1933 Act Registration No. 333-
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-14AE
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
[ ] Pre-Effective [ ] Post-Effective
Amendment No. Amendment No.
EVERGREEN INVESTMENT TRUST
[Exact Name of Registrant as Specified in Charter]
Area Code and Telephone Number: (617) 210-3200
200 Berkeley Street
Boston, Massachusetts 02116
-----------------------------------
(Address of Principal Executive Offices)
Rosemary D. Van Antwerp, Esq.
Keystone Investment Management Company
200 Berkeley Street
Boston, Massachusetts 02116
-----------------------------------------
(Name and Address of Agent for Service)
Copies of All Correspondence to:
Robert N. Hickey, Esq.
Sullivan & Worcester LLP
1025 Connecticut Avenue, N.W.
Washington, D.C. 20036
Approximate date of proposed public offering: As soon as possible after
the effective date of this Registration Statement.
The Registrant has registered an indefinite amount of securities under
the Securities Act of 1933 pursuant to Section 24(f) under the Investment
Company Act of 1940 (File No. 2-94560); accordingly, no fee is payable herewith.
Pursuant to Rule 429, this Registration Statement relates to the aforementioned
registration on Form N-1A. A Rule 24f-2 Notice for the Registrant's fiscal year
ended August 31, 1997 was filed with the Commission on or about October 31,
1997.
It is proposed that this filing will become effective on December 29,
1997 pursuant to Rule 488 of the Securities Act of 1933.
<PAGE>
EVERGREEN INVESTMENT TRUST
CROSS REFERENCE SHEET
Pursuant to Rule 481(a) under the Securities Act of 1933
Location in Prospectus/Proxy
Item of Part A of Form N-14 Statement
1. Beginning of Registration Cross Reference Sheet; Cover
Statement and Outside Page
Front Cover Page of
Prospectus
2. Beginning and Outside Table of Contents
Back Cover Page of
Prospectus
3. Fee Table, Synopsis and Comparison of Fees and
Risk Factors Expenses; Summary; Comparison
of Investment Objectives and
Policies; Risks
4. Information About the Summary; Reasons for the
Transaction Reorganization; Comparative
Information on Shareholders'
Rights; Exhibit A (Agreement
and Plan of Reorganization)
5. Information about the Cover Page; Summary; Risks;
Registrant Comparison of Investment
Objectives and Policies;
Comparative Information on
Shareholders' Rights;
Additional Information
6. Information about the Cover Page; Summary; Risks;
Company Being Acquired Comparison of Investment
Objective and Policies;
Comparative Information on
Shareholders' Rights;
Additional Information
<PAGE>
7. Voting Information Cover Page; Summary; Voting
Information Concerning the
Meeting
8. Interest of Certain Financial Statements and
Persons and Experts Experts; Legal Matters
9. Additional Information Inapplicable
Required for Reoffering
by Persons Deemed to be
Underwriters
Item of Part B of Form N-14
10. Cover Page Cover Page
11. Table of Contents Omitted
12. Additional Information Statement of Additional
About the Registrant Information of the Evergreen
Investment Trust - Evergreen
Treasury Money Market Fund
dated December , 1997
13. Additional Information Statement of Additional
about the Company Being Information of The Virtus
Acquired Funds - The Treasury Money
Market Fund dated November 30,
1997
14. Financial Statements Financial Statements dated
August 31, 1997 of Evergreen
Treasury Money Market Fund;
Financial Statements of The
Virtus Funds - The Treasury
Money Market Fund dated
September 30, 1997; Pro Forma
Financial Statements of
Evergreen Treasury Money
Market Fund
<PAGE>
Item of Part C of Form N-14
15. Indemnification Incorporated by Reference to
Part A Caption - "Comparative
Information on Shareholders'
Rights - Liability and
Indemnification of Trustees"
16. Exhibits Item 16. Exhibits
17. Undertakings Item 17. Undertakings
<PAGE>
THE VIRTUS FUNDS
THE TREASURY MONEY MARKET FUND
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
January 5, 1998
Dear Shareholder,
I am writing to shareholders of The Treasury Money Market Fund, a series of The
Virtus Funds (the "Fund"), to inform you of a Special Shareholders' meeting to
be held on February 20, 1998. Before that meeting, I would like your vote on the
important issues affecting your Fund as described in the attached
Prospectus/Proxy Statement.
The Prospectus/Proxy Statement includes two proposals. The first proposal
requests that shareholders consider and act upon an Agreement and Plan of
Reorganization whereby all of the assets of the Fund would be acquired by
Evergreen Treasury Money Market Fund in exchange for either Class A or Class Y
shares of Evergreen Treasury Money Market Fund and the assumption by Evergreen
Treasury Money Market Fund of certain liabilities of the Fund. You will receive
shares of Evergreen Treasury Money Market Fund having an aggregate net asset
value equal to the aggregate net asset value of your Fund shares. Details about
the Evergreen Treasury Money Market Fund's investment objective, portfolio
management team, performance, etc. are contained in the attached
Prospectus/Proxy Statement. The transaction is a non-taxable event for
shareholders.
The second proposal requests shareholder consideration of an Interim Investment
Advisory Agreement between the Fund and
Virtus Capital Management, Inc.
Information relating to the Interim Investment Advisory Agreement is contained
in the attached Prospectus/Proxy Statement.
The Board of Trustees has unanimously approved the proposals and recommends that
you vote FOR these proposals.
I realize that this Prospectus/Proxy Statement will take time to review, but
your vote is very important. Please take the time to familiarize yourself with
the proposals presented and sign and return your proxy card in the enclosed
postage paid envelope today.
If we do not receive your completed proxy card after several weeks, you may be
contacted by our proxy solicitor,
<PAGE>
Shareholder Communications Corporation, who will remind you to vote your shares.
Thank you for taking this matter seriously and participating in this important
process.
Sincerely,
[Name]
[Title]
The Virtus Funds
<PAGE>
[SUBJECT TO COMPLETION, NOVEMBER 28, 1997 PRELIMINARY COPY]
THE VIRTUS FUNDS
THE TREASURY MONEY MARKET FUND
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 20, 1998
Notice is hereby given that a Special Meeting (the "Meeting") of
Shareholders of The Treasury Money Market Fund, a series of The Virtus Funds
(the "Fund"), will be held at the offices of the Evergreen Funds, 200 Berkeley
Street, 26th Floor, Boston, Massachusetts 02116 on February 20, 1998 at
2:00 p.m. for the following purposes:
1. To consider and act upon the Agreement and Plan of Reorganization
(the "Plan") dated as of November 26, 1997, providing for the acquisition of all
of the assets of the Fund by the Evergreen Treasury Money Market Fund, a series
of Evergreen Money Market Trust, ("Evergreen Treasury") in exchange for shares
of Evergreen Treasury and the assumption by Evergreen Treasury of certain
identified liabilities of the Fund. The Plan also provides for distribution of
such shares of Evergreen Treasury to shareholders of the Fund in liquidation and
subsequent termination of the Fund. A vote in favor of the Plan is a vote in
favor of the liquidation and dissolution of the Fund.
2. To consider and act upon the Interim Investment Advisory Agreement
between the Fund and Virtus Capital
Management, Inc.
3. To transact any other business which may properly come before the
Meeting or any adjournment or adjournments thereof.
The Trustees of The Virtus Funds on behalf of The Treasury Money Market
Fund have fixed the close of business on December 26, 1997 as the record date
for the determination of shareholders of the Fund entitled to notice of and to
vote at the Meeting or any adjournment thereof.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO NOT
EXPECT TO ATTEND IN PERSON ARE URGED WITHOUT DELAY TO SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE, SO THAT
THEIR SHARES MAY BE REPRESENTED AT THE MEETING. YOUR PROMPT
<PAGE>
ATTENTION TO THE ENCLOSED PROXY WILL HELP TO AVOID THE EXPENSE OF FURTHER
SOLICITATION.
By Order of the Board of Trustees
John W. McGonigle
Secretary
January 5, 1998
<PAGE>
INSTRUCTIONS FOR EXECUTING PROXY CARDS
The following general rules for signing proxy cards may be of
assistance to you and may help to avoid the time and expense involved in
validating your vote if you fail to sign your proxy card(s) properly.
1. INDIVIDUAL ACCOUNTS: Sign your name exactly as it
appears in the Registration on the proxy card(s).
2. JOINT ACCOUNTS: Either party may sign, but the name
of the party signing should conform exactly to a name shown in
the Registration on the proxy card(s).
3. ALL OTHER ACCOUNTS: The capacity of the individual signing the proxy
card(s) should be indicated unless it is reflected in the form of Registration.
For example:
REGISTRATION VALID SIGNATURE
CORPORATE
ACCOUNTS
(1) ABC Corp. ABC Corp.
(2) ABC Corp. John Doe, Treasurer
(3) ABC Corp.
c/o John Doe, Treasurer John Doe, Treasurer
(4) ABC Corp. Profit Sharing Plan John Doe, Trustee
TRUST ACCOUNTS
(1) ABC Trust Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee Jane B. Doe
u/t/d 12/28/78
CUSTODIAL OR ESTATE ACCOUNTS
(1) John B. Smith, Cust. John B. Smith
f/b/o John B. Smith, Jr. UGMA
(2) John B. Smith, Jr. John B. Smith, Jr.,
Executor
<PAGE>
PROSPECTUS/PROXY STATEMENT DATED JANUARY 5, 1998
Acquisition of Assets of
THE TREASURY MONEY MARKET FUND
a series of
The Virtus Funds
Federated Investors Tower
Pittsburgh, Pennsylvania, 15222-3779
By and in Exchange for Shares of
EVERGREEN TREASURY MONEY MARKET FUND
a series of
Evergreen Money Market Trust
200 Berkeley Street
Boston, Massachusetts 02116
This Prospectus/Proxy Statement is being furnished to shareholders of
The Treasury Money Market Fund ("Virtus Treasury") in connection with a proposed
Agreement and Plan of Reorganization (the "Plan") to be submitted to
shareholders of Virtus Treasury for consideration at a Special Meeting of
Shareholders to be held on February 20, 1998 at 2:00 p.m. at the offices of the
Evergreen Funds, 200 Berkeley Street, Boston, Massachusetts 02116, and any
adjournments thereof (the "Meeting"). The Plan provides for all of the assets of
Virtus Treasury to be acquired by Evergreen Treasury Money Market Fund
("Evergreen Treasury") in exchange for shares of Evergreen Treasury and the
assumption by Evergreen Treasury of certain identified liabilities of Virtus
Treasury (hereinafter referred to as the "Reorganization"). Evergreen Treasury
and Virtus Treasury are sometimes hereinafter referred to individually as the
"Fund" and collectively as the "Funds." Following the Reorganization, shares of
Evergreen Treasury will be distributed to shareholders of Virtus Treasury in
liquidation of Virtus Treasury and such Fund will be terminated. Holders of
Investment shares and Trust shares of Virtus Treasury will receive Class A and
Class Y shares, respectively, of Evergreen Treasury. Each such class of shares
of Evergreen Treasury has substantially similar Rule 12b-1 distribution-related
fees, if any, as the shares of the class of Virtus Treasury held by such holders
prior to the Reorganization. No initial sales charge will be imposed in
connection with Class A shares of Evergreen Treasury received by holders of
Investment Shares of Virtus Treasury. As a result of the proposed
Reorganization, shareholders of Virtus Treasury will receive that number of full
and fractional shares of Evergreen Treasury, having an aggregate net asset value
equal to the aggregate net asset value of such
<PAGE>
shareholder's shares of Virtus Treasury. The Reorganization is being structured
as a tax-free reorganization for federal income tax purposes.
Evergreen Treasury is a separate series of Evergreen Money Market
Trust, an open-end management investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"). The investment objective of
Evergreen Treasury is to seek to maintain stability of principal while earning
current income. Such investment objective is substantially identical to the
investment objective of Virtus Treasury. Each Fund seeks to maintain a stable
net asset value of $1.00 per share although no assurances can be given that such
a stable net asset value will be maintained.
Shareholders of Virtus Treasury are also being asked to approve the
Interim Investment Advisory Agreement with Virtus Capital Management, Inc., a
subsidiary of First Union Corporation ("Virtus") (the "Interim Advisory
Agreement") with the same terms and fees as the previous advisory agreement
between Virtus Treasury and Virtus. The Interim Advisory Agreement will be in
effect for the period of time between November 28, 1997, the date on which the
merger of Signet Banking Corporation with and into a wholly-owned subsidiary of
First Union Corporation was consummated, and the date of the Reorganization
(scheduled for on or about February 27, 1998).
This Prospectus/Proxy Statement, which should be retained for future
reference, sets forth concisely the information about Evergreen Treasury that
shareholders of Virtus Treasury should know before voting on the Reorganization.
Certain relevant documents listed below, which have been filed with the
Securities and Exchange Commission ("SEC"), are incorporated in whole or in part
by reference. A Statement of Additional Information dated January 5, 1998,
relating to this Prospectus/Proxy Statement and the Reorganization which
includes the financial statements of Evergreen Treasury dated August 31, 1997
and Virtus Treasury dated September 30, 1997, has been filed with the SEC and is
incorporated by reference in its entirety into this Prospectus/Proxy Statement.
A copy of such Statement of Additional Information is available upon request and
without charge by writing to Evergreen Treasury at 200 Berkeley Street, Boston,
Massachusetts 02116 or by calling toll-free 1-800-343-2898.
The two Prospectuses of Evergreen Treasury dated December , 1997 and
its Annual Report for the fiscal year ended August 31, 1997 are incorporated
herein by reference in their entirety, insofar as they relate to Evergreen
Treasury only,
<PAGE>
and not to any other funds described therein. The Prospectuses, which pertain
(i) to Class Y shares and (ii) to Class A shares, differ only insofar as they
describe the separate distribution and shareholder servicing arrangements
applicable to the classes. Shareholders of Virtus Treasury will receive, with
this Prospectus/Proxy Statement, copies of the Prospectus pertaining to the
class of shares of Evergreen Treasury that they will receive as a result of the
consummation of the Reorganization. Additional information about Evergreen
Treasury is contained in its Statement of Additional Information which has been
filed with the SEC and which is available upon request and without charge by
writing to or calling Evergreen Treasury at the address or telephone number
listed in the preceding paragraph.
The two Prospectuses of Virtus Treasury (which pertain to (i) Trust
shares and (ii) Investment shares) dated November 30, 1997, insofar as they
relate to Virtus Treasury only, and not to any other funds described therein,
are incorporated herein in their entirety by reference. Copies of the
Prospectuses and related Statements of Additional Information dated the same
date are available upon request without charge by writing to Virtus Treasury at
the address listed on the cover page of this Prospectus/Proxy Statement or by
calling toll-free 1-800-829-3863.
Included as Exhibits A and B to this Prospectus/Proxy Statement is a
copy of the Plan and the Interim Advisory Agreement, respectively.
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/PROXY STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The shares offered by this Prospectus/Proxy Statement are not deposits
or obligations of any bank and are not insured or otherwise protected by the
U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve
Board or any other government agency and involve investment risk,
including possible loss of capital.
<PAGE>
TABLE OF CONTENTS
Page
COMPARISON OF FEES AND EXPENSES.............................................6
SUMMARY ..................................................................10
Proposed Plan of Reorganization...................................10
Tax Consequences..................................................12
Investment Objectives and Policies of the Funds...................12
Comparative Performance Information for each Fund.................13
Management of the Funds...........................................15
Investment Advisers...............................................15
Administrators....................................................15
Distribution of Shares............................................16
Purchase and Redemption Procedures................................18
Exchange Privileges...............................................18
Dividend Policy...................................................18
Risks .........................................................19
REASONS FOR THE REORGANIZATION.............................................20
Agreement and Plan of Reorganization..............................22
Federal Income Tax Consequences...................................24
Pro-forma Capitalization..........................................26
Shareholder Information...........................................27
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES...........................28
COMPARATIVE INFORMATION ON SHAREHOLDERS' RIGHTS............................30
Forms of Organization.............................................30
Capitalization....................................................30
Shareholder Liability.............................................30
Shareholder Meetings and Voting Rights............................31
Liquidation or Dissolution........................................32
Liability and Indemnification of Trustees.........................32
INFORMATION REGARDING THE INTERIM ADVISORY AGREEMENT.......................34
Introduction......................................................34
Comparison of the Interim Advisory Agreement and the
Previous Advisory Agreement..............................35
Information about Virtus Treasury's Investment
Adviser......................................................36
ADDITIONAL INFORMATION.....................................................37
VOTING INFORMATION CONCERNING THE MEETING..................................37
FINANCIAL STATEMENTS AND EXPERTS...........................................40
LEGAL MATTERS..............................................................40
<PAGE>
OTHER BUSINESS.............................................................40
APPENDIX A.................................................................42
EXHIBIT A
EXHIBIT B
EXHIBIT C
<PAGE>
COMPARISON OF FEES AND EXPENSES
The amounts for Class Y and Class A shares of Evergreen Treasury set
forth in the following tables and in the examples are based on the expenses of
Evergreen Treasury for the fiscal year ended August 31, 1997. The amounts for
Trust shares and Investment shares of Virtus Treasury set forth in the following
tables and in the examples are based on the expenses for Virtus Treasury for the
fiscal year ended September 30, 1997. The pro forma amounts for Class Y and
Class A shares of Evergreen Treasury are based on what the combined expenses
would have been for Evergreen Treasury for the fiscal year ending August 31,
1997. All amounts are adjusted for voluntary expense waivers.
The following tables show for Evergreen Treasury, Virtus Treasury and
Evergreen Treasury pro forma, assuming consummation of the Reorganization, the
shareholder transaction expenses and annual fund operating expenses associated
with an investment in the Class Y, Class A, Trust and Investment shares of each
Fund, as applicable.
<TABLE>
<CAPTION>
Comparison of Class Y and Class A Shares
of Evergreen Treasury with Trust and
Investment Shares of Virtus Treasury
Evergreen Treasury Virtus Treasury
<S> <C> <C> <C> <C>
Shareholder
Transaction Expenses Class Y Class A Trust Investment
Maximum Sales Load None None None None
Imposed on Purchases
(as a percentage of
offering price)
Maximum Sales Load None None None None
Imposed on Reinvested
Dividends (as a
percentage of offering
price)
Contingent Deferred None None None None (1)
Sales Charge (as a
percentage of original
purchase price or
redemption proceeds,
whichever is lower)
<PAGE>
Exchange Fee None None None None
Annual Fund Operating
Expenses (as a
percentage of average
daily net assets)
Management Fee 0.35% 0.35% 0.50% 0.50%
12b-1 Fees (2) None 0.30% None 0.25%
Other Expenses 0.07% 0.07% 0.23% 0.23%
Annual Fund Operating 0.42% 0.72% 0.73% 0.98%
Expenses (3)
</TABLE>
<TABLE>
<CAPTION>
Evergreen Treasury Pro Forma
Shareholder
Transaction Class Y Class A
Expenses ------- -------
<S> <C> <C>
Maximum Sales Load None None
Imposed on
Purchases (as a
percentage of
offering price)
Maximum Sales Load None None
Imposed on
Reinvested
Dividends (as a
percentage of
offering price)
Contingent Deferred None None
Sales Charge (as a
percentage of
original purchase
price or redemption
proceeds, whichever
is lower)
Exchange Fee None None
<PAGE>
Annual Fund
Operating Expenses
(as a percentage of
average daily net
assets)
Management Fee 0.35% 0.35%
12b-1 Fees(2) None 0.30%
Other Expenses 0.07% 0.07%
--------- ----------
Annual Fund
Operating Expenses 0.42% 0.72%
--------- ----------
--------- ----------
</TABLE>
- ---------------
(1) A contingent deferred sales charge will be imposed on the
shares of Virtus Treasury only in the limited
circumstances in which shares being redeemed are acquired
in exchange for Investment shares in those Virtus Funds
which charge a contingent deferred sales charge. The
contingent deferred sales charge is 2.00% of the lesser
of the original purchase price or the net asset value of
shares redeemed, within five years following the purchase
date of such shares, and 0.00% thereafter.
(2) Class A shares of Evergreen Treasury can pay up to 0.75% of average
daily net assets as a 12b-1 fee. For the foreseeable future, the Class
A 12b-1 fees will be limited to 0.30% of average daily net assets.
(3) Annual Fund Operating Expenses for the Class Y and Class A shares of
Evergreen Treasury would have been % and % for the fiscal year ended
August 31, 1997 absent fee waivers and expense reimbursements.
Examples. The following tables show for Evergreen Treasury and Virtus
Treasury, and for Evergreen Treasury pro forma, assuming consummation of the
Reorganization, examples of the cumulative effect of shareholder transaction
expenses and annual fund operating expenses indicated above on a $1,000
investment in each class of shares for the periods specified, assuming (i) a 5%
annual return and (ii) redemption at the end of such period and, additionally
for Investment shares, no redemption at the end of each period.
<PAGE>
<TABLE>
<CAPTION>
Evergreen Treasury
---------------
One Three Five Ten
Year Years Years Years
---- ----- ----- -----
<S> <C> <C> <C> <C>
Class Y $4 $13 $24 $53
Class A $7 $23 $40 $89
</TABLE>
<TABLE>
<CAPTION>
Virtus Treasury
---------
One Three Five Ten
Year Years Years Years
---- ----- ----- -----
<S> <C> <C> <C> <C>
Trust $7 $23 $41 $91
Investment $10 $51 $54 $120
(Assuming
redemption at end
of period)
Investment $10 $37 $54 $120
(Assuming no
redemption at end
of period)
</TABLE>
<TABLE>
<CAPTION>
Evergreen Treasury - Pro Forma
------------------------------
One Three Five Ten
Year Years Years Years
----- ----- ----- -----
<S> <C> <C> <C> <C>
$4 $13 $24 $53
Class Y
Class A $7 $23 $40 $89
</TABLE>
The purpose of the foregoing examples is to assist Virtus Treasury
shareholders in understanding the various costs and expenses that an investor in
Evergreen Treasury would bear
<PAGE>
directly and indirectly as a result of the Reorganization, as compared with the
various direct and indirect expenses currently borne by a shareholder in Virtus
Treasury. These examples should not be considered a representation of past or
future expenses or annual return. Actual expenses may be greater or less than
those shown.
SUMMARY
This summary is qualified in its entirety by reference to the
additional information contained elsewhere in this Prospectus/Proxy Statement,
and, to the extent not inconsistent with such additional information, the
Prospectuses of Evergreen Treasury dated December , 1997 and the Prospectuses of
Virtus Treasury dated November 30, 1997, (which are incorporated herein by
reference), the Plan and the Interim Advisory Agreement, forms of which are
attached to this Prospectus/Proxy Statement as Exhibits A and B, respectively.
Proposed Plan of Reorganization
The Plan provides for the transfer of all of the assets of Virtus
Treasury in exchange for shares of Evergreen Treasury and the assumption by
Evergreen Treasury of certain identified liabilities of Virtus Treasury. The
identified liabilities consist only of those liabilities reflected on the Fund's
statement of assets and liabilities determined immediately preceding the
Reorganization. The Plan also calls for the distribution of shares of Evergreen
Treasury to Virtus Treasury shareholders in liquidation of Virtus Treasury as
part of the Reorganization. As a result of the Reorganization, the holders of
Investment and Trust shares of Virtus Treasury will become the owners of that
number of full and fractional Class A and Class Y shares, respectively, of
Evergreen Treasury having an aggregate net asset value equal to the aggregate
net asset value of the shareholder's shares of Virtus Treasury, as of the close
of business immediately prior to the date that Virtus Treasury's assets are
exchanged for shares of Evergreen Treasury. See "Reasons for the Reorganization
- - Agreement and Plan of Reorganization."
The Trustees of The Virtus Funds, including the Trustees who are not
"interested persons," as such term is defined in the 1940 Act (the "Independent
Trustees"), have concluded that the Reorganization would be in the best
interests of shareholders of Virtus Treasury, and that the interests of the
shareholders of Virtus Treasury will not be diluted as a result of the
transactions contemplated by the Reorganization.
<PAGE>
Accordingly, the Trustees have submitted the Plan for the approval of Virtus
Treasury's shareholders.
THE BOARD OF TRUSTEES OF THE VIRTUS FUNDS
RECOMMENDS APPROVAL BY SHAREHOLDERS OF VIRTUS TREASURY
OF THE PLAN EFFECTING THE REORGANIZATION.
The Trustees of Evergreen Money Market Trust have also
approved the Plan and, accordingly, Evergreen Treasury's
participation in the Reorganization.
Approval of the Reorganization on the part of Virtus Treasury will
require the affirmative vote of a majority of Virtus Treasury's shares voted and
entitled to vote, with all classes voting together as a single class at a
Meeting at which a quorum of the Fund's shares is present. A majority of the
outstanding shares entitled to vote, represented in person or by proxy, is
required to constitute a quorum at the Meeting. See "Voting Information
Concerning the Meeting."
The merger (the "Merger") of Signet Banking Corporation ("Signet") with
and into a wholly-owned subsidiary of First Union Corporation ("First Union")
has been consummated and, as a result, by law the Merger terminated the
investment advisory agreement between Virtus and Virtus Treasury. Prior to
consummation of the Merger, Virtus Treasury received an order from the SEC which
permitted the implementation, without formal shareholder approval, of a new
investment advisory agreement between the Fund and Virtus for a period of not
more than 120 days beginning on the date of the closing of the Merger and
continuing through the date the Interim Advisory Agreement is approved by the
Fund's shareholders (but in no event later than April 30, 1998). The Interim
Advisory Agreement has the same terms and fees as the previous investment
advisory agreement between Virtus Treasury and Virtus. The Reorganization is
scheduled to take place on or about February 27, 1998.
Approval of the Interim Advisory Agreement requires the affirmative
vote of (i) 67% or more of the shares of Virtus Treasury present in person or by
proxy at the Meeting, if holders of more than 50% of the shares of Virtus
Treasury outstanding on the record date are present, in person or by proxy, or
(ii) more than 50% of the outstanding shares of Virtus Treasury, whichever is
less. See "Voting Information Concerning the Meeting."
If the shareholders of Virtus Treasury do not vote to approve the
Reorganization, the Trustees will consider other
<PAGE>
possible courses of action in the best interests of
shareholders.
Tax Consequences
Prior to or at the completion of the Reorganization, Virtus Treasury
will have received an opinion of counsel that the Reorganization has been
structured so that no gain or loss will be recognized by the Fund or its
shareholders for federal income tax purposes as a result of the receipt of
shares of Evergreen Treasury in the Reorganization. The holding period and
aggregate tax basis of shares of Evergreen Treasury that are received by Virtus
Treasury's shareholders will be the same as the holding period and aggregate tax
basis of shares of the Fund previously held by such shareholders, provided that
shares of the Fund are held as capital assets. In addition, the holding period
and tax basis of the assets of Virtus Treasury in the hands of Evergreen
Treasury as a result of the Reorganization will be the same as in the hands of
the Fund immediately prior to the Reorganization, and no gain or loss will be
recognized by Evergreen Treasury upon the receipt of the assets of the Fund in
exchange for shares of Evergreen Treasury and the assumption by Evergreen
Treasury of certain identified liabilities.
Investment Objectives and Policies of the Funds
The investment objectives and policies of Evergreen Treasury and Virtus
Treasury are substantially identical.
The investment objective of Evergreen Treasury is to seek to maintain
stability of principal while earning current income. The Fund will invest in
short-term United States Treasury obligations with an average dollar-weighted
maturity of 90 days or less, and obligations, the principal and interest of
which, are backed by the full faith and credit of the United States government.
Under normal market conditions, at least 65% of the Fund's total assets will be
invested in obligations issued directly by the U.S. Treasury. As a matter of
investment strategy, the Fund's adviser intends to maintain a dollar-weighted
average maturity of 60 days or less.
The investment objective of Virtus Treasury is to seek to provide
current income consistent with stability of principal by investing in short-term
U.S. Treasury obligations which are fully guaranteed as to principal and
interest by the U.S. government. The U.S. obligations mature in 397 days or less
from the date of acquisition unless purchased under a repurchase agreement
providing for the seller to repurchase
<PAGE>
the obligations within one year from the date of acquisition. The average
dollar-weighted maturity will be 90 days or less.
Each Fund seeks to maintain a stable net asset value of $1.00 per share,
although no assurances can be given that such a stable net asset value will be
maintained. The investment objective of Virtus Treasury may not be changed
without shareholder approval. See "Comparison of Investment Objectives and
Policies" below.
Comparative Performance Information for each Fund
Discussion of the manner of calculation of yield and total return are contained
in the respective Prospectuses and Statements of Additional Information of the
Funds. The following tables set forth the current yield and effective yield of
the Class A and Class Y shares of Evergreen Treasury and the Trust Shares and
Investment Shares of the Virtus Treasury for the 7 day period ended September
30, 1997 and the total return of each such Class of the Evergreen Treasury and
Virtus Treasury for the one and five year periods ended September 30,1997 and
the period from inception through September 30, 1997. The calculation of total
return assumes the reinvestment of all dividends and capital gains distributions
on the reinvestment date and the deduction of all recurring expenses (including
sales charges, if any) that were charged to shareholders' accounts.
<TABLE>
<CAPTION>
Current Yield Effective Yield
7 Days Ended 7 Days Ended
September 30, 1997 (1) September 30, 1997 (1)
<S> <C> <C>
Evergreen Treasury
Class Y shares 5.27 5.41
Class A shares 4.97 5.10
Virtus Treasury
Trust shares 4.79% 4.90%
Investment shares 4.54% 4.64%
</TABLE>
<TABLE>
<CAPTION>
Average Annual
Total Return (1)
<PAGE>
1 Year From
Ended 5 Years Inception
September Ended To
30, September September Inception
1997 30, 1997 30, 1997 Date
------- ------- --------- ---------
<S> <C> <C> <C> <C>
Evergreen
Treasury
Class Y 5.17% 4.51% 4.58% 3/6/91
shares
Class A 4.96% 4.19% 4.27% 3/6/91
shares
Virtus
Treasury
(1)
Trust 4.84% 4.15% 4.34% 10/16/90
shares
Investment 4.58% 3.93% 4.18% 10/16/90
shares
</TABLE>
--------------
(1) Reflects waiver of advisory fees and reimbursements and/or waivers of
expenses. Without such reimbursements and/or waivers, the yield and
average annual total return during the period would have been lower.
Important information about Evergreen Treasury is also contained in
management's discussion of Evergreen Treasury's performance, attached hereto as
Exhibit C. This information also appears in Evergreen Treasury's most recent
Annual Report.
Management of the Funds
The overall management of Evergreen Treasury and of Virtus Treasury is
the responsibility of, and is supervised by, the Board of Trustees of Evergreen
Money Market Trust and The Virtus Funds, respectively.
Investment Advisers
The investment adviser to Evergreen Treasury is the Capital Management
Group of First Union National Bank ("FUNB"). FUNB is a subsidiary of First
Union, the sixth largest bank holding company in the United States based on
<PAGE>
total assets as of June 30, 1997. The Capital Management Group of FUNB and its
affiliates manage the Evergreen family of mutual funds with assets of
approximately $32.5 billion as of September 30, 1997. For further information
regarding FUNB and First Union, see "Management of the Funds - Investment
Advisers" in the Prospectuses of Evergreen Treasury.
FUNB manages investments and supervises the daily business affairs of
Evergreen Treasury subject to the authority of the Trustees. FUNB is entitled to
receive from the Fund an annual fee equal to 0.35% of the Fund's average daily
net assets.
Virtus serves as the investment adviser for Virtus Treasury. As
investment adviser, Virtus continuously conducts investment research and
supervision on behalf of the Fund and is responsible for the purchase and sale
of portfolio securities. For its services as investment adviser, Virtus receives
a fee at an annual rate of 0.50% of the Fund's average daily net assets.
Each investment adviser may, at its discretion, reduce or waive its fee
or reimburse a Fund for certain of its other expenses in order to reduce its
expense ratios. Each investment adviser may reduce or cease these voluntary
waivers and reimbursements at any time.
Administrators
Evergreen Investment Services ("EIS") serves as administrator to
Evergreen Treasury. As administrator, EIS provides facilities, equipment and
personnel to Evergreen Treasury and is entitled to receive an administration fee
from the Fund based on the aggregate average daily net assets of all the mutual
Funds advised by FUNB and its affiliates, calculated in accordance with the
following schedule: 0.050% on the first $7 billion, 0.035% on the next $3
billion, 0.030% on the next $5 billion, 0.020% on the next $10 billion, 0.015%
on the next $5 billion and 0.010% on assets in excess of $30 billion.
Federated Administrative Services ("FAS") provides Virtus Treasury with
certain administrative personnel and services including certain legal and
accounting services. FAS is entitled to receive a fee for such services at the
following annual rates: 0.15% on the first $250 million of average daily net
assets of the combined assets of the funds in the Blanchard/Virtus mutual fund
family; 0.125% on the next $250 million of such assets, 0.10% on the next $250
million of such assets, and 0.075% on assets in excess of $750 million.
<PAGE>
Distribution of Shares
Evergreen Distributor, Inc. ("EDI"), an affiliate of BISYS Fund
Services, acts as underwriter of Evergreen Treasury's shares. EDI distributes
the Fund's shares directly or through broker-dealers, banks (including FUNB), or
other financial intermediaries. Evergreen Treasury offers two classes of shares:
Class A and Class Y. Each class has separate distribution arrangements. (See
"Distribution- Related and Shareholder Servicing-Related Expenses" below.) No
class bears the distribution expenses relating to the shares of any other class.
In the proposed Reorganization, shareholders of Virtus Treasury who own
Trust shares and Investment shares will receive Class Y and Class A shares,
respectively, of Evergreen Treasury. The Class Y and Class A shares of Evergreen
Treasury have substantially similar arrangements with respect to the imposition
of distribution and service fees as the Trust and Investment shares of Virtus
Treasury. Because the Reorganization will be effected at net asset value without
the imposition of a sales charge, Evergreen Treasury shares acquired by
shareholders of Virtus Treasury pursuant to the proposed Reorganization would
not be subject to any initial sales charge or contingent deferred sales charge
("CDSC") as a result of the Reorganization.
The following is a summary description of charges and fees for the
Class Y and Class A shares of Evergreen Treasury which will be received by
Virtus Treasury shareholders in the Reorganization. More detailed descriptions
of the distribution arrangements applicable to the classes of shares are
contained in the respective Evergreen Treasury Prospectuses and the Virtus
Treasury Prospectuses and in each Fund's respective Statements of Additional
Information.
Class Y Shares. Class Y shares are sold at net asset value without any
initial sales charge and are not subject to distribution-related fees. Class Y
shares are only available to (i) persons who at or prior to December 31, 1994
owned shares in a mutual fund advised by Evergreen Asset Management Corp.,
("Evergreen Asset"), (ii) certain institutional investors and (iii) investment
advisory clients of FUNB, Evergreen Asset or their affiliates. Virtus Treasury
shareholders who receive Evergreen Treasury Class Y shares in the Reorganization
who wish to make subsequent purchases of Evergreen Treasury's shares will be
able to purchase Class Y shares.
<PAGE>
Class A Shares. Class A shares are sold at net asset value and, as
indicated below, are subject to distribution- related fees. Holders of
Investment shares of Virtus Treasury who receive Class A shares of Evergreen
Treasury in the Reorganization will be able to purchase additional Class A
shares of Evergreen Treasury and of any other Evergreen fund at net asset value.
Additional information regarding the classes of shares of each Fund is
included in its respective Prospectuses and Statements of Additional
Information.
Distribution-Related Expenses. Evergreen Treasury has adopted a Rule
12b-1 plan with respect to its Class A shares under which the Class may pay for
distribution-related expenses at an annual rate which may not exceed 0.75% of
average daily net assets attributable to the Class. Payments with respect to
Class A shares are currently limited to 0.30% of average daily net assets
attributable to the Class, which amount may be increased to the full plan rate
for the Fund by the Trustees without shareholder approval.
Virtus Treasury has adopted a Rule 12b-1 plan with respect to its
Investment shares under which the Class may pay for distribution-related
expenses at an annual rate of 0.25% of average daily net assets attributable to
the Class. Virtus Treasury has not adopted a Rule 12b-1 plan with respect to its
Trust shares.
Additional information regarding the Rule 12b-1 plans adopted by each
Fund is included in its respective Prospectus and Statement of Additional
Information.
Purchase and Redemption Procedures
Information concerning applicable sales charges and
distribution-related fees is provided above. Investments in the Funds are not
insured. The minimum initial purchase requirement for each Fund is $1,000
($10,000 for Trust shares of Virtus Treasury). Except for the minimum subsequent
investment requirement of $100 for Investment shares of Virtus Treasury, there
is no minimum for subsequent purchases of shares of either Fund. Each Fund
provides for telephone, mail or wire redemption of shares at net asset value, as
next determined after receipt of a redemption request on each day the New York
Stock Exchange ("NYSE") is open for trading. Additional information concerning
purchases and redemptions of shares, including how each Fund's net asset value
is determined, is contained in the respective Prospectuses for each Fund. Each
Fund may involuntarily redeem shareholders'
<PAGE>
accounts that have less than $1,000 of invested funds. All funds invested in
each Fund are invested in full and fractional shares. The Funds reserve the
right to reject any purchase order.
Exchange Privileges
Virtus Treasury currently permits holders of Investment shares to
exchange such shares for Investment shares of other funds managed by Virtus.
Exchanges of Trust shares are not permitted. Holders of shares of a class of
Evergreen Treasury generally may exchange their shares for shares of the same
class of any other Evergreen fund. Virtus Treasury shareholders will be
receiving Class Y and Class A shares of Evergreen Treasury in the Reorganization
and, accordingly, with respect to shares of Evergreen Treasury received by
Virtus Treasury shareholders in the Reorganization, the exchange privilege is
limited to the Class Y and Class A shares, as applicable, of other Evergreen
funds. No sales charge is imposed on an exchange. An exchange which represents
an initial investment in another Evergreen fund is subject to the minimum
investment and suitability requirements of each Fund. The current exchange
privileges, and the requirements and limitations attendant thereto, are
described in each Fund's respective Prospectuses and Statements of Additional
Information.
Dividend Policy
Each Fund declares substantially all of its net investment income as
dividends each business day and distributes its income dividends monthly.
Distributions of any net realized gains of a Fund will be made at least
annually. Shareholders begin to earn dividends on the first business day after
shares are purchased unless shares were not paid for, in which case dividends
are not earned until the next business day after payment is received. Dividends
and distributions are reinvested in additional shares of the same class of the
respective Fund, or paid in cash, as a shareholder has elected. See the
respective Prospectuses of each Fund for further information concerning
dividends and distributions.
After the Reorganization, shareholders of Virtus Treasury who have
elected to have their dividends and/or distributions reinvested will have
dividends and/or distributions received from Evergreen Treasury reinvested in
shares of Evergreen Treasury. Shareholders of Virtus Treasury who have elected
to receive dividends and/or distributions in cash will receive dividends and/or
distributions from Evergreen Treasury in cash after the Reorganization, although
they may, after the
<PAGE>
Reorganization, elect to have such dividends and/or distributions reinvested in
additional shares of Evergreen Treasury.
Each of Evergreen Treasury and Virtus Treasury has qualified and
intends to continue to qualify to be treated as a regulated investment company
under the Internal Revenue Code of 1986, as amended (the "Code"). While so
qualified, so long as each Fund distributes all of its investment company
taxable income and any net realized gains to shareholders, it is expected that a
Fund will not be required to pay any federal income taxes on the amounts so
distributed. A 4% nondeductible excise tax will be imposed on amounts not
distributed if a Fund does not meet certain distribution requirements by the end
of each calendar year. Each Fund anticipates meeting such distribution
requirements.
Risks
Since the investment objectives and policies of each Fund are
substantially identical, the risks involved in investing in each Fund's shares
are the same. There is no assurance that the Funds will meet their investment
objectives of maintaining a stable net asset value of $1.00 per share. For a
discussion of each Fund's objectives and policies, see "Comparison of Investment
Objectives and Policies."
The ability of each Fund to meet its investment objective is
necessarily subject to the ability of the issuers of securities in which the
Funds invest to meet their payment obligations. In addition, the portfolio of
each Fund will be affected by general changes in interest rates which will
result in increases or decreases in the values of the obligations held by the
Fund. Investors should recognize that, in periods of declining interest rates,
the yield of a Fund will tend to be somewhat higher than prevailing market
rates, and in periods of rising interest rates, the yield of a Fund will tend to
be somewhat lower. Also, when interest rates are falling, the inflow of net new
money to a Fund from the continuous sales of its shares will likely be invested
in portfolio instruments producing lower yields than the balance of the Fund's
portfolio, thereby reducing the current yield of the Fund. In periods of rising
interest rates, the opposite can be expected to occur.
REASONS FOR THE REORGANIZATION
On July 18, 1997, First Union entered into an Agreement and Plan of
Merger with Signet which provided, among other things, for the Merger of Signet
with and into a wholly-owned
<PAGE>
subsidiary of First Union. The Merger was consummated on November 28, 1997. As a
result of the Merger it is expected that FUNB and its affiliates will succeed to
the investment advisory and administrative functions currently performed for
Virtus Treasury by various units of Signet and various unaffiliated parties. It
is also expected that Signet, or its successors, will no longer, upon completion
of the Reorganization and similar reorganizations of other funds in the Signet
mutual fund family, provide investment advisory or administrative services to
investment companies.
At a regular meeting held on September 16, 1997, the Board of Trustees
of The Virtus Funds considered and approved the Reorganization as in the best
interests of shareholders of Virtus Treasury and determined that the interests
of existing shareholders of Virtus Treasury will not be diluted as a result of
the transactions contemplated by the Reorganization. In addition, the Trustees
approved the Interim Advisory Agreement with respect to Virtus Treasury.
As noted above, Signet has merged with and into a wholly-owned
subsidiary of First Union. Signet is the parent company of Virtus, investment
adviser to the mutual funds which comprise The Virtus Funds. The Merger caused,
as a matter of law, termination of the investment advisory agreement between
each series of The Virtus Funds and Virtus with respect to the Fund. The Virtus
Funds have received an order from the SEC which permits Virtus to continue to
act as Virtus Treasury's investment adviser without shareholder approval, for a
period of not more than 120 days from the date the Merger was consummated
(November 28, 1997) to the date of shareholder approval of a new investment
advisory agreement. Accordingly, the Trustees considered the recommendations of
Signet in approving the proposed Reorganization.
In approving the Plan, the Trustees reviewed various factors about the
Funds and the proposed Reorganization. There are substantial similarities
between Evergreen Treasury and Virtus Treasury. Specifically, Evergreen Treasury
and Virtus Treasury have substantially identical investment objectives, policies
and risk profiles. See "Comparison of Investment Objectives and Policies" below.
At the same time, the Board of Trustees evaluated the potential economies of
scale associated with larger mutual funds and concluded that operational
efficiencies may be achieved upon the combination of Virtus Treasury with an
Evergreen fund with a greater level of assets. As of September 30, 1997,
Evergreen Treasury's net assets were approximately $2,912 million and Virtus
Treasury's net assets were approximately $318 million.
<PAGE>
In addition, assuming that an alternative to the Reorganization would
be to propose that Virtus Treasury continue its existence and be separately
managed by FUNB or one of its affiliates, Virtus Treasury would be offered
through common distribution channels with the substantially identical Evergreen
Treasury. Virtus Treasury would also have to bear the cost of maintaining its
separate existence. Signet and FUNB believe that the prospect of dividing the
resources of the Evergreen mutual fund organization between two substantially
identical funds could result in each Fund being disadvantaged due to an
inability to achieve optimum size, performance levels and the greatest possible
economies of scale. Accordingly, for the reasons noted above and recognizing
that there can be no assurance that any economies of scale or other benefits
will be realized, Signet and FUNB believe that the proposed Reorganization would
be in the best interests of each Fund and its shareholders.
The Board of Trustees of The Virtus Funds met and considered the
recommendation of Signet and FUNB and, in addition, considered among other
things, (i) the terms and conditions of the Reorganization; (ii) whether the
Reorganization would result in the dilution of shareholders' interests; (iii)
expense ratios, fees and expenses of Evergreen Treasury and Virtus Treasury;
(iv) the comparative performance records of each of the Funds; (v) compatibility
of their investment objectives and policies; (vi) the investment experience,
expertise and resources of FUNB; (vii) the service and distribution resources
available to the Evergreen funds and the broad array of investment alternatives
available to shareholders of the Evergreen funds; (viii) the personnel and
financial resources of First Union and its affiliates; (ix) the fact that FUNB
will bear the expenses incurred by Virtus Treasury in connection with the
Reorganization; (x) the fact that Evergreen Treasury will assume certain
identified liabilities of Virtus Treasury; and (xi) the expected federal income
tax consequences of the Reorganization.
The Trustees also considered the benefits to be derived by shareholders
of Virtus Treasury from the sale of its assets to Evergreen Treasury. In this
regard, the Trustees considered the potential benefits of being associated with
a larger entity and the economies of scale that could be realized by the
participation in such an entity by shareholders of Virtus Treasury.
In addition, the Trustees considered that there are alternatives
available to shareholders of Virtus Treasury, including the ability to redeem
their shares, as well as the option to vote against the Reorganization.
<PAGE>
During their consideration of the Reorganization the Trustees met with
Fund counsel and counsel to the Independent Trustees regarding the legal issues
involved. The Trustees of Evergreen Money Market Trust also concluded at a
meeting on September 16, 1997 that the proposed Reorganization would be in the
best interests of shareholders of Evergreen Treasury and that the interests of
the shareholders of Evergreen Treasury would not be diluted as a result of the
transactions contemplated by the Reorganization.
THE TRUSTEES OF THE VIRTUS FUNDS RECOMMEND
THAT THE SHAREHOLDERS OF VIRTUS TREASURY APPROVE
THE PROPOSED REORGANIZATION.
Agreement and Plan of Reorganization
The following summary is qualified in its entirety by reference to the
Plan (Exhibit A hereto).
The Plan provides that Evergreen Treasury will acquire all of the
assets of Virtus Treasury in exchange for shares of Evergreen Treasury and the
assumption by Evergreen Treasury of certain identified liabilities of Virtus
Treasury on or about February 27, 1998 or such other date as may be agreed upon
by the parties (the "Closing Date"). Prior to the Closing Date, Virtus Treasury
will endeavor to discharge all of its known liabilities and obligations.
Evergreen Treasury will not assume any liabilities or obligations of Virtus
Treasury other than those reflected in an unaudited statement of assets and
liabilities of Virtus Treasury prepared as of the close of regular trading on
the NYSE, currently 4:00 p.m. Eastern time, on the business day immediately
prior to the Closing Date. The number of full and fractional shares of each
class of Evergreen Treasury to be received by the shareholders of Virtus
Treasury will be determined by multiplying the respective outstanding class of
shares of Virtus Treasury by a factor which shall be computed by dividing the
net asset value per share of the respective class of shares of Virtus Treasury
by the net asset value per share of the respective class of shares of Evergreen
Treasury. Such computations will take place as of the close of regular trading
on the NYSE on the business day immediately prior to the Closing Date. The net
asset value per share of each class will be determined by dividing assets, less
liabilities, in each case attributable to the respective class, by the total
number of outstanding shares.
State Street Bank and Trust Company, the custodian for Evergreen
Treasury, will compute the value of each Fund's respective portfolio securities.
The method of valuation
<PAGE>
employed will be consistent with the procedures set forth in the Prospectuses
and Statement of Additional Information of Evergreen Treasury, Rule 22c-1 under
the 1940 Act, and with the interpretations of such Rule by the SEC's Division of
Investment Management.
At or prior to the Closing Date, Virtus Treasury will have declared a
dividend or dividends and distribution or distributions which, together with all
previous dividends and distributions, shall have the effect of distributing to
the Fund's shareholders (in shares of the Fund, or in cash, as the shareholder
has previously elected) all of the Fund's net investment company taxable income
for the taxable period ending on the Closing Date (computed without regard to
any deduction for dividends paid) and all of its net capital gains realized in
all taxable periods ending on the Closing Date (after reductions for any capital
loss carryforward).
As soon after the Closing Date as conveniently practicable, Virtus
Treasury will liquidate and distribute pro rata to shareholders of record as of
the close of business on the Closing Date the full and fractional shares of
Evergreen Treasury received by Virtus Treasury. Such liquidation and
distribution will be accomplished by the establishment of accounts in the names
of the Fund's shareholders on the share records of Evergreen Treasury's transfer
agent. Each account will represent the respective pro rata number of full and
fractional shares of Evergreen Treasury due to the Fund's shareholders. All
issued and outstanding shares of Virtus Treasury, including those represented by
certificates, will be canceled. The shares of Evergreen Treasury to be issued
will have no preemptive or conversion rights. After such distributions and the
winding up of its affairs, Virtus Treasury will be terminated. In connection
with such termination, The Virtus Funds will file with the SEC an application
for termination as a registered investment company.
The consummation of the Reorganization is subject to the conditions set
forth in the Plan, including approval by Virtus Treasury's shareholders,
accuracy of various representations and warranties and receipt of opinions of
counsel, including opinions with respect to those matters referred to in
"Federal Income Tax Consequences" below. Notwithstanding approval of Virtus
Treasury's shareholders, the Plan may be terminated (a) by the mutual agreement
of Virtus Treasury and Evergreen Treasury; or (b) at or prior to the Closing
Date by either party (i) because of a breach by the other party of any
representation, warranty, or agreement contained therein to be performed at or
prior to the Closing Date if not cured within
<PAGE>
30 days, or (ii) because a condition to the obligation of the terminating party
has not been met and it reasonably appears that it cannot be met.
The expenses of Virtus Treasury in connection with the Reorganization
(including the cost of any proxy soliciting agent) will be borne by FUNB whether
or not the Reorganization is consummated. No portion of such expenses will be
borne directly or indirectly by Virtus Treasury or its shareholders. There are
not any liabilities or any expected reimbursements in connection with the 12b-1
Plan of Virtus Treasury. As a result, no 12b-1 liabilities will be assumed by
Evergreen Treasury following the Reorganization.
If the Reorganization is not approved by shareholders of Virtus
Treasury, the Board of Trustees of The Virtus Funds will consider other possible
courses of action in the best
interests of shareholders.
Federal Income Tax Consequences
The Reorganization is intended to qualify for federal income tax
purposes as a tax-free reorganization under section 368(a) of the Code. As a
condition to the closing of the Reorganization, Virtus Treasury will receive an
opinion of counsel to the effect that, on the basis of the existing provisions
of the Code, U.S. Treasury regulations issued thereunder, current administrative
rules, pronouncements and court decisions, for federal income tax purposes, upon
consummation of the Reorganization:
(1) The transfer of all of the assets of Virtus Treasury solely in
exchange for shares of Evergreen Treasury and the assumption by Evergreen
Treasury of certain identified liabilities, followed by the distribution of
Evergreen Treasury's shares by Virtus Treasury in dissolution and liquidation of
Virtus Treasury, will constitute a "reorganization" within the meaning of
section 368(a)(1)(C) of the Code, and Evergreen Treasury and Virtus Treasury
will each be a "party to a reorganization" within the meaning of section 368(b)
of the Code;
(2) No gain or loss will be recognized by Virtus Treasury on the
transfer of all of its assets to Evergreen Treasury solely in exchange for
Evergreen Treasury's shares and the assumption by Evergreen Treasury of certain
identified liabilities of Virtus Treasury or upon the distribution of Evergreen
Treasury's shares to Virtus Treasury's shareholders in exchange for their shares
of Virtus Treasury;
<PAGE>
(3) The tax basis of the assets transferred will be the same to
Evergreen Treasury as the tax basis of such assets to Virtus Treasury
immediately prior to the Reorganization, and the holding period of such assets
in the hands of Evergreen Treasury will include the period during which the
assets were held by Virtus Treasury;
(4) No gain or loss will be recognized by Evergreen Treasury upon the
receipt of the assets from the Virtus Treasury solely in exchange for the shares
of Evergreen Treasury and the assumption by Evergreen Treasury of certain
identified liabilities of Virtus Treasury;
(5) No gain or loss will be recognized by Virtus Treasury's
shareholders upon the issuance of the shares of Evergreen Treasury to them,
provided they receive solely such shares (including fractional shares) in
exchange for their shares of the Fund; and
(6) The aggregate tax basis of the shares of Evergreen Treasury,
including any fractional shares, received by each of the shareholders of Virtus
Treasury pursuant to the Reorganization will be the same as the aggregate tax
basis of the shares of the Fund held by such shareholder immediately prior to
the Reorganization, and the holding period of the shares of Evergreen Treasury,
including fractional shares, received by each such shareholder will include the
period during which the shares of Virtus Treasury exchanged therefor were held
by such shareholder (provided that the shares of Virtus Treasury were held as a
capital asset on the date of the Reorganization).
Opinions of counsel are not binding upon the Internal Revenue Service
or the courts. If the Reorganization is consummated but does not qualify as a
tax-free reorganization under the Code, shareholders of Virtus Treasury would
recognize a taxable gain or loss equal to the difference between his or her tax
basis in his or her Fund shares and the fair market value of Evergreen Treasury
shares he or she received. Shareholders of Virtus Treasury should consult their
tax advisers regarding the effect, if any, of the proposed Reorganization in
light of their individual circumstances. It is not anticipated that the
securities of the combined portfolio will be sold in significant amounts in
order to comply with the policies and investment practices of Evergreen
Treasury. Since the foregoing discussion relates only to the federal income tax
consequences of the Reorganization, shareholders of Virtus Treasury should also
consult their tax advisers as to the state and local tax consequences, if any,
of the Reorganization.
<PAGE>
Pro-forma Capitalization
The following table sets forth the capitalizations of Evergreen
Treasury and Virtus Treasury as of September 30, 1997 and the capitalization of
Evergreen Treasury on a pro forma basis as of that date, giving effect to the
proposed acquisition of assets at net asset value. The pro forma data reflects
an exchange ratio of approximately 1.00 and 1.00 Class Y and Class A shares,
respectively, of Evergreen Treasury issued for each Trust and Investment share,
respectively, of Virtus Treasury.
<TABLE>
<CAPTION>
Capitalization of Virtus Treasury,
Evergreen Treasury and Evergreen
Treasury (Pro Forma)
Evergreen
Treasury
Evergreen (After
Virtus Treasury Reorgani-
Treasury -------- zation)
--------- ------------
<S> <C> <C> <C>
Net Assets
Trust.......................... $196,450,150 N/A N/A
Investment..................... $121,299,188 N/A N/A
Class A........................ N/A $2,380,836,926 $2,502,136,044
Class Y........................ N/A $531,131,587 $727,581,737
------------ -------------- --------------
Total Net $317,749,268 $2,911,968,513 $3,229,717,781
Assets . . . .
Net Asset Value Per
Share
Trust.......................... $1.00 N/A N/A
Investment..................... $1.00 N/A N/A
Class A........................ N/A $1.00 $1.00
Class Y........................ N/A $1.00 $1.00
Shares Outstanding
Trust.......................... 196,450,150 N/A N/A
Investment..................... 121,466,050 N/A N/A
Class A........................ N/A 2,380,810,488 2,502,276,538
Class Y........................ N/A 531,124,936 727,575,086
------------ -------------- -------------
All Classes.................... 317,916,200 2,911,935,424 3,229,851,624
</TABLE>
The table set forth above should not be relied upon to reflect the
number of shares to be received in the Reorganization; the actual number of
shares to be received
<PAGE>
will depend upon the net asset value and number of shares outstanding of each
Fund at the time of the Reorganization.
Shareholder Information
As of December 29, 1997 (the "Record Date"), the following number of
each Class of shares of beneficial interest of Virtus Treasury were outstanding:
Class of Shares
- ---------------
Trust..........................................
Investment.....................................
All Classes....................................
As of October 31, 1997, the officers and Trustees of The Virtus Funds
beneficially owned as a group less than 1% of the outstanding shares of Virtus
Treasury. To Virtus Treasury's knowledge, the following persons owned
beneficially or of record more than 5% of Virtus Treasury's total outstanding
shares as of October 31, 1997:
<TABLE>
<CAPTION>
Percen- Percen-
tage of tage of
Shares of Shares of
Class Class
Before After
No. of Reorgani- Reorgani-
Name and Address Class Shares zation zation
- ---------------- ----- ------ --------- ---------
<S> <C> <C> <C> <C>
Stephens, Inc. Investment
111 Center Street
Little Rock, AR
72201-3507
Bova & Co. Trust
Signet Trust
Company
P.O. Box 26311
Richmond, VA
23260-6311
</TABLE>
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
The following discussion is based upon and qualified in its entirety by the
descriptions of the respective investment
<PAGE>
objectives, policies and restrictions set forth in the respective Prospectuses
and Statements of Additional Information of the Funds. The investment objective,
policies and restrictions of Evergreen Treasury can be found in the Prospectuses
of Evergreen Treasury under the caption "Investment Objectives and Policies."
Evergreen Treasury's Prospectuses also offer additional funds advised by FUNB or
its affiliates. These additional funds are not involved in the Reorganization,
their investment objectives and policies are not discussed in this
Prospectus/Proxy Statement and their shares are not offered hereby. The
investment objective, policies and restrictions of Virtus Treasury can be found
in the respective Prospectuses of the Fund under the caption "Investment
Objective and Policies of each Fund." Unlike the investment objective of Virtus
Treasury, which is fundamental, the investment objective of Evergreen Treasury
is non- fundamental and can be changed by the Board of Trustees without
shareholder approval.
The investment objective of Evergreen Treasury is to maintain stability
of principal while earning current income. The Fund will only attempt to seek
income to the extent consistent with stability of principal and, therefore,
investments will be made in short-term United States Treasury obligations with
an average dollar-weighted maturity of 90 days or less and obligations the
principal and interest of which are backed by the full faith and credit of the
United States government, provided that the Fund shall, under normal market
conditions, invest at least 65% of its total assets in obligations issued
directly by the U.S. Treasury. As a matter of investment strategy, the Fund's
investment adviser intends to maintain a dollar-weighted average maturity for
the Fund of 60 days or less.
The short-term United States Treasury obligations in which the Fund
invests are issued by the U.S. government and are fully guaranteed as to
principal and interest by the United States. Such securities will have a
maturity date that is 397 days or less from the date of acquisition unless they
are purchased under an agreement that provides for repurchase of the securities
from the Fund within 397 days from the date of acquisition. The Fund may also
retain Fund assets in cash.
The investment objective of Virtus Treasury is to provide current
income consistent with stability of principal. The Fund pursues its investment
objective by investing only in a portfolio of short-term U.S. Treasury
obligations which are issued by the U.S. government and are fully guaranteed as
to principal and interest by the United States. The U.S. obligations mature in
397 days or less from the date of
<PAGE>
acquisition unless they are purchased under a repurchase agreement that provides
for repurchase by the seller within one year from the date of acquisition. The
average maturity of these U.S. obligations computed on a dollar-weighted basis
will be 90 days or less.
Both Funds must comply with SEC Rule 2a-7 which regulates money market
funds, which restricts illiquid securities to 10% of a money market fund's net
assets.
The characteristics of each investment policy and the associated risks
are described in each Fund's respective Prospectuses and Statements of
Additional Information. The Funds have other investment policies and
restrictions which are also set forth in the Prospectuses and Statements of
Additional Information of each Fund.
COMPARATIVE INFORMATION ON SHAREHOLDERS' RIGHTS
Forms of Organization
Evergreen Money Market Trust and The Virtus Funds are open-end
management investment companies registered with the SEC under the 1940 Act,
which continuously offer shares to the public. Evergreen Money Market Trust is
organized as a Delaware business trust and The Virtus Funds is organized as a
Massachusetts business trust. Each Trust is governed by a Declaration of Trust,
By-Laws and a Board of Trustees. Each Trust is also governed by applicable
Delaware, Massachusetts and federal law. Evergreen Treasury is a series of
Evergreen Money Market Trust and Virtus Treasury is a series of The Virtus
Funds.
Capitalization
The beneficial interests in Evergreen Treasury are represented by an
unlimited number of transferable shares of beneficial interest, $.001 par value
per share. The beneficial interests in Virtus Treasury are represented by an
unlimited number of transferable shares of beneficial interest without par
value. The respective Declaration of Trust under which each Fund has been
established permits the Trustees to allocate shares into an unlimited number of
series, and classes thereof, with rights determined by the Trustees, all without
shareholder approval. Fractional shares may be issued. Each Fund's shares
represent equal proportionate interests in the assets belonging to the Funds.
Shareholders of each Fund are entitled to receive dividends and other amounts as
determined by the Trustees. Shareholders of each Fund vote separately, by class,
as to matters, such as
<PAGE>
approval of or amendments to Rule 12b-1 distribution plans, that affect only
their particular class and by series as to matters, such as approval of or
amendments to investment advisory agreements or proposed reorganizations, that
affect only their particular series.
Shareholder Liability
Under Massachusetts law, shareholders of a business trust could, under
certain circumstances, be held personally liable for the obligations of the
business trust. However, the Declaration of Trust under which Virtus Treasury
was established disclaims shareholder liability for acts or obligations of the
series and requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Fund or the Trustees.
The Declaration of Trust provides for indemnification out of the series property
for all losses and expenses of any shareholder held personally liable for the
obligations of the series. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is considered remote since it is
limited to circumstances in which a disclaimer is inoperative and the series or
the trust itself would be unable to meet its obligations.
Under Delaware law, shareholders of a Delaware business trust are
entitled to the same limitation of personal liability extended to stockholders
of Delaware corporations. No similar statutory or other authority limiting
business trust shareholder liability exists in any other state. As a result, to
the extent that Evergreen Money Market Trust or a shareholder is subject to the
jurisdiction of courts in those states, the courts may not apply Delaware law,
and may thereby subject shareholders of a Delaware trust to liability. To guard
against this risk, the Declaration of Trust of Evergreen Money Market Trust (a)
provides that any written obligation of the Trust may contain a statement that
such obligation may only be enforced against the assets of the Trust or the
particular series in question and the obligation is not binding upon the
shareholders of the Trust; however, the omission of such a disclaimer will not
operate to create personal liability for any shareholder; and (b) provides for
indemnification out of Trust property of any shareholder held personally liable
for the obligations of the Trust. Accordingly, the risk of a shareholder of
Evergreen Money Market Trust incurring financial loss beyond that shareholder's
investment because of shareholder liability is limited to circumstances in
which: (i) the court refuses to apply Delaware law; (ii) no contractual
limitation of liability was in effect; and (iii) the Evergreen Money Market
<PAGE>
Trust itself would be unable to meet its obligations. In light of Delaware law,
the nature of the Trust's business, and the nature of its assets, the risk of
personal liability to a shareholder of Evergreen Money Market Trust is remote.
Shareholder Meetings and Voting Rights
Neither Evergreen Money Market Trust on behalf of Evergreen Treasury
nor The Virtus Funds on behalf of Virtus Treasury is required to hold annual
meetings of shareholders. However, a meeting of shareholders for the purpose of
voting upon the question of removal of a Trustee must be called when requested
in writing by the holders of at least 10% of the outstanding shares of Evergreen
Money Market Trust or The Virtus Funds. In addition, each is required to call a
meeting of shareholders for the purpose of electing Trustees if, at any time,
less than a majority of the Trustees then holding office were elected by
shareholders. Each Trust currently does not intend to hold regular shareholder
meetings. Each Trust does not permit cumulative voting. Except when a larger
quorum is required by applicable law, with respect to Evergreen Treasury,
twenty-five percent (25%) of the outstanding shares entitled to vote, and with
respect to Virtus Treasury, a majority of the outstanding shares entitled to
vote constitutes a quorum for consideration of such matter. For Evergreen
Treasury and Virtus Treasury, a majority of the votes cast and entitled to vote
is sufficient to act on a matter (unless otherwise specifically required by the
applicable governing documents or other law, including the 1940 Act).
Under the Declaration of Trust of Evergreen Money Market Trust, each
share of Evergreen Treasury will be entitled to one vote for each dollar of net
asset value applicable to each share. Under the voting provisions governing
Virtus Treasury, each share is entitled to one vote. Over time, the net asset
values of the mutual funds which are each a series of The Virtus Funds have
changed in relation to one another and are expected to continue to do so in the
future. Because of the divergence in net asset values, a given dollar investment
in a fund which is a series of The Virtus Funds and which has a lower net asset
value will purchase more shares, and, under the current voting provisions of The
Virtus Funds, will have more votes, than the same investment in a fund with a
higher net asset value. Under the Declaration of Trust of Evergreen Money Market
Trust, voting power is related to the dollar value of a shareholder's investment
rather than to the number of shares held.
Liquidation or Dissolution
<PAGE>
In the event of the liquidation of Evergreen Treasury and Virtus
Treasury the shareholders are entitled to receive, when, and as declared by the
Trustees, the excess of the assets belonging to such Fund or attributable to the
class over the liabilities belonging to the Fund or attributable to the class.
In either case, the assets so distributable to shareholders of the Fund will be
distributed among the shareholders in proportion to the number of shares of a
class of the Fund held by them and recorded on the books of the Fund.
Liability and Indemnification of Trustees
The Declaration of Trust of The Virtus Funds provides that a Trustee
shall be liable only for his own willful defaults, and that no Trustee shall be
protected against any liability to which he would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
The By-Laws of The Virtus Funds provide that a present or former
Trustee or officer is entitled to indemnification against liabilities and
expenses with respect to claims related to his or her position with the Trust,
provided that no indemnification shall be provided to a Trustee or officer
against any liability to the Trust or any series thereof or the shareholders of
any series by reasons of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
Under the Declaration of Trust of Evergreen Money Market Trust, a
Trustee is liable to the Trust and its shareholders only for such Trustee's own
willful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of the office of Trustee or the discharge of such
Trustee's functions. As provided in the Declaration of Trust, each Trustee of
the Trust is entitled to be indemnified against all liabilities against him or
her, including the costs of litigation, unless it is determined that the Trustee
(i) did not act in good faith in the reasonable belief that such Trustee's
action was in or not opposed to the best interests of the Trust; (ii) had acted
with willful misfeasance, bad faith, gross negligence or reckless disregard of
such Trustee's duties; and (iii) in a criminal proceeding, had reasonable cause
to believe that such Trustee's conduct was unlawful (collectively, "disabling
conduct"). A determination that the Trustee did not engage in disabling conduct
and is, therefore, entitled to indemnification may be based upon the outcome of
a court action or administrative proceeding or by (a) a vote of a majority of
those Trustees
<PAGE>
who are neither "interested persons" within the meaning of the 1940 Act nor
parties to the proceeding or (b) an independent legal counsel in a written
opinion. The Trust may also advance money for such litigation expenses provided
that the Trustee undertakes to repay the Trust if his or her conduct is later
determined to preclude indemnification and certain other conditions are met.
The foregoing is only a summary of certain characteristics of the
operations of the Declarations of Trust, By-Laws, Delaware and Massachusetts law
and is not a complete description of those documents or law. Shareholders should
refer to the provisions of such Declarations of Trust, By-Laws, Delaware and
Massachusetts law directly for more complete information.
INFORMATION REGARDING THE INTERIM ADVISORY AGREEMENT
Introduction
In view of the Merger discussed above, and the factors discussed below,
the Board of Trustees of The Virtus Funds recommends that shareholders of Virtus
Treasury approve the Interim Advisory Agreement. The Merger became effective on
November 28, 1997. Pursuant to an order received from the SEC all fees payable
under the Interim Advisory Agreement will be placed in escrow and paid to Virtus
if shareholders approve the contract within 120 days of its effective date. The
Interim Advisory Agreement will remain in effect until the earlier of the
Closing Date for the Reorganization or two years from its effective date. The
terms of the Interim Advisory Agreement are essentially the same as the Previous
Advisory Agreement (as defined below). The only difference between the Previous
Advisory Agreement and the Interim Advisory Agreement, if approved by
shareholders, is the length of time each Agreement is in effect. A description
of the Interim Advisory Agreement pursuant to which Virtus continues as
investment adviser to Virtus Treasury, as well as the services to be provided by
Virtus pursuant thereto, is set forth below under "Advisory Services." The
description of the Interim Advisory Agreement in this Prospectus/Proxy Statement
is qualified in its entirety by reference to the Interim Advisory Agreement,
attached hereto as Exhibit B.
Virtus, a Maryland corporation formed in 1995 to succeed to the
business of Signet Asset Management (adviser to the Fund since 1990), is an
indirect wholly-owned subsidiary of First Union. Virtus' address is 707 East
Main Street, Suite 1300, Richmond, Virginia 23219. Virtus has served as
investment adviser pursuant to an Investment Advisory Contract
<PAGE>
dated March 1, 1995, as amended on October 21, 1996. As used herein, the
Investment Advisory Agreement, as amended, for Virtus Treasury is referred to as
the "Previous Advisory Agreement." At a meeting of the Board of Trustees of The
Virtus Funds held on September 16, 1997, the Trustees, including a majority of
the Independent Trustees, approved the Interim Advisory Agreement for Virtus
Treasury.
The Trustees have authorized The Virtus Funds, on behalf of Virtus
Treasury, to enter into the Interim Advisory Agreement with Virtus. Such
Agreement became effective on November 28, 1997. If the Interim Advisory
Agreement for Virtus Treasury is not approved by shareholders, the Trustees will
consider appropriate actions to be taken with respect to Virtus Treasury's
investment advisory arrangements at that time. The Previous Advisory Agreement
was last approved by the Trustees, including a majority of the Independent
Trustees, on February 24, 1997.
Comparison of the Interim Advisory Agreement and the Previous
Advisory Agreement
Advisory Services. The management and advisory services to be provided
by Virtus under the Interim Advisory Agreement are identical to those currently
provided by Virtus under the Previous Advisory Agreement. Under the Previous
Advisory Agreement and Interim Advisory Agreement, Virtus manages Virtus
Treasury and continually conducts investment research and supervision for the
Fund and is responsible for the purchase and sale of portfolio securities.
FAS currently acts as administrator of Virtus Treasury. FAS will
continue during the term of the Interim Advisory Agreement as Virtus Treasury's
administrator for the same compensation as currently received; except that on
February 9, 1998, FAS' obligations to provide transfer agency services for
Virtus Treasury's shareholders will terminate and such services will be provided
for the same fees by Evergreen Service Company. See "Summary - Administrators."
Fees and Expenses. The investment advisory fees and expense limitations for
Virtus Treasury under the Previous Advisory Agreement and the Interim Advisory
Agreement are identical. See "Summary - Investment Advisers."
Expense Reimbursement. The Previous Advisory Agreement included a
provision which provides that Virtus may from time to time and for such periods
as it deems appropriate reduce its compensation to the extent that the Fund's
expenses exceed such lower expense limitation as Virtus may, by notice to The
<PAGE>
Virtus Funds, voluntarily declare to be effective. Furthermore, Virtus may, if
it deems appropriate, assume expenses of the Fund or class to the extent that
the Fund's or classes' expenses exceed such lower expense limitation as Virtus
may, by notice to The Virtus Funds, voluntarily declare to be effective.
The Interim Advisory Agreement contains an identical provision.
Payment of Expenses and Transaction Charges. Under the Previous
Advisory Agreement, The Virtus Funds was required to pay or cause to be paid on
behalf of the Fund or each class, all of the Fund's or classes' expenses and the
Fund's or classes' allocable share of The Virtus Funds' expenses.
The Interim Advisory Agreement contains an identical provision.
Limitation of Liability. The Previous Advisory Agreement provided that
in the absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties under the Agreement on the part of Virtus,
Virtus was not liable to The Virtus Funds or to the Fund or to any shareholder
for any act or omission in the course of or connected in any way with rendering
services or for any losses that may be sustained in the purchase, holding or
sale of any security.
The Interim Advisory Agreement contains an identical provision.
Termination; Assignment. The Interim Advisory Agreement provides that
it may be terminated without penalty by vote of a majority of the outstanding
voting securities of Virtus Treasury (as defined in the 1940 Act) or by a vote
of a majority of The Virtus Funds' entire Board of Trustees on 60 days' written
notice to Virtus or by Virtus on 60 days' written notice to The Virtus Funds.
Also, the Interim Advisory Agreement will automatically terminate in the event
of its assignment (as defined in the 1940 Act). The Previous Advisory Agreement
contained identical provisions as to termination and assignment.
Information about Virtus Treasury's Investment Adviser
Virtus, a registered investment adviser, manages, in addition to the
Fund, other funds of The Virtus Funds, the Blanchard Group of Funds and three
fixed income trust funds. The name and address of each executive officer and
director of
<PAGE>
Virtus are set forth in Appendix A to this Prospectus/Proxy Statement.
During the fiscal years ended September 30, 1997, 1996 and 1995, Virtus
received from Virtus Treasury management fees of $1,897,464, $ and $2,341,724,
respectively, of which $46,840, $209,248 and $469,485, respectively, were
voluntarily waived. Signet acts as custodian for Virtus Treasury and received
$120,115 for the fiscal year ended September 30, 1997. Signet will continue to
act as Virtus Treasury's custodian during the term of the Interim Advisory
Agreement.
The Board of Trustees considered the Interim Advisory Agreement as part
of its overall approval of the Plan. The Board of Trustees considered, among
other things, the factors set forth above in "Reasons for the Reorganization."
The Board of Trustees also considered the fact that there were no material
differences between the terms of the Interim Advisory Agreement and the terms of
the Previous Advisory Agreement.
THE TRUSTEES OF THE VIRTUS FUNDS RECOMMEND
THAT THE SHAREHOLDERS OF VIRTUS TREASURY
APPROVE THE INTERIM ADVISORY AGREEMENT
ADDITIONAL INFORMATION
Evergreen Treasury. Information concerning the operation and management
of Evergreen Treasury is incorporated herein by reference from the Prospectuses
dated December __, 1997, copies of which are enclosed, and Statement of
Additional Information of the same date. A copy of such Statement of Additional
Information is available upon request and without charge by writing to Evergreen
Treasury at the address listed on the cover page of this Prospectus/Proxy
Statement or by calling toll-free 1-800-343-2898.
Virtus Treasury. Information about the Fund is included in its current
Prospectuses dated November 30, 1997 and in the Statements of Additional
Information of the same date, that have been filed with the SEC, all of which
are incorporated herein by reference. Copies of the Prospectuses and Statements
of Additional Information are available upon request and without charge by
writing to Virtus Treasury at the address listed on the cover page of this
Prospectus/Proxy Statement or by calling toll-free 1-800-829-3863.
Evergreen Treasury and Virtus Treasury are each subject to the
informational requirements of the Securities Exchange
<PAGE>
Act of 1934 and the 1940 Act, and in accordance therewith file reports and other
information including proxy material, and charter documents with the SEC. These
items can be inspected and copies obtained at the Public Reference Facilities
maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the SEC's Regional Offices located at Northwest Atrium Center, 500 West Madison
Street, Chicago, Illinois 60661-2511 and Seven World Trade Center, Suite 1300,
New York, New York 10048.
VOTING INFORMATION CONCERNING THE MEETING
This Prospectus/Proxy Statement is furnished in connection with a
solicitation of proxies by the Trustees of The Virtus Funds to be used at the
Special Meeting of Shareholders to be held at 2:00 p.m., February 20, 1998, at
the offices of the Evergreen Funds, 200 Berkeley Street, Boston, Massachusetts
02116, and at any adjournments thereof. This Prospectus/Proxy Statement, along
with a Notice of the meeting and a proxy card, is first being mailed to
shareholders of Virtus Treasury on or about January 5, 1998. Only shareholders
of record as of the close of business on the Record Date will be entitled to
notice of, and to vote at, the Meeting or any adjournment thereof. The holders
of a majority of the outstanding shares entitled to vote, at the close of
business on the Record Date, present in person or represented by proxy, will
constitute a quorum for the Meeting. If the enclosed form of proxy is properly
executed and returned in time to be voted at the Meeting, the proxies named
therein will vote the shares represented by the proxy in accordance with the
instructions marked thereon. Unmarked proxies will be voted FOR the proposed
Reorganization, FOR the Interim Advisory Agreement and FOR any other matters
deemed appropriate. Proxies that reflect abstentions and "broker non-votes"
(i.e., shares held by brokers or nominees as to which (i) instructions have not
been received from the beneficial owners or the persons entitled to vote or (ii)
the broker or nominee does not have discretionary voting power on a particular
matter) will be counted as shares that are present and entitled to vote for
purposes of determining the presence of a quorum, but will not be counted as
shares voted and will have no effect on the vote regarding the Plan. However,
such "broker non-votes" will have the effect of being counted as votes against
the Interim Advisory Agreement which must be approved by a percentage of the
shares present at the Meeting or a majority of the outstanding voting
securities. A proxy may be revoked at any time on or before the Meeting by
written notice to the Secretary of The Virtus Funds, Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779. Unless revoked, all valid proxies will be
voted in accordance with
<PAGE>
the specifications thereon or, in the absence of such specifications, FOR
approval of the Plan and the Reorganization contemplated thereby and FOR
approval of the Interim Advisory Agreement.
Approval of the Plan will require the affirmative vote of a majority of
the shares voted and entitled to vote, with all classes voting together as a
single class at the Meeting at which a quorum of the Fund's shares is present.
Approval of the Interim Advisory Agreement will require the affirmative vote of
(i) 67% or more of the outstanding voting securities if holders of more than 50%
of the outstanding voting securities are present, in person or by proxy, at the
Meeting, or (ii) more than 50% of the outstanding voting securities, whichever
is less, with all classes voting together as one class. Each full share
outstanding is entitled to one vote and each fractional share outstanding is
entitled to a proportionate share of one vote.
Proxy solicitations will be made primarily by mail, but proxy
solicitations may also be made by telephone, telegraph or personal solicitations
conducted by officers and employees of FUNB or Signet, their affiliates or other
representatives of Virtus Treasury (who will not be paid for their soliciting
activities). Shareholder Communications Corp. has been engaged by Virtus
Treasury to assist in soliciting proxies.
If you wish to participate in the Meeting, you may submit the proxy
card included with this Prospectus/Proxy Statement or attend in person. Any
proxy given by you is revocable.
In the event that sufficient votes to approve the Reorganization are
not received by February 20, 1998, the persons named as proxies may propose one
or more adjournments of the Meeting to permit further solicitation of proxies.
In determining whether to adjourn the Meeting, the following factors may be
considered: the percentage of votes actually cast, the percentage of negative
votes actually cast, the nature of any further solicitation and the information
to be provided to shareholders with respect to the reasons for the solicitation.
Any such adjournment will require an affirmative vote by the holders of a
majority of the shares present in person or by proxy and entitled to vote at the
Meeting. The persons named as proxies will vote upon such adjournment after
consideration of all circumstances which may bear upon a decision to adjourn the
Meeting.
A shareholder who objects to the proposed Reorganization will not be
entitled under either Massachusetts law or the Declaration of Trust of The
Virtus Funds to demand payment
<PAGE>
for, or an appraisal of, his or her shares. However, shareholders should be
aware that the Reorganization as proposed is not expected to result in
recognition of gain or loss to shareholders for federal income tax purposes and
that, if the Reorganization is consummated, shareholders will be free to redeem
the shares of Evergreen Treasury which they receive in the transaction at their
then-current net asset value. Shares of Virtus Treasury may be redeemed at any
time prior to the consummation of the Reorganization. Shareholders of Virtus
Treasury may wish to consult their tax advisers as to any differing consequences
of redeeming Fund shares prior to the Reorganization or exchanging such shares
in the Reorganization.
Virtus Treasury does not hold annual shareholder meetings. If the
Reorganization is not approved, shareholders wishing to submit proposals for
consideration for inclusion in a proxy statement for a subsequent shareholder
meeting should send their written proposals to the Secretary of The Virtus Funds
at the address set forth on the cover of this Prospectus/Proxy Statement such
that they will be received by the Fund in a reasonable period of time prior to
any such meeting.
The votes of the shareholders of Evergreen Treasury are not being
solicited by this Prospectus/Proxy Statement and are not required to carry out
the Reorganization.
NOTICE TO BANKS, BROKER-DEALERS AND VOTING TRUSTEES AND THEIR NOMINEES.
Please advise Virtus Treasury whether other persons are beneficial owners of
shares for which proxies are being solicited and, if so, the number of copies of
this Prospectus/Proxy Statement needed to supply copies to the beneficial owners
of the respective shares.
FINANCIAL STATEMENTS AND EXPERTS
The financial statements of Evergreen Treasury as of August 31, 1997,
and the financial statements and financial highlights for the periods indicated
therein, have been incorporated by reference herein and in the Registration
Statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
The financial statements and financial highlights of Virtus Treasury
incorporated by reference in this Prospectus/Proxy Statement by reference from
the Annual Report of The Virtus Funds for the year ended September 30, 1997 have
<PAGE>
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which is incorporated herein by reference and have been so incorporated
in reliance upon the report of such firm given upon their authority as experts
in accounting and auditing.
LEGAL MATTERS
Certain legal matters concerning the issuance of shares of Evergreen
Treasury will be passed upon by Sullivan & Worcester LLP, Washington, D.C.
OTHER BUSINESS
The Trustees of The Virtus Funds do not intend to present any other
business at the Meeting. If, however, any other matters are properly brought
before the Meeting, the persons named in the accompanying form of proxy will
vote thereon in accordance with their judgment.
THE TRUSTEES OF THE VIRTUS FUNDS RECOMMEND APPROVAL OF THE PLAN AND THE
INTERIM ADVISORY AGREEMENT, AND ANY UNMARKED PROXIES WITHOUT INSTRUCTIONS TO THE
CONTRARY WILL BE VOTED IN FAVOR OF APPROVAL OF THE PLAN AND THE INTERIM ADVISORY
AGREEMENT.
January 5, 1998
<PAGE>
APPENDIX A
The names and addresses of the principal executive
officers and directors of Virtus Capital Management, Inc. are
as follows:
OFFICERS:
Name Address
- ---- -------
John Stephen Hall Virtus Capital Management, Inc.
707 East Main Street
Suite 1300
Richmond, Virginia 23219
Tanya Orr Bird Virtus Capital Management, Inc.
707 East Main Street
Suite 1300
Richmond, Virginia 23219
Josie Clemons Rosson Virtus Capital Management, Inc.
707 East Main Street
Suite 1300
Richmond, Virginia 23219
DIRECTORS:
Name Address
- ---- -------
John S. Hall Virtus Capital Management, Inc.
707 East Main Street
Suite 1300
Richmond, Virginia 23219
Tanya Orr Bird Virtus Capital Management, Inc.
707 East Main Street
Suite 1300
Richmond, Virginia 23219
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of this 26th day of November, 1997, by and between the Evergreen Money Market
Trust, a Delaware business trust, with its principal place of business at 200
Berkeley Street, Boston, Massachusetts 02116 (the "Trust"), with respect to its
Evergreen Treasury Money Market Fund series (the "Acquiring Fund"), and The
Virtus Funds, a Massachusetts business trust, with its principal place of
business at Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
("Virtus Funds"), with respect to its The Treasury Money Market Fund series (the
"Selling Fund").
This Agreement is intended to be, and is adopted as, a plan of
reorganization and liquidation within the meaning of Section 368(a)(1)(C) of the
United States Internal Revenue Code of 1986, as amended (the "Code"). The
reorganization (the "Reorganization") will consist of (i) the transfer of all of
the assets of the Selling Fund in exchange solely for Class A and Class Y shares
of beneficial interest, $.001 par value per share, of the Acquiring Fund (the
"Acquiring Fund Shares"); (ii) the assumption by the Acquiring Fund of certain
identified liabilities of the Selling Fund; and (iii) the distribution, after
the Closing Date hereinafter referred to, of the Acquiring Fund Shares to the
shareholders of the Selling Fund in liquidation of the Selling Fund as provided
herein, all upon the terms and conditions hereinafter set forth in this
Agreement.
WHEREAS, the Selling Fund and the Acquiring Fund are each a separate
investment series of an open-end, registered investment company of the
management type and the Selling Fund owns securities that generally are assets
of the character in which the Acquiring Fund is permitted to invest;
WHEREAS, both Funds are authorized to issue their shares
of beneficial interest;
WHEREAS, the Trustees of the Trust have determined that the exchange of
all of the assets of the Selling Fund for Acquiring Fund Shares and the
assumption of certain identified liabilities of the Selling Fund by the
Acquiring Fund on the terms and conditions hereinafter set forth are in the best
interests of the Acquiring Fund's shareholders;
<PAGE>
WHEREAS, the Trustees of Virtus Funds have determined that the Selling
Fund should exchange all of its assets and certain identified liabilities for
Acquiring Fund Shares and that the interests of the existing shareholders of the
Selling Fund will not be diluted as a result of the transactions contemplated
herein;
NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
ARTICLE I
TRANSFER OF ASSETS OF THE SELLING FUND IN EXCHANGE FOR
THE ACQUIRING FUND SHARES AND ASSUMPTION OF SELLING FUND
LIABILITIES AND LIQUIDATION OF THE SELLING FUND
1.1 THE EXCHANGE. Subject to the terms and conditions herein set forth
and on the basis of the representations and warranties contained herein, the
Selling Fund agrees to transfer all of the Selling Fund's assets as set forth in
paragraph 1.2 to the Acquiring Fund. The Acquiring Fund agrees in exchange
therefor (i) to deliver to the Selling Fund the number of Acquiring Fund Shares,
including fractional Acquiring Fund Shares, determined by multiplying the shares
outstanding of each class of the Selling Fund by the ratio computed by dividing
the net asset value per share of each such class of the Selling Fund by the net
asset value per share of the corresponding class of Acquiring Fund Shares
computed in the manner and as of the time and date set forth in paragraph 2.2;
and (ii) to assume certain identified liabilities of the Selling Fund, as set
forth in paragraph 1.3. Such transactions shall take place at the closing
provided for in paragraph 3.1 (the "Closing Date").
1.2 ASSETS TO BE ACQUIRED. The assets of the Selling Fund to be
acquired by the Acquiring Fund shall consist of all property, including, without
limitation, all cash, securities, commodities, and interests in futures and
dividends or interest receivables, that is owned by the Selling Fund and any
deferred or prepaid expenses shown as an asset on the books of the Selling Fund
on the Closing Date.
The Selling Fund has provided the Acquiring Fund with its most recent
audited financial statements, which contain a list of all of Selling Fund's
assets as of the date thereof. The Selling Fund hereby represents that as of the
date of the execution of this Agreement there have been no changes in its
financial position as reflected in said financial statements other than those
occurring in the ordinary course of its
<PAGE>
business in connection with the purchase and sale of securities and the payment
of its normal operating expenses.
The Acquiring Fund will, within a reasonable time prior to the Closing
Date, furnish the Selling Fund with a list of the securities, if any, on the
Selling Fund's list referred to in the second sentence of this paragraph that do
not conform to the Acquiring Fund's investment objectives, policies, and
restrictions. The Selling Fund will, within a reasonable period of time prior to
the Closing Date, furnish the Acquiring Fund with a list of its portfolio
securities and other investments. In the event that the Selling Fund holds any
investments that the Acquiring Fund may not hold, the Selling Fund, if requested
by the Acquiring Fund, will dispose of such securities prior to the Closing
Date. In addition, if it is determined that the Selling Fund and the Acquiring
Fund portfolios, when aggregated, would contain investments exceeding certain
percentage limitations imposed upon the Acquiring Fund with respect to such
investments, the Selling Fund if requested by the Acquiring Fund will dispose of
a sufficient amount of such investments as may be necessary to avoid violating
such limitations as of the Closing Date. Notwithstanding the foregoing, nothing
herein will require the Selling Fund to dispose of any investments or securities
if, in the reasonable judgment of the Selling Fund, such disposition would
adversely affect the tax-free nature of the Reorganization or would violate the
Selling Fund's fiduciary duty to its shareholders.
1.3 LIABILITIES TO BE ASSUMED. The Selling Fund will endeavor to
discharge all of its known liabilities and obligations prior to the Closing
Date. The Acquiring Fund shall assume only those liabilities, expenses, costs,
charges and reserves reflected on a Statement of Assets and Liabilities of the
Selling Fund prepared on behalf of the Selling Fund, as of the Valuation Date
(as defined in paragraph 2.1), in accordance with generally accepted accounting
principles consistently applied from the prior audited period. The Acquiring
Fund shall assume only those liabilities of the Selling Fund reflected in such
Statement of Assets and Liabilities and shall not assume any other liabilities,
whether absolute or contingent, known or unknown, accrued or unaccrued, all of
which shall remain the obligation of the Selling Fund.
In addition, upon completion of the Reorganization, for purposes of
calculating the maximum amount of sales charges (including asset based sales
charges) permitted to be imposed by the Acquiring Fund under the National
Association of Securities Dealers, Inc. Conduct Rule 2830 ("Aggregate NASD
<PAGE>
Cap"), the Acquiring Fund will add to its Aggregate NASD Cap of the Selling Fund
immediately prior to the Reorganization, in each case calculated in accordance
with such Rule 2830.
1.4 LIQUIDATION AND DISTRIBUTION. On or as soon after the Closing Date
as is conveniently practicable (the "Liquidation Date"), (a) the Selling Fund
will liquidate and distribute pro rata to the Selling Fund's shareholders of
record, determined as of the close of business on the Valuation Date (the
"Selling Fund Shareholders"), the Acquiring Fund Shares received by the Selling
Fund pursuant to paragraph 1.1; and (b) the Selling Fund will thereupon proceed
to dissolve as set forth in paragraph 1.8 below. Such liquidation and
distribution will be accomplished by the transfer of the Acquiring Fund Shares
then credited to the account of the Selling Fund on the books of the Acquiring
Fund to open accounts on the share records of the Acquiring Fund in the names of
the Selling Fund Shareholders and representing the respective pro rata number of
the Acquiring Fund Shares due such shareholders. All issued and outstanding
shares of the Selling Fund will simultaneously be canceled on the books of the
Selling Fund. The Acquiring Fund shall not issue certificates representing the
Acquiring Fund Shares in connection with such exchange.
1.5 OWNERSHIP OF SHARES. Ownership of Acquiring Fund Shares will be
shown on the books of the Acquiring Fund's transfer agent. Shares of the
Acquiring Fund will be issued in the manner described in the combined Prospectus
and Proxy Statement on Form N-14 to be distributed to shareholders of the
Selling Fund as described in paragraph 5.7.
1.6 TRANSFER TAXES. Any transfer taxes payable upon issuance of the
Acquiring Fund Shares in a name other than the registered holder of the Selling
Fund shares on the books of the Selling Fund as of that time shall, as a
condition of such issuance and transfer, be paid by the person to whom such
Acquiring Fund Shares are to be issued and transferred.
1.7 REPORTING RESPONSIBILITY. Any reporting responsibility of the
Selling Fund is and shall remain the responsibility of the Selling Fund up to
and including the Closing Date and such later date on which the Selling Fund is
terminated.
<PAGE>
1.8 TERMINATION. The Selling Fund shall be terminated promptly
following the Closing Date and the making of all distributions pursuant to
paragraph 1.4.
ARTICLE II
VALUATION
2.1 VALUATION OF ASSETS. The value of the Selling Fund's assets to be
acquired by the Acquiring Fund hereunder shall be the value of such assets
computed as of the close of business on the New York Stock Exchange on the
business day next preceding the Closing Date (such time and date being
hereinafter called the "Valuation Date"), using the valuation procedures set
forth in the Trust's Declaration of Trust and the Acquiring Fund's then current
prospectuses and statement of additional information or such other valuation
procedures as shall be mutually agreed upon by the parties.
2.2 VALUATION OF SHARES. The net asset value per share of the Acquiring
Fund Shares shall be the net asset value per share computed as of the close of
business on the New York Stock Exchange on the Valuation Date, using the
valuation procedures set forth in the Trust's Declaration of Trust and the
Acquiring Fund's then current prospectuses and statement of additional
information.
2.3 SHARES TO BE ISSUED. The number of the Acquiring Fund Shares of
each class to be issued (including fractional shares, if any) in exchange for
the Selling Fund's assets shall be determined by multiplying the shares
outstanding of each class of the Selling Fund by the ratio computed by dividing
the net asset value per share of the Selling Fund attributable to each of its
classes by the net asset value per share of the respective classes of the
Acquiring Fund determined in accordance with paragraph 2.2. Holders of
Investment shares and Trust shares of the Selling Fund will receive Class A and
Class Y shares, respectively, of the Acquiring Fund.
2.4 DETERMINATION OF VALUE. All computations of value shall be made by
State Street Bank and Trust Company in accordance with its regular practice in
pricing the shares and assets of the Acquiring Fund.
<PAGE>
ARTICLE III
CLOSING AND CLOSING DATE
3.1 CLOSING DATE. The Closing (the "Closing") shall take place on or
about February 27, 1998 or such other date as the parties may agree to in
writing (the "Closing Date"). All acts taking place at the Closing shall be
deemed to take place simultaneously immediately prior to the opening of business
on the Closing Date unless otherwise provided. The Closing shall be held as of
9:00 a.m. at the offices of the Evergreen Funds, 200 Berkeley Street, Boston, MA
02116, or at such other time and/or place as the parties may agree.
3.2 CUSTODIAN'S CERTIFICATE. Signet Trust Company, as custodian for the
Selling Fund (the "Custodian"), shall deliver at the Closing a certificate of an
authorized officer stating that (a) the Selling Fund's portfolio securities,
cash, and any other assets shall have been delivered in proper form to the
Acquiring Fund on the Closing Date; and (b) all necessary taxes including all
applicable federal and state stock transfer stamps, if any, shall have been
paid, or provision for payment shall have been made, in conjunction with the
delivery of portfolio securities by the Selling Fund.
3.3 EFFECT OF SUSPENSION IN TRADING. In the event that on the Valuation
Date (a) the New York Stock Exchange or another primary trading market for
portfolio securities of the Acquiring Fund or the Selling Fund shall be closed
to trading or trading thereon shall be restricted; or (b) trading or the
reporting of trading on said Exchange or elsewhere shall be disrupted so that
accurate appraisal of the value of the net assets of the Acquiring Fund or the
Selling Fund is impracticable, the Valuation Date shall be postponed until the
first business day after the day when trading shall have been fully resumed and
reporting shall have been restored.
3.4 TRANSFER AGENT'S CERTIFICATE. Evergreen Service Company, as
transfer agent for the Selling Fund as of the Closing Date shall deliver at the
Closing a certificate of an authorized officer stating that its records contain
the names and addresses of the Selling Fund Shareholders and the number and
percentage ownership of outstanding shares owned by each such shareholder
immediately prior to the Closing. The Acquiring Fund shall issue and deliver or
cause Evergreen Service Company, its transfer agent as of the Closing Date, to
issue and deliver a confirmation evidencing the Acquiring Fund Shares to be
credited on the Closing Date to the Secretary of
<PAGE>
Virtus Funds or provide evidence satisfactory to the Selling Fund that such
Acquiring Fund Shares have been credited to the Selling Fund's account on the
books of the Acquiring Fund. At the Closing, each party shall deliver to the
other such bills of sale, checks, assignments, share certificates, if any,
receipts and other documents as such other party or its counsel may reasonably
request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS OF THE SELLING FUND. The Selling
Fund represents and warrants to the Acquiring Fund as follows:
(a) The Selling Fund is a separate investment series of a
Massachusetts business trust duly organized, validly existing, and in good
standing under the laws of The Commonwealth of Massachusetts.
(b) The Selling Fund is a separate investment series of a
Massachusetts business trust that is registered as an investment company
classified as a management company of the open-end type, and its registration
with the Securities and Exchange Commission (the "Commission") as an investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
is in full force and effect.
(c) The current prospectuses and statement of additional
information of the Selling Fund conform in all material respects to the
applicable requirements of the Securities Act of 1933, as amended (the "1933
Act"), and the 1940 Act and the rules and regulations of the Commission
thereunder and do not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(d) The Selling Fund is not, and the execution, delivery, and
performance of this Agreement (subject to shareholder approval) will not result,
in violation of any provision of Virtus Funds' Declaration of Trust or By-Laws
or of any material agreement, indenture, instrument, contract, lease, or other
undertaking to which the Selling Fund is a party or by which it is bound.
<PAGE>
(e) The Selling Fund has no material contracts or other
commitments (other than this Agreement) that will be terminated with liability
to it prior to the Closing Date except for liabilities, if any, to be discharged
or reflected on the Statement of Assets and Liabilities as provided in paragraph
1.3 hereof.
(f) Except as otherwise disclosed in writing to and accepted
by the Acquiring Fund, no litigation, administrative proceeding, or
investigation of or before any court or governmental body is presently pending
or to its knowledge threatened against the Selling Fund or any of its properties
or assets, which, if adversely determined, would materially and adversely affect
its financial condition, the conduct of its business, or the ability of the
Selling Fund to carry out the transactions contemplated by this Agreement. The
Selling Fund knows of no facts that might form the basis for the institution of
such proceedings and is not a party to or subject to the provisions of any
order, decree, or judgment of any court or governmental body that materially and
adversely affects its business or its ability to consummate the transactions
herein contemplated.
(g) The financial statements of the Selling Fund at September
30, 1997 are in accordance with generally accepted accounting principles
consistently applied, and such statements (copies of which have been furnished
to the Acquiring Fund) fairly reflect the financial condition of the Selling
Fund as of such date, and there are no known contingent liabilities of the
Selling Fund as of such date not disclosed therein.
(h) Since September 30, 1997 there has not been any material
adverse change in the Selling Fund's financial condition, assets, liabilities,
or business other than changes occurring in the ordinary course of business, or
any incurrence by the Selling Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as otherwise disclosed to
and accepted by the Acquiring Fund. For the purposes of this subparagraph (h), a
decline in the net asset value of the Selling Fund shall not constitute a
material adverse change.
(i) At the Closing Date, all federal and other tax returns and
reports of the Selling Fund required by law to have been filed by such dates
shall have been filed, and all federal and other taxes shown due on said returns
and reports shall have been paid, or provision shall have been made for the
payment thereof. To the best of the Selling Fund's
<PAGE>
knowledge, no such return is currently under audit, and no assessment has been
asserted with respect to such returns.
(j) For each fiscal year of its operation, the Selling Fund
has met the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company and has distributed in each such
year all net investment income and realized capital gains.
(k) All issued and outstanding shares of the Selling Fund are,
and at the Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable by the Selling Fund (except that, under Massachusetts
law, Selling Fund Shareholders could under certain circumstances be held
personally liable for obligations of the Selling Fund). All of the issued and
outstanding shares of the Selling Fund will, at the time of the Closing Date, be
held by the persons and in the amounts set forth in the records of the transfer
agent as provided in paragraph 3.4. The Selling Fund does not have outstanding
any options, warrants, or other rights to subscribe for or purchase any of the
Selling Fund shares, nor is there outstanding any security convertible into any
of the Selling Fund shares.
(l) At the Closing Date, the Selling Fund will have good and
marketable title to the Selling Fund's assets to be transferred to the Acquiring
Fund pursuant to paragraph 1.2 and full right, power, and authority to sell,
assign, transfer, and deliver such assets hereunder, and, upon delivery and
payment for such assets, the Acquiring Fund will acquire good and marketable
title thereto, subject to no restrictions on the full transfer thereof,
including such restrictions as might arise under the 1933 Act, other than as
disclosed to the Acquiring Fund and accepted by the Acquiring Fund.
(m) The execution, delivery, and performance of this Agreement
have been duly authorized by all necessary action on the part of the Selling
Fund and, subject to approval by the Selling Fund Shareholders, this Agreement
constitutes a valid and binding obligation of the Selling Fund, enforceable in
accordance with its terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium, and other laws relating to or affecting creditors'
rights and to general equity principles.
(n) The information to be furnished by the Selling Fund for
use in no-action letters, applications for orders, registration statements,
proxy materials, and other documents that may be necessary in connection with
the transactions
<PAGE>
contemplated hereby shall be accurate and complete in all material respects and
shall comply in all material respects with federal securities and other laws and
regulations thereunder applicable thereto.
(o) The Proxy Statement of the Selling Fund to be included in
the Registration Statement (as defined in paragraph 5.7)(other than information
therein that relates to the Acquiring Fund) will, on the effective date of the
Registration Statement and on the Closing Date, not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which such statements were made, not misleading.
4.2.1 REPRESENTATIONS OF THE ACQUIRING FUND. The
Acquiring Fund represents and warrants to the Selling Fund as
follows:
(a) The Acquiring Fund is a separate investment series of a
Delaware business trust duly organized, validly existing and in good standing
under the laws of the State of Delaware.
(b) The Acquiring Fund is a separate investment series of a
Delaware business trust that is registered as an investment company classified
as a management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act is in full force and
effect.
(c) The current prospectus and statement of additional
information of the Acquiring Fund conform in all material respects to the
applicable requirements of the 1933 Act and the 1940 Act and the rules and
regulations of the Commission thereunder and do not include any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(d) The Acquiring Fund is not, and the execution, delivery and
performance of this Agreement will not result, in violation of the Trust's
Declaration of Trust or By-Laws or of any material agreement, indenture,
instrument, contract, lease, or other undertaking to which the Acquiring Fund is
a party or by which it is bound.
(e) Except as otherwise disclosed in writing to the
Selling Fund and accepted by the Selling Fund, no litigation,
<PAGE>
administrative proceeding or investigation of or before any court or
governmental body is presently pending or to its knowledge threatened against
the Acquiring Fund or any of its properties or assets, which, if adversely
determined, would materially and adversely affect its financial condition and
the conduct of its business or the ability of the Acquiring Fund to carry out
the transactions contemplated by this Agreement. The Acquiring Fund knows of no
facts that might form the basis for the institution of such proceedings and is
not a party to or subject to the provisions of any order, decree, or judgment of
any court or governmental body that materially and adversely affects its
business or its ability to consummate the transactions contemplated herein.
(f) The financial statements of the Acquiring Fund at August
31, 1997 are in accordance with generally accepted accounting principles
consistently applied, and such statements (copies of which have been furnished
to the Selling Fund) fairly reflect the financial condition of the Acquiring
Fund as of such date, and there are no known contingent liabilities of the
Acquiring Fund as of such date not disclosed therein.
(g) Since August 31, 1997, there has not been any material
adverse change in the Acquiring Fund's financial condition, assets, liabilities,
or business other than changes occurring in the ordinary course of business, or
any incurrence by the Acquiring Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as otherwise disclosed to
and accepted by the Selling Fund. For the purposes of this subparagraph (g), a
decline in the net asset value of the Acquiring Fund shall not constitute a
material adverse change.
(h) At the Closing Date, all federal and other tax returns and
reports of the Acquiring Fund required by law then to be filed by such dates
shall have been filed, and all federal and other taxes shown due on said returns
and reports shall have been paid or provision shall have been made for the
payment thereof. To the best of the Acquiring Fund's knowledge, no such return
is currently under audit, and no assessment has been asserted with respect to
such returns.
(i) For each fiscal year of its operation, the Acquiring Fund
has met the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company and has distributed in each such
year all net investment income and realized capital gains.
<PAGE>
(j) All issued and outstanding Acquiring Fund Shares are, and
at the Closing Date will be, duly and validly issued and outstanding, fully paid
and non-assessable. The Acquiring Fund does not have outstanding any options,
warrants, or other rights to subscribe for or purchase any Acquiring Fund
Shares, nor is there outstanding any security convertible into any Acquiring
Fund Shares.
(k) The execution, delivery, and performance of this Agreement
have been duly authorized by all necessary action on the part of the Acquiring
Fund, and this Agreement constitutes a valid and binding obligation of the
Acquiring Fund enforceable in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium, and other
laws relating to or affecting creditors' rights and to general equity
principles.
(l) The Acquiring Fund Shares to be issued and delivered to
the Selling Fund, for the account of the Selling Fund Shareholders, pursuant to
the terms of this Agreement will, at the Closing Date, have been duly authorized
and, when so issued and delivered, will be duly and validly issued Acquiring
Fund Shares, and will be fully paid and non-assessable.
(m) The information to be furnished by the Acquiring Fund for
use in no-action letters, applications for orders, registration statements,
proxy materials, and other documents that may be necessary in connection with
the transactions contemplated hereby shall be accurate and complete in all
material respects and shall comply in all material respects with federal
securities and other laws and regulations applicable thereto.
(n) The Prospectus and Proxy Statement (as defined in
paragraph 5.7) to be included in the Registration Statement (only insofar as it
relates to the Acquiring Fund) will, on the effective date of the Registration
Statement and on the Closing Date, not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which such statements were made, not misleading.
(o) The Acquiring Fund agrees to use all reasonable efforts to
obtain the approvals and authorizations required by the 1933 Act, the 1940 Act,
and such of the state Blue Sky or securities laws as it may deem appropriate in
order to continue its operations after the Closing Date.
<PAGE>
4.2.2 REPRESENTATIONS OF PREDECESSOR FUND. The representations and
warranties set forth in Section 4.2.1 shall be deemed to include, to the extent
applicable, representations and warranties made by and on behalf of Evergreen
Treasury Money Market Fund (the "Predecessor Fund"), a series of Evergreen
Investment Trust, a Massachusetts business trust, as of the date hereof. The
Acquiring Fund shall deliver to the Selling Fund a certificate of the
Predecessor Fund of even date making the representations set forth in Section
4.2.1 with respect to the Predecessor Fund to the extent applicable to the
Predecessor Fund as of the date hereof.
ARTICLE V
COVENANTS OF THE ACQUIRING FUND AND THE SELLING FUND
5.1 OPERATION IN ORDINARY COURSE. The Acquiring Fund and the Selling
Fund each will operate its business in the ordinary course between the date
hereof and the Closing Date, it being understood that such ordinary course of
business will include customary dividends and distributions.
5.2 APPROVAL OF SHAREHOLDERS. Virtus Funds will call a meeting of the
Selling Fund Shareholders to consider and act upon this Agreement and to take
all other action necessary to obtain approval of the transactions contemplated
herein.
5.3 INVESTMENT REPRESENTATION. The Selling Fund covenants that the
Acquiring Fund Shares to be issued hereunder are not being acquired for the
purpose of making any distribution thereof other than in accordance with the
terms of this Agreement.
5.4 ADDITIONAL INFORMATION. The Selling Fund will assist the Acquiring
Fund in obtaining such information as the Acquiring Fund reasonably requests
concerning the beneficial ownership of the Selling Fund shares.
5.5 FURTHER ACTION. Subject to the provisions of this Agreement, the
Acquiring Fund and the Selling Fund will each take, or cause to be taken, all
action, and do or cause to be done, all things reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement, including any actions required to be taken after the Closing Date.
5.6 STATEMENT OF EARNINGS AND PROFITS. As promptly as practicable, but in
any case within sixty days after the Closing Date, the Selling Fund shall
furnish the Acquiring
<PAGE>
Fund, in such form as is reasonably satisfactory to the Acquiring Fund, a
statement of the earnings and profits of the Selling Fund for federal income tax
purposes that will be carried over by the Acquiring Fund as a result of Section
381 of the Code, and which will be reviewed by KPMG Peat Marwick and certified
by Virtus Funds' President and Treasurer.
5.7 PREPARATION OF FORM N-14 REGISTRATION STATEMENT. The Selling Fund
will provide the Acquiring Fund with information reasonably necessary for the
preparation of a prospectus, which will include the proxy statement, referred to
in paragraph 4.1(o) (the "Prospectus and Proxy Statement"), all to be included
in a Registration Statement on Form N-14 of the Acquiring Fund (the
"Registration Statement"), in compliance with the 1933 Act, the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and the 1940 Act in
connection with the meeting of the Selling Fund Shareholders to consider
approval of this Agreement and the transactions contemplated herein.
5.8 CAPITAL LOSS CARRYFORWARDS. AS promptly as practicable, but in any
case within sixty days after the Closing Date, the Acquiring Fund and the
Selling Fund shall cause KPMG Peat Marwick LLP to issue a letter addressed to
the Acquiring Fund and the Selling Fund, in form and substance satisfactory to
the Funds, setting forth the federal income tax implications relating to capital
loss carryforwards (if any) of the Selling Fund and the related impact, if any,
of the proposed transfer of all of the assets of the Selling Fund to the
Acquiring Fund and the ultimate dissolution of the Selling Fund, upon the
shareholders of the Selling Fund.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLING FUND
The obligations of the Selling Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquiring Fund of all the obligations to be performed by it hereunder on or
before the Closing Date, and, in addition thereto, the following further
conditions:
6.1 All representations, covenants, and warranties of the Acquiring
Fund contained in this Agreement shall be true and correct as of the date hereof
and as of the Closing Date with the same force and effect as if made on and as
of the Closing Date, and the Acquiring Fund shall have delivered to the Selling
Fund a certificate executed in its name by the
<PAGE>
Trust's President or Vice President and its Treasurer or Assistant Treasurer, in
form and substance reasonably satisfactory to the Selling Fund and dated as of
the Closing Date, to such effect and as to such other matters as the Selling
Fund shall reasonably request.
6.2 The Selling Fund shall have received on the Closing Date an opinion
from Sullivan & Worcester LLP, counsel to the Acquiring Fund, dated as of the
Closing Date, in a form reasonably satisfactory to the Selling Fund, covering
the following points:
(a) The Acquiring Fund is a separate investment series of a
Delaware business trust duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the power to own all of its
properties and assets and to carry on its business as presently conducted.
(b) The Acquiring Fund is a separate investment series of a
Delaware business trust registered as an investment company under the 1940 Act,
and, to such counsel's knowledge, such registration with the Commission as an
investment company under the 1940 Act is in full force and effect.
(c) This Agreement has been duly authorized, executed, and
delivered by the Acquiring Fund and, assuming due authorization, execution and
delivery of this Agreement by the Selling Fund, is a valid and binding
obligation of the Acquiring Fund enforceable against the Acquiring Fund in
accordance with its terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium, and other laws relating to or affecting creditors'
rights generally and to general equity principles.
(d) Assuming that a consideration therefor not less than the
net asset value thereof has been paid, the Acquiring Fund Shares to be issued
and delivered to the Selling Fund on behalf of the Selling Fund Shareholders as
provided by this Agreement are duly authorized and upon such delivery will be
legally issued and outstanding and fully paid and non-assessable, and no
shareholder of the Acquiring Fund has any preemptive rights in respect thereof.
(e) The Registration Statement, to such counsel's knowledge,
has been declared effective by the Commission and no stop order under the 1933
Act pertaining thereto has been issued, and to the knowledge of such counsel, no
consent, approval, authorization or order of any court or governmental authority
of the United States or the State of Delaware is
<PAGE>
required for consummation by the Acquiring Fund of the transactions contemplated
herein, except such as have been obtained under the 1933 Act, the 1934 Act and
the 1940 Act, and as may be required under state securities laws.
(f) The execution and delivery of this Agreement did not, and
the consummation of the transactions contemplated hereby will not, result in a
violation of the Trust's Declaration of Trust or By-Laws or any provision of any
material agreement, indenture, instrument, contract, lease or other undertaking
(in each case known to such counsel) to which the Acquiring Fund is a party or
by which it or any of its properties may be bound or to the knowledge of such
counsel, result in the acceleration of any obligation or the imposition of any
penalty, under any agreement, judgment, or decree to which the Acquiring Fund is
a party or by which it is bound.
(g) Only insofar as they relate to the Acquiring Fund, the
descriptions in the Prospectus and Proxy Statement of statutes, legal and
governmental proceedings and material contracts, if any, are accurate and fairly
present the information required to be shown.
(h) Such counsel does not know of any legal or governmental
proceedings, only insofar as they relate to the Acquiring Fund, existing on or
before the effective date of the Registration Statement or the Closing Date
required to be described in the Registration Statement or to be filed as
exhibits to the Registration Statement which are not described or filed as
required.
(i) To the knowledge of such counsel, no litigation or
administrative proceeding or investigation of or before any court or
governmental body is presently pending or threatened as to the Acquiring Fund or
any of its properties or assets and the Acquiring Fund is not a party to or
subject to the provisions of any order, decree or judgment of any court or
governmental body, which materially and adversely affects its business, other
than as previously disclosed in the Registration Statement.
Such counsel shall also state that they have participated in
conferences with officers and other representatives of the Acquiring Fund at
which the contents of the Prospectus and Proxy Statement and related matters
were discussed and, although they are not passing upon and do not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Prospectus and Proxy Statement (except to the extent indicated
in paragraph (g) of their
<PAGE>
above opinion), on the basis of the foregoing (relying as to materiality to a
large extent upon the opinions of the Trust's officers and other representatives
of the Acquiring Fund), no facts have come to their attention that lead them to
believe that the Prospectus and Proxy Statement as of its date, as of the date
of the Selling Fund Shareholders' meeting, and as of the Closing Date, contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein regarding the Acquiring Fund or necessary, in the
light of the circumstances under which they were made, to make the statements
therein regarding the Acquiring Fund not misleading. Such opinion may state that
such counsel does not express any opinion or belief as to the financial
statements or any financial or statistical data, or as to the information
relating to the Selling Fund, contained in the Prospectus and Proxy Statement or
the Registration Statement, and that such opinion is solely for the benefit of
Virtus Funds and the Selling Fund. Such opinion shall contain such other
assumptions and limitations as shall be in the opinion of Sullivan & Worcester
LLP appropriate to render the opinions expressed therein.
In this paragraph 6.2, references to Prospectus and Proxy Statement
include and relate to only the text of such Prospectus and Proxy Statement and
not to any exhibits or attachments thereto or to any documents incorporated by
reference therein.
6.3 The merger between First Union Corporation and Signet Banking
Corporation shall be completed prior to the Closing Date.
6.4 The acquisition of the assets of the Predecessor Fund by the
Acquiring Fund shall have been completed prior to the Closing Date.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to complete the transactions
provided for herein shall be subject, at its election, to the performance by the
Selling Fund of all the obligations to be performed by it hereunder on or before
the Closing Date and, in addition thereto, the following conditions:
7.1 All representations, covenants, and warranties of the Selling Fund
contained in this Agreement shall be true and correct as of the date hereof and
as of the Closing Date with
<PAGE>
the same force and effect as if made on and as of the Closing Date, and the
Selling Fund shall have delivered to the Acquiring Fund on the Closing Date a
certificate executed in its name by Virtus Funds' President or Vice President
and the Treasurer or Assistant Treasurer, in form and substance satisfactory to
the Acquiring Fund and dated as of the Closing Date, to such effect and as to
such other matters as the Acquiring Fund shall reasonably request.
7.2 The Selling Fund shall have delivered to the Acquiring Fund a
statement of the Selling Fund's assets and liabilities, together with a list of
the Selling Fund's portfolio securities showing the tax costs of such securities
by lot and the holding periods of such securities, as of the Closing Date,
certified by the Treasurer of Virtus Funds.
7.3.1 The Acquiring Fund shall have received on the Closing Date an
opinion of Dickstein Shapiro Morin & Oshinsky LLP, counsel to the Selling Fund,
in a form satisfactory to the Acquiring Fund covering the following points:
(a) The Selling Fund is a separate investment series of a
Massachusetts business trust duly organized, validly existing and in good
standing under the laws of The Commonwealth of Massachusetts and has the power
to own all of its properties and assets and to carry on its business as
presently conducted.
(b) The Selling Fund is a separate investment series of a
Massachusetts business trust registered as an investment company under the 1940
Act, and, to such counsel's knowledge, such registration with the Commission as
an investment company under the 1940 Act is in full force and effect.
(c) This Agreement has been duly authorized, executed and
delivered by the Selling Fund, and, assuming due authorization, execution, and
delivery of this Agreement by the Acquiring Fund, is a valid and binding
obligation of the Selling Fund enforceable against the Selling Fund in
accordance with its terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting creditors'
rights generally and to general equity principles.
(d) To the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental authority of the United
States or The Commonwealth of Massachusetts is required for consummation by the
Selling Fund of the transactions contemplated herein, except such as have
<PAGE>
been obtained under the 1933 Act, the 1934 Act and the 1940 Act, and as may be
required under state securities laws.
(e) The execution and delivery of this Agreement did not, and
the consummation of the transactions contemplated hereby will not, result in a
violation of Virtus Funds' Declaration of Trust or By-laws, or any provision of
any material agreement, indenture, instrument, contract, lease or other
undertaking (in each case known to such counsel) to which the Selling Fund is a
party or by which it or any of its properties may be bound or, to the knowledge
of such counsel, result in the acceleration of any obligation or the imposition
of any penalty, under any agreement, judgment, or decree to which the Selling
Fund is a party or by which it is bound.
(f) The descriptions in the Prospectus and Proxy Statement of
this Agreement, as set forth under the caption "Reasons for the Reorganization -
Agreement and Plan of Reorganization," the Interim Advisory Agreement and the
Previous Advisory Agreement, as set forth under the caption "Information
Regarding the Interim Advisory Agreement," and the description of voting
requirements applicable to approval of the Interim Advisory Agreement, as set
forth under the caption "Voting Information Concerning the Meeting," insofar as
the latter constitutes a summary of applicable voting requirements under the
Investment Company Act of 1940, as amended, are, in each case, accurate and
fairly present the information required to be shown by the applicable
requirements of Form N-14.
(g) Such counsel does not know of any legal or governmental
proceedings, insofar as they relate to the Selling Fund existing on or before
the date of mailing of the Prospectus and Proxy Statement and the Closing Date,
required to be described in the Prospectus and Proxy Statement or to be filed as
an exhibit to the Registration Statement which are not described or filed as
required.
(h) To the knowledge of such counsel, no litigation or
administrative proceeding or investigation of or before any court or
governmental body is presently pending or threatened as to the Selling Fund or
any of its respective properties or assets and the Selling Fund is neither a
party to nor subject to the provisions of any order, decree or judgment of any
court or governmental body, which materially and adversely affects its business
other than as previously disclosed in the Prospectus and Proxy Statement.
7.3.2 The Acquiring Fund shall have received on the
Closing Date an opinion of C. Grant Anderson, Esq., Assistant
<PAGE>
Secretary of Virtus Funds, in form satisfactory to the Acquiring Fund as
follows: Assuming that a consideration therefor of not less than the net asset
value thereof has been paid, and assuming that such shares were issued in
accordance with the terms of the Selling Fund's registration statement, or any
amendment thereto, in effect at the time of such issuance, all issued and
outstanding shares of the Selling Fund are legally issued and fully paid and
non-assessable (except that, under Massachusetts law, Selling Fund Shareholders
could under certain circumstances be held personally liable for obligations of
the Selling Fund).
Mr. Anderson shall also state that he has reviewed and is familiar with
the contents of the Prospectus and Proxy Statement and, although he is not
passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Prospectus and Proxy
Statement, on the basis of the foregoing, no facts have come to his attention
that lead him to believe that the Prospectus and Proxy Statement as of its date,
as of the date of the Selling Fund Shareholders' meeting, and as of the Closing
Date, contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein regarding the Selling Fund or
necessary, in the light of the circumstances under which they were made, to make
the statements therein regarding the Selling Fund not misleading. Such opinion
may state that he does not express any opinion or belief as to the financial
statements or any financial or statistical data, or as to the information
relating to the Acquiring Fund, contained in the Prospectus and Proxy Statement
or Registration Statement.
The opinions set forth in paragraphs 7.3.1 and 7.3.2 may state that
such opinions are solely for the benefit of the Acquiring Fund. Such opinions
shall contain such other assumptions and limitations as shall be in the opinion
of Dickstein Shapiro Morin & Oshinsky LLP and C. Grant Anderson, as applicable,
appropriate to render the opinions expressed therein, and shall indicate, with
respect to matters of Massachusetts law, that as Dickstein Shapiro Morin &
Oshinsky LLP and C. Grant Anderson are not admitted to the bar of Massachusetts,
such opinions are based either upon the review of published statutes, cases and
rules and regulations of the Commonwealth of Massachusetts or upon an opinion of
Massachusetts counsel.
In this paragraph 7.3, references to Prospectus and Proxy Statement
include and relate to only the text of such Prospectus and Proxy Statement and
not to any exhibits or
<PAGE>
attachments thereto or to any documents incorporated by
reference therein.
7.4 The merger between First Union Corporation and Signet Banking
corporation shall be completed prior to the Closing Date.
ARTICLE VIII
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING
FUND AND THE SELLING FUND
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the Selling Fund or the Acquiring Fund, the other
party to this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:
8.1 This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Selling Fund in accordance with the provisions of Virtus Funds' Declaration
of Trust and By-Laws and certified copies of the resolutions evidencing such
approval shall have been delivered to the Acquiring Fund. Notwithstanding
anything herein to the contrary, neither the Acquiring Fund nor the Selling Fund
may waive the conditions set forth in this paragraph 8.1.
8.2 On the Closing Date, the Commission shall not have issued an
unfavorable report under Section 25(b) of the 1940 Act, nor instituted any
proceeding seeking to enjoin the consummation of the transactions contemplated
by this Agreement under Section 25(c) of the 1940 Act and no action, suit or
other proceeding shall be threatened or pending before any court or governmental
agency in which it is sought to restrain or prohibit, or obtain damages or other
relief in connection with, this Agreement or the transactions contemplated
herein.
8.3 All required consents of other parties and all other consents,
orders, and permits of federal, state and local regulatory authorities
(including those of the Commission and of state Blue Sky securities authorities,
including any necessary "no-action" positions of and exemptive orders from such
federal and state authorities) to permit consummation of the transactions
contemplated hereby shall have been obtained, except where failure to obtain any
such consent, order, or permit would not involve a risk of a material adverse
effect on the assets or properties of the Acquiring Fund or the
<PAGE>
Selling Fund, provided that either party hereto may for itself waive any of such
conditions.
8.4 The Registration Statement shall have become effective under the
1933 Act, and no stop orders suspending the effectiveness thereof shall have
been issued and, to the best knowledge of the parties hereto, no investigation
or proceeding for that purpose shall have been instituted or be pending,
threatened or contemplated under the 1933 Act.
8.5 The Selling Fund shall have declared a dividend or dividends which,
together with all previous such dividends, shall have the effect of distributing
to the Selling Fund Shareholders all of the Selling Fund's net investment
company taxable income for all taxable periods ending on or prior to the Closing
Date (computed without regard to any deduction for dividends paid) and all of
its net capital gains realized in all taxable periods ending on or prior to the
Closing Date (after reduction for any capital loss carryforward).
8.6 The parties shall have received a favorable opinion of Sullivan &
Worcester LLP, addressed to the Acquiring Fund and the Selling Fund
substantially to the effect that for federal income tax purposes:
(a) The transfer of all of the Selling Fund assets in exchange
for the Acquiring Fund Shares and the assumption by the Acquiring Fund of
certain stated liabilities of the Selling Fund followed by the distribution of
the Acquiring Fund Shares to the Selling Fund in dissolution and liquidation of
the Selling Fund will constitute a "reorganization" within the meaning of
Section 368(a)(1)(C) of the Code and the Acquiring Fund and the Selling Fund
will each be a "party to a reorganization" within the meaning of Section 368(b)
of the Code.
(b) No gain or loss will be recognized by the Acquiring Fund
upon the receipt of the assets of the Selling Fund solely in exchange for the
Acquiring Fund Shares and the assumption by the Acquiring Fund of certain stated
liabilities of the Selling Fund.
(c) No gain or loss will be recognized by the Selling Fund
upon the transfer of the Selling Fund assets to the Acquiring Fund in exchange
for the Acquiring Fund Shares and the assumption by the Acquiring Fund of
certain stated liabilities of the Selling Fund or upon the distribution (whether
actual or constructive) of the Acquiring Fund Shares to Selling Fund
Shareholders in exchange for their shares of the Selling Fund.
<PAGE>
(d) No gain or loss will be recognized by the Selling Fund
Shareholders upon the exchange of their Selling Fund shares for the Acquiring
Fund Shares in liquidation of the Selling Fund.
(e) The aggregate tax basis for the Acquiring Fund Shares
received by each Selling Fund Shareholder pursuant to the Reorganization will be
the same as the aggregate tax basis of the Selling Fund shares held by such
shareholder immediately prior to the Reorganization, and the holding period of
the Acquiring Fund Shares to be received by each Selling Fund Shareholder will
include the period during which the Selling Fund shares exchanged therefor were
held by such shareholder (provided the Selling Fund shares were held as capital
assets on the date of the Reorganization).
(f) The tax basis of the Selling Fund assets acquired by the
Acquiring Fund will be the same as the tax basis of such assets to the Selling
Fund immediately prior to the Reorganization, and the holding period of the
assets of the Selling Fund in the hands of the Acquiring Fund will include the
period during which those assets were held by the Selling Fund.
Notwithstanding anything herein to the contrary, neither the Acquiring
Fund nor the Selling Fund may waive the conditions set forth in this paragraph
8.6.
8.7 The Acquiring Fund shall have received from KPMG Peat Marwick LLP a
letter addressed to the Acquiring Fund, in form and substance satisfactory to
the Acquiring Fund, to the effect that:
(a) they are independent certified public accountants with
respect to the Selling Fund within the meaning of the 1933 Act and the
applicable published rules and regulations thereunder;
(b) on the basis of limited procedures agreed upon by the
Acquiring Fund and described in such letter (but not an examination in
accordance with generally accepted auditing standards), the Capitalization Table
appearing in the Registration Statement and Prospectus and Proxy Statement has
been obtained from and is consistent with the accounting records of the Selling
Fund;
(c) on the basis of limited procedures agreed upon by the
Acquiring Fund and described in such letter (but not an examination in
accordance with generally accepted auditing standards), the data utilized in the
calculations of the
<PAGE>
projected expense ratios appearing in the Registration Statement and Prospectus
and Proxy Statement agree with underlying accounting records of the Selling Fund
or with written estimates by Selling Fund's management and were found to be
mathematically correct.
In addition, the Acquiring Fund shall have received from KPMG Peat
Marwick LLP a letter addressed to the Acquiring Fund dated on the Closing Date,
in form and substance satisfactory to the Acquiring Fund, to the effect, that on
the basis of limited procedures agreed upon by the Acquiring Fund (but not an
examination in accordance with generally accepted auditing standards), the
calculation of net asset value per share of the Selling Fund as of the Valuation
Date was determined in accordance with generally accepted accounting practices
and the portfolio valuation practices of the Acquiring Fund.
8.8 The Selling Fund shall have received from KPMG Peat Marwick LLP a
letter addressed to the Selling Fund, in form and substance satisfactory to the
Selling Fund, to the effect that:
(a) they are independent certified public accountants with
respect to the Acquiring Fund within the meaning of the 1933 Act and the
applicable published rules and regulations thereunder;
(b) on the basis of limited procedures agreed upon by the
Selling Fund and described in such letter (but not an examination in accordance
with generally accepted auditing standards), the Capitalization Table appearing
in the Registration Statement and Prospectus and Proxy Statement has been
obtained from and is consistent with the accounting records of the Acquiring
Fund; and
(c) on the basis of limited procedures agreed upon by the
Selling Fund (but not an examination in accordance with generally accepted
auditing standards), the data utilized in the calculations of the projected
expense ratio appearing in the Registration Statement and Prospectus and Proxy
Statement agree with written estimates by each Fund's management and were found
to be mathematically correct.
ARTICLE IX
EXPENSES
9.1 Except as otherwise provided for herein, all expenses of the
transactions contemplated by this Agreement incurred by the Selling Fund and the
Acquiring Fund will be
<PAGE>
borne by First Union National Bank. Such expenses include, without limitation,
(a) expenses incurred in connection with the entering into and the carrying out
of the provisions of this Agreement; (b) expenses associated with the
preparation and filing of the Registration Statement under the 1933 Act covering
the Acquiring Fund Shares to be issued pursuant to the provisions of this
Agreement; (c) registration or qualification fees and expenses of preparing and
filing such forms as are necessary under applicable state securities laws to
qualify the Acquiring Fund Shares to be issued in connection herewith in each
state in which the Selling Fund Shareholders are resident as of the date of the
mailing of the Prospectus and Proxy Statement to such shareholders; (d) postage;
(e) printing; (f) accounting fees; (g) legal fees; and (h) solicitation costs of
the transaction. Notwithstanding the foregoing, the Acquiring Fund shall pay its
own federal and state registration fees.
ARTICLE X
ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Acquiring Fund and the Selling Fund agree that neither party
has made any representation, warranty or covenant not set forth herein and that
this Agreement constitutes the entire agreement between the parties.
<PAGE>
10.2 The representations, warranties, and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall not survive the consummation of the transactions contemplated hereunder.
ARTICLE XI
TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the
Acquiring Fund and the Selling Fund. In addition, either the Acquiring Fund or
the Selling Fund may at its option terminate this Agreement at or prior to the
Closing Date because:
(a) of a breach by the other of any representation, warranty,
or agreement contained herein to be performed at or prior to the Closing Date,
if not cured within 30 days; or
(b) a condition herein expressed to be precedent to the
obligations of the terminating party has not been met and it reasonably appears
that it will not or cannot be met.
11.2 In the event of any such termination, in the absence of willful
default, there shall be no liability for damages on the part of either the
Acquiring Fund, the Selling Fund, the Trust, Virtus Funds, the respective
Trustees or officers, to the other party or its Trustees or officers.
ARTICLE XII
AMENDMENTS
This Agreement may be amended, modified, or supplemented in such manner
as may be mutually agreed upon in writing by the authorized officers of the
Selling Fund and the Acquiring Fund; provided, however, that following the
meeting of the Selling Fund Shareholders called by the Selling Fund pursuant to
paragraph 5.2 of this Agreement, no such amendment may have the effect of
changing the provisions for determining the number of the Acquiring Fund Shares
to be issued to the Selling Fund Shareholders under this Agreement to the
detriment of such shareholders without their further approval.
<PAGE>
ARTICLE XIII
HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY
13.1 The Article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.2 This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
13.3 This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without giving effect to the conflicts
of laws provisions thereof; provided, however, that the due authorization,
execution and delivery of this Agreement, in the case of the Selling Fund, shall
be governed and construed in accordance with the laws of The Commonwealth of
Massachusetts, without giving effect to the conflicts of laws provisions
thereof.
13.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but, except as provided in
this paragraph, no assignment or transfer hereof or of any rights or obligations
hereunder shall be made by any party without the written consent of the other
party. Nothing herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm, or corporation, other than the parties
hereto and their respective successors and assigns, any rights or remedies under
or by reason of this Agreement.
13.5 It is expressly agreed that the obligations of the Selling Fund
and the Acquiring Fund hereunder shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents, or employees of Virtus Funds or the
Trust personally, but shall bind only the trust property of the Selling Fund and
the Acquiring Fund, as provided in the Declarations of Trust of Virtus Funds and
the Trust. The execution and delivery of this Agreement have been authorized by
the Trustees of Virtus Funds on behalf of the Selling Fund and the Trust on
behalf of the Acquiring Fund and signed by authorized officers of Virtus Funds
and the Trust, acting as such, and neither such authorization by such Trustees
nor such execution and delivery by such officers shall be deemed to have been
made by any of them individually or to impose any liability on any of them
personally, but shall bind only the trust property of the Selling Fund and the
Acquiring Fund as
<PAGE>
provided in the Declarations of Trust of Virtus Funds and the
Trust.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement, all
as of the date first written above.
EVERGREEN MONEY MARKET
TRUST
ON BEHALF OF EVERGREEN
TREASURY MONEY MARKET FUND
By:
Name:
Title:
THE VIRTUS FUNDS
ON BEHALF OF THE TREASURY
MONEY MARKET FUND
By:
Name:
Title:
<PAGE>
EXHIBIT B
THE VIRTUS FUNDS
INTERIM INVESTMENT ADVISORY AGREEMENT
This Agreement is made between Virtus Capital Management, Inc., a
Maryland corporation having its principal place of business in Richmond,
Virginia (the "Adviser"), and The Virtus Funds, a Massachusetts business trust
having its principal place of business in Pittsburgh, Pennsylvania (the
"Trust").
WHEREAS, the Trust is an open-end management investment company as that
term is defined in the Investment Company Act of 1940 (the "Act") and
is registered as such with the Securities and Exchange Commission; and
WHEREAS, the Adviser is engaged in the business of rendering investment
advisory and management services.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
1. The Trust hereby appoints Adviser as Investment Adviser for each of
the portfolios ("Funds") of the Trust, which may be offered in one or more
classes of shares ("Classes"), on whose behalf the Trust executes an exhibit to
this Agreement, and Adviser, by its execution of each such exhibit, accepts the
appointments. Subject to the direction of the Trustees of the Trust, Adviser
shall provide investment research and supervision of the investments of each of
the Funds and conduct a continuous program of investment evaluation and of
appropriate sale or other disposition and reinvestment of each Fund's assets.
2. Adviser, in its supervision of the investments of each of the Funds,
will be guided by each of the Fund's fundamental investment policies and the
provisions and restrictions contained in the Declaration of Trust and By-Laws of
the Trust and as set forth in the Registration Statement and exhibits as may be
on file with the Securities and Exchange Commission.
3. The Trust shall pay or cause to be paid on behalf of each Fund or
Class, all of the Fund's or Classes' expenses and the Fund's or Classes'
allocable share of Trust expenses.
<PAGE>
4. The Trust, on behalf of each of the Funds shall pay to Adviser for
all services rendered to such Fund by Adviser hereunder the fees set forth in
the exhibits attached hereto.
5. The Adviser may from time to time and for such periods as it deems
appropriate reduce its compensation to the extent that any Fund's expenses
exceed such lower expense limitation as the Adviser may, by notice to the Trust,
voluntarily declare to be effective. Furthermore, the Adviser may, if it deems
appropriate, assume expenses of one or more Fund or Class to the extent that any
Fund's or Classes' expenses exceed such lower expense limitation as the Adviser
may, by notice to the Trust, voluntarily declare to be effective.
6. This Agreement shall begin for each Fund on the date that the Trust
executes an exhibit to this Contract relating to such Fund. This Agreement shall
remain in effect for each Fund until the earlier of the Closing Date defined in
the Agreement and Plan of Reorganization to be dated as of November 26, 1997
with respect to each Fund or for two years from the date of its execution and
from year to year thereafter, subject to the provisions for termination and all
of the other terms and conditions hereof if: (a) such continuation shall be
specifically approved at least annually by the vote of a majority of the
Trustees of the Trust, including a majority of the Trustees who are not parties
to this Agreement or interested persons of any such party (other than as
Trustees of the Trust) cast in person at a meeting called for that purpose; and
(b) Adviser shall not have notified the Trust in writing at least sixty (60)
days prior to the anniversary date of this Agreement in any year thereafter that
it does not desire such continuation with respect to that Fund.
7. Notwithstanding any provision in this Agreement, it may be
terminated at any time with respect to any Fund, without the payment of any
penalty, by the Trustees of the Trust or by a vote of a majority of the
outstanding voting securities of that Fund, as defined in Section 2(a)(42) of
the Act on sixty (60) days' written notice to Adviser.
8. This Agreement may not be assigned by Adviser and shall
automatically terminate in the event of any assignment. Adviser may employ or
contract with such other person, persons, corporation or corporations at its own
cost and expense as it shall determine in order to assist it in carrying out
this Agreement.
<PAGE>
9. In the absence of willful misfeasance, bad faith, gross negligence
or reckless disregard of obligations or duties under this Agreement on the part
of Adviser, Adviser shall not be liable to the Trust or to any of the Funds or
to any shareholder for any act or omission in the course of or connected in any
way with rendering services or for any losses that may be sustained in the
purchase, holding or sale of any security.
10. This Agreement may be amended at any time by agreement of the
parties provided that the amendment shall be approved both by vote of a majority
of the Trustees of the Trust, including a majority of the Trustees who are not
parties to this Agreement or interested persons of any such party to this
Agreement (other than as Trustees of the Trust), cast in person at a meeting
called for that purpose, and on behalf of a Fund by a majority of the
outstanding voting securities of such Fund as defined in Section 2(a)(42) of the
Act.
11. Adviser is hereby expressly put on notice of the limitation of
liability as set forth in Article XI of the Declaration of Trust and agrees that
the obligations pursuant to this Agreement of a particular Fund and of the Trust
with respect to that particular Fund be limited solely to the assets of that
particular Fund, and Adviser shall not seek satisfaction of any such obligation
from the assets of any other Fund, the shareholders of any Fund, the Trustees,
officers, employees or agents of the Trust, or any of them.
12. This Agreement shall be construed in accordance with and governed
by the laws of the Commonwealth of Pennsylvania.
13. This Agreement will become binding on the parties hereto upon their
execution of the attached exhibits to this Agreement.
<PAGE>
EXHIBIT A
THE U.S. GOVERNMENT SECURITIES FUND
THE VIRGINIA MUNICIPAL BOND FUND
THE MARYLAND MUNICIPAL BOND FUND
THE TREASURY MONEY MARKET FUND
THE MONEY MARKET FUND
THE TAX-FREE MONEY MARKET FUND
THE STYLE MANAGER FUND
THE STYLE MANAGER: LARGE CAP FUND
Name of Fund Percentage of Net Assets
The Treasury Money Market Fund .50 of 1%
The Money Market Fund .50 of 1%
The Tax-Free Money Market Fund .50 of 1%
The U.S. Government Securities Fund .75 of 1%
The Virginia Municipal Bond Fund .75 of 1%
The Maryland Municipal Bond Fund .75 of 1%
The Style Manager: Large Cap Fund .75 of 1%
The Style Manager Fund 1.25 of 1%
For all services rendered by Adviser hereunder, the Trust shall pay to
Adviser and Adviser agrees to accept as full compensation for all services
rendered hereunder, an annual investment advisory fee equal to the following
percentage (the "applicable percentage") of the average daily net assets of each
Fund.
The fee shall be accrued daily at the rate of 1/365th of the applicable
percentage applied to the daily net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser daily.
Witness the due execution hereof this 28th day of November, 1997.
Attest: VIRTUS CAPITAL MANAGEMENT, INC.
By:
Assistant Secretary President
Attest: THE VIRTUS FUNDS
By:
Assistant Secretary Vice President
C. Grant Anderson
<PAGE>
EVERGREEN
TREASURY MONEY MARKET FUND (Evergreen Graphic
Goes Here)
FUND AT A GLANCE
As of August 31, 1997
<TABLE>
<CAPTION>
PERFORMANCE
AVERAGE ANNUALIZED TOTAL
RETURNS YIELDS & DISTRIBUTIONS
-------------------------------- -------------------------------
SHARE INCEPTION 3 5 SINCE 7-DAY YIELD 30-DAY YIELD 12-MONTH
CLASS DATE 1 YEAR YEARS YEARS INCEPTION (ANNUALIZED) (ANNUALIZED) DISTRIBUTION
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A 3/6/91 4.82% 4.98% 4.17% 4.27% 4.87% 4.89% $0.05
Y 3/6/91 5.14% 5.30% 4.48% 4.57% 5.18% 5.18% $0.05
</TABLE>
<TABLE>
<CAPTION>
PORTFOLIO CHARACTERISTICS
<S> <C>
TOTAL NET ASSETS (ALL CLASSES): $3,031,680,413
AVERAGE MATURITY: 51 days
OBJECTIVE: Stability of principal and current income
STRATEGY: Invests in short-term U.S. Treasuries and
repurchase agreements
</TABLE>
PORTFOLIO COMPOSITION
(AS A PERCENTAGE OF PORTFOLIO ASSETS)
(Pie chart appears here with the following plot points.)
Mutual Fund Shares 1.4%
U.S. Treasury Notes 27.6%
Repurchase Agreements 71%
PORTFOLIO MANAGER
Kellie Allen has over 11 years of investment experience. She is
Vice President and Fixed Income Portfolio Manager. She manages
three money market and short-term funds as well as several
separately managed accounts and has responsibility for a total of
$2.4 billion in assets. Ms. Allen started at First Union as an
equity trader in 1986. Prior to joining First Union, she worked as
an equity trader for First Tennessee Bank in Memphis, TN.
(Photo of
Kellie Allen
Goes Here)
KELLIE ALLEN
AN INVESTMENT IN THE FUND IS NEITHER INSURED OR GUARANTEED BY THE U.S.
GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN
A STABLE NAV OF $1.00 PER SHARE. YIELDS WILL FLUCTUATE. PAST PERFORMANCE IS NO
GUARANTEE OF FUTURE RESULTS.
STATEMENT OF ADDITIONAL INFORMATION
Acquisition of the Assets of
THE TREASURY MONEY MARKET FUND
a Series of
THE VIRTUS FUNDS
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
(800) 829-3863
By and In Exchange For Shares of
EVERGREEN TREASURY MONEY MARKET FUND
a Series of
EVERGREEN MONEY MARKET TRUST
200 Berkeley Street
Boston, Massachusetts 02116
(800) 343-2898
This Statement of Additional Information, relating specifically to the
proposed transfer of the assets and liabilities of The Treasury Money Market
Fund ("Virtus Treasury"), a series of The Virtus Funds, to Evergreen Treasury
Money Market Fund ("Evergreen Treasury"), a series of the Evergreen Money Market
Trust, in exchange for Class A shares (to be issued to holders of Investment
shares of Virtus Treasury) and Class Y shares (to be issued to holders of Trust
shares of Virtus Treasury) of beneficial interest, $.001 par value per share, of
Evergreen Treasury, consists of this cover page and the following described
documents, each of which is attached hereto and incorporated by reference
herein:
(1) The Statement of Additional Information of Evergreen
Treasury dated December , 1997; (To be filed by
amendment)
(2) The Statement of Additional Information of Virtus Treasury
dated November 30, 1997; (To be filed by amendment)
(3) Annual Report of Virtus Treasury for the year ended September
30, 1997; (To be filed by amendment)
(4) Annual Report of Evergreen Treasury for the year ended August
31, 1997; (To be filed by amendment) and
<PAGE>
(5) Pro-Forma Combining Financial Statements (unaudited) dated
August 31, 1997.
This Statement of Additional Information, which is not a prospectus,
supplements, and should be read in conjunction with, the Prospectus/Proxy
Statement of Evergreen Treasury and Virtus Treasury dated January 5, 1998. A
copy of the Prospectus/Proxy Statement may be obtained without charge by calling
or writing to Evergreen Treasury or Virtus Treasury at the telephone numbers or
addresses set forth above.
The date of this Statement of Additional Information is January 5,
1998.
<PAGE>
<PAGE>
Evergreen Treasury Money Market Fund
Pro Forma Combining Financial Statements (Unaudited)
PORTFOLIO OF INVESTMENTS (000's omitted)
August 31, 1997
<TABLE>
<CAPTION>
Evergreen Treasury Virtus Treasury
Money Market Fund Money Market Fund
------------------------------- ---------------------------
Market Market
Principal Value Principal Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UNITED STATES TREASURY NOTES - 32.1%
6.00%, 9/2/97*** $110,000 $110,000
5.75%, 9/30/97*** 185,000 185,024
8.75%, 10/15/97 $14,000 $14,051
5.75%, 10/31/97 50,000 50,009
5.625%-5.75%, 10/31/97 31,000 31,004
6.00%, 11/30/97 75,000 75,023
5.25%, 12/31/97*** 175,000 174,828
7.875%, 1/15/98 37,000 37,298
6.125%, 3/31/98 75,000 75,141
5.875%, 4/30/98 50,000 49,995
5.125%, 4/30/98 12,000 11,927
6.125%, 5/15/98 15,000 15,036
6.25%, 6/30/98 135,000 135,549
8.25%, 7/15/98 7,000 7,150
6.25%, 7/31/98 3,000 3,016
4.75%-6.125%, 8/31/98 110,000 109,666
6.125%, 8/31/98 8,000 8,027
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL UNITED STATES TREASURY NOTES (Cost - $1,092,744) 965,235 127,509
- -----------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS* - 80.2%
Aubrey G. Lanston, 5.55%, dated 8/29/97, due 9/2/97 (1) 19,136 19,136
Barclays Bank, PLC, 5.56%, dated 8/29/97, due 9/2/97 (2) 90,000 90,000
Dean Witter Reynolds, Inc., 5.53%, dated 8/29/97, due 9/2/97 (3) 100,000 100,000
Deutsche Bank GC, 5.57%, dated 8/29/97, due 9/2/97 (4) 140,000 140,000
Donalson Lufkin & Jenrette Securities Corp., 5.53%, dated 8/29/97,
due 9/2/97 (5) 140,000 140,000
Dresdner Bank AG, 5.64%, dated 8/29/97, due 9/2/97 (6) 100,000 100,000
Dresdner Bank AG, 5.64%, dated 8/29/97, due 9/2/97 (7)** 111,238 111,238
Dresdner Bank AG, 5.70%, dated 8/29/97, due 9/2/97 (8)** 40,200 40,200
Dresdner Bank AG, 5.85%, dated 8/29/97, due 9/2/97 (9)** 177,844 177,844
First Boston Corp., 5.53%, dated 8/29/97, due 9/2/97 (10) 140,000 140,000
First Boston Corp., 5.53%, dated 8/29/97, due 9/2/97 (a) 70,000 70,000
HSBC, 5.57%, dated 8/29/97, due 9/2/97 (11) 140,000 140,000
Lehman Brothers, Inc., 5.50%, dated 8/29/97, due 9/2/97 (12) 300,000 300,000
Merrill Lynch, Pierce, Fenner & Smith, 5.55%, dated 8/29/97,
due 9/2/97 (13) 140,000 140,000
Merrill Lynch, Pierce, Fenner & Smith, 5.50%, dated 8/29/97,
due 9/2/97 (a) 50,000 50,000
Morgan Guaranty Trust Co. of New York, 5.56%, dated 8/29/97,
due 9/2/97 (14) 140,000 140,000
NationsBank, Charlotte, NC, 5.53%, dated 8/29/97, due 9/2/97 (15) 50,000 50,000
Prudential Securities, Inc., 5.53%, dated 8/29/97, due 9/2/97 (a) 60,318 60,318
Smith Barney Shearson, Inc., 5.57%, dated 8/29/97, due 9/2/97 (16) 210,000 210,000
Smith Barney Shearson, Inc., 5.75%, dated 8/29/97, due 9/2/97 (17)** 145,725 145,725
Smith Barney Shearson, Inc., 5.52%, dated 8/29/97, due 9/2/97 (a) 70,000 70,000
Union Bank Switzerland, 5.59%, dated 8/29/97, due 9/2/97 (18) 300,000 300,000
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS (Cost - $2,734,461) 2,484,143 250,318
- -----------------------------------------------------------------------------------------------------------------------------------
MUTUAL FUND SHARES - 1.4% (Cost - $49,316)
Fidelity U.S. Treasury, Inc. Portfolio 49,316 49,316
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 113.7% (Cost - $3,876,521) 3,498,694 377,827
OTHER ASSETS AND LIABILITIES (13.7%) -467,014 480
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS (100.0%) $3,031,680 $378,307
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Pro Forma
Combined
----------------------------------
Market
Adjustment Principal Value
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
UNITED STATES TREASURY NOTES - 32.1%
6.00%, 9/2/97*** $110,000 $110,000
5.75%, 9/30/97*** 185,000 185,024
8.75%, 10/15/97 14,000 14,051
5.75%, 10/31/97 50,000 50,009
5.625%-5.75%, 10/31/97 31,000 31,004
6.00%, 11/30/97 75,000 75,023
5.25%, 12/31/97*** 175,000 174,828
7.875%, 1/15/98 37,000 37,298
6.125%, 3/31/98 75,000 75,141
5.875%, 4/30/98 50,000 49,995
5.125%, 4/30/98 12,000 11,927
6.125%, 5/15/98 15,000 15,036
6.25%, 6/30/98 135,000 135,549
8.25%, 7/15/98 7,000 7,150
6.25%, 7/31/98 3,000 3,016
4.75%-6.125%, 8/31/98 110,000 109,666
6.125%, 8/31/98 8,000 8,027
- -------------------------------------------------------------------------------------------------------------------
TOTAL UNITED STATES TREASURY NOTES (Cost - $1,092,744) 1,092,744
- -------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS* - 80.2%
Aubrey G. Lanston, 5.55%, dated 8/29/97, due 9/2/97 (1) 19,136 19,136
Barclays Bank, PLC, 5.56%, dated 8/29/97, due 9/2/97 (2) 90,000 90,000
Dean Witter Reynolds, Inc., 5.53%, dated 8/29/97, due 9/2/97 (3) 100,000 100,000
Deutsche Bank GC, 5.57%, dated 8/29/97, due 9/2/97 (4) 140,000 140,000
Donalson Lufkin & Jenrette Securities Corp., 5.53%, dated 8/29/97,
due 9/2/97 (5) 140,000 140,000
Dresdner Bank AG, 5.64%, dated 8/29/97, due 9/2/97 (6) 100,000 100,000
Dresdner Bank AG, 5.64%, dated 8/29/97, due 9/2/97 (7)** 111,238 111,238
Dresdner Bank AG, 5.70%, dated 8/29/97, due 9/2/97 (8)** 40,200 40,200
Dresdner Bank AG, 5.85%, dated 8/29/97, due 9/2/97 (9)** 177,844 177,844
First Boston Corp., 5.53%, dated 8/29/97, due 9/2/97 (10) 140,000 140,000
First Boston Corp., 5.53%, dated 8/29/97, due 9/2/97 (a) 70,000 70,000
HSBC, 5.57%, dated 8/29/97, due 9/2/97 (11) 140,000 140,000
Lehman Brothers, Inc., 5.50%, dated 8/29/97, due 9/2/97 (12) 300,000 300,000
Merrill Lynch, Pierce, Fenner & Smith, 5.55%, dated 8/29/97,
due 9/2/97 (13) 140,000 140,000
Merrill Lynch, Pierce, Fenner & Smith, 5.50%, dated 8/29/97,
due 9/2/97 (a) 50,000 50,000
Morgan Guaranty Trust Co. of New York, 5.56%, dated 8/29/97,
due 9/2/97 (14) 140,000 140,000
NationsBank, Charlotte, NC, 5.53%, dated 8/29/97, due 9/2/97 (15) 50,000 50,000
Prudential Securities, Inc., 5.53%, dated 8/29/97, due 9/2/97 (a) 60,318 60,318
Smith Barney Shearson, Inc., 5.57%, dated 8/29/97, due 9/2/97 (16) 210,000 210,000
Smith Barney Shearson, Inc., 5.75%, dated 8/29/97, due 9/2/97 (17)** 145,725 145,725
Smith Barney Shearson, Inc., 5.52%, dated 8/29/97, due 9/2/97 (a) 70,000 70,000
Union Bank Switzerland, 5.59%, dated 8/29/97, due 9/2/97 (18) 300,000 300,000
- -------------------------------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS (Cost - $2,734,461) 2,734,461
- -------------------------------------------------------------------------------------------------------------------
MUTUAL FUND SHARES - 1.4% (Cost - $49,316)
Fidelity U.S. Treasury, Inc. Portfolio 49,316 49,316
- -------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 113.7% (Cost - $3,876,521) 3,876,521
OTHER ASSETS AND LIABILITIES (13.7%) -466,534
- -------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS (100.0%) $3,409,987
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) These repurchase agreements are fully collateralized by U.S. Treasury
and/or agency obligations based on market prices at the date at the date of
the portfolio.
* Collateralized by:
(1) $15,934,000 U.S. Treasury Notes, 5.625% to 8.875%, 1/15/00 to 11/30/00;
value including accrued interest --- $16,388,876 and $3,120,000 U.S.
Treasury Bonds, 6.50% to 6.625%, 11/15/26 to 2/15/27; value including
accrued interest --- $3,132,341.
(2) $27,102,000 U.S. Treasury Bills, 11/13/97 to 8/20/98; value including
accrued interest --- $26,192,415 and $51,225,000 U.S. Treasury Bonds,
9.25%, 2/15/16; value including accrued interest --- $65,608,213.
Page 1
<PAGE>
Evergreen Treasury Money Market Fund
Pro Forma Combining Financial Statements (Unaudited)
PORTFOLIO OF INVESTMENTS (000'S omitted)
August 31, 1997
(3) $357,182,000 U.S. Treasury Strips, 11/15/97 to 8/15/25; value including
accrued interest --- $102,000,016.
(4) $13,821,000 U.S. Treasury Bills, 11/13/97; value including accrued
interest --- $13,671,982 and $52,198,000 U.S. Treasury Notes, 6.625%,
7/31/01; value including accrued interest --- $53,339,142 and $26,899,000
U.S. Treasury Bonds, 14.25%, 2/15/02; value including accrued interest --
$34,226,067 and $59,973,000 GNMA, 5.50% to 9.50%, 1/1/00 to 4/15/29; value
including accrued interest --- $40,063,252.
(5) $22,982,000 U.S. Treasury Notes, 8.00% to 8.875%, 11/15/98 to 5/15/01;
value including accrued interest --- $24,047,930 and $55,561,000 U.S.
Treasury Bonds, 6.00%, 2/15/26; value including accrued interest ---
$50,678,667 and $177,031,000 U.S. Treasury Strips, 11/15/97 to 8/15/21;
value including accrued interest --- $68,073,977.
(6) $90,180,000 U.S. Treasury Bonds, 6.50% to 9.25%, 2/15/16 to 11/15/26; value
including accrued interest --- $102,004,192.
(7) $116,526,310 GNMA, 7.50% to 8.50%; value including accrued interest ---
$114,416,627.
(8) $2,600,000 U.S. Treasury Notes, 6.125%, 7/31/00; value including accrued
interest --- $2,618,244 and $40,200,757 GNMA, 6.50% to 7.50%; value
including accrued interest --- $38,819,048.
(9) $50,000,000 U.S. Treasury Notes, 6.50%, 8/15/05; value including accrued
interest --- $50,608,142 and $128,400,000 U.S. Treasury Bonds, 6.00% to
11.25%, 2/15/15 to 2/15/26; value including accrued interest ---
$130,945,206 and $2,300,000 GNMA, 8.50%; value including accrued interest
--- $1,499,795.
(10) $137,932,000 U.S. Treasury Notes, 6.75% to 7.75%, 2/15/98 to 2/15/05; value
including accrued interest --- $144,179,245.
(11) $143,930,000 U.S. Treasury Bills, 10/23/97; value including accrued
interest --- $142,804,471
(12) $486,244,112 GNMA, 5.50% to 11.25%, 5/20/99 to 8/20/27; value including
accrued interest --- $305,965,182.
(13) $110,393,000 U.S. Treasury Bonds, 7.625% to 14.00%, 2/15/07 to 11/15/11;
value including accrued interest --- $142,804,948.
(14) $135,815,000 U.S. Treasury Notes, 5.875% to 7.75%, 8/15/98 to 11/30/99;
value including accrued interest --- $137,374,570 and $5,510,000 U.S.
Treasury Bills, 12/18/97; value including accrued interest --- $5,426,072.
(15) $49,625,000 U.S. Treasury Notes, 6.375%, 4/30/99; value including accrued
interest --- $49,660,151.
(16) & (17) $9,177,000 U.S. Treasury Bills, 2/19/98; value including accrued
interest --- $8,948,025 and $29,338,000 U.S. Treasury Notes, 5.25% to
6.875%, 9/30/98 to 5/15/06; value including accrued interest ---
$29,858,352 and $8,254,000 REMIC, 7.00% to 8.00%, 6/15/06 to 5/20/24; value
including accrued interest --- $5,965,419 and $90,830,000 Strips, 8/15/03
to 11/15/18; value including accrued interest --- $37,628,410 and
$409,435,458 GNMA, 5.00% to 17.00%, 11/15/97 to 8/20/27: value including
accrued interest --- $278,397,905.
(18) $377,414,341 GNMA, 6.00% to 9.50%; value including accrued interest ---
$306,004,521.
** Represents investment of cash collateral received from securities on loan.
*** Securities on loan (See Note 3).
See Notes to Pro Forma Combining Financial Statements.
Page 2
<PAGE>
Evergreen Treasury Money Market Fund
Pro Forma Combining Financial Statements (Unaudited)
STATEMENT OF ASSETS & LIABILITIES (000's)
August 31, 1997
<TABLE>
<CAPTION>
Evergreen Treasury Virtus Treasury
Money Market Money Market Pro Forma
Fund Fund Adjustments Combined
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Investments in securities $1,014,551 $127,509 $1,142,060
Investments in repurchase agreements 2,484,143 250,318 2,734,461
-------------------------------------------------------------------
Investments at value (cost $3,876,521) 3,498,694 377,827 3,876,521
Interest receivable 28,945 2,371 31,316
Receivable for Fund shares sold 1,799 0 1,799
Due from investment adviser 0 5 5
Prepaid expenses and other assets 71 2 73
-------------------------------------------------- -------------
Total Assets 3,529,509 380,205 3,909,714
Liabilities:
Payable for securities on loan 483,677 0 483,677
Payable for Fund shares redeemed 550 0 550
Dividends payable 10,997 1,498 12,495
Distribution fee payable 1,266 26 1,292
Due to related parties 994 216 1,210
Due to custodian 0 153 153
Accrued Trustees' fees and expenses 132 0 132
Accrued professional fees 6 5 11
Accrued expenses and other liabilities 207 0 207
-------------------------------------------------------------------
Total Liabilities 497,829 1,898 499,727
Net Assets $3,031,680 $378,307 $3,409,987
===================================================================
Net assets represented by:
Paid-in capital $3,031,631 $378,307 $3,409,938
Undistributed net investment income 49 0 49
-------------------------------------------------------------------
Net Assets $3,031,680 $378,307 $3,409,987
===================================================================
Class A Shares
Net Assets $2,484,759 $122,116 $2,606,875
Shares of Beneficial Interest Outstanding 2,484,733 122,284 2,607,017
Net Asset Value $1.00 $1.00 $1.00
Class Y Shares
Net Assets $546,921 $256,191 $803,112
Shares of Beneficial Interest Outstanding 546,914 256,194 803,108
Net Asset Value $1.00 $1.00 $1.00
</TABLE>
See Notes to Pro Forma Combining Financial Statements.
<PAGE>
Evergreen Treasury Money Market Fund
Pro Forma Combining Financial Statements (Unaudited)
STATEMENT OF OPERATIONS (000's)
Year Ended August 31, 1997
<TABLE>
<CAPTION>
Evergreen Treasury Virtus Treasury
Money Market Money Market Pro Forma
Fund Fund Adjustments Combined
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income:
Interest $168,501 $20,727 $189,228
Expenses:
Advisory fee 10,831 1,912 (574)a 12,169
Distribution Plan expenses 7,263 336 31 d 7,630
Transfer agent fees 185 254 (162)b 277
Custodian fees 581 122 (53)b 650
Administrative services fees 1,241 372 (219)a 1,394
Professional fees 28 121 (122)c 27
Trustees' fees and expenses 66 6 1 73
Other 204 36 (14)b 226
Fee waivers and/or expense reimbursements (132) (60) 163 (29)
--------------------------------------------------------------
Total Expenses 20,267 3,099 (949) 22,417
Less: Indirectly paid expenses (10) 0 0 (10)
--------------------------------------------------------------
Net expenses 20,257 3,099 (949) 22,407
--------------------------------------------------------------
Net investment income 148,244 17,628 949 166,821
--------------------------------------------------------------
Net increase in net assets resulting from operations $148,244 $17,628 $949 $166,821
==============================================================
</TABLE>
a Reflects a decrease based on the surviving fund's fee schedule and pro forma
combined assets.
b Reflects a decrease based on the combined assets.
c Reflects expected cost savings when the funds are combined.
d Reflects an increase due to increased assets with a 30bp distribution fee.
See Notes to Pro Forma Combining Financial Statements.
<PAGE>
Evergreen Treasury Money Market Fund
Notes to Pro Forma Combining Financial Statements (Unaudited)
August 31, 1997
1. Basis of Combination - The Pro Forma Combining Statement of Assets and
Liabilities, including the Pro Forma Schedule of Investments, and the related
Pro Forma Combining Statement of Operations ("Pro Forma Statements") reflect the
accounts of Evergreen Treasury Money Market Fund ("Evergreen") and Virtus
Treasury Money Market Fund ("Virtus") at August 31, 1997 and for the year then
ended.
The Pro Forma Statements give effect to the proposed Agreement and Plan of
Reorganization (the "Reorganization") to be submitted to shareholders of Virtus.
The Reorganization provides for the acquisition of all assets and liabilities of
Virtus by Evergreen, in exchange for shares of Evergreen. Thereafter, there will
be a distribution of such shares of Evergreen to shareholders of Virtus in
liquidation and subsequent termination thereof. As a result of the
Reorganization, the shareholders of Virtus will become the owners of that number
of full and fractional shares of Evergreen having an aggregate net asset value
equal to the aggregate net asset value of their shares of Virtus as of the close
of business immediately prior to the date that Virtus assets are exchanged for
shares of Evergreen.
The Pro Forma Statements reflect the expenses of each Fund in carrying out its
obligations under the Reorganization as though the merger occurred at the
beginning of the period presented.
The information contained herein is based on the experience of each Fund for the
period ended August 31, 1997 and is designed to permit shareholders of the
consolidating mutual funds to evaluate the financial effect of the proposed
Reorganization. The expenses of Virtus in connection with the Reorganization
(including the cost of any proxy soliciting agents) will be borne by First Union
National Bank of North Carolina.
The Pro Forma Statements should be read in conjunction with the historical
financial statements of each Fund incorporated by reference in the Statement of
Additional Information.
2. Shares of Beneficial Interest - The Pro Forma net asset values per share
assume the issuance of shares of Evergreen Class A and Class Y which would have
been issued at August 31, 1997 in connection with the proposed Reorganization.
Shareholders of Virtus Investment Shares and Trust Shares would receive shares
of Evergreen Class A and Class Y, respectively, based on a conversion ratio
determined on August 31, 1997. The conversion ratio is calculated by dividing
the net asset value of Virtus Investment Shares and Trust Shares by the net
asset value per share of the shares of Evergreen Class A and Class Y,
respectively.
3. Pro Forma Operations - The Pro Forma Combining Statement of Operations
assumes similar rates of gross investment income for the investments of each
Fund. Accordingly, the combined gross investment income is equal to the sum of
the Funds' gross investment income. Pro Forma operating expenses include the
actual expenses of the Funds adjusted to reflect the expected expenses of the
combined entity. The investment advisory and distribution fees have been charged
to the combined Fund based on the fee schedule in effect for Evergreen at the
combined level of average net assets for the year ended August 31, 1997.
EVERGREEN INVESTMENT TRUST
PART C
OTHER INFORMATION
Item 15. Indemnification.
The response to this item is incorporated by reference to "Liability
and Indemnification of Trustees" under the caption "Comparative Information on
Shareholders' Rights" in Part A of this Registration Statement.
Item 16. Exhibits:
1(a). Declaration of Trust of Evergreen Money Market Trust,
a Delaware business trust. To be filed by amendment.
2. Bylaws of Evergreen Money Market Trust, a Delaware business trust. To be
filed by amendment.
3. Not applicable.
4. Agreement and Plan of Reorganization. Exhibit A to Prospectus contained in
Part A of this Registration Statement.
5. Declaration of Trust of Evergreen Money Market Trust Articles II., III.6(c),
IV.(3), IV.(8), V., VI., VII., and VIII and By-Laws Articles II., III. and VIII.
6(a). Form of Investment Advisory Agreement between First Union National Bank
and Evergreen Money Market Trust. To be filed by amendment.
6(b). Form of Interim Investment Advisory Agreement.
Exhibit B to Prospectus contained in Part A of this
Registration Statement.
7(a). Distribution Agreement between Evergreen Distributor,
Inc. and Evergreen Money Market Trust. To be filed by
amendment.
7(b). Form of Dealer Agreement for Class A shares used by
Evergreen Distributor, Inc. To be filed by amendment.
8. Deferred Compensation Plan. To be filed by amendment.
<PAGE>
9. Custody Agreement between State Street Bank and Trust
Company and Evergreen Money Market Trust. To be filed by
amendment.
10. Rule 12b-1 Distribution Plan. To be filed by amendment.
11. Opinion and consent of Sullivan & Worcester LLP. To be filed by amendment.
12. Tax opinion and consent of Sullivan & Worcester LLP. To be filed by
amendment.
13. Not applicable.
14(a). Consent of KPMG Peat Marwick LLP. Filed herewith.
14(b). Consent of Deloitte & Touche LLP. To be filed by amendment.
15. Not applicable.
16. Powers of Attorney. Filed herewith.
17(a). Form of Proxy Card. Filed herewith.
17(b). Registrant's Rule 24f-2 Declaration. Incorporated by reference to
Registrant's Form N-1A Registration Statement - Registration No. 2-94560
Item 17. Undertakings.
(1) The undersigned Registrant agrees that prior to any public
reoffering of the securities registered through the use of a prospectus that is
a part of this Registration Statement by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c) of the Securities Act of 1933,
the reoffering prospectus will contain the information called for by the
applicable registration form for reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as a part of an amendment to the
Registration Statement and will not be used until the amendment is effective,
and that, in determining any liability under the Securities Act of 1933, each
post-effective amendment shall be deemed to be a
<PAGE>
new Registration Statement for the securities offered therein, and the offering
of the securities at that time shall be deemed to be the initial bona fide
offering of them.
(3) The undersigned Registrant agrees to file, by post-effective
amendment, an opinion of counsel or copy of an Internal Revenue Service ruling
supporting the tax consequences of the proposed Reorganization within a
reasonable time after receipt of such opinion or ruling.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement
has been signed on behalf of the Registrant, in the City of New York and State
of New York, on the 26th day of November, 1997.
EVERGREEN INVESTMENT TRUST
By: /s/ John J. Pileggi
----------------------
Name: John J. Pileggi
Title: President
As required by the Securities Act of 1933, the following persons have
signed this Registration Statement in the capacities on the 26th day of
November, 1997.
Signatures Title
- ---------- -----
/s/John J. Pileggi President and
- ------------------ Treasurer
John J. Pileggi
/s/Laurence B. Ashkin* Trustee
- ---------------------
Laurence B. Ashkin
/s/Charles A. Austin III* Trustee
- -------------------------
Charles A. Austin III
/s/K. Dun Gifford* Trustee
- -----------------
K. Dun Gifford
/s/James S. Howell* Trustee
- ------------------
James S. Howell
/s/Leroy Keith, Jr.* Trustee
- -------------------
Leroy Keith, Jr.
<PAGE>
/s/Gerald M. McDonnell* Trustee
- ----------------------
Gerald M. McDonnell
/s/Thomas L. McVerry* Trustee
- --------------------
Thomas L. McVerry
/s/William Walt Pettit* Trustee
- ---------------------
William Walt Pettit
/s/David M. Richardson* Trustee
- ----------------------
David M. Richardson
/s/Russell A. Salton III* Trustee
- -------------------------
Russell A. Salton III
/s/Michael S. Scofield* Trustee
- ----------------------
Michael S. Scofield
/s/Richard J. Shima* Trustee
- -------------------
Richard J. Shima
* 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 and included as Exhibit 16 to this
Registration Statement.
<PAGE>
INDEX TO EXHIBITS
N-14
EXHIBIT NO.
14(a) Consent of KPMG Peat Marwick LLP
16 Powers of Attorney
17(a) Form of Proxy
- --------------------
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
The Trustees and Shareholders
Evergreen Investment Trust
We consent to the use of our report dated October 10, 1997 for Evergreen
Treasury Money Market Fund incorporated by reference herein and to the reference
to our firm under the caption "FINANCIAL STATEMENTS AND EXPERTS" in the
prospectus/proxy
statement.
/s/KPMG Peat Marwick LLP
------------------------
KPMG Peat Marwick LLP
Boston, Massachusetts
November 28, 1997
<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/Laurence B. Ashkin Director/Trustee
- ---------------------
Laurence B. Ashkin
<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
<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
<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
<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/Leroy Keith, Jr. Director/Trustee
- -------------------
Leroy Keith, Jr.
<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
<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
<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
<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
<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
<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
<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
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" EACH PROPOSAL.
PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN
YOUR PROXY IN THE ENCLOSED ENVELOPE TODAY!
Please detach at perforation before mailing.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
THE TREASURY MONEY MARKET FUND,
a series of The Virtus Funds
PROXY FOR THE MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 20, 1998
The undersigned, revoking all Proxies heretofore given, hereby appoints
, and or any of them as Proxies of the undersigned, with full power of
substitution, to vote on behalf of the undersigned all shares of The Treasury
Money Market Fund, a series of The Virtus Funds ("Virtus Treasury") that the
undersigned is entitled to vote at the special meeting of shareholders of Virtus
Treasury to be held at 2:00 p.m. on Friday, February 20, 1998 at the offices of
the Evergreen Funds, 200 Berkeley Street, Boston, Massachusetts 02116 and at any
adjournments thereof, as fully as the undersigned would be entitled to vote if
personally present.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR ON
THIS PROXY. If joint owners, EITHER may sign this
Proxy. When signing as attorney, executor,
administrator, trustee, guardian, or custodian for a
minor, please give your full title. When signing on
behalf of a corporation or as a partner for a
partnership, please give the full corporate or
partnership name and your title, if any.
Date , 199
----------------------------------------
----------------------------------------
Signature(s) and Title(s), if applicable
-1-
<PAGE>
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE VIRTUS
FUNDS. THIS PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO
BE TAKEN ON THE FOLLOWING PROPOSALS. THE SHARES REPRESENTED HEREBY WILL BE VOTED
AS INDICATED OR FOR THE PROPOSALS IF NO CHOICE IS INDICATED. THE BOARD OF
TRUSTEES OF THE VIRTUS FUNDS RECOMMENDS A VOTE FOR THE PROPOSALS. PLEASE MARK
YOUR VOTE BELOW IN BLUE OR BLACK INK. DO NOT USE RED INK. EXAMPLE: X
1. To approve an Agreement and Plan of Reorganization whereby Evergreen
Treasury Money Market Fund, a series of Evergreen Money Market Trust, will (i)
acquire all of the assets of Virtus Treasury in exchange for shares of Evergreen
Treasury Money Market Fund; and (ii) assume certain identified liabilities of
Virtus Treasury, as substantially described in the accompanying Prospectus/Proxy
Statement.
- ---- FOR ---- AGAINST ---- ABSTAIN
2. To approve the proposed Interim Investment Advisory Agreement with
Virtus Capital Management, Inc.
- ---- FOR ---- AGAINST ---- ABSTAIN
3. To consider and vote upon such other matters as may properly come
before said meeting or any adjournments thereof.
<PAGE>
