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. 12 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 11 [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:
[x] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) 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. 12
to
REGISTRATION STATEMENT
This Post-Effective Amendment No. 12 to Registrant's Registration Statement
No. 333-37453/811-08413 consists of the following pages, items of information
and documents:
The Facing Sheet
The Contents Page
PART A
------
Prospectuses for 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 and Evergreen Tax Strategic Equity Fund
are contained herein.
Prospectuses for the following fund are contained in Registration Statement
No.333-37453/811-08413 filed on October 1, 1998:
Evergreen Masters Fund.
Prospectuses for the following funds are contained in Registration
Statement No. 333-37453/811-08413 filed on September 30, 1998: Evergreen Fund
for Total Return, Evergreen Growth and Income Fund, Evergreen Income and Growth
Fund, Evergreen Small Cap Equity Income Fund, Evergreen Value Fund, Evergreen
Utility Fund and Evergreen Blue Chip Fund.
Prospectuses for 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.
PART B
------
Statement of Additional Information for 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, Evergreen Tax Strategic Equity Fund and Evergreen Masters Fund
is contained herein.
Statement of Additional Information for the following funds is contained
in Registration Statement No. 333-37453/811-08413 filed on September 30, 1998:
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.
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.
PART C
------
Exhibits
Indemnification
Business and Other Connections of Investment Adviser
Principal Underwriter
Location of Accounts and Records
Undertakings
Signatures
<PAGE>
EVERGREEN EQUITY TRUST
PART A
PROSPECTUSES
<PAGE>
[GRAPHIC APPEARS HERE]
Evergreen
Domestic Growth Funds
Evergreen Fund
Evergreen Micro Cap Fund
Evergreen Aggressive Growth Fund
Evergreen Omega Fund
Evergreen Small Company Growth Fund
Evergreen Strategic Growth Fund
Evergreen Tax Strategic Equity Fund
Class A
Class B
Class C
Evergreen Stock Selector Fund
Class A
Class B
Prospectus, February 1, 1999 [LOGO OF EVERGREEN FUNDS(SM) APPEARS HERE]
The Securities and Exchange Commission has not determined that the information
in this prospectus is accurate or complete, nor has it approved or disapproved
these securities. Anyone who tells you otherwise is committing a crime.
<PAGE>
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TABLE OF CONTENTS
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<TABLE>
<S> <C>
FUND SUMMARIES:
Evergreen Fund ............................................................ 2
Evergreen Micro Cap Fund .................................................. 4
Evergreen Aggressive Growth Fund .......................................... 6
Evergreen Omega Fund ...................................................... 8
Evergreen Small Company Growth Fund ....................................... 10
Evergreen Strategic Growth Fund ........................................... 12
Evergreen Stock Selector Fund ............................................. 14
Evergreen Tax Strategic Equity Fund ....................................... 16
GENERAL INFORMATION:
The Funds' Investment Advisors ............................................ 18
The Funds' Portfolio Managers ............................................. 18
Calculating the Share Price ............................................... 19
How to Choose an Evergreen Fund ........................................... 19
How to Choose the Share Class
That Best Suits You ....................................................... 20
How to Buy Shares ......................................................... 22
How to Redeem Shares ...................................................... 23
Other Services ............................................................ 24
The Tax Consequences of Investing in the Funds ............................ 24
Fees and Expenses of the Funds ............................................ 25
Financial Highlights ...................................................... 26
Other Fund Practices ...................................................... 34
</TABLE>
In general, Funds included in this prospectus seek to provide investors with
capital growth. These Funds tend to have more growth potential, risk and
volatility than less aggressive funds.
Fund Summaries Key
Each Fund's summary is organized around the following basic topics and
questions:
[GRAPHIC APPEARS HERE] INVESTMENT GOAL
What is the Fund's financial objective? You can find clarification on how the
Fund seeks to achieve its objective by looking at the Fund's strategy and
investment policies. The Fund's Board of Trustees can change the investment
objective without a shareholder vote.
[GRAPHIC APPEARS HERE] INVESTMENT STRATEGY
How does the Fund go about trying to meet its goals? What types of investments
does it contain? What style of investing and investment philosophy does it
follow? Does it have limits on the amount invested in any particular type of
security?
[GRAPHIC APPEARS HERE] RISK FACTORS
What are the specific risks for an investor in the Fund?
[GRAPHIC APPEARS HERE] PERFORMANCE
How well has the Fund performed in the past year? The past five years? The past
ten years?
[GRAPHIC APPEARS HERE] EXPENSES
How much does it cost to invest in the Fund? What is the difference between
sales charges and expenses?
<PAGE>
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OVERVIEW
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Domestic
Growth
Funds
typically rely on a combination of the following strategies:
. investing primarily in common stocks;
. investing in companies expected to provide capital appreciation; and
. selling a portfolio investment when the value of the investment reaches or
exceeds its estimated fair value, when the issuer's investment fundamentals
begin to deteriorate, when the investment no longer appears to meet the
Fund's investment objective, when the Fund must meet redemptions, or for
other reasons which the portfolio manager deems necessary.
may be appropriate for investors who:
. seek an investment expected to grow over time;
. can tolerate substantial volatility in the value of their investment.
Following this overview, you will find information on each Domestic Growth
Fund's specific investment strategies and risks.
Risk Factors For All Mutual Funds
Please remember that mutual fund investment shares are:
. not guaranteed to achieve their investment goal
. not insured, endorsed or guaranteed by the FDIC, a bank or any government
agency
. subject to investment risks, including possible loss of your original
investment
Like most investments, your investment in an Evergreen Domestic Growth Fund
could fluctuate significantly in value over time and could result in a loss of
money.
Here are the most important factors that may affect the value of your
investment:
Stock Market Risk
Your investment will be affected by general economic conditions such as
prevailing economic growth, inflation and interest rates. When economic growth
slows, or interest or inflation rates increase, securities tend to decline in
value. Such events could also cause companies to decrease the dividends they
pay. If these events were to occur, the value of and dividend yield and total
return earned on your investment would likely decline. Even if general economic
conditions do not change, your investment may decline in value if the particular
industries, issuers or sectors your Fund invests in do not perform well.
Interest Rate Risk
When interest rates go up, the value of debt securities and dividend-paying
stocks tends to fall. If your Fund invests a significant portion of its
portfolio in debt securities or dividend-paying stocks and interest rates rise,
then the value of your investment may decline. When interest rates go down,
interest earned by your Fund on its investments may also decline, which could
cause the Fund to reduce the dividends it pays.
Credit Risk
The value of a debt security is directly affected by the issuer's ability to
repay principal and pay interest on time. If your Fund invests in debt
securities then the value of your investment may decline if an issuer fails to
pay an obligation on a timely basis.
Foreign Investment Risk
A Fund's investment in non-U.S. securities could expose it to certain unique
risks of foreign investing. For example, political turmoil and economic
instability in the countries in which the Fund invests could adversely affect
the value of your investment. In addition, if the value of any foreign currency
in which the Fund's investments are denominated declines relative to the U.S.
dollar, the value of your investment in the Fund may decline as well. Certain
foreign countries have less developed and less regulated securities markets and
accounting systems than the U.S. This may make it harder to get accurate
information about a security or company, and increase the likelihood that an
investment will not perform as well as expected.
Small Company Risk
Your investment may be subject to special risks associated with investing in
securities issued by small companies. Smaller, less established companies tend
to be more dependent on individual managers and limited products and product
lines. Additionally, securities issued by small companies also tend to fluctuate
in value more dramatically than those of larger companies.
DOMESTIC GROWTH FUNDS 1
<PAGE>
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EVERGREEN
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Evergreen Fund
FUND FACTS:
Goal:
. Capital Appreciation
Principal Investments:
. Common Stocks
. Convertible Securities
Classes of Shares Offered in this Prospectus:
. Class A
. Class B
. Class C
Investment Advisor:
. Evergreen Asset Management Corp.
Portfolio Managers:
. Stephen A. Lieber
. Nola Maddox Falcone
NASDAQ Symbols:
EVRAX (Class A)
EVRBX (Class B)
EVRCX (Class C)
Dividend Payment Schedule:
Annually
[GRAPHIC APPEARS HERE] INVESTMENT GOAL
The Fund seeks capital appreciation.
[GRAPHIC APPEARS HERE] INVESTMENT STRATEGY
The following supplements the investment strategies discussed in the "Overview"
on page 1.
The Fund invests primarily in the common stocks of companies with innovative and
entrepreneurial management and that exhibit sound financial business practices.
The Fund may invest in securities of relatively well-known and large companies
as well as small and medium-sized specialty companies. The Fund's managers seek
long-term gains from the companies in which the Fund invests.
The Fund may invest in high quality money market instruments in response to
adverse economic, political or market conditions. This strategy is inconsistent
with the Fund's principal investment strategy and investment goal, and if
employed could result in a lower return and loss of market opportunity.
[GRAPHIC APPEARS HERE] RISK FACTORS
Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 1 under the headings:
. Stock Market Risk
. Small Company Risk
2 DOMESTIC GROWTH FUNDS
<PAGE>
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EVERGREEN
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[GRAPHIC APPEARS HERE] PERFORMANCE
The following charts show how the Fund has performed in the past. Past
performance is not an indication of future results.
The chart below shows the percentage gain or loss for Class A shares of the Fund
in each of the last ten calendar years. It should give you a general idea of how
the Fund's return has varied from year-to-year. This graph includes the effects
of Fund expenses, but not sales charges. Returns would be lower if sales charges
were included.
Year-by-Year Total Return for Class A Shares (%)*
[BAR CHART APPEARS HERE]
1989 15.01
1990 -11.72
1991 40.05
1992 8.73
1993 6.27
1994 0.73
1995 36.61
1996 17.25
1997 30.09
1998 6.79
Best Quarter: 1st Quarter 1991 +19.63%*
Worst Quarter: 3rd Quarter 1990 -21.34%*
The next table lists the Fund's average year-by-year return by class over
the past one, five and ten years and since inception (through 12/31/98),
including sales charges. This table is intended to provide you with some
indication of the risks of investing in the Fund. At the bottom of the table you
can compare this performance with the Russell 2000 Index, which is an unmanaged
index tracking the performance of 2000 publicly-traded U.S. stocks. It is often
used to indicate the performance of smaller company stocks. The Russell 2000
Index is not an actual investment.
Average Annual Total Return
(for the period ended 12/31/98)*
<TABLE>
<CAPTION>
Inception Performance
Date 1 year 5 year 10 year Since
of Class 10/15/71
<S> <C> <C> <C> <C> <C>
Class A 1/3/95 1.71% 16.38% 13.37% 16.24%
Class B 1/3/95 1.19% 16.71% 13.62% 16.34%
Class C 1/3/95 5.16% 16.87% 13.61% 16.33%
Russell 2000 -2.55% 11.87% 12.92% 14.91%**
</TABLE>
*Historical performance for Classes A, B and C prior to inception reflects that
of Class Y, the original class offered, the inception date of which is 10/15/71,
and does not reflect 12b-1 fees. If such fees were reflected, returns would have
been lower. Returns reflect expense limits previously in effect, without which
returns would have been lower.
**Inception date of the index is 12/31/78.Performance is since that date.
Performance since 1/3/95 is 15.58%.
[GRAPHIC APPEARS HERE] EXPENSES
This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.
Shareholder Fees (fees paid directly from your investment)
Shareholder Transaction Expenses Class A Class B Class C
Maximum sales charge imposed on 4.75% None None
purchases (as a % of offering price)
Maximum deferred sales charge None* 5.00% 1.00%
(as a % of either the redemption
amount or initial investment,
whichever is lower)
*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 of 1.00% upon
redemption within one year after the month of purchase.
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses*
Class A 0.89% 0.25% 0.30% 1.44%
Class B 0.89% 1.00% 0.30% 2.19%
Class C 0.89% 1.00% 0.30% 2.19%
*Actual for the fiscal year ended 9/30/98
The table below shows the total expenses you would pay on a $10,000 investment
over one-, three-, five- and ten-year periods. The example is intended to help
you compare the cost of investing in this Fund versus other mutual funds and is
for illustration only. The example assumes a 5% average annual return and that
you reinvest all of your dividends. Your actual costs may be higher or lower.
Example of Fund Expenses
Assuming Redemption at Assuming
End of Period No Redemption
Class A Class B Class C Class B Class C
After 1 year $ 615 $ 722 $ 322 $ 222 $ 222
After 3 years $ 909 $ 985 $ 685 $ 685 $ 685
After 5 years $1,225 $1,375 $1,175 $1,175 $1,175
After 10 years $2,117 $2,245 $2,524 $2,245 $2,524
DOMESTIC GROWTH FUNDS 3
<PAGE>
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EVERGREEN
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Micro Cap Fund
FUND FACTS:
Goal:
. Capital Appreciation
Principal Investment:
. Small-Cap Common Stocks
Classes of Shares Offered in this Prospectus:
. Class A
. Class B
. Class C
Investment Advisor:
. Evergreen Asset Management Corp.
Portfolio Managers:
. A committee including Stephen A. Lieber and Edwin A. Miska
NASDAQ Symbol:
None
Dividend Payment Schedule:
Annually
[GRAPHIC APPEARS HERE] INVESTMENT GOAL
The Fund seeks capital appreciation.
[GRAPHIC APPEARS HERE] INVESTMENT STRATEGY
The following supplements the investment strategies discussed in the "Overview"
on page 1.
The Fund invests primarily in common stocks of very small companies (generally
between $1 million and $150 million in market capitalization) which have a
relatively limited trading market (traded over-the-counter or on a regional
securities exchange). The Fund seeks companies with promising products or
services and the potential for rapid growth. The Fund's managers look for
investment opportunities not widely recognized by industry analysts due to the
small size of the companies and the resulting limited amounts of information on
the companies. The Fund focuses on investing in companies with high returns on
equity and consistent earnings growth.
The Fund may invest in high quality money market instruments in response to
adverse economic, political or market conditions. This strategy is inconsistent
with the Fund's principal investment strategy and investment goal, and if
employed could result in a lower return and loss of market opportunity.
[GRAPHIC APPEARS HERE] RISK FACTORS
Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 1 under the headings:
. Stock Market Risk
. Small Company Risk
In addition, your investment may be subject to special risks associated with
investing in securities issued by very small companies. Please note that the
investments in very small companies may accentuate the risks normally associated
with small company investing.
4 DOMESTIC GROWTH FUNDS
<PAGE>
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EVERGREEN
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[GRAPHIC APPEARS HERE] PERFORMANCE
The following charts show how the Fund has performed in the past. Past
performance is not an indication of future results.
The chart below shows the percentage gain or loss for Class A shares of the Fund
in each of the last ten calendar years. It should give you a general idea of how
the Fund's return has varied from year-to-year. This graph includes the effects
of Fund expenses, but not sales charges. Returns would be lower if sales charges
were included.
Year-by-Year Total Return for Class A Shares (%)*
[BAR CHART APPEARS HERE]
1989 20.89
1990 -10.42
1991 51.07
1992 10.13
1993 9.55
1994 -10.55
1995 10.31
1996 12.16
1997 47.10
1998 -22.25
Best Quarter: 1st Quarter 1991 +25.86%*
Worst Quarter: 3rd Quarter 1998 -23.89%*
The next table lists the Fund's average year-by-year return by class over
the past one, five and ten years and since inception (through 12/31/98),
including sales charges. This table is intended to provide you with some
indication of the risks of investing in the Fund. At the bottom of the table you
can compare this performance with the Russell 2000 Index, which is an unmanaged
index tracking the performance of 2000 publicly-traded U.S. stocks. It is often
used to indicate the performance of smaller company stocks. The Russell 2000
Index is not an actual investment.
Average Annual Total Return
(for the period ended 12/31/98)*
<TABLE>
<CAPTION>
Inception Performance
Date 1 year 5 year 10 year Since
of Class 6/1/83
<S> <C> <C> <C> <C> <C>
Class A 1/3/95 -25.94% 3.82% 9.06% 11.97%
Class B 1/3/95 -26.63% 3.96% 9.26% 12.11%
Class C 1/3/95 -23.55% 4.23% 9.28% 12.12%
Russell 2000 -2.55% 11.87% 12.92% 10.15%**
</TABLE>
*Historical performance for Classes A, B and C prior to inception reflects that
of Class Y, the original class offered, the inception date of which is 6/1/83,
and does not include 12b-1 fees. If such fees were reflected, returns would have
been lower. Returns reflect expense limits previously in effect, without which
returns would have been lower.
**Performance since 1/3/95 is 15.58%.
[GRAPHIC APPEARS HERE] EXPENSES
This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.
Shareholder Fees (fees paid directly from your investment)
Shareholder Transaction Expenses Class A Class B Class C
Maximum sales charge imposed on 4.75% None None
purchases (as a % of offering price)
Maximum deferred sales charge None* 5.00% 1.00%
(as a % of either the redemption
amount or initial investment,
whichever is lower)
*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 of 1.00% upon
redemption within one year after the month of purchase
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses*
Class A 1.00% 0.25% 0.40% 1.65%
Class B 1.00% 1.00% 0.40% 2.40%
Class C 1.00% 1.00% 0.40% 2.40%
*Estimated for the fiscal year ending 9/30/99
The table below shows the total expenses you would pay on a $10,000 investment
over one-, three-, five- and ten-year periods. The example is intended to help
you compare the cost of investing in this Fund versus other mutual funds and is
for illustration only. The example assumes a 5% average annual return and that
you reinvest all of your dividends. Your actual costs may be higher or lower.
Example of Fund Expenses
Assuming Redemption at Assuming
End of Period No Redemption
Class A Class B Class C Class B Class C
After 1 year $ 635 $ 743 $ 343 $ 243 $ 243
After 3 years $ 971 $1,048 $ 748 $ 748 $ 748
After 5 years $1,329 $1,480 $1,280 $1,280 $1,280
After 10 years $2,337 $2,463 $2,736 $2,463 $2,736
DOMESTIC GROWTH FUNDS 5
<PAGE>
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EVERGREEN
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Aggressive Growth Fund
FUND FACTS:
Goal:
. Long-term Capital Appreciation
Principal Investments:
. Common Stocks
. Convertible Securities
Classes of Shares Offered in this Prospectus:
. Class A
. Class B
. Class C
Investment Advisor:
. Evergreen Investment Management
Portfolio Manager:
. Harold J. Ireland, Jr.
NASDAQ Symbols:
EAGAX (Class A)
EAGBX (Class B
Dividend Payment Schedule:
Annually
[GRAPHIC APPEARS HERE] INVESTMENT GOAL
The Fund seeks long-term capital appreciation.
[GRAPHIC APPEARS HERE] INVESTMENT STRATEGY
The following supplements the investment strategies discussed in the "Overview"
on page 1.
The Fund seeks to achieve its goal by investing in emerging growth companies and
larger, more well-established companies, which are viewed by the manager as
having above-average appreciation potential. The Fund invests at least 65% of
its assets in common stocks, or securities convertible into common stocks, of
(1) companies that are in the less seasoned stage of development but expected to
grow over the long term, and/or (2) established companies that, in the opinion
of the Fund's manager, have growth potential similar to that of companies in the
less seasoned stage of development. The Fund may also invest up to 35% of its
assets in investment grade corporate bonds, U.S. Government Securities,
commercial paper, certificates of deposit and repurchase agreements.
The Fund may invest in high quality money market instruments in response to
adverse economic, political or market conditions. This strategy is inconsistent
with the Fund's principal investment strategy and investment goal, and if
employed could result in a lower return and loss of market opportunity.
[GRAPHIC APPEARS HERE] RISK FACTORS
Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 1 under the headings:
. Stock Market Risk
. Interest Rate Risk
. Credit Risk
. Small Company Risk
In addition, your investment may be subject to special risks associated with
investing in securities issued by emerging growth companies. These companies are
typically in a less seasoned stage of development. This could lead to wide
fluctuations in the price/value of the securities due to limited financing
alternatives, limited management depth, intense competition from larger
companies, or limited trading liquidity.
6 DOMESTIC GROWTH FUNDS
<PAGE>
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EVERGREEN
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[GRAPHIC APPEARS HERE] PERFORMANCE
The following charts show how the Fund has performed in the past. Past
performance is not an indication of future results.
The chart below shows the percentage gain or loss for Class A shares of the Fund
in each of the last ten calendar years. It should give you a general idea of how
the Fund's return has varied from year-to-year. This graph includes the effects
of Fund expenses, but not sales charges. Returns would be lower if sales charges
were included.
Year-by-Year Total Return for Class A Shares (%)
[BAR CHART APPEARS HERE]
1989 33.87
1990 -4.51
1991 77.23
1992 13.90
1993 17.88
1994 -9.31
1995 34.34
1996 17.23
1997 7.66
1998 23.54
Best Quarter: 4th Quarter 1998 +22.90%
Worst Quarter: 3rd Quarter 1990 -19.85%
The next table lists the Fund's average year-by-year return by class over the
past one, five and ten years and since inception (through 12/31/98), including
sales charges. This table is intended to provide you with some indication of the
risks of investing in the Fund. At the bottom of the table you can compare this
performance with the Russell 2000 Index and the S&P 500 Index. The Russell 2000
Index is an unmanaged index tracking the performance of 2000 publicly-traded
U.S. stocks. It is often used to indicate the performance of smaller company
stocks. The S&P 500 Index is an unmanaged index tracking the performance of 500
publicly-traded U.S. stocks. It is often used to indicate the performance of the
overall stock market. These indexes are not actual investments.
Average Annual Total Return
(For the period ended 12/31/98)*
Inception Performance
Date 1 year 5 year 10 year Since
of Class 4/15/83
Class A 4/15/83 17.69% 12.59% 18.59% 13.92%
Class B 7/7/95 17.51% 12.90% 18.89% 14.10%
Class C 8/3/95 21.39% 13.11% 18.87% 14.09%
Russell 2000 -2.55% 11.87% 12.92% 10.84%**
S&P 500 26.67% 21.39% 16.04% 17.21%***
*Historical performance for Classes B and C prior to inception reflects that of
Class A, the original class offered, the inception date of which is 4/15/83, and
includes appropriate 12b-1 fees for Class A. If appropriate fees for Classes B
and C were reflected, returns for these classes would have been lower.
**Performance since 7/7/95 is 13.54% and since 8/3/95 is 12.04%.
***Performance since 7/7/95 is 24.26% and since 8/3/95 is 24.06%.
[GRAPHIC APPEARS HERE] EXPENSES
This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.
Shareholder Fees (fees paid directly from your investment)
Shareholder Transaction Expenses Class A Class B Class C
Maximum sales charge imposed on 4.75% None None
Purchases (as a % of offering price)
Maximum deferred sales charge None* 5.00% 1.00%
(as a % of either the redemption
amount or initial investment,
whichever is lower)
*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 of 1.00% upon
redemption within one year after the month of purchase.
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses*
Class A 0.60% 0.25% 0.47% 1.32%
Class B 0.60% 1.00% 0.47% 2.07%
Class C 0.60% 1.00% 0.47% 2.07%
*Estimated for the fiscal year ending 9/30/99
The table below shows the total expenses you would pay on a $10,000 investment
over one-, three-, five- and ten-year periods. The example is intended to help
you compare the cost of investing in this Fund versus other mutual funds and is
for illustration only. The example assumes a 5% average annual return and that
you reinvest all of your dividends. Your actual costs may be higher or lower.
Example of Fund Expenses
Assuming Redemption at Assuming
End of Period No Redemption
Class A Class B Class C Class B Class C
After 1 year $ 603 $ 710 $ 310 $ 210 $ 210
After 3 years $ 873 $ 949 $ 649 $ 649 $ 649
After 5 years $1,164 $1,314 $1,114 $1,114 $1,114
After 10 years $1,990 $2,118 $2,400 $2,118 $2,400
DOMESTIC GROWTH FUNDS 7
<PAGE>
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EVERGREEN
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Omega Fund
FUND FACTS:
Goal:
. Capital Growth
Principal Investments:
. Common Stocks
. Convertible Securities
Classes of Shares Offered in this Prospectus:
. Class A
. Class B
. Class C
Investment Advisor:
. Evergreen Investment Management Company
Portfolio Manager:
. Maureen E. Cullinane
NASDAQ Symbol:
EKOAX (Class A)
EKOBX (Class B)
EKOCX (Class C)
Dividend Payment Schedule:
Annually
[GRAPHIC APPEARS HERE] INVESTMENT GOAL
The Fund seeks maximum capital growth.
[GRAPHIC APPEARS HERE] INVESTMENT STRATEGY
The following supplements the investment strategies discussed in the "Overview"
on page 1.
The Fund invests primarily in common stocks and securities convertible into
common stocks. The Fund utilizes the fully-managed investment concept whereby
the Fund's manager will continuously review the Fund's holdings in light of
market conditions, business developments and economic trends. During this review
process, the Fund's manager seeks to identify and invest in industries that are
growing faster than the economy. The Fund invests in companies of all sizes. The
continuous review may lead to high portfolio turnover, but that will not limit
investment decisions. The Fund may also invest up to 25% of its assets in
foreign securities.
The Fund may invest in high quality money market instruments in response to
adverse economic, political or market conditions. This strategy is inconsistent
with the Fund's principal investment strategy and investment goal, and if
employed could result in a lower return and loss of market opportunity.
[GRAPHIC APPEARS HERE] RISK FACTORS
Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 1 under the headings:
. Stock Market Risk
. Foreign Investment Risk
. Small Company Risk
8 DOMESTIC GROWTH FUNDS
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
[GRAPHIC APPEARS HERE] PERFORMANCE
The following charts show how the Fund has performed in the past. Past
performance is not an indication of future results.
The chart below shows the percentage gain or loss for Class A shares of the Fund
in each of the last ten calendar years. It should give you a general idea of how
the Fund's return has varied from year-to-year. This graph includes the effects
of Fund expenses, but not sales charges. Returns would be lower if sales charges
were included.
Year-by-Year Total Return for Class A Shares (%)
[BAR CHART APPEARS HERE]
1989 33.05
1990 -2.38
1991 54.49
1992 4.00
1993 19.33
1994 -5.66
1995 36.94
1996 11.31
1997 24.53
1998 27.30
Best Quarter: 1st Quarter 1991 +26.03%
Worst Quarter: 3rd Quarter 1990 -14.82%
The next table lists the Fund's average year-by-year return by class over the
past one, five and ten years and since inception (through 12/31/98), including
sales charges. This table is intended to provide you with some indication of the
risks of investing in the Fund. At the bottom of the table you can compare this
performance with the S&P 500 Index, which is an unmanaged index tracking the
performance of 500 publicly-traded U.S. stocks. It is often used to indicate the
performance of the overall stock market. The S&P 500 Index is not an actual
investment.
Average Annual Total Return
(For the period ended 12/31/98)*
Inception Performance
Date 1 year 5 year 10 year Since
of Class 4/29/68
Class A 4/29/68 21.27% 16.78% 18.39% 13.66%
Class B 8/2/93 21.43% 16.69% 18.42% 13.67%
Class C 8/2/93 25.43% 16.89% 18.43% 13.68%
S&P 500 26.67% 21.39% 16.04% 12.66%**
*Historical performance for Classes B and C prior to inception reflects that of
Class A, the original class offered, the inception date of which is 4/29/68, and
includes appropriate 12b-1 fees for Class A. If appropriate fees for Classes B
and C were reflected, returns for these classes would have been lower.
**Performance since 8/2/93 is 21.39%
[GRAPHIC APPEARS HERE] EXPENSES
This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.
Shareholder Fees (fees paid directly from your investment)
Shareholder Transaction Expenses Class A Class B Class C
Maximum sales charge imposed on 4.75% None None
Purchases (as a % of offering price)
Maximum deferred sales charge None* 5.00% 1.00%
(as a % of either the redemption
amount or initial investment,
whichever is lower)
*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 of 1.00% upon
redemption within one year after the month of purchase.
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses*
Class A 0.74% 0.25% 0.36% 1.35%
Class B 0.74% 1.00% 0.36% 2.10%
Class C 0.74% 1.00% 0.36% 2.10%
*Estimated for the fiscal year ending 9/30/99
The table below shows the total expenses you would pay on a $10,000 investment
over one-, three-, five- and ten-year periods. The example is intended to help
you compare the cost of investing in this Fund versus other mutual funds and is
for illustration only. The example assumes a 5% average annual return and that
you reinvest all of your dividends. Your actual costs may be higher or lower.
Example of Fund Expenses
Assuming Redemption at Assuming
End of Period No Redemption
Class A Class B Class C Class B Class C
After 1 year $ 606 $ 713 $ 313 $ 213 $ 213
After 3 years $ 882 $ 958 $ 658 $ 658 $ 658
After 5 years $1,179 $1,329 $1,129 $1,129 $1,129
After 10 years $2,022 $2,150 $2,431 $2,150 $2,431
DOMESTIC GROWTH FUNDS 9
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
Small Company Growth Fund
FUND FACTS:
Goal:
. Long-Term Capital Growth
Principal Investment:
. Small-Cap Common Stocks
Classes of Shares Offered in this Prospectus:
. Class A
. Class B
. Class C
Investment Advisor:
. Evergreen Investment Management Company
Portfolio Manager:
. J. Gary Craven
NASDAQ Symbol:
EKAAX (Class A)
EKABX (Class B)
Dividend Payment Schedule:
. Annually
[GRAPHIC APPEARS HERE] INVESTMENT GOAL
The Fund seeks long-term growth of capital.
[GRAPHIC APPEARS HERE] INVESTMENT STRATEGY
The following supplements the investment strategies discussed in the "Overview"
on page 1.
The Fund invests at least 65% of its assets in common stocks of companies with
small market capitalizations (less than $1 billion) at the time of the Fund's
investment. The Fund may also invest up to 35% of its assets in corporate
securities without regard to the market capitalization of the issuer, including
(1) common stocks of companies with large and medium market capitalizations (at
least $1 billion), (2) securities convertible into common stocks, and (3) rights
or warrants to purchase common stocks. While income is not a goal of the Fund,
securities with strong income potential may be included in the portfolio as long
as they do not conflict with the Fund's goal of long-term capital growth. The
Fund may also invest up to 25% of its assets in foreign securities.
The Fund may invest in high quality money market instruments in response to
adverse economic, political or market conditions. This strategy is inconsistent
with the Fund's principal investment strategy and investment goal, and if
employed could result in a lower return and loss of market opportunity.
[GRAPHIC APPEARS HERE] RISK FACTORS
Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 1 under the headings:
. Stock Market Risk
. Foreign Investment Risk
. Small Company Risk
10 DOMESTIC GROWTH FUNDS
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
[GRAPHIC APPEARS HERE] PERFORMANCE
The following charts show how the Fund has performed in the past. Past
performance is not an indication of future results.
The chart below shows the percentage gain or loss for Class B shares of the Fund
in each of the last ten calendar years. It should give you a general idea of how
the Fund's return has varied from year-to-year. This graph includes the effects
of Fund expenses, but not sales charges. Returns would be lower if sales charges
were included.
Year-by-Year Total Return for Class B Shares (%)
[BAR CHART APPEARS HERE]
1989 23.61
1990 -6.01
1991 72.90
1992 9.86
1993 25.34
1994 0.18
1995 36.27
1996 0.82
1997 13.39
1998 -17.00
Best Quarter: 1st Quarter 1991 +33.82%
Worst Quarter: 3rd Quarter 1998 -29.40%
The next table lists the Fund's average year-by-year return by class over the
past one, five and ten years and since inception (through 12/31/98), including
sales charges. This table is intended to provide you with some indication of the
risks of investing in the Fund. At the bottom of the table you can compare this
performance with the Russell 2000 Index, which is an unmanaged index tracking
the performance of 2000 publicly-traded U.S. stocks. It is often used to
indicate the performance of smaller company stocks. The Russell 2000 Index is
not an actual investment.
Average Annual Total Return
(For the period ended 12/31/98)*
Inception Performance
Date 1 year 5 year 10 year Since
of Class 9/11/35
Class A 1/20/98 -20.33% 5.06% 13.74% 9.80%
Class B 9/11/35 -20.35% 5.10% 13.61% 9.76%
Class C 1/26/98 -17.55% 5.31% 13.38% 9.66%
Russell 2000 -2.55% 11.87% 12.92% 14.91%**
*Historical performance for Classes A and C prior to inception reflects that of
Class B, the original class offered, the inception date of which is 9/11/35, and
has been adjusted for appropriate 12b-1 fees for each class.
**Inception date of the index is 12/31/78. Performance is since that date.
Performance since 1/20/98 is -0.99% and since 1/26/98 is 1.46%.
[GRAPHIC APPEARS HERE] EXPENSES
This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.
Shareholder Fees (fees paid directly from your investment)
Shareholder Transaction Expenses Class A Class B Class C
Maximum sales charge imposed on 4.75% None None
Purchases (as a % of offering price)
Maximum deferred sales charge None* 5.00% 1.00%
(as a % of either the redemption
amount or initial investment,
whichever is lower)
*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 of 1.00% upon
redemption within one year after the month of purchase.
Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses*
Class A 0.49% 0.25% 0.33% 1.07%
Class B 0.49% 1.00% 0.33% 1.82%
Class C 0.49% 1.00% 0.33% 1.82%
*Estimated for the fiscal year ending 9/30/99
The table below shows the total expenses you would pay on a $10,000 investment
over one-, three-, five- and ten-year periods. The example is intended to help
you compare the cost of investing in this Fund versus other mutual funds and is
for illustration only. The example assumes a 5% average annual return and that
you reinvest all of your dividends. Your actual costs may be higher or lower.
Example of Fund Expenses
Assuming Redemption at Assuming
End of Period No Redemption
Class A Class B Class C Class B Class C
After 1 year $ 579 $ 685 $ 285 $ 185 $ 185
After 3 years $ 799 $ 873 $ 573 $ 573 $ 573
After 5 years $1,037 $1,185 $ 985 $ 985 $ 985
After 10 years $1,719 $1,848 $2,137 $1,848 $2,137
DOMESTIC GROWTH FUNDS 11
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
Strategic Growth Fund
FUND FACTS:
Goal:
. Capital Growth
Principal Investments:
. Common Stocks
. Bonds
. Convertible Securities
Classes of Shares Offered in this Prospectus:
. Class A
. Class B
. Class C
Investment Advisor:
. Evergreen Investment Management Company
Portfolio Manager:
. Maureen E. Cullinane
NASDAQ Symbols:
EKJAX (Class A)
EKJBX (Class B)
Dividend Payment Schedule:
. Annually
[GRAPHIC APPEARS HERE] INVESTMENT GOAL
The Fund seeks growth of capital.
[GRAPHIC APPEARS HERE] INVESTMENT STRATEGY
The following supplements the investment strategies discussed in the "Overview"
on page 1.
The Fund seeks to achieve its goal by investing in a wide range of sectors,
industries and companies both in the U.S. and abroad. The Fund invests primarily
in domestic common stocks, bonds (including bonds convertible into or
exchangeable for common stocks) and rights or warrants to purchase common
stocks. The Fund may also invest in foreign securities.
The Fund may invest in high quality money market instruments in response to
adverse economic, political or market conditions. This strategy is inconsistent
with the Fund's principal investment strategy and investment goal, and if
employed could result in a lower return and loss of market opportunity.
[GRAPHIC APPEARS HERE] RISK FACTORS
Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 1 under the headings:
. Stock Market Risk
. Foreign Investment Risk
. Interest Rate Risk
. Credit Risk
12 DOMESTIC GROWTH FUNDS
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
[GRAPHIC APPEARS HERE] PERFORMANCE
The following charts show how the Fund has performed in the past. Past
performance is not an indication of future results.
The chart below shows the percentage gain or loss for Class B shares of the
Fund in each of the last ten calendar years. It should give you a general idea
of how the Fund's return has varied from year-to-year. This graph includes the
effects of Fund expenses, but not sales charges. Returns would be lower if sales
charges were included.
Year-by-Year Total Return for Class B Shares (%)
[BAR CHART APPEARS HERE]
1989 24.09
1990 -6.99
1991 41.58
1992 8.36
1993 13.12
1994 -2.95
1995 28.51
1996 11.96
1997 31.71
1998 25.02
Best Quarter: 4th Quarter 1998 +20.73%
Worst Quarter: 3rd Quarter 1990 -15.05%
The next table lists the Fund's average year-by-year return by class over the
past one, five and ten years and since inception (through 12/31/98), including
sales charges. This table is intended to provide you with some indication of the
risks of investing in the Fund. At the bottom of the table you can compare this
performance with the S&P 500 Index, which is an unmanaged index tracking the
performance of 500 publicly-traded U.S. stocks. It is often used to indicate the
performance of the overall stock market. The S&P 500 Index is not an actual
investment.
Average Annual Total Return
(For the period ended 12/31/98)*
<TABLE>
<CAPTION>
Inception Performance
Date 1 year 5 year 10 year Since
of Class 9/11/35
<S> <C> <C> <C> <C> <C>
Class A 1/20/98 19.95% 17.61% 16.46% 11.78%
Class B 9/11/35 20.02% 17.91% 16.50% 11.74%
Class C 1/22/98 24.02% 17.89% 16.06% 11.62%
S&P 500 26.67% 21.39% 16.04% 12.31%**
</TABLE>
*Historical performance for Classes A and C prior to inception reflects that of
Class B, the original class offered, the inception date of which is 9/11/35, and
have been adjusted for appropriate 12b-1 fees for each class.
**Performance since 1/20/98 is 27.17%and since 1/22/98 is 29.45%.
[GRAPHIC APPEARS HERE] EXPENSES
This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.
Shareholder Fees (fees paid directly from your investment)
Shareholder Transaction Expenses Class A Class B Class C
Maximum sales charge imposed on 4.75% None None
Purchases (as a % of offering price)
Maximum deferred sales charge None* 5.00% 1.00%
(as a % of either the redemption
amount or initial investment,
whichever is lower)
*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 of 1.00% upon
redemption within one year after the month of purchase.
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses*
Class A 0.53% 0.25% 0.31% 1.09%
Class B 0.53% 1.00% 0.31% 1.84%
Class C 0.53% 1.00% 0.31% 1.84%
*Estimated for the fiscal year ending 9/30/99
The table below shows the total expenses you would pay on a $10,000 investment
over one-, three-, five- and ten-year periods. The example is intended to help
you compare the cost of investing in this Fund versus other mutual funds and is
for illustration only. The example assumes a 5% average annual return and that
you reinvest all of your dividends. Your actual costs may be higher or lower.
Example of Fund Expenses
Assuming Redemption at Assuming
End of Period No Redemption
Class A Class B Class C Class B Class C
After 1 year $ 581 $ 687 $ 287 $ 187 $ 187
After 3 years $ 805 $ 879 $ 579 $ 579 $ 579
After 5 years $1,047 $1,196 $ 996 $ 996 $ 996
After 10 years $1,741 $1,870 $2,159 $1,870 $2,159
DOMESTIC GROWTH FUNDS 13
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
Stock Selector Fund
FUND FACTS:
Goal:
. Total Return
Principal Investments:
. Common Stocks
. Bonds
. Convertible Securities
Classes of Shares Offered in this Prospectus:
. Class A
. Class B
Investment Advisor:
. Meridian Investment Company
Portfolio Manager:
. Joseph E. Stocke
NASDAQ Symbols:
EVSAX (Class A)
Dividend Payment Schedule:
. Annually
[GRAPHIC APPEARS HERE] INVESTMENT GOAL
The Fund seeks maximum total return.
[GRAPHIC APPEARS HERE] INVESTMENT STRATEGY
The following supplements the investment strategies discussed in the "Overview"
on page 1.
The Fund strives to provide a total return greater than that of the S&P 500
Index by investing primarily in a diversified portfolio of common stocks of U.S.
and foreign companies expected to experience growth in earnings and price.
Companies of all sizes will be considered for the Fund's portfolio. The Fund may
also invest up to 20% of its assets in preferred stocks, securities convertible
into common stock, corporate bonds and notes, and short term obligations.
The Fund may invest in high quality money market instruments in response to
adverse economic, political or market conditions. This strategy is inconsistent
with the Fund's principal investment strategy and investment goal, and if
employed could result in a lower return and loss of market opportunity.
[GRAPHIC APPEARS HERE] RISK FACTORS
Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 1 under the headings:
. Stock Market Risk
. Interest Rate Risk
. Credit Risk
. Foreign Investment Risk
. Small Company Risk
14 DOMESTIC GROWTH FUNDS
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
[GRAPHIC APPEARS HERE] PERFORMANCE
The following charts show how the Fund has performed in the past. Past
performance is not an indication of future results.
The chart below shows the percentage gain or loss for Class A shares of the Fund
in each calendar year since the Class A shares' inception on 2/28/90. It should
give you a general idea of how the Fund's return has varied from year-to-year.
This graph includes the effects of Fund expenses, but not sales charges. Returns
would be lower if sales charges were included.
Year-by-Year Total Return for Class A Shares (%)
[BAR CHART APPEARS HERE]
1989
1990
1991 43.19
1992 9.18
1993 8.01
1994 -2.59
1995 35.43
1996 27.19
1997 30.43
1998 12.55
Best Quarter: 4th Quarter 1998 +26.52%
Worst Quarter: 3rd Quarter 1998 -18.28%
The next table lists the Fund's average year-by-year return by class over
the past one,five and ten years and since inception (through 12/31/98),
including sales charges. This table is intended to provide you with some
indication of the risks of investing in the Fund. At the bottom of the table you
can compare this performance with an index that tracks investments similar to
the Fund's, the S&P 500 Index, which is an unmanaged index tracking the
performance of 500 publicly-traded U.S. stocks. It is often used to indicate the
performance of the overall stock market. The S&P 500 Index is not an actual
investment.
Average Annual Total Return
(For the period ended 12/31/98)*
<TABLE>
<CAPTION>
Inception Performance
Date 1 year 5 year 10 year Since
of Class 2/28/90
<S> <C> <C> <C> <C> <C>
Class A 2/28/90 7.19% 18.60% N/A 17.05%
Class B 11/7/97 8.12% 17.28% N/A 16.44%
S&P 500 26.67% 21.39% N/A 19.03%*
</TABLE>
*Historical performance for Class B prior to inception reflects that of
Class A, the original class offered, the inception date of which is 2/28/90, and
includes appropriate 12b-1 fees for Class A. If 12b-1 fees for Class B were
reflected, returns for Class B would have been lower. Returns reflect
expense limits previously in effect, without which returns would have been
lower.
**Performance since 11/7/97 is 26.36%
[GRAPHIC APPEARS HERE] EXPENSES
This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.
Shareholder Fees (fees paid directly from your investment)
Shareholder Transaction Expenses Class A Class B Class C
Maximum sales charge imposed on 4.75% None None
Purchases (as a % of offering price)
Maximum deferred sales charge None* 5.00% 1.00%
(as a % of either the redemption
amount or initial investment,
whichever is lower)
*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 of 1.00% upon
redemption within one year after the month of purchase.
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)*
<TABLE>
<CAPTION>
Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses**
<S> <C> <C> <C> <C>
Class A 0.74% 0.25% 0.26% 1.25%
Class B 0.74% 1.00% 0.26% 2.00%
</TABLE>
* From time to time, the Fund's investment advisor may, at its discretion,
reduce or waive its fees or reimburse a Fund for certain of its expenses in
order to reduce expense ratios. The Fund's investment advisor may cease these
reimbursements at any time. The annual operating expenses do not reflect fee
waivers and expense reimbursements. Including current fee waivers and expense
reimbursements, total operating fees would be 1.18% for Class A and 1.94% for
Class B.
**Actual for the fiscal year ended 9/30/98
The table below shows the total expenses you would pay on a $10,000 investment
over one-, three-, five- and ten-year periods. The example is intended to help
you compare the cost of investing in this Fund versus other mutual funds and is
for illustration only. The example assumes a 5% average annual return and that
you reinvest all of your dividends. Your actual costs may be higher or lower.
Example of Fund Expenses
<TABLE>
<CAPTION>
Assuming Redemption at Assuming
End of Period No Redemption
Class A Class B Class B
<S> <C> <C> <C>
After 1 year $ 596 $ 703 $ 203
After 3 years $ 853 $ 927 $ 627
After 5 years $1,129 $1,278 $1,078
After 10 years $1,915 $2,043 $2,043
</TABLE>
DOMESTIC GROWTH FUNDS 15
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
Tax Strategic Equity Fund
FUND FACTS:
Goal:
. Tax-Efficient Long-Term Capital Growth
Principal Investment:
. Common Stocks
Classes of Shares Offered in this Prospectus:
. Class A
. Class B
. Class C
Investment Advisor:
. Evergreen Asset Management Corp.
Portfolio Manager:
. Stephen A. Lieber
NASDAQ Symbols:
None
Dividend Payment Schedule:
. Annually
[GRAPHIC APPEARS HERE] INVESTMENT GOAL
The Fund seeks long-term capital growth within a tax-efficient strategy.
[GRAPHIC APPEARS HERE] INVESTMENT STRATEGY
The following supplements the investment strategies discussed in the "Overview"
on page 1.
The Fund invests at least 65% of assets in common stocks of companies with large
and medium market capitalizations (at least $1 billion). The Fund may also
invest up to 35% of its assets in (1) foreign securities, including foreign
securities represented by American Depository Receipts and (2) common stocks of
companies with small market capitalizations (less than $1 billion). The Fund
uses investment techniques that reduce the impact of taxes on shareholder
returns. One of these techniques is to buy stocks paying low or no dividends
which reduces the taxable dividends the Fund pays to shareholders. Another
technique is to purchase securities the Fund expects to hold for growth over the
long-term. This practice decreases the Fund's portfolio turnover rate, which in
turn lessens the taxable capital gain, if any, the Fund pays to shareholders. A
third technique, used when selling securities in the portfolio, involves selling
the securities with the highest cost basis in order to minimize realized capital
gain. This also lessens taxable distributions to shareholders.
The Fund may invest in high quality money market instruments in response to
adverse economic, political or market conditions. This strategy is inconsistent
with the Fund's principal investment strategy and investment goal, and if
employed could result in a lower return and loss of market opportunity.
[GRAPHIC APPEARS HERE] RISK FACTORS
Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 1 under the headings:
. Stock Market Risk
. Foreign Investment Risk
. Small Company Risk
16 DOMESTIC GROWTH FUNDS
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
[GRAPHIC APPEARS HERE] PERFORMANCE
The return for Class A shares since inception on 9/1/98 to 12/31/98 is
36.30%*. This figure includes the effects of Fund expenses, but
not sales charges. The return would be lower if sales charges were included.
Past performance is not an indication of future results.
* Historical performance for Class A prior to inception reflects that of
Class Y, the original class offered, and does not include 12b-1 fees. If such
fees were reflected, returns would have been lower. The advisor is waiving a
portion of its advisory fee. Had the fee not been waived, the returns would have
been lower.
[GRAPHIC APPEARS HERE] EXPENSES
This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.
Shareholder Fees (fees paid directly from your investment)
Shareholder Transaction Expenses Class A Class B Class C
Maximum sales charge imposed on 4.75% None None
Purchases (as a % of offering price)
Maximum deferred sales charge None* 5.00% 1.00%
(as a % of either the redemption
amount or initial investment,
whichever is lower)
*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 of 1.00% upon
redemption within one year after the month of purchase.
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)*
<TABLE>
<CAPTION>
Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses**
<S> <C> <C> <C> <C>
Class A 0.95% 0.25% 0.97% 2.17%
Class B 0.95% 1.00% 0.97% 2.92%
Class C 0.95% 1.00% 0.97% 2.92%
</TABLE>
*From time to time, the Fund's investment advisor may, at its discretion, reduce
or waive its fees or reimburse a Fund for certain of its expenses in order to
reduce expense ratios. The Fund's investment advisor may cease these
reimbursements at any time. The annual operating expenses do not reflect fee
waivers and expense reimbursements. Including current fee waivers and expense
reimbursements, total operating fees would be 1.54% for Class A, 2.29% for Class
B and 2.29% for Class C.
**Estimated for the fiscal year ending 9/30/99
The table below shows the total expenses you would pay on a $10,000 investment
over one-, three-, five- and ten-year periods. The example is intended to help
you compare the cost of investing in this Fund versus other mutual funds and is
for illustration only. The example assumes a 5% average annual return and that
you reinvest all of your dividends. Your actual costs may be higher or lower.
Example of Fund Expenses
Assuming Redemption at Assuming
End of Period No Redemption
Class A Class B Class C Class B Class C
After 1 year $ 685 $ 795 $ 395 $ 295 $ 295
After 3 years $1,122 $1,204 $ 904 $ 904 $ 904
After 5 years $1,584 $1,738 $1,538 $1,538 $1,538
After 10 years $2,859 $2,983 $3,242 $2,983 $3,242
DOMESTIC GROWTH FUNDS 17
<PAGE>
- --------------------------------------------------------------------------------
Evergreen
- --------------------------------------------------------------------------------
The Funds' Investment Advisors
Each investment advisor manages a Fund's investments and supervises its daily
business affairs. There are three different investment advisors for the
Evergreen Domestic Growth Funds. All investment advisors for the Evergreen Funds
are subsidiaries of First Union Corporation, the sixth largest bank holding
company in the United States, with over $237.4 billion in consolidated assets as
of December 31, 1998. First Union Corporation is located at 301 South College
Street, Charlotte, North Carolina 28288-0013.
Evergreen Asset Management Corp. (EAMC) is the investment advisor to:
. Evergreen Fund,
. Micro Cap Fund and
. Tax Strategic Equity Fund.
EAMC, with its predecessors, has served as investment advisor to the Evergreen
Funds since 1971, and currently manages over $18.2 billion in assets for 21 of
the Evergreen Funds. EAMC is located at 2500 Westchester Avenue, Purchase, New
York 10577.
Evergreen Investment Management Company (EIMC) is the investment advisor to:
. Omega Fund,
. Small Company Growth Fund and
. Strategic Growth Fund.
EIMC has been managing money for over 50 years and currently manages over $8.9
billion in assets for 25 of the Evergreen Funds. EIMC is located at 200 Berkeley
Street, Boston, Massachusetts 02116-5034.
Evergreen Investment Management (EIM) is the investment advisor to:
. Aggressive Growth Fund.
EIM, (formerly known as the Capital Management Group, or CMG) a division of
First Union National Bank, has been managing mutual funds and private accounts
since 1932 and currently manages over $28.1 billion in assets for 42 of the
Evergreen Funds. EIM is located at 201 South College Street, Charlotte, North
Carolina 28288-0630.
Meridian Investment Company (MIC) is the investment advisor to:
. Stock Selector Fund.
MIC has been managing money for over 15 years and currently manages over $3
billion in assets, including $500 million in assets for two of the Evergreen
Funds. MIC is located at 55 Valley Stream Parkway, Malvern, Pennsylvania 19355.
Year 2000 Compliance
The investment advisors and other service providers for the Evergreen Funds are
taking steps to address any potential Year 2000-related computer problems.
However, there is some risk that these problems could disrupt the Funds'
operations or financial markets generally.
European Currency Conversion Risk
Certain countries in Europe converted their different currencies to a single,
common currency on January 1, 1999. In connection with this change, investment
advisors, mutual funds and their service providers have modified their
accounting and recordkeeping systems to handle the new currency. If a Fund
invests in foreign securities, your investment in the Fund may be adversely
affected if these technical modifications have not been implemented properly.
Also, the conversion to a single currency may impair the markets for securities
denominated in the currencies eliminated, which may also adversely impact your
investment.
THE FUNDS' PORTFOLIO MANAGERS
Evergreen Fund
The day-to-day management of the Fund is handled by Stephen A. Lieber, and Nola
Maddox Falcone, C.F.A. Mr. Lieber is Chairman and Co-Chief Executive Officer of
EAMC. He was a founding partner of Lieber & Company, the original sponsor of the
Evergreen Funds, when it was established in 1969. He has been with EAMC and its
predecessor since 1971 and has been in the investment management profession
since 1952. Ms. Falcone is President and Co-Chief Executive Officer of EAMC. She
joined Lieber & Company as Senior Portfolio Manager in 1974, and was a General
Partner from January 1981 to June 1994.
18 DOMESTIC GROWTH FUNDS
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
Micro Cap Fund
The day-to-day management of the Fund is handled by a committee of portfolio
managers and stock analysts including Stephen A. Lieber and Edwin A. Miska. Mr.
Lieber is Chairman and Co-Chief Executive Officer of EAMC. He was a founding
partner of Lieber & Company, the original sponsor of the Evergreen Funds, when
it was established in 1969. He has been with EAMC and its predecessor since 1971
and has been in the investment management profession since 1952. Mr. Miska has
been an analyst and portfolio manager with EAMC and its predecessor since 1989.
Aggressive Growth Fund
The day-to-day management of the Fund is handled by Harold J. Ireland, Jr. He is
a Vice President of EIM who has been a portfolio manager at EIM since 1995. Mr.
Ireland previously worked for Palm Beach Capital Management, Inc. where he was
portfolio manager of the Fund's predecessor, ABT Emerging Growth Fund, from its
inception in 1983 to 1995.
Omega Fund
The day-to-day management of the Fund has been handled by Maureen E. Cullinane
since 1989. Ms. Cullinane is a Senior Vice President and Senior Portfolio
Manager of EIMC and has over 20 years of investment experience.
Small Company Growth Fun
The day-to-day management of the Fund has been handled by J. Gary Craven since
November 1996 when he joined EIMC. Mr. Craven is a Senior Vice President and
Chief Investment Officer of EIMC, as well as Group Leader for the small-cap
equity group. Prior to joining EIMC, Mr. Craven was a portfolio manager for 9
years at Invista Capital Management, Inc.
Strategic Growth Fund
The day-to-day management of the Fund has been handled by Maureen E. Cullinane
since 1995. Ms. Cullinane is a Senior Vice President and Senior Portfolio
Manager of EIMC and has over 20 years of investment experience.
Stock Selector Fund
The day-to-day management of the Fund is handled by Joseph E. Stocke, CFA. Mr.
Stocke joined MIC 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.
Tax Strategic Equity Fund
The day-to-day management of the Fund is handled by Stephen A. Lieber. Mr.
Lieber is Chairman and Co-Chief Executive Officer of EAMC. He was a founding
partner of Lieber & Company, the original sponsor of the Evergreen Funds, when
it was established in 1969. He has been with EAMC and its predecessor since 1971
and has been in the investment management profession since 1952.
CALCULATING THE SHARE PRICE
The value of one share of a Fund, also known as the net asset value, or NAV, is
calculated on each day the New York Stock Exchange is open as of the time the
Exchange closes (normally 4:00 p.m. Eastern time). We calculate the share price
for each share by adding up the total assets of the Fund, subtracting all
liabilities, then dividing the result by the total number of shares outstanding.
Each class of shares is calculated separately. Each security held by a Fund is
valued using the most recent market quote for that security. If no market
quotation is available for a given security, we will price that security at fair
value according to policies established by the Fund's' Board of Trustees.
Short-term securities with maturities of 60 days or less will be valued on the
basis of amortized cost.
The price per share you pay for a Fund purchase or the amount you receive for a
Fund redemption is based on the next price calculated after the order is
received and all required information is provided. The value of your account at
any given time is the latest share price multiplied by the number of shares you
own. Your account balance may change daily because the share price may change
daily.
HOW TO CHOOSE AN EVERGREEN FUND
When choosing an Evergreen Fund, you should:
. Most importantly, read the prospectus to see if the Fund is suitable for you.
. Consider talking to an investment professional. He or she is qualified to give
you investment advice based on your investment goals and financial situation
and
DOMESTIC GROWTH FUNDS 19
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
will be able to answer questions you may have after reading the Fund's
prospectus. He or she can also assist you through all phases of opening your
account.
. Request any additional information you want about the Fund, such as the
Statement of Additional Information, Annual Report or Semi-Annual Report by
calling 1-800-343-2898.
HOW TO CHOOSE THE SHARE CLASS THAT BEST SUITS YOU
After choosing a Fund, you select a share class. The Evergreen Domestic Growth
Funds offer three different retail share classes (except Evergreen Stock
Selector Fund, which offers two). Each retail class of shares has its own sales
charge. Pay particularly close attention to this fee structure so you know how
much you will be paying before you invest.
Class A
If you select Class A shares, you may pay a front-end sales charge of up to
4.75%. This charge is deducted from your investment before it is invested. The
actual charge depends on the amount invested, as shown below:
As a % of As a % Dealer
Your NAV excluding of your commission
Investment sales charge investment as a % of NAV
Up to $49,999 4.75% 4.99% 4.25%
$50,000-$99,999 4.50% 4.71% 4.25%
$100,000-$249,999 3.75% 3.90% 3.25%
$250,000-$499,999 2.50% 2.56% 2.00%
$500,000-$999,999 2.00% 2.04% 1.75%
$1,000,000 and over 0% 0% 1.00% of the amount
invested up to $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.
Although no front-end sales charge applies to purchases of $1,000,000 and over,
you will pay a 1% deferred sales charge if you redeem any such shares within
thirteen months of purchase.
Two ways you can reduce your Class A sales charges:
1. Rights of Accumulation allow you to combine your investment with all existing
investments in all your Evergreen Fund accounts when determining whether you
meet the threshold for a reduced Class A sales charge.
2. Letter of Intent. If you agree to purchase at least $50,000 over a 13-month
period, you pay the same sales charge as if you had invested the full amount
all at once. The Fund will hold a certain portion of your investment in
escrow until your commitment is met.
Contact your broker or the Evergreen Service Company at 1-800-343-2898 if you
think you may qualify for either of these services.
Each Fund may also sell Class A shares at net asset value without any initial or
contingent sales charge to the Directors, Trustees, officers and employees of
the Fund and the advisory affiliates of First Union Corporation, and to members
of their immediate families, to registered representatives of firms with dealer
agreements with Evergreen Distributor, Inc., and to a bank or trust company
acting as trustee for a single account.
Class B
If you select Class B shares, you do not pay a front-end sales charge, so the
entire amount of your purchase is invested in the Fund. However, your shares are
subject to an additional expense, known as the 12b-1 fee. In addition, you may
pay a deferred sales charge if you redeem your shares within six years after the
month of purchase. The amount of the deferred sales charge depends on the length
of time the shares are held, as shown below:
<TABLE>
<CAPTION>
Time Held Contingent Deferred
Sales Charge
<S> <C>
Month of Purchase + First 12 Month Period 5.00%
Month of Purchase + Second 12 Month Period 4.00%
Month of Purchase + Third 12 Month Period 3.00%
Month of Purchase + Fourth 12 Month Period 3.00%
Month of Purchase + Fifth 12 Month Period 2.00%
Month of Purchase + Sixth 12 Month Period 1.00%
Thereafter 0%
After 7 Years Converts to Class A
Dealer Allowance 4.00%
</TABLE>
The deferred sales charge percentage is applied to the value of the shares when
purchased or when redeemed, whichever is less. No deferred sales charge is paid
on shares purchased through dividend or capital gain reinvestments or on any
gain in the value of your shares.
Class C
Class C Shares are similar to Class B Shares, except the deferred sales charge
is less and only applies if shares are redeemed within the first year after the
month of purchase. Also, these shares do not convert to Class A shares and so
the higher 12b-1 fee continues for the life of the account.
<TABLE>
<CAPTION>
Time Held Contingent Deferred
Sales Charge
<S> <C>
Month of Purchase + Less Than 1 Year 1.00%
Month of Purchase + 1 Year or More 0%
</TABLE>
20 DOMESTIC GROWTH FUNDS
<PAGE>
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EVERGREEN
- --------------------------------------------------------------------------------
Waiver of Class B or Class C Deferred Sales Charges
You will not be assessed a deferred sales charge for Class B or Class C shares
if you redeem shares in the following situations:
. When the shares were purchased through reinvestment of dividends/capital gains
. Death or disability
. Lump-sum distribution from a 401(k) plan or other benefit plan qualified under
ERISA
. Automatic IRA withdrawals if your age is at least 59 1/2
. Automatic withdrawals of up to 1.0% of the account balance per month
. Loan proceeds and financial hardship distributions from a retirement plan
. Returns of excess contributions or excess deferral amounts made to a
retirement plan participant
DOMESTIC GROWTH FUNDS 21
<PAGE>
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EVERGREEN
- --------------------------------------------------------------------------------
HOW TO BUY SHARES
Evergreen Funds' low investment minimums make investing easy. Once you decide on
an amount and a share class, simply fill out an application and send in your
payment, or talk to your investment professional.
Minimum Investments
Initial Additional
Regular Accounts $1,000 None
IRAs $250 None
Systematic Investment Plan $50 $25
<TABLE>
<CAPTION>
Method Opening an Account Adding to an Account
<S> <C> <C>
By Mail or . Complete and sign the account application. . Make your check payable to Evergreen Funds.
through an . Make the check payable to Evergreen Funds. . Write a note specifying:
Investment . Mail the application and your check to the address below: - the Fund name
Professional Evergreen Service Company Overnight Address: - share class
P.O. Box 2121 Evergreen Service Company - your account number
Boston, MA 02106-2121 200 Berkeley St. - the name(s) in which the account is
Boston, MA 02116-5039 . Mail to the address below or deliver to your
. Or deliver them to your investment representative (provided investment representative.
he or she has a broker-dealer arrangement with Evergreen
Distributor, Inc.)
By Phone . Call 1-800-343-2898 to set up an account number and get . Call the Evergreen Express Line at
wiring instructions (call before 12 noon if you want wired 1-800-346-3858 24 hours a day or
funds to be credited that day). 1-800-343-2898 between 8 a.m. and 6 p.m.
. Instruct your bank to wire or transfer your purchase (they Eastern time, on any business day.
may charge a wiring fee). . If your bank account is set up on file, you
. Complete the account application and mail to: can request either:
Evergreen Service Company Overnight Address: - Federal Funds Wire (offers immediate access
P.O. Box 2121 Evergreen Service Company to funds) or
Boston, MA 02106-2121 200 Berkeley St. - Electronic transfer through the Automated
Boston, MA 02116-5039 Clearing House which avoids wiring fees.
. Wires received after 4:00 p.m. Eastern time on market
trading days will receive the next market day's closing
price.
By Exchange . You can make an additional investment by exchange from an existing Evergreen Funds account by contacting your
investment representative or calling the Evergreen Express Line at 1-800-346-3858.*
. You can only exchange shares within the same class.
. There is no sales charge or redemption fee when exchanging funds within the Evergreen Funds family.
. Orders placed before 4 p.m. Eastern time on market trading days will receive that day's closing share price (if
not, you will receive the next market day's closing price).
. Exchanges are limited to three per calendar quarter, and five per calendar year.
. Exchanges between accounts which do not have identical ownership must be made in writing with a signature
guarantee (see below).
Systematic . You can transfer money automatically from your bank account . To establish automatic investing for an
Investment into your Fund on a monthly basis. existing account, call 1-800-343-2898 for an
Plan (SIP) . Initial investment minimum is $50 if you invest at least $25 application.
per month with this service. . The minimum is $25 per month or $75 per
. To enroll, check off the box on the account application and quarter.
provide: . You can also establish an investing program
- your bank account information through direct deposit from your paycheck.
- the amount and date of your monthly investment. Call 1-800-343-2898 for details.
</TABLE>
* Once you have authorized either the telephone exchange or redemption service,
anyone with a Personal Identification Number (PIN) and the required account
information (including your broker) can request a telephone transaction in your
account. All calls are recorded or monitored for verification, recordkeeping and
quality-assurance purposes. The Evergreen Funds reserve the right to terminate
the exchange privilege of any shareholder who exceeds the listed maximum number
of exchanges, as well as to reject any large dollar exchange if placing it
would, in the judgment of the portfolio manager, adversely affect the price of
the Fund.
22 DOMESTIC GROWTH FUNDS
<PAGE>
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EVERGREEN
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
We offer you several convenient ways to redeem your shares in any of the
Evergreen Funds:
Methods Requirements
Call Us . Call the Evergreen Express Line at 1-800-346-3858 24 hours
a day or 1-800-343-2898 between 8 a.m. and 6 p.m.
Eastern time, on any business day.
. This service must be authorized ahead of time, and is only
available for regular accounts.*
. All authorized requests made before 4 p.m. Eastern time on
market trading days will be processed at that day's closing
price. Requests after 4 p.m. will be processed the
following business day.
. We can either:
- wire the proceeds into your bank account (service charges
may apply)
- electronically transmit the proceeds into your bank
account via the Automated Clearing House service
- mail you a check.
. All telephone calls are recorded for your protection. We
are not responsible for acting on telephone orders we
believe are genuine.
. See exceptions list below for requests that must be made in
writing.
Write Us . You can mail a redemption request to:
Evergreen Service Company Overnight Address:
P.O. Box 2121 Evergreen Service Company
Boston, MA 02106-2121 200 Berkeley St.
Boston, MA 02116-5039
. Your letter of instructions must:
- list the Fund name and the account number
- indicate the number of shares or dollar value you wish to
redeem
- be signed by the registered owner(s).
. See exceptions list below for requests that must be
signature guaranteed.
. To redeem from an IRA or other retirement account, call
1-800-346-3858 for a special application.
Sell Your . You may also redeem your shares through participating
Shares in broker-dealers by delivering a letter as described above to
Person your broker-dealer.
. A fee may be charged for this service
Systematic . You can transfer money automatically from your Fund account
Withdrawal on a monthly or quarterly basis -- without redemption fees.
Plan (SWP) . The withdrawal can be mailed to you, or deposited directly
to your bank account.
. The minimum is $75 per month.
. The maximum is 1% of your account per month or 3% per
quarter.
. To enroll, call 1-800-343-2898 for an application.
Timing of Proceeds
Normally, we will send your redemption proceeds on the next business day after
we receive your request; however, we reserve the right to wait up to seven
business days to redeem any investments made by check and five business days for
investments made by Automated Clearing House transfer.
We also reserve the right to redeem in kind by paying you the proceeds of a
redemption in securities rather than in cash, and to redeem the remaining amount
in the account if your redemption brings the account balance below the initial
minimum of $1,000.
Exceptions: Redemption Requests That Require A Signature Guarantee
To protect you and Evergreen Funds against fraud, certain redemption requests
must be made in writing with your signature guaranteed. A signature guarantee
can be obtained at most banks and securities dealers. A notary public is not
authorized to provide a signature guarantee. The following circumstances require
signature guarantees:
. You are redeeming more than $50,000
. You want the proceeds transmitted to a bank account not listed on the account
. You want the proceeds payable to anyone other than the registered owner(s) of
the account
. Either your address or the address of your bank account has been changed
within 30 days
. The account is registered in the name of a fiduciary corporation or any other
organization.
In these cases, additional documentation is required:
corporate accounts: certified copy of corporate resolution
fiduciary accounts: copy of the power of attorney or other governing document
Who Can Provide A Signature Guarantee:
. Commercial Bank
. Trust Company
. Savings Association
. Credit Union
. Member of a U.S. stock exchange
DOMESTIC GROWTH FUNDS 23
<PAGE>
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EVERGREEN
- --------------------------------------------------------------------------------
OTHER SERVICES
Evergreen Express Line
Use our automated, 24-hour service to check the value of your investment in a
Fund; purchase, redeem or exchange Fund shares; find a Fund's price, yield or
total return; order a statement or duplicate tax form; or hear market commentary
from Evergreen portfolio managers.
Automatic Reinvestment of Dividends
For the convenience of investors, all dividends and capital gains distributions
are automatically reinvested, unless you request otherwise. Distributions can be
made by check or electronic transfer through the Automated Clearing House to
your bank account. The details of your dividends and other distributions will be
included on your statement.
Payroll Deduction
If you want to invest automatically through your paycheck, call us to find out
how you can set up direct payroll deductions. The amounts deducted will be
invested in your Fund account using the Electronic Funds Transfer System. We
will provide the Fund account number. Your payroll department will let you know
the date of the pay period when your investment begins.
Telephone Investment Plan
You may make additional investments electronically in an existing Fund account
at amounts of not less than $100 or more than $10,000 per investment. Telephone
requests received by 4:00 p.m. Eastern time will be invested the day the request
is received.
Dividend Exchange
You may elect on the application to reinvest capital gains and/or dividends
earned in one Evergreen Fund into an existing account in another Evergreen Fund
in the same share class -- automatically. Please indicate on the application the
Evergreen Fund(s) into which you want to invest the distributions.
Reinvestment Privileges
Under certain circumstances, shareholders may, within one year of redemption,
reinstate their accounts at the current price (net asset value).
THE TAX CONSEQUENCES OF INVESTING IN THE FUNDS
You may be taxed in two ways:
. On Fund distributions (capital gains and dividends)
. On any profit you make when you sell any or all of your shares.
Fund Distributions
A mutual fund passes along to all of its shareholders the net income or profits
it receives from its investments. The shareholders of the fund then pay any
taxes due, whether they receive these distributions in cash or elect to have
them reinvested. The Fund distributes two types of taxable income to you:
. Dividends. The Fund pays either a monthly, quarterly or yearly dividend from
the dividends, interest and other income on the securities in which it
invests. The frequency of dividends for each particular Evergreen Domestic
Growth Fund is listed under the Fund's Investment Strategy section in the
summary of each Fund previously presented.
. Capital Gains. When a mutual fund sells a security it owns for a profit, the
result is a capital gain. Evergreen Domestic Growth Funds generally distribute
capital gains at least once a year, near the end of the calendar year.
Short-term capital gains reflect securities held by the Fund for a year or
less and are considered ordinary income just like dividends. Profits on
securities held longer than 12 months are considered long-term capital gains
and are taxed at a special tax rate (20% for most taxpayers, on sales made
after January 1, 1998).
Dividend and Capital Gain Reinvestment
Unless you choose otherwise on the account application, all dividend and capital
gain payments will be reinvested to buy additional shares. Distribution checks
that are returned and distribution checks that are uncashed when the shareholder
has failed to respond to mailings from the shareholder servicing agent will
automatically be reinvested to buy additional shares.
No interest will accrue on amounts represented by uncashed distribution or
redemption checks.
We will send you a statement each January with the federal tax status of
dividends and distributions paid by each Fund during the previous calendar year.
24 DOMESTIC GROWTH FUNDS
<PAGE>
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EVERGREEN
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Profits You Realize When You Redeem Shares
When you sell shares in a mutual fund, whether by redeeming or exchanging, you
have created a taxable event. You must report any gain or loss on your tax
return unless the transaction was entered into by a tax-deferred retirement plan
or occurred in a money market fund. It is your responsibility to keep accurate
records of your mutual fund transactions. You will need this information when
you file your income tax return, since you must report any capital gains or
losses you incur when you sell shares. Remember, an exchange is a purchase and a
sale for tax purposes.
Tax Reporting
Evergreen Service Company provides you with a tax statement of your dividend and
capital gains distributions for each calendar year on Form 1099 DIV. Proceeds
from a sale are reported on Form 1099B. You must report these on your tax
return. Since the IRS receives a copy as well, you could pay a penalty if you
neglect to report them.
Evergreen Service Company will send you a tax information guide each year during
tax season, which may include a cost basis statement detailing the gain or loss
on taxable transactions you had during the year. Please consult your own tax
advisor for further information regarding the federal, state and local tax
consequences of an investment in the Funds.
Retirement Plans
You may invest in each Fund through various retirement plans, including IRAs,
401(k) plans, Simplified Employee Plans (SEPs), IRAs, 403(b) plans, 457 plans
and others. For special rules concerning these plans, including applications,
restrictions, tax advantages, and potential sales charge waivers, contact your
broker-dealer. To determine if a retirement plan may be appropriate for you,
consult your tax advisor.
FEES AND EXPENSES OF THE FUNDS
Every mutual fund has fees and expenses that are assessed either directly or
indirectly. This section describes each of those fees.
Management Fee
The management fee pays for the normal expenses of managing the fund, including
portfolio manager salaries, research costs, corporate overhead expenses and
related expenses.
12b-1 Fee
The Trustees of the Evergreen Funds have approved a policy to assess 12b-1 fees
for Class A, Class B and Class C shares. These fees increase the cost of your
investment. The purpose of the 12b-1 fee is to promote the sale of more shares
of the Funds to the public. The Funds might use this fee for advertising and
marketing and as a "service fee" to the broker-dealer for additional shareholder
services.
Other Expenses
Other expenses include miscellaneous fees from outside service providers. These
may include legal, audit, custodial and safekeeping fees, the printing and
mailing of reports and statements, automatic reinvestment of distributions and
other conveniences for which the shareholder pays no transaction fees.
Total Fund Operating Expenses
The total cost of running the Fund is called the expense ratio. As a
shareholder, you are not charged these fees directly; instead they are taken out
before the Fund's net asset value is calculated, and are expressed as a
percentage of the Fund's average daily net assets. The effect of these fees is
reflected in the performance results for that share class. Because these fees
are "invisible," investors should examine them closely in the prospectus,
especially when comparing one fund with another fund in the same investment
category. There are three things to remember about expense ratios: 1) your total
return in the Fund is reduced in direct proportion to the fees; 2) expense
ratios can vary greatly between funds and fund families, from under 0.25% to
over 3.0%; and 3) a Fund's advisor may waive a portion of the Fund's expenses
for a period of time, reducing its expense ratio.
DOMESTIC GROWTH FUNDS 25
<PAGE>
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EVERGREEN
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
This section looks in detail at the results for one share in each share
class of the Funds--how much income it earned, how much of this income was
passed along as a distribution and how much the return was reduced by expenses.
The following tables have been derived from financial information audited by
PricewaterhouseCoopers LLP: Evergreen Fund for each fiscal year or period shown
below; Micro Cap Fund for each fiscal year ended September 30, 1998 through
1996; Aggressive Growth Fund for each fiscal year or period ended September 30,
1998 through 1995; and Stock Selector Fund for the fiscal period ended September
30, 1998. The following tables have been derived from financial information
audited by KPMG Peat Marwick LLP: Omega Fund,
- --------------------------------------------------------------------------------
EVERGREEN FUND CLASS A
<TABLE>
<CAPTION>
Year Ended September 30,
--------------------------------------
1998 1997 1996 1995*
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of year $ 22.96 $ 17.64 $ 15.55 $ 11.97
======= ======= ======= =======
....................................................................................
Income from investment operations
Net investment income 0.06# 0.11# 0.12 0.01
....................................................................................
Net realized and unrealized gains
or losses on securities (1.31) 5.71 2.61 3.57
------- ------- ------- -------
....................................................................................
Total from investment operations (1.25) 5.82 2.73 3.58
------- ------- ------- -------
....................................................................................
Less distributions
From net investment income (0.10) (0.09) (0.06) 0
....................................................................................
From net realized gain on securities (0.50) (0.41) (0.58) 0
------- ------- ------- -------
....................................................................................
Total distributions (0.60) (0.50) (0.64) 0
------- ------- ------- -------
....................................................................................
Net asset value, end of year $ 21.11 $ 22.96 $ 17.64 $ 15.55
======= ======= ======= =======
....................................................................................
Total Return+ (5.59%) 33.72% 18.07% 29.91%
....................................................................................
Ratios/supplemental data
Net assets, end of year (millions) $ 183 $ 161 $ 87 $ 29
....................................................................................
Ratios to average net assets:
Total expenses 1.44% 1.40% 1.45% 1.70%++
....................................................................................
Net investment income 0.24% 0.58% 0.63% 0.13%++
....................................................................................
Portfolio turnover rate 7% 12% 15% 19%
....................................................................................
</TABLE>
+ Excluding sales charges.
++ Annualized.
- --------------------------------------------------------------------------------
MICRO CAP FUND CLASS A
<TABLE>
<CAPTION>
Year Ended September 30,
-------------------------------------
1998 1997 1996 1995*
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of year $ 26.68 $ 17.31 $ 18.41 $ 15.76
===== ======= ======= =====
....................................................................................
Income from investment operations
Net investment income (0.24)# (0.15) (0.10) (0.10)
....................................................................................
Net realized and unrealized gains
or losses on securities (5.17) 9.52 (0.44) 2.75
-------- ------- -------- -------
....................................................................................
Total from investment operations (5.41) 9.37 (0.54) 2.65
-------- ------- -------- -------
....................................................................................
Less distributions
From net realized gain on securities (1.39) 0 (0.56) 0
-------- ------- -------- -------
....................................................................................
Total distributions (1.39) 0 (0.56) 0
-------- ------- -------- -------
....................................................................................
Net asset value, end of year $ 19.88 $ 26.68 $ 17.31 $ 18.41
======== ======= ======== =======
....................................................................................
Total Return+ (21.49%) 54.13% (2.90%) 16.81%
....................................................................................
Ratios/supplemental data
Net assets, end of year (thousands) $ 4,741 $ 2,438 $ 903 $ 1,089
....................................................................................
Ratios to average net assets:
Total expenses 1.64% 1.79% 1.73% 1.51%++
....................................................................................
Interest expense 0.03% 0.02% 0.02% N/A
....................................................................................
Net investment income (0.95%) (0.73%) (0.52%) (1.03%)++
....................................................................................
Portfolio turnover rate 47% 59% 160% 84%
....................................................................................
</TABLE>
+ Excluding sales charges.
++ Annualized.
26 DOMESTIC GROWTH FUNDS
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
Small Company Growth Fund, Strategic Growth Fund and Tax Strategic Equity
Fund. The information in the tables for Stock Selector Fund (formerly CoreFunds,
Inc. Core Equity Fund) for the periods ended June 30, 1996 through 1998
has been audited by Ernst & Young LLP, indpendent auditors. For a more complete
picture of the Funds' financial statements, please see the Funds' Annual Report
as well as the Statement of Additional Information.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B CLASS C
Year Ended September 30, Year Ended September 30,
---------------------------------------- ------------------------------------
1998 1997 1996 1995* 1998 1997 1996 1995*
- ----------------------------------------------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$22.69 $17.49 $15.48 $11.97 $22.66 $17.47 $15.48 $11.97
====== ====== ====== ====== ====== ====== ====== ======
............................................... ...........................................
(0.12)# (0.03)# (0.03) (0.02) (0.11)# (0.04)# 0 (0.01)
............................................... ...........................................
(1.25) 5.64 2.64 3.53 (1.26) 5.64 2.61 3.52
------ ------ ------ ------ ------ ------ ------ ------
............................................... ...........................................
(1.37) 5.61 2.61 3.51 (1.37) 5.60 2.61 3.51
------ ------ ------ ------ ------ ------ ------ ------
............................................... ...........................................
0 0 (0.02) 0 0 0 (0.04) 0
............................................... ...........................................
(0.50) (0.41) (0.58) 0 (0.50) (0.41) (0.58) 0
------ ------ ------ ------ ------ ------ ------ ------
............................................... ...........................................
(0.50) (0.41) (0.60) 0 (0.50) (0.41) (0.62) 0
------ ------ ------ ------ ------ ------ ------ ------
............................................... ...........................................
$20.82 $22.69 $17.49 $15.48 $20.79 $22.66 $17.47 $15.48
====== ====== ====== ====== ====== ====== ====== ======
............................................... ...........................................
(6.18%) 32.69% 17.29% 29.32% (6.19%) 32.67% 17.29% 29.32%
............................................... ...........................................
$624 $503 $254 $74 $13 $9 $6 $2
............................................... ...........................................
2.19% 2.15% 2.18% 2.32%++ 2.19% 2.16% 2.14% 2.12%++
............................................... ...........................................
(0.50%) (0.16%) (0.10%) (0.48%)++ (0.50%) (0.18%) (0.07%) (0.31%)++
............................................... ...........................................
7% 12% 15% 19% 7% 12% 15% 19%
............................................... ...........................................
</TABLE>
* For the period from January 3, 1995 (commencement of class operations) to
September 30, 1995.
# Net investment income is based on average shares outstanding during the
period.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B CLASS C
Year Ended September 30, Year Ended September 30,
---------------------------------------- ------------------------------------
1998 1997 1996 1995* 1998 1997 1996 1995*
- ---------------------------------------------- ------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$26.14 $17.07 $18.30 $15.76 $26.16 $17.09 $18.31 $15.76
====== ====== ====== ====== ====== ====== ====== ======
.............................................. ..........................................
(0.42)# (0.28)# (0.25) (0.20) (0.43)# (0.25)# (0.35) (0.20)
.............................................. ..........................................
(5.02) 9.35 (0.42) 2.74 (5.01) 9.32 (0.31) 2.75
- ------ ------ ------ ------ ------ ------ ------ ------
.............................................. ..........................................
(5.44) 9.07 (0.67) 2.54 (5.44) 9.07 (0.66) 2.55
- ------ ------ ------ ------ ------ ------ ------ ------
.............................................. ..........................................
(1.39) 0 (0.56) 0 (1.39) 0 (0.56) 0
- ------ ------ ------ ------ ------ ------ ------ ------
.............................................. ..........................................
(1.39) 0 (0.56) 0 (1.39) 0 (0.33) 0
- ------ ------ ------ ------ ------ ------ ------ ------
.............................................. ..........................................
$19.31 $26.14 $17.07 $18.30 $19.33 $26.16 $17.09 $18.31
====== ====== ====== ====== ====== ====== ====== ======
.............................................. ..........................................
(22.07%) 53.13% (3.64%) 16.12% (22.05%) 53.07% (3.58%) 16.18%
.............................................. ..........................................
$4,236 $1,713 $1,461 $2,020 $3,093 $261 $27 $62
.............................................. ..........................................
2.38% 2.59% 2.47% 2.26%++ 2.39% 2.56% 2.44% 2.25%++
.............................................. ..........................................
0.03% 0.02% 0.02% N/A 0.03% 0.02% 0.02% N/A
.............................................. ..........................................
(1.70%) (1.44%) (1.28%) (1.77%)++ (1.71%) (1.50%) (1.35%) (1.76%)++
.............................................. ..........................................
47% 59% 160% 84% 47% 59% 160% 84%
.............................................. ..........................................
</TABLE>
* For the period from January 3, 1995 (commencement of class operations) to
September 30, 1995.
# Net investment income is based on average shares outstanding during the
period.
DOMESTIC GROWTH FUNDS 27
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH FUND CLASS A
Year Ended September 30, Year Ended October 31,
--------------------------------------------- ----------------------
1998 1997 1996 1995*(a) 1994(a) 1993(a)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $23.48 $21.04 $17.37 $13.85 $14.44 $11.76
====== ====== ====== ====== ====== ======
.................................................................................................................................
Income from investment operations
Net investment income (0.25)# (0.21)# (0.15) (0.16) (0.13)# (0.12)#
.................................................................................................................................
Net realized and unrealized gains or losses
on securities (1.12) 2.65 4.46 3.68 (0.22) 3.06
------ ------ ------ ------ ------ ------
.................................................................................................................................
Total from investment operations (1.37) 2.44 4.31 3.52 (0.35) 2.94
------ ------ ------ ------ ------ ------
.................................................................................................................................
Less distributions
From net realized gain on securities (0.85) 0 (0.64) 0 (0.24) (0.26)
------ ------ ------ ------ ------ ------
.................................................................................................................................
Total distributions (0.85) 0 (0.64) 0 (0.24) (0.26)
------ ------ ------ ------ ------ ------
.................................................................................................................................
Net asset value, end of year $21.26 $23.48 $21.04 $17.37 $13.85 $14.44
====== ====== ====== ====== ====== ======
.................................................................................................................................
Total Return+ (5.93%) 11.60% 25.62% 25.42% (2.42%) 25.31%
.................................................................................................................................
Ratios/supplemental data
Net assets, end of year (thousands) $137,776 $173,982 $96,608 $70,858 $64,635 $58,053
.................................................................................................................................
Ratios to average net assets:
Total expenses 1.33% 1.26% 1.22% 1.47%++ 1.25% 1.31%
.................................................................................................................................
Net investment income (1.14%) (1.05%) (0.86%) (1.12%)++ (0.92%) (0.92%)
.................................................................................................................................
Portfolio turnover rate 22% 56% 33% 31% 59% 48%
.................................................................................................................................
</TABLE>
+ Excluding sales charges.
++Annualized.
* For the eleven-month period ended September 30, 1995. The fund changed its
fiscal year end from October 31 to September 30, effective September 30, 1995.
**For the period from July 7, 1995 (commencement of class operations) to
September 30, 1995.
# Net investment income is based on average shares outstanding during the
period.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OMEGA FUND CLASS A
Year Ended September 30, Year Ended December 31,
------------------------ ----------------------------------------
1998 1997* 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $22.69 $19.52 $19.56 $15.54 $17.11 $15.84
====== ====== ====== ====== ====== ======
.................................................................................................................................
Income from investment operations
Net investment income (0.09)# (0.03)# (0.06) 0 0.04 (0.07)
.................................................................................................................................
Net realized and unrealized gains or losses on securities 1.03 4.05 2.15 5.58 (1.00) 3.07
------ ------ ------ ------ ------ ------
.................................................................................................................................
Total from investment operations 0.94 4.02 2.09 5.58 (0.96) 3.00
------ ------ ------ ------ ------ ------
.................................................................................................................................
Less distributions
From net realized gain on securities (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 year $21.50 $22.69 $19.52 $19.56 $15.54 $17.11
====== ====== ====== ====== ====== ======
.................................................................................................................................
Total Return+ 4.43% 21.45% 11.31% 36.94% (5.66%) 19.33%
.................................................................................................................................
Ratios/supplemental data
Net assets, end of year (thousands) $156,220 $162,847 $154,825 $135,079 $99,569 $90,404
.................................................................................................................................
Ratios to average net assets:
Total expenses 1.32% 1.32%++ 1.33% 1.38% 1.41% 1.51%
.................................................................................................................................
Net investment income (0.38%) (0.20%)++ (0.29%) 0.00% 0.27% (0.48%)
.................................................................................................................................
Portfolio turnover rate 159% 76% 173% 159% 137% 162%
.................................................................................................................................
</TABLE>
+ Excluding sales charges.
++ Annualized.
28 Domestic Growth funds
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B CLASS C
Year Ended September 30, Year Ended September 30,
---------------------------------------- ------------------------------------
1998 1997 1996 1995** 1998 1997 1996 1995*
- ----------------------------------------------- ------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$23.18 $20.89 $17.35 $15.82 $23.16 $20.88 $17.31 $16.42
====== ====== ====== ====== ====== ====== ====== ======
............................................... ..........................................
(0.41)# (0.37)# (0.16) (0.03) (0.41)# (0.36)# (0.15) (0.01)
------ ------ ------ ------ ------ ------ ------ ------
............................................... ..........................................
(1.14) 2.66 4.34 1.56 (1.15) 2.64 4.36 0.90
------ ------ ------ ------ ------ ------ ------ ------
............................................... ..........................................
(1.55) 2.29 4.18 1.53 (1.56) 2.28 4.21 0.89
------ ------ ------ ------ ------ ------ ------ ------
(0.85) 0 (0.64) 0 (0.85) 0 (0.64) 0
------ ------ ------ ------ ------ ------ ------ ------
............................................... ..........................................
(0.85) 0 (0.64) 0 (0.85) 0 (0.64) 0
------ ------ ------ ------ ------ ------ ------ ------
............................................... ..........................................
$20.78 $23.18 $20.89 $17.35 $20.75 $23.16 $20.88 $17.31
====== ====== ====== ====== ====== ====== ====== ======
............................................... ..........................................
(6.82%) 10.96% 24.88% 9.67% (6.87%) 10.92% 25.11% 5.42%
............................................... ..........................................
$36,301 $41,167 $21,644 $2,858 $2,570 $3,992 $991 $416
............................................... ..........................................
2.08% 2.02% 1.98% 2.09%++ 2.08% 2.02% 1.96% 2.09%++
............................................... ..........................................
(1.88%) (1.80%) (1.60%) (1.71%)++ (1.88%) (1.80%) (1.57%) (1.51%)++
............................................... ..........................................
22% 56% 33% 31% 22% 56% 33% 31%
............................................... ..........................................
</TABLE>
(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 result of operations of ABT
Emerging Growth Fund prior to June 30, 1995.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B CLASS C
Year Ended September 30, Year Ended December 31, Year Ended September 30, Year Ended December 31,
- ------------------------ ---------------------------------------- ------------------------ --------------------------------------
1998 1997* 1996 1995 1994 1993** 1998 1997* 1996 1995 1994 1993**
- ----------------------------------------------------------------- --------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$21.71 $18.83 $19.10 $15.34 $17.06 $17.29 $21.74 $18.86 $19.13 $15.37 $17.09 $17.29
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
(0.25)# (0.15)# (0.17) (0.09) (0.06) (0.05) (0.25)# (0.15)# (0.18) (0.13) (0.07) (0.06)
................................................................. ..............................................................
0.99 3.88 2.03 5.41 (1.60) 1.55 1.01 3.88 2.04 5.45 (1.04) 1.59
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
................................................................. ..............................................................
0.74 3.73 1.86 5.32 (1.66) 1.50 0.76 3.73 1.86 5.32 (1.11) 1.53
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
(2.13) (0.85) (2.13) (1.56) (0.06) (1.73) (2.13) (0.85) (2.13) (1.56) (0.61) (1.73)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
................................................................. ..............................................................
(2.13) (0.85) (2.13) (1.56) (0.06) (1.73) (2.13) (0.85) (2.13) (1.56) (0.61) (1.73)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
................................................................. ..............................................................
$20.32 $21.71 $18.83 $19.10 $15.34 $17.06 $20.37 $21.74 $18.86 $19.13 $15.37 $17.09
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
................................................................. ..............................................................
3.64% 20.68% 10.31% 35.70% (6.57%) 9.02% 3.73% 20.65% 10.29% 35.62% (6.56%) 9.20%
................................................................. ..............................................................
$114,068 $110,349 $89,921 $71,636 $32,266 $7,423 $13,752 $16,067 $17,628 $13,963 $9,900 $3,620
................................................................. ..............................................................
2.10% 2.18%++ 2.20% 2.29% 2.30% 2.57%++ 2.11% 2.18%++ 2.21% 2.30% 2.30% 2.48%++
................................................................. ..............................................................
(1.16%) (1.06%)++ (1.15%) (0.94%) (0.58%) (1.73%)++ (1.16%) (1.05%)++ (1.17%) (0.91%) (0.63%) (1.64%)++
................................................................. ..............................................................
159% 76% 173% 159% 137% 162% 159% 76% 173% 159% 137% 162%
................................................................. ..............................................................
</TABLE>
* For the nine-month period ended September 30, 1997. The Fund changed its
fiscal year end from December 31 to September 30, effective September 30,
1997.
** For the period from August 2, 1993 (commencement of class operations) to
December 31, 1993.
# Net investment income is based on average shares outstanding during the
period.
DOMESTIC GROWTH FUNDS 29
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
SMALL COMPANY GROWTH FUND CLASS A
<TABLE>
<CAPTION>
Period Ended
September 30, 1998*
- --------------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period $7.75
=====
................................................................................
Income from investment operations
Net investment income (0.04)#
................................................................................
Net realized and unrealized gains or losses on securities (1.99)
-----
................................................................................
Total from investment operations (2.03)
-----
................................................................................
Less distributions
From net realized gain on securities 0
-----
................................................................................
Total distributions 0
-----
................................................................................
Net asset value, end of period $5.72
=====
................................................................................
Total Return+ (26.19%)
................................................................................
Ratios/supplemental data
Net assets, end of period (millions) $589
................................................................................
Ratios to average net assets:
Total expenses 1.15%++
................................................................................
Net investment income (0.50%)++
................................................................................
Portfolio turnover rate 97%
................................................................................
</TABLE>
+ Excluding sales charges.
++ Annualized.
- --------------------------------------------------------------------------------
STRATEGIC GROWTH FUND CLASS A
<TABLE>
<CAPTION>
Period Ended
September 30, 1998*
- --------------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period $9.12
=====
................................................................................
Income from investment operations
Net investment income 0.01#
................................................................................
Net realized and unrealized gains or losses on securities 0.54
.....................................................................----.......
Total from investment operations 0.55
.....................................................................----.......
Less distributions
Net investment income 0
................................................................................
From net realized gain on securities 0
-----
................................................................................
Total distributions 0
-----
................................................................................
Net asset, value end of period $9.67
=====
................................................................................
Total Return+ 6.03%
................................................................................
Ratios/supplemental data
Net assets, end of period (millions -A and B, thousands -C) $706
................................................................................
Ratios to average net assets:
Total expenses 1.10%++
................................................................................
Net investment income 0.08%++
................................................................................
Portfolio turnover rate 141%
................................................................................
</TABLE>
+ Excluding sales charges.
++ Annualized.
30 DOMESTIC GROWTH FUNDS
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B CLASS C
Year Ended September 30, Year Ended May 31,
- ------------------------ ----------------------------------------- Period Ended
1998 1997** 1997 1996 1995 1994 September 30, 1998*
- ------------------------------------------------------------------ -------------------
<S> <C> <C> <C> <C> <C> <C>
$9.44 $8.44 $10.35 $8.62 $7.64 $7.95 $7.73
===== ===== ====== ===== ===== ===== =====
.................................................................. ...................
(0.07)# (0.04)# (0.11) (0.13) (0.07) (0.12) (0.10)#
.................................................................. ...................
(2.90) 1.74 (0.78) 2.87 1.68 0.63 (1.93)
----- ----- ------ ----- ----- ----- -----
.................................................................. ...................
(2.97) 1.70 (0.89) 2.74 1.61 0.51 (2.03)
----- ----- ------ ----- ----- ----- -----
.................................................................. ...................
(0.78) (0.70) (1.02) (1.01) (0.63) (0.82) 0
----- ----- ------ ----- ----- ----- -----
.................................................................. ...................
(0.78) (0.70) (1.02) (1.01) (0.63) (0.82) 0
----- ----- ------ ----- ----- ----- -----
.................................................................. ...................
$5.69 $9.44 $8.44 $10.35 $8.62 $7.64 $5.70
===== ===== ====== ===== ===== ===== =====
.................................................................. ...................
(33.91%) 21.43% (8.61%) 33.03% 23.58% 6.84% (26.26%)
.................................................................. ...................
$200 $1,546 $1,407 $2,006 $1,460 $1,006 $4
.................................................................. ...................
1.36% 1.77%++ 1.75% 1.73% 1.78% 1.73% 1.90%++
.................................................................. ...................
(0.89%) (1.43%)++ (1.32%) (1.34%) (1.10%) (1.49%) (1.32%)++
.................................................................. ...................
97% 28% 48% 94% 38% 60% 97%
.................................................................. ...................
</TABLE>
* For the period from January 20, 1998 (commencement of class operations) to
September 30, 1998.
** For the four-month period ended September 30, 1997. The Fund changed its
fiscal year end from May 31 to September 30, effective September 30, 1997.
# Net investment income is based on average shares outstanding during the
period.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B CLASS C
Year Ended September 30, Year Ended October 31,
- ------------------------- ------------------------------------- Period Ended
1998 1997** 1996 1995 1994 1993 September 30, 1998*
- ---------------------------------------------------------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
$10.61 $8.68 $8.05 $7.54 $9.00 $7.60 $9.25
====== ===== ===== ===== ===== ===== =====
................................................................ ...................
(0.03) 0.01# (0.04) (0.02) 0 (0.06) (0.07)#
................................................................ ...................
0.39 2.96 1.04 1.13 0.23 1.89 0.45
------ ----- ----- ----- ----- ----- -----
................................................................ ...................
0.36 2.97 1.00 1.11 0.23 1.83 0.38
------ ----- ----- ----- ----- ----- -----
................................................................ ...................
(0.02) 0 (0.01) 0 0 (0.03) 0
................................................................ ...................
(1.32) (1.04) (0.36) (0.60) (1.69) (0.40) 0
------ ----- ----- ----- ----- ----- -----
................................................................ ...................
(1.34) (1.04) (0.37) (0.60) (1.69) (0.43) 0
------ ----- ----- ----- ----- ----- -----
................................................................ ...................
$9.63 $10.61 $8.68 $8.05 $7.54 $9.00 $9.63
====== ===== ===== ===== ===== ===== =====
................................................................ ...................
3.87% 37.74% 12.95% 15.05% 3.55% 24.97% 4.11%
................................................................ ...................
$130 $920 $497 $492 $417 $404 $453
................................................................ ...................
1.36% 1.19%++ 1.91% 2.01% 1.73% 1.83% 1.84%++
................................................................ ...................
(0.26%) 0.12%++ (0.48%) (0.25%) (0.17%) (0.57%) (0.80%)++
................................................................ ...................
141% 71% 156% 140% 68% 65% 141%
................................................................ ...................
</TABLE>
* For the period from January 20, 1998 (commencement of class operations) to
September 30, 1998.
** For the eleven-month period ended September 30, 1997. The Fund changed its
fiscal year end from October 31 to September 30, effective September 30,
1997.
# Net investment income is based on average shares outstanding during the
period.
DOMESTIC GROWTH FUNDS 31
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
TAX STRATEGIC EQUITY FUND CLASS A
<TABLE>
<CAPTION>
Period Ended
September 30, 1998*
- --------------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period $10.11
======
................................................................................
Income from investment operations
Net investment income 0.00+++
................................................................................
Net realized and unrealized gains on securities 0.54
------
................................................................................
Total from investment operations 0.54
------
................................................................................
Net asset value, end of period $10.65
======
................................................................................
Total Return+ 5.34%
................................................................................
Ratios/supplemental data
Net assets, end of period (thousands) $10
................................................................................
Ratios to average net assets:
Total expenses 1.54%++
................................................................................
Net investment income 0.43%++
................................................................................
Portfolio turnover rate 0%
................................................................................
</TABLE>
+ Excluding sales charges.
++ Annualized.
+++ Less than one cent per share.
* For the period from September 4, 1998 (commencement of Class A operations)
to September 30, 1998.
- --------------------------------------------------------------------------------
STOCK SELECTOR FUND CLASS A
<TABLE>
<CAPTION>
Period Ended October 31,
Period Ended Period Ended June 30, ------------------------
September 30, -------------------------------- Retail Class Prior Class
1998*** 1998(d) 1997(d) 1996*****++(d) 1995** 1994*
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $22.43 $21.13 $17.28 $17.08 $15.00 $15.39
====== ====== ====== ====== ====== ======
....................................................................................................................................
Income from investment operations
Net investment income (0)(a) (0.02) 0.07 0.12 0.18 0.11
....................................................................................................................................
Net realized and unrealized gains or losses on securities (4.09) 4.24 5.32 1.49 2.87 0.22
------ ------ ------ ------ ------ ------
....................................................................................................................................
Total from investment operations (4.09) 4.22 5.39 1.61 3.05 0.33
------ ------ ------ ------ ------ ------
....................................................................................................................................
Less distributions
From net investment income 0 0 (0.07) (0.11) (0.17) (0.11)
....................................................................................................................................
From net realized gain on securities 0 (2.92) (1.47) (1.30) (0.80) (0.61)
------ ------ ------ ------ ------ ------
....................................................................................................................................
Total distributions 0 (2.92) (1.54) (1.41) (0.97) (0.72)
------ ------ ------ ------ ------ ------
....................................................................................................................................
Net asset value, end of period $18.34 $22.43 $21.13 $17.28 $17.08 $15.00
====== ====== ====== ====== ====== ======
....................................................................................................................................
Total Return+ (18.23%) 21.54% 32.74% 19.11% 21.94% 2.21%
....................................................................................................................................
Ratios/supplemental data
Net assets, end of period (thousands) $15,910 $20,509 $16,043 $11,178 $6,591 $50,128
....................................................................................................................................
Ratios to average net assets:
Total expenses 1.18%++ 1.25% 1.23% 1.22%++ 1.34% 1.49%++
....................................................................................................................................
Net investment income (0.06%)++ (0.10%) 0.38% 0.89%++ 1.23% 0.75%++
....................................................................................................................................
Portfolio turnover rate 28% 61% 79% 114%(c) 119% 35%
....................................................................................................................................
</TABLE>
+ Excluding sales charges.
++ Annualized.
* For the period from March 15, 1994 (commencement of class operations) to
October 31, 1994.
** 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' ratio of expenses, net investment income, total return, and the
per share investment activities and distributions reflect this allocation.
32 DOMESTIC GROWTH FUNDS
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
STOCK SELECTOR FUND CLASS B
<TABLE>
<CAPTION>
Period Ended Period Ended
September 30, 1998*** June 30, 1998****(d)
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $22.33 $22.76(b)
====== ======
...............................................................................................
Income from investment operations
Net investment loss (0.03) (0.09)
...............................................................................................
Net realized and unrealized gains or losses on securities (4.07) 2.90
------ ------
...............................................................................................
Total from investment operations (4.10) 2.81
------ ------
...............................................................................................
Less distributions
From net investment income 0 0
...............................................................................................
From net realized gain on securities 0 (3.24)(b)
------ ------
...............................................................................................
Total distributions 0 (3.24)
------ ------
...............................................................................................
Net asset value, end of period $18.23 $22.33
====== ======
...............................................................................................
Total Return+ (18.36%) 14.38%
...............................................................................................
Ratios/supplemental data
Net assets, end of period (thousands) $413 $349
...............................................................................................
Ratios to average net assets:
Total expenses 1.94%++ 2.00%++
...............................................................................................
Net investment loss (0.76%)++ (0.85%)++
...............................................................................................
Portfolio turnover rate 28% 61%
...............................................................................................
</TABLE>
*** For the three-month period ended September 30, 1998. The Fund changed its
fiscal year end from June 30 to September 30, effective September 30,
1998.
**** For the period from November 7, 1997 (commencement of class operations) to
June 30, 1998.
***** The per share amount for the Fund for the year 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.
++ On April 15, 1996, the Conestoga Equity Fund was acquired by CoreFunds,
Inc. At that time the Retail Class Shares of the Fund were exchanged for
Class A Shares.
(a) Less than one cent per share.
(b) Amounts adjusted to reflect a reverse stock split which occurred on June
24, 1998.
(c) For the year ended June 30, 1996, transactions relating to the merger
were excluded from the calculation of the Portfolio turnover rate.
d) On July 24, 1998, CoreFund Core Equity Fund exchanged substantially all its
net assets to Evergreen Stock Selector Fund. As CoreFund Core Equity Fund is the
accounting survivor, its basis of accounting for assets and liabilities and its
operating results for the periods prior to July 24, 1998 have been carried
forward in these financial highlights.
DOMESTIC GROWTH FUNDS 33
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
OTHER FUND PRACTICES
The Funds may invest in futures and options. If a Fund invests in foreign
securities, it may also invest in foreign currencies. The Funds may also engage
in short sales. Such practices are used to hedge a Fund's portfolio to protect
against changes in interest rates and to adjust the portfolio's duration.
Although this is intended to increase returns, these practices may actually
reduce returns or increase volatility.
In addition, the Funds may borrow money and lend their securities. Borrowing is
a form of leverage, which may magnify a Fund's gain or loss. Lending securities
may cause the Fund to lose the opportunity to sell these securities at the most
desirable price and, therefore, lose money.
- --------------------------------------------------------------------------------
Please consult the Statement of Additional Information for more information
regarding these and other investment practices used by the Funds, including
risks.
- --------------------------------------------------------------------------------
34 DOMESTIC GROWTH FUNDS
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
Notes
DOMESTIC GROWTH FUNDS 35
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
Evergreen Funds
Money Market
Treasury Money Market Fund
Money Market Fund
Municipal Money Market Fund
Pennsylvania Municipal Money Market Fund
Florida Municipal Money Market Fund
New Jersey Municipal Money Market Fund
Municipal Bond
Short Intermediate Municipal Fund
High Grade Municipal Bond Fund
Municipal Bond Fund
California Municipal Bond Fund
Connecticut Municipal Bond Fund
Florida High Income Municipal Bond Fund
Florida Municipal Bond Fund
Georgia Municipal Bond Fund
Maryland Municipal Bond Fund
Massachusetts Municipal Bond Fund
Missouri Municipal Bond Fund
New Jersey Municipal Bond Fund
New York Municipal Bond Fund
North Carolina Municipal Bond Fund
Pennsylvania Municipal Bond Fund
South Carolina Municipal Bond Fund
Virginia Municipal Bond Fund
Income
Capital Preservation and Income Fund
Short Intermediate Bond Fund
Intermediate Term Government Securities Fund
Intermediate Term Bond Fund
U.S. Government Fund
Diversified Bond Fund
Strategic Income Fund
High Yield Bond Fund
Balanced
American Retirement Fund
Balanced Fund
Tax Strategic Foundation Fund
Foundation Fund
Growth & Income
Utility Fund
Income and Growth Fund
Fund for Total Return
Value Fund
Blue Chip Fund
Growth and Income Fund
Small Cap Equity Income Fund
Domestic Growth
Strategic Growth Fund
Stock Selector Fund
Evergreen Fund
Omega Fund
Small Company Growth Fund
Aggressive Growth Fund
Micro Cap Fund
Tax Strategic Equity Fund
Masters Fund
Global International
Global Leaders Fund
International Growth Fund
Global Opportunities Fund
Precious Metals Fund
Emerging Markets Growth Fund
Latin America Fund
Express Line
800.346.3858
Investor Services
800.343.2898
36 DOMESTIC GROWTH FUNDS
<PAGE>
- --------------------------------------------------------------------------------
QUICK REFERENCE GUIDE
- --------------------------------------------------------------------------------
1 Evergreen Express Line
Call 1-800-346-3858
24 hours a day to
. check your account
. order a statement
. get a Fund's current price, yield and total return
. buy, redeem or exchange Fund shares
2 Non-retirement account holders
Call 1-800-343-2898
Each business day, 8 a.m. to 6 p.m. Eastern time to
. buy, redeem or exchange shares
. order applications
. get assistance with your account
3 Information Line for Hearing and Speech
Impaired (TTY/TDD)
Call 1-800-343-2888
Each business day, 8 a.m. to 6 p.m.
Eastern time
4 Write us a letter
Evergreen Service Company
P.O. Box 2121
Boston, MA 02106-2121
. to buy, redeem or exchange shares
. to change the registration on your account
. for general correspondence
5 For express, registered or certified mail:
Evergreen Service Company
200 Berkeley Street
Boston, MA 02116-5039
6 Contact us on-line:
www.evergreen-funds.com
7 Regular communications you will receive:
Account Statements -- You will receive quarterly statements for each fund
you invest in.
Confirmation Notices -- We send a confirmation of any transaction you make
within five days of the transaction.
Annual and Semiannual reports -- You will receive a detailed financial
report on each Fund you invest in twice a year.
Tax Forms -- Each January you will receive any Fund tax information you
need to include in your tax returns as well as the Evergreen Tax
Information Guide.
Evergreen Events -- You will receive a periodic newsletter published
exclusively for Evergreen Funds' shareholders.
<PAGE>
For More Information About the
Evergreen Domestic Growth Funds, Ask for:
The Funds' most recent Annual or Semi-annual Report, which contains a complete
financial accounting for each Fund and a complete list of the Fund's holdings as
of a specific date, as well as commentary from the Fund's manager. This Report
discusses the market conditions and investment strategies that significantly
affected the Fund's performance during the most recent fiscal year or period.
The Statement of Additional Information (SAI), which contains more detailed
information about the policies and procedures of the Funds. The SAI has been
filed with the Securities and Exchange Commission (SEC) and its contents are
legally considered to be part of this prospectus.
For questions, other information, or to request a copy, without charge, of any
of the documents, call 1-800-343-2898 or ask your investment representative. We
will mail material within three business days.
Information about these Funds (including the SAI) is also available on the SEC's
Internet web site at http://www.sec.gov, or, for a duplication fee, by writing
the SEC Public Reference Section, Washington DC 20549-6009. This material can
also be reviewed and copied at the SEC's Public Reference Room in Washington,
DC. For more information, call the SEC at 1-800-SEC-0330.
Evergreen Distributor, Inc.
125 W. 55th Street
New York, New York 10019
(811-08413)
48811 536122 RV5
---------------
BULK RATE
U.S. POSTAGE
PAID
PERMIT NO. 19
HUDSON, MA
---------------
[LOGO OF EVERGREEN FUNDS(SM) APPEARS HERE]
201 South College St.
Charlotte, NC 28288
<PAGE>
[GRAPHIC APPEARS HERE]
Evergreen
Domestic Growth Funds
Evergreen Fund
Evergreen Micro Cap Fund
Evergreen Aggressive Growth Fund
Evergreen Omega Fund
Evergreen Small Company Growth Fund
Evergreen Stock Selector Fund
Evergreen Tax Strategic Equity Fund
Class Y
[LOGO OF EVERGREEN FUNDS(SM)
APPEARS HERE]
Prospectus, February 1, 1999
The Securities and Exchange Commission has not determined that the information
in this prospectus is accurate or complete, nor has it approved or disapproved
these securities. Anyone who tells you otherwise is committing a crime.
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FUND SUMMARIES:
<S> <C>
Evergreen Fund ............................................................ 2
Evergreen Micro Cap Fund .................................................. 4
Evergreen Aggressive Growth Fund .......................................... 6
Evergreen Omega Fund ...................................................... 8
Evergreen Small Company Growth Fund ....................................... 10
Evergreen Stock Selector Fund ............................................. 12
Evergreen Tax Strategic Equity Fund ....................................... 14
GENERAL INFORMATION:
The Funds' Investment Advisors ............................................ 16
The Funds' Portfolio Managers ............................................. 16
Calculating the Share Price ............................................... 17
How to Choose an Evergreen Fund ........................................... 17
Who Can Buy Shares ........................................................ 17
How to Buy Class Y Shares ................................................. 18
How to Redeem Shares ...................................................... 19
Other Services ............................................................ 20
The Tax Consequences of Investing in the Funds ............................ 20
Fees and Expenses of the Funds ............................................ 21
Financial Highlights ...................................................... 22
Other Fund Practices ...................................................... 27
</TABLE>
In general, Funds included in this prospectus seek to provide investors with
capital growth. These Funds tend to have more growth potential, risk and
volatility than less aggressive funds.
Fund Summaries Key
Each Fund's summary is organized around the following basic topics and
questions:
[GRAPHIC APPEARS HERE] INVESTMENT GOAL
What is the Fund's financial objective? You can find clarification on how the
Fund seeks to achieve its objective by looking at the Fund's strategy and
investment policies. The Fund's Board of Trustees can change the investment
objective without a shareholder vote.
[GRAPHIC APPEARS HERE] INVESTMENT STRATEGY
How does the Fund go about trying to meet its goals? What types of investments
does it contain? What style of investing and investment philosophy does it
follow? Does it have limits on the amount invested in any particular type of
security?
[GRAPHIC APPEARS HERE] RISK FACTORS
What are the specific risks for an investor in the Fund?
[GRAPHIC APPEARS HERE] PERFORMANCE
How well has the Fund performed in the past year? The past five years? The past
ten years?
[GRAPHIC APPEARS HERE] EXPENSES
How much does it cost to invest in the Fund? What is the difference between
sales charges and expenses?
<PAGE>
- --------------------------------------------------------------------------------
OVERVIEW
- --------------------------------------------------------------------------------
Domestic Growth Funds
typically rely on a combination of the following strategies:
. investing primarily in common stocks;
. investing in companies expected to provide capital appreciation; and
. selling a portfolio investment when the value of the investment reaches or
exceeds its estimated fair value, when the issuer's investment fundamentals
begin to deteriorate, when the investment no longer appears to meet the
Fund's investment objective, when the Fund must meet redemptions, or for
other reasons which the portfolio manager deems necessary.
may be appropriate for investors who:
. seek an investment expected to grow over time;
. can tolerate substantial volatility in the value of their investment.
Following this overview, you will find information on each Domestic Growth
Fund's specific investment strategies and risks.
................................................................................
Risk Factors for All Mutual Funds
Please remember that mutual fund investment shares are:
. not guaranteed to achieve their investment goal
. not insured, endorsed or guaranteed by the FDIC, a bank or any government
agency
. subject to investment risks, including possible loss of your original
investment
Like most investments, your investment in an Evergreen Domestic Growth Fund
could fluctuate significantly in value over time and could result in a loss of
money.
Here are the most important factors that may affect the value of your
investment:
Stock Market Risk
Your investment will be affected by general economic conditions such as
prevailing economic growth, inflation and interest rates. When economic growth
slows, or interest or inflation rates increase, securities tend to decline in
value. Such events could also cause companies to decrease the dividends they
pay. If these events were to occur, the value of and dividend yield and total
return earned on your investment would likely decline. Even if general economic
conditions do not change, your investment may decline in value if the particular
industries, issuers or sectors your Fund invests in do not perform well.
Interest Rate Risk
When interest rates go up, the value of debt securities and dividend-paying
stocks tends to fall. If your Fund invests a significant portion of its
portfolio in debt securities or dividend-paying stocks and interest rates rise,
then the value of your investment may decline. When interest rates go down,
interest earned by your Fund on its investments may also decline, which could
cause the Fund to reduce the dividends it pays.
Credit Risk
The value of a debt security is directly affected by the issuer's ability to
repay principal and pay interest on time. If your Fund invests in debt
securities then the value of your investment may decline if an issuer fails to
pay an obligation on a timely basis.
Foreign Investment Risk
A Fund's investment in non-U.S. securities could expose it to certain unique
risks of foreign investing. For example, political turmoil and economic
instability in the countries in which the Fund invests could adversely affect
the value of your investment. In addition, if the value of any foreign currency
in which the Fund's investments are denominated declines relative to the U.S.
dollar, the value of your investment in the Fund may decline as well. Certain
foreign countries have less developed and less regulated securities markets and
accounting systems than the U.S. This may make it harder to get accurate
information about a security or company, and increase the likelihood that an
investment will not perform as well as expected.
Small Company Risk
Your investment may be subject to special risks associated with investing in
securities issued by small companies. Smaller, less established companies tend
to be more dependent on individual managers and limited products and product
lines. Additionally, securities issued by small companies also tend to fluctuate
in value more dramatically than those of larger companies.
DOMESTIC GROWTH FUNDS 1
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
Evergreen Fund
FUND FACTS:
Goal:
. Capital Appreciation
Principal Investments:
. Common Stocks
. Convertible Securities
Class of Shares Offered in this Prospectus:
. Class Y
Investment Advisor:
. Evergreen Asset Management Corp.
Portfolio Managers:
. Stephen. A. Lieber
. Nola Maddox Falcone
NASDAQ Symbol:
EVRYX (Class Y)
Dividend Payment Schedule:
Annually
[GRAPHIC APPEARS HERE] INVESTMENT GOAL
The Fund seeks capital appreciation.
[GRAPHIC APPEARS HERE] INVESTMENT STRATEGY
The following supplements the investment strategies discussed in the "Overview"
on page 1.
The Fund invests primarily in the common stocks of companies with innovative and
entrepreneurial management and that exhibit sound financial business practices.
The Fund may invest in securities of relatively well-known and large companies
as well as small and medium-sized specialty companies. The Fund's managers seek
long-term gains from the companies in which the Fund invests.
The Fund may invest in high quality money market instruments in response to
adverse economic, political or market conditions. This strategy is inconsistent
with the Fund's principal investment strategy and investment goal, and if
employed could result in a lower return and loss of market opportunity.
[GRAPHIC APPEARS HERE] RISK FACTORS
Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 1 under the headings:
. Stock Market Risk
. Small Company Risk
2 DOMESTIC GROWTH FUNDS
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
[GRAPHIC APPEARS HERE] PERFORMANCE
The following charts show how the Fund has performed in the past. Past
performance is not an indication of future results.
The chart below shows the percentage gain or loss for Class Y shares of the Fund
in each of the last ten calendar years. It should give you a general idea of how
the Fund's return has varied from year-to-year. This graph includes the effects
of Fund expenses.
Year-by-Year Total Return for Class Y Shares (%)*
[BAR CHART APPEARS HERE]
1989 15.01
1990 -11.72
1991 40.05
1992 8.73
1993 6.27
1994 0.73
1995 37.19
1996 17.55
1997 30.34
1998 7.23
Best Quarter: 1st Quarter 1991 +19.63%*
Worst Quarter: 3rd Quarter 1990 -21.34%*
The next table lists the Fund's average year-by-year return for Class Y
shares over the past one, five and ten years and since inception (through
12/31/98). This table is intended to provide you with some indication of the
risks of investing in the Fund. At the bottom of the table you can compare this
performance with the Russell 2000 Index, which is an unmanaged index tracking
the performance of 2000 publicly-traded U.S. stocks. It is often used to
indicate the performance of smaller company stocks. The Russell 2000 Index is
not an actual investment.
Average Annual Total Return
(for the period ended 12/31/98)*
<TABLE>
<CAPTION>
Inception Performance
Date 1 year 5 year 10 year Since
of Class 10/15/71
<S> <C> <C> <C> <C> <C>
Class Y 10/15/71 7.23% 17.82% 14.07% 16.50%
Russell 2000 -2.55% 11.87% 12.92% 14.91%**
</TABLE>
*Returns reflect expense limits previously in effect, without which returns
would have been lower.
**Inception date of the index is 12/31/78. Performance is since that date.
[GRAPHIC APPEARS HERE] EXPENSES
This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.
Shareholder Fees (fees paid directly from your investment)
Shareholder Transaction Expenses Class Y
Maximum sales charge imposed on None
purchases (as a % of offering price)
Maximum deferred sales charge None
(as a % of either the redemption amount
or initial investment, whichever is lower)
Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses*
Class Y 0.89% None 0.29% 1.18%
* Actual for the fiscal year ended 9/30/98
The table below shows the total expenses you would pay on a $10,000 investment
over one-, three-, five- and ten-year periods. The example is intended to help
you compare the cost of investing in this Fund versus other mutual funds and is
for illustration only. The example assumes a 5% average annual return and that
you reinvest all of your dividends. Your actual costs may be higher or lower.
Example of Fund Expenses
After 1 year $120
After 3 years $375
After 5 years $649
After 10 years $1,432
DOMESTIC GROWTH FUNDS 3
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
Micro Cap Fund
FUND FACTS:
Goal:
. Capital Appreciation
Principal Investment:
. Small Cap Common Stocks
Class of Shares Offered in this Prospectus:
. Class Y
Investment Advisor:
. Evergreen Asset Management Corp.
Portfolio Managers:
. A committe including Stephen A. Liebar and Edwin A. Miska
NASDAQ Symbol:
EMCYX (Class Y)
Dividend Payment Schedule:
Annually
[GRAPHIC APPEARS HERE] INVESTMENT GOAL
The Fund seeks capital appreciation.
[GRAPHIC APPEARS HERE] INVESTMENT STRATEGY
The following supplements the investment strategies discussed in the "Overview"
on page 1.
The Fund invests primarily in common stocks of very small companies (generally
between $1 million and $150 million in market capitalization) which have a
relatively limited trading market (traded over-the-counter or on a regional
securities exchange). The Fund seeks companies with promising products or
services and the potential for rapid growth. The Fund's managers look for
investment opportunities not widely recognized by industry analysts due to the
small size of the companies and the resulting limited amounts of information on
the companies. The Fund focuses on investing in companies with high returns on
equity and consistent earnings growth.
The Fund may invest in high quality money market instruments in response to
adverse economic, political or market conditions. This strategy is inconsistent
with the Fund's principal investment strategy and investment goal, and if
employed could result in a lower return and loss of market opportunity.
[GRAPHIC APPEARS HERE] RISK FACTORS
Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 1 under the headings:
. Stock Market Risk
. Small Company Risk
In addition, your investment may be subject to special risks associated with
investing in securities issued by very small companies. Please note that the
investments in very small companies may accentuate the risks normally associated
with small company investing.
4 DOMESTIC GROWTH FUNDS
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
[GRAPHIC APPEARS HERE] PERFORMANCE
The following charts show how the Fund has performed in the past. Past
performance is not an indication of future results.
The chart below shows the percentage gain or loss for Class Y shares of the Fund
in each of the last ten calendar years. It should give you a general idea of how
the Fund's return has varied from year-to-year. This graph includes the effects
of Fund expenses.
Year-by-Year Total Return for Class Y Shares (%)*
[BAR CHART APPEARS HERE]
1989 20.89
1990 -10.42
1991 51.07
1992 10.13
1993 9.55
1994 -10.55
1995 10.38
1996 12.46
1997 47.59
1998 -22.10
Best Quarter: 1st Quarter 1991 +25.86%*
Worst Quarter: 3rd Quarter 1998 -23.85%*
The next table lists the Fund's average year-by-year return for Class Y
shares over the past one, five and ten years and since inception (through
12/31/98). This table is intended to provide you with some indication of the
risks of investing in the Fund. At the bottom of the table you can compare this
performance with the Russell 2000 Index, which is an unmanaged index tracking
the performance of 2000 publicly-traded U.S. stocks. It is often used to
indicate the performance of smaller company stocks. The Russell 2000 Index is
not an actual investment.
<TABLE>
<CAPTION>
Average Annual Total Return
(for the period ended 12/31/98)*
Inception Performance
Date 1 year 5 year 10 year Since
of Class 6/1/83
<S> <C> <C> <C> <C> <C>
Class Y 6/1/83 -22.10% 5.01% 9.68% 12.39%
Russell 2000 -2.55% 11.87% 12.92% 10.15%
*Returns reflect expense limits previously in effect, without which
returns would have been lower.
</TABLE>
[GRAPHIC APPEARS HERE] EXPENSES
This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.
Shareholder Fees (fees paid directly from your investment)
Shareholder Transaction Expenses Class Y
Maximum sales charge imposed on None
purchases (as a % of offering price)
Maximum deferred sales charge None
(as a % of either the redemption amount
or initial investment, whichever is lower)
Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses*
Class Y 1.00% None 0.39% 1.39%
* Estimated for the fiscal year ending 9/30/99
The table below shows the total expenses you would pay on a $10,000 investment
over one-, three-, five- and ten-year periods. The example is intended to help
you compare the cost of investing in this Fund versus other mutual funds and is
for illustration only. The example assumes a 5% average annual return and that
you reinvest all of your dividends. Your actual costs may be higher or lower.
Example of Fund Expenses
After 1 year $142
After 3 years $440
After 5 years $761
After 10 years $1,669
DOMESTIC GROWTH FUNDS 5
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
Aggressive Growth Fund
FUND FACTS:
Goal:
. Long-term Capital Appreciation
Principal Investments:
. Common Stocks
. Convertible Securities
Class of Shares Offered in this Prospectus:
. Class Y
Investment Advisor:
. Evergreen Investment Management
Portfolio Manager:
. Harold J. Ireland, Jr.
NASDAQ Symbol:
EAGYX (Class Y)
Dividend Payment Schedule:
Annually
[GRAPHIC APPEARS HERE] INVESTMENT GOAL
The Fund seeks long-term capital appreciation.
[GRAPHIC APPEARS HERE] INVESTMENT STRATEGY
The following supplements the investment strategies discussed in the "Overview"
on page 1.
The Fund seeks to achieve its goal by investing in emerging growth companies and
larger, more well-established companies, which are viewed by the manager as
having above-average appreciation potential. The Fund invests at least 65% of
its assets in common stocks, or securities convertible into common stocks, of
(1) companies that are in the less seasoned stage of development but expected to
grow over the long term, and/or (2) established companies that, in the opinion
of the Fund's manager, have growth potential similar to that of companies in the
less seasoned stage of development. The Fund may also invest up to 35% of its
assets in investment grade corporate bonds, U.S. Government securities,
commercial paper, certificates of deposit and repurchase agreements.
The Fund may invest in high quality money market instruments in response to
adverse economic, political or market conditions. This strategy is inconsistent
with the Fund's principal investment strategy and investment goal, and if
employed could result in a lower return and loss of market opportunity.
[GRAPHIC APPEARS HERE] RISK FACTORS
Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 1 under the headings:
. Stock Market Risk
. Interest Rate Risk
. Credit Risk
. Small Company Risk
In addition, your investment may be subject to special risks associated with
investing in securities issued by emerging growth companies. These companies are
typically in a less seasoned stage of development. This could lead to wide
fluctuations in the price/value of the securities due to limited financing
alternatives, limited management depth, intense competition from larger
companies, or limited trading liquidity.
6 DOMESTIC GROWTH FUNDS
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
[GRAPHIC APPEARS HERE] PERFORMANCE
The following charts show how the Fund has performed in the past. Past
performance is not an indication of future results.
The chart below shows the percentage gain or loss for Class Y shares of the Fund
in each of the last ten calendar years. It should give you a general idea of how
the Fund's return has varied from year-to-year. This graph includes the effects
of Fund expenses.
Year-by-Year Total Return for Class Y Shares (%)*
[BAR CHART APPEARS HERE]
1989 33.87
1990 -4.51
1991 77.23
1992 13.90
1993 17.88
1994 -9.31
1995 34.49
1996 17.33
1997 7.93
1998 24.28
Best Quarter: 4th Quarter 1998 +23.06%*
Worst Quarter: 3rd Quarter 1990 -19.85%*
The next table lists the Fund's average year-by-year return for Class Y
Shares over the past one, five and ten years and since inception (through
12/31/98). This table is intended to provide you with some indication of the
risks of investing in the Fund. At the bottom of the table you can compare this
performance with the Russell 2000 Index and the S&P 500 Index. The Russell 2000
Index, is an unmanaged index tracking the performance of 2000 publicly-traded
U.S. stocks. It is often used to indicate the performance of smaller company
stocks. The S&P 500 Index is an unmanaged index tracking the performance of 500
publicly-traded U.S. stocks. It is often used to indicate the performance of the
overall stock market. These indexes are not actual investments.
Average Annual Total Return
(for the period ended 12/31/98)*
Inception Performance
Date 1 year 5 year 10 year Since
of Class 4/15/83
Class Y 7/11/95 24.28% 13.93% 19.30% 14.35%
Russell 2000 -2.55% 11.87% 12.92% 10.84%**
S&P 500 26.67% 21.39% 16.04% 17.21%***
* Historical performance for Class Y prior to inception reflects that of Class
A, the original class offered, the inception date of which is 4/15/83, and
includes appropriate 12b-1 fees for Class A. If 12b-1 fees were not reflected,
returns would have been higher.
** Performance since 7/11/95 is 12.04%.
*** Performance since 7/11/95 is -23.89%.
[GRAPHIC APPEARS HERE] EXPENSES
This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.
Shareholder Fees (fees paid directly from your investment)
Shareholder Transaction Expenses Class Y
Maximum sales charge imposed on None
purchases (as a % of offering price)
Maximum deferred sales charge None
(as a % of either the redemption amount
or initial investment, whichever is lower)
Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses*
Class Y 0.60% None 0.47% 1.07%
* Estimated for the fiscal year ending 9/30/99
The table below shows the total expenses you would pay on a $10,000 investment
over one-, three-, five- and ten-year periods. The example is intended to help
you compare the cost of investing in this Fund versus other mutual funds and is
for illustration only. The example assumes a 5% average annual return and that
you reinvest all of your dividends. Your actual costs may be higher or lower.
Example of Fund Expenses
After 1 year $109
After 3 years $340
After 5 years $590
After 10 years $1,306
DOMESTIC GROWTH FUNDS 7
<PAGE>
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EVERGREEN
- --------------------------------------------------------------------------------
Omega Fund
FUND FACTS:
Goal:
. Capital Growth
Principal Investments:
. Common Stocks
. Convertible Securities
Class of Shares Offered in this Prospectus:
. Class Y
Investment Advisor:
. Evergreen Investment Management Company
Portfolio Manager:
. Maureen E. Cullinane
NASDAQ Symbol:
None
Dividend Payment Schedule:
Annually
[GRAPHIC APPEARS HERE] INVESTMENT GOAL
The Fund seeks maximum capital growth.
[GRAPHIC APPEARS HERE] INVESTMENT STRATEGY
The following supplements the investment strategies discussed in the "Overview"
on page 1.
The Fund invests primarily in common stocks and securities convertible into
common stocks. The Fund utilizes the fully-managed investment concept whereby
the Fund's manager will continuously review the Fund's holdings in light of
market conditions, business developments and economic trends. During this review
process, the Fund's manager seeks to identify and invest in industries that are
growing faster than the economy. The Fund invests in companies of all sizes. The
continuous review may lead to high portfolio turnover, but that will not limit
investment decisions. The Fund may also invest up to 25% of its assets in
foreign securities.
The Fund may invest in high quality money market instruments in response to
adverse economic, political or market conditions. This strategy is inconsistent
with the Fund's principal investment strategy and investment goal, and if
employed could result in a lower return and loss of market opportunity.
[GRAPHIC APPEARS HERE] RISK FACTORS
Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 1 under the headings:
. Stock Market Risk
. Foreign Investment Risk
. Small Company Risk
8 DOMESTIC GROWTH FUNDS
<PAGE>
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EVERGREEN
- --------------------------------------------------------------------------------
[GRAPHIC APPEARS HERE] PERFORMANCE
The following charts show how the Fund has performed in the past. Past
performance is not an indication of future results.
The chart below shows the percentage gain or loss for Class Y shares of the Fund
in each of the last ten calendar years. It should give you a general idea of how
the Fund's return has varied from year-to-year. This graph includes the effects
of Fund expenses.
Year-by-Year Total Return for Class Y Shares (%)*
[BAR CHART APPEARS HERE]
1989 33.05
1990 -2.38
1991 54.49
1992 4.00
1993 19.33
1994 -5.66
1995 36.94
1996 11.31
1997 24.53
1998 27.64
Best Quarter: 1st Quarter 1991 +26.03%*
Worst Quarter: 3rd Quarter 1990 -14.82%*
The next table lists the Fund's average year-by-year return for Class Y
shares over the past one, five and ten years and since inception (through
12/31/98). This table is intended to provide you with some indication of the
risks of investing in the Fund. At the bottom of the table you can compare this
performance with the S&P 500 Index, which is an unmanaged index tracking the
performance of 500 publicly-traded U.S. stocks. It is often used to indicate the
performance of the overall stock market. The S&P 500 Index is not an actual
investment.
Average Annual Total Return
(for the period ended 12/31/98)*
Inception Performance
Date 1 year 5 year 10 year Since
of Class 4/29/68
Class Y 1/13/97 27.64% 17.98% 18.99% 13.85%
S&P 500 26.67% 21.39% 16.04% 12.66%**
* Historical performance for Class Y prior to inception reflects that of Class
A, the original class offered, the inception date of which is 4/29/68, and
includes appropriate 12b-1 fees for Class A. If 12b-1 fees were not reflected,
returns would have been higher.
** Performance since 1/13/97 is 27.61%.
[GRAPHIC APPEARS HERE] EXPENSES
This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.
Shareholder Fees (fees paid directly from your investment)
Shareholder Transaction Expenses Class Y
Maximum sales charge imposed on None
purchases (as a % of offering price)
Maximum deferred sales charge None
(as a % of either the redemption amount
or initial investment, whichever is lower)
Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses*
Class Y 0.74% None 0.37% 1.11%
* Actual for the fiscal year ended 9/30/98
The table below shows the total expenses you would pay on a $10,000 investment
over one-, three-, five- and ten-year periods. The example is intended to help
you compare the cost of investing in this Fund versus other mutual funds and is
for illustration only. The example assumes a 5% average annual return and that
you reinvest all of your dividends. Your actual costs may be higher or lower.
Example of Fund Expenses
After 1 year $113
After 3 years $353
After 5 years $612
After 10 years $1,352
DOMESTIC GROWTH FUNDS 9
<PAGE>
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EVERGREEN
- --------------------------------------------------------------------------------
Small Company Growth Fund
FUND FACTS:
GOAL:
. Long-Term Capital Growth
Principal Investment:
. Small-Cap Common Stocks
Class of Shares Offered in this Prospectus:
. Class Y
Investment Advisor:
. Evergreen Investment Management Company
Portfolio Manager:
. J. Gary Craven
NASDAQ Symbol:
None
Dividend Payment Schedule:
Annually
[GRAPHIC APPEARS HERE] INVESTMENT GOAL
The Fund seeks long-term growth of capital.
[GRAPHIC APPEARS HERE] INVESTMENT STRATEGY
The following supplements the investment strategies discussed in the "Overview"
on page 1.
The Fund invests at least 65% of its assets in common stocks of companies with
small market capitalizations (less than $1 billion) at the time of the Fund's
investment. The Fund may also invest up to 35% of its assets in corporate
securities without regard to the market capitalization of the issuer, including
(1) common stocks of companies with large and medium market capitalizations (at
least $1 billion), (2) securities convertible into common stocks, and (3) rights
or warrants to purchase common stocks. While income is not a goal of the Fund,
securities with strong income potential may be included in the portfolio as long
as they do not conflict with the Fund's goal of long-term capital growth. The
Fund may also invest up to 25% of its assets in foreign securities.
The Fund may invest in high quality money market instruments in response to
adverse economic, political or market conditions. This strategy is inconsistent
with the Fund's principal investment strategy and investment goal, and if
employed could result in a lower return and loss of market opportunity.
[GRAPHIC APPEARS HERE] RISK FACTORS
Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 1 under the headings:
. Stock Market Risk
. Foreign Investment Risk
. Small Company Risk
10 DOMESTIC GROWTH FUNDS
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
[GRAPHIC APPEARS HERE] PERFORMANCE
The following charts show how the Fund has performed in the past. Past
performance is not an indication of future results.
The chart below shows the percentage gain or loss for Class Y shares of the Fund
for each of the last ten calendar years. It should give you a general idea of
how the Fund's return has varied from year-to-year. This graph includes the
effects of Fund expenses.
Year-by-Year Total Return for Class Y Shares (%)*
[BAR CHART APPEARS HERE]
1989 24.11%
1990 -5.39%
1991 73.84%
1992 10.99%
1993 26.56%
1994 1.18%
1995 37.60%
1996 1.83%
1997 14.36%
1998 -16.11%
Best Quarter: 1st Quarter 1991 +33.99%*
Worst Quarter: 3rd Quarter 1998 -29.14%*
The next table lists the Fund's average year-by-year return for Class Y
Shares over the past one, five and ten years and since inception (through
12/31/98). This table is intended to provide you with some indication of the
risks of investing in the Fund. At the bottom of the table you can compare this
performance with the Russell 2000 Index, which is an unmanaged index tracking
the performance of 2000 publicly-traded U.S. stocks. It is often used to
indicate the performance of smaller company stocks. The Russell 2000 Index is
not an actual investment.
Average Annual Total Return (for the period ended 12/31/98)*
Inception Performance
Date 1 year 5 year 10 year Since
of Class 9/11/35
Class Y 1/26/98 -16.11% 6.35% 14.58% 9.95%
Russell 2000 -2.55% 11.87% 12.92% 14.91%**
* Historical performance for Class Y prior to inception reflects that of Class
B, the original class offered, the inception date of which is 9/11/35, and has
been adjusted for appropriate 12b-1 fees.
**Inception date of the index is 12/31/78. Performance is since that
date.Performance since 1/28/98 is 1.46%.
[GRAPHIC APPEARS HERE] EXPENSES
This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.
Shareholder Fees (fees paid directly from your investment)
Shareholder Transaction Expenses Class Y
Maximum sales charge imposed on None
purchases (as a % of offering price)
Maximum deferred sales charge None
(as a % of either the redemption amount
or initial investment, whichever is lower)
Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses*
Class Y 0.49% None 0.33% 0.82%
*Estimated for the fiscal year ending 9/30/99
The table below shows the total expenses you would pay on a $10,000 investment
over one-, three-, five- and ten-year periods. The example is intended to help
you compare the cost of investing in this Fund versus other mutual funds and is
for illustration only. The example assumes a 5% average annual return and that
you reinvest all of your dividends. Your actual costs may be higher or lower.
Example of Fund Expenses
After 1 year $84
After 3 years $262
After 5 years $455
After 10 years $1,014
DOMESTIC GROWTH FUNDS 11
<PAGE>
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EVERGREEN
- --------------------------------------------------------------------------------
Stock Selector Fund
FUND FACTS:
Goal:
. Total Return
Principal Investments:
. Common Stocks
. Bonds
. Convertible Securities
Class of Shares Offered in this Prospectus:
. Class Y
Investment Advisor:
. Meridian Investment Company
Portfolio Manager:
. Joseph E. Stocke
NASDAQ Symbol:
EVSYX (Class Y)
Dividend Payment Schedule:
Annually
[GRAPHIC APPEARS HERE] INVESTMENT GOAL
The Fund seeks maximum total return.
[GRAPHIC APPEARS HERE] INVESTMENT STRATEGY
The following supplements the investment strategies discussed in the "Overview"
on page 1.
The Fund strives to provide a total return greater than that of the S&P 500
Index by investing primarily in a diversified portfolio of common stocks of U.S.
and foreign companies expected to experience growth in earnings and price.
Companies of all sizes will be considered for the Fund's portfolio. The Fund may
also invest up to 20% of its assets in preferred stocks, securities convertible
into common stock, corporate bonds and notes, and short term obligations.
The Fund may invest in high quality money market instruments in response to
adverse economic, political or market conditions. This strategy is inconsistent
with the Fund's principal investment strategy and investment goal, and if
employed could result in a lower return and loss of market opportunity.
[GRAPHIC APPEARS HERE] RISK FACTORS
Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 1 under the headings:
. Stock Market Risk
. Interest Rate Risk
. Credit Risk
. Foreign Investment Risk
. Small Company Risk
12 DOMESTIC GROWTH FUNDS
<PAGE>
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EVERGREEN
- --------------------------------------------------------------------------------
[GRAPHIC APPEARS HERE] PERFORMANCE
The following charts show how the Fund has performed in the past. Past
performance is not an indication of future results.
The chart below shows the percentage gain or loss for Class Y shares of the Fund
in each calendar year since the Fund's inception on 2/28/90. It should give you
a general idea of how the Fund's return has varied from year-to-year. This graph
includes the effects of Fund expenses.
Year-by-Year Total Return for Class Y Shares (%)*
[BAR CHART APPEARS HERE]
1989
1990
1991 43.19
1992 9.18
1993 8.01
1994 -2.59
1995 35.70
1996 27.28
1997 30.81
1998 12.76
Best Quarter: 4th Quarter 1998 +26.56%*
Worst Quarter: 3rd Quarter 1998 -18.23%*
The next table lists the Fund's average year-by-year return for Class Y shares
over the past one, five and ten years and since inception (through 12/31/98).
This table is intended to provide you with some indication of the risks of
investing in the Fund. At the bottom of the table you can compare this
performance with an index that tracks investments similar to the Fund's, the S&P
500 Index, which is an unmanaged index tracking the performance of 500
publicly-traded U.S. stocks. It is often used to indicate the performance of the
overall stock market. The S&P 500 Index is not an actual investment.
Average Annual Total Return
(for the period ended 12/31/98)*
Inception Performance
Date 1 year 5 year 10 year Since
of Class 2/28/90
Class Y 2/21/95 12.76% 19.94% N/A 17.80%
S&P 500 26.67% 21.39% 16.04% 19.03%**
* Historical performance for Class Y prior to inception reflects that of Class
A, the original class offered, the inception date of which is 2/28/90, and
includes appropriate 12b-1 fees for Class A. If 12b-1 fees were not reflected,
returns would have been higher. Returns reflect expense limits previously in
effect, without which returns would have been lower.
** Performance since 2/21/95 is 28.80%.
[GRAPHIC APPEARS HERE] EXPENSES
This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.
Shareholder Fees (fees paid directly from your investment)
Shareholder Transaction Expenses Class Y
Maximum sales charge imposed on None
purchases (as a % of offering price)
Maximum deferred sales charge None
(as a % of either the redemption amount
or initial investment, whichever is lower)
Annual Fund Operating Expenses (expenses that are deducted from Fund assets)*
Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses**
Class Y 0.74% None 0.26% 1.00 %
* From time to time, the Fund's investment advisor may, at its discretion,
reduce or waive its fees or reimburse a Fund for certain of its expenses in
order to reduce expense ratios. The Fund's investment advisor may cease these
reimbursements at any time. The annual operating expenses do not reflect fee
waivers and expense reimbursements. Including current fee waivers and expense
reimbursements, total operating fees for Class Y would be 0.93%.
**Actual for the fiscal year ended 9/30/98
The table below shows the total expenses you would pay on a $10,000 investment
over one-, three-, five- and ten-year periods. The example is intended to help
you compare the cost of investing in this Fund versus other mutual funds and is
for illustration only. The example assumes a 5% average annual return and that
you reinvest all of your dividends. Your actual costs may be higher or lower.
Example of Fund Expenses
After 1 year $102
After 3 years $318
After 5 years $552
After 10 years $1,225
DOMESTIC GROWTH FUNDS 13
<PAGE>
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EVERGREEN
- --------------------------------------------------------------------------------
Tax Strategic Equity Fund
FUND FACTS:
Goal:
. Tax-Efficient Long-Term Capital Growth
Principal Investment:
. Common Stocks
Class of Shares Offered in this Prospectus:
. Class Y
Investment Advisor:
. Evergreen Asset Management Corp.
Portfolio Manager:
. Stephen A. Lieber
NASDAQ Symbol:
None
Dividend Payment Schedule:
Annually
[GRAPHIC APPEARS HERE] INVESTMENT GOAL
The Fund seeks long-term capital growth within a tax-efficient strategy.
[GRAPHIC APPEARS HERE] INVESTMENT STRATEGY
The following supplements the investment strategies discussed in the "Overview"
on page 1.
The Fund invests at least 65% of assets in common stocks of companies with large
and medium market capitalizations (at least $1 billion). The Fund may also
invest up to 35% of its assets in (1) foreign securities, including foreign
securities represented by American Depositary Receipts and (2) common stocks of
companies with small market capitalizations (less than $1 billion). The Fund
uses investment techniques that reduce the impact of taxes on shareholder
returns. One of these techniques is to buy stocks paying low or no dividends
which reduces the taxable dividends the Fund pays to shareholders. Another
technique is to purchase securities the Fund expects to hold for growth over the
long-term. This practice decreases the Fund's portfolio turnover rate, which in
turn lessens the taxable capital gain, if any, the Fund pays to shareholders. A
third technique, used when selling securities in the portfolio, involves selling
the securities with the highest cost basis in order to minimize realized capital
gain. This also lessens taxable distributions to shareholders.
The Fund may invest in high quality money market instruments in response to
adverse economic, political or market conditions. This strategy is inconsistent
with the Fund's principal investment strategy and investment goal, and if
employed could result in a lower return and loss of market opportunity.
[GRAPHIC APPEARS HERE] RISK FACTORS
Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 1 under the headings:
. Stock Market Risk
. Foreign Investment Risk
. Small Company Risk
14 DOMESTIC GROWTH FUNDS
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
[GRAPHIC APPEARS HERE] PERFORMANCE
The return for Class Y shares since inception on 9/1/98 to 12/31/98 is 36.70%.
This figure includes the effects of Fund expenses. Past performance is not an
indication of future results.
[GRAPHIC APPEARS HERE] EXPENSES
This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.
Shareholder Fees (fees paid directly from your investment)
Shareholder Transaction Expenses Class Y
Maximum sales charge imposed on None
purchases (as a % of offering price)
Maximum deferred sales charge None
(as a % of either the redemption amount
or initial investment, whichever is lower)
Annual Fund Operating Expenses (expenses that are deducted from Fund assets)*
Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses**
Class Y 0.95% None 0.97% 1.92%
*From time to time, the Fund's investment advisor may, at its discretion, reduce
or waive its fees or reimburse a Fund for certain of its expenses in order to
reduce expense ratios. The Fund's investment advisor may cease these
reimbursements at any time. The annual operating expenses do not reflect fee
waivers and expense reimbursements. Including current fee waivers and expense
reimbursements, total operating fees for Class Y would be 1.30%.
** Estimated for the fiscal year ending 9/30/99
The table below shows the total expenses you would pay on a $10,000 investment
over one-, three-, five- and ten-year periods. The example is intended to help
you compare the cost of investing in this Fund versus other mutual funds and is
for illustration only. The example assumes a 5% average annual return and that
you reinvest all of your dividends. Your actual costs may be higher or lower.
Example of Fund Expenses
After 1 year $195
After 3 years $603
After 5 years $1,037
After 10 years $2,243
DOMESTIC GROWTH FUNDS 15
<PAGE>
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EVERGREEN
- --------------------------------------------------------------------------------
THE FUND'S INVESTMENT ADVISORS
Each investment advisor manages a Fund's investments and supervises its daily
business affairs. There are three different investment advisors for the
Evergreen Domestic Growth Funds. All investment advisors for the Evergreen Funds
are subsidiaries of First Union Corporation, the sixth largest bank holding
company in the United States, with over $237.4 billion in consolidated assets as
of December 31, 1998. First Union Corporation is located at 301 South College
Street, Charlotte, North Carolina 28288-0013.
Evergreen Asset Management Corp. (EAMC) is the investment advisor to:
. Evergreen Fund
. Micro Cap Fund
. Tax Strategic Equity Fund
EAMC, with its predecessors, has served as investment advisor to the Evergreen
Funds since 1971, and currently manages over $18.2 billion in assets for 21 of
the Evergreen Funds. EAMC is located at 2500 Westchester Avenue, Purchase, New
York 10577.
Evergreen Investment Management Company (EIMC) is the investment advisor to:
. Omega Fund
. Small Company Growth Fund
EIMC has been managing money for over 50 years and currently manages over $8.9
billion in assets for 25 of the Evergreen Funds. EIMC is located at 200 Berkeley
Street, Boston, Massachusetts 02116-5034.
Evergreen Investment Management (EIM) is the investment advisor to:
. Aggressive Growth Fund
EIM, (formerly known as the Capital Management Group, or CMG) a division of
First Union National Bank, has been managing mutual funds and private accounts
since 1932 and currently manages over $28.1 billion in assets for 42 of the
Evergreen Funds. EIM is located at 201 South College Street, Charlotte, North
Carolina 28288-0630.
Meridian Investment Company (MIC) is the investment advisor to:
. Stock Selector Fund
MIC has been managing money for over 15 years and currently manages over $3
billion in assets, including $500 million in assets for two of the Evergreen
Funds. MIC is located at 55 Valley Stream Parkway, Malvern, Pennsylvania 19355.
Year 2000 Compliance
The investment advisors and other service providers for the Evergreen Funds are
taking steps to address any potential Year 2000-related computer problems.
However, there is some risk that these problems could disrupt the Funds'
operations or financial markets generally.
European Currency Conversion Risk
Certain countries in Europe converted their different currencies to a single,
common currency on January 1, 1999. In connection with this change, investment
advisors, mutual funds and their service providers have modified their
accounting and recordkeeping systems to handle the new currency. If a Fund
invests in foreign securities, your investment in the Fund may be adversely
affected if these technical modifications have not been implemented properly.
Also, the conversion to a single currency may impair the markets for securities
denominated in the currencies eliminated, which may also adversely impact your
investment.
THE FUNDS' PORTFOLIO MANAGERS
Evergreen Fund
The day-to-day management of the Fund is handled by Stephen A. Lieber, and Nola
Maddox Falcone, C.F.A. Mr. Lieber is Chairman and Co-Chief Executive Officer of
EAMC. He was a founding partner of Lieber & Company, the original sponsor of the
Evergreen Funds, when it was established in 1969. He has been with EAMC and its
predecessor since 1971 and has been in the investment management profession
since 1952. Ms. Falcone is President and Co-Chief Executive Officer of EAMC. She
joined Lieber & Company as Senior Portfolio Manager in 1974, and was a General
Partner from January 1981 to June 1994.
Micro Cap Fund
The day-to-day management of the Fund is handled by a committee of portfolio
managers and stock analysts including Stephen A. Lieber and Edwin A. Miska. Mr.
Lieber is Chairman and Co-Chief Executive Officer of EAMC. He was a founding
partner of Lieber &
16 DOMESTIC GROWTH FUNDS
<PAGE>
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EVERGREEN
- --------------------------------------------------------------------------------
Company, the original sponsor of the Evergreen Funds, when it was established in
1969. He has been with EAMC and its predecessor since 1971 and has been in the
investment management profession since 1952. Mr. Miska has been an analyst and
portfolio manager with EAMC and its predecessor since 1989.
Aggressive Growth Fund
The day-to-day management of the Fund is handled by Harold J. Ireland, Jr. He is
a Vice President of EIM who has been a portfolio manager at EIM since 1995. Mr.
Ireland previously worked for Palm Beach Capital Management, Inc., where he was
portfolio manager of the Fund's predecessor, ABT Emerging Growth Fund, from its
inception in 1983 to 1995.
Omega Fund
The day-to-day management of the Fund has been handled by Maureen E. Cullinane
since 1989. Ms. Cullinane is a Senior Vice President and Senior Portfolio
Manager of EIMC and has over 20 years of investment experience.
Small Company Growth Fund
The day-to-day management of the Fund has been handled by J. Gary Craven since
November 1996 when he joined EIMC. Mr. Craven is a Senior Vice President and
Chief Investment Officer of EIMC, as well as Group Leader for the small-cap
equity group. Prior to joining EIMC, Mr. Craven was a portfolio manager for 9
years at Invista Capital Management, Inc.
Stock Selector Fund
The day-to-day management of the Fund is handled by Joseph E. Stocke, CFA. Mr.
Stocke joined MIC 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.
Tax Strategic Equity Fund
The day-to-day management of the Fund is handled by Stephen A. Lieber. Mr.
Lieber is Chairman and Co-Chief Executive Officer of EAMC. He was a founding
partner of Lieber & Company, the original sponsor of the Evergreen Funds, when
it was established in 1969. He has been with EAMC and its predecessor since 1971
and has been in the investment management profession since 1952.
CALCULATING THE SHARE PRICE
The value of one share of a Fund, also known as the net asset value, or NAV, is
calculated on each day the New York Stock Exchange is open as of the time the
Exchange closes (normally 4:00 p.m. Eastern time). We calculate the share price
for each share by adding up the total assets of the Fund, subtracting all
liabilities, then dividing the result by the total number of shares outstanding.
Each class of shares is calculated separately. Each security held by a Fund is
valued using the most recent market quote for that security. If no market
quotation is available for a given security, we will price that security at fair
value according to policies established by the Fund's Board of Trustees.
Short-term securities with maturities of 60 days or less will be valued on the
basis of amortized cost.
The price per share you pay for a Fund purchase or the amount you receive for a
Fund redemption is based on the next price calculated after the order is
received and all required information is provided. The value of your account at
any given time is the latest share price multiplied by the number of shares you
own. Your account balance may change daily because the share price may change
daily.
HOW TO CHOOSE AN EVERGREEN FUND
When choosing an Evergreen Fund, you should:
. Most importantly, read the prospectus to see if the Fund is suitable for you.
. Consider talking to an investment professional. He or she is qualified to
give you investment advice based on your investment goals and financial
situation and will be able to answer questions you may have after reading the
Fund's prospectus. He or she can also assist you through all phases of
opening your account.
. Request any additional information you want about the Fund, such as the
Statement of Additional Information, Annual Report or Semi-Annual Report by
calling 1-800-343-2898.
WHO CAN BUY CLASS Y SHARES
Class Y shares are only offered to:
. Persons who owned shares in a Fund advised by EAMC on or before December 31,
1994.
. Certain institutional investors.
. Investment advisory clients of an investment advisor of an Evergreen Fund (or
the advisor's affiliate).
DOMESTIC GROWTH FUNDS 17
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
How To Buy Shares
Evergreen Funds' low investment minimums make investing easy. Once you decide on
an amount and a share class, simply fill out an application and send in your
payment, or talk to your investment professional.
Minimum Investments
Initial Additional
Regular Accounts $1,000 None
IRAs $250 None
Systematic Investment Plan $50 $25
<TABLE>
<CAPTION>
Method Opening an Account Adding to an Account
<S> <C> <C>
By Mail or . Complete and sign the account application. . Make your check payable to Evergreen Funds
through . Make the check payable to Evergreen Funds. . Write a note specifying:
an Investment . Mail the application and your check to the address below: - the Fund name
Professional Evergreen Service Company Overnight Address: - share class
P.O. Box 2121 Evergreen Service Company - your account number
Boston, MA 02106-2121 200 Berkeley St. - the name(s) in which the account is registered
Boston, MA 02116-5039 . Mail to the address to the left or deliver to
. Or deliver them to your investment representative (provided your investment representative.
he or she has a broker-dealer arrangement with Evergreen
Distributor, Inc.)
By Phone . Call 1-800-343-2898 to set up an account number and get . Call the Evergreen Express Line at
wiring instructions (call before 12 noon if you want wired 1-800-346-3858 24 hours a day or
funds to be credited that day). 1-800-343-2898 between 8 a.m. and 6 p.m. Eastern
. Instruct your bank to wire or transfer your purchase (they time, on any business day.
may charge a wiring fee). . If your bank account is set up on file, you can
. Complete the account application and mail to: request either:
Evergreen Service Company Overnight Address: - Federal Funds Wire (offers immediate access
P.O. Box 2121 Evergreen Service Company to funds) or
Boston, MA 02106-2121 200 Berkeley St. - Electronic transfer through the Automated
Boston, MA 02116-5039 Clearing House which avoids wiring fees.
. Wires received after 4:00 p.m. Eastern time on market trading
days will receive the next market day's closing price.
By Exchange . You can make an additional investment by exchange from an
existing Evergreen Funds account by contacting your investment
representative or calling the Evergreen Express Line at
1-800-346-3858.*
. You can only exchange shares within the same class.
. There is no sales charge or redemption fee when exchanging
Funds within the Evergreen Funds family.
. Orders placed before 4 p.m. Eastern time on market trading days
will receive that day's closing share price (if not, you will
receive the next market day's closing price).
. Exchanges are limited to three per calendar quarter, and five
per calendar year.
. Exchanges between accounts which do not have identical
ownership must be made in writing with a signature guarantee
(see below).
Systematic . You can transfer money automatically from your bank account . To establish automatic investing for an existing
Investment into your Fund on a monthly basis. account, call 1-800-343-2898 for an
Plan (SIP) . Initial investment minimum is $50 if you invest at least application.
$25 per month with this service. . The minimum is $25 per month or $75 per quarter
. To enroll, check off the box on the account application and . You can also establish an investing program
provide: through direct deposit from your paycheck.
- your bank account information Call 1-800-343-2898 for details.
- the amount and date of your monthly investment.
</TABLE>
* Once you have authorized either the telephone exchange or redemption service,
anyone with a Personal Identification Number (PIN) and the required account
information (including your broker) can request a telephone transaction in your
account. All calls are recorded or monitored for verification, recordkeeping and
quality-assurance purposes. The Evergreen Funds reserve the right to terminate
the exchange privilege of any shareholder who exceeds the listed maximum number
of exchanges, as well as to reject any large dollar exchange if placing it
would, in the judgment of the portfolio manager, adversely affect the price of
the Fund.
18 DOMESTIC GROWTH FUNDS
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
We offer you several convenient ways to redeem your shares in any of the
Evergreen Funds:
<TABLE>
<CAPTION>
Methods Requirements
<S> <C>
Call Us . Call the Evergreen Express Line at 1-800-346-3858 24 hours a day or
1-800-343-2898 between 8 a.m. and 6 p.m. Eastern time, on any business day.
. This service must be authorized ahead of time, and is only available for
regular accounts.*
. All authorized requests made before 4 p.m. Eastern time on market trading
days will be processed at that day's closing price. Requests after 4 p.m.
will be processed the following business day.
. We can either:
- wire the proceeds into your bank account (service charges may apply)
- electronically transmit the proceeds into your bank account via the
Automated Clearing House service
- mail you a check.
. All telephone calls are recorded for your protection. We are not responsible
for acting on telephone orders we believe are genuine.
. See exceptions list below for requests that must be made in writing.
Write Us . You can mail a redemption request to:
Evergreen Service Company Overnight Address:
P.O. Box 2121 Evergreen Service Company
Boston, MA 02106-2121 200 Berkeley St.
Boston, MA 02116-5039
. Your letter of instructions must:
- list the Fund name and the account number
- indicate the number of shares or dollar value you wish to redeem
- be signed by the registered owner(s)
. See exceptions list below for requests that must be signature guaranteed.
. To redeem from an IRA or other retirement account, call 1-800-343-2898 for a
special application.
Sell Your . You may also redeem your shares through participating broker-dealers by
Shares in delivering a letter as described above to your broker-dealer.
Person . A fee may be charged for this service.
Systematic . You can transfer money automatically from your Fund account on a monthly or
Withdrawal quarterly basis without redemption fees.
Plan (SWP) . The withdrawal can be mailed to you, or deposited directly to your bank account.
. The minimum is $75 per month.
. The maximum is 1% of your account per month or 3% per quarter.
. To enroll, call 1-800-343-2898 for an application.
</TABLE>
Timing of Proceeds
Normally, we will send your redemption proceeds on the next business day after
we receive your request; however, we reserve the right to wait up to seven
business days to redeem any investments made by check and five business days for
investments made by Automated Clearing House transfer.
We also reserve the right to redeem in kind by paying you the proceeds of a
redemption in securities rather than in cash, and to redeem the remaining amount
in the account if your redemption brings the account balance below the initial
minimum of $1,000.
Exceptions: Redemption Requests That Require A Signature Guarantee
To protect you and Evergreen Funds against fraud, certain redemption requests
must be made in writing with your signature guaranteed. A signature guarantee
can be obtained at most banks and securities dealers. A notary public is not
authorized to provide a signature guarantee.
The following circumstances require signature guarantees:
. You are redeeming more than $50,000
. You want the proceeds transmitted to a bank account not listed on the account
. You want the proceeds payable to anyone other than the registered owner(s) of
the account
. Either your address or the address of your bank account has been changed
within 30 days
. The account is registered in the name of a fiduciary corporation or any other
organization.
In these cases, additional documentation is required:
corporate accounts: certified copy of corporate resolution
fiduciary accounts: copy of the power of attorney or other governing document
Who Can Provide A Signature Guarantee:
. Commercial Bank
. Trust Company
. Savings Association
. Credit Union
. Member of a U.S. stock exchange
DOMESTIC GROWTH FUNDS 19
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
OTHER SERVICES
Evergreen Express Line
Use our automated, 24-hour service to check the value of your investment in a
Fund; purchase, redeem or exchange Fund shares; find a Fund's price, yield or
total return; order a statement or duplicate tax form; or hear market commentary
from Evergreen portfolio managers.
Automatic Reinvestment of Dividends
For the convenience of investors, all dividends and capital gains distributions
are automatically reinvested, unless you request otherwise. Distributions can be
made by check or electronic transfer through the Automated Clearing House to
your bank account. The details of your dividends and other distributions will be
included on your statement.
Telephone Investment Plan
You may make additional investments electronically in an existing Fund account
at amounts of not less than $100 or more than $10,000 per investment. Telephone
requests received by 4:00 p.m. Eastern time will be invested the day the request
is received.
Dividend Exchange
You may elect on the application to reinvest capital gains and/or dividends
earned in one Evergreen Fund into an existing account in another Evergreen Fund
in the same share class--automatically. Please indicate on the application the
Evergreen Fund(s) into which you want to invest the distributions.
Reinvestment Privileges
Under certain circumstances, shareholders may, within one year of redemption,
reinstate their accounts at the current price (net asset value).
THE TAX CONSEQUENCES OF INVESTING IN THE FUNDS
You may be taxed in two ways:
. On Fund distributions (capital gains and dividends)
. On any profit you make when you sell any or all of your shares.
Fund Distributions
A mutual fund passes along to all of its shareholders the net income or profits
it receives from its investments. The shareholders of the fund then pay any
taxes due, whether they receive these distributions in cash or elect to have
them reinvested. The Fund distributes two types of taxable income to you:
. Dividends. The Fund pays either a monthly, quarterly or yearly dividend from
the dividends, interest and other income on the securities in which it
invests. The frequency of dividends for each particular Evergreen Domestic
Growth Fund is listed under the Fund's Investment Strategy section in the
summary of each Fund previously presented.
. Capital Gains. When a mutual fund sells a security it owns for a profit, the
result is a capital gain. Evergreen Domestic Growth Funds generally
distribute capital gains at least once a year, near the end of the calendar
year. Short-term capital gains reflect securities held by the Fund for a year
or less and are considered ordinary income just like dividends. Profits on
securities held longer than 12 months are considered long-term capital gains
and are taxed at a special tax rate (20% for most taxpayers, on sales made
after January 1, 1998.)
Dividend and Capital Gain Reinvestment
Unless you choose otherwise on the account application, all dividend and capital
gain payments will be reinvested to buy additional shares. Distribution checks
that are returned and distribution checks that are uncashed when the shareholder
has failed to respond to mailings from the shareholder servicing agent will
automatically be reinvested to buy additional shares.
No interest will accrue on amounts represented by uncashed distribution or
redemption checks.
We will send you a statement each January with the federal tax status of
dividends and distributions paid by each Fund during the previous calendar year.
20 DOMESTIC GROWTH FUNDS
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
Profits You Realize When You Redeem Shares
When you sell shares in a mutual fund, whether by redeeming or exchanging, you
have created a taxable event. You must report any gain or loss on your tax
return unless the transaction was entered into by a tax-deferred retirement plan
or occurred in a money market fund. It is your responsibility to keep accurate
records of your mutual fund transactions. You will need this information when
you file your income tax return, since you must report any capital gains or
losses you incur when you sell shares. Remember, an exchange is a purchase and a
sale for tax purposes.
Tax Reporting
Evergreen Service Company provides you with a tax statement of your dividend and
capital gains distributions for each calendar year on Form 1099 DIV. Proceeds
from a sale are reported on Form 1099B. You must report these on your tax
return. Since the IRS receives a copy as well, you could pay a penalty if you
neglect to report them.
Evergreen Service Company will send you a tax information guide each year during
tax season, which may include a cost basis statement detailing the gain or loss
on taxable transactions you had during the year. Please consult your own tax
advisor for further information regarding the federal, state and local tax
consequences of an investment in the Funds.
Retirement Plans
You may invest in each Fund through various retirement plans, including IRAs,
401(k) plans, Simplified Employee Plans (SEPs), IRAs, 403(b) plans, 457 plans
and others. For special rules concerning these plans, including applications,
restrictions, tax advantages, and potential sales charge waivers, contact your
broker-dealer. To determine if a retirement plan may be appropriate for you,
consult your tax advisor.
FEES AND EXPENSES OF THE FUNDS
Every mutual fund has fees and expenses that are assessed either directly or
indirectly. This section describes each of those fees.
Management Fee
The management fee pays for the normal expenses of managing the fund, including
portfolio manager salaries, research costs, corporate overhead expenses and
related expenses.
Other Expenses
Other expenses include miscellaneous fees from outside service providers. These
may include legal, audit, custodial and safekeeping fees, the printing and
mailing of reports and statements, automatic reinvestment of distributions and
other conveniences for which the shareholder pays no transaction fees.
Total Fund Operating Expenses
The total cost of running the Fund is called the expense ratio. As a
shareholder, you are not charged these fees directly; instead they are taken out
before the Fund's net asset value is calculated, and are expressed as a
percentage of the Fund's average daily net assets. The effect of these fees is
reflected in the performance results for that share class. Because these fees
are "invisible," investors should examine them closely in the prospectus,
especially when comparing one fund with another fund in the same investment
category. There are three things to remember about expense ratios: 1) your total
return in the Fund is reduced in direct proportion to the fees; 2) expense
ratios can vary greatly between funds and fund families, from under 0.25% to
over 3.0%; and 3) a Fund's advisor may waive a portion of the Fund's expenses
for a period of time, reducing its expense ratio.
DOMESTIC GROWTH FUNDS 21
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
This section looks in detail at the results for one Class Y share of the Funds
- -- how much income it earned, how much of this income was passed along as a
distribution and how much the return was reduced by expenses. The following
tables have been audited by PricewaterhouseCoopers LLP: Evergreen Fund for each
fiscal year or period shown below; Micro Cap Fund for each fiscal year ended
September 30, 1998 through 1996; Aggressive Growth Fund for each fiscal year or
period ended September 30, 1998 through 1995; and Stock Selector Fund for the
fiscal period September 30,1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
EVERGREEN FUND CLASS Y
Year Ended September 30,
---------------------------------------------------------
1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $23.07 $17.71 $15.59 $14.62 $14.46
====== ====== ====== ====== ======
..............................................................................................................................
Income from investment operations
Net investment income 0.12# 0.16# 0.24 0.10 0.07
..............................................................................................................................
Net realized and unrealized gains or losses on securities (1.30) 5.73 2.55 3.10 0.79
------ ------ ------ ------ ------
..............................................................................................................................
Total from investment operations (1.18) 5.89 2.79 3.20 0.86
------ ------ ------ ------ ------
..............................................................................................................................
Less distributions
From net investment income (0.14) (0.12) (0.09) (0.07) (0.09)
..............................................................................................................................
From net realized gain on securities (0.50) (0.41) (0.58) (2.16) (0.61)
------ ------ ------ ------ ------
..............................................................................................................................
Total distributions (0.64) (0.53) (0.67) (2.23) (0.70)
------ ------ ------ ------ ------
..............................................................................................................................
Net asset value, end of year $21.25 $23.07 $17.71 $15.59 $14.62
====== ====== ====== ====== ======
..............................................................................................................................
Total return (5.25%) 34.08% 18.43% 26.79% 6.16%
..............................................................................................................................
Ratios/supplemental data
..............................................................................................................................
Net assets, end of year (millions) $1,028 $1,104 $841 $612 $526
..............................................................................................................................
Ratios to average net assets:
Total expenses 1.18% 1.15% 1.15% 1.16% 1.13%
..............................................................................................................................
Net investment income 0.49% 0.80% 0.93% 0.53% 0.40%
..............................................................................................................................
Portfolio turnover rate 7% 12% 15% 19% 19%
..............................................................................................................................
</TABLE>
# Net investment income is based on average shares outstanding during the
period.
22 DOMESTIC GROWTH FUNDS
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
1998. The following tables have been derived from financial information
audited by KPMG Peat Marwick LLP for each fiscal year or period shown below:
Omega Fund, Small Company Growth Fund; and Tax Strategic Equity Fund. The
information in the tables for Stock Selector Fund (formerly CoreFunds, Inc. Core
Equity Fund)for the periods ended June 30, 1996 through 1998 has been audited by
Ernst & Young LLP, independent auditors. For a more complete picture of the
Fund's financial statements, please see the Funds' Annual Report as well as the
Statement of Additional Information.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MICRO CAP FUND CLASS Y
Year Ended September 30,
------------------------------------------------------ Year Ended
1998 1997 1996 1995 1994* May 31, 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $26.83 $17.35 $18.42 $21.74 $21.20 $20.87
====== ====== ====== ====== ====== ======
....................................................................................................................................
Income from investment operations
Net investment income (0.18)# (0.09)# (0.08) (0.23) (0.05) (0.07)
....................................................................................................................................
Net realized and unrealized gains or losses on securities (5.21) 9.57 (0.43) 0.59 0.59 1.67
------ ------ ------ ------ ------ ------
....................................................................................................................................
Total from investment operations (5.39) 9.48 (0.51) 0.36 0.54 1.60
------ ------ ------ ------ ------ ------
....................................................................................................................................
Less distributions
From net realized gain on securities (1.39) 0 (0.56) (3.68) 0 (1.27)
------ ------ ------ ------ ------ ------
....................................................................................................................................
Total distributions (1.39) 0 (0.56) (3.68) 0 (1.27)
------ ------ ------ ------ ------ ------
....................................................................................................................................
Net asset value, end of year $20.05 $26.83 $17.35 $18.42 $21.74 $21.20
====== ====== ====== ====== ====== ======
....................................................................................................................................
Total return (21.28%) 54.64% (2.73%) 4.76% 2.55% 7.64%
....................................................................................................................................
Ratios/supplemental data
Net assets, end of year (thousands) $39,112 $50,732 $39,622 $64,721 $99,340 $96,357
....................................................................................................................................
Ratios to average net assets:
Total expenses 1.40% 1.59% 1.55% 1.36% 1.37%+ 1.26%
....................................................................................................................................
Net investment income (0.70%) (0.45%) (0.38%) (0.87%) (0.70%)+ (0.33%)
....................................................................................................................................
Portfolio turnover rate 47% 59% 160% 84% 36% 89%
....................................................................................................................................
</TABLE>
+ Annualized.
* For the four-month period ended September 30, 1994. The Fund changed its
fiscal year end from May 31 to September 30, effective September 30, 1994.
# Net investment income is based on average shares outstanding during the
period.
DOMESTIC GROWTH FUNDS 23
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
AGGRESSIVE GROWTH FUND CLASS Y
Year Ended September 30,
---------------------------------------------------------
1998 1997 1996 1995*
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of year $23.57 $21.09 $17.38 $15.79
====== ====== ====== ======
........................................................................................................................
Income from investment operations
Net investment income (0.20)# (0.17)# (0.06) (0.01)
........................................................................................................................
Net realized and unrealized gains or losses on securities (1.06) 2.65 4.41 1.60
------ ------ ------ ------
........................................................................................................................
Total from investment operations (1.26) 2.48 4.35 1.59
------ ------ ------ ------
........................................................................................................................
Less distributions
From net realized gain on securities (0.85) 0 (0.64) 0
------ ------ ------ ------
........................................................................................................................
Total distributions (0.85) 0 (0.64) 0
------ ------ ------ ------
........................................................................................................................
Net asset value, end of year $21.46 $23.57 $21.09 $17.38
====== ====== ====== ======
........................................................................................................................
Total return (5.43%) 11.76% 25.84% 10.07%
........................................................................................................................
Ratios/supplemental data
........................................................................................................................
Net assets, end of year (thousands) $28,314 $44,384 $25,918 $1,889
........................................................................................................................
Ratios to average net assets:
Total expenses 1.08% 1.01% 0.97% 1.08%+
........................................................................................................................
Net investment income (0.89%) (0.78%) (0.60%) (0.71%)+
........................................................................................................................
Portfolio turnover rate 22% 56% 33% 31%
........................................................................................................................
</TABLE>
+ Annualized.
* For the period from July 11, 1995 (commencement of class operations) to
September 30, 1995.
# Net investment income is based on average shares outstanding during the
period.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
OMEGA FUND CLASS Y
Year Ended September 30,
------------------------
1998 1997*
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of year $22.68 $19.98
====== ======
.......................................................................................
Income from investment operations
Net investment income (0.02)# (0.01)#
.......................................................................................
Net realized and unrealized gains or losses on securities 1.01 3.56
------ ------
........................................................................................
Total from investment operations 0.99 3.55
------ ------
........................................................................................
Less distributions
From net realized gain on securities (2.13) (0.85)
------ ------
........................................................................................
Total distributions (2.13) (0.85)
------ ------
........................................................................................
Net asset value, end of year $21.54 $22.68
====== ======
........................................................................................
Total return 4.67% 18.60%
........................................................................................
Ratios/supplemental data
........................................................................................
Net assets, end of year (thousands) $571 $5
........................................................................................
Ratios to average net assets:
Total expenses 1.11% 1.24%+
........................................................................................
Net investment income (0.09%) (0.21%)+
........................................................................................
Portfolio turnover rate 159% 76%
........................................................................................
</TABLE>
+ Annualized.
* For the period from January 13, 1997 (commencement of class operations) to
September 30, 1997.
# Net investment income is based on average shares outstanding during the
period.
24 DOMESTIC GROWTH FUNDS
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SMALL COMPANY GROWTH FUND CLASS Y
Period Ended
September 30, 1998*
- --------------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period $7.73
=====
................................................................................
Income from investment operations
Net investment income (0.02)#
................................................................................
Net realized and unrealized gains or losses on securities (1.97)
-----
................................................................................
Total from investment operations (1.99)
-----
................................................................................
Net asset value, end of period $5.74
=====
................................................................................
Total return (25.74%)
................................................................................
Ratios/supplemental data
................................................................................
Net assets, end of period (millions) $1
................................................................................
Ratios to average net assets:
Total expenses 0.91%+
................................................................................
Net investment income (0.33%)+
................................................................................
Portfolio turnover rate 97%
................................................................................
</TABLE>
+ Annualized.
* For the period from January 20, 1998 (commencement of class operations) to
September 30, 1998.
# Net investment income is based on average shares outstanding during the
period.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
STOCK SELECTOR FUND CLASS Y
Institutional
Class
--------------
Period Ended Period Ended June 30, Year Ended
September 30, ---------------------------------- October 31,
1998*** 1998(b) 1997(b) 1996**++(b) 1995*
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $22.43 $21.11 $17.26 $17.07 $15.00
====== ====== ====== ====== ======
..............................................................................................................................
Income from investment operations
Net investment income 0.01 0.04 0.12 0.14 0.19
..............................................................................................................................
Net realized and unrealized gains or losses on securities (4.09) 4.24 5.32 1.49 2.87
------ ------ ------ ------ ------
..............................................................................................................................
Total from investment operations (4.08) 4.28 5.44 1.63 3.06
------ ------ ------ ------ ------
..............................................................................................................................
Less distributions
From net investment income 0 (0.04) (0.12) (0.14) (0.19)
..............................................................................................................................
From net realized gain on securities 0 (2.92) (1.47) (1.30) (0.80)
------ ------ ------ ------ ------
..............................................................................................................................
Total distributions 0 (2.96) (1.59) (1.44) (0.99)
------ ------ ------ ------ ------
..............................................................................................................................
Net asset value, end of period $18.35 $22.43 $21.11 $17.26 $17.07
====== ====== ====== ====== ======
..............................................................................................................................
Total return (18.19%) 21.90% 33.10% 19.24% 22.00%
..............................................................................................................................
Ratios/supplemental data
Net assets, end of period (thousands) $424,992 $563,987 $515,015 $414,824 $378,352
..............................................................................................................................
Ratios to average net assets:
Total expenses 0.93%+ 1.00% 0.98% 0.97%+ 1.05%+
..............................................................................................................................
Net investment income 0.19%+ 0.15% 0.63% 1.15%+ 1.44%+
..............................................................................................................................
Portfolio turnover rate 28% 61% 79% 114%(a) 119%
..............................................................................................................................
</TABLE>
+ Annualized.
* 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' ratio of expenses, net investment income, total return, and the
per share investment activities and distributions reflect this allocation.
** The per share amount for the Fund for the year 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.
*** For the three-month period ended September 30, 1998. The Fund changed its
fiscal year end from June 30 to September 30, effective September 30, 1998.
++ On April 15, 1996, the Conestoga Equity Fund was acquired by CoreFund, Inc.
At the time the institutional Class Shares of the Fund were exchanged for
Class Y Shares.
(a) For the year ended June 30, 1996 transactions relating to the merger noted
in ++ above were excluded from the calculation of the Portfolio turnover
rate.
(b) On July 24, 1998, CoreFund Core Equity Fund exchanged substantially all
of its net assets to Evergreen Stock Selector Fund. As CoreFund Core Equity Fund
is the accounting survivor, its basis of accounting for assets and liabilities
and its operating results for the periods prior to July 24, 1998 have been
carried forward in these financial highlights.
DOMESTIC GROWTH FUNDS 25
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
TAX STRATEGIC EQUITY FUND CLASS Y
Period Ended
September 30, 1998*
- --------------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period $10.00
======
................................................................................
Income from investment operations
Net investment income 0.00++
................................................................................
Net realized and unrealized gains or losses on securities 0.65
------
................................................................................
Total from investment operations 0.65
------
................................................................................
Net asset value, end of period $10.65
======
................................................................................
Total return 6.50%
................................................................................
Ratios/supplemental data
Net assets, end of period (thousands) $3,629
................................................................................
Ratios to average net assets:
Total expenses 1.30%+
................................................................................
Net investment income 0.61%+
................................................................................
Portfolio turnover rate 0%
................................................................................
</TABLE>
+ Annualized.
++ Less than one cent per share.
* For the period from September 1, 1998 (commencement of Class Y operations)
to September 30, 1998.
26 DOMESTIC GROWTH FUNDS
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
OTHER FUND PRACTICES
The Funds may invest in futures and options. If a Fund invests in foreign
securities, it may also invest in foreign currencies. The Funds may also engage
in short sales. Such practices are used to hedge a Fund's portfolio to protect
against changes in interest rates and to adjust the portfolio's duration.
Although this is intended to increase returns, these practices may actually
reduce returns or increase volatility.
In addition, the Funds may borrow money and lend their securities. Borrowing is
a form of leverage, which may magnify a Fund's gain or loss. Lending securities
may cause the Fund to lose the opportunity to sell these securities at the most
desirable price and, therefore, lose money.
- --------------------------------------------------------------------------------
Please consult the Statement of Additional Information for more information
regarding these and other investment practices used by the Funds, including
risks.
- --------------------------------------------------------------------------------
DOMESTIC GROWTH FUNDS 27
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
- --------------------------------------------------------------------------------
Evergreen Funds
Money Market
Treasury Money Market Fund
Money Market Fund
Municipal Money Market Fund
Pennsylvania Municipal Money Market Fund
Florida Municipal Money Market Fund
New Jersey Municipal Money Market Fund
Municipal Bond
Short Intermediate Municipal Fund
High Grade Municipal Bond Fund
Municipal Bond Fund
California Municipal Bond Fund
Connecticut Municipal Bond Fund
Florida High Income Municipal Bond Fund
Florida Municipal Bond Fund
Georgia Municipal Bond Fund
Maryland Municipal Bond Fund
Massachusetts Municipal Bond Fund
Missouri Municipal Bond Fund
New Jersey Municipal Bond Fund
New York Municipal Bond Fund
North Carolina Municipal Bond Fund
Pennsylvania Municipal Bond Fund
South Carolina Municipal Bond Fund
Virginia Municipal Bond Fund
Income
Capital Preservation and Income Fund
Short Intermediate Bond Fund
Intermediate Term Government Securities Fund
Intermediate Term Bond Fund
U.S. Government Fund
Diversified Bond Fund
Strategic Income Fund
High Yield Bond Fund
Balanced
American Retirement Fund
Balanced Fund
Tax Strategic Foundation Fund
Foundation Fund
Growth & Income
Utility Fund
Income and Growth Fund
Fund for Total Return
Value Fund
Blue Chip Fund
Growth and Income Fund
Small Cap Equity Income Fund
Domestic Growth
Strategic Growth Fund
Stock Selector Fund
Evergreen Fund
Omega Fund
Small Company Growth Fund
Aggressive Growth Fund
Micro Cap Fund
Tax Strategic Equity Fund
Masters Fund
Global International
Global Leaders Fund
International Growth Fund
Global Opportunities Fund
Precious Metals Fund
Emerging Markets Growth Fund
Latin America Fund
Express Line
800.346.3858
Investor Services
800.343.2898
28 DOMESTIC GROWTH FUNDS
<PAGE>
- --------------------------------------------------------------------------------
QUICK REFERENCE GUIDE
- --------------------------------------------------------------------------------
1 Evergreen Express Line
Call 1-800-346-3858
24 hours a day to
. check your account
. order a statement
. get a Fund's current price, yield and total return
. buy, redeem or exchange Fund shares
2 Non-retirement account holders
Call 1-800-343-2898
Each business day, 8 a.m. to 6 p.m.
Eastern time to
. buy, redeem or exchange shares
. order applications
. get assistance with your account
3 Information Line for Hearing and Speech
Impaired (TTY/TDD)
Call 1-800-343-2888
Each business day, 8 a.m. to 6 p.m.
Eastern time
4 Write us a letter
Evergreen Service Company
P.O. Box 2121
Boston, MA 02106-2121
. to buy, redeem or exchange shares
. to change the registration on your account
. for general correspondence
5 For express, registered or certified mail:
Evergreen Service Company
200 Berkeley Street
Boston, MA 02116-5039
6 Contact us on-line:
www.evergreen-funds.com
7 Regular communications you will receive:
Account Statements -- You will receive
quarterly statements for each Fund
you invest in.
Confirmation Notices -- We send a
confirmation of any transaction you make
within five days of the transaction.
Annual and Semi-annual reports -- You will
receive a detailed financial report on each
Fund you invest in twice a year.
Tax Forms -- Each January you will receive
any Fund tax information you need to
include in your tax returns as well as the
Evergreen Tax Information Guide.
Evergreen Events -- You will receive a
periodic newsletter published exclusively for
Evergreen Funds' shareholders.
<PAGE>
For More Information About the
Evergreen Domestic Growth Funds, Ask for:
The Funds' most recent Annual or Semi-Annual Report, which contains a complete
financial accounting for each Fund and a complete list of the Fund's holdings as
of a specific date, as well as commentary from the Fund's manager. This Report
discusses the market conditions and investment strategies that significantly
affected the Fund's performance during the most recent fiscal year or period.
The Statement of Additional Information (SAI), which contains more detailed
information about the policies and procedures of the Funds. The SAI has been
filed with the Securities and Exchange Commission (SEC) and its contents are
legally considered to be part of this prospectus.
For questions, other information, or to request a copy, without charge, of any
of the documents, call 1-800-343-2898 or ask your investment representative. We
will mail material within three business days.
Information about these Funds (including the SAI) is also available on the SEC's
Internet web site at http://www.sec.gov, or, for a duplication fee, by writing
the SEC Public Reference Section, Washington DC 20549-6009. This material can
also be reviewed and copied at the SEC's Public Reference Room in Washington,
DC. For more information, call the SEC at 1-800-SEC-0330.
Evergreen Distributor, Inc.
125 W. 55th Street
New York, New York 10019
(811-08413)
48813 536114 RV5
--------------
BULK RATE
U.S. POSTAGE
PAID
PERMIT NO. 19
HUDSON, MA
--------------
[LOGO OF EVERGREEN FUNDS(SM) APPEARS HERE]
201 South College St.
Charlotte, NC 28288
<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, 1999
Evergreen Fund ("Evergreen")
Evergreen Micro Cap Fund ("Micro Cap")
Evergreen Aggressive Growth Fund ("Aggressive Growth")
Evergreen Omega Fund ("Omega")
Evergreen Small Company Growth Fund ("Small Company")
Evergreen Strategic Growth Fund ("Strategic Growth")
Evergreen Stock Selector Fund ("Stock Selector")
Evergreen Tax Strategic Equity Fund ("Tax Strategic")
Evergreen Masters Fund ("Masters")
(Each a "Fund"; together, the "Funds")
Each Fund is a series of Evergreen Equity Trust (the "Trust").
This Statement of Additional Information ("SAI") pertains to all
classes of shares of the Funds listed above. It is not a prospectus but should
be read in conjunction with the prospectuses of the Funds dated February 1, 1999
(except for Masters, which are dated January 4, 1999). The Funds are offered
through two separate prospectuses: one offering Class A, Class B and Class C
shares of each Fund (other than Stock Selector, which offers only Class A and
Class B shares) and one offering only Class Y shares of each Fund. You may
obtain any of these prospectuses without charge by calling (800)-343-2898.
Certain information may be incorporated by reference to the Funds
Annual Report dated September 30, 1998. You may obtain a copy of the Annual
Report without charge by calling (800)-343-2898.
<PAGE>
TABLE OF CONTENTS
PART 1
TRUST HISTORY
INVESTMENT POLICIES
OTHER SECURITIES AND PRACTICES
PRINCIPAL HOLDERS OF FUND SHARES
EXPENSES
PERFORMANCE
COMPUTATION OF CLASS A OFFERING PRICE
SERVICE PROVIDERS
FINANCIAL STATEMENTS
PART 2
ADDITIONAL INFORMATION ON SECURITIES AND INVESTMENT PRACTICES
PURCHASE, REDEMPTION AND PRICING OF SHARES
SALES CHARGE WAIVERS AND REDUCTIONS
PERFORMANCE CALCULATIONS
PRINCIPAL UNDERWRITER
DISTRIBUTION EXPENSES UNDER RULE 12b-1
TAX INFORMATION
BROKERAGE
ORGANIZATION
INVESTMENT ADVISORY AGREEMENT
MANAGEMENT OF THE TRUST
CORPORATE AND MUNICIPAL BOND RATINGS
ADDITIONAL INFORMATION
<PAGE>
PART 1
TRUST HISTORY
The Evergreen Equity Trust is an open-end management investment company,
which was organized as a Delaware business trust on September 18, 1997. A copy
of the Declaration of Trust is on file as an exhibit to the Trust's Registration
Statement, of which this SAI is a part. The foregoing is qualified in its
entirety by reference to the Declaration of Trust.
INVESTMENT POLICIES
FUNDAMENTAL INVESTMENT RESTRICTIONS
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 (the "1940
Act"). Where necessary, an explanation beneath a fundamental policy describes
the Fund's practices with respect to that policy, as allowed by current law. If
the law governing a policy changes, the Funds' 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 and enter into reverse repurchase
agreements in an amount up to 33 1/3% of its total assets, taken at market
value. Each Fund may also borrow up to an additional 5% of its total assets from
banks or others. A Fund may borrow only as a temporary measure for extraordinary
or emergency purposes such as the redemption of Fund shares. A Fund may purchase
additional securities so long as borrowings do not exceed 5% of its total
assets. 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 a 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, a 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 a 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 a 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, a 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 the Fund any income accruing on the security. The
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 the 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. The Fund has the right to call
a loan and obtain the securities lent any time on notice of not more than five
business days. The Fund may pay reasonable fees in connection with such loans.
OTHER SECURITIES AND PRACTICES
For information regarding certain securities the Funds may purchase and
certain investment practices the Funds may use, see the following sections under
"Additional Information on Securities and Investment Practices" in Part 2 of
this SAI:
Defensive Investments
U.S. Government Securities
When-Issued, Delayed-Delivery and Forward Commitment Transactions
Repurchase Agreements
Reverse Repurchase Agreements
Options
Futures Transactions
Foreign Securities (not applicable to Evergreen, Micro Cap or Aggressive Growth)
Foreign Currency Transactions (not applicable to Evergreen, Micro Cap or
Aggressive Growth)
Illiquid and Restricted Securities Investment in Other
Investment Companies Short Sales
PRINCIPAL HOLDERS OF FUND SHARES
As of December 31, 1998, the officers and Trustees of the Trust owned as
a group less than 1% of the outstanding shares 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 the
outstanding shares of any class of each Fund as ofDecember 31, 1998.
Evergreen Class A:
None
Evergreen Class B:
None
Evergreen Class C:
Turtle & Co. 7.853%
P.O. Box 9427
Boston, MA 02209-9427
MLPF&S For the Sole Benefit 6.016%
Of its Customers
Attn: Fund Administration #97JB1
4800 Deer Lake Dr. E 2nd FL
Jacksonville, FL 32246-6484
Evergreen Class Y:
First Union National Bank/EB/INT 26.275%
Reinvest Account
Attn Trust Operations Fund Group
401 S. Tryon St. 3rd FL CMG 1151
Charlotte, NC 25208-1911
First Union Nationa Bank/EB/INT 10.317%
Cash Account
Attn Trust Operations Fund Group
401 S. Tryon St. 3rd FL CMG 1151
Charlotte, NC 28202-1911
Micro Cap Class A:
Dr. Paul Errera 6.591%
9 October Hill Rd.
Woodbridge, CT 06525-1148
Micro Cap Class B:
MLPF&S For the Sole Benefit 6.735%
Of its Customers
Attn: Fund Administration #97H76
4800 Deer Lake Dr. E 2nd FL
Jacksonville, FL 32246-6484
Micro Cap Class C:
MLPF&S For the Sole Benefit 5.482%
Of its Customers
Attn: Fund Administration #97JA4
4800 Deer Lake Dr. E 2nd FL
Jacksonville, FL 32246-6484
Micro Cap Class Y:
Stephen A. Lieber 12.483%
1210 Greacen Point Rd.
Mamaroneck, NY 10543-4613
Constance E. Lieber 8.930%
1210 Greacen Point Rd.
Mamaroneck, NY 10543-4613
Charles Schwab & Co. Inc. 8.891%
Special Custody Account
FBO Exclusive Benefit of Customers
Reinvest Account Attn Mutual FD
101 Montgomery St.
San Francisco, CA 94104-4122
CITIBANK NA 8.106%
Delta Airlines Master Trust 308235
Joe Villella Citicorp Services
3800 Citibank Center
Attn: Carolyn Smith
Tampa, FL 33610
Aetna Life Insurance & Annuity 6.345%
Central Valuation Unit
Attn: Jackie Johnson-Conveyor TS 31
151 Farmington Ave.
Hartford, CT 06156-0001
Aggressive Growth Class A:
MLPF&S For the Sole Benefit 10.270%
Of its Customers
Attn: Fund Administration #97212
4800 Deer Lake Dr. E 2nd FL
Jacksonville, FL 32246-6484
Aggressive Growth Class B:
None
Aggressive Growth Class C:
MLPF&S For the Sole Benefit 10.667%
Of its Customers
Attn: Fund Administration #97JA1
4800 Deer Lake Dr. E 2nd FL
Jacksonville, FL 32246-6484
Lavedna Ellingson 8.996%
Douglas Ellingson JTWROS
8510 McClintock
Tempe, AZ 85284-2527
Salomon Smith Barney Inc. 5.434%
333 West 34th St. - 3rd FL
New York, NY 10001
Aggressive Growth Class Y:
First Union National Bank 51.677%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
310 S. Tryon St.
Charlotte, NC 28202-1910
First Union National Bank 28.303%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon St.
Charlotte, NC 28202-1910
Omega Class A:
None
Evergreen Omega Fund Class B:
MLPF&S For the Sole Benefit 6.737%
Of its Customers
Attn: Fund Administration #97BP1
4800 Deer Lake Dr. E 2nd FL
Jacksonville, FL 32246-6484
Omega Class C:
MLPF&S For the Sole Benefit 24.259%
Of its Customers
Attn: Fund Administration #97BP5
4800 Deer Lake Dr. E 2nd FL
Jacksonville, FL 32246-6484
Omega Class Y:
Pembroke Limited 39.378%
Craigmuir Chambers
P.O. Box 71
Road Town Tortola
British Virgin Islands
First Union National Bank 14.666%
Re-invest Account
Attn: Trust Operations Fund Group
401 South Tryon St. 3rd FL
Charlotte, NC 28202-1911
First Union National Bank 9.980%
Cash Account
Attn: Trust Operations Group
1525 West WT Harris BLVD
Charlotte, NC 28262
Hobert Z Cross & Hazel H Cross TR 6.519%
Cross Family Rev Trust
U/A/D 3-8-88
5335 Fidler Ave.
Lakewood, CA 90712-2001
Small Company Class A:
ROFE & CO 8.445%
C/O State Street Bank & Trust Co.
For Sub Account
Kokusai Securities Co. Ltd.
P.O. Box 5061
Boston, MA 02206-5061
Small Company Class B:
MLPF&S For the Sole Benefit 19.588%
Of its Customers
Attn: Fund Administration #98302
4800 Deer Lake Dr. E 2nd FL
Jacksonville, FL 32246-6484
Small Company Class C:
MLPF&S For the Sole Benefit 40.828%
Of its Customers
Attn: Fund Administration #97JA1
4800 Deer Lake Dr. E 2nd FL
Jacksonville, FL 32246-6484
J C Bradford & Co. Cust FBO 11.638%
Consolidated Investors
330 Commerce St.
Nashville, TN 37201-1809
State Street BK and TR CO Cust 8.618%
Rollover IRA FBO Mark Loveland
2701 Westheimer Rd. #12H
Houston, TX 77098-1238
Small Company Class Y:
First Union National Bank 47.492%
Cash Account
Attn Trust Operation Fund Group
401 South Tryon St. 3rd FL
Charlotte, NC 28202-1911
Pembroke Limited 41.841%
Craigmuir Chambers
P.O. Box 71
Road Town Tortola
British Virgin Islands
First Union National Bank 5.972%
Re-Invest Account
Attn Trust Operations Fund Group
401 South Tryon St. 3rd FL
Charlotte, NC 28202-1911
Strategic Growth Class A:
None
Strategic Growth Class B:
None
Strategic Growth Class C:
State Street BK and TR CO Cust 5.970%
Edward W Sparrow Hosp TSA FBO
Dennis Allen Swan
3741 Chippendale
Okemos, MI 48864-3861
State Street BK and TR CO Cust 5.392%
Rollover IRA FBO
Sandra K. Rosenberg
1558 Park Circle
Mendota Heights, MN 55118
State Street BK and TR CO Cust 5.335%
SARSEP IRA FBO Scott Staley
395 E Richards Rd.
Oregon, WI 53575
State Street BK and TR CO Cust 5.250%
IRA FBO
William B. Read
100 Christwood Blvd. Apt 225
Covington, LA 70433-4603
Stock Selector Class A:
None
Stock Selector Class B:
OFP Limited Partnership 57.562%
P O Box 5430
Incline Village, NV 89450-5430
Stock Selector Class C:
None
Stock Selector Class Y:
First Union Natl BK BK/EB/INT 90.310%
Reinvest Account
Attn Trust Oper FD GRP
401 S Tryon St. 3rd FL CMG 1151
Charlotte, NC 28202-1911
First Union Natl BK BK/EB/INT 5.254%
Cash Account
Attn: Trust Oper FD GRP
401 S. Tryon St. 3rd FL CMG 1151
Charlotte, NC 28202-1911
Tax Strategic Class A:
First Union Brokerage Services 11.724%
Thomas K. Morton and
A/C 6066-1004
961 Lew Blvd.
St. Augustine, FL 32084
First Union Brokerage Services 11.724%
William K Morton and
Leslie H. Morton JTWROS
A/C 6066-3284
2 Viejo St.
St Augustine, FL 32084
Thomas G. Henry 7.949%
Rita E Henry JT WROS
60 Mountain Rd.
York, PA 17402-7754
Dwight R. Markey & 5.686%
Treva R Markey JT TEN
2710 Joppa Rd.
York, PA 17403-5152
Harvey S. Kline 5.094%
Ruth Z Kline TTEES M/B
Harvey S & Ruth Z Kline
Trust U/A DTD 10-13-92
207-C Hope Lane
New Oxford, PA 17350-8528
Tax Strategic Class B:
Svea Erikson TTEE 9.082%
Alice Johanson Rev Liv Trust
U/A DTD 12-07-94
5959 Parkwalk Circle W
Boynton Beach, FL 33437-2349
First Union Brokerage Services 7.252%
Sarah T Driggers and
A/C 2819-4486
4973 San Pable Road S
Jacksonville, FL 32224
MLPF&S For the Sole Benefit 5.717%
Of its Customers
Attn: Fund Administration #97YU0
4800 Deer Lake Dr. E 2nd FL
Jacksonville, FL 32246-6484
Tax Strategic Class C:
MLPF&S For the Sole Benefit 23.576%
Of its Customers
Attn: Fund Administration #97YU1
4800 Deer Lake Dr. E 2nd FL
Jacksonville, FL 32246-6484
NFSC FEBO # A7D-061336 16.266%
Nancy J. Vandenput
Donald H. Vandenput
1314 Orlando Dr.
Green Bay, WI 54313
NFSC FEBO #A7D-134090 14.538%
Dian H Crawford
300 ST Joseph St.
Suite 25
Green Bay, WI 54301
Carolyn R Penrose TTEE 8.591%
Carolyn R Penrose Trust
U/A DTD 02/10/92 1125 Laplaloma Blvd.
Gail F Vanderperren 5.734%
TOD Patrick Jay
1665 Lennwood St.
Green Bay, WI 54303
Tax Strategic Class Y:
Stephen A. Lieber 28.777%
1210 Greacen Point Rd.
Mamaroneck, NY 10543-4613
L. Charles Hilton Jr. 26.596%
Lela G Hilton JTWROS
4116 North Highway 231
Panama City, FL 32404
Samuel A. Lieber TTEE 14.389%
Janice Ruth Lieber Trust
U/A/D 2-22-1995
1210 Greacen Point Rd.
Mamaroneck, Ny 10543-4613
Nola Maddox Falcone 14.232%
70 Drake Rd.
Scarsdale, NY 10583-6447
EXPENSES
Advisory Fees
Each Fund has its own investment advisor. For more information, see
"Investment Advisory Agreements" in Part 2 of this SAI.
Evergreen Asset Management Corp. ("EAMC") is the investment advisor to
Evergreen and Micro Cap. Lieber & Company acts as sub-advisor to these Funds,
and is reimbursed by EAMC for the costs of providing sub-advisory services. EAMC
is entitled to receive from each of these Funds an annual fee based on the
Fund's average daily net assets, as follows:
Average Daily Net Assets Fee
- ------------------------- -----
first $750 million 1.00%
next $250 million 0.90%
over $1 billion 0.80%
EAMC is also the investment advisor to Tax Strategic. EAMC is entitled
to receive from Tax Strategic an annual fee equal to 0.95% of the average daily
net assets of the Fund. Lieber & Company acts as sub-advisor to the Fund, and is
reimbursed by EAMC for the costs of providing sub-advisory services.
Evergreen Investment Management ("EIM"), formerly the Capital Management
Group of First Union National Bank, is the investment advisor to Aggressive
Growth. EIM is entitled to receive from Aggressive Growth an annual fee equal to
0.60% of the average daily net assets of the Fund.
EIM is also the investment advisor to Masters. EIM is entitled to
receive from Masters an annual fee equal to 0.95% of the average daily net
assets of the Fund.
Evergreen Investment Management Company ("EIMC"), formerly Keystone
Investment Management Company, is the investment advisor to Omega. EIMC is
entitled to receive from Omega an annual fee based on the Fund's average daily
net assets, as follows:
Average Daily Net Assets Fee
- --------------------------- ----
first $250 million 0.75%
next $250 million 0.675%
next $500 million 0.60%
over $1 billion 0.50%
EIMC is also the investment advisor to Small Company and Strategic
Growth. EIMC is entitled to receive from each of these Funds an annual fee based
on the Fund's average daily net assets, as follows:
Average Daily Net Assets Fee
- ------------------------- ----
first $100 million 0.70%
next $100 million 0.65%
next $100 million 0.60%
next $100 million 0.55%
next $100 million 0.50%
next $500 million 0.45%
next $500 million 0.40%
over $1.5 billion 0.35%
Meridian Investment Company ("MIC") is the investment advisor to Stock
Selector. MIC is entitled to receive from Stock Selector an annual fee equal to
0.74% of the average daily net assets of the Fund, MIC has agreed to limit the
expenses of the Fund until August 2000
Advisory Fees Paid
Below are the advisory fees paid by each Fund for the last three fiscal
periods. Information for Masters is not available since the Fund commenced
operations on 1/4/99.
Fund/Fiscal Year or Period Advisory Fee Waiver
Year or Period Ended 1998
Evergreen (Year ended 9/30/98) $17,536,054 -0-
Micro Cap (Year ended 9/30/98) $615,473 -0-
Aggressive Growth (Year ended 9/30/98) $1,390,081 -0-
Omega (Year ended 9/30/98) $2,214,127 -0-
Small Company (Year ended 9/30/98) $6,367,129 -0-
Strategic Growth (Year ended 9/30/98) $4,870,007 -0-
Stock Selector (Three months
ended 9/30/98) $968,973 $85,492
Stock Selector (Year ended 6/30/98) $4,270,615 -0-
Tax Strategic (One month ended 9/30/98) $2,079 $2,079
Year or Period Ended 1997
Evergreen (Year ended 9/30/97) $13,089,112 -0-
Micro Cap (Year ended 9/30/97) $428,047 -0-
Aggressive Growth (Year ended 9/30/97) $1,013,344 -0-
Omega (Nine months ended 9/30/97) $1,480,178 -0-
Small Company (Four months
ended 9/30/97) $2,387,425 -0-
Small Company (Year ended 5/31/97) $7,788,033 -0-
Strategic Growth (Eleven months
ended 9/30/97) $3,205,753 -0-
Stock Selector (Year Ended 6/30/97) $3,459,108 -0-
Tax Strategic (N/A) N/A N/A
Year or Period Ended 1996
Evergreen (Year ended 9/30/96) $9,145,287 $9,740
Micro Cap (Year ended 9/30/96) $510,421 -0-
Aggressive Growth (Year ended (9/30/96) $612,492 -0-
Omega (Year ended 12/31/96) $1,831,142 -0-
Small Company (Year ended 5/31/96) $8,473,139 -0-
Strategic Growth (Year ended 10/31/96) $2,994,500 -0-
Stock Selector (Year Ended 6/30/96) $1,973,776 -0-
Tax Strategic (N/A) N/A N/A
Brokerage Commissions
Below are the brokerage commissions paid by each Fund and brokerage
commissions paid by the applicable Funds to Lieber & Company for the last three
fiscal years or periods. For more information regarding brokerage commissions,
see "Brokerage" in Part 2 of this SAI. Information for Masters is not available
since the Fund commenced operations on 1/4/99.
Fund/Fiscal Year or Period Total Paid to Total Paid to Lieber
All Brokers
Year or Period Ended 1998
- ---------------------------------- -------------- -------------------
Evergreen (Year ended 9/30/98) $507,457 $405,182
Micro Cap (Year ended 9/30/98) $96,323 $56,631
Aggressive Growth (Year ended 9/30/98) $127,761 N/A
Omega (Year ended 9/30/98) $512,446 N/A
Small Company (Year ended 9/30/98) $2,527,607 N/A
Strategic Growth (Year ended 9/30/98) $162,350 N/A
Stock Selector (Three months
ended 9/30/98) $81,289 N/A
Stock Selector (Year ended 6/30/98) $840,644 N/A
Tax Strategic (One month ended 9/30/98) $5,853 $5,653
Year or Period Ended 1997
- ---------------------------------- -------------- -------------------
Evergreen (Year ended 9/30/97) $503,276 $416,953
Micro Cap (Year ended 9/30/97) $91,568 $61,717
Aggressive Growth (Year ended 9/30/97) $677,860 N/A
Omega (Nine months ended 9/30/97) $403,294 N/A
Small Company (Year ended 5/31/97) $1,891,397 N/A
Strategic Growth (Eleven months
ended 9/30/97) $1,144,065 N/A
Stock Selector (Year ended 6/30/97) $1,026,435 N/A
Tax Strategic (N/A) N/A N/A
Year or Period Ended 1996
- ---------------------------------- -------------- -------------------
Evergreen (Year ended 9/30/96) $590,105 $515,522
Micro Cap (Year ended 9/30/96) $317,058 $153,596
Aggressive Growth (Year ended 9/30/96) $119,584 N/A
Omega (Year ended 12/31/96) $829,479 N/A
Small Company (Year ended 5/31/96) $2,853,950 N/A
Strategic Growth (Year ended 10/31/96) $1,990,208 N/A
Stock Selector (Year ended 6/30/96) $1,422,984 N/A
Tax Strategic (N/A) N/A N/A
Percentage of Brokerage Commissions Paid to Lieber & Company
The table below shows, for the fiscal year or period ended September 30,
1998, (1) the percentage of aggregate brokerage commissions paid by each
applicable Fund to Lieber & Company and (2) the percentage of each applicable
Fund's aggregate dollar amount of commissionable transactions effected through
Lieber & Company. For more information, see "Selection of Brokers" under
"Brokerage" in Part 2 of this SAI.
Percentage of
Percentage of Commissionable
Commissions to Transactions through
Fund Lieber & Company Lieber & Company
Evergreen 79.85% 72.97%
Micro Cap 58.80% 51.98%
Tax Strategic 96.58% 94.74%
Underwriting Commissions
Below are the underwriting commissions paid by each Fund and the amounts
retained by the principal underwriter for the last three fiscal years or
periods. For more information, see "Principal Underwriter" in Part 2 of this
SAI. Information for Masters is not available since the Fund commenced
operations on 1/4/99.
Total Underwriting
Underwriting Commissions
Fund/Fiscal Year or Period Commissions Retained
Year or Period Ended 1998
Evergreen (Year ended 9/30/98) $10,689,087 $233,260
Micro Cap (Year ended 9/30/98) $331,040 $10,258
Aggressive Growth (Year
ended 9/30/98) $414,138 $19,289
Omega (Year ended 9/30/98) $790,103 $25,765
Small Company (Year ended 9/30/98) $958,402 $2,569
Strategic Growth (Year
ended 9/30/98) $883,936 $12,462
Stock Selector (Year
Ended 6/30/98) $110,148 $10,160
Stock Selector (Three months
ended 9/30/98) $5,836 $324
Tax Strategic (One month
ended 9/30/98) $477 $52
Year or Period Ended 1997
Evergreen (Year ended 9/30/97) $1,464,361 $129,417
Micro Cap (Year ended 9/30/97) $2,223 $300
Aggressive Growth (Year
ended 9/30/97) $278,145 $21,472
Omega (Nine months ended 9/30/97) $254,113 $19,806
Small Company (Four months
ended 9/30/97) $878,274 $22,796
Small Company (Year ended 5/31/97) $17,885,604 $13,187,854
Strategic Growth (Eleven months
ended 9/30/97) $646,769 $14,708
Stock Selector (Year
ended 6/30/97) $96,837 $4,819
Tax Strategic (N/A) N/A N/A
Year or Period Ended 1996
Evergreen (Year ended 9/30/96) $1,462,012 $157,233
Micro Cap (Year ended 9/30/96) $2,963 $188
Aggressive Growth (Year
ended 9/30/96) $185,835 $22,742
Omega (Year ended 12/31/96) $983,621 $759,394
Small Company (Year ended 5/31/96) $15,690,812 ($5,933,719)
Strategic Growth (Year
ended 10/31/96) $4,093,912 $2,049,519
Stock Selector (Year
ended 6/30/96) $12,612 $1,710
Tax Strategic (N/A) N/A N/A
12b-1 Fees
Below are the 12b-1 fees paid by each Fund for the fiscal year or period
ended September 30, 1998. For more information, see "Distribution Expenses Under
Rule 12b-1" in Part 2 of this SAI. Information for Masters is not available
since the Fund commenced operations on 1/4/99.
<TABLE>
<CAPTION>
Fund Class A Class B Class C
Distribution Service Fees Distribution Service Fees Distribution Service
Fees Fees Fees Fees
<S> <C> <C> <C> <C> <C> <C>
Evergreen -0- $487,965 $4,642,418 $1,547,473 $89,549 $29,850
Micro Cap -0- $11,483 $29,627 $9,876 $21,463 $7,154
Aggressive
Growth -0- $386,073 $294,671 $98,224 $25,518 $8,506
Omega -0- $369,456 $878,159 $292,789 $117,485 $39,162
Small Company -0- $1,539,502 $2,345,500 $1,267,915 $26,072 $8,690
Strategic
Growth -0- $1,356,293 $1,239,580 $720,005 $1,151 $383
Stock Selector -0- $11,597 $671 $223 -0- -0-
Tax Strategic -0- $1 -0- -0- -0- -0-
</TABLE>
Trustee Compensation
Listed below is the Trustee compensation paid by the Trust individually
and by the Trust and the eight other trusts in the Evergreen Fund Complex for
the twelve months ended September 30, 1998. The Trustees do not receive pension
or retirement benefits from the Funds. For more information, see "Management of
the Trust" in Part 2 of this SAI.
Total Compensation
Aggregate from Trust and Fund
Compensation from Complex Paid to
Trustee Trust Trustees**
Laurence B. Ashkin $27,177 $73,450
Charles A. Austin, III $23,723 $65,450
K. Dun Gifford $23,091 $63,575
James S. Howell $35,759 $99,425
Leroy Keith Jr. $23,091 $63,575
Gerald M. McDonnell $28,937 $79,200
Thomas L. McVerry $31,955 $88,275
William Walt Pettit $26,529 $72,325
David M. Richardson $22,878 $62,950
Russell A. Salton, III $29,569 $81,625
Michael S. Scofield $29,771 $81,924
Richard J. Shima $25,585 $70,150
Robert J. Jeffries* $9,702 $28,437
Foster Bam* $16,951 $42,950
*Former Trustee; retired as of December 31, 1997.
**Certain Trustees have elected to defer all or part of their
total compensation for the twelve months ended
September 30, 1998. The amounts listed below will be
payable in later years to the respective Trustees:
Austin $8,512
McVerry $88,275
Howell $76,119
Salton $81,625
Petit $72,325
McDonnell $79,200
Scofield $11,740
PERFORMANCE
Total Return
Below are the annual total returns for each class of shares of the Funds
(including applicable sales charges) as of September 30, 1998. For more
information, see "Total Return" under "Performance Calculations" in Part 2 of
this SAI. Information for Masters is not available since the Fund commenced
operations on 1/4/99.
Ten Years or
Fund/Class One Year Five Years Since Inception Inception Date
Evergreen
Class A -10.07% 13.77% 11.57% 1/3/95
Class B -10.77% 14.07% 11.83% 1/3/95
Class C -7.11% 14.30% 11.83% 1/3/95
Class Y -5.25% 15.16% 12.25% 10/15/71
Micro Cap
Class A -25.22% 3.66% 8.87% 1/3/95
Class B -25.76% 3.81% 9.10% 1/3/95
Class C -22.79% 4.12% 9.11% 1/3/95
Class Y -21.28% 4.85% 9.49% 6/1/83
Aggressive Growth
Class A -10.40% 9.04% 15.75% 4/15/83
Class B -11.30% 9.34% 16.05% 7/7/95
Class C -7.76% 9.59% 16.04% 8/3/95
Class Y -5.43% 10.31% 16.42% 7/11/95
Omega
Class A -0.53% 11.24% 16.08% 4/29/68
Class B -1.04% 11.07% 16.12% 8/2/93
Class C 2.80% 11.37% 16.15% 8/2/93
Class Y 4.67% 12.37% 16..67% 1/13/97
Small Company
Class A -36.69% 1.47% 12.06% 1/20/98
Class B -36.92% 1.50% 11.96% 9/11/35
Class C -34.48% 1.75% 11.68% 1/26/98
Class Y -33.25% 2.76% 12.91% 1/26/98
Strategic Growth
Class A -.53% 13.20% 14.78% 1/20/98
Class B -0.67% 13.50% 14.84% 9/11/35
Class C 2.90% 13.50% 14.40% 1/22/98
Stock Selector
Class A -15.99% 13.78% 14.42% 2/28/90
Class B -24.52 12.49% 13.82% 11/7/97
Class Y -11.56% 15.04% 15.16% 2/21/95
Tax Strategic
Class A N/A N/A 1.43% 9/4/98
Class B N/A N/A N/A N/A
Class C N/A N/A N/A N/A
Class Y N/A N/A 6.50% 9/1/98
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 year or period. For more information, see
"Purchase, Redemption and Pricing of Shares."
Per Share Offering
Fund Date Net Asset Sales Price Per
Value Charge Share
Evergreen 9/30/98 $21.11 4.75% $22.16
Micro Cap 9/30/98 $19.88 4.75% $20.87
Aggressive
Growth 9/30/98 $21.26 4.75% $22.32
Omega 9/30/98 $21.50 4.75% $22.57
Small Company 9/30/98 $5.72 4.75% $6.01
Strategic
Growth 9/30/98 $9.67 4.75% $10.15
Stock Selector 9/30/98 $18.34 4.75% $19.25
Tax Strategic 9/30/98 $10.65 4.75% $11.18
SERVICE PROVIDERS
Administrator
Evergreen Investment Services, Inc. ("EIS") serves as administrator for
aggressive Growth and Tax Strategic, subject to the supervision and control of
the Trust's Board of Trustees. EIS provides the Funds with facilities, equipment
and personnel and is entitled to receive a fee from the Fund based on the total
assets of all mutual funds for which EIS serves as administrator and a First
Union Corporation subsidiary serves as investment advisor. The fee paid to EIS
is calculated in accordance with the following schedule:
Assets Fee
- ----------------- ------
first $7 billion 0.050%
next $3 billion 0.035%
next $5 billion 0.030%
next $10 billion 0.020%
next $5 billion 0.015%
over $30 billion 0.010%
EIS also provides facilities, equipment and personnel to Evergreen,
Micro Cap, Omega, Small Company and Strategic Growth on behalf of the investment
advisor. Omega, Small Company and Strategic Growth reimburse EIS for providing
such services.
Transfer Agent
Evergreen Service Company ("ESC"), a subsidiary of First Union
Corporation, is the Fund's transfer agent. ESC issues and redeems shares, pays
dividends and performs other duties in connection with the maintenance of
shareholder accounts. The transfer agent's address is P.O. Box 2121, Boston,
Massachusetts 02106-2121. The Fund pays ESC annual fees as follows:
Annual Fee Annual Fee
Per Open Per Closed
Fund Type Account* Account**
Monthly Dividend Funds $25.50 $9.00
Quarterly Dividend Funds $24.50 $9.00
Semiannual Dividend Funds $23.50 $9.00
Annual Dividend Funds $23.50 $9.00
Money Market Funds $25.50 $9.00
*For shareholder accounts only. The Fund pays ESC cost plus 15%
for broker accounts.
**Closed accounts are maintained on the system in order to
facilitate historical and tax information.
Distributor
Evergreen Distributor, Inc. ( "EDI") markets the Funds through
broker-dealers and other financial representatives. Its address is 125 W. 55th
Street, New York, NY 10019.
Independent Auditors
KPMG Peat Marwick LLP, 99 High Street, Boston, Massachusetts 02110,
audits the financial statements of Omega, Small Company, Strategic Growth and
Tax Strategic.
PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, New
York 10036, audits the financial statements of Evergreen, Micro Cap, Aggressive
Growth and Stock Selector.
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.
FINANCIAL STATEMENTS
The financial statements for Stock Selector for the periods from November
1, 1995 through June 30, 1998 have been audited by Ernst & Young, LLP,
independent auditors. The financial statements of Stock Selector for the three
month period ended September 30, 1998 have been audited by
PricewaterhouseCoopers LLP, independent auditors. Reports of Ernst & Young LLP
for the period ended June 30, 1998 and PricewaterhouseCoopers LLP for the period
ended September 30, 1998 on the financial statements for Stock Selector appear
in the Fund's Annual Reports which are incorporated by reference. The financial
statements for Omega, Small Company, Strategic Growth and Tax 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 Cap and Aggressive Growth 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 be 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.
<PAGE>
EVERGREEN FUNDS
Statement of Additional Information ("SAI")
PART 2
ADDITIONAL INFORMATION ON SECURITIES
AND INVESTMENT PRACTICES
The prospectus describes the Fund's investment objective and the
securities in which it primarily invests. The following describes other
securities the Fund may purchase and investment strategies it may use. Some of
the information below will not apply to the Fund in which you are interested.
See the list under Other Securities and Practices in Part 1 of this SAI to
determine which of the sections below are applicable.
Defensive Investments
The Fund may invest up to 100% of its assets in high quality money
market instruments, such as notes, certificates of deposit, commercial paper,
banker's acceptances, bank deposits or U.S. government securities if, in the
opinion of the advisor, market conditions warrant a temporary defensive
investment strategy. Evergreen Fund for Total Return may also invest in debt
securities and high grade preferred stocks for defensive purposes when its
investment advisor determines a temporary defensive strategy is warranted.
U.S. Government Securities
The 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) Credit System, including the National Bank for Cooperatives, Farm
Credit Banks and Banks for Cooperatives;
(ii) 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 Fund 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.
When-Issued, Delayed-Delivery and Forward Commitment Transactions
The Fund 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 Fund 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, the 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 the 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 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. In
addition, when the 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.
Repurchase Agreements
The Fund 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
investment advisor to be creditworthy. In a repurchase agreement the Fund
obtains a security and simultaneously commits to return the security to the
seller at a set price (including principal and interest) within 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.
The Fund's custodian or a third party will take possession of the
securities subject to repurchase agreements, and these securities will be marked
to market daily. To the extent that the original seller does not repurchase the
securities from the 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. The Fund's investment 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 Fund 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
As described herein, the Fund may also enter into reverse repurchase
agreements. These transactions are similar to borrowing cash. In a reverse
repurchase agreement, the 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 the 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 the 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
An option is a right to buy or sell a security for a specified price
within a limited time period. The option buyer pays the option seller (known as
the "writer") for the right to buy, which is a "call" option, or the right to
sell, which is a "put" option. Unless the option is terminated, the option
seller must then buy or sell the security at the agreed-upon price when asked to
do so by the option buyer.
The Fund may buy or sell put and call options on securities it holds or
intends to acquire, and may purchase put and call options for the purpose of
offsetting previously written put and call options of the same series. The Fund
may also buy and sell options on financial futures contracts. The Fund will use
options as a hedge against decreases or increases in the value of securities it
holds or intends to acquire.
The Fund may write only covered options. With regard to a call option,
this means that the Fund will own, for the life of the option, the securities
subject to the call option. The 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 the 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.
Futures Transactions
The Fund may enter into financial futures contracts and write options on
such contracts. The Fund intends to enter into such contracts and related
options for hedging purposes. The Fund will enter into futures on securities or
index-based futures contracts 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. The Fund does not make payment or
deliver securities upon entering into a futures contract. Instead, it puts down
a margin deposit, which is adjusted to reflect changes in the value of the
contract and which continues until the contract is terminated.
The Fund may sell or purchase futures contracts. When a futures contract
is sold by the 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, the Fund sells futures contracts in order to offset
a possible decline in the value of its securities. If a futures contract is
purchased by the Fund, the value of the contract will tend to rise when the
value of the underlying securities increases and to fall when the value of such
securities declines. The Fund intends to purchase futures contracts in order to
establish what is believed by the investment advisor to be a favorable price or
rate of return for securities the Fund intends to purchase.
The Fund also intends to purchase put and call options on futures
contracts for hedging purposes. A put option purchased by the Fund would give it
the right to assume a position as the seller of a futures contract. A call
option purchased by the 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 the Fund to pay a premium. In exchange for the premium, the 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, the Fund's loss will be
limited to the amount of the premium and any transaction costs.
The 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. The Fund's ability to enter into
closing transactions depends on the development and maintenance of a liquid
secondary market. There is no assurance that a liquid secondary market will
exist for any particular contract or at any particular time. As a result, there
can be no assurance that the Fund will be able to enter into an offsetting
transaction with respect to a particular contract at a particular time. If the
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 the
Fund to manage market, interest rate or exchange 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 investment
advisor correctly predicts interest rate movements, a hedge could be
unsuccessful if changes in the value of the Fund's futures position did not
correspond to changes in the value of its investments. This lack of correlation
between the Fund's futures and securities positions may be caused by differences
between the futures and securities markets or by differences between the
securities underlying the Fund's futures position and the securities held by or
to be purchased for the Fund. The Fund's investment advisor will attempt to
minimize these risks through careful selection and monitoring of the Fund's
futures and options positions.
The Fund does not intend to use futures transactions for speculation or
leverage. The Fund has the ability to write options on futures, but currently
intends to write such options only to close out options purchased by the Fund.
The Fund will not change these policies without supplementing the information in
the prospectus and SAI.
The Fund will not maintain open positions in futures contracts it has
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 its 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, the 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 Fund does not pay or
receive money upon the purchase or sale of a futures contract. Rather the 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 the 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 the Fund upon termination of the futures contract, assuming
all contractual obligations have been satisfied.
A futures contract held by the Fund is valued daily at the official
settlement price of the exchange on which it is traded. Each day the 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 the 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 the Fund
will mark-to-market its open futures positions. The Fund is also required to
deposit and maintain margin when it writes call options on futures contracts.
Foreign Securities
The Fund may invest in foreign securities or U.S. securities traded in
foreign markets. In addition to securities issued by foreign companies,
permissible investments may also 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. The Fund may also invest in Canadian commercial paper and Europaper.
These instruments may subject the Fund to investment risks that differ in some
respects from those related to investments in obligations of U.S. issuers. Such
risks include the possibility of adverse political and economic developments;
imposition of withholding taxes on interest or other income; seizure,
nationalization, or expropriation of foreign deposits; establishment of exchange
controls or taxation at the source; greater fluctuations in value due to changes
in exchange rates, or the adoption of other foreign governmental restrictions
which might adversely affect the payment of principal and interest on such
obligations. Such investments may also entail higher custodial fees and sales
commissions than domestic investments. Foreign issuers of securities or
obligations are often subject to accounting treatment and engage in business
practices different from those respecting domestic issuers of similar securities
or obligations. Foreign branches of U.S. banks and foreign banks may be subject
to less stringent reserve requirements than those applicable to domestic
branches of U.S. banks.
Foreign Currency Transactions
As one way of managing exchange rate risk, the 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 the Fund will deliver and receive when the contract is
completed) is fixed when the Fund enters into the contract. The Fund usually
will enter into these contracts to stabilize the U.S. dollar value of a security
it has agreed to buy or sell. The Fund intends to use these contracts to hedge
the U.S. dollar value of a security it already owns, particularly if the Fund
expects a decrease in the value of the currency in which the foreign security is
denominated. Although the Fund will attempt to benefit from using forward
contracts, the success of its hedging strategy will depend on the investment
advisor's ability to predict accurately the future exchange rates between
foreign currencies and the U.S. dollar. The value of the Fund's investments
denominated in foreign currencies will depend on the relative strengths of those
currencies and the U.S. dollar, and the Fund may be affected favorably or
unfavorably by changes in the exchange rates or exchange control regulations
between foreign currencies and the U.S. dollar. Changes in foreign currency
exchange rates also may affect the value of dividends and interest earned, gains
and losses realized on the sale of securities and net investment income and
gains, if any, to be distributed to shareholders by the Fund. The Fund may also
purchase and sell options related to foreign currencies in connection with
hedging strategies.
High Yield, High Risk Bonds
The Fund may invest a portion of its assets in lower rated bonds. Bonds
rated below BBB by Standard & Poor's Ratings Services ("S&P") or Fitch IBCA,
Inc. ("Fitch") or below Baa by Moody's Investors Service, Inc. ("Moody's"),
commonly known as "junk bonds," offer high yields, but also high risk. While
investment in junk bonds provides opportunities to maximize return over time,
they are considered predominantly speculative with respect to the ability of the
issuer to meet principal and interest payments. Investors should be aware of the
following risks:
(1) The lower ratings of junk bonds reflect a greater possibility that
adverse changes in the financial condition of the issuer or in general economic
conditions, or both, or an unanticipated rise in interest rates may impair the
ability of the issuer to make payments of interest and principal, especially if
the issuer is highly leveraged. Such issuer's ability to meet its debt
obligations may also be adversely affected by the issuer's inability to meet
specific forecasts or the unavailability of additional financing. Also, an
economic downturn or an increase in interest rates may increase the potential
for default by the issuers of these securities.
(2) The value of junk bonds may be more susceptible to real or perceived
adverse economic or political events than is the case for higher quality bonds.
(3) The value of junk bonds, like those of other fixed income
securities, fluctuates in response to changes in interest rates, generally
rising when interest rates decline and falling when interest rates rise. For
example, if interest rates increase after a fixed income security is purchased,
the security, if sold prior to maturity, may return less than its cost. The
prices of junk bonds, however, are generally less sensitive to interest rate
changes than the prices of higher-rated bonds, but are more sensitive to news
about an issuer or the economy which is, or investors perceive as, negative.
(4) The secondary market for junk bonds may be less liquid at certain
times than the secondary market for higher quality bonds, which may adversely
effect (a) the bond's market price, (b) the Fund's ability to sell the bond and
the Fund's ability to obtain accurate market quotations for purposes of valuing
its assets.
For bond ratings descriptions, see "Corporate and Municipal Bond
Ratings" below.
Illiquid and Restricted Securities
The Fund may not invest more than 15% of its net assets in securities
that are illiquid. A security is illiquid when the Fund cannot dispose of it in
the ordinary course of business within seven days at approximately the value at
which the Fund has the investment on its books.
The 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 the
Fund's compliance with the limit on illiquid securities indicated above. In
determine 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
The Fund may purchase the shares of other investment companies to the
extent permitted under the 1940 Act. Currently, the Fund may not (1) own more
than 3% of the outstanding voting stocks 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, the 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 the Fund. Investing in other investment
companies may expose a Fund to duplicate expenses and lower it's value.
Short Sales
A short sale is the sale of a security the Fund has borrowed. The Fund
expects to profit from a short sale by selling the borrowed security for more
than the cost of buying it to repay the lender. After a short sale is completed,
the value of the security sold short may rise. If that happens, the cost of
buying it to repay the lender may exceed the amount originally received for the
sale by the Fund.
The Fund may engage in short sales, but it 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. The Fund may effect a short sale in connection with an
underwriting in which the Fund is a participant.
Municipal Bonds
The Fund may invest in municipal bonds of any state, territory or
possession of the United States ("U.S."), including the District of Columbia.
The Fund may also invest in municipal bonds of any political subdivision, agency
or instrumentality (e.g., counties, cities, towns, villages, districts,
authorities) of the U.S. or its possessions. Municipal bonds are debt
instruments issued by or for a state or local government to support its general
financial needs or to pay for special projects such as airports, bridges,
highways, public transit, schools, hospitals, housing and water and sewer works.
Municipal bonds may also may be issued to refinance public debt.
Municipal bonds are mainly divided between "general obligation" and
"revenue" bonds. General obligation bonds are backed by the full faith and
credit of governmental issuers with the power to tax. They are repaid from the
issuer's general revenues. Payment, however, may be dependent upon legislative
approval and may be subject to limitations on the issuer's taxing power.
Enforcement of payments due under general obligation bonds varies according to
the law applicable to the issuer. In contrast, revenue bonds are supported only
by the revenues generated by the project or facility.
The Fund may also invest in industrial development bonds. Such bonds are
usually revenue bonds issued to pay for facilities with a public purpose
operated by private corporations. The credit quality of industrial development
bonds is usually directly related to the credit standing of the owner or user of
the facilities. To qualify as a municipal bond, the interest paid on an
industrial development bond must qualify as fully exempt from federal income
tax. However, the interest paid on an industrial development bond may be subject
to the federal alternative minimum tax.
The yields on municipal bonds depend on such factors as market
conditions, the financial condition of the issuer and the issue's size, maturity
date and rating. Municipal bonds are rated by S&P, Moody's and Fitch. Such
ratings, however, are opinions, not absolute standards of quality. Municipal
bonds with the same maturity, interest rates and rating may have different
yields, while municipal bonds with the same maturity and interest rate, but
different ratings, may have the same yield. Once purchased by the Fund, a
municipal bond may cease to be rated or receive a new rating below the minimum
required for purchase by the Fund. Neither event would require the Fund to sell
the bond, but the Fund's investment advisor would consider such events in
determining whether the Fund should continue to hold it.
The ability of the Fund to achieve its investment objective depends upon
the continuing ability of issuers of municipal bonds to pay interest and
principal when due. Municipal bonds are subject to the provisions of bankruptcy,
insolvency and other laws affecting the rights and remedies of creditors. Such
laws extend the time for payment of principal and/or interest, and may otherwise
restrict the Fund's ability to enforce its rights in the event of default. Since
there is generally less information available on the financial condition of
municipal bond issuers compared to other domestic issuers of securities, the
Fund's investment advisor may lack sufficient knowledge of an issue's
weaknesses. Other influences, such as litigation, may also materially affect the
ability of an issuer to pay principal and interest when due. In addition, the
market for municipal bonds is often thin and can be temporarily affected by
large purchases and sales, including those by the Fund.
From time to time, Congress has considered restricting or eliminating
the federal income tax exemption for interest on municipal bonds. Such actions
could materially affect the availability of municipal bonds and the value of
those already owned by the Fund. If such legislation were passed, the Trust's
Board of Trustees may recommend changes in the Fund's investment objectives and
policies or dissolution of the Fund.
Virgin Islands, Guam and Puerto Rico
The Fund may invest in obligations of the governments of the Virgin
Islands, Guam and Puerto Rico to the extent such obligations are exempt from the
income or intangibles taxes, as applicable, of the state for which the Fund is
named. The Fund does not presently intend to invest more than (a) 10% of its net
assets in the obligations of each of the Virgin Islands and Guam or (b) 25% of
its net assets in the obligations of Puerto Rico. Accordingly, the Fund may be
adversely affected by local political and economic conditions and developments
within the Virgin Islands, Guam and Puerto Rico affecting the issuers of such
obligations.
Master Demand Notes
The Fund may invest in master demand notes. These are unsecured
obligations that permit the investment of fluctuating amounts by the Fund at
varying rates of interest pursuant to direct arrangements between the Fund, as
lender, and the issuer, as borrower. Master demand notes may permit daily
fluctuations in the interest rate and daily changes in the amounts borrowed. The
Fund has the right to increase the amount under the note at any time up to the
full amount provided by the note agreement, or to decrease the amount. The
borrower may repay up to the full amount of the note without penalty. Master
demand notes permit the Fund to demand payment of principal and accrued interest
at any time (on not more than seven days' notice). Notes acquired by the Fund
may have maturities of more than one year, provided that (1) the Fund is
entitled to payment of principal and accrued interest upon not more than seven
days' notice, and (2) the rate of interest on such notes is adjusted
automatically at periodic intervals, which normally will not exceed 31 days, but
may extend up to one year. The notes are deemed to have a maturity equal to the
longer of the period remaining to the next interest rate adjustment or the
demand notice period. Because these types of notes are direct lending
arrangements between the lender and borrower, such instruments are not normally
traded and there is no secondary market for these notes, although they are
redeemable and thus repayable by the borrower at face value plus accrued
interest at any time. Accordingly, the Fund's right to redeem is dependent on
the ability of the borrower to pay principal and interest on demand. In
connection with master demand note arrangements, the Fund`s investment advisor
considers, under standards established by the Board of Trustees, earning power,
cash flow and other liquidity ratios of the borrower and will monitor the
ability of the borrower to pay principal and interest on demand. These notes are
not typically rated by credit rating agencies. Unless rated, the Fund may invest
in them only if at the time of an investment the issuer meets the criteria
established for commercial paper discussed in this statement of additional
information (which limits such investments to commercial paper rated A-1 by S&P,
Prime-1 by Moody's or F-1 by Fitch.
Obligations of Foreign Branches of United States Banks
The Fund may invest in obligations of foreign branches of U.S. banks.
These may be general obligations of the parent bank in addition to the issuing
branch, or may be limited by the terms of a specific obligation and by
government regulation. Payment of interest and principal upon these obligations
may also be affected by governmental action in the country of domicile of the
branch (generally referred to as sovereign risk). In addition, evidences of
ownership of such securities may be held outside the U.S. and the Fund may be
subject to the risks associated with the holding of such property overseas.
Examples of governmental actions would be the imposition of currency controls,
interest limitations, withholding taxes, seizure of assets or the declaration of
a moratorium. Various provisions of federal law governing domestic branches do
not apply to foreign branches of domestic banks.
Obligations of United States Branches of Foreign Banks
The Fund may invest in obligations of U.S. branches of foreign banks.
These may be general obligations of the parent bank in addition to the issuing
branch, or may be limited by the terms of a specific obligation and by federal
and state regulation as well as by governmental action in the country in which
the foreign bank has its head office. In addition, there may be less publicly
available information about a U.S. branch of a foreign bank than about a
domestic bank.
Payment-in-kind Securities
The Fund may invest in payment-in-kind ("PIK") securities. PIKs pay
interest in either cash or additional securities, at the issuer's option, for a
specified period. The issuer's option to pay in additional securities typically
ranges from one to six years, compared to an average maturity for all PIK
securities of eleven years. Call protection and sinking fund features are
comparable to those offered on traditional debt issues.
PIKs, like zero coupon bonds, are designed to give an issuer
flexibility in managing cash flow. Several PIKs are senior debt. In other cases,
where PIKs are subordinated, most senior lenders view them as equity
equivalents.
An advantage of PIKs for the issuer -- as with zero coupon securities
- -- is that interest payments are automatically compounded (reinvested) at the
stated coupon rate, which is not the case with cash-paying securities. However,
PIKs are gaining popularity over zeros since interest payments in additional
securities can be monetized and are more tangible than accretion of a discount.
As a group, PIK bonds trade flat (i.e., without accrued interest).
Their price is expected to reflect an amount representing accredit interest
since the last payment. PIKs generally trade at higher yields than comparable
cash-paying securities of the same issuer. Their premium yield is the result of
the lesser desirability of non-cash interest, the more limited audience for
non-cash paying securities, and the fact that many PIKs have been issued to
equity investors who do not normally own or hold such securities.
Calculating the true yield on a PIK security requires a discounted cash
flow analysis if the security (ex interest) is trading at a premium or a
discount because the realizable value of additional payments is equal to the
current market value of the underlying security, not par.
Regardless of whether PIK securities are senior or deeply subordinated,
issuers are highly motivated to retire them because they are usually their most
costly form of capital.
Zero Coupon "Stripped" Bonds
The Fund may invest in zero coupon "stripped" bonds. These represent
ownership in serially maturing interest payments or principal payments on
specific underlying notes and bonds, including coupons relating to such notes
and bonds. The interest and principal payments are direct obligations of the
issuer. Coupon Zero coupon bonds of any series mature periodically from the date
of issue of such series through the maturity date of the securities related to
such series. Principal zero coupon bonds mature on the date specified therein,
which is the final maturity date of the related securities. Each zero coupon
bond entitles the holder to receive a single payment at maturity. There are no
periodic interest payments on a zero coupon bond. Zero coupon bonds are offered
at discounts from their face amounts.
In general, owners of zero coupon bonds have substantially all the
rights and privileges of owners of the underlying coupon obligations or
principal obligations. Owners of zero coupon bonds have the right upon default
on the underlying coupon obligations or principal obligations to proceed
directly and individually against the issuer and are not required to act in
concert with other holders of zero coupon bonds.
For federal income tax purposes, a purchaser of principal zero coupon
bonds or coupon zero coupon bonds (either initially or in the secondary market)
is treated as if the buyer had purchased a corporate obligation issued on the
purchase date with an original issue discount equal to the excess of the amount
payable at maturity over the purchase price. The purchaser is required to take
into income each year as ordinary income an allocable portion of such discounts
determined on a "constant yield" method. Any such income increases the holder's
tax basis for the zero coupon bond, and any gain or loss on a sale of the zero
coupon bonds relative to the holder's basis, as so adjusted, is a capital gain
or loss. If the holder owns both principal zero coupon bonds and coupon zero
coupon bonds representing interest in the same underlying issue of securities, a
special basis allocation rule (requiring the aggregate basis to be allocated
among the items sold and retained based on their relative fair market value at
the time of sale) may apply to determine the gain or loss on a sale of any such
zero coupon bonds.
Mortgage-Backed or Asset-Backed Securities
The Fund may invest in mortgage-backed securities and asset-backed
securities. Two principal types of mortgage-backed securities are collateralized
mortgage obligations ("CMOs") and real estate mortgage investment conduits
("REMICs"). CMOs are securities collateralized by mortgages, mortgage
pass-throughs, mortgage pay-through bonds (bonds representing an interest in a
pool of mortgages where the cash flow generated from the mortgage collateral
pool is dedicated to bond repayment), and mortgage-backed bonds (general
obligations of the issuers payable out of the issuers' general funds and
additionally secured by a first lien on a pool of single family detached
properties). Many CMOs are issued with a number of classes or series which have
different maturities and are retired in sequence.
Investors purchasing CMOs in the shortest maturities receive or are
credited with their pro rata portion of the scheduled payments of interest and
principal on the underlying mortgages plus all unscheduled prepayments of
principal up to a predetermined portion of the total CMO obligation. Until that
portion of such CMO obligation is repaid, investors in the longer maturities
receive interest only. Accordingly, the CMOs in the longer maturity series are
less likely than other mortgage pass-throughs to be prepaid prior to their
stated maturity. Although some of the mortgages underlying CMOs may be supported
by various types of insurance, and some CMOs may be backed by GNMA certificates
or other mortgage pass-throughs issued or guaranteed by U.S. government agencies
or instrumentalities, the CMOs themselves are not generally guaranteed.
REMICs, which were authorized under the Tax Reform Act of 1986, are
private entities formed for the purpose of holding a fixed pool of mortgages
secured by an interest in real property. REMICs are similar to CMOs in that they
issue multiple classes of securities.
In addition to mortgage-backed securities, the Fund may invest in
securities secured by other assets including company receivables, truck and auto
loans, leases, and credit card receivables. These issues may be traded
over-the-counter and typically have a short-intermediate maturity structure
depending on the pay down characteristics of the underlying financial assets
which are passed through to the security holder.
Credit card receivables are generally unsecured and the debtors are
entitled to the protection of a number of state and federal consumer credit
laws, many of which give such debtors the right to set off certain amounts owed
on the credit cards, thereby reducing the balance due. Most issuers of
asset-backed securities backed by automobile receivables permit the servicers of
such receivables to retain possession of the underlying obligations. If the
services were to sell these obligations to another party, there is a risk that
the purchaser would acquire an interest superior to that of the holders of the
rated asset-backed securities. In addition, because of the large number of
vehicles involved in a typical issuance and technical requirements under state
laws, the trustee for the holders of asset-backed securities backed by
automobile receivables may not have a proper security interest in all of the
obligations backing such receivables. Therefore, there is the possibility that
recoveries on repossessed collateral may not, in some cases, be available to
support payments on these securities.
In general, issues of asset-backed securities are structured to include
additional collateral and/or additional credit support to protect against the
risk that a portion of the collateral supporting the asset-backed securities may
default and/or may suffer from these defects. In evaluating the strength of
particular issues of asset-backed securities, the investment advisor considers
the financial strength of the guarantor or other provider of credit support, the
type and extent of credit enhancement provided as well as the documentation and
structure of the issue itself and the credit support.
Variable or Floating Rate Instruments
The Fund may invest in variable or floating rate instruments which may
involve a demand feature and may include variable amount master demand notes
which may or may not be backed by bank letters of credit. Variable or floating
rate instruments bear interest at a rate which varies with changes in market
rates. The holder of an instrument with a demand feature may tender the
instrument back to the issuer at par prior to maturity. A variable amount master
demand note is issued pursuant to a written agreement between the issuer and the
holder, its amount may be increased by the holder or decreased by the holder or
issuer, it is payable on demand, and the rate of interest varies based upon an
agreed formula. The quality of the underlying credit must, in the opinion of the
investment advisor, be equivalent to the long-term bond or commercial paper
ratings applicable to permitted investments for the Fund. The investment advisor
will monitor, on an ongoing basis, the earning power, cash flow, and liquidity
ratios of the issuers of such instruments and will similarly monitor the ability
of an issuer of a demand instrument to pay principal and interest on demand.
PURCHASE, REDEMPTION AND PRICING OF SHARES
You may buy shares of the Fund through the Distributor, broker-dealers
that have entered into special agreements with the Distributor or certain other
financial institutions. The Fund offers up to different classes of shares that
differ primarily with respect to sales charges and distribution fees. Depending
upon the class of shares, you will pay an initial sales charge when you buy the
Fund's shares, a contingent deferred sales charge (a "CDSC") when you redeem the
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. If you purchase Class A shares in the amount of $1
million or more, without an initial sales charge, the Fund will charge a CDSC of
1.00% if you redeem during the month of your purchase or the 12-month period
following the month of your purchase (see "Contingent Deferred Sales Charge"
below).
No front-end sales charges are imposed on Class A shares purchased by
(a) institutional investors, which may include bank trust departments and
registered investment advisors; (b) investment advisors, consultants or
financial planners who place trades for their own accounts or the accounts of
their clients and who charge such clients a management, consulting, advisory or
other fee; (c) clients of investment advisors or financial planners who place
trades for their own accounts if the accounts are linked to the master account
of such investment advisors or financial planners on the books of the
broker-dealer through whom shares are purchased; (d) institutional clients of
broker-dealers, including retirement and deferred compensation plans and the
trusts used to fund these plans, which place trades through an omnibus account
maintained with the 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 First Union National Bank ("FUNB") and its affiliates, EDI and any
broker-dealer with whom EDI has entered into an agreement to sell shares of the
Fund, and members of the immediate families of such employees; and (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.
Class B Shares
The Fund offers Class B shares at net asset value without an initial
sales charge. With certain exceptions, however, the Fund will charge a CDSC on
shares you redeem within 72 months after the month of your purchase, in
accordance with the following schedule:
REDEMPTION TIME CDSC RATE
Month of purchase and the first 12-month
period following the month of purchase. ........................5.00%
Second 12-month period following the month of purchase..........4.00%
Third 12-month period following the month of purchase...........3.00%
Fourth 12-month period following the month of purchase..........3.00%
Fifth 12-month period following the month of purchase...........2.00%
Sixth 12-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 Fund
offers Class C shares at net asset value without an initial sales charge. With
certain exceptions, however, the Fund will charge a CDSC of 1.00% on shares you
redeem within 12-months after the month of your purchase. See "Contingent
Deferred Sales Charge" below.
Class Y Shares
No CDSC is imposed on the redemption of Class Y shares. Class Y shares
are not offered to the general public and are available only to (1) persons who
at or prior to December 31, 1994 owned shares in a mutual fund advised by (2)
certain institutional investors and (3) investment advisory clients of EIM,
EAMC, EIMC, MIC, First International Advisors, Ltd., 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.
INSTITUTIONAL SHARES, INSTITUTIONAL SERVICE SHARES AND CHARITABLE SHARES
Each institutional class of shares is sold without a front-end sales
charge or contingent deferred sales charge. Institutional Service shares pay an
ongoing service fee. The minimum initial investment in any institutional class
of shares is $1 million, which may be waived in certain circumstances. There is
no minimum amount required for subsequent purchases.
Contingent Deferred Sales Charge
The Fund charges a CDSC as reimbursement for certain expenses, such as
commissions or shareholder servicing fees, that it has incurred in connection
with the sale of its shares (see "Distribution Expenses Under Rule 12b-1,"
below). Institutional, Institutional Service and Charitable shares do not charge
a CDSC. If imposed, the Fund deducts the CDSC from the redemption proceeds you
would otherwise receive. The CDSC is a percentage of the lesser of (1) the net
asset value of the shares at the time of redemption or (2) the shareholder's
original net cost for such shares. Upon request for redemption, to keep the CDSC
a shareholder must pay as low as possible, the 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.
SALES CHARGE WAIVERS AND REDUCTIONS
The following information is not applicable to Institutional,
Institutional Service and Charitable shares.
If you making a large purchase, there are several ways you can combine
multiple purchases of Class A shares in Evergreen Funds and take advantage of
lower sales charges. These are described below.
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%.
Your account, and therefore your rights of accumulation, can be linked
to immediate family members which includes father and mother, brothers and
sisters, and sons and daughters. The same rule applies with respect to
individual retirement plans. Please note, however, that retirement plans
involving employees stand alone and do not pass on rights of accumulation.
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 Fund may sell its 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 a master account of such
investment advisors or financial planners on the books of the broker-dealer
through whom shares are purchased;
6. institutional clients of broker-dealers, including retirement and
deferred compensation plans and the trusts used to fund these plans, which place
trades through an omnibus account maintained with the Fund by the broker-dealer;
7. employees of First Union National Bank ("FUNB"), its affiliates, the
Distributor, any broker-dealer with whom the Distributor, has entered into an
agreement to sell shares of the Fund, 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, the Fund will only sell shares to
these parties upon the purchasers written assurance that the purchase is for
their personal investment purposes only.
Such purchasers may not resell the securities except through redemption by the
Fund. The Fund will not charge any CDSC on redemptions by such purchasers.
Waiver of CDSCS
The Fund does 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 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. a financial hardship withdrawal made by a retirement plan
participant;
10. a withdrawal consisting of returns of excess contributions or
excess deferral amounts made to a retirement plan; or
11. a redemption by an individual participant in a Qualifying Plan that
purchased Class C shares (this waiver is not available in the event a Qualifying
Plan, as a whole, redeems substantially all of its assets).
Exchanges
Investors may exchange shares of the Fund for shares of the same class
of any other Evergreen fund other that the Evergreen Select Funds. Shares of any
class of the Evergreen Select Funds may be exchanged for the same class of
shares of any other Evergreen Select Fund. See "By Exchange" under "How to Buy
Shares" in the 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.
Automatic Reinvestment
As described in the prospectus, a shareholder may elect to receive
dividends and capital gains distributions in cash instead of shares. However,
ESC will automatically reinvest 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. When a check is returned, the Fund will hold the check amount in a
no-interest account in the shareholder's name until the shareholder updates his
or her address or automatic reinvestment begins. Uncashed or returned redemption
checks will also be handled in the manner described above.
Calculation of Net Asset Value
The Fund calculates its net asset value ("NAV") once daily on Monday
through Friday, as described in the prospectus. The Fund will not compute its
NAV on the days theNew York Stock Exchange is closed: 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 the Fund is calculated by dividing the value of the Fund's
net assets attributable to that class by all of the shares issued for that
class.
Valuation of Portfolio Securities
Current values for the Fund's portfolio securities are determined as
follows:
(1) Securities that are traded on an established 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 an established 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 sixty 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 the 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.
PERFORMANCE CALCULATIONS
Total Return
Total return quotations for a class of shares of the 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. To the initial
investment all dividends and distributions are added, 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 following
is the formula used to calculate average annual total return:
n
P(1 + T) = ERV
P = initial payment of $1,000
T = average total return
N = number of years
ERV = ending redeemable value of the initial $1,000
Yield
Described below are yield calculations the Fund may use. Yield
quotations are expressed in annualized terms and may be quoted on a compounded
basis. Yields based on these calculations do not represent the Fund's yield for
any future period.
30-Day Yield
If the Fund invests primarily in bonds, it may quote its 30-day yield
in advertisements or in reports or other communications to shareholders. It is
calculated by dividing the net investment income per share earned during the
period by the maximum offering price per share on the last day of the period,
according to the following formula:
6
Yield=2[(a - b + 1) - 1
-----
cd
Where:
a = Dividends and interest earned during the period
b = Expenses accrued for the period (net of reimbursements)
c = The average daily number of shares outstanding during the period
that were entitled to receive dividends
d = The maximum offering price per share on the last day of the period
7-Day Current and Effective Yield
If the Fund invests primarily in money market instruments, it may quote
its 7-day current yield or effective yield in advertisements or in reports or
other communications to shareholders.
The current yield is calculated by determining the net change,
excluding capital changes and income other than investment income, in the value
of a hypothetical, pre-existing account having a balance of one share at the
beginning of the 7-day base period, subtracting a hypothetical charge reflecting
deductions from shareholder accounts, and dividing the difference by the value
of the account at the beginning of the base period to obtain the base period
return, and then multiplying the base period return by (365/7).
The effective yield is based on a compounding of the current yield,
according to the following formula:
365/7
Effective Yield = [(base period return)] + 1) ] - 1
Tax Equivalent Yield
If the Fund invests primarily in municipal bonds, it may quote in
advertisements or in reports or other communications to shareholders a tax
equivalent yield, which is what an investor would generally need to earn from a
fully taxable investment in order to realize, after income taxes, a benefit
equal to the tax free yield provided by the Fund. Tax equivalent yield is
calculated using the following formula:
Tax Equivalent Yield = Yield
-------------------
1 - Income Tax Rate
The quotient is then added to that portion, if any, of the Fund's yield
that is not tax exempt. Depending on the Fund's objective, the income tax rate
used in the formula above may be federal or a combination of federal and state.
PRINCIPAL UNDERWRITER
The Distributor is the principal underwriter for the Trust and with
respect to each class of shares of the Fund. The Trust has entered into a
Principal Underwriting Agreement ("Underwriting Agreement") with the Distributor
with respect to each class of the 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 Fund and the Fund reserves
the right, in its sole discretion, to reject any order received. Under the
Underwriting Agreement, the Fund is not liable to anyone for failure to accept
any order.
The Distributor has agreed that it will, in all respects, duly conform
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 Trustees who are not interested persons of the Fund, as
defined in the 1940 Act (the "Independent Trustees"), and (ii) by vote of a
majority of the Trust's Trustees, in each case, cast in person at a meeting
called for that purpose.
The Underwriting Agreement may be terminated, without penalty, on 60
days' written notice by the Board of Trustees or by a vote of a majority of
outstanding shares subject to such agreement. The Underwriting Agreement will
terminate automatically upon its "assignment," as that term is defined in the
1940 Act.
From time to time, if, in the Distributor's judgment, it could benefit
the sales of shares, the Distributor may provide to selected broker-dealers
promotional materials and selling aids, including, but not limited to, personal
computers, related software, and data files.
DISTRIBUTION EXPENSES UNDER RULE 12b-1
The Fund bears some of the costs of selling its Class A, Class B, and, when
applicable, Class C shares, or Institutional Service shares, including certain
advertising, marketing and shareholder service expenses, pursuant to Rule 12b-1
of the 1940 Act. These "12b-1 fees" or "distribution fees" are indirectly paid
by the shareholder, as shown by the Fund's expense table in the prospectus.
Under the Distribution Plans (each a "Plan," together, the "Plans") that the
Fund has adopted for its, Class A, Class B, and, when applicable, Class C
shares, or Institutional Service shares, the Fund may incur expenses for
distribution costs up to a maximum annual percentage of the average daily net
assets attributable to a class, as follows:
Class A 0.75%*
Class B 1.00%
Class C 1.00%
Institutional
Service 0.35%*
*Currently limited to 0.25% or less. See the expense table in the prospectus
of the Fund in which you are interested.
Of the amounts above, each class may pay under its Plan a maximum
service fee of 0.25% to compensate organizations, which may include the Fund's
investment advisor or its affiliates, for personal services provided to
shareholders and the maintenance of shareholder accounts. The Fund may not,
during any fiscal period, pay distribution or service fees greater than the
amounts above.
Amounts paid under the Plans are used to compensate the Distributor
pursuant to Distribution Agreements (each an "Agreement," together, the
"Agreements") that the Fund has entered into with respect to its Class A, Class
B and, if applicable, Class C shares. The compensation is based on a maximum
annual percentage of the average daily net assets attributable to a class, as
follows:
Class A 0.25%*
Class B 1.00%
Class C 1.00%
*May be lower. See the expense table in the prospectus of the Fund in which
you are interested.
The Agreements provide that the Distributor will use the distribution
fees received from the Fund for the following purposes:
(1) to compensate broker-dealers or other persons for distributing Fund shares;
(2) to compensate broker-dealers, depository institutions and other financial
intermediaries for providing administrative, accounting and other services with
respect to the Fund's shareholders; and
(3) to otherwise promote the sale of Fund shares.
The Agreements also provide that the Distributor may use distribution
fees to make interest and principal payments in respect of amounts that have
been financed to pay broker-dealers or other persons for distributing Fund
shares. The Distributor may assign its rights to receive compensation under the
Plans to secure such financings. FUNB or its affiliates may finance payments
made by the Distributor to compensate broker-dealers or other persons for
distributing shares of the Fund.
In the event the Fund acquires the assets of another mutual fund,
compensation paid to the Distributor under the Agreements may be paid by the
Fund's Distributor to the acquired fund's distributor or its predecessor.
Since the Distributor's compensation under the Agreements is not
directly tied to the expenses incurred by the Distributor, the compensation
received by it under the Agreements during any fiscal year may be more or less
than its actual expenses and may result in a profit to the Distributor.
Distribution expenses incurred by the Distributor in one fiscal year that exceed
the compensation paid to the Distributor for that year may be paid from
distribution fees received from the Fund in subsequent fiscal years.
Distribution fees are accrued daily and paid at least 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 Plans, the Treasurer of the Trust reports the amounts expended
under the Plans 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.
The investment advisor may from time to time from its own funds or such
other resources as may be permitted by rules of the Securities and Exchange
Commission ("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 the Agreement will continue in effect for successive
12-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.
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, Class C and
Institutional Service shares. The Plans are designed to (i) stimulate brokers to
provide distribution and administrative support services to the Fund and holders
of Class A, Class B, Class C and Institutional Service shares and (ii) stimulate
administrators to render administrative support services to the Fund and holders
of Class A, Class B, Class C and Institutional 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, Class C
and Institutional Service 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, Class C and
Institutional Service shares.
In the event that the Plan or Distribution Agreement is terminated or
not continued with respect to one or more classes of the 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 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 the 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 the 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. For more information about 12b-1
fees, see "Expenses" in the prospectus and "12b-1 Fees" under "Expenses" in Part
1 of this SAI.
TAX INFORMATION
Requirements for Qualifications as a Regulated Investment Company
The Fund intends to qualify for and elect the tax treatment applicable
to regulated investment companies ("RIC") under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). If the (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, the 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, the 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 the Fund to the
extent it does not meet certain distribution requirements by the end of each
calendar year. The Fund anticipates meeting such distribution requirements.
Taxes on Distributions
Unless the Fund is a municipal bond fund, 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 the 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. Unless the Fund is a municipal bond fund or U.S. Treasury
money market fund, it anticipates that all or a portion of the 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. If the Fund is a municipal bond fund or U.S. Treasury money market
fund, none of its income will consist of corporate dividends; therefore, none of
its distributions will qualify for the 70% dividends-received deduction for
corporations.
From time to time, the Fund will distribute the excess of its net
long-term capital gains over its 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.
Distributions by the 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 the Fund's total assets at the end of
a fiscal year is represented by securities of foreign corporations and the Fund
elects to make foreign tax credits available to its shareholders, a shareholder
will be required to include in his gross income both cash dividends and the
amount the Fund advises him is his pro rata portion of income taxes withheld by
foreign governments from interest and dividends paid on the Fund's investments.
The shareholder may be entitled, however, to take the amount of such foreign
taxes withheld as a credit against his U.S. income tax, or to treat the foreign
tax withheld as an itemized deduction from his gross income, if that should be
to his advantage. In substance, this policy enables the shareholder to benefit
from the same foreign tax credit or deduction that he would have received if he
had been the individual owner of foreign securities and had paid foreign income
tax on the income therefrom. As in the case of individuals receiving income
directly from foreign sources, the credit or deduction is subject to a number of
limitations.
Special Tax Information for Municipal Bond Fund Shareholders
The Fund expects that substantially all of its dividends will be "exempt
interest dividends," which should be treated as excludable from federal gross
income. In order to pay exempt interest dividends, at least 50% of the value of
the Fund's assets must consist of federally tax-exempt obligations at the close
of each quarter. An exempt interest dividend is any dividend or part thereof
(other than a capital gain dividend) paid by the Fund with respect to its net
federally excludable municipal obligation interest and designated as an exempt
interest dividend in a written notice mailed to each shareholder not later than
60 days after the close of its taxable year. The percentage of the total
dividends paid by the Fund with respect to any taxable year that qualifies as
exempt interest dividends will be the same for all shareholders of the Fund
receiving dividends with respect to such year. If a shareholder receives an
exempt interest dividend with respect to any share and such share has been held
for six months or less, any loss on the sale or exchange of such share will be
disallowed to the extent of the exempt interest dividend amount.
Any shareholder of the Fund who may be a "substantial user" (as defined by the
Code) of a facility financed with an issue of tax-exempt obligations or a
"related person" to such a user should consult his tax advisor concerning his
qualification to receive exempt interest dividends should the Fund hold
obligations financing such facility.
Under regulations to be promulgated, to the extent attributable to
interest paid on certain private activity bonds, the Fund's exempt interest
dividends, while otherwise tax-exempt, will be treated as a tax preference item
for alternative minimum tax purposes. Corporate shareholders should also be
aware that the receipt of exempt interest dividends could subject them to
alternative minimum tax under the provisions of Section 56(g) of the Code
(relating to "adjusted current earnings").
Interest on indebtedness incurred or continued by shareholders to
purchase or carry shares of the Fund will not be deductible for federal income
tax purposes to the extent of the portion of the interest expense relating to
exempt interest dividends. Such portion is determined by multiplying the total
amount of interest paid or accrued on the indebtedness by a fraction, the
numerator of which is the exempt interest dividends received by a shareholder in
his taxable year and the denominator of which is the sum of the exempt interest
dividends and the taxable distributions out of the Fund's investment income and
long-term capital gains received by the shareholder.
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 12
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 61-day period
beginning 30 days before and ending 30 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 distributions of
net capital gains on such shares.
Shareholders who fail to furnish their taxpayer identification numbers
to the 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. 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
the 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 the 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.
BROKERAGE
Brokerage Commissions
If the Fund invests in equity securities, it expects to buy and sell
them 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. Where transactions are made in the
over-the-counter market, the Fund will deal with primary market makers unless
more favorable prices are otherwise obtainable.
If the Fund invests in fixed income securities, it expects to buy and
sell them directly from the issuer or an underwriter or market maker for the
securities. Generally, the Fund will not pay brokerage commissions for such
purchases. When the 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 the 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, the advisor seeks brokers
who can provide the most benefit to the Fund. When selecting a broker, the
investment advisor will primarily look for the best price at the lowest
commission, but in the context of the broker's:
1. ability to provide the best net financial result to 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.
The 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 the investment advisor do
not replace, but supplement, the services the investment advisor is required to
deliver to the Fund. It is impracticable for the investment 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, the investment advisor
may also consider the amount of Fund shares a broker has sold, subject to the
other requirements described above.
If the Fund is advised by EAMC, Lieber & Company, an affiliate of EAMC
and a member of the New York and American Stock Exchanges, will to the extent
practicable effect substantially all of the portfolio transactions effected on
those exchanges for the Fund.
Simultaneous Transactions
The investment advisor makes investment decisions for the 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 the investment advisor to engage in a simultaneous transaction, that is, buy
or sell the same security for more than one client. The investment 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 Fund, but the ideal price or trading volume may not
always be achieved for the Fund.
ORGANIZATION
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
the Fund represents an equal proportionate interest with each other share of
that series and/or class. Upon liquidation, shares are entitled to a pro rata
share of the Trust based on the relative net assets of each series and/or class.
Shareholders have no preemptive or conversion rights. Shares are redeemable and
transferable.
Voting Rights
Under the terms of the Declaration of Trust, the Trust is not required
to hold annual 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 "NAV"applicable to such share. Shares generally vote together as one class on
all matters. Classes of shares of the 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 (for such reasons as electing or removing Trustees, changing fundamental
policies, and approving advisory agreements or 12b-1 plans), 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.
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 Trust. Such
laws and regulations also prohibit banks from issuing, underwriting or
distributing securities in general. However, under the Glass-Steagall Act and
such other laws and regulations, a Member Bank or an affiliate thereof may act
as investment advisor, transfer agent or custodian to a registered open-end
investment company and may also act as agent in connection with the purchase of
shares of such an investment company upon the order of its customer, FUNB and
its affiliates are subject to, and in compliance with, the aforementioned laws
and regulations.
Changes to applicable laws and regulations or future judicial or
administrative decisions could result in FUNB and its affiliates being prevented
from continuing to perform the services required under the investment advisory
contract or from acting as agent in connection with the purchase of shares of
the Fund by its customers. If FUNB and its affiliates were prevented from
continuing to provide for services called for under the investment advisory
agreement, it is expected that the Trustees would identify, and call upon the
Fund's shareholders to approve a new investment advisor. If this were to occur,
it is not anticipated that the shareholders of the Fund would suffer any adverse
financial consequences.
INVESTMENT ADVISORY AGREEMENT
On behalf of the Fund, the Trust has entered into an investment advisory
agreement with the Fund's investment advisor (the "Advisory Agreement"). Under
the Advisory Agreement, and subject to the supervision of the Trust's Board of
Trustees, the investment advisor furnishes to the Fund (unless the Fund is
Masters ) 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 investment advisor pays
for all of the expenses incurred in connection with the provision of its
services.
If the Fund is Masters, the Advisory Agreement is similar to the above
except that the investment advisor selects sub-advisors (hereinafter referred to
as "Managers") for the Fund and monitors each Manager's investment program and
results. The investment advisor has primary responsibility under the
multi-manager strategy to oversee the Managers, including making recommendations
to the Trust regarding the hiring, termination and replacement of Managers.
The Fund pays for all charges and expenses, other than those
specifically referred to as being borne by the investment 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; (5) brokerage commissions, brokers'
fees and expenses; (6) issue and transfer taxes; (7) applicable costs and
expenses under the Distribution Plan (as described above) (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 the Fund and its
shares with the SEC or under state or other securities laws; (11) expenses of
preparing, printing and mailing prospectuses, SAIs, notices, reports and proxy
materials to shareholders of the Fund; (12) expenses of shareholders' and
Trustees' meetings; (13) charges and expenses of legal counsel for the Fund and
for the Independent Trustees on matters relating to the 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 the Fund. For information on
advisory fees paid by the Fund, see "Expenses" in Part 1 of this SAI.
The 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 the
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 Agreement 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. The Advisory Agreement will terminate
automatically upon its "assignment" as that term is defined in the 1940 Act.
Managers (Masters only)
Masters' investment program is based upon the investment advisor's
multi-manager concept. The investment advisor allocates the Fund's portfolio
assets on an equal basis among a number of investment management organizations -
currently four in number - each of which employs a different investment style,
and periodically rebalances the Fund's portfolio among the Managers so as to
maintain an approximate equal allocation of the portfolio among them throughout
all market cycles. Each Manager provides these services under a Portfolio
Management Agreement. Each Manager has discretion, subject to oversight by the
Trustees and the investment advisor, to purchase and sell portfolio assets
consistent with the Fund's investment objectives, policies and restrictions and
specific investment strategies developed by the investment advisor. The Fund's
current Managers are, EAMC MFS Institutional Advisors, Inc. ("MFS"),
OppenheimerFunds, Inc. ("Oppenheimer") and Putnam Investment Management, Inc.
("Putnam").
The Trust and FUNB have received an order from, the SEC that will
permit the investment advisor to employ a "manager of managers" strategy in
connection with its management of the Fund. The exemptive order permits the
investment advisor, subject to certain conditions, and without shareholder
approval, to: (a) select new Managers who are unaffiliated with the investment
advisor with the approval of the Trust's Board of Trustees; (b) change the
material terms of the Portfolio Management Agreements with the Managers; and (c)
continue the employment of a Manager after an event which would otherwise cause
the automatic termination of a Portfolio Management Agreement. Shareholders
would be notified of any Manager changes. Shareholders have the right to
terminate arrangements with a Manager by vote of a majority of the outstanding
shares of the Fund. The order also permits the Fund to disclose the Managers'
fees only in the aggregate.
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 the Fund to buy or
sell securities from another investment company for which a subsidiary of First
Union Corporation is an investment advisor. The Rule 17a-7 Procedures also allow
the Fund to buy or sell securities from other advisory clients for whom a
subsidiary of First Union Corporation is an investment advisor. The Fund may
engage in such transaction if it is equitable to each participant and consistent
with each participant's investment objective.
MANAGEMENT OF THE TRUST
The Trust is supervised by a Board of Trustees that is responsible for
representing the interest of the shareholders. The Trustees meet periodically
throughout the year to oversee the Fund's activities, reviewing, among other
things, the Fund's performance and its contractual arrangements with various
service providers. Each Trustee is paid a fee for his or her services. See
"Expenses-Trustee Compensation" in Part 1 of this SAI.
The Trust has an Executive Committee which consists of the Chairman of
the Board, James Howell, and Messrs. Scofield and Salton, each of whom is an
Independent Trustee. The Executive Committee recommends Trustees to fill
vacancies, prepares the agenda for Board meetings and acts on routine matters
between scheduled Board meetings.
Set forth below are the Trustees and officers of the Trust and their
principal occupations and 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; and President of
(DOB: 2/2/28) Centrum Equities and Centrum Properties, Inc.
Charles A. Austin III Trustee Investment Counselor to Appleton Partners, Inc.; former Director, Executive Vice
(DOB: 10/23/34) President and Treasurer, State Street Research & Management Company (investment
advice); Director, The Andover Companies (Insurance); and Trustee, Arthritis
Foundation of New England
K. Dun Gifford Trustee Trustee, Treasurer and Chairman of the Finance Committee, Cambridge College;
(DOB: 10/12/38) 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; former Chairman, Gifford,
Drescher & Associates (environmental consulting)
James S. Howell Chairman of the Former Chairman of the Distribution Foundation for the Carolinas; and former
(DOB: 8/13/24) Board of Trustees Vice President of Lance Inc. (food manufacturing).
Leroy Keith, Jr. Trustee Chairman of the Board and Chief Executive Officer, Carson Products Company;
(DOB: 2/14/39) 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.
(DOB: 7/14/39) (steel producer).
Thomas L. McVerry Trustee Former Vice President and Director of Rexham Corporation (manufacturing); and
(DOB: 8/2/39) 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 International, Inc.
(DOB: 9/14/41) (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 Services; former Managed Health
(DOB: 6/2/47) 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 agency); Executive
(DOB: 8/11/39) 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 Executive Vice President/Operations, BISYS Fund Services.
(DOB:8/30/58) Treasurer
Nimish S. Bhatt* Vice President and Vice President, Tax, BISYS Fund Services; former Assistant Vice President,
(DOB: 6/6/63) Assistant Treasurer EAMC/First Union Bank; former Senior Tax Consulting/Acting Manager, Investment
Companies Group, PricewaterhouseCoopers LLP, New York.
Bryan Haft* Vice President Team Leader, Fund Administration, BISYS Fund Services.
(DOB: 1/23/65)
Michael H. Koonce Secretary Senior Vice President and Assistant General Counsel, First Union Corporation;
(DOB: 4/20/60) former Senior Vice President and General Counsel, Colonial Management
Associates, Inc.
*Address: BISYS, 3435 Stelzer Road, Columbus, Ohio 43219-8001
</TABLE>
CORPORATE AND MUNICIPAL BOND RATINGS
The Fund relies on ratings provided by independent rating services to help
determine the credit quality of bonds and other obligations the Fund intends to
purchase or already owns. A rating is an opinion of an issuer's ability to pay
interest and/or principal when due. Ratings reflect an issuer's overall
financial strength and whether it can meet its financial commitments under
various economic conditions.
If a security held by the Fund loses its rating or has its rating reduced after
the Fund has purchased it, the Fund is not required to sell or otherwise dispose
of the security, but may consider doing so.
The principal rating services, commonly used by the Fund and investors
generally, are S&P and Moody's. The Fund may also rely on ratings provided by
Fitch. Rating systems are similar among the different services. As an example,
the chart below compares basic ratings for long-term bonds. The "Credit Quality"
terms in the chart are for quick reference only. Following the chart are the
specific definitions each service provides for its ratings.
COMPARISON OF LONG-TERM BOND RATINGS
<TABLE>
<CAPTION>
MOODY'S S&P FITCH Credit Quality
<S> <C> <C> <C>
Aaa AAA AAA Excellent Quality (lowest risk)
Aa AA AA Almost Excellent Quality (very low risk)
A A A Good Quality (low risk)
Baa BBB BBB Satisfactory Quality (some risk)
Ba BB BB Questionable Quality (definite risk)
B B B Low Quality (high risk)
Caa/Ca/C CCC/CC/C CCC/CC/C In or Near Default
D DDD/DD/D In Default
</TABLE>
CORPORATE BONDS
LONG-TERM RATINGS
Moody's Corporate Long-Term Bond Ratings
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
edged." 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.
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 risk appear somewhat larger than the Aaa securities.
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 some time in the future.
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.
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.
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.
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.
Ca Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa to Caa. The modifier 1 indicates that the company ranks
in the higher end of its generic rating category; the modifier 2 indicates a
mid-range raking and the modifier 3 indicates that the company ranks in the
lower end of its generic rating category.
S&P Corporate Long-Term Bond Ratings
AAA An obligation rated AAA has the highest rating assigned by S&P. The
obligor's capacity to meet its financial commitment on the obligation is
extremely strong.
AA An obligation rated AA differs from the highest-rated obligations only in
small degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.
A An obligation rated A is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
BBB An obligation rated BBB exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation.
BB, B, CCC, CC and C: As described below, obligations rated BB, B, CCC, CC, and
C are regarded as having significant speculative characteristics. BB indicates
the least degree of speculation and C the highest. While such obligations will
likely have some quality and protective characteristics, these may be outweighed
by large uncertainties or major exposures to adverse conditions.
BB An obligation rated BB is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions, which could lead to the
obligor's inadequate capacity to meet its financial commitment on the
obligation.
B An obligation rated B is more vulnerable to nonpayment than obligations rated
BB, but the obligor currently has the capacity to meet its financial commitment
on the obligation. Adverse business, financial, or economic conditions will
likely impair the obligor's capacity or willingness to meet it financial
commitment on the obligation.
CCC An obligation rated CCC is currently vulnerable to nonpayment and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial, or economic conditions, the obligor is not likely
to have the capacity to meet its financial commitment on the obligation.
CC An obligation rated CC is currently highly vulnerable to nonpayment.
C The C rating may be used to cover a situation where a bankruptcy petition has
been filed or similar action has been taken, but payments on this obligation are
being continued.
D The D rating, unlike other ratings, is not prospective; rather, it is used
only where a default has actually occurred--and not where a default is only
expected. S&P changes ratings to D either:
- - On the day an interest and/or principal payment is due and is not paid. An
exception is made if there is a grace period and S&P believes that a payment
will be made, in which case the rating can be maintained; or
- - Upon voluntary bankruptcy filing or similar action. An exception is made if
S&P expects that debt service payments will continue to be made on a specific
issue. In the absence of a payment default or bankruptcy filing, a technical
default (i.e., covenant violation) is not sufficient for assigning a D rating.
Plus (+) or minus (-) The ratings from AA to CCC may be modified by the addition
of a plus or minus sign to show relative standing within the major rating
categories.
Fitch Corporate Long-Term Bond Ratings
Investment Grade
AAA Highest credit quality. AAA ratings denote the lowest expectation of credit
risk. They are assigned only in case of exceptionally strong capacity for timely
payment of financial commitments. This capacity is highly unlikely to be
adversely affected by foreseeable events.
AA Very high credit quality. AA ratings denote a very low expectation of credit
risk. They indicate very strong capacity for timely payment of financial
commitments. This capacity is not significantly vulnerable to foreseeable
events.
A High credit quality. A ratings denote a lower expectation of credit risk. The
capacity for timely payment of financial commitments is considered strong. This
capacity may, nevertheless, be more vulnerable to changes in circumstances or in
economic conditions than is the case for higher ratings.
BBB Good credit quality. BBB ratings indicate that there is currently a low
expectation of credit risk. The capacity for timely payment of financial
commitments is considered adequate, but adverse changes in circumstances and in
economic conditions are more likely to impair this capacity. This is the lowest
investment-grade category.
Speculative Grade
BB Speculative. BB ratings indicate that there is a possibility of credit risk
developing, particularly as the result of adverse economic change over time;
however, business or financial alternatives may be available to allow financial
commitments to be met. Securities rated in this category are not investment
grade.
B Highly speculative. B ratings indicate that significant credit risk is
present, but a limited margin of safety remains. Financial commitments are
currently being met; however, capacity for continued payment is contingent upon
a sustained, favorable business and economic environment.
CCC, CC, C High default risk. Default is a real possibility. Capacity for
meeting financial commitment is solely reliant upon sustained, favorable
business or economic developments. A CC rating indicates that default of some
kind appears probable. C ratings signal imminent default.
DDD, DD, D Default. Securities are not meeting current obligations and are
extremely speculative. DDD designates the highest potential for recovery of
amounts outstanding on any securities involved. For U.S. corporates, for
example, DD indicates expected recovery of 50%-90% of such outstandings, and D
the lowest recovery potential, i.e. below 50%.
+ or - may be appended to a rating to denote relative status within major rating
categories. Such suffixes are not added to the AAA rating category or to
categories below CCC.
CORPORATE SHORT-TERM RATINGS
Moody's Corporate Short-Term Issuer Ratings
Prime-1 Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics.
- -- Leading market positions in well-established industries.
- -- High rates of return on funds employed.
- -- Conservative capitalization structure with moderate reliance on debt and
ample asset protection.
- -- Broad margins in earnings coverage of fixed financial changes and high
internal cash generation.
- -- Well-established access to a range of financial markets and assured sources
of alternate liquidity.
Prime-2 Issuers rated Prime-2 (or supporting institutions) have a strong ability
for repayment of senior short-term debt obligations. This will normally be
evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
Prime-3 Issuers rated Prime-3 (or supporting institutions) have an acceptable
ability for repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.
Not Prime Issuers rated Not Prime do not fall within any of the Prime rating
categories.
S&P Corporate Short-Term Obligation Ratings
A-1 A short-term obligation rated A-1 is rated in the highest category by S&P.
The obligor?s capacity to meet its financial commitment on the obligation is
strong. Within this category certain obligations are designated with a plus sign
(+). This indicates that the obligor?s capacity to meet its financial commitment
on these obligations is extremely strong.
A-2 A short-term obligation rated A-2 is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor?s capacity to meet
its financial commitment on the obligation is satisfactory.
A-3 A short-term obligation rated A-3 exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.
B A short-term obligation rated B is regarded as having significant speculative
characteristics. The obligor currently has the capacity to meet its financial
commitment on the obligation; however, it faces major ongoing uncertainties
which could lead to the obligor?s inadequate capacity to meet its financial
commitment on the obligation.
C A short-term obligation rated C is currently vulnerable to nonpayment and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation.
D The D rating, unlike other ratings, is not prospective; rather, it is used
only where a default has actually occurred--and not where a default is only
expected. S&P changes ratings to D either:
- - On the day an interest and/or principal payment is due and is not paid. An
exception is made if there is a grace period and S&P believes that a payment
will be made, in which case the rating can be maintained; or
- - Upon voluntary bankruptcy filing or similar action, An exception is made if
S&P expects that debt service payments will continue to be made on a specific
issue. In the absence of a payment default or bankruptcy filing, a technical
default (i.e., covenant violation) is not sufficient for assigning a D rating.
Fitch Corporate Short-Term Obligation Ratings
F1 Highest credit quality. Indicates the strongest capacity for timely payment
of financial commitments; may have an added ?+? to denote any exceptionally
strong credit feature.
F2 Good credit quality. A satisfactory capacity for timely payment of financial
commitments, but the margin of safety is not as great as in the case of the
higher ratings.
F3 Fair credit quality. The capacity for timely payment of financial commitments
is adequate; however, near-term adverse changes could result in a reduction to
non-investment grade.
B Speculative. Minimal capacity for timely payment of financial commitments,
plus vulnerability to near-term adverse changes in financial and economic
conditions.
C High default risk. Default is a real possibility. Capacity for meeting
financial commitments is solely reliant upon a sustained, favorable business and
economic environment.
D Default. Denotes actual or imminent payment default.
MUNICIPAL BONDS
LONG-TERM RATINGS
Moody's Municipal Long-Term Bond Ratings
Aaa Bonds 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.
Aa Bonds 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 risk appear somewhat larger than the Aaa securities.
A Bonds 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 some time in the future.
Baa Bonds 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.
Ba Bonds 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.
B Bonds 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.
Caa Bonds 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.
Ca Bonds rated Ca represent obligations which are speculative in a high degree.
Such issues are often in default or have other marked shortcomings.
C Bonds rated C are the lowest rated class of bonds, and issues so rated can be
regarded as having extremely poor prospects of ever attaining any real
investment standing.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa to B. The modifier 1 indicates that the company ranks in
the higher end of its generic rating category; the modifier 2 indicates a
mid-range raking and the modifier 3 indicates that the company ranks in the
lower end of its generic rating category.
S&P Municipal Long-Term Bond Ratings
AAA An obligation rated AAA has the highest rating assigned by S&P. The
obligor?s capacity to meet its financial commitment on the obligation is
extremely strong.
AA An obligation rated AA differs from the highest-rated obligations only in
small degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.
A An obligation rated A is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
BBB An obligation rated BBB exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation.
BB, B, CCC, CC and C: As described below, obligations rated BB, B, CCC, CC, and
C are regarded as having significant speculative characteristics. BB indicates
the least degree of speculation and C the highest. While such obligations will
likely have some quality and protective characteristics, these may be outweighed
by large uncertainties or major exposures to adverse conditions.
BB An obligation rated BB is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions, which could lead to the
obligor's inadequate capacity to meet its financial commitment on the
obligation.
B An obligation rated B is more vulnerable to nonpayment than obligations rated
BB, but the obligor currently has the capacity to meet its financial commitment
on the obligation. Adverse business, financial, or economic conditions will
likely impair the obligor?s capacity or willingness to meet it financial
commitment on the obligation.
CCC An obligation rated CCC is currently vulnerable to nonpayment and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial, or economic conditions, the obligor is not likely
to have the capacity to meet its financial commitment on the obligation.
CC An obligation rated CC is currently highly vulnerable to nonpayment.
C The C rating may be used to cover a situation where a bankruptcy petition has
been filed or similar action has been taken, but payments on this obligation are
being continued.
D An obligation rated D is in payment default. The D rating category is used
when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating also will be used upon the
filing of a bankruptcy petition or the taking of a similar action if payments on
an obligation are jeopardized.
Plus (+) or minus (-) The ratings from AA to CCC may be modified by the addition
of a plus or minus sign to show relative standing within the major rating
categories.
Fitch Municipal Long-Term Bond Ratings
Investment Grade
AAA Highest credit quality. AAA ratings denote the lowest expectation of credit
risk. They are assigned only in case of exceptionally strong capacity for timely
payment of financial commitments. This capacity is highly unlikely to be
adversely affected by foreseeable events.
AA Very high credit quality. AA ratings denote a very low expectation of credit
risk. They indicate very strong capacity for timely payment of financial
commitments. This capacity is not significantly vulnerable to foreseeable
events.
A High credit quality. A ratings denote a lower expectation of credit risk. The
capacity for timely payment of financial commitments is considered strong. This
capacity may, nevertheless, be more vulnerable to changes in circumstances or in
economic conditions than is the case for higher ratings.
BBB Good credit quality. BBB ratings indicate that there is currently a low
expectation of credit risk. The capacity for timely payment of financial
commitments is considered adequate, but adverse changes in circumstances and in
economic conditions are more likely to impair this capacity. This is the lowest
investment-grade category.
Speculative Grade
BB Speculative. BB ratings indicate that there is a possibility of credit risk
developing, particularly as the result of adverse economic change over time;
however, business or financial alternatives may be available to allow financial
commitments to be met. Securities rated in this category are not investment
grade.
B Highly speculative. B ratings indicate that significant credit risk is
present, but a limited margin of safety remains. Financial commitments are
currently being met; however, capacity for continued payment is contingent upon
a sustained, favorable business and economic environment.
CCC, CC, C High default risk. Default is a real possibility. Capacity for
meeting financial commitments is solely reliant upon sustained, favorable
business or economic developments. A CC rating indicates that default of some
kind appears probable. C ratings signal imminent default.
DDD, DD, D Default. Securities are not meeting current obligations and are
extremely speculative. DDD designates the highest potential for recovery of
amounts outstanding on any securities involved. DD designates lower recovery
potential and D the lowest.
+ or - may be appended to a rating to denote relative status within major rating
categories. Such suffixes are not added to the AAA rating category or to
categories below CCC.
SHORT-TERM MUNICIPAL RATINGS
Moody's Municipal Short-Term Issuer Ratings
Prime-1 Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidence by many of the following characteristics.
- -- Leading market positions in well-established industries.
- -- High rates of return on funds employed.
- -- Conservative capitalization structure with moderate reliance on debt and
ample asset protection.
- -- Broad margins in earnings coverage of fixed financial changes and high
internal cash generation.
- -- Well-established access to a range of financial markets and assured sources
of alternate liquidity.
Prime-2 Issuers rated Prime-2 (or supporting institutions) have a strong ability
for repayment of senior short-term debt obligations. This will normally be
evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
Prime-3 Issuers rated Prime-3 (or supporting institutions) have an acceptable
ability for repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.
Not Prime Issuers rated Not Prime do not fall within any of the Prime rating
categories.
Moody's Municipal Short-Term Loan Ratings
MIG 1 This designation denotes best quality. There is strong protection by
established cash flows, superior liquidity support, or demonstrated broad-based
access to the market for refinancing.
MIG 2 This designation denotes high quality. Margins of protection are ample
although not so large as in the preceding group.
MIG 3 This designation denotes favorable quality. Liquidity and cash-flow
protection may be narrow and market access for refinancing is likely to be less
well established.
SG This designation denotes speculative quality. Debt instruments in this
category may lack margins of protection.
S&P Commercial Paper Ratings
A-1 This designation indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus sign (+) designation.
A-2 Capacity for timely payment on issues with this designation is satisfactory.
However, the relative degree of safety is not as high as for issues designated
A-1.
A-3 Issues carrying this designation have an adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.
B Issues rated B are regarded as having only speculative capacity for timely
payment.
C This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.
D Debt rated D is in payment default. The D rating category is used when
interest payments of principal payments are not made on the date due, even if
the applicable grace period has not expired, unless S&P believes such payments
will be made during such grace period.
S&P Municipal Short-Term Obligation Ratings
SP-1 Strong capacity to pay principal and interest. An issue determined to
possess a very strong capacity to pay debt service is given a plus (+)
designation.
SP-2 Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse financial and economic changes over the term of the
notes.
SP-3 Speculative capacity to pay principal and interest.
Fitch Municipal Short-Term Obligation Ratings
F1 Highest credit quality. Indicates the strongest capacity for timely payment
of financial commitments; may have an added "+" to denote any exceptionally
strong credit feature.
F2 Good credit quality. A satisfactory capacity for timely payment of financial
commitments, but the margin of safety is not as great as in the case of the
higher ratings.
F3 Fair credit quality. The capacity for timely payment of financial commitments
is adequate; however, near-term adverse changes could result in a reduction to
non-investment grade.
B Speculative. Minimal capacity for timely payment of financial commitments,
plus vulnerability to near-term adverse changes in financial and economic
conditions.
C High default risk. Default is a real possibility. Capacity for meeting
financial commitments is solely reliant upon a sustained, favorable business and
economic environment.
D Default. Denotes actual or imminent payment default.
ADDITIONAL INFORMATION
Except as otherwise stated in its prospectus or required by law, the
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 the Fund's
prospectus, SAI or in supplemental sales literature issued by the Fund or the
Distributor, and no person is entitled to rely on any information or
representation not contained therein.
The Fund's prospectus 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.
<PAGE>
EVERGREEN EQUITY TRUST
PART C
Item 23 Exhibits
Unless otherwise indicated, each of the Exhibits listed below is filed
herewith.
<TABLE>
<CAPTION>
Exhibit
Number Description Location
- ------- ----------- -----------
<S> <C> <C>
(a) Declaration of Trust Incorporated by reference to
Registrant's Registration Statement
Filed on October 8, 1997
(b) By-laws Incorporated by reference to
Registrant's Registration Statement
Filed on October 8, 1997
(c) Provisions of instruments defining the rights Incorporated by reference to
of holders of the securities being registered Registrant's Registration Statement
are contained in the Declaration of Trust Filed on October 8, 1997
Articles II, III.(6)(c), VI.(3), IV.(8), V, VI,
VII, VIII and By-laws Articles II, III and VIII.
(d)(1) 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
(d)(2) 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
(d)(3) Investment Advisory and Management Incorporated by reference to
Agreement between the Registrant and Post-Effective Amendment No. 4 to
Evergreen Investment Management Company Registrant's Registration Statement
(formerly Keystone Investment Management Filed on March 12, 1998
Company)
(d)(4) Investment Advisory and Management
Agreement between the Registrant and
Meridian Investment Company
(d)(5) Sub-advisory Agreement between Evergreen Asset Incorporated by reference to
Management Corp. and Lieber & Company Post-Effective Amendment No.9 to
Registrant's Registrant Statement
Filed on October 1, 1998
(d)(6) Portfolio Management Agreement between
OppenheimerFunds, Inc. and First Union
National Bank
(d)(7) Portfolio Management Agreement between
MFS Institutional Advisors, Inc. and First
Union National Bank
(d)(8) Portfolio Management Agreement between
Putnam Investment Management, Inc. and First
Union National Bank
(e)(1) 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
(e)(2) 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
(e)(3) 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
(e)(4) 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
(e)(5) 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
(e)(6) 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
(e)(7) 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
(e)(8) 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
(f) Form of Deferred Compensation Plan Incorporated by reference to
Registrant's Pre-Effective Amendment No. 1
Filed on November 10, 1997
(g) 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
(h)(1) 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
(h)(2) 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
(i) Opinion and Consent of Sullivan & Worcester LLP Incorporated by reference to
Registrant's Post-Effective Amendment No. 2
Filed on December 12, 1997
(j)(1) Consent of KPMG Peat Marwick LLP
(j)(2) Consent of PricewaterhouseCoopers LLP
(j)(3) Consent of Ernst & Young LLP
(k) Not applicable
(l) Not applicable
(m)(1) 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
(m)(2) 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
(m)(3) 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
(m)(4) 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
(m)(5) 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
(n) Financial Data Schedules
(o) Not applicable
(p) Multiple Class Plan Incorporated by reference to
Registrant's Pre-Effective Amendment No. 1
Filed on November 10, 1997
</TABLE>
Item 24. Persons Controlled by or Under Common Control with Registrant.
None
Item 25. Indemnification.
Registrant has obtained from a major insurance carrier a trustees and
officers liability policy covering certain types of errors and omissions.
Provisions for the indemnification of the Registrant's Trustees and
officers are also contained in 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.
Provisions for the indemnification of Evergreen Service Company, the
Registrant's transfer agent, are contained in the Master Transfer and
Recordkeeping Agreement between Evergreen Service Company and the Registrant.
Provisions for the indemnification of State Street Bank and Trust Company,
the Registrant's custodian, are contained in the Custodian Agreement between
State Street Bank and Trust Company and the Registrant.
Item 26. 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 Evergreen Investment
Management Company (formerly Keystone Investment Management Company) is
incorporated by reference to the Form ADV (File No. 801-8327) of Evergreen
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 27. Principal Underwriters.
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.
The Directors and principal executive officers of Evergreen Distributor,
Inc. are:
Lynn C. Mangum Director, Chairman and Chief Executive
Officer
Dennis Sheehan Director, Chief Financial 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.
The Registrant has not paid, directly or indirectly, any commissions or
other compensation to the Principal Underwriter in the last fiscal year.
Item 28. 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
Evergreen Investment Management Company (formerly 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 29. Management Services.
Not Applicable
Item 30. 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 Trust has duly caused this Registration
Statement to be signed on its behalf by the undersigned, duly authorized, in the
City of Columbus, and State of Ohio, on the ___th day of January, 1999.
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 __th day of January, 1999.
<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 Chairman of the Board Trustee
and Trustee
/s/Gerald M. McDonnell /s/ Thomas L. McVerry /s/ Michael S. Scofield
- ------------------------------- ----------------------------- --------------------------------
Gerald M. McDonnell* Thomas L. McVerry* Michael S. Scofield*
Trustee Trustee Trustee
/s/ David M. Richardson /s/ Russell A. Salton, III MD /s/ Leroy Keith, Jr.
- ------------------------------ ------------------------------- --------------------------------
David M. Richardson* Russell A. Salton, III MD* Leroy Keith, Jr.
Trustee Trustee Trustee
/s/ Richard J. Shima
- ------------------------------
Richard J. Shima*
Trustee
</TABLE>
*By: /s/ Catherine Foley
- -------------------------------
Catherine Foley
Attorney-in-Fact
*Catherine Foley, 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
- ------- -------
(d)(4) Investment Advisory and Management
Agreement between the Registrant and
Meridian Investment Company
(d)(6) Portfolio Management Agreement between
OppenheimerFunds, Inc. and First
Union National Bank
(d)(7) Portfolio Management Agreement between
MFS Institutional Advisors, Inc. and First
Union National Bank
(d)(8) Portfolio Management Agreement between
Putnam Investment Management, Inc. and First
Union National Bank
(j)(1) Consent of KPMG Peat Marwick LLP
(j)(2) Consent of PricewaterhouseCoopers LLP
(j)(3) Consent of Ernst & Young LLP
(n) Financial Data Schedules
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
AGREEMENT made the 31st day of May 1998, by and between EVERGREEN
EQUITY TRUST, a Delaware business trust (the "Trust") and MERIDIAN INVESTMENT
COMPANY, a Pennsylvania corporation (the "Adviser").
WHEREAS, the Trust and the Adviser wish to enter into an Agreement
setting forth the terms on which the Adviser will perform certain services for
the Trust, its series of shares as listed on Schedule 1 to this Agreement and
each series of shares subsequently issued by the Trust (each singly a "Fund" or
collectively the "Funds").
THEREFORE, in consideration of the promises and the mutual agreements
hereinafter contained, the Trust and the Adviser agree as follows:
1. (a) The Trust hereby employs the Adviser to manage and administer
the operation of the Trust and each of its Funds, to supervise the provision of
the services to the Trust and each of its Funds by others, and to manage the
investment and reinvestment of the assets of each Fund of the Trust in
conformity with such Fund's investment objectives and restrictions as may be set
forth from time to time in the Fund's then current prospectus and statement of
additional information, if any, and other governing documents, all subject to
the supervision of the Board of Trustees of the Trust, for the period and on the
terms set forth in this Agreement. The Adviser hereby accepts such employment
and agrees during such period, at its own expense, to render the services and to
assume the obligations set forth herein, for the compensation provided herein.
The Adviser shall for all purposes herein be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent the Trust in any way or otherwise be deemed an
agent of the Trust.
(b) In the event that the Trust establishes one or more Funds, in
addition to the Funds listed on Schedule 1, for which it wishes the Adviser to
perform services hereunder, it shall notify the Adviser in writing. If the
Adviser is willing to render such services, it shall notify the Trust in writing
and such Fund shall become a Fund hereunder and the compensation payable to the
Adviser by the new Fund will be as agreed in writing at the time.
2. The Adviser shall place all orders for the purchase and sale of
portfolio securities for the account of each Fund with broker-dealers selected
by the Adviser. In executing portfolio transactions and selecting
broker-dealers, the Adviser will use its best efforts to seek best execution on
behalf of each Fund. In assessing the best execution available for any
transaction, the Adviser shall consider all factors it deems relevant, including
the breadth of the market in the security, the price of the security, the
financial condition and execution capability of the broker-dealer, and the
reasonableness of the commission, if any (all for the specific transaction and
on a continuing basis). In evaluating the best execution available, and in
selecting the broker-dealer to execute a particular transaction, the Adviser may
also consider
24181
1
<PAGE>
the brokerage and research services (as those terms are used in Section 28(e) of
the Securities Exchange Act of 1934 (the "1934 Act")) provided to a Fund and/or
other accounts over which the Adviser or an affiliate of the Adviser exercises
investment discretion. The Adviser is authorized to pay a broker-dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for a Fund which is in excess of the amount of commission
another broker-dealer would have charged for effecting that transaction if, but
only if, the Adviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker-dealer viewed in terms of that particular transaction or
in terms of all of the accounts over which investment discretion is so
exercised.
3. The Adviser, at its own expense, shall furnish to the Trust office
space in the offices of the Adviser or in such other place as may be agreed upon
by the parties from time to time, all necessary office facilities, equipment and
personnel in connection with its services hereunder, and shall arrange, if
desired by the Trust, for members of the Adviser's organization to serve without
salaries from the Trust as officers or, as may be agreed from time to time, as
agents of the Trust. The Adviser assumes and shall pay or reimburse the Trust
for:
(a) the compensation (if any) of the Trustees of the Trust who are
affiliated with the Adviser or with its affiliates, or with any adviser retained
by the Adviser, and of all officers of the Trust as such; and
(b) all expenses of the Adviser incurred in connection with its
services hereunder.
The Trust assumes and shall pay all other expenses of the Trust and its
Funds, including, without limitation:
(a) all charges and expenses of any custodian or depository appointed
by the Trust for the safekeeping of the cash, securities and other property of
any of its Funds;
(b) all charges and expenses for bookkeeping and auditors;
(c) all charges and expenses of any transfer agents and registrars
appointed by the Trust;
(d) all fees of all Trustees of the Trust who are not affiliated with
the Adviser or any of its affiliates, or with any adviser retained by the
Adviser;
(e) all brokers' fees, expenses, and commissions and issue and transfer
taxes chargeable to a Fund in connection with transactions involving securities
and other property to which the Fund is a party;
(f) all costs and expenses of distribution of shares of its Funds
incurred pursuant to Plans of Distribution adopted under Rule 12b-1 under the
Investment Company Act of 1940 ("1940 Act");
(g) all taxes and trust fees payable by the Trust or its Funds to
Federal, state, or other governmental agencies;
(h) all costs of certificates representing shares of the Trust or its
Funds;
24181
2
<PAGE>
(i) all fees and expenses involved in registering and maintaining
registrations of the Trust, its Funds and of their shares with the Securities
and Exchange Commission (the "Commission") and registering or qualifying the
Funds' shares under state or other securities laws, including, without
limitation, the preparation and printing of registration statements,
prospectuses, and statements of additional information for filing with the
Commission and other authorities;
(j) expenses of preparing, printing, and mailing prospectuses and
statements of additional information to shareholders of each Fund of the Trust;
(k) all expenses of shareholders' and Trustees' meetings and of
preparing, printing, and mailing notices, reports, and proxy materials to
shareholders of the Funds;
(l) all charges and expenses of legal counsel for the Trust and its
Funds and for Trustees of the Trust in connection with legal matters relating to
the Trust and its Funds, including, without limitation, legal services rendered
in connection with the Trust and its Funds' existence, trust, and financial
structure and relations with its shareholders, registrations and qualifications
of securities under Federal, state, and other laws, issues of securities,
expenses which the Trust and its Funds have herein assumed, whether customary or
not, and extraordinary matters, including, without limitation, any litigation
involving the Trust and its Funds, its Trustees, officers, employees, or agents;
(m) all charges and expenses of filing annual and other reports with
the Commission and other authorities; and
(n) all extraordinary expenses and charges of the Trust and its Funds.
In the event that the Adviser provides any of these services or pays
any of these expenses, the Trust and any affected Fund will promptly reimburse
the Adviser therefor.
The services of the Adviser to the Trust and its Funds hereunder are
not to be deemed exclusive, and the Adviser shall be free to render similar
services to others.
4. As compensation for the Adviser's services to the Trust with respect
to each Fund during the period of this Agreement, the Trust will pay to the
Adviser a fee at the annual rate set forth on Schedule 2 for such Fund.
The Adviser's fee is computed as of the close of business on each
business day.
A pro rata portion of the Trust's fee with respect to a Fund shall be
payable in arrears at the end of each day or calendar month as the Adviser may
from time to time specify to the Trust. If and when this Agreement terminates,
any compensation payable hereunder for the period ending with the date of such
termination shall be payable upon such termination.
Amounts payable hereunder shall be promptly paid when due.
5. The Adviser may enter into an agreement to retain, at its own
expense, a firm or firms ("SubAdviser") to provide the Trust with respect to all
or any of its Funds all of the
24181
3
<PAGE>
services to be provided by the Adviser hereunder, if such agreement is approved
as required by law. Such agreement may delegate to such SubAdviser all of
Adviser's rights, obligations, and duties hereunder.
6. The Adviser shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Trust or any of its Funds in connection
with the performance of this Agreement, except a loss resulting from the
Adviser's willful misfeasance, bad faith, gross negligence, or from reckless
disregard by it of its obligations and duties under this Agreement. Any person,
even though also an officer, Director, partner, employee, or agent of the
Adviser, who may be or become an officer, Trustee, employee, or agent of the
Trust, shall be deemed, when rendering services to the Trust or any of its Funds
or acting on any business of the Trust or any of its Funds (other than services
or business in connection with the Adviser's duties hereunder), to be rendering
such services to or acting solely for the Trust or any of its Funds and not as
an officer, Director, partner, employee, or agent or one under the control or
direction of the Adviser even though paid by it.
7. The Trust shall cause the books and accounts of each of its Funds to
be audited at least once each year by a reputable independent public accountant
or organization of public accountant or organization of public accountants who
shall render a report to the Trust.
8. Subject to and in accordance with the Declaration of Trust of the
Trust, the governing documents of the Adviser and the governing documents of any
SubAdviser, it is understood that Trustees, Directors, officers, agents and
shareholders of the Trust or any Adviser are or may be interested in the Adviser
(or any successor thereof) as Directors and officers of the Adviser or its
affiliates, as stockholders of First Union Corporation or otherwise; that
Directors, officers and agents of the Adviser and its affiliates or stockholders
of First Union Corporation are or may be interested in the Trust or any Adviser
as Trustees, Directors, officers, shareholders or otherwise; that the Adviser
(or any such successor) is or may be interested in the Trust or any SubAdviser
as shareholder, or otherwise; and that the effect of any such adverse interests
shall be governed by the Declaration of Trust of the Trust, governing documents
of the Adviser and governing documents of any SubAdviser.
9. This Agreement shall continue in effect for two years from the date
set forth above and after such date (a) such continuance is specifically
approved at least annually by the Board of Trustees of the Trust or by a vote of
a majority of the outstanding voting securities of the Trust, and (b) such
renewal has been approved by the vote of the majority of Trustees of the Trust
who are not interested persons, as that term is defined in the 1940 Act, of the
Adviser or of the Trust, cast in person at a meeting called for the purpose of
voting on such approval.
10. On sixty days' written notice to the Adviser, this Agreement may be
terminated at any time without the payment of any penalty by the Board of
Trustees of the Trust or by vote of the holders of a majority of the outstanding
voting securities of any Fund with respect to that Fund; and on sixty days'
written notice to the Trust, this Agreement may be terminated at
24181
4
<PAGE>
any time without the payment of any penalty by the Adviser with respect to a
Fund. This Agreement shall automatically terminate upon its assignment (as that
term is defined in the 1940 Act). Any notice under this Agreement shall be given
in writing, addressed and delivered, or mailed postage prepaid, to the other
party at the main office of such party.
11. This Agreement may be amended at any time by an instrument in
writing executed by both parties hereto or their respective successors, provided
that with regard to amendments of substance such execution by the Trust shall
have been first approved by the vote of the holders of a majority of the
outstanding voting securities of the affected Funds and by the vote of a
majority of Trustees of the Trust who are not interested persons (as that term
is defined in the 1940 Act) of the Adviser, any predecessor of the Adviser, or
of the Trust, cast in person at a meeting called for the purpose of voting on
such approval. A "majority of the outstanding voting securities" of the Trust or
the affected Funds shall have, for all purposes of this Agreement, the meaning
provided therefor in the 1940 Act.
12. Any compensation payable to the Adviser hereunder for any period
other than a full year shall be proportionately adjusted.
13. The provisions of this Agreement shall be governed, construed, and
enforced in accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
EVERGREEN EQUITY TRUST
By: /s/ William J. Tomko
---------------------------
NAME: William J. Tomko
TITLE: President
MERIDIAN INVESTMENT COMPANY
By: /s/ David Francis
---------------------------
NAME: David Francis
TITLE: Senior Vice President
24181
5
<PAGE>
SCHEDULE 1
----------
Evergreen Stock Selector Fund
24181
6
<PAGE>
SCHEDULE 2
----------
As compensation for the Adviser's services to each Fund during the
period of this Agreement, each Fund will pay to the Adviser a fee at the annual
rate of:
I. Evergreen Stock Selector Fund
- --------------------------------------------------------------------------------
0.74% of Average Daily Net Assets of the Fund
24181
7
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this 4th day of January, 1999, by and between, First Union
National Bank, a national banking association, (the "Advisor") and
OppenheimerFunds, Inc., a Colorado corporation (the "Manager").
WHEREAS, Evergreen Masters Fund ("Fund"), a series of Evergreen Equity
Trust (the "Trust"), is a Delaware business trust which has filed a registration
statement under the Investment Company Act of 1940, as amended (the "1940 Act")
and the Securities Act of 1933 (the "Registration Statement"); and
WHEREAS, the Trust is comprised of several separate investment portfolios,
one of which is the Fund; and
WHEREAS, the Advisor desires to avail itself of the services, advice
and assistance of the Manager to assist the Advisor in providing investment
advisory services to the Fund and the Manager desires to provide such services;
and
WHEREAS, the Advisor has entered into an Investment Advisory Agreement
as of September 18, 1997 with the Trust pursuant to which the Advisor
acts as investment adviser with respect to the Fund;
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, it is agreed as follows:
1. Employment of the Manager. The Manager is registered under the Investment
Advisers Act of 1940, as amended (the "Advisers Act") and is engaged in the
business of rendering investment advisory services. The Advisor is a bank as
defined in Section 202(a)(2) of the Advisers Act and serves as investment
manager to the Fund. The Advisor hereby employs the Manager to manage the
investment and reinvestment of that portion of the Fund which the Advisor
allocates to the Manager from time to time (the "Account"), subject to the
supervision of the Advisor and the control and direction of the Trust's Board of
Trustees, for the period and on the terms hereinafter set forth, and the Manager
hereby accepts such employment. The Manager shall not be responsible for any
services to the Fund, or the Account, or to bear any expenses, other than those
expressly set forth in this Agreement. The Manager shall for all purposes herein
be deemed to be an independent contractor and shall, except as expressly
provided or authorized (whether herein or otherwise), have no authority to act
for or represent the Advisor, the Fund or the Trust in any way. The Manager, on
behalf of the Fund, may execute account documentation, agreements, contracts and
other documents requested by brokers, dealers, counter-parties and other persons
in connection with its management of the Account.
2. Rebalancing of the Fund. In addition to the Manager, the Advisor intends to
appoint three other sub-advisers to assist in the management of the Fund's
assets, and to allocate to each sub-adviser (including the Manager) 25% of all
Fund inflows from share sales and distribution reinvestment and 25% of all Fund
outflows from share redemptions and cash distributions. The Advisor and the
Manager acknowledge that market action may result in each sub-adviser managing
more or less than 25% of the Fund's assets at any point in time. The Advisor
agrees that it will not actively reallocate Fund assets among the sub-advisers
unless average daily net assets allocated to one sub-adviser (i) exceeds 35% or
(ii) is less than 15%, in each case of average daily net assets of the Fund for
three consecutive calendar months. Upon the occurrence of such an event, the
Advisor may, but shall not be obligated to, reallocate Fund assets among the
sub-advisers so as to provide for more equal distribution of Fund assets among
sub-advisers. The Advisor shall provide each sub-advisers affected by such
reallocation with at least 30 days prior notice thereof.
3. Obligations of Services to be Provided by the Manager. The Manager undertakes
to provide the following services and to assume the following obligations:
a. The Manager shall manage the investment and reinvestment of the portfolio
assets of the Account, all without prior consultation with the Advisor, subject
to and in accordance with (i) the investment objective and policies of the Fund
set forth in the Fund's Prospectus and Statement of Additional Information as
from time to time in effect (the "Governing Documents"),
(ii) the requirements applicable to registered investment companies under the
1940 Act and Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code") and (iii) any written instructions which the Advisor or the Trust's
Board of Trustees may issue from time-to-time; provided, however, that for
purposes of determining compliance with the Governing Documents and with
applicable law, the Manager shall treat the Account as if it constituted the
entire Fund. The Manager also agrees to conduct its activities hereunder in
accordance with any applicable procedures or policies adopted by the Trust's
Board of Trustees as from time to time in effect as previously provided to the
Manager by the Advisor (the "Procedures"). Notwithstanding anything to the
contrary contained in this Agreement, but subject to the Manager's obligations
set forth in clauses 3 a (i)-(iii) above, the Advisor expressly assumes and
shall retain overall responsibility for (i) monitoring the investment program
maintained by the Manager for the Account and the other subadvisers to ensure
that the Account's and the Fund's assets are invested in compliance with this
Agreement, the Governing Documents, the Procedures and the requirements of
applicable law, (ii) the actions and omissions of any other subadviser to the
Fund, for the purposes of compliance or otherwise, and (iii) all other
compliance requirements relating to the Fund. The Advisor has provided to the
Manager true and correct copies of all Governing Documents and Procedures and
shall promptly provide to the Manager any amendments or supplements thereto.
Subject to and in pursuance of the foregoing, the Manager shall make all
determinations with respect to the purchase and sale of portfolio securities and
shall take such action necessary to implement the same. The Manager shall from
time to time (but no more often than quarterly) upon reasonable request render
reports in such form as the Manager shall determine to the Trust's Board of
Trustees and the Advisor on portfolio transactions and investments held in the
Account. The Advisor shall, in good faith and in a manner which it reasonably
believes best serves the interests of the Account's shareholders, direct the
Account's custodian as to how to vote such proxies as may be necessary or
advisable in connection with any matters submitted to a vote of shareholders of
securities held in the Account.
b. Subject to supervision of the Advisor, the Manager is authorized to, in the
name of the Fund, place orders for the execution of portfolio transactions with
or through such brokers, dealers or other financial institutions as the Manager
may select which may include, to the extent permitted by the Advisor and the
Fund, brokers or dealers affiliated with the Manager. The Manager shall seek to
obtain "best execution" on all portfolio transactions executed on behalf of the
Fund, provided that, so long as the Manager has complied with Section 28(e) of
the Securities Exchange Act of 1934, the Manager may cause the Fund to pay a
commission on a transaction in excess of the amount of commission another
broker-dealer would have charged.
On occasions when the Manager deems the purchase or sale of a security to be in
the best interests of the Fund as well as other clients of the Manager, the
Manager, to the extent permitted by applicable laws and regulations, may, but
shall be under no obligation to, aggregate the securities to be sold or
purchased in order to obtain to most favorable price or lower brokerage
commissions and efficient execution. In such event, allocations of securities so
sold or purchased, as well as the expenses incurred in the transaction, will be
made by the Manager in the manner the Manager considers to be the most equitable
and consistent with its fiduciary obligations to the Fund and to such other
clients. Subject to the foregoing provisions of this section (b), then Manager
may also consider sales of Fund shares and shares of other investment companies
managed by the Manager or its affiliates as a factor in the selection of brokers
or dealers for the Fund's portfolio transactions.
c. Solely in connection with the placement of orders for the execution of the
portfolio transactions of the Account, the Manager shall maintain all necessary
records pertaining to the purchase and sale of securities by the Manager on
behalf of the Account required by Rule 31a-2 (c) and (f) under the 1940 Act. All
records shall be the property of the Trust and shall be available for inspection
and use by the Securities and Exchange Commission ("SEC"), the Trust, the
Advisor or any person retained by the Trust during business hours upon
reasonable notice and request. Where applicable, such records shall be
maintained by the Manager for the periods and in the places required by Rule
31a-2 under the 1940 Act.
d. The Manager shall bear its expenses of providing services pursuant to this
Agreement.
e. Notwithstanding anything to the contrary contained herein, the Adviser shall
remain responsible for, among other things, providing to the Manager, or causing
the Fund's Custodian to provide to the Manager, on each business day as of a
time deadline to be mutually agreed upon but in no event later than reasonably
necessary for the Manager to perform its daily duties, a report or computer
download in a mutually acceptable software program and format, detailing the
Account's portfolio holdings, uninvested cash, current valuations and other
information requested by the Manager to assist it in carrying out its duties
under this Agreement, as of the close of the prior business day. In performing
obligations under this Agreement, the Manager may rely on the information
provided to it by or on behalf of the Advisor or the Fund's Custodian.
f. The Advisor agrees to abide by the provisions of the 1940 Act and the
Advisers Act, and the regulations thereunder, irrespective of whether it is not
an "investment adviser" subject to the provisions of each statutes and
regulations.
g. The Advisor hereby represents and warrants to the Manager that (i) all
computer and other systems used by the Advisor in connection with the management
and operation of the Fund, and (ii) the Advisor believes, after reasonable
inquiry, that all computer and other systems used by third parties in connection
with the management and operation of the Fund, shall be able to handle eight
digit dates and the advent of the Year 2000 will not materially affect the
functioning of such systems.
4. Compensation of the Manager. In full consideration of services rendered
pursuant to this Agreement, the Advisor will pay the Manager a fee at the annual
rate set forth in Schedule A hereto of the value of the Account's average daily
net assets. Such fee shall be accrued daily and paid monthly as soon as possible
after the end of each month but no later than 15 days after the end of the
preceding month. If the Manager shall serve for less than the whole of any
month, the foregoing compensation shall be prorated. For the purpose of
determining fees payable to the Manager, the value of the Account's net assets
shall be computed at the times and in the manner that the Fund's net assets are
computed, as specified in the Governing Documents.
5. Other Activities of the Manager. The services of the Manager hereunder are
not to be deemed exclusive, and the Manager (including its officers and
employees) shall be free to render investment advisory, administrative or other
services to others and to engage in other activities.
6. Use of Names. The Advisor shall not use the name of the Manager or any of its
affiliates in any prospectus, sales literature or other material in any manner
not approved in writing prior thereto by the Manager; provided, however, that
the Advisor may use the name of the Manager in any such material that merely
refers in accurate terms to the Manager's appointment hereunder so long as the
size and format of reference is consistent with any reference to other Fund
sub-advisors named in such material. The Manager shall not use the name of the
Trust or the Advisor in any material relating to the Manager in any manner not
approved prior thereto by the Advisor; provided, however, that the Manager may
use the name of the Advisor or the Trust in any material that merely refers in
accurate terms to the appointment of the Manager hereunder.
7. Liability of the Manager. Absent willful misfeasance, bad faith, gross
negligence, or reckless disregard of obligations or duties hereunder on the part
of the Manager, the Manager shall not be liable for any act or omission, or any
losses that may be sustained, in the course of, or connected with, rendering
services hereunder. Subject to the foregoing, nothing herein shall constitute a
waiver of any rights or remedies which the Trust may have under any federal or
state securities laws. The Manager shall not be liable to the Advisor, the Trust
or the Fund for any losses that may be sustained as a result of delays in or
inaccuracy of information about the Fund provided to the Manager by or on behalf
of the Advisor or the Fund's Custodian.
8. Limitation of Trust's Liability. The Manager acknowledges that it has
received notice of and accepts the limitations upon the Trust's liability set
forth in its Agreement and Declaration of Trust. The Manager agrees that any of
the Trust's obligations shall be limited to the assets of the Fund and that the
Manager shall not seek satisfaction of any such obligation from the shareholders
of the Trust nor from any Trust officer, employee or agent of the Trust.
9. Renewal, Termination and Amendment. This Agreement shall continue in effect,
unless sooner terminated as hereinafter provided, for a period of two years from
the date hereof and shall continue in full force and effect for successive
periods of one year thereafter, but only so long as each such continuance is
specifically approved at least annually by vote of the holders of a majority of
the outstanding voting securities of the Fund or by vote of a majority of the
Trustees who are not parties to this Agreement or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval. This Agreement may be terminated at any time without payment of any
penalty, by the Trust's Board of Trustees, by the Advisor, or by a vote of a
majority of the outstanding voting securities of the Fund upon 60 days prior
written notice to the Manager or by the Manager upon 60 days' prior written
notice to the Advisor, or upon such shorter notice as may be mutually agreed
upon. This Agreement shall terminate automatically and immediately upon
termination of the Management Agreement between the Advisor and the Trust. This
Agreement shall terminate automatically and immediately in the event of its
assignment. The terms "assignment" and "vote of a majority of the outstanding
voting securities" shall have the meaning set forth for such terms in the 1940
Act.
This Agreement may be amended at any time by the Manager and the Advisor,
subject to approval by the Trust's Board of Trustees and, if required by
applicable SEC rules and regulations, a vote of a majority of the Fund's
outstanding voting securities.
10. Confidential Relationship. Any confidential information and advice furnished
by either party to this Agreement to the other shall be treated as confidential
and shall not be disclosed to third parties without the consent of the other
party hereto except as required by law, rule or regulation. The Advisor hereby
consents to the disclosure to third parties of investment results and other data
of the Account in connection with providing composite investment results and
related information of the Manager.
11. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statue, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
12. Miscellaneous. This Agreement constitutes the full and complete agreement of
the parties hereto with respect to the subject matter hereof. Each party agrees
to perform such further actions and execute such further documents as are
necessary to effectuate the purposes hereof. This Agreement shall be construed
and enforced in accordance with and governed by the laws of the Commonwealth of
Massachusetts. The captions in this Agreement are included for convenience only
and in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. This Agreement may be executed in several
counterparts, all of which together shall for all purposes constitute one
Agreement, binding on the parties.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first written above.
FIRST UNION NATIONAL BANK
By: /s/ Michael H. Koonce
___________________________
Authorized Officer
OPPENHEIMERFUNDS, INC.
By: /s/ Andrew J. Donohue
____________________________
Authorized Officer
<PAGE>
SCHEDULE A
Evergreen Masters Annual Fee as a % of average daily net
Fund assets of the Account:
0.50% of the first $500 million of net
assets, (with a minimum fee of no less
than $5,000 per month commencing 3 months
after the date hereof)
0.40% of next $500 million of net assets,
0.35% of net assets over $1 billion
24885
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this 4th day of January, 1999, by and between First
Union National Bank, a national banking association, ("the Advisor"), and MFS
Institutional Advisors, Inc., a Delaware corporation ("the Manager").
WHEREAS, the Advisor has been organized to serve as investment adviser
of the Evergreen Masters Fund ("Fund"), a series of Evergreen Equity Trust ("the
Trust"), a Delaware business trust which has filed a registration statement
under the Investment Company Act of 1940, as amended ("the 1940 Act") and the
Securities Act of 1933 ("the Registration Statement"); and
WHEREAS, the Trust is comprised of several separate investment
portfolios, one of which is the Fund; and
WHEREAS, the Advisor desires to avail itself of the services, advice
and assistance of the Manager to assist the Advisor in providing investment
advisory services to the Fund; and
WHEREAS, the Advisor is registered under the Investment Advisers Act of
1940, as amended ("the Advisers Act"), is engaged in the business of rendering
investment advisory services to investment companies and other institutional
clients and desires to provide such services to the Advisor;
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, it is agreed as follow:
1. Employment of the Manager. The Advisor hereby employs the Manager to
manage the investment and reinvestment of that portion of the Fund which the
Advisor allocates to the Manager from time to time ("the Account"), subject to
the control and direction of the Trust's Board of Trustees, for the period and
on the terms hereinafter set forth. The Manager hereby accepts such employment
and agrees during such period to render the services and to assume the
obligations herein set forth for the compensation herein provided. The Manager
shall for all purposes herein be deemed to be an independent contractor and
shall, except as expressly provided or authorized (whether herein or otherwise),
have no authority to act for or represent the Advisor, the Fund or the Trust in
any way. The Manager may execute account documentation, agreements, contracts
and other documents requested by brokers, dealers, counterparties and other
persons in connection with its management of the Account.
<PAGE>
2. Rebalancing of the Fund. In addition to the Manager, the Advisor
intends to appoint three other sub-advisers to assist in the management of the
Fund=s assets, and to allocate to each sub-adviser 25% of all Fund inflows from
share sales and distribution reinvestments and 25% of all Fund outflows from
share redemptions and cash distributions. The Advisor and the Manager
acknowledge that market action may resul in each sub-adviser managing more or
less than 25% of the Fund=s assets at any pointin time. The Advisor agrees that
it will not actively reallocate Fund assets among the sub-advisers unless
average daily net assets allocated to one sub-adviser (i) exceeds 35% or (ii) is
less than 15%, in each case of average daily net assets of the Fund for three
consecutive calendar months. Upon the occurrence of such an event, then Advisor
may, but shall not be obligated to, reallocate Fund assets among the
sub-advisers so as to provide for more equal distribution of Fund assets among
sub-advisers. The Advisor shall provide each sub-adviser affected by such
reallocation with at least 30 days prior notice thereof.
3. Obligations of Services to be Provided by the Advisor. The Manager
undertakes to provide the following services and to assume the following
obligations:
a. The Manager shall manage the investment and reinvestment of the
portfolio assets of the Account, all without prior consultation with the
Advisor, subject to and in accordance with (i) the investment objective and
policies of the Fund set forth in the Fund's Prospectus and Statement of
Additional Information as from time to time in effect("the Governing
Documents")(ii) the requirements applicable to registered investment companies
under applicable laws, including without limitation the Investment Company Act
of 1940 ("1940 Act") and Subchapter M of the Internal Revenue Code of 1986, as
amended ("the Code") and (iii) any written instructions which the Advisor or the
Trust's Board of Trustees may issue from time-to-time; provided, however, that
for purposes of determining compliance with the Governing Documents and with
applicable law, the Manager may treat the Account as if it constituted the
entire Fund. The Advisor also agrees to conduct its activities hereunder in
accordance with any applicable procedures or policies adopted by the Trust's
Board of Trustees as from time to time in effect and provided to the Adviser
("the Procedures"). The Advisor has provided to the Manager copies of all
Governing Documents and Procedures and shall promptly provide to the Manager any
amendments or supplements thereto. Subject to and in pursuance of the foregoing,
the Manager shall make all determinations with respect to the purchase and sale
of portfolio securities and shall take such action necessary to implement the
same. The Manager shall render such reports to the Trust's Board of Trustees and
the Advisor as they may reasonably request concerning the investment activities
of the Account. Unless the Advisor gives the Manager written instructions to the
contrary, the Manager shall, in good faith and in a manner which it reasonably
believes best serves the interests of the Account's shareholders, direct the
Account's custodian as to how to vote such proxies as may be necessary or
advisable in connection with any matters submitted to a vote of shareholders of
securities held in the Account.
b. Absent instructions of the Advisor to the contrary, the Manager
shall, in the name of the Fund, place orders for the execution of portfolio
transactions with or through such brokers, dealers or other financial
institutions as it may select. The Manager shall use its best efforts to obtain
Abest executions on all portfolio transactions executed on behalf of the Fund,
provided that, so long as the Manager has complied with Section 28(e) of the
Securities Exchange Act of 1934, the Manager may cause the Fund to pay a
commission on a transaction in excess of the amount of commission another
broker-dealer would have charged.
<PAGE>
c. In connection with the placement of orders for the execution of the
portfolio transactions of the Account, the Manager shall create and maintain all
necessary records pertaining to the purchase and sale of securities by the
Manager on behalf of the Account in accordance with all applicable laws, rules
and regulations, including but not limited to records required by Section 31(a)
of the 1940 Act. All records shall be the property of the Trust and shall be
available for inspection and use by the Securities and Exchange Commission
(ASEC@) as required by applicable law, the Trust, the Advisor or any person
retained by the Trust at all reasonable times. Where applicable, such records
shall be maintained by the Manager for the periods and in the places required by
Rule 31a-2 under the 1940 Act.
d. The Manager shall bear its expenses of providing services pursuant
to this Agreement.
4. Compensation of the Advisor. In full consideration of services
rendered pursuant to this Agreement, the Advisor will pay the Manager a fee at
the annual rate set forth in Schedule A hereto of the value of the Account's
average daily net assets. Such fee shall be accrued daily and paid monthly as
soon as practicable after the end of each month. If the Manager shall serve for
less than the whole of any month, the foregoing compensation shall be prorated.
For the purpose of determining fees payable to the Manager, the value of the
Account's net assets shall be computed at the times and in the manner that the
Fund's net assets are computed, as specified in the Governing Documents.
5. Other Activities of the Advisor. The services of the Manager
hereunder are not to be deemed exclusive, and the Manager shall be free to
render similar services to others and to engage in other activities, so long as
the services rendered hereunder are not impaired.
6. Use of Names. The Advisor shall not use the name of the Manager or
any of its affiliates in any prospectus, sales literature or other material
relating to the Trust or the Fund in any manner not approved prior thereto by
the Manager; provided, however, that the Advisor may use the name of the Manager
and its affiliates in any such material that merely refers in accurate terms to
the Manager's appointment hereunder. The Manager shall not use the name of the
Trust or the Advisor in any material relating to the Manager in any manner not
approved prior thereto by the Advisor; provided, however, that the Manager may
use the name of the Advisor or the Trust in any material that merely refers in
accurate terms to the appointment of the Manager hereunder.
7. Liability of the Manager. Absent willful misfeasance, bad faith,
gross negligence, or reckless disregard of obligations or duties hereunder on
the part of the Manager, the Manager shall not be liable for any act or omission
in the course of, or connected with, rendering services hereunder or for any
losses that may be sustained in the purchase, holding or sale of any security.
Subject to the foregoing, nothing herein shall constitute a waiver of any rights
or remedies which the Trust may have under any federal or state securities laws.
<PAGE>
8. Limitation of Trust's Liability. The Manager acknowledges that it
has received notice of and accepts the limitations upon the Trust's liability
set forth in its Agreement and Declaration of Trust. The Manager agrees that any
of the Trust's obligations shall be limited to the assets of the Fund and that
the Manager shall not seek satisfaction of any such obligation from the
shareholders of the Trust nor from any Trust officer, employee or agent of the
Trust.
9. Renewal, Termination and Amendment. This Agreement shall continue in
effect, unless sooner terminated as hereinafter provided, for a period of two
years from the date hereof and shall continue in full force and effect for
successive periods of one year thereafter, but only so long as each such
continuance is specifically approved at least annually by vote of the holders of
a majority of the outstanding voting securities of the Fund or by vote of a
majority of the Trustees who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval. This Agreement may be terminated at any time without
payment of any penalty, by the Trust's Board of Trustees, by the Advisor, or by
a vote of a majority of the outstanding voting securities of the Fund upon 60
days= prior written notice to the Manager or by the Manager upon 90 days= prior
written notice to the Advisor, or upon such shorter notice as may be mutually
agreed upon. This Agreement shall terminate automatically and immediately upon
termination of the Investment Advisory and Management Agreement between the
Advisor and the Trust. This Agreement shall terminate automatically and
immediately in the event of its assignment. The terms "assignment" and Avote of
a majority of the outstanding voting securities shall have the meaning set forth
for such terms in the 1940 Act. This Agreement may be amended at any time by the
Manager and the Advisor, subject to approval by the Trust's Board of Trustees
and, if required by applicable SEC rules and regulations, a vote of a majority
of the Fund's outstanding voting securities.
10. Confidential Relationship. Any information and advice furnished by
either party to this Agreement to the other shall be treated as confidential and
shall not be disclosed to third parties without the consent of the other party
hereto except as required by law, rule or regulation or in the ordinary course
of the Adviser carrying out its duties as anticipated by this agreement. The
Advisor hereby consents to the disclosure to third parties of investment results
and other data of the Account in connection with providing composite investment
results and related information of the Manager.
11. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statue, rule or otherwsise, the remainder of
this Agreement shall not be affected thereby.
<PAGE>
12. Miscellaneous. This Agreement constitutes the full and complete
agreement of the parties hereto with respect to the subject matter hereof. Each
party agrees to perform such further actions and execute such further documents
as are necessary to effectuate the purposes hereof. This Agreement shall be
construed and enforced in accordance with and governed by the laws of the
Commonwealth of Massachusetts. The captions in this Agreement are included for
convenience only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. This Agreement may be executed in
several counterparts, all of which together shall for all purposes constitute
one Agreement, binding on the parties.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
FIRST UNION NATIONAL BANK
By: /s/ Michael H. Koonce
_________________________
Authorized Officer
MFS INSTITUTIONAL ADVISORS, INC.
By: /s/ Joseph Trainor
___________________________
Authorized Officer
<PAGE>
24840
SCHEDULE A
Evergreen Masters Fund Annual Fee as a % of average daily net
Fund assets of the Account:
0.50% of the first $500 million of net
assets
0.40% of the next $500 million of net
assets
0.35% of net assets over $1 billion
24814
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this 4th day of January, 1999, by and between First
Union National Bank, a national banking association, ("the Advisor"), and Putnam
Investment Management, Inc., a Massachusetts corporation ("the Manager").
WHEREAS, the Advisor has been appointed to serve as investment Advisor
of the Evergreen Masters Fund ("A Fund"), a series of Evergreen Equity Trust
("the Trust"), a Delaware business trust which has filed a registration
statement under the Investment Company Act of 1940, as amended ("the 1940 Act")
and the Securities Act of 1933 ("the Registration Statement"); and
WHEREAS, the Trust is comprised of several separate investment
portfolios, one of which is the Fund; and
WHEREAS, the Advisor desires to avail itself of the services, advice
and assistance of the Manager to assist the Advisor in providing investment
advisory services to the Fund; and
WHEREAS, the Manager is registered under the Investment Advisers Act of
1940, as amended ("the Advisers Act"), is engaged in the business of rendering
investment advisory services to investment companies and other institutional
clients and desires to provide such services to the Advisor;
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, it is agreed as follow:
1. Employment of the Manager. The Advisor hereby employs the Manager to
manage the investment and reinvestment of that portion of the Fund which the
Advisor allocates to the Manager from time to time ("the Account"), subject to
the control and direction of the Trust's Board of Trustees, for the period and
on the terms hereinafter set forth. The Manager hereby accepts such employment
and agrees during such period to render the services and to assume the
obligations herein set forth for the compensation herein provided. The Manager
shall for all purposes herein be deemed to be an independent contractor and
shall, except as expressly provided or authorized (whether herein or otherwise),
have no authority to act for or represent the Advisor, the Fund or the Trust in
any way. The Manager may execute account documentation, agreements, contracts
and other documents requested by brokers, dealers, counter parties and other
persons in connection with its management of the Account.
<PAGE>
2. Rebalancing of the Fund. In addition to the Manager, the Advisor
intends to appoint three other sub-Advisors to assist in the management of the
Fund's assets, and to allocate to each sub-Advisor 25% of all Fund inflows from
share sales and distribution reinvestments and 25% of all Fund outflows from
share redemptions and cash distributions. The Advisor and the Manager
acknowledge that market action may result in each sub-Advisor managing more or
less than 25% of the Fund's assets at any point in time. The Advisor agrees that
it will not actively reallocate Fund assets among the sub-Advisors unless
average daily net assets allocated to one sub-Advisor (i) exceeds 35% or (ii) is
less than 15%, in each case of average daily net assets of the Fund for three
consecutive calendar months. Upon the occurrence of such an event, the Advisor
may, but shall not be obligated to, reallocate Fund assets among the
sub-Advisors so as to provide for more equal distribution of Fund assets among
sub-Advisors. The Advisor shall provide each sub-Advisor affected by such
reallocation with at least 30 days prior notice thereof.
3. Obligations of Services to be Provided by the Manager. The Manager
undertakes to provide the following services and to assume the following
obligations:
a. The Manager shall manage the investment and reinvestment of the
portfolio assets of the Account, all without prior consultation with the
Advisor, subject to and in accordance with (i) the investment objective and
policies of the Fund set forth in the Fund's Prospectus and Statement of
Additional Information as from time to time in effect, as provided to the
Manager, ("the Governing Documents")(ii) the requirements applicable to
registered investment companies under applicable laws, including without
limitation the 1940 Act and Subchapter M of the Internal Revenue Code of 1986,
as amended ("the Code") and (iii) any written instructions which the Advisor or
the Trust's Board of Trustees may issue from time-to-time; provided, however,
that for purposes of determining compliance with the Governing Documents and
with applicable law, the Manager may treat the Account as if it constituted the
entire Fund. The Manager also agrees to conduct its activities hereunder in
accordance with any applicable procedures or policies adopted by the Trust's
Board of Trustees, as provided to the Manager, as from time to time in effect
(the "Procedures"). The Advisor has provided to the Manager copies of all
Governing Documents and Procedures and shall promptly provide to the Manager any
amendments or supplements thereto. Subject to and in pursuance of the foregoing,
the Manager shall make all determinations with respect to the purchase and sale
of portfolio securities and shall take such action necessary to implement the
same. The Manager shall render such reports to the Trust's Board of Trustees and
the Advisor as they may reasonably request concerning the investment activities
of the Account. Unless the Advisor or the Trust's Board of Trustees gives the
Manager written instructions to the contrary, the Manager shall, in good faith
and in a manner which it reasonably believes best serves the interests of the
Account's shareholders, direct the Account's custodian as to how to vote such
proxies as may be necessary or advisable in connection with any matters
submitted to a vote of shareholders of securities held in the Account.
<PAGE>
b. Absent instructions of the Advisor to the contrary, the Manager
shall, in the name of the Fund, place orders for the execution of portfolio
transactions with or through such brokers, dealers or other financial
institutions as it may select In the selection of such brokers or dealers and
the placing of such orders, the Manager shall use its best efforts to obtain for
the Account the most favorable price and execution available, except to the
extent it may be permitted to pay higher brokerage commissions for brokerage and
research services as described below. In using its best efforts to obtain for
the account the most favorable price and execution available, the Manager,
bearing in mind the Account's best interest at all times, shall consider all
factors it deems relevant, including by way of illustration, price, the size of
the transaction, the nature of the market for the security, the amount of the
commission, the timing of the transaction taking into account market prices and
trends, the reputation, experience and financial stability of the broker or
dealer involved and the quality of service rendered by the broker or dealer in
other transactions. Subject to such policies as the Trustees of the Trust may
determine and have been communicated in writing to the Manager, the Manager
shall not be deemed to have acted unlawfully or to have breached any duty
created by this Agreement or otherwise solely by reason of its having caused the
Account to pay a broker or dealer that provides brokerage and research services
to the Manager an amount of commission for effecting a portfolio investment
transaction in excess of the amount of commission another broker or dealer would
have charged for effecting that transaction, if the Manager determines in good
faith that such amount of commission was reasonable in relation to the value of
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the Manager's overall
responsibilities with respect to the account and other clients of the Manager as
to which the Manager exercises investment discretion.
c. In connection with the placement of orders for the execution of the
portfolio transactions of the Account, the Manager shall create and maintain all
necessary records pertaining to the purchase and sale of securities by the
Manager on behalf of the Account in accordance with all applicable laws, rules
and regulations, including but not limited to records required by Section 31(a)
of the 1940 Act. All records shall be the property of the Trust and shall
available for inspection and use by the Securities and Exchange Commission
(ASEC@), the Trust, the Advisor or any person retained by the Trust at all
reasonable times. Where applicable, such records shall be maintained by the
Manager for the periods and in the places required by Rule 31a-2 under the 1940
Act.
d. The Manager shall bear its expenses of providing services pursuant
to this Agreement.
4. Compensation of the Manager. In full consideration of services
rendered pursuant to this Agreement, the Advisor will pay the Manager a fee at
the annual rate set forth in Schedule A hereto of the value of the Account's
average daily net assets. Such fee shall be accrued daily and paid monthly as
soon as practicable after the end of each month. If the Manager shall serve for
less than the whole of any month, the foregoing compensation shall be prorated.
For the purpose of determining fees payable to the Manager, the value of the
Account's net assets shall be computed at the times and in the manner that the
Fund=s net assets are computed, as specified in the Governing Documents.
5. Other Activities of the Manager. The services of the Manager
hereunder are not to be deemed exclusive, and the Manager shall be free to
render similar services to others and to engage in other activities, so long as
the services rendered hereunder are not impaired.
<PAGE>
6. Use of Names. The Advisor shall not use the name of the Manager or
any of its affiliates in any prospectus, sales literature or other material
relating to the Trust or the Fund in any manner not approved prior thereto by
the Manager; provided, however, that the Advisor may use the name of the Manager
and its affiliates in any such material that merely refers in accurate terms to
the Manager's appointment hereunder. The Manager shall not use the name of the
Trust or the Advisor in any material relating to the Manager in any manner not
approved prior thereto by the Advisor; provided, however, that the Manager may
use the name of the Advisor or the Trust in any material that merely refers in
accurate terms to the appointment of the Manager hereunder. Neither the Advisor
nor the Trust shall use or refer in any way the name of the Manager following
termination of this agreement without the Manager's consent except as may be
required by law.
7. Liability of the Manager. Absent willful misfeasance, bad faith,
gross negligence, or reckless disregard of obligations or duties hereunder on
the part of the Manager, the Manager shall not be liable for any act or omission
in the course of, or connected with, rendering services hereunder or for any
losses that may be sustained in the purchase, holding or sale of any security.
Subject to the foregoing, nothing herein shall constitute a waiver of any rights
or remedies which the Trust may have under any federal or state securities laws.
8. Limitation of Trust's Liability. The Manager acknowledges that it
has received notice of and accepts the limitations upon the Trust's liability
set forth in its Agreement and Declaration of Trust. The Manager agrees that any
of the Trust's obligations shall be limited to the assets of the Fund and that
the Manager shall not seek satisfaction of any such obligation from the
shareholders of the Trust nor from any Trust officer, employee or agent of the
Trust.
9. Renewal, Termination and Amendment. This Agreement shall continue in
effect, unless sooner terminated as hereinafter provided, for a period of two
years from the date hereof and shall continue in full force and effect for
successive periods of one year thereafter, but only so long as each such
continuance is specifically approved at least annually by vote of the holders of
a majority of the outstanding voting securities of the Fund or by vote of a
majority of the Trustees who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval. This Agreement may be terminated at any time without
payment of any penalty, by the Trust=s Board of Trustees, by the Advisor, or by
a vote of a majority of the outstanding voting securities of the Fund upon 60
days, prior written notice to the Manager or by the Manager upon 90 days' prior
written notice to the Advisor, or upon such shorter notice as may be mutually
agreed upon. This Agreement shall terminate automatically and immediately upon
termination of the Management Agreement between the Advisor and the Trust. This
Agreement shall terminate automatically and immediately in the event of its
assignment. The terms "assignment" and Avote of a majority of the outstanding
voting securities' shall have the meaning set forth for such terms in the 1940
Act. This Agreement may be amended at any time by the Manager and the Advisor,
subject to approval by the Trust's Board of Trustees and, if required by
applicable SEC rules and regulations, a vote of a majority of the Fund's
outstanding voting securities.
<PAGE>
24814
24519
10. Confidential Relationship. Any information and advice furnished by
either party to this Agreement to the other shall be treated as confidential and
shall not be disclosed to third parties without the consent of the other party
hereto except as required by law, rule or regulation. The Advisor hereby
consents to the disclosure to third parties of investment results and other data
of the Account in connection with providing composite investment results and
related information of the Manager.
11. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
12. Miscellaneous. This Agreement constitutes the full and complete
agreement of the parties hereto with respect to the subject matter hereof. Each
party agrees to perform such further actions and execute such further documents
as are necessary to effectuate the purposes hereof. This Agreement shall be
construed and enforced in accordance with and governed by the laws of The
Commonwealth of Massachusetts. The captions in this Agreement are included for
convenience only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. This Agreement may be executed in
several counterparts, all of which together shall for all purposes constitute
one Agreement, binding on the parties.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
FIRST UNION NATIONAL BANK
By: /s/ Michael H. Koonce
__________________________
Authorized Officer
PUTNAM INVESTMENT MANAGEMENT, INC.
By:/s/ John Verani
_____________________________
Authorized Officer
<PAGE>
SCHEDULE A
Evergreen Masters
Fund 0.50% of average daily net assets of the
Account; provided, however, that the fee
for the twelve months ending December 31,
2000 shall not be less than $125,000. The
difference, if any, between such amount
and the aggregate fee actually paid
during such twelve month period shall be
paid no later than January 31, 2001.
CONSENT OF INDEPENDENT AUDITORS
The Trustees and Shareholders
Evergreen Equity Trust:
We consent to the use of our report dated November 6, 1998 for Evergreen
Omega Fund, Evergreen Small Company Growth Fund and Evergreen Strategic Growth
Fund, and our report dated October 6, 1998 for Evergreen Tax Strategic Equity
Fund incorporated by reference herein and to the references to our firm under
the captions "FINANCIAL HIGHLIGHTS" in the prospectuses and "Independent
Auditors" in the Statement of Additional Information.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Boston, Massachusetts
February 1, 1999
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 12 to the registration statement on Form N-1A (the "Registration
Statement") of Evergreen Equity Trust of our report dated November 12, 1998,
relating to the financial statements and financial highlights of Evergreen Fund,
Evergreen Micro Cap Fund, Evergreen Aggressive Growth Fund and Evergreen Stock
Selector Fund appearing in the September 30, 1998 Annual Report to Shareholders,
which is also incorporated by reference into the Registration Statement. We also
consent to the references to us under the heading "Financial Highlights" in the
Prospectuses and under the headings "Independent Auditors" and "Financial
Statements" in the Statement of Additional Information.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
January 27, 1999
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. 12 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 25, 1998 on the CoreFunds, Inc. Core Equity Fund.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
January 27, 1999
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 101
<NAME> EVERGREEN AGGRESSIVE GROWTH FUND CLASS A
<PERIOD-TYPE> 12-MOS
<S> <C>
<FISCAL-YEAR-END> SEPT-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEPT-30-1998
<INVESTMENTS-AT-COST> 134,332,397
<INVESTMENTS-AT-VALUE> 204,595,125
<RECEIVABLES> 844,274
<ASSETS-OTHER> 35,506
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 205,474,905
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 512,160
<TOTAL-LIABILITIES> 512,160
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 56,857,458
<SHARES-COMMON-STOCK> 6,480,639
<SHARES-COMMON-PRIOR> 7,031,081
<ACCUMULATED-NII-CURRENT> 230,381
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12,002,095
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 68,686,543
<NET-ASSETS> 137,776,477
<DIVIDEND-INCOME> 237,423
<INTEREST-INCOME> 54,136
<OTHER-INCOME> 0
<EXPENSES-NET> (2,044,756)
<NET-INVESTMENT-INCOME> (1,753,197)
<REALIZED-GAINS-CURRENT> 14,010,430
<APPREC-INCREASE-CURRENT> (21,917,489)
<NET-CHANGE-FROM-OPS> (9,660,256)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (6,090,321)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,458,678
<NUMBER-OF-SHARES-REDEEMED> (2,644,186)
<SHARES-REINVESTED> 256,170
<NET-CHANGE-IN-ASSETS> (36,406,797)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (926,551)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (2,046,430)
<AVERAGE-NET-ASSETS> 154,406,586
<PER-SHARE-NAV-BEGIN> 23.48
<PER-SHARE-NII> (0.25)
<PER-SHARE-GAIN-APPREC> (1.12)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (0.85)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 21.26
<EXPENSE-RATIO> 1.33
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 102
<NAME> EVERGREEN AGGRESSIVE GROWTH FUND CLASS B
<PERIOD-TYPE> 12-MOS
<S> <C>
<FISCAL-YEAR-END> SEPT-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEPT-30-1998
<INVESTMENTS-AT-COST> 134,332,397
<INVESTMENTS-AT-VALUE> 204,595,125
<RECEIVABLES> 844,274
<ASSETS-OTHER> 35,506
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 205,474,905
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 512,160
<TOTAL-LIABILITIES> 512,160
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 32,655,158
<SHARES-COMMON-STOCK> 1,746,951
<SHARES-COMMON-PRIOR> 1,776,073
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (457,874)
<ACCUMULATED-NET-GAINS> 3,707,914
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 396,187
<NET-ASSETS> 36,301,385
<DIVIDEND-INCOME> 61,848
<INTEREST-INCOME> 14,193
<OTHER-INCOME> 0
<EXPENSES-NET> (814,762)
<NET-INVESTMENT-INCOME> (738,721)
<REALIZED-GAINS-CURRENT> 3,587,746
<APPREC-INCREASE-CURRENT> (5,576,071)
<NET-CHANGE-FROM-OPS> (2,727,046)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (1,515,887)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 438,746
<NUMBER-OF-SHARES-REDEEMED> (537,072)
<SHARES-REINVESTED> 69,204
<NET-CHANGE-IN-ASSETS> (4,615,770)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (235,726)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (815,188)
<AVERAGE-NET-ASSETS> 39,282,878
<PER-SHARE-NAV-BEGIN> 23.18
<PER-SHARE-NII> (0.41)
<PER-SHARE-GAIN-APPREC> (1.14)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (0.85)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.78
<EXPENSE-RATIO> 2.08
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> EVERGREEN AGGRESSIVE GROWTH FUND CLASS C
<PERIOD-TYPE> 12-MOS
<S> <C>
<FISCAL-YEAR-END> SEPT-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEPT-30-1998
<INVESTMENTS-AT-COST> 134,332,397
<INVESTMENTS-AT-VALUE> 204,595,125
<RECEIVABLES> 844,274
<ASSETS-OTHER> 35,506
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 205,474,905
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 512,160
<TOTAL-LIABILITIES> 512,160
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,288,148
<SHARES-COMMON-STOCK> 123,875
<SHARES-COMMON-PRIOR> 172,372
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (35,415)
<ACCUMULATED-NET-GAINS> 321,436
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (3,694)
<NET-ASSETS> 2,570,475
<DIVIDEND-INCOME> 5,362
<INTEREST-INCOME> 1,191
<OTHER-INCOME> 0
<EXPENSES-NET> (70,540)
<NET-INVESTMENT-INCOME> (63,987)
<REALIZED-GAINS-CURRENT> 329,067
<APPREC-INCREASE-CURRENT> (482,735)
<NET-CHANGE-FROM-OPS> (217,655)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (134,112)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 257,084
<NUMBER-OF-SHARES-REDEEMED> (311,675)
<SHARES-REINVESTED> 6,094
<NET-CHANGE-IN-ASSETS> (1,461,549)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (20,407)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (70,577)
<AVERAGE-NET-ASSETS> 3,400,820
<PER-SHARE-NAV-BEGIN> 23.16
<PER-SHARE-NII> (0.41)
<PER-SHARE-GAIN-APPREC> (1.15)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (0.85)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.75
<EXPENSE-RATIO> 2.08
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> EVERGREEN AGGRESSIVE GROWTH FUND CLASS Y
<PERIOD-TYPE> 12-MOS
<S> <C>
<FISCAL-YEAR-END> SEPT-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEPT-30-1998
<INVESTMENTS-AT-COST> 134,332,397
<INVESTMENTS-AT-VALUE> 204,595,125
<RECEIVABLES> 844,274
<ASSETS-OTHER> 35,506
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 205,474,905
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 512,160
<TOTAL-LIABILITIES> 512,160
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 22,998,719
<SHARES-COMMON-STOCK> 1,319,267
<SHARES-COMMON-PRIOR> 1,882,994
<ACCUMULATED-NII-CURRENT> 249,257
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,882,740
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,183,692
<NET-ASSETS> 28,314,408
<DIVIDEND-INCOME> 52,144
<INTEREST-INCOME> 11,697
<OTHER-INCOME> 0
<EXPENSES-NET> (371,317)
<NET-INVESTMENT-INCOME> (307,476)
<REALIZED-GAINS-CURRENT> 3,201,758
<APPREC-INCREASE-CURRENT> (4,905,963)
<NET-CHANGE-FROM-OPS> (2,011,681)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (1,606,606)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 948,746
<NUMBER-OF-SHARES-REDEEMED> (1,556,481)
<SHARES-REINVESTED> 44,007
<NET-CHANGE-IN-ASSETS> (16,078,856)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (207,397)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (371,692)
<AVERAGE-NET-ASSETS> 34,562,032
<PER-SHARE-NAV-BEGIN> 23.57
<PER-SHARE-NII> (0.20)
<PER-SHARE-GAIN-APPREC> (1.06)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (0.85)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 21.46
<EXPENSE-RATIO> 1.08
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 101
<NAME> EVERGREEN FUND CLASS A
<PERIOD-TYPE> 12-MOS
<S> <C>
<FISCAL-YEAR-END> SEPT-30-1998
<PERIOD-START> SEPT-30-1997
<PERIOD-END> SEPT-30-1998
<INVESTMENTS-AT-COST> 1,220,157,650
<INVESTMENTS-AT-VALUE> 1,890,946,248
<RECEIVABLES> 9,682,183
<ASSETS-OTHER> 82,049
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,900,710,480
<PAYABLE-FOR-SECURITIES> 1,058,303
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 52,322,159
<TOTAL-LIABILITIES> 53,380,462
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 153,307,202
<SHARES-COMMON-STOCK> 8,648,992
<SHARES-COMMON-PRIOR> 7,031,081
<ACCUMULATED-NII-CURRENT> 187,029
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (1,227,790)
<ACCUM-APPREC-OR-DEPREC> 30,323,619
<NET-ASSETS> 182,590,060
<DIVIDEND-INCOME> 1,415,726
<INTEREST-INCOME> 1,858,169
<OTHER-INCOME> 0
<EXPENSES-NET> (2,801,888)
<NET-INVESTMENT-INCOME> 472,007
<REALIZED-GAINS-CURRENT> 1,096,062
<APPREC-INCREASE-CURRENT> (12,983,321)
<NET-CHANGE-FROM-OPS> (11,415,252)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (756,350)
<DISTRIBUTIONS-OF-GAINS> (3,670,523)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 26,892,204
<NUMBER-OF-SHARES-REDEEMED> (25,471,595)
<SHARES-REINVESTED> 197,302
<NET-CHANGE-IN-ASSETS> 21,345,399
<ACCUMULATED-NII-PRIOR> 478,527
<ACCUMULATED-GAINS-PRIOR> 3,379,810
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (1,733,553)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (2,801,888)
<AVERAGE-NET-ASSETS> 195,186,057
<PER-SHARE-NAV-BEGIN> 22.96
<PER-SHARE-NII> 0.06
<PER-SHARE-GAIN-APPREC> (1.31)
<PER-SHARE-DIVIDEND> (0.10)
<PER-SHARE-DISTRIBUTIONS> (0.50)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 21.11
<EXPENSE-RATIO> 1.44
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 102
<NAME> EVERGREEN FUND CLASS B
<PERIOD-TYPE> 12-MOS
<S> <C>
<FISCAL-YEAR-END> SEPT-30-1998
<PERIOD-START> SEPT-30-1997
<PERIOD-END> SEPT-30-1998
<INVESTMENTS-AT-COST> 1,220,157,650
<INVESTMENTS-AT-VALUE> 1,890,946,248
<RECEIVABLES> 9,682,183
<ASSETS-OTHER> 82,049
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,900,710,480
<PAYABLE-FOR-SECURITIES> 1,058,303
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 52,322,159
<TOTAL-LIABILITIES> 53,380,462
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 555,213,849
<SHARES-COMMON-STOCK> 29,947,478
<SHARES-COMMON-PRIOR> 22,182,031
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (4,087,798)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (4,601,259)
<ACCUM-APPREC-OR-DEPREC> 77,119,495
<NET-ASSETS> 623,644,287
<DIVIDEND-INCOME> 4,538,443
<INTEREST-INCOME> 5,897,039
<OTHER-INCOME> 0
<EXPENSES-NET> (13,542,946)
<NET-INVESTMENT-INCOME> (3,107,464)
<REALIZED-GAINS-CURRENT> 3,475,905
<APPREC-INCREASE-CURRENT> (41,173,571)
<NET-CHANGE-FROM-OPS> (40,805,130)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (11,529,535)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,537,318
<NUMBER-OF-SHARES-REDEEMED> (4,288,369)
<SHARES-REINVESTED> 516,498
<NET-CHANGE-IN-ASSETS> 130,879,989
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 4,143,061
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (957,650)
<GROSS-ADVISORY-FEES> (5,509,554)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (13,542,946)
<AVERAGE-NET-ASSETS> 618,989,078
<PER-SHARE-NAV-BEGIN> 22.69
<PER-SHARE-NII> (0.12)
<PER-SHARE-GAIN-APPREC> (1.25)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (0.50)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.82
<EXPENSE-RATIO> 2.19
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> EVERGREEN FUND CLASS C
<PERIOD-TYPE> 12-MOS
<S> <C>
<FISCAL-YEAR-END> SEPT-30-1998
<PERIOD-START> SEPT-30-1997
<PERIOD-END> SEPT-30-1998
<INVESTMENTS-AT-COST> 1,220,157,650
<INVESTMENTS-AT-VALUE> 1,890,946,248
<RECEIVABLES> 9,682,183
<ASSETS-OTHER> 82,049
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,900,710,480
<PAYABLE-FOR-SECURITIES> 1,058,303
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 52,322,159
<TOTAL-LIABILITIES> 53,380,462
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 11,261,848
<SHARES-COMMON-STOCK> 607,099
<SHARES-COMMON-PRIOR> 392,275
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (81,503)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (83,258)
<ACCUM-APPREC-OR-DEPREC> 1,522,930
<NET-ASSETS> 12,620,017
<DIVIDEND-INCOME> 88,016
<INTEREST-INCOME> 113,869
<OTHER-INCOME> 0
<EXPENSES-NET> (261,404)
<NET-INVESTMENT-INCOME> (59,519)
<REALIZED-GAINS-CURRENT> 67,050
<APPREC-INCREASE-CURRENT> (794,230)
<NET-CHANGE-FROM-OPS> (786,700)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (199,185)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 311,900
<NUMBER-OF-SHARES-REDEEMED> (105,425)
<SHARES-REINVESTED> 8,349
<NET-CHANGE-IN-ASSETS> 4,071,101
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 76,081
<OVERDISTRIB-NII-PRIOR> (21,546)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (106,275)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (261,404)
<AVERAGE-NET-ASSETS> 11,939,929
<PER-SHARE-NAV-BEGIN> 22.66
<PER-SHARE-NII> (0.11)
<PER-SHARE-GAIN-APPREC> (1.26)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (0.50)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.79
<EXPENSE-RATIO> 2.19
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> EVERGREEN FUND CLASS Y
<PERIOD-TYPE> 12-MOS
<S> <C>
<FISCAL-YEAR-END> SEPT-30-1998
<PERIOD-START> SEPT-30-1997
<PERIOD-END> SEPT-30-1998
<INVESTMENTS-AT-COST> 1,220,157,650
<INVESTMENTS-AT-VALUE> 1,890,946,248
<RECEIVABLES> 9,682,183
<ASSETS-OTHER> 82,049
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,900,710,480
<PAYABLE-FOR-SECURITIES> 1,058,303
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 52,322,159
<TOTAL-LIABILITIES> 53,380,462
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 448,555,313
<SHARES-COMMON-STOCK> 48,390,516
<SHARES-COMMON-PRIOR> 47,870,520
<ACCUMULATED-NII-CURRENT> 5,973,801
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12,123,983
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 561,822,556
<NET-ASSETS> 1,028,475,653
<DIVIDEND-INCOME> 8,325,963
<INTEREST-INCOME> 10,899,628
<OTHER-INCOME> 0
<EXPENSES-NET> (13,581,251)
<NET-INVESTMENT-INCOME> 5,644,340
<REALIZED-GAINS-CURRENT> 6,441,720
<APPREC-INCREASE-CURRENT> (76,304,902)
<NET-CHANGE-FROM-OPS> (64,218,842)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (6,894,401)
<DISTRIBUTIONS-OF-GAINS> (23,699,502)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 77,736,786
<NUMBER-OF-SHARES-REDEEMED> (78,332,089)
<SHARES-REINVESTED> 1,115,299
<NET-CHANGE-IN-ASSETS> (87,062,866)
<ACCUMULATED-NII-PRIOR> 7,265,900
<ACCUMULATED-GAINS-PRIOR> 28,469,162
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (10,186,672)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (13,581,251)
<AVERAGE-NET-ASSETS> 1,147,141,639
<PER-SHARE-NAV-BEGIN> 23.07
<PER-SHARE-NII> 0.12
<PER-SHARE-GAIN-APPREC> (1.30)
<PER-SHARE-DIVIDEND> (0.14)
<PER-SHARE-DISTRIBUTIONS> (0.50)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 21.25
<EXPENSE-RATIO> 1.18
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 101
<NAME> EVERGREEN MICRO CAP FUND CLASS A
<PERIOD-TYPE> 12-MOS
<S> <C>
<FISCAL-YEAR-END> SEPT-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEPT-30-1998
<INVESTMENTS-AT-COST> 48,577,126
<INVESTMENTS-AT-VALUE> 50,947,609
<RECEIVABLES> 574,093
<ASSETS-OTHER> 18,693
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 51,540,395
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 357,749
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,515,438
<SHARES-COMMON-STOCK> 238,535
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (8,937)
<ACCUMULATED-NET-GAINS> (111,687)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (653,377)
<NET-ASSETS> 4,741,437
<DIVIDEND-INCOME> 29,726
<INTEREST-INCOME> 1,788
<OTHER-INCOME> 0
<EXPENSES-NET> (75,390)
<NET-INVESTMENT-INCOME> (43,636)
<REALIZED-GAINS-CURRENT> (70,855)
<APPREC-INCREASE-CURRENT> (1,117,625)
<NET-CHANGE-FROM-OPS> (1,232,116)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (142,183)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 359,192
<NUMBER-OF-SHARES-REDEEMED> (217,436)
<SHARES-REINVESTED> 5,408
<NET-CHANGE-IN-ASSETS> 147,164
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (46,056)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (75,390)
<AVERAGE-NET-ASSETS> 4,593,605
<PER-SHARE-NAV-BEGIN> 26.68
<PER-SHARE-NII> (0.24)
<PER-SHARE-GAIN-APPREC> (5.17)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (1.39)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 19.88
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 102
<NAME> EVERGREEN MICRO CAP FUND CLASS B
<PERIOD-TYPE> 12-MOS
<S> <C>
<FISCAL-YEAR-END> SEPT-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEPT-30-1998
<INVESTMENTS-AT-COST> 48,577,126
<INVESTMENTS-AT-VALUE> 50,947,609
<RECEIVABLES> 574,093
<ASSETS-OTHER> 18,693
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 51,540,395
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 357,749
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,999,216
<SHARES-COMMON-STOCK> 219,404
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (47,791)
<ACCUMULATED-NET-GAINS> (116,480)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (599,296)
<NET-ASSETS> 4,235,649
<DIVIDEND-INCOME> 25,212
<INTEREST-INCOME> 1,543
<OTHER-INCOME> 0
<EXPENSES-NET> (93,995)
<NET-INVESTMENT-INCOME> (67,033)
<REALIZED-GAINS-CURRENT> (78,985)
<APPREC-INCREASE-CURRENT> (961,108)
<NET-CHANGE-FROM-OPS> (1,107,126)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (114,702)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 195,624
<NUMBER-OF-SHARES-REDEEMED> (46,210)
<SHARES-REINVESTED> 4,452
<NET-CHANGE-IN-ASSETS> 153,866
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (39,635)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (93,995)
<AVERAGE-NET-ASSETS> 3,950,297
<PER-SHARE-NAV-BEGIN> 26.14
<PER-SHARE-NII> (0.42)
<PER-SHARE-GAIN-APPREC> (5.02)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (1.39)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 19.31
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> EVERGREEN MICRO CAP FUND CLASS C
<PERIOD-TYPE> 12-MOS
<S> <C>
<FISCAL-YEAR-END> SEPT-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEPT-30-1998
<INVESTMENTS-AT-COST> 48,577,126
<INVESTMENTS-AT-VALUE> 50,947,609
<RECEIVABLES> 574,093
<ASSETS-OTHER> 18,693
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 51,540,395
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 357,749
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,090,069
<SHARES-COMMON-STOCK> 160,013
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (25,539)
<ACCUMULATED-NET-GAINS> (108,868)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (862,540)
<NET-ASSETS> 3,093,122
<DIVIDEND-INCOME> 18,214
<INTEREST-INCOME> 1,174
<OTHER-INCOME> 0
<EXPENSES-NET> (68,446)
<NET-INVESTMENT-INCOME> (48,908)
<REALIZED-GAINS-CURRENT> (52,082)
<APPREC-INCREASE-CURRENT> (696,269)
<NET-CHANGE-FROM-OPS> (797,259)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (57,650)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 219,122
<NUMBER-OF-SHARES-REDEEMED> (71,292)
<SHARES-REINVESTED> 2,222
<NET-CHANGE-IN-ASSETS> 150,052
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (28,735)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (68,446)
<AVERAGE-NET-ASSETS> 2,861,771
<PER-SHARE-NAV-BEGIN> 26.16
<PER-SHARE-NII> (0.43)
<PER-SHARE-GAIN-APPREC> (5.01)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (1.39)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 19.33
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> EVERGREEN MICRO CAP FUND CLASS Y
<PERIOD-TYPE> 12-MOS
<S> <C>
<FISCAL-YEAR-END> SEPT-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEPT-30-1998
<INVESTMENTS-AT-COST> 48,577,126
<INVESTMENTS-AT-VALUE> 50,947,609
<RECEIVABLES> 574,093
<ASSETS-OTHER> 18,693
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 51,540,395
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 357,749
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 33,069,621
<SHARES-COMMON-STOCK> 1,951,003
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 69,983
<ACCUMULATED-NET-GAINS> 1,487,138
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,485,696
<NET-ASSETS> 39,112,438
<DIVIDEND-INCOME> 328,584
<INTEREST-INCOME> 17,688
<OTHER-INCOME> 0
<EXPENSES-NET> (701,465)
<NET-INVESTMENT-INCOME> (352,561)
<REALIZED-GAINS-CURRENT> 1,479,251
<APPREC-INCREASE-CURRENT> (12,199,622)
<NET-CHANGE-FROM-OPS> (11,072,932)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (2,593,995)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 325,348
<NUMBER-OF-SHARES-REDEEMED> (335,562)
<SHARES-REINVESTED> 70,343
<NET-CHANGE-IN-ASSETS> 60,129
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (501,046)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (701,465)
<AVERAGE-NET-ASSETS> 50,142,269
<PER-SHARE-NAV-BEGIN> 26.83
<PER-SHARE-NII> (0.18)
<PER-SHARE-GAIN-APPREC> (5.21)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (1.39)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.05
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 101
<NAME> EVERGREEN OMEGA FUND CLASS A
<PERIOD-TYPE> 12-MOS
<S> <C>
<FISCAL-YEAR-END> SEPTEMBER-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEPT-30-1998
<INVESTMENTS-AT-COST> 244,554,856
<INVESTMENTS-AT-VALUE> 284,124,313
<RECEIVABLES> 4,086,797
<ASSETS-OTHER> 54,209
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 288,265,319
<PAYABLE-FOR-SECURITIES> 2,864,344
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 789,772
<TOTAL-LIABILITIES> 3,654,116
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 98,737,471
<SHARES-COMMON-STOCK> 7,266,503
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 2,044,564
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 23,439,173
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 31,998,643
<NET-ASSETS> 156,219,851
<DIVIDEND-INCOME> 1,118,454
<INTEREST-INCOME> 460,635
<OTHER-INCOME> 0
<EXPENSES-NET> (2,210,413)
<NET-INVESTMENT-INCOME> (631,322)
<REALIZED-GAINS-CURRENT> 26,541,491
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 25,910,169
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (14,940,773)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,365,259
<NUMBER-OF-SHARES-REDEEMED> (1,928,567)
<SHARES-REINVESTED> 652,599
<NET-CHANGE-IN-ASSETS> 12,069,227
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (1,233,981)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (2,212,035)
<AVERAGE-NET-ASSETS> 167,185,229
<PER-SHARE-NAV-BEGIN> 22.69
<PER-SHARE-NII> (0.09)
<PER-SHARE-GAIN-APPREC> 1.03
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (2.13)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 21.50
<EXPENSE-RATIO> 1.32
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 102
<NAME> EVERGREEN OMEGA FUND CLASS B
<PERIOD-TYPE> 12-MOS
<S> <C>
<FISCAL-YEAR-END> SEPTEMBER-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEPT-30-1998
<INVESTMENTS-AT-COST> 244,554,856
<INVESTMENTS-AT-VALUE> 284,124,313
<RECEIVABLES> 4,086,797
<ASSETS-OTHER> 54,209
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 288,265,319
<PAYABLE-FOR-SECURITIES> 2,864,344
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 789,772
<TOTAL-LIABILITIES> 3,654,116
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 99,508,797
<SHARES-COMMON-STOCK> 5,612,889
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (1,718,285)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 10,004,091
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,273,831
<NET-ASSETS> 114,068,434
<DIVIDEND-INCOME> 781,122
<INTEREST-INCOME> 324,809
<OTHER-INCOME> 0
<EXPENSES-NET> (2,459,272)
<NET-INVESTMENT-INCOME> (1,353,342)
<REALIZED-GAINS-CURRENT> 18,238,493
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 16,885,151
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (10,805,705)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,005,764
<NUMBER-OF-SHARES-REDEEMED> (992,163)
<SHARES-REINVESTED> 515,276
<NET-CHANGE-IN-ASSETS> 16,891,854
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (863,887)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (2,460,371)
<AVERAGE-NET-ASSETS> 117,034,250
<PER-SHARE-NAV-BEGIN> 21.71
<PER-SHARE-NII> (0.25)
<PER-SHARE-GAIN-APPREC> 0.99
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (2.13)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.32
<EXPENSE-RATIO> 2.10
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> EVERGREEN OMEGA FUND CLASS C
<PERIOD-TYPE> 12-MOS
<S> <C>
<FISCAL-YEAR-END> SEPTEMBER-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEPT-30-1998
<INVESTMENTS-AT-COST> 244,554,856
<INVESTMENTS-AT-VALUE> 284,124,313
<RECEIVABLES> 4,086,797
<ASSETS-OTHER> 54,209
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 288,265,319
<PAYABLE-FOR-SECURITIES> 2,864,344
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 789,772
<TOTAL-LIABILITIES> 3,654,116
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 11,324,173
<SHARES-COMMON-STOCK> 675,119
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (331,888)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,430,838
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,329,127
<NET-ASSETS> 13,752,250
<DIVIDEND-INCOME> 105,167
<INTEREST-INCOME> 42,623
<OTHER-INCOME> 0
<EXPENSES-NET> (329,241)
<NET-INVESTMENT-INCOME> (181,452)
<REALIZED-GAINS-CURRENT> 2,578,523
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 2,397,071
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (1,549,758)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 105,783
<NUMBER-OF-SHARES-REDEEMED> (244,821)
<SHARES-REINVESTED> 75,246
<NET-CHANGE-IN-ASSETS> (554,455)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (115,480)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (329,349)
<AVERAGE-NET-ASSETS> 15,642,811
<PER-SHARE-NAV-BEGIN> 21.74
<PER-SHARE-NII> (0.25)
<PER-SHARE-GAIN-APPREC> 1.01
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (2.13)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.37
<EXPENSE-RATIO> 2.11
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> EVERGREEN OMEGA FUND CLASS Y
<PERIOD-TYPE> 12-MOS
<S> <C>
<FISCAL-YEAR-END> SEPTEMBER-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEPT-30-1998
<INVESTMENTS-AT-COST> 244,554,856
<INVESTMENTS-AT-VALUE> 284,124,313
<RECEIVABLES> 4,086,797
<ASSETS-OTHER> 54,209
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 288,265,319
<PAYABLE-FOR-SECURITIES> 2,864,344
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 789,772
<TOTAL-LIABILITIES> 3,654,116
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 613,146
<SHARES-COMMON-STOCK> 26,492
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 669
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (11,003)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (32,144)
<NET-ASSETS> 570,668
<DIVIDEND-INCOME> 568
<INTEREST-INCOME> 501
<OTHER-INCOME> 0
<EXPENSES-NET> (1,182)
<NET-INVESTMENT-INCOME> (113)
<REALIZED-GAINS-CURRENT> (9,947)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> (10,060)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (493)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 38,657
<NUMBER-OF-SHARES-REDEEMED> (12,421)
<SHARES-REINVESTED> 24
<NET-CHANGE-IN-ASSETS> 597,593
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (779)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (1,166)
<AVERAGE-NET-ASSETS> 105,547
<PER-SHARE-NAV-BEGIN> 22.68
<PER-SHARE-NII> (0.02)
<PER-SHARE-GAIN-APPREC> 1.01
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (2.13)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 21.54
<EXPENSE-RATIO> 1.11
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 101
<NAME> EVERGREEN SMALL COMPANY GROWTH FUND CLASS A
<PERIOD-TYPE> 12-MOS
<S> <C>
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> SEP-30-1997
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 801,807,653
<INVESTMENTS-AT-VALUE> 790,731,270
<RECEIVABLES> 18,692,980
<ASSETS-OTHER> 148,122
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 809,572,372
<PAYABLE-FOR-SECURITIES> 13,780,148
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,896,406
<TOTAL-LIABILITIES> 15,676,554
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 786,016,248
<SHARES-COMMON-STOCK> 102,955,378
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 2,048,730
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,048,502)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (196,783,146)
<NET-ASSETS> 589,233,330
<DIVIDEND-INCOME> 1,605,232
<INTEREST-INCOME> 1,675,697
<OTHER-INCOME> 662,206
<EXPENSES-NET> 7,038,292
<NET-INVESTMENT-INCOME> (3,095,157)
<REALIZED-GAINS-CURRENT> 1,642,112
<APPREC-INCREASE-CURRENT> (196,783,146)
<NET-CHANGE-FROM-OPS> (198,236,191)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 152,946,050
<NUMBER-OF-SHARES-REDEEMED> (49,990,672)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 589,221,260
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,087
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7,068
<AVERAGE-NET-ASSETS> 884,397
<PER-SHARE-NAV-BEGIN> 7.75
<PER-SHARE-NII> (0.04)
<PER-SHARE-GAIN-APPREC> (1.99)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 5.72
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 102
<NAME> EVERGREEN SMALL COMPANY GROWTH FUND CLASS B
<PERIOD-TYPE> 12-MOS
<S> <C>
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> SEP-30-1997
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 801,807,653
<INVESTMENTS-AT-VALUE> 790,731,270
<RECEIVABLES> 18,692,980
<ASSETS-OTHER> 148,122
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 809,572,372
<PAYABLE-FOR-SECURITIES> 13,780,148
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,896,406
<TOTAL-LIABILITIES> 15,676,554
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> (55,141,326)
<SHARES-COMMON-STOCK> 35,096,950
<SHARES-COMMON-PRIOR> 163,756,330
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (2,067,310)
<ACCUMULATED-NET-GAINS> 70,266,827
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 186,818,624
<NET-ASSETS> 199,876,815
<DIVIDEND-INCOME> 1,660,910
<INTEREST-INCOME> 1,225,367
<OTHER-INCOME> 246,378
<EXPENSES-NET> 9,043,209
<NET-INVESTMENT-INCOME> (5,910,554)
<REALIZED-GAINS-CURRENT> 94,190,892
<APPREC-INCREASE-CURRENT> (309,210,187)
<NET-CHANGE-FROM-OPS> (220,929,849)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (124,537,167)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 34,914,270
<NUMBER-OF-SHARES-REDEEMED> (176,576,817)
<SHARES-REINVESTED> 13,003,167
<NET-CHANGE-IN-ASSETS> (1,346,032,162)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,260
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 9,065
<AVERAGE-NET-ASSETS> 663,638
<PER-SHARE-NAV-BEGIN> 9.44
<PER-SHARE-NII> (0.07)
<PER-SHARE-GAIN-APPREC> (2.90)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (0.78)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 5.69
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> EVERGREEN SMALL COMPANY GROWTH FUND CLASS C
<PERIOD-TYPE> 12-MOS
<S> <C>
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> SEP-30-1997
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 801,807,653
<INVESTMENTS-AT-VALUE> 790,731,270
<RECEIVABLES> 18,692,980
<ASSETS-OTHER> 148,122
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 809,572,372
<PAYABLE-FOR-SECURITIES> 13,780,148
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,896,406
<TOTAL-LIABILITIES> 15,676,554
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,164,579
<SHARES-COMMON-STOCK> 717,391
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (16,035)
<ACCUMULATED-NET-GAINS> (232,947)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (828,716)
<NET-ASSETS> 4,086,881
<DIVIDEND-INCOME> 9,020
<INTEREST-INCOME> 7,348
<OTHER-INCOME> 4,040
<EXPENSES-NET> 66,213
<NET-INVESTMENT-INCOME> (45,805)
<REALIZED-GAINS-CURRENT> (211,588)
<APPREC-INCREASE-CURRENT> (828,716)
<NET-CHANGE-FROM-OPS> (1,086,109)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,743,241
<NUMBER-OF-SHARES-REDEEMED> (1,025,850)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 4,327,878
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 17
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 66
<AVERAGE-NET-ASSETS> 5,118
<PER-SHARE-NAV-BEGIN> 7.73
<PER-SHARE-NII> (0.10)
<PER-SHARE-GAIN-APPREC> (1.93)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 5.70
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> EVERGREEN SMALL COMPANY GROWTH FUND CLASS Y
<PERIOD-TYPE> 12-MOS
<S> <C>
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> SEP-30-1997
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 801,807,653
<INVESTMENTS-AT-VALUE> 790,731,270
<RECEIVABLES> 18,692,980
<ASSETS-OTHER> 148,122
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 809,572,372
<PAYABLE-FOR-SECURITIES> 13,780,148
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,896,406
<TOTAL-LIABILITIES> 15,676,554
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,020,402
<SHARES-COMMON-STOCK> 121,812
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 2,808
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (41,274)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (283,144)
<NET-ASSETS> 698,792
<DIVIDEND-INCOME> 1,380
<INTEREST-INCOME> 1,105
<OTHER-INCOME> 625
<EXPENSES-NET> 4,903
<NET-INVESTMENT-INCOME> (1,793)
<REALIZED-GAINS-CURRENT> (37,972)
<APPREC-INCREASE-CURRENT> (283,145)
<NET-CHANGE-FROM-OPS> (322,910)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 261,851
<NUMBER-OF-SHARES-REDEEMED> (140,039)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 633,324
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5
<AVERAGE-NET-ASSETS> 791
<PER-SHARE-NAV-BEGIN> 7.73
<PER-SHARE-NII> (0.02)
<PER-SHARE-GAIN-APPREC> (1.97)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 5.74
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 101
<NAME> EVERGREEN STOCK SELECTOR FUND CLASS A
<PERIOD-TYPE> 3-MOS
<S> <C>
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUN-30-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 431,748,348
<INVESTMENTS-AT-VALUE> 433,609,934
<RECEIVABLES> 14,759,466
<ASSETS-OTHER> 722,167
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 449,091,567
<PAYABLE-FOR-SECURITIES> 2,189,707
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,586,366
<TOTAL-LIABILITIES> 7,776,073
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,325,667
<SHARES-COMMON-STOCK> 867,445
<SHARES-COMMON-PRIOR> 914,469
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (2,782)
<ACCUMULATED-NET-GAINS> 3,325,649
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 261,565
<NET-ASSETS> 15,910,099
<DIVIDEND-INCOME> 50,332
<INTEREST-INCOME> 1,684
<OTHER-INCOME> 0
<EXPENSES-NET> 54,792
<NET-INVESTMENT-INCOME> (2,776)
<REALIZED-GAINS-CURRENT> 634,639
<APPREC-INCREASE-CURRENT> (4,251,640)
<NET-CHANGE-FROM-OPS> (3,619,777)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9,092
<NUMBER-OF-SHARES-REDEEMED> (56,116)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (4,617,947)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 34
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 58
<AVERAGE-NET-ASSETS> 18,404
<PER-SHARE-NAV-BEGIN> 22.43
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> (4.09)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 18.34
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 102
<NAME> EVERGREEN STOCK SELECTOR FUND CLASS B
<PERIOD-TYPE> 3-MOS
<S> <C>
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUN-30-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 431,748,348
<INVESTMENTS-AT-VALUE> 433,609,934
<RECEIVABLES> 14,759,466
<ASSETS-OTHER> 722,167
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 449,091,567
<PAYABLE-FOR-SECURITIES> 2,189,707
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,586,366
<TOTAL-LIABILITIES> 7,776,073
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 474,796
<SHARES-COMMON-STOCK> 22,664
<SHARES-COMMON-PRIOR> 15,639
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (682)
<ACCUMULATED-NET-GAINS> 24,850
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (85,908)
<NET-ASSETS> 413,056
<DIVIDEND-INCOME> 1,016
<INTEREST-INCOME> 35
<OTHER-INCOME> 0
<EXPENSES-NET> 1,732
<NET-INVESTMENT-INCOME> (681)
<REALIZED-GAINS-CURRENT> 11,816
<APPREC-INCREASE-CURRENT> (81,945)
<NET-CHANGE-FROM-OPS> (70,810)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,269
<NUMBER-OF-SHARES-REDEEMED> (1,244)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 65,814
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2
<AVERAGE-NET-ASSETS> 355
<PER-SHARE-NAV-BEGIN> 22.33
<PER-SHARE-NII> (0.03)
<PER-SHARE-GAIN-APPREC> (4.07)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 18.23
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> EVERGREEN STOCK SELECTOR FUND CLASS C
<PERIOD-TYPE> 3-MOS
<S> <C>
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUN-30-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 431,748,348
<INVESTMENTS-AT-VALUE> 433,609,934
<RECEIVABLES> 14,759,466
<ASSETS-OTHER> 722,167
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 449,091,567
<PAYABLE-FOR-SECURITIES> 2,189,707
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,586,366
<TOTAL-LIABILITIES> 7,776,073
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0.00
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> EVERGREEN STOCK SELECTOR FUND CLASS Y
<PERIOD-TYPE> 3-MOS
<S> <C>
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUN-30-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 431,748,348
<INVESTMENTS-AT-VALUE> 433,609,934
<RECEIVABLES> 14,759,466
<ASSETS-OTHER> 722,167
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 449,091,567
<PAYABLE-FOR-SECURITIES> 2,189,707
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,586,366
<TOTAL-LIABILITIES> 7,776,073
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 334,870,832
<SHARES-COMMON-STOCK> 23,166,413
<SHARES-COMMON-PRIOR> 25,145,364
<ACCUMULATED-NII-CURRENT> 235,040
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 88,200,644
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,685,823
<NET-ASSETS> 424,992,339
<DIVIDEND-INCOME> 1,363,316
<INTEREST-INCOME> 45,652
<OTHER-INCOME> 0
<EXPENSES-NET> 1,173,730
<NET-INVESTMENT-INCOME> 235,238
<REALIZED-GAINS-CURRENT> 17,294,774
<APPREC-INCREASE-CURRENT> (115,681,612)
<NET-CHANGE-FROM-OPS> (98,151,600)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,552,973
<NUMBER-OF-SHARES-REDEEMED> (3,531,924)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (138,977,007)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 934
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,256
<AVERAGE-NET-ASSETS> 500,740
<PER-SHARE-NAV-BEGIN> 22.43
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> (4.09)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 18.35
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 101
<NAME> EVERGREEN TAX STRATEGIC EQUITY FUND CLASS A
<PERIOD-TYPE> 12-MOS
<S> <C>
<FISCAL-YEAR-END> SEPTEMBER-30-1998
<PERIOD-START> SEPTEMBER-01-1998
<PERIOD-END> SEPTEMBER-30-1998
<INVESTMENTS-AT-COST> 3,376,618
<INVESTMENTS-AT-VALUE> 3,511,244
<RECEIVABLES> 17,208
<ASSETS-OTHER> 112,806
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,641,258
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,591
<TOTAL-LIABILITIES> 1,591
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 9,563
<SHARES-COMMON-STOCK> 964
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 63
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 637
<NET-ASSETS> 10,263
<DIVIDEND-INCOME> 9
<INTEREST-INCOME> 2
<OTHER-INCOME> 0
<EXPENSES-NET> (8)
<NET-INVESTMENT-INCOME> 9
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 637
<NET-CHANGE-FROM-OPS> 646
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 964
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 10,269
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (5)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (11)
<AVERAGE-NET-ASSETS> 10,476
<PER-SHARE-NAV-BEGIN> 10.11
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 0.54
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.65
<EXPENSE-RATIO> 1.54
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 102
<NAME> EVERGREEN TAX STRATEGIC EQUITY FUND CLASS B
<PERIOD-TYPE> 12-MOS
<S> <C>
<FISCAL-YEAR-END> SEPTEMBER-30-1998
<PERIOD-START> SEPTEMBER-01-1998
<PERIOD-END> SEPTEMBER-30-1998
<INVESTMENTS-AT-COST> 3,376,618
<INVESTMENTS-AT-VALUE> 3,511,244
<RECEIVABLES> 17,208
<ASSETS-OTHER> 112,806
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,641,258
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,591
<TOTAL-LIABILITIES> 1,591
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,478,375
<SHARES-COMMON-STOCK> 340,703
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 17,018
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 22
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 133,989
<NET-ASSETS> 3,629,404
<DIVIDEND-INCOME> 3,292
<INTEREST-INCOME> 879
<OTHER-INCOME> 0
<EXPENSES-NET> (2,838)
<NET-INVESTMENT-INCOME> 1,327
<REALIZED-GAINS-CURRENT> 22
<APPREC-INCREASE-CURRENT> 133,989
<NET-CHANGE-FROM-OPS> 135,338
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 340,703
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3,629,398
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (2,074)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (19,404)
<AVERAGE-NET-ASSETS> 2,747,888
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 0.65
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.65
<EXPENSE-RATIO> 1.30
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> EVERGREEN TAX STRATEGIC EQUITY FUND CLASS C
<PERIOD-TYPE> 12-MOS
<S> <C>
<FISCAL-YEAR-END> SEPTEMBER-30-1998
<PERIOD-START> SEPTEMBER-01-1998
<PERIOD-END> SEPTEMBER-30-1998
<INVESTMENTS-AT-COST> 3,376,618
<INVESTMENTS-AT-VALUE> 3,511,244
<RECEIVABLES> 17,208
<ASSETS-OTHER> 112,806
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,641,258
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,591
<TOTAL-LIABILITIES> 1,591
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0.00
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> EVERGREEN TAX STRATEGIC EQUITY FUND CLASS Y
<PERIOD-TYPE> 12-MOS
<S> <C>
<FISCAL-YEAR-END> SEPTEMBER-30-1998
<PERIOD-START> SEPTEMBER-01-1998
<PERIOD-END> SEPTEMBER-30-1998
<INVESTMENTS-AT-COST> 3,376,618
<INVESTMENTS-AT-VALUE> 3,511,244
<RECEIVABLES> 17,208
<ASSETS-OTHER> 112,806
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,641,258
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,591
<TOTAL-LIABILITIES> 1,591
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0.00
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 101
<NAME> EVERGREEN STRATEGIC GROWTH FUND CLASS A
<PERIOD-TYPE> 12-MOS
<S> <C>
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 74,173,434
<INVESTMENTS-AT-VALUE> 73,721,473
<RECEIVABLES> 1,103,345
<ASSETS-OTHER> 74,069
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 74,898,887
<PAYABLE-FOR-SECURITIES> 5,425,941
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 252,022
<TOTAL-LIABILITIES> 5,677,963
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,660,818
<SHARES-COMMON-STOCK> 277,892
<SHARES-COMMON-PRIOR> 194,446
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (20,892)
<ACCUMULATED-NET-GAINS> 158,862
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (21,992)
<NET-ASSETS> 2,776,796
<DIVIDEND-INCOME> 26,900
<INTEREST-INCOME> 11,961
<OTHER-INCOME> 0
<EXPENSES-NET> (39,445)
<NET-INVESTMENT-INCOME> (584)
<REALIZED-GAINS-CURRENT> 147,823
<APPREC-INCREASE-CURRENT> (20,215)
<NET-CHANGE-FROM-OPS> 127,024
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 383,278
<NUMBER-OF-SHARES-REDEEMED> (289,832)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,032,860
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (33,884)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (51,028)
<AVERAGE-NET-ASSETS> 2,262,265
<PER-SHARE-NAV-BEGIN> 8.46
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 1.53
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 9.99
<EXPENSE-RATIO> 1.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 102
<NAME> EVERGREEN STRATEGIC GROWTH FUND CLASS B
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 74,173,434
<INVESTMENTS-AT-VALUE> 73,721,473
<RECEIVABLES> 1,103,345
<ASSETS-OTHER> 74,069
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 74,898,887
<PAYABLE-FOR-SECURITIES> 5,425,941
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 252,022
<TOTAL-LIABILITIES> 5,677,963
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,862,960
<SHARES-COMMON-STOCK> 407,935
<SHARES-COMMON-PRIOR> 343,322
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (48,150)
<ACCUMULATED-NET-GAINS> 240,959
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (35,613)
<NET-ASSETS> 4,020,156
<DIVIDEND-INCOME> 44,010
<INTEREST-INCOME> 18,953
<OTHER-INCOME> 0
<EXPENSES-NET> (91,350)
<NET-INVESTMENT-INCOME> (28,387)
<REALIZED-GAINS-CURRENT> 266,612
<APPREC-INCREASE-CURRENT> (32,735)
<NET-CHANGE-FROM-OPS> 205,490
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 164,864
<NUMBER-OF-SHARES-REDEEMED> (100,251)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 922,482
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (55,448)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (110,107)
<AVERAGE-NET-ASSETS> 3,663,453
<PER-SHARE-NAV-BEGIN> 8.39
<PER-SHARE-NII> (0.08)
<PER-SHARE-GAIN-APPREC> 1.54
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 9.85
<EXPENSE-RATIO> 2.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> EVERGREEN STRATEGIC GROWTH FUND CLASS C
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 74,173,434
<INVESTMENTS-AT-VALUE> 73,721,473
<RECEIVABLES> 1,103,345
<ASSETS-OTHER> 74,069
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 74,898,887
<PAYABLE-FOR-SECURITIES> 5,425,941
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 252,022
<TOTAL-LIABILITIES> 5,677,963
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,319,829
<SHARES-COMMON-STOCK> 130,192
<SHARES-COMMON-PRIOR> 10,089
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (10,144)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (20,149)
<ACCUM-APPREC-OR-DEPREC> (7,404)
<NET-ASSETS> 1,282,132
<DIVIDEND-INCOME> 9,849
<INTEREST-INCOME> 4,701
<OTHER-INCOME> 0
<EXPENSES-NET> (18,992)
<NET-INVESTMENT-INCOME> (4,442)
<REALIZED-GAINS-CURRENT> 97,223
<APPREC-INCREASE-CURRENT> (6,806)
<NET-CHANGE-FROM-OPS> 85,975
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 128,876
<NUMBER-OF-SHARES-REDEEMED> (8,773)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,294,159
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (11,598)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (22,892)
<AVERAGE-NET-ASSETS> 761,678
<PER-SHARE-NAV-BEGIN> 8.38
<PER-SHARE-NII> (0.06)
<PER-SHARE-GAIN-APPREC> 1.53
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 9.85
<EXPENSE-RATIO> 2.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
