SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. __ [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. __ [ ]
EVERGREEN SELECT FIXED INCOME TRUST
(Exact Name of Registrant as Specified in Charter)
200 Berkeley Street, Boston, Massachusetts 02116-5034
(Address of Principal Executive Offices)
(617) 210-3200
(Registrant's Telephone Number)
The Corporation Trust Company
1209 Orange Street
Wilmington, Delaware 19801
(Name and Address of Agent for Service)
Registrant declares that it hereby elects pursuant to Rule 24f-2
promulgated under the Investment Company Act of 1940 to register by this
Registration Statement an indefinite number or amount of its securities under
the Securities Act of 1933, as amended.
Approximate Date of Proposed Offering:
As soon as practicable after the effective date
of the Registration Statement.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
EVERGREEN SELECT FIXED INCOME TRUST
CONTENTS OF
REGISTRATION STATEMENT ON
FORM N-1A
This Registration Statement on Form N-1A of the Registrant consists of the
following pages, items of information and documents, together with the exhibits
indicated in Part C as being filed herewith:
Facing Sheet
Contents Page
Cross-Reference Sheet
PART A
Prospectus(es) of Evergreen Select Core Bond Fund,
Evergreen Select Fixed Income Fund,
Evergreen Select Income Plus Fund,
Evergreen Select Intermediate Bond Fund,
Evergreen Select Intermediate Tax Exempt Bond Fund, and
Evergreen Select Limited Duration Fund
PART B
Statement of Additional Information
PART C
Exhibits
Number of Security Holders
Idemnification
Business and Other Connections of Investment Advisers
Principal Underwriter
Location of Accounts and Records
Signatures
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EVERGREEN SELECT FIXED INCOME TRUST
CROSS REFERENCE SHEET
Pursuant to Rule 481(a) under the Securities Act of 1933
ITEM OF PART A OF FORM N-1A LOCATION IN PROSPECTUS
1. Cover Page Cover Page
2. Synopsis and Fee Table Expenses
3. Condensed Financial Information Not applicable
4. General Description of Registrant Cover Page; Fund Descriptions;
Fund Details
5. Management of the Fund Fund Details
6. Capital Stock and Other Securities Fund Descriptions
7. Purchase of Securities Being Offered Buying and Selling Shares
8. Redemption or Repurchase Buying and Selling Shares
9. Pending Legal Proceedings Not Applicable
LOCATION IN STATEMENT OF
ITEM IN PART B OF FORM N-1A ADDITIONAL INFORMATION
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Not Applicable
13. Investment Objectives and Policies Investment Policies
14. Management of the Fund Management of the Trust
15. Control Persons and Principal Not applicable
Holders of Securities
16. Investment Advisory and Other Services Investment Advisory and Other
Services
17. Brokerage Allocation Brokerage Allocation and Other
Practices
18. Capital Stock and Other Securities Capital Stock and Other
Securities
19. Purchase, Redemption and Pricing of Purchase, Redemption and Pricing
of Securities Being Offered of Securities Being Offered
20. Tax Status Not applicable
21. Underwriters Principal Underwriter
22. Calculation of Performance Data Calcuation of Performance Data
23. Financial Statements Financial Statements
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EVERGREEN SELECT FIXED INCOME TRUST
PART A
PROSPECTUS(ES)
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall therebe any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
Subject to Completion Preliminary Prospectus dated September 19, 1997
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PROSPECTUS , 1997
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EVERGREEN SELECT FIXED INCOME TRUST [EVERGREEN LOGO APPEARS HERE]
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EVERGREEN SELECT CORE BOND FUND
EVERGREEN SELECT FIXED INCOME FUND
EVERGREEN SELECT INCOME PLUS FUND
EVERGREEN SELECT INTERMEDIATE BOND FUND
EVERGREEN SELECT INTERMEDIATE TAX EXEMPT BOND FUND
EVERGREEN SELECT LIMITED DURATION FUND
(EACH A "FUND," TOGETHER THE "FUNDS")
INSTITUTIONAL SHARES
This prospectus explains important information about the Institutional
Shares of the Evergreen Select Fixed Income Trust, including how the Funds
invest and services available to shareholders. Please read this prospectus
before investing, and keep it for future reference.
When you consider investing in a Fund, remember that the higher the risk of
losing money, the higher the potential reward. The reverse is also generally
true: the lower the risk, the lower the potential reward.
By itself, no Fund is a complete investment plan. When considering an
investment in any of the Funds, remember to consider your overall investment
objectives and any other investments you own. You should also carefully evaluate
your ability to handle the risks posed by your investment in the Funds. You can
find information on the risks associated with investing in the Funds under the
section called "Fund Descriptions."
To learn more about the Evergreen Select Fixed Income Trust, ask for a copy
of the Funds' statement of additional information ("SAI") dated , 1997. The
Funds have filed the SAI with the Securities and Exchange Commission and have
incorporated it by reference (legally included it) into this prospectus. If you
would like a free copy of the SAI, call 1-800-633-2700.
PLEASE REMEMBER THAT SHARES OF THE FUNDS ARE:
o NOT DEPOSITS OR OBLIGATIONS OF ANY BANK.
o NOT ENDORSED OR GUARANTEED BY ANY BANK.
o NOT INSURED OR OTHERWISE PROTECTED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER AGENCY.
o SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
<S> <C>
EXPENSES 3
FUND DESCRIPTIONS 4
Each Fund's Investment Objective 4
Each Fund's Investment Approach 4
Securities and Investment Practices
Used By Each Fund 5
BUYING AND SELLING SHARES 7
How To Buy Shares 7
How To Redeem Shares 8
Additional Transaction Policies 9
Exchanges 9
Dividends 9
Taxes 9
Shareholder Services 10
FUND DETAILS 10
Fund Organization and Service
Providers 10
Other Information and Policies 13
Fund Performance 14
</TABLE>
2
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EXPENSES
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The tables and examples below are designed to help you understand the
various expenses that you will bear, directly or indirectly, when you invest in
the Funds. Shareholder transaction expenses are fees paid directly from your
account when you buy or sell shares of a Fund. THERE ARE NO SHAREHOLDER
TRANSACTION EXPENSES.
Annual operating expenses reflect the normal operating expenses of a Fund,
and include costs such as management, distribution and other fees. The table
below shows the Funds' estimated annual operating expenses for the fiscal period
ending September 30, 1998. Each Fund's example shows what you would pay if you
invested $1,000 over the periods indicated. The examples assume that you
reinvest all of your dividends and that each Fund's average annual return will
be 5%. THE EXAMPLES ARE FOR ILLUSTRATION PURPOSES ONLY AND SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR ANNUAL RETURN. THE
FUNDS' ACTUAL EXPENSES AND RETURNS WILL VARY. For a more complete description of
the various costs and expenses borne by the Funds see "Fund Details."
<TABLE>
<CAPTION>
Total Operating
Expenses (After
Annual Fund Operating Expenses Management 12b-1 Other Expense Waivers or
(as a percentage of average daily net assets) Fees(1) Fees Expenses Reimbursements)(1)
<S> <C> <C> <C> <C>
Evergreen Select Core Bond Fund 0.30% None 0.12% 0.42%
Evergreen Select Fixed Income Fund 0.40% None 0.12% 0.52%
Evergreen Select Income Plus Fund 0.40% None 0.11% 0.51%
Evergreen Select Intermediate Bond Fund 0.30% None 0.10%1 0.40%
Evergreen Select Intermediate Tax Exempt Bond Fund 0.50% None 0.14% 0.64%
Evergreen Select Limited Duration Fund 0.20% None 0.10%1 0.30%
Example of Fund Expenses 1 year 3 years
Evergreen Select Core Bond Fund $4 $13
Evergreen Select Fixed Income Fund $5 $17
Evergreen Select Income Plus Fund $5 $16
Evergreen Select Intermediate Bond Fund $4 $13
Evergreen Select Intermediate Tax Exempt Bond Fund $7 $20
Evergreen Select Limited Duration Fund $3 $10
</TABLE>
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(1) The Fund's investment adviser has voluntarily agreed to waive 0.10% of the
Fund's investment advisory fee. Without such waivers each Management Fee set
forth above would be 0.10% higher. The investment adviser currently intends
to continue this expense waiver through November 30, 1998; however, it may
modify or cancel its expense waiver at any time. See "Fund Details" for more
information. In addition, the investment adviser has limited the Other
Expenses of Evergreen Select Intermediate Bond Fund and Evergreen Select
Limited Duration Fund to 0.10% and 0.10%, respectively. Absent expense
waivers and/or reimbursements, the Total Operating Expenses for each of the
Funds would be as follows:
<TABLE>
<CAPTION>
<S> <C>
Fund Total Fund Operating Expenses
Evergreen Select Core Bond Fund 0.52%
Evergreen Select Fixed Income Fund 0.62%
Evergreen Select Income Plus Fund 0.61%
Evergreen Select Intermediate Bond Fund 0.63%
Evergreen Select Intermediate Tax Exempt Bond Fund 0.74%
Evergreen Select Limited Duration Fund 0.57%
</TABLE>
3
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FUND DESCRIPTIONS
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EACH FUND'S INVESTMENT OBJECTIVE
EVERGREEN SELECT CORE BOND FUND seeks to maximize total return. The Fund is
managed pursuing a controlled risk approach which uses duration adjustments,
sector composition and security selection in an effort to exceed the return of
its benchmark, the Lehman Brothers Aggregate Bond Index.
EVERGREEN SELECT FIXED INCOME FUND seeks a high level of current income and
a potential for capital appreciation. As a secondary objective, the Fund seeks
preservation of capital. The Fund seeks a return that exceeds the return of its
benchmark, the Lehman Brothers Intermediate Government/Corporate Bond Index.
EVERGREEN SELECT INCOME PLUS FUND seeks a high level of current income and
a potential for capital appreciation. The Fund seeks a return that exceeds the
return of its benchmark, the Lehman Brothers Government/ Corporate Bond Index.
EVERGREEN SELECT INTERMEDIATE BOND FUND seeks to maximize total return. The
Fund is managed pursuing a controlled risk approach which uses duration
adjustments, sector composition and security selection in an effort to exceed
the return of its benchmark, the Lehman Brothers Intermediate
Government/Corporate Bond Index.
EVERGREEN SELECT INTERMEDIATE TAX EXEMPT BOND FUND seeks the highest
possible current income, exempt from federal income taxes, while seeking to
preserve capital.
EVERGREEN SELECT LIMITED DURATION FUND seeks to provide current income
consistent with preservation of capital and low principal fluctuation. The
average portfolio duration of the Fund will normally vary from one to three
years based on the Fund's adviser's forecast for interest rates. The Fund seeks
a return that exceeds the return of its benchmark, the Merrill Lynch 1-3 Year
Treasury Bond Index.
EACH FUND'S investment objective(s) are nonfundamental. As a result, a Fund
may change its objective(s) without a shareholder vote. Each Fund has also
adopted certain fundamental investment policies which are mainly designed to
limit a Fund's exposure to risk. A Fund's fundamental policies cannot be changed
without a shareholder vote. See the SAI for more information regarding a Fund's
fundamental investment policies or other related investment policies.
EACH FUND'S INVESTMENT APPROACH
EACH FUND, OTHER THAN EVERGREEN SELECT INTERMEDIATE TAX EXEMPT BOND FUND,
invests at least 65% of its assets in investment grade debt securities
(including convertible securities) of the U.S. government and its agencies and
instrumentalities; foreign governments and their subdivisions, agencies and
instrumentalities; domestic and foreign corporations; and obligations of
international agencies or supranational entities. Each of the Funds will invest
only in U.S. dollar denominated securities.
EVERGREEN SELECT INTERMEDIATE TAX EXEMPT BOND FUND normally invests at
least 80% of its assets in investment grade federally tax-exempt municipal
securities. The Fund may invest up to 20% of its assets in securities that are
subject to the alternative minimum tax and/or taxable obligations. The Fund will
maintain a dollar-weighted average maturity of five to ten years.
EACH FUND may invest in a variety of derivative instruments that are
consistent with its investment objective(s) and policies. Such derivatives may
include options, futures, options on futures, mortgage-backed and other
asset-backed securities, inflation-indexed bonds, structured notes, loan
participations, interest rate swaps and index swaps. For more information, see
"Derivatives" and "Mortgage-Backed Securities" below.
EACH FUND may lend portfolio securities and enter into repurchase and
reverse repurchase agreements, forward commitment and when-issued transactions.
EACH FUND, OTHER THAN EVERGREEN SELECT INTERMEDIATE TAX EXEMPT BOND FUND,
may also invest up to 35% of its assets in high-yield, high-risk bonds. See
"High-yield, High-risk Bonds" below.
4
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EVERGREEN SELECT INTERMEDIATE TAX EXEMPT BOND FUND may invest up to 20% of
its assets in high-yield, high-risk bonds, but not in bonds that are rated below
B.
EACH FUND may invest for temporary defensive purposes up to 100% of its
assets in short-term obligations. Such obligations may include master demand
notes, commercial paper and notes, bank deposits and other financial institution
obligations.
SECURITIES AND INVESTMENT PRACTICES USED BY EACH FUND
You can find more information about the types of securities in which a Fund
may invest, the types of investment techniques a Fund may employ in pursuit of
its objective and a summary of related risks set forth below. The Funds' SAI
contains additional information about these investments and investment
techniques.
DEBT SECURITIES. Each Fund may invest in bonds or other instruments used by
corporations or governments to borrow money from investors, including all kinds
of convertible securities. When a Fund buys a debt security, it expects to earn
a variable or fixed rate of interest and it expects the issuer to repay the
amount borrowed at maturity. Some debt securities, such as zero coupon bonds, do
not pay current interest, but are purchased at a discount from their face
values. The main risks of investing in debt securities are:
o INTEREST RATE RISK: The risk that a bond's prices will fall when
interest rates rise, and vice versa. Debt securities have varying levels
of sensitivity to interest rates. Longer-term bonds are generally more
sensitive to changes in interest rates than short term bonds.
o CREDIT RISK: The chance that the issuer of a bond will have its credit
rating downgraded or will default (fail to make scheduled interest and
principal payments), potentially reducing the Fund's income and/or share
price.
Debt securities have varying degrees of quality. Investment grade bonds are
generally rated within the four highest grades as determined by Standard &
Poor's Ratings Group ("S & P") (AAA, AA, A or BBB), Moody's Investors Service
("Moody's") (Aaa, Aa, A or Baa), or Fitch Investors Service, L.P. ("Fitch")
(AAA, AA, A or BBB) or their respective equivalent ratings or, if not rated or
rated by another system, determined by the Fund's adviser to be of equivalent
credit quality to securities so rated. For information on below-investment grade
bonds, see "High-yield, High-risk Bonds" below. Investment grade bonds are
regarded as having a greater capacity to pay interest and repay principal.
However, adverse economic conditions, or changing circumstances may to lead to a
weakened capacity to pay interest and repay principal than higher-rated bonds.
Each Fund is not required to sell or otherwise dispose of any security that
loses its rating or has its rating reduced after the Fund has purchased it.
Also, if S&P, Moody's or Fitch changes its ratings system, each Fund will try to
use comparable ratings as standards according to the Fund's investment
objectives and policies.
UNITED STATES ("U.S.") GOVERNMENT SECURITIES. Each Fund may buy debt securities
that are issued or guaranteed by the U.S. Treasury or by an agency or
instrumentality of the U.S. government. Some U.S. government securities, such
as Treasury bills, notes and bonds, are supported by the full faith and credit
of the U.S. Others, however, are supported only by the credit of the
instrumentality or by the right of the instrumentality to borrow from the U.S.
government.
While U.S. government securities are guaranteed as to principal and
interest, their market value is not guaranteed. Generally, U.S. government
securities are subject to the same interest rate and credit risks as other
fixed-income securities. However, since U.S. government securities are of the
highest credit quality, the credit risk is minimal. THE U.S. GOVERNMENT DOES
NOT GUARANTEE THE NET ASSET VALUE OF THE FUNDS' SHARES.
MUNICIPAL SECURITIES. Municipal securities include municipal bonds, notes and
commercial paper obligations that are obligations issued by or on behalf of
States of the U.S., territories and possessions of the U.S., the District of
Columbia and their political sub-divisions, agencies and instrumentalities.
Municipal bonds include fixed, variable or floating rate general obligations and
revenue bonds (including municipal lease obligations and resource recovery
bonds). Municipal notes include tax anticipation notes, bond anticipation notes
and revenue anticipation notes. Municipal commercial paper obligations are
unsecured promissory notes issued by municipalities to meet short-term credit
needs.
5
<PAGE>
FOREIGN SECURITIES. Each Fund may buy U.S. dollar denominated obligations of
foreign governments and corporations. Because foreign markets operate
differently than the U.S. market, a Fund investing abroad will encounter risks
not normally associated with U.S. companies. For example, information about
foreign corporate securities is frequently less available than information about
U.S. securities, which may reduce the reliability of investment decisions
regarding foreign securities. Political or financial problems more likely to
occur in foreign countries may cause foreign investments to lose money. Foreign
markets may be less liquid than U.S. markets. Foreign issuers may not be subject
to the same accounting, auditing and financial reporting standards and practices
as U.S. issuers, making it more difficult to value the investment. Foreign
governments may regulate or supervise foreign issuers less than in the U.S. All
of these factors can make foreign investments more volatile than U.S.
investments.
MORTGAGE-BACKED SECURITIES. A mortgage-backed security represents an interest in
a "pool" of commercial or residential mortgages. Payments of interest and
principal made by the individual borrowers on the mortgages that underlie the
securities are passed through to the Fund. Each Fund may invest in
mortgage-backed securities and other complex asset backed securities, including
collateralized mortgage obligations and stripped mortgage-backed securities.
Early repayment of the mortgages underlying the securities may expose a
Fund to a lower rate of return when it reinvests the principal. The rate of
prepayments will affect the price and volatility of the mortgage-backed security
and may have the effect of shortening or extending the effective maturity beyond
what the Fund anticipated at the time of purchase.
Like other debt securities, changes in interest rates generally affect the
value of a mortgage-backed security. Additionally, some mortgage-backed
securities may be structured so that they may be particularly sensitive to
interest rates and difficult to predict.
HIGH-YIELD, HIGH-RISK BONDS. High-yield, high-risk bonds (commonly called "junk
bonds") are bonds rated BB or lower by S&P or Fitch or Ba by Moody's or, if
unrated or rated under another system, are of comparable quality to obligations
so rated as determined by a Fund's investment adviser. Since these bonds have a
low rating, a degree of doubt surrounds the ability of the issuer to continue
interest payments. High-yield, high-risk bonds are usually backed by issuers of
less proven or questionable financial strength. Compared with higher grade
bonds, issuers of high-yield, high-risk bonds are more likely to face financial
problems and to be materially affected by those problems. As a result, the
ability of issuers of high-yield, high-risk bonds to pay interest and principal
is uncertain. Moreover, the value of a high-yield, high-risk bond may react
strongly to real or perceived unfavorable news about an issuer or the economy.
If a high-yield, high-risk bond issuer defaults, the bond will lose some or all
of its value.
DERIVATIVES. Derivatives are financial contracts whose value is based on an
underlying asset, such as a stock or a bond, or an underlying economic factor,
such as an index or an interest rate.
Each Fund may invest in derivatives only if the expected risks and rewards
are consistent with its objectives and policies. The Funds may use futures and
options for hedging purposes only, not for speculation.
Losses from derivatives can sometimes be substantial. This is true partly
because small price movements in the underlying asset can result in immediate
and substantial gains or losses in the value of the derivative. Derivatives can
also cause a Fund to lose money if the Fund fails to correctly predict the
direction in which the underlying asset or economic factor will move.
BORROWING. Each Fund may borrow from banks in an amount up to 33 1/3% of its
total assets, taken at market value. A Fund may only borrow as a temporary
measure for extraordinary or emergency purposes such as the redemption of Fund
shares. A Fund will not purchase securities while borrowings are outstanding
except to exercise prior commitments and to exercise subscribtion rights.
SECURITIES LENDING. To generate income and offset expenses, each Fund may lend
securities to broker-dealers and other financial institutions. Loans of
securities by a Fund may not exceed 30% of the value of the Fund's total assets.
While securities are on loan, the borrower will pay the Fund any income accruing
on the security. Also, the Fund may invest any collateral it receives in
additional securities.
6
<PAGE>
Gains or losses in the market value of a lent security will affect a Fund
and its shareholders. When a Fund lends its securities, it runs the risk that it
could not retrieve the securities on a timely basis, possibly losing the
opportunity to sell the securities at a desirable price. Also, if the borrower
files for bankruptcy or becomes insolvent, the Fund's ability to dispose of the
securities may be delayed.
REPURCHASE AGREEMENTS. Each Fund may enter into repurchase agreements. A
repurchase agreement is an agreement by a Fund to purchase a security and sell
it back for a specified price. The repurchase price reflects an agreed-upon
interest rate for the time period of the agreement. A Fund's risk is the
inability of the seller to pay the agreed-upon price at delivery date. However,
such risk is tempered by the ability of a Fund to sell the security in the open
market in case of default. In such a case, a Fund may incur costs in disposing
of the security which would increase Fund expenses.
REVERSE REPURCHASE AGREEMENTS. Each Fund may enter into reverse repurchase
agreements. A reverse repurchase agreement is an agreement by a Fund to sell a
security and repurchase it at a specified time and price. A Fund could lose
money if the market value of the securities it sold declines below their
repurchase price. Reverse repurchase agreements may be considered a form of
borrowing, and, therefore, a form of leverage. Leverage may magnify gains or
losses of a Fund.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Funds may invest in
securities of other investment companies. Each Fund's investment adviser will
waive its investment advisory fee on assets invested in securities of other
open-end investment companies.
WHEN-ISSUED, DELAYED-DELIVERY AND FORWARD COMMITMENT TRANSACTIONS. Each Fund may
enter into transactions whereby it commits to buying a security, but does not
pay for or take delivery of the security until some specified date in the
future. The value of these securities is subject to market fluctuation during
this period and no income accrues to a Fund until settlement. At the time of
settlement, a when-issued security may be valued at less than its purchase
price. When entering into these transactions, a Fund relies on the other party
to consummate the transaction; if the other party fails to do so, the Fund may
be disadvantaged.
OTHER INVESTMENT RESTRICTIONS. Each Fund has adopted additional investment
restrictions and guidelines that are set forth in the SAI.
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BUYING AND SELLING SHARES
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HOW TO BUY SHARES
Institutional investors may buy Institutional Shares of the Funds through
broker-dealers, banks and certain other financial intermediaries, or directly
through the Fund's distributor, Evergreen Keystone Distributor, Inc. Investors
may purchase Institutional Shares at the public offering price, which equals the
class's net asset value per share ("NAV"). See "Offering Price and Other
Purchase Information" below.
MINIMUM INVESTMENT. The minimum initial investment in Institutional Shares is
$1 million, which may be waived in certain situations. There is no minimum
amount required for subsequent purchases.
OPENING AN ACCOUNT. You may open an account by mailing a signed account
application to the particular Fund c/o Evergreen Keystone Service Company, P.O.
Box 2121, Boston, Massachusetts 02106-2121. You may get an account application
by calling 1-800-633-2700.
Except as provided below, you can only purchase shares by wiring federal
funds to Evergreen Keystone Service Company (the "Service Company"). You may
obtain wiring instructions by calling 1-800-633-2700. When you call, the Service
Company representative will ask you for the following information: name of
authorized person; shareholder name; shareholder account number; name of the
Fund and share class; amount being wired; and wiring bank name.
7
<PAGE>
OFFERING PRICE AND OTHER PURCHASE INFORMATION. When you buy a Fund's shares, you
pay its NAV next determined after the Fund receives and accepts your order. To
receive that day's offering price, a Fund must receive and accept your order by
the close of the business day (generally 4:00 p.m. Eastern time); otherwise, you
will receive the next day's offering price. For more information, see "How the
Funds Calculate Their NAV."
You may, at a Fund's discretion, pay for shares of a Fund with securities
instead of cash. Additionally, if you want to buy a Fund's shares equal in
amount to $5 million or more the Fund may require you to pay for those shares
with securities instead of cash. A Fund will only accept securities that are
consistent with its investment objective, policies and restrictions. Also, a
Fund will value the securities in the manner described under "How the Funds
Calculate their NAV." Investors who receive a Fund's shares for securities
instead of cash may pay such transaction costs as broker's commissions, taxes or
governmental fees.
HOW TO REDEEM SHARES
You may redeem shares of a Fund by mail, telephone or other types of
telecommunication.
MAIL REDEMPTIONS. You may redeem shares on each day that the New York Stock
Exchange ("NYSE") is open by mailing a written request to the Service Company at
the following address:
Evergreen Keystone Service Company
P.O. Box 2121
Boston, Massachusetts 02106-2121
The signatures on the written request must be properly guaranteed, as
described below.
HOW TO REDEEM BY TELEPHONE. You may redeem your shares by calling 1-800-633-2700
between the hours of 9:00 a.m. and 5:00 p.m. (Eastern time) on each business
day. You may also redeem shares by sending a facsimile to (617) 210-2708 or by
other means of wire communication. You must state the Fund and class from which
you want to redeem, the number or dollar amount of shares you want to redeem and
your account number. The telephone redemption service is not available to you
automatically. You must elect to do so on your account application.
If you are unable to reach the Funds or the Service Company by telephone,
you should redeem by mail.
The Service Company will wire your redemption proceeds to the commercial
bank account designated on the account application. If the Service Company deems
it appropriate, it may require additional documentation. Although at present the
Service Company pays the wire costs involved, it reserves the right at any time
to require the shareholder to pay such costs.
REDEMPTION VALUE AND OTHER REDEMPTION POLICIES. When you sell shares, you
receive the NAV computed at the close of the NYSE on the day that a Fund
receives your request, if your request is received before 4:00 p.m. Eastern
time. If a Fund receives your redemption request after 4:00 p.m. Eastern time,
you will receive the next day's NAV. Generally, a Fund pays redemption proceeds
within seven days. The Funds may, at any time, change, suspend or terminate any
of the redemption methods described in this prospectus, except redemptions by
mail. For more information, see "How the Funds Calculate Their NAV."
The Funds may, at their discretion, pay your redemption proceeds with
securities instead of cash. However, each Fund is obligated to redeem shares
solely in cash, up to the lesser of $250,000 or 1% of a Fund's total net assets
during any ninety day period for any one shareholder. See the SAI for further
details.
Except as otherwise noted, neither the Funds, the Service Company nor the
Funds' distributor assumes responsibility for the authenticity of any
instructions received by any of them from a shareholder by telephone. The
Service Company will employ reasonable procedures to confirm that instructions
received over the telephone or otherwise are genuine. Neither the Funds the
Service Company nor the Funds' distributor will be liable when following
instructions received by telephone or otherwise that the Service Company
reasonably believes to be genuine.
Shareholders may only change information contained in their account
registration (such as the bank account designated to receive wire redemption
proceeds) by writing to the Service Company. Signatures on such written
instructions must be guaranteed.
8
<PAGE>
ADDITIONAL TRANSACTION POLICIES
HOW THE FUNDS CALCULATE THEIR NAV. A Fund's NAV equals the value of its share
without sales charges. A Fund calculates its NAV by adding up the total value of
its investments and other assets, subtracting its liabilities and then dividing
the result by the number of shares outstanding. The Funds compute their NAV as
of the close of regular trading (generally 4:00 p.m. Eastern time) on each day
that the NYSE is open.
The Funds' assets are valued primarily on the basis of market quotations.
Short-term securities with remaining maturities of sixty days or less for which
quotations are not readily available are valued on the basis of amortized cost.
In addition, securities for which quotations are not readily available,
including fixed-income securities, are valued by a method that the Board of
Trustees believes accurately reflects fair value.
SIGNATURE GUARANTEE. For your protection, signatures on stock powers, and
written orders or authorizations must have a signature guarantee. A signature
guarantee can be provided by a U.S. stock exchange member, a bank, or other
persons eligible to guarantee signatures under the Securities Exchange Act of
1934 and the Service Company's policies. The Service Company may waive this
requirement or may require additional documentation in certain cases.
EXCHANGES
You may exchange Institutional shares of any Fund for Institutional Shares
of any other Evergreen Select Fund. You may exchange your shares through your
broker-dealer, by mail or by telephone. All exchange orders must comply with the
applicable requirements for purchases and redemptions and must include your
account number, the number or value of shares to be exchanged, the class of
shares, and the Funds to and from which you wish to exchange.
Signatures on exchange orders must be guaranteed, as described below.
The Funds reserve the right to change or revoke the exchange privilege of
any shareholder or to limit or revoke any exchange. Currently, you may not make
more than five exchanges in a year or three exchanges in a calendar quarter.
Please read the prospectus of the fund that you want to exchange into
before requesting your exchange.
For federal income tax purposes, an exchange is treated as a sale for
taxable investors.
DIVIDENDS
As a shareholder, you are entitled to your share of earnings on a Fund's
investments. You receive such earnings as either an income dividend or a capital
gains distribution. Income dividends come from the dividends that a Fund earns
from its stocks plus any interest it receives from its bonds. The Fund realizes
a capital gain whenever it sells a security for a higher price than its tax
basis.
DIVIDEND SCHEDULE. Each Fund declares dividends from its net investment income
daily and pays such dividends monthly. Each Fund pays shareholders its net
capital gains at least once a year.
PAYMENT OPTIONS. Unless you select another option on your account application,
your dividends and capital gains will be reinvested in additional shares of the
same class of the same Fund.
You may elect to receive some or all of your dividends and capital gains in
cash. Should you select this option, a check will be mailed to you or your agent
or trustee no later than seven days after the payment date.
TAXES
Each Fund intends to qualify as a regulated investment company (a "RIC")
under Subchapter M of the Internal Revenue Code of 1986, as amended. As long as
a Fund qualifies as a RIC and distributes substantially all of its net
investment income and capital gains, it will not pay federal income taxes on the
earnings it distributes to shareholders.
Distributions to shareholders, whether taken in cash or reinvested in
shares, are generally considered taxable for federal income tax purposes as
follows:
9
<PAGE>
o Income distributions and net short-term capital gains are taxable as
ordinary income.
o Long-term capital gains distributions are taxable as capital gains,
regardless of how long you have held your shares.
After each calendar year, the Service Company will mail you a statement
indicating which of that year's distributions you should treat as ordinary
income and which you should treat as capital gains. Distributions of income or
capital gains may also be subject to state and local taxes.You should always
consult your tax adviser for specific guidance as to the tax consequences of
your investment in the Funds.
SHAREHOLDER SERVICES
Details on all shareholder services may be obtained from the Service
Company by calling toll free 1-800-633-2700 or by writing to the Service
Company.
SUBACCOUNT. Special processing has been arranged with the Service Company for
banks and other institutions that wish to open multiple accounts (a master
account and subaccounts). An investor wishing to avail himself or herself of
the Service Company's subaccounting facilities will be required to enter into a
separate agreement, with the charges to be determined on the basis of the level
of services to be rendered. Subaccounts may be opened with the initial
investment or at a later date and may be established by an investor with
registration either by name or by number.
- --------------------------------------------------------------------------------
FUND DETAILS
- --------------------------------------------------------------------------------
FUND ORGANIZATION AND SERVICE PROVIDERS
FUND STRUCTURE. Each Fund is an investment pool, which invests shareholders'
money towards a specified goal. Each Fund is a diversified series of an
open-end, investment management company, called "Evergreen Select Fixed Income
Trust" (the "Trust"). The Trust is a Delaware business trust organized on
September 17, 1997.
BOARD OF TRUSTEES. The Trust is supervised by a Board of Trustees that is
responsible for representing the interests of shareholders. The Trustees meet
periodically throughout the year to oversee the Funds' activities, reviewing,
among other things, their performance and their contractual arrangements with
various service providers.
SHAREHOLDER RIGHTS. All shareholders participate equally in dividends and
distributions from the Funds' assets and have equal voting, liquidation and
other rights. Shareholders may exchange shares as described under "Exchanges,"
but will have no other preference, conversion, exchange or preemptive rights.
When issued and paid for, your shares will be fully paid and nonassessable.
Shares of the Funds are redeemable, transferable and freely assignable as
collateral. The Trust may establish additional classes or series of shares.
The Funds do not hold annual shareholder meetings; a Fund may, however,
hold special meetings for such purposes as electing or removing Trustees,
changing fundamental policies and approving investment advisory agreements or
12b-1 plans. In addition, the Funds are prepared to assist shareholders in
communicating with one another for the purpose of convening a meeting to elect
Trustees. If any matters are to be voted on by shareholders, each share owned as
of the record date for the meeting would be entitled to one vote.
ADVISER. The investment adviser to each Fund is the First Capital Group ("FCG")
of First Union National Bank ("FUNB"), a subsidiary of First Union Corporation
("First Union"). First Union and First Union National Bank are located at 301
South College Street, Charlotte, North Carolina 28288-0630. First Union and its
subsidiaries provide a broad range of financial services to individuals and
businesses throughout the U.S.
Each Fund pays FCG a fee for its services as set forth below. FCG's annual
advisory fees are expressed as a percentage of average net assets. In addition,
FCG has voluntarily agreed to reduce its advisory fee by 0.10%, resulting in the
net advisory fees that are also indicated in the table below.
10
<PAGE>
<TABLE>
<CAPTION>
Fund Advisory Fee Net Advisory Fee
<S> <C> <C>
Evergreen Select Core Bond Fund 0.40% 0.30%
Evergreen Select Fixed Income Fund 0.50% 0.40%
Evergreen Select Income Plus Fund 0.50% 0.40%
Evergreen Select Intermediate Bond Fund 0.40% 0.30%
Evergreen Select Intermediate Tax-Exempt Bond Fund 0.60% 0.50%
Evergreen Select Limited Duration Fund 0.30% 0.20%
</TABLE>
FCG currently intends to continue waiving 0.10% of each Fund's respective
advisory fee through November 30, 1998. However, FCG may modify or cancel its
expense waiver at any time.
PORTFOLIO MANAGERS. Information about the individual portfolio managers
responsible for management of the Trust's currently operational Funds, including
their occupations for the past five years, is provided below.
- --------------------------------------------------------------------------------
Fund Portfolio Manager(s)
- --------------------------------------------------------------------------------
Evergreen Select Core The portfolio managers of the Fund are Robert Cheshire
Bond Fund and Bruce J. Besecker.
ROBERT CHESHIRE. Robert Cheshire joined First Fidelity
Bank in 1990, which was acquired by First Union in 1995,
as Vice President and senior portfolio manager. He is
head of the Newark Taxable Fixed Income Unit and manages
the Evergreen Intermediate Term Government Securities
Fund.
BRUCE J. BESECKER. Bruce Besecker has over 16 years
investment experience. In addition to managing the
Philadelphia Taxable Fixed Income Unit for Capital
Management Group of FUNB, he maintains fund and
individual account responsibilities. Prior to joining
First Union, Mr. Besecker served as Assistant Vice
President in Institutional Sales at Merrill Lynch in New
York, a Senior Trust Officer and Portfolio Manager at
Fidelity Bank and a Research Assistant in the Economics
Department at the Federal Reserve Bank in Philadelphia.
Evergreen Select Fixed The portfolio managers of the Fund are Thomas Ellis,
Rollin C. Williams and Robert Income Fund Cheshire.
THOMAS ELLIS. Thomas Ellis has over 28 years of
experience in investments. Mr. Ellis joined First Union
in 1985 as a Vice President and Senior Portfolio
Manager. At First Union he is responsible for the
portfolio management of over $1 billion in taxable and
municipal fixed income assets, including Evergreen
Short-Intermediate Bond Fund, a mutual fund; the Fixed
Income Fund, a common trust fund; and 17 separate
accounts. Prior to joining First Union, Mr. Ellis served
in the bond department of 1st Tennessee Bank.
ROLLIN C. WILLIAMS, CFA. Rollin Williams has over 28
years of investment and banking management experience.
In addition to managing First Union's Diversified Bond
Group Trust and the Evergreen U.S. Government Fund, he
is also responsible for the management of over $2.2
billion in fixed income portfolios. Before joining First
Union, Mr. Williams was the head of fixed income
investment at Dominion Trust Company in Roanoke, VA. Mr.
Williams has been with First Union since 1993 when
Dominion was acquired by the bank; he started with
Dominion Trust Company in 1988.
ROBERT CHESHIRE. Robert Cheshire joined First Fidelity
Bank in 1990, which was acquired by First Union in 1995,
as Vice President and senior portfolio manager. He is
head of the Newark Taxable Fixed Income Unit and manages
the Evergreen Intermediate Term Government Securities
Fund.
Evergreen Select The portfolio managers of the Fund are George Prattos
Income Plus Fund and J. P. Weaver.
11
<PAGE>
- --------------------------------------------------------------------------------
Fund Portfolio Manager(s)
- --------------------------------------------------------------------------------
GEORGE PRATTOS. George Prattos has over 18 years of
investment experience. Mr. Prattos joined First Union in
1991 as a Vice President and Director of the Specialty
Fixed Income Group. He is primarily responsible for
managing specialty fixed income products throughout the
First Union system.
J. P. WEAVER. J. P. Weaver has over 12 years of market
experience in fixed income investments. He joined First
Union in 1994 as a Vice President and Director of Fixed
Income Research. In addition, he manages several
separate accounts within the Specialty Fixed Income
Group. Mr. Weaver joined First Union from One Federal
Asset Management in Boston, MA, where he served as a
portfolio manager.
Evergreen Select The portfolio managers of the Fund are George Prattos,
Fund David Fowley and Bradley B. Limited Duration Ridinger.
GEORGE PRATTOS. George Prattos has over 18 years of
investment experience. Mr. Prattos joined First Union in
1991 as a Vice President and Director of the Specialty
Fixed Income Group. He is primarily responsible for
managing specialty fixed income products throughout the
First Union system.
DAVID FOWLEY. David Fowley has over five years of
investment experience. Mr. Fowley joined First Union in
1994 as a Trust Investment Officer and Portfolio
Manager.
BRADLEY B. RIDINGER. Brad Ridinger, CFA, has over 10
years of investment management experience. Mr. Ridinger
joined First Union in 1987 as a Vice President and
Senior Portfolio Manager.
Evergreen Select RICHARD K. MARRONE. Richard Marrone has over 15 years of
Intermediate Tax investment and market experience. Mr. Marrone joined
Exempt Bond Fund First Union in 1993 as a Vice President and Senior
Portfolio Manager. Mr. Marrone came to First Union from
Woodbridge Capital management where he served as a
portfolio manager for mutual and common trust funds.
Evergreen Select The portfolio managers of the Fund are Thomas Ellis,
Fund Rollin C. Williams and Robert Cheshire.
THOMAS ELLIS. Thomas Ellis has over 28 years of
experience in investments. Mr. Ellis joined First Union
in 1985 as a Vice President and Senior Portfolio
Manager. Prior to joining First Union, Mr. Ellis served
in the bond department of 1st Tennessee Bank.
ROLLIN C. WILLIAMS, CFA. Rollin Williams has over 28
years of investment and banking management experience.
In addition to managing First Union's Diversified Bond
Group Trust and the Evergreen U.S. Government Fund, he
is also responsible for the management of over $2.2
billion in fixed income portfolios. Before joining First
Union, Mr. Williams was the head of fixed income
investment at Dominion Trust Company in Roanoke, VA. Mr.
Williams has been with First Union since 1993 when
Dominion was acquired by the bank; he started with
Dominion Trust Company in 1988.
ROBERT CHESHIRE. Robert Cheshire joined First Fidelity
Bank in 1990, which was acquired by First Union in 1995,
as Vice President and senior portfolio manager. He is
head of the Newark Taxable Fixed Income Unit and manages
the Evergreen Intermediate Term Government Securities
Fund.
DISTRIBUTOR. Evergreen Keystone Distributor, Inc. is each Fund's distributor.
Evergreen Keystone Distributor, Inc. is located at 125 West 55th Street, New
York, New York 10019 and is a subsidiary of The BISYS Group, Inc. Evergreen
Keystone Distributor, Inc. markets the Funds and distributes their shares
through broker-dealers, financial planners and other financial representatives.
Evergreen Keystone Distributor, Inc. is not affiliated with First Union.
12
<PAGE>
TRANSFER AGENT. Evergreen Keystone Service Company is each Fund's transfer
agent. Evergreen Keystone Service Company is a subsidiary of First Union and is
located at 200 Berkeley Street, Boston, MA 02116-5034. Evergreen Keystone
Service Company handles shareholder services, including record keeping and
account statements, distribution of dividends and capital gains and processing
of transactions.
ADMINISTRATOR. Evergreen Keystone Investment Services, Inc. ("EKIS") serves as
administrator to each Fund. As administrator, and subject to the supervision and
control of the Trust's Board of Trustees, EKIS provides the Funds with
facilities, equipment and personnel. For its services as administrator, EKIS is
entitled to receive a fee based on the aggregate average daily net assets of the
Funds at a rate based on the total assets of all mutual funds advised by First
Union subsidiaries. The administration fee is calculated in accordance with the
following schedule.
<TABLE>
<CAPTION>
Aggregate Average Daily Net Assets Of Mutual Funds
For Which Any Subsidiary of First Union
Administrative Fee Serves As Investment Adviser
<S> <C>
0.060% on the first $7 billion
0.0425% on the next $3 billion
0.035% on the next $5 billion
0.025% on the next $10 billion
0.019% on the next $5 billion
0.014% on assets in excess of $30 billion
</TABLE>
SUBADMINISTRATOR. BISYS Fund Services serves as sub-administrator to the Funds.
For its services BISYS Fund Services is entitled to receive a fee from EKIS
calculated on the aggregate average daily net assets of the Funds at a rate
based on the total assets of all mutual funds administered by EKIS for which
First Union subsidiaries also serve as investment adviser. The sub-administrator
fee is calculated in accordance with the following schedule:
<TABLE>
<CAPTION>
Aggregate Average Daily Net Assets Of Mutual Funds Administered
By BISYS For Which Any Subsidiary Of First Union
Sub-Administrative Fee Serves As Investment Adviser
<S> <C>
0.0100% on the first $7 billion
0.0075% on the next $3 billion
0.0050% on the next $15 billion
0.0040% on assets in excess of $25 billion
</TABLE>
OTHER INFORMATION AND POLICIES
BANKING LAWS. The Glass-Steagall Act and other banking laws and regulations
presently prohibit a bank holding company or its affiliates (a "Bank") from
sponsoring, organizing, controlling, or distributing the shares of a registered
open-end investment company such as each Fund. However, a Bank may act as
investment adviser, transfer agent or custodian to a registered open-end
investment company. A Bank may also purchase shares of such company and pay
third parties for performing these functions.
SECURITIES TRANSACTIONS. Under policies established by the Trust's Board of
Trustees, FCG selects broker-dealers to execute portfolio transactions subject
to the receipt of best execution. In so doing, FCG may select broker-dealers who
are affiliated with FCG. Moreover, the Funds may pay higher commissions to
broker-dealers that provide research services, which FCG may use in advising the
Fund or its other clients.
13
<PAGE>
PORTFOLIO TURNOVER. The estimated annual portfolio turnover rates for each Fund
is not expected to exceed the rate set forth below.
<TABLE>
<CAPTION>
Estimated Annual
Fund Name Portfolio Turnover
<S> <C>
Evergreen Select Core Bond Fund 50%
Evergreen Select Fixed Income Fund 50%
Evergreen Select Income Plus Fund 50%
Evergreen Select Intermediate Bond Fund 50%
Evergreen Select Intermediate Tax Exempt
Bond Fund 75%
Evergreen Select Limited Duration Fund 100%
</TABLE>
CODE OF ETHICS. The Fund and FCG have each adopted a code of ethics
incorporating policies on personal securities trading. In general, these codes
of ethics require that certain personnel of the Funds and FCG (1) abstain from
engaging in certain personal trading practices and (2) report certain personal
trading activities.
OTHER CLASSES OF SHARES. Each Fund, other than Evergreen Select Core Bond Fund,
offers two classes of shares, Institutional and Institutional Service. Evergreen
Select Core Bond Fund offers three classes of shares, Charitable, Institutional
and Institutional Service. Only Institutional shares are offered through this
prospectus. Call the Service Company for information on the other classes of
shares, including how to get a prospectus.
FUND PERFORMANCE
TOTAL RETURN. Total return is the change in value of an investment in a Fund
over a given period, assuming that dividends and capital gains are reinvested
and that recurring charges are deducted. A cumulative total return reflects
actual performance over a stated period of time. An average annual total return
is a hypothetical rate of return that, if achieved annually, would have produced
the same cumulative total return if performance had been constant over the
entire period. Average annual total returns smooth out variations in
performance; they are not the same as actual year-by-year results.
YIELD. Yield is the income generated by an investment in a Fund over a given
period of time, expressed as an annual percentage rate. Yields are calculated
according to a standard that is required for all stock and bond Funds. Because
this differs from other accounting methods, the quoted yield may not equal the
income actually paid to shareholders.
GENERAL. The Funds may include comparative performance information in
advertising or in marketing the Fund's shares. Such information could include
data from Lipper Analytical Services, Inc., Morningstar, Inc., CDS Weisenberger
and Value Line, other industry publications or various indexes, such as the
Lehman Brothers Aggregate Bond Index.
14
<PAGE>
INVESTMENT ADVISER
First Capital Group of First Union National Bank, 201 South College Street,
Charlotte, North Carolina 28288
CUSTODIAN
State Street Bank and Trust Company, Box 9021, Boston, Massachusetts 02205-9827
TRANSFER AGENT
Evergreen Keystone Service Company, 200 Berkeley Street, Boston, Massachusetts,
02116
LEGAL COUNSEL
Sullivan & Worcester LLP, 1025 Connecticut Avenue, N.W., Washington, D.C. 20036
INDEPENDENT AUDITORS
Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts 02110
DISTRIBUTOR
Evergreen Keystone Distributor, Inc., 125 West 55th Street, New York, New York
10019
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall therebe any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
Subject to Completion
Preliminary Prospectus dated September 19, 1997
- -------------------------------------------------------------------------------
PROSPECTUS , 1997
- -------------------------------------------------------------------------------
EVERGREEN SELECT FIXED INCOME TRUST (graphic of tree)
- -------------------------------------------------------------------------------
Evergreen Select Core Bond Fund
(The "Fund")
CHARITABLE SHARES
This prospectus explains important information about the Charitable Shares
of the Evergreen Select Fixed Income Trust, including how the Fund invests and
services available to shareholders. Please read this prospectus before
investing, and keep it for future reference.
When you consider investing in the Fund, remember that the higher the risk
of losing money, the higher the potential reward. The reverse is also generally
true: the lower the risk, the lower the potential reward.
By itself, the Fund is a complete investment plan. When considering an
investment in the Fund, remember to consider your overall investment objectives
and any other investments you own. You should also carefully evaluate your
ability to handle the risks posed by your investment in the Fund. You can find
information on the risks associated with investing in the Fund under the section
called "Fund Descriptions."
To learn more about the Evergreen Select Fixed Income Trust, ask for a copy
of the Fund's statement of additional information ("SAI") dated , 1997. The Fund
has filed the SAI with the Securities and Exchange Commission and has
incorporated it by reference (legally included it) into this prospectus. If you
would like a free copy of the SAI, call 1-800-343-3453.
Please remember that shares of the Fund are:
o Not deposits or obligations of any bank.
o Not endorsed or guaranteed by any bank.
o Not insured or otherwise protected by the Federal Deposit Insurance
Corporation or any other agency.
o Subject to investment risks, including possible loss of the principal amount.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
<S> <C>
EXPENSES 3
FUND DESCRIPTIONS 3
The Fund's Investment Objective 3
The Fund's Investment Approach 3 Securities and Investment Practices
Used By The Fund 4
BUYING AND SELLING SHARES 6
How To Buy Shares 6
How To Redeem Shares 7
Additional Transaction Policies 7
Exchanges 8
Dividends 8
Taxes 8
Shareholder Services 9
<S> <C>
FUND DETAILS 9
Fund Organization and Service
Providers 9
Other Information and Policies 10
Fund Performance 11
</TABLE>
2
<PAGE>
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
The tables and examples below are designed to help you understand the
various expenses that you will bear, directly or indirectly, when you invest in
the Fund. Shareholder transaction expenses are fees paid directly from your
account when you buy or sell shares of the Fund. There are no shareholder
transaction expenses.
Annual operating expenses reflect the normal operating expenses of the
Fund, and include costs such as management, distribution and other fees. The
table below shows the Fund's estimated annual operating expenses for the fiscal
period ending September 30, 1998. The Fund's example shows what you would pay if
you invested $1,000 over the periods indicated. The examples assume that you
reinvest all of your dividends and that the Fund's average annual return will be
5%. The examples are for illustration purposes only and should not be considered
a representation of past or future expenses or annual return. The Fund's actual
expenses and returns will vary. For a more complete description of the various
costs and expenses borne by the Fund see "Fund Details."
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Total Operating
Expenses (After
Annual Fund Operating Expenses Management 12b-1 Other Expense Waivers or
(as a percentage of average daily net assets) Fees1 Fees Expenses Reimbursements)1
Evergreen Select Core Bond Fund 0.30% None 0.12% 0.42%
Example of Fund Expenses 1 year 3 years
Evergreen Select Core Bond Fund $4 $13
</TABLE>
- --------
(1) The Fund's investment adviser has voluntarily agreed to waive 0.10% of the
Fund's investment advisory fee. Without such waivers the Management Fee set
forth above would be 0.10% higher. The investment adviser currently intends
to continue this expense waiver through November 30, 1998; however, it may
modify or cancel its expense waiver at any time. See "Fund Details" for more
information. Absent expense waivers and/or reimbursements, the Total
Operating Expenses for the Fund would be as follows:
<TABLE>
<CAPTION>
<S> <C>
Fund Total Fund Operating Expenses
Evergreen Select Core Bond Fund 0.52%
</TABLE>
- --------------------------------------------------------------------------------
FUND DESCRIPTIONS
- --------------------------------------------------------------------------------
THE FUND'S INVESTMENT OBJECTIVE
Evergreen Select Core Bond Fund seeks to maximize total return. The Fund is
managed pursuing a controlled risk approach which uses duration adjustments,
sector composition and security selection in an effort to exceed the return of
its benchmark, the Lehman Brothers Aggregate Bond Index.
The Fund's investment objective is not fundamental. As a result, the Fund
may change its objective without a shareholder vote. The Fund has adopted
certain fundamental investment policies which are mainly designed to limit the
Fund's exposure to risk. The Fund's fundamental policies cannot be changed
without a shareholder vote. See the SAI for more information regarding the
Fund's fundamental investment policies and other related policies.
THE FUND'S INVESTMENT APPROACH
The Fund invests at least 65% of its assets in investment grade debt
securities (including convertible securities) of the U.S. government and its
agencies and instrumentalities; foreign governments and their subdivisions,
agencies and instrumentalities; domestic and foreign corporations; and
obligations of international agencies or supranational entities. The Fund will
invest only in U.S. dollar denominated securities.
The Fund may invest in a variety of derivative instruments that are
consistent with its investment objective and policies. Such derivatives may
include options, futures, options on futures, mortgage-backed and other asset-
backed securities, inflation-indexed bonds, structured notes, loan
participations, interest rate swaps and index swaps. For more information, see
"Derivatives" and "Mortgage-Backed Securities" below.
3
<PAGE>
The Fund may lend portfolio securities and enter into repurchase and
reverse repurchase agreements, forward commitment and when-issued transactions.
The Fund may also invest up to 35% of its assets in high-yield, high-risk
bonds. See "High-yield, High-risk Bonds" below.
The Fund may invest for temporary defensive purposes up to 100% of its
assets in short-term obligations. Such obligations may include master demand
notes, commercial paper and notes, bank deposits and other financial institution
obligations.
SECURITIES AND INVESTMENT PRACTICES USED BY THE FUND
You can find more information about the types of securities in which the
Fund may invest, the types of investment techniques the Fund may employ in
pursuit of its objective and a summary of related risks set forth below. The
Fund's SAI contains additional information about these investments and
investment techniques.
Debt Securities. The Fund may invest in bonds or other instruments used by
corporations or governments to borrow money from investors, including all kinds
of convertible securities. When the Fund buys a debt security, it expects to
earn a variable or fixed rate of interest and it expects the issuer to repay the
amount borrowed at maturity. Some debt securities, such as zero coupon bonds, do
not pay current interest, but are purchased at a discount from their face
values. The main risks of investing in debt securities are:
o Interest Rate Risk: The risk that a bond's prices will fall when interest
rates rise, and vice versa. Debt securities have varying levels of
sensitivity to interest rates. Longer-term bonds are generally more
sensitive to changes in interest rates than short term bonds.
o Credit Risk: The chance that the issuer of a bond will have its credit
rating downgraded or will default (fail to make scheduled interest and
principal payments), potentially reducing the Fund's income and/or share
price.
Debt securities have varying degrees of quality. Investment grade bonds are
generally rated within the four highest grades as determined by Standard &
Poor's Ratings Group ("S & P") (AAA, AA, A or BBB), Moody's Investors Service
("Moody's") (Aaa, Aa, A or Baa), or Fitch Investors Service, L.P. ("Fitch")
(AAA, AA, A or BBB) or their respective equivalent ratings or, if not rated or
rated by another system, determined by the Fund's adviser to be of equivalent
credit quality to securities so rated. For information on below-investment grade
bonds, see "High-yield, High-risk Bonds" below. Investment grade bonds are
regarded as having a greater capacity to pay interest and repay principal.
However, adverse economic conditions, or changing circumstances may to lead to a
weakened capacity to pay interest and repay principal than higher-rated bonds.
The Fund is not required to sell or otherwise dispose of any security that
loses its rating or has its rating reduced after the Fund has purchased it.
Also, if S&P, Moody's or Fitch changes its ratings system, the Fund will try to
use comparable ratings as standards according to the Fund's investment
objectives and policies.
United States ("U.S.") Government Securities. The Fund may buy debt securities
that are issued or guaranteed by the U.S. Treasury or by an agency or
instrumentality of the U.S. government. Some U.S. government securities, such
as Treasury bills, notes and bonds, are supported by the full faith and credit
of the U.S. Others, however, are supported only by the credit of the
instrumentality or by the right of the instrumentality to borrow from the U.S.
government.
While U.S. government securities are guaranteed as to principal and
interest, their market value is not guaranteed. Generally, U.S. government
securities are subject to the same interest rate and credit risks as other
fixed-income securities. However, since U.S. government securities are of the
highest credit quality, the credit risk is minimal. The U.S. government does
not guarantee the net asset value of the Funds' shares.
Foreign Securities. The Fund may buy U.S. dollar denominated obligations of
foreign governments and corporations. Because foreign markets operate
differently than the U.S. market, a Fund investing abroad will encounter risks
not normally associated with U.S. companies. For example, information about
foreign corporate securities is frequently less available than information
about U.S. securities, which may reduce the reliability of investment decisions
regarding foreign securities. Political or financial problems more likely to
occur in foreign countries may cause
4
<PAGE>
foreign investments to lose money. Foreign markets may be less liquid than U.S.
markets. Foreign issuers may not be subject to the same accounting, auditing
and financial reporting standards and practices as U.S. issuers, making it more
difficult to value the investment. Foreign governments may regulate or
supervise foreign issuers less than in the U.S. All of these factors can make
foreign investments more volatile than U.S. investments.
Mortgage-Backed Securities. A mortgage-backed security represents an interest in
a "pool" of commercial or residential mortgages. Payments of interest and
principal made by the individual borrowers on the mortgages that underlie the
securities are passed through to the Fund. The Fund may invest in
mortgage-backed securities and other complex asset backed securities, including
collateralized mortgage obligations and stripped mortgage-backed securities.
Early repayment of the mortgages underlying the securities may expose a
Fund to a lower rate of return when it reinvests the principal. The rate of
prepayments will affect the price and volatility of the mortgage-backed security
and may have the effect of shortening or extending the effective maturity beyond
what the Fund anticipated at the time of purchase.
Like other debt securities, changes in interest rates generally affect the
value of a mortgage-backed security. Additionally, some mortgage-backed
securities may be structured so that they may be particularly sensitive to
interest rates and difficult to predict.
High-yield, High-risk Bonds. High-yield, high-risk bonds (commonly called "junk
bonds") are bonds rated BB or lower by S&P or Fitch or Ba by Moody's or, if
unrated or rated under another system, are of comparable quality to obligations
so rated as determined by a Fund's investment adviser. Since these bonds have a
low rating, a degree of doubt surrounds the ability of the issuer to continue
interest payments. High-yield, high-risk bonds are usually backed by issuers of
less proven or questionable financial strength. Compared with higher grade
bonds, issuers of high-yield, high-risk bonds are more likely to face financial
problems and to be materially affected by those problems. As a result, the
ability of issuers of high-yield, high-risk bonds to pay interest and principal
is uncertain. Moreover, the value of a high-yield, high-risk bond may react
strongly to real or perceived unfavorable news about an issuer or the economy.
If a high-yield, high-risk bond issuer defaults, the bond will lose some or all
of its value.
Derivatives. Derivatives are financial contracts whose value is based on an
underlying asset, such as a stock or a bond, or an underlying economic factor,
such as an index or an interest rate.
The Fund may invest in derivatives only if the expected risks and rewards
are consistent with its objectives and policies. The Fund may use futures and
options for hedging purposes only, not for speculation.
Losses from derivatives can sometimes be substantial. This is true partly
because small price movements in the underlying asset can result in immediate
and substantial gains or losses in the value of the derivative. Derivatives can
also cause the Fund to lose money if it fails to correctly predict the direction
in which the underlying asset or economic factor will move.
Borrowing. The Fund may borrow from banks in an amount up to 33 1/3% of its
total assets, taken at market value. The Fund may only borrow as a temporary
measure for extraordinary or emergency purposes such as the redemption of Fund
shares. The Fund will not purchase securities while borrowings are outstanding
except to exercise prior commitments and to exercise subscribtion rights.
Securities Lending. To generate income and offset expenses, the Fund may lend
securities to broker-dealers and other financial institutions. Loans of
securities by the Fund may not exceed 30% of the value of the Fund's total
assets. While securities are on loan, the borrower will pay the Fund any income
accruing on the security. Also, the Fund may invest any collateral it receives
in additional securities.
Gains or losses in the market value of a lent security will affect the Fund
and its shareholders. When the Fund lends its securities, it runs the risk that
it could not retrieve the securities on a timely basis, possibly losing the
opportunity to sell the securities at a desirable price. Also, if the borrower
files for bankruptcy or becomes insolvent, the Fund's ability to dispose of the
securities may be delayed.
5
<PAGE>
Repurchase Agreements. The Fund may enter into repurchase agreements. A
repurchase agreement is an agreement by the Fund to purchase a security and sell
it back for a specified price. The repurchase price reflects an agreed-upon
interest rate for the time period of the agreement. The Fund's risk is the
inability of the seller to pay the agreed-upon price at delivery date. However,
such risk is tempered by the ability of the Fund to sell the security in the
open market in case of default. In such a case, the Fund may incur costs in
disposing of the security which would increase Fund expenses.
Reverse Repurchase Agreements. The Fund may enter into reverse repurchase
agreements. A reverse repurchase agreement is an agreement by the Fund to sell a
security and repurchase it at a specified time and price. The Fund could lose
money if the market value of the securities it sold declines below their
repurchase price. Reverse repurchase agreements may be considered a form of
borrowing, and, therefore, a form of leverage. Leverage may magnify gains or
losses of the Fund.
Investing in Securities of Other Investment Companies. The Fund may invest in
securities of other investment companies. The Fund's investment adviser will
waive its investment advisory fee on assets invested in securities of other
open-end investment companies.
When-Issued, Delayed-Delivery and Forward Commitment Transactions. The Fund may
enter into transactions whereby it commits to buying a security, but does not
pay for or take delivery of the security until some specified date in the
future. The value of these securities is subject to market fluctuation during
this period and no income accrues to the Fund until settlement. At the time of
settlement, a when-issued security may be valued at less than its purchase
price. When entering into these transactions, the Fund relies on the other party
to consummate the transaction; if the other party fails to do so, the Fund may
be disadvantaged.
Other Investment Restrictions. The Fund has adopted additional investment
restrictions and guidelines that are set forth in the SAI.
- --------------------------------------------------------------------------------
BUYING AND SELLING SHARES
- --------------------------------------------------------------------------------
HOW TO BUY SHARES
Charitable investors may buy Charitable Shares of the Fund through
broker-dealers, banks and certain other financial intermediaries, or directly
through the Fund's distributor, Evergreen Keystone Distributor, Inc. A
charitable investor is one that qualifies as a non-profit organization under the
Internal Revenue Code of 1986, as amended. Examples of such organizations
include: Charitable trusts, hospitals, private foundations, private schools and
colleges, public charities, religious entities and charitable remainder trusts.
Investors may purchase Charitable Shares at the public offering price, which
equals the class's net asset value per share ("NAV"). See "Offering Price and
Other Purchase Information" below.
Minimum Investment. The minimum initial investment in Charitable Shares is $1
million, which may be waived in certain situations. There is no minimum amount
required for subsequent purchases.
Opening an Account. You may open an account by mailing a signed account
application to the Fund c/o Evergreen Keystone Service Company, P.O. Box 2121,
Boston, Massachusetts 02106-2121. You may get an account application by calling
1-800-343-3453.
Except as provided below, you can only purchase shares by wiring federal
funds to Evergreen Keystone Service Company (the "Service Company"). You may
obtain wiring instructions by calling 1-800-343-3453. When you call, the Service
Company representative will ask you for the following information: name of
authorized person; shareholder name; shareholder account number; name of the
Fund and share class; amount being wired; and wiring bank name.
Offering Price and Other Purchase Information. When you buy the Fund's shares,
you pay its NAV next determined after the Fund receives and accepts your order.
To receive that day's offering price, the Fund must receive and accept your
order by the close of the business day (generally 4:00 p.m. Eastern time);
otherwise, you will receive the next day's offering price. For more information,
see "How the Fund Calculates its NAV."
6
<PAGE>
You may, at the Fund's discretion, pay for shares of the Fund with
securities instead of cash. Additionally, if you want to buy the Fund's shares
equal in amount to $5 million or more the Fund may require you to pay for those
shares with securities instead of cash. The Fund will only accept securities
that are consistent with its investment objective, policies and restrictions.
Also, the Fund will value the securities in the manner described under "How the
Fund Calculates its NAV." Investors who receive the Fund's shares for securities
instead of cash may pay such transaction costs as broker's commissions, taxes or
governmental fees.
HOW TO REDEEM SHARES
You may redeem shares of the Fund by mail, telephone or other types of
telecommunication.
Mail Redemptions. You may redeem shares on each day that the New York Stock
Exchange ("NYSE") is open by mailing a written request to the Service Company at
the following address:
Evergreen Keystone Service Company
P.O. Box 2121
Boston, Massachusetts 02106-2121
The signatures on the written request must be properly guaranteed, as
described below.
How To Redeem By Telephone. You may redeem your shares by calling 1-800-343-3453
between the hours of 8:00 a.m. and 6:00 p.m. (Eastern time) on each business
day. You may also redeem shares by sending a facsimile to (617) 210-2711 or by
other means of wire communication. You must state the Fund and class from which
you want to redeem, the number or dollar amount of shares you want to redeem and
your account number. The telephone redemption service is not available to you
automatically. You must elect to do so on your account application.
If you are unable to reach the Fund or the Service Company by telephone,
you should redeem by mail.
The Service Company will wire your redemption proceeds to the commercial
bank account designated on the account application. If the Service Company deems
it appropriate, it may require additional documentation. Although at present the
Service Company pays the wire costs involved, it reserves the right at any time
to require the shareholder to pay such costs.
Redemption Value and Other Redemption Policies. When you sell shares, you
receive the NAV computed at the close of the NYSE on the day that the Fund
receives your request, if your request is received before 4:00 p.m. Eastern
time. If the Fund receives your redemption request after 4:00 p.m. Eastern time,
you will receive the next day's NAV. Generally, the Fund pays redemption
proceeds within seven days. The Fund may, at any time, change, suspend or
terminate any of the redemption methods described in this prospectus, except
redemptions by mail. For more information, see "How the Fund Calculates its
NAV."
The Fund may, at its discretion, pay your redemption proceeds with
securities instead of cash. However, the Fund is obligated to redeem shares
solely in cash, up to the lesser of $250,000 or 1% of the Fund's total net
assets during any ninety day period for any one shareholder. See the SAI for
further details.
Except as otherwise noted, neither the Fund, the Service Company nor the
Fund's distributor assumes responsibility for the authenticity of any
instructions received by any of them from a shareholder by telephone. The
Service Company will employ reasonable procedures to confirm that instructions
received over the telephone or otherwise are genuine. Neither the Fund, the
Service Company nor the Fund's distributor will be liable when following
instructions received by telephone or otherwise that the Service Company
reasonably believes to be genuine.
Shareholders may only change information contained in their account
registration (such as the bank account designated to receive wire redemption
proceeds) by writing to the Service Company. Signatures on such written
instructions must be guaranteed.
ADDITIONAL TRANSACTION POLICIES
How the Fund Calculates its NAV. The Fund's NAV equals the value of its share
without sales charges. The Fund calculates its NAV by adding up the total value
of its investments and other assets, subtracting its liabilities and then
dividing the result by the number of shares outstanding. The Fund computes its
NAV as of the close of regular trading (generally 4:00 p.m. Eastern time) on
each day that the NYSE is open.
7
<PAGE>
The Fund's assets are valued primarily on the basis of market quotations.
Short-term securities with remaining maturities of sixty days or less for which
quotations are not readily available are valued on the basis of amortized cost.
In addition, securities for which quotations are not readily available,
including fixed-income securities, are valued by a method that the Board of
Trustees believes accurately reflects fair value.
Signature Guarantee. For your protection, signatures on stock powers, and
written orders or authorizations must have a signature guarantee. A signature
guarantee can be provided by a U.S. stock exchange member, a bank, or other
persons eligible to guarantee signatures under the Securities Exchange Act of
1934 and the Service Company's policies. The Service Company may waive this
requirement or may require additional documentation in certain cases.
EXCHANGES
You may exchange Charitable Shares of the Fund for Charitable Shares of any
other Evergreen Select Fund. You may exchange your shares through your
broker-dealer, by mail or by telephone. All exchange orders must comply with the
applicable requirements for purchases and redemptions and must include your
account number, the number or value of shares to be exchanged, the class of
shares, and the Funds to and from which you wish to exchange.
Signatures on exchange orders must be guaranteed, as described below.
The Fund reserves the right to change or revoke the exchange privilege of
any shareholder or to limit or revoke any exchange. Currently, you may not make
more than five exchanges in a year or three exchanges in a calendar quarter.
Please read the prospectus of the fund that you want to exchange into
before requesting your exchange.
For federal income tax purposes, an exchange is treated as a sale for
taxable investors.
DIVIDENDS
As a shareholder, you are entitled to your share of earnings on the Fund's
investments. You receive such earnings as either an income dividend or a capital
gains distribution. Income dividends come from the dividends that the Fund earns
from its stocks plus any interest it receives from its bonds. The Fund realizes
a capital gain whenever it sells a security for a higher price than its tax
basis.
Dividend Schedule. The Fund declares dividends from its net investment income
daily and pays such dividends monthly. The Fund pays shareholders its net
capital gains at least once a year.
Payment Options. Unless you select another option on your account application,
your dividends and capital gains will be reinvested in additional shares of the
same class of the same Fund.
You may elect to receive some or all of your dividends and capital gains in
cash. Should you select this option, a check will be mailed to you or your agent
or trustee no later than seven days after the payment date.
TAXES
The Fund intends to qualify as a regulated investment company (a "RIC")
under Subchapter M of the Internal Revenue Code of 1986, as amended. As long as
a Fund qualifies as a RIC and distributes substantially all of its net
investment income and capital gains, it will not pay federal income taxes on the
earnings it distributes to shareholders.
Distributions to shareholders, whether taken in cash or reinvested in
shares, are generally considered taxable for federal income tax purposes as
follows:
o Income distributions and net short-term capital gains are taxable as
ordinary income.
o Long-term capital gains distributions are taxable as capital gains,
regardless of how long you have held your shares.
8
<PAGE>
After each calendar year, the Service Company will mail you a statement
indicating which of that year's distributions you should treat as ordinary
income and which you should treat as capital gains. Distributions of income or
capital gains may also be subject to state and local taxes.You should always
consult your tax adviser for specific guidance as to the tax consequences of
your investment in the Fund.
SHAREHOLDER SERVICES
Details on all shareholder services may be obtained from the Service
Company by calling toll free 1-800-343-3453 or by writing to the Service
Company.
Subaccount. Special processing has been arranged with the Service Company for
banks and other institutions that wish to open multiple accounts (a master
account and subaccounts). An investor wishing to avail himself or herself of
the Service Company's subaccounting facilities will be required to enter into a
separate agreement, with the charges to be determined on the basis of the level
of services to be rendered. Subaccounts may be opened with the initial
investment or at a later date and may be established by an investor with
registration either by name or by number.
- --------------------------------------------------------------------------------
FUND DETAILS
- --------------------------------------------------------------------------------
FUND ORGANIZATION AND SERVICE PROVIDERS
Fund Structure. The Fund is an investment pool, which invests shareholders'
money towards a specified goal. The Fund is a diversified series of an open-end,
investment management company, called "Evergreen Select Fixed Income Trust" (the
"Trust"). The Trust is a Delaware business trust organized on September 17,
1997.
Board of Trustees. The Trust is supervised by a Board of Trustees that is
responsible for representing the interests of shareholders. The Trustees meet
periodically throughout the year to oversee the Fund's activities, reviewing,
among other things, the Fund's performance and its contractual arrangements with
various service providers.
Shareholder Rights. All shareholders participate equally in dividends and
distributions from the Fund's assets and have equal voting, liquidation and
other rights. Shareholders may exchange shares as described under "Exchanges,"
but will have no other preference, conversion, exchange or preemptive rights.
When issued and paid for, your shares will be fully paid and nonassessable.
Shares of the Fund are redeemable, transferable and freely assignable as
collateral. The Trust may establish additional classes or series of shares.
The Fund does not hold annual shareholder meetings; the Fund may, however,
hold special meetings for such purposes as electing or removing Trustees,
changing fundamental policies and approving investment advisory agreements or
12b-1 plans. In addition, the Fund is prepared to assist shareholders in
communicating with one another for the purpose of convening a meeting to elect
Trustees. If any matters are to be voted on by shareholders, each share owned as
of the record date for the meeting would be entitled to one vote.
Adviser. First Capital Group ("FCG") of First Union National Bank ("FUNB") is
the investment adviser to the Fund. FUNB is a subsidiary of First Union
Corporation ("First Union"). First Union and First Union National Bank are
located at 301 South College Street, Charlotte, North Carolina 28288-0630. First
Union and its subsidiaries provide a broad range of financial services to
individuals and businesses throughout the U.S.
The Fund pays FCG a fee for its services equal to 0.40% of the Fund's average
net assets. Of that amount, FCG has voluntarily agreed to reduce its advisory
fee by 0.10%, resulting in a net annual advisory fee of 0.30% of the average net
assets of the Fund.
FCG currently intends to continue waiving 0.10% of its advisory fee through
November 30, 1998. However, FCG may modify or cancel its expense waiver at any
time.
Portfolio Managers. The portfolio managers of the Fund are Robert Cheshire and
Bruce J. Besecker.
Robert Cheshire. Robert Cheshire joined First Fidelity Bank in 1990, which
was acquired by First Union in 1995, as Vice President and senior portfolio
manager. He is head of the Newark Taxable Fixed Income Unit and manages the
Evergreen Intermediate Term Government Securities Fund.
9
<PAGE>
Bruce J. Besecker. Bruce Besecker has over 16 years investment experience.
In addition to managing the Philadelphia Taxable Fixed Income Unit for Capital
Management Group of FUNB, he maintains fund and individual account
responsibilities. Prior to joining First Union, Mr. Besecker served as Assistant
Vice President in Institutional Sales at Merrill Lynch in New York, a Senior
Trust Officer and Portfolio Manager at Fidelity Bank and a Research Assistant in
the Economics Department at the Federal Reserve Bank in Philadelphia.
Distributor. Evergreen Keystone Distributor, Inc. is the Fund's distributor.
Evergreen Keystone Distributor, Inc. is located at 125 West 55th Street, New
York, New York 10019 and is a subsidiary of The BISYS Group, Inc. Evergreen
Keystone Distributor, Inc. markets the Fund and distributes their shares
through broker-dealers, financial planners and other financial representatives.
Evergreen Keystone Distributor, Inc. is not affiliated with First Union.
Transfer Agent. Evergreen Keystone Service Company is the Fund's transfer agent.
Evergreen Keystone Service Company is a subsidiary of First Union and is located
at 200 Berkeley Street, Boston, MA 02116-5034. Evergreen Keystone Service
Company handles shareholder services, including record keeping and account
statements, distribution of dividends and capital gains and processing of
transactions.
Administrator. Evergreen Keystone Investment Services, Inc. ("EKIS") serves as
administrator to the Fund. As administrator, and subject to the supervision and
control of the Trust's Board of Trustees, EKIS provides the Fund with
facilities, equipment and personnel. For its services as administrator, EKIS is
entitled to receive a fee based on the aggregate average daily net assets of the
Fund at a rate based on the total assets of all mutual funds advised by First
Union subsidiaries. The administration fee is calculated in accordance with the
following schedule.
<TABLE>
<CAPTION>
<S> <C>
Aggregate Average Daily Net Assets Of Mutual Funds
For Which Any Subsidiary of First Union
Administrative Fee Serves As Investment Adviser
0.060% on the first $7 billion
0.0425% on the next $3 billion
0.035% on the next $5 billion
0.025% on the next $10 billion
0.019% on the next $5 billion
0.014% on assets in excess of $30 billion
</TABLE>
SubAdministrator. BISYS Fund Services serves as sub-administrator to the Fund.
For its services, BISYS Fund Services is entitled to receive a fee from EKIS
calculated on the aggregate average daily net assets of the Fund at a rate based
on the total assets of all mutual funds administered by EKIS for which First
Union subsidiaries also serve as investment adviser. The sub-administrator fee
is calculated in accordance with the following schedule:
<TABLE>
<CAPTION>
<S> <C>
Aggregate Average Daily Net Assets Of Mutual Funds Administered
By BISYS For Which Any Subsidiary Of First Union
Sub-Administrative Fee Serves As Investment Adviser
0.0100% on the first $7 billion
0.0075% on the next $3 billion
0.0050% on the next $15 billion
0.0040% on assets in excess of $25 billion
</TABLE>
OTHER INFORMATION AND POLICIES
Banking Laws. The Glass-Steagall Act and other banking laws and regulations
presently prohibit a bank holding company or its affiliates (a "Bank") from
sponsoring, organizing, controlling, or distributing the shares of a registered
open-end investment company such as each Fund. However, a Bank may act as
investment adviser, transfer agent or custodian to a registered open-end
investment company. A Bank may also purchase shares of such company and pay
third parties for performing these functions.
10
<PAGE>
Securities Transactions. Under policies established by the Trust's Board of
Trustees, FCG selects broker-dealers to execute portfolio transactions subject
to the receipt of best execution. In so doing, FCG may select broker-dealers who
are affiliated with FCG. Moreover, the Fund may pay higher commissions to
broker-dealers that provide research services, which FCG may use in advising the
Fund or its other clients.
Portfolio Turnover. The estimated annual portfolio turnover rates for the Fund
is not expected to exceed 50%.
Code of Ethics. The Fund and FCG have each adopted a code of ethics
incorporating policies on personal securities trading. In general, these codes
of ethics require that certain personnel of the Funds and FCG (1) abstain from
engaging in certain personal trading practices and (2) report certain personal
trading activities.
Other Classes of Shares. The Fund offers three classes of shares, Charitable,
Institutional and Institutional Service. Only Charitable shares are offered
through this prospectus. Call the Service Company for information on the other
classes of shares, including how to get a prospectus.
FUND PERFORMANCE
Total return. Total return is the change in value of an investment in the Fund
over a given period, assuming that dividends and capital gains are reinvested
and that recurring charges are deducted. A cumulative total return reflects
actual performance over a stated period of time. An average annual total return
is a hypothetical rate of return that, if achieved annually, would have produced
the same cumulative total return if performance had been constant over the
entire period. Average annual total returns smooth out variations in
performance; they are not the same as actual year-by-year results.
Yield. Yield is the income generated by an investment in the Fund over a given
period of time, expressed as an annual percentage rate. Yields are calculated
according to a standard that is required for all stock and bond funds. Because
this differs from other accounting methods, the quoted yield may not equal the
income actually paid to shareholders.
General. The Fund may include comparative performance information in advertising
or in marketing the Fund's shares. Such information could include data from
Lipper Analytical Services, Inc., Morningstar, Inc., CDS Weisenberger and Value
Line, other industry publications or various indexes, such as the Lehman
Brothers Aggregate Bond Index.
11
<PAGE>
Investment Adviser
First Capital Group of First Union National Bank, 201 South College Street,
Charlotte, North Carolina 28288
Custodian
State Street Bank and Trust Company, Box 9021, Boston, Massachusetts 02205-9827
Transfer Agent
Evergreen Keystone Service Company, 200 Berkeley Street, Boston, Massachusetts,
02116
Legal Counsel
Sullivan & Worcester LLP, 1025 Connecticut Avenue, N.W., Washington, D.C. 20036
Independent Auditors
Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts 02110
Distributor
Evergreen Keystone Distributor, Inc., 125 West 55th Street, New York, New York
10019
62054 541915
<PAGE>
- --------------------------------------------------------------------------------
PROSPECTUS , 1997
- --------------------------------------------------------------------------------
EVERGREEN SELECT FIXED INCOME TRUST (graphic of tree)
- --------------------------------------------------------------------------------
Evergreen Select Core Bond Fund
Evergreen Select Fixed Income Fund
Evergreen Select Income Plus Fund
Evergreen Select Intermediate Bond Fund
Evergreen Select Intermediate Tax Exempt Bond Fund
Evergreen Select Limited Duration Fund
(Each a "Fund," together the "Funds")
INSTITUTIONAL SERVICE SHARES
This prospectus explains important information about the Institutional
Service Shares of the Evergreen Select Fixed Income Trust, including how the
Funds invest and services available to shareholders. Please read this prospectus
before investing, and keep it for future reference.
When you consider investing in a Fund, remember that the higher the risk of
losing money, the higher the potential reward. The reverse is also generally
true: the lower the risk, the lower the potential reward.
By itself, no Fund is a complete investment plan. When considering an
investment in any of the Funds, remember to consider your overall investment
objectives and any other investments you own. You should also carefully evaluate
your ability to handle the risks posed by your investment in the Funds. You can
find information on the risks associated with investing in the Funds under the
section called "Fund Descriptions."
To learn more about the Evergreen Select Fixed Income Trust, ask for a copy
of the Funds' statement of additional information ("SAI") dated , 1997.
The Funds have filed the SAI with the Securities and Exchange Commissionand have
incorporated it by reference (legally included it) into this prospectus.
If you would like a free copy of the SAI, call 1-800-343-3453.
Please remember that shares of the Funds are:
o Not deposits or obligations of any bank.
o Not endorsed or guaranteed by any bank.
o Not insured or otherwise protected by the Federal Deposit Insurance
Corporation or any other agency.
o Subject to investment risks, including possible loss of the principal amount.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
<S> <C>
EXPENSES 3
FUND DESCRIPTIONS 4
Each Fund's Investment Objective 4
Each Fund's Investment Approach 4
Securities and Investment Practices
Used By Each Fund 5
BUYING AND SELLING SHARES 7
How To Buy Shares 7
How To Redeem Shares 8
Additional Transaction Policies 9
Exchanges 9
Dividends 9
Taxes 9
Shareholder Services 10
<S> <C>
FUND DETAILS 10
Fund Organization and Service
Providers 10
Other Information and Policies 13
Fund Performance 14
</TABLE>
2
<PAGE>
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
The tables and examples below are designed to help you understand the
various expenses that you will bear, directly or indirectly, when you invest in
the Funds. Shareholder transaction expenses are fees paid directly from your
account when you buy or sell shares of a Fund. THERE ARE NO SHAREHOLDER
TRANSACTION EXPENSES.
Annual operating expenses reflect the normal operating expenses of a Fund,
and include costs such as management, distribution and other fees. The table
below shows the Funds' estimated annual operating expenses for the fiscal year
ending September 30, 1998. Each Fund's example shows what you would pay if you
invested $1,000 over the periods indicated. The examples assume that you
reinvest all of your dividends and that each Fund's average annual return will
be 5%. THE EXAMPLES ARE FOR ILLUSTRATION PURPOSES ONLY AND SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR ANNUAL RETURN. THE
FUNDS' ACTUAL EXPENSES AND RETURNS WILL VARY. For a more complete description of
the various costs and expenses borne by the Funds see "Fund Details."
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Total Operating
Expenses (After
Annual Fund Operating Expenses Management 12b-1 Other Expense Waivers or
(as a percentage of average daily net assets) Fees1 Fees Expenses Reimbursements)1
Evergreen Select Core Bond Fund 0.30% 0.25% 0.12% 0.67%
Evergreen Select Fixed Income Fund 0.40% 0.25% 0.12% 0.77%
Evergreen Select Income Plus Fund 0.40% 0.25% 0.11% 0.76%
Evergreen Select Intermediate Bond Fund 0.30% 0.25% 0.10% 1 0.65%
Evergreen Select Intermediate Tax Exempt Bond Fund 0.50% 0.25% 0.14% 0.89%
Evergreen Select Limited Duration Fund 0.20% 0.25% 0.10% 1 0.55%
Example of Fund Expenses 1 year 3 years
Evergreen Select Core Bond Fund $5 $17
Evergreen Select Fixed Income Fund $8 $25
Evergreen Select Income Plus Fund $8 $24
Evergreen Select Intermediate Bond Fund $8 $24
Evergreen Select Intermediate Tax Exempt Bond Fund $9 $28
Evergreen Select Limited Duration Fund $7 $21
</TABLE>
- --------
(1) The Fund's investment adviser has voluntarily agreed to waive 0.10% of the
Fund's investment advisory fee. Without such waivers each Management Fee set
forth above would be 0.10% higher. The investment adviser currently intends
to continue this expense waiver through the fiscal period ended September
30, 1998; however, it may modify or cancel its expense waiver at any time.
See "Fund Details" for more information. In addition, the investment adviser
has limited the Other Expenses of Evergreen Select Intermediate Bond Fund
and Evergreen Select Limited Duration Fund to 0.10% and 0.10%, respectively.
Absent expense waivers and/or reimbursements, the Total Operating Expenses
for each of the Funds would be as follows:
<TABLE>
<S> <C>
Fund Total Fund Operating Expenses
Evergreen Select Core Bond Fund 0.77%
Evergreen Select Fixed Income Fund 0.88%
Evergreen Select Income Plus Fund 0.86%
Evergreen Select Intermediate Bond Fund 0.88%
Evergreen Select Intermediate Tax Exempt Bond Fund 0.99%
Evergreen Select Limited Duration Fund 0.82%
</TABLE>
3
<PAGE>
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FUND DESCRIPTIONS
- --------------------------------------------------------------------------------
EACH FUND'S INVESTMENT OBJECTIVE
EVERGREEN SELECT CORE BOND FUND seeks to maximize total return. The Fund is
managed pursuing a controlled risk approach which uses duration adjustments,
sector composition and security selection in an effort to exceed the return of
its benchmark, the Lehman Brothers Aggregate Bond Index.
EVERGREEN SELECT FIXED INCOME FUND seeks a high level of current income and
a potential for capital appreciation. As a secondary objective, the Fund seeks
preservation of capital. The Fund seeks a return that exceeds the return of its
benchmark, the Lehman Brothers Intermediate Government/Corporate Bond Index.
EVERGREEN SELECT INCOME PLUS FUND seeks a high level of current income and
a potential for capital appreciation. The Fund seeks a return that exceeds the
return of its benchmark, the Lehman Brothers Government/ Corporate Bond Index.
EVERGREEN SELECT INTERMEDIATE BOND FUND seeks to maximize total return. The
Fund is managed pursuing a controlled risk approach which uses duration
adjustments, sector composition and security selection in an effort to exceed
the return of its benchmark, the Lehman Brothers Intermediate
Government/Corporate Bond Index.
EVERGREEN SELECT INTERMEDIATE TAX EXEMPT BOND FUND seeks the highest
possible current income, exempt from federal income taxes, while seeking to
preserve capital.
EVERGREEN SELECT LIMITED DURATION FUND seeks to provide current income
consistent with preservation of capital and low principal fluctuation. The
average portfolio duration of the Fund will normally vary from one to three
years based on the Fund's adviser's forecast for interest rates. The Fund seeks
a return that exceeds the return of its benchmark, the Merrill Lynch 1-3 Year
Treasury Bond Index.
Each Fund's investment objective(s) are nonfundamental. As a result a Fund
may change its objective(s) without a shareholder vote. Each Fund has also
adopted certain fundamental investment policies which are mainly designed to
limit a Fund's exposure to risk. A Fund's fundamental policies cannot be changed
without a shareholder vote. See the SAI for more information regarding a Fund's
fundamental investment policies or other related investment policies.
EACH FUND'S INVESTMENT APPROACH
EACH FUND, OTHER THAN EVERGREEN SELECT INTERMEDIATE TAX EXEMPT BOND FUND,
invests at least 65% of its assets in investment grade debt securities
(including convertible securities) of the U.S. government and its agencies and
instrumentalities; foreign governments and their subdivisions, agencies and
instrumentalities; domestic and foreign corporations; and obligations of
international agencies or supranational entities. Each of the Funds will invest
only in U.S. dollar denominated securities.
EVERGREEN SELECT INTERMEDIATE TAX EXEMPT BOND FUND normally invests at
least 80% of its assets in investment grade federally tax-exempt municipal
securities. The Fund may invest up to 20% of its assets in securities that are
subject to the alternative minimum tax and/or taxable obligations. The Fund will
maintain a dollar-weighted average maturity of five to ten years.
Each Fund may invest in a variety of derivative instruments that are
consistent with its investment objective(s) and policies. Such derivatives may
include options, futures, options on futures, mortgage-backed and other
asset-backed securities, inflation-indexed bonds, structured notes, loan
participations, interest rate swaps and index swaps. For more information, see
"Derivatives" and "Mortgage-Backed Securities" below.
Each Fund may lend portfolio securities and enter into repurchase and
reverse repurchase agreements, forward commitment and when-issued transactions.
EACH FUND, OTHER THAN EVERGREEN SELECT INTERMEDIATE TAX EXEMPT BOND FUND,
may also invest up to 35% of its assets in high-yield, high-risk bonds. See
"High-yield, High-risk Bonds" below.
4
<PAGE>
Evergreen Select Intermediate Tax Exempt Bond Fund may invest up to 20% of
its assets in high-yield, high-risk bonds, but not in bonds that are rated below
B.
Each Fund may invest for temporary defensive purposes up to 100% of its
assets in short-term obligations. Such obligations may include master demand
notes, commercial paper and notes, bank deposits and other financial institution
obligations.
SECURITIES AND INVESTMENT PRACTICES USED BY EACH FUND
You can find more information about the types of securities in which a Fund
may invest, the types of investment techniques a Fund may employ in pursuit of
its objective and a summary of related risks set forth below. The Funds' SAI
contains additional information about these investments and investment
techniques.
Debt Securities. Each Fund may invest in bonds or other instruments used by
corporations or governments to borrow money from investors, including all kinds
of convertible securities. When a Fund buys a debt security, it expects to earn
a variable or fixed rate of interest and it expects the issuer to repay the
amount borrowed at maturity. Some debt securities, such as zero coupon bonds, do
not pay current interest, but are purchased at a discount from their face
values. The main risks of investing in debt securities are:
o Interest Rate Risk: The risk that a bond's prices will fall when interest
rates rise, and vice versa. Debt securities have varying levels of
sensitivity to interest rates. Longer-term bonds are generally more
sensitive to changes in interest rates than short term bonds.
o Credit Risk: The chance that the issuer of a bond will have its credit
rating downgraded or will default (fail to make scheduled interest and
principal payments), potentially reducing the Fund's income and/or share
price.
Debt securities have varying degrees of quality. Investment grade bonds are
generally rated within the four highest grades as determined by Standard &
Poor's Ratings Group ("S & P") (AAA, AA, A or BBB), Moody's Investors Service
("Moody's") (Aaa, Aa, A or Baa), or Fitch Investors Service, LP ("Fitch") (AAA,
AA, A or BBB) or their respective equivalent ratings or, if not rated or rated
by another system, determined by the Fund's adviser to be of equivalent credit
quality to securities so rated. For information on below investment grade bonds,
see "High-yield, High-risk Bonds" below. Investment grade bonds are regarded as
having a greater capacity to pay interest and repay principal. However, adverse
economic conditions, or changing circumstances may to lead to a weakened
capacity to pay interest and repay principal than higher-rated bonds.
Each Fund is not required to sell or otherwise dispose of any security that
loses its rating or has its rating reduced after the Fund has purchased it.
Also, if S&P, Moody's or Fitch changes its ratings system, each Fund will try to
use comparable ratings as standards according to the Fund's investment
objectives and policies.
United States ("U.S.") Government Securities. Each Fund may buy debt securities
that are issued or guaranteed by the U.S. Treasury or by an agency or
instrumentality of the U.S. government. Some U.S. government securities, such
as Treasury bills, notes and bonds, are supported by the full faith and credit
of the U.S. Others, however, are supported only by the credit of the
instrumentality or by the right of the instrumentality to borrow from the U.S.
government.
While U.S. government securities are guaranteed as to principal and
interest, their market value is not guaranteed. Generally, U.S. government
securities are subject to the same interest rate and credit risks as other
fixed-income securities. However, since U.S. government securities are of the
highest credit quality, the credit risk is minimal. The U.S. government does
not guarantee the net asset value of the Funds' shares.
Municipal Securities. Municipal securities include municipal bonds, notes and
commercial paper obligations that are obligations issued by or on behalf of
States of the U.S., territories and possessions of the U.S., the District of
Columbia and their political sub-divisions, agencies and instrumentalities.
Municipal bonds include fixed, variable or floating rate general obligations and
revenue bonds (including municipal lease obligations and resource recovery
bonds). Municipal notes include tax anticipation notes, bond anticipation notes
and revenue anticipation notes. Municipal commercial paper obligations are
unsecured promissory notes issued by municipalities to meet short-term credit
needs.
5
<PAGE>
Foreign Securities. Each Fund may buy U.S. dollar denominated obligations of
foreign governments and corporations. Because foreign markets operate
differently than the U.S. market, a Fund investing abroad will encounter risks
not normally associated with U.S. companies. For example, information about
foreign corporate securities is frequently less available than information about
U.S. securities, which may reduce the reliability of investment decisions
regarding foreign securities. Political or financial problems more likely to
occur in foreign countries may cause foreign investments to lose money. Foreign
markets may be less liquid than U.S. markets. Foreign issuers may not be subject
to the same accounting, auditing and financial reporting standards and practices
as U.S. issuers, making it more difficult to value the investment. Foreign
governments may regulate or supervise foreign issuers less than in the U.S. All
of these factors can make foreign investments more volatile than U.S.
investments.
Mortgage-Backed Securities. A mortgage-backed security represents an interest in
a "pool" of commercial or residential mortgages. Payments of interest and
principal made by the individual borrowers on the mortgages that underlie the
securities are passed through to the Fund. Each Fund may invest in
mortgage-backed securities and other complex asset backed securities, including
collateralized mortgage obligations and stripped mortgage-backed securities.
Early repayment of the mortgages underlying the securities may expose a
Fund to a lower rate of return when it reinvests the principal. The rate of
prepayments will affect the price and volatility of the mortgage-backed security
and may have the effect of shortening or extending the effective maturity beyond
what the Fund anticipated at the time of purchase.
Like other debt securities, changes in interest rates generally affect the
value of a mortgage-backed security. Additionally, some mortgage-backed
securities may be structured so that they may be particularly sensitive to
interest rates and difficult to predict.
High-yield, High-risk Bonds. High-yield, high-risk bonds (commonly called "junk
bonds") are bonds rated BB or lower by S&P or Fitch or Ba by Moody's or, if
unrated or rated under another system, are of comparable quality to obligations
so rated as determined by a Fund's investment adviser. Since these bonds have a
low rating, a degree of doubt surrounds the ability of the issuer to continue
interest payments. High-yield, high-risk bonds are usually backed by issuers of
less proven or questionable financial strength. Compared with higher grade
bonds, issuers of high-yield, high-risk bonds are more likely to face financial
problems and to be materially affected by those problems. As a result, the
ability of issuers of high-yield, high-risk bonds to pay interest and principal
is uncertain. Moreover, the value of a high-yield, high-risk bond may react
strongly to real or perceived unfavorable news about an issuer or the economy.
If a high-yield, high-risk bond issuer defaults, the bond will lose some or all
of its value.
Derivatives. Derivatives are financial contracts whose value is based on an
underlying asset, such as a stock or a bond, or an underlying economic factor,
such as an index or an interest rate.
Each Fund may invest in derivatives only if the expected risks and rewards
are consistent with its objectives and policies. The Funds may use futures and
options for hedging purposes only, not for speculation.
Losses from derivatives can sometimes be substantial. This is true partly
because small price movements in the underlying asset can result in immediate
and substantial gains or losses in the value of the derivative. Derivatives can
also cause a Fund to lose money if the Fund fails to correctly predict the
direction in which the underlying asset or economic factor will move.
Borrowing. Each Fund may borrow from banks in an amount up to 33 1/3% of its
total assets, taken at market value. A Fund may only borrow as a temporary
measure for extraordinary or emergency purposes such as the redemption of Fund
shares. A Fund will not purchase securities while borrowings are outstanding
except to exercise prior commitments and to exercise subscribtion rights.
Securities Lending. To generate income and offset expenses, each Fund may lend
securities to broker-dealers and other financial institutions. Loans of
securities by a Fund may not exceed 30% of the value of the Fund's total assets.
While securities are on loan, the borrower will pay the Fund any income accruing
on the security. Also, the Fund may invest any collateral it receives in
additional securities.
6
<PAGE>
Gains or losses in the market value of a lent security will affect a Fund
and its shareholders. When a Fund lends its securities, it runs the risk that it
could not retrieve the securities on a timely basis, possibly losing the
opportunity to sell the securities at a desirable price. Also, if the borrower
files for bankruptcy or becomes insolvent, the Fund's ability to dispose of the
securities may be delayed.
Repurchase Agreements. Each Fund may enter into repurchase agreements. A
repurchase agreement is an agreement by a Fund to purchase a security and sell
it back for a specified price. The repurchase price reflects an agreed-upon
interest rate for the time period of the agreement. A Fund's risk is the
inability of the seller to pay the agreed-upon price at delivery date. However,
such risk is tempered by the ability of a Fund to sell the security in the open
market in case of default. In such a case, a Fund may incur costs in disposing
of the security which would increase Fund expenses.
Reverse Repurchase Agreements. Each Fund may enter into reverse repurchase
agreements. A reverse agreement is an agreement by a Fund to sell a security and
repurchase it at a specified time and price. A Fund could lose money if the
market value of the securities it sold declines below their repurchase price.
Reverse repurchase agreements may be considered a form of borrowing, and,
therefore, a form of leverage. Leverage may magnify gains or losses of a Fund.
Investing in Securities of Other Investment Companies. The Funds may invest in
securities of other investment companies. Each Fund's investment adviser will
waive its investment advisory fee on assets invested in securities of other
open-end investment companies.
When-Issued, Delayed-Delivery and Forward Commitment Transactions. Each Fund may
enter into transactions whereby it commits to buying a security, but does not
pay for or take delivery of the security until some specified date in the
future. The value of these securities is subject to market fluctuation during
this period and no income accrues to a Fund until settlement. At the time of
settlement, a when-issued security may be valued at less than its purchase
price. When entering into these transactions, a Fund relies on the other party
to consummate the transaction; if the other party fails to do so, the Fund may
be disadvantaged.
Other Investment Restrictions. Each Fund has adopted additional investment
restrictions and guidelines that are set forth in the SAI.
- --------------------------------------------------------------------------------
BUYING AND SELLING SHARES
- --------------------------------------------------------------------------------
HOW TO BUY SHARES
Institutional investors may buy Institutional Service Shares of the Funds
through broker-dealers, banks and certain other financial intermediaries, or
directly through the Fund's distributor, Evergreen Keystone Distributor, Inc.
Investors may purchase Institutional Service Shares at the public offering
price, which equals the class's net asset value per share ("NAV"). See "Offering
Price and Other Purchase Information" below.
Minimum Investment. The minimum initial investment in Institutional Service
Shares is $1 million, which may be waived in certain situations. There is no
minimum amount required for subsequent purchases.
Opening an Account. You may open an account by mailing a signed account
application to the particular Fund c/o Evergreen Keystone Service Company, P.O.
Box 2121, Boston, Massachusetts 02106-2121. You may get an account application
by calling 1-800-343-3453.
Except as provided below, you can only purchase shares by wiring federal
funds to Evergreen Keystone Service Company (the "Service Company"). You may
obtain wiring instructions by calling 1-800-343-3453. When you call, the Service
Company representative will ask you for the following information: name of
authorized person; shareholder name; shareholder account number; name of the
Fund and share class; amount being wired; and wiring bank name.
7
<PAGE>
Offering Price and Other Purchase Information. When you buy a Fund's shares, you
pay its NAV next determined after the Fund receives and accepts your order. To
receive that day's offering price, a Fund must receive and accept your order by
the close of the business day (generally 4:00 p.m. Eastern time); otherwise, you
will receive the next day's offering price. For more information, see "How the
Funds Calculate Their NAV."
You may, at a Fund's discretion, pay for shares of a Fund with securities
instead of cash. Additionally, if you want to buy a Fund's shares equal in
amount to $5 million or more the Fund may require you to pay for those shares
with securities instead of cash. A Fund will only accept securities that are
consistent with its investment objective, policies and restrictions. Also, a
Fund will value the securities in the manner described under "How the Funds
Calculate their NAV." Investors who receive a Fund's shares for securities
instead of cash may pay such transaction costs as broker's commissions, taxes or
governmental fees.
HOW TO REDEEM SHARES
You may redeem shares of a Fund by mail, telephone or other types of
telecommunication.
Mail Redemptions. You may redeem shares on each day that the New York Stock
Exchange ("NYSE") is open by mailing a written request to the Service Company at
the following address:
Evergreen Keystone Service Company
P.O. Box 2121
Boston, Massachusetts 02106-2121
The signatures on the written request must be properly guaranteed, as
described below.
How To Redeem By Telephone. You may redeem your shares by calling 1-800-343-3453
between the hours of 9:00 a.m. and 5:00 p.m. (Eastern time) on each business
day. You may also redeem shares by sending a facsimile to (617) 210-2711 or by
other means of wire communication. You must state the Fund and class from which
you want to redeem, the number or dollar amount of shares you want to redeem and
your account number. The telephone redemption service is not available to you
automatically. You must elect to do so on your account application.
If you are unable to reach the Fund or the Service Company by telephone,
you should redeem by mail.
The Service Company will wire your redemption proceeds to the commercial
bank account designated on the account application. If the Service Company deems
it appropriate, it may require additional documentation. Although at present the
Service Company pays the wire costs involved, it reserves the right at any time
to require the shareholder to pay such costs.
Redemption Value and Other Redemption Policies. When you sell shares, you
receive the NAV computed at the close of the NYSE on the day that a Fund
receives your request, if it receives your request before 4:00 p.m. Eastern
time. If a Fund receives your redemption request after 4:00 p.m. Eastern time,
you will receive the next day's NAV. Generally, the Fund pays redemption
proceeds within seven days. The Funds may, at any time, change, suspend or
terminate any of the redemption methods described in this prospectus, except
redemptions by mail. For more information, see "How the Funds Calculate Their
NAV."
The Funds may, at their discretion, pay your redemption proceeds with
securities instead of cash. However, each Fund is obligated to redeem shares
solely in cash, up to the lesser of $250,000 or 1% of a Fund's total net assets
during any ninety day period for any one shareholder. See the SAI for further
details.
Except as otherwise noted, neither the Funds, the Service Company nor the
Funds' distributor assumes responsibility for the authenticity of any
instructions received by any of them from a shareholder by telephone. The
Service Company will employ reasonable procedures to confirm that instructions
received over the telephone or otherwise are genuine. Neither the Fund, the
Service Company nor the Funds' distributor will be liable when following
instructions received by telephone or otherwise that the Service Company
reasonably believes to be genuine.
Shareholders may only change information contained in their account
registration (such as the bank account designated to receive wire redemption
proceeds) by writing to the Service Company. Signatures on such written
instructions must be guaranteed.
8
<PAGE>
ADDITIONAL TRANSACTION POLICIES
How the Funds Calculate Their NAV. A Fund's NAV equals the value of its share
without sales charges. A Fund calculates its NAV by adding up the total value of
its investments and other assets, subtracting its liabilities and then dividing
the result by the number of shares outstanding. The Funds compute their NAV as
of the close of regular trading (generally 4:00 p.m. Eastern time) on each day
that the NYSE is open.
The Funds' assets are valued primarily on the basis of market quotations.
Short-term securities with remaining maturities of sixty days or less for which
quotations are not readily available are valued on the basis of amortized cost.
In addition, securities for which quotations are not readily available,
including fixed-income securities, are valued by a method that the Board of
Trustees believes accurately reflects fair value.
Signature Guarantee. For your protection, signatures on stock powers, and
written orders or authorizations must have a signature guarantee. A signature
guarantee can be provided by a U.S. stock exchange member, a bank, or other
persons eligible to guarantee signatures under the Securities Exchange Act of
1934 and the Service Company's policies. The Service Company may waive this
requirement or may require additional documentation in certain cases.
EXCHANGES
You may exchange Institutional Service Shares of any Fund for Institutional
Service Shares of any other Evergreen Select Fund. You may exchange your shares
through your broker-dealer, by mail or by telephone. All exchange orders must
comply with the applicable requirements for purchases and redemptions and must
include your account number, the number or value of shares to be exchanged, the
class of shares, and the Funds to and from which you wish to exchange.
Signatures on exchange orders must be guaranteed, as described below.
The Funds reserve the right to change or revoke the exchange privilege of
any shareholder or to limit or revoke any exchange. Currently, you may not make
more than five exchanges in a year or three exchanges in a calendar quarter.
Please read the prospectus of the fund that you want to exchange into
before requesting your exchange.
For federal income tax purposes, an exchange is treated as a sale for
taxable investors.
DIVIDENDS
As a shareholder, you are entitled to your share of earnings on a Fund's
investments. You receive such earnings as either an income dividend or a capital
gains distribution. Income dividends come from the dividends that a Fund earns
from its stocks plus any interest it receives from its bonds. The Fund realizes
a capital gain whenever it sells a security for a higher price than its tax
basis.
Dividend Schedule. Each Fund declares dividends from its net investment income
daily and pays such dividends monthly. Each Fund pays shareholders its net
capital gains at least once a year.
Payment Options. Unless you select another option on your account application,
your dividends and capital gains will be reinvested in additional shares of the
same class of the same Fund.
You may elect to receive some or all of your dividends and capital gains in
cash. Should you select this option, a check will be mailed to you or your agent
or trustee no later than seven days after the payment date.
TAXES
Each Fund intends to qualify as a regulated investment company (a "RIC")
under Subchapter M of the Internal Revenue Code of 1986, as amended. As long as
a Fund qualifies as a RIC and distributes substantially all of its net
investment income and capital gains, it will not pay federal income taxes on the
earnings it distributes to shareholders.
Distributions to shareholders, whether taken in cash or reinvested in
shares, are generally considered taxable for federal income tax purposes as
follows:
9
<PAGE>
o Income distributions and net short-term capital gains are taxable as
ordinary income.
o Long-term capital gains distributions are taxable as capital gains,
regardless of how long you have held your shares.
After each calendar year, the Service Company will mail you a statement
indicating which of that year's distributions you should treat as ordinary
income and which you should treat as capital gains. Distributions of income or
capital gains may also be subject to state and local taxes.You should always
consult your tax adviser for specific guidance as to the tax consequences of
your investment in the Funds.
SHAREHOLDER SERVICES
Details on all shareholder services may be obtained from the Service
Company by calling toll free 1-800-343-3453 or by writing to the Service
Company.
Subaccount. Special processing has been arranged with the Service Company for
banks and other institutions that wish to open multiple accounts (a master
account and subaccounts). An investor wishing to avail himself or herself of
the Service Company's subaccounting facilities will be required to enter into a
separate agreement, with the charges to be determined on the basis of the level
of services to be rendered. Subaccounts may be opened with the initial
investment or at a later date and may be established by an investor with
registration either by name or by number.
- --------------------------------------------------------------------------------
FUND DETAILS
- --------------------------------------------------------------------------------
FUND ORGANIZATION AND SERVICE PROVIDERS
Fund Structure. Each Fund is an investment pool, which invests shareholders'
money towards a specified goal. In technical terms, each Fund is a diversified
series of an open-end, investment management company, called "Evergreen Select
Fixed Income Trust" (the "Trust"). The Trust is a Delaware business trust
organized on September 17, 1997.
Board of Trustees. The Trust is supervised by a Board of Trustees that is
responsible for representing the interests of shareholders. The Trustees meet
periodically throughout the year to oversee each Fund's activities, reviewing,
among other things, the Funds' performance and its contractual arrangements with
various service providers.
Shareholder Rights. All shareholders participate equally in dividends and
distributions from the Funds' assets and have equal voting, liquidation and
other rights. Shareholders may exchange shares as described under "Exchanges,"
but will have no other preference, conversion, exchange or preemptive rights.
When issued and paid for, your shares will be fully paid and nonassessable.
Shares of the Funds are redeemable, transferable and freely assignable as
collateral. The Trust may establish additional classes or series of shares.
The Funds do not hold annual shareholder meetings; a Fund may, however,
hold special meetings for such purposes as electing or removing Trustees,
changing fundamental policies and approving investment advisory agreements or
12b-1 plans. In addition, the Funds are prepared to assist shareholders in
communicating with one another for the purpose of convening a meeting to elect
Trustees. If any matters are to be voted on by shareholders, each share owned as
of the record date for the meeting would be entitled to one vote.
Adviser. The investment adviser to each Fund is the First Capital Group ("FCG")
of First Union National Bank ("FUNB"), a subsidiary of First Union Corporation
("First Union"). First Union and First Union National Bank are located at 301
South College Street, Charlotte, North Carolina 28288-0630. First Union and its
subsidiaries provide a broad range of financial services to individuals and
businesses throughout the U.S.
Each Fund pays FCG a fee for its services as set forth below. FCG's annual
advisory fees are expressed as a percentage of average net assets. In addition,
FCG has voluntarily agreed to reduce its advisory fee by 0.10%, resulting in the
net advisory fees that are also indicated in the table below.
10
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Fund Advisory Fee Net Advisory Fee
Evergreen Select Core Bond Fund 0.40% 0.30%
Evergreen Select Fixed Income Fund 0.50% 0.40%
Evergreen Select Income Plus Fund 0.50% 0.40%
Evergreen Select Intermediate Bond Fund 0.40% 0.30%
Evergreen Select Intermediate Tax-Exempt Bond Fund 0.60% 0.50%
Evergreen Select Limited Duration Fund 0.30% 0.20%
</TABLE>
FCG currently intends to continue waiving its advisory fees through the
fiscal period ended September 30, 1998. However, FCG may modify or cancel its
expense waiver at any time.
Portfolio Managers. Information about the individual portfolio managers
responsible for management of the Trust's currently operational Funds, including
their occupations for the past five years, is provided below.
- --------------------------------------------------------------------------------
Fund Portfolio Manager(s)
Evergreen Select The portfolio managers of the Fund are Robert Cheshire
Core Bond Fund and Bruce J. Besecker. Robert Cheshire. Robert Cheshire
joined First Fidelity Bank in 1990, which was acquired by
First Union in 1995, as Vice President and senior portfolio
manager. He is head of the Newark Taxable Fixed Income Unit
and manages the Evergreen Intermediate Term Government
Securities Fund.
Bruce J. Besecker. Bruce Besecker has over 16 years
investment experience. In addition to managing the
Philadelphia Taxable Fixed Income Unit for Capital Management
Group of FUNB, he maintains fund and individual account
responsibilities. Prior to joining First Union, Mr. Besecker
served as Assistant Vice President in Institutional Sales at
Merrill Lynch in New York, a Senior Trust Officer and
Portfolio Manager at Fidelity Bank and a Research Assistant
in the Economics Department at the Federal Reserve Bank in
Philadelphia.
Evergreen Select The portfolio managers of the Fund are Thomas Ellis,
Fixed Income Fund Rollin C. Williams and Robert Cheshire.
Thomas Ellis. Thomas Ellis has over 28 years of experience
in investments. Mr. Ellis joined First Union in 1985 as a
Vice President and Senior Portfolio Manager. At First Union
he is responsible for the portfolio management of over $1
billion in taxable and municipal fixed income assets,
including Evergreen Short-Intermediate Bond Fund, a mutual
fund; the Fixed Income Fund, a common trust fund;
and 17 separate accounts. Prior to joining First Union,
Mr. Ellis served in the bond department of 1st Tennessee
Bank.
Rollin C. Williams, CFA. Rollin Williams has over 28 years of
investment and banking management experience. In addition to
managing First Union's Diversified Bond Group Trust and the
Evergreen U.S. Government Fund, he is also responsible for
the management of over $2.2 billion in fixed income
portfolios. Before joining First Union, Mr. Williams was the
head of fixed income investment at Dominion Trust Company in
Roanoke, VA. Mr. Williams has been with First Union since
1993 when Dominion was acquired by the bank; he started with
Dominion Trust Company in 1988.
Robert Cheshire. Robert Cheshire joined First Fidelity Bank
in 1990, which was acquired by First Union in 1995, as Vice
President and senior portfolio manager. He is head of the
Newark Taxable Fixed Income Unit and manages the Evergreen
Intermediate Term Government Securities Fund.
Evergreen Select The portfolio managers of the Fund are George Prattos and J.
Income Plus Fund P. Weaver.
11
<PAGE>
Fund Portfolio Manager(s)
George Prattos. George Prattos has over 18 years of
investment experience. Mr. Prattos joined First Union in
1991 as a Vice President and Director of the Specialty Fixed
Income Group. He is primarily responsible for managing
specialty fixed income products throughout the First Union
system.
J. P. Weaver. J. P. Weaver has over 12 years of market
experience in fixed income investments. He joined First
Union in 1994 as a Vice President and Director of Fixed
Income Research. In addition, he manages several separate
accounts within the Specialty Fixed Income Group. Mr. Weaver
joined First Union from One Federal Asset Management in
Boston, MA, where he served as a portfolio manager.
Evergreen Select The portfolio managers of the Fund are George Prattos, David
Limited Duration Fowley and Bradley B. Ridinger.
Fund
George Prattos. George Prattos has over 18 years of
investment experience. Mr. Prattos joined First Union in
1991 as a Vice President and Director of the Specialty
Fixed Income Group. He is primarily responsible for managing
specialty fixed income products throughout the First Union
system.
David Fowley. David Fowley has over five years of investment
experience. Mr. Fowley joined First Union in 1994 as a Trust
Investment Officer and Portfolio Manager.
Bradley B. Ridinger. Brad Ridinger, CFA, has over 10 years
of investment management experience. Mr. Ridinger joined
First Union in 1987 as a Vice President and Senior Portfolio
Manager.
Evergreen Select Richard K. Marrone. Richard Marrone has over 15 years of
Intermediate Tax investment and market experience. Mr. Marrone joined First
Exempt Bond Fund Union in 1993 as a Vice President and Senior Portfolio
Manager. Mr. Marrone came to First Union from Woodbridge
Capital management where he served as a portfolio manager for
mutual and common trust funds.
Evergreen Select The portfolio managers of the Fund are Thomas Ellis, Rollin
Intermediate Bond C. Williams and Robert Cheshire.
Fund
Thomas Ellis. Thomas Ellis has over 28 years of experience
in investments. Mr. Ellis joined First Union in 1985 as a
Vice President and Senior Portfolio Manager. Prior to
joining First Union, Mr. Ellis served in the bond department
of 1st Tennessee Bank.
Rollin C. Williams, CFA. Rollin Williams has over 28 years of
investment and banking management experience. In addition to
managing First Union's Diversified Bond Group Trust and the
Evergreen U.S. Government Fund, he is also responsible for
the management of over $2.2 billion in fixed income
portfolios. Before joining First Union, Mr. Williams was the
head of fixed income investment at Dominion Trust Company in
Roanoke, VA. Mr. Williams has been with First Union since
1993 when Dominion was acquired by the bank; he started with
Dominion Trust Company in 1988.
Robert Cheshire. Robert Cheshire joined First Fidelity Bank
in 1990, which was acquired by First Union in 1995, as Vice
President and senior portfolio manager. He is head of the
Newark Taxable Fixed Income Unit and manages the Evergreen
Intermediate Term Government Securities Fund.
Distributor. Evergreen Keystone Distributor, Inc. is each Fund's distributor.
Evergreen Keystone Distributor, Inc. is located at 125 West 55th Street, New
York, New York 10019 and is a subsidiary of The BISYS Group, Inc. Evergreen
Keystone Distributor, Inc. markets the Funds and distributes their shares
through broker-dealers, financial planners and other financial representatives.
Evergreen Keystone Distributor, Inc. is not affiliated with First Union.
12
<PAGE>
Transfer Agent. Evergreen Keystone Service Company is each Fund's transfer
agent. Evergreen Keystone Service Company is a subsidiary of First Union and is
located at 200 Berkeley Street, Boston, MA 02116-5034. Evergreen Keystone
Service Company handles shareholder services, including record keeping and
account statements, distribution of dividends and capital gains and processing
of transactions.
Administrator. Evergreen Keystone Investment Services, Inc. ("EKIS") serves as
administrator to each Fund. As administrator, and subject to the supervision and
control of the Trust's Board of Trustees, EKIS provides the Funds with
facilities, equipment and personnel. For its services as administrator, EKIS is
entitled to receive a fee based on the aggregate average daily net assets of the
Funds at a rate based on the total assets of all mutual funds advised by First
Union subsidiaries. The administration fee is calculated in accordance with the
following schedule.
<TABLE>
<CAPTION>
<S> <C>
Aggregate Average Daily Net Assets Of Mutual Funds
For Which Any Subsidiary of First Union
Administrative Fee Serves As Investment Adviser
0.060% on the first $7 billion
0.0425% on the next $3 billion
0.035% on the next $5 billion
0.025% on the next $10 billion
0.019% on the next $5 billion
0.014% on assets in excess of $30 billion
</TABLE>
SubAdministrator. BISYS Fund Services serves as sub-administrator to the Funds.
For its services BISYS Fund Services is entitled to receive a fee from EKIS
calculated on the aggregate average daily net assets of the Funds at a rate
based on the total assets of all mutual funds administered by EKIS for which
First Union subsidiaries also serve as investment adviser. The sub-administrator
fee is calculated in accordance with the following schedule:
<TABLE>
<CAPTION>
<S> <C>
Aggregate Average Daily Net Assets Of Mutual Funds
Administered By BISYS For Which Any Subsidiary
Of First Union
Sub-Administrative Fee Serves As Investment Adviser
0.0100% on the first $7 billion
0.0075% on the next $3 billion
0.0050% on the next $15 billion
0.0040% on assets in excess of $30 billion
</TABLE>
OTHER INFORMATION AND POLICIES
Distribution Plan. The Trust has adopted a distribution plan for the
Institutional Service Class shares of each Fund as allowed under the Investment
Company Act of 1940. Each Fund's distribution plan permits the Fund to pay an
annual service fee of up to 0.25% of the average daily net assets of the class
for personal services rendered to shareholders and/or the maintenance of
accounts. Each Fund's distribution plan may be terminated at any time by vote of
the Independent Trustees or by vote of a majority of the outstanding
Institutional Select Shares. For more information about the Funds distribution
plans, see the SAI.
Banking Laws. The Glass-Steagall Act and other banking laws and regulations
presently prohibit a bank holding company or its affiliates (a "Bank") from
sponsoring, organizing, controlling, or distributing the shares of a registered
open-end investment company such as each Fund. However, a Bank may act as
investment adviser, transfer agent or custodian to a registered open-end
investment company. A Bank may also purchase shares of such company and pay
third parties for performing these functions.
Securities Transactions. Under policies established by the Trust's Board of
Trustees, FCG selects broker-dealers to execute portfolio transactions subject
to the receipt of best execution. In so doing, FCG may select broker-dealers who
are affiliated with FCG. Moreover, the Funds may pay higher commissions to
broker-dealers that provide research services, which FCG may use in advising the
Fund or its other clients.
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Portfolio Turnover. The estimated annual portfolio turnover rates for each Fund
is not expected to exceed the rate set forth below.
<TABLE>
<CAPTION>
<S> <C>
Estimated Annual
Fund Name Portfolio Turnover
Evergreen Select Core Bond Fund 50%
Evergreen Select Fixed Income Fund 50%
Evergreen Select Income Plus Fund 50%
Evergreen Select Intermediate Bond Fund 50%
Evergreen Select Intermediate Tax Exempt
Bond Fund 75%
Evergreen Select Limited Duration Fund 100%
</TABLE>
Code of Ethics. The Fund and FCG have each adopted a code of ethics
incorporating policies on personal securities trading. In general, these codes
of ethics require that certain personnel of the Funds and FCG (1) abstain from
engaging in certain personal trading practices and (2) report certain personal
trading activities.
Other Classes of Shares. Each Fund, other than Evergreen Select Core Bond Fund,
offers two classes of shares, Institutional and Institutional Service. Evergreen
Select Core Bond Fund offers three classes of shares, Charitable, Institutional
and Institutional Service. Only Institutional Service Shares are offered through
this prospectus. Call the Service Company for information on the other classes
of shares, including how to get a prospectus.
FUND PERFORMANCE
Total return. Total return is the change in value of an investment in a Fund
over a given period, assuming that dividends and capital gains are reinvested
and that recurring charges are deducted. A cumulative total return reflects
actual performance over a stated period of time. An average annual total return
is a hypothetical rate of return that, if achieved annually, would have produced
the same cumulative total return if performance had been constant over the
entire period. Average annual total returns smooth out variations in
performance; they are not the same as actual year-by-year results.
Yield. Yield is the income generated by an investment in a Fund over a given
period of time, expressed as an annual percentage rate. Yields are calculated
according to a standard that is required for all stock and bond Funds. Because
this differs from other accounting methods, the quoted yield may not equal the
income actually paid to shareholders.
General. The Funds may include comparative performance information in
advertising or in marketing the Fund's shares. Such information could include
data from Lipper Analytical Services, Inc., Morningstar, Inc., CDS Weisenberger
and Value Line, other industry publications or various indexes, such as the
Lehman Brothers Aggregate Bond Index.
14
<PAGE>
Investment Adviser
First Capital Group of First Union National Bank, 201 South College Street,
Charlotte, North Carolina 28288
Custodian
State Street Bank and Trust Company, Box 9021, Boston, Massachusetts 02205-9827
Transfer Agent
Evergreen Keystone Service Company, 200 Berkeley Street, Boston, Massachusetts,
02116
Legal Counsel
Sullivan & Worcester LLP, 1025 Connecticut Avenue, N.W., Washington, D.C. 20036
Independent Auditors
Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts 02110
Distributor
Evergreen Keystone Distributor, Inc., 125 West 55th Street, New York, New York
10019
62081 541224
<PAGE>
EVERGREEN SELECT FIXED INCOME TRUST
PART B
STATEMENT OF ADDITIONAL INFORMATION
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
SUBJECT TO COMPLETION
PRELIMINARY STATEMENT OF ADDITIONAL INFORMATION DATED SEPTEMBER 19, 1997
EVERGREEN SELECT FIXED INCOME TRUST
200 BERKELEY STREET
BOSTON, MASSACHUSETTS 02116
(800) 633-2700
STATEMENT OF ADDITIONAL INFORMATION
, 1997
EVERGREEN SELECT CORE BOND FUND
EVERGREEN SELECT INCOME PLUS FUND
EVERGREEN SELECT FIXED INCOME FUND
EVERGREEN SELECT INTERMEDIATE BOND FUND
EVERGREEN SELECT INTERMEDIATE TAX EXEMPT BOND FUND
EVERGREEN SELECT LIMITED DURATION FUND
(EACH A "FUND" TOGETHER THE "FUNDS")
EACH FUND IS A SERIES OF AN OPEN-END
MANAGEMENT INVESTMENT COMPANY, KNOWN AS
"EVERGREEN SELECT FIXED INCOME TRUST"
(THE "TRUST").
This statement of additional information ("SAI") provides additional
information about all classes of shares of the Funds listed above. It is not a
prospectus and you should read it in conjunction with the prospectus of the
Funds dated ________, 1997, as supplemented from time to time. You may get a
copy of the prospectus from the Funds' principal underwriter, Evergreen Keystone
Distributor, Inc.
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TABLE OF CONTENTS
INVESTMENT POLICIES.......................................................3
Additional Information on Securities and Investment Practices....3
Investment Restrictions And Guidelines......................... 12
MANAGEMENT OF THE TRUST..................................................14
INVESTMENT ADVISORY AND OTHER SERVICES...................................16
Investment Adviser..............................................16
Distribution Plan...............................................18
Additional Service Providers....................................18
BROKERAGE ALLOCATION AND OTHER PRACTICES.................................19
Selection of Brokers............................................19
Brokerage Commissions...........................................19
General Brokerage Policies......................................19
CAPITAL STOCK AND OTHER SECURITIES.......................................19
Form of Organization............................................19
Description of Shares...........................................20
Voting Rights...................................................20
Limitation of Trustees' Liability...............................20
PURCHASE, REDEMPTION AND PRICING OF SECURITIES
BEING OFFERED..........................................................20
Exchanges.......................................................20
How the Funds Value Their Shares................................20
Shareholder Services............................................21
PRINCIPAL UNDERWRITER....................................................21
CALCULATION OF PERFORMANCE DATA..........................................22
ADDITIONAL INFORMATION...................................................23
FINANCIAL STATEMENTS.....................................................23
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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INVESTMENT POLICIES
The investment objectives of each Fund and a description of the
securities in which each Fund may invest is set forth in the Funds' prospectus.
The following expands upon the discussion in the prospectus regarding certain
investments of the Funds.
ADDITIONAL INFORMATION ON SECURITIES AND INVESTMENT PRACTICES
DERIVATIVES
Derivatives are financial contracts whose value depends on, or is
derived from, the value of an underlying asset, reference rate or index. These
assets, rates, and indices may include bonds, stocks, mortgages, commodities,
interest rates, currency exchange rates, bond indices, and stock indices.
Derivatives may be standardized, exchange-traded contracts or customized,
privately negotiated contracts. Exchange-traded derivatives tend to be more
liquid and subject to less credit risk than those that are privately negotiated.
There are four principal types of derivative instruments -- options,
futures, forwards, and swaps -- from which virtually any type of derivative
transaction can be created. Debt instruments that incorporate one or more of
these building blocks for the purpose of determining the principal amount of
and/or rate of interest payable on the debt instruments are often referred to as
"structured securities." An example of this type of structured security is
indexed commercial paper. The term is also used to describe certain securities
issued in connection with the restructuring of certain foreign obligations. The
term "derivative" is also sometimes used to describe securities involving rights
to a portion of the cash flows from an underlying pool of mortgages or other
assets from which payments are passed through to the owner of, or that
collateralize, the securities.
The Funds can use derivatives to earn income, to enhance returns, to
hedge or adjust the risk profile of the portfolio, in place of more traditional
direct investments or to obtain exposure to otherwise inaccessible markets. A
Fund's use derivatives for non-hedging purposes entails greater risks than if a
Fund were to derivatives solely for hedging purposes.
Derivatives are a valuable tool which, when used properly, can provide
significant benefit to a Fund's shareholders. The Funds' Adviser (as hereinafter
defined) is not an aggressive user of derivatives with respect to the Funds.
However, a Fund may take positions in those derivatives that are within its
investment policies if, in the Adviser's judgment, this represents an effective
response to current or anticipated market conditions. the Adviser's use of
derivatives is subject to continuous risk assessment and control from the
standpoint of a Fund's investment objective and policies. While the judicious
use of derivatives by experienced investment managers, such as the Adviser, can
be beneficial, derivatives also involve risks different from, and, in certain
cases, greater than, the risks presented by more traditional investments.
Following is a general discussion of important risk factors and issues
concerning the use of derivatives that investors should understand before
investing in a Fund.
Market Risk -- This is the general risk attendant to all investments
that the value of a particular investment will decline or otherwise
change in a way detrimental to a Fund's interest.
Management Risk -- Derivative products are highly specialized
instruments that require investment techniques and risk analyses
different from those associated with stocks and bonds. The use of a
derivative requires an understanding not only of the underlying
instrument, but also of the derivative itself, without the benefit of
observing the performance of the derivative under all possible market
conditions. Because derivatives are complex, the Funds and the Adviser
must (1) maintain controls to monitor the transactions entered into,
(2) assess the risk that a derivative adds
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<PAGE>
to a Fund's portfolio and (3) forecast price, interest rate or currency
exchange rate movements correctly.
Credit Risk -- This is the risk that a Fund may lose money because the
other party to a derivative (usually called a "counter party") failed
to comply with the terms of the derivative contract. The credit risk
for exchange-traded derivatives is generally less than for privately
negotiated derivatives, since the clearing house, which is the issuer
or counter party to each exchange-traded derivative, guarantees
performance. This guarantee is supported by a daily payment system
(i.e., margin requirements) operated by the clearing house to reduce
overall credit risk. For privately negotiated derivatives, there is no
similar clearing agency guarantee. Therefore, a Fund considers the
creditworthiness of each counter party to a privately negotiated
derivative in evaluating potential credit risk.
Liquidity Risk -- Liquidity risk exists is the possibility that a Fund
will have difficulty buying or selling a particular instrument. If a
derivative transaction is particularly large or if the relevant market
is illiquid (as is the case with many privately negotiated
derivatives), a Fund may not be able to initiate a transaction or
liquidate a position at an advantageous price.
Leverage Risk -- Since many derivatives have a leverage component,
adverse changes in the value or level of the underlying asset, rate or
index can result in a loss substantially greater than the amount
invested in the derivative itself. In the case of swaps, the risk of
loss generally is related to a notional principal amount, even if the
parties have not made any initial investment. Certain derivatives have
the potential for unlimited loss, regardless of the size of the initial
investment.
Other Risks -- Other risks in using derivatives include the risk of
mispricing or improper valuation and the inability of derivatives to
correlate perfectly with underlying assets, rates, and indices. Many
derivatives, in particular privately negotiated derivatives, are
complex and often valued subjectively. Improper valuations can result
in increased cash payment requirements to counter parties or a loss of
value to a Fund. Derivatives do not always perfectly or even highly
correlate or track the value of the assets, rates or indices they are
designed to closely track. Consequently, a Fund's use of derivatives
may not always be an effective means of, and sometimes could be
counterproductive to, furthering a Fund's investment objective.
OPTIONS TRANSACTIONS
WRITING COVERED OPTIONS. The Funds may write (i.e., sell) covered call
and put options. By writing a call option, a Fund becomes obligated during the
term of the option to deliver the securities underlying the option upon payment
of the exercise price. Writing a put option obligates the Fund during the term
of the option to purchase the securities underlying the option at the exercise
price if the option buyer exercises the option. A Fund also may write straddles
(combinations of covered puts and calls on the same underlying security).
The Funds may only write "covered" options. This means that while a
Fund is obligated as the writer of a call option it will own the underlying
securities subject to the option or, with call options on U.S. Treasury bills,
it might own similar U.S. Treasury bills. If a Fund has written options against
all of its securities that are available for writing options, the Fund may be
unable to write additional options unless it sells some of its portfolio
holdings to obtain new securities against which it can write options. If this
were to occur, higher portfolio turnover and correspondingly greater brokerage
commissions and other transaction costs may result. The Funds do not expect,
however, that this will occur. A Fund will be considered "covered" with respect
to a put option it writes if, while it is obligated as the writer of the put
option, it deposits and maintains with its custodian in a segregated account
liquid assets having a value equal to or greater than the exercise price of the
option.
The principal reason for writing call or put options is to obtain,
through a receipt of premiums, a greater current return than would be realized
on the underlying securities alone. A Fund receives a premium from writing a
call or put option, which it retains whether or not the option is exercised. By
writing a call option, a Fund might lose the potential for gain on the
underlying security while the option is
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<PAGE>
open, and, by writing a put option, a Fund might become obligated to purchase
the underlying security for more than its current market price upon exercise.
PURCHASING OPTIONS. The Funds may purchase put or call options,
including put or call options for offsetting previously written put or call
options of the same series. Once a Fund has written a covered option, it will
continue to hold the segregated securities or assets until it effects a closing
purchase transaction. If the Fund is unable to close the option position, it
must hold the segregated securities or assets until the option expires or is
exercised. An option position may be closed out only in a secondary market for
an option of the same series. Although a Fund generally writes only those
options for which there appears to be an active secondary market, there is no
assurance that a liquid secondary market will exist for any particular option at
any particular time, and, for some options, no secondary market may exist. In
such event, effecting a closing transaction for a particular option might not be
possible.
Options on some securities are relatively new, and predicting how much
trading interest there will be for such options is impossible. There can be no
assurance that viable markets will develop or continue. The failure of such
markets to develop or continue could significantly impair a Fund's ability to
use such options to achieve its investment objective.
OPTIONS TRADING MARKETS. The Funds trade in options that are generally
listed on national securities exchanges, currently including the Chicago Board
Options Exchange and the New York, American, Pacific and Philadelphia Stock
Exchanges. Options on some securities are traded in the over-the-counter market,
and may not be listed on any exchange. Options traded in the over-the-counter
market involve a greater risk that the securities dealers participating in the
transactions could fail to meet their obligations to a Fund. Certain state
authorities may limit the use of options traded in the over-the-counter market.
A Fund will include the premiums it has paid for the purchase of
unlisted options and the value of securities used to cover options it has
written for purposes of calculating whether the Fund has complied with its
policies on illiquid securities.
FUTURES TRANSACTIONS AND RELATED OPTIONS TRANSACTIONS
The Funds intend to enter into financial futures contracts as a hedge
against changes in prevailing levels of interest rates to seek relative
stability of principal and to establish more definitely the effective return on
securities held or intended to be acquired by the Fund or as a hedge against
changes in the prices of securities held by a Fund or to be acquired by a Fund.
A Fund's hedging may include sales of futures as an offset against the effect of
expected increases in interest rates or securities prices and purchases of
futures as an offset against the effect of expected declines in interest rates.
For example, when a Fund anticipates a significant market or market
sector advance, it will purchase a stock index futures contract as a hedge
against not participating in such advance at a time when a Fund is not fully
invested. The purchase of a futures contract serves as a temporary substitute
for the purchase of individual securities which may then be purchased in an
orderly fashion. As such purchases are made, an equivalent amount of index based
futures contracts would be terminated by offsetting sales. In contrast, a Fund
would sell stock index futures contracts in anticipation of or in a general
market or market sector decline that may adversely affect the market value of
the Fund's portfolio. To the extent that the Fund's portfolio changes in value
in correlation with a given index, the sale of futures contracts on that index
would substantially reduce the risk to the portfolio of a market decline or
change in interest rates, and, by doing so, provide an alternative to the
liquidation of the Fund's securities positions and the resulting transaction
costs.
The Funds intend to engage in options transactions which are related to
financial futures contracts for hedging purposes and in connection with the
hedging strategies described above.
Although techniques other than sales and purchases of futures contracts
and related options transactions could be used to reduce the Funds' exposure to
interest rate and/or market fluctuations, the Funds may be able to hedge their
exposure more effectively and perhaps at a lower cost through using futures
contracts and related options transactions. While the Funds do not intend to
take delivery of the
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<PAGE>
instruments underlying futures contracts they hold, the Funds do not intend to
engage in such futures contracts for speculation.
FUTURES CONTRACTS. Futures contracts are transactions in the commodities markets
rather than in the securities markets. A futures contract creates an obligation
by the seller to deliver to the buyer the commodity specified in the contract at
a specified future time for a specified price. The futures contract creates an
obligation by the buyer to accept delivery from the seller of the commodity
specified at the specified future time for the specified price. In contrast, a
spot transaction creates an immediate obligation for the seller to deliver and
the buyer to accept delivery of and pay for an identified commodity. In general,
futures contracts involve transactions in fungible goods such as wheat, coffee
and soybeans. However, in the last decade an increasing number of futures
contracts have been developed which specify financial instruments or financially
based indexes as the underlying commodity.
U.S. futures contracts are traded only on national futures exchanges
and are standardized as to maturity date and underlying financial instrument.
The principal financial futures exchanges in the United States are The Board of
Trade of the City of Chicago, the Chicago Mercantile Exchange, the International
Monetary Market (a division of the Chicago Mercantile Exchange), the New York
Futures Exchange and the Kansas City Board of Trade. Each exchange guarantees
performance under contract provisions through a clearing corporation, a
nonprofit organization managed by the exchange membership, which is also
responsible for handling daily accounting of deposits or withdrawals of margin.
A futures commission merchant ("Broker") effects each transaction in connection
with futures contracts for a commission. Futures exchanges and trading are
regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC") and National Futures Association ("NFA").
INTEREST RATE FUTURES CONTRACTS. The sale of an interest rate futures contract
creates an obligation by a Fund, as seller, to deliver the type of financial
instrument specified in the contract at a specified future time for a specified
price. The purchase of an interest rate futures contract creates an obligation
by a Fund, as purchaser, to accept delivery of the type of financial instrument
specified at a specified future time for a specified price. The specific
securities delivered or accepted, respectively, at settlement date, are not
determined until at or near that date. The determination is in accordance with
the rules of the exchange on which the futures contract sale or purchase was
made.
Currently, interest rate futures contracts can be purchased or sold on
90-day U.S. Treasury bills, U.S. Treasury bonds, U.S. Treasury notes with
maturities between 6 1/2 and 10 years, Government National Mortgage Association
(GNMA) certificates, 90-day domestic bank certificates of deposit, 90-day
commercial paper, and 90-day Eurodollar certificates of deposit. It is expected
that futures contracts trading in additional financial instruments will be
authorized. The standard contract size is $100,000 for futures contracts in U.S.
Treasury bonds, U.S. Treasury notes and GNMA certificates, and $1,000,000 for
the other designated contracts. While U.S. Treasury bonds, U.S. Treasury bills
and U.S. Treasury notes are backed by the full faith and credit of the U.S.
government and GNMA certificates are guaranteed by a U.S. government agency, the
futures contracts in U.S. government securities are not obligations of the U.S.
Treasury.
INDEX BASED FUTURES CONTRACTS, OTHER THAN STOCK INDEX BASED. It is expected that
bond index and other financially based index futures contracts will be developed
in the future. It is anticipated that such index based futures contracts will be
structured in the same way as stock index futures contracts but will be measured
by changes in interest rates, related indexes or other measures, such as the
consumer price index. In the event that such futures contracts are developed,
the Funds will sell interest rate index and other index based futures contracts
to hedge against changes which are expected to affect the Funds' portfolios.
The purchase or sale of a futures contract differs from the purchase or
sale of a security, in that no price or premium is paid or received. Instead, to
initiate trading an amount of cash, cash equivalents, money market instruments,
or U.S. Treasury bills equal to approximately 1 1/2% (up to 5%) of the contract
amount must be deposited by a Fund with the Broker. This amount is known as
initial margin.
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The nature of initial margin in futures transactions is different from that of
margin in security transactions. Futures contract margin does not involve the
borrowing of funds by the customer to finance the transactions. Rather, the
initial margin is in the nature of a performance bond or good faith deposit on
the contract which is returned to a Fund upon termination of the futures
contract assuming all contractual obligations have been satisfied. The margin
required for a particular futures contract is set by the exchange on which the
contract is traded and may be significantly modified from time to time by the
exchange during the term of the contract.
Subsequent payments, called variation margin, to the Broker and from
the Broker, are made on a daily basis as the value of the underlying instrument
or index fluctuates making the long and short positions in the futures contract
more or less valuable, a process known as mark-to-market. For example, when a
Fund has purchased a futures contract and the price of the underlying financial
instrument or index has risen, that position will have increased in value, and
the Fund will receive from the Broker a variation margin payment equal to that
increase in value. Conversely, where a Fund has purchased a futures contract and
the price of the underlying financial instrument or index has declined, the
position would be less valuable and the Fund would be required to make a
variation margin payment to the Broker. At any time prior to expiration of the
futures contract, a Fund may elect to close the position. A final determination
of variation margin is then made, additional cash is required to be paid to or
released by the Broker, and the Fund realizes a loss or gain.
Each Trust intends to enter into arrangements with its custodian and
with Brokers to enable the initial margin of a Fund and any variation margin to
be held in a segregated account by its custodian on behalf of the Broker.
Although interest rate futures contracts by their terms call for actual
delivery or acceptance of financial instruments, and index based futures
contracts call for the delivery of cash equal to the difference between the
closing value of the index on the expiration date of the contract and the price
at which the futures contract is originally made, in most cases such futures
contracts are closed out before the settlement date without the making or taking
of delivery. Closing out a futures contract sale is effected by an offsetting
transaction in which a Fund enters into a futures contract purchase for the same
aggregate amount of the specific type of financial instrument or index and same
delivery date. If the price in the sale exceeds the price in the offsetting
purchase, the Fund is paid the difference and thus realizes a gain. If the
offsetting purchase price exceeds the sale price, the Fund pays the difference
and realizes a loss. Similarly, the closing out of a futures contract purchase
is effected by an offsetting transaction in which a Fund enters into a futures
contract sale. If the offsetting sale price exceeds the purchase price, the Fund
realizes a gain. If the purchase price exceeds the offsetting sale price the
Fund realizes a loss. The amount of the Fund's gain or loss on any transaction
is reduced or increased, respectively, by the amount of any transaction costs
incurred by the Fund.
As an example of an offsetting transaction, the contractual obligations
arising from the sale of one contract of September U.S. Treasury bills on an
exchange may be fulfilled at any time before delivery of the contract is
required (i.e. on a specified date in September, the "delivery month") by the
purchase of one contract of September U.S. Treasury bills on the same exchange.
In such instance the difference between the price at which the futures contract
was sold and the price paid for the offsetting purchase, after allowance for
transaction costs, represents the profit or loss to a Fund.
There can be no assurance, however, that a Fund will be able to enter
into an offsetting transaction with respect to a particular contract at a
particular time. If a Fund is not able to enter into an offsetting transaction,
the Fund will continue to be required to maintain the margin deposits on the
contract and to complete the contract according to its terms.
OPTIONS ON FINANCIAL FUTURES. The Funds intend to purchase call and put options
on financial futures contracts and sell such options to terminate an existing
position. Options on futures are similar to options on stocks except that an
option on a futures contract gives the purchaser the right, in return for the
premium paid, to assume a position in a futures contract (a long position if the
option is a call and a short position if the option is a put) rather than to
purchase or sell stock at a specified exercise price at any time during the
period of the option. Upon exercise of the option, the delivery of the futures
position by the writer of the option to the holder of the option will be
accompanied by delivery of the accumulated balance
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in the writer's futures margin account. This amount represents the amount by
which the market price of the futures contract at exercise exceeds, in the case
of a call, or is less than, in the case of a put, the exercise price of the
option on the futures contract. If an option is exercised the last trading day
prior to the expiration date of the option, the settlement will be made entirely
in cash equal to the difference between the exercise price of the option and
value of the futures contract.
The Funds intend to use options on financial futures contracts in
connection with hedging strategies. In the future the Funds may use such options
for other purposes.
PURCHASE OF PUT OPTIONS ON FUTURES CONTRACTS. The purchase of protective put
options on financial futures contracts is analogous to the purchase of
protective puts on individual stocks, where an absolute level of protection is
sought below which no additional economic loss would be incurred by a Fund. Put
options may be purchased to hedge a portfolio of stocks or debt instruments or a
position in the futures contract upon which the put option is based.
PURCHASE OF CALL OPTIONS ON FUTURES CONTRACTS. The purchase of call options on
financial futures contracts represents a means of obtaining temporary exposure
to market appreciation at limited risk. It is analogous to the purchase of a
call option on an individual stock, which can be used as a substitute for a
position in the stock itself. Depending on the pricing of the option compared to
either the futures contract upon which it is based, or upon the price of the
underlying financial instrument or index itself, purchase of a call option may
be less risky than the ownership of the interest rate or index based futures
contract or the underlying securities. Call options on commodity futures
contracts may be purchased to hedge against an interest rate increase or a
market advance when a Fund is not fully invested.
USE OF NEW INVESTMENT TECHNIQUES INVOLVING FINANCIAL FUTURES CONTRACTS OR
RELATED OPTIONS. The Funds may employ new investment techniques involving
financial futures contracts and related options. The Funds intend to take
advantage of new techniques in these areas which may be developed from time to
time and which are consistent with the Fund's investment objective. Each Trust
believes that no additional techniques have been identified for employment by
the Funds in the foreseeable future other than those described above.
LIMITATIONS ON PURCHASE AND SALE OF FUTURES CONTRACTS AND RELATED OPTIONS ON
SUCH FUTURES CONTRACTS. A Fund will not enter into a futures contract if, as
a result thereof, more than 5% of the Fund's total assets (taken at market
value at the time of entering into the contract) would be committed to margin
deposits on such futures contracts, including any premiums paid for options on
futures.
The Funds intend that its futures contracts and related options
transactions will be entered into for traditional hedging purposes. That is,
futures contracts will be sold to protect against a decline in the price of
securities that a Fund owns, or futures contracts will be purchased to protect a
Fund against an increase in the price of securities it intends to purchase. The
Funds do not intend to enter into futures contracts for speculation.
In instances involving the purchase of futures contracts by a Fund, an
amount of cash and cash equivalents, equal to the market value of the futures
contracts will be deposited in a segregated account with each Trust's custodian
and/or in a margin account with a Broker to collateralize the position and
thereby insure that the use of such futures is unleveraged.
RISKS OF FUTURES CONTRACTS. Financial futures contracts prices are volatile and
are influenced, among other things, by changes in stock prices, market
conditions, prevailing interest rates and anticipation of future stock prices,
market movements or interest rate changes, all of which in turn are affected by
economic conditions, such as government fiscal and monetary policies and
actions, and national and international political and economic events.
At best, the correlation between changes in prices of futures contracts
and of the securities being hedged can be only approximate. The degree of
imperfection of correlation depends upon circumstances, such as variations in
speculative market demand for futures contracts and for securities, including
technical influences in futures contracts trading; differences between the
securities being hedged and the financial instruments and indexes underlying the
standard futures contracts available for trading, in such respects as interest
rate levels, maturities and creditworthiness of issuers, or identities of
securities comprising the
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index and those in a Fund's portfolio. In addition, futures contract
transactions involve the remote risk that a party be unable to fulfill its
obligations and that the amount of the obligation will be beyond the ability of
the clearing broker to satisfy. A decision of whether, when and how to hedge
involves the exercise of skill and judgment, and even a well conceived hedge may
be unsuccessful to some degree because of market behavior or unexpected interest
rate trends.
Because of the low margin deposits required, futures trading involves
an extremely high degree of leverage. As a result, a relatively small price
movement in a futures contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the futures contract is deposited as margin, a 10% decrease in the
value of the futures contract would result in a total loss of the margin
deposit, before any deduction for the transaction costs, if the account were
then closed out, and a 15% decrease would result in a loss equal to 150% of the
original margin deposit. Thus, a purchase or sale of a futures contract may
result in losses in excess of the amount invested in the futures contract.
However, a Fund would presumably have sustained comparable losses if, instead of
entering into the futures contract, it had invested in the underlying financial
instrument. Furthermore, in order to be certain that a Fund has sufficient
assets to satisfy its obligations under a futures contract, the Fund will
establish a segregated account in connection with its futures contracts which
will hold cash or cash equivalents equal in value to the current value of the
underlying instruments or indices less the margins on deposit.
Most U.S. futures exchanges limit the amount of fluctuation permitted
in futures contract prices during a single trading day. The daily limit
establishes the maximum amount that the price of a futures contract may vary
either up or down from the previous day's settlement price at the end of a
trading session. Once the daily limit has been reached in a particular type of
contract, no trades may be made on that day at a price beyond that limit. The
daily limit governs only price movement during a particular trading day and
therefore does not limit potential losses because the limit may prevent the
liquidation of unfavorable positions. Futures contract prices have occasionally
moved to the daily limit for several consecutive trading days with little or no
trading, thereby preventing prompt liquidation of futures positions and
subjecting some futures traders to substantial losses.
RISKS OF OPTIONS ON FUTURES CONTRACTS. In addition to the risks described above
for financial futures contracts, there are several special risks relating to
options on futures contracts. The ability to establish and close out positions
on such options will be subject to the development and maintenance of a liquid
secondary market. There is no assurance that a liquid secondary market will
exist for any particular contract or at any particular time. A Fund will not
purchase options on any futures contract unless and until it believes that the
market for such options has developed sufficiently that the risks in connection
with such options are not greater than the risks in connection with the futures
contracts. Compared to the use of futures contracts, the purchase of options on
such futures involves less potential risk to a Fund because the maximum amount
at risk is the premium paid for the options (plus transaction costs). However,
there may be circumstances when the use of an option on a futures contract would
result in a loss to a Fund, even though the use of a futures contract would not,
such as when there is no movement in the level of the futures contract.
LOANS OF SECURITIES
To generate income and offset expenses, the Funds may lend portfolio
securities to broker-dealers and other financial institutions. Loans of
securities by a Fund may not exceed 30% of the value of the Fund's total assets.
While securities are on loan, the borrower will pay the Fund any income accruing
on the security. The Fund may invest any collateral it receives in additional
portfolio securities, such as U.S. Treasury notes, certificates of deposit,
other high-grade, short-term obligations or interest bearing cash equivalents.
Gains or losses in the market value of a security lent will affect the Fund and
its shareholders.
When a Fund lends its securities, it will require the borrower to give
the Fund collateral in cash or government securities. The Fund will require
collateral in an amount equal to at least 100% of the current market value of
the securities lent, including accrued interest. The Funds have the right to
call a loan and
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obtain the securities lent any time on notice of not more than five business
days. The Funds may pay reasonable fees in connection with such loans.
Although voting rights attendant to securities lent pass to the
borrower, the Funds may call such loans at any time and may vote the securities
if it believes a material event affecting the investment is to occur. The Funds
may experience a delay in receiving additional collateral or in recovering the
securities lent or may even suffer a loss of rights in the collateral should the
borrower of the securities fail financially. The Funds may only make loans to
borrowers deemed to be of good standing, under standards approved by the Board
of Trustees, when the income to be earned from the loan justifies the attendant
risks.
MASTER DEMAND NOTES
Master demand notes are unsecured obligations that permit the
investment of fluctuating amounts by the Funds at varying rates of interest
pursuant to direct arrangements between a Fund, as lender, and the issuer, as
borrower. Master demand notes may permit daily fluctuations in the interest rate
and daily changes in the amounts borrowed. A Fund has the right to increase the
amount under the note at any time up to the full amount provided by the note
agreement, or to decrease the amount. The borrower may repay up to the full
amount of the note without penalty. Notes purchased by a Fund permit the Fund to
demand payment of principal and accrued interest at any time (on not more than
seven days' notice). Notes acquired by a Fund may have maturities of more than
one year, provided that (1) the Fund is entitled to payment of principal and
accrued interest upon not more than seven days' notice, and (2) the rate of
interest on such notes is adjusted automatically at periodic intervals, which
normally will not exceed 31 days, but may extend up to one year. The notes are
deemed to have a maturity equal to the longer of the period remaining to the
next interest rate adjustment or the demand notice period. Because these types
of notes are direct lending arrangements between the lender and borrower, such
instruments are not normally traded and there is no secondary market for these
notes, although they are redeemable and thus repayable by the borrower at face
value plus accrued interest at any time. Accordingly, a Fund's right to redeem
is dependent on the ability of the borrower to pay principal and interest on
demand. In connection with master demand note arrangements, a Fund's Adviser
considers, under standards established by the Board of Trustees, earning power,
cash flow and other liquidity ratios of the borrower and will monitor the
ability of the borrower to pay principal and interest on demand. These notes are
not typically rated by credit rating agencies. Unless rated, a Fund may invest
in them only if at the time of an investment the issuer meets the criteria
established for commercial paper discussed in this statement of additional
information (which limits such investments to commercial paper rated A-1 by S&P,
Prime-1 by Moody's or F-1 by Fitch Investors Service, L.P.).
OBLIGATIONS OF FOREIGN BRANCHES OF UNITED STATES BANKS
The obligations of foreign branches of U.S. banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by government regulation.
Payment of interest and principal upon these obligations may also be affected by
governmental action in the country of domicile of the branch (generally referred
to as sovereign risk). In addition, evidences of ownership of such securities
may be held outside the U.S. and the Funds may be subject to the risks
associated with the holding of such property overseas. Examples of governmental
actions would be the imposition of currency controls, interest limitations,
withholding taxes, seizure of assets or the declaration of a moratorium. Various
provisions of federal law governing domestic branches do not apply to foreign
branches of domestic banks.
OBLIGATIONS OF UNITED STATES BRANCHES OF FOREIGN BANKS
Obligations of U.S. branches of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by federal and state
regulation as well as by governmental action in the country in which the foreign
bank has its head
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office. In addition, there may be less publicly available information about a
U.S. branch of a foreign bank than about a domestic bank.
PAYMENT-IN-KIND SECURITIES
Payment-in-kind ("PIK") securities pay interest in either cash or
additional securities, at the issuer's option, for a specified period. The
issuer's option to pay in additional securities typically ranges from one to six
years, compared to an average maturity for all PIK securities of eleven years.
Call protection and sinking fund features are comparable to those offered on
traditional debt issues.
PIKs, like zero coupon bonds, are designed to give an issuer
flexibility in managing cash flow. Several PIKs are senior debt. In other cases,
where PIKs are subordinated, most senior lenders view them as equity
equivalents.
An advantage of PIKs for the issuer -- as with zero coupon securities
- -- is that interest payments are automatically compounded (reinvested) at the
stated coupon rate, which is not the case with cash-paying securities. However,
PIKs are gaining popularity over zeros since interest payments in additional
securities can be monetized and are more tangible than accretion of a discount.
As a group, PIK bonds trade flat (i.e., without accrued interest).
Their price is expected to reflect an amount representing accreted interest
since the last payment. PIKs generally trade at higher yields than comparable
cash-paying securities of the same issuer. Their premium yield is the result of
the lesser desirability of non-cash interest, the more limited audience for
non-cash paying securities, and the fact that many PIKs have been issued to
equity investors who do not normally own or hold such securities.
Calculating the true yield on a PIK security requires a discounted cash
flow analysis if the security (ex interest) is trading at a premium or a
discount because the realizable value of additional payments is equal to the
current market value of the underlying security, not par.
Regardless of whether PIK securities are senior or deeply subordinated,
issuers are highly motivated to retire them because they are usually their most
costly form of capital.
REPURCHASE AGREEMENTS
The Funds may enter into repurchase agreements with entities that are
registered U.S. government securities dealers, including member banks of the
Federal Reserve System having at least $1 billion in assets, primary dealers in
U.S. government securities or other financial institutions believed a Fund's
Adviser to be creditworthy. A repurchase agreement is an agreement by which a
person (e.g., a Fund) obtains a security and simultaneously commits to return
the security to the seller (a member bank of the Federal Reserve System or
recognized securities dealer) at an agreed upon price (including principal and
interest) on an agreed upon date within a number of days (usually not more than
seven) from the date of purchase. The resale price reflects the purchase price
plus an agreed upon market rate of interest which is unrelated to the coupon
rate or maturity of the underlying security. A repurchase agreement involves the
obligation of the seller to pay the agreed upon price, which obligation is in
effect secured by the value of the underlying security.
A Fund or its custodian will take possession of the securities subject
to repurchase agreements, and these securities will be marked to market daily.
To the extent that the original seller does not repurchase the securities from
the Fund, the Fund could receive less than the repurchase price on any sale of
such securities. In the event that such a defaulting seller filed for bankruptcy
or became insolvent, disposition of such securities by a Fund might be delayed
pending court action. The Funds believe that under the regular procedures
normally in effect for custody of a Fund's portfolio securities subject to
repurchase agreements, a court of competent jurisdiction would rule in favor of
the Fund and allow retention or disposition of such securities. The Fund will
only enter into repurchase agreements with banks and other recognized financial
institutions, such as broker-dealers, which are deemed by the Adviser to be
creditworthy pursuant to guidelines established by the Trustees.
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RESTRICTED AND ILLIQUID SECURITIES
Pursuant to Rule 144A under the Securities Act of 1933 ("Rule 144A"),
the Board of Trustees of the Trust determines the liquidity of certain
restricted securities. Rule 144A is a non-exclusive, safe-harbor for certain
secondary market transactions involving securities subject to restrictions on
resale under federal securities laws. Rule 144A provides an exemption from
registration for resales of otherwise restricted securities to qualified
institutional buyers. Rule 144A was expected to further enhance the liquidity of
the secondary market for securities eligible for sale under Rule 144A. In
determining the liquidity of certain restricted securities the Trustees
consider: (i) the frequency of trades and quotes for the security; (ii) the
number of dealers willing to purchase or sell the security and the number of
other potential buyers; (iii) dealer undertakings to make a market in the
security; and (iv) the nature of the security and the nature of the marketplace
trades.
REVERSE REPURCHASE AGREEMENTS
Under a reverse repurchase agreement, the Fund would sell securities
and agree to repurchase them at a mutually agreed upon date and price. Reverse
repurchase agreements involve the risk that the market value of the securities
the Fund is obligated to repurchase may decline below the repurchase price.
U.S. GOVERNMENT OBLIGATIONS
The types of U.S. government obligations in which the Funds may invest
generally include obligations that the U.S. government agencies or
instrumentalities issued or guaranteed.
These securities are backed by:
(1) the discretionary authority of the U.S. government to purchase
certain obligations of agencies or instrumentalities; or
(2) the credit of the agency or instrumentality issuing the obligations.
Examples of agencies and instrumentalities that may not always receive
financial support from the U.S. government are:
(i) Farm Credit System, including the National Bank for
Cooperatives, Farm Credit Banks and Banks for Cooperatives;
(ii) Farmers Home Administration;
(iii) Federal Home Loan Banks;
(iv) Federal Home Loan Mortgage Corporation;
(v) Federal National Mortgage Association;
(vi) Government National Mortgage Association; and
(vii) Student Loan Marketing Association
GNMA SECURITIES
The Funds may invest in securities issued by the Government National
Mortgage Association ("GNMA"), a wholly-owned U.S. Government corporation, which
guarantees the timely payment of principal and interest, but not premiums paid
to purchase these instruments. The market value and interest yield of these
instruments can vary due to market interest rate fluctuations and early
prepayments of underlying mortgages. These securities represent ownership in a
pool of federally insured mortgage loans. GNMA certificates consist of
underlying mortgages with a maximum maturity of 30 years. However, due to
scheduled and unscheduled principal payments, GNMA certificates have a shorter
average maturity and, therefore, less principal volatility than a comparable
30-year bond. Since
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prepayment rates vary widely, it is not possible to accurately predict the
average maturity of a particular GNMA pool. The scheduled monthly interest and
principal payments relating to mortgages in the pool will be "passed through" to
investors. GNMA securities differ from conventional bonds in that principal is
paid back to the certificate holders over the life of the loan rather than at
maturity. As a result, there will be monthly scheduled payments of principal and
interest. In addition, there may be unscheduled principal payments representing
prepayments on the underlying mortgages.
Although GNMA certificates may offer yields higher than those available
from other types of U.S. Government securities, GNMA certificates may be less
effective than other types of securities as a means of "locking in" attractive
long-term rates because of the prepayment feature. For instance, when interest
rates decline, the value of a GNMA certificate likely will not rise as much as
comparable debt securities due to the prepayment feature. In addition, these
prepayments can cause the price of a GNMA certificate originally purchased at a
premium to decline in price compared to its par value, which may result in a
loss.
MORTGAGE-BACKED OR ASSET-BACKED SECURITIES
The Funds may invest in mortgage-backed securities and asset-backed
securities. Two principal types of mortgage-backed securities are collateralized
mortgage obligations ("CMOs") and real estate mortgage investment conduits
("REMICs"). CMOs are securities collateralized by mortgages, mortgage
pass-throughs, mortgage pay-through bonds (bonds representing an interest in a
pool of mortgages where the cash flow generated from the mortgage collateral
pool is dedicated to bond repayment), and mortgage-backed bonds (general
obligations of the issuers payable out of the issuers' general funds and
additionally secured by a first lien on a pool of single family detached
properties). Many CMOs are issued with a number of classes or series which have
different maturities and are retired in sequence.
Investors purchasing CMOs in the shortest maturities receive or are
credited with their pro rata portion of the scheduled payments of interest and
principal on the underlying mortgages plus all unscheduled prepayments of
principal up to a predetermined portion of the total CMO obligation. Until that
portion of such CMO obligation is repaid, investors in the longer maturities
receive interest only. Accordingly, the CMOs in the longer maturity series are
less likely than other mortgage pass-throughs to be prepaid prior to their
stated maturity. Although some of the mortgages underlying CMOs may be supported
by various types of insurance, and some CMOs may be backed by GNMA certificates
or other mortgage pass-throughs issued or guaranteed by U.S. Government agencies
or instrumentalities, the CMOs themselves are not generally guaranteed.
REMICs, which were authorized under the Tax Reform Act of 1986, are
private entities formed for the purpose of holding a fixed pool of mortgages
secured by an interest in real property. REMICs are similar to CMOs in that they
issue multiple classes of securities.
In addition to mortgage-backed securities, the Funds may invest in
securities secured by other assets including company receivables, truck and auto
loans, leases, and credit card receivables. These issues may be traded
over-the-counter and typically have a short-intermediate maturity structure
depending on the pay down characteristics of the underlying financial assets
which are passed through to the security holder.
Credit card receivables are generally unsecured and the debtors are
entitled to the protection of a number of state and federal consumer credit
laws, many of which give such debtors the right to set off certain amounts owed
on the credit cards, thereby reducing the balance due. Most issuers of
asset-backed securities backed by automobile receivables permit the servicers of
such receivables to retain possession of the underlying obligations. If the
servicer were to sell these obligations to another party, there is a risk that
the purchaser would acquire an interest superior to that of the holders of the
rated asset-backed securities. In addition, because of the large number of
vehicles involved in a typical issuance and technical requirements under state
laws, the trustee for the holders of asset-backed securities backed by
automobile receivables may not have a proper security interest in all of the
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obligations backing such receivables. Therefore, there is the possibility that
recoveries on repossessed collateral may not, in some cases, be available to
support payments on these securities.
In general, issues of asset-backed securities are structured to include
additional collateral and/or additional credit support to protect against the
risk that a portion of the collateral supporting the asset-backed securities may
default and/or may suffer from these defects. In evaluating the strength of
particular issues of asset-backed securities, the Adviser considers the
financial strength of the guarantor or other provider of credit support, the
type and extent of credit enhancement provided as well as the documentation and
structure of the issue itself and the credit support.
VARIABLE OR FLOATING RATE INSTRUMENTS
The Funds may invest in variable or floating rate instruments which may
involve a demand feature and may include variable amount master demand notes
which may or may not be backed by bank letters of credit. Variable or floating
rate instruments bear interest at a rate which varies with changes in market
rates. The holder of an instrument with a demand feature may tender the
instrument back to the issuer at par prior to maturity. A variable amount master
demand note is issued pursuant to a written agreement between the issuer and the
holder, its amount may be increased by the holder or decreased by the holder or
issuer, it is payable on demand, and the rate of interest varies based upon an
agreed formula. The quality of the underlying credit must, in the opinion of the
Adviser, be equivalent to the long-term bond or commercial paper ratings
applicable to permitted investments for each Fund. The Adviser will monitor, on
an ongoing basis, the earning power, cash flow, and liquidity ratios of the
issuers of such instruments and will similarly monitor the ability of an issuer
of a demand instrument to pay principal and interest on demand.
WHEN-ISSUED, DELAYED-DELIVERY AND FORWARD COMMITMENT TRANSACTIONS
The Funds may purchase securities on a when-issued or delayed delivery
basis and may purchase or sell securities on a forward commitment basis. These
transactions involve the purchase of debt obligations with delivery and payment
normally take place within a month or more after the date of commitment to
purchase. The Funds will only make commitments to purchase obligations on a
when-issued basis with the intention of actually acquiring the securities, but
may sell them before the settlement date. The when-issued securities are subject
to market fluctuation, and no interest accrues on the security to the purchaser
during this period. The payment obligation and the interest rate that will be
received on the securities are each fixed at the time the purchaser enters into
the commitment.
Segregated accounts will be established with the custodian, and the
Funds will maintain liquid assets in an amount at least equal in value to a
Fund's commitments to purchase when-issued securities. If the value of these
assets declines, a Fund will place additional liquid assets in the account on a
daily basis so that the value of the assets in the account is equal to the
amount of such commitments.
Purchasing obligations on a when-issued basis is a form of leveraging
and can involve a risk that the yields available in the market when the delivery
takes place may actually be higher than those obtained in the transaction
itself. In that case there could be an unrealized loss at the time of delivery.
A Fund uses when-issued, delayed-delivery and forward commitment
transactions to secure what it considers to be an advantageous price and yield
at the time of purchase. When a Fund engages in when- issued, delayed-delivery
and forward commitment transactions, it relies on the buyer or seller, as the
case may be, to consummate the sale. If the buyer or seller fails to complete
the sale, then the Fund may miss the opportunity to obtain the security at a
favorable price or yield.
Typically, no income accrues on securities a Fund has committed to
purchase prior to the time delivery of the securities is made, although the Fund
may earn income on securities it has deposited in a segregated account. When
purchasing a security on a when-issued, delayed delivery, or forward commitment
basis, the Fund assumes the rights and risks of ownership of the security,
including the risk of
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price and yield fluctuations, and takes such fluctuations into account when
determining its net asset value. Because the Fund is not required to pay for the
security until the delivery date, these risks are in addition to the risks
associated with the Fund's other investments.
ZERO COUPON "STRIPPED" BONDS
A zero coupon "stripped" bond represents ownership in serially maturing
interest payments or principal payments on specific underlying notes and bonds,
including coupons relating to such notes and bonds. The interest and principal
payments are direct obligations of the issuer. Coupon zero coupon bonds of any
series mature periodically from the date of issue of such series through the
maturity date of the securities related to such series. Principal zero coupon
bonds mature on the date specified therein, which is the final maturity date of
the related securities. Each zero coupon bond entitles the holder to receive a
single payment at maturity. There are no periodic interest payments on a zero
coupon bond. Zero coupon bonds are offered at discounts from their face amounts.
In general, owners of zero coupon bonds have substantially all the
rights and privileges of owners of the underlying coupon obligations or
principal obligations. Owners of zero coupon bonds have the right upon default
on the underlying coupon obligations or principal obligations to proceed
directly and individually against the issuer and are not required to act in
concert with other holders of zero coupon bonds.
For federal income tax purposes, a purchaser of principal zero coupon
bonds or coupon zero coupon bonds (either initially or in the secondary market)
is treated as if the buyer had purchased a corporate obligation issued on the
purchase date with an original issue discount equal to the excess of the amount
payable at maturity over the purchase price. The purchaser is required to take
into income each year as ordinary income an allocable portion of such discounts
determined on a "constant yield" method. Any such income increases the holder's
tax basis for the zero coupon bond, and any gain or loss on a sale of the zero
coupon bonds relative to the holder's basis, as so adjusted, is a capital gain
or loss. If the holder owns both principal zero coupon bonds and coupon zero
coupon bonds representing interest in the same underlying issue of securities, a
special basis allocation rule (requiring the aggregate basis to be allocated
among the items sold and retained based on their relative fair market value at
the time of sale) may apply to determine the gain or loss on a sale of any such
zero coupon bonds.
INVESTMENT RESTRICTIONS AND GUIDELINES
FUNDAMENTAL POLICIES
Each Fund has adopted the fundamental investment restrictions set forth
below which may not be changed without the vote of a majority of the Fund's
outstanding shares, as defined in the 1940 Act. Unless otherwise stated, all
references to the assets of the Fund are in terms of current market value.
DIVERSIFICATION
Each Fund may not make any investment that is inconsistent with its
classification as a diversified investment company under the 1940 Act.
CONCENTRATION
Each Fund may not invest more than 25% of its total assets, taken at
market value, in the securities of issuers primarily engaged in a particular
industry. This restriction does not apply to securities that are issued or
guaranteed by the United States government or its agencies or instrumentalities.
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ISSUING SENIOR SECURITIES
Except as permitted under the 1940 Act, each Fund may not issue senior
securities.
BORROWING
Each Fund may not borrow money, except to the extent permitted by
applicable law and the guidelines set forth in each Fund's prospectus and
statement of additional information, as they may be amended from time to time.
UNDERWRITING SECURITIES ISSUED BY OTHER PERSONS
Each Fund may not underwrite securities issued by other persons, except
insofar as each Fund may be deemed to be an underwriter in connection with the
disposition of its portfolio securities.
REAL ESTATE
Each Fund may not buy or sell real estate, except that, to the extent
permitted by applicable law, each Fund may invest in (a) securities that are
directly or indirectly secured by real estate, or (b) securities issued by
companies that invest in real estate.
COMMODITIES
Each Fund may not purchase or sell physical commodities or contracts on
commodities, except that each Fund may engage in financial futures contacts and
related options and currency contracts and related options on such contracts and
may otherwise do so in accordance with applicable law and each Fund's prospectus
and statement of additional information, and without registering as a commodity
pool operator under the Commodity Exchange Act.
LOANS TO OTHER PERSONS
Each Fund may lend its portfolio securities to the extent permitted by
applicable law and the guidelines set forth in its current prospectus and
statement of additional information. Otherwise, each Fund may not make loans to
other persons. Each Fund does not consider the acquisition of investment
instruments in accordance with each Fund's prospectus and statement of
additional information to be the making of a loan.
GUIDELINES
BORROWINGS
Each Fund may borrow from banks in an amount up to 33 1/3% of its total
assets, taken at market value. A Fund may only borrow as a temporary measure for
extraordinary or emergency purposes such as the redemption of Fund shares. A
Fund will not purchase securities while borrowings are outstanding except to
exercise prior commitments and to exercise subscription rights.
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CONCENTRATION
For Evergreen Select Intermediate Tax Exempt Bond Fund's investment
restriction on concentration, the phrase "securities of issuers primarily
engaged in any particular industry" includes industrial development bonds from
the same facility or similar types of facilities. Governmental issuers are not
considered to be members of an industry for concentration purposes. The Fund may
invest more than 25% of its total assets in industrial development bonds.
ILLIQUID SECURITIES
Each Fund will not invest more than 15% of its net assets in securities
that are Illiquid. A security is Illiquid when a fund may not dispose of it in
the ordinary course of business within seven days at approximately the value at
which each Fund has the investment on its books.
INVESTMENT IN OTHER INVESTMENT COMPANIES
Each Fund may purchase the shares of other investment companies to the
extent permitted under the 1940 Act. Currently, each Fund may not (1) own more
than 3% of the outstanding voting stock of another investment company, (2)
invest more than 5% of its assets in any single investment company, and (3)
invest more than 10% of its assets in investment companies. However, each Fund
may invest all of its investable assets in securities of a single open-end
management investment company with substantially the same fundamental investment
objectives, policies and limitations as each Fund.
MANAGEMENT OF THE TRUST
Set forth below are the Trustees and officers of the Trust and their
principal occupations and some of their affiliations over the last five years.
Unless otherwise indicated, the address for each Trustee and officer is 200
Berkeley Street, Boston, Massachusetts, 02116. Each Trustee is also a Trustee of
each of the other Trusts in the Evergreen Fund complex.
<TABLE>
<CAPTION>
NAME POSITION WITH TRUST PRINCIPAL OCCUPATIONS FOR LAST FIVE YEARS
- -------------------------- -------------------------- -------------------------------------------------------------
<S> <C> <C>
Laurence B. Ashkin Trustee Real estate developer and construction consultant;
and President of Centrum Equities and Centrum
Properties, Inc.
Charles A. Austin III Trustee Investment Counselor to Appleton Partners, Inc.;
and former Managing Director, Seaward
Management Corporation (investment advice).
K. Dun Gifford Trustee Trustee, Treasurer and Chairman of the Finance
Committee, Cambridge College; Chairman Emeritus
and Director, American Institute of Food and Wine;
Chairman and President, Oldways Preservation and
Exchange Trust (education); former Chairman of
the Board, Director, and Executive Vice President,
The London Harness Company; former Managing
Partner, Roscommon Capital Corp.; former Chief
Executive Officer, Gifford Gifts of Fine Foods;
former Chairman, Gifford, Drescher & Associates
(environmental consulting); and former Director,
Keystone Investments, Inc.
James S. Howell Chairman of the Former Chairman of the Distribution Foundation for
Board of Trustees the Carolinas; and former Vice President of Lance
Inc. (food manufacturing).
Leroy Keith, Jr. Trustee Chairman of the Board and Chief Executive Officer,
Carson Products Company; Director of Phoenix
Total Return Fund and Equifax, Inc.; Trustee of
Phoenix Series Fund, Phoenix Multi-Portfolio Fund,
and The Phoenix Big Edge Series Fund; and former
President, Morehouse College.
Gerald M. McDonnell Trustee Sales Representative with Nucor-Yamoto, Inc.
(steel producer).
20936
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NAME AND ADDRESS POSITION WITH TRUST PRINCIPAL OCCUPATIONS FOR LAST FIVE YEARS
- -------------------------- ----------------------- -------------------------------------------------------------
Thomas L. McVerry Trustee Former Vice President and Director of Rexham
Corporation; and former Director of Carolina
Cooperative Federal Credit Union.
*William Walt Pettit Trustee Partner in the law firm of Holcomb and Pettit, P.A.
David M. Richardson Trustee Vice Chair and former Executive Vice President,
DHR International, Inc. (executive recruitment);
former Senior Vice President, Boyden International
Inc. (executive recruitment); and Director,
Commerce and Industry Association of New
Jersey, 411 International, Inc., and J&M Cumming
Paper Co.
Russell A. Salton, III MD Trustee Medical Director, U.S. Health Care/Aetna Health
Services; and former Managed Health Care
Consultant; former President, Primary Physician
Care.
Michael S. Scofield Trustee Attorney, Law Offices of Michael S. Scofield.
Richard J. Shima Trustee Chairman, Environmental Warranty, Inc. (insurance Executive
` Consultant, Drake Beam Morin, Inc. (executive outplacement);
Director of Connecticut Natural Gas Corporation, Hartford
Hospital, Old State House Association, Middlesex Mutual
Assurance Company, and Enhance Financial Services, Inc.;
Chairman, Board of Trustees, Hartford Graduate Center;
Trustee, Greater Hartford YMCA; former Director, Vice
Chairman and Chief Investment Officer, The Travelers
Corporation; former Trustee, Kingswood- Oxford School; and
former Managing Director and Consultant, Russell Miller, Inc.
John J. Pileggi President and Senior Managing Director, Furman Selz LLC since Consultant
230 Park Avenue Treasurer 1992; Managing Director from 1984 to 1992; to BISYS Fund
Suite 910 Services since 1996.
New York, NY
George O. Martinez Secretary Senior Vice President and Director of
3435 Stelzer Road Administration and Regulatory Services, BISYS
Columbus, Ohio Fund Services; Vice President/Assistant General
Counsel, Alliance Capital Management from 1988
to 1995; 3435 Stelzer Road, Columbus, Ohio.
Management from 1988 to 1995.
</TABLE>
*This Trustee may be considered an interested trustee within the meaning of the
1940 Act.
The officers of the Trust are all officers and/or employees of The
BISYS Group, Inc. ("BISYS"), except for Mr. Pileggi, who is a consultant to
BISYS. For further information on BISYS, see "Subadministrator" below.
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER
The First Capital Group of FUNB is the investment adviser (the
"Adviser") to each Fund. FUNB is a subsidiary of First Union Corporation, a bank
holding company headquartered in Charlotte, North Carolina. First Union
Corporation and its subsidiaries provide a broad range of financial services to
individuals and businesses throughout the United States. First Union Corporation
and FUNB are located at 201 South College Street, Charlotte North Carolina 28288
Pursuant to the advisory agreement (the "Advisory Agreement") between
the Trust and the Adviser, and subject to the supervision of the Trust's Board
of Trustees, the Adviser furnishes to each Fund investment advisory, management
and administrative services, office facilities, and equipment in connection with
its services for managing the investment and reinvestment of each Fund's assets.
The Adviser pays for all of the expenses incurred in connection with the
provision of its services.
All charges and expenses, other than those specifically referred to as
being borne by the Adviser, including, but not limited to, (1) custodian charges
and expenses; (2) bookkeeping and independent auditors' charges and expenses;
(3) transfer agent charges and expenses; (4) fees and expenses of Independent
Trustees; (5) brokerage commissions, brokers' fees and expenses; (6) issue and
transfer taxes; (7) costs and expenses under the Distribution Plan; (8) taxes
and trust fees payable to governmental agencies; (9) the cost of share
certificates; (10) fees and expenses of the registration and qualification of
such Fund and its shares with the Securities and Exchange Commission or under
state or other securities laws; (11) expenses of preparing, printing and mailing
prospectuses, statements of additional information, notices, reports and proxy
materials to shareholders of such Fund; (12) expenses of shareholders' and
Trustees' meetings; (13) charges and expenses of legal counsel for such Fund and
for the Independent Trustees of the Trust on matters relating to such Fund; and
(14) charges and expenses of filing annual and other reports with the Securities
and Exchange Commission and other authorities; and all extraordinary charges and
expenses of such Fund.
Each Fund pays the Adviser a fee for its services, expressed as a
percentage of average net assets, as set forth below. In addition, the Adviser
has voluntarily agreed to reduce its advisory fee by 0.10%, resulting in the net
advisory fees that are also indicated in the table below.
FUND ADVISORY FEE NET ADVISORY FEE
Evergreen Select Core Bond Fund 0.40% 0.30%
Evergreen Select Fixed Income Fund 0.50% 0.40%
Evergreen Select Income Plus Fund 0.50% 0.40%
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Evergreen Select Intermediate Bond Fund 0.40% 0.40%
Evergreen Select Intermediate 0.60% 0.50%
Tax-Exempt Bond Fund
Evergreen Select Limited Duration Fund 0.30% 0.20%
Under the Advisory Agreement, any liability of the Adviser in
connection with rendering services thereunder is limited to situations involving
its willful misfeasance, bad faith, gross negligence or reckless disregard of
its duties.
The Advisory Agreement continues in effect for two years from its
effective date and, thereafter, from year to year only if approved at least
annually by the Board of Trustees of the Trust or by a vote of a majority of a
Fund's outstanding shares (as defined in the 1940 Act). In either case, the
terms of the Advisory Agreement and continuance thereof must be approved by the
vote of a majority of the Independent Trustees (Trustees who are not interested
persons of the Fund, as defined in the 1940 Act, and who have no direct or
indirect financial interest in the Fund's Distribution Plan or any agreement
related thereto) cast in person at a meeting called for the purpose of voting on
such approval. The Advisory Agreement may be terminated, without penalty, on 60
days' written notice by the Trust's Board of Trustees or by a vote of a majority
of outstanding shares. The Advisory Agreement will terminate automatically upon
its "assignment" as that term is defined in the 1940 Act.
DISTRIBUTION PLAN
Rule 12b-1 under the 1940 Act permits investment mutual funds to use
their assets to pay for distributing their shares. However, to take advantage of
Rule 12b-1, the 1940 Act requires that mutual funds comply with various
conditions, including adopting a distribution plan. The Funds have adopted a
distribution plan for their Institutional Service Shares (the "Plan") that
permits a Fund to deduct up to 0.25% of the Institutional Service class' average
net assets to pay for shareholder services. The Board of Trustees, including a
majority of the Independent Trustees has approved the Plan.
The National Association of Securities Dealers, Inc. ("NASD") limits
the amount that a mutual fund may pay annually in distribution costs for sale of
its shares and shareholder service fees. The NASD limits annual expenditures to
1.00% of the aggregate average daily net asset value of its shares, of which
0.75% may be used to pay such distribution costs and 0.25% may be used to pay
shareholder service fees. The NASD also limits the aggregate amount that a Fund
may pay for such distribution costs to 6.25% of gross share sales since the
inception of the distribution plan, plus interest at the prime rate plus 1.00%
on such amounts remaining unpaid from time to time.
The Independent Trustees or a majority of the outstanding voting shares
of a Fund's Institutional Service Class may terminate the Plan.
A Fund cannot change the Plan in a way that materially increases the
distribution expenses of the Institutional Service Class without obtaining
shareholder approval. Otherwise, the Trustees may amend the Plan.
Management must report the amounts and purposes of expenditures under
the Plan to the Independent Trustees quarterly.
While the Institutional Service Distribution Plan is in effect, a Fund
will be required to commit the selection and nomination of candidates for
Independent Trustees to the discretion of the Independent Trustees.
The Independent Trustees of the Trust have determined that the Funds
will benefit from the Institutional Service shares distribution plan.
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<PAGE>
ADDITIONAL SERVICE PROVIDERS
ADMINISTRATOR
Evergreen Keystone Investment Services, Inc. ("EKIS") serves as
administrator to each Fund, subject to the supervision and control of the
Trust's Board of Trustees. EKIS provides the Funds with facilities, equipment
and personnel and is entitled to receiive a fee based on the aggregate average
daily net assets of the Funds based on the total assets of all mutual funds
advised by First Union subsidiaries. EKIS' fee is calculated in accordance with
the following schedule: 0.60% on the first $7 billion; 0.0425% on the next $3
billion; 0.035% on the next $5 billion; 0.025% on the next $10 billion; 0.019%
on the next $5 bilion and 0.014% on assets in excess of $30 billion.
SUB-ADMINISTRATOR
BISYS provides such personnel and certain administrative services to
the Fund pursuant to a subadministrator agreement. For its services under that
agreement, BISYS receives a fee based on the aggregate average daily net assets
of the Fund at a rate based on the total assets of all mutual funds for which
First Union National Bank ("FUNB") affiliates serve as investment adviser and
BISYS serves as subadministrator. The sub-administrator fee is calculated in
accordance with the following schedule: 0.0100% on the first $7 billion; 0.0075%
on the next $3 billion; 0.0050% on the next $15 billion; 0.0040% on assets in
excess of $25 billion. BISYS is an affiliate of Evergreen Keystone Distributor,
Inc., the distributor of each Fund
TRANSFER AGENT
Evergreen Keystone Service Company, 200 Berkeley Street, Boston,
Massachusetts 02116.
INDEPENDENT AUDITORS
Price Waterhouse LLP, 160 Federal Street, Boston, Massachusetts 02110.
CUSTODIAN
State Street Bank and Trust Company,225 Franklin Street, Boston,
Massachusetts 02110.
BROKERAGE ALLOCATION AND OTHER PRACTICES
SELECTION OF BROKERS
In effecting transactions in portfolio securities for the Funds, the
Adviser seeks the best execution of orders at the most favorable prices. The
Adviser determines whether a broker has provided a Fund with best execution and
price in the execution of a securities transaction by evaluating, among other
things, the broker's ability to execute large or potentially difficult
transactions, and the financial strength and stability of the broker.
BROKERAGE COMMISSIONS
The Funds expect to buy and sell their fixed-income securities through
principal transactions that is directly from the issuer or from an underwriter
or market maker for the securities. Generally, the Funds will not pay brokerage
commissions for such purchases. Usually, when a Fund buys a security from an
underwriter, the purchase price will include underwriting commission or
concession. The purchase price for
21
<PAGE>
securities bought from dealers serving as market makers will similarly include
the dealer's mark up or reflect a dealer's mark down. When the Funds execute
transactions in the over-the-counter market, they will deal with primary market
makers unless more favorable prices are otherwise obtainable.
GENERAL BROKERAGE POLICIES
The Adviser makes investment decisions for a Fund independently from
those of its other clients. It may frequently develop, however, that the Adviser
will make the same investment decision for more than one client. Simultaneous
transactions are inevitable when the same security is suitable for the
investment objective of more than one account. When two or more of its clients
are engaged in the purchase or sale of the same security, the Adviser will
allocate the transactions according to a formula that is equitable to each of
its clients. Although, in some cases, this system could have a detrimental
effect on the price or volume of the Fund's securities, the Fund believes that
in other cases its ability to participate in volume transactions will produce
better executions. In order to take advantage of the availability of lower
purchase prices, each Fund may occasionally participate in group bidding for the
direct purchase from an issuer of certain securities.
The Board of Trustees periodically reviews each Fund's brokerage
policy. Because of the possibility of further regulatory developments affecting
the securities exchanges and brokerage practices generally, the Board of
Trustees may change, modify or eliminate any of the foregoing practices.
CAPITAL STOCK AND OTHER SECURITIES
FORM OF ORGANIZATION
The Trust was formed as a Delaware business trust on September 17, 1997
(the "Declaration of Trust"). A copy of the Declaration of Trust is on file as
an exhibit to the Trust's Registration Statement, of which this statement of
additional information is a part. This summary is qualified in its entirety by
reference to the Declaration of Trust.
DESCRIPTION OF SHARES
The Declaration of Trust authorizes the issuance of an unlimited number
of shares of beneficial interest of series and classes of shares. Each share of
a Fund represents an equal proportionate interest with each other share of that
series and/or class. Upon liquidation, shares are entitled to a pro rata share
of the Trust based on the relative net assets of each series and/or class.
Shareholders have no preemptive or conversion rights. Shares are redeemable and
transferable.
VOTING RIGHTS
Under the terms of the Declaration of Trust, the Trust is not required
to hold annual meetings. However, the Trust intends to hold meetings at least
annually. At meetings called for the initial election of Trustees or to consider
other matters, shares are entitled to one vote per share. Shares generally vote
together as one class on all matters. Classes of shares of a Fund have equal
voting rights. No amendment may be made to the Declaration of Trust that
adversely affects any class of shares without the approval of a majority of the
shares of that class. Shares have non-cumulative voting rights, which means that
the holders of more than 50% of the shares voting for the election of Trustees
can elect 100% of the Trustees to be elected at a meeting and, in such event,
the holders of the remaining 50% or less of the shares voting will not be able
to elect any Trustees.
22
<PAGE>
After the initial meeting as described above, no further meetings of
shareholders for the purpose of electing Trustees will be held, unless required
by law, unless and until such time as less than a majority of the Trustees
holding office have been elected by shareholders, at which time, the Trustees
then in office will call a shareholders' meeting for the election of Trustees.
LIMITATION OF TRUSTEES' LIABILITY
The Declaration of Trust provides that a Trustee will not be liable for
errors of judgment or mistakes of fact or law, but nothing in the Declaration of
Trust protects a Trustee against any liability to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of his duties involved in the conduct of his office.
PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING
OFFERED
EXCHANGES
Investors may exchange shares of any Fund for shares of the same class
of any other Evergreen Select Fund, as described under Exchanges in the Funds
prospectus. Before you make an exchange, you should read the prospectus of the
Evergreen Select Fund into which you wish to exchange. The Trust reserves the
right to discontinue, alter or limit the exchange privilege at any time.
HOW THE FUNDS VALUE THEIR SHARES
HOW AND WHEN THE FUNDS CALCULATE THEIR NET ASSET VALUE PER SHARE ("NAV")
Each Fund computes its net asset value once daily on Monday through
Friday, as described in the Prospectus. A Fund will not compute its net asset
value on days on which there have been no purchases or sales of its shares.
Also, a Fund will not compute its NAV on the day the following legal holidays
are observed: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
Each class of shares of a Fund calculates its net asset value per share
by adding up its investments and other assets, subtracting its liabilities and
then dividing the result by the number of shares outstanding.
HOW THE FUNDS VALUE THE SECURITIES THEY OWN
Current values for a Fund's portfolio securities are determined in the
following manner:
(1) securities that are traded on a national securities exchange or the
over-the-counter National Market System ("NMS") are valued on the basis
of the last sales price on the exchange where primarily traded or NMS
prior to the time of the valuation, provided that a sale has occurred;
(2) securities traded in the over-the-counter market, other than on NMS
are valued at the mean of the bid and asked prices at the time of
valuation;
(3) short-term investments maturing in more than sixty days for which
market quotations are readily available, are valued at current market
value;
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<PAGE>
(4) short-term investments maturing in sixty days or less (including
all master demand notes) are valued at amortized cost (original
purchase cost as adjusted for amortization of premium or accretion of
discount), which, when combined with accrued interest, approximates
market;
(5) short-term investments maturing in more than sixty days when
purchased that are held on the sixtieth day prior to maturity are
valued at amortized cost (market value on the sixtieth day adjusted for
amortization of premium or accretion of discount), which, when combined
with accrued interest, approximates market; and
(6) securities, including restricted securities, for which complete
quotations are not readily available; listed securities or those on NMS
if, in the Fund's opinion, the last sales price does not reflect a
current market value or if no sale occurred; and other assets are
valued at prices deemed in good faith to be fair under procedures
established by the Board of Trustees.
SHAREHOLDER SERVICES
As described in the prospectus, a shareholder may elect to receive
their dividends and capital gains distributions in cash instead of shares.
However, the Service Company will automatically convert a shareholder's
distribution option so that the shareholder reinvests all dividends and
distributions in additional shares when it learns that the postal or other
delivery service is unable to deliver checks or transaction confirmations to the
shareholder's address of record. The Fund will hold the returned distribution or
redemption proceeds in a non interest-bearing account in the shareholder's name
until the shareholder updates their address. Therefore, no interest will accrue
on amounts represented by uncashed distribution or redemption checks
PRINCIPAL UNDERWRITER
Evergreen Keystone Distributor, Inc., 125 W. 55th Street, New York, New
York 10019 is the principal underwriter for the Trust and with respect to each
class of each Fund. The Trust has entered into a Principal Underwriting
Agreement ( "Underwriting Agreement") with the Distributor with respect to each
class of each Fund. The Distributor is a subsidiary of The BISYS Group, Inc.
The Distributor, as agent, has agreed to use its best efforts to find
purchasers for the shares. The Distributor may retain and employ representatives
to promote distribution of the shares and may obtain orders from broker-dealers,
and others, acting as principals, for sales of shares to them. The Underwriting
Agreement provides that the Distributor will bear the expense of preparing,
printing, and distributing advertising and sales literature and prospectuses
used by it.
All subscriptions and sales of shares by the Distributor are at the
public offering price of the shares, which is determined in accordance with the
provisions of the Trust's Declaration of Trust, By-Laws, current prospectuses
and statement of additional information. All orders are subject to acceptance by
the respective Fund and each Fund reserves the right, in its sole discretion, to
reject any order received. Under the Underwriting Agreement, the Fund is not
liable to anyone for failure to accept any order.
The Distributor has agreed that it will, in all respects, duly conform
with all state and federal laws applicable to the sale of the shares. The
Distributor has also agreed that it will indemnify and hold harmless the Trust
and each person who has been, is, or may be a Trustee or officer of the Trust
against expenses reasonably incurred by any of them in connection with any
claim, action, suit, or proceeding to which any of them may be a party that
arises out of or is alleged to arise out of any misrepresentation or omission to
state a material fact on the part of the Distributor or any other person for
whose acts the Distributor is responsible or is alleged to be responsible,
unless such misrepresentation or omission was made in reliance upon written
information furnished by the Trust.
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<PAGE>
The Underwriting Agreement provides that it will remain in effect as
long as its terms and continuance are approved annually (i) by a vote of a
majority of the Trust's Independent Trustees, and (ii) by vote of a majority of
the Trust's Trustees, in each case, cast in person at a meeting called for that
purpose.
The Underwriting Agreement may be terminated, without penalty, on 60
days' written notice by the Board of Trustees or by a vote of a majority of
outstanding shares subject to such agreement. The Underwriting Agreement will
terminate automatically upon its "assignment," as that term is defined in the
1940 Act.
From time to time, if, in the Distributor's judgment, it could benefit
the sales of shares, the Distributor may provide to selected broker-dealers
promotional materials and selling aids, including, but not limited to, personal
computers, related software, and data files.
CALCULATION OF PERFORMANCE DATA
Total return quotations for a class of shares of a Fund as they may
appear from time to time in advertisements are calculated by finding the average
annual compounded rates of return over one, five and ten year periods, or the
time periods for which such class of shares has been effective, whichever is
relevant, on a hypothetical $1,000 investment that would equate the initial
amount invested in the class to the ending redeemable value. To the initial
investment all dividends and distributions are added, and all recurring fees
charged to all shareholder accounts are deducted. The ending redeemable value
assumes a complete redemption at the end of the relevant periods.
Current yield quotations as they may appear, from time to time, in
advertisements will consist of a quotation based on a 30-day period ended on the
date of the most recent balance sheet of a Fund, computed by dividing the net
investment income per share earned during the period by the maximum offering
price per share on the last day of the base period.
Any given yield or total return quotation should not be considered
representative of a Fund's yield or total return for any future period.
ADDITIONAL INFORMATION
Except as otherwise stated in its prospectus or required by law, a Fund
reserves the right to change the terms of the offer stated in its prospectus
without shareholder approval, including the right to impose or change fees for
services provided.
No dealer, salesman or other person is authorized to give any
information or to make any representation not contained in a Fund's prospectus,
statement of additional information or in supplemental sales literature issued
by such Fund or the Distributor, and no person is entitled to rely on any
information or representation not contained therein.
The Funds' prospectus and statement of additional information omit
certain information contained in its registration statement. The Funds have
filed this SAI with the Securities and Exchange Commission and you may get a
copy of the SAI by writing to the Securities and Exchange Commission's principal
office in Washington, D.C. To get a copy of the SAI from the Securities and
Exchange Commission, you will have to pay the fee prescribed by their rules and
regulations.
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FINANCIAL STATEMENTS
The audited statement of assets and liabilities and the report thereon
of Price Waterhouse LLP for each Fund will be filed by amendment.
26
<PAGE>
APPENDIX A
CORPORATE AND MUNICIPAL BOND RATINGS
S&P CORPORATE AND MUNICIPAL BOND RATINGS
A. MUNICIPAL NOTES
An S&P note rating reflects the liquidity concerns and market access
risks unique to notes. Notes due in three years or less will likely receive a
note rating. Notes maturing beyond three years will most likely receive a
long-term debt rating. The following criteria are used in making that
assessment:
a. Amortization schedule (the larger the final maturity relative to
other maturities the more likely it will be treated as a note), and
b. Source of payment (the more dependent the issue is on the market for
its refinancing, the more likely it will be treated as a note).
Note ratings are as follows:
1. SP-1 - Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics
will be given a plus (+) designation.
2. SP-2 - Satisfactory capacity to pay principal and interest.
3. SP-3 - Speculative capacity to pay principal and interest.
B. TAX EXEMPT DEMAND BONDS
S&P assigns "dual" ratings to all long-term debt issues that have as
part of their provisions a demand or double feature.
The first rating addresses the likelihood of repayment of principal and
interest as due, and the second rating addresses only the demand feature. The
long-term debt rating symbols are used for bonds to denote the long-term
maturity and the commercial paper rating symbols are used to denote the put
option (for example, "AAA/A-1+"). For the newer "demand notes," S&P note rating
symbols, combined with the commercial paper symbols, are used (for example,
"SP-1+/A-1+" ).
C. CORPORATE AND MUNICIPAL BOND RATINGS
An S&P corporate or municipal bond rating is a current assessment of
the creditworthiness of an obligor, including obligors outside the U.S., with
respect to a specific obligation. This assessment may take into consideration
obligors such as guarantors, insurers or lessees. Ratings of foreign obligors do
not take into account currency exchange and related uncertainties. The ratings
are based on current information furnished by the issuer or obtained by S&P from
other sources it considers reliable.
The ratings are based, in varying degrees, on the following
considerations:
a. Likelihood of default and capacity and willingness of the obligor as
to the timely payment of interest and repayment of principal in accordance with
the terms of the obligation;
b. Nature of and provisions of the obligation; and
c. Protection afforded by and relative position of the obligation in
the event of bankruptcy reorganization or other arrangement under the laws of
bankruptcy and other laws affecting creditors' rights.
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PLUS (+) OR MINUS (-): To provide more detailed indications of credit
quality, ratings from "AA" to "BBB" may be modified by the addition of a plus or
minus sign to show relative standing within the major rating categories.
A provisional rating is sometimes used by S&P. It assumes the
successful completion of the project being financed by the debt being rated and
indicates that payment of debt service requirements is largely or entirely
dependent upon the successful and timely completion of the project. This rating,
however, while addressing credit quality subsequent to completion of the
project, makes no comment on the likelihood of, or the risk of default upon
failure of, such completion.
C. BOND RATINGS ARE AS FOLLOWS:
a. AAA - Debt rated AAA has the highest rating assigned by S&P.
Capacity to pay interest and repay principal is extremely strong.
b. AA - Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the higher rated issues only in small degree.
3. A - Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
4. BBB - Debt rated BBB is regarded as having an adequate capacity to
pay interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for debt in this category than in higher rated categories.
5. BB, B, CCC, CC AND C - Debt rated BB, B, CCC, CC AND C is regarded,
on balance, as predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation and C the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
D. MOODY'S CORPORATE AND MUNICIPAL BOND RATINGS
Moody's ratings are as follows:
1. AAA - Bonds which are rated AAA are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt-edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
2. AA - Bonds which are rated AA are judged to be of high quality by
all standards. Together with the AAA group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in AAA securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long term risks appear somewhat larger than in AAA
securities.
3. A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
4. BAA - Bonds which are rated BAA are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
28
<PAGE>
5. BA - Bonds which are rated BA are judged to have speculative
elements. Their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and thereby
not well safeguarded during both good and bad times over the future. Uncertainty
of position characterizes bonds in this class.
6. B - Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from AA through BAA in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
CON. (---) - Municipal bonds for which the security depends upon the
completion of some act or the fulfillment of some condition are rated
conditionally. These are bonds secured by (a) earnings of projects under
construction, (b) earnings of projects unseasoned in operation experience, (c)
rentals which begin when facilities are completed, or (d) payments to which some
other limiting condition attaches. Parenthetical rating denotes probable credit
stature upon completion of construction or elimination of basis of condition.
Those municipal bonds in the AA, A, and BAA groups which Moody's
believes possess the strongest investment attributes are designated by the
symbols AA 1, A 1, and BAA 1.
MONEY MARKET INSTRUMENTS
Money market securities are instruments with remaining maturities of
one year or less such as bank certificates of deposit, bankers' acceptances,
commercial paper (including variable rate master demand notes), and obligations
issued or guaranteed by the U.S. government, its agencies or instrumentalities,
some of which may be subject to repurchase agreements.
COMMERCIAL PAPER
Commercial paper will consist of issues rated at the time of purchase
A-1, by Standard & Poor's Ratings Group (S&P), or PRIME-1 by Moody's Investors
Service, Inc., (Moody's) or F-1 by Fitch Investors Services, L.P. (Fitch's); or,
if not rated, will be issued by companies which have an outstanding debt issue
rated at the time of purchase AAA, AA or A by Moody's, or AAA, AA or A by S&P,
or will be determined by a Fund's investment adviser to be of comparable
quality.
A. S&P RATINGS
An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more than
365 days. Ratings are graded into four categories, ranging from "A" for the
highest quality obligations to "D" for the lowest. The top category is as
follows:
1. A: Issues assigned this highest rating are regarded as having the
greatest capacity for timely payment. Issues in this category are delineated
with the numbers 1, 2 and 3 to indicate the relative degree of safety.
2. A-1: This designation indicates that the degree of safety regarding
timely payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus (+) sign
designation.
29
<PAGE>
B. MOODY'S RATINGS
The term "commercial paper" as used by Moody's means promissory
obligations not having an original maturity in excess of nine months. Moody's
commercial paper ratings are opinions of the ability of issuers to repay
punctually promissory obligations not having an original maturity in excess of
nine months. Moody's employs the following designation, judged to be investment
grade, to indicate the relative repayment capacity of rated issuers.
1. The rating PRIME-1 is the highest commercial paper rating assigned
by Moody's. Issuers rated PRIME-1 (or related supporting institutions) are
deemed to have a superior capacity for repayment of short term promissory
obligations. Repayment capacity of PRIME-1 issuers is normally evidenced by the
following characteristics:
1) leading market positions in well-established industries;
2) high rates of return on funds employed;
3) conservative capitalization structures with moderate reliance
on debt and ample asset protection;
4) broad margins in earnings coverage of fixed financial charges
and high internal cash generation; and
5) well established access to a range of financial markets and
assured sources of alternate liquidity.
In assigning ratings to issuers whose commercial paper obligations are
supported by the credit of another entity or entities, Moody's evaluates the
financial strength of the affiliated corporations, commercial banks, insurance
companies, foreign governments or other entities, but only as one factor in the
total rating assessment.
30
<PAGE>
EVERGREEN SELECT FIXED INCOME TRUST
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
To be filed by Amendment
(b) Exhibits. Unless otherwise indicated, each of the Exhibits listed below is
filed herewith.
<TABLE>
<CAPTION>
Exhibit
Number Description Location
- ------- ----------- -----------
<S> <C> <C>
1 Declaration of Trust
2 By-laws To be filed by amendment
3 Not applicable
4 Provisons of instruments defining the rights
of holders of the securities being registered
are contained in the Declaration of Trust
Articles II, V, VI, VIII, IX and By-laws
Articles II and VI included as part of
Exhibits 1 and 2 of this Registration
Statement
5 Form of Investment Advisory Agreement between To be filed by amendment
the Registrant and First Union National Bank
6 Form of Principal Underwriting Agreement between To be filed by amendment
the Registrant and Evergreen Keystone Distributor,
Inc.
7 Not applicable
8 Form of Custodian Agreement between the Registrant To be filed by amendment
and State Street Bank and Trust Company
9(a) Form of Administration Agreement between Evergreen To be filed by amendment
Keystone Investment Services, Inc. and the
Registrant
9(b) Form of Sub Administrator Agreement between BISYS To be filed by amendment
Fund Services and Evergreen Keystone Investment
Services, Inc.
9(c) Form of Transfer Agent Agreement between the To be filed by amendment
Registrant and Evergreen Keystone Service Company.
10 Opinion and Consent of Sullivan & Worcester To be filed by amendment
11 Consent of Price Waterhouse LLP To be filed by amendment
12 Not applicable
13 Not applicable
15 Distribution Plan for the Institutional Service To be filed by amendment
Class Adopted Pursuant to Rule 12b-1
18 Multiple Class Plan To be filed by amendment
19 Powers of Attorney
</TABLE>
Item 25. Persons Controlled by or Under Common Control with Registrant.
None
Item 26. Number of Holders of Securities (as of September 19, 1997).
None
Item 27. Indemnification.
Provisions for the indemnification of the Registrant's Trustees and
officers are contained the Registrant's Declaration of Trust a copy of which is
filed herewith.
Provisions for the indemnification of Evergreen Keystone Distributor, Inc.,
the Registrant's principal underwriter, are contained in the Principal
Underwriting Agreement between Evergreen Keystone Distributor, Inc. and the
Registrant.
Item 28. Business or Other Connections of Investment Adviser.
The Directors and principal executive officers of First Union National Bank
are:
Edward E. Crutchfield, Jr. Chairman and Chief Executive Officer,
First Union Corporation; Chief Executive
Officer and Chairman, First Union National
Bank
Anthony P. Terracciano President, First Union Corporation; President
First Union National Bank
John R. Georgius Vice Chairman, First Union Corporation;
Vice Chairman, First Union National Bank
Marion A. Cowell, Jr. Executive Vice President, Secretary &
General Counsel, First Union Corporation;
Secretary and Executive Vice President,
First Union National Bank
Robert T. Atwood Executive Vice President and Chief Financial
Officer, First Union Corporation; Chief
Financial Officer and Executive Vice
President
All of the above persons are located at the following address: First
Union National Bank, One First Union Center, Charlotte, NC 28288.
Item 29. Principal Underwriters.
Evergreen Keystone Distributor, Inc. The Director and principal executive
officers are:
Director Michael C. Petrycki
Officers Robert A. Hering President
Michael C. Petrycki Vice President
Lawrence Wagner VP, Chief Financial Officer
Steven D. Blecher VP, Treasurer, Secretary
Elizabeth Q. Solazzo Assistant Secretary
Evergreen Keystone Distributor, Inc. acts as principal underwriter for each
registered investment company of series thereof that is a part of the Evergreen
Keystone "fund complex" as such term is defined in Item 22(a) of Schedule 14A
under the Securities Exchange Act of 1934.
Item 30. Location of Accounts and Records.
All accounts and records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the Rules 31a-1 through 31a-3 promulgated
thereunder are maintained at one of the following locations:
Evergreen Keystone Investment Services, Inc. and Evergreen Keystone
Service Company, both located at 200 Berkeley Street, Boston, Massachusetts
02110
First Union National Bank, One First Union Center, 301 S. College Street,
Charlotte, North Carolina 28288
Iron Mountain, 3431 Sharp Slot Road, Swansea, Massachusetts 02777
State Street Bank and Trust Company, 2 Heritage Drive, North Quincy,
Massachusetts 02171
Item 31. Management Services.
Not Applicable
Item 32. Undertakings.
The Registrant hereby undertakes to file with the Securities and Exchange
Commission a Post-Effective Amendment to this Registration Statement using
financial statements, which need not be audited, within four to six months from
the effective date of Registrant's Registration Statement.
The Registrant hereby undertakes to comply with the provision of Section
16(c) of the Investment Company Act of 1940 with respect to the removal of
Trustees and the calling of special shareholder meetings by shareholders.
The Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of New York, and State of New York, on the 19th day of
September, 1997.
EVERGREEN SELECT FIXED INCOME TRUST
By: /s/ John J. Pileggi
-----------------------------
Name: John J. Pileggi
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on the 19th day of September, 1997.
<TABLE>
<CAPTION>
<S> <C> <C>
/s/John J. Pileggi /s/ Laurence B. Ashkin /s/ Charles A. Austin, III
- ------------------------- ----------------------------- --------------------------------
John J. Pileggi Laurence B. Ashkin* Charles A. Austin III*
President amd Treasurer (Principal Trustee Trustee
Financial and Accounting Officer)
/s/ K. Dun Gifford /s/ James S. Howell /s/ William Walt Pettit
- ---------------------------- ---------------------------- --------------------------------
K. Dun Gifford* James S. Howell* William Walt Pettit*
Trustee Trustee Trustee
/s/Gerald M. McDonnell /s/ Thomas L. McVerry /s/ Michael S. Scofield
- ------------------------------- ----------------------------- --------------------------------
Gerald M. McDonell* Thomas L. McVerry* Michael S. Scofield*
Trustee Trustee Trustee
/s/ David M. Richardson /s/ Russell A. Salton, III MD
- ------------------------------ -------------------------------
David M. Richardson* Russell A. Salton, III MD*
Trustee Trustee
/s/ Richard J. Shima
- ------------------------------
Richard J. Shima*
Trustee
</TABLE>
*By: /s/ Martin J. Wolin
- -------------------------------
Martin J. Wolin
Attorney-in-Fact
Martin J. Wolin, by signing his name hereto, does hereby sign this document
on behalf of each of the above-named individuals pursuant to powers of attorney
duly executed by such persons.
<PAGE>
INDEX TO EXHIBITS
Exhibit Number Exhibit
- -------------- -------
1 Declaration of Trust
19 Powers of Attorney
AGREEMENT AND DECLARATION OF TRUST
of
EVERGREEN SELECT FIXED INCOME TRUST
a Delaware Business Trust
Principal Place of Business:
200 Berkeley Street
Boston, Massachusetts 02116
Agent for Service of
Process in Delaware:
Corporation Trust Company
Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
<PAGE>
TABLE OF CONTENTS
AGREEMENT AND DECLARATION OF TRUST
ARTICLE I Name and Definitions............................................1
1. Name .......................................................1
2. Definitions.....................................................1
(a) By-Laws................................................1
(b) Certificate of Trust...................................1
(c) Class..................................................1
(d) Commission.............................................2
(e) Declaration of Trust...................................2
(f) Delaware Act...........................................2
(g) Interested Person......................................2
(h) Adviser(s).............................................2
(i) 1940 Act...............................................2
(j) Person.................................................2
(k) Principal Underwriter..................................2
(l) Series.................................................2
(m) Shareholder............................................2
(n) Shares.................................................2
(o) Trust..................................................2
(p) Trust Property.........................................2
(q) Trustees...............................................2
ARTICLE II Purpose of Trust................................................3
ARTICLE III Shares..........................................................3
1. Division of Beneficial Interest.................................3
2. Ownership of Shares.............................................4
3. Transfer of Shares..............................................4
4. Investments in the Trust........................................5
5. Status of Shares and Limitation of Personal Liability...........5
6. Establishment, Designation, Abolition or
Termination, etc. of Series or Class............................5
(a) Assets Held with Respect to a Particular Series........5
(b) Liabilities Held with Respect to a Particular Series...6
(c) Dividends, Distributions, Redemptions,
and Repurchases........................................7
(d) Equality...............................................7
(e) Fractions..............................................7
(f) Exchange Privilege.....................................7
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<PAGE>
(g) Combination of Series...................................7
ARTICLE IV Trustees.........................................................8
1. Number, Election, and Tenure.....................................8
2. Effect of Death, Resignation, etc. of a Trustee..................8
3. Powers...........................................................9
4. Payment of Expenses by the Trust................................12
5. Payment of Expenses by Shareholders.............................13
6. Ownership of Assets of the Trust................................13
7. Service Contracts...............................................13
8. Trustees and Officers as Shareholders...........................14
9. Compensation....................................................15
ARTICLE V Shareholders' Voting Powers and Meetings........................15
1. Voting Powers, Meetings, Notice and Record Dates................15
2. Quorum and Required Vote........................................15
3. Record Dates....................................................16
4. Additional Provisions...........................................16
ARTICLE VI Net Asset Value, Distributions and Redemptions..................16
1. Determination of Net Asset Value, Net Income
and Distributions...............................................16
2. Redemptions and Repurchases.....................................16
ARTICLE VII Limitation of Liability; Indemnification........................17
1. Trustees, Shareholders, etc. Not Personally
Liable; Notice..................................................17
2. Trustees' Good Faith Action; Expert Advice;
No Bond or Surety...............................................18
3. Indemnification of Shareholders.................................19
4. Indemnification of Trustees, Officers, etc......................19
5. Compromise Payment..............................................20
6. Indemnification Not Exclusive, etc..............................20
7. Liability of Third Persons Dealing with Trustees................20
8. Insurance.......................................................21
ARTICLE VIIIMiscellaneous
1. Termination of the Trust or Any Series or Class.................21
2. Reorganization..................................................21
3. Amendments......................................................22
4. Filing of Copies; References; Headings..........................23
-ii-
<PAGE>
5. Applicable Law..................................................23
6. Provisions in Conflict with Law or Regulations..................24
7. Business Trust Only.............................................24
-iii-
<PAGE>
AGREEMENT AND DECLARATION OF TRUST
EVERGREEN SELECT FIXED INCOME TRUST
THIS AGREEMENT AND DECLARATION OF TRUST is made and entered into as of
the date set forth below by the Trustees named hereunder for the purpose of
forming a Delaware business trust in accordance with the provisions hereinafter
set forth.
NOW, THEREFORE, the Trustees hereby direct that the Certificate of
Trust be filed with the Office of the Secretary of State of the State of
Delaware and do hereby declare that the Trustees will hold IN TRUST all cash,
securities, and other assets which the Trust now possesses or may hereafter
acquire from time to time in any manner and manage and dispose of the same upon
the following terms and conditions for the benefit of the holders of Shares of
this Trust.
ARTICLE I
Name and Definitions
Section 1. Name. This Trust shall be known as Evergreen Select Fixed
Income Trust and the Trustees shall conduct the business of the Trust under that
name or any other name as they may from time to time determine.
Section 2. Definitions. Whenever used herein, unless otherwise required
by the context or specifically provided:
(a) "Adviser(s)" means a party or parties furnishing services to the
Trust pursuant to any investment advisory or investment management contract
described in Article IV, Section 6(a) hereof;
(b) "By-Laws" shall mean the By-Laws of the Trust as amended from time
to time, which By-Laws are expressly herein incorporated by reference as part of
the "governing instrument" within the meaning of the Delaware Act;
(c) "Certificate of Trust" means the certificate of trust, as amended
or restated from time to time, filed by the Trustees in the Office of the
Secretary of State of the State of Delaware in accordance with the Delaware Act;
(d) "Class" means a class of Shares of a Series of the Trust
established in accordance with the provisions of Article III hereof;
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<PAGE>
(e) "Commission" shall have the meaning given such term in the 1940
Act;
(f) "Declaration of Trust" means this Agreement and Declaration of
Trust, as amended or restated from time to time;
(g) "Delaware Act" means the Delaware Business Trust Act, 12 Del. C.
ss.ss. 3801 et seq., as amended from time to time;
(h) "Interested Person" shall have the meaning given it in Section
2(a)(19) of the 1940 Act;
(i) "1940 Act" means the Investment Company Act of 1940 and the rules
and regulations thereunder, all as amended from time to time;
(j) "Person" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures, estates, and other entities,
whether or not legal entities, and governments and agencies and political
subdivisions thereof, whether domestic or foreign;
(k) "Principal Underwriter" shall have the meaning given such term in
the 1940 Act;
(l) "Series" means each Series of Shares established and designated
under or in accordance with the provisions of Article III hereof; and where the
context requires or where appropriate, shall be deemed to include "Class" or
"Classes";
(m) "Shareholder" means a record owner of outstanding Shares;
(n) "Shares" means the shares of beneficial interest into which the
beneficial interest in the Trust shall be divided from time to time and includes
fractions of Shares as well as whole Shares;
(o) "Trust" means the Delaware Business Trust established under the
Delaware Act by this Declaration of Trust and the filing of the Certificate of
Trust in the Office of the Secretary of State of the State of Delaware;
(p) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is from time to time owned or held by or for the
account of the Trust; and
(q) "Trustees" means the Person or Persons who have signed this
Declaration of Trust and all other Persons who may from time to time be duly
elected or appointed to serve as Trustees in accordance with the provisions
hereof, in each case so long as such Person shall continue in office in
accordance with the terms of this Declaration of
-2-
<PAGE>
Trust, and reference herein to a Trustee or the Trustees shall refer to such
Person or Persons in his or her or their capacity as Trustees hereunder.
ARTICLE II
Purpose of Trust
The purpose of the Trust is to conduct, operate and carry on the
business of an investment company registered under the 1940 Act through one or
more Series and to carry on such other business as the Trustees may from time to
time determine. The Trustees shall not be limited by any law limiting the
investments which may be made by fiduciaries.
ARTICLE III
Shares
Section 1. Division of Beneficial Interest. The beneficial interest in
the Trust shall be divided into one or more Series. The Trustees may divide each
Series into Classes. Subject to the further provisions of this Article III and
any applicable requirements of the 1940 Act, the Trustees shall have full power
and authority, in their sole discretion, and without obtaining any authorization
or vote of the Shareholders of any Series or Class thereof, (i) to divide the
beneficial interest in each Series or Class thereof into Shares, with or without
par value as the Trustees shall determine, (ii) to issue Shares without
limitation as to number (including fractional Shares) to such Persons and for
such amount and type of consideration, including cash or securities, subject to
any restriction set forth in the By-Laws, at such time or times and on such
terms as the Trustees may deem appropriate, (iii) to establish and designate and
to change in any manner any Series or Class thereof and to fix such preferences,
voting powers, rights, duties and privileges and business purpose of each Series
or Class thereof as the Trustees may from time to time determine, which
preferences, voting powers, rights, duties and privileges may be senior or
subordinate to (or in the case of business purpose, different from) any existing
Series or Class thereof and may be limited to specified property or obligations
of the Trust or profits and losses associated with specified property or
obligations of the Trust, (iv) to divide or combine the Shares of any Series or
Class thereof into a greater or lesser number without thereby materially
changing the proportionate beneficial interest of the Shares of such Series or
Class thereof in the assets held with respect to that Series, (v) to classify or
reclassify any issued Shares of any Series or Class thereof into shares of one
or more Series or Classes thereof; (vi) to change the name of any Series or
Class thereof; (vii) to abolish or terminate any one or more Series or Classes
thereof; (viii) to refuse to issue Shares to any Person or class of Persons; and
(ix) to take such other action with respect to the Shares as the Trustees may
deem desirable.
-3-
<PAGE>
Subject to the distinctions permitted among Classes of the same Series
as established by the Trustees, consistent with the requirements of the 1940
Act, each Share of a Series of the Trust shall represent an equal beneficial
interest in the net assets of such Series, and each holder of Shares of a Series
shall be entitled to receive such Shareholder's pro rata share of distributions
of income and capital gains, if any, made with respect to such Series and upon
redemption of the Shares of any Series, such Shareholder shall be paid solely
out of the funds and property of such Series of the Trust.
All references to Shares in this Declaration of Trust shall be deemed
to be Shares of any or all Series or Classes thereof, as the context may
require. All provisions herein relating to the Trust shall apply equally to each
Series of the Trust and each Class thereof, except as the context otherwise
requires.
All Shares issued hereunder, including, without limitation, Shares
issued in connection with a dividend or other distribution in Shares or a split
or reverse split of Shares, shall be fully paid and nonassessable. Except as
otherwise provided by the Trustees, Shareholders shall have no preemptive or
other right to subscribe to any additional Shares or other securities issued by
the Trust.
Section 2. Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or those of a transfer or similar agent for
the Trust, which books shall be maintained separately for the Shares of each
Series or Class of the Trust. No certificates certifying the ownership of Shares
shall be issued except as the Trustees may otherwise determine from time to
time. The Trustees may make such rules as they consider appropriate for the
issuance of Share certificates, the transfer of Shares of each Series or Class
of the Trust and similar matters. The record books of the Trust as kept by the
Trust or any transfer or similar agent, as the case may be, shall be conclusive
as to the identity of the Shareholders of each Series or Class of the Trust and
as to the number of Shares of each Series or Class of the Trust held from time
to time by each Shareholder.
Section 3. Transfer of Shares. Except as otherwise provided by the
Trustees, Shares shall be transferable on the books of the Trust only by the
record holder thereof or by his or her duly authorized agent upon delivery to
the Trustees or the Trust's transfer agent of a duly executed instrument of
transfer, together with a Share certificate if one is outstanding, and such
evidence of the genuineness of each such execution and authorization and of such
other matters as may be required by the Trustees. Upon such delivery, and
subject to any further requirements specified by the Trustees or contained in
the By-Laws, the transfer shall be recorded on the books of the Trust. Until a
transfer is so recorded, the holder of record of Shares shall be deemed to be
the holder of such Shares for all purposes hereunder and neither the Trustees
nor the Trust, nor any transfer agent or registrar or any officer, employee, or
agent of the Trust, shall be affected by any notice of a proposed transfer.
-4-
<PAGE>
Section 4. Investments in the Trust. Investments may be accepted by the
Trust from Persons, at such times, on such terms, and for such consideration as
the Trustees from time to time may authorize.
Section 5. Status of Shares and Limitation of Personal Liability.
Shares shall be deemed to be personal property giving only the rights provided
in this instrument. Every Shareholder by virtue of having become a Shareholder
shall be held to have expressly assented and agreed to the terms hereof. The
death, incapacity, dissolution, termination, or bankruptcy of a Shareholder
during the existence of the Trust shall not operate to terminate the Trust, nor
entitle the representative of any such Shareholder to an accounting or to take
any action in court or elsewhere against the Trust or the Trustees, but shall
entitle such representative only to the rights of such Shareholder under this
Trust. Ownership of Shares shall not entitle the Shareholder to any title in or
to the whole or any part of the Trust Property or any right to call for a
participation or division of the same or for an accounting, nor shall the
ownership of Shares constitute the Shareholders as partners. No Shareholder
shall be personally liable for the debts, liabilities, obligations and expenses
incurred by, contracted for, or otherwise existing with respect to, the Trust or
any Series. Neither the Trust nor the Trustees, nor any officer, employee, or
agent of the Trust shall have any power to bind personally any Shareholder, nor,
except as specifically provided herein, to call upon any Shareholder for the
payment of any sum of money or assessment whatsoever other than such as the
Shareholder may at any time personally agree to pay.
Section 6. Establishment, Designation, Abolition or Termination etc. of
Series or Class. The establishment and designation of any Series or Class of
Shares of the Trust shall be effective upon the adoption by a majority of the
Trustees then in office of a resolution that sets forth such establishment and
designation and the relative rights and preferences of such Series or Class of
the Trust, whether directly in such resolution or by reference to another
document including, without limitation, any registration statement of the Trust,
or as otherwise provided in such resolution. The abolition or termination of any
Series or Class of Shares of the Trust shall be effective upon the adoption by a
majority of the Trustees then in office of a resolution that abolishes or
terminates such Series or Class.
Shares of each Series or Class of the Trust established pursuant to
this Article III, unless otherwise provided in the resolution establishing such
Series or Class, shall have the following relative rights and preferences:
(a) Assets Held with Respect to a Particular Series. All consideration
received by the Trust for the issue or sale of Shares of a particular Series,
together with all assets in which such consideration is invested or reinvested,
all income, earnings, profits, and proceeds thereof from whatever source derived
(including, without limitation, any proceeds derived from the sale, exchange or
liquidation of such assets and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be) shall
irrevocably be held separate with respect to that Series for all
-5-
<PAGE>
purposes, and shall be so recorded upon the books of account of the Trust. Such
consideration, assets, income, earnings, profits and proceeds thereof, from
whatever source derived, (including, without limitation) any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds), in whatever form the same may
be, are herein referred to as "assets held with respect to" that Series. In the
event that there are any assets, income, earnings, profits and proceeds thereof,
funds or payments which are not readily identifiable as assets held with respect
to any particular Series (collectively "General Assets"), the Trustees shall
allocate such General Assets to, between or among any one or more of the Series
in such manner and on such basis as the Trustees, in their sole discretion, deem
fair and equitable, and any General Assets so allocated to a particular Series
shall be held with respect to that Series. Each such allocation by the Trustees
shall be conclusive and binding upon the Shareholders of all Series for all
purposes. Separate and distinct records shall be maintained for each Series and
the assets held with respect to each Series shall be held and accounted for
separately from the assets held with respect to all other Series and the General
Assets of the Trust not allocated to such Series.
(b) Liabilities Held with Respect to a Particular Series. The assets of
the Trust held with respect to each particular Series shall be charged against
the liabilities of the Trust held with respect to that Series and all expenses,
costs, charges, and reserves attributable to that Series, except that
liabilities and expenses allocated solely to a particular Class shall be borne
by that Class. Any general liabilities of the Trust which are not readily
identifiable as being held with respect to any particular Series or Class shall
be allocated and charged by the Trustees to and among any one or more of the
Series or Classes in such manner and on such basis as the Trustees in their sole
discretion deem fair and equitable. All liabilities, expenses, costs, charges,
and reserves so charged to a Series or Class are herein referred to as
"liabilities held with respect to" that Series or Class. Each allocation of
liabilities, expenses, costs, charges, and reserves by the Trustees shall be
conclusive and binding upon the Shareholders of all Series or Classes for all
purposes. Without limiting the foregoing, but subject to the right of the
Trustees to allocate general liabilities, expenses, costs, charges or reserves
as herein provided, the debts, liabilities, obligations and expenses incurred,
contracted for or otherwise existing with respect to a particular Series shall
be enforceable against the assets held with respect to such Series only and not
against the assets of the Trust generally or against the assets held with
respect to any other Series. Notice of this contractual limitation on
liabilities among Series may, in the Trustees' discretion, be set forth in the
Certificate of Trust and upon the giving of such notice in the Certificate of
Trust, the statutory provisions of Section 3804 of the Delaware Act relating to
limitations on liabilities among Series (and the statutory effect under Section
3804 of setting forth such notice in the certificate of trust) shall become
applicable to the Trust and each Series. Any person extending credit to,
contracting with or having any claim against any Series may look only to the
assets of that Series to satisfy or enforce any debt, with respect to that
Series. No Shareholder or former Shareholder of any Series shall have a claim on
or any right to any assets allocated or belonging to any other Series.
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(c) Dividends, Distributions. Redemptions, and Repurchases.
Notwithstanding any other provisions of this Declaration of Trust, including,
without limitation, Article Vl, no dividend or distribution, including, without
limitation, any distribution paid upon termination of the Trust or of any Series
or Class with respect to, nor any redemption or repurchase of, the Shares of any
Series or Class, shall be effected by the Trust other than from the assets held
with respect to such Series, nor shall any Shareholder or any particular Series
or Class otherwise have any right or claim against the assets held with respect
to any other Series except to the extent that such Shareholder has such a right
or claim hereunder as a Shareholder of such other Series. The Trustees shall
have full discretion, to the extent not inconsistent with the 1940 Act, to
determine which items shall be treated as income and which items as capital, and
each such determination and allocation shall be conclusive and binding upon the
Shareholders.
(d) Equality. All the Shares of each particular Series shall represent
an equal proportionate interest in the assets held with respect to that Series
(subject to the liabilities held with respect to that Series or Class thereof
and such rights and preferences as may have been established and designated with
respect to any Class within such Series), and each Share of any particular
Series shall be equal to each other Share of that Series. With respect to any
Class of a Series, each such Class shall represent interests in the assets held
with respect to that Series and shall have identical voting, dividend,
liquidation and other rights and the same terms and conditions, except that
expenses allocated to a Class may be borne solely by such Class as determined by
the Trustees and a Class may have exclusive voting rights with respect to
matters affecting only that Class.
(e) Fractions. Any fractional Share of a Series or Class thereof shall
carry proportionately all the rights and obligations of a whole Share of that
Series or Class, including rights with respect to voting, receipt of dividends
and distributions, redemption of Shares and termination of the Trust.
(f) Exchange Privilege. The Trustees shall have the authority to
provide that the holders of Shares of any Series or Class shall have the right
to exchange said Shares for Shares of one or more other Series of Shares or
Class of Shares of the Trust or of other investment companies registered under
the 1940 Act in accordance with such requirements and procedures as may be
established by the Trustees.
(g) Combination of Series. The Trustees shall have the authority,
without the approval of the Shareholders of any Series or Class unless otherwise
required by applicable law, to combine the assets and liabilities held with
respect to any two or more Series or Classes into assets and liabilities held
with respect to a single Series or Class.
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ARTICLE IV
Trustees
Section 1. Number, Election and Tenure. The number of Trustees shall
initially be 12, who shall be Laurence B. Ashkin, Charles A. Austin, III, K. Dun
Gifford, James S. Howell, Leroy Keith, Jr., Gerald M. McDonnell, Thomas L.
McVerry, David M. Richardson, Russell A. Salton, III, Michael S. Scofield,
Richard J. Shima, and William W. Pettit. Thereafter, the number of Trustees
shall at all times be at least one and no more than such number as determined,
from time to time, by the Trustees pursuant to Section 3 of this Article IV.
Each Trustee shall serve during the lifetime of the Trust until he or she dies,
resigns, has reached any mandatory retirement age as set by the Trustees, is
declared bankrupt or incompetent by a court of appropriate jurisdiction, or is
removed, or, if sooner, until the next meeting of Shareholders called for the
purpose of electing Trustees and until the election and qualification of his or
her successor. In the event that less than a majority of the Trustees holding
office have been elected by the Shareholders, the Trustees then in office shall
take such actions as may be necessary under applicable law for the election of
Trustees. Any Trustee may resign at any time by written instrument signed by him
or her and delivered to any officer of the Trust or to a meeting of the
Trustees. Such resignation shall be effective upon receipt unless specified to
be effective at some other time. Except to the extent expressly provided in a
written agreement with the Trust, no Trustee resigning and no Trustee removed
shall have any right to any compensation for any period following his or her
resignation or removal, or any right to damages on account of such removal. The
Shareholders may elect Trustees at any meeting of Shareholders called by the
Trustees for that purpose. Any Trustee may be removed at any meeting of
Shareholders by a vote of two-thirds of the outstanding Shares of the Trust.
Section 2. Effect of Death. Resignation. etc. of a Trustee. The death,
declination to serve, resignation, retirement, removal or incapacity of one or
more Trustees, or all of them, shall not operate to annul the Trust or to revoke
any existing agency created pursuant to the terms of this Declaration of Trust.
Whenever there shall be fewer than the designated number of Trustees, until
additional Trustees are elected or appointed as provided herein to bring the
total number of Trustees equal to the designated number, the Trustees in office,
regardless of their number, shall have all the powers granted to the Trustees
and shall discharge all the duties imposed upon the Trustees by this Declaration
of Trust. As conclusive evidence of such vacancy, a written instrument
certifying the existence of such vacancy may be executed by an officer of the
Trust or by a majority of the Trustees. In the event of the death, declination,
resignation, retirement, removal, or incapacity of all the then Trustees within
a short period of time and without the opportunity for at least one Trustee
being able to appoint additional Trustees to replace those no longer serving,
the Trust's Adviser(s) are empowered to appoint new Trustees subject to the
provisions of the 1940 Act.
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Section 3. Powers. Subject to the provisions of this Declaration of
Trust, the business of the Trust shall be managed by the Trustees, and the
Trustees shall have all powers necessary or convenient to carry out that
responsibility including the power to engage in transactions of all kinds on
behalf of the Trust as described in this Declaration of Trust. Without limiting
the foregoing, the Trustees may: adopt By-Laws not inconsistent with this
Declaration of Trust providing for the management of the affairs of the Trust
and may amend and repeal such By-Laws to the extent that such By-Laws do not
reserve that right to the Shareholders; enlarge or reduce the number of
Trustees; remove any Trustee with or without cause at any time by written
instrument signed by at least two-thirds of the number of Trustees prior to such
removal, specifying the date when such removal shall become effective, and fill
vacancies caused by enlargement of their number or by the death, resignation,
retirement or removal of a Trustee; elect and remove, with or without cause,
such officers and appoint and terminate such agents as they consider
appropriate; appoint from their own number and establish and terminate one or
more committees, consisting of two or more Trustees, that may exercise the
powers and authority of the Board of Trustees to the extent that the Trustees so
determine; employ one or more custodians of the assets of the Trust and may
authorize such custodians to employ subcustodians and to deposit all or any part
of such assets in a system or systems for the central handling of securities or
with a Federal Reserve Bank; employ an administrator for the Trust and may
authorize such administrator to employ subadministrators; employ an investment
adviser or investment advisers to the Trust and may authorize such Advisers to
employ subadvisers; retain a transfer agent or a shareholder servicing agent, or
both; provide for the issuance and distribution of Shares by the Trust directly
or through one or more Principal Underwriters or otherwise; redeem, repurchase
and transfer Shares pursuant to applicable law; set record dates for the
determination of Shareholders with respect to various matters; declare and pay
dividends and distributions to Shareholders of each Series from the assets of
such Series; and in general delegate such authority as they consider desirable
to any officer of the Trust, to any committee of the Trustees and to any agent
or employee of the Trust or to any such custodian, transfer or shareholder
servicing agent, or Principal Underwriter. Any determination as to what is in
the interests of the Trust made by the Trustees in good faith shall be
conclusive. In construing the provisions of this Declaration of Trust, the
presumption shall be in favor of a grant of power to the Trustees. Unless
otherwise specified herein or in the By-Laws or required by law, any action by
the Trustees shall be deemed effective if approved or taken by a majority of the
Trustees present at a meeting of Trustees at which a quorum of Trustees is
present, within or without the State of Delaware.
Without limiting the foregoing, the Trustees shall have the power and
authority to cause the Trust (or to act on behalf of the Trust):
(a) To invest and reinvest cash, to hold cash uninvested, and to
subscribe for, invest in, reinvest in, purchase or otherwise acquire, own, hold,
pledge, sell, assign, transfer, exchange, distribute, write options on, lend or
otherwise deal in or dispose of contracts for the future acquisition or delivery
of fixed income or other securities, and
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securities of every nature and kind, including, without limitation, all types of
bonds, debentures, stocks, negotiable or non-negotiable instruments,
obligations, evidences of indebtedness, certificates of deposit or indebtedness,
commercial papers, repurchase agreements, bankers' acceptances, and other
securities of any kind, issued, created, guaranteed, or sponsored by any and all
Persons, including without limitation, states, territories, and possessions of
the United States and the District of Columbia and any political subdivision,
agency, or instrumentality thereof, any foreign government or any political
subdivision of the United States Government or any foreign government, or any
international instrumentality, or by any bank or savings institution, or by any
corporation or organization organized under the laws of the United States or of
any state, territory, or possession thereof, or by any corporation or
organization organized under any foreign law, or in "when issued" contracts for
any such securities, to change the investments of the assets of the Trust; and
to exercise any and all rights, powers, and privileges of ownership or interest
in respect of any and all such investments of every kind and description,
including, without limitation, the right to consent and otherwise act with
respect thereto, with power to designate one or more Persons to exercise any of
said rights, powers, and privileges in respect of any of said instruments;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate, lease, or
write options (including, options on futures contracts) with respect to or
otherwise deal in any property rights relating to any or all of the assets of
the Trust or any Series;
(c) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and deliver
proxies or powers of attorney to such Person or Persons as the Trustees shall
deem proper, granting to such Person or Persons such power and discretion with
relation to securities or property as the Trustees shall deem proper;
(d) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities;
(e) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form, or in its own
name or in the name of a custodian or subcustodian or a nominee or nominees or
otherwise;
(f) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer of any security which is
held in the Trust; to consent to any contract, lease, mortgage, purchase or sale
of property by such corporation or issuer; and to pay calls or subscriptions
with respect to any security held in the Trust;
(g) To join with other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to deposit any
security with, or transfer any security to, any such committee, depositary or
trustee, and to delegate to them such power and authority with relation to any
security (whether or not
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so deposited or transferred) as the Trustees shall deem proper, and to agree to
pay, and to pay, such portion of the expenses and compensation of such
committee, depositary or trustee as the Trustees shall deem proper;
(h) To compromise, arbitrate or otherwise adjust claims in favor of or
against the Trust or any matter in controversy, including, but not limited to,
claims for taxes;
(i) To enter into joint ventures, general or limited partnerships and
any other combinations or associations;
(j) To borrow funds or other property in the name of the Trust
exclusively for Trust purposes and in connection therewith to issue notes or
other evidences of indebtedness; and to mortgage and pledge the Trust Property
or any part thereof to secure any or all of such indebtedness;
(k) To endorse or guarantee the payment of any notes or other
obligations of any Person; to make contracts of guaranty or suretyship, or
otherwise assume liability for payment thereof; and to mortgage and pledge the
Trust Property or any part thereof to secure any of or all of such obligations;
(l) To purchase and pay for entirely out of Trust Property such
insurance as the Trustees may deem necessary or appropriate for the conduct of
the business, including, without limitation, insurance policies insuring the
assets of the Trust or payment of distributions and principal on its portfolio
investments, and insurance polices insuring the Shareholders, Trustees,
officers, employees, agents, investment advisers, principal underwriters, or
independent contractors of the Trust, individually against all claims and
liabilities of every nature arising by reason of holding, being or having held
any such office or position, or by reason of any action alleged to have been
taken or omitted by any such Person as Trustee, officer, employee, agent,
investment adviser, principal underwriter, or independent contractor, including
any action taken or omitted that may be determined to constitute negligence,
whether or not the Trust would have the power to indemnify such Person against
liability;
(m) To adopt, establish and carry out pension, profit-sharing, share
bonus, share purchase, savings, thrift and other retirement, incentive and
benefit plans and trusts, including the purchasing of life insurance and annuity
contracts as a means of providing such retirement and other benefits, for any or
all of the Trustees, officers, employees and agents of the Trust;
(n) To operate as and carry out the business of an investment company,
and exercise all the powers necessary or appropriate to the conduct of such
operations;
(o) To enter into contracts of any kind and description;
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(p) To employ as custodian of any assets of the Trust one or more
banks, trust companies or companies that are members of a national securities
exchange or such other entities as the Commission may permit as custodians of
the Trust, subject to any conditions set forth in this Declaration of Trust or
in the By-Laws;
(q) To employ auditors, counsel or other agents of the Trust, subject
to any conditions set forth in this Declaration of Trust or in the By-Laws;
(r) To interpret the investment policies, practices, or limitations of
any Series or Class;
(s) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes, and with
separate Shares representing beneficial interests in such Series, and to
establish separate Classes, all in accordance with the provisions of Article
III;
(t) To the full extent permitted by the Delaware Act, to allocate
assets, liabilities and expenses of the Trust to a particular Series and Class
or to apportion the same between or among two or more Series or Classes,
provided that any liabilities or expenses incurred by a particular Series or
Class shall be payable solely out of the assets belonging to that Series or
Class as provided for in Article III;
(u) To invest all of the assets of the Trust, or any Series or any
Class thereof in a single investment company;
(v) Subject to the 1940 Act, to engage in any other lawful act or
activity in which a business trust organized under the Delaware Act may engage.
The Trust shall not be limited to investing in obligations maturing
before the possible termination of the Trust or one or more of its Series. The
Trust shall not in any way be bound or limited by any present or future law or
custom in regard to investment by fiduciaries. The Trust shall not be required
to obtain any court order to deal with any assets of the Trust or take any other
action hereunder.
Section 4. Payment of Expenses by the Trust. The Trustees are
authorized to pay or cause to be paid out of the principal or income of the
Trust, or partly out of the principal and partly out of income, as they deem
fair, all expenses, fees, charges, taxes and liabilities incurred or arising in
connection with the Trust, or in connection with the management thereof,
including, but not limited to, the Trustees' compensation and such expenses and
charges for the services of the Trust's officers, employees, Advisers, Principal
Underwriter, auditors, counsel, custodian, transfer agent, shareholder servicing
agent, and such other agents or independent contractors and such other expenses
and charges as the Trustees may deem necessary or proper to incur, which
expenses, fees, charges, taxes and liabilities shall be allocated in accordance
with Article III, Section 6 hereof.
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Section 5. Payment of Expenses by Shareholders. The Trustees shall have
the power, as frequently as they may determine, to cause each Shareholder, or
each Shareholder of any particular Series, to pay directly, in advance or
arrears, expenses of the Trust as described in Section 4 of this Article IV
("Expenses"), in an amount fixed from time to time by the Trustees, by setting
off such Expenses due from such Shareholder from declared but unpaid dividends
owed such Shareholder and/or by reducing the number of Shares in the account of
such Shareholder by that number of full and/or fractional Shares which
represents the outstanding amount of such Expenses due from such Shareholder,
provided that the direct payment of such Expenses by Shareholders is permitted
under applicable law.
Section 6. Ownership of Assets of the Trust. Title to all of the assets
of the Trust shall at all times be considered as vested in the Trust, except
that the Trustees shall have power to cause legal title to any Trust Property to
be held by or in the name of one or more of the Trustees, or in the name of the
Trust, or in the name of any other Person as nominee, on such terms as the
Trustees may determine. The right, title and interest of the Trustees in the
Trust Property shall vest automatically in each Person who may hereafter become
a Trustee. Upon the resignation, removal or death of a Trustee, he or she shall
automatically cease to have any right, title or interest in any of the Trust
Property, and the right, title and interest of such Trustee in the Trust
property shall vest automatically in the remaining Trustees. Such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered.
Section 7. Service Contracts.
(a) Subject to such requirements and restrictions as may be set forth
under federal and/or state law and in the By-Laws, including, without
limitation, the requirements of Section 15 of the 1940 Act, the Trustees may, at
any time and from time to time, contract for exclusive or nonexclusive advisory,
management and/or administrative services for the Trust or for any Series (or
Class thereof) with any Person and any such contract may contain such other
terms as the Trustees may determine, including, without limitation, authority
for the Adviser(s) or administrator to delegate certain or all of its duties
under such contracts to other qualified investment advisers and administrators
and to determine from time to time without prior consultation with the Trustees
what investments shall be purchased, held sold or exchanged and what portion, if
any, of the assets of the Trust shall be held uninvested and to make changes in
the Trust's investments, or such other activities as may specifically be
delegated to such party.
(b) The Trustees may also, at any time and from time to time, contract
with any Person, appointing such Person exclusive or nonexclusive distributor or
Principal
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Underwriter for the Shares of one or more of the Series (or Classes) or other
securities to be issued by the Trust.
(c) The Trustees are also empowered, at any time and from time to
time, to contract with any Person, appointing such Person or Persons the
custodian, transfer agent and/or shareholder servicing agent for the Trust or
one or more of its Series.
(d) The Trustees are further empowered, at any time and from time to
time, to contract with any Person to provide such other services to the Trust or
one or more of the Series, as the Trustees determine to be in the best interests
of the Trust and the applicable Series.
(e) The fact that:
(i) any of the Shareholders, Trustees, or
officers of the Trust is a shareholder,
director, officer, partner, trustee,
employee, Adviser, Principal Underwriter,
distributor, or affiliate or agent of or for
any Person, or for any parent or affiliate
of any Person with which an advisory,
management, or administration contract, or
Principal Underwriter's or distributor's
contract, or transfer agent, shareholder
servicing agent or other type of service
contract may have been or may hereafter be
made, or that any such organization, or any
parent or affiliate thereof, is a
Shareholder or has an interest in the Trust;
or that
(ii) any Person with which an advisory,
management, or administration contract or
Principal Underwriter's or distributor's
contract, or transfer agent or shareholder
servicing agent contract may have been or
may hereafter be made also has an advisory,
management, or administration contract, or
Principal Underwriter's or distributor's or
other service contract with one or more
other Persons, or has other business or
interests,
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same, or create any liability or accountability to the Trust or its
shareholders.
Section 8. Trustees and Officers as Shareholders. Any Trustee, officer
or agent of the Trust may acquire, own and dispose of Shares to the same extent
as if he or she were not a Trustee, officer or agent; and the Trustees may issue
and sell and cause to be issued and sold Shares to, and redeem such Shares from,
any such Person or any firm or company in which such Person is interested,
subject only to the general limitations contained herein or in the By-Laws
relating to the sale and redemption of such Shares.
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Section 9. Compensation. The Trustees in such capacity shall be
entitled to reasonable compensation from the Trust and they may fix the amount
of such compensation. Nothing herein shall in any way prevent the employment of
any Trustee for advisory, management, legal, accounting, investment banking or
other services and payment for such services by the Trust.
ARTICLE V
Shareholders' Voting Powers and Meetings
Section 1. Voting Powers. Meetings. Notice. and Record Dates. The
Shareholders shall have power to vote only: (i) for the election or removal of
Trustees as provided in Article IV, Section 1 hereof, and (ii) with respect to
such additional matters relating to the Trust as may be required by applicable
law, this Declaration of Trust, the By-Laws or any registration statement of the
Trust with the Commission (or any successor agency) or as the Trustees may
consider necessary or desirable. Shareholders shall be entitled to one vote for
each dollar, and a fractional vote for each fraction of a dollar, of net asset
value per Share for each Share held, as to any matter on which the Share is
entitled to vote. Notwithstanding any other provision of this Declaration of
Trust, on any matters submitted to a vote of the Shareholders, all shares of the
Trust then entitled to vote shall be voted in aggregate, except: (i) when
required by the 1940 Act, Shares shall be voted by individual Series; (ii) when
the matter involves any action that the Trustees have determined will affect
only the interests of one or more Series, then only Shareholders of such Series
shall be entitled to vote thereon; and (iii) when the matter involves any action
that the Trustees have determined will affect only the interests of one or more
Classes, then only the Shareholders of such Class or Classes shall be entitled
to vote thereon. There shall be no cumulative voting in the election of
Trustees. Shares may be voted in person or by proxy. A proxy may be given in
writing. The By-Laws may provide that proxies may also, or may instead, be given
by an electronic or telecommunications device or in any other manner. Until
Shares are issued, the Trustees may exercise all rights of Shareholders and may
take any action required by law, this Declaration of Trust or the By-Laws to be
taken by the Shareholders. Meetings of the Shareholders shall be called and
notice thereof and record dates therefor shall be given and set as provided in
the By-Laws.
Section 2. Quorum and Required Vote. Except when a larger quorum is
required by applicable law, by the By-Laws or by this Declaration of Trust,
twenty-five percent (25%) of the Shares issued and outstanding shall constitute
a quorum at a Shareholders' meeting but any lesser number shall be sufficient
for adjourned sessions. When any one or more Series (or Classes) is to vote as a
single Series (or Class) separate from any other Shares, twenty-five percent
(25%) of the Shares of each such Series (or Class) issued and outstanding shall
constitute a quorum at a Shareholders' meeting of that Series (or Class). Except
when a larger vote is required by any provision of this Declaration of Trust or
the By-Laws or by applicable law, when a quorum is present at any meeting, a
majority of the Shares voted shall decide any questions and a
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plurality of the Shares voted shall elect a Trustee, provided that where any
provision of law or of this Declaration of Trust requires that the holders of
any Series shall vote as a Series (or that holders of a Class shall vote as a
Class), then a majority of the Shares of that Series (or Class) voted on the
matter (or a plurality with respect to the election of a Trustee) shall decide
that matter insofar as that Series (or Class) is concerned.
Section 3. Record Dates. For the purpose of determining the
Shareholders of any Series (or Class) who are entitled to receive payment of any
dividend or of any other distribution, the Trustees may from time to time fix a
date, which shall be before the date for the payment of such dividend or such
other payment, as the record date for determining the Shareholders of such
Series (or Class) having the right to receive such dividend or distribution.
Without fixing a record date, the Trustees may for distribution purposes close
the register or transfer books for one or more Series (or Classes) at any time
prior to the payment of a distribution. Nothing in this Section shall be
construed as precluding the Trustees from setting different record dates for
different Series (or Classes).
Section 4. Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters.
ARTICLE VI
Net Asset Value, Distributions and Redemptions
Section 1. Determination of Net Asset Value, Net Income and
Distributions. Subject to applicable law and Article III, Section 6 hereof, the
Trustees, in their absolute discretion, may prescribe and shall set forth in the
By-Laws or in a duly adopted vote of the Trustees such bases and time for
determining the per Share or net asset value of the Shares of any Series or
Class or net income attributable to the Shares of any Series or Class, or the
declaration and payment of dividends and distributions on the Shares of any
Series or Class, as they may deem necessary or desirable.
Section 2. Redemptions and Repurchases.
(a) The Trust shall purchase such Shares as are offered by any
Shareholder for redemption, upon the presentation of a proper instrument of
transfer together with a request directed to the Trust, or a Person designated
by the Trust, that the Trust purchase such Shares or in accordance with such
other procedures for redemption as the Trustees may from time to time authorize;
and the Trust will pay therefor the net asset value thereof as determined by the
Trustees (or on their behalf), in accordance with any applicable provisions of
the By-Laws, any registration statement of the Trust and applicable law. Unless
extraordinary circumstances exist, payment for said Shares shall be made by the
Trust to the Shareholder in accordance with the 1940 Act and any rules and
regulations thereunder or as otherwise required by the Commission. The
obligation set forth in this Section 2(a) is subject to the provision that,
during any
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emergency which makes it impracticable for the Trust to dispose of the
investments of the applicable Series or to determine fairly the value of the net
assets held with respect to such Series, such obligation may be suspended or
postponed by the Trustees. In the case of a suspension of the right of
redemption as provided herein, a Shareholder may either withdraw the request for
redemption or receive payment based on the net asset value per share next
determined after the termination of such suspension.
(b) The redemption price may in any case or cases be paid wholly or
partly in kind if the Trustees determine that such payment is advisable in the
interest of the remaining Shareholders of the Series or Class thereof for which
the Shares are being redeemed. Subject to the foregoing, the fair value,
selection and quantity of securities or other property so paid or delivered as
all or part of the redemption price may be determined by or under authority of
the Trustees. In no case shall the Trust be liable for any delay of any Adviser
or other Person in transferring securities selected for delivery as all or part
of any payment-in-kind.
(c) If the Trustees shall, at any time and in good faith, determine
that direct or indirect ownership of Shares of any Series or Class thereof has
or may become concentrated in any Person to an extent that would disqualify any
Series as a regulated investment company under the Internal Revenue Code of
1986, as amended (or any successor statute thereof), then the Trustees shall
have the power (but not the obligation) by such means as they deem equitable (i)
to call for the redemption by any such Person of a number, or principal amount,
of Shares sufficient to maintain or bring the direct or indirect ownership of
Shares into conformity with the requirements for such qualification, (ii) to
refuse to transfer or issue Shares of any Series or Class thereof to such Person
whose acquisition of the Shares in question would result in such
disqualification, or (iii) to take such other actions as they deem necessary and
appropriate to avoid such disqualification. Any such redemption shall be
effected at the redemption price and in the manner provided in this Article VI.
(d) The holders of Shares shall upon demand disclose to the Trustees in
writing such information with respect to direct and indirect ownership of Shares
as the Trustees deem necessary to comply with the provisions of the Internal
Revenue Code of 1986, as amended (or any successor statute thereto), or to
comply with the requirements of any other taxing authority.
ARTICLE VII
Limitation of Liability; Indemnification
Section 1. Trustees, Shareholders, etc. Not Personally Liable; Notice.
The Trustees, officers, employees and agents of the Trust, in incurring any
debts, liabilities or obligations, or in limiting or omitting any other actions
for or in connection with the Trust, are or shall be deemed to be acting as
Trustees, officers, employees or agents of the Trust and not in their own
capacities. No Shareholder shall be subject to any
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personal liability whatsoever in tort, contract or otherwise to any other Person
or Persons in connection with the assets or the affairs of the Trust or of any
Series, and subject to Section 4 of this Article VII, no Trustee, officer,
employee or agent of the Trust shall be subject to any personal liability
whatsoever in tort, contract, or otherwise, to any other Person or Persons in
connection with the assets or affairs of the Trust or of any Series, save only
that arising from his or her own willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or
her office or the discharge of his or her functions. The Trust (or if the matter
relates only to a particular Series, that Series) shall be solely liable for any
and all debts, claims, demands, judgments, decrees, liabilities or obligations
of any and every kind, against or with respect to the Trust or such Series in
tort, contract or otherwise in connection with the assets or the affairs of the
Trust or such Series, and all Persons dealing with the Trust or any Series shall
be deemed to have agreed that resort shall be had solely to the Trust Property
of the Trust (or if the matter relates only to a particular Series, that of such
Series), for the payment or performance thereof.
The obligations of any instrument made or issued by the Trustees or by
any officer of officers of the Trust are not binding upon any of them or the
Shareholders individually but are binding only upon the assets and property of
the Trust, or the particular Series in question, as the case may be. The
omission of any statement to such effect from such instrument shall not operate
to bind any Trustees or Trustee or officers or officer or Shareholders or
Shareholder individually, or to subject the assets of any Series to the
obligations of any other Series.
Section 2. Trustees' Good Faith Action; Expert Advice; No Bond or
Surety. The exercise by the Trustees of their powers and discretions hereunder
shall be binding upon everyone interested. Subject to Section 4 of this Article
VII, a Trustee shall be liable for his or her own willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee, and for nothing else, and shall not be liable
for errors of judgment or mistakes of fact or law. Subject to the foregoing, (i)
the Trustees shall not be responsible or liable in any event for any neglect or
wrongdoing of any officer, agent, employee, consultant, Adviser, administrator,
distributor or Principal Underwriter, custodian or transfer agent, dividend
disbursing agent, shareholder servicing agent or accounting agent of the Trust,
nor shall any Trustee be responsible for the act or omission of any other
Trustee; (ii) the Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Declaration of Trust and their
duties as Trustees, and shall be under no liability for any act or omission in
accordance with such advice or for failing to follow such advice; and (iii) in
discharging their duties, the Trustees, when acting in good faith, shall be
entitled to rely upon the books of account of the Trust and upon written reports
made to the Trustees by any officer appointed by them, any independent public
accountant, and (with respect to the subject matter of the contract involved)
any officer, partner or responsible employee of a contracting party employed by
the Trust. The Trustees as such shall not be required to give any bond or surety
or any other security for the performance of their duties.
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Section 3. Indemnification of Shareholders. If any Shareholder (or
former Shareholder) of the Trust shall be charged or held to be personally
liable for any obligation or liability of the Trust solely by reason of being or
having been a Shareholder and not because of such Shareholder's acts or
omissions or for some other reason, the Trust (upon proper and timely request by
the Shareholder) may assume the defense against such charge and satisfy any
judgment thereon or may reimburse the Shareholders for expenses, and the
Shareholder or former Shareholder (or the heirs, executors, administrators or
other legal representatives thereof, or in the case of a corporation or other
entity, its corporate or other general successor) shall be entitled (but solely
out of the assets of the Series of which such Shareholder or former Shareholder
is or was the holder of Shares) to be held harmless from and indemnified against
all loss and expense arising from such liability.
Section 4. Indemnification of Trustees, Officers, etc. Subject to the
limitations, if applicable, hereinafter set forth in this Section 4, the Trust
shall indemnify (from the assets of one or more Series to which the conduct in
question relates) each of its Trustees, officers, employees and agents
(including Persons who serve at the Trust's request as directors, officers or
trustees of another organization in which the Trust has any interest as a
shareholder, creditor or otherwise (hereinafter, together with such Person's
heirs, executors, administrators or personal representative, referred to as a
"Covered Person")) against all liabilities, including but not limited to amounts
paid in satisfaction of judgments, in compromise or as fines and penalties, and
expenses, including reasonable accountants' and counsel fees, incurred by any
Covered Person in connection with the defense or disposition of any action, suit
or other proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which such Covered Person may be or may
have been involved as a party or otherwise or with which such Covered Person may
be or may have been threatened, while in office or thereafter, by reason of
being or having been such a Trustee or officer, director or trustee, except with
respect to any matter as to which it has been determined that such Covered
Person (i) did not act in good faith in the reasonable belief that such Covered
Person's action was in or not opposed to the best interests of the Trust; or
(ii) had acted with willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered Person's office;
and (iii) for a criminal proceeding, had reasonable cause to believe that his or
her conduct was unlawful (the conduct described in (i), (ii) and (iii) being
referred to hereafter as "Disabling Conduct"). A determination that the Covered
Person is entitled to indemnification may be made by (i) a final decision on the
merits by a court or other body before whom the proceeding was brought that the
Covered Person to be indemnified was not liable by reason of Disabling Conduct,
(ii) dismissal of a court action or an administrative proceeding against a
Covered Person for insufficiency of evidence of Disabling Conduct, or (iii) a
reasonable determination, based upon a review of the facts, that the indemnitee
was not liable by reason of Disabling Conduct by (a) a vote of a majority of a
quorum of the Trustees who are neither "interested persons" of the Trust as
defined in the 1940 Act nor parties to the proceeding (the "Disinterested
Trustees"), or (b) an independent legal counsel in a written opinion. Expenses,
including accountants' and counsel fees so
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incurred by any such Covered Person (but excluding amounts paid in satisfaction
of judgments, in compromise or as fines or penalties), may be paid from time to
time by one or more Series to which the conduct in question related in advance
of the final disposition of any such action, suit or proceeding; provided that
the Covered Person shall have undertaken to repay the amounts so paid to such
Series if it is ultimately determined that indemnification of such expenses is
not authorized under this Article VII and (i) the Covered Person shall have
provided security for such undertaking, (ii) the Trust shall be insured against
losses arising by reason of any lawful advances, or (iii) a majority of a quorum
of the Disinterested Trustees, or an independent legal counsel in a written
opinion, shall have determined, based on a review of readily available facts (as
opposed to a full trial type inquiry), that there is reason to believe that the
Covered Person ultimately will be found entitled to indemnification.
Section 5. Compromise Payment. As to any matter disposed of by a
compromise payment by any such Covered Person referred to in Section 4 of this
Article VII, pursuant to a consent decree or otherwise, no such indemnification
either for said payment or for any other expenses shall be provided unless such
indemnification shall be approved (i) by a majority of a quorum of the
Disinterested Trustees or (ii) by an independent legal counsel in a written
opinion. Approval by the Trustees pursuant to clause (i) or by independent legal
counsel pursuant to clause (ii) shall not prevent the recovery from any Covered
Person of any amount paid to such Covered Person in accordance with either of
such clauses as indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction not to have acted in good faith
in the reasonable belief that such Covered Person's action was in or not opposed
to the best interests of the Trust or to have been liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of the Covered Person's
office.
Section 6. Indemnification Not Exclusive, etc. The right of
indemnification provided by this Article VII shall not be exclusive of or affect
any other rights to which any such Covered Person or shareholder may be
entitled. As used in this Article VII, a "disinterested" Person is one against
whom none of the actions, suits or other proceedings in question, and no other
action, suit or other proceeding on the same or similar grounds is then or has
been pending or threatened. Nothing contained in this Article VII shall affect
any rights to indemnification to which personnel of the Trust, other than
Trustees and officers, and other Persons may be entitled by contract or
otherwise under law, nor the power of the Trust to purchase and maintain
liability insurance on behalf of any such Person.
Section 7. Liability of Third Persons Dealing with Trustees. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
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Section 8. Insurance. The Trustees shall be entitled and empowered to
the fullest extent permitted by law to purchase with Trust assets insurance for
liability and for all expenses reasonably incurred or paid or expected to be
paid by a Trustee, officer, employee, or agent of the Trust in connection with
any claim, action, suit, or proceeding in which he or she may become involved by
virtue of his or her capacity or former capacity as a Trustee of the Trust.
ARTICLE VIII
Miscellaneous
Section 1. Termination of the Trust or Any Series or Class.
(a) Unless terminated as provided herein, the Trust shall continue
without limitation of time. The Trustees in their sole discretion may terminate
the Trust.
(b) Upon the requisite action by the Trustees to terminate the Trust or
any one or more Series of Shares or any Class thereof, after paying or otherwise
providing for all charges, taxes, expenses, and liabilities, whether due or
accrued or anticipated, of the Trust or of the particular Series or any Class
thereof as may be determined by the Trustees, the Trust shall in accordance with
such procedures as the Trustees may consider appropriate reduce the remaining
assets of the Trust or of the affected Series or Class to distributable form in
cash or Shares (if any Series remain) or other securities, or any combination
thereof, and distribute the proceeds to the Shareholders of the Series or
Classes involved, ratably according to the number of Shares of such Series or
Class held by the Shareholders of such Series or Class on the date of
distribution. Thereupon, the Trust or any affected Series or Class shall
terminate and the Trustees and the Trust shall be discharged from any and all
further liabilities and duties relating thereto or arising therefrom, and the
right, title, and interest of all parties with respect to the Trust or such
Series or Class shall be canceled and discharged.
(c) Upon termination of the Trust, following completion of winding up
of its business, the Trustees shall cause a certificate of cancellation of the
Trust's Certificate of Trust to be filed in accordance with the Delaware Act,
which certificate of cancellation may be signed by any one Trustee.
Section 2. Reorganization.
(a) Notwithstanding anything else herein, the Trustees may, without
Shareholder approval unless such approval is required by applicable law, (i)
cause the Trust to merge or consolidate with or into or transfer its assets and
any liabilities to one or more trusts (or series thereof to the extent permitted
by law), partnerships, associations, corporations or other business entities
(including trusts, partnerships, associations, corporations or other business
entities created by the Trustees to accomplish such merger or consolidation or
transfer of assets and any liabilities) so long
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as the surviving or resulting entity is an investment company as defined in the
1940 Act, or is a series thereof, that will succeed to or assume the Trust's
registration under the 1940 Act and that is formed, organized, or existing under
the laws of the United States or of a state, commonwealth, possession or colony
of the United States, unless otherwise permitted under the 1940 Act, (ii) cause
any one or more Series (or Classes) of the Trust to merge or consolidate with or
into or transfer its assets and any liabilities to any one or more other Series
(or Classes) of the Trust, one or more trusts (or series or classes thereof to
the extent permitted by law), partnerships, associations, corporations, (iii)
cause the Shares to be exchanged under or pursuant to any state or federal
statute to the extent permitted by law or (iv) cause the Trust to reorganize as
a corporation, limited liability company or limited liability partnership under
the laws of Delaware or any other state or jurisdiction.
(b) Pursuant to and in accordance with the provisions of Section
3815(f) of the Delaware Act, and notwithstanding anything to the contrary
contained in this Declaration of Trust, an agreement of merger or consolidation
or exchange or transfer of assets and liabilities approved by the Trustees in
accordance with this Section 2 may (i) effect any amendment to the governing
instrument of the Trust or (ii) effect the adoption of a new governing
instrument of the Trust if the Trust is the surviving or resulting trust in the
merger or consolidation.
(c) The Trustees may create one or more business trusts to which all or
any part of the assets, liabilities, profits, or losses of the Trust or any
Series or Class thereof may be transferred and may provide for the conversion of
Shares in the Trust or any Series or Class thereof into beneficial interests in
any such newly created trust or trusts or any series or classes thereof.
Section 3. Amendments. Except as specifically provided in this Section
3, the Trustees may, without Shareholder vote, restate, amend, or otherwise
supplement this Declaration of Trust. Shareholders shall have the right to vote
on (i) any amendment that would affect their right to vote granted in Article V,
Section 1 hereof, (ii) any amendment to this Section 3 of Article VIII; (iii)
any amendment that may require their vote under applicable law or by the Trust's
registration statement, as filed with the Commission, and (iv) any amendment
submitted to them for their vote by the Trustees. Any amendment required or
permitted to be submitted to the Shareholders that, as the Trustees determine,
shall affect the Shareholders of one or more Series shall be authorized by a
vote of the Shareholders of each Series affected and no vote of Shareholders of
a Series not affected shall be required. Notwithstanding anything else herein,
no amendment hereof shall limit the rights to insurance provided by Article VII
hereof with respect to any acts or omissions of Persons covered thereby prior to
such amendment nor shall any such amendment limit the rights to indemnification
referenced in Article VIl hereof as provided in the By-Laws with respect to any
actions or omissions of Persons covered thereby prior to such amendment. The
Trustees may, without Shareholder vote, restate, amend, or otherwise supplement
the Certificate of Trust as they deem necessary or desirable.
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Section 4. Filing of Copies; References; Headings. The original or a
copy of this instrument and of each restatement and/or amendment hereto shall be
kept at the office of the Trust where it may be inspected by any Shareholder.
Anyone dealing with the Trust may rely on a certificate by an officer of the
Trust as to whether or not any such restatements and/or amendments have been
made and as to any matters in connection with the Trust hereunder; and, with the
same effect as if it were the original, may rely on a copy certified by an
officer of the Trust to be a copy of this instrument or of any such restatements
and/or amendments. In this instrument and in any such restatements and/or
amendments, references to this instrument, and all expressions such as "herein,"
"hereof," and "hereunder," shall be deemed to refer to this instrument as
amended or affected by any such restatements and/or amendments. Headings are
placed herein for convenience of reference only and shall not be taken as a part
hereof or control or affect the meaning, construction or effect of this
instrument. Whenever the singular number is used herein, the same shall include
the plural; and the neuter, masculine and feminine genders shall include each
other, as applicable. This instrument may be executed in any number of
counterparts each of which shall be deemed an original.
Section 5. Applicable Law.
(a) The Trust is created under, and this Declaration of Trust is to be
governed by, and construed and enforced in accordance with, the laws of the
State of Delaware. The Trust shall be of the type commonly called a business
trust, and without limiting the provisions hereof, the Trust specifically
reserves the right to exercise any of the powers or privileges afforded to
business trusts or actions that may be engaged in by business trusts under the
Delaware Act, and the absence of a specific reference herein to any such power,
privilege, or action shall not imply that the Trust may not exercise such power
or privilege or take such actions.
(b) Notwithstanding the first sentence of Section 5(a) of this Article
VIII, there shall not be applicable to the Trust, the Trustees, or this
Declaration of Trust either the provisions of Section 3540 of Title 12 of the
Delaware Code or any provisions of the laws (statutory or common) of the State
of Delaware (other than the Delaware Act) pertaining to trusts that relate to or
regulate: (i) the filing with any court or governmental body or agency of
Trustee accounts or schedules of trustee fees and charges; (ii) affirmative
requirements to post bonds for trustees, officers, agents, or employees of a
trust; (iii) the necessity for obtaining a court or other governmental approval
concerning the acquisition, holding, or disposition of real or personal
property; (iv) fees or other sums applicable to trustees, officers, agents or
employees of a trust; (v) the allocation of receipts and expenditures to income
or principal; (vi) restrictions or limitations on the permissible nature,
amount, or concentration of trust investments or requirements relating to the
titling, storage, or other manner of holding of trust assets; or (vii) the
establishment of fiduciary or other standards or responsibilities or limitations
on the acts or powers or liabilities or authorities and powers of trustees that
are inconsistent with the limitations or liabilities or authorities and powers
of the Trustees set forth or
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referenced in this Declaration of Trust; or (viii) activities similar to those
referenced in the foregoing items (i) through (vii).
Section 6. Provisions in Conflict with Law or Regulations.
(a) The provisions of this Declaration of Trust are severable, and if
the Trustees shall determine, with the advice of counsel, that any such
provision is in conflict with the 1940 Act, the regulated investment company
provisions of the Internal Revenue Code of 1986, as amended (or any successor
statute thereto), and the regulations thereunder, the Delaware Act or with other
applicable laws and regulations, the conflicting provision shall be deemed never
to have constituted a part of this Declaration of Trust; provided, however, that
such decision shall not affect any of the remaining provisions of this
Declaration of Trust or render invalid or improper any action taken or omitted
prior to such determination.
(b) If any provision of this Declaration of Trust shall be held invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall, not in any manner
affect such provision in any other jurisdiction or any other provision of this
Declaration of Trust in any jurisdiction.
Section 7. Business Trust Only. It is the intention of the Trustees to
create a business trust pursuant to the Delaware Act. It is not the intention of
the Trustees to create a general partnership, limited partnership, joint stock
association, corporation, bailment, or any form of legal relationship other than
a business trust pursuant to the Delaware Act. Nothing in this Declaration of
Trust shall be construed to make the Shareholders, either by themselves or with
the Trustees, partners, or members of a joint stock association.
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IN WITNESS WHEREOF, the Trustees named below do hereby make and enter
into this Agreement and Declaration of Trust as of the 18th day of September,
1997.
/s/ Laurence B. Ashkin /s/ Thomas L. McVerry
Laurence B. Ashkin Thomas L. McVerry
Trustee and not individually Trustee and not individually
/s/ Charles A. Austin, III /s/ David M. Richardson
Charles A. Austin, III David M. Richardson
Trustee and not individually Trustee and not individually
/s/ K. Dun Gifford /s/ Russell A. Salton, III
K. Dun Gifford Russell A. Salton, III
Trustee and not individually Trustee and not individually
/s/ James S. Howell /s/ Michael S. Scofield
ames S. Howell Michael S. Scofield
Trustee and not individually Trustee and not individually
/s/ Richard J. Shima
Leroy Keith, Jr. Richard J. Shima
Trustee and not individually Trustee and not individually
/s/ Gerald M. McDonnell /s/ William W. Pettit
Gerald M. McDonnell William W. Pettit
Trustee and not individually Trustee and not individually
THE PRINCIPAL PLACE OF BUSINESS
OF THE TRUST IS:
200 Berkeley Street
Boston, Massachusetts 02116
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POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
SIGNATURE TITLE
/s/ Laurence B. Ashkin
____________________________ Director/Trustee
Laurence B. Ashkin
20388
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
SIGNATURE TITLE
/s/ Charles A. Austin III
_____________________________ Director/Trustee
Charles A. Austin III
20388
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
SIGNATURE TITLE
/s/ K. Dun Gifford
_____________________________ Director/Trustee
K. Dun Gifford
20388
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
SIGNATURE TITLE
/s/ James S. Howell
_____________________________ Director/Trustee
James S. Howell
20388
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
SIGNATURE TITLE
/s/ Gerald M. McDonnell
_____________________________ Director/Trustee
Gerald M. McDonnell
20388
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
SIGNATURE TITLE
/s/ Thomas L. McVerry
_____________________________ Director/Trustee
Thomas L. McVerry
20388
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
SIGNATURE TITLE
/s/ William Walt Pettit
_____________________________ Director/Trustee
William Walt Pettit
20388
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
SIGNATURE TITLE
/s/ David M. Richardson
_____________________________ Director/Trustee
David M. Richardson
20388
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
SIGNATURE TITLE
/s/ Russell A. Salton, III MD
_____________________________ Director/Trustee
Russell A. Salton, III MD
20388
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
SIGNATURE TITLE
/s/ Michael S. Scofield
_____________________________ Director/Trustee
Michael S. Scofield
20388
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
SIGNATURE TITLE
/s/ Richard J. Shima
_____________________________ Director/Trustee
Richard J. Shima
20388