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, 1998
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>
<TABLE>
<CAPTION>
REQUIRED INFORMATION
A. Financial Statements and Schedules: Page
----
<S> <C>
Independent Auditors' Report 3
Statements of Net Assets Available for Plan
Benefits as of December 31, 1998 and 1997 4
Statements of Changes in Net Assets Available for
Plan Benefits for the Years Ended December 31, 1998 and 1997 5
Notes to Financial Statements 6-18
Schedule I Line 27a - Schedule of Assets Held for Investment Purposes
- Assets Held at the End of the Plan Year 19-28
Schedule II Line 27a - Schedule of Assets Held for Investment Purposes
- Assets Acquired and Disposed of Within the Plan Year 29
Schedule III Line 27d - Schedule of Reportable Transactions 30
</TABLE>
B. Exhibits
(23) Consent of Independent Auditors
(99) GE S&S Program Mutual Funds 1998 Annual Report
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act
of 1934, the trustees (or other persons who administer the employee benefit
plan) have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
GE Savings and Security Program
(Name of Plan)
Date: June 25, 1999 Philip D. Ameen
------------- ---------------------------------------------
Vice President and Comptroller
<PAGE>
1
GE SAVINGS AND SECURITY PROGRAM
Financial Statements and Supplemental Schedules
December 31, 1998 and 1997
(With Independent Auditors' Report Thereon)
<PAGE>
2
GE SAVINGS AND SECURITY PROGRAM
December 31, 1998 and 1997
Table of Contents
Page
Number(s)
---------
Independent Auditors' Report 3
Statements of Net Assets Available for Plan
Benefits as of December 31, 1998 and 1997 4
Statements of Changes in Net Assets Available for
Plan Benefits for the Years Ended December 31, 1998 and 1997 5
Notes to Financial Statements 6-18
Schedule I Line 27a - Schedule of Assets Held for Investment Purposes
- Assets Held at the End of the Plan Year 19-28
Schedule II Line 27a - Schedule of Assets Held for Investment Purposes
- Assets Acquired and Disposed of Within the Plan Year 29
Schedule III Line 27d - Schedule of Reportable Transactions 30
<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, 1998
and 1997, 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, 1998 and 1997, 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, II and III 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.
/s/ KPMG LLP
May 7, 1999
<PAGE>
4
GE SAVINGS AND SECURITY PROGRAM
Statements of Net Assets Available for Plan Benefits
December 31, 1998 and 1997
(in thousands)
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
ASSETS
- ------
Investments at fair value (Cost: $12,642,406 and
$11,016,601, respectively) (note 3):
General Electric Company common stock (note 6) $16,627,154 $12,535,932
Registered investment companies:
S&S Long Term Interest Fund 2,135,262 1,992,480
S&S Program Mutual Fund 2,499,060 2,061,263
U.S. government and agency debt obligations 1,091,187 753,020
Loans to participants (note 4) 428,467 411,689
Corporate bonds and notes 237,540 256,116
U.S. Savings Bonds (Series E & EE) 198,183 214,819
Short-term money market instruments 896,099 654,141
Loans secured by mortgages 87,952 161,434
Other 3,979 15,873
----------- -----------
Total investments 24,204,883 19,056,767
----------- -----------
Accrued dividends and interest 63,306 56,753
Due from brokers -- 120,550
----------- -----------
Total assets 24,268,189 19,234,070
----------- -----------
LIABILITIES
- -----------
Due to brokers -- 119,566
Liability for collateral deposits (note 3) -- 15,452
Other liabilities 29,932 31,098
----------- -----------
Total liabilities 29,932 166,116
----------- -----------
Net assets available for plan benefits (note 7) $24,238,257 $19,067,954
=========== ===========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
5
GE SAVINGS AND SECURITY PROGRAM
Statements of Changes in Net Assets Available for Plan Benefits
Years Ended December 31, 1998 and 1997
(in thousands)
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Additions to net assets attributed to:
Investment income:
Net realized and unrealized appreciation
in value of investments $ 4,960,118 $ 4,352,773
Interest and dividend income:
General Electric Company common stock 214,260 183,845
Registered investment companies 479,882 383,454
Interest 144,142 138,867
----------- -----------
5,798,402 5,058,939
----------- -----------
Contributions:
Employee 628,390 560,560
Employer 211,218 195,590
----------- -----------
839,608 756,150
----------- -----------
Total additions 6,638,010 5,815,089
Deductions from net assets attributed to:
Participant withdrawals (1,467,707) (1,054,384)
----------- -----------
Net increase 5,170,303 4,760,705
Net assets available for plan benefits (note 7):
Beginning of year 19,067,954 14,307,249
----------- -----------
End of year $24,238,257 $19,067,954
=========== ===========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
6
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements
December 31, 1998 and 1997
(1) Description of the Plan
-----------------------
GE Savings and Security Program (the "Plan") is a defined contribution
plan sponsored by General Electric Company (the "Company") and its
participating affiliates. 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"). Information
concerning the Plan, including benefits, vesting provisions and effects
of plan termination is included in plan handbooks and other material
distributed to participants.
Employee Contributions and Investment Funds
-------------------------------------------
Eligible employees of the Company and its participating affiliates may
participate in the Plan by investing a portion of their earnings
(generally up to 7% with employer partial matching and an additional 10%
without any employer 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 and medium-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. Only participant after-tax
contributions may be invested in the U.S. Bond Fund.
Prior to January 1, 1998, eligible employees could elect to apply either
0.5% or 1.0% of earnings to purchase life insurance; effective January 1,
1998, the life insurance option was removed from the Plan. 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 in 1997. Total
life insurance in force amounted to $4.5 billion at December 31, 1997.
<PAGE>
7
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements, continued
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 or split the amount equally between two other investment
funds. The U.S. Bond Fund does not accept switches from other investment
funds.
The Internal Revenue Code sets out maximum limits on participant pre-tax
contributions. The limit was $10,000 and $9,500 for 1998 and 1997,
respectively.
Employer Contributions
----------------------
The Plan generally provides for employer 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 U.S. Savings Bonds.
Rollovers and Transfers from Other Qualified Plans
--------------------------------------------------
Subject to Company approval, participants may elect to roll over amounts
attributable to other plans in accordance with the Internal Revenue Code.
For the years ended December 31, 1998 and 1997, transfers from other
qualified plans accounted for $54.1 million and $45.1 million,
respectively, of employee contributions included in the statements of
changes in net assets available for plan benefits.
Withdrawals
-----------
Subject to certain limitations prescribed by the Plan and the 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 based on the monthly average of
the composite yield on corporate bonds, as published by Moody's Investors
Service, for the month that is two months before the month in which the
loan is requested.
A participant may have no more than two outstanding loans from the Plan
at any time and may not obtain more than one such loan during any
calendar year.
Loans are repaid with interest in equal payments over the term of the
loan by payroll deductions, personal check or other such methods as may
be required. Participants may repay the entire principal amount by check
with written notice and without penalty beginning three months after the
date of the loan.
In the event of a loan default, as defined by the Internal Revenue
Service, the Plan will report the amount of the loan principal and
accrued interest as a withdrawal.
(continued)
<PAGE>
8
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements, continued
Vesting
-------
Participants are fully vested in their employee and employer
contributions.
Plan Termination and Amendment
------------------------------
Although the Company has not expressed any intent to do so, it has the
right under the Plan (subject to applicable contractual requirements) to
discontinue its 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. 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 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.
(continued)
<PAGE>
9
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements, continued
(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.
(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,
1998 and 1997:
Fair Value
----------
(in thousands)
1998
----
GE common stock 163,011,314 shares $16,627,154
S&S Long Term Interest Fund 185,191,643 shares 2,135,262
S&S Program Mutual Fund 43,514,903 shares 2,499,060
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
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 ST 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 zero and $15.5 million at December 31, 1998 and 1997, respectively.
The value of cash collateral obtained and reinvested in short-term
investments is reflected as a liability in the Plan's financial
statements.
(continued)
<PAGE>
10
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements, continued
(4) Loans to Participants
---------------------
The following table summarizes the changes in loans to participants.
Year Ended December 31
----------------------
1998 1997
---- ----
(in thousands)
Loan balance - beginning of year $ 411,689 $ 383,826
Loans made 212,084 207,315
Less: Loan repayments
- Reinvestments (182,485) (170,274)
- Withdrawals (12,821) (9,178)
----------- -----------
Loan balance - end of year $ 428,467 $ 411,689
=========== ===========
(5) Tax Status
----------
The Internal Revenue Service has determined and informed the Company by a
letter dated September 2, 1998, that the Plan is qualified under the
appropriate sections of the Internal Revenue Code.
The portion of a participant's compensation contributed to the Plan as a
pre-tax contribution and the Company's matching contribution are not
subject to Federal income tax when such contributions are credited to
participant accounts, subject to certain limitations. These amounts and
any investment earnings may be included in the participant's gross
taxable income for the year in which such amounts are withdrawn from the
Plan.
(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 the value of these securities. Such net realized gains
and net unrealized appreciation were $4.8 billion and $4.0 billion for
the years ended December 31, 1998 and 1997, 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, 1998 and 1997.
<PAGE>
11
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements
Net Assets Available for Plan Benefits
December 31, 1998
(in thousands except participant unit value and number of participants)
<TABLE>
<CAPTION>
Assets GE Stock Fund LT Fund Mutual Fund ST Fund MM Fund
- ------ ------------- ------- ----------- ------- -------
<S> <C> <C> <C> <C> <C>
Investments at fair value $16,627,154 $2,135,262 $2,499,060 $ 888,961 $1,417,679
Accrued dividends and interest 50,835 -- -- 10,379 2,044
----------- ---------- ---------- ---------- ----------
Total assets 16,677,989 2,135,262 2,499,060 899,340 1,419,723
----------- ---------- ---------- ---------- ----------
Liabilities
- -----------
Other liabilities 16,976 -- -- 446 10,118
----------- ---------- ---------- ---------- ----------
Total liabilities 16,976 -- -- 446 10,118
----------- ---------- ---------- ---------- ----------
Net assets available for plan benefits $16,661,013 $2,135,262 $2,499,060 $ 898,894 $1,409,605
=========== ========== ========== ========== ==========
Participant units outstanding 162,845 185,192 43,515 86,933 140,961
=========== ========== ========== ========== ==========
Participant unit value $ 102.31<F1> $ 11.53 $ 57.43 $ 10.34 $ 10.00
=========== ========== ========== ========== ==========
Number of participants 191,261 87,959 89,299 63,001 55,682
=========== ========== ========== ========== ==========
<FN>
<F1> Participant unit value includes the value of a share of GE stock of $102.00
and the unit value of accrued dividends in the fund.
(continued)
</FN>
</TABLE>
<PAGE>
12
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements
Net Assets Available for Plan Benefits, continued
December 31, 1998
(in thousands except participant unit value and number of participants)
<TABLE>
<CAPTION>
Total Loan and
U.S. Bond Investment Other Program
Assets Fund Funds Accounts Total
- ------ -------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Investments at fair value $203,802 $23,771,918 $432,965 $24,204,883
Accrued dividends and interest -- 63,258 48 63,306
-------- ----------- -------- -----------
Total assets 203,802 23,835,176 433,013 24,268,189
-------- ----------- -------- -----------
Liabilities
- -----------
Other liabilities -- 27,540 2,392 29,932
-------- ----------- -------- -----------
Total liabilities -- 27,540 2,392 29,932
-------- ----------- -------- -----------
Net assets available for plan benefits $203,802 $23,807,636 $430,621 $24,238,257
======== =========== ======== ===========
Participant units outstanding <F1>
========
Participant unit value <F1>
========
Number of participants 27,939
========
<FN>
<F1> Not applicable as individual participant values are determined based upon
the time at which investments are made.
</FN>
</TABLE>
<PAGE>
13
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)
<TABLE>
<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
=========== ========== ========== ======== ========
<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>
(continued)
<PAGE>
14
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)
<TABLE>
<CAPTION>
Total Loan and
U.S. Bond Investment Other Program
Assets 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 <F1>
========
Participant unit value <F1>
========
Number of participants 30,812
========
<FN>
<F1> Not applicable as individual participant values are determined based upon
the time at which investments are made.
</FN>
</TABLE>
<PAGE>
15
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements
Changes in Net Assets Available for Plan Benefits
Year Ended December 31, 1998
(in thousands)
<TABLE>
<CAPTION>
GE Stock Fund LT Fund Mutual Fund ST Fund MM Fund
------------- ----------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income:
Net realized and unrealized appreciation
(depreciation)in value of investments $ 4,782,798 $ (5,331) $ 165,731 $ 4,775 $ --
Interest and dividends 214,260 167,664 312,218 52,835 61,479
------------ ----------- ----------- --------- -----------
4,997,058 162,333 477,949 57,610 61,479
------------ ----------- ----------- --------- -----------
Contributions:
Employee 407,268 40,792 112,373 35,750 19,296
Employer 161,604 9,773 23,067 10,816 5,958
------------ ----------- ----------- --------- -----------
568,872 50,565 135,440 46,566 25,254
------------ ----------- ----------- --------- -----------
Total additions 5,565,930 212,898 613,389 104,176 86,733
------------ ----------- ----------- --------- -----------
Deductions from and other changes in net
assets attributed to:
Participant withdrawals (884,535) (158,797) (147,938) (62,686) (168,321)
Net loan transactions 25,483 (8,580) (9,337) (1,769) (4,633)
Interfund transfers (618,309) 97,261 (18,317) 11,902 535,017
------------ ----------- ----------- --------- -----------
Total deductions and other changes in net assets (1,477,361) (70,116) (175,592) (52,553) 362,063
------------ ----------- ----------- --------- -----------
Net increase (decrease) 4,088,569 142,782 437,797 51,623 448,796
Net assets available for plan benefits:
Beginning of year 12,572,444 1,992,480 2,061,263 847,271 960,809
------------ ----------- ----------- --------- -----------
End of year $ 16,661,013 $ 2,135,262 $ 2,499,060 $ 898,894 $ 1,409,605
============ =========== =========== ========= ===========
</TABLE>
(continued)
<PAGE>
16
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements
Changes in Net Assets Available for Plan Benefits, continued
Year Ended December 31, 1998
(in thousands)
<TABLE>
<CAPTION>
Loan and
Total Other
U.S. Bond Investment Program
Fund Fund 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 $ 10,816 $ 4,958,789 $ 1,329 $ 4,960,118
Interest and dividends -- 808,456 29,828 838,284
----------- ------------ ----------- ------------
10,816 5,767,245 31,157 5,798,402
----------- ------------ ----------- ------------
Contributions:
Employee 12,911 628,390 -- 628,390
Employer -- 211,218 -- 211,218
----------- ------------ ----------- ------------
12,911 839,608 -- 839,608
----------- ------------ ----------- ------------
Total additions 23,727 6,606,853 31,157 6,638,010
----------- ------------ ----------- ------------
Deductions from and other changes in net assets attributed to:
Participant withdrawals (32,609) (1,454,886) (12,821) (1,467,707)
Net loan transactions (922) 242 (242) --
Interfund transfers (7,554) -- -- --
----------- ------------ ----------- ------------
Total deductions and other changes in net assets (41,085) (1,454,644) (13,063) (1,467,707)
----------- ------------ ----------- ------------
Net increase (decrease) (17,358) 5,152,209 18,094 5,170,303
Net assets available for plan benefits:
Beginning of year 221,160 18,655,427 412,527 19,067,954
----------- ------------ ----------- ------------
End of year $ 203,802 $ 23,807,636 $ 430,621 $ 24,238,257
=========== ============ =========== ============
</TABLE>
<PAGE>
17
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements
Changes in Net Assets Available for Plan Benefits
Year Ended December 31, 1997
(in thousands)
<TABLE>
<CAPTION>
GE Stock Fund LT Fund Mutual Fund ST Fund MM Fund
------------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C>
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
============ =========== =========== ========= =========
</TABLE>
(continued)
<PAGE>
18
GE SAVINGS AND SECURITY PROGRAM
Notes to Financial Statements
Changes in Net Assets Available for Plan Benefits, continued
Year Ended December 31, 1997
(in thousands)
<TABLE>
<CAPTION>
Total Loan and
U.S. Bond Investment Other Program
Fund Fund 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>
19
Schedule I
GE SAVINGS AND SECURITY PROGRAM
Line 27a - Schedule of Assets Held for Investment Purposes
Assets Held at the end of the Plan Year
<TABLE>
<CAPTION>
Description
- -----------
Employer Securities Cost Market
- ------------------- ---- ------
<S> <C> <C>
CORPORATE STOCKS - COMMON
GENERAL ELECTRIC COMPANY (163,011,314 shares) $5,624,593,305 $16,627,153,835
-------------- ---------------
Shares of Registered Investment Companies
- -----------------------------------------
S&S LONG TERM INTEREST FUND (185,191,643 shares) 2,121,149,008 2,135,262,121
S&S PROGRAM MUTUAL FUND (43,514,903 shares) 2,021,939,418 2,499,060,308
-------------- ---------------
Total Registered Investment Companies 4,143,088,426 4,634,322,429
============== ===============
</TABLE>
(continued)
<PAGE>
20
Schedule I
GE SAVINGS AND SECURITY PROGRAM
Line 27a - Schedule of Assets Held for Investment Purposes, continued
Assets Held at the end of the Plan Year
Description
- ----------- Coupon
Rate Maturity Cost Market
---- -------- ---- ------
U.S. Government and
Agency Debt Obligations
- ------------------------------
FEDERAL HOME LN BK CONS D * 03/19/1999 $76,862,908 $76,862,908
UNITED STATES TREAS NTS 6.625% 03/31/2002 60,299,469 60,018,163
FEDERAL NATL MTG ASSN DIS * 04/01/1999 55,660,498 55,660,498
UNITED STATES TREAS NTS 6.625% 07/31/2001 55,099,980 54,847,614
FEDERAL HOME LN BK CONS DSC NT * 01/04/1999 48,270,420 48,270,420
FEDERAL NATL MTG ASSN DIS * 02/18/1999 44,698,200 44,698,200
FEDERAL NATL MTG ASSN DIS * 05/06/1999 43,424,343 43,424,343
UNITED STATES TREAS NTS 5.750% 11/15/2000 43,049,993 43,209,056
FEDERAL HOME LN BK CONS D * 03/31/1999 40,854,202 40,854,202
FEDERAL HOME LN MTG DISC * 02/26/1999 39,693,867 39,693,867
FEDERAL NATL MTG ASSN 5.100% 09/25/2000 38,383,290 38,101,116
FEDERAL HOME LN MTG DISC * 02/17/1999 37,168,238 37,168,238
FEDERAL NATL MTG ASSN DIS * 03/19/1999 36,803,703 36,803,703
UNITED STATES TREAS NTS 5.875% 09/30/2002 34,375,648 34,766,927
FEDERAL HOME LN MTG DISC * 01/14/1999 34,161,180 34,161,180
FEDERAL FARM CR BK DISC N * 01/19/1999 30,417,586 30,417,586
UNITED STATES TREAS NTS 5.750% 11/30/2002 27,356,487 28,133,471
FEDERAL HOME LN MTG DISC NTS * 01/28/1999 24,726,925 24,726,925
FEDERAL NATL MTG ASSN MTN 5.380% 01/16/2001 24,319,064 24,511,330
FEDERAL HOME LN MTG DISC * 03/30/1999 22,395,620 22,395,620
GNMA POOL 9.500% 12/15/2009 22,437,525 22,034,066
GNMA POOL 9.000% 08/15/2009 21,304,498 21,163,997
UNITED STATES TREAS NTS 6.500% 05/31/2002 20,668,570 21,115,600
GNMA POOL 9.000% 12/15/2009 20,628,699 20,376,067
FNMA POOL 9.000% 08/01/2010 16,446,956 16,313,367
* These are discounted instruments and therefore coupon rate does not apply.
(continued)
<PAGE>
21
Schedule I
GE SAVINGS AND SECURITY PROGRAM
Line 27a - Schedule of Assets Held for Investment Purposes, continued
Assets Held at the end of the Plan Year
Description
- ----------- Coupon
Rate Maturity Cost Market
---- -------- ---- ------
U.S. Government and
Agency Debt Obligations (continued)
- -----------------------------------
FEDERAL HOME LN BK CONS D * 01/13/1999 15,874,984 15,874,984
FEDERAL HOME LN BKS 5.625% 03/19/2001 15,498,796 15,356,258
FEDERAL FARM CR BK DISC N * 02/12/1999 14,918,013 14,918,013
FEDERAL NATL MTG ASSN REMIC 6.221% 05/25/2014 14,245,069 14,360,235
FEDERAL NATL MTG ASSN MTN 5.560% 07/24/2000 13,868,130 14,009,315
FED HM LN PC 6.590% 09/01/2002 12,934,259 13,081,132
FED HM LN PC 8.000% 08/01/2003 12,485,703 12,407,063
FEDERAL NATL MTG ASSN GTD 6.504% 09/17/2004 9,794,516 9,847,096
FEDERAL NATL MTG ASSN MTN 5.670% 05/26/2000 9,508,997 9,612,821
FEDERAL HOME LN MTG CORP 5.929% 05/25/2006 9,001,721 9,021,476
FEDERAL NATL MTG ASSN DIS * 02/25/1999 8,237,865 8,237,865
UNITED STATES TREAS NTS 5.375% 02/15/2001 7,017,296 7,157,936
FEDERAL NATL MTG ASSN DIS * 04/08/1999 6,909,806 6,909,806
FEDERAL NATL MTG ASSN 6.881% 11/17/2006 5,442,830 5,504,677
GNMA POOL 9.500% 12/15/2009 3,638,669 3,573,741
GNMA POOL 9.500% 12/15/2009 3,515,077 3,503,776
FEDERAL NATL MTG ASSN GTD 7.000% 06/18/2020 2,498,421 2,502,331
FEDERAL NATL MTG ASSN * 11/25/2006 2,067,059 1,702,724
FED HM LN PC 7.500% 11/01/2008 1,637,689 1,605,159
FED HM LN PC 6.000% 12/01/2008 958,255 990,479
FEDERAL HOME LN MTG DISC * 01/08/1999 507,537 507,537
FEDERAL HOME LN MTG PC GTD 2.000% 07/15/2006 16,169 351,785
FNMA POOL 6.000% 05/01/2001 309,416 320,719
FEDERAL HOME LN MTG PC GTD Variable 09/15/2005 2,883 101,224
------------- -------------
Total U.S. Government
and Agency Debt Obligations 1,090,397,029 1,091,186,616
============= =============
* These are discounted instruments and therefore coupon rate does not apply.
(continued)
<PAGE>
22
Schedule I
GE SAVINGS AND SECURITY PROGRAM
Line 27a - Schedule of Assets Held for Investment Purposes, continued
Assets Held at the end of the Plan Year
Description
- ----------- Coupon
Loans to Participants Rate Maturity Cost Market
- --------------------- ---- -------- ---- ------
VARIOUS 6.75-12.51% 1 month to $428,467,464 $428,467,464
15 years ------------ ------------
Debt Securities
- ---------------
Corporate Bonds and
Notes - Preferred
- -------------------
CHEMICAL MASTER CR CARD TR 1 5.550% 09/15/2003 12,562,742 12,689,468
AT + T UNVL CARD MASTER TR 5.950% 10/17/2002 10,936,341 10,857,388
PREMIER AUTO TR 6.340% 01/06/2002 9,966,352 10,141,423
FLEET CR CARD LLC MED TERM SR 6.450% 10/30/2000 9,823,763 9,920,333
FORD MTR CR MEDIUM TERM NTS 7.320% 05/23/2002 9,923,651 9,899,250
PREMIER AUTO TR 5.770% 01/06/2002 9,749,983 9,795,630
MBNA MASTER CR CARD TR II 6.050% 11/15/2002 9,824,281 9,787,882
FORD CR AUTO OWNER TR 5.650% 10/15/2001 9,737,965 9,764,350
MONSANTO CO 5.375% 12/01/2001 9,161,421 9,138,676
DISCOVER CARD MT 1 5.800% 09/16/2003 6,969,272 7,052,500
FORD MTR CR CO 6.500% 02/28/2002 6,073,464 6,182,700
AMERICAN EXPRESS MASTER TR 5.375% 07/15/2001 4,238,903 4,209,304
CARNIVAL CORP 5.650% 10/15/2000 3,976,587 4,010,360
ELECTRONIC DATA SYS CORP 6.850% 05/15/2000 2,999,267 3,066,360
GOLDMAN SACHS GROUP L P 6.200% 12/15/2000 1,937,142 1,955,206
LG G CAP CORP 144A 5.750% 11/01/2001 1,525,000 1,514,462
LEHMAN FHA TITLE I LN TR 7.300% 05/25/2017 1,397,784 1,409,152
----------- -----------
Total Corporate Bonds and
Notes - Preferred 120,803,918 121,394,444
=========== ===========
(continued)
<PAGE>
23
Schedule I
GE SAVINGS AND SECURITY PROGRAM
Line 27a - Schedule of Assets Held for Investment Purposes, continued
Assets Held at the end of the Plan Year
Description
- ----------- Coupon
Issuer Rate Maturity Cost Market
- ------ ---- -------- ---- ------
Corporate Bonds and
Notes - All Other
- --------------------
NABISCO PASS THROUGH ASSET TR 6.300% 08/26/1999 $ 9,996,982 $ 9,993,700
NATIONAL CITY CAP TR I 6.750% 06/01/1999 9,847,901 9,885,756
WOOLWORTH CORP 7.000% 06/01/2000 9,872,918 9,827,345
PREMIER AUTO TR 5.780% 04/08/2003 9,390,094 9,387,141
LONG ISLAND LTG CO 7.300% 07/15/1999 9,043,412 9,102,330
TYCO INTL LTD 6.500% 11/01/2001 8,927,286 8,913,460
PENNZOIL CO 10.625% 06/01/2001 6,799,550 6,812,962
RAYTHEON CO 5.950% 03/15/2001 6,737,881 6,809,265
CONSECO INC MEDIUM TERM SR NTS 6.400% 06/15/2001 6,474,394 6,242,702
CLEVELAND ELEC ILLUM CO 7.190% 07/01/2000 5,890,950 5,890,798
FEDERATED DEPT STORES INC DEL 6.125% 09/01/2001 4,479,969 4,530,624
ARKLA INC 8.875% 07/15/1999 4,190,116 4,218,185
ORYX ENERGY CO 9.500% 11/01/1999 4,069,270 4,106,000
USA WASTE SVCS INC 6.125% 07/15/2001 3,992,957 4,026,320
PETROLEOS MEXICANOS 7.600% 06/15/2000 4,000,000 3,960,000
KOREA DEV BK 9.600% 12/01/2000 3,122,492 3,013,350
TIME WARNER PASS THRU ASSET TR 6.100% 12/30/2001 2,154,121 2,174,475
NIAGARA MOHAWK PWR CORP 9.500% 06/01/2000 2,074,099 2,097,820
VORNADO FIN CORP 6.360% 12/01/2000 2,002,064 2,021,875
VASTAR RES INC 6.000% 04/20/2000 1,199,586 1,207,344
WORLDCOM INC GA 6.125% 08/15/2001 949,130 965,181
WESTINGHOUSE EL CBS CORP 8.875% 06/01/2001 939,402 958,473
----- ---------- ----------- -----------
Total Corporate Bonds and
Notes - All Other 116,154,574 116,145,106
----------- -----------
Total Corporate Bonds
and Notes 236,958,492 237,539,550
----------- -----------
(continued)
<PAGE>
24
Schedule I
GE SAVINGS AND SECURITY PROGRAM
Line 27a - Schedule of Assets Held for Investment Purposes, continued
Assets Held at the end of the Plan Year
Description
- -----------
U.S. Savings Bonds (Series E and EE) Units Cost Market
- ------------------------------------ ----- ---- ------
1959 US SAVINGS BOND E SERIES 122 $ 2,288 $ 22,232
1960 US SAVINGS BOND E SERIES 104 1,950 18,781
1961 US SAVINGS BOND E SERIES 92 1,725 16,560
1962 US SAVINGS BOND E SERIES 131 2,456 23,164
1963 US SAVINGS BOND E SERIES 151 2,831 26,246
1964 US SAVINGS BOND E SERIES 195 3,656 33,259
1965 US SAVINGS BOND E SERIES 198 3,713 29,050
1969 US SAVINGS BOND E SERIES 1,122 21,038 147,819
1970 US SAVINGS BOND E SERIES 1,334 25,013 172,285
1971 US SAVINGS BOND E SERIES 1,821 34,144 202,405
1972 US SAVINGS BOND E SERIES 2,223 41,681 243,201
1973 US SAVINGS BOND E SERIES 3,212 60,225 343,376
1974 US SAVINGS BOND E SERIES 5,012 93,975 509,471
1975 US SAVINGS BOND E SERIES 6,700 125,625 657,215
1976 US SAVINGS BOND E SERIES 8,723 163,556 825,708
1977 US SAVINGS BOND E SERIES 12,171 228,206 1,094,688
1978 US SAVINGS BOND E SERIES 19,416 364,050 1,432,143
1979 US SAVINGS BOND E SERIES 33,048 619,650 2,358,353
1980 US SAVINGS BOND EE SERIES 12,462 623,100 2,454,003
1981 US SAVINGS BOND EE SERIES 12,682 634,100 2,227,693
1982 US SAVINGS BOND EE SERIES 14,748 737,400 2,389,936
1983 US SAVINGS BOND EE SERIES 26,965 1,348,250 3,710,837
1984 US SAVINGS BOND EE SERIES 29,020 1,451,000 3,649,027
1985 US SAVINGS BOND EE SERIES 38,035 1,901,750 4,515,433
1986 US SAVINGS BOND EE SERIES 96,238 4,811,900 10,812,024
1987 US SAVINGS BOND EE SERIES 102,498 5,124,900 9,965,562
1988 US SAVINGS BOND EE SERIES 122,416 6,120,800 11,226,687
(continued)
<PAGE>
25
Schedule I
GE SAVINGS AND SECURITY PROGRAM
Line 27a - Schedule of Assets Held for Investment Purposes, continued
Assets Held at the end of the Plan Year
Description
- -----------
U.S. Savings Bonds (Series E and EE) Units Cost Market
- ------------------------------------ ----- ---- ------
1989 US SAVINGS BOND EE SERIES 175,807 $ 8,790,350 $ 15,188,210
1990 US SAVINGS BOND EE SERIES 181,443 9,072,150 14,764,749
1991 US SAVINGS BOND EE SERIES 190,140 9,507,000 14,596,261
1992 US SAVINGS BOND EE SERIES 314,102 15,705,100 22,685,939
1993 US SAVINGS BOND EE SERIES 224,149 11,207,450 14,861,530
1994 US SAVINGS BOND EE SERIES 182,521 9,126,050 10,906,467
1995 US SAVINGS BOND EE SERIES 75,419 3,770,950 4,395,459
1996 US SAVINGS BOND EE SERIES 278,747 13,937,350 15,424,139
1997 US SAVINGS BOND EE SERIES 259,487 12,974,350 13,795,158
1998 US SAVINGS BOND EE SERIES 246,115 12,305,750 12,458,081
---------- -----------
Total U.S. Savings Bonds 130,945,482 198,183,151
---------- -----------
(continued)
<PAGE>
26
Schedule I
GE SAVINGS AND SECURITY PROGRAM
Line 27a - Schedule of Assets Held for Investment Purposes, continued
Assets Held at the end of the Plan Year
Description
- -----------
Short Term Money Market
Instruments
- ----------------------- Coupon
Rate Maturity Cost Market
---- -------- ---- ------
Interest Bearing Time Deposits
and Commercial Paper
- ------------------------------
BANK OF NOVA SCOTIA 5.080% 02/19/1999 $58,512,601 $58,512,601
BAYERISCHE VEREINSBANK AG NY 5.250% 01/25/1999 51,319,870 51,319,870
SOCIETE GENERALE INSTL CTF DEP 5.200% 01/25/1999 50,560,000 50,560,000
ALGEMENE BK NEDERLAND N V 5.140% 03/04/1999 50,000,000 50,000,000
REPUBLIC NY CORP BA 5.050% 03/19/1999 50,000,000 50,000,000
DEUTSCHE BANK FIN INC 5.890% 01/04/1999 49,975,458 49,975,458
MORGAN J P + CO INC 5.120% 02/16/1999 49,672,889 49,672,889
DRESDNER BK AG 5.340% 01/19/1999 47,490,000 47,490,000
ASSOC CORP OF NORTH AMER 5.250% 02/04/1999 47,264,479 47,264,479
MORGAN STANLEY DEAN WITTER DIS 5.290% 02/24/1999 47,133,008 47,133,008
RABOBANK USA FINANCIAL CORP 5.240% 01/13/1999 46,917,907 46,917,907
BANK OF MONTREAL (CHICAGO) 5.300% 01/08/1999 46,840,000 46,840,000
UBS FINANCE DELAWARE INC 5.210% 01/11/1999 45,933,428 45,933,428
CANADIAN IMPERIAL 5.140% 01/25/1999 45,000,000 45,000,000
HALIFAX PLC YRS 1+2 5.060% 01/08/1999 39,181,412 39,181,412
ABBEY NATL NO AMERICA 5.110% 02/08/1999 31,548,906 31,548,906
ABBEY NATL NO AMERICA 5.179% 02/08/1999 25,857,865 25,857,865
BANK AMERICA 4.750% 01/04/1999 21,320,000 21,320,000
DEUTSCHE BANK FIN INC 6.000% 01/04/1999 12,493,750 12,493,750
HALIFAX PLC YRS 1+2 5.200% 01/08/1999 7,991,911 7,991,911
BANK OF MONTREAL (CHICAGO) 5.300% 01/08/1999 5,000,000 5,000,000
ABN AMRO 5.150% 03/01/1999 4,000,000 4,000,000
BANK AMERICA 4.750% 01/04/1999 4,000,000 4,000,000
UBS FINANCE DELAWARE INC 5.306% 01/11/1999 2,686,035 2,686,035
(continued)
<PAGE>
27
Schedule I
GE SAVINGS AND SECURITY PROGRAM
Line 27a - Schedule of Assets Held for Investment Purposes, continued
Assets Held at the end of the Plan Year
Description
- -----------
Short Term Money Market
Instruments
- ----------- Coupon
Rate Maturity Cost Market
---- -------- ---- ------
Interest Bearing Time Deposits
and Commercial Paper (continued)
- ---------------------------------
RABOBANK NEDERLAND N. V 5.260% 01/13/1999 $ 1,697,019 $ 1,697,019
HALIFAX PLC YRS 1+2 5.380% 01/11/1999 1,497,759 1,497,759
DRESDNER US FINANCE 5.400% 01/05/1999 1,199,280 1,199,280
STATE STREET CAYMAN ISLANDS 5.000% 01/04/1999 1,060,000 1,060,000
----------- -----------
Total Interest Bearing Time
Deposits and Commercial
Paper 846,153,577 846,153,577
----------- -----------
Short-Term Investment Fund
- --------------------------
GE I SHORT TERM INVESTMENT FD Variable N/A 49,888,489 49,888,489
----------- -----------
Non-Interest Bearing Cash
- -------------------------
NON-INTEREST BEARING CASH 56,601 56,601
----------- -----------
Total Short-Term Money Market Instruments 896,098,667 896,098,667
----------- -----------
<PAGE>
28
Schedule I
GE SAVINGS AND SECURITY PROGRAM
Line 27a - Schedule of Assets Held for Investment Purposes, continued
Assets Held at the end of the Plan Year
<TABLE>
<CAPTION>
Description
- ----------- Coupon
Issuer Rate Maturity Cost Market
- ------ ---- -------- ---- ------
Loan Secured by Mortgages
- -------------------------
<S> <C> <C> <C> <C> <C>
BCF L L C 7.050% 12/25/2008 $15,855,533 $15,872,861
SALOMON BROS MTG SECS VII INC 6.469% 01/20/2028 14,226,106 14,264,771
ASSET SECURITIZATION CORP 6.500% 02/14/2041 12,782,735 12,849,823
GS MTG SECS CORP II 6.940% 07/13/2030 9,097,549 9,203,986
DLJ COML MTG CORP 5.908% 02/08/2000 7,597,298 7,568,808
FLEETWOOD CR GRANTOR TR 6.400% 05/15/2013 6,685,020 6,723,002
CITIBANK CR CATD MASTER TR 1 5.850% 04/10/2003 4,787,574 4,745,496
DLJ MTG ACCEP CORP 6.990% 02/15/2005 4,145,379 4,120,609
PROVIDENT BK HOME EQUITY LN TR 7.180% 04/21/2013 3,507,724 3,555,472
ADVANTA MTG LN TR 6.300% 07/25/2025 2,607,127 2,589,655
CAPITAL ASSET RESH FDG LP 6.400% 12/15/2004 2,327,836 2,338,332
SALOMON BROS MTG SECS II INC 8.125% 11/01/2012 2,381,617 2,306,777
LOEWEN PASS THRU ASSET TR 6.700% 10/01/1999 1,723,339 1,656,000
HOME EQUITY LOAN 4.650% 12/20/2008 157,628 156,400
--------------- ---------------
Total Loans Secured by Mortgages 87,882,465 87,951,992
--------------- ---------------
Other
- -----
COLUMBIA REP 8.750% 10/06/1999 3,974,799 3,979,625
--------------- ---------------
Total Investments $12,642,406,129 $24,204,883,329
=============== ===============
</TABLE>
<PAGE>
29
Schedule II
GE Savings and Security Program
Line 27a - Schedule of Assets Held for Investment Purposes
Assets Acquired and Disposed of Within the Plan Year
<TABLE>
<CAPTION>
Coupon Costs of Proceeds of
Issuer Rate Maturity Acquisitions Dispositions
------ ---- -------- ------------ ------------
<S> <C> <C> <C> <C>
BANCO HIPOTECARIO MTN 13.00% 12/03/08 $ 2,165,000 $ 2,170,143
MORGAN STANLEY AIRCRAFT FIN Variable 3/15/23 9,740,000 9,740,000
NOMURA DEPOSITOR TR ST I Variable 2/15/34 9,720,279 9,720,279
------------- -------------
Total Transactions $ 21,625,279 $ 21,630,422
============= =============
</TABLE>
For purposes of this schedule, assets acquired and disposed of within the plan
year do not include any investment that falls within any of the following
categories:
(a) Debt obligations of the United States or any agency of the United
States;
(b) Interests issued by a company registered under the Investment Company
Act of 1940;
(c) Bank certificates of deposit with a maturity of not more than one
year;
(d) Commercial paper with a maturity of not more than nine months if it is
ranked in the highest rating category by at least two nationally
recognized rating services and is issued by a company required to file
reports with the Securities and Exchange Commission under section 13 of
the Securities Exchange Act of 1934;
(e) Participation's in a bank common or collective trust;
(f) Participation's in an insurance company pooled separate account;
(g) Securities purchased from a person registered as a broker-dealer under
the Securities Exchange Act of 1934 and listed on a national securities
exchange registered under section 6 of the Securities Exchange Act of
1934 or quoted on NASDAQ.
<PAGE>
30
Schedule III
GE SAVINGS AND SECURITY PROGRAM
Line 27d - Schedule of Reportable Transactions
Year Ended December 31, 1998
A. Single Transaction in Excess of 5% ($961,703,520) 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% ($961,703,520) 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% ($961,703,520) 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% ($961,703,520) of the Current Value of
Plan Assets at the Beginning of the Plan Year: NONE
Exhibit 23
ACCOUNTANTS' CONSENT
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 May 7, 1999, relating to the financial statements and supplemental
schedules of GE Savings and Security Program as of and for the years ended
December 31, 1998 and 1997, which appear in the December 31, 1998 annual report
on Form 11-K of General Electric Company.
/s/ KPMG LLP
Albany, New York
June 23, 1999
[GE LOGO OMITTED]
S&S PROGRAM
- ------------------------------------------------------------------
MUTUAL FUNDS
ANNUAL REPORT &
S&SP DISCLOSURE
DOCUMENT
DECEMBER 31, 1998
<PAGE>
UNDERSTANDING YOUR REPORT
PAGE
- --------------------------------------------------------------------------------
A LETTER FROM THE PRESIDENT ........................... 1
John Myers on market events
REVIEW OF PERFORMANCE AND
SCHEDULES OF INVESTMENTS
Portfolio managers discuss your
Funds' results in 1998
S&S PROGRAM MUTUAL FUND ............................ 3
S&S LONG TERM INTEREST FUND ........................ 9
NOTES TO PERFORMANCE .................................. 17
NOTES TO SCHEDULES OF INVESTMENTS ..................... 18
FINANCIAL STATEMENTS
Financial Highlights ............................... 19
Notes to Financial Highlights ...................... 20
Statements of Assets and Liabilities,
Operations, and Changes in Net Assets .............. 21
NOTES TO FINANCIAL STATEMENTS ......................... 24
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 .............................. 33
SUPPLEMENTAL INFORMATION* 34 Illustrations of the relative market value of
investments offered under the S&S Program based on historical earnings.
DISCLOSURE STATEMENT .................................. 36
Information about the S&S Program investment
alternatives.
S&S MUTUAL FUNDS'
INVESTMENT TEAM ....................................... 48
SHAREHOLDER SERVICES ....................INSIDE BACK COVER
How you can obtain more information
* THE SUPPLEMENTAL INFORMATION PART OF THIS DOCUMENT CONSTITUTES PART
OF A PROSPECTUS COVERING SECURITIES THAT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933.
HIGHLY RATED S&S FUNDS
MORNINGSTAR RATINGS(TM)
THROUGH DECEMBER 31, 1998
- --------------------------------------------------------------------------------
NUMBER
FUND OF FUNDS STAR
(CATEGORY) IN CATEGORY RATING
- --------------------------------------------------------------------------------
S&S PROGRAM MUTUAL -- (Domestic Equity)
- --------------------------------------------------------------------------------
Overall 2802 [STAR] [STAR] [STAR] [STAR] [STAR]
3 year 2802 [STAR] [STAR] [STAR] [STAR] [STAR]
5 year 1702 [STAR] [STAR] [STAR] [STAR] [STAR]
10 year 732 [STAR] [STAR] [STAR] [STAR]
- --------------------------------------------------------------------------------
S&S LONG TERM INTEREST -- (Taxable Bonds)
- --------------------------------------------------------------------------------
Overall 1488 [STAR] [STAR] [STAR] [STAR] [STAR]
3 year 1488 [STAR] [STAR] [STAR] [STAR]
5 year 987 [STAR] [STAR] [STAR] [STAR]
10 year 368 [STAR] [STAR] [STAR] [STAR] [STAR]
- --------------------------------------------------------------------------------
Morningstar is an independent fund rating 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 after 3 years' performance.
Morningstar proprietary ratings reflect historical risk-adjusted performance
through December 31, 1998. The ratings are subject to change every month.
Morningstar ratings are calculated from a fund's three-, five- and ten-year
returns (with fee and sales charge adjustments) in excess of 90-day T-bill
returns and a risk factor that reflects fund performance below 90-day T-bill
returns. The top ten percent of the funds in a rating category receive five
stars and the next 22.5% receive four stars.
Investment return and principal value of an investment will fluctuate and you
may have a gain or loss when you sell your shares. Returns assume changes in
share price and reinvestment of dividends and capital gains. Past performance is
no guarantee of future results.
- --------------------------------------------------------------------------------
<PAGE>
A LETTER FROM THE PRESIDENT
- --------------------------------------------------------------------------------
DEAR SHAREHOLDER,
We are pleased to provide you with the 1998 S&S Funds Annual Report.
1998 was a year of unusually high volatility for the financial markets. The S&P
500 Index of large cap stocks posted an unprecedented fourth consecutive year of
20%+ returns, finishing the year at 28.7%, while the Russell 2000 small
cap-stock index posted a return of negative 2.6% thus recording the largest
negative divergence with large caps ever. Internationally, European markets were
up 28%; Japan returned 5% in U.S. dollars but was down 9% in local currency; and
emerging market stock indices were down 25.3%! Although the large-cap U.S.
equity market was up strongly, individual stock performance was very
concentrated. The twenty top performers, led by technology stocks such as
Microsoft, Dell, Lucent, etc., accounted for about two-thirds of the S&P 500's
total performance, and only 17% of U.S. equity funds outperformed the S&P 500
Index as the average U.S. stock fund was up 14.5%.
PERFORMANCE HIGHLIGHTS
Both S&S Program Mutual Fund and S&S Long Term Interest Fund posted strong
performance results in 1998. S&S Program Mutual Fund finished the year with a
23.78% return and rated in the top 30% of its Lipper peer group for the 1, 5,
and 10 year periods. S&S Long Term rated in the top 27% of its peers for 1998
with a return of 8.49% and achieved impressive rankings in the top 3% and 1% of
its peers for the 5 and 10 year periods, respectively. 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 fund's performance can be found on the performance
review pages included in this report.
MARKET OVERVIEW
The past several years have been a very positive environment for financial
markets. Traditional long-term U.S. stock returns normally in the range of
10-12% have been significantly exceeded with average returns of 17.5% in the
80's and 16.2% so far in the 90's. The last 4 years in particular have set new
standards averaging 30.5%. These incredible returns have not only been in stocks
but also in long term government bonds which posted returns of 12.6% in the 80's
and 10.0% in the 90's versus historic averages of 6-7%. This has been due to a
number of positive factors. Since the fall of the Iron Curtain, we have
experienced a disinflationary peacetime economy with corresponding low interest
rates, strong consistent economic growth, excellent productivity gains and
rising corporate profitability. This has led to unprecedented high historic
valuation levels on almost any basis of measurement-dividend yields, price to
book, price to sales, or price to earnings ratios. One might argue, however,
that the current technology innovations and increased services content of the
economy should lead us to evaluate valuations differently in this "new era",
similar to what occurred in the late 1800's during the industrial revolution.
The U.S. Federal Reserve Bank reduced interest rates three times during late
1998 and 63 other central banks around the world followed suit. These actions
put liquidity back into world markets and stabilized the emerging market
economic crises in Asia, Russia and Latin America. It also calmed the turmoil in
global markets during the third quarter triggered by the near collapse of a
large hedge fund, Long Term Capital. As a result, the S&P 500, which had fallen
nearly 20% from its peak levels in August, recovered all of its losses and
finished the year strong.
MARKET OUTLOOK
Looking ahead, a number of positive factors continue. Commodity prices are at
25-year lows and there are few signs that they will significantly increase.
[PHOTO OF JOHN MYERS OMITTED]
1
<PAGE>
A LETTER FROM THE PRESIDENT (CONTINUED)
- --------------------------------------------------------------------------------
The "Supertanker America" U.S. growth engine seems likely to continue, albeit at
a more moderate 2-3% rate but still positive. New investment dollars continue to
move into the market through 401(k) plans and mutual funds and as foreign
pension plans increase their equity allocations. The U.S. market should be a
beneficiary of those new flows as well. Finally, business merger and acquisition
activity, especially in Europe, is booming.
On the cautionary side, valuations continue to be high and there is more
worldwide producing capacity than there is demand. Bottom-up analyst
expectations of double digit earnings growth of 15% will not be realized and
there will be continued high volatility and narrow market breath as many
companies will disappoint. S&P 500 earnings, however, should still be positive
around the 4-5% level which, together with 1.5-2% dividends, should result in
positive gains for the year closer to historic levels.
The principal wild cards impacting this outlook continue to be outside
the U.S. We are watching Japan where their economic crisis has been exacerbated
by rising interest rates, a strengthening yen, and continued weak consumer
demand. We are also monitoring developments in Brazil where recent events could
become a negative catalyst for other world markets if they cannot get their
social benefits structure in order.
The volatility in 1998 underscores the danger of trying to market time and
reliance on back-tested investment models (e.g., Long Term Capital) that tell
you what has already happened and may not be a good indicator of what will
happen in the future. Maintaining a well-diversified portfolio is even more
important when markets are volatile and the economic outlook uncertain. Equities
have the potential to be the best performing long-term asset class, although
returns over the next few years will most likely not equal the levels they have
been at for the past four. Stock selection will be a major factor in performance
as we expect small and mid-cap stocks to narrow the historic high variances with
large-caps. Fixed income investments (whether taxable or tax-exempt) typically
match the goal of current income and can provide some moderate growth of capital
as well. The basic rules still apply-know your investment objectives and your
tolerance for risk, then spend as much time and diligence investing your money
as you spent earning it. These held true in 1998 and we would recommend that you
consider them in your investment plans in the future.
On a final note, many shareholders have inquired about the impact the year 2000
(Y2K) may have with respect to their financial investments and recordkeeping. We
have incorporated Y2K readiness capability into our analysis processes for the
investment portfolios. In addition, we have been engaged in a multi-year effort
to address Y2K date-related issues in a broad range of areas including
applications, process-enabling systems and facilities. We also benefit from the
Y2K efforts of our parent, General Electric Company, which systematically
monitors the implementation of the Y2K programs of all GE businesses and
facilitates the sharing of best practices. With respect to third-party systems,
GE Investments like many similar companies, must largely rely on the efforts and
affirmations of others; however, we continue to work closely in partnership with
our most critical vendor, State Street Bank and Trust Company. Although the
interaction of various software and hardware elements is highly complex -- and
the possibility of Y2K related problems cannot be totally eliminated -- GE
Investments believes it is taking appropriate steps.
Sincerely,
/S/SIGNATURE
John Myers
President and Chief Executive Officer
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 PROMUS 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 $33 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, 1998?
A. The S&S Program Mutual Fund posted a total return of 23.78%. This compares
to 28.70% return for the S&P 500 Index. Our Lipper peer group of 863 Growth
and Income funds posted an average return of 16.98% for the same period.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE?
A. The S&P 500 Index outperformed the fund in a narrow market where a few
large companies, notably in the technology sector, did extremely well.
Investors gave these companies high valuations and, although the fund
includes strong technology stocks such as Cisco Systems, Sun Microsystems,
EMC and International Business Machines, it was underweighted in the sector
because of valuation concerns.
Q. WHICH INVESTMENTS STAND OUT?
A. Strong performances by consumer stocks helped the fund outperform its
peers. Healthcare issues such as Allergan, Merck and Watson Pharmaceuticals
did well because their earnings growth remained strong while earnings
slowed in other sectors. With consumer confidence high and unemployment
low, holdings in home improvement retailers Home Depot and Lowes Cos,
retailers Wal-Mart Stores and Dayton Hudson, and Comcast, a media company,
posted excellent returns. In contrast, the fund's energy sector holdings
underperformed because oil prices stayed low longer than expected. We
remain hopeful that factors such as colder weather, production cutbacks
within the Organization of Petroleum Exporting Countries, and a possible
increase in demand from Asia may reverse the inventory overhang and
resulting oil price weakness in 1999.
Q. HAVE YOU MADE ANY CHANGES TO THE PORTFOLIO?
A. In early 1999, we made some changes to the portfolio's structure. These
changes should generate better returns without altering the fund's basic
investment objectives. The fund remains balanced between value and growth
stocks. The bulk of the fund's assets moved from utilizing four portfolio
managers to the two most senior managers. This resulted in a portfolio that
is more concentrated, with holdings declining from 250 companies to
approximately 160. We also added a research portfolio component, comprising
about 15% of the fund. This component reflects the best ideas of our
research analysts, who have been managing a very successful broad research
portfolio for the past seven years. The fund will use a more concentrated
version of the research portfolio - with approximately 60 companies. The
goal is to amplify positions that the two portfolio managers already own.
This places more emphasis on stock selection, which has been our strength
historically, rather than sector allocation. We believe these changes will
set the stage for better performance going forward. We will continue to
focus on fundamental research and stock selection, with more concentration
in fewer stocks that we believe have the best potential to outperform the
market over the longer term.
Q. WHAT IS YOUR OUTLOOK FOR THE FUND IN 1999?
A. We foresee a reasonably healthy United States economy fueled by low
inflation, high consumer confidence, job growth and another federal budget
surplus. Although domestic and global growth may slow, signs of recession
are few. However, businesses will find it challenging to raise prices. In
this environment, shareholders will reward companies that can increase
revenues and profits consistently without the benefit of higher prices.
[PHOTO OF GENE BOLTON OMITTED]
3
<PAGE>
S&S PROGRAM MUTUAL FUND
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT
[LINE GRAPH OMITTED]
[PLOT POINTS]
S&S PROGRAM MUTUAL S&P 500
`88 $10,000 $10,000
`89 13,010 13,130
`90 12,646 12,710
`91 16,338 16,586
`92 17,668 17,863
`93 19,695 19,668
`94 19,348 19,943
`95 26,462 27,442
`96 32,562 33,783
`97 43,330 45,030
`98 53,599 57,953
AVERAGE ANNUAL TOTAL RETURN
FOR THE PERIODS ENDED DECEMBER 31, 1998
ONE FIVE TEN
YEAR YEAR YEAR
- --------------------------------------------------------------------------------
S&S Program Mutual 23.78% 22.18% 18.28%
S&P 500 Index 28.70% 24.08% 19.21%
- --------------------------------------------------------------------------------
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 12/31/98
GROWTH AND INCOME PEER GROUP
ONE FIVE TEN
YEAR YEAR YEAR
Fund's rank in peer group: ........ 255 68 19
Number of Funds in peer group: .... 863 350 153
Peer group average total return: .. 16.98% 18.94% 15.63%
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, 1998
- --------------------------------------------------------------------------------
Citigroup Inc. 2.70%
- --------------------------------------------------------------------------------
Bristol-Myers Squibb Co. 2.39%
- --------------------------------------------------------------------------------
Merck & Co. Inc. 2.37%
- --------------------------------------------------------------------------------
Federal National Mortgage Assoc. 2.31%
- --------------------------------------------------------------------------------
International Business Machines 2.03%
- --------------------------------------------------------------------------------
AlliedSignal Inc. 1.92%
- --------------------------------------------------------------------------------
Airtouch Communications Inc. 1.67%
- --------------------------------------------------------------------------------
First Data Corp. 1.62%
- --------------------------------------------------------------------------------
Exxon Corp. 1.60%
- --------------------------------------------------------------------------------
Abbott Laboratories 1.55%
- --------------------------------------------------------------------------------
SEE NOTES TO PERFORMANCE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
4
<PAGE>
SCHEDULE OF INVESTMENTS (DOLLARS IN THOUSANDS) -- DECEMBER 31, 1998
- --------------------------------------------------------------------------------
S&S PROGRAM MUTUAL FUND
[PIE CHART OMITTED]
TRANSPORTATION 1.7%
CONSUMER 16.9%
FINANCIAL SERVICES 16.0%
HEALTHCARE 14.8%
TECHNOLOGY 14.4%
CAPITAL GOODS 9.4%
UTILITIES 9.0%
ENERGY 6.9%
RETAIL TRADE 5.3%
CASH & OTHER 3.4%
BASIC MATERIALS 2.2%
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCK -- 96.3%
- --------------------------------------------------------------------------------
BASIC MATERIALS -- 2.2%
Air Products & Chemicals Inc. ... 307,598 $ 12,304
Airgas Inc. ..................... 249,386 2,229(a)
Avery Dennison Corp. ............ 140,569 6,334
Barrick Gold Corp. .............. 310,694 6,059
Du Pont de Nemours (E.I.)
& Co. ........................ 476,280 25,273
Fort James Corp. ................ 59,535 2,381
Great Lakes Chemical Corp. ...... 82,687 3,308
Mead Corp. ...................... 215,649 6,321
Monsanto Co. .................... 40,265 1,973(a)
Morton International Inc. ....... 458,089 11,223
Newmont Mining Corp. ............ 534,638 9,657
Placer Dome Inc. ................ 39,690 456
Rayonier Inc. ................... 161,604 7,424
Union Camp Corp. ................ 36,382 2,456
97,398
[GRAPHIC OMITTED] CAPITAL GOODS-- 9.4%
AlliedSignal Inc. ..............1,893,802 83,919
Deere & Co. .................... 291,060 9,641
Dover Corp. ....................1,769,945 64,824
Emerson Electric Co. ........... 685,675 41,483
Hubbell Inc. (Class B) ......... 815,630 30,994
Lockheed Martin Corp. .......... 115,761 9,811
Martin Marietta Materials Inc. . 456,574 28,393
Masco Corp. .................... 562,472 16,171
Molex Inc. (Class A) ........... 406,822 12,968
Textron Inc. ................... 558,521 42,413
Tyco International Ltd. ........ 13,228 998
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
United Technologies Corp. ...... 232,491 $ 25,283
Waste Management Inc. .......... 929,431 43,335
410,233
[GRAPHIC OMITTED] CONSUMER - CYCLICAL-- 9.1%
ACNielsen Corp. ................ 275,515 7,783(a)
Carnival Corp. (Class A) ....... 284,445 13,653
Catalina Marketing Corp. ....... 201,758 13,795(a)
Cendant Corp. .................. 96,447 1,839(a)
Comcast Corp. (Class A) ........ 640,862 37,611
Federal-Mogul Corp. ............ 33,075 1,968
Ford Motor Co. ................. 195,142 11,452
Gannett Inc. ................... 631,018 40,701
General Motors Corp. ........... 36,052 2,580
Harman International
Industries Inc. ............. 107,825 4,111
Interpublic Group Cos. Inc. .... 556,208 44,358
ITT Industries Inc. ............ 33,072 1,315
Knight-Ridder Inc. ............. 330,883 16,916
McDonald's Corp. ............... 325,326 24,928
NTL Inc. ....................... 749,035 42,274(a)
Stanley Works .................. 102,530 2,845
Tele-Communications Inc.
(Series A) .................. 605,270 33,479(a)
Tele-Communications Inc.
Liberty Media Group
(Series A) .................. 267,908 12,341(a)
Tele-Communications TCI
Ventures Group (Series A) ... 304,291 7,170(a)
Time Warner Inc. ............... 224,910 13,958
Walt Disney Co. ................ 984,070 29,522
Xerox Corp. .................... 285,570 33,697
398,296
CONSUMER - STABLE -- 7.9%
Anheuser Busch Cos. Inc. ....... 498,903 32,740
Archer-Daniels-Midland Co. ..... 277,830 4,775
Avon Products Inc. ............. 598,593 26,488
Bestfoods ...................... 241,977 12,885
Coca-Cola Co. .................. 23,946 1,601
Colgate-Palmolive Co. .......... 131,412 12,205
Conagra Inc. ................... 194,442 6,125
General Mills Inc. ............. 119,070 9,258
Gillette Co. ................... 91,684 4,429
Hershey Foods Corp. ............ 53,912 3,353
Kimberly Clark Corp. ........... 519,013 28,286
Nestle S.A. (Regd.) ............ 3,969 8,639
Pepsico Inc. ...................1,079,236 44,181
Philip Morris Cos. Inc. ........1,154,185 61,749
- ----------
See Notes to Schedules of Investments and Financial Statements.
5
<PAGE>
S&S PROGRAM MUTUAL FUND (DOLLARS IN THOUSANDS) -- DECEMBER 31, 1998
- --------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
Procter & Gamble Co. ........... 278,359 $ 25,418
Ralston Purina Co. ............. 529,200 17,133
Sara Lee Corp. .................1,114,628 31,419
Sysco Corp. .................... 158,892 4,360
Unilever N.V. .................. 84,341 6,995
342,039
ENERGY -- 6.9%
Anadarko Petroleum Co. ......... 271,215 8,374
Baker Hughes Inc. .............. 570,545 10,091
British Petroleum PLC ADR ...... 161,396 15,333
Burlington Resources Inc. ...... 687,467 24,620
Chevron Corp. .................. 149,831 12,427
Elf Aquitaine S.A. ADR ......... 53,912 3,053
Exxon Corp. .................... 952,230 69,632
Halliburton Co. ................ 178,605 5,291
Mobil Corp. .................... 427,659 37,260
Nabors Industries Inc. ......... 281,138 3,813(a)
Royal Dutch Petroleum
Co. ADR ..................... 639,803 30,630
Schlumberger Ltd. .............. 886,410 40,886
Texaco Inc. .................... 229,408 12,130
Tosco Corp. .................... 110,669 2,863
Total S.A. ADR ................. 99,225 4,936
Unocal Corp. ................... 637,620 18,610
USX-Marathon Group ............. 66,150 1,993
301,942
[GRAPHIC OMITTED] FINANCIAL ---10.7%
American Express Co. ........... 475,422 48,612
AmSouth Bancorp. ............... 72,765 3,320
Associates First Capital
Corp. (Class A) ............. 476,358 20,186
Bank of New York Inc. .......... 211,680 8,520
BankAmerica Corp. .............. 397,076 23,874
BankBoston Corp. ............... 436,589 17,000
Chase Manhattan Corp. .......... 380,290 25,883
Citigroup Inc. .................2,376,179 117,621
Countrywide Credit Industries .. 73,427 3,685
Crestar Financial Corp. ........ 239 17
Edwards A.G. Inc. .............. 109,941 4,095
Federal National
Mortgage Assoc. .............1,362,202 100,803
First Union Corp. .............. 132,300 8,046
Morgan Stanley, Dean Witter .... 379,370 26,935
National City Corp. ............ 218,294 15,826
State Street Corp. ............. 195,144 13,575(h)
T. Rowe Price & Associates ..... 79,380 2,719
United States Bancorp. ......... 264,798 9,400
Wells Fargo & Co. .............. 380,360 15,191
465,308
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED] HEALTHCARE-- 14.8%
Abbott Laboratories ............1,377,772 $ 67,511
Allergan Inc. .................. 461,396 29,875
American Home Products Corp. ... 628,426 35,388
Amgen Inc. ..................... 99,225 10,375(a)
Bristol-Myers Squibb Co. ....... 779,643 104,326
Cardinal Health Inc. ........... 818,523 62,105
Dentsply International Inc. .... 190,115 4,895
Eli Lilly & Co. ................ 61,453 5,462
Henry Schein Inc. .............. 95,918 4,292(a)
Johnson & Johnson .............. 798,960 67,013
Lincare Holdings Inc. .......... 218,295 8,855(a)
Merck & Co. Inc. ............... 700,860 103,508
Omnicare Inc. .................. 84,077 2,922
Pfizer Inc. .................... 327,443 41,074
Pharmacia & Upjohn Inc. ........ 350,596 19,853
Schering Plough Corp. .......... 383,666 21,198
Shire Pharmaceuticals Group
PLC ADR ..................... 76,073 1,540(a)
Sybron International Corp. ..... 357,211 9,712(a)
Tenet Healthcare Corp. ......... 343,980 9,029(a)
Watson Pharmaceuticals Inc. .... 575,505 36,185(a)
645,118
INSURANCE -- 5.4%
American International
Group Inc. .................. 407,233 39,349
Berkshire Hathaway Inc.
(Class B) ................... 25,040 58,844(a)
Chicago Title Corp. ............ 2,778 130
Hartford Financial Services
Group Inc. .................. 132,300 7,260
Jefferson-Pilot Corp. .......... 26,104 1,958
Lincoln National Corp. ......... 205,104 16,780
Loews Corp. .................... 297,476 29,227
Marsh & McLennan Cos. Inc. ..... 493,281 28,826
Progressive Corp. .............. 29,806 5,048
Provident Cos. Inc. ............ 489,510 20,315
Reliastar Financial Corp. ...... 178,868 8,250
St. Paul Cos. Inc. ............. 218,294 7,586
UNUM Corp. ..................... 211,152 12,326
235,899
RETAIL TRADE -- 5.4%
Costco Cos. Inc. ............... 186,892 13,491(a)
CVS Corp. ...................... 124,282 6,836
Dayton Hudson Corp. ............ 792,289 42,982
Federated Department
Stores Inc. ................. 275,124 11,985(a)
- ----------
See Notes to Schedules of Investments and Financial Statements.
6
<PAGE>
SCHEDULE OF INVESTMENTS (DOLLARS IN THOUSANDS) -- DECEMBER 31, 1998
- --------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
Home Depot Inc. ................ 804,649 $ 49,234
Lowes Cos. Inc. ................ 456,437 23,364
Rite Aid Corp. ................. 79,380 3,934
Sears Roebuck & Co. ............ 350,595 14,900
Wal-Mart Stores Inc. ........... 770,648 62,760
229,486
TECHNOLOGY - ELECTRONICS & EQUIPMENT-- 7.9%
3Com Corp. ..................... 85,995 3,854(a)
Analog Devices Inc. ............ 340,673 10,688(a)
Applied Materials Inc. ......... 277,832 11,860(a)
Cisco Systems Inc. ............. 587,347 54,513(a)
Hewlett Packard Co. ............ 339,018 23,159
Intel Corp. .................... 505,716 59,959
International Business
Machines .................... 478,924 88,481
Northern Telecom Ltd. .......... 330,750 16,579
Perkin Elmer Corp. ............. 17,056 1,664
Pitney Bowes Inc. .............. 601,502 39,737
Storage Technology Corp. ....... 133,954 4,764(a)
Sun Microsystems Inc. .......... 335,711 28,745(a)
344,003
TECHNOLOGY - SOFTWARE & SERVICES -- 5.9%
Adobe Systems Inc. ............. 54,574 2,551
Automatic Data Processing Inc. . 543,158 43,555
Computer Sciences Corp. ........ 184,847 11,911
EMC Corp. ...................... 398,885 33,905(a)
Equifax Inc. ...................1,451,993 49,640
First Data Corp. ...............2,227,605 70,587
Hyperion Solutions Corp. ....... 67,804 1,221(a)
Microsoft Corp. ................ 183,898 25,504(a)
Reuters Holdings PLC ADR ....... 297,940 18,882
257,756
TRANSPORTATION -- 1.7%
Burlington Northern Santa Fe ... 949,254 32,037
Canadian Pacific Ltd. .......... 433,349 8,180
Continental Airlines Inc.
(Class B) ................... 423,889 14,200(a)
Delta Air Lines Inc. ........... 337,366 17,543
Pittston Brinks Group .......... 79,379 2,530
74,490
[GRAPHIC OMITTED] UTILITIES -- 9.0%
Airtouch Communications Inc. ...1,010,441 72,878(a)
American Electric Power Inc. ... 264,600 12,453
American Telephone &
Telegraph Corp. ............. 347,817 26,173
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
Bell Atlantic Corp. ............ 552,353 $ 29,275
BellSouth Corp. ................ 125,684 6,269
Cincinnati Bell Inc. ........... 29,764 1,125
CMS Energy Corp. ............... 300,983 14,579
Duke Energy Corp. .............. 370,440 23,731
Edison International ........... 406,823 11,340
El Paso Energy Corp. ........... 186,212 6,483
Florida Progress Corp. ......... 185,220 8,300
FPL Group Inc. ................. 171,989 10,599
Frontier Corp. ................. 165,375 5,623
GTE Corp. ...................... 310,906 20,209
MCI WorldCom Inc. .............. 405,983 29,129(a)
New Century Energies Inc. ...... 198,447 9,674
Northern States Power Co. ...... 198,450 5,507
Peco Energy Co. ................ 52,920 2,203
SBC Communications Inc. ........1,169,202 62,698
Sprint Corp. ................... 118,077 9,933
Sprint Corp. ................... 66,150 1,530(a)
Texas Utilities Co. ............ 198,450 9,265
U.S. WEST Inc. ................. 218,295 14,107
393,083
TOTAL COMMON STOCK
(COST $2,687,992) ........... 4,195,051
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
CONVERTIBLE BOND -- 0.0%
- --------------------------------------------------------------------------------
Ames Department Stores Inc.
(COST $ 352) .............. $ 79 0(a)
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
PREFERRED STOCK -- 0.6%
- --------------------------------------------------------------------------------
Microsoft Corp. (Series A),
(COST $ 20,961) ............. 249,716 24,410
TOTAL INVESTMENTS IN SECURITIES
(COST $2,709,305) ........... 4,219,461
- -----------
See Notes to Schedules of Investments and Financial Statements.
7
<PAGE>
S&S PROGRAM MUTUAL FUND (DOLLARS IN THOUSANDS) -- DECEMBER 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 3.0%
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES -- 0.7%
Federal Home Loan Bank
4.96% 01/22/99 ............. $15,000 $ 14,959
Federal National Mortgage Assoc.
4.95% 01/27/99 ............. 15,000 14,948
29,907
REPURCHASE AGREEMENT -- 2.3%
State Street Bank and Trust Co.
4.70% 01/4/99 .............. 99,245 99,245
(dated 12/31/98, proceeds
$99,297 collateralized by
$101,231 U.S. Treasury
Notes, 7.875%, 08/15/01)
TOTAL SHORT-TERM INVESTMENTS
(COST $129,152) .............. 129,152
OTHER ASSETS AND LIABILITIES,
NET 0.1% ..................... 5,271
----------
NET ASSETS-- 100% ............... $4,353,884
==========
[GRAPHIC OMITTED] ICONS REPRESENT THE TOP FIVE INDUSTRY WEIGHTINGS IN THE
S&S PROGRAM MUTUAL FUND AT DECEMBER 31, 1998.
- ---------
See Notes to Schedules of Investments and Financial Statements.
8
<PAGE>
S&S LONG TERM INTEREST FUND
- --------------------------------------------------------------------------------
Q&A
ROBERT MACDOUGALL LEADS THE FIXED INCOME TEAM AT GE INVESTMENTS. ASSETS UNDER
MANAGEMENT EXCEED $29 BILLION. HIS RESPONSIBILITIES INCLUDE MANAGEMENT OF 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, 1998?
A. The S&S Long Term Interest Fund posted a return of 8.49%. This compares
with a 8.67% return for the Lehman Brothers Aggregate Bond Index. Our
Lipper peer group of 136 Intermediate U.S. Taxable Bond funds posted an
average return of 7.81% for the same period.
Q. WHAT HAPPENED IN THE FIXED INCOME MARKETS DURING THE ONE-YEAR PERIOD ENDED
DECEMBER 31, 1998?
A. The past twelve months have seen a nice rally in the bond market. Yields on
30 year U.S. Treasury Bonds fell 82 basis points (0.80%) from 5.92% to
5.10%. Similar declines occurred on Treasuries of shorter maturities as
well. During the first half of the year the Federal Reserve, concerned
about the tight labor market, had a bias to raise interest rates to help
slow our economy and prevent an acceleration of inflation. Uncertainty
about the impact of the Asian crisis and whether it would spread to other
regions of the world kept the Fed on the sidelines. As the Asian financial
crisis worsened and spread to Russia and Latin America, investors were
increasingly attracted to the U.S. Treasury market's quality, liquidity and
value. Signs of a slowing of domestic economic activity and continued low
inflation, together with the global market turmoil, prompted the Federal
Reserve to ease monetary policy on three occasions during the fall. Not all
sectors of the fixed income market fared well. Declining interest rates
prompted many homeowners to refinance their mortgages. This had a dampening
effect on the price performance of securities backed by home mortgages. The
mortgage sector, as measured by the Lehman Brothers Mortgage Index returned
6.96% for the one-year period ended December 1998 compared with a 10.03%
return for the Treasury index. Corporate and other non-U.S. government
bonds were hit with fears of "repayment" risk. For years investors have
increasingly "reached for yield" by buying lower rated corporates and
driving credit spreads tighter and tighter. After the Russian debt default
in August, the markets reassessed - and repriced - the credit risk premiums
in the corporate bond market. Lower quality bonds were sold in favor of
high quality U.S. Treasuries. This "flight to quality" pushed corporate
yields up while driving Treasury yields down. The yield differential, or
spread, widened in some cases to levels not seen since the 1990-91
recession. During this period there was an inverse correlation between
yield and return. The lowest yielding sectors (Treasuries) outperformed
higher yielding corporates and mortgages.
Q. WHAT WERE THE KEY DRIVERS OF FUND PERFORMANCE?
A. Anticipating the decline in interest rates we maintained a longer duration
(interest rate exposure) than the market. This plus good security selection
in the mortgage-backed sector, helped performance. The widening of
corporate bond spreads was a negative.
Q. WHAT IS YOUR OUTLOOK FOR THE BOND MARKET?
A. Despite the low level of interest rates we believe that bonds continue to
offer good value on both a fundamental (real) basis as well as a relative
(to other asset classes) basis. Inflation remains low and well controlled,
fiscal policy is supportive and monetary policy has been effective. The
widening of mortgage and credit spreads has presented many opportunities
for value in these sectors. We believe that high quality bonds will
continue to play an important role in a well balanced portfolio.
[PHOTO OF ROBERT MACDOUGALL OMITTED]
9
<PAGE>
S&S LONG TERM INTEREST FUND
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT
[LINE GRAPH OMITTED]
[PLOT POINTS]
S&S LONG TERM LB AGGREGATE
`88 $10,000 $10,000
`89 11,450 11,450
`90 12,526 12,481
`91 14,531 14,477
`92 15,536 15,549
`93 17,059 17,057
`94 16,632 16,562
`95 19,682 19,626
`96 20,515 20,339
`97 22,470 22,301
`98 24,389 24,236
AVERAGE ANNUAL TOTAL RETURN
FOR THE PERIODS ENDED DECEMBER 31, 1998
ONE FIVE TEN
YEAR YEAR YEAR
- --------------------------------------------------------------------------------
S&S Long Term 8.49% 7.40% 9.33%
LB Aggregate 8.67% 7.27% 9.26%
- --------------------------------------------------------------------------------
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 12/31/98
INTERMEDIATE U.S. TAXABLE BOND PEER GROUP
ONE FIVE TEN
YEAR YEAR YEAR
Fund's rank in peer group: ............ 38 3 1
Number of Funds in peer group: ........ 136 78 26
Peer group average total return: ...... 7.81% 5.94% 7.87%
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, 1998
- --------------------------------------------------------------------------------
PERCENT OF
MOODY'S RATINGS + NET ASSETS
- --------------------------------------------------------------------------------
Aaa 78.7%
- --------------------------------------------------------------------------------
Aa 2.7%
- --------------------------------------------------------------------------------
A 5.9%
- --------------------------------------------------------------------------------
Baa 8.7%
- --------------------------------------------------------------------------------
Ba 2.5%
- --------------------------------------------------------------------------------
B 0.2%
- --------------------------------------------------------------------------------
Other 1.3%
- --------------------------------------------------------------------------------
+MOODY'S INVESTORS SERVICE, INC. IS A NATIONALLY RECOGNIZED
STATISTICAL RATING ORGANIZATION.
SEE NOTES TO PERFORMANCE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
10
<PAGE>
S&S LONG TERM INTEREST FUND (DOLLARS IN THOUSANDS) -- DECEMBER 31, 1998
- --------------------------------------------------------------------------------
S&S LONG TERM INTEREST FUND
[PIE CHART OMITTED]
MORTGAGE BACKED 46.3%
U.S. TREASURIES 20.1%
FEDERAL AGENCIES 12.4%
CORPORATE NOTES 20.4%
CASH & OTHER 0.8%
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
BONDS AND NOTES -- 104.9%
- --------------------------------------------------------------------------------
U.S. TREASURIES -- 20.1%
U.S. Treasury Bonds
10.625% 08/15/15 ............. $16,800 $ 26,680(j)
8.125% 08/15/19 ............. 87,161 116,401(j)
8.125% 05/15/21 ............. 43,312 58,431(j)
5.50% 08/15/28 ............. 1,135 1,188(i)
5.25% 11/15/28 ............. 84,355 86,358(i)
289,058
U.S. Treasury Notes
5.38% 06/30/00 ............. 107,685 108,795(j)
5.25% 08/31/00 ............. 26,161 26,361(i,j)
4.50% 09/30/00 ............. 11,394 11,369(i)
4.625% 11/30/00 ............. 5,280 5,283(j)
6.50% 08/31/01 ............. 29,345 30,689(j)
5.375% 06/30/03 ............. 2,680 2,758(j)
5.25% 08/15/03 ............. 26,978 27,665(i)
4.25% 11/15/03 ............. 4,370 4,314(i)
4.75% 11/15/08 ............. 28,930 29,156(i,j)
246,390
U.S. Treasury STRIPS
5.31% 08/15/11 ............. 74,307 38,388(d,j)
5.35% 02/15/12 ............. 46,285 23,175(d,j)
61,563
TOTAL U.S. TREASURIES
(COST $583,752) .............. 597,011
FEDERAL AGENCIES -- 12.4%
Federal Agricultural Mortgage Corp.
6.44% 01/04/99 ............. 22,475 22,466(d)
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
Federal Farm Credit Bank
5.32% 02/10/99 ............. $31,375 $ 31,199(d)
Federal Home Loan Bank
5.62% 08/10/00 ............. 23,550 23,774
5.625% 03/19/01 ............. 5,565 5,639
29,413
Federal Home Loan Mortgage Corp.
6.22% 03/18/08 ............. 9,855 10,084
5.75% 04/15/08 ............. 26,555 27,456
5.125% 10/15/08 ............. 13,820 13,688(j)
51,228
Federal National Mortgage Assoc.
5.60% 03/27/00 ............. 23,135 23,301
5.67% 05/26/00 ............. 39,795 40,162
5.56% 07/24/00 ............. 13,970 14,090
5.10% 09/25/00 ............. 13,954 13,980
5.38% 01/16/01 ............. 11,680 11,769
6.41% 07/08/02 ............. 12,595 13,095(g)
5.75% 04/15/03 ............. 8,452 8,677
6.99% 07/09/07 ............. 14,870 15,607
6.00% 05/15/08 ............. 32,570 34,382(i)
6.221% 05/25/14 ............. 4,245 4,301
6.42% 05/25/18 ............. 5,790 5,911
6.16% 08/07/28 ............. 21,670 22,672
207,947
Small Business Administration
6.55% 10/01/17 - 12/01/17 .. 8,366 8,639
6.125% 01/01/18 ............. 15,228 15,418
24,057
TOTAL FEDERAL AGENCIES
(COST $360,653) .............. 366,310
AGENCY MORTGAGE BACKED -- 36.2%
Federal Home Loan Mortgage Corp.
7.50% 06/01/10 ............. 22,064 22,717
7.50% 09/01/12 ............. 11,265 11,582
9.00% 05/01/16 - 11/01/16 .. 4,298 4,568
7.50% 04/01/28 ............. 41,899 43,032
6.50% 02/01/28 - 12/01/28 .. 171,475 172,707
254,606
Federal National Mortgage Assoc.
6.43% 01/04/99 ............. 93,730 93,690(d)
6.50% 01/01/04 ............. 1,298 1,307
7.623% 12/17/04 ............. 6,944 7,309(d)
5.64% 12/10/08 ............. 10,180 10,225
9.00% 02/01/09 ............. 100 105
7.50% 12/01/09 ............. 15,022 15,454
9.00% 05/01/10 ............. 31 33
- ----------
See Notes to Schedules of Investments and Financial Statements.
11
<PAGE>
S&S LONG TERM INTEREST FUND (DOLLARS IN THOUSANDS) -- DECEMBER 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
6.50% 01/01/13 - 11/01/13 .. $39,338 $ 39,893
9.00% 09/01/13 ............. 663 699
9.00% 01/01/14 - 08/01/14 .. 4,471 4,755
6.50% 09/01/14 ............. 9,845 10,030
9.00% 05/01/15 - 12/01/15 .. 206 215
9.00% 07/01/16 - 10/01/16 .. 140 148
8.50% 09/01/16 - 12/01/16 .. 143 150
9.00% 01/01/17 - 08/01/17 .. 422 448
9.00% 03/01/18 - 05/01/18 .. 279 298
9.00% 02/01/19 - 09/01/19 .. 3,139 3,345
7.00% 06/18/20 ............. 8,194 8,194(b)
6.247% 03/25/21 ............. 7,315 7,386
9.00% 04/01/21 - 06/01/21 .. 216 229
9.50% 09/01/21 ............. 39 42
8.50% 10/01/21 - 11/01/21 .. 502 528
9.00% 03/01/22 - 04/01/22 .. 954 1,016(g)
9.50% 05/01/22 - 06/01/22 .. 19 20
8.50% 07/25/22 - 12/01/22 .. 393 413
8.50% 01/01/23 - 02/01/23 .. 1,381 1,451
6.424% 12/25/23 ............. 12,155 12,375
8.00% 08/01/24 ............. 1 1
9.00% 11/01/25 ............. 27,752 29,373
8.50% 12/01/25 ............. 35,613 37,304
8.50% 12/01/26 ............. 12,560 13,153
7.00% 08/01/27 - 12/01/27 .. 76,707 78,415
8.50% 02/01/28 ............. 28,654 30,006
7.00% 01/01/28 - 07/01/28 .. 13,366 13,654
6.00% TBA .................. 150,160 149,993(c)
7.50% TBA .................. 20,940 21,506(c)
593,163
Government National Mortgage Assoc.
7.00% 03/15/12 ............. 29,160 29,889
8.50% 10/15/17 ............. 12,529 13,394
9.00% 04/15/18 - 11/15/18 .. 1,915 2,059
9.00% 07/15/19 - 12/15/19 .. 4,426 4,760
7.375% 05/20/21 ............. 14 14(e)
7.00% 11/20/21 ............. 16 17(e)
7.50% 02/15/22 - 11/15/22 .. 10,128 10,450
7.00% 08/20/23 - 09/20/23 .. 309 313(e)
7.50% 11/15/23 ............. 1,119 1,155
6.875% 01/20/24 - 04/20/24 .. 298 301(e)
6.50% 01/15/24 - 12/15/24 .. 21,813 22,044
7.00% 09/20/24 - 11/20/24 .. 441 445(e)
7.00% 10/20/25 ............. 272 275(e)
7.00% 03/15/26 - 05/15/26 .. 2,251 2,303
6.50% 08/15/27 - 11/15/27 .. 151 153
7.00% 01/15/27 - 12/15/27 .. 8,555 8,754
7.50% 12/15/27 ............. 1,096 1,130
7.00% 01/15/28 - 09/15/28 .. 15,032 15,375
6.50% 03/15/28 - 04/15/28 .. 29,273 29,566
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
7.50% 01/15/28 .............$ 243 $ 251(b)
7.50% 05/15/28 - 10/15/28 .. 79,607 82,136
224,784
TOTAL AGENCY MORTGAGE BACKED
(COST $1,065,794) ............ 1,072,553
AGENCY COLLATERALIZED MORTGAGE OBLIGATIONS -- 1.1%
Collateralized Mortgage Obligation Trust
5.20% 09/01/15 ............. 2,060 1,924(d,f)
4.88% 11/01/18 ............. 4,369 3,598(d,f)
5,522
Federal Home Loan Mortgage Corp.
8.00% 04/15/20 ............. 4,679 4,852
Federal National Mortgage Assoc.
8.50% 03/01/17 - 04/01/17 .. 5,663 1,066(g)
8.50% 01/01/18 ............. 703 130(g)
9.00% 02/25/22 ............. 4,469 845(g)
8.50% 07/01/22 ............. 8,079 1,377(g)
8.50% 01/01/23 ............. 31,598 6,043
9,461
Federal National Mortgage Assoc. REMIC
10.84% 07/25/20 ............. 3,341 3,236(d,f)
8.00% 10/25/20 ............. 2,971 3,077
4.58% 12/25/22 ............. 4,396 3,740(d,f)
10,053
TOTAL AGENCY COLLATERALIZED
MORTGAGE OBLIGATIONS
(COST $29,894) ............... 29,888
ASSET BACKED -- 4.0%
Advanta Mortgage Loan Trust Corp.
6.30% 07/25/25 ............. 2,733 2,715
Capital One Master Trust
5.43% 01/15/07 ............. 12,764 12,772
Chase Credit Card Master Trust
6.00% 08/15/05 ............. 5,650 5,728
Discover Card Master Trust I
5.60% 05/15/06 ............. 12,764 12,830
Fleetwood Credit Grantor Trust
6.40% 05/15/13 ............. 3,736 3,755
Ford Credit Auto Loan Master Trust
5.656% 07/15/01 ............. 5,614 5,621
5.50% 02/15/03 ............. 3,076 3,085
Ford Credit Auto Owner Trust
5.90% 06/15/02 ............. 5,072 5,136
MBNA Master Credit Card Trust
5.732% 01/15/02 ............. 8,797 8,797
6.05% 11/15/02 ............. 6,850 6,912
- --------
See Notes to Schedules of Investments and Financial Statements.
12
<PAGE>
SCHEDULE OF INVESTMENTS (DOLLARS IN THOUSANDS) -- DECEMBER 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
MBNA Master Credit Card Trust II
5.705% 03/15/03 ............. $29,000 $ 28,991
5.795% 10/15/03 ............. 4,750 4,747
5.812% 03/15/04 ............. 5,280 5,285
Signet Master Trust
5.735% 09/16/02 ............. 11,791 11,791
TOTAL ASSET BACKED
(COST $118,206) .............. 118,165
CORPORATE NOTES -- 20.4%
Abbey National PLC
6.70% 06/29/49 ............. 8,360 8,188
7.35% 10/29/49 ............. 3,088 3,122
Associates Corp. North America
6.375% 10/15/02 ............. 6,700 6,894
5.75% 11/01/03 ............. 5,095 5,141
Bank Austria AG
7.25% 02/15/17 ............. 7,000 7,271
Bank of Scotland
7.00% 11/29/49 ............. 4,500 4,473(b)
Beckman Instruments Inc.
7.10% 03/04/03 ............. 4,180 4,204
Bell Telephone Co. - Pennsylvania
8.375% 12/15/30 ............. 6,514 8,480
BellSouth Telecomm Inc.
6.375% 06/01/28 ............. 5,075 5,275
Black & Decker Holdings Inc.
7.05% 07/01/28 ............. 3,675 3,675(b)
Boston University
7.625% 07/15/2097 ........... 5,755 6,647
Brascan Ltd.
7.375% 10/01/02 ............. 3,760 3,905
Carnival Corp.
5.65% 10/15/00 ............. 5,000 5,013
Cleveland Electric Co.
7.19% 07/01/00 ............. 2,550 2,588
Coca-Cola Enterprises Inc.
7.00% 10/01/26 ............. 3,700 4,036
Columbia University
Trustees New York
6.83% 12/15/20 ............. 4,000 4,415
Conseco Inc.
6.40% 06/15/01 ............. 5,000 4,817
6.80% 06/15/05 ............. 2,305 2,154
8.70% 11/15/26 ............. 6,729 6,148
Continental Cablevision Inc.
8.50% 09/15/01 ............. 5,825 6,179
Corporacion Andina De Fomento
6.75% 03/15/05 ............. 4,465 4,295
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
Dayton Hudson Corp.
5.895% 06/15/37 ............. $ 4,305 $ 4,510
Discover Card Master Trust
5.625% 08/18/03 ............. 8,260 8,237
Empresa Nacional De Electricidad
8.125% 02/01/2097 ........... 5,000 3,799
Federal Express Corp.
7.52% 01/15/18 ............. 4,422 4,683
Federated Department Stores Inc.
6.125% 09/01/01 ............. 3,830 3,873
Felcor Suites Ltd.
7.375% 10/01/04 ............. 4,000 3,717
Ford Motor Credit Corp.
7.32% 05/23/02 ............. 13,835 13,904
Fujian International Trust &
Investment Corp.
7.375% 08/25/07 ............. 2,490 1,071(b)
GMAC
5.75% 11/10/03 ............. 2,690 2,711
Greenpoint Bank Brooklyn
6.70% 07/15/02 ............. 4,600 4,566
Gruma S.A. de C.V.
7.625% 10/15/07 ............. 1,600 1,404
Guangdong International Trust
& Investment Corp.
8.75% 10/24/16 ............. 2,660 1,490(b,k)
Heritage Media Corp.
8.75% 02/15/06 ............. 6,415 6,912
Household Finance Corp.
6.125% 07/15/02 ............. 1,915 1,910
Hydro-Quebec
8.05% 07/07/24 ............. 5,418 6,502
8.25% 04/15/26 ............. 6,180 7,640
International Lease Finance Corp.
5.62% 02/01/00 ............. 3,400 3,414
Israel Electric Corp. Ltd.
7.125% 07/15/05 ............. 2,295 2,329(b)
8.10% 12/15/2096 ........... 9,085 8,930(b)
J.C. Penney Co. Inc.
7.40% 04/01/37 ............. 3,350 3,647
Korea Development Bank
7.125% 09/17/01 ............. 1,800 1,706
6.625% 11/21/03 ............. 5,045 4,510
Landeskreditbank Baden
7.875% 04/15/04 ............. 5,165 5,761
Lasmo USA Inc.
6.75% 12/15/07 ............. 4,890 4,922
LCI International Inc.
7.25% 06/15/07 ............. 4,060 4,111
- ---------
See Notes to Schedules of Investments and Financial Statements.
13
<PAGE>
S&S LONG TERM INTEREST FUND (DOLLARS IN THOUSANDS) -- DECEMBER 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
Lehman Brothers Holdings Inc.
6.90% 03/30/01 ............. $ 2,713 $ 2,758
8.05% 01/15/19 ............. 5,425 5,506
7.50% 08/01/26 ............. 5,995 6,240
LG&E Capital Corp.
5.75% 11/01/01 ............. 4,790 4,757(b)
Liberty Property Ltd. Partnership
7.50% 01/15/18 ............. 3,530 3,265
Loewen Group International Inc.
6.70% 10/01/99 ............. 3,532 3,391(b)
7.50% 04/15/01 ............. 6,789 5,940
MBNA Corp.
6.306% 04/22/03 ............. 3,250 3,202
MCI Communications Corp.
6.125% 04/15/02 ............. 5,550 5,635
Meditrust
7.114% 08/15/04 ............. 5,070 4,573
Merita Bank Ltd.
7.15% 12/29/49 ............. 6,375 6,168(b)
Merrill Lynch & Co. Inc.
5.388% 01/22/99 ............. 6,215 6,216
MIC Financing Trust
8.375% 02/01/27 ............. 5,120 5,332(b)
Monsanto Co.
5.75% 12/01/05 ............. 3,350 3,342
6.60% 12/01/28 ............. 3,350 3,344(b)
Morgan Stanley Finance PLC
8.03% 02/28/17 ............. 3,860 4,082
National Rural Utilities Cooperative
6.046% 04/15/03 ............. 3,000 3,056
National Westminster Bank PLC
7.75% 04/29/49 ............. 4,654 4,911
New Jersey Economic
Development Authority
7.425% 02/15/29 ............. 3,755 4,305
News America Holdings Inc.
8.15% 10/17/36 ............. 8,733 9,818
Niagara Mohawk Power Corp.
9.50% 06/01/00 ............. 3,000 3,147
Norfolk Southern Corp.
7.05% 05/01/37 ............. 2,615 2,829
7.90% 05/15/2097 ........... 7,274 8,515
Noram Energy Corp.
6.375% 11/01/03 ............. 3,370 3,403
North Atlantic Energy Corp.
9.05% 06/01/02 ............. 6,466 6,718
Northrop Grumman Corp.
8.625% 10/15/04 ............. 4,245 4,750
NRG Energy Inc.
7.50% 06/15/07 ............. 3,880 4,087
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
Occidental Petroleum Corp.
7.375% 11/15/08 .............$ 1,150 $ 1,173
Paramount Communications Inc.
5.875% 07/15/00 ............. 3,200 3,204
Philip Morris Cos. Inc.
7.25% 09/15/01 ............. 3,260 3,403
7.20% 02/1/07 .............. 3,770 4,095
Reliance Industries Ltd.
10.50% 08/06/46 ............. 3,545 2,739(b)
Republic of Columbia
7.25% 02/15/03 ............. 4,000 3,520
Republic of Panama
7.875% 02/13/02 ............. 4,000 3,860(b)
Riggs Capital Trust
8.625% 12/31/26 ............. 3,860 3,923(b)
RJR Nabisco Inc.
7.625% 09/15/03 ............. 5,400 5,262
6.125% 02/01/33 ............. 4,510 4,398
Safeway Inc.
5.75% 11/15/00 ............. 3,140 3,146
Sprint Capital Corp.
5.70% 11/15/03 ............. 2,925 2,936
6.125% 11/15/08 ............. 2,810 2,871
6.875% 11/15/28 ............. 3,760 3,908
St. George Funding Co.
8.485% 12/31/49 ............. 9,085 8,087(b)
Stop & Shop Cos. Inc.
9.75% 02/01/02 ............. 2,525 2,792
Sun Life Canada Capital Trust
8.526% 05/29/49 ............. 7,390 8,020(b)
Sunamerica Inc.
5.60% 07/31/2097 ........... 8,380 7,121
Suntrust Banks Inc.
6.00% 01/15/28 ............. 3,760 3,865
TCI Communications Inc.
8.65% 09/15/04 ............. 4,415 5,060
Tele-Communications Inc.
9.25% 04/15/02 ............. 4,200 4,670
9.80% 02/01/12 ............. 4,715 6,296
Tenet Healthcare Corp.
7.875% 01/15/03 ............. 5,055 5,156
8.00% 01/15/05 ............. 1,985 2,015
Texas Utilities Co.
5.943% 10/15/01 ............. 6,215 6,251
Time Warner Entertainment Co. L.P.
10.15% 05/01/12 ............. 6,438 8,649
Time Warner - Pass - Through Asset Trust
6.10% 12/30/01 ............. 7,100 7,214(b)
- ----------
See Notes to Schedules of Investments and Financial Statements.
14
<PAGE>
SCHEDULE OF INVESTMENTS (DOLLARS IN THOUSANDS) -- DECEMBER 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
Times Mirror Co.
6.61% 09/15/27 ............. $ 4,400 $ 4,700
Toledo Edison Co.
7.38% 03/31/00 ............. 10,067 10,264
Transamerica Capital
7.625% 11/15/37 ............. 6,800 7,052
Turner Broadcasting Systems Inc.
8.375% 07/01/13 ............. 4,650 5,558
Tyco International Group S.A.
6.25% 06/15/03 ............. 2,520 2,546
6.125% 11/01/08 ............. 3,355 3,365(b)
7.00% 06/15/28 ............. 3,905 3,984
Union Pacific Corp.
6.79% 11/09/07 ............. 5,605 5,754
United Illuminating Co.
6.25% 12/15/02 ............. 1,300 1,314
United Parcel Service Inc.
8.375% 04/01/30 ............. 5,800 7,262
US West Capital Funding Inc.
6.125% 07/15/02 ............. 1,595 1,628
6.875% 07/15/28 ............. 2,450 2,617
USA Waste Services Inc.
6.125% 07/15/01 ............. 2,000 2,013
USX Marathon Group
9.80% 07/01/01 ............. 3,790 4,095
8.125% 07/15/23 ............. 3,760 3,991
Viacom Inc.
7.75% 06/01/05 ............. 9,650 10,469
Washington Mutual Capital
8.375% 06/01/27 ............. 3,400 3,729
Waterford Funding Corp.
8.09% 01/02/17 ............. 1,160 1,258
Westdeutsche Landesbank
6.75% 06/15/05 ............. 5,045 5,183
Westinghouse Electric Corp.
8.875% 06/01/01 ............. 2,000 2,130
Williams Cos. Inc.
6.125% 02/15/02 ............. 7,265 7,254
WMX Technologies Inc.
6.65% 05/15/05 ............. 4,140 4,275
Worldcom Inc.
6.125% 08/15/01 ............. 2,715 2,758
6.40% 08/15/05 ............. 4,300 4,469
8.875% 01/15/06 ............. 4,600 5,028
Yale University Notes
7.375% 04/15/2096 ........... 10,799 12,263
Zurich Capital Trust
8.376% 06/01/37 ............. 2,525 2,822(b)
TOTAL CORPORATE NOTES
(COST $596,181) .............. 603,884
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
NON-AGENCY MORTGAGE BACKED SECURITIES -- 10.2%
American Housing Trust
6.09% 01/25/21 ............. $ 3 $ 942(d)
Amresco Commercial Mortgage
Funding Corp.
6.73% 06/17/29 ............. 4,733 4,831
Asset Securitization Corp.
6.50% 02/14/41 ............. 3,238 3,285
BCF
7.22% 11/25/28 ............. 16,978 16,999
7.25% 11/25/28 ............. 10,131 9,315
6.315% 11/25/37 ............. 6,213 6,187
BHN Mortgage Trust
7.916% 07/25/09 ............. 2,666 1,973(b)
7.54% 04/31/17 ............. 4,003 2,883(b)
Chase Commercial Mortgage
Securities Corp.
6.39% 11/18/08 ............. 8,979 9,263
Commercial Mortgage
Acceptance Corp.
6.49% 05/15/08 ............. 5,568 5,772
Credit Suisse First Boston
Mortgage Securities Corp.
6.30% 11/11/30 ............. 10,365 10,535
DDR Pass-Through Asset Trust
7.125% 03/15/02 ............. 8,170 8,140(b)
DLJ Commercial Mortgage Corp.
6.24% 11/12/31 ............. 11,250 11,457(d)
DLJ Mortgage Acceptance Corp.
6.65% 12/17/27 ............. 3,670 3,726(b)
GMAC Commercial Mortgage
Security Inc.
6.42% 08/15/08 ............. 8,736 9,020
GS Mortgage Securities Corp.
7.75% 05/19/27 ............. 2,824 2,931
6.86% 07/13/30 ............. 8,178 8,518(d)
Lehman Large Loan
6.79% 6/12/04 .............. 4,910 5,082
Merrill Lynch Mortgage
Investors Inc.
6.39% 02/15/30 ............. 5,488 5,650
Mid State Trust
7.54% 07/01/35 ............. 2,468 2,535(d)
Morgan Stanley Capital Inc.
6.92% 05/15/06 ............. 8,017 8,276(b)
6.52% 01/15/08 ............. 21,811 22,636
6.59% 10/03/30 ............. 2,130 2,192(b)
6.01% 11/15/30 ............. 6,644 6,713
6.48% 11/15/30 ............. 10,007 10,388
- --------
See Notes to Schedules of Investments and Financial Statements.
15
<PAGE>
S&S LONG TERM INTEREST FUND (DOLLARS IN THOUSANDS) -- DECEMBER 31, 1998
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
Nationslink Funding Corp.
6.001% 11/20/07 ............$ 3,766 $ 3,790
6.476% 07/20/08 ............ 8,896 9,190
Residential Assets
Securitization Trust
7.75% 03/01/27 - 07/25/27 . 28,014 28,774
Sawgrass Finance REMIC Trust
6.45% 01/20/06 ............ 10,944 11,064
Structured Asset Securities Corp.
5.642% 08/25/00 - 06/15/15 . 33,947 33,756(b)
8.414% 04/25/27 - 10/15/34 . 13,508 13,964
0.44% 02/25/28 - 04/01/21 . 64,985 3,533(d)
Vornado Finance Corp.
6.36% 12/01/00 ............ 20,964 21,193(b)
TOTAL NON-AGENCY MORTGAGE BACKED SECURITIES
(COST $302,822) ............. 304,513
NON-AGENCY COLLATERALIZED MORTGAGE OBLIGATIONS -- 0.5%
Salomon Brothers Mortgage
Securities Inc.
7.00% 07/25/24 ............ 14,469 14,147
8.125% 11/01/12 ............ 2,724 2,743
TOTAL NON-AGENCY COLLATERALIZED
MORTGAGE OBLIGATIONS
(COST $17,128) .............. 16,890
TOTAL BONDS AND NOTES
(COST $3,074,430) ........... 3,109,214
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
PREFERRED STOCK -- 1.4%
- --------------------------------------------------------------------------------
CORPORATE PREFERRED
Banesto Holdings Ltd., 10.50% .. 12,750 367(b)
Centaur Funding, 9.08% ......... 5,135 5,327(b)
Citigroup Inc., 6.23% .......... 107,900 5,742
Entertainment Property
Inc., 14.25% ................ 6,000 5,302(b)
Home Ownership, 13.33% ......... 9,170 8,662(b)
New Plan Realty Trust, 7.80% ... 39,103 1,826
News Corp. Ltd., 5.00% ......... 46,040 2,831(b)
Pinto Totta International
Finance Ltd., 7.77% ......... 6,691 6,122(b)
Spaulding Properties Inc., 7.89% 49,890 2,270
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
TCI Communications Inc.,
10.00% ...................... 148,000 $ 3,996
TOTAL PREFERRED STOCK
(COST $43,281) .............. 42,445
TOTAL INVESTMENTS IN SECURITIES
(COST $3,117,711) ........... 3,151,659
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 5.5%
- --------------------------------------------------------------------------------
Cariplo Finance Inc. ........... 16,500 16,490
GEI Short Term Investment Fund . 104,105 104,105
Generale Bank Inc. ............. 16,500 16,489
Westdeutcshe Landesbank Giroz .. 26,130 26,118
TOTAL SHORT-TERM INVESTMENTS
(COST $163,202) ............. 163,202
NUMBER
EXPIRATION OF
DATE/ CONTRACTS
STRIKE PRICE (IN THOUSANDS) VALUE
- --------------------------------------------------------------------------------
CALL OPTIONS -- 0.0%
- --------------------------------------------------------------------------------
U.S. Treasury Notes Jan 99/107.06 (20,910) (11)
U.S. Treasury Notes Jan 99/104.42 (21,895) (135)
(WRITTEN OPTION PREMIUM $(168)) .......... (146)
- --------------------------------------------------------------------------------
PUT OPTIONS -- 0.0%
- --------------------------------------------------------------------------------
U.S. Treasury Notes Jan 99/101.06 (20,910) (116)
U.S. Treasury Notes Jan 99/ 98.42 (21,895) (55)
(WRITTEN OPTION PREMIUM $(187)) .......... (171)
OTHER ASSETS AND LIABILITIES,
NET (11.8)% ........................... (350,413)
----------
NET ASSETS-- 100% ........................ $2,964,131
==========
- -------
See Notes to Schedules of Investments and Financial Statements.
16
<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 is not available from the
Funds' commencement of investment operations through December 31, 1998. 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.
17
<PAGE>
NOTES TO SCHEDULES OF INVESTMENTS (DOLLARS IN THOUSANDS) -- DECEMBER 31, 1998
- --------------------------------------------------------------------------------
(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, 1998, these securities amounted to
$204,185 or 6.9% 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,
1998.
(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) State Street Corp. is the parent company of State Street Bank & Trust Co.,
the fund's custodian.
(i) All or a portion of security out on loan.
(j) At December 31, 1998 all or a portion of this security was pledged to cover
collateral requirements for futures, options or TBA's.
(k) Security in default.
ABBREVIATIONS:
ADR -- American Depositary Receipt
Regd -- Registered
REMIC -- Real Estate Mortgage
Investment Conduit
STRIPS -- Separate Trading of Registered
Interest and Principal of Securities
18
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SELECTED DATA BASED ON A SHARE OUTSTANDING THROUGHOUT THE PERIOD(S) INDICATED
<TABLE>
<CAPTION>
S&S PROGRAM MUTUAL FUND 1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year .............. $53.06 $45.54 $41.19 $33.59 $37.01
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income ........................ 0.87 0.87 0.97 1.00 1.00
Net realized and unrealized
gains (losses) on investments ............. 11.77 14.04 8.63 11.33 (1.65)
- ----------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS ........................ 12.64 14.91 9.60 12.33 (0.65)
- ----------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income ........................ 0.87 0.87 0.96 1.00 1.00
Net realized gains ........................... 7.40 6.52 4.29 3.73 1.71
Tax return of capital ........................ 0.00 0.00 0.00 0.00 0.06
- ----------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS ............................. 8.27 7.39 5.25 4.73 2.77
- ----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD .................. $57.43 $53.06 $45.54 $41.19 $33.59
======================================================================================================================
TOTAL RETURN(a) ................................. 23.78% 33.07% 23.05% 36.77% (1.76%)
RATIOS / SUPPLEMENTAL DATA:
Net assets, end of year
(in thousands) ...........................$4,353,884 $3,658,804 $2,790,830 $2,314,537 $1,717,813
Ratios to average net assets:
Net investment income ..................... 1.46% 1.60% 2.10% 2.48% 2.70%
Expenses .................................. 0.09% 0.08% 0.12% 0.12% 0.13%
Portfolio turnover rate ...................... 32% 31% 36% 47% 33%
</TABLE>
- -------
See Notes to Financial Statements.
19
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SELECTED DATA BASED ON A SHARE OUTSTANDING THROUGHOUT THE PERIOD(S) INDICATED
<TABLE>
<CAPTION>
S&S LONG TERM INTEREST FUND 1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ............. $11.55 $11.28 $11.59 $10.52 $11.64
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income ....................... 0.74 0.76 0.77 0.80 0.74
Net realized and unrealized
gains (losses) on investments ............ 0.21 0.27 (0.31) 1.07 (1.03)
- ----------------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS ....................... 0.95 1.03 0.46 1.87 (0.29)
- ----------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
Net investment income ....................... 0.76 0.76 0.77 0.80 0.74
Net realized gains .......................... 0.21 0.00 0.00 0.00 0.09
- ----------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS ............................ 0.97 0.76 0.77 0.80 0.83
- ----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD ................. $11.53 $11.55 $11.28 $11.59 $10.52
======================================================================================================================
TOTAL RETURN(a) ................................ 8.49% 9.53% 4.23% 18.34% (2.50%)
RATIOS / SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) ..............................$2,964,131 $2,818,779 $2,842,343 $3,096,022 $2,806,433
Ratios to average net assets:
Net investment income .................... 6.30% 6.70% 6.87% 7.18% 6.66%
Expenses ................................. 0.09% 0.11% 0.13% 0.11% 0.11%
Portfolio turnover rate ..................... 225% 218% 194% 314% 219%
<FN>
- -----------
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.
</FN>
</TABLE>
- ------------
See Notes to Financial Statements.
20
<PAGE>
STATEMENTS OF ASSETS
AND LIABILITIES DECEMBER 31, 1998 (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 $2,709,305 and $3,117,711, respectively) ............ $ 4,219,461 $ 3,151,659
Short term investments (at amortized cost) ................... 129,152 163,202
Cash ......................................................... -- 214
Receivable for investments sold .............................. -- 28,345
Income receivables ........................................... 3,984 31,192
Receivable for fund shares sold .............................. 2,857 224
- ---------------------------------------------------------------------------------------------------------
TOTAL ASSETS .............................................. 4,355,454 3,374,836
- ---------------------------------------------------------------------------------------------------------
LIABILITIES
Options written, at market* .................................. -- 317
Distributions payable to shareholders ........................ -- 6,960
Payable upon return of securities loaned ..................... -- 229,697
Payable for investments purchased ............................ -- 172,066
Payable for fund shares redeemed ............................. 188 133
Payable to GEIC .............................................. 1,382 1,532
- ---------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES ......................................... 1,570 410,705
- ---------------------------------------------------------------------------------------------------------
NET ASSETS ...................................................... $ 4,353,884 $ 2,964,131
=========================================================================================================
NET ASSETS CONSIST OF:
Capital paid in .............................................. $ 2,845,339 $ 2,923,487
Undistributed net investment income .......................... 588 1,526
Accumulated net realized gain (loss) ......................... (2,203) 5,132
Net unrealized appreciation on:
Investments ............................................... 1,510,156 33,948
Written options ........................................... -- 38
Foreign currency related transactions ..................... 4 --
- ---------------------------------------------------------------------------------------------------------
NET ASSETS ...................................................... $ 4,353,884 $ 2,964,131
=========================================================================================================
Shares outstanding ($25.00 and $10.00 par value, respectively) .. 75,816 257,169
Net asset value, offering and redemption
price per share .............................................. $ 57.43 $ 11.53
<FN>
*Premium received for the S&S Long Term was $355.
</FN>
</TABLE>
- -----------
See Notes to Financial Statements.
21
<PAGE>
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998 (AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
S&S PROGRAM S&S LONG TERM
MUTUAL FUND INTEREST FUND
- ------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
INCOME:
<S> <C> <C>
Dividends ............................................. $ 58,441 $ 4,364
Interest .............................................. 3,725 178,969*
Less: Foreign taxes withheld .......................... (413) --
- ------------------------------------------------------------------------------------------------------
TOTAL INCOME ............................................. 61,753 183,333
- ------------------------------------------------------------------------------------------------------
EXPENSES:
Administration expenses ............................... 2,182 1,377
Shareholder servicing agent expenses .................. 127 123
Transfer agent fees ................................... 596 669
Custody and accounting expenses ....................... 393 254
Professional fees ..................................... 144 103
Registration, filing, printing and
miscellaneous expenses ............................. 153 145
- ------------------------------------------------------------------------------------------------------
TOTAL EXPENSES ........................................... 3,595 2,671
- ------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME .................................... 58,158 180,662
======================================================================================================
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
REALIZED GAIN (LOSS) ON:
Investments ........................................... 494,287 64,975
Futures ............................................... -- --
Written options ....................................... -- 2,434
Foreign currency related transactions ................. (40) 2,361
INCREASE (DECREASE) IN UNREALIZED APPRECIATION/
DEPRECIATION ON:
Investments ........................................... 297,144 (18,676)
Written options ....................................... -- (2)
Foreign currency related transactions ................. 4 (990)
- ------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
on investments ........................................ 791,395 50,102
- ------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ....................................... $ 849,553 $ 230,764
======================================================================================================
<FN>
* Income attributable to security lending activity, net of rebate expenses, for
the S&S Long term Interest Fund was $2,283.
</FN>
</TABLE>
- -------
See Notes to Financial Statements.
22
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 (AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
S&S PROGRAM S&S LONG TERM
MUTUAL FUND INTEREST FUND
- ------------------------------------------------------------------------------------------------------------------------
1998 1997 1998 1997
- ------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
<S> <C> <C> <C> <C>
Net investment income .................................. $ 58,158 $ 52,633 $ 180,662 $ 188,356
Net realized gain on investments,
futures, written options and
foreign currency related transactions ............... 494,247 397,201 69,770 38,717
Net increase (decrease) in unrealized
appreciation/depreciation ........................... 297,148 469,337 (19,668) 29,754
- ------------------------------------------------------------------------------------------------------------------------
Net increase from operations ........................... 849,553 919,171 230,764 256,827
- ------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income .................................. (58,284) (52,667) (186,009) (188,578)
Net realized gains ..................................... (493,417) (396,432) (53,358) --
- ------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS ....................................... (551,701) (449,099) (239,367) (188,578)
- ------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from
operations and distributions ........................... 297,852 470,072 (8,603) 68,249
- ------------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Proceeds from sale of shares ........................... 310,232 280,080 327,552 298,242
Value of distributions reinvested ...................... 505,407 413,300 224,491 180,252
Cost of shares redeemed ................................ (418,411) (295,478) (398,088) (570,307)
- ------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from
share transactions ..................................... 397,228 397,902 153,955 (91,813)
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ................... 695,080 867,974 145,352 (23,564)
NET ASSETS
Beginning of year ......................................... 3,658,804 2,790,830 2,818,779 2,842,343
- ------------------------------------------------------------------------------------------------------------------------
End of year ............................................... $4,353,884 $3,658,804 $ 2,964,131 $ 2,818,779
========================================================================================================================
UNDISTRIBUTED NET INVESTMENT
INCOME, END OF YEAR ....................................... $ 588 $ 754 $ 1,526 $ 4,512
CHANGES IN FUND SHARES
- ------------------------------------------------------------------------------------------------------------------------
Shares sold .................................................. 5,321 5,288 28,060 26,446
Issued for distributions reinvested .......................... 8,776 7,957 19,327 15,927
Shares redeemed .............................................. (7,234) (5,569) (34,188) (50,494)
- ------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN FUND SHARES ....................... 6,863 7,676 13,199 (8,121)
========================================================================================================================
</TABLE>
- --------
See Notes to Financial Statements.
23
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 1998
- --------------------------------------------------------------------------------
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 an 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 57%
of the S&S Program Mutual Fund and 72% 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 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 increases and decreases in net
assets from operations during the reporting period. Actual results may differ
from those estimates, but are expected to be immaterial.
The following summarizes the significant accounting policies of the Funds:
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 or original cost plus
accrued interest, both of which approximate current value. 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 specific 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 denominated in a foreign currency
are translated to U.S. dollars at the prevailing rates of exchange at period
end. Purchases and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the prevailing exchange rate on the respective
dates of the 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 or unrealized gain or loss from investments. Reported net realized
exchange gains or losses from foreign currency transactions represent gains or
losses on sale of foreign currencies, currency gains or losses between the trade
date and the settlement date on securities transactions, net realized gains and
losses on sales and maturities of forward foreign currency contracts, and the
difference between the amounts of foreign investment income and withholding
taxes accrued 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
arising from changes in the value of assets and liabilities as a result of
changes in foreign exchange rates are included as increases or decreases in
unrealized appreciation/ depreciation on foreign currency related transactions.
INCOME TAXES
The Funds intended to comply with all sections of the Internal Revenue Code
applicable to regulated investment companies and to distribute taxable income,
and realized 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. None of the Funds had capital loss carryovers. 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
24
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 1998
- --------------------------------------------------------------------------------
next tax year if the Fund so elects to defer such losses. The S&S Long Term
Interest Fund incurred and elected to defer currency losses of $94,369 at
October 31, 1998.
INVESTMENT INCOME
Corporate actions (including cash dividends) are recorded net of non-reclaimable
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 become available. Interest income is recorded on the accrual basis.
All premiums and discounts on taxable bonds are amortized to call or maturity
date, whichever is shorter, using the effective yield method.
EXPENSES
Expenses of the Funds which are directly identifiable to a specific Fund are
allocated to that Fund. Expenses which are not directly 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
S&S Long Term Interest Fund declares investment income dividends daily and pays
them monthly. The S&S Program Mutual Fund declares and pays dividends from
investment income annually. The Funds declare and pay net realized capital gain
distributions annually. The character of income and gains to be distributed is
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, losses deferred due to
wash sale transactions and deferred organization expenses. Reclassifications are
made to the Funds' capital accounts to reflect income and gains available for
distribution (or available capital loss carryovers) under income tax
regulations. These reclassifications have no impact on net investment income,
realized gains or losses, or net asset value of the Funds. 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 AND FORWARD COMMITMENTS
The Funds may purchase and sell securities on a when-issued or forward
commitment basis. These transactions are arrangements in which the Funds
purchase and sell securities with payment and delivery scheduled for a future
time. Settlement dates may be a month or more after entering into these
transactions, and the purchase of securities on a when-issued or forward
commitment basis involves a risk of loss if the value of the underlying
securities declines prior to the settlement date. The price of the underlying
securities and the date when these 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 prices and yields. In
connection with such purchases, the Funds maintain cash or liquid assets in an
amount equal to purchase commitments for such underlying securities until
settlement date and for sales commitments the Funds maintain equivalent
deliverable securities as "cover" for the transaction. Unsettled commitments are
valued at current market value of the underlying security. Daily fluctuations in
the value of such contracts are recorded as unrealized gains or losses. The
Funds will not enter into such agreements for the purpose of investment
leverage.
FOREIGN SECURITIES
The Funds may invest in foreign securities, subject to certain limitations.
There are certain additional risks involved when investing in foreign securities
(including those denominated in foreign currencies) that are not inherent in
domestic securities. These risks may involve, foreign currency exchange rate
fluctuations; changes in foreign exchange control regulations; application of
foreign tax laws; including withholding taxes; lack of uniform accounting,
auditing and financial reporting standards; and increased uncertainty about
changes in governmental administration or economic or monetary policy (in the
United States or abroad). The Funds may be subject to restrictions on the
repatriation or foreign currencies and may be limited on the use or removal of
its assets.
25
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 1998
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS
The Funds may enter into forward currency contracts to facilitate transactions
in foreign denominated securities and to manage the Fund's currency exposure. A
forward foreign currency contract is an agreement between two parties to buy or
sell currency at a set price on a future date. Contracts to sell are generally
used to hedge the Fund's investments against currency fluctuations or to offset
a previous contract to buy. Contracts to buy are generally used to hedge
exposure to foreign currencies or to offset a previous contract to sell.
Currency exposure exists during the period that a foreign denominated investment
is held or during a period between the trade date and settlement date of an
investment which is purchased or sold. These contracts involve market risk in
excess of the unrealized gain or loss reflected in the fund's Statement of
Assets and Liabilities. This amount represents the aggregate exposure to each
currency the Fund has acquired or hedge through currency contracts at year end.
Losses may arise from changes in the value of foreign currency or if the
counterparties do not perform under the contracts' terms. An open contract is
marked-to-market daily and the change in the market value is recorded by the
Fund as an unrealized gain or loss. When the contract is closed, the Fund
records a realized gain or loss equal to the difference between the value at the
time it was opened and the value at the time it was closed. The Funds may not
enter into forward foreign currency transactions for speculative purposes.
REPURCHASE AGREEMENTS
The Funds may enter into repurchase agreements. The Funds' custodian takes
possession of the collateral pledged for investments in repurchase agreements on
behalf of the Funds. The Funds value the underlying collateral daily on a
mark-to-market basis to determine that the value, including accrued interest, is
at least equal to the repurchase price. In the event of default of the
obligation to repurchase, the Funds have the right to liquidate the collateral
and apply the proceeds in satisfaction of the obligation. There is the risk that
the collateral may be insufficient to meet the obligation in the event of
default.
FINANCIAL FUTURES CONTRACTS AND OPTIONS
The Funds may invest in financial futures contracts and purchase and write
options, subject to certain limitations. The Funds may invest in futures and
options 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. Buying futures, writing puts and buying calls tend to increase a
Fund's exposure to the underlying instrument. Selling futures, buying puts and
writing calls tend to decrease a Fund's exposure to the underlying instruments
or hedge other Fund investments. The Funds will not enter into a transaction
involving futures and options on futures for speculative purposes.
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, shown in the Schedule of Investments under the
captions "Other Information", "Call Options Written" and "Put Options Written"
reflect the extent of the involvement the Funds have in the particular classes
of these instruments. Losses may be caused by an imperfect correlation between
movements in the price of the underlying securities and interest rates and
currency. Losses also may arise if there is an illiquid secondary market for the
instruments, or an inability of counterparties to perform.
Upon entering into a financial 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 the sales of a
security as a result of exercising a written call option, the purchase cost of a
security acquired from exercising a written put option, or the proceeds on
26
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 1998
- --------------------------------------------------------------------------------
the sale of the security from exercising a purchased put option or cost of the
security acquired from exercising a purchased call option is adjusted by the
amount of original premium received or paid.
SECURITY LENDING
The Funds may loan securities to brokers, dealers, and financial institutions
determined by GEIC to be creditworthy, up to a maximum of 20% of the total value
of the Fund's assets. The loans of securities will be secured by collateral in
the form of cash or other liquid assets, which will be segregated and maintained
with the custodian in an amount at least equal to the current market value of
the loaned securities. The Funds receive a lender fee in addition to the
interest and dividends on the loaned securities during the term of the loan. A
Fund will receive any gain or loss in the market value of its loaned securities
and of securities in which cash collateral is invested net of any rebate during
the term of the loan. 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
using proceeds from the sale of collateral.
3. FEES AND COMPENSATION PAID TO AFFILIATES
ADVISORY AND ADMINISTRATION FEES
During 1998, 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.
4. AGGREGATE UNREALIZED APPRECIATION AND DEPRECIATION
(DOLLARS IN THOUSANDS)
Aggregate gross unrealized appreciation/(depreciation) of investments for each
Fund at December 31, 1998, were as follows:
GROSS GROSS NET
UNREALIZED UNREALIZED UNREALIZED
APPRECIATION DEPRECIATION APPRECIATION
- ---------------------------------------------------------------
S&S Program
Mutual Fund $1,564,639 $54,483 $1,510,156
S&S Long Term
Interest Fund 55,347 21,399 33,948
The aggregate cost of each Fund's investments was substantially the same for
book and federal income tax purposes at December 31, 1998.
5. OPTIONS
(CONTRACTS AND DOLLARS IN THOUSANDS)
During the period ended December 31, 1998, the following option contracts were
written:
S&S LONG TERM INTEREST FUND
- ---------------------------------------------------------
NUMBER
OF CONTRACTS PREMIUM
- ---------------------------------------------------------
Balance as of
December 31, 1997 90,110 $ 315
Written 849,480 3,382
Closed and Expired (724,820) (2,770)
Exercised (129,160) (572)
- ---------------------------------------------------------
Balance as of
December 31, 1998 85,610 $ 355
- ---------------------------------------------------------
27
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- DECEMBER 31, 1998
- --------------------------------------------------------------------------------
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, 1998, were as follows:
PURCHASES SALES
- ---------------------------------------------------------
S&S Program
Mutual Fund $ 1,229,144 $ 1,386,489
S&S Long Term
Interest Fund 740,534,697 766,201,952
The cost of purchases and the proceeds from sales of long-term U.S. Government
securities for the year ended December 31, 1998, were as follows:
PURCHASES SALES
- ---------------------------------------------------------
S&S Program
Mutual Fund $ 5,659 $ 6,634
S&S Long Term
Interest Fund 5,922,523 5,685,047
7. SECURITY LENDING
At December 31, 1998, the S&S Long Term Interest Fund, which is the only fund
that participated in securities lending, loaned securities having a value,
including accrued interest, of approximately $227,100,220 and received
$232,804,828 in cash and letters of credit as collateral for the loans.
28
<PAGE>
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
KPMG 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, 1998, 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, 1998, by correspondence with the custodian. As to securities
purchased or sold but not yet received or delivered, we performed other
appropriate auditing procedures. 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, 1998,
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 LLP
New York, New York
February 4, 1999
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.
30
<PAGE>
SCHEDULE OF INVESTMENTS (DOLLARS IN THOUSANDS) -- DECEMBER 31, 1998
- --------------------------------------------------------------------------------
(UNAUDITED)
S&S SHORT TERM INTEREST FUND
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
BONDS AND NOTES -- 93.4%
- --------------------------------------------------------------------------------
U.S. TREASURIES -- 27.7%
U.S. Treasury Notes
5.75% 11/15/00 ............. $42,388 $ 43,209
5.375% 02/15/01 ............. 7,050 7,158
6.625% 07/31/01 ............. 52,345 54,848
6.625% 03/31/02 ............. 56,780 60,018
6.50% 05/31/02 ............. 20,000 21,116
5.875% 09/30/02 ............. 33,450 34,767
5.75% 11/30/02 ............. 27,137 28,133
TOTAL U.S. TREASURIES
(COST $247,867) .............. 249,249
FEDERAL AGENCIES -- 7.5%
Federal Home Loan Bank
5.625% 03/19/01 ............. 15,155 15,356
Federal National Mortgage Assoc.
5.56% 07/24/00 ............. 13,890 14,010
5.10% 09/25/00 ............. 38,030 38,101
52,111
TOTAL FEDERAL AGENCIES
(COST $67,750) ............... 67,467
AGENCY MORTGAGE BACKED -- 10.7%
Federal Home Loan Mortgage Corp.
8.00% 08/01/03 ............. 12,140 12,407
7.50% 11/01/08 ............. 1,576 1,605
6.00% 12/01/08 ............. 989 991
15,003
Federal National Mortgage Assoc.
6.00% 05/01/01 ............. 320 321
9.00% 08/01/10 ............. 15,489 16,313
16,634
Federal National Mortgage
Assoc. REMIC
6.221% 12/01/2098 ........... 14,174 14,360
Government National
Mortgage Assoc.
9.00% 08/15/09 ............. 20,192 21,164(j)
9.50% 12/15/09 ............. 27,464 29,112(j)
50,276
TOTAL AGENCY MORTGAGE BACKED
(COST $96,979) ............... 96,273
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
AGENCY COLLATERALIZED MORTGAGE OBLIGATIONS -- 10.7%
Federal Home Loan Mortgage Corp.
5.929% 01/01/99 ............ $ 9,010 $ 9,021
13.46% 09/15/05 ............ 12 101
16.21% 07/15/06 ............ 23 352
9,474
Federal National Mortgage Assoc.
6.504% 12/01/98 ............ 9,771 9,847
5.67% 05/26/00 ............ 9,525 9,613
5.38% 01/16/01 ............ 24,325 24,511
6.59% 09/01/02 ............ 12,908 13,081
6.88% 11/17/06 ............ 5,433 5,505
5.47% 11/25/06 ............ 1,753 1,703(d)
7.00% 06/18/20 ............ 2,502 2,502(b)
66,762
Government National Mortgage Assoc.
9.00% 12/15/09 ............ 19,117 20,376(j)
TOTAL AGENCY COLLATERALIZED MORTGAGE OBLIGATIONS
(COST $96,214) .............. 96,612
ASSET BACKED -- 8.3%
Advanta Mortgage Loan Trust Corp.
6.30% 07/25/25 ............ 2,607 2,590
American Express Master Trust
5.375% 07/15/01 ............ 4,208 4,209
AT & T Universal Card Master Trust
5.95% 10/17/02 ............ 10,740 10,857
Capital Asset Research Funding L.P.
6.40% 03/15/99 ............ 2,328 2,338
Citibank Credit Catd Master Trust I
5.85% 04/10/03 ............ 4,700 4,746
Fleetwood Credit Grantor Trust
6.40% 05/15/13 ............ 6,690 6,723
HFC Home Equity Loan
4.65% 12/20/08 ............ 157 156
MBNA Master Credit Card Trust
6.05% 11/15/02 ............ 9,700 9,788
Premier Auto Trust
5.77% 01/06/02 ............ 9,750 9,796(d)
6.34% 01/06/02 ............ 9,967 10,141(d)
5.78% 04/08/03 ............ 9,300 9,387
Provident Bank Home Equity
Loan Trust
7.18% 04/21/13 ............ 3,509 3,556
TOTAL ASSET BACKED
(COST $74,179) .............. 74,287
- -------
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, 1998
- --------------------------------------------------------------------------------
(UNAUDITED)
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
CORPORATE NOTES -- 18.5%
Arkla Inc.
8.875% 07/15/99 ............. $ 4,150 $ 4,218
Carnival Corp.
5.65% 10/15/00 ............. 4,000 4,010
Cleveland Electric
Illuminating Co.
7.19% 07/01/00 ............. 5,805 5,891
Conseco Inc.
6.40% 06/15/01 ............. 6,480 6,243
Electronic Data Systems Corp.
6.85% 05/15/00 ............. 3,000 3,066(b)
Federated Department Stores Inc.
6.125% 09/01/01 ............. 4,480 4,531
Fleet Credit Card LLC
6.45% 10/30/00 ............. 9,750 9,920
Ford Motor Credit Corp.
5.65% 10/15/01 ............. 9,740 9,764(d)
6.50% 02/28/02 ............. 6,000 6,183
7.32% 05/23/02 ............. 9,850 9,899
Goldman Sachs Group L.P.
6.20% 12/15/00 ............. 1,930 1,955(b)
Korea Development Bank
9.60% 12/01/00 ............. 3,000 3,013
LG&E Capital Corp.
5.75% 11/01/01 ............. 1,525 1,515(b)
Loewen Group International Inc.
6.70% 10/01/99 ............. 1,725 1,656(b)
Long Island Lighting
7.30% 07/15/99 ............. 9,000 9,102
MCI WorldCom Inc.
6.125% 04/15/02 ............. 950 965
Monsanto Co.
5.375% 12/01/01 ............. 9,175 9,139(b)
National City Capital Trust
6.75% 06/01/99 ............. 9,850 9,886
Niagara Mohawk Power Corp.
9.50% 06/01/00 ............. 2,000 2,098
Oryx Energy Co.
9.50% 11/01/99 ............. 4,000 4,106
Pennzoil Co.
10.625% 06/01/01 ............. 6,700 6,813
Petroleos Mexicanos
7.60% 06/15/00 ............. 4,000 3,960(b)
Raytheon Co.
5.95% 03/15/01 ............. 6,750 6,809
Republic of Columbia
8.75% 10/06/99 ............. 3,950 3,980
RJR Nabisco Inc.
6.30% 08/26/99 ............. 10,000 9,994(b)
Time Warner - Pass - Through Asset Trust
6.10% 12/30/01 ............. 2,140 2,175(b)
Tyco International Ltd.
6.50% 11/01/01 ............. 8,725 8,913
USA Waste Services Inc.
6.125% 07/15/01 ............. 4,000 4,026
Vastar Resources Inc.
6.00% 04/20/00 ............. 1,200 1,207
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
Westinghouse Electric Corp.
8.875% 06/01/01 .............$ 900 $ 959
Woolworth Corp.
7.00% 06/01/00 ............. 9,850 9,827
TOTAL CORPORATE NOTES
(COST $165,619) .............. 165,823
NON-AGENCY MORTGAGE BACKED SECURITIES -- 8.2%
Asset Securitization Corp.
6.50% 02/14/41 ............. 12,668 12,850
BCF
7.05% 12/25/08 ............. 15,843 15,873
Chemical Master Credit
Card Trust I
5.55% 09/15/03 ............. 12,650 12,689
Discover Card Master Trust I
5.80% 09/16/03 ............. 7,000 7,053
DLJ Mortgage Acceptance Corp.
5.908% 01/08/99 ............. 7,597 7,569(b)
6.99% 02/15/05 ............. 4,128 4,120(b)
GS Mortgage Securities Corp.
6.94% 07/13/30 ............. 8,963 9,204
Lehman FHA Title I Loan Trust
7.30% 05/25/17 ............. 1,398 1,409
Vornado Finance Corp.
6.36% 12/01/00 ............. 2,000 2,022(b)
TOTAL NON-AGENCY MORTGAGE BACKED SECURITIES
(COST $82,411) ............... 72,789
NON-AGENCY COLLATERALIZED MORTGAGE OBLIGATIONS -- 1.8%
Salomon Brothers Mortgage
Securities Inc.
8.125% 11/01/12 ............. 2,291 2,307
6.469% 01/20/28 ............. 14,263 14,265
TOTAL NON-AGENCY COLLATERALIZED MORTGAGE OBLIGATIONS
(COST $16,608) ............... 16,572
TOTAL INVESTMENTS IN SECURITIES
(COST $837,627) .............. 839,072
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 5.5%
- --------------------------------------------------------------------------------
GEI Short Term Investment Fund
(Cost $ 49,888) .............. 49,888 49,888
OTHER ASSETS AND LIABILITIES,
NET 1.1% ..................... 9,843
---------
NET ASSETS-- 100% ............... $ 898,803
=========
- ---------------
See Notes to Schedules of Investments (which are unaudited for the purposes of
this fund).
32
<PAGE>
SCHEDULE OF INVESTMENTS (DOLLARS IN THOUSANDS) -- DECEMBER 31, 1998
- --------------------------------------------------------------------------------
(UNAUDITED)
S&S MONEY MARKET FUND
- --------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT COST
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 100.6%
- --------------------------------------------------------------------------------
U.S. GOVERNMENT (d) -- 41.2%
Federal Farm Credit Bank
4.80% 01/19/99 - 02/12/99 .. $45,490 $ 45,336
Federal Home Loan Bank
5.21% 01/04/99 ............. 48,290 48,270
4.89% 01/13/99 ............. 15,900 15,875
5.23% 03/19/99 ............. 77,695 76,863
4.91% 03/31/99 ............. 41,350 40,854
181,862
Federal Home Loan Mortgage Corp.
4.93% 01/08/99 - 01/14/99 .. 34,728 34,669
5.17% 01/28/99 ............. 24,820 24,727
5.13% 02/17/99 - 02/26/99 .. 77,410 76,862
4.94% 03/30/99 ............. 22,666 22,396
158,654
Federal National Mortgage Assoc.
5.27% 02/18/99 - 03/19/99 .. 82,210 81,502
5.13% 02/25/99 ............. 8,300 8,238
5.01% 04/01/99 ............. 56,340 55,660
4.96% 04/08/99 ............. 7,000 6,910
4.95% 05/06/99 ............. 44,163 43,424
195,734
TOTAL U.S. GOVERNMENT
(COST $581,586) .............. 581,586
COMMERCIAL PAPER -- 36.9%
Abbey National PLC
5.11% 02/08/99 ............. 31,720 31,549(d)
5.179% 02/08/99 ............. 26,000 25,858(d)
Associates Corp. of
North America
5.25% 02/04/99 ............. 47,500 47,264
Bank of Nova Scotia
5.08% 02/19/99 ............. 58,920 58,513
Deutsche Bank Finance Inc.
5.89% 01/04/99 ............. 50,000 49,975
6.00% 01/04/99 ............. 12,500 12,494
Dresdner U.S. Finance
5.40% 01/05/99 ............. 1,200 1,199
Halifax Building Society
5.06% 01/08/99 ............. 39,220 39,181
5.20% 01/08/99 ............. 8,000 7,992
5.38% 01/11/99 ............. 1,500 1,498
Morgan (J.P.) & Co. Inc.
5.12% 02/16/99 ............. 50,000 49,673
PRINCIPAL AMORTIZED
AMOUNT COST
- --------------------------------------------------------------------------------
Morgan Stanley, Dean Witter
5.29% 02/24/99 ............. $47,510 $ 47,133
Rabobank Nederland N.V.
5.26% 01/13/99 ............. 1,700 1,697
Rabobank USA Financial Corp.
5.24% 01/13/99 ............. 47,000 46,918
Republic National Bank of
New York
5.05% 03/19/99 ............. 50,000 50,000
UBS Finance Delaware Inc.
5.21% 01/11/99 ............. 46,000 45,933
5.306% 01/11/99 ............. 2,690 2,686
TOTAL COMMERCIAL PAPER
(COST $519,563) .............. 519,563
CERTIFICATES OF DEPOSIT -- 0.3%
ABN Amro
5.15% 03/01/99
(COST $ 4,000) ............... 4,000 4,000
YANKEE CERTIFICATES OF DEPOSIT -- 20.7%
Algemene Bank Nederland N.V.
5.14% 03/04/99 ............. 50,000 50,000
Bank of Montreal (Chicago)
5.30% 01/08/99 ............. 46,840 46,840
Bayerische Vereinsbank AG
5.25% 01/25/99 ............. 51,320 51,320
Canadian Imperial
5.14% 01/25/99 ............. 45,000 45,000
Dresdner Bank AG
5.34% 01/19/99 ............. 47,490 47,490
Societe Generale
5.20% 01/25/99 ............. 50,560 50,560
TOTAL YANKEE CERTIFICATES OF DEPOSIT
(COST $291,210) .............. 291,210
TIME DEPOSIT -- 1.5%
Bank of America
4.75% 01/04/99
(COST $ 21,320) .............. 21,320 21,320
TOTAL SHORT-TERM INVESTMENTS
(COST $1,417,679) ............ 1,417,679
OTHER ASSETS AND LIABILITIES,
NET (0.6)% ................... (8,010)
----------
NET ASSETS-- 100% ............... $1,409,669
==========
- --------------
See Notes to Schedules of Investments (which are unaudited for the purposes of
this fund).
33
<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, 1996, 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, 1996
<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 (f) DIVIDENDS(b) (c)(d) DISTRIBUTIONS (c)(e)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1996 ................. $1,200 $ 29 $1,229 $ 17 $1,412 $ 128 $1,347
1997 ................. 2,400 129 2,529 61 3,586 372 3,142
1998 ................. 3,600 292 3,892 112 6,480 647 5,239
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)
- -----------------------------------------------------------------------------------------------------------------------
1996 ................. $1,200 $ 42 $1,243 $ 46 $1,255 $ 36 $1,236
1997 ................. 2,400 168 2,574 177 2,642 143 2,543
1998 ................. 3,600 370 3,995 474 4,119 321 3,921
</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. Past
performance is no guarantee of future results.
(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 $4.29, $6.52, and $7.40 per unit were paid on Mutual Fund
Shares in 1996, 1997, and 1998, respectively. The LT Fund paid a capital
gains distribution of $0.21 in 1998.
(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, which is contained in the GE S&S Program Plan Document.
(f) The redemption value assumes the bonds are held longer than five years and
does not include the 3-month interest penalty that would be applied if the
bonds were redeemed before five years.
34
<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, 1996 in Bonds, Stock, Mutual Fund, ST Fund, LT Fund, and MM
Fund.
VALUE OF INVESTMENT OF $1,000
Investment Made on January 1, 1996
<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(f) DIVIDENDS(b) DIVIDENDS(d) DISTRIBUTIONS (c)(e)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1996 ............... $ 45 $1,045 $ 33 $1,411 $ 127 $1,231
1997 ............... 101 1,101 64 2,130 327 1,637
1998 ............... 157 1,157 99 3,003 582 2,027
- ----------------------------------------------------------------------------------------------------------
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)
- ----------------------------------------------------------------------------------------------------------
1996 ............... $ 64 $1,056 $ 68 $1,042 $ 56 $1,056
1997 ............... 134 1,129 141 1,141 115 1,115
1998 ............... 205 1,207 240 1,238 178 1,178
- ----------------------------------------------------------------------------------------------------------
</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, 1998:
MUTUAL FUND LT FUND
- --------------------------------------------------------------------------------
Management Expenses ....................... .05% .05%
Other Expenses ............................ .04% .04%
------- -------
Total Fund Operating Expenses ............ .09% .09%
======= =======
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 $ 12
LT Fund ...................... 1 3 5 12
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 34 FOR EXPLANATION OF NOTES (b), (c), (d), (e) AND (f).
35
<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 OR OTHER INVESTMENT EXPERIENCE OCCURING 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
DESCRIPTION OF INVESTMENT
ALTERNATIVES
I. BONDS
The Bonds in which participants may invest are Series "EE" Savings Bonds
issued by the U.S. Treasury. Such purchase may be made only from the
participant's after-tax savings. The option to purchase Bonds under the S&SP is
subject to numerous restrictions which are more fully described in the GE
Benefits Handbook.
II. STOCK
The participants may invest in shares of Stock. The Stock held in a
participant's account will increase or decrease in value depending on how well
the Stock performs in the stock market. Participants should be aware that an
investment in stock of any company, including the Stock, may be subject to
greater market volatility than investing in a diversified portfolio of
securities. There are no restrictions on the exercise of voting, tender or
similar rights appurtenant to a participant's investment in Stock. The option to
purchase Stock under the S&SP is more fully described in the GE Benefits
Handbook.
It is the policy of the Trustees of the S&SP that information relating to
participant transactions and voting with respect to Stock in the S&SP shall be
maintained in confidence. While participants may easily access information
relating to their own accounts, third party access to participant information is
restricted through the use of PIN numbers. In addition, those individuals whose
jobs require them to have access to S&SP records are instructed concerning the
confidential nature of this information. The Trustees of the S&SP (c/o General
Electric Investment Corporation, 3003 Summer Street, Stamford, CT
36
<PAGE>
GE S&S PROGRAM DISCLOSURE STATEMENT
- --------------------------------------------------------------------------------
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. 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
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.
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 pri-
37
<PAGE>
GE S&S PROGRAM DISCLOSURE STATEMENT
- --------------------------------------------------------------------------------
vate 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 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.
38
<PAGE>
GE S&S PROGRAM DISCLOSURE STATEMENT
- --------------------------------------------------------------------------------
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. This investment restriction is not
intended to prohibit the mutual fund from engaging in such transactions
with other investment companies or accounts managed by the investment
manager or the investment manager's affiliates when the transactions are
entered into in accordance with the 1940 Act and the rules thereunder.
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.
39
<PAGE>
GE S&S PROGRAM DISCLOSURE STATEMENT
- --------------------------------------------------------------------------------
2. THE ST FUND, THE LT FUND AND THE MM FUND
The ST Fund, the LT Fund and the MM Fund will not:
a. purchase securities on margin or sell short or participate in a joint
trading account;
b. deal in options to buy or sell securities except to the extent permitted
by law;
c. borrow money or property except as a temporary measure to meet the cash
or administrative needs of such Funds. In no event will the amount of
such borrowings exceed 10% of such Funds' total assets taken at market
value at the time of such borrowing;
d. make cash loans to others except through the purchase of debt securities
in accordance with such Funds' investment objectives;
e. invest directly in real estate (except as specified in Paragraph A.3.
above with respect to investments of the LT Fund) or invest in interests
in oil, gas or other mineral lease or production agreements;
f. act as an underwriter of securities for other issuers except that such
Fund may acquire securities under circumstances where if they are later
resold it may be deemed to be an underwriter under the 1933 Act;
g. purchase securities for the purpose of exercising control or management;
h. pledge, mortgage or hypothecate any of its assets except, that, to secure
borrowings permitted by subparagraph c, it may pledge securities which,
together with all such securities previously so pledged, at the time of
pledge, do not exceed 10% of such Funds` total assets;
i. unless otherwise permitted by law, purchase from or sell directly to any
of its officers or Trustees or the officers or directors of GEIC, or any
other affiliate (as defined in the 1940 Act) of such Fund or any
affiliate of such affiliate, portfolio securities or other property of
such Fund; or
j. unless otherwise permitted by law, invest in securities of the Company or
its affiliates, or in securities of an investment manager of such Fund
and will not during the existence of any underwriting syndicate purchase
any securities for which its investment manager is acting as principal
underwriter. For purposes of this restriction, purchases of securities
from underwriting syndicates in which PaineWebber Incorporated, an
affiliate of GEIC, is a participant are not prohibited provided such
investments are made in accordance with the 1940 Act and the rules
thereunder.
In addition to the foregoing, the LT Fund will not:
a. purchase any security if as a result of such purchase more than 25% of
its total assets would be invested in a particular industry;
b. purchase any security if as a result of such purchase more than 25% of
its total assets would be subject to legal or contractual restrictions
on resale; or
c. invest in the securities of registered investment companies.
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GE S&S PROGRAM DISCLOSURE STATEMENT
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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
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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
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A Fund's unit value may change significantly when the currencies, other than
the U.S. dollar, in which the Fund's portfolio investments are denominated
strengthen or weaken against the U.S. dollar. Currency exchange rates generally
are determined by the forces of supply and demand in the foreign exchange
markets and the relative merits of investments in different countries as seen
from an international perspective. Currency exchange rates can also be affected
unpredictably by intervention by U.S. or foreign governments or central banks or
by currency controls or political developments in the United States or abroad.
COVERED OPTION WRITING. The ST Fund and the LT Fund may purchase and write
put and call options on securities. Upon the exercise of a put option written by
the ST Fund or the LT Fund, the Fund may suffer a loss equal to the difference
between the price at which the Fund is required to purchase the underlying
security and its market value at the time of the option exercise, less the
premium received for writing the option. Upon the exercise of a call option
written by the ST Fund or the LT Fund, the Fund may suffer a loss equal to the
excess of the security's market value at the time of the option's exercise over
the Fund's acquisition cost of the security, less the premium received from
writing the option. In addition, no assurance can be given that the ST Fund or
the LT Fund will be able to effect closing purchase transactions at a desired
time. The ability of the ST Fund and the LT Fund to engage in closing
transactions with respect to options depends on the existence of a liquid
secondary market. Although the ST Fund and the LT Fund will generally purchase
or write securities options only if a liquid secondary market appears to exist
for the option purchased or sold, no such secondary market may exist or the
market may cease to exist.
The ST Fund and the LT Fund will engage in hedging transactions only when
deemed advisable by GEIC. Successful use by the ST Fund and the LT Fund of
options will depend on GEIC's ability to predict correctly movements in the
direction of the securities underlying the option used as a hedge. Losses
incurred in hedging transactions and the costs of these transactions will affect
the Fund's performance.
SECURITIES INDEX OPTIONS. The ST Fund and the LT Fund may each purchase
options on securities indexes. Securities index options are subject to position
and exercise limits and other regulations imposed by the exchange on which they
are traded. The ability of the ST Fund and the LT Fund to engage in closing
purchase transactions with respect to securities index options depends on the
existence of a liquid secondary market. Although the ST Fund and the LT Fund
will generally purchase or write securities index options only if a liquid
secondary market for the options purchased or sold appears to exist, no such
secondary market may exist, or the market may cease to exist at some future
date, for some options. No assurance can be given that a closing purchase
transaction can be effected when GEIC desires that the ST Fund or the LT Fund
engage in such a transaction.
FUTURES AND OPTIONS ON FUTURES. The ST Fund and the LT Fund may invest in
financial and bond index futures or related options. The uses of futures
contracts and options on futures contracts as a hedging device involves several
risks. No assurance can be given that a correlation will exist between price
movements in the underlying securities or index and price movements in the
securities that are the subject of the hedge. Positions in futures contracts and
options on futures contracts may be closed out only on the exchange or board of
trade on which they were entered, and no assurance can be given that an active
market will exist for a particular contract or option at any particular time.
Losses incurred in hedging transactions and the costs of these transactions will
affect the Fund's performance.
FORWARD CURRENCY TRANSACTIONS. The ST Fund and the LT Fund may engage in
forward currency transactions. In entering into forward currency contracts, the
ST Fund and the LT Fund will be subject to a number of risks and special
considerations. The market for forward currency contracts, for example, may be
limited with respect to certain currencies. The existence of a limited market
may in turn
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GE S&S PROGRAM DISCLOSURE STATEMENT
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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
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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
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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,
PRESIDENT AND CHIEF EXECUTIVE OFFICER, 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 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
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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
OR VISIT BENEFITS.GE.COM ON THE GENET
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
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BULK RATE
U.S. POSTAGE
PAID
CANTON, MA
PERMIT NO. 313
----------------
GE S&S FUNDS
3003 SUMMER STREET
STAMFORD, CT 06904-7900
DISTRIBUTOR
GE INVESTMENT DISTRIBUTORS INC.
MEMBER NASD AND SIPC
777 LONG RIDGE ROAD, BUILDING B
STAMFORD, CT 06927
[GE LOGO OMITTED]
SS-2 (2/99)
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