1933 Act No. 333-37453
1940 Act No. 811-08413
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. 7 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 6 [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 3, 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. 7
to
REGISTRATION STATEMENT
This Post-Effective Amendment No. 7 to Registrant's Registration Statement
Nos. 333-37453/811-08413 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 Aggressive Growth Fund,
Evergreen Fund, Evergreen Micro Cap Fund, Evergreen Omega Fund,
Evergreen Small Company Growth Fund, Evergreen Strategic Growth Fund
and Evergreen Stock Selector Fund are contained herein.
Prospectuses for the following funds are contained in Registration Statement
No. 333-37453/811-08413 filed on July 31, 1998: Evergreen American Retirement
Fund, Evergreen Foundation Fund, Evergreen Tax Strategic Foundation Fund
and Evergreen Balanced Fund.
Prospectuses for the following fund are contained in Registration
Statement No. 333-37453/811-08413 filed on June 12, 1998:
Evergreen Tax Strategic Equity Fund.
Prospectuses for the following funds are contained in Registration
Statement No. 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 B
------
Statement of Additional Information 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 Stock Selector Fund is contained herein.
Statement of Additional Information for the following funds
is contained in Registration Statement No. 333-37453/811-08413
filed on July 31, 1998: Evergreen American Retirement Fund,
Evergreen Foundation Fund, Evergreen Tax Strategic Foundation Fund
and Evergreen Balanced Fund.
Statement of Additional Information for the following fund is
contained in Registration Statement No. 333-37453/811-08413
filed on June 12, 1998: Evergreen Tax Strategic Equity Fund.
Statement of Additional Information for the following funds is contained
in Registration Statement No. 333-37453/811-08413 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.
Part A Location in Prospectus(es)
- ------ --------------------------
<S> <C>
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
Part B Location in Statement of 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
<PAGE>
- -------------------------------------------------------------------------------
PROSPECTUS
February 1, 1998, as amended August 3, 1998
- -------------------------------------------------------------------------------
EVERGREEN DOMESTIC GROWTH FUNDS [LOGO OF EVERGREEN
FUNDS(SM) APPEARS HERE]
- -------------------------------------------------------------------------------
EVERGREEN FUND
EVERGREEN MICRO CAP FUND
EVERGREEN AGGRESSIVE GROWTH FUND
EVERGREEN OMEGA FUND
EVERGREEN SMALL COMPANY GROWTH FUND
EVERGREEN STRATEGIC GROWTH FUND
EVERGREEN STOCK SELECTOR FUND
(EACH A "FUND;" TOGETHER, THE "FUNDS")
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
The Funds are designed to provide investors with a selection of
investment alternatives which seek to provide capital growth and
diversification. 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
February 1, 1998, as amended August 1, 1998, 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 Funds at (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.
AN INVESTMENT IN THE FUNDS IS NOT A DEPOSIT OR OBLIGATION OF ANY BANK, IS NOT
ENDORSED OR GUARANTEED BY ANY BANK, AND IS NOT INSURED OR OTHERWISE PROTECTED
BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY AND 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
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
EXPENSE INFORMATION.................................................... 3
FINANCIAL HIGHLIGHTS................................................... 5
DESCRIPTION OF THE FUNDS............................................... 17
Investment Objectives and Policies.................................. 17
Investment Practices and Restrictions............................... 19
ORGANIZATION AND SERVICE PROVIDERS..................................... 23
Organization........................................................ 23
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 below are designed to help you understand the
various expenses that you will bear, directly or indirectly, when you invest
in a Fund. Shareholder transaction expenses are fees paid directly from your
account when you buy or sell shares of a Fund.
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES CLASS A SHARES CLASS B SHARES CLASS C SHARES
- -------------------------------- -------------- -------------- --------------
<S> <C> <C> <C>
Maximum Sales Charge Imposed on
Purchases 4.75% None None
(as a % of offering price)
Maximum Contingent Deferred Sales
Charge (as a % of original
purchase price or redemption
proceeds, whichever is lower) None(1) 5%(2) 1%(2)
</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 FUND, EVERGREEN MICRO CAP FUND,
EVERGREEN AGGRESSIVE GROWTH FUND and EVERGREEN OMEGA FUND actual annual
operating expenses for the fiscal period ended September 30, 1997. The annual
operating expenses for EVERGREEN SMALL COMPANY GROWTH FUND, EVERGREEN
STRATEGIC GROWTH FUND and EVERGREEN STOCK SELECTOR FUND have been estimated
for the fiscal period ending September 30, 1998. The examples show what you
would pay if you invested $1,000 over the periods indicated. The examples
assume that you reinvest all of your dividends and that a Fund's 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. A FUND'S ACTUAL EXPENSES AND RETURNS WILL VARY. For a more complete
description of the various costs and expenses borne by a Fund see
"Organization and Service Providers."
EVERGREEN FUND
<TABLE>
<CAPTION>
EXAMPLES
--------
ASSUMING REDEMPTION ASSUMING
ANNUAL OPERATING EXPENSES AT END OF PERIOD NO REDEMPTION
---------------------------- ----------------------- ---------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS B CLASS C
-------- -------- -------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees 0.92% 0.92% 0.92% After 1 Year $ 61 $ 72 $ 32 $ 22 $ 22
12b-1 Fees (3) 0.25% 1.00% 1.00% After 3 Years $ 90 $ 97 $ 68 $ 67 $ 68
Other Expenses 0.23% 0.23% 0.24% After 5 Years $120 $135 $116 $115 $116
-------- -------- -------- After 10 Years $207 $220 $249 $220 $249
Total 1.40% 2.15% 2.16%
======== ======== ========
</TABLE>
EVERGREEN MICRO CAP FUND
<TABLE>
<CAPTION>
EXAMPLES
--------
ASSUMING REDEMPTION AT ASSUMING NO
ANNUAL OPERATING EXPENSES END OF PERIOD REDEMPTION
---------------------------- ----------------------- ---------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS B CLASS C
-------- -------- -------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees 1.00% 1.00% 1.00% After 1 Year $ 65 $ 76 $ 36 $ 26 $ 26
12b-1 Fees (3) 0.25% 1.00% 1.00% After 3 Years $101 $111 $ 80 $ 81 $ 80
Other Expenses 0.54% 0.59% 0.56% After 5 Years $140 $158 $136 $138 $136
-------- -------- -------- After 10 Years $248 $263 $290 $263 $290
Total 1.79% 2.59% 2.56%
======== ======== ========
</TABLE>
EVERGREEN AGGRESSIVE GROWTH FUND
<TABLE>
<CAPTION>
EXAMPLES
--------
ASSUMING REDEMPTION AT ASSUMING NO
ANNUAL OPERATING EXPENSES END OF PERIOD REDEMPTION
---------------------------- ----------------------- ---------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS B CLASS C
-------- -------- -------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees 0.60% 0.60% 0.60% After 1 Year $ 60 $ 71 $ 31 $ 21 $ 21
12b-1 Fees (3) 0.25% 1.00% 1.00% After 3 Years $ 86 $ 93 $ 63 $ 63 $ 63
Other Expenses 0.41% 0.42% 0.42% After 5 Years $113 $129 $109 $109 $109
-------- -------- -------- After 10 Years $193 $206 $235 $206 $235
Total 1.26% 2.02% 2.02%
======== ======== ========
</TABLE>
3
<PAGE>
EVERGREEN OMEGA FUND
<TABLE>
<CAPTION>
EXAMPLES
--------
ASSUMING REDEMPTION AT ASSUMING NO
ANNUAL OPERATING EXPENSES END OF PERIOD REDEMPTION
---------------------------- ----------------------- ---------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS B CLASS C
-------- -------- -------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees 0.74% 0.74% 0.74% After 1 Year $ 60 $ 72 $ 32 $ 22 $ 22
12b-1 Fees (3) 0.25% 1.00% 1.00% After 3 Years $ 87 $ 98 $ 68 $ 68 $ 68
Other Expenses 0.33% 0.44% 0.44% After 5 Years $116 $137 $117 $117 $117
-------- -------- -------- After 10 Years $199 $219 $251 $219 $251
Total 1.32% 2.18% 2.18%
======== ======== ========
</TABLE>
EVERGREEN SMALL COMPANY GROWTH FUND
<TABLE>
<CAPTION>
EXAMPLES
--------
ASSUMING REDEMPTION AT ASSUMING NO
ANNUAL OPERATING EXPENSES END OF PERIOD REDEMPTION
---------------------------- ----------------------- ---------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS B CLASS C
-------- -------- -------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees 0.48% 0.48% 0.48%
12b-1 Fees (3) 0.25% 1.00% 1.00% After 1 Year $ 57 $ 68 $ 28 $ 18 $ 18
Other Expenses 0.29% 0.29% 0.29% After 3 Years $ 78 $ 86 $ 56 $ 56 $ 56
-------- -------- -------- After 5 Years $101 $116 $ 96 $ 96 $ 96
Total 1.02% 1.77% 1.77% After 10 Years $166 $179 $208 $179 $208
======== ======== ========
</TABLE>
EVERGREEN STRATEGIC GROWTH FUND
<TABLE>
<CAPTION>
EXAMPLES
--------
ASSUMING REDEMPTION AT ASSUMING NO
ANNUAL OPERATING EXPENSES END OF PERIOD REDEMPTION
---------------------------- ----------------------- ---------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS B CLASS C
-------- -------- -------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees 0.53% 0.53% 0.53%
12b-1 Fees (3) 0.25% 1.00% 1.00% After 1 Year $ 58 $ 69 $ 29 $ 19 $ 19
Other Expenses 0.32% 0.32% 0.32% After 3 Years $ 81 $ 88 $ 58 $ 58 $ 58
-------- -------- -------- After 5 Years $105 $120 $100 $100 $100
Total 1.10% 1.85% 1.85% After 10 Years $175 $188 $217 $188 $217
======== ======== ========
</TABLE>
EVERGREEN STOCK SELECTOR FUND
<TABLE>
<CAPTION>
EXAMPLES
--------
ANNUAL OPERATING ASSUMING REDEMPTION AT ASSUMING NO
EXPENSES END OF PERIOD REDEMPTION
----------------------- ----------------------- ---------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS B CLASS C
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees
(After
Waiver)(4) 0.65% 0.65% 0.65% After 1 year $59 $70 $30 $20 $20
12b-1 Fees (3) 0.25% 1.00% 1.00% After 3 years $83 $91 $61 $61 $61
Other Expenses 0.28% 0.28% 0.28%
----- ----- -----
Total (4) 1.18% 1.93% 1.93%
===== ===== =====
</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.
(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) The management fee has been reduced from .74% to reflect the voluntary
waiver by the investment advisor. This voluntary waiver can be terminated
at any time. The investment advisor has undertaken to limit the Fund's
Total Annual Operating Expenses for a period of at least two years from
the date of this prospectus to 1.27%, 2.02% and 2.02% of the average daily
net assets of the Fund's Class A, Class B and Class C shares,
respectively. Absent the management fee waiver and the limitation on Total
Annual Operating Expenses, such estimated expenses for the fiscal period
ending September 30, 1998 will be 1.27%, 2.02% and 2.02% of the average
daily net assets of the Fund's Class A, Class B and Class C shares,
respectively.
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, for EVERGREEN FUND has been audited by
PricewaterhouseCoopers LLP, the Fund's independent auditors. The information
in the tables for EVERGREEN MICRO CAP FUND for the fiscal years ended
September 30, 1997 and 1996 has been audited by PricewaterhouseCoopers LLP,
the Fund's current independent auditors. The information in the tables for the
Fund's fiscal period ended September 30, 1995 was audited by the Fund's prior
independent auditors. The information in the tables for EVERGREEN AGGRESSIVE
GROWTH FUND for the fiscal periods ended September 30, 1997 through 1995 has
been audited by PricewaterhouseCoopers LLP, the Fund's current independent
auditors. The information in the tables for each of the years in the six-year
period ended October 31, 1994, the ten months ended October 31, 1988 and for
the year ended December 31, 1987 was audited by the Fund's prior independent
auditors. The information in the tables for EVERGREEN OMEGA FUND for the
fiscal period ended September 30, 1997 and for each of the years in the eight-
year period ended December 31, 1996 for Class A shares, for the fiscal period
ended September 30, 1997 and for each of the years in the three-year period
ended December 31, 1996, and the period from August 2, 1993 (date of initial
public offering) to December 31, 1993 for Class B and Class C shares has been
audited by KPMG Peat Marwick LLP, the Fund's independent auditors. The
information in the tables for each of the years in the two-year period ended
December 31, 1988 for Class A shares was audited by the Fund's prior
independent auditors. The information in the tables for EVERGREEN SMALL
COMPANY GROWTH FUND for the fiscal period ended September 30, 1997 and for
each of the years in the ten-year period ended May 31, 1996 was audited by
KPMG Peat Marwick LLP, the Fund's current independent auditors. The
information in the tables for EVERGREEN STRATEGIC GROWTH FUND for the fiscal
period ended September 30, 1997 and for each of the years in the ten-year
period ended October 31, 1996 was audited by KPMG Peat Marwick LLP, the Fund's
current independent auditors. The information in the tables for EVERGREEN
STOCK SELECTOR FUND (formerly Core Equity Fund, a portfolio of CoreFunds,
Inc., and reorganized into EVERGREEN STOCK SELECTOR FUND in July 1998) for the
fiscal periods ended June 30, 1997 and 1996 was audited by Ernst & Young LLP,
independent auditors. The information in the tables for each of the periods in
the six-year period ended October 31, 1995 was audited by the Fund's prior
independent auditors. Class A and Class C shares of EVERGREEN SMALL COMPANY
GROWTH FUND and EVERGREEN STRATEGIC GROWTH FUND were not offered until January
20, 1998, and Class B and Class C shares of EVERGREEN STOCK SELECTOR FUND are
offered only as of the date of this prospectus. Therefore, no financial
highlights are currently available for those shares. A report of
PricewaterhouseCoopers LLP, KPMG Peat Marwick LLP, or Ernst & Young LLP as the
case may be, on the audited information with respect to each Fund is
incorporated by reference in the SAI. The following information for each Fund
should be read in conjunction with the financial statements and related notes
which are incorporated by reference in the SAI.
Further information about each Fund's performance is contained in the
Fund's Annual Report to shareholders, which may be obtained without charge.
5
<PAGE>
EVERGREEN FUND -- CLASS A AND B SHARES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
-------------------------------------------- --------------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30, ENDED YEAR ENDED SEPTEMBER 30,
MARCH 31, 1998# ---------------------------- MARCH 31, 1998# ----------------------------
(UNAUDITED) 1997# 1996 1995* (UNAUDITED) 1997# 1996 1995*
--------------- -------- -------- -------- --------------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value
beginning of year...... $22.96 $17.64 $15.55 $11.97 $22.69 $17.49 $15.48 $11.97
------- -------- -------- ------- ------- -------- -------- -------
Income from investment
operations:
Net investment income.. 0.03 0.11 0.12 0.01 (0.05) (0.03) (0.03) (0.02)
Net realized and
unrealized gain on
investments........... 2.73 5.71 2.61 3.57 2.71 5.64 2.64 3.53
------- -------- -------- ------- ------- -------- -------- -------
Total from investment
operations............. 2.76 5.82 2.73 3.58 2.66 5.61 2.61 3.51
------- -------- -------- ------- ------- -------- -------- -------
Less distributions from:
Net investment income.. (0.10) (0.09) (0.06) 0 0 0 (0.02) 0
Net realized gain on
investments........... (0.50) (0.41) (0.58) 0 (0.50) (0.41) (0.58) 0
------- -------- -------- ------- ------- -------- -------- -------
Total distributions..... (0.60) (0.50) (0.64) 0 (0.50) (0.41) (0.60) 0
------- -------- -------- ------- ------- -------- -------- -------
Net asset value end of
year................... $25.12 $22.96 $17.64 $15.55 $24.85 $22.69 $17.49 $15.48
======= ======== ======== ======= ======= ======== ======== =======
TOTAL RETURN+........... 12.35% 33.72% 18.07% 29.91% 11.98% 32.69% 17.29% 29.32%
RATIOS & SUPPLEMENTAL
DATA:
Ratios to average net
assets:
Total expenses......... 1.44%++ 1.40% 1.45% 1.70%++ 2.19%++ 2.15% 2.18% 2.32%++
Total expenses,
excluding indirectly
paid expenses......... 1.44%++ 1.40% N/A N/A 2.19%++ 2.15% N/A N/A
Total expenses,
excluding fee waivers
& expense
reimbursements........ N/A N/A N/A 1.75%++ N/A N/A N/A 2.34%++
Net investment income.. 0.23%++ 0.58% 0.63% 0.13%++ (0.52%)++ (0.16%) (0.10%) (0.48%)++
Portfolio turnover
rate................... 4% 12% 15% 19% 4% 12% 15% 19%
Average commission rate
paid per share......... $0.0571 $0.0577 $0.0603 N/A $0.0571 $0.0577 $0.0603 N/A
NET ASSETS END OF YEAR
(MILLIONS)............. $219 $161 $87 $29 $664 $503 $254 $74
</TABLE>
EVERGREEN FUND -- CLASS C SHARES
<TABLE>
<CAPTION>
CLASS C SHARES
--------------------------------------------
SIX MONTHS
ENDED YEAR ENDED SEPTEMBER 30,
MARCH 31, 1998# ----------------------------
(UNAUDITED) 1997# 1996 1995*
--------------- -------- -------- --------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value beginning of
year........................... $22.66 $17.47 $15.48 $11.97
------- -------- -------- -------
Income from investment
operations:
Net investment income.......... (0.03) (0.04) 0 (0.01)
Net realized and unrealized
gain on investments........... 2.67 5.64 2.61 3.52
------- -------- -------- -------
Total from investment
operations..................... 2.64 5.60 2.61 3.51
------- -------- -------- -------
Less distributions from:
Net investment income.......... 0 0 (0.04) 0
Net realized gain on
investments................... (0.50) (0.41) (0.58) 0
------- -------- -------- -------
Total distributions............. (0.50) (0.41) (0.62) 0.00
------- -------- -------- -------
Net asset value end of year..... $24.80 $22.66 $17.47 $15.48
======= ======== ======== =======
TOTAL RETURN+................... 11.91% 32.67% 17.29% 29.32%
RATIOS & SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses................. 2.19%++ 2.16% 2.14% 2.12%++
Total expenses, excluding
indirectly paid expenses...... 2.19%++ 2.16% N/A N/A
Total expenses, excluding fee
waivers & expense
reimbursements................ N/A N/A 2.38% 5.31%++
Net investment income.......... (0.51%)++ (0.18%) (0.07%) (0.31%)++
Portfolio turnover rate......... 4% 12% 15% 19%
Average commission rate paid per
share.......................... $0.0571 $0.0577 $0.0603 N/A
NET ASSETS END OF YEAR
(MILLIONS)..................... $13 $9 $6 $2
</TABLE>
- -------
# Net investment income is based on average shares outstanding during the
period.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 3, 1995 (commencement of class operations) to
September 30, 1995.
6
<PAGE>
EVERGREEN MICRO CAP FUND -- CLASS A AND B SHARES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
----------------------------------------- -----------------------------------------
SIX MONTHS SIX MONTHS
ENDED ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30, MARCH 31, YEAR ENDED SEPTEMBER 30,
1998# ---------------------------- 1998# ----------------------------
(UNAUDITED) 1997# 1996 1995* (UNAUDITED) 1997# 1996 1995*
----------- -------- -------- -------- ----------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value
beginning of year...... $26.68 $17.31 $18.41 $15.76 $26.14 $17.07 $18.30 $15.76
------- -------- -------- -------- ------- -------- -------- --------
Income from investment
operations:
Net investment loss.... (0.15) (0.15) (0.10) (0.10) (0.24) (0.28) (0.25) (0.20)
Net realized and
unrealized gain (loss)
on investments........ 2.47 9.52 (0.44) 2.75 2.41 9.35 (0.42) 2.74
------- -------- -------- -------- ------- -------- -------- --------
Total from investment
operations............. 2.32 9.37 (0.54) 2.65 2.17 9.07 (0.67) 2.54
------- -------- -------- -------- ------- -------- -------- --------
Less distributions from:
Net realized gain on
investments........... (1.39) 0 (0.56) 0 (1.39) 0 (0.56) 0
------- -------- -------- -------- ------- -------- -------- --------
Total distributions..... (1.39) 0 (0.56) 0 (1.39) 0 (0.56) 0
------- -------- -------- -------- ------- -------- -------- --------
Net asset value end of
year................... $27.61 $26.68 $17.31 $18.41 $26.92 $26.14 $17.07 $18.30
======= ======== ======== ======== ======= ======== ======== ========
TOTAL RETURN+........... 9.04% 54.13% (2.90%) 16.81% 8.64% 53.13% (3.64%) 16.12%
RATIOS & SUPPLEMENTAL
DATA:
Ratios to average net
assets:
Total expenses......... 1.79%++ 1.79% 1.73% 1.51%++ 2.54%++ 2.59% 2.47% 2.26%++
Interest expense....... 0.06%++ 0.02% 0.02% N/A 0.06%++ 0.02% 0.02% N/A
Total expenses,
excluding indirectly
paid expenses......... 1.78%++ 1.78% N/A N/A 2.53%++ 2.58% N/A N/A
Total expenses,
excluding fee waiver &
expense
reimbursement......... N/A N/A 3.08% 4.33%++ N/A N/A 3.26% 3.66%++
Net investment loss.... (1.14%)++ (0.73%) (0.52%) (1.03%)++ (1.89%)++ (1.44%) (1.28%) (1.77%)++
Portfolio turnover
rate................... 24% 59% 160% 84% 24% 59% 160% 84%
Average commission rate
paid per share......... $0.0523 $0.0543 $0.0465 N/A $0.0523 $0.0543 $0.0465 N/A
NET ASSETS END OF YEAR
(THOUSANDS)............ $5,922 $2,438 $903 $1,089 $4,719 $1,713 $1,461 $2,020
</TABLE>
EVERGREEN MICRO CAP FUND -- CLASS C SHARES
<TABLE>
<CAPTION>
CLASS C SHARES
-----------------------------------------
SIX MONTHS
ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30,
1998# ----------------------------
(UNAUDITED) 1997# 1996 1995*
----------- -------- -------- --------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value beginning of year.. $26.16 $17.09 $18.31 $15.76
------- -------- -------- --------
Income from investment operations:
Net investment loss............... (0.25) (0.25) (0.35) (0.20)
Net realized and unrealized gain
(loss) on investments............ 2.42 9.32 (0.31) 2.75
------- -------- -------- --------
Total from investment operations... 2.17 9.07 (0.66) 2.55
------- -------- -------- --------
Less distributions from:
Net realized gain on investments.. (1.39) 0 (0.56) 0
------- -------- -------- --------
Total distributions................ (1.39) 0 (0.56) 0
------- -------- -------- --------
Net asset value end of year........ $26.94 $26.16 $17.09 $18.31
======= ======== ======== ========
TOTAL RETURN+...................... 8.63% 53.07% (3.58%) 16.18%
RATIOS & SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses.................... 2.54%++ 2.56% 2.44% 2.25%++
Interest expense.................. 0.06%++ 0.02% 0.02% N/A
Total expenses, excluding
indirectly paid expenses......... 2.53%++ 2.55% N/A N/A
Total expenses, excluding fee
waiver & expense reimbursement... N/A N/A 32.28% 41.34%++
Net investment loss............... (1.93%)++ (1.50%) (1.35%) (1.76%)++
Portfolio turnover rate............ 24% 59% 160% 84%
Average commission rate paid per
share............................. $0.0523 $0.0543 $0.0465 N/A
NET ASSETS END OF YEAR
(THOUSANDS)....................... $3,721 $261 $27 $62
</TABLE>
- -------
# Net investment income is based on average shares outstanding during the
period.
* For the period from January 3, 1995 (commencement of class operations) to
September 30, 1995.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
7
<PAGE>
EVERGREEN AGGRESSIVE GROWTH FUND -- CLASS A SHARES
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
1998# --------------------------
(UNAUDITED) 1997# 1996 1995*
----------- -------- ------- -------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value
beginning of
year............ $23.48 $21.04 $17.37 $13.85
-------- -------- ------- -------
Income from
investment
operations:
Net investment
loss........... (0.12) (0.21) (0.15) (0.16)
Net realized and
unrealized gain
(loss) on
investments.... 0.67 2.65 4.46 3.68
-------- -------- ------- -------
Total from
investment
operations...... 0.55 2.44 4.31 3.52
-------- -------- ------- -------
Less
distributions
from:
Net realized
gain on
investments.... (0.85) 0 (0.64) 0
-------- -------- ------- -------
Total
distributions... (0.85) 0 (0.64) 0
-------- -------- ------- -------
Net asset value
end of year..... $23.18 $23.48 $21.04 $17.37
======== ======== ======= =======
TOTAL RETURN+.... 2.56% 11.60% 25.62% 25.42%
RATIOS &
SUPPLEMENTAL
DATA:
Ratios to average
net assets:
Total expenses.. 1.27%++ 1.26% 1.22% 1.47%++
Total expenses,
excluding
indirectly paid
expenses....... 1.27%++ 1.25% N/A N/A
Net investment
loss........... (1.11%)++ (1.05%) (0.86%) (1.12%)++
Portfolio
turnover rate... 28% 56% 33% 31%
Average
commission rate
paid per share.. $0.0598 $0.0531 $0.0582 N/A
NET ASSETS END OF
YEAR
(THOUSANDS)..... $157,749 $173,982 $96,608 $70,858
<CAPTION>
YEAR ENDED OCTOBER 31, YEAR ENDED
------------------------------------------------------------------------ DECEMBER 31,
1994#(A) 1993#(A) 1992#(A) 1991#(A) 1990#(A) 1989#(A) 1988**#(A) 1987#(A)
--------- --------- --------- --------- --------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value
beginning of
year............ $14.44 $11.76 $12.22 $7.37 $11.06 $7.62 $7.07 $8.77
--------- --------- --------- --------- --------- --------- ------------ ------------
Income from
investment
operations:
Net investment
loss........... (0.13) (0.12) (0.10) (0.08) (0.04) (0.11) (0.21) (0.11)
Net realized and
unrealized gain
(loss) on
investments.... (0.22) 3.06 1.84 5.59 (2.02) 3.55 0.76 (1.34)
--------- --------- --------- --------- --------- --------- ------------ ------------
Total from
investment
operations...... (0.35) 2.94 1.74 5.51 (2.06) 3.44 0.55 (1.45)
--------- --------- --------- --------- --------- --------- ------------ ------------
Less
distributions
from:
Net realized
gain on
investments.... (0.24) (0.26) (2.20) (0.66) (1.63) 0 0 (0.25)
--------- --------- --------- --------- --------- --------- ------------ ------------
Total
distributions... (0.24) (0.26) (2.20) (0.66) (1.63) 0 0 (0.25)
--------- --------- --------- --------- --------- --------- ------------ ------------
Net asset value
end of year..... $13.85 $14.44 $11.76 $12.22 $7.37 $11.06 $7.62 $7.07
========= ========= ========= ========= ========= ========= ============ ============
TOTAL RETURN+.... (2.42%) 25.31% 17.43% 79.80% (20.45%) 45.14% 7.78% (16.51%)
RATIOS &
SUPPLEMENTAL
DATA:
Ratios to average
net assets:
Total expenses.. 1.25% 1.31% 1.44% 1.59% 1.86% 1.78% 2.02%++ 1.57%
Total expenses,
excluding
indirectly paid
expenses....... N/A N/A N/A N/A N/A N/A N/A N/A
Net investment
loss........... (0.92%) (0.92%) (0.93%) (0.71%) (0.49%) (1.19%) (1.36%)++ (1.05%)
Portfolio
turnover rate... 59% 48% 46% 108% 100% 120% 45% 65%
Average
commission rate
paid per share.. N/A N/A N/A N/A N/A N/A N/A N/A
NET ASSETS END OF
YEAR
(THOUSANDS)..... $64,635 $58,053 $29,302 $23,509 $14,325 $21,241 $19,900 $25,700
</TABLE>
- -------
# Net investment income is based on average shares outstanding during the
period.
++ Annualized.
+ Initial sales charge or contingent deferred sales charge is not reflected.
* For the eleven months ended September 30, 1995. The Fund changed its fiscal
year end from October 31 to September 30, effective September 30, 1995.
** For the ten months ended October 31, 1988. The Fund changed its fiscal year
end from December 31 to October 31, effective October 31, 1988.
(a) Effective June 30, 1995, Evergreen Aggressive Growth Fund, a new series of
Evergreen Trust, acquired substantially all of the net assets of ABT
Emerging Growth Fund. ABT Emerging Growth Fund, which had a fiscal year
that ended on October 31 was the accounting survivor in the combination.
Accordingly, the information above includes the results of operations of
ABT Emerging Growth Fund prior to June 30, 1995.
8
<PAGE>
EVERGREEN AGGRESSIVE GROWTH FUND -- CLASS B AND C SHARES
<TABLE>
<CAPTION>
CLASS B SHARES CLASS C SHARES
----------------------------------------- ------------------------------------------
SIX MONTHS SIX MONTHS
ENDED ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30, MARCH 31, YEAR ENDED SEPTEMBER 30,
1998# ---------------------------- 1998# -----------------------------
(UNAUDITED) 1997# 1996 1995* (UNAUDITED) 1997# 1996 1995**
----------- -------- -------- -------- ----------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value
beginning of year...... $23.18 $20.89 $17.35 $15.82 $23.16 $20.88 $17.31 $16.42
------- -------- -------- ------- ------- -------- -------- -------
Income from investment
operations:
Net investment loss.... (0.20) (0.37) (0.16) (0.03) (0.20) (0.36) (0.15) (0.01)
Net realized and
unrealized gain on
investments........... 0.67 2.66 4.34 1.56 0.68 2.64 4.36 0.90
------- -------- -------- ------- ------- -------- -------- -------
Total from investment
operations............. 0.47 2.29 4.18 1.53 0.48 2.28 4.21 0.89
------- -------- -------- ------- ------- -------- -------- -------
Less distributions from:
Net realized gain on
investments........... (0.85) 0 (0.64) 0 (0.85) 0 (0.64) 0
------- -------- -------- ------- ------- -------- -------- -------
Total distributions..... (0.85) 0 (0.64) 0 (0.85) 0 (0.64) 0
------- -------- -------- ------- ------- -------- -------- -------
Net asset value end of
year................... $22.80 $23.18 $20.89 $17.35 $22.79 $23.16 $20.88 $17.31
======= ======== ======== ======= ======= ======== ======== =======
TOTAL RETURN+........... 2.24% 10.96% 24.88% 9.67% 2.29% 10.92% 25.11% 5.42%
RATIOS & SUPPLEMENTAL
DATA:
Ratios to average net
assets:
Total expenses......... 2.04%++ 2.02% 1.98% 2.09%++ 2.04%++ 2.02% 1.96% 2.09%++
Total expenses,
excluding indirectly
paid expenses......... 2.04%++ 2.01% N/A N/A 2.04%++ 2.01% N/A N/A
Net investment loss.... (1.87%)++ (1.80%) (1.60%) (1.71%)++ (1.87%)++ (1.80%) (1.57%) (1.51%)++
Portfolio turnover
rate................... 28% 56% 33% 31% 28% 56% 33% 31%
Average commission rate
paid per share......... $0.0598 $0.0531 $0.0582 N/A $0.0598 $0.0531 $0.0582 N/A
Net assets end of year
(thousands)............ $40,305 $41,167 $21,644 $2,858 $3,767 $3,992 $991 $416
</TABLE>
- -------
# Net investment income is based on average shares outstanding during the
period.
* For the period from July 7, 1995 (commencement of class operations) to
September 30, 1995.
** For the period from August 3, 1995 (commencement of class operations) to
September 30, 1995.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
9
<PAGE>
EVERGREEN OMEGA FUND -- CLASS A SHARES
<TABLE>
<CAPTION>
SIX MONTHS
ENDED NINE MONTHS
MARCH 31, ENDED
1998# SEPTEMBER 30,
(UNAUDITED) 1997#*
----------- -------------
<S> <C> <C>
PER SHARE DATA:
Net asset value
beginning of
period.......... $22.69 $19.52
-------- --------
Income from
investment
operations:
Net investment
income (loss).. (0.04) (0.03)
Net realized and
unrealized gain
(loss) on
investments.... 3.44 4.05
-------- --------
Total from
investment
operations...... 3.40 4.02
-------- --------
Less
distributions
from:
Net realized
gain on
investments.... (2.13) (0.85)
-------- --------
Total
distributions... (2.13) (0.85)
-------- --------
Net asset value
end of period... $23.96 $22.69
======== ========
TOTAL RETURN+.... 16.37% 21.45%
RATIOS &
SUPPLEMENTAL
DATA:
Ratios to average
net assets:
Total expenses.. 1.31%++ 1.32%++
Total expenses,
excluding
indirectly paid
expenses....... 1.31%++ 1.31%++
Net investment
income (loss).. (0.39%)++ (0.20%)++
Portfolio
turnover rate... 108% 76%
Average
commission rate
paid per
share........... $0.0587 $0.0580
NET ASSETS END OF
PERIOD
(THOUSANDS)..... $179,362 $162,847
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992# 1991 1990 1989 1988 1987
--------- --------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value
beginning of
period.......... $19.56 $15.54 $17.11 $15.84 $17.68 $13.37 $16.03 $13.66 $12.08 $13.44
--------- --------- -------- -------- -------- -------- -------- -------- -------- --------
Income from
investment
operations:
Net investment
income (loss).. (0.06) 0 0.04 (0.07) 0 (0.04) 0.11 0.17 0.30(a) 0.02
Net realized and
unrealized gain
(loss) on
investments.... 2.15 5.58 (1.00) 3.07 0.39 6.92 (0.39) 4.30 1.40 1.11
--------- --------- -------- -------- -------- -------- -------- -------- -------- --------
Total from
investment
operations...... 2.09 5.58 (0.96) 3.00 0.39 6.88 (0.28) 4.47 1.70 1.13
--------- --------- -------- -------- -------- -------- -------- -------- -------- --------
Less
distributions
from:
Net realized
gain on
investments.... (2.13) (1.56) (0.61) (1.73) (2.23) (2.50) (2.09) (1.90) 0 (2.25)
--------- --------- -------- -------- -------- -------- -------- -------- -------- --------
Total
distributions... (2.13) (1.56) (0.61) (1.73) (2.23) (2.57) (2.38) (2.10) (0.12) (2.49)
--------- --------- -------- -------- -------- -------- -------- -------- -------- --------
Net asset value
end of period... $19.52 $19.56 $15.54 $17.11 $15.84 $17.68 $13.37 $16.03 $13.66 $12.08
========= ========= ======== ======== ======== ======== ======== ======== ======== ========
TOTAL RETURN+.... 11.31% 36.94% (5.66%) 19.33% 4.00% 54.49% (2.38%) 33.05% 14.05% 8.27%
RATIOS &
SUPPLEMENTAL
DATA:
Ratios to average
net assets:
Total expenses.. 1.33% 1.38% 1.41% 1.51% 1.52% 1.57% 1.73% 1.84% 1.78% 1.99%
Total expenses,
excluding
indirectly paid
expenses....... 1.32% 1.37% N/A N/A N/A N/A N/A N/A N/A N/A
Net investment
income (loss).. (0.29%) 0.00% 0.27% (.48%) (0.01%) (0.31%) 0.70% 1.03% 2.22% 0.13%
Portfolio
turnover rate... 173% 159% 137% 162% 176% 115% 108% 77% 84% 106%
Average
commission rate
paid per
share........... $0.0621 N/A N/A N/A N/A N/A N/A N/A N/A N/A
NET ASSETS END OF
PERIOD
(THOUSANDS)..... $154,825 $135,079 $99,569 $90,404 $73,144 $58,671 $38,531 $39,682 $33,951 $30,246
</TABLE>
- -------
# Net investment income is based on average shares outstanding during the
period.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* The Fund changed its fiscal year end from December 31 to September 30,
effective September 30, 1997.
(a) Includes $0.17 per share relating to a special non-recurring distribution
from Inco Limited.
10
<PAGE>
EVERGREEN OMEGA FUND -- CLASS B AND C SHARES
<TABLE>
<CAPTION>
CLASS B SHARES
--------------------------------------------------------------
SIX MONTHS
ENDED NINE MONTHS
MARCH 31, ENDED YEAR ENDED DECEMBER 31,
1998# SEPTEMBER 30, ---------------------------------
(UNAUDITED) 1997#** 1996 1995 1994 1993*
----------- ------------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value
beginning of
period.......... $21.71 $18.83 $19.10 $15.34 $17.06 $17.29
-------- -------- ------- ------- ------- ------
Income from
investment
operations:
Net investment
income (loss).. (0.12) (0.15) (0.17) (0.09) (0.06) (0.05)
Net realized and
unrealized gain
(loss) on
investments.... 3.26 3.88 2.03 5.41 (1.60) 1.55
-------- -------- ------- ------- ------- ------
Total from
investment
operations...... 3.14 3.73 1.86 5.32 (1.66) 1.50
-------- -------- ------- ------- ------- ------
Less
distributions
from:
Net realized
gain on
investments.... (2.13) (0.85) (2.13) (1.56) (0.06) (1.73)
-------- -------- ------- ------- ------- ------
Total
distributions... (2.13) (0.85) (2.13) (1.56) (0.06) (1.73)
-------- -------- ------- ------- ------- ------
Net asset value
end of period... $22.72 $21.71 $18.83 $19.10 $15.34 $17.06
======== ======== ======= ======= ======= ======
TOTAL RETURN+.... 15.94% 20.68% 10.31% 35.70% (6.57%) 9.02%
RATIOS &
SUPPLEMENTAL
DATA:
Ratios to average
net assets:
Total expenses.. 2.12%++ 2.18%++ 2.20% 2.29% 2.30% 2.57%++
Total expenses,
excluding
indirectly paid
expenses....... 2.12%++ 2.17%++ 2.18% 2.27% N/A N/A
Net investment
income (loss).. (1.20%)++ (1.06%)++ (1.15%) (0.94%) (0.58%) (1.73%)++
Portfolio
turnover rate... 108% 76% 173% 159% 137% 162%
Average
commission rate
paid per share.. $0.0587 $0.0580 $0.0621 N/A N/A N/A
Net assets end of
period
(thousands)..... $124,631 $110,349 $89,921 $71,636 $32,266 $7,423
<CAPTION>
CLASS C SHARES
--------------------------------------------------------------
SIX MONTHS
ENDED NINE MONTHS
MARCH 31, ENDED YEAR ENDED DECEMBER 31,
1998# SEPTEMBER 30, -----------------------------------
(UNAUDITED) 1997#** 1996 1995 1994 1993*
------------ ------------- -------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value
beginning of
period.......... $21.74 $18.86 $19.13 $15.37 $17.09 $17.29
------------ ------------- -------- -------- ------- ---------
Income from
investment
operations:
Net investment
income (loss).. (0.13) (0.15) (0.18) (0.13) (0.07) (0.06)
Net realized and
unrealized gain
(loss) on
investments.... 3.29 3.88 2.04 5.45 (1.04) 1.59
------------ ------------- -------- -------- ------- ---------
Total from
investment
operations...... 3.16 3.73 1.86 5.32 (1.11) 1.53
------------ ------------- -------- -------- ------- ---------
Less
distributions
from:
Net realized
gain on
investments.... (2.13) (0.85) (2.13) (1.56) (0.61) (1.73)
------------ ------------- -------- -------- ------- ---------
Total
distributions... (2.13) (0.85) (2.13) (1.56) (0.61) (1.73)
------------ ------------- -------- -------- ------- ---------
Net asset value
end of period... $22.77 $21.74 $18.86 $19.13 $15.37 $17.09
============ ============= ======== ======== ======= =========
TOTAL RETURN+.... 15.96% 20.65% 10.29% 35.62% (6.56%) 9.20%
RATIOS &
SUPPLEMENTAL
DATA:
Ratios to average
net assets:
Total expenses.. 2.12%++ 2.18%++ 2.21% 2.30% 2.30% 2.48%++
Total expenses,
excluding
indirectly paid
expenses....... 2.12%++ 2.17%++ N/A N/A N/A N/A
Net investment
income (loss).. (1.20%)++ (1.05%)++ (1.17%) (0.91%) (0.63%) (1.64%)++
Portfolio
turnover rate... 108% 76% 173% 159% 137% 162%
Average
commission rate
paid per share.. $0.0587 $0.0580 $0.0621 N/A N/A N/A
Net assets end of
period
(thousands)..... $16,566 $16,067 $17,628 $13,963 $9,900 $3,620
</TABLE>
- -------
# Net investment income is based on average shares outstanding during the
period.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from August 2, 1993 (commencement of class operations) to
December 31, 1993.
** The Fund changed its fiscal year end from December 31 to September 30,
effective September 30, 1997.
11
<PAGE>
EVERGREEN SMALL COMPANY GROWTH FUND -- CLASS A SHARES
<TABLE>
<CAPTION>
PERIOD ENDED
MARCH 31,
1998#*
(UNAUDITED)
------------
<S> <C>
PER SHARE DATA:
Net asset value beginning of period............................... $7.75
-------
Income from investment operations:
Net investment income ........................................... 0
Net realized and unrealized gain on investments and foreign
currency related transactions................................... 1.01
-------
Total from investment operations.................................. 1.01
-------
Net asset value end of period..................................... $8.76
=======
TOTAL RETURN +.................................................... 13.03%
RATIOS & SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses................................................... 1.06%++
Total expenses, excluding indirectly paid expenses............... 1.06%++
Net investment loss.............................................. (0.21%)++
Portfolio turnover rate........................................... 41%
Average commission rate paid per share............................ $0.0507
Net assets end of period (millions)............................... $1,035
</TABLE>
- -------
# Net investment income is based on average shares outstanding during the
period.
* 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.
EVERGREEN SMALL COMPANY GROWTH FUND -- CLASS B SHARES
<TABLE>
<CAPTION>
SIX MONTHS
ENDED FOUR-MONTH
MARCH 31, PERIOD ENDED YEAR ENDED MAY 31,
1998# SEPTEMBER 30, ---------------------------------------------------------------------------------
(UNAUDITED) 1997#* 1997# 1996 1995 1994 1993# 1992# 1991# 1990# 1989# 1988
----------- ------------- ------- ------- ------ ------ ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value
beginning of
period.......... $9.44 $8.44 $10.35 $8.62 $7.64 $7.95 $7.61 $7.17 $6.24 $5.66 $4.48 $7.80
------- ------- ------- ------- ------ ------ ------ ------ ------ ------ ------ -------
Income from
investment
operations:
Net investment
income (loss).. (0.06) (0.04) (0.11) (0.13) (0.07) (0.12) (0.12) (0.08) (0.04) 0 0.02 0
Net realized and
unrealized gain
(loss) on
investments and
foreign
currency
related
transactions... 0.15 1.74 (0.78) 2.87 1.68 0.63 1.82 0.98 1.17 0.63 1.20 (1.64)
------- ------- ------- ------- ------ ------ ------ ------ ------ ------ ------ -------
Total from
investment
operations...... 0.09 1.70 (0.89) 2.74 1.61 0.51 1.70 0.90 1.13 0.63 1.22 (1.64)
------- ------- ------- ------- ------ ------ ------ ------ ------ ------ ------ -------
Less
distributions
from:
Net realized
gain on
investments and
foreign
currency
related
transactions... (0.78) (0.70) (1.02) (1.01) (0.63) (0.82) (1.36) (0.46) (0.20) 0 (0.03) (1.68)
------- ------- ------- ------- ------ ------ ------ ------ ------ ------ ------ -------
Total
distributions... (0.78) (0.70) (1.02) (1.01) (0.63) (0.82) (1.36) (0.46) (0.20) (0.05) (0.04) (1.68)
------- ------- ------- ------- ------ ------ ------ ------ ------ ------ ------ -------
Net asset value
end of period... $8.75 $9.44 $8.44 $10.35 $8.62 $7.64 $7.95 $7.61 $7.17 $6.24 $5.66 $4.48
======= ======= ======= ======= ====== ====== ====== ====== ====== ====== ====== =======
TOTAL RETURN +... 1.64% 21.43% (8.61%) 33.03% 23.58% 6.84% 28.76% 13.45% 19.42% 11.24% 27.45% (22.39%)
RATIOS &
SUPPLEMENTAL
DATA:
Ratios to average
net assets:
Total expenses.. 1.19%++ 1.77%++ 1.75% 1.73% 1.78% 1.73% 2.04% 1.47% 1.48% 1.40% 1.27% 1.17%
Total expenses,
excluding
indirectly paid
expenses....... 1.19%++ 1.77%++ 1.73% 1.72% N/A N/A N/A N/A N/A N/A N/A N/A
Net investment
income (loss).. (0.81%)++ (1.43%)++ (1.32%) (1.34%) (1.10%) (1.49%) (1.68%) (1.09%) (0.68%) 0.02% 0.47% 0.03%
Portfolio
turnover rate... 41% 28% 48% 94% 38% 60% 78% 81% 73% 77% 57% 80%
Average
commission rate
paid per share.. $0.0507 $0.0525 $0.0551 $0.0563 N/A N/A N/A N/A N/A N/A N/A N/A
Net assets end of
period
(millions)...... $407 $1,546 $1,407 $2,006 $1,460 $1,006 $966 $702 $623 $538 $504 $442
</TABLE>
- -------
# Net investment income is based on average shares outstanding during the
period.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized
* Effective September 30, 1997, the Fund changed its fiscal year end from May
31 to September 30.
12
<PAGE>
EVERGREEN SMALL COMPANY GROWTH FUND -- CLASS C SHARES
<TABLE>
<CAPTION>
PERIOD ENDED
MARCH 31,
1998#*
(UNAUDITED)
------------
<S> <C>
PER SHARE DATA:
Net asset value beginning of period............................... $7.73
-------
Income (loss) from investment operations:
Net investment loss.............................................. (0.02)
Net realized and unrealized gain on investments and foreign
currency related transactions................................... 1.04
-------
Total from investment operations.................................. 1.02
-------
Net asset value end of period..................................... $8.75
=======
TOTAL RETURN +.................................................... 13.20%
RATIOS & SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses................................................... 1.81%++
Total expenses, excluding indirectly paid expenses............... 1.81%++
Net investment loss.............................................. (1.13%)++
Portfolio turnover rate........................................... 41%
Average commission rate paid per share............................ $0.0507
Net assets end of period (millions)............................... $6
</TABLE>
- -------
# Net investment income is based on average shares outstanding during the
period.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
* For the period from January 26, 1998 (commencement of class operations) to
March 31, 1998.
13
<PAGE>
EVERGREEN STRATEGIC GROWTH FUND -- CLASS A SHARES
<TABLE>
<CAPTION>
PERIOD ENDED
MARCH 31,
1998#*
(UNAUDITED)
------------
<S> <C>
PER SHARE DATA:
Net asset value beginning of period............................... $9.12
-------
Income from investment operations:
Net investment income ........................................... 0.01
Net realized and unrealized gain on investments and foreign
currency related transactions................................... 1.40
-------
Total from investment operations.................................. 1.41
-------
Net asset value end of period..................................... $10.53
=======
TOTAL RETURN +.................................................... 15.46%
RATIOS & SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses................................................... 1.10%++
Total expenses, excluding indirectly paid expenses............... 1.10%++
Net investment income............................................ 0.38%++
Portfolio turnover rate........................................... 70%
Average commission rate paid per share............................ $0.0020
Net assets end of period (millions)............................... $825
</TABLE>
- -------
# Net investment income is based on average shares outstanding during the
period.
* 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
14
<PAGE>
EVERGREEN STRATEGIC GROWTH FUND -- CLASS B SHARES
<TABLE>
<CAPTION>
SIX MONTHS ELEVEN-MONTH
ENDED PERIOD ENDED YEAR ENDED OCTOBER 31,
MARCH 31, 1998# SEPTEMBER 30, -------------------------------
(UNAUDITED) 1997 #* 1996 1995 1994 1993
--------------- ------------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value
beginning of period.... $ 10.61 $8.68 $8.05 $7.54 $9.00 $7.60
------- ------- ------- ------ ------ ------
Income from investment
operations
Net investment income
(loss)................ (0.01) 0.01 (0.04) (0.02) 0 (0.06)
Net realized and
unrealized gain (loss)
on investments and
foreign currency
related transactions.. 1.24 2.96 1.04 1.13 0.23 1.89
------- ------- ------- ------ ------ ------
Total from investment
operations............. 1.23 2.97 1.00 1.11 0.23 1.83
------- ------- ------- ------ ------ ------
Less distributions:
From net investment
income................ 0 0 (0.01) 0 0 0
In excess of net
investment income..... 0 0 0 0 0 (0.03)
Net realized gain on
investments and
foreign currency
related transactions.. (1.33) (1.04) (0.36) (0.60) (1.66) (0.40)
In excess of net
realized gain on
investments and
foreign currency
related transactions.. 0 0 0 0 (0.03) 0
------- ------- ------- ------ ------ ------
Total distributions..... (1.33) (1.04) (0.37) (0.60) (1.69) (0.43)
------- ------- ------- ------ ------ ------
Net asset value end of
period................. $ 10.51 $10.61 $8.68 $8.05 $7.54 $9.00
======= ======= ======= ====== ====== ======
TOTAL RETURN+........... 13.46% 37.74% 12.95% 15.05% 3.55% 24.97%
RATIOS & SUPPLEMENTAL
DATA:
Ratios to average net
assets:
Total expenses......... 1.17%++ 1.19%++ 1.91% 2.01% 1.73% 1.83%
Total expenses,
excluding indirectly
paid expenses......... 1.17%++ 1.18%++ 1.90% 2.00% N/A N/A
Net investment income
(loss)................ (0.14%)++ 0.12%++ (0.48%) (0.25%) (0.17%) (0.57%)
Portfolio turnover
rate................... 70% 71% 156% 140% 68% 65%
Average commission rate
paid per share......... $0.0020 $0.0222 $0.0042 N/A N/A N/A
NET ASSETS END OF PERIOD
(MILLIONS)............. $ 157 $920 $497 $492 $417 $404
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
---------------------------------------------
1992 1991 1990 1989 1988 1987
------ ------ ------- ------ ----- -----
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value beginning of
period......................... $8.18 $6.52 $7.67 $6.53 $7.55 $9.13
------ ------ ------- ------ ----- -----
Income from investment
operations
Net investment income (loss)... (0.01) 0.08 0.08 0.16 0.18 0.02
Net realized and unrealized
gain (loss) on investments and
foreign currency related
transactions.................. 0.42 2.24 (0.80) 1.21 0.19 0.04
------ ------ ------- ------ ----- -----
Total from investment
operations..................... 0.41 2.32 (0.72) 1.37 0.37 0.06
------ ------ ------- ------ ----- -----
Less distributions:
From net investment income..... (0.01) (0.16) (0.18) (0.18) (0.14) (0.13)
In excess of net investment
income........................ (0.05) 0 0 0 0 0
Net realized gain on
investments and foreign
currency related
transactions.................. (0.93) (0.50) (0.25) (0.05) (1.25) (1.51)
In excess of net realized gain
on investments and foreign
currency related
transactions.................. 0 0 0 0 0 0
------ ------ ------- ------ ----- -----
Total distributions............. (0.99) (0.66) (0.43) (0.23) (1.39) (1.64)
------ ------ ------- ------ ----- -----
Net asset value end of period... $7.60 $8.18 $6.52 $7.67 $6.53 $7.55
====== ====== ======= ====== ===== =====
TOTAL RETURN+ .................. 6.38% 38.77% (10.05%) 21.74% 7.73% 0.15%
RATIOS & SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses................. 1.58% 1.52% 1.65% 1.59% 1.69% 2.12%
Total expenses, excluding
indirectly paid expenses...... N/A N/A N/A N/A N/A N/A
Net investment income (loss)... (0.15%) 0.99% 1.64% 2.06% 2.14% 0.23%
Portfolio turnover rate......... 62% 86% 30% 40% 89% 104%
Average commission rate paid per
share.......................... N/A N/A N/A N/A N/A N/A
NET ASSETS END OF PERIOD
(MILLIONS)..................... $322 $339 $234 $330 $328 $299
</TABLE>
- -------
# Calculation based on average shares outstanding during the period.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized
* Effective September 30, 1997, the Fund changed its fiscal year end from
October 31 to September 30.
15
<PAGE>
EVERGREEN STRATEGIC GROWTH FUND -- CLASS C SHARES
<TABLE>
<CAPTION>
PERIOD ENDED
MARCH 31, 1998#*
(UNAUDITED)
----------------
<S> <C>
PER SHARE DATA:
Net asset value beginning of period.......................... $ 9.25
=======
Income (loss) from investment operations.....................
Net investment loss.......................................... (0.02)
Net realized and unrealized gain on investments and foreign
currency related transactions............................... 1.29
Total from investment operations............................. 1.27
Net asset value end of period................................ $ 10.52
=======
TOTAL RETURN+................................................ 13.73%
RATIOS & SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses.............................................. 1.90%++
Total expenses, excluding indirectly paid expenses.......... 1.90%++
Net investment loss......................................... (0.37%)++
PORTFOLIO TURNOVER RATE...................................... 70%
AVERAGE COMMISSION RATE PAID PER SHARE....................... $0.0020
NET ASSETS END OF PERIOD (THOUSANDS)......................... $ 133
</TABLE>
- -------
# Net investment income is based on average shares outstanding during the
period.
* For the period from January 22, 1998 (commencement of class operations) to
March 31, 1998.
+ Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
EVERGREEN STOCK SELECTOR FUND -- CLASS A SHARES*(3)
<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30, YEAR ENDED OCTOBER 31,
SIX-MONTHS -------------- -----------------------------------------------
ENDED RETAIL PRIOR
DECEMBER 31, 1997 CLASS CLASS
(UNAUDITED) 1997 1996 1995 1994 1993 1992 1991 1990(1)
----------------- ------ ------ ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 21.13 17.28 17.08 15.00 15.39 13.93 13.08 8.95 10.00
Net Investment Income... $ -- 0.07 0.12 0.18 0.11 0.14 0.19 0.26 0.14
Realized and Unrealized
Net Gains (Losses) on
Securities............. $ 2.40 5.32 1.49 2.87 0.22 1.89 1.02 4.13 (1.05)
Distributions from Net
Investment Income...... $ -- (0.07) (0.11) (0.17) (0.11) (0.14) (0.19) (0.26) (0.14)
Distributions from
Capital Gains.......... $ (2.92) (1.47) (1.30) (0.80) (0.61) (0.43) (0.17) -- --
Net Asset Value, End of
Period................. $ 20.61 21.13 17.28 17.08 15.00 15.39 13.93 13.08 8.95
======= ====== ====== ===== ====== ====== ====== ====== =====
TOTAL RETURN(2)......... 11.70% 32.74 19.11 21.94 2.21 14.90 9.27 49.37 (9.22)
Net Assets, End of
Period (000 omitted)... $19,043 16,043 11,178 6,591 50,128 45,677 28,103 12,830 5,982
Ratio of Expenses to
Average Net Assets..... 1.24 % 1.23 1.22 1.34 1.49 1.20 0.92 0.54 0.65
Ratio of Net Income to
Average Net Assets..... (0.04)% 0.38 0.89 1.23 0.75 0.94 1.47 2.30 2.29
Ratio of Expenses to
Average Net Assets
(Excluding Waivers).... 1.30 % 1.28 1.26 1.53 1.51 1.41 1.23 1.48 1.59
Ratio of Net Income to
Average Net Assets
(Excluding Waivers).... (0.10)% 0.33 0.85 1.04 0.73 0.73 1.17 1.36 1.35
Portfolio Turnover
Rate**................. 23 % 79 114 119 35 24 39 68 43
Average Commission Rate
Paid(4)................ $0.0658 0.0512 0.0636 n/a n/a n/a n/a n/a n/a
</TABLE>
- -------
* On February 21, 1995, the Shares of the Fund were redesignated as either
Retail or Institutional Shares. On that date, the Fund's net investment
income, expenses and distributions for the period November 1, 1994 through
February 20, 1995 were allocated to each class of Shares. The basis for the
allocation was the relative net assets of each class of Shares as of
February 21, 1995. The results were combined with the results of operations
and distributions for each applicable class for the period February 21,
1995 through October 31, 1995. For the year ended October 31, 1995, the
Financial Highlights' ratios of expenses, net investment income, total
return, and the per share investment activities and distributions reflect
this allocation. Also, on April 15, 1996, the assets of the Conestoga
Equity Fund were acquired by CoreFunds. At that time the Retail Class
Shares of the Fund were exchanged for Class A Shares.
** For the period ended June 30, 1996, transactions relating to the merger
were excluded from the calculation of the Portfolio Turnover Rate.
(1) Commenced operations February 28, 1990. Unless otherwise noted, all ratios
for the period have been annualized.
(2) Total return does not reflect applicable sales load. Additionally, total
return for the period ended June 30, 1996 is for an eight-month period.
(3) The per share amount for the period ended June 30, 1996 represents the
period from November 1, 1995 to June 30, 1996. All prior years are for the
periods November 1 to October 31.
(4) Presentation of the rate is only required for fiscal periods beginning
after September 1, 1995.
16
<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.
EVERGREEN FUND
The EVERGREEN FUND seeks to achieve its investment objective of capital
appreciation principally through investments in common stock and securities
convertible into or exchangeable for common stock of companies which are
little-known, relatively small or represent special situations which, in the
opinion of the Fund's investment adviser, offer potential for capital
appreciation. A "little-known" company means one whose business is limited to
a regional market or whose securities are closely held with only a small
proportion traded publicly. A "relatively small" company means one which has a
small share of the market for its products or services in comparison with
other companies in its field, or which provides goods or services for a
limited market. A "special situation" company is one which offers potential
for capital appreciation because of a recent or anticipated change in
structure, management, products or services. In addition to the securities
described above, the EVERGREEN FUND may invest in securities of relatively
well-known and large companies with potential for capital appreciation.
Investments may also be made to a limited degree in non-convertible debt
securities and preferred stocks which offer an opportunity for capital
appreciation. Short-term investments may also be made if the Fund's investment
advisor believes that such action will benefit the Fund.
EVERGREEN MICRO CAP FUND
The investment objective of EVERGREEN MICRO CAP FUND is to achieve
capital appreciation; income is not a factor in the selection of portfolio
securities. The Fund seeks to achieve its objective principally through
investments in common stock of companies for which there is a relatively
limited trading market. A relatively limited trading market is one in which
only small amounts of stock are available at any given time generally through
five or fewer market makers. The securities of such companies are often traded
only over-the-counter or on a regional securities exchange, rarely on a
national securities exchange, and may not trade every day or in the volume
typical of trading on a national securities exchange.
Investments by the Fund are made with a view toward taking advantage of
market inefficiencies affecting the price of a company's securities or by
exploiting the investment opportunities which may be inherent in companies
offering new or unique products or services. Market inefficiency can result
from a company being too small to be covered by most industry analysts,
thereby resulting in a limited dissemination of information about the company
or its industry. The companies in which the Fund may invest are small, but
have at least $1,000,000 and generally no more than $150,000,000 of market
capitalization. The Fund may also invest in little-known or unpopular
companies which may not be widely recommended for purchase by industry
analysts due to some situation unique to the company or its industry. There
are no restrictions as to types of businesses or industries in which the Fund
may invest. The Fund's investment advisor believes that its investment
research programs will uncover a variety of relatively unexploited investment
opportunities.
The Fund's investment advisor will attempt to screen the universe of
companies falling within the capitalization range described above and invest
primarily in what it believes to be the 100 best based on certain qualitative
and quantitative criteria. Such companies may include those with the highest
return on equity and consistent earnings growth. The criteria will be reviewed
and evaluated on an ongoing basis by the Fund's investment advisor. In
addition, the Fund will invest in other companies which do not meet the
screening criteria. These will include companies which offer unique products
or services or operate in industries or sectors that have, in the opinion of
the Fund's investment advisor, significant growth prospects. In selecting
investment opportunities for the Fund, the Fund's investment advisor will use
certain proprietary computer screening techniques and the extensive library
facilities of Lieber & Company, the Fund's sub-adviser.
While the focus of EVERGREEN MICRO CAP FUND is on long-term capital
appreciation, investments may on occasion be made with the expectation of
short-term capital appreciation. Securities held for a short time period may
be sold if the investment objective for such securities has been achieved or
if other circumstances warrant.
17
<PAGE>
EVERGREEN AGGRESSIVE GROWTH FUND
The EVERGREEN AGGRESSIVE GROWTH FUND'S investment objective is to achieve
long-term capital appreciation by investing primarily in common stocks of
emerging growth companies and larger, more well established companies, all of
which are viewed by the Fund's investment advisor as having above-average
appreciation potential. Under normal circumstances, the Fund intends to invest
at least 65% of its net assets in common stocks or securities convertible into
common stocks. The Fund's investment advisor considers an emerging growth
company to be one which is still in the developmental stage, yet has
demonstrated, or is expected to achieve, growth of earnings over various major
business cycles. Important qualities of any emerging growth company include
sound management and a good product with growing market opportunities. To the
extent that its assets are not invested in common stocks or securities
convertible into common stocks, the Fund also may invest its assets in, or
enter into repurchase agreements with banks or broker-dealers with respect to,
investment grade corporate bonds, United States ("U.S.") government
securities, commercial paper and certificates of deposit of domestic banks.
Consistent with its investment objective, the Fund also may invest in
equity securities of seasoned, established companies which its investment
advisor believes have above-average appreciation potential similar to that of
companies in the developmental stage. This may be due, for example, to
management change, new technology, new product or service developments,
changes in demand, or other factors. Investments in stocks of emerging growth
companies may involve special risks.
EVERGREEN OMEGA FUND
The investment objective of EVERGREEN OMEGA FUND is to seek maximum
capital growth by investing in a varied portfolio consisting primarily of
common stocks and securities convertible into common stocks. The Fund pursues
its objective by employing techniques of the fully managed-investment concept,
meaning that the Fund's investment advisor will continuously review both
individual securities and relevant general conditions. Whenever, in the
opinion of the Fund's investment advisor, a security no longer seems to have
the required characteristics, an anticipated level of performance has been
achieved, or other securities present relatively greater opportunities for
realizing the Fund's objective, appropriate changes will be made in the Fund's
portfolio. The Fund's equity position will be changed as the investment
advisor changes its evaluation of trends in general securities price levels.
Portfolio turnover rate will not be considered a limiting factor in the
execution of investment decisions.
EVERGREEN SMALL COMPANY GROWTH FUND
EVERGREEN SMALL COMPANY GROWTH FUND seeks long-term growth of capital.
The Fund invests at least 65% of its total assets in equity securities of
companies with small market capitalizations. For this purpose, companies with
small market capitalizations are generally those with market capitalizations
of less than $1 billion ("small cap") at the time of the Fund's investment.
Companies whose capitalization falls outside this range after the purchase
continue to be considered small cap for this purpose.
While the Fund focuses on small cap stocks, it may also invest in other
types of securities without regard to the market capitalization of the issuer
and which may be listed on national exchanges or traded over-the-counter,
including other common stocks, debt securities convertible into common stocks
or having common stock characteristics, and rights and warrants to purchase
common stocks. While income is not an objective, securities appearing to offer
attractive possibilities for future growth of income may be included in the
portfolio whenever it seems possible to do so without conflicting with the
Fund's objective of capital growth.
EVERGREEN STRATEGIC GROWTH FUND
EVERGREEN STRATEGIC GROWTH FUND'S investment objective is to provide
shareholders with growth of capital. In pursuing its objective, the Fund
invests in common stocks, debt securities, including debt securities
convertible or exchangeable for preferred or common stock, and rights and
warrants to purchase such stocks and securities that it considers to be
consistent with an investment objective of capital growth. When appropriate,
the Fund increases the quality of its investments to resist downward market
movements.
EVERGREEN STOCK SELECTOR FUND
The EVERGREEN STOCK SELECTOR FUND seeks maximum total return. The Fund
strives to provide a total return greater than broad stock market indices such
as the Standard & Poor's 500 Composite Stock Price Index
18
<PAGE>
by investing principally in a diversified portfolio of common stocks of
companies that its investment advisor expects will experience growth in
earnings and price including stocks of companies with large market
capitalizations (i.e. over $5 billion), medium market capitalizations (i.e.,
between $1 billion and $5 billion) and small market capitalizations (i.e.,
under $1 billion). In addition, up to 20% of the Fund's total assets may be
invested in preferred stocks, securities convertible into common stock,
corporate bonds and notes, warrants (up to 5% of total assets), short-term
obligations and foreign securities represented by sponsored and unsponsored
American Depositary Receipts.
Debt securities, which include both secured and unsecured obligations,
will, at the time of investment, be rated within the three highest categories
by Standard & Poor's Rating Services ("S&P") (AAA, AA and A), by Moody's
Investors Service, Inc. ("Moody's") (Aaa, Aa and A), by Fitch IBCA, Inc. (AAA,
AA and A), 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.
Other Eligible Securities. Each Fund may invest, for temporary defensive
purposes, up to 100% of their assets in short-term obligations. Such
obligations may include U.S. government securities, master demand notes,
commercial paper notes, bank deposits and other financial obligations.
EVERGREEN SMALL COMPANY GROWTH FUND and EVERGREEN STRATEGIC GROWTH FUND
may invest in limited partnerships, including master limited partnerships.
EVERGREEN OMEGA FUND, EVERGREEN SMALL COMPANY GROWTH FUND, EVERGREEN STRATEGIC
GROWTH FUND and EVERGREEN STOCK SELECTOR FUND may invest in foreign
securities: however, EVERGREEN OMEGA FUND and EVERGREEN SMALL COMPANY GROWTH
FUND will not invest more than 25% of their assets in such securities.
EVERGREEN OMEGA FUND may invest, for temporary defensive purposes,
without limit in investment grade bonds or debentures rated by Moody's as Baa
or better or by S&P as BBB or better or those having at least similar quality
in the investment advisor's judgment. The Fund may also invest in non-
convertible preferred stocks of companies considered creditworthy and able to
sustain dividend payments and in short-term money market instruments maturing
in one year or less.
In addition to the investment policies detailed above, each Fund may
employ certain additional investment strategies which are discussed in
"Investment Practices and Restrictions."
INVESTMENT PRACTICES AND RESTRICTIONS
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 the Fund enters into repurchase
agreements.
Reverse Repurchase Agreements. The Funds 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 securities it sold decline below their
repurchase prices. Reverse repurchase agreements may be considered a form of
borrowing, and, therefore, a form of leverage. Leverage may magnify gains or
losses of a Fund.
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.
Securities Lending. To generate income and offset expenses, each Fund may lend
securities to broker-dealers and other financial institutions. Loans of
securities by a Fund may not exceed 33 1/3% of the value of the Fund's total
assets. While securities are on loan, the borrower will pay the Fund any
income accruing on the security.
19
<PAGE>
Also, the Fund may invest any collateral it receives in additional securities.
Gains or losses in the market value of a lent security will affect a Fund and
its shareholders. When a Fund lends its securities, it runs the risk that it
could not retrieve the securities on a timely basis possibly losing 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.
Investing in Securities of Other Investment Companies. Each Fund may invest in
the securities of other investment companies. As a shareholder of another
investment company, a Fund would pay its portion of the other investment
company's expenses. These expenses would be in addition to the expenses that a
Fund currently bears concerning its own operations and may result in some
duplication of fees.
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.
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 purpose of the foregoing 15% limit. The inability of a Fund to dispose
of illiquid investments readily or at a reasonable price could impair its
ability to raise cash for redemptions or other purposes.
Restricted Securities. Each Fund may invest in restricted securities,
including securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933 (the "1933 Act"). 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 U.S.
Each Fund's investment advisor determines the liquidity of Rule 144A
securities according to the 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.
Options and Futures. The Funds may engage in options and futures transactions.
Options and futures transactions are intended to enable a Fund to manage
market, interest rate or exchange rate risk. The Funds do not use these
transactions for speculation or leverage.
The Funds may attempt to hedge all or a portion of their portfolios
through the purchase of both put and call options on their portfolio
securities and listed put options on financial futures contracts for portfolio
securities. The Funds may also purchase call options on financial futures
contracts. The Funds may write covered call options on their portfolio
securities to attempt to increase their current income. The Funds will
maintain their 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.
The Funds 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. 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). The
Funds may only write "covered" options. This means that so long as a 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, a Fund might own substantially similar U.S. Treasury bills. A
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 Funds receive a premium from writing a
call or put option which they retain whether or not the option is exercised.
By writing a call option, the Funds might lose the potential for gain on the
underlying security while the option is open, and by writing a put option the
Funds might become obligated to purchase the underlying securities for more
than their current market price upon exercise.
20
<PAGE>
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 specified agencies or instrumentalities
of the U.S. government. If a 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 a Fund's anticipated holding period. A 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.
The Funds may also enter into currency and other financial futures
contracts and write options on such contracts. The Funds intend to enter into
such contracts and related options for hedging purposes. The Funds 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 Funds do not make
payment or deliver securities upon entering into a futures contract. Instead,
they put 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 Funds 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 Funds sell futures contracts in order to
offset a possible decline in the profit on their securities or currencies. If
a futures contract is purchased by a 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 Funds 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 their options positions. The Funds' 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 Funds will be able to enter into an
offsetting transaction with respect to a particular contract at a particular
time. If the Funds are not able to enter into an offsetting transaction, the
Funds 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
they would continue to bear market risk on the transaction.
EVERGREEN STOCK SELECTOR FUND may neither purchase futures contracts or
options where premiums and margin deposits exceed 5% of its total assets nor
enter into futures contracts or options where its obligations would exceed 20%
of its total assets.
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 can result in poorer performance (i.e., the Funds' returns
may be reduced). The Funds' attempt 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 the Funds use 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 Funds' portfolios. This may cause the
financial futures contracts 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 a Fund's futures position did not
correspond to changes in the value of its investments. In these events, the
Fund may lose money on the financial futures contracts or the options on
financial futures contracts. It is not certain that a secondary market for
positions in financial futures contracts or for options on financial futures
contracts will exist at all times. Although a Fund's investment advisor will
consider liquidity before entering into financial futures contracts or options
on financial futures contracts, there is no assurance that a liquid secondary
market on an exchange will exist for any particular financial futures contract
or option on a financial futures contract at any particular time. The Funds'
ability to establish and close out financial
21
<PAGE>
futures contracts and options on financial futures contract 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, a Fund may lose money on the
futures contract or option, and the losses to a Fund could be significant.
Derivatives. Derivatives are financial contracts, such as those described
above, whose value is based on an underlying asset, such as a stock or a bond,
or an underlying economic factor, such as an index or an interest rate.
The Funds may invest in derivatives only if the expected risks and
rewards are consistent with their objectives and policies.
Losses from derivatives can sometimes be substantial. This is true partly
because small price movements in the underlying asset can result in immediate
and substantial gains or losses in the value of the derivative. Derivatives
can also cause a Fund to lose money if a Fund fails to correctly predict the
direction in which the underlying asset or economic factor will move.
Investments in Small and Mid-Sized Companies. Investments in securities of
little-known, relatively small or mid-sized and special situation companies
may tend to be speculative and volatile. A lack of management depth in such
companies could increase the risks associated with the loss of key personnel.
Also, the material and financial resources of such companies may be limited,
with the consequence that funds or external financing necessary for growth may
be unavailable. Such companies may also be involved in the development or
marketing of new products or services for which there are no established
markets. If projected markets do not materialize or only regional markets
develop, such companies may be adversely affected or may be subject to the
consequences of local events. Moreover, such companies may be insignificant
factors in their industries and may become subject to intense competition from
larger companies. Securities of companies in which the Funds may invest will
frequently be traded only in the over-the-counter market or on regional stock
exchanges and will often be closely held. Securities of this type may have
limited liquidity and may be subject to wide price fluctuations. As a result
of the risk factors described above, the net asset value of each Fund's shares
can be expected to vary significantly. Accordingly, each Fund should not be
considered suitable for investors who are unable or unwilling to assume the
associated risks, nor should investment in the Funds be considered a balanced
or complete investment program.
Foreign Investments. 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 the investment
advisors of EVERGREEN OMEGA FUND, EVERGREEN SMALL COMPANY GROWTH FUND,
EVERGREEN STRATEGIC GROWTH FUND and EVERGREEN STOCK SELECTOR FUND before
making any of these types of investments.
Foreign Currency Transactions. As discussed above, EVERGREEN OMEGA FUND,
EVERGREEN SMALL COMPANY GROWTH FUND, EVERGREEN STRATEGIC GROWTH FUND and
EVERGREEN STOCK SELECTOR FUND may invest in securities of foreign issuers.
When the Funds invest in foreign securities, they usually will be denominated
in foreign currencies, and the Funds 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, the Funds 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 the Funds
will deliver or receive when the contract is completed) is fixed when the
Funds enter into the contract. The Funds usually will enter into these
contracts to stabilize the U.S. dollar value of a security they have agreed to
buy or sell. The Funds intend to use these contracts to hedge the U.S. dollar
value of a security they already own, particularly if the Funds expect a
decrease in the value of the currency in which the foreign security is
denominated. Although the Funds will attempt to benefit from using forward
contracts, the success of their 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 the Funds' investments
denominated in foreign currencies will depend on the relative strength of
those currencies and the U.S. dollar, and the Funds may be affected favorably
or unfavorably by changes in the exchange rates or exchange control
regulations between foreign currencies and the U.S. dollar.
22
<PAGE>
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 the Funds. 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.
- -------------------------------------------------------------------------------
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 each Fund's activities, reviewing,
among other things, each Fund's performance and its 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 the Funds 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; a Fund 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 of EVERGREEN FUND and EVERGREEN
MICRO CAP FUND is Evergreen Asset Management Corp. ("Evergreen Asset"), which
is a wholly-owned subsidiary of First Union Corporation ("First Union").
Evergreen Asset, with its predecessors, has served as investment advisor to
the Evergreen mutual funds since 1971.
Evergreen Asset is entitled to receive from EVERGREEN FUND and EVERGREEN
MICRO CAP FUND an annual fee equal to 1.00% of average daily net assets of
each Fund on the first $750,000,000, plus 0.90% of average daily net assets on
the next $250,000,000, plus 0.80% of average daily net assets on assets over
$1,000,000,000.
The Capital Management Group of First Union National Bank ("FUNB") serves
as investment advisor to EVERGREEN AGGRESSIVE GROWTH FUND. FUNB is a
subsidiary of First Union. FUNB is located at 201 South College Street, and
First Union 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 U.S.
FUNB receives an annual fee from EVERGREEN AGGRESSIVE GROWTH FUND equal
to 0.60% of average daily net assets of the Fund.
The investment advisor to each of EVERGREEN OMEGA FUND, EVERGREEN SMALL
COMPANY GROWTH FUND and EVERGREEN STRATEGIC GROWTH 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 an indirect subsidiary of FUNB.
EVERGREEN OMEGA FUND pays Keystone a fee, calculated on an annual basis,
equal to 0.75% of the first $250,000,000 of average daily net assets, plus
0.675% of the next $250,000,000 of average daily net assets, plus
23
<PAGE>
0.60% of the next $500,000,000 of average daily net assets, plus 0.50% of
amounts over $1,000,000,000 of average daily net assets, computed as of the
close of business each business day and paid monthly.
EVERGREEN SMALL COMPANY GROWTH FUND and EVERGREEN STRATEGIC GROWTH FUND
each pay Keystone a fee, calculated on an annual basis, equal to 0.70% of the
first $100,000,000 of the aggregate net asset value of the shares of the Fund,
plus 0.65% of the next $100,000,000, plus 0.60% of the next $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 $500,000,000, plus 0.40% of the next $500,000,000, plus
0.35% of amounts over $1,500,000,000, computed as of the close of business
each business day and paid monthly.
The investment advisor of EVERGREEN STOCK SELECTOR FUND is Meridian
Investment Company ("Meridian"). Meridian is an indirect subsidiary of FUNB.
Meridian's address is 55 Valley Stream Parkway, Malvern, Pennsylvania 19355.
Meridian is entitled to receive an annual fee of 0.74% of average daily
net assets of EVERGREEN STOCK SELECTOR FUND.
Portfolio Managers. The portfolio managers for EVERGREEN FUND are Stephen A.
Lieber, Chairman and Co-Chief Executive of Evergreen Asset and Nola Maddox
Falcone, C.F.A., President and Co-Chief Executive Officer of Evergreen Asset.
Mr. Lieber is the founder of Evergreen Asset and has been associated with
Evergreen Asset and its predecessor since 1971. Ms. Falcone joined Lieber &
Company (see "Sub-adviser" below) as a Senior Portfolio Manager in 1974, and
was a General Partner from January 1981 to June 1994.
The portfolio manager for EVERGREEN AGGRESSIVE GROWTH FUND is Harold J.
Ireland, Jr., a Vice President of FUNB who has been associated with FUNB since
1995. Prior to that, Mr. Ireland was at Palm Beach Capital Management, Inc.
and served as portfolio manager of the Fund's predecessor, ABT Emerging Growth
Fund, since 1985.
The portfolio of EVERGREEN MICRO CAP FUND is managed by a committee,
which includes Stephen A. Lieber and Edwin A. Miska, an analyst with Evergreen
Asset and its predecessor since 1989, together with portfolio management and
analytical personnel employed by Evergreen Asset or its affiliates.
Maureen E. Cullinane has been EVERGREEN OMEGA FUND'S portfolio manager
since 1989 and EVERGREEN STRATEGIC GROWTH FUND'S portfolio manager since 1985.
Ms. Cullinane is a Keystone Senior Vice President and Senior Portfolio Manager
and has more than 20 years of investment experience.
The portfolio manager of EVERGREEN SMALL COMPANY GROWTH FUND is J. Gary
Craven, who joined Keystone in November, 1996. Mr. Craven is currently a
Keystone Senior Vice President, Chief Investment Officer and Group Leader for
the small cap equity area. Prior to joining Keystone, Mr. Craven was a
portfolio manager at Invista Capital Management, Inc. since 1987.
The portfolio manager of EVERGREEN STOCK SELECTOR FUND is Joseph E.
Stocke, CFA. Mr. Stocke joined Meridian in 1983 as an Assistant Investment
Officer and since 1990 has been a Senior Investment Manager/Equities. Mr.
Stocke managed the Special Equity Fund and Core Equity Fund (the predecessor
of EVERGREEN STOCK SELECTOR FUND) of CoreFunds, Inc. from 1990 to July 1998.
Sub-adviser. Evergreen Asset has entered into sub-advisory agreements with
Lieber & Company, an indirect wholly-owned subsidiary of First Union, which
provide that Lieber & Company's research department and staff will furnish
Evergreen Asset with information, investment recommendations, advice and
assistance, and will generally be available for consultation on the portfolios
of EVERGREEN FUND and EVERGREEN MICRO CAP FUND. Lieber & Company will be
reimbursed by Evergreen Asset in connection with the rendering of services on
the basis of the direct and indirect costs of performing such services. There
is no additional charge to the Funds for the services provided by Lieber &
Company.
Transfer Agent and Dividend Disbursing Agent. Evergreen Service Company
("ESC"), 200 Berkeley Street, Boston, Massachusetts 02116, acts as the Funds'
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 the Funds' custodian.
24
<PAGE>
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.
Administrator. Evergreen Investment Services, Inc. ("EIS") serves as
administrator to EVERGREEN AGGRESSIVE GROWTH FUND and EVERGREEN STOCK SELECTOR
FUND. As administrator, and subject to the supervision and control of the
Trust's Board of Trustees, EIS provides the Fund 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 Fund at a rate
based on the total assets of all mutual funds administered by EIS for which
any affiliate of FUNB serves as investment advisor. The administration fee is
calculated in accordance with the following schedule.
<TABLE>
<CAPTION>
ADMINISTRATION FEE
------------------
<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
0.010% on assets in excess of $30 billion
</TABLE>
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 such shares according to
distribution plans adopted pursuant to Rule 12b-1 under the Investment Company
Act of 1940 (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 a 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 adviser or their affiliates, for
personal services rendered to shareholders and/or the maintenance of
shareholder accounts. The Funds may not pay any distribution or services fee
during any fiscal period in excess of the amounts set forth above. Amounts
paid under the Plans are used to compensate the Funds' distributor pursuant to
the Distribution Agreements entered into by each Fund.
The Plans are in compliance with the Conduct Rules of the National
Association of Securities Dealers, Inc. 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-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.
Distribution Agreements. Each Fund has also entered into distribution
agreements (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 a 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 Distribution Agreements 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 a
Fund.
25
<PAGE>
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 EDI 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.
- -------------------------------------------------------------------------------
PURCHASE AND REDEMPTION OF SHARES
- -------------------------------------------------------------------------------
HOW TO BUY SHARES
You may purchase shares of any Fund through broker-dealers, banks or
other financial intermediaries, or directly through EDI. In addition, you may
purchase 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 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 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 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:
<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 None None 1.00% of the amount invested up to
or more $2,999,999; .50% of the amount
invested over $2,999,999, up to
$4,999,999; and .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 advisers; (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 advisers 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
26
<PAGE>
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) upon the initial purchase of an
Evergreen fund by investors reinvesting the proceeds from a redemption within
the preceding 30 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 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 corporate or
certain other qualified retirement plans 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 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 a Fund. 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 net asset 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, Letters of Intent, certain Retirement Plans and Reinstatement
Privilege. Consult the application 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. A Fund 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
27
<PAGE>
no longer be subject to the higher distribution and service fees 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.
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. A Fund 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 service fee 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.
Each Fund may also sell Class A, Class B or Class C shares at net asset
value without any initial sales charge or CDSC to certain Directors, Trustees,
officers and employees of a Fund, Keystone, FUNB, Meridian, 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.
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 the 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 believe would accurately reflect
fair value.
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.
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<PAGE>
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 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 U.S. 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 advisor, 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
advisor 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. A Fund
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 in a Fund to the Fund for cash
at their 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 the Fund receives your
request in proper form. Proceeds generally will be sent to you within seven
days. However, for shares recently purchased by check, the 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 a 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.
The Funds 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 Years 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
29
<PAGE>
telephone redemption service must complete the appropriate section 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. A 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 Fund cannot dispose of its 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. If the shares being tendered for exchange are still
subject to a CDSC or are eligible for conversion in a specified time, such
remaining charge or remaining time will carry over to the shares being
acquired in the exchange transaction. 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 the 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.
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<PAGE>
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, the 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 by filling out the appropriate part of the
application. Under this 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 Plan was opened.
Fund shares will be redeemed as necessary to meet withdrawal payments. All
participants must elect to have their dividends and capital gains
distributions reinvested automatically.
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, Meridian 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 a 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.
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<PAGE>
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. 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 or its affiliates being
prevented from continuing to perform the services required under the
investment advisory contract or from acting as agent in connection with the
purchase of shares of the Funds by its customers. If FUNB or its affiliates
were prevented from continuing to provide the services called for under the
investment advisory agreement, it is expected that the Trustees would
identify, and call upon the Funds' shareholders to approve, a new investment
advisor. If this were to occur, it is not anticipated that the shareholders of
the Funds would suffer any adverse financial consequences.
- -------------------------------------------------------------------------------
OTHER INFORMATION
- -------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund intends to distribute its investment company taxable income
annually and net capital realized 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 the 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 the 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 and intends to continue to qualify as a regulated
investment company under the Internal Revenue Code of 1986, as amended (the
"Code"). While so qualified, it is expected that a Fund will not be required
to pay any federal income taxes on that portion of its investment company
taxable income and any net realized capital gains it distributes to
shareholders. The Code imposes a 4% nondeductible excise tax on regulated
investment companies, such as the 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.
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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.
A Fund may be subject to foreign withholding taxes which would reduce the
yield on its investments. Tax treaties between certain countries and the U.S.
may reduce or eliminate such taxes. Shareholders of a Fund who are subject to
U.S. 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.
Each Fund is 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 Funds' transfer agent, that the investor's
social security or taxpayer identification number is correct and that the
investor is not currently subject to backup withholding or is exempt from
backup withholding.
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 the Fund.
Each Fund intends to distribute its net capital gains as capital gains
dividends. Shareholders should treat such dividends as long-term capital
gains. A Fund will designate capital gains distributions as such by a written
notice mailed to each shareholder no later than 60 days after the close of a
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 a 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 and Brokerage. The estimated annual portfolio turnover rate
for the EVERGREEN FUND and EVERGREEN STOCK SELECTOR FUND is not expected to
exceed 100%. The estimated annual portfolio turnover rate for EVERGREEN MICRO
CAP FUND, EVERGREEN AGGRESSIVE GROWTH FUND, EVERGREEN OMEGA FUND, EVERGREEN
SMALL COMPANY GROWTH FUND and EVERGREEN STRATEGIC GROWTH FUND is not expected
to exceed 200%. 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. It is contemplated that Lieber
& Company, 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 EVERGREEN FUND and EVERGREEN MICRO CAP
FUND effected on those exchanges. See the SAI for further information
regarding the practices of the Funds affecting portfolio turnover and
brokerage allocation practices.
Portfolio Transactions. Consistent with the Conduct Rules of the National
Association of Securities Dealers, Inc., and subject to seeking best price and
execution, a Fund may consider sales of its shares as a factor in the
selection of broker-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 (except for EVERGREEN STRATEGIC GROWTH
FUND which offers three classes of shares, Class A, Class B and Class C), 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, Meridian 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.
33
<PAGE>
Performance Information. From time to time, a Fund may quote its "total
return" or "yield" for a specified period in advertisements, reports or other
communications to shareholders. Total return and yield are computed separately
for Class A, Class B, Class C and Class Y shares. 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, the 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. A Fund 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 12-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 indicative 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 free of charge 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 therein, do not contain all the information set
forth in the Registration Statement filed by the Trust with the SEC under the
1933 Act, as amended. Copies of the Registration Statement 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 ADVISORS
Evergreen Asset Management Corp., 2500 Westchester Avenue, Purchase, New York
10577
Evergreen Fund, Evergreen Micro Cap Fund
Capital Management Group of First Union National Bank, 201 South College
Street, Charlotte, North Carolina 28288
Evergreen Aggressive Growth Fund
Keystone Investment Management Company, 200 Berkeley Street, Boston,
Massachusetts 02116-5034
Evergreen Omega Fund, Evergreen Small Company Growth Fund, Evergreen
Strategic Growth Fund
Meridian Investment Company, 55 Valley Stream Parkway, Malvern, Pennsylvania
19355
Evergreen Stock Selector 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 02106-2121
LEGAL COUNSEL
Sullivan & Worcester LLP, 1025 Connecticut Avenue, N.W., Washington, D.C. 20036
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, New York
10036
Evergreen Fund, Evergreen Micro Cap Fund, Evergreen Aggressive Growth Fund,
Evergreen Stock Selector Fund
KPMG Peat Marwick LLP, 99 High Street, Boston, Massachusetts 02110
Evergreen Omega Fund, Evergreen Small Company Growth Fund, Evergreen
Strategic Growth Fund
DISTRIBUTOR
Evergreen Distributor, Inc., 125 W. 55th Street, New York, New York 10019
60433 536114RV3
<PAGE>
- -------------------------------------------------------------------------------
PROSPECTUS February 1, 1998 as amended August 3, 1998
- -------------------------------------------------------------------------------
EVERGREEN DOMESTIC GROWTH FUNDS [LOGO OF EVERGREEN
FUNDS(SM) APPEARS HERE]
- -------------------------------------------------------------------------------
EVERGREEN FUND
EVERGREEN MICRO CAP FUND
EVERGREEN AGGRESSIVE GROWTH FUND
EVERGREEN OMEGA FUND
EVERGREEN SMALL COMPANY GROWTH FUND
EVERGREEN STOCK SELECTOR FUND (EACH A "FUND;" TOGETHER, THE "FUNDS")
CLASS Y SHARES
The Funds are designed to provide investors with a selection of
investment alternatives which seek to provide capital growth and
diversification. This prospectus provides information regarding the Class Y
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
February 1, 1998, as amended August 1, 1998, 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 Funds at (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.
AN INVESTMENT IN THE FUNDS IS NOT A DEPOSIT OR OBLIGATION OF ANY BANK, IS NOT
ENDORSED OR GUARANTEED BY ANY BANK, AND IS NOT INSURED OR OTHERWISE PROTECTED
BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY AND 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
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
EXPENSE INFORMATION........................................................ 3
FINANCIAL HIGHLIGHTS....................................................... 5
DESCRIPTION OF THE FUNDS................................................... 10
Investment Objectives and Policies...................................... 10
Investment Practices and Restrictions................................... 12
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 below are designed to help you understand the
various expenses that you will bear, directly or indirectly, when you invest
in a Fund. Shareholder transaction expenses are fees paid directly from your
account when you buy or sell shares of a Fund.
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Sales Charge Imposed on Purchases....... None
Sales Charge Imposed on Dividend
Reinvestments.......................... None
Contingent Deferred Sales Charge........ None
</TABLE>
Annual operating expenses reflect the normal operating expenses of a
Fund, and include costs such as management and other fees. The tables below
show for each of EVERGREEN FUND, EVERGREEN MICRO CAP FUND, EVERGREEN
AGGRESSIVE GROWTH FUND and EVERGREEN OMEGA FUND actual annual operating
expenses for the fiscal period ended September 30, 1997 and for EVERGREEN
SMALL COMPANY GROWTH FUND and EVERGREEN STOCK SELECTOR FUND annual operating
expenses have been estimated for the fiscal period ending September 30, 1998.
The examples show what you would pay if you invested $1,000 over the periods
indicated. The examples assume that you reinvest all of your dividends and
that a Fund's 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. A FUND'S ACTUAL EXPENSES AND RETURNS
WILL VARY. For a more complete description of the various costs and expenses
borne by a Fund see "Organization and Service Providers."
EVERGREEN FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
---------------- -------
<S> <C> <C> <C>
Management Fees 0.92% After 1 Year $ 12
Other Expenses 0.23% After 3 Years $ 37
---- After 5 Years $ 63
Total 1.15% After 10 Years $140
====
</TABLE>
EVERGREEN MICRO CAP FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
---------------- -------
<S> <C> <C> <C>
Management Fees 1.00% After 1 Year $ 16
Other Expenses 0.59% After 3 Years $ 50
---- After 5 Years $ 87
Total 1.59% After 10 Years $189
====
</TABLE>
EVERGREEN AGGRESSIVE GROWTH FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
---------------- -------
<S> <C> <C> <C>
Management Fees 0.64% After 1 Year $ 10
Other Expenses 0.37% After 3 Years $ 32
---- After 5 Years $ 56
Total 1.01% After 10 Years $124
====
</TABLE>
EVERGREEN OMEGA FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
---------------- -------
<S> <C> <C> <C>
Management Fees 0.74% After 1 Year $ 13
Other Expenses 0.50% After 3 Years $ 39
---- After 5 Years $ 68
Total 1.24% After 10 Years $150
====
</TABLE>
3
<PAGE>
EVERGREEN SMALL COMPANY GROWTH FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
---------------- -------
<S> <C> <C> <C>
Management Fees 0.48% After 1 Year $ 8
Other Expenses 0.29% After 3 Years $25
----
Total 0.77%
====
</TABLE>
EVERGREEN STOCK SELECTOR FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
---------------- -------
<S> <C> <C> <C>
Management Fees After 1 Year $ 9
(After Waiver)(1) 0.65% After 3 Years $30
Other Expenses 0.28%
----
Total(1) 0.93%
====
</TABLE>
- -------
(1) The management fee has been reduced from 0.74% to reflect the voluntary
waiver by the investment advisor. This voluntary waiver can be terminated
at any time. The investment advisor has undertaken to limit the Fund's
Total Annual Operating Expenses for a period of at least two years from
the date of this prospectus to 1.02% of Class Y shares' average daily net
assets. Absent the management fee waiver and the limitation on Total
Annual Operating Expenses, such estimated expenses for the fiscal period
ending September 30, 1998 will be 1.02% of Class Y shares' average daily
net assets.
4
<PAGE>
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
The tables on the following pages present, for each Fund, (except
EVERGREEN SMALL COMPANY GROWTH 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, for
EVERGREEN FUND has been audited by PricewaterhouseCoopers LLP, the Fund's
independent auditors. The information in the tables for EVERGREEN MICRO CAP
FUND for the fiscal years ended September 30, 1997 and 1996 has been audited
by PricewaterhouseCoopers LLP, the Fund's current independent auditors. The
information in the tables for the Fund's fiscal year ended September 30, 1995,
for the four months ended September 30, 1994 and each of the years in the
seven-year period ended May 31, 1994 was audited by the Fund's prior
independent auditors. The information in the tables for EVERGREEN AGGRESSIVE
GROWTH FUND for the fiscal periods ended September 30, 1997 through 1995 has
been audited by PricewaterhouseCoopers LLP, the Fund's current independent
auditors. The information in the tables for EVERGREEN OMEGA FUND for the
period from January 13, 1997 (date of initial public offering) to September
30, 1997 has been audited by KPMG Peat Marwick LLP, the Fund's current
independent auditors. The information in the tables for EVERGREEN STOCK
SELECTOR FUND (formerly Core Equity Fund, a portfolio of CoreFunds, Inc., and
reorganized into EVERGREEN STOCK SELECTOR FUND in July 1998) for the fiscal
periods ended June 30, 1997 and 1996 has been audited by Ernst & Young LLP,
independent auditors. The information in the tables for each of the periods in
the six-year period ended October 31, 1995 was audited by the Fund's prior
independent auditors. Class Y shares of Evergreen SMALL COMPANY GROWTH FUND
were not offered until January 23, 1998. Therefore, no financial highlights
are currently available. A report of PricewaterhouseCoopers, LLP, KPMG Peat
Marwick LLP or Ernst & Young LLP, as the case may be, on the audited
information with respect to each Fund is incorporated by reference in the SAI.
The following information for each Fund should be read in conjunction with the
financial statements and related notes which are incorporated by reference in
the SAI.
Further information about each Fund's performance is contained in the
Fund's Annual Report to shareholders, which may be obtained without charge.
EVERGREEN FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30,
1998# ---------------------------------------------------------------------------------
(UNAUDITED) 1997# 1996 1995 1994 1993 1992 1991 1990 1989 1988*
----------- ------- ------- ------ ------ ------ ------ ------ ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value
beginning of year...... $23.07 $17.71 $15.59 $14.62 $14.46 $13.10 $13.32 $9.66 $14.01 $12.47 $15.12
------- ------- ------- ------ ------ ------ ------ ------ ------- ------ ------
Income from investment
operations
Net investment income... 0.05 0.16 0.24 0.10 0.07 0.09 0.09 0.17 0.24 0.32 0.21
Net realized and
unrealized gain (loss)
on investments......... 2.76 5.73 2.55 3.10 0.79 1.96 0.55 3.93 (3.62) 1.99 (1.05)
------- ------- ------- ------ ------ ------ ------ ------ ------- ------ ------
Total from investment
operations............. 2.81 5.89 2.79 3.20 0.86 2.05 0.64 4.10 (3.38) 2.31 (0.84)
------- ------- ------- ------ ------ ------ ------ ------ ------- ------ ------
Less distributions from
Net investment income... (0.14) (0.12) (0.09) (0.07) (0.09) (0.07) (0.17) (0.18) (0.36) (0.21) (0.25)
Net realized gain on
investments............ (0.50) (0.41) (0.58) (2.16) (0.61) (0.62) (0.69) (0.26) (0.61) (0.56) (1.56)
------- ------- ------- ------ ------ ------ ------ ------ ------- ------ ------
Total distributions..... (0.64) (0.53) (0.67) (2.23) (0.70) (0.69) (0.86) (0.44) (0.97) (0.77) (1.81)
------- ------- ------- ------ ------ ------ ------ ------ ------- ------ ------
Net asset value end of
year................... $ 25.24 $23.07 $17.71 $15.59 $14.62 $14.46 $13.10 $13.32 $9.66 $14.01 $12.47
======= ======= ======= ====== ====== ====== ====== ====== ======= ====== ======
TOTAL RETURN............ 12.54% 34.08% 18.43% 26.79% 6.16% 15.83% 5.19% 43.74% (25.38%) 19.99% (1.87%)
RATIOS/SUPPLEMENTAL
DATA:
Ratios to average net
assets:
Total expenses.......... 1.18%+ 1.15% 1.15% 1.16% 1.13% 1.11% 1.13% 1.15% 1.15% 1.11% 1.03%
Total expenses,
excluding indirectly
paid expenses.......... 1.18%+ 1.15% N/A N/A N/A N/A N/A N/A N/A N/A N/A
Interest expense........ N/A N/A N/A 0.06% 0.09% 0.01% 0.56% 1.45% 1.83% 2.46% 1.70%
Net investment income... 0.48% 0.80% 0.93% 0.53% 0.40% 0.60% 32% 35% 39% 40% 42%
Portfolio turnover
rate................... 4% 12% 15% 19% 19% 21% N/A N/A N/A N/A N/A
Average commission rate
paid per share......... $0.0571 $0.0577 $0.0603 N/A N/A N/A
Net assets end of year
(millions)............. $1,258 $1,104 $841 $612 $526 $657 $772 $755 $525 $867 $751
</TABLE>
- -------
# Net investment income is based on average shares outstanding during the
period.
+ Annualized.
* Net of expense limitation in fiscal year 1988.
5
<PAGE>
EVERGREEN AGGRESSIVE GROWTH FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30,
1998# ----------------------------
(UNAUDITED) 1997# 1996 1995*
----------- -------- -------- --------
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value beginning of year... $23.57 $ 21.09 $ 17.38 $ 15.79
------- -------- -------- -------
Income from investment operations
Net investment loss................ (0.09) (0.17) (0.06) (0.01)
Net realized and unrealized gain on
investments....................... 0.67 2.65 4.41 1.60
------- -------- -------- -------
Total from investment operations.. 0.58 2.48 4.35 1.59
------- -------- -------- -------
Less distributions from
Net realized gain on investments... (0.85) 0 (0.64) 0
------- -------- -------- -------
Total distributions............... (0.85) 0 (0.64) 0
------- -------- -------- -------
Net asset value end of year......... $23.30 $ 23.57 $ 21.09 $ 17.38
======= ======== ======== =======
TOTAL RETURN........................ 2.68% 11.76% 25.84% 10.07%
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses..................... 1.01%+ 1.01% 0.97% 1.08%+
Total expenses, excluding
indirectly paid expenses.......... 1.01%+ 1.00% N/A N/A
Net investment loss................ (0.86%)+ (.78%) (0.60%) (0.71%)+
Portfolio turnover rate............. 28% 56% 33% 31%
Average commission rate paid per
share.............................. $0.0598 $0.0531 $0.0582 N/A
Net assets end of year (thousands).. $32,043 $44,384 $25,918 $ 1,889
</TABLE>
- -------
# Net investment income is based on average shares outstanding during the
period.
+ Annualized.
* For the period from July 11, 1995 (commencement of class operations) to
September 30, 1995.
6
<PAGE>
EVERGREEN MICRO CAP FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30,
1998# ----------------------------------
(UNAUDITED) 1997# 1996 1995 1994*
----------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value
beginning of
year............. $ 26.83 $17.35 $18.42 $21.74 $21.20
------- ------- ------- ------- -------
Income from
investment
operations
Net investment
income (loss)... (0.11) (0.09) (0.08) (0.23) (0.05)
Net realized and
unrealized gain
(loss) on
investments..... 2.48 9.57 (0.43) 0.59 0.59
------- ------- ------- ------- -------
Total from
investment
operations..... 2.37 9.48 (0.51) 0.36 0.54
------- ------- ------- ------- -------
Less distributions
from:
Net investment
income.......... 0 0 0 0 0
Net realized gain
on investments.. (1.39) 0 (0.56) (3.68) 0
------- ------- ------- ------- -------
Total
distributions.. (1.39) 0 (0.56) (3.68) 0
------- ------- ------- ------- -------
Net asset value
end of year...... $ 27.81 $26.83 $17.35 $18.42 $21.74
======= ======= ======= ======= =======
TOTAL RETURN...... 9.18% 54.64% (2.73%) 4.76% 2.55%
RATIOS/SUPPLEMENTAL
DATA:
Ratios to average
net assets:
Total expenses... 1.54%+ 1.59% 1.55% 1.36% 1.37%+
Interest
expense......... 0.06%+ 0.02% 0.02% N/A N/A
Total expenses,
excluding
indirectly paid
expenses........ 1.53%+ 1.58% N/A N/A N/A
Total expenses,
excluding fee
waivers &
expense
reimbursements.. N/A N/A 1.60% N/A N/A
Net investment
income (loss)... (0.80%)+ (0.45%) (0.38%) (0.87%) (0.70%)+
Portfolio turnover
rate............. 24% 59% 160% 84% 36%
Average commission
rate paid per
share............ $0.0523 $0.0543 $0.0465 N/A N/A
Net assets end of
year
(thousands)...... $54,721 $50,732 $39,622 $64,721 $99,340
<CAPTION>
YEAR ENDED MAY 31,
--------------------------------------------------------------
1994 1993 1992 1991 1990 1989# 1988
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value
beginning of
year............. $20.87 $21.02 $18.81 $17.69 $21.02 $16.82 $18.55
-------- -------- -------- -------- -------- -------- --------
Income from
investment
operations
Net investment
income (loss)... (0.07) (0.03) 0.02 0.56 0.45 0.16 0
Net realized and
unrealized gain
(loss) on
investments..... 1.67 1.57 3.33 1.67 0.25 4.37 (0.78)
-------- -------- -------- -------- -------- -------- --------
Total from
investment
operations..... 1.60 1.54 3.35 2.23 0.70 4.53 (0.78)
-------- -------- -------- -------- -------- -------- --------
Less distributions
from:
Net investment
income.......... 0 0 (0.14) (0.53) (0.36) (0.05) 0
Net realized gain
on investments.. (1.27) (1.69) (1.00) (0.58) (3.67) (0.28) (0.95)
-------- -------- -------- -------- -------- -------- --------
Total
distributions.. (1.27) (1.69) (1.14) (1.11) (4.03) (0.33) (0.95)
-------- -------- -------- -------- -------- -------- --------
Net asset value
end of year...... $21.20 $20.87 $21.02 $18.81 $17.69 $21.02 $16.82
======== ======== ======== ======== ======== ======== ========
TOTAL RETURN...... 7.64% 7.47% 18.33% 14.42% 4.20% 27.35% (4.01%)
RATIOS/SUPPLEMENTAL
DATA:
Ratios to average
net assets:
Total expenses... 1.26% 1.24% 1.25% 1.32% 1.33% 1.30% 1.47%
Interest
expense......... N/A N/A N/A N/A N/A N/A N/A
Total expenses,
excluding
indirectly paid
expenses........ 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 N/A
Net investment
income (loss)... (0.33%) (0.07%) 0.22% 3.32% 2.25% 0.86% 0.01%
Portfolio turnover
rate............. 89% 29% 55% 59% 46% 45% 47%
Average commission
rate paid per
share............ N/A N/A N/A N/A N/A N/A N/A
Net assets end of
year
(thousands)...... $96,357 $80,605 $62,172 $45,687 $37,838 $37,292 $23,007
</TABLE>
- -------
# Net investment income is based on average shares outstanding during the
period.
* For the four months ended September 30, 1994. The Fund changed its fiscal
year end from May 31 to September 30, effective September 30, 1994.
+ Annualized.
7
<PAGE>
EVERGREEN OMEGA FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
MARCH 31,
1998# PERIOD ENDED
(UNAUDITED) SEPTEMBER 30, 1997#*
----------- --------------------
<S> <C> <C>
PER SHARE DATA:
Net asset value beginning of period........... $22.68 $19.98
------- -------
Income from investment operations
Net investment loss.......................... (0.02) (0.01)
Net realized and unrealized gain on
investments................................. 3.44 3.56
------- -------
Total from investment operations............. 3.42 3.55
-------
Less distributions from
Net realized gain on investments............. (2.13) (0.85)
------- -------
Total distributions.......................... (2.13) (0.85)
------- -------
Net asset value end of period................. $23.97 $22.68
======= =======
TOTAL RETURN.................................. 16.47% 18.60%
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets
Total expenses............................... 1.07%+ 1.24%+
Total expenses, excluding indirectly paid
expenses.................................... 1.07%+ 1.24%+
Net investment income (loss)................. (0.17%)+ (0.21%)+
Portfolio turnover rate....................... 108% 76%
Average commission rate paid per share........ $0.0587 $0.0580
Net assets end of period (thousands).......... $6 $5
</TABLE>
- -------
# Net investment income is based on average shares outstanding during the
period.
* For the period from January 13, 1997 (commencement of class operations) to
September 30, 1997.
+ Annualized.
EVERGREEN SMALL COMPANY GROWTH FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
PERIOD ENDED
MARCH 31, 1998#*
(UNAUDITED)
----------------
<S> <C>
PER SHARE DATA:
Net asset value beginning of period........................... $7.73
-------
Income from investment operations
Net investment income........................................ 0
Net realized and unrealized gain on investments and foreign
currency related transactions............................... 1.04
-------
Total from investment operations............................. 1.04
-------
Net asset value end of period................................. $8.77
=======
TOTAL RETURN.................................................. 13.45%
RATIOS/SUPPLEMENTAL DATA:
Ratios to average net assets:
Total expenses............................................... 0.82%**
Total expenses, excluding indirectly paid expenses........... 0.82%**
Net investment loss.......................................... (0.15%)**
Portfolio turnover rate....................................... 41%
Average commission rate paid per share........................ $0.0507
Net assets end of period (millions)........................... $1
</TABLE>
- -------
# Net investment income is based on average shares outstanding during the
period.
** Annualized.
* For the period from January 26, 1998 (commencement of class operations) to
March 31, 1998.
8
<PAGE>
EVERGREEN STOCK SELECTOR FUND -- CLASS Y*(3)
<TABLE>
<CAPTION>
YEAR ENDED
SIX MONTHS JUNE 30, YEAR ENDED OCTOBER 31,
ENDED ------------------ ---------------------------------------------------------
DECEMBER 31, INSTITUTIONAL PRIOR
1997 CLASS CLASS
(UNAUDITED) 1997 1996 1995 1994 1993 1992 1991 1990(1)
------------ -------- -------- ------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $21.11 $17.26 $17.07 $15.00 $15.39 $13.93 $13.08 $8.95 $10.00
Net Investment Income.. -- 0.12 0.14 0.19 0.11 0.14 0.19 0.26 0.14
Realized and Unrealized
Net Gains (Losses) on
Securities............ 2.41 5.32 1.49 2.87 0.22 1.89 1.02 4.13 (1.05)
Distributions from Net
Investment Income..... -- (0.12) (0.14) (0.19) (0.11) (0.14) (0.19) (0.26) (0.14)
Distributions from
Capital Gains......... (2.92) (1.47) (1.30) (0.80) (0.61) (0.43) (0.17) -- --
Net Asset Value, End of
Period................. $20.60 $21.11 $17.26 $17.07 $15.00 $15.39 $13.93 $13.08 $8.95
======== ======== ======== ======== ======= ======= ======= ======= ======
TOTAL RETURN(2)......... 11.87% 33.10% 19.24% 22.00% 2.21% 14.90% 9.27% 49.37% (9.22%)
Net Assets, End of
Period (000 omitted)... $557,593 $515,015 $414,824 $378,352 $50,128 $45,677 $28,103 $12,830 $5,982
Ratio of Expenses to
Average Net Assets..... 0.99% 0.98% 0.97% 1.05% 1.49% 1.20% 0.92% 0.54% 0.65%
Ratio of Net Income to
Average Net Assets..... 0.21% 0.63% 1.15% 1.44% 0.75% 0.94% 1.47% 2.30% 2.29%
Ratio of Expenses to
Average Net Assets
(Excluding Waivers).... 1.05% 1.03% 1.01% 1.10% 1.51% 1.41% 1.23% 1.48% 1.59%
Ratio of Net Income to
Average Net Assets
(Excluding Waivers).... 0.15% 0.58% 1.11% 1.44% 0.73% 0.73% 1.17% 1.36% 1.35%
Portfolio Turnover
Rate**................. 23% 79% 114% 119% 35% 24% 39% 68% 43%
Average Commission Rate
Paid(4)................ $0.0658 $0.0512 $0.0636 n/a n/a n/a n/a n/a n/a
</TABLE>
- -------
* On February 21, 1995, the Shares of the Fund were redesignated as either
Retail or Institutional Shares. On that date, the Fund's net investment
income, expenses and distributions for the period November 1, 1994 through
February 20, 1995 were allocated to each class of shares. The basis for the
allocation was the relative net assets of each class of Shares as of
February 21, 1995. The results were combined with the results of operations
and distributions for each applicable class for the period February 21,
1995 through October 31, 1995. For the year ended October 31, 1995, the
Financial Highlights' ratios of expenses, net investment income, total
return, and the per share investment activities and distributions reflect
this allocation. Also, on April 15, 1996, the assets of the Conestoga
Equity Fund were acquired by CoreFunds. At that time the Institutional
Class Shares of the Fund were exchanged for Class Y Shares.
** For the period ended June 30, 1996, transactions relating to the merger
were excluded from the calculation of the Portfolio Turnover Rate.
(1) Commenced operations February 28, 1990. Unless otherwise noted, all ratios
for the period have been annualized.
(2) Total return for the period ended June 30, 1996 is for an eight-month
period.
(3) The per share amounts for the period ended June 30, 1996, represents the
period from November 1, 1995 to June 30, 1996. All prior years are for the
periods November 1 to October 31.
(4) Presentation of the rate is only required for fiscal periods beginning
after September 1, 1995.
9
<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.
EVERGREEN FUND
The EVERGREEN FUND seeks to achieve its investment objective of capital
appreciation principally through investments in common stock and securities
convertible into or exchangeable for common stock of companies which are
little-known, relatively small or represent special situations which, in the
opinion of the Fund's investment advisor, offer potential for capital
appreciation. A "little-known" company means one whose business is limited to
a regional market or whose securities are closely held with only a small
proportion traded publicly. A "relatively small" company means one which has a
small share of the market for its products or services in comparison with
other companies in its field, or which provides goods or services for a
limited market. A "special situation" company is one which offers potential
for capital appreciation because of a recent or anticipated change in
structure, management, products or services. In addition to the securities
described above, the EVERGREEN FUND may invest in securities of relatively
well-known and large companies with potential for capital appreciation.
Investments may also be made to a limited degree in non-convertible debt
securities and preferred stocks which offer an opportunity for capital
appreciation. Short-term investments may also be made if the Fund's investment
advisor believes that such action will benefit the Fund.
EVERGREEN MICRO CAP FUND
The investment objective of EVERGREEN MICRO CAP FUND is to achieve
capital appreciation; income is not a factor in the selection of portfolio
securities. The Fund seeks to achieve its objective principally through
investments in common stock of companies for which there is a relatively
limited trading market. A relatively limited trading market is one in which
only small amounts of stock are available at any given time generally through
five or fewer market makers. The securities of such companies are often traded
only over-the-counter or on a regional securities exchange, rarely on a
national securities exchange, and may not trade every day or in the volume
typical of trading on a national securities exchange.
Investments by the Fund are made with a view toward taking advantage of
market inefficiencies affecting the price of a company's securities or by
exploiting the investment opportunities which may be inherent in companies
offering new or unique products or services. Market inefficiency can result
from a company being too small to be covered by most industry analysts,
thereby resulting in a limited dissemination of information about the company
or its industry. The companies in which the Fund may invest are small, but
have at least $1,000,000 and generally no more than $150,000,000 of market
capitalization. The Fund may also invest in little-known or unpopular
companies which may not be widely recommended for purchase by industry
analysts due to some situation unique to the company or its industry. There
are no restrictions as to types of businesses or industries in which the Fund
may invest. The Fund's investment advisor believes that its investment
research programs will uncover a variety of relatively unexploited investment
opportunities.
The Fund's investment advisor will attempt to screen the universe of
companies falling within the capitalization range described above and invest
primarily in what it believes to be the 100 best based on certain qualitative
and quantitative criteria. Such companies may include those with the highest
return on equity and consistent earnings growth. The criteria will be reviewed
and evaluated on an ongoing basis by the Fund's investment advisor. In
addition, the Fund will invest in other companies which do not meet the
screening criteria. These will include companies which offer unique products
or services or operate in industries or sectors that have, in the opinion of
the Fund's investment advisor, significant growth prospects. In selecting
investment opportunities for the Fund, the Fund's investment advisor will use
certain proprietary computer screening techniques and the extensive library
facilities of Lieber & Company, the Fund's sub-adviser.
While the focus of EVERGREEN MICRO CAP FUND is on long-term capital
appreciation, investments may on occasion be made with the expectation of
short-term capital appreciation. Securities held for a short time period may
be sold if the investment objective for such securities has been achieved or
if other circumstances warrant.
10
<PAGE>
EVERGREEN AGGRESSIVE GROWTH FUND
The EVERGREEN AGGRESSIVE GROWTH FUND'S investment objective is to achieve
long-term capital appreciation by investing primarily in common stocks of
emerging growth companies and larger, more well established companies, all of
which are viewed by the Fund's investment advisor as having above-average
appreciation potential. Under normal circumstances, the Fund intends to invest
at least 65% of its net assets in common stocks or securities convertible into
common stocks. The Fund's investment advisor considers an emerging growth
company to be one which is still in the developmental stage, yet has
demonstrated, or is expected to achieve, growth of earnings over various major
business cycles. Important qualities of any emerging growth company include
sound management and a good product with growing market opportunities. To the
extent that its assets are not invested in common stocks or securities
convertible into common stocks, the Fund also may invest its assets in, or
enter into repurchase agreements with banks or broker-dealers with respect to,
investment grade corporate bonds, United States ("U.S.") government
securities, commercial paper and certificates of deposit of domestic banks.
Consistent with its investment objective, the Fund also may invest in
equity securities of seasoned, established companies which its investment
advisor believes have above-average appreciation potential similar to that of
companies in the developmental stage. This may be due, for example, to
management change, new technology, new product or service developments,
changes in demand, or other factors. Investments in stocks of emerging growth
companies may involve special risks.
EVERGREEN OMEGA FUND
The investment objective of EVERGREEN OMEGA FUND is to seek maximum
capital growth by investing in a varied portfolio consisting primarily of
common stocks and securities convertible into common stocks. The Fund pursues
its objective by employing techniques of the fully managed-investment concept,
meaning that the Fund's investment advisor will continuously review both
individual securities and relevant general conditions. Whenever, in the
opinion of the Fund's investment advisor, a security no longer seems to have
the required characteristics, an anticipated level of performance has been
achieved, or other securities present relatively greater opportunities for
realizing the Fund's objective, appropriate changes will be made in the Fund's
portfolio. The Fund's equity position will be changed as the investment
advisor changes its evaluation of trends in general securities price levels.
Portfolio turnover rate will not be considered a limiting factor in the
execution of investment decisions.
EVERGREEN SMALL COMPANY GROWTH FUND
EVERGREEN SMALL COMPANY GROWTH FUND seeks long-term growth of capital.
The Fund invests at least 65% of its total assets in equity securities of
companies with small market capitalizations. For this purpose, companies with
small market capitalizations are generally those with market capitalizations
of less than $1 billion ("small cap") at the time of the Fund's investment.
Companies whose capitalization falls outside this range after the purchase
continue to be considered small cap for this purpose.
While the Fund focuses on small cap stocks, it may also invest in other
types of securities without regard to the market capitalization of the issuer
and which may be listed on national exchanges or traded over-the-counter,
including other common stocks, debt securities convertible into common stocks
or having common stock characteristics, and rights and warrants to purchase
common stocks. While income is not an objective, securities appearing to offer
attractive possibilities for future growth of income may be included in the
portfolio whenever it seems possible to do so without conflicting with the
Fund's objective of capital growth.
EVERGREEN STOCK SELECTOR FUND
The EVERGREEN STOCK SELECTOR FUND seeks maximum total return. The Fund
strives to provide a total return greater than broad stock market indices such
as the Standard & Poor's 500 Composite Stock Index by investing principally in
a diversified portfolio of common stocks of companies that its investment
advisor expects will experience growth in earnings and price including stocks
of companies with large market capitalizations (i.e., over $5 billion), medium
market capitalizations (i.e., between $1 billion and $5 billion) and small
market capitalizations (i.e., under $1 billion). In addition, up to 20% of the
Fund's total assets may be invested in preferred stocks, securities
convertible into common stock, corporate bonds and notes, warrants (up to 5%
of total assets), short-term obligations and foreign securities represented by
sponsored and unsponsored American Depositary Receipts.
11
<PAGE>
Debt securities which include both secured and unsecured obligations,
will, at the time of investment, be rated within the three highest categories
by Standard & Poor's Rating Services ("S&P") (AAA, AA and A), by Moody's
Investors Service, Inc., ("Moody's") (Aaa, Aa and A), by Fitch IBCA, Inc.
(AAA, AA and A), 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.
Other Eligible Securities. Each Fund may invest, for temporary defensive
purposes, up to 100% of their assets in short-term obligations. Such
obligations may include U.S. government securities, master demand notes,
commercial paper notes, bank deposits and other financial obligations.
EVERGREEN SMALL COMPANY GROWTH FUND may invest in limited partnerships,
including master limited partnerships. EVERGREEN OMEGA FUND, EVERGREEN SMALL
COMPANY GROWTH FUND and EVERGREEN STOCK SELECTOR FUND may invest in foreign
securities: however, EVERGREEN OMEGA FUND and EVERGREEN SMALL COMPANY GROWTH
FUND will not invest more than 25% of their assets in such securities.
EVERGREEN OMEGA FUND may invest, for temporary defensive purposes,
without limit in investment grade bonds or debentures rated by Moody's as Baa
or better or by S&P as BBB or better or those having at least similar quality
in the investment adviser's judgment. The Fund may also invest in non-
convertible preferred stocks of companies considered creditworthy and able to
sustain dividend payments and in short-term money market instruments maturing
in one year or less.
In addition to the investment policies detailed above, each Fund may
employ certain additional investment strategies which are discussed in
"Investment Practices and Restrictions."
INVESTMENT PRACTICES AND RESTRICTIONS
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 the Fund enters into repurchase
agreements.
Reverse Repurchase Agreements. The Funds 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 securities it sold decline below their
repurchase prices. Reverse repurchase agreements may be considered a form of
borrowing, and, therefore, a form of leverage. Leverage may magnify gains or
losses of a Fund.
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.
Securities Lending. To generate income and offset expenses, each Fund may lend
securities to broker-dealers and other financial institutions. Loans of
securities by a Fund may not exceed 33 1/3% of the value of the Fund's total
assets. While securities are on loan, the borrower will pay the Fund any
income accruing on the security. Also, the Fund may invest any collateral it
receives in additional securities. Gains or losses in the market value of a
lent security will affect a Fund and its shareholders. When a Fund lends its
securities, it runs the risk that it could not retrieve the securities on a
timely basis possibly losing 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.
Investing in Securities of Other Investment Companies. Each Fund may invest in
the securities of other investment companies. As a shareholder of another
investment company, a Fund would pay its portion of the
12
<PAGE>
other investment company's expenses. These expenses would be in addition to
the expenses that a Fund currently bears concerning its own operations and may
result in some duplication of fees.
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.
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 purpose of the foregoing 15% limit. The inability of a Fund to dispose
of illiquid investments readily or at a reasonable price could impair its
ability to raise cash for redemptions or other purposes.
Restricted Securities. Each Fund may invest in restricted securities,
including securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933 (the "1933 Act"). 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 U.S.
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.
Options and Futures. The Funds may engage in options and futures transactions.
Options and futures transactions are intended to enable a Fund to manage
market, interest rate or exchange rate risk. The Funds do not use these
transactions for speculation or leverage.
The Funds may attempt to hedge all or a portion of their portfolios
through the purchase of both put and call options on their portfolio
securities and listed put options on financial futures contracts for portfolio
securities. The Funds may also purchase call options on financial futures
contracts. The Funds may write covered call options on their portfolio
securities to attempt to increase their current income. The Funds will
maintain their 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.
The Funds 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. 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). The
Funds may only write "covered" options. This means that so long as a 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, a Fund might own substantially similar U.S. Treasury bills. A
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 Funds receive a premium from writing a
call or put option which they retain whether or not the option is exercised.
By writing a call option, the Funds might lose the potential for gain on the
underlying security while the option is open, and by writing a put option the
Funds might become obligated to purchase the underlying securities for more
than their current market price upon exercise.
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 specified agencies or instrumentalities
of the U.S. government. If a 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 a Fund's anticipated holding period. A 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.
13
<PAGE>
The Funds may also enter into currency and other financial futures
contracts and write options on such contracts. The Funds intend to enter into
such contracts and related options for hedging purposes. The Funds 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 Funds do not make
payment or deliver securities upon entering into a futures contract. Instead,
they put 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 Funds 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 Funds sell futures contracts in order to
offset a possible decline in the profit on their securities or currencies. If
a futures contract is purchased by a 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 Funds 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 their options positions. The Funds' 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 Funds will be able to enter into an
offsetting transaction with respect to a particular contract at a particular
time. If the Funds are not able to enter into an offsetting transaction, the
Funds 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
they would continue to bear market risk on the transaction.
EVERGREEN STOCK SELECTOR FUND may neither purchase futures contracts or
options where premiums and margin deposits exceed 5% of its total assets nor
enter into futures contracts or options where its obligations would exceed 20%
of its total assets.
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 can result in poorer performance (i.e., the Funds' returns
may be reduced). The Funds' attempt 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 the Funds use 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 Funds' portfolios. This may cause the
financial futures contracts 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 a Fund's futures position did not
correspond to changes in the value of its investments. In these events, the
Fund may lose money on the financial futures contracts or the options on
financial futures contracts. It is not certain that a secondary market for
positions in financial futures contracts or for options on financial futures
contracts will exist at all times. Although a Fund's investment advisor will
consider liquidity before entering into financial futures contracts or options
on financial futures contracts, there is no assurance that a liquid secondary
market on an exchange will exist for any particular financial futures contract
or option on a financial futures contract at any particular time. The Funds'
ability to establish and close out financial futures contracts and options on
financial futures contract 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, a Fund may lose money on the futures contract or option,
and the losses to a Fund could be significant.
Derivatives. Derivatives are financial contracts, such as those described
above, whose value is based on an underlying asset, such as a stock or a bond,
or an underlying economic factor, such as an index or an interest rate.
The Funds may invest in derivatives only if the expected risks and
rewards are consistent with their objectives and policies.
Losses from derivatives can sometimes be substantial. This is true partly
because small price movements in the underlying asset can result in immediate
and substantial gains or losses in the value of the derivative.
14
<PAGE>
Derivatives can also cause a Fund to lose money if a Fund fails to correctly
predict the direction in which the underlying asset or economic factor will
move.
Investments in Small and Mid-Sized Companies. Investments in securities of
little-known, relatively small or mid-sized and special situation companies
may tend to be speculative and volatile. A lack of management depth in such
companies could increase the risks associated with the loss of key personnel.
Also, the material and financial resources of such companies may be limited,
with the consequence that funds or external financing necessary for growth may
be unavailable. Such companies may also be involved in the development or
marketing of new products or services for which there are no established
markets. If projected markets do not materialize or only regional markets
develop, such companies may be adversely affected or may be subject to the
consequences of local events. Moreover, such companies may be insignificant
factors in their industries and may become subject to intense competition from
larger companies. Securities of companies in which the Funds may invest will
frequently be traded only in the over-the-counter market or on regional stock
exchanges and will often be closely held. Securities of this type may have
limited liquidity and may be subject to wide price fluctuations. As a result
of the risk factors described above, the net asset value of each Fund's shares
can be expected to vary significantly. Accordingly, each Fund should not be
considered suitable for investors who are unable or unwilling to assume the
associated risks, nor should investment in the Funds be considered a balanced
or complete investment program.
Foreign Investments. 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 the investment
advisors of EVERGREEN OMEGA FUND, EVERGREEN SMALL COMPANY GROWTH FUND and
EVERGREEN STOCK SELECTOR FUND before making any of these types of investments.
Foreign Currency Transactions. As discussed above, EVERGREEN OMEGA FUND,
EVERGREEN SMALL COMPANY GROWTH FUND and EVERGREEN STOCK SELECTOR FUND may
invest in securities of foreign issuers. When the Funds invest in foreign
securities, they usually will be denominated in foreign currencies, and the
Funds 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, the Funds 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 the Funds
will deliver or receive when the contract is completed) is fixed when the
Funds enter into the contract. The Funds usually will enter into these
contracts to stabilize the U.S. dollar value of a security they have agreed to
buy or sell. The Funds intend to use these contracts to hedge the U.S. dollar
value of a security they already own, particularly if the Funds expect a
decrease in the value of the currency in which the foreign security is
denominated. Although the Funds will attempt to benefit from using forward
contracts, the success of their 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 the Funds' investments
denominated in foreign currencies will depend on the relative strength of
those currencies and the U.S. dollar, and the Funds 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 the Funds.
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.
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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.
15
<PAGE>
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 each Fund's activities, reviewing,
among other things, each Fund's performance and its 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 the Funds 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; a Fund 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 of EVERGREEN FUND and EVERGREEN
MICRO CAP FUND is Evergreen Asset Management Corp. ("Evergreen Asset"), which
is a wholly-owned subsidiary of First Union Corporation ("First Union").
Evergreen Asset, with its predecessors, has served as investment advisor to
the Evergreen mutual funds since 1971.
Evergreen Asset is entitled to receive from EVERGREEN FUND and EVERGREEN
MICRO CAP FUND an annual fee equal to 1.00% of average daily net assets of
each Fund on the first $750,000,000, plus 0.90% of average daily net assets on
the next $250,000,000, plus 0.80% of average daily net assets on assets over
$1,000,000,000.
The Capital Management Group of First Union National Bank ("FUNB") serves
as investment advisor to EVERGREEN AGGRESSIVE GROWTH FUND. FUNB is a
subsidiary of First Union. FUNB is located at 201 South College Street and
First Union 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 U.S.
FUNB receives an annual fee from EVERGREEN AGGRESSIVE GROWTH FUND equal
to 0.60% of average daily net assets of the Fund.
The investment advisor to EVERGREEN OMEGA FUND and EVERGREEN SMALL
COMPANY GROWTH 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 an indirect subsidiary of FUNB.
EVERGREEN OMEGA FUND pays Keystone a fee, calculated on an annual basis,
equal to 0.75% of the first $250,000,000 of average daily net assets, plus
0.675% of the next $250,000,000 of average daily net assets, plus 0.60% of the
next $500,000,000 of average daily net assets, plus 0.50% of amounts over
$1,000,000,000 of average daily net assets, computed as of the close of
business each business day and paid monthly.
EVERGREEN SMALL COMPANY GROWTH FUND pays Keystone a fee, calculated on an
annual basis, equal to 0.70% of the first $100,000,000 of the aggregate net
asset value of the shares of the Fund, plus 0.65% of the next $100,000,000,
plus 0.60% of the next $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 $500,000,000, plus
0.40% of the next $500,000,000, plus 0.35% of amounts over $1,500,000,000,
computed as of the close of business each business day and paid monthly.
The investment advisor of EVERGREEN STOCK SELECTOR FUND is Meridian
Investment Company ("Meridian"). Meridian is an indirect subsidiary of FUNB.
Meridian's address is 55 Valley Stream Parkway, Malvern, Pennsylvania 19355.
Meridian is entitled to receive an annual fee equal to 0.74% of average
daily net assets of EVERGREEN STOCK SELECTOR FUND.
Portfolio Managers. The portfolio managers for EVERGREEN FUND are Stephen A.
Lieber, Chairman and Co-Chief Executive of Evergreen Asset and Nola Maddox
Falcone C.F.A., President and Co-Chief Executive Officer of
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<PAGE>
Evergreen Asset. Mr. Lieber is the founder of Evergreen Asset and has been
associated with Evergreen Asset and its predecessor since 1971. Ms. Falcone
joined Lieber & Company (see "Sub-adviser" below) as a Senior Portfolio
Manager in 1974, and was a General Partner from January 1981 to June 1994.
The portfolio manager for EVERGREEN AGGRESSIVE GROWTH FUND is Harold J.
Ireland, Jr., a Vice President of FUNB who has been associated with FUNB since
1995. Prior to that, Mr. Ireland was at Palm Beach Capital Management, Inc.
and served as portfolio manager of the Fund's predecessor, ABT Emerging Growth
Fund, since 1985.
The portfolio of EVERGREEN MICRO CAP FUND is managed by a committee,
which includes Stephen A. Lieber and Edwin A. Miska, an analyst with Evergreen
Asset and its predecessor since 1989, together with portfolio management and
analytical personnel employed by Evergreen Asset or its affiliates.
Maureen E. Cullinane has been EVERGREEN OMEGA FUND'S portfolio manager
since 1989. Ms. Cullinane is a Keystone Senior Vice President and Senior
Portfolio Manager and has more than 20 years of investment experience.
The portfolio manager of EVERGREEN SMALL COMPANY GROWTH FUND is J. Gary
Craven, who joined Keystone in November, 1996. Mr. Craven is currently a
Keystone Senior Vice President, Chief Investment Officer and Group Leader for
the small cap equity area. Prior to joining Keystone, Mr. Craven was a
portfolio manager at Invista Capital Management, Inc. since 1987.
The portfolio manager of EVERGREEN STOCK SELECTOR FUND is Joseph E.
Stocke, CFA. Mr. Stocke joined Meridian in 1983 as an Assistant Investment
Officer and since 1990 has been a Senior Investment Manager/Equities. Mr.
Stocke managed the Special Equity Fund and Core Equity Fund (the predecessor
of EVERGREEN STOCK SELECTOR FUND) of CoreFunds, Inc. from 1990 to July 1998.
Sub-adviser. Evergreen Asset has entered into sub-advisory agreements with
Lieber & Company, an indirect wholly-owned subsidiary of First Union, which
provide that Lieber & Company's research department and staff will furnish
Evergreen Asset with information, investment recommendations, advice and
assistance, and will generally be available for consultation on the portfolios
of EVERGREEN FUND and EVERGREEN MICRO CAP FUND. Lieber & Company will be
reimbursed by Evergreen Asset in connection with the rendering of services on
the basis of the direct and indirect costs of performing such services. There
is no additional charge to the Funds for the services provided by Lieber &
Company.
Transfer Agent and Dividend Disbursing Agent. Evergreen Service Company
("ESC"), 200 Berkeley Street, Boston, Massachusetts 02116, acts as the Funds'
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 the Funds' 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.
Administrator. Evergreen Investment Services, Inc. ("EIS") serves as
administrator to EVERGREEN AGGRESSIVE GROWTH FUND and EVERGREEN STOCK SELECTOR
FUND. 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 administered by EIS for which
any affiliate of FUNB serves as investment advisor. The administration fee is
calculated in accordance with the following schedule.
<TABLE>
<CAPTION>
ADMINISTRATION FEE
------------------
<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
0.010% on assets in excess of $30 billion
</TABLE>
17
<PAGE>
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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 load. 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, Meridian 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 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 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 the 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 believe would accurately reflect
fair value.
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 a Fund's
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. A
Fund 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 in a Fund to the Fund
for cash at their 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 the Fund
receives your request in proper form. Proceeds generally will be sent to you
within seven days. However, for shares recently purchased by check, the 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 a 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.
The Funds 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.
18
<PAGE>
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 Years 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 section 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. A 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 Fund cannot dispose of its 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 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
19
<PAGE>
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 the 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, the 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 by filling out the appropriate part of the
application. Under this 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 Plan was opened.
Fund shares will be redeemed as necessary to meet withdrawal payments. All
participants must elect to have their dividends and capital gains
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 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 a 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. You may select
this service on your application and indicate the Evergreen fund(s) into which
distributions are to be invested.
20
<PAGE>
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 or its affiliates being
prevented from continuing to perform the services required under the
investment advisory contract or from acting as agent in connection with the
purchase of shares of the Funds by its customers. If FUNB or its affiliates
were prevented from continuing to provide the services called for under the
investment advisory agreement, it is expected that the Trustees would
identify, and call upon the Funds' shareholders to approve, a new investment
advisor. If this were to occur, it is not anticipated that the shareholders of
the Funds would suffer any adverse financial consequences.
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OTHER INFORMATION
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DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund intends to distribute its investment company taxable income
annually and net capital realized 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 the 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 and intends to continue to qualify as a regulated
investment company under the Internal Revenue Code of 1986, as amended (the
"Code"). While so qualified, it is expected that a Fund will not be required
to pay any federal income taxes on that portion of its investment company
taxable income and any net realized capital gains it distributes to
shareholders. The Code imposes a 4% nondeductible excise tax on regulated
investment companies, such as the 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.
A Fund may be subject to foreign withholding taxes which would reduce the
yield on its investments. Tax treaties between certain countries and the U.S.
may reduce or eliminate such taxes. Shareholders of a Fund who are subject to
U.S. 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 a 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.
21
<PAGE>
Each Fund is 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 Funds' transfer agent, that the investor's
social security or taxpayer identification number is correct and that the
investor is not currently subject to backup withholding or is exempt from
backup withholding.
Each Fund intends to distribute its net capital gains as capital gains
dividends. Shareholders should treat such dividends as long-term capital
gains. A Fund will designate capital gains distributions as such by a written
notice mailed to each shareholder no later than 60 days after the close of a
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 a 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 and Brokerage. The estimated annual portfolio turnover rate
for the EVERGREEN FUND and EVERGREEN STOCK SELECTOR FUND is not expected to
exceed 100%. The estimated annual portfolio turnover rate for EVERGREEN MICRO
CAP FUND, EVERGREEN AGGRESSIVE GROWTH FUND, EVERGREEN OMEGA FUND and EVERGREEN
SMALL COMPANY GROWTH FUND is not expected to exceed 200%. 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. It is contemplated that Lieber & Company, 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 EVERGREEN FUND and EVERGREEN MICRO CAP FUND effected on those
exchanges. See the SAI for further information regarding the practices of the
Funds affecting portfolio turnover and brokerage allocation practices.
Portfolio Transactions. Consistent with the Conduct Rules of the National
Association of Securities Dealers, Inc., and subject to seeking best price and
execution, a Fund may consider sales of its shares as a factor in the
selection of broker-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 (except for EVERGREEN STRATEGIC GROWTH
FUND which offers three classes of shares, Class A, Class B and Class C) 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, Meridian 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.
Performance Information. From time to time, a Fund may quote its "total
return" or "yield" for a specified period in advertisements, reports or other
communications to shareholders. Total return and yield are computed separately
for Class A, Class B, Class C and Class Y shares. 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, the Fund's yield may not equal its
distribution rate, the income paid to your account or the
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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. A Fund 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 12-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 indicative 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 free of charge 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 Statement filed by the Trust with the SEC under the 1933
Act, as amended. Copies of the Registration Statement 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.
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INVESTMENT ADVISORS
Evergreen Asset Management Corp., 2500 Westchester Avenue, Purchase, New York
10577
Evergreen Fund, Evergreen Micro Cap Fund
Capital Management Group of First Union National Bank, 201 South College
Street, Charlotte, North Carolina 28288
Evergreen Aggressive Growth Fund
Keystone Investment Management Company, 200 Berkeley Street, Boston,
Massachusetts 02116-5034
Evergreen Omega Fund, Evergreen Small Company Growth Fund
Meridian Investment Company, 55 Valley Stream Parkway, Malvern, Pennsylvania
19355
Evergreen Stock Selector 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 02106-2121
LEGAL COUNSEL
Sullivan & Worcester LLP, 1025 Connecticut Avenue, N.W., Washington, D.C. 20036
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, New York
10036
Evergreen Fund, Evergreen Micro Cap Fund, Evergreen Aggressive Growth Fund,
Evergreen Stock Selector Fund
KPMG Peat Marwick LLP, 99 High Street, Boston, Massachusetts 02110
Evergreen Omega Fund, Evergreen Small Company Growth Fund
DISTRIBUTOR
Evergreen Distributor, Inc., 125 W. 55th Street, New York, New York 10019
60882 541292RV1
<PAGE>
EVERGREEN EQUITY TRUST
PART B
STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
EVERGREEN EQUITY TRUST
200 BERKELEY STREET
BOSTON, MASSACHUSETTS 02116
(800) 633-2700
DOMESTIC GROWTH FUNDS
STATEMENT OF ADDITIONAL INFORMATION
FEBRUARY 1, 1998 AS AMENDED AUGUST 3, 1998
EVERGREEN FUND ("EVERGREEN")
EVERGREEN MICRO CAP FUND ("MICRO")
EVERGREEN AGGRESSIVE GROWTH FUND ("AGGRESSIVE")
EVERGREEN OMEGA FUND ("OMEGA")
EVERGREEN SMALL COMPANY GROWTH FUND ("SMALL")
EVERGREEN STRATEGIC GROWTH FUND ("STRATEGIC")
EVERGREEN STOCK SELECTOR FUND ("STOCK")
(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 as amended ("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 prospectuses of Evergreen, Micro,
Aggressive, Omega, Small, Strategic and Stock dated February 1, 1998 as amended
August 3, 1998, and 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 all but Strategic. You
may obtain any of these prospectuses from Evergreen Distributor, Inc.
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TABLE OF CONTENTS
INVESTMENT POLICIES...........................................................3
Fundamental Investment Policies......................................3
Additional Information on Securities and Investment Practices........5
MANAGEMENT OF THE TRUST......................................................11
PRINCIPAL HOLDERS OF FUND SHARES.............................................13
INVESTMENT ADVISORY AND OTHER SERVICES.......................................18
Investment Advisors.................................................18
Investment Advisory Agreements......................................19
Distributor.........................................................20
Distribution Plans and Agreements...................................20
Additional Service Providers........................................21
BROKERAGE....................................................................22
Brokerage Commissions...............................................22
Selection of Brokers................................................22
Simultaneous Transactions...........................................23
TRUST ORGANIZATION...........................................................23
Form of Organization................................................23
Description of Shares...............................................23
Voting Rights.......................................................24
Limitation of Trustees' Liability...................................24
PURCHASE, REDEMPTION AND PRICING OF SHARES...................................24
How the Funds Offer Shares to the Public............................24
Contingent Deferred Sales Charge....................................25
Sales Charge Waivers or Reductions..................................26
Exchanges...........................................................28
Calculation of Net Asset Value per Share ("NAV")....................28
Valuation of Portfolio Securities...................................28
Shareholder Services................................................29
PRINCIPAL UNDERWRITER........................................................29
ADDITIONAL TAX INFORMATION...................................................30
Requirements for Qualification as a Regulated Investment Company....30
Taxes on Distributions..............................................30
Taxes on the Sale or Exchange of Fund Shares........................31
Other Tax Considerations............................................31
FINANCIAL INFORMATION........................................................32
Expenses ...........................................................32
Brokerage Commissions Paid..........................................33
Computation of Class A Offering Price...............................34
Performance.........................................................24
ADDITIONAL INFORMATION.......................................................37
APPENDIX A..................................................................A-1
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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 the 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, each 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
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others. Each Fund may borrow only as a temporary measure for extraordinary or
emergency purposes such as the redemption of Fund shares. Each 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. Each Fund may purchase securities on margin and engage in short
sales to the extent permitted by applicable law.
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 a 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 a 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. The Fund will require
collateral in an amount equal to at least 100% of the current market value of
the securities lent, including accrued interest. A Fund has the right to call a
loan and obtain the securities lent at any time on notice of not more than five
business days. A Fund may pay reasonable fees in connection with such loans.
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ADDITIONAL INFORMATION ON SECURITIES AND INVESTMENT PRACTICES
U.S. Government Securities
Each Fund may invest in securities issued or guaranteed by U.S.
Government agencies or instrumentalities.
These securities are backed by (1) the discretionary authority of the
U.S. Government to purchase certain obligations of agencies or instrumentalities
or (2) 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 the price of 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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When-Issued, Delayed-Delivery and Forward Commitment Transactions
The Funds may purchase securities on a when-issued or delayed delivery
basis and may purchase or sell securities on a forward commitment basis.
Settlement of such transactions normally occurs within a month or more after the
purchase or sale commitment is made.
The Funds may purchase securities under such conditions only with the
intention of actually acquiring them, but may enter into a separate agreement to
sell the securities before the settlement date. Since the value of securities
purchased may fluctuate prior to settlement, a Fund may be required to pay more
at settlement than the security is worth. In addition, the purchaser is not
entitled to any of the interest earned prior to settlement.
Upon making a commitment to purchase a security on a when-issued,
delayed delivery or forward commitment basis, a Fund will hold liquid assets
worth at least the equivalent of the amount due. The liquid assets will be
monitored on a daily basis and adjusted as necessary to maintain the necessary
value.
Purchases made under such conditions are a form of leveraging and may
involve the risk that yields secured at the time of commitment may be lower than
otherwise available by the time settlement takes place, causing an unrealized
loss to the Fund. Leverage may cause any gains or losses of a Fund to be
magnified. In addition, when a Fund engages in such purchases, it relies on the
other party to consummate the sale. If the other party fails to perform its
obligations, the Fund may miss the opportunity to obtain a security at a
favorable price or yield.
Loans of Securities
To generate income, each Fund may lend to broker-dealers and other
financial institutions portfolio securities valued at up to 33 1/3% of a Fund's
total assets. A Fund will require borrowers to provide collateral in cash or
government securities at least equal to the value of the securities loaned. A
Fund may invest such collateral in additional portfolio securities, such as U.S.
Treasury notes, certificates of deposit, other high-grade, short-term
obligations or interest-bearing cash equivalents. While securities are on loan,
the borrower will pay a Fund any income accruing on the security.
Each Fund may make loans only to borrowers which meet credit standards
set by the Board of Trustees. Income to be earned from the loan must justify the
attendant risks. If a borrower fails financially, a Fund may have difficulty
recovering the securities lent or may lose its right to the collateral.
Each Fund has the right to call a loan and obtain the securities lent
upon giving notice of not more than five business days.
Repurchase Agreements
The Funds may enter into repurchase agreements with entities that are
registered as 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
Advisor (as defined later) to be creditworthy. In a repurchase agreement, a Fund
obtains a security and simultaneously commits to return the security to the
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seller at a set price (including principal and interest) within a period of time
usually not exceeding seven days. 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.
A Fund or its custodian 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 the Fund might be delayed
pending court action. Each Fund's Advisor 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. The
Funds will only enter into repurchase agreements with banks and other recognized
financial institutions, such as broker-dealers, which are deemed by the
investment advisor to be creditworthy pursuant to guidelines established by the
Board of Trustees.
Reverse Repurchase Agreements
Each Fund may 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.
Options
The Funds may buy or sell (i.e., write) put and call options on
securities they hold or intend to acquire. The Funds may also buy and sell
options on financial futures contracts. The Funds will use options as a hedge
against decreases or increases in the value of securities they hold or intends
to acquire. The Funds may purchase put and call options for the purpose of
offsetting previously written put and call options of the same series.
The Funds may write only covered options. With regard to a call option,
this means that a Fund will own, for the life of the option, the securities
subject to the call option. Each Fund will cover put options by holding, in a
segregated account, liquid assets having a value equal to or greater than the
price of securities subject to the put option. If a Fund is unable to effect a
closing purchase transaction with respect to the covered options it has sold, it
will not be able to sell the underlying securities or dispose of assets held in
a segregated account until the options expire or are exercised.
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Futures Transactions (Evergreen, Omega, Small, Strategic and Stock)
Each Fund may enter into financial futures contracts and write options
on such contracts. Each Fund intends to enter into such contracts and related
options for hedging purposes. Each Fund will enter into futures contracts on
securities or indices in order to hedge against changes in interest or exchange
rates or securities prices. A futures contract on securities is an agreement to
buy or sell securities at a specified price during a designated month. 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. A 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 continues until the contract is terminated.
Each Fund may sell or purchase futures contracts. When a futures
contract is sold by a Fund, the value of the contract will tend to rise when the
value of the underlying securities declines and to fall when the value of such
securities increases. Thus, each Fund sells futures contracts in order to offset
a possible decline in the value of its securities. If a futures contract is
purchased by a Fund, the value of the contract will tend to rise when the value
of the underlying securities increases and to fall when the value of such
securities declines. Each Fund intends to purchase futures contracts in order to
establish what is believed by the Advisor to be a favorable price and rate of
return for securities the Fund intends to purchase.
Each Fund also intends to purchase put and call options on futures
contracts for hedging purposes. A put option purchased by a Fund would give it
the right to assume a position as the seller of a futures contract. A call
option purchased by a Fund would give it the right to assume a position as the
purchaser of a futures contract. The purchase of an option on a futures contract
requires a Fund to pay a premium. In exchange for the premium, a Fund becomes
entitled to exercise the benefits, if any, provided by the futures contract, but
is not required to take any action under the contract. If the option cannot be
exercised profitably before it expires, a Fund's loss will be limited to the
amount of the premium and any transaction costs.
Each Fund may enter into closing purchase and sale transactions in
order to terminate a futures contract and may sell put and call options for the
purpose of closing out its options positions. A 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 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, in which case it would continue to bear
market risk on the transaction.
Although futures and options transactions are intended to enable a Fund
to manage market or interest rate risk, unanticipated changes in interest rates
or market prices could result in poorer performance than if it had not entered
into these transactions. Even if the Advisor correctly predicts interest rate
movements, a hedge could be unsuccessful if changes in the value of a Fund's
futures position did not correspond to changes in the value of its investments.
This lack of correlation between a Fund's futures and securities positions may
be caused by differences between the futures and securities markets or by
differences between the securities underlying a Fund's futures position and the
securities held by or to be purchased for a Fund. Each Fund's Advisor will
attempt to minimize these risks through careful selection and monitoring of the
Fund's futures and options positions.
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The Funds do not intend to use futures transactions for speculation or
leverage. Each Fund has the ability to write options on futures, but currently
intends to write such options only to close out options purchased by a Fund.
Each Fund will not change these policies without supplementing the information
in the prospectus and SAI.
The Funds will not maintain open positions in futures contracts they
have sold or call options it has written on futures contracts if, in the
aggregate, the value of the open positions (marked to market) exceeds the
current market value of their securities portfolio plus or minus the unrealized
gain or loss on those open positions, adjusted for the correlation of volatility
between the hedged securities and the futures contracts. If this limitation is
exceeded at any time, each Fund will take prompt action to close out a
sufficient number of open contracts to bring its open futures and options
positions within this limitation.
"Margin" in Futures Transactions
Unlike the purchase or sale of a security, the Funds do not pay or
receive money upon the purchase or sale of a futures contract. Rather, each Fund
is required to deposit an amount of "initial margin" in cash or U.S. Treasury
bills with its custodian (or the broker, if legally permitted). The nature of
initial margin in futures transactions is different from that of margin in
securities transactions in that futures contract initial margin does not involve
the borrowing of funds by a Fund to finance the transactions. 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.
A futures contract held by a Fund is valued daily at the official
settlement price of the exchange on which it is traded. Each day, a Fund pays or
receives cash, called "variation margin," equal to the daily change in value of
the futures contract. This process is known as "marking to market". Variation
margin does not represent a borrowing or loan by a Fund but is instead
settlement between the Fund and the broker of the amount one would owe the other
if the futures contract expired. In computing its daily net asset value, a Fund
will mark-to-market its open futures positions. The Funds are also required to
deposit and maintain margin when they write call options on futures contracts.
Foreign Securities (Omega, Small, Strategic and Stock)
Each 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.
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
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<PAGE>
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.
Foreign Currency Transactions (Omega, Small, Strategic and Stock)
As one way of managing exchange rate risk, each 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 a 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 a Fund expects
a decrease in the value of the currency in which the foreign security is
denominated. Although each 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 a 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 each Fund. Each Fund may also purchase and sell
options related to foreign currencies in connection with hedging strategies.
Illiquid and Restricted Securities
Each 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 each Fund has the investment on its books.
Each 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.
Investment in Other Investment Companies
Each Fund may purchase the shares of other investment companies to the
extent permitted under the 1940 Act. Currently, each Fund may not (1) own more
than 3% of the outstanding voting stock of another investment company, (2)
invest more than 5% of its assets in any single investment company, and (3)
invest more than 10% of its assets in investment companies. However, each 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, policies and limitations as each Fund.
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<PAGE>
Short Sales
Each Fund may not make short sales of securities or maintain a short
position unless, at all times when a short position is open, it owns an equal
amount of such securities or of securities which, without payment of any further
consideration, are convertible into or exchangeable for securities of the same
issue as, and equal in amount to, the securities sold short. Each Fund may
effect a short sale in connection with an underwriting in which a Fund is a
participant.
MANAGEMENT OF THE TRUST
Set forth below are the Trustees and officers of the Trust and their
principal occupations and some of 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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<PAGE>
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)
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
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, 3435 Stelzer Road, Columbus, Ohio 43219-8001
Trustee Compensation
Listed below is the Trustee compensation for the twelve-month period
ended September 30, 1997.
COMPENSATION FROM TRUST
TRUSTEE COMPENSATION FROM TRUST AND FUND COMPLEX
Laurence B. Ashkin $29,301 $63,400
Charles A. Austin III $14,709(a) $41,400(b)
K. Dun Gifford $13,462 $38,700
James S. Howell $38,651(c) $100,542(d)
Leroy Keith Jr. $13,504 $37,800
Gerald M. McDonnell* $34,939 $87,051
Thomas L. McVerry* $36,363 $91,101
William Walt Pettit* $35,613 $89,101
David M. Richardson* $14,709 $41,400
Russell A. Salton, III $34,876 $90,701
Michael S. Scofield $34,052 $87,801
Richard J. Shima $21,849 $61,125
(a) $2,206 of this amount payable in later years as deferred compensation.
(b) $6,210 of this amount payable in later years as deferred compensation.
(c) $30,921 of this amount payable in later years as deferred compensation.
(d) $80,434 of this amount payable in later years as deferred compensation.
* Entire amount payable in later years as deferred compensation.
PRINCIPAL HOLDERS OF FUND SHARES
As of the date of this SAI, 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 more than 5% of a class of a
Fund's outstanding shares as of June 30, 1998.
EVERGREEN CLASS A
None over 5%
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<PAGE>
EVERGREEN CLASS B
None over 5%
EVERGREEN CLASS C
Turtle & Company 9.132%
P.O. Box 9427
Boston, MA 02209-9427
MLPF&S For the Sole Benefit 6.110%
Of Its Customers
Attn: Fund Administration #97 JB1
4800 Deer Lake Drive E. 2nd Fl.
Jacksonville, FL 32246-6484
EVERGREEN CLASS Y
First Union National Bank/EF/INT 23.919%
Cash Account
Attn: Trust Operations Fund Group
401 S. Tryon Street 3rd Fl. CMG
1151
Charlotte, NC 28202-1911
First Union National Bank/EF/INT 9.432%
Cash Account
Attn: Trust Operations Fund Group
401 S. Tryon Street 3rd Fl. CMG
1151
Charlotte, NC 28202-1911
MICRO CLASS A
Charles Schwab & Company Inc. 5.240%
Special Custody Account
FBO Exclusive Benefit of
Customers
Reinvest Account Attn: Mutual
Fund
101 Montgomery Street
San Francisco, CA 94104-4122
First Union Brokerage Services 5.215%
Vince Vitti and
Susan Vitti JTWROS LN Account
Atn: Bob Lemaire
266 Harridstown Road 3rd Fl.
, NJ 07452
MICRO CLASS B
MLPF&S for the Sole Benefit 6.399%
Of Its Customers
Attn: Fund Administration #97H76
4800 Deer Lake Drive E. 2nd Fl.
Jacksonville, FL 32246-6484
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<PAGE>
MICRO CLASS C
MLPF&S for the Sole Benefit 5.306%
Of Its Customers
Attn: Fund Administration #97H76
4800 Deer Lake Drive E. 2nd Fl.
Jacksonville, FL 32246-6484
MICRO CLASS Y
Stephen A. Lieber 12.223%
1210 Greacen Point Road
Mamaroneck, NY 10543-4613
Charles Schwab & Company Inc. 9.354%
Special Custody Account
FBO Exclusive Benefit of
Customers
Reinvest Account, Attn: Mutual
Fund
101 Montgomery Street
San Francisco, CA 94104-4122
Constance E. Lieber 8.744%
1210 Greacen Point Road
Mamaroneck, NY 10543-4613
Citibank NA 7.764%
Delta Airlines Master Trust
Joe Villella Citicorp Services
1410 N Westshore Blvd. Fl. 5
Tampa, FL 33607-4500
OMEGA CLASS A
None
OMEGA CLASS B
MLPF&S For the Sole Benefit 26.77%
Of Its Customers
Attn: Fund Administration #97BP1
4800 Deer Lake Drive E. 2nd Fl.
Jacksonville, FL 32246-6484
OMEGA CLASS C
MLPF&S For the Sole Benefit 26.77%
Of Its Customers
Attn: Fund Administration #97BP5
4800 Deer Lake Drive E. 2nd Fl.
Jacksonville, FL 32246-6484
OMEGA CLASS Y
Juliana Guazzo 38.84%
38 Bath Street
Lido Beach, NY 11561-5007
24440
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<PAGE>
Herbert R. Kosow 15.64%
Wilma J. Kosow JT TEN
4 Meadow Lane
Freeport, NY 11520-1003
Timothy L. Bell 15.16%
Retha M. Bell Company-Trustees
Kristiana N. Bell IRR Trust
U/A Dated 2-27-98
9914 McGee Street
Elberta, AL 36530
State Street Bank & Trust Co. 12.56%
Cust.
SEP IRA FBO
John T. Rosner
P.O. Box 3403
Thomasville, GA 31799
State Street Bank & Trust Co. 9.06%
Cust.
IRA FBO
Nancy A. LaValley
2048 Clairmont Terrace
Atlanta, GA 30345-2001
Hobert Z. Cross & Hazel H. Cross 6.46%
Trust/Cross Family REV Trust
U/A/D 3-8-88
5335 Fidler Avenue
Lakewood, CA 90712-2001
STRATEGIC CLASS A
None
STRATEGIC CLASS B
None
STRATEGIC CLASS C
State Street Bank & Trust Co. 34.24%
Cust.
Edward W. Sparrow Hosp. TSA
FBO
Dennis Allen Swan
3741 Chippendale
Okemos, MI 48864-3861
Douglas M. Ellingson 14.89%
1833 East Carver Street
Tempe, AZ 85284-2509
Bear Stearns Securities Corp. 13.77%
1 Metrotech Center North
Brooklyn, NY 11201-3859
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<PAGE>
Ronald J. Stark 7.90%
1617 32nd Street SE
Rio Rancho, NM 87124-1745
AGGRESSIVE CLASS A
MLPF&S For the Sole Benefit 10.77%
Of Its Customers
Attn: Fund Administration #97212
4800 Deer Lake Drive E. 2nd Fl.
Jacksonville, FL 32246-6484
AGGRESSIVE CLASS B
None
AGGRESSIVE CLASS C
MLPF&S For the Sole Benefit 22.02%
Of Its Customers
Attn: Fund Administration #97JA1
4800 Deer Lake Drive E. 2nd Fl.
Jacksonville, FL 32246-6484
Lavedna Ellingson 9.40%
Douglas Ellingson JT WROS
8510 McClintock
Tempe, AZ 85284-2527
Smith Barney Inc. 5.68%
388 Greenwich Street
New York, NY 10013
AGGRESSIVE CLASS Y
First Union National Bank 53.00%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28202-1910
First Union National Bank 28.13%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28202-1910
SMALL CLASS A
ROFE & Company 5.73%
C/O State Street Bank & Trust Co.
For Sub Account
Kokusai Securities Co. LTD
P.O. Box 5061
Boston, MA 02206-5061
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<PAGE>
SMALL CLASS B
MLPF&S For the Sole Benefit 22.18%
Of Its Customers
Attn: Fund Administration #98302
4800 Deer Lake Drive E. 2nd Fl.
Jacksonville, FL 32246-6484
SMALL CLASS C
MLPF&S For the Sole Benefit 67.07%
Of Its Customers
Attn: Fund Administration #97TUO
4800 Deer Lake Drive E. 2nd Fl.
Jacksonville, FL 32246-6484
SMALL CLASS Y
First Union National Bank
Cash Account
Attn: Trust Operations Fund Group
401 S. Tryon Street, 3rd Fl.
Charlotte, NC 28202-1911
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISORS
The investment advisor to each Fund (the "Advisor") is a subsidiary of
First Union Corporation ("First Union"). First Union is a bank holding company
headquartered at 301 South College Street, Charlotte, North Carolina 28288.
First Union and its subsidiaries provide a broad range of financial services to
individuals and businesses throughout the United States.
The Advisor to Evergreen and Micro is Evergreen Asset Management Corp.
("Evergreen Asset"), 2500 Westchester Avenue, Purchase, New York 10577.
Evergreen Asset is entitled to receive from each Fund an annual fee based on
each Fund's average daily net assets, as follows: 1.00% of the first $750
million; plus 0.90% of the next $250 million; plus 0.80% of assets over $1
billion. Under an agreement with Evergreen Asset, Lieber & Company, a First
Union subsidiary at the same address as Evergreen Asset, serves as subadviser to
each Fund at no additional cost to either Fund. Lieber & Company is paid for its
services by Evergreen Asset.
The Advisor to Aggressive is the Capital Management Group ("CMG") of
First Union National Bank ("FUNB"). CMG is entitled to receive from Aggressive
an annual fee equal to 0.60% of the Fund's average daily net assets.
The Advisor to Omega, Small and Strategic is Keystone Investment
Management Company ("Keystone"), 200 Berkeley Street, Boston, Massachusetts
02116. Keystone is entitled to receive from Omega an annual fee based on the
aggregate net asset value of the Fund's shares, as follows: 0.75% of the first
$250 million; plus 0.675% of the next $250 million; plus 0.60% of the next $500
million; plus 0.50% of assets over $1 billion, all computed as of the close of
business each business day and payable monthly. Keystone is entitled to receive
from Small and Strategic an
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<PAGE>
annual fee based on the aggregate net asset value of each Fund's shares, as
follows: 0.70% of the first $100 million; plus 0.65% of the next $100 million;
plus 0.60% of the next $100 million; plus 0.55% of the next $100 million; plus
0.50% of the next $100 million; plus 0.45% of the next $500 million; plus 0.40%
of the next $500 million; plus 0.35% of assets over $1.5 billion, all computed
as of the close of business each business day and payable monthly.
The Advisor to Stock is Meridian Investment Company ("Meridian"), 550
Valley Stream Parkway, Malvern, Pennsylvania 19355. Meridian is entitled to
receive from Stock an annual fee equal to 0.74% of the Fund's average daily net
assets.
INVESTMENT ADVISORY AGREEMENTS
On behalf of each of its Funds, the Trust has entered into an
investment advisory agreement with the Advisor (the "Advisory Agreements").
Under the Advisory Agreements, 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 (Trustees
who are not interested persons of a 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 Securities and Exchange Commission ("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 each
Fund; (12) expenses of shareholders' and Trustees' meetings; (13) charges and
expenses of legal counsel for each 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
each 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 of 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
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<PAGE>
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 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 the 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 each 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 each Fund and holders of Class A, Class B
and Class C shares and (ii) stimulate administrators to render administrative
support services to the 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 the
Fund reasonably requests for its Class A, Class B and
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<PAGE>
Class C shares, as applicable.
FUNB or its affiliates may finance the payments made by the Distributor
to compensate broker-dealers or other persons for distributing shares of a Fund.
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 the
Fund to the Distributor with respect to that class or classes, and (ii) the Fund
would not be obligated to pay the Distributor for any amounts expended under the
Distribution Agreement not previously recovered by the Distributor from
distribution services fees in respect of shares of such class or classes through
deferred sales charges.
All material amendments to any Plan or Distribution Agreement must be
approved by a vote of the Trustees of the Trust or the holders of the Fund's
outstanding voting securities, voting separately by class, and in either case,
by a majority of the 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 the 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 any time by a
majority vote of the holders of the outstanding voting securities of the Fund,
voting separately by class or by a majority vote of the 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, the
Fund need give no notice to the Distributor. Any Distribution Agreement will
terminate automatically in the event of its assignment. (See also the section
entitled "Financial Information.")
ADDITIONAL SERVICE PROVIDERS
Administrator
Evergreen Investment Services, Inc. ("EIS") serves as administrator to
Aggressive and Stock, 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 based on the total
assets of all mutual funds administered by EIS for which any affiliate of FUNB
serves as investment advisor, as follows: 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 and 0.010% of assets in excess of $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. The transfer agent's address is Box 2121, Boston,
Massachusetts 02106-2121.
Independent Auditors
KPMG Peat Marwick LLP, 99 High Street, Boston, Massachusetts 02110,
audits the annual financial statements of Omega, Small and Strategic.
PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, New
York, 10036, audits the annual financial statements of Evergreen, Micro,
Aggressive and Stock.
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<PAGE>
Custodian
State Street Bank and Trust Company is the Funds' custodian. The bank
keeps custody of each Fund's securities and cash and performs other related
duties. The custodian's address is 225 Franklin Street, Boston, Massachusetts
02110.
Legal Counsel
Sullivan & Worcester LLP provides legal advice to the Funds. Its
address is 1025 Connecticut Avenue, N.W., Washington, D.C. 20036.
BROKERAGE
Due to 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, each 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.
Each Fund expects to buy and sell its fixed income securities directly
from the issuer or an underwriter or market maker for the securities. Generally,
each 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 the Fund or Funds for which a trade
is being made. When selecting a broker, an Advisor primarily will 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 the 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.
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Under each Advisory Agreement, each Fund may pay higher brokerage
commissions to a broker providing it with research services, as defined in item
6, above. Pursuant to Section 28(e) of the Securities Exchange Act of 1934, this
practice is permitted if the commission is reasonable in relation to the
brokerage and research services provided. 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 because research services intended for one
client may indirectly benefit another.
When selecting a broker for portfolio trades, an Advisor may also
consider the amount of Fund shares a broker has sold, subject to the other
requirements described above.
Lieber & Company, 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 Evergreen and Micro effected
on those exchanges.
SIMULTANEOUS TRANSACTIONS
Each 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.
TRUST ORGANIZATION
FORM OF ORGANIZATION
Each Fund is a series of an open-end management investment company,
known as "Evergreen Equity Trust" (the "Trust"). The Trust was formed as a
Delaware business trust on September 18, 1997 pursuant to an Agreement and
Declaration of Trust (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.
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.
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<PAGE>
VOTING RIGHTS
Under the terms of the Declaration of Trust, the Trust is not required
to hold annual 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 meetings of
shareholders 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 (except
Strategic, which offers three) 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 of 4.75%. (The prospectus contains 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:
REDEMPTION TIMING CDSC RATE
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%
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 (Not Offered by Strategic)
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 CMG, Evergreen Asset, Keystone, Meridian 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
The Funds charge a CDSC as reimbursement for certain expenses, such as
commissions or shareholder servicing fees, that they have incurred in connection
with the sale of their shares (see "Distribution Plans and Agreements," above).
If imposed, the Funds deduct 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. ("NASD"), 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 advisors;
4. 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;
5. 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
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<PAGE>
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;
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 to
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 purchases are for
their personal investment purposes only. Such purchasers may not resell the
securities except through redemption by the Fund. The Funds will not charge any
CDSC on redemptions by such purchasers.
Waiver of CDSCs
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 the 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 we have closed because the account
has an aggregate net asset value of less than $1,000;
7. an automatic withdrawal under an Systematic Income 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. financial hardship withdrawals made by a retirement plan
participant;
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<PAGE>
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).
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
a Fund's prospectus. 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 prospectus. 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) Securities that are traded on a national securities exchange
or the over-the-counter National Market System ("NMS") are
valued on the basis of the last sales price on the exchange
where primarily traded or on the NMS prior to the time of the
valuation, provided that a sale has occurred.
(2) Securities traded on a national securities exchange or in the
over-the-counter market for which there has been no sale and
other securities traded in the over-the-counter market are
valued at the mean of the bid and asked prices at the time of
valuation.
(3) Short-term investments maturing in more than 60 days, for
which market quotations are readily available, are valued at
current market value.
(4) Short-term investments maturing in 60 days or less are valued
at amortized cost, which approximates market.
(5) Securities, including restricted securities, for which market
quotations are not readily available; listed securities or
those on NMS if, in a Fund's opinion, the last sales price
does not reflect a current market value; and other assets are
valued at prices deemed in good faith to be fair under
procedures established by the Board of Trustees.
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<PAGE>
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 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 offering 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.
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<PAGE>
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 Subchapter M of the Internal Revenue Code of 1986, as amended (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
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 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 the Fund from its
investment company taxable income (net taxable investment income plus net
realized short-term capital gains, if any). The Fund will include dividends it
receives from domestic corporations when the Fund calculates its gross
investment income. The Fund anticipates that all or a portion of ordinary
dividends which it pays will qualify for the 70% dividends-received deduction
for corporations. The Fund will inform shareholders of the amounts that so
qualify.
From time to time, the Fund will distribute the excess of its net
long-term capital gains over its net short-term capital loss 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. The Fund
will inform shareholders of the portion, if any, of a capital gain distribution
which qualifies for the new 20% maximum federal rate.
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<PAGE>
Distributions by a Fund reduce its NAV. A distribution that reduces the
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 the 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 shares or cash, must be reported
by each shareholder on his or her federal income tax return. Each shareholder
should consult a 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 a 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 a 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 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
twelve months is generally subject to a maximum federal income tax rate of 20%
for an individual. 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 not allow a shareholder to
realize a loss on the sale of Fund shares held by the shareholder for six months
or less to the extent the shareholder received exempt-interest dividends on such
shares. Moreover, 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 the Fund. If the withholding provisions are applicable, any such dividends or
capital gain distributions to these shareholders, whether taken in cash or
reinvested in additional shares, and any redemption proceeds will be reduced by
the amounts required to be withheld. Investors may wish to consult their own tax
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.
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<PAGE>
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.
FINANCIAL INFORMATION
The financial information below pertains to each Fund except Stock. A
separate section entitled "Financial Information for Stock Selector Fund"
follows this section.
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," "Principal Underwriter" and "Purchase, Redemption and
Pricing of Shares."
<TABLE>
<CAPTION>
1997 FUND EXPENSES
Total Underwriting
Advisory Class A Class B Class C Underwriting Commissions
FUND Fees 12b-1 Fees 12b-1 Fees 12b-1 Fees Commissions Retained
===================== ================ ================ ================= ================ =============== ================
<S> <C> <C> <C> <C> <C> <C> <C>
Evergreen (1) $13,089,112 $299,430 $3,629,968 $72,777 $1,464,361 $129,417
Aggressive (1) $1,013,344 $251,302 $289,795 $19,048 $278,145 $21,472
Micro (1) $428,047 $3,314 $13,933 $400 $2,223 $300
Omega (2) $1,480,178 $153,219 $739,237 $120,064 $254,113 $19,806
Small (3a) $2,387,425 N/A $4,928,079* N/A $878,274 $22,796
Small (3b) $7,788,033 N/A $16,641,755* N/A $17,885,604 $13,187,854
Strategic (4) $3,205,753 N/A $1,790,675* N/A -- --
===================== ================ ================ ================= ================ =============== ================
</TABLE>
(1) Year ended 9/30/97
(2) Nine months ended 9/30/97
(3a) Four months ended 9/30/97
(3b) Year ended 5/31/97
(4) Eleven months ended 9/30/97
* Not multiple class during this period; amount reflects all 12b-1 fees.
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<TABLE>
<CAPTION>
1996 FUND EXPENSES
Total Underwriting
Advisory Class A Class B Class C Underwriting Commissions
FUND Fees 12b-1 Fees 12b-1 Fees 12b-1 Fees Commissions Retained
===================== ================ ================ ================= ================ =============== ================
<S> <C> <C> <C> <C> <C> <C> <C>
Evergreen (1) $9,145,287 $149,922 $1,185,957 $10,292 $1,462,012 $157,233
Aggressive (1) $612,492 $197,507 $26,469 $3,308 $185,835 $22,742
Micro (1) $510,421 $2,471 $12,608 $310 $2,963 $188
Omega (2) $1,831,142 $186,596 $814,977 $168,748 $983,621 $759,394
Small (3) $8,473,139 N/A $18,458,861* N/A $15,690,812 ($5,933,719)
Strategic (4) $2,994,500 N/A $4,845,352* N/A $4,093,912 $2,049,519
===================== ================ ================ ================= ================ =============== ================
</TABLE>
(1) Year ended 9/30/96
(2) Year ended 12/31/96
(3) Year ended 5/31/96
(4) Year ended 10/31/96
* Not multiple class during this period; amount reflects all 12b-1 fees.
1995 FUND EXPENSES
Total Underwriting
Underwriting Commissions
FUND Advisory Fees Commissions Retained
==================== ================ ================ ================
Evergreen (1) $5,472,439 $586,701 $72,923
Aggressive (2) $106,041 $70,327 $89,909
Micro (1) $800,642 $3,418 $495
Omega (3) $1,280,436 $548,386 $1,167,486
Small (4) $6,037,504 $10,076,379 $2,257,795
Strategic (5) $2,799,544 $3,911,744 $288,671
(1) Nine months ended 9/30/95
(2) Two months ended 9/30/95
(3) Year ended 12/31/95
(4) Year ended 5/31/95
(5) Year ended 10/31/95
BROKERAGE COMMISSIONS PAID
The table below shows (1) total amounts paid by each Fund in brokerage
commissions and (2) amounts paid to Lieber & Company, an affiliate of FUNB,
during each of the last three years.
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<PAGE>
<TABLE>
<CAPTION>
Evergreen Aggressive Micro Omega Small Strategic
====================== =================== ================ ============== ============== =============== ==============
<S> <C> <C> <C> <C> <C> <C>
1997 Aggregate $ 503,276 $677,860 $ 91,568 $403,294 $1,891,397 $1,144,065
Dollar Amount
1997 Dollar Amount $ 416,953 -- $ 61,717 -- -- --
Paid to Lieber
1996 Aggregate $590,105 -- $ 317,058 $829,479 $2,853,950 $1,990,208
Dollar Amount
1996 Dollar Amount $515,522 -- $153,596 -- -- --
Paid to Lieber
1995 Aggregate $342,559 -- $414,048 $735,203 $1,445,066 $871,000
Dollar Amount
1995 Dollar Amount $252,069 -- $125,347 -- -- --
Paid to Lieber
====================== =================== ================ ============== ============== =============== ==============
</TABLE>
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 of Class A shares of each Fund aggregating
less than $100,000 based upon the NAV of each Fund's Class A shares at the end
of each Fund's latest fiscal period.
<TABLE>
<CAPTION>
FUND* DATE NET ASSET VALUE PER SHARE SALES CHARGE OFFERING PRICE PER SHARE
<S> <C> <C> <C> <C>
Evergreen 9/30/97 $22.96 4.75% $24.10
Aggressive 9/30/97 $23.48 4.75% $24.65
Micro 9/30/97 $26.68 4.75% $28.01
Omega Fund 9/30/97 $22.69 4.75% $23.82
===================== ==================== ====================== ============================== ==============================
</TABLE>
*Excludes Strategic and Small, which did not offer Class A at the end of their
latest fiscal periods.
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 the relevant periods.
The annual total returns as of September 30, 1997 for each class of
shares of the Funds (including applicable sales charges) are as follows:
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<PAGE>
<TABLE>
<CAPTION>
TEN YEARS OR
ONE YEAR FIVE YEARS SINCE INCEPTION INCEPTION DATE
EVERGREEN
<S> <C> <C> <C> <C>
Class A 27.37% -- 27.63% Jan. 3, 1995
Class B 27.69% -- 28.32% Jan. 3, 1995
Class C 31.67% -- 29.01% Jan. 3, 1995
Class Y 34.08% 19.88% 12.64% Oct. 15, 1971
AGGRESSIVE
Class A 6.30% 16.77% 14.73% Apr. 15, 1983
Class B 5.96% -- 19.49% July 7, 1995
Class C 9.92% -- 19.22% Aug. 3, 1995
Class Y 11.76% -- 21.67% July 11, 1995
MICRO
Class A 46.81% -- 20.43% Jan. 3, 1995
Class B 48.13% -- 20.91% Jan. 3, 1995
Class C 52.07% -- 21.72% Jan. 3, 1995
Class Y 54.64% 14.19% 11.46% June 1, 1983
OMEGA
Class A 20.60% 16.86% 14.31% Apr. 29, 1968
Class B 20.45% -- 15.45% Aug. 2, 1993
Class C 24.41% -- 15.78% Aug. 2, 1993
Class Y -- -- -- Jan. 13, 1997
STRATEGIC
Class B 37.33% 18.73% 11.76% Jul. 15, 1935
SMALL 15.48% 20.55% 13.95% Jul. 15, 1935
Class B
================= =================== =================== =================== ===================
</TABLE>
FINANCIAL INFORMATION FOR STOCK SELECTOR FUND
The information below pertains to Evergreen Stock Selector Fund,
formerly Core Equity Fund, a portfolio of CoreFunds, Inc. Core Equity Fund was
reorganized into Evergreen Stock Selector Fund in July 1998.
ADVISORY FEES
The table below shows amounts paid by Core Equity Fund to its
investment advisor,
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<PAGE>
CoreStates Investment Advisers, Inc. ("CoreStates Advisers"), for the fiscal
years ended June 30, 1995, 1996 and 1997. The table also shows advisory fees
waived by CoreStates Advisers.
<TABLE>
<CAPTION>
ADVISORY FEES PAID ADVISORY FEES WAIVED
<S> <C> <C> <C> <C> <C>
1995 1996 1997 1995 1996 1997
$199,645 $1,973,776 $3,459,108 $51,162 0 0
</TABLE>
DISTRIBUTION FEES
The table below shows the aggregate sales charges payable for the
fiscal years ended June 30, 1995, 1996 and 1997 to SEI Investments Distribution
Co. ("SEI"), Core Equity Fund's distributor. The table also shows amounts
retained by SEI.
AGGREGATE SALES CHARGE PAYABLE TO SEI AMOUNT RETAINED BY SEI
1995 1996 1997 1995 1996 1997
$616 $12,612 $96,837 $68 $1,710 $4,819
The table below shows the distribution fees SEI received with respect
to Class A shares of Core Equity Fund for the fiscal year ended June 30, 1997.
AMOUNT FEE AMOUNT PAID TO 3RD PARTIES
RECEIVED BY SEI
$32,372 $0.25 $32,372
BROKERAGE COMMISSIONS PAID
For the fiscal year ended June 30, 1997, Core Equity Fund paid
$1,026,435 in brokerage commissions.
PERFORMANCE
The table below shows Core Equity Fund's average annual total return as
of June 30, 1997 Class B Shares were not offered as of that date.
SINCE
CLASS ONE YEAR FIVE YEAR INCEPTION
Y 33.10% 18.74% 18.03%
A without load 32.74% 18.64% 17.96%
A with load 25.41% 17.31% 17.06%
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<PAGE>
Non-Standardized Performance
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 financial statements for Stock have been audited by Ernst & Young,
LLP, independent auditors, for the periods from November 1, 1995 through June
30, 1997. A report of Ernst & Young on the financial statements for Stock
appears in the Fund's Annual Report which is incorporated by reference. The
financial statements for Omega, Small and Strategic have been audited by KPMG
Peat Marwick LLP, independent auditors. A report of KPMG Peat Marwick LLP on the
financial statements for those Funds appears in the Funds' Annual Report which
is incorporated by reference. The financial statements for Evergreen, Micro and
Aggressive have been audited by PricewaterhouseCoopers LLP , independent
auditors. A report of PricewaterhouseCoopers LLP on the financial statements for
those Funds appears in the Funds' Annual Report which is incorporated by
reference. Annual Reports may obtained without charge by writing to ESC, P.O.
Box 2121, Boston, Massachusetts 02106-2121, or by calling ESC toll-free at
1-800-343-2898.
ADDITIONAL INFORMATION
Except as otherwise stated in its prospectuses or required by law, each Fund
reserves the right to change the terms of the offer stated in its prospectus
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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<PAGE>
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:
1. Likelihood of default and capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in accordance with the
terms of the obligation;
2. Nature of and provisions of the obligation; and
3. 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:
1. AAA - Debt rated AAA has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
2. 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.
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<PAGE>
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 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 the
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
in 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
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<PAGE>
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.
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; or, if not rated, 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 of 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:
1) leading market positions in well-established industries;
2) high rates of return on funds employed;
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<PAGE>
3) conservative capitalization structures with moderate reliance on debt and
ample asset protection;
4) broad margins in earnings coverage of fixed financial charges and high
internal cash generation; and
5) well established access to a range of financial markets and assured
sources of alternate liquidity.
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.
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<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 FUND - Class A For the six-month period ended March 31, 1998 (unaudited); for each of the years in the
two-year period ended September 30, 1997; and for the period from January 3, 1995
(Commencement of Operations) to September 30, 1995.
EVERGREEN FUND - Class B For the six-month period ended March 31, 1998 (unaudited); for each of the years in the
two-year period ended September 30, 1997; and for the period from January 3, 1995
(Commencement of Operations) to September 30, 1995.
EVERGREEN FUND - Class C For the six-month period ended March 31, 1998 (unaudited); for each of the years in the
two-year period ended September 30, 1997; and for the period from January 3, 1995
(Commencement of Operations) to September 30, 1995.
EVERGREEN FUND - Class Y For the six-month period ended March 31, 1998 (unaudited); for each of the years in the
ten-year period ended September 30, 1997.
EVERGREEN AGGRESSIVE GROWTH FUND - For the six-month period ended March 31, 1998 (unaudited); for each of the years in the
Class A two-year period ended September 30, 1997; for the eleven-month period ended September
30, 1995; for each of the years in the six-year period ended October 31, 1994; for the
ten-month period ended October 31, 1988; and for the one-year ended December 31, 1987.
EVERGREEN AGGRESSIVE GROWTH FUND - For the six-month period ended March 31, 1998 (unaudited); for each of the years in the
Class B two-year period ended September 30, 1997; and for the period from July 7, 1995
(Commencement of Operations) to September 30, 1995.
EVERGREEN AGGRESSIVE GROWTH FUND - For the six-month period ended March 31, 1998 (unaudited); for each of the years in the
Class C two-year period ended September 30, 1997; and for the period from August 3, 1995
(Commencement of Operations) to September 30, 1995.
EVERGREEN AGGRESSIVE GROWTH FUND - For the six-month period ended March 31, 1998 (unaudited); for each of the years in the
Class Y two-year period ended September 30, 1997; and for the period from July 11, 1995
(Commencement of Operations) to September 30, 1995.
EVERGREEN MICRO CAP FUND - Class A For the six-month period ended March 31, 1998 (unaudited); for each of the years in the
two-year period ended September 30, 1997; and for the period from January 3, 1995
(Commencement of Operations) to September 30, 1995.
EVERGREEN MICRO CAP FUND - Class B For the six-month period ended March 31, 1998 (unaudited); for each of the years in the
two-year period ended September 30, 1997; and for the period from January 3, 1995
(Commencement of Operations) to September 30, 1995.
EVERGREEN MICRO CAP FUND - Class C For the six-month period ended March 31, 1998 (unaudited); for each of the years in the
two-year period ended September 30, 1997; and for the period from January 3, 1995
(Commencement of Operations) to September 30, 1995.
EVERGREEN MICRO CAP FUND - Class Y For the six-month period ended March 31, 1998 (unaudited); for each of the years in the
three-year period ended September 30, 1997; for the four-month period ended September 30,
1994; and for each of the years in the seven-year period ended May 31, 1994.
EVERGREEN OMEGA FUND - Class A For the six-month period ended March 31, 1998 (unaudited); for the nine-month period ended
September 30, 1997; and for each of the years in the ten-year period ended December 31,
1996.
EVERGREEN OMEGA FUND - Class B For the six-month period ended March 31, 1998 (unaudited); for the nine-month period ended
September 30, 1997; for each of the years in the three-year period ended December 31, 1996;
and for the period from August 2, 1993 (Commencement of Operations) to December 31, 1993.
EVERGREEN OMEGA FUND - Class C For the nine-month period ended September 30, 1997; for each of the years in the three-year
period ended December 31, 1996; and for the period from August 2, 1993 (Commencement of
Operations) to December 31, 1993.
EVERGREEN OMEGA FUND - Class Y For the six-month period ended March 31, 1998 (unaudited); for the period from January 13,
1997 (Commencement of Operations) to September 30, 1997.
EVERGREEN SMALL COMPANY GROWTH FUND - For the three-month period from January 20, 1998 to March 31, 1998 (unaudited).
Class A
Class B For the six-month period ended March 31, 1998 (unaudited); for the four-month period ended
September 30, 1997; and for each of the years in the ten-year period ended May 31, 1997.
Class C For the three-month period from January 20, 1998 to March 31, 1998 (unaudited).
Class Y For the three-month period from January 20, 1998 to March 31, 1998 (unaudited).
EVERGREEN STRATEGIC GROWTH FUND - For the three-month period from January 20, 1998 to March 31, 1998 (unaudited).
Class A
Class B For the three-month period from January 20, 1998 to March 31, 1998 (unaudited); for the
eleven-month period ended September 30, 1997; and for each of the years in the
ten-year period ended October 31, 1996.
Class C For the three-month period from January 22, 1998 to March 31, 1998 (unaudited).
EVERGREEN STOCK SELECTOR FUND - For the six-month period ended December 31, 1997; for the year ended June 30, 1997; for the
Class A eight-month period from November 1, 1995 to June 30, 1996; for the five-year period from
November 1, 1990 to October 31, 1995 and the period from February 28, 1990 (Commencement of
Operations) to October 31, 1990.
Class Y For the six-month period ended December 31, 1997; for the year ended June 30, 1997; for the
eight-month period from November 1, 1995 to June 30, 1996; for the five-year period from
November 1, 1990 to October 31, 1995; and for the period from February 28, 1990
(Commencement of Operations) to October 31, 1990
</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 Aggressive Growth Fund, Evergreen
Fund, Evergreen Micro Cap Fund, Inc., Evergreen Omega Fund, Evergreen
Small Company Growth Fund, Evergreen Strategic Growth Fund as of
September 30, 1997.
Schedule of Investments of Evergreen Stock Selector Fund as of June 30,
1998.
Statement of Assets and Liabilities of Evergreen Aggressive Growth
Fund, Evergreen Fund, Evergreen Micro Cap Fund, Inc., Evergreen
Omega Fund, Evergreen Small Company Growth Fund, Evergreen Strategic
Growth Fund as of September 30, 1997.
Statement of Assets and Liabilities of Evergreen Stock Selector Fund as
of June 30, 1997.
Statement of Operations of Evergreen Aggressive Growth Fund, Evergreen
Fund, Evergreen Micro Cap Fund, Inc., Evergreen Omega Fund, Evergreen
Small Company Growth Fund, Evergreen Strategic Growth Fund as of
September 30, 1997.
Statement of Operations of Evergreen Stock Selector Fund as of June 30,
1997.
Statement of Changes in Net Assets of Evergreen Aggressive Growth
Fund, Evergreen Fund, Evergreen Micro Cap Fund, Inc., Evergreen
Omega Fund, Evergreen Small Company Growth Fund, Evergreen Strategic
Growth Fund as of September 30, 1997.
Notes to Financial Statements of Evergreen Aggressive Growth Fund,
Evergreen Fund, Evergreen Micro Cap Fund, Inc., Evergreen Omega Fund,
Evergreen Small Company Growth Fund, Evergreen Strategic Growth Fund and
Evergreen Stock Selector Fund.
Report of Independent Accountants for Evergreen Aggressive Growth
Fund, Evergreen Fund, and Evergreen Micro Cap Fund, Inc. as of
November 11, 1996.
Independent Auditors' Report for Evergreen Omega Fund as of
October 31, 1997.
Independent Auditors' Report for Evergreen Strategic Growth Fund as of
October 31, 1997.
Independent Auditors' Report for Evergreen Small Company Growth Fund
as of October 31, 1997.
Independent Auditors' Report for Evergreen Stock Selector Fund as of
August 21, 1997.
The information required by this item for Evergreen American Retirement
Fund, Evergreen Foundation Fund, Evergreen Tax Strategic Foundation Fund and
Evergreen Balanced Fund is contained in Registration Statement No.
333-37453/811-08413 filed on July 31, 1998.
The information required by this item for 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 is contained in Registration Statement No.
333-37453/811-08413 filed on December 12, 1997.
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 Post-Effective Amendment No. 4 to
Union National Bank Registrant's Registration Statement
Filed on March 12, 1998
5(b) Investment Advisory and Management Incorporated by reference to
Agreement between the Registrant and Evergreen Post-Effective Amendment No. 4 to
Asset Management Corp. Registrant's Registration Statement
Filed on March 12, 1998
5(c) Investment Advisory and Management Incorporated by reference to
Agreement between the Registrant and Keystone Post-Effective Amendment No. 4 to
Investment Management Company Registrant's Registration Statement
Filed on March 12, 1998
5(d) Form of Investment Advisory and Management Incorporated by reference to
Agreement between the Registrant and Post-Effective Amendment No. 4 to
Meridian Investment Company Registrant's Registration Statement
Filed on March 12, 1998
6(a) Class A and Class C Principal Underwriting Incorporated by reference to
Agreement between the Registrant and Evergreen Post-Effective Amendment No. 4 to
Distributor, Inc. Registrant's Registration Statement
Filed on March 12, 1998
6(b) Class B Principal Underwriting Agreement Incorporated by reference to
between the Registrant and Evergreen Investment Post-Effective Amendment No. 4 to
Services, Inc. (B-1) Registrant's Registration Statement
Filed on March 12, 1998
6(c) Class B Principal Underwriting Agreement Incorporated by reference to
between the Registrant and Evergreen Distributor, Post-Effective Amendment No. 4 to
Inc. (B-2) Registrant's Registration Statement
Filed on March 12, 1998
6(d) Class B Principal Underwriting Agreement Incorporated by reference to
between the Registrant and Evergreen Distributor, Post-Effective Amendment No. 4 to
Inc. (Evergreen/KCF) Registrant's Registration Statement
Filed on March 12, 1998
6(e) Class Y Principal Underwriting Agreement Incorporated by reference to
between the Registrant and Evergreen Distributor, Post-Effective Amendment No. 4 to
Inc. Registrant's Registration Statement
Filed on March 12, 1998
6(f) Principal Underwriting Agreement between Incorporated by reference to
the Registrant and Kokusai Securities Company Post-Effective Amendment No. 6 to
Limited Registrant's Registration Statement
Filed on July 31, 1998
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) Principal Underwriting Agreement between Incorporated by reference to
the Registrant and Nomura Securities Company Post-Effective Amendment No. 6 to
Registrant's Registration Statement
Filed on July 31, 1998
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 Incorporated by reference to
and State Street Bank and Trust Company Post-Effective Amendment No. 4 to
Registrant's Registration Statement
Filed on March 12, 1998
9(a) Administration Agreement between Evergreen Incorporated by reference to
Investment Services, Inc. and the Registrant Post-Effective Amendment No. 4 to
Registrant's Registration Statement
Filed on March 12, 1998
9(b) Transfer Agent Agreement between the Incorporated by reference to
Registrant and Evergreen Service Company Post-Effective Amendment No. 4 to
Registrant's Registration Statement
Filed on March 12, 1998
10 Opinion and Consent of Sullivan & Worcester LLP Incorporated by reference to
Registrant's Post-Effective Amendment No. 2
Filed on December 12, 1997
11(a) Consent of Price Waterhouse LLP Incorporated by reference to
Registrant's Post-Effective Amendment No. 3
Filed on January 30, 1998
11(b) Consent of KPMG Peat Marwick LLP Incorporated by reference to
Registrant's Post-Effective Amendment No. 3
Filed on January 30, 1998
11(c) Consent of Ernst & Young LLP
12 Not applicable
13 Not applicable
15(a) 12b-1 Distribution Plan for Class A Incorporated by reference to
Post-Effective Amendment No. 4 to
Registrant's Registration Statement
Filed on March 12, 1998
15(b) 12b-1 Distribution Plan for Class B Incorporated by reference to
(KAF B-1) Post-Effective Amendment No. 4 to
Registrant's Registration Statement
Filed on March 12, 1998
15(c) 12b-1 Distribution Plan for Class B Incorporated by reference to
(KAF B-2) Post-Effective Amendment No. 4 to
Registrant's Registration Statement
Filed on March 12, 1998
15(d) 12b-1 Distribution Plan for Class B Incorporated by reference to
(KCF/Evergreen) Post-Effective Amendment No. 4 to
Registrant's Registration Statement
Filed on March 12, 1998
15(e) 12b-1 Distribution Plan for Class C Incorporated by reference to
Post-Effective Amendment No. 4 to
Registrant's Registration Statement
Filed on March 12, 1998
16 Not applicable
17 Not applicable
18 Multiple Class Plan Incorporated by reference to
Registrant's Pre-Effective Amendment No. 1
Filed on November 10, 1997
19 Powers of Attorney
</TABLE>
Item 25. Persons Controlled by or Under Common Control with Registrant.
None
Item 26. Number of Holders of Securities (as of June 30, 1998)
NUMBER OF
TITLE OF CLASS RECORD HOLDERS
-------------- --------------
Evergreen Fund
Class A 26,898
Class B 83,298
Class C 948
Class Y 20,327
Evergreen Aggressive Growth Fund
Class A 10,496
Class B 4,821
Class C 239
Class Y 498
Evergreen Omega Fund
Class A 10,050
Class B 8,836
Class C 1,084
Class Y 8
Evergreen Micro Cap Fund
Class A 644
Class B 732
Class C 487
Class Y 955
Evergreen Small Company Growth Fund
Class A 43,781
Class B 31,591
Class C 298
Class Y 13
Evergreen Strategic Growth Fund
Class A 34,686
Class B 12,005
Class C 35
Evergreen Stock Selector Fund
Class A 0
Class B 0
Class C 0
Class Y 0
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.
The information required by this item with respect to Meridian Investment
Company is incorporated by reference to the Form ADV (File No. 801-8327) of
Meridian Investment 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
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
"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
Iron Mountain, 3431 Sharp Slot Road, Swansea, Massachusetts 02777
State Street Bank and Trust Company, 2 Heritage Drive, North Quincy,
Massachusetts 02171
Meridian Investment Co., 55 Valley Stream Parkway, Malvern, Pennsylvania
19355
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 1st day of
August, 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 1st day of August, 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
- ------- -------
11(c) Consent of Ernst & Young LLP
19 Powers of Attorney
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Financial
Highlights" in the Prospectuses and "Financial Statements" in the Statement of
Additional Information and to the incorporation by reference in this
Post-Effective Amendment No. 7 to the Registration Statement on Form N-1A (Nos.
333-37453/811-08413) of Evergreen Equity Trust (Evergreen Stock Selector Fund),
of our report dated August 12, 1997 on the CoreFunds, Inc. Core Equity Fund.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
July 28, 1998
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
