands)
S&S PROGRAM S&S LONG TERM
MUTUAL FUND INTEREST FUND
----------- -------------
INVESTMENT INCOME
INCOME:
Dividends $ 52,372 $ 5,858
Interest 3,288 185,596
Less: Foreign taxes withheld (403) 0
- --------------------------------------------------------------------------------
TOTAL INCOME 55,257 191,454
- --------------------------------------------------------------------------------
EXPENSES:
Administration expenses 1,443 1,800
Shareholder servicing agent expenses 253 256
Transfer agent fees 370 517
Custody and accounting expenses 426 402
Professional fees 72 76
Registration, filing, printing and
miscellaneous expenses 60 47
- --------------------------------------------------------------------------------
TOTAL EXPENSES 2,624 3,098
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 52,633 188,356
================================================================================
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
REALIZED GAIN (LOSS) ON:
Investments 397,311 27,798
Futures 0 (108)
Written options 0 881
Foreign currency related transactions (110) 10,146
INCREASE (DECREASE) IN UNREALIZED APPRECIATION/
DEPRECIATION ON:
Investments 469,332 29,959
Futures 0 (229)
Written options 0 40
Foreign currency related transactions 5 (16)
- --------------------------------------------------------------------------------
Net realized and unrealized gain
on investments 866,538 68,471
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $919,171 $256,827
================================================================================
- ----------
See Notes to Financial Statements
23
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended December 31, 1997 and 1996 (Amounts in thousands)
<TABLE>
<CAPTION>
S&S PROGRAM S&S LONG TERM
MUTUAL FUND INTEREST FUND
1997 1996 1997 1996
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income $ 52,633 $ 53,977 $ 188,356 $ 198,980
Net realized gain (loss) on investments,
futures, written options and
foreign currency related transactions 397,201 241,594 38,717 (12,333)
Net increase (decrease) in unrealized
appreciation/depreciation 469,337 236,640 29,754 (73,389)
- ---------------------------------------------------------------------------------------------------------------------
Net increase from operations 919,171 532,211 256,827 113,258
- ---------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (52,667) (53,080) (188,578) (199,141)
Net realized gains (396,432) (237,331) 0 0
- ---------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (449,099) (290,411) (188,578) (199,141)
- ---------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from
operations and distributions 470,072 241,800 68,249 (85,883)
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Proceeds from sale of shares 280,080 194,738 298,242 208,396
Value of distributions reinvested 413,300 268,219 180,252 188,128
Cost of shares redeemed (295,478) (228,464) (570,307) (564,320)
- ---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from
share transactions 397,902 234,493 (91,813) (167,796)
- ---------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 867,974 476,293 (23,564) (253,679)
NET ASSETS
Beginning of year 2,790,830 2,314,537 2,842,343 3,096,022
- ---------------------------------------------------------------------------------------------------------------------
End of year $3,658,804 $2,790,830 $2,818,779 $2,842,343
=====================================================================================================================
UNDISTRIBUTED NET INVESTMENT
INCOME, END OF YEAR $754 $897 $4,512 $1,959
- ---------------------------------------------------------------------------------------------------------------------
CHANGES IN FUND SHARES
- ---------------------------------------------------------------------------------------------------------------------
Shares sold 5,288 4,338 26,446 18,569
Issued for distributions reinvested 7,957 5,778 15,927 16,794
Shares redeemed (5,569) (5,029) (50,494) (50,311)
- ---------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN FUND SHARES 7,676 5,087 (8,121) (14,948)
=====================================================================================================================
</TABLE>
- ----------
See Notes to Financial Statements
24
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 1997
1. ORGANIZATION OF THE FUNDS
The S&S Program Mutual Fund and S&S Long Term Interest Fund (each a "Fund" and
collectively the "Funds") are registered under the Investment Company Act of
1940 (as amended) (the "1940 Act") as open-end management investment companies.
The Funds are two of the investment options offered under the GE Savings &
Security Program ("Program"). The Program, through a trust, owns 56% 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, but are
expected to be immaterial.
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 are valued at the last sale price, or if no
sales occurred on that day, at the last quoted bid price. 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. Fund positions which
cannot be valued as set forth above are valued at fair value determined under
procedures approved by the Board of Trustees of the Funds.
Transactions are accounted for as of the trade date. Realized gains or losses on
investments sold are recorded on the basis of identified cost 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 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
substantially all of its taxable income and gains to its shareholders and,
therefore, no provision for federal income tax has been made. Each Fund is
treated as a separate taxpayer for federal income tax purposes. Capital loss
carryovers are available to offset future realized capital gains to the extent
provided in the Internal Revenue Code and regulations thereunder. 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. At
December 31, 1997, the S&S Long Term Interest Fund had a capital loss carryover
of $ 8,755,413 which
25
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 1997
expires December 31, 2004. Any net capital and currency losses incurred after
October 31, within each Fund's tax year, are deemed to arise on the first day of
the Fund's next tax year if the Fund so elects to defer such losses.
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 accreted or 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 General Electric Investment
Corporation ("GEIC"), the investment adviser to the Funds, and reimbursed by the
Funds.
DISTRIBUTIONS TO SHAREHOLDERS
The S&S Long Term Interest Fund declares net investment income dividends daily
and pays them monthly. The S&S Program Mutual Fund declares and pays dividends
from net investment income annually. The 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 contracts, 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. During any particular year, net realized gains from
investment transactions in excess of any applicable capital loss carryforwards,
would be taxable to the Funds if not distributed and, therefore, will be
declared and paid to their shareholders annually.
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 Funds to subsequently invest at less
advantageous yields. In connection with such purchases, the Funds are 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 Funds as an unrealized gain or loss. When the Forward is closed, the
Funds record 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 Funds
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 Funds may
enter into Forwards in connection with planned purchases and sales of
securities, to hedge specific receivables or payables against changes in future
exchange rates or to hedge the U.S. dollar value of portfolio securities
denominated in a foreign currency.
REPURCHASE AGREEMENTS
The Funds' custodian takes possession of the collateral pledged for investments
in repurchase agreements on behalf of the Funds. It is the policy of the Funds
to value the underlying collateral daily on a mark-to-market basis to determine
that the value, including accrued interest, is at least equal to the repurchase
price. In the event of default of the obligation to repurchase, the Funds have
the right to liq-
26
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 1997
uidate 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 these instruments. Risks may be caused by an imperfect
correlation between movements in the price of the instruments and the price of
the underlying securities and interest rates. Risks also may arise if there is
an illiquid secondary market for the instruments, or an inability of
counterparties to perform. The Funds may invest in futures contracts for the
following reasons: (1) for the purpose of hedging against the effects of changes
in the value of portfolio securities or other investments due to anticipated
changes in interest rates, stock market conditions and currency market
conditions, (2) to gain stock, bond, or currency market exposure for
accumulating and residual cash positions, (3) for duration management, (4) when
such transactions are an economically appropriate way to reduce risks inherent
in the management of a Fund, and (5) for non-hedging purposes such as seeking
additional income or otherwise seeking to increase total return.
Upon entering into a futures contract, the Funds are required to deposit with
the Funds' custodian in a segregated account 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 Funds 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 Funds recognize a
realized gain or loss when the futures contract is closed. The Funds will
realize a gain or loss upon the expiration or closing of an option transaction.
When an option is exercised, the proceeds on sales for a written call option,
the purchase cost for a written put option, or the proceeds on the sale of the
security for a purchased put or cost of the security for a call option is
adjusted by the amount of premium received or paid.
SECURITY LENDING
The Funds may loan securities to well known and recognized U.S. and foreign
brokers and banks and receive lender fees. 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 1997, the Funds incurred expenses for the cost of services rendered by
General Electric Company's wholly-owned subsidiary, 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, 1997
4. AGGREGATE UNREALIZED APPRECIATION AND DEPRECIATION
(Dollars in Thousands)
Aggregate gross unrealized appreciation/(depreciation) of investments for each
Fund at December 31, 1997, were as follows:
GROSS GROSS NET
UNREALIZED UNREALIZED UNREALIZED
APPRECIATION DEPRECIATION APPRECIATION
- --------------------------------------------------------------------------------
S&S Program
Mutual Fund $1,234,738 $21,726 $1,213,012
S&S Long Term
Interest Fund 62,027 9,403 52,624
The aggregate cost of each Fund's investments was substantially the same for
book and federal income tax purposes at December 31, 1997.
5. OPTIONS
(Contracts and Dollars in Thousands)
During the year ended December 31, 1997, the following option contracts were
written:
S&S LONG TERM INTEREST FUND
- --------------------------------------------------------------------------------
NUMBER
OF CONTRACTS PREMIUM
- --------------------------------------------------------------------------------
Balance as of
December 31, 1996 0 $ 0
Written 353,270 1,201
Closed and Expired (263,160) (886)
Exercised 0 0
-------- ------
Balance as of
December 31, 1997 90,110 $ 315
======== ======
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, 1997, were as follows:
PURCHASES SALES
- --------------------------------------------------------------------------------
S&S Program
Mutual Fund $ 987,656 $1,020,087
S&S Long Term
Interest Fund 1,192,706 495,128
The cost of purchases and the proceeds from sales of long-term U.S. Government
securities for the year ended December 31, 1997, were as follows:
PURCHASES SALES
- --------------------------------------------------------------------------------
S&S Program
Mutual Fund $ 5,659 $ 6,634
S&S Long Term
Interest Fund 5,129,958 5,738,478
7. SECURITY LENDING
At December 31, 1997, the S&S Long Term Interest Fund loaned securities having a
value, including accrued interest, of approximately $ 190,555,105 and received $
194,532,372 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, 1997.
28
<PAGE>
INDEPENDENT AUDITORS' REPORT
KPMG Peat Marwick LLP
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 (the "Funds"),
including the schedules of investments, as of December 31, 1997, 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, 1997, 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, 1997,
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 13, 1998
29
<PAGE>
GE S&S PROGRAM SUPPLEMENTARY INFORMATION -- INTRODUCTION
(UNAUDITED)
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.
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES THAT HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
30
<PAGE>
SCHEDULE OF INVESTMENTS (DOLLARS IN THOUSANDS) -- DECEMBER 31, 1997
(UNAUDITED)
S&S Short Term Interest Fund
Principal
Amount Value
- --------------------------------------------------------------------------------
Bonds and Notes -- 98.7%
- --------------------------------------------------------------------------------
Federal Agencies -- 4.1%
Federal National Mortgage Assoc.
5.96% 07/23/99
(Cost $34,647) $ 34,630 $ 34,711
U.S. Treasuries -- 18.6%
U.S. Treasury Notes
5.875% 08/31/99 18,279 18,336(j)
5.75% 11/15/00 138,415 138,674(i,j)
Total U.S. Treasuries
(Cost $156,798) 157,010
Asset Backed -- 8.7%
Advanta Mortgage Loan Trust Corp.
6.30% 07/25/25 3,567 3,506
California Infrastructure
6.17% 03/25/03 7,800 7,822
Capital Asset Research Funding L.P.
6.40% 03/15/02 4,875 4,878
Carco Auto Loan Master Trust
6.689% 08/15/04 3,361 3,371
Discover Card Master Trust
5.40% 11/16/01 5,000 4,970
First Deposit Master Trust
5.75% 06/15/01 10,500 10,490
Fleetwood Credit Grantor Trust
6.40% 05/15/13 9,294 9,343
Green Tree Recreational,
Equipment & Consumer Trust
6.49% 02/25/18 5,974 5,997
HFC Home Equity Loan
4.65% 12/20/08 1,340 1,328
Premier Auto Trust
6.34% 01/06/02 9,967 10,014
Provident Bank Home Equity
Loan Trust
7.18% 04/25/13 5,415 5,460
The Money Store Home Equity Trust
5.675% 02/15/09 6,833 6,586
Total Asset Backed
(Cost $73,864) 73,765
Principal
Amount Value
- --------------------------------------------------------------------------------
Corporate Notes -- 28.6%
America West Airlines
6.86% 07/02/04 $ 12,000 $ 11,959
Arkla Inc.
8.74% 05/14/98 4,750 4,787
8.875% 07/15/99 4,150 4,317
Banco Hipotecario Nacional
8.00% 06/04/99 2,165 2,116(b)
Blockbuster Entertainment Corp.
6.625% 02/15/98 8,555 8,554
Canada Province of Manitoba
6.125% 05/28/98 8,875 8,883
Cleveland Electric Illuminating Co.
7.19% 07/01/00 805 817
Electronic Data Systems Corp.
6.85% 05/15/00 3,000 3,054(b)
Ford Motor Credit Corp.
7.32% 05/23/02 9,850 9,967
GMAC Pass-Through Trust
6.375% 09/30/98 16,500 16,536(b)
Great Atlantic & Pacific Tea Inc.
9.125% 01/15/98 9,750 9,756
Great Northern Nekoosa Corp.
9.125% 02/01/98 4,300 4,309
Henderson Land Finance
6.00% 12/08/98 5,000 4,956
Ikon Capital Resource Inc.
6.27% 07/19/99 4,900 4,914
Korea Development Bank
9.60% 12/01/00 3,000 2,680
Lehman Brothers Holdings Inc.
6.875% 06/08/98 2,000 2,007
6.84% 09/25/98 4,250 4,271
Loewen Group International Inc.
6.70% 10/01/99 3,450 3,434(b)
Long Island Lighting
7.30% 07/15/99 9,000 9,119
Nabisco Inc.
6.30% 08/26/99 10,000 10,016(b)
National City Capital Trust
6.75% 06/01/99 9,850 9,925
New York New York
6.10% 02/01/98 4,000 4,000
- ----------
See Notes to Schedules of Investments (which are unaudited for the purposes of
this fund)
31
<PAGE>
S&S SHORT TERM INTEREST FUND (DOLLARS IN THOUSANDS) -- DECEMBER 31, 1997
(UNAUDITED)
Principal
Amount Value
- --------------------------------------------------------------------------------
New York State Dormitory
Authority Revenue
6.32% 04/01/99 $ 2,575 $ 2,582
News America Holdings Inc.
9.125% 10/15/99 3,890 4,069
Niagara Mohawk Power Corp.
9.50% 06/01/00 2,000 2,116
NWCG Holding Corp.
6.33% 06/15/99 9,865 9,019(d)
Oryx Energy Co.
9.50% 11/01/99 4,000 4,193
Pennzoil Co.
10.625% 06/01/01 6,700 7,069
Petroleos Mexicanos
7.75% 10/29/99 4,125 4,146(b)
7.60% 06/15/00 4,000 3,880(b)
PSI Energy Inc.
6.25% 12/15/98 5,000 5,005
Republic of Argentina
9.50% 11/30/02 5,252 5,223
Republic of Columbia
8.75% 10/06/99 3,950 4,068
Salomon Inc.
6.70% 12/01/98 5,925 5,957
Tele-Communications Inc.
7.13% 02/02/98 7,300 7,303
9.875% 04/01/98 5,000 5,042
6.469% 12/20/00 9,830 9,912
Time Warner Inc.
4.90% 07/29/99 6,000 5,881(b)
Videotron Holdings PLC
11.125% 07/01/04 6,900 6,572
Woolworth Corp.
7.00% 06/01/00 9,850 9,976
Total Corporate Notes
(Cost $242,169) 242,390
Mortgage Backed -- 38.7%
Federal Home Loan Mortgage Corp.
8.00% 08/01/03 18,785 19,200
7.50% 11/01/08 2,364 2,404
6.00% 12/01/08 1,557 1,549
23,153
Principal
Amount Value
- --------------------------------------------------------------------------------
Federal National Mortgage Assoc.
6.00% 05/01/01 $ 627 $ 625
9.00% 08/01/10 21,078 22,329
22,954
Government National Mortgage Assoc.
9.00% 08/15/09 - 12/15/09 55,347 58,858
9.50% 12/15/09 36,592 39,767
98,625
Collateralized Mortgage Obligations
Asset Securitization Corp.
6.50% 02/14/41 9,735 9,814
BCF
7.05% 12/25/08 28,378 28,466
CS First Boston Mortgage
Securities Corp.
6.425% 08/20/30 430 430
DLJ Mortgage Acceptance Corp.
6.99% 02/15/05 4,874 4,907(b)
Federal Home Loan Mortgage
Corp. REMIC
9.62% 09/15/05 19 196(g)
9.54% 07/15/06 35 686(g)
Federal National Mortgage Assoc.
6.59% 03/25/02 16,357 16,459
6.881% 11/17/02 9,318 9,435
7.373% 08/17/03 16,414 16,778
6.521% 09/17/04 14,153 14,205
7.00% 06/18/20 4,574 4,608(b)
Federal National Mortgage
Assoc. REMIC
6.27% 11/25/06 3,755 3,513(d,f)
GS Mortgage Securities Corp.
6.94% 07/13/30 9,632 9,813
Lehman FHA Title I Loan Trust
7.30% 05/25/17 2,168 2,186
Morgan Stanley Capital Inc.
6.85% 02/15/20 6,291 6,371
Salomon Brothers Mortgage
Securities Inc.
6.469% 09/20/01 28,354 28,387
8.125% 11/01/12 3,050 3,134
Structured Asset Securities Corp.
6.75% 06/25/30 21,704 21,758(b)
- ----------
See Notes to Schedules of Investments (which are unaudited for the purposes of
this fund)
32
<PAGE>
SCHEDULE OF INVESTMENTS (DOLLARS IN THOUSANDS)
(UNAUDITED)
Principal
Amount Value
- --------------------------------------------------------------------------------
Vornado Finance Corp.
6.36% 12/01/00 $ 2,000 $ 2,001(b)
183,147
Total Mortgage Backed
(Cost $326,800) 327,879
Total Investments in Securities
(Cost $834,278) 835,755
Number
of Shares Value
- --------------------------------------------------------------------------------
Short-Term Investments -- 2.2%
- --------------------------------------------------------------------------------
GEI Short Term Investment Fund
(COST $18,528) 18,528 18,528
Other Assets and Liabilities,
net (0.9%) (7,998)
- --------------------------------------------------------------------------------
NET ASSETS -- 100% $846,285
================================================================================
- ----------
See Notes to Schedules of Investments (which are unaudited for the purposes of
this fund)
33
<PAGE>
SCHEDULE OF INVESTMENTS (DOLLARS IN THOUSANDS) -- DECEMBER 31, 1997
(UNAUDITED)
S&S Money Market Fund
Principal Amortized
Amount Cost
- --------------------------------------------------------------------------------
Short-Term Investments -- 103.8%
- --------------------------------------------------------------------------------
U.S. Governments(d) -- 39.0%
Federal Farm Credit Bank
5.59% 04/07/98 $ 26,480 $ 26,097
Federal Home Loan Bank
5.17% 01/02/98 2,060 2,060
5.69% 01/14/98 17,810 17,775
5.72% 06/10/98 36,200 35,315
55,150
Federal Home Loan Mortgage Corp.
6.00% 01/02/98 27,900 27,895
5.62% 01/26/98 8,000 7,969
5.57% 02/11/98 34,880 34,662
5.68% 02/11/98 10,000 9,937
5.71% 02/17/98 4,000 3,971
5.69% 03/10/98 45,410 44,929
129,363
Federal National Mortgage Assoc.
5.91% 01/07/98 35,000 34,967
5.89% 01/08/98 15,000 14,984
5.62% 01/12/98 16,470 16,442
5.67% 02/06/98 15,480 15,395
5.78% 02/20/98 45,000 44,652
5.73% 06/19/98 14,000 13,638
140,078
International Bank for
Reconstruction & Development
5.57% 03/13/98 16,880 16,698
Total U.S. Governments
(Cost $367,386) 367,386
Commercial Paper(d) -- 47.6%
Abbey National PLC
5.61% 01/09/98 34,250 34,208(d)
5.823% 01/09/98 11,250 11,235
Associates Corp. of North America
5.802% 03/16/98 45,000 44,471
Chase Manhattan Corp.
5.741% 02/24/98 39,760 39,422
Principal Amortized
Amount Cost
- --------------------------------------------------------------------------------
Credit Suisse
5.80% 02/06/98 $ 12,600 $ 12,528
5.69% 02/12/98 33,080 32,864
First Union Corp.
5.743% 02/02/98 20,000 19,899
Halifax Building Society
5.754% 03/20/98 45,000 44,447
Merrill Lynch & Co. Inc.
5.826% 01/30/98 45,000 44,791
Morgan (J.P.) & Co. Inc.
5.806% 02/03/98 45,600 45,360
NationsBank Corp.
5.688% 02/12/98 25,380 25,214
5.777% 02/12/98 10,000 9,934
Norwest Corp.
5.75% 01/23/98 42,000 41,854
5.827% 01/23/98 3,600 3,587
Toronto Dominion Bank
5.741% 02/18/98 38,500 38,209
Total Commercial Paper
(Cost $448,023) 448,023
Certificates of Deposit -- 17.2%
Bank of Montreal
5.61% 01/08/98 34,250 34,250
5.87% 01/08/98 11,300 11,300
Deutsche Bank AG
5.60% 01/02/98 20,910 20,910
5.84% 01/02/98 7,000 7,000
Dresdner Bank AG
5.62% 01/22/98 34,300 34,300
5.72% 01/22/98 4,700 4,700
5.78% 01/22/98 6,600 6,600
Swiss Bank Corp.
5.77% 03/17/98 42,940 42,940
Total Certificates of Deposit
(Cost $162,000) 162,000
Total Short-Term Investments
(Cost $977,409) 977,409
Other Assets and Liabilities,
net (3.8%) (36,064)
- --------------------------------------------------------------------------------
NET ASSETS -- 100% $941,345
================================================================================
- ----------
See Notes to Schedules of Investments (which are unaudited for the purposes of
this fund)
34
<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, 1995, 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").
VALUE OF INVESTMENT OF $100 PER MONTH (A)
Investment Beginning January 1, 1995
<TABLE>
<CAPTION>
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) (d) Distributions (c)(e)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1995 $1,200 $ 29 $1,229 $ 13 $1,479 $ 131 $1,367
1996 2,400 114 2,514 80 3,499 433 3,023
1997 3,600 281 3,881 170 6,737 1152 5,442
</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 (c) (e) (c) (e) Interest Interest(c)(e)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1995 $1,200 $ 43 $1,259 $ 48 $1,296 $ 39 $1,239
1996 2,400 165 2,573 182 2,605 144 2,544
1997 3,600 380 3,996 410 4,122 325 3,925
</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 reinvested dividends assumes that dividends on GE stock were not
paid out to participant under the S&S Dividend Payout Option.
(c) Cumulative values include the year-end market value of Stock and the share
price of Mutual Fund, ST Fund, LT Fund and MM Shares purchased through the
reinvestment of income and dividends, as the case may be. Capital gains
distributions of $3.73, $4.29, and $6.52 per unit were paid on Mutual Fund
Shares in 1995, 1996, and 1997, respectively. The LT Fund did not have a
capital gains distribution during 1995, 1996 or 1997.
(d) The market value of Stock is based on the closing price as of the last
business day of the year, as reported by the Consolidated Tape of New York
Stock Exchange listed shares.
(e) The value of Mutual Fund, ST Fund, LT Fund and MM 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, 1995 in Bonds, Stock, Mutual Fund, ST Fund, LT Fund, and MM
Fund.
VALUE OF INVESTMENT OF $1,000
Investment Made on January 1, 1995
<TABLE>
<CAPTION>
Bonds Stock Mutual Fund
--------------------------- ---------------------------- -----------------------------
Redemption Value
Value Market Value Including
At Year Cumulative Including Cumulative Including Cumulative Reinvested
Ended Accrued Accrued Reinvested Reinvested Reinvested Distributions
Dec. 31 Interest Interest Dividends(b) Dividends(d) Distributions (c)(e)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1995 $ 44 $1,044 $ 24 $1,441 $ 141 $1,368
1996 91 1,091 72 2,034 315 1,683
1997 148 1,148 117 3,070 588 2,240
- ----------------------------------------------------------------------------------------------------------------------
</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 (c)(e) Distributions (c)(e) Interest Interest(c)(e)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1995 $ 69 $1,110 $ 79 $1,186 $ 61 $1,061
1996 139 1,172 160 1,236 120 1,120
1997 218 1,253 246 1,353 184 1,184
- ------------------------------------------------------------------------------------------------------------------------
</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, 1997:
MUTUAL FUND LT FUND
- --------------------------------------------------------------------------------
Management Expenses .04% .06%
Other Expenses .04% .05%
------- -------
Total Fund Operating Expenses .08% .11%
======= =======
The following expenses would be paid on a $1,000 investment utilizing the
expense ratio's shown above and assuming a 5% annual return:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
Mutual Fund $ 1 $ 3 $ 5 $ 10
LT Fund 1 4 6 14
The purpose of this table is to assist the investor in understanding the
expenses that an investor in the Funds 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.
See page 35 for explanation of notes (b), (c), (d) and (e).
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. (Effective January 1, 1998, Life Insurance is no longer
available under the S&SP.)
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
37
<PAGE>
GE S&S PROGRAM DISCLOSURE STATEMENT
confidential nature of this information. The Trustees of the S&SP (c/o General
Electric Investment Corporation, 3003 Summer Street, Stamford, CT 06904
(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
Prior to January 1, 1998, any participant could elect to apply 1% or 1/2% of
his or her earnings to the purchase of life insurance. Such purchase was from
the participant's after-tax savings. The option to purchase life insurance under
the S&SP and the benefits payable thereunder were more fully described in the
applicable 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
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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, or (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.
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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.
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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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<PAGE>
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 06904, 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. 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 06904 (203-326-2300).
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S&S MUTUAL FUNDS INVESTMENT TEAM
PORTFOLIO MANAGERS
S&S Program Mutual Fund
Team led by Eugene K. Bolton
S&S Long Term Interest Fund
Team led by 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
Thomas J. Szkutak, Trustee, EVP, Chief Financial Officer
Donald W. Torey, Trustee, EVP, Alternative Investments and Real Estate
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 419631
Kansas City, MO 64141-6631
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 investment 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
Bulk Rate
U.S. Postage
PAID
Canton, MA
Permit No. 313
Distributed by GE Investment Distributors, Inc.,
member NASD and SIPC SS-2 (2/98)
