[Federal Register Volume 65, Number 197 (Wednesday, October 11, 2000)]
[Notices]
[Pages 60488-60489]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-26033]


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SECURITIES AND EXCHANGE COMMISSION

[Rel No. IC-24674; 812-11878]


GE Asset Management Incorporated, et al.; Notice of Application

October 3, 2000.
AGENCY: Securities and Exchange Commission (``SEC'').

ACTION: Notice of application under section 17(b) of the Investment 
Company Act of 1940 (``Act'') for an exemption from section 17(a) of 
the Act.

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    Summary of Application: Applicants request an order to permit 
certain series of GE Institutional Funds (the ``Fund'') to accept an 
investment in-kind from certain affiliated investors in exchange for 
shares of the series.
    Applicants: GE Asset Management Incorporated (GEAM) and the Fund.
    Filing Dates: The application was filed on December 10, 1999, and 
amended on May 3, 2000 and October 3, 2000.
    Hearing or Notification of Hearing: An order granting the requested 
relief will be issued unless the SEC orders a hearing. Interested 
persons may request a hearing by writing to the SEC's Secretary and 
serving applicants with a copy of the request, personally or by mail. 
Hearing requests should be received by the SEC by 5:30 p.m. on October 
27, 2000, and should be accompanied by proof of service on applicants, 
in the form of an affidavit or, for lawyers, a certificate of service. 
Hearing requests should state the nature of the writer's interest, the 
reason for the request, and the issues contested. Persons who wish to 
be notified of a hearing may request notification by writing to the 
SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth Street, NW., Washington, DC 20549-
0609. Applicants, GE Asset Management Incorporated, 777 Long Ridge 
Road, Stamford, Connecticut 06927.

FOR FURTHER INFORMATION CONTACT: Julia Kim Gilmer, Senior Counsel, at 
(202) 942-0528, or Mary Kay Frech, Branch Chief, at (202) 942-0564 
(Division of Investment Management, Office of Investment Company 
Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the

[[Page 60489]]

application. The complete application may be obtained for a fee at the 
SEC's Public Reference Branch, 450 Fifth Street, NW., Washington, DC 
20549-0102 (tel: 202-942-8090).

Applicants' Representations

    1. The Fund is an open-end management investment company organized 
under the laws of the State of Delaware in 1997 and registered under 
the Act. The Fund consists of 17 series and is designed primarily for 
institutional investors.
    2. GEAM is an investment adviser registered under the Investment 
Advisers Act of 1940 and serves as the investment adviser to the Fund. 
GEAM is a direct wholly-owned subsidiary of General Electric Company 
(``GE'').
    3. GE Capital Asset Maintenance Plan Master Trust and Asset 
Management Plan for GE Affiliated Companies (the ``Affiliated 
Investors'') are qualified retirement plans and trusts maintained by GE 
and its affiliates. The Affiliated Investors currently own more than 5% 
of certain series of GE Funds (``Redeeming Series''), an open-end 
management investment company organized under the laws of the 
Commonwealth of Massachusetts in 1992 and registered under the Act.\1\ 
GE Funds offers shares primarily to retail and smaller institutional 
investors who generally do not meet the requirements for investment in 
the Fund. The Affiliated Investors first invested in GE Funds in 1995.
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    \1\ As of June 30, 2000, the Affiliated Investors owned 11.27% 
of the GE Funds International Equity Fund, 7.25% of the GE Funds 
U.S. Equity Fund, 8.87% of the GE Funds Strategic Investment Fund, 
and 5.02% of the GE Funds Fixed Income Fund.
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    4. Applicants propose that the Affiliated Investors redeem in-kind 
all of their shares of the Redeeming Series and immediately invest all 
the proceeds of the redemptions in corresponding series of the Fund 
(``Fund Series'') with substantively the same investment objectives and 
strategies as the Redeeming Series (the ``Purchase'').\2\ The Purchase 
will occur as soon as practicable after the relief requested in the 
application is granted or on November 1, 2000, whichever is later.\3\ 
The securities to be delivered to the Fund in connection with the 
Purchase will be valued in the same manner as they would be valued for 
purposes of computing the net asset value for the Fund Series. The 
Affiliated Investors have determined to redeem their interests in the 
Redeeming Funds and invest in the corresponding Fund Series to benefit 
from the lower fund operating expenses of the Fund Series. Applicants 
state that, since the Affiliated Investors are pension plans, it is 
expected that they will be long-term investors in the Fund.
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    \2\ The Redeeming Series will rely on and adhere to all of the 
conditions enumerated in the no-action letter issued by SEC staff to 
Signature Financial Group, Inc. (publicly available Dec. 28, 1999) 
in connection with the redemptions in-kind of the Affiliated 
Investors' shares in the Redeeming Series.
    \3\ The Affiliated Investors will purchase shares of the 
following Fund Series with the proceeds of their redemptions: GE 
Institutional International Equity Fund, GE Institutional U.S. 
Equity Fund, GE Institutional Strategic Investment Fund and GE 
Institutional Fixed Income Fund.
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Applicants' Legal Analysis

    1. Section 17(a)(1) of the Act, in pertinent part, prohibits an 
affiliated person of a registered investment company, or any affiliated 
person of such person, acting as principal, from selling to or 
purchasing from such registered investment company, any security or 
other property.
    2. Section 2(a)(3)(C) of the Act defines an ``affiliated person'' 
of another person to include any person directly or indirectly 
controlling, controlled by, or under common control with, such other 
person, and if the other person is an investment company, any 
investment adviser of the company. Applicants state that the Affiliated 
Investors may be deemed to be controlled by or under common control 
with the Fund's investment adviser by virtue of being a pension plan 
sponsored by GE or a GE-affiliated entity. The Affiliated Investors, 
therefore, are affiliated persons of the Fund, and the Purchase may be 
prohibited by section 17(a) of the Act.
    3. Section 17(b) of the Act provides that the SEC shall exempt a 
transaction from the restrictions of section 17(a) if evidence 
establishes that the terms of the proposed transaction, including the 
consideration to be paid or received, are reasonable and fair and do 
not involve overreaching on the part of any person concerned; the 
proposed transaction is consistent with the policy of each registered 
investment company concerned, as recited in its registration statement 
and reports filed under the Act; and the proposed transaction is 
consistent with the general purposes of the Act.
    4. Applicants submit that the terms of the Purchase satisfy the 
standards set forth in section 17(b). Applicants state that Fund's 
board of trustees (``Board''), including all of the non-interested 
trustees, has determined that the Purchase is in the best interests of 
the shareholders of the Fund Series. Applicants also state that the 
Purchase will comply with rule 17a-7(c) and (d) of the Act and the 
conditions set forth below.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will 
be subject to the following conditions:
    1. The securities to be transferred to the Fund Series in the 
Purchase will be valued in the same manner as they would be valued for 
purposes of computing the Fund Series' net asset values.
    2. At the next regular meeting following the Purchase, the Board, 
including a majority of the disinterested trustee, will determine (a) 
whether the securities transferred in the Purchase were valued in 
accordance with condition 1; and (b) whether the acquisition of the 
securities was consistent with the policies of the Fund Series as 
reflected in their registration statements and reports filed under the 
Act.
    3. The Fund will maintain and preserve for a period of not less 
than six years from the end of the fiscal year in which the Purchase 
occurs, the first two years in an easily accessible place, a written 
record of the Purchase setting forth a description of each security 
transferred, the terms of the transfer, and the information or 
materials upon which the determinations required by condition 2 were 
made.

    For the SEC, by the Division of Investment Management, under 
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-26033 Filed 10-10-00; 8:45 am]
BILLING CODE 8010-11-M