<PAGE>
ABT INVESTMENT SERIES, INC.
ABT EMERGING GROWTH FUND
340 ROYAL PALM WAY
PALM BEACH, FLORIDA 33480
MAY 11, 1995
Dear Shareholder:
On March 3, 1995, we agreed to sell certain of the assets of Palm Beach
Capital Management, Inc. ("PBCM"), currently utilized in its business as
investment adviser, administrator and accounting agent for the ABT Emerging
Growth Fund ("the ABT Fund"), the sole series of the ABT Investment Series, Inc.
("ABT Investment"), to First Union National Bank of North Carolina, a national
banking association ("FUNB"). The Board of Directors is recommending that you
approve the Agreement and Plan of Reorganization (the "Plan") whereby
substantially all of the assets of the ABT Fund will be purchased by the
Evergreen Aggressive Growth Fund (the "Evergreen Aggressive Fund"), a newly
formed series of Evergreen Trust, in exchange for Class A Shares of the
Evergreen Aggressive Fund. Class A shares will be distributed to you in exchange
for your ABT Fund shares. In the opinion of counsel, the exchange of your shares
will be free from federal income tax to you and the ABT Fund.
The Evergreen Aggressive Fund is a newly formed mutual fund with similar
investment objectives and policies which is advised by the Capital Management
Group of FUNB. As of December 31, 1994, FUNB and its subsidiaries served as
investment adviser to 33 mutual funds with aggregate net assets of approximately
$7 billion.
The Plan contains various terms and conditions which must be satisfied
prior to a closing. In addition, the agreement to sell certain assets of PBCM to
FUNB provides as a condition to the closing of the transaction that shareholders
of the other ABT funds approve similar agreements and plans of reorganization
for the sale of their assets.
If shareholders approve the Plan, upon consummation of the transaction
contemplated in the Plan, you will receive Class A Shares of the Evergreen
Aggressive Fund with a value equal to the value of your then outstanding shares
of the ABT Fund. As a shareholder of the Evergreen Aggressive Fund, you will
have the ability to exchange your shares for shares of the other funds in the
Evergreen family of funds comparable to your present right to exchange among the
ABT family of funds.
The Board of Directors has called a special meeting of shareholders to be
held on June 19, 1995 to consider the Plan. WE STRONGLY URGE YOUR PARTICIPATION
BY ASKING YOU TO REVIEW, COMPLETE AND RETURN YOUR PROXY AS SOON AS POSSIBLE.
Information about the Plan is contained in the enclosed proxy statement. I
thank you for your participation as a shareholder and urge you, please, to
exercise your right to vote by completing, dating and signing the enclosed proxy
card. A self-addressed, postage-paid envelope has been enclosed for your
convenience.
If you have any questions regarding the proposed transaction, please call
1- 800-553-7838.
IT IS VERY IMPORTANT THAT YOUR VOTING INSTRUCTIONS BE RECEIVED AS SOON AS
POSSIBLE.
Sincerely,
/s/ Edward W. Cook
Edward W. Cook, President
ABT Investment Series, Inc.
<PAGE>
ABT INVESTMENT SERIES, INC.
ABT EMERGING GROWTH FUND
340 ROYAL PALM WAY
PALM BEACH, FLORIDA 33480
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 19, 1995
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of the ABT Emerging Growth Fund (the "ABT Fund"), the sole series of
the ABT Investment Series, Inc. ("ABT Investment"), will be held at the offices
of ABT Investment, 340 Royal Palm Way, Palm Beach, Florida 33480 on June 19,
1995 at 10:00 a.m. for the following purposes:
1. To consider and act upon the Agreement and Plan of Reorganization (the
"Plan") dated as of March 15, 1995 providing for the acquisition of
substantially all of the assets of the ABT Fund by the Evergreen
Aggressive Growth Fund (the "Evergreen Aggressive Fund"), a newly formed
series of Evergreen Trust, in exchange for Class A Shares of the
Evergreen Aggressive Fund and the assumption by the Evergreen Aggressive
Fund of certain identified liabilities of the ABT Fund, and for
distribution of such shares of the Evergreen Aggressive Fund to
shareholders of the ABT Fund in liquidation of the ABT Fund. A vote in
favor of the Plan is a vote in favor of liquidation and dissolution of
the ABT Fund.
2. To transact any other business which may properly come before the
Meeting or any adjournment or adjournments thereof.
The Directors of ABT Investment have fixed the close of business on April 25,
1995 as the record date for the determination of shareholders of the ABT Fund
entitled to notice of and to vote at this Meeting or any adjournment thereof.
By order of the Board of Directors
Timothy Cox
Secretary
May 11, 1995
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO NOT
EXPECT TO ATTEND IN PERSON ARE URGED TO SIGN AND RETURN THE ENCLOSED PROXY
WITHOUT DELAY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE, SO THAT THEIR
SHARES MAY BE REPRESENTED AND VOTED AT THE MEETING. YOUR PROMPT ATTENTION TO THE
ENCLOSED PROXY WILL HELP TO AVOID THE EXPENSE OF FURTHER SOLICITATION.
<PAGE>
INSTRUCTIONS FOR EXECUTING PROXY CARDS
The following general rules for signing proxy cards may be of assistance to
you and 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:
<TABLE>
<CAPTION>
REGISTRATION VALID SIGNATURE
------------ ---------------
<S> <C>
CORPORATE ACCOUNTS
(1) ABC Corp. ABC Corp.
(2) ABC Corp. John Doe, Treasurer
(3) ABC Corp. John Doe
c/o John Doe, Treasurer
(4) ABC Corp. Profit Sharing Plan John Doe, Trustee
<CAPTION>
TRUST ACCOUNTS
<S> <C>
(1) ABC Trust Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee Jane B. Doe
u/t/d 12/28/78
<CAPTION>
CUSTODIAL OR ESTATE ACCOUNTS
<S> <C>
(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
</TABLE>
<PAGE>
PROSPECTUS/PROXY STATEMENT DATED MAY 11, 1995
ACQUISITION OF ASSETS OF
ABT EMERGING GROWTH FUND
OF
ABT INVESTMENT SERIES, INC.
340 ROYAL PALM WAY
PALM BEACH, FLORIDA 33480
1-800-553-7838
BY AND IN EXCHANGE FOR SHARES OF
EVERGREEN AGGRESSIVE GROWTH FUND
OF
EVERGREEN TRUST
2500 WESTCHESTER AVENUE
PURCHASE, NEW YORK 10577
This Prospectus/Proxy Statement is being furnished to shareholders of ABT
Emerging Growth Fund (the "ABT Fund"), the sole series of the ABT Investment
Series, Inc. ("ABT Investment"), in connection with a proposed Agreement and
Plan of Reorganization (the "Plan"), to be submitted to shareholders of the ABT
Fund for consideration at a Special Meeting of Shareholders to be held on June
19, 1995 at 10:00 a.m. Eastern Daylight Time, at the offices of ABT Investment,
340 Royal Palm Way, Palm Beach, Florida 33480 and any adjournments thereof (the
"Meeting"). The Plan provides for substantially all of the assets of the ABT
Fund to be acquired by the Evergreen Aggressive Growth Fund (the "Evergreen
Aggressive Fund"), a newly formed series of Evergreen Trust, in exchange for
Class A Shares of the Evergreen Aggressive Fund and the assumption by the
Evergreen Aggressive Fund of certain identified liabilities of the ABT Fund
(hereinafter referred to as the "Reorganization"). Following the Reorganization,
Class A Shares of the Evergreen Aggressive Fund will be distributed to
shareholders of the ABT Fund in liquidation of the ABT Fund, and the ABT Fund
will be terminated. As a result of the proposed Reorganization, each shareholder
of the ABT Fund will receive that number of Class A Shares of the Evergreen
Aggressive Fund having an aggregate net asset value equal to the aggregate net
asset value of such shareholder's shares of the ABT Fund, calculated as set
forth in the Plan. The Reorganization is being structured as a tax-free
reorganization for federal income tax purposes.
Evergreen Trust is an open-end diversified management investment company
comprised of two series, one of which, the Evergreen Aggressive Fund, is a party
to the Reorganization.
The ABT Fund and the Evergreen Aggressive Fund have identical investment
objectives and substantially similar policies and investment restrictions. Both
Funds seek long-term capital appreciation by investing primarily in common
stocks of emerging growth companies and in larger, more well-established
companies, all of which are viewed by each Fund's investment adviser as having
above average appreciation potential. The ABT Fund does not have a specific
stated policy which requires a minimum percentage of assets to be invested in
common stocks. Under normal circumstances the Evergreen Aggressive Fund intends
to invest at least 65% of its net assets in common stocks or securities
convertible into common stocks.
This Prospectus/Proxy Statement, which should be retained for future
reference, sets forth concisely the information about the Evergreen Aggressive
Fund that shareholders of the ABT Fund should know before voting on the
Reorganization or investing in the Evergreen Aggressive Fund. Certain relevant
documents noted below, which have been filed with the Securities and Exchange
Commission ("SEC"), are incorporated
<PAGE>
in whole or in part by reference. A Statement of Additional Information dated
May 11, 1995, relating to this Prospectus/Proxy Statement and the
Reorganization, incorporating by reference the financial statements of the ABT
Fund dated October 31, 1994, 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 the Evergreen Aggressive Fund at the address listed on the cover
page of this Prospectus/Proxy Statement or by calling toll-free 1- 800-326-3241.
The Prospectus of the ABT Fund dated February 28, 1995 is incorporated
herein in its entirety by reference. A copy of the Prospectus, a Statement of
Additional Information dated the same date and the Annual Report for the fiscal
year ended October 31, 1994 are available upon request without charge by writing
the ABT Fund at the address listed on the cover page of this Prospectus/Proxy
Statement or by calling toll-free 1-800-553-7838.
Also accompanying this Prospectus/Proxy Statement as Exhibit A is a copy of
the Plan for the proposed Reorganization.
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 ARE NOT DEPOSITS OR OBLIGATIONS OF
FIRST UNION NATIONAL BANK OF NORTH CAROLINA OR ITS SUBSIDIARIES, ARE NOT
ENDORSED OR GUARANTEED BY FIRST UNION OR ITS SUBSIDIARIES, AND ARE NOT INSURED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY
OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
COMPARISON OF EXPENSES................................................ 1
SUMMARY............................................................... 2
Proposed Reorganization.............................................. 2
Tax Consequences..................................................... 2
Investment Objectives and Policies................................... 2
Total Return Performances of the Funds............................... 3
Management; Advisory Fees and Expense Ratios......................... 3
Distribution; Sales Charges.......................................... 3
Purchase and Redemption Procedures................................... 4
Exchange Privileges.................................................. 5
Dividend Policy...................................................... 5
RISKS................................................................. 5
MANAGEMENT OF THE
EVERGREEN AGGRESSIVE FUND............................................ 6
DESCRIPTION OF THE ACQUISITION AGREEMENT.............................. 6
Section 15(f) of the 1940 Act........................................ 6
INFORMATION ABOUT THE REORGANIZATION.................................. 7
Plan of Reorganization............................................... 7
Capitalization....................................................... 8
BASIS FOR THE BOARD OF DIRECTORS' RECOMMENDATION FOR APPROVAL
OF THE PLAN......................................................... 9
DESCRIPTION OF SHARES OF THE EVERGREEN AGGRESSIVE FUND AND
THE ABT FUND......................................................... 10
FEDERAL INCOME TAX CONSEQUENCES....................................... 10
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES...................... 11
Investment Objective................................................. 11
COMPARATIVE INFORMATION ON SHAREHOLDERS' RIGHTS....................... 11
Form of Organization................................................. 11
Capitalization....................................................... 12
Shareholder Liability................................................ 12
Shareholder Meetings and Voting Rights............................... 12
Liquidation or Dissolution........................................... 13
Liability and Indemnification of Trustees and Directors.............. 13
Rights of Inspection................................................. 13
ADDITIONAL INFORMATION................................................ 13
ABT Fund............................................................. 13
Evergreen Aggressive Fund............................................ 14
OTHER BUSINESS........................................................ 21
VOTING INFORMATION.................................................... 21
FINANCIAL STATEMENTS AND
EXPERTS.............................................................. 23
LEGAL MATTERS......................................................... 23
</TABLE>
<PAGE>
COMPARISON OF EXPENSES
The following tables show for the ABT Fund and the Evergreen Aggressive Fund
the anticipated shareholder transaction costs associated with an investment in
Class A Shares of the Evergreen Aggressive Fund and the shares of the ABT Fund.
<TABLE>
<CAPTION>
EVERGREEN
AGGRESSIVE FUND ABT
CLASS A SHARES FUND
--------------- -----
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)...................... 4.75% 4.75%
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)...................... None None
Contingent Deferred Sales Charge.......................... None None
Exchange Fee.............................................. None None
Redemption Fees........................................... None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets)
Management Fees........................................... .60% .60%
12b-1 Fees................................................ .25%* .25%
Other Expenses............................................ .39% .41%
----- -----
Total Fund Operating
Expenses.................................................. 1.24% 1.26%
----- -----
</TABLE>
- --------
* The 12b-1 distribution plan of the Evergreen Aggressive Fund permits payments
at an annual rate up to .75% of the Fund's average daily net assets
attributable to Class A Shares. It is currently intended that annual 12b-1
fees will be limited for at least one year to .25%.
The foregoing and following tables show for each Fund the annual operating
expenses (as a percentage of average daily net assets) attributable to the Class
A Shares of the Evergreen Aggressive Fund and the shares of the ABT Fund,
together with examples of the cumulative effect of such expenses on a $1,000
investment in such shares for the periods specified, assuming (i) a 5% annual
return, and (ii) redemption at the end of such period. In these examples, the
expenses of the Class A Shares of the Evergreen Aggressive Fund and the shares
of the ABT Fund assume deduction of the 4.75% sales charge at the time of
purchase.
<TABLE>
<CAPTION>
EVERGREEN
AGGRESSIVE FUND
CLASS A SHARES ABT FUND
--------------- --------
<S> <C> <C>
After 1 year........................................... $ 60 $ 60
After 3 years.......................................... $ 85 $ 86
After 5 years.......................................... $112 $113
After 10 years......................................... $190 $193
</TABLE>
The purpose of the foregoing tables is to assist an ABT Fund shareholder in
understanding the various costs and expenses that an investor in the Class A
Shares of the Evergreen Aggressive Fund will bear directly and indirectly, as
compared with the various direct and indirect expenses that would be borne by an
ABT Fund shareholder. The amounts set forth in the foregoing tables and in the
examples with respect to the ABT Fund are based on the expenses of shares of the
ABT Fund for the fiscal year ended October 31, 1994 and, with respect to the
Evergreen Aggressive Fund, are based on the estimated expenses in its first year
of operation. These examples should not be considered a representation of past
or future expenses or annual return. Actual expenses and annual return may be
greater or less than those shown.
1
<PAGE>
SUMMARY
THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE ADDITIONAL
INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS/PROXY STATEMENT (INCLUDING
THE DOCUMENTS INCORPORATED THEREIN BY REFERENCE), THE PROSPECTUS OF THE ABT
EMERGING GROWTH FUND DATED FEBRUARY 28, 1995, AND THE PLAN, A COPY OF WHICH IS
ATTACHED TO THIS PROSPECTUS/PROXY STATEMENT AS EXHIBIT A.
PROPOSED REORGANIZATION. The Plan provides for the transfer of
substantially all of the assets of the ABT Emerging Growth Fund ("the ABT
Fund"), the sole series of the ABT Investment Series, Inc. ("ABT Investment"),
in exchange for Class A Shares of the Evergreen Aggressive Growth Fund ("the
Evergreen Aggressive Fund"), a newly formed series of Evergreen Trust, and the
assumption by the Evergreen Aggressive Fund of certain identified liabilities of
the ABT Fund. The Plan also calls for the distribution of Class A Shares of the
Evergreen Aggressive Fund to the ABT Fund shareholders in liquidation of the ABT
Fund. (The transaction is referred to in this Prospectus/Proxy Statement as the
"Reorganization.") As a result of the Reorganization, each shareholder of record
of the ABT Fund will become the record holder of that number of full and
fractional Class A Shares of the Evergreen Aggressive Fund having an aggregate
net asset value equal to the aggregate net asset value of the shareholder's
shares of the ABT Fund, calculated as set forth in the Plan, as of the close of
business on the date that the ABT Fund's assets are exchanged for Class A Shares
of the Evergreen Aggressive Fund. See "Information About the Reorganization."
The Board of Directors of ABT Investment, including the Directors who are
not "interested persons," as that term is defined in the Investment Company Act
of 1940, as amended (the "1940 Act"), has concluded that the interests of the
existing shareholders of the ABT Fund will not be diluted as a result of the
transactions contemplated by the Reorganization, and therefore has submitted the
Plan for the approval of the ABT Fund's shareholders.
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF THE PLAN EFFECTING THE
REORGANIZATION. THE BOARD OF TRUSTEES OF EVERGREEN TRUST HAS APPROVED THE PLAN,
AND ACCORDINGLY, THE EVERGREEN AGGRESSIVE FUND'S PARTICIPATION IN THE
REORGANIZATION.
Approval of the Reorganization on the part of the ABT Fund will require the
affirmative vote of more than 50% of its outstanding voting securities. See
"Voting Information."
If the shareholders of the ABT Fund do not vote to approve the
Reorganization, ABT Investment's Board of Directors will continue to operate
the ABT Fund under its existing arrangements.
TAX CONSEQUENCES. Prior to or at the completion of the Reorganization, the
ABT Fund will have received an opinion of counsel that the Reorganization has
been structured so that no gain or loss will be recognized by the ABT Fund or
its shareholders for federal income tax purposes as a result of the receipt of
shares of the Evergreen Aggressive Fund in the Reorganization. The holding
period and aggregate tax basis of shares of the Evergreen Aggressive Fund that
are received by the ABT Fund shareholders will be the same as the holding
period and aggregate tax basis of shares of the ABT Fund previously held by
such shareholders, provided that shares of the ABT Fund are held as capital
assets. In addition, the holding period and tax basis of the assets of the ABT
Fund in the hands of the Evergreen Aggressive Fund as a result of the
Reorganization will be the same as in the hands of the ABT Fund immediately
prior to the Reorganization.
INVESTMENT OBJECTIVES AND POLICIES. Both Funds seek long-term capital
appreciation by investing primarily in common stocks of emerging growth
companies and in larger, more well established companies, all of which are
viewed by each Fund's investment adviser as having above average appreciation
potential. There is no assurance the investment objective of either Fund will
be achieved. Under normal circumstances the Evergreen Aggressive Fund intends
to invest at least 65% of its net assets in common stocks and securities
convertible into common stocks.
2
<PAGE>
TOTAL RETURN PERFORMANCES OF THE FUNDS. Because the Evergreen Aggressive Fund
is newly organized, there is no separate historical performance information
available for it. The total return for the ABT Fund for the year ended December
31, 1994 was -13.63%. The average annual total return for the five and ten year
periods ended December 31, 1994 was 14.43% and 15.15%, respectively. The
calculations of total return assume the reinvestment of all dividends and
capital gains distributions on the reinvestment date and the deduction of all
recurring expenses (including sales charges) that were charged to shareholders'
accounts.
MANAGEMENT; ADVISORY FEES AND EXPENSE RATIOS. The business affairs of the ABT
Fund are managed by the Board of Directors of ABT Investment and the business
affairs of the Evergreen Aggressive Fund are managed by the Board of Trustees
of Evergreen Trust. Palm Beach Capital Management, Inc. ("PBCM") serves as the
investment adviser for the ABT Fund for an annual fee of .60% of average daily
net assets. The Capital Management Group of First Union National Bank of North
Carolina ("FUNB") serves as the investment adviser to the Evergreen Aggressive
Fund for an annual fee of .60% of average daily net assets. PBCM acts as
administrator and fund accounting agent for the ABT Fund for an annual fee of
.12% of average daily net assets. As of July 1, 1995, Evergreen Asset
Management Corp., an indirect wholly-owned subsidiary of FUNB ("EAMC"), will
act as administrator pursuant to a contract approved by the Trustees of
Evergreen Trust on April 20, 1995. Under the contract, EAMC will receive the
following fees.
<TABLE>
<CAPTION>
AGGREGATE DAILY NET ASSETS
OF FUNDS ADMINISTERED BY EAMC
FOR WHICH EITHER EAMC OR FUNB
ADMINISTRATIVE FEE SERVES AS INVESTMENT ADVISER
------------------ ----------------------------------
<S> <C>
.050% on the first $7 billion
.035% on the next $3 billion
.030% on the next $5 billion
.020% on the next $10 billion
.015% on the next $5 billion
.010% on assets in excess of $30 billion
</TABLE>
Based on the current amount of assets to be administered by EAMC, the
expected maximum annual fee for the Evergreen Aggressive Fund as a percentage
of net assets is .05%. The ratio of expenses to average daily net assets was
1.25% for the ABT Fund (fiscal year ended October 31, 1994). Comparable
information is not available for the Evergreen Aggressive Fund because it is
newly organized.
DISTRIBUTION; SALES CHARGES. Evergreen Funds Distributor, Inc. ("EFD"), a
wholly-owned subsidiary of Furman Selz Incorporated, will act as underwriter of
the Evergreen Aggressive Fund's shares, which are issued in four classes: Class
A, Class B, Class C and Class Y Shares. Each class will have separate
distribution arrangements. No class will bear the distribution expenses
relating to shares of any other class. Class A Shares, which will be received
by the ABT Fund's shareholders if the Reorganization is approved, will be sold
with an initial sales charge ranging from 4.75% to .25%. No sales charge will
be imposed on the Class A Shares to be received by the ABT Fund's shareholders
as part of the Reorganization, but subsequent purchases of the Evergreen
Aggressive Fund's shares will be subject to any applicable sales charges. For a
description of the Class A, Class B, Class C and Class Y Shares to be issued by
the Evergreen Aggressive Fund see "Additional Information--Evergreen Aggressive
Fund" below. Class Y Shares will be sold without a sales load or distribution
fee only to certain eligible investors. The Class A Shares will be subject to a
Rule 12b-1 plan under which the Evergreen Aggressive Fund may pay for
distribution-related and shareholder servicing-related expenses relating to the
Class A Shares at an annual rate which may not exceed .75% of aggregate average
daily net assets attributable to the Class A Shares. Payments under the Rule
12b-1 plan with respect to Class A Shares are currently limited under the
Evergreen Aggressive Fund's distribution agreement to .25% of average daily net
assets attributable to Class A Shares. The level of Rule 12b-1 distribution
payments may be increased and the distribution agreement may be amended by
Evergreen Trust's Board of Trustees without shareholder approval.
3
<PAGE>
ABT Financial Services, Inc. ("ABT Distributor") acts as underwriter of ABT
Fund shares. There is only one class of shares outstanding. The shares are sold
with an initial sales charge ranging from 4.75% to 1%. The ABT Fund has adopted
a Rule 12b-1 plan under which the Fund may reimburse distribution expenses
incurred by ABT Distributor in amounts up to .25% of aggregate average daily
net assets. Currently, ABT Distributor is reimbursed for distribution-related
expenses of .25% of average daily net assets.
The sales charge schedules for the ABT Fund and the Evergreen Aggressive Fund
are as follows:
<TABLE>
<CAPTION>
INITIAL SALES CHARGE
FOR THE ABT FUND
-------------------------------
PUBLIC NET
OFFERING AMOUNT DEALER
AMOUNT OF INVESTMENT PRICE INVESTED REALLOWANCE
-------------------- -------- -------- -------------
<S> <C> <C> <C>
Less than $100,000......................... 4.75% 4.99% 4.00%
$100,000 but less than $250,000............ 4.25 4.44 3.60
$250,000 but less than $500,000............ 3.00 3.09 2.40
$500,000 but less than $1,000,000.......... 2.25 2.30 1.85
$1,000,000 but less than $5,000,000........ 1.50 1.52 1.25
$5,000,000 or more......................... 1.00 1.01 .90
<CAPTION>
INITIAL SALES CHARGE FOR THE
EVERGREEN AGGRESSIVE FUND
-------------------------------
PUBLIC NET
AMOUNT OF OFFERING AMOUNT COMMISSION TO
PURCHASE PRICE INVESTED DEALER/AGENT
--------- -------- -------- -------------
<S> <C> <C> <C>
Less than $100,000......................... 4.75% 4.99% 4.25%
$100,000-$249,999.......................... 3.75 3.90 3.25
$250,000-$499,999.......................... 3.00 3.09 2.50
$500,000-$999,999.......................... 2.00 2.04 1.75
$1,000,000-$2,499,999...................... 1.00 1.01 1.00
Over $2,500,000............................ .25 .25 .25
</TABLE>
Since the Evergreen Aggressive Fund's Rule 12b-1 plan is a "compensation"
type plan as compared with the ABT Fund's plan, which is a "reimbursement" type
plan, future Rule 12b-1 fees may permit recovery of unreimbursed expenses by
EFD or may result in a profit to EFD.
PURCHASE AND REDEMPTION PROCEDURES. EFD will distribute the Evergreen
Aggressive Fund shares through broker-dealers, banks (including FUNB) or other
financial intermediaries, or directly to investors. When the Class A Shares are
sold, EFD will normally pay a portion of the applicable sales charge to a
selling broker-dealer or other financial intermediary and may also pay fees to
banks from sales charges for services performed on behalf of the bank's
customers purchasing the Class A Shares. In addition, EFD may retain a portion
of the sales charge paid. In addition to the compensation at the time of sale,
entities whose clients have purchased Class A Shares may receive a fee equal to
.25% of the average daily net asset value on an annual basis of Class A Shares
held by their clients. This fee will be paid by EFD from Rule 12b-1 fees
received from the Evergreen Aggressive Fund.
ABT Distributor, as agent for the ABT Fund, sells shares through broker-
dealers having sales agreements with ABT Distributor and retains a portion of
the sales charge. The ABT Distributor may also pay a fee equal to .25% of the
average daily net asset value on an annual basis to entities whose clients have
purchased ABT Fund Shares.
The minimum initial purchase requirement for the ABT Fund and the Evergreen
Aggressive Fund is $1,000. The Evergreen Aggressive Fund does not have a
minimum for subsequent purchases. The minimum subsequent purchase requirement
for the ABT Fund is $50.
4
<PAGE>
Each Fund provides for mail or wire redemption of shares at net asset value
next determined after receipt of the redemption request on each day the New
York Stock Exchange is open for business. The Evergreen Aggressive Fund will
also permit redemptions by telephone (see "Additional Information-Evergreen
Aggressive Fund" below).
The ABT Fund and the Evergreen Aggressive Fund may, after prior notice,
involuntarily redeem shareholders' accounts that have less than $1,000 of
invested funds.
EXCHANGE PRIVILEGES. Each Fund permits shareholders to exchange shares of the
Evergreen Aggressive Fund or the ABT Fund for shares of other funds of the
Evergreen mutual fund family or other funds in the ABT mutual fund family,
respectively. Holders of shares of a class of the Evergreen Aggressive Fund
generally may exchange their shares for shares of the same class of any other
funds of the Evergreen mutual fund family. Accordingly, with respect to shares
of the Evergreen Aggressive Fund received by ABT Fund shareholders in the
Reorganization, the exchange privilege is limited to the Class A Shares of
other funds of the Evergreen mutual fund family. In addition, exchanges in the
Evergreen mutual fund family may be limited to five exchanges per calendar
year, with a maximum of three per calendar quarter. No sales charge is imposed
on an exchange. An exchange which represents an initial investment in another
fund of the Evergreen mutual fund family must amount to at least $1,000.
After July 1, 1995 (or as soon thereafter as is reasonably practicable
subject to applicable laws), it is expected, although it cannot be assured,
that shareholders in each of the portfolios of the First Union Funds and
shareholders in funds in the Evergreen family of funds will be permitted to
exchange their shares for shares of the same Class (to the extent available) of
all portfolios of First Union Funds and all funds in the Evergreen family of
funds. Although there is no present intention to do so, an exchange privilege
may be modified or terminated at any time. Currently, ABT Fund Shareholders may
exchange their ABT Fund Shares for shares of Prime Cash Series ("PCS") a money
market fund for which Federated Investors, Pittsburgh, Pennsylvania, is the
investment adviser. It is anticipated that this exchange privilege with PCS
will be terminated following the Reorganization. Exchange privileges, however,
will be offered into the money market funds managed by FUNB or EAMC.
DIVIDEND POLICY. The Evergreen Aggressive Fund distributes its investment
company taxable income annually. The ABT Fund distributes its net investment
income annually. Each Fund distributes net long-term capital gains annually.
Income dividends and capital gain distributions are automatically reinvested in
additional shares, unless the shareholder has made a written request for
payment in cash. Shareholders of ABT Fund that have elected, as of June 19,
1995, to receive dividends and/or distributions in cash will continue to do so
after the Reorganization. After the Reorganization, former ABT Fund
shareholders may change their election with respect to receipt in cash or
reinvestment of dividends or distributions of the Evergreen Aggressive Fund.
RISKS
Since the investment objective of each Fund is identical and the policies and
investment restrictions of each Fund are substantially similar, PBCM believes
that there is no significant difference in the risks involved in investing in
each Fund's shares. Securities of lesser-known, relatively small and special
situation companies tend to be speculative and volatile. Therefore, the net
asset value of each Fund's shares may vary significantly. There is no assurance
that investment performance will be positive and that the Funds will meet their
investment objectives. See additional discussions of risks in Sections entitled
"Comparison of Investment Objectives and Policies--Investment Objective" and
"Additional Information--Evergreen Aggressive Fund--Investment Practices and
Restrictions; Special Risk Considerations."
5
<PAGE>
MANAGEMENT OF THE EVERGREEN AGGRESSIVE FUND
The Capital Management Group of FUNB provides investment advisory services to
the Evergreen Aggressive Fund. The address of FUNB is One First Union Center,
301 S. College Street, Charlotte, North Carolina 28288. FUNB is a subsidiary of
First Union Corporation ("First Union"), one of the ten largest bank holding
companies in the United States.
First Union had $77.3 billion in consolidated assets as of December 31, 1994.
First Union and its subsidiaries provide a broad range of financial services to
individuals and businesses through offices in 42 states and two foreign
countries. FUNB's Capital Management Group employs an experienced staff of
professional investment analysts, portfolio managers, and traders, and uses
several proprietary computer-based systems in conjunction with fundamental
analysis to identify investment opportunities. The Capital Management Group has
been managing trust assets for over 50 years and currently oversees assets of
more than $51.2 billion. In addition, the Capital Management Group serves as
investment adviser to the First Union Funds, which was organized in 1984.
The portfolio manager for the Evergreen Aggressive Fund is expected to be
Harold J. Ireland, Jr., who has served as portfolio manager of the ABT Fund
since prior to 1989. Mr. Ireland was a Vice President of Palm Beach Capital
Management, Inc. and is expected to become a Vice President of the Capital
Management Group.
EAMC, together with its predecessors, has served as investment adviser to the
Evergreen Family of Funds since 1971.
DESCRIPTION OF THE ACQUISITION AGREEMENT
On March 3, 1995, Edward W. Cook ("Cook"), Edward W. Cook Revocable Trust,
dated September 26, 1989 ("Cook Trust"), Cook International, Inc., Palm Beach
Capital Management, Inc., a corporation organized under the laws of the State
of Florida and whose sole shareholder is Cook Trust ("PBCM"), entered into an
Asset Purchase Agreement (the "Agreement") with FUNB. The Agreement provides
for the acquisition by FUNB of substantially all of the assets and none of the
liabilities of PBCM, including the right to use the names "American Birthright
Trust" and "ABT". In exchange for the assets being acquired, FUNB has agreed to
pay PBCM the sum of $9,000,000, subject to certain adjustments.
The Agreement also contemplates that the ABT Fund, along with the ABT Utility
Income Fund, Inc., ABT Growth and Income Trust, ABT Florida Tax-Free Fund and
ABT Florida High Income Municipal Bond Fund will consolidate with certain other
investment companies managed by FUNB. The ABT Fund has entered into an
Agreement and Plan of Reorganization in the form attached hereto as Exhibit A.
A similar Plan of Reorganization has also been entered into by each of the ABT
Utility Income Fund, Inc., ABT Growth and Income Trust, ABT Florida Tax-Free
Fund and ABT Florida High Income Municipal Bond Fund (collectively, the "Other
ABT Funds").
The consummation of the reorganizations contemplated by the Agreement is
subject to a number of conditions, which include: (i) the receipt of all
necessary regulatory approvals; (ii) the approval by the shareholders of the
ABT Fund, and the Other ABT Funds, of the reorganizations contemplated in the
Agreement; (iii) the accuracy of the representations and warranties contained
in the Agreement; (iv) the absence of pending or threatened litigation relating
to the reorganizations contemplated by the Agreement; and (v) the receipt of
various legal opinions and accountants' letters. The Agreement may be
terminated under certain circumstances, including the failure of the
reorganizations contemplated thereby to close by July 15, 1995.
SECTION 15(F) OF THE 1940 ACT. Section 15(f) of the 1940 Act provides that an
investment adviser to a registered investment company may receive any amount or
benefit in connection with a sale of any interest in
6
<PAGE>
such adviser which results in an assignment of an investment advisory contract
if two conditions are satisfied. One condition is that, for a period of three
years after such assignment, at least 75% of the board of directors of the
investment company cannot be "interested persons" (as defined in the 1940 Act)
of the new investment adviser or its predecessor. The second condition is that
no "unfair burden" be imposed on the investment company as a result of the
assignment or any express or implied terms, conditions or understandings
applicable thereto.
In connection with the first condition of Section 15(f), FUNB has agreed in
the Agreement that, for a period of three years after the Closing Date, it will
use its reasonable best efforts, and will cause EAMC to use its reasonable best
efforts (recognizing that the compositions of Boards of Trustees/Directors
remain within the control of Trustees/Directors and shareholders of the First
Union family of funds and the Evergreen family of funds) so that at least 75%
of the Trustees/Directors of each of the First Union or Evergreen Funds
involved in the consolidations (or any successor thereto by reorganization or
otherwise) are not "interested persons" of FUNB, EAMC or PBCM.
With respect to the second condition of Section 15(f), an "unfair burden" on
an investment company is defined in the 1940 Act to include any arrangement
relating to the transaction during the two-year period after any such
transaction occurs whereby the investment adviser or its predecessor or
successor, or any "interested person" of such adviser, predecessor or
successor, receives or is entitled to receive any compensation of two types,
either directly or indirectly. The first type is compensation from any person
in connection with the purchase or sale of securities or other property to,
from or on behalf of the investment company, other than bona fide ordinary
compensation as principal underwriter for such company. The second type is
compensation from the investment company or its security holders for other than
bona fide investment advisory or other services. In the Agreement, FUNB
represents that there is no express or implied understanding or agreement or
intention to impose an "unfair burden" within the meaning of Section 15(f) on
the ABT Fund or the Other ABT Funds or any of their successors as a result of
the transactions contemplated in the Agreement and from the date of the
Agreement to two years after the consummation of the transactions contemplated
thereby it will not take or recommend any action that would constitute an
"unfair burden" within the meaning of Section 15(f) on the ABT Fund, any Other
ABT Fund, any of the First Union or Evergreen Funds involved in the
consolidations or any successor thereto.
INFORMATION ABOUT THE REORGANIZATION
PLAN OF REORGANIZATION. The following summary of the Plan is qualified in its
entirety by reference to the Plan (Exhibit A hereto). The Plan provides that
the Evergreen Aggressive Fund will acquire substantially all of the assets of
the ABT Fund in exchange for Class A Shares of the Evergreen Aggressive Fund
and the assumption by the Evergreen Aggressive Fund of certain identified
liabilities of the ABT Fund on June 30, 1995 or such later date as may be
agreed upon by the parties (the "Closing Date"). Prior to the Closing Date, the
ABT Fund will endeavor to discharge all of its known liabilities and
obligations. The Evergreen Aggressive Fund will not assume any liabilities or
obligations of the ABT Fund other than those liabilities reflected in an
unaudited statement of assets and liabilities of the ABT Fund prepared as of
the close of regular trading on the New York Stock Exchange, Inc. (the "NYSE"),
currently 4:00 pm. Eastern Time, on the Closing Date. The number of full and
fractional Class A Shares of the Evergreen Aggressive Fund to be issued to the
ABT Fund's shareholders will be determined on the basis of the relative net
asset values per share of the Evergreen Aggressive Fund's Class A Shares and
the ABT Fund's shares, computed as of the close of regular trading on the NYSE
on the Closing Date. The net asset value per share of such shares will be
determined by dividing the respective assets, less liabilities, by the total
number of outstanding shares.
State Street Bank & Trust Company, the custodian for the Evergreen Aggressive
Fund, will compute the value of each Fund's respective portfolio securities.
The method of valuation employed will be consistent with the procedures set
forth in this Prospectus/Proxy Statement and the Statement of Information, Rule
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<PAGE>
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, the ABT Fund shall have declared a dividend
or dividends and distribution or distributions which, together with all
previous such dividends and distributions, shall have the effect of
distributing to the ABT Fund's shareholders all of the ABT Fund's investment
company taxable income for the taxable year 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 years ending on or prior to the
Closing Date (after reductions for any capital loss carryforward).
As soon after the Closing Date as conveniently practicable, the ABT Fund will
liquidate and distribute pro rata to shareholders of record as of the close of
business on the Closing Date the full and fractional Class A Shares of the
Evergreen Aggressive Fund received by the ABT Fund. Such liquidation and
distribution will be accomplished by the establishment of accounts in the names
of the ABT Fund's shareholders on the share records of the Evergreen Aggressive
Fund's transfer agent. Each account will represent the respective pro rata
number of full and fractional Class A shares of the Evergreen Aggressive Fund
due to such ABT Fund's shareholders. After such distribution and the winding up
of its affairs, the ABT Fund will file an application with the SEC seeking an
order that it has ceased to be an investment company. Thereafter, it will be
terminated.
The consummation of the Reorganization is subject to the conditions set forth
in the Plan, including approval by the ABT Fund's shareholders, accuracy of
various representations and warranties and receipt of opinions of counsel
including those matters referred to in "Federal Income Tax Consequences."
Notwithstanding approval of the ABT Fund's shareholders, the Plan may be
terminated at any time by the mutual agreement of both parties. In addition,
either party may at, its option, terminate the Plan at or prior to the Closing
Date because (a) 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 30 days; or (b) a condition to the obligation
of the terminating party cannot be met.
FUNB will bear all the expenses of the Evergreen Aggressive Fund in
connection with the Reorganization. Other than the fees and expenses of counsel
to the ABT Fund and counsel to the independent Directors of ABT Investment and
expenses for officers and Directors ongoing insurance coverage (which will be
paid by the ABT Fund), the expenses of the Reorganization (including the cost
of any proxy soliciting agents) will be borne by PBCM and FUNB. No portion of
such expenses shall be paid by the Evergreen Aggressive Fund. See "Voting
Information."
If the Reorganization is not approved by shareholders of the ABT Fund, ABT
Investment's Board of Directors will continue to operate the ABT Fund under its
existing arrangements.
CAPITALIZATION. The following table shows the capitalization as of March 31,
1995 of the Evergreen Aggressive Fund (assuming it was capitalized as set forth
below) and the ABT Fund individually and on a pro forma combined basis as of
that date, giving effect to the proposed acquisition of the ABT Fund's net
assets at fair value or market value, as appropriate:
<TABLE>
<CAPTION>
EVERGREEN CLASS A SHARES
AGGRESSIVE FUND PRO FORMA FOR
CLASS A SHARES ABT FUND REORGANIZATION*
--------------- ----------- ---------------
<S> <C> <C> <C>
Net Assets.......................... $ 14 $62,288,014 $62,288,028
Net Asset Value per share........... $13.85 $ 13.85 $ 13.85
Shares outstanding.................. 1 4,496,329 4,496,330
</TABLE>
- --------
* The figures in this table include the consolidation related expenses
including the insurance premiums described below in "Basis for the Board of
Directors' Recommendation for Approval of the Plan."
8
<PAGE>
As of April 25, 1995, (the "Record Date"), there were 4,438,297.245
outstanding shares of beneficial interest of the ABT Fund.
As of the Record Date, the officers and Directors of the ABT Fund
beneficially owned as a group less than 1% of the outstanding shares of the ABT
Fund. To the best knowledge of the ABT Fund Directors, as of the Record Date,
no other shareholder or "group" (as that term is used in Section 13(d) of the
Securities Exchange Act of 1934 (the "Exchange Act")) beneficially owned more
than 5% of the ABT Fund's outstanding shares.
BASIS FOR THE BOARD OF DIRECTORS'
RECOMMENDATION FOR APPROVAL OF THE PLAN
The independent Trustees/Directors of the Board of Trustees/Directors of ABT
Investment and the Other ABT Funds requested and reviewed extensive information
from FUNB and EAMC in evaluating the effect of the consolidation on the
shareholders of the ABT Fund and the Other ABT Funds. The information
described: performance of FUNB and EAMC managed funds; the extensive investment
research, including credit analysis, available to FUNB and EAMC managed funds;
the expenses of the FUNB and EAMC managed funds in relation to other mutual
funds and to the ABT Fund and the Other ABT Funds; the possibility of a future
reduction in expenses per share as a result of the consolidation; the extensive
marketing channels available to the FUNB and EAMC managed funds; the quality
and variety of administrative services provided FUNB and EAMC managed funds and
the financial condition of the service providers; and the financial size of
FUNB giving it the capital necessary to develop the initiatives and responses
required as financial markets change.
The Trustees/Directors of ABT Investment and the Other ABT Funds, including
all of the independent Trustees/Directors, visited the offices of FUNB. During
the visit, personnel from FUNB and EAMC were available to discuss operations of
their respective entities and to answer questions concerning the proposed
consolidation. The independent Trustees/Directors of the ABT Fund and the Other
ABT Funds retained independent counsel to advise such Trustees/Directors with
respect to their fiduciary duties in connection with approval of the proposed
consolidation.
The Trustees/Directors evaluated the consolidation for the ABT Fund, as well
as the Other ABT Funds. The Trustees/Directors considered the advantages to the
ABT Fund's and the Other ABT Funds' shareholders from being associated with a
considerably larger mutual fund complex that offers shareholders more depth in
investment management. The Trustees/Directors also considered the benefits to
the ABT Fund's shareholders of being part of a larger group of mutual funds
with significantly greater net assets and more diverse investment objectives.
In particular, the Trustees/Directors noted that shareholders of the ABT Fund
will after consummation of the Reorganization, enjoy the same exchange
privileges available currently to shareholders of the other mutual funds
managed by FUNB and EAMC.
PBCM has informed the Evergreen Aggressive Fund that it has advised the ABT
Fund that after the closing, PBCM may pay the independent Trustees/Directors of
ABT Investment and the Other ABT Funds a fee in return for which the
Trustees/Directors will make themselves available for two years to consult on
former ABT family of funds' matters. PBCM is not obligated to pay such a fee.
If paid, the amount is expected to be at a rate of $10,000 per year/per
Trustee/Director.
The independent Trustees/Directors have voted to retain their ability to make
claims under their existing Officers and Directors insurance policy for a
period of three years following the consummation of the Reorganization. As with
the premium for the policy, the premium for the continuation will be paid by
the ABT Fund and the Other ABT Funds and is expected to be approximately
$133,000 ($17,556 of which will be paid by ABT Fund) for three years.
9
<PAGE>
THE BOARD OF DIRECTORS OF ABT INVESTMENT RECOMMENDS THAT SHAREHOLDERS APPROVE
THE PLAN TO CONSOLIDATE THE ABT EMERGING GROWTH FUND WITH THE EVERGREEN
AGGRESSIVE GROWTH FUND.
DESCRIPTION OF SHARES OF THE
EVERGREEN AGGRESSIVE FUND AND THE ABT FUND
Full and fractional Class A Shares of beneficial interest of the Evergreen
Aggressive Fund will be distributed to the ABT Fund's shareholders in
accordance with the procedures detailed in the Plan. All issued and outstanding
shares of the ABT Fund, including those represented by certificates, if any,
will be canceled. The Evergreen Aggressive Fund does not intend to issue share
certificates to shareholders. Instead, the transfer agent for the Evergreen
Aggressive Fund will maintain a share account for each shareholder of record.
The Class A Shares of the Evergreen Aggressive Fund to be issued will have no
pre-emptive or conversion rights and are transferable without restriction. See
"Summary--Distribution; Sales Charges."
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 Internal Revenue Code of
1986, as amended (the "Code"). As a condition to the closing of the
Reorganization, the ABT Fund 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 substantially all of the assets of the ABT Fund
solely in exchange for Class A Shares of the Evergreen Aggressive Fund and
the assumption by the Evergreen Aggressive Fund of certain liabilities,
followed by the distribution of the Evergreen Aggressive Fund's Class A
Shares by the ABT Fund in dissolution and liquidation of the ABT Fund, will
constitute a "reorganization" within the meaning of section 368(a)(1)(F) of
the Code, and the Evergreen Aggressive Fund and the ABT Fund 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 to the ABT Fund on the transfer of
its assets to the Evergreen Aggressive Fund (except, possibly, with respect
to certain options, futures and forward contracts included in the assets
("Contracts")), solely in exchange for the Evergreen Aggressive Fund's
Class A Shares and the assumption by the Evergreen Aggressive Fund of
liabilities or upon the distribution (whether actual or constructive) of
the Evergreen Aggressive Fund's Class A Shares to the ABT Fund's
shareholders in exchange for their shares of the ABT Fund;
(3) The tax basis of the assets transferred (with the possible exception
of the Contracts) will be the same to the Evergreen Aggressive Fund as the
tax basis of such assets to the ABT Fund immediately prior to the
Reorganization, and the holding period of such assets (with the possible
exception of the Contracts) in the hands of the Evergreen Aggressive Fund
will include the period during which the assets were held by the ABT Fund;
(4) No gain or loss will be recognized by the Evergreen Aggressive Fund
upon the receipt of the assets from the ABT Fund solely in exchange for the
Class A Shares of the Evergreen Aggressive Fund and the assumption by the
Evergreen Aggressive Fund of certain liabilities;
(5) No gain or loss will be recognized by the ABT Fund's shareholders
upon the issuance of the Class A Shares of the Evergreen Aggressive Fund to
them, provided they receive solely such Class A Shares (including
fractional shares) in exchange for their shares of the ABT Fund; and
(6) The aggregate tax basis of the Class A Shares of the Evergreen
Aggressive Fund, including any fractional shares, received by each of the
shareholders of the ABT Fund pursuant to the Reorganization will be the
same as the aggregate tax basis of the shares of the ABT Fund held by such
shareholder immediately prior to the Reorganization, and the holding period
of the Class A Shares of the Evergreen
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<PAGE>
Aggressive Fund, including fractional shares, received by each such
shareholder will include the period during which the shares of the ABT Fund
exchanged therefor were held by such shareholder (provided that the shares
of the ABT Fund 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, the consequences described above would not be
applicable. Shareholders of the ABT Fund should consult their tax advisers
regarding the effect, if any, of the proposed Reorganization in light of their
individual circumstances. Since the foregoing discussion only relates to the
federal income tax consequences of the Reorganization, shareholders of the ABT
Fund should also consult their tax advisers as to state and local tax
consequences, if any, of the Reorganization.
It is not expected that the securities of the combined portfolio will be sold
in significant amounts to comply with the policy and investment practices of
the Evergreen Aggressive Fund.
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
The following discussion compares the investment objectives, policies and
restrictions of the ABT Fund and the Evergreen Aggressive Fund. This discussion
is based upon and qualified in its entirety by the respective investment
objectives, policies and restrictions stated in the Prospectus and Statement of
Additional Information of the ABT Fund and the investment objectives, policies
and restrictions of the Evergreen Aggressive Fund, contained in "Additional
Information--Evergreen Aggressive Fund" below. For a full discussion of the
investment objectives, policies and restrictions of the ABT Fund, refer to the
Prospectus of the ABT Fund under the caption "Investment Objectives and
Policies."
The Evergreen Aggressive Fund is a new series of Evergreen Trust established
for the purpose of acquiring substantially all of the assets of the ABT Fund.
Accordingly, its investment objective is identical and its policies and
investment restrictions are substantially similar.
INVESTMENT OBJECTIVE. Both Funds' investment objective is to achieve long-
term capital appreciation by investing primarily in common stocks of emerging
growth companies and larger, more well established companies, all of which are
viewed by each Fund's adviser as having above-average appreciation potential.
The ABT Fund does not have a specific stated policy which requires a minimum
percentage of assets to be invested in common stocks. Under normal
circumstances the Evergreen Aggressive Fund intends to invest at least 65% of
its net assets in common stocks and securities convertible into common stocks.
The investment adviser of each Fund considers an emerging growth company to be
one which is still in the developmental stage, yet has demonstrated, or is
expected to achieve, growth of earnings over various major business cycles.
Important qualities of any emerging growth company include sound management and
a good product with growing market opportunities. Consistent with its
investment objective, each Fund may invest in equity securities of seasoned,
established companies which its investment adviser believes have above-average
appreciation potential similar to that of companies in the developmental stage.
This may be due, for example, to management change, new technology, new product
or service developments, changes in demand, or to other factors. Investments in
stocks of emerging growth companies may involve special risks. Securities of
lesser-known, relatively small and special situation companies tend to be
speculative and volatile. Therefore, the current net asset value of each Fund's
shares may vary significantly. Accordingly, both Funds should not be considered
suitable for investors who are unable or unwilling to assume the risks of loss
inherent in such a program, nor should investment in either Fund be considered
a balanced or complete investment program.
COMPARATIVE INFORMATION ON SHAREHOLDERS' RIGHTS
FORM OF ORGANIZATION. The ABT Fund is the sole series of ABT Investment
Series, Inc. The Evergreen Aggressive Fund is a newly formed series of
Evergreen Trust. Both the ABT Investment Series, Inc. and
11
<PAGE>
Evergreen Trust are open-end management investment companies registered with
the SEC under the 1940 Act, which continuously offer to sell shares at their
current net asset value plus any applicable sales loads. Evergreen Trust is
organized as a Massachusetts business trust and is governed by a Declaration of
Trust, By-Laws, Board of Trustees, and applicable Massachusetts laws. ABT
Investment is a Maryland corporation and is governed by its Articles of
Incorporation, By-Laws, Board of Directors and applicable Maryland laws.
CAPITALIZATION. The beneficial interests in Evergreen Trust are represented
by shares with $.001 par value per share. The Declaration of Trust of Evergreen
Trust permits the Board of Trustees to issue an unlimited number of shares of
beneficial interest and permits the Board of Trustees, without shareholder
approval, to divide its shares into an unlimited number of series and classes
with the rights of such series and classes to be determined by the Board of
Trustees. The Evergreen Aggressive Fund consists of four classes of shares as
described above. See "Summary--Distribution; Sales Charges." Fractional shares
may be issued.
The ABT Fund has issued transferable common stock, par value $.001 per share.
The Articles of Incorporation authorize the issuance of two billion shares.
Fractional shares may be issued.
Each Fund's shares have equal voting rights and represent equal proportionate
interests in the assets belonging to each Fund, and are entitled to receive
dividends and other amounts as determined by Evergreen Trust's Board of
Trustees or ABT Investment's Board of Directors, except in the case of the
Evergreen Aggressive Fund, where there are different voting and other rights
applicable to different classes of shares in connection with or as a result of
the classes' distribution and shareholder servicing arrangements.
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 of
Evergreen Trust disclaims shareholder liability for acts or obligations of
Evergreen Trust and requires that notice of such disclaimer be given in each
agreement, obligation or instrument entered into or executed by Evergreen Trust
or its Board of Trustees. The Declaration of Trust provides for indemnification
out of the portfolio's or series' property for all losses and expenses of any
shareholder held personally liable for the obligations of the portfolio or
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 portfolio or series itself would
be unable to meet its respective obligations. A substantial number of mutual
funds in the United States are organized as Massachusetts business trusts.
Under Maryland law, shareholders have no personal liability as such for a
corporation's acts or obligations.
SHAREHOLDER MEETINGS AND VOTING RIGHTS. Neither Evergreen Trust nor ABT
Investment are required to hold annual meetings of shareholders. Trustees of
Evergreen Trust may be removed by a two-thirds vote of the number of Trustees
prior to such removal or by two-thirds vote of the shareholders at a special
meeting. The By-Laws of ABT Investment provide that Directors may be removed by
a majority vote of shareholders. Evergreen Trust is required to call a meeting
of shareholders for the purpose of voting upon the question of removal of a
Trustee when requested in writing to do so by the holders of at least 10% of
Evergreen Trust's outstanding shares. ABT Investment must hold a special
meeting of its shareholders upon the written request of shareholders entitled
to vote not less than 25% of all the votes entitled to be cast at such meeting.
Evergreen Trust 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. ABT Investment and Evergreen Trust
currently do not intend to hold regular shareholder meetings. Neither permits
cumulative voting. A majority of shares entitled to vote on a matter
constitutes a quorum for consideration of such matter, and a majority of the
shares present 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). All shares of all classes of each series in
Evergreen Trust have equal voting rights except that in matters affecting only
a particular series or class (for example, a Rule 12b-1 plan of that class)
only shares of that series or class are entitled to vote.
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<PAGE>
LIQUIDATION OR DISSOLUTION. In the event of the liquidation of a Fund the
shareholders are entitled to receive, when, and as declared by the Board of
Trustees or Board of Directors, the excess of the assets belonging to such Fund
over the liabilities belonging to the Fund. In either case, the assets so
distributable to shareholders of the respective Fund will be distributed among
the shareholders pro rata based on the shares of the Fund held by them and
recorded on the books of the Fund.
LIABILITY AND INDEMNIFICATION OF TRUSTEES AND DIRECTORS. The Declaration of
Trust of Evergreen Trust provides generally that no Trustee of Evergreen Trust
shall be personally liable to any person for any action or failure to act,
except for his own bad faith, willful misfeasance, gross negligence or reckless
disregard of his duties. The By-Laws of Evergreen Trust provide that present
and former Trustees or officers generally are entitled to indemnification
against liabilities and expenses with respect to claims related to their
position with Evergreen Trust unless, in the case of any liability to Evergreen
Trust or its shareholders, it shall have been determined that such Trustee or
officer is liable by reason of his willful misfeasance, bad faith, gross
negligence or reckless disregard of his duties involved in the conduct of his
office.
The By-Laws of ABT Investment provide that no Director or officer of ABT
Investment shall be personally liable to any person for any action or failure
to act, except for his own bad faith, willful misfeasance, gross negligence, or
reckless disregard of his duties. The By-Laws of ABT Investment provide that a
Director or officer is entitled to indemnification against liabilities and
expenses with respect to claims related to his position with ABT Investment,
unless such Director or officer shall have been adjudicated to have acted with
bad faith, willful misfeasance, or gross negligence, or in reckless disregard
of his duties, or not to have acted in good faith in the reasonable belief that
his action was in the best interest of ABT Investment. The By-Laws of ABT
Investment provide that a Director or officer is not entitled to
indemnification against liabilities in the event of settlement unless there has
been a determination that such Director or officer has not engaged in willful
misfeasance, bad faith, gross negligence, or reckless disregard of his duties.
Indemnification of officers of a corporation is provided for under Maryland
law.
RIGHTS OF INSPECTION. Shareholders of the Evergreen Aggressive Fund have the
same right to inspect in Massachusetts the governing documents, records of
meetings of shareholders, shareholder lists, share transfer records, accounts
and books of the Fund as are permitted shareholders of a corporation under the
Massachusetts corporation law. The purpose of inspection must be for interests
of shareholders relevant to the affairs of the Fund. Under Maryland law,
persons who have been shareholders of record for six months or more and who own
at least 5% of the shares of the ABT Fund may inspect the books of record and
stock ledger of the ABT Fund during regular business hours, following a written
demand stating a proper purpose related to corporate business.
The foregoing is only a summary of certain characteristics of the operations
of the Declaration of Trust and By-Laws of Evergreen Trust and the Articles of
Incorporation and By-Laws of ABT Investment, and of Massachusetts, Maryland and
federal law. The foregoing is not a complete description of those documents or
laws. Shareholders should refer to the provisions of the respective Declaration
of Trust, Articles of Incorporation, By-Laws, and Massachusetts, Maryland and
federal law directly for more complete information.
ADDITIONAL INFORMATION
ABT FUND. Information about the ABT Fund is included in its current
Prospectus dated February 28, 1995, and in the Statement of Additional
Information of the same date that has been filed with the SEC, both of which
are incorporated herein by reference. A copy of the Prospectus and the
Statement of Additional Information and the Fund's Annual Report dated October
31, 1994 are available upon request and without charge by writing to the ABT
Fund at the address listed on the cover page of this Prospectus/Proxy Statement
or by calling toll-free 1-800-553-7838.
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EVERGREEN AGGRESSIVE FUND. The following additional information supplements
information about the Evergreen Aggressive Fund contained elsewhere in this
Prospectus/Proxy Statement.
ORGANIZATION
Evergreen Trust (formerly named The Evergreen Fund) is a Massachusetts
business trust organized in 1988. Evergreen Trust currently has two investment
series, Evergreen Fund and Evergreen Aggressive Fund. The Evergreen Aggressive
Fund was designated as a separate series of Evergreen Trust in March, 1995.
INVESTMENT OBJECTIVE AND POLICIES
The Evergreen Aggressive Fund's investment objective is to achieve long-term
capital appreciation by investing under normal circumstances at least 65% of
its net assets in common stocks and securities convertible into common stocks
of emerging growth companies and larger, more well established companies, all
of which are viewed by its investment adviser as having above-average
appreciation potential. The Evergreen Aggressive Fund's investment adviser
considers an emerging growth company to be one which is still in the
developmental stage, yet has demonstrated, or is expected to achieve, growth of
earnings over various major business cycles. Important qualities of any
emerging growth company include sound management and a good product with
growing market opportunities.
Consistent with its investment objective, the Evergreen Aggressive Fund also
may invest in equity securities of seasoned, established companies which its
investment adviser believes have above-average appreciation potential similiar
to that of companies in the developmental stage. This may be due, for example,
to management change, new technology, new product or service developments,
changes in demand, or other factors. Investments in stocks of emerging growth
companies may involve special risks. Securities of lesser-known, relatively
small and special situation companies tend to be speculative and volatile.
Therefore, the current net asset value of the Evergreen Aggressive Fund's
shares may vary significantly. Accordingly, the Evergreen Aggressive Fund
should not be considered suitable for investors who are unable or unwilling to
assume the risks of loss inherent in such a program, nor should investment in
the Fund be considered a balanced or complete investment program.
The Evergreen Aggressive Fund may also borrow money on a temporary basis,
invest in cash and cash equivalents for defensive purposes and lend portfolio
securities.
INVESTMENT PRACTICES AND RESTRICTIONS; SPECIAL RISK CONSIDERATIONS
DEFENSIVE INVESTMENTS. The Evergreen Aggressive Fund may invest without
limitation in high quality money market instruments, such as notes,
certificates of deposit or bankers' acceptances, or U.S. Government securities
if, in the opinion of the Fund's investment adviser, market conditions warrant
a temporary defensive investment strategy.
PORTFOLIO TURNOVER AND BROKERAGE. It is anticipated that the annual portfolio
turnover rate for the Fund will not exceed 100%. See "Investment Practices and
Restrictions; Special Risk Considerations" below. A portfolio turnover rate of
100% would occur if all of the Evergreen Aggressive Fund's portfolio securities
were replaced in one year. The portfolio turnover rate experienced by the Fund
directly affects brokerage commissions and other transaction costs which the
Fund bears directly. A high rate of portfolio turnover will increase such
costs.
BORROWING. As a matter of fundamental policy, the Evergreen Aggressive Fund
may not borrow money except from banks as a temporary measure for extraordinary
or emergency purposes. The proceeds from borrowings may be used to facilitate
redemption requests which might otherwise require the untimely disposition of
portfolio securities.
The specific limits and other terms applicable to borrowing by the Fund are
set forth in the Statement of Additional Information.
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LENDING OF PORTFOLIO SECURITIES. In order to generate income and to offset
expenses, the Evergreen Aggressive Fund may lend portfolio securities to
brokers, dealers and other financial institutions. The Fund's investment
adviser will monitor the creditworthiness of such borrowers. Loans of
securities by the Evergreen Aggressive Fund, if and when made, may not exceed
30% of the value of the Fund's total assets and must be collateralized by cash
or U.S. Government securities that are maintained at all times in an amount
equal to at least 100% of the current market value of the securities loaned,
including accrued interest. While such securities are on loan, the borrower
will pay the Evergreen Aggressive Fund any income accruing thereon, and the
Fund may invest the cash collateral in portfolio securities, thereby
increasing its return. Any gain or loss in the market price of the loaned
securities which occurs during the term of the loan would affect the Evergreen
Aggressive Fund and its investors. The Evergreen Aggressive Fund has the right
to call a loan and obtain the securities loaned at any time on notice of not
more than five business days. The Evergreen Aggressive Fund may pay reasonable
fees in connection with such loans.
ILLIQUID SECURITIES. The Evergreen Aggressive Fund may invest up to 15% of
its net assets in illiquid securities and other securities, which are not
readily marketable, including repurchase agreements with maturities longer
than seven days. Securities eligible for resale pursuant to Rule 144A under
the Securities Act of 1933, which have been determined to be liquid, will not
be considered by the Fund's investment adviser to be illiquid or not readily
marketable and, therefore, are not included in the aforementioned 15% limit.
The inability of the Fund to dispose of illiquid or not readily marketable
investments readily or at a reasonable price could impair the Fund's ability
to raise cash for redemptions or other purposes. The liquidity of securities
purchased by the Evergreen Aggressive Fund which are eligible for resale
pursuant to Rule 144A will be monitored by the Fund's investment adviser on an
ongoing basis, subject to the oversight of the Trustees. In the event that
such a security is deemed to be no longer liquid, the Evergreen Aggressive
Fund's holdings will be reviewed to determine what action, if any, is required
to ensure that the retention of such security does not result in the Fund
violating the above-mentioned limits on assets invested in illiquid or not
readily marketable securities.
SPECIAL RISK CONSIDERATIONS. Investments in securities of little-known,
relatively small and special situation companies may tend to be speculative
and volatile. A lack of management depth in such companies could increase the
risks associated with the loss of key personnel. Also, the material and
financial resources of such companies may be limited, with the consequence
that funds or external financing necessary for growth may be unavailable. Such
companies may also be involved in the development or marketing of new products
or services for which there are no established markets. If projected markets
do not materialize or only regional markets develop, such companies may be
adversely affected or be subject to the consequences of local events.
Moreover, such companies may be insignificant factors in their industries and
may become subject to intense competition from larger companies. Securities of
companies in which the Evergreen Aggressive Fund may invest will frequently be
traded only in the over-the-counter market or on regional stock exchanges and
will often be closely held. Securities of this type may have limited liquidity
and be subject to wide price fluctuations. As a result of the risk factors
described above, the net asset value of the Evergreen Aggressive Fund's shares
can be expected to vary significantly. Accordingly, the Evergreen Aggressive
Fund should not be considered suitable for investors who are unable or
unwilling to assume the associated risks, nor should investment in the Fund be
considered a balanced or complete investment program.
OTHER INVESTMENT RESTRICTIONS. The Evergreen Aggressive Fund has adopted
additional investment restrictions that are set forth in the Statement of
Additional Information. Unless otherwise noted, the restrictions and policies
set forth above are not fundamental and may be changed without shareholder
approval.
REGISTRAR, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT. State Street Bank
and Trust Company, P.O. Box 9021, Boston, Massachusetts 02205-9827 acts as the
Evergreen Aggressive Fund's registrar, transfer agent and dividend-disbursing
agent for a fee based upon the number of shareholder accounts maintained for
the Fund. The transfer agency fees with respect to other Classes of shares of
the Evergreen Aggressive Fund may be higher than the transfer agency fee with
respect to the Class A shares.
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FUND EXPENSES
Under its investment advisory agreement with the Evergreen Aggressive Fund,
FUNB has agreed to furnish reports, statistical and research services and
recommendations with respect to the Fund's
portfolio of investments. In addition, as described previously, EAMC acts as
administrator of the Evergreen Aggressive Fund and performs a variety of
administrative services. The Evergreen Aggressive Fund pays the cost of all of
its other expenses and liabilities, including expenses and liabilities incurred
in connection with maintaining its registration under the Securities Act of
1933, as amended, and the 1940 Act, printing prospectuses (for existing
shareholders) as they are updated, state qualifications, share certificates,
mailings, brokerage, custodian and stock transfer charges, printing, legal and
auditing expenses, expenses of shareholder meetings and reports to
shareholders. Notwithstanding the foregoing, FUNB will pay the cost of printing
and distributing prospectuses used for prospective shareholders.
PURCHASE OF SHARES
You can purchase shares of the Evergreen Aggressive Fund through broker-
dealers, banks or other financial institutions, or directly through EFD. The
minimum initial investment is $1,000, which may be waived in certain
situations. There is no minimum for subsequent investments. Investments of $25
or more are allowed under the systematic investment program. Share certificates
are not issued for Class A shares. In states where EFD is not registered as a
broker-dealer shares of the Evergreen Aggressive Fund will only be sold through
other broker-dealers or other financial institutions that are registered. See
the Share Purchase Application and Statement of Additional Information for more
information. Only Class A shares are offered through the Prospectus/Proxy
Statement. (See "Capital Stock; Other Classes of Shares.")
No front-end sales charges are imposed on Class A shares purchased by
institutional investors, which may include bank trust departments and
registered investment advisers, and through qualified and non-qualified
employee benefit and savings plans which make shares of the Evergreen
Aggressive Fund and the other Evergreen funds available to their participants,
and which: (a) are employee benefit plans having at least $1,000,000 in
investable assets, or 250 or more eligible participants; or (b) are non-
qualified benefit or profit sharing plans which are sponsored by an
organization which also makes the Evergreen funds available through a qualified
plan meeting the criteria specified under (a). Payments may be made to broker-
dealers or other financial intermediaries in an amount equal to .50 of 1% of
the net asset value of shares purchased. These payments are subject to reclaim
in the event shares are redeemed within 12 months after purchase.
In addition to the discount or commission paid to dealers, EFD will from time
to time pay to dealers additional cash or other incentives that are conditioned
upon the sale of a specified minimum dollar amount of shares of the Evergreen
Aggressive Fund and/or other Evergreen mutual funds. Such incentives will take
the form of payment for attendance at seminars, lunches, dinners, sporting
events or theater performances, or payment for travel, lodging and
entertainment incurred in connection with travel by persons associated with a
dealer and their immediate family members to urban or resort locations within
or outside the United States. Such a dealer may elect to receive cash
incentives of equivalent amount in lieu of such payments.
When Class A shares are sold, EFD will normally retain a portion of the
applicable sales charge and pay the balance to the broker-dealer or other
financial intermediary through whom the sale was made. EFD may also pay fees to
banks from sales charges for services performed on behalf of the bank's
customers in connection with the purchase of shares of the Evergreen Aggressive
Fund. In addition to compensation paid at the time of sale, entities whose
clients have purchased Class A shares may receive a trailing commission equal
to .25 of 1% of the average daily value on an annual basis of Class A shares
held by their clients. Certain purchases of Class A shares may qualify for
reduced sales charges in accordance with the Evergreen Aggressive Fund's
Combined Purchase Privilege, Cumulative Quantity Discount, Statement of
Intention, Privilege for Certain Retirement Plans and Reinstatement Privilege.
Consult the Share Purchase Application and Statement of Additional Information
for additional information concerning these reduced sales charges.
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HOW THE EVERGREEN AGGRESSIVE FUND VALUES ITS SHARES. The net asset value of
Class A shares of the Evergreen Aggressive Fund is calculated by dividing the
value of the amount of the Fund's net assets attributable to that Class by the
number of outstanding shares of that Class. Shares are valued each day the NYSE
is open as of the close of regular trading (currently 4:00 p.m. Eastern time).
The securities in the Evergreen Aggressive Fund are valued at their current
market value determined on the basis of market quotations or, if such
quotations are not readily available, such other methods as Evergreen Trust's
Trustees believe would accurately reflect fair market value. Non-dollar
denominated securities will be valued as of the close of the NYSE at the
closing price of such securities in their principal trading market.
ADDITIONAL PURCHASE INFORMATION. If a purchase of Fund shares is canceled due
to nonpayment or because an investor's check does not clear, the investor will
be responsible for any loss the Fund or its investment adviser incurs. If such
investor is an existing shareholder the Evergreen Aggressive Fund may redeem
shares from an investor's account to reimburse the Fund or its investment
adviser for any loss. In addition, such investors may be prohibited or
restricted from making further purchases in any of the Evergreen funds.
REDEMPTION OF SHARES
You may "redeem", i.e., sell your Class A shares in the Evergreen Aggressive
Fund to the Fund on any day the NYSE is open, either directly or through your
financial intermediary. The price you will receive is the net asset value next
calculated after the Evergreen Aggressive Fund receives your request in proper
form. Proceeds generally will be sent to you within seven days. However, for
shares recently purchased by check, the Evergreen Aggressive Fund will not send
proceeds until it is reasonably satisfied that the check has been collected
(which may take up to 15 days). Once a redemption request has been telephoned
or mailed, it is irrevocable and may not be modified or canceled.
REDEEMING SHARES THROUGH YOUR FINANCIAL INTERMEDIARY. The Evergreen
Aggressive Fund must receive instructions from your financial intermediary
before 4:00 p.m. Eastern time for you to receive that day's net asset value.
Your financial intermediary is responsible for furnishing all necessary
documentation to the Evergreen Aggressive Fund and may charge you for this
service.
REDEEMING SHARES DIRECTLY BY MAIL OR TELEPHONE. Send a signed letter of
instruction or stock power form to State Street Bank and Trust Company ("State
Street") which is the registrar, transfer agent and dividend-disbursing agent
for the Evergreen Aggressive Fund. Stock power forms are available from your
financial intermediary, State Street, and many commercial banks. Additional
documentation is required for the sale of shares by corporations, financial
intermediaries, fiduciaries and surviving joint owners. Signature quarantees
are required for all redemption requests for shares with a value of more than
$10,000 or where the redemption proceeds are to be mailed to an address other
than that shown in the account registration. A signature guarantee must be
provided by a bank or trust company (not a Notary Public), a member firm of a
domestic stock exchange or by other financial institutions whose guarantees are
acceptable to State Street.
Shareholders may withdraw amounts of $1,000 or more from their accounts by
calling State Street (800-423-2615) between the hours of 9:00 a.m. and 4:00
p.m. (Eastern time) each business day (i.e., any weekday exclusive of days on
which the NYSE or State Street's offices are closed). The NYSE is closed on New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. Redemption requests made after 4:00
p.m. (Eastern time) will be processed using the net asset value determined on
the next business day. Such redemption requests must include the shareholder's
account name, as registered with the Evergreen Aggressive Fund, and the account
number. During periods of drastic economic or market changes, shareholders may
experience difficulty in effecting telephone redemptions. Shareholders who are
unable to reach the Evergreen Aggressive Fund or State Street by telephone
should follow the procedures outlined above for redemption by mail.
The telephone redemption service is not made available to shareholders
automatically, Shareholders wishing to use the telephone redemption service
should contact the Evergreen Aggressive Fund for
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information about signing up for the privilege. Redemption proceeds will either
(i) be mailed by check to the shareholder at the address in which the account
is registered or (ii) be wired to an account with the same registration as the
shareholder's account in the Evergreen Aggressive Fund at a designated
commercial bank. State Street currently deducts a $5 wire charge from all
redemption proceeds wired. This charge is subject to change without notice. A
shareholder who decides later to use this service, or to change instructions
already given, should fill out a Shareholder Services Form and send it to State
Street Bank and Trust Company, P.O. Box 9021, Boston, Massachusetts 02205-9827,
with such shareholder's signature quaranteed by a bank or trust company (not a
Notary Public), a member firm of a domestic stock exchange or by other
financial institutions whose guarantees are acceptable to State Street.
Shareholders should allow approximately ten days for such form to be processed.
The Evergreen Aggressive Fund will employ reasonable procedures to verify that
telephone requests are genuine. These procedures include requiring some form of
personal identification prior to acting upon instructions and tape recording of
conversations. If the Evergreen Aggressive Fund fails to follow such
procedures, it may be liable for any losses due to unauthorized or fraudulent
instructions. The Evergreen Aggressive Fund shall not be liable for following
telephone instructions reasonably believed to be genuine. Also, the Evergreen
Aggressive Fund reserves the right to refuse a telephone redemption request, if
it is believed advisable to do so. Financial intermediaries may charge a fee
for handling telephone requests. The telephone redemption option may be
suspended or terminated at any time without notice.
GENERAL. Class B and Class C shares, which are not offered by this
Prospectus/Proxy Statement, are subject to a contingent deferred sales charge
("CDSC") upon redemption. See "Capital Stock; Other Classes of Shares" below.
The sale of shares is a taxable transaction for federal tax purposes. Under
unusual circumstances, the Evergreen Aggressive Fund may suspend redemptions or
postpone payment for up to seven days or longer, as permitted by federal
securities law. The Evergreen Aggressive Fund reserves the right to close an
account that through redemption has remained below $1,000 for 30 days.
Shareholders will receive 60 days' written notice to increase the account value
before the account is closed. The Evergreen Aggressive Fund has elected to be
governed by Rule 18f-1 under the 1940 Act pursuant to which the Fund is
obligated to redeem shares solely in cash, up to the lesser of $250,000 or 1%
of the Fund's total net assets during any ninety day period for any one
shareholder. See the Statement of Additional Information for further details.
EXCHANGE PRIVILEGE
HOW TO EXCHANGE SHARES. You may exchange some or all of your Class A shares
for shares of the same Class in the other Evergreen funds through your
financial intermediary, or by telephone or mail as described below. An exchange
which represents an initial investment in another Evergreen fund must amount to
at least $1,000. Once an exchange request has been telephoned or mailed, it is
irrevocable and may not be modified or canceled. Exchanges will be made on the
basis of the relative net asset values of the shares exchanged next determined
after an exchange request is received. Exchanges are subject to minimum
investment and suitability requirements.
Each of the Evergreen funds have different investment objectives and
policies. For complete information, a prospectus of the fund into which an
exchange will be made should be read prior to the exchange. An exchange is
treated for federal income tax purposes as a redemption and purchase of shares
and may result in the realization of a capital gain or loss. Shareholders are
limited to five exchanges per calendar year, with a maximum of three per
calendar quarter. This exchange privilege may be modified or discontinued at
any time by the Evergreen Aggressive Fund upon sixty days' notice to
shareholders and is only available in states in which shares of the fund being
acquired may lawfully be sold.
EXCHANGES THROUGH YOUR FINANCIAL INTERMEDIARY. The Evergreen Aggressive Fund
must receive exchange instructions from your financial intermediary before 4:00
p.m. Eastern time for you to receive that day's net asset value. Your financial
intermediary is responsible for furnishing all necessary documentation to the
Evergreen Aggressive Fund and may charge you for this service.
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EXCHANGES BY TELEPHONE AND MAIL. You may exchange shares with a value of
$1,000 or more by telephone by calling State Street (800-423-2615). Exchange
requests made after 4:00 p.m. (Eastern time) will be processed using the net
asset value determined on the next business day. During periods of drastic
economic or market changes, shareholders may experience difficulty in effecting
telephone exchanges. You should follow the procedures outlined below for
exchanges by mail if you are unable to reach State Street by telephone. If you
wish to use the telephone exchange service you should contact the Fund. As
noted above, the Evergreen Aggressive Fund will employ reasonable procedures to
confirm that instructions for the redemption or exchange of shares communicated
by telephone are genuine. A telephone exchange may be refused by the Evergreen
Aggressive Fund or State Street if it is believed advisable to do so.
Procedures for exchanging Evergreen Aggressive Fund shares by telephone may be
modified or terminated at any time. Written requests for exchanges should
follow the same procedures outlined for written redemption requests in the
section entitled "Redemption of Shares," however, no signature guarantee is
required.
SHAREHOLDER SERVICES
The Evergreen Aggressive Fund offers the following shareholder services. For
more information about these services contact your financial intermediary, EFD
or the toll-free number for the Fund, 800-326-3241. Some services are described
in more detail in the Share Purchase Application which is available from the
Fund. Certain additional conditions may apply to Class B, Class C or Class Y
shares, which are not offered herein with respect to certain shareholder
services.
SYSTEMATIC INVESTMENT PLAN. You may make monthly or quarterly investments
into an existing account automatically in amounts of not less than $25.
TELEPHONE INVESTMENT PLAN. You may make investments into an existing account
electronically in amounts of not less than $100 or more than $10,000 per
investment. Telephone investment requests received by 3:00 p.m. (Eastern time)
will be credited to a shareholder's account the day the request is received.
SYSTEMATIC CASH WITHDRAWAL PLAN. When an account of $10,000 or more is opened
or when an existing account reaches that size, you may participate in the
Evergreen Aggressive Fund's Systematic Cash Withdrawal Plan by filling out the
appropriate part of the Share Purchase Application. Under this plan, you may
receive (or designate a third party to receive) a monthly or quarterly check in
a stated amount of not less than $100. Fund shares will be redeemed as
necessary to meet withdrawal payments. All participants must elect to have
their dividends and capital gain distributions reinvested automatically.
INVESTMENTS THROUGH EMPLOYEE BENEFIT AND SAVINGS PLANS. Certain qualified and
non-qualified benefit and savings plans may make shares of the Evergreen
Aggressive Fund and the other Evergreen funds available to their participants.
Investments made by such employee benefit plans may be exempt from front-end
sales charges upon Class A shares if they meet the criteria set forth under
"Purchase of Shares." Affiliates of FUNB may provide compensation to
organizations providing administrative and record-keeping services to plans
which make shares of the Evergreen funds available to their participants.
RETIREMENT PLANS. Eligible investors may invest in the Evergreen Aggressive
Fund under the following prototype retirement plans: (i) Individual Retirement
Account (IRA); (ii) Simplified Employee Pension (SEP) for sole proprietors,
partnerships and corporations; and (iii) Profit-Sharing and Money Purchase
Pension Plans for corporations and their employees.
AUTOMATIC REINVESTMENT PLAN. For the convenience of investors, all dividends
and distributions are automatically reinvested in full and fractional shares of
the Evergreen Aggressive Fund at the net asset value per share at the close of
business on the record date, unless otherwise requested by a shareholder in
writing. If the transfer agent does not receive a written request for
subsequent dividends and/or distributions to be paid in cash at least three
full business days prior to a given record date, the dividends and/or
distributions
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to be paid to a shareholder will be reinvested. If you elect to receive
dividends and distributions in cash and the U.S. Postal Service cannot deliver
the checks, or if the checks remain uncashed for six months, the checks will be
reinvested into your account at the then current net asset value.
DIVIDENDS, DISTRIBUTIONS AND OTHER TAXES
It is the policy of the Evergreen Aggressive Fund to distribute its
investment company taxable income and any net realized capital gains to
shareholders annually or more frequently as required as a condition of
continued qualification as a regulated investment company by the Code.
Dividends and distributions generally are taxable in the year in which they are
paid, except any dividends paid in January that were declared in the previous
calendar quarter may be treated as paid in December in the previous year.
Income dividends and capital gain distributions are automatically reinvested in
additional shares of the Evergreen Aggressive Fund at the net asset value per
share at the close of business on the record date, unless the shareholder
writes to the Fund's transfer agent and requests payment in cash.
The Evergreen Aggressive Fund intends to qualify to be treated as a regulated
investment company under the Code. While so qualified, it is expected that the
Evergreen Aggressive Fund will not be required to pay any federal income taxes
on that portion of its investment company taxable income and any net realized
capital gains it distributes to shareholders. The Code imposes a 4%
nondeductible excise tax on regulated investment companies, such as the
Evergreen Aggressive Fund, to the extent they do not meet certain distribution
requirements by the end of such calendar year. The Evergreen Aggressive Fund
anticipates meeting such distribution requirements. Most shareholders of the
Evergreen Aggressive Fund normally will have to pay federal income taxes and
any state or local taxes on the dividends and distributions they receive from
the Fund.
Following the end of such calendar year, every shareholder of the Evergreen
Aggressive Fund will be sent applicable tax information and information
regarding the dividends and capital gain distributions made during the calendar
year. Under current law, the highest federal income tax rate applicable to net
long-term capital gains realized by individuals is 28%. The rate applicable to
corporations is 35%. Certain income from the Evergreen Aggressive Fund may
qualify for a corporate dividends-received deduction of 70%. Specific questions
should be addressed to the investor's own tax adviser.
The Evergreen Aggressive Fund is required by federal law to withhold 31% of
reportable payments (which may include dividends, capital gain distributions
and redemptions) paid to certain shareholders. In order to avoid this backup
withholding requirement, you must certify that the investor's social security
or taxpayer identification number is correct and that the investor is not
currently subject to backup withholding or is exempt from backup withholding.
CAPITAL STOCK; OTHER CLASSES OF SHARES
OTHER CLASSES OF SHARES. The Evergreen Aggressive Fund will offer four
classes of shares, Class A, Class B, Class C and Class Y, and may in the future
offer additional classes. Class Y, B and C shares are not offered by this
Prospectus/Proxy Statement. Class Y Shares are offered without any sales charge
or Rule 12b-1 distribution or shareholder servicing fees. Class Y shares are
only available to (i) all shareholders of record in one or more of the
Evergreen funds as of December 30, 1994, (ii) certain institutional investors
and (iii) investment advisory clients of FUNB and its affiliates. The dividends
payable with respect to Class A, Class B and Class C shares will be less than
those payable with respect to Class Y shares due to the distribution and
distribution related expenses borne by Class A, Class B and Class C shares and
the fact that such expenses are not borne by Class Y shares.
Class B shares are offered at net asset value without an initial sales
charge. Class B shareholders will pay a CDSC of up to 7%, declining to 0% after
seven years, if such shareholder redeems shares within seven years (after which
it is expected they will convert into Class A shares). Class C shares are
offered without any initial sales charge, but are subject to a 1% CDSC if the
shareholder redeems within one year of purchase. Both Class B and Class C
shares are subject to ongoing distribution and shareholder servicing fees of
1.00%
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of the aggregate average daily net assets attributable to the Class B and Class
C shares, respectively, pursuant to the Rule 12b-1 plan relating to each such
Class. The dividends payable with respect to Class A, Class B and Class C
shares will be less than those payable with respect to Class Y shares due to
the distribution and distribution-related expenses borne by Class A, Class B
and Class C shares and the fact that such expenses are not borne by Class Y
shares. The different sales charges and expenses relating to the various
Classes of shares of the Evergreen Aggressive Fund may impact the performance
of such Classes. To obtain information concerning the other Classes of shares
of the Evergreen Aggressive Fund not offered in this Prospectus/Proxy
Statement, please call 1-800-326-3241.
EFFECT OF BANKING LAWS
The Glass-Steagall Act and other banking laws and regulations presently
prohibit member banks of the Federal Reserve System ("Member Banks") or their
non-bank affiliates from sponsoring, organizing, controlling, or distributing
the shares of registered open-end investment companies such as the Evergreen
Aggressive Fund. Such laws and regulations also prohibit banks from issuing,
underwriting or distributing securities in general. However, under the Glass-
Steagall Act and such other laws and regulations, a Member Bank or an affiliate
thereof may act as investment adviser, transfer agent or custodian to a
registered open-end investment company and may also act as agent in connection
with the purchase of shares of such an investment company upon the order of
their customer. FUNB and EAMC, since it is a subsidiary of FUNB, is subject to
and in compliance with the aforementioned laws and regulations.
Changes to applicable laws and regulations or future judicial or
administrative decisions could result in FUNB and EAMC being prevented from
continuing to perform the services required under the investment advisory and
administrative services contracts or from acting as agent in connection with
the purchase of shares of the Evergreen Aggressive Fund by its customers. If
FUNB and EAMC were prevented from continuing to provide the services called for
under these agreements, it is expected that the Trustees would identify, and
call upon the Evergreen Aggressive Fund's shareholders to approve, a new
investment adviser or administrator. If this were to occur, it is not
anticipated that the shareholders of the Evergreen Aggressive Fund would suffer
any adverse financial consequences.
ABT Investment and Evergreen Trust are each subject to the informational
requirements of the Exchange Act and the 1940 Act, and in accordance therewith
file reports and other information including proxy material, reports 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 Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois, 60661-2511, and 7 World Trade Center, 13th Floor, New York, New York
10048. Copies of such material can also be obtained from the Public Reference
Branch, Office of Consumer Affairs and Information Services, Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates.
OTHER BUSINESS
The Directors of ABT Investment 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.
VOTING INFORMATION
This Prospectus/Proxy Statement is furnished in connection with a
solicitation of proxies by the Board of Directors of ABT Investment to be used
at the Special Meeting of Shareholders of the ABT Fund, a series of ABT
Investment, to be held at 10:00 a.m., June 19, 1995, at 340 Royal Palm Way,
Palm Beach, Florida 33480 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 on or about May 11, 1995. 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
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Meeting or any adjournment thereof. The holders of a majority of the shares
outstanding 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 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. Since shares represented by
"broker non-votes" are considered outstanding shares, a "broker non-vote" has
the same effect as a vote against the Reorganization. A proxy may be revoked at
any time at or before the Meeting by written notice to the Secretary of ABT
Investment, 340 Royal Palm Way, Palm Beach, Florida 33480. Unless revoked, all
valid proxies will be voted in accordance with the specifications thereon or,
in the absence of such specifications, for approval of the Plan and the
Reorganization contemplated thereby.
Approval of the Plan will require the affirmative vote of more than 50% of
the outstanding voting securities of the ABT Fund. Each full share outstanding
is entitled to one vote and each fractional share outstanding is entitled to a
proportionate share of one vote.
If the shareholders do not vote to approve the Reorganization, the Board of
Directors of ABT Investment will continue to operate the ABT Fund under
existing arrangements.
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 PBCM, its affiliates or officers and Directors of ABT
Investment (who will not be paid for their solicitation activities). Proxies
may be recorded pursuant to telephone or electronically transmitted
instructions obtained pursuant to procedures reasonably designed to verify that
such instructions have been authorized. PBCM has retained Shareholder
Communications Corporation to assist in the proxy solicitation process.
The ABT Fund will be responsible for the fees and expenses of its counsel and
counsel for the independent Directors in connection with the Reorganization,
whether or not the Reorganization is consummated. With respect to the costs of
preparing this Prospectus/Proxy Statement and soliciting shareholders of the
ABT Fund, PBCM has agreed to bear such costs and FUNB shall reimburse PBCM 50%
of its costs up to a maximum reimbursement of $85,000.
In the event that sufficient votes to approve the Plan are not received by
June 19, 1995, 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 transaction will not be entitled
under either Maryland law or the Articles of Incorporation of ABT Investment to
demand payment 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 Class A Shares of the Evergreen
Aggressive Fund which they received in the transaction at their then-current
net asset value. Shares of the ABT Fund may be redeemed at any time prior to
the consummation of the Reorganization. ABT Fund shareholders may wish to
consult their tax advisers as to any differing consequences of redeeming ABT
Fund shares prior to the Reorganization or exchanging such shares in the
Reorganization.
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ABT Investment 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, if any, should send their written proposals to the Secretary of ABT
Investment at the address set forth on the cover of this Prospectus/Proxy
Statement such that they will be received by ABT Investment in a reasonable
period of time prior to any such meeting.
NOTICE TO BANKS, BROKER-DEALERS AND VOTING TRUSTEES AND THEIR
NOMINEES. Please advise ABT Investment 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.
The votes of the shareholders of the Evergreen Aggressive Fund are not being
solicited by the Prospectus/Proxy Statement and are not required to carry out
the Reorganization.
FINANCIAL STATEMENTS AND EXPERTS
The audited financial statements of ABT Fund as of October 31, 1994 and the
financial highlights for the periods indicated therein, have been incorporated
by reference into this Prospectus/Proxy Statement in reliance on the reports of
Tait, Weller & Baker, independent accountants for the ABT Fund, given on the
authority of the firm as experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters concerning the issuance of shares of the Evergreen
Aggressive Fund will be passed upon by Shereff, Friedman, Hoffman & Goodman,
LLP, 919 Third Avenue, New York, New York 10022.
THE BOARD OF DIRECTORS OF ABT INVESTMENT, INCLUDING THE "NON-INTERESTED"
DIRECTORS, RECOMMENDS APPROVAL OF THE PLAN, AND ANY UNMARKED PROXIES WITHOUT
INSTRUCTIONS TO THE CONTRARY WILL BE VOTED IN FAVOR OF APPROVAL OF THE PLAN.
----------------
May 11, 1995
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EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement") is made as of
this 15th day of March, 1995, by and between Evergreen Trust, a Massachusetts
business trust (the "Trust"), with its principal place of business at 2500
Westchester Avenue, Purchase, New York 10577, with respect to its Evergreen
Aggressive Growth Fund series (the "Acquiring Fund"), and ABT Investment
Series, Inc., a Maryland corporation (the "Company"), with respect to its ABT
Emerging Growth Fund series, with its principal place of business at 340 Royal
Palm Way, Palm Beach, Florida 33480 (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)(F) of the United
States Internal Revenue Code of 1986 (the "Code"). The reorganization (the
"Reorganization") will consist of the transfer of substantially all of the
assets of the Selling Fund in exchange solely for shares of beneficial
interest, no par value per share, of the Acquiring Fund (the "Acquiring Fund
Shares") and the assumption by the Acquiring Fund of certain stated liabilities
of the Selling Fund and 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 separate investment
series of open-end, registered investment companies of the management type and
the Selling Fund owns securities which 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
substantially all of the assets of the Selling Fund for Acquiring Fund Shares
and the assumption of certain stated liabilities by the Acquiring Fund on the
terms and conditions hereinafter set forth is in the best interests of the
Acquiring Fund shareholders and that the interests of the existing shareholders
of the Acquiring Fund will not be diluted as a result of the transactions
contemplated herein;
Whereas, the Board of Directors of the Company has determined that the
Selling Fund should exchange substantially all of its assets and certain of its
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 the Selling Fund's assets as set forth in paragraph 1.2
to the Acquiring Fund, and 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 dividing the value of
the Selling Fund's net assets computed in the manner and as of the time and
date set forth in paragraph 2.1 by the net asset value of one Acquiring Fund
Share computed in the manner and as of the time and date set forth in paragraph
2.2 and (ii) to assume certain liabilities of the
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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 futures interests and dividends or
interest receivable, which 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 business in connection with the
purchase and sale of securities and the payment of its normal operating
expenses. The Selling Fund reserves the right to sell any of such securities
but will not, without the prior written approval of the Acquiring Fund, acquire
any additional securities other than securities of the type in which the
Acquiring Fund is permitted to invest. The Acquiring Fund will, within a
reasonable time prior to the Closing Date, furnish the Selling Fund with a
statement of the Acquiring Fund's investment objectives, policies and
restrictions and a list of the securities, if any, on the Selling Fund's list
referred to in the second sentence of this paragraph which do not conform to
the Acquiring Fund's investment objectives, policies, and restrictions. In the
event that the Selling Fund holds any investments which the Acquiring Fund may
not hold, the Selling 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.
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 by Palm Beach Capital Management, Inc., the investment adviser
and administrator 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.
1.4 Liquidation and Distribution. 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 Closing 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 Section 5.
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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 and deregistered.
1.8 Termination and Deregistration. The business of the Selling Fund shall be
wound up, and the Company shall be terminated as a Maryland corporation and
deregistered as an investment company under the Investment Company Act of 1940,
as amended (the "1940 Act"), 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
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 current prospectus 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 of an Acquiring Fund Share 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 current
prospectus and statement of additional information.
2.3 Shares to be Issued. The number of the Acquiring Fund Shares to be issued
(including fractional shares, if any) in exchange for the Selling Fund's assets
shall be determined by dividing the value of the assets of the Selling Fund
determined using the same valuation procedures referred to in paragraph 2.1 by
the net asset value of an Acquiring Fund Share determined in accordance with
paragraph 2.2.
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.
ARTICLE III
CLOSING AND CLOSING DATE
3.1 Closing Date. The Closing Date shall be June 30, 1995 or such later date
as the parties may agree to in writing. All acts taking place at the Closing
shall be deemed to take place simultaneously as of the close of business on the
Closing Date unless otherwise provided. The Closing shall be held as of 5:00
o'clock p.m. at the offices of Evergreen Asset Management Corp., 2500
Westchester Avenue, Purchase, New York 10577, or at such other time and/or
place as the parties may agree.
3.2 Custodian's Certificate. The Bank of New York, 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
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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.
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 Closing 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. Boston Financial Data Services, Inc., as
transfer agent for each of the Selling Fund and the Acquiring Fund shall
deliver at the Closing a certificate of an authorized officer stating that
their 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 a confirmation evidencing the Acquiring Fund Shares to be
credited on the Closing Date to the Secretary of the Company, 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 Maryland
corporation duly organized, validly existing and in good standing under the
laws of the State of Maryland;
(b) The Selling Fund is a separate investment series of a registered
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 (the "1940 Act") is in full force and effect;
(c) The current prospectus 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 materially 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 the Company's Articles of Incorporation or
By-Laws or of any agreement, indenture, instrument, contract, lease or
other undertaking to which the Selling Fund is a party or by which it is
bound;
(e) The Selling Fund has no material contracts or other commitments
(other than this Agreement) which will be terminated with liability to it
prior to the Closing Date;
(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 which 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
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governmental body which materially and adversely affects its business or
its ability to consummate the transactions herein contemplated;
(g) The financial statements of the Selling Fund at October 31, 1994 have
been audited by Tait, Weller & Baker, certified public accountants, and 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 dates, and there are no known contingent liabilities of the
Selling Fund as of such dates not disclosed therein;
(h) Since October 31, 1994, 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 shall have been paid so
far as due, or provision shall have been made for the payment thereof and
to the best of the Selling Fund's knowledge no such return is currently
under audit and no assessment has been asserted with respect to such
returns;
(j) For each of the preceding six fiscal years 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. 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's 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 which 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 thereunder applicable thereto;
(o) The proxy statement of the Selling Fund to be included in the
Registration Statement referred to 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.
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4.2 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 Massachusetts
business trust duly organized, validly existing and in good standing under
the laws of The Commonwealth of Massachusetts.
(b) The Acquiring 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
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 materially 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 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 to the Selling Fund and accepted by the
Selling Fund, no material litigation, 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 which
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 which materially and adversely affects its
business or its ability to consummate the transactions contemplated herein;
(f) Other than actions taken in connection with its designation as an
investment series of the Trust, the Acquiring Fund has had no operations as
of the date of the Agreement and has no net assets or liabilities;
(g) Since its designation as an investment series of the Trust, 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
Acquiring 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 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
and 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;
(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 (except that, under Massachusetts law, shareholders of
the Acquiring Fund could, under certain circumstances, be held personally
liable for obligations of the Acquiring Fund). 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;
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(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 (except
that, under Massachusetts law, shareholders of the Acquiring Fund could,
under certain circumstances, be held personally liable for obligations of
the Acquiring Fund);
(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 which 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 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; and
(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.
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. The Company 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.
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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 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 which will be carried over by the Acquiring Fund as a
result of Section 381 of the Code, and which will be certified by the Company's
President, its Treasurer and its independent auditors.
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 (the "Prospectus and Proxy Statement") which will
include the Prospectus and Proxy Statement, referred to in paragraph 4.1(o),
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.
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 Trust's President or Vice
President and its Treasurer or Assistant Treasurer, in a form reasonably
satisfactory to the Selling Fund and dated as of the Closing Date, to such
effect and as to such other matters as the Acquiring Fund shall reasonably
request; and
6.2 The Selling Fund shall have received on the Closing Date an opinion from
Shereff, Friedman, Hoffman & Goodman, 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:
That (a) the Acquiring 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 Agreement has been duly authorized,
executed and delivered by the Acquiring Fund, and, assuming that the
Prospectus, Registration Statement and Proxy Statement comply with the 1933
Act, the 1934 Act and the 1940 Act and the rules and regulations thereunder
and, assuming due authorization, execution and delivery of the 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; (c) assuming that a
consideration therefor not less than the net asset value therefor 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 (except that, under
Massachusetts law, shareholders of the Acquiring Fund could, under certain
circumstances, be held personally liable for obligations of the Acquiring
Fund), and no shareholder of the Acquiring Fund has any preemptive rights
in respect thereof; (d) the execution and delivery of the 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
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which it is bound; (e) 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 the
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 such as may be required under state securities laws; (f) 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; (g) 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 as required; (h) the Acquiring 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 best
knowledge, such registration with the Commission as an investment company
under the 1940 Act is in full force and effect; and (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. In addition, 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
(f) of their 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 Registration Statement, and that such opinion is solely for
the benefit of the Company and the Selling Fund., Such opinion shall
contain such other assumptions and limitations as shall be in the opinion
of Shereff, Friedman, Hoffman & Goodman, LLP appropriate to render the
opinions expressed therein and shall indicate, with respect to matters of
Massachusetts law that as Shereff, Friedman, Hoffman & Goodman, LLP are not
admitted to the bar of Massachusetts, such opinions are based solely upon
the review of published statutes, cases and rules and regulations of the
Commonwealth of Massachusetts. In this paragraph 6.2, references to
Prospectus and Proxy Statement include and relate only to the text of such
Prospectus and Proxy Statement and not to any exhibits or attachments
thereto or to any documents incorporated by reference therein.
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 the same force and effect as if made
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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 the
Company's President or Vice President and its 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 the Company; and
7.3 The Acquiring Fund shall have received on the Closing Date an opinion of
Charles Moore, Esq., counsel to the Selling Fund, in a form satisfactory to the
Acquiring Fund covering the following points:
That (a) the Selling Fund is a separate investment series of a Maryland
corporation duly organized, validly existing and in good standing under the
laws of the State of Maryland and has the power to own all of its
properties and assets and to carry on its business as presently conducted;
(b) the Agreement has been duly authorized, executed and delivered by the
Selling Fund, and, assuming that the Prospectus, the Registration Statement
and the Prospectus and Proxy Statement comply with the 1933 Act, the 1934
Act and the 1940 Act and the rules and regulations thereunder and, assuming
due authorization, execution and delivery of the 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; (c) the execution and delivery of the Agreement did not,
and the consummation of the transactions contemplated hereby will not,
result in a violation of the Company's Articles of Incorporation 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; (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 State of Maryland is required for the consummation
by the Selling Fund of the transactions contemplated herein, except such as
have been obtained under the 1933 Act, the 1934 Act and the 1940 Act, and
such as may be required under state securities laws; (e) only insofar as
they relate to the Selling 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; (f) such counsel does not know of any legal or
governmental proceedings, only 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; (g) the Selling
Fund is a separate investment series of a Maryland corporation registered
as an investment company under the 1940 Act and to such counsel's best
knowledge, such registration with the Commission as an investment company
under the 1940 Act is in full force and effect; (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; and (i)
assuming that a consideration therefor not less than the net asset value
therefor 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; Such counsel shall also state that they have
participated in conferences with officers and other representatives of the
Selling Fund at which the contents of the Prospectus and Proxy Statement
and related matters were discussed and,
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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
(e) of their above opinion), on the basis of the foregoing (relying as to
materiality to a large extent upon the opinions of the Company's officers
and other representatives of the Selling 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 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 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
Acquiring Fund contained in the Prospectus and Proxy Statement or
Registration Statement, and that such opinion is solely for the benefit of
the Trust and Acquiring Fund. Such opinion shall contain such other
assumptions and limitations as shall be in the opinion of Charles Moore,
Esq. appropriate to render the opinions expressed therein and shall
indicate, with respect to matters of Massachusetts law that as Charles
Moore, Esq. is not admitted to the bar of Maryland, such opinions are based
either upon the review of published statutes, cases and rules and
regulations of the State of Maryland or upon an opinion of Maryland
counsel.
In this paragraph 7.3, references to Prospectus and Proxy Statement include
and relate only to the text of such Prospectus and Proxy Statement and not to
any exhibits or attachments thereto or to any documents incorporated by
reference therein.
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 The 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 the Company's Articles of
Incorporation 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 and 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 Selling Fund, provided
that either party hereto may for itself waive any of such conditions;
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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
investment company taxable income for all taxable years ending on or prior to
the Closing Date (computed without regard to any deduction for dividends paid)
and all of its net capital gain realized in all taxable years 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, addressed to the Acquiring Fund and the Selling Fund substantially
to the effect that for Federal income tax purposes:
(a) The transfer of substantially all of the Selling Fund assets in
exchange for the Acquiring Fund Shares and the assumption by the Acquiring
Fund of certain identified liabilities of the Selling Fund followed by the
distribution of the Acquiring Fund's 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)(F) 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 identified
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 identified 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; (d) no gain or loss will be recognized by 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); and (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 Tait, Weller & Baker 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 (i) 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; (ii) in their opinion, the audited financial statements
and the per share data and ratios contained in the section entitled Financial
Highlights and provided in accordance with Item 3 of Form N-1A (the "Per Share
Data") of the Selling Fund included in or incorporated by reference into the
Registration Statement and Prospectus and Proxy Statement and previously
reported on by them comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the published rules and
regulations thereunder; (iii) 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) consisting of a reading
of any unaudited pro forma financial statements included in the Registration
Statement and Prospectus and Proxy Statement, and inquiries of appropriate
officials of the Company responsible for financial and accounting
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matters, nothing came to their attention which caused them to believe that (A)
such unaudited pro forma financial statements do not comply as to form in all
material respects with the applicable accounting requirements of the 1933 Act
and the published rules and regulations thereunder, or (B) said unaudited pro
forma financial statements are not fairly presented in conformity with
generally accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements; (iv) 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; and (v) 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 pro forma financial statements which are included in the
Registration Statement and Prospectus and Proxy Statement, were prepared based
on the valuation of the Selling Fund's assets in accordance with the Trust's
Declaration of Trust and the Acquiring Fund's then current prospectus and
statement of additional information pursuant to procedures customarily utilized
by the Acquiring Fund in valuing its own assets (such procedures having been
previously described to Tait, Weller & Baker in writing by the Acquiring Fund).
In addition, the Acquiring Fund shall have received from Tait, Weller & Baker
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) (i) the data utilized
in the calculations of the projected expense ratio appearing in the
Registration Statement and Prospectus and Proxy Statement agree with underlying
accounting records of the Selling Fund or to written estimates by Selling
Fund's management and were found to be mathematically correct; and (ii) 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 Price Waterhouse LLP a letter
addressed to the Selling Fund dated on the Closing Date, in form and substance
satisfactory to the Selling Fund, to the effect that (i) 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; (ii) in their opinion, the audited financial statements and the per
share data and ratios contained in the section entitled Financial Highlights
and provided in accordance with Item 3 of Form N-1A (the "Per Share Data") of
the Acquiring Fund included in or incorporated by reference into the
Registration Statement and Prospectus and Proxy Statement and previously
reported on by them comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the published rules and
regulations thereunder; (iii) on the basis of limited procedures agreed upon by
the Trust and described in such letter (but not an examination in accordance
with generally accepted auditing standards) consisting of a reading of any
unaudited pro forma financial statements included in the Registration Statement
and Prospectus and Proxy Statement, and inquiries of appropriate officials of
the Trust responsible for financial and accounting matters, nothing came to
their attention which caused them to believe that (A) such unaudited pro forma
financial statements do not comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the published rules and
regulations thereunder, or (B) said unaudited pro forma financial statements
are not fairly presented in conformity with generally accepted accounting
principles applied on a basis substantially consistent with that of the audited
financial statements; and (iv) 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.
In addition, the Selling Fund shall have received from Price Waterhouse LLP a
letter addressed to the Selling Fund dated on the Closing Date, in form and
substance satisfactory to the Selling Fund, to the effect
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that 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
underlying accounting records of the Acquiring Fund and the Selling Fund or to
written estimates by each Fund's management and were found to be mathematically
correct.
8.9 The Acquiring Fund and the Selling Fund shall also have received from
Tait, Weller & Baker a letter addressed to the Acquiring Fund and the Selling
Fund, dated on the Closing Date 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 or substantially 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 IX
BROKERAGE FEES AND EXPENSES
9.1 The Acquiring Fund and the Selling Fund each represents and warrants to
the other that there are no brokers or finders entitled to receive any payments
in connection with the transactions provided for herein.
9.2 (a) Except as otherwise provided for herein, all expenses of the
transactions contemplated by this Agreement incurred by the Acquiring Fund will
be borne by First Union National Bank of North Carolina ("FUNB"). The Selling
Fund will bear the expense of its own counsel and counsel to its Directors in
connection with the transactions contemplated by this Agreement. All other
expenses of the transactions contemplated by this Agreement incurred by the
Selling Fund will be borne by Palm Beach Capital Management, Inc., subject to
the undertaking of FUNB to reimburse up to $85,000 of such expenses incurred by
Palm Beach Capital Management, Inc. in connection with this and all other
related transactions between investment companies for which it serves as
investment adviser and investment companies for which FUNB or its affiliates
serve as investment adviser. Such expenses include, without limitation, (i)
expenses incurred in connection with the entering into and the carrying out of
the provisions of this Agreement; (ii) 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; (iii) 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; (iv)
postage; (v) printing; (vi) accounting fees; (vii) legal fees; and
(viii) solicitation cost of the transactions. (b) Consistent with the
provisions of paragraph 1.3, the Selling Fund, prior to the Closing Date, shall
pay for or include in the audited statement of assets and liabilities prepared
pursuant to paragraph 1.3 all of its known and reasonably estimated expenses
associated with the transactions contemplated by this Agreement.
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 the
Agreement constitutes the entire agreement between the parties.
10.2 The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection
herewith shall survive the consummation of the transactions contemplated
hereunder.
A-14
<PAGE>
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 or the Selling Fund, the Trust or the Company, or their respective
Directors, Trustees or officers, to the other party or its Directors, Trustees
or officers, but each shall bear the expenses incurred by it incidental to the
preparation and carrying out of this Agreement as provided in paragraph 9.2.
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 Company 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.
ARTICLE XIII
NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy, overnight courier or certified mail addressed to
the Acquiring Fund
Evergreen Trust
2500 Westchester Avenue
Purchase, New York 10577
Attention: Joseph J. McBrien, Esq.
or to the Selling Fund
ABT Investment Series, Inc.
340 Royal Palm Way
Palm Beach, Florida
Attention: Timothy Cox, Esq.
A-15
<PAGE>
ARTICLE XIV
HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY
14.1 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.
14.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
14.3 This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts.
14.4 This Agreement shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns, but 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.
14.5 It is expressly agreed to that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents, or employees of the Trust, personally, but bind only the
trust property of the Trust, as provided in the Declaration of Trust of the
Acquiring Fund. The execution and delivery of this Agreement has been
authorized by the Trustees of the Trust on behalf of the Acquiring Fund and
signed by authorized officers of 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 Acquiring Fund as provided in the Trust's Declaration of Trust.
In Witness Whereof, the parties have duly executed and sealed this Agreement,
all as of the date first written above.
Evergreen Trust on behalf of
Evergreen Aggressive Growth Fund
/s/ John J. Pileggi
By: _________________________________
Name: John J. Pileggi
Title:President
(Seal)
ABT Investment Series, Inc. on
behalf of ABT Emerging Growth Fund
/s/ Edward W. Cook
By: _________________________________
Name: Edward W. Cook
Title:President
(Seal)
A-16
<PAGE>
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
VOTE THIS PROXY CARD TODAY!
YOUR PROMPT RESPONSE WILL SAVE
THE EXPENSE OF ADDITIONAL MAILINGS
Please detach at perforation before mailing.
ABT INVESTMENT SERIES, INC.
SPECIAL MEETING OF SHAREHOLDERS -- JUNE 19,1995
The undersigned hereby appoints Timothy W. Cox and Steven Eldredge and each of
them, attorneys and proxies for the undersigned, with full powers of
substitution and revocation, to represent the undersigned and to vote on behalf
of the undersigned all shares of the ABT Emerging Growth Fund (the "Fund"), a
series of ABT investment Series, Inc. ("ABT Investment")which the undersigned is
entitled to vote at a Meeting of Shareholders of the Fund to be held at 340
Royal Palm Way, Palm Beach, Florida 33480 on June 19, 1995, at 10:00 a.m., and
any adjournments thereof (the "Meeting"). The undersigned hereby acknowledges
receipt of the Notice of Meeting and Prospectus/Proxy Statement, and hereby
instructs said attorneys and proxies to vote said shares as indicated hereon. In
their discretion, the proxies are authorized to vote upon such other matters as
may properly come before the Meeting. A majority of the proxies present and
acting at the Meeting in person or by substitute (or, if only one shall be so
present, then that one) shall have and may exercise all of the powers and
authority of said proxies hereunder.
The undersigned hereby revoked any proxy previously given.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. THIS PROXY IS
- -----------------------------------------------------------------------------
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
- ----------------------------------------------
Please sign exactly as your name appears on this Proxy. If joint owners, EITHER
may sign this Proxy. When signing as attorney, executor, administrator, trustee,
guardian, or corporate officer, please give your full title.
Date: _____________________ 1995
- ---------------------------
- ---------------------------
Signature(s)
- ---------------------------
Title(s) if applicable A
<PAGE>
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
In order to hold the Meeting, a quorum of a Fund's shares must be present in
person or by proxy. You can help reduce the cost of additional mailings by
promptly returning your signed proxy. No matter how many shares you own, your
vote counts!
PLEASE SIGN, DATE AND RETURN YOUR PROXY
TODAY!
Please detach at perforation before mailing.
PLEASE INDICATE YOUR VOTE BY AN "X" IN THE APPROPRIATE BOX BELOW.
THIS PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION
TO BE TAKEN ON THE FOLLOWING PROPOSALS, IN THE ABSENCE OF ANY SPECIFICATION,
THIS PROXY WILL BE VOTED IN FAVOR OF THE PROPOSALS.
1. To approve the proposed Agreement and Plan of Reorganization with
the Evergreen Aggressive Growth Fund.
For Against Abstain
[_] [_] [_]
2. To consider and vote upon such other matters as may properly come before
said meeting or any adjournments thereof.
For Against Abstain
[_] [_] [_]
These items are discussed in greater detail in the attached Prospectus/Proxy
Statement. The Board of Directors of ABT Investment has fixed the close of
business on April 25, 1995, as the record date for the determination of
shareholders entitled to notice of and to vote at the meeting.
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE SPECIAL MEETING ARE REQUESTED TO
COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD IN THE ENCLOSED ENVELOPE WHICH
NEEDS NO POSTAGE IF MAILED IN THE UNTIED STATES. INSTRUCTIONS FOR THE PROPER
EXECUTION OF PROXIES ARE SET FORTH ON THE INSIDE COVER.
Timothy W. Cox
Secretary
May 3, 1995
In their discretion, the Proxies, and each of them, are authorized to vote
upon any other business that may properly come before the meeting, or any
adjournment(s) thereof, including any adjournment(s) necessary to obtain the
requisite quorums and for approvals.
* * * * * * * * * * * * * * *
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION DATED MAY 10, 1995
Acquisition of the Assets of
ABT EMERGING GROWTH FUND
of
ABT Investment Series, Inc.
340 Royal Palm Way
Palm Beach, Florida 33480
1-800-553-7838
By and in Exchange for Shares of
EVERGREEN AGGRESSIVE GROWTH FUND
of
The Evergreen Trust
2500 Westchester Avenue
Purchase, New York 10577
1-800-326-3241
This Statement of Additional Information, relating specifically to the
proposed transfer of the assets of the ABT Emerging Growth Fund, a portfolio of
ABT Investment Series, Inc., in exchange for Class A Shares of the Evergreen
Aggressive Growth Fund, a series of the Evergreen Trust, and the assumption by
the Evergreen Aggressive Growth Fund (the "Trust") of certain identified
liabilities of the ABT Emerging Growth Fund, is not a prospectus. A
Prospectus/Proxy Statement dated May 10, 1995 relating to the above-referenced
matter may be obtained from the Evergreen Trust, 2500 Westchester Avenue,
Purchase, New York 10577. This Statement of Additional Information relates to
and should be read in conjunction with such Prospectus/Proxy Statement.
This Statement of Additional Information incorporates by reference the
following documents, a copy of each of which accompanies this Statement of
Additional Information:
1. The Prospectus of the ABT Emerging Growth Fund, dated February 28, 1995
(Contained in Post-Effective Amendment No. 18 to the Registration Statement of
ABT Investment Series, Inc., File No. 2-76945).
2. The Statement of Additional Information of the ABT Emeriging Growth
Fund, dated February 28, 1995(Contained in Post-Effective Amendment No. 18 to
the Registration Statement of ABT Investment Series, Inc., File No. 2-76945).
3. The Annual Report of the ABT Emerging Growth Fund dated October 31, 1994.
<PAGE>
TABLE OF CONTENTS
Page
EVERGREEN AGGRESSIVE FUND ADDITIONAL INFORMATION
Investment Objectives and Policies................................... 3
Investment Restrictions ............................................. 6
Non-Fundamental Operating Policies................................... 14
Certain Risk Considerations.......................................... 15
Management........................................................... 17
Investment Adviser................................................... 21
Distribution Plans................................................... 25
Allocation of Brokerage.............................................. 26
Additional Tax Information........................................... 29
Net Asset Value...................................................... 32
Purchase of Shares................................................... 33
Performance Information.............................................. 43
PRO-FORMA FINANCIAL STATEMENTS
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of the Fund and a description of the securities in
which it may invest is set forth under "Summary -- Investment Objectives and
Policies" and "Comparison of Investment Objective and Policies" in the Fund's
Prospectus/Proxy Statement.
The Fund may not invest more than 25% of its net assets in any one
industry.
As a matter of non-fundamental investment policy, the Fund may invest up to
15% of its net assets in illiquid securities and other securities which are not
readily marketable. Repurchase agreements with maturities longer than seven days
will be included for the purpose of the foregoing 15% limit. Securities eligible
for resale pursuant to Rule 144A under the Securities Act of 1933, which the
Trustees have determined to be liquid, will not be considered by the Fund to be
illiquid or not readily marketable and, therefore, are not subject to the
aforementioned 15% limit. The inability of the Fund to dispose of illiquid or
not readily marketable investments readily or at a reasonable price could impair
the Fund's ability to raise cash for redemptions or other purposes. The
liquidity of securities purchased by the Fund which are eligible for resale
pursuant to Rule 144A will be monitored by the Adviser (defined below) on an
ongoing basis, subject to the oversight of the Trustees. Notwithstanding the
fact that a favorable liquidity determination was made at the time of purchase
of such a security, subsequent developments affecting the market for such
securities held by the Fund could have a negative effect on their liquidity. In
the event that such a security is deemed to be no longer liquid, the Fund's
holdings will be reviewed to determine what action, if any, is required to
ensure that the retention of such security does not result in the Fund exceeding
the applicable limit on assets invested in illiquid or not readily marketable
securities.
INVESTMENT RESTRICTIONS
Except as noted, the investment restrictions set forth below are
fundamental and may not be changed with respect to the Fund without the
affirmative vote of a majority of the outstanding voting securities of the Fund.
Where an asterisk (*) appears after a policy, the relevant policy is
non-fundamental and may be changed by the Fund's Adviser without shareholder
approval, subject to review and approval by the Trustees. As used in this
Statement of Additional Information, "a majority of the outstanding voting
securities of the Fund" means the lesser of (1) the holders of more than 50% of
the outstanding shares of beneficial interest of the Fund or (2) 67% of the
shares present if more than 50% of the shares are present at a meeting in person
or by proxy.
<PAGE>
1. 10% Limit on Securities of Any One Issuer*
The Fund may not purchase more than 10% of the voting securities of any
one issuer other than the United States Government and its
agencies or instrumentalities.
2. Concentration of Assets in Any One Issuer
The Fund may not invest more than 5% of its total assets, at the time
of the investment in question, in the securities of any one issuer
other than the United States Government and its agencies or
instrumentalities, except that up to 25% of the value of the Fund's
total assets may be invested without regard to such 5% limitation.
3. Investment for Purposes of Control or Management*
The Fund may not invest in companies for the purpose of exercising
control or management.
4. Purchase of Securities on Margin*
The Fund may not purchase securities on margin, except that the Fund
may obtain such short-term credits as may be necessary for the
clearance of transactions and provided that margin payments in
connection with futures contracts and options on futures contracts
shall not constitute purchasing securities on margin.
5. Unseasoned Issuers*
The Fund may not invest more than 5% of its total assets in securities
of unseasoned issuers that have been in continuous operation for less
than three years, including operating periods of their predecessors,
except obligations issued or guaranteed by the United States Government
and its agencies or instrumentalities (this limitation does not apply
to real estate investment trusts).
6. Underwriting*
The Fund may not engage in the business of underwriting the securities
of other issuers.
7. Interests in Oil, Gas or Other Mineral Exploration or
Development Programs*
The Fund may not purchase, sell or invest in interests in oil, gas or
other mineral exploration or development programs.
8. Concentration in Any One Industry
The Fund may not invest 25% or more of its total assets in the
securities of issuers conducting their principal business activities in
any one industry; provided, that this limitation shall not apply with
respect to obligations issued or guaranteed by the United States
Government or its agencies or instrumentalities. For purposes of this
restriction, utility companies, gas, electric, water and telephone
companies will be considered separate industries.
9. Warrants*
The Fund may not invest more than 5% of its net assets in warrants,
and, of this amount, no more than 2% of the Fund's net assets may be
invested in warrants that are listed on neither the New York nor the
American Stock Exchange.
10. Ownership by Trustees*
The Fund may not purchase or retain the securities of any issuer if (i)
one or more officers or Trustees of the Trust or the Adviser
individually owns or would own, directly or beneficially, more than
1/2% of the securities of such issuer, and (ii) in the aggregate, such
persons own or would own, directly or beneficially, more than 5% of
such securities.
11. Short Sales*
The Fund may not make short sales of securities or maintain a short
position, unless at the time of each such sale and thereafter, while a
short position exists, the Fund owns an equal amount of securities
which, without payment by the Fund of any consideration, are
convertible into or exchangeable for, an equal amount of securities of
the same issue (and provided that transactions in futures contracts and
options are not deemed to be selling securities short).
12. Lending of Funds*
The Fund may not lend its funds to other persons, provided that the
Fund may purchase issues of debt securities, acquire privately
negotiated loans made to municipal borrowers and enter into repurchase
agreements.
13. Lending of Securities*
The Fund may not lend its portfolio securities, unless the borrower is
a broker, dealer or financial institution that pledges and maintains
collateral with the Fund consisting of cash or securities issued or
guaranteed by the United States Government having a value at all times
not less than 100% of the current market value of the loaned
securities, including accrued interest, provided that the aggregate
amount of such loans shall not exceed 30% of the Fund's total assets.
14. Commodities*
The Fund may not purchase, sell or invest in physical commodities
unless acquired as a result of ownership of securities or other
instruments (but this shall not prevent the Fund from purchasing or
selling options and futures contracts or from investing in securities
or other instruments backed by physical commodities).
15. Real Estate*
The Fund may not purchase, sell or invest in real estate or interests
in real estate, except that the Fund may purchase, sell or invest in
marketable securities of companies holding real estate or interests in
real estate, including real estate investment trusts.
16. Borrowing, Senior Securities, Reverse Repurchase Agreements*
The Fund may not borrow money except from banks as a temporary measure
for extraordinary or emerging purposes. The proceeds from the
borrowings may be used to facilitate redemption requests which might
otherwise require the untimely disposition of securities.
17. Joint Trading*
The Fund may not participate on a joint or joint and several basis in
any trading account in any securities. (The "bunching" of orders for
the purchase or sale of portfolio securities with the Adviser or
accounts under its management to reduce brokerage commissions, to
average prices among them or to facilitate such transactions is not
considered a trading account in securities for purposes of this
restriction).
18. Other Investment Companies.*
The Fund may purchase the securities of other investment companies,
except to the extent such purchases are not permitted by applicable
law.
CERTAIN RISK CONSIDERATIONS
There can be no assurance that the Fund will achieve its investment
objective and an investment in the Fund involves certain risks which are
described under "Risks" in the Prospectus/Proxy Statement.
MANAGEMENT
The following is information concerning the Trustees and executive
officers of the Trust:
Laurence B. Ashkin (67), 180 East Pearson Street, Chicago, IL Trustee. Real
estate developer and construction consultant since 1980; President of
Centrum Equities since 1987 and Centrum Properties, Inc. since 1980.
Foster Bam *(68), Greenwich Plaza, Greenwich, CT Trustee. Partner in the law
firm of Cummings and Lockwood since 1968.
James S. Howell (70), 4124 Crossgate Road, Charlotte, NC Trustee. Retired
Vice President of Lance Inc.; Chairman of the Distribution Comm.
Foundation for the Carolinas from 1989 to 1993; Chairman of the First
Union Funds since 1984.
Robert J. Jeffries (72), 2118 New Bedford Drive, Sun City Center, FL
Trustee. Corporate consultant since 1967.
Gerald M. McDonnell (55), 821 Regency Drive, Charlotte, NC Trustee. Sales
Representative with Nucor-Yamoto Inc. since 1988; Trustee of the First
Union Funds since 1988.
Thomas L. McVerry (56), 4419 Parkview Drive, Charlotte, NC Trustee. Senior
executive and advisor to the Board of Directors of Rexham Corporation
from 1973 to 1980; Director of Carolina Cooperative Federal Credit
Union since 1990 and Rexham Corporation from 1988 to 1990; Vice
President of Rexham Industries, Inc. from 1989 to 1990; Vice
President-Finance and Resources, Rexham Corporation from 1979 to 1990;
Trustee of the First Union Funds since October 1993.
William Walt Pettit*(39), Holcomb and Pettit, P.A., 207 West Trade St.,
Charlotte, NC Trustee. Partner in the law firm Holcomb and Pettit, P.A.
since 1990; Attorney, Clontz and Clontz from 1980 to 1990; Trustee of
the First Union Funds since 1988.
Russell A. Salton, III, M.D. (47), Primary Physician Care, 1515 Mockingbird
Lane, Charlotte, NC Trustee. President, Primary Physician Care since
1990; President, Metrolina Family Practice Group, P.A. from 1982
to 1989; Trustee of the First Union Funds since 1984.
Michael S. Scofield (52), 212 S. Tryon Street Suite 980, Charlotte, NC Trustee.
Attorney, Law Offices of Michael S. Scofield since prior to 1989;
Trustee of the First Union Funds since 1984.
John J. Pileggi (35), 237 Park Avenue, Suite 910, New York, NY President and
Treasurer. Senior Managing Director, Furman Selz Incorporated since
1992, Managing Director from 1984 to 1992.
Joan V. Fiore (39), 237 Park Avenue, Suite 910, New York, NY Secretary.
Managing Director and Counsel, Furman Selz Incorporated since 1991;
Staff Attorney, Securities and Exchange Commission from 1986 to 1991.
Donald E. Brostrom (35), 237 Park Avenue, Suite 910, New York, NY Assistant
Treasurer. Director of Fund Services, Furman Selz Incorporated since
1992, Associate Director from 1986 to 1992.
Sheryl A. Hirschfeld (34), 237 Park Avenue, Suite 910, New York, NY Assistant
Secretary. Director, Corporate Secretary Services, Furman Selz
Incorporated since 1994; Assistant to the Corporate Secretary, The
Dreyfus Corporation since prior to 1989.
Stephen W. St. Clair (36), 237 Park Avenue, Suite 910, New York, NY Assistant
Treasurer. Associate Director of Fund Services, Furman Selz
Incorporated since 1994, Administrator from 1992 to 1994; Assistant
Treasurer of J. W. Seligman Co., Inc. from 1989 to 1992.
- --------------------------
* "Interested person" within the meaning of the 1940 Act.
The Trustees and officers listed above hold the same positions with a total
of [18] funds within the Evergreen mutual fund complex.
The officers of the Fund are all officers and/or employees of Furman Selz
Incorporated. Furman Selz Incorporated is the parent of Evergreen Funds
Distributor, Inc., the distributor of each Class of shares of the Fund.
The Fund does not pay any direct remuneration to any officer or Trustee who
is an "affiliated person" of Evergreen Asset Management Corp. ("Evergreen
Asset"), First Union National Bank of North Carolina ("FUNB" or the "Adviser"),
or their affiliates. Currently, none of the Fund's Trustees is an "affiliated
person". One of the Trustees, Mr. Pettit, is considered an "interested person"
of the Fund by virtue of the fact that he and his firm provide legal services to
FUNB. Another Trustee, Mr. Bam, is considered an "interested person" of the Fund
by virtue of the fact that his son is employed by Evergreen Asset. However, Mr.
Bam and Mr. Pettit are not considered "affiliated persons" of Evergreen Asset or
FUNB defined in the 1940 Act. The Fund pays each Trustee who is not an
"affiliated person" an annual retainer of [$] and a fee of $100 per meeting
attended, plus expenses (and $50 for each telephone conference meeting).
As of the date of this Statement of Additional Information, no Trustee
or officer owned shares of the Fund; all of the shares of the Fund are owned by
____________________________.
- ---------------
(*) An "interested person" within the meaning of the Investment Company
Act of 1940, as amended (the "1940 Act").
The Fund does not pay any direct remuneration to any officer or Trustee who
is an "affiliated person" of Evergreen Asset Management Corp. ("Evergreen
Asset"), First Union National Bank of North Carolina ("FUNB") or their
affiliates. Currently, none of the Fund's Trustees is an "affiliated person".
One of the Trustees, Mr. Pettit, is considered an "interested person" of the
Funds by virtue of the fact that he and his firm provide legal services to FUNB.
Another Trustee Mr. Bam, is considered an "interested person" of the Fund by
virtue of the fact that his son is employed by Evergreen Asset. However, Mr. Bam
and Mr. Pettit are not considered "affiliated persons" of Evergreen Asset or
FUNB as defined in the 1940 Act. The Evergreen Trust pays each Trustee who is
not an "affiliated person" an annual retainer of $2,250 and the Fund pays each
Trustee a fee of $100 per meeting attended, plus expenses (and $50 for each
telephone conference meeting).
The Trustees who were not affiliated with the Adviser during the Fund's
last fiscal year received total Trustees/Directors' fees and expenses as
follows:
COMPENSATION OF DIRECTORS AND TRUSTEES
AGGREGATE AGGREGATE COMPENSATION
COMPENSATION RECIEVED FROM ALL
RECIEVED EVERGREEN MUTUAL FUNDS
FROM FOR THE YEAR ENDED
NAME REGISTRANT DECEMBER 31, 1994
- ----- ---------- ----------------------
Laurence Ashkin 5,175 28,800
Foster Bam 5,175 28,850
James S. Howell 1,425 12,000
Robert J. Jefferies 5,175 29,800
Gerald M. McDonnel 1,425 14,200
Thomas L. McVerry 1,425 14,250
William Walt Pettit 1,425 14,200
Russell A. Salton, III, M.D. 1,425 14,200
Michael S. Scofield 1,425 14,200
--------- ---------
Total 29,250 170,500
========= =========
The Trust has no retirement or pension plan for directors. The Evergreen
family of funds consists of ten registered investment companies that offer a
total of sixteen investment portfolios.
No officer or Trustee owned shares of the Fund as of the date of this
Statement of Additional Information. As of the date of this Statement of
Additional Information, all of the shares of the Fund were owned by Evergreen
Asset Management Corp.
INVESTMENT ADVISER
(See also "Management of the Evergreen High Income Fund"
in the Prospectus/Proxy Statement)
The Fund's investment adviser is FUNB. It provides investment advisory
services through its Capital Management Group. First Union is a subsidiary of
First Union Corporation, a bank holding company headquartered in Charlotte,
North Carolina.
FUNB's Capital Management Group employs an experienced staff of
professional investment analysts, portfolio managers, and traders, and uses
several proprietary computer-based systems in conjunction with fundamental
analysis to identify investment opportunities. The Capital Management Group has
been managing trust assets for over 50 years and currently oversees assets of
more than $51.2 billion. In addition, the Capital Management Group has advised
the Fund since its inception.
As part of its regular banking operations, FUNB may make loans to
public companies. Thus, it may be possible, from time to time, for the Fund to
hold or acquire the securities of issuers which are also lending clients of
FUNB. The lending relationship will not be a factor in the selection of
securities.
FUNB shall not be liable to the Fund or any shareholder thereof for any
losses that may be sustained in the purchase, holding, or sale of any security,
or for anything done or omitted by it, except acts or omissions involving
willful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties imposed upon it by its contract with the Trust.
Because of the internal controls maintained by FUNB to restrict the
flow of non-public information, the Fund's investments are typically made
without any knowledge of FUNB's or its affiliates' lending relationships with an
issuer.
The investment advisory agreement is terminable, without the payment of
any penalty, on sixty days' written notice, by a vote of the holders of a
majority of the Fund's outstanding shares, or by a vote of a majority of the
Trustees or by FUNB. The investment advisory agreement will automatically
terminate in the event of their assignment. The investment advisory agreement
provides in substance that FUNB shall not be liable for any action or failure to
act in accordance with its duties thereunder in the absence of willful
misfeasance, bad faith or gross negligence on the part of FUNB or of reckless
disregard of its obligations thereunder. The investment advisory agreement was
approved by the Fund's sloe shareholder on April 20, 1995, is expected to become
effective on July 1, 1995, and will continue in effect until June 30, 1996, and
thereafter from year to year provided that its continuance is approved annually
by a vote of a majority of the Trustees who are not parties thereto or
interested persons (as defined in the 1940 Act) of any such party, cast in
person at a meeting duly called for the purpose of voting on such approval, and
by a vote of the Trustees or a majority of the outstanding voting shares of the
Fund.
ADVISORY FEES
For its advisory services, FUNB receives an annual investment advisory
fee as described in the Fund's Prospectus/Proxy Statement.
ADMINISTRATIVE SERVICES
Evergreen Asset provides administrative personnel and services to the
Fund and manages its business affairs for a fee as described in the
Prospectus/Proxy Statement of the Fund.
DISTRIBUTION PLANS
Reference is made to "Summary--Distribution; Sales Charges" and
"Additional Information - Evergreen Aggressive Fund" in the Prospectus/Proxy
Statement of the Fund for additional disclosure regarding the Fund's
distribution arrangements.
Distribution fees are accrued daily and paid monthly on the Class A, B and
C shares and are charged as class expenses, as accrued. The distribution fees
attributable to the Class B shares and Class C shares are designed to permit an
investor to purchase such shares through broker-dealers without the assessment
of an initial sales charge, and, in the case of Class C shares, without the
assessment of a contingent deferred sales charge after the first year following
purchase, while at the same time permitting Evergreen Funds Distributor, Inc.
(the "Distributor") to compensate broker-dealers in connection with the sale of
such shares. In this regard the purpose and function of the combined contingent
deferred sales charge and distribution services fee on the Class B shares and
the Class C shares, are the same as those of the initial sales charge and
distribution fee with respect to the Class A shares in that in each case the
sales charge and/or distribution fee provide for the financing of the
distribution of the Fund's shares.
Under the Rule 12b-1 Distribution Plans that have been adopted by the Fund
with respect to each of its Class A, Class B and Class C shares (each a "Plan"
and collectively, the "Plans"), the Treasurer of the Trust reports the amounts
expended under the Plan and the purposes for which such expenditures were made
to the Trustees of the Trust for their review on a quarterly basis. Also, each
Plan provides that the selection and nomination of Trustees who are not
interested persons of the Trust (as defined in the 1940 Act) are committed to
the discretion of such disinterested Trustees then in office.
The Adviser may from time to time and from its own funds or such other
resources as may be permitted by rules of the Securities and Exchange Commission
make payments for distribution services to the Distributor; the latter may in
turn pay part or all of such compensation to brokers or other persons for their
distribution assistance.
As of the date of this Statement of Additional Information, the Trust has
not offered its Class A, B, C or Y shares other than with respect to the
Reorganization as discussed in the Prospectus/Proxy Statement.
The Plan for the Class A shares of the Fund was initially approved by the
sole shareholder of the Class A shares of the Fund on April 20, 1995 and by the
unanimous vote of the Trustees, including the disinterested Trustees voting
separately, at a meeting called for that purpose and held on April 20, 1995. The
Distribution Agreement between the Trust and the Distributor, was approved at
the April 20, 1995 meeting by the unanimous vote of the Trustees, including the
disinterested Trustees voting separately. The Plan and Distribution Agreement
will continue in effect for successive twelve-month periods provided, however,
that such continuance is specifically approved at least annually by the Trustees
or by vote of the holders of a majority of the outstanding voting securities (as
defined in the 1940 Act) of that Class, and, in either case, by a majority of
the Trustees who are not parties to the Agreement or interested persons, as
defined in the 1940 Act, of any such party (other than as Trustees of the Trust)
and who have no direct or indirect financial interest in the operation of the
Plan or any agreement related thereto.
In the event that the Plan or Distribution Agreement is terminated or not
continued with respect to one or more Classes of the Fund, (i) no distribution
fees (other than current amounts accrued but not yet paid) would be owed by the
Fund to the Distributor with respect to that Class or Classes, and (ii) the Fund
would not be obligated to pay the Distributor for any amounts expended under the
Distribution Agreement not previously recovered by the Distributor from
distribution services fees in respect of shares of such Class or Classes through
deferred sales charges.
All material amendments to the Plan or Distribution Agreement must be
approved by a vote of the Trustees of the Trust or the holders of the Fund's
outstanding voting securities, voting separately by Class, and in either case,
by a majority of the disinterested Trustees, cast in person at a meeting called
for the purpose of voting on such approval; and any Plan or Distribution
Agreement may not be amended in order to increase materially the costs that a
particular Class of shares of the Fund may bear pursuant to the Plan without the
approval of a majority of the holders of the outstanding voting shares of the
Class affected. Any Plan or Distribution Agreement may be terminated (a) by the
Fund without penalty at any time by a majority vote of the holders of the
outstanding voting securities of the Fund, voting separately by Class or by a
majority vote of the Trustees who are not "interested persons" as defined in the
1940 Act, or (b) by the Distributor. To terminate any Distribution Agreement,
any party must give the other parties 60 days' written notice; to terminate a
Plan only, the Fund need give no notice to the Distributor. Any Distribution
Agreement will terminate automatically in the event of its assignment.
ALLOCATION OF BROKERAGE
Decisions regarding the portfolio of the Fund are made by FUNB, subject
to the supervision and control of the Trustees. Orders for the purchase and sale
of securities and other investments are placed by employees of FUNB. In general,
the same individuals perform the same functions for the other funds managed by
FUNB. The Fund will not effect any brokerage transactions with any broker or
dealer affiliated directly or indirectly with FUNB unless such transactions are
fair and reasonable, under the circumstances, to the Fund's shareholders.
Circumstances that may indicate that such transactions are fair or reasonable
include the frequency of such transactions, the selection process and the
commissions payable in connection with such transactions.
Most of the transactions in equity securities for the Fund will occur on
domestic stock exchanges. Transactions on stock exchanges involve the payment of
brokerage commissions. In transactions on stock exchanges in the United States,
these commissions are negotiated, whereas on many foreign stock exchanges these
commissions are fixed. In the case of securities traded in the foreign and
domestic over-the-counter markets, there is generally no stated commission, but
the price usually includes an undisclosed commission or markup. Over-the-counter
transactions will generally be placed directly with a principal market maker,
although the Fund may place an over-the-counter order with a broker-dealer if a
better price (including commission) and execution are available.
In selecting firms to effect securities transactions, the primary
consideration of the Fund shall be prompt execution at the most favorable price.
The Fund will also consider such factors as the price of the securities and the
size and difficulty of execution of the order. If these objectives may be met
with more than one firm, the Fund will also consider the availability of
statistical and investment data and economic facts and opinions helpful to the
Fund. Any such research and analysis is not expected to reduce the costs of the
Adviser.
ADDITIONAL TAX INFORMATION
(See also "Additional Information - Evergreen Aggressive Fund" in
the Prospectus/Proxy Statement.)
The Fund has qualified and intends to continue to qualify for and elect
the tax treatment applicable to regulated investment companies ("RIC") under
Subchapter M of the Code. (Such qualification does not involve supervision of
management or investment practices or policies by the Internal Revenue Service.)
In order to qualify as a regulated investment company, the Fund must, among
other things, (a) derive at least 90% of its gross income from dividends,
interest, payments with respect to proceeds from securities loans, gains from
the sale or other disposition of securities and other income (including gains
from options) derived with respect to its business of investing in such
securities; (b) derive less than 30% of its gross income from the sale or other
disposition of securities of any of the following: options, futures or forward
contracts (other than those on foreign currencies), or foreign currencies (or
options, futures or forward contracts thereon) that are not directly related to
the RIC's principal business of investing in securities (or options and futures
with respect thereto) held less than three months; and (c) diversify its
holdings so that, at the end of each quarter of its taxable year, (i) at least
50% of the market value of the Fund's total assets is represented by cash, U.S.
Government securities and other securities limited in respect of any one issuer,
to an amount not greater than 5% of the Fund's total assets and 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the
value of its total assets is invested in the securities of any one issuer (other
than U.S. Government securities). By so qualifying, the Fund is not subject to
federal income tax if it timely distributes its investment company taxable
income and any net realized capital gains. A 4% nondeductible excise tax will be
imposed on the Fund to the extent it does not meet certain distribution
requirements by the end of each calendar year. The Fund anticipates meeting such
distribution requirements.
Dividends paid by the Fund from investment company taxable income
generally will be taxed to the shareholders as ordinary income. Investment
company taxable income includes net investment income and net realized
short-term gains (if any). Any dividends received by the Fund from domestic
corporations will constitute a portion of the Fund's gross investment income. It
is anticipated that this portion of the dividends paid by the Fund (other than
distributions of securities profits) will qualify for the 70% dividends-received
deduction for corporations. Shareholders will be informed of the amounts of
dividends which so qualify.
Distributions of the excess of net long-term capital gain over net
short-term capital loss are taxable to shareholders (who are not exempt from
tax) as long-term capital gain, regardless of the length of time the shares of
the Fund have been held by such shareholders. Short-term capital gains are
taxable to shareholders who are not exempt from tax as ordinary income. Such
distributions are not eligible for the dividends-received deduction. Any loss
recognized upon the sale of shares of the Fund held by a shareholder for six
months or less will be treated as a long-term capital loss to the extent that
the shareholder received a long-term capital gain distribution with respect to
such shares.
Distributions of investment company taxable income and any net long-term
capital gains will be taxable as ordinary income as described above to
shareholders (who are not exempt from tax), whether made in shares or in cash.
Shareholders electing to receive distributions in the form of additional shares
will have a cost basis for federal income tax purposes in each share so received
equal to the net asset value of a share of the Fund on the reinvestment date.
Distributions by the Fund result in a reduction in the net asset value of
the Fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution nevertheless would be taxable as
ordinary income or capital gain as described above to shareholders (who are not
exempt from tax), even though, from an investment standpoint, it may constitute
a return of capital. In particular, investors should be careful to consider the
tax implications of buying shares just prior to a distribution. The price of
shares purchased at that time includes the amount of the forthcoming
distribution. Those purchasing just prior to a distribution will then receive,
what in effect is, a return of capital upon the distribution which will
nevertheless be taxable to shareholders subject to taxes.
Upon a sale or exchange of its shares, a shareholder will realize a
taxable gain or loss depending on its basis in the shares. Such gains or losses
will be treated as a capital gain or loss if the shares are capital assets in
the investor's hands and will be a long-term capital gain or loss if the shares
have been held for more than one year. Generally, any loss realized on a sale or
exchange will be disallowed to the extent shares disposed of are replaced within
a period of sixty-one days beginning thirty days before and ending thirty days
after the shares are disposed of. Any loss realized by a shareholder on the sale
of shares of the Fund held by the shareholder for six months or less will be
disallowed to the extent of any exempt interest dividends received by the
shareholder with respect to such shares, and will be treated for tax purposes as
a long-term capital loss to the extent of any distributions of net capital gains
received by the shareholder with respect to such shares.
All distributions of taxable income or gains, whether received in shares
or cash, must be reported by each shareholder on his or her federal income tax
return. Each shareholder should consult his or her own tax adviser to determine
the state and local tax implications of Fund distributions.
Shareholders who fail to furnish their taxpayer identification numbers to
the Fund and to certify as to its correctness and certain other shareholders may
be subject to a 31% federal income tax backup withholding requirement on
dividends, distributions of capital gains and redemption proceeds paid to them
by the Fund. If the withholding provisions are applicable, any such dividends or
capital gain distributions to these shareholders, whether taken in cash or
reinvested in additional shares, and any redemption proceeds will be reduced by
the amounts required to be withheld. Investors may wish to consult their own tax
advisers about the applicability of the backup withholding provisions.
The foregoing discussion relates solely to U.S. federal income tax law
as applicable to U.S. persons (i.e., U.S. citizens and residents and U.S.
domestic corporations, partnerships, trusts and estates). It does not reflect
the special tax consequences to certain taxpayers (e.g., banks, insurance
companies, tax exempt organizations and foreign persons). Shareholders are
encouraged to consult their own tax advisers regarding specific questions
relating to federal, state and local consequences of investing in shares of the
Fund. Each shareholder who is not a U.S. person should consult his or her tax
adviser regarding the U.S. and foreign tax consequences of ownership of shares
of the Fund, including the possibility that such a shareholder may be subject to
a U.S. withholding tax at a rate of 30% (or at a lower rate under a tax treaty)
on amounts treated as income from U.S. sources under the Code.
NET ASSET VALUE
The following information supplements that set forth in the
Prospectus/Proxy Statement under the subheading "Purchase and Redemption of
Shares - How the Evergreen Aggressive Fund Values Its Shares" in the Section
entitled "Additional Information - Evergreen Aggressive Fund."
The public offering price of shares of the Fund is its net asset value,
plus, in the case of Class A shares, a sales charge which will vary depending on
the purchase alternative chosen by the investor, as more fully described in the
Prospectus/Proxy Statement. On each Fund business day on which a purchase or
redemption order is received by the Fund and trading in the types of securities
in which the Fund invests might materially affect the value of Fund shares, the
per share net asset value of the Fund is computed in accordance with the Trust's
Declaration of Trust and By-Laws as of the next close of regular trading on the
New York Stock Exchange (the "Exchange") (currently 4:00 p.m. Eastern time) by
dividing the value of the Fund's total assets, less its liabilities, by the
total number of its shares then outstanding. A Fund business day is any weekday,
exclusive of national holidays on which the Exchange is closed and Good Friday.
Exchange-listed securities and over-the-counter securities admitted to trading
on the NASDAQ National List are valued at the last quoted sale or, if no sale,
at the mean of closing bid and asked prices and portfolio bonds are presently
valued by a recognized pricing service when such prices are believed to reflect
the fair value of the security. Unlisted securities for which market quotations
are readily available are valued at a price quoted by one or more brokers. If
accurate quotations are not available, securities will be valued at fair value
determined in good faith by the Board of Trustees.
PURCHASE OF SHARES
"The following information supplements that set forth in each
Prospectus/Proxy Statement under the headings "Summary -- Purchase and
Redemption Procedures" and "Additional Information - Evergreen Aggressive Fund -
Purchase and Redemption of Shares."
General
Shares of the Fund will be offered on a continuous basis at a price equal
to their net asset value plus an initial sales charge at the time of purchase
(Class A Shares) (the "initial sales charge alternative"), with a contingent
deferred sales charge (Class B Shares) (the "deferred sales charge
alternative"), or without any initial sales charge, but with a contingent
deferred sales charge imposed only during the first year after purchase (Class C
Shares) (the "level-load alternative"), as described below. Class Y shares
which, as described below, are not offered to the general public, are offered
without any initial or contingent sales charges. Shares of the Fund are offered
on a continuous basis through (i) investment dealers that are members of the
National Association of Securities Dealers, Inc. and have entered into selected
dealer agreements with the Distributor ("selected dealers"), (ii) depository
institutions and other financial intermediaries or their affiliates, that have
entered into selected agent agreements with the Distributor ("selected agents"),
or (iii) the Distributor. The minimum for initial investments is $1,000; there
is no minimum for subsequent investments. The subscriber may use the Share
Purchase Application available from the Distributor for his or her initial
investment. Sales personnel of selected dealers and agents distributing the
Fund's shares may receive differing compensation for selling Class A, Class B or
Class C shares.
Investors may purchase shares of the Fund in the United States either
through selected dealers or agents or directly through the Distributor. The Fund
reserves the right to suspend the sale of its shares to the public in response
to conditions in the securities markets or for other reasons.
The Fund will accept unconditional orders for its shares to be executed
at the public offering price equal to the net asset value next determined (plus
for Class A shares, the applicable sales charges), as described below. Orders
received by the Distributor prior to the close of regular trading on the
Exchange on the day the Exchange is open for trading are priced at the net asset
value computed as of the close of regular trading on the Exchange on that day
(plus for Class A shares the sales charges). In the case of orders for purchase
of shares placed through selected dealers or agents, the applicable public
offering price will be the net asset value as so determined, but only if the
selected dealer or agent receives the order prior to the close of regular
trading on the Exchange and transmits it to the Distributor prior to its close
of business that same day (normally 5:00 p.m. Eastern time). The selected dealer
or agent is responsible for transmitting such orders by 5:00 p.m. If the
selected dealer or agent fails to do so, the investor's right to that day's
closing price must be settled between the investor and the selected dealer or
agent. If the selected dealer or agent receives the order after the close of
regular trading on the Exchange, the price will be based on the net asset value
determined as of the close of regular trading on the Exchange on the next day it
is open for trading.
Following the initial purchase of shares of the Fund, a shareholder may
place orders to purchase additional shares by telephone if the shareholder has
completed the appropriate portion of the Share Purchase Application. Payment for
shares purchased by telephone can be made only by Electronic Funds Transfer from
a bank account maintained by the shareholder at a bank that is a member of the
National Automated Clearing House Association ("ACH"). If a shareholder's
telephone purchase request is received before 4:00 p.m. New York time on a Fund
business day, the order to purchase shares is automatically placed the same Fund
business day and the applicable public offering price will be the public
offering price determined as of the close of business on such business day. Full
and fractional shares are credited to a subscriber's account in the amount of
his or her subscription. As a convenience to the subscriber, and to avoid
unnecessary expense to the Fund, stock certificates representing Class Y shares
of the Fund are not issued except upon written request to the Fund by the
shareholder or his or her authorized selected dealer or agent. This facilitates
later redemption and relieves the shareholder of the responsibility for and
inconvenience of lost or stolen certificates. No certificates are issued for
fractional shares, although such shares remain in the shareholder's account on
the records of the Fund, or for Class A, B or C shares of the Fund.
In addition to the discount or commission amount paid to selected dealers
or agents, the Distributor may from time to time pay additional cash bonuses or
other incentives to selected dealers in connection with the sale of shares,
other than Class Y shares, of the Fund. On some occasions, such bonuses or
incentives may be conditioned upon the sale of a specified minimum dollar amount
of the shares of the Fund and/or other Evergreen mutual funds (as described
below), as defined below, during a specific period of time. At the option of the
dealer such bonuses or other incentives may take the form of payment for travel
expenses, including lodging incurred in connection with trips taken by persons
associated with the dealer and members of their families to places within or
outside of the United States.
Alternative Purchase Arrangements
Except as noted, the Fund issues four classes of shares: (i) Class A
shares, which are sold to investors choosing the initial sales charge
alternative; (ii) Class B shares, which are sold to investors choosing the
deferred sales charge alternative; (iii) Class C shares, which are sold to
investors choosing the level-load sales charge alternative; and (iv) Class Y
shares, which will be offered only to (a) shareholders in one or more of the
Evergreen Mutual Funds prior to December 30, 1994, (b) certain investment
advisory clients of the Adviser and its affiliates, and (c) institutional
investors. The four classes of shares represent an interest in the same
portfolio of investments of the Fund, have the same rights and are identical in
all respects, except that (I) only Class A, Class B and Class C shares are
subject to a Rule 12b-1 distribution services fee, (II) Class A shares bear the
expense of the initial sales charge and Class B and Class C shares bear the
expense of the deferred sales charge, (III) Class B shares and Class C shares
each bear the expense of a higher Rule 12b-1 distribution services fee than
Class A shares and, in the case of Class B shares, higher transfer agency costs,
(IV) with the exception of Class Y Shares, each Class of the Fund has exclusive
voting rights with respect to provisions of the Rule 12b-1 Plan pursuant to
which its distribution services fee is paid which relates to a specific Class
and other matters for which separate Class voting is appropriate under
applicable law, provided that, if the Fund submits to a simultaneous vote of
Class A, Class B and Class C shareholders an amendment to the Rule 12b-1 Plan
that would materially increase the amount to be paid thereunder with respect to
the Class A shares, the Class A shareholders and the Class B and Class C
shareholders will vote separately by Class, and (V) only the Class B shares are
subject to a conversion feature. Each Class has different exchange privileges
and certain different shareholder service options available.
The alternative purchase arrangements permit an investor to choose the
method of purchasing shares that is most beneficial given the amount of the
purchase, the length of time the investor expects to hold the shares, and other
circumstances. Investors should consider whether, during the anticipated life of
their investment in the Fund, the accumulated distribution services fee and
contingent deferred sales charges on Class B shares prior to conversion, or the
accumulated distribution services fee on Class C shares, would be less than the
initial sales charge and accumulated distribution services fee on Class A shares
purchased at the same time, and to what extent such differential would be offset
by the higher return of Class A shares. Class B and Class C shares will normally
not be suitable for the investor who qualifies to purchase Class A shares at the
lowest applicable sales charge. For this reason, the Distributor will reject any
order (except orders for Class B shares from certain retirement plans) for more
than $2,500,000 for Class B or Class C shares.
Class A shares are subject to a lower distribution services fee and,
accordingly, pay correspondingly higher dividends per share than Class B shares
or Class C shares. However, because initial sales charges are deducted at the
time of purchase, investors purchasing Class A shares would not have all their
funds invested initially and, therefore, would initially own fewer shares.
Investors not qualifying for reduced initial sales charges who expect to
maintain their investment for an extended period of time might consider
purchasing Class A shares because the accumulated continuing distribution
charges on Class B shares or Class C shares may exceed the initial sales charge
on Class A shares during the life of the investment. Again, however, such
investors must weigh this consideration against the fact that, because of such
initial sales charges, not all their funds will be invested initially.
Other investors might determine, however, that it would be more
advantageous to purchase Class B shares or Class C shares in order to have all
their funds invested initially, although remaining subject to higher continuing
distribution charges and, in the case of Class B shares, being subject to a
contingent deferred sales charge for a seven-year period. For example, based on
current fees and expenses, an investor subject to the 4.75% initial sales charge
would have to hold his or her investment approximately seven years for the B and
Class C distribution services fee, to exceed the initial sales charge plus the
accumulated distribution services fee of Class A shares. In this example, an
investor intending to maintain his or her investment for a longer period might
consider purchasing Class A shares. This example does not take into account the
time value of money, which further reduces the impact of the Class C
distribution services fees on the investment, fluctuations in net asset value or
the effect of different performance assumptions.
Those investors who prefer to have all of their funds invested initially
but may not wish to retain Fund shares for the seven year period during which
Class B shares are subject to a contingent deferred sales charge may find it
more advantageous to purchase Class C shares.
The Trustees have determined that currently no conflict of interest exists
between or among the Class A, Class B, Class C and Class Y shares. On an ongoing
basis, the Trustees of the Fund, pursuant to their fiduciary duties under the
1940 Act and state laws, will seek to ensure that no such conflict arises.
Class A Shares
The public offering price of Class A shares for purchasers choosing the
initial sales charge alternative is the net asset value plus a sales charge as
set forth in the Prospectus/Proxy Statement.
Shares issued pursuant to the automatic reinvestment of income dividends or
capital gains distributions are not subject to any sales charges. The Fund
receives the entire net asset value of its Class A shares sold to investors. The
Distributor's commission is the sales charge set forth in the Prospectus/Proxy
Statement for the Fund, less any applicable discount or commission "reallowed"
to selected dealers and agents. The Distributor will reallow discounts to
selected dealers and agents in the amounts indicated in the table in the
Prospectus/Proxy Statement. In this regard, the Distributor may elect to reallow
the entire sales charge to selected dealers and agents for all sales with
respect to which orders are placed with the Distributor. A selected dealer who
receives reallowance in excess of 90% of such a sales charge may be deemed to be
an "underwriter" under the Securities Act of 1933, as amended.
Set forth below is an example of the method of computing the offering
price of the Class A shares of the Fund to be offered pursuant to the
Prospectus/Proxy Statement. The example assumes a purchase of Class A shares of
the Fund aggregating less than $100,000 subject to the schedule of sales charges
set forth above at a price based upon the net asset value of Class A shares of
the Fund at March 31, 1995.
Net Per Offering
Asset Share Price Per
Value Sales Share
Charge
Florida High
Income $ 13.85 - - $ 13.85
Prior to the date of this Statement of Additional Information, shares of
the Fund have not been offered to the public and, accordingly, no underwriting
commissions have been paid in respect of sales of shares of the Fund or retained
by the Distributor.
Investors choosing the initial sales charge alternative may under certain
circumstances be entitled to pay reduced sales charges. The circumstances under
which such investors may pay reduced sales charges are described below.
Combined Purchase Privilege. Certain persons may qualify for the sales
charge reductions by combining purchases of shares of one or more Funds into a
single "purchase," if the resulting "purchase" totals at least $100,000. The
term "purchase" refers to: (i) a single purchase by an individual, or to
concurrent purchases, which in the aggregate are at least equal to the
prescribed amounts, by an individual, his or her spouse and their children under
the age of 21 years purchasing shares for his, her or their own account(s); (ii)
a single purchase by a trustee or other fiduciary purchasing shares for a single
trust, estate or single fiduciary account although more than one beneficiary is
involved; or (iii) a single purchase for the employee benefit plans of a single
employer. The term "purchase" also includes purchases by any "company," as the
term is defined in the 1940 Act, but does not include purchases by any such
company which has not been in existence for at least six months or which has no
purpose other than the purchase of shares of the Fund or shares of other
registered investment companies at a discount. The term "purchase" does not
include purchases by any group of individuals whose sole organizational nexus is
that the participants therein are credit card holders of a company, policy
holders of an insurance company, customers of either a bank or broker-dealer or
clients of an investment adviser. A "purchase" may also include shares,
purchased at the same time through a single selected dealer or agent, of any
Evergreen Mutual Fund. Including the Fund and the Evergreen Florida High Income
Municipal Fund, the Evergreen Mutual Funds include:
The Evergreen Aggressive Growth Fund
The Evergreen Fund
Evergreen Global Real Estate Equity Fund
Evergreen U.S. Real Estate Equity Fund
The Evergreen Limited Market Fund, Inc.
The Evergreen Florida High Income
Municipal Bond Fund
Evergreen Growth and Income Fund
The Evergreen Total Return Fund
The Evergreen American Retirement Fund
Evergreen Small Cap Equity Income Fund
Evergreen Tax Strategic Foundation Fund
Evergreen Short-Intermediate Municipal Fund
Evergreen Short-Intermediate Municipal Fund-CA
Evergreen National Tax-Free Fund
Evergreen Tax Exempt Money Market Fund
The Evergreen Money Market Trust
Evergreen U.S. Government Securities Fund
Evergreen Foundation Fund
Prospectuses for the Evergreen Mutual Funds may be obtained without charge
by contacting the Distributor or the Adviser at 1- 800-326-3241.
Cumulative Quantity Discount (Right of Accumulation). An investor's
purchase of additional Class A shares of the Fund may qualify for a Cumulative
Quantity Discount. The applicable sales charge will be based on the total of:
(i) the investor's current purchase;
(ii) the net asset value (at the close of business on the previous day)
of (a) all Class A, Class B and Class C shares of the Fund held by the investor
and (b) all such shares of any other Evergreen Mutual Fund held by the investor;
and
(iii) the net asset value of all shares described in paragraph (ii) owned
by another shareholder eligible to combine his or her purchase with that of the
investor into a single "purchase" (see above).
For example, if an investor owned Class A, B or C shares of an Evergreen
Mutual Fund worth $200,000 at their then current net asset value and,
subsequently, purchased Class A shares of the Fund worth an additional $100,000,
the sales charge for the $100,000 purchase would be at the 3.00% rate applicable
to a single $300,000 purchase of shares of the Fund, rather than the 3.75% rate.
To qualify for the Combined Purchase Privilege or to obtain the
Cumulative Quantity Discount on a purchase through a selected dealer or agent,
the investor or selected dealer or agent must provide the Distributor with
sufficient information to verify that the purchase qualifies for the privilege
or discount.
Statement of Intention. Class A investors may also obtain the reduced sales
charges shown in the table in the Prospectus/Proxy Statement by means of a
written Statement of Intention, which expresses the investor's intention to
invest not less than $100,000 within a period of 13 months in Class A shares (or
Class A, Class B and/or Class C shares) of the Fund or any other Evergreen
Mutual Fund. The purchase of shares under a Statement of Intention will be made
at the public offering price or prices applicable at the time of such purchase
to a single transaction of the dollar amount indicated in the Statement of
Intention. At the investor's option, a Statement of Intention may include
purchases of Class A, B or C shares of the Fund or any other Evergreen Mutual
Fund made not more than 90 days prior to the date that the investor signs a
Statement of Intention; however, the 13-month period during which the Statement
of Intention is in effect will begin on the date of the earliest purchase to be
included.
Investors qualifying for the Combined Purchase Privilege described above
may purchase shares of the Evergreen Mutual Funds under a single Statement of
Intention. For example, if at the time an investor signs a Statement of
Intention to invest at least $100,000 in Class A shares of the Fund, the
investor and the investor's spouse each purchase shares of the Fund worth
$20,000 (for a total of $40,000), it will only be necessary to invest a total of
$60,000 during the following 13 months in shares of the Fund or any other
Evergreen Mutual Fund, to qualify for the 3.75% sales charge on the total amount
being invested (the sales charge applicable to an investment of $100,000).
The Statement of Intention is not a binding obligation upon the investor
to purchase the full amount indicated. The minimum initial investment under a
Statement of Intention is 5% of such amount. Shares purchased with the first 5%
of such amount will be held in escrow (while remaining registered in the name of
the investor) to secure payment of the higher sales charge applicable to the
shares actually purchased if the full amount indicated is not purchased, and
such escrowed shares will be involuntarily redeemed to pay the additional sales
charge, if necessary. Dividends on escrowed shares, whether paid in cash or
reinvested in additional Fund shares, are not subject to escrow. When the full
amount indicated has been purchased, the escrow will be released. To the extent
that an investor purchases more than the dollar amount indicated on the
Statement of Intention and qualifies for a further reduced sales charge, the
sales charge will be adjusted for the entire amount purchased at the end of the
13-month period. The difference in sales charge will be used to purchase
additional shares of the Fund subject to the rate of sales charge applicable to
the actual amount of the aggregate purchases.
Class A shareholders wishing to enter into a Statement of Intention can
obtain a form of Statement of Intention by contacting the Fund at the address or
telephone numbers shown on the cover of this Statement of Additional
Information.
Investments Through Employee Benefit and Savings Plans. Certain qualified
and non-qualified benefit and savings plans may make shares of the Evergreen
mutual funds available to their participants. Investments made by such employee
benefit plans may be exempt from any applicable front-end sales charges if they
meet the criteria set forth in the Prospectus/Proxy Statement under "Additional
Information Evergreen Aggressive Fund - Purchase of Shares". The Adviser may
provide compensation to organizations providing administrative and recordkeeping
services to plans which make shares of the Evergreen Funds available to their
participants.
Reinstatement Privilege. A Class A shareholder who has caused any or all
of his or her shares of the Fund to be redeemed or repurchased may reinvest all
or any portion of the redemption or repurchase proceeds in Class A shares of the
Fund at net asset value without any sales charge, provided that such
reinvestment is made within 30 calendar days after the redemption or repurchase
date. Shares are sold to a reinvesting shareholder at the net asset value next
determined as described above. A reinstatement pursuant to this privilege will
not cancel the redemption or repurchase transaction; therefore, any gain or loss
so realized will be recognized for federal tax purposes except that no loss will
be recognized to the extent that the proceeds are reinvested in shares of the
Fund. The reinstatement privilege may be used by the shareholder only once,
irrespective of the number of shares redeemed or repurchased, except that the
privilege may be used without limit in connection with transactions whose sole
purpose is to transfer a shareholder's interest in the Fund to his or her
individual retirement account or other qualified retirement plan account.
Investors may exercise the reinstatement privilege by written request sent to
the Fund at the address shown on the cover of this Statement of Additional
Information.
Sales at Net Asset Value. The Fund may sell its Class A shares at net asset
value, i.e., without any sales charge, to certain categories of investors
including: (i) certain investment advisory clients of the Adviser or its
affiliates; (ii) officers and present or former Trustees of the Trust; present
or former directors and trustees of other investment companies managed by the
Adviser; present or retired full-time employees of the Adviser; officers,
directors and present or retired full-time employees of the Adviser, the
Distributor, and their affiliates; officers, directors and present and full-time
employees of selected dealers or agents; or the spouse, sibling, direct ancestor
or direct descendant (collectively "relatives") of any such person; or any
trust, individual retirement account or retirement plan account for the benefit
of any such person or relative; or the estate of any such person or relative, if
such shares are purchased for investment purposes (such shares may not be resold
except to the Fund); (iii) certain employee benefit plans for employees of the
Adviser, the Distributor. and their affiliates; and (iv) persons participating
in a fee-based program, sponsored and maintained by a registered broker-dealer
and approved by the Distributor, pursuant to which such persons pay an
asset-based fee to such broker-dealer, or its affiliate or agent, for service in
the nature of investment advisory or administrative services. These provisions
are intended to provide additional job-related incentives to persons who serve
the Funds or work for companies associated with the Fund and selected dealers
and agents of the Fund. Since these persons are in a position to have a basic
understanding of the nature of an investment company as well as a general
familiarity with the Fund, sales to these persons, as compared to sales in the
normal channels of distribution, require substantially less sales effort.
Similarly, these provisions extend the privilege of purchasing shares at net
asset value to certain classes of institutional investors who, because of their
investment sophistication, can be expected to require significantly less than
normal sales effort on the part of the Fund and the Distributor.
GENERAL INFORMATION
Capitalization and Organization.
The Fund is a series of Evergreen Trust (formerly The Evergreen Fund,), a
Massachusetts business trust (the "Trust"). The Trust has one additional series,
Evergreen Fund.
Liability Under Massachusetts Law
Under Massachusetts law, trustees and shareholders of a business trust
may, in certain circumstances, be held personally liable for its obligations.
The Declaration of Trust under which the Fund operates provides that no trustee
or shareholder will be personally liable for the obligations of the Trust and
that every written contract made by the Trust contain a provision to that
effect. If any Trustee or shareholder were required to pay any liability of the
Trust, that person would be entitled to reimbursement from the general assets of
the Trust.
The Fund may issue an unlimited number of shares of beneficial interest
with a $0.001 par value. All shares of the Fund have equal rights and
privileges. Each share is entitled to one vote, to participate equally in
dividends and distributions declared by the Fund and on liquidation to their
proportionate share of the assets remaining after satisfaction of outstanding
liabilities. Shares of the Fund are fully paid, nonassessable and fully
transferable when issued and have no pre-emptive, conversion or exchange rights.
Fractional shares have proportionally the same rights, including voting rights,
as are provided for a full share.
The Trustees of the Trust were elected by the shareholders of the Fund at
a Joint Special Meeting of Shareholders of the Evergreen Funds held on June 23,
1994. Under the Trust's Declaration of Trust, each Trustee will continue in
office until the termination of the Trust or his or her earlier death,
incapacity, resignation or removal. Shareholders can remove a Trustee upon a
vote of two-thirds of the outstanding shares of beneficial interest of the
Trust. Vacancies will be filled by a majority of the remaining Trustees, subject
to the 1940 Act. As a result, normally no annual or regular meetings of
shareholders will be held, unless otherwise required by the Declaration of Trust
of the Trust or the 1940 Act.
Shares have noncumulative voting rights, which means that the holders of
more than 50% of the shares voting for the election of Trustees can elect 100%
of the Trustees if they choose to do so and in such event the holders of the
remaining shares so voting will not be able to elect any Trustees.
The Trustees are authorized to reclassify and issue any unissued shares to
any number of additional series without shareholder approval. Accordingly, in
the future, for reasons such as the desire to establish one or more additional
portfolios of the Trust with different investment objectives, policies or
restrictions, additional series of shares may be created by the Trust. Any
issuance of shares of another series or class would be governed by the 1940 Act
and the law of the State of Massachusetts. If shares of another series of the
Trust were issued in connection with the creation of additional investment
series, each share of the newly created series would normally be entitled to one
vote for all purposes. Generally, shares of all series would vote as a single
series on matters, such as the election of Trustees, that affect all series in
substantially the same manner. As to matters affecting each series differently,
such as approval of the Investment Advisory Contract and changes in investment
policy, shares of the series would vote separately.
In addition the Fund may, in the future, create additional classes of
shares which represent an interest in the same investment portfolio. Except for
the different distribution related and other specific costs borne by such
additional classes, they will have the same voting and other rights described
for the existing classes of the Fund.
Procedures for calling a shareholders' meeting for the removal of the
Trustees of the Trust, similar to those set forth in Section 16(c) of the 1940
Act will be available to shareholders of the Fund. The rights of the holders of
shares of a series of the Fund may not be modified except by the vote of a
majority of the outstanding shares of such series.
An order has been received from the Securities and Exchange Commission
permitting the issuance and sale of multiple classes of shares representing
interests in the Fund. In the event the Fund were to issue additional Classes of
shares other than those described herein, no further relief from the Securities
and Exchange Commission would be required.
As of April 20, 1995 the Fund had outstanding 1 share of each Class.
Custodian and Transfer Agent
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, acts as custodian for the securities and cash of the Fund
but plays no part in deciding the purchase or sale of portfolio securities.
Distributor
Evergreen Funds Distributor, Inc. (the "Distributor"), 230 Park Avenue, New
York, New York 10169, serves as the Fund's principal underwriter, and as such
may solicit orders from the public to purchase shares of the Fund. Evergreen
Funds Distributor, Inc. is not obligated to sell any specific amount of shares
and will purchase shares for resale only against orders for shares. Under the
agreement between the Trust and the Distributor, the Fund has agreed to
indemnify the Distributor, in the absence of its willful misfeasance, bad faith,
gross negligence or reckless disregard of its obligations thereunder, against
certain civil liabilities, including liabilities under the Securities Act of
1933, as amended.
Counsel
Shereff, Friedman, Hoffman & Goodman, LLP, 919 Third Avenue, New York,
New York 10022 serves as counsel to the Fund.
Independent Auditors
Price Waterhouse LLP has been selected to be the independent auditors of
the Trust.
PERFORMANCE INFORMATION
From time to time the Fund may advertise its "total return." Computed
separately for each class, the Fund's "total return" is its average annual
compounded total return for recent one, five, and ten-year periods (or the
period since the Fund's inception). The Fund's total return for such a period is
computed by finding, through the use of a formula prescribed by the Securities
and Exchange Commission, the average annual compounded rate of return over the
period that would equate an assumed initial amount invested to the value of such
investment at the end of the period. For purposes of computing total return,
income dividends and capital gains distributions paid on shares of the Fund are
assumed to have been reinvested when paid and the maximum sales charge
applicable to purchases of Fund shares is assumed to have been paid. The Fund
will include performance data for Class A, Class B and Class C shares in any
advertisement or information including performance data of the Fund.
The performance numbers for the Class A, B and C shares are hypothetical
numbers based on the performance for Class Y shares as adjusted for any
applicable front-end sales charge or contingent deferred sales charge ("CDSC").
The Fund's total return is not fixed and will fluctuate in response to
prevailing market conditions or as a function of the type and quality of the
securities in the Fund's portfolio and its expenses. Total return information is
useful in reviewing the Fund's performance but such information may not provide
a basis for comparison with bank deposits or other investments which pay a fixed
yield for a stated period of time. An investor's principal invested in the Fund
is not fixed and will fluctuate in response to prevailing market conditions.
From time to time, the Fund may quote its performance in advertising and
other types of literature as compared to the performance of the S & P Index, the
Dow Jones Industrial Average, Russell 2000 Index, or any other commonly quoted
index of common stock prices. The S & P Index, the Dow Jones Industrial Average
and the Russell 2000 Index are unmanaged indices of selected common stock
prices. The Fund's performance may also be compared to those of other mutual
funds having similar objectives. This comparative performance would be expressed
as a ranking prepared by Lipper Analytical Services, Inc., an independent
service which monitors the performance of mutual funds. The Fund's performance
will be calculated by assuming, to the extent applicable, reinvestment of all
capital gains distributions and income dividends paid. Any such comparisons may
be useful to investors who wish to compare the Fund's past performance with that
of its competitors. Of course, past performance cannot be a guarantee of future
results.
ADDITIONAL INFORMATION
Any shareholder inquiries may be directed to the shareholder's broker or to
the Adviser at the address or telephone numbers shown on the front cover of this
Statement of Additional Information. This Statement of Additional Information
does not contain all the information set forth in the N-14 Registration
Statement filed by the Trust with the Securities and Exchange Commission under
the Securities Act of 1933. Copies of the N-14 Registration Statement may be
obtained at a reasonable charge from the Securities and Exchange Commission or
may be examined, without charge, at the offices of the Securities and Exchange
Commission in Washington, D.C.
The following pro forma financial information relates to the ABT
Emerging Growth Fund and the Evergreen Aggressive Growth
Fund:
<PAGE>
PRO FORMA COMBINING PORTFOLIOS OF INVESTMENTS OF
EVERGREEN AGGRESSIVE GROWTH FUND AND ABT EMERGING GROWTH FUND
DECEMBER 31, 1994
(unaudited)
<TABLE>
<CAPTION>
EVERGREEN ABT EVERGREEN ABT
AGGRESSIVE EMERGING AGGRESSIVE EMERGING
GROWTH GROWTH PRO FORMA GROWTH GROWTH PRO FORMA
FUND FUND COMBINED FUND FUND COMBINED
- -----------------------------------------------------------------------------------------------------------------------------
SHARES COMMON STOCKS VALUE
- ----------------------------------- ---------------------------------------- -----------------------------------------
<C> <C> <C> <S> <C> <C> <C>
180,000 180,000 American Power Conversion Corp. $ $ 2,947,500 $ 2,947,500
70,000 70,000 Atmel Corp. 2,345,000 2,345,000
110,000 110,000 AutoZone, Inc. 2,667,500 2,667,500
25,000 25,000 Breed Technologies, Inc. 709,375 709,375
100,000 100,000 Cisco Systems, Inc. 3,512,500 3,512,500
130,000 130,000 Danka Business Systems PLC 2,811,250 2,811,250
140,000 140,000 EMC Corp. 3,027,500 3,027,500
60,000 60,000 Fastenal Co. 2,452,500 2,452,500
65,000 65,000 First Data Corp. 3,079,375 3,079,375
22,500 22,500 Fiserv, Inc. 483,750 483,750
50,000 50,000 Franklin Quest Co. 1,493,750 1,493,750
110,000 110,000 GENTEX Corp. 2,667,500 2,667,500
30,000 30,000 Green Tree Financial Corp. 911,250 911,250
42,000 42,000 Health Management Associates, Inc. 1,050,000 1,050,000
81,000 81,000 Home Depot, Inc. 3,726,000 3,726,000
120,000 120,000 IVAX Corp. 2,280,000 2,280,000
47,000 47,000 John Alden Financial Corp. 1,351,250 1,351,250
42,000 42,000 Microsoft Corp. 2,567,250 2,567,250
140,000 140,000 Office Depot, Inc. 3,360,000 3,360,000
75,000 75,000 Parametric Technology Corp. 2,587,500 2,587,500
105,000 105,000 Sensormatic Electronics Corp. 3,780,000 3,780,000
25,000 25,000 Surgical Care Affiliates, Inc. 506,250 506,250
150,000 150,000 Tech Data Corp. 2,550,000 2,550,000
55,000 55,000 United Healthcare Corp. 2,481,875 2,481,875
8,800 8,800 Viacom, Inc. - CL A 366,300 366,300
66,676 66,676 Viacom, Inc. - CL B 2,708,713 2,708,713
110,000 110,000 Viacom, Inc. - VCR 9/95 123,750 123,750
-----------------------------------------
TOTAL COMMON STOCKS - 58,547,638 58,547,638
-----------------------------------------
PRINCIPAL AMOUNT SHORT TERM OBLIGATIONS
- ----------------------------------- -----------------------------------
$1,000,000 $1,000,000 U.S. Treasury Bill, 3.75%,
maturity 1/1/95 - 999,551 999,551
-----------------------------------------
REPURCHASE AGREEMENT
2,637,947 2,637,947 Repurchase agreement with Cantor
Fitzgerald, (dated 12/31/94),
5.75%, due 1/03/95 Collateral
-$2,714,911 U.S. Treasury Note,
6.875%, 7/31/99, market value
$2,690,969) (Repurchase proceeds
$2,639,632) - 2,637,947 2,637,947
-----------------------------------------
TOTAL INVESTMENTS (Cost 44,254,768) $ - $62,185,136 $62,185,136
-----------------------------------------
-----------------------------------------
</TABLE>
See notes to pro forma financial statements
<PAGE>
PRO FORMA COMBINING STATEMENT OF ASSETS AND LIABILITIES OF
EVERGREEN AGGRESSIVE GROWTH FUND AND ABT EMERGING GROWTH FUND
DECEMBER 31, 1994
(unaudited)
<TABLE>
<CAPTION>
EVERGREEN ABT
AGGRESSIVE EMERGING
GROWTH GROWTH PRO FORMA
FUND FUND COMBINED
---------------- ------------ -----------
<S> <C> <C> <C>
ASSETS
Investments in securities at value
(cost $0; $44,254,768; and
$44,254,768, respectively) $ $62,185,136 $62,185,136
Cash 13 941 928
Receivables:
Fund shares sold 104,544 104,544
Dividends 17,419 17,419
Prepaid expenses 11,738 11,738
---------------- ------------ -----------
Total assets 13 62,319,778 62,319,765
---------------- ------------ -----------
LIABILITIES
Payable for Fund shares redeemed 70,806 70,806
Accrued expenses 61,795 61,795
---------------- ------------ -----------
Total liabilities - 132,601 132,601
---------------- ------------ -----------
TOTAL NET ASSETS $ 13 $62,187,177 $62,187,164
---------------- ------------ -----------
---------------- ------------ ----------
Shares outstanding 1 4,627,318 4,627,317
---------------- ------------ -----------
Net asset value (total net assets DIVIDED BY shares outstanding) $13.44 $13.44 $13.44
---------------- ------------ -----------
<FN>
*Class A Investment Shares
</FN>
</TABLE>
See notes to pro forma financial statements
<PAGE>
PRO FORMA COMBINING STATEMENT OF OPERATIONS OF
EVERGREEN AGGRESSIVE GROWTH FUND AND ABT EMERGING GROWTH FUND
FOR THE YEAR ENDED DECEMBER 31, 1994
(unaudited)
<TABLE>
<CAPTION>
EVERGREEN ABT
AGGRESSIVE EMERGING
GROWTH GROWTH PRO FORMA
FUND FUND ADJUSTMENTS COMBINED
------------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
INCOME:
Dividends $ $ 112,160 $ 112,160
Interest 132,374 132,374
----------------------------------------------- ------------
- 244,534 - 244,534
----------------------------------------------- ------------
EXPENSES:
Investment advisory fees 371,353 371,353
Distribution fees 154,711 154,711
Transfer agent fees 99,204 (7,204) * 92,000
Administrative fees 41,875 41,875
Accounting fees 24,511 24,511
Custodian fees 11,909 11,909
Registration fees and expenses 11,229 11,229
Directors' fees and expenses 19,149 (9,767) * 9,382
Insurance 5,583 4,417 * 10,000
Audit fees and expenses 13,504 13,504
Printing and shareholder communications 13,801 13,801
Legal fees and expenses 6,816 6,816
Other 8,359 8,359
----------------------------------------------- ------------
Total expenses - 782,004 (12,554) 769,450
----------------------------------------------- ------------
Net investment income - (537,590) 12,554 (524,916)
----------------------------------------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments (1,106,821) (1,106,821)
Change in unrealized appreciation (2,647,810) (2,647,810)
----------------------------------------------- ------------
Net realized and unrealized gain (loss) on investments - (3,754,631) - (3,754,631)
----------------------------------------------- ------------
NET CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ - $(4,292,101) $ 12,554 $(4,279,547)
----------------------------------------------- ------------
----------------------------------------------- ------------
<FN>
* Reflects adjustments to fees based on the fee schedules to be in effect for
the Evergreen Aggressive Growth Fund.
</FN>
</TABLE>
See notes to pro forma financial statements
<PAGE>
NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS OF
EVERGREEN AGGRESSIVE GROWTH FUND AND ABT EMERGING GROWTH FUND
DECEMBER 31, 1994
(unaudited)
1. BASIS OF COMBINATION
The Pro Forma Combining Portfolio of Investments and Pro Forma Combining
Statement of Assets and Liabilities reflect the accounts of Evergreen Aggressive
Growth Fund (Evergreen) and ABT Emerging Growth Fund (ABT) at December 31, 1994.
The Pro Forma Combining Statement of Operations reflects the accounts of
Evergreen and ABT for the year ended December 31, 1994. Evergreen was organized
as a separate series of Evergreen Trust on March 15, 1995, for the sole purpose
of merging with ABT. Evergreen did not have any assets or operations as of the
date of these pro forma statements, and will not have any assets or operations
until the merger with ABT. These statements have been derived from ABT's books
and records utilized in calculating daily net asset value at December 31, 1994.
The pro forma statements give effect to the proposed transfer of the assets
and stated liabilities of ABT in exchange for Class A investment shares of
Evergreen under generally accepted accounting principles. The historical cost of
investment securities will be carried forward to the surviving entity and the
results of operations of Evergreen for pre-combination periods will not be
restated. The pro forma statements do not reflect the expenses of either fund in
carrying out its obligations under the Agreement and Plan of Reorganization.
First Union National Bank of North Carolina ("FUNB") will bear all the expenses
of Evergreen in connection with the Reorganization. Other than the fees and
expenses of counsel to ABT and expenses for Officers and Trustees ongoing
insurance coverage (which will be paid by ABT), the expenses of the
Reorganization (including the cost of any proxy soliciting agents) will be borne
by Palm Beach Capital Management Corp. and FUNB. No portion of such expenses
shall be paid by the Evergreen. The actual fiscal year of the combined Fund will
be August 31, the fiscal year end of Evergreen.
The Pro Forma Combining Portfolio of Investments, the Pro Forma Combining
Statement of Assets and Liabilities and the Pro Forma Combining Statement of Net
Investment Income should be read in conjunction with the historical financial
statements of ABT included or incorporated by reference in the Statement of
Additional Information.
2. SHARES OF BENEFICIAL INTEREST
The pro forma net asset value per share assumes the issuance of shares of
Evergreen Class A investment shares, which would have been issued at December
31, 1994, in connection with the proposed reorganization.
3. PRO FORMA OPERATIONS
The Pro Forma Statement of Operations assumes the same rate of gross
investment income for the investments of ABT. Pro Forma operating expenses
include the actual expenses of ABT and the combined Fund with certain expenses
adjusted to reflect the expected expenses of the combined Fund.
4. OFFICERS AND DIRECTORS INSURANCE
The independent Trustees/Directors have voted to retain their ability to
make claims under their existing Officers and Directors insurance policy for a
period of three years following the consummation of the Reorganization. As with
the premium for the policy, the premium for the continuation will be paid by ABT
and the other ABT Funds prior to the consummation of the transaction and is
expected to be approximately $133,000 ($17,556 of which will be paid by ABT) for
the three years.
