Federal Register / Vol. 63, No. 128 / Monday, July 6, 1998 / Notices 36455

consistent with the policy of the

investment company, as recited in its

registration statement and reports filed

under the Act; and (c) the proposed

transaction is consistent with the

general purposes of the Act.

3. Section 6(c) of the Act provides that

the SEC may exempt classes of persons

or transactions from the Act, where an

exemption is necessary or appropriate

in the public interest and consistent

with the protection of investors and the

purposes fairly intended by the policy

and provisions of the Act.

4. Applicants request an order under

sections 6(c) and 17(b) of the Act

exempting applicants from section 17(a)

of the Act to permit Affiliated

Shareholders to redeem their shares inkind. The requested order would not

apply to redemptions by shareholders

who are affiliated persons of a Fund or

Portfolio within the meaning of sections

2(a)(3) (B) through (F) of the Act.

5. Applicants submit that the

proposed transactions meet the

standards set forth in sections 6(c) and

17(b) of the Act. Applicants believe that

the use of proposed objective standards

for the selection and valuation of

securities to be distributed in an in-kind

redemption to an Affiliated Shareholder

will ensure that the proposed

transactions will be on terms that are

reasonable and fair to the Portfolios, the

Affiliated Shareholders, and nonAffiliated Shareholders, and will not

involve overreaching on the part of any

person.

6. Applicants submit that the

proposed transactions are consistent

with the investment policy of each Fund

and Portfolio. Applicants further submit

that the proposed transactions are

consistent with the general purposes of

the Act because no Affiliated

Shareholder would receive any

advantage over any other shareholder if

the proposed transactions are effected.

Affiliated Shareholders who wish to

redeem shares would receive the same

in-kind distribution of securities, and in

the case of the PreservationPlus Fund,

Cloned Wrapper Agreements, and cash

on the same basis as other shareholders

wishing to redeem their shares.

Applicants’ Conditions

Applicants agree that any order

granting the requested relief will be

subject to the following conditions:

1. The portfolio securities distributed

to Affiliated Shareholders and nonAffiliated Shareholders pursuant to a

redemption in-kind (the ‘‘In-Kind

Portfolio Securities’’) will be limited to

securities that are traded on a public

securities market or for which quoted

bid and asked prices are available.

2. The In-Kind Portfolio Securities

will be distributed to Affiliated

Shareholders on a pro rata basis after

excluding: (a) securities which, if

distributed, would be required to be

registered under the Securities Act of

1933; and (b) securities issued by

entities in countries which restrict or

prohibit the holding of securities by

non-nationals other than through

qualified investment vehicles, such as

the Portfolios. Cash will be paid for that

portion of the Portfolio’s assets

represented by cash equivalents (such as

certificates of deposit, commercial

paper, and repurchase agreements) and

other assets that are not readily

distributable (including receivables and

prepaid expenses), net of all liabilities

(including accounts payable). In

addition, cash will be distributed in lieu

of portfolio securities not amounting to

round lots or fractional shares.

3. The terms and conditions of the

Cloned Wrapper Agreements will be

substantially similar to those Wrapper

Agreements held by the

PreservationPlus Portfolio.

4. The board of trustees of a Fund or

Portfolio (‘‘Board’’), including a majority

of the disinterested trustees, will

determine no less frequently than

annually: (a) whether the In-Kind

Portfolio Securities and Cloned Wrapper

Agreements have been distributed in

accordance with conditions 1, 2 and 3;

and (b) whether the distribution of any

such In-Kind Portfolio Securities and

Cloned Wrapper Agreements is

consistent with the policies of the

relevant Fund or Portfolio as reflected in

the prospectus of the Fund or the

Portfolio. In addition, each Board shall

make and approve such changes as the

Board deems necessary in its procedures

for monitoring compliance by

applicants with the terms and

conditions of the application.

5. The relevant Fund or Portfolio will

maintain and preserve for a period of

not less than six years from the end of

the fiscal year in which any redemption

in-kind to an Affiliated Shareholder

occurred, the first two years in an easily

accessible place, a written record of

each such redemption setting forth a

description of each security distributed,

the identity of the Affiliated

Shareholder, the terms of the

distribution, and the information or

materials upon which the valuation was

made.

6. In-Kind Portfolio Securities and

Cloned Wrapper Agreements distributed

to Affiliated Shareholders and nonAffiliated Shareholders will be valued

in the same manner as they would be

valued for computing a Fund’s or a

Portfolio’s net asset value per share.

For the SEC, by the Division of Investment

Management, under delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–17712 Filed 7–2–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Releases No. IC–23289, 812–11120]

The Evergreen Equity Trust, et al.;

Notice of Application

June 26, 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

request an order to permit certain series

of registered open-end management

investment companies to acquire all of

the assets and certain stated liabilities of

certain series of another registered openend management investment company.

APPLICANTS: Evergreen Equity Trust,

Evergreen Select Equity Trust,

Evergreen International Trust, Evergreen

Fixed Income Trust, Evergreen Select

Fixed Income Trust, Evergreen

Municipal Trust, Evergreen Money

Market Trust, Evergreen Select Money

Market Trust (together with their series,

the ‘‘Evergreen Funds’’), CoreFunds,

Inc. (with its series, the ‘‘CoreFunds’’

and together with the Evergreen Funds,

the ‘‘Funds’’), and First Union National

Bank (‘‘FUND’’).

FILING DATES: The application was filed

on April 23, 1998 and amended on June

24, 1998. Applicants have agreed to file

an amendment during the notice period,

the substance of which is reflected in

this notice.

HEARING ON NOTIFICATION OF HEARING: An

order granting the application will be

issued unless the SEC orders a hearing.

Interested persons may request 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 July 21, 1998, and

should be accompanied by proof of

service on the applicants, in the form of

an affidavit or, for lawyers, a certificate

or 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.
36456 Federal Register / Vol. 63, No. 128 / Monday, July 6, 1998 / Notices

1The CoreFunds Elite Government Reserve Fund

has not commenced operations as the date of the

filing of the application and is not being acquired

by the Evergreen Funds. The CoreFunds Treasury

Reserve Fund will reorganize into the Evergreen

Treasury Money Market Fund and will rely on rule

17a–8. Accordingly, these three series are not

parties to this application.

2The Selling Funds and the corresponding

Acquiring Funds are: CoreFunds Balanced Fund

and Evergreen Foundation Fund; CoreFunds

Growth Equity Fund and Evergreen Select Strategic

Growth Fund; CoreFunds International Growth

Fund and Evergreen International Growth Fund;

CoreFunds Government Income Fund and

Evergreen U.S. Government Fund; CoreFunds Bond

Fund and Evergreen Select Income Plus Fund;

CoreFunds Short-Intermediate Bond Fund and

Evergreen Select Fixed Income Fund; CoreFunds

Short-Term Income Fund and Evergreen Select

Limited Duration Fund; CoreFunds Intermediate

Municipal Bond Fund and Evergreen High Grade

Tax Free Fund; CoreFunds New Jersey Municipal

Bond Fund and Evergreen New Jersey Tax-Free

Income Fund; CoreFunds Pennsylvania Municipal

Bond Fund and Evergreen Pennsylvania Tax-Free

Fund; CoreFunds Cash Reserve Fund and Evergreen

Money Market Fund; CoreFunds Tax-Free Reserve

Fund and Evergreen Municipal Money Market

Fund; CoreFunds Elite Cash Reserve Fund and

Evergreen Select Money Market Fund; CoreFunds

Elite Tax-Free Reserve Fund and Evergreen Select

Municipal Money Market Fund; CoreFunds Elite

Treasury Reserve Fund and Evergreen Select

Treasury Money Market Fund; CoreFunds Global

Bond Fund and Evergreen Select International Bond

Fund; CoreFunds Core Equity Fund and Evergreen

Stock Selector Fund; CoreFunds Equity Index Fund

and Evergreen Select Equity Index Fund;

CoreFunds Special Equity Fund and Evergreen

Select Special Equity Fund.

ADDRESSES: Secretary, SEC, 450 Fifth

Street, NW, Washington, DC 20549.

Applicants: FUNB, 201 S. College

Street, Charlotte, North Carolina 20288;

CoreFunds, Inc., 530 East Swedesford

Road, Wayne, Pennsylvania 19087; The

Evergreen Funds, 200 Berkeley Street,

Boston, Massachusetts 02116.

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).

Applicant’s Representations

1. The CoreFunds is a Maryland

corporation registered under the Act as

an open-end management investment

company. CoreFunds consist of twentyone separate series, nineteen of which

are the selling funds (‘‘Selling Funds’’) 1

CoreStates Investment Advisers, Inc.

(‘‘CSIA’’) is registered under the

Investment Advisers Act 1940

(‘‘Advisers Act’’) and is the investment

adviser for the CoreFunds.

2. The Evergreen Funds are Delaware

business trusts and each is registered

under the Act as an open-end

management investment company.

Nineteen of the Evergreen Funds’ series

are the acquiring funds (‘‘Acquiring

Funds’’). FUNB, a subsidiary of First

Union Corporation (‘‘First Union’’) , is

a national banking association. FUNB is

not required to register under the

Advisers Act. The Capital Management

Group, a division of FUNB and two of

FUNB’s subsidiaries, Evergreen Asset

Management Corp. and Keystone

Investment Management Company as

well as Meridian Investment Company,

an indirect wholly-owned subsidiary of

First Union are the investment advisers

to the Evergreen Funds. Evergreen Asset

Management Corp. and Keystone

Investment Management Company are

each registered under the Advisers Act.

FUNB, as a fiduciary for its customers,

owns of record 5% (in some cases 25%)

or more of the outstanding voting

securities of each of the Selling Funds

or their respective Acquiring Funds.

3. On April 30, 1998, CoreStates

Financial merged with and into a

wholly-owned subsidiary of First Union

(the ‘‘Merger’’). CSIA was a whollyowned, indirect subsidiary of CoreStates

Financial. As a result of the Merger,

CSIA became a wholly-owned

subsidiary of FUNB. .

4. On February 6 and 11, 1998

respectively, the board of CoreFunds

and each Evergreen Fund (the

‘‘Boards’’), including a majority of the

directors/trustees who are not

‘‘interested persons’’ under section

2(a)(19) of the Act (the ‘‘Independent

Directors’’), approved plans of

reorganization under which the

Acquiring Funds will acquire

corresponding Selling Funds with

similar investment objectives (the

‘‘Plans’’). Pursuant to the Plans, each

Selling Fund has agreed to sell all of its

assets and certain stated liabilities to the

corresponding Acquiring Fund in

exchange for shares of the Acquiring

Fund (the ‘‘Reorganizations.’’) 2 As a

result of the Reorganizations, 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

Reorganizations will occur. Applicants

expect that the Reorganizations will

occur on or about July 27, 1998 (the

‘‘Closing Date’’).

5. The Selling Funds, except for the

money market funds, offer four classes

of shares: Classes A Individual, B

Individual, C Individual, and Y

(Institutional) Shares. Certain of the

Acquiring Funds offer one or more of

six classes of shares, which are Classes

A, B, C, Y, Institutional, and

Institutional Service Shares.

6. Under the Plans, holders of Class A

and Class B Shares of CoreFunds

Balanced Fund, CoreFunds Intermediate

Municipal Bond Fund, CoreFunds New

Jersey Municipal Bond Fund,

CoreFunds Pennsylvania Municipal

Bond Fund, CoreFunds Cash Reserve

Fund, CoreFunds Tax-Free Reserve

Fund, CoreFunds Treasury Reserve

Fund, CoreFunds International Growth

Fund, CoreFunds Government Income

Fund, and CoreFunds Core Equity Fund

will receive Class A or B Shares of the

corresponding Acquiring Fund. Holders

of Class A and B Shares of the

remaining Selling Funds will receive

Institutional Service Shares of the

corresponding Acquiring Fund. Holders

of Class C Shares of the CoreFunds Cash

Reserve Fund, CoreFunds Tax-Free

Reserve Fund and CoreFunds Treasury

Reserve Fund will receive Class A

Shares of the corresponding Acquiring

Fund. Holders of Class C Shares of the

remaining Selling Funds will receive

Institutional Service Shares of the

corresponding Acquiring Fund. Holders

of Class Y Shares of the CoreFunds

Balanced Fund, CoreFunds Intermediate

Municipal Bond Fund, CoreFunds New

Jersey Municipal Bond Fund,

CoreFunds Pennsylvania Municipal

Bond Fund, CoreFunds Cash Reserve

Fund, CoreFunds Tax-Free Reserve

Fund, CoreFunds Treasury Reserve

Fund, CoreFunds International Growth

Fund, CoreFunds Government Income

Fund, and CoreFunds Core Equity Fund

will receive Class Y Shares of the

corresponding Acquiring Fund. Holders

of Class Y Shares of the remaining

Selling Funds will receive Institutional

Shares of the corresponding Acquiring

Fund.

7. Class Y (Institutional) Shares of the

Selling Fund and Class Y and

Institutional Shares of the Acquiring

Funds are not subject to any asset-based

distribution or administrative service

fees. Class C Shares of the Selling Funds

and Institutional Service Shares of the

Acquiring Funds are subject to an assetbased distribution fee. Class A

Individual and Class A Shares are

subject to varying front-end sales

charges and asset-based distribution

fees. Class B Individual and Class B

Shares are subject to varying contingent

deferred sales charges and asset-based

distribution fees. No initial sales charge

will be imposed in connection with

Class A Shares and no contingent
Federal Register / Vol. 63, No. 128 / Monday, July 6, 1998 / Notices 36457

deferred sales charge will be imposed

with respect to Class B Institutional

Service Shares.

8. The investment objectives of each

Selling Fund and its corresponding

Acquiring Fund are substantially

similar. The investment restrictions and

limitations of each Selling Fund and its

corresponding Acquiring Fund also are

substantially similar, but in some cases

involve differences that reflect the

differences in the general investment

strategies utilized by the Funds.

9. The Boards, including a majority of

Independent Directors, approved the

Reorganizations in the best interests of

existing shareholders of the Funds and

determined that the interests of existing

shareholders will not be diluted. The

Boards considered a number of factors

in authorizing the Reorganizations,

including: (a) The terms and conditions

of the Reorganizations; (b) whether the

Reorganizations would result in the

dilution of shareholders’ interests; (c)

expense ratios of the Funds, fees and

expenses of the Reorganizations; (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 the Funds’ advisers; (g)

service features available to

shareholders of the respective Acquiring

Fund and Selling Fund; (h) the fact that

FUNB will bear the expenses incurred

by the Funds in connection with the

Reorganizations; (i) the fact that the

Acquiring Funds will assume the

identified liabilities of the Selling

Funds; and (j) the expected federal

income tax consequences of the

Reorganizations. FUNB will pay the

expenses of the Reorganizations other

than the Acquiring Funds’ federal and

state registration fees.

10. The Plans may be terminated by

either the Selling or Acquiring Fund at

or prior to the Closing Date if the other

party breaches any provision of a 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.

11. Registration statements on Form

N–14 containing preliminary combined

prospectus/proxy statements for each

Fund Reorganization, were filed with

the SEC between April 10, 1998 and

June 10, 1998. A final prospectus/proxy

was mailed to shareholders of the

Selling Funds on June 10, 1998, except

for the CoreFunds Global Bond Fund

the prospectus/proxy for which will be

mailed on or about July 10, 1998. A

special meeting of the Selling Funds’

shareholders will be held on or about

July 17, 1998 for all Selling Funds

except for the CoreFunds Global Bond

Fund the meeting of whose shareholders

will be held on or about August 17,

1998.

12. The consummation of each

Reorganization under the Plans is

subject to a number of conditions

precedent, including: (a) The Plans have

been approved by the Boards and each

of the Funds’ shareholders in the

manner required by applicable law; (b)

management of each Selling Fund

solicits proxies from its shareholders

seeking approval of the Reorganizations;

(c) the Funds have received opinions of

counsel stating, among other things, that

each Reorganization will not result in

federal income taxes for the Fund or its

shareholders; and (d) the Funds have

received from the SEC an order

exempting the Reorganizations from the

provisions of section 17(a) of the Act.

Applicants agree not to make any

material changes to the Plans 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 Selling Funds may be

affiliated persons of FUNB because

FUNB, as fiduciary for its customers,

owns of record 5% or more of the

outstanding securities of the Selling

Funds. FUNB, in turn, is an affiliated

person of the Acquiring Funds because

FUNB, or one of its affiliates, serves as

adviser to the Acquiring Funds. In

addition, the Acquiring Funds may be

affiliated persons of FUNB because

FUNB, as fiduciary for its customers,

owns of record 5% or more of the

outstanding securities of the Acquiring

Funds.

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 any 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

Reorganizations. Applicants submit that

the Reorganizations satisfy the

provisions of section 17(b) of the Act.

Applicants state that the Board of each

of the Funds has determined that the

transactions are in the best interests of

the shareholders and that the interests

of the existing shareholders will not be

diluted as a result of the

Reorganizations. In addition, applicants

state that the exchange of the Selling

Funds’ shares for shares of the

Acquiring Funds 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. 98–17783 Filed 7–2–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IC–23288; File No. 812–11004]

Phoenix Home Life Mutual Insurance

Company, et al.; Notice of Application

June 26, 1998.

AGENCY: Securities and Exchange

Commission (‘‘Commission’’

ACTION: Notice of application

(‘‘Application’’) for order pursuant to

Section 26(b) and Section 17(b) of the

Investment Company Act of 1940 (the

‘‘Act’’ or the ‘‘1940 Act’’).