1933 Act Registration No. 333-
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-14AE24
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
[ ] Pre-Effective [ ] Post-Effective
Amendment No. Amendment No.
EVERGREEN EQUITY TRUST
[Exact Name of Registrant as Specified in Charter)
Area Code and Telephone Number: (617) 210-3200
200 Berkeley Street
Boston, Massachusetts 02116
-----------------------------------
(Address of Principal Executive Offices)
Rosemary D. Van Antwerp, Esq.
Keystone Investment Management Company
200 Berkeley Street
Boston, Massachusetts 02116
-----------------------------------------
(Name and Address of Agent for Service)
Copies of All Correspondence to:
Robert N. Hickey, Esq.
Sullivan & Worcester LLP 1025
Connecticut Avenue, N.W.
Washington, D.C. 20036
Approximate date of proposed public offering: As soon as possible after
the effective date of this Registration Statement.
The Registrant has registered an indefinite amount of securities under
the Securities Act of 1933 pursuant to Section 24(f) under the Investment
Company Act of 1940 (File No. 33-11050); accordingly, no fee is payable
herewith. Registrant is filing as an exhibit to this Registration Statement a
copy of an earlier declaration under Rule 24f-2. Pursuant to Rule 429, this
Registration Statement relates to the aforementioned registration on Form N-1A.
A Rule 24f-2 Notice for the Registrant's fiscal year ended October 31, 1996 was
filed with the Commission on or about , 1997.
<PAGE>
It is proposed that this filing will become effective on December 22,
1997 pursuant to Rule 488 of the Securities Act of 1933.
<PAGE>
EVERGREEN EQUITY TRUST
CROSS REFERENCE SHEET
Pursuant to Rule 481(a) under the Securities Act of 1933
Location in Prospectus/Proxy
Item of Part A of Form N-14 Statement
1. Beginning of Registration Cross Reference Sheet; Cover
Statement and Outside Page
Front Cover Page of
Prospectus
2. Beginning and Outside Table of Contents
Back Cover Page of
Prospectus
3. Fee Table, Synopsis and Comparison of Fees and
Risk Factors Expenses; Summary; Comparison
of Investment Objectives and
Policies; Risks
4. Information About the Summary; Reasons for the
Transaction Reorganizations; Comparative
Information on Shareholders'
Rights; Exhibit A (Agreement
and Plan of Reorganization)
5. Information about the Cover Page; Summary; Risks;
Registrant Comparison of Investment
Objectives and Policies;
Comparative Information on
Shareholders' Rights;
Additional Information
6. Information about the Cover Page; Summary; Risks;
Company Being Acquired Comparison of Investment
Objective and Policies;
Comparative Information on
Shareholders' Rights;
Additional Information
<PAGE>
7. Voting Information Cover Page; Summary; Voting
Information Concerning the
Meeting
8. Interest of Certain Financial Statements and
Persons and Experts Experts; Legal Matters
9. Additional Information Inapplicable
Required for Reoffering
by Persons Deemed to be
Underwriters
Item of Part B of Form N-14
10. Cover Page Cover Page
11. Table of Contents Omitted
12. Additional Information Statement of Additional
About the Registrant Information of Evergreen
Global Leaders Fund dated
March 3, 1997
13. Additional Information Statement of Additional
about the Company Being Information of Blanchard Funds
Acquired - Blanchard Global Growth Fund
dated August 31, 1997
14. Financial Statements Financial Statements dated
October 31, 1996 and April 30,
1997 of Evergreen Global
Leaders Fund; Financial
Statements of Blanchard Global
Growth Fund dated September
30, 1997; Pro Forma Financial
Statements of Evergreen Global
Leaders Fund
<PAGE>
Item of Part C of Form N-14
Incorporated by Reference to
15. Indemnification Part A Caption - "Comparative
Information on Shareholders'
Rights - Liability and
Indemnification of Trustees"
16. Exhibits Item 16. Exhibits
17. Undertakings Item 17. Undertakings
<PAGE>
BLANCHARD FUNDS
BLANCHARD GLOBAL GROWTH FUND
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
January __, 1998
Dear Shareholder,
I am writing to shareholders of the Blanchard Global Growth Fund, a series of
Blanchard Funds (the "Fund"), to inform you of a Special Shareholders' meeting
to be held on February 20, 1998. Before that meeting, I would like your vote on
the important issues affecting your Fund as described in the attached
Prospectus/Proxy Statement.
The Prospectus/Proxy Statement includes three proposals. The first proposal
requests that shareholders consider and act upon an Agreement and Plan of
Reorganization whereby all of the assets of the Fund would be acquired by
Evergreen Global Leaders Fund in exchange for Class A shares of Evergreen Global
Leaders Fund and the assumption by Evergreen Global Leaders Fund of certain
liabilities of the Fund. You will receive shares of Evergreen Global Leaders
Fund having an aggregate net asset value equal to the aggregate net asset value
of your Fund shares. Details about the new fund's investment objective,
portfolio management team, performance, etc. are contained in the attached
Prospectus/Proxy Statement. The transaction is a non-taxable event for
shareholders.
The second proposal requests shareholder consideration of an Interim Investment
Advisory Agreement between the Fund and
Virtus Capital Management, Inc.
The third and final proposal requests shareholder
consideration of an Interim Sub-Advisory Agreement between
Virtus Capital Management, Inc. and Mellon Capital Management,
Inc.
Information relating to the Interim Investment Advisory Agreement and the
Interim Sub-Advisory Agreement is contained in the attached Prospectus/Proxy
Statement.
The Board of Trustees has unanimously approved the proposals and recommends that
you vote FOR these proposals.
I realize that this Prospectus/Proxy Statement will take time to review, but
your vote is very important. Please take the time to familiarize yourself with
the proposals presented and sign and return your proxy card(s) in the enclosed
postage-paid envelope today. You may receive more than one proxy card if you own
shares in more than one fund. Please sign and return each card you receive.
If we do not receive your completed proxy card(s) after several weeks, you may
be contacted by our proxy solicitor, Shareholder Communications Corporation, who
will remind you to vote your shares.
Thank you for taking this matter seriously and participating in this important
process.
Sincerely,
[Name]
[Title]
Blanchard Funds
<PAGE>
[SUBJECT TO COMPLETION, NOVEMBER 10, 1997 PRELIMINARY COPY]
BLANCHARD FUNDS
BLANCHARD GLOBAL GROWTH FUND
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 20, 1998
Notice is hereby given that a Special Meeting (the "Meeting") of
Shareholders of Blanchard Global Growth Fund, a series of Blanchard Funds
("Global Growth"), will be held at the offices of the Evergreen Funds, 200
Berkeley Street, Boston, Massachusetts 02116 on February 20, 1998 at 2:00 p.m.
for the following purposes:
1. To consider and act upon the Agreement and Plan of Reorganization
(the "Plan") dated as of November 20, 1997, providing for the acquisition of all
of the assets of Global Growth by the Evergreen Global Leaders Fund ("Evergreen
Global Leaders"), a series of the Evergreen Equity Trust, in exchange for Class
A shares of Evergreen Global Leaders and the assumption by Evergreen Global
Leaders of certain identified liabilities of Global Growth. The Plan also
provides for distribution of such shares of Evergreen Global Leaders to
shareholders of Global Growth in liquidation and subsequent termination of
Global Growth. A vote in favor of the Plan is a vote in favor of the liquidation
and dissolution of Global Growth.
2. To consider and act upon the Interim Management Contract
between Global Growth and Virtus Capital Management, Inc.
3. To consider and act upon the Interim Sub-Advisory Agreement
between Virtus Capital Management, Inc. and Mellon Capital Management, Inc.
4. To transact any other business which may properly come before the
Meeting or any adjournment or adjournments thereof.
The Trustees of Blanchard Funds on behalf of Global Growth have fixed
the close of business on December 26, 1997 as the record date for the
determination of shareholders of Global Growth entitled to notice of and to vote
at the Meeting or any adjournment thereof.
<PAGE>
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
John W. McGonigle
Secretary
January 5, 1998
<PAGE>
INSTRUCTIONS FOR EXECUTING PROXY CARDS
The following general rules for signing proxy cards may be of
assistance to you and may help to avoid the time and expense involved in
validating your vote if you fail to sign your proxy card(s) properly.
1. INDIVIDUAL ACCOUNTS: Sign your name exactly as it
appears in the Registration on the proxy card(s).
2. JOINT ACCOUNTS: Either party may sign, but the name
of the party signing should conform exactly to a name shown in
the Registration on the proxy card(s).
3. ALL OTHER ACCOUNTS: The capacity of the individual signing the proxy
card(s) should be indicated unless it is reflected in the form of Registration.
For example:
REGISTRATION VALID SIGNATURE
CORPORATE
ACCOUNTS
(1) ABC Corp. ABC Corp.
(2) ABC Corp. John Doe, Treasurer
(3) ABC Corp.
c/o John Doe, Treasurer John Doe, Treasurer
(4) ABC Corp. Profit Sharing Plan John Doe, Trustee
TRUST ACCOUNTS
(1) ABC Trust Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee Jane B. Doe
u/t/d 12/28/78
CUSTODIAL OR ESTATE ACCOUNTS
(1) John B. Smith, Cust. John B. Smith
f/b/o John B. Smith, Jr. UGMA
(2) John B. Smith, Jr. John B. Smith, Jr.,
Executor
<PAGE>
PROSPECTUS/PROXY STATEMENT DATED JANUARY 5, 1998
Acquisition of Assets of
BLANCHARD GLOBAL GROWTH FUND
a series of
Blanchard Funds
Federated Investors Tower
Pittsburgh, Pennsylvania, 15222-3779
By and in Exchange for Shares of
EVERGREEN GLOBAL LEADERS FUND
a series of
Evergreen Equity Trust
200 Berkeley Street
Boston, Massachusetts 02116
This Prospectus/Proxy Statement is being furnished to shareholders of
Blanchard Global Growth Fund ("Global Growth") in connection with a proposed
Agreement and Plan of Reorganization (the "Plan") to be submitted to
shareholders of Global Growth for consideration at a Special Meeting of
Shareholders to be held on February 20, 1998 at 2:00 p.m. at the offices of the
Evergreen Funds, 200 Berkeley Street, Boston, Massachusetts 02116, and any
adjournments thereof (the "Meeting"). The Plan provides for all of the assets of
Global Growth to be acquired by Evergreen Global Leaders Fund ("Evergreen Global
Leaders") in exchange for shares of Evergreen Global Leaders and the assumption
by Evergreen Global Leaders of certain identified liabilities of Global Growth
(hereinafter referred to as the "Reorganization"). Evergreen Global Leaders and
Global Growth are sometimes hereinafter referred to individually as the "Fund"
and collectively as the "Funds." Following the Reorganization, shares of
Evergreen Global Leaders will be distributed to shareholders of Global Growth in
liquidation of Global Growth and such Fund will be terminated. Holders of shares
of Global Growth will receive Class A shares of Evergreen Global Leaders. No
initial sales charges will be imposed in connection with the Class A shares of
Evergreen Global Leaders received by holders of shares of Global Growth. As a
result of the proposed Reorganization, shareholders of Global Growth will
receive that number of full and fractional shares of Evergreen Global Leaders
having an aggregate net asset value equal to the aggregate net asset value of
such shareholder's shares of Global Growth. The Reorganization is being
structured as a tax-free reorganization for federal income tax purposes.
<PAGE>
Evergreen Global Leaders is a separate series of Evergreen Equity
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 Global Leaders is to seek capital appreciation by investing primarily
in a diversified portfolio of U.S. and non-U.S. equity securities of companies
located in the world's major industrialized countries. The investment objective
of Global Growth is to seek long-term capital growth by following a global
allocation strategy that contemplates shifts among strategic market sectors,
including U.S. Equities; U.S. Fixed Income; Foreign Equities; Foreign Fixed
Income; Precious Metals Securities; and Emerging Markets.
Shareholders of Global Growth are also being asked to approve the
Interim Management Contract with Virtus Capital Management, Inc., a subsidiary
of First Union Corporation ("Virtus"), (the "Interim Advisory Agreement") with
the same terms and fees as the previous advisory agreement between Global Growth
and Virtus and the Interim Sub-Advisory Agreement between Virtus and Mellon
Capital Management, Inc. ("Mellon Capital") with the same terms and fees as the
previous sub-advisory agreement between Virtus and Mellon Capital. The Interim
Advisory Agreement and Interim Sub- Advisory Agreement will be in effect for the
period of time between November 21, 1997, the date on which the merger of Signet
Banking Corporation with and into a wholly-owned subsidiary of First Union
Corporation was consummated, and the date of the Reorganization (scheduled for
on or about February 27, 1998).
This Prospectus/Proxy Statement, which should be retained for future
reference, sets forth concisely the information about Evergreen Global Leaders
that shareholders of Global Growth should know before voting on the
Reorganization. Certain relevant documents listed below, which have been filed
with the Securities and Exchange Commission ("SEC"), are incorporated in whole
or in part by reference. A Statement of Additional Information dated January 5,
1998, relating to this Prospectus/Proxy Statement and the Reorganization which
includes the financial statements of Evergreen Global Leaders dated October 31,
1996 and April 30, 1997 and Global Growth dated September 30, 1997, has been
filed with the SEC and is incorporated by reference in its entirety into this
Prospectus/Proxy Statement. A copy of such Statement of Additional Information
is available upon request and without charge by writing to Evergreen Global
Leaders at 200 Berkeley Street, Boston, Massachusetts 02116, or by calling
toll-free 1-800-343-2898.
<PAGE>
The Prospectus of Evergreen Global Leaders relating to Class A, Class B
and Class C shares dated March 3, 1997, as supplemented, and its Annual Report
for the fiscal year ended October 31, 1996 and its Semi-Annual Report for the
six month period ended April 30, 1997 are incorporated herein by reference in
their entirety, insofar as they relate to Evergreen Global Leaders relating to
Class A, Class B and Class C shares only, and not to any other fund described
therein. Shareholders of Global Growth will receive, with this Prospectus/Proxy
Statement, copies of the Prospectus of Evergreen Global Leaders. Additional
information about Evergreen Global Leaders 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 to or calling
Evergreen Global Leaders at the address or telephone number listed in the
preceding paragraph.
The Prospectus of Global Growth dated August 31, 1997, insofar as it
relates to Global Growth only, and not to any other funds described therein, is
incorporated herein in its entirety by reference. Copies of the Prospectus and
related Statement of Additional Information dated the same date, are available
upon request without charge by writing to Global Growth at the address listed on
the cover page of this Prospectus/Proxy Statement or by calling toll-free
1-800-829- 3863.
Included as Exhibit A to 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 any bank and are not insured or otherwise protected by the
U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve
Board or any other government agency and involve investment risk,
including possible loss of capital.
<PAGE>
TABLE OF CONTENTS
Page
COMPARISON OF FEES AND EXPENSES...................................6
SUMMARY...........................................................8
Proposed Plan of Reorganization..........................8
Tax Consequences.........................................10
Investment Objectives and Policies
of the Funds...........................................10
Comparative Performance Information
for each Fund..........................................11
Management of the Funds..................................12
Investment Advisers and Sub-Adviser......................12
Administrators...........................................13
Portfolio Management.....................................14
Distribution of Shares...................................14
Purchase and Redemption Procedures.......................16
Exchange Privileges......................................16
Dividend Policy..........................................16
Risks....................................................17
REASONS FOR THE REORGANIZATION....................................19
Agreement and Plan of Reorganization.....................21
Federal Income Tax Consequences..........................23
Pro-forma Capitalization.................................25
Shareholder Information..................................26
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES..................26
COMPARATIVE INFORMATION ON SHAREHOLDERS' RIGHTS...................29
Forms of Organization....................................29
Capitalization...........................................29
Shareholder Liability....................................30
Shareholder Meetings and Voting Rights...................31
Liquidation or Dissolution...............................31
Liability and Indemnification of Trustees................32
INFORMATION REGARDING THE INTERIM ADVISORY
AGREEMENT......................................................33
Introduction.............................................33
Comparison of the Interim Advisory
Agreement and the Previous Advisory
Agreement..............................................34
Information About Global Growth's Investment
Adviser................................................35
INFORMATION REGARDING THE INTERIM SUB-
ADVISORY AGREEMENT..............................................36
Introduction.............................................36
Comparison of the Interim Sub-Advisory
Agreement and the Previous Sub-
Advisory Agreement.....................................37
ADDITIONAL INFORMATION............................................38
<PAGE>
VOTING INFORMATION CONCERNING THE MEETING.........................39
FINANCIAL STATEMENTS AND EXPERTS..................................42
LEGAL MATTERS.....................................................42
OTHER BUSINESS....................................................42
<PAGE>
COMPARISON OF FEES AND EXPENSES
The amounts for Class A shares of Evergreen Global Leaders set forth in
the following tables and in the examples are based on the expenses of Evergreen
Global Leaders for the fiscal year ended October 31, 1996. The amounts for
shares of Global Growth set forth in the following tables and in the examples
are based on the expenses for Global Growth for the fiscal year ended September
30, 1997. The pro forma amounts for Class A shares of Evergreen Global Leaders
are based on what the combined expenses would have been for Evergreen Global
Leaders for the fiscal year ending April 30, 1997. All amounts are adjusted for
voluntary expense waivers.
The following tables show for Evergreen Global Leaders, Global Growth
and Evergreen Global Leaders pro forma, assuming consummation of the
Reorganization, the shareholder transaction expenses and annual fund operating
expenses associated with an investment in the Class A shares of Evergreen Global
Leaders and shares of Global Growth, as applicable.
Comparison of Class A Shares
of Evergreen Global Leaders With
Shares of Global Growth
<TABLE>
<CAPTION>
Evergreen Evergreen
Global Global Global
Leaders Growth Leaders
<S> <C> <C> <C>
---------- ------ ------
Shareholder Pro Forma
Transaction Class A Shares Class A
Expenses ------- ------ ------
Maximum Sales Load 4.75% None 4.75%
Imposed on Purchases
(as a percentage of
offering price)
Maximum Sales Load None None None
Imposed on Reinvested
Dividends (as a
percentage of offering
price)
<PAGE>
Contingent Deferred None None None
Sales Charge (as a
percentage of original
purchase price or
redemption proceeds,
whichever is lower)
Exchange Fee None None None
Annual Fund Operating
Expenses (as a
percentage of average
daily net assets)
Management Fee 0.95% 1.00% 0.95%
12b-1 Fees (1) 0.25% [ ]% 0.25%
Other Expenses 0.55% [ ] 0.55%
--------- -------- ---------
Annual Fund Operating 1.75% [ ]% 1.75%
Expenses --------- --------- ---------
--------- --------- ---------
</TABLE>
- ---------------
(1) Class A shares of Evergreen Global Leaders can pay up to 0.75% of
average daily net assets as a 12b-1 fee. For the foreseeable future,
the Class A 12b-1 fees will be limited to 0.25% of average daily net
assets.
Examples. The following tables show for Evergreen Global Leaders and
Global Growth, and for Evergreen Global Leaders pro forma, assuming consummation
of the Reorganization, examples of the cumulative effect of shareholder
transaction expenses and annual fund operating expenses indicated above on a
$1,000 investment in each class of shares for the periods specified, assuming
(i) a 5% annual return, and (ii) redemption at the end of such period. In the
case of Evergreen Global Leaders - pro forma, the example does not reflect the
imposition of the 4.75% maximum sales load on purchases because Global Growth
Shareholders who receive Class A shares of Evergreen Global Leasers in the
Reorganization or who purchase additional Class A shares of Evergreen Global
Leaders subsequent to the Reorganization will not incur any sales load.
<PAGE>
<TABLE>
<CAPTION>
One Three Five Ten
Year Years Years Years
---- ----- ----- -----
<S> <C> <C> <C> <C>
Evergreen Global
Leaders Class A $64 $100 $138 $244
Global Growth $26 $78 $134 $286
Evergreen Global
Leaders - Pro $18 $55 $95 $206
Forma Class A
</TABLE>
The purpose of the foregoing examples is to assist Global Growth
shareholders in understanding the various costs and expenses that an investor in
Evergreen Global Leaders would bear directly and indirectly as a result of the
Reorganization as compared with the various direct and indirect expenses
currently borne by a shareholder in Global Growth. 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
Prospectus of Evergreen Global Leaders dated March 3, 1997, as supplemented, and
the Prospectus of Global Growth dated August 31, 1997 (which are incorporated
herein by reference), the Plan, the Interim Advisory Agreement and the Interim
Sub- Advisory Agreement, forms of which are attached to this Prospectus/Proxy
Statement as Exhibits A, B and C, respectively.
Proposed Plan of Reorganization
The Plan provides for the transfer of all of the assets of Global
Growth in exchange for shares of Evergreen Global Leaders and the assumption by
Evergreen Global Leaders of certain identified liabilities of Global Growth. The
Plan also calls for the distribution of shares of Evergreen Global Leaders to
Global Growth shareholders in liquidation of Global Growth as part of the
Reorganization. As a result of the Reorganization, the shareholders of Global
Growth will become
<PAGE>
the owners of that number of full and fractional Class A shares of Evergreen
Global Leaders having an aggregate net asset value equal to the aggregate net
asset value of the shareholder's shares of Global Growth, as of the close of
business immediately prior to the date that Global Growth's assets are exchanged
for shares of Evergreen Global Leaders. See "Reasons for the Reorganization -
Agreement and Plan of Reorganization."
The Trustees of Blanchard Funds, including the Trustees who are not
"interested persons," as such term is defined in the 1940 Act (the "Independent
Trustees"), have concluded that the Reorganization would be in the best
interests of shareholders of Global Growth, and that the interests of the
shareholders of Global Growth will not be diluted as a result of the
transactions contemplated by the Reorganization. Accordingly, the Trustees have
submitted the Plan for the approval of Global Growth's shareholders.
THE BOARD OF TRUSTEES OF BLANCHARD FUNDS
RECOMMENDS APPROVAL BY SHAREHOLDERS OF GLOBAL GROWTH
OF THE PLAN EFFECTING THE REORGANIZATION.
The Trustees of Evergreen Equity Trust, on behalf of Evergreen Global
Leaders, have also approved the Plan, and accordingly Evergreen Global Leaders'
participation in the Reorganization.
Approval of the Reorganization on the part of Global Growth will
require the affirmative vote of a majority of Global Growth's shares voted and
entitled to vote, with all classes voting together as a single class at a
Meeting at which a quorum of the Fund's shares is present. A majority of the
outstanding shares entitled to vote, represented in person or by proxy, is
required to constitute a quorum at the Meeting. See "Voting Information
Concerning the Meeting."
The merger (the "Merger") of Signet Banking Corporation ("Signet") with
and into a wholly-owned subsidiary of First Union Corporation ("First Union")
has been consummated and, as a result, by law the Merger terminated the
investment advisory agreement between Virtus and Global Growth and the sub-
advisory agreement between Virtus and Mellon Capital. Prior to consummation of
the Merger, Global Growth received an order from the SEC which permitted the
implementation, without formal shareholder approval, of a new investment
advisory agreement between the Fund and Virtus and a new sub-advisory agreement
between Virtus and Mellon Capital for a period of not more than 120 days
beginning on the date of the closing of the Merger and continuing through the
date the Interim
<PAGE>
Advisory Agreement and Interim Sub-Advisory Agreement are approved by the Fund's
shareholders (but in no event later than April 30, 1998). The Interim Advisory
Agreement and the Interim Sub-Advisory Agreement have the same terms and fees as
the previous investment advisory agreement between Global Growth and Virtus and
the previous sub-advisory agreement between Virtus and Mellon Capital,
respectively. The Reorganization is scheduled to take place on or about February
27, 1998.
Approval of the Interim Advisory Agreement and Interim Sub-Advisory
Agreement requires the affirmative vote of (i) 67% or more of the shares of
Global Growth present in person or by proxy at the Meeting, if holders of more
than 50% of the shares of Global Growth outstanding on the record date are
present, in person or by proxy, or (ii) more than 50% of the outstanding shares
of Global Growth, whichever is less. See "Voting Information Concerning the
Meeting."
If the shareholders of Global Growth do not vote to approve the
Reorganization, the Trustees will consider other possible courses of action in
the best interests of shareholders.
Tax Consequences
Prior to or at the completion of the Reorganization, Global Growth will
have received an opinion of counsel that the Reorganization has been structured
so that no gain or loss will be recognized by the Fund or its shareholders for
federal income tax purposes as a result of the receipt of shares of Evergreen
Global Leaders in the Reorganization. The holding period and aggregate tax basis
of shares of Evergreen Global Leaders that are received by Global Growth's
shareholders will be the same as the holding period and aggregate tax basis of
shares of the Fund previously held by such shareholders, provided that shares of
the Fund are held as capital assets. In addition, the holding period and tax
basis of the assets of Global Growth in the hands of Evergreen Global Leaders as
a result of the Reorganization will be the same as in the hands of the Fund
immediately prior to the Reorganization, and no gain or loss will be recognized
by Evergreen Global Leaders upon the receipt of the assets of the Fund in
exchange for shares of Evergreen Global Leaders and the assumption by Evergreen
Global Leaders of certain identified liabilities.
Investment Objectives and Policies of the Funds
The investment objectives and policies of Evergreen Global Leaders and
Global Growth are similar in that both seek
<PAGE>
capital appreciation through investments in both U.S. and foreign securities.
There are, however, differences between the Funds' objectives and policies.
The investment objective of Evergreen Global Leaders is to seek to
achieve capital appreciation by investing primarily in a diversified portfolio
of U.S. and non-U.S. equity securities of companies located in the world's major
industrialized countries. The investment adviser of Evergreen Global Leaders
attempts to screen the largest companies in the world's major industrialized
countries and invests, in the opinion of the investment adviser, in the 100 best
based on certain qualitative and quantitative criteria, including those with the
highest return on equity and consistent earnings growth.
The investment objective of Global Growth is to seek long-term capital
growth. Global Growth attempts to achieve its objective by following a global
allocation strategy that contemplates shifts among strategic market sectors,
including U.S. Equities; U.S. Fixed Income; Foreign Equities; Foreign Fixed
Income; Precious Metals Securities; and Emerging Markets. See "Comparison of
Investment Objectives and Policies" below.
Comparative Performance Information for each Fund
Discussions of the manner of calculation of total return are contained
in the respective Prospectus and Statement of Additional Information of the
Funds. The total return of Global Growth for the one, five, and ten year periods
ended September 30, 1997, and for the period from inception through September
30, 1997 and for Evergreen Global Leaders for the one year period ended
September 30, 1997 and for the period from inception through September 30, 1997
are set forth in the table below. The calculations of total return assume the
reinvestment of all dividends and capital gains distributions on the
reinvestment date and the deduction of all recurring expenses (including sales
charges) that were charged to shareholders' accounts.
Average Annual Total Return (1)
<TABLE>
<CAPTION>
1 Year 5 Years 10 Years From
Ended Ended Ended Inception
September September September To
30, 30, 30, September Inception
1997 1997 1997 30, 1997 Date
------- ------- -------- --------- ---------
<PAGE>
<S> <C> <C> <C> <C>
Evergreen
Global
Leaders
Class A 16.64% N/A N/A 15.19% 6/3/94
shares
Global 13.20% 10.51% 6.44% 8.97% 6/1/86
Growth
</TABLE>
- ---------
(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 periods would have been lower.
Important information about Evergreen Global Leaders is also contained
in management's discussion of Evergreen Global Leaders's performance, attached
hereto as Exhibit D. This information also appears in the most recent Annual
Report of Evergreen Global Leaders.
Management of the Funds
The overall management of Evergreen Global Leaders and of Global Growth
is the responsibility of, and is supervised by, the Board of Trustees of
Evergreen Equity Trust and Blanchard Funds, respectively.
Investment Advisers and Sub-Adviser
Evergreen Asset Management Corp ("Evergreen Asset") serves as
investment adviser to Evergreen Global Leaders. Evergreen Asset has served as
investment adviser to the Evergreen mutual funds since 1971. Evergreen is a
wholly-owned subsidiary of First Union National Bank ("FUNB"). FUNB is a
subsidiary of First Union, the sixth largest bank holding company in the United
States. The Capital Management Group of FUNB, Evergreen Asset and Keystone
Investment Management Company manage the Evergreen family of mutual funds with
assets of approximately $32.5 billion as of September 30, 1997. For further
information regarding Evergreen, FUNB and First Union, see "Management of the
Funds - Investment Advisers" in the Prospectus of Evergreen Global Leaders.
Evergreen Asset manages investments, provides various administrative
services and supervises the daily business affairs of Evergreen Global Leaders
subject to the authority of the Evergreen Equity Trust's Board of Trustees.
Evergreen Global Leaders pays Evergreen Asset a fee for its services at
<PAGE>
the annual rate of 0.95% of the Fund's average daily net
assets.
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 on
Evergreen Global Leaders. 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
Evergreen Global Leaders 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.
Virtus serves as the investment adviser for Global Growth. As
investment adviser, Virtus is responsible for providing or providing for all
management and administrative services for the Fund. In carrying out its
obligations, Virtus provides or arranges for investment research and supervising
the Fund's investments, selects and evaluates the performance of the Fund's
sub-adviser, Mellon Capital, and conducts or arranges for a continuous program
of appropriate sale or other disposition of the Fund's assets, subject at all
times to the direction of the Board of Trustees. Virtus compensates Mellon
Capital from the advisory fee received from Global Growth. See "Information
Regarding the Interim Sub- Advisory Agreement." For its services as investment
adviser, Virtus receives a fee at an annual rate of 1.00% of Global Growth's
average daily net assets.
Each investment adviser may, at its discretion, reduce or waive its fee
or reimburse a Fund for certain of its other expenses in order to reduce its
expense ratios. Each investment adviser may reduce or cease these voluntary
waivers and reimbursements at any time.
Administrators
Evergreen Investment Services ("EIS") serves as administrator to
Evergreen Global Leaders. As administrator, EIS provides facilities, equipment
and personnel to Evergreen Global Leaders and is entitled to receive an
administration fee from the Fund based on the aggregate average daily net assets
of all the mutual funds advised by Evergreen Asset and its affiliates,
calculated in accordance with the following schedule: 0.050% on the first $7
billion, 0.035% on the next
<PAGE>
$3 billion, 0.030% on the next $5 billion, 0.020% on the next $10 billion,
0.015% on the next $5 billion and 0.010% on assets in excess of $30 billion.
Federated Administrative Services ("FAS") provides Global Growth with
certain administrative personnel and services including certain legal and
accounting services. FAS is entitled to receive a fee for such services at the
following annual rates: 0.15% on the first $250 million of average daily net
assets of the combined assets of the funds in the Blanchard/Virtus mutual fund
family; 0.125% on the next $250 million of such assets, 0.10% on the next $250
million of such assets, and 0.075% on assets in excess of $750 million.
Portfolio Management
The portfolio of Evergreen Global Leaders is managed by a committee
composed of portfolio management and analytical personnel employed by Evergreen
Asset. The members of this committee include Stephen A. Lieber, who is Chairman
and Co- Chief Executive Officer of Evergreen Asset, and Edwin D. Miska, who is
an analyst with Evergreen Asset. Messrs. Lieber and Miska are responsible for
the day-to-day operations of the Fund. Mr. Lieber is the founder of Evergreen
Asset and has been associated with Evergreen Asset and its predecessor since
1971. Mr. Miska has been a quantitative analyst with Evergreen Asset and its
predecessor since 1986.
Distribution of Shares
Evergreen Distributor, Inc. ("EDI"), an affiliate of BISYS Fund
Services, acts as underwriter of the shares of Evergreen Global Leaders. EDI
distributes the Fund's shares directly or through broker-dealers, banks
(including FUNB), or other financial intermediaries. Evergreen Global Leaders
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 Global Growth will
receive Class A shares of Evergreen Global Leaders. Class A shares of Evergreen
Global Leaders currently incur Rule 12b-1 fees of 0.25% per year, while shares
of Global Growth incur 12b-1 fees at the rate of 0.75% per year. Because the
Reorganization will be effected at net asset value without the imposition of a
sales charge, Evergreen Global Leaders shares acquired by shareholders of Global
Growth pursuant to the proposed Reorganization would not be subject
<PAGE>
to any initial sales charge or contingent deferred sales
charge as a result of the Reorganization.
The following is a summary description of charges and fees for the
Class A shares of Evergreen Global Leaders which will be received by Global
Growth shareholders in the Reorganization. More detailed descriptions of the
distribution arrangements applicable to the classes of shares are contained in
the respective Evergreen Global Leaders Prospectus and the Global Growth
Prospectus and in each Fund's respective Statement of Additional Information.
Class A Shares. Class A shares are sold at net asset value plus an
initial sales charge and, as indicated below, are subject to
distribution-related fees. For a description of the initial shares charges
applicable to purchases of Class A shares, see "Purchase and Redemption of
Shares - How to Buy Shares" in the Prospectus for Evergreen Global Leaders.
Holders of shares of Global Growth who receive Class A shares of Evergreen
Global Leaders will be able to purchase additional Class A shares of Evergreen
Global Leaders and of any other Evergreen Fund at net asset value. No initial
sales charge will be imposed.
Additional information regarding the classes of shares of each Fund is
included in its respective Prospectus and Statement of Additional Information.
Distribution-Related Expenses. Evergreen Global Leaders has adopted a
Rule 12b-1 plan with respect to its Class A shares under which the Class may pay
for distribution-related expenses at an annual rate which may not exceed 0.75%
of average daily net assets attributable to the Class. Payments with respect to
Class A shares are currently limited to 0.25% of average daily net assets
attributable to the Class, which amount may be increased to the full plan rate
for the Fund by the Trustees without shareholder approval.
Global Growth has adopted a Rule 12b-1 plan with respect to its shares
under which such shares may pay for distribution-related expenses at an annual
rate of 0.75% of average daily net assets.
Additional information regarding the Rule 12b-1 plans adopted by each
Fund is included in its respective Prospectus and Statement of Additional
Information.
Purchase and Redemption Procedures
<PAGE>
Information concerning applicable sales charges and
distribution-related fees is provided above. Investments in the Funds are not
insured. The minimum initial purchase requirement for Evergreen Global Leaders
is $1,000 and the minimum investment for Global Growth is $3,000 ($2,000 for
qualified pension plans). Global Growth has a minimum investment requirement of
$200 for subsequent investments. There is no minimum for subsequent purchases of
shares of Evergreen Global Leaders. Each Fund provides for telephone, mail or
wire redemption of shares at net asset value as next determined after receipt of
a redemption request on each day the New York Stock Exchange ("NYSE") is open
for trading. Additional information concerning purchases and redemptions of
shares, including how each Fund's net asset value is determined, is contained in
the respective Prospectus for each Fund. Each Fund 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
Global Growth currently permits shareholders to exchange such shares
for shares of another fund in the Blanchard Group of Funds or for Investment
shares of other funds managed by Virtus. In addition, such shares may be
exchanged for shares of Federated Emerging Markets Fund. Holders of shares of a
class of Evergreen Global Leaders generally may exchange their shares for shares
of the same class of any other Evergreen fund. Global Growth shareholders will
be receiving Class A shares of Evergreen Global Leaders in the Reorganization
and, accordingly, with respect to shares of Evergreen Global Leaders received by
Global Growth shareholders in the Reorganization, the exchange privilege is
limited to the Class A shares of other Evergreen funds. No sales charge is
imposed on an exchange. An exchange which represents an initial investment in
another Evergreen fund must amount to at least $1,000. The current exchange
privileges, and the requirements and limitations attendant thereto, are
described in each Fund's respective Prospectus and Statement of Additional
Information.
Dividend Policy
Each Fund distributes its income dividends annually. Distributions of
any net realized gains of a Fund will be made at least annually. Dividends and
distributions are reinvested in additional shares of the same class of the
respective Fund, or paid in cash, as a shareholder has elected. See the
<PAGE>
respective Prospectus of each Fund for further information concerning dividends
and distributions.
After the Reorganization, shareholders of Global Growth who have
elected to have their dividends and/or distributions reinvested will have
dividends and/or distributions received from Evergreen Global Leaders reinvested
in shares of Evergreen Global Leaders. Shareholders of Global Growth who have
elected to receive dividends and/or distributions in cash will receive dividends
and/or distributions from Evergreen Global Leaders 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
Global Leaders.
Each of Evergreen Global Leaders and Global Growth 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 net investment company
taxable income and any net realized gains to shareholders, it is expected that a
Fund will not be required to pay any federal income taxes on the amounts so
distributed. A 4% nondeductible excise tax will be imposed on amounts not
distributed if a Fund does not meet certain distribution requirements by the end
of each calendar year. Each Fund anticipates meeting such distribution
requirements.
Risks
Since the investment objectives and policies of each Fund are similar,
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.
Options and Futures. Both Funds may employ for hedging purposes the
strategy of engaging in options and futures transactions. The risks involved in
these strategies are described in the "Investment Practices and Restrictions
Options and Futures" section in the Prospectus of Evergreen Global Leaders.
Foreign Securities. Both Funds invest in foreign securities. Securities
markets of foreign countries in which the Funds may invest are generally not
subject to the same degree of regulation as the U.S. markets and may be more
volatile and less liquid than the major U.S. markets. The differences between
investing in foreign and U.S. companies include: (1) less publicly available
information about
<PAGE>
foreign companies; (2) the lack of uniform financial accounting standards and
practices among countries which could impair the validity of direct comparisons
of valuations measures (such as price/earnings ratios) for securities in
different countries; (3) less readily available market quotations on foreign
companies; (4) differences in government regulation and supervision of foreign
stock exchanges, brokers, listed companies, and banks; (5) differences in legal
systems which may affect the ability to enforce contractual obligations or
obtain court judgments; (6) generally lower foreign stock market volume; (7) the
likelihood that foreign securities may be less liquid or more volatile, which
may affect the Fund's ability to purchase or sell large blocks of securities and
thus obtain the best price; (8) transaction costs, including brokerage charges
and custodian charges associated with holding foreign securities, may be higher;
(9) the settlement period for foreign securities, which are sometimes longer
than those for securities of U.S. issuers, may affect portfolio liquidity; (10)
the possibility that foreign securities held by a Fund may be traded on days
that the Fund does not value its portfolio securities, such as Saturdays and
customary business holidays, and accordingly, the Fund's net asset value may be
significantly affected on days when shareholders do not have access to the Fund;
(11) political and social instability, expropriation, and political or financial
changes which adversely affect investment in some countries.
Emerging Markets. Investing in securities of issuers in emerging
markets countries involves exposure to economic systems that are generally less
stable than those of developed countries. Investing in companies in emerging
markets countries may involve exposure to national policies that may restrict
investment by foreigners and undeveloped legal systems governing private and
foreign investments and private property. The typically small size of the
markets for securities issued by companies in emerging markets countries and the
possibility of a low or nonexistent volume of trading in those securities may
also result in a lack of liquidity and in price volatility for those securities.
Additional Information. Further information about these risks, as well as
other risks relating to an investment in Evergreen Global Leaders, is set forth
in the Prospectus of Evergreen Global Leaders at "Special Risk Considerations."
REASONS FOR THE REORGANIZATION
<PAGE>
On July 18, 1997, First Union entered into an Agreement and Plan of
Merger with Signet, which provided, among other things, for the Merger of Signet
with and into a wholly-owned subsidiary of First Union. The Merger was
consummated on November 21, 1997. As a result of the Merger it is expected that
FUNB and its affiliates will succeed to the investment advisory and
administrative functions currently performed for Global Growth by various units
of Signet and various unaffiliated parties. It is also expected that Signet, or
its successors, will no longer, upon completion of the Reorganization and
similar reorganizations of other funds in the Signet mutual fund family, provide
investment advisory or administrative services to investment companies.
At a regular meeting held on September 16, 1997, the Board of Trustees
of Blanchard Funds considered and approved the Reorganization as in the best
interests of shareholders of Global Growth and determined that the interests of
existing shareholders of Global Growth will not be diluted as a result of the
transactions contemplated by the Reorganization. In addition, the Trustees
approved the Interim Advisory Agreement and Interim Sub-Advisory Agreement with
respect to Global Growth.
As noted above, Signet has merged with and into a wholly-owned
subsidiary of First Union. Signet is the parent company of Virtus, investment
adviser to the mutual funds which comprise Blanchard Funds. The Merger caused,
as a matter of law, termination of the investment advisory agreement between
each series of Blanchard Funds and Virtus and the sub-advisory agreement between
Virtus and Mellon Capital with respect to the Fund. Blanchard Funds have
received an order from the SEC which permits Virtus and Mellon Capital to
continue to act as Global Growth's investment adviser and sub-adviser,
respectively, without shareholder approval, for a period of not more than 120
days from the date the Merger was consummated (November 21, 1997) to the date of
shareholder approval of a new investment advisory agreement and sub- advisory
agreement. Accordingly, the Trustees considered the recommendations of Signet in
approving the proposed Reorganization.
In approving the Plan, the Trustees reviewed various factors about the
Funds and the proposed Reorganization. There are substantial similarities
between Evergreen Global Leaders and Global Growth. Specifically, Evergreen
Global Leaders and Global Growth have substantially identical investment
objectives and policies and comparable risk profiles. See "Comparison of
Investment Objectives and Policies" below. At the same time, the Board of
Trustees
<PAGE>
evaluated the potential economies of scale associated with larger mutual funds
and concluded that operational efficiencies may be achieved upon the combination
of Global Growth with an Evergreen fund with a greater level of assets. As of
September 30, 1997, Evergreen Global Leaders's net assets were approximately
$213.6 million and Global Growth's net assets were approximately $62.2 million.
In addition, assuming that an alternative to the Reorganization would
be to propose that Global Growth continue its existence and be separately
managed by Evergreen Asset or one of its affiliates, Global Growth would be
offered through common distribution channels with the similar Evergreen Global
Leaders. Global Growth would also have to bear the cost of maintaining its
separate existence. Signet and Evergreen Asset believe that the prospect of
dividing the resources of the Evergreen mutual fund organization between two
substantially similar funds could result in each Fund being disadvantaged due to
an inability to achieve optimum size, performance levels and the greatest
possible economies of scale. Accordingly, for the reasons noted above and
recognizing that there can be no assurance that any economies of scale or other
benefits will be realized, Signet and Evergreen Asset believe that the proposed
Reorganization would be in the best interests of each Fund and its shareholders.
The Board of Trustees of Blanchard Funds met and considered the
recommendation of Signet and Evergreen Asset and, in addition, considered among
other things, (i) the terms and conditions of the Reorganization; (ii) whether
the Reorganization would result in the dilution of shareholders' interests;
(iii) expense ratios, fees and expenses of Evergreen Global Leaders and Global
Growth; (iv) the comparative performance records of each of the Funds; (v)
compatibility of their investment objectives and policies; (vi) the investment
experience, expertise and resources of Evergreen; (vii) the service and
distribution resources available to the Evergreen funds and the broad array of
investment alternatives available to shareholders of the Evergreen funds; (viii)
the personnel and financial resources of First Union and its affiliates; (ix)
the fact that FUNB will bear the expenses incurred by Global Growth in
connection with the Reorganization; (x) the fact that Evergreen Global Leaders
will assume certain identified liabilities of Global Growth; and (xi) the
expected federal income tax consequences of the Reorganization.
The Trustees also considered the benefits to be derived by shareholders
of Global Growth from the sale of its assets to Evergreen Global Leaders. In
this regard, the Trustees
<PAGE>
considered the potential benefits of being associated with a larger entity and
the economies of scale that could be realized by the participation in such an
entity by shareholders of Global Growth.
In addition, the Trustees considered that there are alternatives
available to shareholders of Global Growth, 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
Fund counsel and counsel to the Independent Trustees regarding the legal issues
involved. The Trustees of Evergreen Equity Trust, on behalf of Evergreen Global
Leaders, also concluded at a meeting on September 17, 1997 that the proposed
Reorganization would be in the best interests of shareholders of Evergreen
Global Leaders and that the interests of the shareholders of Evergreen Global
Leaders would not be diluted as a result of the transactions contemplated by the
Reorganization.
THE TRUSTEES OF BLANCHARD FUNDS RECOMMEND
THAT THE SHAREHOLDERS OF GLOBAL GROWTH 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 Global Leaders will acquire all of the
assets of Global Growth in exchange for shares of Evergreen Global Leaders and
the assumption by Evergreen Global Leaders of certain identified liabilities of
Global Growth on or about February 27, 1998 or such other date as may be agreed
upon by the parties (the "Closing Date"). Prior to the Closing Date, Global
Growth will endeavor to discharge all of its known liabilities and obligations.
Evergreen Global Leaders will not assume any liabilities or obligations of
Global Growth other than those reflected in an unaudited statement of assets and
liabilities of Global Growth 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 Global Leaders to be received by the shareholders of Global Growth
will be determined by multiplying the respective outstanding class of shares of
Global Growth by a factor which shall be computed by dividing the net asset
value per share of the respective class of shares of Global Growth by the net
asset value per share of
<PAGE>
the respective class of shares of Evergreen Global Leaders. Such computations
will take place as of the close of regular trading on the NYSE on the business
day immediately prior to the Closing Date. The net asset value per share of each
class will be determined by dividing assets, less liabilities, in each case
attributable to the respective class, by the total number of outstanding shares.
State Street Bank and Trust Company, the custodian for Evergreen Global
Leaders, will compute the value of each Fund's respective portfolio securities.
The method of valuation employed will be consistent with the procedures set
forth in the Prospectus and Statement of Additional Information of Evergreen
Global Leaders, 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, Global Growth will have declared a
dividend or dividends and distribution or distributions which, together with all
previous dividends and distributions, shall have the effect of distributing to
the Fund's shareholders (in shares of the Fund, or in cash, as the shareholder
has previously elected) all of the Fund's net investment company taxable income
for the taxable period ending on the Closing Date (computed without regard to
any deduction for dividends paid) and all of its net capital gains realized in
all taxable periods ending on the Closing Date (after reductions for any capital
loss carryforward).
As soon after the Closing Date as conveniently practicable, Global
Growth will liquidate and distribute pro rata to shareholders of record as of
the close of business on the Closing Date the full and fractional shares of
Evergreen Global Leaders received by Global Growth. Such liquidation and
distribution will be accomplished by the establishment of accounts in the names
of the Fund's shareholders on the share records of Evergreen Global Leaders'
transfer agent. Each account will represent the respective pro rata number of
full and fractional shares of Evergreen Global Leaders due to the Fund's
shareholders. All issued and outstanding shares of Global Growth, including
those represented by certificates, will be canceled. The shares of Evergreen
Global Leaders to be issued will have no preemptive or conversion rights. After
such distributions and the winding up of its affairs, Global Growth will be
terminated. In connection with such termination, Blanchard Funds will file with
the SEC an application for termination as a registered investment company.
<PAGE>
The consummation of the Reorganization is subject to the conditions set
forth in the Plan, including approval by Global Growth'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 Global Growth's
shareholders, the Plan may be terminated (a) by the mutual agreement of Global
Growth and Evergreen Global Leaders; 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 Global Growth in connection with the Reorganization
(including the cost of any proxy soliciting agent) will be borne by FUNB whether
or not the Reorganization is consummated. No portion of such expenses will be
borne directly or indirectly by Global Growth or its shareholders. There are no
liabilities or expected reimbursements in connection with the 12b-1 Plan of
Global Growth. As a result, no 12b-1 liabilities will be assumed by Evergreen
Global Leaders following the Reorganization.
If the Reorganization is not approved by shareholders of Global Growth,
the Board of Trustees of Blanchard Funds will consider other possible courses of
action in the best interests of shareholders.
Federal Income Tax Consequences
The Reorganization is intended to qualify for federal income tax
purposes as a tax-free reorganization under section 368(a) of the Code. As a
condition to the closing of the Reorganization, Global Growth will receive an
opinion of counsel to the effect that, on the basis of the existing provisions
of the Code, U.S. Treasury regulations issued thereunder, current administrative
rules, pronouncements and court decisions, for federal income tax purposes, upon
consummation of the Reorganization:
(1) The transfer of all of the assets of Global Growth solely in
exchange for shares of Evergreen Global Leaders and the assumption by Evergreen
Global Leaders of certain identified liabilities, followed by the distribution
of Evergreen Global Leaders' shares by Global Growth in dissolution and
liquidation of Global Growth, will constitute a "reorganization" within the
meaning of section 368(a)(1)(C)
<PAGE>
of the Code, and Evergreen Global Leaders and Global Growth 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 Global Growth on the transfer
of all of its assets to Evergreen Global Leaders solely in exchange for
Evergreen Global Leaders' shares and the assumption by Evergreen Global Leaders
of certain identified liabilities of Global Growth or upon the distribution of
Evergreen Global Leaders' shares to Global Growth's shareholders in exchange for
their shares of Global Growth;
(3) The tax basis of the assets transferred will be the same to
Evergreen Global Leaders as the tax basis of such assets to Global Growth
immediately prior to the Reorganization, and the holding period of such assets
in the hands of Evergreen Global Leaders will include the period during which
the assets were held by Global Growth;
(4) No gain or loss will be recognized by Evergreen Global Leaders upon
the receipt of the assets from Global Growth solely in exchange for the shares
of Evergreen Global Leaders and the assumption by Evergreen Global Leaders of
certain identified liabilities of Global Growth;
(5) No gain or loss will be recognized by Global Growth's shareholders
upon the issuance of the shares of Evergreen Global Leaders to them, provided
they receive solely such shares (including fractional shares) in exchange for
their shares of Global Growth; and
(6) The aggregate tax basis of the shares of Evergreen Global Leaders,
including any fractional shares, received by each of the shareholders of Global
Growth pursuant to the Reorganization will be the same as the aggregate tax
basis of the shares of Global Growth held by such shareholder immediately prior
to the Reorganization, and the holding period of the shares of Evergreen Global
Leaders, including fractional shares, received by each such shareholder will
include the period during which the shares of Global Growth exchanged therefor
were held by such shareholder (provided that the shares of Global Growth 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, a shareholder of Global Growth would
recognize a taxable gain or loss equal to the difference between his or
<PAGE>
her tax basis in his or her Fund shares and the fair market value of Evergreen
Global Leaders shares he or she received. Shareholders of Global Growth should
consult their tax advisers regarding the effect, if any, of the proposed
Reorganization in light of their individual circumstances. It is not anticipated
that the securities of the combined portfolio will be sold in significant
amounts in order to comply with the policies and investment practices of
Evergreen Global Leaders. Since the foregoing discussion relates only to the
federal income tax consequences of the Reorganization, shareholders of Global
Growth should also consult their tax advisers as to the state and local tax
consequences, if any, of the Reorganization.
Pro-forma Capitalization
The following table sets forth the capitalizations of Evergreen Global
Leaders and Global Growth as of September 30, 1997 and the capitalization of
Evergreen Global Leaders on a pro forma basis as of that date, giving effect to
the proposed acquisition of assets at net asset value. The pro forma data
reflects an exchange ratio of approximately 0.73758 Class A shares of Evergreen
Global Leaders issued for each share of Global Growth.
Capitalization of Global Growth,
Evergreen Global Leaders and Evergreen
Global Leaders (Pro Forma)
<TABLE>
<CAPTION>
Evergreen
Global
Evergreen Leaders
Global Global (After
Growth Leaders Reorgani-
--------- -------- zation)
------------
<S> <C> <C> <C>
Net Assets
Shares......................... $62,197,366 N/A N/A
Class A........................ N/A $ 39,205,199 $101,402,565
Class B........................ N/A $135,612,309 $135,612,309
Class C........................ N/A $ 2,420,914 $ 2,420,914
Class Y........................ N/A $ 36,351,166 $ 36,351,166
Total Net Assets $62,197,366 $213,589,588 $275,786,954
Net Asset Value Per
Share
Shares......................... $ 10.54 N/A N/A
Class A........................ N/A $ 14.29 $ 14.29
<PAGE>
Evergreen
Global
Evergreen Leaders
Global Global (After
Growth Leaders Reorgani-
--------- -------- zation)
------------
Class B........................ N/A $ 14.14 $ 14.14
Class C........................ N/A $ 14.13 $ 14.13
Class Y........................ N/A $ 14.33 $ 14.33
Shares Outstanding
Shares......................... 5,899,615 N/A N/A
Class A........................ N/A 2,743,650 7,096,051
Class B........................ N/A 9,588,110 9,588,110
Class C........................ N/A 171,342 171,342
Class Y........................ N/A 2,537,390 2,537,390
All Classes.................... 5,899,615 15,040,492 19,392,893
</TABLE>
The table set forth above should not be relied upon to reflect the
number of shares to be received in the Reorganization; the actual number of
shares to be received will depend upon the net asset value and number of shares
outstanding of each Fund at the time of the Reorganization.
Shareholder Information
As of December 26, 1997 (the "Record Date"), there were shares of
beneficial interest of Global Growth outstanding.
As of October 31, 1997, the officers and Trustees of Blanchard Funds
beneficially owned as a group less than 1% of the outstanding shares of Global
Growth. To Global Growth's knowledge, no person owned beneficially or of record
more than 5% of Global Growth's total outstanding shares as of October 31, 1997.
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
While the investment objectives, policies, and restrictions of the two
Funds are similar, there are differences. In particular, Global Growth is
permitted to invest up to 65% of its assets in any one of the following: U.S.
equities, foreign equities, U.S. fixed income securities, or foreign fixed
income securities. By contrast, Evergreen Global Leaders will, under normal
conditions, invest at least 65% of its assets in equity securities. In addition,
Global Growth may invest up to 15% of its total assets in emerging market
securities. Evergreen Global Leaders generally will invest only in securities of
issuers in major industrial
<PAGE>
countries. Unlike the investment objective and certain of the investment
policies and restrictions of Global Growth, the investment objective, policies
and restrictions of Evergreen Global Leaders are non-fundamental and may be
changed by the Trustees of Evergreen Equity Trust without shareholder approval.
Other differences between the investment objectives, policies and restrictions
of the Funds are discussed below. 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 Prospectus and
Statement of Additional Information of the Funds. The investment objective,
policies and restrictions of Evergreen Global Leaders can be found in the
Prospectus of Evergreen Global Leaders under the caption "Investment Objectives
and Policies." The Prospectus of Evergreen Global Leaders also offers additional
funds advised by Evergreen Asset or its affiliates. These additional funds are
not involved in the Reorganization, their investment objectives and policies are
not discussed in this Prospectus/Proxy Statement and their shares are not
offered hereby. The investment objective, policies and restrictions of Global
Growth can be found in the Prospectus of the Fund under the caption "The Funds'
Investment Objectives and Policies."
The investment objective of Evergreen Global Leaders is to achieve
capital appreciation by investing primarily in a diversified portfolio of U.S.
and non-U.S. equity securities of companies located in the world's major
industrialized countries. The Fund makes investments in no less than three
countries, which may include the United States. The investment adviser of
Evergreen Global Leaders attempts to screen the largest companies in the world's
major industrialized countries and invests, in the opinion of the investment
adviser, in the 100 best based on certain qualitative and quantitative criteria,
including those with the highest return on equity and consistent earnings
growth.
Evergreen Global Leaders primarily invests in:
Equity Securities. These include common and preferred stocks,
convertible securities and warrants of foreign and domestic corporations. Under
normal conditions at least 65% of the Fund's total assets will consist of global
equity securities.
Fixed Income Securities. These include obligations of foreign governments
and supranational organizations (such as the World Bank); corporate and foreign
government fixed income securities denominated in currencies other than U.S.
dollars
<PAGE>
rated, at the time of purchase Baa or higher by Moody's Investors Service or BBB
or higher by Standard & Poor's Ratings Group, or which, if unrated, are
considered to be of comparable quality by Evergreen Asset.
Strategic investments. These include options and futures contracts on
currency, securities options, and forward foreign currency exchange contracts.
Securities of closed-end investment companies.
The investment objective of Global Growth is to seek long-term capital
growth by following a global allocation strategy that contemplates shifts among
six strategic market sectors. The sectors are:
U.S. equity securities.
Foreign equity securities.
U.S. fixed income securities.
Foreign fixed income securities.
Precious metals securities.
Emerging market securities.
Global Growth invests, under normal market conditions, at least 65% of
the value of its total assets in securities of at least three different
countries. The Fund may invest up to 65% of its assets in any one sector, except
that its investment in precious metals securities is limited to 25% of assets
and its investment in emerging market securities is limited to 15% of assets.
Neither Evergreen Global Leaders nor Global Growth may invest more than
5% of its assets in securities of any one issuer or purchase more than 10% of
the outstanding voting securities of any one issuer. However, because Global
Growth is a non-diversified portfolio for purposes of the 1940 Act, these
restrictions apply to 50% of the assets of Global Growth. As a diversified
portfolio under the 1940 Act, the same restrictions apply to 75% of the assets
of Evergreen Global Leaders. Nondiversification may increase investment risks.
The characteristics of each investment policy and the associated risks are
described in each Fund's respective Prospectus and Statement of Additional
Information. The Funds
<PAGE>
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
Forms of Organization
Evergreen Equity Trust and Blanchard Funds are both open-end management
investment companies registered with the SEC under the 1940 Act, which
continuously offer shares to the public. Evergreen Equity Trust is organized as
a Delaware business trust, and Blanchard Funds is organized as a Massachusetts
business trust. Each Trust is governed by a Declaration of Trust, By-Laws and a
Board of Trustees. Each Trust is also governed by applicable Delaware,
Massachusetts and federal law. Evergreen Global Leaders is a series of Evergreen
Equity Trust, and Global Growth is a series of Blanchard Funds.
As set forth in the supplement to the Prospectus of Evergreen Global
Leaders, effective December 19, 1997, Evergreen Global Leaders, a series of
Evergreen Equity Trust, was reorganized (the "Delaware Reorganization")into a
corresponding series of Evergreen Equity Trust, a Delaware business trust. In
connection with the Delaware Reorganization, the Fund's investment objectives
were reclassified from "fundamental" to "non-fundamental" and therefore may be
changed without shareholder approval; the Fund adopted certain standardized
investment restrictions; and the Fund eliminated or reclassified from
fundamental to non- fundamental certain of the Fund's other fundamental
investment restrictions.
Capitalization
The beneficial interests in Evergreen Global Leaders are represented by
an unlimited number of transferable shares of beneficial interest $.001 par
value per share. The beneficial interests in Global Growth are represented by an
unlimited number of transferable shares of beneficial interest without par
value. The respective Declaration of Trust under which each Fund has been
established permits the Trustees to allocate shares into an unlimited number of
series, and classes thereof, with rights determined by the Trustees, all without
shareholder approval. Fractional shares may be issued. Each Fund's shares
represent equal proportionate interests in the assets belonging to the Funds.
Shareholders of each Fund are entitled to receive dividends and other amounts as
determined by the Trustees. Shareholders of each
<PAGE>
Fund vote separately, by class, as to matters, such as approval of or amendments
to Rule 12b-1 distribution plans, that affect only their particular class and by
series as to matters, such as approval of or amendments to investment advisory
agreements or proposed reorganizations, that affect only their particular
series.
Shareholder Liability
Under Massachusetts law, shareholders of a business trust could, under
certain circumstances, be held personally liable for the obligations of the
business trust. However, the Declaration of Trust under which Global Growth was
established disclaims shareholder liability for acts or obligations of the
series and requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by the Fund or the Trustees.
The Declaration of Trust provides for indemnification out of the series property
for all losses and expenses of any shareholder held personally liable for the
obligations of the series. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is considered remote since it is
limited to circumstances in which a disclaimer is inoperative and the series or
the trust itself would be unable to meet its obligations.
Under Delaware law, shareholders of a Delaware business trust are
entitled to the same limitation of personal liability extended to stockholders
of Delaware corporations. No similar statutory or other authority limiting
business trust shareholder liability exists in any other state. As a result, to
the extent that Evergreen Equity Trust or a shareholder is subject to the
jurisdiction of courts in those states, the courts may not apply Delaware law,
and may thereby subject shareholders of a Delaware trust to liability. To guard
against this risk, the Declaration of Trust of Evergreen Equity Trust (a)
provides that any written obligation of the Trust may contain a statement that
such obligation may only be enforced against the assets of the Trust or the
particular series in question and the obligation is not binding upon the
shareholders of the Trust; however, the omission of such a disclaimer will not
operate to create personal liability for any shareholder; and (b) provides for
indemnification out of Trust property of any shareholder held personally liable
for the obligations of the Evergreen Equity Trust. Accordingly, the risk of a
shareholder of Evergreen Equity Trust incurring financial loss beyond that
shareholder's investment because of shareholder liability is limited to
circumstances in which: (i) the court refuses to apply Delaware law; (ii) no
contractual limitation of liability was in effect; and (iii)
<PAGE>
the Trust itself would be unable to meet its obligations. In light of Delaware
law, the nature of the Trust's business, and the nature of its assets, the risk
of personal liability to a shareholder of Evergreen Equity Trust is remote.
Shareholder Meetings and Voting Rights
Neither Evergreen Equity Trust on behalf of Evergreen Global Leaders
nor Blanchard Funds on behalf of Global Growth is required to hold annual
meetings of shareholders. However, a meeting of shareholders for the purpose of
voting upon the question of removal of a Trustee must be called when requested
in writing by the holders of at least 10% of the outstanding shares of Evergreen
Equity Trust or Blanchard Funds. In addition, each is required to call a meeting
of shareholders for the purpose of electing Trustees if, at any time, less than
a majority of the Trustees then holding office were elected by shareholders.
Each Trust currently does not intend to hold regular shareholder meetings.
Neither Trust permits cumulative voting. [Except when a larger quorum is
required by applicable law, a majority of the outstanding shares entitled to
vote of each Fund constitutes a quorum for consideration of such matter.] For
Evergreen Global Leaders and Global Growth, a majority of the votes cast and
entitled to vote is sufficient to act on a matter (unless otherwise specifically
required by the applicable governing documents or other law, including the 1940
Act).
Under the Declaration of Trust of Evergreen Equity Trust, each share of
Evergreen Global Leaders is entitled to one vote for each dollar of net asset
value applicable to each share. Under the voting provisions governing Global
Growth, each share is entitled to one vote. Over time, the net asset values of
the Funds have changed in relation to one another and are expected to continue
to do so in the future. Because of the divergence in net asset values, a given
dollar investment in a Fund with a lower net asset value will purchase more
shares and, under Global Growth's current voting provisions, have more votes,
than the same investment in a Fund with a higher net asset value. Under the
Declaration of Trust of Evergreen Equity Trust, voting power is related to the
dollar value of a shareholder's investment rather than to the number of shares
held.
Liquidation or Dissolution
In the event of the liquidation of Evergreen Global Leaders and Global
Growth 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
<PAGE>
over the liabilities belonging to the Fund or attributable to the class. In
either case, the assets so distributable to shareholders of the Fund will be
distributed among the shareholders in proportion to the number of shares of a
class of the Fund held by them and recorded on the books of the Fund.
Liability and Indemnification of Trustees
The Declaration of Trust of Blanchard Funds provides that no Trustee
shall be liable for errors of judgment or mistakes of fact or law and that no
Trustee shall be subject to liability unless such Trustee is found to have acted
in bad faith, with willful misfeasance, gross negligence or reckless disregard
of the duties involved in the conduct of his or her office.
The Declaration of Trust of Blanchard Funds provides that a present or
former Trustee or officer is entitled to indemnification against liabilities and
expenses with respect to claims related to his or her position with the Trust,
provided that no indemnification shall be provided to a Trustee or officer
against any liability to the Trust or any series thereof or the shareholders of
any series by reasons of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
Under the Declaration of Trust of Evergreen Equity Trust, a Trustee is
liable to the Trust and its shareholders only for such Trustee's own willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of the office of Trustee or the discharge of such
Trustee's functions. As provided in the Declaration of Trust, each Trustee of
the Trust is entitled to be indemnified against all liabilities against him or
her, including the costs of litigation, unless it is determined that the Trustee
(i) did not act in good faith in the reasonable belief that such Trustee's
action was in or not opposed to the best interests of the Trust; (ii) had acted
with willful misfeasance, bad faith, gross negligence or reckless disregard of
such Trustee's duties; and (iii) in a criminal proceeding, had reasonable cause
to believe that such Trustee's conduct was unlawful (collectively, "disabling
conduct"). A determination that the Trustee did not engage in disabling conduct
and is, therefore, entitled to indemnification may be based upon the outcome of
a court action or administrative proceeding or by (a) a vote of a majority of
those Trustees who are neither "interested persons" within the meaning of the
1940 Act nor parties to the proceeding or (b) an independent legal counsel in a
written opinion. The Trust may also
<PAGE>
advance money for such litigation expenses provided that the Trustee undertakes
to repay the Trust if his or her conduct is later determined to preclude
indemnification and certain other conditions are met.
The foregoing is only a summary of certain characteristics of the
operations of the Declarations of Trust, By-Laws, Delaware and Massachusetts law
and is not a complete description of those documents or law. Shareholders should
refer to the provisions of such Declarations of Trust, By-Laws, Delaware and
Massachusetts law directly for more complete information.
INFORMATION REGARDING THE INTERIM ADVISORY AGREEMENT
Introduction
In view of the Merger discussed above, and the factors discussed below,
the Board of Trustees of Blanchard Funds recommends that shareholders of Global
Growth approve the Interim Advisory Agreement. The Merger became effective on
November 13, 1997. Pursuant to an order received from the SEC all fees payable
under the Interim Advisory Agreement will be placed in escrow and paid to Virtus
if shareholders approve the contract within 120 days of its effective date. The
Interim Advisory Agreement will remain in effect until the earlier of the
Closing Date for the Reorganization or two years from the effective date. The
terms of the Interim Advisory Agreement are essentially the same as the Previous
Advisory Agreement (as defined below). The only difference between the Previous
Advisory Agreement and the Interim Advisory Agreement, if approved by
shareholders, is the length of time each Agreement is in effect. A description
of the Interim Advisory Agreement pursuant to which Virtus continues as
investment adviser to Global Growth, as well as the services to be provided by
Virtus pursuant thereto is set forth below under "Advisory Services." The
description of the Interim Advisory Agreement in this Prospectus/Proxy Statement
is qualified in its entirety by reference to the Interim Advisory Agreement,
attached hereto as Exhibit B.
Virtus, a Maryland corporation formed in 1995 to succeed to the
business of Signet Asset Management, is a wholly-owned subsidiary of First
Union. The address of Virtus is 707 East Main Street, Suite 1300, Richmond,
Virginia 23219. Virtus has served as investment adviser pursuant to an
Investment Advisory Contract dated July 12, 1995. As used herein, the Investment
Advisory Agreement, as amended, for Global Growth is referred to as the
"Previous Advisory Agreement." At a meeting of the Board of Trustees of
Blanchard Funds held on
<PAGE>
September 16, 1997, the Trustees, including a majority of the Independent
Trustees, approved the Interim Advisory Agreement
for Global Growth.
The Trustees have authorized Blanchard Funds, on behalf of Global
Growth, to enter into the Interim Advisory Agreement with Virtus. Such Agreement
became effective on November 13, 1997. If the Interim Advisory Agreement for
Global Growth is not approved by shareholders, the Trustees will consider
appropriate actions to be taken with respect to Global Growth's investment
advisory arrangements at that time. The Previous Advisory Agreement was last
approved by the Trustees, including a majority of the Independent Trustees, on
May 11, 1997.
Comparison of the Interim Advisory Agreement and the Previous
Advisory Agreement
Advisory Services. The management and advisory services to be provided
by Virtus under the Interim Advisory Agreement are identical to those currently
provided by Virtus under the Previous Advisory Agreement. Under the Previous
Advisory Agreement and Interim Advisory Agreement, Virtus is responsible for
managing the Fund and overseeing the investment of its assets, subject at all
times to the supervision of the Board of Trustees. Virtus selects, monitors and
evaluates the Fund's sub-adviser. Virtus periodically reviews the sub-adviser's
performance record and will make a change, if necessary, subject to approval of
the Board of Trustees and shareholders.
Federated Administrative Services ("FAS") currently acts as
administrator of Global Growth. FAS will continue during the term of the Interim
Advisory Agreement as Global Growth's administrator for the same compensation as
currently received, except that on February 9, 1998, the obligations of FAS to
provide transfer agency services for Global Growth shareholders will terminate
and such services will be provided for the same fees by Evergreen Service
Company. See "Summary - Administrators."
Fees and Expenses. The investment advisory fees and expense limitations for
Global Growth under the Previous Advisory Agreement and the Interim Advisory
Agreement are identical. See "Summary - Investment Advisers and Sub- Adviser."
Expense Reimbursement. Virtus may, if it deems appropriate, assume expenses
of the Fund or class to the extent that the Fund's or classes' expenses exceed
such lower
<PAGE>
expense limitation as Virtus may, by notice to the Fund, voluntarily declare to
be effective.
The Interim Advisory Agreement contains an identical provision.
Payment of Expenses and Transaction Charges. Under the Previous
Advisory Agreement, Blanchard Funds was required to pay or cause to be paid on
behalf of the Fund, all of the Fund's expenses and the Fund's allocable share of
Blanchard Funds' expenses.
The Interim Advisory Agreement contains an identical provision.
Limitation of Liability. The Previous Advisory Agreement provided that
in the absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties under the Agreement on the part of Virtus,
Virtus was not liable to Blanchard Funds or to the Fund or to any shareholder
for any act or omission in the course of or connected in any way with rendering
services or for any losses that may be sustained in the purchase, holding or
sale of any security.
The Interim Advisory Agreement contains an identical provision.
Termination; Assignment. The Interim Advisory Agreement provides that
it may be terminated without penalty by vote of a majority of the outstanding
voting securities of Global Growth (as defined in the 1940 Act) or by a vote of
the Trustees of Blanchard Funds on 60 days' written notice to Virtus or by
Virtus on 60 days' written notice to Blanchard Funds. Also, the Interim Advisory
Agreement will automatically terminate in the event of its assignment (as
defined in the 1940 Act). The Previous Advisory Agreement contained identical
provisions as to termination and assignment.
Information about Global Growth's Investment Adviser
Virtus, a registered investment adviser, manages, in addition to the
Fund, other funds of The Virtus Funds, the Blanchard Group of Funds and three
fixed income trust funds. The name and address of each executive officer and
director of Virtus are set forth in Appendix A to this Prospectus/Proxy
Statement.
<PAGE>
For the fiscal year ended September 30, 1997 and the period from May 1,
1996 to September 30, 1996, Virtus received from Global Growth management fees
of $645,955 and $291,223, respectively. For the fiscal year ended April 30,
1996, the Fund's investment management fee paid to Virtus and the prior manager
was $783,420. Signet acts as custodian for Global Growth and received $10,132
for the fiscal year ended September 30, 1997. Signet will continue to act as
Global Growth's custodian during the term of the Interim Advisory Agreement.
The Board of Trustees considered the Interim Advisory Agreement as part
of its overall approval of the Plan. The Board of Trustees considered, among
other things, the factors set forth above in "Reasons for the Reorganization."
The Board of Trustees also considered the fact that there were no material
differences between the terms of the Interim Advisory Agreement and the terms of
the Previous Advisory Agreement.
INFORMATION REGARDING THE INTERIM SUB-ADVISORY AGREEMENT
Introduction
In view of the Merger discussed above, and the factors discussed below,
the Board of Trustees of Blanchard Funds recommends that shareholders of Global
Growth approve the Interim Sub-Advisory Agreement. Such Agreement became
effective on November 21, 1997. Pursuant to an order from the SEC, all fees
payable under the Interim Sub-Advisory Agreement will be placed in escrow and
paid to Mellon Capital if shareholders approve the contract within 120 days of
its effective date. The Interim Sub-Advisory Agreement will remain in effect
until the earlier of the Closing Date for the Reorganization or two years from
its effective date. The terms of the Interim Sub-Advisory Agreement are
essentially the same as the Previous Sub-Advisory Agreement (as defined below).
The only difference between the Previous Sub-Advisory Agreement and the Interim
Sub-Advisory Agreement, if approved by shareholders, is the length of time the
Agreement is in effect. A description of the Interim Sub-Advisory Agreement
pursuant to which Mellon Capital continues as the investment sub-adviser to
Global Growth, as well as the services to be provided by Mellon Capital pursuant
thereto, is set forth below under "Sub-Advisory Services." The description of
the Interim Sub-Advisory Agreement in this Prospectus/Proxy Statement is
qualified in its entirety by reference to the Interim Sub-Advisory Agreement,
attached hereto as Exhibit C.
Mellon Capital Management Corporation, 595 Market Street,
Suite 3000, San Francisco, California 94105, has served as
<PAGE>
sub-adviser to Global Growth since May 28, 1996 pursuant to a Sub-Advisory
Agreement dated December 1, 1995 (the "Previous Sub-Advisory Agreement") and is
responsible for the day-to-day management of Global Growth's portfolio. See
"Summary Investment Advisers and Sub-Adviser." Mellon Capital was established in
1983 and provides investment advisory services to investment companies, pension
plans, foundations, endowments, and other institutions located both in the
United States and abroad. As of September 30, 1996, Mellon Capital had over
$46.4 billion in assets under management.
The Trustees have authorized Blanchard Funds, on behalf of Global
Growth, to enter into the Interim Sub-Advisory Agreement with Virtus and Mellon
Capital. Such Agreement became effective on November 21, 1997. If the Interim
Sub- Advisory Agreement for Global Growth is not approved by shareholders, the
Trustees will consider appropriate actions to be taken with respect to Global
Growth's investment sub- advisory arrangements at that time. The Previous
Sub-Advisory Agreement was last approved by the Trustees, including a majority
of the Independent Trustees, on December 1, 1995.
Comparison of the Interim Sub-Advisory Agreement and the Previous Sub-Advisory
Agreement
Sub-Advisory Services. The management and advisory services to be
provided by Mellon Capital under the Interim Sub-Advisory Agreement are
identical to those currently provided by Mellon Capital under the Previous
Sub-Advisory Agreement. Under the Previous Sub-Advisory Agreement, Mellon
Capital supervised the investment and reinvestment of the cash, securities or
other properties comprising the Fund's portfolio, subject at all times to the
direction of Virtus and the policies and control of Blanchard Funds' Board of
Trustees.
Fees and Expenses. The investment sub-advisory fees under the Previous
Sub-Advisory Agreement and the Interim Sub- Advisory Agreement are identical. As
compensation for its sub-advisory services under the Previous Sub-Advisory
Agreement Mellon Capital was paid by Virtus a monthly fee at the annual rate of
.375% of the first $100 million of the Fund's average daily net assets; plus
.35% of the Fund's average daily net assets in excess of $100 million but less
than $150 million; plus .325% of the Fund's average daily net assets in excess
of $150 million.
The fee paid to Mellon Capital by Virtus for the fiscal year ended
September 30, 1997 was $243,134. The fee paid to Mellon Capital by Virtus for
the period from May 1, 1996
<PAGE>
through September 30, 1996 was $108,872. The fee paid to the prior sub-adviser
by the prior manager and by Virtus for the fiscal year ended April 30, 1996 was
$140,258.
The name and address of the principal executive officers and directors
of Mellon Capital are set forth in Appendix B to this Prospectus/Proxy
Statement.
Limitation of Liability. The Previous Sub-Advisory Agreement provided
that in the absence of willful misfeasance, bad faith or gross negligence on the
part of Mellon Capital or its officers, directors, or employees or reckless
disregard by Mellon Capital of its duties under the Agreement, Mellon Capital
shall not be liable to Virtus, Blanchard Funds or to any shareholder of
Blanchard Funds for any act or omission in the course of, or connected with,
rendering services thereunder or for any losses that may sustained in the
purchase, holding or sale of any security. The Interim Sub- Advisory Agreement
contains an identical provision.
Termination; Assignment. The Interim Sub-Advisory Agreement provides
that it may be terminated without penalty by vote of a majority of the
outstanding voting securities of Global Growth (as defined in the 1940 Act) or
by a vote of a majority of Blanchard Funds' entire Board of Trustees on 60 days'
written notice to Mellon Capital or by Virtus or Mellon Capital on 60 days'
written notice to the other party to the Agreement. Also, the Interim
Sub-Advisory Agreement will automatically terminate in the event of its
assignment (as defined in the 1940 Act). The Previous Sub-Advisory Agreement
contained identical provisions as to termination and assignment.
The Board of Trustees considered the Interim Sub-Advisory Agreement as
part of its overall approval of the Plan. The Board of Trustees considered,
among other things, the factors set forth above in "Reasons for the
Reorganization." The Board of Trustees also considered the fact that there were
no material differences between the terms of the Interim Sub- Advisory Agreement
and the terms of the Previous Sub-Advisory Agreement.
ADDITIONAL INFORMATION
Evergreen Global Leaders. Information concerning the operation and
management of Evergreen Global Leaders is incorporated herein by reference from
the Prospectus dated March 3, 1997, as supplemented, a copy of which is
enclosed, and Statement of Additional Information dated March 3, 1997. A copy of
such Statement of Additional Information is
<PAGE>
available upon request and without charge by writing to Evergreen Global Leaders
at the address listed on the cover page of this Prospectus/Proxy Statement or by
calling toll-free 1-800-343-2898.
Global Growth. Information about the Fund is included in its current
Prospectus dated August 31, 1997 and in the Statement of Additional Information
of the same date, that have been filed with the SEC, all of which are
incorporated herein by reference. Copies of the Prospectus and Statement of
Additional Information are available upon request and without charge by writing
to Global Growth at the address listed on the cover page of this
Prospectus/Proxy Statement or by calling toll-free 1-800-829-3863.
Evergreen Global Leaders and Global Growth 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 Trustees of Blanchard Funds to be used at the
Special Meeting of Shareholders to be held at 2:00 p.m., February 20, 1998, at
the offices of the Evergreen Funds, 200 Berkeley Street, Boston, Massachusetts
02116 and at any adjournments thereof. This Prospectus/Proxy Statement, along
with a Notice of the meeting and a proxy card, is first being mailed to
shareholders of Global Growth on or about January 5, 1998. Only shareholders of
record as of the close of business on the Record Date will be entitled to notice
of, and to vote at, the Meeting or any adjournment thereof. The holders of a
majority of the outstanding shares entitled to vote, at the close of business on
the Record Date, present in person or represented by proxy, will constitute a
quorum for the Meeting. If the enclosed form of proxy is properly executed and
returned in time to be voted at the Meeting, the proxies named therein will vote
the shares represented by the proxy in accordance with the instructions marked
thereon. Unmarked proxies will be voted FOR the proposed Reorganization, FOR the
Interim Advisory Agreement, FOR the Interim Sub-Advisory Agreement and
<PAGE>
FOR any other matters deemed appropriate. Proxies that reflect abstentions and
"broker non-votes" (i.e., shares held by brokers or nominees as to which (i)
instructions have not been received from the beneficial owners or the persons
entitled to vote or (ii) the broker or nominee does not have discretionary
voting power on a particular matter) will be counted as shares that are present
and entitled to vote for purposes of determining the presence of a quorum, but
will not be counted as shares voted and will have no effect on the vote
regarding the Plan. However, such "broker non-votes" will have the effect of
being counted as votes against the Interim Advisory Agreement and the Interim
Sub-Advisory Agreement which must be approved by a percentage of the shares
present at the Meeting or a majority of the outstanding votes securities. A
proxy may be revoked at any time on or before the Meeting by written notice to
the Secretary of Blanchard Funds, Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779. 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, FOR approval of the Interim Advisory Agreement and FOR approval of the
Interim Sub-Advisory Agreement.
Approval of the Plan will require the affirmative vote of a majority of
the shares voted and entitled to vote at the Meeting at which a quorum of the
Fund's shares is present. Approval of the Interim Advisory Agreement and Interim
Sub- Advisory Agreement will require the affirmative vote of (i) 67% or more of
the outstanding voting securities if holders of more than 50% of the outstanding
voting securities are present, in person or by proxy, at the Meeting, or (ii)
more than 50% of the outstanding voting securities, whichever is less. 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 or Signet, their affiliates or
other representatives of Global Growth (who will not be paid for their
soliciting activities). Shareholder Communications has been engaged by Global
Growth to assist in soliciting proxies.
If you wish to participate in the Meeting, you may still submit the
proxy card included with this Prospectus/Proxy Statement or attend in person.
Any proxy given by you is revocable.
<PAGE>
In the event that sufficient votes to approve the Reorganization are
not received by February 20, 1998, the persons named as proxies may propose one
or more adjournments of the Meeting to permit further solicitation of proxies.
In determining whether to adjourn the Meeting, the following factors may be
considered: the percentage of votes actually cast, the percentage of negative
votes actually cast, the nature of any further solicitation and the information
to be provided to shareholders with respect to the reasons for the solicitation.
Any such adjournment will require an affirmative vote by the holders of a
majority of the shares present in person or by proxy and entitled to vote at the
Meeting. The persons named as proxies will vote upon such adjournment after
consideration of all circumstances which may bear upon a decision to adjourn the
Meeting.
A shareholder who objects to the proposed Reorganization will not be
entitled under either Massachusetts law or the Declaration of Trust of Blanchard
Funds 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 Global Leaders which they receive in the
transaction at their then-current net asset value. Shares of Global Growth may
be redeemed at any time prior to the consummation of the Reorganization.
Shareholders of Global Growth may wish to consult their tax advisers as to any
differing consequences of redeeming Fund shares prior to the Reorganization or
exchanging such shares in the Reorganization.
Global Growth 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 Blanchard Funds
at the address set forth on the cover of this Prospectus/Proxy Statement such
that they will be received by the Fund in a reasonable period of time prior to
any such meeting.
The votes of the shareholders of Evergreen Global Leaders 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 Global Growth whether other persons are beneficial owners of
shares for which proxies are being solicited and, if so, the number of copies of
this
<PAGE>
Prospectus/Proxy Statement needed to supply copies to the beneficial owners of
the respective shares.
FINANCIAL STATEMENTS AND EXPERTS
The financial statements of Evergreen Global Leaders as of October 31,
1996, and the financial statements and financial highlights for the periods
indicated therein, have been incorporated by reference herein and in the
Registration Statement in reliance upon the report of Price Waterhouse LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
The financial statements and financial highlights of Global Growth
incorporated in this Prospectus/Proxy Statement by reference from the Annual
Report of Global Growth for the year ended September 30, 1997 have been audited
by Deloitte & Touche LLP, independent auditors, as stated in their report, which
is incorporated herein by reference, and have been so incorporated in reliance
upon the report of such firm given upon their authority as experts in accounting
and auditing.
LEGAL MATTERS
Certain legal matters concerning the issuance of shares of Evergreen
Global Leaders will be passed upon by Sullivan & Worcester LLP, Washington, D.C.
OTHER BUSINESS
The Trustees of Blanchard Funds do not intend to present any other
business at the Meeting. If, however, any other matters are properly brought
before the Meeting, the persons named in the accompanying form of proxy will
vote thereon in accordance with their judgment.
THE TRUSTEES OF BLANCHARD FUNDS RECOMMEND APPROVAL OF THE PLAN, THE
INTERIM ADVISORY AGREEMENT AND THE INTERIM SUB- ADVISORY AGREEMENT AND ANY
UNMARKED PROXIES WITHOUT INSTRUCTIONS TO THE CONTRARY WILL BE VOTED IN FAVOR OF
APPROVAL OF THE PLAN, THE INTERIM ADVISORY AGREEMENT AND THE INTERIM
SUB-ADVISORY AGREEMENT.
January 5, 1998
<PAGE>
APPENDIX A
The names and addresses of the principal executive officers and directors
of Virtus Capital Management, Inc. are as follows:
OFFICERS:
Name Address
- ---- -------
John Stephen Hall Virtus Capital Management, Inc.
707 East Main Street
Suite 1300
Richmond, Virginia 23219
Tanya Orr Bird Virtus Capital Management, Inc.
707 East Main Street
Suite 1300
Richmond, Virginia 23219
Josie Clemons Rosson Virtus Capital Management, Inc.
707 East Main Street
Suite 1300
Richmond, Virginia 23219
DIRECTORS:
Name Address
- ---- -------
John S. Hall Virtus Capital Management, Inc.
707 East Main Street
Suite 1300
Richmond, Virginia 23219
Tanya Orr Bird Virtus Capital Management, Inc.
707 East Main Street
Suite 1300
Richmond, Virginia 23219
<PAGE>
APPENDIX B
The names and addresses of the principal executive officers and
directors of Mellon Capital Management Corporation are as follows:
OFFICERS:
Name Address
- ---- -------
William L. Fouse Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Thomas F. Loeb Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Thomas B. Hazuka, Ph.D. Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Brenda J. Oakley Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Mary C. "Polly" Shouse Mellon Capital Management Corp.
910 Travis Street
Suite 2210
Houston, Texas 77002
James R. Tufts Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Bernadette L. Bolger Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Barbara W. Daugherty Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
<PAGE>
Name Address
- ---- -------
Douglas F. Dooley Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Susan M. Ellison Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Richard J. Forster Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Alexander c. Huberts Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Charles J. Jacklin, Ph.D. Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
David C. Kwan Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
James P. Palermo Mellon Capital Management Corp.
One Boston Place
8th Floor
Boston, Massachusetts 02108
Roger A. Wharton Mellon Capital Management Corp.
1 Mellon Bank Center
Pittsburg, Pennsylvania 15258
Lowell Bennett Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Cindy Clay Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
<PAGE>
Name Address
- ---- -------
Richard A. Brown Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
John DiRe Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Alberto DoRosario Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Gregg Lee Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Vikas Oswal Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Helen Potter Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Anne Colton Sapp Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Daniel Schuessler Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Pierre Sequier Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Jim Yoon Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
<PAGE>
Name Address
- ---- -------
Alan Carpenter Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Christopher Emmanuel Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Susan Franey Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Neil O. Brown Mellon Capital Management Corp.
One Boston Place
8th Floor
Boston, Massachusetts 02108
Mark D'Andrea Mellon Capital Management Corp.
One Boston Place
8th Floor
Boston, Massachusetts 02108
Scott Ruddick Mellon Capital Management Corp.
One Boston Place
8th Floor
Boston, Massachusetts 02108
Karen Nussbaum Mellon Capital Management Corp.
1 Mellon Bank Center
Pittsburg, Pennsylvania 15258
Michael Ho, Ph.D. Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Paul Kreiselmaier Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Steven Tael, Ph.D. Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
<PAGE>
Name Address
- ---- -------
Eva Xu, Ph.D. Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Kathleen Cuenco Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Noel Florendo Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Susan M. Hinkson Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Patrick T. Hughes Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Anna Tom Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Christine Carr Smith Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Susan L. Drew Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Christiane Marshall Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
DIRECTORS:
<PAGE>
Name Address
- ---- -------
William L. Fouse Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Thomas F. Loeb Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Thomas B. Hazuka, Ph.D. Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Brenda J. Oakley Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Mary C. "Polly" Shouse Mellon Capital Management Corp.
910 Travis Street
Suite 2210
Houston, Texas 77002
James R. Tufts Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Bernadette L. Bolger Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Barbara W. Daugherty Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Douglas F. Dooley Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Susan M. Ellison Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
<PAGE>
Name Address
- ---- -------
Richard J. Forster Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Alexander c. Huberts Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
Charles J. Jacklin, Ph.D. Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
David C. Kwan Mellon Capital Management Corp.
595 Market Street
Suite 3000
San Francisco, California 94105
James P. Palermo Mellon Capital Management Corp.
One Boston Place
8th Floor
Boston, Massachusetts 02108
Roger A. Wharton Mellon Capital Management Corp.
1 Mellon Bank Center
Pittsburg, Pennsylvania 15258
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of this 20th day of November, 1997, by and between the Evergreen Equity Trust, a
Delaware business trust, with its principal place of business at 200 Berkeley
Street, Boston, Massachusetts 02116 (the "Trust"), with respect to the Evergreen
Global Leaders Fund series (the "Acquiring Fund"), and Blanchard Funds, a
Massachusetts business trust, with its principal place of business at Federated
Investors Tower, Pittsburgh, Pennsylvania 15222- 3779, with respect to its
Blanchard Global Growth Fund series (the "Selling Fund").
This Agreement is intended to be, and is adopted as, a plan of
reorganization and liquidation within the meaning of Section 368(a)(1)(C) of the
United States Internal Revenue Code of 1986, as amended (the "Code"). The
reorganization (the "Reorganization") will consist of (i) the transfer of all of
the assets of the Selling Fund in exchange solely for Class A shares of
beneficial interest, $.001 par value per share, of the Acquiring Fund (the
"Acquiring Fund Shares"); (ii) the assumption by the Acquiring Fund of certain
identified liabilities of the Selling Fund; and (iii) the distribution, after
the Closing Date hereinafter referred to, of the Acquiring Fund Shares to the
shareholders of the Selling Fund in liquidation of the Selling Fund as provided
herein, all upon the terms and conditions hereinafter set forth in this
Agreement.
WHEREAS, the Selling Fund and the Acquiring Fund are each a separate
investment series of an open-end, registered investment company of the
management type and the Selling Fund owns securities that generally are assets
of the character in which the Acquiring Fund is permitted to invest;
WHEREAS, both Funds are authorized to issue their shares
of beneficial interest;
WHEREAS, the Trustees of the Trust have determined that the exchange of
all of the assets of the Selling Fund for Acquiring Fund Shares and the
assumption of certain identified liabilities of the Selling Fund by the
Acquiring Fund on the terms and conditions hereinafter set forth are in the best
interests of the Acquiring Fund's shareholders;
WHEREAS, the Trustees of Blanchard Funds have determined that the
Selling Fund should exchange all of its assets and
<PAGE>
certain identified liabilities for Acquiring Fund Shares and that the interests
of the existing shareholders of the Selling Fund will not be diluted as a result
of the transactions contemplated herein;
NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
ARTICLE I
TRANSFER OF ASSETS OF THE SELLING FUND IN EXCHANGE FOR
THE ACQUIRING FUND SHARES AND ASSUMPTION OF SELLING FUND
LIABILITIES AND LIQUIDATION OF THE SELLING FUND
1.1 THE EXCHANGE. Subject to the terms and conditions herein set forth
and on the basis of the representations and warranties contained herein, the
Selling Fund agrees to transfer all of the Selling Fund's assets as set forth in
paragraph 1.2 to the Acquiring Fund. The Acquiring Fund agrees in exchange
therefor (i) to deliver to the Selling Fund the number of Acquiring Fund Shares,
including fractional Acquiring Fund Shares, determined by multiplying the shares
outstanding of each class of the Selling Fund by the ratio computed by dividing
the net asset value per share of each such class of the Selling Fund by the net
asset value per share of the corresponding class of Acquiring Fund Shares
computed in the manner and as of the time and date set forth in paragraph 2.2;
and (ii) to assume certain identified liabilities of the Selling Fund, as set
forth in paragraph 1.3. Such transactions shall take place at the closing
provided for in paragraph 3.1 (the "Closing Date").
1.2 ASSETS TO BE ACQUIRED. The assets of the Selling Fund to be
acquired by the Acquiring Fund shall consist of all property, including, without
limitation, all cash, securities, commodities, and interests in futures and
dividends or interest receivables, that is owned by the Selling Fund and any
deferred or prepaid expenses shown as an asset on the books of the Selling Fund
on the Closing Date.
The Selling Fund has provided the Acquiring Fund with its most recent
audited financial statements, which contain a list of all of Selling Fund's
assets as of the date thereof. The Selling Fund hereby represents that as of the
date of the execution of this Agreement there have been no changes in its
financial position as reflected in said financial statements other than those
occurring in the ordinary course of its business in connection with the purchase
and sale of securities and the payment of its normal operating expenses.
<PAGE>
The Acquiring Fund will, within a reasonable time prior to the Closing
Date, furnish the Selling Fund with a list of the securities, if any, on the
Selling Fund's list referred to in the second sentence of this paragraph that do
not conform to the Acquiring Fund's investment objectives, policies, and
restrictions. The Selling Fund will, within a reasonable time prior to the
Closing Date, furnish the Acquiring Fund with a list of its portfolio securities
and other investments. In the event that the Selling Fund holds any investments
that the Acquiring Fund may not hold, the Selling Fund, if requested by the
Acquiring Fund, will dispose of such securities prior to the Closing Date. In
addition, if it is determined that the Selling Fund and the Acquiring Fund
portfolios, when aggregated, would contain investments exceeding certain
percentage limitations imposed upon the Acquiring Fund with respect to such
investments, the Selling Fund if requested by the Acquiring Fund will dispose of
a sufficient amount of such investments as may be necessary to avoid violating
such limitations as of the Closing Date. Notwithstanding the foregoing, nothing
herein shall require the Selling Fund to dispose of any investments or
securities if, in the reasonable judgment of the Selling Fund, such disposition
would adversely affect the tax-free nature of the Reorganization or would
violate the Selling Fund's fiduciary duty to its shareholders.
1.3 LIABILITIES TO BE ASSUMED. The Selling Fund will endeavor to
discharge all of its known liabilities and obligations prior to the Closing
Date. The Acquiring Fund shall assume only those liabilities, expenses, costs,
charges and reserves reflected on a Statement of Assets and Liabilities of the
Selling Fund prepared on behalf of the Selling Fund, as of the Valuation Date
(as defined in paragraph 2.1), in accordance with generally accepted accounting
principles consistently applied from the prior audited period. The Acquiring
Fund shall assume only those liabilities of the Selling Fund reflected in such
Statement of Assets and Liabilities and shall not assume any other liabilities,
whether absolute or contingent, known or unknown, accrued or unaccrued, all of
which shall remain the obligation of the Selling Fund.
In addition, upon completion of the Reorganization, for purposes of
calculating the maximum amount permitted to be charged to the Acquiring Fund
under the National Association of Securities Dealers, Inc. Conduct Rule 2830,
minus the amount of the sales charges paid or accrued (including asset based
sales charges), plus permitted interest ("Aggregate NASD Cap"), the Acquiring
Fund will add to its Aggregate NASD Cap
<PAGE>
immediately prior to the Reorganization the Aggregate NASD Cap of the Selling
Fund immediately prior to the Reorganization.
1.4 LIQUIDATION AND DISTRIBUTION. On or as soon after the Closing Date
as is conveniently practicable (the "Liquidation Date"), (a) the Selling Fund
will liquidate and distribute pro rata to the Selling Fund's shareholders of
record, determined as of the close of business on the Valuation Date (the
"Selling Fund Shareholders"), the Acquiring Fund Shares received by the Selling
Fund pursuant to paragraph 1.1; and (b) the Selling Fund will thereupon proceed
to dissolve as set forth in paragraph 1.8 below. Such liquidation and
distribution will be accomplished by the transfer of the Acquiring Fund Shares
then credited to the account of the Selling Fund on the books of the Acquiring
Fund to open accounts on the share records of the Acquiring Fund in the names of
the Selling Fund Shareholders and representing the respective pro rata number of
the Acquiring Fund Shares due such shareholders. All issued and outstanding
shares of the Selling Fund will simultaneously be canceled on the books of the
Selling Fund. The Acquiring Fund shall not issue certificates representing the
Acquiring Fund Shares in connection with such exchange.
1.5 OWNERSHIP OF SHARES. Ownership of Acquiring Fund Shares will be
shown on the books of the Acquiring Fund's transfer agent. Shares of the
Acquiring Fund will be issued in the manner described in the combined Prospectus
and Proxy Statement on Form N-14 to be distributed to shareholders of the
Selling Fund as described in paragraph 5.7.
1.6 TRANSFER TAXES. Any transfer taxes payable upon issuance of the
Acquiring Fund Shares in a name other than the registered holder of the Selling
Fund shares on the books of the Selling Fund as of that time shall, as a
condition of such issuance and transfer, be paid by the person to whom such
Acquiring Fund Shares are to be issued and transferred.
1.7 REPORTING RESPONSIBILITY. Any reporting responsibility of the
Selling Fund is and shall remain the responsibility of the Selling Fund up to
and including the Closing Date and such later date on which the Selling Fund is
terminated.
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
<PAGE>
VALUATION
2.1 VALUATION OF ASSETS. The value of the Selling Fund's assets to be
acquired by the Acquiring Fund hereunder shall be the value of such assets
computed as of the close of business on the New York Stock Exchange on the
business day next preceding the Closing Date (such time and date being
hereinafter called the "Valuation Date"), using the valuation procedures set
forth in the Trust's Declaration of Trust and the Acquiring Fund's then current
prospectuses and statement of additional information or such other valuation
procedures as shall be mutually agreed upon by the parties.
2.2 VALUATION OF SHARES. The net asset value per share of the Acquiring
Fund Shares shall be the net asset value per share computed as of the close of
business on the New York Stock Exchange on the Valuation Date, using the
valuation procedures set forth in the Trust's Declaration of Trust and the
Acquiring Fund's then current prospectuses and statement of additional
information.
2.3 SHARES TO BE ISSUED. The number of the Acquiring Fund Shares of
each class to be issued (including fractional shares, if any) in exchange for
the Selling Fund's assets shall be determined by multiplying the shares
outstanding of each class of the Selling Fund by the ratio computed by dividing
the net asset value per share of the Selling Fund attributable to each of its
classes by the net asset value per share of the respective classes of the
Acquiring Fund determined in accordance with paragraph 2.2. Holders of shares of
the Selling Fund will receive Class A shares of the Acquiring Fund.
2.4 DETERMINATION OF VALUE. All computations of value shall be made by
State Street Bank and Trust Company in accordance with its regular practice in
pricing the shares and assets of the Acquiring Fund.
ARTICLE III
CLOSING AND CLOSING DATE
3.1 CLOSING DATE. The Closing (the "Closing") shall take place on or
about February 27, 1998 or such other date as the parties may agree to in
writing (the "Closing Date"). All acts taking place at the Closing shall be
deemed to take place simultaneously immediately prior to the opening of business
on the Closing Date unless otherwise provided. The Closing shall be held as of
9:00 a.m. at the offices of the Evergreen
<PAGE>
Funds, 200 Berkeley Street, Boston, MA 02116, or at such other time and/or place
as the parties may agree.
3.2 CUSTODIAN'S CERTIFICATE. Signet Trust Company, as custodian for the
Selling Fund (the "Custodian"), shall deliver at the Closing a certificate of an
authorized officer stating that (a) the Selling Fund's portfolio securities,
cash, and any other assets shall have been delivered in proper form to the
Acquiring Fund on the Closing Date; and (b) all necessary taxes including all
applicable federal and state stock transfer stamps, if any, shall have been
paid, or provision for payment shall have been made, in conjunction with the
delivery of portfolio securities by the Selling Fund.
3.3 EFFECT OF SUSPENSION IN TRADING. In the event that on the Valuation
Date (a) the New York Stock Exchange or another primary trading market for
portfolio securities of the Acquiring Fund or the Selling Fund shall be closed
to trading or trading thereon shall be restricted; or (b) trading or the
reporting of trading on said Exchange or elsewhere shall be disrupted so that
accurate appraisal of the value of the net assets of the Acquiring Fund or the
Selling Fund is impracticable, the Valuation Date shall be postponed until the
first business day after the day when trading shall have been fully resumed and
reporting shall have been restored.
3.4 TRANSFER AGENT'S CERTIFICATE. Evergreen Service Company, as
transfer agent for the Selling Fund as of the Closing Date shall deliver at the
Closing a certificate of an authorized officer stating that its records contain
the names and addresses of the Selling Fund Shareholders and the number and
percentage ownership of outstanding shares owned by each such shareholder
immediately prior to the Closing. The Acquiring Fund shall issue and deliver or
cause Evergreen Service Company, its transfer agent as of the Closing Date, to
issue and deliver a confirmation evidencing the Acquiring Fund Shares to be
credited on the Closing Date to the Secretary of Blanchard Funds or provide
evidence satisfactory to the Selling Fund that such Acquiring Fund Shares have
been credited to the Selling Fund's account on the books of the Acquiring Fund.
At the Closing, each party shall deliver to the other such bills of sale,
checks, assignments, share certificates, if any, receipts and other documents as
such other party or its counsel may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
<PAGE>
4.1 REPRESENTATIONS OF THE SELLING FUND. The Selling Fund represents and
warrants to the Acquiring Fund as follows:
(a) The Selling Fund is a separate investment series of a
Massachusetts business trust duly organized, validly existing, and in good
standing under the laws of The Commonwealth of Massachusetts.
(b) The Selling Fund is a separate investment series of a
Massachusetts business trust that is registered as an investment company
classified as a management company of the open-end type, and its registration
with the Securities and Exchange Commission (the "Commission") as an investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
is in full force and effect.
(c) The current prospectuses and statement of additional
information of the Selling Fund conform in all material respects to the
applicable requirements of the Securities Act of 1933, as amended (the "1933
Act"), and the 1940 Act and the rules and regulations of the Commission
thereunder and do not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(d) The Selling Fund is not, and the execution, delivery, and
performance of this Agreement (subject to shareholder approval) will not result,
in violation of any provision of Blanchard Funds' Declaration of Trust or
By-Laws or of any material agreement, indenture, instrument, contract, lease, or
other undertaking to which the Selling Fund is a party or by which it is bound.
(e) The Selling Fund has no material contracts or other
commitments (other than this Agreement) that will be terminated with liability
to it prior to the Closing Date, except for liabilities, if any, to be
discharged or reflected on the Statement of Assets and Liabilities as provided
in paragraph 1.3 hereof.
(f) Except as otherwise disclosed in writing to and accepted
by the Acquiring Fund, no litigation, administrative proceeding, or
investigation of or before any court or governmental body is presently pending
or to its knowledge threatened against the Selling Fund or any of its properties
or assets, which, if adversely determined, would materially and adversely affect
its financial condition, the conduct of its business, or the ability of the
Selling Fund to carry out
<PAGE>
the transactions contemplated by this Agreement. The Selling Fund knows of no
facts that might form the basis for the institution of such proceedings and is
not a party to or subject to the provisions of any order, decree, or judgment of
any court or governmental body that materially and adversely affects its
business or its ability to consummate the transactions herein contemplated.
(g) The financial statements of the Selling Fund at September
30, 1997 are in accordance with generally accepted accounting principles
consistently applied, and such statements (copies of which have been furnished
to the Acquiring Fund) fairly reflect the financial condition of the Selling
Fund as of such date, and there are no known contingent liabilities of the
Selling Fund as of such date not disclosed therein.
(h) Since September 30, 1997 there has not been any material
adverse change in the Selling Fund's financial condition, assets, liabilities,
or business other than changes occurring in the ordinary course of business, or
any incurrence by the Selling Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as otherwise disclosed to
and accepted by the Acquiring Fund. For the purposes of this subparagraph (h), a
decline in the net asset value of the Selling Fund shall not constitute a
material adverse change.
(i) At the Closing Date, all federal and other tax returns and
reports of the Selling Fund required by law to have been filed by such dates
shall have been filed, and all federal and other taxes shown due on said returns
and reports shall have been paid, or provision shall have been made for the
payment thereof. To the best of the Selling Fund's 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
<PAGE>
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.
<PAGE>
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
Delaware business trust duly organized, validly existing and in good standing
under the laws of the State of Delaware.
(b) The Acquiring Fund is a separate investment series of a
Delaware business trust that is registered as an investment company classified
as a management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act is in full force and
effect.
(c) The current prospectus and statement of additional
information of the Acquiring Fund conform in all material respects to the
applicable requirements of the 1933 Act and the 1940 Act and the rules and
regulations of the Commission thereunder and do not include any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(d) The Acquiring Fund is not, and the execution, delivery and
performance of this Agreement will not result, in violation of the Trust's
Declaration of Trust or By-Laws or of any material agreement, indenture,
instrument, contract, lease, or other undertaking to which the Acquiring Fund is
a party or by which it is bound.
(e) Except as otherwise disclosed in writing to the Selling
Fund and accepted by the Selling Fund, no litigation, 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 October 31, 1996 are in accordance with generally accepted
<PAGE>
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 October 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. 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.
<PAGE>
(l) The Acquiring Fund Shares to be issued and delivered to
the Selling Fund, for the account of the Selling Fund Shareholders, pursuant to
the terms of this Agreement will, at the Closing Date, have been duly authorized
and, when so issued and delivered, will be duly and validly issued Acquiring
Fund Shares, and will be fully paid and non-assessable.
(m) The information to be furnished by the Acquiring Fund for
use in no-action letters, applications for orders, registration statements,
proxy materials, and other documents that may be necessary in connection with
the transactions contemplated hereby shall be accurate and complete in all
material respects and shall comply in all material respects with federal
securities and other laws and regulations applicable thereto.
(n) The Prospectus and Proxy Statement (as defined in
paragraph 5.7) to be included in the Registration Statement (only insofar as it
relates to the Acquiring Fund) will, on the effective date of the Registration
Statement and on the Closing Date, not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which such statements were made, not misleading.
(o) The Acquiring Fund agrees to use all reasonable efforts to
obtain the approvals and authorizations required by the 1933 Act, the 1940 Act,
and such of the state Blue Sky or securities laws as it may deem appropriate in
order to continue its operations after the Closing Date.
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. Blanchard Funds will call a meeting of
the Selling Fund Shareholders to consider and act upon this Agreement and to
take all other action necessary to obtain approval of the transactions
contemplated herein.
5.3 INVESTMENT REPRESENTATION. The Selling Fund covenants that the
Acquiring Fund Shares to be issued
<PAGE>
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 reviewed by Price
Waterhouse LLP and certified by Blanchard Funds' President and Treasurer.
5.7 PREPARATION OF FORM N-14 REGISTRATION STATEMENT. The Selling Fund
will provide the Acquiring Fund with information reasonably necessary for the
preparation of a prospectus, which will include the proxy statement, referred to
in paragraph 4.1(o) (the "Prospectus and Proxy Statement"), all to be included
in a Registration Statement on Form N-14 of the Acquiring Fund (the
"Registration Statement"), in compliance with the 1933 Act, the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and the 1940 Act in
connection with the meeting of the Selling Fund Shareholders to consider
approval of this Agreement and the transactions contemplated herein.
5.8 CAPITAL LOSS CARRYFORWARDS. As promptly as practicable, but in any
case within sixty days after the Closing Date, the Acquiring Fund and the
Selling Fund shall cause Price Waterhouse LLP to issue a letter addressed to
the Acquiring Fund and the Selling Fund, in form and substance satisfactory to
the Funds, setting forth the federal income tax implications relating to capital
loss carryforwards (if any) of the Selling Fund and the related impact, if any,
of the proposed transfer of all of the assets of the Selling Fund
<PAGE>
to the Acquiring Fund and the ultimate dissolution of the Selling Fund, upon the
shareholders of the Selling Fund.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLING FUND
The obligations of the Selling Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquiring Fund of all the obligations to be performed by it hereunder on or
before the Closing Date, and, in addition thereto, the following further
conditions:
6.1 All representations, covenants, and warranties of the Acquiring
Fund contained in this Agreement shall be true and correct as of the date hereof
and as of the Closing Date with the same force and effect as if made on and as
of the Closing Date, and the Acquiring Fund shall have delivered to the Selling
Fund a certificate executed in its name by the Trust's President or Vice
President and its Treasurer or Assistant Treasurer, in form and substance
reasonably satisfactory to the Selling Fund and dated as of the Closing Date, to
such effect and as to such other matters as the Selling Fund shall reasonably
request.
6.2 The Selling Fund shall have received on the Closing Date an opinion
from Sullivan & Worcester LLP, counsel to the Acquiring Fund, dated as of the
Closing Date, in a form reasonably satisfactory to the Selling Fund, covering
the following points:
(a) The Acquiring Fund is a separate investment series of a
Delaware business trust duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the power to own all of its
properties and assets and to carry on its business as presently conducted.
(b) The Acquiring Fund is a separate investment series of a
Delaware business trust registered as an investment company under the 1940 Act,
and, to such counsel's knowledge, such registration with the Commission as an
investment company under the 1940 Act is in full force and effect.
(c) This Agreement has been duly authorized, executed, and
delivered by the Acquiring Fund, and, assuming due authorization, execution and
delivery of this Agreement by the Selling Fund, is a valid and binding
obligation of the Acquiring Fund enforceable against the Acquiring Fund in
<PAGE>
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. No shareholder
of the Acquiring Fund has any preemptive rights in respect thereof.
(e) The Registration Statement, to such counsel's knowledge,
has been declared effective by the Commission and no stop order under the 1933
Act pertaining thereto has been issued, and to the knowledge of such counsel, no
consent, approval, authorization or order of any court or governmental authority
of the United States or the State of Delaware is required for consummation by
the Acquiring Fund of the transactions contemplated herein, except such as have
been obtained under the 1933 Act, the 1934 Act and the 1940 Act, and as may be
required under state securities laws.
(f) The execution and delivery of this Agreement did not, and
the consummation of the transactions contemplated hereby will not, result in a
violation of the Trust's Declaration of Trust or By-Laws or any provision of any
material agreement, indenture, instrument, contract, lease or other undertaking
(in each case known to such counsel) to which the Acquiring Fund is a party or
by which it or any of its properties may be bound or to the knowledge of such
counsel, result in the acceleration of any obligation or the imposition of any
penalty, under any agreement, judgment, or decree to which the Acquiring Fund is
a party or by which it is bound.
(g) Only insofar as they relate to the Acquiring Fund, the
descriptions in the Prospectus and Proxy Statement of statutes, legal and
governmental proceedings and material contracts, if any, are accurate and fairly
present the information required to be shown.
(h) Such counsel does not know of any legal or governmental
proceedings, only insofar as they relate to the Acquiring Fund, existing on or
before the effective date of the Registration Statement or the Closing Date
required to be described in the Registration Statement or to be filed as
<PAGE>
exhibits to the Registration Statement which are not described
or filed as required.
(i) To the knowledge of such counsel, no litigation or
administrative proceeding or investigation of or before any court or
governmental body is presently pending or threatened as to the Acquiring Fund or
any of its properties or assets and the Acquiring Fund is not a party to or
subject to the provisions of any order, decree or judgment of any court or
governmental body, which materially and adversely affects its business, other
than as previously disclosed in the Registration Statement.
Such counsel shall also state that they have participated in
conferences with officers and other representatives of the Acquiring Fund at
which the contents of the Prospectus and Proxy Statement and related matters
were discussed and, although they are not passing upon and do not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Prospectus and Proxy Statement (except to the extent indicated
in paragraph (g) of their above opinion), on the basis of the foregoing (relying
as to materiality to a large extent upon the opinions of the Trust's officers
and other representatives of the Acquiring Fund), no facts have come to their
attention that lead them to believe that the Prospectus and Proxy Statement as
of its date, as of the date of the Selling Fund Shareholders' meeting, and as of
the Closing Date, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein regarding the Acquiring Fund
or necessary, in the light of the circumstances under which they were made, to
make the statements therein regarding the Acquiring Fund not misleading. Such
opinion may state that such counsel does not express any opinion or belief as to
the financial statements or any financial or statistical data, or as to the
information relating to the Selling Fund, contained in the Prospectus and Proxy
Statement or the Registration Statement, and that such opinion is solely for the
benefit of Blanchard Funds and the Selling Fund. Such opinion shall contain such
other assumptions and limitations as shall be in the opinion of Sullivan &
Worcester LLP appropriate to render the opinions expressed therein.
In this paragraph 6.2, references to Prospectus and Proxy Statement
include and relate to only the text of such Prospectus and Proxy Statement and
not to any exhibits or attachments thereto or to any documents incorporated by
reference therein.
<PAGE>
6.3 The merger between First Union Corporation and Signet Banking
Corporation shall be completed prior to the Closing Date.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to complete the transactions
provided for herein shall be subject, at its election, to the performance by the
Selling Fund of all the obligations to be performed by it hereunder on or before
the Closing Date and, in addition thereto, the following conditions:
7.1 All representations, covenants, and warranties of the Selling Fund
contained in this Agreement shall be true and correct as of the date hereof and
as of the Closing Date with 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 Blanchard Funds'
President or Vice President and the Treasurer or Assistant Treasurer, in form
and substance satisfactory to the Acquiring Fund and dated as of the Closing
Date, to such effect and as to such other matters as the Acquiring Fund shall
reasonably request.
7.2 The Selling Fund shall have delivered to the Acquiring Fund a
statement of the Selling Fund's assets and liabilities, together with a list of
the Selling Fund's portfolio securities showing the tax costs of such securities
by lot and the holding periods of such securities, as of the Closing Date,
certified by the Treasurer of Blanchard Funds.
7.3.1 The Acquiring Fund shall have received on the Closing Date an
opinion of Dickstein Shapiro Morin & Oshinsky LLP, counsel to the Selling Fund,
in a form satisfactory to the Acquiring Fund covering the following points:
(a) The Selling Fund is a separate investment series of a
Massachusetts business trust duly organized, validly existing and in good
standing under the laws of The Commonwealth of Massachusetts and has the power
to own all of its properties and assets and to carry on its business as
presently conducted.
(b) The Selling Fund is a separate investment series of a
Massachusetts business trust registered as an investment company under the 1940
Act, and, to such counsel's
<PAGE>
knowledge, such registration with the Commission as an investment company under
the 1940 Act is in full force and effect.
(c) This Agreement has been duly authorized, executed and
delivered by the Selling Fund, and, assuming due authorization, execution, and
delivery of this Agreement by the Acquiring Fund, is a valid and binding
obligation of the Selling Fund enforceable against the Selling Fund in
accordance with its terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting creditors'
rights generally and to general equity principles.
(d) To the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental authority of the United
States or The Commonwealth of Massachusetts is required for consummation by the
Selling Fund of the transactions contemplated herein, except such as have been
obtained under the 1933 Act, the 1934 Act and the 1940 Act, and as may be
required under state securities laws.
(e) The execution and delivery of this Agreement did not, and
the consummation of the transactions contemplated hereby will not, result in a
violation of Blanchard Funds' Declaration of Trust or By-laws, or any provision
of any material agreement, indenture, instrument, contract, lease or other
undertaking (in each case known to such counsel) to which the Selling Fund is a
party or by which it or any of its properties may be bound or, to the knowledge
of such counsel, result in the acceleration of any obligation or the imposition
of any penalty, under any agreement, judgment, or decree to which the Selling
Fund is a party or by which it is bound.
(f) The descriptions in the Prospectus and Proxy Statement of
this Agreement, as set forth under the caption "Reasons for the Reorganization -
Agreement and Plan of Reorganization," the Interim Advisory Agreement and the
Previous Advisory Agreement, as set forth under the caption "Information
Regarding the Interim Advisory Agreement," the Interim Sub-Advisory Agreement
and the Previous Sub-Advisory Agreement, as set forth under the caption
"Information Regarding the Interim Sub-Advisory Agreement" and the description
of voting requirements applicable to approval of the Interim Advisory Agreement
and Interim Sub-Advisory Agreement, as set forth under the caption "Voting
Information Concerning the Meeting," insofar as the latter constitutes a summary
of applicable voting requirements under the Investment Company Act of 1940, as
amended, are, in each case, accurate
<PAGE>
and fairly present the information required to be shown by the
applicable requirements of Form N-14.
(g) Such counsel does not know of any legal or governmental
proceedings, insofar as they relate to the Selling Fund existing on or before
the date of mailing of the Prospectus and Proxy Statement and the Closing Date,
required to be described in the Prospectus and Proxy Statement or to be filed as
an exhibit to the Registration Statement which are not described or filed as
required.
(h) To the knowledge of such counsel, no litigation or
administrative proceeding or investigation of or before any court or
governmental body is presently pending or threatened as to the Selling Fund or
any of its respective properties or assets and the Selling Fund is neither a
party to nor subject to the provisions of any order, decree or judgment of any
court or governmental body, which materially and adversely affects its business
other than as previously disclosed in the Prospectus and Proxy Statement.
7.3.2 The Acquiring Fund shall have received on the closing Date an
opinion of C. Grant Anderson, Esq., Assistant Secretary of the Blanchard Funds,
in form satisfactory to the Acquiring Fund as follows: Assuming that a
consideration therefor of not less than the net asset value thereof has been
paid, and assuming that such shares were issued in accordance with the terms of
the Selling Fund's registration statement, or any amendment thereto, in effect
at the time of such issuance, all issued and outstanding shares of the Selling
Fund are legally issued and fully paid and non-assessable (except that, under
Massachusetts law, Selling Fund Shareholders could under certain circumstances
be held personally liable for obligations of the Selling Fund).
Mr. Anderson shall also state that he has reviewed and is familiar with
the contents of the Prospectus and Proxy Statement and, although he is not
passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Prospectus and Proxy
Statement on the basis of the foregoing, no facts have come to his attention
that lead him to believe that the Prospectus and Proxy Statement as of its date,
as of the date of the Selling Fund Shareholders' meeting, and as of the Closing
Date, contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein regarding the Selling Fund or
necessary, in the light of the circumstances under which they were made, to make
the statements therein regarding the Selling Fund not misleading. Such opinion
may state that he does not express any opinion or
<PAGE>
belief as to the financial statements or any financial or statistical data, or
as to the information relating to the Acquiring Fund, contained in the
Prospectus and Proxy Statement or Registration Statement.
The opinions set forth in paragraphs 7.3.1 and 7.3.2 may state that
such opinions are solely for the benefit of the Acquiring Fund. Such opinions
shall contain such other assumptions and limitations as shall be in the opinion
of Dickstein Shapiro Morin & Oshinsky LLP and C. Grant Anderson, as applicable,
appropriate to render the opinions expressed therein, and shall indicate, with
respect to matters of Massachusetts law, that as Dickstein Shapiro Morin &
Oshinsky LLP and C. Grant Anderson are not admitted to the bar of Massachusetts,
such opinions are based either upon the review of published statutes, cases and
rules and regulations of the Commonwealth of Massachusetts or upon an opinion of
Massachusetts counsel.
In this paragraph 7.3, references to Prospectus and Proxy Statement
include and relate to only the text of such Prospectus and Proxy Statement and
not to any exhibits or attachments thereto or to any documents incorporated by
reference therein.
7.4 The merger between First Union Corporation and Signet Banking
Corporation shall be completed prior to the Closing Date.
ARTICLE VIII
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING
FUND AND THE SELLING FUND
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the Selling Fund or the Acquiring Fund, the other
party to this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:
8.1 This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Selling Fund in accordance with the provisions of Blanchard Funds'
Declaration of Trust and By-Laws and certified copies of the resolutions
evidencing such approval shall have been delivered to the Acquiring Fund.
Notwithstanding anything herein to the contrary, neither the Acquiring Fund nor
the Selling Fund may waive the conditions set forth in this paragraph 8.1.
<PAGE>
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 net investment
company taxable income for all taxable periods ending on or prior to the Closing
Date (computed without regard to any deduction for dividends paid) and all of
its net capital gains realized in all taxable periods ending on or prior to the
Closing Date (after reduction for any capital loss carryforward).
8.6 The parties shall have received a favorable opinion of Sullivan &
Worcester LLP, addressed to the Acquiring Fund and the Selling Fund
substantially to the effect that for federal income tax purposes:
(a) The transfer of all of the Selling Fund assets in exchange
for the Acquiring Fund Shares and the assumption by the Acquiring Fund of
certain stated liabilities of the Selling Fund followed by the distribution of
the Acquiring
<PAGE>
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 the Selling Fund
Shareholders upon the exchange of their Selling Fund shares for the Acquiring
Fund Shares in liquidation of the Selling Fund.
(e) The aggregate tax basis for the Acquiring Fund Shares
received by each Selling Fund Shareholder pursuant to the Reorganization will be
the same as the aggregate tax basis of the Selling Fund shares held by such
shareholder immediately prior to the Reorganization, and the holding period of
the Acquiring Fund Shares to be received by each Selling Fund Shareholder will
include the period during which the Selling Fund shares exchanged therefor were
held by such shareholder (provided the Selling Fund shares were held as capital
assets on the date of the Reorganization).
(f) The tax basis of the Selling Fund assets acquired by the
Acquiring Fund will be the same as the tax basis of such assets to the Selling
Fund immediately prior to the Reorganization, and the holding period of the
assets of the Selling Fund in the hands of the Acquiring Fund will include the
period during which those assets were held by the Selling Fund.
Notwithstanding anything herein to the contrary, neither the Acquiring
Fund nor the Selling Fund may waive the conditions set forth in this paragraph
8.6.
<PAGE>
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 Blanchard Funds 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 requirement 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 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;
(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 ratios appearing in the Registration
Statement and Prospectus and Proxy Statement agree with
<PAGE>
underlying accounting records of the Selling Fund or with written estimates by
Selling Fund's management and were found to be mathematically correct.
In addition, the Acquiring Fund shall have received from 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), the Capitalization Table appearing
in the Registration Statement and Prospectus and Proxy Statement has been
obtained from and is consistent with the accounting records of the Acquiring
Fund; and
(c) on the basis of limited procedures agreed upon by the
Selling Fund (but not an examination in accordance with generally accepted
auditing standards), the data utilized in the calculations of the projected
expense ratio appearing in the Registration Statement and Prospectus and Proxy
Statement agree with written estimates by each Fund's management and were found
to be mathematically correct.
ARTICLE IX
EXPENSES
9.1 Except as otherwise provided for herein, all expenses of the
transactions contemplated by this Agreement incurred by the Selling Fund and the
Acquiring Fund will be borne by First Union National Bank. Such expenses
include,
<PAGE>
without limitation, (a) expenses incurred in connection with the entering into
and the carrying out of the provisions of this Agreement; (b) expenses
associated with the preparation and filing of the Registration Statement under
the 1933 Act covering the Acquiring Fund Shares to be issued pursuant to the
provisions of this Agreement; (c) registration or qualification fees and
expenses of preparing and filing such forms as are necessary under applicable
state securities laws to qualify the Acquiring Fund Shares to be issued in
connection herewith in each state in which the Selling Fund Shareholders are
resident as of the date of the mailing of the Prospectus and Proxy Statement to
such shareholders; (d) postage; (e) printing; (f) accounting fees; (g) legal
fees; and (h) solicitation costs of the transaction. Notwithstanding the
foregoing, the Acquiring Fund shall pay its own federal and state registration
fees.
ARTICLE X
ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Acquiring Fund and the Selling Fund agree that neither party
has made any representation, warranty or covenant not set forth herein and that
this Agreement constitutes the entire agreement between the parties.
10.2 The representations, warranties, and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall not survive the consummation of the transactions contemplated hereunder.
ARTICLE XI
TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the
Acquiring Fund and the Selling Fund. In addition, either the Acquiring Fund or
the Selling Fund may at its option terminate this Agreement at or prior to the
Closing Date because:
(a) of a breach by the other of any representation, warranty,
or agreement contained herein to be performed at or prior to the Closing Date,
if not cured within 30 days; or
(b) a condition herein expressed to be precedent to the
obligations of the terminating party has not been met and it reasonably appears
that it will not or cannot be met.
<PAGE>
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, Blanchard Funds, the respective
Trustees or officers, to the other party or its Trustees or officers.
ARTICLE XII
AMENDMENTS
This Agreement may be amended, modified, or supplemented in such manner
as may be mutually agreed upon in writing by the authorized officers of the
Selling Fund and the Acquiring Fund; provided, however, that following the
meeting of the Selling Fund Shareholders called by the Selling Fund pursuant to
paragraph 5.2 of this Agreement, no such amendment may have the effect of
changing the provisions for determining the number of the Acquiring Fund Shares
to be issued to the Selling Fund Shareholders under this Agreement to the
detriment of such shareholders without their further approval.
ARTICLE XIII
HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY
13.1 The Article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.2 This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
13.3 This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without giving effect to the conflicts
of laws provisions thereof; provided, however, that the due authorization,
execution and delivery of this Agreement, in the case of the Selling Fund, shall
be governed and construed in accordance with the laws of the Commonwealth of
Massachusetts, without giving effect to the conflicts of laws provisions
thereof.
13.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but, except as provided in
this paragraph, no assignment or transfer hereof or of any rights or obligations
hereunder shall be made by any party without the written consent of the other
party. Nothing herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm, or corporation, other than the parties
<PAGE>
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 Blanchard Funds or the
Evergreen Equity Trust personally, but shall bind only the trust property of the
Selling Fund and the Acquiring Fund, as provided in the Declarations of Trust of
Blanchard Funds and the Trust. The execution and delivery of this Agreement have
been authorized by the Trustees of Blanchard Funds on behalf of the Selling Fund
and the Trust on behalf of the Acquiring Fund and signed by authorized officers
of Blanchard Funds and the Trust, acting as such, and neither such authorization
by such Trustees nor such execution and delivery by such officers shall be
deemed to have been made by any of them individually or to impose any liability
on any of them personally, but shall bind only the trust property of the Selling
Fund and the Acquiring Fund as provided in the Declarations of Trust of
Blanchard Funds and the Trust.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed and sealed this
Agreement, all as of the date first written above.
EVERGREEN EQUITY TRUST
ON BEHALF OF EVERGREEN GLOBAL
LEADERS FUND
By:
Name:
Title:
BLANCHARD FUNDS
ON BEHALF OF BLANCHARD GLOBAL
GROWTH FUND
By:
Name:
Title:
<PAGE>
EXHIBIT B
BLANCHARD FUNDS
INTERIM MANAGEMENT CONTRACT
This Contract is made this 21st day of November, 1997 between Virtus
Capital Management, Inc., a Maryland corporation having its principal place of
business in Richmond, Virginia (the "Manager"), and Blanchard Funds, a
Massachusetts business trust having its principal place of business in
Pittsburgh, Pennsylvania (the "Trust").
WHEREAS the Trust is an open-end management investment company as that
term is defined in the Investment Company Act of 1940, as amended, and
is registered as such with the Securities and Exchange Commission; and
WHEREAS Manager is engaged in the business of rendering investment
advisory and management services.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. The Trust hereby appoints Manager as manager for each of the
portfolios ("Funds") of the Trust which executes an exhibit to this Contract,
and Manager accepts the appointments. Subject to the direction of the Trustees
of the Trust, Manager shall provide or procure on behalf of each of the Funds
all management and administrative services. In carrying out its obligations
under this paragraph, the Manager shall; (i) provide or arrange for investment
research and supervision of the investments of the Funds; (ii) select and
evaluate the performance of each Fund's Portfolio Sub-Adviser; (iii) select and
evaluate the performance of the Administrator; and (iv) conduct or arrange for a
continuous program of appropriate sale or other disposition and reinvestment of
each Fund's assets.
2. Manager, in its supervision of the investments of each of the Funds,
will be guided by each of the Fund's investment objective and policies and the
provisions and restrictions contained in the Declaration of Trust and By-Laws of
the Trust and as set forth in the Registration Statements and exhibits as may be
on file with the Securities and Exchange Commission.
3. Each Fund shall pay or cause to be paid all of its own expenses and
its allocable share of Trust expenses, including, without limitation, the
expenses of organizing the
<PAGE>
Trust and continuing its existence; fees and expenses of Trustees and officers
of the Trust; fees for management services and administrative personnel and
services; expenses incurred in the distribution of its shares ("Shares"),
including expenses of administrative support services; fees and expenses of
preparing and printing its Registration Statements under the Securities Act of
1933 and the Investment Company Act of 1940, as amended, and any amendments
thereto; expenses of registering and qualifying the Trust, the Funds, and Shares
of the Funds under federal and state laws and regulations; expenses of
preparing, printing, and distributing prospectuses (and any amendments thereto)
to shareholders; interest expense, taxes, fees, and commissions of every kind;
expenses of issue (including cost of Share certificates), purchase, repurchase,
and redemption of Shares, including expenses attributable to a program of
periodic issue; charges and expenses of custodians, transfer agents, dividend
disbursing agents, shareholder servicing agents, and registrars; printing and
mailing costs, auditing, accounting, and legal expenses; reports to shareholders
and governmental officers and commissions; expenses of meetings of Trustees and
shareholders and proxy solicitations therefor; insurance expenses; association
membership dues and such nonrecurring items as may arise, including all losses
and liabilities incurred in administering the Trust and the Funds. Each Fund
will also pay its allocable share of such extraordinary expenses as may arise
including expenses incurred in connection with litigation, proceedings, and
claims and the legal obligations of the Trust to indemnify its officers and
Trustees and agents with respect thereto.
4. Each of the Funds shall pay to Manager, for all services rendered to
each Fund by Manager hereunder, the fees set forth in the exhibits attached
hereto.
5. If, for any fiscal year, the total of all ordinary business expenses
of the Fund, including all investment advisory fees but excluding distribution
fees, taxes, interest and extraordinary expenses and certain other excludable
expenses, would exceed the most restrictive expense limits imposed by any
statute or regulatory authority of any jurisdiction in which Shares of the Fund
are offered for sale Manager shall reduce its management fee in order to reduce
such excess expenses, but will not be required to reimburse the Fund for any
ordinary business expenses which exceed the amount of its management fee for
such fiscal year. The amount of any such reduction is to be borne by the Manager
and shall be deducted from the monthly management fee otherwise payable to the
Manager during such fiscal year. For the purposes of this paragraph, the term
"fiscal year" shall exclude the
<PAGE>
portion of the current fiscal year which shall have elapsed prior to the date
hereof and shall include the portion of the then current fiscal year which shall
have elapsed at the date of termination of this Agreement.
6. The net asset value of each Fund's Shares as used herein will be
calculated to the nearest 1/10th of one cent.
7. The Manager may from time to time and for such periods as it deems
appropriate reduce its compensation (and, if appropriate, assume expenses of one
or more of the Funds) to the extent that any Fund's expenses exceed such lower
expense limitation as the Manger may, by notice to the Fund, voluntarily declare
to be effective.
8. This Contract shall begin for each Fund as of the date of execution
of the applicable exhibit and shall continue in effect with respect to each Fund
presently set forth on an exhibit (and any subsequent Funds added pursuant to an
exhibit during the initial term of this Contract) until the earlier of the
Closing Date defined in the Agreement and Plan of Reorganization dated as of
November 20, 1997 with respect to each Fund or for two years from the date of
this Contract set forth above and thereafter for successive periods of one year,
subject to the provisions for termination and all of the other terms and
conditions hereof if: (a) such continuation shall be specifically approved at
least annually by the vote of a majority of the Trustees of the Trust, including
a majority of the Trustees who are not parties to this Contract or interested
persons of any such party cast in person at a meeting called for that purpose;
and (b) Manager shall not have notified a Fund in writing at least sixty (60)
days prior to the anniversary date of this Contract in any year thereafter that
it does not desire such continuation with respect to that Fund. If a Fund is
added after the first approval by the Trustees as described above, this Contract
will be effective as to that Fund upon execution of the applicable exhibit and
will continue in effect until the next annual approval of the Contract by the
Trustees and thereafter for successive periods of one year, subject to approval
as described above.
9. Notwithstanding any provision in this Contract, it may be terminated
at any time with respect to any Fund, without the payment of any penalty, by the
Trustees of the Trust or by a vote of the shareholders of that Fund on sixty
(60) days' written notice to Manager.
10. This Contract may not be assigned by Manager and shall
automatically terminate in the event of any assignment.
<PAGE>
Manager may employ or contract with such other person, persons, corporation, or
corporations at its own cost and expense as it shall determine in order to
assist it in carrying out this Contract.
11. In the absence of willful misfeasance, bad faith, gross negligence,
or reckless disregard of the obligations or duties under this Contract on the
part of Manager, Manager shall not be liable to the Trust or to any of the Funds
or to any shareholder for any act or omission in the course of or connected in
any way with rendering services or for any losses that may be sustained in the
purchase, holding, or sale of any security.
12. This Contract may be amended at any time by agreement of the
parties provided that the amendment shall be approved both by the vote of a
majority of the Trustees of the Trust, including a majority of the Trustees who
are not parties to this Contract or interested persons of any such party to this
Contract (other than as Trustees of the Trust) cast in person at a meeting
called for that purpose, and where required by Section 15(a)(2) of the Act, on
behalf of a Fund by a majority of the outstanding voting securities of such Fund
as defined in Section 2(a)(42) of the Act.
13. The Manager acknowledges that all sales literature for investment
companies (such as the Trust) are subject to strict regulatory oversight. The
Manager agrees to submit any proposed sales literature for the Trust (or any
Fund) or for itself or its affiliates which mentions the Trust (or any Fund) to
the Trust's distributor for review and filing with the appropriate regulatory
authorities prior to the public release of any such sales literature, provided,
however, that nothing herein shall be construed so as to create any obligation
or duty on the part of the Manager to produce sales literature for the Trust (or
any Fund). The Trust agrees to cause its distributor to promptly review all such
sales literature to ensure compliance with relevant requirements, to promptly
advise Manager of any deficiencies contained in such sales literature, to
promptly file complying sales literature with the relevant authorities, and to
cause such sales literature to be distributed to prospective investors in the
Trust.
14. A copy of the Agreement and Declaration of Trust of the Trust is on
file with the Secretary of The Commonwealth of Massachusetts, and notice is
hereby given that this instrument is executed on behalf of the Trustees of the
Trust as Trustees and not individually and that the obligations of this
instrument are not binding upon any of the Trustees, or any of
<PAGE>
the officers, employees, agents or shareholders of the Trust individually but
are binding only upon the assets and property of the Trust. Notice is also
hereby given that the obligations pursuant to this instrument of a particular
Fund and of the Trust with respect to that particular Fund shall be limited
solely to the assets of that particular Fund.
15. This Contract shall be construed in accordance with and governed by
the laws of the Commonwealth of Pennsylvania.
16. This Contract will become binding on the parties hereto upon their
execution of the attached exhibits to this Contract.
<PAGE>
EXHIBIT A
to the
Management Contract
Blanchard Global Growth Fund
Blanchard Flexible Income Fund
Blanchard Short-Term Bond Fund
Blanchard Flexible Tax-Free Bond Fund
Blanchard Growth & Income Fund
For all services rendered by Manager hereunder, the above-named Funds
of the Trust shall pay to Manager and Manager agrees to accept as full
compensation for all services rendered hereunder, an annual management fee equal
to the following percentage ("the applicable percentage") of the average daily
net assets of each Fund
Name of Fund Percentage of Net Assets
Blanchard Global Growth Fund 1% of the first $150 million
of average daily net
assets, .875% of the
Fund's average daily
net assets in excess
of $150 million but
not exceeding $300
million and .75% of
the Fund's average
daily net assets in
excess of $300
million.
Blanchard Flexible Income Fund .75%
Blanchard Growth & Income Fund 1.10% of the Fund's average
daily net assets, .40% of
which, which would otherwise
be received by Manager and
paid to the Chase Manhattan
Bank, N.A. ("Chase") for
portfolio advisory services,
shall be paid to Chase
directly by the Fund under a
separate investment advisory
agreement between Chase and
the Fund.
Blanchard Short-Term Bond Fund .75%
Blanchard Flexible Tax-Free .75%
Bond Fund
<PAGE>
The portion of the fee based upon the average daily net assets of the
Fund shall be accrued daily at the rate of 1/365th of the applicable percentage
applied to the daily net assets of the Fund.
The advisory fee so accrued shall be paid to Manager daily except for
the Blanchard Growth & Income Fund which shall be paid to Manager monthly.
Witness the execution hereof this 21st day of November, 1997.
Attest: Virtus Capital Management, Inc.
By:
Secretary Executive Vice President
Attest: Blanchard Funds
By:
Assistant Secretary Vice President
<PAGE>
EXHIBIT C
BLANCHARD FUNDS
INTERIM SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made as of this 21st day of November 1997 by and
between VIRTUS CAPITAL MANAGEMENT, INC., a Maryland corporation (the "Manager"),
and MELLON CAPITAL MANAGEMENT CORPORATION, a Delaware corporation (the
"Portfolio Manager" or "MCMC") with respect to the following recital of fact:
R E C I T A L
WHEREAS, Blanchard Funds (the "Trust") is registered as an open-end,
non-diversified, management investment company under the Investment Company Act
of 1940, as amended (the "1940 Act"), and the rules and regulations promulgated
thereunder; and
WHEREAS, the Portfolio Manager is registered as an investment manager
under the Investment Advisers Act of 1940, as amended, and engages in the
business of acting as an investment adviser; and
WHEREAS, the Trust is authorized to issue shares of beneficial interest
in separate series, with each such series representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Trust offers shares in one series called the Blanchard
Global Growth Fund (such series, being referred to as the "Fund"); and
WHEREAS, the Trust and the Manager have entered into an agreement of
even date herewith to provide for management services for the Fund on the terms
and conditions set forth therein (the "Interim Management Agreement"); and
WHEREAS, the Portfolio Manager proposes to render investment advisory
services to the Manager in connection with the Manager's responsibilities to the
Fund on the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
1. Investment Management. MCMC shall act as a Portfolio Manager for the
Fund and shall, in such capacity,
<PAGE>
supervise the investment and reinvestment of the cash, securities or other
properties comprising the Fund's portfolio, subject at all times to the
direction of the Manager and the policies and control of the Trust's Board of
Trustees. MCMC shall give the Fund the benefit of its best judgment, efforts and
facilities in rendering its services as Portfolio Manager.
2. Investment Analysis and Implementation. In carrying
out its obligation under paragraph 1 hereof, the Portfolio
Manager shall:
a. use the same skill and care in providing such
service as it uses in providing services to
fiduciary accounts for which it has investment
responsibilities;
b. obtain and evaluate pertinent information about
significant developments and economics,
statistical and financial data, domestic,
foreign or otherwise, whether affecting the
economy generally or the Fund's portfolio and
whether concerning the individual issuers whose
securities are included in the Fund's portfolio
or the activities in which the issuers engage,
or with respect to securities which the
Portfolio Manager considers desirable for
inclusion in the Fund's portfolio;
c. determine which issuers and securities shall be
represented in the Fund's portfolio and
regularly report thereon to the Trust's Board
of Trustees;
d. formulate and implement continuing programs for
the purchases and sales of the securities of
such issuers and regularly report thereon to
the Trust's Board of Trustees; and
e. take, on behalf of the Fund, all actions which
appear to the Trust and the Manager necessary
to carry into effect such purchase and sale
programs and supervisory functions as
aforesaid, including the placing of orders for
the purchase and sale of securities for the
Fund and the prompt reporting to the Manager of
such purchases and sales.
3. Broker-Dealer Relationships. The Portfolio Manager
is responsible for decisions to buy and sell securities for
<PAGE>
the Fund's portfolio, broker-dealer selection, and negotiation of brokerage
commission rates. The Portfolio Manager's primary consideration in effecting a
security transaction will be its best efforts to execute at the most favorable
price. In selecting a broker-dealer to execute each particular transaction, the
Portfolio Manager will take the following into consideration: the net price
available, the reliability, integrity and financial condition of the
broker-dealer; the size of and difficulty in executing the order, and the value
of the expected contribution of the broker-dealer to the investment performance
of the Fund on a continuing basis. Accordingly, the price to the Fund in any
transaction may be less favorable than that available from another broker-dealer
if the difference is reasonably justified by other aspects of the portfolio
execution services offered. Subject to such policies as the Board of Trustees
may determine, the Portfolio Manager shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement or otherwise
solely by reason of its having caused the Fund to pay a broker for effecting a
portfolio investment transaction in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction, if the
Portfolio Manager determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that particular
transaction or the Portfolio Manager's overall responsibilities with respect to
the Fund and to its other clients as to which it exercises investment
discretion. Subject to the provisions of the Investment Company Act of 1940, the
Portfolio Manger is further authorized to allocate the orders placed by it on
behalf of the Fund to any affiliated broker-dealer or to such brokers and
dealers who also provide research or statistical material, or other services to
the Fund or the Portfolio Manager. Such allocation shall be in such amounts and
proportions as the Portfolio Manager shall determine and the Portfolio Manager
will report on said allocations regularly to the Board of Trustees of the Trust
indicating the brokers to whom such allocations have been made and the basis
therefor.
4. Control by Board of Trustees. Any investment program undertaken by
the Portfolio Manager pursuant to this Agreement, as well as any other
activities undertaken by the Portfolio Manger on behalf of the Fund pursuant
thereto, shall at all times be subject to any directives of the Board of
Trustees of the Trust. The Manager shall provide the Portfolio Manager with
written notice of all such directives, so long as this Agreement remains in
effect.
<PAGE>
5. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Portfolio Manager shall at all times
conform to:
a. all applicable provisions of the 1940 Act; and
b. the provisions of the Registration Statement of
the Trust under the Securities Act of 1933 and
the 1940 Act; and
c. any other applicable provisions of state and
federal law.
6. Expenses. The Portfolio Manager shall maintain, at its expense and
without cost to the Manager or the Fund, a trading function in order to carry
out its obligations under subparagraph (e) of paragraph 2 hereof to place orders
for the purchase and sale of portfolio securities for the Fund.
7. Delegation of Responsibilities. Upon request of the Manager and with
the approval of the Trust's Board of Trustees, the Portfolio Manager may perform
services on behalf of the Fund which are not required by this Agreement. Such
services will be performed on behalf of the Fund and the Portfolio Manager's
cost in rendering such services may be billed monthly to the Manager, subject to
examination by the Manager's independent accountants. Payment or assumption by
the Portfolio Manager of any Fund expense that the Portfolio Manager is not
required to pay or assume under this Agreement shall not relieve the Manager or
the Portfolio Manager of any of their obligations to the Fund or obligate the
Portfolio Manager to pay or assume any similar Fund expense on any subsequent
occasions.
8. Compensation. For the services to be rendered and the facilities
furnished hereunder, the Manager shall pay the Portfolio Manager a monthly fee
at the annual rate of .375% of the Fund's average daily net assets up to $100
million; .35% on net assets between $100 million and $150 million; and .325% on
net assets in excess of $150 million. Compensation under this Agreement shall be
calculated and accrued daily and the amounts of the daily accruals shall be paid
monthly. If this Agreement becomes effective subsequent to the first day of a
month or shall terminate before the last day of a month, compensation for that
part of the month this Agreement is in effect shall be prorated in a manner
consistent with the calculation of the fees as set forth above. Payment of the
Portfolio Manager's compensation for the preceding month shall be made as
promptly as possible after the end of each month.
<PAGE>
9. Non-Exclusivity. The services of the Portfolio Manager to the
Manager are not to be deemed to be exclusive, and the Portfolio Manager shall be
free to render investment advisory or other services to others (including other
investment companies) and to engage in other activities, so long as its services
under this Agreement are not impaired thereby.
10. Term. This Agreement shall become effective at the close of
business on the date hereof and shall remain in force and effect until the
earlier of the Closing Date defined in the Agreement and Plan of Reorganization
to be dated as of December 19, 1997 with respect to the Fund or for two years
from the date of its execution, and shall remain in effect thereafter if
approved in the manner set forth in Section 11 hereof.
11. Renewal. Following the expiration of its initial two year term,
this Agreement shall continue in force and effect from year to year, provided
that such continuance is specifically approved at least annually:
a. (i) by the Trust's Board of Trustees or (ii) by
the vote of a majority of the Fund's
outstanding voting securities (as defined in
Section 2(a)(42) of the 1940 Act), and
b. by the affirmative vote of a majority of the trustees
who are not parties to this Agreement or interested
persons of a party to this Agreement (other than as a
trustee of the Trust), by votes cast in person at a
meeting specifically called for such purpose.
12. Termination. This Agreement may be terminated at any time, without
the payment of any penalty, by vote of the Trust's Board of Trustees or by vote
of a majority of the Fund's outstanding voting securities (as defined in Section
2(a)(42) of the 1940 Act), by the Manager, or by the Portfolio Manager on sixty
(60) days' written notice to the other party. This Agreement shall automatically
terminate: (a) in the event of its assignment, the term "assignment" having the
meaning defined in Section 2(a)(4) of the 1940 Act, or (b) in the event that the
Interim Management Agreement between the Fund and the Manager shall terminate.
13. Liability of the Portfolio Manager. In the absence of willful
misfeasance, bad faith or gross negligence on the part of the Portfolio Manager
or its officers, directors or employees, or reckless disregard by the Portfolio
Manager of
<PAGE>
its duties under this Agreement, the Portfolio Manager shall not be liable to
the Manager, the Trust or to any shareholder of the Trust for any act or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security.
14. Notices. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Manager
for this purpose shall be 707 East Main Street, Suite 1300, Richmond, Virginia
23219, that of the Trust for this purpose shall be Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779, and the address of the Portfolio Manager
for this purpose shall be 595 Market Street, San Francisco, California 94105.
Attention: Charles Jacklin.
15. Questions of Interpretation. Any question of interpretation of any
term or provision of this Agreement having a counterpart in or otherwise derived
from a term or provision of the 1940 Act shall be resolved by reference to such
term or provision of the 1940 Act and to interpretations thereof, if any, by the
United States Courts or in the absence of any controlling decision of any such
court, by rules, regulations or orders of the Securities and Exchange Commission
issued pursuant to said Act. In addition, where the effect of a requirement of
the 1940 Act reflected in the provision of this Agreement is revised by rule,
regulation or order of the Securities and Exchange Commission, such provision
shall be deemed to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
above written.
Attest: MELLON CAPITAL MANAGEMENT
CORPORATION
By
Title: Senior Vice President President
Attest: VIRTUS CAPITAL MANAGEMENT, INC.
By
Title: Senior Vice President Senior Vice President
<PAGE>
EXHIBIT D
MANAGEMENT'S DISCUSSION AND ANALYSIS
(To be filed by amendment)
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
Acquisition of the Assets of
BLANCHARD GLOBAL GROWTH FUND
a Series of
BLANCHARD FUNDS
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
(800) 829-3863
By and In Exchange For Shares of
EVERGREEN GLOBAL LEADERS FUND
a Series of
EVERGREEN EQUITY TRUST
200 Berkeley Street
Boston, Massachusetts 02116
(800) 343-2898
This Statement of Additional Information, relating specifically to the
proposed transfer of the assets and liabilities of Blanchard Global Growth Fund
("Global Growth"), a series of Blanchard Funds, to Evergreen Global Leaders Fund
("Evergreen Global Leaders"), a series of Evergreen Equity Trust, in exchange
for Class A shares of beneficial interest, $.001 par value per share, of
Evergreen Global Leaders, consists of this cover page and the following
described documents, each of which is attached hereto and incorporated by
reference herein:
(1) The Statement of Additional Information of Evergreen Global
Leaders dated March 3, 1997; (To be filed by amendment)
(2) The Statement of Additional Information of Global Growth dated
August 31, 1997; (To be filed by amendment)
(3) Annual Report of Global Growth for the year ended September
30, 1997; (To be filed by amendment)
(4) Annual Report of Evergreen Global Leaders for the year ended
October 31, 1996; (To be filed by amendment)
<PAGE>
(5) Semi-Annual Report of Evergreen Global Leaders for the six
months ended April 30, 1997; (To be filed by amendment) and
(6) Pro Forma Combining Financial Statements (unaudited) dated
April 30, 1997.
This Statement of Additional Information, which is not a prospectus,
supplements, and should be read in conjunction with, the Prospectus/Proxy
Statement of Evergreen Global Leaders and Global Growth dated January 5, 1998. A
copy of the Prospectus/Proxy Statement may be obtained without charge by calling
or writing to Evergreen Global Leaders or Global Growth at the telephone numbers
or addresses set forth above.
The date of this Statement of Additional Information is January 5,
1998.
<PAGE>
EVERGREEN GLOBAL LEADERS FUND
Pro Forma Combining Financial Statements (unaudited)
Statement of Assets and Liabilities (000's omitted)
Year Ended April 30, 1997
<TABLE>
<CAPTION>
Evergreen Blanchard
Global Leaders Global Growth Pro Forma
Fund Fund Adjustment Combined
------------------ ----------------- ---------------
<S> <C> <C> <C>
Assets:
Investments at value (cost $192,485) $139,320 $60,940 $200,260
Foreign currencies at value (cost $46) 47 - 47
Receivable for investments sold 1,922 566 2,488
Dividends and interest receivable 393 473 866
Unrealized appreciation on open forward
foreign currency exchange contracts 0 273 273
Receivable for futures margin 0 267 267
Receivable for Fund shares sold 1,261 - 1,261
Unamortized organizational expenses 27 - 27
Prepaid expenses 47 - 47
------------------ ----------------- ---------------
Total Assets 143,017 62,519 205,536
Liabilities:
Payable for investments purchased 1,999 65 2,064
Payable for Fund shares repurchased 100 - 100
Due to custodian (72) 518 446
Unrealized depreciation on open forward
foreign currency exchange contracts 0 55 55
Accrued advisory fee 94 50 144
Distributions payable 78 54 132
Accrued expenses 102 67 169
------------------ ----------------- ---------------
Total Liabilities 2,301 809 3,110
Net Assets 140,716 61,710 202,426
================== ================= ===============
Net Assets are comprised of:
Paid-in capital 132,579 58,265 190,844
Accumulated net realized (income or loss) (148) 1,079 931
Undistributed net realized gain on investments 1,080 1,795 2,875
Net unrealized appreciation on investments 7,205 571 7,776
------------------ ----------------- ---------------
Net Assets 140,716 61,710 202,426
================== ================= ===============
Class A Shares
Net Assets $26,474 $61,710 $88,184
Shares of beneficial interest outstanding 2,114 6,349 (1,420) 7,043
Net Asset Value $12.52 $9.72 $12.52
Maximum Offer Price - 4.75% $13.14
Class B Shares
Net Assets $85,094 - $85,094
Shares of beneficial interest outstanding 6,843 - 6,843
Net Asset Value $12.43 - $12.43
Class C Shares
Net Assets $1,580 - $1,580
Shares of beneficial interest outstanding 127 - 127
Net Asset Value $12.42 - $12.42
Class Y Shares
Net Assets $27,568 - $27,568
Shares of beneficial interest outstanding 2,198 - 2,198
Net Asset Value $12.54 - $12.54
</TABLE>
See Notes to Pro Forma Combining Financial Statements.
<PAGE>
EVERGREEN GLOBAL LEADERS FUND
Pro Forma Combining Financial Statements (unaudited)
Statement of Operations (000's omitted)
Year Ended April 30, 1997
<TABLE>
<CAPTION>
Evergreen Blanchard Pro
Global Leaders Global Growth Forma
Fund Fund Adjustments Combined
---------------- -------------- ------------
<S> <C> <C> <C> <C>
Investment Income:
Dividend income (net of w/h taxes of $157) $1,110 $426 $1,536
Interest income 229 2342 2571
---------------- ----------------------------------------------
Total income 1,339 2,768 4,107
Expenses:
Advisory fees 675 669 (33)a 1,311
Administrative fees 30 63 (35)a 58
Distribution fees 432 501 (334)a 520
Transfer agent fees 159 111 (76)c 273
Custodian fees 168 71 87 b 326
State registration and filing fees 112 17 (17)c 112
Federal registration fees 0 18 2 b 20
Audit fees 26 49 (49)c 26
Legal fees 2 8 (4)c 6
Printing fees 6 72 (63)c 15
Miscellaneous fees 26 61 (46)c 41
Fee waivers and/or expense reimbursements by affiliates (138) (5) 110 b (33)
---------------- ----------------------------------------------
Total expenses 1,498 1,635 (458) 2,675
Less: Indirectly paid expenses (1) 0 1 0
---------------- ----------------------------------------------
Net expenses 1,497 1,635 (457) 2,675
================ ==============================================
Net investment income (158) 1,133 457 1,432
Net realized gain (loss)on investments and foreign
currency related transactions 1,081 10,454 11,535
Net change in unrealized appreciation (depreciation)
of investments and foreign currency related transactions 4,778 (7,193) -2,415
---------------- -------------- ------------
Net realized and unrealized gain on investments and
foreign currency related transactions 5,859 3,261 9,120
---------------- -------------- ------------
Net increase in net assets resulting from operations $5,701 $4,394 457 $10,552
---------------- -------------- ------------
</TABLE>
a Reflects a decrease based on surviving fund's fee schedule and pro forma
combined assets
b Reflects an increase based on combined assets.
c Reflects expected cost savings when the fund's are combined.
See Notes to Pro Forma Combining Financial Statements.
<PAGE>
Evergreen Global Leaders Fund
Pro Forma Schedule of Investments
Year Ended April 30, 1997 (000's omitted)
<TABLE>
<CAPTION>
Evergreen Blanchard Pro Forma
Global Leaders Fund Global Growth Fund Combined
Market Market Market
Shares Value Shares Value Shares Value
-------- ------------ ----------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCKS - 76.4%
Argentina - 0.0%
Perez Companc SA 19 156 19 156
----------- --------
156 156
----------- --------
Austria - 0.0%
Bank Austria AG 7 7
Boehler- Uddeholm AG 7 7
Creditanstalt-Bankverein 6 6
Lenzing Ag 11 11
Oester Elektrizita 7 7
OMV AG 16 16
Radex Heraklith 8 8
------------ ----------- --------
62 62
----------- --------
Australia - 0.3%
Incitec, Ltd. 140 677 140 677
------------ --------
677 677
------------ --------
Belgium - 2.0%
* Barco NV 7 1192 7 1192
Colruyt SA 3 1192 3 1192
UCB SA 1 1646 1 1646
------------ ----------- --------
4030 4030
------------ --------
Brazil - 0.4%
Acesita Cia Acos Especiais Ita-ADR 4 18 4 18
BCO Bradesco SA 7000 58 7000 58
Companhia Energetica De Minas, ADR 3 146 3 146
Companhia Vale do Rio Doce, ADR 7 188 7 188
Rhodia Ster 7 23 7 23
Telecomunicacoes Brasileiras, ADR 3 316 3 316
------------ ----------- --------
749 749
----------- --------
Canada - 3.3%
Bombardier, Inc. 140 2836 140 2836
* Canadian Natural Resources, Ltd. 75 1788 75 1788
DuPont Canada, Inc. 80 2004 80 2004
------------ ----------- --------
6628 6628
------------ --------
Chile - 0.2%
Chilectra SA, ADR 2 91 2 91
Chilgener SA, ADR 4 114 4 114
Compania Cervecerias Unidas SA, ADR 4 93 4 93
Compania de Telecom de Chile SA, ADR 3 82 3 82
------------ ----------- --------
380 380
----------- --------
Colombia - 0.1%
Banco Ganadero S A, ADR 3 89 3 89
Banco Industrial Colombiano SA, ADR 6 101 6 101
Cementos Diamante 4 51 4 51
------------ ----------- --------
241 241
----------- --------
Denmark - 0.0%
Danisco 6 6
Den Danske Bank AS 17 17
Korn Og Foderstof 9 9
Nkt 6 6
Sas Danmark A/S 4 4
Tele Danmark AS, Series B 10 10
Unidanmark AS, Registered Shares 20 20
------------ ----------- --------
72 72
----------- --------
</TABLE>
<PAGE>
Evergreen Global Leaders Fund
Pro Forma Schedule of Investments
Year Ended April 30, 1997 (000's omitted)
<TABLE>
<CAPTION>
Evergreen Blanchard Pro Forma
Global Leaders Fund Global Growth Fund Combined
Market Market Market
Shares Value Shares Value Shares Value
-------- --------- --------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Finland - 0.0%
Kesko 1 10 1 10
Merita Ltd. 4 13 4 13
Nokia Ab Oy 16 16
Outokumpu Oy 1 10 1 10
UPM-Kymmene Corp. 1 30 1 30
--------- ---------- --------
79 79
---------- --------
France - 5.1%
Carrefour SA 4 2373 4 2373
Castorama Dubois Investisse 7 1035 40 7 1075
Cie de Saint Gobain 33 33
Cie Fin de Paribas, Class A 15 15
Havas 11 11
Hermes Internatonal 7 1748 7 1748
LAPEYRE SA 17 995 17 995
L Oreal 78 78
Lafarge 18 18
LVMH Moet Hennessy 76 76
Michelin 21 21
Peugeot SA 15 15
Pin Printemps Redo 25 25
Rhone Poulenc SA 1 37 1 37
Sagem Co. SA 1 326 1 326
Sanofi 27 27
SEB SA 8 1358 8 1358
Societe Technip 13 1321 13 1321
Suez Lyonn Eaux 15 15
Synthelabo 6 714 6 714
Uap Cie Uap 1 16 1 16
--------- ---------- --------
9870 427 10297
--------- ---------- --------
Germany - 7.0%
Allianz AG Hldg 2 291 2 291
ALTANA AG 3 1934 3 1934
Bayer AG 5 179 5 179
Bayerische Hypotheken - und Wechsel-Bank AG 2 70 2 70
Daimler Benz AG, Rights expire May 13, 1997 1 1
Daimler- Benz AG 1 74 1 74
Deutsche Bank AG 3 142 3 142
Hugo Boss AG 1 1725 1 1725
Lufthansa AG 3 35 3 35
Merck KGAA 2 60 2 60
RWE AG 106 4419 2 85 108 4504
SAP AG 17 3132 17 3132
Siemens AG 6 306 6 306
Suedzucker AG 4 1664 4 1664
Thyssen AG 44 44
Viag AG 97 97
--------- ---------- --------
12874 1383 14257
--------- ---------- --------
Greece - 0.0%
Ergo Bank 28 28
--------- ---------- --------
28 28
---------- --------
Hong Kong - 2.5%
Bank of East Asia Ltd. 5 17 5 17
Cheung Kong Holdings, Ltd. 117 1027 5 44 122 1071
China Light & Power Co., Ltd. 9 41 9 41
Giordano International, Ltd. 600 325 600 325
Hang Seng Bank 6 68 6 68
Henderson China Holdings, Ltd. 52 90 52 90
Henderson Land Development Co., Ltd. 115 969 115 969
Hong Kong & Shanghai Hotels Ltd.. 3 4 3 4
Hong Kong Telecomm 34 58 34 58
Hongkong-China Gas 12 19 12 19
Hong Kong Telecommunications, Ltd. ADS 60 1028 60 1028
</TABLE>
<PAGE>
Evergreen Global Leaders Fund
Pro Forma Schedule of Investments
Year Ended April 30, 1997 (000's omitted)
<TABLE>
<CAPTION>
Evergreen Blanchard Pro Forma
Global Leaders Fund Global Growth Fund Combined
Market Market Market
Shares Value Shares Value Shares Value
-------- ------- -------- ------- -------- --------
<C> <S> <C> <C> <C> <C> <C> <C>
Hutchison Whampoa, Ltd. 9 67 9 67
Hysan Development Co. 2 6 2 6
National Mutual Asia Ltd. 700 723 700 723
New World Develelopment Co., Ltd. 5 29 5 29
Peregrine Invmtnt 6 9 6 9
Shangri La Asia Ltd 4 5 4 5
Sun Hung Kai Properties Ltd. 10 108 10 108
Swire Pacific Ltd. 3 23 3 23
Television Broadct 2 8 2 8
Wharf (Holdings) Ltd. (The) 4 15 4 15
Wing Lung Bank 78 427 1 7 79 434
-------- -------- --------
4589 528 5117
-------- -------- --------
India - 0.1%
Indian Petrochemic 6 74 6 74
Reliance Industries Ltd., GDS 4 84 4 84
Steel Authority Of 6 49 6 49
-------- --------
207 207
-------- --------
Indonesia - 0.2%
Bank International Indonesia 261 188 261 188
* Bank International Indonesia, Warrants
expiring 1/17/2000 @ 1000 IDR 32 10 32 10
Bdni Bk Dagang Nas 20 7 20 7
Bank Dagang Nasional Indonesia 138 138 138 138
-------- --------
343 343
-------- --------
Ireland - 0.0%
Bank Of Ireland
CRH 14 140 14 140
-------- --------
140 140
-------- --------
Italy - 3.2%
BCA Comm Italiana 5 11 5 11
Burgo Cartiere SpA 1 6 1 6
Beneton Group SpA ADS 60 1553 60 1553
Credito Italiano SpA 6 9 6 9
Edison 1 6 1 6
Eni S.p.A. 26 132 26 132
Fiat Spa 34 113 34 113
Fiat Spa 4 7 4 7
Fila Holding SpA ADS 25 1081 25 1081
Imi 1 5 1 5
Industrie Natuzzi SpA ADS 73 1629 73 1629
Luxottica Group SpA ADS 25 1509 25 1509
Mediaset 4 15 4 15
Pirelli Spa 2 5 2 5
Telecom Italia 18 47 18 47
Telecom Italia Mob 91 286 91 286
-------- -------- --------
5772 642 6414
-------- -------- --------
Japan - 7.3%
Asahi Bank 10 61 10 61
Asahi Glass Co 14 127 14 127
Bank Of Tokyo Mits 16 253 16 253
Canon Sales Co., Inc. 3 56 3 56
Canon, Inc. 7 166 7 166
Chugai Pharm Co 6 44 6 44
Credit Saison Co 3 51 3 51
Daicel Chemical Industries, Ltd. 28 105 28 105
Daiwa Securities Co., Ltd. 4 27 4 27
</TABLE>
<PAGE>
Evergreen Global Leaders Fund
Pro Forma Schedule of Investments
Year Ended April 30, 1997 (000's omitted)
<TABLE>
<CAPTION>
Evergreen Blanchard Pro Forma
Global Leaders Fund Global Growth Fund Combined
Market Market Market
Shares Value Shares Value Shares Value
------- -------- ------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Fuji Bank 13 146 13 146
Fuji Photo Film Co. 2 76 2 76
Hankyu Dept Stores 11 94 11 94
Hitachi Ltd. 18 163 18 163
Honda Motor Co., Ltd. 3 93 3 93
House Food Corp 4 59 4 59
Ind Bank Japan 11 117 11 117
Ito Yokado Co 2 96 2 96
Itochu Corp 15 71 15 71
Kaken Pharm 4 17 4 17
Kawasaki Kisen 40 69 40 69
Kinki Nippon Rlwy 31 172 31 172
Komatsu Ltd. 16 117 16 117
Marubeni Corp. 22 82 22 82
Matsushita Eleltric Industrial Co., Ltd. 10 160 10 160
Mitsubishi Estate Co., Ltd. 9 113 9 113
Mitsubishi Heavy Industries Ltd. 34 224 34 224
Mitsubishi Oil Co 10 41 10 41
Mitsubishi Tr+Bkg 6 64 6 64
Mitsui Trust & Banking 4 23 4 23
Mitsui Soko Co. 150 722 150 722
Mori Seiki Co. 4 58 4 58
Nikkei 134 293 134 293
Nintendo Co., Ltd. 48 3509 48 3509
Nippon Chemical 69 386 69 386
Nisshinbo Industries Inc. 11 73 11 73
Nkk Corporation 58 125 58 125
Nomura Securities International Inc. 7 78 7 78
Ntt Data Corp 58 58
Onward Kashiyama 6 77 6 77
Sakura Bank 17 90 17 90
Sankyo Co 3 80 3 80
Sekisui Chemical Co. 6 58 6 58
Sekisui House, Ltd. 11 98 11 98
Seven-Eleven Japan Co., Ltd. 75 4782 75 4782
Sharp Corp. 6 78 6 78
Shionogi + Co 4 27 4 27
Shiseido Co., Ltd. 6 86 6 86
Sony Corp. 1 73 1 73
Sumitomo Bakelite 10 67 10 67
Sumitomo Bank 14 160 14 160
Sumitomo Mar+Fire 15 92 15 92
Taisei Corp 13 48 13 48
Takara Standard Co 4 30 4 30
Takuma Co 5 54 5 54
Tokai Bank 9 67 9 67
Tokyo Elec Power 8 144 8 144
Toyota Motor Corp. 15 435 15 435
Yamaichi Securities Co., Ltd. 3 8 3 8
Yamanouchi Pharmaceutical 3 64 3 64
Yamatake Honeywell 6 89 6 89
-------- ---------- ------------
9399 5497 14896
-------- ---------- ------------
<CAPTION>
Korea - 0.2%
<S> <C> <C> <C> <C>
Anam Industrial Co 3 50 3 50
Dong Bang Forwrdng 2 138 2 138
Hyundai Motor Svcs 2 21 2 21
Korea Electric Power 3 95 3 95
Kumho Const + Eng 9 23 9 23
Samsung Electronic
Samsung Electronics Ltd., GDR 1 1
Yukong 3 46 3 46
---------- ------------
374 374
---------- ------------
</TABLE>
<PAGE>
Evergreen Global Leaders Fund
Pro Forma Schedule of Investments
Year Ended April 30, 1997 (000's omitted)
<TABLE>
<CAPTION>
Evergreen Blanchard Pro Forma
Global Leaders Fund Global Growth Fund Combined
Market Market Market
Shares Value Shares Value Shares Value
------- -------- -------- --------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Malaysia - 2.7%
AMMB Holdings Berhad 76 505 505
Commerce Asset Holding Berhad 100 597 7 42 107 639
DCB Holdings Berhad 155 503 25 81 180 584
Genting Berhad 12 64 12 64
Guinness Anchor Bd 40 88 40 88
Jaya Tiasa Hldgs 10 51 10 51
Malayan Banking Berhad 100 996 12 119 112 1115
Malaysian Oxygen Berhad 40 198 40 198
Malaysian Airline Systems 25 55 25 55
Nestle Berhad 61 476 61 476
Petronas Gas Berhad 18 62 18 62
Perusahaan Otomobil Nasional Berhad 100 597 100 597
Renong Berhad 47 64 47 64
Sime Darby, Berhad 35 108 35 108
Telekom Malaysia Berhad 9 63 9 63
United Engineers Ltd. Berhad 112 794 9 64 121 858
-------- --------- --------
4666 861 5527
-------- --------- --------
Mexico - 0.3%
Alfa SA de CV 13 70 13 70
Apasco SA 11 65 11 65
Carso Global Telecom Sa de CV, ADR 5 30 5 30
Grupo Carso Sa de CV, ADR 5 57 5 57
* Grupo Finance Banamex Accival SA de CV, Series B 16 34 16 34
Grupo Finance Banamex Accival, SA de CV, Series L 1 2 1 2
Grupo Financiero Inbursa SA De CV ADR 1 1
Grupo Televisa SA 4 46 4 46
Kimberly Clark Corp. de Mexico 25 93 25 93
Telefonos De Mexico 110 228 110 228
-------- --------- --------
626 626
--------- --------
Netherlands - 2.9%
ABN-AMRO Holdings NV 27 27
AEGON NV 4 267 4 267
Ahold (Kon) NV 4 285 4 285
Elsevier NV 14 224 14 224
Elsevier NV ADS 28 920 28 920
Getronics NV 24 733 24 733
Heineken NV 1 168 1 168
ING Groep NV 1 55 1 55
Nutricia Verenigde Bedrijven NV 7 1062 7 1062
Philips Electronics NV 1 52 1 52
Royal Dutch Petroleum Co. 1 214 1 214
Unilever Nv 39 39
VNU 45 931 45 931
Wolters Kluwer NV 9 1007 9 1007
-------- --------- --------
4877 1107 5984
-------- --------- --------
New Zealand - 0.7%
Carter Holt Harvey Ltd. 8 18 8 18
Fletcher Challenge, Energy Shares 6 16 6 16
Telecom Corporation Of New Zealand 4 17 4 17
Telecom Corp. of New Zealand Ltd. ADS 40 1447 40 1447
-------- --------- --------
1447 51 1498
-------- --------- --------
Norway - 0.6%
Aker AS, Series A 5 5
Elkem AS 8 8
Norsk Hydro AS 1 49 1 49
Norske Skogindustrier AS, Class A 10 10
Norske Skogindustrier AS, Class B 6 6
Orkla ASA 15 1258 8 15 1266
Storebrand Asa 1 8 1 8
-------- --------- --------
1258 94 1352
-------- --------- --------
</TABLE>
<PAGE>
Evergreen Global Leaders Fund
Pro Forma Schedule of Investments
Year Ended April 30, 1997 (000's omitted)
<TABLE>
<CAPTION>
Evergreen Blanchard Pro Forma
Global Leaders Fund Global Growth Fund Combined
Market Market Market
Shares Value Shares Value Shares Value
------ -------- -------- --------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Peru - 0.0%
Indosat, ADR 3 85 3 85
-------- --------- ------------
85 85
--------- ------------
Philippines - 0.1%
* Belle Corp. 400 96 400 96
Metro Bank & Trust Co. 2 40 2 40
-------- --------- ------------
136 136
--------- ------------
Portugal - 0.1%
BCO Commerce Portugal 6 91 6 91
Jeronimo Martins Sgps 1 84 1 84
Portugal Telecom SA 2 74 2 74
Sonae Investimentos SA 2 49 2 49
-------- --------- ------------
298 298
--------- ------------
Singapore - 0.6%
City Developments Ltd. 2 16 2 16
DBS Land Ltd. 3 10 3 10
Development Bank of Singapore 3 36 3 36
First Capital Corp 2 5 2 5
Hotel Properties 3 5 3 5
* Keppel Corp., Ltd. 1 5 1 5
O/Seas Chinese Bk 5 58 5 58
Singapore Airlines 3 27 3 27
Singapore Press Holdings, Ltd. 50 926 1 19 51 945
Singapore Telecomm 13 22 13 22
United O/Seas Bank 4 38 4 38
United OverSeas Land Ltd. 5 7 5 7
Van Der Horst 2 6 2 6
-------- --------- ------------
926 254 1180
-------- --------- ------------
South Africa - 0.6%
Amalgamated Bank South Africa 7 47 7 47
Anglo Amer Coal 27 27
Anglo Amer Indl Cp 1 44 1 44
Anglo American Corp. Ltd. 2 96 2 96
Barlow Ltd. 6 66 6 66
De Beers Centenary AG 3 119 3 119
Dimension Data Hld 1 1
Ellerine Hldgs 1 5 1 5
Foodcorp Ltd 1 5 1 5
Free State Consolidated Gold Mines Ltd. 5 30 5 30
Gencor Ltd. 20 84 20 84
JD Group Ltd. 1 1
Liberty Life Associates 3 84 3 84
Liberty Life Stgic 28 106 28 106
Malbak Ltd. 6 10 6 10
Nedcor Ltd. 3 51 3 51
New Clicks Hldgs 2 3 2 3
Rembrandt Group Ltd. 7 74 7 74
Rustenberg Platnum 3 48 3 48
S A Druggists 1 8 1 8
Sasol Ltd. 9 115 9 115
South Africa Brews 4 118 4 118
Standard Bank Invr1 1 46 1 46
Sun Intl South Africa 63 40 63 40
--------- ------------
1228 1228
--------- ------------
</TABLE>
<PAGE>
Evergreen Global Leaders Fund
Pro Forma Schedule of Investments
Year Ended April 30, 1997 (000's omitted)
<TABLE>
<CAPTION>
Evergreen Blanchard Pro Forma
Global Leaders Fund Global Growth Fund Combined
Market Market Market
Shares Value Shares Value Shares Value
--------- -------- -------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Spain - 3.4%
BCO Bilbao Vizcaya 20 20
BCO Santander SA 30 30
Centros Comerciales Pryca, SA 30 521 30 521
Corporacion Bancaria de Espana SA 13 13
Empresa Nacional de Electricdad 1 42 1 42
Empresa Nacional de Electricdad ADS 36 2516 36 2516
Gas Natural Sdg Sa 21 21
Iberdrola SA 2 25 2 25
Prosegur, CIA de Seguridad SA 55 596 55 596
Repsol SA 1 46 1 46
Repsol SA, ADS 70 2931 70 2931
Telefonica de Espana SA 2 56 2 56
Union Electrica Fenosa SA 1 5 1 5
Vallehermoso SA 6 148 6 148
-------- --------- --------
6564 406 6970
-------- --------- --------
Sweden - 1.9%
Astra AB 3 106 3 135 6 241
Astra AB ADS 56 2276 56 2276
Ericsson Lm Tel 2 73 2 73
Hennes & Mauritz AB Cl. B 6 897 6 897
Scania Ab 3 67 3 67
Scania Ab 3 67 3 67
Skandinaviska Enskilda Banken, Series B 2 15 2 15
Svedala Industri 7 128 7 128
Svenska Handelsbanken, Series A 8 8
-------- --------- --------
3279 493 3772
-------- --------- --------
Switzerland - 0.6%
ABB AG 115 115
Adecco SA 33 33
Credit Suisse Group 1 68 1 68
Nestle SA 182 182
Novartis AG, Registered Shares 263 263
Roche Holding AG 253 253
Schweizerische Rueckversicherungs-Gesellschaft 116 116
Schweizerische Bankgesellsch 47 47
Schweizerischer Bankverein 55 55
Ubs Schw Bkgesell 38 38
Zurich Versicherun, Bearer Shares 33 33
-------- --------- --------
1203 1203
--------- --------
Taiwan - 0.1%
Macronix Intl Co Ltd ADR 3 63 3 63
Tuntex Distinct 10 87 10 87
Walsin Lihwa Corp., GDR 6 61 6 61
--------- --------
211 211
--------- --------
Thailand - 0.2%
Krung Thailand Bank Plc 27 34 27 34
PTT Exploration & Production Public Co., Ltd. 5 58 5 58
Siam Cement Public Co., Ltd. Foreign Shares 2 54 2 54
Siam Commercial Bank Plc Ltd. 14 79 14 79
Telecomasia 35 53 35 53
United Communication Industry 9 52 9 52
--------- --------
330 330
--------- --------
Turkey - 0.0%
Koc Yatirim (a)
--------- --------
</TABLE>
<PAGE>
Evergreen Global Leaders Fund
Pro Forma Schedule of Investments
Year Ended April 30, 1997 (000's omitted)
<TABLE>
<CAPTION>
Evergreen Blanchard Pro Forma
Global Leaders Fund Global Growth Fund Combined
Market Market Market
Shares Value Shares Value Shares Value
------- --------- -------- --------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
United Kingdom - 6.6%
Allied Domecq Plc 14 101 14 101
Argos Plc 35 361 35 361
British Aerospace 2 40 2 40
British Petroleum Co. Plc 10 118 10 118
British Sky Broadcast 1 8 1 8
Burmah Castrol Plc 30 491 30 491
Cable + Wireless 1 8 1 8
Carlton Communications Plc 28 226 28 226
Carlton Communications Plc ADS 20 838 20 838
Chubb Security Plc 29 210 29 210
EMI Group 6 127 6 127
Energy Group Plc 8 235 8 235
Glaxo Wellcome 5 94 5 94
Granada Group Plc 55 800 55 800
Hanson Plc, ADR 8 182 8 182
HSBC Holdings Plc 7 166 7 166
Legal & General Group Plc 58 387 58 387
Lloyds TSB Group Plc 95 867 7 65 102 932
Morgan Crucible Company Plc 65 457 65 457
National Westminster Bank 18 213 18 213
Next Plc 40 422 40 422
Reckitt & Colman Plc 80 1089 80 1089
Rentokil Group Plc 95 623 95 623
Reuters Holdings Plc ADS 13 770 13 770
Siebe 9 130 9 130
Smithkline Beecham Plc 17 267 17 267
SmithKline Beecham Plc ADS 16 1298 16 1298
Smiths Industries Plc 40 489 40 489
Thorn 6 17 6 17
TI Group Plc 85 729 85 729
United News & Media Plc ADS 33 400 33 400
Vodafone Group Plc ADS 13 553 13 553
Williams Holdings Plc 26 139 26 139
Wolseley Plc 50 403 50 403
---------- ---------- ------------
11116 2207 13323
---------- ---------- ------------
United States - 23.1%
AlliedSignal Inc. 19 1373 19 1373
* Amgen, Inc. 14 830 14 830
AT & T Corp. 33 1106 33 1106
Avon Products, Inc. 11 647 11 647
Callaway Golf Co. 26 777 26 777
Carnival, Corp. 30 1106 30 1106
* Cisco Systems, Inc. 27 1397 27 1397
Coca Cola Co. (The) 20 1273 20 1273
Computer Associates International, Inc. 32 1651 32 1651
* CUC International, Inc. 43 914 43 914
Deere & Co. 20 920 20 920
Disney Walt Co. (The) 14 1140 14 1140
Dover Corp. 15 795 15 795
Dresser Inds Inc. 30 896 30 896
* E M C Corp. Mass. 5 182 5 182
Federal National Mortgage Association 38 1563 38 1563
Gannett Inc. 15 1309 15 1309
Gap, Inc. 25 797 25 797
General Electric Co. 30 3271 30 3271
Goodyear Tire & Rubber Co. (The) 17 868 17 868
Home Depot, Inc. (The) 30 1740 30 1740
Intel Corp. 16 2389 16 2389
</TABLE>
<PAGE>
Evergreen Global Leaders Fund
Pro Forma Schedule of Investments
Year Ended April 30, 1997 (000's omitted)
<TABLE>
<CAPTION>
Evergreen Blanchard Pro Forma
Global Leaders Fund Global Growth Fund Combined
Market Market Market
Shares Value Shares Value Shares Value
------ --------- -------- --------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Marriott International, Inc. 27 1464 27 1464
Marsh & McLennan Co., Inc. 6 687 6 687
Mattel, Inc. 35 976 35 976
MBNA Corp. 35 1155 35 1155
McGraw-Hill Cos., Inc. 13 636 13 636
Merck & Co., Inc. 22 1946 22 1946
Merrill Lynch & Co., Inc. 13 1191 13 1191
* Microsoft Corp. 19 2248 19 2248
Norwest Corp. 22 1097 22 1097
* Oracle Systems Corp. 35 1391 35 1391
* Parametric Technology Corp. 28 1267 28 1267
Schering-Plough Corp. 17 1360 17 1360
Schwab (Charles) & Co., Inc. 15 549 15 549
Student Loan Marketing Corp. 5 591 5 591
SunAmerica, Inc. 30 1380 30 1380
Wal-Mart Stores, Inc. 70 1978 70 1978
--------- -------------
46860 46860
--------- -------------
Total Common Stocks 134829 20898 155730
========= ========= =============
PREFERRED STOCKS - 0.1%
Austria - 0.0%
Creditanstalt-Bankverein 8 8
--------- -------------
8 8
--------- -------------
Brazil - 0.0%
Acos Espec Itabira 1212 3 1212 3
* Eletrobras SA, Cl. B Shares 150 70 150 70
--------- -------------
73 73
--------- -------------
Finland - 0.0%
Nokia (Ab) Oy 1 31 1 31
--------- -------------
31 31
--------- -------------
Korea - 0.0%
Anam Industrial Co 6 32 6 32
Daewoo Heavy Inds 6 20 6 20
--------- -------------
52 52
--------- -------------
Total Preferred Stocks 164 164
========= =============
</TABLE>
<PAGE>
Evergreen Global Leaders Fund
Pro Forma Schedule of Investments
April 30, 1997
<TABLE>
<CAPTION>
Evergreen Blanchard
Global Leaders Global Growth
Fund Fund
Principal Market Value Principal Market Value
---------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
CORPORATE BONDS-10.3%
United States-10.3%
Abbey National 5.34%, 6/10/97 3000 2985
Associates First Capital Corporation 5.54%, 6/23/97 3000 2979
Ford Motor Credit Company 5.55%, 6/20/97 3000 2980
Halifax Building Society 5.31%, 6/9/97 3000 2985
Hertz Corporation 5.51%, 6/23/97 3000 2979
Repsol International Finance 5.32%, 6/9/97 3000 2985
Xerox Credit Corporation 5.32%, 6/5/97 3000 2987
------------
Total Corporate Bonds 20880
============
FOREIGN GOVERNMENT BONDS
Australia - 0.1%
Australian Commonwealth 7.50%, 7/15/05 165 AUD 127
------------
127
------------
Canada - 0.3%
Canada Government 11.00%, 6/1/09 645 CAD 617
------------
617
------------
Denmark - 0.3%
Denmark Kingdom 8.00%, 3/15/06 3,310 DKK 551
------------
551
------------
France - 0.6%
Government of France 7.25%, 4/25/06 2,150, FRF 410
Government of France 6.50%, 10/25/06 4,890 FRF 887
------------
1297
------------
Germany - 0.7%
Germany Fed Rep 7.125%, 12/20/02 287 DEM 182
Germany Fed Rep 6.50%, 7/15/03 165 DEM 102
Germany Fed Rep 6.00%, 1/5/06 1,140 DEM 671
Germany Fed Rep 6.25%, 4/26/06 690 DEM 413
------------
1368
------------
Italy - 0.4%
Republic of Italy 10.5%, 4/15/98 880,000 ITL 529
Republic of Italy 10.5%, 4/1/05 310,000 ITL 211
------------
740
------------
Spain - 0.4%
Spain(Kingdom Of) 12.25%, 3/25/00 104,600 ESP 839
------------
839
------------
Sweden - 0.1%
Sweden (Kingdom Of) 10.25%, 5/5/00 1,600 SDK 230
------------
230
------------
United Kingdom - 0.6%
Treasury 7.75%, 9/8/06 239 GBP 394
Treasury 9.75%, 8/27/02 190 GBP 341
Treasury 7.50% 12/7/06 370 GBP 595
------------
1330
------------
Total Foreign Government Bonds 7099
============
<CAPTION>
Pro Forma
Combined
Principal Market Value
------------------ ---------------
<S> <C> <C>
CORPORATE BONDS-10.3%
United States-10.3%
Abbey National 5.34%, 6/10/97 3000 2985
Associates First Capital Corporation 5.54%, 6/23/97 3000 2979
Ford Motor Credit Company 5.55%, 6/20/97 3000 2980
Halifax Building Society 5.31%, 6/9/97 3000 2985
Hertz Corporation 5.51%, 6/23/97 3000 2979
Repsol International Finance 5.32%, 6/9/97 3000 2985
Xerox Credit Corporation 5.32%, 6/5/97 3000 2987
---------------
Total Corporate Bonds 20880
===============
FOREIGN GOVERNMENT BONDS
Australia - 0.1%
Australian Commonwealth 7.50%, 7/15/05 165 AUD 127
---------------
127
---------------
Canada - 0.3%
Canada Government 11.00%, 6/1/09 645 CAD 617
---------------
617
---------------
Denmark - 0.3%
Denmark Kingdom 8.00%, 3/15/06 3,310 DKK 551
---------------
551
---------------
France - 0.6%
Government of France 7.25%, 4/25/06 2,150, FRF 410
Government of France 6.50%, 10/25/06 4,890 FRF 887
---------------
1297
---------------
Germany - 0.7%
Germany Fed Rep 7.125%, 12/20/02 287 DEM 182
Germany Fed Rep 6.50%, 7/15/03 165 DEM 102
Germany Fed Rep 6.00%, 1/5/06 1,140 DEM 671
Germany Fed Rep 6.25%, 4/26/06 690 DEM 413
---------------
1368
---------------
Italy - 0.4%
Republic of Italy 10.5%, 4/15/98 880,000 ITL 529
Republic of Italy 10.5%, 4/1/05 310,000 ITL 211
---------------
740
---------------
Spain - 0.4%
Spain(Kingdom Of) 12.25%, 3/25/00 104,600 ESP 839
---------------
839
---------------
Sweden - 0.1%
Sweden (Kingdom Of) 10.25%, 5/5/00 1,600 SDK 230
---------------
230
---------------
United Kingdom - 0.6%
Treasury 7.75%, 9/8/06 239 GBP 394
Treasury 9.75%, 8/27/02 190 GBP 341
Treasury 7.50% 12/7/06 370 GBP 595
---------------
1330
---------------
Total Foreign Government Bonds 7099
===============
</TABLE>
<PAGE>
Evergreen Global Leaders Fund
Pro Forma Schedule of Investments
April 30, 1997
<TABLE>
<CAPTION>
Evergreen Blanchard
Global Leaders Global Growth
Fund Fund
Principal Market Value Principal Market Value
---------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
UNITED STATES GOVERNMENT & AGENCY OBLIGATIONS-4.4%
United States Treasury Bills 6/26/97 1850 1836
United States Tres Bond Strip Principal 8/15/05 350 201
United States Tres Strip Interest 2/15/05 350 208
United States Treasury Notes 6.25%, 2/15/03 400 394
United States Treasury Bonds 7.50%, 11/15/16 500 526
United States Treasury Bonds 7.25%, 8/15/22 2500 2558
United States Treasury Bonds 7.625%, 11/15/22 1200 1282
United States Treasury Bonds 11.75%, 11/15/14 1430 2003
-------------
Total United States Government & Agency Obligations 9008
=============
SHORT-TERM INVESTMENTS - 3.6%
United States - 3.6%
Federal Farm Credit Bank
5.36%, 5/23/97 300 299
Federal Home Loan Mortgage Corp.
5.41%, 5/6/97 450 450
Federal National Mortgage Association
5.41%, 5/2/97 100 100
Federal National Mortgage Association
5.41%, 5/9/97 300 300
Federal National Mortgage Association
5.35%, 5/20/97 3000 2992
Federal National Mortgage Association
5.35%, 5/28/97 350 349
CS First Boston Repurchase Agreement,
5.35%, 5/1/97 2891 2891
-------------- -------------
Total Short Term Investments 4490 2891
============== =============
Total Investments 139320 60940
-------------- -------------
Other Assets and
Liabilities - net 1395 770
Net Assets - 140716 61710
-------------- -------------
<CAPTION>
Pro Forma
Combined
Principal Market Value
------------------ ----------------
<S> <C> <C>
UNITED STATES GOVERNMENT & AGENCY OBLIGATIONS-4.4%
United States Treasury Bills 6/26/97 1850 1836
United States Tres Bond Strip Principal 8/15/05 350 201
United States Tres Strip Interest 2/15/05 350 208
United States Treasury Notes 6.25%, 2/15/03 400 394
United States Treasury Bonds 7.50%, 11/15/16 500 526
United States Treasury Bonds 7.25%, 8/15/22 2500 2558
United States Treasury Bonds 7.625%, 11/15/22 1200 1282
United States Treasury Bonds 11.75%, 11/15/14 1430 2003
----------------
Total United States Government & Agency Obligations 9008
----------------
SHORT-TERM INVESTMENTS - 3.6%
United States - 3.6%
Federal Farm Credit Bank
5.36%, 5/23/97 300 299
Federal Home Loan Mortgage Corp.
5.41%, 5/6/97 450 450
Federal National Mortgage Association
5.41%, 5/2/97 100 100
Federal National Mortgage Association
5.41%, 5/9/97 300 300
Federal National Mortgage Association
5.35%, 5/20/97 3000 2992
Federal National Mortgage Association
5.35%, 5/28/97 350 349
CS First Boston Repurchase Agreement,
5.35%, 5/1/97 2891 2891
----------------
Total Short Term Investments 7381
================
Total Investments 200260
----------------
Other Assets and
Liabilities - net 2166
Net Assets - 202426
----------------
</TABLE>
* Non-income producing securities
a Less than $1,000
ADS-American Depository Shares
See Notes to Pro Forma Combining Financial Statements.
<PAGE>
Evergreen Global Leaders Fund
Notes to Pro-Forma Combining Financial Statements (Unaudited)
April 30, 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 Global Leaders Fund (Evergreen) and Blanchard Global Growth Fund
(Blanchard) at April 30, 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 Keystone shares in exchange for shares of
Evergreen. The Pro-Forma Statements reflect the expense of each Fund in
carrying out its obligations under the Agreement and Plan of Reorganization (the
"Reorganization") as though the merger occurred at the beginning of the period
presented.
Under the Reorganization, Evergreen will acquire substantially all of the assets
and assume certain identified liabilities of Blanchard. Thereafter, there will
be a distribution of shares of Evergreen to shareholders of Blanchard in
liquidation and subsequent termination thereof. The information contained
herein is based on the experience of each Fund for the year ended April 30, 1997
and is designed to permit shareholders of the consolidating mutual funds to
evaluate the financial effect of the proposed Reorganization. The expenses of
Evergreen and Blanchard in connection with the Reorganization (including the
cost of any proxy soliciting agents), will be borne by First Union National Bank
of North Carolina.
The Pro-Forma Statements should be read in conjunction with the historical
financial statements of each Fund incorporated by reference in the Statement of
Additional Information.
2. Shares of Beneficial Interest - The Pro-Forma net asset values per share
assumes the issuance of additional shares of Evergreen Class A which would have
been issued at April 30, 1997 in connection with the proposed Reorganization.
The amount of additional shares assumed to be issued was calculated based on the
net assets of Blanchard Class A as of April 30, 1997 of $61,710 (reported in
000's), and the net asset value per share of the respective share class of
Evergreen of $12.52.
The Pro-Forma shares outstanding of 7,099 for Class A (reported in 000's)
consist of 1,420 (reported in 000's) fewer shares of Class A to be issued in the
proposed reorganization, as calculated above, in addition to the shares of
Evergreen outstanding as of April 30, 1997.
3. Pro-Forma Operations - Pro-Forma operating expenses include the actual
expenses of each Fund and the combined Fund, with certain expenses adjusted to
reflect the expected expenses of the combined entity. The investment advisory,
administrative personnel and service fees have been calculated for the combined
Fund based on the fee schedule in effect for Evergreen at the combined level of
average net assets for the year ended April 30, 1997.
<PAGE>
EVERGREEN EQUITY 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. Declaration of Trust, as supplemented. Incorporated by reference to the
Registrant's Registration Statement on Form N-1A filed on October 8, 1997 -
Registration No. 333- 37453 ("Form N-1A Registration Statement").
2. Bylaws. Incorporated by reference to the Form N-1A Registration Statement(the
"Statement").
3. Not applicable.
4. Agreement and Plan of Reorganization. Exhibit A to Prospectus contained in
Part A of this Registration Statement.
5. Declaration of Trust Articles II., III.(6)(c),
IV.(3), IV.(8), V., VI., VII., and VIII. and By-Laws Articles
II., III. and VIII.
6(a). Form of Investment Advisory Agreement between
Evergreen Asset Management Corp. and the Registrant.
Incorporated by reference to the Form N-1A Registration
Statement.
6(b). Form of Interim Management Contract. Exhibit B to
Prospectus contained in Part A of this Registration Statement.
6(c). Form of Interim Sub-Advisory Agreement. Exhibit C to
Prospectus contained in Part A of this Registration Statement.
7(a). Distribution Agreement between Evergreen Distributor,
Inc. and the Registrant. Incorporated by reference to the
Form N-1A Registration Statement.
7(b). Form of Dealer Agreement for Class A, Class B and Class C shares used by
Evergreen Distributor, Inc.
<PAGE>
Incorporated by reference to the Form N-1A Registration Statement.
8. Deferred Compensation Plan. To be filed by amendment.
9. Custody Agreement between State Street Bank and Trust Company and the
Registrant. Incorporated by reference to the Form N-1A Registration Statement.
10(a). Rule 12b-1 Distribution Plan. Incorporated by reference to the Form N-1A
Registration Statement.
10(b). Multiple Class Plan. Incorporated by reference to
the Form N-1A Registration Statement.
11. Opinion and consent of Sullivan & Worcester LLP. To be filed by amendment.
12. Tax opinion and consent of Sullivan & Worcester LLP. To be filed by
amendment.
13. Not applicable.
14(a). Consent of Price Waterhouse LLP. Filed herewith.
14(b). Consent of Deloitte & Touche LLP. Filed herewith.
15. Not applicable.
16. Powers of Attorney. Filed herewith.
17(a). Form of Proxy Card. Filed herewith.
17(b). Registrant's Rule 24f-2 Declaration. Incorporated by
reference to Registrant's initial Form N-1A Registration
Statement filed November 4, 1988 (Registration Statement No.
33-25379).
Item 17. Undertakings.
(1) The undersigned Registrant agrees that prior to any public
reoffering of the securities registered through the use of a prospectus that is
a part of this Registration Statement by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c) of the Securities Act of 1933,
the reoffering prospectus will contain the information called for by the
applicable registration form for reofferings by persons who may be deemed
underwriters, in addition to the
<PAGE>
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 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 9th day of November, 1997.
EVERGREEN EQUITY TRUST
By: /s/ John J. Pileggi
----------------------
Name: John J. Pileggi
Title: President
As required by the Securities Act of 1933, the following persons have
signed this Registration Statement in the capacities on the 9th day of November,
1997.
Signatures Title
- ---------- -----
/s/John J. Pileggi President and
- --------------------- Treasurer
John J. Pileggi
/s/Laurence B. Ashkin* Trustee
- ---------------------
Laurence B. Ashkin
/s/Charles A. Austin* Trustee
- ---------------------
Charles A. Austin
/s/K. Dun Gifford* Trustee
- ---------------------
K. Dun Gifford
/s/James S. Howell* Trustee
- ---------------------
James S. Howell
/s/Leroy Keith, Jr.* Trustee
- ---------------------
Leroy Keith, Jr.
/s/Gerald M. McDonnell* Trustee
- ---------------------
<PAGE>
Gerald M. McDonnell
/s/Thomas L. McVerry* Trustee
- ---------------------
Thomas L. McVerry
/s/William Walt Pettit* Trustee
- ---------------------
William Walt Pettit
/s/David M. Richardson* Trustee
- ---------------------
David M. Richardson
/s/Russell A. Salton III* Trustee
- ---------------------
Russell A. Salton III
/s/Michael S. Scofield* Trustee
- ---------------------
Michael S. Scofield
/s/Richard J. Shima* Trustee
- ---------------------
Richard J. Shima
* By: /s/Martin J. Wolin
------------------
Martin J. Wolin
Attorney-in-Fact
Martin J. Wolin, by signing his name hereto, does hereby sign this
document on behalf of each of the above-named individuals pursuant to powers of
attorney duly executed by such persons and included as Exhibit 16 to this
Registration Statement.
<PAGE>
INDEX TO EXHIBITS
N-14
EXHIBIT NO.
14(a) Consent of Price Waterhouse LLP
14(b) Consent of Deloitte & Touche LLP
16 Powers of Attorney
17(a) Form of Proxy
- --------------------
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference into the Prospectus/Proxy
Statement (the "Prospectus/Proxy") and Statement of Additional Information
constituting parts of this Registration Statement on Form N-14 (the
"Registration Statement") of Evergreen Equity Trust of our report dated December
19, 1996 on the financial statements and financial highlights included in the
October 31, 1996 Annual Report to Shareholders of Evergreen Global Leaders Fund,
which is also incorporated by reference into the Registration Statement.
We also consent to the reference to our Firm under the heading "Financial
Statements and Experts" in the Prospectus/Proxy and to the references to our
Firm under the headings "Financial Highlights" in the Prospectus and
"Independent Auditors" and "Financial Statements" in the Statement of Additional
information, both dated March 3, 1997, for Evergreen Global Leaders Fund, which
are also incorporated by reference into the Prospectus/Proxy.
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
November 10, 1997
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement of
Evergreen Equity Trust on Form N-14 of our report on Blanchard Global Growth
Fund dated November 15, 1996, appearing in the Annual Report of Blanchard Global
Growth Fund for the year ended September 30, 1996 and to the reference to us
under the heading "Financial Statements and Experts" in the Prospectus/Proxy
Statement, which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
November 7, 1997
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
Signature Title
- --------- -----
/s/Laurence B. Ashkin Director/Trustee
- ---------------------
Laurence B. Ashkin
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
Signature Title
- --------- -----
/s/Charles A. Austin, III Director/Trustee
- -------------------------
Charles A. Austin, III
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
Signature Title
- --------- -----
/s/K. Dun Gifford Director/Trustee
- -----------------
K. Dun Gifford
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
Signature Title
- --------- -----
/s/James S. Howell Director/Trustee
- ------------------
James S. Howell
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
Signature Title
- --------- -----
/s/Leroy Keith, Jr. Director/Trustee
- -------------------
Leroy Keith, Jr.
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
Signature Title
- --------- -----
/s/Gerald M. McDonnell Director/Trustee
- ----------------------
Gerald M. McDonnell
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
Signature Title
- --------- -----
/s/Thomas L. McVerry Director/Trustee
- --------------------
Thomas L. McVerry
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
Signature Title
- --------- -----
/s/William Walt Pettit Director/Trustee
- ----------------------
William Walt Pettit
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
Signature Title
- --------- -----
/s/David M. Richardson Director/Trustee
- ----------------------
David M. Richardson
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
Signature Title
- --------- -----
/s/Russell A. Salton, III MD Director/Trustee
- ----------------------------
Russell A. Salton, III MD
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
Signature Title
- --------- -----
/s/Michael S. Scofield Director/Trustee
- ----------------------
Michael S. Scofield
<PAGE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Dorothy E. Bourassa, Terrence J.
Cullen, Rosemary D. Van Antwerp, James P. Wallin, Martin J. Wolin and John J.
Pileggi, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name in the capacity indicated
below any and all registration statements, including, but not limited to, Forms
N-8A, N-8B-1, S-5, N-14 and N-1A, as amended from time to time, and any and all
amendments thereto to be filed with the Securities and Exchange Commission for
the purpose of registering from time to time all investment companies of which I
am now or hereafter a Director or Trustee and for which Keystone Investment
Management Company, Evergreen Asset Management Corp. or First Union National
Bank of North Carolina serves as Adviser or Manager and registering from time to
time the shares of such companies, and generally to do all such things in my
name and on my behalf to enable such investment companies to comply with the
provisions of the Securities Act of 1933, as amended, the Investment Company Act
of 1940, as amended, and all requirements and regulations of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by my said attorneys to any and all registration statements and
amendments thereto.
In Witness Whereof, I have executed this Power of Attorney as of June
18, 1997.
Signature Title
- --------- -----
/s/Richard J. Shima Director/Trustee
- -------------------
Richard J. Shima
BLANCHARD GLOBAL GROWTH FUND
PROXY FOR THE MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 20, 1998
The undersigned, revoking all Proxies heretofore given, hereby appoints
, and or any of them as Proxies of the undersigned, with full power of
substitution, to vote on behalf of the undersigned all shares of Blanchard
Global Growth Fund ("Global Growth") that the undersigned is entitled to vote at
the special meeting of shareholders of Global Growth to be held at 2:00 p.m. on
Friday, February 20, 1998 at the offices of the Evergreen Funds, 200 Berkeley
Street, Boston, Massachusetts 02116 and at any adjournments thereof, as fully as
the undersigned would be entitled to vote if personally present, as follows:
1. To approve an Agreement and Plan of Reorganization whereby Evergreen
Global Leaders Fund, a series of Evergreen Equity Trust, will (i) acquire all of
the assets of Global Growth in exchange for shares of Evergreen Global Leaders
Fund; and (ii) assume certain identified liabilities of Global Growth, as
substantially described in the accompanying Prospectus/Proxy Statement.
---- FOR ---- AGAINST ---- ABSTAIN
2. To approve the proposed Interim Management Contract with Virtus
Capital Management, Inc.
---- FOR ---- AGAINST ---- ABSTAIN
3. To approve the proposed Interim Sub-Advisory Agreement between Virtus
Capital Management, Inc. and Mellon Capital Management, Inc.
---- FOR ---- AGAINST ---- ABSTAIN
4. To consider and vote upon such other matters as may properly come
before said meeting or any adjournments thereof.
<PAGE>
---- FOR ---- AGAINST ---- ABSTAIN
PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
OF BLANCHARD FUNDS
THE BOARD OF TRUSTEES OF BLANCHARD FUNDS
RECOMMENDS A VOTE FOR THE PROPOSALS.
THE SHARES REPRESENTED HEREBY WILL BE VOTED AS
INDICATED OR FOR THE PROPOSALS IF NO CHOICE IS
INDICATED.
NOTE: PLEASE SIGN EXACTLY AS YOUR
NAME(S) APPEAR ON THIS CARD.
Dated: , 1998
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 the 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.
<PAGE>
