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 MUNICIPAL 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. 33-23180); 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 August 31, 1996 was filed with
the Commission on or about October 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 MUNICIPAL 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 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 Short-Intermediate
Municipal Fund dated October 31, 1996
13. Additional Information about Statement of Additional Information
the Company Being Acquired of Evergreen Short-Intermediate
Municipal Fund-California dated
October 31, 1996
14. Financial Statements Financial Statements dated
August 31, 1996 of Evergreen
Short-Intermediate Municipal Fund
Financial Statements dated
August 31, 1996 of Evergreen Short-
Intermediate Municipal Fund-California
Item of Part C of Form N-14
15. Indemnification Incorporated by Reference to Part A
Caption - "Comparative Information
on Shareholders' Rights - Liability
and Indemnification of Trustees"
16. Exhibits Item 16. Exhibits
17. Undertakings Item 17. Undertakings
********************************************************************************
EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND-CALIFORNIA
2500 Westchester Avenue
Purchase, New York 10577
May [ __ ], 1997
Dear Shareholder:
The proposal contained in the accompanying Prospectus/Proxy Statement
provides for a combination of your Fund, Evergreen Short-Intermediate Municipal
Fund-California, with Evergreen Short-Intermediate Municipal Fund, a mutual fund
also advised by Evergreen Asset Management Corp. Your Fund and Evergreen
Short-Intermediate Municipal Fund have substantially similar investment
objectives and policies, although your Fund follows a policy of investing in
obligations issued by the State of California, its political subdivisions and
duly constituted authorities, the interest from which is exempt from Federal and
California income taxes, while Evergreen Short-Intermediate Municipal Fund
invests in Municipal securities issued by any State or political subdivision
thereof. Management believes that, in view of the current size of Evergreen
Short-Intermediate Municipal Fund-California, its shareholders would be better
served if it were combined with Evergreen Short-Intermediate Municipal Fund. An
objective of the proposed combination is to achieve possible economies of scale,
facilitate the management of assets and the delivery of shareholder services.
Under the proposed Agreement and Plan of Reorganization (the "Plan"),
Evergreen Short- Intermediate Municipal Fund would acquire all the assets of
your Fund in exchange for shares of Evergreen Short-Intermediate Municipal Fund
(the "Reorganization"). As of February 28, 1997, the Evergreen
Short-Intermediate Municipal Fund-California had net assets of approximately $[
___ ] million and Evergreen Short-Intermediate Municipal Fund had approximately
$[ __ ] billion of net assets. We believe that the proposed combination will
achieve the goal of efficient investment management and delivery of shareholder
services.
The proposed transaction will not result in any Federal income tax
liability for you or for Evergreen Short-Intermediate Municipal Fund-California.
As a shareholder of Evergreen Short- Intermediate Municipal Fund you will have
the ability to exchange your shares for the corresponding class of shares of the
other funds in Evergreen Keystone family of mutual funds. Following completion
of the Reorganization, your Fund will be liquidated.
SUMMARY OF BENEFITS
o Lower management fees and operating expenses
o Potential for greater operating efficiencies
The Trustees of Evergreen Short-Intermediate Municipal Fund-California
have called a special meeting of shareholders of the Fund to be held on July 14,
1997 to consider the proposed transaction. WE STRONGLY INVITE YOUR PARTICIPATION
BY ASKING YOU TO REVIEW, COMPLETE AND RETURN YOUR PROXY AS SOON AS POSSIBLE.
Detailed information about the proposed transaction is described in the
enclosed Prospectus/Proxy Statement. We thank you for your participation as a
shareholder and urge you to please exercise your right to vote by completing,
dating and signing the enclosed proxy card. A self-addressed, postage-paid
envelope has been enclosed for your convenience.
A copy of Evergreen Short-Intermediate Municipal Fund Prospectus
accompanies the Prospectus/Proxy Statement. We urge you to read the Prospectus
and retain it for future reference.
If you have any questions regarding the proposed transaction or if you
would like additional information about Evergreen Keystone family of mutual
funds, please telephone 1-800-xxx-xxxx.
IT IS VERY IMPORTANT THAT YOUR VOTING INSTRUCTIONS BE RECEIVED AS SOON AS
POSSIBLE.
Stephen A. Lieber James Howell
Chairman Chairman of the Board
Evergreen Asset Management Corp. Evergreen Funds
<PAGE>
EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND-CALIFORNIA
2500 Westchester Avenue
Purchase, New York 10577
--------------------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held On JULY 14, 1997
--------------------------------------------------
NOTICE IS HEREBY GIVEN that a Special Meeting (the "Meeting") of
Shareholders of Evergreen Short-Intermediate Municipal Fund-California will be
held at the offices of Keystone Investment Management Company, 200 Berkeley
Street, Boston, MA 02116 on July 14, 1997 at 3:00 p.m., Eastern Time, for the
following purposes:
1. To consider and act upon an Agreement and Plan of Reorganization (the
"Plan"), providing for the acquisition of all of the assets of
Evergreen Short-Intermediate Municipal Fund-California by Evergreen
Short-Intermediate Municipal Fund in exchange for shares of Evergreen
Short-Intermediate Municipal Fund, and the assumption by Evergreen
Short-Intermediate Municipal Fund of certain identified liabilities of
Evergreen Short-Intermediate Municipal Fund-California. The Plan also
provides for distribution of such shares of Evergreen
Short-Intermediate Municipal Fund to shareholders of Evergreen
Short-Intermediate Municipal Fund-California in liquidation and
subsequent termination of Evergreen Short-Intermediate Municipal
Fund-California. A vote in favor of the Plan is a vote in favor of the
liquidation and dissolution of Evergreen Short-Intermediate Municipal
Fund-California.
2. To transact any other business which may properly come before the
Meeting or any adjournment or adjournments thereof.
The Trustees of Evergreen Short-Intermediate Municipal Fund-California
have fixed the close of business on April 29, 1997 as the record date for the
determination of shareholders of Evergreen Short-Intermediate Municipal
Fund-California 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 Trustees
George O. Martinez
May [ ___ ], 1997 Secretary
18995
<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. Smit
f/b/o John B. Smith, Jr. UGMA
(2) John B. Smith, Jr. John B. Smith, Jr., Executor
<PAGE>
SUBJECT TO COMPLETION, APRIL [ ___ ], 1997
PRELIMINARY COPY
PROSPECTUS/PROXY STATEMENT DATED MAY [ ___ ], 1997
Acquisition of Assets of
EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND-CALIFORNIA
a series of
Evergreen Municipal Trust
2500 Westchester Avenue
Purchase, New York 10577
By and in Exchange for Shares of
EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND
a series of
Evergreen Municipal Trust
2500 Westchester Avenue
Purchase, New York 10577
This Prospectus/Proxy Statement is being furnished to shareholders of
Evergreen Short-Intermediate Municipal Fund-California ("Short-Intermediate-CA")
in connection with a proposed Agreement and Plan of Reorganization (the "Plan")
to be submitted to shareholders of Short- Intermediate-CA for consideration at a
Special Meeting of Shareholders to be held on July 14, 1997 at 3:00 p.m. at the
offices of Keystone Investment Management Company, 200 Berkeley Street, Boston,
MA 02116, and any adjournments thereof (the "Meeting"). The Plan provides for
substantially all of the assets of Short-Intermediate-CA to be acquired by
Evergreen Short-Intermediate Municipal Fund ("Evergreen Short-Intermediate") in
exchange for shares of Evergreen Short-Intermediate and the assumption by
Evergreen Short-Intermediate of certain identified liabilities of
Short-Intermediate-CA (hereinafter referred to as the "Reorganization").
Following the Reorganization, shares of Evergreen Short-Intermediate will be
distributed to shareholders of Short- Intermediate-CA in liquidation of
Short-Intermediate-CA and Short-Intermediate-CA will be terminated. Holders of
shares of Short-Intermediate-CA will receive shares of the class of Evergreen
Short-Intermediate (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 Short-Intermediate-CA held by them prior to the
Reorganization. As a result of the proposed Reorganization, shareholders of
Short-Intermediate-CA will receive that number of full and fractional
Corresponding Shares of Evergreen Short-Intermediate having an aggregate net
asset value equal to the aggregate net asset value of such shareholder's shares
of Short-Intermediate-CA. The Reorganization is being structured as a tax-free
reorganization for federal income tax purposes.
Evergreen Short-Intermediate is a separate series of Evergreen Municipal
Trust, an open-end management investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"). The investment objective of
Evergreen Short-Intermediate is to achieve as high a level of current income,
exempt from Federal income tax other than the AMT, as is consistent with
preserving capital and providing liquidity. Such investment objective is
substantially similar to that of Short-Intermediate-CA.
<PAGE>
This Prospectus/Proxy Statement, which should be retained for future
reference, sets forth concisely the information about Evergreen
Short-Intermediate that shareholders of Short-Intermediate- CA 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, incorporating by reference the financial statements of
Evergreen Short-Intermediate dated August 31, 1996 and the financial statements
of Short-Intermediate-CA dated August 31, 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 Short-Intermediate at 2500
Westchester Avenue, Purchase, New York 10577 or by calling toll-free
1-800-XXX-XXXX.
The Prospectuses of Evergreen Short-Intermediate and of
Short-Intermediate-CA dated October 31, 1996 and the Annual Reports of both
funds for the fiscal year ended August 31, 1996 are incorporated herein by
reference in their entirety, insofar as they relate to Evergreen
Short-Intermediate and Short-Intermediate-CA only, and not to any other fund
described therein. The two Prospectuses, which pertain (i) to Class Y shares and
(ii) to Class A, Class B and Class C shares, differ only insofar as they
describe the separate distribution and shareholder servicing arrangements
applicable to the classes. Shareholders of Short-Intermediate-CA will receive,
with this Prospectus/Proxy Statement, copies of the Prospectus pertaining to the
class of shares of Evergreen Short-Intermediate that they will receive as a
result of the consummation of the Reorganization. This Prospectus also includes
the prospectus for Short-Intermediate-CA. Additional information about Evergreen
Short-Intermediate 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 Short-Intermediate
at the address or telephone number listed in the preceding paragraph. The
Statement of Additional Information also includes information relating to
Short-Intermediate-CA.
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.
18995
2
<PAGE>
TABLE OF CONTENTS
Page
COMPARISON OF FEES AND EXPENSES..............................................5
SUMMARY ....................................................................8
Proposed Plan of Reorganization.....................................8
Tax Consequences...........................................9
Investment Objectives and Policies of Evergreen
Short-Intermediate and Short-Intermediate-CA ..............9
Comparative Performance Information of Each Fund....................9
Management of the Funds............................................10
Investment Adviser and Sub-adviser.................................10
Portfolio Management...............................................12
Distribution of Shares.............................................12
Purchase and Redemption Procedures.................................14
Exchange Privileges................................................15
Dividend Policy....................................................15
RISKS ...................................................................15
Reasons for the Reorganization.....................................15
Agreement and Plan of Reorganization...............................17
Federal Income Tax Consequences....................................18
Pro-forma Capitalization...........................................19
Shareholder Information............................................20
COMPARATIVE INFORMATION ON SHAREHOLDERS' RIGHTS ............................23
Form of Organization...............................................23
Capitalization.....................................................23
Shareholder Liability..............................................23
Shareholder Meetings and Voting Rights.............................24
Liquidation or Dissolution.........................................24
Liability and Indemnification of Trustees..........................24
Rights of Inspection...............................................25
ADDITIONAL INFORMATION......................................................25
VOTING INFORMATION CONCERNING THE MEETING ..................................25
FINANCIAL STATEMENTS AND EXPERTS............................................27
LEGAL MATTERS...............................................................28
OTHER BUSINESS..............................................................28
18995
3
<PAGE>
COMPARISON OF FEES AND EXPENSES
The amounts for Class Y, Class A, Class B, and Class C shares of Evergreen
Short-Intermediate set forth in the following tables and examples are based on
the expenses for the fiscal year ended August 31, 1996. The amounts for Class Y,
Class A, Class B, and Class C shares of Short-Intermediate-CA set forth in the
following tables and in the examples are estimates based on
Short-Intermediate-CA's fiscal year ending August 31, 1997. All amounts are
adjusted for voluntary expense waivers. The amounts for Evergreen
Short-Intermediate pro forma are based on the combined expenses expected for the
twelve months ending ending August 31, 1997.
The following tables show for Evergreen Short-Intermediate and
Short-Intermediate-CA the shareholder transaction expenses and annual fund
operating expenses associated with an investment in the Class Y, Class A, Class
B, and Class C shares of each Fund.
Comparison of Class A, And Class B Shares of Evergreen
Short-Intermediate With Corresponding Shares of Short-Intermediate-CA
Evergreen Short-Intermediate
Shareholder Transaction Expenses Class Y Class A Class B
------- ------- -------
Maximum Sales Load Imposed on None 3.25% None
Purchases (as a percentage of offering
price)
Maximum Sales Load Imposed on None None None
Reinvested Dividends (as a percentage
of offering price)
Contingent Deferred Sales Charge (as a None None 5.00% in
percentage of original purchase price the first
year and or redemption proceeds, year, de-
whichever is lower) clining to
1.00% in
the sixth
year and
0.00%
thereafter
Exchange Fee None None None
Annual Fund Operating Expenses (as a
percentage of average daily net assets)
Advisory Fees 0.50% 0.50% 0.50%
12b-1 Fees None 0.10%(1) 1.00%(1)
Other Expenses (2) 0.23% 0.23% 0.23%
Annual Fund Operating Expenses 0.73% 0.83% 1.73%
Short-Intermediate-CA
Shareholder Transaction Expenses Class Y Class A Class B
------- ------- -------
Maximum Sales Load Imposed on None 3.25% None
Purchases (as a percentage of offering
price)
Maximum Sales Load Imposed on None None None
Reinvested Dividends (as a percentage
of offering price)
Contingent Deferred Sales Charge (as a None None 5.00% in the
percentage of original purchase price first year,
year and or redemption proceeds, declining to
whichever is lower) 1.00% in the
sixth year
and 0.00%
thereafter
Exchange Fee None None None
Annual Fund Operating Expenses (as a
percentage of average daily net assets)
Advisory Fees 0.55% 0.55% 0.55%
12b-1 Fees None 0.25% 1.00%
Other Expenses (2) 0.34% 0.34% 0.34%
Annual Fund Operating Expenses 0.89% 0.99% xxx%
Evergreen Short-Intermediate Pro Forma
Shareholder Transaction Expenses Class Y Class A Class B
------- ------- -------
Maximum Sales Load Imposed on None 3.25% None
Purchases (as a percentage of offering
price)
Maximum Sales Load Imposed on None None None
Reinvested Dividends (as a percentage
of offering price)
Contingent Deferred Sales Charge (as a None None 5.00% in
percentage of original purchase price the first
year and or redemption proceeds, year, de-
whichever is lower) clining to
1.00% in
the sixth
year and
0.00%
thereafter
Exchange Fee None None None
Annual Fund Operating Expenses (as a
percentage of average daily net assets)
Advisory Fees 0.50% 0.50% 0.50%
12b-1 Fees None 0.25%(1) 1.00%(1)
Other Expenses (2) 0.20% 0.20% 0.20%
Annual Fund Operating Expenses 0.70% 0.80% 1.70%
- ----------------
(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 Shares of Evergreen Short-Intermediate,
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) Reflects agreements by Evergreen Asset Management Corp. to voluntarily
reimburse Evergreen Short-Intermediate and Short-Intermediate-CA, respectively,
for certain class specific expenses. Each Fund's investment adviser may cease or
modify these waivers and reimbursements at any time. Absent such agreements, the
operating expenses for the year ended August 31, 1996 and the estimated
operating expenses for Short-Intermediate-CA year ending August 31, 1996, are as
follows:
Class Y Class A Class B Class C
------- ------- ------- -------
Evergreen Short-Intermediate 0.90% 1.11% 2.09% 2.09%
Short-Intermediate-CA 1.09% 1.19% 2.09% 2.09%
EXAMPLES. The following tables show for each Fund, and for Evergreen
Short-Intermediate, 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 Short-Intermediate Short-Intermediate-CA
One Three Five Ten One Three Five Ten
Year Years Years Years Year Years Years Years
Class Y $7 $23 $41 $91 $9 $28 $49 $110
Class A $41 $58 $77 $132 $42 $63 $85 $150
Class B
Assuming
redemption
at end of period $68 $84 $114 $169 $69 $89 $122 $187
Class B
Assuming no
redemption
at end of period $18 $54 $94 $168 $19 $59 $102 $187
Evergreen Short-Intermediate - Pro Forma
One Three Five Ten
Year Years Years Years
Class Y $7 $22 $39 $87
Class A $40 $57 $75 $128
Class B
Assuming
redemption
at end of period $67 $84 $112 $166
Class B
Assuming no
redemption
at end of period $17 $54 $97 $166
The purpose of the foregoing examples is to assist a Short-Intermediate-CA
shareholder in understanding the various costs and expenses that an investor in
Evergreen Short-Intermediate 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 Short-Intermediate-CA. These
examples should not be considered a representation of past or future expenses or
annual return. Actual expenses may be greater or less than those shown.
SUMMARY
This summary is qualified in its entirety by reference to the additional
information contained elsewhere in this Prospectus/Proxy Statement, and, to the
extent not inconsistent with such additional information, the Prospectuses of
Evergreen Short-Intermediate and Short-Intermediate-CA dated October 31, 1996
(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 substantially all of the assets of
Short-Intermediate-CA in exchange for shares of Evergreen Short-Intermediate and
the assumption by Evergreen Short- Intermediate of certain identified
liabilities of Short-Intermediate-CA. (Short-Intermediate-CA and Evergreen
Short-Intermediate 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 Short-Intermediate to Short-Intermediate-CA
shareholders in liquidation of Short-Intermediate-CA as part of the
Reorganization. As a result of the Reorganization, the shareholders of
Short-Intermediate- CA will become the owners of that number of full and
fractional Corresponding Shares of Evergreen Short-Intermediate having an
aggregate net asset value equal to the aggregate net asset value of the
shareholder's shares of Short-Intermediate-CA as of the close of business
immediately prior to the date that Short-Intermediate-CA's assets are exchanged
for shares of Evergreen Short-Intermediate. See "Information About the
Reorganization."
The Trustees of Short-Intermediate-CA, including the Trustees who are not
"interested persons," as such term is defined in the 1940 Act (the "Independent
Trustees"), have concluded that the Reorganization would be in the best
interests of shareholders of Short-Intermediate-CA and that the interests of the
shareholders of Short-Intermediate-CA will not be economically diluted as a
result of the transactions contemplated by the Reorganization. Accordingly, the
Trustees have submitted the Plan for the approval of Short-Intermediate-CA's
shareholders.
THE BOARD OF TRUSTEES OF SHORT-INTERMEDIATE-CA RECOMMENDS
APPROVAL BY SHAREHOLDERS OF SHORT-INTERMEDIATE-CA OF THE PLAN
EFFECTING THE REORGANIZATION.
The Trustees of Evergreen Short-Intermediate have also approved the Plan,
and accordingly, Evergreen Short-Intermediate's participation in the
Reorganization.
Approval of the Reorganization on the part of Short-Intermediate-CA 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. See "Voting
Information Concerning the Meeting."
The Reorganization is scheduled to take place on or about July 30, 1997.
If the shareholders of Short-Intermediate-CA do not vote to approve the
Reorganization, the Trustees of Short-Intermediate-CA will consider other
possible courses of action in the best interests of shareholders.
Tax Consequences
Prior to or at the completion of the Reorganization, Short-Intermediate-CA
will have received an opinion of counsel that the Reorganization has been
structured so that no gain or loss will be recognized by Short-Intermediate-CA
or its shareholders for federal income tax purposes as a result of the receipt
of shares of Evergreen Short-Intermediate in the Reorganization. The holding
period and aggregate tax basis of shares of Evergreen Short-Intermediate that
are received by Short-Intermediate-CA shareholders will be the same as the
holding period and aggregate tax basis of shares of Short- Intermediate-CA
previously held by such shareholders, provided that shares of
Short-Intermediate-CA are held as capital assets. In addition, the holding
period and tax basis of the assets of Short- Intermediate-CA in the hands of
Evergreen Short-Intermediate as a result of the Reorganization will be the same
as in the hands of Short-Intermediate-CA immediately prior to the Reorganization
and no gain or loss will be recognized by Evergreen Short-Intermediate upon the
receipt of the assets of Short- Intermediate-CA in exchange for shares of
Evergreen Short-Intermediate and the assumption by Evergreen Short-Intermediate
of certain identified liabilities.
Investment Objectives and Policies of The Funds
The investment objective of Evergreen Short-Intermediate is to achieve as
high a level of current income, exempt from Federal income tax other than the
AMT, as is consistent with preserving capital and providing liquidity. Under
normal circumstances, it is anticipated that Evergreen Short- Intermediate will
invest its assets so that at least 80% of its annual interest income is exempt
from Federal income tax other than the AMT. Evergreen Short-Intermediate will
seek to achieve its objective by investing substantially all of its assets in a
diversified portfolio of short and intermediate- term debt obligations issued by
states, territories and possessions of the United States and by the District of
Columbia, and their political subdivisions and duly constituted authorities, the
interest from which is exempt from Federal income tax other than the AMT. The
securities in which Evergreen Short-Intermediate invests are generally known as
Municipal Securities.
The investment objective and policies of Short-Intermediate-CA are
substantially similar, except that the Municipal Securities in which it invests
are limited to those issued by the State of California, its political
subdivisions and duly constituted authorities, the interest from which is exempt
from Federal and California income taxes.
Comparative Performance Information For 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 total return of Evergreen Short- Intermediate for the one and five
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 Annualized Compounded Total Return (1)
1 Year 5 Years To
Ended Ended March 31, Inception
March 31, March 31, 1997 Date
1997 1997 From
Inception
Evergreen Short-Intermediate
Class A shares
Class B shares
Class C shares
Class Y shares
Short-Intermediate-CA (2)
Class A shares
Class B shares
Class C shares
Class Y shares
- ----------------
(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.
(2) Not annualized.
Important information about Evergreen Short-Intermediate is also contained
in Management's Discussion of Evergreen Short-Intermediate's Performance,
attached hereto as Exhibit B. This information also appears in Evergreen
Short-Intermediate's most recent Annual Report.
Management of the Funds
The overall management of Evergreen Short-Intermediate and of
Short-Intermediate-CA is the responsibility of, and is supervised by, their
respective Board of Trustees.
Investment Adviser and Sub-adviser
Evergreen Asset Management Corp. ("Evergreen Asset") serves as investment
adviser to Evergreen Short-Intermediate and Short-Intermediate-CA. Evergreen
Asset, with its predecessors, has served as investment adviser to Evergreen
family of mutual funds since 1971. Evergreen Asset is a wholly-owned subsidiary
of First Union National Bank of North Carolina ("FUNB"). FUNB is a subsidiary of
First Union, one of the ten largest bank holding companies in the United States.
The Capital Management Group of FUNB and Evergreen Asset manage Evergreen family
of mutual funds with assets of approximately $[ __ ] billion as of February 28,
1997. For further information regarding Evergreen Asset, FUNB and First Union,
see "Management of the Funds -- Investment Advisers" in the Prospectuses of
Evergreen Short-Intermediate and Short-Intermediate-CA.
Evergreen Asset manages investments, provides various administrative
services and supervises the daily business affairs of the Funds subject to the
authority of the Trustees. Evergreen Asset is entitled to receive from Evergreen
Short-Intermediate an annual fee equal to 0.50 of 1.00% of average daily net
assets, and from Short-Intermediate-CA an annual fee equal to 0.55 of 1.00% of
average daily net assets. From time to time Evergreen Asset may, at its
discretion, also reduce or waive its fee or reimburse the Funds for certain of
their other expenses in order to reduce its expense ratio. Evergreen Asset may
reduce or cease these voluntary waivers and reimbursements at any time.
Evergreen Asset has entered into a sub-advisory agreement with Lieber &
Company which provides that Lieber & Company's research department and staff
will furnish Evergreen Asset with information, investment recommendations,
advice and assistance, and will be generally available for consultation with
respect to the Funds. Lieber & Company will be reimbursed by Evergreen Asset in
connection with the rendering of services on the basis of the direct and
indirect costs of performing such services. There is no additional charge to the
Funds for the services provided by Lieber & Company. The address of both
Evergreen Asset and Lieber & Company is 2500 Westchester Avenue, Purchase, New
York 10577. Lieber & Company is an indirect, wholly-owned, subsidiary of First
Union.
Portfolio Management
The portfolio manager of both Evergreen Short-Intermediate and
Short-Intermediate-CA is Stephen Shachat, who is a Vice President of Evergreen
Asset. Mr. Shachat has served as each Fund's principal manager since its
inception.
Distribution of Shares
Evergreen Keystone Distributor, Inc. ("EKD"), an affiliate of BISYS Group,
Inc., acts as underwriter of both Evergreen Short-Intermediate's and
Short-Intermediate-CA's shares. EKD distributes each Fund's shares directly or
through broker-dealers, banks (including FUNB), or other financial
intermediaries. Evergreen Short-Intermediate offers four classes of shares:
Class A, Class B, Class C and Class Y. Short-Intermediate-CA offers four classes
of shares: Class A, Class B, Class C and Class Y. Each class has separate
distribution arrangements. (See "Distribution-Related and Shareholder
Servicing-Related Expenses" below.) No class bears the distribution expenses
relating to the shares of any other class.
In the proposed Reorganization, shareholders of Short-Intermediate-CA will
receive the corresponding class of shares of Evergreen Short-Intermediate which
they currently hold in Short-Intermediate-CA. The Class A, Class B, Class C and
Class Y shares of Evergreen Short-Intermediate have substantially identical
arrangements with respect to the imposition of initial sales charges, CDSCs and
distribution and service fees as the comparable class of shares of
Short-Intermediate-CA. Because the Reorganization will be effected at net asset
value without the imposition of a sales charge, Evergreen Short-Intermediate
shares acquired by shareholders of Short-Intermediate-CA 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
Short-Intermediate shares acquired as a result of the Reorganization would
continue to be subject to a CDSC upon subsequent redemption to the same extent
as if they had continued to hold their shares of Short-Intermediate-CA.
The following is a summary description of charges and fees for each of the
different classes of shares. More detailed descriptions of the distribution
arrangements applicable to the classes of shares are contained in the respective
Evergreen Short-Intermediate Prospectuses and Short-Intermediate-CA Prospectus
and in each Fund's respective Statement of Additional Information.
CLASS Y SHARES. Class A shares are sold at net asset value without any
initial sales charge and are not subject to distribution-related fees. Class Y
Shares are only available to certain classes of investors as is more fully
described in the Prospectus for each Fund.
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 the Short-Intermediate California 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 Short-Intermediate received by Short-Intermediate-CA shareholders in
the Reorganization, Evergreen Short-Intermediate will treat such shares as
having been sold on the date the shares of the Short-Intermediate-CA were
originally purchased by the Short-Intermediate-CA 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 the Funds 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," as that term is defined in the NASD Rule (as
defined below), 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%).
The payment of fees under the respective Rule 12b-1 plans may from time to
time be limited to the extent any amounts payable thereunder exceed the
limitations contained under Section 26(d) of Article III of the Rules of Fair
Practice of the National Association of Securities Dealers, Inc. ("NASD Rule").
The NASD Rule provides that the rate of payments of "asset based sales charges"
shall be limited to .75 of 1% of average annual net assets and, to the extent
that payments are made in respect of "shareholder services," the rate of such
payments shall be limited to .25 of 1% of average annual net assets. In
addition, the payment of such fees and the Funds' CDSCs may, from time to time,
be limited by certain other provisions of the NASD Rule.
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
$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 Prospectuses for each
Fund. Evergreen Short-Intermediate and Short-Intermediate-CA 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
Each Fund declares income dividends daily and pays such dividends monthly.
Distributions of any net realized gains of a Fund will be made at least
annually. Shareholders begin to earn dividends on the first business day after
shares are purchased unless shares were not paid for, in which case dividends
are not earned until the next business day after payment is received. Dividends
and distributions are reinvested in additional shares of the same class of the
respective Fund, or paid in cash, as a shareholder has elected. See the
respective Prospectuses of the Funds for further information concerning
dividends and distributions.
After the Reorganization, shareholders of Short-Intermediate-CA that have
elected to have their dividends and/or distributions reinvested will have
dividends and/or distributions received from Evergreen Short-Intermediate
reinvested in shares of Evergreen Short-Intermediate. Shareholders of
Short-Intermediate-CA that have elected to receive dividends and/or
distributions in cash will receive dividends and/or distributions from Evergreen
Short-Intermediate 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 Short-Intermediate.
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.
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.
REASONS FOR THE REORGANIZATION
At a regular meeting held on March 12, 1997, the Board of Trustees of
Short-Intermediate-CA considered and approved the Reorganization as in the best
interests of shareholders.
In approving the Plan, the Trustees reviewed various factors about the
Funds and the proposed Reorganization. There are substantial similarities
between Evergreen Short-Intermediate and Short-Intermediate-CA. Specifically,
Evergreen Short-Intermediate and Short-Intermediate-CA have substantially
similar investment objectives and policies, and comparable risk profiles. See
"Comparison of Investment Objectives and Policies" below.
In addition, assuming that an alternative to the Reorganization would be to
propose that Short- Intermediate-CA continue its existence,
Short-Intermediate-CA would be offered through common distribution channels with
the substantially identical Evergreen Short-Intermediate. Short-Intermediate- CA
would also have to bear the cost of maintaining its separate existence.
Evergreen Asset believes that the prospect of dividing the resources of
Evergreen Keystone mutual fund organization between two substantially identical
funds could result in Short-Intermediate-CA being disadvantaged due to an
inability to achieve optimum size, performance levels and the greatest possible
economies of scale. In addition, Evergreen Asset noted that
Short-Intermediate-CA had not achieved an asset level that could justify its
continuance as a separate fund or enable it to bid for California Municipal
Securities on the same basis as larger funds specializing in California
Municipal Securities. 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, Evergreen Asset believes that the proposed Reorganization
would be in the best interest of each Fund and its shareholders.
The Board of Trustees of Short-Intermediate-CA 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 economic dilution of shareholder interests;
(iii) expense ratios, fees and expenses of Short-Intermediate-CA and Evergreen
Short- Intermediate and of similar funds; (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 Evergreen
Asset; (viii) the service and distribution resources available to Evergreen
Keystone family of mutual funds and the broad array of investment alternatives
available to shareholders of Evergreen Keystone family of mutual funds,
including the future marketing plans and resources expected to be used in
connection with Evergreen Keystone family of mutual funds; and the personnel and
financial resources of First Union and its affiliates; (ix)the fact that FUNB
will bear the expenses incurred by Short-Intermediate-CA in connection with the
Reorganization; (x) the fact that Evergreen Short-Intermediate will assume
certain identified liabilities of Short-Intermediate-CA; and (xi) the expected
federal income tax consequences of the Reorganization.
The Trustees also considered the benefits to be derived by shareholders of
Short-Intermediate-CA from the sale of its assets to Evergreen
Short-Intermediate. In this regard, the Trustees considered the potential
benefits of being associated with a larger entity and the economies of scale
that could be realized by the participation by shareholders of
Short-Intermediate-CA in the combined fund. In addition, the Trustees considered
that there are alternatives available to shareholders of Short- Intermediate-CA,
including the ability to redeem their shares, as well as the option to vote
against the Reorganization.
During their consideration of the Reorganization, the Trustees met with
counsel to the Independent Trustees regarding the legal issues involved. The
Trustees of Evergreen Short-Intermediate also concluded at a regular meeting on
March 11, 1997 that the proposed Reorganization would be in the best interests
of shareholders of Evergreen Short-Intermediate and that the interests of the
shareholders of Evergreen Short-Intermediate will not be diluted as a result of
the transactions contemplated by the Reorganization.
THE TRUSTEES OF SHORT-INTERMEDIATE-CA RECOMMEND THAT THE
SHAREHOLDERS OF SHORT-INTERMEDIATE-CA 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 Short-Intermediate will acquire
substantially all of the assets of Short-Intermediate-CA in exchange for shares
of Evergreen Short-Intermediate and the assumption by Evergreen
Short-Intermediate of certain identified liabilities of Short-Intermediate-CA on
or about July 30, 1997 or such other date as may be agreed upon by the parties
(the "Closing Date"). Prior to the Closing Date, Short-Intermediate-CA will
endeavor to discharge all of its known liabilities and obligations. Evergreen
Short-Intermediate will not assume any liabilities or obligations of Short-
Intermediate-CA other than those reflected in an unaudited statement of assets
and liabilities of Short-Intermediate-CA prepared as of the close of regular
trading on the NYSE, currently 4:00 p.m. Eastern Time, on the business day
immediately prior to the Closing Date. The number of full and fractional shares
of each class of Evergreen Short-Intermediate to be received by the shareholders
of Short- Intermediate-CA will be determined by dividing the value of the assets
of Short-Intermediate-CA to be acquired by the ratio of the net asset value per
share of each respective class of Evergreen Short- Intermediate and each class
of Short-Intermediate-CA, 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
Prospectuses and Statement of Additional Information of Evergreen Short-
Intermediate, 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, Short-Intermediate-CA 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 Short-Intermediate-CA's shareholders (in shares of Short-Intermediate-CA, or
in cash, as the shareholder has previously elected) all of
Short-Intermediate-CA'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,
Short-Intermediate-CA 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 Short-Intermediate received by
Short-Intermediate- CA. Such liquidation and distribution will be accomplished
by the establishment of accounts in the names of Short-Intermediate-CA's
shareholders on the share records of Evergreen Short-Intermediate's transfer
agent. Each account will represent the respective pro rata number of full and
fractional Corresponding Shares of Evergreen Short-Intermediate due to
Short-Intermediate-CA's shareholders. All issued and outstanding shares of
Short-Intermediate-CA, including those represented by certificates, will be
canceled. Evergreen Short-Intermediate does not issue share certificates to
shareholders. The shares of Evergreen Short-Intermediate to be issued will have
no preemptive or conversion rights. After such distribution and the winding up
of its affairs, Short-Intermediate-CA will be terminated.
The consummation of the Reorganization is subject to the conditions set
forth in the Plan, including approval by Short-Intermediate-CA'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
Short-Intermediate-CA's shareholders, the Plan may be terminated (a) by the
mutual agreement of Short-Intermediate-CA and Evergreen Short-Intermediate; 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 Short-Intermediate-CA in connection with the
Reorganization (including the cost of any proxy soliciting agents) and the
expenses of Evergreen Short-Intermediate will be borne by each respective Fund.]
If the Reorganization is not approved by shareholders of
Short-Intermediate-CA, the Board of Trustees of Short-Intermediate-CA 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, Short-Intermediate-CA will receive an opinion
of counsel to the effect that, on the basis of the existing provisions of the
Code, U.S. Treasury regulations issued thereunder, current administrative rules,
pronouncements and court decisions, for federal income tax purposes, upon
consummation of the Reorganization:
(1)The transfer of substantially all of the assets of
Short-Intermediate-CA solely in exchange for shares of Evergreen
Short-Intermediate and the assumption by Evergreen Short-Intermediate of certain
identified liabilities, followed by the distribution of Evergreen
Short-Intermediate's shares by Short- Intermediate-CA in dissolution and
liquidation of Short-Intermediate-CA, will constitute a "reorganization" within
the meaning of section 368(a)(1)(D) of the Code, and Evergreen Short-
Intermediate and Short-Intermediate-CA 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 Short-Intermediate-CA on the
transfer of substantially all of its assets to Evergreen Short-Intermediate
solely in exchange for Evergreen Short-Intermediate's shares and the assumption
by Evergreen Short-Intermediate of certain identified liabilities of Short-
Intermediate-CA or upon the distribution of Evergreen Short-Intermediate's
shares to Short- Intermediate-CA's shareholders in exchange for their shares of
Short-Intermediate-CA;
18995
16
<PAGE>
(3) The tax basis of the assets transferred will be the same to Evergreen
Short-Intermediate as the tax basis of such assets to Short-Intermediate-CA
immediately prior to the Reorganization, and the holding period of such assets
in the hands of Evergreen Short-Intermediate will include the period during
which the assets were held by Short-Intermediate-CA;
(4) No gain or loss will be recognized by Evergreen Short-Intermediate
upon the receipt of the assets from Short-Intermediate-CA solely in exchange for
the shares of Evergreen Short-Intermediate and the assumption by Evergreen
Short-Intermediate of certain identified liabilities of Short- Intermediate-CA;
(5) No gain or loss will be recognized by Short-Intermediate-CA's
shareholders upon the issuance of the shares of Evergreen Short-Intermediate to
them, provided they receive solely such shares (including fractional shares) in
exchange for their shares of Short-Intermediate-CA; and
(6) The aggregate tax basis of the shares of Evergreen Short-Intermediate,
including any fractional shares, received by each of the shareholders of
Short-Intermediate-CA pursuant to the Reorganization will be the same as the
aggregate tax basis of the shares of Short-Intermediate-CA held by such
shareholder immediately prior to the Reorganization, and the holding period of
the shares of Evergreen Short-Intermediate, including fractional shares,
received by each such shareholder will include the period during which the
shares of Short-Intermediate-CA exchanged therefor were held by such shareholder
(provided that the shares of Short-Intermediate-CA 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 Short-Intermediate-CA shareholder
would recognize a taxable gain or loss equal to the difference between his or
her tax basis in his or her Short-Intermediate-CA shares and the fair market
value of Evergreen Short-Intermediate shares he or she received. Shareholders of
the Short-Intermediate-CA 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 Short-Intermediate-CA
should also consult their tax advisers as to state and local tax consequences,
if any, of the Reorganization.
Pro-forma Capitalization
The following tables sets forth the capitalization of Evergreen
Short-Intermediate and the Short-Intermediate-CA 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
.9862, .9862, and .9872 Class A, Class B and Class Y shares, respectively, of
Evergreen Short- Intermediate issued for each Class A, Class B and Class Y
share, respectively, of Short-Intermediate-CA.
Capitalization of Evergreen Short-Intermediate and
Short-Intermediate-CA
Short-
Evergreen Short- Intermediate- Combined After
Intermediate CA Reorganization
----------------- ------------- --------------
Net Assets (in 000's) $66,117 $17,608 $83,725
Net Asset Value Per
Share
Class A $ 10.18 $ 10.04 $10.18
Class B $ 10.18 $ 10.04 $10.18
Class Y $ 10.17 $ 10.04 $10.17
Shares Outstanding
Class A 2,637,348 747 2,638,084
Class B 672,363 4,981 627,276
Class Y 3,187,763 1,747,810 4,913,448
All Classes 6,497,473 1,753,537 8,228,803
The table set forth above should not be relied on to reflect the number of
shares to be received 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 April 29, 1997 (the "Record Date"), there were the following number
of each class of shares of beneficial interest of Short-Intermediate-CA and
Evergreen Short-Intermediate outstanding:
Class of Shares Evergreen Short- Short-Intermediate-CA
Intermediate
- --------------- ---------------- ---------------------
Class A
Class B
Class C
Class Y
All Classes
As of the Record Date, the officers and Trustees of Short-Intermediate-CA
beneficially owned as a group less than 1% of the outstanding shares of
Short-Intermediate-CA. To the Short-Intermediate- CA's knowledge, the following
persons owned beneficially or of record more than 5% of Short- Intermediate-CA's
total outstanding shares as of the Record Date:
As of the Record Date, the officers and Trustees of Evergreen
Short-Intermediate beneficially owned as a group less than 1% of the outstanding
shares of Evergreen Foundation. To Evergreen Short-Intermediate's knowledge, the
following persons owned beneficially or of record more than 5% of Evergreen
Short-Intermediate'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 is based upon and qualified in its entirety by
the descriptions of the respective investment objectives, policies and
restrictions set forth in the respective Prospectuses and Statements of
Additional Information of the Funds. The investment objectives, policies and
restrictions of Evergreen Short-Intermediate can be found in the Prospectus of
Evergreen Short-Intermediate under the caption "Investment Objectives and
Policies." Evergreen Short-Intermediate's Prospectus also offers additional
funds advised by Evergreen Asset or CMG. These additional funds are not involved
in the Reorganization, their investment objectives, policies and restrictions
are not discussed in this Prospectus/Proxy Statement and their shares are not
offered hereby. The investment objectives, policies and restrictions of
Short-Intermediate-CA can be found in the Prospectus of Short-Intermediate-CA
under the caption "Investment Objective and Policies."
The investment objective of Evergreen Short Intermediate is to achieve as
high a level of current income, exempt from Federal income tax other than the
AMT, as is consistent with preserving capital and providing liquidity. Under
normal circumstances, it is anticipated that the Fund will invest its assets so
that at least 80% of its annual interest income is exempt from Federal income
tax other than the AMT. The Fund will seek to achieve its objective by investing
substantially all of its assets in a diversified portfolio of short and
intermediate-term debt obligations issued by states, territories and possessions
of the United States and by the District of Columbia, and their political
subdivisions and duly constituted authorities, the interest from which is exempt
from Federal income tax other than the AMT. Such securities are generally known
as Municipal Securities (See "Municipal Securities" below). As a matter of
policy, the Trustees will not change the Fund's investment objective without
shareholder approval.
The investment objective of Short-Intermediate-CA is to achieve as high
a level of current income exempt from Federal and California income taxes, as is
consistent with preserving capital and providing liquidity. The Fund will seek
to achieve its objective by investing at least 80% of the value of its assets in
a diversified portfolio of short and intermediate-term debt obligations issued
by the State of California, its political subdivisions and duly constituted
authorities, the interest from which is exempt from Federal and California
income taxes. Such securities are generally known as Municipal Securities (see
"Municipal Securities" below).
MUNICIPAL SECURITIES. Both Evergreen Short-Intermediate and
Short-Intermediate-CA invest primarily in "Municipal Securities", which are debt
obligations issued to obtain funds for various public purposes that are exempt
from Federal income tax in the opinion of issuer's counsel. Both Funds will only
invest in Municipal Securities so long as they are determined to be of high or
upper medium quality. Municipal Securities meeting this criteria include bonds
rated A or higher by S&P, Moody's or another nationally recognized statistical
rating organization ("SRO"); notes rated SP-1 or SP-2 by S&P or MIG-1 or MIG-2
by Moody's or rated VMIG-1 or VMIG-2 by Moody's in the case of variable rate
demand notes or having comparable ratings from another SRO; and commercial paper
rated A-1 or A-2 by S&P or Prime-1 or Prime-2 by Moody's or having comparable
ratings from another SRO. For a description of such ratings see the Statement of
Additional Information.
The principal difference between the Funds is that while
Short-Intermediate-CA limits its investments in Municipal Securities to debt
obligations issued by the State of California, its political subdivisions and
duly constituted authorities, the interest from which is exempt from Federal and
California income taxes, Evergreen Short-Intermediate invests in Municipal
Securities generally. Accordingly, once the Funds are combined, shareholders
that had formerly held shares of Short- Intermediate-CA can no longer expect
income exempt from California income taxes
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 Short-Intermediate and Short-Intermediate-CA 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
Short-Intermediate-CA and Evergreen Short-Intermediate are open-end
management investment companies registered with the SEC under the 1940 Act,
which continuously offer shares to the public. Each is organized as series of
the same Massachusetts business trust, namely Evergreen Municipal Trust (the
"Trust"), which is governed by a Declaration of Trust, By-Laws and Board of
Trustees. The Trust is also governed by applicable Massachusetts and Federal
law.
Capitalization
The beneficial interests in Evergreen Short-Intermediate and
Short-Intermediate-CA are represented by an unlimited number of transferable
shares of beneficial interest with a $.0001 par value per share. The Declaration
of Trust under which each Fund has been established permits the Trustees to
allocate shares into an unlimited number of series, and classes thereof, with
rights determined by the Trustees, all without shareholder approval. Fractional
shares may be issued. Each Fund's shares have equal voting rights with respect
to matters affecting shareholders of all classes of each Fund 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 Short-Intermediate-CA's Trustees or Evergreen Investment 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 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 the Funds were
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 Funds or the Trustees.
The Declaration of Trust provides for indemnification out of the series'
property for all losses and expenses of any shareholder held personally liable
for the obligations of the series. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is considered remote since it
is limited to circumstances in which a disclaimer is inoperative and the series
or the trust itself would be unable to meet its obligations. A substantial
number of mutual funds in the United States are organized as Massachusetts
business trusts.
Shareholder Meetings and Voting Rights
Neither Short-Intermediate-CA nor Evergreen Foundation Trust, on behalf of
Evergreen Short- Intermediate or any of its other series, is required to hold
annual meetings of shareholders. However, a meeting of shareholders for the
purpose of voting upon the question of removal of a Trustee must be called when
requested in writing by the holders of at least 10% of the outstanding shares.
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. If Trustees of the Trust fail or
refuse to call a meeting as required by its By-laws after a request in writing
by shareholders holding an aggregate of at least 10% of the shares outstanding,
then shareholders holding said 10% may call and give notice of such meeting.
Evergreen Investment Trust and Short-Intermediate-CA currently do not intend to
hold regular shareholder meetings. Neither permits cumulative voting. A majority
of shares entitled to vote on a matter constitutes a quorum for consideration of
such matter. 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).
Liquidation or Dissolution
In the event of the liquidation of a 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
The Declaration of Trust provides that no Trustee or officer shall be
liable to each Fund or to any shareholder, Trustee, officer, employee or agent
of each 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 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.
Rights of Inspection
Shareholders of the respective Funds have the same right to inspect in
Massachusetts the governing documents, records of meetings of shareholders,
shareholder lists, share transfer records, accounts and books of the Fund as are
permitted shareholders of a corporation under the Massachusetts corporation law.
The purpose of inspection must be for interests of shareholders relative to the
affairs of the Fund.
The foregoing is only a summary of certain characteristics of the
operations of the Declarations of Trust, By-Laws and Massachusetts law and is
not a complete description of those documents or law. Shareholders should refer
to the provisions of such Declaration of Trust, By-Laws, and Massachusetts law
directly for more complete information.
ADDITIONAL INFORMATION
Evergreen Short-Intermediate. Information concerning the operation and
management of the Evergreen Short-Intermediate is incorporated herein by
reference from the Prospectus dated April 1, 1997, a copy of which is enclosed,
and Statement of Additional Information dated April 1, 1997. A copy of such
Statement of Additional Information is available upon request and without charge
by writing to Evergreen Short-Intermediate, at the address listed on the cover
page of this Prospectus/Proxy Statement or by calling toll-free 1-800-807-2940.
Short-Intermediate-CA. Information about the Fund is included in its
current Prospectus dated August 16, 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. A copy of the
Prospectus and Statement of Additional Information 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 Short-Intermediate and Short-Intermediate-CA 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 Trustees of Short-Intermediate-CA to be
used at the Special Meeting of Shareholders to be held at 3:00 p.m., July [ ],
1997, at the offices of Keystone Investment Management Company, 200 Berkeley
Street, Boston, MA 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 [ __ ], 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 Short-Intermediate-CA, 2500 Westchester Avenue, Purchase, New York
10577. 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.
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 Evergreen Asset, their affiliates or
other representatives of Short-Intermediate-CA (who will not be paid for their
solicitation activities). [ ____ ] has been engaged by Short-Intermediate-CA to
assist in soliciting proxies, and may contact certain shareholders of
Short-Intermediate-CA over the telephone. Shareholders that are contacted by may
be asked to cast their vote by telephonic proxy. Such proxies will be recorded
in accordance with the procedures set forth below. Short-Intermediate-CA
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. Evergreen
Short-Intermediate has received an opinion of Sullivan & Worcester LLP that
addresses the validity, under the applicable law of the Commonwealth of
Massachusetts, of a proxy given orally. The opinion given by concludes that a
Massachusetts court would find that there is no Massachusetts law or
Massachusetts public policy against the acceptance of proxies signed by an
orally-authorized agent.
In all cases where a telephonic proxy is solicited, the 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 [Name of Solicitor] by the transfer agent to
Short-Intermediate-CA, then the representative will explain the process, read
the proposals listed on the proxy card and ask for your instructions on each
proposal. The 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, [ _____________ ] will send you a letter or mailgram to confirm your vote
and asking you to call immediately if your instructions are not correctly
reflected in the confirmation.
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 July 10, 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.
Any such adjournment will require an affirmative vote by the holders of a
majority of the shares present in person or by proxy and entitled to vote at the
Meeting. The persons named as proxies will vote upon such adjournment after
consideration of all circumstances which may bear upon a decision to adjourn the
Meeting.
A shareholder who objects to the proposed Reorganization will not be
entitled under either Massachusetts law or the Declaration of Trust of
Short-Intermediate-CA 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
Short-Intermediate which they receive in the transaction at their then-current
net asset value. Shares of Short-Intermediate-CA may be redeemed at any time
prior to the consummation of the Reorganization. Short-Intermediate-CA
shareholders may wish to consult their tax advisers as to any differing
consequences of redeeming Short-Intermediate-CA shares prior to the
Reorganization or exchanging such shares in the Reorganization.
Short-Intermediate-CA does not hold annual shareholder meetings. If the
Reorganization is not approved, shareholders wishing to submit proposals for
consideration for inclusion in a proxy statement for a subsequent shareholder
meeting should send their written proposals to the Secretary of Short-
Intermediate-CA at the address set forth on the cover of this Prospectus/Proxy
Statement such that they will be received by Short-Intermediate-CA in a
reasonable period of time prior to any such meeting.
The votes of the shareholders of Evergreen Short-Intermediate 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 Short-Intermediate-CA 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 Short-Intermediate-CA as of August 31, 1996 and
the financial highlights have been incorporated by reference into this
Prospectus/Proxy Statement and have been audited by Price Waterhouse LLP,
independent public accountants, as indicated in their report with respect
thereto, and included herein in reliance upon the authority of said firm as
experts in giving said report.
The audited financial statements of Evergreen Short-Intermediate as of
August 31, 1996 and the financial highlights for the periods indicated therein
have been incorporated by reference into this Prospectus/Proxy Statement in
reliance on the report of Price Waterhouse LLP, independent auditors for
Evergreen Short-Intermediate, given on the authority of such firm as experts in
accounting and auditing.
LEGAL MATTERS
Certain legal matters concerning the issuance of shares of Evergreen
Short-Intermediate will be passed upon by Sullivan & Worcester LLP, Washington,
D.C.
OTHER BUSINESS
The Trustees of Short-Intermediate-CA 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 TRUSTEES OF SHORT-INTERMEDIATE-CA, 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 [ __ ] , 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 the Evergreen Short-Intermediate Municipal Fund
series (the "Acquiring Fund") of the Evergreen Municipal Trust (the "Trust"), a
Massachusetts business trust, with its principal place of business at 2500
Westchester Avenue, Purchase, New York 10577, on the one hand, Evergreen
Short-Intermediate Municipal Fund series of the Trust (the "Selling Fund") on
the other.
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 Y, Class A, Class B and Class C shares
of beneficial interest, $.0001 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 each 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 Funds are authorized to issue their shares of beneficial interest;
WHEREAS, the Trustees of the Trust have determined that the exchange of all of
the assets of the Selling Fund for Acquiring Fund Shares and the assumption of
certain 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 Trustees of the Trust 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 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, 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 limits 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.
1.8 TERMINATION. The Selling Fund shall be terminated promptly following the
Closing Date and the making of all distributions pursuant to paragraph 1.4.
ARTICLE II
VALUATION
2.1 VALUATION OF ASSETS. The value of the Selling Fund's assets to be acquired
by the Acquiring Fund hereunder shall be the value of such assets computed as of
the close of business on the New York Stock Exchange on the business day next
preceding the Closing Date (such time and date being hereinafter called the
"Valuation Date"), using the valuation procedures set forth in the Trust's
Declaration of Trust and the Acquiring Fund's then current 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 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
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 Massachusetts
business trust duly organized, validly existing, and in good standing
under the laws of The Commonwealth of Massachusetts.
(b) The Selling Fund is a separate investment series of a 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
Declaration of Trust or By-Laws or of any material agreement,
indenture, instrument, contract, lease, or other undertaking to which
the Selling Fund is a party or by which it is bound.
(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.
(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 December 31, 1996 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 December 31, 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 (except that, under
Massachusetts law, Selling Fund Shareholders could under certain
circumstances be held personally liable for obligations of the Selling
Fund). All of the issued and outstanding shares of the Selling Fund
will, at the time of the Closing Date, be held by the persons and in
the amounts set forth in the records of the transfer agent as provided
in paragraph 3.4. The Selling Fund does not have outstanding any
options, warrants, or other rights to subscribe for or purchase any of
the Selling Fund shares, nor is there outstanding any security
convertible into any of the Selling Fund shares.
(l) At the Closing Date, the Selling Fund will have good and marketable
title to the Selling Fund's assets to be transferred to the Acquiring
Fund pursuant to paragraph 1.2 and full right, power, and authority to
sell, assign, transfer, and deliver such assets hereunder, and, upon
delivery and payment for such assets, the Acquiring Fund will acquire
good and marketable title thereto, subject to no restrictions on the
full transfer thereof, including such restrictions as might arise under
the 1933 Act, other than as disclosed to the Acquiring Fund and
accepted by the Acquiring Fund.
(m) The execution, delivery, and performance of this Agreement have been
duly authorized by all necessary action on the part of the Selling Fund
and, subject to approval by the Selling Fund Shareholders, this
Agreement constitutes a valid and binding obligation of the Selling
Fund, enforceable in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium, and
other laws relating to or affecting creditors' rights and to general
equity principles.
(n) The information to be furnished by the Selling Fund for use in
no-action letters, applications for orders, registration statements,
proxy materials, and other documents that may be necessary in
connection with the transactions 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 the Evergreen
Foundation Trust's Declaration of Trust or By-Laws or of any material
agreement, indenture, instrument, contract, lease, or other undertaking
to which the Acquiring Fund is a party or by which it is bound.
(e) Except as otherwise disclosed in writing to the Selling Fund and
accepted by the Selling Fund, no litigation, administrative proceeding
or investigation of or before any court or governmental body is
presently pending or to its knowledge threatened against the Acquiring
Fund or any of its properties or assets, which, if adversely
determined, would materially and adversely affect its financial
condition and the conduct of its business or the ability of the
Acquiring Fund to carry out the transactions contemplated by this
Agreement. The Acquiring Fund knows of no facts that might form the
basis for the institution of such proceedings and is not a party to or
subject to the provisions of any order, decree, or judgment of any
court or governmental body that materially and adversely affects its
business or its ability to consummate the transactions contemplated
herein.
(f) The financial statements of the Acquiring Fund at August 31, 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 Selling Fund) fairly reflect the financial
condition of the Acquiring Fund as of such date, and there are no known
contingent liabilities of the Acquiring Fund as of such date not
disclosed therein.
(g) Since August 31, 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
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. The Selling Fund II will call a meeting of the
Selling Fund Shareholders to consider and act upon this Agreement and to take
all other action necessary to obtain approval of the transactions contemplated
herein.
5.3 INVESTMENT REPRESENTATION. The Selling Fund covenants that the Acquiring
Fund Shares to be issued hereunder are not being acquired for the purpose of
making any distribution thereof other than in accordance with the terms of this
Agreement.
5.4 ADDITIONAL INFORMATION. The Selling Fund will assist the Acquiring Fund in
obtaining such information as the Acquiring Fund reasonably requests concerning
the beneficial ownership of the Selling Fund shares.
5.5 FURTHER ACTION. Subject to the provisions of this Agreement, the Acquiring
Fund and the Selling Fund will each take, or cause to be taken, all action, and
do or cause to be done, all things reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement,
including any actions required to be taken after the Closing Date.
5.6 STATEMENT OF EARNINGS AND PROFITS. As promptly as practicable, but in any
case within sixty days after the Closing Date, the Selling Fund shall furnish
the Acquiring 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 Selling 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 the Acquiring Fund'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,
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 in its name by the President or Vice
President and the Treasurer or Assistant Treasurer of the Selling Fund, in form
and substance satisfactory to the Acquiring Fund and dated as of the Closing
Date, to such effect and as to such other matters as the Acquiring Fund shall
reasonably request.
7.2 The Selling Fund shall have delivered to the Acquiring Fund a statement of
the Selling Fund's assets and liabilities, together with a list of the Selling
Fund's portfolio securities showing the tax costs of such securities by lot and
the holding periods of such securities, as of the Closing Date, certified by the
Treasurer of the Selling Fund
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 Massachusetts
business trust duly organized, validly existing and in good standing
under the laws of The Commonwealth of Massachusetts and has the power
to own all of its properties and assets and to carry on its business as
presently conducted.
(b) The Selling Fund is the sole investment series of a Massachusetts
business trust registered as an investment company under the 1940 Act,
and, to such counsel's knowledge, such registration with the Commission
as an investment company under the 1940 Act is in full force and
effect.
(c) This Agreement has been duly authorized, executed and delivered by the
Selling Fund, and, assuming 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 Commonwealth of Massachusetts 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
Declaration of Trust and By-Laws and certified copies of the resolutions
evidencing such approval shall have been delivered to the Acquiring Fund.
Notwithstanding anything herein to the contrary, neither the Acquiring Fund nor
the Selling Fund may waive the conditions set forth in this paragraph 8.1.
8.2 On the Closing Date, the Commission shall not have issued an unfavorable
report under Section 25(b) of the 1940 Act, nor instituted any proceeding
seeking to enjoin the consummation of the transactions contemplated by this
Agreement under Section 25(c) of the 1940 Act and no action, suit or other
proceeding shall be threatened or pending before any court or governmental
agency in which it is sought to restrain or prohibit, or obtain damages or other
relief in connection with, this Agreement or the transactions contemplated
herein.
8.3 All required consents of other parties and all other consents, orders, and
permits of Federal, state and local regulatory authorities (including those of
the Commission and of state Blue Sky securities authorities, including any
necessary "no-action" positions of and exemptive orders from such Federal and
state authorities) to permit consummation of the transactions contemplated
hereby shall have been obtained, except where failure to obtain any such
consent, order, or permit would not involve a risk of a material adverse effect
on the assets or properties of the Acquiring Fund or the 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 substantially 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).
(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 Price Waterhouse 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 Foundation
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 Price Waterhouse
LLP a letter addressed to the Acquiring Fund dated on the Closing Date, in form
and substance satisfactory to the Acquiring Fund, to the effect, that on the
basis of limited procedures agreed upon by the Acquiring Fund (but not an
examination in accordance with generally accepted auditing standards), the
calculation of net asset value per share of the Selling Fund as of the Valuation
Date was determined in accordance with generally accepted accounting practices
and the portfolio valuation practices of the Acquiring Fund.
8.8 The Selling Fund shall have received from 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 Foundation 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 Price
Waterhouse 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, the Trust, the Trustees or officers, to the other party
or its Trustees or officers.
ARTICLE XII
AMENDMENTS
This Agreement may be amended, modified, or supplemented in such manner as
may be mutually agreed upon in writing by the authorized officers of the Selling
Fund and the Acquiring Fund; provided, however, that following the meeting of
the Selling Fund Shareholders called by the Selling Fund pursuant to paragraph
5.2 of this Agreement, no such amendment may have the effect of changing the
provisions for determining the number of the Acquiring Fund Shares to be issued
to the Selling Fund Shareholders under this Agreement to the detriment of such
shareholders without their further approval.
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 Selling Fund and
the Acquiring Fund hereunder shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents, or employees of the Trust personally,
but bind only the trust property of the Selling Fund and the Acquiring Fund, as
provided in the Declaration of Trust of the Trust. The execution and delivery of
this Agreement have been authorized by the Trustees of the Trust on behalf of
the Selling Fund and the Acquiring Fund and signed by authorized officers of the
Trust, acting as such, and neither such authorization by such Trustees nor such
execution and delivery by such officers shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Selling Fund and the Acquiring Fund as
provided in the respective Declaration of Trust.
IN WITNESS WHEREOF, the parties have duly executed and sealed this
Agreement, all as of the date first written above.
EVERGREEN MUNICIPAL TRUST
ON BEHALF OF EVERGREEN SHORT-
INTERMEDIATE MUNICIPAL FUND
By:
Name:
Title:
EVERGREEN MUNICIPAL TRUST
ON BEHALF OF EVERGREEN SHORT-
INTERMEDIATE MUNICIPAL FUND-CALIFORNIA
By:
Name:
Title:
<PAGE>
*******************************************************************************
EXHIBIT B
Set forth below are the Financial Highlights for each Class of Shares
offered by Evergreen Short-Intermediate Municipal Fund, as well as the
Management Discussion and Analysis of the results of the Fund for the period
ended August 31, 1996.
<PAGE>
EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND
FINANCIAL HIGHLIGHTS
(Evening sunset photo) CLASS A AND B SHARES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B
JANUARY 5, SHARES
YEAR 1995* YEAR
ENDED THROUGH ENDED
AUGUST 31, AUGUST 31, AUGUST 31,
1996 1995 1996
<S> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period............................................... $10.17 $9.97 $10.17
Income from investment operations:
Net investment income............................................................ .43 .30 .34
Net realized and unrealized gain (loss) on investments........................... (.09) .20 (.09)
Total from investment operations............................................... .34 .50 .25
Less distributions to shareholders from net investment income...................... (.43) (.30) (.34)
Net asset value, end of period................................................... $10.08 $10.17 $10.08
TOTAL RETURN+...................................................................... 3.4% 5.1% 2.4%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted).......................................... $27,722 $6,820 $7,413
Ratios to average net assets:
Expenses**....................................................................... .80% .70%++ 1.67%
Net investment income**.......................................................... 4.05% 4.32%++ 3.28%
Portfolio turnover rate............................................................ 29% 80% 29%
JANUARY 5,
1995*
THROUGH
AUGUST 31,
1995
PER SHARE DATA:
Net asset value, beginning of period............................................... $9.97
Income from investment operations:
Net investment income............................................................ .24
Net realized and unrealized gain (loss) on investments........................... .20
Total from investment operations............................................... .44
Less distributions to shareholders from net investment income...................... (.24)
Net asset value, end of period................................................... $10.17
TOTAL RETURN+...................................................................... 4.5%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted).......................................... $6,050
Ratios to average net assets:
Expenses**....................................................................... 1.58%++
Net investment income**.......................................................... 3.50%++
Portfolio turnover rate............................................................ 80%
</TABLE>
* Commencement of class operations.
+ Total return is calculated for the periods indicated and is not annualized.
Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
** Net of expense waivers and reimbursements. If the Fund had borne all expenses
that were reimbursed or waived by the investment adviser, the annualized
ratios of expenses and net investment income to average net assets would have
been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B
JANUARY 5, SHARES
YEAR 1995* YEAR
ENDED THROUGH ENDED
AUGUST 31, AUGUST 31, AUGUST 31,
1996 1995 1996
<S> <C> <C> <C>
Expenses........................................................................... 1.11% 1.14% 2.07%
Net investment income.............................................................. 3.74% 3.88% 2.88%
JANUARY 5,
1995*
THROUGH
AUGUST 31,
1995
Expenses........................................................................... 2.26%
Net investment income.............................................................. 2.82%
</TABLE>
See accompanying notes to financial statements.
23
<PAGE>
EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND
FINANCIAL HIGHLIGHTS -- (CONTINUED)
(Evening sunset photo) CLASS Y SHARES
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
1996 1995 1994 1993
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period............................................. $10.17 $10.21 $10.58 $10.33
Income from investment operations:
Net investment income.......................................................... .43 .46 .47 .49
Net realized and unrealized gain (loss) on investments......................... (.10) (.04) (.32) .25
Total from investment operations............................................. .33 .42 .15 .74
Less distributions to shareholders:
From net investment income..................................................... (.43) (.46) (.47) (.49)
From net realized gains on investments......................................... -- -- (.03) --
In excess of net realized gain on investment................................... -- -- (.02) --
Total distributions.......................................................... (.43) (.46) (.52) (.49)
Net asset value, end of period................................................. $10.07 $10.17 $10.21 $10.58
TOTAL RETURN+.................................................................... 3.3% 4.2% 1.4% 7.4%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)........................................ $34,893 $40,581 $53,417 $66,607
Ratios to average net assets:
Expenses**..................................................................... .70% .74% .58% .40%
Net investment income**........................................................ 4.27% 4.52% 4.54% 4.73%
Portfolio turnover rate.......................................................... 29% 80% 32% 37%
1992||
PER SHARE DATA:
Net asset value, beginning of period............................................. $10.00
Income from investment operations:
Net investment income.......................................................... .51
Net realized and unrealized gain (loss) on investments......................... .33
Total from investment operations............................................. .84
Less distributions to shareholders:
From net investment income..................................................... (.51)
From net realized gains on investments......................................... --
In excess of net realized gain on investment................................... --
Total distributions.......................................................... (.51)
Net asset value, end of period................................................. $10.33
TOTAL RETURN+.................................................................... 8.6%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)........................................ $54,470
Ratios to average net assets:
Expenses**..................................................................... .17%
Net investment income**........................................................ 4.85%
Portfolio turnover rate.......................................................... 57%
</TABLE>
|| On November 18, 1991, the Fund was changed to a diversified municipal bond
fund with a fluctuating net asset value per share from a non-diversified
money market fund with a stable net asset value per share. The shares
outstanding at August 31, 1991 and the related per share data are restated
to reflect both for a 1 for 2 reverse share split on October 30, 1991 and a
1 for 5 reverse share split on August 19, 1992. Total return calculated
after November 18, 1991 reflects the fluctuation in net asset value per
share.
+ Total return is calculated for the periods indicated and is not annualized.
** Net of expense waivers and reimbursements. If the Fund had borne all expenses
that were reimbursed or waived by the investment adviser, the annualized
ratios of expenses and net investment income to average net assets would have
been the following:
<TABLE>
<CAPTION>
CLASS Y SHARES
YEAR ENDED AUGUST 31,
1996 1995 1994 1993
<S> <C> <C> <C> <C>
Expenses......................................................................... .90% .86% .83% .81%
Net investment income............................................................ 4.07% 4.40% 4.29% 4.32%
<CAPTION>
1992
Expenses......................................................................... .86%
Net investment income............................................................ 4.16%
</TABLE>
See accompanying notes to financial statements.
24
* * * * * * * * * * * * * * *
<PAGE>
EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND
(Evening sunset photo)
A REPORT FROM YOUR
PORTFOLIO MANAGER
STEVEN C. SHACHAT
The markets both elated and frustrated investors during the
last six months of the Fund's fiscal year. At the start of 1996, (Photo of
bond prices drifted lower in reaction to mixed economic signals, Steven C.
despite the fact that the U.S. economy seemed to be following a Shachat)
slow growth pattern; one generally beneficial for bonds.
Beginning in March, statistics indicating strong job growth and
consumers' continued willingness to spend to their debt limits
and beyond, propelled the bond market to a state of heightened
alert for a resurgence of inflation and a new round of interest
rate increases by the Federal Reserve. Throughout the last half
of the Fund's fiscal year, however, inflation remained
restrained and the Fed chose not to raise or lower interest
rates.
As a consequence of this uncertainty over the economy's
direction, yields for both municipal and treasury bonds rose, and prices
declined. Long-term government bond yields have gyrated wildly in response to
the shifting tone of incoming statistics but, in the end, they've remained in a
fairly narrow 6 3/4% to 7 1/4% range. Municipals, aided by a declining supply of
tax-free bonds and steady demand from retail buyers, outperformed treasuries.
During the first half of our fiscal year, we had emphasized both ends of the
Fund's limited maturity range. The shortest maturities were emphasized for lower
share price volatility and longer maturities for higher yields and capital
appreciation potential. We pursued this strategy because we believed that
tax-free bonds with maturities in the five- to ten-year range offered the most
attractive after-tax yields and total return potential of any bonds in which the
Fund is permitted to invest. As market perceptions turned more tentative,
emphasis was shifted to those issues bearing lesser qualities of principal
volatility. At times, higher levels of cash reserves were established in order
to further buffer the portfolio from the consequences of a rising interest rate
environment. Throughout the second half of the Fund's fiscal year, investment
decisions tended to focus on those issues bearing higher degrees of
creditworthiness and strong characteristics of protection from redemption prior
to maturity. These more defensive measures caused the Fund's total return to lag
over this period.
Overall, we continue to purchase premium bonds as they can offer us better
liquidity, more upside potential, and less volatility than similar securities,
such as discount bonds. In addition, diversification remains an important
strategy for the Fund, allowing us to spread risk over a number of sectors and
geographic areas. Lastly, the Fund's overall credit quality remains high, with
over 75% of the bonds in its portfolio rated AAA and AA at fiscal year-end.
The economy is at a crossroads where growth is concerned. Going forward, we
anticipate continued market volatility until the future of economic growth is
made more clear. We shall continue to search for attractive value by weighing
the maturity characteristics, credit quality, and income potential of each bond
we consider for purchase.
At its fiscal year-end on August 31, 1996, Evergreen Short-Intermediate
Municipal Fund's total net assets were $70 million. The table below illustrates
the Fund's yields as of August 31. (For additional performance information,
please see page 16.)
<TABLE>
<CAPTION>
CLASS Y SHARES CLASS A SHARES CLASS B SHARES
<S> <C> <C> <C>
30-Day SEC Yield 3.81% 3.58% 2.80%
Tax-Equivalent Yield* 5.95% 5.59% 4.38%
</TABLE>
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
*TAX-EQUIVALENT YIELD ASSUMES A 36% FEDERAL TAX BRACKET. TAX-EQUIVALENT YIELD
WOULD BE LOWER FOR INVESTORS IN LOWER TAX BRACKETS AND HIGHER FOR INVESTORS IN
HIGHER TAX BRACKETS. YIELDS FLUCTUATE.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE. INVESTORS' SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
DURING THE PERIOD UNDER REVIEW, THE ADVISER CONTINUED TO VOLUNTARILY WAIVE A
PORTION OF ITS ADVISORY FEE. HAD FEE NOT BEEN WAIVED, YIELDS WOULD HAVE BEEN
LOWER. FEE WAIVER MAY BE REVISED AT ANY TIME.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE. INVESTORS' SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
THE FUND'S INCOME MAY BE SUBJECT TO STATE AND LOCAL TAXES AND THE FEDERAL
ALTERNATIVE MINIMUM TAX FOR CERTAIN INVESTORS.
CLASS A SHARES ARE SUBJECT TO A MAXIMUM 3.25% FRONT-END SALES CHARGE AND CLASS B
SHARES ARE SUBJECT TO A MAXIMUM 5% CONTINGENT DEFERRED SALES CHARGE.
<PAGE>
EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND
(Evening sunset photo)
RESULTS TO DATE
PERFORMANCE OF $10,000 INVESTED IN THE
EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND
The graphs below compare a $10,000 investment in the Evergreen
Short-Intermediate Municipal Fund (Class A, Class B and Class Y Shares) with a
similar investment in the Lehman Brothers 3 Year Municipal Bond Index ("Index").
CLASS A
ONE YEAR TOTAL RETURN = 0.01%
AVERAGE ANNUAL COMPOUND
RETURN SINCE INCEPTION = 2.9%
(Class A chart appears here. Plot points are below.)
1/3/95* 2/28/95 8/31/95 2/29/96 8/31/96
(Customer to fill in plot points)
CLASS B
ONE YEAR TOTAL RETURN = 2.5%
AVERAGE ANNUAL COMPOUND
RETURN SINCE INCEPTION = 1.7%
(Class B chart appears here. Plot points are below.)
1/3/95* 2/28/95 8/31/95 2/29/96 8/31/96
(Customer to fill in plot points)
CLASS Y
ONE YEAR TOTAL RETURN = 3.3%
AVERAGE ANNUAL COMPOUND
RETURN SINCE INCEPTION = 4.9%
(Class Y chart appears here. Plot points are below.)
11/18/91* 8/31/92 8/31/93 8/31/94 8/31/95 8/31/96
(Customer to fill in plot points)
- - - - Evergreen Short-Intermediate Municipal Fund
- - - Lehman Brothers 3 Year Municipal Bond Index
*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 3.25% 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
Shares, assuming full redemption on August 31, 1996; (c) all recurring fees
(including investment advisory fees) were deducted; and (d) all dividends and
distributions were reinvested.
The Index is an unmanaged index 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.
*******************************************************************************
STATEMENT OF ADDITIONAL INFORMATION
Acquisition of Assets of
EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND-CALIFORNIA
a series of
Evergreen Municipal Trust
2500 Westchester Avenue
Purchase, New York 10577
By and in Exchange for Shares of
EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND
a series of
Evergreen Municipal Trust
2500 Westchester Avenue
Purchase, New York 10577
This Statement of Additional Information, relating specifically to the
proposed transfer of the assets and liabilities of the Evergreen
Short-Intermediate Municipal Fund-California ("Short-Intermediate-California")
to Evergreen Short-Intermediate Municipal Fund ("Evergreen Short-Intermediate"),
a series of the Evergreen Foundation Trust, in exchange for Class Y, Class A,
Class B and Class C Shares of beneficial interest, $.0001 par value per Share,
of Evergreen Short-Intermediate, 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 the Evergreen
Short-Intermediate Municipal Fund-California dated October 31, 1996
(Incorporated by reference to Post-Effective Amendment No. 23 to The Evergreen
Municipal Trust's Registration Statement [File No. 33-23180] filed with the
Securities and Exchange Commission on October 31, 1996);
(2) The Statement of Additional Information of the Evergreen
Short-Intermediate Municipal Fund-California dated October 31, 1996
(Incorporated by reference to Post-Effective Amendment No. 23 to The Evergreen
Municipal Trust's Registration Statement [File No. 33-23180] filed with the
Securities and Exchange Commission on October 31, 1996);
(3) Annual Report of the Evergreen Short-Intermediate Municipal Fund for
the year ended August 31, 1996 (Incorporated by reference to Form N-30D of The
Evergreen Municipal Trust [File No. 33-23180] filed with the Securities and
Exchange Commission on November 1, 1996); and
(4) The Annual Report of the Evergreen Short-Intermediate Municipal
Fund-California for the year ended August 31, 1996 (Incorporated by reference to
Form N-30D of The Evergreen Municipal Trust [File No. 33-23180] filed with the
Securities and Exchange Commission on November 1, 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 Short-Intermediate Municipal Fund and
Evergreen Short-Intermediate Municipal Fund-California dated May ___, 1997. A
copy of the Proxy Statement/Prospectus may by obtained without charge by calling
or writing to the Evergreen Short-Intermediate Municipal Fund or Evergreen
Short-Intermediate Municipal Fund-California at the telephone numbers or
addresses set forth above.
The date of this Statement of Additional Information is May ________, 1997.
<PAGE>
The following pro forma financial information relates to the Evergreen
Short-Intermediate Municipal Fund and the Evergreen Short-Intermediate Municipal
Fund-California:
EVERGREEN SHORT - INTERMEDIATE MUNICIPAL FUND Pro-Forma Combining Financial
Statements (unaudited) Statement of Assets and Liabilities February 28, 1997
(000's omitted)
<TABLE>
<CAPTION>
Short Short
Intermediate Intermediate Pro-Forma
Municipal Municipal-CA Adjustments Combined
-------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Investments at value (cost $81,611) $65,293 $17,399 $82,692
Cash 0 28 28
Receivable for Fund shares sold 70 9 79
Interest receivable 1,011 239 1,250
Prepaid expenses 24 5 29
-------------------------------------------------------
Total Assets 66,398 17,680 0 84,078
Liabilities:
Payable for Fund shares redeemed 257 14 271
Distributions payable 97 3 100
Accrued expenses 59 12 71
-------------------------------------------------------
Total Liabilities 413 29 0 442
Net Assets $65,985 $17,651 0 $83,636
=======================================================
Net assets are comprised of:
Paid-in capital $65,414 $17,677 $83,091
Accumulated net realized loss (308) (227) (535)
Net unrealized appreciation
of investments 879 201 1,080
-------------------------------------------------------
Net Assets $65,985 $17,651 0 $83,636
=======================================================
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Class A Shares
Net Assets $26,860 $7 $26,867
Shares of Beneficial Interest Outstanding 2,639 1 2,640
Net Asset Value $10.18 $10.04 $10.18
Maximum Offering Price $10.52 $10.38 $10.52
Class B Shares
Net Assets $6,855 $50 $6,905
Shares of Beneficial Interest Outstanding 674 5 679
Net Asset Value $10.18 $10.04 $10.18
Class Y Shares
Net Assets $32,270 $17,594 $49,864
Shares of Beneficial Interest Outstanding 3,172 1,752 (22) 4,902
Net Asset Value $10.17 $10.04 $10.17
</TABLE>
See Notes to Pro-Forma Combining Financial Statements.
::
EVERGREEN SHORT - INTERMEDIATE MUNICIPAL FUND
Pro-Forma Combining Financial Statements (unaudited)
Statement of Operations
Year Ended February 28, 1997 (000's omitted)
<TABLE>
<CAPTION>
Short Short
Intermediate Intermediate Pro-Forma
Municipal Municipal-CA Adjustments Combined
-----------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income:
Interest income $3,137 $899 $4,036
Expenses:
Advisory fee 295 104 (319)(a) 390
Distribution Plan expenses 94 0 94
Custodian fees and expenses 55 42 (21)(b) 76
Professional fees 26 19 (19)(b) 26
Registration and filing fees 59 1 (1)(b) 59
Reports and notices to shareholders 15 9 (7)(b) 17
Transfer Agent fee 54 21 (15)(b) 60
Trustees' fees and expenses 9 4 (4)(c) 9
Amortization of organization expense 5 0 5
Other expenses 16 6 (6)(b) 16
-----------------------------------------------------------
Total Expenses 628 206 (82) 752
Less: Fee waivers and reimbursements (58) (46) 31(d) (73)
-----------------------------------------------------------
Net Expenses 570 160 (51) 679
Net investment income 2,567 739 51 3,357
Net realized and unrealized
gain/(loss) on investments:
Net realized gain/(loss) on investments 72 (8) 64
Net change in unrealized depreciation
of investments (190) (148) (338)
-----------------------------------------------------------
Net loss on investments (118) (156) 0 (274)
Net increase in net assets resulting
from operations $2,449 $583 51 $3,074
===========================================================
</TABLE>
(a) Reflects an decrease in the investment advisory fee based on the
surviving Fund's fee schedule (b)Reflects expected cost savings when
the funds combine.
(c) Reflects allocation of complex-wide Trustees' fees based on combined assets.
(d) Reflects an decrease in fee waivers and reimbursements based upon the
survivings Fund's fee waivers.
See Notes to Pro-Forma Combining Financial Statements.
EVERGREEN SHORT - INTERMEDIATE MUNICIPAL FUND
PRO-FORMA COMBINING FINANCIAL STATEMENTS (UNAUDITED)
PORTFOLIO OF INVESTMENTS (000's omitted)
MARCH 31, 1997
<TABLE>
<CAPTION>
Evergreen Evergreen
Short - Intermediate Short - Intermediate Pro Forma
Municipal Fund Municipal Fund - CA Combined
Maturity Market Market Adjust- Market
Coupon Date Principal Value Principal Value ments Principal Value
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MUNICIPAL BONDS (98.9%)
Arizona -- 2.1%
Pima Cnty. GO RFB, (Ser. 1992) 6.55 07/01/01 1,600 $1,712 1,600 $1,712
California -- 20.8%
Burbank-Glendale-Pasadena Arpt.
Auth. RRB, (Ser. 1992) ( AMBAC) 5.00 06/01/98 1,000 1,013 1,000 1,013
California Statewide Cmntys. Dev. Auth. COP
(Sutter Obligated Group), (AMBAC) 5.00 08/15/98 500 507 500 507
California Hsg. Fin. Agcy. Multi-Unit
Rental Hsg. RB, (1992 Ser.A) 5.25 02/01/98 320 322 320 322
California Pollutn Ctl Sld Wst 1.00 10/01/24 100 100 100 100
California St Economic Dev Fin 1.00 12/01/26 500 500 500 500
City & Cnty. of San Francisco General
Purpose Swr. RB, Prerefunded @ 101.50
(Ser. 1988B) (AMBAC) 7.60 10/01/97 785 812 785 812
City of Los Angeles Judgement Oblig.
Bonds, (Ser. 1992-A) 5.00 08/01/01 1,090 1,105 1,090 1,105
City of Santa Ana: California Env. Fin.
Corp. COP (Santa Ana Recycling Proj.),
(1996 Ser. A) (AMBAC) 5.25 05/01/00 775 787 775 787
City of Santa Rosa Wastewater Svc. Facs.
Dist. 1992 Refunding Imp. Bonds (AMBAC) 5.10 07/02/98 565 573 565 573
City of Santa Rosa Wastewater RRB,
(1992 Ser. B) (FGIC) 5.10 09/01/98 650 660 650 660
City of Vallejo RB (Wtr. Imp. Proj.),
(1992 Ser. B) (FGIC) 6.00 11/01/98 1,100 1,135 1,100 1,135
County of San Bernardino COP (West Valley
Detention Center Proj.), Prerefunded @ 102 7.70 11/01/98 685 737 685 737
County of Stanislaus Refunding COP
(Capital Imp. Prog.), (Ser A of 1996) (MBIA) 4.50 05/01/02 1,000 990 1,000 990
East Bay Muni. Util. Dist. Wtr. Sys.
Subordinated RRB, (Ser. 1996) (FGIC) 6.00 06/01/01 900 947 900 947
Irvine Ranch CA Wtr Dist 1.00 11/15/13 100 100 100 100
Los Angeles California Certificates
Participation Muni. Imp. Corp.
Equipment Real Prop. 4.50 12/01/99 900 902 900 902
Los Angeles Cnty. Metropolitan Trans. Auth.
Proposition C Sales Tax RB Second Sr.
Bonds, (Ser. 1995-A) (AMBAC) 5.90 07/01/05 1,000 1,066 1,000 1,066
Newport Beach California Revenue Hoag Mem. Hosp.
Presbyterian (VDRN) 3.35 03/03/97 900 900 900 900
Pico Rivera Pub. Financing Auth. 1992 RRB
(Wtr. Enterprise Proj.), (Ser. A) (FGIC) 5.70 12/01/98 450 462 450 462
Rim of the World Unified Sch. Dist. 1992 COP
(Measure V Capital Projs.) (AMBAC) 5.10 09/01/97 500 503 500 503
Rim of the World Unified Sch. Dist. 1992 COP
(Measure V Capital Projs.) (AMBAC) 5.25 09/01/98 500 509 500 509
Riverside Cnty CA Indl Dev Rev 1.00 08/09/01 100 100 100 100
San Diego Unified Sch. Dist. Pub. Sch. Bldg.
Corp. COP (1989 - 1991 Capital
Projs.), (Ser. 1991 B) 5.90 07/01/97 575 578 575 578
San Diego Cnty. Regional Trans. Commission
Second Sr. Sales Tax RB (Ltd. Tax Bonds),
(1992 Ser. A) (FGIC) 4.40 04/01/01 880 872 880 872
State of California Various Purpose GO (FGIC) 7.00 08/01/02 900 996 900 996
Sunnyvale Financing Auth. Utils. RB (Solid
Waste Materials & Transfer Station),
(1992 Ser. B) (MBIA) 5.10 10/01/98 300 305 300 305
---------- ----------
17,481 17,481
---------- ----------
Colorado -- 1.9%
Arapahoe Cnty. GO RB, Cherry Creek
Sch. Dist. No.5 (Ser. 1995A) 5.25 12/15/02 1,000 1,025 1,000 1,025
Colorado Stud. Oblig. Board Auth.
Stud. Loan RB, (Ser. 1985B) 6.13 12/01/98 520 531 520 531
----------- ----------
1,556 1,556
----------- ----------
Connecticut -- 2.5%
Conn St. Spec. Assessment Unemployment
RFB, (Ser A) 5.50 11/15/00 2,000 2,059 2,000 2,059
District of Columbia -- 1.8%
Dist. of Columbia GO RFB, (Ser. 1989B) 6.63 06/01/98 1,500 1,542 1,500 1,542
Florida -- 2.0%
City of Jacksonville Excise Tax
Revenue Bonds, (Ser. 1996B (AMT)) 4.60 10/01/00 1,540 1,536 1,540 1,536
Illinois -- 1.3%
Central Lake Cnty. Joint Action Wtr. Agcy. RB,
Prerefunded @ 102, (Ser. 1990A) 7.00 05/01/00 1,000 1,085 1,000 1,085
Lombard IL Indl Dev Rev 1.00 10/02/01 440 440 440 440
----------- ----------
1,525 1,525
----------- ----------
Maryland -- 2.2%
Maryland Energy Financing Administration
Solid Waste Disp. RB, Wheelabrator Wtr. Tech-
nologies Baltimore L.L.C. Projs., (Ser. 1996) 4.80 12/01/98 635 637 635 637
Montgomery Cnty. GO Bonds Consolidated Pub.
Imp. RB, (Ser. 1992A) 5.30 07/01/01 1,140 1,170 1,140 1,170
----------- ----------
1,807 1,807
----------- ----------
Massachusetts -- 9.7%
City of Boston GO, (Ser. 1995A) 5.25 10/01/02 1,500 1,531 1,500 1,531
Massachusetts Wtr. Poll. Abatement Trust
RB, MWRA Loan Prog., (Ser. 1995A) 6.00 08/01/02 1,000 1,052 1,000 1,052
Massachusetts Indl. Finance Agency
Indl Dev. Bonds,(Ser. 1986A) 1.00 11/01/07 1,025 1,046 1,025 1,046
Massachusetts Indl. Finance Agency
Indl Dev. Bonds,(Ser. 1986A) 1.00 11/01/07 2,345 2,364 2,345 2,364
New England Ed. Loan Marketing Corp. Stud.
Loan RB, (Ser. 1993B) 4.75 07/01/98 1,000 1,005 1,000 1,005
New England Ed. Loan Marketing Corp. Stud.
Loan RB, (Ser. 1993B) 5.40 06/01/00 1,000 1,012 1,000 1,012
----------- ----------
8,010 8,010
----------- ----------
Michigan -- 1.8%
Detroit Sewage Disp. Sys. RB, (Ser. 1993A) 4.85 07/01/01 1,500 1,507 1,500 1,507
----------- ----------
Minnesota -- 3.1%
City of Minneapolis & Hsg. & Redev. Auth.
of the City of St. Paul, Single
Family Mtge. RRB, (Ser. 1996A) 1.00 06/01/32 2,030 2,034 2,030 2,034
State of Minnesota General Oblig. State Bonds 6.60 08/01/99 500 525 500 525
----------- ----------
2,559 2,559
----------- ----------
Missouri -- 1.7%
North Kansas City Sch. Dist. GO, Direct
Deposit Prog.,(Ser. 1996) 7.00 03/01/99 665 696 665 696
North Kansas City Sch. Dist. GO, Direct
Deposit Prog.,(Ser. 1996) 6.70 03/01/00 710 750 710 750
----------- ----------
1,446 1,446
----------- ----------
Nevada -- 1.9%
Clark Cnty., GO Public Safety Bonds
Light, (Ser. 1996) 6.00 06/01/00 1,500 1,559 1,500 1,559
----------- ----------
New Jersey -- 3.9%
New Jersey St. GO, (Ser. 1991) 5.90 08/01/02 2,000 2,108 2,000 2,108
New Jersey St. Trans. Trust Fund Auth. Trans.
Sys. Bonds' (Series 1995B) (MBIA) 6.00 06/15/01 1,040 1,091 1,040 1,091
----------- ----------
3,199 3,199
----------- ----------
New York -- 1.2%
Pwr. Auth. of the State of New York
Revenue and General Purpose, (Series Z) 5.85 01/01/00 1,000 1,032 1,000 1,032
----------- ----------
Ohio -- 1.2%
The Stud. Loan Funding Corp. (Cincinnati)
Stud. Loan RB, (Ser. 1993A) 5.50 12/01/01 1,000 1,014 1,000 1,014
----------- ----------
Oregon -- 1.4%
Josephine Cnty., Sch. Dist. # 007 GO 5.00 06/01/99 1,125 1,138 1,125 1,138
----------- ----------
Pennsylvania -- 6.9%
Commonwealth of Pennsylvania General Oblig. Bonds
Fitch Light Rtg Aa-, (Series A) 7.00 05/01/06 2,000 2,162 2,000 2,162
Lancaster Cnty. Hosp. Auth. Hosp. Revenue Bonds
(The Lancaster General Hosp. Proj.),
(Ser. 1992) (AMBAC) 5.60 07/01/00 1,000 1,029 1,000 1,029
Sayre Hlth. Care Facs. Auth. RB,
Gutherie Healthcare Sys., (Ser. 1991A) (AMBAC) 6.40 03/01/99 1,950 2,019 1,950 2,019
St. of Pennsylvania GO, (Ser. 1971) 6.00 12/15/98 500 503 500 503
----------- ----------
5,713 5,713
----------- ----------
South Carolina -- .7%
Charleston Cnty. Arpt. Dist. Arpt.
System Revenue Bonds, (Ser. 1993) 8.25 07/01/00 500 553 500 553
----------- ----------
South Dakota -- 3.3%
City of Sioux Falls Sales Tax Revenue
Bonds, (Ser. 1996A), (AMBAC) 5.50 11/15/00 2,615 2,693 2,615 2,693
----------- ----------
Tennessee -- 1.2%
Tennessee St Sch. Bond Auth. Higher Edl.
Fac. Bonds,(Ser. 1996) 5.00 05/01/00 1,000 1,012 1,000 1,012
----------- ----------
Texas -- 8.2%
Brazos Higher Ed. Auth., Inc., Stud.
Loan RRB, (Ser. 1992A) 5.30 12/01/97 1,000 1,008 1,000 1,008
City of Dallas GO 5.90 02/15/01 500 522 500 522
City of Houston Pub. Imp. RFB, (Ser. 1992C) 5.70 03/01/01 1,000 1,034 1,000 1,034
Dallas Cnty. Imp. (Ltd. Tax) RB, (Ser. 1992A) 6.00 08/15/01 1,300 1,370 1,300 1,370
San Antonio Independent Sch. Dist. Pub. Facs.
Corp. RB, (Ser. 1986) 5.00 10/15/00 505 508 505 508
Texas Dept. Hsg. + Cmnty. Aff Single Family
Mtge. RevenueBonds, (Ser. 1996E) 4.45 03/01/99 1,265 1,265 1,265 1,265
Texas Dept. Hsg. + Comnty. Aff Single Family
Mtge. RevenueBonds , (Ser. 1996E) 4.65 03/01/00 1,050 1,053 1,050 1,053
----------- ----------
6,760 6,760
----------- ----------
Utah -- 3.5%
Intermountain Pwr. Agcy., Pwr.
Supply RFB, (Ser. C) (MBIA) 6.00 07/01/00 2,500 2,599 2,500 2,599
Utah Hsg. Fin. Agcy. Single Family
Mtge. RRB, (Ser. 1993A) 5.20 01/01/01 290 294 290 294
----------- ----------
2,893 2,893
----------- ----------
Virginia -- 3.4%
Chesapeake Wtr. & Swr., (Ser. 1995A) 7.00 12/01/01 1,200 1,315 1,200 1,315
South Hampton Cnty Va Indl Dev 1.00 04/01/15 100 100 100 100
Virginia Hsg. Dev. Auth. Commonwealth Mtge.
Bonds, (Ser. 1992B, Subseries B - 1) 6.00 01/01/98 1,500 1,517 1,500 1,517
----------- ----------
2,932 2,932
----------- ----------
Washington -- 6.5%
Washington St Cmnty Econ Brd 1.00 07/01/98 735 735 735 735
St. of Washington GO RB, Motor Vehicle
Fuel Tax, (Ser. R-92D) 5.60 09/01/01 2,950 3,052 2,950 3,052
Washington St Pub. Pwr. Supply Sys.
Nuclear Refunding Bonneville Pwr.
Administration A Fitch Light Rtg Aa- 5.00 07/01/98 1,620 1,634 1,620 1,634
Washington St Pub. Pwr. Supply Sys.
Nuclear Refunding Bonneville Pwr.
Administration A Fitch Light Rtg Aa- 5.00 07/01/99 675 680 675 680
----------- ----------
6,101 6,101
----------- ----------
Wisconsin -- 3.9%
Milwaukee GO Corp. Purpose Bonds,
Pub. Imps., (Ser. BZ) 6.30 06/15/01 1,000 1,060 1,000 1,060
Milwaukee Metropolitan Sewage
Dist. GO, (Ser. 1989A) 7.00 09/01/01 1,000 1,089 1,000 1,089
Wisconsin St. GO RFB, (Ser. 1992) 6.00 05/01/02 1,000 1,054 1,000 1,054
----------- ----------
3,203 3,203
----------- ---------
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (98.8%) (Cost - $82,225) 65,061 17,480 82,541
OTHER ASSETS AND LIABILITIES (1.2%) 782 233 1,015
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS (100.0%) $65,843 $17,713 $83,556
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
LEGEND OF PORTFOLIO ABBREVIATIONS:
AMBAC - Insured by American Municipal Bond Assurance Corp.
FGIC - Financial Guaranty Insurance Corp.
GO - General Obligations
MBIA - Municipal Bond Investors Assurance Corp.
RB - Revenue Bonds
RFB - Refunding Bonds
RRB - Refunding Revenue Bonds
Evergreen Short - Intermediate Municipal Fund
Notes to Pro-Forma Combining Financial Statements (Unaudited)
February 28, 1997
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 Short - Intermediate Municipal Fund and Evergreen Short - Intermediate
Municipal Fund - California at February 28, 1997 and for the year then ended.
The Pro-Forma Statements give effect to the proposed transfer of all assets and
certain identified liabilities of Evergreen Short - Intermediate Municipal Fund
- - California shares in exchange for shares of Evergreen Short - Intermediate
Municipal Fund. 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 Short - Intermediate Municipal Fund will
acquire substantially all of the assets and assume certain identified
liabilities of Evergreen Short Intermediate Municipal Fund - California.
Thereafter, there will be a distribution of shares of Evergreen Short
Intermediate Municipal Fund to shareholders of Evergreen Short Intermediate
Municipal Fund - California in liquidation and subsequent termination thereof.
The information contained herein is based on the experience of each Fund for the
year ended February 28, 1997 and is designed to permit shareholders of the
consolidating mutual funds to evaluate the financial effect of the proposed
Reorganization. The expenses of both funds 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 value per share
assumes the issuance of additional shares of Evergreen Short - Intermediate
Municipal Fund Class A, Class B and Class Y which would have been issued at
February 28, 1997 in connection with the proposed Reorganization. The amount of
additional shares assumed to be issued was calculated based on the net assets of
Evergreen Short - Intermediate Municipal Fund - California Class A, B and Y as
of February 28, 1997 of $7, $50 and $17,594 (reported in 000's) respectively,
and the net asset value per share of the respective share class of Evergreen
Short - Intermediate Municipal Fund of $10.18, $10.18 and $10.17, respectively.
The Pro-Forma shares outstanding of 2,640, 679 and 4,902 for Class A, Class B
and Class Y, respectively (reported in 000's) consist of 1 (reported in 000's)
additional shares of Class A, 5 (reported in 000's) additional shares of Class B
and 1,730 (reported in 000's) additional shares of Class Y to be issued in the
proposed reorganization, as calculated above, in addition to the shares of
Evergreen Short - Intermediate Municipal Fund outstanding as of February 28,
1997.
<PAGE>
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
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 February 28, 1997.
<PAGE>
*******************************************************************************
<PAGE>
EVERGREEN MUNICIPAL 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 the Registrant's
Registration Statement on Form N-1A filed on July 18, 1988 -- Registration
No. ("Form N-1A Registration Statement").
1(b)Certificate of Amendment to Declaration of Trust. Incorporated by reference
to Post-Effective Amendment No. 16 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. 16 to the
Registrant's Form N-1A Registration Statement filed on January 3, 1995 and
to Post-Effective Amendment No. 17 to the Registrant's Form N-1A
Registration Statement filed on April 3, 1995.
2(a) By-Laws. Incorporated by reference to the Form N-1A Registration Statement.
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. 17 to the Registrant's Form N-1A Registration
Statement filed on April 3, 1995.
7 Distribution Agreement between Evergreen Funds Distributor, Inc. and the
Registrant. Filed Herewith.
8 Not applicable.
9 Custody Agreement between State Street Bank and Trust Company and
Registrant. Incorporated by reference to Pre- Effective Amendment No. 2 to
the Registrant's Form N-1A Registration Statement filed on September 15,
1988.
10 Form of Distribution Plan (relating to Class A Shares). Incorporated by
reference to Post-Effective Amendment No. 17 to the Registrant's Form N-1A
Registration Statement filed on March 31, 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. 17 to the Registrant's Form N-1A Registration
Statement filed on April 3, 1995.
14 Consent of PRICE WATERHOUSE LLP, independent accountants.
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 14th day of April, 1997.
EVERGREEN MUNICIPAL 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 and James P.
Wallin, 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 14th
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
N-14
EXHIBIT NO. Page
7(a) Distribution Agreement between Evergreen Keystone
Distributor, Inc. and Registrant
(b) Form of Dealer Agreement of Evergreen Keystone
Distributor, Inc.
11 Opinion and Consent of Sullivan & Worcester LLP
14 Consent of KPMG Peat Marwick 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 Municipal 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.
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
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.
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
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
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.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below.
EVERGREEN KEYSTONE DISTRIBUTOR, INC. EVERGREEN MUNICIPAL TRUST
By:_______________________________ By: /s/John J. Pileggi
Title: , Vice President Title: John J. Pileggi, President
<PAGE>
EXHIBIT A
To Distribution Agreement between Evergreen Keystone Distributor, Inc.
and EVERGREEN MUNICIPAL TRUST
FUNDS AND CLASSES COVERED BY THIS AGREEMENT:
Evergreen Tax-Exempt Money Market Fund
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
CLASS Y SHARES
Evergreen Institutional Tax-Exempt Money Market Fund
SERVICE CLASS SHARES
INSTITUTIONAL CLASS SHARES
Evergreen Florida High Income Municipal Bond Fund
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
CLASS Y SHARES
Evergreen Evergreen Short-Intermediate Municipal Fund
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
CLASS Y SHARES
Evergreen Evergreen Short-Intermediate Municipal Fund-California
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 MUNICIPAL 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.
April 11, 1997
Evergreen Municipal Trust
2500 Westchester Avenue
Purchase, NY 10577
Ladies and Gentlemen:
We have been requested by the Evergreen Municipal Trust, a Massachusetts
business trust with transferable shares and currently consisting of five series
(the "Trust") established under a Declaration of Trust dated July 13, 1988 as
amended (the "Declaration"), for our opinion with respect to certain matters
relating to the Evergreen Short-Intermediate Municipal 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 Evergreen Short-Intermediate Municipal Fund-CA (the "Acquired Fund"),
another series of the Trust, 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 July 14, 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 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 ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constitutng parts of this Registration
Statement on Form N-14 (the "Registration Statement") of our report dated
October 18, 1996, relating to the financial s tatements and financial highlights
of Evergreen Short - Intermediate Municipal Fund and Evergreen Short -
Intermediate Municipal Fund - California which are 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
Money Market Funds dated October 31, 1996 which are also incorporated by
reference into the Registration Statement.
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
April 14, 1997
Evergreen Short-Intermediate Municipal Fund-California
PROXY FOR THE MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 14, 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
Evergreen Short-Intermediate Municipal Fund-California (the "Short-Intermediate
Fund-California") that the undersigned is entitled to vote at the special
meeting of shareholders of the Short-Intermediate Fund-California to be held at
3:00 p.m. on Monday, July 14, 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
Short-Intermediate Municipal Fund will (I) acquire all of the assets of the
Short-Intermediate Fund-California in exchange for Shares of Evergreen
Short-Intermediate Municipal Fund; and (ii) assume [_______ _________]
liabilities of the Short-Intermediate Fund-California, as substantially
described in the accompanying Prospectus/Proxy Statement.
_______ FOR ________ AGAINST ________ ABSTAIN
PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE KEYSTONE BALANCED
FUND.
THE BOARD OF TRUSTEES OF THE SHORT-INTERMEDIATE FUND-CALIFORNIA RECOMMENDS A
VOTE FOR THE PROPOSAL.
THE SHARES REPRESENTED HEREBY WILL BE VOTED AS INDICATED OR FOR THE PROPOSAL IF
NO CHOICE IS INDICATED.
THE PROXIES ARE AUTHORIZED IN THEIR DISCRETION TO VOTE UPON SUCH
OTHER MATTERS AS MAY COME BEFORE THE MEETING OR ANY
ADJOURNMENTS THEREOF.
.
<PAGE>
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.
File No. 33-23180
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-lA
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. 1
Post-Effective Amendment No.
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 1
THE EVERGREEN MUNICIPAL TRUST
(Exact name of Registrant as specified in Charter)
550 Mamaroneck Avenue
Harrison, New York 10528
(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code:
(914) 698-5711
JOSEPH J. MCBRIEN, Esg.
550 Mamaroneck Avenue
Harrison, New York 10528
(Name and Address of Agent for Service)
Copies to:
Stanley J. Friedman, Esg.
Shereff, Friedman, Hoffman & Goodman
919 Third Avenue
New York, New York 10022
Approximate date of proposed public offering: As soon as practicable after
this Registration Statement becomes effective.
Registrant has elected to register an indefinite number of shares of beneficial
interest, par value $.0001 per share, pursuant to Rule 24f-2 under the
Investment Company Act of 1940. The registration fee of $500.00 was paid with
the filing of the Registration Statement.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which Specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as theCommission, acting pursuant to Section 8(a), may
determine.
