[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
