Elfun Trusts, et al.; Notice of Application

AGENCY:

Securities and Exchange Commission (“SEC” or “Commission”).

ACTION:

Notice of application for an order under section 6(b) of the Investment Company Act of 1940 (the “Act”).

Summary of Application:

Applicants request an order that would amend prior orders (“Prior Orders”) to expand the class of persons eligible to purchase shares of certain employees' securities companies to include certain specified immediate family members and grandchildren of eligible employees. In addition, the order would permit eligible employees to transfer shares of the employees' securities companies to estate planning vehicles formed for the benefit of lineal descendants of the eligible employees.

Applicants:

Elfun Trusts, Elfun Tax-Exempt Income Fund, Elfun Income Fund, Elfun International Equity Fund, Elfun Diversified Fund, Elfun Money Market Fund (collectively, the “Elfun Funds”), and General Electric S&S Program Mutual Fund and General Electric S&S Long Term Interest Fund (collectively, the “S&S Funds”).

Filing Dates:

The application was filed on December 22, 1999, and amended on December 1, 2000.

Hearing or Notification of Hearing:

An order granting the application 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 December 26, 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, c/o Alan M. Lewis, Esq., GE Asset Management Incorporated, 3003 Summer Street, Stamford, Connecticut 06905.

FOR FURTHER INFORMATION CONTACT:

Elaine M. Boggs, Special Counsel, at (202) 942-0572, or Christine Y. Greenlees, Branch Chief, at (202) 942-0564 (Division of Investment Management, Office of Investment Company Regulation).

SUPPLEMENTARY INFORMATION:

The following is a summary of the application. The complete application may be obtained for a fee at the SEC's Public Reference Branch, 450 5th Street, NW., Washington, DC 20549-0102 (tel. (202) 942-8090).

Applicants' Representations

1. Applicants are diversified, open-end management investment companies registered under the Act. Shares of the Elfun Funds are registered under the Securities Act of 1933. Each applicant is organized and operated to meet the definition of an “employees' securities company” within the meaning of section 2(a)(13) of the Act for the benefit of employees of General Electric Company (“GE”).

2. Pursuant to the Prior Orders, shares of the Elfun Funds may be purchased by: (a) members of an honor society of GE employees (“Elfun Society Members”); (b) employees of the Elfun Funds' adviser who have been employed by the adviser for at least one year (“Adviser Employees”); (c) immediate family members of both (a) and (b) above; (d) trusts whose sole beneficiaries are individuals in (a) through (c) above; (e) surviving unmarried spouses of deceased Elfun Society members; (f) members of the board of directors of GE; and (g) GE and its subsidiaries (persons in (a), (b), and (f) are “Elfun Eligible Investors”).

3. The S&S Funds are part of a defined contribution profit sharing plan (the “Program”) that is intended to qualify for favorable tax treatment under sections 401(a) and 401(k) of the Internal Revenue Code of 1986, as amended. Units in the S&S Funds (“Units”) are offered only to employees participating in the Program (“S&S Employee Participants”). Although Units cannot be purchased outside of the Program, under certain circumstances S&S Employee Participants may hold Units outside the Program (“S&S Distributees”). (Collectively, Elfun Eligible Investors and S&S Distributees are “Eligible Employees”)

4. Under the Prior Orders, the Elfun Funds have limited investment by the immediate family members of Elfun Society Members and Adviser Employees to spouses and children (including step and adoptive relationships) of such Elfun Society Members and Adviser Employees. The S&S Funds have limited the transfer of Units held outside of the Program to the immediate family members of S&S Distributees, which is limited to spouses and children (including step and adoptive relationships). Applicants propose to expand the class of immediate family members of Eligible Employees who may invest in the Elfun and S&S Funds to include any parent, spouse of a parent, child, spouse of a child, spouse, brother, sister, or grandchild (including step and adoptive relationships) (“Eligible Family Members”) of Eligible Employees. In addition, the order would permit Eligible Employees to transfer shares of the Elfun and S&S Funds held by them to estate planning vehicles formed for the benefit of lineal descendants of the Eligible Employees.

Applicants' Legal Analysis

1. Section 2(a)(13) of the Act defines “employees' securities company” generally as any investment company, or similar issuer, all of the outstanding securities of which (other than short-term paper) are beneficially owned by employees or persons on retainer, former employees, and immediate family of the employees, persons on retainer, or former employees.

2. Section 6(b) of the Act provides that the Commission shall exempt employees' securities companies from the provisions of the Act to the extent that the exemption is consistent with the protection of investors. Applicants state that the proposal satisfies the requirements of section 6(b).

3. Applicants state that an employees' securities company is a labor-related entity that exists primarily to promote the economic welfare of its employee-investors. Applicants also state that the requested relief would permit Eligible Employees to achieve certain tax and economic goals through the effective use of estate planning tools. Applicants state that the requested relief is consistent with the protection of investors because permitting Eligible Family Members of Eligible Employees to invest in the Funds, and Eligible Employees to transfer shares of the Funds to estate planning vehicles formed for the benefit of lineal descendants of the Eligible Employees, would preserve the status of the Funds as entities designed primarily to promote the economic welfare of Eligible Employees.