<PAGE>
<TABLE>
<CAPTION>
ABT EMERGING GROWTH FUND
Schedule of Investments (Unaudited) April 30, 1995
- ------------------------------------------------------------------------------------
Shares Value
--------- ----------------
<S> <C> <C> <C>
COMMON STOCKS -- 98.1%
Auto Parts 80,000 GENTEX Corp. $ 1,540,000
2.5% ----------------
Business Services 55,000 First Data Corp. 3,093,750
8.5% 22,500 Fiserv, Inc. 596,250
50,000 Franklin Quest Co. 1,662,500
----------------
5,352,500
----------------
Computers 180,000 American Power Conversion Corp. 3,060,000
14.3% 80,000 Cisco Systems, Inc. 3,190,000
140,000 EMC Corp. 2,765,000
----------------
9,015,000
----------------
Entertainment 8,800 Viacom, Inc. - CL A 412,500
5.7% 66,676 Viacom, Inc. - CL B 3,058,761
110,000 Viacom, Inc. - VCR 9/95 144,375
----------------
3,615,636
----------------
Financial Service 70,000 Green Tree Financial Corp. 2,861,250
4.5% ----------------
Health 42,000 Health Management Associates, Inc. 1,218,000
16.1% 120,000 IVAX Corp. 3,105,000
44,000 Medtronic Inc. 3,272,500
25,000 Surgical Care Affiliates, Inc. 581,250
55,000 United Healthcare Corp. 1,993,750
----------------
10,170,500
----------------
Pharmaceuticals 62,000 Mylan Laboratories 1,906,500
3.0% ----------------
Specialty Retail 110,000 AutoZone, Inc. 2,543,750
23.9% 100,000 Danka Business Systems PLC 2,737,500
120,000 Fastenal Co. 3,180,000
81,000 Home Depot, Inc. 3,381,750
140,000 Office Depot, Inc. 3,185,000
---------------
15,028,000
---------------
Technology 50,000 Atmel Corp. 2,200,000
19.6% 42,000 Microsoft Corp. 3,433,500
75,000 Parametric Technology Corp. 3,562,500
105,000 Sensormatic Electronics Corp. 3,123,750
---------------
12,319,750
---------------
TOTAL INVESTMENTS (Cost $39,701,002) - 98.1% 61,809,136
Other assets, less liabilities - 1.9% 1,183,766
---------------
NET ASSETS - 100.00% $ 62,992,902
===============
</TABLE>
See notes to financial statements
<PAGE>
ABT EMERGING GROWTH FUND
Statement of Assets and Liabilities (Unaudited)
April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS
Investments in securities at value $ 61,809,136
(cost $39,701,002)
Cash 1,466,375
Receivables:
Shares of beneficial
interest sold 24,266
Dividends 10,285
---------------
Total assets 63,310,062
---------------
LIABILITIES
Payables:
Shares of beneficial
interest redeemed 287,256
Accrues expenses 29,894
---------------
Total liabilities 317,150
---------------
NET ASSETS
Source of Net Assets:
Net capital paid in
on shares of
beneficial interest $ 41,931,825
Undistributed net
investment income (310,453)
Accumulated net
realized gain (736,604)
Net unrealized
appreciation 22,108,134
--------------- ---------------
Total net assets $ 62,992,902
===============
Shares outstanding (Note ) 4,422,748
Net asset value and redemption
price per share (total net assets
+ shares outstanding) 14.24
Offering price per share (net asset
value + 95.25%)* 14.95
</TABLE>
Statement of Operations (Unaudited)
Six months ended April 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividends $ 61,183
Interest 62,066
---------------
Total income 123,249
---------------
Expenses:
Investment advisory fees (Note ) 184,712
Distribution Fees (Note ) 76,953
Transfer agent fees and expenses 67,726
Administrative fees 25,666
Accounting fees 16,995
Custodian fees 7,553
Registration fees and expenses 11,920
Trustees' fees and expenses (Note ) 10,304
Insurance 5,185
Audit fees and expenses 7,964
Printing and shareholder
communications 6,844
Legal fees and expenses 5,720
Other 8,129
---------------
Total expenses 433,702
---------------
Net investment loss (310,453)
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss)
on investments $ (540,076)
Change in unrealized
appreciation (depreciation) 2,537,155
---------------
Net gain (loss) on
investments $ 1,997,079
---------------
Net increase (decrease) in net
assets from operations $ 1,686,625
===============
</TABLE>
*The sales charge is 4.75% on a single sale of less than $100,000, reduced on
sales of $100,000 or more and certain other sales.
See notes to financial statements
<PAGE>
ABT EMERGING GROWTH FUND
Financial Highlights (Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six months Year ended April 30,
Per share operating performance ended --------------------------------------------------------------
(Based on average shares outstanding) April 30, 1995 1994 1993 1992 1991 1990
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 13.85 $ 14.44 $ 11.75 $ 12.22 $ 7.37 $ 11.06
- ------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income (0.07) (0.13) (0.12) (0.10) (0.08) (0.04)
Net realized and unrealized
gain (loss) 0.46 (0.22) 3.06 1.84 5.59 (2.02)
---------- --------- --------- --------- --------- ---------
Total from investment operations 0.39 (0.35) 2.94 1.74 5.51 (2.06)
---------- --------- --------- --------- --------- ---------
Less distributions
Distributions from net realized gains - (0.24) (0.26) (2.20) (0.66) (1.83)
---------- --------- --------- --------- --------- ---------
Change in net asset value for period 0.39 (0.59) 2.68 (0.46) 4.85 (3.89)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 14.24 $ 13.85 $ 14.44 $ 11.76 $ 12.22 $ 7.37
- ------------------------------------------------------------------------------------------------------------------------------
Total Return* 2.82% (2.42)% 25.31% 17.43% 79.80% (20.45)%
Ratios/supplemental data
Net assets, end of period $ 62,993 $ 64,635 $ 58,053 $ 29,302 $ 23,509 $ 14,325
Ratio to average net assets of:
Expenses 1.41%+ 1.25% 1.31% 1.44% 1.59% 1.58%
Net investment income (1.01)%+ (.92)% (.92)% (.93)% (0.71)% (0.49)%
Portfolio Turnover 14% 59% 48% 46% 108% 100%
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Does not reflect sales load.
+ Annualized
<PAGE>
ABT EMERGING GROWTH FUND
Notes to Financial Statements April 30, 1995
- --------------------------------------------------------------------------------
1. Summary of Significant Accounting Policies
ABT Emerging Growth Fund (the Fund) is the only series of ABT Investment
Series, Inc. (the Company), a Maryland corporation. The Fund is registered under
the Investment Company Act of 1940 as an open-end, diversified management
investment company. The following is a summary of significant accounting
policies followed in the preparation of its financial statements.
(a) Valuation of Investments. Securities listed or trade on a recognized
national stock exchange or NASDAQ are valued at the last reported sales prices
on the principal exchange on which the securities are traded. Over-the-counter
securities and listed securities for which no sale is reported are valued at the
last current bid price. Securities for which market quotations are not readily
available are valued a fair value as determined by management and approved in
good faith by the Board of Directors. Securities with a remaining maturity of 60
days or less are valued at amortized cost, which approximates market value.
(b) Repurchase Agreements. Money market instruments may be purchased from
banks and non-bank dealers, subject to the seller's agreement to repurchase them
at an agreed upon date and price. The Fund's custodian takes possession of
securities collaterlaizing repurchase agreements until maturity of the
repurchase agreement through the Federal Reserve Book Entry System. Collateral
is marked-to-market daily to ensure that the market values of the underlying
assets remain sufficient to protect the Fund in the event of default; however,
in the event of default or bankruptcy by the other party to the agreement,
realization and/or retention of the collateral may be subject to legal
proceedings.
(c) Investment Transactions and Related Investment Income. Investment
transactions are accounted for on trade date basis. Interest income is recorded
on a daily basis and dividend income is recorded on ex-dividend date.
(d) Income Taxes. It is the Fund's intention to comply with the provisions of
the Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to its shareholders. Therefore, no
provision has been made for federal income taxes. Distributions of shareholders
are recorded on the ex-dividend date. Income and capital gain distributions are
determined in accordance with income tax regulations.
2. Transactions in Shares of Beneficial Interest
As of April 30, 1995, there were 2 billion shares at $0.001 par value
authorized. Transactions are summarized as follows:
<TABLE>
<CAPTION>
Six Months Year
ended ended
April 30, October 31,
1995 1994
---------- -----------
<S> <C> <C>
Shares sold 323,380 1,539,650
Shares issued on reinvestment
of distributions 0 54,495
Shares redeemed (568,325) (945,351)
-------- ---------
Net increase in shares outstanding (244,945) 648,794
======== =========
</TABLE>
3. Investment Advisory Fees and Other Transactions with Affiliates
The Fund pays monthly an investment advisory fee to Palm Beach Capital
Management, Ltd. (the Adviser) equal on an annual basis to 0.60% of the average
daily net assets of the Fund.
ABT Financial Services, Inc. (ABT), an affiliate of the Adviser, serves as
the Fund's principal underwriter and distributor. During the year ended April
30, 1995, ABT received $43,131 for underwriting concessions on sales of shares
and $22,445 in commissions as broker.
The Fund has adopted a distribution plan (12b-1 Plan) pursuant to which the
Fund reimburses ABT monthly (subject to a limit of 0.25% per annum of the Fund's
average daily net assets) for ABT's costs
<PAGE>
and expenses in connection with any activity that is primarily intended to
result in a sale of Fund shares. Such distribution fees are set forth in the
Statement of Operations, pursuant to the 12b-1 Plan.
During the year ended October 31, 1994, The Bank of New York provided
administrative and accounting services for the Fund, for which they received the
fees shown in the Statement of Operations. Effective November 1, 1994,
administrative and accounting services are being provided by the Adviser, and
all fees for these services will be paid to the Adviser.
Certain officers and a director of the Company are also officers and/or
directors of the Adviser and ABT.
4. Investment Transactions
During the six months ended April 30, 1995, the cost of purchases and the
proceeds from sales of investment securities other than short-term obligations
were $ and $ , respectively. The cost of securities for
federal income tax purposes is the same as that shown in the investment
portfolio. Realized gains and losses are reported on an identified cost basis.
At October 31, 1994, the aggregate gross unrealized appreciation and
depreciation of portfolio securities, based on cost for federal income tax
purposes, was as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 20,312,283
Unrealized depreciation (819,026)
---------------
Net unrealized appreciation $ 19,493,257
===============
</TABLE>
5. Reclassification
Effective November 1, 1993 the Fund adopted AICPA Statement of Position,
Determination, Disclosure and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies. The
Statement generally requires that distributions to shareholders be classified in
accordance with federal income tax regulations. Accordingly, amounts as of
October 31, 1993, have been restated to reflect an increase in paid-in capital
and a decrease in undistributed net realized gains on investments of $ .
Net investment income, net realized gains and net assets were not affected by
this change.
6. Reorganization
On March 31, 1995, the Adviser and certain of its affiliates entered into
an Asset Purchase Agreement with First Union National Bank (First Union)
pursuant to which First Unions would acquire substantially all of the assets of
the Adviser (the Acquisition). On March 15, 1995, in connection with the
Acquisition, The Fund entered into an Agreement and Plan of Reorganization (the
Plan) with First Unions Funds, on behalf of Evergreen Aggressive Growth Fund
(the Portfolio). The Plan provides that the Fund will Transfer substantially
all of its assets in exchange for Class A investment shares of the Portfolio, on
a tax-free basis. It is anticipated that the Plan will be consummated at the
close of business on June 30, 1995.
