To Our Investors: I assumed the CEO job on September 7, 2001, a fact most of you know. The week after September 11, GE’s stock was in a “free fall.” On September 21, GE opened at $29 and then stabilized. As the stock hit $34 during the fall, I bought 15,000 shares thinking, “I love the Company and when will it ever be this cheap again?” The answer turned out to be — in 2006. You can only believe one thing if you run GE or own GE stock: Consistent earnings and cash flow growth, with expanding returns, increase shareowner value. This is a long-term investment. There are no short-term tricks. We lead the Company to grow earnings and cash fl ow with high returns. We invest and deliver consistently. If you take out the effect of non-cash pension, over the last fi ve years we have nearly doubled GE’s profits from $11 billion in 2001 to $21 billion. Cash flow from operations has made similar progress, growing to $24.6 billion. Our return, at 18.4%, has increased 220 basis points in the last two years and is near our target. We strive to be a reliable growth company. Our earnings growth has been 11% over one year, 10% over fi ve years, 11% over 10 years, 12% over 15 years and 11% over 20 years. Over the past 20 years, the S&P 500’s earnings growth has averaged 8%. The question is: Has reliable growth gone out of style? Alternative investments such as hedge funds are very popular today. GE’s PE ratio is only a modest premium to that of the S&P 500, despite our strong performance. We don’t believe reliable growth has gone out of style. We know that reliable growth is always in style for long-term investors. They look at the Company over an extended horizon, like I do. They benefit from a company that anticipates change in the envi- ronment and executes aggressively. This is your GE. A reliable growth company must have the courage to invest and the discipline to deliver. It took courage to invest over $1 billion in a new jet engine, such as the GE90, with minimal returns for more than 10 years. Today, because of these investments, GE enjoys exceptional success in commercial aviation. The GE90 engine should generate $40 billion of revenues over the next 30 years. It took courage to invest $11 billion to acquire Amersham in 2004. This was our biggest industrial acquisition, and it gave us capability in molecular diagnostics. Today, we have a transformed Healthcare business that is a leader in the early detection of disease. At the same time, we will always be disciplined in our actions. It takes discipline to be one of only six U.S. industrial companies with a “Triple-A” balance sheet. It is tempting, particularly today, to add more leverage. However, we like the fi nancial fl exibility of a strong balance sheet. ge 2006 annual report 3

letter to investors Delivering on commitments is important in our culture. Many of our mornings begin with meetings to review working capital or pric- ing. We “sweat” the details required to run a successful company. Building a reliable growth company that invests and delivers requires a unique team. They must be “ambidextrous” managers. They are expected to deliver on commitments in the short term and required to invest to build leadership over the long term. Because we are a reliable growth company, this is the best time to invest in GE. The global economic environment over the past few years has been benign. We have had solid economic growth, volatility has been low and the risk environment has been stable. The future may be different. The engine of global economic growth has been the U.S. consumer, propelled by historically low interest rates. While consumers are still solid, 17 interest rate increases over the last two and a half years have mellowed them a bit. In almost any economic environment, GE is positioned for sustained high single-digit revenue and double-digit earnings growth, while expanding margins and returns. We have used our size and unique multi-business structure to build early leadership positions in the trends that shape the future. At the same time, we remain disciplined in the application of our strategic principles to deliver consistent performance. This is the story of how we invest and deliver. Winning in the Future To be a reliable growth company requires the ability to concep- tualize the future. We are investing to capitalize on the major growth trends of this era that will grow at multiples of the global GDP growth rate. We are using our breadth, financial strength and intellectual capital to create a competitive advantage. These are the trends where GE is building leadership: Infrastructure Technology. There will be $4 trillion invested in global infrastructure by 2015. GE has the broadest array of infra- structure products, services and financing in the world. From Energy to Aviation to Transportation to Water to Oil & Gas, GE is solving customers’ infrastructure challenges around the world. We have more than $120 billion of infrastructure products and services revenues in our backlog with another $60 billion of Infrastructure financing assets generating returns for our investors. When our customers invest in infrastructure, they are looking for innovation, reliability and financial strength. GE has a leadership position and can deliver for customers in a unique way. Emerging Markets. These markets include China, India, Eastern Europe, Russia, Middle East, Africa, Latin America and Southeast Asia. They are growing at 3X the global GDP rate based on popu- lation growth and high oil prices. GE had $10 billion of emerging markets revenues in 2000. Today we have $29 billion, and we could have $50 billion by 2010. We have a great set of financial, technical and services offerings that we integrate to accelerate growth. We have already invested in people and capability to establish leadership in these regions. Only GE has the breadth to adopt a “company-to-country” approach to emerging markets. When we build a healthcare facility in Saudi Arabia, we also build a relationship that benefi ts GE as a whole. Environmental Solutions. The challenges of global warming, water scarcity and conservation permeate every part of the world. While government policies may differ, there is a growing consensus among our customers that they value technology that can preserve the environment and achieve productivity at the same time. Our ecomaginationSM initiative is designed to drive growth by creating innovative solutions to environmental challenges. We have already launched 45 products and have engaged hundreds of customers. When we started, we had $6 billion of revenues in ecomagination products in 2006, we had $12 billion and by 2010, we are targeting more than $20 billion. GE has the technical breadth and credibility and is building partnerships and capability that should secure decades of accel- erated growth. Digital Connections. Our customers are increasingly using the Internet. Digitization facilitates rapid distribution and knowledge transfer to a fragmented customer base. GE is positioned to capitalize on digitization. We have thousands of engines, turbines, locomotives and scanners in our installed base. These have been digitized, so that we can provide our cus- tomers with interactive decision support to boost productivity. These range from simple online tools to improve a locomotive’s fuel efficiency to a web-based electronic medical record. Today, we have $4 billion of fast-growth digital services. In GE Money, we are originating loans online, which allows us to reach new consumers with tailored offerings. GE is a leader, and could originate $15 billion through the Internet by 2009. The most important impact of the Internet is in our NBC Universal (NBCU) entertainment business. We are a leader in content and the Internet opens up new avenues for growth. We should hit $1 billion of digital advertising by 2009. Global Liquidity. Global growth and strong capital markets have created new investment opportunities. Private equity funds have almost $2 trillion of buying power. More than $600 billion of wealth is flowing to oil exporting countries each year looking for investment opportunities. GE can tap into this liquidity to create investor value. In 2007, we will originate $50 billion of commercial finance assets and sell them to investors. This boosts our returns and growth rates. At the same time, we can partner with multiple funding sources to accelerate infrastructure investments like power plants, air- ports and desalination facilities. GE can harness liquidity to expand our growth rate and lower risk. GE’s leadership around these major trends creates a foundation for rapid growth. All our strategies and investments have been applied to build leadership around these trends. GE is exceptionally well positioned to win in the future. 4 ge 2006 annual report