the administration of its mutual funds in-house. Officials with the Charlotte, N.C., banking company said that Evergreen Asset Management, a subsidiary of First Union, will administer the combined Evergreen Funds and First Union Funds after July 1. The two fund families will go by the name Evergreen Funds after that date. First Union acquired Evergreen when it bought Lieber & Co. last year. First Union's decision to absorb the administrative duties ends its relationship with Federated Investors, which had administered and distributed the company's proprietary funds for five years. Furman Selz and Boston Financial Data Services, which were the distributor and transfer agent, respectively, for the Evergreen Funds, will maintain those positions. Keeping much of the relationships and expertise associated with the Evergreen Funds intact, some experts say, is a strong indication that First Union is serious about expanding the sale of its proprietary funds beyond the confines of its bank branches. "They don't hide their desire to compete aggressively with other firms to sell investment services and products," said Avi Nachmany, a partner with Strategic Insight, a New York research and consulting firm. "Clearly, it's a part of a vision to be able to sell these funds both internally and externally." Before being acquired, the Evergreen Funds were a well-known fund family sold primarily through a toll-free telephone line. Combined with the First Union Funds and the ABT Funds, a Florida-based fund family that the banking company is awaiting shareholder approval to purchase, the new Evergreen Funds will have more than $8 billion of assets under management and be sold through First Union's 2,200-person investment sales force. Barbara J. Colvin, a senior vice president at First Union, would neither confirm nor deny that the company is looking to market the Evergreen Funds outside the bank channel, saying only that "you always want to look for other avenues of distribution." Geoffrey H. Bobroff, president of Bobroff Consulting, East Greenwich, R.I., said, "It's a natural evolution that more and more banks" will want added control over how their funds are run and marketed once a they reach a certain critical mass." Chase Manhattan Corp., Citicorp, and Banc One Corp. handle much of their fund administration, which includes filing with federal regulators and preparing a fund's prospectus, among other things. Under federal regulations, banks must have an outside firm distribute, or market, a bank's proprietary fund, in addition to preparing promotional material. First Union's Ms. Colvin said the banking company has been planning this move since last year, when it notified Federated that its contract would not be renewed come July 1. "Clearly Federated has lots of clients with plenty of resources behind it," said Strategic Insight's Mr. Nachmany. "One of them leaving will not threaten them with collapse." Federated had been in negotiations with First Union to help finance the launch of a new class of mutual fund shares. According to Ronald M. Petnuch, senior vice president in charge of Federated's bank administrative services, the deal has been scrapped.

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