1933 Act Registration No. 33-__________
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-14
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
[ ] Pre-Effective [ ] Post-Effective
Amendment No. Amendment No.
EVERGREEN TRUST
(Exact name of registrant as specified in charter)
Area Code and Telephone Number: (914) 694-2020
2500 Westchester Avenue
Purchase, New York 10577
(Address of principal executive offices)
James P. Wallin, Esq.
Evergreen Asset Management Corp.
2500 Westchester Avenue
Purchase, New York 10577
(Name and address of agent for service)
Approximate date of proposed public offering: As soon as possible after the
effective date of this Registration Statement.
The Registrant has registered an indefinite amount of securities under the
Securities Act of 1933 pursuant to Section 24(f) of the Investment Company Act
of 1940 (File No.2-40357); accordingly, no fee is payable herewith. Pursuant to
Rule 429 under the Securities Act of 1933, this Registration Statement relates
to the aforementioned registration on Form N-1A. A Rule 24f-2 Notice for the
Registrant's most recent fiscal year ended September 30, 1996 was filed with the
Commission on or about November 28, 1996.
It is proposed that this filing will become effective thirty days after
filing pursuant to Rule 488 under the Securities Act of 1933.
<PAGE>
EVERGREEN TRUST
CROSS REFERENCE SHEET
Pursuant to Rule 481(a) under the Securities Act of 1933
Location in Prospectus/Proxy
Item of Part A of Form N-14 Statement
1. Beginning of Registration Statement Cross Reference Sheet; Cover Page
and Outside Front Cover Page of
Prospectus
2. Beginning and Outside Back Cover Table of Contents
Pageof Prospectus
3. Fee Table, Synopsis Information and Comparison of Fees and Expenses;
Risk Factors Comparison of investment objectives
and policies; Summary; Risks
4. Information About the Transaction Summary; Reasons for the
Reorganization; Comparative
Information on Shareholders' Rights;
Exhibit A (Agreement and Plan of
Reorganization)
5. Information about the Registrant Cover Page; Summary; Comparison of
Investment Objectives and Policies;
Comparative Information on
Shareholders' Rights; Additional
Information
6. Information about the Company Cover Page; Summary; Comparison of
Being Acquired Investment Objectives and Policies;
Comparative Information on
Shareholders' Rights; Additional
Information
7. Voting Information Cover Page; Summary; Voting
Information Concerning the Meeting
8. Interest of Certain Persons Financial Statements and Experts;
and Experts Legal Matters
9. Additional Information Required for Inapplicable
Reoffering by Persons Deemed to be
Underwriters
Item of Part B of Form N-14
<PAGE>
10. Cover Page Cover Page
11. Table of Contents Omitted
12. Additional Information About the Statement of Additional Information
Registrant of the Evergreen Aggressive Growth
Fund dated November 29, 1996
13. Additional Information about Statement of Additional Information
the Company Being Acquired of Keystone America Hartwell Emerging
Growth Fund, Inc. dated December 10,
1996 as supplimented January 1, 1997
14. Financial Statements Financial Statements dated
September 30, 1996 of Evergreen
Aggressive Growth Fund
Financial Statements dated
September 30, 1996 of Keystone
America Hartwell Emerging Growth Fund,
Inc.
Item of Part C of Form N-14
15. Indemnification Incorporated by Reference to Part A
Caption - "Comparative Information
on Shareholders' Rights - Liability
and Indemnification of
Trustees or Directors"
16. Exhibits Item 16. Exhibits
17. Undertakings Item 17. Undertakings
********************************************************************************
<PAGE>
[EVERGREEN KEYSTONE LOGO]
May, 1997
Dear Shareholder:
We are pleased to announce that the Evergreen Keystone merger is well underway,
and with the combined power of Evergreen Keystone we will be able to bring our
investment and service capabilities to a new level. One of the areas we are
focusing on is merging funds with similar objectives to maximize the potential
for greater operating efficiencies and lower overall fees and expenses.
The enclosed Prospectus/Proxy Statement contains our proposal to combine the
Evergreen Aggressive Growth Fund with Keystone America Hartwell Emerging Growth
Fund, Inc. This proposal is scheduled to be voted on at a special meeting of
shareholders of Keystone America Hartwell Emerging Growth Fund, Inc. on June 30,
1997.
The merger has been structured as a tax-free transaction for shareholders. We
believe it will result in one combined fund with lower management fees and
operating expenses and greater efficiencies than two separate funds. This merger
is not expected to affect the total value of your investment.
SUMMARY OF BENEFITS
o Lower management fees and operating expenses
o Potential for greater operating efficiencies
The Fund's Directors have very carefully reviewed this proposed
reorganization and believe it is in the best interests of shareholders. They
recommend you vote FOR the proposal, which is described in detail in the
attached Prospectus/Proxy Statement.
VOTING INSTRUCTIONS
This package contains the materials you will need to vote. To vote, please sign
the attached proxy card and return it today in the postage-paid envelope. It is
extremely important that you vote, no matter how many shares you own. This is an
opportunity to voice your opinion on any important matter affecting your
investment. Voting promptly helps to reduce the cost of additional mailings.
If you have any questions regarding the proposed transaction or if you would
like additional information about the Evergreen Keystone family of mutual funds,
please telephone your financial adviser or Evergreen Keystone at 1-800-xxx-xxxx.
Albert H. Elfner, III George S. Bissell
CHAIRMAN CHAIRMAN OF THE BOARD
Keystone Investment Management Company Keystone Funds
<PAGE>
KEYSTONE AMERICA HARTWELL EMERGING GROWTH FUND, INC.
200 BERKELEY STREET
BOSTON, MASSACHUSETTS 02116
--------------------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 30, 1997
--------------------------------------------------
NOTICE IS HEREBY GIVEN that a Special Meeting (the "Meeting") of
Shareholders of Keystone America Hartwell Emerging Growth Fund, Inc.
("Hartwell") will be held at the offices of the Fund, 200 Berkeley Street,
Boston, Massachusetts on Monday, June 30, 1997 at 3:00 p.m., Eastern time, for
the following purposes:
1. To approve or disapprove an Agreement and Plan of Reorganization (the
"Plan"), providing for the acquisition of all of the assets of Hartwell by
the Evergreen Aggressive Growth Fund in exchange for shares of the
Evergreen Aggressive Growth Fund, and the assumption by the Evergreen
Aggressive Growth Fund of certain stated liabilities of Hartwell. The
Plan also provides for distribution of such shares of the Evergreen
Aggressive Growth Fund to shareholders of Hartwell in liquidation and
subsequent termination of Hartwell. A vote in favor of the Plan is a vote
in favor of the liquidation and dissolution of Hartwell.
2. To transact any other business which may properly come before the
Meeting or any adjournment thereof.
The Directors of Hartwell have fixed the close of business on May 2, 1997
as the record date for the determination of shareholders of Hartwell entitled to
notice of and to vote at the Meeting or any adjournment thereof.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO NOT
EXPECT TO ATTEND IN PERSON ARE URGED WITHOUT DELAY TO SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE, SO THAT
THEIR SHARES MAY BE REPRESENTED AT THE MEETING. YOUR PROMPT ATTENTION TO THE
ENCLOSED PROXY WILL HELP TO AVOID THE EXPENSE OF FURTHER SOLICITATION.
By Order of the Board of Directors
George O. Martinez
SECRETARY
May [ ___ ], 1997
<PAGE>
INSTRUCTIONS FOR EXECUTING PROXY CARDS
The following general rules for signing proxy cards may be of
assistance to you and may help to avoid the time and expense involved in
validating your vote if you fail to sign your proxy card(s) properly.
1. Individual Accounts: Sign your name exactly as it appears in the
Registration on the proxy card(s).
2. Joint Accounts: Either party may sign, but the name of the party
signing should conform exactly to a name shown in the
Registration on the proxy card(s).
3. All Other Accounts: The capacity of the individual signing the
proxy card(s) should be indicated unless it is reflected in the
form of Registration. For example:
Registration Valid Signature
Corporate Accounts
(1) ABC Corp. ABC Corp.
(2) ABC Corp. John Doe, Treasurer
(3) ABC Corp.
c/o John Doe, Treasurer John Doe, Treasurer
(4) ABC Corp. Profit Sharing Plan John Doe, Trustee
Trust Accounts
(1) ABC Trust Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee Jane B. Doe
u/t/d 12/28/78
Custodial or Estate Accounts
(1) John B. Smith, Cust. John B. Smith
f/b/o John B. Smith, Jr. UGMA
(2) John B. Smith, Jr. John B. Smith, Jr., Executor
<PAGE>
SUBJECT TO COMPLETION, APRIL 18, 1997
PRELIMINARY COPY
PROSPECTUS/PROXY STATEMENT DATED MAY [ ___ ], 1997
Acquisition of Assets of
Keystone America Hartwell Emerging Growth Fund, Inc.
200 Berkeley Street
Boston, Massachusetts 02116
By and in Exchange for Shares of
Evergreen Aggressive Growth Fund
a series of
Evergreen Trust
2500 Westchester Avenue
Purchase, New York 10577
This Prospectus/Proxy Statement is being furnished to shareholders of
Keystone America Hartwell Emerging Growth Fund, Inc. ("Hartwell") in connection
with a proposed Agreement and Plan of Reorganization (the "Plan") to be
submitted to shareholders of Hartwell for consideration at a Special Meeting of
Shareholders to be held on June 30, 1997 at 3:00 p.m. at the offices of the
Fund, 200 Berkeley Street, Boston, Massachusetts, and any adjournments thereof
(the "Meeting"). The Plan provides for all of the assets of Hartwell to be
acquired by Evergreen Aggressive Growth Fund in exchange for shares of the
Evergreen Aggressive Growth Fund and the assumption by Evergreen Aggressive
Growth Fund ("Evergreen Aggressive") of certain stated liabilities of Hartwell
(hereinafter referred to as the "Reorganization"). Following the Reorganization,
shares of Evergreen Aggressive will be distributed to shareholders of Hartwell
in liquidation of Hartwell and Hartwell will be terminated. Holders of shares of
Hartwell will receive shares of the Class of Evergreen Aggressive (the
"Corresponding Shares") having the same letter designation and the same
distribution-related fees, shareholder servicing-related fees and contingent
deferred sales charges ("CDSCs"), if any, as the shares of the Class of the
Hartwell held by them prior to the Reorganization. As a result of the proposed
Reorganization, shareholders of Hartwell will receive that number of full and
fractional Corresponding Shares of Evergreen Aggressive having an aggregate net
asset value equal to the aggregate net asset value of such shareholder's shares
of Hartwell. The Reorganization is being structured as a tax-free reorganization
for federal income tax purposes.
Evergreen Aggressive is a separate series of Evergreen Trust, an open-end
management investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"). Evergreen Aggressive seeks to achieve
long-term capital apprecition by investing primarily in common stocks of
emerging growth companies and larger, more well established companies, all of
which are viewed by the investment adviser as having above-average appreciation
potential.
This Prospectus/Proxy Statement, which should be retained for future
reference, sets forth concisely the information about Evergreen Aggressive that
shareholders of Hartwell should know before voting on the Reorganization.
Certain relevant documents listed below, which have been filed with the
Securities and Exchange Commission ("SEC"), are incorporated in whole or in part
by reference. A Statement of Additional Information dated May [ __ ], 1997,
relating to this Prospectus/Proxy Statement and the Reorganization, which
includes the financial statements of Evergreen Aggressive dated September 30,
1996 and the financial statements of Hartwell dated June 30, 1996 and September
30, 1996, has been filed with the SEC and is incorporated by reference in its
entirety into this Prospectus/Proxy Statement. A copy of such Statement of
Additional Information is available upon request and without charge by writing
to Evergreen Aggressive at 2500 Westchester Avenue, Purchase, New York 10577 or
by calling toll-free 1-800-807-2940.
The Prospectus of Evergreen Aggressive relating to Class A, Class B and
Class C shares dated November 29, 1996 and its Annual Report for the fiscal year
ended September 30, 1996 are incorporated herein by reference in their entirety,
insofar as they relate to Evergreen Aggressive only, and not to any other fund
described therein. Shareholders of Hartwell will receive, with this
Prospectus/Proxy Statement, copies of the Prospectus of Evergreen Aggressive.
Additional information about Evergreen Aggressive is contained in its Statement
of Additional Information of the same date which has been filed with the SEC and
which is available upon request and without charge by writing or calling to
Evergreen Aggressive at the address or telephone number listed in the preceding
paragraph.
The Prospectus of Hartwell dated December 10, 1996, as supplemented on
January 1, 1997 is incorporated herein in its entirety by reference. Copies of
the Prospectus and a Statement of Additional Information dated the same date are
available upon request without charge by writing to the Hartwell at 200 Berkeley
Street, Boston, Massachusetts 02116 or by calling toll-free 1-800-343-2898.
Included as Exhibit A of this Prospectus/Proxy Statement is a copy of the
Plan.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OFFERED BY THIS PROSPECTUS/PROXY STATEMENT ARE NOT DEPOSITS OR
OBLIGATIONS OF FIRST UNION CORPORATION ("FIRST UNION") OR ANY OF ITS
SUBSIDIARIES, ARE NOT ENDORSED OR GUARANTEED BY FIRST UNION OR ANY OF ITS
SUBSIDIARIES, AND ARE NOT INSURED OR OTHERWISE PROTECTED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY.
INVESTMENT IN THESE SHARES INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL.
<PAGE>
TABLE OF CONTENTS
PAGE
COMPARISON OF FEES AND EXPENSES.........................................6
SUMMARY ................................................................9
Proposed Plan of Reorganization....................................9
Tax Consequences..................................................10
Investment Objectives and Policies of Evergreen Agressive
and Hartwell ........................................10
Comparative Performance Information of Each Fund..................10
Management of the Funds...........................................11
Investment Advisers, Administrator and Sub-adviser................11
Portfolio Management..............................................13
Distribution of Shares............................................13
Purchase and Redemption Procedures................................15
Exchange Privileges...............................................15
Dividend Policy...................................................15
RISKS ................................................................16
REASONS FOR THE REORGANIZATION.........................................17
Agreement and Plan of Reorganization..............................18
Federal Income Tax Consequences...................................20
Pro-forma Capitalization..........................................21
Shareholder Information...........................................22
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES.......................23
COMPARATIVE INFORMATION ON SHAREHOLDERS' RIGHTS .......................25
Form of Organization..............................................25
Capitalization....................................................25
Shareholder Liability.............................................26
Shareholder Meetings and Voting Rights............................26
Liquidation or Dissolution........................................26
Liability and Indemnification of Trustees and Directors...........27
Rights of Inspection..............................................27
ADDITIONAL INFORMATION.................................................27
VOTING INFORMATION CONCERNING THE MEETING..............................28
FINANCIAL STATEMENTS AND EXPERTS.......................................30
LEGAL MATTERS..........................................................31
OTHER BUSINESS.........................................................31
<PAGE>
COMPARISON OF FEES AND EXPENSES
The amounts for Class A, Class B, Class C and Class Y shares of Evergreen
Aggressive set forth in the following tables and examples are based on the
expenses for the fiscal year ended September 30, 1996. The amounts for Class A,
Class B, and Class C shares of Hartwell set forth in the following tables and in
the examples are based on the expenses for Hartwell for the fiscal year ended
September 30, 1996. All amounts are adjusted for voluntary expense waivers. The
amounts for Evergreen Aggressive's pro forma are based on what the combined
expenses would have been for the twelve months ended September 30, 1996.
The following tables show for Evergreen Aggressive and Hartwell the
shareholder transaction expenses and annual fund operating expenses associated
with an investment in the Class A, Class B, and Class C shares of each Fund.
<PAGE>
COMPARISON OF CLASS A, CLASS B, AND CLASS C SHARES OF EVERGREEN
AGGRESSIVE WITH CORRESPONDING SHARES OF HARTWELL
EVERGREEN AGGRESSIVE
Shareholder Transaction Expenses Class Y Class A Class B Class C
------- ------- ------- -------
Maximum Sales Charge Imposed on None 4.75% None None
Purchases (as a percentage of offering
price)
Maximum Sales Charge Imposed on None None None None
Reinvested Dividends (as a percentage
of offering price)
Contingent Deferred Sales Charge (as a None None 5.00% in 1.00%
percentage of original purchase price the first in the
or redemption proceeds, year, de- first
whichever is lower) clining to year
1.00% in and
the sixth 0.00%
year and there-
0.00% after
thereafter
Exchange Fee None None None None
Annual Fund Operating Expenses (as a
percentage of average daily net assets)
Advisory Fees 0.60% 0.60% 0.60% 0.60%
12b-1 Fees(1) None 0.25% 1.00% 1.00%
Other Expenses 0.37% 0.37% 0.37% 0.37%
Annual Fund Operating Expenses 0.97% 1.225 1.97% 1.97%
HARTWELL
Shareholder Transaction Expenses Class A Class B Class C
------- ------- -------
Maximum Sales Charge Imposed on 4.75% None None
Purchases (as a percentage of offering
price)
Maximum Sales Charge Imposed on None None None
Reinvested Dividends (as a percentage
of offering price)
Contingent Deferred Sales Charge (as a None 5.00% in the 1.00%
percentage of original purchase price first year, in the
or redemption proceeds, declining to first
whichever is lower) 1.00% in the year
sixth year and
and 0.00% 0.00%
thereafter there-
after
Exchange Fee None None None
Annual Fund Operating Expenses (as a
percentage of average daily net assets)
Advisory Fees (2) 0.99% 0.99% 0.99%
12b-1 Fees (1) 0.20% 1.00% 1.00%
Other Expenses 0.47% 0.47% 0.47%
Annual Fund Operating Expenses 1.66% 2.46% 2.46%
EVERGREEN AGGRESSIVE PRO FORMA
Shareholder Transaction Expenses Class Y Class A Class B Class C
------- ------- ------- -------
Maximum Sales Charge Imposed on None 4.75% None None
Purchases (as a percentage of offering
price)
Maximum Sales Charge Imposed on None None None None
Reinvested Dividends (as a percentage
of offering price)
Contingent Deferred Sales Charge (as a None None 5.00% in 1.00%
percentage of original purchase price the first in the
or redemption proceeds, year, de- first
whichever is lower) clining to year
1.00% in and
the sixth 0.00%
year and there-
0.00% after
thereafter
Exchange Fee None None None None
Annual Fund Operating Expenses (as a
percentage of average daily net assets)
Advisory Fees 0.60% 0.60% 0.60% 0.60%
12b-1 Fees (1) None 0.25% 1.00% 1.00%
Other Expenses 0.26% 0.26% 0.26% 0.26%
Annual Fund Operating Expenses 0.86% 1.11% 1.86% 1.86%
(1) Class A shares can pay up to .75 of 1% of average net assets as a 12b-1 fee.
For the foreseeable future, the Class A 12b-1 fees will be limited to .25 of 1%
of average net assets. For Class B and Class C shares of Evergreen Aggressive, a
portion of the 12b-1 fees equivalent to .25 of 1% of average net assets will be
shareholder servicing-related. Distribution-related 12b-1 fees will be limited
to .75 of 1% of average net assets as permitted under the rules of the National
Association of Securities Dealers, Inc.
(2) The Fund pays a basic advisory fee which is subject to adjustment up or down
by up to 1/2 of 1% of the average daily net asset value during the latest 12
months depending upon the performance of the Fund relative to the Standard and
Poor's Index of 500 stocks. See "Investment Advisers And Administrator".
EXAMPLES. The following tables show for each Fund, and for Evergreen
Aggressive Pro-Forma, assuming consummation of the Reorganization, examples of
the cumulative effect of shareholder transaction expenses and annual fund
operating expenses indicated above on a $1,000 investment in each class of
shares for the periods specified, assuming (i) a 5% annual return, and (ii)
redemption at the end of such period, and additionally for Class B and Class C
shares, no redemption at the end of each period.
EVERGREEN AGGRESSIVE HARTWELL
One Three Five Ten One Three Five Ten
Year Years Years Years Year Years Years Years
Class A $59 $84 $111 $188 $64 $97 $133 $235
Class B
Assuming
redemption
at end of period $70 $92 $126 $201 $75 $107 $151 $251
Class B
Assuming no
redemption
at end of period $20 $62 $106 $201 $25 $77 $131 $251
Class C
Assuming
redemption
at end of period $30 $62 $106 $230 $35 $77 $131 $280
Class C
Assuming no
redemption
at end of period $20 $62 $106 $230 $25 $77 $131 $280
Class Y
Assuming
redemption
at end of period $10 $31 $54 $119 - - - -
EVERGREEN AGGRESSIVE - PRO FORMA
One Three Five Ten
Year Years Years Years
Class A $58 $81 $106 $175
Class B
Assuming
redemption
at end of period $69 $88 $121 $188
Class B
Assuming no
redemption
at end of period $19 $58 $101 $188
Class C
Assuming
redemption
at end of period $29 $58 $101 $218
Class C
Assuming no
redemption
at end of period $19 $58 $101 $218
Class Y
Assuming
redemption
at end of period $9 $27 $48 $106
The purpose of the foregoing examples is to assist a Hartwell shareholder
in understanding the various costs and expenses that an investor in Evergreen
Aggressive as a result of the Reorganization would bear directly and indirectly,
as compared with the various direct and indirect expenses currently borne by a
shareholder in Hartwell. These examples should not be considered a
representation of past or future expenses or annual returns. Actual expenses may
be greater or less than those shown. Moreover, while the examples assume a 5%
annual return, a Fund's actual performance will vary and may result in actual
returns greater or less than 5%.
SUMMARY
THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE ADDITIONAL
INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS/PROXY STATEMENT, THE
PROSPECTUS OF EVERGREEN AGGRESSIVE DATED NOVEMBER 29, 1996 AND THE PROSPECTUS OF
HARTWELL DATED DECEMBER 10, 1996, AS SUPPLEMENTED JANUARY 1, 1997 (WHICH ARE
INCORPORATED HEREIN BY REFERENCE) AND THE PLAN, A FORM OF WHICH IS ATTACHED TO
THIS PROSPECTUS/PROXY STATEMENT AS EXHIBIT A.
PROPOSED PLAN OF REORGANIZATION
The Plan provides for the transfer of all of the assets of Hartwell in
exchange for shares of Evergreen Aggressive and the assumption by Evergreen
Aggressive of [Certain stated] labilities of Hartwell. (Hartwell and Evergreen
Aggressive each may also be referred to in this Prospectus/Proxy Statement as a
"Fund" and together, as the "Funds".) The Plan also calls for the distribution
of shares of Evergreen Aggressive to Hartwell shareholders in liquidation of
Hartwell as part of the Reorganization. As a result of the Reorganization, the
shareholders of Hartwell will become the owners of that number of full and
fractional Corresponding Shares of Evergreen Aggressive having an aggregate net
asset value equal to the aggregate net asset value of the shareholder's shares
of Hartwell as of the close of business immediately prior to the date that
Hartwell's assets are exchanged for shares of Evergreen Aggressive.
The Directors of Hartwell, including the Directors who are not "interested
persons," as such term is defined in the 1940 Act (the "Independent Directors"),
have concluded that the Reorganization would be in the best interests of
shareholders of Hartwell and that the interests of the shareholders of Hartwell
will not be diluted as a result of the transactions contemplated by the
Reorganization. Accordingly, the Directors have submitted the Plan for the
approval of Hartwell's shareholders.
THE BOARD OF DIRECTORS OF HARTWELL RECOMMENDS APPROVAL BY
SHAREHOLDERS OF HARTWELL OF THE PLAN EFFECTING THE REORGANIZATION.
The Trustees of Evergreen Trust on behalf of Evergreen Aggressive have
also approved the Plan, and accordingly, Evergreen Agressive's participation
in the Reorganization.
Approval of the Reorganization on the part of Hartwell will require the
affirmative vote of a majority of the shares present and entitled to vote, with
all classes voting together as a single class, at a meeting at which a quorum is
present. A majority of the outstanding shares of the Fund, represented in person
or by proxy, is required to constitute a quorum at the Meeting. See "Voting
Information Concerning the Meeting." The Reorganization is scheduled to take
place on or about July 18, 1997.
If the shareholders of Hartwell do not vote to approve the Reorganization,
the Directors of Hartwell will consider other possible courses of action in the
best interests of shareholders.
TAX CONSEQUENCES
Prior to or at the completion of the Reorganization, Hartwell will have
received an opinion of counsel that the Reorganization has been structured so
that no gain or loss will be recognized by Hartwell or its shareholders for
federal income tax purposes as a result of the receipt of shares of Evergreen
Aggressive in the Reorganization. The holding period and aggregate tax basis of
the Corresponding Shares of Evergreen Aggressive that are received by Hartwell
shareholders will be the same as the holding period and aggregate tax basis of
shares of Hartwell previously held by such shareholders, provided that shares of
Hartwell are held as capital assets. In addition, the holding period and tax
basis of the assets of Hartwell in the hands of Evergreen Aggressive as a result
of the Reorganization will be the same as in the hands of Hartwell immediately
prior to the Reorganization and no gain or loss will be recognized by Evergreen
Aggressive upon the receipt of the assets of Hartwell in exchange for shares of
Evergreen Aggressive and the assumption by Evergreen Aggressive of
[certain stated] liabilities of Hartwell.
INVESTMENT OBJECTIVES AND POLICIES OF
EVERGREEN AGGRESSIVE AND HARTWELL
The investment objective of Evergreen Aggressive 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 its investment adviser as having above-average appreciation potential. The
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.
The investment objective of Hartwell is to provide capital appreciation.
The Fund seeks to achieve its objective through a program based on substantially
full investment in equity securities of companies in a relatively early stage of
development that are principally traded in the over-the-counter ("OTC") market
(emerging growth companies). Such emerging growth companies are small to
medium-sized companies (generally under $500 million in market capitalization)
that the Fund's advisers believe have strong potential for (1) earnings growth
over time that is well above the growth rate of the economy and (2) becoming
more widely recognized as growth companies. See "Comparison of Investment
Objectives and Policies" below.
COMPARATIVE PERFORMANCE INFORMATION OF EACH FUND
Discussions of the manner of calculation of total return are contained in
the respective Prospectuses and Statements of Additional Information of the
Funds. The average annual total return of the Class A, Class B and Class C
shares of Hartwell for the one, five and ten year periods ended September 30,
1997 and for Evergreen Aggressive for the one, five and ten year periods ended
March 31, 1997 and for both Funds for the periods from inception through March
31, 1997 are set forth in the table below. 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.
AVERAGE ANNUAL TOTAL RETURN
Average Annualized Compounded Total Return
1 Year 5 Years 10 Years To
Ended Ended Ended March 31 Inception
March 31 March 31 March 31 1997 Date
1997 1997 1997 From
Inception
Evergreen Agressive
Class A shares (7.22%) 11.29% 10.21% 12.62% 4/15/83
Class B shares (8.23%) -- -- 8.55% 7/7/95
Class C shares (4.26%) -- -- 8.68% 8/3/95
Hartwell
Class A shares (5.15%) 4.92% 9.46% 7.26% 9/10/68
Class B shares (4.83%) -- -- 3.03% 8/2/93
Class C shares (1.22%) -- -- 3.81% 8/2/93
- ----------------
(1) Reflects waiver of advisory fees and reimbursements and/or waivers of
expenses. Without such reimbursements and/or waivers, the average annual total
return during the period would have been lower.
Important information about Evergreen Aggressive is also contained in
Management's Discussion of Evergreen Aggressive's Performance, attached hereto
as Exhibit B. This information also appears in the Evergreen Aggressive's most
recent Annual Report.
MANAGEMENT OF THE FUNDS
The overall management of Evergreen Aggressive and of the Hartwell is the
responsibility of, and is supervised by, their respective Board of Trustees or
Directors.
INVESTMENT ADVISERS, ADMINISTRATOR AND SUB-ADMINISTRATOR
EVERGREEN AGGRESSIVE
The Capital Management Group of First Union National Bank of North Carolina
("FUNB") serves as investment adviser to Evergreen Aggressive. The address of
FUNB is One First Union Center, 301 S. College Street, Charlotte, North Carolina
28288. FUNB is a subsidiary of First Union, the sixth largest bank holding
company in the United States. The Capital Management Group ("CMG") of FUNB and
CMG manage the Evergreen family of mutual funds with assets of approximately $19
billion as of February 28, 1997. For further information regarding CMG, FUNB and
First Union, see "Management of the Funds -- Investment Advisers" in the
Prospectus of Evergreen Aggressive.
CMG manages investments, provides various administrative services and
supervises the daily business affairs of Evergreen Aggressive subject to the
authority of the Trustees. FUNB is entitled to receive from Evergreen Aggressive
an annual fee equal to 0.60 of 1.00% of average daily net assets of Evergreen
Aggressive. From time to time CMG may, at its discretion, also reduce or waive
its fee or reimburse Evergreen Aggressive for certain of its other expenses in
order to reduce its expense ratio. CMG may reduce or cease these voluntary
waivers and reimbursements at any time.
Administrator. Evergreen Keystone Investment Services, Inc. ("EKIS") serves
as administrator to Evergreen Aggressive. As administrator, and subject to the
supervision and control of the Trustees/Directors of the Fund, EKIS provides
the Fund with facilities, equipment and personnel. For its services as
administrator, EKIS is entitled to receive a fee based on the aggregate average
daily net assets of the Fund at a rate based on the total assets of all mutual
funds advised by FUNB,and its affiliates.
HARTWELL
Keystone Investment Management Company ("Keystone") an indirect,
wholly-owned, subsidiary of FUNB serves as the investment adviser for Hartwell.
Keystone manages the investment and reinvestment of the Fund's assets,
supervises the operation of the Fund and provides all necessary office space,
facilities and equipment.
For services rendered under the Advisory Agreement, the Fund pays Keystone
a basic monthly fee at the following annual rates of the Fund's average daily
net asset value during the latest 12 months:
1% of such net assets up to and including $100,000,000;
0.90% of such net assets over $100,000,000 up to and including $200,000,000;
0.80% of such net assets over $200,000,000 up to and including $300,000,000;
0.70% of such net assets over $300,000,000 up to and including $400,000,000;
and 0.65% of such net assets over $400,000,000.
Under the Advisory Agreement, the basic management fee may be increased or
decreased by an incentive adjustment of up to 1/2 of 1% of the average daily net
asset value of the Fund during the latest 12 months. The incentive adjustment is
based on the Fund's performance relative to the Standard and Poor's Index of 500
Stocks (S&P 500).
Subadviser. The subadviser to Hartwell is J.M. Hartwell Limited Partnership
and is located at 515 Madison Avenue, New York, New York 10022, and is a
majority-owned subsidiary of JMH Management Corporation.
Under its SubInvestment Advisory Agreement with Keystone ("Subadvisory
Agreement"), J.M. Hartwell Limited Partnership provides Hartwell and Keystone
with investment research, advice, information and recommendations concerning
securities to be acquired, held or sold by Hartwell.
For its services for each calendar month, the subadviser receives from
Keystone, after calculation of the monthly fee due Keystone, 40% of Keystone's
basic monthly management fee and 60% of Keystone's incentive adjustment,
provided that the subadviser's total fee will always equal at least 25% of the
combined total fee paid by Hartwell. Hartwell has no responsibility to pay the
subadviser's fee.
PORTFOLIO MANAGEMENT
The portfolio manager for Evergreen Aggressive is Harold J. Ireland, Jr.,
who had previously served as portfolio manager of the ABT Emerging Growth Fund,
the predecessor to Evergreen Aggressive, since 1985. Mr. Ireland is a Vice
President of CMG.
DISTRIBUTION OF SHARES
Evergreen Keystone Distributor, Inc. ("EKD"), an indirect, wholly-owned
subsidiary of The BISYS Group, Inc., acts as underwriter of both Evergreen
Aggressive's and Hartwell's shares. EKD distributes each Fund's shares directly
or through broker-dealers, banks (including FUNB), or other financial
intermediaries. Evergreen Aggressive offers four classes of shares: Class A,
Class B, Class C and Class Y. Hartwell offers three classes of shares: Class A,
Class B and Class C. Each Class has separate distribution arrangements. (See
"Distribution-Related and Shareholder Servicing-Related Expenses" below.) No
Class bears the distribution expenses relating to the shares of any other Class.
In the proposed Reorganization, shareholders of Hartwell will receive the
corresponding Class of shares of Evergreen Aggressive which they currently hold
in Hartwell. The Class A, Class B and Class C shares of Evergreen Aggressive
have identical arrangements with respect to the imposition of initial sales
charges, CDSCs and distribution and service fees as the comparable Class of
shares of Hartwell. Because the Reorganization will be effected at net asset
value without the imposition of a sales charge, Evergreen Aggressive shares
acquired by shareholders of Hartwell pursuant to the proposed Reorganization
would not be subject to any initial sales charge or CDSC as a result of the
Reorganization. However, holders of Evergreen Aggressive shares acquired as a
result of the Reorganization would continue to be subject to a CDSC upon
subsequent redemptions to the same extent as if they had continued to hold their
shares of Hartwell.
The following is a summary description of charges and fees for each of the
different Classes of shares of both Evergreen Aggressive and Hartwell. More
detailed descriptions of the distribution arrangements applicable to the Classes
of shares are contained in the respective Evergreen Aggressive Prospectus and
Hartwell Prospectus and in each Fund's respective Statement of Additional
Information.
CLASS A SHARES. Class A shares are sold at net asset value plus an initial
sales charge and, as indicated below, are subject to distribution-related fees.
CLASS B SHARES. Class B shares are sold without an initial sales charge but
are subject to a CDSC, which ranges from 5% to 1%, if shares are redeemed during
the first six years after the month of purchase. In addition, Class B shares are
subject to distribution-related fees and shareholder servicing-related fees as
described below. Class B shares issued in the Reorganization will automatically
convert to Class A in accordance with the conversion schedule in effect at the
time Hartwell shares were originally purchased.
Class B shares are subject to higher distribution-related fees than the
corresponding Class A shares of each Fund on which a front-end sales charge is
imposed (until they convert to Class A shares). The higher fees mean a higher
expense ratio, so Class B shares pay correspondingly lower dividends and may
have a lower net asset value than Class A shares of the Fund.
CLASS C SHARES. Class C shares are sold without an initial sales charge but,
as indicated below, are subject to distribution and shareholder
servicing-related fees. Class C shares are subject to a 1% CDSC if such shares
are redeemed during the month of purchase and the 12-month period following the
month of purchase. No CDSC is imposed on amounts redeemed thereafter. Class C
shares incur higher distribution and/or shareholder service fees than Class A
shares but, unlike Class B shares, do not convert to any other class of shares.
The amount of the CDSCs applicable to redemptions of Class B and Class C
shares are charged as a percentage of the lesser of the then current net asset
value or original cost. The CDSC is deducted from the amount of the redemption
and is paid to the respective Fund's distributor or its predecessor, as the case
may be. Shares of each Fund acquired through dividend or distribution
reinvestment are not subject to a CDSC. For purposes of determining the schedule
of CDSCs, and the time of conversion to Class A shares, applicable to shares of
Evergreen Aggressive Growth Fund received by Hartwell shareholders in the
Reorganization, Evergreen Aggressive Growth Fund will treat such shares as
having been sold on the date the shares of Hartwell were originally purchased by
Hartwell shareholder. Additional information regarding the Classes of shares of
each Fund is included in its respective Prospectus and Statement of Additional
Information.
DISTRIBUTION-RELATED AND SHAREHOLDER SERVICING-RELATED EXPENSES. Each Fund
has adopted a Rule 12b-1 plan with respect to its Class A shares under which the
Class may pay for distribution-related expenses at an annual rate which may not
exceed .75 of 1%, of average daily net assets attributable to the Class.
Payments with respect to Class A shares of each fund are currently limited to
.25 of 1% of average daily net assets attributable to the Class, which amount
may be increased to the full plan rate for such Fund by the Trustees without
shareholder approval.
Each Fund has also adopted a Rule 12b-1 plan with respect to its Class B and
Class C shares under which the Class may pay for distribution-related and
shareholder servicing-related expenses at an annual rate which may not exceed 1%
of average daily net assets attributable to the Class.
The Class B and Class C Rule 12b-1 plans provide for the payment in respect
of "shareholder services" at an annual rate which may not exceed .25 of 1%
(making total Rule 12b-1 fees for Class B and Class C shares payable at a
maximum annual rate of 1.00%). Consistent with the requirements of Rule 12b-1
and the applicable rules of the National Association of Securities Dealers,
Inc., following the Reorganization Evergreen Aggressive may make
distribution-related and shareholder servicing-related payments with respect to
Hartwell shares sold prior to the Reorganization, including payments to
Hartwell's former underwriter.
Additional information regarding the Rule 12b-1 plans adopted by each Fund is
included in its respective Prospectus and Statement of Additional Information.
PURCHASE AND REDEMPTION PROCEDURES
Information concerning applicable sales charges, distribution-related fees
and shareholder servicing-related fees are described above. Investments in the
Funds are not insured. The minimum initial purchase requirement for each Fund is
$1,000. There is no minimum for subsequent purchases of shares of either Fund.
Each Fund provides for telephone, mail or wire redemption of shares at net asset
value as next determined after receipt of a redemption request on each day the
New York Stock Exchange ("NYSE") is open for trading. Additional information
concerning purchases and redemptions of shares, including how each Fund's net
asset value is determined, is contained in the respective Prospectus for each
Fund. Evergreen Aggressive and Hartwell each may involuntarily redeem
shareholders' accounts that have less than $1,000 of invested funds. All funds
invested in each Fund are invested in full and fractional shares. The Funds
reserve the right to reject any purchase order.
EXCHANGE PRIVILEGES
Each Fund currently has identical exchange privileges. No sales charge is
imposed on an exchange. An exchange which represents an initial investment in
another fund must amount to at least $1,000. The current exchange privileges,
and the requirements and limitations attendant thereto, are described in the
Funds' respective Prospectuses and Statements of Additional Information.
DIVIDEND POLICY
Evergreen Aggressive distributes its investment company taxable income
quarterly and net long-term capital gains at least annually. Hartwell
distributes its investment company taxable income and net long-term capital
gains at least annually. Dividends and distributions are reinvested in
additional shares of the same class of the respective Fund, or paid in cash, as
a shareholder has elected. See the respective Prospectuses of the Funds for
further information concerning dividends and distributions.
After the Reorganization, shareholders of Hartwell that have elected to
have their dividends and/or distributions reinvested will have dividends and/or
distributions received from Evergreen Aggressive reinvested in shares of
Evergreen Aggressive. Shareholders of Hartwell that have elected to receive
dividends and/or distributions in cash will receive dividends and/or
distributions from the Evergreen Aggressive in cash after the Reorganization,
although they may, after the Reorganization, elect to have such dividends and/or
distributions reinvested in additional shares of Evergreen Aggressive.
Each Fund has qualified and intends to continue to qualify to be treated as a
regulated investment company under the Internal Revenue Code of 1986, as amended
(the "Code"). While so qualified, so long as each Fund distributes all of its
investment company taxable income and any net realized gains to shareholders, it
is expected that a Fund will not be required to pay any federal income taxes on
the amounts so distributed. A 4% nondeductible excise tax will be imposed on
amounts not distributed if a Fund does not meet certain distribution
requirements by the end of each calendar year. Each Fund anticipates meeting
such distribution requirements.
RISKS
Since the investment objectives and policies of each Fund are substantially
comparable, the risks involved in investing in each Fund's shares are similar.
There is no assurance that investment performances will be positive and that the
Funds will meet their investment objectives. 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".
Investment in Small Companies - Evergreen Agressive. Evergreen Agressive may
make investments in securities of little-known, relatively small and special
situation companies. Such invesmtnes 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 Funds
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 each Fund's
shares can be expected to vary significantly. Accordingly, each Fund should not
be considered suitable for investors who are unable or unwilling to assume the
associated risks, nor should investment in the Funds be considered a balanced or
complete investment program.
REASONS FOR THE REORGANIZATION
At a regular meeting held on March 12, 1997, the Board of Directors of the
Hartwell considered and approved the Reorganization as in the best interests of
the Fund and its shareholders and determined that the interests of the existing
shareholders of Hartwell will not be diluted as a result of the transactions
contemplated by the Reorganization.
In approving the Plan, the Directors reviewed various factors about the
Funds and the proposed Reorganization. There are substantial similarities
between Evergreen Aggressive and Hartwell. Specifically, Evergreen Aggressive
and Hartwell have substantially similar investment objectives and policies, and
comparable risk profiles. See "Comparison of Investment Objectives and Policies"
below. At the same time, the Board of Directors evaluated the potential
economies of scale associated with larger mutual funds and concluded that
operational efficiencies may be achieved upon a reorganization with another
Evergreen Keystone mutual fund with a greater level of assets. As of February
28, 1997, Evergreen Agressive's assets were approximately $158 million and
Hartwell's assets were approximately $83 million.
In addition, assuming that an alternative to the Reorganization would be to
propose that Hartwell continue its existence, Hartwell would be offered through
common distribution channels with the substantially identical Evergreen
Aggressive. Hartwell would also have to bear the cost of maintaining its
separate existence. Keystone and FUNB believe that the prospect of dividing the
resources of the Evergreen Keystone mutual fund organization between two
substantially identical funds could result in Hartwell being disadvantaged due
to an inability to achieve optimum size, performance levels and the greatest
possible economies of scale. Accordingly, for the reasons noted above and
recognizing that there can be no assurance that any economies of scale or other
benefits will be realized, both Keystone and FUNB believe that the proposed
Reorganization would be in the best interest of each Fund and its shareholders.
The Board of Directors of Hartwell met and considered the recommendation of
Keystone and FUNB, and, in addition, considered among other things, (i) the
terms and conditions of the Reorganization; (ii) whether the Reorganization
would result in the dilution of shareholder interests; (iii) expense ratios,
fees and expenses of Hartwell and Evergreen Aggressive; (iv) the comparative
performance records of each of the Funds; (v) compatibility of their investment
objectives and policies; (vi) service features available to shareholders in the
respective funds; (vii) the investment experience, expertise and resources of
FUNB; (viii) the fact that FUNB will bear the expenses incurred by Hartwell in
connection with the Reorganization; (ix) the fact that the Evergreen Aggressive
will assume [certain stated] liabilities of the Hartwell; and (x) the
expected federal income tax consequences of the Reorganization.
The Directors also considered the benefits to be derived by shareholders of
Hartwell from the sale of its assets to Evergreen Aggressive. In this regard,
the Directors considered the potential benefits of being associated with a
larger entity and the economies of scale that could be realized by the
participation by shareholders of Hartwell in the combined fund. In addition, the
Directors considered that there are alternatives available to shareholders of
Hartwell, including the ability to redeem their shares, as well as the option to
vote against the Reorganization.
During their consideration of the Reorganization, the Directors met with
counsel to the Fund and the Independent Directors regarding the legal issues
involved. The Trustees of Evergreen Aggressive also concluded at a regular
meeting on March 11, 1997 that the proposed Reorganization would be in the best
interests of shareholders of Evergreen Aggressive and that the interests of the
shareholders of Evergreen Aggressive will not be diluted as a result of the
transactions contemplated by the Reorganization.
<PAGE>
THE DIRECTORS OF HARTWELL RECOMMEND THAT THE SHAREHOLDERS OF HARTWELL APPROVE
THE PROPOSED REORGANIZATION.
AGREEMENT AND PLAN OF REORGANIZATION
The following summary is qualified in its entirety by reference to the Plan
(Exhibit A hereto).
The Plan provides that Evergreen Aggressive will acquire all of the assets
of Hartwell in exchange for shares of Evergreen Aggressive and the assumption by
Evergreen Aggressive of [certain stated] liabilities of Hartwell on or about
July 18, 1997 or such other date as may be agreed upon by the parties (the
"Closing Date"). Prior to the Closing Date, Hartwell will endeavor to discharge
all of its known liabilities and obligations. Evergreen Aggressive will not
assume any liabilities or obligations of Hartwell other than those reflected in
an unaudited statement of assets and liabilities of Hartwell prepared as of the
close of regular trading on the NYSE, currently 4:00 p.m. Eastern time, on the
business day immediately prior to the Closing Date and certain indemnification
obligations. The number of full and fractional shares of each Class of Evergreen
Aggressive to be received by the shareholders of Hartwell will be determined by
dividing the value of the assets of Hartwell to be acquired by the ratio of the
net asset value per share of each respective Class of Evergreen Aggressive and
each Class of Hartwell, computed as of the close of regular trading on the NYSE
on the business day immediately prior to the Closing Date. The net asset value
per share of each Class will be determined by dividing assets, less liabilities,
in each case attributable to the respective Class, by the total number of
outstanding shares.
State Street Bank and Trust Company, the custodian for both Funds, will
compute the value of the Funds' respective portfolio securities. The method of
valuation employed will be consistent with the procedures set forth in the
Prospectus and Statement of Additional Information of Evergreen Aggressive, Rule
22c-1 under the 1940 Act, and with the interpretations of such rule by the SEC's
Division of Investment Management.
At or prior to the Closing Date, Hartwell shall have declared a dividend or
dividends and distribution or distributions which, together with all previous
dividends and distributions, shall have the effect of distributing to Hartwell's
shareholders (in shares of the Hartwell, or in cash, as the shareholder has
previously elected) all of Hartwell'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 carry forward).
As soon after the Closing Date as conveniently practicable, Hartwell will
liquidate and distribute pro rata to shareholders of record as of the close of
business on the Closing Date the full and fractional Corresponding Shares of
Evergreen Aggressive received by Hartwell. Such liquidation and distribution
will be accomplished by the establishment of accounts in the names of Hartwell's
shareholders on the share records of Evergreen Aggressive's transfer agent. Each
account will represent the respective pro rata number of full and fractional
Corresponding Shares of Evergreen Aggressive due to Hartwell's shareholders. All
issued and outstanding shares of the Hartwell, including those represented by
certificates, will be canceled. Evergreen Aggressive does not issue share
certificates to shareholders. The shares of Evergreen Aggressive to be issued
will have no preemptive or conversion rights. After such distribution and the
winding up of its affairs, Hartwell will be terminated. In connection with such
termination, Hartwell will file with the SEC an application for deregistration
as a registered investment company.
The consummation of the Reorganization is subject to the conditions set
forth in the Plan, including approval by Hartwell's shareholders, accuracy of
various representations and warranties and receipt of opinions of counsel,
including opinions with respect to those matters referred to in "Federal Income
Tax Consequences" below. Notwithstanding approval of Hartwell's shareholders,
the Plan may be terminated (a) by the mutual agreement of Hartwell and Evergreen
Aggressive; or (b) at or prior to the Closing Date by either party (i) because
of a breach by the other party of any representation, warranty, or agreement
contained therein to be performed at or prior to the Closing Date if not cured
within 30 days, or (ii) because a condition to the obligation of the terminating
party has not been met and it reasonably appears that it cannot be met.
The expenses of Hartwell in connection with the Reorganization (including
the cost of any proxy soliciting agents) and the expenses of Evergreen
Aggressive will be borne by FUNB whether or not the Reorganization is
consummated.
If the Reorganization is not approved by shareholders of Hartwell, the
Board of Directors of Hartwell will consider other possible courses of action in
the best interests of shareholders.
FEDERAL INCOME TAX CONSEQUENCES
The Reorganization is intended to qualify for federal income tax purposes as
a tax-free reorganization under section 368(a) of the Code. As a condition to
the closing of the Reorganization, Hartwell will receive an opinion of counsel
to the effect that, on the basis of the existing provisions of the Code, U.S.
Treasury regulations issued thereunder, current administrative rules,
pronouncements and court decisions, for federal income tax purposes, upon
consummation of the Reorganization:
(1) The transfer of all of the assets of Hartwell solely in exchange for
shares of Evergreen Aggressive and the assumption by Evergreen Aggressive of
certain stated liabilities, followed by the distribution of Evergreen
Aggressive's shares by Hartwell in dissolution and liquidation of Hartwell, will
constitute a "reorganization" within the meaning of section 368(a)(1)(C) of the
Code, and Evergreen Aggressive and Hartwell will each be a "party to a
reorganization" within the meaning of section 368(b) of the Code;
(2) No gain or loss will be recognized by Hartwell on the transfer of all
of its assets to Evergreen Aggressive solely in exchange for Evergreen
Aggressive's shares and the assumption by the Evergreen Aggressive of certain
stated liabilities of Hartwell or upon the distribution of Evergreen
Aggressive's shares to Hartwell's shareholders in exchange for their shares of
the Hartwell;
(3) The tax basis of the assets transferred will be the same to the
Evergreen Aggressive as the tax basis of such assets to Hartwell immediately
prior to the Reorganization, and the holding period of such assets in the hands
of Evergreen Aggressive will include the period during which the assets were
held by Hartwell;
(4) No gain or loss will be recognized by Evergreen Aggressive upon the
receipt of the assets from Hartwell solely in exchange for the shares of
Evergreen Aggressive and the assumption by Evergreen Aggressive of
certain stated liabilities of Hartwell;
(5) No gain or loss will be recognized by Hartwell's shareholders upon the
issuance of the shares of Evergreen Aggressive to them, provided they receive
solely such shares (including fractional shares) in exchange for their shares of
Hartwell; and
(6) The aggregate tax basis of the shares of Evergreen Aggressive, including
any fractional shares, received by each of the shareholders of Hartwell pursuant
to the Reorganization will be the same as the aggregate tax basis of the shares
of Hartwell held by such shareholder immediately prior to the Reorganization,
and the holding period of the shares of Evergreen Aggressive, including
fractional shares, received by each such shareholder will include the period
during which the shares of Hartwell exchanged therefor were held by such
shareholder (provided that the shares of Hartwell 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, each Hartwell shareholder would
recognize a taxable gain or loss equal to the difference between his or her tax
basis in his or her Hartwell shares and the fair market value of Evergreen
Aggressive shares he or she received. Shareholders of Hartwell should consult
their tax advisers regarding the effect, if any, of the proposed Reorganization
in light of their individual circumstances. Since the foregoing discussion
relates only to the federal income tax consequences of the Reorganization,
shareholders of Hartwell should also consult their tax advisers as to state and
local tax consequences, if any, of the Reorganization.
It is not anticipated that the securities of the combined portfolio will be
sold in significant amounts in order to comply with the policies and investment
practices of Evergreen Aggressive.
PRO FORMA CAPITALIZATION
The following table sets forth the capitalization of Evergreen Aggressive
and Hartwell as of February 28, 1997 and on a pro forma basis as of that date,
giving effect to the proposed acquisition of assets at net asset value. The pro
forma data reflects an exchange ratio of approximately 1.24, 1.20, and 1.22
Class A, Class B and Class C shares, respectively, of Evergreen Aggressive
issued for each Class A, Class B and Class C share, respectively, of Hartwell.
CAPITALIZATION OF EVERGREEN AGGRESSIVE AND HARTWELL
Evergreen Combined After
Aggressive Hartwell Reorganization
----------------- ------------- --------------
Net Assets (in 000's)
Class A $89,417 $74,867 $164,284
Class B $27,949 $ 6,188 $ 34,137
Class C $ 1,708 $ 1,994 $ 3,702
Class Y $39,106 -- $ 39,106
Net Asset Value Per Share
Class A $19.89 $24.66 $19.89
Class B $19.68 $23.73 $19.68
Class C $19.65 $23.88 $19.65
Class Y $19.94 - $19.94
Shares Outstanding
Class A 4,495,366 3,035,812 8,259,434
Class B 1,420,454 260,748 1,734,864
Class C 86,924 83,494 188,395
Class Y 1,960,833 -- 1,960,833
The table set forth above should not be relied on to reflect the number of
shares to be received by Hartwell shareholders in the Reorganization; the actual
number of shares to be received will depend upon the net asset value and number
of shares outstanding of each Fund at the time of the Reorganization.
SHAREHOLDER INFORMATION
As of May 12, 1997 (the "Record Date"), there were the following number of
each Class of shares of beneficial interest of Hartwell and Evergreen Aggressive
outstanding:
Class of Shares Evergreen Hartwell
Agressive
- -------------------- --------------------- ------------------------
Class A
Class B
Class C
Class Y
All Classes
As of the Record Date, the officers and Directors of Hartwell beneficially
owned as a group less than 1% of the outstanding shares of the Hartwell. To
Hartwell's knowledge, the following persons owned beneficially or of record more
than 5% of Hartwell's total outstanding shares as of the Record Date:
[ insert table ]
As of the Record Date, the officers and Trustees of Evergreen Aggressive
beneficially owned as a group less than 1% of the outstanding shares of
Evergreen Aggressive. To Evergreen Aggressive's knowledge, the following persons
owned beneficially or of record more than 5% of Evergreen Aggressive's total
outstanding shares as of the Record Date:
Percentage of
Number Percentage Total Shares
Name and Address Class of Shares of Class Outstanding
Charles Schwab & Co. Inc. A
101 Montgomery Street
San Francisco, CA 94104-4122
Charles Schwab & Co. Inc. Y
101 Montgomery Street
San Francisco, CA 94104-4122
First Union National Bank/EB Y
Reinvest Account
Attn: Trust Operations Fund Group
401 S. Tryon Street
3rd Floor, CMG 1151
Charlotte, NC 28202-1911
Mac & Co. Y
c/o Lieber & Co.
A/C 195-6432
c/o Mellon Bank NA
Mutual Funds
P.O.Box 320
Pittsburgh, PA 15230-0320
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
The following discussion compares the investment objectives, policies and
restrictions of Hartwell and Evergreen Aggressive. This discussion is based upon
and qualified in its entirety by the respective investment objectives, policies
and restrictions stated in the respective Prospectuses and Statements of
Additional Information of the Funds. The Investment objectives and policies and
restrictions of Evergreen Aggressive can be found in the Prospectus of Evergreen
Agressive under the caption "Investment Objectives and Policies." Evergreen
Aggressive's Prospectus also offers additional funds advised by FUNB affiliates.
These additional funds are not involved in the Reorganization and their
investment objectives, policies and restrictions are not disclosed in this
Prospectus/Proxy Statement and their shares are not offered hereby. The
investment objectives, policies and restrictions of Hartwell Prospectus of
Hartwell under the caption "Investment Objectives and Policies."
INVESTMENT OBJECTIVE. The investment objective of both Funds' 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. Under normal circumstances each Fund intends to invest at least 65%
of its net assets in common stocks and securities convertible into common
stocks. Under favorable conditions Hartwell's investment in such securities may
exceed 90% of its net assets. 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.
Hartwell's objective is not fundamental and may be changed without the vote
of a majority of the Fund's outstanding shares (as defined in the Investment
Company Act of 1940 ("1940 Act"). Hartwell seeks to achieve its objective
through a program based on substantially full investment in equity securities of
companies in a relatively early stage of development that are principally traded
in the over-the-counter ("OTC") market (emerging growth companies). Such
emerging growth companies are small to medium-sized companies (generally under
$500 million in market capitalization) that the Fund's adviser and sub- advisor
believe have strong potential for (1) earnings growth over time that is well
above the growth rate of the economy and (2) becoming more widely recognized as
growth companies.
The investment objective of Evergreen Aggressive is fundamental and may not
be changed without the vote of a majority of the Fund's outstanding shares. The
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.
While it is anticipated that equity securities will constitute all or most
of the investment portfolio of each Fund, the Funds may also invest in
convertible preferred stocks and debt securities when it appears desirable in
light of the Fund's objective.
Up to 10% of the value of Hartwell's net assets may be invested in
securities of companies with an operating history of less than three years
(unseasoned companies). Evergreen Agressive has a similar policy, but permits up
to 15% of its assets to be so invested.
Hartwell may also invest in foreign securities and American Depository
Receipts whose underlying securities are issued by issuers located in developed
countries as well as emerging markets countries. Evergreen Agressive does not
have such a policy.
When, in the judgment of each Fund's adviser, a defensive or conservative
posture is appropriate, each Fund may hold a portion of its assets in short-term
U.S. Government obligations, cash or cash equivalents.
Each Fund may invest in restricted securities, including securities
eligible for resale pursuant to Rule 144A under the Securities Act of 1933 (the
"1933 Act"). The Trustees or Directors of each Fund have adopted guidelines and
procedures pursuant to which the liquidity of the Fund's Rule 144A securities is
determined. Evergreen Agressive has a policy of limiting investments in Rule
144A securities to 15% of net assets, while Hartwell has no stated limitation.
Each Fund may enter into repurchase agreements for the purpose of investing
cash balances held by the Fund.
The characteristics of each investment policy and the associated risks are
described in the Prospectus and Statement of Additional Information of each
Fund. Both Evergreen Aggressive and Hartwell have other investment policies and
restrictions which are also set forth in the Prospectus and Statement of
Additional Information of each Fund.
COMPARATIVE INFORMATION ON SHAREHOLDERS' RIGHTS
FORM OF ORGANIZATION
Hartwell and Evergreen Trust are open-end management investment companies
registered with the SEC under the 1940 Act, which continuously offer shares to
the public. Evergreen Trust is organized as a Massachusetts business trust and
is governed by a Declaration of Trust, By-Laws and Board of Trustees. Evergreen
Trust is also governed by applicable Massachusetts and Federal law. Evergreen
Aggressive is a series of Evergreen Trust.
Hartwell was incorporated in New York on April 8, 1968 and began operations
on September 10, 1968. Hartwell is governed by a Certificate of Incorporation
and By-Laws and Board of Directors. Hartwell is also governed by applicable New
York and Federal law.
CAPITALIZATION
The beneficial interests in Evergreen Aggressive are represented by an
unlimited number of transferable shares of beneficial interest with a $.001 par
value per share. The beneficial interests in Hartwell are represented by
250,000,000 shares of Common Stock consisting of: 30,000,000 shares of Class A,
par value One Dollar ($1.00) per share; 30,000,000 shares of Class B, par value
One Dollar ($1.00) per share; 30,000,000 shares of Class C, par value One Dollar
($1.00) per share; 30,000,000 shares of Class E, par value One Dollar
($1.00) per share, 100,000, 000 Class D, par value are dollar ($1.00) per share
and 30,000,000 Class F, par value one dollar ($1.00) per share.
The Declaration of Trust under which Evergreen Aggressive has been
established permits the Trustees to allocate shares into an unlimited number of
series, and classes thereof, with rights determined by the Trustees, all without
shareholder approval. Fractional shares may be issued.
Each Fund's shares have equal voting rights with respect to matters
affecting shareholders of all classes of each Fund, and in the case of
Evergreen Aggressive, each series of the Evergreen Trust, and represent equal
proportionate interests in the assets belonging to the Funds. Shareholders of
each Fund are entitled to receive dividends and other amounts as determined by
Hartwell's Directors or Evergreen Trust's Trustees. Shareholders of each Fund
vote separately, by class, as to matters, such as approval or amendments of Rule
12b-1 distribution plans that affect only their particular class and, in the
case of Evergreen Aggressive, which is a series of Evergreen Trust, by series as
to matters, such as approval or amendments of investment advisory agreements or
proposed reorganizations, that affect only their particular series.
SHAREHOLDER LIABILITY
Under Massachusetts law, shareholders of a business trust could, under
certain circumstances, be held personally liable for the obligations of the
business trust. However, the Declaration of Trust under which Evergreen
Aggressive is established disclaim shareholder liability for acts or obligations
of the series and require that notice of such disclaimer be given in each
agreement, obligation or instrument entered into or executed by the Fund or the
Trustees. The Declaration of Trust of the Evergreen Trust provides for
indemnification out of the series' property for all losses and expenses of any
shareholder held personally liable for the obligations of the series. Thus, the
risk of a shareholder incurring financial loss on account of shareholder
liability is considered remote since it is limited to circumstances in which a
disclaimer is inoperative and the series or the trust itself would be unable to
meet its obligations. A substantial number of mutual funds in the United States
are organized as Massachusetts business trusts. A stockholder in a corporation
suchg as Hartwell does not have this potential liability.
SHAREHOLDER MEETINGS AND VOTING RIGHTs
Evergreen Trust, on behalf of the Evergreen Aggressive or any of its other
series, is not required to hold annual meetings of shareholders. However, a
meeting of shareholders for the purpose of voting upon the question of removal
of a Trustee must be called when requested in writing by the holders of at least
10% of the outstanding shares. In addition, each is required to call a meeting
of shareholders for the purpose of electing Trustees if, at any time, less than
a majority of the Trustees then holding office were elected by shareholders.
Evergreen Trust currently does not intend to hold regular shareholder meetings.
Evergreen Trust does not permit cumulative voting. A majority of shares
outstanding and entitled to vote on a matter constitutes a quorum for
consideration of such matter. In either case, a majority of the shares voting is
sufficient to act on a matter (unless otherwise specifically required by the
applicable governing documents or other law, including the 1940 Act).
Under New York Law Hartwell is required to hold annual meetings of
shareholders.
LIQUIDATION OR DISSOLUTION
In the event of the liquidation of either Fund the shareholders are
entitled to receive, when, and as declared by the Trustees, the excess of the
assets belonging to such Fund or attributable to the class over the liabilities
belonging to the Fund or attributable to the class. In either case, the assets
so distributable to shareholders of the Fund will be distributed among the
shareholders in proportion to the number of shares of the Fund held by them and
recorded on the books of the Fund.
LIABILITY AND INDEMNIFICATION OF TRUSTEES OR DIRECTORS
The Declaration of Trust of the Evergreen Trust provides that no Trustee or
officer shall be liable to the Fund or to any shareholder, Trustee, officer,
employee or agent of the Fund for any action or failure to act except for his or
her own bad faith, willful misfeasance, gross negligence or reckless disregard
of his or her duties. The By-laws of Evergreen Trust provide that present and
former Trustees or officers are generally entitled to indemnification against
liabilities and expenses with respect to claims related to their position with
the Fund unless, in the case of any liability to the Fund or its shareholders,
it shall have been determined that such Trustee or officer is liable by reason
of his or her willful misfeasance, bad faith, gross negligence or reckless
disregard of his or her duties involved in the conduct of his or her office.
The Certificate of Incorporation of Hartwell provides that a Director will
not be liable for errors of judgment or mistake of fact or law, but nothing in
the Certificate of Incorporation protects a Director against any liability to
which he would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of his duties involved in the conduct of
his office. The Certificate of Incorporation provides that a Director or officer
is entitled to indemnification against liabilities and expenses with respect to
claims related to his or her position with Hartwell, 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 or her duties,
or not to have acted in good faith in the reasonable belief that his or her
action was in the best interest of Hartwell, or, 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 or her duties.
RIGHTS OF INSPECTION
Shareholders of Evergreen Aggressive 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.
Shareholders of Hartwell have rights under New York law to inspect the governing
documents, records of meetings of shareholders, shareholder lists, share
transfer records, accounts and books of the Fund. The purpose of inspection for
Evergreen Aggressive and Hartwell must be for interests of shareholders relative
to the affairs of the Fund.
<PAGE>
The foregoing is only a summary of certain characteristics of the
operations of the Declaration of Trust of Evergreen Trust, the Certificate of
Incorporation of Hartwell, the By-Laws of each and New York and Massachusetts
law and is not a complete description of those documents or law. Shareholders
should refer to the provisions of such respective Declaration of Trust,
Certificate of Incorporation, By-Laws, New York and Massachusetts law directly
for more complete information.
ADDITIONAL INFORMATION
Evergreen Aggressive. Information concerning the operation and management
of the Evergreen Aggressive is incorporated herein by reference from the
Prospectus dated December 1, 1996, a copy of which is enclosed, and Statement
of Additional Information dated December 1, 1996. A copy of such Statement of
Additional Information is available upon request and without charge by writing
to the Evergreen Aggressive, at the address listed on the cover page of this
Prospectus/Proxy Statement or by calling toll-free 1-800-807-2940.
Hartwell. Information about Hartwell is included in its current Prospectus
dated December 10, 1996, as supplemented January 1, 1997, and in the Statement
of Additional Information of the same date that have been filed with the SEC,
all of which are incorporated herein by reference. Copies of the Prospectus,
Statement of Additional Information, and the Fund's Annual Report dated
September 30, 1996, are available upon request and without charge by writing to
the address listed on the cover page of this Prospectus/Proxy Statement or by
calling toll-free 1-800-343-2898.
Evergreen Trust and Hartwell are each subject to the informational
requirements of the Securities Exchange Act of 1934 and the 1940 Act, and in
accordance therewith file reports and other information including proxy
material, and charter documents with the SEC. These items can be inspected and
copies obtained at the Public Reference Facilities maintained by the SEC at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's Regional Offices
located at Northwest Atrium Center, 500 West Madison Street, Chicago, Illinois
60661-2511 and Seven World Trade Center, Suite 1300, New York, New York 10048.
VOTING INFORMATION CONCERNING THE MEETING
This Prospectus/Proxy Statement is furnished in connection with a
solicitation of proxies by the Board of Directors of Hartwell to be used at the
Special Meeting of Shareholders to be held at 3:00 p.m., June 30, 1997, at the
offices of Hartwell, 200 Berkeley Street, Boston, Massachusetts 02116 and at any
adjournments thereof. This Prospectus/Proxy Statement, along with a Notice of
the Meeting and a proxy card, is first being mailed to shareholders on or about
May 18, 1997. Only shareholders of record as of the close of business on the
Record Date will be entitled to notice of, and to vote at, the Meeting or any
adjournment thereof. The holders of a majority of the 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, but will have no effect on the outcome of the vote to
approve the Plan. A proxy may be revoked at any time on or before the Meeting by
written notice to the Secretary of the Keystone America Hartwell Emerging Growth
Fund Inc., 200 Berkeley Street, Boston, Massachusetts 02116. 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 a majority of the
shares present and entitled to vote, with all classes voting together as a
single class. Each full share outstanding is entitled to one vote and each
fractional share outstanding is entitled to a proportionate share of one vote.
The presence of the holders of one-third of the shares entitled to vote at the
meeting will constitute a quorum for the purpose of acting on approval of the
Plan.
Proxy solicitations will be made primarily by mail, but proxy solicitations
may also be made by telephone, telegraph or personal solicitations conducted by
officers and employees of FUNB or Keystone, their affiliates or other
representatives of Hartwell (who will not be paid for their solicitation
activities). Corporate Investors Communications, Inc. ("CIC") has been engaged
by Hartwell to assist in soliciting proxies, and may contact certain
shareholders of Hartwell over the telephone. Shareholders that are contacted by
CIC may be asked to cast their vote by telephonic proxy. Such proxies will be
recorded in accordance with the procedures set forth below. Hartwell believes
these procedures are reasonably designed to ensure that the identity of the
shareholder casting the vote is accurately determined and that the voting
instructions of the shareholder are accurately reflected. Hartwell has received
an opinion of Sullivan & Worcester LLP that addresses the validity, under the
applicable law of the State of New York of a proxy given orally. The opinion
concludes that a New York court would find that there is no New York law public
policy against the acceptance of proxies signed by an orally-authorized agent.
In all cases where a telephonic proxy is solicited, the CIC representative
will ask you for your full name, address, social security or employer
identification number, title (if you are authorized to act on behalf of an
entity, such as a corporation), and number of shares owned. If the information
solicited agrees with the information provided to CIC by the transfer agent to
Hartwell, then the CIC representative will explain the process, read the
proposals listed on the proxy card and ask for your instructions on each
proposal. The CIC representative, although he or she will answer questions about
the process, will not recommend to the shareholder how he or she should vote,
other than to read any recommendations set forth in the proxy statement. Within
72 hours, CIC will send you a letter or mailgram to confirm your vote and ask
you to call immediately if your instructions are not correctly reflected in the
confirmation.
It is expected that the cost of retaining CIC to assist in the proxy
solicitation process will not exceed $[________], which cost will be borne by
FUNB.
If you wish to participate in the Meeting, but do not wish to give your proxy
by telephone, you may still submit the proxy card included with this
Prospectus/Proxy Statement or attend in person. Any proxy given by you, whether
in writing or by telephone, is revocable.
In the event that sufficient votes to approve the Reorganization are not
received by June 30, 1997, 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.
<PAGE>
Any such adjournment will require an affirmative vote by the holders of a
majority of the shares present in person or by proxy and entitled to vote at the
Meeting. The persons named as proxies will vote upon such adjournment after
consideration of all circumstances which may bear upon a decision to adjourn the
Meeting.
A shareholder who objects to the proposed Reorganization will not be
entitled under either New York law or the Certificate of Incorporation of
Hartwell 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 shares of Evergreen Aggressive which they receive in the
transaction at their then-current net asset value subject to any applicable
CDSC. Shares of Hartwell may be redeemed at any time prior to the consummation
of the Reorganization. Hartwell shareholders may wish to consult their tax
advisers as to any differing consequences of redeeming Hartwell shares prior to
the Reorganization or exchanging such shares in the Reorganization.
If the Reorganization is not approved, shareholders wishing to submit
proposals for consideration for inclusion in a proxy statement for a subsequent
shareholder meeting should send their written proposals to the Secretary of
Hartwell at the address set forth on the cover of this Prospectus/Proxy
Statement such that they will be received by Hartwell in a reasonable period of
time prior to any such meeting.
The votes of the shareholders of the Evergreen Aggressive are not being
solicited by this Prospectus/Proxy Statement and are not required to carry out
the Reorganization.
NOTICE TO BANKS, BROKER-DEALERS AND VOTING TRUSTEES AND THEIR NOMINEES.
Please advise Hartwell whether other persons are beneficial owners of shares for
which proxies are being solicited and, if so, the number of copies of this
Prospectus/Proxy Statement needed to supply copies to the beneficial owners of
the respective shares.
FINANCIAL STATEMENTS AND EXPERTS
The financial statements of Hartwell as of September 30, 1996 and the
financial highlights for the periods indicated therein have been incorporated by
reference into this Prospectus/Proxy Statement in reliance upon the report of
KPMG Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
The financial statements of the Evergreen Aggressive as of September 30,
1996 and the financial highlights for the periods indicated therein have been
incorporated by reference into or included in this Prospectus/Proxy Statement in
reliance on the report of Price Waterhouse LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in auditing and accounting.
LEGAL MATTERS
Certain legal matters concerning the issuance of shares of the Evergreen
Aggressive will be passed upon by Sullivan & Worcester LLP, Washington, D.C.
OTHER BUSINESS
The Directors of Hartwell do not intend to present any other business at
the Meeting. If, however, any other matters are properly brought before the
Meeting, the persons named in the accompanying form of proxy will vote thereon
in accordance with their judgment.
THE BOARD OF DIRECTORS OF HARTWELL, INCLUDING THE INDEPENDENT TRUSTEES,
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 16, 1997
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this day of , 1997, by and between Evergreen Trust, a Massachusetts business
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 Keystone America Hartwell Emerging Growth
Fund, Inc. a New York corporation, with its principal place of business at 200
Berkeley Street, Boston, Massachusetts 02116 (the "Selling Fund").
This Agreement is intended to be, and is adopted as a plan of reorganization and
liquidation within the meaning of Section 368 (a)(1)(C) of the United States
Internal Revenue Code of 1986, as amended (the "Code"). The reorganization (the
"Reorganization") will consist of (i) the transfer of all of the assets of the
Selling Fund in exchange solely for Class A, Class B and Class C shares of
beneficial interest, $.001 par value per share, of the Acquiring Fund (the
"Acquiring Fund Shares"); (ii) the assumption by the Acquiring Fund of [certain
stated] liabilities of the Selling Fund; (iii) 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 a registered investment
company and a separate investment series of an open-end, registered investment
company of the management type, respectively, and the Selling Fund owns
securities that generally are assets of the character in which the Acquiring
Fund is permitted to invest;
WHEREAS, both the acquiring Fund and the Sell are authorized to issue their
shares of beneficial interest and shares of common stock, respectively;
WHEREAS, the Trustees of the Evergreen Trust have determined that the exchange
of all of the assets of the Selling Fund for Acquiring Fund Shares and the
assumption of [certain stated] liabilities of the Selling Fund by the Acquiring
Fund on the terms and conditions hereinafter set forth are in the best interests
of the Acquiring Fund's shareholders 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 Directors of Keystone America Hartwell Emerging Growth Fund,
Inc. have determined that the Selling Fund should exchange all of its assets and
[certain stated] liabilities for Acquiring Fund Shares and that the interests of
the existing shareholders of the Selling Fund will not be diluted as a result of
the transactions contemplated herein;
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
ARTICLE I TRANSFER OF ASSETS OF THE SELLING FUND IN EXCHANGE FOR
THE ACQUIRING FUND SHARES AND ASSUMPTION OF SELLING FUND
LIABILITIES AND LIQUIDATION OF THE SELLING FUND
1.1 THE EXCHANGE. Subject to the terms and conditions herein set forth and on
the basis of the representations and warranties contained herein, the Selling
Fund agrees to transfer all of the Selling Fund's assets as set forth in
paragraph 1.2 to the Acquiring Fund. The Acquiring Fund agrees in exchange
therefor (i) to deliver to the Selling Fund the number of Acquiring Fund Shares,
including fractional Acquiring Fund Shares, determined by multiplying the shares
outstanding of each class of the Selling Fund by the ratio computed by dividing
the net asset value per share of each such class of the Selling Fund by the net
asset value per share of the corresponding class of Acquiring Fund Shares
computed in the manner and as of the time and date set forth in paragraph 2.2;
and (ii) to assume [certain stated] liabilities of the Selling Fund, as set
forth in paragraph 1.3. Such transactions shall take place at the closing
provided for in paragraph 3.1 (the "Closing Date").
1.2 ASSETS TO BE ACQUIRED. The assets of the Selling Fund to be acquired by the
Acquiring Fund shall consist of all property, including, without limitation, all
cash, securities, commodities, and futures interests and dividends or interest
receivables, that is owned by the Selling Fund and any deferred or prepaid
expenses shown as an asset on the books of the Selling Fund on the Closing Date.
The Selling Fund has provided the Acquiring Fund with its most recent audited
financial statements, which contain a list of all of Selling Fund's assets as of
the date thereof. The Selling Fund hereby represents that as of the date of the
execution of this Agreement there have been no changes in its financial position
as reflected in said financial statements other than those occurring in the
ordinary course of its 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
that do not conform to the Acquiring Fund's investment objectives, policies, and
restrictions. In the event that the Selling Fund holds any investments that 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 on behalfof 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, other than the
obligation to idemnify the Directors and officers of the Selling Fun to the
extent provided in the Selling Fund's Certificate of Incorporation dated [April
8, 1968], as amended and By-Laws all of which shall remain the obligation of the
Selling Fund.
In addition Acquiring Fund hereby agrees that, upon completion of the
Reorganization, the calculation of the maximum amount permitted to be charged to
the Acquiring Fund under the National Association of Securities Dealers, Inc.
Conduct Rule 2830, which limit the aggregate of all front-end, deferred and
asset-based sales charges imposed with respect to a class of shares by a mutual
fund that also charges a service fee to 6.25% of cumulative gross sales of
shares of all classes of the fund, plus interest on the unpaid amount at the
prime rate plus 1% per annum ("Aggregate NASD Cap"), the Acquiring Fund will add
to its existing Aggregate NASD Cap the Aggregate NASD Cap of the Selling Fund
existing immediately prior to the Reorganization.
1.4 LIQUIDATION AND DISTRIBUTION. On or soon after the Closing Date as is
conveniently practicable (the "Liquidation Date"), (a) the Selling Fund will
liquidate and distribute pro rata to the Selling Fund's shareholders of record,
determined as of the close of business on the Valuation Date (the "Selling Fund
Shareholders"), the Acquiring Fund Shares received by the Selling Fund pursuant
to paragraph 1.1; and (b) the Selling Fund will thereupon proceed to dissolve as
set forth in paragraph 1.8 below. Such liquidation and distribution will be
accomplished by the transfer of the Acquiring Fund Shares then credited to the
account of the Selling Fund on the books of the Acquiring Fund to open accounts
on the share records of the Acquiring Fund in the names of the Selling Fund
Shareholders and representing the respective pro rata number of the Acquiring
Fund Shares due such shareholders. All issued and outstanding shares of the
Selling Fund will simultaneously be cancelled on the books of the Selling Fund.
The Acquiring Fund shall not issue certificates representing the Acquiring Fund
Shares in connection with such exchange.
1.5 OWNERSHIP OF SHARES. Ownership of Acquiring Fund Shares will be shown on the
books of the Acquiring Fund's transfer agent. Shares of the Acquiring Fund will
be issued in the manner described in the combined Prospectus and Proxy Statement
on Form N-14 to be distributed to shareholders of the Selling Fund as described
in paragraph 5.7.
1.6 TRANSFER TAXES. Any transfer taxes payable upon issuance of the Acquiring
Fund Shares in a name other than the registered holder of the Selling Fund
shares on the books of the Selling Fund as of that time shall, as a condition of
such issuance and transfer, be paid by the person to whom such Acquiring Fund
Shares are to be issued and transferred.
1.7 REPORTING RESPONSIBILITY. Any reporting responsibility of the Selling Fund
is and shall remain the responsibility of the Selling Fund up to and including
the Closing Date and such later date on which the Selling Fund is terminated.
<PAGE>
1.8 TERMINATION. The Selling Fund shall be terminated promptly following the
Closing Date and the making of all distributions pursuant to paragraph 1.4.
ARTICLE II
VALUATION
2.1 VALUATION OF ASSETS. The value of the Selling Fund's assets to be acquired
by the Acquiring Fund hereunder shall be the value of such assets computed as of
the close of business on the New York Stock Exchange on the business day next
preceding the Closing Date (such time and date being hereinafter called the
"Valuation Date"), using the valuation procedures set forth in the Evergreen
Trust's Declaration of Trust and the Acquiring Fund's then 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 per share of the Acquiring Fund
Shares shall be the net asset value per share computed as of the close of
business on the New York Stock Exchange on the Valuation Date, using the
valuation procedures set forth in the Evergreen Trust's Declaration of Trust and
the Acquiring Fund's then current prospectus and statement of additional
information.
2.3 SHARES TO BE ISSUED. The number of the Acquiring Fund Shares of each class
to be issued (including fractional shares, if any) in exchange for the Selling
Fund's assets shall be determined by multiplying the shares outstanding of each
class of the Selling Fund by the ratio computed by dividing the net asset value
per share of the Selling Fund attributable to each of its classes by the net
asset value per share of the respective classes of the Acquiring Fund determined
in accordance with paragraph 2.2.
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 (the "Closing") shall take place on or such other
date as the parties may agree to in writing (the "Closing Date"). All acts
taking place at the Closing shall be deemed to take place simultaneously
immediately prior to the opening of business on the Closing Date unless
otherwise provided. The Closing shall be held as of 9:00 a.m. at the offices of
Keystone Investment Management Company, 200 Berkeley Street, Boston, MA 02116,
or at such other time and/or place as the parties may agree.
3.2 CUSTODIAN'S CERTIFICATE. State Street Bank and Trust Company, as custodian
for the Selling Fund (the "Custodian"), shall deliver at the Closing a
certificate of an authorized officer stating that (a) the Selling Fund's
portfolio securities, cash, and any other assets shall have been delivered in
proper form to the Acquiring Fund on the Closing Date; and (b) all necessary
taxes including all applicable Federal and state stock transfer stamps, if any,
shall have been paid, or provision for payment shall have been made, in
conjunction with the delivery of portfolio securities by the Selling Fund.
3.3 EFFECT OF SUSPENSION IN TRADING. In the event that on the Valuation Date (a)
the New York Stock Exchange or another primary trading market for portfolio
securities of the Acquiring Fund or the Selling Fund shall be closed to trading
<PAGE>
or trading thereon shall be restricted; or (b) trading or the reporting of
trading on said Exchange or elsewhere shall be disrupted so that accurate
appraisal of the value of the net assets of the Acquiring Fund or the Selling
Fund is impracticable, the Valuation Date shall be postponed until the first
business day after the day when trading shall have been fully resumed and
reporting shall have been restored.
3.4 TRANSFER AGENT'S CERTIFICATE. Evergreen Keystone Service Company, as
transfer agent for the Selling Fund as of the Closing Date ("EKSC"), shall
deliver at the Closing a certificate of an authorized officer stating that its
records contain the names and addresses of the Selling Fund Shareholders and the
number and percentage ownership of outstanding shares owned by each such
shareholder immediately prior to the Closing. The Acquiring Fund shall issue and
deliver or cause EKSC, its transfer agent as of the Closing Date, to issue and
deliver a confirmation evidencing the Acquiring Fund Shares to be credited on
the Closing Date to the Secretary of the Selling Fund, 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 the sole investment series of a New York corporation
duly organized, validly existing, and in good standing under the laws
of the State of New York.
(b) The Selling Fund is the sole 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, as
amended (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 misleading.
(d) The Selling Fund is not, and the execution, delivery, and performance
of this Agreement (subject to shareholder approval) will not, result in a
violation of any provision of the Selling Fund's Certificate of
Incorporation or By-Laws or of any material agreement, indenture,
instrument, contract, lease, or other undertaking to which the Selling
Fund is a party or by which it is bound.
(e) The Selling Fund has no material contracts or other commitments (other than
this Agreement) that will be terminated with liability to it prior to the
Closing Date.
<PAGE>
(f) Except as otherwise disclosed in writing to and accepted by the
Acquiring Fund, no litigation, administrative proceeding, or investigation
of or before any court or governmental body is presently pending or to its
knowledge threatened against the Selling Fund or any of its properties or
assets, which, if adversely determined, would materially and adversely
affect its financial condition, the conduct of its business, or the ability
of the Selling Fund to carry out the transactions contemplated by this
Agreement. The Selling Fund knows of no facts that might form the basis for
the institution of such proceedings and is not a party to or subject to the
provisions of any order, decree, or judgment of any court or governmental
body that materially and adversely affects its business or its ability to
consummate the transactions herein contemplated.
(g) The financial statements of the Selling Fund at September 30, 1996
have been audited by KPMG Peat Marwick LLP, 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 date, and there are
no known contingent liabilities of the Selling Fund as of such date
not disclosed therein.
(h) Since September 30, 1996, there has not been any material adverse change
in the Selling Fund's financial condition, assets, liabilities, or
business other than changes occurring in the ordinary course of
business, or any incurrence by the Selling Fund of indebtedness
maturing more than one year from the date such indebtedness was
incurred, except as otherwise disclosed to and accepted by the
Acquiring Fund. For the purposes of this subparagraph (h), a decline
in the net asset value of the Selling Fund shall not constitute a
material adverse change.
(i) At the Closing Date, all Federal and other tax returns and reports of the
Selling Fund required by law to have been filed by such dates shall have
been filed, and all Federal and other taxes shown due on said returns and
reports shall have been paid, or provision shall have been made for the
payment thereof. To the best of the Selling Fund's knowledge, no such
return is currently under audit, and no assessment has been asserted with
respect to such returns.
(j) For each fiscal year of its operation, the Selling Fund has met the
requirements of Subchapter M of the Code for qualification and treatment as
a regulated investment company and has distributed in each such year all
net investment income and realized capital gains.
(k) All issued and outstanding shares of the Selling Fund are, and at the
Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable by the Selling Fund. 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
<PAGE>
sell, assign, transfer, and deliver such assets hereunder, and, upon
delivery and payment for such assets, the Acquiring Fund will acquire good
and marketable title thereto, subject to no restrictions on the full
transfer thereof, including such restrictions as might arise under the 1933
Act, other than as disclosed to the Acquiring Fund and accepted by the
Acquiring Fund.
(m) The execution, delivery, and performance of this Agreement have been
duly authorized by all necessary action on the part of the Selling Fund
and, subject to approval by the Selling Fund Shareholders, this
Agreement constitutes a valid and binding obligation of the Selling
Fund, enforceable in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium, and
other laws relating to or affecting creditors' rights and to general
equity principles.
(n) The information to be furnished by the Selling Fund for use in no-action
letters, applications for orders, registration statements, proxy materials,
and other documents that may be necessary in connection with the
transactions contemplated hereby shall be accurate and complete in all
material respects and shall comply in all material respects with Federal
securities and other laws and regulations thereunder applicable thereto.
(o) The proxy statement of the Selling Fund to be included in the
Registration Statement (as defined in paragraph 5.7)(other than
information therein that relates to the Acquiring Fund) will, on the
effective date of the Registration Statement and on the Closing Date,
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which such
statements were made, not misleading.
4.2 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 misleading.
(d) The Acquiring Fund is not, and the execution, delivery and performance of
this Agreement will not, result in a violation of Evergreen
Trust's Declaration of Trust or By-Laws or of any material
agreement, indenture, instrument, contract, lease, or other undertaking
to which the Acquiring Fund is a party or by which it is bound.
<PAGE>
(e) Except as otherwise disclosed in writing to the Selling Fund and
accepted by the Selling 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 Acquiring Fund or any of
its properties or assets, which, if adversely determined, would materially
and adversely affect its financial condition and the conduct of its
business or the ability of the Acquiring Fund to carry out the transactions
contemplated by this Agreement. The Acquiring Fund knows of no facts that
might form the basis for the institution of such proceedings and is not a
party to or subject to the provisions of any order, decree, or judgment of
any court or governmental body that materially and adversely affects its
business or its ability to consummate the transactions contemplated herein.
(f) The financial statements of the Acquiring Fund at September 30, 1996
have been audited by Price Waterhouse LLP, 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 Selling Fund) fairly reflect the financial condition of
the Acquiring Fund as of such date, and there are no known contingent
liabilities of the Acquiring Fund as of such date not disclosed therein.
(g) Since September 30, 1996, there has not been any material adverse change
in the Acquiring Fund's financial condition, assets, liabilities, or
business other than changes occurring in the ordinary course of
business, or any incurrence by the Acquiring Fund of indebtedness
maturing more than one year from the date such indebtedness was
incurred, except as otherwise disclosed to and accepted by the Selling
Fund. For the purposes of this subparagraph (g), a decline in the net
asset value of the Acquiring Fund shall not constitute a material
adverse change.
(h) At the Closing Date, all Federal and other tax returns and reports of the
Acquiring Fund required by law then to be filed by such dates shall have
been filed, and all Federal and other taxes shown due on said returns and
reports shall have been paid or provision shall have been made for the
payment thereof. To the best of the Acquiring Fund's knowledge, no such
return is currently under audit, and no assessment has been asserted with
respect to such returns.
(i) For each fiscal year of its operation the Acquiring Fund has met the
requirements of Subchapter M of the Code for qualification and treatment as
a regulated investment company and has distributed in each such year all
net investment income and realized capital gains.
(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.
(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
<PAGE>
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 that may be necessary in connection with the
transactions contemplated hereby shall be accurate and complete in all
material respects and shall comply in all material respects with Federal
securities and other laws and regulations applicable thereto.
(n) The Prospectus and Proxy Statement (as defined in paragraph 5.7) to be
included in the Registration Statement (only insofar as it relates to the
Acquiring Fund ) will, on the effective date of the Registration Statement
and on the Closing Date, not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which such statements were made, not misleading.
(o) The Acquiring Fund agrees to use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act, and
such of the state Blue Sky or securities laws as it may deem appropriate in
order to continue its operations after the Closing Date.
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. Keytone America Hartwell Emerging Growth
Fund, Inc. 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
<PAGE>
consummate and make effective the transactions contemplated by this Agreement,
including any actions required to be taken after the Closing Date.
5.6 STATEMENT OF EARNINGS AND PROFITS. As promptly as practicable, but in any
case within sixty days after the Closing Date, the Selling Fund shall furnish
the Acquiring Fund, in such form as is reasonably satisfactory to the Acquiring
Fund, a statement of the earnings and profits of the Selling Fund for Federal
income tax purposes that will be carried over by the Acquiring Fund as a result
of Section 381 of the Code, and which will be certified by the Keystone Balanced
Fund II'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, which will include the proxy statement, referred to
in paragraph 4.1(o) (the "Prospectus and Proxy Statement"), all to be included
in a Registration Statement on Form N-14 of the Acquiring Fund (the
"Registration Statement"), in compliance with the 1933 Act, the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and the 1940 Act in
connection with the meeting of the Selling Fund Shareholders to consider
approval of this Agreement and the transactions contemplated herein.
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 Evergreen Trust's President or Vice
President and its Treasurer or Assistant Treasurer, in form and substance
reasonably satisfactory to the Selling Fund and dated as of the Closing Date, to
such effect and as to such other matters as the Selling Fund shall reasonably
request.
6.2 The Selling Fund shall have received on the Closing Date an opinion from
Sullivan & Worcester LLP, counsel to the Acquiring Fund, dated as of the Closing
Date, in a form reasonably satisfactory to the Selling Fund, covering the
following points:
(a) The Acquiring Fund is a separate investment series of a 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 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 knowledge, such registration with the Commission as an
investment company under the 1940 Act is in full force and effect.
(c) This Agreement has been duly authorized, executed, and delivered by the
Acquiring Fund, and, assuming that the Prospectus and Proxy Statement,
<PAGE>
and Registration 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 this Agreement by the Selling
Fund, is a valid and binding obligation of the Acquiring Fund enforceable
against the Acquiring Fund in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium, and
other laws relating to or affecting creditors' rights generally and to
general equity principles.
(d) Assuming that a consideration therefor not less than the net asset
value thereof has been paid, the Acquiring Fund Shares to be issued and
delivered to the Selling Fund on behalf of the Selling Fund
Shareholders as provided by this Agreement are duly authorized and upon
such delivery will be legally issued and outstanding and fully paid and
non-assessable (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.
(e) The Registration Statement, to such counsel's knowledge, has been
declared effective by the Commission and no stop order under the 1933
Act pertaining thereto has been issued, and to the knowledge of such
counsel, no consent, approval, authorization or order of any court or
governmental authority of the United States or The Commonwealth of
Massachusetts is required for consummation by the Acquiring Fund of the
transactions contemplated herein, except such as have been obtained
under the 1933 Act, the 1934 Act and the 1940 Act, and as may be
required under state securities laws.
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 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 by its 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 its
Treasurer.
7.3 The Acquiring Fund shall have received on the Closing Date an opinion of
Sullivan & Worcester LLP, counsel to the Selling Fund, in a form satisfactory to
the Acquiring Fund covering the following points:
(a) The Selling Fund is the sole investment series of a New York Corporation
<PAGE>
duly organized, validly existing and in good standing under the laws of
The State of New York and has the power to own all of its properties
and assets and to carry on its business as presently conducted.
(b) The Selling Fund is the sole investment series of a New York
corporation duly organized, validly existing, and in good standing under
the laws of The State of New York registered as an investment company under
the 1940 Act, and, to such counsel's knowledge, such registration with the
Commission as an investment company under the 1940 Act is in full force and
effect.
(c) This Agreement has been duly authorized, executed and delivered by the
Selling Fund, and, assuming that the Prospectus and Proxy Statement, and
Registration 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 this Agreement by the Acquiring
Fund, is a valid and binding obligation of the Selling Fund enforceable
against the Selling Fund in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors' rights generally and to
general equity principles.
(d) To the knowledge of such counsel, no consent, approval, authorization or
order of any court or governmental authority of the United States or The
State of New York is required for 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 as may be
required under state securities laws.
ARTICLE VIII
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING
FUND AND THE SELLING FUND
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the Selling Fund or the Acquiring Fund, the other
party to this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:
8.1 This Agreement and the transactions contemplated herein shall have been
approved by the requisite vote of the holders of the outstanding shares of the
Selling Fund in accordance with the provisions of the Selling Fund's Certificate
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 securities authorities, including any
necessary "no-action" positions of and exemptive orders from such Federal and
<PAGE>
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.
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
LLP, addressed to the Acquiring Fund and the Selling Fund substantially to the
effect that for Federal income tax purposes:
(a) The transfer of all of the Selling Fund assets in exchange for the
Acquiring Fund Shares and the assumption by the Acquiring Fund of
[certain stated] liabilities of the Selling Fund followed by the
distribution of the Acquiring Fund Shares to the Selling Fund in
dissolution and liquidation of the Selling Fund will constitute a
"reorganization" within the meaning of Section 368(a)(1)(C) of the
Code and the Acquiring Fund and the Selling Fund will each be a "party to
a reorganization" within the meaning of Section 368(b) of the Code.
(b) No gain or loss will be recognized by the Acquiring Fund upon the receipt
of the assets of the Selling Fund solely in exchange for the Acquiring Fund
Shares and the assumption by the Acquiring Fund of [certain stated]
liabilities of the Selling Fund.
(c) No gain or loss will be recognized by the Selling Fund upon the transfer of
the Selling Fund assets to the Acquiring Fund in exchange for the Acquiring
Fund Shares and the assumption by the Acquiring Fund of [certain stated]
liabilities of the Selling Fund or upon the distribution (whether actual or
constructive) of the Acquiring Fund Shares to Selling Fund Shareholders in
exchange for their shares of the Selling Fund.
(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).
<PAGE>
(f) The tax basis of the Selling Fund assets acquired by the Acquiring Fund
will be the same as the tax basis of such assets to the Selling Fund
immediately prior to the Reorganization, and the holding period of the
assets of the Selling Fund in the hands of the Acquiring Fund will include
the period during which those assets were held by the Selling Fund.
Notwithstanding anything herein to the contrary, neither the Acquiring Fund
nor the Selling Fund may waive the conditions set forth in this paragraph 8.6.
8.7 The Acquiring Fund shall have received from KPMG Peat Marwick LLP a letter
addressed to the Acquiring Fund, in form and substance satisfactory to the
Acquiring Fund, to the effect that
(a) they are independent certified public accountants with respect to the
Selling Fund within the meaning of the 1933 Act and the applicable
published rules and regulations thereunder;
(b) on the basis of limited procedures agreed upon by the Acquiring Fund
and described in such letter (but not an examination in accordance with
generally accepted auditing standards) 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 Selling Fund responsible for financial and
accounting matters, nothing came to their attention that caused them to
believe that 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;
(c) on the basis of limited procedures agreed upon by the Acquiring Fund and
described in such letter (but not an examination in accordance with
generally accepted auditing standards), the 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;
(d) 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
that 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 Evergreen 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; and
(e) on the basis of limited procedures agreed upon by the Acquiring Fund
and described in such letter (but not an examination in accordance with
generally accepted auditing standards), the data utilized in the
calculations of the 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.
In addition, the Acquiring Fund shall have received from KPMG Peat Marwick
LLP a letter addressed to the Acquiring Fund dated on the Closing Date, in form
and substance satisfactory to the Acquiring Fund, to the effect, that on
<PAGE>
the basis of limited procedures agreed upon by the Acquiring Fund (but not an
examination in accordance with generally accepted auditing standards), the
calculation of net asset value per share of the Selling Fund as of the Valuation
Date was determined in accordance with generally accepted accounting practices
and the portfolio valuation practices of the Acquiring Fund.
8.8 The Selling Fund shall have received from Price Waterhouse LLP a letter
addressed to the Selling Fund, in form and substance satisfactory to the Selling
Fund, to the effect that
(a) they are independent certified public accountants with respect to the
Acquiring Fund within the meaning of the 1933 Act and the applicable
published rules and regulations thereunder;
(b) on the basis of limited procedures agreed upon by the Selling Fund and
described in such letter (but not an examination in accordance with
generally accepted auditing standards) 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 Evergreen Trust responsible for financial and accounting
matters, nothing came to their attention that caused them to believe that
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;
(c) on the basis of limited procedures agreed upon by the Selling Fund and
described in such letter (but not an examination in accordance with
generally accepted auditing standards), the Capitalization Table appearing
in the Registration Statement and Prospectus and Proxy Statement has been
obtained from and is consistent with the accounting records of the
Acquiring Fund; and
(d) 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 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 KPMG
Peat Marwick LLP 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 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
EXPENSES
9.1 Except as otherwise provided for herein, all expenses of the transactions
contemplated by this Agreement incurred by the Selling Fund and the Acquiring
Fund will be borne by First Union National Bank of North Carolina. Such expenses
include, without limitation, (a) expenses incurred in connection with the
entering into and the carrying out of the provisions of this Agreement; (b)
expenses associated with the preparation and filing of the Registration
Statement under the 1933 Act covering the Acquiring Fund Shares to be issued
pursuant to the provisions of this Agreement; (c) registration or qualification
fees and expenses of preparing and filing such forms as are necessary under
applicable state securities laws to qualify the Acquiring Fund Shares to be
issued in connection herewith in each state in which the Selling Fund
Shareholders are resident as of the date of the mailing of the Prospectus and
Proxy Statement to such shareholders; (d) postage; (e) printing; (f) accounting
fees; (g) legal fees; and (h) solicitation cost of the transaction.
Notwithstanding the foregoing, the Acquiring Fund shall pay its own Federal and
state registration fees.
ARTICLE X
ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Acquiring Fund and the Selling Fund agree that neither party has made
any representation, warranty or covenant not set forth herein and that this
Agreement constitutes the entire agreement between the parties.
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.
ARTICLE XI
TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the Acquiring
Fund and the Selling Fund. In addition, either the Acquiring Fund or the Selling
Fund may at its option terminate this Agreement at or prior to the Closing Date
because
(a) of a breach by the other of any representation, warranty, or agreement
contained herein to be performed at or prior to the Closing Date, if not
cured within 30 days; or
(b) a condition herein expressed to be precedent to the obligations of the
terminating party has not been met and it reasonably appears that it will
not or cannot be met.
11.2 In the event of any such termination, in the absence of willful default,
there shall be no liability for damages on the part of either the Acquiring
Fund, the Selling Fund, Evergreen Trust, Keystone America Hartwell Emerging
Growth Fund, Inc. or their respective Directors, Trustees or officers, to
the other party or its Trustees or officers.
ARTICLE XII
AMENDMENTS
This Agreement may be amended, modified, or supplemented in such manner as
may be mutually agreed upon in writing by the authorized officers of the Selling
Fund and the Acquiring Fund; provided, however, that following the meeting of
the Selling Fund Shareholders called by Keystone America Hartwell Emerging
Growth Fund, Inc. 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
HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY
13.1 The Article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.2 This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original.
13.3 This Agreement shall be governed by and construed in accordance with the
laws of The Commonwealth of Massachusetts, without giving effect to the
conflicts of laws provisions thereof.
13.4 This Agreement shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns, but no assignment or transfer
hereof or of any rights or obligations hereunder shall be made by any party
without the written consent of the other party. Nothing herein expressed or
implied is intended or shall be construed to confer upon or give any person,
firm, or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
13.5 It is expressly agreed that the obligations of the Acquiring Fund
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents, or employees of Evergreen Trust , personally, but bind only
the trust property of the Acquiring Fund, as provided in the Declaration of
Trust of Evergreen Trust.
The execution and delivery of this Agreement have been authorized by the
Directors of Keystone Amnerica Hartwell Emerging Growth Fund, Inc. on behalf of
the Selling Fund, and the Trustees of Evergreen Trust on behalf of the Acquiring
Fund and signed by authorized officers of Keystone America Hartwell Emerging
Growth Fund, Inc. and the Evergreen Trust, acting as such, and, in the case of
Evergreen Trust, 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 Evergreen Trust as provided in its
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
By:
Name:
Title:
Keystone America Hartwell Emerging Growth Fund, Inc.
By:
Name:
Title:
*******************************************************************************
EXHIBIT B
Set forth below are the Financial Highlights for each Class of Shares
offered by Evergreen Aggressive, as well as the Management Discussion and
Analysis of the results of the Fund for the period ended September 30, 1996.
EVERGREEN AGGRESSIVE GROWTH FUND
(Photo of beakers appears here)
The Fund's Class A shares are subject to a 4.75% front end
sales charge, which is not reflected in the performance figures
above. The Fund's one-, three-, five- and ten-year average annual
returns as of September 30, 1996, for its Class A shares with the
maximum 4.75% front-end sales charge were 19.7%,13.7%, 17.5% and
14.8%, respectively. (For additional performance information,
please see page 22.)
ECONOMIC AND INVESTMENT BACKGROUND
The economic background during the past year has been generally favorable for
your Fund, with somewhat stronger than expected economic growth and somewhat
less than expected inflation. The disinflationary trends that have continued in
force for several years are supportive of our strategies and of growth stock
investing. Companies that can produce sustained double-digit revenue growth and
maintain or improve margins in an environment of stable pricing are in shorter
supply and command higher price earnings multiples. There is an increasing
payoff on finding and sticking with our long-term corporate winners.
PORTFOLIO PROFILE
Owning superior companies that can sustain high revenue and profit growth
over the long term has been the key to the Fund's success. The profile below
lists some of the characteristics that have been most important for the
companies owned. At September 30, 1996, the Fund's 31 holdings had the following
average position profile on a dollar-weighted basis:
<TABLE>
<S> <C>
Revenue Growth (five years, compounded) 42%
Earnings Per Share Growth (five years, compounded) 42%
Return on Equity (twelve months) 29%
Net Profit Margin (after tax) 8.8%
Median Market Value $2.6 billion
Long-Term Debt as a Percent of Total Capital 20%
Beta++ 1.39
Median Daily Trading Volume (calendar year-to-date) 625,000 shares
Price/Earnings Ratio (twelve months' earnings per share) 40.1
</TABLE>
These characteristics reflect our strategy to own the best companies in their
respective industries and to pay a fair price for their established superior
growth. While these numbers reflect the companies' past achievements, our
successful growth stock investing process also focuses on current business
trends and future growth opportunities for each company.
PHILOSOPHY AND STRATEGY
Most simply put, our philosophy has always been to go with the winners and to
hold on for the long term. A rigorous quantitative screening process produces a
list of candidates for the portfolio and helps separate the contenders from the
pretenders. In-depth analysis of the company, its products and/or services, the
management team and their past successes and current commitment contribute to
the final selection. Finally, careful
++ BETA IS A MEASURE OF THE MARKET RISK OF A FUND'S PORTFOLIO, ILLUSTRATING THE
VOLATILITY OF THE NET ASSET PER SHARE OF A MUTUAL FUND AS COMPARED WITH THE
MARKET AS A WHOLE (AS MEASURED BY S&P 500 REINVESTED INDEX WHICH IS ASSIGNED
A BETA OF ONE). A BETA OF LESS THAN ONE INDICATES THAT A FUND WOULD FLUCTUATE
LESS THAN THE MARKET AND GREATER THAN ONE INDICATES IT WOULD FLUCTUATE MORE
THAN THE MARKET.
19
<PAGE>
EVERGREEN AGGRESSIVE GROWTH FUND
(Photo of beakers appears here)
A REPORT FROM YOUR
PORTFOLIO MANAGER -- (CONTINUED)
judgment of each company's growth opportunity and the current structure of its
industry's competition are essential in completing the selection process. This
style has often led to a concentrated portfolio. At September 30, the portfolio
held 31, predominantly mid-cap companies. This was a significant increase from
holdings of 24 companies at 1995 fiscal year-end. Since we believe in focusing
on and sticking with established, dominant companies and do not believe in
trading down in quality, the Fund is more concentrated than many. In addition to
greater concentration on established growth leaders, our philosophy also has led
to lower portfolio turnover, which helps to lower expenses which, in turn, can
result in a higher after-tax return to shareholders.
INDUSTRY WEIGHTINGS AND PORTFOLIO HIGHLIGHTS
Business Services comprised 20.3% of net assets and includes the shares of
companies that help other companies lower costs and increase quality and
productivity through outsourcing. APAC Teleservices, Inc., the leader in the
outsourcing of customer services by telephone, is now the second largest
portfolio position and has been our most successful holding in terms of price
appreciation for the calendar year-to-date.
Computers, Information Services and Technology sectors represented 21.7% of
net assets and includes major positions in Cisco Systems, Microsoft and
Parametric Technologies. Each of these companies are not only dominant in their
businesses, but also dictate the structure of competition to all their
competitors.
Healthcare companies constituted 13.9% of the portfolio. The leading position
is Medtronic, Inc., the world's largest maker of implantable biomedical devices,
including pacemakers and cardiovascular support systems.
Specialty Retail comprised 25.0% of net assets. Holdings in this sector are
companies that offer the consumer a better value and that consolidate their
respective industries by taking market share from weaker entities. Tommy
Hilfiger and Viking Office Products are our new names in this sector in the past
year, joining our continuing large positions in Office Depot and Home Depot.
Environmental Services at 8.0% of net assets consists of our position in
Republic Industries, a fast growing consolidator of the highly fragmented waste
service, security and car resale industries with a strong management team and
proven track record.
Financial Services comprised 5.4% of net assets and includes our major
position in Green Tree Financial, the dominant company in providing loans for
the manufactured housing industry. Green Tree also provides specialty loans and
insurance for motorcycles, boats and utility vehicles.
The Oil/Gas sector at 5.1% of net assets consists of our position in
Transocean Offshore, the world's leading offshore contract driller with a
dominant position in deep water and harsh environmental drilling.
20
<PAGE>
EVERGREEN AGGRESSIVE GROWTH FUND
(Photo of beakers appears here)
A REPORT FROM YOUR
PORTFOLIO MANAGER -- (CONTINUED)
PORTFOLIO THEMES
Each of our highlighted holdings participate in key investment themes that I
believe will carry through into the next century. Global trends of disinflation
are forcing companies to become ever more efficient, to lower their costs and to
specialize in what they do best. Global consumerism, leveraged by the
information technology revolution, is forcing companies to give the customer
better quality with more convenience at a lower price. These trends are most
evident in the U.S., but are emerging in Europe and Asia and will be global.
Change is more rapid than ever. Being the best and being dominant in a specialty
or niche is more highly rewarded. Companies can not be all things to all people.
Technology is both a solution and a driver for this process. Technology
encompasses not only the computers and chips, but also the processes and
techniques, such as software, communications and outsourcing. Identifying,
investing in and sticking with the beneficiaries of these themes is what has
produced and we hope will continue to produce the success of Evergreen
Aggressive Growth Fund. In terms of investment style, your portfolio manager
strives to be a marathon investor rather than a sprinter.
Thank you for investing in our Fund. May we continue to run in this marathon
race toward investment success together.
21
<PAGE>
EVERGREEN AGGRESSIVE GROWTH FUND
(Photo of beakers appears here)
RESULTS TO DATE
PERFORMANCE OF $10,000 INVESTED IN THE
EVERGREEN AGGRESSIVE GROWTH FUND
The graphs below compare a $10,000 investment in the Evergreen Aggressive
Growth Fund (Class A, Class B, Class C and Class Y Shares) with a similar
investment in the NASDAQ Industrials Index ("Index").
<TABLE>
<CAPTION>
CLASS A 1 YEAR TOTAL RETURN = 19.7%
AVERAGE ANNUAL COMPOUND
RETURN: 5-YEAR = 17.5% 10-YEAR = 14.8%
(graph appears here)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/86 9/30/87 9/30/88 9/30/89 9/30/90 9/30/91 9/30/92 9/30/93 9/30/94 9/30/95 9/30/96
Evergreen Aggressive Growth Fund
NASDAQ Industrials Index
(Customer to provide plot points)
</TABLE>
CLASS B 1 YEAR TOTAL RETURN = 19.9%
AVERAGE ANNUAL COMPOUND
RETURN SINCE INCEPTION = 25.9%
(graph appears here)
7/7/95* 9/30/95 3/31/96 9/30/96
Evergreen Aggressive Growth Fund
NASDAQ Industrials Index
(Customer to provide plot points)
CLASS C 1 YEAR TOTAL RETURN = 24.1%
AVERAGE ANNUAL COMPOUND
RETURN SINCE INCEPTION = 26.8%
(graph appears here)
8/3/95* 9/30/95 3/31/96 9/30/96
Evergreen Aggressive Growth Fund
NASDAQ Industrials Index
(Customer to provide plot points)
CLASS Y 1 YEAR TOTAL RETURN = 25.8%
AVERAGE ANNUAL COMPOUND RETURN
SINCE INCEPTION = 20.7%
(graph appears here)
7/11/95* 9/30/95 3/31/96 9/30/96
Evergreen Aggressive Growth Fund
NASDAQ Industrials Index
(Customer to provide plot points)
*Commencement of class operations.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE RESULTS. MUTUAL FUNDS
ARE
NOT OBLIGATIONS OF, OR GUARANTEED BY, ANY BANK AND ARE NOT FEDERALLY INSURED.
For the purposes of the graphs and the accompanying tables, it has been
assumed that (a) the maximum sales charge of 4.75% was deducted from the initial
$10,000 investment in Class A Shares; (b) the maximum applicable contingent
deferred sales charge was deducted from the value of the investment in Class B
and Class C Shares, assuming full redemption on September 30, 1996; (c) all
recurring fees (including investment advisory fees) were deducted; and (d) all
dividends and distributions were reinvested.
The Index is unmanaged and includes the reinvestment of income, but does
not reflect the payment of transaction costs and advisory fees associated with
an investment in the Fund.
22
* * * * * * * * * * * * * * *
<PAGE>
EVERGREEN AGGRESSIVE GROWTH FUND
CLASS A SHARES
(Photo of beakers appears here)
The table below presents the financial highlights for a share outstanding
throughout each period indicated. The information in the tables for the fiscal
periods ended September 30, 1996 and 1995 has been audited by Price Waterhouse
LLP, the Fund's current independent auditors. The information in the tables for
each of the years in the three-year period ended October 31, 1994 was audited by
Tait, Weller & Baker, the Fund's prior independent auditors. A report of Price
Waterhouse LLP or Tait Weller & Baker, as the case may be, on the audited
information with respect to the Fund is incorporated by reference in the
Statement of Additional Information. The following information should be read in
conjuction with the financial satements and related notes which are incorporated
by reference in the Statement of Additional Information.
Further information about a Fund's performance is contained in the Fund's
annual report to shareholers, which may be obtained without charge.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A SHARES
YEAR ELEVEN MONTHS
ENDED ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, OCTOBER 31,
1996 1995*# 1994|#
<S> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period........................................ $17.37 $13.85 $14.44
Income (loss) from investment operations:
Net investment loss....................................................... (.15) (.16) (.13)
Net realized and unrealized gain (loss) on investments.................... 4.46 3.68 (.22)
Total from investment operations........................................ 4.31 3.52 (.35)
Less distributions to shareholders from net realized gains.................. (.64) -- (.24)
Net asset value, end of period.............................................. $21.04 $17.37 $13.85
TOTAL RETURN+............................................................... 25.6% 25.4% (2.4%)
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)................................... $96,608 $70,858 $64,635
Ratios to average net assets:
Expenses.................................................................. 1.22% 1.47%++ 1.25%
Net investment loss....................................................... (.86%) (1.12%)++ (.92%)
Portfolio turnover rate..................................................... 33% 31% 59%
Average commission rate paid per share...................................... $.0582 N/A N/A
<CAPTION>
1993|# 1992|#
<S> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period........................................ $11.76 $12.22
Income (loss) from investment operations:
Net investment loss....................................................... (.12) (.10)
Net realized and unrealized gain (loss) on investments.................... 3.06 1.84
Total from investment operations........................................ 2.94 1.74
Less distributions to shareholders from net realized gains.................. (.26) (2.20)
Net asset value, end of period.............................................. $14.44 $11.76
TOTAL RETURN+............................................................... 25.3% 17.4%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)................................... $58,053 $29,302
Ratios to average net assets:
Expenses.................................................................. 1.31% 1.44%
Net investment loss....................................................... (.92%) (.93%)
Portfolio turnover rate..................................................... 48% 46%
Average commission rate paid per share...................................... N/A N/A
</TABLE>
* The Fund changed its fiscal year end from October 31 to September 30.
# Effective June 30, 1995, Evergreen Aggressive Growth Fund, a new series of
Evergreen Trust, acquired substantially all of the net assets of ABT Emerging
Growth Fund. ABT Emerging Growth Fund, which had a fiscal year that ended on
October 31 was the accounting survivor in the combination. Accordingly, the
information above includes the results of operations of ABT Emerging Growth
Fund prior to June 30, 1995.
| Per share data based on average shares outstanding.
+ Total return is calculated on net asset value per share for the periods
indicated and is not annualized. Initial sales charge is not reflected.
++ Annualized.
27
<PAGE>
EVERGREEN AGGRESSIVE GROWTH FUND
CLASS B, CLASS C AND CLASS Y SHARES
(Photo of beakers appears here)
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS B SHARES CLASS C SHARES CLASS Y
JULY 7, AUGUST 3, SHARES
YEAR 1995* YEAR 1995* YEAR
ENDED THROUGH ENDED THROUGH ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995 1996
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period........... $17.35 $15.82 $17.31 $16.42 $17.38
Income (loss) from investment operations:
Net investment loss.......................... (.16) (.03) (.15) (.01) (.06)
Net realized and unrealized gain on
investments................................ 4.34 1.56 4.36 .90 4.41
Total from investment operations........... 4.18 1.53 4.21 .89 4.35
Less distributions to shareholders from net
realized gains............................... (.64) -- (.64) -- (.64)
Net asset value, end of period................. $20.89 $17.35 $20.88 $17.31 $21.09
TOTAL RETURN+.................................. 24.9% 9.7% 25.1% 5.4% 25.8%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)...... $21,644 $2,858 $991 $416 $25,918
Ratios to average net assets:
Expenses..................................... 1.98% 2.09%++ 1.96% 2.09%++ .97%
Net investment loss.......................... (1.60%) (1.71%)++ (1.57%) (1.51%)++ (.60%)
Portfolio turnover rate........................ 33% 31% 33% 31% 33%
Average commission rate paid per share......... $.0582 N/A $.0582 N/A $.0582
<CAPTION>
JULY 11,
1995*
THROUGH
SEPTEMBER 30,
1995
<S> <C>
PER SHARE DATA:
Net asset value, beginning of period........... $15.79
Income (loss) from investment operations:
Net investment loss.......................... (.01)
Net realized and unrealized gain on
investments................................ 1.60
Total from investment operations........... 1.59
Less distributions to shareholders from net
realized gains............................... --
Net asset value, end of period................. $17.38
TOTAL RETURN+.................................. 10.1%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)...... $1,889
Ratios to average net assets:
Expenses..................................... 1.08%++
Net investment loss.......................... (.71%)++
Portfolio turnover rate........................ 31%
Average commission rate paid per share......... N/A
</TABLE>
* Commencement of class operations.
+ Total return is calculated on net asset value per share for the periods
indicated and is not annualized. Contingent deferred sales charges are not
reflected.
++ Annualized.
28
* * * * * * * * * * * * * * *
********************************************************************************
STATEMENT OF ADDITIONAL INFORMATION
Acquisition of the Assets of
Keystone America Hartwell Emerging Growth Fund, Inc.
200 Berkeley Street
Boston, Massachusetts 02116
(800) 343-2898
By and In Exchange For Shares of
Evergreen Aggressive Growth Fund
A Series of
Evergreen Trust
2500 Westchester Avenue
Purchase, New York 10577
(800) 807-2940
This Statement of Additional Information, relating specifically to the
proposed transfer of the assets and liabilities of Keystone America Hartwell
Emerging Growth Fund, Inc. ("Hartwell") to Evergreen Aggressive Growth Fund
("Evergreen Aggressive"), a series of the Evergreen Trust, in exchange for Class
A, Class B and Class C Shares of beneficial interest, $.001 par value per Share,
of Evergreen Aggressive, consists of this cover page and the following described
documents, each of which is attached hereto and incorporated by reference
herein:
(1) The Statement of Additional Information of Evergreen Agressive dated
November 29, 1996 (Incorporated by reference to Post-Effective Amendment No. 32
to The Evergreen Trust's Registration Statement [File No. 2-40357] filed with
the Securities and Exchange Commission on November 27, 1996);
(2) The Statement of Additional Information of Hartwell dated December 10,
1996, as supplemented January 1, 1997 (Incorporated by reference to Post-
Effective Amendment No. 46 to the Registration Statement [File No.2-28719] filed
with the Securities and Exchange Commission on December 9, 1996);
(3) Annual Report of Evergreen Aggressive for the year ended September
30, 1996 (Incorporated by reference to Form N-30D of The Evergreen
Trust [File No. 2-40357] filed with the Securities and Exchange Commission on
December 12, 1996); and
(4) The Annual Report of Hartwell dated September 30, 1996 (Incorporated by
reference to Form N-30D of Keystone America Hartwell Emerging Growth Fund, Inc.
[File No. 2-28719] filed with the Securities and Exchange Commission on Novemebr
25, 1996).
This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the Proxy
Statement/Prospectus of the Evergreen Aggressive and Hartwell dated May ___,
1997. A copy of the Proxy Statement/Prospectus may by obtained without charge by
calling or writing to the Evergreen Aggressive or Hartwell at the telephone
numbers or addresses set forth above.
The date of this Statement of Additional Information is ____________, 1997.
<PAGE>
The following pro forma financial information relates to Evergreen
Aggressive and Hartwell:
- -------------------------------------------------------------------------
Evergreen Aggressive Growth Fund
Pro-Forma Combining Financial Statements (unaudited)
Portfolio of Investments (000's omitted)
September 30, 1996
<TABLE>
<CAPTION>
Evergreen Hartwell
Aggressive Pro-Forma
Combined
---------------------------------------------------------------------
Shares Market Value Shares Market Value Shares Market Value
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCKS - 94.0%(1)
Biotechnology-0.4%
* BioChem Pharmaceuticals, Inc. 25 $1,003 25 $1,003 0.41%
----------- ------------
Business Services - 12.1%
* APAC TeleServices, Inc. 200 $10,250 200 10,250 4.20%
Danka Business Systems, ADR 140 5,565 140 5,565 2.28%
First Data Corp. 85 6,938 85 6,938 2.84%
* Fiserv, Inc. 25 956 25 956 0.39%
* Medic Computer Systems, Inc. 37 1,346 37 1,346 0.55%
* Sterling Commerce, Inc. 150 4,425 150 4,425 1.81%
------------ -------------
29,480 29,480 12.07%
Computers - 4.8%
* Adaptec, Inc. 30 1,800 30 1,800 0.74%
* Cisco Systems, Inc. 160 9,930 160 9,930 4.07%
------------ -------------
11,730 11,730 4.80%
Communications
Equipment/Service -3.8%
* Cisco Systems, Inc. 50 3,103 50 3,103 1.27%
* National Techteam, Inc. 55 1,492 55 1,492 0.61%
* P-Com, Inc. 75 1,856 75 1,856 0.76%
* Precision Response Corp. 40 1,540 40 1,540 0.63%
* PMT Services, Inc 69 1,392 69 1,392 0.57%
----------- ------------
9,383 9,383 3.84%
Environmental Services - 4.7%
* Republic Industries, Inc. 400 11,600 400 11,600 4.75%
------------ ------------
Financial Services-3.4%
Green Tree Financial Corp. 185 7,261 185 7,261 2.97%
* E-Trade Group, Inc. 40 528 40 528 0.22%
Mercury Finance Co. 50 600 50 600 0.25%
------------ ----------- ------------
7,861 528 8,389 3.44%
Healthcare -16.0%
* Capstone Pharmacy Services, Inc 200 2,475 200 2,475 1.01%
* Dura Pharmaceeuticals, Inc 160 5,900 160 5,900 2.42%
* Gulf South Medical Supply, Inc. 130 3,348 130 3,348 1.37%
HBO & Co. 75 5,006 75 5,006 2.05%
* Health Management Associates,
Inc. 100 2,488 100 2,488 1.02%
* HEALTHSOUTH Corp. 30 1,151 30 1,151 0.47%
IVAX Corp. 80 1,250 80 1,250 0.51%
* Matrix Pharmaceuticals, Inc. 65 520 65 520 0.21%
Medtronic, Inc. 118 7,567 118 7,567 3.10%
* Medquist, Inc. 32 648 32 648 0.27%
Mylan Laboratories, Inc. 75 1,284 75 1,284 0.53%
* PhyCor, Inc. 135 5,138 135 5,138 2.10%
* Respironics, Inc. 40 970 40 970 0.40%
* Theratx, Inc. 120 1,425 120 1,425 0.58%
------------ ----------- ------------
20,236 18,934 39,170 16.04%
Information Services & Technology - 8.1%
* Mircosoft Corp 50 6,594 50 6,594 2.70%
* Network General Corporation 250 5,719 250 5,719 2.34%
* Parametric Technology Corp 150 7,406 150 7,406 3.03%
------------ ------------
19,719 19,719 8.07%
Laser/Electro-Optic Systems-2.5%
* Uniphase Corp. 143 6,042 143 6,042 2.47%
----------- ------------
Retailing Specialty - 16.1%
* Alrenco, Inc. 40 840 40 840 0.34%
* Autozone, Inc. 25 725 25 725 0.30%
* Bed Bath & Beyond, Inc. 150 4,106 150 4,106 1.68%
* Fastenal Co. 80 3,960 80 3,960 1.62%
Home Depot, Inc. (The) 100 5,688 100 5,688 2.33%
* Office Depot, Inc. 300 7,088 300 7,088 2.90%
* Petco Animal Supplies, Inc. 80 2,180 80 2,180 0.89%
* Tommy Hilfiger Corp. 125 7,406 125 7,406 3.03%
* Viking Office Products, Inc. 245 7,350 245 7,350 3.01%
------------- ------------ ------------
36,323 3,020 39,343 16.11%
Oil/Gas - 6.9%
* Falcon Drilling Co, Inc. 115 2,990 115 2,990 1.22%
* Input/Output, Inc. 66 1,963 66 1,963 0.80%
* Oceaneering International 100 1,700 100 1,700 0.70%
* Petroleum Geo Services 100 2,725 100 2,725 1.12%
Transocean Offshore Inc. 120 7,350 120 7,350 3.01%
------------- ------------ ------------
7,350 9,378 16,728 6.85%
Software/Business-6.7%
* Legato Systems, Inc. 105 4,988 105 4,988 2.04%
* McAfee Assoc, Inc 98 6,728 98 6,728 2.76%
* PeopleSoft, Inc 550 4,579 550 4,579 1.88%
------------ ------------
16,295 16,295 6.67%
Software/Maunfacturing-0.9%
* Viasoft, Inc. 50 2,100 50 2,100 0.86%
------------ ------------
Technology Services/Consulting-5.9%
* Alternative Resources Group 80 2,250 80 2,250 0.92%
* Claremont Technology Corp 50 1,800 50 1,800 0.74%
* Computer Horizons Corp. 120 3,420 120 3,420 1.40%
* Interim Services, Inc. 50 2,137 50 2,137 0.88%
* Intelliquest Information Group, Inc 5 128 5 128 0.05%
* Vanstar Corp. 190 4,607 190 4,607 1.89%
------------ ------------
14,342 14,342 5.87%
Video Conferencing-1.7%
* PictureTel Corp. 120 4,230 120 4,230 1.73%
------------ ------------
Total Common Stocks
------------- ------------ -------------
(pro forma combined cost $133,058) 144,299 85,255 229,554 94.00%
------------- ------------ -------------
WARRANTS-0.0%
* Sound Advice, Inc
$8.70, expires 6/14/99 806 0 806 0
------------- -------------
Total Warrants
(proforma combined cost $0)
Principal Principal Principal
Value Amount Value Amount Value Amount
-----------------------------------------------------------------------
REPURCHASE AGREEMENTS - 6.9%
State Street Bank & Trust Co.,
4.75%, dated 9/30/96, due
10/1/96-collateralized by $2,305
U.S. Treasury Bonds, 7.50%
due 11/15/16, interest - $2,480
(Proforma combined cost $2,435) $2,435 2,435 $2,435 2,435 1.00%
State Street Bank & Trust Co.,
4.75%, dated 9/30/96, due
10/1/96-collateralized by $13,530
U.S. Treasury Bonds, 8.75%
due 8/15/00, interest - $14,477
for $14,477 (cost $14,475) $14,475 14,475 $14,475 14,475 5.93%
------------------ ------------------ ------------------
Total Repurchase Agreements
(proforma combined cost $16,910) $2,435 2,435 $14,475 14,475 $16,910 16,910 6.92%
------------------ ------------------ ------------------
Total Investments -
------------------ ------------------ ------------------
(proforma combined cost $149,968)100.9% 146,734 99,730 246,464 100.92%
Other Assets and
Liabilities - net (0.9)% (1,573) (682) (2,255) -0.92%
----------------------------- ------------------ ------------------
Net Assets 100.0% $145,161 $99,048 $244,209 100.00%
=================== ================= ================== ========
(1) Based on proforma combined net assets.
* Non-Inocme producing security
</TABLE>
EVERGREEN AGGRESSIVE GROWTH FUND Pro-Forma Combining Financial Statements
(unaudited) Statement of Assets and Liabilities September 30, 1996 (000's
omitted)
<TABLE>
<CAPTION>
Evergreen Hartwell
Aggressive Pro-Forma
Adjustments Combined
<S> <C> <C> <C> <C>
Assets:
Investments at value (cost $149,968) $146,734 $99,729 $246,463
Cash 636 1 637
Receivable for Fund shares sold 580 16 596
Dividend and interest receivable 7 2 9
Unamortized organization expenses 20 0 20
Other assets 14 2 16
--------------------------------------------------------
Total Assets 147,991 99,750 0 247,741
<CAPTION>
<S> <C> <C> <C> <C>
Liabilities:
Payable for investments purchased 2,364 561 2,925
Payable for Fund shares redeemed 240 94 334
Accrued expenses 226 47 273
--------------------------------------------------------
Total Liabilities 2,830 702 0 3,532
Net Assets $145,161 $99,048 $0 $244,209
========================================================
<CAPTION>
<S> <C> <C> <C> <C>
Net assets are comprised of:
Paid-in capital $87,663 $56,461 $144,124
Accumulated net realized gain/(loss) (2,992) 6,586 3,594
Accumulated net investment loss (4) 0 (4)
Net unrealized appreciation of investments 60,494 36,001 96,495
--------------------------------------------------------
Net Assets $145,161 $99,048 $0 $244,209
========================================================
<CAPTION>
<S> <C> <C> <C> <C>
Class A Shares
Net Assets $96,608 $89,726 $186,334
Shares of Beneficial Interest Outstanding 4,592 3,135 1,129 8,856
Net Asset Value $21.04 $28.62 $21.04
Maximum Offering Price $22.09 $30.37 $22.09
Class B Shares
Net Assets $21,644 $6,954 $28,598
Shares of Beneficial Interest Outstanding 1,036 251 82 1,369
Net Asset Value $20.89 $27.73 $20.89
Class C Shares
Net Assets $991 $2,368 $3,359
Shares of Beneficial Interest Outstanding 47 85 29 161
Net Asset Value $20.88 $27.89 $20.88
Class Y Shares
Net Assets $25,918 - $25,918
Shares of Beneficial Interest Outstanding 1,229 - 1,229
Net Asset Value $21.09 - $21.09
See Notes to Pro-Forma Combining Financial Statements.
::
</TABLE>
EVERGREEN AGGRESSIVE GROWTH FUND Pro Forma Combining Financial
Statements (unaudited) Statement of Operations Year Ended September 30, 1996
(000's omitted)
<TABLE>
<CAPTION>
Evergreen Hartwell
Aggressive Pro-Forma
Adjustments Combined
<S> <C> <C> <C> <C>
Investment Income:
Interest income $174 $577 $751
Dividend income (net of foreign withholding
tax of $2,042, $0 and $2,042, respectively) 202 2 204
--------------------------------------------------------
Total Income 376 579 0 955
Expenses:
Advisory fee 612 1,066 (420)(a) 1,258
Distribution Plan expenses 308 278 0 586
Administration fee 51 21 3(a) 75
Custodian fees and expenses 56 42 (26)(b) 72
Professional fees 31 79 (79)(b) 31
Registration and filing fees 43 14 (14)(b) 43
Reports and notices to shareholders 44 32 5(b) 81
Transfer Agent fee 138 291 (201)(b) 228
Trustees' fees and expenses 8 0 2(c) 10
Amortization of organization expense 6 0 0 6
Other expenses 3 18 (18)(b) 3
--------------------------------------------------------
Total Expenses 1,300 1,841 (748) 2,393
Net Investment loss (924) (1,262) 748 (1,438)
Net realized and unrealized gain/(loss) on investments:
Net reailzed gain/(loss) on investments (2,456) 8,826 6,370
Net increase in unrealized appreciation
of investments 27,981 1,007 28,988
--------------------------------------------------------
Net gain on investments 25,525 9,833 0 35,358
Net increase in net assets resulting
from operations $24,601 $8,571 $748 $33,920
========================================================
</TABLE>
(a)Reflects a decrease in the investment advisory fee and an increase in
administrative personnel and service fees based on the surviving Fund's fee
schedule.
(b)Reflects expected cost savings when the funds combine based on duplicate
costs.
(c)Reflects allocation of complex-wide Trustees' fees based on combined assets.
See Notes to Pro-Forma Combining Financial Statements.
<PAGE>
Evergreen Aggressive Growth Fund
Notes to Pro-Forma Combining Financial Statements (Unaudited)
September 30, 1996
1. Basis of Combination - The Pro-Forma Statement of Assets and Liabilities,
including the Pro- Forma Portfolio of Investments, and the related Pro-Forma
Statement of Operations (Pro-Forma Statements) reflect the accounts of Evergreen
Aggressive Growth Fund (Evergreen Aggressive) and Keystone America Hartwell
Emerging Growth Fund, Inc. (Hartwell) at September 30, 1996 and for the year
then ended.
The Pro-Forma Statements give effect to the proposed transfer of all assets and
certain identified liabilities of Hartwell shares in exchange for shares of
Evergreen. The Pro-Forma Statements reflect the expense of each Fund in carrying
out its obligations under the Agreement and Plan of Reorganization (the
"Reorganization") as though the merger occurred at the beginning of the period
presented.
Under the Reorganization, Evergreen Aggressive will acquire all of the
assets and assume certain identified liabilities of Hartwell. Thereafter, there
will be a distribution of shares of Evergreen to shareholders of Hartwell in
liquidation and subsequent termination thereof. The information contained herein
is based on the experience of each Fund for the year ended September 30, 1996
and is designed to permit shareholders of the consolidating mutual funds to
evaluate the financial effect of the proposed Reorganization. The expenses of
Evergreen and Hartwell in connection with the Reorganization (including the cost
of any proxy soliciting agents), will be borne by First Union National Bank of
North Carolina.
The Pro-Forma Statements should be read in conjunction with the historical
financial statements of each Fund incorporated by reference in the Statement of
Additional Information.
2. Shares of Beneficial Interest - The Pro-Forma net asset values per share
assumes the issuance of additional shares of Evergreen Aggressive Class A, Class
B, and Class C which would have been issued at September 30, 1996 in connection
with the proposed Reorganization. The amount of additional shares assumed to be
issued was calculated based on the net assets of Hartwell Class A, Class B and
Class C as of September 30, 1996 of $89,726, $6,954 and $2,368 (reported in
000's), respectively, and the net asset value per share of the respective share
class of Evergreen Aggressive Class A, Class B and Class C as of September 30,
1996 of $21.04, $20.89 and $20.88, respectively.
The Pro Forma shares outstanding of 8,856, 1,369 and 161 for Class A, Class B
and Class C, respectively (reported in 000's) consist of 4,264 additional shares
of Class A, 333 additional shares of Class B and 114 additional shares of Class
C (reported in 000's) to be issued in the proposed reorganization, as calculated
above, in addition to the shares of Evergreen outstanding as of September 30,
1996.
3. Pro-Forma Operations - Pro-Forma operating expenses include the actual
expenses of each Fund and the combined Fund, with certain expenses adjusted to
reflect the expected expenses of the combined entity. The investment advisory,
administrative personnel and service fees have been calculated for the combined
Fund based on the fee schedule in effect for Evergreen at the combined level of
average net assets for the year ended September 30, 1996.
<PAGE>
- -------------------------------------------------------------------------
<PAGE>
EVERGREEN TRUST
PART C
OTHER INFORMATION
Item 15. Indemnification
The response to this item is incorporated by
reference to "Liability and Indemnification of
Trustees" under the caption "Comparative Information
on Shareholders' Rights" in Part A of this
Registration Statement.
Item 16. Exhibits:
1(a). Declaration of Trust. Incorporated by
reference to Post-Effective Amendment
No. 18 to the Registrant's Registration
Statement on Form N-1A filed on February
2, 1987 - Registration No. 2-40357.
1(b). Certificate of Amendment to Declaration
of Trust. Incorporated by reference to
Post-Effective Amendment No. 27 to the
Registrant's Form N-1A Registration
Statement filed on January 3, 1995.
1(c). Instrument providing for the
Establishment and Designation of
Classes. Incorporated by reference to
Post-Effective Amendment No. 27 to the
Registrant's Form N-1A Registration
Statement filed on January 3, 1995 and
to Post-Effective Amendment No. 28 to
the Registrant's Form N-1A Registration
Statement filed on April 3, 1995.
2. Bylaws. Incorporated by reference to
Post-Effective Amendment No. 18 to the
Registrant's Registration Statement on Form
N-1A filed on February 2, 1987.
3. Not applicable.
4. Agreement and Plan of Reorganization.
Exhibit A to Prospectus contained in
Part A of this Registration Statement.
5. Not applicable.
6. Form of Investment Advisory Agreement
between First Union National Bank of
North Carolina and the Registrant.
Incorporated by reference to Post-
Effective Amendment No. 28 to the
Registrant's Form N-1A Registration
Statement filed on April 3, 1995.
7(a) Distribution Agreement between Evergreen
Keystone Distributor, Inc. and the
Registrant. Filed Herewith.
7(b) Form of Dealer Agreement by Evergreen
Keystone Distributor, Inc. Filed herewith
8. Not applicable.
9. Custody Agreement between State Street
Bank and Trust Company and Registrant.
Incorporated by reference to Post-
Effective Amendment No. 20 to the
Registrant's Form N-1A Registration
Statement filed on February 1, 1989.
10. Form of Distribution Plan Incorporated by
reference to Post-Effective Amendment
No. 28 to the Registrant's Form N-1A
Registration Statement filed on April 3,1995.
11. Opinion and consent of
Sullivan & Worcester LLP. Filed
herewith.
12. Tax opinion and consent of Sullivan &
Worcester LLP. To be Filed by amendment.
13. Form of Administration Agreement.
Incorporated by reference to Post-
Effective Amendment No. 28 to the
Registrant's Form N-1A Registration
Statement filed on March 31, 1995.
14(a). Consent of KPMG Peat Marwick LLP
filed herewith
14(b). Consent of Price Waterhouse, LLP
independent accountants, as to the use
of their report dated November 18, 1996 Filed
herewith.
15. Not applicable.
16. Not applicable.
17(a). Form of Proxy Card. Filed herewith.
17(b). Registrant's Rule 24f-2 Declaration.
Filed herewith.
Item 17. Undertakings.
(1) The undersigned Registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is a part of
this Registration Statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) of the Securities Act of 1933, the
reoffering prospectus will contain the information called for by the applicable
registration form for reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the applicable
form.
(2) The undersigned Registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to the
Registration Statement and will not be used until the amendment is effective,
and that, in determining any liability under the Securities Act of 1933, each
post-effective amendment shall be deemed to be a new Registration Statement for
the securities offered therein, and the offering of the securities at that time
shall be deemed to be the initial bona fide offering of them.
(3) The undersigned registrant agrees to file, by post-effective amendment,
an opinion of counsel or a copy of an Internal Revenue Service ruling supporting
the tax consequences of the proposed reorganization within a reasonable time
after receipt of such opinion or ruling.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement has
been signed on behalf of the Registrant, in the City of New York and State of
New York, on the 18th day of April, 1997.
EVERGREEN TRUST
By: /s/ John J. Pileggi
-----------------------
Name: John J. Pileggi
Title: President
Know all men by these presents that each person whose signature appears below
hereby severally constitutes and appoints John J. Pileggi, James P. Wallin,
Dorothy E. Bourassa, Terrence J. Cullen and Martin J. Wolin, and each of them
singly, his or her true and lawful attorneys-in-fact and agents, with full power
of substitution, for the undersigned and in the undersigned's name, place and
stead, in any and all capacities, to sign and affix the undersigned's name to
any and all amendments to this Registration Statement, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing necessary or incidental to the performance and execution of
the powers herein granted, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them or their substitutes, may lawfully
do or cause to be done by virtue hereof.
As required by the Securities Act of 1933, the following persons have signed
this Registration Statement in the capacities indicated as of the 18th day of
April, 1997.
Signatures Title
- ----------- -----
/s/ John J. Pileggi
- ----------------------- President and
John J. Pileggi Treasurer
/s/ Laurence B. Ashkin
- ----------------------- Trustee
Laurence B. Ashkin
/s/ Foster Bam
- ----------------------- Trustee
Foster Bam
/s/ James S. Howell
- ----------------------- Trustee
James S. Howell
/s/ Gerald M. McDonnell
- ----------------------- Trustee
Gerald M. McDonnell
/s/ Thomas L. McVerry
- ----------------------- Trustee
Thomas L. McVerry
/s/ William Walt Pettit
- ----------------------- Trustee
William Walt Pettit
/s/ Russell A. Salton, III, M.D.
- -------------------------------- Trustee
Russell A. Salton, III, M.D
/s/ Michael S. Scofield
- ----------------------- Trustee
Michael S. Scofield
<PAGE>
INDEX TO EXHIBITS
<PAGE>
N-14
EXHIBIT NO. Page
7(a) Distribution Agreement between Evergreen Keystone Distributor,
Inc. and Registrant
(b) Form of Dealer Agreement by Evergreen Keystone Distributor, Inc.
11 Opinion and Consent of Sullivan & Worcester LLP
14(a) Consent of KPMG Peat Marwick LLP
14(b) Consent of Price Waterhouse LLP
17(a) Form of Proxy
17(b) Rule 24f-2 Declaration
- -------------------
DISTRIBUTION AGREEMENT
AGREEMENT, made as of the 1st day of January, 1997, by and between the
Evergreen Trust (the "Trust") and Evergreen Keystone Distributor, Inc. ("EKD")
WHEREAS, The Trust, has adopted one or more Plans of Distribution with
respect to certain Classes of shares of its separate investment series (each a
"Plan", or collectively the "Plans") pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended (the "1940 Act") which Plans authorize the Trust
on behalf of the Funds to enter into agreements regarding the distribution of
such Classes of shares (the "Shares") of the separate investment series of the
Trust (the "Funds") set forth on Exhibit A; and
WHEREAS, the Trust has agreed that Evergreen Keystone Distributor, Inc.
(the "Distributor"), a Delaware corporation, shall act as the distributor of the
Shares; and
WHEREAS, the Distributor agrees to act as distributor of the Shares for
the period of this Distribution Agreement (the "Agreement");
NOW, THEREFORE, in consideration of the agreements hereinafter contained,
it is agreed as follows:
1. SERVICES AS DISTRIBUTOR
1.1. The Distributor agrees to use appropriate efforts to promote each Fund
and to solicit orders for the purchase of Shares and will undertake such
advertising and promotion as it believes reasonable in connection with such
solicitation The services to be performed hereunder by the Distributor are
described in more detail in Section 7 hereof. . In the event that the Trust
establishes additional investment series with respect to which it desires to
retain Evergreen Funds Distributor, Inc. to act as distributor for one or more
Classes hereunder, it shall promptly notify the Distributor in writing. If the
Distributor is willing to render such services it shall notify the Trust in
writing whereupon such portfolio shall become a Fund and its designated Classes
of shares of beneficial interest shall become Shares hereunder.
<PAGE>
1.2. All activities by the Distributor and its agents and employees as the
distributor of Shares shall comply with all applicable laws, rules and
regulations, including, without limitation, all rules and regulations made or
adopted pursuant to the 1940 Act by the Securities and Exchange Commission (the
"Commission") or any securities association registered under the Securities
Exchange Act of 1934, as amended.
1.3 In selling the Shares, the Distributor shall use its best efforts in
all respects duly to conform with the requirements of all Federal and state laws
relating to the sale of such securities. Neither the Distributor, any selected
dealer or any other person is authorized by the Trust to give any information or
to make any representations, other than those contained in the Trust's
registration statement (the "Registration Statement") or related Fund prospectus
and statement of additional information ("Prospectus and Statement of Additional
Information") and any sales literature specifically approved by the Trust.
1.4 The Distributor shall adopt and follow procedures, as approved by the
officers of the Trust, for the confirmation of sales to investors and selected
dealers, the collection of amounts payable by investors and selected dealers on
such sales, and the cancellation of unsettled transactions, as may be necessary
to comply with the requirements of the National Association of Securities
Dealers, Inc. (the "NASD"), as such requirements may from time to time exist.
1.5. The Distributor will transmit any orders received by it for purchase
or redemption of Shares to the transfer agent and custodian for the applicable
Fund.
1.6 The Distributor shall provide persons acceptable to the Trust to serve
as officers of the Trust.
1.7. Whenever in their judgment such action is warranted by unusual market,
economic or political conditions, or by abnormal circumstances of any kind, the
Trust's officers may decline to accept any orders for, or make any sales of
Shares until such time as those officers deem it advisable to accept such orders
and to make such sales.
1.8. The Distributor will act only on its own behalf as principal if it
chooses to enter into selling agreements with selected dealers or others. The
Distributor shall offer and sell Shares only to such selected dealers as are
members, in good standing, of the NASD.
1.9 The Distributor agrees to adopt compliance standards, in a form
satisfactory to the Trust, governing the operation of the multiple class
distribution system under which Shares are offered.
2. DUTIES OF THE TRUST.
2.1. The Trust agrees at its own expense to execute any and all documents
and to furnish, at its own expense, any and all information and otherwise to
take all actions that may be reasonably necessary in connection with the
qualification of Shares for sale in such states as the Trust and the Distributor
may designate.
2.2. The Trust shall furnish from time to time, for use in connection with
the sale of Shares such information with respect to the Funds and the Shares as
the Distributor may reasonably request; and the Trust warrants that any such
information shall be true and correct. Upon request, the Trust shall also
provide or cause to be provided to the Distributor: (a) unaudited semi-annual
statements of each Fund's books and accounts, (b) quarterly earnings
<PAGE>
statements of each Fund, (c) a monthly itemized list of the securities in each
Fund, (d) monthly balance sheets as soon as practicable after the end of each
month, and (e) from time to time such additional. information regarding each
Fund's financial condition as the Distributor may reasonably request.
3. REPRESENTATIONS OF THE TRUST.
3.1. The Trust represents to the Distributor that it is registered under
the 1940 Act and that the Shares of each of the Funds have been registered under
the Securities Act of 1933, as amended (the "Securities Act"). The Trust will
file such amendments to its Registration Statement as may be required and will
use its best efforts to ensure that such Registration Statement remains
accurate.
4. INDEMNIFICATION.
4.1 The Trust shall indemnify and hold harmless the Distributor, ITS
OFFICERS AND DIRECTORS, and each person, if any, who controls the Distributor
within the meaning of Section 15 of the Securities Act against any loss,
liability, claim, damage or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, claim, damage or expense
and reasonable counsel fees incurred in connection therewith), which the
Distributor or such controlling person may incur under the Securities Act or
under common law or otherwise, arising out of or based upon any untrue
statement, or alleged untrue statement, of a material fact contained in the
Registration Statement, as from time to time amended or supplemented, any
prospectus or annual or interim report to shareholders of the Trust, or arising
out of or based upon any omission, or alleged omission, to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, unless such statement or omission was made in reliance upon, and in
conformity with, information furnished to the Trust in connection therewith by
or on behalf of the Distributor, provided, however, that in no case (i) is the
indemnity of the Trust in favor of the Distributor, ITS OFFICER AND DIRECTORS,
or any such controlling persons would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of their duties or
by reason of the reckless disregard of their obligations and duties under this
Agreement; or (ii) is the Trust to be liable under its indemnity agreement
contained in this paragraph with respect to any claim made against the
Distributor or any such controlling persons, unless the Distributor or such
controlling person, as the case maybe, shall have notified the Trust in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon the other
first legal process giving information of the nature of the claim shall have
been served upon the Distributor or such controlling persons (or after the
Distributor or such controlling persons shall have received notice of such
service on any designated agent), but failure to notify the Trust of any such
claim shall not relieve it from any liability which it may have to the person
against whom such action it brought otherwise than on account of its indemnity
agreement contained in this paragraph. The Trust will be entitled to participate
at its own expense in the defense, or, if it so elects, to assume the defense of
any suit brought to enforce any such liability, but if the Trust elects to
assume the defense, such defense shall be conducted by counsel chosen by it and
satisfactory to the Distributor or such controlling person or persons, defendant
or defendants in the suit. In the event the Trust elects to assume the defense
of any such suit and retain such counsel, the Distributor or such controlling
person or persons, defendant or defendants in the suit, shall bear the fees and
expenses of any additional counsel retained by them, but, in case the Trust does
not elect to assume the defense of any such suit, it will reimburse the
Distributor or such controlling person or persons, defendant or defendants in
the suit, for the reasonable fees and expenses of any counsel retained by them.
<PAGE>
The Trust shall promptly notify the Distributor of the commencement of any
litigation or proceeding against it or any of its officers or directors in
connection with the issuance or sale of any of the shares.
4.2 The Distributor shall indemnify and hold harmless the Trust and each of
its directors and officers and each person, if any, who controls the Trust
against any loss, liability, claim, damage or expense described in the foregoing
indemnity contained in paragraph 4.1, but only with respect to statements or
omissions made in reliance upon , and in conformity with, information furnished
to the Trust in writing by or on behalf of the Distributor for uses in
connection with the Registration Statement, as from time to time amended, or the
annual or interim reports to shareholders. In case any action shall be brought
against the Trust or any persons so indemnified, in respect of which indemnity
may be sought against the Distributor, the Distributor shall have rights and
duties given to the Trust, and the Trust and each person so indemnified shall
have the rights and duties given to the Distributor by the provisions of
paragraph 4.1.
5. OFFERING OF SHARES.
5.1. None of the Shares shall be offered by either the Distributor or the
Trust under any of the provisions of this Agreement, and no orders for the
purchase or sale of Shares hereunder shall be accepted by the Trust, if and so
long as the effectiveness of the registration statement then in effect or any
necessary amendments thereto shall be suspended under any of the provisions of
the Securities Act or if and so long as a current prospectus and statement of
additional information as required by Section 10(b) (2) of the Securities Act,
as amended, is not on file with the Commission; provided, however, that nothing
contained in this paragraph 5.1 shall in any way restrict or have any
application to or bearing upon the Trust's obligation to repurchase Shares from
any shareholder in accordance with the provisions of the prospectus of each Fund
or the Trust's prospectus or Declaration of Trust.
6. AMENDMENTS TO REGISTRATION STATEMENT AND OTHER MATERIAL EVENTS.
6.1. The Trust agrees to advise the Distributor as soon as reasonably
practical by a notice in writing delivered to the Distributor: (a) of any
request or action taken by the Commission which is material to the Distributor's
obligations hereunder or (b) any material fact of which the Trust becomes aware
which affects the Distributor's obligations hereunder.
For purposes of this section, informal requests by or acts of the Staff of
the Commission shall not be deemed actions of or requests by the Commission.
7. COMPENSATION OF DISTRIBUTOR.
7.1. (a) As promptly as possible after the first Business Day (as defined
in the Prospectus) of each month this Agreement is in effect, the Trust shall
compensate the Distributor for its distribution services rendered during the
previous month (but not prior to the Commencement Date); by making payment to
the Distributor in the amounts set forth on Exhibit A annexed hereto with
respect to each Class of Shares of each Fund to which this Agreement is
applicable. The compensation by the Trust of the Distributor is authorized
pursuant to the Plan or Plans adopted by the Trust pursuant to Rule 12b-l under
the 1940 Act.
(b) Under this Agreement, the Distributor shall: (i) make payments to
securities dealers and others engaged in the sale of Shares; (ii) make payments
of principal and interest in connection with the financing of commission
payments made by the Distributor in connection with the sale of Shares (iii)
incur the expense of obtaining such support services, telephone
<PAGE>
facilities and shareholder services as may reasonably be required in connection
with its duties hereunder; (iv) formulate and implement marketing and
promotional activities, including, but not limited to, direct mail promotions
and television, radio, newspaper, magazine and other mass media advertising; (v)
prepare, print and distribute sales literature; (vi) prepare, print and
distribute Prospectuses of the Funds and reports for recipients other than
existing shareholders of the Funds; and (vii) provide to the Trust such
information, analyses and opinions with respect to marketing and promotional
activities as the Trust may, from time to time, reasonably request.
(c) The Distributor shall prepare and deliver reports to the Treasurer
of the Trust on a regular, at least monthly, basis, showing the distribution
expenditures incurred by the Distributor in connection with its services
rendered pursuant to this Agreement and the Plan and the purposes therefor, as
well as any supplemental reports as the Trustees, from time to time, may
reasonably request.
(d) The Distributor may retain as a sales charge the difference between
the current offering price of Shares, as set forth in the current prospectus for
each Fund, and net asset value, less any reallowance that is payable in
accordance with the sales charge schedule in effect at any given time with
respect to the Shares.
(e) The Distributor may retain any contingent deferred sales charge
("CDSCs") payable with respect to the redemption of any Shares, provided
however, that any CDSCs received by the Distributor shall first be applied by
the Distributor or its assignee to any outstanding amounts payable or which may
in the future be payable by the Distributor or its assignee under financing
arrangements entered into in connection with the payment of commissions on the
sale of Shares.
(f) The Distributor may sell, assign, pledge or hypothecate its rights
to receive compensation hereunder. The Trust acknowledges that, in connection
with the financing of commission payments made by the Distributor in connection
with the sale of Shares, the Distributor may sell and assign, and/or has sold
and assigned, to Mutual Fund Funding 1994-1 the Distributor's interest in
certain items of compensation payable to the Distributor hereunder, and that
Mutual Fund Funding 1994-1 in turn may pledge or assign, and/or has assigned,
such interest to First Union Corporation as lender to secure such financing. It
is understood that an assignee may not further sell, assign, pledge, or
hypothecate its right to receive such reimbursement unless such sale,
assignment, pledge or hypothecation has been approved by the vote of the Board
of the Trust, including a majority of the Disinterested Trustees, cast in person
at a meeting called for the purpose of voting on such approval.
(g) In addition to the foregoing, and in respect of its services
hereunder and for similar services rendered to other investment companies for
which Evergreen Asset Management Corp. (the "Investment Adviser") serves as
investment adviser, the Investment Adviser may pay to the Distributor an
additional fee to be paid in such amount and manner as the Investment Adviser
and Distributor may agree from time to time.
8. CONFIDENTIALITY, NON-EXCLUSIVE AGENCY.
8.1. The Distributor agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of the Trust all records and other
information relative to the Funds and its prior, present or potential
shareholders, and not to use such records and information for any purpose other
than performance of its responsibilities and to obtain approval in writing by
the Trust, which approval shall not be unreasonably withheld and may not be
withheld where the Distributor may be exposed to civil or criminal contempt
<PAGE>
proceedings for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by the Trust.
8.2. Nothing contained in this Agreement shall prevent the Distributor, or
any affiliated person of the Distributor, from performing services similar to
those to be performed hereunder for any other person, firm, or corporation or
for its or their own accounts or for the accounts of others.
9. TERM.
9.1. This Agreement shall continue until June 30, 1998 and thereafter for
successive annual periods, provided such continuance is specifically approved at
least annually by (i) a vote of the majority of the Trustees of the Trust and
(ii) a vote of the majority of those Trustees of the Trust who are not
interested persons of the Trust and who have no direct or indirect financial
interest in the operation of the Plan, in this Agreement or any agreement
related to the Plan (the "Independent Trustees") by vote cast in person at a
meeting called for the purpose of voting on such approval. This Agreement is
terminable at any time, with respect to the Trust, without penalty, (a) on not
less than 60 days' written notice by vote of a majority of the Independent
Trustees, or by vote of the holders of a majority of the outstanding voting
securities of the Trust, or (b) upon not less than 60 days' written notice by
the Distributor. This Agreement may remain in effect with respect to a Fund even
if it has been terminated in accordance with this paragraph with respect to one
or more other Funds of the Trust. This Agreement will also terminate
automatically in the event of its assignment. (As used in this Agreement, the
terms "majority of the outstanding voting securities", "interested persons", and
"assignment" shall have the same meaning as such terms have in the 1940 Act.)
10. MISCELLANEOUS.
10.1. This Agreement shall be governed by the laws of the State of New
York.
10.2. The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their constructions or effect.
10.3 The obligations of the Trust hereunder are not personally binding
upon, nor shall resort be had to the private property of, any of the Trustees,
shareholders, officers, employees or agents of the Trust and only the Trust's
property shall be bound.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below.
EVERGREEN KEYSTONE DISTRIBUTOR, INC. EVERGREEN TRUST
By:_______________________________ By:______________________________
Title: , Vice President Title: John J. Pileggi, President
<PAGE>
EXHIBIT A
To Distribution Agreement between Evergreen Keystone Distributor, Inc.
and EVERGREEN TRUST
FUNDS AND CLASSES COVERED BY THIS AGREEMENT:
Evergreen Aggressive Growth Fund
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
CLASS Y SHARES
Evergreen Fund
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
CLASS Y SHARES
DISTRIBUTION FEES
1. During the term of this Agreement, the Trust will pay to the Distributor a
quarterly fee with respect to each of the Funds and Classes of Shares thereof
listed above. This fee will be computed at the annual rate of .25 of 1% of the
average net asset value on an annual basis of Class A Shares of each Fund; and
.75 of 1% of the average net asset value on an annual basis of Class B and Class
C Shares of each Fund.
2. For the quarterly period in which the Agreement becomes effective or
terminates, there shall be an appropriate proration of any fee payable on the
basis of the number of days that the Agreement is in effect during the quarter.
IN WITNESS WHEREOF, the parties hereto have caused this Exhibit A to the
Distribution Agreement between the parties dated as of January 1, 1997 to be
executed by their officers designated below.
EVERGREEN KEYSTONE DISTRIBUTOR, INC. EVERGREEN TRUST
By:_______________________________ By: /s/John J. Pileggi
Title: , Vice President Title: John J. Pileggi, President
- ---------------------
EVERGREEN KEYSTONE
- ---------------------
[logo] FUNDS [logo]
- ---------------------
EVERGREEN KEYSTONE DISTRIBUTOR, INC.
230 PARK AVENUE
NEW YORK, NEW YORK 10169
December 12, 1996
Effective January 1, 1997
To Whom It May Concern:
You currently have a dealer agreement ("Agreement") with Evergreen
Keystone Distributor, Inc. ("Company"). Effective January 1, 1997 the
Agreement is amended and restated in its entirety as set forth below.
The Company, principal underwriter, invites you to participate in the
distribution of shares, including separate classes of shares, ("Shares") of
the Keystone Fund Family, the Keystone America Fund Family, the Evergreen Fund
Family and to the extent applicable their separate investment series
(collectively "Funds" and each individually a "Fund") designated by us which
are currently or hereafter underwritten by the Company, subject to the
following terms:
1. You will offer and sell Shares of the Funds at the public offering price
with respect to the applicable class described in the then current prospectus
and/or statement of additional information ("Prospectus") of the Fund whose
Shares you offer. You will offer Shares only on a forward pricing basis, i.e.
orders for the purchase, repurchase or exchange of Shares accepted by you
prior to the close of the New York Stock Exchange and placed with us the same
day prior to the close of our business day, 5:00 p.m. Eastern Time, shall be
confirmed at the closing price for that business day. You agree to place
orders for Shares only with us and at such closing price. In the event of a
difference between verbal and written price confirmation, the written
confirmations shall be considered final. Prices of a Fund's Shares are
computed by and are subject to withdrawal by each Fund in accordance with its
Prospectus. You agree to place orders with us only through your central order
department unless we accept your written Power of Attorney authorizing others
to place orders on your behalf. This Agreement on your part runs to us and the
respective Fund and is for the benefit and enforceable by each.
2. In the distribution and sale of Shares, you shall not have authority to act
as agent for the Fund, the Company or any other dealer in any respect in such
transactions. All orders are subject to acceptance by us and become effective
only upon confirmation by us. The Company reserves the unqualified right not
to accept any specific order for the purchase or exchange of Shares.
3. In addition to the distribution services provided by you with respect to a
Fund you may be asked to render administrative, account maintenance and other
services as necessary or desirable for shareholders of such Fund ("Shareholder
Services").
4. Notwithstanding anything else contained in this Agreement or in any other
agreement between us, the Company hereby acknowledges and agrees that any
information received from you concerning your customer in the course of this
arrangement is confidential. Except as requested by the customer or as
required by law and except for the respective Fund, its officers, directors,
employees, agents or service providers, the Company will not provide nor
permit access to such information by any person or entity, including any First
Union Corporation bank or First Union Brokerage Services, Inc.
5. So long as this Agreement remains in effect, we will pay you commissions on
sales of Shares of the Funds and service fees for Shareholder Services, in
accordance with the Schedule of Commissions and Service Fees ("Schedule")
attached hereto and made a part hereof, which Schedule may be modified from
time to time or rescinded by us, in either case without prior notice. You have
no vested right to receive any continuing service fees, other fees, or other
commissions which we may elect to pay to you from time to time on Shares
previously sold by you or by any person who is not a broker or dealer actually
engaged in the investment banking or securities business. You will receive
commissions in accordance with the attached Schedule on all purchase
transactions in shareholder accounts (excluding reinvestment of income
dividends and capital gains distributions) for which you are designated as
Dealer of Record except where we determine that any such purchase was made
with the proceeds of a redemption or repurchase of Shares of the same Fund or
another Fund, whether or not the transaction constitutes the exercise of the
exchange privilege. Commissions will be paid to you twice a month. You will
receive service fees for shareholder accounts for which you are designated
Dealer of Record as provided in the Schedule. You hereby represent that
receipt of such service fees by you will be disclosed to your customers.
You hereby authorize us to act as your agent in connection with all
transactions in shareholder accounts in which you are designated as Dealer of
Record. All designations of Dealer of Record and all authorizations of the
Company to act as your agent shall cease upon the termination of this
Agreement or upon the shareholder's instruction to transfer his or her account
to another Dealer of Record.
6. Payment for all Shares purchased from us shall be made to the Company and
shall be received by the Company within three business days after the
acceptance of your order or such shorter time as may be required by law. If
such payment is not received by us, we reserve the right, without prior
notice, forthwith to cancel the sale, or, at our option, to sell such Shares
back to the respective Fund in which case we may hold you responsible for any
loss, including loss of profit, suffered by us or by such Fund resulting from
your failure to make payment as aforesaid.
7. You agree to purchase Shares of the Funds only from us or from your
customers. If you purchase Shares from us, you agree that all such purchases
shall be made only to cover orders already received by you from your
customers, or for your own bonafide investment without a view to resale. If
you purchase Shares from your customers, you agree to pay such customers the
applicable net asset value per Share less any contingent deferred sales charge
("CDSC") that would be applicable under the Prospectus ("repurchase price").
8. You will sell Shares only (a) to your customers at the prices described in
paragraph 2 above; or (b) to us as agent for a Fund at the repurchase
price. In such a sale to us, you may act either as principal for your own
account or as agent for your customer. If you act as principal for your own
account in purchasing Shares for resale to us, you agree to pay your
customer not less nor more than the repurchase price which you receive from
us. If you act as agent for your customer in selling Shares to us, you
agree not to charge your customer more than a fair commission for handling
the transaction. You shall not withhold placing with us orders received
from your customers so as to profit yourself as a result of such
withholding.
10. We will not accept from you any conditional orders for Shares.
11. If any Shares sold to you under the terms of this Agreement are
repurchased by a Fund, or are tendered for redemption, within seven business
days after the date of our confirmation of the original purchase by you, it is
agreed that you shall forfeit your right to any commissions on such sales even
though the shareholder may be charged a CDSC by the Fund.
We will notify you of any such repurchase or redemption within the next
ten business days after the date on which the certificate or written request
for redemption is delivered to us or to the Fund, and you shall forthwith
refund to us the full amount of any commission you received on such sale. We
agree, in the event of any such repurchase or redemption, to refund to the
Fund any commission we retained on such sale and, upon receipt from you of the
commissions paid to you, to pay such commissions forthwith to the Fund.
12. Shares sold to you hereunder shall not be issued until payment has been
received by the Fund concerned. If transfer instructions are not received from
you within 15 days after our acceptance of your order, the Company reserves
the right to instruct the transfer agent for the Fund concerned to register
Shares sold to you in your name and notify you of such. You agree to hold
harmless and indemnify the Company, the Fund and its transfer agent for any
loss or expense resulting from such registration.
13. You agree to comply with any compliance standards that may be furnished to
you by us regarding when each class of Shares of a Fund may appropriately be
sold to particular customers.
14. No person is authorized to make any representations concerning Shares of a
Fund except those contained in the Prospectus and in sales literature issued
by us supplemental to such Prospectus. In purchasing Shares from us you shall
rely solely on the representations contained in the appropriate Prospectus and
in such sales literature. We will furnish additional copies of such
Prospectuses and sales literature and other releases and information issued by
us in reasonable quantities upon request. You agree that you will in all
respects duly conform with all laws and regulations applicable to the sales of
Shares of the Funds and will indemnify and hold harmless the Funds, their
directors and trustees and the Company from any damage or expenses on account
of any wrongful act by you, your representatives, agents or sub-agents in
connection with any orders or solicitation or orders of Shares of the Funds by
you, your representatives, agents or sub-agents.
15. Each party hereto represents that it is (1) a member of the National
Association of Securities Dealers, Inc., and agrees to notify the other should
it cease to be a member of such Association and agrees to the automatic
termination of this Agreement at that time or (2) excluded from the definition
of broker-dealer under the Securities Exchange Act of 1934. It is further
agreed that all rules or regulations of the Association now in effect or
hereafter adopted, including its Business Conduct Rule 2830(d), which are
binding upon underwriters and dealers in the distribution of the securities of
open-end investment companies, shall be deemed to be a part of this Agreement
to the same extent as if set forth in full herein.
16. You will not offer the Funds for sale in any State where they are not
qualified for sale under the blue sky laws and regulations of such State or
where you are not qualified to act as a dealer except for States in which they
are exempt from qualification.
17. This Agreement supersedes and cancels any prior agreement with respect to
the sales of Shares of any of the Funds underwritten by the Company. The
Agreement may be amended by us at any time upon written notice to you.
18. This amendment to the Agreement shall be effective on January 1, 1997 and
all sales hereunder are to be made, and title to Shares of the Funds shall
pass in The Commonwealth of Massachusetts. This Agreement shall be interpreted
in accordance with the laws of The Commonwealth of Massachusetts.
19. All communications to the Company should be sent to the above address. Any
notice to you shall be duly given if mailed or telegraphed to you at the
addressed specified by you.
20. Either part may terminate this Agreement at any time by written notice to
the other party.
- --------------------------- EVERGREEN KEYSTONE DISTRIBUTOR, INC.
Dealer or Broker Name
- --------------------------- /s/ Robert A. Hering
Address
ROBERT A. HERING, President
<PAGE>
- ---------------------
EVERGREEN KEYSTONE
- ---------------------
[logo] FUNDS [logo]
- ---------------------
EVERGREEN KEYSTONE DISTRIBUTOR, INC. ROBERT A. HERING
230 PARK AVENUE President
NEW YORK, NEW YORK 10169
December 12, 1996
Effective January 1, 1997
Dear Financial Professional:
This Schedule of Commissions and Service Fees ("Schedule") supersedes any
previous Schedules, is hereby made part of our dealer agreement ("Agreement")
with you effective January 1, 1997 and will remain in effect until modified or
rescinded by us. Capitalized terms used in this Schedule and not defined
herein have the same meaning as such terms have in the Agreement. All
commission rates and service fee rates set forth in this Schedule may be
modified by us from time to time without prior notice.
I. KEYSTONE FUNDS
KEYSTONE QUALITY BOND FUND (B-1) KEYSTONE MID-CAP GROWTH FUND (S-3)
KEYSTONE DIVERSIFIED BOND FUND (B-2) KEYSTONE SMALL COMPANY GROWTH FUND (S-4)
KEYSTONE HIGH INCOME BOND FUND (B-4) KEYSTONE INTERNATIONAL FUND INC.
KEYSTONE BALANCED FUND (K-1) KEYSTONE PRECIOUS METALS HOLDINGS, INC.
KEYSTONE STRATEGIC GROWTH FUND (K-2) KEYSTONE TAX FREE FUND
KEYSTONE GROWTH AND INCOME FUND (S-1) (COLLECTIVELY "KEYSTONE FUNDS")
1. COMMISSIONS FOR THE KEYSTONE FUNDS (OTHER THAN KEYSTONE PRECIOUS METALS
HOLDINGS, INC.)
Except as otherwise provided in our Agreement, we will pay you commissions
on your sales of Shares of such Keystone Funds rtds d such er tv amrr
rdKeystone Fundat the rate of 4.0% of the aggregate public offering price of
such Shares as described in the Fund's Prospectus ("Offering Price") when sold
in an eligible sale.
2. COMMISSIONS FOR KEYSTONE PRECIOUS METALS HOLDINGS, INC.
Except as otherwise provided for in our Agreement, we will pay you
commissions on your sale of Shares of Keystone Precious Metals Holdings, Inc.
as the rate of the Offering Price when sold in an eligible sale as follows:
AMOUNT OF PURCHASE COMMISSION AMOUNT OF PURCHASE COMMISSION
Less than $100,000 4% $250,000-$499,999 1%
$100,000-$249,999 2% $500,000 and above 0.5%
3. SERVICE FEES
We will pay you service fees based on the aggregate net asset value of
Shares of the Keystone Funds (other than Keystone Precious Metals Holdings,
Inc.) you have sold on or after June 1, 1983 and of Keystone Precious Metals
Holdings, Inc. you have sold on or after November 19, 1984, which remain
issued and outstanding on the books of such Funds on the fifteenth day of the
third month of each calendar quarter (March 15, June 15, September 15 and
December 15, each hereinafter a "Service Fee Record Date") and which are
registered in the names of customers for whom you are dealer of record
("Eligible Shares"). Such service fees will be calculated quarterly at the
rate of 0.0625% per quarter of the aggregate net asset value of all such
Eligible Shares (approximately 0.25% annually) on the Service Fee Record Date;
provided, however, that in any calendar quarter in which service fees earned
by you on Eligible Shares of all Funds (except Keystone Liquid Trust Class A
Shares) are less than $50.00 in the aggregate, no service fees will be paid to
you nor will such amounts be carried over for payment in a future quarter.
Service fees will be payable within five business days after the Service Fee
Record Date. Service fees will only be paid by us to the extent that such
amounts have been paid to us by the Funds.
4. PROMOTIONAL INCENTIVES
We may, from time to time, provide promotional incentives, including
reallowance and/or payment of additional commissions to certain dealers. Such
incentives may, at our discretion, be limited to dealers who allow their
individual selling representatives to participate in such additional
commissions.
<TABLE>
<CAPTION>
II. KEYSTONE AMERICA FUNDS AND EVERGREEN FUNDS
KEYSTONE AMERICA FUNDS
<S> <C>
KEYSTONE GOVERNMENT SECURITIES FUND KEYSTONE OMEGA FUND
KEYSTONE STATE TAX FREE FUND KEYSTONE SMALL COMPANY GROWTH FUND - II
KEYSTONE STATE TAX FREE FUND - SERIES II KEYSTONE FUND FOR TOTAL RETURN
KEYSTONE STRATEGIC INCOME FUND KEYSTONE BALANCED FUND - II
KEYSTONE TAX FREE INCOME FUND (COLLECTIVELY "KEYSTONE EQUITY AND LONG TERM INCOME FUNDS")
KEYSTONE WORLD BOND FUND KEYSTONE CAPITAL PRESERVATION AND INCOME FUND
KEYSTONE FUND OF THE AMERICAS KEYSTONE INTERMEDIATE TERM BOND FUND
KEYSTONE GLOBAL OPPORTUNITIES FUND (COLLECTIVELY "KEYSTONE INTERMEDIATE INCOME FUNDS")
KEYSTONE AMERICA HARTWELL EMERGING GROWTH FUND, INC. KEYSTONE LIQUID TRUST
KEYSTONE GLOBAL RESOURCES AND DEVELOPMENT FUND
EVERGREEN FUNDS
EVERGREEN U.S. GOVERNMENT FUND EVERGREEN AMERICAN RETIREMENT FUND
EVERGREEN HIGH GRADE TAX FREE FUND EVERGREEN FOUNDATION FUND
EVERGREEN FLORIDA MUNICIPAL BOND FUND EVERGREEN TAX STRATEGIC FOUNDATION FUND
EVERGREEN GEORGIA MUNICIPAL BOND FUND EVERGREEN UTILITY FUND
EVERGREEN NEW JERSEY MUNICIPAL BOND FUND EVERGREEN TOTAL RETURN FUND
EVERGREEN NORTH CAROLINA MUNICIPAL BOND FUND EVERGREEN SMALL CAP EQUITY INCOME FUND
EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND (COLLECTIVELY "EVERGREEN EQUITY AND LONG TERM INCOME FUNDS")
EVERGREEN VIRGINIA MUNICIPAL BOND FUND
EVERGREEN FLORIDA HIGH INCOME MUNICIPAL BOND FUND EVERGREEN MONEY MARKET FUND
EVERGREEN FUND EVERGREEN TAX EXEMPT MONEY MARKET FUND
EVERGREEN U.S. REAL ESTATE EQUITY FUND EVERGREEN TREASURY MONEY MARKET FUND
EVERGREEN LIMITED MARKET FUND EVERGREEN PENNSYLVANIA TAX FREE MONEY MARKET FUND
EVERGREEN AGGRESSIVE GROWTH FUND (COLLECTIVELY "EVERGREEN MONEY MARKET FUNDS")
EVERGREEN INTERNATIONAL EQUITY FUND EVERGREEN SHORT-INTERMEDIATE BOND FUND
EVERGREEN GLOBAL LEADERS FUND EVERGREEN INTERMEDIATE-TERM BOND FUND
EVERGREEN EMERGING MARKETS FUND EVERGREEN INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND
EVERGREEN GLOBAL REAL ESTATE EQUITY FUND EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND
EVERGREEN BALANCED FUND EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND -- CALIFORNIA
EVERGREEN GROWTH & INCOME FUND (COLLECTIVELY "EVERGREEN INTERMEDIATE INCOME AND
EVERGREEN VALUE FUND MONEY MARKET FUNDS")
</TABLE>
A. CLASS A SHARES
1. COMMISSIONS
Except as otherwise provided in our Agreement, in paragraph 2 below or in
connection with certain types of purchases at net asset value which are
described in the Prospectuses for the Keystone America Funds and the Evergreen
Funds, we will pay you commissions on your sales of Shares of such Funds in
accordance with the following sales charge schedules* on sales where we
receive a commission from the shareholder:
KEYSTONE AMERICA AND EVERGREEN EQUITY AND LONG TERM INCOME FUNDS
SALES CHARGE AS COMMISSION AS
AMOUNT OF A PERCENTAGE OF A PERCENTAGE OF
PURCHASE OFFERING PRICE OFFERING PRICE
Less than $50,000 4.75% 4.25%
$50,000-$99,999 4.50% 4.25%
$100,000-$249,999 3.75% 3.25%
$250,000-$499,999 2.50% 2.00%
$500,000-$999,999 2.00% 1.75%
Over $1,000,000 None See paragraph 2
KEYSTONE AMERICA AND EVERGREEN INTERMEDIATE INCOME FUNDS
SALES CHARGE AS COMMISSION AS
AMOUNT OF A PERCENTAGE OF A PERCENTAGE OF
PURCHASE OFFERING PRICE OFFERING PRICE
Less than $50,000 3.25% 2.75%
$50,000-$99,999 3.00% 2.75%
$100,000-$249,999 2.50% 2.25%
$250,000-$499,999 2.00% 1.75%
$500,000-$999,999 1.50% 1.25%
Over $1,000,000 None See paragraph 2
KEYSTONE LIQUID TRUST AND EVERGREEN MONEY MARKET FUNDS
No sales charge for any amount of purchase.
2. COMMISSIONS FOR CERTAIN TYPES OF PURCHASES
With respect to (a) purchases of Class A Shares in the amount of $1 million
or more and/or (b) purchases of Class A Shares made by a corporate or certain
other qualified retirement plan or a non-qualified deferred compensation plan
or a Title I tax sheltered annuity or TSA Plan sponsored by an organization
having 100 or more eligible employees (a "Qualifying Plan"), (each such
purchase a "NAV Purchase"), we will pay you commissions as follows:
<TABLE>
<CAPTION>
a. Purchases described in 2(a) above
AMOUNT OF COMMISSION AS A PERCENTAGE
PURCHASE OF OFFERING PRICE
<S> <C>
$1,000,000-$2,999,999 1.00% of the first $2,999,999, plus
$3,000,000-$4,999,999 0.50% of the next $2,000,000, plus
$5,000,000 0.25% of amounts equal to or over $5,000,000
b. Purchases described in 2(b) above .50% of amount of purchase (subject to recapture
upon early redemption)
</TABLE>
* These sales charge schedules apply to purchases made at one time or pursuant
to Rights of Accumulation or Letters of Intent. Any purchase which is made
pursuant to Rights of Accumulation or Letter of Intent is subject to the
terms described in the Prospectus(es) for the Fund(s) whose Shares are being
purchased.
3. PROMOTIONAL INCENTIVES
We may, from time to time, provide promotional incentives, including
reallowance and/or payment of up to the entire sales charge to certain
dealers. Such incentives may, at our discretion, be limited to dealers who
allow their individual selling representatives to participate in such
additional commissions.
4. SERVICE FEES FOR EVERGREEN FUNDS (OTHER THAN EVERGREEN MONEY MARKET FUNDS)
AND KEYSTONE AMERICA FUNDS (OTHER THAN KEYSTONE STATE TAX FREE FUND,
KEYSTONE STATE TAX FREE FUND - SERIES II, KEYSTONE CAPITAL PRESERVATION AND
INCOME FUND AND KEYSTONE LIQUID TRUST)
a. Keystone America Funds Only. Until March 31, 1997, we will pay you
service fees based on the aggregate net asset value of Shares of such Funds
you have sold which remain issued and outstanding on the books of such Funds
on the fifteenth day of the third month of each calendar quarter (March 15,
June 15, September 15 and December 15, each hereinafter a "Service Fee Record
Date") and which are registered in the names of customers for whom you are
dealer of record ("Eligible Shares"). Such service fees will be calculated
quarterly at the rate of 0.0625% per quarter of the aggregate net asset value
of all such Eligible Shares (approximately 0.25% annually) on the Service Fee
Record Date; provided, however, that in any calendar quarter in which total
service fees earned by you on Eligible Shares of all Keystone Funds (except
Keystone Liquid Trust Class A Shares) are less than $50.00 in the aggregate,
no service fees will be paid to you nor will such amounts be carried over for
payment in a future quarter. Service fees will be paid within five days after
the Service Fee Record Date. Service fees will only be paid by us to the
extent that such amounts have been paid to us by the Funds.
b. Evergreen Funds and Keystone America Funds (after March 31, 1997). We
will pay you service fees based on the average daily net asset value of Shares
of such Funds you have sold which are issued and outstanding on the books of
such Funds during each calendar quarter and which are registered in the names
of customers for whom you are dealer of record ("Eligible Shares"). Such
service fees will be calculated quarterly at the rate of 0.0625% per quarter
of the daily average net asset value of all such Eligible Shares
(approximately 0.25% annually) during such quarter; provided, however, that in
any calendar quarter in which total service fees earned by you on Eligible
Shares of all Funds (except Keystone Liquid Trust Class A Shares) are less
than $50.00 in the aggregate, no service fees will be paid to you nor will
such amounts be carried over for payment in a future quarter. Service fees
will be paid by the twentieth day of the month before the end of the
respective quarter. Service fees will only be paid by us to the extent that
such amounts have been paid to us by the Funds.
5. SERVICE FEES FOR KEYSTONE STATE TAX FREE FUND AND KEYSTONE STATE TAX FREE
FUND - SERIES II
a. Until March 31, 1997, we will pay you service fees based on the aggregate
net asset value of Shares of such Funds you have sold which remain issued and
outstanding on the books of the Funds on the fifteenth day of the third month
of each calendar quarter (March 15, June 15, September 15 and December 15,
each hereinafter a "Service Fee Record Date") and which are registered in the
names of customers for whom you are dealer of record ("Eligible Shares"). Such
service fees will be calculated quarterly at the rate of 0.0375% per quarter
of the aggregate net asset value of all such Eligible Shares (approximately
0.15% annually) on the Service Fee Record Date; provided, however, that in any
calendar quarter in which total service fees earned by you on Eligible Shares
of all Funds (except Keystone Liquid Trust Class A Shares) are less than
$50.00 in the aggregate, no service fees will be paid to you nor will such
amounts be carried over for payment in a future quarter. Service fees will be
paid within five days after the Service Fee Record Date. Service fees will
only be paid by us to the extent that such amounts have been paid to us by the
Funds.
b. After March 31, 1997 we will pay you service fees calculated as provided
in section II (A)(4)(b) except that the quarterly rate will be 0.0375%
(approximately 0.15% annually).
c. After June 30, 1997, we will pay you service fees calculated as provided
in section II (A)(4)(b) above on Shares sold on or after July 1, 1997.
6. SERVICE FEES FOR KEYSTONE CAPITAL PRESERVATION AND INCOME FUND
a. Until March 31, 1997, we will pay you service fees calculated as provided
in section II (A)(4)(a) except that for Eligible Shares sold after January 1,
1997 the quarterly rate will be 0.025% (approximately 0.10% annually).
b. After March 31, 1997 we will pay you service fees calculated as provided
in section II (A)(4)(b) except that for Eligible Shares sold after January 1,
1997 the quarterly rate will be 0.025% (approximately 0.10% annually).
7. SERVICE FEES FOR KEYSTONE LIQUID TRUST
We will pay you service fees based on the aggregate net asset value of all
Shares of such Fund you have sold which remain issued and outstanding on the
books on the Fund on the fifteenth day of the third month of each calendar
quarter (March 15, June 15, September 15 and December 15, each hereinafter a
"Service Fee Record Date") and which are registered in the names of customers
for whom you are dealer of record ("Eligible Shares"). Such service fees will
be calculated at the rates set forth below and based on the aggregate net
asset value of all such Eligible Shares on the Service Fee Record Date;
provided, however, that no such service fees will be paid to you for any
quarter if the aggregate net asset value of such Eligible Shares on the last
business day of the quarter is less than $2 million; and provided further,
however, that service fees will only be paid to us to the extent that such
amounts have been paid to us by the Fund. Service fees will be paid within 5
days after the Service Fee Record Date. The quarterly rates at which such
service fees are payable and the net asset value to which such rates will be
applied are set forth below:
ANNUAL QUARTERLY AGGREGATE NET ASSET
RATE PAYMENT RATE VALUE OF SHARES
0.00000% 0.00000% of the first $1,999,999, plus
0.15000% 0.03750% of the next $8,000,000, plus
0.20000% 0.05000% of the next $15,000,000, plus
0.25000% 0.06250% of the next $25,000,000, plus
0.30000% 0.07500% of amounts over $50,000,000
8. SERVICE FEES FOR EVERGREEN MONEY MARKET FUNDS
We will pay you service fees calculated as provided in section II (A)(4)(b)
except that the quarterly rate will be 0.075% (approximately 0.30% annually.)
<PAGE>
B. CLASS B SHARES
ALL KEYSTONE AMERICA AND EVERGREEN FUNDS
1. COMMISSIONS
Except as otherwise provided in our Agreement, we will pay you commissions
on your sales of Class B Shares of the Keystone America Funds and the
Evergreen Funds at the rate of 4.00% of the aggregate Offering Price of such
Shares, when sold in an eligible sale.
2. PROMOTIONAL INCENTIVES
We may, from time to time, provide promotional incentives, including
reallowance and/or payment of additional commissions, to certain dealers. Such
incentives may, at our discretion, be limited to dealers who allow their
individual selling representatives to participate in such additional
commissions.
3. SERVICE FEES FOR EVERGREEN FUNDS AND KEYSTONE AMERICA FUNDS (OTHER THAN
KEYSTONE STATE TAX FREE FUND AND KEYSTONE STATE TAX FREE FUND - SERIES II)
a. Keystone America Funds - Until March 31, 1997, we will pay you service
fees calculated as provided in section II (A)(4)(a) above.
b. Evergreen Funds and Keystone America Funds (after March 31. 1997). We
will pay you service fees calculated as provided in section II (A)(4)(b)
above.
4. SERVICE FEES FOR KEYSTONE STATE TAX FREE FUND AND KEYSTONE STATE TAX FREE
FUND - SERIES II
a. Until March 31, 1997, we will pay you service fees calculated as provided
in section II (A)(5)(a) above.
b. After March 31, 1997, we will pay you service fees calculated as provided
in section II (A)(5)(b) above.
c. After June 30, 1997, we will pay you service fees calculated as provided
in section II (A)(5)(c) above.
C. CLASS C SHARES
ALL KEYSTONE AMERICA AND EVERGREEN FUNDS
1. COMMISSIONS
Except as provided in our Agreement, we will pay you initial commissions on
your sales of Class C Shares of the Keystone America and the Evergreen Funds
at the rate of 0.75% of the aggregate Offering Price of such Shares sold in
each eligible sale.
We will also pay you commissions based on the average daily net asset value
of Shares of such Funds you have sold which have been on the books of the
Funds for a minimum of 14 months from the date of purchase (plus any
reinvested distributions attributable to such Shares), which have been issued
and outstanding on the books of such Funds during the calendar quarter and
which are registered in the names of customers for whom you are dealer of
record ("Eligible Shares"). Such commissions will be calculated quarterly at
the rate of 0.1875% per quarter of the average daily net asset value of all
such Eligible Shares (approximately 0.75% annually) during such quarter. Such
commissions will be paid by the twentieth day of the month before the end of
the respective quarter. Such commissions will continue to be paid to you
quarterly so long as aggregate payments do not exceed applicable NASD
limitations and other governing regulations.
2. SERVICE FEES
We will pay you a full year's service fee in advance on your sales of Class
C Shares of such Funds at the rate of 0.25% of the aggregate net asset value
of such Shares.
We will pay you service fees based on the average daily net asset value of
Shares of such Funds you have sold which have been on the books of the Funds
for a minimum of 14 months from the date of purchase (plus any reinvested
distributions attributable to such Shares), which have been issued and
outstanding during the respective quarter and which are registered in the
names of customers for whom you are the dealer of record ("Eligible Shares").
Such service fees will be calculated quarterly at the rate of 0.0625% per
quarter of the average daily net asset value of all such Eligible Shares
(approximately 0.25% annually); provided, however, that in any calendar
quarter in which total service fees earned by you on Eligible Shares of Funds
(except Keystone Liquid Trust Class A Shares) are less than $50.00 in the
aggregate, no service fees will be paid to you nor will such amounts be
carried over for payment in a future quarter. Service fees will be paid by the
twentieth day of the month before the end of the respective quarter. Service
fees other than those paid in advance will only be paid by us to the extent
that such amounts have been paid to us by the Funds.
Sullivan & Worcester LLP
1025 Connecticut Avenue, N.W.
Washington, DC 20036
April 18, 1997
Evergreen Trust
2500 Westchester Avenue
Purchase, NY 10577
Ladies and Gentlemen:
We have been requested by the Evergreen Trust, a Massachusetts business
trust with transferable shares and currently consisting of three series (the
"Trust") established under a Declaration of Trust dated November 25, 1986 as
amended (the "Declaration"), for our opinion with respect to certain matters
relating to the Evergreen Aggressive Growth Fund (the "Acquiring Fund"), a
series of the Trust. We understand that the Trust is about to file a
Registration Statement on Form N-14 for the purpose of registering shares of the
Trust under the Securities Act of 1933, as amended (the "1933 Act"), in
connection with the proposed acquisition by the Acquiring Fund of all of the
assets of the Keystone America Hartwell Emerging Growth Fund, Inc. (the
"Acquired Fund"), a New York corporation with transferable shares, in exchange
solely for shares of the Acquiring Fund and the assumption by the Acquiring Fund
of liabilities of the Acquired Fund pursuant to an Agreement and Plan of
Reorganization the form of which is included in the Form N-14 Registration
Statement (the "Plan").
We have, as counsel, participated in various business and other proceedings
relating to the Trust. We have examined copies, either certified or otherwise
proved to be genuine to our satisfaction, of the Trust's Declaration and
By-Laws, and other documents relating to its organization, operation, and
proposed operation, including the proposed Plan and we have made such other
investigations as, in our judgment, are necessary or appropriate to enable us to
render the opinion expressed below.
Based upon the foregoing, and assuming the approval by shareholders of the
Acquired Fund of certain matters scheduled for their consideration at a meeting
presently anticipated to be held on June 30, 1997, it is our opinion that the
shares of the Acquiring Fund currently being registered, when issued in
accordance with the Plan and the Trust's Declaration and By-Laws, will be
legally issued, fully paid
<PAGE>
Evergreen Trust
April 18, 1997
Page 2
and non-assessable by the Trust, subject to compliance with the 1933 Act, the
Investment Company Act of 1940, as amended and applicable state laws regulating
the offer and sale of securities.
With respect to the opinion stated in the paragraph above, we note that
shareholders of a Massachusetts business trust may under some circumstances be
subject to assessment at the instance of creditors to pay the obligations of
such trust in the event that its assets are insufficient for the purpose.
We hereby consent to the filing of this opinion with and as a part of the
Registration Statement on Form N-14 and to the reference to our firm under the
caption "Legal Matters" in the Prospectus/Proxy Statement filed as part of the
Registration Statement. In giving such consent, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the 1933 Act or the rules and regulations promulgated thereunder.
Very truly yours,
/s/SULLIVAN & WORCESTER LLP
---------------------------
SULLIVAN & WORCESTER LLP
CONSENT OF INDEPENDENT AUDITORS
The Directors and Shareholders
Keystone America Hartwell Emerging Growth Fund, Inc.
We consent to the use of our report dated November 1, 1996 which is
incorporated by reference in the Form N-14 of Evergreen Trust dated April 18,
1997 and to the references to our firm under the caption "FINANCIAL STATEMENTS
AND EXPERTS" in the prospectus/proxy statement.
KPMG Peat Marwick LLP
Boston, Massachusetts
April 18, 1997
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Registration
Statement on Form N-14 (the "Registration Statement") of our report dated
November 18, 1996, relating to the financial statements and financial highlights
appearing in the September 30, 1996 Annual Report to Shareholders of Evergreen
Aggressive Growth Fund, which is also incorporated by reference into the
Registration Statement. We also consent to the reference to us under the
heading "Financial Statements and Experts" in the Prospectus.
We also consent to the reference to us under the heading "Financial Highlights"
in the Prospectus and under the headings "Independent Auditors" and "Financial
Statements" in the Statement of Additional Information both of the Evergreen
Trust Dated December 1, 1996 which are also incorporated by reference into
the Registration Statement.
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
April 16, 1997
<PAGE>
KEYSTONE AMERICA HARTWELL EMERGING GROWTH FUND, INC.
PROXY FOR THE MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 30, 1997
The undersigned, revoking all Proxies heretofore given, hereby appoints
[Name], [Name], and [Name] or any of them as Proxies of the undersigned, with
full power of substitution, to vote on behalf of the undersigned all shares of
Keystone America Hartwell Emerging Growth Fund, Inc. ("Hartwell") that the
undersigned is entitled to vote at the special meeting of shareholders of
Hartwell to be held at 3:00 p.m. on Monday, June 30, 1997 at the offices of
Keystone Investment Management Company, 26th Floor, 200 Berkeley Street, Boston,
Massachusetts 02116 and at any adjournments thereof, as fully as the undersigned
would be entitled to vote if personally present, as follows:
To approve an Agreement and Plan of Reorganization whereby Evergreen
Aggressive Growth Fund will (i) acquire all of the assets of Hartwell in
exchange for Shares of Evergreen Aggressive Growth Fund; and (ii) assume
[_Certain Stated_] liabilities of Hartwell, as substantially described in the
accompanying Prospectus/Proxy Statement.
_______ FOR ________ AGAINST ________ ABSTAIN
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE KEYSTONE AMERICA
HARTWELL EMERGING GROWTH FUND, INC.
THE BOARD OF DIRECTORS OF HARTWELL RECOMMENDS A VOTE FOR THE PROPOSAL.
THE SHARES REPRESENTED HEREBY WILL BE VOTED AS INDICATED OR FOR THE PROPOSAL IF
NO CHOICE IS INDICATED.
<PAGE>
THE PROXIES ARE AUTHORIZED IN THEIR DISCRETION TO VOTE UPON SUCH OTHER MATTERS
AS MAY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF.
NOTE: PLEASE SIGN EXACTLY AS YOUR
NAME(S) APPEAR ON THIS CARD.
Dated: , 199_
Signature(s):
Signature (of joint owner, if any):
NOTE: When signing as attorney, executor, administrator, trustee, guardian, or
as custodian for a minor, please sign your name and give your full title as
such. If signing on behalf of a corporation, please sign full corporate name and
your name and indicate your title. If you are a partner signing for a
partnership, please sign the partnership name and your name. Joint owners should
each sign this proxy. Please sign, date and return.
Registration Statement File No.2-40357
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
----------------------------
Post-Effective Amendment No.7
TO
FORM S-5
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------------
THE EVERGREEN FUND, INC.
(Exact name of Registrant as specified in Charter)
----------------------------
600 Mamaroneck Avenue
Harrison, New York 10528
(Address of Principal Executive Office)
----------------------------
STEPHEN A. LIEBER
600 Mamaroneck Avenue
Harrison, New York 10528
(Name and Address of Agent for Service)
----------------------------
Copies to:
Gerald M. Freedman, Esg.
TRUBIN, SILLCOCKS, EDELMAN & KNAPP
375 Park Avenue
New York, New York 10022
----------------------------
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum Maximum Amount of
Title of securities Amount Being Offering Price Aggregate Registration
Being Registered Registered Per Unit Offering Price Fee
- -------------------------------------------------------------------------------
Common Stock Indefinite * Not Not $500
Number* Applicable Applicable
- -------------------------------------------------------------------------------
*In addition to the number of shares of Common Stock of the Registrant
presently registered under the Securities Act of 1933, an indefinite number of
such shares of Common Stock is being registered by this Post-Effective Amendment
pursuant to Rule 24f-2 under the Investment Company Act of 1940.
===============================================================================
