<PAGE>
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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant[X]
Filed by a Party other than the Registrant[_]
Check the Appropriate Box:
[_]Preliminary Proxy Statement
[_]Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))[_]
[X]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
EVERGREEN TRUST KEYSTONE INSTITUTIONAL TRUST
EVERGREEN EQUITY TRUST KEYSTONE INTERNATIONAL FUND INC.
THE EVERGREEN LIMITED MARKET FUND, KEYSTONE OMEGA FUND
INC. KEYSTONE PRECIOUS METALS HOLDINGS,
EVERGREEN GROWTH AND INCOME FUND INC.
EVERGREEN INCOME AND GROWTH FUND KEYSTONE STRATEGIC GROWTH FUND (K-2)
THE EVERGREEN AMERICAN RETIREMENT KEYSTONE HIGH INCOME BOND FUND (B-4)
TRUST KEYSTONE CAPITAL PRESERVATION AND
EVERGREEN FOUNDATION TRUST INCOME FUND
THE EVERGREEN MUNICIPAL TRUST KEYSTONE INSTITUTIONAL ADJUSTABLE RATE
EVERGREEN MONEY MARKET TRUST FUND
EVERGREEN INVESTMENT TRUST KEYSTONE STRATEGIC INCOME FUND
THE EVERGREEN LEXICON FUND KEYSTONE FUND FOR TOTAL RETURN
EVERGREEN TAX FREE TRUST EVERGREEN LATIN AMERICA FUND
KEYSTONE GLOBAL RESOURCES AND KEYSTONE GLOBAL OPPORTUNITIES FUND
DEVELOPMENT FUND KEYSTONE STATE TAX FREE FUND
KEYSTONE GROWTH AND INCOME FUND (S-1) KEYSTONE STATE TAX FREE FUND--SERIES
II
----------------
(NAME OF REGISTRANTS AS SPECIFIED IN THEIR CHARTERS)
EVERGREEN TRUST KEYSTONE INSTITUTIONAL TRUST
EVERGREEN EQUITY TRUST KEYSTONE INTERNATIONAL FUND INC.
THE EVERGREEN LIMITED MARKET FUND, KEYSTONE OMEGA FUND
INC. KEYSTONE PRECIOUS METALS HOLDINGS,
EVERGREEN GROWTH AND INCOME FUND INC.
EVERGREEN INCOME AND GROWTH FUND KEYSTONE STRATEGIC GROWTH FUND (K-2)
THE EVERGREEN AMERICAN RETIREMENT KEYSTONE HIGH INCOME BOND FUND (B-4)
TRUST KEYSTONE CAPITAL PRESERVATION AND
EVERGREEN FOUNDATION TRUST INCOME FUND
THE EVERGREEN MUNICIPAL TRUST KEYSTONE INSTITUTIONAL ADJUSTABLE RATE
EVERGREEN MONEY MARKET TRUST FUND
EVERGREEN INVESTMENT TRUST KEYSTONE STRATEGIC INCOME FUND
THE EVERGREEN LEXICON FUND KEYSTONE FUND FOR TOTAL RETURN
EVERGREEN TAX FREE TRUST EVERGREEN LATIN AMERICA FUND
KEYSTONE GLOBAL RESOURCES AND KEYSTONE GLOBAL OPPORTUNITIES FUND
DEVELOPMENT FUND KEYSTONE STATE TAX FREE FUND
KEYSTONE GROWTH AND INCOME FUND (S-1) KEYSTONE STATE TAX FREE FUND--SERIES
II
----------------
(NAME OF PERSONS FILING PROXY STATEMENT)
Payment of filing fee (check the appropriate box):
[X]No fee required.
[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)Title of each class of securities to which transaction applies:
(2)Aggregate number of securities to which transaction applies:
(3)Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4)Proposed maximum aggregate value of transaction:
(5)Total fee paid:
[_]Fee paid previously with preliminary material
[_]Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1)Amount Previously Paid:
(2)Form, Schedule or Registration Statement No.:
(3)Filing Party:
(4)Date Filed:
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<PAGE>
IMPORTANT NEWS
FOR EVERGREEN SHAREHOLDERS
We encourage you to read the attached proxy statement in full; however, the
following questions and answers represent some typical concerns that
shareholders might have regarding this proxy.
Q: WHY IS EVERGREEN SENDING ME THIS PROXY?
Mutual funds are required to obtain shareholders' votes for certain types of
changes. As a shareholder, you have a right to vote on major policy decisions,
such as those included here.
Q: WHAT ARE THE ISSUES CONTAINED IN THIS PROXY?
There are several different proposals represented here and they are outlined
on the chart at the beginning of the proxy statement. Several of them apply to
all the funds and others are fund-specific.
Q: HOW WILL THE BROAD-BASED PROPOSALS AFFECT ME AS A FUND SHAREHOLDER?
THE REORGANIZATION OF EACH FUND INTO A CORRESPONDING SERIES OF A DELAWARE
BUSINESS TRUST will provide both consistency across the fund family and
flexibility compared to their previous forms of organization. In addition,
Delaware law offers certain advantages for business trusts and some important
protections for shareholders. See Part I of the proxy statement for more
information.
CHANGING THE FUNDAMENTAL INVESTMENT OBJECTIVE TO NON-FUNDAMENTAL AND
CHANGING CERTAIN FUNDAMENTAL RESTRICTIONS TO NON-FUNDAMENTAL gives each fund's
investment adviser greater flexibility to respond to market, regulatory or
industry changes. These reclassifications are not intended to materially alter
any fund's investment objective.
ADOPTING STANDARDIZED INVESTMENT RESTRICTIONS ACROSS ALL FUNDS will help
provide operational efficiencies and make it easier to monitor compliance with
these restrictions. Standardized investment restrictions will also make it
easier for the funds to respond quickly to market, regulatory or industry
developments. These changes will not substantially affect the way the funds
are currently managed.
<PAGE>
Q: WHY IS EVERGREEN PROPOSING THESE CHANGES?
These proposals represent some final steps we are undertaking to unify the
Evergreen and Keystone fund families. Shareholders can anticipate the
following benefits:
. A comprehensive fund family with a common risk/reward spectrum
. The elimination of any overlap or gaps in fund offerings
. Reduced confusion surrounding privileges associated with each fund,
specifically regarding exchangeability, letters of intent, and rights of
accumulation
. A user-friendly product line for both shareholders and investment
professionals
. A single location for fund information, whether you're looking up funds
in the newspaper or locating a Morningstar report on the Internet
Q: WHY DOES THE PROXY CARD SHOW THE OLD NAME OF MY FUND AND THE PROXY
STATEMENT SHOW THE NEW NAME?
The name change to Evergreen is effective as of October 31, 1997. Because
most shareholders will receive their copy of the proxy statement after that
date, the proxy statement uses the funds' new names. As of the record date of
the shareholder meeting, however, the name change hadn't gone into effect.
Using the old names on the proxy card is legally correct, and will also make
it easier for shareholders to recognize their funds by the names they are
accustomed to seeing. The cover page of the proxy statement lists all the
funds' new names and references the former names to help avoid confusion.
Q: HOW DO THE BOARD MEMBERS OF MY FUND RECOMMEND THAT I VOTE?
The Board members of all the funds recommend that you vote in favor of or
FOR all of the proposals on the enclosed proxy card.
Q: WHOM DO I CALL FOR MORE INFORMATION OR TO PLACE MY VOTE?
Please call Shareholder Communications at 800-733-8481 EXTENSION 404 for
additional information. You can vote one of three ways:
Use the enclosed proxy card to record your vote of either For, Against or
Abstain for each proposal, then return the card in the postpaid envelope
provided.
OR
Complete the enclosed proxy card and FAX IT TO 800-733-1885.
OR
Call 800-733-8481 EXTENSION 404 and record your vote by telephone.
Q: WHY ARE MULTIPLE CARDS ENCLOSED?
If you own shares of more than one fund, you will receive a proxy card for
each fund you own. Please sign, date and return each proxy card you receive.
<PAGE>
[EVERGREEN FUNDS LOGO APPEARS HERE]
October 1997
Dear Shareholder:
I am writing to shareholders of the Evergreen Funds to inform you of a
special shareholder meeting to be held on December 15, 1997. Before that
meeting I would like your vote on the important issues affecting your fund as
described in the attached proxy statement.
The proxy statement includes proposals relating to the reorganization of
each fund as a series of a Delaware business trust and the adoption of
standardized investment restrictions for each of the funds. These proposals
are intended to provide consistency and increased flexibility throughout the
fund family. More specific information about all of the proposals is contained
in the proxy statement.
THE BOARDS OF TRUSTEES HAVE UNANIMOUSLY APPROVED THE PROPOSALS AND RECOMMEND
THAT YOU VOTE FOR ALL OF THE PROPOSALS DESCRIBED WITHIN THIS DOCUMENT.
I realize that this proxy statement will take time to review, but your vote
is very important. Please familiarize yourself with the proposals presented
and sign and return your proxy card(s) in the enclosed postage-paid envelope
today. You may receive more than one proxy card if you own shares in more than
one fund. Please sign and return each card you receive.
If we do not receive your completed proxy card(s) after several weeks, you
may be contacted by our proxy solicitor, Shareholder Communications
Corporation. They will remind you to vote your shares or will record your vote
over the phone if you choose to vote in that manner. You may also call
Shareholder Communications Corporation directly at 800-733-8481 EXTENSION 404
and vote by phone.
Thank you for taking this matter seriously and participating in this
important process.
Sincerely,
/s/ William M. Ennis
William M. Ennis
Managing Director
Evergreen Funds
201 South College Street, Suite 600 Charlotte, North Carolina 28288-1195
<PAGE>
EVERGREEN FUNDS
200 BERKELEY STREET
BOSTON, MASSACHUSETTS 02116
----------------
NOTICE OF JOINT SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 15, 1997
----------------
Notice Is Hereby Given that a Joint Special Meeting (the "Meeting") of
Shareholders of each series (a "Fund") of The Evergreen American Retirement
Trust, Evergreen Equity Trust (except Evergreen Global Real Estate Equity Fund
and Evergreen U.S. Real Estate Equity Fund), Evergreen Foundation Trust,
Evergreen Growth and Income Fund, Evergreen Income and Growth Fund, Evergreen
Investment Trust (except Evergreen Balanced Fund and Evergreen Florida
Municipal Bond Fund), The Evergreen Lexicon Fund (except Evergreen
Intermediate Term Bond Fund), The Evergreen Micro Cap Fund, Inc., Evergreen
Money Market Trust, The Evergreen Municipal Trust, Evergreen Tax Free Trust,
Evergreen Trust, Evergreen Capital Preservation and Income Fund, Evergreen
Fund for Total Return, Evergreen Latin America Fund, Evergreen Global
Opportunities Fund, Evergreen Natural Resources Fund, Keystone Growth and
Income Fund (S-1), Keystone High Income Bond Fund (B-4), Evergreen Select
Adjustable Rate Fund, Evergreen Select Small Cap Growth Fund, Keystone
International Fund Inc., Evergreen Omega Fund, Keystone Precious Metals
Holdings, Inc., Evergreen State Tax Free Fund (except Evergreen Florida Tax
Free Fund), Evergreen State Tax Free Fund-Series II, Keystone Strategic Growth
Fund (K-2), and Evergreen Strategic Income Fund will be held at 200 Berkeley
Street, 26th Floor, Boston, Massachusetts on Monday, December 15, 1997 at 3:00
p.m., Eastern time, for the following purposes:
1. To approve an Agreement and Plan of Conversion and Termination (the
"Plan") for each Fund providing for the reorganization of the Fund as a
corresponding series (a "Successor Fund") of one of several Delaware
business trusts, and in connection therewith, the acquisition of all of
the assets of the Fund in exchange for shares of the Successor Fund, and
the assumption by the Successor Fund of all of the liabilities of the
Fund. Each Plan also provides for the distribution of such shares of the
Successor Fund to shareholders of the Fund in liquidation and subsequent
termination of the Fund.
2. To approve the proposed reclassification of the investment objective of
each Fund (other than Evergreen Omega Fund) from fundamental to
nonfundamental.
3. To approve the adoption of standardized fundamental investment
restrictions by amending or reclassifying the current fundamental
investment restrictions of each Fund.
4. FOR EVERGREEN INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND, EVERGREEN
PENNSYLVANIA TAX FREE MONEY MARKET FUND, AND EVERGREEN TAX EXEMPT MONEY
MARKET FUND ONLY, to approve an amendment to each Fund's investment
objective to permit the Fund to invest without limit in obligations
subject to the Federal alternative minimum tax. If approved, the name of
each Fund will be changed as set forth in the proxy statement.
5. FOR EVERGREEN LATIN AMERICA FUND ONLY, to approve an amendment to the
investment objective of the Fund to permit the Fund to invest without
limit in securities of issuers located in Latin America.
6. FOR EVERGREEN LATIN AMERICA FUND ONLY, to approve an amendment to the
Fund's investment restriction relating to industry concentration to re-
quire the Fund to invest at least 25% of its assets in the aggregate in
issuers in the energy, telecommunications, and utility industries.
7. To transact any other business which may properly come before the
Meeting or any adjournments thereof.
The close of business on October 16, 1997 has been fixed as the record date
for the determination of shareholders of each Fund entitled to notice of and
to vote at the Meeting or any adjournments thereof. Shareholders of Keystone
International Fund Inc. should consult Exhibit B in the proxy materials
regarding appraisal rights.
<PAGE>
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO NOT
EXPECT TO ATTEND IN PERSON ARE URGED TO SIGN WITHOUT DELAY AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE, SO THAT
THEIR SHARES MAY BE REPRESENTED AT THE MEETING. YOUR PROMPT ATTENTION TO THE
ENCLOSED PROXY WILL HELP TO AVOID THE EXPENSE OF FURTHER SOLICITATION.
By Order of the Boards
George O. Martinez
Secretary
October 24, 1997
THE NAME OF EACH FUND AND REGISTRANT SET FORTH IN THIS NOTICE REFLECTS THE
NAME OF SUCH FUND AND REGISTRANT AS OF OCTOBER 31, 1997.
<PAGE>
INSTRUCTIONS FOR EXECUTING PROXY CARD
The following general rules for signing proxy cards may be of assistance to
you and may help to avoid the time and expense involved in validating your
vote if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears on the proxy
card.
2. Joint Accounts: Either party may sign, but the name of the party
signing should conform exactly to a name shown on the proxy card.
3. All Other Accounts: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the name on the proxy
card. For example:
<TABLE>
<CAPTION>
REGISTRATION VALID SIGNATURE
------------ ---------------
<S> <C>
Corporate Accounts
(1) ABC Corp. (1) ABC Corp.
John Doe, Treasurer
(2) ABC Corp. (2) John Doe, Treasurer
c/o John Doe, Treasurer
(3) ABC Corp. Profit Sharing Plan (3) John Doe, Trustee
Trust Accounts
(1) ABC Trust (1) Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee (2) Jane B. Doe
u/t/d 12/28/78
Custodial or Estate Accounts
(1) John B. Smith, Cust. (1) John B. Smith
f/b/o John B. Smith, Jr. UGMA
(2) John B. Smith, Jr. (2) John B. Smith, Jr., Executor
</TABLE>
<PAGE>
EVERGREEN FUNDS
EVERGREEN AGGRESSIVE GROWTH FUND, EVERGREEN AMERICAN RETIREMENT FUND,
EVERGREEN EMERGING MARKETS GROWTH FUND, EVERGREEN FLORIDA HIGH INCOME
MUNICIPAL BOND FUND, EVERGREEN FOUNDATION FUND, EVERGREEN FUND, EVERGREEN
GEORGIA MUNICIPAL BOND FUND, EVERGREEN GLOBAL LEADERS FUND, EVERGREEN GROWTH
AND INCOME FUND, EVERGREEN HIGH GRADE TAX FREE FUND, EVERGREEN INCOME AND
GROWTH FUND, EVERGREEN INTERMEDIATE TERM GOVERNMENT SECURITIES FUND, EVERGREEN
INTERNATIONAL EQUITY FUND, EVERGREEN INSTITUTIONAL MONEY MARKET FUND,
EVERGREEN INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND, EVERGREEN INSTITUTIONAL
TREASURY MONEY MARKET FUND, EVERGREEN LATIN AMERICA FUND, THE EVERGREEN MICRO
CAP (FORMERLY LIMITED MARKET) FUND, INC., EVERGREEN MONEY MARKET FUND,
EVERGREEN NEW JERSEY TAX FREE INCOME FUND, EVERGREEN NORTH CAROLINA MUNICIPAL
BOND FUND, EVERGREEN PENNSYLVANIA TAX FREE MONEY MARKET FUND, EVERGREEN SHORT-
INTERMEDIATE BOND FUND, EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND, EVERGREEN
SMALL CAP EQUITY INCOME FUND, EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND,
EVERGREEN TAX EXEMPT MONEY MARKET FUND, EVERGREEN TAX STRATEGIC FOUNDATION
FUND, EVERGREEN TREASURY MONEY MARKET FUND, EVERGREEN U.S. GOVERNMENT FUND,
EVERGREEN UTILITY FUND, EVERGREEN VALUE FUND, EVERGREEN VIRGINIA MUNICIPAL
BOND FUND, EVERGREEN (FORMERLY KEYSTONE) CAPITAL PRESERVATION AND INCOME FUND,
EVERGREEN (FORMERLY KEYSTONE) FUND FOR TOTAL RETURN, EVERGREEN (FORMERLY
KEYSTONE) GLOBAL OPPORTUNITIES FUND, EVERGREEN NATURAL RESOURCES (FORMERLY
KEYSTONE GLOBAL RESOURCES AND DEVELOPMENT) FUND, EVERGREEN (FORMERLY KEYSTONE)
OMEGA FUND, EVERGREEN (FORMERLY KEYSTONE) STRATEGIC INCOME FUND, EVERGREEN
(FORMERLY KEYSTONE) CALIFORNIA TAX FREE FUND, EVERGREEN (FORMERLY KEYSTONE)
MASSACHUSETTS TAX FREE FUND, EVERGREEN (FORMERLY KEYSTONE) MISSOURI TAX FREE
FUND, EVERGREEN (FORMERLY KEYSTONE) NEW YORK TAX FREE FUND, EVERGREEN
(FORMERLY KEYSTONE) PENNSYLVANIA TAX FREE FUND, KEYSTONE HIGH INCOME BOND FUND
(B-4), KEYSTONE STRATEGIC GROWTH FUND (K-2), KEYSTONE GROWTH AND INCOME FUND
(S-1), EVERGREEN SELECT (FORMERLY KEYSTONE INSTITUTIONAL) ADJUSTABLE RATE
FUND, EVERGREEN SELECT SMALL CAP (FORMERLY KEYSTONE INSTITUTIONAL SMALL
CAPITALIZATION) GROWTH FUND, KEYSTONE INTERNATIONAL FUND INC., AND KEYSTONE
PRECIOUS METALS HOLDINGS, INC.
200 BERKELEY STREET
BOSTON, MASSACHUSETTS 02116
----------------
PROXY STATEMENT
JOINT SPECIAL MEETING OF SHAREHOLDERS
DECEMBER 15, 1997
----------------
This proxy statement is furnished in connection with the solicitation by the
respective Board of each of the investment companies listed in the
accompanying notice of meeting (each a "Registrant," and collectively the
"Registrants") for the joint special meeting of shareholders to be held at 200
Berkeley Street, 26th Floor, Boston, Massachusetts on Monday, December 15,
1997 at 3:00 p.m., and all adjournments thereof (the "Meeting"). Shareholders
of record at the close of business on October 16, 1997 (the "Record Date") are
entitled to notice of, and to vote at, the Meeting. This proxy statement and
the accompanying notice of meeting and proxy card(s) are first being mailed to
shareholders on or about October 27, 1997.
The shares of the Registrants entitled to vote at the Meeting are issued in
one or more separate series representing one or more investment portfolios,
each of which is referred to herein as a "Fund." As used in this proxy
statement, each Registrant's board of directors or trustees is referred to as
a "Board," and the term "Trustee" includes each director of those Registrants
organized as corporations rather than trusts. In addition, the names of the
Registrants, Funds and other related entities used herein reflect such names
as of October 31, 1997.
<PAGE>
SUMMARY OF PROPOSALS REQUIRING SHAREHOLDER VOTE
PROPOSAL 1. REORGANIZATION OF EACH FUND
<TABLE>
<CAPTION>
FUNDS FOR WHICH SHAREHOLDER VOTE IS
MATTER REQUIRING SHAREHOLDER VOTE REQUIRED
--------------------------------- -----------------------------------
<S> <C>
Approval of an Agreement and Plan of All Funds
Conversion and Termination (the "Plan") for
each Fund providing for the reorganization
of the Fund as a corresponding series (a
"Successor Fund") of one of several
Delaware business trusts, and in connection
therewith, the acquisition of all of the
assets of the Fund in exchange for shares
of the Successor Fund, and the assumption
by the Successor Fund of all of the
liabilities of the Fund. Each Plan also
provides for the distribution of such
shares of the Successor Fund to
shareholders of the Fund in liquidation and
subsequent termination of the Fund
</TABLE>
PROPOSAL 2. RECLASSIFICATION OF INVESTMENT OBJECTIVE OF CERTAIN FUNDS FROM
FUNDAMENTAL TO NONFUNDAMENTAL
<TABLE>
<CAPTION>
FUNDS FOR WHICH SHAREHOLDER VOTE IS
MATTER REQUIRING SHAREHOLDER VOTE REQUIRED
--------------------------------- -----------------------------------
<S> <C>
Reclassification of the Investment All Funds except: Evergreen Omega Fund
Objective of Certain Funds from Fundamental
to Nonfundamental
</TABLE>
PROPOSAL 3. CHANGES TO FUNDAMENTAL INVESTMENT RESTRICTIONS
Standardization of Fundamental Investment Restrictions (Proposals 3A-3I)
<TABLE>
<CAPTION>
MATTER REQUIRING SHAREHOLDER VOTE FUNDS FOR WHICH SHAREHOLDER VOTE IS REQUIRED
--------------------------------- --------------------------------------------
<S> <C>
3A.Diversification of Investments All Funds
3B.Concentration of Fund's Assets in a Par- All Funds
ticular Industry
3C.Issuance of Senior Securities All Funds
3D.Borrowing All Funds
3E.Underwriting All Funds
3F.Investment in Real Estate All Funds
3G.Commodities All Funds
3H.Lending All Funds
3I.Investment in Federally Tax Exempt Evergreen Tax Strategic Foundation
Securities Fund, Evergreen Tax Exempt Money
Market Fund, Evergreen Institutional
Tax Exempt Money Market Fund,
Evergreen Pennsylvania Tax Free
Money Market Fund, Evergreen Georgia
Municipal Bond Fund, Evergreen North
Carolina Municipal Bond Fund,
Evergreen South Carolina Municipal
Bond Fund, Evergreen Virginia
Municipal Bond Fund, Evergreen New
Jersey Tax Free Income Fund,
Evergreen Short-Intermediate
Municipal Fund,
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
FUNDS FOR WHICH SHAREHOLDER VOTE IS
MATTER REQUIRING SHAREHOLDER VOTE REQUIRED
--------------------------------- -----------------------------------
<S> <C>
3I. Investment in Federally Tax Exempt Evergreen High Grade Tax Free Fund,
Securities (cont.) Evergreen Massachusetts Tax Free
Fund, Evergreen New York Tax Free
Fund, Evergreen Pennsylvania Tax
Free Fund, Evergreen California Tax
Free Fund, and Evergreen Missouri
Tax Free Fund
</TABLE>
Reclassification of Other Fundamental Restrictions of Certain Funds as
Nonfundamental (Proposal 3J)
<TABLE>
<CAPTION>
MATTER REQUIRING SHAREHOLDER VOTE FUNDS FOR WHICH SHAREHOLDER VOTE IS REQUIRED
--------------------------------- --------------------------------------------
<S> <C>
3J. (See current fundamental restrictions All Funds except: Evergreen
shown by an "R" in Exhibit D) Institutional Money Market Fund,
Evergreen Institutional Treasury
Money Market Fund, and Evergreen
Select Small Cap Growth Fund
</TABLE>
PROPOSAL 4. AMENDMENT TO INVESTMENT OBJECTIVES OF EVERGREEN INSTITUTIONAL TAX
EXEMPT MONEY MARKET FUND, EVERGREEN PENNSYLVANIA TAX FREE MONEY
MARKET FUND, AND EVERGREEN TAX EXEMPT MONEY MARKET FUND
<TABLE>
<CAPTION>
MATTER REQUIRING SHAREHOLDER VOTE FUNDS FOR WHICH SHAREHOLDER VOTE IS REQUIRED
--------------------------------- --------------------------------------------
<S> <C>
To permit each Fund to invest without limit Evergreen Institutional Tax Exempt
in obligations subject to the Federal Money Market Fund, Evergreen
alternative minimum tax (if approved, the Pennsylvania Tax Free Money Market
words "Tax Free" or "Tax Exempt" in each Fund, and Evergreen Tax Exempt Money
Fund's name will be replaced with Market Fund
"Municipal")
</TABLE>
PROPOSAL 5. AMENDMENT TO INVESTMENT OBJECTIVE OF EVERGREEN LATIN AMERICA FUND
<TABLE>
<CAPTION>
MATTER REQUIRING SHAREHOLDER VOTE FUND FOR WHICH SHAREHOLDER VOTE IS REQUIRED
--------------------------------- -------------------------------------------
<S> <C>
To permit the Fund to invest without limit Evergreen Latin America Fund
in securities of issuers located in Latin
America, and to provide that the Fund's
primary objective is long term growth of
capital through investments in equity and
fixed income securities of issuers located
in Latin America
</TABLE>
PROPOSAL 6. AMENDMENT TO FUNDAMENTAL RESTRICTION OF EVERGREEN LATIN AMERICA
FUND REGARDING CONCENTRATION
<TABLE>
<CAPTION>
MATTER REQUIRING SHAREHOLDER VOTE FUND FOR WHICH SHAREHOLDER VOTE IS REQUIRED
--------------------------------- -------------------------------------------
<S> <C>
To provide that the Fund will invest in the Evergreen Latin America Fund
aggregate more than 25% of its total
assets, taken at market value, in the
securities of issuers primarily engaged in
the energy, telecommunications, and utility
industries.
</TABLE>
3
<PAGE>
PART I
PROPOSAL 1 -- THE PROPOSED REORGANIZATIONS
OF THE FUNDS AS SERIES OF DELAWARE BUSINESS TRUSTS
At the Meeting, the shareholders of each Fund will be asked to approve an
Agreement and Plan of Conversion and Termination (the "Plan of
Reorganization"), which provides for the reorganization (the "Reorganization")
of each Fund into a corresponding series (each a "Successor Fund," and
collectively the "Successor Funds") of one of several Delaware business trusts
(each a "Successor Trust"). The Reorganizations are part of an overall
restructuring of the Evergreen Funds, each of which is advised by First Union
National Bank or one of its affiliates. The restructuring involves, among
other components, the Reorganizations, the reclassification of investment
objectives from "fundamental" (i.e., changeable by shareholder vote only) to
"nonfundamental" (i.e., changeable by vote of the Trustees), the adoption of
standardized fundamental investment restrictions, the reclassification of
certain investment restrictions from fundamental to nonfundamental, and the
amendment of fundamental investment objectives and policies of certain Funds.
The reclassification of investment objectives, the adoption of standardized
investment restrictions and the reclassification of certain investment
restrictions are discussed in Part II of this proxy statement. The amendment
of fundamental investment objectives and policies of certain Funds are
discussed in Part III of this proxy statement. The restructuring also includes
several consolidations to combine certain other Evergreen investment companies
with substantially similar investment objectives and policies. The Funds are
not a party to such proposed consolidations, and the votes of shareholders of
such other funds are not being solicited by this proxy statement. The intended
result of the overall restructuring is to produce a more integrated mutual
fund complex with the potential for greater operational efficiencies.
SELECTION OF DELAWARE BUSINESS TRUST FORM OF ORGANIZATION
On September 16 and 17, 1997, the Board of each Registrant unanimously
approved a proposal by each Fund's investment adviser to reorganize the Funds
as separate series of various Delaware business trusts. Each Registrant is
currently organized as a Massachusetts business trust, a Pennsylvania common
law trust, or a Delaware, Maryland or Massachusetts corporation. The Funds are
proposed to be structured as business trusts, as opposed to corporations, due
to the inherent flexibility of the business trust form of organization. The
principal reason for reorganizing the Funds in Delaware is the availability of
certain advantages of Delaware law with respect to business trusts. The
Delaware Business Trust Act (the "Delaware Act") has been specifically drafted
to accommodate the unique governance needs of investment companies and
provides that its policy is to give maximum freedom of contract to the trust
instrument of a Delaware business trust.
Under the Delaware Act, a shareholder of a Delaware business trust is
entitled to the same limitation of personal liability extended to stockholders
of Delaware corporations. No similar statutory or other authority limiting
business trust shareholder liability exists in Massachusetts, Pennsylvania or
in any other state. As a result, Delaware law is generally considered to
afford additional protection against potential shareholder liability to
shareholders than Massachusetts or Pennsylvania trusts. See "Certain
Comparative Information About the Registrants and the Successor Trusts--
Shareholder Liability" below. Similarly, Delaware law provides that, should a
Delaware trust issue multiple series of shares, each series shall not be
liable for the debts of another series, another potential, though remote, risk
in the case of other business trusts.
Delaware has obtained a favorable national reputation for its business laws
and business environment. The Delaware courts, which may be called upon to
interpret the Delaware Act, are among the nation's most highly respected and
have an expertise in corporate matters which in part grew out of the fact that
Delaware legal issues are concentrated in the Court of Chancery where there
are no juries and where judges issue written opinions explaining their
decisions. Thus, there is a well established body of precedent which may be
relevant in deciding issues pertaining to a Delaware business trust.
There are other advantages that may be afforded by a Delaware business
trust. Under Delaware law, the Successor Funds will have the flexibility to
respond to future business contingencies. For example, the Trustees
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<PAGE>
will have the power to incorporate a Successor Trust, to merge or consolidate
it with another entity, to cause each series to become a separate trust, and
to change the Successor Trust's domicile without a shareholder vote. This
flexibility could help to assure that the Successor Trust operates under the
most advanced form of organization and could reduce the expense and frequency
of future shareholder meetings for non-investment related issues.
DESCRIPTION OF THE REORGANIZATIONS
The detailed terms and conditions of each Reorganization are contained in a
Plan of Reorganization applicable to each Fund. The information in this proxy
statement with respect to each Plan of Reorganization is qualified in its
entirety by reference to, and made subject to, the complete text of the form
of the Plan of Reorganization, a copy of which is attached to this proxy
statement as Exhibit A.
It is anticipated that each of the Funds will participate in the
Reorganization and that the Reorganization, if approved by the shareholders of
each Fund, will be effected contemporaneously as to each Fund. If shareholders
of one or more of the Funds do not approve the Reorganization, that Fund will
continue as currently organized, but each other Fund that has received
shareholder approval may nevertheless implement the Reorganization.
If the shareholders of a Fund approve the Reorganization and the conditions
of the Reorganization are satisfied, all of the assets and liabilities of that
Fund will be transferred to the corresponding Successor Fund and each
shareholder of the Fund will receive shares of the corresponding Successor
Fund (the "New Shares"). The New Shares of each Successor Fund will be issued
to the corresponding Fund in consideration of the transfer to the Successor
Fund by the corresponding Fund of all assets and liabilities of the
corresponding Fund. Immediately thereafter, each Fund will liquidate and
distribute the New Shares to its shareholders. New Shares will be issued on a
class by class basis, so that shareholders will receive New Shares of the same
class as the class of shares issued by the Fund. As a result of the
Reorganization, each shareholder will receive, in exchange for his or her Fund
shares, New Shares with a total net asset value equal to the total net asset
value of the shareholder's Fund shares immediately prior to the consummation
of the Reorganization.
It will not be necessary for holders of share certificates of a Fund to
exchange their certificates for new certificates following consummation of the
Reorganization. Certificates for shares of a Fund issued prior to the
Reorganization will represent outstanding shares of the corresponding
Successor Fund after the Reorganization. Shareholders of a Fund who have not
been issued certificates and whose shares are held in an open account will
automatically have those shares designated as shares of the corresponding
Successor Fund.
If approved by shareholders of a Fund, it is currently contemplated that the
Reorganization will become effective as to that Fund on or about the opening
of business on December 22, 1997. However, a Reorganization may become
effective at another time and date should the Meeting be adjourned to a later
date or should any other condition to the Reorganization not be satisfied at
that time. Notwithstanding prior shareholder approval, the Plan of
Reorganization may be terminated as to any Fund at any time prior to its
implementation by the mutual agreement of the parties thereto.
THE SUCCESSOR TRUSTS
Each Successor Trust was established pursuant to a substantially identical
Agreement and Declaration of Trust (each a "Master Trust Agreement") under the
laws of the State of Delaware. Each Successor Trust is organized as a "series
company" as that term is used in Rule 18f-2 under the Investment Company Act
of 1940, as amended (the "1940 Act"). Each Successor Trust consists of
Successor Funds of the same asset class.
The Board of Trustees of each Successor Trust is comprised of some, but not
all, of the individuals who currently serve as trustees of the Trusts.
Accordingly, different trustees will have ultimate responsibility for the
oversight and management of the Successor Funds subsequent to the
Reorganizations. The Trustees of each
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<PAGE>
Successor Trust are Laurence B. Ashkin, Charles A. Austin III, K. Dun Gifford,
James S. Howell, Leroy Keith, Jr., Gerald M. McDonnell, Thomas L. McVerry,
David M. Richardson, Russell A. Salton III, Michael S. Scofield, Richard J.
Shima, and William W. Pettit.
The Successor Trust is authorized to issue shares divisible into an
indefinite number of different series. The interests of investors in the
various series of the Successor Trust will be separate and distinct. All
consideration received for the sales of shares of a particular series of the
Successor Trust, all assets in which such consideration is invested, and all
income, earnings and profits derived from such investments, will be allocated
to that series. The Master Trust Agreement of each Successor Trust provides
that the Board of Trustees of the Successor Trust may: (i) establish one or
more additional series thereof; (ii) issue the shares of any series in any
number of classes; (iii) issue shares of a series to different groups of
investors; and (iv) convert a series into a pooled fund structure, without any
further action by the shareholders of the Successor Trust. The Successor
Trusts will not engage in any activities prior to the Reorganization with
respect to the Successor Funds, except as may be required in connection with
effecting the Reorganization.
The Master Trust Agreement of each Successor Trust provides for shareholder
voting only for the following matters: (a) the election or removal of Trustees
as provided in the Master Trust Agreement; and (b) with respect to such
additional matters relating to the Successor Trust as may be required by (i)
applicable law, (ii) any by-laws adopted by the Trustees, or (iii) as the
Trustees may consider necessary or desirable. Certain of the foregoing matters
will involve separate votes of one or more of the affected series (or affected
classes of a series) of the Successor Trust, while others will require a vote
of the Successor Trust's shareholders as a whole.
All shares of all series vote together as a single class for the election or
removal of Trustees of the Successor Trust with each having one vote for each
dollar of net asset value applicable to each share, regardless of series. See
"Certain Comparative Information About the Registrants and the Successor
Trusts--Voting Rights" below.
As required by the 1940 Act, shareholders of each series of the Successor
Trusts, voting separately, will have the power to vote at special meetings
for, among other things, changes in fundamental investment restrictions
applicable to such series, approval of any new or amended investment advisory
agreement, approval of any new or amended Rule 12b-1 plan and certain other
matters that affect the shareholders of that series. If, at any time, less
than a majority of the Trustees holding office has been elected by the
shareholders, the Trustees then in office will call a shareholders' meeting
for the purpose of electing Trustees of the Successor Trust.
CERTAIN COMPARATIVE INFORMATION ABOUT THE REGISTRANTS AND THE SUCCESSOR TRUSTS
As a Delaware business trust, each Successor Trust's operations will be
governed by the Master Trust Agreement and applicable Delaware law, rather
than by the applicable trust document of each Registrant organized as a trust,
or articles of incorporation of each Registrant organized as a corporation,
and the law of the state of its organization. For ease of reference, the
organizational document of each Registrant is sometimes referred to as a
"Charter," regardless of its form of organization. As discussed below, certain
of the differences between the Registrants and the Successor Trusts derive
from provisions of the Successor Trust's Master Trust Agreement and By-laws.
Shareholders entitled to vote at the Meeting may obtain a copy of a Successor
Trust's Master Trust Agreement and By-laws, without charge, upon written
request to the Funds at the address on the cover page of this proxy statement.
Capitalization. The beneficial interests in each Successor Trust are issued
as transferable shares of beneficial interest, $.001 par value per share. The
Master Trust Agreement permits the Trustees to issue an unlimited number of
shares and to divide such shares into an unlimited number of series or classes
thereof, all without shareholder approval. Each share of a Successor Trust
series represents an equal proportionate interest in the assets and
liabilities belonging to that series (or class) as declared by the Board of
Trustees. Each Registrant organized as a trust is authorized to divide its
shares into an unlimited number of series, and the Trustees of such trust are
empowered to establish other classes. Each Registrant organized as a trust has
the
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<PAGE>
authority to issue an unlimited number of transferable shares of beneficial
interest. The ownership in the Registrants organized as corporations is
represented by a fixed number of shares of common stock.
Amendments to Governing Instrument. Generally, the provisions of the Master
Trust Agreement of a Successor Trust may be amended without shareholder
approval so long as such amendment is not in contravention of applicable law,
by an instrument in writing signed by a majority of the then Trustees of the
Successor Trust (or by an officer of the Successor Trust pursuant to the vote
of a majority of such Trustees). Under the Master Trust Agreement of the
Successor Trust, except as provided by applicable law, a quorum is 25% of the
shares entitled to vote. The quorum requirements of the Registrants range from
25% to 51% of the shares entitled to vote. The affirmative vote of a majority
of the shares entitled to be cast is generally required to amend the Charter
applicable to each Registrant (unless otherwise specifically required by the
applicable governing documents or other law, including the 1940 Act), except
that some Charters of the Registrants organized as business trusts may be
amended by the Trustees of the Trust without the vote of shareholders in
certain limited circumstances. For a Registrant organized as a corporation, a
Charter amendment generally also requires adoption of a resolution approving
the amendment by the Board of Directors in addition to the required
shareholder vote.
Voting Rights. The Charter applicable to each Registrant that is a business
trust generally provides that a special meeting of shareholders for the
purpose of considering the removal of a person serving as a Trustee of the
Trust shall be called upon the written request of shareholders representing
10% of the outstanding shares. The By-laws of each Successor Trust provide
that, to the extent required by the 1940 Act, meetings of the shareholders for
the purpose of voting on the removal of any Trustee shall be called promptly
by the Trustees upon the written request of Shareholders holding at least 10%
of the outstanding shares of the Successor Trust entitled to vote. Like each
Registrant other than Keystone International Fund Inc. and Keystone Precious
Metals Holdings, Inc., a Successor Trust will not be required to hold annual
meetings of its shareholders and, at this time, does not intend to do so.
Keystone International Fund Inc. and Keystone Precious Metals Holdings, Inc.
are currently required to hold such meetings. The record date for determining
shareholders who are entitled to notice of, and to vote at, a shareholders'
meeting is either subject to the discretion of the Board or may not be more
than 60 days preceding the scheduled meeting date under the applicable
governing documents of each Registrant. Under the By-laws of each Successor
Trust the record date may not be more than 90 days nor less than 10 days
preceding the scheduled meeting date.
The Master Trust Agreement provides for shareholder voting in certain
circumstances. See "The Successor Trusts" above. Shareholders of a Registrant
organized as a business trust generally have the power to vote with respect to
the election of Trustees, the removal of Trustees, the approval or termination
of any investment advisory or management agreement, certain amendments to the
Charter, whether or not a court action, proceeding or claim should be brought
or maintained derivatively or as a class action on behalf of the Trust to the
same extent as shareholders of a corporation, and with respect to certain
other actions, such as a transfer of all or substantially all of the Trust's
assets or the dissolution of the Trust. Shareholders of a Registrant organized
as a corporation have the power to vote only with respect to those matters
provided by applicable corporate law.
A Trustee of the Successor Trust may be removed at any meeting of
shareholders by a vote of at least two-thirds of the outstanding shares of the
Successor Trust. The Charters of certain Registrants organized as business
trusts permit removal of a Trustee with cause by action of at least two-thirds
of the other Trustees, and in general the Charter of Registrants organized as
corporations permits removal of a Trustee by vote of two-thirds of the
outstanding shares.
The Master Trust Agreement of each Successor Trust provides that a majority
of the shares voted at a meeting at which a quorum is present shall decide any
questions and that a plurality shall elect a Trustee, except when a different
vote is required or permitted by any provision of the 1940 Act or other
applicable law or by the Master Trust Agreement or the By-laws of the
Successor Trust. Similar requirements apply to each Registrant. Shareholders
of the Successor Trusts are not required to approve the termination or
reorganization of the
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Successor Trust. Unlike the Master Trust Agreement of the Successor Trusts,
the Charter applicable to certain Registrants requires that any termination or
reorganization of a Fund must be approved by the vote of a majority of the
outstanding voting shares of such Fund.
Under each Master Trust Agreement, each share of a Successor Fund is
entitled to one vote for each dollar of net asset value applicable to each
share. Under the current voting provisions governing the Funds that are
organized in multiple series, each share of beneficial interest or stock is
entitled to one vote, regardless of the specific Fund it represents. Under a
Fund's Charter or applicable law, a matter affecting only one Fund is voted on
only by that Fund. Generally, the Charters further provide that, where
required by law or applicable regulation, certain matters will be voted on
separately by each Fund. In all other matters, all Funds vote together as a
group. Over time, the net asset values of such Funds have changed in relation
to one another and are expected to continue to do so in the future. Because of
the divergence in net asset values, a given dollar investment in a Fund with a
lower net asset value will purchase more shares, and under the Registrant's
current voting provisions, have more votes, than the same investment in a Fund
with a higher net asset value. Under the Master Trust Agreement, voting power
is related to the dollar value of the shareholders' investments rather than to
the number of shares held.
Shareholder Liability. Under Delaware law, shareholders of a Delaware
business trust are entitled to the same limitation of personal liability
extended to stockholders of Delaware corporations. No similar statutory or
other authority limiting business trust shareholder liability exists in any
other state. As a result, to the extent that a Successor Trust or a
shareholder is subject to the jurisdiction of courts in those states, the
courts may not apply Delaware law, and may thereby subject shareholders of a
Delaware trust to liability. To guard against this risk, the Master Trust
Agreement: (i) provides that any written obligation of the Successor Trust may
contain a statement that such obligation may only be enforced against the
assets of the Successor Trust; however, the omission of such a disclaimer will
not operate to create personal liability for any shareholder; and (ii)
provides for indemnification out of trust property of any shareholder held
personally liable for the obligations of the Successor Trust. Accordingly, the
risk of a shareholder of the Successor Trust incurring financial loss beyond
that shareholder's investment because of shareholder liability is limited to
circumstances in which: (i) a court refuses to apply Delaware law; (ii) no
contractual limitation of liability was in effect; and (iii) the Successor
Trust itself would be unable to meet its obligations. In light of Delaware
law, the nature of the Successor Trust's business, and the nature of its
assets, the risk of personal liability to a shareholder of a Successor Trust
is remote.
Shareholders of a Registrant organized as a Massachusetts business trust or
Pennsylvania common law trust may, under certain circumstances, be held
personally liable under the applicable state law for the obligations of the
trust. However, the trust agreement under which each Fund that is organized as
a Massachusetts or Pennsylvania trust is established contains an express
disclaimer of shareholder liability and requires that notice of such
disclaimer be given in each agreement entered into or executed by the trust or
the trustees of the trust. Each trust agreement also provides for
indemnification out of the property of the trust. A stockholder in a
corporation such as The Evergreen Micro Cap Fund, Inc., Keystone International
Fund Inc., or Keystone Precious Metals Holdings, Inc. does not have this
potential liability.
Liability and Indemnification of Trustees and Directors. Under the Master
Trust Agreement of each Successor Trust, a Trustee is liable to a Successor
Trust and its shareholders only for such Trustee's own willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties involved in
the conduct of the office of Trustee or the discharge of the duties of a
Trustee. Trustees and officers of a Successor Trust are entitled to be
indemnified for the expenses of litigation against them except with respect to
any matter as to which it has been determined that such person: (i) did not
act in good faith in the reasonable belief that his or her action was in or
not opposed to the best interests of the Successor Trust; or (ii) had acted
with willful misfeasance, bad faith, gross negligence or reckless disregard of
his or her duties; and (iii) for a criminal proceeding, had reasonable cause
to believe that his or her conduct was unlawful, such determination to be
based upon the outcome of a court action or administrative proceeding or a
reasonable determination, following a review of the facts, by (a) a vote of a
majority of those Trustees who are neither "interested persons" within the
meaning of the 1940 Act nor parties to the proceeding, or (b) an independent
legal counsel in a written opinion. A Successor
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Trust may also advance money to any Trustee or officer involved in a
proceeding discussed above provided that the Trustee or officer undertakes to
repay the Successor Trust if his or her conduct is later determined to
preclude indemnification and certain other conditions are met. It is currently
the view of the staff of the Securities and Exchange Commission ("SEC") that
to the extent that any provisions such as those described above are
inconsistent with the 1940 Act, the provisions of the 1940 Act may preempt the
foregoing provisions.
The Charter of each Registrant generally provides that its Trustees shall
not be liable to the Registrant or its shareholders, except for the Trustees'
acts of willful misfeasance, bad faith, gross negligence, or reckless
disregard of duties involved in the conduct of their office. The Charters
generally also provide that Trustees and officers of the Trust will be
indemnified against liability and expenses of litigation against them unless
their conduct constituted willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of their office.
Right of Inspection. The By-laws of each Registrant generally provide that
no shareholder shall have the right to inspect the books of account and stock
ledger of the Registrant except as conferred by law, the By-laws, or as
authorized by the Board of the Registrant or a resolution of shareholders. The
By-laws of the Successor Trust provide that no shareholder of the Successor
Trust shall have any right to inspect any account or book or document of the
Successor Trust except as conferred by law or otherwise by the Trustees or by
resolution of the shareholders.
The foregoing is only a summary of certain of the differences between the
governing instruments and laws generally applicable to a Registrant and
Successor Trust. It is not a complete list of differences. Shareholders should
refer directly to the provisions of the governing instruments and applicable
law for more complete information.
CURRENT AND SUCCESSOR ADVISORY AGREEMENTS
As a result of the Reorganizations, each Successor Fund will be subject to a
new investment advisory agreement (the "Successor Advisory Agreement") between
the Successor Trust on behalf of the Successor Fund and the current investment
adviser of the corresponding Fund. Since, with certain exceptions, each Fund
currently receives substantially identical services, each Successor Advisory
Agreement has been standardized with the fee schedules being the only variant.
The current investment advisory agreement of each Fund (the "Current Advisory
Agreement") is similar in many respects to the Successor Advisory Agreement.
Except as noted below, the Successor Advisory Agreement contains the material
terms of the Current Advisory Agreement. Most importantly, the rate at which
fees are required to be paid by each Fund for investment advisory services, as
a percentage of average daily net assets, will remain the same.
The following summarizes certain aspects of the Current Advisory Agreement
and the Successor Advisory Agreement of each Fund.
Brokerage Transactions. The Successor Advisory Agreement sets forth specific
terms as to brokerage transactions and the investment adviser's use of broker-
dealers. For example, the investment adviser will be obligated to use its best
efforts to seek to execute portfolio transactions at prices which, under the
circumstances, result in total costs or proceeds being most favorable to the
Successor Funds. In assessing the best overall terms available for any
transaction, the investment adviser will 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
or dealer, research services provided and the reasonableness of the
commission, if any, both for the specific transaction and on a continuing
basis. The Successor Advisory Agreement also specifically states that the
investment adviser is entitled to rely on the provisions of Section 28(e) of
the Securities Exchange Act of 1934, as amended (the "1934 Act"), which
permits an investment adviser to have its client, including an investment
company, pay more than the lowest available commission for executing a
securities trade in return for research services and products. The Current
Advisory Agreement of each of the Evergreen Funds (which term for purposes of
this discussion includes each Fund for which the Capital Management Group of
First Union
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National Bank or Evergreen Asset Management Corp. serves as investment
adviser), other than the Funds that are series of Evergreen Investment Trust,
does not specify the standards to be used in the selection of brokers or refer
to the provisions of Section 28(e) of the 1934 Act.
Expenses. Each Successor Advisory Agreement and the Current Advisory
Agreement for each Fund that was formerly a Keystone Fund (which term for
purposes of this discussion includes each Fund for which Keystone Investment
Management Company serves as investment adviser), except Keystone
International Fund Inc., provides that the investment adviser is required to
pay or reimburse the Successor Fund for (i) the compensation (if any) of the
Trustees who are affiliated with the investment adviser or with its
affiliates, or with any adviser retained by the investment adviser, and of all
officers of the Successor Fund, and (ii) all expenses of the investment
adviser incurred in connection with its services thereunder. The substance of
the Current Advisory Agreement of each Evergreen Fund and Keystone
International Fund Inc. is the same as the Successor Advisory Agreement,
except that affiliated Trustees are not required to serve at the investment
adviser's cost.
Liability and Indemnification. Each Successor Advisory Agreement and the
Current Advisory Agreement for each Fund that was formerly a Keystone Fund,
except Keystone International Fund Inc. and Keystone Precious Metals Holdings,
Inc., and for the Funds that are series of Evergreen Investment Trust provide
that the investment adviser shall have no liability in connection with
rendering services thereunder, other than liabilities resulting from the
adviser's willful misfeasance, bad faith, gross negligence or reckless
disregard of its duties. The Current Advisory Agreements for Keystone
International Fund Inc., Keystone Precious Metals Holdings, Inc., and each
Evergreen Fund other than the Funds that are series of Evergreen Investment
Trust either omit liability standards or have different provisions.
The Current Advisory Agreement for each Fund that was formerly a Keystone
Fund, except Keystone International Fund Inc. and Keystone Precious Metals
Holdings, Inc., and for the Funds that are series of Evergreen Investment
Trust provides that each such Fund will indemnify the investment adviser
against liabilities, losses and expenses incurred in connection with the
performance of such Agreement, except those stated above and liabilities
involving a breach of the investment adviser's fiduciary duties in respect of
the receipt of compensation for its services. The Current Advisory Agreements
for Keystone International Fund Inc., Keystone Precious Metals Holdings, Inc.,
and each Evergreen Fund except the Funds that are series of Evergreen
Investment Trust do not contain provisions indemnifying the investment
adviser. The Successor Advisory Agreement will not contain provisions
indemnifying the investment adviser.
Amendments. The Current Advisory Agreement for Keystone International Fund
Inc., Keystone Precious Metals Holdings, Inc., and for the Funds that are
series of Evergreen Investment Trust provides that all changes (rather than
only substantial changes) must be approved by shareholders. Each other Current
Advisory Agreement and each Successor Advisory Agreement, including the
Successor Advisory Agreement applicable to Keystone International Fund Inc.,
Keystone Precious Metals Holdings, Inc., and the Funds that are series of
Evergreen Investment Trust, provides that only amendments of substance require
shareholder approval.
CURRENT AND SUCCESSOR DISTRIBUTION ARRANGEMENTS
Evergreen Distributor, Inc., located at 125 West 55th Street, New York, New
York 10019, serves as principal underwriter for the Funds. It is anticipated
that no material change will occur in the Funds' distribution agreement or the
Funds' Rule 12b-1 plans as a result of the Reorganizations.
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NAMES
The name of each Successor Fund will be the same as that of the
corresponding Fund at the time the Reorganization becomes effective, except
for the following name changes which will become effective on January 9, 1998.
<TABLE>
<CAPTION>
FUND NAME SUCCESSOR FUND NAME
--------- -------------------
<S> <C>
Evergreen Institutional Money Market Fund Evergreen Select Money Market Fund
Evergreen Institutional Treasury Money Market Fund Evergreen Select Treasury Money Market Fund
Keystone International Fund Inc. Evergreen International Growth Fund
Keystone Precious Metals Holdings, Inc. Evergreen Precious Metals Fund
Keystone Growth and Income Fund (S-1) Evergreen Blue Chip Fund
Keystone High Income Bond Fund (B-4) Evergreen High Yield Bond Fund
Keystone Strategic Growth Fund (K-2) Evergreen Strategic Growth Fund
</TABLE>
CERTAIN VOTES TO BE TAKEN PRIOR TO THE REORGANIZATIONS
Prior to the Reorganizations, Evergreen Distributor, Inc., the principal
underwriter of each Fund and a subsidiary of BISYS Group, Inc., will own a
single outstanding share of the corresponding Successor Fund. The purpose of
the issuance by each Fund of this nominal share prior to the effective time of
the Reorganization is to enable the Successor Trust to eliminate the need to
incur the additional expense by a Successor Trust of having to hold a separate
meeting of shareholders of the Successor Funds in order to comply with certain
shareholder approval requirements of the 1940 Act.
INVESTMENT OBJECTIVES AND RESTRICTIONS
Each Successor Fund will have the same investment objective(s) as the
corresponding Fund except that, if Proposal 2 in this proxy statement is
approved by shareholders, the Successor Fund's investment objective(s) will
not be considered "fundamental". As a result, a Successor Fund's investment
objective(s) could be changed by its Trustees, without shareholder approval,
after prior notice to shareholders. The investment objective(s) of certain
Funds are proposed to be amended as described in Part III of this proxy
statement. The investment restrictions of each Fund are proposed to be changed
as described in Part II below.
Except as described in Parts II and III below, the investment advisers do
not presently intend to change in any material way for the Successor Funds the
investment strategy or operations employed for the Funds.
FEDERAL INCOME TAX CONSEQUENCES
It is anticipated that the transactions contemplated by the Plan of
Reorganization will be tax-free. Sullivan & Worcester LLP, counsel to the
Funds, has informed each Board that if substantially all of the assets and
liabilities of the Funds are transferred to the corresponding Successor Funds,
it will issue an opinion that a Reorganization will not give rise to the
recognition of income, gain or loss to the Fund, the Successor Fund, or
shareholders of the Fund for federal income tax purposes pursuant to sections
361, 1032(a) and 354(a)(1), respectively, of the Internal Revenue Code of
1986, as amended. Such opinion will be based upon customary representations of
the Registrant and the Successor Trust and certain customary assumptions. The
receipt of such an opinion is a condition to the consummation of each
Reorganization.
A shareholder's adjusted basis for tax purposes in shares of the Successor
Fund after the Reorganization will be the same as the shareholder's adjusted
basis for tax purposes in the shares of the Fund immediately before the
Reorganization. The holding period for the shares of the Successor Fund
received in the Reorganization will include a shareholder's holding period for
shares of the Fund (provided that the shares of the Fund were held as capital
assets on the date of the Reorganization). Shareholders should consult their
own tax advisers with respect to the state and local tax consequences of the
proposed transaction.
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REORGANIZATION EXPENSES
The expenses of the Reorganization will be borne by the Funds. The current
Trustees of the Funds, including those Trustees not continuing to serve as
Trustees of the Successor Trusts, will retain their ability to make claims
under their existing directors and officers insurance policy for a period of
three years following the consummation of the Reorganization.
APPRAISAL RIGHTS
Neither the applicable Charter nor Massachusetts or Pennsylvania law grants
shareholders of any Registrant organized as a Massachusetts business trust or
Pennsylvania common law trust any rights in the nature of appraisal or
dissenters' rights with respect to any action upon which such shareholders may
be entitled to vote. In addition, neither the applicable Charter nor Delaware
or Maryland law grants shareholders of Keystone Precious Metals Holdings, Inc.
or The Evergreen Micro Cap Fund, Inc., respectively, any such rights. However,
the customary right of mutual fund shareholders to redeem their shares is not
affected by the proposed Reorganization.
Shareholders of Keystone International Fund Inc. who do not vote in favor of
the Reorganization have the right under Massachusetts law to receive payment
for their shares from the Fund and an appraisal thereof upon compliance with
the procedures specified in chapter 156B sections 86 and 87 et seq. of the
Massachusetts Business Corporation Law. A copy of the relevant provisions of
the Massachusetts Business Corporation Law is set forth as Exhibit B to this
proxy statement. A vote by a shareholder of Keystone International Fund Inc.
against the Reorganization or the execution of a proxy directing such a vote
will not satisfy the requirements of the provisions of Massachusetts law. A
failure to vote against the Reorganization will not constitute a waiver of
such rights.
For federal income tax purposes, dissenting shareholders obtaining payment
for their shares in accordance with the above-referenced provisions will
recognize gain or loss measured by the difference between any such payment and
the tax basis for their shares. Shareholders of Keystone International Fund
Inc. are advised to consult their personal tax advisers as to the tax
consequences of dissenting.
Shareholders of Keystone International Fund Inc. will continue to be able to
redeem their shares at their current net asset value until the effective date
of the Reorganization. Redemption requests received by Keystone International
Fund Inc. thereafter will be treated as requests for the redemption of Shares
of the Successor Fund received by the shareholder in the Reorganization.
RECOMMENDATION OF TRUSTEES
The Board of each Registrant requested, received and considered such
information as it deemed reasonably necessary to enable the members of such
Board to evaluate the Plan of Reorganization. The Boards reviewed the
potential benefits associated with the proposed Reorganization and adoption of
the proposed Master Trust Agreement. In this regard, the Trustees considered:
(i) the potential disadvantages which apply to operating the Funds under their
current form of organization; (ii) the advantages which apply to operating the
Successor Funds as series of Delaware business trusts; (iii) the advantages of
adopting the new Master Trust Agreements under Delaware law; and (iv) the
expected federal tax consequences to the Funds, the Successor Funds and
shareholders resulting from the proposed Reorganization, and the likelihood
that no recognition of income, gain or loss for shareholders will occur as a
result thereof.
At the meetings of the Boards called for the purpose on September 16 and 17,
1997, the Board of each Registrant voted to approve the proposed Plan of
Reorganization and determined that participation in the Reorganization is in
the best interests of each Fund and that the interests of existing
shareholders will not be diluted as a result of the Reorganization.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the shares of Evergreen
Fund and Evergreen Aggressive Growth Fund present and entitled to vote on the
Proposal at the Meeting is required to approve the Reorganization for such
Funds.
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The affirmative vote of the holders of a majority of the shares of Evergreen
Intermediate Term Government Securities Fund voted on the Proposal at the
Meeting is required to approve the Reorganization for such Fund.
The affirmative vote of the holders of a majority of the issued and
outstanding shares of the following Funds is required to approve the
Reorganization for such Funds: Evergreen Income and Growth Fund, Evergreen
Growth and Income Fund, Evergreen Money Market Fund, Evergreen Institutional
Money Market Fund, Evergreen Institutional Treasury Money Market Fund,
Evergreen American Retirement Fund, Evergreen Small Cap Equity Income Fund,
Evergreen Tax Exempt Money Market Fund, Evergreen Short-Intermediate Municipal
Fund, Evergreen Florida High Income Municipal Bond Fund, Evergreen
Institutional Tax Exempt Money Market Fund, Evergreen Global Leaders Fund,
Evergreen Foundation Fund, Evergreen Tax Strategic Foundation Fund, Evergreen
Emerging Markets Growth Fund, Evergreen International Equity Fund, Evergreen
Value Fund, Evergreen Utility Fund, Evergreen Short-Intermediate Bond Fund,
Evergreen U.S. Government Fund, Evergreen Georgia Municipal Bond Fund,
Evergreen North Carolina Municipal Bond Fund, Evergreen South Carolina
Municipal Bond Fund, Evergreen Virginia Municipal Bond Fund, Evergreen High
Grade Tax Free Fund, Evergreen Treasury Money Market Fund, Evergreen Latin
America Fund, Evergreen Capital Preservation and Income Fund, Evergreen Fund
for Total Return, Evergreen Global Opportunities Fund, Evergreen Natural
Resources Fund, Evergreen Omega Fund, Evergreen Massachusetts Tax Free Fund,
Evergreen Pennsylvania Tax Free Fund, Evergreen New York Tax Free Fund,
Evergreen California Tax Free Fund, Evergreen Missouri Tax Free Fund,
Evergreen Strategic Income Fund, Keystone High Income Bond Fund (B-4),
Keystone Strategic Growth Fund (K-2), Keystone Growth and Income Fund (S-1),
Evergreen Select Adjustable Rate Fund, Evergreen Select Small Cap Growth Fund,
Keystone International Fund Inc., and Keystone Precious Metals Holdings, Inc.
The affirmative vote of the holders of two-thirds of the issued and
outstanding shares of The Evergreen Micro Cap Fund, Inc., Evergreen
Pennsylvania Tax Free Money Market Fund, and Evergreen New Jersey Tax Free
Income Fund is required to approve the Reorganization for such Funds.
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE TO APPROVE PROPOSAL 1.
PART II
PROPOSAL 2 -- RECLASSIFICATION AS NONFUNDAMENTAL OF THE INVESTMENT
OBJECTIVE OF THOSE FUNDS WHOSE INVESTMENT OBJECTIVE IS CURRENTLY
CLASSIFIED AS FUNDAMENTAL
RECLASSIFICATION OF FUNDAMENTAL INVESTMENT OBJECTIVES AS NONFUNDAMENTAL
Under the 1940 Act, a Fund's investment objective is not required to be
classified as "fundamental." A fundamental investment objective may be changed
only by vote of a Fund's shareholders. In order to provide each Fund's
investment adviser with enhanced investment management flexibility to respond
to market, industry or regulatory changes, the Trustees of the Funds (other
than Evergreen Omega Fund) have approved the reclassification from fundamental
to nonfundamental of each Fund's investment objective. The investment
objective of Evergreen Omega Fund is currently classified as nonfundamental. A
nonfundamental investment objective may be changed at any time by the Trustees
of a Fund without approval by the Fund's shareholders.
For a complete description of the investment objective(s) of your Fund(s),
please consult your Fund(s)' prospectuses. The reclassification from
fundamental to nonfundamental will not alter any Fund's investment objective.
If at any time in the future, the Trustees of a Fund approve a change in a
Fund's nonfundamental investment objective, shareholders of such Fund will be
given notice of such change prior to its implementation; however, if such a
change were to occur, shareholders would not be asked to approve such change.
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If the reclassification of any Fund's investment objective from fundamental
to nonfundamental is not approved by shareholders of a particular Fund, such
Fund's investment objective will remain fundamental and shareholder approval
(and its attendant costs and delays) will continue to be required prior to any
change in investment objective.
RECOMMENDATION OF TRUSTEES
The Trustees of each Registrant have considered the enhanced management
flexibility to respond to market, industry or regulatory changes that would
accrue to the Funds' investment advisers if each Fund's fundamental investment
objectives were reclassified as nonfundamental.
At the meetings of the Trustees called for the purpose on September 16 and
17, 1997, the Trustees of each Registrant voted to approve the
reclassification of the investment objective of each Fund currently classified
as fundamental to nonfundamental.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the outstanding voting
securities of a Fund is required to approve the reclassification of a Fund's
investment objective from fundamental to nonfundamental. Under the 1940 Act,
the affirmative vote of "a majority of the outstanding voting securities" of a
Fund is defined as the lesser of (a) 67% or more of the voting securities of
the Fund present or represented by proxy at the Meeting, if the holders of
more than 50% of the outstanding voting securities of the Fund are present or
represented by proxy, or (b) more than 50% of the outstanding voting
securities of the Fund.
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE TO APPROVE PROPOSAL 2.
PROPOSAL 3 -- CHANGES TO FUNDAMENTAL
INVESTMENT RESTRICTIONS
ADOPTION OF STANDARDIZED INVESTMENT RESTRICTIONS (PROPOSALS 3A-3I)
The primary purpose of Proposals 3A through 3I is to revise and standardize
the Funds' fundamental investment restrictions (the "Restrictions"). The
Trustees have concurred with the Funds' investment advisers' efforts to
analyze the fundamental and nonfundamental investment restrictions of the
Funds and, where practicable and appropriate to a Fund's investment objective
and policies, propose to shareholders adoption of standardized Restrictions.
It is not anticipated that any of the changes will substantially affect the
way the Funds are currently managed. These proposals are being presented to
shareholders for approval because it is believed that increased
standardization will help to promote operational efficiencies and facilitate
monitoring of compliance with the Restrictions. Because the proposed
standardized fundamental Restrictions in general are phrased more broadly than
many Funds' current fundamental Restrictions, the Funds will be able to
respond more expeditiously to changed market, industry or regulatory
developments. Set forth below, as sub-sections of this Proposal, are general
descriptions of each of the proposed changes. You will be given the option to
approve all, some, or none of the proposed changes on the proxy card enclosed
with this proxy statement.
A listing of the proposed standardized fundamental Restrictions to be
adopted by each Fund is set forth in Exhibit C to this proxy statement. A
listing of the current fundamental Restrictions of each Fund is set forth in
Exhibit D. Exhibit D contains an index to assist you in locating the page(s)
at which your Fund(s)' current fundamental Restrictions are described. Those
fundamental Restrictions that you are being requested to vote to standardize
are shown in Exhibit D by an "S", which stands for "To be Standardized." If a
particular change is not approved by shareholders of a Fund, the current
fundamental Restriction will remain in place.
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Because of the variety of ways in which the various Funds' current
fundamental Restrictions are expressed, the discussions below are general. To
compare your Fund's current fundamental Restriction to the proposed changed
fundamental Restriction, please refer to Exhibit D.
Many of the Funds' current Restrictions are accompanied by descriptive
language. Such descriptive language should not be read as part of the
fundamental Restriction. To the extent such descriptive language in a current
Restriction does not conflict with the language in a proposed Restriction, the
language will be retained but will not be considered fundamental and, as such,
may be changed by the Trustees without a further shareholder vote.
If approved by shareholders, the revised fundamental Restrictions described
in Proposals 3A through 3I will remain fundamental and, as such, cannot be
changed without a further shareholder vote. If a proposed standardized
fundamental Restriction is not approved by shareholders of a particular Fund,
the current Restriction will remain fundamental and shareholder approval (and
its attendant costs and delays) will continue to be required prior to any
change in the Restriction.
RECLASSIFICATION OF FUNDAMENTAL RESTRICTIONS AS NONFUNDAMENTAL (PROPOSAL 3J)
The reclassification from fundamental to nonfundamental of certain of the
Funds' other current fundamental Restrictions will enhance the ability of the
Funds to achieve their respective investment objectives because of the greater
investment flexibility to respond to changed market, industry or regulatory
conditions without the delay and expense of the solicitation of shareholder
approval.
RECOMMENDATION OF TRUSTEES
The Trustees of each Registrant have reviewed the potential benefits
associated with the proposed standardization of the Funds' fundamental
Restrictions (Proposals 3A through 3I below) as well as the potential benefits
associated with the reclassification of certain of the Funds' other
fundamental Restrictions to nonfundamental (Proposal 3J).
At the meetings of the Trustees called for the purpose on September 16 and
17, 1997, the Trustees of each Registrant voted to approve the proposed
standardization of the Funds' fundamental Restrictions (Proposals 3A through
3I below) and the reclassification from fundamental to nonfundamental of
certain of the Funds' other fundamental Restrictions (Proposal 3J below).
REQUIRED VOTE
The affirmative vote of the holders of a majority of the outstanding voting
securities of a Fund is required to standardize the language of the Funds'
fundamental Restrictions (Proposals 3A through 3I) and to approve the
reclassification of other fundamental Restrictions to nonfundamental (Proposal
3J). Under the 1940 Act, the affirmative vote of "a majority of the
outstanding voting securities" of a Fund is defined as the lesser of (a) 67%
or more of the voting securities of the Fund present or represented by proxy
at the Meeting, if the holders of more than 50% of the outstanding voting
securities of the Fund are present or represented by proxy, or (b) more than
50% of the outstanding voting securities of the Fund.
THE TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE TO APPROVE PROPOSAL 3.
PROPOSAL 3A: TO AMEND THE FUNDAMENTAL RESTRICTION CONCERNING DIVERSIFICATION
OF INVESTMENTS
DIVERSIFIED FUNDS
The current fundamental Restriction of many of the Funds concerning
diversification of investments provides generally that a Fund cannot purchase
the securities of an issuer if the purchase would cause more than 5% of the
Fund's total assets taken at market value to be invested in the securities of
such issuer, except U.S.
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government securities, or if the purchase would cause more than 10% of the
outstanding voting securities of any one issuer to be held in the Fund's
portfolio. Most Funds apply this limitation to 75% of their total assets. The
Funds express this Restriction in a variety of ways. It is proposed that
shareholders approve new language standardizing this Restriction.
Most of the Funds have elected to be "diversified" open-end management
investment companies under the 1940 Act, which requires the 5% of assets and
10% of outstanding voting securities tests described above to apply to 75% of
the total assets of the Fund. The current policy of certain diversified Funds
(the "100% Funds") is more restrictive than required by the 1940 Act, since
such Funds apply the foregoing tests to 100% of their assets, rather than 75%
of their assets. The primary purpose of the proposed change with respect to
the 100% Funds is to allow the Funds to invest in accordance with the less
restrictive limits contained in the 1940 Act for diversified investment
companies. The proposed change would allow the 100% Funds the flexibility to
purchase larger amounts of issuers' securities when their investment adviser
deems an opportunity attractive. The new policy would allow the investment
policies of the 100% Funds to conform with the definition of "diversified" as
it appears in the 1940 Act.
With respect to those Funds currently applying the 1940 Act standard, the
amendment of the fundamental Restriction will allow such Funds to respond more
quickly to changes of that standard, as well as to other legal, regulatory,
and market developments without the delay or expense of a shareholder vote.
The amendment of the fundamental Restriction would also standardize the
Restrictions across the Funds. Adoption of this change is not expected to
materially affect the operation of the Funds.
NON-DIVERSIFIED FUNDS
Some Funds are classified as "non-diversified". A non-diversified management
investment company may have no more than 25% of its total assets invested in
the securities (other than U.S. government securities or the shares of other
regulated investment companies) of any one issuer and must invest 50% of its
total assets under the 5% of assets and 10% of outstanding voting securities
tests applicable to diversified Funds as described above. For those Funds that
are currently non-diversified, no change other than standardized language is
being proposed and, as with the diversified Funds, adoption of the change is
not expected to materially affect the operation of the non-diversified Funds.
No Fund is changing its current classification. As proposed, each Fund's
fundamental Restriction regarding diversification, or non-diversification as
the case may be, will be replaced with the following fundamental Restriction:
"The Fund may not make any investment inconsistent with the
Fund's classification as a diversified [non-diversified]
investment company under the Investment Company Act of 1940."
PROPOSAL 3B: TO AMEND THE FUNDAMENTAL RESTRICTION CONCERNING CONCENTRATION OF
A FUND'S ASSETS IN A PARTICULAR INDUSTRY
Most of the Funds currently have a fundamental Restriction concerning the
concentration of investments in a particular industry. The staff of the SEC
takes the position that a mutual fund "concentrates" its investments in a
particular industry if more than 25% of the mutual fund's assets (exclusive of
cash and U.S. government securities) are invested in the securities of issuers
in such industry. The Restrictions generally embody the SEC staff
interpretation by stating that a Fund will not concentrate its investments in
a particular industry by investing more than 25% of its assets, exclusive of
cash and U.S. government securities, in securities of issuers in any one
industry.
Shareholders of most of the Funds are being requested to approve an
amendment of the foregoing fundamental Restriction. As proposed and except for
the Funds named below, each Fund's current fundamental Restriction regarding
concentration of the Fund's assets in a particular industry will be replaced
by the following fundamental Restriction:
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"The Fund may not concentrate its investments 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 [or in
the case of Money Market Funds domestic bank money
instruments])."
The primary purpose of the proposed amendment is to adopt insofar as
possible a standardized Restriction regarding concentration for those Funds
that do not concentrate their investments. Adoption of this change is not
expected to materially affect the operation of the Funds.
Certain Funds currently follow a policy of concentration. The Evergreen
Utility Fund concentrates its investments in the utilities industry and
Keystone Precious Metals Holdings, Inc. concentrates its investments in
industries related to mining, processing or dealing in gold or other precious
metals and minerals. Shareholders of these Funds are being requested to vote
to amend and simplify their Funds' current Restriction concerning
concentration. Shareholders of these Funds can find the proposed amended and
simplified fundamental Restriction concerning concentration in Exhibit C and
can find their Fund's current fundamental Restriction concerning concentration
in Exhibit D.
With respect to Evergreen Latin America Fund, see Proposal 6 below regarding
a proposed amendment to the Fund's fundamental Restriction regarding
concentration.
The primary purpose of the proposed amendment is to simplify the above-named
Funds' discussion of their concentration policies and allow for future
investment flexibility in response to regulatory requirements without the
necessity of a further shareholder vote. Adoption of the simplified
fundamental Restrictions on concentration for the above-named Funds is not
expected to materially affect the operation of such Funds because each Fund
will continue to abide by its current concentration policy as described in
Exhibit D.
PROPOSAL 3C: TO AMEND THE FUNDAMENTAL RESTRICTION CONCERNING THE ISSUANCE OF
SENIOR SECURITIES
The Funds' current fundamental Restrictions regarding the issuance of senior
securities generally state that a Fund shall not issue any senior security or
state the criteria under which a security is deemed not to be a senior
security.
It is proposed that shareholders approve replacing the Funds' current
fundamental Restrictions concerning the issuance of senior securities with the
following fundamental Restriction governing the issuance of senior securities:
"Except as permitted under the Investment Company Act of 1940,
the Fund may not issue senior securities."
The primary purpose of this proposed change is to standardize the Funds'
fundamental Restriction regarding senior securities.
The proposed fundamental Restriction clarifies that the Funds may issue
senior securities to the full extent permitted under the 1940 Act. Although
the definition of a "senior security" involves complex statutory and
regulatory concepts, a senior security is generally an obligation of a Fund
which has a claim to the Fund's assets or earnings that takes precedence over
the claims of the Fund's shareholders. The 1940 Act generally prohibits open-
end investment companies (i.e., mutual funds) from issuing any senior
securities; however, under current SEC staff interpretations, mutual funds are
permitted to engage in certain types of transactions that might be considered
"senior securities" as long as certain conditions are satisfied. For example,
a transaction that obligates a Fund to pay money at a future date (e.g., the
purchase of securities to be settled on a date that is farther away than the
normal settlement period) may be considered a "senior security." A mutual fund
is permitted to enter into this type of transaction if it maintains a
segregated account containing liquid securities in an amount equal to its
obligation to pay cash for the securities at a future date. Funds would engage
in transactions that could be considered to involve "senior securities" only
in accordance with applicable regulatory requirements under the 1940 Act.
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Adoption of the proposed fundamental Restriction concerning senior
securities is not expected to materially affect the operation of the Funds.
However, adoption of a standardized fundamental Restriction will facilitate
investment compliance efforts on behalf of the Funds and will allow the Funds
to respond to legal, regulatory and market developments which may make the use
of permissible senior securities advantageous to the Funds and their
shareholders.
PROPOSAL 3D: TO AMEND THE FUNDAMENTAL RESTRICTION CONCERNING BORROWING
Generally, the Funds' current fundamental Restrictions concerning borrowing
state that a Fund shall not borrow money except in an amount not in excess of
5% of the total assets of the Fund, and then only for emergency and
extraordinary purposes, which shall not prohibit escrow and collateral
arrangements in connection with investment in financial futures contracts and
related options. Some Funds have more broad borrowing authority. When
reviewing your Fund(s)' policies on borrowings as set forth in Exhibit D, you
should also review your Fund(s)' policies on the issuance of senior securities
since the topics are interrelated.
In general, under the 1940 Act, a Fund may not borrow money, except that (i)
a Fund may borrow from banks (as defined in the 1940 Act) or enter into
reverse repurchase agreements, in amounts up to 33 1/3% of its total assets
(including the amount borrowed), (ii) a Fund may borrow up to an additional 5%
of its total assets for temporary purposes, (iii) a Fund may obtain such
short-term credit as may be necessary for the clearance of purchases and sales
of portfolio securities, and (iv) a Fund may not pledge its assets other than
to secure such borrowings or, to the extent permitted by the Fund's investment
policies, as such policies may be set forth in its prospectus and statement of
additional information, as they may be amended from time to time, in
connection with hedging transactions, short sales, when-issued and forward
commitment transactions and similar investment strategies.
It is proposed that shareholders approve replacing the Funds' current
fundamental Restrictions regarding borrowing with the following fundamental
Restriction:
"The Fund may not borrow money, except to the extent permitted
by applicable law."
If the proposal is approved, all Funds other than Evergreen American
Retirement Fund will disclose that they will not engage in leveraging.
The primary purpose of the proposed change to the fundamental Restriction
concerning borrowing is to standardize the Restriction.
Adoption of the proposed Restriction is not currently expected to materially
affect the operations of the Funds. However, many of the Funds' current
Restrictions restrict borrowing to a lower percentage of total assets than the
33 1/3% permitted under the 1940 Act. The proposed Restriction therefore would
allow a Fund to purchase a security while borrowings representing more than 5%
of total assets are outstanding. While the Funds other than Evergreen American
Retirement Fund have no current intention to purchase securities while
borrowings representing more than 5% of total assets are outstanding, the
flexibility to do so may be beneficial to a Fund at a future date.
PROPOSAL 3E: TO AMEND THE FUNDAMENTAL RESTRICTION CONCERNING UNDERWRITING
Each Fund is currently subject to a fundamental Restriction concerning
underwriting. The Restrictions generally provide that a Fund shall not
underwrite any securities. It is proposed that shareholders approve replacing
the current fundamental Restriction with the following fundamental Restriction
concerning underwriting:
"The Fund may not underwrite securities of other issuers,
except insofar as the Fund may be deemed an underwriter in
connection with the disposition of its portfolio securities."
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The primary purpose of the proposed change is to clarify that the Funds are
not prohibited from selling securities if, as a result of the sale, the Funds
would be considered underwriters under the federal securities laws. It is also
intended to standardize the Funds' fundamental Restrictions regarding
underwriting. While the proposed change will have no current impact on the
Funds, adoption of the proposed standardized fundamental Restriction will
advance the goals of standardization.
PROPOSAL 3F: TO AMEND THE FUNDAMENTAL RESTRICTION CONCERNING INVESTMENT IN
REAL ESTATE
The Funds currently have a fundamental Restriction concerning the purchase
of real estate. In general, the Restrictions state that a Fund shall not
purchase or sell real estate. In the opinion of management, this Restriction
does not currently preclude investment in securities of issuers that deal in
real estate.
Shareholders are being asked to approve amendment of Restrictions similar to
that described above. As proposed, the Funds' current fundamental Restrictions
will be replaced by the following fundamental Restriction which will govern
future purchases and sales of real estate:
"The Fund may not purchase or sell real estate, except that,
to the extent permitted by applicable law, the Fund may invest
in (a) securities directly or indirectly secured by real
estate, or (b) securities issued by issuers that invest in
real estate."
The primary purpose of the proposed amendment is to clarify the types of
securities in which the Funds are authorized to invest and to standardize the
Funds' fundamental Restriction concerning real estate.
The proposed fundamental Restriction would make it explicit that each of the
Funds may acquire a security or other instrument whose payments of interest
and principal may be secured by a mortgage or other right to foreclose on real
estate, in the event of default. Any investments in these securities are, of
course, subject to the Fund's investment objective and policies and to other
limitations regarding diversification and concentration.
To the extent that a Fund buys securities and instruments of companies in
the real estate business, the Fund's performance will be affected by the
condition of the real estate market. This industry is sensitive to factors
such as changes in real estate values and property taxes, overbuilding,
variations in rental income, and interest rates. Performance could also be
affected by the structure, cash flow, and management skill of real estate
companies.
While the proposed change will have no current impact on the Funds, adoption
of the proposed standardized fundamental Restriction will advance the goals of
standardization.
PROPOSAL 3G: TO AMEND THE FUNDAMENTAL INVESTMENT RESTRICTION CONCERNING
COMMODITIES
The Funds currently are subject to various fundamental Restrictions that
generally provide that a Fund shall not purchase or sell commodities or
commodity contracts, except that certain Funds may, for hedging purposes, buy
or sell financial futures contracts and related options.
It is proposed that shareholders approve replacing the current fundamental
Restrictions with the following fundamental Restriction concerning
commodities:
"The Fund may not purchase or sell commodities or contracts on
commodities except to the extent that the 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."
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The proposed amendment is intended to allow appropriate Funds to have the
flexibility to invest in futures contracts and related options, including
financial futures such as interest rate and stock index futures. Certain Funds
currently have the ability to invest in financial futures. Under the proposed
amendment, these types of securities may be used for hedging or for investment
purposes and involve certain risks.
Investment in futures contracts and related options may not be appropriate
for all Funds. If the proposed amendment is approved, the Funds and their
investment advisers will determine the appropriateness of investment in
futures contracts (including financial futures) and related options on a Fund-
by-Fund basis.
While the proposed change will have no material impact on the operation of
the Funds, adoption of the proposed fundamental Restriction will advance the
goals of standardization.
PROPOSAL 3H: TO AMEND THE FUNDAMENTAL INVESTMENT RESTRICTION CONCERNING
LENDING
The Funds' current fundamental Restrictions concerning lending state
generally that a Fund shall not lend its portfolio securities except under
certain percentage and other limitations. In general, it is the Funds' current
policy that such loans must be secured continuously by cash collateral
maintained on a current basis in an amount at least equal to the market value
of the securities loaned, or by irrevocable letters of credit. During the
existence of the loan, a Fund must continue to receive the equivalent of the
interest and dividends paid by the issuer on the securities loaned and
interest on the investment of the collateral; the Fund must have the right to
call the loan and obtain the securities loaned at any time on five days'
notice, including the right to call the loan to enable the Fund to vote the
securities. To comply with previous (but as a result of federal legislation
passed last year, now superseded) requirements of certain state securities
administrators, such loans were not to exceed one-third of the Fund's net
assets taken at market value.
It is proposed that shareholders approve the replacement of the foregoing
fundamental Restriction with the following amended fundamental Restriction
concerning lending:
"The Fund may not make loans to other persons, except that the
Fund may lends 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."
The proposal is not expected to materially affect the operation of the
Funds. However, the proposed Restriction would clarify the Funds' ability to
invest in direct debt instruments such as loans and loan participations, which
are interests in amounts owed to another party by a company, government or
other borrower. These types of securities may have additional risks beyond
conventional debt securities because they may provide less legal protection
for the Fund, or there may be a requirement that the Fund supply additional
cash to a borrower on demand.
The adoption of the proposed standardized fundamental Restriction will
advance the goals of standardization.
PROPOSAL 3I: TO AMEND THE FUNDAMENTAL RESTRICTION CONCERNING INVESTMENT IN
FEDERALLY TAX EXEMPT SECURITIES
This proposed change applies only to the following Funds: Evergreen Tax
Exempt Money Market Fund, Evergreen Institutional Tax Exempt Money Market
Fund, Evergreen Pennsylvania Tax Free Money Market Fund, Evergreen Short-
Intermediate Municipal Fund, Evergreen High Grade Tax Free Fund, Evergreen Tax
Strategic Foundation Fund, Evergreen Georgia Municipal Bond Fund, Evergreen
North Carolina Municipal Bond Fund, Evergreen South Carolina Municipal Bond
Fund, Evergreen Virginia Municipal Bond Fund, Evergreen New Jersey Tax Free
Income Fund, Evergreen Massachusetts Tax Free Fund, Evergreen New York Tax
Free Fund, Evergreen Pennsylvania Tax Free Fund, Evergreen California Tax Free
Fund, and Evergreen Missouri Tax Free Fund.
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The 1940 Act provides, in effect, that a mutual fund cannot use a name or
title which may be deceptive or misleading. If a fund's name suggests a
certain type of investment policy, its name should be consistent with its
statement of policy. The SEC staff has taken the position that if a mutual
fund's name implies that its distributions will be exempt from federal income
taxation it should have a fundamental policy requiring that during periods of
normal market conditions either (i) the fund's assets will be invested so that
at least 80% of the income will be tax-exempt or (ii) the fund will have at
least 80% of its net assets invested in tax-exempt securities. While expressed
in a variety of ways, each of the Funds listed above currently has a
fundamental policy complying with the foregoing requirement.
If the Fund's name implies that its distributions will be exempt from
federal income taxation, it is proposed that shareholders of the above-named
Funds approve replacing such Funds' current fundamental Restrictions regarding
the foregoing 80% test with the following fundamental Restriction:
"The Fund will, during periods of normal market conditions,
invest its assets in accordance with applicable guidelines
issued by the Securities and Exchange Commission or its staff
concerning investment in tax-exempt securities for Funds with
the words tax exempt, tax free or municipal in their names."
This proposed fundamental Restriction, if adopted by shareholders, will
permit a Fund to respond to changed market, industry or regulatory
requirements without the delay and expense of the solicitation of shareholder
approval. Adoption of the proposed change is not expected to materially affect
the operation of the Funds and the Funds will continue to follow applicable
SEC staff guidelines as embodied in the applicable Funds' current fundamental
Restrictions. The above-named Funds' current fundamental Restrictions in this
regard may be found in Exhibit D.
PROPOSAL 3J: RECLASSIFICATION AS NONFUNDAMENTAL OF ALL CURRENT FUNDAMENTAL
RESTRICTIONS OTHER THAN THE FUNDAMENTAL RESTRICTIONS DESCRIBED IN
THE FOREGOING PROPOSALS 3A THROUGH 3I.
Like all mutual funds, when the Funds were established the Trustees adopted
certain investment Restrictions that would govern the efforts of the Funds'
investment advisers in seeking the Funds' respective investment objectives.
Some of these Restrictions were designated as "fundamental" and, as such, may
not be changed unless the change has first been approved by the Trustees and
then by the shareholders of the relevant Fund. Many of the Funds' investment
restrictions were required to be classified as fundamental under the
securities laws of various states. Since October 1996, such state securities
laws and regulations regarding fundamental investment restrictions have been
preempted by federal law and no longer apply.
The Funds' fundamental Restrictions were established to reflect certain
regulatory, business or industry conditions as they existed at the time a Fund
was established. Many such conditions no longer exist. The 1940 Act requires
only that the Restrictions discussed in Proposals 3A through 3H above be
classified as fundamental and certain SEC staff guidelines require Proposal 3I
to be classified as fundamental. As a result, this Proposal 3J proposes to
reclassify as nonfundamental all current fundamental Restrictions of certain
Funds other than the fundamental Restrictions discussed in the foregoing
Proposals 3A through 3I.
Nonfundamental Restrictions may be changed or eliminated by a Fund's
Trustees at any time without approval of the Fund's shareholders. The current
fundamental Restrictions proposed to be reclassified as nonfundamental are
shown in Exhibit D by an "R", which stands for "To be Reclassified." You will
find the page(s) in which your Fund's(s') Restrictions are described in the
index at the beginning of Exhibit D.
None of the proposed changes will alter any Fund's investment objective.
Indeed, the Trustees believe that approval of the reclassification of
fundamental Restrictions to nonfundamental Restrictions will enhance the
ability of the Funds to achieve their respective investment objectives because
the Funds will have greater investment management flexibility to respond to
changed market, industry or regulatory conditions without the delay and
expense of the solicitation of shareholder approval.
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PART III
PROPOSAL 4 -- AMENDMENT TO THE INVESTMENT OBJECTIVE OF EVERGREEN INSTITUTIONAL
TAX EXEMPT MONEY MARKET FUND, EVERGREEN PENNSYLVANIA TAX FREE MONEY MARKET
FUND, AND EVERGREEN TAX EXEMPT MONEY MARKET FUND
The Boards of Trustees of Evergreen Institutional Tax Exempt Money Market
Fund, Evergreen Pennsylvania Tax Free Money Market Fund, and Evergreen Tax
Exempt Money Market Fund have proposed amending each Fund's investment
objective to permit each Fund to invest without limit in obligations subject
to the Federal alternative minimum tax. If the change in investment objective
is approved, the respective Board has approved a change in the name of the
Fund respectively from Evergreen Institutional Tax Exempt Money Market Fund to
Evergreen Select Municipal Money Market Fund, from Evergreen Pennsylvania Tax
Free Money Market Fund to Evergreen Pennsylvania Municipal Money Market Fund,
and from Evergreen Tax Exempt Money Market Fund to Evergreen Municipal Money
Market Fund.
Each Fund has a substantially similar investment objective of seeking high
current income exempt from Federal income tax, and in the case of the
Evergreen Pennsylvania Tax Free Money Market Fund, exempt from Pennsylvania
personal income taxes. Interest income on certain types of bonds issued after
August 7, 1986 to finance nongovernmental activities is an item of "tax-
preference" subject to the Federal alternative minimum tax for individuals and
corporations. To the extent a Fund invests in these "private activity" bonds
(some of which were formerly referred to as "industrial development" bonds),
individual and corporate shareholders, depending on their status, may be
subject to the alternative minimum tax on the part of the Fund's distributions
derived from the bonds. As a matter of fundamental policy, which may not be
changed without shareholder approval, each of the Funds currently invests at
least 80% of its net assets in municipal obligations, the interest from which
is not subject to the Federal alternative minimum tax.
The Board of each applicable Registrant believes that it would be
advantageous to shareholders to permit the respective Fund to invest without
limit in obligations subject to the Federal alternative minimum tax.
Obligations subject to the Federal alternative minimum tax generally provide a
higher rate of return than obligations not subject to the Federal alternative
minimum tax. As a result, the proposed change could result in enhanced yields
for the Funds. In addition, since relatively few people are subject to the
federal alternative minimum tax it is not expected that the proposed change
will negatively affect the vast majority of shareholders.
If shareholders approve the proposed change to amend the investment
objective of the Funds named above, under normal circumstances it is
anticipated that each Fund will invest its assets so that at least 80% of its
annual interest income is exempt from Federal income tax other than the
Federal alternative minimum tax.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the outstanding voting
securities of a Fund is required to approve Proposal 4. Under the 1940 Act,
the affirmative vote of "a majority of the outstanding voting securities" of a
Fund is defined as the lesser of (a) 67% or more of the voting securities of
the Fund present or represented by proxy at the Meeting, if the holders of
more than 50% of the outstanding voting securities of the Fund are present or
represented by proxy, or (b) more than 50% of the outstanding voting
securities of the Fund.
THE TRUSTEES OF EACH APPLICABLE REGISTRANT RECOMMEND THAT SHAREHOLDERS VOTE
TO APPROVE PROPOSAL 4.
PROPOSAL 5 -- AMENDMENT TO THE INVESTMENT OBJECTIVE OF
EVERGREEN LATIN AMERICA FUND
The Trustees of Evergreen Latin America Fund have proposed amending the
Fund's investment objective to permit the Fund to invest without limit in
securities of issuers located in Latin America. If the change in investment
objective is approved, the Fund would no longer be required to invest a
percentage of its assets in securities of issuers in the United States and
Canada.
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The Fund's current primary investment objective is long term growth of
capital through investments in equity and fixed income securities of North
America (the United States and Canada) and Latin America. As a secondary
objective, the Fund seeks current income. The Fund's investment objectives are
fundamental and may not be changed without shareholder approval.
Under normal circumstances, the Fund invests at least 65% of its assets in
securities of issuers in Latin America. The Fund ordinarily maintains
investments in at least three Latin American countries. The Fund deems Latin
America to include Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica,
Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama,
Paraguay, Peru, Uruguay and Venezuela. An issuer is deemed to be in Latin
America if it is organized under the laws of a country within that region; its
principal securities trading market is in that region; it derives at least 50%
of its revenue or profits from goods produced or sold, investments made, or
services performed in that region; or it has at least 50% of its assets
located in the region.
If shareholders approve the proposed change, the Fund's investment
objectives would be amended to provide that the Fund's primary investment
objective is "long term growth of capital through investments in equity and
fixed income securities of issuers located in Latin America." The Trustees
believe that the amended investment objective better reflects the Fund's
emphasis of investing in Latin America and the Fund's name change from
Keystone Fund of the Americas. While investments in Latin America's emerging
market present strong long term growth potential, such investments are subject
to special risks, such as political and economic uncertainties, fluctuating
currency exchange rates, less-regulated securities markets and different legal
standards. If the change in investment objective is approved, the Fund will
continue to be permitted to invest up to 35% of its assets in securities of
United States and Canadian issues.
REQUIRED VOTE
The affirmative vote of the holders a majority of the outstanding voting
securities of Evergreen Latin America Fund is required to approve Proposal 5.
Under the 1940 Act, the affirmative vote of "a majority of the outstanding
voting securities" of a Fund is defined as the lesser of (a) 67% or more of
the voting securities of the Fund present or represented by proxy at the
Meeting if the holders of more than 50% of the outstanding voting securities
of the Fund are present or represented by proxy, or (b) more than 50% of the
outstanding voting securities of the Fund.
THE TRUSTEES OF EVERGREEN LATIN AMERICA FUND RECOMMEND THAT SHAREHOLDERS
VOTE TO APPROVE PROPOSAL 5.
PROPOSAL 6 -- AMENDMENT TO THE FUNDAMENTAL RESTRICTION OF
EVERGREEN LATIN AMERICA FUND RELATING TO
INDUSTRY CONCENTRATION
The Trustees of Evergreen Latin America Fund also have proposed amending the
Fund's investment restriction relating to industry concentration. The Fund's
current investment restriction states that it may not invest 25% or more of
its total assets (taken at market value) in securities of issuers in a
particular industry or group or related industries, including a foreign
government, except United States government securities. If shareholders
approve the proposed amendment, the Fund's investment restriction regarding
industry concentration would be amended to provide that the Fund "will invest
in the aggregate more than 25% of its total assets, taken at market value, in
the securities of issuers primarily engaged in the energy, telecommunications,
and utility industries."
It is the position of the staff of the SEC that investment (including
holdings of debt securities) of more than 25% of the value of a mutual fund's
assets in any one industry represents concentration. If the investment company
intends to concentrate in a particular industry or group of industries it is
required to specify the industry or group of industries in which it will
concentrate. If a mutual fund desires to change a policy of concentration, the
1940 Act requires that shareholder approval of a new policy must be obtained.
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If approved by shareholders, the proposal would require that the Fund in the
aggregate invest at least 25% of its assets in issuers in the
telecommunications, energy, and utility industries. The Trustees believe that
it would be advantageous to shareholders to permit the Fund to concentrate its
investments in the industries specified above. The specified industries
represent a proportionately larger percentage of Latin American issuers than
the same industries in the United States. Certain issuers in the specified
industries were formed from former government monopolies that have recently
been privatized and may represent attractive investment opportunities. As a
result of the Fund's investment concentration in the specified industries,
however, if the proposal is approved, the Fund would be subject to the risks
of investment in the specified industries to a greater degree than if the Fund
did not concentrate its investments as proposed.
In general, some of the risks associated with the utility industry include
difficulties in earning adequate returns on investments despite frequent rate
increases, restrictions on operations and increased costs and delays due to
governmental regulations, building or construction delays, environmental
regulations, difficulty of the capital markets in absorbing utility debt and
equity securities, and difficulties in obtaining fuel at reasonable prices.
Energy companies include the conventional areas of oil, gas, electricity and
coal, as well as new sources of energy such as geothermal, nuclear, shale and
solar power. These companies include those that produce, transmit, market or
measure energy, as well as those companies involved in exploring for new
sources of energy. In general, securities of companies in the energy field are
subject to changes in value and dividend yield which depend largely on the
price and supply of energy fuels. Swift price and supply fluctuations may be
caused by events relating to international politics, energy conservation, the
success of exploration projects and tax or other governmental regulatory
policies.
Telecommunications companies include companies engaged in the development,
manufacture, or sale of communications services or equipment. They may range
from traditional local and long distance telephone service or equipment
providers, to companies involved in new technologies. Telecommunications
companies are often subject to government regulation governing rates of return
and services that may be offered. Companies in the industry often compete
fiercely for market share.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the outstanding voting
securities of Evergreen Latin America Fund is required to approve Proposal 6.
Under the 1940 Act, the affirmative vote of "a majority of the outstanding
voting securities" of a Fund is defined as the lesser of (a) 67% or more of
the voting securities of the Fund present or represented by proxy at the
Meeting if the holders of more that 50% of the outstanding voting securities
of the Fund are present or represented by proxy, or (b) more than 50% of the
outstanding voting securities of the Fund.
THE TRUSTEES OF EVERGREEN LATIN AMERICA FUND RECOMMEND THAT SHAREHOLDERS
VOTE TO APPROVE PROPOSAL 6.
VOTING INFORMATION CONCERNING THE MEETING
Only shareholders of record as of the close of business on the Record Date
will be entitled to notice of, and to vote at, the Meeting or any adjournment
thereof. The holders of a majority of the shares outstanding at the close of
business on the Record Date present in person or represented by proxy will
constitute a quorum for the Meeting for the following Funds: Evergreen Fund,
Evergreen Aggressive Growth Fund, Evergreen Income and Growth Fund, Evergreen
Growth and Income Fund, Evergreen Money Market Fund, Evergreen Institutional
Money Market Fund, Evergreen Institutional Treasury Money Market Fund,
Evergreen American Retirement Fund, Evergreen Small Cap Equity Income Fund,
Evergreen Tax Exempt Money Market Fund, Evergreen Short-Intermediate Municipal
Fund, Evergreen Florida High Income Municipal Bond Fund, Evergreen
Institutional Tax Exempt Money Market Fund, Evergreen Global Leaders Fund,
Evergreen Foundation Fund, Evergreen Tax Strategic Foundation Fund, Evergreen
Intermediate Term Government Securities Fund, Evergreen Pennsylvania Tax Free
Money Market Fund, Evergreen New Jersey Tax Free Income Fund, Evergreen Latin
America Fund, Evergreen Capital Preservation and Income Fund, Evergreen Fund
for Total Return, Evergreen Natural Resources Fund, Evergreen Omega Fund,
Evergreen Massachusetts Tax Free Fund, Evergreen Pennsylvania Tax
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Free Fund, Evergreen New York Tax Free Fund, Evergreen California Tax Free
Fund, Evergreen Missouri Tax Free Fund, Evergreen Strategic Income Fund,
Keystone High Income Bond Fund (B-4), Keystone Strategic Growth Fund (K-2),
Keystone Growth and Income Fund (S-1), Evergreen Select Adjustable Rate Fund,
Evergreen Select Small Cap Growth Fund, and Keystone Precious Metals Holdings,
Inc.
The holders of one-third of the shares outstanding at the close of business
on the Record Date present in person or represented by proxy will constitute a
quorum for the Meeting of The Evergreen MicroCap Fund, Inc.
The holders of one-fourth of the shares outstanding at the close of business
on the Record Date present in person or represented by proxy will constitute a
quorum for the Meeting of the following Funds: Evergreen Emerging Markets
Growth Fund, Evergreen International Equity Fund, Evergreen Value Fund,
Evergreen Utility Fund, Evergreen Short-Intermediate Bond Fund, Evergreen U.S.
Government Fund, Evergreen Georgia Municipal Bond Fund, Evergreen North
Carolina Municipal Bond Fund, Evergreen South Carolina Municipal Bond Fund,
Evergreen Virginia Municipal Bond Fund, Evergreen High Grade Tax Free Fund,
Evergreen Treasury Money Market Fund, Evergreen Global Opportunities Fund, and
Keystone International Fund Inc.
If the enclosed form of proxy is properly executed and returned in time to
be voted at the Meeting, the proxies named therein will vote the shares
represented by the proxy in accordance with the instructions marked thereon.
Proxies that reflect abstentions and "broker non-votes" (i.e., shares held by
brokers or nominees as to which (i) instructions have not been received from
the beneficial owners or the persons entitled to vote or (ii) the broker or
nominee does not have discretionary voting power on a particular matter) will
be counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum, but will have no effect on the outcome
of the vote to approve any proposal requiring a vote based on the percentage
of shares actually voted. A proxy may be revoked at any time on or before the
Meeting by written notice to the Secretary of the appropriate Fund, 200
Berkeley Street, Boston, Massachusetts 02116. Unless revoked, all valid
proxies will be voted in accordance with the specifications thereon or, in the
absence of such specifications, FOR approval of the Plan and the
Reorganization contemplated thereby described in Part I of this proxy
statement and FOR the proposals described in Parts II and III of this proxy
statement.
Each full share outstanding as of the Record Date is entitled to one vote
and each fractional share outstanding is entitled to a proportionate share of
one vote. The number of shares of each Fund outstanding as of the close of
business on the Record Date is set forth in Exhibit E.
Proxy solicitations will be made primarily by mail, but proxy solicitations
may also be made by telephone, telegraph or personal solicitations conducted
by officers and employees of First Union National Bank, its affiliates or
other representatives of the Funds (who will not be paid for their
solicitation activities). Shareholder Communications Corporation ("SCC") and
its agents have been engaged by the Funds to assist in soliciting proxies, and
may call shareholders to ask if they would be willing to authorize SCC to
execute a proxy on their behalf authorizing the voting of their shares in
accordance with the instructions given over the telephone by the shareholders.
In addition, shareholders may call SCC at 1-800-733-8481 extension 404 between
the hours of 9:00 a.m. and 11:00 p.m. Eastern time in order to initiate the
processing of their votes by telephone. SCC will utilize a telephone vote
solicitation procedure designed to authenticate the shareholder's identity by
asking the shareholder to provide his or her social security number (in the
case of an individual) or taxpayer identification number (in the case of an
entity). The shareholder's telephone instructions will be implemented in a
proxy executed by SCC and a confirmation will be sent to the shareholder to
ensure that the vote has been authorized in accordance with the shareholder's
instructions. Although a shareholder's vote may be solicited and cast in this
manner, each shareholder will receive a copy of this proxy statement and may
vote by mail using the enclosed proxy card. The Funds believe that this
telephonic voting system complies with applicable law and have reviewed
opinions of counsel to that effect.
If you wish to participate in the Meeting, but do not wish to give your
proxy by telephone, you may still submit the proxy card included with this
proxy statement or attend in person. Any proxy given by you, whether in
writing or by telephone, is revocable.
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In the event that sufficient votes to approve a proposal are not received,
the persons named as proxies may propose one or more adjournments of the
Meeting to permit further solicitation of proxies. In determining whether to
adjourn the Meeting, the following factors may be considered: the percentage
of votes actually cast, the percentage of negative votes actually cast, the
nature of any further solicitation and the information to be provided to
shareholders with respect to the reasons for the solicitation. Any such
adjournment will require an affirmative vote by the holders of a majority of
the shares present in person or by proxy and entitled to vote at the Meeting.
The persons named as proxies will vote upon such adjournment after
consideration of all circumstances which may bear upon a decision to adjourn
the Meeting.
Except for Keystone International Fund Inc. and Keystone Precious Metals
Holdings, Inc., no Fund is required or intends to hold annual or other
periodic meetings of shareholders except as may be required by the 1940 Act.
If the Reorganization is not approved by shareholders of a Fund, the next
meeting of the shareholders of such Fund will be held at such time as the
Board may determine or as may be legally required. If any change proposed in
Parts II and III of this proxy statement is not approved by shareholders of a
Fund, the current restriction, limitation or policy will remain in place as to
such Fund. Shareholders wishing to submit proposals for consideration for
inclusion in a proxy statement for a subsequent shareholder meeting should
send their written proposals to the Secretary of the Fund at the address set
forth on the cover of this proxy statement such that they will be received by
the Fund in a reasonable period of time prior to any such meeting.
NOTICE TO BANKS, BROKER-DEALERS AND VOTING TRUSTEES AND THEIR NOMINEES.
Please advise each Fund whether other persons are beneficial owners of shares
for which proxies are being solicited and, if so, the number of copies of this
proxy statement needed to supply copies to the beneficial owners of the
respective shares.
ADDITIONAL INFORMATION
PAYMENT OF EXPENSES
Each Fund will pay its proportionate share of expenses of the preparation,
printing and mailing to its shareholders of the proxy, accompanying notice of
meeting and this proxy statement and any supplementary solicitation of its
shareholders.
It is expected that the cost of retaining SCC to assist in the proxy
solicitation process will not exceed $909,000, which cost will be allocated
among the Funds pro rata based on their respective net assets.
BENEFICIAL OWNERSHIP
Exhibit F contains information about the beneficial ownership by
shareholders of five percent or more of each Fund's outstanding Shares, as of
September 30, 1997. On that date, the existing Trustees and officers of the
Funds, together as a group, "beneficially owned" less than one percent of each
Fund's outstanding Shares.
The term "beneficial ownership" is as defined under Section 13(d) of the
1934 Act. The information as to beneficial ownership is based on statements
furnished to each Fund by the existing Trustees, officers of such Fund, and/or
on records of Evergreen Service Company.
ANNUAL AND SEMI-ANNUAL REPORTS TO SHAREHOLDERS
Each of the Funds will furnish, without charge, a copy of its most recent
annual report (and most recent semi-annual report succeeding the annual
report, if any) to a shareholder of the Fund upon request. Any such request
should be directed to Evergreen Service Company at 200 Berkeley Street,
Boston, Massachusetts 02116-5034 or (800) 343-2898.
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OTHER BUSINESS
The Boards do not intend to present any other business at the Meeting. If,
however, any other matters are properly brought before the Meeting, the
persons named in the accompanying proxy card(s) will vote thereon in
accordance with their judgment.
EACH BOARD, INCLUDING ITS INDEPENDENT TRUSTEES, RECOMMENDS APPROVAL OF EACH
PROPOSAL AND ANY UNMARKED PROXIES WITHOUT INSTRUCTIONS TO THE CONTRARY WILL BE
VOTED IN FAVOR OF APPROVAL OF THE PROPOSALS.
October 1997
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EXHIBIT A
[FORM OF AGREEMENT AND PLAN OF CONVERSION AND TERMINATION]
AGREEMENT AND PLAN OF CONVERSION AND TERMINATION dated as of , 1997
(the "Agreement"), between [Name of Original Fund], a [Massachusetts business
trust, Pennsylvania common law trust or New York, Delaware or Maryland
corporation] having an office at 200 Berkeley Street, Boston, Massachusetts
02116 (the "Original Fund") and [Name of Successor Trust], a Delaware business
trust having an office at 200 Berkeley Street, Boston, Massachusetts 02116.
WHEREAS, the Board of [Directors] Trustees of the Original Fund and the
Board of Trustees of the Successor Trust have determined that it is in the
best interests of the Original Fund and the Successor Trust, respectively,
that the assets of the Original Fund be acquired by the Successor Trust
pursuant to this Agreement and in accordance with the applicable laws of the
state of organization of the Original Fund and the State of Delaware; and
WHEREAS, the parties desire to enter into a plan of exchange which would
constitute a reorganization within the meaning of Section 368 of the Internal
Revenue Code of 1986, as amended:
NOW THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto agree as follows:
1. PLAN OF EXCHANGE.
(a) Subject to the terms and conditions set forth herein, on the Exchange
Date (as defined herein), the Original Fund shall assign, transfer and convey
the assets of each of its series (collectively, the "Funds" and each
individually, a "Fund"), including all securities and cash held by each Fund
(subject to the liabilities of each such Fund) to a corresponding series of
the Successor Trust (collectively, the "Successor Funds" and each
individually, a "Successor Fund"), and each such Successor Fund shall acquire
all of the assets of each corresponding Fund (subject to the liabilities of
each such Fund) in exchange for full and fractional shares of beneficial
interest of such Successor Fund, $.001 par value per share (the "Fund
Shares"), to be issued by the Successor Trust, having, in the case of each
Successor Fund, an aggregate net asset value equal to the value of the net
assets of the corresponding Fund acquired. The value of the assets of each of
the Funds and the net asset value per share of the Fund Shares of each of the
Successor Funds shall be determined as of the Valuation Date (as defined
herein) in accordance with the procedures for determining the value of each
Fund's assets set forth in the Successor Fund's organizational document and
the then-current prospectus and statement of additional information for each
Fund that forms a part of the Successor Fund's Registration Statement on Form
N-1A (the "Registration Statement"). In lieu of delivering certificates for
the Fund Shares, the Successor Trust shall credit the Fund Shares to the
Original Fund's account on the share record books of the Successor Trust and
shall deliver a confirmation thereof to the Original Fund. The Original Fund
shall then deliver written instructions to the Successor Trust's transfer
agent to establish accounts for the shareholders on the share record books
relating to each of the Funds. With respect to any Fund that offers more than
one class of shares as of the Exchange Date, the exchange transaction
described above will involve the delivery of shares of classes relative to the
corresponding class of each such class, respectively. Fund Shares of each such
class shall have the same aggregate net asset value as the aggregate net asset
value of the corresponding class of the Fund. Notwithstanding anything
expressly or by implication set forth herein (but without limiting the rights
of the governing Boards of the Original Fund and Successor Trust under Section
8 hereof), this Agreement, and the transactions contemplated herein, shall be
deemed to apply to each Fund as to which the condition precedent set forth in
Section 6(a) hereof shall have been satisfied and its corresponding Successor
Fund, and shall not apply to any Fund (or its corresponding Successor Fund) as
to which such condition precedent shall not have been satisfied.
(b) Delivery of the assets of each of the Funds to be transferred shall be
made not later than the next business day following the Valuation Date (the
"Exchange Date"). Assets transferred shall be delivered to State Street Bank
and Trust Company, the Successor Trust's custodian (the "Custodian"), for the
account of the
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Successor Trust and the Successor Funds, with all securities not in bearer or
book entry form duly endorsed, or accompanied by duly executed separate
assignments or stock powers, in proper form for transfer, with signatures
guaranteed, and with all necessary stock transfer stamps, sufficient to
transfer good and marketable title thereto (including all accrued interest and
dividends and rights pertaining thereto) to the Custodian for the account of
the Successor Trust and the Successor Funds free and clear of all liens,
encumbrances, rights, restrictions and claims. All cash delivered shall be in
the form of immediately available funds payable to the order of the Custodian
for the account of the Successor Trust and the Successor Funds. All assets
delivered to the Custodian as provided herein shall be allocated by the
Successor Trust to each Successor Fund corresponding to the Fund from which,
or on the account of which, the assets were transferred.
(c) The Original Fund will pay or cause to be paid to the Successor Trust
any interest received on or after the Exchange Date with respect to assets
transferred from any Fund to the corresponding Successor Fund hereunder and to
the Successor Trust any distributions, rights or other assets received by the
Original Fund after the Exchange Date as distributions on or with respect to
the securities transferred from any Fund to the corresponding Successor Fund
hereunder, and the Successor Trust shall allocate any such distributions,
rights or other assets to the appropriate Successor Fund. All such assets
shall be deemed included in assets transferred to the Funds on the Exchange
Date and shall not be separately valued.
(d) The Valuation Date shall be December 19, 1997, or such earlier or later
date as may be mutually agreed upon by the parties.
(e) As soon as practicable after the Exchange Date, the Original Fund shall
distribute all of the Fund Shares of each of the Successor Funds received by
it among the shareholders of each corresponding Fund in proportion to the
number of shares each such shareholder holds in each such Fund and, upon the
effecting of such a distribution on behalf of all of the Funds, the Original
Fund will dissolve and terminate. After an Exchange Date, a Fund which has
been the subject of the exchange transactions on such Exchange Date shall not
conduct any business except in connection with its dissolution and
termination.
2. THE ORIGINAL FUND'S REPRESENTATIONS AND WARRANTIES. The Original Fund
represents and warrants to and agrees with the Successor Trust as follows:
(a) The Original Fund is duly organized, validly existing and in good
standing under the laws of the state of its organization and has power to own
all of its properties and assets and, subject to the approval of its
shareholders as contemplated hereby, to carry out this Agreement.
(b) The Original Fund is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment
company, and such registration has not been revoked or rescinded and is in
full force and effect.
(c) Except as shown on the audited financial statements of each Original
Fund for its most recently completed fiscal period and as incurred in the
ordinary course of the Original Fund's and each Fund's business since then,
neither the Original Fund nor any Fund has any known liabilities of a material
amount, contingent or otherwise, and there are no material legal,
administrative or other proceedings pending or threatened against the Original
Fund or any Fund.
(d) On the Exchange Date, the Original Fund will have full right, power and
authority to sell, assign, transfer and deliver the assets to be transferred
by it hereunder.
3. THE SUCCESSOR TRUST'S REPRESENTATIONS AND WARRANTIES. The Successor Trust
represents and warrants to and agrees with the Original Fund as follows:
(a) The Successor Trust is a business trust duly organized, validly existing
and in good standing under the laws of the State of Delaware and has power to
carry on its business as it is now being conducted and to carry out this
Agreement.
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(b) The Successor Trust is registered or will register as an open-end
management investment company and adopt the Registration Statement of the
Original Fund, for purposes of the Securities Act of 1933, as amended, (the
"1933 Act") and the 1940 Act.
(c) Neither the Successor Trust nor any Successor Fund has any known
liabilities of a material amount, contingent or otherwise, and there are no
material legal, administrative or other proceedings pending or threatened
against the Successor Trust or any Successor Fund.
(d) At the Exchange Date, the Fund Shares to be issued to the Original Fund
(the only Fund Shares to be issued as of the Exchange Date, except for the
initial capital, if any, of the Successor Trust) will have been duly
authorized and, when issued and delivered pursuant to this Agreement, will be
legally and validly issued and will be fully paid and non-assessable by the
Successor Trust. No Successor Trust or Successor Fund shareholder will have
any preemptive right of subscription or purchase in respect thereof.
4. THE SUCCESSOR TRUST'S CONDITIONS PRECEDENT. The obligations of the
Successor Trust hereunder shall be subject to the following conditions:
(a) The Original Fund shall have furnished to the Successor Trust a
statement of the Original Fund's assets, including a list of securities owned
by the Original Fund with their respective tax costs and values determined as
provided in Section 1 hereof, all as of the Valuation Date.
(b) As of the Exchange Date, all representations and warranties of the
Original Fund made in this Agreement shall be true and correct as if made at
and as of such date, and the Original Fund shall have complied with all the
agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to such date.
(c) For each Fund, a vote approving this Agreement and the transactions and
exchange contemplated hereby shall have been adopted by the vote required by
applicable law.
5. THE ORIGINAL FUND'S CONDITIONS PRECEDENT. The obligations of the Original
Fund hereunder shall be subject to the condition that as of the Exchange Date
all representations and warranties of the Successor Trust made in the
Agreement shall be true and correct as if made at and as of such date, and
that the Successor Trust shall have complied with all of the agreements and
satisfied all the conditions on its part to be performed or satisfied at or
prior to such date.
6. THE SUCCESSOR TRUST'S AND THE ORIGINAL FUND'S CONDITIONS PRECEDENT. The
obligations of both the Successor Trust and the Original Fund hereunder as to
any particular Fund and its corresponding Successor Fund shall be subject to
the following conditions:
(a) This Agreement and the transactions contemplated hereby shall have been
approved by the vote required by applicable law.
(b) The receipt of such authority, including "no-action" letters and orders
from the Securities and Exchange Commission (the "Commission") or state
securities commissions, as may be necessary to permit the parties to carry out
the transaction contemplated by this Agreement shall have been received.
(c) The Successor Trust's adoption of the Registration Statement on Form N-
1A under the 1933 Act and the 1940 Act shall have become effective, and any
post-effective amendments to such Registration Statement as are determined by
the Trustees to be necessary and appropriate, shall have been filed with the
Commission and shall have become effective.
(d) The Commission shall not have issued an unfavorable advisory report
under Section 25(b) of the 1940 Act nor instituted nor threatened to institute
any proceeding seeking to enjoin consummation of the reorganization
transactions contemplated hereby under Section 25(c) of the 1940 Act and no
other action, suit or
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<PAGE>
other proceeding shall be threatened or pending before any court or
governmental agency which seeks to restrain or prohibit, or obtain damages or
other relief in connection with, this Agreement or the transactions
contemplated herein.
Provided, however, that at any time prior to the Exchange Date, any of the
foregoing conditions in this Section 6 may be waived by the parties if, in the
judgment of the parties, such waiver will not have a material adverse effect
on the benefits intended under this Agreement to the shareholders of the
Original Fund.
7. INDEMNIFICATION. The Successor Trust hereby agrees with the Original Fund
and each Trustee or Director of the Original Fund: (i) to indemnify each
Trustee or Director of the Original Fund against all liabilities and expenses
referred to in the indemnification provisions of the Original Fund's
organizational documents, to the extent provided therein, incurred by any
Trustee or Director of the Original Fund; and (ii) in addition to the
indemnification provided in (i) above, to indemnify each Trustee or Director
of the Original Fund against all liabilities and expenses and pay the same as
they arise and become due, without any exception, limitation or requirement of
approval by any person, and without any right to require repayment thereof by
any such Trustee (unless such Trustee has had the same repaid to him or her)
based upon any subsequent or final disposition or findings made in connection
therewith or otherwise, if such action, suit or other proceeding involves such
Trustee's participation in authorizing or permitting or acquiescing in,
directly or indirectly, by action or inaction, the making of any distribution
in any manner of all or any assets of the Original Fund without making
provision for the payment of any liabilities of any kind, fixed or contingent,
of the Original Fund, which liabilities were not actually and consciously
personally known to such Trustee to exist at the time of such Trustee's
participation in so authorizing or permitting or acquiescing in the making of
any such distribution.
8. TERMINATION OF AGREEMENT. As to any Fund and its corresponding Successor
Fund, this Agreement and the transactions contemplated hereby may be
terminated and abandoned by resolution of the Board of the Original Fund or
the Board of the Successor Trust, at any time prior to the Exchange Date (and
notwithstanding any vote of the shareholders of the Fund) if circumstances
should develop that, in the opinion of either the Board of Trustees of the
Original Fund or the Board of the Successor Trust, make proceeding with this
Agreement inadvisable. In making any such determination as to any Fund and its
corresponding Successor Fund, the respective Boards may consider, among other
factors, whether approval has been rendered by shareholders of all (or only
some) of the Funds.
As to any Fund and its corresponding Successor Fund, if this Agreement is
terminated and the exchange contemplated hereby is abandoned pursuant to the
provisions of this Section 8, this Agreement shall become void and have no
effect, without any liability on the part of any party hereto or the Trustees,
officers or shareholders of the Successor Trust or the Trustees, officers or
shareholders of the Original Fund, in respect of this Agreement.
9. WAIVER AND AMENDMENTS. At any time prior to the Exchange Date, any of the
conditions set forth in Section 4 may be waived by the Board of the Original
Fund, and any of the conditions set forth in Section 5 may be waived by the
Board of the Successor Trust, if, in the judgment of the waiving party, such
waiver will not have a material adverse effect on the benefits intended under
this Agreement to the shareholders of the Original Fund or the shareholders of
the Successor Trust, as the case may be. In addition, prior to the Exchange
Date, any provision of this Agreement may be amended or modified by the Boards
of the Original Fund and Successor Trust if such amendment or modification
would not have a material adverse effect upon the benefits intended under this
Agreement and would be consistent with the best interests of shareholders.
10. NO SURVIVAL OF REPRESENTATIONS. None of the representations and
warranties included or provided for herein shall survive consummation of the
transactions contemplated hereby.
11. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of Delaware, without giving effect to principles of
conflict of laws; provided, however, that the due authorization, execution and
delivery of this Agreement, in the case of the Original Fund, shall be
governed and construed in
A-4
<PAGE>
accordance with the laws of the state of organization of the Original Fund
without giving effect to principles of conflict of laws.
12. CAPACITY OF TRUSTEES, ETC. With respect to the Original Fund, if
organized as a trust, the names refer respectively to the trust created and,
as the case may be, the Trustees, as trustees but not individually or
personally, acting from time to time under organizational documents filed in
the Original Fund's state of organization, which is hereby referred to and is
also on file at the principal office of the Original Fund. The obligations of
the Original Fund entered into in the name or on behalf thereof by any of the
Trustees, representatives or agents are made not individually, but in such
capacities, and are not binding upon any of the Trustees, shareholders or
representatives of the Original Fund personally, but bind only the trust
property, and all persons dealing with any Fund of the Original Fund must look
solely to the trust property belonging to such Fund for the enforcement of any
claims against the Original Fund.
13. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which, when executed and delivered, shall be deemed to be an original.
IN WITNESS WHEREOF, the Original Fund and the Successor Trust have caused
this Agreement and Plan of Conversion and Termination to be executed as of the
date above first written.
[Original Fund]
ATTEST:
---------------------------- By:
---------------------------------
Title:
[Successor Trust]
ATTEST: By:
---------------------------- ---------------------------------
Title:
A-5
<PAGE>
EXHIBIT B
FOR KEYSTONE INTERNATIONAL FUND INC. (THE "FUND") ONLY
BUSINESS CORPORATION LAW OF THE
COMMONWEALTH OF MASSACHUSETTS
Chapter 156B, (S)86 provides that if a corporation proposes to take a
corporate action as to which any section of this chapter provides that a
stockholder who objects to such action shall have the right to demand payment
for his shares and an appraisal thereof, sections eighty-seven to ninety-
eight, inclusive, shall apply except as otherwise specifically provided in any
section of this chapter. Except as provided in section eighty-two and eighty-
three, no stockholder shall have such right unless (1) he files with the
corporation before the taking of the vote of the shareholders on such
corporate action, written objection to the proposed action stating that he
intends to demand payment for his shares if the action is taken and (2) his
shares are not voted in favor of the proposed action.
If the proposed Reorganization is approved by the stockholders at the
Meeting and effected by the Fund, any stockholder (1) who files with the Fund
before the taking of the vote on the approval of such action, written
objection to the proposed action stating that he or she intends to demand
payment for his or her shares if the action is taken and (2) whose shares are
not voted in favor of such action has or may have the right to demand in
writing from the Fund or the Successor Fund within twenty days after the date
of mailing to him or her of notice in writing that the corporate action has
become effective, payment for his or her shares and an appraisal of the value
thereof. The Fund and any such stockholder shall in such cases have the rights
and duties and shall follow the procedure set forth in sections 88 to 98,
inclusive, of chapter 156B of the General Laws of Massachusetts.
B-1
<PAGE>
EXHIBIT C
PROPOSED STANDARDIZED FUNDAMENTAL RESTRICTIONS
1.DIVERSIFICATION OF INVESTMENTS
The Fund may not make any investment inconsistent with the Fund's
classification as a diversified [non-diversified] investment company under
the Investment Company Act of 1940.
2.CONCENTRATION OF A FUND'S ASSETS IN A PARTICULAR INDUSTRY (ALL FUNDS OTHER
THAN THOSE LISTED BELOW)
The Fund may not concentrate its investments 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
[or in the case of Money Market Funds domestic bank money instruments]).
FOR EVERGREEN UTILITY FUND
The Fund will concentrate its investments in the utilities industry.
FOR KEYSTONE PRECIOUS METALS HOLDINGS, INC.
The Fund will concentrate its investments in industries related to the
mining, processing or dealing in gold or other precious metals and
minerals.
3.ISSUANCE OF SENIOR SECURITIES
Except as permitted under the Investment Company Act of 1940, the Fund may
not issue senior securities.
4.BORROWING
The Fund may not borrow money, except to the extent permitted by applicable
law.
5.UNDERWRITING
The Fund may not underwrite securities of other issuers, except insofar as
the Fund may be deemed an underwriter in connection with the disposition of
its portfolio securities.
6.INVESTMENT IN REAL ESTATE
The Fund may not purchase or sell real estate, except that, to the extent
permitted by applicable law, the Fund may invest in (a) securities directly
or indirectly secured by real estate, or (b) securities issued by issuers
that invest in real estate.
7.COMMODITIES
The Fund may not purchase or sell commodities or contracts on commodities
except to the extent that the 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.
C-1
<PAGE>
8.LENDING
The Fund may not make loans to other persons, except that the 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.
9.INVESTMENT IN FEDERALLY TAX EXEMPT SECURITIES (EVERGREEN TAX EXEMPT MONEY
MARKET FUND, EVERGREEN INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND, EVERGREEN
PENNSYLVANIA TAX FREE MONEY MARKET FUND, EVERGREEN SHORT-INTERMEDIATE
MUNICIPAL FUND, EVERGREEN TAX STRATEGIC FOUNDATION FUND, EVERGREEN HIGH GRADE
TAX FREE FUND, EVERGREEN GEORGIA MUNICIPAL BOND FUND, EVERGREEN NORTH CAROLINA
MUNICIPAL BOND FUND, EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND, EVERGREEN
VIRGINIA MUNICIPAL BOND FUND, EVERGREEN NEW JERSEY TAX FREE INCOME FUND,
EVERGREEN MASSACHUSETTS TAX FREE FUND, EVERGREEN NEW YORK TAX FREE FUND,
EVERGREEN PENNSYLVANIA TAX FREE FUND, EVERGREEN CALIFORNIA TAX FREE FUND, AND
EVERGREEN MISSOURI TAX FREE FUND ONLY)
The Fund will, during periods of normal market conditions, invest its
assets in accordance with applicable guidelines issued by the Securities
and Exchange Commission or its staff concerning investment in tax- exempt
securities for Funds with the words tax exempt, tax free or municipal in
their names.
C-2
<PAGE>
EXHIBIT D
INDEX
EVERGREEN FUNDS
<TABLE>
<CAPTION>
PAGE D-
-------
<S> <C>
I.Equity Funds
Evergreen Fund........................................................ 3
The Evergreen Micro Cap Fund, Inc..................................... 6
Evergreen Aggressive Growth Fund...................................... 8
Evergreen Growth and Income Fund...................................... 10
Evergreen Utility Fund................................................ 13
Evergreen Small Cap Equity Income Fund................................ 15
Evergreen Income and Growth Fund...................................... 17
Evergreen Value Fund.................................................. 20
II.Bond Funds
Evergreen U.S. Government Fund........................................ 22
Evergreen Short-Intermediate Bond Fund................................ 24
Evergreen Intermediate-Term Government Securities Fund................ 27
III.Balanced Funds
Evergreen Foundation Fund............................................. 30
Evergreen Tax Strategic Foundation Fund............................... 33
Evergreen American Retirement Fund.................................... 35
IV.International/Global Funds
Evergreen Emerging Markets Growth Fund................................ 38
Evergreen International Equity Fund................................... 40
Evergreen Global Leaders Fund......................................... 42
V.Money Market
Evergreen Money Market Fund........................................... 44
Evergreen Tax Exempt Money Market Fund................................ 47
Evergreen Treasury Money Market Fund.................................. 50
Evergreen Institutional Money Market Fund............................. 52
Evergreen Institutional Treasury Money Market Fund.................... 54
Evergreen Institutional Tax Exempt Money Market Fund.................. 55
Evergreen Pennsylvania Tax Free Money Market Fund..................... 57
VI.Municipal (Tax Free) Funds
Evergreen Georgia Municipal Bond Fund................................. 60
Evergreen North Carolina Municipal Bond Fund.......................... 62
Evergreen South Carolina Municipal Bond Fund.......................... 64
Evergreen Virginia Municipal Bond Fund................................ 66
Evergreen Florida High Income Municipal Bond Fund..................... 68
Evergreen New Jersey Tax Free Income Fund............................. 71
Evergreen Short-Intermediate Municipal Fund........................... 74
Evergreen High Grade Tax Free Fund.................................... 77
</TABLE>
D-1
<PAGE>
EVERGREEN (FORMERLY KEYSTONE) FUNDS
<TABLE>
<CAPTION>
PAGE D-
-------
<S> <C>
I.Equity Funds
Evergreen Natural Resources Fund (formerly Keystone Global Resources
and Development Fund)............................................... 80
Keystone Growth and Income Fund (S-1)................................ 82
Evergreen Select Small Cap Growth Fund (formerly Keystone
Institutional Small Capitalization Growth Fund)..................... 84
Evergreen (formerly Keystone) Omega Fund............................. 86
Keystone Precious Metals Holdings, Inc............................... 89
Keystone Strategic Growth Fund (K-2)................................. 92
II.Bond Funds
Keystone High Income Bond Fund (B-4)................................. 94
Evergreen Select (formerly Keystone) Capital Preservation and Income
Fund................................................................ 96
Evergreen Select (formerly Keystone Institutional) Adjustable Rate
Fund................................................................ 98
Evergreen (formerly Keystone) Strategic Income Fund.................. 100
III.Balanced Funds
Evergreen (formerly Keystone) Fund for Total Return.................. 102
IV.International/Global Funds
Evergreen Latin America Fund (formerly Keystone Fund of the
Americas)........................................................... 104
Evergreen (formerly Keystone) Global Opportunities Fund.............. 106
Keystone International Fund Inc...................................... 108
V.Municipal (Tax Free) Funds
Evergreen (formerly Keystone) Massachusetts Tax Free Fund............ 110
Evergreen (formerly Keystone) New York Tax Free Fund................. 110
Evergreen (formerly Keystone) Pennsylvania Tax Free Fund............. 110
Evergreen (formerly Keystone) California Tax Free Fund............... 113
Evergreen (formerly Keystone) Missouri Tax Free Fund................. 113
</TABLE>
D-2
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
EQUITY FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC EVERGREEN FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION The Fund may not invest more than 5% of its net
(S) assets, at the time of the investment in
question, in the securities of any one issuer
other than the U.S. government and its agencies
or instrumentalities. The Fund may not purchase
more than 10% of any class of securities of any
one issuer other than the U.S. government and
its agencies or instrumentalities.
- -------------------------------------------------------------------------------
2. CONCENTRATION The Fund may not concentrate its investments in
(S) any one industry, except that the Fund may
invest up to 25% of its total net assets in any
one industry; provided, that this limitation
shall not apply with respect to the Fund, to
obligations issued or guaranteed by the U.S.
government or its agencies or instrumentalities.
For purposes of this restriction, utility
companies, gas, electric, water and telephone
companies will be considered separate
industries.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR See "Borrowing"
SECURITIES
(S)
</TABLE>
D-3
<PAGE>
<TABLE>
<CAPTION>
TOPIC EVERGREEN FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
4. BORROWING (INCLUDING The Fund may not borrow except as a temporary
REVERSE REPURCHASE measure for extraordinary or emergency purposes.
AGREEMENTS) The proceeds from borrowings may be used to
(S) facilitate redemption requests which might
otherwise require the untimely disposition of
portfolio securities. The Fund may not borrow
money except from banks as a temporary measure
for extraordinary or emergency purposes (i) on
an unsecured basis, subject to the requirements
that the value of the Fund's assets, including
the proceeds of borrowings, does not at any time
become less than 300% of the Fund's
indebtedness; provided, however, that if the
value of the Fund's assets becomes less than
such amount, the Fund will reduce its borrowings
within three business days so that the value of
the Fund's assets will be at least 300% of its
indebtedness, or (ii) may make such borrowings
on a secured basis, provided that the aggregate
amount of such borrowings shall not exceed 5% of
the value of its total net assets at the time of
any such borrowing, or mortgage, pledge or
hypothecate its assets, except in an amount not
exceeding 15% of its total net assets taken at
cost to secure such borrowing.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES The Fund may not engage in the business of
OF OTHER ISSUERS underwriting the securities of other issuers.
(S)
- -------------------------------------------------------------------------------
6. REAL ESTATE The Fund may not purchase, sell or invest in
(S) real estate or interests in real estate, except
that the Fund may purchase, sell or invest in
marketable securities of companies holding real
estate or interests in real estate, including
real estate investment trusts.
- -------------------------------------------------------------------------------
7. COMMODITIES The Fund may not purchase, sell or invest in
(S) commodities or commodity contracts.
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS The Fund may not lend its funds to other
(S) persons, except through the purchase of a
portion of an issue of debt securities publicly
distributed or the entering into of repurchase
agreements. The Fund may not lend its portfolio
securities, unless the borrower is a broker,
dealer or financial institution that pledges and
maintains collateral with the Fund consisting of
cash or securities issued or guaranteed by the
U.S. government having a value at all times not
less than 100% of the current market value of
the loaned securities, including accrued
interest, provided that the aggregate amount of
such loans shall not exceed 30% of the Fund's
net assets.
- -------------------------------------------------------------------------------
9. UNSEASONED ISSUERS The Fund may not invest more than 5% of its net
(R) assets in securities of unseasoned issuers that
have been in continuous operation for less than
three years, including operating periods of
their predecessors.
- -------------------------------------------------------------------------------
10. CONTROL OR MANAGEMENT The Fund may not invest in companies for the
(R) purpose of exercising control or management.
- -------------------------------------------------------------------------------
</TABLE>
D-4
<PAGE>
<TABLE>
<CAPTION>
TOPIC EVERGREEN FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
11. SHORT SALES The Fund may not make short sales of securities
(R) unless, at the time of each such sale and
thereafter while a short position exists, the
Fund owns an equal amount of securities of the
same issue or owns securities which, without
payment by the Fund of any consideration, are
convertible into, or are exchangeable for, an
equal amount of securities of the same issue
(and provided that transactions in futures
contracts and options are not deemed to
constitute selling securities short).
- -------------------------------------------------------------------------------
12. MARGIN PURCHASES The Fund may not purchase securities on margin,
(R) except that the Fund may obtain such short-term
credits as may be necessary for the clearance of
transactions. A deposit or payment by the Fund
of initial or variation margin in connection
with financial futures contracts or related
options transactions is not considered the
purchase of a security on margin.
- -------------------------------------------------------------------------------
13. OFFICERS' AND DIRECTORS' The Fund may not purchase or retain the
OWNERSHIP OF SHARES securities of any issuer if (i) one or more
(R) officers or Trustees of the Fund or its
investment adviser individually owns or would
own, directly or beneficially, more than 1/2 of
1% of the securities of such issuer, and (ii) in
the aggregate, such persons own or would own,
directly or beneficially, more than 5% of such
securities.
- -------------------------------------------------------------------------------
14. WARRANTS The Fund may not invest more than 5% of its net
(R) assets in warrants, and, of this amount, no more
than 2% of the Fund's total net assets may be
invested in warrants that are listed on neither
the New York nor the American Stock Exchange.
- -------------------------------------------------------------------------------
15. INTERESTS IN OIL, GAS OR The Fund may not purchase, sell or invest in
OTHER MINERAL interests in oil, gas or other mineral
EXPLORATION OR exploration or development programs.
DEVELOPMENT PROGRAMS (R)
- -------------------------------------------------------------------------------
16. JOINT TRADING The Fund may not participate on a joint or joint
(R) and several basis in any trading account in any
securities. (A Fund's "bunching" of orders for
the purchase or sale of portfolio securities
with its investment adviser or accounts under
its management to reduce brokerage commissions,
to average prices among them or to facilitate
such transactions is not considered a trading
account in securities for purposes of this
restriction).
- -------------------------------------------------------------------------------
17. OPTIONS The Fund may not write, purchase or sell put or
(R) call options, or combinations thereof, except
that the Fund is authorized to write covered
call options on portfolio securities and to
purchase call options in closing purchase
transactions, provided that (i) such options are
listed on a national securities exchange, (ii)
the aggregate market value of the underlying
securities does not exceed 25% of the Fund's
total net assets, taken at current market value
on the date of any such writing, and (iii) the
Fund retains the underlying securities for so
long as call options written against them make
the shares subject to transfer upon the exercise
of any options.
</TABLE>
D-5
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
EQUITY FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC MICRO CAP FUND, INC.
- --------------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION The Fund may not invest more than 5% of its net assets,
(S) at the time of the investment in question, in the
securities of any one issuer other than the U.S.
government and its agencies or instrumentalities. The
Fund may not purchase more than 10% of any class of
securities of any one issuer other than the U.S.
government and its agencies or instrumentalities.
- --------------------------------------------------------------------------------------
2. CONCENTRATION The Fund may not concentrate its investments in any one
(S) industry, except that the Fund may invest up to 25% of
its total net assets in any one industry; provided,
that this limitation shall not apply with respect to
the Fund, to obligations issued or guaranteed by the
U.S. government or its agencies or instrumentalities.
For purposes of this restriction, utility companies,
gas, electric, water and telephone companies will be
considered separate industries.
- --------------------------------------------------------------------------------------
3. ISSUING SENIOR The Fund may not issue senior securities, as defined in
SECURITIES the Investment Company Act of 1940, as amended, except
(S) insofar as the Fund may be deemed to have issued a
senior security by reason of borrowing money in
accordance with the "Borrowing" restrictions.
- --------------------------------------------------------------------------------------
4. BORROWING (REVERSE The Fund may not borrow money except as a temporary
REPURCHASE AGREEMENTS) measure for extraordinary or emergency purposes. The
(S) proceeds from borrowings may be used to facilitate
redemption requests which might otherwise require the
untimely disposition of portfolio securities. The Fund
may not borrow money except from banks as a temporary
measure to facilitate redemption requests which might
otherwise require the untimely disposition of portfolio
investments and for extraordinary or emergency purposes
provided that the aggregate amount of such borrowings
shall not exceed 5% of the value of the Fund's total
net assets at the time of any such borrowing, or
mortgage, pledge or hypothecate its assets, except in
an amount sufficient to secure any such borrowing.
- --------------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES The Fund may not engage in the business of underwriting
OF OTHER ISSUERS the securities of other issuers.
(S)
- --------------------------------------------------------------------------------------
6. REAL ESTATE The Fund may not purchase, sell or invest in real
(S) estate or interests in real estate, except that the
Fund may purchase, sell or invest in marketable
securities of companies holding real estate or
interests in real estate, including real estate
investment trusts.
- --------------------------------------------------------------------------------------
7. COMMODITIES The Fund may not purchase, sell or invest in
(S) commodities or commodity contracts.
- --------------------------------------------------------------------------------------
</TABLE>
D-6
<PAGE>
<TABLE>
<CAPTION>
TOPIC MICRO CAP FUND, INC.
- --------------------------------------------------------------------------------------
<S> <C> <C>
8. LOANS TO OTHERS The Fund may not lend its funds to other persons,
(S) except through the purchase of a portion of an issue of
debt securities publicly distributed or the entering
into of repurchase agreements. The Fund may not lend
its portfolio securities, unless the borrower is a
broker, dealer or financial institution that pledges
and maintains collateral with the Fund consisting of
cash or securities issued or guaranteed by the U.S.
government having a value at all times not less than
100% of the current market value of the loaned
securities, including accrued interest, provided that
the aggregate amount of such loans shall not exceed 30%
of the Fund's net assets.
- --------------------------------------------------------------------------------------
9. SHORT SALES The Fund may not make short sales of securities unless,
(R) at the time of each such sale and thereafter while a
short position exists, the Fund owns an equal amount of
securities of the same issue or owns securities which,
without payment by the Fund of any consideration, are
convertible into, or are exchangeable for, an equal
amount of securities of the same issue (and provided
that transactions in futures contracts and options are
not deemed to constitute selling securities short).
- --------------------------------------------------------------------------------------
10. MARGIN PURCHASES The Fund may not purchase securities on margin, except
(R) that the Fund may obtain such short-term credits as may
be necessary for the clearance of transactions. A
deposit or payment by the Fund of initial or variation
margin in connection with financial futures contracts
or related options transactions is not considered the
purchase of a security on margin.
- --------------------------------------------------------------------------------------
11. OFFICERS' AND DIRECTORS' The Fund may not purchase or retain the securities of
OWNERSHIP OF SHARES any issuer if (i) one or more officers or Directors of
(R) the Fund or its investment adviser individually owns or
would own, directly or beneficially, more than 1/2 of
1% of the securities of such issuer, and (ii) in the
aggregate, such persons own or would own, directly or
beneficially, more than 5% of such securities.
- --------------------------------------------------------------------------------------
12. WARRANTS The Fund may not invest more than 5% of its net assets
(R) in warrants, and, of this amount, no more than 2% of
each Fund's total net assets may be invested in
warrants that are listed on neither the New York nor
the American Stock Exchange.
- --------------------------------------------------------------------------------------
13. INTERESTS IN OIL, GAS OR The Fund may not purchase, sell or invest in interests
OTHER MINERAL in oil, gas or other mineral exploration or development
EXPLORATION OR programs.
DEVELOPMENT PROGRAMS
(R)
- --------------------------------------------------------------------------------------
14. JOINT TRADING The Fund may not participate on a joint or joint and
(R) several basis in any trading account in any securities.
(A Fund's "bunching" of orders for the purchase or sale
of portfolio securities with its investment adviser or
accounts under its management to reduce brokerage
commissions, to average prices among them or to
facilitate such transactions is not considered a
trading account in securities for purposes of this
restriction).
- --------------------------------------------------------------------------------------
15. OPTIONS The Fund may not write, purchase or sell put or call
(R) options, or combinations thereof.
</TABLE>
D-7
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
EQUITY FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC AGGRESSIVE GROWTH FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION The Fund may not invest more than 5% of its
(S) total assets, at the time of the investment in
question, in the securities of any one issuer
other than the U.S. government and its agencies
or instrumentalities, except that up to 25% of
the value of a Fund's total assets may be
invested without regard to such 5% limitation.
- -------------------------------------------------------------------------------
2. CONCENTRATION The Fund may not concentrate its investments in
(S) any one industry, except that the Fund may
invest up to 25% of its total net assets in any
one industry; provided, that this limitation
shall not apply with respect to the Fund, to
obligations issued or guaranteed by the U.S.
government or its agencies or instrumentalities.
For purposes of this restriction, utility
companies, gas, electric, water and telephone
companies will be considered separate
industries.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR See "Borrowing"
SECURITIES
(S)
- -------------------------------------------------------------------------------
4. BORROWING (REVERSE The Fund may not borrow money except as a
REPURCHASE AGREEMENTS) temporary measure for extraordinary or emergency
(S) purposes. The proceeds from borrowings may be
used to facilitate redemption requests which
might otherwise require the untimely disposition
of portfolio securities. The Fund may not borrow
money except on an unsecured basis up to 25% of
its net assets, subject to the requirements that
the value of the Fund's assets, including the
proceeds of borrowings, does not at any time
become less than 300% of the Fund's
indebtedness; provided, however, that if the
value of the Fund's assets becomes less than
such amount, the Fund will reduce its borrowings
within three business days so that the value of
the Fund's assets will be at least 300% of its
indebtedness.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES The Fund may not engage in the business of
OF OTHER ISSUERS underwriting the securities of other issuers.
(S)
- -------------------------------------------------------------------------------
6. REAL ESTATE The Fund may not purchase, sell or invest in
(S) real estate or interests in real estate, except
that the Fund may purchase, sell or invest in
marketable securities of companies holding real
estate or interests in real estate, including
real estate investment trusts.
- -------------------------------------------------------------------------------
</TABLE>
D-8
<PAGE>
<TABLE>
<CAPTION>
TOPIC AGGRESSIVE GROWTH FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
7. COMMODITIES The Fund may not purchase, sell or invest in
(S) physical commodities unless acquired as a result
of ownership of securities or other instruments
(but this shall not prevent a Fund from
purchasing or selling options and futures
contracts or from investing in securities or
other instruments backed by physical
commodities).
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS The Fund may not lend its funds to other
(S) persons, except through the purchase of a
portion of an issue of debt securities publicly
distributed or the entering into of repurchase
agreements. The Fund may not lend its portfolio
securities, unless the borrower is a broker,
dealer or financial institution that pledges and
maintains collateral with the Fund consisting of
cash or securities issued or guaranteed by the
U.S. government having a value at all times not
less than 100% of the current market value of
the loaned securities, including accrued
interest, provided that the aggregate amount of
such loans shall not exceed 30% of the Fund's
net assets.
- -------------------------------------------------------------------------------
9. INTERESTS IN OIL, GAS OR The Fund may not purchase, sell or invest in
OTHER MINERAL interests in oil, gas or other mineral
EXPLORATION OR exploration or development programs.
DEVELOPMENT PROGRAMS
(R)
</TABLE>
D-9
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
EQUITY FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<S> <C> <C>
TOPIC GROWTH AND INCOME FUND
- ---------------------------------------------------------------------------
1. DIVERSIFICATION The Fund may invest more than 5% of its net
(S) assets, at the time of the investment in
question, in the securities of any one
issuer other than the U.S. government and
its agencies or instrumentalities. The Fund
may not purchase more than 10% of any class
of securities of any one issuer other than
the U.S. government and its agencies or
instrumentalities.
- ---------------------------------------------------------------------------
2. CONCENTRATION The Fund may not concentrate its
(S) investments in any one industry, except
that each Fund may invest up to 25% of its
total net assets in any one industry.
- ---------------------------------------------------------------------------
3. ISSUING SENIOR SECURITIES The Fund may not issue senior securities,
(S) as defined in the Investment Company Act of
1940, except that this restriction shall
not be deemed to prohibit the Fund from (i)
making any permitted borrowings, mortgages
or pledges, (ii) lending its portfolio
securities, or (iii) entering into
permitted repurchase transactions.
- ---------------------------------------------------------------------------
4. BORROWING (INCLUDING The Fund may not borrow money except from
REVERSE REPURCHASE banks as a temporary measure for
AGREEMENTS) extraordinary or emergency purposes,
(S) provided that the aggregate amount of such
borrowings shall not exceed 5% of the value
of the Fund's total assets at the time of
such borrowing; or mortgage, pledge or
hypothecate its assets, except in an amount
not exceeding 15% of its assets taken at
cost to secure such borrowing.
- ---------------------------------------------------------------------------
5. UNDERWRITING SECURITIES The Fund will not underwrite any issue of
OF OTHER ISSUERS securities except as they may be deemed an
(S) underwriter under the Securities Act of
1933 in connection with the sale of
securities in accordance with their
investment objective, policies and
limitations.
- ---------------------------------------------------------------------------
6. REAL ESTATE The Fund may not purchase, sell or invest
(S) in real estate or interests in real estate,
except that the Fund may purchase, sell or
invest in marketable securities of
companies holding real estate or interests
in real estate, including real estate
investment trusts.
- ---------------------------------------------------------------------------
7. COMMODITIES The Fund may not purchase, sell or invest
(S) in commodities or commodity contracts.
- ---------------------------------------------------------------------------
8. LOANS TO OTHERS The Fund may not lend its funds to other
(S) persons, except through the purchase of a
portion of an issue of debt securities
publicly distributed. The Fund may not lend
its portfolio securities, unless the
borrower is a broker, dealer or financial
institution that pledges and maintains
collateral with the Fund consisting of cash
or securities issued or guaranteed by the
U.S. government having the value at all
times not less than 100% of the value of
the loaned securities, provided that the
aggregate amount of such loans shall not
exceed 30% of the Fund's net assets.
</TABLE>
D-10
<PAGE>
<TABLE>
<S> <C> <C>
TOPIC GROWTH AND INCOME FUND
- -------------------------------------------------------------------------------
9. UNSEASONED ISSUERS The Fund may not invest more than 10% of its
(R) total net assets in securities of unseasoned
issuers that have been in continuous operation
for less than three years, including operating
periods of their predecessors.
- -------------------------------------------------------------------------------
10. CONTROL OR MANAGEMENT The Fund may not invest in companies for the
(R) purpose of exercising control or management.
- -------------------------------------------------------------------------------
11. SHORT SALES The Fund may not make short sales of securities
(R) unless, at the time of each such sale and
thereafter while a short position exists, the
Fund owns an equal amount of securities of the
same issue or owns securities which, without
payment by the Fund of any consideration, are
convertible into, or are exchangeable for, an
equal amount of securities of the same issue.
The Fund may, as a defensive strategy, make
short sales of securities
- -------------------------------------------------------------------------------
12. MARGIN PURCHASES The Fund may not purchase securities on margin,
(R) except that the Fund may obtain such short-term
credits as may be necessary for the clearance of
transactions. A deposit or payment by of Fund of
initial or variation margin in connection with
financial futures contracts or related options
transactions is not considered the purchase of a
security on margin.
- -------------------------------------------------------------------------------
13. OTHER INVESTMENT The Fund may purchase the securities of other
COMPANIES investment companies, except to the extent such
(R) purchases are not permitted by applicable law.
- -------------------------------------------------------------------------------
14. OFFICERS' AND DIRECTORS' The Fund may not purchase or retain the
OWNERSHIP OF SHARES securities of any issuer if (i) one or more
(R) officers or Trustees of the fund or its
investment adviser individually owns or would
own, directly or beneficially, more than 1/2 of
1% of the securities of such issuer, and (ii) in
the aggregate, such persons own or would own,
directly or beneficially, more than 5% of such
securities. Portfolio securities of the Fund may
not be purchased from or sold or loaned to its
Adviser or affiliate thereof, or any of their
directors, officers or employees.
- -------------------------------------------------------------------------------
15. WARRANTS The Fund may not invest more than 5% of its net
(R) assets in warrants and, of this amount, no more
than 2% of the Fund's net assets may be invested
in warrants that are listed on neither the New
York nor the American Stock Exchange.
- -------------------------------------------------------------------------------
16. INTERESTS IN OIL, GAS OR The Fund may not purchase, sell or invest in
OTHER MINERAL interests in oil, gas or other mineral
EXPLORATION OR exploration or development programs.
DEVELOPMENT PROGRAMS (R)
- -------------------------------------------------------------------------------
17. JOINT TRADING The Fund may not participate on a joint or joint
(R) and several basis in any trading account in any
securities. (The "bunching" of orders or the
purchase or sale of portfolio securities with
its investment adviser or accounts under its
management to reduce brokerage commissions, to
average prices among them or to facilitate such
transactions is not considered a trading account
in securities for purposes of this restriction).
- -------------------------------------------------------------------------------
</TABLE>
D-11
<PAGE>
<TABLE>
<S> <C> <C>
TOPIC GROWTH AND INCOME FUND
- -------------------------------------------------------------------------------
18. OPTIONS The Fund may not write, purchase or sell put or
(R) call options, or combinations thereof, except
that the Fund is authorized to write covered
call options on portfolio securities and to
purchase call options in closing purchase
transactions, provided that (i) such options are
listed on a national securities exchange, (ii)
the aggregate market value of the underlying
securities does not exceed 25% of the Fund's net
assets, taken at current market value on the
date of any such writing, and (iii) the Fund
retains the underlying securities for so long as
call options written against them make the
shares subject to transfer upon the exercise of
any options.
</TABLE>
D-12
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
EQUITY FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC UTILITY FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION Fund may not invest more than 5% of its total
(S) assets, at the time of the investment in
question, in the securities of any one issuer
other than the U.S. government and its agencies
or instrumentalities, except that up to 25% of
the value of the fund's total assets may be
invested without regard to such 5% limitation.
The Fund may not purchase more than 10% of the
outstanding voting securities of any one issuer.
- -------------------------------------------------------------------------------
2. CONCENTRATION The Fund will not invest more than 25% of its
(S) total assets (valued at the time of investment)
in securities of companies engaged principally
in any one industry other than the utilities
industry, except that this restriction does not
apply to cash or cash items and securities
issued or guaranteed by the U.S. government, its
agencies or instrumentalities.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR Fund will not issue senior securities except
SECURITIES (S) that each Fund may borrow money and engage in
reverse repurchase agreements in amounts up to
one-third or the value of its total assets,
including the amounts borrowed and except to the
extent a Fund may enter into futures contracts
- -------------------------------------------------------------------------------
4. BORROWING (INCLUDING Fund may borrow money and engage in reverse
REVERSE REPURCHASE repurchase agreements in amounts up to one-third
AGREEMENTS) of the value of its total assets, including the
(S) amounts borrowed and except to the extent a Fund
may enter into futures contracts. The Funds will
not borrow money or engage in reverse repurchase
agreements for investment leverage, but rather
as a temporary, extraordinary or emergency
measure to facilitate management of their
portfolios by enabling them to, for example,
meet redemption requests when the liquidation of
portfolio securities is deemed to be
inconvenient or disadvantageous. The Fund will
not purchase any securities while borrowings in
excess of 5% of total assets are outstanding.
The Fund will not mortgage, pledge or
hypothecate any assets except to secure
permitted borrowings, and then the Fund may
pledge assets having a market value not
exceeding the lesser of the dollar amounts
borrowed or 15% of the value of total assets at
the time of borrowing. Margin deposits for the
purchase and sale of financial futures contracts
and related options and segregation or
collateral arrangements made in connection with
options activities are not deemed to be a
pledge.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES The Fund will not underwrite any issue of
OF OTHER ISSUERS securities except as they may be deemed an
(S) underwriter under the Securities Act of 1933 in
connection with the sale of securities in
accordance with their investment objective,
policies and limitations.
- -------------------------------------------------------------------------------
</TABLE>
D-13
<PAGE>
<TABLE>
<CAPTION>
TOPIC UTILITY FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
6. REAL ESTATE Fund will not buy or sell real estate although
(S) each Fund may invest in securities of companies
whose business involves the purchase or sale of
real estate or in securities which are secured
by real estate or interests in real estate. The
Fund will not invest in limited partnership
interests in real estate.
- -------------------------------------------------------------------------------
7. COMMODITIES Fund will not purchase or sell commodities or
(S) commodity contracts; however, the Fund may enter
into futures contracts on financial instruments
or currency and sell or buy options on such
contracts.
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS Fund will not lend any of its assets, except
(S) portfolio securities up to 15% of the value of
its total assets. This does not prevent the Fund
from purchasing or holding corporate or
government bonds, debentures, notes, agreements,
or other transactions which are permitted by the
Fund's investment objective and policies or the
Declaration of Trust governing the Fund.
- -------------------------------------------------------------------------------
9. SHORT SALES The Fund will not sell any securities short.
(R)
- -------------------------------------------------------------------------------
10. MARGIN PURCHASES The Fund may not purchase securities on margin,
(R) except that the Fund may obtain such short-term
credits as may be necessary for the clearance of
transactions. A deposit or payment by a Fund of
initial or variation margin in connection with
financial futures contracts or related options
transactions is not considered the purchase of a
security on margin.
- -------------------------------------------------------------------------------
11. OTHER INVESTMENT The Fund may invest in securities of other
COMPANIES investment companies. The Fund will purchase
(R) securities of investment companies only in open-
market transactions involving customary broker's
commissions. However, these limitations are not
applicable if the securities are acquired in a
merger, consolidation or acquisition of assets.
It should be noted that investment companies
incur certain expenses such as management fees
and therefore any investment by a Fund in shares
of another investment company would be subject
to such duplicate expenses.
</TABLE>
D-14
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
EQUITY FUNDS
"S" Fundamental Restriction to be Standardized
"R" Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<S> <C> <C>
TOPIC SMALL CAP EQUITY INCOME FUND
- -------------------------------------------------------------------------------
1. DIVERSIFICATION The Fund may not invest more than 5% of its
(S) total assets, at the time of the investment in
question, in the securities of any one issuer
other than the U.S government and its agencies
or instrumentalities, except that up to 25% of
the value of a Fund's total assets may be
invested without regard to such 5% limitation.
The Fund may not purchase more than 10% of any
class of securities of any one issuer other than
the U.S. government and its agencies or
instrumentalities.
- -------------------------------------------------------------------------------
2. CONCENTRATION The Fund may not invest 25% or more of its total
(S) assets in the securities of issuers conducting
their principal business activities in any one
industry; provided, that this limitation shall
not apply with respect to the Fund, to
obligations issued or guaranteed by the U.S.
government or its agencies or instrumentalities.
For purposes of this restriction, utility
companies, gas, electric, water and telephone
companies will be considered separate
industries.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR The Fund may not borrow money, issue senior
SECURITIES securities or enter into reverse repurchase
(S) agreements, except for temporary or emergency
purposed, and then not for leveraging, in then
in amounts not in excess of 10% of the value of
the Fund's total assets at the time of such
borrowing.
- -------------------------------------------------------------------------------
4. BORROWING (INCLUDING The Fund may not borrow money, issue senior
REVERSE REPURCHASE securities or enter into reverse repurchase
AGREEMENTS) agreements, except for temporary or emergency
(S) purposed, and then not for leveraging, in then
in amounts not in excess of 10% of the value of
the Fund's total assets at the time of such
borrowing; or mortgage, pledge or hypothecate
any assets except in connection with any such
borrowing and in amounts not in excess of the
lesser of the dollar amounts borrowed or 10% of
the value of the Fund's total assets at the time
of such borrowing, provided that the Fund will
not purchase any securities at any time when
borrowings, including reverse repurchase
agreements, exceed 5% of the value of its total
assets. The Fund will not enter into reverse
repurchase agreements exceeding 5% of the value
of its total assets.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES The Fund will not underwrite any issue of
OF OTHER ISSUERS securities except as they may be deemed an
(S) underwriter under the Securities Act of 1933 in
connection with the sale of securities in
accordance with their investment objective,
policies and limitations.
- -------------------------------------------------------------------------------
</TABLE>
D-15
<PAGE>
<TABLE>
<S> <C> <C>
TOPIC SMALL CAP EQUITY INCOME FUND
- -------------------------------------------------------------------------------
6. REAL ESTATE The Fund may not purchase or invest in real
(S) estate or interests in real estate (but this
shall not prevent the Fund from investing in
marketable securities issued by companies such
as real estate investment trusts which deal in
real estate or interests therein).
The Fund may invest without limit in investments
related to real estate, including REITS
- -------------------------------------------------------------------------------
7. COMMODITIES The Fund may not purchase, sell or invest in
(S) physical commodities unless acquired as a result
of ownership of securities or other instruments
(but this shall not prevent the Fund from
purchasing or selling options and futures
contracts or from investing in securities or
other instruments backed by physical
commodities).
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS The Fund may not lend its funds to other
(S) persons, except through the purchase of a
portion of an issue debt securities publicly
distributed or the entering into of repurchase
agreements. The Fund may not lend its portfolio
securities, unless the borrower is a broker,
dealer or financial institution that pledges and
maintains collateral with the Fund consisting of
cash or securities issued or guaranteed by the
U.S. government having a value at all times not
less than 100% of the current market value of
the loaned securities, including accrued
interest, provided that the aggregate amount of
such loans shall not exceed 30% of the Fund's
total assets.
- -------------------------------------------------------------------------------
9. OTHER INVESTMENT The Fund may purchase the securities of other
COMPANIES investment companies, except to the extent such
(R) purchases are not permitted by applicable law.
- -------------------------------------------------------------------------------
10. INTERESTS IN OIL, GAS OR The Fund may not purchase, sell or invest in
OTHER MINERAL interests in oil, gas or other mineral
EXPLORATION OR exploration or development programs.
DEVELOPMENT PROGRAMS
(R)
</TABLE>
D-16
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS AND POLICIES
EQUITY FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC INCOME AND GROWTH FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION The Fund may invest more than 5% of its net
(S) assets, at the time of the investment in
question, in the securities of any one issuer
other than the U.S. government and its agencies
or instrumentalities. The Fund may not purchase
more than 10% of any class of securities of any
one issuer other than the U.S. government and
its agencies or instrumentalities.
- -------------------------------------------------------------------------------
2. CONCENTRATION The Fund may not concentrate its investments in
(S) any one industry, except that each Fund may
invest up to 25% of its total net assets in any
one industry.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR (See "Borrowing")
SECURITIES
(S)
- -------------------------------------------------------------------------------
4. BORROWING (INCLUDING The Fund may not borrow money except from banks
REVERSE REPURCHASE as a temporary measure to facilitate redemption
AGREEMENTS) requests which might otherwise require the
(S) untimely disposition of portfolio investments
and for extraordinary or emergency purposes,
provided that the aggregate amount of such
borrowings shall not exceed 5% of the value of
the Fund's total net assets at the time of any
such borrowing, or mortgage, pledge or
hypothecate its assets, except in an amount
sufficient to secure any such borrowing.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES The Fund will not underwrite any issue of
OF OTHER ISSUERS securities except as they may be deemed an
(S) underwriter under the Securities Act of 1933 in
connection with the sale of securities in
accordance with their investment objective,
policies and limitations.
- -------------------------------------------------------------------------------
6. REAL ESTATE The Fund may not purchase, sell or invest in
(S) real estate or interests in real estate, except
that the Fund may purchase, sell or invest in
marketable securities of companies holding real
estate or interests in real estate, including
real estate investment trusts.
The Fund may invest up to 15% of its net assets
in investments related to real estate, including
REITS.
- -------------------------------------------------------------------------------
7. COMMODITIES The Fund may not purchase, sell or invest in
(S) commodities or commodity contracts.
</TABLE>
D-17
<PAGE>
<TABLE>
<CAPTION>
TOPIC INCOME AND GROWTH FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
8. LOANS TO OTHERS The Fund may not lend its funds to other
(S) persons, except through the purchase of a
portion of an issue of debt securities publicly
distributed. The Fund may not lend its portfolio
securities, unless the borrower is a broker,
dealer or financial institution that pledges and
maintains collateral with the Fund consisting of
cash, letters of credit or securities issued or
guaranteed by the U.S. government having a
value at all times not less than 100% of the
value of the loaned securities, including
accrued interest, provided that the aggregate
amount of such loans shall not exceed 30% of the
Fund's net assets.
- -------------------------------------------------------------------------------
9. UNSEASONED ISSUERS The Fund may not invest more than 5% of its
(R) total assets in securities of unseasoned issuers
that have been in continuous operation for less
than three years, including operating periods of
their predecessors.
- -------------------------------------------------------------------------------
10. CONTROL OR MANAGEMENT The Fund may not invest in companies for the
(R) purpose of exercising control or management.
- -------------------------------------------------------------------------------
11. SHORT SALES The Fund may not make short sales of securities
(R) unless, at the time of each such sale and
thereafter while a short position exists, the
Fund owns an equal amount of securities of the
same issue or owns securities which, without
payment by the Fund of any consideration, are
convertible into, or are exchangeable for, an
equal amount of securities of the same issue.
The Fund may, as a defensive strategy, make
short sales of securities.
- -------------------------------------------------------------------------------
12. MARGIN PURCHASES The Fund may not purchase securities on margin,
(R) except that the Fund may obtain such short-term
credits as may be necessary for the clearance of
transactions. A deposit or payment by a Fund of
initial or variation margin in connection with
financial futures contracts or related options
transactions is not considered the purchase of a
security on margin.
- -------------------------------------------------------------------------------
13. OTHER INVESTMENT The Fund may purchase the securities of other
COMPANIES investment companies, except to the extent such
(R) purchases are not permitted by applicable law.
- -------------------------------------------------------------------------------
14. OFFICERS' AND DIRECTORS' The Fund may not purchase or retain the
OWNERSHIP OF SHARES securities of any issuer if (i) one or more
(R) officers or Trustees of the Fund or its
investment adviser individually owns or would
own, directly or beneficially, more than 1/2 of
1% of the securities of such issuer, and (ii) in
the aggregate, such persons own or would own,
directly or beneficially, more than 5% of such
securities. Portfolio securities of the Fund may
not be purchased from or sold or loaned to its
Adviser or affiliate thereof, or any of their
directors, officers or employees.
- -------------------------------------------------------------------------------
15. WARRANTS The Fund may not invest more than 5% of its net
(R) assets in warrants and, of this amount, no more
than 2% of the Fund's net assets may be invested
in warrants that are listed on neither the New
York nor the American Stock Exchange.
- -------------------------------------------------------------------------------
16. INTERESTS IN OIL, GAS OR The Fund may not purchase, sell or invest in
OTHER MINERAL interests in oil, gas or other mineral
EXPLORATION OR exploration or development programs.
DEVELOPMENT PROGRAMS (R)
</TABLE>
D-18
<PAGE>
<TABLE>
<CAPTION>
TOPIC INCOME AND GROWTH FUND
- --------------------------------------------------------------------------------------
<S> <C> <C>
17. JOINT TRADING The Fund may not participate on a joint or joint and
(R) several basis in any trading account in any securities.
(The "bunching" of orders or the purchase or sale of
portfolio securities with its investment adviser or
accounts under its management to reduce brokerage
commissions, to average prices among them or to
facilitate such transactions is not considered a
trading account in securities for purposes of this
restriction).
- --------------------------------------------------------------------------------------
18. OPTIONS The Fund may not write, purchase or sell put or call
(R) options, or combinations thereof, except that the Fund
is authorized to write covered call options on
portfolio securities and to purchase call options in
closing purchase transactions, provided that (i) such
options are listed on a national securities exchange,
(ii) the aggregate market value of the underlying
securities does not exceed 25% of the Fund's net
assets, taken at current market value on the date of
any such writing, and (iii) the Fund retains the
underlying securities for so long as call options
written against them make the shares subject to
transfer upon the exercise of any options.
</TABLE>
D-19
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
EQUITY FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC VALUE FUND
- ----------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION Fund may not invest more than 5% of its total
(S) assets, at the time of the investment in
question, in the securities of any one issuer
other than the U.S. government and its
agencies or instrumentalities, except that up
to 25% of the value of the fund's total
assets may be invested without regard to such
5% limitation. The Fund may not purchase more
than 10% of the outstanding voting securities
of any one issuer.
- ----------------------------------------------------------------------------
2. CONCENTRATION The Fund will not invest 25% or more of the
(S) value of their total assets in any one
industry except the Fund may invest 25% or
more of its total assets in securities issued
or guaranteed by the U.S. government, its
agencies or instrumentalities.
- ----------------------------------------------------------------------------
3. ISSUING SENIOR The Fund will not issue senior securities
SECURITIES except that the Fund may borrow money
(S) directly or through reverse repurchase
agreements as a temporary measure for
extraordinary or emergency purposes and then
only in amounts not in excess of 10% of the
value of its total assets; provided that
while borrowings exceed 5% of the Fund's
total assets, any such borrowings will be
repaid before additional investments are
made. The Fund will not purchase any
securities while borrowings in excess of 5%
of the value of its total assets are
outstanding.
- ----------------------------------------------------------------------------
4. BORROWING (INCLUDING The Fund may borrow money directly or through
REVERSE REPURCHASE reverse repurchase agreements as a temporary
AGREEMENTS) measure for extraordinary or emergency
(S) purposes and then only in amounts not in
excess of 10% of the value of its total
assets; provided that while borrowings exceed
5% of the Fund's total assets, any such
borrowings will be repaid before additional
investments are made. The Fund will not
purchase any securities while borrowings in
excess of 5% of the value of its total assets
are outstanding. The Fund will not borrow
money or engage in reverse repurchase
agreements for investment leverage purposes.
The Fund will not mortgage, pledge or
hypothecate any assets except to secure
permitted borrowings. In these cases, the
Fund may pledge assets having a market value
not exceeding the lesser of the dollar
amounts borrowed or 10% of the value of total
assets at the time of borrowing. Margin
deposits for the purchase and sale of
financial futures contracts and related
options and segregation or collateral
arrangements made in connection with options
activities are not deemed to be a pledge.
- ----------------------------------------------------------------------------
5. UNDERWRITING SECURITIES The Fund will not underwrite any issue of
OF OTHER ISSUERS securities except as they may be deemed an
(S) underwriter under the Securities Act of 1933
in connection with the sale of securities in
accordance with their investment objective,
policies and limitations.
</TABLE>
D-20
<PAGE>
<TABLE>
<CAPTION>
TOPIC VALUE FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
6. REAL ESTATE Fund will not buy or sell real estate although
(S) the Fund may invest in securities of companies
whose business involves the purchase or sale of
real estate or in securities which are secured
by real estate or interests in real estate. The
Fund will not invest in limited partnership
interests in real estate.
- -------------------------------------------------------------------------------
7. COMMODITIES Fund will not purchase or sell commodities or
(S) commodity contracts; however, the Fund may enter
into futures contracts on financial instruments
or currency and sell or buy options on such
contracts.
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS The Fund will not lend any of its assets except
(S) that it may purchase or hold corporate or
government bonds, debentures, notes,
certificates or indebtedness or other debt
securities of an issuer, repurchase agreements
or other transactions which are permitted by the
Fund's investment objectives and policies or the
Declaration of Trust by which the Fund is
governed or lend portfolio securities valued at
not more than 5% of its total assets to broker-
dealers.
- -------------------------------------------------------------------------------
9. CONTROL OR MANAGEMENT The Fund may not invest in companies for the
(R) purpose of exercising control or management.
- -------------------------------------------------------------------------------
10. SHORT SALES The Fund will not sell any securities short.
(R)
- -------------------------------------------------------------------------------
11. MARGIN PURCHASES The Fund may not purchase securities on margin,
(R) except that the Fund may obtain such short-term
credits as may be necessary for the clearance of
transactions. A deposit or payment by a Fund of
initial or variation margin in connection with
financial futures contracts or related options
transactions is not considered the purchase of a
security on margin.
- -------------------------------------------------------------------------------
12. OTHER INVESTMENT The Fund will purchase securities of investment
COMPANIES companies only in open-market transactions
(R) involving customary broker's commissions.
However, these limitations are not applicable if
the securities are acquired in a merger,
consolidation or acquisition of assets. It
should be noted that investment companies incur
certain expenses such as management fees and
therefore any investment by a Fund in shares of
another investment company would be subject to
such duplicate expenses.
- -------------------------------------------------------------------------------
13. INTERESTS IN OIL, GAS OR The Fund will not purchase interests in oil, gas
OTHER MINERAL or other mineral exploration or development
EXPLORATION OR programs or leases, although it may purchase the
DEVELOPMENT PROGRAMS (R) publicly traded securities of companies engaged
in such activities.
- -------------------------------------------------------------------------------
14. RESTRICTED SECURITIES The Fund will not invest more than 10% of their
(R) net assets in securities subject to restrictions
on resale under the Securities Act of 1933.
</TABLE>
D-21
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
BOND FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC U.S. GOVERNMENT FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION With respect to 75% of the value of its assets,
(S) the Fund will not purchase securities of any one
issuer (other than cash, cash items or
securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities)
if as a result more than 5% of the value of its
total assets would be invested in the securities
of the issuer. The Fund will not acquire more
than 10% of the outstanding voting securities of
any one issuer.
- -------------------------------------------------------------------------------
2. CONCENTRATION The Fund will not invest more than 25% of the
(S) value of its total assets in any one industry,
except the Fund may invest more than 25% of its
total assets in securities issued or guaranteed
by the U.S. Government, its agencies or
instrumentalities.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR The Fund will not issue senior securities.
SECURITIES
(S)
- -------------------------------------------------------------------------------
4. BORROWING (INCLUDING The Fund may not borrow money except as a
REVERSE REPURCHASE temporary measure to facilitate redemption
AGREEMENTS) requests or for extraordinary or emergency
(S) purposes. The Fund may borrow money directly or
through reverse repurchase agreements as a
temporary measure for extraordinary or emergency
purposes in an amount up to one-third of the
value of its total assets, including the amounts
borrowed. The Fund will not purchase any
securities while borrowings in excess of 5% of
the value of its total assets are outstanding.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES The Fund will not underwrite any issue of
OF OTHER ISSUERS securities except as they may be deemed an
(S) underwriter under the Securities Act of 1933 in
connection with the sale of securities in
accordance with their investment objectives,
policies and limitations.
- -------------------------------------------------------------------------------
6. REAL ESTATE The Fund may not buy or sell real estate
(S) although the Fund may invest in securities of
companies whose business involves the purchase
or sale of real estate or in securities which
are secured by real estate or interest in real
estate. However, subject to its permitted
investments, the Fund may invest in companies
which invest in real estate.
- -------------------------------------------------------------------------------
7. COMMODITIES The Fund will not purchase or sell commodities
(S) or commodity contracts; however, the Fund may
enter into futures contracts on financial
instruments or currency and sell or buy options
on such contracts. However, subject to their
permitted investments, the Fund may invest in
companies which invest in commodities or
commodities contracts.
- -------------------------------------------------------------------------------
</TABLE>
D-22
<PAGE>
<TABLE>
<CAPTION>
TOPIC U.S. GOVERNMENT FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
8. LOANS TO OTHERS The Fund will not lend any of its assets except
(S) portfolio securities in accordance with its
investment objectives, policies and limitations.
The Fund may lend securities pursuant to
agreements requiring that the loans be
continuously secured by cash, securities of the
U.S. Government or its agencies, or any
combination of cash and such securities, as
collateral equal at all times to 100% of the
market value of the securities lent. Such loans
will not be made if, as a result, the aggregate
amount of all outstanding securities loans for
the Fund exceed one-third of the value of the
Fund's total assets taken at fair market value.
In order to generate additional income, the Fund
may lend portfolio securities a short-term or
long-term basis to broker/dealers, banks, or
other institutional borrowers of securities. The
Fund will not lend any of its assets except
portfolio securities up to one-third of its
total assets.
- -------------------------------------------------------------------------------
9. SHORT SALES The Fund will not sell any securities short.
(R)
- -------------------------------------------------------------------------------
10. MARGIN PURCHASES The Fund will not purchase securities on margin,
(R) except that the Fund may obtain such short-term
credits as may be necessary for the clearance of
transactions. A deposit or payment by a Fund of
initial or variation margin in connection with
financial futures contracts or related options
transactions is not considered the purchase of a
security on margin.
- -------------------------------------------------------------------------------
11. PLEDGING The Fund will not mortgage, pledge or
(R) hypothecate any assets except to secure
permitted borrowings. Margin deposits for the
purchase and sale of financial futures contracts
and related options activities are not deemed to
be a pledge.
</TABLE>
D-23
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
BOND FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC SHORT-INTERMEDIATE BOND FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION With respect to 75% of the value of its assets,
(S) the Fund will not purchase securities of any one
issuer (other than cash, cash items or
securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities)
if as a result more than 5% of the value of its
total assets would be invested in the securities
of the issuer.
- -------------------------------------------------------------------------------
2. CONCENTRATION The Fund will not invest more than 25% of the
(S) value of its total assets in any one industry
except the Fund may invest more than 25% of its
total assets in securities issued or guaranteed
by the U.S. government, its agencies or
instrumentalities.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR See "Borrowing"
SECURITIES
(S)
- -------------------------------------------------------------------------------
4. BORROWING (INCLUDING The Fund may not borrow money except as a
REVERSE REPURCHASE temporary measure to facilitate redemption
AGREEMENTS) requests or for extraordinary or emergency
(S) purposes. The Fund may borrow only in amounts
not in excess of 5% of the value of its total
assets in order to meet redemption requests when
the liquidation of portfolio securities is
deemed to be inconvenient or disadvantageous.
The entry by the Fund into futures contracts
shall be deemed a borrowing. Any such borrowings
need not be collateralized. The Fund will not
purchase any securities while borrowings in
excess of 5% of the value of their total assets
are outstanding. The Fund may also enter into
reverse repurchase agreements.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES The Fund will not underwrite any issue of
OF OTHER ISSUERS securities except as they may be deemed an
(S) underwriter under the Securities Act of 1933 in
connection with the sale of securities in
accordance with their investment objectives,
policies and limitations.
- -------------------------------------------------------------------------------
6. REAL ESTATE The Fund may not buy or sell real estate
(S) although the Fund may invest in securities of
companies whose business involves the purchase
or sale of real estate or in securities which
are secured by real estate or interests in real
estate.
- -------------------------------------------------------------------------------
7. COMMODITIES The Fund will not purchase or sell commodities
(S) or commodity contracts; however, the Fund may
enter into futures contracts on financial
instruments or currency and sell or buy options
on such contracts. However, subject to their
permitted investments, the Fund may invest in
companies which invest in commodities or
commodities contracts.
- -------------------------------------------------------------------------------
</TABLE>
D-24
<PAGE>
<TABLE>
<CAPTION>
TOPIC SHORT-INTERMEDIATE BOND FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
8. LOANS TO OTHERS The Fund will not lend portfolio securities
(S) valued at more than 15% of its total assets to
broker-dealers.
The Fund may lend securities pursuant to
agreements requiring that the loans be
continuously secured by cash, securities of the
U.S. Government or its agencies, or any
combination of cash and such securities, as
collateral equal at all times to 100% of the
market value of the securities lent. The
collateral received when a Fund lends portfolio
securities must be valued daily and, should the
market value of the loaned securities increase,
the borrower must furnish additional collateral
to the lending Fund. During the time portfolio
securities are on loan, the borrower pays the
Fund any dividends or interest paid on such
securities. Loans are subject to termination at
the option of the Fund or the borrower. A Fund
may pay reasonable administrative and custodial
fees in connection with a loan and may pay a
negotiated portion of the interest earned on the
cash or equivalent collateral to the borrower or
placing broker. A Fund does not have the right
to vote securities on loan, but would terminate
the loan and regain the right to vote if that
were considered important with respect to the
investment. Any loan may be terminated by either
party upon reasonable notice to the other party.
However, loans are made only to the borrower
deemed by the Adviser to be of good standing and
when, in the judgement of the Adviser, the
consideration which can be earned currently from
such securities loans justifies the attendant
risk. Such loans will not be made if, as a
result, the aggregate amount of all outstanding
securities loans for the Fund exceed 15% of the
value of the Fund's total assets taken at fair
market value.
- -------------------------------------------------------------------------------
9. SHORT SALES The Fund will not make short sales of securities
(R) 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 use of short sales will allow a Fund
to retain certain bonds in its portfolio longer
than it would without such sales. To the extent
that the Fund receives the current income
produced by such bonds for a longer period than
it might otherwise, the Fund's investment
objective is furthered.
- -------------------------------------------------------------------------------
10. MARGIN PURCHASES The Fund will not purchase securities on margin,
(R) except that the Fund may obtain such short-term
credits as may be necessary for the clearance of
transactions. A deposit or payment by a Fund of
initial or variation margin in connection with
financial futures contracts or related options
transactions is not considered the purchase of a
security on margin.
- -------------------------------------------------------------------------------
</TABLE>
D-25
<PAGE>
<TABLE>
<CAPTION>
TOPIC SHORT-INTERMEDIATE BOND FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
11. OTHER INVESTMENT The Fund will purchase securities of investment
COMPANIES companies only in open-market transactions
(R) involving customary broker's commissions. It
should be noted that investment companies incur
certain expenses such as management fees and
therefore any investment by a Fund in shares of
another investment company would be subject to
such duplicate expenses. It is the position of
the Securities and Exchange Commission's Staff
that certain nongovernmental issuers of CMOs and
REMICs constitute investment companies pursuant
to the Investment Company Act of 1940 and either
(a) investments in such instruments are subject
to the limitations set forth above or (b) the
issuers of such instruments have received orders
from the Securities and Exchange Commission
exempting such instruments from the definition
of investment company.
- -------------------------------------------------------------------------------
12. PLEDGING The Fund will not mortgage, pledge or
(R) hypothecate any assets except to secure
permitted borrowings. In these cases, the Fund
may pledge assets having a market value not
exceeding the lesser of the dollar amounts
borrowed or 15% of the value of total assets at
the time of borrowing. Margin deposits for the
purchase and sale of financial futures contracts
and related options and segregation or
collateral arrangements made in connection with
options activities are not deemed to be a
pledge.
- -------------------------------------------------------------------------------
13. RESTRICTED SECURITIES The Fund will not invest more than 10% of its
(R) net assets in securities subject to restrictions
on resale under the Securities Act of 1933.
- -------------------------------------------------------------------------------
14. ILLIQUID SECURITIES The Fund will not invest more than 10% of its
(R) net assets in illiquid securities, including
repurchase agreements providing for settlement
in more than seven days after notice and certain
securities determined by the Trustees not to be
liquid.
The Fund which invests in Rule 144A securities
believes that the Staff of the SEC has left the
question of determining the liquidity of all
restricted securities (eligible for resale under
the Rule) for determination by the Trustees. The
Fund may invest up to 10% of its net assets in
illiquid securities.
</TABLE>
D-26
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
BOND FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<S> <C> <C>
TOPIC INTERMEDIATE TERM GOVERNMENT SECURITIES FUND
- -------------------------------------------------------------------------------
1. DIVERSIFICATION With respect to 75% of the value of its assets,
(S) the Fund will not purchase securities of any one
issuer (other than cash, cash items or
securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities)
if as a result more than 5% of the value of its
total assets would be invested in the securities
of the issuer. The Fund will not acquire more
than 10% of the outstanding voting securities of
any one issuer.
- -------------------------------------------------------------------------------
2. CONCENTRATION N/A
(S)
- -------------------------------------------------------------------------------
3. ISSUING SENIOR See "Borrowing"
SECURITIES (S)
- -------------------------------------------------------------------------------
4. BORROWING (INCLUDING The Fund may not borrow money except as a
REVERSE REPURCHASE temporary measure to facilitate redemption
AGREEMENTS) requests or for extraordinary or emergency
(S) purposes. The Fund will not borrow money except
as a temporary measure for extraordinary or
emergency purposes in an amount up to one-third
of the value of total assets, including the
amounts borrowed. Any borrowing will be done
from a bank and to the extent such borrowing
exceeds 5% of the value of a Fund's total
assets, asset coverage of at least 300% is
required. In the event that such asset coverage
shall at any time fall below 300%, the Fund
shall within three days thereafter or such
longer period as the Securities and Exchange
Commission may prescribe by rules and
regulations, reduce the amounts of its
borrowings to such an extent that the asset
coverage of such borrowings shall be at least
300%. This borrowing provision is included
solely to facilitate the orderly sale of
portfolio securities to accommodate heavy
redemption requests if they should occur and is
not for investment purposes. All borrowings will
be repaid before making additional investments
and any interest paid on such borrowings will
reduce income.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES The Fund will not underwrite any issue of
OF OTHER ISSUERS securities except as they may be deemed an
(S) underwriter under the Securities Act of 1933 in
connection with the sale of securities in
accordance with their investment objectives,
policies and limitations.
- -------------------------------------------------------------------------------
6. REAL ESTATE The Fund may not purchase or sell real estate,
(S) real estate limited partnership interests, and
interests in a pool of securities that are
secured by interests in real estate. However,
the Fund may invest in securities of companies
whose business involves the purchase or sale of
real estate or in securities which are secured
by real estate or interests in real estate.
</TABLE>
D-27
<PAGE>
<TABLE>
<S> <C> <C>
TOPIC INTERMEDIATE TERM GOVERNMENT SECURITIES FUND
- -------------------------------------------------------------------------------
7. COMMODITIES The Fund may not purchase commodities or
(S) commodity contracts. However, subject to their
permitted investments, the Fund may invest in
companies which invest in commodities contracts.
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS The Fund may not make loans, except that (a) the
(S) Fund may purchase or hold debt instruments in
accordance with its investment objective and
policies; (b) the Fund may enter into repurchase
agreements, and (c) the Fund may engage in
securities lending as described in its
Prospectus and Statement of Additional
Information.
- -------------------------------------------------------------------------------
9. CONTROL OR MANAGEMENT The Fund may not invest in companies for the
(R) purpose of exercising control.
- -------------------------------------------------------------------------------
10. SHORT SALES The Fund will not sell any securities short.
(R)
- -------------------------------------------------------------------------------
11. MARGIN PURCHASES The Fund will not purchase securities on margin,
(R) except that the Fund may obtain such short-term
credits as may be necessary for the clearance of
transactions. A deposit or payment by a Fund of
initial or variation margin in connection with
financial futures contracts or related options
transactions is not considered the purchase of a
security on margin.
- -------------------------------------------------------------------------------
12. OTHER INVESTMENT The Fund may only purchase securities of other
COMPANIES investment companies which are money market
(R) funds and CMOs and REMICs deemed to be
investment companies. In each case the Funds
will only make such purchases to the extent
permitted by the Investment Company Act of 1940
and the rules and regulations thereunder.
However, these limitations are not applicable if
the securities are acquired in a merger,
consolidation or acquisition of assets. It
should be noted that investment companies incur
certain expenses such as management fees and
therefore any investment by a Fund in shares of
another investment company would be subject to
such duplicate expenses. It is the position of
the Securities and Exchange Commission's Staff
that certain nongovernmental issuers of CMOs and
REMICS constitute investment companies pursuant
to the Investment Company Act of 1940 and either
(a) investments in such instruments are subject
to the limitations set forth above or (b) the
issuers of such instruments have received orders
from the Securities and Exchange Commission
exempting such instruments from the definition
of investment company.
- -------------------------------------------------------------------------------
13. OFFICERS' AND DIRECTORS' The Fund may not purchase or retain the
OWNERSHIP OF SHARES securities of any issuer if (i) one or more
(R) officers or Trustees of a Fund or its investment
adviser individually owns or would own, directly
or beneficially more than 1/2 of 1% of the
securities of such issuer, and (ii) in the
aggregate, such persons would own, directly or
beneficially, more than 5% of such securities.
- -------------------------------------------------------------------------------
14. INTERESTS IN OIL, GAS OR The Fund will not purchase interests in oil, gas
OTHER MINERAL or other mineral exploration or development
EXPLORATION OR programs or leases, although the Fund may
DEVELOPMENT PROGRAMS purchase the securities of other issuers which
(R) invest in or sponsor such programs.
</TABLE>
D-28
<PAGE>
<TABLE>
<S> <C> <C>
TOPIC INTERMEDIATE TERM GOVERNMENT SECURITIES FUND
- ------------------------------------------------------------------------------
15. OPTIONS The Fund may not write or purchase puts, calls,
(R) options or combinations thereof.
- ------------------------------------------------------------------------------
16. PLEDGING The Fund will not mortgage, pledge or
(R) hypothecate any assets except to secure
permitted borrowings. The Fund may do so in
amounts up to 10% of its total assets. Margin
deposits for the purchase and sale of financial
futures contracts and related options and
segregation or collateral arrangements made in
connection with options activities are not
deemed to be a pledge.
</TABLE>
D-29
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
BALANCED FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC FOUNDATION FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION The Fund may not invest more than 5% of its
(S) total assets, at the time of the investment in
question, in the securities of any one issuer
other than the U.S. government and its agencies
or instrumentalities, except that up to 25% of
the value of a Fund's total assets may be
invested without regard to such 5% limitation.
The Fund may not purchase more than 10% of any
class of securities of any one issuer other than
the U.S. government and its agencies or
instrumentalities.
- -------------------------------------------------------------------------------
2. CONCENTRATION The Fund may not invest 25% or more of its total
(S) assets in the securities of issuers conducting
their principal business activities in any one
industry; provided, that this limitation shall
not apply with respect to the Fund, to
obligations issued or guaranteed by the U.S.
government or its agencies or instrumentalities.
For purposes of this restriction, utility
companies, gas, electric, water and telephone
companies will be considered separate
industries.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR The Fund may not issue senior securities, except
SECURITIES as permitted by the Investment Company Act of
(S) 1940.
- -------------------------------------------------------------------------------
4. BORROWING (INCLUDING The Fund may not borrow money except from banks
REVERSE REPURCHASE as a temporary measure to facilitate redemption
AGREEMENTS) requests which might otherwise require the
(S) untimely disposition of portfolio investments
and for extraordinary or emergency purposes
provided that the aggregate amount of such
borrowings shall not exceed 5% of the value of
the Fund's total assets at the time of any such
borrowing, or mortgage, pledge or hypothecate
its assets, except in an amount sufficient to
secure any such borrowing. The Fund may not
enter into repurchase agreements or reverse
repurchase agreements.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES The Fund will not underwrite any issue of
OF OTHER ISSUERS securities except as they may be deemed an
(S) underwriter under the Securities Act of 1933 in
connection with the sale of securities in
accordance with their investment objectives,
policies and limitations.
- -------------------------------------------------------------------------------
6. REAL ESTATE The Fund may not purchase, sell or invest in
(S) real estate or interests in real estate, except
that the Fund may purchase, sell or invest in
marketable securities of companies holding real
estate or interests in real estate, including
real estate investment trusts.
- -------------------------------------------------------------------------------
7. COMMODITIES The Fund may not purchase, sell or invest in
(S) commodities or commodity contracts.
- -------------------------------------------------------------------------------
</TABLE>
D-30
<PAGE>
<TABLE>
<CAPTION>
TOPIC FOUNDATION FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
8. LOANS TO OTHERS The Fund may not lend its funds to other
(S) persons, except through the purchase of a
portion of an issue of debt securities publicly
distributed. The Fund may not lend its portfolio
securities, unless the borrower is a broker,
dealer or financial institution that pledges and
maintains collateral with the Fund consisting of
cash or securities issued or guaranteed by the
U.S. government having a value at all times not
less than 100% of the current market value of
the loaned securities, including accrued
interest, provided that the aggregate amount of
such loans shall not exceed 30% of the Fund's
total assets.
- -------------------------------------------------------------------------------
9. UNSEASONED ISSUERS The Fund may not invest in the securities of
(R) unseasoned issuers that have been in continuous
operation for less than three years, including
operating periods of their predecessors.
- -------------------------------------------------------------------------------
10. CONTROL OR MANAGEMENT The Fund may not invest in companies for the
(R) purpose of exercising control or management.
- -------------------------------------------------------------------------------
11. SHORT SALES The Fund may not make short sales of securities
(R) unless, at the time of each such sale and
thereafter while a short position exists, the
Fund owns the securities sold or securities
convertible into or carrying rights to acquire
such securities.
- -------------------------------------------------------------------------------
12. MARGIN PURCHASES The Fund may not purchase securities on margin,
(R) except that each Fund may obtain such short-term
credits as may be necessary for the clearance of
transactions. A deposit or payment by a Fund of
initial or variation margin in connection with
financial futures contracts or related options
transactions is not considered the purchase of a
security on margin.
- -------------------------------------------------------------------------------
13. OTHER INVESTMENT The Fund may purchase the securities of other
COMPANIES investment companies, except to the extent such
(R) purchases are not permitted by applicable law.
- -------------------------------------------------------------------------------
14. OFFICERS' AND DIRECTORS' The Fund may not purchase or retain the
OWNERSHIP OF SHARES securities of any issuer if (i) one or more
(R) officers or Trustees of the Fund or its
investment adviser individually owns or would
own, directly or beneficially, more than 1/2 of
1% of the securities of such issuer, and (ii) in
the aggregate, such persons own or would own,
directly or beneficially, more than 5% of such
securities. Portfolio securities of the Fund may
not be purchased from or sold or loaned to its
Adviser or any affiliate thereof, or any of
their directors, officers or employees.
- -------------------------------------------------------------------------------
15. WARRANTS The Fund may not invest more than 5% of its net
(R) assets in warrants and, of this amount, no more
than 2% of each Fund's net assets may be
invested in warrants that are listed on neither
the New York nor the American Stock Exchange.
- -------------------------------------------------------------------------------
16. INTERESTS IN OIL, GAS OR The Fund may not purchase, sell or invest in
OTHER MINERAL interests in oil, gas or other mineral
EXPLORATION OR exploration or development programs.
DEVELOPMENT PROGRAMS
(R)
- -------------------------------------------------------------------------------
</TABLE>
D-31
<PAGE>
<TABLE>
<CAPTION>
TOPIC FOUNDATION FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
17. JOINT TRADING The Fund may not participate on a joint or joint
(R) and several basis in any trading account in any
securities. (The "bunching of orders or the
purchase or sale of portfolio securities with
its investment adviser or accounts under its
management to reduce brokerage commissions, to
average prices among them or to facilitate such
transactions is not considered a trading account
in securities for purposes of this restriction).
- -------------------------------------------------------------------------------
18. OPTIONS The Fund may not write, purchase or sell put or
(R) call options, or combinations thereof.
</TABLE>
D-32
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
BALANCED FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC TAX STRATEGIC FOUNDATION FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION The Fund may not invest more than 5% of its
(S) total assets, at the time of the investment in
question, in the securities of any one issuer
other than the U.S. government and its agencies
or instrumentalities, except that up to 25% of
the value of the Fund's total assets may be
invested without regard to such 5% limitation.
For this purpose each political subdivision,
agency, or instrumentality and each multi-state
agency of which a state is a member, and each
public authority which issues industrial
development bonds on behalf of a private entity,
will be regarded as a separate issuer for
determining the diversification of the Fund's
portfolio. The Fund may not purchase more than
10% of the voting securities of any one issuer
other than the U.S. government and its agencies
or instrumentalities.
- -------------------------------------------------------------------------------
2. CONCENTRATION The Fund may not invest 25% or more of its total
(S) assets in the securities of issuers conducting
their principal business activities in any one
industry; provided, that this limitation shall
not apply with respect to the Fund, (i) to
obligations issued or guaranteed by the U.S.
government or its agencies or instrumentalities,
or (ii) to municipal securities. For purposes of
this restriction, utility companies, gas,
electric, water and telephone companies will be
considered separate industries.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR The Fund may not borrow money, issue senior
SECURITIES securities or enter into reverse repurchase
(S) agreements, except for temporary or emergency
purposes, and not for leveraging, and then in
amounts not in excess of 10% of the value of the
Fund's total assets at the time of such
borrowing.
- -------------------------------------------------------------------------------
4. BORROWING (INCLUDING The Fund may not borrow money, issue senior
REVERSE REPURCHASE securities or enter into reverse repurchase
AGREEMENTS) agreements, except for temporary or emergency
(S) purposes, and not for leveraging, and then in
amounts not in excess of 10% of the value of the
Fund's total assets at the time of such
borrowing; or mortgage, pledge or hypothecate
any assets except in connection with any such
borrowing and in amounts not in excess of the
lesser of the dollar amounts borrowed or 10% of
the value of the Fund's total assets at the time
of such borrowing, provided that the Fund will
not purchase any securities at any time when
borrowings, including reverse repurchase
agreements, exceed 5% of the value of its total
assets. The Fund will not enter into reverse
repurchase agreements exceeding 5% of the value
of its total assets.
- -------------------------------------------------------------------------------
</TABLE>
D-33
<PAGE>
<TABLE>
<CAPTION>
TOPIC TAX STRATEGIC FOUNDATION FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
5. UNDERWRITING SECURITIES The Fund will not underwrite any issue of
OF OTHER ISSUERS securities except as they may be deemed an
(S) underwriter under the Securities Act of 1933 in
connection with the sale of securities in
accordance with their investment objectives,
policies and limitations.
- -------------------------------------------------------------------------------
6. REAL ESTATE The Fund may not purchase, sell or invest in
(S) real estate or interests in real estate, except
that (i) the Fund may purchase, sell or invest
in marketable securities of companies holding
real estate or interests in real estate,
including real estate investment trusts, and
(ii) the Fund may purchase, sell or invest in
municipal securities or other debt securities
secured by real estate or interests therein.
- -------------------------------------------------------------------------------
7. COMMODITIES The Fund may not purchase, sell or invest in
(S) commodities, commodity contracts or financial
futures contracts.
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS The Fund may not lend its funds to other
(S) persons, except through the purchase of a
portion of an issue of debt securities publicly
distributed or the entering into of repurchase
agreements. The Fund may not lend its portfolio
securities, unless the borrower is a broker,
dealer or financial institution that pledges and
maintains collateral with the Fund consisting of
cash or securities issued or guaranteed by the
U.S. government having a value at all times not
less than 100% of the current market value of
the loaned securities, including accrued
interest, provided that the aggregate amount of
such loans shall not exceed 30% of the Fund's
total assets.
- -------------------------------------------------------------------------------
9. INVESTMENT IN FEDERALLY As a matter of fundamental policy, 80% of the
TAX EXEMPT SECURITIES Fund's investments in Municipal Securities will
(S) be invested in Municipal Securities, the
interest from which is not subject to the
federal alternative minimum tax.
- -------------------------------------------------------------------------------
10. OTHER INVESTMENT The Fund may purchase the securities of other
COMPANIES investment companies, except to the extent such
(R) purchases are not permitted by applicable law.
- -------------------------------------------------------------------------------
11. INTERESTS IN OIL, GAS OR The Fund may not purchase, sell or invest in
OTHER MINERAL interests in oil, gas or other mineral
EXPLORATION OR exploration or development programs.
DEVELOPMENT PROGRAMS (R)
</TABLE>
D-34
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
BALANCED FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC AMERICAN RETIREMENT FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION The Fund may not invest more than 5% of its
(S) total assets, at the time of the investment in
question, in the securities of any one issuer
other than the U.S. government and its agencies
or instrumentalities. The Fund may not purchase
more than 10% of any class of securities of any
one issuer other than the U.S. government and
its agencies or instrumentalities.
- -------------------------------------------------------------------------------
2. CONCENTRATION The Fund may not invest 25% or more of its total
(S) assets in the securities of issuers conducting
their principal business activities in any one
industry; provided, that this limitation shall
not apply with respect to the Fund, to
obligations issued or guaranteed by the U.S.
government or its agencies or instrumentalities.
For purposes of this restriction, utility
companies, gas, electric, water and telephone
companies will be considered separate
industries.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR The Fund may not issue senior securities, except
SECURITIES as permitted by the Investment Company Act of
(S) 1940.
- -------------------------------------------------------------------------------
4. BORROWING (INCLUDING The Fund may not borrow money except from banks
REVERSE REPURCHASE as a temporary measure to facilitate redemption
AGREEMENTS) requests which might otherwise require the
(S) untimely disposition of portfolio investments
and for extraordinary or emergency purposes and
for leverage, provided that the aggregate amount
of such borrowings shall not exceed 5% of the
value of the Fund's total assets at the time of
any such borrowing, or mortgage, pledge or
hypothecate its assets, except in an amount
sufficient to secure any such borrowing. The
Fund may not enter into repurchase agreements or
reverse repurchase agreements.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES The Fund will not underwrite any issue of
OF OTHER ISSUERS securities except as they may be deemed an
(S) underwriter under the Securities Act of 1933 in
connection with the sale of securities in
accordance with their investment objectives,
policies and limitations.
- -------------------------------------------------------------------------------
6. REAL ESTATE The Fund may not purchase, sell or invest in
(S) real estate or interests in real estate, except
that the Fund may purchase, sell or invest in
marketable securities of companies holding real
estate or interests in real estate, including
real estate investment trusts.
- -------------------------------------------------------------------------------
7. COMMODITIES The Fund may not purchase, sell or invest in
(S) commodities or commodity contracts.
- -------------------------------------------------------------------------------
</TABLE>
D-35
<PAGE>
<TABLE>
<CAPTION>
TOPIC AMERICAN RETIREMENT FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
8. LOANS TO OTHERS The Fund may not lend its funds to other
(S) persons, except through the purchase of a
portion of an issue of debt securities publicly
distributed. The Fund may not lend its portfolio
securities, unless the borrower is a broker,
dealer or financial institution that pledges and
maintains collateral with the Fund consisting of
cash or securities issued or guaranteed by the
U.S. government having a value at all times not
less than 100% of the current market value of
the loaned securities, provided that the
aggregate amount of such loans shall not exceed
30% of the Fund's net assets.
- -------------------------------------------------------------------------------
9. UNSEASONED ISSUERS The Fund may not invest in the securities of
(R) unseasoned issuers that have been in continuous
operation for less than three years, including
operating periods of their predecessors.
- -------------------------------------------------------------------------------
10. CONTROL OR MANAGEMENT The Fund may not invest in companies for the
(R) purpose of exercising control or management.
- -------------------------------------------------------------------------------
11. SHORT SALES The Fund may not make short sales of securities
(R) unless, at the time of each such sale and
thereafter while a short position exists, the
Fund owns the securities sold or securities
convertible into or carrying rights to acquire
such securities.
- -------------------------------------------------------------------------------
12. MARGIN PURCHASES The Fund may not purchase securities on margin,
(R) except that each Fund may obtain such short-term
credits as may be necessary for the clearance of
transactions. A deposit or payment by a Fund of
initial or variation margin in connection with
financial futures contracts or related options
transactions is not considered the purchase of a
security on margin.
- -------------------------------------------------------------------------------
13. OTHER INVESTMENT The Fund may purchase the securities of other
COMPANIES investment companies, except to the extent such
(R) purchases are not permitted by applicable law.
- -------------------------------------------------------------------------------
14. OFFICERS' AND DIRECTORS' The Fund may not purchase or retain the
OWNERSHIP OF SHARES securities of any issuer if (i) one or more
(R) officers or Trustees of a Fund or its investment
adviser individually owns or would own, directly
or beneficially, more than 1/2 of 1% of the
securities of such issuer, and (ii) in the
aggregate, such persons own or would own,
directly or beneficially, more than 5% of such
securities. Portfolio securities of the Fund may
not be purchased from or sold or loaned to its
Adviser or any affiliate thereof, or any of
their directors, officers or employees.
- -------------------------------------------------------------------------------
15. WARRANTS The Fund may not invest more than 5% of its net
(R) assets in warrants and, of this amount, no more
than 2% of the Fund's net assets may be invested
in warrants that are listed on neither the New
York nor the American Stock Exchange.
- -------------------------------------------------------------------------------
16. INTERESTS IN OIL, GAS OR The Fund may not purchase, sell or invest in
OTHER MINERAL interests in oil, gas or other mineral
EXPLORATION OR exploration or development programs.
DEVELOPMENT PROGRAMS
(R)
- -------------------------------------------------------------------------------
</TABLE>
D-36
<PAGE>
<TABLE>
<CAPTION>
TOPIC AMERICAN RETIREMENT FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
17. JOINT TRADING The Fund may not participate on a joint or joint
(R) and several basis in any trading account in any
securities. (The "bunching of orders or the
purchase or sale of portfolio securities with
its investment adviser or accounts under its
management to reduce brokerage commissions, to
average prices among them or to facilitate such
transactions is not considered a trading account
in securities for purposes of this restriction).
- -------------------------------------------------------------------------------
18. OPTIONS The Fund may not write, purchase or sell put or
(R) call options, or combinations thereof, except
that the Fund is authorized (i) to write call
options traded on a national securities exchange
against no more than 15% of the value of the
equity securities (including securities
convertible into equity securities) held in its
portfolio, provided that the Fund owns the
optioned securities or securities convertible
into or carrying rights to acquire the optioned
securities and (ii) to purchase call options in
closing purchase transactions.
- -------------------------------------------------------------------------------
19. INVESTMENT IN EQUITY The Fund may not invest more than 75% of the
SECURITIES value of its total assets in equity securities
(R) (including securities convertible into equity
securities).
</TABLE>
D-37
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
INTERNATIONAL/GLOBAL FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC EMERGING MARKETS GROWTH FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION The Fund may not invest more than 5% of its
(S) total assets, at the time of the investment in
question, in the securities of any one issuer
other than the U.S. government and its agencies
or instrumentalities and repurchase agreements
collateralized by such securities except that up
to 25% of the value of a Fund's total assets may
be invested without regard to such 5%
limitation. The Fund may not purchase more than
10% of the outstanding voting securities of any
one issuer.
- -------------------------------------------------------------------------------
2. CONCENTRATION The Fund will not invest 25% or more of the
(S) value of the total assets in any one industry
except that it may invest more than 25% of its
total assets in securities issued or guaranteed
by the U.S. government, its agencies or
instrumentalities. For purposes of this
restriction, utility companies, gas, electric,
water and telephone companies will be considered
separate industries.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR The Fund will not issue senior securities except
SECURITIES that the Fund may borrow money directly or
(S) through reverse repurchase agreements in amounts
up to one-third of the value of its total
assets, including the amounts borrowed and
except to the extent that a Fund may enter into
futures contracts.
- -------------------------------------------------------------------------------
4. BORROWING (INCLUDING The Fund will not issue senior securities except
REPURCHASE AGREEMENTS that the Fund may borrow money directly or
AND REVERSE REPURCHASE through reverse repurchase agreements in amounts
AGREEMENTS) up to one-third of the value of its total
(S) assets, including the amounts borrowed and
except to the extent that a Fund may enter into
futures contracts. The Fund will not borrow
money or engage in reverse repurchase agreements
for investment leverage, but rather as a
temporary, extraordinary or emergency measure to
facilitate management of its portfolios by
enabling them to, for example, meet redemption
requests when the liquidation of portfolio
securities is deemed to be inconvenient or
disadvantageous. A Fund will not purchase any
securities while borrowings in excess of 5% of
its total assets are outstanding.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES The Fund will not underwrite any issue of
OF OTHER ISSUERS securities except as it may be deemed an
(S) underwriter under the Securities Act of 1933, as
amended (the "1933 Act") in connection with the
sale of securities in accordance with its
investment objectives, policies and limitations.
</TABLE>
D-38
<PAGE>
<TABLE>
<CAPTION>
TOPIC EMERGING MARKETS GROWTH FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
6. REAL ESTATE The Fund will not purchase or sell real estate,
(S) including limited partnership interests in real
estate, although the Fund may invest in
securities of companies whose business involves
the purchase or sale of real estate or in
securities which are secured by real estate or
interests in real estate.
- -------------------------------------------------------------------------------
7. COMMODITIES The Fund will not invest in commodities except
(S) that the Fund reserves the right to engage in
transactions including futures contracts,
options and forward contracts with respect to
securities indices or currencies.
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS The Fund will not lend any of its assets, except
(S) portfolio securities up to one-third of the
value of its total assets. This does not prevent
the Fund from purchasing or holding corporate or
government bonds, debentures, notes,
certificates of indebtedness or other debt
securities of an issuer, repurchase agreements,
or other transactions which are permitted by the
Fund's investment objectives and policies or the
Declaration of Trust governing the Fund.
- -------------------------------------------------------------------------------
9. CONTROL OR MANAGEMENT The Fund may not invest in companies for the
(R) purpose of exercising control or management.
- -------------------------------------------------------------------------------
10. SHORT SALES The Fund will not sell any securities short.
(R)
- -------------------------------------------------------------------------------
11. MARGIN PURCHASES The Fund may not purchase securities on margin,
(R) except that each Fund may obtain such short-term
credits as may be necessary for the clearance of
transactions. A deposit or payment by a Fund of
initial or variation margin in connection with
financial futures contracts or related options
transactions is not considered the purchase of a
security on margin.
- -------------------------------------------------------------------------------
12. PLEDGING The Fund will not mortgage, pledge or
(R) hypothecate any assets except to secure
permitted borrowings. In these cases, a Fund may
pledge assets having a market value not
exceeding the lesser of the dollar amounts
borrowed or 15% of the value of total assets at
the time of borrowing. For purposes of this
limitation, the following are not deemed to be
pledges: margin deposits for the purchase and
sale of financial futures contracts and related
options and segregation or collateral
arrangements made in connection with options
activities or the purchase of securities on a
when-issued basis.
</TABLE>
D-39
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
INTERNATIONAL/GLOBAL FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC INTERNATIONAL EQUITY FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION The Fund may not invest more than 5% of its
(S) total assets, at the time of the investment in
question, in the securities of any one issuer
other than the U.S. government and its agencies
or instrumentalities and repurchase agreements
collateralized by such securities except that up
to 25% of the value of a Fund's total assets may
be invested without regard to such 5%
limitation. The Fund may not purchase more than
10% of the outstanding voting securities of any
one issuer.
- -------------------------------------------------------------------------------
2. CONCENTRATION The Fund will not invest 25% or more of the
(S) value of the total assets in any one industry
except that it may invest more than 25% of its
total assets in securities issued or guaranteed
by the U.S. government, its agencies or
instrumentalities. For purposes of this
restriction, utility companies, gas, electric,
water and telephone companies will be considered
separate industries.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR The Fund will not issue senior securities except
SECURITIES that the Fund may borrow money directly or
(S) through reverse repurchase agreements in amounts
up to one-third of the value of its total
assets, including the amounts borrowed and
except to the extent that a Fund may enter into
futures contracts.
- -------------------------------------------------------------------------------
4. BORROWING (INCLUDING The Fund will not issue senior securities except
REPURCHASE AGREEMENTS that the Fund may borrow money directly or
AND REVERSE REPURCHASE through reverse repurchase agreements in amounts
AGREEMENTS) up to one-third of the value of its total
(S) assets, including the amounts borrowed and
except to the extent that a Fund may enter into
futures contracts. The Fund will not borrow
money or engage in reverse repurchase agreements
for investment leverage, but rather as a
temporary, extraordinary or emergency measure to
facilitate management of its portfolios by
enabling it to, for example, meet redemption
requests when the liquidation of portfolio
securities is deemed to be inconvenient or
disadvantageous. A Fund will not purchase any
securities while borrowings in excess of 5% of
its total assets are outstanding.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES The Fund will not underwrite any issue of
OF OTHER ISSUERS securities except as it may be deemed an
(S) underwriter under the Securities Act of 1933, as
amended in connection with the sale of
securities in accordance with its investment
objectives, policies and limitations.
</TABLE>
D-40
<PAGE>
<TABLE>
<CAPTION>
TOPIC INTERNATIONAL EQUITY FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
6. REAL ESTATE The Fund will not purchase or sell real estate,
(S) including limited partnership interests in real
estate, although the Fund may invest in
securities of companies whose business involves
the purchase or sale of real estate or in
securities which are secured by real estate or
interests in real estate.
- -------------------------------------------------------------------------------
7. COMMODITIES The Fund will not invest in commodities except
(S) that the Fund reserves the right to engage in
transactions including futures contracts,
options and forward contracts with respect to
securities indices or currencies.
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS The Fund will not lend any of its assets, except
(S) portfolio securities up to one-third of the
value of its total assets. This does not prevent
the Fund from purchasing or holding corporate or
government bonds, debentures, notes,
certificates of indebtedness or other debt
securities of an issuer, repurchase agreements,
or other transactions which are permitted by the
Fund's investment objectives and policies or the
Declaration of Trust governing the Fund.
- -------------------------------------------------------------------------------
9. CONTROL OR MANAGEMENT The Fund may not invest in companies for the
(R) purpose of exercising control or management.
- -------------------------------------------------------------------------------
10. SHORT SALES The Fund will not sell any securities short.
(R)
- -------------------------------------------------------------------------------
11. MARGIN PURCHASES The Fund may not purchase securities on margin,
(R) except that each Fund may obtain such short-term
credits as may be necessary for the clearance of
transactions. A deposit or payment by a Fund of
initial or variation margin in connection with
financial futures contracts or related options
transactions is not considered the purchase of a
security on margin.
- -------------------------------------------------------------------------------
12. PLEDGING The Fund will not mortgage, pledge or
(R) hypothecate any assets except to secure
permitted borrowings. In these cases, a Fund may
pledge assets having a market value not
exceeding the lesser of the dollar amounts
borrowed or 15% of the value of total assets at
the time of borrowing. For purposes of this
limitation, the following are not deemed to be
pledges: margin deposits for the purchase and
sale of financial futures contracts and related
options and segregation or collateral
arrangements made in connection with options
activities or the purchase of securities on a
when-issued basis.
</TABLE>
D-41
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
INTERNATIONAL/GLOBAL FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC GLOBAL LEADERS FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION The Fund may not invest more than 5% of its
(S) total assets, at the time of the investment in
question, in the securities of any one issuer
other than the U.S. government and its agencies
or instrumentalities.
The Fund may not purchase more than 10% of any
class of securities of any one issuer other than
the U.S. government and its agencies or
instrumentalities.
- -------------------------------------------------------------------------------
2. CONCENTRATION The Fund will not invest 25% or more of the
(S) value of its total assets in any one industry
except that it may invest more than 25% of its
total assets in securities issued or guaranteed
by the U.S. government, its agencies or
instrumentalities. For purposes of this
restriction, utility companies, gas, electric,
water and telephone companies will be considered
separate industries.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR The Fund may not borrow money, issue senior
SECURITIES securities or enter into reverse repurchase
(S) agreements, except for temporary or emergency
purposes, and not for leveraging, and then in
amounts not in excess of 10% of the value of the
Fund's total assets at the time of such
borrowing.
- -------------------------------------------------------------------------------
4. BORROWING (INCLUDING The Fund may not borrow money, issue senior
REPURCHASE AGREEMENTS securities or enter into reverse repurchase
AND REVERSE REPURCHASE agreements, except for temporary or emergency
AGREEMENTS) purposes, and not for leveraging, and then in
(S) amounts not in excess of 10% of the value of the
Fund's total assets at the time of such
borrowing; or mortgage, pledge or hypothecate
any assets except in connection with any such
borrowing and in amounts not in excess of the
lesser of the dollar amounts borrowed or 10% of
the value of the Fund's total assets at the time
of such borrowing.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES The Fund will not underwrite any issue of
OF OTHER ISSUERS securities except as it may be deemed an
(S) underwriter under the Securities Act of 1933, as
amended in connection with the sale of
securities in accordance with its investment
objectives, policies and limitations.
- -------------------------------------------------------------------------------
6. REAL ESTATE The Fund may not purchase or invest in real
(S) estate or interests in real estate (although
they may purchase securities secured by real
estate or interests therein or issued by
companies or investment trusts which invest in
real estate or interests therein).
- -------------------------------------------------------------------------------
7. COMMODITIES The Fund will not purchase, sell or invest in
(S) commodities or commodity contracts; provided,
however, that this policy does not prevent the
Fund from purchasing and selling currency
futures contracts and entering into forward
foreign currency contracts.
</TABLE>
D-42
<PAGE>
<TABLE>
<CAPTION>
TOPIC GLOBAL LEADERS FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
8. LOANS TO OTHERS The Fund may not lend its funds to other
(S) persons, except through the purchase of a
portion of an issue of debt securities publicly
distributed or the entering into of repurchase
agreements. The Fund may not lend its portfolio
securities, unless the borrower is a broker-
dealer or financial institution that pledges
and maintains collateral with the Fund
consisting of cash or securities issued or
guaranteed by the U.S. government having a
value of at all times not less than 100% of the
current market-value of the loaned securities,
including accrued interest, provided that the
aggregate amount of such loans shall not exceed
30% of the Fund's net assets.
- -------------------------------------------------------------------------------
9. CONTROL OR MANAGEMENT The Fund may not invest in companies for the
(R) purpose of exercising control or management.
- -------------------------------------------------------------------------------
10. MARGIN PURCHASES The Fund may not purchase securities on margin,
(R) except that the Fund may obtain such short-term
credits as may be necessary for the clearance
of transactions. A deposit or payment by a Fund
of initial or variation margin in connection
with financial futures contracts or related
options transactions is not considered the
purchase of a security on margin.
</TABLE>
D-43
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
MONEY MARKET FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC MONEY MARKET FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION The Fund may not invest more than 5% of its
(S) total assets, at the time of the investment in
question, in the securities of any one issuer
other than the U.S. government and its agencies
or instrumentalities. The Fund may not purchase
more than 10% of any class of securities of any
one issuer other than the U.S. government and
its agencies or instrumentalities.
For this purpose each political subdivision,
agency, or instrumentality and each multi-state
agency of which a state is a member, and each
public authority which issues industrial
development bonds on behalf of a private entity,
will be regarded as a separate issuer for
determining the diversification of the Fund's
portfolio.
- -------------------------------------------------------------------------------
2. CONCENTRATION The Fund may not invest 25% or more of its total
(S) assets in the securities of issuers conducting
their principal business activities in any one
industry; provided, that this limitation shall
not apply to obligations issues or guaranteed by
the U.S. government or its agencies or
instrumentalities.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR The Fund may not borrow money, issue senior
SECURITIES securities or enter into reverse repurchase
(S) agreements, except for temporary or emergency
purposes, and not for leveraging, and then in
amounts not in excess of 10% of the value of the
Fund's total assets at the time of such
borrowing.
- -------------------------------------------------------------------------------
4. BORROWING (INCLUDING The Fund may not borrow money, issue senior
REVERSE REPURCHASE securities or enter into reverse repurchase
AGREEMENTS) agreements, except for temporary or emergency
(S) purposes, and not for leveraging, and then in
amounts not in excess of 10% of the value of the
Fund's total assets at the time of such
borrowing; or mortgage, pledge or hypothecate
any assets except in connection with any such
borrowing and in amounts not in excess of the
lesser of the dollar amounts borrowed or 10% of
the value of the Fund's total assets at the time
of such borrowing, provided that the Fund will
not purchase any securities at times when any
borrowings (including reverse repurchase
agreements) are outstanding. The Fund will not
enter into reverse repurchase agreements
exceeding 5% of the value of its total assets.
A Fund will not purchase any securities whenever
any borrowings (including reverse repurchase
agreements) are outstanding. If a Fund enters
into a reverse repurchase agreement, it will
place in a segregated custodial account cash,
United States Government securities or liquid
high grade debt obligations having a value equal
to the repurchase price (including accrued
interest) and will subsequently monitor the
account to ensure that such equivalent value is
maintained. Reverse repurchase agreements
involve risk that the market value of the
securities sold by a Fund may decline below the
repurchase price of those securities.
</TABLE>
D-44
<PAGE>
<TABLE>
<CAPTION>
TOPIC MONEY MARKET FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
5. UNDERWRITING SECURITIES The Fund may not engage in the business of
OF OTHER ISSUERS underwriting the securities of other issuers.
(S)
- -------------------------------------------------------------------------------
6. REAL ESTATE The Fund may not purchase, sell or invest in
(S) real estate or interests in real estate except
that the Fund may purchase sell or invest in
marketable securities of companies holding real
estate or interests in real estate, including
real estate investment trusts.
- -------------------------------------------------------------------------------
7. COMMODITIES The Fund may not purchase, sell or invest in
(S) commodities, commodity contracts or financial
futures contracts.
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS The Fund may not lend its funds to other
(S) persons, provided that it may purchase money
market securities or enter into repurchase
agreements. The Fund may not lend its portfolio
securities, unless the borrower is a broker,
dealer or financial institution that pledges and
maintains collateral with the Fund consisting of
cash, letters of credit or securities issued or
guaranteed by the U.S. government having a value
at all times not less than 100% of the current
market value of the loaned securities, including
accrued interest, provided that the aggregate
amount of such loans shall not exceed 30% of the
Fund's total assets.
- -------------------------------------------------------------------------------
9. UNSEASONED ISSUERS The Fund may not invest more than 5% of its
(R) total assets in securities of unseasoned issuers
that have been in continuous operation for less
than three years, including operating periods of
its predecessors.
- -------------------------------------------------------------------------------
10. CONTROL OR MANAGEMENT The Fund may not invest in companies for the
(R) purpose of exercising control or management.
- -------------------------------------------------------------------------------
11. SHORT SALES The Fund may not make short sales of securities
(R) or maintain a short position.
- -------------------------------------------------------------------------------
12. MARGIN PURCHASES The Fund may not purchase securities on margin,
(R) except that the Fund may obtain such short-term
credits as may be necessary for the clearance of
transactions. A deposit or payment by a Fund of
initial or variation margin in connection with
financial futures contracts or related options
transactions is not considered the purchase of a
security on margin.
- -------------------------------------------------------------------------------
13. OFFICERS' AND DIRECTORS' The Fund may not purchase or retain the
OWNERSHIP OF SHARES securities of any issuer if (i) one or more
(R) officers or Trustees of a Fund or its investment
adviser individually owns or would own, directly
or beneficially, more than 1/2 of 1% of the
securities of such issuer, and (ii) in the
aggregate, such persons own or would own,
directly or beneficially, more than 5% of such
securities.
- -------------------------------------------------------------------------------
14. INTERESTS IN OIL, GAS OR The Fund may not purchase, sell or invest in
OTHER MINERAL interests in oil, gas or other mineral
EXPLORATION OR exploration or development programs.
DEVELOPMENT PROGRAMS
(R)
- -------------------------------------------------------------------------------
</TABLE>
D-45
<PAGE>
<TABLE>
<CAPTION>
TOPIC MONEY MARKET FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
15. OPTIONS The Fund may not write, purchase or sell put or
(R) call options, or combinations thereof, except
the Fund may do so as permitted under
"Description of the Funds--Investment Objective
and Policies" in the Fund's Prospectus.
- -------------------------------------------------------------------------------
16. INVESTMENT IN MONEY The Fund may not purchase any securities other
MARKET SECURITIES than money market instruments as described under
(R) "Description of Funds--Investment Objective and
Policies" in the Fund's Prospectus.
</TABLE>
D-46
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
MONEY MARKET FUNDS
"S" Fundamental Restriction to be Standardized
"R" Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC TAX EXEMPT MONEY MARKET FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION The Fund may not invest more than 5% of their
(S) total assets, at the time of the investment in
question, in the securities of any one issuer
other than the U.S. government and its agencies
or instrumentalities, except that up to 25% of
the value of the Fund's total assets may be
invested without regard to such 5% limitation.
For this purpose each political subdivision,
agency, or instrumentality and each multi-state
agency of which a state is a member, and each
public authority which issues industrial
development bonds on behalf of a private entity,
will be regarded as a separate issuer for
determining the diversification of the Fund's
portfolio. The Fund may not purchase more than
10% of any class of securities of any one issuer
other than the U.S. government and its agencies
or instrumentalities.
- -------------------------------------------------------------------------------
2. CONCENTRATION The Fund may not invest 25% or more of its total
(S) assets in the securities of issuers conducting
their principal business activities in any one
industry; provided, that this limitation shall
not apply to obligations issued or guaranteed by
the U.S. government or its agencies or
instrumentalities, or to municipal securities
and certificates of deposit and bankers'
acceptances issued by domestic branches of U.S.
banks.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR The Fund may not borrow money, issue senior
SECURITIES securities or enter into reverse repurchase
(S) agreements, except for temporary or emergency
purposes, and not for leveraging, and then in
amounts not in excess of 10% of the value of the
Fund's total assets at the time of such
borrowing.
- -------------------------------------------------------------------------------
4. BORROWING (INCLUDING The Fund may not borrow money, issue senior
REVERSE REPURCHASE securities or enter into reverse repurchase
AGREEMENTS) agreements, except for temporary or emergency
(S) purposes, and not for leveraging, and then in
amounts not in excess of 10% of the value of the
Fund's total assets at the time of such
borrowing; or mortgage, pledge or hypothecate
any assets except in connection with any such
borrowing and in amounts not in excess of the
lesser of the dollar amounts borrowed or 10% of
the value of the Fund's total assets at the time
of such borrowing, provided that the Fund will
not purchase any securities at times when any
borrowings (including reverse repurchase
agreements) are outstanding. The Fund will not
enter into reverse repurchase agreements
exceeding 5% of the value of its total assets.
</TABLE>
D-47
<PAGE>
<TABLE>
<CAPTION>
TOPIC TAX EXEMPT MONEY MARKET FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
A Fund will not purchase any securities whenever
any borrowings (including reverse repurchase
agreements) are outstanding. If a Fund enters
into a reverse repurchase agreement, it will
place in a segregated custodial account cash,
United States Government securities or liquid
high grade debt obligations having a value equal
to the repurchase price (including accrued
interest) and will subsequently monitor the
account to ensure that such equivalent value is
maintained. Reverse repurchase agreements
involve risk that the market value of the
securities sold by a Fund may decline below the
repurchase price of those securities.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES The Fund may not engage in the business of
OF OTHER ISSUERS underwriting the securities of other issuers;
(S) provided that the purchase by the Fund of
municipal securities or other permitted
investments, directly from the issuer thereof
(or from an underwriter for an issuer) and the
later disposition of such securities in
accordance with the Fund's investment program
shall not be deemed to be an underwriting.
- -------------------------------------------------------------------------------
6. REAL ESTATE The Fund may not purchase, sell or invest in
(S) real estate or interests in real estate except
that the Fund may purchase municipal securities
and other debt securities secured by real estate
or interests therein.
- -------------------------------------------------------------------------------
7. COMMODITIES The Fund may not purchase, sell or invest in
(S) commodities, commodity contracts or financial
futures contracts.
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS The Fund may not lend its funds to other
(S) persons; however, it may purchase issues of debt
securities, enter into repurchase agreements and
acquire privately negotiated loans made to
municipal borrowers. The Fund may not lend its
portfolio securities, unless the borrower is a
broker, dealer or financial institution that
pledges and maintains collateral with the Fund
consisting of cash, letters of credit or
securities issued or guaranteed by the U.S.
government having a value at all times not less
than 100% of the current market value of the
loaned securities, including accrued interest,
provided that the aggregate amount of such loans
shall not exceed 30% of the Fund's total assets.
- -------------------------------------------------------------------------------
9. INVESTMENT IN FEDERALLY As a matter of fundamental policy, which may not
TAX EXEMPT SECURITIES be changed without shareholder approval, the
(S) Fund will invest at least 80% of its net assets
in Municipal Securities, the interest from which
is not subject to the Federal alternative
minimum tax.
- -------------------------------------------------------------------------------
10. UNSEASONED ISSUERS The Fund may not invest more than 5% of its
(R) total assets in taxable securities of unseasoned
issuers that have been in continuous operation
for less than three years, including operating
periods of their predecessors, except that (i)
the Fund may invest in obligations issued or
guaranteed by the U.S. government and its
agencies or instrumentalities, and (ii) the Fund
may invest in municipal securities.
- -------------------------------------------------------------------------------
11. CONTROL OR MANAGEMENT The Fund may not invest in companies for the
(R) purpose of exercising control or management.
</TABLE>
D-48
<PAGE>
<TABLE>
<CAPTION>
TOPIC TAX EXEMPT MONEY MARKET FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
12. SHORT SALES The Fund may not make short sales of securities
(R) or maintain a short position.
- -------------------------------------------------------------------------------
13. MARGIN PURCHASES The Fund may not purchase securities on margin,
(R) except that the Fund may obtain such short-term
credits as may be necessary for the clearance of
transactions. A deposit or payment by a Fund of
initial or variation margin in connection with
financial futures contracts or related options
transactions is not considered the purchase of a
security on margin.
- -------------------------------------------------------------------------------
14. OFFICERS' AND DIRECTORS' The Fund may not purchase or retain the
OWNERSHIP OF SHARES securities of any issuer if (i) one or more
(R) officers or Trustees of the Fund or its
investment adviser individually owns or would
own, directly or beneficially, more than of 1%
of the securities of such issuer, and (ii) in
the aggregate, such persons own or would own,
directly or beneficially, more than 5% of such
securities.
- -------------------------------------------------------------------------------
15. WARRANTS The Fund may not invest more than 5% of its
(R) total net assets in warrants, and, of this
amount, no more than 2% of the Fund's total net
assets may be invested in warrants that are
listed on neither the New York nor the American
Stock Exchange.
- -------------------------------------------------------------------------------
16. INTERESTS IN OIL, GAS OR The Fund may not purchase, sell or invest in
OTHER MINERAL interests in oil, gas or other mineral
EXPLORATION OR exploration or development programs.
DEVELOPMENT PROGRAMS
(R)
- -------------------------------------------------------------------------------
17. OPTIONS The Fund may not write, purchase or sell put or
(R) call options, or combinations thereof. The Fund
may purchase securities with rights to put
securities to the seller in accordance with its
investment program.
- -------------------------------------------------------------------------------
18. ILLIQUID SECURITIES The Fund will limit the value of its investments
(R) in any floating or variable rate securities
which are not readily marketable and in all
other not readily marketable securities to 10%
or less of its net assets.
- -------------------------------------------------------------------------------
19. INVESTMENT IN MUNICIPAL The Fund may not invest more than 20% of its
SECURITIES total assets in securities other than municipal
(R) securities including municipal bonds, short-term
municipal notes and tax exempt commercial paper,
unless extraordinary circumstances dictate a
more defensive posture.
</TABLE>
D-49
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
MONEY MARKET FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC TREASURY MONEY MARKET FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION For purposes of diversification under the 1940
(S) Act, the identification of the issuer of
Municipal Obligations depends on the terms and
conditions of the obligation.
- -------------------------------------------------------------------------------
2. CONCENTRATION N/A
(S)
- -------------------------------------------------------------------------------
3. ISSUING SENIOR The Fund will not issue senior securities except
SECURITIES that the Fund may borrow money directly, as a
(S) temporary measure of extraordinary or emergency
purposes and then only in amounts not in excess
of 5% of the value of its total assets, or in an
amount up to one-third of the value of its total
assets, including the amount borrowed, in order
to meet redemption requests without immediately
selling portfolio instruments. Any such
borrowings need not be collateralized. The Fund
will not purchase any securities while
borrowings in excess of 5% of the total value of
its total assets are outstanding.
- -------------------------------------------------------------------------------
4. BORROWING (INCLUDING The Fund will not issue senior securities except
REVERSE REPURCHASE that the Fund may borrow money directly, as a
AGREEMENTS) temporary measure of extraordinary or emergency
(S) purposes and then only in amounts not in excess
of 5% of the value of its total assets, or in an
amount up to one-third of the value of its total
assets, including the amount borrowed, in order
to meet redemption requests without immediately
selling portfolio instruments. Any such
borrowings need not be collateralized. The Fund
will not purchase any securities while
borrowings in excess of 5% of the total value of
its total assets are outstanding. The Fund will
not borrow money or engage in reverse repurchase
agreements for investment leverage purposes. The
Fund will not mortgage, pledge or hypothecate
any assets except to secure permitted
borrowings. In these cases, the Fund may pledge
assets having a market value not exceeding the
lesser of the dollar amounts borrowed or 15% of
the value of total assets at the time of the
pledge.
A Fund will not purchase any securities whenever
any borrowings (including reverse repurchase
agreements) are outstanding. If a Fund enters
into a reverse repurchase agreement, it will
place in a segregated custodial account cash,
United States Government securities or liquid
high grade debt obligations having a value equal
to the repurchase price (including accrued
interest) and will subsequently monitor the
account to ensure that such equivalent value is
maintained. Reverse repurchase agreements
involve risk that the market value of the
securities sold by a Fund may decline below the
repurchase price of those securities.
</TABLE>
D-50
<PAGE>
<TABLE>
<CAPTION>
TOPIC TREASURY MONEY MARKET FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
5. UNDERWRITING SECURITIES N/A
OF OTHER ISSUERS
(S)
- -------------------------------------------------------------------------------
6. REAL ESTATE The Fund may not purchase, sell or invest in
(S) real estate or interests in real estate.
- -------------------------------------------------------------------------------
7. COMMODITIES The Fund may not purchase, sell or invest in
(S) commodities, commodity contracts or financial
futures contracts.
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS The Fund will not lend any of its assets, except
(S) that it may purchase or hold U.S. Treasury
obligations, including repurchase agreements.
- -------------------------------------------------------------------------------
9. SHORT SALES The Fund may not make short sales of securities
(R) or maintain a short position; except that, 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.
- -------------------------------------------------------------------------------
10. MARGIN PURCHASES The Fund may not purchase securities on margin,
(R) except that the Fund may obtain such short-term
credits as may be necessary for the clearance of
transactions. A deposit or payment by a Fund of
initial or variation margin in connection with
financial futures contracts or related options
transactions is not considered the purchase of a
security on margin.
- -------------------------------------------------------------------------------
11. OFFICERS' AND DIRECTORS' The Fund may not purchase or retain the
OWNERSHIP OF SHARES securities of any issuer if (i) one or more
(R) officers or Trustees of a Fund or its investment
adviser individually owns or would own, directly
or beneficially, more than 1/2 of 1% of the
securities of such issuer, and (ii) in the
aggregate, such persons own or would own,
directly or beneficially, more than 5% of such
securities.
</TABLE>
D-51
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
MONEY MARKET FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC INSTITUTIONAL MONEY MARKET FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION The Fund may not invest more than 5% of its
(S) total assets, at the time of the investment in
question, in the securities of any one issuer
other than the U.S. government and its agencies
or instrumentalities. For this purpose each
political subdivision, agency or instrumentality
and each multi-state agency of which a state is
a member, and each public authority which issues
industrial development bonds on behalf of a
private entity, will be regarded as a separate
issuer for determining the diversification of
the Fund's portfolio. The Fund may not purchase
more than 10% of any class of securities of any
one issuer other than the U.S. government and
its agencies or instrumentalities.
- -------------------------------------------------------------------------------
2. CONCENTRATION The Fund may not invest 25% or more of its total
(S) assets in the securities of issuers conducting
their principal business activities in any one
industry; provided, that this limitation shall
not apply to obligations issued or guaranteed by
the U.S. government or its agencies or
instrumentalities.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR The Fund may not borrow money, issue senior
SECURITIES securities or enter into reverse repurchase
(S) agreements, except for temporary or emergency
purposes, and not for leveraging, and then in
amounts not in excess of 10% of the value of the
Fund's total assets at the time of such
borrowing.
</TABLE>
D-52
<PAGE>
<TABLE>
<CAPTION>
TOPIC INSTITUTIONAL MONEY MARKET FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
4. BORROWING (INCLUDING The Fund may not borrow money, issue senior
REVERSE REPURCHASE securities or enter into reverse repurchase
AGREEMENTS) agreements, except for temporary or emergency
(S) purposes, and not for leveraging, and then in
amounts not in excess of 10% of the value of the
Fund's total assets at the time of such
borrowing; or mortgage, pledge or hypothecate
any assets except in connection with any such
borrowing and in amounts not in excess of the
lesser of the dollar amounts borrowed or 10% of
the value of the Fund's total assets at the time
of such borrowing, provided that the Fund will
not purchase any securities at times when any
borrowings (including reverse repurchase
agreements) are outstanding. The Fund will not
enter into reverse repurchase agreements
exceeding 5% of the value of its total assets.
A Fund will not purchase any securities whenever
any borrowings (including reverse repurchase
agreements) are outstanding. If a Fund enters
into a reverse repurchase agreement, it will
place in a segregated custodial account cash,
United States Government securities or liquid
high grade debt obligations having a value equal
to the repurchase price (including accrued
interest) and will subsequently monitor the
account to ensure that such equivalent value is
maintained. Reverse repurchase agreements
involve risk that the market value of the
securities sold by a Fund may decline below the
repurchase price of those securities.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES The Fund may not engage in the business of
OF OTHER ISSUERS underwriting the securities of other issuers.
(S)
- -------------------------------------------------------------------------------
6. REAL ESTATE The Fund may not purchase, sell or invest in
(S) real estate or interests in real estate except
that the Fund may purchase, sell or invest in
marketable securities of companies holding real
estate or interests in real estate, including
real estate investment trusts.
- -------------------------------------------------------------------------------
7. COMMODITIES The Fund may not purchase, sell or invest in
(S) commodities, commodity contracts or financial
futures contracts.
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS The Fund may not lend its funds to other
(INCLUDING REPURCHASE persons, provided that it may purchase money
AGREEMENTS) market securities or enter into repurchase
(S) agreements. The Fund may not lend its portfolio
securities, unless the borrower is a broker,
dealer or financial institution that pledges and
maintains collateral with the Fund consisting of
cash, letters of credit or securities issued or
guaranteed by the U.S. government having a value
at all times not less than 100% of the current
market value of the loaned securities, including
accrued interest, provided that the aggregate
amount of such loans shall not exceed 30% of the
Fund's total assets.
</TABLE>
D-53
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
MONEY MARKET FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC INSTITUTIONAL TREASURY MONEY MARKET FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION For purposes of diversification under the 1940
(S) Act, the identification of the issuer of
Municipal Obligations depends on the terms and
conditions of the obligation.
- -------------------------------------------------------------------------------
2. CONCENTRATION N/A
(S)
- -------------------------------------------------------------------------------
3. ISSUING SENIOR The Fund will not issue senior securities except
SECURITIES that the Fund may borrow money directly, as a
(S) temporary measure for extraordinary or emergency
purposes and then only in amounts not in excess
of 5% of the value of its total assets, or in an
amount up to one-third of the value of its total
assets, including the amount borrowed, in order
to meet redemption requests without immediately
selling portfolio instruments. Any such
borrowings need not be collateralized. The Fund
will not purchase any securities while
borrowings in excess of 5% of the total value of
its total assets are outstanding.
- -------------------------------------------------------------------------------
4. BORROWING (INCLUDING The Fund will not issue senior securities except
REVERSE REPURCHASE that the Fund may borrow money directly, as a
AGREEMENTS) temporary measure for extraordinary or emergency
(S) purposes and then only in amounts not in excess
of 5% of the value of its total assets, or in an
amount up to one-third of the value of its total
assets, including the amount borrowed, in order
to meet redemption requests without immediately
selling portfolio instruments. Any such
borrowings need not be collateralized. The Fund
will not purchase any securities while
borrowings in excess of 5% of the total value of
its total assets are outstanding. The Fund will
not borrow money or engage in reverse repurchase
agreements for investment leverage purposes. The
Fund will not mortgage, pledge or hypothecate
any assets except to secure permitted
borrowings. In these cases, the Fund may pledge
assets having a market value not exceeding the
lesser of the dollar amounts borrowed or 15% of
the value of total assets at the time of the
pledge.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES N/A
OF OTHER ISSUERS
(S)
- -------------------------------------------------------------------------------
6. REAL ESTATE The Fund may not purchase, sell or invest in
(S) real estate or interests in real estate.
- -------------------------------------------------------------------------------
7. COMMODITIES The Fund may not purchase, sell or invest in
(S) commodities, commodity contracts or financial
futures contracts.
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS The Fund will not lend any of its assets, except
(INCLUDING REPURCHASE that it may purchase or hold U.S. Treasury
AGREEMENTS) obligations, including repurchase agreements.
(S)
</TABLE>
D-54
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
MONEY MARKET FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION The Fund may not invest more than 5% of its
(S) total assets, at the time of the investment in
question, in the securities of any one issuer
other than the U.S. government and its agencies
or instrumentalities, except that up to 25% of
the value of the Fund's total assets may be
invested without regard to such 5% limitation.
For this purpose each political subdivision,
agency, or instrumentality and each multi-state
agency of which a state is a member, and each
public authority which issues industrial
development bonds on behalf of a private entity,
will be regarded as a separate issuer for
determining the diversification of the Fund's
portfolio. The Fund may not purchase more than
10% of any class of securities of any one issuer
other than the U.S. government and its agencies
or instrumentalities.
- -------------------------------------------------------------------------------
2. CONCENTRATION The Fund may not invest 25% or more of its total
(S) assets in the securities of issuers conducting
their principal business activities in any one
industry; provided, that this limitation shall
not apply to obligations issued or guaranteed by
the U.S. government or its agencies or
instrumentalities, or to municipal securities
and certificates of deposit and bankers'
acceptances issued by domestic branches of U.S.
banks.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR The Fund may not borrow money, issue senior
SECURITIES (S) securities or enter into reverse repurchase
agreements, except for temporary or emergency
purposes, and not for leveraging, and then in
amounts not in excess of 10% of the value of the
Fund's total assets at the time of such
borrowing.
- -------------------------------------------------------------------------------
4. BORROWING (INCLUDING The Fund may not borrow money, issue senior
REVERSE REPURCHASE securities or enter into reverse repurchase
AGREEMENTS) agreements, except for temporary or emergency
(S) purposes, and not for leveraging, and then in
amounts not in excess of 10% of the value of the
Fund's total assets at the time of such
borrowing or mortgage, pledge or hypothecate any
assets except in connection with any such
borrowing and in amounts not in excess of the
lesser of the dollar amounts borrowed or 10% of
the value of the Fund's total assets at the time
of such borrowing, provided that the Fund will
not purchase any securities at times when any
borrowings (including reverse repurchase
agreements) are outstanding. The Fund will not
enter into reverse repurchase agreements
exceeding 5% of the value of its total assets.
</TABLE>
D-55
<PAGE>
<TABLE>
<CAPTION>
TOPIC INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
5. UNDERWRITING SECURITIES The Fund may not engage in the business of
OF OTHER ISSUERS underwriting the securities of other issuers;
(S) provided, that the purchase by the Fund of
municipal securities or other permitted
investments, directly from the issuer thereof
(or from an underwriter of an issuer) and the
later disposition of such securities in
accordance with the Fund's investment program
shall not be deemed to be an underwriting.
- -------------------------------------------------------------------------------
6. REAL ESTATE The Fund may not purchase, sell or invest in
(S) real estate or interests in real estate except
that the Fund may purchase municipal securities
and other debt securities secured by real estate
or interests therein.
- -------------------------------------------------------------------------------
7. COMMODITIES The Fund may not purchase, sell or invest in
(S) commodities, commodity contracts or financial
futures contracts.
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS The Fund may not lend its funds to other
(INCLUDING REPURCHASE persons; however, it may purchase issues of debt
AGREEMENTS) (S) securities, enter into repurchase agreements and
acquire privately negotiated loans made to
municipal borrowers. The Fund may not lend its
portfolio securities, unless the borrower is a
broker, dealer or financial institution that
pledges and maintains collateral with the Fund
consisting of cash, letters of credit or
securities issued or guaranteed by the U.S.
government having a value at all times not less
than 100% of the current market value of the
loaned securities, including accrued interest,
provided that the aggregate amount of the loaned
securities, including accrued interest, provided
that the aggregate amount of such loans shall
not exceed 30% of the Fund's total assets.
- -------------------------------------------------------------------------------
9. INVESTMENT IN FEDERALLY As a matter of fundamental policy, which may not
TAX EXEMPT SECURITIES be changed without shareholder approval, the
(S) Fund will invest at least 80% of its net assets
in Municipal Obligations, the interest from
which is not subject to the Federal alternative
minimum tax.
- -------------------------------------------------------------------------------
10. INVESTMENT IN MUNICIPAL The Fund may not invest more than 20% of its
SECURITIES total assets in securities other than municipal
(R) securities including municipal bonds, short-term
municipal notes and tax exempt commercial paper,
unless extraordinary circumstances dictate a
more defensive posture.
</TABLE>
D-56
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
MONEY MARKET FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC PENNSYLVANIA TAX FREE MONEY MARKET FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION The Fund may not invest more than 5% of its
(S) total assets, at the time of the investment in
question, in the securities of any one issuer
other than the U.S. government and its agencies
or instrumentalities, except that up to 25% of
the value of the Fund's total assets may be
invested without regard to such 5% limitation.
For this purpose each political subdivision,
agency, or instrumentality and each multi-state
agency of which a state is a member, and each
public authority which issues industrial
development bonds on behalf of a private entity,
will be regarded as a separate issuer for
determining the diversification of each Fund's
portfolio. The Fund may not purchase more than
10% of any class of securities of any one issuer
other than the U.S. government and its agencies
or instrumentalities.
- -------------------------------------------------------------------------------
2. CONCENTRATION The Fund may not invest 25% or more of its total
(S) assets in the securities of issuers conducting
their principal business activities in any one
industry; provided, that this limitation shall
not apply to obligations issued or guaranteed by
the U.S. government or its agencies or
instrumentalities, or to municipal securities
and certificates of deposit and bankers'
acceptances issued by domestic branches of U.S.
banks.
The Fund does not intend to concentrate its
investments in any one industry. Thus, from time
to time, the Fund may invest 25% or more of its
total assets in Municipal Obligations which are
related in such a way that an economic, business
or political development or change affecting one
such Obligation would also affect the other
Obligations.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR The Fund shall not borrow money, issue senior
SECURITIES securities, or pledge, mortgage or hypothecate
(S) its assets, except that the Fund may borrow from
banks if immediately after each borrowing there
is asset coverage of at least 300%.
- -------------------------------------------------------------------------------
4. BORROWING The Fund shall not borrow money, issue senior
(INCLUDING securities, or pledge, mortgage or hypothecate
REVERSE its assets, except that the Fund may borrow from
REPURCHASE banks if immediately after each borrowing there
AGREEMENTS) is asset coverage of at least 300%.
(S)
</TABLE>
D-57
<PAGE>
<TABLE>
<CAPTION>
TOPIC PENNSYLVANIA TAX FREE MONEY MARKET FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
5. UNDERWRITING The Fund may not engage in the business of
SECURITIES OF underwriting the securities of other issuers.
OTHER ISSUERS
(S)
- -------------------------------------------------------------------------------
6. REAL ESTATE The Fund will not buy or sell real estate
(S) although the Fund may invest in securities of
companies whose business involves the purchase
or sale of real estate or in securities which
are secured by real estate or interests in real
estate.
- -------------------------------------------------------------------------------
7. COMMODITIES N/A
(S)
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS The Fund may not lend its portfolio securities,
(INCLUDING REPURCHASE unless the borrower is a broker, dealer or
AGREEMENTS) (S) financial institution that pledges and maintains
collateral with the Fund consisting of cash,
letters of credit or securities issued or
guaranteed by the U.S. government having a value
at all times not less than 100% of the current
market value of the loaned securities, including
accrued interest, provided that the aggregate
amount of such loans shall not exceed 5% of the
Fund's total assets.
The Fund will enter into repurchase agreements
only with broker-dealers, domestic banks or
recognized financial institutions which, in the
opinion of the Fund's Adviser, present minimal
credit risks.
- -------------------------------------------------------------------------------
9. INVESTMENT IN FEDERALLY The Fund invests at least 80% of its net assets
TAX EXEMPT SECURITIES in municipal obligations issued by the
(S) Commonwealth of Pennsylvania or its counties,
municipalities, authorities or other political
subdivisions, and municipal obligations issued
by territories or possessions of the United
States, such as Puerto Rico (collectively,
"Municipal Obligations"), the interest on which,
in the opinion of bond counsel, is exempt from
Federal taxes. The Fund limits its investment to
Municipal Obligations with remaining maturities
of thirteen months or less and will maintain a
dollar-weighted average portfolio maturity of 90
days or less.
- -------------------------------------------------------------------------------
10. CONTROL OR MANAGEMENT The Fund may not invest in companies for the
(R) purpose of exercising control or management.
- -------------------------------------------------------------------------------
11. MARGIN PURCHASES The Fund may not purchase securities on margin,
(R) except that the Fund may obtain such short-term
credits as may be necessary for the clearance of
transactions. A deposit or payment by a Fund of
initial or variation margin in connection with
financial futures contracts or related options
transactions is not considered the purchase of a
security on margin.
- -------------------------------------------------------------------------------
12. INTERESTS IN OIL, GAS OR The Fund may not purchase, sell or invest in
OTHER MINERAL interests in oil, gas or other mineral
EXPLORATION OR exploration or development programs.
DEVELOPMENT PROGRAMS (R)
- -------------------------------------------------------------------------------
13. OPTIONS The Fund shall not write, purchase or sell puts,
(R) calls, warrants or options or any combination
thereof, except that the Fund may purchase
securities with put or demand rights.
</TABLE>
D-58
<PAGE>
<TABLE>
<CAPTION>
TOPIC PENNSYLVANIA TAX FREE MONEY MARKET FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
14. INVESTMENT IN MUNICIPAL The Fund may not invest more than 20% of its
SECURITIES total assets in securities other than municipal
(R) securities including municipal bonds, short-term
municipal notes and tax exempt commercial,
unless extraordinary circumstances dictate a
more defensive posture.
- -------------------------------------------------------------------------------
15. INVESTMENT IN STATE TAX The Fund invests at least 80% of its net assets
EXEMPT SECURITIES in municipal obligations issued by the
(S) Commonwealth of Pennsylvania or its counties,
municipalities, authorities or other political
subdivisions, and municipal obligations issued
by territories or possessions of the United
States, such as Puerto Rico (collectively,
"Municipal Obligations"), the interest on which,
in the opinion of bond counsel, is exempt from
Pennsylvania personal income taxes. The Fund
limits its investment to Municipal Obligations
with remaining maturities of thirteen months or
less and will maintain a dollar-weighted average
portfolio maturity of 90 days or less.
</TABLE>
D-59
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
MUNICIPAL/TAX-FREE FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC GEORGIA MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION The Fund intends to comply with Subchapter M of
(S) the Internal Revenue Code of 1986, as amended
(the "Code") which requires that at the end of
each quarter of each taxable year, with regard
to at least 50% of the Fund's total assets, no
more than 5% of the total assets may be invested
in the securities of a single issuer and that
with respect to the remainder of the Fund's
total assets, no more than 25% of its total
assets are invested in the securities of a
single issuer.
- -------------------------------------------------------------------------------
2. CONCENTRATION The Fund will not purchase securities if, as a
(S) result of such purchase, 25% or more of the
value of its total assets would be invested in
any one industry, or in industrial development
bonds or other securities, the interest upon
which is paid from revenues of similar types of
projects. However, the Fund may invest as
temporary investments more than 25% of the value
of their total assets in cash or cash items,
securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities,
or instruments secured by these money market
instruments, such as repurchase agreements.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR The Fund will not issue senior securities,
SECURITIES (S) except the Fund may borrow money directly or
through reverse repurchase agreement as a
temporary measure for extraordinary or emergency
purposes in an amount up to one-third of the
value of its total assets, including the amount
borrowed, in order to meet redemption requests
without immediately selling portfolio
instruments.
- -------------------------------------------------------------------------------
4. BORROWING (INCLUDING As a matter of fundamental policy, which may not
REVERSE REPURCHASE be changed without shareholder approval, the
AGREEMENTS) Fund may not borrow money except as a temporary
(S) measure to facilitate redemption requests which
might otherwise require the untimely disposition
of portfolio investments and for extraordinary
or emergency purposes, provided that the
aggregate amount of such borrowings shall not
exceed one-third of the value of the total net
assets at the time of such borrowing. The Fund
will not issue senior securities, except each
Fund may borrow money directly or through
reverse repurchase agreement as a temporary
measure for extraordinary or emergency purposes
in an amount up to one-third of the value of its
total assets, including the amount borrowed, in
order to meet redemption requests without
immediately selling portfolio instruments; and
except to the extent a Fund will enter into
futures contracts. Any such borrowings need not
be collateralized. The Fund will not purchase
any securities while borrowings in excess of 5%
of its total assets are outstanding. The Fund
will not borrow money or engage in reverse
repurchase agreements for investment leverage
purposes.
</TABLE>
D-60
<PAGE>
<TABLE>
<CAPTION>
TOPIC GEORGIA MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
5. UNDERWRITING SECURITIES The Fund may not engage in the business of
OF OTHER ISSUERS underwriting the securities of other issuers,
(S) provided that the purchase of municipal
securities or other permitted investments,
directly from the issuer thereof (or from an
underwriter for an issuer) and the later
disposition of such securities in accordance
with a Fund's investment program shall not be
deemed to be an underwriting.
- -------------------------------------------------------------------------------
6. REAL ESTATE The Fund will not buy or sell real estate,
(S) including limited partnership interests,
although the Fund may invest in municipal bonds
secured by real estate or interests in real
estate.
- -------------------------------------------------------------------------------
7. COMMODITIES The Fund will not purchase or sell commodities.
(S) However, the Fund may purchase put and call
options on portfolio securities and on financial
futures contracts. In addition, the Fund
reserves the right to hedge its portfolio by
entering into financial futures contracts and to
sell puts and calls on financial futures
contracts.
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS The Fund will not lend any of its assets, except
(INCLUDING REPURCHASE portfolio securities up to one-third of the
AGREEMENTS) (S) value of its total assets. The Fund may,
however, acquire publicly or non-publicly issued
municipal bonds or temporary investments or
enter into repurchase agreements in accordance
with its investment objective, policies and
limitations or the Declaration of Trust.
- -------------------------------------------------------------------------------
9. INVESTMENT IN FEDERALLY The Fund will normally invest its assets so that
TAX EXEMPT SECURITIES at least 80% of its annual interest income is,
(S) or at least 80% of its net assets are, invested
in obligations which provide interest income
which is exempt from federal regular income
taxes. The interest retains its tax-free status
when distributed to the Fund's shareholders.
- -------------------------------------------------------------------------------
10. SHORT SALES The Fund will not sell any securities short or
(R) maintain a short position.
- -------------------------------------------------------------------------------
11. MARGIN PURCHASES The Fund may not purchase securities on margin,
(R) except that the Fund may obtain such short-term
credits as may be necessary for the clearance of
transactions. A deposit or payment by a Fund of
initial or variation margin in connection with
financial futures contracts or related options
transactions is not considered the purchase of a
security on margin.
- -------------------------------------------------------------------------------
12. INVESTMENT IN MUNICIPAL At least 65% of the value of the Fund's total
SECURITIES assets will be invested in municipal bonds of
(R) the state of Georgia.
</TABLE>
D-61
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
MUNICIPAL/TAX-FREE FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC NORTH CAROLINA MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION The Fund intends to comply with Subchapter M of
(S) the Internal Revenue Code of 1986, as amended
(the "Code") which requires that at the end of
each quarter of each taxable year, with regard
to at least 50% of the Fund's total assets, no
more than 5% of the total assets may be invested
in the securities of a single issuer and that
with respect to the remainder of the Fund's
total assets, no more than 25% of its total
assets are invested in the securities of a
single issuer.
- -------------------------------------------------------------------------------
2. CONCENTRATION The Fund will not purchase securities if, as a
(S) result of such purchase, 25% or more of the
value of its total assets would be invested in
any one industry, or in industrial development
bonds or other securities, the interest upon
which is paid from revenues of similar types of
projects. However, the Fund may invest as
temporary investments more than 25% of the value
of their total assets in cash or cash items,
securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities,
or instruments secured by these money market
instruments, such as repurchase agreements.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR The Fund will not issue senior securities,
SECURITIES except the Fund may borrow money directly or
(S) through reverse repurchase agreement as a
temporary measure for extraordinary or emergency
purposes in an amount up to one-third of the
value of its total assets, including the amount
borrowed, in order to meet redemption requests
without immediately selling portfolio
instruments.
- -------------------------------------------------------------------------------
4. BORROWING (INCLUDING The Fund will not issue senior securities,
REVERSE REPURCHASE except the Fund may borrow money directly or
AGREEMENTS) through reverse repurchase agreement as a
(S) temporary measure for extraordinary or emergency
purposes in an amount up to one-third of the
value of its total assets, including the amount
borrowed, in order to meet redemption requests
without immediately selling portfolio
instruments; and except to the extent a Fund
will enter into futures contracts. Any such
borrowings need not be collateralized. The Fund
will not purchase any securities while
borrowings in excess of 5% of its total assets
are outstanding. The Fund will not borrow money
or engage in reverse repurchase agreements for
investment leverage purposes.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES The Fund may not engage in the business of
OF OTHER ISSUERS underwriting the securities of other issuers,
(S) provided that the purchase of municipal
securities or other permitted investments,
directly from the issuer thereof (or from an
underwriter for an issuer) and the later
disposition of such securities in accordance
with a Fund's investment program shall not be
deemed to be an underwriting.
</TABLE>
D-62
<PAGE>
<TABLE>
<CAPTION>
TOPIC NORTH CAROLINA MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
6. REAL ESTATE The Fund will not buy or sell real estate,
(S) including limited partnership interests,
although the Fund may invest in municipal bonds
secured by real estate or interests in real
estate.
- -------------------------------------------------------------------------------
7. COMMODITIES The Fund will not purchase or sell commodities.
(S) However, the Fund may purchase put and call
options on portfolio securities and on financial
futures contracts. In addition, the Fund
reserves the right to hedge its portfolio by
entering into financial futures contracts and to
sell puts and calls on financial futures
contracts.
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS The Fund will not lend any of its assets, except
(INCLUDING REPURCHASE portfolio securities up to one-third of the
AGREEMENTS) value of its total assets. The Fund may,
(S) however, acquire publicly or non-publicly issued
municipal bonds or temporary investments or
enter into repurchase agreements in accordance
with its investment objective, policies and
limitations or the Declaration of Trust.
- -------------------------------------------------------------------------------
9. INVESTMENT IN FEDERALLY The Fund will normally invest its assets so that
TAX EXEMPT SECURITIES at least 80% of its annual interest income is,
(S) or at least 80% of its net assets are, invested
in obligations which provide interest income
which is exempt from federal regular income
taxes. The interest retains its tax-free status
when distributed to the Fund's shareholders.
- -------------------------------------------------------------------------------
10. SHORT SALES The Fund will not sell any securities short or
(R) maintain a short position.
- -------------------------------------------------------------------------------
11. MARGIN PURCHASES The Fund may not purchase securities on margin,
(R) except that the Fund may obtain such short-term
credits as may be necessary for the clearance of
transactions. A deposit or payment by a Fund of
initial or variation margin in connection with
financial futures contracts or related options
transactions is not considered the purchase of a
security on margin.
- -------------------------------------------------------------------------------
12. INVESTMENTS IN MUNICIPAL At least 65% of the value of the Fund's total
SECURITIES assets will be invested in municipal bonds of
(R) North Carolina.
</TABLE>
D-63
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
MUNICIPAL/TAX-FREE FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC SOUTH CAROLINA MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION The Fund intends to comply with Subchapter M of
(S) the Internal Revenue Code of 1986, as amended
(the "Code") which requires that at the end of
each quarter of each taxable year, with regard
to at least 50% of the Fund's total assets, no
more than 5% of the total assets may be invested
in the securities of a single issuer and that
with respect to the remainder of the Fund's
total assets, no more than 25% of its total
assets are invested in the securities of a
single issuer.
- -------------------------------------------------------------------------------
2. CONCENTRATION The Fund will not purchase securities if, as a
(S) result of such purchase, 25% or more of the
value of its total assets would be invested in
any one industry, or in industrial development
bonds or other securities, the interest upon
which is paid from revenues of similar types of
projects. However, the Fund may invest as
temporary investments more than 25% of the value
of their total assets in cash or cash items,
securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities,
or instruments secured by these money market
instruments, such as repurchase agreements.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR The Fund will not issue senior securities,
SECURITIES except the Fund may borrow money directly or
(S) through reverse repurchase agreement as a
temporary measure for extraordinary or emergency
purposes in an amount up to one-third of the
value of its total assets, including the amount
borrowed, in order to meet redemption requests
without immediately selling portfolio
instruments.
- -------------------------------------------------------------------------------
4. BORROWING (INCLUDING The Fund will not issue senior securities,
REVERSE REPURCHASE except the Fund may borrow money directly or
AGREEMENTS) through reverse repurchase agreement as a
(S) temporary measure for extraordinary or emergency
purposes in an amount up to one-third of the
value of its total assets, including the amount
borrowed, in order to meet redemption requests
without immediately selling portfolio
instruments; and except to the extent a Fund
will enter into futures contracts. Any such
borrowings need not be collateralized. The Fund
will not purchase any securities while
borrowings in excess of 5% of its total assets
are outstanding. The Fund will not borrow money
or engage in reverse repurchase agreements for
investment leverage purposes.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES The Fund may not engage in the business of
OF OTHER ISSUERS underwriting the securities of other issuers,
(S) provided that the purchase of municipal
securities or other permitted investments,
directly from the issuer thereof (or from an
underwriter for an issuer) and the later
disposition of such securities in accordance
with a Fund's investment program shall not be
deemed to be an underwriting.
</TABLE>
D-64
<PAGE>
<TABLE>
<CAPTION>
TOPIC SOUTH CAROLINA MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
6. REAL ESTATE The Fund will not buy or sell real estate,
(S) including limited partnership interests,
although the Fund may invest in municipal bonds
secured by real estate or interests in real
estate.
- -------------------------------------------------------------------------------
7. COMMODITIES The Fund will not purchase or sell commodities.
(S) However, the Fund may purchase put and call
options on portfolio securities and on financial
futures contracts. In addition, the Fund
reserves the right to hedge its portfolio by
entering into financial futures contracts and to
sell puts and calls on financial futures
contracts.
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS The Fund will not lend any of its assets, except
(INCLUDING REPURCHASE portfolio securities up to one-third of the
AGREEMENTS) (S) value of its total assets. The Fund may,
however, acquire publicly or non-publicly issued
municipal bonds or temporary investments or
enter into repurchase agreements in accordance
with its investment objective, policies and
limitations or the Declaration of Trust.
- -------------------------------------------------------------------------------
9. INVESTMENT IN FEDERALLY The Fund will normally invest its assets so that
TAX EXEMPT SECURITIES at least 80% of its annual interest income is,
(S) or at least 80% of its net assets are, invested
in obligations which provide interest income
which is exempt from federal regular income
taxes. The interest retains its tax-free status
when distributed to the Fund's shareholders.
- -------------------------------------------------------------------------------
10. SHORT SALES The Fund will not sell any securities short or
(R) maintain a short position.
- -------------------------------------------------------------------------------
11. MARGIN PURCHASES The Fund may not purchase securities on margin,
(R) except that the Fund may obtain such short-term
credits as may be necessary for the clearance of
transactions. A deposit or payment by a Fund of
initial or variation margin in connection with
financial futures contracts or related options
transactions is not considered the purchase of a
security on margin.
- -------------------------------------------------------------------------------
12. INVESTMENT IN MUNICIPAL At least 65% of the value of the Fund's total
SECURITIES assets will be invested in municipal bonds of
(R) the state of South Carolina.
</TABLE>
D-65
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
MUNICIPAL/TAX FREE FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC VIRGINIA MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION The Fund intends to comply with Subchapter M of
(S) the Internal Revenue Code of 1986, as amended
(the "Code") which requires that at the end of
each quarter of each taxable year, with regard
to at least 50% of the Fund's total assets, no
more than 5% of the total assets may be invested
in the securities of a single issuer and that
with respect to the remainder of the Fund's
total assets, no more than 25% of its total
assets are invested in the securities of a
single issuer.
- -------------------------------------------------------------------------------
2. CONCENTRATION The Fund will not purchase securities if, as a
(S) result of such purchase, 25% or more of the
value of its total assets would be invested in
any one industry, or in industrial development
bonds or other securities, the interest upon
which is paid from revenues of similar types of
projects. However, the Fund may invest as
temporary investments more than 25% of the value
of their total assets in cash or cash items,
securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities,
or instruments secured by these money market
instruments, such as repurchase agreements.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR The Fund will not issue senior securities,
SECURITIES (S) except the Fund may borrow money directly or
through reverse repurchase agreement as a
temporary measure for extraordinary or emergency
purposes in an amount up to one-third of the
value of its total assets, including the amount
borrowed, in order to meet redemption requests
without immediately selling portfolio
instruments.
- -------------------------------------------------------------------------------
4. BORROWING (INCLUDING The Fund will not issue senior securities,
REVERSE REPURCHASE except the Fund may borrow money directly or
AGREEMENTS) through reverse repurchase agreement as a
(S) temporary measure for extraordinary or emergency
purposes in an amount up to one-third of the
value of its total assets, including the amount
borrowed, in order to meet redemption requests
without immediately selling portfolio
instruments; and except to the extent a Fund
will enter into futures contracts. Any such
borrowings need not be collateralized. The Fund
will not purchase any securities while
borrowings in excess of 5% of its total assets
are outstanding. The Fund will not borrow money
or engage in reverse repurchase agreements for
investment leverage purposes.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES The Fund may not engage in the business of
OF OTHER ISSUERS underwriting the securities of other issuers,
(S) provided that the purchase of municipal
securities or other permitted investments,
directly from the issuer thereof (or from an
underwriter for an issuer) and the later
disposition of such securities in accordance
with a Fund's investment program shall not be
deemed to be an underwriting.
</TABLE>
D-66
<PAGE>
<TABLE>
<CAPTION>
TOPIC VIRGINIA MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
6. REAL ESTATE The Fund will not buy or sell real estate,
(S) including limited partnership interests,
although the Fund may invest in municipal bonds
secured by real estate or interests in real
estate.
- -------------------------------------------------------------------------------
7. COMMODITIES The Fund will not purchase or sell commodities.
(S) However, the Fund may purchase put and call
options on portfolio securities and on financial
futures contracts. In addition, the Fund
reserves the right to hedge its portfolio by
entering into financial futures contracts and to
sell puts and calls on financial futures
contracts.
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS The Fund will not lend any of its assets, except
(INCLUDING REPURCHASE portfolio securities up to one-third of the
AGREEMENTS) (S) value of its total assets. The Fund may,
however, acquire publicly or non-publicly issued
municipal bonds or temporary investments or
enter into repurchase agreements in accordance
with its investment objective, policies and
limitations or the Declaration of Trust.
- -------------------------------------------------------------------------------
9. INVESTMENT IN FEDERALLY The Fund will normally invest its assets so that
TAX EXEMPT SECURITIES at least 80% of its net assets are invested in
(S) obligations which provide interest income which
is exempt from federal regular income taxes. The
interest retains its tax-free status when
distributed to the Fund's shareholders.
- -------------------------------------------------------------------------------
10. MARGIN PURCHASES The Fund may not purchase securities on margin,
(R) except that the Fund may obtain such short-term
credits as may be necessary for the clearance of
transactions. A deposit or payment by the Fund
of initial or variation margin in connection
with financial futures contracts or related
options transactions is not considered the
purchase of a security on margin.
- -------------------------------------------------------------------------------
11. SHORT SALES The Fund will not sell any securities short or
(R) maintain a short position.
- -------------------------------------------------------------------------------
12. INVESTMENT IN MUNICIPAL At least 65% of the value of Fund's total assets
SECURITIES will be invested in municipal bonds of the
(R) Commonwealth of Virginia.
</TABLE>
D-67
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
MUNICIPAL/TAX-FREE FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC FLORIDA HIGH INCOME MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION The Fund may not invest more than 5% of its
(S) total assets, at the time of the investment in
question, in the securities of any one issuer
other than the U.S. government and its agencies
or instrumentalities, except that up to 25% of
the value of the Fund's total assets may be
invested without regard to such 5% limitation.
For this purpose each political subdivision,
agency, or instrumentality and each multi-state
agency of which a state is a member, and each
public authority which issues industrial
development bonds on behalf of a private entity,
will be regarded as a separate issuer for
determining the diversification of the Fund's
portfolio. Under this limitation, each
governmental subdivision, including states and
the District of Columbia, territories,
possessions of the United States, or their
political subdivisions, agencies, authorities,
instrumentalities, or similar entities, will be
considered a separate issuer of its assets and
revenues are separate from those of the
governmental body creating it and the security
is backed only by its own assets and revenues.
Industrial development bonds, backed only by the
assets and revenues of a nongovernmental issuer,
are considered to be issued solely by the
issuer. If, in the case of an industrial
development bond or governmental-issued
security, a governmental or other entity
guarantees the security, such guarantee would be
considered a separate security issued by the
guarantor as well as the other issuer, subject
to limited exclusions allowed by the Investment
Company Act of 1940.
- -------------------------------------------------------------------------------
2. CONCENTRATION The Fund will not purchase securities if, as a
(S) result of such purchase, 25% or more of the
value of its total assets would be invested in
any one industry, or in industrial development
bonds or other securities, the interest upon
which is paid from revenues of similar types of
projects. However, the Fund may invest as
temporary investments more than 25% of the value
of their total assets in cash or cash items,
securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities,
or instruments secured by these money market
instruments, such as repurchase agreements.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR The Fund may not borrow money, issue senior
SECURITIES (S) securities or enter into reverse repurchase
agreements, except for temporary or emergency
purposes, and not for leveraging, and then in
amounts not in excess of 10% of the value of the
Fund's total assets at the time of such
borrowing.
</TABLE>
D-68
<PAGE>
<TABLE>
<CAPTION>
TOPIC FLORIDA HIGH INCOME MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
4. BORROWING (INCLUDING As a matter of fundamental policy, which may not
REVERSE REPURCHASE be changed without shareholder approval, the
AGREEMENTS) Fund may not borrow money except as a temporary
(S) measure to facilitate redemption requests which
might otherwise require the untimely disposition
of portfolio investments and for extraordinary
or emergency purposes, provided that the
aggregate amount of such borrowings shall not
exceed one-third of the value of the total net
assets at the time of such borrowing. The Fund
may not borrow money, issue senior securities or
enter into reverse repurchase agreements, except
for temporary or emergency purposes, and not for
leveraging, and then in amounts not in excess of
10% of the value of the Fund's total assets at
the time of such borrowing. The Fund may not
mortgage, pledge or hypothecate any assets
except in connection with any such borrowing and
in amounts not in excess of the lesser of the
dollar amounts borrowed or 10% of the value of
the Fund's total assets at the time of such
borrowing. No Fund will enter into reverse
repurchase agreements exceeding 5% of the value
of its total assets.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES The Fund may not engage in the business of
OF OTHER ISSUERS underwriting the securities of other issuers,
(S) provided that the purchase of municipal
securities or other permitted investments,
directly from the issuer thereof (or from an
underwriter for an issuer) and the later
disposition of such securities in accordance
with a Fund's investment program shall not be
deemed to be an underwriting.
- -------------------------------------------------------------------------------
6. REAL ESTATE The Fund may not purchase, sell or invest in
(S) real estate or interests in real estate, except
that it may purchase, sell or invest in
marketable securities of companies holding real
estate or interests in real estate, including
real estate investment trusts.
- -------------------------------------------------------------------------------
7. COMMODITIES The Fund may not purchase, sell or invest in
(S) physical commodities unless acquired as a result
of ownership of securities or other instruments
(but this shall not prevent the Fund from
purchasing or selling options and futures
contracts or from investing in securities or
other instruments backed by physical
commodities.)
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS The Fund may not lend its funds to other
(INCLUDING REPURCHASE persons, provided that the Fund may purchase
AGREEMENTS) (S) issues of debt securities, acquire privately
negotiated loans made to municipal borrowers and
enter into repurchase agreements.
- -------------------------------------------------------------------------------
9. CONTROL OR MANAGEMENT The Fund may not invest in companies for the
(R) purpose of exercising control or management.
- -------------------------------------------------------------------------------
10. INTERESTS IN OIL, GAS OR The Fund may not purchase, sell or invest in
OTHER MINERAL interests in oil, gas or other mineral
EXPLORATION OR exploration or development programs.
DEVELOPMENT PROGRAMS (R)
</TABLE>
D-69
<PAGE>
<TABLE>
<CAPTION>
TOPIC FLORIDA HIGH INCOME MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
11. JOINT TRADING The Fund may not participate on a joint or joint
(R) and several basis in any trading account in any
securities. (The "bunching of orders for the
purchase or sale of portfolio securities with
its investment adviser or accounts under its
management to reduce brokerage commissions, to
average prices among them or to facilitate such
transactions is not considered a trading account
in securities for purposes of this restriction).
- -------------------------------------------------------------------------------
12. INVESTMENT IN MUNICIPAL The Fund will invest, under normal market
SECURITIES conditions, at least 80% of its net assets in
(R) municipal securities and at least 90% of such
assets will be invested in Florida obligations.
</TABLE>
D-70
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
MUNICIPAL/TAX-FREE FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC NEW JERSEY TAX FREE INCOME FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION The Fund is nondiversified under the federal
(S) securities laws. The 1940 Act does not restrict
the percentage of a nondiversified fund's assets
that may be invested at any time in the
securities of any one issuer. The Fund intends
to comply, however, with the Internal Revenue
Code's diversification requirements and other
requirements applicable to "regulated investment
companies" so that they will not be subject to
U.S. Federal income tax on income and capital
gain distributions to shareholders. The Fund
intends to comply with Subchapter M of the
Internal Revenue Code of 1986, as amended (the
"Code") which requires that at the end of each
quarter of each taxable year, with regard to at
least 50% of the Fund's total assets, no more
than 5% of the total assets may be invested in
the securities of a single issuer and that with
respect to the remainder of the Fund's total
assets, no more than 25% of its total assets are
invested in the securities of a single issuer.
- -------------------------------------------------------------------------------
2. CONCENTRATION The Fund may not purchase any security of any
(S) issuer (other than issues of the U.S.
government, its agencies or instrumentalities)
if as a result more than 25% of its total assets
would be invested in a single industry;
governmental issuers of municipal bonds are not
regarded as members of an industry and a Fund
may invest more than 25% of its assets in
industrial development bonds and, in
certificates of deposit and banker's acceptances
issued by domestic branches of U.S. banks or New
Jersey municipal obligations. The Fund presently
does not intend to invest more than 25% of its
total assets in municipal obligations the
payment of which depends on revenues derived
from a single facility or similar types of
facilities. The Fund will treat (1) each state,
territory and possession of the U.S., the
District of Columbia and, if its assets and
revenues are separate from those of the entity
or entities creating it, each political
subdivision, agency and instrumentality of any
one (or more, as in the case of a multi state
authority or agency) of the foregoing as an
issuer of all securities that are backed
primarily by its assets or revenues; (2) each
company as an issuer of all securities that are
backed primarily by its assets or revenues; and
(3) each of the foregoing entities as an issuer
of all securities that it guarantees; provided,
however, that for the purpose of the first
fundamental investment restriction no entity
shall be deemed to be an issuer of a security
that it guarantees so long as no more than 10%
of a Fund's total assets (taken at current
value) are invested in securities guaranteed by
the entity and securities of which it is
otherwise deemed to be an issuer.
</TABLE>
D-71
<PAGE>
<TABLE>
<CAPTION>
TOPIC NEW JERSEY TAX FREE INCOME FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
3. ISSUING SENIOR The Fund may not issue senior securities; the
SECURITIES purchase or sale of securities on a "when
(S) issued" basis, or collateral arrangement with
respect to the writing of options on securities,
are not deemed to be the issuance of a senior
security.
- -------------------------------------------------------------------------------
4. BORROWING (INCLUDING The Fund may not issue senior securities, borrow
REVERSE REPURCHASE money or pledge or mortgage its assets, except
AGREEMENTS) that the Fund may borrow from banks up to 10% of
(S) the value of its total net assets for temporary
or emergency purposes only to meet anticipated
redemption requirements. The Fund will not
purchase securities while any such borrowings
are outstanding. The Fund may enter into reverse
repurchase agreements (treated as borrowings).
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES The Fund may not underwrite securities of other
OF OTHER ISSUERS issuers, except that the Fund may purchase
(S) securities from the issuer or others and dispose
of such securities in a manner consistent with
its investment objective. The Fund will treat
(1) each state, territory and possession of the
U.S., the District of Columbia and, if its
assets and revenues are separate from those of
the entity or entities creating it, each
political subdivision, agency and
instrumentality of any one (or more, as in the
case of a multi state authority or agency) of
the foregoing as an issuer of all securities
that are backed primarily by its assets or
revenues; (2) each company as an issuer of all
securities that are backed primarily by its
assets or revenues; and (3) each of the
foregoing entities as an issuer of all
securities that it guarantees; provided,
however, that for the purpose of the first
fundamental investment restriction no entity
shall be deemed to be an issuer of a security
that it guarantees so long as no more than 10%
of the Fund's total assets (taken at current
value) are invested in securities guaranteed by
the entity and securities of which it is
otherwise deemed to be an issuer.
- -------------------------------------------------------------------------------
6. REAL ESTATE The Fund may not purchase or sell commodities or
(S) commodity contracts or real estate, except that
it may purchase and sell securities secured by
real estate and securities of companies which
invest in real estate.
- -------------------------------------------------------------------------------
7. COMMODITIES The Fund may not purchase or sell commodities or
(S) commodity contracts or real estate, except that
it may purchase and sell securities secured by
real estate and securities of companies which
invest in real estate.
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS The Fund may not make loans, except that the
(INCLUDING REPURCHASE Fund may purchase or hold debt securities
AGREEMENTS) consistent with its investment objectives, lend
(S) portfolio securities valued at not more than 15%
of its total assets to broker-dealers and enter
into repurchase agreements. In order to generate
additional income, the Fund may lend its
portfolio securities on a short-term or long-
term basis to broker/dealers, banks, or other
institutional borrowers of securities. The Fund
will only enter into loan arrangements with
creditworthy borrowers and will receive
collateral in the form of cash or U.S.
government securities equal to at least 100% of
the value of the securities loaned. As a matter
of fundamental investment policy, which cannot
be changed without shareholder approval, the
Fund will not lend any of its assets except
portfolio securities up to 5% of the value of
its net assets.
</TABLE>
D-72
<PAGE>
<TABLE>
<CAPTION>
TOPIC NEW JERSEY TAX FREE INCOME FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
9. INVESTMENT IN FEDERALLY The Fund invests at least 80% of its net assets
TAX EXEMPT SECURITIES in municipal securities issued by the State of
(S) New Jersey or its counties, municipalities,
authorities or other political subdivisions and
municipal securities issued by territories or
possessions of the United States, such as Puerto
Rico, the interest on which, in the opinion of
bond counsel, is exempt from federal taxes.
- -------------------------------------------------------------------------------
10. MARGIN PURCHASES The Fund may not purchase securities on margin
(R) except that it may obtain such short-term credit
as may be necessary for the clearance of
purchases and sales of securities.
- -------------------------------------------------------------------------------
11. OTHER INVESTMENT The Fund may not purchase securities of other
COMPANIES investment companies, except to the extent such
(R) purchases are not prohibited by applicable law.
- -------------------------------------------------------------------------------
12. OPTIONS The Fund may not write, purchase or sell put or
(R) call options, or combinations thereof, except
that the Fund may purchase securities with
rights to put securities to the seller in
accordance with its investment program.
- -------------------------------------------------------------------------------
13. INVESTMENT IN EQUITY The Fund may not purchase equity securities or
SECURITIES securities convertible into equity securities.
(R)
- -------------------------------------------------------------------------------
14. RESTRICTED SECURITIES The Fund may not purchase restricted securities,
(R) which are securities that must be registered
under the Securities Act of 1933 before they may
be offered or sold to the public. This
restriction does not apply to restricted
securities which are determined to be liquid by
the Fund's investment adviser under supervision
of the Board of Trustees.
- -------------------------------------------------------------------------------
15. INVESTMENT IN STATE TAX The Fund invests at least 80% of its net assets
EXEMPT SECURITIES in municipal securities issued by the State of
(R) New Jersey or its counties, municipalities,
authorities or other political subdivisions and
municipal securities issued by territories or
possessions of the United States, such as Puerto
Rico, the interest on which, in the opinion of
bond counsel, is exempt from New Jersey personal
income taxes.
</TABLE>
D-73
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
MUNICIPAL/TAX-FREE FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC SHORT-INTERMEDIATE MUNICIPAL FUND
- --------------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION The Fund may not invest more than 5% of its total
(S) assets, at the time of the investment in question, in
the securities of any one issuer other than the U.S.
government and its agencies or instrumentalities,
except that up to 25% of the value of the Fund's total
assets may be invested without regard to such 5%
limitation. For this purpose each political
subdivision, agency, or instrumentality and each multi-
state agency of which a state is a member, and each
public authority which issues industrial development
bonds on behalf of a private entity, will be regarded
as a separate issuer for determining the
diversification of the Fund's portfolio. Under this
limitation, each governmental subdivision, including
states and the District of Columbia, territories,
possessions of the United States, or their political
subdivisions, agencies, authorities, instrumentalities,
or similar entities, will be considered a separate
issuer of its assets and revenues are separate from
those of the governmental body creating it and the
security is backed only by its own assets and revenues.
Industrial development bonds, backed only by the assets
and revenues of a nongovernmental issuer, are
considered to be issued solely by the that issuer. If,
in the case of an industrial development bond or
governmental-issued security, a governmental or other
entity guarantees the security, such guarantee would be
considered a separate security issued by the guarantor
as well as the other issuer, subject to limited
exclusions allowed by the Investment Company Act of
1940. The Fund may not purchase more than 10% of any
class of voting securities of any one issuer other than
the U.S. government and its agencies or
instrumentalities.
- --------------------------------------------------------------------------------------
2. CONCENTRATION The Fund may not invest 25% or more of its total assets
(S) in the securities of issuers conducting their principal
business activities in any one industry; provided, that
this limitation shall not apply to obligations issued
or guaranteed by the U.S. government or its agencies or
instrumentalities and to municipal securities.
- --------------------------------------------------------------------------------------
3. ISSUING SENIOR The Fund may not borrow money, issue senior securities
SECURITIES or enter into reverse repurchase agreements, except for
(S) temporary or emergency purposes, and not for
leveraging, and then in amounts not in excess of 10% of
the value of the Fund's total assets at the time of
such borrowing.
</TABLE>
D-74
<PAGE>
<TABLE>
<CAPTION>
TOPIC SHORT-INTERMEDIATE MUNICIPAL FUND
- --------------------------------------------------------------------------------------
<S> <C> <C>
4. BORROWING (INCLUDING The Fund may not borrow money, issue senior securities
REVERSE REPURCHASE or enter into reverse repurchase agreements, except for
AGREEMENTS) temporary or emergency purposes, and not for
(S) leveraging, and then in amounts not in excess of 10% of
the value of the Fund's total assets at the time of
such borrowing. The Fund may not mortgage, pledge or
hypothecate any assets except in connection with any
such borrowing and in amounts not in excess of the
lesser of the dollar amounts borrowed or 10% of the
value of each Fund's total assets at the time of such
borrowing. No Fund will enter into reverse repurchase
agreements exceeding 5% of the value of its total
assets.
- --------------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES The Fund may not engage in the business of underwriting
OF OTHER ISSUERS the securities of other issuers, provided that the
(S) purchase of municipal securities or other permitted
investments, directly from the issuer thereof (or from
an underwriter for an issuer) and the later disposition
of such securities in accordance with the Fund's
investment program shall not be deemed to be an
underwriting.
- --------------------------------------------------------------------------------------
6. REAL ESTATE The Fund may not purchase, sell or invest in real
(S) estate or interests in real estate, except that the
Fund may purchase municipal securities and other debt
securities secured by real estate or interests therein.
- --------------------------------------------------------------------------------------
7. COMMODITIES The Fund may not purchase, sell or invest in
(S) commodities, commodity contracts or financial futures
contracts.
- --------------------------------------------------------------------------------------
8. LOANS TO OTHERS The Fund may not lend its funds to other persons,
(INCLUDING REPURCHASE provided that the Fund may purchase issues of debt
AGREEMENTS) securities, acquire privately negotiated loans made to
(S) municipal borrowers and enter into repurchase
agreements. The Fund may not lend its portfolio
securities, unless the borrower is a broker, dealer or
financial institution that pledges and maintains
collateral with the Fund consisting of cash or
securities issued or guaranteed by the U.S. government
having a value at all times not less than 100% of the
current market value of the loaned securities,
including accrued interest, provided that the aggregate
amount of such loans shall not exceed 30% of the Fund's
total assets.
- --------------------------------------------------------------------------------------
9. INVESTMENT IN FEDERALLY Under normal circumstances, it is anticipated that the
TAX-EXEMPT SECURITIES Fund will invest its assets so that at least 80% of its
(S) annual investment income is exempt from Federal income
tax other than the Federal alternative minimum tax.
- --------------------------------------------------------------------------------------
10. UNSEASONED The Fund may not invest more than 5% of its total
ISSUERS assets in securities that have been in continuous
(R) operation for less than three years, including
operating periods of their predecessors, except that no
limitation shall apply to the extent that the Fund may
invest in obligations issued or guaranteed by the U.S.
government and its agencies or instrumentalities.
</TABLE>
D-75
<PAGE>
<TABLE>
<CAPTION>
TOPIC SHORT-INTERMEDIATE MUNICIPAL FUND
- --------------------------------------------------------------------------------------
<S> <C> <C>
11. CONTROL OR The Fund may not invest in companies for the purpose of
MANAGEMENT exercising control or management.
(R)
- --------------------------------------------------------------------------------------
12. SHORT SALES The Fund will not sell any securities short or maintain
(R) a short position.
- --------------------------------------------------------------------------------------
13. MARGIN PURCHASES The Fund may not purchase securities on margin, except
(R) that the Fund may obtain such short-term credits as may
be necessary for the clearance of transactions. A
deposit or payment by a Fund of initial or variation
margin in connection with financial futures contracts
or related options transactions is not considered the
purchase of a security on margin.
- --------------------------------------------------------------------------------------
14. OFFICERS' AND The Fund may not purchase or retain the securities of
DIRECTORS' any issuer if (i) one or more officers or Trustees of a
OWNERSHIP OF Fund or its investment adviser individually owns or
SHARES would own, directly or beneficially, more than or 1% of
(R) the securities of such issuer, and (ii) in the
aggregate, such persons own or would own, directly or
beneficially, more than 5% of such securities.
- --------------------------------------------------------------------------------------
15. WARRANTS The Fund may not invest more than 5% of its total net
(R) assets in warrants, and, of this amount, no more than
2% of the Fund's total net assets may be invested in
warrants that are listed on neither the New York nor
the American Stock Exchange.
- --------------------------------------------------------------------------------------
16. INTERESTS IN OIL, GAS OR The Fund may not purchase, sell or invest in interests
OTHER MINERAL in oil, gas or other mineral exploration or development
EXPLORATION OR programs.
DEVELOPMENT PROGRAMS
(R)
- --------------------------------------------------------------------------------------
17. OPTIONS The Fund may not write, purchase or sell put or call
(R) options, or combinations thereof, except that the Fund
may purchase securities with rights to put securities
to the seller in accordance with its investment
program.
- --------------------------------------------------------------------------------------
18. INVESTMENT IN The Fund may not invest more than 20% of its total
MUNICIPAL assets in securities other than municipal securities
SECURITIES (as described under "Description of the Funds--
(R) Investment Objectives and Policies" in the Fund's
Prospectus), unless extraordinary circumstances dictate
a more defensive posture.
</TABLE>
D-76
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
MUNICIPAL/TAX FREE FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC HIGH GRADE TAX FREE FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION With respect to 75% of the value of its total
(S) assets, the Fund will not purchase securities of
any one issuer (other than cash, cash items or
securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities)
if as a result more than 5% of the value of its
total assets would be invested in the securities
of that issuer. Under this limitation, each
governmental subdivision, including states and
the District of Columbia, territories,
possessions of the United States, or their
political subdivisions, agencies, authorities,
instrumentalities, or similar entities, will be
considered a separate issuer of its assets and
revenues are separate from those of the
governmental body creating it and the security
is backed only by its own assets and revenues.
Industrial development bonds, backed only by the
assets and revenues of a nongovernmental issuer,
are considered to be issued solely by the that
issuer. If, in the case of an industrial
development bond or governmental-issued
security, a governmental or other entity
guarantees the security, such guarantee would be
considered a separate security issued by the
guarantor as well as the other issuer, subject
to limited exclusions allowed by the Investment
Company Act of 1940.
- -------------------------------------------------------------------------------
2. CONCENTRATION The Fund will not purchase securities if, as a
(S) result of such purchase, 25% or more of the
value of its total assets would be invested in
any one industry, or in industrial development
bonds or other securities, the interest upon
which is paid from revenues of similar types of
projects. However, the Fund may invest as
temporary investments more than 25% of the value
of their total assets in cash or cash items,
securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities,
or instruments secured by these money market
instruments, such as repurchase agreements.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR The Fund will not issue senior securities,
SECURITIES (S) except the Fund may borrow money directly or
through reverse repurchase agreement as a
temporary measure for extraordinary or emergency
purposes in an amount up to one-third of the
value of its total assets, including the amount
borrowed, in order to meet redemption requests
without immediately selling portfolio
instruments; and except to the extent a Fund
will enter into futures contracts.
</TABLE>
D-77
<PAGE>
<TABLE>
<CAPTION>
TOPIC HIGH GRADE TAX FREE FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
4. BORROWING (INCLUDING The Fund will not issue senior securities,
REVERSE REPURCHASE except the Fund may borrow money directly or
AGREEMENTS) through reverse repurchase agreement as a
(S) temporary measure for extraordinary or emergency
purposes in an amount up to one-third of the
value of its total assets, including the amount
borrowed, in order to meet redemption request
without immediately selling portfolio
instruments; and except to the extent a Fund
will enter into futures contracts. Any such
borrowings need not be collateralized. The Fund
will not purchase any securities while
borrowings in excess of 5% of its total assets
are outstanding. The Fund will not borrow money
or engage in reverse repurchase agreements for
investment leverage purposes. The Fund will not
mortgage, pledge or hypothecate any assets
except to secure permitted borrowings. In those
cases, the Fund may pledge assets having a
market value not exceeding the lesser of the
dollar amounts borrowed or 15% of the value of
total assets at the time of borrowing. Margin
deposits for the purchase and sale of financial
futures contracts and related options and
segregation or collateral arrangements made in
connection with options activities and the
purchase of securities on a when-issued basis
are not deemed to be a pledge.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES The Fund may not engage in the business of
OF OTHER ISSUERS underwriting the securities of other issuers,
(S) provided that the purchase of municipal
securities or other permitted investments,
directly from the issuer thereof (or from an
underwriter for an issuer) and the later
disposition of such securities in accordance
with a Fund's investment program shall not be
deemed to be an underwriting.
- -------------------------------------------------------------------------------
6. REAL ESTATE The Fund will not buy or sell real estate,
(S) although it may invest in securities of
companies whose business involves the purchase
or sale of real estate or in securities which
are secured by real estate or interests in real
estate.
- -------------------------------------------------------------------------------
7. COMMODITIES The Fund will not purchase or sell commodities
(S) or commodity contracts.
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS The Fund will not lend any of its assets except
(INCLUDING REPURCHASE that it may purchase or hold money market
AGREEMENTS) (S) instruments, including repurchase agreements and
variable amount demand master notes in
accordance with its investment objective,
policies and limitations and it may lend
portfolio securities valued at not more than 15%
of its total assets to broker-dealers.
- -------------------------------------------------------------------------------
9. INVESTMENTS IN FEDERALLY Under normal circumstances, it is anticipated
TAX EXEMPT SECURITIES that the Fund will invest its assets so that at
(S) least 80% of its annual investment income is
exempt from Federal income tax other than the
Federal alternative minimum tax
</TABLE>
D-78
<PAGE>
<TABLE>
<CAPTION>
TOPIC HIGH GRADE TAX FREE FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
10. SHORT SALES The Fund will not make short sales of securities
(R) or maintain a short position, unless at all
times when a short position is open the Fund
owns an equal amount of such securities or of
securities which, without payment of any further
consideration are convertible into or exchange
able for securities of the same issue as, and
equal in amount to, the securities sold short.
The use of short sales will allow the funds to
retain certain bonds in their portfolios longer
than it would without such sales. To the extent
that the Fund receives the current income
produced by such bonds for a longer period than
it might otherwise, a Fund's investment
objective is furthered.
- -------------------------------------------------------------------------------
11. MARGIN PURCHASES The Fund may not purchase securities on margin,
(R) except that the Fund may obtain such short-term
credits as may be necessary for the clearance of
transactions. A deposit or payment by the Fund
of initial or variation margin in connection
with financial futures contracts or related
options transactions is not considered the
purchase of a security on margin.
- -------------------------------------------------------------------------------
12. OTHER INVESTMENT The Fund will not purchase securities of
COMPANIES investment companies only in open-market
(R) transactions involving customary broker's
commissions. However, these limitations are not
applicable if the securities are acquired in a
merger, consolidation or acquisition of assets.
It should be noted that investment companies
incur certain expenses such as management fees
and therefore any investment by a Fund in shares
of another investment company would be subject
to such duplicate expenses.
- -------------------------------------------------------------------------------
13. INTERESTS IN OIL, GAS OR The Fund will not purchase interests in or sell
OTHER MINERAL oil, gas or other mineral exploration or
EXPLORATIONS OR development programs or leases, although it may
DEVELOPMENT PROGRAMS purchase the securities or issuers which invest
(R) in or sponsor such programs.
- -------------------------------------------------------------------------------
14. RESTRICTED SECURITIES The Fund will not invest more than 10% of its
(R) total assets in securities subject to
restrictions on resale under the Federal
Securities Laws.
- -------------------------------------------------------------------------------
15. INVESTMENT IN TAXABLE The Fund may temporarily invest up to 20% of its
SECURITIES total assets in taxable securities.
(R)
</TABLE>
D-79
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
EQUITY FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC NATURAL RESOURCES FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION With respect to 75% of its total assets, Fund
(S) may not invest more than 5% of the value 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, all as determined immediately after such
investment; provided that these limitations do
not apply to investments in securities issued or
guaranteed by the U.S. government or its
agencies or instrumentalities.
- -------------------------------------------------------------------------------
2. CONCENTRATION Fund may not invest more than 25% of the value
(S) of its total assets in the securities of issuers
in any one industry other than securities issued
or guaranteed by the U.S. government or its
agencies or instrumentalities.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR Fund may not issue senior securities, except
SECURITIES (S) that Fund may (a) make permitted borrowings of
money; (b) enter into firm commitment agreements
and collateral arrangements with respect to the
writing of options on securities and engage in
permitted transactions in futures and options
thereon and forward contracts; and (c) issue
shares of any additional permitted classes or
series.
- -------------------------------------------------------------------------------
4. BORROWING Fund may not borrow money, except that Fund may
(S) (a) borrow from any bank, provided that,
immediately after any such borrowing there is
asset coverage of at least 300% for all
borrowings; (b) borrow for temporary purposes
only and in an amount not exceeding 5% of the
value of the Fund's total assets, computed at
the time of borrowing; or (c) enter into reverse
repurchase agreements, provided that,
immediately after entering into any such
agreements, there is asset coverage of at least
300% of all bank borrowings and reverse
repurchase agreements.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES N/A
OF OTHER ISSUERS
(S)
- -------------------------------------------------------------------------------
6. REAL ESTATE Fund may not invest in real estate, except that
(S) Fund may invest in securities directly or
indirectly secured by real estate and interests
therein and securities of companies that invest
in real estate and interests therein, including
mortgages and other liens.
- -------------------------------------------------------------------------------
7. COMMODITIES Fund may not invest in commodities, except that
(S) Fund may enter into financial futures contracts
and options thereon for hedging purposes and
enter into forward contracts.
</TABLE>
D-80
<PAGE>
<TABLE>
<CAPTION>
TOPIC NATURAL RESOURCES FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
8. LOANS TO OTHERS Fund may not make loans, except that Fund may
(S) (a) make, purchase, or hold publicly and
nonpublicly offered debt securities (including
convertible securities) and other debt
investments, including loans, consistent with
its investment objective; (b) lend its portfolio
securities to broker-dealers; and (c) enter into
repurchase agreements.
Fund does not presently intend to lend its
securities if, as a result, the aggregate of all
outstanding securities loans exceeds 15% of the
value of the Fund's total assets taken at their
current value. Shareholder approval is necessary
to amend the following conditions which Fund
must meet in order to be permitted by the SEC to
engage in loan transactions: (1) Fund must
receive 100% collateral in the form of cash or
cash equivalents, e.g., U. S. Treasury bills or
notes, from the borrower; and (2) the borrower
must increase the collateral whenever the market
value of the securities (determined on a daily
basis) exceeds the value of the collateral.
Other such conditions for the making of loans
exist but do not require shareholder approval
before being amended from time to time by Fund's
Board of Trustees.
- -------------------------------------------------------------------------------
9. FUND OF FUNDS Notwithstanding any other investment policy or
(R) restriction, Fund may invest all of its assets
in the securities of a single open-end
management investment company with substantially
the same fundamental investment objectives,
policies and restrictions as the Fund.
</TABLE>
D-81
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
EQUITY FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC GROWTH AND INCOME FUND (S-1)
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION With respect to 75% of its total assets, Fund
(S) may not invest more than 5% of the value 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, all as determined immediately after such
investment; provided that these limitations do
not apply to investments in securities issued or
guaranteed by the U.S. government or its
agencies or instrumentalities.
- -------------------------------------------------------------------------------
2. CONCENTRATION Fund may not invest more than 25% of its total
(S) assets in the securities of issuers in any
single industry, other than securities issued by
banks and savings and loan associations or
securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR (See "Borrowing")
SECURITIES (S)
- -------------------------------------------------------------------------------
4. BORROWING Fund may not borrow money, except that Fund may
(S) (a) borrow money from banks for temporary or
emergency purposes in aggregate amounts up to
10% of the value of the Fund's net assets
(computed at cost); or (b) enter into reverse
repurchase agreements (bank borrowings and
reverse repurchase agreements, in aggregate,
shall not exceed 10% of the value of Fund's net
assets).
Fund has no current intention of attempting to
increase its net income by borrowing and intends
to repay any borrowings made in accordance with
the investment restriction enumerated above
before it makes any additional investments.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES Fund may not underwrite securities, except that
OF OTHER ISSUERS Fund may purchase securities from issuers
(S) thereof or others and dispose of such securities
in a manner consistent with its other investment
policies; in the disposition of restricted
securities, Fund may be deemed to be an
underwriter, as defined in the Securities Act of
1933.
- -------------------------------------------------------------------------------
6. REAL ESTATE Fund may not purchase or sell real estate or
(S) interests in real estate, except that it may
purchase and sell securities secured by real
estate and securities of companies which invest
in real estate.
- -------------------------------------------------------------------------------
7. COMMODITIES Fund will not purchase or sell commodities or
(S) commodity contracts, except that Fund may engage
in currency or other financial futures contracts
and related options transactions.
</TABLE>
D-82
<PAGE>
<TABLE>
<CAPTION>
TOPIC GROWTH AND INCOME FUND (S-1)
- -------------------------------------------------------------------------------
<S> <C> <C>
8. LOANS TO OTHERS Fund may not make loans, except that Fund may
(S) purchase money market securities, enter into
repurchase agreements, buy publicly and
privately distributed debt securities and lend
limited amounts of its portfolio securities to
broker-dealers; all such investments must be
consistent with Fund's investment objective and
policies.
Fund will not lend securities to brokers or
dealers if, as a result, the aggregate of all
outstanding securities loans exceed 15% of the
value of the Fund's total assets taken at their
current value.
- -------------------------------------------------------------------------------
9. UNSEASONED ISSUERS Fund may not invest more than 5% of the value of
(R) its total assets in companies which have been in
operation for less than 3 years.
- -------------------------------------------------------------------------------
10. CONTROL OR MANAGEMENT Fund may not invest for the primary purpose of
(R) exercising control over or management of any
issuer.
- -------------------------------------------------------------------------------
11. SHORT SALES Fund may not make short sales of securities.
(R)
- -------------------------------------------------------------------------------
12. MARGIN PURCHASES Fund may not make margin purchases.
(R)
- -------------------------------------------------------------------------------
13. OTHER INVESTMENT Fund may not purchase the securities of any
COMPANIES other investment company except in the open
(R) market and at customary brokerage rates and in
no event more than 3% of the voting securities
of any investment company.
</TABLE>
D-83
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
EQUITY FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC SELECT SMALL CAP GROWTH FUND
- --------------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION With respect to 75% of its total assets, Fund may not
(S) invest more than 5% of the value 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, all as determined at the
time of purchase; provided that these limitations do
not apply to investments in securities issued or
guaranteed by the U.S. government or its agencies or
instrumentalities.
- --------------------------------------------------------------------------------------
2. CONCENTRATION Fund may not concentrate its investments in the
(S) securities of issuers in any one industry other than
securities issued or guaranteed by the U.S. government
or its agencies or instrumentalities.
- --------------------------------------------------------------------------------------
3. ISSUING SENIOR Fund may not issue senior securities, except that Fund
SECURITIES may (a) make permitted borrowings of money; (b) enter
(S) into firm commitment agreements and collateral
arrangements with respect to the writing of options on
securities and engage in permitted transactions in
futures and options thereon and forward contracts; and
(c) issue shares of any additional permitted classes or
series.
- --------------------------------------------------------------------------------------
4. BORROWING Fund may not borrow money, except that Fund may (a)
(S) borrow from any bank, provided that, immediately after
any such borrowing there is asset coverage of at least
300% for all borrowings; (b) borrow for temporary
purposes only and in an amount not exceeding 5% of the
value of the Fund's total assets, computed at the time
of borrowing; or (c) enter into reverse repurchase
agreements, provided that, immediately after entering
into any such agreements, there is asset coverage of at
least 300% of all bank borrowings and reverse
repurchase agreements.
- --------------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES Fund may not engage in the business of underwriting
OF OTHER ISSUERS securities issued by other persons, except insofar as
(S) Fund may be deemed to be an underwriter in connection
with the disposition of its portfolio investments.
- --------------------------------------------------------------------------------------
6. REAL ESTATE Fund may not invest in real estate, except that Fund
(S) may invest in securities directly or indirectly secured
by real estate and interests therein and securities of
companies that invest in real estate and interests
therein, including mortgages and other liens.
- --------------------------------------------------------------------------------------
7. COMMODITIES Fund may not invest in commodities, except that Fund
(S) may enter into financial futures contracts and options
thereon for hedging purposes and enter into forward
contracts.
</TABLE>
D-84
<PAGE>
<TABLE>
<CAPTION>
TOPIC SELECT SMALL CAP GROWTH FUND
- --------------------------------------------------------------------------------------
<S> <C> <C>
8. LOANS TO OTHERS Fund may not make loans, except that Fund may (a) make,
(S) purchase, or hold publicly and nonpublicly offered debt
securities (including convertible securities) and other
debt investments, including loans, consistent with its
investment objective; (b) lend its portfolio securities
to broker-dealers; and (c) enter into repurchase
agreements.
Fund will not lend securities to broker-dealers if, as
a result, the aggregate of all outstanding securities
loans exceeds 1/3 of the value of Fund's total assets
taken at their current value.
</TABLE>
D-85
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
EQUITY FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC OMEGA FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION Fund may not invest more than 10% of Fund's
(S) total assets (taken at market or fair value as
determined by Fund's Board of Trustees) in the
securities of any one issuer (except U.S.
government securities).
As a diversified investment company, Fund has
undertaken not to purchase a security if, as a
result, more than 10% of the outstanding voting
securities of any single issuer would be held by
Fund or more than 5% of its total assets would
be invested in the securities of any one issuer.
- -------------------------------------------------------------------------------
2. CONCENTRATION Fund may not concentrate its investments in any
(S) particular industry.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR (See "Borrowing")
SECURITIES
(S)
- -------------------------------------------------------------------------------
4. BORROWING Fund may not borrow, unless, immediately after
(S) any such borrowing, such borrowing and all other
such borrowings and other liabilities do not
exceed 1/3 of the value of Fund's total assets
(including all such borrowings), taken at market
or other fair value.
A borrowing limitation in excess of 5% is
generally associated with a leveraged fund. Fund
anticipates borrowing only for temporary
purposes. To the extent Fund's total borrowings
exceed 5%, no additional investments will be
made until such borrowings are reduced to 5%.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES Fund may not act as a securities underwriter, or
OF OTHER ISSUERS act as a distributor of securities of which it
(S) is the issuer, except that Fund may issue, sell
and distribute securities of which it is the
issuer, including additional shares of its
capital stock, and may act as its own
distributor of such securities to the extent
that such action is not in contravention of such
rules and regulations as the SEC may prescribe
in respect thereof, and except that Fund might
be deemed an underwriter within the meaning of
Section 2(11) of the Securities Act of 1933 in
making sales of restricted securities.
- -------------------------------------------------------------------------------
6. REAL ESTATE Fund may not purchase or sell real estate or
(S) interests in real estate.
- -------------------------------------------------------------------------------
7. COMMODITIES Fund may not purchase or sell commodities or
(S) commodity contracts, except that Fund may engage
in transactions in commodity futures contracts
and options on commodity futures contracts,
other than physical commodity futures contracts.
</TABLE>
D-86
<PAGE>
<TABLE>
<CAPTION>
TOPIC OMEGA FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
8. LOANS TO OTHERS Fund may not make loans, except by the purchase
(S) of a portion of an issue of bonds, notes,
debentures or other obligations publicly
distributed or of a type customarily purchased
by financial institutions, or by entering into
loan transactions with respect to portfolio
securities not in excess of 25% of Fund's total
assets (taken at current value) immediately
after such transaction; Fund will not lend any
of its assets to any investment adviser or
principal underwriter for Fund or to any
officer, trustee or employee of either of them
or of Fund.
Loans of Fund securities may not exceed 25% of
Fund's total assets. Shareholder approval is
necessary to amend the following conditions
which Fund must meet in order to be permitted by
the SEC to engage in loan transactions: (1) Fund
must receive 100% collateral in the form of cash
or cash equivalents, e.g., U. S. Treasury bills
or notes, from the borrower; and (2) the
borrower must increase the collateral whenever
the market value of the securities (determined
on a daily basis) exceeds the value of the
collateral. Other such conditions for the making
of loans exist but do not require shareholder
approval before being amended from time to time
by Fund's Board of Trustees.
- -------------------------------------------------------------------------------
9. UNSEASONED ISSUERS Fund may not purchase securities of any company
(R) with a record of less than 3 years' continuous
operation (including that of predecessors) if
such purchase would cause Fund's investments in
such companies taken at cost to exceed 5% of
Fund's total assets taken at market value.
- -------------------------------------------------------------------------------
10. SHORT SALES Fund may not make short sales of securities or
(R) maintain a short position, unless, at all times
when a short position is open, it owns an equal
amount of such securities convertible into or
exchangeable, without payment of any further
consideration, for securities of the same issue
as, and equal in amount to, the securities sold
short and unless not more than 15% of Fund's net
assets (taken at market or fair value as
determined by Fund's Board of Trustees) is held
as collateral for such sales at any one time (a
reason for making such a sale would be to defer
realization of gain or loss for federal income
tax purposes).
- -------------------------------------------------------------------------------
11. MARGIN PURCHASES Fund may not purchase securities on margin,
(R) provided that Fund may obtain such short-term
credits as may be necessary for the clearance of
purchases and sales of securities.
</TABLE>
D-87
<PAGE>
<TABLE>
<CAPTION>
TOPIC OMEGA FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
12. OTHER INVESTMENT Fund may not purchase or acquire the securities
COMPANIES of any other investment company; except that it
(R) may make such a purchase or acquisition in the
open market involving no commission or profit to
a sponsor or dealer (other than the customary
broker's commission); provided that, immediately
after such purchase or acquisition, Fund and any
company or companies controlled by Fund do not
own in the aggregate: (a) more than 3% of the
total outstanding voting stock of the acquired
company; (b) securities issued by the acquired
company having an aggregate value in excess of
5% of the value of the total assets of Fund; or
(c) securities issued by the acquired company
and all other investment companies having an
aggregate value in excess of 10% of the value of
the total assets of Fund; and provided that,
immediately after such purchase or acquisition,
Fund, other investment companies having the same
investment adviser, and companies controlled by
Fund and/or such investment companies do not own
more than 10% of the total outstanding voting
stock of any closed-end investment company so
purchased or acquired.
A purchase by Fund of securities of other
investment companies would result in a layering
of expenses such that Fund's shareholders would
indirectly bear a proportionate share of the
expenses of those investment companies,
including operating costs, investment advisory
fees and administrative fees. Fund does not
anticipate purchasing the securities of other
investment companies.
- -------------------------------------------------------------------------------
13. OFFICERS' AND DIRECTORS' Fund may not purchase or retain the securities
OWNERSHIP OF SHARES of any issuer if those officers and trustees of
(R) Fund or its investment adviser owning
individually more than 1/2 of 1% of the
securities of such issuer together own more than
5% of the securities of such issuer.
</TABLE>
D-88
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
EQUITY FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC PRECIOUS METALS HOLDINGS, INC.
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION Fund may not invest more than 5% of its total
(S) assets taken at market value in the securities
of any one issuer, not including securities of
the U.S. government and its instrumentalities
and the securities of one or more domestic or
foreign wholly-owned subsidiaries except that up
to 25% of its total assets may be invested
without regard to this limit.
Fund may not acquire, directly or indirectly,
more than 10% of the voting securities of any
issuer other than one or more domestic or
foreign wholly-owned subsidiaries.
- -------------------------------------------------------------------------------
2. CONCENTRATION Fund "concentrates" (within the meaning of the
(S) 1940 Act) its assets in securities related to
mining, processing or dealing in gold or other
precious metals and minerals, which means that
at least 25% of its assets will be invested in
the securities of these industries.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR Fund may not issue any senior securities.
SECURITIES
(S)
- -------------------------------------------------------------------------------
4. BORROWING Fund may not borrow money, except that Fund may
(S) (a) borrow money from banks for emergency or
extraordinary purposes in aggregate amounts up
to 5% of its net assets and (b) enter into
reverse repurchase agreements.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES Fund may not underwrite the securities of other
OF OTHER ISSUERS issuers, except to the extent that, in
(S) connection with the disposition of securities of
the type referred to in current Fundamental
Restriction 17 below, Fund may be deemed to be
an underwriter under certain U.S. securities
laws.
- -------------------------------------------------------------------------------
6. REAL ESTATE Fund may not purchase or sell real estate or
(S) interests therein or real estate mortgages,
provided that the foregoing shall not prevent
Fund from purchasing or selling (a) readily
marketable securities which are secured by
interests in real estate and (b) readily
marketable securities of companies which deal in
real estate, including real estate investment
trusts.
</TABLE>
D-89
<PAGE>
<TABLE>
<CAPTION>
TOPIC PRECIOUS METALS HOLDINGS, INC.
- -------------------------------------------------------------------------------
<S> <C> <C>
7. COMMODITIES Fund may not purchase or sell commodities or
(S) commodity contracts, except that Fund may invest
in the securities of one or more domestic or
foreign wholly-owned subsidiaries which deal in
precious metals and minerals and contracts relat
to the limitation that no such investment may be
made if at the time thereof the fair value of
all such investments exceeds, or by virtue of
such investment would exceed, an amount equal to
25% of the then market value of Fund's total
assets, and except also that Fund may engage in
currency or other financial futures and related
options transactions.
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS Fund may not make loans to other persons, except
(S) through the investment of up to 25% of the total
assets of Fund in one or more domestic or
foreign wholly-owned subsidiaries; for the
purposes of this restriction, the purchase of a
portion of an issue of bonds, notes, debentures
or other obligations distributed publicly,
whether or not the purchase is made upon the
original issuance of such securities, will not
be deemed to be the making of a loan.
- -------------------------------------------------------------------------------
9. UNSEASONED ISSUERS Fund may not invest more than 5% of the value of
(R) Fund's total assets in the securities of any
issuers which have a record of less than 3 years
continuous operation, including the similar
operations of predecessors or parents, or equity
securities of issuers which are not readily
marketable, except that this restriction shall
not apply to Fund's investments in one or more
domestic or foreign wholly-owned subsidiaries.
- -------------------------------------------------------------------------------
10. CONTROL OR MANAGEMENT Fund may not invest in companies for the purpose
(R) of exercising control or management, except for
one or more domestic or foreign wholly-owned
subsidiaries.
- -------------------------------------------------------------------------------
11. SHORT SALES Fund may not sell securities short, unless at
(R) the time it owns an equal amount of such
securities or, by virtue of ownership of
convertible or exchangeable securities, it has
the right to obtain through conversion or
exchange of such other securities an amount
equal to the securities sold short, in which
case Fund will retain such securities as long as
it is in a short position.
- -------------------------------------------------------------------------------
12. MARGIN PURCHASES Fund may not purchase or sell securities on
(R) margin, but it may obtain such short-term
credits as may be necessary for the clearance of
purchased and sold securities.
- -------------------------------------------------------------------------------
13. OTHER INVESTMENT Fund may not purchase the securities of any
COMPANIES other investment company, except that it may
(R) make such a purchase (a) in the open market
involving no commission or profit to a sponsor
or dealer, other than the customary broker's
commission, and (b) as part of a merger,
consolidation or acquisition of assets; provided
that immediately after any such purchase (a) not
more than 10% of Fund's total assets would be
invested in such securities and (b) not more
than 3% of the voting stock of such company
would be owned by Fund.
</TABLE>
D-90
<PAGE>
<TABLE>
<CAPTION>
TOPIC PRECIOUS METALS HOLDINGS, INC.
- -------------------------------------------------------------------------------
<S> <C> <C>
14. OFFICERS' AND DIRECTORS' Fund may not purchase or retain the securities
OWNERSHIP OF SHARES of any issuer if the Treasurer of Fund has
(R) knowledge that those officers and/or Directors
of Fund or its investment adviser who own
individually more than of 1% of the securities
of such issuer together own more than 5% of the
securities of such issuer.
- -------------------------------------------------------------------------------
15. OIL, GAS AND MINERALS Fund may not invest in oil and gas interests,
(R) puts, calls, straddles, spreads and options,
except that Fund may write covered call options
traded on the London Stock Exchange, a national
securities exchange or the over-the-counter
market and purchase call options to close out
previously written call options; this
restriction shall not apply to the extent the
investments of one or more domestic or foreign
wholly-owned subsidiaries in metals or minerals
contracts might be considered options.
- -------------------------------------------------------------------------------
16. PLEDGES Fund may not pledge more than 15% of its net
(R) assets to secure indebtedness; the purchase or
sale of securities on a "when issued" basis, or
collateral arrangements with respect to the
writing of options on securities, are not deemed
to be a pledge of assets.
As a matter of practice, Fund does not pledge
its assets except in the course of portfolio
trading.
- -------------------------------------------------------------------------------
17. ILLIQUID SECURITIES Fund may not invest more than 15% of its net
(R) assets in securities for which market quotations
are not readily available, or in repurchase
agreements maturing in more than 7 days; except
that this restriction shall not apply to Fund's
investments in one or more domestic or foreign
wholly-owned subsidiaries, and except also that
Fund may write covered call options traded on
the over-the-counter market and purchase call
options to close out existing positions.
</TABLE>
D-91
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
EQUITY FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC STRATEGIC GROWTH FUND (K-2)
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION With respect to 75% of its total assets, Fund
(S) may not invest more than 5% of the value 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, all as determined immediately after such
investment; provided that these limitations do
not apply to investments in securities issued or
guaranteed by the U.S. government or its
agencies or instrumentalities.
- -------------------------------------------------------------------------------
2. CONCENTRATION Fund may not invest more than 25% of its assets
(S) in the securities of issuers in any single
industry.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR Fund will not issue senior securities, except as
SECURITIES appropriate to evidence indebtedness which Fund
(S) is permitted to incur pursuant to Fundamental
Restriction 4 below and except for shares of any
additional series or portfolios which may be
established by the Trustees.
- -------------------------------------------------------------------------------
4. BORROWING Fund may not borrow money, except that Fund may
(S) (i) borrow money from banks for temporary or
emergency purposes in aggregate amounts up to
10% of the value of Fund's net assets (computed
at cost), or (ii) enter into reverse repurchase
agreements provided that bank borrowings and
reverse repurchase agreements, in aggregate,
shall not exceed 10% of the value of Fund's
assets.
Fund has no current intention of attempting to
increase its net income by borrowing and intends
to repay any borrowings made in accordance with
the investment restriction enumerated above
before it makes any additional investments.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES Fund may not underwrite securities, except that
OF OTHER ISSUERS Fund may purchase securities from issuers
(S) thereof or others and dispose of such securities
in a manner consistent with its other investment
policies; in the disposition of restricted
securities, Fund may be deemed to be an
underwriter, as defined in the Securities Act of
1933.
- -------------------------------------------------------------------------------
6. REAL ESTATE Fund may not purchase or sell real estate or
(S) interests in real estate, except that it may
purchase and sell securities secured by real
estate and securities of companies which invest
in real estate.
- -------------------------------------------------------------------------------
7. COMMODITIES Fund will not purchase or sell commodities or
(S) commodity contracts, except that Fund may engage
in currency or other financial futures contracts
and related options transactions.
</TABLE>
D-92
<PAGE>
<TABLE>
<CAPTION>
TOPIC STRATEGIC GROWTH FUND (K-2)
- -------------------------------------------------------------------------------
<S> <C> <C>
8. LOANS TO OTHERS Fund will not make loans, except that Fund may
(S) buy publicly and privately distributed debt
securities, provided that such securities
purchases are consistent with its investment
objectives and policies, and except that Fund
may lend limited amounts of its portfolio
securities to broker-dealers.
Fund will not lend securities to brokers and
dealers if as a result the aggregate of all
outstanding securities loans exceeds 15% of the
value of Fund's total assets taken at their
current value.
- -------------------------------------------------------------------------------
9. UNSEASONED ISSUERS Fund may not invest more than 5% of the value of
(R) its total assets in companies which have been in
operation for less than 3 years.
- -------------------------------------------------------------------------------
10. CONTROL OR MANAGEMENT Fund may not invest in a company for the purpose
(R) of control or management.
- -------------------------------------------------------------------------------
11. SHORT SALES Fund may not make short sales of securities.
(R)
- -------------------------------------------------------------------------------
12. MARGIN PURCHASES Fund may not make margin purchases.
(R)
- -------------------------------------------------------------------------------
13. OTHER INVESTMENT Fund may not purchase the securities of any
COMPANIES other investment company except in the open
(R) market and at customary brokerage rates and in
no event more than 3% of the voting securities
of any investment company.
</TABLE>
D-93
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
BOND FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC HIGH INCOME BOND FUND (B-4)
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION With respect to 75% of its total assets, Fund
(S) may not invest more than 5% of the value 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, all as determined immediately after such
investment; provided that these limitations do
not apply to investments in securities issued or
guaranteed by the U.S. government or its
agencies or instrumentalities.
- -------------------------------------------------------------------------------
2. CONCENTRATION Fund may not invest more than 25% of its assets
(S) in the securities of issuers in any single
industry, other than securities issued by banks
and savings and loan associations or securities
issued or guaranteed by the U.S. government, its
agencies or instrumentalities.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR Fund will not issue senior securities, except as
SECURITIES appropriate to evidence indebtedness which Fund
(S) is permitted to incur pursuant to Fundamental
Restriction 4 below and except for shares of any
additional series or portfolios which may be
established by the Trustees.
- -------------------------------------------------------------------------------
4. BORROWING Fund may not borrow money, except that Fund may
(S) (a) borrow money from banks for temporary or
emergency purposes in aggregate amounts up to
10% of the value of Fund's net assets (computed
at cost), or (b) enter into reverse repurchase
agreements (bank borrowings and reverse
repurchase agreements, in aggregate, shall not
exceed 10% of the value of Fund's net assets).
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES Fund may not underwrite securities, except that
OF OTHER ISSUERS Fund may purchase securities from issuers
(S) thereof or others and dispose of such securities
in a manner consistent with its other investment
policies; in the disposition of restricted
securities Fund may be deemed to be an
underwriter, as defined in the Securities Act of
1933.
- -------------------------------------------------------------------------------
6. REAL ESTATE Fund may not purchase or sell real estate or
(S) interests in real estate, except that it may
purchase and sell securities secured by real
estate and securities of companies which invest
in real estate.
- -------------------------------------------------------------------------------
7. COMMODITIES Fund will not purchase or sell commodities or
(S) commodity contracts, except that Fund may engage
in currency or other financial futures contracts
and related options transactions.
</TABLE>
D-94
<PAGE>
<TABLE>
<CAPTION>
TOPIC HIGH INCOME BOND FUND (B-4)
- -------------------------------------------------------------------------------
<S> <C> <C>
8. LOANS TO OTHERS Fund may not make loans, except that Fund may
(S) make, purchase or hold debt securities and other
debt investments, including loans, consistent
with its investment objective, lend portfolio
securities valued at not more than 15% of its
total assets to broker-dealers, and enter into
repurchase agreements.
Fund may lend securities to brokers and dealers,
but such loans will not be made with respect to
Fund if, as a result, the aggregate of all
outstanding securities loans exceeds 15% of the
value of Fund's total assets taken at their
current value.
- -------------------------------------------------------------------------------
9. UNSEASONED ISSUERS Fund may not invest more than 5% of the value of
(R) its total assets in companies which have been in
operation for less than 3 years.
- -------------------------------------------------------------------------------
10. CONTROL OR MANAGEMENT Fund may not invest for the primary purpose of
(R) exercising control over or management of any
issuer.
- -------------------------------------------------------------------------------
11. SHORT SALES Fund may not make short sales of securities.
(R)
- -------------------------------------------------------------------------------
12. MARGIN PURCHASES Fund may not make margin purchases.
(R)
- -------------------------------------------------------------------------------
13. OTHER INVESTMENT Fund may not purchase the securities of any
COMPANIES other investment company except in the open
(R) market and at customary brokerage rates and in
no event more than 3% of the voting securities
of any investment company.
</TABLE>
D-95
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
BOND FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC CAPITAL PRESERVATION AND INCOME FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION With respect to 75% of the value of its assets,
(S) Fund will not purchase securities of any one
issuer (other than cash, cash items or
securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities)
if as a result more than 5% of the value of its
total assets would be invested in the securities
of the issuer.
- -------------------------------------------------------------------------------
2. CONCENTRATION N/A
(S)
- -------------------------------------------------------------------------------
3. ISSUING SENIOR Fund may not issue senior securities; the
SECURITIES purchase or sale of securities on a "when
(S) issued" basis or collateral arrangement with
respect to the writing of options on securities
are not deemed to be the issuance of a senior
security.
- -------------------------------------------------------------------------------
4. BORROWING Fund will not borrow money or enter into reverse
(S) repurchase agreements, except that Fund may
enter into reverse repurchase agreements or
borrow money from banks for temporary or
emergency purposes in aggregate amounts of up to
1/3 of the value of Fund's net assets; provided
that, while borrowings from banks (not including
reverse repurchase agreements) exceed 5% of
Fund's net assets, any such excess borrowings
will be repaid before additional investments are
made.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES Fund will not underwrite securities of other
OF OTHER ISSUERS issuers, except that Fund may purchase
(S) securities from the issuer or others and dispose
of such securities in a manner consistent with
its investment objective.
- -------------------------------------------------------------------------------
6. REAL ESTATE Fund may not purchase or sell real estate,
(S) except that it may purchase and sell securities
secured by real estate and securities of
companies which invest in real estate.
- -------------------------------------------------------------------------------
7. COMMODITIES Fund may not purchase or sell commodities or
(S) commodity contracts, except that it may engage
in financial futures contracts and related
options transactions.
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS Fund may not make loans, except that Fund may
(S) (a) purchase or hold debt securities consistent
with its investment objective, (b) lend
portfolio securities valued at not more than 15%
of its total assets to broker-dealers, and (c)
enter into repurchase agreements.
In order to generate additional income, Fund may
lend up to 15% of its portfolio securities on a
short-term or long-term basis to broker-dealers,
banks, or other institutional borrowers of
securities. Loans of securities by Fund are
limited to 15% of Fund's total assets.
</TABLE>
D-96
<PAGE>
<TABLE>
<CAPTION>
TOPIC CAPITAL PRESERVATION AND INCOME FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
9. UNSEASONED ISSUERS Fund may not invest more than 5% of its total
(R) assets in securities of unseasoned issuers that
have been in continuous operation for less than
3 years, including operating periods of their
predecessors.
- -------------------------------------------------------------------------------
10. SHORT SALES Fund will not make short sales of securities or
(R) 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.
- -------------------------------------------------------------------------------
11. MARGIN PURCHASES Fund will not purchase securities on margin,
(R) except that it may obtain such short-term
credits as may be necessary for the clearance of
transactions.
- -------------------------------------------------------------------------------
12. OTHER INVESTMENT Fund may not purchase securities of other
COMPANIES investment companies, except as part of a
(R) merger, consolidation, purchase of assets or
similar transaction.
- -------------------------------------------------------------------------------
13. PLEDGES Fund will not mortgage, pledge or hypothecate
(R) any assets except to secure permitted
borrowings. Fund may not pledge more than 15% of
its net assets to secure indebtedness; the
purchase or sale of securities on a "when
issued" basis or collateral arrangement with
respect to the writing of options on securities
are not deemed to be a pledge of assets.
</TABLE>
D-97
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
BOND FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC SELECT ADJUSTABLE RATE FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION With respect to 75% of its total assets, Fund
(S) may not invest more than 5% of the value of its
total assets in the securities of any one
issuer; this limitation does not apply to
investments in securities issued or guaranteed
by the U.S. government, its agencies or
instrumentalities.
- -------------------------------------------------------------------------------
2. CONCENTRATION N/A
(S)
- -------------------------------------------------------------------------------
3. ISSUING SENIOR Fund may not issue senior securities; the
SECURITIES purchase or sale of securities on a when issued
(S) basis is not deemed to be the issuance of a
senior security.
- -------------------------------------------------------------------------------
4. BORROWING Fund may not borrow money or enter into reverse
(S) repurchase agreements, except that Fund may
enter into reverse repurchase agreements or
borrow money from banks for temporary or
emergency purposes in aggregate amounts up to
1/3 of the value of Fund's net assets; provided
that while borrowings from banks (not including
reverse repurchase agreements) exceed 5% of
Fund's net assets, any such excess borrowings
will be repaid before additional investments are
made.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES Fund may not underwrite securities of other
OF OTHER ISSUERS issuers, except that Fund may purchase
(S) securities from the issuer or others and dispose
of such securities in a manner consistent with
its investment objective.
- -------------------------------------------------------------------------------
6. REAL ESTATE Fund may not purchase or sell real estate,
(S) except that it may purchase and sell securities
secured by real estate and securities of
companies which invest in real estate.
- -------------------------------------------------------------------------------
7. COMMODITIES Fund may not purchase or sell commodities or
(S) commodity contracts, except that it may engage
in financial futures contracts and related
options transactions.
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS Fund may not make loans, except that Fund may
(S) purchase or hold debt securities consistent with
its investment objective, lend portfolio
securities valued at not more than 15% of its
total assets to brokers, dealers and financial
institutions, and enter into repurchase
agreements.
- -------------------------------------------------------------------------------
9. UNSEASONED ISSUERS Fund may not invest more than 5% of its total
(R) assets in securities of any company having a
record, together with its predecessors, of less
than 3 years of continuous operations.
</TABLE>
D-98
<PAGE>
<TABLE>
<CAPTION>
TOPIC SELECT ADJUSTABLE RATE FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
10. SHORT SALES Fund may not make short sales of securities or
(R) 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.
- -------------------------------------------------------------------------------
11. MARGIN PURCHASES Fund may not purchase securities on margin,
(R) except that it may obtain such short-term credit
as may be necessary for the clearance of
purchases and sales of securities.
- -------------------------------------------------------------------------------
12. OTHER INVESTMENT Fund may not purchase more than 3% of the total
COMPANIES outstanding voting securities of any one
(R) investment company, invest more than 5% of its
total assets in any one investment company or
invest more than 10% of its total assets in
investment companies in general, except as part
of a merger, consolidation, purchase of assets
or similar transaction.
- -------------------------------------------------------------------------------
13. PLEDGES Fund may not pledge more than 15 % of its net
(R) assets to secure indebtedness; the purchase or
sale of securities on a when issued basis is not
deemed to be a pledge of assets.
</TABLE>
D-99
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
BOND FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC STRATEGIC INCOME FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION Fund may not purchase any security (other than
(S) U.S. government securities) of any issuer if as
a result more than 5% of its total assets would
be invested in securities of the issuer, except
that up to 25% of its total assets may be
invested without regard to this limit.
- -------------------------------------------------------------------------------
2. CONCENTRATION Fund may not purchase any security (other than
(S) U.S. government securities) of any issuer if as
a result more than 25% of its total assets would
be invested in a single industry; except that
(a) there is no restriction with respect to
obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities;
(b) wholly owned finance companies will be
considered to be in the industries of their
parents if their activities are primarily
related to financing the activities of the
parents; (c) the industry classification of
utilities will be determined according to their
services (for example, gas, gas transmission,
electric and telephone will each be considered a
separate industry); and (d) the industry
classification of medically related industries
will be determined according to their services
(for example, management, hospital supply,
medical equipment and pharmaceuticals will each
be considered a separate industry).
- -------------------------------------------------------------------------------
3. ISSUING SENIOR Fund may not issue senior securities; the
SECURITIES purchase or sale of securities on a "when
(S) issued" basis or collateral arrangement with
respect to the writing of options on securities
are not deemed to be the issuance of a senior
security.
- -------------------------------------------------------------------------------
4. BORROWING Fund may not borrow money or enter into reverse
(S) repurchase agreements, except that Fund may (a)
enter into reverse repurchase agreements or (b)
borrow money from banks for temporary or
emergency purposes in aggregate amounts up to
1/3 of the value of Fund's net assets; provided
that while borrowings from banks exceed 5% of
Fund's net assets, any such borrowings will be
repaid before additional investments are made.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES Fund may not underwrite securities of other
OF OTHER ISSUERS issuers, except that Fund may purchase
(S) securities from the issuer or others and dispose
of such securities in a manner consistent with
its investment objective.
- -------------------------------------------------------------------------------
6. REAL ESTATE Fund may not purchase or sell real estate,
(S) except that Fund may purchase and sell
securities secured by real estate and securities
of companies which invest in real estate.
- -------------------------------------------------------------------------------
7. COMMODITIES Fund may not purchase or sell commodities or
(S) commodity contracts, except that Fund may engage
in currency or other financial futures contracts
and related options transactions.
</TABLE>
D-100
<PAGE>
<TABLE>
<CAPTION>
TOPIC STRATEGIC INCOME FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
8. LOANS TO OTHERS Fund may not make loans, except that Fund may
(S) make, purchase or hold debt securities and other
debt investments, including loans, consistent
with its investment objective, lend portfolio
securities valued at not more than 15% of its
total assets to broker-dealers, and enter into
repurchase agreements.
In order to generate additional income, Fund may
lend portfolio securities on a short-term or
long-term basis to broker/dealers, banks, or
other institutional borrowers of securities.
Fund will not lend any of its assets except
portfolio securities up to 15% of the value of
its total assets.
- -------------------------------------------------------------------------------
9. UNSEASONED ISSUERS Fund may not invest more than 5% of its total
(R) assets in securities of any company having a
record, together with its predecessors, of less
than 3 years of continuous operation.
- -------------------------------------------------------------------------------
10. SHORT SALES Fund may not make short sales of securities or
(R) 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, and unless not more than 10% of its net
assets are held as collateral for such sales at
any one time.
- -------------------------------------------------------------------------------
11. MARGIN PURCHASES Fund may not purchase securities on margin
(R) except that it may obtain such short term credit
as may be necessary for the clearance of
purchases and sales of securities.
- -------------------------------------------------------------------------------
12. OTHER INVESTMENT Fund may not purchase securities of other
COMPANIES investment companies, except as part of a
(R) merger, consolidation, purchase of assets or
similar transaction.
- -------------------------------------------------------------------------------
13. PLEDGES Fund may not pledge more than 15% of its net
(R) assets to secure indebtedness; the purchase or
sale of securities on a "when issued" basis or
collateral arrangement with respect to the
writing of options on securities are not deemed
to be a pledge of assets.
</TABLE>
D-101
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
BALANCED FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC FUND FOR TOTAL RETURN
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION Fund may not invest more than 5% of its total
(S) assets, at the time of the investment in
question, in the securities of any one issuer
other than the U.S. government and its agencies
or instrumentalities, except that up to 25% of
the value of Fund's total assets may be invested
without regard to such 5% limitation.
Fund may not purchase more than 10% of the
voting securities of any one issuer other than
the U.S. government and its agencies and
instrumentalities.
- -------------------------------------------------------------------------------
2. CONCENTRATION Fund will not purchase any security (other than
(S) U.S. government securities) of any issuer if as
a result more than 25% of its total assets would
be invested in a single industry; except that
(a) there is no restriction with respect to
obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities;
(b) wholly-owned finance companies will be
considered to be in the industries of their
parents if their activities are primarily
related to financing the activities of the
parents; (c) the industry classification of
utilities will be determined according to their
services (for example, gas, gas transmission,
electric and telephone will each be considered a
separate industry); and (d) the industry
classification of medically related industries
will be determined according to their services
(for example, management, hospital supply,
medical equipment and pharmaceuticals will each
be considered a separate industry).
- -------------------------------------------------------------------------------
3. ISSUING SENIOR Fund will not issue senior securities; the
SECURITIES purchase or sale of securities on a "when
(S) issued" basis or collateral arrangement with
respect to the writing of options on securities
are not deemed to be the issuance of a senior
security.
- -------------------------------------------------------------------------------
4. BORROWING Fund will not borrow money or enter into reverse
(S) repurchase agreements, except that Fund may
enter into reverse repurchase agreements or
borrow money from banks for temporary or
emergency purposes in aggregate amounts up to
1/3 of the value of Fund's net assets; provided
that while borrowings from banks (not including
reverse repurchase agreements) exceed 5% of
Fund's net assets, any such borrowings will be
repaid before additional investments are made.
Fund may borrow in amounts up to 1/3 of its net
assets as a temporary measure or for
extraordinary or emergency purposes, as well as
for leverage.
</TABLE>
D-102
<PAGE>
<TABLE>
<CAPTION>
TOPIC FUND FOR TOTAL RETURN
- -------------------------------------------------------------------------------
<S> <C> <C>
5. UNDERWRITING SECURITIES Fund will not underwrite any issue of securities
OF OTHER ISSUERS except as it may be deemed an underwriter under
(S) the Securities Act of 1933 in connection with
the sale of securities in accordance with its
investment objectives, policies and limitations.
- -------------------------------------------------------------------------------
6. REAL ESTATE Fund will not purchase or sell real estate,
(S) except that it may purchase and sell securities
secured by real estate and securities of
companies which invest in real estate.
- -------------------------------------------------------------------------------
7. COMMODITIES Fund will not purchase or sell commodities or
(S) commodity contracts; however, Fund may enter
into futures contracts on financial instruments
or currency and sell or buy options on such
contracts.
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS Fund will not make loans, except that Fund may
(S) purchase or hold debt securities consistent with
its investment objective, lend portfolio
securities valued at not more than 15% of its
total assets to broker-dealers and enter into
repurchase agreements.
In order to generate income and to offset
expenses, Fund may lend portfolio securities to
brokers, dealers and other financial
institutions. Loans of securities by Fund, if
and when made, may not exceed 15% of the value
of the net assets of Fund.
- -------------------------------------------------------------------------------
9. UNSEASONED ISSUERS Fund may not invest more than 5% of its total
(R) assets in securities of unseasoned issuers that
have been in continuous operation for less than
3 years, including operating periods of their
predecessors.
- -------------------------------------------------------------------------------
10. CONTROL OR MANAGEMENT Fund may not invest in companies for the purpose
(R) of exercising control or management.
- -------------------------------------------------------------------------------
11. SHORT SALES Fund will not make short sales of securities or
(R) 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.
- -------------------------------------------------------------------------------
12. MARGIN PURCHASES Fund may not purchase securities on margin,
(R) except that Fund may obtain such short-term
credits as may be necessary for the clearance of
transactions. A deposit or payment by Fund of
initial or variation margin in connection with
financial futures contracts or related options
transactions is not considered the purchase of a
security on margin.
- -------------------------------------------------------------------------------
13. OTHER INVESTMENT Fund may not purchase securities of other
COMPANIES investment companies, except as part of a
(R) merger, consolidation, purchase of assets or
similar transaction.
- -------------------------------------------------------------------------------
14. PLEDGES Fund will not pledge more than 15% of its net
(R) assets to secure indebtedness; the purchase or
sale of securities on a "when issued" basis or
collateral arrangement with respect to the
writing of options on securities are not deemed
to be a pledge of assets.
</TABLE>
D-103
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
INTERNATIONAL/GLOBAL FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC LATIN AMERICA FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION Fund may not purchase securities of any one
(S) issuer if as a result more than 10% of the
outstanding voting securities of such issuer
would be held by Fund, or invest more than 5% of
Fund's total assets (taken at market value) in
the securities of any one issuer, except
securities issued or guaranteed by the U.S.
government or any of its agencies or
instrumentalities, provided that Fund may invest
up to 25% of its total assets in securities
issued or guaranteed by any single foreign
government and up to 10% of its total assets in
securities issued or guaranteed by any single
multinational agency limited in the aggregate to
25% of its total assets.
- -------------------------------------------------------------------------------
2. CONCENTRATION Fund may not invest 25% or more of its total
(S) assets (taken at market value) in securities of
issuers in a particular industry or group of
related industries, including a foreign
government, except U.S. government securities.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR Fund may not issue senior securities, except as
SECURITIES appropriate to evidence indebtedness which Fund
(S) is permitted to incur pursuant to Fundamental
Restriction 4 below and except for shares of any
additional series or portfolios which may be
established by the Trustees.
- -------------------------------------------------------------------------------
4. BORROWING Fund may not borrow money, except from a bank
(S) for temporary or emergency purposes (not for
leveraging or investment) and may not borrow
money in an amount exceeding 1/3 of the value of
its total assets (less liabilities other than
borrowings); any borrowings that come to exceed
1/3 of Fund's total assets by reason of a
decline in net assets will be reduced within 3
days to the extent necessary to comply with the
1/3 limitation; Fund will not purchase
securities while borrowings in excess of 5% of
its total assets are outstanding.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES Fund may not underwrite securities issued by
OF OTHER ISSUERS others, except to the extent that it may be
(S) deemed an underwriter in connection with the
disposition of restricted securities.
- -------------------------------------------------------------------------------
6. REAL ESTATE Fund may not invest in real estate or mortgages
(S) (but may invest in real estate investment trusts
or companies whose business involves the
purchase or sale of real estate or mortgages
except real estate limited partnerships).
- -------------------------------------------------------------------------------
7. COMMODITIES Fund may not invest in commodities or commodity
(S) contracts, except futures contracts and options
on futures contracts, including but not limited
to contracts for the future delivery of
securities or currency, contracts based on
securities indices and forward foreign currency
exchange contracts.
</TABLE>
D-104
<PAGE>
<TABLE>
<CAPTION>
TOPIC LATIN AMERICA FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
8. LOANS TO OTHERS Fund may not make loans, except (a) through the
(S) purchase of a portion of an issue of publicly
distributed debt securities in accordance with
its investment objectives, policies and
restrictions, and (b) by entering into; loan
transactions and; repurchase agreements with
respect to its securities if, as a result
thereof, not more than 25% of Fund's total
assets (taken at current value) would be subject
to loan transactions.
Fund may lend its securities to broker-dealers
or other institutional borrowers for use in
connection with such borrowers' short sales,
arbitrages or other securities transactions.
Such loans may not exceed 25% of Fund's total
assets. Shareholder approval is necessary to
amend the following conditions which Fund must
meet in order to be permitted by the SEC to
engage in loan transactions: (1) Fund must
receive 100% collateral in the form of cash or
cash equivalents, e.g., U.S. Treasury bills or
notes, from the borrower; and (2) the borrower
must increase the collateral whenever the market
value of the securities (determined on a daily
basis) exceeds the value of the collateral.
Other such conditions for the making of loans
exist but do not require shareholder approval
before being amended from time to time by Fund's
Board of Trustees.
- -------------------------------------------------------------------------------
9. PLEDGES Fund may not pledge, mortgage or hypothecate its
(R) assets, except that Fund may pledge not more
than 1/3 of its total assets (taken at current
value) to secure borrowings made in accordance
with Fundamental Restriction 4 above, and
provided that Fund may make initial and
variation margin payments in connection with
purchases or sales of futures contracts or of
options on futures contracts.
</TABLE>
D-105
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
INTERNATIONAL/GLOBAL FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC GLOBAL OPPORTUNITIES FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION Portfolio may not purchase any security of any
(S) issuer (other than any security issued or
guaranteed as to principal or interest by the
U.S., its agencies or instrumentalities) if as a
result more than 5% of its total assets would be
invested in securities of the issuer, except
that up to 25% of its total assets may be
invested without regard to this limit.
Portfolio may not purchase any security (other
than U.S. government securities) of any issuer
if as a result Portfolio would hold more than
10% of the voting securities of the issuer.
- -------------------------------------------------------------------------------
2. CONCENTRATION Portfolio may not purchase any security of any
(S) issuer if as a result more than 25% of its total
assets would be invested in a single industry;
except that (a) there is no restriction with
respect to U.S. government securities; (b)
wholly-owned finance companies will be
considered to be in the industries of their
parents if their activities are primarily
related to financing the activities of the
parents; (c) the industry classification of
utilities will be determined according to their
services (for example, gas, gas transmission,
electric, and telephone will each be considered
a separate industry) and (d) the industry
classification of medically related industries
will be determined according to their services
(for example, management, hospital supply,
medical equipment and pharmaceuticals will each
be considered a separate industry).
- -------------------------------------------------------------------------------
3. ISSUING SENIOR Portfolio may not issue senior securities; the
SECURITIES purchase or sale of securities on a "when
(S) issued" basis or collateral arrangement with
respect to the writing of options on securities
are not deemed to be the issuance of a senior
security.
- -------------------------------------------------------------------------------
4. BORROWING Portfolio may not borrow money, except that
(S) Portfolio may borrow money from banks and/or
enter into reverse repurchase agreements for
temporary or emergency purposes in aggregate
amounts up to 1/3 of the value of Portfolio's
net assets provided that no additional
investments shall be made at any time that
outstanding borrowings (including amounts
payable under reverse repurchase agreements)
exceed 5% of Portfolio's assets.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES Portfolio may not underwrite securities of other
OF OTHER ISSUERS issuers, except that Portfolio may purchase
(S) securities from the issuer or others and dispose
of such securities in a manner consistent with
its investment objectives.
</TABLE>
D-106
<PAGE>
<TABLE>
<CAPTION>
TOPIC GLOBAL OPPORTUNITIES FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
6. REAL ESTATE Portfolio may not purchase or sell real estate,
(S) except that it may purchase and sell securities
secured by real estate and securities of
companies which invest in real estate.
- -------------------------------------------------------------------------------
7. COMMODITIES Portfolio may not purchase or sell commodities
(S) or commodity contracts, except that it may
engage in currency and other financial futures
contracts and related options transactions.
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS Portfolio may not make loans, except that
(S) Portfolio may purchase or hold debt securities,
including nonpublicly offered debt securities
and convertible debt securities, consistent with
its investment objective, lend portfolio
securities valued at not more than 15% of its
total assets to broker-dealers, and enter into
repurchase agreements.
Portfolio may lend securities to brokers or
dealers, but such loans will not be made with
respect to Portfolio if, as a result, the
aggregate of all outstanding securities loans
exceeds 15% of the value of Portfolio's total
assets taken at their current value.
- -------------------------------------------------------------------------------
9. UNSEASONED ISSUERS Portfolio may not invest more than 5% of its
(R) total assets in securities of any company having
a record, together with its predecessors, of
less than 3 years of continuous operation.
- -------------------------------------------------------------------------------
10. CONTROL OR MANAGEMENT Portfolio may not purchase any security for the
(R) purpose of control or management.
- -------------------------------------------------------------------------------
11. SHORT SALES Portfolio may not make short sales of securities
(R) 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.
- -------------------------------------------------------------------------------
12. MARGIN PURCHASES Portfolio may not purchase securities on margin
(R) except that it may obtain such short-term credit
as may be necessary for the clearance of
purchases and sales of securities.
- -------------------------------------------------------------------------------
13. OTHER INVESTMENT Portfolio may not purchase securities of other
COMPANIES investment companies, except as part of a
(R) merger, consolidation, purchase of assets or
similar transaction.
- -------------------------------------------------------------------------------
14. PLEDGES Portfolio may not pledge more than 15% of its
(R) net assets to secure indebtedness; the purchase
or sale of securities on a "when issued" basis,
or collateral arrangement with respect to the
writing of options on securities, are not deemed
to be a pledge of assets.
</TABLE>
D-107
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
INTERNATIONAL / GLOBAL FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC INTERNATIONAL FUND INC.
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION Fund may not invest more than 5% of its total
(S) assets, computed at market value, in the
securities of any one issuer.
Fund may not invest in more than 10% of the
outstanding voting securities of any one issuer.
- -------------------------------------------------------------------------------
2. CONCENTRATION Fund may not invest more than 25% of its assets
(S) in the securities of issuers in any single
industry.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR Fund will not issue senior securities, except as
SECURITIES appropriate to evidence indebtedness that the
(S) portfolio is permitted to incur pursuant to
Fundamental Restriction 4 below and except for
shares of any additional series or portfolios
that may be established by the Directors.
- -------------------------------------------------------------------------------
4. BORROWING Fund may not borrow money, except that Fund may
(S) borrow money from banks and/or enter into
reverse repurchase agreements for emergency or
extraordinary purposes in aggregate amounts up
to 10% of its gross assets, computed at the
lower of cost or current value, provided that no
additional investments shall be made at any time
that outstanding borrowings (including amounts
payable under reverse repurchase agreements)
exceed 5% of Fund's gross assets.
- -------------------------------------------------------------------------------
5. UNDERWRITING SECURITIES Fund may not underwrite securities, except that
OF OTHER ISSUERS Fund may purchase securities from issuers
(S) thereof or others and dispose of such securities
in a manner consistent with its other investment
policies; in the disposition of restricted
securities Fund may be deemed to be an
underwriter, as defined in the Securities Act of
1933.
- -------------------------------------------------------------------------------
6. REAL ESTATE Fund may not purchase real estate.
(S)
- -------------------------------------------------------------------------------
7. COMMODITIES Fund may not purchase commodities or commodity
(S) contracts, except that Fund may enter into
currency or other financial futures contracts
and engage in related options transactions.
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS Fund may not lend any of its assets, except
(S) through the purchase of debt securities of a
type commonly distributed or sold publicly or
privately to financial institutions and except
that Fund may lend limited amounts of its
portfolio securities to broker dealers.
Fund may lend securities to brokers or dealers,
but such loans will not be made with respect to
Fund if, as a result, the aggregate of all
outstanding securities loans exceeds 15% of the
value of Fund's total assets taken at their
current value.
</TABLE>
D-108
<PAGE>
<TABLE>
<CAPTION>
TOPIC INTERNATIONAL FUND INC.
- -------------------------------------------------------------------------------
<S> <C> <C>
9. UNSEASONED ISSUERS Fund may not invest more than 5% of the value of
(R) its total assets in companies that have been in
operation for less than 3 years.
- -------------------------------------------------------------------------------
10. CONTROL OR MANAGEMENT Fund may not invest in a company for the purpose
(R) of exercising control over or management of any
issuer.
- -------------------------------------------------------------------------------
11. SHORT SALES Fund may not make short sales of securities.
(R)
- -------------------------------------------------------------------------------
12. MARGIN PURCHASES Fund may not make margin purchases.
(R)
- -------------------------------------------------------------------------------
13. OTHER INVESTMENT Fund may not purchase the securities of any
COMPANIES other investment company except in the open
(R) market and at customary brokerage rates and in
no event more than 3% of the voting securities
of any investment company.
</TABLE>
D-109
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
MUNICIPAL (TAX FREE) FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC STATE TAX FREE FUND: MASSACHUSETTS TAX FREE
FUND, NEW YORK TAX FREE FUND AND PENNSYLVANIA
TAX FREE FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION A Fund may not purchase a security if more than
(S) 25% of the Fund's total assets would be invested
in the securities of a single issuer (other than
the U.S. government, its agencies and
instrumentalities); or, with respect to 50% of
the Fund's total assets, if more than 5% of such
assets would be invested in the securities of a
single issuer (other than the U.S. government,
its agencies and instrumentalities).
The Funds are nondiversified under the federal
securities laws. The 1940 Act does not restrict
the percentage of a nondiversified fund's assets
that may be invested at any time in the
securities of any one issuer. The Funds intend
to comply, however, with the Code's
diversification requirements and other
requirements applicable to "regulated investment
companies" so that they will not be subject to
U.S. federal income tax on income and capital
gain distributions to shareholders. For this
reason, each Fund has adopted the additional
investment restriction enumerated above, which
may not be changed without the approval of
shareholders.
</TABLE>
D-110
<PAGE>
<TABLE>
<CAPTION>
TOPIC STATE TAX FREE FUND: MASSACHUSETTS TAX FREE
FUND,
NEW YORK TAX FREE FUND AND PENNSYLVANIA TAX FREE
FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
2. CONCENTRATION Each Fund may not purchase any security of any
(S) issuer (other than issues of the U.S.
government, its agencies or instrumentalities)
if as a result more than 25% of its total assets
would be invested in a single industry,
including industrial development bonds from the
same facility or similar types of facilities;
governmental issuers of municipal bonds are not
regarded as members of an industry and a Fund
may invest more than 25% of its assets in
industrial development bonds.
None of the Funds presently intends to invest
more than 25% of its total assets in municipal
obligations the payment of which depends on
revenues derived from a single facility or
similar types of facilities.
For purposes of Fundamental Restriction 2, each
Fund will treat (1) each state, territory and
possession of the U.S., the District of Columbia
and, if its assets and revenues are separate
from those of the entity or entities creating
it, each political subdivision, agency and
instrumentality of any one (or more, as in the
case of a multi state authority or agency) of
the foregoing as an issuer of all securities
that are backed primarily by its assets or
revenues; (2) each company as an issuer of all
securities that are backed primarily by its
assets or revenues; and (3) each of the
foregoing entities as an issuer of all
securities that it guarantees; provided,
however, that for the purpose of Fundamental
Restriction 2, no entity shall be deemed to be
an issuer of a security that it guarantees so
long as no more than 10% of a Fund's total
assets (taken at current value) are invested in
securities guaranteed by the entity and
securities of which it is otherwise deemed to be
an issuer.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR Each Fund may not issue senior securities; the
SECURITIES (S) purchase or sale of securities on a "when
issued" basis, or collateral arrangement with
respect to the writing of options on securities,
are not deemed to be the issuance of a senior
security.
- -------------------------------------------------------------------------------
4. BORROWING Each Fund may not borrow money or enter into
(S) reverse repurchase agreements, except that a
Fund may enter into reverse repurchase
agreements or borrow money from banks for
temporary or emergency purposes in aggregate
amounts up to 1/3 of the value of the Fund's net
assets; provided that while borrowings from
banks (not including reverse repurchase
agreements) exceed 5% of the Fund's net assets,
any such borrowings will be repaid before
additional investments are made.
As a matter of practice, each Fund permitted to
enter into repurchase agreements treats reverse
repurchase agreements as borrowings for purposes
of compliance with the limitations of the 1940
Act.
</TABLE>
D-111
<PAGE>
<TABLE>
<CAPTION>
TOPIC STATE TAX FREE FUND: MASSACHUSETTS TAX FREE
FUND,
NEW YORK TAX FREE FUND AND PENNSYLVANIA TAX FREE
FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
5. UNDERWRITING SECURITIES Each Fund may not underwrite securities of other
OF OTHER ISSUERS issuers, except that the Fund may purchase
(S) securities from the issuer or others and dispose
of such securities in a manner consistent with
its investment objective.
For purposes of Fundamental Restriction 5, each
Fund will treat (1) each state, territory and
possession of the U.S., the District of Columbia
and, if its assets and revenues are separate
from those of the entity or entities creating
it, each political subdivision, agency and
instrumentality of any one (or more, as in the
case of a multi state authority or agency) of
the foregoing as an issuer of all securities
that are backed primarily by its assets or
revenues; (2) each company as an issuer of all
securities that are backed primarily by its
assets or revenues; and (3) each of the
foregoing entities as an issuer of all
securities that it guarantees.
- -------------------------------------------------------------------------------
6. REAL ESTATE Each Fund may not purchase or sell real estate,
(S) except that it may purchase and sell securities
secured by real estate and securities of
companies which invest in real estate.
- -------------------------------------------------------------------------------
7. COMMODITIES Each Fund may not purchase or sell commodities
(S) or commodity contracts, except that it may
engage in currency or other financial futures
contracts and related options transactions.
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS Each Fund may not make loans, except that a Fund
(S) may purchase or hold debt securities consistent
with its investment objectives, lend portfolio
securities valued at not more than 15% of its
total assets to broker-dealers and enter into
repurchase agreements.
Each Fund may lend securities to brokers and
dealers. Such loans will not be made with
respect to a Fund if as a result the aggregate
of all outstanding securities loans exceeds 15%
of the value of the Fund's total assets taken at
their current value.
- -------------------------------------------------------------------------------
9. INVESTMENT IN FEDERALLY Each Fund is required to invest, under ordinary
TAX EXEMPT SECURITIES circumstances, at least 80% of its assets in
(S) federally tax-exempt municipal obligations.
- -------------------------------------------------------------------------------
10. MARGIN PURCHASES Each Fund may not purchase securities on margin
(R) except that it may obtain such short-term credit
as may be necessary for the clearance of
purchases and sales of securities.
- -------------------------------------------------------------------------------
11. OTHER INVESTMENT Each Fund may not purchase securities of other
COMPANIES investment companies except as part of a merger,
(R) consolidation, purchase of assets or similar
transaction.
- -------------------------------------------------------------------------------
12. ILLIQUID SECURITIES Each Fund may not invest more than 10% of its
(R) assets in securities with legal or contractual
restrictions on resale or in securities for
which market quotations are not readily
available, or in repurchase agreements maturing
in more than 7 days.
- -------------------------------------------------------------------------------
13. INVESTMENT IN STATE TAX Under ordinary circumstances, at least 80% of
EXEMPT SECURITIES the Fund's assets will be invested in municipal
(R) obligations that are exempt from certain taxes
in the state for which the Fund is named.
</TABLE>
D-112
<PAGE>
EVERGREEN FUNDS
CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS
MUNICIPAL (TAX FREE) FUNDS
"S": Fundamental Restriction to be Standardized
"R": Fundamental Restriction to be Reclassified as Non-Fundamental
<TABLE>
<CAPTION>
TOPIC STATE TAX FREE FUND--SERIES II: CALIFORNIA TAX
FREE FUND AND MISSOURI TAX FREE FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
1. DIVERSIFICATION A Fund may not purchase a security if more than
(S) 25% of the Fund's total assets would be invested
in the securities of a single issuer (other than
the U.S. government, its agencies and
instrumentalities); or, with respect to 50% of
the Fund's total assets, if more than 5% of such
assets would be invested in the securities of a
single issuer (other than the U.S. government,
its agencies and instrumentalities).
The Funds are nondiversified under the federal
securities laws. The 1940 Act does not restrict
the percentage of a nondiversified fund's assets
that may be invested at any time in the
securities of any one issuer. The Funds intend
to comply, however, with the Code's
diversification requirements and other
requirements applicable to "regulated investment
companies" so that they will not be subject to
U.S. federal income tax on income and capital
gain distributions to shareholders. For this
reason, each Fund has adopted the additional
investment restriction enumerated above, which
may not be changed without the approval of
shareholders.
</TABLE>
D-113
<PAGE>
<TABLE>
<CAPTION>
TOPIC STATE TAX FREE FUND--SERIES II: CALIFORNIA TAX
FREE FUND AND MISSOURI TAX FREE FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
2. CONCENTRATION Each Fund may not purchase any security of any
(S) issuer (other than issues of the U.S.
government, its agencies or instrumentalities)
if as a result more than 25% of its total assets
would be invested in a single industry,
including industrial development bonds from the
same facility or similar types of facilities;
governmental issuers of municipal bonds are not
regarded as members of an industry and a Fund
may invest more than 25% of its assets in
industrial development bonds.
None of the Funds presently intends to invest
more than 25% of its total assets in municipal
obligations the payment of which depends on
revenues derived from a single facility or
similar types of facilities.
For purposes of Fundamental Restriction 2, each
Fund will treat (1) each state, territory and
possession of the U.S., the District of Columbia
and, if its assets and revenues are separate
from those of the entity or entities creating
it, each political subdivision, agency and
instrumentality of any one (or more, as in the
case of a multi state authority or agency) of
the foregoing as an issuer of all securities
that are backed primarily by its assets or
revenues; (2) each company as an issuer of all
securities that are backed primarily by its
assets or revenues; and (3) each of the
foregoing entities as an issuer of all
securities that it guarantees; provided,
however, that for the purpose of Fundamental
Restriction 2, no entity shall be deemed to be
an issuer of a security that it guarantees so
long as no more than 10% of a Fund's total
assets (taken at current value) are invested in
securities guaranteed by the entity and
securities of which it is otherwise deemed to be
an issuer.
- -------------------------------------------------------------------------------
3. ISSUING SENIOR Each Fund may not issue senior securities; the
SECURITIES purchase or sale of securities on a "when
(S) issued" basis, or collateral arrangement with
respect to the writing of options on securities,
are not deemed to be the issuance of a senior
security.
- -------------------------------------------------------------------------------
4. BORROWING Each Fund may not borrow money or enter into
(S) reverse repurchase agreements, except that a
Fund may enter into reverse repurchase
agreements or borrow money from banks for
temporary or emergency purposes in aggregate
amounts up to 1/3 of the value of the Fund's net
assets; provided that while borrowings from
banks (not including reverse repurchase
agreements) exceed 5% of the Fund's net assets,
any such borrowings will be repaid before
additional investments are made.
As a matter of practice, each Fund permitted to
enter into repurchase agreements treats reverse
repurchase agreements as borrowings for purposes
of compliance with the limitations of the 1940
Act.
</TABLE>
D-114
<PAGE>
<TABLE>
<CAPTION>
TOPIC STATE TAX FREE FUND--SERIES II: CALIFORNIA TAX
FREE FUND AND MISSOURI TAX FREE FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
5. UNDERWRITING SECURITIES Each Fund may not underwrite securities of other
OF OTHER ISSUERS issuers, except that the Fund may purchase
(S) securities from the issuer or others and dispose
of such securities in a manner consistent with
its investment objective.
For purposes of Fundamental Restriction 5, each
Fund will treat (1) each state, territory and
possession of the U.S., the District of Columbia
and, if its assets and revenues are separate
from those of the entity or entities creating
it, each political subdivision, agency and
instrumentality of any one (or more, as in the
case of a multi state authority or agency) of
the foregoing as an issuer of all securities
that are backed primarily by its assets or
revenues; (2) each company as an issuer of all
securities that are backed primarily by its
assets or revenues; and (3) each of the
foregoing entities as an issuer of all
securities that it guarantees.
- -------------------------------------------------------------------------------
6. REAL ESTATE Each Fund may not purchase or sell real estate,
(S) except that it may purchase and sell securities
secured by real estate and securities of
companies which invest in real estate.
- -------------------------------------------------------------------------------
7. COMMODITIES Each Fund may not purchase or sell commodities
(S) or commodity contracts, except that it may
engage in currency or other financial futures
contracts and related options transactions.
- -------------------------------------------------------------------------------
8. LOANS TO OTHERS Each Fund may not make loans, except that a Fund
(S) may purchase or hold debt securities consistent
with its investment objectives, lend portfolio
securities valued at not more than 15% of its
total assets to broker-dealers and enter into
repurchase agreements.
Each Fund may lend securities to brokers and
dealers. Such loans will not be made with
respect to a Fund if as a result the aggregate
of all outstanding securities loans exceeds 15%
of the value of the Fund's total assets taken at
their current value.
- -------------------------------------------------------------------------------
9. INVESTMENT IN FEDERALLY Each Fund is required to invest, under ordinary
TAX EXEMPT SECURITIES circumstances, at least 80% of its assets in
(S) federally tax-exempt municipal obligations.
- -------------------------------------------------------------------------------
10. MARGIN PURCHASES Each Fund may not purchase securities on margin
(R) except that it may obtain such short-term credit
as may be necessary for the clearance of
purchases and sales of securities.
- -------------------------------------------------------------------------------
11. OTHER INVESTMENT Each Fund may not purchase securities of other
COMPANIES investment companies except as part of a merger,
(R) consolidation, purchase of assets or similar
transaction.
- -------------------------------------------------------------------------------
12. ILLIQUID SECURITIES Each Fund may not invest more than 10% of its
(R) assets in securities with legal or contractual
restrictions on resale or in securities for
which market quotations are not readily
available, or in repurchase agreements maturing
in more than 7 days.
- -------------------------------------------------------------------------------
13. INVESTMENT IN STATE TAX Under ordinary circumstances, at least 80% of
EXEMPT SECURITIES the Fund's assets will be invested in municipal
(R) obligations that are exempt from certain taxes
in the state for which the Fund is named.
</TABLE>
D-115
<PAGE>
EXHIBIT E
NUMBER OF SHARES OF EACH FUND (OR CLASS)
OUTSTANDING AS OF THE CLOSE OF BUSINESS ON
OCTOBER 16, 1997
EVERGREEN FUNDS
<TABLE>
<S> <C>
I.Equity Funds
Evergreen Fund
Class A....................................................... 6,801,727.837
Class B....................................................... 22,530,326.853
Class C....................................................... 397,830.659
Class Y....................................................... 45,801,991.215
The Evergreen Micro Cap Fund, Inc.
Class A....................................................... 86,189.990
Class B....................................................... 69,827.966
Class C....................................................... 22,630.388
Class Y....................................................... 1,877,853.501
Evergreen Aggressive Growth Fund
Class A....................................................... 7,284,024.662
Class B....................................................... 1,775,812.710
Class C....................................................... 159,678.364
Class Y....................................................... 1,858,508.888
Evergreen Growth and Income Fund
Class A....................................................... 6,805,638.391
Class B....................................................... 22,481,934.925
Class C....................................................... 1,023,326.649
Class Y....................................................... 23,377,343.433
Evergreen Utility Fund
Class A....................................................... 7,796,523.539
Class B....................................................... 3,180,305.631
Class C....................................................... 30,422.085
Class Y....................................................... 148,313.651
Evergreen Small Cap Equity Income Fund
Class A....................................................... 804,403.089
Class B....................................................... 1,838,363.746
Class C....................................................... 373,955.937
Class Y....................................................... 3,654,673.820
Evergreen Income and Growth Fund
Class A....................................................... 514,846.970
Class B....................................................... 1,963,618.653
Class C....................................................... 38,980.152
Class Y....................................................... 37,149,362.205
Evergreen Value Fund
Class A....................................................... 15,752,840.677
Class B....................................................... 11,560,877.427
Class C....................................................... 127,634.731
Class Y....................................................... 44,495,727.379
II.Bond Funds
Evergreen U.S. Government Fund
Class A....................................................... 3,816,133.249
Class B....................................................... 15,122,341.973
Class C....................................................... 638,618.934
Class Y....................................................... 14,245,166.383
</TABLE>
E-1
<PAGE>
<TABLE>
<S> <C>
Evergreen Short-Intermediate Bond Fund
Class A...................................................... 1,699,592.545
Class B...................................................... 2,122,110.359
Class C...................................................... 94,211.672
Class Y...................................................... 35,511,146.733
Evergreen Intermediate-Term Government Securities Fund
Class A...................................................... 58,378.590
Class B...................................................... 59,935.076
Class C...................................................... 12,038.292
Class Y...................................................... 7,086,579.404
III.Balanced Funds
Evergreen Foundation Fund
Class A...................................................... 15,055,620.914
Class B...................................................... 45,192,818.908
Class C...................................................... 1,983,051.491
Class Y...................................................... 51,360,031.350
Evergreen Tax Strategic Foundation Fund
Class A...................................................... 2,514,131.202
Class B...................................................... 6,737,320.174
Class C...................................................... 853,134.141
Class Y...................................................... 1,162,869.650
Evergreen American Retirement Fund
Class A...................................................... 1,423,744.395
Class B...................................................... 7,650,190.148
Class C...................................................... 137,204.966
Class Y...................................................... 2,465,756.885
IV.International/Global Funds
Evergreen Emerging Markets Growth Fund
Class A...................................................... 234,422.052
Class B...................................................... 419,935.156
Class C...................................................... 125,941.400
Class Y...................................................... 6,120,447.866
Evergreen International Equity Fund
Class A...................................................... 827,961.354
Class B...................................................... 1,944,204.246
Class C...................................................... 39,888.583
Class Y...................................................... 21,009,763.647
Evergreen Global Leaders Fund
Class A...................................................... 2,783,174.969
Class B...................................................... 9,806,555.307
Class C...................................................... 174,847.759
Class Y...................................................... 2,577,600.115
V.Money Market
Evergreen Money Market Fund
Class A...................................................... 186,603.800
Class B...................................................... 20,272,086.246
Class C...................................................... 5,157,135.783
Class K...................................................... 186,603.800
Class Y...................................................... 639,565,644.488
Evergreen Tax Exempt Money Market Fund
Class A...................................................... 665,770,989.930
Class Y...................................................... 384,934,175.045
</TABLE>
E-2
<PAGE>
<TABLE>
<S> <C>
Evergreen Treasury Money Market Fund
Class A.................................................... 2,462,592,573.540
Class Y.................................................... 985,145.268
Evergreen Institutional Money Market Fund
Institutional Service Class................................ 522,562,641.850
Institutional Class........................................ 974,925,466.230
Evergreen Institutional Treasury Money Market Fund
Institutional Service Class................................ 553,048,498.800
Institutional Class........................................ 1,101,819,478.290
Evergreen Institutional Tax Exempt Money Market Fund
Institutional Service Class................................ 20,206,537.690
Institutional Class........................................ 346,564,414.830
Evergreen Pennsylvania Tax Free Money Market Fund
Class A.................................................... 34,250,153.450
Class Y.................................................... 30,451,104.460
VI.Municipal (Tax Free) Funds
Evergreen Georgia Municipal Bond Fund
Class A.................................................... 200,683.881
Class B.................................................... 1,150,796.730
Class Y.................................................... 122,891.953
Evergreen North Carolina Municipal Bond Fund
Class A.................................................... 786,368.934
Class B.................................................... 4,587,307.850
Class Y.................................................... 399,016.071
Evergreen South Carolina Municipal Bond Fund
Class A.................................................... 111,861.538
Class B.................................................... 464,736.881
Class Y.................................................... 742,811.603
Evergreen Virginia Municipal Bond Fund
Class A.................................................... 297,707.564
Class B.................................................... 703,389.490
Class Y.................................................... 683,982.065
Evergreen Florida High Income Municipal Bond Fund
Class A.................................................... 11,419,799.342
Class B.................................................... 6,140,289.693
Class Y.................................................... 647,948.582
Evergreen New Jersey Tax Free Income Fund
Class A.................................................... 2,828,357.288
Class B.................................................... 991,399.024
Class Y.................................................... 930,793.421
Evergreen Short-Intermediate Municipal Fund
Class A.................................................... 485,401.887
Class B.................................................... 619,378.412
Class Y.................................................... 4,542,235.174
Evergreen High Grade Tax Free Fund
Class A.................................................... 4,080,533.250
Class B.................................................... 2,898,174.814
Class Y.................................................... 2,214,100.852
</TABLE>
E-3
<PAGE>
EVERGREEN (FORMERLY KEYSTONE) FUNDS
<TABLE>
<S> <C>
I.Equity Funds
Evergreen Natural Resources Fund (formerly Keystone Global
Resources and Development Fund)
Class A..................................................... 311,514.567
Class B..................................................... 1,285,042.756
Class C..................................................... 348,609.745
Keystone Growth and Income Fund (S-1)......................... 10,413,855.892
Evergreen Select Small Cap Growth Fund (formerly Keystone
Institutional Small Capitalization Growth Fund).............. 3,523,545,570
Evergreen (formerly Keystone) Omega Fund
Class A..................................................... 7,122,022.850
Class B..................................................... 5,089,890.198
Class C..................................................... 737,141.565
Class Y..................................................... 232.099
Keystone Precious Metals Holdings, Inc........................ 7,002,301.730
Keystone Strategic Growth Fund (K-2).......................... 86,442,786.012
II.Bond Funds
Keystone High Income Bond Fund (B-4).......................... 121,742,236.133
Evergreen (formerly Keystone) Capital Preservation and Income
Fund
Class A..................................................... 1,402,423.077
Class B..................................................... 3,069,285.256
Class C..................................................... 427,717.452
Evergreen Select (formerly Keystone Institutional) Adjustable
Rate Fund
Class Y..................................................... 985,145.268
Class Z..................................................... 2,090,248.312
Evergreen (formerly Keystone) Strategic Income Fund
Class A..................................................... 9,231,231.159
Class B..................................................... 16,743,057.555
Class C..................................................... 3,233,353.515
Class Y..................................................... 164,321.370
III.Balanced Funds
Evergreen (formerly Keystone) Fund for Total Return
Class A..................................................... 2,347,514.866
Class B..................................................... 4,685,220.007
Class C..................................................... 1,025,665.417
Class Y..................................................... 2,160.429
IV.International/Global Funds
Evergreen Latin America Fund (formerly Keystone Fund of the
Americas)
Class A..................................................... 1,154,798.113
Class B..................................................... 6,023,019.351
Class C..................................................... 876,921.599
Evergreen (formerly Keystone) Global Opportunities Fund
Class A..................................................... 4,347,600.559
Class B..................................................... 9,755,527.477
Class C..................................................... 1,987,673.010
Class Y..................................................... 1.000
</TABLE>
E-4
<PAGE>
<TABLE>
<S> <C>
Keystone International Fund Inc................................. 17,612,774.974
V.Municipal (Tax Free) Funds
Evergreen (formerly Keystone) Massachusetts Tax Free Fund
Class A....................................................... 218,831.540
Class B....................................................... 749,533.259
Class C....................................................... 194,370.314
Evergreen (formerly Keystone) New York Tax Free Fund
Class A....................................................... 352,945.659
Class B....................................................... 1,899,912.957
Class C....................................................... 153,105.868
Evergreen (formerly Keystone) Pennsylvania Tax Free Fund
Class A....................................................... 2,084,387.908
Class B....................................................... 3,363,658.541
Class C....................................................... 566,983.111
Evergreen (formerly Keystone) California Tax Free Fund
Class A....................................................... 426,661.605
Class B....................................................... 2,110,052.002
Class C....................................................... 189,140.125
Evergreen (formerly Keystone) Missouri Tax Free Fund
Class A....................................................... 502,964.538
Class B....................................................... 2,021,249.076
Class C....................................................... 137,827.234
</TABLE>
E-5
<PAGE>
EXHIBIT F
PRINCIPAL HOLDERS OF VOTING SECURITIES
EVERGREEN FUNDS
<TABLE>
<CAPTION>
PAGE F-
-------
<S> <C>
Evergreen Fund
Class Y.............................................................. 1
The Evergreen Micro Cap Fund, Inc.
Class A.............................................................. 1
Class C.............................................................. 1
Class Y.............................................................. 2
Evergreen Aggressive Growth Fund
Class A.............................................................. 2
Class C.............................................................. 2
Class Y.............................................................. 2
Evergreen Growth and Income Fund
Class A.............................................................. 2
Class C.............................................................. 2
Class Y.............................................................. 3
Evergreen Utility Fund
Class C.............................................................. 3
Class Y.............................................................. 3
Evergreen Small Cap Equity Income Fund
Class A.............................................................. 3
Class B.............................................................. 3
Class C.............................................................. 3
Class Y.............................................................. 4
Evergreen Income and Growth Fund
Class C.............................................................. 4
Evergreen Value Fund
Class C.............................................................. 4
Class Y.............................................................. 4
Evergreen U.S. Government Fund
Class A.............................................................. 4
Class C.............................................................. 4
Class Y.............................................................. 4
Evergreen Short-Intermediate Bond Fund
Class A.............................................................. 5
Class C.............................................................. 5
Class Y.............................................................. 6
Evergreen Intermediate-Term Government Securities Fund
Class A.............................................................. 6
Class B.............................................................. 6
Class C.............................................................. 7
Class Y.............................................................. 7
Evergreen Foundation Fund
Class A.............................................................. 7
Class C.............................................................. 7
Class Y.............................................................. 7
</TABLE>
F-i
<PAGE>
<TABLE>
<CAPTION>
PAGE F-
-------
<S> <C>
Evergreen Tax Strategic Foundation Fund
Class B.............................................................. 7
Class C.............................................................. 8
Class Y.............................................................. 8
Evergreen American Retirement Fund
Class C.............................................................. 8
Class Y.............................................................. 8
Evergreen Emerging Markets Growth Fund
Class A.............................................................. 8
Class C.............................................................. 8
Class Y.............................................................. 8
Evergreen International Equity Fund
Class C.............................................................. 9
Class Y.............................................................. 9
Evergreen Global Leaders Fund
Class C.............................................................. 9
Class Y.............................................................. 9
Evergreen Money Market Fund
Class A.............................................................. 9
Class C.............................................................. 10
Class K.............................................................. 10
Class Y.............................................................. 10
Evergreen Tax Exempt Money Market Fund
Class A.............................................................. 10
Class Y.............................................................. 11
Evergreen Treasury Money Market Fund
Class A.............................................................. 11
Class Y.............................................................. 11
Evergreen Institutional Money Market Fund
Institutional Service Class.......................................... 12
Institutional Class.................................................. 12
Evergreen Institutional Treasury Money Market Fund
Institutional Service Class.......................................... 12
Institutional Class.................................................. 12
Evergreen Institutional Tax Exempt Money Market Fund
Institutional Service Class.......................................... 12
Institutional Class.................................................. 13
Evergreen Pennsylvania Tax Free Money Market Fund
Class A.............................................................. 13
Class Y.............................................................. 13
Evergreen Georgia Municipal Bond Fund
Class A.............................................................. 13
Class Y.............................................................. 14
Evergreen North Carolina Municipal Bond Fund
Class Y.............................................................. 14
</TABLE>
F-ii
<PAGE>
<TABLE>
<CAPTION>
PAGE F-
-------
<S> <C>
Evergreen South Carolina Municipal Bond Fund
Class A.............................................................. 14
Class B.............................................................. 14
Class Y.............................................................. 15
Evergreen Virginia Municipal Bond Fund
Class A.............................................................. 15
Class B.............................................................. 15
Class Y.............................................................. 15
Evergreen Florida High Income Municipal Bond Fund
Class A.............................................................. 15
Class B.............................................................. 15
Class Y.............................................................. 15
Evergreen New Jersey Tax Free Income Fund
Class Y.............................................................. 15
Evergreen Short-Intermediate Municipal Fund
Class A.............................................................. 16
Class B.............................................................. 16
Class Y.............................................................. 16
Evergreen High Grade Tax Free Fund
Class Y.............................................................. 17
</TABLE>
F-iii
<PAGE>
EVERGREEN (FORMERLY KEYSTONE) FUNDS
<TABLE>
<CAPTION>
PAGE F-
-------
<S> <C>
Evergreen Natural Resources Fund (formerly Keystone Global Resources
and Development Fund)
Class A............................................................. 17
Class B............................................................. 17
Class C............................................................. 17
Keystone Growth and Income Fund (S-1)................................. 17
Evergreen Select Small Cap Growth Fund (formerly Keystone
Institutional Small Capitalization Growth Fund)
Institutional Class................................................. 17
Evergreen (formerly Keystone) Omega Fund
Class B............................................................. 18
Class C............................................................. 18
Class Y............................................................. 18
Keystone Precious Metals Holdings, Inc. .............................. 18
Keystone High Income Bond Fund (B-4).................................. 18
Evergreen (formerly Keystone) Capital Preservation and Income Fund
Class A............................................................. 18
Class B............................................................. 18
Class C............................................................. 18
Evergreen Select (formerly Keystone Institutional) Adjustable Rate
Fund
Class Y............................................................. 19
Class Z............................................................. 19
Evergreen (formerly Keystone) Strategic Income Fund
Class A............................................................. 19
Class B............................................................. 19
Class C............................................................. 20
Class Y............................................................. 20
Evergreen (formerly Keystone) Fund for Total Return
Class A............................................................. 20
Class B............................................................. 20
Class C............................................................. 20
Class Y............................................................. 20
Evergreen Latin America Fund (formerly Keystone Fund of the Americas)
Class A............................................................. 20
Class B............................................................. 21
Class C............................................................. 21
Evergreen (formerly Keystone) Global Opportunities Fund
Class A............................................................. 21
Class B............................................................. 21
Class C............................................................. 21
Class Y............................................................. 21
Keystone International Fund Inc.
Class Y............................................................. 21
</TABLE>
F-iv
<PAGE>
<TABLE>
<CAPTION>
PAGE F-
-------
<S> <C>
Evergreen (formerly Keystone) Massachusetts Tax Free Fund
Class A.............................................................. 21
Class C.............................................................. 22
Evergreen (formerly Keystone) New York Tax Free Fund
Class A.............................................................. 22
Class B.............................................................. 22
Class C.............................................................. 22
Evergreen (formerly Keystone) Pennsylvania Tax Free Fund
Class A.............................................................. 23
Class B.............................................................. 23
Class C.............................................................. 23
Evergreen (formerly Keystone) California Tax Free Fund
Class A.............................................................. 23
Class B.............................................................. 23
Class C.............................................................. 23
Evergreen (formerly Keystone) Missouri Tax Free Fund
Class A.............................................................. 24
Class B.............................................................. 24
Class C.............................................................. 24
</TABLE>
F-v
<PAGE>
EXHIBIT F
PRINCIPAL HOLDERS OF VOTING SECURITIES
As of September 30, 1997, the following shareholders were known to the
Registrants to own beneficially 5% or more of the shares of a Class of a Fund:
EVERGREEN FUNDS
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
NAME OF FUND NAME AND ADDRESS OF RECORD OWNER CLASS SHARES OWNED SHARES OF CLASS
<S> <C> <C> <C> <C>
Evergreen Fund First Union National Bank/EB/INT Reinvest Y 14,917,115.108 31.133%
Account
Attn: Trust Operations Fund Group
401 S. Tryon St., 3rd Fl. CMG-1151
Charlotte, NC 28202-1911
The Evergreen Charles Schwab & Co., Inc. A 31,849.985 40.519%
Micro Cap Fund, Inc. Special Custody Account for the Exclusive
(formerly Limited Market Benefit of Customers:
Fund) Reinvest Account
Attn: Mutual Funds Dept.
101 Montgomery St.
San Francisco, CA 94104-4122
Gruntal & Co. LLC C 1,484.287 17.223%
FBO 210-23200-13
14 Wall Street
New York, NY 10005
- ------------------------------------------------------------------------------------------------------------
First Union National Bank GA C/F Janet E. C 1,064.348 12.350%
Daugherty: IRA
3164 Kent Ct.
Duluth, GA 30136-3734
- ------------------------------------------------------------------------------------------------------------
Donaldson Lufkin Jenrette Securities C 1,018.330 11.816%
Corporation Inc.
P.O. Box 2052
Jersey City, NJ 07303-9998
- ------------------------------------------------------------------------------------------------------------
MLPF&S for the Sole Benefit of Its C 836.000 9.700%
Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
- ------------------------------------------------------------------------------------------------------------
Frank L. Brothers C 767.460 8.905%
701 Metairie Rd. STE 2A-201
Metairie, LA 70005-4049
- ------------------------------------------------------------------------------------------------------------
Charles P. Stewart and Barbara L. Stewart: C 767.460 8.905%
JTWROS
11618 Primwood Dr.
Houston, TX 77070
- ------------------------------------------------------------------------------------------------------------
NFSC FEBO #115-217387 C 699.852 8.121%
David Oberhettinger and Janice F.
Oberhettinger
25872 Espinoza Dr.
Valencia, CA 91355-2149
- ------------------------------------------------------------------------------------------------------------
Phoebe A. Steyer and Terrance F. Steyer: C 497.413 5.772%
JTWROS
7340 W. Villa Rita Dr.
Glendale, AZ 85308
</TABLE>
F-1
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
NAME OF FUND NAME AND ADDRESS OF RECORD OWNER CLASS SHARES OWNED SHARES OF CLASS
<S> <C> <C> <C> <C>
The Evergreen Stephen A. Lieber Y 237,691.022 12.654%
Micro Cap Fund, Inc. 1210 Greacen Point Rd.
(formerly Limited Market Mamaroneck, NY 10543-4693
Fund) (Continued)
- -----------------------------------------------------------------------------------------------------------
Constance E. Lieber Y 170,045.513 9.053%
1210 Greacen Point Rd.
Mamaroneck, NY 10543-4693
- -----------------------------------------------------------------------------------------------------------
Charles Schwab & Co., Inc. Y 146,186.057 7.782%
Special Custody Account for the Exclusive
Benefit of
Customers: Reinvest Account
Attn: Mutual Funds Dept.
101 Montgomery St.
San Francisco, CA 94104-4122
- -----------------------------------------------------------------------------------------------------------
Citibank, NA Y 143,281.112 7.628%
Delta Airlines Master Trust 308235
Joe Villella Citicorp Services
1410 N. Westshore Blvd., Fl. 5
Tampa, FL 33607-4519
Evergreen Aggressive MLPF&S for the Sole Benefit of its A 882,814.663 11.935%
Growth Fund Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
MLPF&S for the Sole Benefit of its C 40,784.000 23.837%
Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
- -----------------------------------------------------------------------------------------------------------
Lavedna Ellingson and Douglas Ellingson: C 12,391.219 7.242%
JTWROS
8510 McClintock
Tempe, AZ 85284-2527
- -----------------------------------------------------------------------------------------------------------
Michael J. Grimaldi C 10,730.948 6.272%
7 Edgeworth Pl.
New Brunswick, NJ 08901-3021
First Union National Bank: Trust Accounts Y 1,611,942.506 85.523%
Attn: Ginny Batten
11th Fl. CMG-1151
301 S. Tryon St.
Charlotte, NC 28288-0002
Evergreen Growth and Charles Schwab & Co., Inc. A 350,073.504 5.201%
Income Fund Special Custody Account for Exclusive
Benefit of
Customers: Reinvest Account
Attn: Mutual Funds Dept.
101 Montgomery St.
San Francisco, CA 94104-4122
MLPF&S for the Sole Benefit of its C 217,831.000 21.691%
Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
</TABLE>
F-2
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
NAME OF FUND NAME AND ADDRESS OF RECORD OWNER CLASS SHARES OWNED SHARES OF CLASS
<S> <C> <C> <C> <C>
Evergreen Growth and First Union National Bank/EB/INT Reinvest Y 17,443,362.675 74.997%
Income Fund (Continued) Account
Attn: Trust Operations Fund Group
401 S. Tryon St., 3rd Fl. CMG 1151
Charlotte, NC 28202-1911
Evergreen Utility Fund FUBS & Co. FEBO C 6,382.217 21.032%
Elsie B. Strom and Lewis F. Strom
906 Wells St.
Bennettsville, SC 29512-3240
- -----------------------------------------------------------------------------------------------------------
FUBS & Co. FEBO C 2,178.640 7.180%
Thomas McKinney and Lottie McKinney
170 Scott Blvd.
Tyrone, GA 30290-9767
- -----------------------------------------------------------------------------------------------------------
FUBS & Co. FEBO C 2,077.625 6.847%
Max Ray and Jeralyne Ray
Route 2, Box 111
Greenmountain, NC 28740-9618
- -----------------------------------------------------------------------------------------------------------
FUBS & Co. FEBO C 1,790.628 5.901%
Evelyn L. Smith and Creg Smith
3294 Myrtle St.
Hapeville, GA 30354-1418
- -----------------------------------------------------------------------------------------------------------
FUBS & Co. FEBO C 1,546.245 5.096%
Ruth D. Hayes and D. W. Hayes
5460 Ash St.
Forest Park, GA 30050-4068
First Union National Bank: Trust Accounts Y 131,729.290 90.124%
Attn: Ginny Batten
11th Fl. CMG-1151
301 S. Tryon St.
Charlotte, NC 28288-0002
Evergreen Small Cap MLPF&S for the Sole Benefit of its A 41,956.000 6.680%
Equity Income Fund Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, Fl. 32246-6484
MLPF&S for the Sole Benefit of its B 193,712.000 13.010%
Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, Fl. 32246-6484
MLPF&S for the Sole Benefit of its C 74,133.000 23.669%
Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, Fl. 32246-6484
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
NAME OF FUND NAME AND ADDRESS OF RECORD OWNER CLASS SHARES OWNED SHARES OF CLASS
<S> <C> <C> <C> <C>
Evergreen Small Cap First Union National Bank/EB/INT Cash Y 2,392,319.568 68.940%
Equity Income Fund Account
(Continued) Attn: Trust Operations Fund Group
401 S. Tryon St., 3rd Fl. CMG-1151
Charlotte, NC 28202-1911
- --------------------------------------------------------------------------------------------------------
Citibank NA Y 379,099.123 10.925%
Delta Airlines Master Trust 308235
Joe Villella Citicorp Services
1410 N. Westshore Blvd., 5th Fl.
Tampa, Fl. 33607
Evergreen Income and FUBS & Co. FEBO C 2,619.284 6.615%
Growth Fund Last Stop, Inc.
8661 Colesville Rd. #D149
Silver Spring, MD 20910-3933
- --------------------------------------------------------------------------------------------------------
First Union National Bank-FL C/F, Inc. C 2,375.801 6.000%
Fred W. Cookson IRA
6704 Willow Ln. Braden Woods
Bradenton, FL 34202-9632
Evergreen Value Fund First Union National Bank-FL C/F C 16,482.896 13.227%
Irving Decter IRA
418 Mariner Dr.
Jupiter, FL 33477
First Union National Bank: Trust Accounts Y 43,893,989.556 98.667%
Attn: Ginny Batten
11th Fl. CMG-1151
301 S. Tryon St.
Charlotte, NC 28288-0002
Evergreen MLPF&S for the Sole Benefit of its A 339,462.000 8.886%
U.S. Government Fund Customers
Attn: Fund Administration
4800 Deer Lake Drive E., 3rd Fl.
Jacksonville, FL 32246-6484
MLPF&S for the Sole Benefit of its C 132,837.000 20.589%
Customers
Attn: Fund Administrator
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
- --------------------------------------------------------------------------------------------------------
Geisinger Foundation C 57,896.555 8.974%
c/o Marilyn Sierer
100 N. Academy Ave.
Danville, PA 17821
- --------------------------------------------------------------------------------------------------------
Patterson & Co. C 55,431.736 8.592%
c/o Corestates Bank NA
P.O. Box 7829
Philadelphia, PA 19101-7829
Wachovia Bank of Georgia: Directed TTEE for Y 6,316,425.076 44.472%
First Union Corp Non-Qualified Retirement
Plan U/A DTD
8/31/94 Investment Act
301 N. Main St.
MC-NC 31051
Winston Salem, NC 27101-3819
</TABLE>
F-4
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
NAME OF FUND NAME AND ADDRESS OF RECORD OWNER CLASS SHARES OWNED SHARES OF CLASS
<S> <C> <C> <C> <C>
Evergreen First Union National Bank: Trust Accounts Y 6,021,624.520 41.762%
U.S. Government Fund Attn: Ginny Batten
(Continued) 11th Fl. CMG-151
301 S. Tryon St.
Charlotte, NC 28288
- ---------------------------------------------------------------------------------------------------------
Wachovia Bank of Georgia: TTEE First Union Y 1,586,264.279 11.168%
Corp.
Retirement Trust for Non Employee
Directors: 10/24/94
301 N. Main St.
MC-NC 31051
Winston Salem, NC 27101-3819
Evergreen Short- FUBS & Co. FEBO A 105,732.907 6.217%
Intermediate Bond Fund Ronald L. Spector
D/B/A River Walk
1800 Second St.
Suite 808
Sarasota, FL 34236-5904
FUBS & Co. FEBO C 11,435.921 12.189%
Dreamland Skating Rink Inc.
P.O. Drawer 13207
Pensacola, FL 32591-3207
- ---------------------------------------------------------------------------------------------------------
MLPF&S for the Sole Benefit of its C 11,281.000 12.024%
Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
- ---------------------------------------------------------------------------------------------------------
FUBS & Co. FEBO C 7,025.041 7.488%
Rachel W. Fort and Edward C. Fort
2737 Stockton St.
Winston Salem, NC 27127
- ---------------------------------------------------------------------------------------------------------
FUBS & Co. FEBO C 5,622.591 5.993%
Victor Wozniak and Vermell Wozniak,
Dreamland Trust
P.O. Drawer 13207
Pensacola, FL 32591-3207
- ---------------------------------------------------------------------------------------------------------
FUBS & Co. FEBO C 5,450.713 5.810%
Emmaus Lutheran Church
2500 So. Volusia Ave.
Orange City, FL 32763-9124
- ---------------------------------------------------------------------------------------------------------
Painewebber for the Benefit of Robert Bowen C 5,245.586 5.591%
& Mona Carpenter-Bowen: JTWROS
1686 Massachusetts Ave.
Lunenburg, MA 01462-1843
- ---------------------------------------------------------------------------------------------------------
FUBS & Co. FEBO C 5,045.409 5.378%
Nathan S. McGarity Family Trust: Nathan S.
McGarity TTEE
U/A/D 12/11/92
P.O. Box 970
Eustis, FL 32727-0970
</TABLE>
F-5
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
NAME OF FUND NAME AND ADDRESS OF RECORD OWNER CLASS SHARES OWNED SHARES OF CLASS
<S> <C> <C> <C> <C>
Evergreen Short- First Union National Bank: Trust Accounts Y 35,100,914.520 98.398%
Intermediate Bond Fund Attn: Ginny Batten
(Continued) 11th Fl. CMG-1151
301 S. Tryon St.
Charlotte, NC 28288
Evergreen Intermediate- First Union Natl. Bank--C/F In F/B/O Zeno A 8,702.904 14.959%
Term Government Chicarilli PSP
Securities Fund Attn: Zeno Chicarilli
2 Cobblefield Ln.
Guilford, CT 06437
- -----------------------------------------------------------------------------------------------------------
FUBS & Co. FEBO A 7,055.394 12.127%
Upper Saucon Volunteer Fire Department #1
c/o Frank Hoffstetter
4888 Lanark Rd.
Center Valley, PA 18034-8605
- -----------------------------------------------------------------------------------------------------------
NJ State Fireman's Assoc. of Morris A 5,306.468 9.121%
Township
11 Catalpa Rd.
Morristown, NJ 07960-6132
- -----------------------------------------------------------------------------------------------------------
Ignaz Keglovitz & Mary Keglovitz: JTTEN A 4,754.526 8.172%
15 N. 9th St.
Coplay, PA 18037-1527
- -----------------------------------------------------------------------------------------------------------
Doris Mack A 4,412.037 7.583%
8 Mountain View Dr.
Chester, NJ 07930-3104
- -----------------------------------------------------------------------------------------------------------
FUBS & Co. FEBO A 3,064.877 5.268%
Alice T. Brophy
30 Rosedale Ave.
Madison, NJ 07940-2146
FUBS & Co. FEBO B 10,198.932 17.042%
Joseph Kascur
7040 Woodside Oak Cir.
Sarasota, FL 34321-5565
- -----------------------------------------------------------------------------------------------------------
FUBS & Co. FEBO B 9,920.635 16.577%
Camela M. Woodruff
1 College Ln., Apt. 86
Brevard, NC 28712
- -----------------------------------------------------------------------------------------------------------
FUBS & Co. FEBO B 9,832.772 16.430%
Frances E. Clyma Rev. Trust: Frances E.
Clyma and
Robert L. Mastin Co-Trustees U/A/D 01/25/96
Palm Beach, FL 33410
- -----------------------------------------------------------------------------------------------------------
FUBS & Co. FEBO B 3,437.437 5.744%
First Union Bank/TN F/B/O Geri McNamara
Loan Account
Attn: Tracy Brown
600 S. Main St.
Goodlettsville, TN 37072
- -----------------------------------------------------------------------------------------------------------
First Union National Bank: C/F in William B 3,380.914 5.649%
E. Bass Sr. IRA
102 Grace Dr.
Goodlettsville, TN 37072
</TABLE>
F-6
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
NAME OF FUND NAME AND ADDRESS OF RECORD OWNER CLASS SHARES OWNED SHARES OF CLASS
<S> <C> <C> <C> <C>
Evergreen Intermediate- FUBS & Co. FEBO B 3,281.670 5.484%
Term Government Loretta and Helen Bukowski
Securities Fund 8860 Taft St.
(Continued) Pembroke Pines, FL 33024-4755
- -----------------------------------------------------------------------------------------------------------
FUBS & Co. FEBO B 3,206.173 5.357%
Howard J. Carroll
4019 N. Chesterbrook Rd.
Arlington, VA 22207
Donaldson Lufkin Jenrette Securities C 10,794.682 90.000%
Corporation, Inc.
P.O. Box 2052
Jersey City, NJ 07303-2052
- -----------------------------------------------------------------------------------------------------------
MLPF&S for the Sole Benefit of its C 1,189.000 9.913%
Customers
Attn: Fund Administration
4800 Deer Lake Drive E., 3rd Fl.
Jacksonville, FL 32246-6484
First Union National Bank: Trust Accounts Y 7,048,597.881 99.55%
Attn: Ginny Batten
11th Fl. CMG-1151
301 S. Tryon St.
Charlotte, NC 28288-0002
Evergreen Foundation Charles Schwab & Co., Inc. A 1,053,149.165 7.079%
Fund Special Custody Account For Exclusive
Benefit Of
Customers: Reinvest Account
Attn: Mutual Funds Dept.
101 Montgomery St.
San Francisco, CA 94104-4122
MLPF&S for the Sole Benefit of its C 459,026.000 23.511%
Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, Fl. 32246-6484
First Union National Bank/EB/INT Reinvest Y 22,292,501.741 43.359%
Account
Attn: Trust Operations Fund Group
401 S. Tryon St., 3rd Floor, CMG-1151
Charlotte, NC 28202-1911
- -----------------------------------------------------------------------------------------------------------
MAC & CO Y 6,759,656.230 13.148%
Aetna Retirement Services
Central Valuation Unit
Attn: Mutual Funds Operations
P.O. Box 3198
Pittsburgh, PA 15230-3198
- -----------------------------------------------------------------------------------------------------------
Charles Schwab & Co., Inc. Y 3,372,766.665 6.560%
Special Custody Account For The Benefit Of
Customers
Attn: Mutual Funds Dept.
101 Montgomery St.
San Francisco, CA 94104-4122
Evergreen Tax Strategic MLPF&S for the Sole Benefit of its B 448,050.000 7.125%
Foundation Fund Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
</TABLE>
F-7
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
NAME OF FUND NAME AND ADDRESS OF RECORD OWNER CLASS SHARES OWNED SHARES OF CLASS
<S> <C> <C> <C> <C>
Evergreen Tax Strategic MLPF&S for the Sole Benefit of its C 340,264.000 44.366%
Foundation Fund Customers
(Continued) Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
- ----------------------------------------------------------------------------------------------------------
FUBS & Co. FEBO C 49,076.759 6.399%
Brenda Dykgraaf
9710 Wild Oak Dr.
Windermere, FL 34786-8335
Stephen A. Lieber Y 518,328.698 45.043%
1210 Greacen Point Rd.
Mamaroneck, NY 10543-4693
- ----------------------------------------------------------------------------------------------------------
Nola Maddox Falcone Y 102,130.166 8.875%
70 Drake Rd.
Scarsdale, NY 10583-6447
- ----------------------------------------------------------------------------------------------------------
Constance E. Lieber Y 59,814.468 5.198%
1210 Greacen Point Rd.
Mamaroneck, NY 10543-4613
Evergreen American First Union National Bank--C/F IN Vincent C 7,573.450 5.681%
Retirement Fund A. Megna IRA
7017 Capitol View Dr.
McLean, VA 22101-2616
Charles Schwab & Co., Inc. Y 472,761.625 19.150%
Special Custody Account for the Exclusive
Benefit of Customers:
Reinvest Account
Attn: Mutual Funds Dept.
101 Montgomery St.
San Francisco, CA 94101-4122
- ----------------------------------------------------------------------------------------------------------
First Union National Bank/EB/INT Reinvest Y 258,547.449 10.473%
Account
Attn: Trust Operations Fund Group
401 S. Tryon St., 3rd Fl. CMG-1151
Charlotte, NC 28202-1911
Evergreen Emerging Trust Company of America A 63,168.230 21.401%
Markets Growth Fund FBO HCM
P.O. Box 6675
Englewood, CO 80155-6675
Dupuy Dufour PSRP & Trust: Don P Dufour & C 6,711.646 5.476%
Harvey J. Dupuy TRS U/A/D 1/1/80
1060 Magazine St.
New Orleans, LA 70130
First Union National Bank: Trust Accounts Y 3,975,552.456 97.538%
Attn: Ginny Batten
11th Fl. CMG-1151
301 S. Tryon St.
Charlotte, NC 28288-0002
</TABLE>
F-8
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
NAME OF FUND NAME AND ADDRESS OF RECORD OWNER CLASS SHARES OWNED SHARES OF CLASS
<S> <C> <C> <C> <C>
Evergreen International MLPF&S for the Sole Benefit of its C 7,848.000 20.317%
Equity Fund Customers
Attn: Fund Adminstration
4800 Deer Lake Drive E., 3rd Fl.
Jacksonville, FL 32246-6484
- -------------------------------------------------------------------------------------------------------------
Emery Jahnke C 4,659.832 12.063%
2402 Lilac Ln.
Fargo, ND 58102-2124
- -------------------------------------------------------------------------------------------------------------
Richard M. Shaw TTEE FBO Richard S. Shaw C 2,050.175 5.307%
Trust
U/A DTD 5/21/97
45 Fremont Dr. SW
Fargo, ND 58103
First Union National Bank: Trust Accounts Y 17,061,993.051 98.194%%
Attn: Ginny Batten
11th Fl. CMG-1151
301 S. Tryon St.
Charlotte, NC 28288-0002
Evergreen Global Leaders MLPF&S for the Sole Benefit of its C 27,992.000 16.346%
Fund Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
First Union National Bank/EB/INT Cash Y 1,769,895.371 69.729%
Account
Attn: Trust Operations Fund Group
401 S. Tryon St., 3rd Fl. CMG-1151
Charlotte, NC 28202-1911
Evergreen Money Market FUNB A 672,497,618.630 24.200%
Fund Attn: CAP Finance GL
230 S. Tryon St.
Charlotte, NC 28202-3215
- -------------------------------------------------------------------------------------------------------------
FUNB A 394,493,535.330 14.196%
Attn: CAP Finance GL
230 S. Tryon St.
Charlotte, NC 28202-3215
- -------------------------------------------------------------------------------------------------------------
First Union Brokerage Services A 293,027,514.880 10.545%
Money Market Omnibus Account
CP13-NC1167
301 S. College St.
Charlotte, NC 28115
- -------------------------------------------------------------------------------------------------------------
FUNB A 282,323,382.060 10.159%
Attn: CAP Finance GL
230 S. Tryon St.
Charlotte, NC 28202-3215
- -------------------------------------------------------------------------------------------------------------
FUNB A 153,537,656.780 5.525%
Attn: CAP Finance GL
230 S. Tryon St.
Charlotte, NC 28202-3215
</TABLE>
F-9
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
NAME OF FUND NAME AND ADDRESS OF RECORD OWNER CLASS SHARES OWNED SHARES OF CLASS
<S> <C> <C> <C> <C>
Evergreen Money Philip Merkatz TTEE Dorothy Johnson Life Insurance Trust C 810,306.170 18.166%
Market Fund U/A DTD 11-18-91
(Continued) 10104 W. Coggins Dr. #D
Sun City, AZ 85351-3405
- ----------------------------------------------------------------------------------------------------------------------------
State Street Bank And Trust, Co. C 344,862.050 7.731%
Customer Rollover IRA FBO Mark Loveland
2701 Westheimer Rd. #12H
Houston, TX 77098
- ----------------------------------------------------------------------------------------------------------------------------
State Street Bank And Trust, Co. C 288,750.880 6.473%
Customer Rollover IRA FBO Mark S. Matlock & Mary S. Matlock,
M.D.
2817 McClelland Blvd. #125
Joplin, MO 64804-1630
- ----------------------------------------------------------------------------------------------------------------------------
Sue K. Isbell C 228,546.950 5.124%
2226 Potomac #1
Houston, TX 77057
Prudential Securities FBO K 76,390.690 40.937%
Charles R. Fuchs & Phyllis A. Fuchs: JT TEN
22 Winding Way
Wayne, NJ 07470-5957
- ----------------------------------------------------------------------------------------------------------------------------
Prudential Securities Inc. FBO K 68,253.410 36.577%
Mr. Marlene Silver: EX EST Elaine B. Ames
6038 Sweetbriar Ct.
Memphis, TN 38120-2514
- ----------------------------------------------------------------------------------------------------------------------------
Interstate/Johnson Lane FBO 329-04563-12 K 18,725.860 10.035%
Interstate Tower
P.O. Box 1220
Charlotte, NC 28201-1220
- ----------------------------------------------------------------------------------------------------------------------------
Wexford Clearing Services Corp. FBO K 12,432.460 6.662%
Marian V. Dingman
9001 Neill Lake Rd.
Eden Prairie, MN 55347-2046
- ----------------------------------------------------------------------------------------------------------------------------
Prudential Securities FBO Mark A. Rust IRA Transfer DTD 9/9/86 K 10,801.380 5.788%
16409 Elsienna
Cleveland, OH 44135-4249
First Union National Bank Trust Accounts Y 215,641,323.210 34.556%
Attn: Ginny Batten CMG-1151-2
401 S. Tryon St., 3rd Fl.
Charlotte, NC 28202-1911
- ----------------------------------------------------------------------------------------------------------------------------
Pitcairn Trust Company Y 51,767,800.270 8.296%
One Pitcairn Pl.
Jenkintown, PA 19046
Evergreen Tax Exempt FUNB A 206,342,087.890 31.143%
Money Market Fund Attn: CAP Finance GL
230 S. Tryon St.
Charlotte, NC 28202-1164
- ----------------------------------------------------------------------------------------------------------------------------
FUNB A 152,777,551.780 23.059%
Attn: CAP Finance GL
230 S. Tryon St.
Charlotte, NC 28202-1164
</TABLE>
F-10
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
NAME OF FUND NAME AND ADDRESS OF RECORD OWNER CLASS SHARES OWNED SHARES OF CLASS
<S> <C> <C> <C> <C>
Evergreen Tax Exempt First Union Brokerage Services A 71,621,872.830 10.810%
Money Market Fund Money Market Omnibus Acocunt
(Continued) CP13-NC1167
301 S. College St.
Charlotte, NC 28115
- --------------------------------------------------------------------------------------------------------------
FUNB A 39,078,122.520 5.898%
Attn: CAP Finance GL
230 S. Tryon St.
Charlotte, NC 28202-1164
- --------------------------------------------------------------------------------------------------------------
FUNB A 35,748,646.180 5.396%
Attn: CAP Finance GL
230 S. Tryon St.
Charlotte, NC 28202-1164
Evergreen Tax-Exempt Money Market "Y" Share Y 57,249,769.780 15.169%
Fund Cash A/C
c/o FUNB For Customers
One First Union Center
301 S. College St.
Charlotte, NC 28288-0601
Evergreen Treasury Money FUNB A 483,245,461.420 20.279%
Market Fund Attn: Cap Finance GL
230 S. Tryon St.
Charlotte, NC 28202-1164
- --------------------------------------------------------------------------------------------------------------
First Union National Bank Trusts Accounts A 479,842,854.170 20.136%
Attn: Ginny Batten
11th Fl. CMG-1151
301 S. Tryon Street
Charlotte, NC 28202-1910
- --------------------------------------------------------------------------------------------------------------
FUNB A 282,001,509.410 11.834%
Attn: Cap Finance GL
230 S. Tryon St.
Charlotte, NC 28202-3215
- --------------------------------------------------------------------------------------------------------------
FUNB A 267,422,276.050 11.222%
Attn: Cap Finance GL
230 S. Tryon St.
Charlotte, NC 28202-3215
- --------------------------------------------------------------------------------------------------------------
FUNB A 156,463,923.790 6.566%
Attn: Cap Finance GL
230 S. Tryon St.
Charlotte, NC 28202-3215
First Union National Bank: Trust Accounts Y 456,713,139.160 86.744%
Attn: Ginny Batten
11th Fl. CMG-1151
301 S. Tryon St.
Charlotte, NC 28288-0002
- --------------------------------------------------------------------------------------------------------------
Evergreen Money Market "Y" Fund Reinvest A/C Y 38,489,500.680 7.310%
c/o FUNB for Customers
One First Union Center
301 S. College St.
Charlotte, NC 28288-0601
</TABLE>
F-11
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
NAME OF FUND NAME AND ADDRESS OF RECORD OWNER CLASS SHARES OWNED SHARES OF CLASS
<S> <C> <C> <C> <C>
Evergreen Evergreen Inst'l Money Market "A" Share Inst. 265,202,414.250 41.990%
Institutional Fund Reinvest A/C Service
Money Market c/o FUNB for Customers
Fund One First Union Center
301 College St.
Charlotte, NC 28288-0601
- -----------------------------------------------------------------------------------------------------
First Union National Bank: Trust Accounts Inst. 216,030,290.120 34.204%
Attn: Ginny Batten CMG-1151-2 Service
401 S. Tryon St., 3rd Fl.
Charlotte, NC 28202-1911
- -----------------------------------------------------------------------------------------------------
Evergreen Inst'l Money Market "A" Share Inst. 50,448,696.220 7.988%
Fund Cash A/C Service
c/o FUNB for Customers
One First Union Center
301 S. College St.
Charlotte, NC 28288-0601
First Union National Bank: Trust Accounts Inst. 835,660,565.280 78.459%
Attn: Ginny Batten
CMG-1151-2
401 S. Tryon St., 3rd Fl.
Charlotte, NC 28202-1911
- -----------------------------------------------------------------------------------------------------
Evergreen Money Market Inst'l Fund Reinvest Inst. 60,888,461.250 5.717%
A/C
c/o FUNB for Customers
One First Union Center
301 S. College St.
Charlotte, NC 28288-0601
Evergreen First Union National Bank: Trust Accounts Inst. 664,491,449.000 88.196%
Institutional Attn: Ginny Batten CMG-1151-2 Service
Treasury 401 S. Tryon St., 3rd Fl.
Money Market Charlotte, NC 28202-1911
Fund
- -----------------------------------------------------------------------------------------------------
Evergreen Institutional Treasury Fund Inst. 43,669,296.850 5.76%
Reinvest A/C Service
c/o FUNB for Customers
One First Union Center,
301 S. College St.
Charlotte, NC 28288-0601
First Union National Bank: Trust Accounts Inst. 975,609,178.81 91.194%
Attn: Ginny Batten CMG-1151-2
401 S. Tryon St., 3rd Fl.
Charlotte, NC 28202-1911
Evergreen First Union National Bank: Trust Accounts Inst. 14,522,785.110 71.888%
Institutional Attn: Ginny Batten CMG-1151-2 Service
Tax Exempt 401 S. Tryon St., 3rd Fl.
Money Market Charlotte, NC 28202-1911
Fund
- -----------------------------------------------------------------------------------------------------
Evergreen Institutional Tax-Exempt Fund Inst. 4,826,126.440 23.840%
Reinvest A/C Service
c/o FUNB for Customers
One First Union Center
301 S. College St.
Charlotte, NC 28288-0601
</TABLE>
F-12
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
NAME OF FUND NAME AND ADDRESS OF RECORD OWNER CLASS SHARES OWNED SHARES OF CLASS
<S> <C> <C> <C> <C>
Evergreen First Union National Bank: Trust Accounts Inst. 295,094,213.060 81.233%
Institutional Attn: Ginny Batten CMG-1151-2
Tax Exempt 401 S. Tryon St., 3rd Fl.
Money Market Charlotte, NC 28202-1911
Fund
(Continued)
- --------------------------------------------------------------------------------------------------
First Union Brokerage Services Inst. 26,536,609.320 7.305%
Money Market Omnibus Account
CP13-NC1167
301 S. College St.
Charlotte, NC 28115
Evergreen FUNB A 24,301,492.830 68.441%
Pennsylvania Attn: Cap Finance GL
Tax Free 230 S. Tryon St.
Money Market Charlotte, NC 28202-3215
Fund
- --------------------------------------------------------------------------------------------------
First Union Brokerage Services A 9,830,393.630 27.685%
Money Market Omnibus Account CP13-NC1167
301 S. College St.
Charlotte, NC 28115
First Union National Bank: Trust Accounts Y 8,862,015.300 29.961%
Attn: Ginny Batten CMG-1151-2
401 S. Tryon St., 3rd Fl.
Charlotte, NC 28202-1911
- --------------------------------------------------------------------------------------------------
Jonathan B. Detwiler Y 2,972,126.980 10.048%
P.O. Box 69
Phoenixville, PA 19460-0069
- --------------------------------------------------------------------------------------------------
Agnes C. Kim Y 2,367,449.540 8.004%
760 Conshohocken State Rd.
Gladuyne, PA 19035-1416
- --------------------------------------------------------------------------------------------------
First Union Brokerage Services Y 1,964,119.750 6.640%
Money Market Omnibus Account
CP13-NC1167
301 S. College St.
Charlotte, NC 28115
- --------------------------------------------------------------------------------------------------
Dalck Feith & Rose Feith: JTWROS Y 1,729,190.110 5.846%
8134 High School Rd.
Elkins Park, PA 19027-2453
- --------------------------------------------------------------------------------------------------
Donald Feith & June Feith: JTWROS Y 1,496,654.810 5.060%
204 Marvin Rd.
Elkins Park, PA 19027-1721
Evergreen FUBS & Co. FEBO A 19,880.716 8.969%
Georgia Lee R. Meadows and Mary Lee Meadows
Municipal 1270 Hicks Cir. SW
Bond Fund Conyers, GA 30207-4221
- --------------------------------------------------------------------------------------------------
FUBS & Co. FEBO A 11,748.920 5.301%
William F. Hill Jr. and Marvin Hill
P.O. Box 554
Silver Creek, GA 30173-0554
</TABLE>
F-13
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
NAME OF FUND NAME AND ADDRESS OF RECORD OWNER CLASS SHARES OWNED SHARES OF CLASS
<S> <C> <C> <C> <C>
Evergreen FUBS & Co. FEBO A 11,654.040 5.258%
Georgia Yasmin M. Dharamsi C/F Farid M. Dharamsi
Municipal 1255 Vineyard Dr.
Bond Fund Conyers, GA 30208-2467
(Continued)
- --------------------------------------------------------------------------------------------------
FUBS & Co. FEBO A 11,381.843 5.135%
Yasmin M. Dharamsi
1255 Vineyard Dr.
Conyers, GA 30208-2467
First Union National Bank: Trust Accounts Y 113,910.185 93.144%
Attn: Ginny Batten
11th Fl. CMG-1151
301 S. Tryon St.
Charlotte, NC 28288-0002
- --------------------------------------------------------------------------------------------------
Vernon V. Gravette Y 6,811.747 5.570%
3792 Harts Mill Ln.
Atlanta, GA 30319-1812
Evergreen First Union National Bank: Trust Accounts Y 381,456.028 95.943%
North Attn: Ginny Batten
Carolina 11th Fl. CMG-1151
Municipal 301 S. Tryon Street
Bond Fund Charlotte, NC 28288-0002
Evergreen FUBS & Co. FEBO A 23,295.941 22.845%
South Mildred R. Robards
Carolina 2037 Eakle Dr.
Municipal Rock Hill, SC 29732-1115
Bond Fund
- --------------------------------------------------------------------------------------------------
FUBS & Co. FEBO A 20,054.819 19.667%
Charles W. Lombard Trust: Charlotte Lombard
and
Warren Prout Co-Trustees U/A/D 5/4/94
Boone, NC 28607
- --------------------------------------------------------------------------------------------------
FUBS & Co. FEBO A 10,725.005 10.518%
Warren A. Ransom Jr. and Laurie R. Ransom
1162 East Parkview Pl.
Mount Pleasant, SC 29464-7909
- --------------------------------------------------------------------------------------------------
FUBS & Co. FEBO A 6,245.824 6.125%
Charles Dean Turner
103 Carolina Club Dr.
Spartanburg, SC 29306-6601
- --------------------------------------------------------------------------------------------------
FUBS & Co. FEBO A 5,232.013 5.131%
Virginia C. Thomas
330 Concord St. No. 7G
Charleston, SC 29401-2731
FUBS & Co. FEBO B 29,436.644 6.364%
Ruby B. Motsinger and Joseph G. Motsinger:
JTIC
550 Brandon Rd.
Clover, SC 29710-9667
</TABLE>
F-14
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
NAME OF FUND NAME AND ADDRESS OF RECORD OWNER CLASS SHARES OWNED SHARES OF CLASS
<S> <C> <C> <C> <C>
Evergreen First Union National Bank: Trust Accounts Y 696,398.888 97.697%
South Attn: Ginny Batten
Carolina 11th Fl. CMG-1151
Municipal 301 S. Tryon St.
Bond Fund Charlotte, NC 28288-0002
(Continued)
Evergreen Duff M. Green A 23,733.555 8.173%
Virginia 638 Kings Highway
Municipal Fredericksburg, VA 22405-3156
Bond Fund
- --------------------------------------------------------------------------------------------------
FUBS & Co. FEBO A 18,873.163 6.499%
David A. Hetzer and Iris L. Hetzer
5009 Laburch Ln.
Annandale, VA 22003-6019
FUBS & Co. FEBO B 43,300.001 6.236%
Patsy B. Williams and Harry S. Williams
P.O. Box 888
Marion, VA 24354-0888
First Union National Bank: Trust Accounts Y 670,924.935 98.959%
Attn: Ginny Batten
11th Fl. CMG-1151
301 S. Tryon St.
Charlotte, NC 28288-0002
Evergreen MLPF&S for the Sole Benefit of its A 1,118,047.000 9.860%
Florida High Customers
Income Attn: Fund Administration
Municipal 4800 Deer Lake Dr. E., 3rd Fl.
Bond Fund Jacksonville, FL 32246-6484
MLPF&S for the Sole Benefit of its B 604,175.000 10.065%
Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
First Union National Bank: Trust Accounts Y 557,826.266 87.659%
Attn: Ginny Batten
11th Fl. CMG-1151
301 S. Tryon St.
Charlotte, NC 28288-0002
Evergreen First Union National Bank: Trust Accounts Y 889,705.095 98.96%
New Jersey Attn: Ginny Batten CMG-1151-2
Tax Free 401 S. Tryon St., 3rd Fl.
Income Fund Charlotte, NC 28202-1911
</TABLE>
F-15
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
NAME OF FUND NAME AND ADDRESS OF RECORD OWNER CLASS SHARES OWNED SHARES OF CLASS
<S> <C> <C> <C> <C>
Evergreen FUBS & Co. FEBO A 104,893.265 17.590%
Short- Haywood D. Cochrane Jr.
Intermediate 21 Castlewood Ct.
Municipal Nashville, TN 37215-4617
Fund
- --------------------------------------------------------------------------------------------------
FUBS & Co. FEBO A 91,232.190 15.299%
Stephen Nash and Linda N. Nash
10006 Stonemill Rd.
Richmond, VA 23233-2800
- --------------------------------------------------------------------------------------------------
FUBS & Co. FEBO A 72,485.770 12.155%
Manuel Garcia and Adeline Garcia
4933 New Providence
Tampa, FL 33629-4814
- --------------------------------------------------------------------------------------------------
FUBS & Co. FEBO A 39,114.517 6.559%
Anthony M. Truscello Sr. and Carolyn A.
Truscello
878 Taylor Dr.
Folcroft, PA 19032-1523
- --------------------------------------------------------------------------------------------------
FUBS & Co. FEBO A 37,909.904 6.357%
First Union National Bank--PA FBO
Anthony Dambro Loan Account
Attn: Augusto Bonnani PA 1322
123 South Broad St.
Philadelphia, PA 19109-1029
- --------------------------------------------------------------------------------------------------
FUBS & Co. FEBO A 30,575.064 5.127%
Lois Umbach
102 Overlook Dr.
Greenwich, CT. 06830-6718
FUBS & Co. FBO B 50,467.333 8.127%
Carl R. Nodine and Linda F. Nodine
P.O. Box 210086
Nashville, TN 37221-0086
- --------------------------------------------------------------------------------------------------
FUBS & Co. FBO B 38,223.484 6.156%
Mark E. Smith and Melissa A. Smith: JT
397 Yadkin Valley Rd.
Advance, NC 27006-8702
- --------------------------------------------------------------------------------------------------
FUBS & Co. FEBO B 32,757.924 5.275%
Shirley L. Roberts
2770 S. Garden Dr.
210 Bldg. 21
Lakeworth, FL 33461-6280
First Union National Bank/EB/INT Cash Y 797,392.055 17.809%
Account
</TABLE> Attn: Trust Operations Fund Group
401 S. Tryon St., 3rd Fl. CMG--1151
Charlotte, NC 28202-1911
F-16
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
NAME OF FUND NAME AND ADDRESS OF RECORD OWNER CLASS SHARES OWNED SHARES OF CLASS
<S> <C> <C> <C> <C>
Evergreen First Union National Bank Trust Accounts Y 571,096.893 25.885%
High Grade Attn: Ginny Batten
Tax Free Fund 11th Fl. CMG-1151
301 S. Tryon St.
Charlotte, NC 28288-0002
- ---------------------------------------------------------------------------------------------------
Foster & Foster Y 405,594.894 18.384%
P.O. Box 1669
Greenwich, CT 06836-1669
EVERGREEN (FORMERLY KEYSTONE) FUNDS
Evergreen MLPF&S for the Sole Benefit of its A 82,983.000 25.869%
Natural Customers
Resources Attn: Fund Administration
Fund 4800 Deer Lake Dr. E., 3rd Fl.
(formerly Jacksonville, FL 32246-6484
Keystone
Global
Resources and
Development
Fund)
MLPF&S for the Sole Benefit of its B 495,370.000 37.812%
Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
MLPF&S for the Sole Benefit of its C 147,542.000 42.018%
Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
Keystone MLPF&S for the Sole Benefit of its N/A 628,503.000 6.004%
Growth and Customers
Income Fund Attn: Fund Administration
(S-1) 4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
Evergreen Worcester County Retirement Fund Inst. 953,288.847 55.971%
Select Small Attn: Michael J. Donoghue
Cap Growth Chairman & Treasurer
Fund 2 Main St.
(formerly Room 3 Courthouse
Keystone Worcester, MA 01601
Institutional
Small
Capitalization
Growth Fund)
- ---------------------------------------------------------------------------------------------------
First Union National Bank FBO Essex Cnty. Inst. 268,975.266 15.792%
Carpenters Pension Fund
A/C 2543001079
1525 West WT Harris Blvd. CMG NC 1151
Charlotte, NC 28288-1151
- ---------------------------------------------------------------------------------------------------
First Union National Bank Re-invest Account Inst. 210,479.969 12.358%
Attn: Trust Operations Fund Group
401 South Tryon St., 3rd Fl.
Charlotte, NC 28288-1151
- ---------------------------------------------------------------------------------------------------
Board of Trustees of Sheet Metal Workers Inst. 202,943.723 11.915%
Local No. 85
Pension Fund
3835 Presidential Parkway, Suite 123
Atlanta, GA 30340-3723
</TABLE>
F-17
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
NAME OF FUND NAME AND ADDRESS OF RECORD OWNER CLASS SHARES OWNED SHARES OF CLASS
<S> <C> <C> <C> <C>
Evergreen MLPF&S for the Sole Benefit of its B 398,336.000 7.846%
(formerly Customers
Keystone) Attn: Fund Administration
Omega Fund 4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
MLPF&S for the Sole Benefit of its C 214,628.000 29.099%
Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
SSB C/F IRA Regular Y 231.054 99.550%
Nancy A. LaValley
2048 Clairmont Terrace
Atlanta, GA 30345-2312
Keystone MLPF&S for the Sole Benefit of its N/A 911,239.000 12.560%
Precious Customers
Metals Attn: Fund Administration
Holdings, 4800 Deer Lake Dr. E., 3rd Fl.
Inc. Jacksonville, FL 32246-6484
Keystone High MLPF&S for the Sole Benefit of its N/A 13,456,279.000 11.013%
Income Bond Customers
Fund (B-4) Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
Evergreen MLPF&S for the Sole Benefit of its A 267,802.000 18.880%
(formerly Customers
Keystone) Attn: Fund Administration
Capital 4800 Deer Lake Dr. E., 3rd Fl.
Preservation Jacksonville, FL 32246-6484
and Income
Fund
- --------------------------------------------------------------------------------------------------
Gary W. Grant & Eva Grant: JT/WROS A 76,468.329 5.391%
10906 Wickline
Houston, TX 77024
MLPF&S for the Sole Benefit of its B 416,153.000 13.355%
Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
MLPF&S For The Sole Benefit of its C 82,076.000 19.964%
Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
- --------------------------------------------------------------------------------------------------
St. Ann's Catholic Church C 20,755.209 5.048%
Attn: Fr. Peter McKenna
P.O. Box 256
La Vernia, TX 78121-0256
</TABLE>
F-18
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
NAME OF FUND NAME AND ADDRESS OF RECORD OWNER CLASS SHARES OWNED SHARES OF CLASS
<S> <C> <C> <C> <C>
Evergreen Ampex Retirement Master Trust Y 1,859,691.394 88.970%
(formerly P.O. Box 1992
Keystone) Boston, MA 02105-1992
Select
Adjustable
Rate Fund
- --------------------------------------------------------------------------------------------------
Buffalo Color Corp. Y 230,556.918 11.030%
Master Trust
P.O. Box 1992
Boston, MA 02105-1992
Wexford Clearing Services Corp. Z 232,663.218 24.157%
FBO McLarand Vasquez Partners
695 Town Center Dr.
Suite 300
Costa Mesa, CA 92626-1924
- --------------------------------------------------------------------------------------------------
Wexford Clearing Services Corp. Z 156,871.050 16.288%
FBO Carl F. McLarand
695 Town Center Dr.
Suite 300
Costa Mesa, CA 92626-1924
- --------------------------------------------------------------------------------------------------
William H. Morgan Jr. Z 122,898.362 12.761%
906 Weightman
Greenwood, MS 38930-2438
- --------------------------------------------------------------------------------------------------
Skyline Telephone Membership Corp. Z 114,718.438 11.911%
Attn: Hobart G. Davis
P.O. Box 759
Jefferson, NC 28694-0759
- --------------------------------------------------------------------------------------------------
Wexford Clearing Services Corp. Z 102,452.496 10.638%
Karen H. Morrison TTEE, The Morrison Family
Trust
U/A DTD 10/20/88
16472 Grimaud Ln.
Huntington Beach, CA 92649-1827
- --------------------------------------------------------------------------------------------------
Wexford Clearing Services Corp Z 75,717.213 7.862%
Karen Hosking Morrison TTEE
The Karen Hosking Morrison Family Trust U/A
DTD 8/19/93
16472 Grimaud Ln.
Huntington Beach, CA 92649-1827
- --------------------------------------------------------------------------------------------------
M & M Farms Z 64,638.694 6.711%
906 Weightman
Greenwood, MS 38930-2438
Evergreen MLPF&S for the Sole Benefit of its A 1,219,932.000 13.145%
(formerly Customers
Keystone) Attn: Fund Administrator
Strategic 4800 Deer Lake Dr. E., 3rd Fl.
Income Fund Jacksonville, FL 32246-6484
MLPF&S for the Sole Benefit of its B 2,192,870.000 13.146%
Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
</TABLE>
F-19
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
NAME OF FUND NAME AND ADDRESS OF RECORD OWNER CLASS SHARES OWNED SHARES OF CLASS
<S> <C> <C> <C> <C>
Evergreen MLPF&S for the Sole Benefit of its C 821,350.000 25.255%
(formerly Customers
Keystone) Attn: Fund Administration
Strategic 4800 Deer Lake Dr. E., 3rd Fl.
Income Fund Jacksonville, FL 32246-6484
(Continued)
First Union National Bank Cash Account Y 56,653.860 99.952%
Attn: Trust Operation Fund Group
401 S. Tryon St., 3rd Fl.
Charlotte, NC 28288-1151
Evergreen MLPF&S for the Sole Benefit of its A 140,166.000 5.986%
(formerly Customers
Keystone) Attn: Fund Administration
Fund for 4800 Deer Lake Dr. E., 3rd Fl.
Total Return Jacksonville, FL 32246-6484
MLPF&S for the Sole Benefit of its B 463,036.000 9.932%
Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
Lavedna Ellingson and Douglas Ellingson: C 137,912.020 13.422%
TTEES
Lavedna Ellingson Marital Trust U/A/D
5/1/86
8510 McClintock
Tempe, AZ 85284-2527
- --------------------------------------------------------------------------------------------------
MLPF&S for the Sole Benefit of its C 121,959.000 11.869%
Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
State Street Bank & Trust Co. Cust. IRA Y 2,159.418 84.202%
Rollover
Gail L. Gulbenkian
3768 McCoy Rd.
Blacksburg, VA 24060-0652
- --------------------------------------------------------------------------------------------------
State Street Bank & Trust Co. Y 404.138 15.759%
Cust. for the IRA of Judith A. Bartsch
49577 Keycove
New Baltimore, MI 48047-2360
Evergreen MLPF&S for the Sole Benefit of its A 340,261.000 29.769%
Latin America Customers
Fund Attn: Fund Administration
(formerly 4800 Deer Lake Dr. E., 3rd Fl.
Keystone Fund Jacksonville, FL 32246-6484
of the
Americas)
- --------------------------------------------------------------------------------------------------
Trust Company of America A 116,919.676 10.229%
FBO HCM
P.O. Box 6675
Englewood, CA 80155-6675
</TABLE>
F-20
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
NAME OF FUND NAME AND ADDRESS OF RECORD OWNER CLASS SHARES OWNED SHARES OF CLASS
<S> <C> <C> <C> <C>
Evergreen MLPF&S for the Sole Benefit of its B 2,658,158.000 44.051%
Latin America Customers
Fund Attn: Fund Administration
(formerly 4800 Deer Lake Dr. E., 3rd Fl.
Keystone Fund Jacksonville, FL 32246-6484
of the
Americas)
(Continued)
MLPF&S for the Sole Benefit of its C 349,596.000 40.246%
Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
Evergreen Rofe & Co. A 923,920.000 20.323%
(formerly c/o State Street Bank & Trust Co. for SUB
Keystone) Account
Global Kokusai Securities Co. Ltd.
Opportunities P.O. Box 5061
Fund Boston, MA 02206-5061
- --------------------------------------------------------------------------------------------------
MLPF&S for the Sole Benefit of its A 425,746.000 9.365%
Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
- --------------------------------------------------------------------------------------------------
Frank Russell Trust Co.: TTEE United A 294,658.206 6.481%
Airlines Pilots
Directed Account Dtd. 11-01-86
909 A St.
Tacoma, WA 98402-5111
MLPF&S for the Sole Benefit of its B 2,529,800.000 25.503%
Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
MLPF&S for the Sole Benefit of its C 967,830.000 47.198%
Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
Kevin Kenely Y 1.000 100%
26 Camperdown Ln.
Sudbury, MA 01776
Keystone MLPF&S for the Sole Benefit of its Y 1,813,764.000 10.262%
International Customers
Fund Inc. Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
Evergreen Richard Nakashian A 21,830.838 9.864%
(formerly P.O. Box 3150
Keystone) Pocasset, MA 02559-3150
Massachusetts
Tax Free Fund
- --------------------------------------------------------------------------------------------------
Margaret Vogel A 17,865.404 8.072%
TR #21720
Keystone Trust Company Trustee
865 Central Ave. H403
Needham, MA 02192-1341
</TABLE>
F-21
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
NAME OF FUND NAME AND ADDRESS OF RECORD OWNER CLASS SHARES OWNED SHARES OF CLASS
<S> <C> <C> <C> <C>
Evergreen Ida R. Rodriguez A 16,909.654 7.640%
(formerly TR #21528
Keystone) Keystone Trust Company Trustee
Massachusetts 58 Helen Rd.
Tax Free Fund Needham, MA 02192-3934
(Continued)
- --------------------------------------------------------------------------------------------------
Robert M. Buddington A 16,570.665 7.487%
P.O. Box 549
S. Orleans, MA 02662-0549
- --------------------------------------------------------------------------------------------------
Bertha M. Beauchemin A 14,379.892 6.497%
TR #21843
Keystone Trust Company Trustee
299 Cambridge St. #233
Winchester, MA 01890-2389
- --------------------------------------------------------------------------------------------------
Shirley W. Tower TTEE Shirley W. Tower A 11,073.338 5.003%
Trust
U/A dated Sep. 18, 1992
119 Brookhaven Dr.
E. Longmeadow, MA 01028-1474
Bear Stearns Securities Corp. C 21,613.348 11.212%
FBO 176-12556-19
1 Metrotech Center North
Brooklyn, NY 11201-3859
- --------------------------------------------------------------------------------------------------
Salvatore M. Moscariello and Irene A. C 14,678.413 7.615%
Moscariello: JT
24 Van Norden Rd.
Reading, MA 01867-1244
- --------------------------------------------------------------------------------------------------
Malcolm Groves & Jean N. Groves: TTEE C 10,993.675 5.703%
Malcolm F. Groves Rev. Liv. Trust
U/A DTD 05-18-94
80 Indian Hill Rd.
Cummaquid, MA 02637
Evergreen Prudential Securities, Inc. A 18,455.147 5.247%
(formerly FBO Ms. Sandra M. Franck
Keystone) 345 W. 70th St., Apt. 6F
New York New York, NY 10023-3554
Tax Free Fund
MLPF&S for the Sole Benefit of its B 217,234.000 11.324%
Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
Bear Stearns Securities Corp. C 23,065.998 14.919%
FBO 626-60277-10
1 Metrotech Center North
Brooklyn, NY 11201-3857
- --------------------------------------------------------------------------------------------------
Carol T. Whitman C 17,653.898 11.418%
P.O. Box 43
Whippleville, NY 12995
- --------------------------------------------------------------------------------------------------
Carol L. Moore C 13,194.077 8.534%
Rt. 2, Box 1055
Chateaugay, NY 12920-9522
</TABLE>
F-22
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
NAME OF FUND NAME AND ADDRESS OF RECORD OWNER CLASS SHARES OWNED SHARES OF CLASS
<S> <C> <C> <C> <C>
Evergreen MLPF&S for the Sole Benefit of its C 9,237.000 5.974%
(formerly Customers
Keystone) New Attn: Fund Administration
York Tax Free 4800 Deer Lake Dr. E., 3rd Fl.
Fund Jacksonville, FL 32246-6484
(Continued)
- --------------------------------------------------------------------------------------------------
Henry W. Demoy and Patricia K. Demoy: C 8,302.454 5.370%
JTWROS
Rd. 2 King Rd.
Cambridge, NY 12816-9802
- --------------------------------------------------------------------------------------------------
Elizabeth Frost C 7,832.243 5.066%
9 Heathcote Rd.
Scarsdale, NY 10583-4413
Evergreen MLPF&S for the Sole Benefit of its A 128,342.000 6.080%
(formerly Customers
Keystone) Attn: Fund Administration
Pennsylvania 4800 Deer Lake Dr. E., 3rd Fl.
Tax Free Fund Jacksonville, FL 32246-6484
MLPF&S for the Sole Benefit of its B 348,314.000 10.341%
Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
MLPF&S for the Sole Benefit of its C 168,440.000 29.198%
Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
Evergreen MLPF&S for the Sole Benefit of its A 42,392.000 10.255%
(formerly Customers
Keystone) Attn: Fund Administration
California 4800 Deer Lake Dr. E., 3rd Fl.
Tax Free Fund Jacksonville, FL 32246-6484
MLPF&S for the Sole Benefit of its B 336,150.000 15.729%
Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
MLPF&S for the Sole Benefit of its C 67,213.000 34.934%
Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
- --------------------------------------------------------------------------------------------------
Victor Edward Rylander and Lucille Rylander C 18,249.189 9.485%
TTEEs
Victor & Lucille Rylander Trust U/A DTD
09/18/96
4102 Caflur Ave.
San Diego, CA 92117
</TABLE>
F-23
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
NAME OF FUND NAME AND ADDRESS OF RECORD OWNER CLASS SHARES OWNED SHARES OF CLASS
<S> <C> <C> <C> <C>
Evergreen Prudential Securities FBO C 11,768.740 6.117%
(formerly Rakesh C. Gupta and Neelam Gupta CT
Keystone) FBO Gupta Family Living Trust 12/22/94
California Hemet, CA 92544
Tax Free Fund
(Continued)
- --------------------------------------------------------------------------------------------------
BT Alex Brown Inc. C 11,118.411 5.779%
FBO 489-31533-14
P.O. Box 1346
Baltimore, MD 21203
- --------------------------------------------------------------------------------------------------
BT Alex Brown Inc. C 10,923.183 5.677%
FBO 489-31533-14
P.O. Box 1346
Baltimore, MD 21203
- --------------------------------------------------------------------------------------------------
Smith Barney Inc. C 10,886.755 5.658%
00154933343
388 Greenwich St.
New York, NY 10013
- --------------------------------------------------------------------------------------------------
Richard B. Smith: Succ. TTEE U/A DTD 4-8-93 C 10,552.192 5.485%
FBO Richard B. Smith
4853 Mt. Royal Ct.
San Diego, CA 92117-2917
Evergreen MLPF&S for the Sole Benefit of its A 251,088.000 49.948%
(formerly Customers
Keystone) Attn: Fund Administration
Missouri Tax 4800 Deer Lake Dr. E., 3rd Fl.
Free Fund Jacksonville, FL 32246-6484
MLPF&S for the Sole Benefit of its B 570,213.000 28.150%
Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
Merrill Lynch C 25,151.000 17.560%
4800 Deer Lake Dr. E.
Jacksonville, FL 32246
- --------------------------------------------------------------------------------------------------
Edward D. Jones And Co. F/A/O Ronald Ralph C 20,172.393 14.084%
Wilder TTEE
U/A DTD 07/26/88 for EDJ# 642-02132-1-4
P.O. Box 2500
Maryland Heights, MO 63043-8500
- --------------------------------------------------------------------------------------------------
PaineWebber for the Benefit of Dorothy K. C 18,951.487 13.231%
Pruett, TTEE
Dorothy K. Pruett Revocable
c/o Mid America Mortgage
8645 College Blvd.
Overland Park, KS 66210
- --------------------------------------------------------------------------------------------------
MLPF&S for the Sole Benefit of its C 16,226.000 11.329%
Customers
Attn: Fund Administration
4800 Deer Lake Dr. E., 3rd Fl.
Jacksonville, FL 32246-6484
</TABLE>
F-24
<PAGE>
[LOGO OF EVERGREEN FUNDS APPEARS HERE]
<PAGE>
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" EACH PROPOSAL.
PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN
YOUR PROXY IN THE ENCLOSED ENVELOPE TODAY!
Please detach at perforation before mailing.
- ---------- ---------- ---------- ---------- ----------
PROXY PROXY
JOINT SPECIAL MEETING OF SHAREHOLDERS - DECEMBER 15, 1997
The undersigned hereby appoints Dorothy E. Bourassa, Terrence J. Cullen and
Martin J. Wolin and each of them, attorneys and proxies for the undersigned,
with full powers of substitution and revocation, to represent the undersigned
and to vote on behalf of the undersigned all shares of the Fund referenced
hereon (the "Fund"), which the undersigned is entitled to vote at a Joint
Special Meeting of Shareholders of the Fund to be held at 200 Berkeley Street,
26th Floor, Boston, Massachusetts 02116 on December 15, 1997, at 3:00 p.m. and
any adjournments thereof (the "Meeting"). The undersigned hereby acknowledges
receipt of the Notice of Meeting and Proxy Statement, and hereby instructs said
attorneys and proxies to vote said shares as indicated hereon. Unless indicated
to the contrary, this proxy shall be deemed to grant authority to vote "FOR" all
proposals relating to the Fund. In their discretion, the proxies are authorized
to vote upon such other matters as may properly come before the Meeting. A
majority of the proxies present and acting at the Meeting in person or by
substitute (or, if only one shall be so present, then that one) shall have and
may exercise all of the powers and authority of said proxies hereunder. The
undersigned hereby revokes any proxy previously given.
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS ON THIS PROXY. IF JOINT OWNERS,
EITHER MAY SIGN THIS PROXY. WHEN SIGNING
AS ATTORNEY, EXECUTOR, ADMINISTRATOR,
TRUSTEE, GUARDIAN, OR CORPORATE OFFICER,
PLEASE GIVE YOUR FULL TITLE.
DATE_______________________________,1997
________________________________________
________________________________________
________________________________________
________________________________________
SIGNATURE(S) TITLE(S), IF APPLICABLE
EV
<PAGE>
EVERY SHAREHOLDER'S VOTE IS IMPORTANT!
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" EACH PROPOSAL.
PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN
YOUR PROXY IN THE ENCLOSED ENVELOPE TODAY!
Please detach at perforation before mailing.
- ---------- ---------- ---------- ---------- ----------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. THIS PROXY WILL BE
VOTED AS SPECIFIED BELOW WITH RESPECT TO THE ACTION TO BE TAKEN ON THE FOLLOWING
PROPOSALS. IN THE ABSENCE OF ANY SPECIFICATION, THIS PROXY WILL BE VOTED IN
FAVOR OF THE PROPOSALS. PLEASE MARK YOUR VOTE BELOW IN BLUE OR BLACK INK. DO NOT
USE RED INK. EXAMPLE:
FOR AGAINST ABSTAIN
1. To approve the proposed Plan of Reorganization [_] [_] [_]
with the Successor Fund of the Successor Trust.
2. To approve the proposed change of the investment [_] [_] [_]
objective of each Fund (other than Keystone Omega
Fund) from fundamental to nonfundamental.
3. To approve the proposed changes to the Fund's
fundamental investment restrictions.
To vote against the proposed changes to one
or more of the specific fundamental
[_] investment restrictions, but to approve the [_] [_] [_]
others, fill in the box at the left AND
indicate the number(s) of the fundamental
investment restriction(s) you do not want to
change on this line:
_____________________________________________
4. FOR EVERGREEN INSTITUTIONAL TAX EXEMPT MONEY
MARKET FUND, EVERGREEN PENNSYLVANIA TAX FREE
MONEY MARKET FUND AND EVERGREEN TAX EXEMPT MONEY
MARKET FUND ONLY, to approve an amendment to the [_] [_] [_]
Fund's investment objective to permit the Fund to
invest without limit in obligations subject to the
Federal alternative minimum tax.
5. FOR EVERGREEN LATIN AMERICA FUND ONLY, to approve [_] [_] [_]
an amendment to the Fund's investment objective to
permit the Fund to invest without limit in
securities of issuers located in Latin America.
6. FOR EVERGREEN LATIN AMERICA FUND ONLY, to approve [_] [_] [_]
an amendment to the Fund's investment restriction
relating to industry concentration.
7. To transact any other business that may properly [_] [_] [_]
come before the meeting or any adjournment
thereof.
EV
