[Federal Register Volume 63, Number 175 (Thursday, September 10, 1998)]
[Notices]
[Pages 48536-48537]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-24205]



[[Page 48536]]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-23426, 812-11260]


The Evergreen International Trust, et al.; Notice of Application

September 2, 1998.
AGENCY: Securities and Exchange Commission (``SEC'').

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

-----------------------------------------------------------------------

SUMMARY OF APPLICATION: Applicants, Evergreen International Trust (the 
``Trust'') and First Union National Bank (``FUNB''), request an order 
to permit a series of the Trust to acquire all of the assets and 
certain stated liabilities of another series of the Trust. Because of 
certain affiliations, Applications may not rely on rule 17a-8 under the 
Act.

FILING DATES: The application was filed on August 11, 1998. Applicants 
have agreed to file an amendment during the notice period, the 
substance of which is reflected in this notice.

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 September 25, 
1998, and should be accompanied by proof of service on the 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. 
Applicants: c/o Robert N. Hickey, Esq., Sullivan & Worcester LLP, 1025 
Connecticut Avenue, Washington, DC 20036.

FOR FURTHER INFORMATION CONTACT:
John K. Forst, Attorney Advisor, at (202) 942-0569, or Edward P. 
Macdonald, 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 Fifth Street, NW., Washington, DC 
20549 (tel. 202-942-8090).

Applicants' Representations

    1. The Trust is a Delaware business trust registered under the Act 
as an open-end management investment company. The Evergreen 
International Equity Fund (the ``Selling Fund'') and the Evergreen 
International Growth Fund (the ``Acquiring Fund''), are each series of 
the Trust. FUNB, a subsidiary of First Union Corporation (``First 
Union''), is a national banking association. The Capital Management 
Group, a division of FUNB, is the investment adviser to the Selling 
Fund. FUNB is not required to register under the Investment Advisers 
Act of 1940 (``Advisers Act''). Keystone Investment Management Company 
(``Keystone''), an indirect, wholly owned subsidiary of FUNB, is the 
investment adviser to the Acquiring Fund. Keystone is registered under 
the Advisers Act. FUNB, as a fiduciary for its customers, owns of 
record more than 25% of the outstanding voting securities of each Fund.
    2. On June 26, 1998, the board of trustees of the Trust (the 
``Board''), including a majority of the trustees who are not 
``interested persons'' under section 2(a)(19) of the Act (the 
``Independent Trustees''), approved a plan of reorganization (the 
``Plan)'' under which the Acquiring Fund will acquire the assets, and 
assume certain stated liabilities, of the Selling Fund in exchange for 
shares of the Acquiring Fund (the ``Reorganization''). As a result of 
the Reorganization, each Selling Fund shareholder will receive 
Acquiring Fund shares having an aggregate net asset value equal to the 
aggregate net asset value of the corresponding Selling Fund's shares 
held by that shareholder calculated as of the close of business 
immediately prior to the date on which the Reorganization will occur. 
Applicants expect that the Reorganization will occur on or about 
October 26, 1998 (the ``Closing Date'').
    3. Each Fund offers four classes of shares: Classes A, B, C, and Y 
shares. Holders of shares of each class of the Selling Fund will 
receive shares of the corresponding class of the Acquiring Fund. Class 
A shares are subject to a front-end sales charge and an asset-based 
distribution fee. Class B and Class C shares are subject to a 
contingent deferred sales charge and an asset-based distribution fee. 
Class Y shares are not subject to any front-end sales charge or asset-
based distribution or service fee. No initial sales charge will be 
imposed in connection with Class A shares of the Acquiring Fund 
received by the Selling Fund shareholders and no contingent deferred 
sales charge will be imposed with respect to receipt of Class B or C 
shares.
    4. The investment objectives of the Selling Fund and Acquiring Fund 
(collectively, the ``Funds'') are substantially similar. The investment 
restrictions and limitations of the Funds also are substantially 
similar.
    5. The Board, including a majority of Independent Trustees, 
approved the Reorganization as in the best interests of shareholders 
and determined that the interests for existing shareholders will not be 
diluted as a result of the Reorganization. The Board considered, among 
other things, (a) the terms and conditions of the Reorganization; (b) 
whether the Reorganization would result in the dilution of 
shareholders' interests; (c) expense ratios, fees and expenses of the 
Funds; (d) the comparative performance records of the Funds; (e) 
compatibility of the Funds' investment objectives and policies; (f) the 
investment experience, expertise and resources of Keystone; (g) the 
service and distribution resources available to the Acquiring Fund and 
the broad array of investment alternatives to shareholders of the 
respective Funds; (h) the personnel and financial resources of First 
Union and its affiliates; (i) the fact that FUNB will bear the expenses 
incurred by the Selling Fund in connection with the Reorganization; (j) 
the fact that the Acquiring Fund will assume the identified liabilities 
of the Selling Fund; and (k) the expected federal income tax 
consequences of the Reorganization. FUNB will pay the expenses of the 
Reorganization older than the Acquiring Fund's federal and state 
registration fees.
    6. The Plan may be terminated by the Selling or Acquiring Fund at 
or prior to the Closing Date if the other party breaches any provision 
of the Plan that was to be performed and the breach is not cured within 
30 days or a condition precedent to the terminating party's obligations 
has not been met and it appears that the condition precedent will not 
or cannot be met.
    7. A registration statement on Form N-14 containing the preliminary 
combined prospectus/proxy statement for the Reorganization, was filed 
with the SEC on August 4, 1998. A final prospectus/proxy will be mailed 
to shareholders of the Selling Fund on or about September 3, 1998. A 
special meeting of the Selling Fund's shareholders will be held on or 
about October 16, 1998, to approve the Reorganization.

[[Page 48537]]

    8. The consummation of the Reorganization under the Plan is subject 
to a number of conditions precedent, including: (a) the Plan has been 
approved by the Board and the Selling Fund's shareholders in the manner 
required by applicable law; (b) management of the Selling Fund solicits 
proxies from its shareholders seeking approval of the Reorganization; 
(c) the Funds have received opinions of counsel stating, among other 
things, that the Reorganization will not result in federal income taxes 
for the Funds or their shareholders; and (d) Funds have received from 
the SEC an order exempting the Reorganization from the provisions of 
section 17(a) of the Act. Applicants agree not to make any material 
changes to the Plan that affect the application without prior SEC 
approval.

Applicants' Legal Analysis

    1. Section 17(a) of the Act generally prohibits an affiliated 
person of a registered investment company, or any affiliated person of 
the person, acting as principal, knowingly from selling any security 
to, or purchasing any security from the company. Section 2(a)(3) of the 
Act defines the term ``affiliated person'' of another person to 
include: (a) any person directly or indirectly owning, controlling, or 
holding with power to vote, 5% or more of the outstanding voting 
securities of the other person; (b) any person 5% or more of whose 
outstanding voting securities are directly or indirectly owned, 
controlled, or held with power to vote, by the other person; (c) any 
person directly or indirectly controlling, controlled by, or under 
common control with, the other person; and (d) if the other person is 
an investment company, any investment adviser of the person.
    2. Rule 17a-8 under the Act exempts from the prohibitions of 
section 17(a) of the Act mergers, consolidations, or purchases or sales 
of substantially all of the assets of registered investment companies 
that are affiliated persons solely by reason of having a common 
investment adviser, common directors, and/or common officers, provided 
that certain conditions are satisfied.
    3. Applicants believe that they cannot rely on rule 17a-8 under the 
Act because the Funds may be affiliated for reasons other than those 
set forth in the rule. The Funds may be affiliated persons of each 
other because FUNB, as fiduciary for its customers, owns of record 25% 
or more of the outstanding securities of each Fund.
    4. Section 17(b) of the Act provides that the SEC may exempt a 
transaction from section 17(a) of the Act if evidence establishes that 
(a) the terms of the proposed transaction, including the consideration 
to be paid, are reasonable and fair and do not involve overreaching on 
the part of the person concerned; (b) the proposed transaction is 
consistent with the policy of each registered investment company 
concerned; and (c) the proposed transaction is consistent with the 
general purposes of the Act.
    5. Applicants request an order under section 17(b) of the Act 
exempting them from section 17(a) of the Act to the extent necessary to 
consummate the Reorganization. Applicants submit that the 
Reorganization satisfies the provisions of section 17(b) of the Act. 
Applicants state that the Board has determined that the transaction is 
in the best interests of the Funds' shareholders and that the interests 
of the existing shareholders will not be diluted as a result of the 
Reorganization. In addition, Applicants state that the exchange of the 
Selling Fund's shares for shares of the Acquiring Fund will be based on 
the relative net asset values.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-24205 Filed 9-9-98; 8:45 am]
BILLING CODE 8010-01-M