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

letter to investors Invest and Deliver Leadership Businesses Growth as a Process 2-3X 10%+ 20% gdp revenue earnings returns Demographics. Aging populations in the developed world and exploding population growth in the developing world are important trends. Healthcare, GE Money and NBCU are examples of some of our businesses that have benefitted from these dynamics. Great People and Teams Execution and Financial Discipline Winning in the Future Infrastructure Technology Emerging Markets Environmental Solutions Digital Connections Global Liquidity Demographics We have invested to build a substantial Healthcare business, which could double in size over the next five years. We are a leader in diagnostics with the capability to improve access to care, fi nd diseases earlier and treat them more effectively. We have invested in our consumer finance business which we can double every five years by marketing innovative fi nancial products globally. We have built a strong Hispanic network in Telemundo, which will grow close to 10% per year in the U.S. and has signifi cant global opportunity. GE has the scale to capture these massive global opportunities. Strategic Principles Being a reliable growth company also requires consistent execution on strategic principles that drive performance every quarter and every year. We have consistently executed on four strategic principles: • Build leadership businesses • Focus on reliable execution and fi nancial discipline • Drive growth as a process • Spread ideas across great people and teams that share common values Our strategies create strengths and capabilities, which, in turn, drive competitive advantage. The consistent execution of the same strategic principles year after year, provides the foundation to invest and deliver. Leadership Businesses GE has six strong businesses: Infrastructure, Healthcare, Commercial Finance, GE Money, Industrial and NBCU. We expect these businesses to achieve 10%+ earnings growth most years, with long-term returns of 20%. We expect them to be industry leaders in market share, value and profitability. We want businesses where we can bring the totality of the Company — products, services, information and financing—to capitalize on the growth trends I mentioned earlier. We run these businesses with common finance and human resource processes. We have one leadership development foundation and one global research infrastructure to achieve excellent results with a common culture. We have a few Company-wide Councils, like Services, so we can share ideas with minimum bureaucracy. We compete hard and are tough-minded about winning. We invest to lead in our core businesses in good times and bad. Sometimes good businesses go through bad cycles and we must have the patience to fix them. However, when we fi nd that a business cannot meet our financial goals or could be run better outside GE, we will exit that business rather than erode shareowner value. It is interesting for investors to think about the Company over 10+ years, the way an owner would think about it. This way you can get a sense for the strategic investments that were required to build the business that is delivering today. In 1996, our Healthcare business had $4 billion in revenues and $550 million in operating profit. We were basically a U.S. diagnostic imaging company. The Healthcare results were buried as part of the “Technical Products and Services” segment with a bunch of businesses no longer in GE. However, we believed that Healthcare would benefit from demographic forces and was in a great market for GE. We knew we could generate good returns, so we invested. ge 2006 annual report 5