1933 Act No. 333-37453
1940 Act No. 811-8413
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 6 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 5 [X]
EVERGREEN EQUITY TRUST
(Exact Name of Registrant as Specified in Charter)
200 Berkeley Street, Boston, Massachusetts 02116-5034
(Address of Principal Executive Offices)
(617) 210-3200
(Registrant's Telephone Number)
The Corporation Trust Company
1209 Orange Street
Wilmington, Delaware 19801
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b)
[X] on August 1, 1998 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i)
<PAGE>
EVERGREEN EQUITY TRUST
CONTENTS OF
POST-EFFECTIVE AMENDMENT NO. 6
to
REGISTRATION STATEMENT
This Post-Effective Amendment No. 6 to Registrant's Registration Statement
Nos. 333-37453/811-8413 consists of the following pages, items of information
and documents:
The Facing Sheet
The Contents Page
The Cross-Reference Sheet
PART A
------
Prospectuses for Evergreen Foundation Fund, Evergreen Tax Strategic
Foundation Fund, Evergreen American Retirement Fund and Evergreen Balanced Fund
are contained herein.
Prospectuses for the following funds are contained in Post-Effective
Amendment No. 5 to Registrant's Registration Statement Nos. 333-37453/811-8413
filed on June 12, 1998: Evergreen Aggressive Growth Fund, Evergreen Fund,
Evergreen Micro Cap Fund, Evergreen Omega Fund, Evergreen Small Company Growth
Fund, Evergreen Strategic Growth Fund and Evergreen Tax Strategic Equity Fund
Prospectuses for the following funds are contained in Post-Effective
Amendment No. 2 to Registrant's Registration Statement Nos. 333-37453/811-8413
filed on December 12, 1997: Evergreen Fund for Total Return, Evergreen Growth
and Income Fund, Evergreen Income and Growth Fund, Evergreen Small Cap
Equity Income Fund, Evergreen Value Fund, Evergreen Utility Fund, and Evergreen
Blue Chip Fund.
Prospectuses for Evergreen Stock Selector (formerly, Core Stock) Fund are
contained in Post-Effective Amendment No. 4 to Registrant's Registration
Statement Nos. 333-37453/811-8413 filed on March 12, 1998.
PART B
------
Statement of Additional Information for Evergreen Foundation Fund,
Evergreen Tax Strategic Foundation Fund, Evergreen American Retirement Fund and
Evergreen Balanced Fund are contained herein.
Statement of Additional Information for the following funds are contained
in Post-Effective Amendment No. 5 to Registrant's Registration Statement Nos.
333-37453/811-8413 filed on June 12, 1998: Evergreen Stock Selector (formerly,
Core Stock) Fund, Evergreen Aggressive Growth Fund, Evergreen Fund, Evergreen
Micro Cap Fund, Evergreen Omega Fund, Evergreen Small Company Growth Fund,
Evergreen Strategic Growth Fund and Evergreen Tax Strategic Equity Fund
Prospectuses for the following funds are contained in Post-Effective
Amendment No. 2 to Registrant's Registration Statement Nos. 333-37453/811-8413
filed on December 12, 1997: Evergreen Fund for Total Return, Evergreen Growth
and Income Fund, Evergreen Income and Growth Fund, Evergreen Small Cap
Equity Income Fund, Evergreen Value Fund, Evergreen Utility Fund, and Evergreen
Blue Chip Fund.
PART C
------
Financial Statements
Exhibits
Number of Holders of Securities
Indemnification
Business and Other Connections of Investment Adviser
Principal Underwriter
Location of Accounts and Records
Undertakings
Signatures
<PAGE>
EVERGREEN EQUITY TRUST
Cross-Reference Sheet pursuant to Rules 404 and 495 under the Securities
Act of 1933.
<TABLE>
<CAPTION>
N-1A Item No. Location in Prospectus(es)
<S> <C>
Part A
Item 1. Cover Page Cover Page
Item 2. Synopsis and Fee Table Expense Information; Performance Data
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant Additional Investment Information; Cover Page; Fund Description; Fund Objectives
and Polices; Investment Restrictions; Risk Factors; General Information
Item 5. Management of the Fund Fund Management; Expenses
Item 6. Capital Stock and Other Securities Fund Description; Dividends and Taxes; Fund Shares; Shareholder Services
Item 7. Purchase of Securities Being Offered Distribution Plan; How to Buy Shares; Pricing Shares; Shareholders Services
Item 8. Redemption or Repurchase How to Redeem Shares
Item 9. Pending Legal Proceedings Not Applicable
Location in Statement of
Part B Additional Information
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History Trust Organization
Item 13. Investment Objectives and Policies Fund Investments
Item 14. Management of the Fund Management of the Trust
Item 15. Control Persons and Principal Management of the Trust; Principal Holders of Fund Shares
Holders of Securities
Item 16. Investment Advisory and Other Services Investment Advisory and Other Services
Item 17. Brokerage Allocation Brokerage
Item 18. Capital Stock and Other Securities Trust Organization
Item 19. Purchase, Redemption and Pricing of Purchase, Redemption and Pricing of Shares
Shares
Item 20. Tax Status Additional Tax Information
Item 21. Underwriters Principal Underwriter
Item 22. Calculation of Performance Data Financial Information
Item 23. Financial Statements Financial Information
</TABLE>
Part C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Registration Statement.
<PAGE>
EVERGREEN EQUITY TRUST
PART A
PROSPECTUSES
- -------------------------------------------------------------------------------
PROSPECTUS August 1, 1998
- -------------------------------------------------------------------------------
EVERGREEN(SM) BALANCED FUNDS [LOGO OF EVERGREEN FUNDS APPEARS HERE]
- -------------------------------------------------------------------------------
EVERGREEN FOUNDATION FUND
EVERGREEN TAX STRATEGIC FOUNDATION FUND
EVERGREEN AMERICAN RETIREMENT FUND
EVERGREEN BALANCED FUND
(EACH A "FUND;" TOGETHER, THE "FUNDS")
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
The Evergreen Balanced Funds are designed to provide investors with a
selection of investment alternatives which seek to provide current income,
capital appreciation or after-tax "total return." This prospectus provides
information regarding the Class A, Class B and Class C shares offered by the
Funds. Each Fund is a diversified series of an open-end management investment
company. This prospectus sets forth concise information about the Funds that a
prospective investor should know before investing. The address of the Funds is
200 Berkeley Street, Boston, Massachusetts 02116.
A Statement of Additional Information ("SAI") for the Funds dated August
1, 1998, as supplemented from time to time, has been filed with the Securities
and Exchange Commission ("SEC") and is incorporated by reference herein. The
SAI provides information regarding certain matters discussed in this
prospectus and other matters which may be of interest to investors, and may be
obtained without charge by calling the Evergreen funds at 1-800-343-2898.
There can be no assurance that the investment objective of any Fund will be
achieved. Investors are advised to read this prospectus carefully.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF ANY
BANK, ARE NOT ENDORSED OR GUARANTEED BY 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. AN
INVESTMENT IN THE FUNDS INVOLVES RISK, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Keep This Prospectus For Future Reference
EVERGREENSM is a Service Mark of Evergreen Asset Management Corp.
Copyright 1995, Evergreen Asset Management Corp.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
EXPENSE INFORMATION................................................... 3
FINANCIAL HIGHLIGHTS.................................................. 5
DESCRIPTION OF THE FUNDS.............................................. 14
Investment Objectives and Policies................................. 14
Investment Practices and Restrictions.............................. 17
Special Risk Considerations........................................ 21
ORGANIZATION AND SERVICE PROVIDERS.................................... 22
Organization....................................................... 22
Service Providers.................................................. 23
Distribution Plans and Agreements................................... 25
PURCHASE AND REDEMPTION OF SHARES...................................... 26
How to Buy Shares................................................... 26
How to Redeem Shares................................................ 29
Exchange Privilege.................................................. 30
Shareholder Services................................................ 31
Banking Laws........................................................ 32
OTHER INFORMATION...................................................... 32
Dividends, Distributions and Taxes.................................. 32
General Information................................................. 33
</TABLE>
2
<PAGE>
- --------------------------------------------------------------------------------
EXPENSE INFORMATION
- --------------------------------------------------------------------------------
The tables and Examples set forth below summarize the various costs and
expenses a shareholder will bear, directly or indirectly, associated with an
investment in Class A, Class B and Class C shares of each Fund. Shareholder
transaction expenses are fees paid directly from your account when you buy or
sell shares. For further information see "Purchase and Redemption of Shares"
and "General Information--Other Classes of Shares."
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
-------------- -------------- --------------
<S> <C> <C> <C>
Maximum Sales Charge Imposed on
Purchases (as a % of offering
price) 4.75% None None
Contingent Deferred Sales Charge
(as a % of original purchase
price or redemption proceeds,
whichever is lower) None(1) 5.00%(2) 1.00%(2)
</TABLE>
- -------
(1) Investments of $1 million or more are not subject to a front-end sales
charge, but may be subject to a contingent deferred sales charge upon
redemption within one year after the month of purchase.
(2) The deferred sales charge on Class B shares declines from 5% to 1% on
amounts redeemed within six years after the month of purchase. The deferred
sales charge on Class C shares is 1% on amounts redeemed within one year
after the month of purchase. No sales charge is imposed on redemptions made
thereafter. See "Purchase and Redemption of Shares" for more information.
Annual operating expenses reflect the normal operating expenses of a Fund,
and include costs such as management, distribution and other fees. The tables
below show for each of EVERGREEN FOUNDATION FUND, EVERGREEN TAX STRATEGIC
FOUNDATION FUND and EVERGREEN AMERICAN RETIREMENT FUND actual annual operating
expenses for the fiscal year ended March 31, 1998 and for EVERGREEN BALANCED
FUND estimated annual operating expenses for the fiscal year ending March 31,
1999. The Examples show what your costs would be for a hypothetical $1,000
investment over the periods indicated. The Examples assume that you reinvest
all of your dividends and that the Funds' average annual return will be 5%. THE
EXAMPLES ARE FOR ILLUSTRATION PURPOSES ONLY AND SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR ANNUAL RETURN. THE FUNDS' ACTUAL
EXPENSES AND RETURNS WILL VARY. For a more complete description of the various
costs and expenses borne by the Funds see "Organization and Service Providers."
EVERGREEN FOUNDATION FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES
- -------------------------
CLASS A CLASS B CLASS C
------- ------- -------
<S> <C> <C> <C>
Management Fees 0.77% 0.77% 0.77%
12b-1 Fees(3) 0.25% 1.00% 1.00%
Other Expenses 0.26% 0.27% 0.27%
---- ---- ----
Total 1.28% 2.04% 2.04%
==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
EXAMPLES
- --------
ASSUMING REDEMPTION AT ASSUMING NO
END OF PERIOD REDEMPTION
----------------------- ---------------
CLASS A CLASS B CLASS C CLASS B CLASS C
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
After 1 Year $ 60 $ 71 $ 31 $ 21 $ 21
After 3 Years $ 86 $ 94 $ 64 $ 64 $ 64
After 5 Years $114 $130 $110 $110 $110
After 10 Years $195 $208 $237 $208 $237
</TABLE>
EVERGREEN TAX STRATEGIC FOUNDATION FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES
- -------------------------
CLASS A CLASS B CLASS C
------- ------- -------
<S> <C> <C> <C>
Management Fees 0.88% 0.88% 0.88%
12b-1 Fees(3) 0.25% 1.00% 1.00%
Other Expenses 0.29% 0.30% 0.30%
---- ---- ----
Total 1.42% 2.18% 2.18%
==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
ASSUMING REDEMPTION AT ASSUMING NO
END OF PERIOD REDEMPTION
----------------------- ---------------
CLASS A CLASS B CLASS C CLASS B CLASS C
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
After 1 Year $ 61 $ 72 $ 32 $ 22 $ 22
After 3 Years $ 90 $ 98 $ 68 $ 68 $ 68
After 5 Years $121 $137 $117 $117 $117
After 10 Years $210 $223 $251 $223 $251
</TABLE>
EVERGREEN AMERICAN RETIREMENT FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES
- -------------------------
CLASS A CLASS B CLASS C
------- ------- -------
<S> <C> <C> <C>
Management Fees 0.75% 0.75% 0.75%
12b-1 Fees(3) 0.25% 1.00% 1.00%
Other Expenses 0.40% 0.40% 0.40%
---- ---- ----
Total 1.40% 2.15% 2.15%
==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
ASSUMING REDEMPTION AT ASSUMING NO
END OF PERIOD REDEMPTION
----------------------- ---------------
CLASS A CLASS B CLASS C CLASS B CLASS C
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
After 1 Year $ 61 $ 72 $ 32 $ 22 $ 22
After 3 Years $ 90 $ 97 $ 67 $ 67 $ 67
After 5 Years $120 $135 $115 $115 $115
After 10 Years $207 $220 $248 $220 $248
</TABLE>
3
<PAGE>
EVERGREEN BALANCED FUND
<TABLE>
<CAPTION>
ESTIMATED ANNUAL OPERATING EXPENSES
- -----------------------------------
CLASS A CLASS B CLASS C
------- ------- -------
<S> <C> <C> <C>
Management Fees 0.46% 0.46% 0.46%
12b-1 Fees(3) 0.25% 1.00% 1.00%
Other Expenses 0.25% 0.25% 0.25%
---- ---- ----
Total 0.96% 1.71% 1.71%
==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
EXAMPLES
- --------
ASSUMING REDEMPTION AT ASSUMING NO
END OF PERIOD REDEMPTION
----------------------- ---------------
CLASS A CLASS B CLASS C CLASS B CLASS C
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
After 1 Year $57 $ 67 $27 $ 17 $17
After 3 Years $77 $ 84 $54 $ 54 $54
After 5 Years N/A $113 N/A $ 93 N/A
After 10 Years N/A $173 N/A $173 N/A
</TABLE>
- -------
(3) Long-term shareholders may pay more than the economic equivalent front-end
sales charges permitted by the National Association of Securities Dealers,
Inc.
4
<PAGE>
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
The tables on the following pages present, for each Fund, financial
highlights for a share outstanding throughout each period indicated. The
information in the tables for the ten most recent fiscal years or the life of
the Fund if shorter has been audited by the respective Fund's independent
auditors as follows: EVERGREEN FOUNDATION FUND, EVERGREEN TAX STRATEGIC
FOUNDATION FUND and EVERGREEN AMERICAN RETIREMENT FUND for the fiscal year
ended March 31, 1998, the three months ended March 31, 1997 and the fiscal
year ended December 31, 1996 by KPMG Peat Marwick LLP and for the fiscal year
ended December 31, 1995 by other auditors; EVERGREEN BALANCED FUND for the
period ended March 31, 1998 and the fiscal years ended June 30, 1997 through
1988 (Class B shares only) by KPMG Peat Marwick LLP. The report of KPMG Peat
Marwick LLP on the audited information with respect to each Fund (except for
EVERGREEN FOUNDATION FUND, EVERGREEN TAX STRATEGIC FOUNDATION FUND and
EVERGREEN AMERICAN RETIREMENT FUND for the fiscal year ended December 31,
1995) is incorporated by reference into the Funds' SAI. The following
information for each Fund should be read in conjunction with the financial
statements and related notes which are incorporated by reference into the
Funds' SAI.
Further information about a Fund's performance is contained in the Funds'
annual report to shareholders, which may be obtained without charge.
EVERGREEN FOUNDATION FUND -- CLASS A SHARES
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
------------------ ---------------
1998# 1997** 1996 1995*
------- ------- ------- ------
<S> <C> <C> <C> <C>
NET ASSET VALUE BEGINNING OF YEAR....... $16.00 $16.13 $15.12 $12.24
------- ------- ------- ------
Income (loss) from investment operations
Net investment income.................. 0.44 0.12 0.50 0.44
Net realized and unrealized gain (loss)
on investments........................ 4.87 (0.13) 1.16 3.14
------- ------- ------- ------
Total from investment operations........ 5.31 (0.01) 1.66 3.58
------- ------- ------- ------
Less distributions
From net investment income............. (0.44) (0.12) (0.50) (0.47)
In excess of net investment income..... 0(a) 0 0 0
From net realized gain on investments.. (0.43) 0 (0.15) (0.23)
------- ------- ------- ------
Total distributions..................... (0.87) (0.12) (0.65) (0.70)
------- ------- ------- ------
Net asset value end of year............. $20.44 $16.00 $16.13 $15.12
======= ======= ======= ======
TOTAL RETURN+........................... 33.88% (0.16%) 11.27% 29.73%
RATIOS/SUPPLEMENTAL DATA
Ratios to average net assets
Total expenses......................... 1.28% 1.25%++ 1.24% 1.33%++
Total expenses, excluding indirectly
paid expenses......................... 1.28% N/A N/A N/A
Total expenses, excluding fee waivers &
expense reimbursements................ N/A N/A N/A 1.34%++
Net investment income.................. 2.39% 2.83%++ 3.39% 3.73%++
Portfolio turnover rate................. 9% 2% 10% 28%
Average commission rate paid per share.. $0.0657 $0.0670 $0.0649 N/A
NET ASSETS END OF YEAR (MILLIONS)....... $350 $220 $206 $107
EVERGREEN FOUNDATION FUND -- CLASS B SHARES
<CAPTION>
YEAR ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
------------------ ---------------
1998# 1997** 1996 1995*
------- ------- ------- ------
<S> <C> <C> <C> <C>
NET ASSET VALUE BEGINNING OF YEAR....... $15.94 $16.07 $15.07 $12.24
------- ------- ------- ------
Income (loss) from investment operations
Net investment income.................. 0.30 0.09 0.40 0.36
Net realized and unrealized gain (loss)
on investments........................ 4.84 (0.13) 1.15 3.09
------- ------- ------- ------
Total from investment operations........ 5.14 (0.04) 1.55 3.45
------- ------- ------- ------
Less distributions
From net investment income............. (0.30) (0.09) (0.40) (0.39)
In excess of net investment income..... (0.01) 0 0 0
From net realized gain on investments.. (0.43) 0 (0.15) (0.23)
------- ------- ------- ------
Total distributions..................... (0.74) (0.09) (0.55) (0.62)
------- ------- ------- ------
Net asset value end of year............. $20.34 $15.94 $16.07 $15.07
======= ======= ======= ======
TOTAL RETURN+........................... 32.81% (0.32%) 10.47% 28.68%
RATIOS/SUPPLEMENTAL DATA
Ratios to average net assets:
Total expenses......................... 2.04% 2.00%++ 1.99% 2.07%++
Total expenses, excluding indirectly
paid expenses......................... 2.04% N/A N/A N/A
Net investment income.................. 1.63% 2.07%++ 2.64% 2.99%++
Portfolio turnover rate................. 9% 2% 10% 28%
Average commission rate paid per share.. $0.0657 $0.0670 $0.0649 N/A
NET ASSETS END OF YEAR (MILLIONS)....... $1,124 $606 $570 $296
</TABLE>
- -------
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of class operations) to
December 31, 1995.
** The Fund changed its fiscal year end from December 31 to March 31,
effective March 31, 1997.
# Net investment income is based on average shares outstanding during the
period.
(a) Less than one cent per share.
5
<PAGE>
EVERGREEN FOUNDATION FUND -- CLASS C SHARES
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
---------------- ---------------
1998# 1997** 1996 1995*
------- ------- ------- ------
<S> <C> <C> <C> <C>
NET ASSET VALUE BEGINNING OF YEAR......... $15.94 $16.06 $15.07 $12.24
------- ------- ------- ------
Income (loss) from investment operations
Net investment income.................... 0.30 0.09 0.40 0.34
Net realized and unrealized gain (loss)
on investments.......................... 4.84 (0.13) 1.14 3.09
------- ------- ------- ------
Total from investment operations.......... 5.14 (0.04) 1.54 3.43
------- ------- ------- ------
Less distributions from
Net investment income.................... (0.30) (0.08) (0.40) (0.37)
In excess of net investment income....... (0.01) 0 0 0
Net realized gain on investments......... (0.43) 0 (0.15) (0.23)
------- ------- ------- ------
Total distributions....................... (0.74) (0.08) (0.55) (0.60)
------- ------- ------- ------
Net asset value end of year............... $20.34 $15.94 $16.06 $15.07
======= ======= ======= ======
TOTAL RETURN+............................. 32.81% (0.26%) 10.41% 28.49%
RATIOS/SUPPLEMENTAL DATA
Ratios to average net assets
Total expenses........................... 2.04% 2.00%++ 1.99% 2.23%++
Total expenses, excluding indirectly paid
expenses................................ 2.04% N/A N/A N/A
Total expenses, excluding fee waivers &
expense reimbursements.................. N/A N/A N/A 2.37%++
Net investment income.................... 1.63% 2.07%++ 2.64% 2.83%++
Portfolio turnover rate................... 9% 2% 10% 28%
Average commission rate paid per share.... $0.0657 $0.0670 $0.0649 N/A
NET ASSETS END OF YEAR (MILLIONS)......... $50 $28 $27 $11
</TABLE>
- -------
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of class operations) to
December 31, 1995.
** The Fund changed its fiscal year end from December 31 to March 31, effective
March 31, 1997.
# Net investment income is based on average shares outstanding during the
period.
6
<PAGE>
EVERGREEN TAX STRATEGIC FOUNDATION FUND -- CLASS A SHARES
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
---------------- ---------------
1998 1997** 1996 1995*
------- ------- ------- ------
<S> <C> <C> <C> <C>
NET ASSET VALUE BEGINNING OF YEAR......... $13.57 $13.50 $12.20 $10.44
------- ------- ------- ------
Income from investment operations
Net investment income.................... 0.31 0.07 0.27 0.29
Net realized and unrealized gain on
investments............................. 2.96 0.06# 1.59 2.24
------- ------- ------- ------
Total from investment operations.......... 3.27 0.13 1.86 2.53
------- ------- ------- ------
Less distributions
From net investment income............... (0.30) (0.06) (0.28) (0.31)
From net realized gain on investments.... (0.18) 0 (0.28) (0.46)
------- ------- ------- ------
Total distributions....................... (0.48) (0.06) (0.56) (0.77)
------- ------- ------- ------
Net asset value, end of year.............. $ 16.36 $ 13.57 $ 13.50 $12.20
======= ======= ======= ======
TOTAL RETURN+............................. 24.40% 0.98% 15.39% 24.82%
RATIOS/SUPPLEMENTAL DATA
Ratios to average net assets
Total expenses........................... 1.42% 1.38%++ 1.52% 1.75%++
Total expenses, excluding indirectly paid
expenses................................ 1.42% N/A N/A N/A
Total expenses, excluding fee waivers &
expense reimbursements.................. N/A N/A 1.76% 5.02%++
Net investment income.................... 2.21% 2.30%++ 2.39% 2.79%++
Portfolio turnover rate................... 50% 29% 88% 110%
Average commission rate paid per share.... $0.0659 $0.0656 $0.0648 N/A
NET ASSETS, END OF PERIOD (THOUSANDS)..... $69,879 $15,039 $11,166 $2,702
</TABLE>
EVERGREEN TAX STRATEGIC FOUNDATION FUND -- CLASS B SHARES
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
----------------- ---------------
1998 1997** 1996 1995*
-------- ------- ------- ------
<S> <C> <C> <C> <C>
NET ASSET VALUE BEGINNING OF YEAR........ $13.56 $13.49 $12.19 $10.31
-------- ------- ------- ------
Income from investment operations
Net investment income................... 0.21 0.05 0.19 0.22
Net realized and unrealized gain on
investments............................ 2.94 0.06# 1.59 2.37
-------- ------- ------- ------
Total from investment operations......... 3.15 0.11 1.78 2.59
-------- ------- ------- ------
Less distributions
From net investment income.............. (0.20) (0.04) (0.20) (0.25)
From net realized gain on investments... (0.18) 0 (0.28) (0.46)
-------- ------- ------- ------
Total distributions...................... (0.38) (0.04) (0.48) (0.71)
-------- ------- ------- ------
Net asset value, end of year............. $ 16.33 $ 13.56 $ 13.49 $12.19
======== ======= ======= ======
TOTAL RETURN+............................ 23.44% 0.84% 14.65% 25.61%
RATIOS/SUPPLEMENTAL DATA
Ratios to average net assets
Total expenses.......................... 2.18% 2.14%++ 2.27% 2.50%++
Total expenses, excluding indirectly
paid expenses.......................... 2.18% N/A N/A N/A
Total expenses, excluding fee waivers &
expense reimbursements................. N/A N/A 2.51% 3.65%++
Net investment income................... 1.46% 1.55%++ 1.64% 2.03%++
Portfolio turnover rate.................. 50% 29% 2% 110%
Average commission rate paid per share... $0.0659 $0.0656 $0.0648 N/A
NET ASSETS, END OF PERIOD (THOUSANDS).... $185,042 $38,838 $28,007 $6,559
</TABLE>
- -------
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 17, 1995 and January 6, 1995 (commencement of
class A and class B operations, respectively) to December 31, 1995.
** The Fund changed its fiscal year end from December 31 to March 31,
effective March 31, 1997.
# The per share amount is not in accord with the net realized and unrealized
gain (loss) for the period due to the timing of the sales of Fund shares and
the amount of per share realized and unrealized gains and losses at such
time.
7
<PAGE>
EVERGREEN TAX STRATEGIC FOUNDATION FUND -- CLASS C SHARES
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
---------------- ---------------
1998 1997** 1996 1995*
------- ------- ------- ------
<S> <C> <C> <C> <C>
NET ASSET VALUE BEGINING OF YEAR........ $ 13.53 $ 13.47 $ 12.19 $10.69
------- ------- ------- ------
Income from investment operations
Net investment income.................. 0.21 0.06 0.18 0.22
Net realized and unrealized gain on
investments........................... 2.94 0.05# 1.58 1.99
------- ------- ------- ------
Total from investment operations........ 3.15 0.11 1.76 2.21
------- ------- ------- ------
Less distributions
From net investment income............. (0.20) (0.05) (0.20) (0.25)
From net realized gain on investments.. (0.18) 0 (0.28) (0.46)
------- ------- ------- ------
Total distributions..................... (0.38) (0.05) (0.48) (0.71)
------- ------- ------- ------
Net asset value end of year............. $ 16.30 $ 13.53 $ 13.47 $12.19
======= ======= ======= ======
TOTAL RETURN+........................... 23.49% 0.77% 14.54% 21.19%
RATIOS/SUPPLEMENTAL DATA
Ratios to average net assets
Total expenses......................... 2.18% 2.13%*++ 2.25% 2.50%++
Total expenses, excluding indirectly
paid expenses......................... 2.18% N/A N/A N/A
Total expenses, excluding fee waivers &
expense reimbursements................ N/A N/A 2.48% 18.91%++
Net investment income.................. 1.46% 1.55%**++ 1.64% 2.07%++
Portfolio turnover rate................. 50% 29% 88% 110%
Average commission rate paid per share.. $0.0659 $0.0656 $0.0648 N/A
NET ASSETS END OF YEAR (THOUSANDS)...... $27,699 $ 5,086 $ 4,108 $ 496
</TABLE>
- -------
+Initial sales charge or contingent deferred sales charge is not reflected.
++Annualized.
* For the period from March 3, 1995 (commencement of class C operations) to
December 31, 1995.
**The Fund changed its fiscal year end from December 31 to March 31, effective
March 31, 1997.
# The per share amount is not in accord with the net realized and
unrealized gain (loss) for the period due to the timing of the sales of Fund
shares and the amount of per share realized and unrealized gains and losses
at such time.
8
<PAGE>
EVERGREEN AMERICAN RETIREMENT FUND -- CLASS A SHARES
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
---------------- ---------------
1998 1997** 1996 1995*
------- ------- ------- ------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR........ $13.74 $13.86 $12.82 $10.65
------- ------- ------- ------
Income (loss) from investment operations
Net investment income.................... 0.49 0.11 0.45 0.41
Net realized and unrealized gain (loss)
on investments.......................... 3.29 (0.12) 1.12 2.22
------- ------- ------- ------
Total from investment operations.......... 3.78 (0.01) 1.57 2.63
------- ------- ------- ------
Less distributions
From net investment income............... (0.48) (0.11) (0.42) (0.46)
From net realized gain on investments.... (0.34) 0 (0.11) 0
------- ------- ------- ------
Total distributions....................... (0.82) (0.11) (0.53) (0.46)
------- ------- ------- ------
Net asset value, end of year.............. $16.70 $13.74 $13.86 $12.82
======= ======= ======= ======
TOTAL RETURN+............................. 28.02% (0.09%) 12.46% 25.11%
RATIOS/SUPPLEMENTAL DATA
Ratios to average net assets
Total expenses........................... 1.40% 1.37%++ 1.30% 1.37%++
Total expenses, excluding indirectly paid
expenses................................ 1.40% N/A N/A N/A
Total expenses, excluding fee waivers &
expense reimbursements.................. N/A 1.68%++ 1.33% 10.96%++
Net investment income.................... 3.21% 3.43%++ 3.53% 3.73%++
Portfolio turnover rate................... 34% 9% 16% 49%
Average commission rate paid per share.... $0.0596 $0.0606 $0.0619 N/A
NET ASSETS, END OF YEAR (THOUSANDS)....... $29,005 $14,590 $11,116 $1,335
</TABLE>
EVERGREEN AMERICAN RETIREMENT FUND -- CLASS B SHARES
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
----------------- ---------------
1998 1997** 1996 1995*
-------- ------- ------- ------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR....... $13.67 $13.80 $12.80 $10.65
-------- ------- ------- ------
Income (loss) from investment operations
Net investment income................... 0.38 0.09 0.36 0.35
Net realized and unrealized gain (loss)
on investments......................... 3.26 (0.13) 1.09 2.20
-------- ------- ------- ------
Total from investment operations......... 3.64 (0.04) 1.45 2.55
-------- ------- ------- ------
Less distributions
From net investment income.............. (0.36) (0.09) (0.34) (0.40)
From net realized gain on investments... (0.34) 0 (0.11) 0
-------- ------- ------- ------
Total distributions...................... (0.70) (0.09) (0.45) (0.40)
-------- ------- ------- ------
Net asset value, end of year............. $16.61 $13.67 $13.80 $12.80
======== ======= ======= ======
TOTAL RETURN+............................ 27.06% (0.32%) 11.49% 24.32%
RATIOS/SUPPLEMENTAL DATA
Ratios to average net assets
Total expenses.......................... 2.15% 2.11%++ 2.06% 2.12%++
Total expenses, excluding indirectly
paid expenses.......................... 2.15% N/A N/A N/A
Total expenses, excluding fee waivers &
expense reimbursements................. N/A 2.43%++ 2.09% 4.20%++
Net investment income................... 2.46% 2.68%++ 2.79% 2.97%++
Portfolio turnover rate.................. 34% 9% 16% 49%
Average commission rate paid per share... $0.0596 $0.0606 $0.0619 N/A
NET ASSETS, END OF YEAR (THOUSANDS)...... $158,252 $76,791 $57,622 $4,839
</TABLE>
- -------
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of class operations) to
December 31, 1995.
** The Fund changed its fiscal year end from December 31 to March 31, effective
March 31, 1997.
9
<PAGE>
EVERGREEN AMERICAN RETIREMENT FUND -- CLASS C SHARES
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
---------------- ----------------
1998 1997** 1996 1995*
------- ------- ------- -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR....... $13.70 $ 13.83 $12.81 $10.65
------- ------- ------- -------
Income (loss) from investment operations
Net investment income................... 0.38 0.09 0.36 0.36
Net realized and unrealized gain (loss)
on investments......................... 3.27 (0.13) 1.11 2.19
------- ------- ------- -------
Total from investment operations......... 3.65 (0.04) 1.47 2.55
------- ------- ------- -------
Less distributions
From net investment income.............. (0.36) (0.09) (0.34) (0.39)
From net realized gain on investments... (0.34) 0 (0.11) 0
------- ------- ------- -------
Total distributions...................... (0.70) (0.09) (0.45) (0.39)
------- ------- ------- -------
Net asset value, end of year............. $16.65 $13.70 $13.83 $12.81
======= ======= ======= =======
TOTAL RETURN+............................ 27.08% (0.32%) 11.63% 24.24%
RATIOS/SUPPLEMENTAL DATA
Ratios to average net assets
Total expenses.......................... 2.15% 2.12%++ 2.05% 2.10%++
Total expenses, excluding indirectly
paid expenses.......................... 2.15% N/A N/A N/A
Total expenses, excluding fee waivers &
expense reimbursements................. N/A 2.43%++ 3.08% 103.52%++
Net investment income................... 2.46% 2.65%++ 2.80% 2.96%++
Portfolio turnover rate.................. 34% 9% 16% 49%
Average commission rate paid per share... $0.0596 $0.0606 $0.0619 N/A
NET ASSETS, END OF YEAR (THOUSANDS)...... $2,777 $1,769 $1,487 $110
</TABLE>
- -------
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of class operations) to
December 31, 1995.
** The Fund changed its fiscal year end from December 31 to March 31, effective
March 31, 1997.
10
<PAGE>
EVERGREEN BALANCED FUND -- CLASS A SHARES
<TABLE>
<CAPTION>
PERIOD ENDED
MARCH 31,
1998*#
------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ............................. $12.36
-------
Income from investment operations:
Net investment income ........................................... 0.08
Net realized and unrealized gain (loss) on investments, futures
contracts and foreign currency related transactions ............ 0.81
-------
Total from investment operations ................................. 0.89
-------
Less distributions:
From net investment income ...................................... (0.12)
From net realized gain on investments, futures contracts and
foreign currency related transactions .......................... (0.26)
-------
Total distributions .............................................. (0.38)
-------
Net asset value, end of period ................................... $12.87
=======
TOTAL RETURN+ .................................................... 7.38%
RATIOS/SUPPLEMENTAL DATA:
RATIOS TO AVERAGE NET ASSETS: ....................................
Total expenses .................................................. 0.99%++
Total expenses, excluding indirectly paid expenses .............. 0.99%++
Net investment income ........................................... 3.25%++
Portfolio turnover rate .......................................... 76%
Average commission rate paid per share ........................... $0.0594
NET ASSETS END OF PERIOD (MILLIONS) .............................. $1,277
</TABLE>
- -------
* For the period from January 20, 1998 (commencement of class operations) to
March 31, 1998.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
# Net investment income is based on average shares outstanding during the
period.
11
<PAGE>
EVERGREEN BALANCED FUND -- CLASS B SHARES
<TABLE>
<CAPTION>
PERIOD ENDED YEAR ENDED JUNE 30,
MARCH 31, ----------------------------------------------------------------------------
1998*# 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
------------ ------ ------ ------ ------ ------ ------ ----- ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
BEGINNING OF YEAR...... $12.95 $11.33 $10.09 $9.26 $10.10 $9.77 $9.16 $9.10 $9.12 $8.37 $9.74
------- ------ ------ ------ ------ ------ ------ ----- ----- ------ ------
Income (loss) from
investment operations:
Net investment income.. 0.26 0.30 0.29 0.31 0.28 0.31 0.32 0.45 0.50 0.46 0.47
Net realized and
unrealized gain (loss)
on investments,
futures contracts and
foreign currency
related transactions.. 1.53 2.07 1.42 0.96 (0.37) 0.66 0.75 0.18 0.20 0.83 (0.82)
------- ------ ------ ------ ------ ------ ------ ----- ----- ------ ------
Total from investment
operations............. 1.79 2.37 1.71 1.27 (0.09) 0.97 1.07 0.63 0.70 1.29 (0.35)
------- ------ ------ ------ ------ ------ ------ ----- ----- ------ ------
Less distributions:
From net investment
income................ (0.27) (0.30) (0.24) (0.31) (0.28) (0.31) (0.32) (0.50) (0.50) (0.54) (0.60)
In excess of net
investment income..... 0 0 (0.03) (0.02) (0.07) (0.09) (0.14) (0.04) (0.04) 0 0
From net realized gain
on investments,
futures contracts and
foreign currency
related transactions.. (1.59) 0 (0.20) (0.02) (0.25) (0.24) 0 (0.03) (0.18) 0 (0.42)
In excess of net
realized gain on
investments, futures
contracts and foreign
currency related
transactions.......... 0 (0.45) 0 (0.09) (0.13) 0 0 0 0 0 0
Tax basis return of
capital............... 0 0 0 0 (0.02) 0 0 0 0 0 0
------- ------ ------ ------ ------ ------ ------ ----- ----- ------ ------
Total distributions..... (1.86) (0.75) (0.47) (0.44) (0.75) (0.64) (0.46) (0.57) (0.72) (0.54) (1.02)
------- ------ ------ ------ ------ ------ ------ ----- ----- ------ ------
Net asset value end of
year................... $12.88 $12.95 $11.33 $10.09 $9.26 $10.10 $9.77 $9.16 $9.10 $9.12 $8.37
======= ====== ====== ====== ====== ====== ====== ===== ===== ====== ======
TOTAL RETURN+........... 14.89% 21.95% 17.35% 14.20% (1.16%) 10.39% 11.86% 7.49% 7.99% 16.07% (3.37%)
RATIOS/SUPPLEMENTAL
DATA:
Ratios to average net
assets:
Total expenses......... 1.35%++ 1.70% 1.72% 1.77% 1.71% 1.93% 1.97% 1.88% 1.99% 1.96% 1.91%
Total expenses,
excluding indirectly
paid expenses......... 1.35%++ 1.69% 1.71% N/A N/A N/A N/A N/A N/A N/A N/A
Net investment income.. 2.66%++ 2.50% 2.71% 3.33% 2.81% 3.07% 3.25% 4.56% 4.94% 5.48% 5.34%
Portfolio turnover
rate................... 76% 89% 96% 88% 88% 74% 52% 60% 35% 49% 64%
Average commission rate
paid per share......... $0.0594 $.0400 $.0031 N/A N/A N/A N/A N/A N/A N/A N/A
NET ASSETS END OF YEAR
(MILLIONS)............. $ 560 $1,625 $1,481 $1,345 $1,390 $1,464 $1,184 $902 $827 $712 $685
</TABLE>
- -------
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* The Fund changed its fiscal year end from June 30 to March 31, effective
March 31, 1998.
# Net investment income is based on average shares outstanding during the
period.
12
<PAGE>
EVERGREEN BALANCED FUND -- CLASS C SHARES
<TABLE>
<CAPTION>
CLASS C
------------
PERIOD ENDED
MARCH 31,
1998*#
------------
<S> <C>
NET ASSET VALUE BEGINNING OF PERIOD............................... $ 12.43
-------
Income from investment operations:
Net investment income............................................ 0.05
Net realized and unrealized gain on investments, futures
contracts and foreign currency related transactions............. 0.75
-------
Total from investment operations.................................. 0.80
-------
Less distributions:
From net investment income....................................... (0.09)
From net realized gain on investments, futures contracts and
foreign currency related transactions........................... (0.26)
-------
Total distributions............................................... (0.35)
-------
Net asset value, end of period.................................... $12.88
=======
TOTAL RETURN+..................................................... 6.58%
RATIOS/SUPPLEMENTAL DATA
Ratios to average net assets:
Total expenses................................................... 1.76%++
Total expenses, excluding indirectly paid expenses............... 1.76%++
Net investment income............................................ 2.41%++
Portfolio turnover rate........................................... 76%
Average commission rate paid per share............................ $0.0594
NET ASSETS END OF PERIOD (THOUSANDS).............................. $ 829
</TABLE>
- -------
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 22, 1998 (commencement of class operations) to
March 31, 1998.
# Net investment income is based on average shares outstanding during the
period.
13
<PAGE>
- -------------------------------------------------------------------------------
DESCRIPTION OF THE FUNDS
- -------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
Each Fund's investment objective is nonfundamental; as a result, a Fund
may change its objective without a shareholder vote. Each Fund has also
adopted certain fundamental investment policies which are mainly designed to
limit a Fund's exposure to risk. Each Fund's fundamental policies cannot be
changed without a shareholder vote. See the SAI for more information regarding
a Fund's fundamental investment policies or other related investment policies.
There can be no assurance that a Fund's investment objective will be achieved.
In addition to the investment policies detailed below, each Fund may
employ certain additional investment strategies which are discussed in
"Investment Practices and Restrictions" below.
EVERGREEN FOUNDATION FUND
The investment objectives of EVERGREEN FOUNDATION FUND, in order of
priority, are reasonable income, conservation of capital and capital
appreciation. The Fund seeks to achieve these objectives by investing in a
combination of common stocks, preferred stocks, securities convertible into or
exchangeable for common stocks, corporate and U.S. government debt
obligations, and short-term debt instruments, such as commercial paper. The
Fund's common stock investments will include those which (at the time of
purchase) pay dividends and in the view of the Fund's investment advisor have
potential for capital enhancement.
The Fund's asset allocation will vary from time to time in accordance
with changing economic and market conditions, including: inflation rates,
business cycle trends, business regulations and tax law impacts on the
investment markets. The composition of its portfolio will be largely
unrestricted and subject to the discretion of the Fund's investment advisor.
Under normal circumstances, the Fund anticipates that at least 25% of its net
assets will consist of fixed income securities. The balance will be invested
in equity securities (including securities convertible into equity
securities).
In selecting fixed income securities for the Fund's portfolio, emphasis
will be placed on issues expected to fluctuate little in value other than as a
result of changes in prevailing interest rates. The market values of the debt
obligations in the Fund's portfolio can be expected to vary inversely to
changes in prevailing interest rates. The Fund may at times emphasize the
generation of interest income by investing in high-yielding debt securities,
with short, medium or long-term maturities. While fixed income investments
will generally be made for the purpose of generating interest income,
investments in medium to long-term debt securities (i.e., those with
maturities from five to ten years and those with maturities over ten years,
respectively) may be made with a view to realizing capital appreciation when
the Fund's investment advisor believes changes in interest rates will lead to
an increase in the values of such securities. The fixed income portion of the
Fund's portfolio may include:
1. Marketable obligations of, or guaranteed by, the U.S. government, its
agencies or instrumentalities, including issues of the U.S. Treasury, such as
bills, certificates of indebtedness, notes and bonds, and issues of agencies
and instrumentalities established under the authority of an act of Congress.
Some of these securities are supported by the full faith and credit of the
U.S. government, and others are supported only by the credit of the agency or
instrumentality. Agencies or instrumentalities whose securities are supported
by the full faith and credit of the United States include, but are not limited
to, the Federal Housing Administration, Export-Import Bank of the United
States, Small Business Administration and Government National Mortgage
Association. Agencies or instrumentalities whose securities are supported only
by the credit of the agency or instrumentality include the Interamerican
Development Bank and the International Bank for Reconstruction and
Development. These obligations are supported by appropriated but unpaid
commitments of their member countries. There are no assurances that the
commitments will be fulfilled in the future.
2. Corporate obligations rated no lower than A by Moody's Investors
Service ("Moody's"), or A-2 by Standard and Poor's Rating Services ("S&P").
3. Obligations of banks or banking institutions having total assets of
more than $2 billion which are members of the Federal Deposit Insurance
Corporation.
4. Commercial paper of high quality (rated no lower than A-2 by S&P or
Prime-2 by Moody's or, if not rated, issued by companies which have an
outstanding long-term debt issue rated AAA or AA by S&P or Aaa or Aa by
Moody's). For a description of such ratings see the SAI.
14
<PAGE>
Certain obligations may be entitled to the benefit of standby letters of
credit or similar commitments issued by banks and, in such instances, the
Fund's investment advisor will take into account the obligation of the bank in
assessing the quality of such security.
EVERGREEN TAX STRATEGIC FOUNDATION FUND
The investment objective of EVERGREEN TAX STRATEGIC FOUNDATION FUND is to
maximize the after-tax "total return" on its portfolio of investments. Total
return consists of current income and capital appreciation in the value of its
shares. The Fund seeks to achieve this objective by investing in common
stocks, preferred stocks and securities convertible into or exchangeable for
common stocks. It will also invest in debt obligations issued by states and
possessions of the United States and by the District of Columbia, and their
political subdivisions and duly constituted authorities, the interest from
which is exempt from federal income tax. Such securities are generally known
as Municipal Securities. The Fund may also invest in taxable debt securities.
(See "Investment Practices and Restrictions--Municipal Securities and Taxable
Fixed-Income Investments" below.)
To the extent that the Fund seeks capital appreciation, it expects that
its investments will provide growth over the long-term. Investments, however,
may be made on occasion for the purpose of short-term capital appreciation if
the Fund believes that such investments will benefit its shareholders. The
Fund may make investments in securities regardless of whether or not such
securities are traded on a national securities exchange. The values of
portfolio securities and their yields are expected to fluctuate over time
because of varying general economic and market conditions.
The Fund's asset allocation will also vary from time to time in
accordance with changing economic and market conditions, including: inflation
rates, business cycle trends, business regulations and tax law impacts on the
investment markets. The composition of its portfolio will be largely
unrestricted and subject to the discretion of the Fund's investment advisor.
Under normal circumstances, the Fund anticipates that, at the close of each
quarter of its taxable year, at least 50% of the value of its total assets
will be invested in Municipal Securities. The balance will be invested in
equity securities (including securities convertible into equity securities).
With respect to the fixed income portion of the Fund's portfolio,
emphasis will be placed on acquiring issues expected to fluctuate little in
value, except with changes in prevailing interest rates. The market values of
the Municipal Securities in the Fund's portfolio can be expected to vary
inversely to changes in prevailing interest rates. The Fund may at times
emphasize the generation of interest income by investing in high-yielding debt
securities, with short, medium or long-term maturities. Investment in medium
(i.e., with maturities from five to ten years) to long-term (i.e., with
maturities over ten years) debt securities may also be made with a view to
realizing capital appreciation when the Fund's investment advisor believes
that interest rates on such investments may decline, thereby increasing their
market value.
In general, the Fund will invest predominately in Municipal Securities
only if they are determined to be of high or upper medium quality. These
include bonds rated BBB or higher by S&P or Baa or higher by Moody's or any
other nationally recognized statistical rating organization ("SRO"). The Fund
may purchase Municipal Securities which are unrated at the time of purchase,
if such securities are determined by the Fund's investment advisor to be of
comparable quality to such rated securities. Certain Municipal Securities
(primarily variable rate demand notes) may be entitled to the benefits of
standby letters of credit or similar commitments issued by banks and, in such
instances, the Fund's investment advisor will take into account the
obligations of the banks in assessing the quality of such securities. Medium
grade bonds are more susceptible to adverse economic conditions or changing
circumstances than higher grade bonds. For a description of such ratings see
the SAI.
Interest income on certain types of bonds issued after August 7, 1986 to
finance nongovernmental activities is an item of "tax-preference" subject to
the federal alternative minimum tax for individuals and corporations. To the
extent the Fund invests in these "private activity" bonds (some of which were
formerly referred to as "industrial development" bonds), individual and
corporate shareholders, depending on their status, may be subject to the
alternative minimum tax on that part of the Fund's distributions derived from
the bonds. As a matter of fundamental policy, 80% of the Fund's investments in
Municipal Securities will be invested in such securities, the interest from
which is not subject to the federal alternative minimum tax.
EVERGREEN AMERICAN RETIREMENT FUND
The investment objectives of EVERGREEN AMERICAN RETIREMENT FUND in order
of priority are conservation of capital, reasonable income and capital growth.
The Fund offers a structured investment approach designed specifically for
retirees and persons contemplating retirement which may also be appropriate
for the qualified retirement plans of smaller companies.
15
<PAGE>
The Fund will invest in a diversified and balanced portfolio of equity
and fixed income securities, with emphasis on income-producing securities
which appear to have potential for capital enhancement. Ordinarily, the Fund
anticipates that approximately 50% of its portfolio will consist of equity
securities (including securities convertible into equity securities) and 50%
of fixed income securities. The Fund's investment advisor may vary the amount
invested in each type of security in response to changing market conditions to
take advantage of relative undervaluation in either the stock or bond markets.
The Fund will, however, not make an additional investment in equity securities
if more than 75% of its total assets at the time the investment is made would
include investments in equity securities. Generally, approximately half of the
equity portion of the Fund's portfolio will be invested in common stocks which
the Fund's investment advisor believes will yield current income and have
potential for long-term capital growth and half in bonds and preferred stocks
convertible into such common stock.
In addition, the Fund may invest up to 20% of its assets in securities of
foreign issuers.
With respect to the fixed income portion of the Fund's portfolio,
emphasis will be placed on acquiring non-speculative issues expected to
fluctuate little in value, except with changes in prevailing interest rates.
The market value of the debt obligations in the Fund's portfolio can be
expected to vary inversely to changes in prevailing interest rates. The Fund
may at times emphasize the generation of interest income by investing in high-
yielding debt securities, with short and medium to long-term maturities.
Investment in medium (i.e., with maturities from five to ten years) to long-
term (i.e., with maturities over ten years) debt securities may also be made
with a view to realizing capital appreciation when the Fund's investment
advisor believes that interest rates on such investments may decline, thereby
increasing their market values.
Normally, the Fund anticipates that approximately half of the fixed
income portion of the Fund's portfolio will be invested in marketable
obligations of, or guaranteed by, the U.S. government, its agencies or
instrumentalities which are supported by the full faith and credit of the
United States or by the right of the issuer to borrow from the U.S. Treasury.
These include issues of the Treasury, such as bills, certificates of
indebtedness, notes and bonds, and issues of agencies and instrumentalities
established under the authority of an act of Congress. Agencies or
instrumentalities whose securities are supported by the full faith and credit
of the United States include, but are not limited to, the Federal Housing
Administration, Export-Import Bank of the United States, Small Business
Administration and Government National Mortgage Association. Examples of
agencies or instrumentalities whose securities are supported by the right of
the issuer to borrow from the Treasury include, but are not limited to, the
Federal Home Loan Bank, Federal Intermediate Credit Banks, Federal National
Mortgage Association and Tennessee Valley Authority. The balance will be
invested in corporate obligations rated no lower than A by Moody's or S&P.
EVERGREEN BALANCED FUND
EVERGREEN BALANCED FUND seeks current income.
The Fund invests in a combination of equity and debt securities chosen
primarily for their potential for current income and secondarily, to the
extent consistent with the Fund's investment objective, for their potential
for capital appreciation. The Fund normally emphasizes securities having a
liberal current yield consistent with investment quality on which the interest
or dividend payments are considered reasonably secure. Under normal
circumstances, the Fund maintains at least 25% of its total assets in fixed
income senior securities. The Fund will invest, under normal circumstances, at
least 50% of its total assets in equity securities. The Fund may invest in any
type of security, including bonds, debentures and income obligations as well
as common and preferred stocks.
Debt securities, which include both secured and unsecured obligations,
will generally, at the time of investment, be rated within the four highest
categories by S&P (AAA, AA, A and BBB), by Moody's (Aaa, Aa, A and Baa), by
Fitch IBCA, Inc. ("Fitch") (AAA, AA, A and BBB), or if not rated or rated
under a different system, will be of comparable quality to obligations so
rated, as determined by the Fund's investment advisor.
The Fund may also invest in limited partnerships, including master limited
partnerships, and in foreign securities (up to 25% of its assets). The Fund
may also invest up to 25% of its assets in below- investment grade securities
issued by the U.S. and foreign issuers having a rating range of BB to CCC by
S&P or Fitch and/or Ba to Caa by Moody's, or if unrated or rated under a
different system, believed by the Fund's investment advisor to be of
comparable quality.
Securities rated BB or lower by S&P or Fitch, or Ba or lower by Moody's,
are considered predominantly speculative with respect to the ability of the
issuer to meet principal and interest payments. For more information on below-
investment grade securities, see the SAI.
16
<PAGE>
The Fund's debt securities may include zero coupon bonds and payment-in-
kind securities ("PIKs").
The Fund may invest in certain types of derivative instruments, including
mortgage-related securities, such as collateralized mortgage obligations, and
enter into interest rate transactions, such as "swaps," "caps," and "floors."
These vehicles can also be combined to create more complex products called
hybrid derivatives or structured securities. For more information see the SAI.
In addition to the investment policies detailed above, the Funds may
employ certain additional investment strategies which are discussed in
"Investment Practices and Restrictions."
INVESTMENT PRACTICES AND RESTRICTIONS
Defensive Investments. The Funds may invest without limitation in high quality
money market instruments, such as notes, certificates of deposit or bankers'
acceptances, or U.S. government securities if, in the opinion of each Fund's
investment advisor, market conditions warrant a temporary defensive investment
strategy.
Borrowing. Each Fund may borrow from banks in an amount up to 33 1/3% of its
total assets, taken at market value. Each Fund may also borrow an additional
5% of its total assets from banks and others. A Fund may only borrow as a
temporary measure for extraordinary or emergency purposes such as the
redemption of Fund shares. A Fund will not purchase securities while
borrowings are outstanding except to exercise prior commitments and to
exercise subscription rights. In addition to borrowing for temporary or
emergency purposes, EVERGREEN AMERICAN RETIREMENT FUND may borrow for the
purpose of leveraging. See "Special Risk Considerations--Leverage" below.
Securities Lending. In order to generate income and to offset expenses, the
Funds may lend portfolio securities to brokers, dealers and other financial
institutions. The Funds will only enter into loan arrangements with
creditworthy borrowers and will receive collateral in the form of cash or U.S.
government securities equal to at least 100% of the value of the securities
loaned. Loans of securities by the Funds may not exceed 33 1/3% of the value
of the Funds' total assets. There is a risk that when lending portfolio
securities, the securities may not be available to a Fund on a timely basis
and a Fund may, therefore, lose the opportunity to sell the securities at a
desirable price. Also, if the borrower files for bankruptcy or becomes
insolvent, a Fund's ability to dispose of the securities may be delayed.
Illiquid Securities. Each Fund may invest up to 15% of its net assets in
illiquid securities and other securities which are not readily marketable.
Repurchase agreements with maturities longer than seven days will be included
for the purposes of the foregoing 15% limit. The inability of a Fund to
dispose of illiquid or not readily marketable investments readily or at a
reasonable price could impair a Fund's ability to raise cash for redemptions
or other purposes.
Restricted Securities. The Funds may invest in restricted securities,
including securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933 (the "1933 Act"). Generally, Rule 144A establishes a
safe harbor from the registration requirements of the 1933 Act for resale by
large institutional investors of securities not publicly traded in the United
States. Each Fund's investment advisor determines the liquidity of Rule 144A
securities according to guidelines and procedures adopted by the Trust's Board
of Trustees. The Board of Trustees monitors the investment advisor's
application of those guidelines and procedures. Securities eligible for resale
pursuant to Rule 144A, which a Fund's investment advisor has determined to be
liquid or readily marketable, are not subject to the 15% limit on illiquid
securities.
Repurchase Agreements. The Funds may invest in repurchase agreements. A
repurchase agreement is an agreement by which a Fund purchases a security
(usually U.S. government securities) for cash and obtains a simultaneous
commitment from the seller (usually a bank or broker/dealer) to repurchase the
security at an agreed-upon price and specified future date. The repurchase
price reflects an agreed-upon interest rate for the time period of the
agreement. A Fund's risk is the inability of the seller to pay the agreed-upon
price on the delivery date. However, this risk is tempered by the ability of a
Fund to sell the security in the open market in the case of a default. In such
a case, a Fund may incur costs in disposing of the security which would
increase Fund expenses. A Fund's investment advisor will monitor the
creditworthiness of the firms with which a Fund enters into repurchase
agreements.
Reverse Repurchase Agreements. Each Fund may enter into reverse repurchase
agreements. A reverse repurchase agreement is an agreement by a Fund to sell a
security and repurchase it at a specified time and price. A Fund could lose
money if the market values of the obligations it sold decline below their
repurchase
17
<PAGE>
prices. Reverse repurchase agreements may be considered a form of borrowing,
and, therefore, a form of leverage. Leverage may magnify gains or losses of
the Funds.
Options and Futures. EVERGREEN AMERICAN RETIREMENT FUND may write covered call
options on certain portfolio securities in an attempt to earn income and
realize a higher return on its portfolio. A call option may not be written by
the Fund if afterwards securities comprising more than 15% of the market value
of the equity securities of the Fund would be subject to call options. The
Fund realizes income from the premium paid to it in exchange for writing the
call option. Once it has written a call option on a portfolio security and
until the expiration of such option, the Fund forgoes the opportunity to
profit from increases in the market price of such security in excess of the
exercise price of the call option. Should the price of the security on which a
call has been written decline, the Fund retains the risk of loss, which would
be offset to the extent the Fund has received premium income. The Fund will
only write "covered" call options traded on U.S. national securities
exchanges. An option will be deemed covered when either (i) the Fund owns the
security (or securities convertible into such security) on which the option
has been written in an amount sufficient to satisfy the obligations arising
under the option, or (ii) the Fund's custodian maintains cash or high-grade
liquid debt securities belonging to the Fund in an amount not less than the
amount needed to satisfy the Fund's obligations with respect to such options.
A "closing purchase transaction" may be entered into with respect to a call
option written by the Fund for the purpose of closing its position.
EVERGREEN AMERICAN RETIREMENT FUND may also purchase futures contracts,
including futures contracts based on securities indices, and write options on
such contracts. The Fund intends to enter into such contracts and related
options for hedging purposes. The Fund may enter into other types of futures
contracts that may become available and relate to the securities held by the
Fund.
EVERGREEN BALANCED FUND may engage in options and futures transactions.
Options and futures transactions are intended to enable the Fund to manage
market, interest rate or exchange rate risk. The Fund does not use these
transactions for speculation or leverage.
EVERGREEN BALANCED FUND may attempt to hedge all or a portion of its
portfolio through the purchase of both put and call options on its portfolio
securities and listed put options on financial futures contracts for portfolio
securities. The Fund may also purchase call options on financial futures
contracts. The Fund may also write covered call options on its portfolio
securities to attempt to increase its current income. The Fund will maintain
its positions in securities, option rights and segregated cash subject to puts
and calls until the options are exercised, closed or have expired. An option
position may be closed out only on an exchange which provides a secondary
market for an option of the same series.
EVERGREEN BALANCED FUND may write covered call and put options. By
writing a call option, a Fund becomes obligated during the term of the option
to deliver the securities underlying the option upon payment of the exercise
price. By writing a put option, a Fund becomes obligated during the term of
the option to purchase the securities underlying the option at the exercise
price if the option is exercised. The Funds may also write straddles
(combinations of covered puts and calls on the same underlying security).
EVERGREEN BALANCED FUND may only write "covered" options. This means that
so long as the Fund is obligated as the writer of a call option, it will own
the underlying securities subject to the option or, in the case of call
options on U.S. Treasury bills, the Fund might own substantially similar U.S.
Treasury bills. The Fund will be considered "covered" with respect to a put
option it writes if, so long as it is obligated as the writer of the put
option, it deposits and maintains with its custodian in a segregated account
liquid assets having a value equal to or greater than the exercise price of
the option.
The principal reason for writing call or put options is to obtain,
through a receipt of premiums, a greater current return than would be realized
on the underlying securities alone. The Fund receives a premium from writing a
call or put option which it retains whether or not the option is exercised. By
writing a call option, the Fund might lose the potential for gain on the
underlying security while the option is open, and by writing a put option the
Fund might become obligated to purchase the underlying securities for more
than their current market prices upon exercise.
EVERGREEN BALANCED FUND may also, as previously stated, purchase futures
contracts and options thereon. A futures contract is a firm commitment by two
parties: the seller, who agrees to make delivery of the specific type of
instrument called for in the contract ("going short"), and the buyer, who
agrees to take delivery of the instrument ("going long") at a certain time in
the future. Financial futures contracts call for the delivery of particular
debt instruments issued or guaranteed by the U.S. Treasury or by specific
agencies or instrumentalities
18
<PAGE>
of the U.S. government. If the Fund enters into financial futures contracts
directly to hedge its holdings of fixed income securities, it would enter into
contracts to deliver securities at an undetermined price (i.e., "go short") to
protect itself against the possibility that the prices of its fixed income
securities may decline during the Fund's anticipated holding period. The Fund
would agree to purchase securities in the future at a predetermined price
(i.e., "go long") to hedge against a decline in market interest rates.
EVERGREEN BALANCED FUND may also enter into currency and other financial
futures contracts and write options on such contracts. The Fund intends to
enter into such contracts and related options for hedging purposes. The Fund
will enter into futures on securities, currencies or index-based futures
contracts in order to hedge against changes in interest or exchange rates or
securities prices. A futures contract on securities or currencies is an
agreement to buy or sell securities or currencies during a designated month at
whatever price exists at that time. A futures contract on a securities index
does not involve the actual delivery of securities, but merely requires the
payment of a cash settlement based on changes in the securities index. The
Fund does not make payment or deliver securities upon entering into a futures
contract. Instead, it puts down a margin deposit, which is adjusted to reflect
changes in the value of the contract and which remains in effect until the
contract is terminated.
The Fund may sell or purchase currency and other financial futures
contracts. When a futures contract is sold by a Fund, the profit on the
contract will tend to rise when the value of the underlying securities or
currencies declines and to fall when the value of such securities or
currencies increases. Thus, the Fund sells futures contracts in order to
offset a possible decline in the profit on the securities or currencies. If a
futures contract is purchased by the Fund, the value of the contract will tend
to rise when the value of the underlying securities or currencies increases
and to fall when the value of such securities or currencies declines.
The Fund may enter into closing purchase and sale transactions in order
to terminate a futures contract and may buy or sell put and call options for
the purpose of closing out its options positions. The Fund's ability to enter
into closing transactions depends on the development and maintenance of a
liquid secondary market. There is no assurance that a liquid secondary market
will exist for any particular contract or at any particular time. As a result,
there can be no assurance that the Fund will be able to enter into an
offsetting transaction. The Fund will continue to be required to maintain the
margin deposits on the contract and to complete the contract according to its
terms, in which case the Fund would continue to bear market risk on the
transaction.
Risk Characteristics of Options and Futures. Although options and futures
transactions are intended to enable the Funds to manage market, exchange or
interest rate risks, these investment devices can be highly volatile, and the
Funds use of them could result in poorer performance (i.e., a Fund's returns
may be reduced). A Fund attempts to use such investment devices for hedging
purposes may not be successful. Successful futures strategies require the
ability to predict future movements in securities prices, interest rates and
other economic factors. When a Fund uses financial futures contracts and
options on financial futures contracts as hedging devices, there is a risk
that the prices of the securities subject to the financial futures contracts
and options on financial futures contracts may not correlate perfectly with
the prices of the securities in the Fund's portfolio. This may cause the
financial futures contract and any related options to react to market changes
differently than the portfolio securities. In addition, a Fund's investment
advisor could be incorrect in its expectations and forecasts about the
direction or extent of market factors, such as interest rates, securities
price movements and other economic factors. Even if a Fund's investment
advisor correctly predicts interest rate movements, a hedge could be
unsuccessful if changes in the value of the Fund's futures position did not
correspond to changes in the value of its financial futures contracts. A
Fund's ability to establish and close out financial futures contracts and
options on financial futures contracts positions depends on this secondary
market. If a Fund is unable to close out its position due to disruptions in
the market or lack of liquidity, the Fund may lose money on the futures
contract or option, and the losses to the Fund could be significant.
When Issued, Delayed Delivery and Forward Commitment Transactions. Each Fund
may enter into transactions whereby it commits to buying a security, but does
not pay for or take delivery of the security until some specified date in the
future. The value of these securities is subject to market fluctuation during
this period and no income accrues to a Fund until settlement. At the time of
settlement, a when-issued security may be valued at less than its purchase
price. When entering into these transactions, a Fund relies on the other party
to consummate the transaction; if the other party fails to do so, a Fund may
be disadvantaged. Each Fund does not intend to purchase when-issued securities
for speculative purposes, but only in furtherance of its investment objective.
19
<PAGE>
Municipal Securities. As noted above, EVERGREEN TAX STRATEGIC FOUNDATION FUND
may invest in Municipal Securities, which include municipal bonds, short-term
municipal notes and tax exempt commercial paper. "Municipal bonds" are debt
obligations issued to obtain funds for various public purposes that are exempt
from federal income tax in the opinion of issuer's counsel. The two principal
classifications of municipal bonds are "general obligation" and "revenue"
bonds. General obligation bonds are secured by the issuer's pledge of its full
faith, credit and taxing power for the payment of principal and interest.
Revenue bonds are payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise tax or other specific source such as from the user of the
facility being financed. The term "municipal bonds" also includes "moral
obligation" issues which are normally issued by special purpose authorities.
Industrial development bonds ("IDBs") and private activity bonds ("PABs") are
in most cases revenue bonds and are not payable from the unrestricted revenues
of the issuer. The credit quality of IDBs and PABs is usually directly related
to the credit standing of the corporate user of the facilities being financed.
Participation interests are interests in municipal bonds, including IDBs and
PABs, and floating and variable rate obligations that are owned by banks.
These interests carry a demand feature permitting the holder to tender them
back to the bank, which demand feature is backed by an irrevocable letter of
credit or guarantee of the bank. A put bond is a municipal bond which gives
the holder the unconditional right to sell the bond back to the issuer at a
specified price and exercise date, which is typically well in advance of the
bond's maturity date. "Short-term municipal notes" and "tax exempt commercial
paper" include tax anticipation notes, bond anticipation notes, revenue
anticipation notes and other forms of short-term loans. Such notes are issued
with a short-term maturity in anticipation of the receipt of tax funds, the
proceeds of bond placements and other revenues.
Floating Rate and Variable Rate Obligations. The Municipal Securities in which
EVERGREEN TAX STRATEGIC FOUNDATION FUND may invest also include certain
variable rate and floating rate municipal obligations with or without demand
features. These variable rate securities do not have fixed interest rates;
rather, the rates fluctuate based upon changes in specified market rates, such
as the prime rate, or are adjusted at predesignated periodic intervals.
Certain of these obligations may carry a demand feature that gives EVERGREEN
TAX STRATEGIC FOUNDATION FUND the right to demand prepayment of the principal
amount of the security prior to its maturity date. The demand obligation may
or may not be backed by letters of credit or other guarantees of banks or
other financial institutions. Such guarantees may enhance the quality of the
security. EVERGREEN TAX STRATEGIC FOUNDATION FUND will limit the value of its
investments in any floating or variable rate securities which are not readily
marketable and in all other not readily marketable securities to 15% or less
of its net assets. EVERGREEN TAX STRATEGIC FOUNDATION FUND may invest no more
than 5% of its total assets in variable and floating rate securities.
Stand-By Commitments. EVERGREEN TAX STRATEGIC FOUNDATION FUND may also acquire
"stand-by commitments" with respect to Municipal Securities held in its
portfolio. Under a stand-by commitment, a dealer agrees to purchase, at the
Fund's option, specified Municipal Securities at a specified price. Failure of
the dealer to purchase such Municipal Securities may result in the Fund
incurring a loss or missing an opportunity to make an alternative investment.
EVERGREEN TAX STRATEGIC FOUNDATION FUND expects that stand-by commitments
generally will be available without the payment of direct or indirect
consideration. However, if necessary and advisable, the Fund may pay for
stand-by commitments either separately in cash or by paying a higher price for
portfolio securities which are acquired subject to such a commitment (thus
reducing the yield to maturity otherwise available for the same securities).
The total amount paid in either manner for outstanding stand-by commitments
held in EVERGREEN TAX STRATEGIC FOUNDATION FUND 'S portfolio will not exceed
10% of the value of its net assets calculated immediately after each stand-by
commitment is acquired. The Fund will maintain cash or liquid securities in a
segregated account with its custodian in an amount equal to such commitments.
The Fund will enter into stand-by commitments only with banks and broker-
dealers that, in the judgment of the Fund's investment advisor, present
minimal credit risks.
Taxable Fixed-Income Investments. EVERGREEN TAX STRATEGIC FOUNDATION FUND may
temporarily invest up to 20% of its net assets in taxable securities under any
one or more of the following circumstances: (1) pending investment of proceeds
of sale of Fund shares or of portfolio securities, (2) pending settlement of
purchases of portfolio securities, and (3) to maintain liquidity for the
purpose of meeting anticipated redemptions. In addition, the Fund may
temporarily invest in taxable securities for defensive purposes. A Fund may
invest for defensive purposes during periods when a Fund's assets available
for investment exceed the available Municipal Securities that meet a Fund's
quality and other investment criteria. Taxable securities in which a Fund may
invest on a short-term basis include obligations of the U.S. government, its
agencies or instrumentalities, including repurchase agreements with banks or
securities dealers involving such securities; time deposits maturing in not
more than seven days; other debt securities rated within the two highest
ratings assigned by any major rating service;
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<PAGE>
commercial paper rated in the highest grade by Moody's, S&P or any SRO; and
certificates of deposit issued by U.S. branches of U.S. banks with assets of
$1 billion or more.
Downgrades. If any security invested in by any of the Funds loses its rating
or has its rating reduced after a Fund has purchased it, a Fund is not
required to sell or otherwise dispose of the security, but may consider doing
so.
SPECIAL RISK CONSIDERATIONS
Foreign Investments. Investments by a Fund in foreign securities may involve
additional risks. Specifically, they may be affected by the strength of
foreign currencies relative to the U.S. dollar, or by political or economic
developments in foreign countries. Accounting procedures and government
supervision may be less stringent than those applicable to U.S. companies.
There may be less publicly available information about a foreign company than
about a U.S. company. Foreign markets may be less liquid or more volatile than
U.S. markets and may offer less protection to investors. It may also be more
difficult to enforce contractual obligations abroad than would be the case in
the U.S. because of differences in the legal systems. Foreign securities may
be subject to foreign taxes, which may reduce yield, and may be less
marketable than comparable U.S. securities. All these factors are considered
by a Fund's investment advisor before making this type of investment.
Investing in securities of issuers in emerging markets countries involves
exposures to economic systems that are generally less mature and political
systems that are generally less stable than those of developed countries. In
addition, investing in companies in emerging markets countries may also
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 of those
securities.
Foreign Currency Transactions. When a Fund invests in foreign securities, they
usually will be denominated in foreign currencies, and a Fund temporarily may
hold funds in foreign currencies. Thus, the value of a Fund's shares will be
affected by changes in exchange rates.
As one way of managing exchange rate risk, in addition to entering into
currency futures contracts, a Fund may enter into forward currency exchange
contracts (agreements to purchase or sell currencies at a specified price and
date). The exchange rate for the transaction (the amount of currency a Fund
will deliver or receive when the contract is completed) is fixed when the Fund
enters into the contract. A Fund usually will enter into these contracts to
stabilize the U.S. dollar value of a security it has agreed to buy or sell. A
Fund intends to use these contracts to hedge the U.S. dollar value of a
security it already owns, particularly if the Fund expects a decrease in the
value of the currency in which the foreign security is denominated. Although a
Fund will attempt to benefit from using forward contracts, the success of its
hedging strategy will depend on the investment advisor's ability to predict
accurately the future exchange rates between foreign currencies and the U.S.
dollar. The value of a Fund's investments denominated in foreign currencies
will depend on the relative strength of those currencies and the U.S. dollar,
and the Fund may be affected favorably or unfavorably by changes in the
exchange rates or exchange control regulations between foreign currencies and
the U.S. dollar. Changes in foreign currency exchange rates also may affect
the value of dividends and interest earned, gains and losses realized on the
sale of securities and net investment income and gains, if any, to be
distributed to shareholders by a Fund. Although the Funds do not currently
intend to do so, they may also purchase and sell options related to foreign
currencies. The Funds do not intend to enter into foreign currency
transactions for speculation or leverage.
Lower-Rated Securities. EVERGREEN AMERICAN RETIREMENT FUND and EVERGREEN
BALANCED FUND may invest a portion of their assets in securities rated below
Baa by Moody's or BBB by S&P (commonly known as "junk bonds"). Lower-rated and
comparable unrated securities (collectively referred to in this discussion as
"lower-rated securities") will likely have some quality and protective
characteristics that, in the judgment of the rating organization, are out-
weighted by large uncertainties or major risk exposures to adverse conditions;
and are predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal in accordance with the terms of the obligation.
While the market values of lower-rated securities tend to react less to
fluctuations in interest rate levels than the market values of higher rated
securities, the market values of certain lower-rated securities also tend to
be more sensitive to individual corporate developments and changes in economic
conditions than higher-rated securities. In addition, lower-rated securities
generally present a higher degree of credit risk. Issuers of lower-rated
securities are often highly leveraged and may not have more traditional
methods of financing available to
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<PAGE>
them so that their ability to service their debt obligations during an
economic downturn or during sustained periods of rising interest rates may be
impaired. The risk of loss due to default by such issuers is significantly
greater because lower-rated securities generally are unsecured and frequently
are subordinated to the prior payment of senior indebtedness. A Fund may incur
additional expenses to the extent that it is required to seek recovery upon a
default in the payment of principal or interest on its portfolio holdings. The
existence of limited markets for lower-rated securities may diminish a Fund's
ability to obtain accurate market quotations for purposes of valuing such
securities and calculating its net asset value. For additional information
about the possible risks of investing in junk bonds, see "Investment
Objectives and Policies--Junk Bonds" in the SAI.
Investments Related to Real Estate. Each Fund may invest up to 15% of its net
assets in investments related to real estate, including real estate investment
trusts ("REITS"). Risks associated with investments in securities of companies
in the real estate industry include: declines in the value of real estate;
risks related to general and local economic conditions; overbuilding and
increased competition; increases in property taxes and operating expenses;
changes in zoning laws; casualty or condemnation losses; variations in rental
income; changes in neighborhood values; the appeal of properties to tenants;
and increases in interest rates. In addition, equity real estate investment
trusts may be affected by changes in the values of the underlying property
owned by the trusts, while mortgage real estate investment trusts may be
affected by the quality of credit extended. Equity and mortgage real estate
investment trusts are dependent upon management skills, may not be diversified
and are subject to the risks of financing projects. Such trusts are also
subject to heavy cash flow dependency, defaults by borrowers, self liquidation
and the possibility of failing to qualify for tax-free pass-through of income
under the Internal Revenue Code of 1986, as amended (the "Code") and to
maintain exemption from the Investment Company Act of 1940, as amended (the
"1940 Act"). In the event an issuer of debt securities collateralized by real
estate defaulted, it is conceivable that a Fund could end up holding the
underlying real estate.
Leverage. The utilization of leverage by the EVERGREEN AMERICAN RETIREMENT
FUND involves certain risks described below. For example, leveraging may
exaggerate changes in the net asset value of the Fund's shares and in the
yield on the Fund's portfolio. Although the principal of the Fund's borrowings
will be fixed, the Fund's assets may change in value during the time the
borrowings are outstanding. Borrowing will create interest expenses for the
Fund which can exceed the income from the assets retained. To the extent the
income derived from securities purchased with borrowed funds exceeds the
interest the Fund will have to pay, the Fund's net income will be greater than
if borrowing were not used. Conversely, if the income from the assets retained
with borrowed funds is not sufficient to cover the cost of borrowing, the net
income of a Fund will be less than if borrowing were not used, and therefore
the amount available for distribution to shareholders as dividends will be
reduced.
Other Investment Restrictions. Each Fund has adopted additional investment
restrictions that are set forth in the SAI. Unless otherwise noted, the
restrictions and policies set forth above are not fundamental and may be
changed without shareholder approval. Shareholders will be notified of any
changes in policies that are not fundamental.
- -------------------------------------------------------------------------------
ORGANIZATION AND SERVICE PROVIDERS
- -------------------------------------------------------------------------------
ORGANIZATION
Fund Structure. Each Fund is an investment pool, which invests shareholders'
money toward a specified goal. Each Fund is a diversified series of an open-
end, management investment company, called Evergreen Equity Trust (the
"Trust"). The Trust is a Delaware business trust organized on September 18,
1997.
Board of Trustees. The Trust is supervised by a Board of Trustees that is
responsible for representing the interests of shareholders. The Trustees meet
periodically throughout the year to oversee the Funds' activities, reviewing,
among other things, the Funds' performance and their contractual arrangements
with various service providers.
Shareholder Rights. All shareholders have equal voting, liquidation and other
rights. Each share is entitled to one vote for each dollar of net asset value
applicable to such share. Shareholders may exchange shares as described under
"Exchanges," but will have no other preference, conversion, exchange or
preemptive rights. When issued and paid for, shares will be fully paid and
nonassessable. Shares of a Fund are redeemable, transferable and freely
assignable as collateral. The Trust may establish additional classes or series
of shares.
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<PAGE>
The Funds do not hold annual shareholder meetings; the Funds may,
however, hold special meetings for such purposes as electing or removing
Trustees, changing fundamental policies and approving investment advisory
agreements or 12b-1 plans. In addition, the Funds are prepared to assist
shareholders in communicating with one another for the purpose of convening a
meeting to elect Trustees.
SERVICE PROVIDERS
Investment Advisors. The investment advisor to EVERGREEN FOUNDATION FUND,
EVERGREEN TAX STRATEGIC FOUNDATION FUND and EVERGREEN AMERICAN RETIREMENT FUND
is Evergreen Asset Management Corp. ("Evergreen Asset"). Evergreen Asset is
located at 2500 Westchester Avenue, Purchase, New York 10577 and is a
subsidiary of First Union Corporation ("First Union"). First Union is located
at 301 South College Street, Charlotte, North Carolina 28288-0630.
As investment advisor to EVERGREEN FOUNDATION FUND, EVERGREEN TAX
STRATEGIC FOUNDATION FUND and EVERGREEN AMERICAN RETIREMENT FUND, Evergreen
Asset manages each Fund's investments, provides various administrative
services and supervises each Fund's daily business affairs, subject to the
authority of the Trustees. Evergreen Asset is entitled to receive from each of
EVERGREEN FOUNDATION FUND, EVERGREEN TAX STRATEGIC FOUNDATION FUND and
EVERGREEN AMERICAN RETIREMENT FUND, an annual percentage of its average daily
net assets, as follows:
<TABLE>
<CAPTION>
AGGREGATE NET
ASSET VALUE OF THE
MANAGEMENT FEE SHARES OF A FUND
-------------- ------------------------
<S> <C>
EVERGREEN AMERICAN RETIREMENT FUND:
0.75% of the first $ 750,000,000; and
0.70% of amounts over $750,000,000.
<CAPTION>
AGGREGATE NET
ASSET VALUE OF THE
MANAGEMENT FEE SHARES OF A FUND
-------------- ------------------------
<S> <C>
EVERGREEN FOUNDATION FUND AND EVERGREEN TAX
STRATEGIC FOUNDATION FUND:
0.875% of the first $ 750,000,000; and
0.750% of the next $ 250,000,000; and
0.700% of amounts over $1,000,000,000.
The investment advisor to EVERGREEN BALANCED FUND is Keystone Investment
Management Company ("Keystone"). Keystone has provided investment advisory and
management services to investment companies and private accounts since it was
organized in 1932. Keystone is located at 200 Berkeley Street, Boston,
Massachusetts 02116-5034, and is an indirect subsidiary of First Union
National Bank ("FUNB"), which is a subsidiary of First Union. FUNB is located
at 201 South College Street, Charlotte, North Carolina 28288-0630. First Union
and its subsidiaries provide a broad range of financial services to
individuals and businesses throughout the United States.
EVERGREEN BALANCED FUND pays Keystone a fee for its services at the
annual rate set forth below:
<CAPTION>
1.5% OF GROSS DIVIDEND
AND INTEREST INCOME PLUS
ASSET VALUE OF THE
AGGREGATE NET
MANAGEMENT FEE SHARES OF THE FUND
-------------- ------------------------
<S> <C>
0.60% of the first $100,000,000; plus
0.55% of the next $100,000,000; plus
0.50% of the next $100,000,000; plus
0.45% of the next $100,000,000; plus
0.40% of the next $100,000,000; plus
0.35% of the next $500,000,000; plus
0.30% of amounts over $1,000,000,000.
</TABLE>
Keystone's fee is computed as of the close of business each business day
and is payable monthly.
The total expenses as a percentage of average daily net assets on an
annual basis of EVERGREEN FOUNDATION FUND, EVERGREEN TAX STRATEGIC FOUNDATION
FUND and EVERGREEN AMERICAN RETIREMENT FUND for the fiscal year ended March
31, 1998 and of EVERGREEN BALANCED FUND for the period ended March 31, 1998,
are set forth in the section entitled "Financial Highlights." Such expenses
reflect all voluntary advisory fee waivers and expense reimbursements which
may be revised or terminated at any time.
23
<PAGE>
Portfolio Managers. Stephen A. Lieber and James T. Colby, III have served as
the portfolio managers for EVERGREEN TAX STRATEGIC FOUNDATION FUND since its
inception. Mr. Lieber and Mr. Colby are assisted in the management of the Fund
by Gary R. Buesser, C.F.A. Mr. Lieber, who is Chairman and Co-Chief Executive
Officer of Lieber & Co. and Evergreen Asset, makes all allocation decisions
and investment decisions for the equity portion of the portfolio. Mr. Leiber
was the founding Partner of Lieber & Co. in 1969 and served as Senior Partner
until June, 1994. Mr. Colby manages the fixed-income portion of the portfolio.
Mr. Colby has served as a fixed-income portfolio manager with Evergreen Asset
since 1992. Mr. Buesser joined Lieber & Co. as an analyst in 1996. Previously,
he was a portfolio manager/analyst with Cohen Asset Management from August
1992 through December 1995 and Shearson Lehman Brothers from January 1985
through August 1992. Mr. Lieber is also the portfolio manager for EVERGREEN
FOUNDATION FUND.
The portfolio manager for EVERGREEN AMERICAN RETIREMENT FUND is Irene D.
O'Neill, C.F.A. Ms. O'Neill has served as the Fund's principal manager since
its inception, and has been associated with Evergreen Asset and its
predecessor since 1981. Ms. O'Neill is assisted in the management of the Fund
by Natalie Kucharski, C.F.A. Since 1985 Ms. Kucharski has served as an analyst
at Lieber & Co. in the insurance, health care services and telecommunications
industries.
Chris Conkey and Judith Warners have co-managed EVERGREEN BALANCED FUND
since June, 1998. Mr. Conkey, Chief Investment Officer of Fixed Income and the
Head of High Grade Bond Team at Keystone, manages the fixed income side of
EVERGREEN BALANCED FUND and Ms. Warners, Vice President of Keystone, manages
the equity portion of the Fund. During the past five years at Keystone, Mr.
Conkey has served as portfolio manager of several high grade fixed income
funds, several high grade-high yield fixed income funds and several off-shore
closed-end fixed income funds. Ms. Warners has over 15 years of investment
experience with Keystone and has managed Evergreen Blue Chip Fund since
January, 1995.
Sub-Advisor. Evergreen Asset has entered into sub-advisory agreements
with Lieber & Co. which provide 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 the portfolios of EVERGREEN FOUNDATION FUND, EVERGREEN TAX
STRATEGIC FOUNDATION FUND and EVERGREEN AMERICAN RETIREMENT FUND. Lieber & Co.
is 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 FOUNDATION FUND, EVERGREEN TAX
STRATEGIC FOUNDATION FUND and EVERGREEN AMERICAN RETIREMENT FUND for the
services provided by Lieber & Co. The address of Lieber & Co. is 2500
Westchester Avenue, Purchase, New York 10577. Lieber & Co. is an indirect,
wholly-owned, subsidiary of First Union.
Administrator. Evergreen Investment Services, Inc. ("EIS"), 200 Berkeley
Street, Boston, Massachusetts 02116-5034, serves as administrator to the
Funds. As administrator, and subject to the supervision and control of the
Trust's Board of Trustees, EIS provides the Funds with facilities, equipment
and personnel. For its services as administrator, EIS is entitled to receive a
fee based on the aggregate average daily net assets of the Funds at a rate
based on the total assets of all mutual funds advised by First Union
subsidiaries and administered by EIS. The administration fee is calculated in
accordance with the following schedule.
Administration Fee:
EVERGREEN FOUNDATION FUND, EVERGREEN TAX STRATEGIC FOUNDATION FUND,
EVERGREEN AMERICAN RETIREMENT FUND:
---------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
0.060% on the first $ 7 billion
0.0425% on the next $ 3 billion
0.035% on the next $ 5 billion
0.025% on the next $10 billion
0.019% on the next $ 5 billion, and
0.014% on assets in excess of $30 billion
</TABLE>
<TABLE>
<CAPTION>
EVERGREEN BALANCED FUND:
------------------------
<S> <C> <C>
0.050% on the first $ 7 billion
0.035% on the next $ 3 billion
0.030% on the next $ 5 billion
0.020% on the next $10 billion
0.015% on the next $ 5 billion, and
0.010% on assets in excess of $30 billion
</TABLE>
24
<PAGE>
Transfer Agent and Dividend Disbursing Agent. Evergreen Service Company
("ESC"), 200 Berkeley Street, Boston, Massachusetts 02116-5034, acts as each
Fund's transfer agent and dividend disbursing agent. ESC is an indirect,
wholly-owned subsidiary of First Union.
Custodian. State Street Bank and Trust Company, P.O. Box 9021, Boston,
Massachusetts 02205-9827, acts as each Fund's custodian.
Principal Underwriter. Evergreen Distributor, Inc. ("EDI"), a subsidiary of
The BISYS Group, Inc., located at 125 West 55th Street, New York, New York
10019, is the principal underwriter of the Funds. EDI is not affiliated with
First Union.
DISTRIBUTION PLANS AND AGREEMENTS
Distribution Plans. Each Fund's Class A, Class B and Class C shares pay for
the expenses associated with the distribution of its shares according to a
distribution plan that it has adopted pursuant to Rule 12b-1 under the 1940
Act (each a "Plan" or collectively the "Plans"). Under the Plans, each Fund
may incur distribution-related and shareholder servicing-related expenses
which are based upon a maximum annual rate as a percentage of each Fund's
average daily net assets attributable to the Class, as follows:
<TABLE>
<S> <C>
Class A shares......................... 0.75% (currently limited to 0.25%)
Class B shares......................... 1.00%
Class C shares......................... 1.00%
</TABLE>
Of the amount that each Class may pay under its respective Plan, up to
0.25% may constitute a service fee to be used to compensate organizations,
which may include each Fund's investment advisor or their affiliates, for
personal services rendered to shareholders and/or the maintenance of
shareholder accounts. The Funds may not pay any distribution or service fees
during any fiscal period in excess of the amounts set forth above. Amounts
paid under the Plans are used to compensate the Fund's distributor pursuant to
the distribution agreements entered into by each Fund.
Distribution Agreements. Each Fund has also entered into a distribution
agreement (each a "Distribution Agreement" or collectively the "Distribution
Agreements") with EDI. Pursuant to the Distribution Agreements, each Fund will
compensate EDI for its services as distributor based upon the maximum annual
rate as a percentage of each Fund's average daily net assets attributable to
the Class, as follows:
<TABLE>
<S> <C>
Class A shares...................................................... 0.25%
Class B shares...................................................... 1.00%
Class C shares...................................................... 1.00%
</TABLE>
The Distribution Agreements provide that EDI will use the distribution
fee received from each Fund for payments (1) to compensate broker-dealers or
other persons for distributing shares of a Fund, including interest and
principal payments made in respect of amounts paid to broker-dealers or other
persons that have been financed (EDI may assign its rights to receive
compensation under the Plans to secure such financings), (2) to otherwise
promote the sale of shares of a Fund, and (3) to compensate broker-dealers,
depository institutions and other financial intermediaries for providing
administrative, accounting and other services with respect to a Fund's
shareholders. FUNB or its affiliates may finance the payments made by EDI to
compensate broker-dealers or other persons for distributing shares of the
Fund.
In the event a Fund acquires the assets of other mutual funds,
compensation paid to EDI under the Distribution Agreements may be paid by EDI
to the distributors of the acquired funds or their predecessors.
Since EDI's compensation under the Distribution Agreements is not
directly tied to the expenses incurred by EDI, the amount of compensation
received by it under the Distribution Agreements during any year may be more
or less than its actual expenses and may result in a profit to EDI.
Distribution expenses incurred by EDI in one fiscal year that exceed the level
of compensation paid to EDI for that year may be paid from distribution fees
received from a Fund in subsequent fiscal years.
The Plans are in compliance with the Conduct Rules of the National
Association of Securities Dealers, Inc. ("NASD") which effectively limit the
annual asset-based sales charges and service fees that a mutual fund may pay
on a class of shares to an annual rate of 0.75% and 0.25%, respectively, of
the average aggregate annual net assets attributable to that class. The rules
also limit the aggregate of all front-end, deferred and asset-
25
<PAGE>
based sales charges imposed with respect to a class of shares by a mutual fund
that also charges a service fee to 6.25% of cumulative gross sales of shares
of that class, plus interest on the unpaid amount at the prime rate plus 1%
per annum.
- -------------------------------------------------------------------------------
PURCHASE AND REDEMPTION OF SHARES
- -------------------------------------------------------------------------------
HOW TO BUY SHARES
You may purchase shares of any of the Funds through broker-dealers, banks
or other financial intermediaries, or directly through EDI. In addition, you
may purchase shares of any of the Funds by mailing to that Fund, c/o ESC, P.O.
Box 2121, Boston, Massachusetts 02106-2121, a completed application and a
check payable to the applicable Fund. You may also telephone 1-800-343-2898 to
obtain the number of an account to which you can wire or electronically
transfer funds and then send in a completed application. Subsequent
investments in any amount may be made by check, by wiring federal funds, by
direct deposit or by an electronic funds transfer.
The minimum initial investment is $1,000, which may be waived in certain
situations. There is no minimum amount for subsequent investments. Investments
of $25 or more are allowed under the Systematic Investment Plan. See the
application for more information. Only Class A, Class B and Class C shares are
offered through this prospectus (see "General Information" -- "Other Classes
of Shares").
Class A Shares -- Front-End Sales Charge Alternative. You may purchase Class A
shares of each Fund at net asset value plus an initial sales charge on
purchases under $1,000,000. You may purchase $1,000,000 or more of Class A
shares without a front-end sales charge; however, a contingent deferred sales
charge ("CDSC") equal to the lesser of 1% of the purchase price or the
redemption value will be imposed on shares redeemed during the month of
purchase and the 12-month period following the month of purchase. The schedule
of charges for Class A shares is as follows:
INITIAL SALES CHARGE
<TABLE>
<CAPTION>
AS A % OF THE NET AS A % OF THE COMMISSION TO DEALER/AGENT
AMOUNT OF PURCHASE AMOUNT INVESTED OFFERING PRICE AS A % OF OFFERING PRICE
- ------------------ ----------------- -------------- --------------------------
<S> <C> <C> <C>
Less than $ 50,000..... 4.99% 4.75% 4.25%
$ 50,000--$ 99,999...... 4.71% 4.50% 4.25%
$100,000--$249,999...... 3.90% 3.75% 3.25%
$250,000--$499,999...... 2.56% 2.50% 2.00%
$500,000--$999,999...... 2.04% 2.00% 1.75%
$1,000,000 or more...... None None 1.00% of the amount invested
up to $2,999,999; 0.50% of the amount
invested over $2,999,999, up to $4,999,999;
and 0.25% of the excess over $4,999,999
</TABLE>
No front-end sales charges are imposed on Class A shares purchased by (a)
institutional investors, which may include bank trust departments and
registered investment advisors; (b) investment advisors, consultants or
financial planners who place trades for their own accounts or the accounts of
their clients and who charge such clients a management, consulting, advisory
or other fee; (c) clients of investment advisors or financial planners who
place trades for their own accounts if the accounts are linked to the master
account of such investment advisors or financial planners on the books of the
broker-dealer through whom shares are purchased; (d) institutional clients of
broker-dealers, including retirement and deferred compensation plans and the
trusts used to fund these plans, which place trades through an omnibus account
maintained with a Fund by the broker-dealer; (e) shareholders of record on
October 12, 1990 in any series of Evergreen Investment Trust in existence on
that date, and the members of their immediate families; (f) current and
retired employees of FUNB and its affiliates, EDI and any broker-dealer with
whom EDI has entered into an agreement to sell shares of the Funds, and
members of the immediate families of such employees; (g) and upon the initial
purchase of an Evergreen fund by investors reinvesting the proceeds from a
redemption within the preceding thirty days of shares of other mutual funds,
provided such shares were initially purchased with a front-end sales charge or
subject to a CDSC; and (h) all qualified plan customers holding Evergreen
Class Y shares in connection with a rollover into an individual
26
<PAGE>
retirement account. Certain broker-dealers or other financial institutions may
impose a fee on transactions in shares of the Funds.
Class A shares may also be purchased at net asset value by a corporation
or certain other qualified retirement plan or a non-qualified deferred
compensation plan, or a Title I tax sheltered annuity or TSA plan sponsored by
an organization having 100 or more eligible employees, or a TSA plan sponsored
by a public education entity having 5,000 or more eligible employees.
In connection with sales made to plans of the type described in the
preceding sentence EDI will pay broker-dealers and others concessions at the
rate of 0.50% of the net asset value of the shares purchased. These payments
are subject to reclaim in the event the shares are redeemed within twelve
months after purchase.
Certain employer-sponsored retirement or savings plans, including
eligible 401(k) plans, may purchase Class A shares at net asset value provided
that such plans meet a certain required minimum number of eligible employees
or required amount of assets. Additional information concerning the waiver of
sales charges is set forth in the SAI.
When Class A shares are sold, EDI will normally retain a portion of the
applicable sales charge and pay the balance to the broker-dealer or other
financial intermediary through whom the sale was made. EDI may also pay fees
to banks from sales charges for services performed on behalf of the customers
of such banks in connection with the purchase of shares of the Funds. In
addition to compensation paid at the time of sale, entities whose clients have
purchased Class A shares may receive a service fee equal to 0.25% of the
average daily value on an annual basis of Class A shares held by their
clients. Certain purchases of Class A shares may qualify for reduced sales
charges in accordance with a Fund's Concurrent Purchases, Rights of
Accumulation, Letter of Intent, certain Retirement Plans and Reinstatement
Privilege. See "Sales Charge Waivers or Reductions" in the SAI for additional
information concerning these reduced sales charges.
Class B Shares--Deferred Sales Charge Alternative. You may purchase Class B
shares at net asset value without an initial sales charge. However, you may
pay a CDSC if you redeem shares within six years after the month of purchase.
The amount of the CDSC (expressed as a percentage of the lesser of the current
net asset value or original cost) will vary according to the number of years
from the month of purchase of Class B shares as set forth below.
<TABLE>
<CAPTION>
CDSC
REDEMPTION TIMING IMPOSED
- ----------------- -------
<S> <C>
Month of purchase and the first twelve-month period following the
month of purchase.................................................... 5.00%
Second twelve-month period following the month of purchase............ 4.00%
Third twelve-month period following the month of purchase............. 3.00%
Fourth twelve-month period following the month of purchase............ 3.00%
Fifth twelve-month period following the month of purchase............. 2.00%
Sixth twelve-month period following the month of purchase............. 1.00%
No CDSC is imposed on amounts redeemed thereafter.
</TABLE>
The CDSC is deducted from the amount of the redemption and is paid to
EDI. In the event a Fund acquires the assets of other mutual funds, the CDSC
may be paid by EDI to the distributors of the acquired funds. Class B shares
are subject to higher distribution and/or shareholder service fees than Class
A shares for a period of seven years after the month of purchase (after which
it is expected that they will convert to Class A shares without imposition of
a front-end sales charge). The higher fees mean a higher expense ratio, so
Class B shares pay correspondingly lower dividends and may have a lower net
asset value than Class A shares. The Funds will not normally accept any
purchase of Class B shares in the amount of $250,000 or more.
At the end of the period ending seven years after the end of the calendar
month in which the shareholder's purchase order was accepted, Class B shares
will automatically convert to Class A shares and will no longer be subject to
a higher distribution services fee imposed on Class B shares. Such conversion
will be on the basis of the relative net asset values of the two Classes,
without the imposition of any sales load, fee or other charge. The purpose of
the conversion feature is to reduce the distribution services fee paid by
holders of Class B shares that have been outstanding long enough for the
Distributor to have been compensated for the expenses associated with the sale
of such shares. The CDSC applicable to Class B Shares will be waived on
redemptions made by certain employer-sponsored retirement or savings plans,
including eligible 401(k) plans. See "Sales Charge Waivers or Reductions" in
the SAI for additional information.
27
<PAGE>
Class C Shares -- Level-Load Alternative. Class C shares are only offered
through broker-dealers who have special distribution agreements with EDI. You
may purchase Class C shares at net asset value without any initial sales
charge and, therefore, the full amount of your investment will be used to
purchase Fund shares. However, you will pay a 1.00% CDSC, if you redeem shares
during the month of purchase and the 12-month period following the month of
purchase. No CDSC is imposed on amounts redeemed thereafter. Class C shares
incur higher distribution and/or shareholder service fees than Class A shares
but, unlike Class B shares, do not convert to any other class of shares of a
Fund. The higher fees mean a higher expense ratio, so Class C shares pay
correspondingly lower dividends and may have a lower net asset value than
Class A shares. The Funds will not normally accept any purchase of Class C
shares in the amount of $500,000 or more. No CDSC will be imposed on Class C
shares purchased by institutional investors and through employee benefit and
savings plans eligible for the exemption from front-end sales charges
described under "Class A Shares-Front End Sales Charge Alternative," above.
Broker-dealers and other financial intermediaries whose clients have purchased
Class C shares may receive a trailing commission equal to 0.75% of the average
daily net asset value of such shares on an annual basis held by their clients
more than one year from the date of purchase. Service fees will commence
immediately with respect to shares eligible for exemption from the CDSC
normally applicable to Class C shares.
Contingent Deferred Sales Charge. Certain shares with respect to which a Fund
did not pay a commission on issuance, including shares obtained from dividend
or distribution reinvestment, are not subject to a CDSC. Any CDSC imposed upon
the redemption of Class A, Class B or Class C shares is a percentage of the
lesser of (1) the net asset value of the shares redeemed or (2) the net asset
value at the time of purchase of such shares.
No CDSC is imposed on a redemption of shares of a Fund in the event of
(1) death or disability of the shareholder; (2) a lump-sum distribution from a
401(k) plan or other benefit plan qualified under the Employee Retirement
Income Security Act of 1974 ("ERISA"); (3) automatic withdrawals from ERISA
plans if the shareholder is at least 59 1/2 years old; (4) involuntary
redemptions of accounts having an aggregate net asset value of less than
$1,000; (5) automatic withdrawals under the Systematic Withdrawal Plan of up
to 1.00% per month of the shareholder's initial account balance; (6)
withdrawals consisting of loan proceeds to a retirement plan participant; (7)
financial hardship withdrawals made by a retirement plan participant; or (8)
withdrawals consisting of returns of excess contributions or excess deferral
amounts made to a retirement plan participant.
The Funds may also sell Class A, Class B or Class C shares at net asset
value without any initial sales charge or a CDSC to certain Directors,
Trustees, officers and employees of the Funds, Keystone, FUNB, Evergreen
Asset, EDI and certain of their affiliates, and to members of the immediate
families of such persons, to registered representatives of firms with dealer
agreements with EDI, and to a bank or trust company acting as a trustee for a
single account.
See "Sales Charge Waivers or Reductions" in the SAI for additional
information.
How the Funds Value Their Shares. The net asset value of each Class of shares
of a Fund is calculated by dividing the value of the amount of a Fund's net
assets attributable to that Class by the number of outstanding shares of that
Class. Shares are valued each day the New York Stock Exchange (the "Exchange")
is open as of the close of regular trading (currently 4:00 p.m. Eastern time).
The securities in a Fund are valued at their current market value determined
on the basis of market quotations or, if such quotations are not readily
available, such other methods as the Trustees believe would accurately reflect
fair value. Non-dollar denominated securities will be valued as of the close
of the Exchange at the closing price of such securities in their principal
trading markets.
General. The decision as to which Class of shares is more beneficial to you
depends on the amount of your investment and the length of time you will hold
it. If you are making a large investment, thus qualifying for a reduced sales
charge, you might consider Class A shares. If you are making a smaller
investment, you might consider Class B shares since 100% of your purchase is
invested immediately and since such shares will convert to Class A shares,
which incur lower ongoing distribution and/or shareholder service fees, after
seven years. If you are unsure of the time period of your investment, you
might consider Class C shares since there are no initial sales charges and,
although there is no conversion feature, the CDSC only applies to redemptions
made during the first year after the month of purchase. Consult your financial
intermediary for further information. The compensation received by broker-
dealers and agents may differ depending on whether they sell Class A, Class B
or Class C shares. There is no size limit on purchases of Class A shares.
In addition to the discount or commission paid to broker-dealers, EDI may
from time to time pay to broker-dealers additional cash or other incentives
that are conditioned upon the sale of a specified minimum dollar amount of
shares of a Fund and/or other Evergreen funds. Such incentives will take the
form of payment for attendance at seminars, lunches, dinners, sporting events
or theater performances, or payment for travel, lodging
28
<PAGE>
and entertainment incurred in connection with travel by persons associated
with a broker-dealer and their immediate family members to urban or resort
locations within or outside the United States. Such a dealer may elect to
receive cash incentives of equivalent amount in lieu of such payments. EDI may
also limit the availability of such incentives to certain specified dealers.
EDI from time to time sponsors promotions involving First Union Brokerage
Services, Inc., an affiliate of each Fund's investment adviser, and select
broker-dealers, pursuant to which incentives are paid, including gift
certificates and payments in amounts up to 1% of the dollar amount of shares
of a Fund sold. Awards may also be made based on the opening of a minimum
number of accounts. Such promotions are not being made available to all
broker-dealers. Certain broker-dealers may also receive payments from EDI or a
Fund's investment adviser over and above the usual trail commissions or
shareholder servicing payments applicable to a given Class of shares.
Additional Purchase Information. As a condition of this offering, if a
purchase is canceled due to nonpayment or because an investor's check does not
clear, the investor will be responsible for any loss a Fund or its investment
advisor incurs. If such investor is an existing shareholder, a Fund may redeem
shares from an investor's account to reimburse the Fund or its investment
advisor for any loss. In addition, such investor may be prohibited or
restricted from making further purchases in any of the Evergreen funds. The
Funds will not accept third party checks other than those payable directly to
a shareholder whose account has been in existence at least 30 days.
HOW TO REDEEM SHARES
You may "redeem" ( i.e., sell) your shares for cash, at the net
redemption value on any day the Exchange is open, either directly by writing
to the Fund, c/o ESC, or through your financial intermediary. The amount you
will receive is the net asset value adjusted for fractions of a cent (less any
applicable CDSC) next calculated after a Fund receives your request in proper
form. Proceeds generally will be sent to you within seven days. However, for
shares recently purchased by check, a Fund will not send proceeds until it is
reasonably satisfied that the check has been collected (which may take up to
15 days). Once a redemption request has been telephoned or mailed, it is
irrevocable and may not be modified or canceled.
Redeeming Shares Through Your Financial Intermediary. A Fund must receive
instructions from your financial intermediary before 4:00 p.m. (eastern time)
for you to receive that day's net asset value (less any applicable CDSC). Your
financial intermediary is responsible for furnishing all necessary
documentation to a Fund and may charge you for this service. Certain financial
intermediaries may require that you give instructions earlier than 4:00 p.m.
(eastern time).
Redeeming Shares Directly by Mail or Telephone. You may redeem by mail by
sending a signed letter of instruction or stock power form to the Fund, c/o
ESC (the registrar, transfer agent and dividend-disbursing agent for each
Fund.) Stock power forms are available from your financial intermediary, ESC,
and many commercial banks. Additional documentation is required for the sale
of shares by corporations, financial intermediaries, fiduciaries and surviving
joint owners. Signature guarantees are required for all redemption requests
for shares with a value of more than $50,000. Currently, the requirement for a
signature guarantee has been waived on redemptions of $50,000 or less when the
account address of record has been the same for a minimum period of 30 days.
Each Fund and ESC reserve the right to withdraw this waiver at any time. A
signature guarantee must be provided by a bank or trust company (not a Notary
Public), a member firm of a domestic stock exchange or by other financial
institutions whose guarantees are acceptable under the Securities Exchange Act
of 1934 and ESC's policies.
Shareholders may redeem amounts of $1,000 or more (up to $50,000) from
their accounts by calling the telephone number on the front page of this
prospectus between the hours of 8:00 a.m. and 6:00 p.m. (eastern time) each
business day (i.e., any weekday exclusive of days on which the Exchange or
ESC's offices are closed). The Exchange is closed on New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day. Redemption requests
received after 4:00 p.m. (eastern time) will be processed using the net asset
value determined on the next business day. Such redemption requests must
include the shareholder's account name, as registered with a Fund, and the
account number. During periods of drastic economic or market changes,
shareholders may experience difficulty in effecting telephone redemptions. If
you cannot reach a Fund by telephone, you should follow the procedures for
redeeming by mail or through a broker-dealer as set forth herein. The
telephone redemption service is not made available to shareholders
automatically. Shareholders wishing to use the telephone redemption service
must complete the appropriate sections on the application and choose how the
redemption proceeds are to be paid. Redemption proceeds will either (1) be
mailed by check to the shareholder at the address in which the account is
registered or (2) be wired to an account with the same registration as the
shareholder's account in a Fund at a designated commercial bank.
29
<PAGE>
In order to insure that instructions received by ESC are genuine when you
initiate a telephone transaction, you will be asked to verify certain criteria
specific to your account. At the conclusion of the transaction, you will be
given a transaction number confirming your request, and written confirmation
of your transaction will be mailed the next business day. Your telephone
instructions will be recorded. Redemptions by telephone are allowed only if
the address and bank account of record have been the same for a minimum period
of 30 days. Each Fund reserves the right at any time to terminate, suspend, or
change the terms of any redemption method described in this prospectus, except
redemption by mail, and to impose fees.
Except as otherwise noted, the Funds, ESC and EDI will not assume
responsibility for the authenticity of any instructions received by any of
them from a shareholder in writing, over the Evergreen Express Line (described
below), or by telephone. ESC will employ reasonable procedures to confirm that
instructions received over the Evergreen Express Line or by telephone are
genuine. The Funds, ESC and EDI will not be liable when following instructions
received over the Evergreen Express Line or by telephone that ESC reasonably
believes are genuine.
Evergreen Express Line. The Evergreen Express Line offers you specific fund
account information and price and yield quotations as well as the ability to
do account transactions, including investments, exchanges and redemptions. You
may access the Evergreen Express Line by dialing toll free 1-800-346-3858 on
any touch-tone telephone, 24 hours a day, seven days a week.
General. The sale of shares is a taxable transaction for federal income tax
purposes. The Funds may temporarily suspend the right to redeem their shares
when (1) the Exchange is closed, other than customary weekend and holiday
closings; (2) trading on the Exchange is restricted; (3) an emergency exists
and the Funds cannot dispose of their investments or fairly determine their
value; or (4) the SEC so orders. The Funds reserve the right to close an
account that through redemption has fallen below $1,000 and has remained so
for 30 days. Shareholders will receive 60 days' written notice to increase the
account value to at least $1,000 before the account is closed. The Funds have
elected to be governed by Rule 18f-1 under the 1940 Act pursuant to which each
Fund is obligated to redeem shares solely in cash, up to the lesser of
$250,000 or 1% of a Fund's total net assets, during any 90-day period for any
one shareholder.
EXCHANGE PRIVILEGE
How to Exchange Shares. You may exchange some or all of your shares for
shares of the same class in other Evergreen funds through your financial
intermediary by calling or writing to ESC, or by using the Evergreen Express
Line as described above. Once an exchange request has been telephoned or
mailed, it is irrevocable and may not be modified or canceled. Exchanges will
be made on the basis of the relative net asset values of the shares exchanged
next determined after an exchange request is received. An exchange which
represents an initial investment in another Evergreen fund is subject to the
minimum investment and suitability requirements of each Fund.
Each of the Evergreen funds has different investment objectives and
policies. For more information, a prospectus of the fund into which an
exchange will be made should be read prior to the exchange. An exchange order
must comply with the requirement for a redemption or repurchase order and must
specify the dollar value or number of shares to be exchanged. An exchange is
treated for federal income tax purposes as a redemption and purchase of shares
and may result in the realization of a capital gain or loss. Shareholders are
limited to five exchanges per calendar year, with a maximum of three per
calendar quarter. This exchange privilege may be modified or discontinued at
any time by a Fund upon 60 days' notice to shareholders and is only available
in states in which shares of a fund being acquired may lawfully be sold.
No CDSC will be imposed in the event shares are exchanged for shares of
the same class of other Evergreen funds. If you redeem shares, the CDSC
applicable to the shares of the Evergreen fund originally purchased for cash
is applied. Also, Class B shares will continue to age following an exchange
for the purpose of conversion to Class A shares and for the purpose of
determining the amount of the applicable CDSC.
Exchanges Through Your Financial Intermediary. A Fund must receive exchange
instructions from your financial intermediary before 4:00 p.m. (eastern time)
for you to receive that day's net asset value. Your financial intermediary is
responsible for furnishing all necessary documentation to a Fund and may
charge you for this service.
Exchanges By Telephone And Mail. Exchange requests received by a Fund after
4:00 p.m. (eastern time) will be processed using the net asset value
determined at the close of the next business day. During periods of
30
<PAGE>
drastic economic or market changes, shareholders may experience difficulty in
effecting telephone exchanges. You should follow the procedures outlined below
for exchanges by mail if you are unable to reach ESC by telephone. If you wish
to use the telephone exchange service you should indicate this on the
application. As noted above, each Fund will employ reasonable procedures to
confirm that instructions for the redemption or exchange of shares
communicated by telephone are genuine. A telephone exchange may be refused by
a Fund or ESC if it is believed advisable to do so. Procedures for exchanging
Fund shares by telephone may be modified or terminated at any time. Written
requests for exchanges should follow the same procedures outlined for written
redemption requests in the section entitled "How to Redeem Shares;" however,
no signature guarantee is required.
SHAREHOLDER SERVICES
The Funds offer the following shareholder services. For more information
about these services or your account, contact your financial intermediary, ESC
or call the toll-free number on the front page of this prospectus. Some
services are described in more detail in the application.
Systematic Investment Plan. Under a Systematic Investment Plan, you may invest
as little as $25 per month to purchase shares of a Fund with no minimum
initial investment required.
Telephone Investment Plan. You may make investments into an existing account
electronically in amounts of not less than $100 or more than $10,000 per
investment. Telephone investment requests received by 4:00 p.m. (Eastern time)
will be credited to a shareholder's account the day the request is received.
Systematic Withdrawal Plan. When an account of $10,000 or more is opened or
when an existing account reaches that size, you may participate in a
Systematic Withdrawal Plan (the "Withdrawal Plan") by filling out the
appropriate part of the application. Under this Withdrawal Plan, you may
receive (or designate a third party to receive) a monthly or quarterly fixed-
withdrawal payment in a stated amount of at least $75, and as much as 1.0% per
month or 3.0% per quarter of the total net asset value of fund shares in your
account when the SWP was opened. Fund shares will be redeemed as necessary to
meet withdrawal payments. All participants must elect to have their dividends
and capital gain distributions reinvested automatically. Any applicable CDSC
will be waived with respect to redemptions occurring under a Withdrawal Plan
during a calendar year to the extent that such redemptions do not exceed 12%
of (1) the initial value of the account plus (2) the value, at the time of
purchase, of any subsequent investments.
Investments Through Employee Benefit and Savings Plans. Certain qualified and
non-qualified employee benefit and savings plans may make shares of the Funds
and other Evergreen funds available to their participants. Investments made by
such employee benefit plans may be exempt from front-end sales charges if they
meet the criteria set forth under "Class A Shares-Front End Sales Charge
Alternative." Evergreen Asset, Keystone or FUNB may provide compensation to
organizations providing administrative and recordkeeping services to plans
which make shares of the Evergreen funds available to their participants.
Automatic Reinvestment Plan. For the convenience of investors, all dividends
and distributions are automatically reinvested in full and fractional shares
of a Fund at the net asset value per share at the close of business on the
record date, unless otherwise requested by a shareholder in writing. If the
transfer agent does not receive a written request for subsequent dividends
and/or distributions to be paid in cash at least three full business days
prior to a given record date, the dividends and/or distributions to be paid to
a shareholder will be reinvested.
Dollar Cost Averaging. Through dollar cost averaging you can invest a fixed
dollar amount each month or each quarter in any Evergreen fund. This results
in more shares being purchased when the selected fund's net asset value is
relatively low and fewer shares being purchased when the fund's net asset
value is relatively high and may result in a lower average cost per share than
a less systematic investment approach.
Prior to participating in dollar cost averaging, you must establish an
account in an Evergreen fund. You should designate on the application (1) the
dollar amount of each monthly or quarterly investment you wish to make and (2)
the fund in which the investment is to be made. Thereafter, on the first day
of the designated month, an amount equal to the specified monthly or quarterly
investment will automatically be redeemed from your initial account and
invested in shares of the designated fund.
Two Dimensional Investing. You may elect to have income and capital gains
distributions from any Evergreen fund shares you own automatically invested to
purchase the same class of shares of any other Evergreen fund.
31
<PAGE>
You may select this service on your application and indicate the Evergreen
fund(s) into which distributions are to be invested.
Tax Sheltered Retirement Plans. The Funds have various retirement plans
available to eligible investors, including Individual Retirement Accounts
(IRAs); Rollover IRAs; Simplified Employee Pension Plans (SEPs); Salary
Incentive Match Plan for Employees (SIMPLEs); Tax Sheltered Annuity Plans;
403(b)(7) Plans; 401(k) Plans; Keogh Plans; Profit-Sharing Plans; Medical
Savings Accounts; Pension and Target Benefit and Money Purchase Plans. For
details, including fees and application forms, call toll free 1-800-247-4075
or write to ESC.
BANKING LAWS
The Glass-Steagall Act and other banking laws and regulations presently
prohibit member banks of the Federal Reserve System ("Member Banks") or their
non-bank affiliates from sponsoring, organizing, controlling, or distributing
the shares of registered open-end investment companies such as the Funds. Such
laws and regulations also prohibit banks from issuing, underwriting or
distributing securities in general. However, under the Glass-Steagall Act and
such other laws and regulations, a Member Bank or an affiliate thereof may act
as investment adviser, transfer agent or custodian to a registered open-end
investment company and may also act as agent in connection with the purchase
of shares of such an investment company upon the order of its customer. FUNB
and its affiliates are subject to and in compliance with the aforementioned
laws and regulations.
Changes to applicable laws and regulations or future judicial or
administrative decisions could result in FUNB and its affiliates being
prevented from continuing to perform the services required under the
investment advisory agreements or from acting as agent in connection with the
purchase of shares of the Funds by their customers. If FUNB and its affiliates
were prevented from continuing to provide the services called for under the
investment advisory agreements, it is expected that the Trustees would
identify, and call upon each Fund's shareholders to approve, new investment
advisers. If this were to occur, it is not anticipated that the shareholders
of any Fund would suffer any adverse financial consequences.
- -------------------------------------------------------------------------------
OTHER INFORMATION
- -------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund intends to distribute its investment company taxable income
quarterly and net realized capital gains at least annually. Shareholders
receive Fund distributions in the form of additional shares of that class of
shares upon which the distribution is based or, at the shareholder's option,
in cash. Shareholders of a Fund who have not opted to receive cash prior to
the payable date for any dividend from net investment income or the record
date for any capital gains distribution will have the number of such shares
determined on the basis of a Fund's net asset value per share computed at the
end of that day after adjustment for the distribution. Net asset value is used
in computing the number of shares in both capital gains and income
distribution investments.
Because Class A shares bear most of the costs of distribution of such
shares through payment of a front-end sales charge, while Class B and, when
applicable, Class C shares bear such expenses through a higher annual
distribution fee, expenses attributable to Class B shares and Class C shares
will generally be higher than those of Class A shares, and income
distributions paid by a Fund with respect to Class A shares will generally be
greater than those paid with respect to Class B and Class C shares.
Account statements and/or checks, as appropriate, will be mailed within
seven days after a Fund pays a distribution. Unless a Fund receives
instructions to the contrary before the record or payable date, as the case
may be, it will assume that a shareholder wishes to receive that distribution
and future capital gains and income distributions in shares. Instructions
continue in effect until changed in writing. If a shareholder has elected to
receive dividends and/or capital gain distributions in cash and the postal or
other delivery service selected by ESC is unable to deliver checks to the
shareholder's address of record, such shareholder's distribution option will
automatically be converted to having all dividend and other distributions
reinvested in additional shares. No interest will accrue on amounts
represented by uncashed distributions or redemption checks.
Each Fund has qualified and intends to continue to qualify as a regulated
investment company under the Code. While so qualified, it is expected that
each Fund will not be required to pay any federal income taxes on that portion
of its investment company taxable income and any net realized capital gains it
distributes to
32
<PAGE>
shareholders. The Code imposes a 4% nondeductible excise tax on regulated
investment companies, such as the Funds, to the extent they do not meet
certain distribution requirements by the end of each calendar year. The Funds
anticipate meeting such distribution requirements.
Any taxable dividend declared in October, November or December to
shareholders of record in such a month and paid by the following January 31
will be includable in the taxable income of shareholders as if paid on
December 31 of the year in which the dividend was declared.
The Funds may be subject to foreign withholding taxes which would reduce
the yield on their investments. Tax treaties between certain countries and the
United States may reduce or eliminate such taxes. Shareholders of a Fund who
are subject to United States federal income tax may be entitled, subject to
certain rules and limitations, to claim a federal income tax credit or
deduction for foreign income taxes paid by the Fund. See the SAI for
additional details. A Fund's transactions in options, futures and forward
contracts may be subject to special tax rules. These rules can affect the
amount, timing and characteristics of distributions to shareholders.
The Funds are required by federal law to withhold 31% of reportable
payments (which may include dividends, capital gains distributions (if any)
and redemptions) paid to certain shareholders. In order to avoid this backup
withholding requirement, each investor must certify on the application, or on
a separate form supplied by a Fund's transfer agent, that the investor's
social security number or taxpayer identification number is correct and that
the investor is not currently subject to backup withholding or is exempt from
backup withholding. A shareholder who acquires Class A shares of a Fund and
sells or otherwise disposes of such shares within 90 days of acquisition may
not be allowed to include certain sales charges incurred in acquiring such
shares for purposes of calculating gain and loss realized upon a sale or
exchange of shares of a Fund.
The Funds intend to distribute their net capital gains as capital gains
dividends. Shareholders should treat such dividends as long-term capital
gains. The Funds will designate capital gains distributions as such by a
written notice mailed to each shareholder no later than 60 days after the
close of each Fund's taxable year. If a shareholder receives a capital gain
dividend and holds his shares for six months or less, then any allowable loss
on disposition of such shares will be treated as long-term capital loss to the
extent of such capital gain dividend.
The foregoing discussion of federal income tax consequences is based on
tax laws and regulations in effect on the date of this prospectus and is
subject to change by legislative or administrative action. As the foregoing
discussion is for general information only, you should also review the
discussion of "Additional Tax Information" contained in the SAI. In addition,
you should consult your own tax adviser as to the tax consequences of
investments in a Fund, including the application of state and local taxes
which may be different from the federal income tax consequences described
above.
GENERAL INFORMATION
Portfolio Turnover. The estimated annual portfolio turnover rate for each of
the Funds is not expected to exceed 100%. A portfolio turnover rate of 100%
would occur if all of a Fund's portfolio securities were replaced in one year.
The portfolio turnover rate experienced by a Fund directly affects the
transaction costs relating to the purchase and sale of securities which a Fund
bears directly. A high rate of portfolio turnover will increase such costs.
The portfolio turnover rates for each Fund are set forth under "Financial
Highlights."
Portfolio Transactions. Consistent with the Conduct Rules of the NASD, and
subject to seeking best price and execution, a Fund may consider sales of its
shares as a factor in the selection of dealers to enter into portfolio
transactions with the Fund.
Other Classes of Shares. Each Fund currently offers four classes of shares,
Class A, Class B, Class C and Class Y, and may in the future offer additional
classes. Class Y shares are not offered by this Prospectus and are only
available to (1) persons who at or prior to December 31, 1994, owned shares in
a mutual fund advised by Evergreen Asset, (2) certain institutional investors
and (3) investment advisory clients of FUNB, Evergreen Asset, Keystone or
their affiliates. The dividends payable with respect to Class A, Class B and
Class C shares will be less than those payable with respect to Class Y shares
due to the distribution and shareholder servicing related expenses borne by
Class A, Class B and Class C shares and the fact that such expenses are not
borne by Class Y shares. Investors should telephone 1-800-343-2898 to obtain
more information on other classes of shares.
Performance Information. The Funds may quote their "total return" or "yield"
for a specified period in advertisements, reports or other communications to
shareholders. Total return and yield are computed separately
33
<PAGE>
for each class of shares. Performance data for one or more classes may be
included in any advertisement or sales literature using performance data of a
Fund.
A Fund's total return for each such period is computed by finding,
through the use of a formula prescribed by the SEC, the average annual
compounded rate of return over the period that would equate an assumed initial
amount invested to the value of the investment at the end of the period. For
purposes of computing total return, dividends and capital gains distributions
paid on shares of a Fund are assumed to have been reinvested when paid and the
maximum sales charges applicable to purchases of the Fund's shares are assumed
to have been paid.
Yield is a way of showing the rate of income a Fund earns on its
investments as a percentage of the Fund's share price. A Fund's yield is
calculated according to accounting methods that are standardized by the SEC
for all stock and bond funds. Because yield accounting methods differ from the
method used for other accounting purposes, a Fund's yield may not equal its
distribution rate, the income paid to your account or the net investment
income reported in the Fund's financial statements. To calculate yield, a Fund
takes the interest and dividend income it earned from its portfolio of
investments (as defined by the SEC formula) for a 30-day period (net of
expenses), divides it by the average number of shares entitled to receive
dividends, and expresses the result as an annualized percentage rate based on
the Fund's share price at the end of the 30-day period. This yield does not
reflect gains or losses from selling securities.
Performance data may be included in any advertisement or sales literature
of a Fund. These advertisements may quote performance rankings or ratings of a
Fund by financial publications or independent organizations such as Lipper
Analytical Services, Inc. and Morningstar, Inc. or may compare the Fund's
performance to various indices. The Funds may also advertise in items of sales
literature an "actual distribution rate" which is computed by dividing the
total ordinary income distributed (which may include the excess of short-term
capital gains over losses) to shareholders for the latest twelve month period
by the maximum public offering price per share on the last day of the period.
Investors should be aware that past performance may not be reflective of
future results.
In marketing a Fund's shares, information may be provided that is
designed to help individuals understand their investment goals and explore
various financial strategies. Such information may include publications
describing general principles of investing, such as asset allocation,
diversification, risk tolerance, and goal setting; a questionnaire designed to
help create a personal financial profile; and an action plan offering
investment alternatives. The information provided to investors may also
include discussions of other Evergreen funds, products, and services, which
may include: retirement investing; brokerage products and services; the
effects of periodic investment plans and dollar cost averaging; saving for
college; and charitable giving. In addition, the information provided to
investors may quote financial or business publications and periodicals,
including model portfolios or allocations, as they relate to fund management,
investment philosophy, and investment techniques. EDI may also reprint, and
use as advertising and sales literature, articles from Evergreen Events, a
quarterly magazine provided to Evergreen fund shareholders.
Year 2000 Risks. Like other investment companies, financial and business
organizations and individuals around the world, the Funds could be adversely
affected if the computer systems used by the Funds' investment advisers and
the Funds' other service providers do not properly process and calculate date-
related information and data from and after January 1, 2000. This is commonly
known as the "Year 2000 Problem." The Funds' investment advisers are taking
steps to address the Year 2000 Problem with respect to the computer systems
that they use and to obtain assurances that comparable steps are being taken
by the Funds' other major service providers. At this time, however, there can
be no assurance that these steps will be sufficient to avoid any adverse
impact on the Funds.
Additional Information. This prospectus and the SAI, which has been
incorporated by reference herein, do not contain all the information set forth
in the Registration Statements filed by the Trust with the SEC under the
Securities Act of 1933, as amended. Copies of the Registration Statements may
be obtained at a reasonable charge from the SEC or may be examined, without
charge, at the offices of the SEC in Washington, D.C.
34
<PAGE>
INVESTMENT ADVISOR
Evergreen Asset Management Corp., 2500 Westchester Avenue, Purchase, New York
10577
Evergreen Foundation Fund, Evergreen Tax Strategic Foundation Fund, Evergreen
American Retirement Fund
Keystone Investment Management Company, 200 Berkeley Street, Boston,
Massachusetts 02116-5034
Evergreen Balanced Fund
CUSTODIAN
State Street Bank and Trust Company, P.O. Box 9021, Boston, Massachusetts
02205-9827
TRANSFER AGENT
Evergreen Service Company, P.O. Box 2121, Boston, Massachusetts 02116-5034
LEGAL COUNSEL
Sullivan & Worcester LLP, 1025 Connecticut Avenue, N.W., Washington, D.C. 20036
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, 99 High Street, Boston, Massachusetts 02110
DISTRIBUTOR
Evergreen Distributor, Inc., 125 W. 55th Street, New York, New York 10019
56761
<PAGE>
- -------------------------------------------------------------------------------
PROSPECTUS August 1, 1998
- -------------------------------------------------------------------------------
EVERGREENSM BALANCED FUNDS LOGO
- -------------------------------------------------------------------------------
EVERGREEN FOUNDATION FUND
EVERGREEN TAX STRATEGIC FOUNDATION FUND
EVERGREEN AMERICAN RETIREMENT FUND
EVERGREEN BALANCED FUND
(EACH A "FUND;" TOGETHER, THE "FUNDS")
CLASS Y SHARES
The Evergreen Balanced Funds are designed to provide investors with a
selection of investment alternatives which seek to provide current income,
capital appreciation or after-tax "total return."
This Prospectus provides information regarding the Class Y shares offered
by the Funds. Each Fund is, or is a series of, an open-end, diversified,
management investment company. This Prospectus sets forth concise information
about the Funds that a prospective investor should know before investing. The
address of the Funds is 200 Berkeley Street, Boston, Massachusetts 02116.
A Statement of Additional Information ("SAI") for the Funds dated August
1, 1998, as supplemented from time to time, has been filed with the Securities
and Exchange Commission ("SEC") and is incorporated by reference herein. The
SAI provides information regarding certain matters discussed in this
prospectus and other matters which may be of interest to investors, and may be
obtained without charge by calling the Evergreen funds at 1-800-343-2898.
There can be no assurance that the investment objective of any Fund will be
achieved. Investors are advised to read this prospectus carefully.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY 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. AN
INVESTMENT IN THE FUNDS INVOLVES RISK, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Keep This Prospectus For Future Reference
EVERGREENSM is a Service Mark of Evergreen Asset Management Corp.
Copyright 1995, Evergreen Asset Management Corp.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
EXPENSE INFORMATION.................... 3
FINANCIAL HIGHLIGHTS................... 4
DESCRIPTION OF THE FUNDS............... 7
Investment Objectives and Policies.. 7
Investment Practices and
Restrictions....................... 10
Special Risk Considerations......... 14
ORGANIZATION AND SERVICE PROVIDERS..... 15
Organization........................ 15
Service Providers................... 16
</TABLE>
<TABLE>
<S> <C>
PURCHASE AND REDEMPTION OF SHARES...................................... 18
How to Buy Shares................................................... 18
How to Redeem Shares................................................ 18
Exchange Privilege.................................................. 19
Shareholder Services................................................ 20
Banking Laws........................................................ 21
OTHER INFORMATION...................................................... 21
Dividends, Distributions and Taxes.................................. 21
General Information................................................. 22
</TABLE>
2
<PAGE>
- -------------------------------------------------------------------------------
EXPENSE INFORMATION
- -------------------------------------------------------------------------------
The tables and Examples set forth below summarize the various costs and
expenses a shareholder will bear, directly or indirectly, associated with an
investment in the Class Y shares of each Fund. Shareholder transaction
expenses are fees paid directly from your account when you buy or sell shares.
For further information see "Purchase and Redemption of Shares" and "General
Information--Other Classes of Shares."
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES None
</TABLE>
Annual operating expenses reflect the normal operating expenses of a
Fund, and include costs such as management, distribution and other fees. The
tables below show for each of EVERGREEN FOUNDATION FUND, EVERGREEN TAX
STRATEGIC FOUNDATION FUND and EVERGREEN AMERICAN RETIREMENT FUND actual annual
operating expenses for the fiscal year ended March 31, 1998 and for EVERGREEN
BALANCED FUND estimated annual operating expenses for the fiscal year ending
March 31, 1999. The Examples show what your costs would be for a hypothetical
$1,000 investment over the periods indicated. The Examples assume that you
reinvest all of your dividends and that the Funds' average annual return will
be 5%. THE EXAMPLES ARE FOR ILLUSTRATION PURPOSES ONLY AND SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR ANNUAL RETURN. THE
FUNDS' ACTUAL EXPENSES AND RETURNS WILL VARY. For a more complete description
of the various costs and expenses borne by the Funds see "Organization and
Service Providers."
EVERGREEN FOUNDATION FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES
- -------------------------
<S> <C>
Management Fees 0.77%
Other Expenses 0.26%
----
Total 1.03%
====
</TABLE>
<TABLE>
<CAPTION>
EXAMPLES ASSUMING REDEMPTION
AT END OF PERIOD
----------------------------
<S> <C>
After 1 Year $ 11
AFTER 3 YEARS $ 33
After 5 Years $ 57
After 10 Years $126
</TABLE>
EVERGREEN TAX STRATEGIC FOUNDATION FUND
<TABLE>
<CAPTION>
ANNUAL
OPERATING
EXPENSES
- ---------
<S> <C>
Management Fees 0.88%
Other Expenses 0.27%
----
Total 1.15%
====
</TABLE>
<TABLE>
<S> <C>
After 1 Year $ 12
After 3 Years $ 37
After 5 Years $ 63
After 10 Years $140
</TABLE>
EVERGREEN AMERICAN RETIREMENT FUND
<TABLE>
<CAPTION>
ANNUAL
OPERATING
EXPENSES
- ---------
<S> <C>
Management Fees 0.75%
Other Expenses 0.39%
----
Total 1.14%
====
</TABLE>
<TABLE>
<S> <C>
After 1 Year $ 12
After 3 Years $ 36
After 5 Years $ 63
After 10 Years $139
</TABLE>
EVERGREEN BALANCED FUND
<TABLE>
<CAPTION>
ESTIMATED
ANNUAL
OPERATING
EXPENSES
- ---------
<S> <C>
Management Fees 0.46%
Other Expenses 0.25%
----
Total 0.71%
====
</TABLE>
<TABLE>
<S> <C>
After 1 Year $ 7
After 3 Years $ 23
After 5 Years $ 40
After 10 Years $ 88
</TABLE>
3
<PAGE>
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
The tables on the following pages present, for each Fund, financial
highlights for a share outstanding throughout each period indicated. The
information in the tables for the five most recent fiscal years or the life of
the Fund if shorter has been audited by the respective Fund's independent
auditors as follows: EVERGREEN FOUNDATION FUND, EVERGREEN TAX STRATEGIC
FOUNDATION FUND and EVERGREEN AMERICAN RETIREMENT FUND for the fiscal year
ended March 31, 1998, the three months ended March 31, 1997 and the fiscal
year ended December 31, 1996 by KPMG Peat Marwick LLP and for the fiscal years
ended December 31, 1995 and prior by other auditors; EVERGREEN BALANCED FUND
for the period ended March 31, 1998 by KPMG Peat Marwick LLP. The report of
KPMG Peat Marwick LLP on the audited information with respect to each Fund
(except for EVERGREEN FOUNDATION FUND, EVERGREEN TAX STRATEGIC FOUNDATION FUND
and EVERGREEN AMERICAN RETIREMENT FUND for the fiscal year ended December 31,
1995 and prior) is incorporated by reference into the Funds' SAI. The
following information for each Fund should be read in conjunction with the
financial statements and related notes which are incorporated by reference
into the Funds' SAI.
Further information about a Fund's performance is contained in the Fund's
annual report to shareholders, which may be obtained without charge.
EVERGREEN FOUNDATION FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
---------------- -------------------------------------------------------
1998# 1997** 1996 1995 1994 1993 1992 1991 1990*
------- ------- ------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
BEGINNING OF YEAR...... $16.02 $16.14 $15.13 $12.27 $13.12 $11.98 $10.75 $8.95 $10.00
------- ------- ------- ------ ------ ------ ------ ------ ------
Income (loss) from
investment operations
Net investment income.. 0.49 0.13 0.54 0.51 0.42 0.31 0.27 0.33 1.23(a)
Net realized and
unrealized gain (loss)
on investments........ 4.86 (0.13) 1.16 3.07 (0.57) 1.55 1.83 2.77 (0.59)
------- ------- ------- ------ ------ ------ ------ ------ ------
Total from investment
operations............. 5.35 0.00 1.70 3.58 (0.15) 1.86 2.10 3.10 0.64
------- ------- ------- ------ ------ ------ ------ ------ ------
Less distributions
From net investment
income................ (0.49) (0.12) (0.54) (0.49) (0.42) (0.31) (0.24) (0.33) (1.17)
From net realized gain
on investments........ (0.43) 0 (0.15) (0.23) (0.28) (0.41) (0.63) (0.97) (0.52)
------- ------- ------- ------ ------ ------ ------ ------ ------
Total distributions..... (0.92) (0.12) (0.69) (0.72) (0.70) (0.72) (0.87) (1.30) (1.69)
------- ------- ------- ------ ------ ------ ------ ------ ------
Net asset value end of
year................... $20.45 $16.02 $16.14 $15.13 $12.27 $13.12 $11.98 $10.75 $8.95
======= ======= ======= ====== ====== ====== ====== ====== ======
TOTAL RETURN............ 34.12% 0.00% 11.50% 29.70% (1.10%) 15.70% 20.00% 36.40% 6.60%
RATIOS/SUPPLEMENTAL DATA
Ratios to average net
assets
Total expenses......... 1.03% 1.00%+ 0.99% 1.07% 1.14% 1.20% 1.40% 1.20% 0.00%+
Total expenses,
excluding indirectly
paid expenses......... 1.03% N/A N/A N/A N/A N/A N/A N/A N/A
Total expenses,
excluding fee waivers
& expense
reimbursements........ N/A N/A N/A N/A N/A N/A 1.43% 2.58% 3.64%+
Net investment income.. 2.65% 3.07%+ 3.64% 3.89% 3.51% 2.81% 2.93% 2.86% 15.07%(a)+
Portfolio turnover
rate................... 9% 2% 10% 28% 33% 60% 127% 178% 131%
Average commission rate
paid per share......... $0.0657 $0.0670 $0.0649 N/A N/A N/A N/A N/A N/A
NET ASSETS END OF YEAR
(MILLIONS)............. $1,117 $802 $809 $623 $332 $240 $64 $11 $2
</TABLE>
- -------
+ Annualized.
* For the period from January 2, 1990 (commencement of class operations) to
December 31, 1990.
** The Fund changed its fiscal year end from December 31 to March 31,
effective March 31, 1997.
(a) Includes receipt of a special dividend representing $0.62 per share net
investment income and 7.59% of average net assets.
# Net investment income is based on average shares outstanding during the
period.
4
<PAGE>
EVERGREEN TAX STRATEGIC FOUNDATION FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
---------------- ---------------------------------
1998 1997** 1996 1995 1994 1993*
------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
BEGINNING OF YEAR...... $13.61 $13.54 $12.22 $10.27 $10.31 $10.00
------- ------- ------- ------- ------- ------
Income from investment
operations
Net investment income.. 0.37 0.09 0.34 0.35 0.27 0.05
Net realized and
unrealized gain on
investments........... 2.95 0.05# 1.56 2.39 0.08 0.31
------- ------- ------- ------- ------- ------
Total from investment
operations............. 3.32 0.14 1.90 2.74 0.35 0.36
------- ------- ------- ------- ------- ------
Less distributions
From net investment
income................ (0.36) (0.07) (0.30) (0.33) (0.27) (0.05)
From net realized gain
on investments........ (0.18) 0 (0.28) (0.46) (0.12) 0
------- ------- ------- ------- ------- ------
Total distributions..... (0.54) (0.07) (0.58) (0.79) (0.39) (0.05)
------- ------- ------- ------- ------- ------
Net asset value end of
year................... $16.39 $13.61 $13.54 $12.22 $10.27 $10.31
======= ======= ======= ======= ======= ======
TOTAL RETURN............ 24.73% 1.00% 15.80% 27.30% 3.40% 3.50%
RATIOS/SUPPLEMENTAL DATA
Ratios to average net
assets:
Total expenses......... 1.15% 1.13%++ 1.30% 1.50% 1.49% 0.00%++
Total expenses,
excluding indirectly
paid expenses......... 1.15% N/A N/A N/A N/A N/A
Total expenses,
excluding fee waivers
& expense
reimbursements........ N/A N/A 1.56% 2.23% 2.41% 3.10%++
Net investment income.. 2.48% 2.54%++ 2.63% 3.06% 2.87% 3.65%++
Portfolio turnover
rate................... 50% 29% 88% 110% 245% 60%
Average commission rate
paid per share......... $0.0659 $0.0656 $0.0649 N/A N/A N/A
NET ASSETS END OF YEAR
(THOUSANDS)............ $19,881 $15,311 $15,002 $13,485 $10,575 $5,424
</TABLE>
- -------
++ Annualized.
* For the period from March 3, 1995 (commencement of class C operations) to
December 31, 1995 and November 2, 1993 (commencement of class Y operations)
to December 31, 1993.
** The Fund changed its fiscal year end from December 31 to March 31,
effective March 31, 1997.
# The net investment income is not in accord with the net realized and
unrealized gain (loss) for the period due to the timing of the sales of Fund
shares and the amount of per share realized and unrealized gains and losses
at such time.
EVERGREEN AMERICAN RETIREMENT FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
---------------- ------------------------------------------------------------------------------
1998 1997** 1996 1995 1994 1993 1992 1991 1990 1989 1988*
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
BEGINNING OF YEAR...... $13.74 $13.86 $12.83 $10.67 $11.60 $10.95 $10.52 $9.59 $10.41 $10.09 $10.00
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------
Income (loss) from
investment operations
Net investment income.. 0.55 0.14 0.48 0.47 0.60 0.56 0.66 0.60 0.60 0.57 0.39
Net realized and
unrealized gain (loss)
on investments........ 3.27 (0.14) 1.10 2.16 (0.93) 0.96 0.55 1.15 (0.66) 0.76 0.18
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------
Total from investment
operations............. 3.82 0 1.58 2.63 (0.33) 1.52 1.21 1.75 (0.06) 1.33 0.57
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------
Less distributions
From net investment
income................ (0.52) (0.12) (0.44) (0.47) (0.60) (0.60) (0.61) (0.60) (0.60) (0.59) (0.36)
From net realized gain
on investments........ (0.34) 0 (0.11) 0 0 (0.24) (0.17) (0.22) (0.16) (0.42) (0.12)
In excess of net
realized gain on
investments........... 0 0 0 0 0 (0.03) N/A N/A N/A N/A N/A
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------
Total distributions..... (0.86) (0.12) (0.55) (0.47) (0.60) (0.87) (0.78) (0.82) (0.76) (1.01) (0.48)
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------
Net asset value end of
year................... $16.70 $13.74 $13.86 $12.83 $10.67 $11.60 $10.95 $10.52 $9.59 $10.41 $10.09
======= ======= ======= ======= ======= ======= ======= ======= ======= ======= ======
TOTAL RETURN............ 28.34% 0.00% 12.60% 25.10% (2.90%) 14.10% 11.80% 18.80% (0.50%) 13.40% 5.80%
RATIOS/SUPPLEMENTAL DATA
Ratios to average net
assets:
Total expenses......... 1.14% 1.11%+ 1.05% 1.26% 1.28% 1.36% 1.51% 1.50% 1.50% 1.88% 2.00%+
Total expenses,
excluding indirectly
paid expenses......... 1.14% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Total expenses,
excluding fee waivers
& expense
reimbursements........ N/A 1.38%+ 1.09% N/A N/A N/A 1.59% 1.82% 1.95% 2.03% N/A
Net investment income.. 3.45% 3.56%+ 3.65% 3.96% 5.40% 5.13% 6.23% 5.91% 6.04% 5.49% 5.01%+
Portfolio turnover
rate................... 34% 9% 16% 49% 136% 92% 151% 97% 33% 152% 52%
Average commission rate
paid per share......... $0.0596 $0.0606 $0.0619 N/A N/A N/A N/A N/A N/A N/A N/A
NET ASSETS END OF YEAR
(THOUSANDS)............ $43,786 $37,237 $41,243 $39,327 $37,176 $37,336 $23,781 $15,632 $12,351 $11,610 $9,449
</TABLE>
- -------
+ Annualized.
* For the period from March 14, 1988 (commencement of class operations) to
December 31, 1988.
** The Fund changed its fiscal year end from December 31 to March 31,
effective March 31, 1997.
5
<PAGE>
EVERGREEN BALANCED FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
PERIOD ENDED
MARCH 31, 1998**#
-----------------
<S> <C>
NET ASSET VALUE BEGINNING OF PERIOD.......................... $12.01
-------
Income from investment operations
Net investment income....................................... 0.08
Net realized and unrealized gain on investments, futures
contracts and foreign currency related transactions........ 0.86
-------
Total from investment operations............................. 0.94
-------
Less distributions
From net investment income.................................. (0.09)
-------
Total distributions.......................................... (0.09)
-------
Net asset value end of period................................ $12.86
=======
TOTAL RETURN................................................. 7.79%
RATIOS/SUPPLEMENTAL DATA
Ratios to average net assets:
Total expenses.............................................. 0.75%++
Total expenses, excluding indirectly paid expenses.......... 0.75%++
Net investment income....................................... 3.47%++
Portfolio turnover rate...................................... 76%
Average commission rate paid per share....................... $0.0594
NET ASSETS END OF PERIOD (THOUSANDS)......................... $39,231
</TABLE>
- -------
++ Annualized.
** For the period from January 26, 1998 (commencement of class operations) to
March 31, 1998.
# Net investment income is based on average shares outstanding during the
period.
6
<PAGE>
- -------------------------------------------------------------------------------
DESCRIPTION OF THE FUNDS
- -------------------------------------------------------------------------------
Each Fund's investment objective is nonfundamental; as a result, a Fund
may change its objective without a shareholder vote. Each Fund has also
adopted certain fundamental investment policies which are mainly designed to
limit a Fund's exposure to risk. Each Fund's fundamental policies cannot be
changed without a shareholder vote. See the SAI for more information regarding
a Fund's fundamental investment policies or other related investment policies.
There can be no assurance that a Fund's investment objective will be achieved.
In addition to the investment policies detailed below, each Fund may
employ certain additional investment strategies which are discussed in
"Investment Practices and Restrictions" below.
INVESTMENT OBJECTIVES AND POLICIES
EVERGREEN FOUNDATION FUND
The investment objectives of EVERGREEN FOUNDATION FUND, in order of
priority, are reasonable income, conservation of capital and capital
appreciation. The Fund seeks to achieve these objectives by investing in a
combination of common stocks, preferred stocks, securities convertible into or
exchangeable for common stocks, corporate and U.S. government debt
obligations, and short-term debt instruments, such as commercial paper. The
Fund's common stock investments will include those which (at the time of
purchase) pay dividends and in the view of the Fund's investment advisor have
potential for capital enhancement.
The Fund's asset allocation will vary from time to time in accordance
with changing economic and market conditions, including: inflation rates,
business cycle trends, business regulations and tax law impacts on the
investment markets. The composition of its portfolio will be largely
unrestricted and subject to the discretion of the Fund's investment advisor.
Under normal circumstances, the Fund anticipates that at least 25% of its net
assets will consist of fixed income securities. The balance will be invested
in equity securities (including securities convertible into equity
securities).
In selecting fixed income securities for the Fund's portfolio, emphasis
will be placed on issues expected to fluctuate little in value other than as a
result of changes in prevailing interest rates. The market values of the debt
obligations in the Fund's portfolio can be expected to vary inversely to
changes in prevailing interest rates. The Fund may at times emphasize the
generation of interest income by investing in high-yielding debt securities,
with short, medium or long-term maturities. While fixed income investments
will generally be made for the purpose of generating interest income,
investments in medium to long-term debt securities (i.e., those with
maturities from five to ten years and those with maturities over ten years,
respectively) may be made with a view to realizing capital appreciation when
the Fund's investment advisor believes changes in interest rates will lead to
an increase in the values of such securities. The fixed income portion of the
Fund's portfolio may include:
1. Marketable obligations of, or guaranteed by, the U.S. government, its
agencies or instrumentalities, including issues of the U.S. Treasury, such as
bills, certificates of indebtedness, notes and bonds, and issues of agencies
and instrumentalities established under the authority of an act of Congress.
Some of these securities are supported by the full faith and credit of the
U.S. government, and others are supported only by the credit of the agency or
instrumentality. Agencies or instrumentalities whose securities are supported
by the full faith and credit of the United States include, but are not limited
to, the Federal Housing Administration, Export-Import Bank of the United
States, Small Business Administration and Government National Mortgage
Association. Agencies or instrumentalities whose securities are supported only
by the credit of the agency or instrumentality include the Interamerican
Development Bank and the International Bank for Reconstruction and
Development. These obligations are supported by appropriated but unpaid
commitments of their member countries. There are no assurances that the
commitments will be fulfilled in the future.
2. Corporate obligations rated no lower than A by Moody's Investors
Service ("Moody's"), or A-2 by Standard and Poor's Rating Services ("S&P").
3. Obligations of banks or banking institutions having total assets of
more than $2 billion which are members of the Federal Deposit Insurance
Corporation.
4. Commercial paper of high quality (rated no lower than A-2 by S&P or
Prime-2 by Moody's or, if not rated, issued by companies which have an
outstanding long-term debt issue rated AAA or AA by S&P or Aaa or Aa by
Moody's). For a description of such ratings see the SAI.
7
<PAGE>
Certain obligations may be entitled to the benefit of standby letters of
credit or similar commitments issued by banks and, in such instances, the
Fund's investment advisor will take into account the obligation of the bank in
assessing the quality of such security.
EVERGREEN TAX STRATEGIC FOUNDATION FUND
The investment objective of EVERGREEN TAX STRATEGIC FOUNDATION FUND is to
maximize the after-tax "total return" on its portfolio of investments. Total
return consists of current income and capital appreciation in the value of its
shares. The Fund seeks to achieve this objective by investing in common
stocks, preferred stocks and securities convertible into or exchangeable for
common stocks. It will also invest in debt obligations issued by states and
possessions of the United States and by the District of Columbia, and their
political subdivisions and duly constituted authorities, the interest from
which is exempt from federal income tax. Such securities are generally known
as Municipal Securities. The Fund may also invest in taxable debt securities.
(See "Investment Practices and Restrictions--Municipal Securities and Taxable
Fixed-Income Investments" below.)
To the extent that the Fund seeks capital appreciation, it expects that
its investments will provide growth over the long-term. Investments, however,
may be made on occasion for the purpose of short-term capital appreciation if
the Fund believes that such investments will benefit its shareholders. The
Fund may make investments in securities regardless of whether or not such
securities are traded on a national securities exchange. The values of
portfolio securities and their yields are expected to fluctuate over time
because of varying general economic and market conditions.
The Fund's asset allocation will also vary from time to time in
accordance with changing economic and market conditions, including: inflation
rates, business cycle trends, business regulations and tax law impacts on the
investment markets. The composition of its portfolio will be largely
unrestricted and subject to the discretion of the Fund's investment advisor.
Under normal circumstances, the Fund anticipates that, at the close of each
quarter of its taxable year, at least 50% of the value of its total assets
will be invested in Municipal Securities. The balance will be invested in
equity securities (including securities convertible into equity securities).
With respect to the fixed income portion of the Fund's portfolio,
emphasis will be placed on acquiring issues expected to fluctuate little in
value, except with changes in prevailing interest rates. The market values of
the Municipal Securities in the Fund's portfolio can be expected to vary
inversely to changes in prevailing interest rates. The Fund may at times
emphasize the generation of interest income by investing in high-yielding debt
securities, with short, medium or long-term maturities. Investment in medium
(i.e., with maturities from five to ten years) to long-term (i.e., with
maturities over ten years) debt securities may also be made with a view to
realizing capital appreciation when the Fund's investment advisor believes
that interest rates on such investments may decline, thereby increasing their
market value.
In general, the Fund will invest predominately in Municipal Securities
only if they are determined to be of high or upper medium quality. These
include bonds rated BBB or higher by S&P or Baa or higher by Moody's or any
other nationally recognized statistical rating organization ("SRO"). The Fund
may purchase Municipal Securities which are unrated at the time of purchase,
if such securities are determined by the Fund's investment advisor to be of
comparable quality to such rated securities. Certain Municipal Securities
(primarily variable rate demand notes) may be entitled to the benefits of
standby letters of credit or similar commitments issued by banks and, in such
instances, the Fund's investment advisor will take into account the
obligations of the banks in assessing the quality of such securities. Medium
grade bonds are more susceptible to adverse economic conditions or changing
circumstances than higher grade bonds. For a description of such ratings see
the SAI.
Interest income on certain types of bonds issued after August 7, 1986 to
finance nongovernmental activities is an item of "tax-preference" subject to
the federal alternative minimum tax for individuals and corporations. To the
extent the Fund invests in these "private activity" bonds (some of which were
formerly referred to as "industrial development" bonds), individual and
corporate shareholders, depending on their status, may be subject to the
alternative minimum tax on that part of the Fund's distributions derived from
the bonds. As a matter of fundamental policy, 80% of the Fund's investments in
Municipal Securities will be invested in such securities, the interest from
which is not subject to the federal alternative minimum tax.
EVERGREEN AMERICAN RETIREMENT FUND
The investment objectives of EVERGREEN AMERICAN RETIREMENT FUND in order
of priority are conservation of capital, reasonable income and capital growth.
The Fund offers a structured investment approach designed specifically for
retirees and persons contemplating retirement which may also be appropriate
for the qualified retirement plans of smaller companies.
8
<PAGE>
The Fund will invest in a diversified and balanced portfolio of equity
and fixed income securities, with emphasis on income-producing securities
which appear to have potential for capital enhancement. Ordinarily, the Fund
anticipates that approximately 50% of its portfolio will consist of equity
securities (including securities convertible into equity securities) and 50%
of fixed income securities. The Fund's investment advisor may vary the amount
invested in each type of security in response to changing market conditions to
take advantage of relative undervaluation in either the stock or bond markets.
The Fund will, however, not make an additional investment in equity securities
if more than 75% of its total assets at the time the investment is made would
include investments in equity securities. Generally, approximately half of the
equity portion of the Fund's portfolio will be invested in common stocks which
the Fund's investment advisor believes will yield current income and have
potential for long-term capital growth and half in bonds and preferred stocks
convertible into such common stock.
In addition, the Fund may invest up to 20% of its assets in securities of
foreign issuers.
With respect to the fixed income portion of the Fund's portfolio,
emphasis will be placed on acquiring non-speculative issues expected to
fluctuate little in value, except with changes in prevailing interest rates.
The market value of the debt obligations in the Fund's portfolio can be
expected to vary inversely to changes in prevailing interest rates. The Fund
may at times emphasize the generation of interest income by investing in high-
yielding debt securities, with short and medium to long-term maturities.
Investment in medium (i.e., with maturities from five to ten years) to long-
term (i.e., with maturities over ten years) debt securities may also be made
with a view to realizing capital appreciation when the Fund's investment
advisor believes that interest rates on such investments may decline, thereby
increasing their market values.
Normally, the Fund anticipates that approximately half of the fixed
income portion of the Fund's portfolio will be invested in marketable
obligations of, or guaranteed by, the U.S. government, its agencies or
instrumentalities which are supported by the full faith and credit of the
United States or by the right of the issuer to borrow from the U.S. Treasury.
These include issues of the Treasury, such as bills, certificates of
indebtedness, notes and bonds, and issues of agencies and instrumentalities
established under the authority of an act of Congress. Agencies or
instrumentalities whose securities are supported by the full faith and credit
of the United States include, but are not limited to, the Federal Housing
Administration, Export-Import Bank of the United States, Small Business
Administration and Government National Mortgage Association. Examples of
agencies or instrumentalities whose securities are supported by the right of
the issuer to borrow from the Treasury include, but are not limited to, the
Federal Home Loan Bank, Federal Intermediate Credit Banks, Federal National
Mortgage Association and Tennessee Valley Authority. The balance will be
invested in corporate obligations rated no lower than A by Moody's or S&P.
EVERGREEN BALANCED FUND
EVERGREEN BALANCED FUND seeks current income.
The Fund invests in a combination of equity and debt securities chosen
primarily for their potential for current income and secondarily, to the
extent consistent with the Fund's investment objective, for their potential
for capital appreciation. The Fund normally emphasizes securities having a
liberal current yield consistent with investment quality on which the interest
or dividend payments are considered reasonably secure. Under normal
circumstances, the Fund maintains at least 25% of its total assets in fixed
income senior securities. The Fund will invest, under normal circumstances, at
least 50% of its total assets in equity securities. The Fund may invest in any
type of security, including bonds, debentures and income obligations as well
as common and preferred stocks.
Debt securities, which include both secured and unsecured obligations,
will generally, at the time of investment, be rated within the four highest
categories by S&P (AAA, AA, A and BBB), by Moody's (Aaa, Aa, A and Baa), by
Fitch IBCA, Inc. ("Fitch") (AAA, AA, A and BBB), or if not rated or rated
under a different system, will be of comparable quality to obligations so
rated, as determined by the Fund's investment advisor.
The Fund may also invest in limited partnerships, including master
limited partnerships, and in foreign securities (up to 25% of its assets). The
Fund may also invest up to 25% of its assets in below-investment grade
securities issued by the U.S. and foreign issuers having a rating range of BB
to CCC by S&P or Fitch and/or Ba to Caa by Moody's, or if unrated or rated
under a different system, believed by the Fund's investment advisor to be of
comparable quality.
Securities rated BB or lower by S&P or Fitch, or Ba or lower by Moody's,
are considered predominantly speculative with respect to the ability of the
issuer to meet principal and interest payments. For more information on below-
investment grade securities, see the SAI.
9
<PAGE>
The Fund's debt securities may include zero coupon bonds and payment-in-
kind securities ("PIKs").
The Fund may invest in certain types of derivative instruments, including
mortgage-related securities, such as collateralized mortgage obligations, and
enter into interest rate transactions, such as "swaps," "caps," and "floors."
These vehicles can also be combined to create more complex products called
hybrid derivatives or structured securities. For more information see the SAI.
In addition to the investment policies detailed above, the Funds may
employ certain additional investment strategies which are discussed in
"Investment Practices and Restrictions."
INVESTMENT PRACTICES AND RESTRICTIONS
Defensive Investments. The Funds may invest without limitation in high quality
money market instruments, such as notes, certificates of deposit or bankers'
acceptances, or U.S. government securities if, in the opinion of the Fund's
investment advisor, market conditions warrant a temporary defensive investment
strategy.
Borrowing. Each Fund may borrow from banks in an amount up to 33 1/3% of its
total assets, taken at market value. Each Fund may also borrow an additional
5% of its total assets from banks and others. A Fund may only borrow as a
temporary measure for extraordinary or emergency purposes such as the
redemption of Fund shares. A Fund will not purchase securities while
borrowings are outstanding except to exercise prior commitments and to
exercise subscription rights. In addition to borrowing for temporary or
emergency purposes, EVERGREEN AMERICAN RETIREMENT FUND may borrow for the
purpose of leveraging. See "Special Risk Considerations--Leverage" below.
Securities Lending. In order to generate income and to offset expenses, the
Funds may lend portfolio securities to brokers, dealers and other financial
institutions. The Funds will only enter into loan arrangements with
creditworthy borrowers and will receive collateral in the form of cash or U.S.
government securities equal to at least 100% of the value of the securities
loaned. Loans of securities by the Funds may not exceed 33 1/3% of the value
of the Funds' total assets. There is a risk that when lending portfolio
securities, the securities may not be available to a Fund on a timely basis
and a Fund may, therefore, lose the opportunity to sell the securities at a
desirable price. Also, if the borrower files for bankruptcy or becomes
insolvent, a Fund's ability to dispose of the securities may be delayed.
Illiquid Securities. Each Fund may invest up to 15% of its net assets in
illiquid securities and other securities which are not readily marketable.
Repurchase agreements with maturities longer than seven days will be included
for the purposes of the foregoing 15% limit. The inability of a Fund to
dispose of illiquid or not readily marketable investments readily or at a
reasonable price could impair a Fund's ability to raise cash for redemptions
or other purposes.
Restricted Securities. The Funds may invest in restricted securities,
including securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933 (the "1933 Act"). Generally, Rule 144A establishes a
safe harbor from the registration requirements of the 1933 Act for resale by
large institutional investors of securities not publicly traded in the United
States. Each Fund's investment advisor determines the liquidity of Rule 144A
securities according to guidelines and procedures adopted by the Trust's Board
of Trustees. The Board of Trustees monitors the investment advisor's
application of those guidelines and procedures. Securities eligible for resale
pursuant to Rule 144A, which the Fund's investment advisor has determined to
be liquid or readily marketable, are not subject to the 15% limit on illiquid
securities.
Repurchase Agreements. The Funds may invest in repurchase agreements. A
repurchase agreement is an agreement by which a Fund purchases a security
(usually U.S. government securities) for cash and obtains a simultaneous
commitment from the seller (usually a bank or broker/dealer) to repurchase the
security at an agreed-upon price and specified future date. The repurchase
price reflects an agreed-upon interest rate for the time period of the
agreement. A Fund's risk is the inability of the seller to pay the agreed-upon
price on the delivery date. However, this risk is tempered by the ability of a
Fund to sell the security in the open market in the case of a default. In such
a case, a Fund may incur costs in disposing of the security which would
increase Fund expenses. A Fund's investment advisor will monitor the
creditworthiness of the firms with which a Fund enters into repurchase
agreements.
Reverse Repurchase Agreements. Each Fund may enter into reverse repurchase
agreements. A reverse repurchase agreement is an agreement by a Fund to sell a
security and repurchase it at a specified time and price. A Fund could lose
money if the market values of the obligations it sold decline below their
repurchase
10
<PAGE>
prices. Reverse repurchase agreements may be considered a form of borrowing,
and, therefore, a form of leverage. Leverage may magnify gains or losses of
the Fund.
Options and Futures. EVERGREEN AMERICAN RETIREMENT FUND may write covered call
options on certain portfolio securities in an attempt to earn income and
realize a higher return on its portfolio. A call option may not be written by
the Fund if afterwards securities comprising more than 15% of the market value
of the equity securities of the Fund would be subject to call options. The
Fund realizes income from the premium paid to it in exchange for writing the
call option. Once it has written a call option on a portfolio security and
until the expiration of such option, the Fund forgoes the opportunity to
profit from increases in the market price of such security in excess of the
exercise price of the call option. Should the price of the security on which a
call has been written decline, the Fund retains the risk of loss, which would
be offset to the extent the Fund has received premium income. The Fund will
only write "covered" call options traded on U.S. national securities
exchanges. An option will be deemed covered when either (i) the Fund owns the
security (or securities convertible into such security) on which the option
has been written in an amount sufficient to satisfy the obligations arising
under the option, or (ii) the Fund's custodian maintains cash or high-grade
liquid debt securities belonging to the Fund in an amount not less than the
amount needed to satisfy the Fund's obligations with respect to such options.
A "closing purchase transaction" may be entered into with respect to a call
option written by the Fund for the purpose of closing its position.
EVERGREEN AMERICAN RETIREMENT FUND may also purchase futures contracts,
including futures contracts based on securities indices, and write options on
such contracts. The Fund intends to enter into such contracts and related
options for hedging purposes. The Fund may enter into other types of futures
contracts that may become available and relate to the securities held by the
Fund.
EVERGREEN BALANCED FUND may engage in options and futures transactions.
Options and futures transactions are intended to enable the Fund to manage
market, interest rate or exchange rate risk. The Fund does not use these
transactions for speculation or leverage.
EVERGREEN BALANCED FUND may attempt to hedge all or a portion of its
portfolio through the purchase of both put and call options on its portfolio
securities and listed put options on financial futures contracts for portfolio
securities. The Fund may also purchase call options on financial futures
contracts. The Fund may also write covered call options on its portfolio
securities to attempt to increase its current income. The Fund will maintain
its positions in securities, option rights and segregated cash subject to puts
and calls until the options are exercised, closed or have expired. An option
position may be closed out only on an exchange which provides a secondary
market for an option of the same series.
EVERGREEN BALANCED FUND may write covered call and put options. By
writing a call option, a Fund becomes obligated during the term of the option
to deliver the securities underlying the option upon payment of the exercise
price. By writing a put option, a Fund becomes obligated during the term of
the option to purchase the securities underlying the option at the exercise
price if the option is exercised. The Funds may also write straddles
(combinations of covered puts and calls on the same underlying security).
EVERGREEN BALANCED FUND may only write "covered" options. This means that
so long as the Fund is obligated as the writer of a call option, it will own
the underlying securities subject to the option or, in the case of call
options on U.S. Treasury bills, the Fund might own substantially similar U.S.
Treasury bills. The Fund will be considered "covered" with respect to a put
option it writes if, so long as it is obligated as the writer of the put
option, it deposits and maintains with its custodian in a segregated account
liquid assets having a value equal to or greater than the exercise price of
the option.
The principal reason for writing call or put options is to obtain,
through a receipt of premiums, a greater current return than would be realized
on the underlying securities alone. The Fund receives a premium from writing a
call or put option which it retains whether or not the option is exercised. By
writing a call option, the Fund might lose the potential for gain on the
underlying security while the option is open, and by writing a put option the
Fund might become obligated to purchase the underlying securities for more
than their current market prices upon exercise.
EVERGREEN BALANCED FUND may also, as previously stated, purchase futures
contracts and options thereon. A futures contract is a firm commitment by two
parties: the seller, who agrees to make delivery of the specific type of
instrument called for in the contract ("going short"), and the buyer, who
agrees to take delivery of the instrument ("going long") at a certain time in
the future. Financial futures contracts call for the delivery of particular
debt instruments issued or guaranteed by the U.S. Treasury or by specific
agencies or instrumentalities
11
<PAGE>
of the U.S. government. If the Fund enters into financial futures contracts
directly to hedge its holdings of fixed income securities, it would enter into
contracts to deliver securities at an undetermined price (i.e., "go short") to
protect itself against the possibility that the prices of its fixed income
securities may decline during the Fund's anticipated holding period. The Fund
would agree to purchase securities in the future at a predetermined price
(i.e., "go long") to hedge against a decline in market interest rates.
EVERGREEN BALANCED FUND may also enter into currency and other financial
futures contracts and write options on such contracts. The Fund intends to
enter into such contracts and related options for hedging purposes. The Fund
will enter into futures on securities, currencies or index-based futures
contracts in order to hedge against changes in interest or exchange rates or
securities prices. A futures contract on securities or currencies is an
agreement to buy or sell securities or currencies during a designated month at
whatever price exists at that time. A futures contract on a securities index
does not involve the actual delivery of securities, but merely requires the
payment of a cash settlement based on changes in the securities index. The
Fund does not make payment or deliver securities upon entering into a futures
contract. Instead, it puts down a margin deposit, which is adjusted to reflect
changes in the value of the contract and which remains in effect until the
contract is terminated.
The Fund may sell or purchase currency and other financial futures
contracts. When a futures contract is sold by a Fund, the profit on the
contract will tend to rise when the value of the underlying securities or
currencies declines and to fall when the value of such securities or
currencies increases. Thus, the Fund sells futures contracts in order to
offset a possible decline in the profit on the securities or currencies. If a
futures contract is purchased by the Fund, the value of the contract will tend
to rise when the value of the underlying securities or currencies increases
and to fall when the value of such securities or currencies declines.
The Fund may enter into closing purchase and sale transactions in order
to terminate a futures contract and may buy or sell put and call options for
the purpose of closing out its options positions. The Fund's ability to enter
into closing transactions depends on the development and maintenance of a
liquid secondary market. There is no assurance that a liquid secondary market
will exist for any particular contract or at any particular time. As a result,
there can be no assurance that the Fund will be able to enter into an
offsetting transaction. The Fund will continue to be required to maintain the
margin deposits on the contract and to complete the contract according to its
terms, in which case the Fund would continue to bear market risk on the
transaction.
Risk Characteristics of Options and Futures. Although options and futures
transactions are intended to enable the Funds to manage market, exchange or
interest rate risks, these investment devices can be highly volatile, and the
Funds use of them could result in poorer performance (i.e., a Fund's returns
may be reduced). A Fund attempts to use such investment devices for hedging
purposes may not be successful. Successful futures strategies require the
ability to predict future movements in securities prices, interest rates and
other economic factors. When a Fund uses financial futures contracts and
options on financial futures contracts as hedging devices, there is a risk
that the prices of the securities subject to the financial futures contracts
and options on financial futures contracts may not correlate perfectly with
the prices of the securities in the Fund's portfolio. This may cause the
financial futures contract and any related options to react to market changes
differently than the portfolio securities. In addition, a Fund's investment
advisor could be incorrect in its expectations and forecasts about the
direction or extent of market factors, such as interest rates, securities
price movements and other economic factors. Even if a Fund's investment
advisor correctly predicts interest rate movements, a hedge could be
unsuccessful if changes in the value of the Fund's futures position did not
correspond to changes in the value of its financial futures contracts. A
Fund's ability to establish and close out financial futures contracts and
options on financial futures contracts positions depends on this secondary
market. If a Fund is unable to close out its position due to disruptions in
the market or lack of liquidity, the Fund may lose money on the futures
contract or option, and the losses to the Fund could be significant.
When Issued, Delayed Delivery and Forward Commitment Transactions. Each Fund
may enter into transactions whereby it commits to buying a security, but does
not pay for or take delivery of the security until some specified date in the
future. The value of these securities is subject to market fluctuation during
this period and no income accrues to a Fund until settlement. At the time of
settlement, a when-issued security may be valued at less than its purchase
price. When entering into these transactions, a Fund relies on the other party
to consummate the transaction; if the other party fails to do so, a Fund may
be disadvantaged. Each Fund does not intend to purchase when-issued securities
for speculative purposes, but only in furtherance of its investment objective.
Municipal Securities. As noted above, EVERGREEN TAX STRATEGIC FOUNDATION FUND
may invest in Municipal Securities, which include municipal bonds, short-term
municipal notes and tax exempt commercial paper. "Municipal bonds" are debt
obligations issued to obtain funds for various public purposes that are exempt
from
12
<PAGE>
federal income tax in the opinion of issuer's counsel. The two principal
classifications of municipal bonds are "general obligation" and "revenue"
bonds. General obligation bonds are secured by the issuer's pledge of its full
faith, credit and taxing power for the payment of principal and interest.
Revenue bonds are payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise tax or other specific source such as from the user of the
facility being financed. The term "municipal bonds" also includes "moral
obligation" issues which are normally issued by special purpose authorities.
Industrial development bonds ("IDBs") and private activity bonds ("PABs") are
in most cases revenue bonds and are not payable from the unrestricted revenues
of the issuer. The credit quality of IDBs and PABs is usually directly related
to the credit standing of the corporate user of the facilities being financed.
Participation interests are interests in municipal bonds, including IDBs and
PABs, and floating and variable rate obligations that are owned by banks.
These interests carry a demand feature permitting the holder to tender them
back to the bank, which demand feature is backed by an irrevocable letter of
credit or guarantee of the bank. A put bond is a municipal bond which gives
the holder the unconditional right to sell the bond back to the issuer at a
specified price and exercise date, which is typically well in advance of the
bond's maturity date. "Short-term municipal notes" and "tax exempt commercial
paper" include tax anticipation notes, bond anticipation notes, revenue
anticipation notes and other forms of short-term loans. Such notes are issued
with a short-term maturity in anticipation of the receipt of tax funds, the
proceeds of bond placements and other revenues.
Floating Rate and Variable Rate Obligations. The Municipal Securities in which
EVERGREEN TAX STRATEGIC FOUNDATION FUND may invest also include certain
variable rate and floating rate municipal obligations with or without demand
features. These variable rate securities do not have fixed interest rates;
rather, the rates fluctuate based upon changes in specified market rates, such
as the prime rate, or are adjusted at predesignated periodic intervals.
Certain of these obligations may carry a demand feature that gives EVERGREEN
TAX STRATEGIC FOUNDATION FUND the right to demand prepayment of the principal
amount of the security prior to its maturity date. The demand obligation may
or may not be backed by letters of credit or other guarantees of banks or
other financial institutions. Such guarantees may enhance the quality of the
security. EVERGREEN TAX STRATEGIC FOUNDATION FUND will limit the value of its
investments in any floating or variable rate securities which are not readily
marketable and in all other not readily marketable securities to 15% or less
of its net assets. EVERGREEN TAX STRATEGIC FOUNDATION FUND may invest no more
than 5% of its total assets in variable and floating rate securities.
Stand-By Commitments. EVERGREEN TAX STRATEGIC FOUNDATION FUND may also acquire
"stand-by commitments" with respect to Municipal Securities held in its
portfolio. Under a stand-by commitment, a dealer agrees to purchase, at the
Fund's option, specified Municipal Securities at a specified price. Failure of
the dealer to purchase such Municipal Securities may result in the Fund
incurring a loss or missing an opportunity to make an alternative investment.
EVERGREEN TAX STRATEGIC FOUNDATION FUND expects that stand-by commitments
generally will be available without the payment of direct or indirect
consideration. However, if necessary and advisable, the Fund may pay for
stand-by commitments either separately in cash or by paying a higher price for
portfolio securities which are acquired subject to such a commitment (thus
reducing the yield to maturity otherwise available for the same securities).
The total amount paid in either manner for outstanding stand-by commitments
held in EVERGREEN TAX STRATEGIC FOUNDATION FUND'S portfolio will not exceed
10% of the value of its net assets calculated immediately after each stand-by
commitment is acquired. The Fund will maintain cash or liquid securities in a
segregated account with its custodian in an amount equal to such commitments.
The Fund will enter into stand-by commitments only with banks and broker-
dealers that, in the judgment of the Fund's investment advisor, present
minimal credit risks.
Taxable Fixed-Income Investments. EVERGREEN TAX STRATEGIC FOUNDATION FUND may
temporarily invest up to 20% of its net assets in taxable securities under any
one or more of the following circumstances: (1) pending investment of proceeds
of sale of Fund shares or of portfolio securities, (2) pending settlement of
purchases of portfolio securities, and (3) to maintain liquidity for the
purpose of meeting anticipated redemptions. In addition, the Fund may
temporarily invest in taxable securities for defensive purposes. A Fund may
invest for defensive purposes during periods when a Fund's assets available
for investment exceed the available Municipal Securities that meet a Fund's
quality and other investment criteria. Taxable securities in which a Fund may
invest on a short-term basis include obligations of the U.S. government, its
agencies or instrumentalities, including repurchase agreements with banks or
securities dealers involving such securities; time deposits maturing in not
more than seven days; other debt securities rated within the two highest
ratings assigned by any major rating service; commercial paper rated in the
highest grade by Moody's, S&P or any SRO; and certificates of deposit issued
by U.S. branches of U.S. banks with assets of $1 billion or more.
Downgrades. If any security invested in by any of the Funds loses its rating
or has its rating reduced after a Fund has purchased it, a Fund is not
required to sell or otherwise dispose of the security, but may consider doing
so.
13
<PAGE>
SPECIAL RISK CONSIDERATIONS
Foreign Investments. Investments by a Fund in foreign securities may involve
additional risks. Specifically, they may be affected by the strength of
foreign currencies relative to the U.S. dollar, or by political or economic
developments in foreign countries. Accounting procedures and government
supervision may be less stringent than those applicable to U.S. companies.
There may be less publicly available information about a foreign company than
about a U.S. company. Foreign markets may be less liquid or more volatile than
U.S. markets and may offer less protection to investors. It may also be more
difficult to enforce contractual obligations abroad than would be the case in
the U.S. because of differences in the legal systems. Foreign securities may
be subject to foreign taxes, which may reduce yield, and may be less
marketable than comparable U.S. securities. All these factors are considered
by a Fund's investment advisor before making this type of investment.
Investing in securities of issuers in emerging markets countries involves
exposures to economic systems that are generally less mature and political
systems that are generally less stable than those of developed countries. In
addition, investing in companies in emerging markets countries may also
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 of those
securities.
Foreign Currency Transactions. When a Fund invests in foreign securities, they
usually will be denominated in foreign currencies, and a Fund temporarily may
hold funds in foreign currencies. Thus, the value of a Fund's shares will be
affected by changes in exchange rates.
As one way of managing exchange rate risk, in addition to entering into
currency futures contracts, a Fund may enter into forward currency exchange
contracts (agreements to purchase or sell currencies at a specified price and
date). The exchange rate for the transaction (the amount of currency a Fund
will deliver or receive when the contract is completed) is fixed when the Fund
enters into the contract. A Fund usually will enter into these contracts to
stabilize the U.S. dollar value of a security it has agreed to buy or sell. A
Fund intends to use these contracts to hedge the U.S. dollar value of a
security it already owns, particularly if the Fund expects a decrease in the
value of the currency in which the foreign security is denominated. Although a
Fund will attempt to benefit from using forward contracts, the success of its
hedging strategy will depend on the investment advisor's ability to predict
accurately the future exchange rates between foreign currencies and the U.S.
dollar. The value of a Fund's investments denominated in foreign currencies
will depend on the relative strength of those currencies and the U.S. dollar,
and the Fund may be affected favorably or unfavorably by changes in the
exchange rates or exchange control regulations between foreign currencies and
the U.S. dollar. Changes in foreign currency exchange rates also may affect
the value of dividends and interest earned, gains and losses realized on the
sale of securities and net investment income and gains, if any, to be
distributed to shareholders by a Fund. Although the Funds do not currently
intend to do so, they may also purchase and sell options related to foreign
currencies. The Funds do not intend to enter into foreign currency
transactions for speculation or leverage.
Lower-Rated Securities. EVERGREEN AMERICAN RETIREMENT FUND AND EVERGREEN
BALANCED FUND may invest a portion of their assets in securities rated below
Baa by Moody's or BBB by S&P (commonly known as "junk bonds"). Lower-rated and
comparable unrated securities (collectively referred to in this discussion as
"lower-rated securities") will likely have some quality and protective
characteristics that, in the judgment of the rating organization, are out-
weighted by large uncertainties or major risk exposures to adverse conditions;
and are predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal in accordance with the terms of the obligation.
While the market values of lower-rated securities tend to react less to
fluctuations in interest rate levels than the market values of higher rated
securities, the market values of certain lower-rated securities also tend to
be more sensitive to individual corporate developments and changes in economic
conditions than higher-rated securities. In addition, lower-rated securities
generally present a higher degree of credit risk. Issuers of lower-rated
securities are often highly leveraged and may not have more traditional
methods of financing available to them so that their ability to service their
debt obligations during an economic downturn or during sustained periods of
rising interest rates may be impaired. The risk of loss due to default by such
issuers is significantly greater because lower-rated securities generally are
unsecured and frequently are subordinated to the prior payment of senior
indebtedness. A Fund may incur additional expenses to the extent that it is
required to seek recovery upon a default in the payment of principal or
interest on its portfolio holdings. The existence of limited markets for
lower-rated securities may diminish a Fund's ability to obtain accurate market
quotations for purposes of valuing such
14
<PAGE>
securities and calculating its net asset value. For additional information
about the possible risks of investing in junk bonds, see "Investment
Objectives and Policies--Junk Bonds" in the SAI.
Investments Related to Real Estate. Each Fund may invest up to 15% of its net
assets in investments related to real estate, including real estate investment
trusts ("REITS"). Risks associated with investments in securities of companies
in the real estate industry include: declines in the value of real estate;
risks related to general and local economic conditions; overbuilding and
increased competition; increases in property taxes and operating expenses;
changes in zoning laws; casualty or condemnation losses; variations in rental
income; changes in neighborhood values; the appeal of properties to tenants;
and increases in interest rates. In addition, equity real estate investment
trusts may be affected by changes in the values of the underlying property
owned by the trusts, while mortgage real estate investment trusts may be
affected by the quality of credit extended. Equity and mortgage real estate
investment trusts are dependent upon management skills, may not be diversified
and are subject to the risks of financing projects. Such trusts are also
subject to heavy cash flow dependency, defaults by borrowers, self liquidation
and the possibility of failing to qualify for tax-free pass-through of income
under the Internal Revenue Code of 1986, as amended (the "Code") and to
maintain exemption from the Investment Company Act of 1940, as amended (the
"1940 Act"). In the event an issuer of debt securities collateralized by real
estate defaulted, it is conceivable that a Fund could end up holding the
underlying real estate.
Leverage. The utilization of leverage by the EVERGREEN AMERICAN RETIREMENT
FUND involves certain risks described below. For example, leveraging may
exaggerate changes in the net asset value of the Fund's shares and in the
yield on the Fund's portfolio. Although the principal of the Fund's borrowings
will be fixed, the Fund's assets may change in value during the time the
borrowings are outstanding. Borrowing will create interest expenses for the
Fund which can exceed the income from the assets retained. To the extent the
income derived from securities purchased with borrowed funds exceeds the
interest the Fund will have to pay, the Fund's net income will be greater than
if borrowing were not used. Conversely, if the income from the assets retained
with borrowed funds is not sufficient to cover the cost of borrowing, the net
income of a Fund will be less than if borrowing were not used, and therefore
the amount available for distribution to shareholders as dividends will be
reduced.
Other Investment Restrictions. Each Fund has adopted additional investment
restrictions that are set forth in the SAI. Unless otherwise noted, the
restrictions and policies set forth above are not fundamental and may be
changed without shareholder approval. Shareholders will be notified of any
changes in policies that are not fundamental.
- -------------------------------------------------------------------------------
ORGANIZATION AND SERVICE PROVIDERS
- -------------------------------------------------------------------------------
ORGANIZATION
Fund Structure. Each Fund is an investment pool, which invests shareholders'
money toward a specified goal. Each Fund is a diversified series of an open-
end, management investment company, called Evergreen Equity Trust (the
"Trust"). The Trust is a Delaware business trust organized on September 18,
1997.
Board of Trustees. The Trust is supervised by a Board of Trustees that is
responsible for representing the interests of shareholders. The Trustees meet
periodically throughout the year to oversee the Funds' activities, reviewing,
among other things, the Funds' performance and their contractual arrangements
with various service providers.
Shareholder Rights. All shareholders have equal voting, liquidation and other
rights. Each share is entitled to one vote for each dollar of net asset value
applicable to such share. Shareholders may exchange shares as described under
"Exchanges," but will have no other preference, conversion, exchange or
preemptive rights. When issued and paid for, shares will be fully paid and
nonassessable. Shares of a Fund are redeemable, transferable and freely
assignable as collateral. The Trust may establish additional classes or series
of shares.
The Funds do not hold annual shareholder meetings; the Funds may,
however, hold special meetings for such purposes as electing or removing
Trustees, changing fundamental policies and approving investment advisory
agreements or 12b-1 plans. In addition, a Fund is prepared to assist
shareholders in communicating with one another for the purpose of convening a
meeting to elect Trustees.
15
<PAGE>
SERVICE PROVIDERS
Investment Advisors. The investment advisor to EVERGREEN FOUNDATION FUND,
EVERGREEN TAX STRATEGIC FOUNDATION FUND and EVERGREEN AMERICAN RETIREMENT FUND
is Evergreen Asset Management Corp. ("Evergreen Asset"). Evergreen Asset is
located at 2500 Westchester Avenue, Purchase, New York 10577 and is a
subsidiary of First Union Corporation ("First Union"). First Union is located
at 301 South College Street, Charlotte, North Carolina 28288-0630.
As investment advisor to EVERGREEN FOUNDATION FUND, EVERGREEN TAX
STRATEGIC FOUNDATION FUND and EVERGREEN AMERICAN RETIREMENT FUND, Evergreen
Asset manages each Fund's investments, provides various administrative
services and supervises each Fund's daily business affairs, subject to the
authority of the Trustees. Evergreen Asset is entitled to receive from each of
EVERGREEN FOUNDATION FUND, EVERGREEN TAX STRATEGIC FOUNDATION FUND and
EVERGREEN AMERICAN RETIREMENT FUND, an annual percentage of its average daily
net assets, as follows:
<TABLE>
<CAPTION>
AGGREGATE
NET ASSET VALUE OF THE
MANAGEMENT FEE SHARES OF A FUND
-------------- ----------------------
<S> <C>
EVERGREEN AMERICAN RETIREMENT FUND:
0.75% of the first $750,000,000; and
0.70% of amounts over $750,000,000.
</TABLE>
<TABLE>
<CAPTION>
AGGREGATE
NET ASSET VALUE OF THE
MANAGEMENT FEE SHARES OF A FUND
-------------- ------------------------
<S> <C>
EVERGREEN FOUNDATION FUND AND EVERGREEN TAX
STRATEGIC FOUNDATION FUND:
0.875% of the first $ 750,000,000; and
0.750% of the next $ 250,000,000; and
0.700% of amounts over $1,000,000,000.
The investment advisor to EVERGREEN BALANCED FUND is Keystone Investment
Management Company ("Keystone"). Keystone has provided investment advisory and
management services to investment companies and private accounts since it was
organized in 1932. Keystone is located at 200 Berkeley Street, Boston,
Massachusetts 02116-5034, and is an indirect subsidiary of First Union
National Bank ("FUNB"), which is a subsidiary of First Union. FUNB is located
at 201 South College Street, Charlotte, North Carolina 28288-0630. First Union
and its subsidiaries provide a broad range of financial services to
individuals and businesses throughout the United States.
EVERGEEN BALANCED FUND pays Keystone a fee for its services at the annual
rate set forth below:
<CAPTION>
1.5% OF GROSS DIVIDEND
AND INTEREST INCOME PLUS
AGGREGATE NET
ASSET VALUE OF THE
MANAGEMENT FEE SHARES OF THE FUND
-------------- ------------------------
<S> <C>
0.60% of the first $100,000,000; plus
0.55% of the next $100,000,000; plus
0.50% of the next $100,000,000; plus
0.45% of the next $100,000,000; plus
0.40% of the next $100,000,000; plus
0.35% of the next $500,000,000; plus
0.30% of amounts over $1,000,000,000.
</TABLE>
Keystone's fee is computed as of the close of business each business day
and is payable monthly.
The total expenses as a percentage of average daily net assets on an
annual basis of EVERGREEN FOUNDATION FUND, EVERGREEN TAX STRATEGIC FOUNDATION
FUND and EVERGREEN AMERICAN RETIREMENT FUND for the fiscal year ended March
31, 1998 and of EVERGREEN BALANCED FUND for the period ended March 31, 1998,
are set forth in the section entitled "Financial Highlights." Such expenses
reflect all voluntary advisory fee waivers and expense reimbursements which
may be revised or terminated at any time.
Portfolio Managers. Stephen A. Lieber and James T. Colby, III have served as
the portfolio managers for EVERGREEN TAX STRATEGIC FOUNDATION FUND since its
inception. Mr. Lieber and Mr. Colby are assisted in the management of the Fund
by Gary R. Buesser, C.F.A. Mr. Lieber, who is Chairman and Co-Chief Executive
Officer of Lieber & Co. and Evergreen Asset, makes all allocation decisions
and investment decisions for the equity
16
<PAGE>
portion of the portfolio. Mr. Leiber was the founding Partner of Lieber & Co.
in 1969 and served as Senior Partner until June, 1994. Mr. Colby manages the
fixed-income portion of the portfolio. Mr. Colby has served as a fixed-income
portfolio manager with Evergreen Asset since 1992. Mr. Buesser joined Lieber &
Co. as an analyst in 1996. Previously, he was a portfolio manager/analyst with
Cohen Asset Management from August 1992 through December 1995 and Shearson
Lehman Brothers from January 1985 through August, 1992. Mr. Lieber is also the
portfolio manager for EVERGREEN FOUNDATION FUND.
The portfolio manager for EVERGREEN AMERICAN RETIREMENT FUND is Irene D.
O'Neill, C.F.A. Ms. O'Neill has served as the Fund's principal manager since
its inception, and has been associated with Evergreen Asset and its
predecessor since 1981. Ms. O'Neill is assisted in the management of the Fund
by Natalie Kucharski, C.F.A. Since 1985 Ms. Kucharski has served as an analyst
at Lieber & Co. in the insurance, health care services and telecommunications
industries.
Chris Conkey and Judith Warners have co-managed EVERGREEN BALANCED FUND
since June, 1998. Mr. Conkey, Chief Investment Officer of Fixed Income and the
Head of High Grade Bond Team at Keystone, manages the fixed income side of
EVERGREEN BALANCED FUND and Ms. Warners, Vice President of Keystone, manages
the equity portion of the Fund. During the past five years at Keystone, Mr.
Conkey has served as portfolio manager of several high grade fixed income
funds, several high grade-high yield fixed income funds and several off-shore
closed-end fixed income funds. Ms. Warners has over 15 years of investment
experience with Keystone and has managed Evergreen Blue Chip Fund since
January, 1995.
Sub-Advisor. Evergreen Asset has entered into sub-advisory agreements with
Lieber & Company which provide 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 the portfolios of EVERGREEN FOUNDATION FUND, EVERGREEN TAX
STRATEGIC FOUNDATION FUND AND EVERGREEN AMERICAN RETIREMENT FUND. Lieber &
Company is 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 FOUNDATION FUND,
EVERGREEN TAX STRATEGIC FOUNDATION FUND and EVERGREEN AMERICAN RETIREMENT FUND
for the services provided by Lieber & Company. The address of Lieber & Company
is 2500 Westchester Avenue, Purchase, New York 10577. Lieber & Company is an
indirect, wholly-owned, subsidiary of First Union.
Administrator. Evergreen Investment Services, Inc. ("EIS"), 200 Berkeley
Street, Boston, Massachusetts 02116-5034, serves as administrator to the
Funds. As administrator, and subject to the supervision and control of the
Trust's Board of Trustees, EIS provides the Funds with facilities, equipment
and personnel. For its services as administrator, EIS is entitled to receive a
fee based on the aggregate average daily net assets of the Funds at a rate
based on the total assets of all mutual funds advised by First Union
subsidiaries and administered by EIS. The administration fee is calculated in
accordance with the following schedule.
<TABLE>
<CAPTION>
ADMINISTRATION FEE
------------------
EVERGREEN FOUNDATION FUND, EVERGREEN TAX STRATEGIC FOUNDATION FUND,
EVERGREEN AMERICAN RETIREMENT FUND:
--------------------------------------------------------------------------------------
<S> <C>
0.060% on the first $ 7 billion
0.0425% on the next $ 3 billion
0.035% on the next $ 5 billion
0.025% on the next $10 billion
0.019% on the next $ 5 billion, and
0.014% on assets in excess of $30 billion
<CAPTION>
EVERGREEN BALANCED FUND
-----------------------
<S> <C>
0.050% on the first $ 7 billion
0.035% on the next $ 3 billion
0.030% on the next $ 5 billion
0.020% on the next $10 billion
0.015% on the next $ 5 billion, and
0.010% on assets in excess of $30 billion
</TABLE>
EIS also provides facilities, equipment and personnel to all of the Funds
on behalf of the investment advisers and is reimbursed by the Funds for its
services.
Transfer Agent and Dividend Disbursing Agent. Evergreen Service Company
("ESC"), 200 Berkeley Street, Boston, Massachusetts 02116-5034, acts as each
Fund's transfer agent and dividend disbursing agent. ESC is an indirect,
wholly-owned subsidiary of First Union.
17
<PAGE>
Custodian. State Street Bank and Trust Company, P.O. Box 9021, Boston,
Massachusetts 02205-9827, acts as each Fund's custodian.
Principal Underwriter. Evergreen Distributor, Inc. ("EDI"), a subsidiary of
The BISYS Group, Inc., located at 125 West 55th Street, New York, New York
10019, is the principal underwriter of the Funds. EDI is not affiliated with
First Union.
- -------------------------------------------------------------------------------
PURCHASE AND REDEMPTION OF SHARES
- -------------------------------------------------------------------------------
HOW TO BUY SHARES
Class Y shares are offered at net asset value without a front-end sales
charge or a contingent deferred sales charge. Class Y shares are only offered
to (1) persons who at or prior to December 31, 1994 owned shares in a mutual
fund advised by Evergreen Asset; (2) certain institutional investors; and (3)
investment advisory clients of FUNB, Evergreen Asset, Keystone or their
affiliates.
Eligible investors may purchase Class Y shares of a Fund through broker-
dealers, banks or other financial intermediaries, or directly through EDI. In
addition, you may purchase Class Y shares of a Fund by mailing to the Fund,
c/o ESC, P. O. Box 2121, Boston, Massachusetts 02106-2121, a completed
application and a check payable to the applicable Fund. You may also telephone
1-800-343-2898 to obtain the number of an account to which you can wire or
electronically transfer funds and then send in a completed application. The
minimum initial investment is $1,000, which may be waived in certain
situations. Subsequent investments in any amount may be made by check, by
wiring federal funds, by direct deposit or by an electronic funds transfer.
There is no minimum amount for subsequent investments. Investments of $25
or more are allowed under the Systematic Investment Plan. See the Application
for more information. Only Class Y shares are offered through this Prospectus
(see "General Information"--"Other Classes of Shares").
How the Fund Values Its Shares. The net asset value of each Class of shares of
a Fund is calculated by dividing the value of the amount of a Fund's net
assets attributable to that Class by the number of outstanding shares of that
Class. Shares are valued each day the New York Stock Exchange (the "Exchange")
is open as of the close of regular trading (currently 4:00 p.m. eastern time).
The securities in a Fund are valued at their current market values determined
on the basis of market quotations or, if such quotations are not readily
available, such other methods as the Trustees of the Trust believe would
accurately reflect fair value. Non-dollar denominated securities will be
valued as of the close of the Exchange at the closing price of such securities
in their principal trading markets.
Additional Purchase Information. As a condition of this offering, if a
purchase is canceled due to nonpayment or because an investor's check does not
clear, the investor will be responsible for any loss a Fund or its investment
advisor incurs. If such investor is an existing shareholder, the Fund may
redeem shares from an investor's account to reimburse a Fund or its investment
advisor for any loss. In addition, such investor may be prohibited or
restricted from making further purchases in any of the Evergreen funds. The
Funds will not accept third party checks other than those payable directly to
a shareholder whose account has been in existence at least 30 days.
HOW TO REDEEM SHARES
You may "redeem" (i.e., sell) your Class Y shares for cash, at the net
redemption value on any day the Exchange is open, either directly by writing
to the Fund, c/o ESC, or through your financial intermediary. The amount you
will receive is the net asset value adjusted for fractions of a cent next
calculated after a Fund receives your request in proper form. Proceeds
generally will be sent to you within seven days. However, for shares recently
purchased by check, a Fund will not send proceeds until it is reasonably
satisfied that the check has been collected (which may take up to 15 days).
Once a redemption request has been telephoned or mailed, it is irrevocable and
may not be modified or canceled.
Redeeming Shares Through Your Financial Intermediary. A Fund must receive
instructions from your financial intermediary before 4:00 p.m. (eastern time)
for you to receive that day's net asset value. Your financial intermediary is
responsible for furnishing all necessary documentation to a Fund and may
charge you for this service. Certain financial intermediaries may require that
you give instructions earlier than 4:00 p.m. (eastern time).
18
<PAGE>
Redeeming Shares Directly by Mail or Telephone. You may redeem by mail by
sending a signed letter of instruction or stock power form to the Fund, c/o
ESC (the registrar, transfer agent and dividend-disbursing agent for each
Fund). Stock power forms are available from your financial intermediary, ESC,
and many commercial banks. Additional documentation is required for the sale
of shares by corporations, financial intermediaries, fiduciaries and surviving
joint owners. Signature guarantees are required for all redemption requests
for shares with a value of more than $50,000. Currently, the requirement for a
signature guarantee has been waived on redemptions of $50,000 or less when the
account address of record has been the same for a minimum period of 30 days.
Each Fund and ESC reserve the right to withdraw this waiver at any time. A
signature guarantee must be provided by a bank or trust company (not a Notary
Public), a member firm of a domestic stock exchange or by other financial
institutions whose guarantees are acceptable under the Securities Exchange Act
of 1934 and ESC's policies.
Shareholders may redeem amounts of $1,000 or more (up to $50,000) from
their accounts by calling the telephone number on the front page of this
prospectus between the hours of 8:00 a.m. and 6:00 p.m. (Eastern time) each
business day (i.e., any weekday exclusive of days on which the Exchange or
ESC's offices are closed). The Exchange is closed on New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day. Redemption requests
received after 4:00 p.m. (eastern time) will be processed using the net asset
value determined on the next business day. Such redemption requests must
include the shareholder's account name, as registered with a Fund, and the
account number. During periods of drastic economic or market changes,
shareholders may experience difficulty in effecting telephone redemptions. If
you cannot reach the Fund by telephone, you should follow the procedures for
redeeming by mail or through a broker-dealer as set forth herein. The
telephone redemption service is not made available to shareholders
automatically. Shareholders wishing to use the telephone redemption service
must complete the appropriate sections on the application and choose how the
redemption proceeds are to be paid. Redemption proceeds will either (1) be
mailed by check to the shareholder at the address in which the account is
registered or (2) be wired to an account with the same registration as the
shareholder's account in a Fund at a designated commercial bank.
In order to insure that instructions received by ESC are genuine when you
initiate a telephone transaction, you will be asked to verify certain criteria
specific to your account. At the conclusion of the transaction, you will be
given a transaction number confirming your request, and written confirmation
of your transaction will be mailed the next business day. Your telephone
instructions will be recorded. Redemptions by telephone are allowed only if
the address and bank account of record have been the same for a minimum period
of 30 days. Each Fund reserves the right at any time to terminate, suspend, or
change the terms of any redemption method described in this prospectus, except
redemption by mail, and to impose fees.
Except as otherwise noted, the Funds, ESC and EDI will not assume
responsibility for the authenticity of any instructions received by any of
them from a shareholder in writing, over the Evergreen Express Line (described
below), or by telephone. ESC will employ reasonable procedures to confirm that
instructions received over the Evergreen Express Line or by telephone are
genuine. The Funds, ESC and EDI will not be liable when following instructions
received over the Evergreen Express Line or by telephone that ESC reasonably
believes are genuine.
Evergreen Express Line. The Evergreen Express Line offers you specific fund
account information and price and yield quotations as well as the ability to
do account transactions, including investments, exchanges and redemptions. You
may access the Evergreen Express Line by dialing toll free 1-800-346-3858 on
any touch-tone telephone, 24 hours a day, seven days a week.
General. The sale of shares is a taxable transaction for federal income tax
purposes. The Funds may temporarily suspend the right to redeem their shares
when (1) the Exchange is closed, other than customary weekend and holiday
closings; (2) trading on the Exchange is restricted; (3) an emergency exists
and the Funds cannot dispose of their investments or fairly determine their
value; or (4) the SEC so orders. The Funds reserve the right to close an
account that through redemption has fallen below $1,000 and has remained so
for 30 days. Shareholders will receive 60 days' written notice to increase the
account value to at least $1,000 before the account is closed. The Funds have
elected to be governed by Rule 18f-1 under the 1940 Act pursuant to which each
Fund is obligated to redeem shares solely in cash, up to the lesser of
$250,000 or 1% of a Fund's total net assets, during any 90-day period for any
one shareholder.
EXCHANGE PRIVILEGE
How to Exchange Shares. You may exchange some or all of your Class Y shares
for shares of the same class in other Evergreen funds through your financial
intermediary by calling or writing to ESC or by using the
19
<PAGE>
Evergreen Express Line as described above. Once an exchange request has been
telephoned or mailed, it is irrevocable and may not be modified or canceled.
Exchanges will be made on the basis of the relative net asset values of the
shares exchanged next determined after an exchange request is received. An
exchange which represents an initial investment in another Evergreen fund is
subject to the minimum investment and suitability requirements of each Fund.
Each of the Evergreen funds has different investment objectives and
policies. For more information, a prospectus of the fund into which an
exchange will be made should be read prior to the exchange. An exchange order
must comply with the requirement for a redemption or repurchase order and must
specify the dollar value or number of shares to be exchanged. An exchange is
treated for federal income tax purposes as a redemption and purchase of shares
and may result in the realization of a capital gain or loss. Shareholders are
limited to five exchanges per calendar year, with a maximum of three per
calendar quarter. This exchange privilege may be modified or discontinued at
any time by a Fund upon 60 days' notice to shareholders and is only available
in states in which shares of a fund being acquired may lawfully be sold.
Exchanges Through Your Financial Intermediary. A Fund must receive exchange
instructions from your financial intermediary before 4:00 p.m. (eastern time)
for you to receive that day's net asset value. Your financial intermediary is
responsible for furnishing all necessary documentation to a Fund and may
charge you for this service.
Exchanges By Telephone And Mail. Exchange requests received by a Fund after
4:00 p.m. (eastern time) will be processed using the net asset value
determined at the close of the next business day. During periods of drastic
economic or market changes, shareholders may experience difficulty in
effecting telephone exchanges. You should follow the procedures outlined below
for exchanges by mail if you are unable to reach ESC by telephone. If you wish
to use the telephone exchange service you should indicate this on the
application. As noted above, each Fund will employ reasonable procedures to
confirm that instructions for the redemption or exchange of shares
communicated by telephone are genuine. A telephone exchange may be refused by
a Fund or ESC if it is believed advisable to do so. Procedures for exchanging
Fund shares by telephone may be modified or terminated at any time. Written
requests for exchanges should follow the same procedures outlined for written
redemption requests in the section entitled "How to Redeem Shares;" however,
no signature guarantee is required.
SHAREHOLDER SERVICES
The Funds offer the following shareholder services. For more information
about these services or your account, contact your financial intermediary, ESC
or call the toll-free number on the front page of this prospectus. Some
services are described in more detail in the application.
Systematic Investment Plan. Under a Systematic Investment Plan, you may invest
as little as $25 per month to purchase shares of a Fund with no minimum
initial investment required.
Telephone Investment Plan. You may make investments into an existing account
electronically in amounts of not less than $100 or more than $10,000 per
investment. Telephone investment requests received by 4:00 p.m. (eastern time)
will be credited to a shareholder's account the day the request is received.
Systematic Withdrawal Plan. When an account of $10,000 or more is opened or
when an existing account reaches that size, you may participate in the
Systematic Withdrawal Plan (the "Withdrawal Plan") by filling out the
appropriate part of the Application. Under this Withdrawal Plan, you may
receive (or designate a third party to receive) a monthly or quarterly fixed-
withdrawal payment in a stated amount of at least $75, and as much as 1.0% per
month or 3.0% per quarter of the total net asset value of the Fund shares in
your account when the Withdrawal Plan was opened. Fund shares will be redeemed
as necessary to meet withdrawal payments. All participants must elect to have
their dividends and capital gain distributions reinvested automatically.
Automatic Reinvestment Plan. For the convenience of investors, all dividends
and distributions are automatically reinvested in full and fractional shares
of a Fund at the net asset value per share at the close of business on the
record date, unless otherwise requested by a shareholder in writing. If the
transfer agent does not receive a written request for subsequent dividends
and/or distributions to be paid in cash at least three full business days
prior to a given record date, the dividends and/or distributions to be paid to
a shareholder will be reinvested.
Dollar Cost Averaging. Through dollar cost averaging you can invest a fixed
dollar amount each month or each quarter in any Evergreen fund. This results
in more shares being purchased when the selected fund's net asset
20
<PAGE>
value is relatively low and fewer shares being purchased when the fund's net
asset value is relatively high and may result in a lower average cost per
share than a less systematic investment approach.
Prior to participating in dollar cost averaging, you must establish an
account in an Evergreen fund. You should designate on the Application (1) the
dollar amount of each monthly or quarterly investment you wish to make and (2)
the fund in which the investment is to be made. Thereafter, on the first day
of the designated month, an amount equal to the specified monthly or quarterly
investment will automatically be redeemed from your initial account and
invested in shares of the designated fund.
Two Dimensional Investing. You may elect to have income and capital gains
distributions from any Class Y Evergreen fund shares you own automatically
invested to purchase the same class of shares of any other Evergreen fund. You
may select this service on your application and indicate the Evergreen fund(s)
into which distributions are to be invested.
Tax Sheltered Retirement Plans. The Funds have various retirement plans
available to eligible investors, including Individual Retirement Accounts
(IRAs); Rollover IRAs; Simplified Employee Pension Plans (SEPs); Salary
Incentive Match Plan for Employees (SIMPLEs); Tax Sheltered Annuity Plans;
403(b)(7) Plans; 401(k) Plans; Keogh Plans; Profit-Sharing Plans; Medical
Savings Accounts; Pension and Target Benefit and Money Purchase Plans. For
details, including fees and application forms, call toll free 1-800-247-4075
or write to ESC.
BANKING LAWS
The Glass-Steagall Act and other banking laws and regulations presently
prohibit member banks of the Federal Reserve System ("Member Banks") or their
non-bank affiliates from sponsoring, organizing, controlling, or distributing
the shares of registered open-end investment companies such as the Funds. Such
laws and regulations also prohibit banks from issuing, underwriting or
distributing securities in general. However, under the Glass-Steagall Act and
such other laws and regulations, a Member Bank or an affiliate thereof may act
as investment advisor, transfer agent or custodian to a registered open-end
investment company and may also act as agent in connection with the purchase
of shares of such an investment company upon the order of its customer. FUNB
and its affiliates, are subject to and in compliance with the aforementioned
laws and regulations.
Changes to applicable laws and regulations or future judicial or
administrative decisions could result in FUNB and its affiliates being
prevented from continuing to perform the services required under the
investment advisory agreements or from acting as agent in connection with the
purchase of shares of the Funds by their customers. If FUNB and its affiliates
were prevented from continuing to provide the services called for under the
investment advisory agreements, it is expected that the Trustees would
identify, and call upon each Fund's shareholders to approve, new investment
advisors. If this were to occur, it is not anticipated that the shareholders
of any Fund would suffer any adverse financial consequences.
- -------------------------------------------------------------------------------
OTHER INFORMATION
- -------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund intends to distribute its investment company taxable income
quarterly and net realized capital gains at least annually. Shareholders
receive Fund distributions in the form of additional shares of that class of
shares upon which the distribution is based or, at the shareholder's option,
in cash. Shareholders of a Fund who have not opted to receive cash prior to
the payable date for any dividend from net investment income or the record
date for any capital gains distribution will have the number of such shares
determined on the basis of a Fund's net asset value per share computed at the
end of that day after adjustment for the distribution. Net asset value is used
in computing the number of shares in both capital gains and income
distribution investments.
Account statements and/or checks, as appropriate, will be mailed within
seven days after a Fund pays a distribution. Unless a Fund receives
instructions to the contrary before the record or payable date, as the case
may be, it will assume that a shareholder wishes to receive that distribution
and future capital gains and income distributions in shares. Instructions
continue in effect until changed in writing.
Each Fund has qualified intends to continue to qualify as a regulated
investment company under the Code. While so qualified, it is expected that
each Fund will not be required to pay any federal income taxes on
21
<PAGE>
that portion of its investment company taxable income and any net realized
capital gains it distributes to shareholders. The Code imposes a 4%
nondeductible excise tax on regulated investment companies, such as the Funds,
to the extent they do not meet certain distribution requirements by the end of
each calendar year. The Funds anticipate meeting such distribution
requirements.
Any taxable dividend declared in October, November or December to
shareholders of record in such a month and paid by the following January 31
will be includable in the taxable income of shareholders as if paid on
December 31 of the year in which the dividend was declared.
The Funds may be subject to foreign withholding taxes which would reduce
the yield on their investments. Tax treaties between certain countries and the
United States may reduce or eliminate such taxes. Shareholders of a Fund who
are subject to United States federal income tax may be entitled, subject to
certain rules and limitations, to claim a federal income tax credit or
deduction for foreign income taxes paid by the Fund. See the SAI for
additional details. A Fund's transactions in options, futures and forward
contracts may be subject to special tax rules. These rules can affect the
amount, timing and characteristics of distributions to shareholders.
The Funds are required by federal law to withhold 31% of reportable
payments (which may include dividends, capital gains distributions (if any)
and redemptions) paid to certain shareholders. In order to avoid this backup
withholding requirement, each investor must certify on the Application, or on
a separate form supplied by the Fund's transfer agent, that the investor's
social security number or taxpayer identification number is correct and that
the investor is not currently subject to backup withholding or is exempt from
backup withholding. A shareholder who acquires Class A shares of a Fund and
sells or otherwise disposes of such shares within 90 days of acquisition may
not be allowed to include certain sales charges incurred in acquiring such
shares for purposes of calculating gain and loss realized upon a sale or
exchange of shares of a Fund.
The Funds intend to distribute their net capital gains as capital gains
dividends. Shareholders should treat such dividends as long-term capital
gains. The Funds will designate capital gains distributions as such by a
written notice mailed to each shareholder no later than 60 days after the
close of each Fund's taxable year. If a shareholder receives a capital gain
dividend and holds his shares for six months or less, then any allowable loss
on disposition of such shares will be treated as long-term capital loss to the
extent of such capital gain dividend.
The foregoing discussion of federal income tax consequences is based on
tax laws and regulations in effect on the date of this prospectus and is
subject to change by legislative or administrative action. As the foregoing
discussion is for general information only, you should also review the
discussion of "Additional Tax Information" contained in the SAI. In addition,
you should consult your own tax advisor as to the tax consequences of
investments in the Fund, including the application of state and local taxes
which may be different from the federal income tax consequences described
above.
GENERAL INFORMATION
Portfolio Turnover. The estimated annual portfolio turnover rate for each of
the Funds is not expected to exceed 100%. A portfolio turnover rate of 100%
would occur if all of a Fund's portfolio securities were replaced in one year.
The portfolio turnover rate experienced by a Fund directly affects the
transaction costs relating to the purchase and sale of securities which a Fund
bears directly. A high rate of portfolio turnover will increase such costs.
The portfolio turnover rates for each Fund are set forth under "Financial
Highlights."
Portfolio Transactions. Consistent with the Conduct Rules of the NASD and
subject to seeking best price and execution, a Fund may consider sales of its
shares as a factor in the selection of dealers to enter into portfolio
transactions with the Fund.
Other Classes of Shares. Each Fund currently offers four classes of shares,
Class A, Class B, Class C and Class Y, and may in the future offer additional
classes. Class Y shares are the only class of shares offered by this
prospectus and are only available to (1) persons who at or prior to December
31, 1994, owned shares in a mutual fund advised by Evergreen Asset, (2)
certain institutional investors and (3) investment advisory clients of FUNB,
Evergreen Asset, Keystone or their affiliates. The dividends payable with
respect to Class A, Class B and Class C shares will be less than those payable
with respect to Class Y shares due to the distribution and shareholder
servicing related expenses borne by Class A, Class B and Class C shares and
the fact that such expenses are not borne by Class Y shares. Investors should
telephone (800) 343-2898 to obtain more information on other classes of
shares.
22
<PAGE>
Performance Information. The Funds may quote their "total return" or "yield"
for a specified period in advertisements, reports or other communications to
shareholders. Total return and yield are computed separately for each class of
shares. Performance data for one or more classes may be included in any
advertisement or sales literature using performance data of a Fund.
A Fund's total return for each such period is computed by finding,
through the use of a formula prescribed by the SEC, the average annual
compounded rate of return over the period that would equate an assumed initial
amount invested to the value of the investment at the end of the period. For
purposes of computing total return, dividends and capital gains distributions
paid on shares of a Fund are assumed to have been reinvested when paid and the
maximum sales charges applicable to purchases of the Fund's shares are assumed
to have been paid.
Yield is a way of showing the rate of income a Fund earns on its
investments as a percentage of a Fund's share price. A Fund's yield is
calculated according to accounting methods that are standardized by the SEC
for all stock and bond funds. Because yield accounting methods differ from the
method used for other accounting purposes, a Fund's yield may not equal its
distribution rate, the income paid to your account or the net investment
income reported in the Fund's financial statements. To calculate yield, a Fund
takes the interest and dividend income it earned from its portfolio of
investments (as defined by the SEC formula) for a 30-day period (net of
expenses), divides it by the average number of shares entitled to receive
dividends, and expresses the result as an annualized percentage rate based on
the Fund's share price at the end of the 30-day period. This yield does not
reflect gains or losses from selling securities.
Performance data may be included in any advertisement or sales literature
of a Fund. These advertisements may quote performance rankings or ratings of a
Fund by financial publications or independent organizations such as Lipper
Analytical Services, Inc. and Morningstar, Inc. or may compare the Fund's
performance to various indices. The Funds may also advertise in items of sales
literature an "actual distribution rate" which is computed by dividing the
total ordinary income distributed (which may include the excess of short-term
capital gains over losses) to shareholders for the latest twelve month period
by the maximum public offering price per share on the last day of the period.
Investors should be aware that past performance may not be reflective of
future results.
In marketing a Fund's shares, information may be provided that is
designed to help individuals understand their investment goals and explore
various financial strategies. Such information may include publications
describing general principles of investing, such as asset allocation,
diversification, risk tolerance, and goal setting; a questionnaire designed to
help create a personal financial profile; and an action plan offering
investment alternatives. The information provided to investors may also
include discussions of other Evergreen funds, products, and services, which
may include: retirement investing; brokerage products and services; the
effects of periodic investment plans and dollar cost averaging; saving for
college; and charitable giving. In addition, the information provided to
investors may quote financial or business publications and periodicals,
including model portfolios or allocations, as they relate to fund management,
investment philosophy, and investment techniques. EDI may also reprint, and
use as advertising and sales literature, articles from Evergreen Events, a
quarterly magazine provided to Evergreen fund shareholders.
Year 2000 Risks. Like other investment companies, financial and business
organizations and individuals around the world, the Funds could be adversely
affected if the computer systems used by the Funds' investment advisors and
the Funds' other service providers do not properly process and calculate date-
related information and data from and after January 1, 2000. This is commonly
known as the "Year 2000 Problem." The Funds' investment advisors are taking
steps to address the Year 2000 Problem with respect to the computer systems
that they use and to obtain assurances that comparable steps are being taken
by the Funds' other major service providers. At this time, however, there can
be no assurance that these steps will be sufficient to avoid any adverse
impact on the Funds.
Additional Information. This prospectus and the SAI, which has been
incorporated by reference herein, do not contain all the information set forth
in the Registration Statements filed by the Trust with the SEC under the
Securities Act of 1933, as amended. Copies of the Registration Statements may
be obtained at a reasonable charge from the SEC or may be examined, without
charge, at the offices of the SEC in Washington, D.C.
23
<PAGE>
INVESTMENT ADVISERS
Evergreen Asset Management Corp., 2500 Westchester Avenue, Purchase, New York
10577
Evergreen Foundation Fund, Evergreen Tax Strategic Foundation Fund, Evergreen
American Retirement Fund
Keystone Investment Management Company, 200 Berkeley Street, Boston,
Massachusetts 02116-5034
Evergreen Balanced Fund
CUSTODIAN
State Street Bank and Trust Company, P.O. Box 9021, Boston, Massachusetts
02205-9827
TRANSFER AGENT
Evergreen Service Company, P.O. Box 2121, Boston, Massachusetts 02116-5034
LEGAL COUNSEL
Sullivan & Worcester LLP, 1025 Connecticut Avenue, N.W., Washington, D.C. 20036
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, 99 High Street, Boston, Massachusetts 02110
DISTRIBUTOR
Evergreen Distributor, Inc., 125 W. 55th Street, New York, New York 10019
24504 540394REV02
EVERGREEN EQUITY TRUST
PART B
STATEMENT OF ADDITIONAL INFORMATION
EVERGREEN EQUITY TRUST
200 Berkeley Street
Boston, Massachusetts 02116
(800) 633-2700
BALANCED FUNDS
STATEMENT OF ADDITIONAL INFORMATION
August 1, 1998
Evergreen Foundation Fund ("Foundation")
Evergreen Tax Strategic Foundation Fund ("Tax Strategic")
Evergreen American Retirement Fund ("American Retirement")
Evergreen Balanced Fund ("Balanced")
(Each a "Fund;" together, the "Funds")
Each Fund is a series of an open-end management investment company
known as Evergreen Equity Trust (the "Trust").
This Statement of Additional Information ("SAI") pertains to all
classes of shares of the Funds listed above. It is not a prospectus and
should be read in conjunction with the Funds' prospectuses dated August 1,
1998, as supplemented from time to time. The Funds are offered through two
separate prospectuses: one offering Class A, Class B and Class C shares of
each Fund and one offering Class Y shares of each Fund. You may obtain
these prospectuses from Evergreen Distributor, Inc.
24202
<PAGE>
TABLE OF CONTENTS
INVESTMENT POLICIES
Fundamental Investment Policies
Additional Information on Securities and Investment Practices
MANAGEMENT OF THE TRUST
PRINCIPAL HOLDERS OF FUND SHARES
INVESTMENT ADVISORY AND OTHER SERVICES
Investment Advisors
Investment Advisory Agreements
Distributor
Distribution Plans and Agreements
Additional Service Providers
BROKERAGE
Brokerage Commissions
Selection of Brokers
Simultaneous Transactions
TRUST ORGANIZATION
Form of Organization
Description of Shares
Voting Rights
Limitation of Trustees' Liability
PURCHASE,REDEMPTION AND PRICING OF SHARES How the Funds Offer Shares to the
Public Contingent Deferred Sales Charge Sales Charge Waivers or
Reductions Exchanges Calculation of Net Asset Value Per Share ("NAV")
Valuation of Portfolio Securities Shareholder Services
PRINCIPAL UNDERWRITER
ADDITIONAL TAX INFORMATION
Requirements for Qualification as a Regulated Investment Company
Taxes on Distributions
Taxes on the Sale or Exchange of Fund Shares
Other Tax Considerations
Special Tax Considerations for Tax Strategic
FINANCIAL INFORMATION
Expenses
Brokerage Commissions Paid
Computation of Class A Offering Price
Performance
ADDITIONAL INFORMATION
APPENDIX A
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INVESTMENT POLICIES
FUNDAMENTAL INVESTMENT POLICIES
Each Fund has adopted the fundamental investment restrictions set forth
below which may not be changed without the vote of a majority of the Fund's
outstanding shares, as defined in the Investment Company Act of 1940, as amended
(the "1940 Act"). Where necessary, an explanation beneath a fundamental policy
describes a Fund's practices with respect to that policy, as allowed by current
law. If the law governing a policy changes, the Fund's practices may change
accordingly without a shareholder vote. Unless otherwise stated, all references
to the assets of a Fund are in terms of current market value.
1. Diversification
Each Fund may not make any investment that is inconsistent with its
classification as a diversified investment company under the 1940 Act.
Further Explanation of Diversification Policy:
To remain classified as a diversified investment company under the 1940
Act, a Fund must conform with the following: With respect to 75% of its total
assets, a diversified investment company may not invest more than 5% of its
total assets, determined at market or other fair value at the time of purchase,
in the securities of any one issuer, or invest in more than 10% of the
outstanding voting securities of any one issuer, determined at the time of
purchase. These limitations do not apply to investments in securities issued or
guaranteed by the United States ("U.S.") government or its agencies or
instrumentalities.
2. Concentration
Each Fund may not concentrate its investments in the securities of
issuers primarily engaged in any particular industry (other than securities that
are issued or guaranteed by the U.S. government or its agencies or
instrumentalities).
Further Explanation of Concentration Policy:
Each Fund may not invest more than 25% of its total assets, taken at
market value , in the securities of issuers primarily engaged in any particular
industry (other than securities issued or guaranteed by the U.S. government or
its agencies or instrumentalities).
3. Issuing Senior Securities
Except as permitted under the 1940 Act, each Fund may not issue senior
securities.
4. Borrowing
Each Fund may not borrow money, except to the extent permitted by
applicable law.
Further Explanation of Borrowing Policy: Each Fund may borrow from
banks in an amount up to 33 1/3% of its total assets, taken at market value.
Each Fund may also borrow up to an additional 5% of its total assets from banks
or others. A Fund may borrow only as a temporary measure for extraordinary or
emergency purposes such as the redemption of Fund shares. A Fund may not
purchase securities while borrowings are outstanding except to exercise prior
commitments and to exercise subscription rights (as defined in the 1940 Act) or
enter into reverse repurchase agreements, in amounts up to 33 1/3% of its total
assets (including the amount borrowed). Each Fund may obtain such short-term
credit as may be necessary for the clearance of purchases and sales of portfolio
securities. A Fund may purchase securities
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on margin and engage in short sales to the extent permitted by applicable law.
In addition to borrowing for temporary or emergency purposes, American
Retirement intends to borrow for the purpose of leveraging.
5. Underwriting
Each Fund may not underwrite securities of other issuers, except
insofar as each Fund may be deemed to be an underwriter in connection with the
disposition of its portfolio securities.
6. Real Estate
Each Fund may not purchase or sell real estate, except that, to the
extent permitted by applicable law, each Fund may invest in (a) securities that
are directly or indirectly secured by real estate, or (b) securities issued by
issuers that invest in real estate.
7. Commodities
Each Fund may not purchase or sell commodities or contracts on
commodities, except to the extent that each Fund may engage in financial futures
contracts and related options and currency contracts and related options and may
otherwise do so in accordance with applicable law and without registering as a
commodity pool operator under the Commodity Exchange Act.
8. Lending
Each Fund may not make loans to other persons, except that each Fund
may lend its portfolio securities in accordance with applicable law. The
acquisition of investment securities or other investment instruments shall not
be deemed to be the making of a loan.
Further Explanation of Lending Policy:
To generate income and offset expenses, each Fund may lend portfolio
securities to broker-dealers and other financial institutions in an amount up to
33 1/3% of its total assets, taken at market value. While securities are on
loan, the borrower will pay each Fund any income accruing on the security. Each
Fund may invest any collateral it receives in additional portfolio securities,
such as U.S. Treasury notes, certificates of deposit, other high-grade,
short-term obligations or interest bearing cash equivalents. Gains or losses in
the market value of a security lent will affect each Fund and its shareholders.
When a Fund lends its securities, it will require the borrower to give
the Fund collateral in cash or government securities. Each Fund will require
collateral in an amount equal to at least 100% of the current market value of
the securities lent, including accrued interest. Each Fund has the right to call
a loan and obtain the securities lent any time on notice of not more than five
business days. Each Fund may pay reasonable fees in connection with such loans.
9. Investments in Federally Tax-Exempt Securities (Tax Strategic)
Tax Strategic will, during periods of normal market conditions, invest
its assets in accordance with applicable guidelines issued by the Securities and
Exchange Commission ("SEC") or its staff concerning investment in tax-exempt
securities for funds with the words tax-exempt, tax free or municipal in their
names.
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ADDITIONAL INFORMATION ON SECURITIES AND INVESTMENT PRACTICES
The investment objectives of each Fund and a description of the
securities in which each Fund may invest are set forth in the Funds'
prospectuses. The following expands upon the discussion in the prospectuses
regarding certain investments of the Funds.
U.S. Government Securities
Each Fund may invest in securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities, including issues of the U.S.
Treasury. These securities are either backed by the discretionary authority of
the U.S. government to purchase certain obligations of agencies or
instrumentalities or the credit of the agency or instrumentality issuing the
obligations.
Some government agencies and instrumentalities may not receive financial
support from the U.S. government. Examples of such agencies are:
(i) Farm Credit System, including the National Bank for
Cooperatives, Farm Credit Banks and Banks for Cooperatives;
(ii) Farmers Home Administration;
(iii) Federal Home Loan Banks;
(iv) Federal Home Loan Mortgage Corporation;
(v) Federal National Mortgage Association; and
(vi) Student Loan Marketing Association.
Securities Issued by the Government National Mortgage Association ("GNMA")
The Funds may invest in securities issued by the GNMA, a
corporation wholly-owned by the U.S. government. GNMA securities or
"certificates" represent ownership in a pool of underlying mortgages. The timely
payment of principal and interest due on these securities is guaranteed.
Unlike conventional bonds, the principal on GNMA certificates is
not paid at maturity but over the life of the security in scheduled monthly
payments. While mortgages pooled in a GNMA certificate may have maturities of up
to 30 years, the certificate itself will have a shorter average maturity and
less principal volatility than a comparable 30-year bond.
The market value and interest yield of GNMA certificates can vary
due not only to market fluctuations, but also to early prepayments of mortgages
within the pool. Since prepayment rates vary widely, it is impossible to
accurately predict the average maturity of a GNMA pool. In addition to the
guaranteed principal payments, GNMA certificates may also make unscheduled
principal payments resulting from prepayments on the underlying mortgages.
Although GNMA certificates may offer yields higher than those
available from other types of U.S. government securities, they may be less
effective as a means of locking in attractive long-term rates because of the
prepayment feature. For instance, when interest rates decline, prepayments are
likely to increase as the holders of the underlying mortgages seek refinancing.
As a result, the value of a GNMA certificate is not likely to rise as much as
the value of a comparable debt security would in response to same decline. In
addition, these prepayments can cause a GNMA certificate originally purchased at
a premium to decline in price compared to its par value, which may result in a
loss.
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Equity Securities
The Funds may invest in equity securities consist primarily of
common stocks and securities convertible into common stocks. Investing in common
stocks, particularly those having growth characteristics, frequently involves
greater risks (and possibly greater rewards) than investing in other types of
securities. Common stock prices tend to be more volatile and companies having
growth characteristics may sometimes be unproven.
Investing in companies with medium market capitalizations involves
greater risk than investing in larger companies. The stock prices of mid-cap
companies can rise quickly and drop substantially in a short period of time.
This volatility results from a number of factors, including reliance by these
companies on relatively limited product lines, markets, and financial resources.
These and other factors may make mid-cap companies more susceptible to setbacks
or downturns.
Investing in companies with small market capitalizations involves
greater risk than investing in larger companies. Their stock prices can rise
very quickly and drop dramatically in a short period of time. This volatility
results from a number of factors, including reliance by these companies on
limited product lines, markets, and financial and management resources. These
and other factors may make small cap companies more susceptible to setbacks or
downturns. These companies may experience higher rates of bankruptcy or other
failures than larger companies. They may be more likely to be negatively
affected by changes in management. In addition, the stock of small cap companies
may be thinly traded.
Derivatives (Balanced and American Retirement)
Derivatives are financial contracts whose value depends on, or is
derived from, the value of an underlying asset, reference rate or index. These
assets, rates, and indices may include bonds, stocks, mortgages, commodities,
interest rates, currency exchange rates, bond indices and stock indices.
Derivatives may be standardized, exchange-traded contracts or customized,
privately negotiated contracts. Exchange-traded derivatives tend to be more
liquid and subject to less credit risk than those that are privately negotiated.
There are four principal types of derivative instruments --
options, futures, forwards, and swaps -- from which virtually any type of
derivative transaction can be created. Debt instruments that incorporate one or
more of these building blocks for the purpose of determining the principal
amount of and/or rate of interest payable on the debt instruments are often
referred to as "structured securities." An example of this type of structured
security is indexed commercial paper. The term is also used to describe certain
securities issued in connection with the restructuring of certain foreign
obligations. The term "derivative" is also sometimes used to describe securities
involving rights to a portion of the cash flows from an underlying pool of
mortgages or other assets from which payments are passed through to the owner
of, or that collateralize, the securities.
The Funds can use derivatives to earn income, to enhance returns,
to hedge or adjust the risk profile of the portfolio, in place of more
traditional direct investments or to obtain exposure to otherwise inaccessible
markets. A Fund's use of derivatives for non-hedging purposes entails greater
risks than if a Fund were to use derivatives solely for hedging purposes.
Derivatives are a valuable tool which, when used properly, can provide
significant benefit to a Fund's shareholders.
The Funds' investment advisor is not an aggressive user of
derivatives with respect to the Funds. However, the Funds may take positions in
those derivatives that are within their investment policies if, in the Advisor's
(as hereinafter defined) judgment, this represents an effective response to
current or anticipated market conditions. The Advisor's use of derivatives is
subject to continuous risk assessment and control from the standpoint of the
Funds' investment objective and policies. While the judicious use of derivatives
by experienced investment managers, such as the Advisor, can be beneficial,
derivatives also involve risks different from, and, in certain cases, greater
than, the risks presented by more traditional
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investments. Following is a general discussion of important risk factors and
issues concerning the use of derivatives that investors should understand before
investing in the Funds.
Market Risk -- This is the general risk attendant to all
investments that the value of a particular investment will decline or otherwise
change in a way detrimental to the Funds' interest.
Management Risk -- Derivative products are highly specialized
instruments that require investment techniques and risk analyses different from
those associated with stocks and bonds. The use of a derivative requires an
understanding not only of the underlying instrument, but also of the derivative
itself, without the benefit of observing the performance of the derivative under
all possible market conditions. Because derivatives are complex, a Fund and its
Advisor must (1) maintain controls to monitor the transactions entered into, (2)
assess the risk that a derivative adds to a Fund's portfolio and (3) forecast
price, interest rate or currency exchange rate movements correctly.
Credit Risk -- This is the risk that a Fund may lose money because
the other party to a derivative (usually called a "counter party") failed to
comply with the terms of the derivative contract. The credit risk for
exchange-traded derivatives is generally less than for privately negotiated
derivatives, since the clearing house, which is the issuer or counter party to
each exchange-traded derivative, guarantees performance. This guarantee is
supported by a daily payment system (i.e., margin requirements) operated by the
clearing house to reduce overall credit risk. For privately negotiated
derivatives, there is no similar clearing agency guarantee. Therefore, a Fund
considers the creditworthiness of each counter party to a privately negotiated
derivative in evaluating potential credit risk.
Liquidity Risk -- Liquidity risk is the possibility that a Fund
will have difficulty buying or selling a particular instrument. If a derivative
transaction is particularly large or if the relevant market is illiquid (as is
the case with many privately negotiated derivatives), a Fund may not be able to
initiate a transaction or liquidate a position at an advantageous price.
Leverage Risk -- Since many derivatives have a leverage component,
adverse changes in the value or level of the underlying asset, rate or index can
result in a loss substantially greater than the amount invested in the
derivative itself. In the case of swaps, the risk of loss generally is related
to a notional principal amount, even if the parties have not made any initial
investment. Certain derivatives have the potential for unlimited loss,
regardless of the size of the initial investment.
Other Risks -- Other risks in using derivatives include the risk
of mispricing or improper valuation and the inability of derivatives to
correlate perfectly with underlying assets, rates, and indices. Many
derivatives, in particular privately negotiated derivatives, are complex and
often valued subjectively. Improper valuations can result in increased cash
payment requirements to counter parties or a loss of value to a Fund.
Derivatives do not always perfectly or even highly correlate or track the value
of the assets, rates or indices they are designed to closely track.
Consequently, a Fund's use of derivatives may not always be an effective means
of, and sometimes could be counterproductive to, furthering the Fund's
investment objective.
Options Transactions (Balanced and American Retirement)
Writing Covered Options. A Fund may write (i.e., sell) covered
call and put options. By writing a call option, a Fund becomes obligated during
the term of the option to deliver the securities underlying the option upon
payment of the exercise price. Writing a put option obligates a Fund during the
term of the option to purchase the securities underlying the option at the
exercise price if the option buyer exercises the option. A Fund also may write
straddles (combinations of covered puts and calls on the same underlying
security).
A Fund may only write "covered" options. This means that while a
Fund is obligated as the writer of a call option it will own the underlying
securities subject to the option or, with call options on U.S.
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Treasury bills, it might own similar U.S. Treasury bills. If a Fund has written
options against all of its securities that are available for writing options,
the Fund may be unable to write additional options unless it sells some of its
portfolio holdings to obtain new securities against which it can write options.
If this were to occur, higher portfolio turnover and correspondingly greater
brokerage commissions and other transaction costs may result. A Fund does not
expect, however, that this will occur. A Fund will be considered "covered" with
respect to a put option it writes if, while it is obligated as the writer of the
put option, it deposits and maintains with its custodian in a segregated account
liquid assets having a value equal to or greater than the exercise price of the
option.
The principal reason for writing call or put options is to obtain,
through a receipt of premiums, a greater current return than would be realized
on the underlying securities alone. A Fund receives a premium from writing a
call or put option, which it retains whether or not the option is exercised. By
writing a call option, a Fund might lose the potential for gain on the
underlying security while the option is open, and, by writing a put option, a
Fund might become obligated to purchase the underlying security for more than
its current market price upon exercise.
Purchasing Options. A Fund may purchase put or call options,
including put or call options for offsetting previously written put or call
options of the same series. Once a Fund has written a covered option, it will
continue to hold the segregated securities or assets until it effects a closing
purchase transaction. If a Fund is unable to close the option position, it must
hold the segregated securities or assets until the option expires or is
exercised. An option position may be closed out only in a secondary market for
an option of the same series. Although a Fund generally writes only those
options for which there appears to be an active secondary market, there is no
assurance that a liquid secondary market will exist for any particular option at
any particular time, and, for some options, no secondary market may exist. In
such event, effecting a closing transaction for a particular option might not be
possible.
Options on some securities are relatively new, and predicting how
much trading interest there will be for such options is impossible. There can be
no assurance that viable markets will develop or continue. The failure of such
markets to develop or continue could significantly impair a Fund's ability to
use such options to achieve its investment objective.
Options Trading Markets. A Fund trades in options that are
generally listed on national securities exchanges, currently including the
Chicago Board Options Exchange and the New York, American, Pacific and
Philadelphia Stock Exchanges. Options on some securities are traded in the
over-the-counter market, and may not be listed on any exchange. Options traded
in the over-the- counter market involve a greater risk that the securities
dealers participating in the transactions could fail to meet their obligations
to a Fund.
A Fund will include the premiums it has paid for the purchase of
unlisted options and the value of securities used to cover options it has
written for purposes of calculating whether the Fund has complied with its
policies on illiquid securities.
Futures Transactions and Related Options Transactions (Balanced and American
Retirement)
A Fund may enter into financial futures contracts as a hedge
against changes in prevailing levels of interest rates to seek relative
stability of principal and to establish more definitely the effective return on
securities held or intended to be acquired by the Fund or as a hedge against
changes in the prices of securities held by the Fund or to be acquired by the
Fund. A Fund's hedging may include sales of futures as an offset against the
effect of expected increases in interest rates or securities prices and
purchases of futures as an offset against the effect of expected declines in
interest rates.
For example, when a Fund anticipates a significant market or
market sector advance, it will purchase a stock index futures contract as a
hedge against not participating in such advance at a time when the Fund is not
fully invested. The purchase of a futures contract serves as a temporary
substitute for the
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purchase of individual securities which may then be purchased in an orderly
fashion. As such purchases are made, an equivalent amount of index based futures
contracts would be terminated by offsetting sales. In contrast, a Fund would
sell stock index futures contracts in anticipation of or in a general market or
market sector decline that may adversely affect the market value of the Fund's
portfolio. To the extent that a Fund's portfolio changes in value in correlation
with a given index, the sale of futures contracts on that index would
substantially reduce the risk to the portfolio of a market decline or change in
interest rates, and, by doing so, provide an alternative to the liquidation of
the Fund's securities positions and the resulting transaction costs.
A Fund intends to engage in options transactions which are related
to financial futures contracts for hedging purposes and in connection with the
hedging strategies described above.
Although techniques other than sales and purchases of futures
contracts and related options transactions could be used to reduce a Fund's
exposure to interest rate and/or market fluctuations, the Fund may be able to
hedge its exposure more effectively and perhaps at a lower cost through using
futures contracts and related options transactions. While a Fund does not intend
to take delivery of the instruments underlying futures contracts it holds, the
Fund does not intend to engage in such futures contracts for speculation.
Futures Contracts (Balanced and American Retirement)
Futures contracts are transactions in the commodities markets
rather than in the securities markets. A futures contract creates an obligation
by the seller to deliver to the buyer the commodity specified in the contract at
a specified future time for a specified price. The futures contract creates an
obligation by the buyer to accept delivery from the seller of the specified
commodity at the specified future time for the specified price. In contrast, a
spot transaction creates an immediate obligation for the seller to deliver and
the buyer to accept delivery of and pay for an identified commodity. In general,
futures contracts involve transactions in fungible goods such as wheat, coffee
and soybeans. However, in the last decade an increasing number of futures
contracts have been developed which specify financial instruments or financially
based indexes as the underlying commodity.
U.S. futures contracts are traded only on national futures
exchanges and are standardized as to maturity date and underlying financial
instrument. The principal financial futures exchanges in the United States are
The Board of Trade of the City of Chicago, the Chicago Mercantile Exchange, the
International Monetary Market (a division of the Chicago Mercantile Exchange),
the New York Futures Exchange and the Kansas City Board of Trade. Each exchange
guarantees performance under contract provisions through a clearing corporation,
a nonprofit organization managed by the exchange membership, which is also
responsible for handling daily accounting of deposits or withdrawals of margin.
A futures commission merchant ("Broker") effects each transaction in connection
with futures contracts for a commission. Futures exchanges and trading are
regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC") and National Futures Association ("NFA").
Interest Rate Futures Contracts. The sale of an interest rate
futures contract creates an obligation by a Fund, as seller, to deliver the type
of financial instrument specified in the contract at a specified future time for
a specified price. The purchase of an interest rate futures contract creates an
obligation by a Fund, as purchaser, to accept delivery of the type of financial
instrument specified at a specified future time for a specified price. The
specific securities delivered or accepted, respectively, at settlement date, are
not determined until at or near that date. The determination is in accordance
with the rules of the exchange on which the futures contract sale or purchase
was made.
Currently, interest rate futures contracts can be purchased or
sold on 90-day U.S. Treasury bills, U.S. Treasury bonds, U.S. Treasury notes
with maturities between 6 1/2 and 10 years, (GNMA) certificates, 90-day domestic
bank certificates of deposit, 90-day commercial paper, and 90-day Eurodollar
certificates of deposit. It is expected that futures contracts trading in
additional financial instruments will be
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authorized. The standard contract size is $100,000 for futures contracts in
U.S. Treasury bonds, U.S. Treasury notes and GNMA certificates, and $1,000,000
for the other designated contracts. While U.S. Treasury bonds, U.S. Treasury
bills, U.S. Treasury notes and GNMA certificates are backed by the full faith
and credit of the U.S. government, futures contracts in U.S. government
securities are not obligations of the U.S. Treasury.
Index Based Futures Contracts, Other Than Stock Index Based. It is
expected that bond index and other financially based index futures contracts
will be developed in the future. It is anticipated that such index based futures
contracts will be structured in the same way as stock index futures contracts
but will be measured by changes in interest rates, related indexes or other
measures, such as the consumer price index. In the event that such futures
contracts are developed, a Fund may sell interest rate index and other index
based futures contracts to hedge against changes which are expected to affect
the Fund's portfolio.
The purchase or sale of a futures contract differs from the
purchase or sale of a security, in that no price or premium is paid or received.
Instead, to initiate trading an amount of cash, cash equivalents, money market
instruments, or U.S. Treasury bills equal to approximately 1 1/2% (up to 5%) of
the contract amount must be deposited by a Fund with the Broker. This amount is
known as initial margin. The nature of initial margin in futures transactions is
different from that of margin in security transactions. Futures contract margin
does not involve the borrowing of funds by the customer to finance the
transactions. Rather, the initial margin is in the nature of a performance bond
or good faith deposit on the contract which is returned to a Fund upon
termination of the futures contract assuming all contractual obligations have
been satisfied. The margin required for a particular futures contract is set by
the exchange on which the contract is traded and may be significantly modified
from time to time by the exchange during the term of the contract.
Subsequent payments, called variation margin, to the Broker and
from the Broker, are made on a daily basis as the value of the underlying
instrument or index fluctuates making the long and short positions in the
futures contract more or less valuable, a process known as mark-to-market. For
example, when a Fund has purchased a futures contract and the price of the
underlying financial instrument or index has risen, that position will have
increased in value, and a Fund will receive from the Broker a variation margin
payment equal to that increase in value. Conversely, where a Fund has purchased
a futures contract and the price of the underlying financial instrument or index
has declined, the position would be less valuable and the Fund would be required
to make a variation margin payment to the Broker. At any time prior to
expiration of the futures contract, a Fund may elect to close the position. A
final determination of variation margin is then made, additional cash is
required to be paid to or released by the Broker, and the Fund realizes a loss
or gain.
The Trust intends to enter into arrangements with its custodian
and with Brokers to enable the initial margin of a Fund and any variation margin
to be held in a segregated account by its custodian on behalf of the Broker.
Although interest rate futures contracts by their terms call for
actual delivery or acceptance of financial instruments, and index based futures
contracts call for the delivery of cash equal to the difference between the
closing value of the index on the expiration date of the contract and the price
at which the futures contract is originally made, in most cases such futures
contracts are closed out before the settlement date without the making or taking
of delivery. Closing out a futures contract sale is effected by an offsetting
transaction in which a Fund enters into a futures contract purchase for the same
aggregate amount of the specific type of financial instrument or index and same
delivery date. If the price in the sale exceeds the price in the offsetting
purchase, the Fund is paid the difference and thus realizes a gain. If the
offsetting purchase price exceeds the sale price, the Fund pays the difference
and realizes a loss. Similarly, the closing out of a futures contract purchase
is effected by an offsetting transaction in which a Fund enters into a futures
contract sale. If the offsetting sale price exceeds the purchase price, the Fund
realizes a gain. If the purchase price exceeds the offsetting sale price the
Fund realizes a loss. The amount of a Fund's gain or loss on any transaction is
reduced or increased, respectively, by the amount of
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any transaction costs incurred by the Fund.
As an example of an offsetting transaction, the contractual
obligations arising from the sale of one contract of September U.S. Treasury
bills on an exchange may be fulfilled at any time before delivery of the
contract is required (i.e. on a specified date in September, the "delivery
month") by the purchase of one contract of September U.S. Treasury bills on the
same exchange. In such instance the difference between the price at which the
futures contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to a Fund.
There can be no assurance, however, that a Fund will be able to
enter into an offsetting transaction with respect to a particular contract at a
particular time. If a Fund is not able to enter into an offsetting transaction,
the Fund will continue to be required to maintain the margin deposits on the
contract and to complete the contract according to its terms.
Options on Financial Futures. A Fund may purchase call and put
options on financial futures contracts and sell such options to terminate an
existing position. Options on futures are similar to options on stocks except
that an option on a futures contract gives the purchaser the right, in return
for the premium paid, to assume a position in a futures contract (a long
position if the option is a call and a short position if the option is a put)
rather than to purchase or sell stock at a specified exercise price at any time
during the period of the option. Upon exercise of the option, the delivery of
the futures position by the writer of the option to the holder of the option
will be accompanied by delivery of the accumulated balance in the writer's
futures margin account. This amount represents the amount by which the market
price of the futures contract at exercise exceeds, in the case of a call, or is
less than, in the case of a put, the exercise price of the option on the futures
contract. If an option is exercised on the last trading day prior to the
expiration date of the option, the settlement will be made entirely in cash
equal to the difference between the exercise price of the option and value of
the futures contract.
A Fund intends to use options on financial futures contracts in
connection with hedging strategies. In the future the Fund may use such options
for other purposes.
Purchase of Put Options on Futures Contracts. The purchase of
protective put options on financial futures contracts is analogous to the
purchase of protective puts on individual stocks, where an absolute level of
protection is sought below which no additional economic loss would be incurred
by a Fund. Put options may be purchased to hedge a portfolio of stocks or debt
instruments or a position in the futures contract upon which the put option is
based.
Purchase of Call Options on Futures Contracts. The purchase of
call options on financial futures contracts represents a means of obtaining
temporary exposure to market appreciation at limited risk. It is analogous to
the purchase of a call option on an individual stock, which can be used as a
substitute for a position in the stock itself. Depending on the pricing of the
option compared to either the futures contract upon which it is based, or upon
the price of the underlying financial instrument or index itself, purchase of a
call option may be less risky than the ownership of the interest rate or index
based futures contract or the underlying securities. Call options on commodity
futures contracts may be purchased to hedge against an interest rate increase or
a market advance when a Fund is not fully invested.
Use of New Investment Techniques Involving Financial Futures
Contracts or Related Options. A Fund may employ new investment techniques
involving financial futures contracts and related options. A Fund intends to
take advantage of new techniques in these areas which may be developed from time
to time and which are consistent with the Fund's investment objective. The Trust
believes that no additional techniques have been identified for employment by a
Fund in the foreseeable future other than those described above.
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Limitations on Purchase and Sale of Futures Contracts and Related
Options on Such Futures Contracts. A Fund will not enter into a futures contract
if, as a result thereof, more than 5% of the Fund's total assets (taken at
market value at the time of entering into the contract) would be committed to
margin deposits on such futures contracts, including any premiums paid for
options on futures.
A Fund intends that its futures contracts and related options
transactions will be entered into for traditional hedging purposes. That is,
futures contracts will be sold to protect against a decline in the price of
securities that a Fund owns, or futures contracts will be purchased to protect
the Fund against an increase in the price of securities it intends to purchase.
A Fund does not intend to enter into futures contracts for speculation.
In instances involving the purchase of futures contracts by a
Fund, an amount of cash and cash equivalents equal to the market value of the
futures contracts will be deposited in a segregated account and/or in a margin
account with a Broker to collateralize the position and thereby insure that the
use of such futures is unleveraged.
Risks of Futures Contracts. Financial futures contracts prices are
volatile and are influenced, among other things, by changes in stock prices,
market conditions, prevailing interest rates and anticipation of future stock
prices, market movements or interest rate changes, all of which in turn are
affected by economic conditions, such as government fiscal and monetary policies
and actions, and national and international political and economic events.
At best, the correlation between changes in prices of futures
contracts and of the securities being hedged can be only approximate. The degree
of imperfection of correlation depends upon various circumstances, such as
variations in speculative market demand for futures contracts and for
securities, including technical influences in futures contracts trading; and
differences between the securities being hedged and the financial instruments
and indexes underlying the standard futures contracts available for trading, in
such respects as interest rate levels, maturities and creditworthiness of
issuers, or identities of securities comprising the index and those in a Fund's
portfolio. In addition, futures contract transactions involve the remote risk
that a party may be unable to fulfill its obligations and that the amount of the
obligation will be beyond the ability of the clearing broker to satisfy. A
decision of whether, when and how to hedge involves the exercise of skill and
judgment, and even a well conceived hedge may be unsuccessful to some degree
because of market behavior or unexpected interest rate trends.
Because of the low margin deposits required, futures trading
involves an extremely high degree of leverage. As a result, a relatively small
price movement in a futures contract may result in immediate and substantial
loss, as well as gain, to the investor. For example, if at the time of purchase,
10% of the value of the futures contract is deposited as margin, a 10% decrease
in the value of the futures contract would result in a total loss of the margin
deposit, before any deduction for the transaction costs. If the account was then
closed out at a total decrease of 15% of the futures contract, it would result
in a loss equal to 150% of the original margin deposit. Thus, a purchase or sale
of a futures contract may result in losses in excess of the amount invested in
the futures contract. However, a Fund would presumably have sustained comparable
losses if, instead of entering into the futures contract, it had invested in the
underlying financial instrument. Furthermore, in order to be certain that a Fund
has sufficient assets to satisfy its obligations under a futures contract, the
Fund will establish a segregated account in connection with its futures
contracts which will hold cash or cash equivalents equal in value to the current
value of the underlying instruments or indices less the margins on deposit.
Most U.S. futures exchanges limit the amount of fluctuation
permitted in futures contract prices during a single trading day. The daily
limit establishes the maximum amount that the price of a futures contract may
vary either up or down from the previous day's settlement price at the end of a
trading session. Once the daily limit has been reached in a particular type of
contract, no trades may be made on that day at a price beyond that limit. The
daily limit governs only price movement during a particular trading day and
therefore does not limit potential losses because the limit may prevent the
liquidation of
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<PAGE>
unfavorable positions. Futures contract prices have occasionally moved to the
daily limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of futures positions and subjecting some
futures traders to substantial losses.
Risks of Options on Futures Contracts. In addition to the risks
described above for financial futures contracts, there are several special risks
relating to options on futures contracts. The ability to establish and close out
positions on such options will be subject to the development and maintenance of
a liquid secondary market. There is no assurance that a liquid secondary market
will exist for any particular contract or at any particular time. A Fund will
not purchase options on any futures contract unless and until it believes that
the market for such options has developed sufficiently that the risks in
connection with such options are not greater than the risks in connection with
the futures contracts. Compared to the use of futures contracts, the purchase of
options on such futures involves less potential risk to a Fund because the
maximum amount at risk is the premium paid for the options (plus transaction
costs). However, there may be circumstances when the use of an option on a
futures contract would result in a loss to a Fund, even though the use of a
futures contract would not, such as when there is no movement in the level of
the futures contract.
Investment Company Securities
Securities of other investment companies may be acquired by a Fund
to the extent permitted under the 1940 Act. These limits require that, as
determined immediately after a purchase is made, (i) not more than 5% of a
Fund's total assets will be invested in the securities of any one investment
company, (ii) not more than 10% of the value of its total assets will be
invested in the aggregate in securities of investment companies as a group, and
(iii) not more than 3% of the outstanding voting stock of any one investment
company will be owned by a Fund. As a shareholder of another investment company,
a Fund would bear, along with other shareholders, its pro rata portion of the
other investment company's expenses, including advisory fees. These expenses
would be in addition to the advisory and other expenses that the Fund bears
directly in connection with its own operations. However, a Fund may invest all
of its investable assets in securities of a single open-end management
investment company with substantially the same fundamental investment
objectives, polices and limitations as the Fund.
Repurchase Agreements
A Fund may enter into repurchase agreements with entities that are
registered U.S. government securities dealers, including member banks of the
Federal Reserve System having at least $1 billion in assets, primary dealers in
U.S. government securities or other financial institutions believed by the
Fund's Advisor to be creditworthy. A repurchase agreement is an agreement by
which a person (e.g., a Fund) obtains a security and simultaneously commits to
return the security to the seller (a member bank of the Federal Reserve System
or recognized securities dealer) at an agreed upon price (including principal
and interest) on an agreed upon date within a number of days (usually not more
than seven) from the date of purchase. The resale price reflects the purchase
price plus an agreed upon market rate of interest which is unrelated to the
coupon rate or maturity of the underlying security. A repurchase agreement
involves the obligation of the seller to pay the agreed upon price, which
obligation is in effect secured by the value of the underlying security.
The Fund's custodian or a third party will take possession of the
securities subject to repurchase agreements, and these securities will be marked
to market daily. To the extent that the original seller does not repurchase the
securities from a Fund, the Fund could receive less than the repurchase price on
any sale of such securities. In the event that such a defaulting seller filed
for bankruptcy or became insolvent, disposition of such securities by a Fund
might be delayed pending court action. A Fund believes that under the regular
procedures normally in effect for custody of the Fund's portfolio securities
subject to repurchase agreements, a court of competent jurisdiction would rule
in favor of the Fund and allow retention or disposition of such securities. A
Fund will only enter into repurchase agreements with banks and other recognized
financial institutions, such as broker-dealers, which are deemed by the Advisor
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to be creditworthy pursuant to guidelines established by the Trustees.
Reverse Repurchase Agreements
A Fund may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase agreement, a
Fund transfers possession of a portfolio instrument to another person, such as a
financial institution, broker, or dealer, in return for a percentage of the
instrument's market value in cash, and agrees that on a stipulated date in the
future the Fund will repurchase the portfolio instrument by remitting the
original consideration plus interest at an agreed upon rate.
The use of reverse repurchase agreements may enable a Fund to
avoid selling portfolio instruments at a time when a sale may be deemed to be
disadvantageous, but the ability to enter into reverse repurchase agreements
does not ensure that the Fund will be able to avoid selling portfolio
instruments at a disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of a
Fund, in a dollar amount sufficient to make payment for the obligations to be
purchased, are segregated at the trade date. These securities are marked to
market daily and maintained until the transaction is settled.
Illiquid and Restricted Securities
A Fund may not invest more than 15% of its net assets in
securities that are illiquid. A security is illiquid when a Fund cannot dispose
of it in the ordinary course of business within seven days at approximately the
value at which the Fund has the investment on its books.
A Fund may invest in "restricted" securities, i.e., securities
subject to restrictions on resale under federal securities laws. Rule 144A under
the Securities Act of 1933 ("Rule 144A") allows certain restricted securities to
trade freely among qualified institutional investors. Since Rule 144A securities
may have limited markets, the Board of Trustees will determine whether such
securities should be considered illiquid for the purpose of determining a Fund's
compliance with the limit on illiquid securities indicated above. In determining
the liquidity of Rule 144A securities, the Trustees will consider: (1) the
frequency of trades and quotes for the security; (2) the number of dealers
willing to purchase or sell the security and the number of other potential
buyers; (3) dealer undertakings to make a market in the security; and (4) the
nature of the security and the nature of the marketplace trades.
When-Issued, Delayed-Delivery and Forward Commitment Transactions
A Fund may purchase securities on a when-issued or
delayed-delivery basis and may purchase or sell securities on a forward
commitment basis. These transactions involve the purchase of debt obligations
with delivery and payment normally taking place within a month or more after the
date of commitment to purchase. A Fund will only make commitments to purchase
obligations on a when-issued basis with the intention of actually acquiring the
securities, but may sell them before the settlement date. The when-issued
securities are subject to market fluctuation, and no interest accrues on the
security to the purchaser during this period. The payment obligation and the
interest rate that will be received on the securities are each fixed at the time
the purchaser enters into the commitment.
Segregated accounts will be established and a Fund will maintain
liquid assets in an amount at least equal in value to the Fund's commitments to
purchase when-issued securities. If the value of these assets declines, the Fund
will place additional liquid assets in the account on a daily basis so that the
value of the assets in the account is equal to the amount of such commitments.
Purchasing obligations on a when-issued basis is a form of
leveraging and can involve a risk that the yields available in the market when
the delivery takes place may actually be higher than those
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<PAGE>
obtained in the transaction itself. In that case there could be an unrealized
loss at the time of delivery.
A Fund uses when-issued, delayed-delivery and forward commitment
transactions to secure what it considers to be an advantageous price and yield
at the time of purchase. When a Fund engages in when-issued, delayed-delivery
and forward commitment transactions, it relies on the buyer or seller, as the
case may be, to consummate the sale. If the buyer or seller fails to complete
the sale, then the Fund may miss the opportunity to obtain the security at a
favorable price or yield.
Typically, no income accrues on securities a Fund has committed to
purchase prior to the time delivery of the securities is made, although the Fund
may earn income on securities it has in a segregated account. When purchasing a
security on a when-issued, delayed-delivery, or forward commitment basis, a Fund
assumes the rights and risks of ownership of the security, including the risk of
price and yield fluctuations, and takes such fluctuations into account when
determining its net asset value. Because a Fund is not required to pay for the
security until the delivery date, these risks are in addition to the risks
associated with the Fund's other investments.
Foreign Currency Transactions
As one way of managing exchange rate risk, a Fund may enter into
forward currency exchange contracts (agreements to purchase or sell currencies
at a specified price and date). The exchange rate for the transaction (the
amount of currency a Fund will deliver and receive when the contract is
completed) is fixed when the Fund enters into the contract. A Fund usually will
enter into these contracts to stabilize the U.S. dollar value of a security it
has agreed to buy or sell. Each Fund intends to use these contracts to hedge the
U.S. dollar value of a security it already owns, particularly if the Fund's
advisor expects a decrease in the value of the currency in which the foreign
security is denominated. Although a Fund will attempt to benefit from using
forward contracts, the success of its hedging strategy will depend on the
Advisor's ability to predict accurately the future exchange rates between
foreign currencies and the U.S. dollar. The value of a Fund's investments
denominated in foreign currencies will depend on the relative strengths of those
currencies and the U.S. dollar, and the Fund may be affected favorably or
unfavorably by changes in the exchange rates or exchange control regulations
between foreign currencies and the U.S. dollar. Changes in foreign currency
exchange rates also may affect the value of dividends and interest earned, gains
and losses realized on the sale of securities and net investment income and
gains, if any, to be distributed to shareholders by a Fund. A Fund may also
purchase and sell options related to foreign currencies in connection with
hedging strategies.
Foreign Securities
A Fund may invest in foreign securities or U.S. securities traded
in foreign markets. Permissible investments may consist of obligations of
foreign branches of U.S. banks and of foreign banks, including European
certificates of deposit, European time deposits, Canadian time deposits and
Yankee certificates of deposit, and investments in Canadian commercial paper,
foreign securities and Europaper. These instruments may subject a Fund to
investment risks that differ in some respects from those related to investments
in obligations of U.S. domestic issuers. Such risks include future adverse
political and economic developments; the possible imposition of withholding
taxes on interest or other income; the possible seizure, nationalization, or
expropriation of foreign deposits; the possible establishment of exchange
controls; or taxation at the source; greater fluctuations in value due to
changes in exchange rates, or the adoption of other foreign governmental
restrictions which might adversely affect the payment of principal and interest
on such obligations. Such investments may also entail higher custodial fees and
sales commissions than domestic investments. Foreign issuers of securities or
obligations are often subject to accounting treatment and engage in business
practices different from those respecting domestic issuers of similar securities
or obligations. Foreign branches of U.S. banks and foreign banks may be subject
to less stringent reserve requirements than those applicable to domestic
branches of U.S. banks.
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Lower Rated Bonds (Balanced and American Retirement)
Balanced and American Retirement may invest in high yield, high
risk bonds, commonly known as "junk bonds." While investment in high yield, high
risk bonds provides opportunities to maximize return over time, investors should
be aware of the following risks associated with high yield, high risk bonds:
(1) High yield, high risk bonds are rated below investment grade, i.e.,
BB or lower by Standard & Poor's Ratings Group ("S&P") or Ba or lower by Moody's
Investors Service ("Moody's"). Securities so rated are considered predominantly
speculative with respect to the ability of the issuer to meet principal and
interest payments. Balanced and American Retirement may also invest in unrated
securities that, in their Advisor's judgment, offer comparable yields and risks
as securities that are rated as low as D by S&P or Cby Moody's. It is possible
for securities rated D or C-, respectively, to have defaulted on payments of
principal and/or interest at the time of investment. (See Appendix A to this SAI
for a description of these rating categories.) Balanced and American Retirement
intend to invest in D rated debt only in cases when, in their Advisor's
judgment, there is a distinct prospect of improvement in the issuer's financial
position as a result of the completion of reorganization or otherwise.
(2) The lower ratings of these securities reflect a greater possibility
that adverse changes in the financial condition of the issuer or in general
economic conditions, or both, or an unanticipated rise in interest rates may
impair the ability of the issuer to make payments of interest and principal,
especially if the issuer is highly leveraged. Such issuer's ability to meet its
debt obligations may also be adversely affected by specific corporate
developments or the issuer's inability to meet specific projected business
forecasts or the unavailability of additional financing. Also, an economic
downturn or an increase in interest rates may increase the potential for default
by the issuers of these securities.
(3) The value of high yield, high risk bonds may be more susceptible to
real or perceived adverse economic, company or industry conditions and publicity
than is the case for higher quality securities.
(4) The value, of high yield, high risk bonds like that of other fixed
income securities, fluctuates in response to changes in interest rates,
generally rising when interest rates decline and falling when interest rates
rise. For example, if interest rates increase after a fixed income security is
purchased, the security, if sold prior to maturity, may return less than its
cost. The prices of below-investment grade bonds, however, are generally less
sensitive to interest rate changes than the prices of higher-rated bonds, but
are more sensitive to adverse or positive economic changes or individual
corporate developments.
(5) The secondary market for such securities may be less liquid at
certain times than the secondary market for higher quality debt securities,
which may adversely effect (1) the market price of the security, (2) a Fund's
ability to dispose of particular issues and (3) a Fund's ability to obtain
accurate market quotations for purposes of valuing its assets.
(6) Zero coupon bonds and payment-in-kind securities ("PIKs") involve
additional special considerations. For example, zero coupon bonds pay no
interest to holders prior to maturity of interest. PIKs are debt obligations
that provide that the issuer may, at its option, pay interest on such bonds in
cash or in the form of additional debt obligations. Such investments may
experience greater fluctuation in value due to changes in interest rates than
debt obligations that pay interest currently. Even though these investments do
not pay current interest in cash, a Fund is, nonetheless, required by tax laws
to accrue interest income on such investments and to distribute such amounts at
least annually to shareholders. Thus, a Fund could be required at times to
liquidate investments in order to fulfill its intention to distribute
substantially all of its net income as dividends. A Fund will not be able to
purchase additional income producing securities with cash used to make such
distributions, and its current income ultimately may be reduced as a result.
An Advisor considers the ratings of S&P and Moody's assigned to various
securities, but does not rely solely on these ratings because (1) S&P's and
Moody's assigned ratings are based largely on historical
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financial data and may not accurately reflect the current financial outlook of
companies; and (2) there can be large differences among the current financial
conditions of issuers within the same category.
MANAGEMENT OF THE TRUST
Set forth below are the Trustees and officers of the Trust and their
principal occupations and their affiliations over the last five years. Unless
otherwise indicated, the address for each Trustee and officer is 200 Berkeley
Street, Boston, Massachusetts 02116. Each Trustee is also a Trustee of each of
the other Trusts in the Evergreen fund complex.
<TABLE>
<CAPTION>
NAME POSITION WITH TRUST PRINCIPAL OCCUPATIONS FOR LAST FIVE YEARS
- ------------------------------- ------------------------- -----------------------------------------------------------------
<S> <C> <C>
Laurence B. Ashkin Trustee Real estate developer and construction consultant;
(DOB: 2/2/28) and President of Centrum Equities and Centrum
Properties, Inc.
Charles A. Austin III Trustee Investment Counselor to Appleton Partners, Inc.;
(DOB: 10/23/34) former Director, Executive Vice President and
Treasurer, State Street Research & Management
Company (investment advice); Director, The Andover
Companies (Insurance); and Trustee, Arthritis
Foundation of New England
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NAME POSITION WITH TRUST PRINCIPAL OCCUPATIONS FOR LAST FIVE YEARS
- ------------------------------- ------------------------- -----------------------------------------------------------------
K. Dun Gifford Trustee Trustee, Treasurer and Chairman of the Finance Committee,
(DOB: 10/12/38) Cambridge College; Chairman Emeritus and Director, American
Institute of Food and Wine; Chairman and President, Oldways
Preservation and Exchange Trust (education); former Chairman
of the Board, Director, and Executive Vice President, The
London Harness Company; former Managing Partner, Roscommon
Capital Corp.; former Chief Executive Officer, Gifford Gifts
of Fine Foods; and former Chair man, Gifford, Drescher &
Associates (environmental consulting)
James S. Howell Chairman of the Former Chairman of the Distribution Foundation for
(DOB: 8/13/24) Board of Trustees the Carolinas; and former Vice President of Lance Inc.
(food manufacturing).
Leroy Keith, Jr. Trustee Chairman of the Board and Chief Executive Officer, Carson
(DOB: 2/14/39) Products Company; Director of Phoenix Total Return Fund and
Equifax, Inc.; Trustee of Phoenix Series Fund, Phoenix
Multi-Portfolio Fund, and The Phoenix Big Edge Series Fund;
and former President, Morehouse College.
Gerald M. McDonnell Trustee Sales Representative with Nucor-Yamoto, Inc. (steel
(DOB: 7/14/39) producer).
Thomas L. McVerry Trustee Former Vice President and Director of Rexham
(DOB: 8/2/39) Corporation; and former Director of Carolina
Cooperative Federal Credit Union.
William Walt Pettit Trustee Partner in the law firm of William Walt Pettit, P.A.
(DOB: 8/26/55)
David M. Richardson Trustee Vice Chair and former Executive Vice President, DHR
(DOB: 9/14/41) International, Inc. (executive recruitment); former
Senior Vice President, Boyden International Inc.
(executive recruitment); and Director, Commerce and
Industry Association of New Jersey, 411
International, Inc., and J&M Cumming Paper Co.
Russell A. Salton, III MD Trustee Medical Director, U.S. Health Care/Aetna Health
(DOB: 6/2/47) Services; former Managed Health Care Consultant;
and former President, Primary Physician Care.
Michael S. Scofield Trustee Attorney, Law Offices of Michael S. Scofield.
(DOB: 2/20/43)
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NAME POSITION WITH TRUST PRINCIPAL OCCUPATIONS FOR LAST FIVE YEARS
- ------------------------------- ------------------------- -----------------------------------------------------------------
Richard J. Shima Trustee Former Chairman, Environmental Warranty, Inc. (insurance
(DOB: 8/11/39) agency); Executive Consultant, Drake Beam Morin, Inc.
(executive outplacement); Director of Connecticut Natural Gas
Corporation, Hartford Hospital, Old State House Association,
Middlesex Mutual Assurance Company, and Enhance Financial
Services, Inc.; Chairman, Board of Trustees, Hartford
Graduate Center; Trustee, Greater Hartford YMCA; former
Director, Vice Chairman and Chief Investment Officer, The
Travelers Corporation; former Trustee, Kingswood-Oxford
School; and former Managing Director and Consultant, Russell
Miller, Inc.
William J. Tomko* President and Senior Vice President and Operations Executive,
(DOB: 8/30/58) Treasurer BISYS Fund Services.
Nimish S. Bhatt* Vice President and Vice President, Tax, BISYS Fund Services; former
(DOB: 6/6/63) Assistant Treasurer Assistant Vice President, Evergreen Asset
Management Corp./First Union National Bank; former
Senior Tax Consulting/Acting Manager, Investment
Companies Group, Price Waterhouse LLP, New York.
Bryan Haft* Vice President Team Leader, Fund Administration, BISYS Fund
(DOB: 1/23/65) Services.
D'Ray Moore* Secretary Vice President, Client Services, BISYS Fund Services.
(DOB: 3/30/59)
</TABLE>
*Address: BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio 43219-8001
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<PAGE>
Trustee Compensation
Listed below is the Trustee compensation for the fiscal year ended
March 31, 1998.
<TABLE>
<CAPTION>
Pension or
Aggregate Retirement Benefits Estimated Annual Total Compensation
Compensation Accrued As Part of Benefits Upon from Trust and
Trustee from Trust Fund Expenses Retirement Fund Complex
<S> <C> <C> <C> <C>
Laurence B. Ashkin $ 9,856 $ 0 $ 0 $ 72,681
Charles A. Austin III 6,993(a) 0 0 49,297(b)
Foster Bam* 7,722 0 0 53,236
K. Dun Gifford 6,468 0 0 46,061
James S. Howell 12,072(c) 0 0 109,570(d)
Robert J. Jeffries* 2,167 0 0 18,222
Leroy Keith Jr. 6,633 0 0 46,461
Gerald M. McDonnell ** 10,718 0 0 94,500
Thomas L. McVerry ** 10,825 0 0 96,805
William Walt Pettit ** 9,700 0 0 86,613
David M. Richardson 6,927 0 0 48,673
Russell A. Salton, III ** 10,424 0 0 95,031
Michael S. Scofield 10,835 0 0 97,794
Richard J. Shima 8,681 0 0 67,325
</TABLE>
(a) $1,049 of this amount payable in later years as deferred compensation.
(b) $7,395 of this amount payable in later years as deferred compensation.
(c) $9,658 of this amount payable in later years as deferred compensation.
(d) $87,656 of this amount payable in later years as deferred compensation.
* Former Trustee; retired as of December 31, 1997
** Entire amount payable in later years as deferred compensation.
PRINCIPAL HOLDERS OF FUND SHARES
As of July 1, 1998, the officers and Trustees of the Trust owned as a
group less than 1% of the outstanding of any class of each Fund.
Set forth below is information with respect to each person who, to each
Fund's knowledge, owned beneficially or of record 5% or more of a class of each
Fund's outstanding shares as of July 1, 1998.
Foundation Class A None
Foundation Class B None
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Foundation Class C
MLPF&S for the sole benefit of its customers
Attn: Fund Administration 26.21%
4800 Deer Lake Dr. East 2nd fl.
Jacksonville, FL 32246-6484
Foundation Class Y
First Union National Bank/EB/INT, Cash Account
Attn: Trust Operations Fund Group 10.43%
401 S. Tryon Street; 3rd Floor CMG 1151
Charlotte, NC 28202-1911
First Union National Bank/EB/INT, Reinvest Account
Attn: Trust Operations Fund Group 36.39%
401 S. Tryon Street;3rd Floor CMG 1151
Charlotte, NC 29202-1911 Mac & Co.
Aetna Retirement Services/Central Valuation Unit 12.01%
Attn: Mutual Funds Operations
P.O. Box 3198
Pittsburgh, PA 15230-3198
AETNA Life Insurance
Life & Annuity/Central Valuation Unit 5.41%
Attn: Jackie Johnson, Conveyor TS31
151 Farminton Ave.
Hartford, CT 06156-0001
Charles Schwab & Co. Inc.
Special Custody Account fo r the Exclusive Benefit of Customers 6.46%
Reinvest Account Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104-4122
Tax Strategic Class A None
Tax Strategic Class B
MLPF&S for the sole benefit of its customers
Attn: Fund Administration 97H99 10.52%
4800 Deer Lake Dr. East 2nd Fl.
Jacksonville, FL 32246-6484
Tax Strategic Class C
MLPF&S for the sole benefit of its customers
Attn: Fund Administration 29.86%
4800 Deer Lake Dr., East 2nd Fl.
Jacksonville, FL 32246-6484
Tax Strategic Class Y
Nola Maddox Falcone
70 Drake Rd. 7.81%
Scarsdale, NY 10583-6447
First Union National Bank, EB/INT, Cash Account
Attn: Trust Operations Fund Group 7.79%
401 S. Tryon St. 3rd Floor CMG 1151
Charlotte, NC 28202-1911
Stephen A. Lieber
1210 Greacen Point Rd. 39.63%
Mamaroneck, NY 10543-4613
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<PAGE>
First Union National Bank EB/INT/ Cash Account
Attn: Trust Operations Fund Group 7.27%
401 S. Tryon St., 3rd Fl
Charlotte, NC 28202-1911
American Retirement Class A None
American Retirement Class B None
American Retirement Class C None
American Retirement Class Y
Charles Schwab & Co. Inc.
Special Custody Account FBO Exclusive Benefit of Customers 21.21%
Reinvest Account, Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122
First Union National Bank/EB/INT, Reinvest Account
Attn: Trust Operations Fund Group 18.70%
401 S. Tryon Street, 3rd Fl., CMG 1151
Charlotte, NC 28202-1911
Balanced Class A None
Balanced Class B None
Balanced Class C
MLPF&S for the sole benefit of its customers
Attn: Fund Administration 15.72%
4800 Deer Lake Dr. East 2nd Fl.
Jacksonville, FL 32246-6484
FUBS & Co. FEBO
FUNB NC FBO Goldstein S. Bldg./Supply Loan Account 5.81%
Attn: Frank Pierce Loan Ofcs.
P.O. Box 3008, 6th Fl.
Raleigh, NC 27602-3008
Donaldson Lufkin Jenrette
Securities Corporation Inc. 5.16%
P.O. Box 2052
Jersey City, NJ 07303-2052
State Street Bank and Trust Company
Rollover IRA FBO Rita E. Resina 6.77%
291 Minneford
Bronx, NY 10464-1421
Balanced Class Y
First Union National Bank
Trust Accounts/ Attn: Ginny Batten 65.77%
11th Floor CMG - 1151
301 S. Tryon St.
Charlotte, NC 28202-1910
First Union National Bank
Trust Accounts Attn: Ginny Batten 30.89%
11th Floor CMG - 1151
301 S. Tryon St.
Charlotte, NC 28202-1910
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISORS
Each Fund has its own investment advisor (the "Advisor"). Each Advisor
is a direct or indirect subsidiary of First Union Corporation ("First Union"), a
bank holding company headquartered at 301 South College Street, Charlotte, North
Carolina 28288-0630. First Union and its subsidiaries provide a broad range of
financial services to individuals and businesses throughout the United States.
Some of the Funds also have an investment subadvisor (the
"Subadvisor"). Each Fund's Advisor and, if applicable, its Subadvisor, is
discussed below, including a description of fees. For a summary of amounts paid
by the Funds to their Advisor for the last three fiscal years see the section
"Financial Information" below.
Evergreen Asset Management Corp. ("Evergreen Asset"), 2500 Westchester
Avenue, Purchase, New York 10577, is the Advisor to Foundation, Tax Strategic
and American Retirement, each of which pays Evergreen Asset an annual percentage
of its average daily net assets, as follows:
Agregate Net Asset Value of
Management Fee the Shares of a Fund
Foundation and Tax Strategic:
0.875% of the first $750,000,000; and
0.750% of the next $250,000,000; and
0.700% of amounts over $1,000,000,000.
Aggregate Net Asset Value of
Management Fee the Shares of a Fund
American Retirement:
0.75% of the first $750,000,000; and
0.70% of amounts over $750,000,000.
Keystone Investment Management Company ("Keystone"), 200 Berkeley
Street, Boston, Massachusetts 02116, is the Advisor to Balanced.
Balanced pays Keystone a fee for its services at the annual rate set
forth below
1.5% of Gross Dividend
and Interest Income
Aggregate Net Plus Aggregate Net Asset Value
Management Fee of the Shares of the Fund
- -------------- ---------------------------
0.60% of the first $100,000,000; plus
0.55% of the next $100,000,000; plus
0.50% of the next $100,000,000; plus
0.45% of the next $100,000,000; plus
0.40% of the next $100,000,000; plus
0.35% of the next $500,000,000; plus
0.30% of amounts over $1,000,000,000.
Keystone's fee is computed as of the close of business each
business day and is payable monthly.
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Lieber & Company, 2500 Westchester Avenue, Purchase, New York 10577, is the
Subadvisor to Foundation, Tax Strategic and American Retirement. Lieber &
Company is reimbursed by Evergreen Asset for the direct and indirect costs of
providing subadvisory services to a Fund.
INVESTMENT ADVISORY AGREEMENTS
On behalf of each of its Funds, the Trust has entered into an
investment advisory agreement with each Advisor (the "Advisory Agreements").
Under each Advisory Agreement, and subject to the supervision of the Trust's
Board of Trustees, the Advisor furnishes to the appropriate Fund investment
advisory, management and administrative services, office facilities, and
equipment in connection with its services for managing the investment and
reinvestment of the Fund's assets. The Advisor pays for all of the expenses
incurred in connection with the provision of its services. Each Fund pays for
all charges and expenses, other than those specifically referred to as being
borne by the Advisor, including, but not limited to: (1) custodian charges and
expenses; (2) bookkeeping and auditors' charges and expenses; (3) transfer agent
charges and expenses; (4) fees and expenses of Independent Trustees of the Trust
(Trustees who are not interested persons of the Fund, as defined in the 1940
Act); (5) brokerage commissions, brokers' fees and expenses; (6) issue and
transfer taxes; (7) costs and expenses under the Distribution Plan (as
applicable); (8) taxes and trust fees payable to governmental agencies; (9) the
cost of share certificates; (10) fees and expenses of the registration and
qualification of such Fund and its shares with the SEC or under state or other
securities laws; (11) expenses of preparing, printing and mailing prospectuses,
SAIs, notices, reports and proxy materials to shareholders of such Fund; (12)
expenses of shareholders' and Trustees' meetings; (13) charges and expenses of
legal counsel for such Fund and for the Independent Trustees of the Trust on
matters relating to such Fund; (14) charges and expenses of filing annual and
other reports with the SEC and other authorities; and (15) all extraordinary
charges and expenses of such Fund. (See also the section entitled "Financial
Information.")
Each Advisory Agreement continues in effect for two years from its
effective date and, thereafter, from year to year only if approved at least
annually by the Board of Trustees of the Trust or by a vote of a majority of a
Fund's outstanding shares. In either case, the terms of the Advisory Agreement
and continuance thereof must be approved by the vote of a majority of the
Independent Trustees cast in person at a meeting called for the purpose of
voting on such approval. The Advisory Agreements may be terminated, without
penalty, on 60 days' written notice by the Trust's Board of Trustees or by a
vote of a majority of outstanding shares. Each Advisory Agreement will terminate
automatically upon its "assignment" as that term is defined in the 1940 Act.
Transactions Among Advisory Affiliates
The Trust has adopted procedures pursuant to Rule 17a-7 under the
1940 Act ("Rule 17a-7 Procedures"). The Rule 17a-7 Procedures permit a Fund to
buy or sell securities from another investment company for which a subsidiary of
First Union is an investment advisor. The Rule 17a-7 Procedures also allow the
Funds to buy or sell securities from other advisory clients for whom a
subsidiary of First Union is an investment advisor. The Funds may engage in such
transactions if they are equitable to each participant and consistent with each
participant's investment objective.
DISTRIBUTOR
Evergreen Distributor, Inc. (the "Distributor") markets the Funds through
broker-dealers and other financial representatives. Its address is 125 W. 55th
Street, New York, NY 10019.
DISTRIBUTION PLANS AND AGREEMENTS
Distribution fees are accrued daily and paid monthly on Class A,
Class B and Class C shares and are charged as class expenses, as accrued. The
distribution fees attributable to the Class B and Class
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C shares are designed to permit an investor to purchase such shares through
broker-dealers without the assessment of a front-end sales charge, while at the
same time permitting the Distributor to compensate broker-dealers in connection
with the sale of such shares. In this regard, the purpose and function of the
combined contingent deferred sales charge and distribution services fee on the
Class B shares are the same as those of the front-end sales charge and
distribution fee with respect to the Class A shares in that in each case the
sales charge and/or distribution fee provide for the financing of the
distribution of a Fund's shares.
Under the Rule 12b-1 Distribution Plans that have been adopted by
each Fund with respect to each of its Class A, Class B and Class C shares (each
a "Plan" and collectively, the "Plans"), the Treasurer of the Trust reports the
amounts expended under the Plans for a Fund and the purposes for which such
expenditures were made to the Trustees of the Trust for their review on a
quarterly basis. Also, each Plan provides that the selection and nomination of
the Independent Trustees are committed to the discretion of such Independent
Trustees then in office.
Each Advisor may from time to time from its own funds or such
other resources as may be permitted by rules of the SEC make payments for
distribution services to the Distributor; the latter may in turn pay part or all
of such compensation to brokers or other persons for their distribution
assistance.
Each Plan and Distribution Agreement will continue in effect for
successive twelve-month periods provided, however, that such continuance is
specifically approved at least annually by the Trustees of the Trust or by vote
of the holders of a majority of the outstanding voting securities of that Class
and, in either case, by a majority of the Independent Trustees of the Trust who
have no direct or indirect financial interest in the operation of the Plan or
any agreement related thereto.
The Plans permit the payment of fees to brokers and others for
distribution and shareholder related administrative services and to
broker-dealers, depository institutions, financial intermediaries and
administrators for administrative services as to Class A, Class B and Class C
shares. The Plans are designed to (i) stimulate brokers to provide distribution
and administrative support services to a Fund and holders of Class A, Class B
and Class C shares, and (ii) stimulate administrators to render administrative
support services to a Fund and holders of Class A, Class B and Class C shares.
The administrative services are provided by a representative who has knowledge
of the shareholder's particular circumstances and goals, and include, but are
not limited to, providing office space, equipment, telephone facilities, and
various personnel including clerical, supervisory, and computer, as necessary or
beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of
client account cash balances; answering routine client inquiries regarding Class
A, Class B and Class C shares; assisting clients in changing dividend options,
account designations, and addresses; and providing such other services as a Fund
reasonably requests for its Class A, Class B and Class C shares.
In the event that a Plan or Distribution Agreement is terminated
or not continued with respect to one or more Classes of a Fund, (i) no
distribution fees (other than current amounts accrued but not yet paid) would be
owed by Fund to the Distributor with respect to that Class or Classes, and (ii)
the Fund would not be obligated to pay the Distributor for any amounts expended
under the Distribution Agreement not previously recovered by the Distributor
from distribution services fees in respect of shares of such Class or Classes
through deferred sales charges.
All material amendments to any Plan or Distribution Agreement must
be approved by a vote of the Trustees of the Trust or the holders of a Fund's
outstanding voting securities, voting separately by class, and in either case,
by a majority of the Independent Trustees, cast in person at a meeting called
for the purpose of voting on such approval; and any Plan or Distribution
Agreement may not be amended in order to increase materially the costs that a
particular class of shares of a Fund may bear pursuant to a Plan or Distribution
Agreement without the approval of a majority of the holders of the outstanding
voting shares of the Class affected. Any Plan or Distribution Agreement may be
terminated (i) by a Fund without penalty at
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any time by a majority vote of the holders of the outstanding voting securities
of a Fund, voting separately by Class or by a majority vote of the Independent
Trustees, or (ii) by the Distributor. To terminate any Distribution Agreement,
any party must give the other parties 60 days' written notice; to terminate a
Plan only, a Fund need give no notice to the Distributor. Any Distribution
Agreement will terminate automatically in the event of its assignment.
For a summary of distribution fees paid by the Funds for the last three fiscal
years see "Financial Information" below.
ADDITIONAL SERVICE PROVIDERS
Administrator
Evergreen Investment Services, Inc. ("EIS"), 200 Berkeley Street,
Boston, Massachusetts 02116-5034, serves as administrator to the Funds, subject
to the supervision and control of the Trust's Board of Trustees. EIS provides
each Fund with facilities, equipment and personnel and is entitled to receive a
fee from the Fund at a rate based on the total assets of all mutual funds
advised by First Union subsidiaries, and for which EIS serves as administrator,
as follows:
Total assets of
Administrator Fee First Union subsidiaries
Foundation, Tax Strategic and American Retirement:
0.060% of the first $7 billion
0.0425% of the next $3 billion
0.035% of the next $5 billion
0.025% of the next $10 billion
0.019% of the next $5 billion
0.014% of amounts over $30 billion
Aggregate Net Total assets of
Administrator Fee First Union subsidiaries
Balanced:
0.050% of the first $7 billion
0.035% of the next $3 billion
0.030% of the next $5 billion
0.020% of the next $10 billion
0.015% of the next $5 billion
0.010% of amounts over $30 billion
Transfer Agent
Evergreen Service Company ("ESC"), a subsidiary of First Union, is
the Funds' transfer agent. The transfer agent issues and redeems shares, pays
dividends and performs other duties in connection with the maintenance of
shareholder accounts. ESC's address is 200 Berkeley Street, Boston,
Massachusetts 02116-5034.
Independent Auditors
KPMG Peat Marwick LLP, is the Funds' independent auditor. The
independent auditor audits the Funds' annual financial statements. The address
of KPMG Peat Marwick LLP is 99 High Street, Boston, Massachusetts 02110.
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Custodian
State Street Bank and Trust Company is the Funds' custodian. The custodian
keeps custody of each Fund's securities and cash and performs other related
duties. State Street Bank and Trust Company's address is P.O. Box 9021, Boston,
Massachusetts 02205-9827.
Legal Counsel
Sullivan & Worcester LLP provides legal advice to the Funds. Its address is
1025 Connecticut Avenue, N.W., Washington, D.C. 20036.
BROKERAGE
The Board of Trustees periodically reviews each Fund's brokerage
policy. Due to future regulatory developments affecting the securities exchanges
and brokerage practices, the Board of Trustees may modify or eliminate any of
the following policies.
BROKERAGE COMMISSIONS
Generally, a Fund expects to purchase and sell its equity
securities through brokerage transactions for which commissions are payable.
Purchases from underwriters will include the underwriting commission or
concession, and purchases from dealers serving as market makers will include a
dealer's mark-up or reflect a dealer's mark-down.
A Fund expects to purchase and sell its fixed income securities
through principal transactions directly from the issuer or an underwriter or
market maker for the securities. Generally, a Fund will not pay brokerage
commissions for such purchases. When a Fund buys a security from an underwriter,
the purchase price will usually include an underwriting commission or
concession. The purchase price for securities bought from dealers serving as
market makers will similarly include the dealer's mark-up or reflect a dealer's
mark-down. When a Fund executes transactions in the over-the-counter market, it
will deal with primary market makers unless more favorable prices are otherwise
obtainable.
SELECTION OF BROKERS
When buying and selling portfolio securities, each Advisor seeks
brokers who can provide the most benefit to a Fund or Funds for which a trade is
being made. When selecting a broker, an Advisor will primarily look for the best
price at the lowest commission, but in the context of the broker's:
1. ability to provide the best net financial result to a Fund;
2. efficiency in handling trades;
3. ability to trade large blocks of securities;
4. readiness to handle difficult trades;
5. financial strength and stability; and
6. provision of "research services," defined as (a) reports and
analyses concerning issuers, industries, securities and
economic factors, and (b) other information useful in making
investment decisions.
A Fund's management weighs these considerations in determining the
overall reasonableness of the brokerage commission paid.
Research services provided by a broker to an Advisor do not
replace, but supplement, the services an Advisor is required to deliver to a
Fund under the Advisory Agreement. It is impracticable for an Advisor to
allocate the cost, value and specific application of such research services
among its clients
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<PAGE>
because research services intended for one client may indirectly benefit
another. Under its Investment Advisory Agreement, Keystone is permitted to pay
higher brokerage commissions for brokerage and research services in accordance
with Section 28(e) of the 1934 Act. In the event Keystone follows such a
practice, it will do so on a basis that is fair and equitable to Balanced.
The Trust's Board of Trustees has determined that the Funds may
consider sales of Fund shares as a factor in the selection of brokers to execute
portfolio transactions, subject to the requirements of best execution described
above.
Lieber & Company ("Lieber"), an affiliate of Evergreen Asset and a
member of the New York and American Stock Exchanges, will to the extent
practicable effect substantially all of the portfolio transactions for
Foundation, Tax Strategic and American Retirement effected on those exchanges.
Under Section 11(a) of the Securities Exchange Act of 1934 (the
"1934 Act"), as amended, and the rules adopted thereunder by the SEC, Lieber may
be compensated for effecting transactions in the rules are met. Each Fund
advised by Evergreen Asset has entered into an agreement with Lieber authorizing
Lieber to retain compensation fro brokerage services. In accordance with such
agreement, it is contemplated that Lieber, a member of the New York and American
Stock Exchanges, will, to the extent practicable, provide brokerage services to
Foundation, Tax Strategic and American Retirement with respect to substantially
all securities transactions effected on the New York and American Stock
Exchanges. In such transactions, the Advisor will seek the best execution at the
most favorable price while paying a commission rate no higher than that offered
to other clients of Lieber or that comparable execution capability in a similar
transaction. However, no Fund will engage in transactions in which Lieber would
be a principal. While no Fund advised by Evergreen Asset contemplates any
ongoing arrangements with other brokerage firms, brokerage business may be given
from time to time to the firms. In addition, the Trustees have adopted
procedures pursuant to Rule 17e-1 under the 1940 Act to ensure that all
brokerage transactions with Lieber, as an affiliated broker-dealer, are fair and
reasonable.
SIMULTANEOUS TRANSACTIONS
An Advisor makes investment decisions for a Fund independently of
decisions made for its other clients. When a security is suitable for the
investment objective of more than one client, it may be prudent for an Advisor
to engage in a simultaneous transaction, that is, buy or sell the same security
for more than one client. Each Advisor strives for an equitable result in such
transactions by using an allocation formula. The high volume involved in some
simultaneous transactions can result in greater value to the Funds, but the
ideal price or trading volume may not always be achieved for an individual Fund.
In order to take advantage of the availablility of lower purchase prices, the
Funds may occasionally participate in group bidding for the direct purchase from
an issuer of certain securities.
For a summary of brokerage commission paid by the Funds for the
last three fiscal years see "Financial Information" below.
TRUST ORGANIZATION
FORM OF ORGANIZATION
Each Fund is a series of an open-end management investment
company, known as Evergreen Equity Trust. The Trust was formed as a Delaware
business trust under an Agreement and Declaration of Trust dated September 18,
1997 (the "Declaration of Trust"). A copy of the Declaration of Trust is on file
at the SEC as an exhibit to the Trust's Registration Statement, of which this
SAI is a part. This summary is qualified in its entirety by reference to the
Declaration of Trust.
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DESCRIPTION OF SHARES
The Declaration of Trust authorizes the issuance of an unlimited
number of shares of beneficial interest of series and classes of shares. Each
share of each Fund represents an equal proportionate interest with each other
share of that series and/or class. Upon liquidation, shares are entitled to a
pro rata share of the Trust based on the relative net assets of each series
and/or class. Shareholders have no preemptive or conversion rights. Shares are
redeemable and transferable.
VOTING RIGHTS
Under the terms of the Declaration of Trust, the Trust is not
required to hold annual shareholder meetings. At meetings called for the initial
election of Trustees or to consider other matters, each share is entitled to one
vote for each dollar of net asset value applicable to such share. Shares
generally vote together as one class on all matters. Classes of shares of each
Fund have equal voting rights. No amendment may be made to the Declaration of
Trust that adversely affects any class of shares without the approval of a
majority of the votes applicable to the shares of that class. Shares have
non-cumulative voting rights, which means that the holders of more than 50% of
the votes applicable to shares voting for the election of Trustees can elect
100% of the Trustees to be elected at a meeting and, in such event, the holders
of the remaining shares voting will not be able to elect any Trustees.
After the initial meeting as described above, no further
shareholder meetings for the purpose of electing Trustees will be held, unless
required by law, unless and until such time as less than a majority of the
Trustees holding office have been elected by shareholders, at which time the
Trustees then in office will call a shareholders' meeting for the election of
Trustees.
LIMITATION OF TRUSTEES' LIABILITY
The Declaration of Trust provides that a Trustee will not be
liable for errors of judgment or mistakes of fact or law, but nothing in the
Declaration of Trust protects a Trustee against any liability to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of his duties involved in the conduct of his
office.
PURCHASE, REDEMPTION AND PRICING OF SHARES
HOW THE FUNDS OFFER SHARES TO THE PUBLIC
You may buy shares of a Fund through the Distributor,
broker-dealers that have entered into special agreements with the Distributor or
certain other financial institutions. Each Fund offers four classes of shares
that differ primarily with respect to sales charges and distribution fees.
Depending upon the class of shares, you will pay an initial sales charge when
you buy a Fund's shares, a contingent deferred sales charge (a "CDSC") when you
redeem a Fund's shares or no sales charges at all.
Class A Shares
With certain exceptions, when you purchase Class A shares you will
pay a maximum sales charge equal to 4.75% of the offering price. (The
prospectuses contain a complete table of applicable sales charges and a
discussion of sales charge reductions or waivers that may apply to purchases.
See also the section in this SAI entitled "Financial Information" for an example
of the method of computing the offering price of Class A shares.) If you
purchase Class A shares in the amount of $1 million or more, without an initial
sales charge, the Funds will charge a CDSC of 1.00% if you redeem during the
month of your purchase and the 12-month period following the month of your
purchase. See "Contingent Deferred Sales Charge" below.
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Class B Shares
The Funds offer Class B shares at net asset value without an
initial sales charge. With certain exceptions, however, the Funds will charge a
CDSC on shares you redeem within 72 months after the month of your purchase, in
accordance with the following schedule:
<TABLE>
<CAPTION>
REDEMPTION TIMING CDSC RATE
<S> <C>
Month of purchase and the first twelve-month
period following the month of purchase 5.00%
Second twelve-month period following the month of purchase 4.00%
Third twelve-month period following the month of purchase 3.00%
Fourth twelve-month period following the month of purchase 3.00%
Fifth twelve-month period following the month of purchase 2.00%
Sixth twelve-month period following the month of purchase 1.00%
Thereafter 0.00%
</TABLE>
Class B shares that have been outstanding for seven years after the
month of purchase will automatically convert to Class A shares without
imposition of a front-end sales charge or exchange fee. (Conversion of Class B
shares represented by stock certificates will require the return of the stock
certificate to ESC.)
Class C Shares
Class C shares are available only through broker-dealers who have
entered into special distribution agreements with the Distributor. The Funds
offer Class C shares at net asset value without an initial sales charge. With
certain exceptions, however, the Funds will charge a CDSC of 1.00% on shares you
redeem within 12 months after the month of your purchase. See "Contingent
Deferred Sales Charge" below.
Class Y Shares
No CDSC is imposed on the redemption of Class Y shares. Class Y shares
are not offered to the general public and are available only to (1) persons who
at or prior to December 31, 1994 owned shares in a mutual fund advised by
Evergreen Asset, (2) certain institutional investors and (3) investment advisory
clients of First Union national Bank ("FUNB"), Evergreen Asset, Keystone, or
their affiliates. Class Y shares are offered at net asset value without a
front-end or back-end sales charge and do not bear any Rule 12b-1 distribution
expenses.
CONTINGENT DEFERRED SALES CHARGE
A Funds charges a CDSC as reimbursement for certain expenses, such as
commissions or shareholder servicing fees, that it has incurred in connection
with the sale of its shares (see "Distribution Plans and Agreements," above). If
imposed, a Fund deducts the CDSC from the redemption proceeds you would
otherwise receive. The CDSC is a percentage of the lesser of (1) the net asset
value of the shares at the time of redemption or (2) the shareholder's original
net cost for such shares. Upon request for redemption, to keep the CDSC a
shareholder must pay as low as possible, a Fund will first seek to redeem shares
not subject to the CDSC and/or shares held the longest, in that order. The CDSC
on any redemption is, to the extent permitted by the National Association of
Securities Dealers, Inc., paid to the Distributor or its predecessor.
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<PAGE>
SALES CHARGE WAIVERS OR REDUCTIONS
Reducing Class A Front-end Loads
With a larger purchase, there are several ways that you can combine
multiple purchases of Class A shares in the Evergreen funds and take advantage
of lower sales charges.
Combined Purchases
You can reduce your sales charge by combining purchases of Class A
shares of multiple Evergreen funds. For example, if you invested $75,000 in each
of two different Evergreen funds, you would pay a sales charge based on a
$150,000 purchase (i.e., 3.75% of the offering price, rather than 4.75%).
Rights of Accumulation
You can reduce your sales charge by adding the value of Class A shares
of Evergreen funds you already own to the amount of your next Class A
investment. For example, if you hold Class A shares valued at $99,999 and
purchase an additional $5,000, the sales charge for the $5,000 purchase would be
at the next lower sales charge of 3.75%, rather than 4.75%.
Letter of Intent
You can, by completing the "Letter of Intent" section of the
application, purchase Class A shares over a 13-month period and receive the same
sales charge as if you had invested all the money at once. All purchases of
Class A shares of an Evergreen fund during the period will qualify as Letter of
Intent purchases.
Waiver of Initial Sales Charges
The Funds may sell their shares at net asset value without an initial
sales charge to:
1. purchasers of shares in the amount of $1 million or more;
2. a corporate or certain other qualified retirement plan or a
non-qualified deferred compensation plan or a Title 1 tax
sheltered annuity or TSA plan sponsored by an organization having
100 or more eligible employees (a "Qualifying Plan") or a TSA
plan sponsored by a public educational entity having 5,000 or
more eligible employees (an "Educational TSA Plan");
3. institutional investors, which may include bank trust departments
and registered investment advisers;
4. investment advisers, consultants or financial planners who place
trades for their own accounts or the accounts of their clients
and who charge such clients a management, consulting, advisory or
other fee;
5. clients of investment advisers or financial planners who place
trades for their own accounts if the accounts are linked to a
master account of such investment advisers or financial planners
on the books of the broker-dealer through whom shares are
purchased;
6. institutional clients of broker-dealers, including retirement and
deferred compensation plans and the trusts used to fund these
plans, which place trades through an omnibus account maintained
with a Fund by the broker-dealer;
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<PAGE>
7. employees of FUNB, its affiliates, the Distributor, any
broker-dealer with whom the Distributor, has entered into an
agreement to sell shares of the Funds, and members of the
immediate families of such employees;
8. certain Directors, Trustees, officers and employees of the
Evergreen funds, the Distributor or their affiliates and the
immediate families of such persons; or
9. a bank or trust company in a single account in the name of such
bank or trust company as trustee if the initial investment in or
any Evergreen fund made pursuant to this waiver is at least
$500,000 and any commission paid at the time of such purchase is
not more than 1% of the amount invested.
With respect to items 8 and 9 above, each Fund will only sell shares to
these parties upon the purchasers' written assurance that the purchase is for
their personal investment purposes only. Such purchasers may not resell the
securities except through redemption by a Fund. The Funds will not charge any
CDSC on redemptions by such purchasers.
Waiver of CDSC
The Funds do not impose a CDSC when the shares you are redeeming
represent:
1. an increase in the share value above the net cost of such shares;
2. certain shares for which a Fund did not pay a commission on
issuance, including shares acquired through reinvestment of
dividend income and capital gains distributions;
3. shares that are in the accounts of a shareholder who has died or
become disabled;
4. a lump-sum distribution from a 401(k) plan or other benefit plan
qualified under the Employee Retirement Income Security Act of
1974 ("ERISA");
5. an automatic withdrawal from the ERISA plan of a shareholder who is
a least 59 1/2 years old;
6. shares in an account that a Fund has closed because the account
has an aggregate net asset value of less than $1,000;
7. an automatic withdrawal under a Systematic Withdrawal Plan of up
to 1.0% per month of your initial account balance;
8. a withdrawal consisting of loan proceeds to a retirement plan
participant;
9. a financial hardship withdrawal made by a retirement plan
participant;
10. a withdrawal consisting of returns of excess contributions or
excess deferral amounts made to a retirement plan; or
11. a redemption by an individual participant in a Qualifying Plan
that purchased Class C shares (this waiver is not available in
the event a Qualifying Plan, as a whole, redeems substantially
all of its assets).
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EXCHANGES
Investors may exchange shares of a Fund for shares of the same class of
any other Evergreen fund, as described under the section entitled "Exchanges" in
the prospectuses. Before you make an exchange, you should read the prospectus of
the Evergreen fund into which you want to exchange. The Trust's Board of
Trustees reserves the right to discontinue, alter or limit the exchange
privilege at any time.
CALCULATION OF NET ASSET VALUE PER SHARE ("NAV")
Each Fund computes its NAV once daily on Monday through Friday, as
described in the prospectuses. A Fund will not compute its NAV on the day the
following legal holidays are observed: New Year's Day, Martin Luther King, Jr.
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
The NAV of each class of shares of a Fund is calculated by dividing the
value of a Fund's net assets attributable to that class by the number of all
shares issued for that class.
VALUATION OF PORTFOLIO SECURITIES
Current values for a Fund's portfolio securities are determined as
follows:
(1) An independent pricing service values each Fund's municipal bonds
at fair value using a variety of factors which may include yield, liquidity,
interest rate risk, credit quality, coupon, maturity and type of issue.
(2) Short-term investments with remaining maturities of sixty days or
less are carried at amortized cost, which approximates market value.
(3) Securities for which valuations are not available from an
independent pricing service, including restricted securities, are valued at fair
value according to procedures established by the Trust's Board of Trustees.
SHAREHOLDER SERVICES
As described in the prospectuses, a shareholder may elect to receive
his or her dividends and capital gains distributions in cash instead of shares.
However, ESC will automatically convert a shareholder's distribution option so
that the shareholder reinvests all dividends and distributions in additional
shares when it learns that the postal or other delivery service is unable to
deliver checks or transaction confirmations to the shareholder's address of
record. The Funds will hold the returned distribution or redemption proceeds in
a non interest-bearing account in the shareholder's name until the shareholder
updates his or her address. No interest will accrue on amounts represented by
uncashed distribution or redemption checks.
PRINCIPAL UNDERWRITER
The Distributor is the principal underwriter for the Trust and with
respect to each class of each Fund. The Trust has entered into a Principal
Underwriting Agreement ("Underwriting Agreement") with the Distributor with
respect to each class of each Fund. The Distributor is a subsidiary of The BISYS
Group, Inc.
The Distributor, as agent, has agreed to use its best efforts to find
purchasers for the shares. The Distributor may retain and employ representatives
to promote distribution of the shares and may obtain
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<PAGE>
orders from broker-dealers, and others, acting as principals, for sales of
shares to them. The Underwriting Agreement provides that the Distributor will
bear the expense of preparing, printing, and distributing advertising and sales
literature and prospectuses used by it.
All subscriptions and sales of shares by the Distributor are at the
public ofering price of the shares, which is determined in accordance with the
provisions of the Trust's Declaration of Trust, By-Laws, current prospectuses
and SAI. All orders are subject to acceptance by the Trust and the Trust
reserves the right, in its sole discretion, to reject any order received. Under
the Underwriting Agreement, the Trust is not liable to anyone for failure to
accept any order.
The Distributor has agreed that it will, in all respects, duly comply
with all state and federal laws applicable to the sale of the shares. The
Distributor has also agreed that it will indemnify and hold harmless the Trust
and each person who has been, is, or may be a Trustee or officer of the Trust
against expenses reasonably incurred by any of them in connection with any
claim, action, suit, or proceeding to which any of them may be a party that
arises out of or is alleged to arise out of any misrepresentation or omission to
state a material fact on the part of the Distributor or any other person for
whose acts the Distributor is responsible or is alleged to be responsible,
unless such misrepresentation or omission was made in reliance upon written
information furnished by the Trust.
The Underwriting Agreement provides that it will remain in effect as
long as its terms and continuance are approved annually (i) by a vote of a
majority of the Trust's Independent Trustees, and (ii) by vote of a majority of
the Trust's Trustees, in each case, cast in person at a meeting called for that
purpose.
The Underwriting Agreement may be terminated, without penalty, on 60
days' written notice by the Board of Trustees or by a vote of a majority of
outstanding shares subject to such agreement. The Underwriting Agreement will
terminate automatically upon its "assignment," as that term is defined in the
1940 Act.
From time to time, if, in the Distributor's judgment, it could benefit
the sales of shares, the Distributor may provide to selected broker-dealers
promotional materials and selling aids, including, but not limited to, personal
computers, related software, and data files.
ADDITIONAL TAX INFORMATION
REQUIREMENTS FOR QUALIFICATION AS A REGULATED INVESTMENT
COMPANY
Each Fund has qualified and intends to continue to qualify for and
elect the tax treatment applicable to a regulated investment company (a "RIC")
under the Code. (Such qualification does not involve supervision of management
or investment practices or policies by the Internal Revenue Service.) In order
to qualify as a RIC, a Fund must, among other things, (i) derive at least 90% of
its gross income from dividends, interest, payments with respect to proceeds
from securities loans, gains from the sale or other disposition of securities or
foreign currencies and other income (including gains from options, futures or
forward contracts) derived with respect to its business of investing in such
securities; and (ii) diversify its holdings so that, at the end of each quarter
of its taxable year, (a) at least 50% of the market value of the Fund's total
assets is represented by cash, U.S. government securities and other securities
limited in respect of any one issuer, to an amount not greater than 5% of the
Fund's total assets and 10% of the outstanding voting securities of such issuer,
and (b) not more than 25% of the value of its total assets is invested in the
securities of any one issuer (other than U.S. government securities and
securities of other regulated investment companies). By so qualifying, a Fund is
not subject to federal income tax if it timely distributes its investment
company taxable income and any net realized capital gains. A 4% nondeductible
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excise tax will be imposed on a Fund to the extent it does not meet certain
distribution requirements by the end of each calendar year. Each Fund
anticipates meeting such distribution requirements.
TAXES ON DISTRIBUTIONS
Distributions will be taxable to shareholders whether made in
additional shares or in cash. Shareholders electing to receive distributions in
the form of additional shares will have a cost basis for federal income tax
purposes in each share so received equal to the net asset value of a share of a
Fund on the reinvestment date.
To calculate ordinary income for federal income tax purposes,
shareholders must generally include dividends paid by a Fund from its investment
company taxable income (net taxable investment income plus net realized
short-term capital gains, if any). A Fund will include dividends it receives
from domestic corporations when it calculates its gross investment income. A
Fund anticipates that all or a portion of the ordinary dividends which it pays
will qualify for the 70% dividends-received deduction for corporations. A Fund
will inform shareholders of the amounts that so qualify.
From time to time, a Fund will distribute the excess of its net
long-term capital gains over its short-term capital losses to shareholders
(i.e., capital gain dividends). For federal tax purposes, shareholders must
include such capital gain dividends when calculating their net long-term capital
gains. Capital gain dividends are taxable as net long-term capital gains to a
shareholder, no matter how long the shareholder has held the shares. Each Fund
will inform its shareholders of the portion, if any, of a long-term capital gain
distribution which is subject to tax at the maximum 28% rate and the portion, if
any, of a long term capital gain distribution which is subject to tax at the
maximum 20% rate. Distributions of long-term capital gains are taxable as such
to a shareholder, no matter how long the shareholder has held the shares.
Distributions by a Fund reduce its NAV. A distribution that reduces a
Fund's NAV below a shareholder's cost basis is taxable as described above,
although from an investment standpoint, it is a return of capital. In
particular, if a shareholder buys Fund shares just before a Fund makes a
distribution, when the Fund makes the distribution the shareholder will receive
what is in effect a return of capital. Nevertheless, the shareholder may incur
taxes on the distribution. Therefore, shareholders should carefully consider the
tax consequences of buying Fund shares just before a distribution.
All distributions, whether received in additional shares or cash, must
be reported by each shareholder on his or her federal income tax return. Each
shareholder should consult his or her tax advisor to determine the state and
local tax implications of Fund distributions.
If more than 50% of the value of a Fund's total assets at the end of a
fiscal year is represented by securities of foreign corporations and the Fund
elects to make foreign tax credits available to its shareholders, a shareholder
will be required to include in his gross income both cash dividends and the
amount the Fund advises him is his pro rata portion of income taxes withheld by
foreign governments from interest and dividends paid on the Fund's investments.
The shareholder may be entitled, however, to take the amount of such foreign
taxes withheld as a credit against his U.S. income tax, or to treat the foreign
tax withheld as an itemized deduction from his gross income, if that should be
to his advantage. In substance, this policy enables the shareholder to benefit
from the same foreign tax credit or deduction that he would have received if he
had been the individual owner of foreign securities and had paid foreign income
tax on the income therefrom. As in the case of individuals receiving income
directly from foreign sources, the credit or deduction is subject to a number of
limitations.
TAXES ON THE SALE OR EXCHANGE OF FUND SHARES
Upon a sale or exchange of Fund shares, a shareholder will realize a
taxable gain or loss
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depending on his or her basis in the shares. A shareholder must treat such gains
or losses as a capital gain or loss if the shareholder held the shares as
capital assets. Capital gain on assets held for more than eighteen months is
generally subject to a maximum federal income tax rate of 20% for an individual.
The maximum capital gains tax rate for capital assets held by an individual for
more than twelve months but not more than eighteen months is generally 28%.
Generally, the Code will not allow a shareholder to realize a loss on shares he
or she has sold or exchanged and replaced within a sixty-one-day period
beginning thirty days before and ending thirty days after he or she sold or
exchanged the shares. The Code will treat a shareholder's loss on shares held
for six months or less as a long-term capital loss to the extent the shareholder
received capital gain dividends on such shares.
Shareholders who fail to furnish their taxpayer identification numbers
to a Fund and to certify as to its correctness and certain other shareholders
may be subject to a 31% federal income tax backup withholding requirement on
dividends, distributions of capital gains and redemption proceeds paid to them
by a Fund. If the withholding provisions are applicable, any such dividends or
capital gain distributions to these shareholders, whether taken in cash or
reinvested in additional shares, and any redemption proceeds will be reduced by
the amounts required to be withheld. Investors may wish to consult their own tax
advisors about the applicability of the backup withholding provisions.
OTHER TAX CONSIDERATIONS
The foregoing discussion relates solely to U.S. federal income tax law as
applicable to U.S. persons (i.e., U.S. citizens and residents and U.S. domestic
corporations, partnerships, trusts and estates). It does not reflect the special
tax consequences to certain taxpayers (e.g., banks, insurance companies, tax
exempt organizations and foreign persons). Shareholders are encouraged to
consult their own tax advisors regarding specific questions relating to federal,
state and local tax consequences of investing in shares of a Fund. Each
shareholder who is not a U.S. person should consult his or her tax advisor
regarding the U.S. and foreign tax consequences of ownership of shares of a
Fund, including the possibility that such a shareholder may be subject to a U.S.
withholding tax at a rate of 30% (or at a lower rate under a tax treaty) on
amounts treated as income from U.S. sources under the Code.
SPECIAL TAX CONSIDERATIONS FOR TAX STRATEGIC
With respect to Tax Strategic, to the extent that the Fund distributes
exempt-interest dividends to a shareholder, interest on indebtedness incurred or
continued by such shareholder to purchase or carry shares of the Fund is not
deductible. Furthermore, entities or persons who are "substantial users" (or
related persons) of facilities financed by "private activity" bonds (some of
which were formerly referred to as "industrial development" bonds) should
consult their tax advisors before purchasing shares of Tax Strategic.
"Substantial user" is defined generally as including a "non-exempt person" who
regularly uses in its trade or business a part of a facility financed from the
proceeds of industrial development bonds.
The percentage of the total dividends paid by Tax Strategic with
respect to any taxable year that qualifies as exempt-interest dividends will be
the same for all shareholders of Tax Strategic receiving dividends with respect
to such year. If a shareholder receives an exempt-interest dividend with respect
to any share and such share has been held for six months or less, any loss on
the sale or exchange of such shares will be disallowed to the extent of the
exempt-interest dividend amount.
FINANCIAL INFORMATION
EXPENSES
The table below shows the total dollar amounts paid by each Fund for
services rendered during the fiscal periods specified. For more information on
specific expenses, see "Investment Advisory and Other Services," "Distribution
Plans and Agreements" and "Purchase, Redemption and Pricing of Shares."
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<TABLE>
<CAPTION>
Class A Class B Class C
Advisory Distribution Distribution Distribution Class B Class C
Fees Fees Fees Fees Service Fees Service Fees
============================== =========== ============= ============= ============= ============= ============
1998 Fund Expenses
============= ============= ============= ============= ============
<S> <C> <C> <C> <C> <C> <C>
Foundation $16,156,433 $695,844 $6,237,105 $274,265 $2,079,035 $91,422
Tax Strategic $1,451,786 $94,260 $734,118 $95,227 $244,706 $31,743
American Retirement $1,350,506 $54,682 $870,882 $15,708 $290,294 $5,236
Balanced(d) $5,534,574 $611,968 $4,710,580 $907 $2,330,725 $303
1997 Fund Expenses
Expenses
- ------------------------------ ---------------------------------------------------------------------------
Foundation(a) $3,246,270 $135,502 $1,113,659 $51,839 $371,220 $17,280
Tax Strategic(a) $143,945 $8,004 $62,195 $8,824 $20,732 $2,941
American Retirement(a) $255,438 $7,950 $124,370 $2,995 $41,475 $998
Balanced $1,170,691 $26,750 $205,485 $710 $68,495 $237
1996 Fund Expenses
- ------------------------------ --------------
Foundation $11,140,780 $414,289 $3,487,899 $152,488 $1,162,633 $50,829
Tax Strategic $354,958(b) $16,426 $131,282 $16,493 $43,761 $5,498
- ------------------------------
American Retirement $549,949(c) $14,426 $199,829 $5,713 $66,610 $1,904
- ------------------------------
Balanced $4,765,912 $107,023 $810,803 $1,883 $270,267 $628
</TABLE>
(a) Foundation, Tax Strategic and American Retirement changed their fiscal
year end from December 31 to March 31, effective March 31, 1997. The
expenses at March 31, 1997 reflect a 3 month period.
(b) Of that amount $90,551 was waived by the Advisor. (c) Of that
amount, $24,841 was waived by the Advisor.
(d) Balanced changed its fiscal year end from June 30 to March 31,
effective March 31, 1998. The expenses at March 31, 1998 reflect a nine
month period.
BROKERAGE COMMISSIONS PAID
The table below shows (1) total amounts paid by each Fund in brokerage
commissions and (2) brokerage commissions paid by each Fund to Lieber & Company,
an affiliate of FUNB, during each of the fiscal periods specified.
COMPUTATION OF CLASS A OFFERING PRICE
Class A shares are sold at the NAV plus a sales charge. Below is an
example of the method of computing the offering price of Class A shares of each
Fund. The example assumes a purchase aggregating less than $50,000 subject to
the schedule of sales charges set forth in the Class A prospectus at a price
based upon the NAV of each Fund's Class A shares as of March 31, 1998.
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Per Share Offering Price
Fund: Net Asset Value Sales Charge Per Share
Foundation $20.44 $1.02 $21.46
Tax Strategic $16.36 $0.82 $17.18
American Retirement $16.70 $0.83 $17.53
Balanced $12.87 $0.64 $13.51
PERFORMANCE
Total Return
Total return quotations for a class of shares of a Fund as they may
appear from time to time in advertisements are calculated by finding the average
annual compounded rates of return over one, five and ten year periods, or the
time periods for which such class of shares has been effective, whichever is
relevant, on a hypothetical $1,000 investment that would equate the initial
amount invested in the class to the ending redeemable value. All dividends and
distributions are added to the initial investment, and all recurring fees
charged to all shareholder accounts are deducted. The ending redeemable value
assumes a complete redemption at the end of each period.
The average annual total returns for each class of shares of the Funds
(including applicable sales charges) as of March 31, 1998 are as follows:
<TABLE>
<CAPTION>
Ten Years
or Since Inception
Fund/Class One Year Five Years Inception Date
Foundation
<S> <C> <C> <C> <C> <C>
Class A 27.52% -- 20.64% 01/03/95
Class B 27.81% -- 20.92% 01/03/95
Class C 31.81% -- 21.47% 01/03/95
Class Y 34.12% 15.72% 17.83% 01/02/90
Tax Strategic
Class A 18.49% -- 18.50% 01/17/95
Class B 18.44% -- 19.15% 01/06/95
Class C 22.49% -- 19.40% 03/03/95
Class Y 24.73% -- 16.86% 11/02/93
American Retirement
Class A 21.94% -- 18.07% 01/03/95
Class B 22.06% -- 18.32% 01/03/95
Class C 26.08% -- 18.97% 01/03/95
Class Y 28.34% 13.59% 12.25% 03/14/88
Balanced
Class A -- -- 2.28% 01/20/98
Class B 21.77% 13.24% 12.29% 09/11/35
Class C -- -- 5.58% 01/22/98
Class Y -- -- 7.79% 01/26/98
</TABLE>
YIELD CALCULATIONS
From time to time, a Fund may quote its yield in advertisements or in
reports or other communications to shareholders. Yield quotations are expressed
in annualized terms and may be quoted on a compounded basis. Yields are computed
by dividing a Fund's interest income (as defined in the SEC
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yield formula) for a given 30-day or one month period, net of expenses, by the
average number of shares entitled to receive distributions during the period,
dividing this figure by the Fund's net asset value per share at the end of the
period and annualizing the result (assuming compounding of income) in order to
arrive at an annual percentage rate. The formula for calculating yield is as
follows:
YIELD = 2[(a-b/cd + 1)6-1]
Where a = Dividends and interest earned during the period b = Expenses
accrued for the period (net of reimbursements)
c = The average daily number of shares outstanding during the period
that were entitled to receive dividends d = The maximum offering price
per share on the last day of the period
Income is calculated for purposes of yield quotations in accordance
with standardized methods applicable to all stock and bond funds. Gains and
losses generally are excluded from the calculation. Income calculated for
purposes of determining a Fund's yield differs from income as determined for
other accounting purposes. Because of the different accounting methods used, and
because of the compounding assumed in yield calculations, the yields quoted for
a Fund may differ from the rates of distributions the Fund paid over the same
period, or the net investment income reported in the Fund's financial
statements.
Yield information is useful in reviewing a Fund's performance, but
because yields fluctuate, such information cannot necessarily be used to compare
an investment in the Fund's shares with bank deposits, savings accounts and
similar investment alternatives which often provide an agreed or guaranteed
fixed yield for a stated period of time. Shareholders should remember that yield
is a function of the kind and quality of the instruments in a Fund's investment
portfolios, portfolio maturity, operating expenses and market conditions.
It should be recognized that in periods of declining interest rates the
yields will tend to be somewhat higher than prevailing market rates, and in
periods of rising interest rates the yields will tend to be somewhat lower.
Also, when interest rates are falling, the inflow of net new money to a Fund
from the continuous sale of its shares will likely be invested in instruments
producing lower yields than the balance of the Fund's investments, thereby
reducing the current yield of the Fund. In periods of rising interest rates, the
opposite can be expected to occur.
The yield of Foundation, Tax Strategic, American Retirement and
Balanced for the thirty-day period ended March 31, 1998 for each class of shares
offered by the Funds is set forth in the table below:
<TABLE>
<CAPTION>
Yield Tax-Equivalent Yield Yield Tax-Equivalent Yield
AMERICAN
FOUNDATION RETIREMENT
<S> <C> <C> <C> <C> <C>
Class A 1.83% N/A Class A 3.30% N/A
Class B 1.18% N/A Class B 2.72% N/A
Class C 1.18% N/A Class C 2.72% N/A
Class Y 2.17% N/A Class Y 3.71% N/A
TAX BALANCED
STRATEGIC
Class A 1.95% % Class A 2.76% N/A
Class B 1.31% % Class B 2.16% N/A
Class C 1.31% % Class C 2.16% N/A
Class Y 2.30% % Class Y 3.15% N/A
</TABLE>
Non-Standardized Performance
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In addition to the performance information described above, a Fund may
provide total return information for designated periods, such as for the most
recent six months or most recent twelve months. This total return information is
computed as described under "Total Return" above except that no annualization is
made.
General
From time to time, a Fund may quote its performance in advertising and
other types of literature as compared to the performance of the Standard &
Poor's 500 Composite Stock Price Index, the Dow Jones Industrial Average,
Russell 2000 Index, or any other commonly quoted index of common stock prices.
The Standard & Poor's 500 Composite Stock Price Index, the Dow Jones Industrial
Average and the Russell 2000 Index are unmanaged indices of selected common
stock prices. A Fund's performance may also be compared to those of other mutual
funds having similar objectives. This comparative performance would be expressed
as a ranking prepared by Lipper Analytical Services, Inc. or similar independent
services monitoring mutual fund performance. A Fund's performance will be
calculated by assuming, to the extent applicable, reinvestment of all capital
gains distributions and income dividends paid. Any such comparisons may be
useful to investors who wish to compare a Fund's past performance with that of
its competitors. Of course, past performance cannot be a guarantee of future
results.
Financial Statements
The audited financial statements and the reports thereon are hereby
incorporated by reference to each Fund's Annual Report, a copy of which may be
obtained without charge from ESC by calling toll-free 1-800-633-2700 or by
writing to ESC at P.O. Box 2121, Boston, Massachusetts 02106-2121.
ADDITIONAL INFORMATION
Except as otherwise stated in its prospectuses or required by law, a
Fund reserves the right to change the terms of the offer stated in its
prospectuses without shareholder approval, including the right to impose or
change fees for services provided.
No dealer, salesman or other person is authorized to give any
information or to make any representation not contained in a Fund's
prospectuses, SAI or in supplemental sales literature issued by such Fund or the
Distributor, and no person is entitled to rely on any information or
representation not contained therein.
Each Fund's prospectuses and SAI omit certain information contained in
the Trust's Registration Statement, which you may obtain for a fee from the SEC
in Washington, D.C.
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APPENDIX A
S&P AND MOODY'S BOND RATINGS
S&P Bond Ratings
An S&P bond rating is a current assessment of the creditworthiness of
an obligor, including obligors outside the U.S., with respect to a specific
obligation. This assessment may take into consideration obligors such as
guarantors, insurers or lessees. Ratings of foreign obligors do not take into
account currency exchange and related uncertainties. The ratings are based on
current information furnished by the issuer or obtained by S&P from other
sources it considers reliable.
The ratings are based, in varying degrees, on the following
considerations:
a. Likelihood of default and capacity and willingness of the obligor to
make the timely payment of interest and repayment of principal in accordance
with the terms of the obligation;
b. Nature of and provisions of the obligation; and
c. Protection afforded by and relative position of the obligation in
the event of bankruptcy reorganization or other arrangement under the laws of
bankruptcy and other laws affecting creditors' rights.
PLUS (+) OR MINUS (-): To provide more detailed indications of credit
quality, ratings from "AA" to "BBB" may be modified by the addition of a plus or
minus sign to show relative standing within the major rating categories.
A provisional rating is sometimes used by S&P. It assumes the
successful completion of the project being financed by the debt being rated and
indicates that payment of debt service requirements is largely or entirely
dependent upon the successful and timely completion of the project. This rating,
however, while addressing credit quality subsequent to completion of the
project, makes no comment on the likelihood of, or the risk of default upon
failure of, such completion.
S&P bond ratings are as follows:
a. AAA - Debt rated AAA has the highest rating assigned by S&P.
Capacity to pay interest and repay principal is extremely strong.
b. AA - Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the higher rated issues only in small degree.
3. A - Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
4. BBB - Debt rated BBB is regarded as having an adequate capacity to
pay interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for debt in this category than in higher rated categories.
5. BB, B, CCC, CC and C - Debt rated BB, B, CCC, CC and C is regarded,
on balance, as predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation and C the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are
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<PAGE>
outweighed by large uncertainties or major risk exposures to adverse conditions.
Moody's Bond Ratings
Moody's ratings are as follows:
1. Aaa - Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt-edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
2. Aa - Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long term risks appear somewhat larger than in Aaa
securities.
3. A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
4. Baa - Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
5. Ba - Bonds which are rated Ba are judged to have speculative
elements. Their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and thereby
not well safeguarded during both good and bad times over the future. Uncertainty
of position characterizes bonds in this class.
6. B - Bonds which are rated B generally lack characteristics of a
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
7. Caa - Bonds which are rated Caa are of poor standing. Such issues
may be in default or there may be present elements of danger with respect to
principal or interest.
8. Ca - Bonds which are rated Ca represent obligations which are
speculative to a high degree. Such issues are often in default or have other
market shortcomings.
9. C - Bonds which are rated as C are the lowest rated class of bonds
and issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through Baa in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
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<PAGE>
MONEY MARKET INSTRUMENTS
Money market securities are instruments with remaining maturities of
one year or less such as bank certificates of deposit, bankers' acceptances,
commercial paper (including variable rate master demand notes), and obligations
issued or guaranteed by the U.S. government, its agencies or instrumentalities,
some of which may be subject to repurchase agreements.
Commercial Paper
Commercial paper will consist of issues rated at the time of purchase
A-1 by S&P or Prime-1 by Moody's or F-1 by Fitch IBCA Inc. ("Fitch"). If not
rated, commercial paper will be issued by companies which have an outstanding
debt issue rated at the time of purchase Aaa, Aa or A by Moody's or AAA, AA or A
by S&P or Fitch, or will be determined by a Fund's investment advisor to be of
comparable quality.
A. S&P Ratings
An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more than
365 days. Ratings are graded into four categories, ranging from "A" for the
highest quality obligations to "D" for the lowest. The top category is as
follows:
1. A: Issues assigned this highest rating are regarded as having the
greatest capacity for timely payment. Issues in this category are delineated
with the numbers 1, 2 and 3 to indicate the relative degree of safety.
2. A-1: This designation indicates that the degree of safety regarding
timely payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus (+) sign
designation.
B. Moody's Ratings
The term "commercial paper" as used by Moody's means promissory
obligations not having an original maturity in excess of nine months. Moody's
commercial paper ratings are opinions as to the ability of issuers to repay
punctually promissory obligations not having an original maturity in excess of
nine months. Moody's employs the following designation, judged to be investment
grade, to indicate the relative repayment capacity of rated issuers.
1. The rating Prime-1 is the highest commercial paper rating assigned
by Moody's. Issuers rated Prime-1 (or related supporting institutions) are
deemed to have a superior capacity for repayment of short term promissory
obligations. Repayment capacity of Prime-1 issuers is normally evidenced by the
following characteristics:
a) leading market positions in well-established industries;
b) high rates of return on funds employed;
c) conservative capitalization structures with moderate reliance on
debt and ample asset protection;
d) broad margins in earnings coverage of fixed financial charges and
high internal cash generation; and
e) well established access to a range of financial markets and
assured sources of alternate liquidity.
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<PAGE>
In assigning ratings to issuers whose commercial paper obligations are
supported by the credit of another entity or entities, Moody's evaluates the
financial strength of the affiliated corporations, commercial banks, insurance
companies, foreign governments or other entities, but only as one factor in the
total rating assessment.
C. Fitch Ratings
Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal and
investment notes.
The short-term rating places greater emphasis than a long-term rating
on the existence of liquidity necessary to meet the issuer's obligations in a
timely manner.
F-1+: Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1: Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
"F-1+."
F-2: Good Credit Quality. Issues assigned to this rating have a
satisfactory degree of assurance for timely payment, but the margin of safety is
not as great as for issues assigned "F-1+" and "F-1" ratings.
F-3: Fair Credit Quality. Issues assigned this rating have
characteristics suggesting that the degree of assurance for timely payment is
adequate; however, near-term adverse changes could cause these securities to be
rated below investment grade.
F-5: Weak Credit Quality. Issues assigned this rating have
characteristics suggesting a minimal degree of assurance for timely payment and
are vulnerable to near-term adverse changes in financial and economic
conditions.
D: Default. Issues assigned to this rating are in actual or imminent
payment default.
LOC: The symbol LOC indicates that the rating is based on a letter of
credit issued by a commercial bank.
24202
A-4
<PAGE>
EVERGREEN EQUITY TRUST
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
Item 24(a). Financial Statements
The financial statements listed below are included in Part A of this
Amendment to the Registration Statement:
Financial Highlights for:
<TABLE>
<S> <C>
EVERGREEN FOUNDATION FUND - Class A For the nine-month period ended March 31, 1998; for the three-month period ended March 31,
1997; and for the fiscal year ended December 31, 1996 and for the period January 3, 1995
(Commencement of Operations) through December 31, 1995.
EVERGREEN FOUNDATION FUND - Class B For the nine-month period ended March 31, 1998; for the three-month period ended March 31,
1997; and for the fiscal year ended December 31, 1996 and for the period January 3, 1995
(Commencement of Operations) through December 31, 1995.
EVERGREEN FOUNDATION FUND - Class C For the nine-month period ended March 31, 1998; for the three-month period ended March 31,
1997; and for the fiscal year ended December 31, 1996 and for the period January 3, 1995
(Commencement of Operations) through December 31, 1995.
EVERGREEN FOUNDATION FUND - Class Y For the nine-month period ended March 31, 1998; for the three-month period ended March 31,
1997; and for the six fiscal years ended December 31, 1996 and for the period from January
2, 1990 (Commencement of Operations) through December 31, 1990.
EVERGREEN TAX-STRATEGIC FOUNDATION For the nine-month period ended March 31, 1998; for the three-month period ended March 31,
FUND - Class A 1997; for the fiscal year ended December 31, 1996 and for the period January 17, 1995
(Commencement of Operations) through December 31, 1995.
EVERGREEN TAX-STRATEGIC FOUNDATION For the nine-month period ended March 31, 1998; for the three-month period ended March 31,
FUND - Class B 1997; for the fiscal year ended December 31, 1996 and for the period January 6, 1995
(Commencement of Operations) through December 31, 1995.
EVERGREEN TAX-STRATEGIC FOUNDATION For the nine-month period ended March 31, 1998; for the three-month period ended March 31,
FUND - Class C 1997; for the fiscal year ended December 31, 1996 and for the period March 3, 1995
(Commencement of Operations) through December 31, 1995.
EVERGREEN TAX-STRATEGIC FOUNDATION For the nine-month period ended March 31, 1998; for the three-month period ended March 31,
FUND - Class Y 1997; for the three fiscal years ended December 31, 1996, and for the period November
2, 1993 (Commencement of Operations) through December 31, 1993.
EVERGREEN AMERICAN RETIREMENT For the nine-month period ended March 31, 1998; for the three-month period ended March 31,
FUND - Class A 1997; for the fiscal year ended December 31, 1996 and for the period January 3, 1995
(Commencement of Operations) through December 31, 1995.
EVERGREEN AMERICAN RETIREMENT For the nine-month period ended March 31, 1998; for the three-month period ended March 31,
FUND - Class B 1997; for the fiscal year ended December 31, 1996 and for the period January 3, 1995
(Commencement of Operations) through December 31, 1995.
EVERGREEN AMERICAN RETIREMENT For the nine-month period ended March 31, 1998; for the three-month period ended March 31,
FUND - Class C 1997; for the fiscal year ended December 31, 1996 and for the period January 3, 1995
(Commencement of Operations) through December 31, 1995.
EVERGREEN AMERICAN RETIREMENT For the nine-month period ended March 31, 1998; for the three-month period ended March 31,
FUND - Class Y 1997; for the eight fiscal years ended December 31, 1996, and for the period March
14, 1988 (Commencement of Operations) through December 31, 1988.
EVERGREEN BALANCED FUND - Class A For the period January 20, 1998 (Commencement of Operations) through March 31, 1998.
EVERGREEN BALANCED FUND - Class B For the nine-month period ended March 31, 1998, and for the ten fiscal years ended
June 30, 1997.
EVERGREEN BALANCED FUND - Class C For the period January 22, 1998 (Commencement of Operations) through March 31, 1998.
EVERGREEN BALANCED FUND - Class Y For the period January 26, 1998 (Commencement of Operations) through March 31, 1998.
</TABLE>
The financial statements listed below are incorporated by reference
in Part B of this Amendment to the Registration Statement:
Schedule of Investments of Evergreen Foundation Fund, Evergreen
Tax-Strategic Foundation Fund, Evergreen American Retirement Fund and Evergreen
Balanced Fund as of March 31, 1998.
Financial Highlights for the years and periods indicated in Part A.
Statement of Assets and Liabilities of Evergreen Foundation Fund, Evergreen
Tax-Strategic Foundation Fund, Evergreen American Retirement Fund and Evergreen
Balanced Fund as of March 31, 1998.
Statement of Operations of Evergreen Foundation Fund, Evergreen
Tax-Strategic Foundation Fund and Evergreen American Retirement Fund for the
year ended March 31, 1998 and of Evergreen Balanced Fund for the nine-month
period ended March 31, 1998 and for the year ended June 30, 1997.
Statement of Changes in Net Assets of Evergreen Foundation Fund, Evergreen
Tax-Strategic Foundation Fund and Evergreen American Retirement Fund for the
year ended March 31, 1998, the three-month period ended March 31, 1997 and the
fiscal year ended December 31, 1996 and Evergreen Balanced Fund for the
nine-month period ended March 31, 1998 and for the two fiscal years ended June
30, 1997.
Notes to Financial Statements of Evergreen Foundation Fund, Evergreen
Tax-Strategic Foundation Fund, Evergreen American Retirement Fund and Evergreen
Balanced Fund as of March 31, 1998.
Independent Auditors' Report for Evergreen Foundation Fund, Evergreen
Tax-Strategic Foundation Fund, Evergreen American Retirement Fund and Evergreen
Balanced Fund as of March 31, 1998, dated May 1, 1998.
The information required by this item for Evergreen Aggressive Growth
Fund, Evergreen Fund, Evergreen Micro Cap Fund, Evergreen Omega Fund, Evergreen
Small Company Growth Fund, Evergreen Strategic Growth Fund and Evergreen Tax
Strategic Equity Fund is contained in Registration Statement Nos. 333-42195/
811-08553 filed on June 12, 1998.
The information required by this item for Evergreem Fund for Total Return,
Evergreen Growth and Income Fund, Evergreen Income and Growth Fund, Evergreen
Small Cap Equity Income Fund, Evergreen Value Fund, Evergreen Utility Fund and
Evergreen Blue Chip Fund is contained in Registration Statement Nos. 333-42195/
811-08553 filed on December 12, 1997.
The information required by this item for Evergreen Stock Selector
(formerly Core Stock) Fund is contained in Registration Statement Nos.
333-42195/811-08553 filed on March 12, 1998.
Item 24(b). Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description Location
- ------- ----------- -----------
<S> <C> <C>
1 Declaration of Trust Incorporated by reference to
Registrant's Registration Statement
Filed on October 8, 1997
2 By-laws Incorporated by reference to
Registrant's Registration Statement
Filed on October 8, 1997
3 Not applicable
4 Provisions of instruments defining the rights
of holders of the securities being registered
are contained in the Declaration of Trust
Articles II, III.(6)(c), VI.(3), IV.(8), V, VI,
VII, VIII and By-laws Articles II, III and VIII
included as part of Exhibits 1 and 2 of this
Registration Statement
5(a) Investment Advisory and Management Incorporated by reference to
Agreement between the Registrant and First Registrant's Post-Effective Amendment No. 4
Union National Bank to Registrant's Registration Statement
Filed on March 12, 1998 ("Post-Effective
Amendment No.4")
5(b) Investment Advisory and Management Incorporated by reference to
Agreement between the Registrant and Evergreen Registrant's Post-Effective Amendment No. 5
Asset Management Corp. to Registrant's Registration Statement
Filed on June 12, 1998 ("Post-Effective
Amendment No.5")
5(c) Investment Advisory and Management Incorporated by reference to
Agreement between the Registrant and Keystone Post-Effective Amendment No. 4
Investment Management Company
6(a) Class A and Class C Principal Underwriting Incorporated by reference to
Agreement between the Registrant and Evergreen Post-Effective Amendment No. 4
Distributor, Inc.
6(b) Class B Principal Underwriting Agreement Incorporated by reference to
between the Registrant and Evergreen Investment Post-Effective Amendment No. 4
Services, Inc. (B-1)
6(c) Class B Principal Underwriting Agreement Incorporated by reference to
between the Registrant and Evergreen Distributor, Post-Effective Amendment No. 4
Inc. (B-2)
6(d) Class B Principal Underwriting Agreement Incorporated by reference to
between the Registrant and Evergreen Distributor, Post-Effective Amendment No. 4
Inc. (Evergreen/KCF)
6(e) Class Y Principal Underwriting Agreement Incorporated by reference to
between the Registrant and Evergreen Distributor, Post-Effective Amendment No. 4
Inc.
6(f) Principal Underwriting Agreement between Filed herein
the Registrant and Kokusai Securities Company
Limited
6(g) Specimen copy of Dealer Agreement used by Incorporated by reference to
Evergreen Distributor, Inc. Registrant's Pre-Effective Amendment No. 1
Filed on November 10, 1997
6(h) Form of Principal Underwriting Agreement between Filed herein
the Registrant and Nomura Securities Company
7 Form of Deferred Compensation Plan Incorporated by reference to
Registrant's Pre-Effective Amendment No. 1
Filed on November 10, 1997
8 Custodian Agreement between the Registrant Incoporated by reference to
and State Street Bank and Trust Company Post-Effective Amendment No. 4
9(a) Administration Agreement between Evergreen Incoporated by reference to
Investment Services, Inc. and the Registrant Post-Effective Amendment No. 4
9(b) Master Transfer and Recordkeeping Agreement Incoporated by reference to
between the Registrant and Evergreen Service Post-Effective Amendment No. 4
Company
10 Opinion and Consent of Sullivan & Worcester LLP Incoporated by reference to
Registrant's Post-Effective Amendment No. 2
Filed on December 12, 1997
11(a) Consent of KPMG Peat Marwick LLP
12 Not applicable
13 Not applicable
14 Not applicable
15(a) Distribution Plan of Class A shares Incoporated by reference to
Post-Effective Amendment No. 4
15(b) Distribution Plan of Class B shares Incoporated by reference to
(KAF B-1) Post-Effective Amendment No. 4
15(c) Distribution Plan of Class B shares Incoporated by reference to
(KAF B-2) Post-Effective Amendment No. 4
15(d) Distribution Plan for Class B shares Incoporated by reference to
(KCF/Evergreen) Post-Effective Amendment No. 4
15(d) Distribution Plan for Class C shares Incoporated by reference to
Post-Effective Amendment No. 4
16(a) Calculation of Yield - Foundation/Class A Filed herein
Calculation of Performance - Foundation/Class A
Calculation of Yield - Foundation/Class B
Calculation of Performance - Foundation/Class B
Calculation of Yield - Foundation/Class C
Calculation of Performance - Foundation/Class C
Calculation of Yield - Foundation/Class Y
Calculation of Performance - Foundation/Class Y
16(e) Calculation of Yield - Tax Strategic/Class A-Y Filed herein
Calculation of Performance - Tax Strategic/Class A
Calculation of Performance - Tax Strategic/Class B
Calculation of Performance - Tax Strategic/Class C
Calculation of Performance - Tax Strategic/Class Y
16(i) Calculation of Yield - American Retirement/Class A Filed herein
Calculation of Performance -AmRet/Class A
Calculation of Yield - American Retirement/Class B
Calculation of Performance -AmRet/Class B
Calculation of Yield - American Retirement/Class C
Calculation of Performance - AmRet/Class C
Calculation of Yield - American Retirement/Class y
Calculation of Performance - AmREt/Class Y
16(m) Calculation of Yield - Balanced/Class A Filed herein
Calculation of Performance - Balanced/Class A
Calculation of Yield - Balanced/Class B
Calculation of Performance - Balanced/Class B
Calculation of Yield - Balanced/Class C
Calculation of Performance - Balanced/Class C
Calculation of Yield - Balanced/Class Y
Calculation of Performance - Balanced/Class Y
17(a)(i) Financial Data Schedule - Foundation/Class A Filed herein
17(a)(ii) Financial Data Schedule - Foundation/Class B Filed herein
17(a)(iii) Financial Data Schedule - Foundation/Class C Filed herein
17(a)(iv) Financial Data Schedule - Foundation/Class Y Filed herein
17(b)(i) Financial Data Schedule - Tax-Strategic/Class A Filed herein
17(b)(ii) Financial Data Schedule - Tax-Strategic/Class B Filed herein
17(b)(iii) Financial Data Schedule - Tax-Strategic/Class C Filed herein
17(b)(iv) Financial Data Schedule - Tax-Strategic/Class Y Filed herein
17(c)(i) Financial Data Schedule - American Retirement/Class A Filed herein
17(c)(ii) Financial Data Schedule - American Retirement/Class B Filed herein
17(c)(iii) Financial Data Schedule - American Retirement/Class C Filed herein
17(c)(iv) Financial Data Schedule - American Retirement/Class Y Filed herein
17(d)(i) Financial Data Schedule - Balanced/Class A Filed herein
17(d)(ii) Financial Data Schedule - Balanced/Class B Filed herein
17(d)(iii) Financial Data Schedule - Balanced/Class C Filed herein
17(d)(iv) Financial Data Schedule - Balanced/Class Y Filed herein
18 Multiple Class Plan Incoporated by reference to
Registrant's Pre-Effective Amendment No. 1
Filed on November 10, 1997
19 Powers of Attorney Incoporated herein
</TABLE>
Item 25. Persons Controlled by or Under Common Control with Registrant.
None
Item 26. Number of Holders of Securities (as of July 1, 1998)
NUMBER OF
TITLE OF CLASS RECORD HOLDERS
-------------- --------------
Evergreen Foundation Fund
Class A 22,096
Class B 85,914
Class C 2,026
Class Y 13,857
Evergreen Tax-Strategic Foundation Fund
Class A 2,418
Class B 7,601
Class C 754
Class Y 226
Evergreen American Retiremnent Fund
Class A 2,042
Class B 11,597
Class C 156
Class Y 906
Evergreen Balanced Fund
Class A 53,928
Class B 32,832
Class C 105
Class Y 52
Item 27. Indemnification.
Provisions for the indemnification of the Registrant's Trustees and
officers are contained the Registrant's Declaration of Trust.
Provisions for the indemnification of the Registrant's Investment Advisors
are contained in their respective Investment Advisory and Management Agreements.
Provisions for the indemnification of Evergreen Distributor, Inc., the
Registrant's principal underwriter, are contained in each Principal Underwriting
Agreement between Evergreen Distributor, Inc. and the Registrant.
Item 28. Business or Other Connections of Investment Adviser.
The Directors and principal executive officers of First Union National Bank
are:
Edward E. Crutchfield, Jr. Chairman and Chief Executive Officer,
First Union Corporation; Chief Executive
Officer and Chairman, First Union National
Bank
Anthony P. Terracciano President, First Union Corporation; President
First Union National Bank
John R. Georgius Vice Chairman, First Union Corporation;
Vice Chairman, First Union National Bank
Marion A. Cowell, Jr. Executive Vice President, Secretary &
General Counsel, First Union Corporation;
Secretary and Executive Vice President,
First Union National Bank
Robert T. Atwood Executive Vice President and Chief Financial
Officer, First Union Corporation; Chief
Financial Officer and Executive Vice
President
All of the above persons are located at the following address: First Union
National Bank, One First Union Center, Charlotte, NC 28288.
The information required by this item with respect to Evergreen Asset
Management Corp. is incorporated by reference to the Form ADV (File No.
801-46522) of Evergreen Asset Management Corp.
The information required by this item with respect to Keystone Investment
Management Company is incorporated by reference to the Form ADV (File No.
801-8327) of Keystone Investment Management Company.
Item 29. Principal Underwriters.
The Directors and principal executive officers of Evergreen Distributor,
Inc. are:
Lynn C. Mangum Director, Chairman and Chief Executive
Officer
Robert J. McMullan Director, Executive Vice President and
Treasurer
J. David Huber President
Kevin J. Dell Vice President, General Counsel and Secretary
All of the above persons are located at the following address: Evergreen
Distributor, Inc., 125 West 55th Street, New York, New York 10019.
Evergreen Distributor, Inc. acts as principal underwriter for each
registered investment company or series thereof that is a part of the Evergreen
Keystone "fund complex" as such term is defined in Item 22(a) of Schedule 14A
under the Securities Exchange Act of 1934.
Item 30. Location of Accounts and Records.
All accounts and records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the Rules 31a-1 through 31a-3 promulgated
thereunder are maintained at one of the following locations:
Evergreen Investment Services, Inc., Evergreen Service Company and Keystone
Investment Management Company, all located at 200 Berkeley Street, Boston,
Massachusetts 02110
First Union National Bank, One First Union Center, 301 S. College Street,
Charlotte, North Carolina 28288
Evergreen Asset Management Corp., 2500 Westchester Avenue, Purchase,
New York 10577
Meridian Investment Company, 55 Valley Stream Parkway,
Malvern, Pennsylvania 19355
Iron Mountain, 3431 Sharp Slot Road, Swansea, Massachusetts 02777
State Street Bank and Trust Company, 2 Heritage Drive, North Quincy,
Massachusetts 02171
Item 31. Management Services.
Not Applicable
Item 32. Undertakings.
The Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Columbus, and State of Ohio, on the 30th day of
January, 1998.
EVERGREEN EQUITY TRUST
By: /s/ William J. Tomko
-----------------------------
Name: William J. Tomko
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on the 30th day of January, 1998.
<TABLE>
<CAPTION>
<S> <C> <C>
/s/William J. Tomko /s/ Laurence B. Ashkin /s/ Charles A. Austin, III
- ------------------------- ----------------------------- --------------------------------
William J. Tomko Laurence B. Ashkin* Charles A. Austin III*
President amd Treasurer (Principal Trustee Trustee
Financial and Accounting Officer)
/s/ K. Dun Gifford /s/ James S. Howell /s/ William Walt Pettit
- ---------------------------- ---------------------------- --------------------------------
K. Dun Gifford* James S. Howell* William Walt Pettit*
Trustee Trustee Trustee
/s/Gerald M. McDonnell /s/ Thomas L. McVerry /s/ Michael S. Scofield
- ------------------------------- ----------------------------- --------------------------------
Gerald M. McDonell* Thomas L. McVerry* Michael S. Scofield*
Trustee Trustee Trustee
/s/ David M. Richardson /s/ Russell A. Salton, III MD
- ------------------------------ -------------------------------
David M. Richardson* Russell A. Salton, III MD*
Trustee Trustee
/s/ Richard J. Shima
- ------------------------------
Richard J. Shima*
Trustee
</TABLE>
*By: /s/ Maureen E. Towle
- -------------------------------
Maureen E. Towle
Attorney-in-Fact
*Maureen E. Towle, by signing her 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.
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Exhibit
- ------- -------
6(f) Principal Underwriting Agreement between
the Registrant and Kokusai Securities Company
Limited
6(h) Form of Principal Underwriting Agreement between
the Registrant and Nomura Securities Company
11(a) Consent of KPMG Peat Marwick LLP
6(a) Calculation of Yield - Foundation/Class A
Calculation of Performance - Foundation/Class A
Calculation of Yield - Foundation/Class B
Calculation of Performance - Foundation/Class B
Calculation of Yield - Foundation/Class C
Calculation of Performance - Foundation/Class C
Calculation of Yield - Foundation/Class Y
Calculation of Performance - Foundation/Class Y
16(e) Calculation of Yield - Tax Strategic/Class A-Y
Calculation of Performance - Tax Strategic/Class A
Calculation of Performance - Tax Strategic/Class B
Calculation of Performance - Tax Strategic/Class C
Calculation of Performance - Tax Strategic/Class Y
16(i) Calculation of Yield - American Retirement/Class A
Calculation of Performance - AmRet/Class A
Calculation of Yield - American Retirement/Class B
Calculation of Performance -AmREt/Class B
Calculation of Yield - American Retirement/Class C
Calculation of Performance - AmRet/Class C
Calculation of Yield - American Retirement/Class Y
Calculation of Performance - AmRet/Class Y
16(m) Calculation of Yield - Balanced/Class A
Calculation of Performance - Balanced/Class A
Calculation of Yield - Balanced/Class B
Calculation of Performance - Balanced/Class B
Calculation of Yield - Balanced/Class C
Calculation of Performance - Balanced/Class C
Calculation of Yield - Balanced/Class Y
Calculation of Performance - Balanced/Class Y
17(a)(i) Financial Data Schedule - Foundation/Class A
17(a)(ii) Financial Data Schedule - Foundation/Class B
17(a)(iii) Financial Data Schedule - Foundation/Class C
17(a)(iv) Financial Data Schedule - Foundation/Class Y
17(b)(i) Financial Data Schedule - Tax-Strategic/Class A
17(b)(ii) Financial Data Schedule - Tax-Strategic/Class B
17(b)(iii) Financial Data Schedule - Tax-Strategic/Class C
17(b)(iv) Financial Data Schedule - Tax-Strategic/Class Y
17(c)(i) Financial Data Schedule - American Retirement/Class A
17(c)(ii) Financial Data Schedule - American Retirement/Class B
17(c)(iii) Financial Data Schedule - American Retirement/Class C
17(c)(iv) Financial Data Schedule - American Retirement/Class Y
17(d)(i) Financial Data Schedule - Balanced/Class A
17(d)(ii) Financial Data Schedule - Balanced/Class B
17(d)(iii) Financial Data Schedule - Balanced/Class C
17(d)(iv) Financial Data Schedule - Balanced/Class Y
19 Powers of Attorney
CONSENT OF INDEPENDENT AUDITORS
The Trustees and Shareholders
Evergreen Equity Trust:
We consent to the use of our report dated May 1, 1998 for Evergreen American
Retirement Fund, Evergreen Balanced Fund, Evergreen Foundation Fund and
Evergreen Tax Strategic Foundation Fund incorporated herein by reference and to
the references to our firm under the captions "FINANCIAL HIGHLIGHTS" in the
prospectus and "Independent Auditors" in the statement of additional
information.
/s/ KPMG Peat Marwick LLp
KPMG Peat Marwick LLP
Boston, Massachusetts
July 29, 1998
UNDERWRITING AGREEMENT
January 23, 1998
Kokasai Securities Co., Ltd.
Tokyo-Sumitomo Twin Building East
27-1, Shinkawa 2-chome Chuo-ku
Tokyo 104-0033
Gentlemen:
INTRODUCTION
Evergreen Small Company Growth Fund (hereinafter referred to collectively
as the "Fund") invites you ("Kokasai") to act as Underwriter in Japan of the
Class A shares ("Shares") of the Fund, subject to the following terms and
conditions:
1. In the distribution and sale in Japan of Shares, Kokasai agrees to act
as principal. Kokasai shall not have authority to act as agent for the Fund,
Keystone Investment Management Company ("Keystone"), Evergreen Distributor, Inc.
("EDI") or for any other dealer in any respect in such transactions.
CONCERNING THE CONTINUOUS OFFERING
2. Kokasai intends to undertake the continuous offering and sale of Shares
of the "Fund" in Japan to Japanese and non-U.S. nationals (the "Continuous
Offering") and the proposed schedule of sales charges, sub-dealer concessions
and net retention by Kokasai will be as follows:
Kokasai's
Sales Sub-Dealer Net
Amount of Purchase Charge Concession Retention
Y500,000 but less than Y5 million 5.0% 4.0% 1.0%
Y5 million but less than Y10 million 4.0 3.2 0.8
Y10 million but less than Y100 million 3.0 2.4 0.6
Y100 million and over 2.0 1.6 0.4
The minimum unit of sale of Shares shall be Y500,000.
22643
1
<PAGE>
Kokasai will be entitled to continuing maintenance fees for ser vices
to its customers in accordance with the attached schedule of maintenance fees
which may be modified from time to time. Kokasai shall not have any vested right
to receive any continuing maintenance fees on Shares sold by it.
3. The Continuous Offering will be made on a forward pricing basis, i.e.,
orders accepted by Kokasai prior to the close of business in Tokyo and placed
with the Fund the same day prior to the close of the Fund's business day, 5:00
p.m. Boston, Massachusetts time, shall be confirmed at the closing per share net
asset value, which the Fund agrees to furnish to Kokasai each day by telex, and
which Kokasai agrees to make public each day at its head and branch offices.
Orders taken by Kokasai on days when the New York Stock Exchange is closed will
be priced at the closing price on the next day when the New York Stock Exchange
is open. In the event of differences between verbal and telex orders on the one
hand, and written price confirmations on the other, the written price
confirmations shall be considered final.
4. In connection with sales to sub-dealers, the concession to sub-dealers
and Kokasai's net retention shall be subject to the table set forth above.
Kokasai agrees to furnish the Fund with English cop ies of agreements entered
into between Kokasai and its sub-dealers. Such agreements and sales by
sub-dealers shall conform in all cases with the terms and conditions of this
Agreement.
5. Payment at the appropriate per share net asset value shall be made to
the Fund by Kokasai and shall be received by the Fund within three business days
after its acceptance of Kokasai's order or such shorter time as may be required
by U.S. law.
If such payment is not received by the Fund, it reserves the right without
notice, forthwith to cancel the sale in which case the Fund may hold Kokasai
responsible for any loss to it, provided, however, that this paragraph shall
have no force and effect if Kokasai's failure to pay shall be caused by reason
of force majeure.
6. Kokasai agrees to act as agent of the Fund for the purpose of
facilitating redemptions of Shares of the Fund sold pursuant to the terms of
this Agreement and held by Japanese investors. If Kokasai repurchases Shares
from its customers or customers of sub-dealers, it agrees to pay not less than
the applicable net asset value as in
22643
2
<PAGE>
effect on the date of such repurchase.
7. The Fund will not accept from Kokasai any conditional orders for sales
of Shares.
8. The Fund agrees that whenever Kokasai places orders for pur chase of
Shares from the Fund or redemption of Shares by the Fund, the Fund shall
unconditionally accept such orders, unless trading on the New York Stock
Exchange has been suspended or there are other reasons, including force majeure,
which prevent such unconditional acceptance. The Fund also agrees to notify
Kokasai promptly by telex after the Fund has executed any such orders from
Kokasai. In the case of sales of Shares to the Fund, the Fund agrees to make
payment to Kokasai within seven days after its acceptance of Kokasai's order or
such shorter time as may be required by U.S. law. Subject to the provisions of
this Paragraph 8, if the Fund fails to make payment to Kokasai as above
provided, the Fund agrees to indemnify and save Kokasai harmless from any loss
resulting therefrom.
9. The Fund will pay all costs and expenses directly attribut able to the
Continuous Offering, excluding costs of advertising, publicity and due diligence
and other meetings, and other sales literature for the Continuous Offering.
10. The Fund agrees that Kokasai, on behalf of the Fund, shall prepare, in
conformance with the rules concerning Foreign Securities Transactions of Japan
Securities Dealers' Association (the "Association's Rules") and applicable
Japanese laws and regulations, the Explanatory Brochure covering the Fund's
Continuous Offering based on prospectuses, securities reports, semi-annual
securities reports and material information furnished from time to time by the
Fund in connection with the Fund (hereinafter collectively referred to as
"Prospectuses-Reports"). In preparing the Explanatory Brochure, Kokasai shall
rely solely on the representations contained in the "Prospectuses-Reports."
Kokasai agrees that it will furnish a draft of the Explanatory Brochure to the
Fund's designated agent in Tokyo to obtain prior approval for the contents
thereof and will also furnish the Fund with the required number of Japanese and
English language translations of the Explanatory Brochure for filing as required
by U.S. law. No person is authorized to make any representations concerning
Shares of the Fund except those contained in the then current applicable
Explanatory Brochure. Kokasai also agrees that it will deliver a copy of the
then current Japanese Explanatory Brochure,
22643
3
<PAGE>
at or prior to the time of sale, to each of its own purchasers and, in the case
of sale by sub-dealers, it will require that they also deliver a copy of such
Explanatory Brochure to each of their purchasers.
11. The Fund agrees to indemnify and save Kokasai harmless from any damages
which shall have occurred in the sale of Shares of the Fund pursuant to this
Agreement to the extent such damages result from a false statement of a material
fact contained in the "ProspectusesReports" of the Fund, an omission of a
material fact which should be stated therein or an omission of a material fact
necessary to make the statement therein not misleading. If the
"Prospectuses-Reports" or any other material used in connection with the sale of
the Fund Shares contains information furnished by Kokasai which information
contains a false statement of a material fact, an omission of a material fact
which should be stated therein, or an omission of a material fact necessary to
make the statement therein not misleading, Kokasai likewise agrees to indemnify
and save the Fund harmless from any damages it shall have incurred in any sales
of the Shares of the Fund pursuant to the terms of this Agreement.
12. The Fund agrees to designate Kokasai if Kokasai so requests, or such
other representative as shall meet the qualification require ments as set forth
in Section 1 of Article 6 of the Japanese Standard Rules Relating to Selection
of Foreign Investment Company Shares to be Sold in Japan (the "Standard Rules")
as legal agent for service of process against the Fund.
13. The Fund hereby appoints Kokasai as its agent securities company as
defined in Article 13 of the Association's Rules and Kokasai agrees that it will
submit to the Association on the Fund's behalf all such documents as may be
required by the provisions of the Association's Rules.
14. The Fund agrees that all its financial statements which appear in the
Japanese Explanatory Brochure and Registration State ment, or in annual reports
to the Ministry of Finance will be certi fied by independent certified public
accountants who are licensed pub lic accountants under the laws of Japan. Any
such financial state ments submitted to the Ministry of Finance will be manually
signed and certified by such representative. The Fund also agrees to submit
semi-annual reports to the Ministry of Finance which need not be certified.
22643
4
<PAGE>
15. The Fund hereby represents and warrants that it currently conforms to
the requirements of the Japanese Standard Rules. The Fund understands that if
subsequently it is made aware that it does not so conform, the Fund will advise
Kokasai promptly and Kokasai may suspend further sales of Shares but, even in
such event, the Fund will continue to be obligated to repurchase or redeem
Shares of the Fund from Kokasai as hereinbefore provided.
16. In offering the Shares of the Fund for sale in Japan, Kokasai agrees to
comply with the applicable laws, rules, regulations and criteria of the Ministry
of Finance and Associations' Rules.
Kokasai also agrees that any advertisements used by Kokasai will
in general conform to the Statement of Policy of the United States
Securities and Exchange Commission (U.S. Release No. 40-2621), except
for Paragraph (h) which deals with comparisons.
17. With the consent of the Board of Trustees of the appropriate Evergreen
Fund, Kokasai may also undertake block and/or continuous offerings of the Shares
of such other Evergreen Funds on the terms and conditions herein stated or as
may be contained in any supplemental agreement hereto.
18. This Agreement is, to the extent applicable, governed by the laws of
Japan.
19. This Agreement shall continue in effect as long as permitted under the
U.S. Investment Company Act of 1940, as amended from time to time, the rules
promulgated thereunder or under the Japanese Securities and Exchange Law of
1948, and appropriate exemptions there from. This Agreement may be terminated at
any time by mutual consent or by either party upon thirty days written notice,
and shall terminate automatically in the event of its assignment.
22643
5
<PAGE>
Evergreen Small Company Growth Fund
D'RAY MOORE
By D'Ray Moore
Title: President
KOKASAI SECURITIES CO., LTD.
YU TAKEDA
By Yu Takeda
Title: Managing Director
22643
6
<PAGE>
SCHEDULE OF MAINTENANCE FEES
Except as otherwise provided for in the Underwriting Agreement, Kokasai
will be entitled to quarterly maintenance fees based on the aggregate net asset
value of Shares of the Fund which Kokasai has sold, which remain issued and
outstanding on the books of the Fund on the last business day of the calendar
quarter and which are registered in the names of clients for whom Kokasai is
broker of record ("Eligible Shares"). Such maintenance fees will be calculated
at the rate of 0.0625% per quarter of the aggregate net asset value of all such
Eligible Shares (approximately 0.25% annually); provided, however, that no
maintenance fees will be paid to Kokasai for any calendar quarter if the
aggregate net asset value of such Eligible Shares on the last business day of
the calendar quarter is less than $1 million. Quarterly maintenance fees shall
be payable within 90 days after the end of the calendar quarter. Such
maintenance fee rate may be modified by the Fund from time to time with prior
notice.
22643
7
<PAGE>
UNDERWRITING AGREEMENT
January 23, 1998
Nomura Securities Co., Ltd.
1-9-1 Nihonbashi, Chuo-Ku
Tokyo, Japan 103-8011
Gentlemen:
INTRODUCTION
Evergreen Small Company Growth Fund (hereinafter referred to collectively
as the "Fund") invites you ("Nomura") to act as Underwriter in Japan of the
Class A shares ("Shares") of the Fund, subject to the following terms and
conditions:
1. In the distribution and sale in Japan of Shares, Nomura agrees to act as
principal. Nomura shall not have authority to act as agent for the Fund,
Keystone Investment Management Company ("Keystone"), Evergreen Distributor, Inc.
("EDI") or for any other
dealer in any respect in such transactions.
CONCERNING THE CONTINUOUS OFFERING
2. Nomura intends to undertake the continuous offering and sale of Shares
of the "Fund" in Japan to Japanese and non-U.S. nationals (the "Continuous
Offering") and the proposed schedule of sales charges, sub-dealer concessions
and net retention by Nomura will be as follows:
Nomura's
Sales Sub-Dealer Net
Amount of Purchase Charge Concession Retention
Y500,000 but less than Y5 million 5.0% 4.0% 1.0%
Y5 million but less than Y10 million 4.0 3.2 0.8
Y10 million but less than Y100 million 3.0 2.4 0.6
Y100 million and over 2.0 1.6 0.4
23165
1
<PAGE>
The minimum unit of sale of Shares shall be Y500,000.
Nomura will be entitled to continuing maintenance fees for ser vices to
its customers in accordance with the attached schedule of maintenance fees which
may be modified from time to time. Nomura shall not have any vested right to
receive any continuing maintenance fees on Shares sold by it.
3. The Continuous Offering will be made on a forward pricing basis, i.e.,
orders accepted by Nomura prior to the close of business in Tokyo and placed
with the Fund the same day prior to the close of the Fund's business day, 5:00
p.m. Boston, Massachusetts time, shall be confirmed at the closing per share net
asset value, which the Fund agrees to furnish to Nomura each day by telex, and
which Nomura agrees to make public each day at its head and branch offices.
Orders taken by Nomura on days when the New York Stock Exchange is closed will
be priced at the closing price on the next day when the New York Stock Exchange
is open. In the event of differences between verbal and telex orders on the one
hand, and written price confirmations on the other, the written price
confirmations shall be considered final.
4. In connection with sales to sub-dealers, the concession to sub-dealers
and Nomura's net retention shall be subject to the table set forth above. Nomura
agrees to furnish the Fund with English cop ies of agreements entered into
between Nomura and its sub-dealers. Such agreements and sales by sub-dealers
shall conform in all cases with the terms and conditions of this Agreement.
5. Payment at the appropriate per share net asset value shall be made to
the Fund by Nomura and shall be received by the Fund within three business days
after its acceptance of Nomura's order or such shorter time as may be required
by U.S. law.
If such payment is not received by the Fund, it reserves the right without
notice, forthwith to cancel the sale in which case the Fund may hold Nomura
responsible for any loss to it, provided, however, that this paragraph shall
have no force and effect if Nomura's failure to pay shall be caused by reason of
force majeure.
6. Nomura agrees to act as agent of the Fund for the purpose of
facilitating redemptions of Shares of the Fund sold pursuant to the terms of
this Agreement and held by Japanese investors. If Nomura repurchases Shares from
its customers or customers of sub-dealers, it
23165
2
<PAGE>
agrees to pay not less than the applicable net asset value as in effect on the
date of such repurchase.
7. The Fund will not accept from Nomura any conditional orders for sales of
Shares.
8. The Fund agrees that whenever Nomura places orders for pur chase of
Shares from the Fund or redemption of Shares by the Fund, the Fund shall
unconditionally accept such orders, unless trading on the New York Stock
Exchange has been suspended or there are other reasons, including force majeure,
which prevent such unconditional acceptance. The Fund also agrees to notify
Nomura promptly by telex after the Fund has executed any such orders from
Nomura. In the case of sales of Shares to the Fund, the Fund agrees to make
payment to Nomura within seven days after its acceptance of Nomura's order or
such shorter time as may be required by U.S. law. Subject to the provisions of
this Paragraph 8, if the Fund fails to make payment to Nomura as above provided,
the Fund agrees to indemnify and save Nomura harmless from any loss resulting
therefrom.
9. The Fund will pay all costs and expenses directly attribut able to the
Continuous Offering, excluding costs of advertising, publicity and due diligence
and other meetings, and other sales literature for the Continuous Offering.
10. The Fund agrees and warrants that its agent securities company as
defined in Article 13 of the rules concerning Foreign Securities Transactions of
Japan Securities Dealers Association (the "Association's Rules"), on behalf of
the Fund, shall prepare and furnish Nomura, in conformance with the
Association's Rules and appli cable Japanese laws and regulations, the Japanese
prospectus and explanatory brochure (hereinafter referred to in accordance with
the Association's Rules as the "Explanatory Brochure") covering the Fund's
Continuous Offering based on prospectuses, securities reports, semi-annual
securities reports and material information in connection with the Fund
furnished from time to time by the Fund (hereinafter collectively referred to as
"Prospectuses-Reports").
11. The Fund agrees to indemnify and save Nomura harmless from any damages
which shall have occurred in the sale of Shares of the Fund pursuant to this
Agreement to the extent such damages result from a false statement of a material
fact contained in the "ProspectusesReports" of the Fund, an omission of a
material fact which should be
23165
3
<PAGE>
stated therein or an omission of a material fact necessary to make the statement
therein not misleading. If the "Prospectuses-Reports" or any other material used
in connection with the sale of the Fund Shares contains information furnished by
Nomura which information contains a false statement of a material fact, an
omission of a material fact which should be stated therein, or an omission of a
material fact necessary to make the statement therein not misleading, Nomura
likewise agrees to indemnify and save the Fund harmless from any damages it
shall have incurred in any sales of the Shares of the Fund pursuant to the terms
of this Agreement.
12. The Fund agrees to designate Nomura if Nomura so requests, or such other
representative as shall meet the qualification requirements as set forth in
Section 1 of Article 6 of the Japanese Standard Rules Relating to Selection of
Foreign Investment Company Shares to be Sold in Japan (the "Standard Rules") as
legal agent for service of process against the Fund.
13. The Fund agrees that all its financial statements which appear in
the Japanese Explanatory Brochure and Registration State ment, or in annual
reports to the Ministry of Finance will be certi fied by independent certified
public accountants who are licensed pub lic accountants under the laws of Japan.
Any such financial state ments submitted to the Ministry of Finance will be
manually signed and certified by such representative. The Fund also agrees to
submit Securities Registration Statements and semi-annual reports to the
Ministry of Finance which need not be certified.
14. The Fund hereby represents and warrants that it currently conforms to
the requirements of the Japanese Standard Rules. The Fund understands that if
subsequently it is made aware that it does not so conform, the Fund will advise
Nomura promptly and Nomura may suspend further sales of Shares but, even in such
event, the Fund will continue to be obligated to repurchase or redeem Shares of
the Fund from Nomura as hereinbefore provided.
15. In offering the Shares of the Fund for sale in Japan, Nomura agrees to
comply with the applicable laws, rules, regulations and criteria of the Ministry
of Finance and Associations' Rules.
Nomura also agrees that any advertisements used by Nomura will in
general conform to the Statement of Policy of the United States
Securities and Exchange Commission (U.S. Release No. 40-2621), except
23165
4
<PAGE>
for Paragraph (h) which deals with comparisons.
16. With the consent of the Board of Trustees of the appropriate Evergreen
Fund, Nomura may also undertake block and/or continuous offerings of the Shares
of such other Evergreen Funds on the terms and conditions herein stated or as
may be contained in any supplemental agreement hereto.
17. This Agreement is, to the extent applicable, governed by the laws of
Japan.
18. This Agreement shall continue in effect as long as permitted under the
U.S. Investment Company Act of 1940, as amended from time to time, the rules
promulgated thereunder or under the Japanese Securities and Exchange Law of
1948, and appropriate exemptions there from. This Agreement may be terminated at
any time by mutual consent or by either party upon thirty days written notice,
and shall terminate automatically in the event of its assignment.
EVERGREEN SMALL COMPANY GROWTH FUND
/S/ D'RAY MOORE
By D'Ray Moore
Title: Secretary
NOMURA SECURITIES CO., LTD.
/S/ YASUNOBU MATASE
By Yasunobu Matase
Title: Director
23165
5
<PAGE>
SCHEDULE OF MAINTENANCE FEES
Except as otherwise provided for in the Underwriting Agreement, Nomura
will be entitled to quarterly maintenance fees based on the aggregate net asset
value of Shares of the Fund which Nomura has sold, which remain issued and
outstanding on the books of the Fund on the last business day of the calendar
quarter and which are registered in the names of clients for whom Nomura is
broker of record ("Eligible Shares"). Such maintenance fees will be calculated
at the rate of 0.0625% per quarter of the aggregate net asset value of all such
Eligible Shares (approximately 0.25% annually); provided, however, that no
maintenance fees will be paid to Nomura for any calendar quarter if the
aggregate net asset value of such Eligible Shares on the last business day of
the calendar quarter is less than $1 million. Quarterly maintenance fees shall
be payable within 90 days after the end of the calendar quarter. Such
maintenance fee rate may be modified by the Fund from time to time with prior
notice.
23165
6
<PAGE>
SUB-TRANSFER AGENCY AGREEMENT
January 23, 1998
Nomura Securities Co., Ltd.
1-9-1 Nihonbashi, Chuo-Ku
Tokyo, Japan 103-8011
Gentlemen:
1. Evergreen Small Company Growth Fund (the "Fund"), hereby invites
you, ("Nomura"), to act as Sub-transfer Agent for those shares of the
Fund sold by Nomura in Japan as a principal underwriter of the Fund.
2. Contemporaneously herewith, the Fund and Nomura have entered into an
Underwriting Agreement under the terms of which Nomura has been
appointed as Underwriter in Japan of the Fund's Class A shares (the
"shares") and has the right thereunder, as principal, to purchase
shares of the Fund at net asset value and to publicly offer and sell
such shares in Japan upon the terms and subject to the conditions
therein stated.
3. Nomura intends to advise Keystone each day by facsimile or telex the
number of shares of the Fund purchased in Japan and the number of such
shares to be redeemed.
4. The Fund also understands that Nomura has entered into a Custodian
Agreement dated January 23, 1998, with State Street Bank and Trust
Company (the "Custodian") of Boston, Massachusetts, USA, under which it
has agreed to act as Nomura's Custodian and as such to hold and
administer in Boston securities and incidental monies accruing
therefrom.
5. Upon its receipt of monies (in U.S. dollars) from the Custodian
arising from the sale of the Fund shares in Japan, the Fund will
forthwith issue and deliver to the Custodian a certificate or
certificates or an open account statement or statements in Nomura's
name representing the number of shares of the Fund then being paid for
pursuant to the Underwriting Agreement.
6. Upon advice from Nomura as to the shares of the Fund tendered for
redemption to the Fund pursuant to the terms of the Underwriting
Agreement, the Fund will, within seven calendar days, transmit to the
Custodian the monies resulting from such redemption required to effect
such repurchases.
7. As Sub-transfer Agent in Japan, Nomura agrees to notify its
customers and the subdealers of the number of shares of the Fund being
held in Nomura's name which they have purchased.
8. Nomura also agrees as such sub-transfer agent, upon receipt of the
redemption monies, to convert the same into yen and to transmit to its
customers or sub-dealers within seven days of the receipt of the
redemption order and upon proper documentation the sums to which they
are respectively entitled upon such repurchases.
9. The Fund agrees that upon the declaration and payment of any income
dividends or capital gains distributions, if any by the Fund, the Fund
will transmit to the Custodian such sums of money as may be required,
calculated on the basis of the number of shares, if any, of the Fund
shown to be outstanding in Nomura's name on the record date, less, in
the case of income dividends, the then appropriate U.S. withholding
tax. As such subtransfer agent, Nomura agrees that upon receipt of such
monies, it will convert the same to yen and distribute same in cash
pro-rata among its customers and sub-dealers according to their
respective holdings.
10. It is the Fund's responsibility to keep records showing the total
number of shares outstanding of the Fund, the names and addresses of
the shareholders of record and the number of shares held by each such
shareholder.
As sub-transfer agent, it will be Nomura's responsibility to
maintain records showing the total number of shares of the Fund for
which Nomura is the shareholder of record outstanding in the names of
Japanese shareholders, the names and addresses of the Japanese
shareholders and the number of shares owned by each such shareholder.
However, solely in connection with the notification of election
by the Fund under Rule 18f-1 promulgated under the Investment Company
Act of 1940, it is understood that the shareholders referred to in the
preceding sentence shall be considered as shareholders of record for
purposes of said Rule, whether they are shareholders of record of
Nomura or of any sub-dealer.
It will be the fund's responsibility to assure that the number
of shares of the Fund outstanding in the name of Nomura as shown in the
Fund's records shall be true and correct at all times.
It will be Nomura's responsibility to assure that the number of
shares of the Fund outstanding as represented in the detailed Japanese
shareholders records as maintained by Nomura agree in total with the
number of shares outstanding in the account of Nomura as shown in the
records of the Fund.
11. Nomura further agrees, as such sub-transfer agent, to issue to
Nomura's customers and sub-dealers safe-keeping receipts indicating the
number of such of the shares of the Fund as may be held by each, to
arrange for the transfer of the holdings of Japanese shareholders of
the Fund as they may request, and to respond to and answer inquiries
from Japanese shareholders and the sub-dealers as to any aspect of
their holdings in the Fund.
12. Nomura also agrees that in the event any of Nomura's customers or
customers of its sub-dealers or its sub-dealers request that
certificates representing the number of Fund shares owned by any such
customer be issued directly to such customer that Nomura will promptly
so inform the Fund and will instruct the Fund to transfer the
appropriate number of shares from the name of Nomura into the name of
such requesting customer. The Custodian will deliver to the Fund
certificates representing the appropriate number of shares as
instructed by Nomura and the Fund will cancel such certificate or
certificates and issue a new certificate in the name of said customer.
In the event the shares registered in the name of Nomura are held in an
open account and no certificates have been issued the Fund will, as
instructed by Nomura, reduce the shares in such open account by the
appropriate number and will issue a certificate in the name of said
customer. The Fund will promptly deliver the certificate registered in
the customer's name to Nomura and Nomura will be responsible for the
prompt delivery of such certificate to its customer or to the customer
of its sub-dealer.
13. The Fund agrees to prepare or cause to be prepared at its own
expense, Japanese language translations of annual an semi-annual
reports of the Fund and to deliver a reasonable number of copies of
same to Nomura for transmittal by Nomura to its customers and
sub-dealers and Nomura agrees to deliver same to its customers and
subdealers.
14. While the shareholders of the Fund do not have general voting
rights, it is understood that if the vote or assent of shareholders
should be required on any matter, Nomura will transmit to its customers
owning shares of the Fund and to sub-dealers all proxy materials and
proxies (previously translated into Japanese at the Fund's expense)
required in connection therewith and as record owners of such shares,
Nomura will vote such shares in accordance with the instructions
received by Nomura from its customers and sub-dealers. Nomura will be
entitled to recover from the Fund its out-of-pocket costs in connection
with the transmission and tabulation of such proxies and the voting
thereon.
15. This Agreement shall become effective on the date first above
written and shall remain effective for one year from that date but may
be terminated by either party on notice in writing within sixty days of
the expiration date, failing which the Agreement shall be extended for
another one-year period and likewise for further extensions.
16. In the event Nomura terminates this Agreement, Nomura will continue
to act as Sub-transfer Agent under all of the terms and conditions
hereof until the Fund has had a reasonable time to make such other
arrangements as it may determine.
23160
1
<PAGE>
If the foregoing represents your understanding of the Agreement
between us, please so indicate by signing and returning to us one copy
hereof.
Very truly yours,
EVERGREEN SMALL COMPANY GROWTH FUND
/S/ D'RAY MOORE
By D'Ray Moore
Title: Secretary
NOMURA SECURITIES CO., LTD.
/S/ YASUNOBU MATASE
By Yasunobu Matase
Authorized Signature
<TABLE>
<CAPTION>
PRICING DATE 3/31/98
TOTAL INCOME FOR PERIOD 952004.1
TOTAL EXPENSES FOR PERIOD 402647.6
30 DAY YTM 1.83% AVERAGE SHARES OUTSTANDING 16853152
LAST PRICE DURING PERIOD 21.46
PRICE ST VARIABLE GAIN/ LONG TERM EQUITY TOTAL DIV ADJUSTED DAILY
DATE INCOME LOSS INCOME INCOME INCOME ACTOR INCOME EXPENSES
3/1/98
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 3/2/98 41194.03 119113.7 76367.19 236674.9 13.22553 31301.5 11860.75
2 3/3/98 41373.63 119371.1 76428.38 237173.1 13.21831 31350.26 11827.05
3 3/4/98 41620.29 119292.8 76532.15 237445.2 13.21798 31385.47 11843.8
4 3/5/98 41764.66 119472.2 76646.51 237883.3 13.22303 31455.38 11844.63
5 3/6/98 42221.63 119187.5 76656.83 238066 13.23726 31513.42 11753.23
6 3/7/98 42221.63 119187.5 76656.83 238066 13.23726 31513.42 11753.23
7 3/8/98 42221.63 119187.5 76656.83 238066 13.23726 31513.42 11753.23
8 3/9/98 42786.9 118975.5 77455.07 239217.5 13.24357 31680.93 11910.39
9 3/10/98 43260.7 118955.6 78148.39 240364.7 13.24647 31839.84 11907.99
10 3/11/98 43260.7 118827.3 77611.1 239699.1 13.24354 31744.65 11993.72
11 3/12/98 43518.92 118467.6 77815.51 239802.1 13.24299 31756.96 12032.06
12 3/13/98 38663.46 118564.6 77922.6 235150.7 13.23898 31131.55 12079.93
13 3/14/98 38663.46 118564.6 77922.6 235150.7 13.23898 31131.55 12079.93
14 3/15/98 38663.46 118564.6 77922.6 235150.7 13.23898 31131.55 12079.93
15 3/16/98 43531.25 118435.6 78050.38 240017.2 13.23541 31767.27 12062.57
16 3/17/98 44162.28 118615.2 78655.12 241432.6 13.22949 31940.3 12150.43
17 3/18/98 44421.7 118720.3 78070.69 241212.7 13.23731 31930.06 12177.48
18 3/19/98 44654.34 118758 78172.49 241584.9 13.21895 31934.98 12209.28
19 3/20/98 44557.02 118777.1 78147.58 241481.7 13.21986 31923.54 12236.7
20 3/21/98 44557.02 118777.1 78147.58 241481.7 13.21986 31923.54 12236.7
21 3/22/98 44557.02 118777.1 78147.58 241481.7 13.21986 31923.54 12236.7
22 3/23/98 43985.08 118732.1 78580.15 241297.4 13.23153 31927.33 12300.86
23 3/24/98 43865.3 118741.2 78531.44 241138 13.23842 31922.85 17181.72
24 3/25/98 43963.61 119097.1 76963.54 240024.3 13.24328 31787.09 17316.28
25 3/26/98 43963.61 119219.5 78958.56 242141.6 13.23653 32051.16 17294.62
26 3/27/98 44380.84 119297.7 78948.9 242627.4 13.24525 32136.61 17311.36
27 3/28/98 44380.84 119297.7 78948.9 242627.4 13.24525 32136.61 17311.36
28 3/29/98 44380.84 119297.7 78948.9 242627.4 13.24525 32136.61 17311.36
29 3/30/98 40466 119495.4 79038.75 239000.2 13.24966 31666.7 17309.06
30 3/31/98 46015.99 119306.6 79470.83 244793.4 13.25442 32445.96 17281.21
1287278 0 3569078 2336524 7192879 952004.1 402647.6
</TABLE>
<TABLE>
<CAPTION>
DAILY DAILY ACCUMULATED ACCUMULATED ACCUMULATED
SHARES PRICE INCOME EXPENSES SHARES
0 0 0
<S> <C> <C> <C> <C>
16618333 21.03 31301.5 11860.75 16618333
16649151 21.01 62651.76 23687.8 33267484
16668931 20.98 94037.23 35531.6 49936415
16685264 20.77 125492.6 47376.23 66621679
16714538 21.04 157006 59129.46 83336216
16714538 21.04 188519.5 70882.69 1E+08
16714538 21.04 220032.9 82635.92 1.17E+08
16738648 21.01 251713.8 94546.31 1.34E+08
16756719 21.15 283553.6 106454.3 1.5E+08
16770797 21.21 315298.3 118448 1.67E+08
16795066 21.28 347055.3 130480.1 1.84E+08
16801308 21.24 378186.8 142560 2.01E+08
16801308 21.24 409318.4 154639.9 2.17E+08
16801308 21.24 440449.9 166719.9 2.34E+08
16821415 21.39 472217.2 178782.4 2.51E+08
16833385 21.4 504157.5 190932.9 2.68E+08
16870636 21.45 536087.5 203110.3 2.85E+08
16858754 21.49 568022.5 215319.6 3.02E+08
16872667 21.57 599946.1 227556.3 3.18E+08
16872667 21.57 631869.6 239793 3.35E+08
16872667 21.57 663793.1 252029.7 3.52E+08
16884870 21.4 695720.5 264330.6 3.69E+08
16997380 21.52 727643.3 281512.3 3.86E+08
17023031 21.47 759430.4 298828.6 4.03E+08
17043055 21.45 791481.6 316123.2 4.2E+08
17067967 21.41 823618.2 333434.6 4.37E+08
17067967 21.41 855754.8 350745.9 4.54E+08
17067967 21.41 887891.4 368057.3 4.71E+08
17090460 21.32 919558.1 385366.4 4.88E+08
17119226 21.46 952004.1 402647.6 5.06E+08
16853152
</TABLE>
<TABLE>
<CAPTION>
$952.50
A NAV A A
TIME ACCOUNT A AVERAGE A/C VALUE A AVERAGE
EARS PERIOD VALUE CLASS ANNUAL W/LOAD CLASS ANNUAL
<S> <C> <C> <C> <C> <C> <C> <C>
31-Mar-98 BLANK 1,929.43 0.00% 952.5 -4.75% -4.75%
30-Sep-97 6 MO 1,743.66 10.65% 10.65% 1,053.98 5.40% 5.40%
31-Dec-97 QTR 1,809.31 6.64% 6.64% 1,015.74 1.57% 1.57%
31-Dec-97 YTD 1,809.31 6.64% 6.64% 1,015.74 1.57% 1.57%
31-Mar-97 1 1,441.16 33.88% 33.88% 1,275.20 27.52% 27.52%
31-Mar-95 3 1,068.91 80.50% 21.76% 1,719.30 71.93% 19.80%
31-Mar-93 5
31-Mar-88 10
2-Jan-95 INCEPT. 1,000.00 92.94% 22.46% 1,837.78 83.78% 20.64%
NCEPTION FACTOR: 3.2438
</TABLE>
<TABLE>
<CAPTION>
PRICING DATE 3/31/98
TOTAL INCOME FOR PERIOD 3028823
TOTAL EXPENSES FOR PERIOD 1949704
30 DAY YTM 1.18% AVERAGE SHARES OUTSTANDING 53919350
LAST PRICE DURING PERIOD 20.34
PRICE ST VARIABLE GAIN/LOSS LONG TERM EQUITY TOTAL DIV ADJUSTED
DATE INCOME INCOME INCOME INCOME FACTOR INCOME
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 3/2/98 41194.03 0 119113.7 76367.19 236674.9 41.66105 98601.24
2 3/3/98 41373.63 0 119371.1 76428.38 237173.1 41.71419 98934.82
3 3/4/98 41620.29 0 119292.8 76532.15 237445.2 41.74091 99111.77
4 3/5/98 41764.66 0 119472.2 76646.51 237883.3 41.77991 99387.43
5 3/6/98 42221.63 0 119187.5 76656.83 238066 41.82044 99560.24
6 3/7/98 42221.63 0 119187.5 76656.83 238066 41.82044 99560.24
7 3/8/98 42221.63 0 119187.5 76656.83 238066 41.82044 99560.24
8 3/9/98 42786.9 0 118975.5 77455.07 239217.5 41.85868100133.3
9 3/10/98 43260.7 0 118955.6 78148.39 240364.7 41.92951100783.7
10 3/11/98 43260.7 0 118827.3 77611.1 239699.1 41.96973100601.1
11 3/12/98 43518.92 0 118467.6 77815.51 239802.1 42.00092100719.1
12 3/13/98 38663.46 0 118564.6 77922.6 235150.7 42.04853 98877.41
13 3/14/98 38663.46 0 118564.6 77922.6 235150.7 42.04853 98877.41
14 3/15/98 38663.46 0 118564.6 77922.6 235150.7 42.04853 98877.41
15 3/16/98 43531.25 0 118435.6 78050.38 240017.2 42.06752100969.3
16 3/17/98 44162.28 0 118615.2 78655.12 241432.6 42.12636101706.8
17 3/18/98 44421.7 0 118720.3 78070.69 241212.7 42.13342101631.1
18 3/19/98 44654.34 0 118758 78172.49 241584.9 42.17834101896.5
19 3/20/98 44557.02 0 118777.1 78147.58 241481.7 42.22639101969
20 3/21/98 44557.02 0 118777.1 78147.58 241481.7 42.22639101969
21 3/22/98 44557.02 0 118777.1 78147.58 241481.7 42.22639101969
22 3/23/98 43985.08 0 118732.1 78580.15 241297.4 42.30449102079.6
23 3/24/98 43865.3 0 118741.2 78531.44 241138 42.37699102187
24 3/25/98 43963.61 0 119097.1 76963.54 240024.3 42.42086101820.4
25 3/26/98 43963.61 0 119219.5 78958.56 242141.6 42.40414102678.1
26 3/27/98 44380.84 0 119297.7 78948.9 242627.4 42.42307102930
27 3/28/98 44380.84 0 119297.7 78948.9 242627.4 42.42307102930
28 3/29/98 44380.84 0 119297.7 78948.9 242627.4 42.42307102930
29 3/30/98 40466 0 119495.4 79038.75 239000.2 42.47482101514.9
30 3/31/98 46015.99 0 119306.6 79470.83 244793.4 42.50801104056.8
1287278 0 3569078 2336524 7192879 3028823
</TABLE>
<TABLE>
<CAPTION>
DAILY DAILY DAILY ACCUMULATED ACCUMULATED ACCUMULATED
EXPENSES SHARES PRICE INCOME EXPENSES SHARES
0 0 0
<S> <C> <C> <C> <C> <C>
58960.22 52652166 19.91 98601.24 58960.22 52652166
58851.75 52846865 19.9 197536.1 117812 1.05E+08
59001.09 52945827 19.87 296647.8 176813.1 1.58E+08
59033.45 53028084 19.67 396035.3 235846.5 2.11E+08
58564.05 53116622 19.93 495595.5 294410.6 2.65E+08
58564.05 53116622 19.93 595155.7 352974.6 3.18E+08
58564.05 53116622 19.93 694716 411538.7 3.71E+08
59388.31 53219793 19.9 794849.3 470927 4.24E+08
59438.55 53356827 20.03 895633 530365.5 4.77E+08
59965.92 53465770 20.08 996234.1 590331.4 5.31E+08
60218.71 53586452 20.15 1096953 650550.2 5.84E+08
60537.76 53684544 20.11 1195831 711087.9 6.38E+08
60537.76 53684544 20.11 1294708 771625.7 6.92E+08
60537.76 53684544 20.11 1393585 832163.4 7.46E+08
60511.93 53790770 20.24 1494555 892675.4 7.99E+08
61049.09 53929539 20.26 1596261 953724.5 8.53E+08
61211.02 54027678 20.3 1697893 1014935 9.07E+08
61477.57 54123124 20.34 1799789 1076413 9.61E+08
61701.71 54228962 20.42 1901758 1138115 1.02E+09
61701.71 54228962 20.42 2003727 1199816 1.07E+09
61701.71 54228962 20.42 2105696 1261518 1.12E+09
62079.41 54322945 20.29 2207776 1323598 1.18E+09
77657.05 54650969 20.4 2309963 1401255 1.23E+09
78376.02 54771013 20.35 2411783 1479631 1.29E+09
78311.01 54842984 20.33 2514461 1557942 1.34E+09
78362.69 54912685 20.3 2617391 1636304 1.4E+09
78362.69 54912685 20.3 2720321 1714667 1.45E+09
78362.69 54912685 20.3 2823251 1793030 1.51E+09
78387.74 55037168 20.22 2924766 1871417 1.56E+09
78286.34 55154086 20.34 3028823 1949704 1.62E+09
1949704 53919350
</TABLE>
<TABLE>
<CAPTION>
$1,000
B B NAV LEVEL VALUE OF VALUE OF B
TIME ACCOUNT B AVERAGE LOAD CLASS B CLASS B INI B AVERAGE
YEARS PERIOD VALUE CLASS ANNUAL COMP INVESTMENT INVESTMENT CUMULATIVE ANNUAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
31-Mar-98 BLANK 1,881.70 0.00% 50 1,000.00 1,000.00 0.00%
30-Sep-97 6MO 1,707.52 10.20% 10.20% 50 1,102.01 1,078.47 5.20% 5.20%
31-Dec-97 QTR 1,768.20 6.42% 6.42% 50 1,064.19 1,060.48 1.42% 1.42%
31-Dec-97 YTD 1,768.20 6.42% 6.42% 50 1,064.19 1,060.48 1.42% 1.42%
31-Mar-97 1 1,416.88 32.81% 32.81% 50 1,328.06 1,276.04 27.81% 27.81%
31-Mar-95 3 1,066.55 76.43% 20.83% 30 1,764.30 1,576.74 73.43% 20.15%
31-Mar-93 5
31-Mar-88 10
3-Jan-95 INCEPT. 1,000.00 88.17% 21.52% 30 1,881.70 1,661.76 85.17% 20.92%
INCEPTION FACTOR: 3.2438
</TABLE>
<TABLE>
<CAPTION>
PRICING DATE 3/31/98
TOTAL INCOME FOR PERIOD 135601.4
TOTAL EXPENSES FOR PERIOD 87309.78
30 DAY YTM 1.18% AVERAGE SHARES OUTSTANDING 2414446
LAST PRICE DURING PERIOD 20.34
PRICE ST FIXED GAIN/LOSS LONG TERM QUITY TOTAL DIV ADJUSTED
DATE INCOME INCOME NCOME INCOME FACTOR INCOME
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 3/2/98 41194.03 0 119113.7 76367.19 236674.9 1.848842 4375.74
2 3/3/98 41373.63 0 119371.1 76428.38 237173.1 1.857735 4406.05
3 3/4/98 41620.29 0 119292.8 76532.15 237445.2 1.860059 4416.62
4 3/5/98 41764.66 0 119472.2 76646.51 237883.3 1.860159 4425.01
5 3/6/98 42221.63 0 119187.5 76656.83 238066 1.865277 4440.59
6 3/7/98 42221.63 0 119187.5 76656.83 238066 1.865277 4440.59
7 3/8/98 42221.63 0 119187.5 76656.83 238066 1.865277 4440.59
8 3/9/98 42786.9 0 118975.5 77455.07 239217.5 1.8731 4480.78
9 3/10/98 43260.7 0 118955.6 78148.39 240364.7 1.870939 4497.08
10 3/11/98 43260.7 0 118827.3 77611.1 239699.1 1.871177 4485.19
11 3/12/98 43518.92 0 118467.6 77815.51 239802.1 1.874795 4495.8
12 3/13/98 38663.46 0 118564.6 77922.6 235150.7 1.874748 4408.48
13 3/14/98 38663.46 0 118564.6 77922.6 235150.7 1.874748 4408.48
14 3/15/98 38663.46 0 118564.6 77922.6 235150.7 1.874748 4408.48
15 3/16/98 43531.25 0 118435.6 78050.38 240017.2 1.878497 4508.72
16 3/17/98 44162.28 0 118615.2 78655.12 241432.6 1.886014 4553.45
17 3/18/98 44421.7 0 118720.3 78070.69 241212.7 1.891085 4561.54
18 3/19/98 44654.34 0 118758 78172.49 241584.9 1.893119 4573.49
19 3/20/98 44557.02 0 118777.1 78147.58 241481.7 1.895755 4577.9
20 3/21/98 44557.02 0 118777.1 78147.58 241481.7 1.895755 4577.9
21 3/22/98 44557.02 0 118777.1 78147.58 241481.7 1.895755 4577.9
22 3/23/98 43985.08 0 118732.1 78580.15 241297.4 1.905735 4598.49
23 3/24/98 43865.3 0 118741.2 78531.44 241138 1.908859 4602.98
24 3/25/98 43963.61 0 119097.1 76963.54 240024.3 1.910319 4585.23
25 3/26/98 43963.61 0 119219.5 78958.56 242141.6 1.910864 4627
26 3/27/98 44380.84 0 119297.7 78948.9 242627.4 1.91231 4639.79
27 3/28/98 44380.84 0 119297.7 78948.9 242627.4 1.91231 4639.79
28 3/29/98 44380.84 0 119297.7 78948.9 242627.4 1.91231 4639.79
29 3/30/98 40466 0 119495.4 79038.75 239000.2 1.907929 4559.95
30 3/31/98 46015.99 0 119306.6 79470.83 244793.4 1.898725 4647.95
1287278 0 3569078 2336524 7192879 135601.4
</TABLE>
<TABLE>
<CAPTION>
DAILY DAILY DAILY ACCUMULATED ACCUMULATED ACCUMULATED
EXPENSES SHARES PRICE INCOME EXPENSES SHARES
0 0 0 0
<S> <C> <C> <C> <C> <C>
2617.33 2337062 19.91 4375.74 2617.33 2337062
2616.45 2353983 19.89 8781.79 5233.78 4691045
2628.44 2359828 19.86 13198.41 7862.22 7050873
2629.47 2361414 19.66 17623.42 10491.69 9412287
2609.81 2369572 19.92 22064.01 13101.5 11781859
2609.81 2369572 19.92 26504.6 15711.31 14151430
2609.81 2369572 19.92 30945.19 18321.12 16521002
2653.29 2381956 19.89 35425.97 20974.41 18902958
2655.92 2381302 20.03 39923.05 23630.33 21284260
2674.62 2384180 20.08 44408.24 26304.95 23668441
2686.42 2392404 20.14 48904.04 28991.37 26060845
2700.63 2394007 20.1 53312.52 31692 28454852
2700.63 2394007 20.1 57721 34392.63 30848859
2700.63 2394007 20.1 62129.48 37093.26 33242866
2700.07 2402455 20.24 66638.2 39793.33 35645321
2729.73 2414917 20.25 71191.65 42523.06 38060238
2743.97 2425396 20.3 75753.19 45267.03 40485634
2759.32 2429708 20.34 80326.68 48026.35 42915341
2769.76 2435082 20.42 84904.58 50796.11 45350423
2769.76 2435082 20.42 89482.48 53565.87 47785505
2769.76 2435082 20.42 94060.38 56335.63 50220586
2791.91 2447616 20.29 98658.87 59127.54 52668202
3498.13 2462209 20.4 103261.9 62625.67 55130412
3529.84 2466953 20.35 107847.1 66155.51 57597365
3527.99 2471878 20.33 112474.1 69683.5 60069243
3531.947 2475786 20.3 117113.9 73215.45 62545029
3531.947 2475786 20.3 121753.7 76747.39 65020815
3531.947 2475786 20.3 126393.5 80279.34 67496601
3525.91 2472703 20.22 130953.4 83805.25 69969305
3504.53 2464076 20.34 135601.4 87309.78 72433380
87309.78 2414446
</TABLE>
<TABLE>
<CAPTION>
$1,000
C C NAV LEVEL VALUE OF VALUE OF C
ACCOUNT C AVERAGE LOAD CLASS C CLASS C INIT C AVERAGE
YEARS VALUE CLASS ANNUAL COMP INVESTMENT INVESTMENT CUMULATIVE ANNUAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
31-Mar-98 Blank 1,879.23 0.00% 10 1,000.00 1,000.00 0.00%
30-Sep-97 6 MO 1,705.28 10.20% 10.20% 10 1,102.01 1,078.47 9.20% 9.20%
31-Dec-97 QTR 1,764.96 6.47% 6.47% 10 1,064.75 1,061.03 5.47% 5.47%
31-Dec-97 YTD 1,764.96 6.47% 6.47% 10 1,064.75 1,061.03 5.47% 5.47%
31-Mar-97 1 1,415.02 32.81% 32.81% 10 1,328.06 1,276.04 31.81% 31.81%
31-Mar-95 3 1,065.31 76.40% 20.83% 1,764.02 1,577.97 76.40% 20.83%
31-Mar-93 5
31-Mar-88 10
3-Jan-95 INCEPT. 1,000.00 87.92% 21.47% 0 1,879.23 1,661.76 87.92% 21.47%
INCEPTION FACTOR: 3.2438
</TABLE>
<TABLE>
<CAPTION>
PRICING DATE 3/31/98
TOTAL INCOME FOR PERIOD 3076453
TOTAL EXPENSES FOR PERIOD 1073702
30 DAY YTM 2.17% AVERAGE SHARES OUTSTANDING 54399378
LAST PRICE DURING PERIOD 20.45
PRICE ST FIXED ZERO COUPON LONG TERM EQUITY TOTAL DIV ADJUSTED
DATE INCOME AND DIV INC INCOME INCOME INCOME FACTOR INCOME
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 3/2/98 41194.03 0 119113.7 76367.19 236674.9 43.26458 102396.4
2 3/3/98 41373.63 0 119371.1 76428.38 237173.1 43.20977 102482
3 3/4/98 41620.29 0 119292.8 76532.15 237445.2 43.18105 102531.3
4 3/5/98 41764.66 0 119472.2 76646.51 237883.3 43.1369 102615.5
5 3/6/98 42221.63 0 119187.5 76656.83 238066 43.07702 102551.7
6 3/7/98 42221.63 0 119187.5 76656.83 238066 43.07702 102551.7
7 3/8/98 42221.63 0 119187.5 76656.83 238066 43.07702 102551.7
8 3/9/98 42786.9 0 118975.5 77455.07 239217.5 43.02465 102922.5
9 3/10/98 43260.7 0 118955.6 78148.39 240364.7 42.95307 103244
10 3/11/98 43260.7 0 118827.3 77611.1 239699.1 42.91555 102868.2
11 3/12/98 43518.92 0 118467.6 77815.51 239802.1 42.8813 102830.3
12 3/13/98 38663.46 0 118564.6 77922.6 235150.7 42.83774 100733.3
13 3/14/98 38663.46 0 118564.6 77922.6 235150.7 42.83774 100733.3
14 3/15/98 38663.46 0 118564.6 77922.6 235150.7 42.83774 100733.3
15 3/16/98 43531.25 0 118435.6 78050.38 240017.2 42.81857 102771.9
16 3/17/98 44162.28 0 118615.2 78655.12 241432.6 42.75814 103232.1
17 3/18/98 44421.7 0 118720.3 78070.69 241212.7 42.73819 103089.9
18 3/19/98 44654.34 0 118758 78172.49 241584.9 42.70959 103179.9
19 3/20/98 44557.02 0 118777.1 78147.58 241481.7 42.65829 103012
20 3/21/98 44557.02 0 118777.1 78147.58 241481.7 42.65829 103012
21 3/22/98 44557.02 0 118777.1 78147.58 241481.7 42.65829 103012
22 3/23/98 43985.08 0 118732.1 78580.15 241297.4 42.55825 102691.9
23 3/24/98 43865.3 0 118741.2 78531.44 241138 42.47573 102425.1
24 3/25/98 43963.61 0 119097.1 76963.54 240024.3 42.42554 101831.6
25 3/26/98 43963.61 0 119219.5 78958.56 242141.6 42.44846 102785.4
26 3/27/98 44380.84 0 119297.7 78948.9 242627.4 42.41937 102921
27 3/28/98 44380.84 0 119297.7 78948.9 242627.4 42.41937 102921
28 3/29/98 44380.84 0 119297.7 78948.9 242627.4 42.41937 102921
29 3/30/98 40466 0 119495.4 79038.75 239000.2 42.3676 101258.6
30 3/31/98 46015.99 0 119306.6 79470.83 244793.4 42.33884 103642.7
1287278 0 3569078 2336524 7192879 3076453
</TABLE>
<TABLE>
<CAPTION>
DAILY DAILY DAILY ACCUMULATED ACCUMULATED ACCUMULATED
EXPENSES SHARES PRICE INCOME EXPENSES SHARES
0 0 0
<S> <C> <C> <C> <C> <C> <C> <C>
31335.6 54295497 20.05 102396.4 31335.6 54295497 100
31210.29 54356365 20.04 204878.4 62545.89 1.09E+08 100
31236.71 54385605 20.01 307409.7 93782.6 1.63E+08 100
31197.57 54362119 19.81 410025.2 124980.2 2.17E+08 100
30889.79 54323208 20.07 512576.9 155870 2.72E+08 100
30889.79 54323208 20.07 615128.6 186759.8 3.26E+08 100
30889.79 54323208 20.07 717680.3 217649.5 3.8E+08 100
31238.81 54308515 20.04 820602.8 248888.4 4.35E+08 100
31172.57 54264401 20.18 923846.8 280060.9 4.89E+08 100
31369.63 54274168 20.23 1026715 311430.6 5.43E+08 100
31445.27 54311401 20.29 1129545 342875.8 5.98E+08 100
31543.85 54292467 20.25 1230279 374419.7 6.52E+08 100
31543.85 54292467 20.25 1331012 405963.5 7.06E+08 100
31543.85 54292467 20.25 1431745 437507.4 7.6E+08 100
31493.69 54346503 20.39 1534517 469001.1 8.15E+08 100
31687.09 54332390 20.41 1637749 500688.2 8.69E+08 100
31729.33 54394968 20.46 1740839 532417.5 9.23E+08 100
31820.9 54395180 20.5 1844019 564238.4 9.78E+08 100
31859.83 54372753 20.58 1947031 596098.2 1.03E+09 100.0003
31859.83 54372753 20.58 2050043 627958.1 1.09E+09 100.0003
31859.83 54372753 20.58 2153055 659817.9 1.14E+09 100.0003
31925.62 54234489 20.4 2255747 691743.5 1.2E+09 100
47564.19 54501398 20.51 2358172 739307.7 1.25E+09 100
47829.63 54498634 20.46 2460003 787137.3 1.3E+09 100
47817.51 54619651 20.44 2562789 834954.8 1.36E+09 100
47805.41 54625616 20.41 2665710 882760.2 1.41E+09 100
47805.41 54625616 20.41 2768631 930565.7 1.47E+09 100
47805.41 54625616 20.41 2871552 978371.1 1.52E+09 100
47724.59 54611633 20.33 2972811 1026096 1.58E+09 100
47606.17 54646292 20.45 3076453 1073702 1.63E+09 100
1073702 54399378
</TABLE>
<TABLE>
<CAPTION>
Y
ACCOUNT Y AVERAGE
YEARS VALUE CLASS ANNUAL
<S> <C> <C> <C> <C> <C>
31-Mar-98 BLANK 3,870.60 0.00%
30-Sep-97 6 MO 3,494.70 10.76% 10.76%
31-Dec-97 QTR 3,627.11 6.71% 6.71%
31-Dec-97 YTD 3,627.11 6.71% 6.71%
31-Mar-97 1 2,885.90 34.12% 34.12%
31-Mar-95 3 2,129.78 81.74% 22.03%
31-Mar-93 5 1,865.03 107.54% 15.72%
31-Mar-88 10
2-Jan-90 INCEPT. 1,000.00 287.06% 17.83%
INCEPTION FACTOR: 8.2493
</TABLE>
<TABLE>
<CAPTION>
PRICING DATE 03/31/98 PRICING DATE 03/31/98
TOTAL INCOME FOR PERIOD 195606.7
TOTAL EXPENSES FOR PERIOD 82402.92
30 DAY YTM 1.95% AVERAGE SHARES OUTSTANDING 4066807
LAST PRICE DURING PERIOD 17.17
30 DAY YTM 1.31%
PRICE ST VARIABLE GAIN/LOSS LONG TERM EQUITY TOTAL DIV ADJUSTED DAILY DAILY DAILY ACCUMULATED
DATE INCOME INCOME INCOME INCOME FACTOR INCOME EXPENSES SHARES PRICE INCOME
03/01/98 0
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 03/02/98 1546.73 20375.19 4700.23 26622.15 23.06794 6141.18 2644.84 3872927 16.96 6141.18
2 03/03/98 1521.47 20408.67 4722.208 26652.35 23.06129 6146.38 2648.59 3903335 16.94 12287.56
3 03/04/98 1423.63 20515.3 4789.01 26727.94 23.0548 6162.07 2661.97 3917143 16.91 18449.63
4 03/05/98 1357.61 20671.02 4789.01 26817.64 23.00617 6169.71 2661.06 3924717 16.83 24619.34
5 03/06/98 1616.14 20682.12 4811.21 27109.47 23.01435 6239.07 2659.243 3941660 16.93 30858.41
6 03/07/98 1616.14 20682.12 4811.21 27109.47 23.01435 6239.07 2659.243 3941660 16.93 37097.48
7 03/08/98 1616.14 20682.12 4811.21 27109.47 23.01435 6239.07 2659.243 3941660 16.93 43336.55
8 03/09/98 1568.01 20688.72 4807.178 27063.91 23.07836 6245.91 2685.44 3963383 16.92 49582.46
9 03/10/98 1607.21 20700.83 4857.153 27165.19 23.07878 6269.39 2690.04 3986346 16.98 55851.85
10 03/11/98 1479.94 20839.28 4862.73 27181.95 23.05612 6267.1 2705.81 3999906 17.01 62118.95
11 03/12/98 1456.9 21102.08 4869.963 27428.94 23.12623 6343.28 2724.48 4032358 17.02 68462.23
12 03/13/98 1900.79 21104.42 4889.937 27895.15 23.13005 6452.16 2738.263 4049580 17.02 74914.39
13 03/14/98 1900.79 21104.42 4889.937 27895.15 23.13005 6452.16 2738.263 4049580 17.02 81366.55
14 03/15/98 1900.79 21104.42 4889.937 27895.15 23.13005 6452.16 2738.263 4049580 17.02 87818.71
15 03/16/98 1924.56 21250.24 4947.02 28121.82 23.06251 6485.6 2739.83 4056934 17.09 94304.31
16 03/17/98 2120.74 21256.06 4991.085 28367.89 23.11279 6556.61 2761.49 4089048 17.11 100860.9
17 03/18/98 2055.8 21485.23 4987.309 28528.34 23.16859 6609.61 2782.22 4119532 17.13 107470.5
18 03/19/98 2187.7 21572.79 4975.56 28736.05 23.13816 6648.99 2793.42 4129611 17.15 114119.5
19 03/20/98 2299.11 21578.4 4975.56 28853.07 23.12914 6673.47 2801.963 4144274 17.19 120793
20 03/21/98 2299.11 21578.4 4975.56 28853.07 23.12914 6673.47 2801.963 4144274 17.19 127466.5
21 03/22/98 2299.11 21578.4 4975.56 28853.07 23.12914 6673.47 2801.963 4144274 17.19 134139.9
22 03/23/98 2408.31 21579.64 4974.289 28962.24 23.05284 6676.62 2806.22 4150231 17.08 140816.6
23 03/24/98 2078.29 22393.85 4991.344 29463.48 23.0507 6791.54 2803.83 4175114 17.17 147608.1
24 03/25/98 2008.68 22696.79 4900.249 29605.72 22.92071 6785.84 2811.51 4163797 17.14 154393.9
25 03/26/98 2022.24 22881.55 5012.754 29916.54 22.89071 6848.11 2808.94 4168567 17.14 161242
26 03/27/98 2118.47 22876.37 5012.758 30007.6 22.84565 6855.43 2809.47 4175695 17.15 168097.5
27 03/28/98 2118.47 22876.37 5012.758 30007.6 22.84565 6855.43 2809.47 4175695 17.15 174952.9
28 03/29/98 2118.47 22876.37 5012.758 30007.6 22.84565 6855.43 2809.47 4175695 17.15 181808.3
29 03/30/98 2158.76 22905.91 5039.467 30104.14 22.91131 6897.25 2823.2 4199632 17.09 188705.6
30 03/31/98 2215.75 22898.12 5015.939 30129.81 22.90464 6901.12 2823.21 4217995 17.17 195606.7
56945.8 0 644945.2 147300.9 849192 195606.7 82402.92 4066807
</TABLE>
<TABLE>
<CAPTION>
PRICING DATE 03/31/98
TOTAL INCOME FOR PERIOD 518385.6
TOTAL EXPENSES FOR PERIOD 325688.1
B 30 DAY YTM 1.31% AVERAGE SHARES OUTSTANDING 10804297
LAST PRICE DURING PERIOD 16.33
ACCUMULATED ACCUMULATED PRICE ST VARIABLE GAIN/LOSS LONG TERM EQUITY TOTAL
EXPENSES SHARES DATE INCOME INCOME INCOME INCOME
0 0
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2644.84 3872927 1 03/02/98 1546.73 0 20375.19 4700.23 26622.15
5293.43 7776261 2 03/03/98 1521.47 0 20408.67 4722.208 26652.35
7955.4 11693404 3 03/04/98 1423.63 0 20515.3 4789.01 26727.94
10616.46 15618121 4 03/05/98 1357.61 0 20671.02 4789.01 26817.64
13275.7 19559781 5 03/06/98 1616.14 0 20682.12 4811.21 27109.47
15934.95 23501441 6 03/07/98 1616.14 0 20682.12 4811.21 27109.47
18594.19 27443100 7 03/08/98 1616.14 0 20682.12 4811.21 27109.47
21279.63 31406483 8 03/09/98 1568.01 0 20688.72 4807.178 27063.91
23969.67 35392830 9 03/10/98 1607.21 0 20700.83 4857.153 27165.19
26675.48 39392736 10 03/11/98 1479.94 0 20839.28 4862.73 27181.95
29399.96 43425093 11 03/12/98 1456.9 0 21102.08 4869.963 27428.94
32138.22 47474674 12 03/13/98 1900.79 0 21104.42 4889.937 27895.15
34876.49 51524254 13 03/14/98 1900.79 0 21104.42 4889.937 27895.15
37614.75 55573834 14 03/15/98 1900.79 0 21104.42 4889.937 27895.15
40354.58 59630769 15 03/16/98 1924.56 0 21250.24 4947.02 28121.82
43116.07 63719816 16 03/17/98 2120.74 0 21256.06 4991.085 28367.89
45898.29 67839349 17 03/18/98 2055.8 0 21485.23 4987.309 28528.34
48691.71 71968960 18 03/19/98 2187.7 0 21572.79 4975.56 28736.05
51493.67 76113234 19 03/20/98 2299.11 0 21578.4 4975.56 28853.07
54295.64 80257508 20 03/21/98 2299.11 0 21578.4 4975.56 28853.07
57097.6 84401782 21 03/22/98 2299.11 0 21578.4 4975.56 28853.07
59903.82 88552013 22 03/23/98 2408.31 0 21579.64 4974.289 28962.24
62707.65 92727127 23 03/24/98 2078.29 0 22393.85 4991.344 29463.48
65519.16 96890924 24 03/25/98 2008.68 0 22696.79 4900.249 29605.72
68328.1 1.01E+08 25 03/26/98 2022.24 0 22881.55 5012.754 29916.54
71137.57 1.05E+08 26 03/27/98 2118.47 0 22876.37 5012.758 30007.6
73947.04 1.09E+08 27 03/28/98 2118.47 0 22876.37 5012.758 30007.6
76756.51 1.14E+08 28 03/29/98 2118.47 0 22876.37 5012.758 30007.6
79579.71 1.18E+08 29 03/30/98 2158.76 0 22905.91 5039.467 30104.14
82402.92 1.22E+08 30 03/31/98 2215.75 0 22898.12 5015.939 30129.81
56945.86 0 644945.2 147300.9 849192
</TABLE>
<TABLE>
<CAPTION>
C
DIV ADJUSTED DAILY DAILY DAILY ACCUMULATED ACCUMULATED ACCUMULATED PRICE ST FIXED GAIN/ LONG TERM
FACTOR INCOME EXPENSES SHARES PRICE INCOME EXPENSES SHARES DATE INCOME LOSS INCOME
0 0 0
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
60.81009 16188.95 10344.29 10237906 16.11 16188.95 10344.29 10237906 1 3/2/98 1546.73 0 20375.19
60.66632 16169 10358.65 10297078 16.1 32357.95 20702.94 20534984 2 3/3/98 1521.47 0 20408.67
60.71103 16226.81 10414.3 10344216 16.07 48584.76 31117.24 30879200 3 3/4/98 1423.63 0 20515.3
60.84589 16317.43 10447.91 10409395 15.99 64902.19 41565.15 41288595 4 3/5/98 1357.61 0 20671.02
60.91044 16512.5 10456.79 10461895 16.09 81414.69 52021.94 51750491 5 3/6/98 1616.14 0 20682.12
60.91044 16512.5 10456.79 10461895 16.09 97927.19 62478.73 62212386 6 3/7/98 1616.14 0 20682.12
60.91044 16512.5 10456.79 10461895 16.09 114439.7 72935.52 72674282 7 3/8/98 1616.14 0 20682.12
60.85566 16469.92 10543.49 10481554 16.07 130909.6 83479.01 83155835 8 3/9/98 1568.01 0 20688.72
60.8346 16525.84 10552.16 10538598 16.12 147435.5 94031.17 93694434 9 3/10/98 1607.21 0 20700.83
60.90816 16556.03 10636.74 10597863 16.15 163991.5 104667.9 1.04E+08 10 3/11/98 1479.94 0 20839.28
60.85769 16692.62 10691.08 10642842 16.17 180684.1 115359 1.15E+08 11 3/12/98 1456.9 0 21102.08
60.88428 16983.76 10742.72 10691441 16.16 197667.9 126101.7 1.26E+08 12 3/13/98 1900.79 0 21104.42
60.88428 16983.76 10742.72 10691441 16.16 214651.6 136844.4 1.36E+08 13 3/14/98 1900.79 0 21104.42
60.88428 16983.76 10742.72 10691441 16.16 231635.4 147587.1 1.47E+08 14 3/15/98 1900.79 0 21104.42
60.98775 17150.86 10790.88 10761115 16.23 248786.2 158378 1.58E+08 15 3/16/98 1924.56 0 21250.24
61.00456 17305.7 10879.83 10826071 16.25 266091.9 169257.9 1.69E+08 16 3/17/98 2120.74 0 21256.06
61.00774 17404.5 10943.71 10881321 16.27 283496.4 180201.6 1.79E+08 17 3/18/98 2055.8 0 21485.23
61.08279 17552.78 11009.33 10936025 16.29 301049.2 191210.9 1.9E+08 18 3/19/98 2187.7 0 21572.79
61.07518 17622.06 11058.78 10978009 16.32 318671.3 202269.7 2.01E+08 19 3/20/98 2299.11 0 21578.4
61.07518 17622.06 11058.78 10978009 16.32 336293.3 213328.5 2.12E+08 20 3/21/98 2299.11 0 21578.4
1.07518 17622.06 11058.78 10978009 16.32 353915.4 224387.2 2.23E+08 21 3/22/98 2299.11 0 21578.4
61.18772 17721.33 11123.09 11051217 16.25 371636.7 235510.3 2.34E+08 22 3/23/98 2408.31 0 21579.64
61.20982 18034.55 11137.09 11102491 16.33 389671.3 246647.4 2.46E+08 23 3/24/98 2078.29 0 22393.85
61.33858 18159.73 11239.66 11158874 16.31 407831 257887.1 2.57E+08 24 3/25/98 2008.68 0 22696.79
61.35994 18356.77 11266.3 11190433 16.31 426187.8 269153.4 2.68E+08 25 3/26/98 2022.24 0 22881.55
61.40301 18425.57 11298.17 11239787 16.31 444613.4 280451.5 2.79E+08 26 3/27/98 2118.47 0 22876.37
61.40301 18425.57 11298.17 11239787 16.31 463038.9 291749.7 2.9E+08 27 3/28/98 2118.47 0 22876.37
61.40301 18425.57 11298.17 11239787 16.31 481464.5 303047.9 3.02E+08 28 3/29/98 2118.47 0 22876.37
61.29421 18452.09 11325.73 11252522 16.26 499916.6 314373.6 3.13E+08 29 3/30/98 2158.76 0 22905.91
61.29809 18469 11314.48 11305980 16.33 518385.6 325688.1 3.24E+08 30 3/31/98 2215.75 0 22898.12
518385.6 325688.1 10804297 56945.86 0 644945.2
</TABLE>
<TABLE>
<CAPTION>
EQUITY TOTAL DIV ADJUSTED DAILY DAILY DAILY ACCUMULATED ACCUMULATED ACCUMULATED
INCOME INCOME FACTOR INCOME EXPENSES SHARES PRICE INCOME EXPENSES SHARES
0 0 0 0
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
4700.23 26622.15 8.940983 2380.28 1523.03 1507667 16.08 2380.28 1523.03 1507667
4722.208 26652.35 9.151076 2438.98 1545.31 1555688 16.07 4819.26 3068.34 3063355
4789.01 26727.94 9.139842 2442.89 1569.17 1559754 16.04 7262.15 4637.51 4623109
4789.01 26817.64 9.082649 2435.75 1565.39 1556305 15.96 9697.9 6202.9 6179414
4811.21 27109.47 9.036016 2449.62 1555.47 1554478 16.06 12147.52 7758.37 7733892
4811.21 27109.47 9.036016 2449.62 1555.47 1554478 16.06 14597.14 9313.84 9288370
4811.21 27109.47 9.036016 2449.62 1555.47 1554478 16.06 17046.76 10869.31 10842847
4807.178 27063.91 9.043529 2447.53 1565.64 1560113 16.04 19494.29 12434.95 12402960
4857.153 27165.19 9.106531 2473.81 1574.57 1580078 16.1 21968.1 14009.52 13983038
4862.73 27181.95 9.086077 2469.77 1589.16 1583485 16.12 24437.87 15598.68 15566522
4869.963 27428.94 9.101272 2496.38 1597.11 1594183 16.14 26934.25 17195.79 17160706
4889.937 27895.15 9.099108 2538.21 1605.96 1600389 16.14 29472.46 18801.75 18761094
4889.937 27895.15 9.099108 2538.21 1605.96 1600389 16.14 32010.67 20407.71 20361483
4889.937 27895.15 9.099108 2538.21 1605.96 1600389 16.14 34548.88 22013.67 21961871
4947.02 28121.82 9.095565 2557.84 1610.8 1607461 16.2 37106.72 23624.47 23569333
4991.085 28367.89 9.067296 2572.2 1619.52 1611690 16.22 39678.92 25243.99 25181023
4987.309 28528.34 9.042372 2579.64 1624.05 1615387 16.24 42258.56 26868.04 26796410
4975.56 28736.05 9.023193 2592.91 1628.72 1618077 16.26 44851.47 28496.76 28414487
4975.56 28853.07 9.06605 2615.83 1638.06 1632204 16.29 47467.3 30134.82 30046691
4975.56 28853.07 9.06605 2615.83 1638.06 1632204 16.29 50083.13 31772.88 31678895
4975.56 28853.07 9.06605 2615.83 1638.06 1632204 16.29 52698.96 33410.94 33311100
4974.289 28962.24 9.059783 2623.92 1648.78 1638929 16.22 55322.88 35059.72 34950028
4991.344 29463.48 9.07186 2672.89 1649.91 1648129 16.3 57995.77 36709.63 36598157
4900.249 29605.72 9.085921 2689.95 1665.31 1655587 16.28 60685.72 38374.94 38253744
5012.754 29916.54 9.108051 2724.81 1670.79 1663742 16.28 63410.53 40045.73 39917487
5012.758 30007.6 9.100887 2730.96 1675.673 1668594 16.28 66141.49 41721.4 41586080
5012.758 30007.6 9.100887 2730.96 1675.673 1668594 16.28 68872.45 43397.08 43254674
5012.758 30007.6 9.100887 2730.96 1675.673 1668594 16.28 71603.41 45072.75 44923267
5039.467 30104.14 9.162797 2758.38 1686.68 1684836 16.23 74361.79 46759.43 46608104
5015.939 30129.81 9.196337 2770.84 1694.77 1698934 16.3 77132.63 48454.2 48307038
147300.9 849192 77132.63 48454.2 1610235
</TABLE>
<TABLE>
<CAPTION>
PRICING DATE 03/31/98 PRICING DATE 3/31/98
y TOTAL INCOME FOR PERIOD 518385.6
TOTAL EXPENSES FOR PERIOD 325688.1
30 DAY YTM 1.31% AVERAGE SHARES OUTSTANDING 10804297
LAST PRICE DURING PERIOD 16.39
PRICE ST FIXED GAIN/ LONG TERM EQUITY TOTAL
DATE INCOME LOSS INCOME INCOME INCOME
<S> <C> <C> <C> <C> <C> <C> <C>
1 3/2/98 1546.73 0 20375.19 4700.23 26622.15
2 3/3/98 1521.47 0 20408.67 4722.208 26652.35
3 3/4/98 1423.63 0 20515.3 4789.01 26727.94
4 3/5/98 1357.61 0 20671.02 4789.01 26817.64
5 3/6/98 1616.14 0 20682.12 4811.21 27109.47
6 3/7/98 1616.14 0 20682.12 4811.21 27109.47
7 3/8/98 1616.14 0 20682.12 4811.21 27109.47
8 3/9/98 1568.01 0 20688.72 4807.178 27063.91
9 3/10/98 1607.21 0 20700.83 4857.153 27165.19
10 3/11/98 1479.94 0 20839.28 4862.73 27181.95
11 3/12/98 1456.9 0 21102.08 4869.963 27428.94
12 3/13/98 1900.79 0 21104.42 4889.937 27895.15
13 3/14/98 1900.79 0 21104.42 4889.937 27895.15
14 3/15/98 1900.79 0 21104.42 4889.937 27895.15
15 3/16/98 1924.56 0 21250.24 4947.02 28121.82
16 3/17/98 2120.74 0 21256.06 4991.085 28367.89
17 3/18/98 2055.8 0 21485.23 4987.309 28528.34
18 3/19/98 2187.7 0 21572.79 4975.56 28736.05
19 3/20/98 2299.11 0 21578.4 4975.56 28853.07
20 3/21/98 2299.11 0 21578.4 4975.56 28853.07
21 3/22/98 2299.11 0 21578.4 4975.56 28853.07
22 3/23/98 2408.31 0 21579.64 4974.289 28962.24
23 3/24/98 2078.29 0 22393.85 4991.344 29463.48
24 3/25/98 2008.68 0 22696.79 4900.249 29605.72
25 3/26/98 2022.24 0 22881.55 5012.754 29916.54
26 3/27/98 2118.47 0 22876.37 5012.758 30007.6
27 3/28/98 2118.47 0 22876.37 5012.758 30007.6
28 3/29/98 2118.47 0 22876.37 5012.758 30007.6
29 3/30/98 2158.76 0 22905.91 5039.467 30104.14
30 3/31/98 2215.75 0 22898.12 5015.939 30129.81
56945.86 0 644945.2 147300.9 849192
</TABLE>
<TABLE>
<CAPTION>
DIV ADJUSTED DAILY DAILY DAILY ACCUMULATED ACCUMULATED ACCUMULATED
FACTOR INCOME EXPENSES SHARES PRICE INCOME EXPENSES SHARES
0 0 0
<S> <C> <C> <C> <C> <C> <C> <C> <C>
7.180989 1911.73 690.03 1202805 16.19 1911.73 690.03 1202805 100
7.121317 1898 685.56 1202513 16.18 3809.73 1375.59 2405318 100
7.09432 1896.17 686.34 1202519 16.15 5705.9 2061.93 3607837 100
7.065283 1894.74 684.47 1202441 16.07 7600.64 2746.4 4810278 100
7.03919 1908.29 681.53671202735 16.17 9508.93 3427.937 6013013 100
7.03919 1908.29 681.53671202735 16.17 11417.22 4109.473 7215748 100
7.03919 1908.29 681.53671202735 16.17 13325.51 4791.01 8418484 100
7.02245 1900.55 684.61 1203116 16.16 15226.06 5475.62 9621599 100
6.980093 1896.16 681.27 1202751 16.21 17122.22 6156.89 10824350 100
6.94964 1889.05 682.51 1202751 16.24 19011.27 6839.4 12027101 100
6.914801 1896.66 681.93 1202763 16.25 20907.93 7521.33 13229864 100
6.886563 1921.02 681.94331202763 16.25 22828.95 8203.27314432627 100
6.886563 1921.02 681.94331202763 16.25 24749.97 8885.21715635390 100
6.886563 1921.02 681.94331202763 16.25 26670.99 9567.16 16838153 100
6.854175 1927.52 680.62 1202766 16.32 28598.51 10247.78 18040919 100
6.815349 1933.37 680.89 1202806 16.34 30531.88 10928.67 19243725 100
6.781294 1934.59 680.72 1202806 16.36 32466.47 11609.39 20446531 100
6.755858 1941.37 681.15 1202806 16.38 34407.84 12290.54 21649337 100
6.729635 1941.71 680.78331202851 16.41 36349.55 12971.32 22852189 100
6.729635 1941.71 680.78331202851 16.41 38291.26 13652.11 24055040 100
6.729635 1941.71 680.78331202851 16.41 40232.97 14332.89 25257892 100
6.699659 1940.37 680.49 1203159 16.3 42173.34 15013.38 26461051 100
6.667617 1964.51 677.23 1205488 16.38 44137.85 15690.61 27666539 100
6.654791 1970.2 680.52 1206711 16.36 46108.05 16371.13 28873250 100
6.641295 1986.85 679.84 1207214 16.36 48094.9 17050.97 30080464 100
6.650454 1995.64 682.08331213326 16.37 50090.54 17733.05 31293790 100
6.650454 1995.64 682.08331213326 16.37 52086.18 18415.14 32507116 100
6.650454 1995.64 682.08331213326 16.37 54081.82 19097.22 33720443 100
6.631682 1996.41 681.94 1213326 16.31 56078.23 19779.16 34933769 100
6.600929 1988.85 678.63 1213326 16.39 58067.08 20457.79 36147095 100
58067.08 20457.79 1204903
</TABLE>
<TABLE>
<CAPTION>
$952.50
A NAV A A
TIME ACCOUNT A AVERAGE A/C VALUE A AVERAGE
YEARS PERIOD VALUE CLASS ANNUAL W/LOAD CLASS ANNNUAL
<S> <C> <C> <C> <C> <C> <C> <C>
31-Mar-98 Blank 1,809.16 0.00% 952.5 -4.75% -4.75%
30-Sep-97 6 MO 1,684.55 7.40% 7.40% 1,022.96 2.30% 2.30%
31-Dec-97 QTR 1,730.20 4.56% 4.56% 995.97 -0.40% -0.40%
31-Dec-97 YTD 1,730.20 4.56% 4.56% 995.97 -0.40% -0.40%
31-Mar-97 1 1,454.33 24.40% 24.40% 1,184.90 18.49% 18.49%
31-Mar-95 3 1,037.32 74.41% 20.37% 1,661.23 66.12% 18.43%
31-Mar-93 5
31-Mar-88 10
17-Jan-95 INCEPT. 1,000.00 80.92% 20.32% 1,723.23 72.32% 18.50%
INCEPTION FACTOR: 3.2055
</TABLE>
<TABLE>
<CAPTION>
$1,000
B B NAV LEVEL VALUE OF VALUE OF B
TIME ACCOUNT B AVERAGE LOAD CLASS B CLASS B INI B AVERAGE
YEARS PERIOD VALUE CLASS ANNNUAL COMP INVESTMENT INVESTMENT CUMULATIVE ANNUAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
31-Mar-98 BLANK 1,792.66 0.00% 50 1,000.00 1,000.00 0.00%
30-Sep-97 6 MO 1,676.80 6.91% 6.91% 50 1,069.10 1,056.96 1.91% 1.91%
31-Dec-97 QTR 1,718.53 4.31% 4.31% 50 1,043.14 1,040.13 -0.69% -0.69%
31-Dec-97 YTD 1,718.53 4.31% 4.31% 50 1,043.14 1,040.13 -0.69% -0.69%
31-Mar-97 1 1,452.30 23.44% 23.44% 50 1,234.36 1,204.28 18.44% 18.44%
31-Mar-95 3 1,049.53 70.81% 19.54% 30 1,708.06 1,534.77 67.81% 18.83%
31-Mar-93 5
31-Mar-88 10
6-Jan-95 INCEPT. 1,000.00 79.27% 19.77% 30 1,792.66 1,583.90 76.27% 19.15%
INCEPTION FACTOR: 3.2356
</TABLE>
<TABLE>
<CAPTION>
$1,000
C C NAV LEVEL VALUE OF VALUE OF C
ACCOUNT C AVERAGE LOAD CLASS C CLASS C INI C. AVERAGE
YEARS VALUE CLASS ANNUAL COMP INVESTMENT INVESTMENT CUMULATIVE ANNUAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
31-Mar-98 BLANK 1,727.40 0.00% 10 1,000.00 1,000.00 0.00%
30-Sep-97 6 MO 1,615.55 6.92% 6.92% 10 1,069.23 1,057.07 5.92% 5.92%
31-Dec-97 QTR 1,656.89 4.26% 4.26% 10 1,042.55 1,039.54 3.26% 3.26%
31-Dec-97 YTD 1,656.89 4.26% 4.26% 10 1,042.55 1,039.54 3.26% 3.26%
31-Mar-97 1 1,398.86 23.49% 23.49% 10 1,234.86 1,204.73 22.49% 22.49%
31-Mar-95 3 1,012.60 70.59% 19.49% 1,705.91 1,531.95 70.59% 19.49%
31-Mar-93 5
31-Mar-88 10
3-Mar-95 INCEPT. 1,000.00 72.74% 19.40% 0 1,727.40 1,524.79 72.74% 19.40%
INCEPTION FACTOR: 3.0822
</TABLE>
<TABLE>
<CAPTION>
Y
ACCOUNT Y AVERAGE
YEARS VALUE CLASS ANNNUAL
<S> <C> <C> <C> <C>
31-Mar-98 BLANK 1,989.31 0.00%
30-Sep-97 6 MO 1,850.37 7.51% 7.51%
31-Dec-97 QTR 1,902.58 4.56% 4.56%
31-Dec-97 YTD 1,902.58 4.56% 4.56%
31-Mar-97 1 1,594.90 24.73% 24.73%
31-Mar-95 3 1,130.89 75.91% 20.71%
31-Mar-93 5
31-Mar-88 10
2-Nov-93 INCEPT. 1,000.00 98.93% 16.86%
INCEPTION FACTOR: 4.4137
</TABLE>
<TABLE>
<CAPTION>
PRICING DATE 3/31/98
TOTAL INCOME FOR PERIOD 118514.8
TOTAL EXPENSES FOR PERIOD 36223.64
30 DAY YTM 3.30% AVERAGE SHARES OUTSTANDING 1719371
LAST PRICE DURING PERIOD 17.53
PRICE ST VARIABLE GAIN/LOSS LONG TERM EQUITY TOTAL DIV ADJUSTED
DATE INCOME INCOME INCOME INCOME FACTOR INCOME
3/1/98
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 3/2/98 1348.21 11563.95 17932.49 30844.65 12.50546 3857.27
2 3/3/98 1519.96 11687.54 17932.49 31139.99 12.4998 3892.44
3 3/4/98 920.57 12385.42 17997.01 31303 12.53648 3924.29
4 3/5/98 964.31 12477.71 17930.5 31372.52 12.51898 3927.52
5 3/6/98 986.82 12414.25 17910.55 31311.62 12.51878 3919.83
6 3/7/98 986.82 12414.25 17946.25 31347.32 12.51878 3924.3
7 3/8/98 986.82 12414.25 17978.3 31379.37 12.51878 3928.31
8 3/9/98 1068.23 12241.08 17965.42 31274.73 12.51756 3914.83
9 3/10/98 1264.31 12186.32 18012.36 31462.99 12.51314 3937.01
10 3/11/98 1290.51 12182.32 18026.44 31499.27 12.5237 3944.88
11 3/12/98 1349.86 12126.67 18062 31538.53 12.51221 3946.17
12 3/13/98 1394.58 12099.58 18075.12 31569.28 12.49723 3945.29
13 3/14/98 1394.58 12099.58 18075.12 31569.28 12.49723 3945.29
14 3/15/98 1394.58 12099.58 18075.12 31569.28 12.49723 3945.29
15 3/16/98 1189.45 12434.72 18091.64 31715.81 12.49822 3963.91
16 3/17/98 1513.97 12033.82 18124.04 31671.83 12.50571 3960.79
17 3/18/98 1597.67 12974.37 18124.04 32696.08 12.51503 4091.92
18 3/19/98 873.19 12287.25 18121.52 31281.96 12.52409 3917.78
19 3/20/98 920.44 12754.79 18068.1 31743.33 12.50792 3970.43
20 3/21/98 920.44 12754.79 18068.1 31743.33 12.50792 3970.43
21 3/22/98 920.44 12754.79 18068.1 31743.33 12.50792 3970.43
22 3/23/98 288.76 12792.89 17945.31 31026.96 12.51659 3883.52
23 3/24/98 311.46 13007.19 18106.47 31425.12 12.51807 3933.82
24 3/25/98 406.71 13071.9 17947.4 31426.01 12.51778 3933.84
25 3/26/98 525.07 13113.63 18041.03 31679.73 12.51664 3965.24
26 3/27/98 767.77 12947.06 18193.39 31908.22 12.5397 4001.19
27 3/28/98 767.77 12947.06 18193.39 31908.22 12.5397 4001.19
28 3/29/98 767.77 12947.06 18193.39 31908.22 12.5397 4001.19
29 3/30/98 691.6 12986.62 18186.47 31864.69 12.52382 3990.68
30 3/31/98 943.34 12838.84 18241.43 32023.61 12.5085 4005.67
28927.8 0 375039.3 541633 946948.3 118514.8
</TABLE>
<TABLE>
<CAPTION>
DAILY DAILY DAILY ACCUMULATED ACCUMULATED ACCUMULATED
EXPENSES SHARES PRICE INCOME EXPENSES SHARES
0 0 0
<S> <C> <C> <C> <C> <C>
1258.03 1685156 17.17 3857.27 1258.03 1685156
1259.57 1689268 17.22 7749.71 2517.6 3374424
1267.28 1698212 17.18 11674 3784.88 5072636
1266.26 1698477 17.12 15601.52 5051.14 6771112
1264.797 1699992 17.24 19521.35 6315.937 8471104
1264.797 1699992 17.24 23445.65 7580.73310171096
1264.797 1699992 17.24 27373.96 8845.53 11871088
1270.49 1700977 17.23 31288.79 10116.02 13572066
1270.3 1702116 17.33 35225.8 11386.32 15274182
1276.39 1706999 17.35 39170.68 12662.71 16981181
1278.09 1708236 17.35 43116.85 13940.8 18689417
1277.92 1709956 17.34 47062.14 15218.72 20399372
1277.92 1709956 17.34 51007.43 16496.64 22109328
1277.92 1709956 17.34 54952.72 17774.56 23819284
1278.85 1712693 17.4 58916.63 19053.41 25531977
1283.5 1715651 17.38 62877.42 20336.91 27247628
1284.31 1719473 17.45 66969.34 21621.22 28967101
1289.64 1724091 17.52 70887.12 22910.86 30691192
1101.687 1725096 17.6 74857.55 24012.55 32416288
1101.687 1725096 17.6 78827.98 25114.23 34141383
1101.687 1725096 17.6 82798.41 26215.92 35866479
1106.52 1728678 17.49 86681.93 27322.44 37595157
1104.03 1742544 17.59 90615.75 28426.47 39337701
1113.7 1744822 17.55 94549.59 29540.17 41082524
1113.21 1745299 17.54 98514.83 30653.38 42827823
1114.843 1750619 17.53 102516 31768.22 44578442
1114.843 1750619 17.53 106517.2 32883.07 46329062
1114.843 1750619 17.53 110518.4 33997.91 48079681
1114.42 1751080 17.46 114509.1 35112.33 49830761
1111.31 1750356 17.53 118514.8 36223.64 51581117
36223.64 1719371
</TABLE>
<TABLE>
<CAPTION>
$952.50
A NAV A A
TIME ACCOUNT A AVERAGE A/C VALUE A AVERAGE
YEARS PERIOD VALUE CLASS ANNNUAL W/LOAD CLASS ANNNUAL
<S> <C> <C> <C> <C> <C> <C> <C>
31-Mar-98 Blank 1,799.61 0.00% 952.5 -4.75% -4.75%
30-Sep-97 6 MO 1,669.55 7.79% 7.79% 1,026.70 2.67% 2.67%
31-Dec-97 QTR 1,703.80 5.62% 5.62% 1,006.06 0.61% 0.61%
31-Dec-97 YTD 1,703.80 5.62% 5.62% 1,006.06 0.61% 0.61%
31-Mar-97 1 1,405.75 28.02% 28.02% 1,219.37 21.94% 21.94%
31-Mar-95 3 1,059.54 69.85% 19.31% 1,617.81 61.78% 17.39%
31-Mar-93 5
31-Mar-88 10
3-Jan-95 INCEPT. 1,000.00 79.96% 19.86% 1,714.13 71.41% 18.07%
INCEPTION FACTOR: 3.2438
</TABLE>
<TABLE>
<CAPTION>
PRICING DATE 3/31/98
TOTAL INCOME FOR PERIOD 636542.1
TOTAL EXPENSES FOR PERIOD 288532.3
30 DAY YTM 2.72% AVERAGE SHARES OUTSTANDING 9293263
LAST PRICE DURING PERIOD 16.61
PRICE ST VARIABLE GAIN/LOSS LONG TERM EQUITY TOTAL DIV ADJUSTED
DATE INCOME INCOME INCOME INCOME FACTOR INCOME
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 3/2/98 1348.21 0 11563.95 17932.49 30844.65 66.88603 20630.76
2 3/3/98 1519.96 0 11687.54 17932.49 31139.99 66.95532 20849.88
3 3/4/98 920.57 0 12385.42 17997.01 31303 66.94426 20955.56
4 3/5/98 964.31 0 12477.71 17930.5 31372.52 66.99156 21016.94
5 3/6/98 986.82 0 12414.25 17910.55 31311.62 66.98717 20974.77
6 3/7/98 986.82 0 12414.25 17946.25 31347.32 66.98717 20998.68
7 3/8/98 986.82 0 12414.25 17978.3 31379.37 66.98717 21020.15
8 3/9/98 1068.23 0 12241.08 17965.42 31274.73 67.00381 20955.26
9 3/10/98 1264.31 0 12186.32 18012.36 31462.99 67.03513 21091.26
10 3/11/98 1290.51 0 12182.32 18026.44 31499.27 67.06573 21125.22
11 3/12/98 1349.86 0 12126.67 18062 31538.53 67.0945 21160.62
12 3/13/98 1394.58 0 12099.58 18075.12 31569.28 67.1636 21203.07
13 3/14/98 1394.58 0 12099.58 18075.12 31569.28 67.1636 21203.07
14 3/15/98 1394.58 0 12099.58 18075.12 31569.28 67.1636 21203.07
15 3/16/98 1189.45 0 12434.72 18091.64 31715.81 67.19576 21311.68
16 3/17/98 1513.97 0 12033.82 18124.04 31671.83 67.21276 21287.51
17 3/18/98 1597.67 0 12974.37 18124.04 32696.08 67.22404 21979.63
18 3/19/98 873.19 0 12287.25 18121.52 31281.96 67.25462 21038.56
19 3/20/98 920.44 0 12754.79 18068.1 31743.33 67.32098 21369.92
20 3/21/98 920.44 0 12754.79 18068.1 31743.33 67.32098 21369.92
21 3/22/98 920.44 0 12754.79 18068.1 31743.33 67.32098 21369.92
22 3/23/98 288.76 0 12792.89 17945.31 31026.96 67.33629 20892.4
23 3/24/98 311.46 0 13007.19 18106.47 31425.12 67.44129 21193.51
24 3/25/98 406.71 0 13071.9 17947.4 31426.01 67.47502 21204.71
25 3/26/98 525.07 0 13113.63 18041.03 31679.73 67.48453 21378.92
26 3/27/98 767.77 0 12947.06 18193.39 31908.22 67.4856 21533.45
27 3/28/98 767.77 0 12947.06 18193.39 31908.22 67.4856 21533.45
28 3/29/98 767.77 0 12947.06 18193.39 31908.22 67.4856 21533.45
29 3/30/98 691.6 0 12986.62 18186.47 31864.69 67.53048 21518.38
30 3/31/98 943.34 0 12838.84 18241.43 32023.61 67.57006 21638.37
30276.01 0 375039.3 541633 946948.3 636542.1
</TABLE>
<TABLE>
<CAPTION>
DAILY DAILY DAILY ACCUMULATED ACCUMULATED ACCUMULATED
EXPENSES SHARES PRICE INCOME EXPENSES SHARES
0 0 0
<S> <C> <C> <C> <C> <C>
9750.07 9071929 16.24 20630.76 9750.07 9071929
9772.55 9107820 16.29 41480.64 19522.62 18179749
9819.39 9127872 16.25 62436.2 29342.01 27307621
9822.02 9148709 16.2 83453.14 39164.03 36456329
9813.463 9156579 16.31 104427.9 48977.4 45612909
9813.463 9156579 16.31 125426.6 58790.96 54769488
9813.463 9156579 16.31 146446.7 68604.42 63926067
9868.81 9165591 16.3 167402 78473.23 73091658
9874.7 9179443 16.4 188493.3 88347.93 82271101
9928.42 9202402 16.42 209618.5 98276.35 91473503
9956.47 9221665 16.42 230779.1 108232.8 1.01E+08
9976.533 9251730 16.4 251982.2 118209.4 1.1E+08
9976.533 9251730 16.4 273185.2 128185.9 1.19E+08
9976.533 9251730 16.4 294388.3 138162.4 1.28E+08
9993.65 9270816 16.46 315700 148156.1 1.38E+08
10034.65 9283807 16.44 336987.5 158190.7 1.47E+08
10035.58 9299301 16.51 358967.1 168226.3 1.56E+08
10080.29 9321963 16.58 380005.7 178306.6 1.66E+08
9102.637 9348853 16.64 401375.6 187409.2 1.75E+08
9102.637 9348853 16.64 422745.5 196511.9 1.84E+08
9102.637 9348853 16.64 444115.5 205614.5 1.94E+08
9149.9 9364488 16.57 465007.9 214764.4 2.03E+08
9137.68 9436660 16.66 486201.4 223902.1 2.12E+08
9233.01 9454152 16.63 507406.1 233135.1 2.22E+08
9232.02 9459125 16.62 528785 242367.1 2.31E+08
9232.48 9470854 16.61 550318.4 251599.6 2.41E+08
9232.48 9470854 16.61 571851.9 260832.1 2.5E+08
9232.48 9470854 16.61 593385.3 270064.6 2.6E+08
9239.15 9492322 16.55 614903.7 279303.7 2.69E+08
9228.6 9505782 16.61 636542.1 288532.3 2.79E+08
288532.3 9293263
</TABLE>
<TABLE>
<CAPTION>
$1,000
B B NAV LEVEL VALUE OF VALUE OF B
TIME ACCOUNT B AVERAGE LOAD CLASS B CLASS B INIT B AVERAGE
YEARS PERIOD VALUE CLASS ANNNUAL COMP INVESTMENT INVESTMENT CUMULATIVE ANNUAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
31-Mar-98 Blank 1,755.63 0.00% 50 1,000.00 1,000.00 0.00%
30-Sep97 6 MO 1,635.16 7.37% 7.37% 50 1,073.68 1,041.38 2.37% 2.37%
31-Dec-97 QTR 1,665.70 5.40% 5.40% 50 1,053.99 1,048.61 0.40% 0.40%
31-Dec-97 YTD 1,665.70 5.40% 5.40% 50 1,053.99 1,048.61 0.40% 0.40%
31-Mar-97 1 1,381.71 27.06% 27.06% 50 1,270.63 1,215.07 22.06% 22.06%
31-Mar-95 3 1,057.76 65.98% 18.40% 30 1,659.77 1,489.69 62.98% 17.68%
31-Mar-93 5
31-Mar-88 10
3-Jan-95 INCEPT. 1,000.00 75.56% 18.95% 30 1,755.63 1,559.62 72.56% 18.32%
INCEPTION FACTOR: 3.2438
</TABLE>
<TABLE>
<CAPTION>
PRICING DATE 3/31/98
TOTAL INCOME FOR PERIOD 11019.52
TOTAL EXPENSES FOR PERIOD 4986.97
30 DAY YTM 2.72% AVERAGE SHARES OUTSTANDING 160516.2
LAST PRICE DURING PERIOD 16.65
PRICE ST FIXED GAIN/LOSS LONG TERM EQUITY TOTAL DIV ADJUSTED
DATE INCOME INCOME INCOME INCOME FACTOR INCOME
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 3/2/98 1348.21 0 11563.95 17932.49 30844.65 1.139119 351.36
2 3/3/98 1519.96 0 11687.54 17932.49 31139.99 1.138733 354.6
3 3/4/98 920.57 0 12385.42 17997.01 31303 1.151275 360.38
4 3/5/98 964.31 0 12477.71 17930.5 31372.52 1.149465 360.62
5 3/6/98 986.82 0 12414.25 17910.55 31311.62 1.158747 362.82
6 3/7/98 986.82 0 12414.25 17946.25 31347.32 1.158747 363.24
7 3/8/98 986.82 0 12414.25 17978.3 31379.37 1.158747 363.61
8 3/9/98 1068.23 0 12241.08 17965.42 31274.73 1.155229 361.29
9 3/10/98 1264.31 0 12186.32 18012.36 31462.99 1.154025 363.09
10 3/11/98 1290.51 0 12182.32 18026.44 31499.27 1.151671 362.77
11 3/12/98 1349.86 0 12126.67 18062 31538.53 1.157733 365.13
12 3/13/98 1394.58 0 12099.58 18075.12 31569.28 1.155218 364.69
13 3/14/98 1394.58 0 12099.58 18075.12 31569.28 1.155218 364.69
14 3/15/98 1394.58 0 12099.58 18075.12 31569.28 1.155218 364.69
15 3/16/98 1189.45 0 12434.72 18091.64 31715.81 1.153392 365.81
16 3/17/98 1513.97 0 12033.82 18124.04 31671.83 1.152114 364.9
17 3/18/98 1597.67 0 12974.37 18124.04 32696.08 1.150497 376.17
18 3/19/98 873.19 0 12287.25 18121.52 31281.96 1.148222 359.19
19 3/20/98 920.44 0 12754.79 18068.1 31743.33 1.160462 368.37
20 3/21/98 920.44 0 12754.79 18068.1 31743.33 1.160462 368.37
21 3/22/98 920.44 0 12754.79 18068.1 31743.33 1.160462 368.37
22 3/23/98 288.76 0 12792.89 17945.31 31026.96 1.166879 362.05
23 3/24/98 311.46 0 13007.19 18106.47 31425.12 1.187829 373.28
24 3/25/98 406.71 0 13071.9 17947.4 31426.01 1.186476 372.86
25 3/26/98 525.07 0 13113.63 18041.03 31679.73 1.192418 377.75
26 3/27/98 767.77 0 12947.06 18193.39 31908.22 1.190973 380.02
27 3/28/98 767.77 0 12947.06 18193.39 31908.22 1.190973 380.02
28 3/29/98 767.77 0 12947.06 18193.39 31908.22 1.190973 380.02
29 3/30/98 691.6 0 12986.62 18186.47 31864.69 1.18907 378.89
- -1 2/28/98 943.34 0 12838.84 18241.43 32023.61 1.188082 380.47
30276.01 0 375039.3 541633 946948.3 11019.52
</TABLE>
<TABLE>
<CAPTION>
DAILY DAILY DAILY ACCUMULATED ACCUMULATED ACCUMULATED
EXPENSES SHARES PRICE INCOME EXPENSES SHARES
0 0 0 0
<S> <C> <C> <C> <C> <C>
164.21 154143.7 16.28 351.36 164.21 154143.7
166.31 154539.9 16.33 705.96 330.52 308683.5
168.11 156611.9 16.29 1066.34 498.63 465295.4
168.68 156611.9 16.24 1426.96 667.31 621907.3
169.19 158023 16.35 1789.78 836.5 779930.3
169.19 158023 16.35 2153.02 1005.69 937953.4
169.19 158023 16.35 2516.63 1174.88 1095976
170.38 157659.5 16.34 2877.92 1345.26 1253636
170.11 157659.5 16.44 3241.01 1515.37 1411295
170.67 157659.5 16.46 3603.78 1686.04 1568955
171.46 158753.1 16.46 3968.91 1857.5 1727708
171.8233 158761 16.44 4333.6 2029.323 1886469
171.8233 158761 16.44 4698.29 2201.147 2045230
171.8233 158761 16.44 5062.98 2372.97 2203991
171.69 158761 16.5 5428.79 2544.66 2362752
172.1 158767 16.48 5793.69 2716.76 2521519
171.86 158782.1 16.55 6169.86 2888.62 2680301
172.28 158782.1 16.62 6529.05 3060.9 2839083
156.2033 160779 16.68 6897.42 3217.103 2999862
156.2033 160779 16.68 7265.79 3373.307 3160641
156.2033 160779 16.68 7634.16 3529.51 3321420
158.17 161901 16.61 7996.21 3687.68 3483321
159.73 165817.3 16.7 8369.49 3847.41 3649139
162.49 165853 16.67 8742.35 4009.9 3814992
162.75 166748 16.66 9120.1 4172.65 3981740
163.0333 166749.6 16.65 9500.12 4335.683 4148489
163.0333 166749.6 16.65 9880.14 4498.717 4315239
163.0333 166749.6 16.65 10260.16 4661.75 4481988
162.85 166749.6 16.59 10639.05 4824.6 4648738
162.37 166749.6 16.65 11019.52 4986.97 4815487
4986.97 160516.2
</TABLE>
<TABLE>
<CAPTION>
$1,000
C C NAV LEVEL VALUE OF VALUE OF C
ACCOUNT C AVERAGE LOAD CLASS C CLASS C INI C. AVERAGE
YEARS VALUE CLASS ANNNUAL COMP INVESTMENT INVESTMENT CUMULATIVE ANNUAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
31-Mar-98 BLANK 1,756.73 0.00% 10 1,000.00 1,000.00 0.00%
30-Sep-97 6 MO 1,635.42 7.42% 7.42% 10 1,074.18 1,041.93 6.42% 6.42%
31-Dec-97 QTR 1,665.91 5.45% 5.45% 10 1,054.52 1,049.15 4.45% 4.45%
31-Dec-97 YTD 1,665.91 5.45% 5.45% 10 1,054.52 1,049.15 4.45% 4.45%
31-Mar-97 1 1,382.40 27.08% 27.08% 10 1,270.78 1,215.33 26.08% 26.08%
31-Mar-95 3 1,057.76 66.08% 18.42% 1,660.81 1,491.94 66.08% 18.42%
31-Mar-93 5
31-Mar-88 10
3-Jan-95 INCEPT. 1,000.00 75.67% 18.97% 0 1,756.73 1,563.38 75.67% 18.97%
INCEPTION FACTOR: 3.2438
</TABLE>
<TABLE>
<CAPTION>
PRICING DATE 3/31/98
TOTAL INCOME FOR PERIOD 180871.9
TOTAL EXPENSES FOR PERIOD 46416.73
30 DAY YTM 3.71% AVERAGE SHARES OUTSTANDING 2622633
LAST PRICE DURING PERIOD 16.7
PRICE ST FIXED ZERO COUPON LONG TERM EQUITY TOTAL DIV ADJUSTED
DATE INCOME AND DIV INC INCOME INCOME INCOME FACTOR INCOME
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 3/2/98 1348.21 0 11563.95 17932.49 30844.65 19.46939 6005.27
2 3/3/98 1519.96 0 11687.54 17932.49 31139.99 19.40614 6043.07
3 3/4/98 920.57 0 12385.42 17997.01 31303 19.36799 6062.76
4 3/5/98 964.31 0 12477.71 17930.5 31372.52 19.33999 6067.44
5 3/6/98 986.82 0 12414.25 17910.55 31311.62 19.3353 6054.2
6 3/7/98 986.82 0 12414.25 17946.25 31347.32 19.3353 6061.1
7 3/8/98 986.82 0 12414.25 17978.3 31379.37 19.3353 6067.3
8 3/9/98 1068.23 0 12241.08 17965.42 31274.73 19.3234 6043.34
9 3/10/98 1264.31 0 12186.32 18012.36 31462.99 19.2977 6071.63
10 3/11/98 1290.51 0 12182.32 18026.44 31499.27 19.25889 6066.41
11 3/12/98 1349.86 0 12126.67 18062 31538.53 19.23556 6066.61
12 3/13/98 1394.58 0 12099.58 18075.12 31569.28 19.18394 6056.23
13 3/14/98 1394.58 0 12099.58 18075.12 31569.28 19.18394 6056.23
14 3/15/98 1394.58 0 12099.58 18075.12 31569.28 19.18394 6056.23
15 3/16/98 1189.45 0 12434.72 18091.64 31715.81 19.15264 6074.41
16 3/17/98 1513.97 0 12033.82 18124.04 31671.83 19.12942 6058.64
17 3/18/98 1597.67 0 12974.37 18124.04 32696.08 19.11043 6248.36
18 3/19/98 873.19 0 12287.25 18121.52 31281.96 19.07307 5966.43
19 3/20/98 920.44 0 12754.79 18068.1 31743.33 19.01063 6034.61
20 3/21/98 920.44 0 12754.79 18068.1 31743.33 19.01063 6034.61
21 3/22/98 920.44 0 12754.79 18068.1 31743.33 19.01063 6034.61
22 3/23/98 288.76 0 12792.89 17945.31 31026.96 18.98023 5888.99
23 3/24/98 311.46 0 13007.19 18106.47 31425.12 18.85282 5924.52
24 3/25/98 406.71 0 13071.9 17947.4 31426.01 18.82073 5914.6
25 3/26/98 525.07 0 13113.63 18041.03 31679.73 18.80641 5957.82
26 3/27/98 767.77 0 12947.06 18193.39 31908.22 18.78373 5993.55
27 3/28/98 767.77 0 12947.06 18193.39 31908.22 18.78373 5993.55
28 3/29/98 767.77 0 12947.06 18193.39 31908.22 18.78373 5993.55
29 3/30/98 691.6 0 12986.62 18186.47 31864.69 18.75663 5976.74
30 3/31/98 943.34 0 12838.84 18241.43 32023.61 18.73336 5999.1
30276.01 0 375039.3 541633 946948.3 180871.9
</TABLE>
<TABLE>
<CAPTION>
DAILY DAILY DAILY ACCUMULATED ACCUMULATED ACCUMULATED
EXPENSES SHARES PRICE INCOME EXPENSES SHARES
0 0 0
<S> <C> <C> <C> <C> <C> <C>
1665.8 2622202 16.35 6005.27 1665.8 2622202 100
1662.59 2621234 16.41 12048.34 3328.39 5243436 100
1664.73 2622201 16.37 18111.1 4993.12 7865637 100
1662.23 2622463 16.32 24178.54 6655.35 10488100 100
1660.46 2624189 16.43 30232.74 8315.81 13112289 100
1660.46 2624189 16.43 36293.84 9976.27 15736478 100
1660.46 2624189 16.43 42361.14 11636.73 18360667 100
1666.14 2624296 16.42 48404.48 13302.87 20984963 100
1664.19 2623467 16.52 54476.11 14967.06 23608430 100
1666.89 2623472 16.54 60542.52 16633.95 26231902 100
1667.78 2624582 16.54 66609.13 18301.73 28856484 100
1664.817 2623299 16.53 72665.36 19966.55 31479783 100
1664.817 2623299 16.53 78721.59 21631.36 34103083 100
1664.817 2623299 16.53 84777.82 23296.18 36726382 100
1663.33 2622950 16.59 90852.23 24959.51 39349332 100
1665.89 2622707 16.56 96910.87 26625.4 41972039 100
1664.1 2623963 16.63 103159.2 28289.5 44596001 100
1665.87 2623952 16.7 109125.7 29955.37 47219953 100
1374.84 2620248 16.77 115160.3 31330.21 49840202 100
1374.84 2620248 16.77 121194.9 32705.05 52460450 100
1374.84 2620248 16.77 127229.5 34079.89 55080699 100
1377.72 2619620 16.66 133118.5 35457.61 57700318 100
1365.63 2624118 16.75 139043 36823.24 60324436 100
1373.96 2623120 16.72 144957.6 38197.2 62947557 100
1372.46 2622056 16.71 150915.4 39569.66 65569613 100
1370.773 2622028 16.7 156909 40940.43 68191641 100
1370.773 2622028 16.7 162902.5 42311.21 70813669 100
1370.773 2622028 16.7 168896.1 43681.98 73435697 100
1369.2 2622219 16.64 174872.8 45051.18 76057916 100
1365.55 2621073 16.7 180871.9 46416.73 78678989 100
46416.73 2622633
</TABLE>
<TABLE>
<CAPTION>
Y
ACCOUNT Y AVERAGE
YEARS VALUE CLASS ANNNUAL
<S> <C> <C> <C> <C>
31-Mar-98 BLANK 3,176.18 0.00%
30-Sep-97 6 MO 2,943.03 7.92% 7.92%
31-Dec-97 QTR 3,007.17 5.62% 5.62%
31-Dec-97 YTD 3,007.17 5.62% 5.62%
31-Mar-97 1 2,474.81 28.34% 28.34%
31-Mar-95 3 1,860.93 70.68% 19.51%
31-Mar-93 5 1,679.35 89.13% 13.59%
31-Mar-88 10 1,000.00 217.62% 12.25%
14-Mar-88 INCEPT. 1,000.00 217.62% 12.18%
INCEPTION FACTOR: 10.0548
0
</TABLE>
<TABLE>
<CAPTION>
PRICING DATE 3/31/98
TOTAL INCOME FOR PERIOD 4205028
TOTAL EXPENSES FOR PERIOD 1116556
30 DAY YTM 2.76% AVERAGE SHARES OUTSTANDING 99946406
LAST PRICE DURING PERIOD 13.51
PRICE ST VARIABLE GAIN/LOSS LONG TERM EQUITY TOTAL DIV ADJUSTED
DATE INCOME INCOME INCOME INCOME FACTOR INCOME
3/1/98
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 3/2/98 5297.37 133317.8 65332.71 203947.8 67.58394 137836
2 3/3/98 4770 134361.5 64638.6 203770.1 67.5801 137708.1
3 3/4/98 4630.39 134253.8 64640.77 203524.9 67.58069 137543.6
4 3/5/98 2708.21 136401.7 64664.24 203774.2 67.59082 137732.6
5 3/6/98 2387.48 136574.1 64675.98 203637.6 67.5457 137548.4
6 3/7/98 2387.48 136574.1 64675.98 203637.6 67.5457 137548.4
7 3/8/98 2387.48 136574.1 64675.98 203637.6 67.5457 137548.4
8 3/9/98 3628.89 134966.7 64646.08 203241.7 67.53813 137265.6
9 3/10/98 3832.31 134932.3 65174.69 203939.3 67.52535 137710.7
10 3/11/98 2245.97 136582.6 65467.52 204296.1 67.50664 137913.4
11 3/12/98 2494.77 136398.4 63432.03 202325.2 67.50906 136587.9
12 3/13/98 2434.03 136099 63444.34 201977.4 67.51019 136355.3
13 3/14/98 2434.03 136099 63444.34 201977.4 67.51019 136355.3
14 3/15/98 3434.04 136099 63444.34 202977.4 67.51019 137030.4
15 3/16/98 2717.88 136005.9 63444.34 202168.1 67.49874 136460.9
16 3/17/98 2502.65 136082.1 63440.94 202025.7 67.47911 136325.1
17 3/18/98 4002.5 134276 63186.57 201465.1 67.47171 135931.9
18 3/19/98 3844.85 134046.8 63031.09 200922.8 67.4551 135532.7
19 3/20/98 1813.63 133793.9 133793.9 269401.5 67.42357 181640.1
20 3/21/98 1818.63 133793.9 133793.9 269406.5 67.42357 181643.5
21 3/22/98 1818.64 133793.9 133793.9 269406.5 67.42357 181643.5
22 3/23/98 2329.69 134692.6 62597.84 199620.1 67.4085 134560.9
23 3/24/98 682.06 135507.7 62545.88 198735.6 67.3813 133910.7
24 3/25/98 4924.39 133941.1 61001.63 199867.1 67.36648 134643.4
25 3/26/98 5277.21 133499.1 63307.95 202084.3 67.36246 136128.9
26 3/27/98 7260.82 130751.2 63307.95 201320 67.37289 135635.1
27 3/28/98 7260.82 130751.2 63307.95 201320 67.37289 135635.1
28 3/29/98 7260.81 130751.2 63307.95 201320 67.37289 135635.1
29 3/30/98 4675.9 132466.5 63307.95 200450.4 67.37183 135047.1
30 3/31/98 4601.48 -34022.4 132130.6 63524.74 166234.5 67.35651 111969.8
107864.4 4035518 2123052 6232412 4205028
</TABLE>
<TABLE>
<CAPTION>
DAILY DAILY DAILY ACCUMULATED ACCUMULATED
EXPENSES SHAREs PRICE INCOME EXPENSES
0 0
<S> <C> <C> <C> <C>
38566.67 1.01E+08 13.13 137836 38566.67
31702.16 1.01E+08 13.15 275544 70268.83
31989.43 1.01E+08 13.11 413087.6 102258.3
33705.89 1.01E+08 13.05 550820.2 135964.2
31312.89 1E+08 13.22 688368.6 167277
31312.89 1E+08 13.22 825917 198589.9
31312.89 1E+08 13.22 963465.5 229902.8
34815.24 1E+08 13.23 1100731 264718.1
31736.1 1E+08 13.32 1238442 296454.2
32617.68 1E+08 13.35 1376355 329071.8
34305.9 1E+08 13.35 1512943 363377.7
31993.08 99982673 13.32 1649298 395370.8
31993.08 99982673 13.32 1785654 427363.9
31993.08 99982673 13.32 1922684 459357
43567.71 99857369 13.4 2059145 502924.7
40649.45 99759974 13.42 2195470 543574.1
40654.66 99721090 13.45 2331402 584228.8
35373.19 99660942 13.47 2466935 619602
39794.22 99548701 13.57 2648575 659396.2
39794.22 99548701 13.57 2830218 699190.4
39794.22 99548701 13.57 3011862 738984.6
43751.91 99484673 13.47 3146423 782736.5
40794.21 99797079 13.53 3280333 823530.7
40785.65 99705494 13.49 3414977 864316.4
40678.5 99650723 13.48 3551106 904994.9
39712.78 99612254 13.45 3686741 944707.7
39712.78 99612254 13.45 3822376 984420.5
39712.78 99612254 13.45 3958011 1024133
51812.7 99537671 13.45 4093058 1075946
40609.81 99416112 13.51 4205028 1116556
1116556 99946406
</TABLE>
<TABLE>
<CAPTION>
$1,000 $952.50
A A NAV A A
TIME ACCOUNT A AVERAGE A/C VALUE A AVERAGE
YEARS PERIOD VALUE CLASS ANNNUAL W/LOAD CLASS ANNNUAL
<S> <C> <C> <C> <C> <C> <C> <C>
31-Mar-98 BLANK 1,073.80 0.00% 952.5 -4.75% -4.75%
28-Feb-98 6 MO 1,040.43 3.21% 3.21% 983.05 -1.69% -1.69%
31-Dec-97 QTR
31-Dec-97 YTD
31-Mar-97 1
31-Mar-95 3
31-Mar-93 5
31-Mar-88 10
20-Jan-98 INCEPT. 1,000.00 7.38% 44.20% 1,022.80 2.28% 12.29%
0
INCEPTION FACTOR: 0.1945 0.1945
</TABLE>
<TABLE>
<CAPTION>
PRICING DATE 3/31/98
TOTAL INCOME FOR PERIOD 1894810
TOTAL EXPENSES FOR PERIOD 856176
30 DAY YTM 2.16% AVERAGE SHARES OUTSTANDING 45052726
LAST PRICE DURING PERIOD 12.88
PRICE ST VARIABLE GAIN/LOSS LONG TERM EQUITY TOTAL DIV ADJUSTED
DATE INCOME INCOME INCOME INCOME FACTOR INCOME
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 3/2/98 5297.37 0 133317.8 65332.71 203947.8 30.27006 61735.13
2 3/3/98 4770 0 134361.5 64638.6 203770.1 30.27174 61684.75
3 3/4/98 4630.39 0 134253.8 64640.77 203524.9 30.27307 61613.26
4 3/5/98 2708.21 0 136401.7 64664.24 203774.2 30.28447 61711.93
5 3/6/98 2387.48 0 136574.1 64675.98 203637.6 30.32949 61762.24
6 3/7/98 2387.48 0 136574.1 64675.98 203637.6 30.32949 61762.24
7 3/8/98 2387.48 0 136574.1 64675.98 203637.6 30.32949 61762.24
8 3/9/98 3628.89 0 134966.7 64646.08 203241.7 30.33616 61655.72
9 3/10/98 3832.31 0 134932.3 65174.69 203939.3 30.34743 61890.33
10 3/11/98 2245.97 0 136582.6 65467.52 204296.1 30.36402 62032.5
11 3/12/98 2494.77 0 136398.4 63432.03 202325.2 30.3747 61455.69
12 3/13/98 2434.03 0 136099 63444.34 201977.4 30.37221 61344.98
13 3/14/98 2434.03 0 136099 63444.34 201977.4 30.37221 61344.98
14 3/15/98 3434.04 0 136099 63444.34 202977.4 30.37221 61648.71
15 3/16/98 2717.88 0 136005.9 63444.34 202168.1 30.38048 61419.64
16 3/17/98 2502.65 0 136082.1 63440.94 202025.7 30.39865 61413.08
17 3/18/98 4002.5 0 134276 63186.57 201465.1 30.406 61257.47
18 3/19/98 3844.85 0 134046.8 63031.09 200922.8 30.42183 61124.39
19 3/20/98 1813.63 0 133793.9 133793.9 269401.5 30.43595 81994.91
20 3/21/98 1818.63 0 133793.9 133793.9 269406.5 30.43595 81996.43
21 3/22/98 1818.64 0 133793.9 133793.9 269406.5 30.43595 81996.43
22 3/23/98 2329.69 0 134692.6 62597.84 199620.1 30.4502 60784.72
23 3/24/98 682.06 0 135507.7 62545.88 198735.6 30.49879 60611.96
24 3/25/98 4924.39 0 133941.1 61001.63 199867.1 30.51146 60982.36
25 3/26/98 5277.21 0 133499.1 63307.95 202084.3 30.51229 61660.55
26 3/27/98 7260.82 0 130751.2 63307.95 201320 30.50256 61407.76
27 3/28/98 7260.82 0 130751.2 63307.95 201320 30.50256 61407.76
28 3/29/98 7260.81 0 130751.2 63307.95 201320 30.50256 61407.75
29 3/30/98 4675.9 0 132466.5 63307.95 200450.4 30.52159 61180.64
30 3/31/98 4601.48 -34022.4 132130.6 63524.74 166234.5 30.53506 50759.79
107864.4 4035518 2123052 6232412 1894810
</TABLE>
<TABLE>
<CAPTION>
DAILY DAILY DAILY ACCUMULATED ACCUMULATED ACCUMULATED
EXPENSES SHARES PRICE INCOME EXPENSES SHARES
0 0 0
<S> <C> <C> <C> <C> <C>
28907.34 45153102 12.5 61735.13 28907.34 45153102
25800.87 45120828 12.52 123419.9 54708.21 90273929
25935.83 45107631 12.48 185033.1 80644.04 1.35E+08
26665.49 45092934 12.42 246745.1 107309.5 1.8E+08
25562.73 45098099 12.58 308507.3 132872.3 2.26E+08
25562.73 45098099 12.58 370269.6 158435 2.71E+08
25562.73 45098099 12.58 432031.8 183997.7 3.16E+08
27293.18 45097694 12.59 493687.5 211290.9 3.61E+08
25929.22 45083683 12.68 555577.8 237220.1 4.06E+08
26412.21 45084954 12.7 617610.3 263632.3 4.51E+08
27203.34 45076389 12.71 679066 290835.7 4.96E+08
26164.03 45026157 12.68 740411 316999.7 5.41E+08
26164.03 45026157 12.68 801756 343163.7 5.86E+08
26164.03 45026157 12.68 863404.7 369327.8 6.31E+08
31335.29 44992348 12.74 924824.3 400663 6.76E+08
30089.2 44989350 12.76 986237.4 430752.2 7.21E+08
30117.11 44988533 12.79 1047495 460869.4 7.66E+08
27777.31 44996773 12.82 1108619 488646.7 8.11E+08
29809.97 44988916 12.91 1190614 518456.6 8.56E+08
29809.97 44988916 12.91 1272611 548266.6 9.01E+08
29809.97 44988916 12.91 1354607 578076.6 9.46E+08
31698.93 44993937 12.85 1415392 609775.5 9.91E+08
30345.52 45110493 12.91 1476004 640121 1.04E+09
30438.03 45098588 12.86 1536986 670559.1 1.08E+09
30344.7 45078672 12.85 1598647 700903.8 1.13E+09
29885.88 45040929 12.83 1660054 730789.6 1.17E+09
29885.88 45040929 12.83 1721462 760675.5 1.22E+09
29885.88 45040929 12.83 1782870 790561.4 1.26E+09
35339.89 45038793 12.82 1844051 825901.3 1.31E+09
30274.76 45014772 12.88 1894810 856176 1.35E+09
856176 45052726
</TABLE>
<TABLE>
<CAPTION>
$1,000
B B NAV LEVEL VALUE OF VALUE OF B
TIME ACCOUNT B AVERAGE LOAD CLASS B CLASS B INI B. AVERAGE
YEARS PERIOD VALUE CLASS ANNNUAL COMP INVESTMENT INVESTMENT CUMULATIVE ANNUAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
31-Mar-98 BLANK 170,033.22 0.00% 50 1,000.00 1,000.00 0.00%
30-Sep-97 6 MO 155,727.56 9.19% 9.19% 47.563 1,091.86 951.26 4.43% 4.43%
31-Dec-97 QTR 158,886.94 7.02% 7.02% 50 1,070.15 1,040.39 2.02% 2.02%
31-Dec-97 YTD 158,886.94 7.02% 7.02% 50 1,070.15 1,040.39 2.02% 2.02%
31-Mar-97 1 134,123.11 26.77% 26.77% 50 1,267.74 1,090.60 21.77% 21.77%
31-Mar-95 3 96,925.64 75.43% 20.60% 30 1,754.26 1,351.52 72.43% 19.91%
31-Mar-93 5 90,345.21 88.20% 13.48% 20 1,882.04 1,280.32 86.20% 13.24%
31-Mar-88 10 53,365.60 218.62% 12.29% 3,186.20 1,565.01 218.62% 12.29%
11-Sep-35 INCEPT. 1,000.00 16903.32% 8.55% 0 170,033.22 562.2 16903.32% 8.55%
INCEPTION FACTOR: 62.5973 62.5973
</TABLE>
<TABLE>
<CAPTION>
PRICING DATE 3/31/98
TOTAL INCOME FOR PERIOD 2580.59
TOTAL EXPENSES FOR PERIOD 1163
30 DAY YTM 2.16% AVERAGE SHARES OUTSTANDING 61306.17
LAST PRICE DURING PERIOD 12.88
PRICE ST FIXED GAIN/LOSS LONG TERM EQUITY TOTAL DIV ADJUSTED
DATE INCOME INCOME INCOME INCOME FACTOR INCOME
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 3/2/98 5297.37 0 133317.8 65332.71 203947.8 0.036339 74.11
2 3/3/98 4770 0 134361.5 64638.6 203770.1 0.036546 74.47
3 3/4/98 4630.39 0 134253.8 64640.77 203524.9 0.036934 75.17
4 3/5/98 2708.21 0 136401.7 64664.24 203774.2 0.038792 79.05
5 3/6/98 2387.48 0 136574.1 64675.98 203637.6 0.039214 79.86
6 3/7/98 2387.48 0 136574.1 64675.98 203637.6 0.039214 79.86
7 3/8/98 2387.48 0 136574.1 64675.98 203637.6 0.039214 79.86
8 3/9/98 3628.89 0 134966.7 64646.08 203241.7 0.039464 80.21
9 3/10/98 3832.31 0 134932.3 65174.69 203939.3 0.039491 80.54
10 3/11/98 2245.97 0 136582.6 65467.52 204296.1 0.041913 85.63
11 3/12/98 2494.77 0 136398.4 63432.03 202325.2 0.041936 84.85
12 3/13/98 2434.03 0 136099 63444.34 201977.4 0.042006 84.84
13 3/14/98 2434.03 0 136099 63444.34 201977.4 0.042006 84.84
14 3/15/98 3434.04 0 136099 63444.34 202977.4 0.042006 85.26
15 3/16/98 2717.88 0 136005.9 63444.34 202168.1 0.042068 85.05
16 3/17/98 2502.65 0 136082.1 63440.94 202025.7 0.042096 85.04
17 3/18/98 4002.5 0 134276 63186.57 201465.1 0.042182 84.98
18 3/19/98 3844.85 0 134046.8 63031.09 200922.8 0.042196 84.78
19 3/20/98 1813.63 0 133793.9 133793.9 269401.5 0.042925 115.64
20 3/21/98 1818.63 0 133793.9 133793.9 269406.5 0.042925 115.64
21 3/22/98 1818.64 0 133793.9 133793.9 269406.5 0.042925 115.64
22 3/23/98 2329.69 0 134692.6 62597.84 199620.1 0.042962 85.76
23 3/24/98 682.06 0 135507.7 62545.88 198735.6 0.043142 85.74
24 3/25/98 4924.39 0 133941.1 61001.63 199867.1 0.043209 86.36
25 3/26/98 5277.21 0 133499.1 63307.95 202084.3 0.043229 87.36
26 3/27/98 7260.82 0 130751.2 63307.95 201320 0.043191 86.95
27 3/28/98 7260.82 0 130751.2 63307.95 201320 0.043191 86.95
28 3/29/98 7260.81 0 130751.2 63307.95 201320 0.043191 86.95
29 3/30/98 4675.9 0 132466.5 63307.95 200450.4 0.04322 86.64
30 3/31/98 4601.48 -34022.4 132130.6 63524.74 166234.5 0.04365 72.56
107864.4 4035518 2123052 6232412 2580.59
</TABLE>
<TABLE>
<CAPTION>
DAILY DAILY DAILY ACCUMULATED ACCUMULATED ACCUMULATED
EXPENSES SHARES PRICE INCOME EXPENSES SHARES
0 0 0 0
<S> <C> <C> <C> <C> <C>
34.27 54203.37 12.5 74.11 34.27 54203.37
31.04 54471.31 12.52 148.58 65.31 108674.7
31.45 55031.35 12.48 223.75 96.76 163706
33.22 57758.09 12.42 302.8 129.98 221464.1
32.85667 58306.81 12.58 382.66 162.8367 279770.9
32.85667 58306.81 12.58 462.52 195.6933 338077.7
32.85667 58306.81 12.58 542.38 228.55 396384.5
35.37 58665.07 12.59 622.59 263.92 455049.6
33.74 58665.07 12.68 703.13 297.66 513714.7
35.21 62229.95 12.7 788.76 332.87 575944.6
37.57 62229.95 12.71 873.61 370.44 638174.6
36.15 62269.95 12.68 958.45 406.59 700444.5
36.15 62269.95 12.68 1043.29 442.74 762714.5
36.15 62269.95 12.68 1128.55 478.89 824984.4
43.37 62297.49 12.74 1213.6 522.26 887281.9
41.67 62297.49 12.76 1298.64 563.93 949579.4
41.75 62408.61 12.79 1383.62 605.68 1011988
38.53 62408.61 12.82 1468.4 644.21 1074397
41.68 63446.06 12.91 1584.04 685.89 1137843
41.68 63446.06 12.91 1699.68 727.57 1201289
41.68 63446.06 12.91 1815.32 769.25 1264735
44.71 63477.95 12.85 1901.08 813.96 1328213
42.87 63806.97 12.91 1986.82 856.83 1392020
43.08 63862.82 12.86 2073.18 899.91 1455883
42.98 63862.43 12.85 2160.54 942.89 1519745
42.33333 63773.79 12.83 2247.49 985.22331583519
42.33333 63773.79 12.83 2334.44 1027.557 1647293
42.33333 63773.79 12.83 2421.39 1069.89 1711066
50.04 63773.79 12.82 2508.03 1119.93 1774840
43.07 64345.02 12.88 2580.59 1163 1839185
0 0
1163 61306.17
</TABLE>
<TABLE>
<CAPTION>
$1,000.00 $1,000
C C NAV LEVEL VALUE OF VALUE OF C
TIME ACCOUNT C AVERAGE LOAD CLASS C CLASS C INI C AVERAGE
YEARS PERIOD VALUE CLASS ANNNUAL COMP INVESTMENT INVESTMENT CUMULATIVE ANNUAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
31-Mar-98 Blank 1,065.85 0.00% 10 1,000.00 1,000.00 0.00%
28-Feb-98 1 MO 1,033.75 3.11% 3.11% 10 1,031.05 1,027.93 2.11% 2.11%
31-Dec-97 QTR
31-Dec-97 YTD
31-Mar-97 1
31-Mar-95 3
31-Mar-93 5
31-Mar-88 10
22-Jan-98 INCEPT. 1,000.00 6.58% 40.12% 10 1,065.85 1,036.20 5.58% 33.31%
INCEPTION FACTOR: 0.189 0.189
</TABLE>
<TABLE>
<CAPTION>
PRICING DATE 3/31/98
TOTAL INCOME FOR PERIOD 129993.3
TOTAL EXPENSES FOR PERIOD 26431.98
30 DAY YTM 3.15% AVERAGE SHARES OUTSTANDING 3088232
LAST PRICE DURING PERIOD 12.86
PRICE ST VARIABLE ZERO COUPON LONG TERM EQUITY TOTAL DIV ADJUSTED
DATE INCOME AND DIV INC INCOME INCOME INCOME FACTOR INCOME
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 3/2/98 5297.37 0 133317.8 0 65332.71 0 203947.8 2.109667 4302.62
2 3/3/98 4770 0 134361.5 0 64638.6 0 203770.1 2.111619 4302.85
3 3/4/98 4630.39 0 134253.8 0 64640.77 0 203524.9 2.1093 4292.95
4 3/5/98 2708.21 0 136401.7 0 64664.24 0 203774.2 2.085923 4250.57
5 3/6/98 2387.48 0 136574.1 0 64675.98 0 203637.6 2.085595 4247.05
6 3/7/98 2387.48 0 136574.1 0 64675.98 0 203637.6 2.085595 4247.05
7 3/8/98 2387.48 0 136574.1 0 64675.98 0 203637.6 2.085595 4247.05
8 3/9/98 3628.89 0 134966.7 0 64646.08 0 203241.7 2.086241 4240.11
9 3/10/98 3832.31 0 134932.3 0 65174.69 0 203939.3 2.087728 4257.7
10 3/11/98 2245.97 0 136582.6 0 65467.52 0 204296.1 2.087427 4264.53
11 3/12/98 2494.77 0 136398.4 0 63432.03 0 202325.2 2.074299 4196.83
12 3/13/98 2434.03 0 136099 0 63444.34 0 201977.4 2.0756 4192.24
13 3/14/98 2434.03 0 136099 0 63444.34 0 201977.4 2.0756 4192.24
14 3/15/98 3434.04 0 136099 0 63444.34 0 202977.4 2.0756 4213
15 3/16/98 2717.88 0 136005.9 0 63444.34 0 202168.1 2.078703 4202.47
16 3/17/98 2502.65 0 136082.1 0 63440.94 0 202025.7 2.080141 4202.42
17 3/18/98 4002.5 0 134276 0 63186.57 0 201465.1 2.08011 4190.69
18 3/19/98 3844.85 0 134046.8 0 63031.09 0 200922.8 2.080868 4180.94
19 3/20/98 1813.63 0 133793.9 0 133793.9 0 269401.5 2.097548 5650.83
20 3/21/98 1818.63 0 133793.9 0 133793.9 0 269406.5 2.097548 5650.93
21 3/22/98 1818.64 0 133793.9 0 133793.9 0 269406.5 2.097548 5650.93
22 3/23/98 2329.69 0 134692.6 0 62597.84 0 199620.1 2.098339 4188.71
23 3/24/98 682.06 0 135507.7 0 62545.88 0 198735.6 2.076766 4127.27
24 3/25/98 4924.39 0 133941.1 0 61001.63 0 199867.1 2.078855 4154.95
25 3/26/98 5277.21 0 133499.1 0 63307.95 0 202084.3 2.082017 4207.43
26 3/27/98 7260.82 0 130751.2 0 63307.95 0 201320 2.08136 4190.19
27 3/28/98 7260.82 0 130751.2 0 63307.95 0 201320 2.08136 4190.19
28 3/29/98 7260.81 0 130751.2 0 63307.95 0 201320 2.08136 4190.19
29 3/30/98 4675.9 0 132466.5 0 63307.95 0 200450.4 2.063357 4136.01
30 3/31/98 4601.48 -34022.4 132130.6 0 63524.74 0 166234.5 2.064781 3432.38
107864.4 4035518 0 2123052 0 6232412 129993.3
</TABLE>
<TABLE>
<CAPTION>
DAILY DAILY DAILY ACCUMULATED ACCUMULATED ACCUMULATED
EXPENSES SHARES PRICE INCOME EXPENSES SHARES
0 0 0
<S> <C> <C> <C> <C> <C>
933.52 3143231 12.52 4302.62 933.52 3143231
720.79 3143630 12.53 8605.47 1654.31 6286862
728.87 3139060 12.49 12898.42 2383.18 9425922
774.63 3102005 12.44 17148.99 3157.81 12527927
702.42 3097175 12.6 21396.04 3860.23 15625102
702.42 3097175 12.6 25643.09 4562.65 18722277
702.42 3097175 12.6 29890.14 5265.07 21819452
808.12 3097175 12.61 34130.25 6073.19 24916627
713.48 3097175 12.7 38387.95 6786.67 28013802
739.25 3095038 12.72 42652.48 7525.92 31108840
786.09 3073825 12.73 46849.31 8312.01 34182665
715.5233 3072485 12.7 51041.55 9027.53337255150
715.5233 3072485 12.7 55233.79 9743.05740327635
715.5233 3072485 12.7 59446.79 10458.58 43400120
1074.1 3073679 12.76 63649.26 11532.68 46473800
984.12 3073679 12.78 67851.68 12516.8 49547479
984.22 3072751 12.82 72042.37 13501.02 52620230
821.32 3072751 12.84 76223.31 14322.34 55692981
965.5167 3095318 12.94 81874.14 15287.86 58788299
965.5167 3095318 12.94 87525.07 16253.37 61883617
965.5167 3095318 12.94 93176 17218.89 64978936
1087.51 3095318 12.82 97364.71 18306.4 68074254
987.85 3077436 12.89 101492 19294.25 71151690
986.61 3078353 12.84 105646.9 20280.86 74230044
986.14 3081505 12.83 109854.4 21267 77311548
956.2067 3078846 12.8 114044.6 22223.21 80390394
956.2067 3078846 12.8 118234.7 23179.41 83469241
956.2067 3078846 12.8 122424.9 24135.62 86548087
1319.17 3049917 12.8 126560.9 25454.79 89598004
977.19 3048956 12.86 129993.3 26431.98 92646960
</TABLE>
<TABLE>
<CAPTION>
$1,000
Y Y NAV
TIME ACCOUNT Y AVERAGE
YEARS PERIOD VALUE CLASS ANNNUAL
<S> <C> <C> <C> <C>
31-Mar-98 Blank 1,077.87 0.00%
28-Feb-98 1 MO 1,044.96 3.15% 3.15%
31-Dec-97 QTR
31-Dec-97 YTD
31-Mar-97 1
31-Mar-95 3
31-Mar-93 5
31-Mar-88 10
26-Jan-98 INCEPT. 1,000.00 7.79% 52.36%
(+$M$7-M16)/M16
INCEPTION FACTOR: 0.1781 0.1781
</TABLE>
POWER OF ATTORNEY
I, the undersigned, hereby constitute Maureen E. Towle, Michael H. Koonce,
T. Hal Clarke, John A. Dudley, Robert N. Hickey, David M. Leahy and William J.
Tomko, and 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 Trustee and for which Keystone Investment Management
Company, Evergreen Asset Management Corp., First Union National Bank, or any
other investment advisory affiliate of First Union National Bank, 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
March 27, 1998.
Signature Title
/s/ K. Dun Gifford
- -------------------------------- Trustee
K. Dun Gifford
POWER OF ATTORNEY
I, the undersigned, hereby constitute Maureen E. Towle, Michael H. Koonce,
T. Hal Clarke, John A. Dudley, Robert N. Hickey, David M. Leahy and William J.
Tomko, and 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 Trustee and for which Keystone Investment Management
Company, Evergreen Asset Management Corp., First Union National Bank, or any
other investment advisory affiliate of First Union National Bank, 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
March 27, 1998.
Signature Title
/s/ Charles A. Austin III
- ----------------------------- Trustee
Charles A. Austin III
POWER OF ATTORNEY
I, the undersigned, hereby constitute Maureen E. Towle, Michael H. Koonce,
T. Hal Clarke, John A. Dudley, Robert N. Hickey, David M. Leahy and William J.
Tomko, and 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 Trustee and for which Keystone Investment Management
Company, Evergreen Asset Management Corp., First Union National Bank, or any
other investment advisory affiliate of First Union National Bank, 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
March 27, 1998.
Signature Title
/s/ Laurence B. Ashkin
- -------------------------------- Trustee
Laurence B. Ashkin
POWER OF ATTORNEY
I, the undersigned, hereby constitute Maureen E. Towle, Michael H. Koonce,
T. Hal Clarke, John A. Dudley, Robert N. Hickey, David M. Leahy and William J.
Tomko, and 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 Trustee and for which Keystone Investment Management
Company, Evergreen Asset Management Corp., First Union National Bank, or any
other investment advisory affiliate of First Union National Bank, 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
March 27, 1998.
Signature Title
/s/ William Walt Pettit
- -------------------------------- Trustee
William Walt Pettit
POWER OF ATTORNEY
I, the undersigned, hereby constitute Maureen E. Towle, Michael H. Koonce,
T. Hal Clarke, John A. Dudley, Robert N. Hickey, David M. Leahy and William J.
Tomko, and 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 Trustee and for which Keystone Investment Management
Company, Evergreen Asset Management Corp., First Union National Bank, or any
other investment advisory affiliate of First Union National Bank, 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
March 27, 1998.
Signature Title
/s/ James S. Howell
- -------------------------------- Trustee
James S. Howell
POWER OF ATTORNEY
I, the undersigned, hereby constitute Maureen E. Towle, Michael H. Koonce,
T. Hal Clarke, John A. Dudley, Robert N. Hickey, David M. Leahy and William J.
Tomko, and 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 Trustee and for which Keystone Investment Management
Company, Evergreen Asset Management Corp., First Union National Bank, or any
other investment advisory affiliate of First Union National Bank, 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
March 27, 1998.
Signature Title
/s/ Leroy Keith, Jr.
- -------------------------------- Trustee
Leroy Keith, Jr.
POWER OF ATTORNEY
I, the undersigned, hereby constitute Maureen E. Towle, Michael H. Koonce,
T. Hal Clarke, John A. Dudley, Robert N. Hickey, David M. Leahy and William J.
Tomko, and 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 Trustee and for which Keystone Investment Management
Company, Evergreen Asset Management Corp., First Union National Bank, or any
other investment advisory affiliate of First Union National Bank, 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
March 27, 1998.
Signature Title
/s/ Gerald M. McDonnell
- -------------------------------- Trustee
Gerald M. McDonnell
POWER OF ATTORNEY
I, the undersigned, hereby constitute Maureen E. Towle, Michael H. Koonce,
T. Hal Clarke, John A. Dudley, Robert N. Hickey, David M. Leahy and William J.
Tomko, and 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 Trustee and for which Keystone Investment Management
Company, Evergreen Asset Management Corp., First Union National Bank, or any
other investment advisory affiliate of First Union National Bank, 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
March 27, 1998.
Signature Title
/s/ Thomas L. McVerry
- -------------------------------- Trustee
Thomas L. McVerry
POWER OF ATTORNEY
I, the undersigned, hereby constitute Maureen E. Towle, Michael H. Koonce,
T. Hal Clarke, John A. Dudley, Robert N. Hickey, David M. Leahy and William J.
Tomko, and 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 Trustee and for which Keystone Investment Management
Company, Evergreen Asset Management Corp., First Union National Bank, or any
other investment advisory affiliate of First Union National Bank, 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
March 27, 1998.
Signature Title
/s/ David M. Richardson
- -------------------------------- Trustee
David M. Richardson
POWER OF ATTORNEY
I, the undersigned, hereby constitute Maureen E. Towle, Michael H. Koonce,
T. Hal Clarke, John A. Dudley, Robert N. Hickey, David M. Leahy and William J.
Tomko, and 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 Trustee and for which Keystone Investment Management
Company, Evergreen Asset Management Corp., First Union National Bank, or any
other investment advisory affiliate of First Union National Bank, 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
March 27, 1998.
Signature Title
/s/ Richard J. Shima
- -------------------------------- Trustee
Richard J. Shima
POWER OF ATTORNEY
I, the undersigned, hereby constitute Maureen E. Towle, Michael H. Koonce,
T. Hal Clarke, John A. Dudley, Robert N. Hickey, David M. Leahy and William J.
Tomko, and 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 Trustee and for which Keystone Investment Management
Company, Evergreen Asset Management Corp., First Union National Bank, or any
other investment advisory affiliate of First Union National Bank, 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
March 27, 1998.
Signature Title
/s/ Michael S. Scofield
- -------------------------------- Trustee
Michael S. Scofield
POWER OF ATTORNEY
I, the undersigned, hereby constitute Maureen E. Towle, Michael H. Koonce,
T. Hal Clarke, John A. Dudley, Robert N. Hickey, David M. Leahy and William J.
Tomko, and 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 Trustee and for which Keystone Investment Management
Company, Evergreen Asset Management Corp., First Union National Bank, or any
other investment advisory affiliate of First Union National Bank, 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
March 27, 1998.
Signature Title
/s/ Russell A. Salton, III, M.D. Trustee
- --------------------------------
Russell A. Salton, III M.D.
POWER OF ATTORNEY
I, the undersigned, hereby constitute Maureen E. Towle, Michael H. Koonce,
T. Hal Clarke, John A. Dudley, Robert N. Hickey, David M. Leahy and William J.
Tomko, and 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 Trustee and for which Keystone Investment Management
Company, Evergreen Asset Management Corp., First Union National Bank, or any
other investment advisory affiliate of First Union National Bank, 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
March 27, 1998.
Signature Title
/s/ William J. Tomko
- ----------------------- President and Treasurer
William J. Tomko
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 101
<NAME> EVERGREEN FOUNDATION FUND CLASS A
<CAPTION>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 1,935,098,601
<INVESTMENTS-AT-VALUE> 2,626,081,854
<RECEIVABLES> 22,430,965
<ASSETS-OTHER> 959,571
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,649,472,390
<PAYABLE-FOR-SECURITIES> 3,028,219
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,216,559
<TOTAL-LIABILITIES> 8,244,778
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 264,173,421
<SHARES-COMMON-STOCK> 17,129,241
<SHARES-COMMON-PRIOR> 13,720,729
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (330,546)
<ACCUMULATED-NET-GAINS> 194,397
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 85,515,313
<NET-ASSETS> 349,552,585
<DIVIDEND-INCOME> 3,306,412
<INTEREST-INCOME> 6,930,496
<OTHER-INCOME> 0
<EXPENSES-NET> (3,570,247)
<NET-INVESTMENT-INCOME> 6,666,661
<REALIZED-GAINS-CURRENT> 4,993,105
<APPREC-INCREASE-CURRENT> 67,655,607
<NET-CHANGE-FROM-OPS> 79,315,373
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (6,684,684)
<DISTRIBUTIONS-OF-GAINS> (6,460,755)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,632,873
<NUMBER-OF-SHARES-REDEEMED> (2,914,232)
<SHARES-REINVESTED> 689,871
<NET-CHANGE-IN-ASSETS> 130,566,149
<ACCUMULATED-NII-PRIOR> (1,460,563)
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (2,138,667)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (3,571,276)
<AVERAGE-NET-ASSETS> 278,350,299
<PER-SHARE-NAV-BEGIN> 16.00
<PER-SHARE-NII> 0.44
<PER-SHARE-GAIN-APPREC> 4.71
<PER-SHARE-DIVIDEND> (0.44)
<PER-SHARE-DISTRIBUTIONS> (0.27)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.44
<EXPENSE-RATIO> 1.28
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 102
<NAME> EVERGREEN FOUNDATION FUND CLASS B
<CAPTION>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 1,935,098,601
<INVESTMENTS-AT-VALUE> 2,626,081,854
<RECEIVABLES> 22,430,965
<ASSETS-OTHER> 959,571
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,649,472,390
<PAYABLE-FOR-SECURITIES> 3,028,219
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,216,559
<TOTAL-LIABILITIES> 8,244,778
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 876,646,596
<SHARES-COMMON-STOCK> 55,243,018
<SHARES-COMMON-PRIOR> 37,994,888
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (1,794,858)
<ACCUMULATED-NET-GAINS> (262,536)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 249,954,764
<NET-ASSETS> 1,124,543,966
<DIVIDEND-INCOME> 9,869,311
<INTEREST-INCOME> 20,672,529
<OTHER-INCOME> 0
<EXPENSES-NET> (16,927,134)
<NET-INVESTMENT-INCOME> 13,614,706
<REALIZED-GAINS-CURRENT> 14,553,530
<APPREC-INCREASE-CURRENT> 200,029,657
<NET-CHANGE-FROM-OPS> 228,197,893
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (13,672,514)
<DISTRIBUTIONS-OF-GAINS> (19,713,787)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 19,942,961
<NUMBER-OF-SHARES-REDEEMED> (4,438,949)
<SHARES-REINVESTED> 1,744,118
<NET-CHANGE-IN-ASSETS> 518,376,184
<ACCUMULATED-NII-PRIOR> (3,012,553)
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (6,390,570)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (16,930,208)
<AVERAGE-NET-ASSETS> 831,658,281
<PER-SHARE-NAV-BEGIN> 15.94
<PER-SHARE-NII> 0.30
<PER-SHARE-GAIN-APPREC> 4.68
<PER-SHARE-DIVIDEND> (0.31)
<PER-SHARE-DISTRIBUTIONS> (0.27)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.34
<EXPENSE-RATIO> 2.04
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> EVERGREEN FOUNDATION FUND CLASS C
<CAPTION>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 1,935,098,601
<INVESTMENTS-AT-VALUE> 2,626,081,854
<RECEIVABLES> 22,430,965
<ASSETS-OTHER> 959,571
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,649,472,390
<PAYABLE-FOR-SECURITIES> 3,028,219
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,216,559
<TOTAL-LIABILITIES> 8,244,778
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 39,280,787
<SHARES-COMMON-STOCK> 2,468,520
<SHARES-COMMON-PRIOR> 1,746,457
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (92,137)
<ACCUMULATED-NET-GAINS> (6,710)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11,099,953
<NET-ASSETS> 50,281,893
<DIVIDEND-INCOME> 433,889
<INTEREST-INCOME> 909,172
<OTHER-INCOME> 0
<EXPENSES-NET> (744,427)
<NET-INVESTMENT-INCOME> 598,634
<REALIZED-GAINS-CURRENT> 639,785
<APPREC-INCREASE-CURRENT> 8,827,822
<NET-CHANGE-FROM-OPS> 10,066,241
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (601,216)
<DISTRIBUTIONS-OF-GAINS> (867,301)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,053,135
<NUMBER-OF-SHARES-REDEEMED> (405,258)
<SHARES-REINVESTED> 74,186
<NET-CHANGE-IN-ASSETS> 22,391,666
<ACCUMULATED-NII-PRIOR> (138,668)
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (281,002)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (744,562)
<AVERAGE-NET-ASSETS> 36,569,885
<PER-SHARE-NAV-BEGIN> 15.94
<PER-SHARE-NII> 0.30
<PER-SHARE-GAIN-APPREC> 4.68
<PER-SHARE-DIVIDEND> (0.31)
<PER-SHARE-DISTRIBUTIONS> (0.27)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.34
<EXPENSE-RATIO> 2.04
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> EVERGREEN FOUNDATION FUND CLASS C
<CAPTION>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 1,935,098,601
<INVESTMENTS-AT-VALUE> 2,626,081,854
<RECEIVABLES> 22,430,965
<ASSETS-OTHER> 959,571
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,649,472,390
<PAYABLE-FOR-SECURITIES> 3,028,219
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,216,559
<TOTAL-LIABILITIES> 8,244,778
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 764,055,631
<SHARES-COMMON-STOCK> 54,619,171
<SHARES-COMMON-PRIOR> 50,044,581
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 692,857
<ACCUMULATED-NET-GAINS> 5,876,977
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 344,413,223
<NET-ASSETS> 1,116,849,168
<DIVIDEND-INCOME> 11,232,065
<INTEREST-INCOME> 23,844,090
<OTHER-INCOME> 0
<EXPENSES-NET> (9,849,552)
<NET-INVESTMENT-INCOME> 25,226,603
<REALIZED-GAINS-CURRENT> 17,546,976
<APPREC-INCREASE-CURRENT> 233,739,505
<NET-CHANGE-FROM-OPS> 276,513,084
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (25,420,180)
<DISTRIBUTIONS-OF-GAINS> (22,280,479)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10,695,459
<NUMBER-OF-SHARES-REDEEMED> (8,434,531)
<SHARES-REINVESTED> 2,313,662
<NET-CHANGE-IN-ASSETS> 316,419,005
<ACCUMULATED-NII-PRIOR> (5,968,305)
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (7,346,194)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (9,853,086)
<AVERAGE-NET-ASSETS> 956,246,901
<PER-SHARE-NAV-BEGIN> 16.02
<PER-SHARE-NII> 0.49
<PER-SHARE-GAIN-APPREC> 4.7
<PER-SHARE-DIVIDEND> (0.49)
<PER-SHARE-DISTRIBUTIONS> (0.27)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.45
<EXPENSE-RATIO> 1.03
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 101
<NAME> EVERGREEN TAX STRATEGIC FOUNDATION FUND CLASS A
<CAPTION>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 268,854,476
<INVESTMENTS-AT-VALUE> 303,383,743
<RECEIVABLES> 6,698,192
<ASSETS-OTHER> 49,136
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 310,131,071
<PAYABLE-FOR-SECURITIES> 6,862,231
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 772,462
<TOTAL-LIABILITIES> 7,634,693
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 62,708,567
<SHARES-COMMON-STOCK> 4,272,621
<SHARES-COMMON-PRIOR> 1,108,365
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (21,917)
<ACCUMULATED-NET-GAINS> (32,725)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,225,216
<NET-ASSETS> 69,879,140
<DIVIDEND-INCOME> 285,042
<INTEREST-INCOME> 1,086,275
<OTHER-INCOME> 0
<EXPENSES-NET> (536,280)
<NET-INVESTMENT-INCOME> 835,038
<REALIZED-GAINS-CURRENT> 299,894
<APPREC-INCREASE-CURRENT> 6,461,640
<NET-CHANGE-FROM-OPS> 7,596,572
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (845,312)
<DISTRIBUTIONS-OF-GAINS> (424,397)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,458,299
<NUMBER-OF-SHARES-REDEEMED> (371,701)
<SHARES-REINVESTED> 77,658
<NET-CHANGE-IN-ASSETS> 54,841,288
<ACCUMULATED-NII-PRIOR> (69,706)
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (330,382)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (537,181)
<AVERAGE-NET-ASSETS> 37,713,164
<PER-SHARE-NAV-BEGIN> 13.57
<PER-SHARE-NII> 0.31
<PER-SHARE-GAIN-APPREC> 2.96
<PER-SHARE-DIVIDEND> (0.30)
<PER-SHARE-DISTRIBUTIONS> (0.18)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.36
<EXPENSE-RATIO> 1.42
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 102
<NAME> EVERGREEN TAX STRATEGIC FOUNDATION FUND CLASS B
<CAPTION>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 268,854,476
<INVESTMENTS-AT-VALUE> 303,383,743
<RECEIVABLES> 6,698,192
<ASSETS-OTHER> 49,136
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 310,131,071
<PAYABLE-FOR-SECURITIES> 6,862,231
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 772,462
<TOTAL-LIABILITIES> 7,634,693
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 166,540,314
<SHARES-COMMON-STOCK> 11,331,967
<SHARES-COMMON-PRIOR> 2,864,713
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (36,062)
<ACCUMULATED-NET-GAINS> (129,361)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 18,668,861
<NET-ASSETS> 185,043,752
<DIVIDEND-INCOME> 738,980
<INTEREST-INCOME> 2,820,194
<OTHER-INCOME> 0
<EXPENSES-NET> (2,128,700)
<NET-INVESTMENT-INCOME> 1,430,474
<REALIZED-GAINS-CURRENT> 741,348
<APPREC-INCREASE-CURRENT> 16,608,032
<NET-CHANGE-FROM-OPS> 18,779,854
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,429,127)
<DISTRIBUTIONS-OF-GAINS> (1,129,269)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,736,220
<NUMBER-OF-SHARES-REDEEMED> (423,863)
<SHARES-REINVESTED> 154,897
<NET-CHANGE-IN-ASSETS> 146,209,371
<ACCUMULATED-NII-PRIOR> (123,210)
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (858,046)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (2,131,043)
<AVERAGE-NET-ASSETS> 97,891,844
<PER-SHARE-NAV-BEGIN> 13.56
<PER-SHARE-NII> 0.21
<PER-SHARE-GAIN-APPREC> 2.94
<PER-SHARE-DIVIDEND> (0.20)
<PER-SHARE-DISTRIBUTIONS> (0.18)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.33
<EXPENSE-RATIO> 2.18
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> EVERGREEN TAX STRATEGIC FOUNDATION FUND CLASS C
<CAPTION>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 268,854,476
<INVESTMENTS-AT-VALUE> 303,383,743
<RECEIVABLES> 6,698,192
<ASSETS-OTHER> 49,136
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 310,131,071
<PAYABLE-FOR-SECURITIES> 6,862,231
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 772,462
<TOTAL-LIABILITIES> 7,634,693
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 25,322,364
<SHARES-COMMON-STOCK> 1,699,021
<SHARES-COMMON-PRIOR> 375,744
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (11,737)
<ACCUMULATED-NET-GAINS> (13,072)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,402,798
<NET-ASSETS> 27,700,353
<DIVIDEND-INCOME> 96,365
<INTEREST-INCOME> 366,330
<OTHER-INCOME> 0
<EXPENSES-NET> (277,044)
<NET-INVESTMENT-INCOME> 185,651
<REALIZED-GAINS-CURRENT> 85,608
<APPREC-INCREASE-CURRENT> 2,133,194
<NET-CHANGE-FROM-OPS> 2,404,453
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (189,734)
<DISTRIBUTIONS-OF-GAINS> (141,334)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,515,720
<NUMBER-OF-SHARES-REDEEMED> (212,250)
<SHARES-REINVESTED> 19,807
<NET-CHANGE-IN-ASSETS> 22,614,145
<ACCUMULATED-NII-PRIOR> (16,785)
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (110,805)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (277,347)
<AVERAGE-NET-ASSETS> 12,691,159
<PER-SHARE-NAV-BEGIN> 13.53
<PER-SHARE-NII> 0.21
<PER-SHARE-GAIN-APPREC> 2.94
<PER-SHARE-DIVIDEND> (0.20)
<PER-SHARE-DISTRIBUTIONS> (0.18)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.3
<EXPENSE-RATIO> 2.19
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> EVERGREEN TAX STRATEGIC FOUNDATION FUND CLASS C
<CAPTION>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 268,854,476
<INVESTMENTS-AT-VALUE> 303,383,743
<RECEIVABLES> 6,698,192
<ASSETS-OTHER> 49,136
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 310,131,071
<PAYABLE-FOR-SECURITIES> 6,862,231
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 772,462
<TOTAL-LIABILITIES> 7,634,693
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 13,076,502
<SHARES-COMMON-STOCK> 1,213,326
<SHARES-COMMON-PRIOR> 1,124,861
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 99,111
<ACCUMULATED-NET-GAINS> 493,877
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,232,392
<NET-ASSETS> 19,877,995
<DIVIDEND-INCOME> 131,294
<INTEREST-INCOME> 508,434
<OTHER-INCOME> 0
<EXPENSES-NET> (202,372)
<NET-INVESTMENT-INCOME> 437,355
<REALIZED-GAINS-CURRENT> 204,637
<APPREC-INCREASE-CURRENT> 3,175,884
<NET-CHANGE-FROM-OPS> 3,817,876
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (422,361)
<DISTRIBUTIONS-OF-GAINS> (207,645)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 105,639
<NUMBER-OF-SHARES-REDEEMED> (29,733)
<SHARES-REINVESTED> 12,558
<NET-CHANGE-IN-ASSETS> 4,561,787
<ACCUMULATED-NII-PRIOR> (78,613)
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (152,553)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (202,788)
<AVERAGE-NET-ASSETS> 17,622,247
<PER-SHARE-NAV-BEGIN> 13.61
<PER-SHARE-NII> 0.37
<PER-SHARE-GAIN-APPREC> 2.94
<PER-SHARE-DIVIDEND> (0.36)
<PER-SHARE-DISTRIBUTIONS> (0.18)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.38
<EXPENSE-RATIO> 1.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 101
<NAME> EVERGREEN AMERICAN RETIREMENT FUND CLASS A
<CAPTION>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR 31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> MAR 31-1998
<INVESTMENTS-AT-COST> 192,500,813
<INVESTMENTS-AT-VALUE> 234,985,901
<RECEIVABLES> 2,874,473
<ASSETS-OTHER> 270,836
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 238,131,210
<PAYABLE-FOR-SECURITIES> 3,550,955
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 760,913
<TOTAL-LIABILITIES> 4,311,868
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 24,657,847
<SHARES-COMMON-STOCK> 1,736,778
<SHARES-COMMON-PRIOR> 1,062,020
<ACCUMULATED-NII-CURRENT> (4,468)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 188,947
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,162,199
<NET-ASSETS> 29,004,525
<DIVIDEND-INCOME> 465,335
<INTEREST-INCOME> 542,265
<OTHER-INCOME> 0
<EXPENSES-NET> (306,262)
<NET-INVESTMENT-INCOME> 701,338
<REALIZED-GAINS-CURRENT> 707,552
<APPREC-INCREASE-CURRENT> 3,799,071
<NET-CHANGE-FROM-OPS> 5,207,961
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (695,207)
<DISTRIBUTIONS-OF-GAINS> (514,560)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 776,394
<NUMBER-OF-SHARES-REDEEMED> (175,621)
<SHARES-REINVESTED> 73,985
<NET-CHANGE-IN-ASSETS> 14,415,336
<ACCUMULATED-NII-PRIOR> (21,362)
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (164,128)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (306,875)
<AVERAGE-NET-ASSETS> 21,873,297
<PER-SHARE-NAV-BEGIN> 13.74
<PER-SHARE-NII> 0.49
<PER-SHARE-GAIN-APPREC> 3.29
<PER-SHARE-DIVIDEND> (0.48)
<PER-SHARE-DISTRIBUTIONS> (0.34)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 16.70
<EXPENSE-RATIO> 1.40
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 102
<NAME> EVERGREEN AMERICAN RETIREMENT FUND CLASS B
<CAPTION>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR 31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> MAR 31-1998
<INVESTMENTS-AT-COST> 192,500,813
<INVESTMENTS-AT-VALUE> 234,985,901
<RECEIVABLES> 2,874,473
<ASSETS-OTHER> 270,836
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 238,131,210
<PAYABLE-FOR-SECURITIES> 3,550,955
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 760,913
<TOTAL-LIABILITIES> 4,311,868
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 135,438,507
<SHARES-COMMON-STOCK> 9,526,808
<SHARES-COMMON-PRIOR> 5,617,901
<ACCUMULATED-NII-CURRENT> (39,430)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,025,142
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 21,827,296
<NET-ASSETS> 158,251,515
<DIVIDEND-INCOME> 2,471,529
<INTEREST-INCOME> 2,879,223
<OTHER-INCOME> 0
<EXPENSES-NET> (2,497,252)
<NET-INVESTMENT-INCOME> 2,853,500
<REALIZED-GAINS-CURRENT> 3,783,982
<APPREC-INCREASE-CURRENT> 20,198,120
<NET-CHANGE-FROM-OPS> 26,835,602
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,792,552)
<DISTRIBUTIONS-OF-GAINS> (2,734,907)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,220,724
<NUMBER-OF-SHARES-REDEEMED> (651,898)
<SHARES-REINVESTED> 340,081
<NET-CHANGE-IN-ASSETS> 81,466,043
<ACCUMULATED-NII-PRIOR> (157,511)
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (871,389)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (2,500,506)
<AVERAGE-NET-ASSETS> 116,119,787
<PER-SHARE-NAV-BEGIN> 13.67
<PER-SHARE-NII> 0.38
<PER-SHARE-GAIN-APPREC> 3.26
<PER-SHARE-DIVIDEND> (0.36)
<PER-SHARE-DISTRIBUTIONS> (0.34)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 16.61
<EXPENSE-RATIO> 2.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> EVERGREEN AMERICAN RETIREMENT FUND CLASS C
<CAPTION>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR 31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> MAR 31-1998
<INVESTMENTS-AT-COST> 192,500,813
<INVESTMENTS-AT-VALUE> 234,985,901
<RECEIVABLES> 2,874,473
<ASSETS-OTHER> 270,836
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 238,131,210
<PAYABLE-FOR-SECURITIES> 3,550,955
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 760,913
<TOTAL-LIABILITIES> 4,311,868
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,347,268
<SHARES-COMMON-STOCK> 166,810
<SHARES-COMMON-PRIOR> 129,121
<ACCUMULATED-NII-CURRENT> 1,116
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 18,136
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 410,875
<NET-ASSETS> 2,777,395
<DIVIDEND-INCOME> 44,562
<INTEREST-INCOME> 51,934
<OTHER-INCOME> 0
<EXPENSES-NET> (44,966)
<NET-INVESTMENT-INCOME> 51,530
<REALIZED-GAINS-CURRENT> 67,777
<APPREC-INCREASE-CURRENT> 361,654
<NET-CHANGE-FROM-OPS> 480,961
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (49,486)
<DISTRIBUTIONS-OF-GAINS> (50,154)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 80,905
<NUMBER-OF-SHARES-REDEEMED> (49,433)
<SHARES-REINVESTED> 6,217
<NET-CHANGE-IN-ASSETS> 1,008,722
<ACCUMULATED-NII-PRIOR> (1,958)
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (15,706)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (45,025)
<AVERAGE-NET-ASSETS> 2,094,375
<PER-SHARE-NAV-BEGIN> 13.7
<PER-SHARE-NII> 0.38
<PER-SHARE-GAIN-APPREC> 3.27
<PER-SHARE-DIVIDEND> (0.36)
<PER-SHARE-DISTRIBUTIONS> (0.34)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.65
<EXPENSE-RATIO> 2.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> EVERGREEN AMERICAN RETIREMENT FUND CLASS C
<CAPTION>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR 31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> MAR 31-1998
<INVESTMENTS-AT-COST> 192,500,813
<INVESTMENTS-AT-VALUE> 234,985,901
<RECEIVABLES> 2,874,473
<ASSETS-OTHER> 270,836
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 238,131,210
<PAYABLE-FOR-SECURITIES> 3,550,955
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 760,913
<TOTAL-LIABILITIES> 4,311,868
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 26,838,646
<SHARES-COMMON-STOCK> 2,621,505
<SHARES-COMMON-PRIOR> 2,710,150
<ACCUMULATED-NII-CURRENT> 278,534
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 584,009
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 16,084,718
<NET-ASSETS> 43,785,907
<DIVIDEND-INCOME> 844,521
<INTEREST-INCOME> 990,861
<OTHER-INCOME> 0
<EXPENSES-NET> (455,936)
<NET-INVESTMENT-INCOME> 1,379,446
<REALIZED-GAINS-CURRENT> 1,280,908
<APPREC-INCREASE-CURRENT> 7,175,189
<NET-CHANGE-FROM-OPS> 9,835,543
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,312,760)
<DISTRIBUTIONS-OF-GAINS> (874,184)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 542,883
<NUMBER-OF-SHARES-REDEEMED> (749,260)
<SHARES-REINVESTED> 117,732
<NET-CHANGE-IN-ASSETS> 6,542,852
<ACCUMULATED-NII-PRIOR> 192,178
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (299,283)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (457,056)
<AVERAGE-NET-ASSETS> 39,982,832
<PER-SHARE-NAV-BEGIN> 13.74
<PER-SHARE-NII> 0.55
<PER-SHARE-GAIN-APPREC> 3.27
<PER-SHARE-DIVIDEND> (0.52)
<PER-SHARE-DISTRIBUTIONS> (0.34)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 16.70
<EXPENSE-RATIO> 1.14
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 101
<NAME> EVERGREEN BALANCED FUND CLASS A
<CAPTION>
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JAN-23-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> JAN-23-1998
<INVESTMENTS-AT-COST> 1,280,624,600
<INVESTMENTS-AT-VALUE> 1,897,588,085
<RECEIVABLES> 27,558,033
<ASSETS-OTHER> 1,364,324
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,926,510,442
<PAYABLE-FOR-SECURITIES> 24,812,113
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,544,588
<TOTAL-LIABILITIES> 29,356,701
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,218,146,246
<SHARES-COMMON-STOCK> 99,290,770
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (3,075,555)
<ACCUMULATED-NET-GAINS> 504,583
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 61,844,174
<NET-ASSETS> 1,277,419,448
<DIVIDEND-INCOME> 3,086,188
<INTEREST-INCOME> 7,296,960
<OTHER-INCOME> 0
<EXPENSES-NET> (2,432,834)
<NET-INVESTMENT-INCOME> 7,950,314
<REALIZED-GAINS-CURRENT> 16,903,289
<APPREC-INCREASE-CURRENT> 61,844,174
<NET-CHANGE-FROM-OPS> 86,697,777
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (12,029,418)
<DISTRIBUTIONS-OF-GAINS> (25,111,250)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 101,581,995
<NUMBER-OF-SHARES-REDEEMED> (4,919,924)
<SHARES-REINVESTED> 2,628,699
<NET-CHANGE-IN-ASSETS> 1,274,892,849
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (1,060,747)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (2,434,093)
<AVERAGE-NET-ASSETS> 1,259,450,501
<PER-SHARE-NAV-BEGIN> 12.36
<PER-SHARE-NII> 0.08
<PER-SHARE-GAIN-APPREC> 0.81
<PER-SHARE-DIVIDEND> (0.12)
<PER-SHARE-DISTRIBUTIONS> (0.26)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.87
<EXPENSE-RATIO> 0.99
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 102
<NAME> EVERGREEN BALANCED FUND CLASS B
<CAPTION>
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JAN-23-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> JAN-23-1998
<INVESTMENTS-AT-COST> 1,280,624,600
<INVESTMENTS-AT-VALUE> 1,897,588,085
<RECEIVABLES> 27,558,033
<ASSETS-OTHER> 1,364,324
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,926,510,442
<PAYABLE-FOR-SECURITIES> 24,812,113
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,544,588
<TOTAL-LIABILITIES> 29,356,701
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,256,434
<SHARES-COMMON-STOCK> 45,003,516
<SHARES-COMMON-PRIOR> 125,534,120
<ACCUMULATED-NII-CURRENT> 5,831,008
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 42,656,811
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 523,929,657
<NET-ASSETS> 579,673,910
<DIVIDEND-INCOME> 13,354,154
<INTEREST-INCOME> 27,599,502
<OTHER-INCOME> 0
<EXPENSES-NET> (13,814,973)
<NET-INVESTMENT-INCOME> 27,138,683
<REALIZED-GAINS-CURRENT> 109,587,124
<APPREC-INCREASE-CURRENT> 7,796,698
<NET-CHANGE-FROM-OPS> 144,522,506
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (25,630,818)
<DISTRIBUTIONS-OF-GAINS> (168,719,950)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 18,533,929
<NUMBER-OF-SHARES-REDEEMED> (15,656,468)
<SHARES-REINVESTED> 111,566,489
<NET-CHANGE-IN-ASSETS> 1,355,590,898
<ACCUMULATED-NII-PRIOR> 3,239,562
<ACCUMULATED-GAINS-PRIOR> 92,401,815
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (4,144,703)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (13,816,332)
<AVERAGE-NET-ASSETS> 1,359,892,714
<PER-SHARE-NAV-BEGIN> 12.95
<PER-SHARE-NII> 0.35
<PER-SHARE-GAIN-APPREC> 1.44
<PER-SHARE-DIVIDEND> (0.27)
<PER-SHARE-DISTRIBUTIONS> (1.59)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.88
<EXPENSE-RATIO> 1.35
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> EVERGREEN BALANCED FUND CLASS C
<CAPTION>
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JAN-23-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> JAN-23-1998
<INVESTMENTS-AT-COST> 1,280,624,600
<INVESTMENTS-AT-VALUE> 1,897,588,085
<RECEIVABLES> 27,558,033
<ASSETS-OTHER> 1,364,324
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,926,510,442
<PAYABLE-FOR-SECURITIES> 24,812,113
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,544,588
<TOTAL-LIABILITIES> 29,356,701
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 826,858
<SHARES-COMMON-STOCK> 64,372
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 939
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12,511
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (11,111)
<NET-ASSETS> 829,197
<DIVIDEND-INCOME> 1,588
<INTEREST-INCOME> 3,475
<OTHER-INCOME> 0
<EXPENSES-NET> 2,136
<NET-INVESTMENT-INCOME> 2,927
<REALIZED-GAINS-CURRENT> 8,194
<APPREC-INCREASE-CURRENT> (11,111)
<NET-CHANGE-FROM-OPS> 10
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,502)
<DISTRIBUTIONS-OF-GAINS> (135)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 65,852
<NUMBER-OF-SHARES-REDEEMED> (1,672)
<SHARES-REINVESTED> 192
<NET-CHANGE-IN-ASSETS> 780,115
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 526
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (2,137)
<AVERAGE-NET-ASSETS> 643,529
<PER-SHARE-NAV-BEGIN> 12.01
<PER-SHARE-NII> 0.10
<PER-SHARE-GAIN-APPREC> 1.12
<PER-SHARE-DIVIDEND> (0.09)
<PER-SHARE-DISTRIBUTIONS> (0.26)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.88
<EXPENSE-RATIO> 1.76
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> EVERGREEN BALANCED FUND CLASS Y
<CAPTION>
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> JAN-23-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> JAN-23-1998
<INVESTMENTS-AT-COST> 1,280,624,600
<INVESTMENTS-AT-VALUE> 1,897,588,085
<RECEIVABLES> 27,558,033
<ASSETS-OTHER> 1,364,324
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,926,510,442
<PAYABLE-FOR-SECURITIES> 24,812,113
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,544,588
<TOTAL-LIABILITIES> 29,356,701
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,227,005
<SHARES-COMMON-STOCK> 45,003,516
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 23,498
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 807,153
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 32,173,530
<NET-ASSETS> 39,231,186
<DIVIDEND-INCOME> 100,059
<INTEREST-INCOME> 208,317
<OTHER-INCOME> 0
<EXPENSES-NET> 54,550
<NET-INVESTMENT-INCOME> 253,826
<REALIZED-GAINS-CURRENT> 522,616
<APPREC-INCREASE-CURRENT> 32,173,530
<NET-CHANGE-FROM-OPS> 32,949,972
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (263,102)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,211,186
<NUMBER-OF-SHARES-REDEEMED> (1,167,179)
<SHARES-REINVESTED> 6,722
<NET-CHANGE-IN-ASSETS> 69,121,291
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (31,597)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (54,591)
<AVERAGE-NET-ASSETS> 41,131,470
<PER-SHARE-NAV-BEGIN> 12.08
<PER-SHARE-NII> 0.08
<PER-SHARE-GAIN-APPREC> 1.05
<PER-SHARE-DIVIDEND> (0.09)
<PER-SHARE-DISTRIBUTIONS> (0.26)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.86
<EXPENSE-RATIO> 0.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
